As of September 2015, DOD determined that the  largest portion attributable to the billions of dollars of unsupported JVs  relates to the Army’s general fund. JVs can also be manually entered or system  generated in the accounting systems. From October 2016 to March 2017, the Working Group,  based on DFAS-produced metrics, reported that it had identified more  than 121,000 unsupported JVs totaling $455 billion. In the May 2017 FIAR Plan Status  Report, DOD stated that the Army had completed its root cause analyses  for all JVs. However, we found that the analyses have been performed on  only a small percentage of the total number of unsupported JVs that  existed as of March 2017 and cannot be considered completed for all  unsupported JVs. In addition, members of the Working Group confirmed  as of June 2017 that the Working Group has not yet performed all  analyses necessary and stated that the Working Group’s efforts will be an  ongoing, iterative process because of anticipated new challenges that  continually arise from new business processes or programs. Our review of the population of unsupported JVs from October 2016 to  March 2017 found that system-generated JVs made up 90 percent in  dollar value and 97 percent in number of total unsupported JVs. Acting on the  DOD OIG’s recommendation, members of the Working Group indicated  that in March 2017, the Working Group began including system- generated JVs in its population of JVs to analyze but had not yet begun  its analyses or identified any root causes. The Working Group Has Developed Corrective Action Plans for All Identified Root Causes but Is Not Sufficiently Monitoring Implementation

As of March 2017, members of the Working Group reported that the  Working Group had developed 38 corrective action plans to address all of  the identified root causes of unsupported manual JVs at the consolidated  level in DDRS-B for the Army’s general fund. In addition, because the root cause analyses have been  limited, the Working Group has not yet been able to determine how many  more corrective action plans will need to be developed to resolve the  unsupported JV issue. Further, we found that the Working Group’s monitoring of corrective  action plan implementation does not include a method that sufficiently  identifies the progress that has been made toward fully addressing the  issue of unsupported JVs or to what extent each implemented corrective  action plan has reduced unsupported JVs. Therefore, the Working Group is unable to demonstrate to what extent it  has moved closer to eliminating and reducing unsupported JVs and to  what extent the Army’s financial statements are becoming auditable for  fiscal year 2018. As of March  2017, the Working Group had not analyzed system-generated JVs that  constitute 90 percent of the total dollar value or 97 percent of the total  number of unsupported JVs because of the volume and potential  correction complexity of these JVs. In addition, the metrics used  to analyze JVs and monitor implemented corrective actions are not  designed to provide the level of detail necessary to sufficiently monitor  whether root causes identified are resolved through corrective action  plans. As a result, the Army cannot determine to what extent it has  reduced unsupported JVs in its general fund and how much more effort is  required to fully address the issue and help ensure that the Army’s  financial statements will be auditable for fiscal year 2018. (Recommendation 1)
The Assistant Secretary of the Army for Financial Management and  Comptroller should work with DFAS to enhance the monthly JV metrics  report or develop another method to sufficiently monitor the extent to  which the Working Group has identified the root causes of unsupported  JVs and to determine the extent to which unsupported JVs are being  reduced based on the implemented corrective actions. In  its written comments, reprinted in appendix II, the Army concurred with  our recommendations and provided information on actions it has taken or  plans to take to address them. Appendix I: Objectives, Scope, and Methodology

Our objectives were to report on the extent to which the Journal Voucher  Working Group (Working Group) had, as of March 2017, (1) performed  analyses to determine the root causes of unsupported journal vouchers  (JV) for the Department of the Army’s (Army) general fund and   (2) developed and monitored the implementation of corrective action  plans to address identified root causes of unsupported JVs.
Why GAO Did This Study

The Department of Defense (DOD) remains on GAO's High-Risk List in part because of its long-standing financial management deficiencies, which have prevented it from having auditable financial statements. One of the contributing factors is the billions of dollars of unsupported JVs within DOD's accounting systems, with the largest portion attributable to the Army's general fund. Because the National Defense Authorization Act for Fiscal Year 2014 required that DOD submit audit results to Congress for fiscal year 2018, a Working Group was established to address the Army's unsupported JVs, including analyzing root causes and developing corrective action plans.
This report examines to what extent the Working Group, as of March 2017, has performed analyses and developed corrective action plans to address identified root causes. GAO reviewed and analyzed relevant documentation and interviewed agency officials and members of the Working Group.

What GAO Found

Since February 2015, the Journal Voucher Working Group (Working Group), which is comprised of Department of the Army (Army) and Defense Finance and Accounting Service personnel, has been actively working toward implementing new processes to address inadequate support for journal vouchers (JV) in the Army's general fund. JVs are accounting entries manually entered or system generated to record corrections or adjustments in an accounting system. From October 2016 to March 2017, the Working Group identified more than 121,000 unsupported JVs totaling $455 billion in one of its reporting systems, Defense Departmental Reporting System-Budgetary (DDRS-B).
In the May 2017 Financial Improvement and Audit Readiness Plan Status Report, the Army stated that it had completed its root cause analyses for all JVs. However, GAO found that the Working Group had conducted the analyses on only a small percentage of the total number of unsupported JVs that existed as of March 2017. Specifically, as of March 2017, the Working Group had been focusing on manual JVs processed in DDRS-B, which only represent 10 percent of the dollar value and 3 percent in the total number of unsupported JVs in that system alone. Therefore, the analyses cannot be considered complete because the Working Group had not yet analyzed the remainder of the population, including those in other systems. Members of the Working Group indicated that in March 2017, the Working Group began including system-generated JVs in its analyses, which made up 90 percent in dollar value and 97 percent in total number of unsupported JVs processed in DDRS-B as of March 2017, but had not yet begun identifying any root causes. Members of the Working Group stated that these efforts will be an ongoing, iterative process because of anticipated new challenges that continually arise from new business processes or programs.
As of March 2017, the Working Group reported that it had developed 38 corrective action plans to address all of the identified root causes of unsupported manual JVs in DDRS-B for the Army's general fund. According to members of the Working Group, 18 of the 38 have been implemented. However, the Working Group is unable to determine how many more corrective action plans will need to be developed to resolve the unsupported JV issue until the root cause analyses are complete. Further, GAO found that the Working Group's monitoring of corrective action plan implementation does not include a method that sufficiently identifies the progress toward fully addressing the issue of unsupported JVs or to what extent each implemented corrective action plan has reduced unsupported JVs. Members of the Working Group stated that the Working Group uses monthly JV metrics reports to monitor its implemented corrective actions, but the reports are not designed to provide the level of detail necessary to sufficiently monitor whether root causes identified are resolved through corrective action plans. Therefore, the metrics cannot demonstrate to what extent the Working Group has reduced unsupported JVs and how much more effort is required to fully address the issue and help ensure that the Army's financial statements are auditable for fiscal year 2018.

What GAO Recommends

GAO recommends that the Army (1) ensure that the entire population of unsupported JVs is identified and analyzed and (2) develop metrics that sufficiently monitor the extent to which the Working Group has identified root causes and determine the extent to which unsupported JVs are being reduced based on the implemented corrective actions. The Army concurred with GAO's recommendations and provided information on actions it has taken or plans to take to address them.