Payment Processing: Documentation Procedures For Electronic Billing and Payment Under the Families First Personal Property Program.
This letter responds to a Department of the Army request for our views on whether certain payment procedures included in the Defense Department's (DOD) proposed Families First Personal Property Program conform with relevant criteria in GAO's Policy and Procedures Manual for Guidance of Federal Agencies. Families First is a DOD initiative to reengineer its processes for transporting household goods and personal property for its service members and civilians. Army's request is in response to a Defense Finance and Accounting Service (DFAS) recommendation that DOD seek our views specifically on whether the proposed procedures for electronic billing and payment meet the supporting documentation requirements in Title VII of GAO's Policy and Procedures Manual for Guidance of Federal Agencies. While the General Services Administration (GSA) is responsible for issuing federal regulations for transportation, including moves of household goods and personal property as well as agency prepayment and postpayment audit requirements for transportation payments, we are responsible for issuing fiscal guidance based on authorities in the U.S. Code. We considered DOD's proposed process of electronic billing and payment in light of our requirements established in Title VII for disbursements and related documentation. Our views are based on our understanding of DOD's planned implementation of the Families First program on a conceptual basis. We did not perform tests of the current or proposed system or validate information provided to us.
In order to respond to DOD's request, we contacted Army staff to gain an understanding of Families First. We considered additional information about the proposal provided by Army. We analyzed sections of the law pertaining to this request. We interviewed GSA staff concerning their audit responsibilities in the transportation area, including for Families First. As explained to us, Families First does not fully meet Title VII documentation requirements for federal payments because the documentation that DOD is to use as evidence of receipt of accessorial services does not provide adequate assurances about the propriety of these services. This is because the documentation is prepared by the transportation service provider (TSP) without independent corroboration upon preparation, and then the documentation is retained by the TSP. These documentation procedures increase the potential risk of improper transportation payments. Management must determine what changes to the documentation procedures or what additional controls will mitigate these risks so that the documentation requirements of Title VII are fully met. The objective of such controls should be to ensure that invoiced accessorial services are allowed, necessary, and were indeed rendered. Automated procedures do not reduce the need for effective internal control nor relieve a certifying/disbursing officer of his or her responsibility. These officers must have sufficient knowledge of the automated systems in order to carry out their responsibilities, and must make sure they can rely on the quality of the automated systems to ensure that transportation invoices authorized for payment are legal, proper, and correct.