United States Government Publishing Office publisher pbl distributor dst United States Government Accountability Office Accounting and Information Management Division author aut Government Organization text government publication eng GAOREPORTS Legislative Agency Publications gao legislative 2010-08-12 U.S. Government Printing Office 1998-09-28 monographic deposited born digital 30 p. GA 1.13:AIMD-98-274 https://www.govinfo.gov/app/details/GAOREPORTS-AIMD-98-274 P0b002ee180394b74 f:ai98274 DGPO 2010-08-12 2011-03-28 GAOREPORTS-AIMD-98-274 machine generated eng fdlp REPORT GAOREPORTS-AIMD-98-274 AIMD-98-274 Financial management systems Department of Defense contractors Fraud Internal controls Financial records Contractor payments Air Force procurement White collar crime Computer security Erroneous payments Letter Report AIMD

As illustrated by two cases in which officials with contracting responsibilities tried to steal or embezzle more than $1 million, lax internal controls over the Air Force's vendor payment system--primarily the lack of segregation of duties among individuals--have left Air Force funds vulnerable to fraudulent and improper payments. As of June 1998, more than 1,800 employees of the Air Force and the Defense Finance and Accounting Service had a level of access to the vendor payment system that allowed them to enter contract information, including the contract number, delivery orders, modifications, and obligations, as well as invoice and receiving report information and remittance addresses. No single person should be able to control all key aspects of a transaction without appropriate compensating controls. This level of access allowed these employees to submit all the information needed to create fraudulent and improper payments. At the same time, the automated vendor payment system was plagued by computer security weaknesses, including inadequate password controls. Missing records, another indicator of weak internal controls, prevented GAO from reconstructing the complete history of the two Air Force contracts associated with fraud at Bolling Air Force Base. GAO also was unable to determine whether the Air Force received the goods and services paid for under these contracts because, in addition to missing records, several improper procedures were followed for receipt and control of equipment and services paid for under the contracts. GAO summarized this report, along with GAO/OSI-98-15, in testimony before Congress; see: Financial Management: Improvements Needed in Air Force Vendor Payment Systems and Controls, by Jeffrey C. Steinhoff, Director of Planning and Reporting in the Accounting and Information Management Division, before the Subcommittee on Administrative Oversight and the Courts, Senate Committee on the Judiciary. GAO/T-AIMD-98-308, Sept. 28 (17 pages). https://www.govinfo.gov/content/pkg/GAOREPORTS-AIMD-98-274/html/GAOREPORTS-AIMD-98-274.htm https://www.govinfo.gov/content/pkg/GAOREPORTS-AIMD-98-274/pdf/GAOREPORTS-AIMD-98-274.pdf GAO/AIMD-98-274 https://www.govinfo.gov/app/details/GAOREPORTS-AIMD-98-274 Letter Report GAO/AIMD-98-274; Financial Management: Improvements Needed in Air Force; Financial management systems Department of Defense contractors Fraud Internal controls Financial records Contractor payments Air Force procurement White collar crime Computer security Erroneous payments Title 10 Section 2307 10 U.S.C. 2307 Title 18 Section 1001 18 U.S.C. 1001