Earlier this week, Reuters issued a daunting report on the Pentagon’s accounting practices and inability to properly track expenses. Certainly shedding light on this important, very complex problem is valuable, however; the report does not include the full story. It leaves out the acknowledgement of the significant progress that has been and is continuing to be made to address many of the issues. As a customer of Oversight’s, we’ve seen firsthand how DFAS and the DOD are not only entirely aware of this complex problem, but are also putting key measures in place to correct it.
The environment is every bit as challenging as the report describes but what’s missing are the solutions such as modern analytic technologies that are making great progress toward addressing these issues. Specifically, with our business data analysis technology DFAS prevents over $2 billion per year in potential improper payments to vendors. Our analytics evaluates pending payments and finds problems before a check is ever written, preventing improper payments and creates in the aforementioned cost savings. DFAS and the Navy leveraged our software to address the Funds Balance with the Treasury challenges through an advanced “Big Data” style solution. By using data analysis technology, DFAS solved the reconciliation puzzle that continues to daunt so many areas of government financial systems (as well as the operations of multi-national companies). Our data analysis technology digs through massive amounts of information, uncovers patterns of activity and identifies exactly why accounts are not reconciling, at the detail level, each month. Most recently DFAS has automated the audit assertion process by using our technology. Based on the approach of monitoring transactions, detecting and analyzing suspicious patterns of activity, and providing alerts and policy update recommendations, our solutions deliver the workflow and case management needed to prove number accuracy.
As you peel the onion on the total extent of the problem, it might seem a complete do over is in order. Unfortunately just not practical from both a budget and technology risk standpoint. Correctly, DFAS and the DOD are replacing old homegrown financial systems with new, more modern financial solutions and phasing out the old. However, with to the size and number of these systems, this takes time. This manageable approach imposes far less risk than a “big bang” cross DoD implementation would. COBOL-based mainframes that pre-date the 1970s play roles in the DoD financial management process and the Oversight powered analysis solutions bring them into the modern era of control and auditability. As the consolidation occurs throughout the DoD to leverage modern commercial off-the-shelf (COTS) software platforms such as Oracle and SAP the Oversight powered control and auditability solutions are easily adapted to these new applications.
In today’s world of political frustration, we would like to share a bit of good news – yes, the problem with financial systems are complex and big, but real progress is being made to correct these problems. Not only to make all the numbers line up, but also to have the appropriate controls in place to prove everything is accurate and ensure the compliant operation of all systems.