Canceled DOD Appropriations: $615 Million of Illegal or Otherwise
Improper Adjustments (26-JUL-01, GAO-01-697).			 
								 
This report reviews the Department of Defense's (DOD) handling of
appropriated funds from expired appropriation accounts. In 1990, 
Congress changed the law governing the use of appropriation	 
accounts because it determined that controls over them were not  
working. Without adequate control, Congress was concerned that	 
agencies could disburse money in amounts and for purposes that it
had not approved. GAO found that DOD improperly charged 	 
appropriation accounts after they were closed. GAO also found	 
that DOD did not establish the requisite systems, controls, and  
managerial attention required to properly account for its	 
disbursements consistent with the 1990 account closing law, and  
as a result, DOD made at least $615 million of illegal or	 
otherwise improper adjustments during fiscal year 2000 alone. DOD
was aware of the limitations the account closing law placed on	 
the availability of canceled appropriations and that the law was 
enacted because of previous abuses by DOD's use of old		 
appropriations. DOD also knew that a major system used to control
its use of appropriations allowed for disbursements to be charged
in a way that was inconsistent with the law. However, DOD did	 
nothing to fix the system, although it estimated the cost to do  
so to be minimal. The $615 million of adjustments GAO identified 
as illegal or otherwise improper must be immediately reversed.	 
Also, at a minimum, DOD will need to effect changes to its	 
systems, policies, procedures, and the overall weak control	 
environment that fostered these practices and served to 	 
perpetuate the problem. GAO summarized this report in testimony  
before Congress; see: Canceled DOD Appropriations: $615 Million  
of Illegal or Otherwise Improper Adjustments, by Jeffrey C.	 
Steinhoff, Managing Director for Financial Management and	 
Assurance, before the Subcommittee on Government Efficiency,	 
Financial Management, and Intergovernmental Relations, House	 
Committee on Government Reform. GAO-01-994T, July 26 (eight	 
pages). 							 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-01-697 					        
    ACCNO:   A01462						        
  TITLE:     Canceled DOD Appropriations: $615 Million of Illegal or  
             Otherwise Improper Adjustments                                   
     DATE:   07/26/2001 
  SUBJECT:   Appropriation accounts				 
	     Defense appropriations				 
	     Expired appropriations				 
	     Accounting procedures				 
	     Accounting standards				 
	     Federal agency accounting systems			 
	     Contract modifications				 
	     Contract oversight 				 
	     Noncompliance					 
	     Financial management				 
	     DOD Contract Reconciliation System 		 

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GAO-01-697
     
GAO United States General Accounting Office

Report to Congressional Requesters

July 2001 CANCELED DOD APPROPRIATIONS

$615 Million of Illegal or Otherwise Improper Adjustments

GAO- 01- 697

Page i GAO- 01- 697 Canceled DOD Appropriations Letter 1

Results in Brief 2 Background 4 Contract Reconciliation 7 $615 Million of
Adjustments Were Illegal or Otherwise Improper 9 Contract Reconciliation
Process Lacks Certain Fundamental

Controls 13 Contract Modifications or Other Instructions Led to Improper

Adjustments 15 Factors Contributing to the Need to Correct Disbursement
Errors 16 Conclusion 19 Recommendations for Executive Action 19

Appendix I Scope and Methodology 22

Appendix II Illegal or Otherwise Improper Adjustments 24

Appendix III GAO Contact and Staff Acknowledgments 28

Tables

Table 1: Fiscal Year 2000 Illegal or Otherwise Improper Adjustments 9

Figures

Figure 1: Sample of DOD?s ?Long Line of Accounting? 17 Contents

Page ii GAO- 01- 697 Canceled DOD Appropriations

Page 1 GAO- 01- 697 Canceled DOD Appropriations

July 26, 2001 The Honorable Stephen Horn Chairman, Subcommittee on
Government

Efficiency, Financial Management and Intergovernmental Relations Committee
on Government Reform House of Representatives

The Honorable Jim Nussle Chairman, Committee on the Budget House of
Representatives

In 1990, the Congress changed the law governing the use of appropriation
accounts because it determined that controls over them were not working. 1
Committee reports and other statements relating to the legislation show that
members of the Congress were concerned that the Congress had inadequate
control over the expenditure of hundreds of millions of dollars of expired
appropriations, particularly in the Department of Defense (DOD). Without
adequate control, the Congress was concerned that agencies could disburse
money in amounts and for purposes that it had not approved. The 1990 law was
intended to improve congressional control by providing that, 5 years after
the expiration of the period of availability of a fixed- term appropriation,
the appropriation account be closed and all remaining balances canceled.
After closing, the appropriation account could no longer be used for
obligations or expenditures for any purpose.

Because agencies need to keep accurate records, they may, in limited
circumstances, adjust accounting records pertaining to closed accounts to
correct unrecorded or improperly charged disbursements. To justify such an
adjustment, an agency must have sufficient documentation for each proposed
adjustment to show that the

 disbursement was made when the appropriation account to be charged was
available to cover the disbursement,

1 National Defense Authorization Act for Fiscal Year 1991 (Public Law 101-
510, dated November 1990).

United States General Accounting Office Washington, DC 20548

Page 2 GAO- 01- 697 Canceled DOD Appropriations

 agency either did not record the disbursement when it was made or charged
it to the wrong appropriation account at that time, and

 proposed adjustment will result in the disbursement being charged to the
proper appropriation account.

From the enactment of the 1990 law through September 30, 1999, DOD requested
that Treasury make adjustments affecting 333 closed accounts valued at $26
billion. By comparison, during the same period, all other federal agencies
combined requested that Treasury make adjustments affecting only 21 closed
accounts valued at $5 million.

Amid concerns over the magnitude of DOD adjustments affecting closed
appropriation accounts and whether they complied with the 1990 account
closing law, you asked that we review the adjustments. The objectives of our
review were to (1) assess the adequacy of DOD procedures for adjusting
closed appropriation accounts and (2) determine if adjustments affecting
closed appropriation accounts complied with the 1990 law. According to DOD,
adjustments affecting closed appropriation accounts during fiscal year 2000
exceeded $2.7 billion. Our review focused primarily on large dollar value
adjustments made during fiscal year 2000. These represented $2.2 billion (81
percent) of the $2.7 billion of DOD?s reported closed appropriation account
adjustments made during fiscal year 2000. We selected fiscal year 2000
closed account adjustments because they were for the most recent complete
year available at the time of our review.

On May 25, 2001, we requested comments on a draft of this report from the
Secretary of Defense or his designee, but none had been provided at the time
we finalized our report on July 17, 2001. Appendix I contains more detailed
information on our scope and methodology.

DOD did not have adequate systems, controls, and managerial attention to
ensure that the $2.7 billion of adjustments affecting closed appropriation
accounts made during fiscal year 2000 were legal and otherwise proper. Our
review of $2.2 billion of these adjustments found about $615 million (28
percent) of the adjustments should not have been made, including about $146
million that violated specific provisions of appropriations law and were
thus illegal. For example, the stated purpose of one adjustment was to
charge a $79 million payment made in February 1999 to a fiscal year 1992
research and development appropriation account to correct previous Results
in Brief

Page 3 GAO- 01- 697 Canceled DOD Appropriations

payment recording errors. However, the fiscal year 1992 research and
development appropriation account closed at the end of fiscal year 1998- 4
months before the $79 million payment was made. 2 Therefore, the adjustment
had the same effect as using canceled funds from a closed appropriation
account to make the February 1999 expenditure, which is prohibited by the
1990 law.

In addition to the $146 million of illegal adjustments, about $364 million
of the improper closed appropriation account adjustments should not have
been made because the actual payments had been charged to the correct
accounts. DOD made these adjustments as part of an effort to correct other
errors in recording disbursements made under the contracts. Generally, these
recording errors were discovered when DOD could not pay an invoice because
the balance for a contract funding line was already used up. We considered
another $105 million to be improper adjustments because there was
insufficient documentation to support the adjustments. Agencies must be able
to provide documentation to show that adjustments are legal and that they
corrected incorrect charges.

System deficiencies in DOD?s Contract Reconciliation System (CRS)
significantly contributed to many of the illegal closed account adjustments.
3 Specifically, CRS did not compare the actual disbursement date with the
appropriation being adjusted to ensure that the adjustment met certain
appropriation law requirements. DOD had been aware of the system deficiency
since at least 1996, but took no action to upgrade CRS until we brought this
problem to its attention. Had CRS been upgraded to make this comparison in
1996 when the programming defect was first identified, the $146 million of
illegal adjustments made during fiscal year 2000 may not have occurred.

We also noted that DOD contracting officers were using contract
modifications and other methods of communication to instruct the

2 Research and development appropriation accounts are available for
obligation for 2 years after which they expire and remain available for an
additional 5 years for obligation adjustments and disbursements against
existing obligations. At the end of the 5- year period, the appropriation
balance is canceled and the account is closed. Therefore, the 5- year
expired period for a fiscal year 1992 research and development appropriation
account began on October 1, 1993, and ended on September 30, 1998.

3 CRS is an automated reconciliation system that has been used since 1995 by
DOD?s Defense Finance and Accounting Service Columbus Center to perform
contract reconciliations and to correct errors.

Page 4 GAO- 01- 697 Canceled DOD Appropriations

Defense Finance and Accounting Service (DFAS) Columbus Center to charge
disbursements to older appropriation accounts without regard to whether
adjustments would result in charging disbursements to appropriations that
had been canceled. This practice, when combined with the deficiencies in
CRS, resulted in some adjustments that were improper.

Finally, the remaining $1.6 billion (72 percent) of the $2.2 billion of
adjustments we reviewed were adequately documented corrections of errors
that DOD had made over the years and, therefore, were not in violation of
appropriations law or otherwise improper. They do, however, exemplify the
broad- based, high- risk problems associated with the accuracy of DOD?s
payment and accounting process. As we have previously reported, DOD has
serious problems with its ability to accurately account for and report on
payments to contractors, which in these cases resulted in $2.7 billion in
adjustments to closed appropriation accounts in fiscal year 2000 alone. DOD
acknowledges that it has problems with its accounting and reporting of
disbursements and has various ongoing initiatives aimed at resolving its
problems.

We are making recommendations that address the need for DOD to reverse and
correct the $615 million of closed account adjustments we identified as
illegal or otherwise improper and to take action to strengthen its policies,
procedures, and controls over closed appropriation account adjustments. To
the extent that DOD is unable to make proper correcting adjustments because
insufficient balances remain in the correct accounts, we are also
recommending that DOD investigate and report on these adjustments, as
required by the Antideficiency Act, 31 U. S. C. 1351, and implementing
guidance.

The Congress generally provides budget authority to an agency for use during
a specific period, referred to as the period of availability. 4 During this
period of availability, the agency may incur new obligations, for example,
those for goods and services, and charge them against the appropriation. At
the end of the period of availability, the appropriation expires, meaning
that it may not be used to incur new obligations.

4 In some instances, the Congress appropriates funds that remain available
?until

expended.? These ?no year? funds are not subject to the time limits that
apply to other appropriations. Background

Page 5 GAO- 01- 697 Canceled DOD Appropriations

Prior to fiscal year 1991, an appropriation account maintained its fiscal
year identity for 2 years after its period of availability expired. After
the 2year period, the remaining obligated balance and unobligated balance
were transferred and merged into ?M? accounts and merged surplus authority,
respectively, with the obligated and unobligated balances of previously
expired appropriation accounts available for the same general purpose. The M
accounts and merged surplus authority were available to pay and adjust valid
obligations incurred prior to expiration. However, because M accounts and
merged surplus authority had no fiscal year identity, upward adjustments
were not limited to the balances from any particular appropriation.

From 1956, when the Congress established the M accounts and merged surplus
authority, through December 1990, federal agencies? reported that M accounts
and merged surplus authority had grown to over $70 billion, with DOD
reported to have about $50 billion, over 70 percent, of this total. In
addition, the use of the merged surplus authority to fund upward adjustments
to M accounts increased dramatically. For example, DOD?s use of large
amounts from the merged surplus authority to cover upward adjustments to M
accounts and other expired surplus accounts increased each year over a 5-
year period from about $57 million in fiscal year 1985 to $560 million in
fiscal year 1989. DOD?s use of large amounts from the merged surplus
authority to cover upward adjustments to obligations prompted the Congress
to pass legislation in 1990 to strengthen its oversight and control over
expired appropriations.

Among other things, the 1990 law eliminated the merged surplus authority and
M accounts. Instead, under the 1990 law, an expired appropriation account
remains available for 5 years, during which it may be used for recording,
adjusting, and making disbursements to liquidate obligations that were
properly chargeable to the account. At the end of the 5- year period, the
appropriation account closes, and any remaining obligated and unobligated
balances are canceled. The closed appropriation account may not be used for
obligation or expenditure for any purpose. After an account closes,
obligations and adjustments to obligations that would have been properly
chargeable to the account before closing may be

Page 6 GAO- 01- 697 Canceled DOD Appropriations

charged to currently available appropriations subject to certain
limitations. 5

Even in those cases in which current appropriations must be used to make
payments after appropriation accounts close, the closed appropriation
accounts are still subject to the provisions of the Antideficiency Act.
Among other things, the act prohibits officers or employees of the
government from making or authorizing obligations or expenditures that
exceed the amounts available in appropriations or funds. Therefore, agencies
must continue to maintain current and accurate records of disbursements
attributable to the canceled appropriations to ensure that payments do not
exceed the originally appropriated amounts.

If a violation of the Antideficiency Act occurs, section 1351 of title 31
requires the head of the agency to immediately report to the President and
the Congress all relevant facts and a statement of actions taken. Also,
under section 1349 of title 31, the officer or employee who violates the act
is subject to administrative discipline.

The Office of Management and Budget (OMB) issues guidelines for budget
execution for executive branch agencies in OMB Circular A- 34. Section 40 of
that circular sets forth the requirements for reporting Antideficiency Act
violations. Section 40.6 requires that an agency head transmit a report to
the President, through OMB, providing information about the violation,
including the appropriation involved, the date and amount of the violation,
the identity of the person( s) responsible for the violation, a statement of
administrative discipline taken, a statement regarding the sufficiency of
the agency?s fund control regulations, and a statement of any actions taken
to prevent similar future violations. Section 40.6 also requires the agency
head to send an identical report to the Speaker of the House of
Representatives and the President of the Senate.

DOD implements the provisions of the Antideficiency Act and OMB?s Circular
A- 34 guidance in Volume 14 of its Financial Management Regulation. Chapters
4 through 7 of that volume contain detailed instructions on investigating
and reporting on possible Antideficiency Act violations. Chapter 9 contains
instructions on discipline for violations.

5 Under 31 U. S. C. 1353( b), obligations or adjustments to obligations that
would have been chargeable to the closed account may be charged to a current
account available for the same purpose. The total amount of charges to a
particular current account may not exceed 1 percent of the total
appropriations for that account.

Page 7 GAO- 01- 697 Canceled DOD Appropriations

As stated previously, because of the need to keep accurate records, agencies
may, in limited circumstances, adjust their records pertaining to closed
appropriation accounts. For example, if an agency determines that the
balances reflected in the records of a closed account are erroneous because
of reporting and clerical errors, it may adjust those records to correct the
errors. An agency may also adjust its records if it discovers that a
disbursement actually made before an appropriation account closed and
properly chargeable to an obligation incurred during the appropriation?s
period of availability was either not recorded at all or was charged to the
wrong appropriation. Neither of these types of adjustments constitutes
charging obligations against or disbursing funds from the closed
appropriation accounts. They represent corrections of the accounting
records. Since the appropriations, in effect, no longer exist, these
adjustments affect only the agency?s records. They have no effect on the
availability or use of obligated or unobligated balances formerly contained
in those appropriation accounts.

According to DFAS headquarters officials, DFAS Columbus makes about 99
percent of DOD?s annual closed appropriation account adjustments. DFAS
Columbus relies on the Mechanization of Contract Administration Services
(MOCAS) system to process DOD contract payment transactions and CRS for
performing and processing reconciliation transactions. MOCAS and CRS
transactions are recorded in various DFAS accounting systems used for the
military services and other DOD organizations that maintain the official
accounting records, including the status of canceled funds. During fiscal
years 1997 through 2000, DFAS Columbus? records showed that it made about
$10 billion of adjustments affecting closed appropriation accounts. 6

DFAS Columbus conducts two types of contract reconciliations- limited and
full scope. 7 Limited scope reconciliations are usually performed to resolve
problems that require immediate action, such as when there are insufficient
funds on the cited accounting classification reference number

6 Complete information on the numbers and dollar values of closed account
adjustments prior to January 1997 were not maintained by DFAS and were not
readily available and, thus, could not be verified.

7 Most requests for reconciliations come from the military services or DOD
organizations responsible for awarding the contracts. In some instances,
DFAS Columbus initiates reconciliation when problems occur with paying an
invoice. Contract

Reconciliation

Page 8 GAO- 01- 697 Canceled DOD Appropriations

(ACRN) to pay a contractor?s invoice. 8 These reconciliations generally
result in making only those adjustments necessary to resolve the problems
that are preventing payment of the invoice.

A full scope reconciliation is generally performed if a limited scope
reconciliation failed to adequately resolve a problem or a contract is being
prepared for final close- out due to contract completion. Depending on the
size of the contracts, these type of reconciliations can result in large
numbers of adjustments since they involve identifying and correcting all
errors made over the life of the contract.

DFAS Columbus uses CRS to help identify discrepancies between a contract?s
hard copy documentation and information recorded in MOCAS. To complete this
process, reconciliation staff re- enters into CRS all hard copy documents
pertaining to the contract. These include documentation for obligations,
invoices, disbursements, shipments, and modifications. After all the hard
copy information has been entered into CRS, it reconstructs the payments in
accordance with the payment instructions input by the reconciliation staff.
For example, if the contract payment terms specified that certain payments
were to be applied to specific ACRNs in the contract and the reconciliation
staff input these data into CRS, it would apply the payments accordingly.
However, if the staff failed to instruct CRS to apply the payments as
specified in the contract, CRS? default program would redistribute the
payments on an ?oldest funds first? basis. Either way, after redistributing
the payments, CRS generates accounting transactions to adjust MOCAS?
contract obligation and payment history so that it will agree with CRS.

Before the adjustments to the closed appropriation account records can be
made, however, reconciliation staffs are required to request approval from
the appropriate fund holder. 9 Once DFAS Columbus has provided the
appropriate fund holder with the request for approval, the fund holder has
45 days to accept or reject the proposed adjustments. DOD procedures provide
that if DFAS Columbus does not receive a response to the request for
approval within 45 days of notification, the adjustment will be considered
approved and processed accordingly.

8 An ACRN is a two- character code that DOD assigns to each appropriation
accounting line on the contract. As payments are made, they are allocated to
the applicable ACRN. 9 In DOD, the fund holder?s accounting functions are
usually performed and maintained by a DFAS field location. In these
instances, the DFAS location would be the approving activity.

Page 9 GAO- 01- 697 Canceled DOD Appropriations

Our review of $2.2 billion of the fiscal year 2000 closed appropriation
account adjustments found that $615 million (28 percent) were either illegal
($ 146 million) or otherwise improper ($ 469 million). These adjustments
should not have been made because the initial disbursements (1) occurred
after the appropriation being charged had already canceled, (2) occurred
before the appropriation being charged was enacted, or (3) were charged to
the correct appropriation in the first place and no adjustment was
necessary. Also included in the $615 million were $105 million of
adjustments that were not sufficiently documented to establish that they
were proper. These were considered to be improper because agencies must be
able to provide documentation to show that adjustments are legal and that
they changed an incorrect charge to a correct one. Table 1 provides
additional details on the $615 million of adjustments that should not have
been made. See appendix II for a detailed list of illegal or otherwise
improper adjustments.

Table 1: Fiscal Year 2000 Illegal or Otherwise Improper Adjustments

Dollars in millions

Problem with adjustment Adjustment amount

Appropriation already canceled when disbursement was made $107.7
Appropriation not yet enacted when disbursement was made 38.2 No adjustment
was necessary 364.0 Insufficient documentation 104.9

Total $614.8

The 1990 account closing law specifically provides that closed appropriation
accounts are not available for expenditures. We found that about $108
million of the adjustments resulted in charging appropriation accounts that
had closed before the disbursements were made. These adjustments produced
the same result as if DOD had made expenditures from and charged closed
appropriation accounts at the time the disbursements were made. Therefore,
these adjustments violated the 1990 account closing law. Following are
several examples in which the adjustments had the effect of spending
canceled funds from the closed accounts.

In December 1999, DFAS Columbus recorded an adjustment that changed $79
million of disbursements from charges against fiscal years 1993 through 1995
research and development appropriations to charges against a fiscal year
1992 research and development appropriation. According to $615 Million of

Adjustments Were Illegal or Otherwise Improper

Appropriation Already Canceled When Disbursement Was Made

Page 10 GAO- 01- 697 Canceled DOD Appropriations

documentation in the contract files, the adjustment was to correct previous
disbursing errors by redistributing the payments in accordance with the
payment terms specified in the contract. The payment terms of the contract
specified that payments should be made using ?oldest funds first.? Under
this instruction, payments should be charged to the oldest appropriation
cited on the contract until the obligated balance has been exhausted for
that appropriation. Subsequent payments are then charged to the next oldest
available appropriation, and so on, until all the funds are used up or the
contract is complete. Making the adjustment that charged the $79 million of
disbursements to the closed fiscal year 1992 research and development
account used up the unspent balances in that appropriation account and freed
up funds on still open 1993 through 1995 research and development
appropriation accounts for other disbursement charges.

We found that charging the $79 million of disbursements to the fiscal year
1992 research and development appropriation was illegal because the
disbursements were made in February 1999- 4 months after the fiscal year
1992 research and development appropriation account had closed on September
30, 1998. DFAS Columbus officials agreed that the adjustment violated the
1990 law and should not have been made. According to the officials, the
adjustment was made by CRS, which lacked the necessary controls to prevent
this from occurring. (CRS weaknesses are discussed in more detail later in
this report.) After we pointed out this illegal adjustment, DFAS Columbus
personnel responsible for resolving this problem told us that they would
reverse the transaction and begin a review of the contract to determine what
they will need to do to properly record the $79 million of disbursements,
including using current- year appropriations if necessary.

In another case, DOD was not able to pay an $832,907 invoice properly
chargeable to a fiscal year 1993 appropriation account because sufficient
funds were not available in the cited ACRN to pay the invoice. This prompted
a reconciliation of the contract to determine why sufficient funds were not
available to pay the invoice. Among other things, the reconciliation
identified $721,037 of overpayments made from August 1991 through February
1992 that were charged to a fiscal year 1989 aircraft procurement
appropriation- an appropriation account that was closed at the time of the
reconciliation. To recover this overpayment, DFAS Columbus offset the amount
against a current invoice. On September 28, 2000, DFAS Columbus paid the
contractor $111,870, which DFAS Columbus calculated as the net amount owed
to the contractor after

Page 11 GAO- 01- 697 Canceled DOD Appropriations

deducting the $721,037 of overpayments from the $832,907 invoice amount.

The 1990 account closing law requires that collections related to closed
appropriation accounts be deposited in the Treasury as miscellaneous
receipts. 10 However, we found that instead of forwarding the $721,037 of
overpayments, which it collected through payment offset, to Treasury, DFAS
Columbus processed adjustments to move the overpayments to a fiscal year
1993 ACRN on the contract that was still open and available for new
disbursements. It then used the overpayments to offset the amount owed to
the contractor. In discussing this adjustment with DFAS Columbus officials,
they told us that it is standard practice to offset collections against
invoices when making payments, even if closed accounts are involved.
However, they agreed that, regarding collections of disbursements made from
accounts that closed before collection, the proper procedure would be to
forward those collections to the Treasury and use other sources of funding
to pay the invoice. Therefore, in this case, the proper procedure would have
been to (1) record the collection of the overpayments as a deposit to
Treasury?s miscellaneous receipts and (2) use available appropriations to
cover the $721,037 needed to replace the funds returned to Treasury. While
DFAS Columbus officials could not tell us why they had not followed proper
procedures in this case, they told us they would review this transaction to
determine how to correct the error.

Under 31 U. S. C. 1502 (a), an appropriation may be used to pay only those
expenses properly incurred during the appropriation?s period of
availability. However, we found that over $38 million of the closed
appropriation account adjustments resulted in charging disbursements to
appropriation accounts that had not yet been enacted at the time the
disbursements were actually made. For example, in January 2000, a total of
$21 million of disbursements charged to fiscal years 1989 and 1990
appropriations were changed to charges against fiscal years 1998 and 1999
missile procurement appropriations. Since the actual disbursements were for
expenses that were incurred before the fiscal years 1998 and 1999

10 31 U. S. C. 1552( b) addresses collections that would ordinarily be
credited to an appropriation account. When a collection is not received
until after the account closes, it cannot be credited to that account.
Therefore, the law provides that the collection shall be deposited in the
Treasury as miscellaneous receipts. Appropriation Not Yet

Enacted When Disbursement Was Made

Page 12 GAO- 01- 697 Canceled DOD Appropriations

appropriations were enacted, charging disbursements to these two
appropriations violated 31 U. S. C. 1502 (a).

Further, included in the $21 million were $9.9 million in overpayments,
which the contractor identified as a return of funds that were paid from the
fiscal years 1988 through 1990 appropriations. However, these appropriations
had been canceled before the overpayments were returned. As discussed
earlier in this report, the 1990 law requires that the collection of
canceled funds be deposited into the Treasury as miscellaneous receipts.
However, we found that instead of forwarding the overpayments to the
Treasury, DFAS Columbus redistributed the $9.9 million to current and
expired appropriations that were funding the still- open contract. In
discussing these errors with responsible DOD officials, they agreed that the
$21 million adjustment and the $9. 9 million redistribution were incorrect
and should not have been made. According to the officials, they plan to
reverse the adjustments and determine what actions are required to correct
the accounting records, including returning the $9.9 million to the
Treasury.

Closed account adjustments totaling $364 million were not necessary because
the initial payments had been charged to the correct appropriations and
should not have been adjusted. DOD made these adjustments during contract
reconciliations to try to correct errors in recording disbursements made
under the contracts. Generally, these reconciliations were initiated if DOD
could not pay invoices because other disbursements had been erroneously
recorded against the wrong appropriations funding contracts. For example, in
November 1999, DFAS Columbus received an invoice from a contractor for
$685,000. DFAS Columbus could not pay the contractor because there were not
sufficient funds available in the cited ACRN to pay the invoice. As a
result, DFAS Columbus reconciled the fiscal year 1988 contract, which
resulted in over $590 million of adjustments affecting closed appropriation
accounts. Our review of these found that $210 million of the adjustments
should not have been made because the actual disbursements- some of which
were made over 10 years earlier- were recorded correctly. As a result of
this process to free up sufficient funds to pay the $685,000 invoice, DFAS
Columbus made unnecessary adjustments affecting the closed accounts. Thus,
the reconciliation resulted in at least $210 million of accounting errors
that did not exist before the reconciliation took place. No Adjustment Was

Necessary

Page 13 GAO- 01- 697 Canceled DOD Appropriations

In order to adjust its records, an agency must have sufficient documentation
to show that the adjustment is legal and changed an incorrect charge to a
correct one. However, neither DOD nor we could find sufficient documentation
in DOD?s accounting and contract records to support about $105 million of
closed appropriation account adjustments. For example, in June 2000, DFAS
Columbus made an adjustment that changed over $2.4 million of disbursements
from charges against a fiscal year 1993 appropriation that had not yet
canceled to a fiscal year 1992 appropriation that had canceled. According to
the contract files, the adjustment was to correct a previous disbursing
error. However, in reviewing the contract files for this adjustment, neither
DOD nor we could identify the original invoice or other supporting
documentation to show which appropriation should have been charged for the
goods or service. We considered these types of unsupported adjustments
improper because DOD must be able to provide documentation to show that the
adjustments are legal and that they changed incorrect charges to correct
ones. DOD is researching these transactions further to determine if
additional documentation can be located to support the adjustments.

The contract reconciliation process lacks the controls necessary to ensure
that adjustments to closed appropriation accounts are proper. Our review
disclosed that CRS routinely processed billions of dollars of closed
appropriation account adjustments without regard to the requirements of the
1990 account closing law, which prohibits making disbursements or
obligations from closed accounts. Further compounding this shortfall was the
lack of oversight on how contract modifications were written and processed,
which, when combined with the deficiencies in CRS, changed the payment terms
of some contracts to free up current and expired funds. As noted earlier,
these deficiencies contributed to at least $615 million in illegal or
otherwise improper closed account adjustments during fiscal year 2000.

CRS does not contain a control to determine if an appropriation was
available at the time the disbursement was made. Specifically, CRS does not
compare the actual disbursement date with the appropriation involved in the
adjustment to ensure that the adjustment does not result in charging
disbursements (1) back to an appropriation that had canceled before the
actual disbursement was made or (2) forward to an appropriation that had not
yet been enacted at the time the actual disbursement was made. Furthermore,
unless reconciliation staff input specific payment terms into CRS, it will
redistribute disbursement charges on an ?oldest funds first? Insufficient

Documentation Contract Reconciliation Process Lacks Certain Fundamental
Controls

Contract Reconciliation System Weaknesses

Page 14 GAO- 01- 697 Canceled DOD Appropriations

basis. As a result, it will change disbursements charged to current and
expired appropriation accounts to charges against older appropriation
accounts, even if they are closed, to use up any unspent balances in the
closed appropriation accounts. This is a violation of the 1990 act.

DOD officials responsible for contract reconciliations told us that they
have been using CRS to perform reconciliations since 1995 and that
redistribution of disbursement charges to the closed appropriation accounts
was a routine practice. They also acknowledged that, in 1996, they
identified the CRS control weakness that allowed them to make adjustments
that charged disbursements to closed accounts. However, they could not tell
us why they had not taken action to correct the problem- a problem (1) they
estimated would have cost $24, 460 to fix in 1996 and (2) that resulted in
illegal and otherwise improper adjustments. After we identified the problem
during our review and brought it to their attention, DOD officials
implemented the control in May 2001.

In regard to the other needed control that would prevent making adjustments
that charge disbursements against appropriation accounts that had not yet
been enacted when the disbursement was actually made, DOD officials told us
that they were not aware of this problem until we brought it to their
attention during our audit. They told us they were reviewing the process to
determine how to include this control in CRS and planned to have it
implemented by September 2001.

In an effort to address some of the control weaknesses we identified, DFAS
Columbus required all reconciliation staff to attend a 3- day refresher
course on the adjustment process. According to DFAS Columbus officials, all
of the 235 DFAS Columbus employees involved in performing contract
reconciliations had completed this course as of March 2001. DFAS Columbus
also issued interim guidance in January 2001 in response to our audit
findings on the weaknesses in CRS. The implementing memorandum noted that
the current process using CRS was flawed because it did not require that
disbursements be compared with dates relevant to the use of appropriations
before the adjustments were processed. It specifically noted that the
current process allowed for the processing of an adjustment even if the date
of the disbursement occurred after the date the funds canceled. To address
these problems, the interim guidance provides detailed steps for staff to
follow to ensure that the person preparing the adjustments performs the
manual comparison of dates and that documentation is prepared to support the
comparison process.

Page 15 GAO- 01- 697 Canceled DOD Appropriations

DFAS Columbus? efforts are a step in the right direction. However,
addressing adjustments that involve moving disbursement charges forward to
appropriations that were not enacted at the time the disbursement occurred
could enhance the interim guidance. DFAS Columbus officials agreed that the
interim guidance should also address this issue and were in the process of
determining what needs to be done. They did not provide us an estimated date
for completing this guidance update.

During our review of transactions, we noticed that DFAS Columbus personnel
were relying on contract modifications or other contracting officers?
informal instructions to justify adjustments that changed disbursements from
charges against current or expired appropriations to charges against closed
appropriation accounts. The modifications or informal guidance either
instructed that payments be made using ?oldest

funds first? or specifically instructed that disbursements be moved from one
ACRN to another.

According to DFAS Columbus officials, when contracting officers modify
contracts or issue informal instructions to make adjustments that charge
disbursements against older appropriations, DFAS Columbus will usually
comply with the modifications without regard to the 1990 closed account law.
We found several instances in which DFAS Columbus followed either a contract
modification or informal instructions and made adjustments that resulted in
improperly charging closed appropriation accounts.

We met with DOD accounting and acquisition officials to discuss the use of
contract modifications to change payment terms to move disbursements back to
closed appropriation accounts. According to the officials, there was no DOD
policy that prohibited changing the payment terms of the contract. In fact,
DFAS Columbus personnel responsible for reconciliations told us that when
they receive a contract modification from a contracting officer to change
payment terms, they take it for granted that the contracting officer wants
DFAS Columbus to apply the modification retroactively on an ?oldest funds
first? basis in order to use up the unspent canceled funds. Air Force
contracting officials also acknowledged that they intended for DFAS Columbus
to apply the modification retroactively. They told us that the use of
modifications was intended to redistribute the disbursements to the unspent
canceled appropriations in order to avoid having to request current- year
funds to replace the canceled appropriations. After pointing out this
practice to DOD accounting and acquisition managers, they agreed that
contract Contract

Modifications or Other Instructions Led to Improper Adjustments

Page 16 GAO- 01- 697 Canceled DOD Appropriations

modifications should not be written with the purpose of using up the unspent
balances in closed appropriation accounts. They told us that they would
review this issue and would revise their policy to prevent this type of
contract modification.

The $1.6 billion of closed account adjustments to which we do not take
exception are part of a bigger problem facing DOD. While these adjustments
were adequately documented corrections of prior errors, the fact that this
large amount of transactions required adjustment in the first place is a
result of a long- standing and well documented problem DOD has with
correctly accounting for and recording obligations and the corresponding
disbursements. For example, for fiscal year 1999, DFAS data showed that
almost $1 of every $3 in contract payment transactions was for adjustments
to previously recorded payments-$ 51 billion of adjustments out of $157
billion in transactions.

Over the years we have issued numerous reports discussing DOD?s financial
management problems, and we have designated DOD financial management as a
high- risk area since 1995. In July 2000, we testified that DOD?s inadequate
process and control problems contribute to billions of dollars in improper
payments. 11 For example, we noted that for fiscal years 1994 through 1999,
DFAS records showed that defense contractors returned over $5.3 billion of
overpayments and erroneous payments due to contract administration actions
and payment- processing errors. In 1997, we reported several key factors
contributed significantly to problems in DOD?s payment process that, for the
most part, still exist today. 12 Among these is the ?long line of
accounting? DOD uses to allocate payment information among numerous
accounting categories. The following discussion from our 1997 report
describes this complex and convoluted process, which, we found, also
contributed to DOD?s $2.7 billion closed account adjustments for fiscal year
2000.

DOD uses what it refers to as a ?long line of accounting? to accumulate
appropriations, budget, and management information for contract payments.
This long line of accounting can contain over 50 alphabetical and numerical
symbols that identify such things as the military service,

11 Department of Defense: Implications of Financial Management Issues

(GAO/ T- AIMD/ NSIAD- 00- 264, July 20, 2000). 12 Contract Management:
Fixing DOD?s Payment Problems Is Imperative

(GAO/ NSIAD- 97- 37, April 10, 1997). Factors Contributing

to the Need to Correct Disbursement Errors

Page 17 GAO- 01- 697 Canceled DOD Appropriations

appropriation, beginning and ending fiscal years, and appropriation
suballotment. The buying activities (generally military services that are
responsible for administering these funding segments) assign a twocharacter
ACRN to each accounting line containing unique information. DFAS Columbus
allocates the payments to the ACRNS. Compounding the problem is that the
type, quantity, and format of information vary among the services since
there is not standardization of account transactions. Figure 1 is a sample
of an accounting line.

Figure 1: Sample of DOD?s ?Long Line of Accounting?

Source: DOD.

Contracts can be assigned anywhere from 1 to over 1,000 ACRNs. A contract
with numerous ACRNs involves extensive data entry, increasing the chance for
errors, and manual payment processing. When buying activities assign
numerous ACRNs to a complex contract, payment allocations to the ACRNs can
be time- consuming. For example, as we noted in our 1997 report, a single
payment on a contract with many ACRNs took DFAS Columbus 6 to 8 hours to
process. The contractor, required to bill by ACRN, took 487 pages to assign
$2.1 million in costs and fees to 267 ACRNs. Ten of the ACRNs cited by the
contractor had insufficient obligation balances to cover the payment,
according to DFAS Columbus? records. The remaining 257 ACRNs corresponded to
eight annual appropriations covering from 1 to 5 fiscal years and included
Army, Air

Appropriation Command

Budget Activity Weapons System

Suballotment Appropriation

Accounting Station Transaction Type

Project Directive Line Item and Suffix for Management Oversight ( e. g. ,
engine accessory)

ACRN Service

Beginning Fiscal Year

Ending Fiscal Year

Office of Management and Budget Cost Code

Participating Manager

Requiring Financial Manager

Receiving Activity Project Unit ( e. g. , engine)

Contractor Support Cost Code

AA 17 9395 1506 4 1 AV 031 BZ 276 0 068342 2B 000000 01030 MAS 0020

Page 18 GAO- 01- 697 Canceled DOD Appropriations

Force, and general defense funds. Of the 257 transactions processed, 38 were
for less than $10, and some involved debits or credits for pennies.
Unresolved discrepancies, such as insufficient funds on some ACRNs, had
persisted for about 3 years.

Our 1997 report pointed out that even a simple purchase could cause
extensive and costly rework if assigned numerous ACRNs. We noted that a
$1,209 Navy contract for children?s toys, candy, and holiday decorations for
a child care center was written with most line items (e. g., bubble gum,
tootsie rolls, and balloons) assigned separate ACRNs. A separate requisition
number was generated for each item ordered, and a separate ACRN was assigned
for each requisition. In total, the contract was assigned 46 ACRNs to
account for contract obligations against a single appropriation. To record
this payment against the one appropriation, DFAS Columbus had to manually
allocate the payment to all 46 ACRNs.

In addition, the contract was modified three times- twice to correct funding
data and once to delete (deobligate) the funding on the contract for out-
of- stock items. The modification deleting funding did not cite all the
affected ACRNs. DFAS Columbus made errors in both entering and allocating
payment data, compounding errors made in the modification. Consequently,
DFAS Columbus allocated payment for the toy jewelry line item to fruit chew,
jump rope, and jack set ACRNs- all of which should have been deleted by
modification. Contract delivery was completed in March 1995, but payment was
delayed until October 1995. DFAS Columbus officials acknowledged that this
payment consumed an excessive amount of time and effort when compared to the
time to process a payment charged to only one ACRN. A single ACRN would also
have significantly reduced the amount of data entered into the system and
the opportunities for errors.

Our 1997 report also noted that sometimes contracts do not require
contractors to provide the accounting detail on the invoices necessary to
allocate the payments. In these instances, DFAS Columbus prorates payments
among ACRNs. How the payments are prorated may have little relationship to
which activities received what goods and services, which may cause funds to
be initially paid from the wrong appropriations. These errors will require
correction at some later date. We found that this problem still exists.

DFAS Columbus officials agreed that they are still experiencing many of the
same problems today that we identified in our 1997 report. They told us that
when contracts do not include detailed payment terms, they would

Page 19 GAO- 01- 697 Canceled DOD Appropriations

generally pay a contractor?s invoice by prorating the payment across all the
applicable ACRNs on the contract. When this happens, sufficient funds may
not be available at some later date because unspent balances in the older
appropriations cancel. This can lead to contract reconciliations that
redistribute the payments using some other form of payment allocation.

Because DOD had not established the requisite systems, controls, and
managerial attention required to properly account for its disbursements
consistent with the 1990 account closing law, DOD made at least $615 million
of illegal or otherwise improper adjustments during fiscal year 2000 alone.
DOD was aware of the limitations the account closing law placed on the
availability of canceled appropriations and that the law was enacted because
of previous abuses by DOD?s use of old appropriations. The department also
knew that a major system used to control its use of appropriations allowed
for disbursements to be charged in a way that was inconsistent with that
law. However, it did nothing to fix the system, although it estimated the
cost to do so to be minimal.

The $615 million of adjustments we identified in this report as illegal or
otherwise improper must be immediately reversed. Furthermore, at a minimum,
DOD will need to effect changes to its systems, policies, procedures, and
the overall weak control environment that fostered these practices and
served to perpetuate this problem. Top management must clearly demonstrate
its commitment to adhering to the account closing law and eliminating the
abuses of appropriations law. In the short term, this will require that DOD
immediately fix the system, contract modification problems, and inadequate
policies and procedures identified in this report. In the long term, DOD
will need to resolve its overall financial management problems, including
the lack of leadership and accountability that have been the subject of
numerous reports and recommended corrective actions over the years.

We recommend that the Secretary of Defense direct the Under Secretary of
Defense (Comptroller) to direct the Director of the Defense Finance and
Accounting Service to

 immediately reverse adjustments to closed accounts identified in this
report as illegal or otherwise improper;

 determine the correct accounting for these adjustments after they have
been reversed;

 ensure that the requisite controls are properly included and operating
effectively in CRS so that it will prohibit charging disbursements against
Conclusion

Recommendations for Executive Action

Page 20 GAO- 01- 697 Canceled DOD Appropriations

appropriation accounts that (1) are closed or (2) have not yet been enacted
at the time the disbursements are actually made;

 revise current policies and procedures pertaining to closed account
adjustments to include specific detailed guidance to require that future
adjustments to closed appropriation accounts satisfy the criteria discussed
in this report; and

 establish a monitoring program for future adjustments to closed
appropriation accounts and make clear to managers that they will be held
accountable if abuses are identified.

To the extent that DFAS Columbus is unable to make correcting adjustments
because insufficient balances remain in the correct accounts, we also
recommend that the Secretary of Defense direct the Under Secretary of
Defense (Comptroller) to investigate and report on these adjustments as
required by the Antideficiency Act, 31 U. S. C. 1351, and implementing
guidance.

We also recommend that the Secretary of Defense direct the Under Secretary
of Defense for Acquisition, Technology, and Logistics to issue a policy that
prohibits the writing of contract modifications to change the payment terms
of a contract if the change would result in illegal or otherwise improper
adjustments, as defined in this report, affecting closed appropriation
accounts.

We are sending copies of this report to interested congressional committees.
We are also sending copies of this report to the Secretary of Defense; the
Principal Deputy Under Secretary of Defense for Acquisition, Technology, and
Logistics; the Secretaries of the Army, Navy, and Air Force; the Director of
the Defense Finance and Accounting Service; and the Director of the Office
of Management and Budget. We will make copies available to others upon
request.

Page 21 GAO- 01- 697 Canceled DOD Appropriations

If you have any questions regarding this report, please contact me at (202)
512- 9505. Key contributors to this report are listed in appendix III.

Gregory D. Kutz Director, Financial Management and Assurance

Appendix I: Scope and Methodology Page 22 GAO- 01- 697 Canceled DOD
Appropriations

To meet our first objective of assessing the adequacy of DOD procedures for
adjusting closed appropriation accounts, we reviewed applicable laws,
regulations, administrative guidelines, policies, and procedures. These
included title 31 U. S. C. ?Money and Finance,? Chapter 13,

?Appropriations,? and Chapter 15, ?Appropriation Accounting;? OMB Circular
A- 34; Volume 3, Chapter 10 of DOD?s Financial Management Regulation,
?Accounting Requirements for Expired and Canceled Accounts;? and DFAS
Columbus? Responsible Contract Reconciliation Agency Guide, which defines
the responsible contract reconciliation agent?s missions and
responsibilities in conducting reconciliations in accordance with Office of
the Secretary of Defense policy and DFAS procedures. We also reviewed DFAS
Columbus? Desk Procedure 808,

?Coding of Adjustments,? that DFAS Columbus employees are to follow when
using CRS to perform contract reconciliations and to correct errors. This
review included the process used by DFAS Columbus to code, report, and
record obligation, disbursement, and appropriation adjustments to closed
accounts. We met with DFAS Columbus officials responsible for performing
contract reconciliations to discuss and obtain an understanding of the
process for reconciling closed account adjustments, including the roles and
responsibilities of the military services in the overall process to make and
approve adjustments to closed appropriation accounts. We also met with
responsible DFAS Columbus officials that had responsibility for CRS to
obtain an understanding of how the system processed and reported on closed
account adjustments.

To meet our second objective to determine if closed appropriation account
adjustments complied with the 1990 account closing law, we selected 268 such
adjustments valued at over $2.2 billion from a population of 4,470
adjustments valued at over $2. 7 billion. The 268 adjustments were selected
based on their large dollar value- generally at least $1.7 million each. 1
The 268 adjustments were limited to closed appropriation account adjustments
made during fiscal year 2000 as recorded in the DFAS Columbus CRS database.
We selected the adjustments from fiscal year 2000 data because they were the
most complete fiscal year data available at the time. The reviewed
adjustments represented 81 percent of the closed appropriation account
adjustment dollars recorded in CRS during fiscal year 2000.

1 Included in the 268 adjustments were 62 adjustments that did not have a
value of at least $1.7 million. These adjustments were selected for other
reasons. Appendix I: Scope and Methodology

Appendix I: Scope and Methodology Page 23 GAO- 01- 697 Canceled DOD
Appropriations

To assess if DFAS Columbus had adequate documentation to support the
propriety of the adjustments, we analyzed financial information from DFAS
Columbus? records and reports, including contracts, contract modifications,
shipping notices, invoices, payment vouchers, and schedules of adjustments.
We identified and met with the DFAS Columbus officials knowledgeable about
each adjustment and obtained their views on the results of our analysis. We
also identified the responsible DFAS or military service locations that
maintained the official account records and obtained documentation to show
how each adjustment was recorded in the accounting records. We compared
these documents with the DFAS Columbus adjustments and resolved any
differences.

We performed our work primarily at the Defense Finance and Accounting
Service Center in Columbus, Ohio. We also obtained documentation from the
following DFAS locations that were responsible for maintaining official
accounting records: Cleveland, and Dayton, Ohio; Limestone, Maine; Omaha,
Nebraska; San Bernardino, California; and St Louis, Missouri. Our review was
conducted from May 2000 through March 2001 in accordance with U. S.
generally accepted government auditing standards, except that we did not
validate the accuracy of the number of closed account adjustments and their
related dollar values in the CRS database, which was provided to us by DFAS
Columbus.

On May 25, 2001, we requested comments on a draft of this report from the
Secretary of Defense or his designee, but none had been provided at the time
we finalized our report on July 17, 2001.

Appendix II: Illegal or Otherwise Improper Adjustments

Page 24 GAO- 01- 697 Canceled DOD Appropriations

Contract Number Voucher number

Appropriation was canceled at time disbursement was

made Appropriation was

not enacted at time disbursement was

made Adjustment was not necessary Insufficient

documentation

N6226986C0217 W9480 $ 1,998,358.00 W9476 $ 3,394,924.00 N6133990C0060 N6779
2,677,997. 70 N6133989C0098 932771 1,776,895. 62 N0016387C0180 S4654
2,386,896. 53 N0003991C0103 W5561 2,444,620. 26

W5553 3,427,571. 00 N0002490C6044 S9238 2,166,058. 00

S9027 2,165,752. 48 S8892 2,165,752. 48 S8472 4,666,393. 64 15,831.36
N0002489C6006 S0405 $ 2,096,307.00 25,829.00 N0002488C6067 N7812 151,710.00

N7800 4,269,136. 00 N7795 2,354,093. 00 N7789 2,267,414. 13 N7786 2,713,316.
00 N7782 $ 21,349.00 27,815.00 N7776 18,036,414.00 N7775 1,934,449. 50 N7772
1,889,754. 00 N7765 1,889,754. 00 N7763 3,779,508. 00 N7756 1,891,872. 00
N7741 21,592.00 N7739 468,149.00 N7716 1,889,754. 00 N7714 1,287,627. 54
N7712 148,364.00 N7710 1,909,026. 00 N7689 310,219.20 N7686 100,171.70 N7684
103,719.98 N7682 103,717.00 N7676 113,661.55 N7670 325,668.72 N7668
52,069,213.98 N7667 26,239,843.37 N7659 505,586.34 N7657 176,588.00
94,261.50 N7624 90,291.50 210,333.75 N7571 15,135.00

Appendix II: Illegal or Otherwise Improper Adjustments

Appendix II: Illegal or Otherwise Improper Adjustments

Page 25 GAO- 01- 697 Canceled DOD Appropriations

Contract Number Voucher number

Appropriation was canceled at time disbursement was

made Appropriation was

not enacted at time disbursement was

made Adjustment was not necessary Insufficient

documentation

N7552 14,532.01 N7517 983,954.46 N7499 67,357.33 N7463 8,700.00 N7397
2,984,130. 00 82,028,430.40 N0002487C4581 N3134 2,770,000. 00

N3133 2,770,000. 00 N0002487C4168 N5519 4,554,153. 23

N5518 2,079,581. 91 N0001986C0326 DD0625 7,191,144. 00

DC0719 3,381,621. 50 N0001986C0236 W7517 3,194,403. 34 N0001985C0034 N5092
2,102,341. 02 N0001984C0256 W8380 13,496,286.90 F4160893C0064 WO4063
2,458,044. 38

WC4062 1,730,215. 00 F3460187C3142 WO8548 355,408.00

WO8790 721,037.00 F3365792C0003 WO7851 1,857,252. 00

WO7845 5,132,911. 42 F3365789C0087 SC3875 2,651,107. 00 F3365788C0037 WC2669
19,355,150.81 F3365786C0012 WO8334 43,051,906.24 F3365781C2108 WO8782
21,174,721.57

WO3179 79,777,518.18 WC3184 3,645,255. 00 WC3181 2,745,542. 00 WC3178
10,555,736.00 WC3176 9,092,777. 00 WC1723 2,000,000. 00 F3365778C0645 WO0138
1,875,276. 69 F1962892C0120 NO4684 4,294,186. 00

NO4681 3,407,738. 00 F1962892C0049 NO3851 4,999,792. 00 F1962886C0131 SO5580
1,815,352. 44

SO5525 92,572.96 SO5475 1,980,175. 00 SO5465 2,195,495. 93 SO5393 3,132,740.
00 SO5392 2,410,310. 00 SO5391 2,067,218. 00 SO5388 4,528,346. 00

Appendix II: Illegal or Otherwise Improper Adjustments

Page 26 GAO- 01- 697 Canceled DOD Appropriations

Contract Number Voucher number

Appropriation was canceled at time disbursement was

made Appropriation was

not enacted at time disbursement was

made Adjustment was not necessary Insufficient

documentation

SO5383 2,499,656. 00 SO5381 7,250,454. 00 SO5379 170,565.70 SO5376
4,058,223. 72 F0960393C0322 WO5376 134,639.00 F0960392C0002 NO4355
1,833,397. 40

NO4354 1,910,253. 40 NO4353 2,734,630. 60 F0862693C0008 GC259 2,469,617. 54
F0470186C0022 WO5661 7,980,582. 03

WO5548 1,763,491. 04 WC5562 2,531,407. 62 WC5551 2,136,241. 90 F0470183C0031
WO7947 1,958,790. 85 F0460688D00670261 SC0610 7,765,922. 00 DASG6092C0217
961061 3, 271,794. 85

961052 3, 906,502. 46 961048 2, 182,311. 18 DAAJ0989CA086 906563 2,826,196.
94 DAAB1088C0001 907417 1,988,499. 52 DAAE0783EA007 931057 33,235.00
F0470189C0081 SC0424 23,000.00

SC0425 33,497.64 SC0426 45,115.59 SC0427 45,986.57 SC0428 78,401.71 SC0429
127,317.42 SC0430 201,600.45 SC0431 120,665.62 F0863592C0050 SC0686
23,918.48

SO0690 8,892.67 SO0691 16,398.29 F1962892C0035 SO0810 23,501.00

SO0812 185,314.00 SO0818 185,314.00 SC0839 340,555.05 MDA90890C0022 S0089
248,549.68 135,000.00 N0014089CTB58 S5841 8,351.62 N0042188C0081 S1214
272,717.64 1,194.65 N0003090C0012 N0201 1,395.00

N0017 4,521.58 N0003092C0092 W5053 1,183,706. 57

Appendix II: Illegal or Otherwise Improper Adjustments

Page 27 GAO- 01- 697 Canceled DOD Appropriations

Contract Number Voucher number

Appropriation was canceled at time disbursement was

made Appropriation was

not enacted at time disbursement was

made Adjustment was not necessary Insufficient

documentation

W5054 419,339.07 W4966 4,661.29 W5055 5,015.55 W5056 12,453.69 W5057
167,306.01 W5058 3,941.41 W5059 3,591.60 W5060 24.00 W0003 3,164.36
N0012383C0333 EC469 8,956.08

EC606 22,837.99 DAAK0185CB312 S0405 168,950.88 F0470186C0022 WO8808
975,038.83

WO5522 560,510.91 WO5523 595,915.76 WO5536 1,217,836. 82 WO5544 1,257,500.
00 WO5638 6,379,406. 38 WO5650 468,305.00 WO5651 5,606,294. 71 WO5656
311,682.00 WO5658 3,355,725. 29 WO5664 210,736.82 WO6242 1,455,157. 15
F3365772L0647 WO7317 172,680.97 F3365787C0051 GD706 149,859.64 F2960189C0014
CD4229 168,076.00 N0002490C6093 N2215 815,519.20

Totals $107,696,969.35 $38,159,572.83 $364,023,650.75 $104,910,739.01

Appendix III: GAO Contact and Staff Acknowledgments

Page 28 GAO- 01- 697 Canceled DOD Appropriations

Larry W. Logsdon, (703) 695- 7510 In addition to the contact named above,
Bertram J. Berlin, Dennis B. Fauber, Jeffrey A. Jacobson, Mary Jo Lewnard,
Keith E. McDaniel, Michael S. Peacock, and Harold P. Santarelli made key
contributions to this report. Appendix III: GAO Contact and Staff

Acknowledgments GAO Contact Acknowledgments

(918986)

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 Web site: http:// www. gao. gov/ fraudnet/ fraudnet. htm

 E- mail: fraudnet@ gao. gov

 1- 800- 424- 5454 (automated answering system) Ordering Information

To Report Fraud, Waste, and Abuse in Federal Programs

United States General Accounting Office Washington, D. C. 20548- 0001

Official Business Penalty for Private Use $300

Address Correction Requested Presorted Standard

Postage & Fees Paid GAO Permit No. GI00
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