Pentagon urged to put executive in charge of financial overhaul

David Walker, head of the Government Accountability Office, said the Defense Department should create a new top management position whose responsibilities would include overhauling the agency's financial management systems.

At a hearing Thursday, the Senate Armed Services Committee questioned comptrollers from the armed services on why they continue to be plagued by financial management problems, and looked to Walker for guidance.

Sen. John Ensign, R-Nev., said it was "unacceptable" that pay delays and inventory mismanagement continue. He said he was tired of hearing that changes are under way with no signs of improvement. "Promises are not being kept," he said.

While conveying gratitude for troops serving abroad, the comptrollers assured the committee that they were putting much time and energy into implementing new systems and that they expected visible improvements over the next several years.

Defense, which is on the GAO's list of areas vulnerable to fraud, waste and abuse in nine areas, has gone through several unsuccessful reforms over the past 20 years. In his testimony, Walker noted that "DoD's financial management deficiencies, taken together, continue to represent the single largest obstacle to achieving an unqualified (clean) audit opinion on the U.S. government's consolidated financial statements." He added that he did not see a clear plan in place and that DoD's goal of having a clean audit by 2007 was unrealistic.

Walker said that though he believed agency leaders were committed to cleaning up financial systems, he recommended creating a new position of chief operating officer or chief management official. That individual would be charged with straightening out the agency's financial management systems.

Ensign said that the person should not be a policy expert or partisan, but rather strictly focused on operational aspects of the agency.

Walker declined to specify a date by which he believes Defense will be able to receive a clean audit because he said he cannot make such an estimate until he sees a plan in place. He said that it would take a top-level executive--the kind of person he recommended for the job--five to seven years.

Tina Jonas, undersecretary of defense, agreed that getting a clean audit may take longer than the current 2007 target. She said she was not at Defense when that date was chosen.

Valerie Lynn Baldwin, assistant secretary of the Army, said one reason soldiers are not getting paid on time is because the Army uses two separate systems for pay and entitlements, and the two systems don't "talk to each other." If a solder is mobilized from Kuwait to Iraq, she said, that soldier may not receive the higher pay he is due because the information is not transferred to the pay system.

In fact, she said, 31 percent of Army staffers, including the Army chief of staff, have experienced delays in paychecks, and "we don't know why." New software, she said, should help.

Walker noted the challenges of having so many distinct organizations within Defense, saying: "There are too many layers, too many players, and too many systems."

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