Auditors fault DLA ERP for obliging manual financial statement processing


The Defense Logistics Agency paid accountants to manually calculate its fiscal 2012 trial balance despite spending more than $2 billion so far on an enterprise resource planning system that should have been able to automatically record transactional data, says the Defense Department office of inspector general.

The DLA is one of many Defense agencies with an ongoing ERP implementation program; in its case, the Enterprise Business System, a SAP-based system. In a March 20 report (.pdf), auditors say DLA officials didn't implement the DoD standard chart of accounts. DLA officials created the EBS system's posting logic and account structure before the comptroller's office issued the chart of accounts for DoD-wide implementation, leading them to determine that reconfiguring the system would be cost-prohibitive. It's not an assertion auditors disagree with, but they say DLA officials should have immediately assured that all SCOA reporting accounts had an EBS equivalent and developed a crosswalk between the two methods.

That lack of a crosswalk in particular meant that DLA has been unable to directly upload into the Defense Department Reporting System, meaning that officials at the Defense Finance and Accounting Services and the DDRS program management office developed their own crosswalk from EBS and SCOA utilizing a manual process in order to calculate DLA financial statements.

In addition, EBS program managers could demonstrate as of August 2012 only partial implementation of the DoD standard financial information structure and its attendant business rules (although in some cases, that's because the Deputy Chief Management Office itself didn't define business rules), resulting in incorrect transactional data records, auditors say.

As of August 2012, DFAS billed DLA more than $30 million for fiscal 2012 accounting functions. The inability of EBS to report data correctly and directly into DDRS caused DoD officials "to require DFAS personnel to continue gathering and reconciling manual data to develop a complete DLA trial balance," the report says.

Auditors lay some of the blame for the state of the affairs with EBS program managers who placed a higher priority on deploying the core system and implementing additional functions over SFIS compliance--and the investment review board that let a requirement for SFIS compliance slide in meetings held during fiscals 2010, 2011 and 2012.

Auditors say the DoD should restrict further EBS funding until the system contains SFIS business rules and SCOA compliance--something that the deputy chief information officer told auditors would be only partially possible, since EBS is also a supply chain system in addition to being the DLA general ledger.

"As of September 30, 2012, DLA obligated more than $2 billion to develop and deploy EBS without demonstrating that the system had the general ledger capability to provide the data necessary to produce an auditable statement of budgetary resources," auditors also say.

For more:
- download the report, DODIG 2013-057 (.pdf)

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