Summary: Because of continuing problems with disbursements, the Defense Department (DOD) is now required to match disbursements above a certain amount with the appropriate obligation in its accounting records before making the disbursement--a process known as disbursement prevalidation. GAO found that prevalidation allowed DOD to spot errors and prevent problem disbursements from being recorded in its accounting records. However, unless the $5 million threshold is lowered at the Defense Finance and Accounting Service's center in Columbus, Ohio, and the $1 million threshold is lowered at the other payment centers, tens of billions of dollars in transactions will continue to bypass this important control. Until a detailed plan is developed to ensure that all payments are properly prevalidated before taxpayer dollars are disbursed, the full benefits of prevalidations will not be realized. More importantly, even at its best, prevalidation will not solve the military's disbursement problems, as evidenced by nearly $22 billion worth of new problem disbursements that surfaced between October 1995 and January 1996. Prevalidation seeks to impose quality near the end of the disbursement process. As a result, it does not address the root problems inherent in poor systems and processes, as well as failure to use basic internal controls. DOD needs to (1) overcome weaknesses in control procedures that enable problem disbursements to occur and (2) improve its contract pay, disbursing, and accounting processes and systems.
