Addressing DOD's Feeder Systems Issues.As the Department of Defense (DoD) enters a new decade and millennium, it finds itself in the midst Adv. 1. in the midst - the middle or central part or point; "in the midst of the forest"; "could he walk out in the midst of his piece?"
midmost of the most extensive financial management reform efforts undertaken since its inception in September 1947. During the decade of the 1990s, the Department set into motion a number of strategic initiatives to enhance its financial management. Early in the decade, DoD established a Chief Financial Officer position to oversee and direct the Department's worldwide financial management operations. In 1991, DoD established the Defense Finance and Accounting Service The Defense Finance and Accounting Service (DFAS), an agency of the United States Department of Defense, provides finance and accounting services for the military and other members of defense.
In FY 2004, DFAS:
DFAS Decorative and Fine Arts Society (The Hague, Holland)
DFAS Dark Field Alignment System
DFAS Department of Fisheries and Aquatic Sciences ) to serve as the Department's primary agency for finance, accounting, and financial reporting. The newly constituted agency assumed responsibility for most of DoD's disbursement DISBURSEMENT. Literally, to take money out of a purse. Figuratively, to pay out money; to expend money; and sometimes it signifies to advance money.
2. and accounting operations, including associated systems. Shortly after its establishment, DFAS began drastically reducing the number of locations from which disbursement and accounting operations were carried out. Simultaneously, it developed and implemented strategic plans t o significantly reduce the number of accounting and finance systems used within DoD.
The above-cited initiatives, and others implemented throughout the Department over the last few years, have produced significant benefits and reduced costs. However, a major area of emphasis and concern has only recently received the concerted attention of management--feeder systems.
"Feeder systems"--the commonly used term by the DoD financial community for program systems that feed data to DFAS systems--are automated information systems The term automated information system means an assembly of computer hardware, software, firmware, or any combination of these, configured to accomplish specific information-handling operations, such as communication, computation, dissemination, processing, and storage of used extensively by DoD components for program management and mission accomplishment--both during times of conflict and peace. Such systems provide or "feed" financial data to DFAS accounting and/or finance systems to satisfy disbursement, accounting, and/or financial reporting purposes. Program systems that generate and provide financial information or financially-related information are subject to various financial management and accounting requirements mandated by the Federal Financial Management Improvement Act of 1996. 
DoD components maintain and operate numerous automated systems to manage war materiel ma·te·ri·el or ma·té·ri·el
The equipment, apparatus, and supplies of a military force or other organization. See Synonyms at equipment. , inventories, operating supplies, equipment, other physical assets, and human resources The fancy word for "people." The human resources department within an organization, years ago known as the "personnel department," manages the administrative aspects of the employees. . These systems are essential for military commanders to ensure they have the correct assets, both in type and numbers, to effectively carry out their missions. In the same token, these systems are needed to provide financial data--such as the cost of assets used, lost, or consumed during operations--and to assist in determining financial resources for future operations and asset replacement. While is it commonly assumed that federal financial management requirements pertain per·tain
intr.v. per·tained, per·tain·ing, per·tains
1. To have reference; relate: evidence that pertains to the accident.
2. only to financial reporting, the body of such requirements also pertains to asset and resource management, control, and visibility. 
DoD's fiscal year (FY) 1998 Financial Management Improvement Plan was the first comprehensive formal acknowledgement of DoD's feeder systems issues. The FY 1999 Plan includes a listing of 70 program systems the military services and Defense Agencies reported as being "critical" to their financial management.  The Office of the Under Secretary of Defense (Comptroller) has directed the owners of the reported systems to assess them and determine their compliance with applicable federal requirements. For those systems that do not substantially comply with requirements, the owners are to develop corrective action A corrective action is a change implemented to address a weakness identified in a management system. Normally corrective actions are instigated in response to a customer complaint, abnormal levels if internal nonconformity, nonconformities identified during an internal audit or plans, including estimated milestones and resources to complete. The systems assessments are to be completed and corrective action plans developed during FY 2000.
For the most part, DoD's logistical lo·gis·tic also lo·gis·ti·cal
1. Of or relating to symbolic logic.
2. Of or relating to logistics.
[Medieval Latin logisticus, of calculation communities, not its financial management personnel, operate such systems. Furthermore, in conducting audits of DoD entities' financial statements, DoD's financial auditors continually note deficiencies in feeder systems. These facts give rise to some basic issues to be addressed in correcting feeder systems deficiencies.
Primary Issues Related to Addressing Feeder Systems/Deficiencies
While various issues exist regarding correcting deficiencies in DoD's feeders, several principal ones prevail. These are: (1) general lack of expertise in the feeder systems communities in defining and interpreting applicable federal financial management systems requirements; (2) implementation of "transaction-driven" general ledger General Ledger
A company's accounting records. This formal ledger contains all the financial accounts and statements of a business.
The ledger uses two columns: one records debits, the other has offsetting credits. requirements; (3) providing summarized data for like financial transactions versus feeding detailed data for each individual transaction; and (4) handing deficiencies in mixed systems in which DFAS controls financial functions whereas the military services or Defense Agencies control non-financial functions.
Federal financial management systems requirements and concepts applicable to DoD's feeder systems are primarily promulgated prom·ul·gate
tr.v. prom·ul·gat·ed, prom·ul·gat·ing, prom·ul·gates
1. To make known (a decree, for example) by public declaration; announce officially. See Synonyms at announce.
2. by financial management experts or specialists at the Office of Management and Budget The Office of Management and Budget (OMB), formerly the Bureau of the Budget, is an agency of the federal government that evaluates, formulates, and coordinates management procedures and program objectives within and among departments and agencies of the Executive Branch. , the Department of Treasury, the Joint Financial Management Improvement Program, and the Federal Accounting Standards Advisory Board The Federal Accounting Standards Advisory Board (FASAB) is a United States federal advisory committee whose mission is to develop generally accepted accounting principles for federal financial reporting entities. . Conversely con·verse 1
intr.v. con·versed, con·vers·ing, con·vers·es
1. To engage in a spoken exchange of thoughts, ideas, or feelings; talk. See Synonyms at speak.
2. , many of the DoD personnel responsible for interpreting and implementing the requirements in the Department's feeder systems are not trained in the financial management disciplines. As such, their ability to correctly interpret applicable requirements and develop or modify their systems to comply with the requirements is at times necessarily limited.
Over the last several months, DFAS staff have met with DoD personnel responsible for implementing federal requirements in selected feeder systems and have begun providing guidance and interpretation. The military services and Defense Agencies have also enlisted the assistance of contractors, primarily CPA (Computer Press Association, Landing, NJ) An earlier membership organization founded in 1983 that promoted excellence in computer journalism. Its annual awards honored outstanding examples in print, broadcast and electronic media. The CPA disbanded in 2000. firms, and audit organizations to help define and interpret pertinent systems requirements and develop the related systems capabilities. DFAS, as an organization, is committed to assisting the military services and Defense Agencies in ensuring that feeder systems requirements are consistently implemented.
Transaction-driven General Ledgers
The most commonly cited deficiency by the Department's financial auditors in DoD's financial management systems is the lack of transaction-driven general ledgers. DFAS' core financial systems are responsible for implementing and maintaining general ledgers that conform to Verb 1. conform to - satisfy a condition or restriction; "Does this paper meet the requirements for the degree?"
coordinate - be co-ordinated; "These activities coordinate well" the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. Standard General Ledger (US SGL SGL
See Speculative Grade Liquidity Rating (SGL). ). All financial events and transactions that occur within DoD are to be recorded and their effects reflected in SGL accounts. Many of the transactions and financial events are initially captured or recorded in the DoD components' program systems. However, the financial effects of such transactions and events are not always recorded and updated in the DFAS core systems.
A common misinterpretation within the Department is that standard general ledgers should be developed and maintained within the feeder systems. No such requirement exists. federal systems requirements stipulate stip·u·late 1
v. stip·u·lat·ed, stip·u·lat·ing, stip·u·lates
a. To lay down as a condition of an agreement; require by contract.
b. that the general ledger function be resident in core financial systems (i.e., DFAS accounting systems), and that interfacing feeder systems be properly coded to provide necessary data to the core systems so that general ledger accounts can be updated. Of course, necessary internal controls must be implemented to ensure the account balances contained in the core systems are supported by and reconcilable rec·on·cil·a·ble
Capable of or qualified for reconciliation: reconcilable differences.
rec to financial transactions captured and reported by the feeder systems.
For the past four years, DFAS has worked on ensuring that its migratory migratory /mi·gra·to·ry/ (mi´grah-tor?e)
1. roving or wandering.
2. of, pertaining to, or characterized by migration; undergoing periodic migration.
emanating from or pertaining to migration. accounting systems  implement the US SGL. DFAS' goal is that by FY 2003, all of its migratory accounting systems comply with US SGL requirements. In turn, DFAS has begun working with the DoD components to help ensure their systems are capable of electronically interfacing with the DFAS core systems to update and support general ledger accounts. While significant work remains to be done, progress is being made.
Summarized Data versus Individual Transactions Data
Another frequent misinterpretation within the Department is that all financial transactions and events must be individually recorded in DFAS' core accounting systems. In other words Adv. 1. in other words - otherwise stated; "in other words, we are broke"
put differently , details of every transaction would be resident in DFAS' core systems. federal requirements stipulate that the effect of all financial transactions and events must post to standard general ledger accounts.
While it is permissible that every individual transaction post directly to a core system standard general ledger, the more logical and feasible approach is to program the feeder systems to capture data by standard financial transactions (such as recording asset consumption, loss and depreciation expense, updating inventory values based on weighted moving average method, etc.). Then, periodically the summarized results of the various transaction types are posted to the requisite general ledger accounts in the core systems.
DFAS' core systems are being developed to accept summarized standard transactions. The interfacing feeder systems, therefore, become the official systems of transaction data entry and maintain subsidiary details to support core systems balances. For example, transactions affecting property, plant, and equipment should be recorded in the Department's property systems and summarized on an integrated basis in the appropriate core accounting systems. In essence, the property systems serve as subsidiary support and detail for related general ledger accounts in the accounting systems.
Jointly-Owned Mixed Systems
A number of the 70 critical feeder systems reported in DoD's FY 1999 Financial Management Improvement Plan are jointly owned by DFAS and the military services/Defense Agencies. Some of these systems are "mixed systems" in that they contain, control, and report financial information as well as non-financial data. Generally, DFAS is responsible for maintaining and upgrading the financial modules in such systems, whereas the cognizant cog·ni·zant
Fully informed; conscious. See Synonyms at aware.
Adj. 1. military service/Defense Agency is responsible for the non-financial functionality. For a number of these systems, DFAS is "migrating" the financial functionality to its migratory accounting systems, leav1ing only the non-financial functions in the existing system.
Once the financial functions are transferred from these systems, they will still be subject to certain federal requirements, the same as other non-DFAS feeder systems--and, like the other feeder systems, it is important their owners ensure compliance with applicable requirements.
DoD has made sigufficant progress in addressing its financial management issues over the past decade. One of the Department's ultimate goals is the achievement of unqualified audit opinions on its annual financial statements. Current plans call for reaching this goal for the FT 2003 financial statements. Resolving financial management deficiencies in its critical feeder systems is a major hurdle facing the Department in achieving this goal. Howevei; with the cooperation, determination, and initiative of the Comptroller's office, DFAS, and the component organizations, the goal should be attainable in a reasonable timeframe.
(1.) The Armed Forces Comptroller presented an article by this author on federal requirements applicable to DoD feeder systems in the Winter 1999 issue. See Thomas, Gerald W "DoD's ritical Feeder Systems: Achieving Compliance With the Federal Financial Management Improvement Act of 1996," Armed Forces Comptroller, Vol. 44, No. 1, Winter 1999, pp. 15-17.
(2.) To illustrate, the inventory systems requirements document (FFMSR-7, June 1995) promulgated by the Joint Financial Management Improvement Program contains numerous requirements covering needs determination, inventory storage, disposition of items, planning, monitoring, and physical controls, as well as financial reporting.
(3.) OMB OMB
Office of Management and Budget
Noun 1. OMB - the executive agency that advises the President on the federal budget
Office of Management and Budget requires federal agencies to annually report their "critical" financial management systems and any material deficiencies associated with them. While not defined by OMB guidance, within DoD a critical financial management is one that materially affects or impacts an entity's (such as the Army, Defense Logistics Agency Noun 1. Defense Logistics Agency - a logistics combat support agency in the Department of Defense; provides worldwide support for military missions
Defense Department, Department of Defense, DoD, United States Department of Defense, Defense - the federal department , etc.) financial management, financial control, and/or financial reporting.
(4.) Migratory accounting systems are those systems selected by DFAS and DoD to be used henceforth From this time forward.
The term henceforth, when used in a legal document, statute, or other legal instrument, indicates that something will commence from the present time to the future, to the exclusion of the past. for the Department's accounting and financial reporting functions.
Gerald Thomas is Deputy Assisrant Director for Accounting Standards and Requirements, systems integration Directorate, Defense Finance ondAccaunting Service. He was appointed to this position in June 1996 after serving almost 20 years with the United States General Accounting Office (GAO). Mr Thomas is a Certified Public Accountant Certified Public Accountant (CPA)
An accountant who has met certain standards, including experience, age, and licensing, and passed exams in a particular state. (Maryland) and a Certified Government Financial Manager A Certified Government Financial Manager (CGFM) is a certification issued by the Association of Government Accountants (AGA). It was created in 1994 to provide a professional standard of financial expertise and ethics in government. . He graduated in July 1976 from East Carolina University East Carolina University is a public, coeducational, intensive research university located in Greenville, North Carolina, United States. Named East Carolina University by statue and commonly known as ECU or East Carolina in Green yule, NC with a Bs in Business Administration (accounting concentration). He is a member of the Association of Government Accountants.