Employees' Travel Claims (DOD) (Correspondence, 06/26/95,
GAO/AIMD-95-171R).
Pursuant to an agency request, GAO reviewed the Department of Defense's
(DOD) proposed new system for processing employee travel claims,
focusing on: (1) the approval of travel disbursements; (2) supporting
documentation; (3) post-payment statistical sampling methods; and (4)
automated signatures. GAO noted that: (1) DOD planned training for
processing employees travel claims should highlight the traveler's,
approving official's, and disbursing officer's responsibilities; (2)
certain techniques, such as selecting a large sample of transactions,
should be implemented to compensate for the added risks associated with
implementing the new travel claims processing plan; (3) the automated
signature generation and validation system should comply with the
Federal Information Processing Standard (FIPS) and the data integrity
requirement; and (4) DOD should emphasize the travel system during its
annual review of internal controls, and determine if travelers are
maintaining supporting travel documentation for the required records
retention period.
--------------------------- Indexing Terms -----------------------------
REPORTNUM: AIMD-95-171R
TITLE: Employees' Travel Claims (DOD)
DATE: 06/26/95
SUBJECT: Travel allowances
Travel costs
Expense claims
Cost control
Federal employees
Claims processing
Computer software verification and validation
Electronic forms
Documentation
Internal controls
IDENTIFIER: Joint Financial Management Improvement Program
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Cover
================================================================ COVER
June 1995
GAO/AIMD-95-171R
Employees' Travel Claims (DOD)
(922218)
Abbreviations
=============================================================== ABBREV
DFAS - Defense Finance and Accounting Service
DOD - Department of Defense
FIPS - Federal Information Processing Standard
GSA - General Services Administration
JFMIP - Joint Financial Management Improvement Program
NIST - National Institute of Standards and Technology
Letter
=============================================================== LETTER
B-261647
June 26, 1995
Mr. John J. Hamre
Comptroller
Department of Defense
Dear Mr. Hamre:
Your March 21, 1995, letter asked that we provide our views on
whether your proposed new system for processing employee travel
claims conforms to the requirements in Title 2, "Accounting" and
Title 7, "Fiscal Guidance," of GAO's Policy and Procedures Manual for
Guidance of Federal Agencies. In your letter, you mentioned that you
requested waivers of several employee travel requirements from the
General Services Administration (GSA).\1 While this response is
independent of any decision made by GSA, your request to raise the
receipt threshold to $75 is pertinent to discussions that follow.
As we understand it, this new system is part of the Department of
Defense's (DOD) effort to streamline its processing of employee
travel claims to make it less costly and more oriented towards
mission accomplishment. The National Performance Review's initiative
to foster better government that costs less and the current move to
downsize government has intensified efforts to streamline operations
and simplify administrative processes through greater use of
available computer technology. Such technology is reducing the paper
generation and document flow, as well as the associated costs, that
have traditionally existed.
As you know, the Air Force recently began testing a new automated
travel system similar to the system envisioned in your request. The
Air Force requested and received a sanction from us to test its
system at Langley Air Force Base and the Pentagon for a year.\2 Also,
the Joint Financial Management Improvement Program (JFMIP) is
examining governmentwide travel procedures with a view towards
streamlining the processes. As it progresses, the JFMIP effort
should provide useful information to consider regarding your proposed
system.
To more fully understand your new system, we contacted your staff to
discuss the proposal in more detail. However, we did not perform any
tests of your current or proposed system and, consequently, our
response only addresses your proposal conceptually.
As discussed in this letter, we identify three issues regarding your
proposal and offer four control procedures to address these issues.
Based on our understanding of your proposal, we have no objection to
its implementation provided that the four controls we suggest are
effectively implemented.
--------------------
\1 GSA is responsible for issuing employee travel regulations which
are published in its manual entitled Federal Travel Regulations
(FTR).
\2 Air Force Automated Travel System (GAO/AIMD-95-74R, February 14,
1995).
DOD'S PROPOSAL
------------------------------------------------------------ Letter :1
Under your proposal, employees will continue to be reimbursed for
actual lodging costs up to the maximum allowed and would receive a
"flat-rate" for meals and related incidental expenses.
A single document, called a "Trip Record," would contain all of the
requisite information, claims, and approvals for a particular trip.
The Trip Record would include (1) the authorization to travel and
would be the basis for obligating travel funds, (2) a listing of
actual expenses incurred by the traveler, and (3) the supervisor's
approval for payment processing. The Trip Record would then be
forwarded to the disbursing officer for certification and payment.
For travel expenses costing $75 or less, excluding lodging, you
propose to eliminate the requirement for receipts,\3 but would
require that the traveler itemize all expenses on the Trip Record.
The traveler would forward all remaining receipts (for lodging and
other expenses over $75) with the Trip Record for administrative
approval. Approval, usually by the traveler's supervisor, would
indicate that the travel was actually taken and that the charges seem
reasonable. After supervisory approval, the receipts would be
returned to the traveler for the appropriate retention period and the
Trip Record would be forwarded to the disbursing officer who would
make payment based on propriety, legality, correctness, and accuracy.
In your letter, you stated that the proposed travel system would be
automated at the outset. Your staff stated that the Trip Record
would be created and maintained electronically and that the signature
of the traveler, administrative approving official (usually the
traveler's supervisor), and the disbursing officer would also be
automated.
Your staff indicated that verifications to ensure validity of the
payment would be done through a combination of (1) computer assisted
edit checks and (2) post-payment statistical sampling. Your staff
explained that the computer edit checks would be designed to be in
accordance with the Defense Finance and Accounting Services's
(DFAS)\4 requirements and specifications, and serve as controls to
help ensure that only proper payments are made.
Your staff also stated that the statistical sampling methods would
conform to the requirements of Title 7 of the GAO Policy and
Procedures Manual. Your staff explained that the samples would be
selected at the disbursing offices after payment and would include
stratified statistical sampling techniques. For each Trip Record
statistically selected, the traveler's claim, including all receipts,
will be examined. The traveler would be required to forward all
receipts to the disbursing office where all amounts claimed would be
reviewed for propriety, legality, correctness, and accuracy. The
receipts would then be retained at the disbursing office along with
the results of the sample for the appropriate records retention
period.
Your staff also stated that a substantial training effort would be
undertaken prior to implementation of the system. They said that
part of the training would be devoted to familiarizing travelers with
procedures for (1) document retention and storage, satisfying
applicable requirements contained in Title 8, "Records Retention," of
the GAO Policy and Procedures Manual and GSA's General Records
Schedule and (2) submission of all travel receipts being held within
the retention period to a responsible official when a traveler
retires or leaves DOD.
--------------------
\3 GSA regulations require receipts for all expenses over $25. DOD
has requested a waiver raising that threshold to $75.
\4 DFAS was created pursuant to DOD's Defense Management Report
Decision 910, December 4, 1990, and is responsible for all finance
and accounting matters.
GAO'S ASSESSMENT OF THE
PROPOSAL
------------------------------------------------------------ Letter :2
Regarding Titles 2 and 7, your request raises three issues: (1)
whether the disbursing officer will have sufficient detail and
support needed to routinely approve travel claims for payment if the
hard copy supporting documentary evidence, such as receipts, is not
forwarded to them, (2) whether it is appropriate for the traveler to
retain documents supporting his or her own claims, and (3) what
specific controls should exist when implementing post-payment
statistical sampling. Also, we wish to highlight the necessary
controls that should exist to ensure data integrity when using
automated signatures.
APPROVING DISBURSEMENT
---------------------------------------------------------- Letter :2.1
Title 7 requires that payments be based on sufficient evidence to
establish the validity of a claim. Where agencies, such as DOD, do
their own disbursing, the disbursing officers must ensure the (1)
propriety of amounts claimed, (2) legality of disbursements, (3)
correctness of the computations, and (4) accuracy of the facts stated
on the voucher and supporting documents. Traditionally, payment on
travel vouchers has been based on the disbursing officer's review of
the supporting documentary receipts that accompany the voucher.
GAO recognizes that supporting documentation is not required to
accompany a travel voucher for payment approval if adequate systems
of controls exist in the processing of travel claims. As we have
previously reported,\5 supporting documentation is not required to
accompany the travel voucher forwarded for payment approval if (1)
the administrative approving official, usually the traveler's
supervisor, knows that the travel actually occurred and its purpose
and reviews the charges for reasonableness, (2) the administrative
approving official and the disbursing officer can obtain supporting
documents if deemed necessary, (3) appropriate edit checks to help
determine propriety, legality, accuracy, and correctness are
performed in the automated processing of the voucher prior to
approval for payment, and (4) a post-payment sample is selected from
all vouchers and reviewed to provide assurances that claims are
adequately supported and valid.
The system design you propose includes the four previously mentioned
processes. If adequate controls in each process are effectively
implemented, the disbursing officer should have reasonable assurances
that the payment approval function is operating properly.
Because of his or her responsibilities to ensure that claims are
valid prior to payment, a disbursing officer may require the
supporting documentation to be provided prior to approval for
payment, even if the travel claim being reviewed is not selected in
the sample for which all supporting documents would be reviewed. We
believe the disbursing officer's responsibility for ensuring proper
payment should be made clear to DOD staff so that they are aware that
such a request could be made.
--------------------
\5 Employees' Travel Claims (GAO/AIMD-95-71R, February 6, 1995) and
Employees' Travel Claims (USIA) (GAO/AIMD-95-138R, May 23, 1995).
THE TRAVELER MAINTAINING
SUPPORTING DOCUMENTATION
---------------------------------------------------------- Letter :2.2
Title 2 appendix 2, "Internal Control Standards," requires that all
transactions be clearly documented and that the documentation be
readily available for examination. Your proposal calls for traveling
employees to retain relevant documents at their duty stations rather
than having them submitted with the Trip Record for approval by the
disbursing officer.
We have previously recognized that employees can retain travel
documents supporting travel claims.\6 The traveler can retain
supporting documentation until (1) the disbursing officer requests
the documents, (2) his or her claim is selected in a post-payment
audit sample to be reviewed and he or she is asked to forward the
documents to the disbursing center, or (3) the end of the applicable
records retention period, whichever comes first. The results of the
sample are documented and retained as the official documents
supporting payment approval for the universe of transactions from
which the sample was selected. These official documents are kept for
the proper retention period.
In the Air Force's case, to help ensure that travelers retaining
documents are knowledgeable of the requirements, Air Force officials
intend to provide training to familiarize travelers with retention
requirements and storage procedures.
Your design provides for similar requirements. Travelers would
retain supporting documents until asked to forward them to disbursing
centers to be examined separately or as part of post-payment review
of sampled claims or the retention period expires. Also, your
proposal includes planned training on proper retention and storage
procedures. If your proposal is effectively implemented, management
should have reasonable assurance that documents supporting travel
claims are properly retained for the required periods.
--------------------
\6 Air Force Automated Travel System (GAO/AIMD-95-74R, February 14,
1995).
POST-PAYMENT STATISTICAL
SAMPLING
---------------------------------------------------------- Letter :2.3
Your proposal calls for the samples to be selected from the universe
of paid claims to test the reliability of the system and the validity
of the claims. As we have previously reported,\7 post-payment
statistical sampling must be supplemented by internal controls that
test the validity of the claim prior to payment authorization. An
automated travel claim processing system presents a situation in
which post-payment statistical sampling techniques supplemented by
automated controls is practical. The automated controls should
include edit checks that help ensure claims are proper, legal,
correct, and accurate. For example, per diem limits should be
programmed into the software so that when travel claim information is
entered, the system processing the claim would check to make sure the
limits are not exceeded. Thus, if per diem costs to a particular
city cannot exceed $100 per day, the automated system would ensure
that the data on a claim entered into the system (involving travel to
that city) will not be processed if the claim exceeds $100.\8 Under
this situation, the post-payment statistical sampling is intended to
verify that the claims are adequately supported by documentation and
are valid.
We recognize that, when new systems are implemented, the risk of
errors or irregularities increases, especially when changing from a
manual to an automated process. To compensate for the increased risk
when initially implementing post-payment sampling procedures, we
believe certain sampling techniques should be given greater
consideration. One possibility would be increasing the sample size
to obtain a higher-than-normally required confidence level.\9
--------------------
\7 Air Force Automated Travel System (GAO/AIMD-95-74R, February 14,
1995).
\8 The system proposed is similar to the concept being tested by the
Air Force. The controls necessary for effective implementation of
such a system are outlined in greater detail in our report to the Air
Force.
\9 In testing a proposed new travel system, the Air Force's
post-payment sampling techniques called for selecting monthly samples
of 50 percent during the first 3 months of the test, thereby
increasing the confidence level above the minimal acceptable level.
(Air Force Automated Travel System (GAO/AIMD-95-74R, February 14,
1995).)
AUTOMATED SIGNATURES
---------------------------------------------------------- Letter :2.4
As we understand your proposal, the system would be electronic and
would include automated signatures of the traveler, approving
official, and disbursing officer. Although the design and
implementation of the automated aspects of the system have yet to be
determined, we wish to point out certain features that should exist
in the automated signature portion of the design.
Automated signatures generated and validated in data processing
systems should provide safeguards to help prevent errors and
irregularities. To do so the automated signature must be (1) unique
to the signer, (2) under the signer's sole control, and (3) capable
of being verified.\10 Also, to help ensure data integrity, the
signature must be linked to the data in such a manner that, if the
data are changed, the signature is invalidated. Because of the
nature of the electronic document, it is difficult to ascertain
whether the data has been altered unless the signature is linked to
the data in the document in such a way the signature verification
process can detect data changes. Traditional passwords and user
identification codes based systems usually do not meet these
criteria.
The National Institute of Standards and Technology (NIST)\11
has established procedures for the evaluation and approval of certain
automated signature techniques\12 to ensure the integrity of the data
and compliance with the previously mentioned criteria. We believe
the signatures should conform with requirements issued by NIST and
also use algorithms and techniques approved by NIST.\13
--------------------
\10 See 71 Comp. Gen. 109 (1991).
\11 Under the requirements of the Computer Security Act, NIST is
responsible for establishing standards for federal computer systems
that process sensitive but unclassified information.
\12 These procedures are contained in the Federal Information
Processing Standard (FIPS).
\13 RCAS Authentication (GAO/AFMD-93-70R, May 4, 1993).
CERTAIN PROCEDURES WOULD
ALLEVIATE INTERNAL CONTROL
CONCERNS
---------------------------------------------------------- Letter :2.5
We support initiatives to create a government that works better and
costs less. In this context, agencies have the responsibility to
protect the government's interest in a cost-effective manner.
Improvements to streamline the employee travel payment process should
be made only within a framework of adequate, cost-effective controls
that reasonably ensure that payment transactions are properly
authorized and sufficient records of these transactions are
maintained. Although Titles 2 and 7 allow flexibility to permit
agencies to implement payment systems that best suit their needs, the
preceding discussion has identified three potential problems that
could arise under your proposal.
To address these potential problems, and to minimize the risk of
irregularities and errors, your proposal should include the following
four procedures or controls.
-- A segment of the planned training should highlight the
traveler's, approving official's, and disbursing officer's
responsibility and the fact that (1) the disbursing officer,
upon review of a voucher, may require the supporting
documentation to be provided prior to making payment and (2) the
traveler may be required to reimburse DOD if documentation
supporting a claim paid him or her cannot be provided when
requested within the records retention period.
-- In designing and initially implementing a post-payment
statistical plan, until a satisfactory level of confidence in
the system is obtained, certain techniques, such as selecting a
large sample of transactions, should be implemented to
compensate for the additional risk inherent in implementing new
procedures. (One possible approach, with several examples of
such statistical sampling techniques, was outlined in our report
to the Air Force.)
-- The automated signature generation and validation process, when
designed and implemented, should comply with FIPS and satisfy
the data integrity requirement and the previously mentioned
criteria for the signature of the traveler, approving official,
and the disbursing officer.
-- The first year the system is operational, you should especially
emphasize its review during the annual reviews of internal
controls under the Federal Managers' Financial Integrity Act.
In future years, special emphasis should be placed on
determining if travelers are maintaining supporting travel
documentation at their duty stations for the records retention
period.
---------------------------------------------------------- Letter :2.6
Our position was discussed with members of your Travel Reengineering
Team. I hope our comments are helpful as you look for ways to
streamline your administrative processes and reduce the cost of
government. If you have any questions or would like to discuss these
matters further, please contact Bruce Michelson, Assistant Director,
at (202) 512-9366.
Sincerely yours,
Gene L. Dodaro
Assistant Comptroller General
*** End of document. ***