United States Army Annual Financial Statement - Office of the Under ...

Management Integrity
The Army’s approach to assuring management
control and integrity is anchored in the fundamental
philosophy that all commanders and managers have
an inherent management control responsibility.
The Headquarters Department of the Army (the
Integrating Subsystem) functional proponents are
responsible for establishing sound management
controls in their policy directives and for exercising
oversight to ensure compliance with these policies.
Commanders and managers throughout the Army
are responsible for establishing and maintaining the
control and integrity of their operations.
In the 21 reporting years since the inception of
the Army’s management control process, Army
commanders and managers have reported 1,371
material weaknesses to the Secretary. These were
the weaknesses remaining after a fi ltering and
value-added reporting process from line managers
up through each higher echelon of management.
After aggregating similar problems and weeding out
lesser issues, the Army reported 231 new material
weaknesses to DoD. Only 12 of these remain open.
The following is the status of the material weakness:
Open material weaknesses as of
September 30, 2003 13
Plus: New material weaknesses
identifi ed in FY 2004 1
Less: Material weaknesses corrected
in FY 2004 2
Open material weaknesses as of
September 30, 2004 12
Weakness Identifi ed During FY 2004
The Army identifi ed one new management control
weakness during FY 2004. The following section
provides a brief description of the weakness and the
target date for correction.
Logistics Asset Visibility and Accountability
The Army does not have adequate visibility over all
requisitions, equipment, and supplies transported to,
from, and within Theaters of operation, nor across
the Army. The supply chain does not effectively
support asset visibility and distribution capability in
Theaters of operation, nor can it effectively manage
General Fund – Management’s Discussion & Analysis — 20
and transport the large amount of supplies and
equipment deployed to support signifi cant Theater
operations such as Operation Iraqi Freedom. Army
policies have reduced stock levels and numbers
of items carried on prescribed load listings and
authorized stockage lists. The result is a lean supply
chain without the benefi t of either an improved
distribution system or an enhanced information
system.
A United States Government Accountability Offi ce
(GAO) letter dated December 18, 2003, Subject:
Defense Logistics Observations on the Effectiveness
of Logistics Activities During Operation Iraqi
Freedom documented the fact that logistics asset
visibility, in conjunction with Theater distribution
and integrated supply chain, is a material weakness.
In addition, these weaknesses were identifi ed in
after-action reviews with commanders and Soldiers
at deployed sites and supporting personnel involved
in the day-to-day support of deployed forces.
Forums included the Offi ce of the Deputy Chief of
Staff (ODCS) G-4 Class IX Supply Policy Summit
General Offi cer Steering Committee August 4,
2003, and the Combined Arms Support Command
(CASCOM) OIF Distribution review March 10-12,
2004.
Radio Frequency Identifi cation (RFID) that tracks
assets shipped to and within Theater is now fully
supported within DoD and is being expanded and
integrated into the Joint Distribution Systems of
Record. The use of RFID is being instituted in
resident training within Army logistics schoolhouses
but still not used in a uniform and consistent manner
at the tactical level. The Army has taken measures
to improve tactical communications, but many
small units do not have continuous assured access
to use DoD logistics and asset visibility systems.
DoD distribution systems are now linked to the
RFID In-Transit Visibility servers and are capable of
exchanging data to maintain inside the box content
level visibility of shipments. Training has improved
for DoD and service personnel on the use of RFID
tags and other tracking tools, but is not fully
instituted in doctrinal publications for effective asset
visibility.
For an extended period of time during Operation
Iraqi Freedom, a discrepancy of $1.2 billion worth of