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Financial Management: The Prompt Payment Act and DOD Problem Disbursements

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Report Type Reports and Testimonies
Report Date May 23, 1997
Report No. AIMD-97-71
Subject
Summary:

The Defense Department (DOD) claims that the Prompt Payment Act has pressured its employees into paying invoices within 30 days even though the payment may cause a problem disbursement. Problem disbursements are payments that have not been properly matched with corresponding obligations. As a result, fraudulent and erroneous payments may go detected and the cumulative amounts of disbursements may exceed appropriated amounts and other legal limits. DOD did not provide, and GAO did not find, any empirical evidence to support assertions that the Prompt Payment Act contributes to problem disbursements. Also, a 1995 Defense study, which identified several major contributing causes to problem disbursements, did not cite either the Prompt Payment Act or DOD policies on making timely payments as a cause.

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