Military Pay: Army Reserve Soldiers Mobilized to Active Duty	 
Experienced Significant Pay Problems (20-JUL-04, GAO-04-990T).	 
                                                                 
In light of GAO's November 2003 report highlighting significant  
pay problems experienced by Army National Guard soldiers	 
mobilized to active duty in support of the global war on	 
terrorism and homeland security, GAO was asked to determine if	 
controls used to pay mobilized Army Reserve soldiers provided	 
assurance that such pays were accurate and timely. GAO's audit	 
used a case study approach to focus on controls over three key	 
areas: processes, people (human capital), and automated systems. 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-04-990T					        
    ACCNO:   A11042						        
  TITLE:     Military Pay: Army Reserve Soldiers Mobilized to Active  
Duty Experienced Significant Pay Problems			 
     DATE:   07/20/2004 
  SUBJECT:   Army personnel					 
	     Army reservists					 
	     Audit reports					 
	     Financial analysis 				 
	     Internal controls					 
	     Military compensation				 
	     Military forces					 
	     Military pay					 
	     Military personnel 				 
	     Military reserve personnel 			 
	     Military systems analysis				 
	     National Guard					 
	     Overpayments					 
	     Strategic planning 				 
	     Timeliness 					 
	     Defense Joint Military Pay 			 
	     System-Reserve Component				 
                                                                 

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GAO-04-990T

United States Government Accountability Office

GAO Testimony

Before the House Committee on Government Reform, Subcommittee on
Government Efficiency and Financial Management, House of Representatives

For Release on Delivery Expected at 2 p.m. EST Tuesday, July 20, 2004

MILITARY PAY

Army Reserve Soldiers Mobilized to Active Duty Experienced Significant Pay
                                    Problems

Gregory D. Kutz 
Director, Financial Management and Assurance 

Geoffrey B. Frank 
Assistant Director, Financial Management and Assurance 

John J. Ryan 
Assistant Director, Office of Special Investigations 

A

GAO-04-990T 

Highlights of GAO-04-990T, a testimony to the Chairman, Committee on
Government Reform, Subcommittee on Government Efficiency and Financial
Management, House of Representatives

In light of GAO's November 2003 report highlighting significant pay
problems experienced by Army National Guard soldiers mobilized to active
duty in support of the global war on terrorism and homeland security, GAO
was asked to determine if controls used to pay mobilized Army Reserve
soldiers provided assurance that such pays were accurate and timely. GAO's
audit used a case study approach to focus on controls over three key
areas: processes, people (human capital), and automated systems.

We provided a draft report detailing the results of our audit findings to
DOD for review and comment on July 9, 2004. The draft report contains a
series of 15 recommended actions. After receiving and considering DOD's
comments, we plan to finalize and issue the report. To its credit, DOD has
already taken a number of actions in response to our report on the Army
National Guard.

www.gao.gov/cgi-bin/getrpt?GAO-04-990T.

To view the full product, including the scope and methodology, click on
the link above. For more information, contact Gregory D. Kutz at (202)
512-9095 or [email protected].

July 2004

MILITARY PAY

Army Reserve Soldiers Mobilized to Active Duty Experienced Significant Pay
Problems

The processes and automated systems relied on to provide active duty pays,
allowances, and tax benefits to mobilized Army Reserve soldiers are so
error-prone, cumbersome, and complex that neither DOD nor, more
importantly, Army Reserve soldiers themselves, could be reasonably assured
of timely and accurate payments. Weaknesses in these areas resulted in pay
problems, including overpayments, and to a lesser extent, late and
underpayments of soldiers' active duty pays and allowances at eight Army
Reserve case study units. Specifically, 332 of 348 soldiers (95 percent)
we audited at eight case study units that were mobilized, deployed, and
demobilized at some time during the 18-month period from August 2002
through January 2004 had at least one pay problem.

Pay Experiences at Eight Army Reserve Case Study Units

Many of the soldiers had multiple problems associated with their active
duty pays and allowances. Some of these problems lingered unresolved for
considerable lengths of time, some for over 1 year. Further, nearly all
soldiers began receiving their tax exemption benefit at least 1 month
late. These pay problems often had a profound adverse impact on individual
soldiers and their families. For example, soldiers were required to spend
considerable time, sometimes while deployed in remote, hostile
environments overseas, seeking help on pay inquiries or in correcting
errors in their active duty pays, allowances, and related tax benefits.

The processes in place to pay mobilized Army Reserve soldiers, involving
potentially hundreds of DOD, Army, and Army Reserve organizations and
thousands of personnel, were deficient with respect to (1) tracking
soldiers' pay status as they transition through their active duty tours,
(2) carrying out soldier readiness reviews, (3) after-the-fact report
reconciliation requirements, and (4) unclear procedures for applying
certain pay entitlements. With respect to human capital, weaknesses
identified at our case study units included (1) insufficient resources
allocated to key unitlevel pay administration responsibilities, (2)
inadequate training related to existing policies and procedures, and (3)
poor customer service. Several automated systems issues also contributed
to the significant pay errors, including nonintegrated systems and limited
processing capabilities.

Mr. Chairman and Members of the Subcommittee:

Thank you for the opportunity to discuss controls over payroll payments to
mobilized Army Reserve soldiers. In November 2003, we reported on
significant pay problems experienced by mobilized Army National Guard
soldiers. We also testified on this matter before the full committee in
January 2004. Because of the severity of the problems identified for these
mobilized Army National Guard soldiers, you, as well as other requestors,1
asked us to examine the accuracy and timeliness of payroll payments to
mobilized Army Reserve soldiers.

In response to the September 11 attacks, many Army Reserve soldiers were
activated to federal duty. A reported 98,000 Army Reserve soldiers-almost
half of the soldiers in the Army's selected reserve-had been mobilized to
active duty at some point since September 2001. These forces were deployed
on various important missions across the United States and overseas in
support of Operations Noble Eagle, Enduring Freedom, and Iraqi Freedom.
Their missions consisted mostly of combat support missions, such as
supply, medical, and transportation operations, as well as military police
and intelligence functions. Given the critical and continuing roles Army
Reserve soldiers play in carrying out vital military and security
missions, effective controls are needed to provide timely and accurate
pays and allowances to these soldiers. Pay-related problems are not only
costly and time-consuming to resolve, but result in financial hardship for
soldiers and their families.

Because current Department of Defense (DOD) operations used to pay
mobilized Army Reserve soldiers relied extensively on error-prone, manual
transactions entered into multiple, nonintegrated systems, we did not
statistically test controls in this area. Instead, we audited eight Army
Reserve units as case studies to provide a detailed perspective on the
nature of payroll deficiencies with respect to Army Reserve soldiers. Each
of these units had mobilized, deployed, and demobilized at some time
during the 18-month period from August 2002 through January 2004. Appendix
I provides details on the 14 pays and allowances we audited for these case
study units, as well as an explanation of the three phases of an

1Other requestors for this audit were Chairman Tom Davis of the House
Committee on Government Reform, Chairman Christopher Shays of the
Subcommittee on National Security, Emerging Threats and International
Relations of the House Committee on Government Reform, and Congressman Ed
Schrock.

active duty mobilization (mobilization, deployment, and demobilization).
Appendix II provides further details on our scope and methodology.

We found that Army Reserve soldiers experienced very similar problems to
those we identified for Army National Guard soldiers. We provided a draft
report detailing the results of our audit findings to DOD for review and
comment on July 9, 2004. The draft report contains a series of 15
recommended actions. After receiving and considering DOD's comments, we
plan to finalize and issue the report. To its credit, DOD has recognized
the seriousness of these problems and has already taken a number of
actions in response to our report on the Army National Guard, which I will
address later in this testimony.

Today, I will summarize the results of our work with respect to (1) the
pay experiences of Army Reserve soldiers at our case study units and (2)
deficiencies in the three key control areas of processes, people, and
automated systems.

Summary	Overall, 332 of the 348 (95 percent) Army Reserve soldiers from
our eight case study units had at least one pay problem associated with
their mobilization. Of these soldiers, 256 soldiers received an estimated
$247,000 in overpayments, 294 soldiers received about $51,000 in
underpayments, and 245 soldiers received about $77,000 in late payments of
their active duty pays and allowances. In addition, none of the 303
soldiers who deployed to designated combat zones received their combat
zone tax exclusion benefits on time. Some of these problems lingered
unresolved for considerable lengths of time-some for over one year. A
brief summary of the results of our audits at each of our case study units
is provided in appendix III.

The consequences of inaccurate, late, and missing payments, and associated
erroneous debts had a profound financial impact on individual soldiers and
their families. At one unit, several soldiers told us that they had to
borrow money from friends and relatives in order to pay their bills when
they initially deployed overseas. Soldiers and their families were
required to spend considerable time, sometimes while the soldiers were
deployed in remote, hostile environments overseas, in repeated attempts to
address concerns over their pay and allowances, and related tax benefits.

Weaknesses in processes, human capital, and automated systems were
associated with pay problems we identified. With respect to processes,

until DOD improves the cumbersome and complex processes used to pay
mobilized Army Reserve personnel, the Army, the Defense Finance and
Accounting Service (DFAS), and, most importantly, the mobilized Army
Reserve soldiers, cannot be reasonably assured of timely and accurate
payroll payments. These processes, involving potentially hundreds of DOD,
Army, and Army Reserve organizations and thousands of personnel, were not
well understood or consistently applied with respect to maintaining
accountability over soldiers and their associated pays, allowances, and
tax benefits as the soldiers moved through the various phases of active
duty mobilization.

In the human capital area, we found weaknesses including (1) insufficient
resources allocated to key unit-level pay administration responsibilities,
(2) inadequate training related to existing policies and procedures, and
(3) poor customer service. The lack of sufficient numbers of well-trained,
competent military pay professionals can undermine the effectiveness of
even a world-class integrated pay and personnel system. A sufficient
number of well-trained military pay staff is particularly crucial given
the extensive, cumbersome, and labor-intensive process requirements that
have evolved to support active duty pay to Army Reserve soldiers.

Automated systems weaknesses also contributed to the pay problems we
found. For example, nonintegrated systems and limitations in system
processing capabilities further constrained DOD's ability to provide a
most basic service to these personnel, many of whom were serving under
difficult conditions in the Middle East. The Defense Joint Military Pay
System-Reserve Component (DJMS-RC)-originally designed to process payroll
payments to personnel on weekend drills, on short periods of fewer than 30
days of annual active duty, or for training-is now being used to pay Army
Reserve soldiers for up to 2 years. Army officials told us that the system
is now stretched to the limits of its functionality. DFAS has established
"workarounds" intended to compensate for the DJMS-RC system limitations,
which further compound the human capital issues. Overall, we found the
current stove-piped, nonintegrated systems were labor-intensive and
required extensive error-prone manual data entry and reentry.

  Case Studies Illustrate Significant Pay Problems

We found significant problems with the active duty pays, allowances, and
related tax benefits received by the soldiers at the eight Army Reserve
units we audited. The eight units we audited were:

o 824th Quartermaster Company - Ft. Bragg, N.C.

o 965th Dental Company - Seagoville, Tex.

o 948th Forward Surgical Team - Southfield, Mich.

o 443rd Military Police Company - Owings Mills, Md.

o  FORSCOM Support Unit - Finksburg, Md.

o 629th Transportation Detachment - Ft. Eustis, Va.

o  3423rd Military Intelligence Detachment - New Haven, Conn.

o 431st Chemical Detachment - Johnstown, Pa.

These units were deployed to help perform a variety of critical domestic
and overseas combat support operations, including supply, medical, and
transportation operations, as well as military police and intelligence
functions.

For the eight units we audited, we found numerous and varied pay problems.
For those problems that we could quantify,2 we identified about $375,000
in errors. These problems consisted of underpayments, overpayments, and
late payments that occurred during all three phases of Army Reserve
mobilization to active duty. For the 18-month period from August 2002
through January 2004, we identified overpayments, underpayments, and late
payments at the eight case study units estimated

2Because of the lack of supporting documents, we were unable to determine
the amounts involved for some of the active duty entitlements we audited
and consequently, did not count these as errors. In addition, because our
objective was to provide perspective on our case study units' pay
experiences and not to make exact calculations of active duty
entitlements, we likely did not identify all of the pay problems related
to the active duty mobilizations of our case study units.

at $247,000, $51,000, and $77,000, respectively.3 Overall, we found that
332 of the 348 soldiers (95 percent) from our case study units had at
least one pay problem associated with their mobilization to active duty.
Table 1 shows the number of soldiers at our case study units with at least
one pay problem during each of the three phases of active duty
mobilization.

Table 1: Pay Problems at Eight Case Study Units Soldiers with pay problems Army
              Reserve unit Mobilization Deployment Demobilization

          824th Quartermaster Company, N.C. 11 of 68 50 of 68 13 of 68

              965th Dental Company, Tex. 25 of 93 86 of 93 7 of 93

          948th Forward Surgical Team, Mich. 5 of 20 20 of 20 18 of 20

       443rd Military Police Company, Md. 67 of 121 114 of 121 17 of 121

                 FORSCOM Support Unit, Md. 0 of 1 1 of 1 1 of 1

         629th Transportation Detachment, Va. 5 of 24 24 of 24 1 of 24

3423rd Military Intelligence Detachment, Conn. 10 of 11 10 of 11 9 of 11

            431st Chemical Detachment, Pa. 6 of 10 10 of 10 0 of 10

Source: GAO analysis.

Some of the pay problems we identified included the following.

o 	Forty-seven soldiers deployed overseas with the 824th Quartermaster
Company from North Carolina improperly received hardship duty pay,
totaling about $30,000, for up to 5 months after departing from their
overseas duty locations.

3 For the pay problems we identified, we defined over- and underpayments
as those pays or allowances for mobilized Army Reserve soldiers during the
period from August 1, 2002 through January 31, 2004, that were in excess
(overpayment) or less than (underpayment) the entitled payment. We
considered as late payments any active duty pays or allowances paid to the
soldier over 30 days after the date on which the soldier was entitled to
receive such pays or allowances. As such, these payments were those that,
although late, addressed a previously unpaid entitlement. We did not
include any erroneous debts associated with these payments as pay
problems. In addition, we used available data to identify about $19,000 in
collections against identified overpayments through February 2004. We did
not attempt to estimate payments received against identified
underpayments. We have provided documentation for the pay problems we
identified to cognizant DOD officials for further research to determine
whether additional amounts are owed to the government or the soldier.

o 	Nine soldiers of the 824th Quartermaster Company improperly received
family separation allowance payments totaling an estimated $6,250 while
serving at Ft. Bragg, their unit's home station.

o 	Forty-nine soldiers with the 824th Quartermaster Company did not
receive the hardship duty pay they were entitled to receive when they
arrived at their designated duty locations overseas until about 3 months
after their arrival.

o 	Ten soldiers with the 443rd Military Police Company had problems with
their overseas housing allowance associated with their deployment in Iraq,
including five soldiers who were underpaid about $2,700 and seven who did
not receive their last allowance until more than 2 months after their
active duty tour ended.

o 	A soldier with the 443rd MP Company who demobilized from an active duty
deployment in August 2002, subsequently received erroneous active duty
payments of about $52,000 through May 2004. These erroneous payments were
not detected and stopped by DOD. The soldier contacted us to ask for our
assistance in resolving this matter.

o 	A soldier from the 965th Dental Company who received an emergency
evacuation from Kuwait as a result of an adverse reaction to anthrax and
antibiotic inoculations he received in preparation for his overseas
deployment, continued to receive about $2,900 in improper hostile fire and
hardship duty payments after his return from Kuwait.

o 	A soldier with the 3423rd Military Intelligence Detachment did not
receive an estimated $3,000 in family separation allowance payments
associated with his active duty mobilization.

o 	Two soldiers received tens of thousands of dollars in active duty pays
and allowances over the course of a year or more even though they never
mobilized with their units.

o 	Nearly, all of the soldiers in the seven case study units that deployed
overseas experienced late payments related to their combat zone tax
exclusion benefit.

In some cases, the problems we identified may have distracted these
professional soldiers from mission requirements, as they spent
considerable time and effort while deployed attempting to address these

issues. Further, these problems likely had an adverse effect on soldier
morale.

  Mobilized Army Reserve Pay Process, Human Capital, and Systems Deficiencies

Deficiencies in three key areas-process, human capital, and automated
systems-were at the heart of the pay problems we identified. Process
deficiencies included weaknesses in (1) tracking and maintaining
accountability over soldiers as they moved from location to location to
carry out their mobilization orders, (2) carrying out soldier readiness
programs (SRPs)-primarily at the mobilization stations, (3) distributing
and reconciling key pay and personnel reports during mobilizations, and
(4) determining eligibility for the family separation allowance associated
with active duty mobilizations. Human capital weaknesses included
insufficient resources, inadequate training, and poor customer service.
Finally, the automated systems supporting pays to mobilized Army Reserve
soldiers were ineffective because they were not integrated and had limited
processing capabilities.

Process Deficiencies	A substantial number of payment errors we found were
caused, at least in part, by design weaknesses in the extensive, complex
set of processes and procedures relied on to provide active duty pays,
allowances, and related tax benefits to mobilized Army Reserve soldiers.
Complex, cumbersome processes, developed in piecemeal fashion over a
number of years, provide numerous opportunities for control breakdowns. We
identified issues with the procedures in place for both determining
eligibility and processing related transactions of active duty pay to
mobilized Army Reserve soldiers. These process weaknesses involved not
only the finance and military pay component of the Army, Army Reserve, and
DFAS, but the Army's operational and personnel functions as well.

Flaws in Maintaining Mobilization policies and procedures did not provide
the Army with

Accountability over Soldiers effective accountability and visibility over
soldiers' locations to provide

throughout Mobilization	reasonable assurance of accurate and timely
payments to mobilized Army Reserve soldiers. Reserve soldiers pass through
four main transitions during the course of a typical mobilization cycle,
including transitions from (1) their home stations to their designated
mobilization station, (2) the mobilization station to their assigned
deployment location, (3) the deployment location to their demobilization
station, and (4) the demobilization station back to their home station.

Soldiers' active duty pays, allowances, and related tax benefits are
closely tied to soldiers' locations. For example, timely data regarding
the dates soldiers arrive at and leave designated locations are essential
for accurate and timely hardship duty pays, allowances, and related combat
zone tax exclusion benefits. To effectively account for soldiers'
movements during these transitions, unit commanders, unit administrators,
as well as individuals assigned to personnel and finance offices across
the Army Reserves, Army mobilization stations, and in theater Army
locations must work closely and communicate extensively to have the
necessary data to pay Army Reserve soldiers accurately and on time
throughout their active duty tours.

However, we identified several critical flaws in the soldier
accountability procedures in place during the period of our audit.
Specifically, we identified flawed procedures for accountability over (1)
soldiers that are supposed to go through processing for mobilization and
demobilization, and (2) dates of soldiers' arrival to and departure from
designated hardship duty deployment locations.

Mobilization Station We found that effective procedures were not in place
to monitor and

                                 Accountability

validate the propriety of active duty pays to mobilized Army Reserve
soldiers. The accountability controls in place at Army mobilization
stations responsible for unit mobilization and demobilization processing
were not effective in detecting any missing Army Reserve soldiers assigned
to units passing through those locations. As a result of these control
design flaws, several soldiers received up to a year of active duty pay
based on issued mobilization orders, even though the soldiers never
reported for active duty.

Illustrative Cases: Flaws in Soldier Location Accountability Procedures
Resulted in Erroneous Active Duty Payments

o  A soldier assigned to the 965th Dental Company received a mobilization
order, but based on a discussion with his commander about a medical
condition, was told he would be transferred to a unit that was not
mobilizing. However, the unit commander did not provide a list of the
unit's mobilizing soldiers to the UPC and did not provide any information
on this soldier indicating that he would not be reporting to the unit's
mobilization station. Consequently, neither the UPC nor the mobilization
station personnel had any means of detecting that a soldier had not
mobilized with his unit and therefore was improperly receiving active duty
pays. As a result, the soldier's pay was started on February 11, 2003, and
continued through February 2004, resulting in more than $36,000 in
overpayments. This improper active duty pay was stopped only after we
identified the error and notified Army officials.

o  A soldier contacted GAO in March 2004 to inquire as to why he had been
receiving active duty pay for almost a year even though, according to the
soldier, he was not mobilized to active duty during that time. Subsequent
inquiry determined that, at least on paper, the soldier was transferred
from Maryland's 443rd Military Police Company to Pennsylvania's 307th
Military Police Company in February 2003, and was mobilized to active duty
with that unit in March 3, 2003. Applicable active duty pays and
allowances for the soldier were initiated based on these March 3, 2003,
orders. After the 307th Military Police Company demobilized in February
2004, the soldier's mobilization order was revoked. Nonetheless, available
pay documentation indicated the soldier continued receiving erroneous
active duty pay and allowances for basic pay, and allowances for
subsistence, housing, and family separation totaling an estimated $52,000
through May of 2004.

Deployment Accountability	Flaws in soldier accountability procedures
associated with overseas deployment locations resulted in payment errors
for almost all of the soldiers in our case study units. Soldiers were
generally paid late or underpaid location-based incentives upon their
initial arrival into designated hardship duty and hostile fire locations.
Subsequently, they were often overpaid these same location-based
entitlements because these payments continued, sometimes for long periods
of time, after soldiers left designated overseas locations. Army local
area servicing finance locations are to obtain documentation-flight
manifests, for example--showing soldier arrival and departure date
information to use as a basis for starting and stopping location-based
pays, allowances, and associated tax benefits. However, despite diligent
efforts by Army local area servicing finance officials to develop and
maintain accurate documentation showing soldiers at the designated
deployment locations, we found indications that this information was often
not timely or accurate for the soldiers at our case study units.

One of our case study units, the 443rd MP Company, relied on an
extraordinary, labor-intensive workaround to ensure that necessary

documentation supporting any changes in the location of the unit's
soldiers, as well as other pay-support documentation, was received by the
unit's area servicing location while the soldiers were deployed in Iraq.

Individual Case Illustration: Biweekly Flights to Transmit Unit Pay
Documents

o  While deployed to guard Iraqi prisoners at Camp Cropper in Iraq, the
unit commander of the 443rd Military Police Company assigned a sergeant to
help address myriad pay complaints. The sergeant was deployed to Iraq as a
cook, but was assigned to assist in pay administration for the unit
because he was knowledgeable in DJMS-RC procedures and pay-support
documentation requirements and was acquainted with one of the soldiers
assigned to the unit's servicing finance office in Camp Arifjan, Kuwait.
Every 2 weeks, for about 5 months, the sergeant gathered relevant
paysupport documentation from the unit's soldiers, took a 1 hour and 15
minute flight to the Kuwait airport, and then drove an hour to the Army
finance office at Camp Arifjan. The day following the sergeant's biweekly
journey to Camp Arifjan, the sergeant worked with the Army finance
officials at Camp Arifjan to enter transactions into DMO, often for 8-12
hours, to get unit soldiers' pay entitlements started or corrected,
particularly hardship duty pays requiring manual input every month.

These flawed procedures, which were relied on to account for Army Reserve
soldiers' actual locations and their related pay entitlements while
deployed, resulted in pay problems in all seven of our case study units
that deployed soldiers overseas. For example:

o 	All 49 soldiers who deployed overseas with our 824th Quartermaster
Company case study unit were underpaid their hardship duty pay when they
first arrived at the designated location. Subsequently, almost all solders
in the unit were overpaid their hardship duty pay--most for up to 5
months--after they left the designated location, and some continued to
receive these payments even after they were released from active duty. In
total, we identified about $30,000 in improper hardship duty payments
received by this unit's soldiers.

o 	Seventy-six soldiers with the 965th Dental Company received improper
hardship duty payments totaling almost $47,000 after they had left their
hardship duty location.

o 	None of the 24 soldiers deployed with the 629th Transportation
Detachment received hardship duty pay for the months they arrived and
departed the hardship duty areas. In addition, they did not receive
hostile fire pay for almost 3 months after their arrival at their assigned
overseas deployment locations.

The debts created by overpayment of these location-based payments placed
an additional administrative burden on both the soldiers and the
department to calculate, monitor, and collect the overpaid amounts.

Lack of Clear Pay Review Procedures at Mobilization Stations

Some of the pay problems we found were associated with flawed procedural
requirements for the pay support review, which is part of the SRP process
carried out at Army mobilization stations. Procedures followed by Army
mobilization station finance officials during the SRP were inconsistent
with respect to what constitutes a "thorough review" of soldiers' pay
support documentation to determine if it is current and complete and has
been entered into the DJMS-RC pay system.

While finance officials at some mobilization stations carried out
one-on-one detailed pay reviews with each soldier, as well as a unit-wide
finance briefing, finance officials at other mobilization stations carried
out less thorough procedures. At two mobilization stations, finance
officials provided only a unit-wide briefing and did not meet individually
with the soldiers to conduct a detailed review of their military pay
accounts. We found far fewer pay problems (excluding location-based pays)
for the soldiers who went through the individual detailed pay reviews
during the SRP than the soldiers who received less thorough or no
individual reviews of their pay entitlements at their mobilization
stations.

Inadequate Processes for Key Pay and Personnel Reconciliation Reports

Design flaws in the procedures in place to obtain and reconcile key pay
and personnel reports impaired the Army's ability to detect improper
active duty payments. As discussed previously, we identified several cases
in which such improper payments continued for over a year without
detection.

The Army Reserve pay review and validation procedures were initially
designed for pays to Army Reserve soldiers performing weekend drills,
annual training, and short-term active duty mobilizations of 30 days or
fewer. Correspondingly, pay and personnel reconciliation processes in
place during our audit were focused primarily on requirements for unit
commanders to reconcile data for reserve soldiers while they are in an
inactive (weekend drilling only) status.

Specifically, current Army Reserve procedures require that unit commanders
review a key report, the Unit Commanders Pay Management

Report,4 for soldiers in their units performing weekend drill activities,
for short-term active duty mobilization activities, and in planning for
lengthy active duty mobilizations. However, these procedures do not
clearly require unit commanders to review this key report for Army Reserve
soldiers in subsequent phases of their active duty mobilization tours. The
unit commander at one of our case study units, the 965th Dental Company,
stated that he did not believe that a review and reconciliation was
needed. Instead, he stated he relied on the unit's soldiers to identify
any pay problems. However, in light of the extensive manual entry, and
nonintegrated systems currently relied on for mobilized Army Reserve
soldiers' pay, the timely and complete reconciliation of comparable pay
and personnel data in these key reports can serve as an important
detective control to identify any pay errors shortly after they have
occurred.

In addition, Army guidance does not specify how deployed units are to
receive these reports. Distribution of these reports is particularly
problematic for units deployed in remote locations overseas. Unit
commanders for several of our case study units stated they did not receive
these key reports while deployed. Had those reports been available and
reconciled, they could have been used to identify and correct improper
active duty payments, such as the large, erroneous active duty
overpayments discussed previously.

Family Separation Allowance Eligibility Requirements Are Not Clear

The existing procedures for applying eligibility requirements for
activated Army Reserve soldiers' family separation allowance payments were
not clear. These flawed procedural requirements for paying family
separation allowance led to varying interpretations and pay errors for
Army Reserve soldiers at the implementing Army home stations and
mobilization stations.

DOD policy clearly provides that soldiers are entitled to receive family
separation allowance if their family does not reside near the duty
station, which is generally defined as within 50 miles.5 However, DOD
guidance

4These reports provide summaries of pay-and personnel-related information
on soldiers in the unit.

5DOD's FMR defines within a reasonable commuting distance as within 50
miles one way, unless the soldier is commuting daily. The FMR also permits
the commander to authorize a soldier to receive FSA payments, even though
the soldier's dependents live within 50 miles of the soldier's duty
station, based on a determination that the required commute is not
reasonable.

and the form for implementing this policy were not clear because they did
not provide for a determination that the soldier's family does not live
near the soldier's duty station. Specifically, they did not require
soldiers to certify that (1) they live over 50 miles away from the unit's
home station and do not commute daily, or (2) the soldier's commander has
certified the soldier's required commute to the duty station is not
reasonable. As a result, we found inconsistencies as to when soldiers
received family separation allowance. For example, soldiers from the 824th
Quartermaster Company received family separation allowance payments while
stationed at their Ft. Bragg home station even though they lived within 50
miles of the base and no documentation was available showing the unit
commander authorized an exception. In contrast, 14 soldiers with
Maryland's 443rd Military Police Company who lived over 50 miles away from
their home station, including several soldiers from Puerto Rico, did not
receive family separation allowance based on their arrival at their home
station.

Human Capital Issues 	Human capital weaknesses also contributed to the pay
problems mobilized Army Reserve soldiers experienced in our eight case
study units. Our Standards for Internal Control in the Federal Government
state that effective human capital practices are critical to establishing
and maintaining a strong internal control environment, including actions
to ensure that an organization has the appropriate number of employees to
carry out assigned responsibilities. Even in an operational environment
supported by a well-designed set of policies and procedures and a
worldclass integrated set of automated pay and personnel systems, an
effective human capital strategy-directed at ensuring that sufficient
numbers of people, with the appropriate knowledge and skills, are assigned
to carry out the existing extensive, complex operational requirements-is
essential. Such a human capital strategy supporting accurate and timely
active duty payments to mobilized Army Reserve soldiers must encompass
numerous DOD components spread across the world that are now involved in
carrying out the extensive coordination, manual intervention, and
reconciliations required to pay mobilized Army Reserve soldiers.

Well-trained pay-support personnel throughout various DOD components are
particularly critical given the extensive, cumbersome, and laborintensive
process requirements that have evolved to provide active duty payments to
mobilized Army Reserve soldiers. We encountered many sincere and
well-meaning Army, Army Reserve and DFAS personnel involved in authorizing
and processing active duty payments to these soldiers. The fact that
mobilized Army Reserve soldiers received any of

Inadequate Resourcing for Critical Unit Administrator Positions

Inadequate Pay Management Training

their entitled active duty pays, allowances, and tax benefits accurately
and on-time is largely due to the dedication and tireless efforts of many
of these pay-support personnel to do the right thing for these mobilized
Army Reserve soldiers. However, in conjunction with our case studies, we
observed the following human capital weaknesses in the current processes
and organizational components now relied on to pay mobilized Army Reserve
soldiers: (1) inadequate resources provided to support unit-level pay
management, (2) inadequate pay management training across the spectrum of
pay-support personnel, and (3) customer service breakdowns.

Vacancies and turnover in key unit administrator positions, and the
deployment of unit administrators to fill other military requirements,
impaired a unit's ability to carry out critical pay administration tasks
that could have prevented or led to early detection of pay problems
associated with our case study units. In addition to pay administration
responsibilities, unit administrator duties include duties for personnel
and supply operations. We were told that vacancies in unit administrator
positions were difficult to fill and often remained vacant for many months
because Army policy requires the individual filling the unit administrator
position have a "dual" status, which means the individual must perform
duties both in the capacity of an Army Reserve military occupation
specialty as well as unit administrator.

For example, at the 948th Surgical Team, the unit administrator position
was vacant prior to and during the unit's mobilization. We were informed
that the 948th Surgical Team had difficulty filling the vacancy because of
its dual status-i.e., the individual must have (1) a medical background to
meet the unit's mission requirements, and (2) knowledge and experience
performing the personnel, payroll, and supply tasks of a unit
administrator. In the absence of the unit administrator, the unit
commander assigned a sergeant with limited knowledge of pay entitlements
and DJMS-RC processing requirements to help carry out some of the unit
administrator's pay management duties. The sergeant told us that during a
2-week period during late April 2003, she spent about 100 hours attempting
to resolve the unit's pay problems, while concurrently carrying out her
duties as a health specialist.

In addition to concerns about the level of resources provided to support
critical unit administrator positions, we identified instances in which
the lack of adequate training on pay management duties and
responsibilities provided to unit administrator and finance office
personnel contributed to soldiers' pay problems. Further, we found that
unit commanders did not

always support these important pay management duties. Our Standards for
Internal Control in the Federal Government provide that management should
establish and maintain a positive and supportive attitude toward internal
controls and conscientious management.

Several of the individuals serving as unit administrators in our case
study units informed us that they had received limited or no formal
training covering unit administrator pay management responsibilities and
that the training they did receive did not prepare them for mobilization
issues associated with supporting and processing active duty pays.
Moreover, few of these unit administrators had completed all of the
required training on active duty pays and allowance eligibility and
processing requirements. Unit administrators have responsibility for a
variety of pay-related actions, including working with the unit soldiers
to obtain critical pay support documentation, maintaining copies of pay
support records, providing paytransaction support documentation to the
UPC, and reviewing pay reports for errors. Without adequate training, unit
administrators may not be aware of these critical pay management
responsibilities.

Lack of training contributed to a number of pay errors that unit
administrators could have prevented:

o 	At the 824th Quartermaster unit, while our audit of unit pay reports
showed that the unit administrator reviewed the documents, we saw no
indication that she used this information to identify and stop an
overpayment of $18,000 to one soldier in her unit. As a result, the
erroneous pay was allowed to continue for another 5 months.

o 	Several soldiers with the 965th Dental Company did not receive
promotion pay increases and other entitlements for over 2 months because
the unit administrator failed to process necessary pay-support
documentation--available at the time of unit's initial SRP--until after
the unit was deployed on active duty.

o 	At the 443rd Military Police Company, the unit's finance sergeant6 who
was assigned pay management responsibilities did not gather and submit
current documentation needed to support active duty pays, such

6For this unit, the unit administrator did not deploy with the unit.
Consequently, the unit's pay management responsibilities were assigned to
a finance sergeant deployed with the unit.

as documents showing soldiers' marital status and number of dependents. As
a result, soldiers from this unit experienced overpayments, underpayments,
and late payments associated with their housing and cost of living
allowances.

Inadequate training of military pay technicians at Army finance offices at
mobilization and demobilization stations, and at area servicing finance
locations (for deployed soldiers), also adversely affected the accuracy
and timeliness of pays to mobilized Army Reserve soldiers. Few of the
military finance personnel responsible for processing pay information at
the mobilization and demobilization stations and at the area servicing
finance office for deployed units had formal training on DJMS-RC pay
procedures. Instead, several of the military pay technicians and
supervisors we talked to at the Army mobilization and demobilization
stations told us they relied primarily on on-the-job training to become
knowledgeable in the pay eligibility and pay transaction processing
requirements for mobilized Army Reserve soldiers. For example, military
pay personnel at the Defense Military Pay Office at Ft. Eustis informed us
that instead of receiving formal training on active duty pay entitlements
or DJMS-RC pay processing, they became knowledgeable in mobilization and
demobilization pay processing procedures by processing hundreds of
soldiers within 2 to 3 weeks of being assigned these responsibilities.
They also said they contacted full-time civilians in the finance office,
as well as UPC and DFAS officials, by telephone for assistance.

Also, few of the Army finance personnel at overseas area servicing finance
locations received formal training on Army Reserve pay eligibility and
DJMS-RC processing requirements before assuming their duties. These
personnel had primary responsibility for supporting active duty payments
to mobilized Army Reserve soldiers deployed overseas, including
responsibility for processing location-based active duty payments to these
soldiers. Camp Arifjan was the Army location assigned responsibility for
processing pay to mobilized Army Reserve soldiers deployed in Kuwait and
Iraq during 2003. Officials from the 336th Command, the Army command with
oversight responsibility for Camp Arifjan, confirmed that while finance
personnel at Camp Arifjan received training in the pay eligibility and pay
processing procedures for active duty Army soldiers, they were not
adequately trained in pay eligibility and processing procedures for Army
Reserve soldiers.

We were told of instances in which Army finance personnel were unable to
help Reserve soldiers resolve their pay problems. For example, the 948th

Surgical Team contacted an Army finance unit located in Kandahar,
Afghanistan, to request its assistance in resolving the unit's pay
problems. However, the finance personnel at that location were unable to
help resolve the 948th Surgical Team's pay problems because they said they
had not had training in this area and were not familiar with DJMS-RC
processing requirements and procedures. All 20 soldiers with the 948th
Surgical unit experienced pay problems associated with their
location-based hardship duty payments, which required manual processing
every month by the unit's area servicing finance office.

Further, we saw little evidence that the unit commanders of our case study
units received any training on their role in supporting their unit
administrators in these important pay management responsibilities. For
example, at one of our case study units, the 965th Dental Company, the
unit commander informed us that he did not support the review of pay
management reports because soldiers had the capability to review their pay
online and would use this capability to identify and report any pay
problems. However, as discussed earlier, while we identified numerous
instances in which soldiers received overpayments or had other pay
problems, we saw little indication that these soldiers found and reported
these problems prior to our audit. Moreover, we identified two instances
in which soldiers did not report that they had received tens of thousands
of dollars in improper active duty payments.

Customer Service Breakdowns

Our audit work at eight case study units identified significant soldier
concerns with both the level and quality of customer service they received
related to their active duty pays, allowances, and tax benefits. The
soldiers' concerns centered around three distinct areas: (1) the
accessibility of customer service, (2) the ability of customer service
locations to help soldiers, and (3) the treatment of soldiers requesting
assistance. Servicing soldiers and their families with pay inquiries and
problems is particularly critical in light of the error-prone processes
and limited automated system processing capabilities. Ultimately, pay
accuracy is left largely to the individual soldier.

Although there are several sources that soldiers can turn to for pay issue
resolution, including an online system and a toll free phone pay
assistance number, soldiers at our case study units experienced problems
in accessing these sources. Mission requirements and the distance between
deployment locations and field finance offices often impaired the
soldiers' ability to utilize the in-theater customer service centers.
Also, soldiers did

not always have Internet and telephone access to utilize sources through
these media. The lack of Internet access for deployed soldiers was
particularly problematic because it limited soldiers' access to pay,
allowance, and tax benefit data reflected in their leave and earnings
statements. Lacking leave and earnings statements, soldiers had no means
to determine the propriety of their active duty payments. For example,
soldiers with the 948th Surgical Team told us that their inability to
access the leave and earnings statements adversely affected their overall
morale.

Even when mobilized reservists were able to contact customer service
sources, their pay issues often continued because the office they were
instructed to contact was unable to address their inquiry or correct their
problem. In some cases, customer service sources failed to help soldiers
because they lacked an understanding of what was needed to fix the
problems. When representatives of the 948th Surgical Team contacted their
parent company for help in correcting pay problems, personnel with the
parent company informed them that they could not fix the unit's pay
problems because they (incorrectly) believed that the unit was paid
through the Army's active duty pay system. Soldiers at other units were
redirected from one source to another. Soldiers were not aware of which
sources could address which types of problems, and more significantly, the
customer service sources themselves often did not know who should correct
a specific problem.

An Army Reserve major's experience illustrates the time and frustration
that is sometimes involved with soldiers' attempts to obtain customer
service for correcting errors in active duty pays, allowances, and related
tax benefits.

Individual Case Illustration: Extensive, Time-consuming Action Required to
Resolve Pay Issue

o  A soldier from Maryland was mobilized in March 2003 from the Army's
Individual Ready Reserve to active duty to serve as a liaison between the
Army and Air Force to help coordinate ground and air combat operations in
Iraq. After completing his 2month active duty tour and returning to an
inactive reserve status in May 2003, he contacted Army officials to inform
them that he was continuing to receive active duty pays and volunteered to
immediately repay these erroneous overpayments. In July 2003, he wrote a
check for $6,150.75 after receiving documentation showing his debt
computation. However, he continued to receive Leave and Earnings
Statements indicating that he had an outstanding debt. He contacted his
Army demobilization finance office to determine how to get the erroneous
outstanding debt removed from his pay records. After being referred by
officials at that location to various DFAS locations (including once being
told, "There is nothing more I can do for you."), he contacted us for
assistance. After DFAS recomputed the soldier's debt as a result of our
inquiry, the soldier was informed that he owed an additional $1,140.54,
because the original debt computation did not fully consider the erroneous
combat zone tax exclusion benefits he received. Overall, he spent nearly a
year after his 2-month active duty tour ended, and about 20 phone calls,
faxes, and letters in contacting at least seven different DOD
representatives at five different customer service centers to correct
active duty pay and allowance overpayments and associated combat tax
exclusion benefit problems.

Finally, soldiers expressed concern about the treatment they sometimes
received while attempting to obtain customer service. Soldiers expressed
concern that certain customer service representatives did not treat
soldiers requesting assistance respectfully. For example, one soldier who
attempted to make corrections to his Certificate of Discharge or Release
from Active Duty (DD 214) informed us that mobilization station personnel
told him that the citations and dates of service he was trying to add
"didn't matter." Additionally, some soldiers told us that when they raised
concerns about the quality of customer service they received with respect
to their pay inquiries and concerns, they were sometimes ignored. For
example, soldiers with Connecticut's 3423rd Military Intelligence
Detachment told us they contacted the local Inspector General because they
believed that finance personnel at their deployment location had both
actively tried to impair the payment of their active duty entitlements and
had tried to intimidate and discourage the unit's soldiers from seeking
help elsewhere. However, they were not aware of any action taken as a
result of their concerns.

Systems Problems 	Weaknesses in automated systems contributed
significantly to the underpayments, overpayments, and late payments we
identified. These weaknesses consisted of (1) nonintegrated systems with
limited system

interfaces and (2) limited processing capabilities within the pay system.
The Army and DFAS rely on the same automated pay system to authorize and
process active duty pays for Army Reserve soldiers as they use for Army
National Guard soldiers. In addition, similar to the Army National Guard,
the Army Reserve's personnel and order-writing systems are not integrated
with the pay system. Consequently, many of the systems problems
experienced by mobilized Army Reserve soldiers are similar to those that
we identified in our report on pay issues associated with mobilized Army
National Guard soldiers.7

Because of the automated systems weaknesses, both Army Reserve and active
Army personnel must put forth significant manual effort to accurately
process pays and allowances for mobilized Army Reserve soldiers. Moreover,
to compensate for the lack of automated controls over the pay process,
both DFAS and the Army place substantial reliance on the review of pay
reports to identify pay errors after the fact. Part of this reliance
includes the expectation that soldiers review their own leave and earnings
statements, even though these statements do not always provide clear
explanations of all payments made. Finally, because of DJMS-RC's
limitations, the system cannot simply stop withholding taxes for soldiers
in designated combat zone locations. Instead, for these soldiers, the
system withholds taxes and then pays the soldiers the amount that was
withheld at least a month after the soldiers were first entitled to
receive this benefit.

Automated Systems Are Not Integrated and Have Limited Interfaces

The key pay and personnel systems involved in authorizing, entering,
processing, and paying mobilized Army Reserve soldiers are not integrated
and have only limited interfaces. Figure 1 provides an overview of the key
systems involved in authorizing, entering, processing, and making active
duty payments to mobilized Army Reserve soldiers.

7U.S. General Accounting Office, Military Pay: Army National Guard
Personnel Mobilized to Active Duty Experienced Significant Pay Problems,
GAO-04-89 (Washington, D.C.: Nov. 13, 2003).

Lacking either an integrated or effectively interfaced set of personnel
and pay systems, DOD must rely on error-prone, manual data entry from the
same source documents into multiple systems. We found numerous instances
in which pay-affecting personnel information was not entered promptly into
the pay system, resulting in numerous pay errors.

We found several instances in which soldiers that were promoted while on
active duty did not receive their pay raises when they should have because
the promotion information was not promptly recorded in DJMS-RC. For
example, one Army Reserve soldier's promotion was effective on July 1,
2003. However, the soldier's promotion was not processed in the pay system
until October 2003, which delayed an increase in both his basic pay and
basic allowance for housing. The soldier received his promotion pay,
including back pay, in late October 2003, resulting in late payments
totaling over $2,700.

Lacking an effective interface between pay and personnel systems, DOD and
the Army must rely on after-the-fact detective controls, such as pay and
personnel system data reconciliations to identify and correct pay errors
occurring as a result of mismatches between personnel and pay system data.
However, even these reconciliations will not identify soldiers that are
being paid for active duty while in inactive status because the Army
Reserve personnel system currently does not maintain data to indicate
whether or not soldiers are on active duty.

Limited Automated Processing Capabilities

DJMS-RC was not designed to pay Army Reserve soldiers for active duty
tours longer than 30 days. According to DOD officials, requiring DJMS-RC
to process various types of pays for active duty tours that exceed 30 days
has stretched the system's automated processing capabilities. Because of
the system's limitations, the Army and DFAS were required to make monthly
error-prone manual inputs for certain active duty pays, such as hardship
duty pay. We found many instances in which these manual inputs resulted in
payment errors. Moreover, because of the way in which hardship duty pay
was processed and reported on soldiers' leave and earnings statements,
mobilized Army Reserve soldiers could not always determine whether they
received all of their entitled pays and allowances. In addition, because
of current processing limitations, DJMS-RC cannot process a required tax
exclusion promptly for soldiers in a combat zone. This processing
limitation has resulted in late payments of this benefit for all entitled
Army Reserve soldiers.

Hardship Duty Pay	During our audit period, we found numerous errors in
hardship duty pay as a result of a DJMS-RC processing limitation that
required the use of a miscellaneous payment code for processing this type
of pay. Because of the use of this miscellaneous code instead of a code
specifically for hardship duty pay, this pay could not be automatically
generated on a monthly basis once a soldier's eligibility was established.
Therefore, hardship duty pay had to be manually entered every month for
eligible soldiers.

We found that nearly all soldiers in our case studies who were eligible
for hardship duty pay experienced problems with this pay, including late
payments, underpayments, and overpayments. For example, the 965th Dental
Company's soldiers from Seagoville, Texas, experienced both underpayments
and overpayments. Specifically, all 85 soldiers deployed to Kuwait were
underpaid a total of approximately $8,000 for hardship duty pay they were
entitled to receive during their deployment overseas. Subsequently, 76 of
the unit's soldiers were overpaid a total of almost $47,000 because they
continued to receive hardship duty payments for more than 6 months after
they had left the theater.

Both underpayments and overpayments, as well as late payments, of hardship
duty pay occurred largely because of the reliance on manual processing of
this pay every month. The errors often occurred because local area finance
personnel did not receive accurate or timely documentation such as flight
manifests or data from the Tactical Personnel System indicating when
soldiers arrived or left the theater. As a result, finance personnel did
not start these payments on time, and did not stop these payments as of
the end of the soldiers' active duty tour date recorded in DJMS-RC.

Use of the miscellaneous code to process hardship duty pay also precluded
the use of system edits as backup controls to prevent overpayments.
Because a miscellaneous code is used for various types of payments, DFAS
could not set up an edit to stop hardship duty pay after a soldier's
active duty tour ended in the event finance personnel mistakenly continued
to manually process hardship duty pay. Similarly, DFAS could not establish
an edit to prevent duplicate payments of hardship duty pay processed using
the miscellaneous code. As a result, hardship duty pay could be entered
more than once for a soldier in a given month without detection. From our
case studies, we identified three soldiers who each received two hardship
duty payments for one month, resulting in total overpayments of $250.

Use of the miscellaneous payment code also made it difficult for soldiers
to understand, and determine the propriety of, some of the payments
reflected on their leave and earnings statements. Hardship duty pay and
other payments that are processed using the miscellaneous code are
reported on leave and earnings statements as "other credits." Furthermore,
the leave and earnings statements did not provide any additional
information about what the "other credits" were for unless pay clerks
entered additional explanations in the "remarks" section of the statement,
which they rarely did. As a result, lacking any explanations, soldiers
often had no means to determine if these types of payments were
appropriate and accurate.

Unit commanders told us that they relied on soldiers to identify any pay
problems based on their review of their leave and earnings statements.
However, because leave and earnings statements do not always provide
adequate information or, as discussed previously, may not be available to
soldiers while deployed, reliance on the soldiers to identify pay errors
is not an effective control.

Combat Zone Tax Exclusion	In addition to soldiers' pay problems that
occurred primarily because of the extensive use of manual processes,
soldiers also experienced systematic problems with automated payments
related to their combat zone tax exclusion, which resulted in late
payments of this benefit for all soldiers in the seven case study units
that deployed overseas. Soldiers are entitled to the combat zone tax
exclusion for any month in which the soldier performs active service in a
designated combat zone area.8

Because DJMS-RC was designed as a pay system for Army Reserve soldiers in
weekend drill status, it does not have the processing capability to halt
the withholding of applicable income taxes. Therefore, as a workaround
procedure to compensate for this limitation, an automated process was
established whereby the system first withholds taxes applicable to
payments made while soldiers are in a combat zone, and then later
reimburses soldiers for these withheld amounts in the following month. As
a result of this workaround process, with few exceptions, Army Reserve
soldiers who served in a designated combat zone received their combat zone
tax exclusion benefit at least one month late.

826 U.S.C. Section 112.

Soldiers experienced longer delays in receiving this benefit if they
arrived in a combat zone after the midmonth cutoff for DJMS-RC processing,
which is approximately on the seventh day of each month. In these cases,
entitlement to the tax exclusion was not recognized until the following
month, which then delayed the soldier's receipt of his combat zone tax
benefit until the next month-the third month the soldier was deployed in
the combat zone. For example, members of the 824th Quartermaster Company
that deployed to Afghanistan arrived in country on July 14, 2003, but did
not receive their first combat zone tax exclusion reimbursements until
early October, almost 3 months after they became eligible for the
exclusion.

  Actions to Improve Accuracy and Timeliness of Mobilized Army Guard and Reserve
  Pay

DOD and the Army have reported a number of relatively recent positive
actions with respect to processes, human capital practices, and automated
systems that, if implemented as reported, should improve the accuracy and
timeliness of active duty pays, allowances, and related tax benefits
provided to mobilized Army Reserve soldiers. Payroll payments to mobilized
Army Reserve soldiers rely on many of the same processes and automated
systems used for payments to mobilized Army National Guard soldiers.
Consequently, actions to improve the accuracy and timeliness of Army
Reserve soldier payments are closely tied to actions taken in response to
several of the recommendations in our November 2003 Army National Guard
pay report.9

Because many of DOD's actions in this area were implemented in the fall of
2003 or later, they were not in place soon enough to have had a positive
impact on mobilized Army Reserve soldiers' payments that we audited
through January 2004. However, if implemented as reported to us, many of
DOD's actions in response to the recommendations in our November 2003
report should help reduce the incidence of the types of pay problems we
identified for Army National Guard soldiers as well as those identified in
the Army Reserve case study units I have presented today.

With respect to the process deficiencies and related recommendations, DOD
reported implementing additional procedural guidance intended to help
minimize the pay problems attributable to non-standard or unclear
procedures. One of the purposes of this guidance is to eliminate any

9GAO-04-89

questions regarding which DOD entity is responsible for resolving a
soldier's pay issues or questions. Further, as of January 2004, DOD
reported establishing a new procedure under which DFAS assumed
responsibility (from the Army finance offices located in various overseas
locations) for all monthly manual entry of mobilized Army Reserve and Army
National Guard soldiers' location-based hardship duty pays.

DOD also reported completing several actions related to our previous
recommendations to improve the human capital practices related to payments
to mobilized Army soldiers. For example, the Army reported that it had
taken action to provide additional training for Army finance personnel at
overseas finance locations and at mobilization and demobilization
stations, as well as for those Army finance personnel scheduled for
deployment. This training was directed at better ensuring that these
personnel are adequately trained on existing and new pay eligibility and
pay processing requirements for mobilized Army National Guard and Army
Reserve soldiers. DOD also reported establishing a new policy in January
2004 directed at more clearly affixing responsibility for addressing
soldiers' pay problems or inquiries. Under this new policy, the Army
National Guard established a pay ombudsman to serve as the single focal
point for ensuring coordinated, prompt customer service on all Army
National Guard soldiers' pay problems.

With respect to automated systems, the Army and DFAS have acknowledged
serious deficiencies in the current automated systems used to pay
mobilized Army Reserve soldiers, and report that they have implemented a
number of significant improvements, particularly to reduce an estimated
67,000 manual monthly entries for hardship duty pay. For example, in
response to our recommendations in the National Guard report, DOD reported
taking actions to (1) automate manual monthly hardship duty pay in March
2004, (2) eliminate the use of "other credits" for processing hardship
duty pay and instead process these pays using a unique transaction code to
facilitate implementing a system edit to identify and stop erroneous
payments, (3) compare active duty release dates in the Army's system used
to generate Release From Active Duty Orders with soldiers' end of active
duty tour dates shown in DJMS-RC to identify and stop any erroneous active
duty payments, and (4) increase the reliability and timeliness of
documentation used to support soldiers' arrival at and departure from
designated overseas locations.

Further, DOD has a major system enhancement effort underway in this
area--the Defense Integrated Military Human Resources System

(DIMHRS). As an interim measure, DOD is now pursuing Forward Compatible
Payroll (FCP). FCP is intended to replace payroll systems now used to pay
Army military personnel and help eliminate several of the laborintensive,
error-prone workarounds necessitated by current DJMS-RC processing
limitations. As of May 2004, FCP was expected to be operational for all
Army Reserve soldiers by March 2005.

Concluding Comments	The increased operating tempo for Army Reserve and
Army National Guard active duty mobilizations has stressed the current
processes, human capital, and automated systems relied on to pay these
soldiers. The significant number of problems we identified associated with
active duty pay, allowances, and related tax benefits provided to
mobilized Army Reserve soldiers at eight case study locations raises
serious concerns about whether current operations can be relied on to
provide accurate and timely payments. These pay problems caused
considerable frustration, adversely affected soldiers' morale, and placed
an additional unnecessary burden on both the soldiers and their families.
Further, if not effectively addressed, these pay problems may ultimately
have an adverse impact on Army Reserve reenlistment and retention.

Strengthening existing processes, human capital practices, and automated
systems is critical to preventing, or at minimum, promptly detecting and
correcting the errors we identified. In this regard, DOD and the Army have
reported a number of relatively recent positive actions intended to
improve the accuracy and timeliness of active duty pays, allowances, and
related tax benefits provided to mobilized Army Reserve soldiers. DOD's
completed and planned near-term actions, if implemented as reported,
should reduce the number of pay problems.

However, mobilized Army Reserve soldiers cannot be reasonably assured of
accurate and timely active duty pays, allowances, and related tax benefits
until DOD completes a reengineering of all the processes, human capital
practices, and automated systems supporting this critical area. Fully and
effectively addressing Army Reserve soldiers pay problems will require
priority attention and sustained, concerted, coordinated efforts by DFAS,
the Army, and the Army Reserve to build on actions taken and planned.

Finally, I commend the Chairman and Vice Chairman for holding an oversight
hearing on this important issue. Your Committee's continuing interest and
diligence in overseeing efforts to effectively and efficiently

support our Army Guard and Reserve forces will be essential in bringing
about comprehensive and lasting improvements to many decades-old,
entrenched problems. We are committed to continuing to work with you and
DOD to identify and monitor actions needed to bring about comprehensive
and lasting solutions to long-standing problems in its business and
financial management operations.

Mr. Chairman, this concludes my statement. I would be pleased to answer
any questions you or other members of the Committee may have at this time.

Contacts and	For further information about this testimony, please contact
Gregory D. Kutz at (202) 512-9095 or [email protected]. Individuals making key

Acknowledgments	contributions to this testimony include James D. Berry
Jr., Amy C. Chang, Francine M. DelVecchio, Geoffrey B. Frank, Jennifer L.
Hall, Ken Hill, Kristi

L. Karls, Jason M. Kelly, Tram Le, Julia C. Matta, Jonathan T. Meyer,
Michelle Philpott, John J. Ryan, Jenniffer F. Wilson, Leonard E. Zapata.

Appendix I

Background

While on active duty, all Army Reserve soldiers earn various statutorily
authorized types of pays and allowances. The types and amounts of pay and
allowances that Army Reserve soldiers are eligible to receive vary
depending upon rank and length of service, dependency status, skills and
certifications acquired, duty location, and the difficulty of the
assignment. While Army Reserve soldiers mobilized to active duty may be
entitled to receive over 50 types of pays and allowances, we focused on 14
types of pays and allowances applicable to the Army Reserve units we
selected for case studies. As shown in table 2, we categorized these 14
pay and allowance types into two groups: (1) pays, including basic pay,
medical and dental and foreign language proficiency skill-based pays, and
locationbased hostile fire and hardship duty pays, and (2) allowances,
including allowances for housing, subsistence, family separation, and cost
of living for the continental United States.1

1The law makes a distinction between the terms "pays" and "allowances"
which together make up a service member's overall compensation package.
Generally, the term pay includes basic pay, special pay, retainer pay,
incentive pay, retired pay, and equivalent pay, but does not include
allowances. 37 U.S.C. Section 101(21). DOD defines allowance as "a
monetary amount paid to an individual in lieu of furnished quarters,
subsistence, or the like." DOD Financial Management Regulation, vol. 7A,
Definitions, para. 15 (February 2001). While generally items considered as
"pay" are taxable for federal income tax purposes, except for the cost of
living allowance for the continental United States, most allowances, such
as those for housing, subsistence, and family separation, are not.

                             Appendix I Background

Table 2: Active Duty Pays and Allowances Associated with Case Study Units

          Pays           Description                Dollar amount             
       Basic pay           Salary       Varies depending on rank and years of 
                                                       service                
Hazardous duty pay Pay for parachute                                       
       (Jump pay)          jumping                 $150 per month

Aviation career incentive pay	Pay for officers performing operational
flying Varies from $125 to $840 per month based duty on years of aviation
service

      Foreign language    Pay for specialized             Varies depending on 
      proficiency pay     foreign language skills     proficiency but may not 
                                                      exceed $300 per month   
Hardship duty location Pay when assigned to duty  $50, $100, or $150 per   
     pay for designated          in specified        month (depending         
           areas                  locations             on duty location)     

Hardship duty location pay for certain places Pay to enlisted soldiers
when assigned to Varies from $8 to $22.50 per month (phase out began on
January 1, 2002) duty in specified locations depending on rank

Medical and dental pay Various special entitlements and incentives Varies
from $100 per month to $3,000 per for medical and dental professionals
month depending on medical specialty, professional qualifications, and
creditable service

Hostile fire/imminent danger pay	Full pay for any portion of month when
$150 per month through September 30, assigned to a location subject to or
in close 2002, $225 per month, effective October 1, proximity to hostile
fire or assigned to duty in 2002, through December 31, 2004. a designated
imminent danger location

Allowances

Basic allowance for Meant to offset the cost of       Varies depending on  
         housing       housing when                      location, rank, and  
                       member does not receive            whether member has  
                       government-                            dependents      
                               provided housing          
Basic allowance for       Meant to offset costs for a  Varies depending on 
       subsistence                        member's meals    whether member is 
                                                         officer or enlisted  

      Family separation     Meant to offset added    Equivalent to monthly    
         allowance I        housing expenses         basic allowance for      
                             resulting from forced   housing for member of    
                                separation from      same rank without        
                                   dependents               dependents        
      Family separation     Meant to offset certain    $100 per month from    
         allowance II       expenses resulting           January 1, 1998,     
                            from forced separation    through September 30,   
                            from dependents               2002; $250 per      
                                                     month effective October  
                                                     1, 2002, through         
                                                        December 31, 2004     
Cost of living allowance     Meant to provide          Varies depending on 
      in the continental        compensation for     location, rank, years of 
        United States       variations in costs        service, and whether   
                            (other than housing) in         member has        
                             the continental United         dependents        
                                     States          
       Overseas housing         Meant to provide       Varies depending on    
          allowance             compensation for        location, rank and    
                             variations in housing    whether the member has  
                                 costs overseas             dependents        

                                  Source: GAO.

Mobilization Phases	As shown in figure 2, three key phases are associated
with the pays and allowances applicable to mobilized Army Reserve
soldiers:

                             Appendix I Background

(1) mobilization: starting applicable active duty pays and allowances, (2)
deployment: starting and stopping applicable location-based active duty
pays while continuing other nonlocation-based active duty pay and
allowance entitlements, and (3) demobilization: stopping active duty pays
and allowances.

Figure 2: Three Key Phases for Active Duty Pays to Army Reserve Soldiers

Source: GAO.

Mobilization	During mobilization, units receive alert orders and begin
preparing for active duty by conducting Soldier Readiness Processing (SRP)
at the unit's home station. Among other things, the SRP is intended to
ensure that each soldier's financial records are in order. The unit
administrator is supposed to gather all necessary documentation for each
soldier and send it to the U.S. Army Reserve Pay Center (UPC). There, pay
technicians enter transactions to initiate basic pays and allowances for
the mobilized soldiers based on soldiers' mobilization orders and
documentation sent by the unit.

                             Appendix I Background

After the initial SRP, soldiers go as a unit to an assigned active duty
Army mobilization station, where they undergo a second SRP. As part of
this second SRP, finance personnel at the mobilization station are
responsible for confirming or correcting the results of the first SRP,
including obtaining any necessary documentation and promptly initiating
appropriate active duty pay and allowance transactions that were not
initiated during the first SRP.2

Deployment	While deployed on active duty, there are several active Army
and DFAS components involved in paying mobilized Army Reserve personnel.
The Army area servicing finance office, which may be within the United
States or in a foreign country, is responsible for initiating pays earned
while the soldier is located in certain specified locations, such as
location-based pays for hostile fire and hardship duty. Pay technicians at
these area servicing finance offices are responsible for starting these
types of pays for each soldier based on documentation, such as annotated
battle rosters or flight manifests, showing when soldiers arrived at these
designated locations.

While the designated Army area servicing finance offices have primary
responsibility for administering pay for deployed Army Reserve soldiers,
finance personnel at the cognizant mobilization station or at the UPC can
also enter certain pay-altering transactions that occur during
deployments, such as those related to a soldier's early separation from
active duty. In addition, the UPC has responsibility for entering all
monthly nonlocationbased, nonautomated pay and allowance transactions,
such as foreign language proficiency pay.

Demobilization	Upon completion of an active duty tour, Army Reserve
soldiers normally return to the same active Army locations from which they
were mobilized for demobilization processing before returning to their
home stations. There, each soldier should receive a copy of the Release
from Active Duty (REFRAD) order and a Form DD 214, Certificate of Release
or Discharge from Active Duty. Pay technicians at the demobilization
station are required to use the date of release from active duty shown on
these documents as a basis for stopping all Army Reserve soldiers' active
duty pay and allowances. The UPC is responsible for discontinuing monthly
input of all nonlocation-based, nonautomated pays and allowances. If the

2 Transactions to initiate and terminate pays for all mobilized Army
Reserve soldiers entitled to receive special medical and dental pay
entitlements are entered and processed centrally at DFAS-IN.

Appendix I Background

demobilization station did not take action to stop active duty pays for
demobilized Army Reserve soldiers, or if a soldier did not return to the
demobilization station for active duty out-processing, the responsibility
for stopping active duty pays and allowances falls to the soldier's unit
or the UPC.

Appendix II

Scope and Methodology

Because current DOD operations used to pay mobilized Army Reserve soldiers
relied extensively on error-prone, manual transactions entered into
multiple, nonintegrated systems, we did not statistically test controls in
this area. Instead, we audited eight Army Reserve units as case studies to
provide a detailed perspective on the pay experiences of mobilized Army
Reserve soldiers. Each of these units had mobilized, deployed, and
demobilized at some time during the 18-month period from August 2002
through January 2004. Using data supplied by the Army Reserve Headquarters
Operations Center, we selected case study units that had a variety of
deployment locations and missions.

To identify the pay experiences associated with each case study unit, we
obtained and analyzed DJMS-RC pay transaction extracts and other available
documentation. We also conducted follow-up inquiries with cognizant
personnel at the Army Reserve Command, Regional Readiness Command, and the
Army Reserve Pay Center. Because our objective was to provide insight into
the pay experiences of mobilized Army Reserve soldiers, we did not perform
an exact calculation of the net pay soldiers should have received. Our
audit results reflect only problems that we identified and we counted
problems only once in the phase in which they first occurred, even though
the problems we identified sometimes extended into subsequent phases.
Soldiers in our case study units may have experienced additional pay
problems that we did not identify.

For purposes of characterizing pay and allowance problems for this report,
we defined overpayments and underpayments as those that were in excess of
(overpayment) or less than (underpayment) the entitled payment. We
considered as late payments any active duty pay or allowance paid to the
soldier over 30 days after the date on which the soldier was entitled to
receive such payments. In addition, while we did not attempt to calculate
the exact impact of any soldier over, under, and late payments on their
combat zone tax exclusion benefits, we did examine readily available data
to determine the extent to which our case study unit soldiers' experienced
problems with their entitled combat zone tax exclusion benefits.

In addition, we conducted a number of other procedures, including

o 	Observing procedures and practices followed by the various DOD
components involved in providing active duty pays and allowances to Army
Reserve soldiers;

Appendix II Scope and Methodology

o 	Interviewing recently demobilized soldiers about their pay experiences
while mobilized; and

o 	Reviewing selected edit and validation checks in DJMS-RC, and certain
data entry processes for DJMS-RC.

We conducted our audit work from November 2003 through June 2004 in
accordance with U.S. generally accepted government auditing standards.
Further details on our scope and methodology will be provided in our
soonto-be-issued report.

Appendix III

Summaries of Case Studies

We audited the pay experiences of soldiers in the following eight Army
Reserve units as case studies of the effectiveness of the processes, human
capital practices, and automated systems in place over active duty pays,
allowances, and related tax benefits:

o 824th Quartermaster Company, Fort Bragg, N.C.

o 965th Dental Company, Seagoville, Tex.

o 948th Forward Surgical Team, Southfield, Mich.

o 443rd Military Police Company, Owings Mills, Md.

o  FORSCOM Support Unit, Finksburg, Md.

o 629th Transportation Company, Ft. Eustis, Va.

o  3423rd Military Intelligence Detachment, New Haven, Conn.

o 431st Chemical Detachment, Johnstown, Pa.

These case studies are presented to provide an overview of the types and
causes of any pay problems experienced by these units. We selected
regional readiness commands that had a large number of activated Reserve
units that had mobilized, deployed, and returned from their tour of active
duty in support of Operations Noble Eagle, Enduring Freedom, and Iraqi
Freedom. From the list of units assigned to these Readiness Commands, we
selected eight case studies that had a variety of deployment locations and
missions, including both overseas and continental U.S. deployments.

                                  Appendix III
                           Summaries of Case Studies

824th Quartermaster
Company
Fort Bragg, NC

Number of mobilized unit soldiers' pays audited: 68

Period of mobilization: February 2003 to September 2003

Principal deployment location: Kuwait and surrounding locations,
Afghanistan, and Fort Bragg, NC

Deployment duties: Rigged parachutes for individual soldiers and large
equipment drops.

Number of unit soldiers with at least one problem with active duty pay and
allowance entitlements: 58 of 68

 Unit Pay and Allowance Problems Identified (by Phase) Phase Number of soldiers
                               with pay problems

                             Mobilization 11 of 68

                               Deployed 50 of 68

                            Demobilization 13 of 68

Source: GAO.

Overpayments identified (number of soldiers affected): $60,000 (57)

Late payments identified (number of soldiers affected): $3,000 (9)

Underpayments identified (number of soldiers affected): $10,000 (49)

Combat zone tax exclusion benefit problems identified: All 49 soldiers
deployed overseas received their combat zone tax exclusion benefit at
least 1 month late, totaling about $20,000. In addition, approximately
$1,300 was over-withheld from 5 soldiers.

Examples of specific problems identified:

o 	Nine soldiers were paid family separation allowance even though they
remained at their home station and worked within their normal commuting
distance of fewer than 50 miles. Another soldier did not

Appendix III
Summaries of Case Studies

receive his entitled family separation allowance, totaling $1,400, until
the end of his active duty tour.

o  Forty-nine soldiers were underpaid hardship duty pay

o 	Forty-seven soldiers continued to receive hardship duty pay payments
for up to 5 months following their return home, totaling $30,000.

o 	Forty-four soldiers that were deployed overseas were overpaid hostile
fire pay.

o 	One soldier who demobilized early due to a medical condition continued
to receive active duty pay and entitlements until the end of January 2004
when we identified the error, resulting in an overpayment of about
$18,000.

                                  Appendix III
                           Summaries of Case Studies

965th Dental Company Number of mobilized unit soldiers' pays audited: 93

Seagoville, Tex Period of mobilization: February 2003 through July 2003

Principal deployment location: Camp Arifjan, Kuwait

Deployment duties: Provided emergency dental services

Number of unit soldiers with at least one problem with active duty pay and
allowance entitlements: 89 of 93

Pay and Allowance Problems Identified (by Phase)

                   Phase Number of soldiers with pay problems

                             Mobilization 25 of 93

                               Deployed 86 of 93

                             Demobilization 7 of 93

Source: GAO.

Overpayments identified (number of soldiers affected): $100,000 (86)

Late payments identified (number of soldiers affected): $16,000 (86)

Underpayments identified (number of soldiers affected): $27,000 (65)

Combat zone tax exclusion benefit problems identified: 75 of the 85
soldiers deployed overseas received their combat zone tax exclusion
benefit 2 to 3 months late, totaling approximately $24,000. In addition,
we identified $200 in over-withholdings and $300 in under-withholdings.

Examples of specific problems identified:

o  Eighty-five soldiers were underpaid for hardship duty pay of $8,000

o 	Sixty-six soldiers received hardship duty pay totally $47,000 for at
least 6 months after leaving Kuwait.

Appendix III
Summaries of Case Studies

o 	One soldier received mobilization orders but did not report to the
unit's mobilization station. Nonetheless, he received $36,000 of active
duty pay for over 12 months. These overpayments continued until we
discovered them during our audit.

o 	Another soldier received hostile fire pay, hardship duty pay, family
separation allowance, and the combat zone tax exclusion benefits that he
was no longer entitled to receive after he left his designated overseas
deployment location early as a result of severe illness incurred during
his active duty mobilization.

o 	One soldier received a duplicate basic allowance for housing allowance
payment of $6,600.

                                  Appendix III
                           Summaries of Case Studies

948th Forward Surgical Number of mobilized unit soldiers' pays audited: 20

Team, Southfield, MI Period of mobilization: January 2003 to September
2003

Principal deployment location: Kandahar, Afghanistan

Deployment duties: Provide emergency medical care to soldiers and
civilians in the field

Number of unit soldiers with at least one problem with active duty pay and
allowance entitlements: 20 of 20

Pay and Allowance Problems Identified (by Phase)

                   Phase Number of soldiers with pay problems

                              Mobilization 5 of 20

                               Deployed 20 of 20

                            Demobilization 18 of 20

Source: GAO.

Overpayments identified (number of soldiers affected): $20,700 (20)

Late payments identified (number of soldiers affected): $5,600 (20)

Underpayments identified (number of soldiers affected): $2,000 (5)

Combat zone tax exclusion benefit problems identified: All 20 unit
soldiers deployed overseas received their combat zone tax exclusion
benefits at least 1 month late, totaling $15,300. In addition, we
identified $130 that was over-withheld.

Examples of specific problems identified:

o 	After arriving in Afghanistan, (1) 19 soldiers waited 47 days to
receive their initial hostile fire pay, (2) 19 soldiers received their
February hardship duty pay in April, and (3) 20 soldiers waited 67 days
before receiving their initial combat zone tax exclusion benefit.

Appendix III
Summaries of Case Studies

o 	A sergeant spent 100 hours in late April 2003 attempting to resolve the
unit's pay problems. Several soldiers were forced to borrow money to meet
financial obligations.

o 	Nineteen soldiers continued to receive hardship duty pay for a period
ranging from 1 to 5 months after leaving Afghanistan.

                                  Appendix III
                           Summaries of Case Studies

443rd Military Police Number of mobilized unit soldiers' pays audited: 121
Company,  Period of mobilization: February 2003 to January 2004

Owings Mills, MD

Principal deployment location: Camp Cropper, Baghdad Airport, Iraq

Deployment duties: Guard Iraqi prisoners at Camp Cropper

Number of unit's soldiers with at least one problem with active duty pay
and allowance entitlements: 119 of 121

Pay and Allowance Problems Identified (by Phase)

                   Phase Number of soldiers with pay problems

                             Mobilization 70 of 121

                              Deployed 114 of 121

                            Demobilization 17 of 121

Source: GAO.

Overpayments identified (number of soldiers affected): $25,000 (48)

Late payments identified (number of soldiers affected): $20,000 (110)

Underpayments identified (number of soldiers affected): $15,000 (114)

Combat zone tax exclusion benefit problems identified: One hundred twelve
of the 114 unit soldiers deployed overseas received their combat zone tax
exclusion benefits at least 1 month late, totaling an estimated $33,000.
In addition, we identified $600 in under-withholding and $400
overwithholdings.

Examples of specific problems identified:

o 	Bi-weekly trips to Kuwait were required for 5 months to address unit
pay issues.

o 	One hundred thirteen soldiers did not receive their last month's
hardship duty pay.

Appendix III
Summaries of Case Studies

o 	Six unit soldiers were paid beyond their date of separation from the
Army, including 1 soldier who was overpaid about $10,500.

                                  Appendix III
                           Summaries of Case Studies

                                FORSCOM Support
                               Unit Finksburg, MD

Number of mobilized unit soldiers' pays audited: 1

Period of mobilization: March 2003 to May 2003

Principal deployment location: Camp Doha, Qatar

Deployment duties: Provided briefings to the Air Force's 379th
Expeditionary Force on the status and positions of Army and other
coalition ground forces

Number of unit soldiers with at least one problem with active duty pay and
allowance entitlements: 1 of 1

 Pay and Allowance Problems Identified (by Phase) Phase Number of soldiers with
                                  pay problems

                              Mobilization 0 of 1

                                Deployed 1 of 1

                             Demobilization 1 of 1

Source: GAO.

Overpayments identified (number of soldiers affected): $8,000 (1)

Late payments identified (number of soldiers affected): $300 (1)

Underpayments identified (number of soldiers affected): $0 (1)

Combat zone tax exclusion benefit problems identified: This soldier
received his combat zone tax exclusion benefit after he demobilized, an
estimated $2,500 late.

Examples of specific problems identified:

o 	Nearly a year of an estimated 20 phone calls, faxes, and letters to
DFAS and Army customer service representatives at five locations were
required to identify and resolve an overpayment of $8,000.

o  Did not receive any hostile fire pay until after he demobilized.

Appendix III
Summaries of Case Studies

o 	Soldier continued to receive active duty pays and allowances for a
month after demobilizing.

                                  Appendix III
                           Summaries of Case Studies

629th Transportation Number of mobilized unit soldiers' pays audited: 24
Detachment  Period of mobilization: March 2003 to January 2004

Fort Eustis, VA

Principal deployment location: Kuwait

Deployment duties: Tracking logistics supplies in and out of Kuwait

Number of unit soldiers with at least one problem with active duty pay and
allowance entitlements: 24 of 24

Pay and Allowance Problems Identified (by Phase)

                   Phase Number of soldiers with pay problems

                              Mobilization 5 of 24

                               Deployed 24 of 24

                             Demobilization 1 of 24

Source: GAO.

Overpayments identified (number of soldiers affected): $3,000 (24)

Late payments identified (number of soldiers affected): $14,000 (23)

Underpayments identified (number of soldiers affected): $2,000 (24)

Combat zone tax exclusion benefit problems identified: While we did not
attempt to quantify, nearly all soldiers deployed overseas received their
combat zone tax exclusion benefit at least 1 month late.

Examples of specific problems identified:

o 	Twenty-three of 24 soldiers deployed to Kuwait received duplicate
payments of $75 for hostile fire pay during their initial month of
deployment.

o 	Twenty-three of 24 soldiers were underpaid hardship duty pay for 1 to 2
months during their overseas deployment.

                                  Appendix III
                           Summaries of Case Studies

3423rd Military Intelligence Detachment New Haven, CT

Number of mobilized unit soldiers' pays audited: 11

Period of mobilization: December 2002 to December 2003

Deployment location: Ft. Belvoir, Virginia

Deployment duties: Analyzed intelligence information for U.S. Army
Intelligence and Security Command

Number of unit soldiers with one (or more) problems with pay and allowance
entitlements associated with active duty mobilization: 11 of 11

 Pay and Allowance Problems Identified (by Phase) Phase Number of soldiers with
                                  pay problems

                             Mobilization 10 of 11

                                Deployed 9 of 11

                             Demobilization 9 of 11

Source: GAO.

Overpayments identified (number of soldiers affected): $18,500 (10)

Late payments identified (number of soldiers affected): $5,000 (9)

Underpayments identified (number of soldiers affected): $4,000 (6)

Combat zone tax exclusion benefit problems identified: None, because the
soldiers were not eligible for this benefit.

Examples of specific problems identified:

o 	Nine soldiers erroneously began receiving the overseas cost of living
allowance, rather than the continental U.S. cost of living allowance, at
the beginning of the mobilization. This created $3,500 in overpayments and
$700 in late payments for the unit.

Appendix III
Summaries of Case Studies

o 	Nine soldiers continued to receive their active duty pays and
entitlements for 13 to 28 days after demobilization, resulting in $14,000
in overpayments.

                                  Appendix III
                           Summaries of Case Studies

431st Chemical Detachment Johnstown, PA

Number of mobilized unit soldiers' pays audited: 10

Period of mobilization: January 2003 to July 2003

Principal deployment location: Kuwait and surrounding locations

Deployment duties: Monitor battlefields for sign of nuclear, biological,
or chemical agents

Number of unit soldiers with at least one problem with active duty pay and
allowance entitlements: 10 of 10

 Pay and Allowance Problems Identified (by Phase) Phase Number of soldiers with
                                  pay problems

                              Mobilization 2 of 10

                               Deployed 10 of 10

                             Demobilization 0 of 10

Source: GAO.

Overpayments identified (number of soldiers affected): $12,000 (10)

Late payments identified (number of soldiers affected): $1,000 (8)

Underpayments identified (number of soldiers affected): $2,000 (10)

Combat zone tax exclusion benefit problems identified: While we were
unable to quantify, nearly all soldiers deployed overseas received their
combat zone tax exclusion benefit at least 1 month late.

Examples of specific problems identified:

o 	While deployed to Kuwait, (1) 8 of 10 soldiers did not receive their
first month's hostile fire pay and (2) all 10 soldiers did not receive
hardship duty pay for the first month after arrival overseas.

o 	All 10 soldiers continued to receive hardship duty pay payments for up
to 7 months following their return home, despite the unit administrator's
attempts to get the pay stopped through the unit's chain of command.

Appendix III
Summaries of Case Studies

The unit administrator also accessed the pay hotline at 888-PAY-ARMY, but
was placed on hold for such a long time that she gave up.

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