department of defense agency financial report fiscal year 2012

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Department of Defense Agency Financial Report for FY 2012 Overpayments comprised 88 percent of the Military Pay improper payments, with less than 0.3 percent of the errors found through random reviews. These overpayments were reported as a result of separation debts (“out-of-service” debts, established after a member has left the service) and through collections reported by the Military Services. Root Causes. The primary reasons for improper payments (mostly overpayments) identified through all procedures (random reviews, out of service debts, and collections) result from administrative and documentation errors: • Basic Allowance for Housing (38 percent) resulting from incorrect reporting of the entitlement. • Base pay for Active Duty and incorrect Active Duty pay for Reservists (16 percent) resulting from incorrect reporting of the entitlement. • Hostile fire/imminent danger pay (10 percent) resulting from incorrect reporting of the entitlement. • Family separation allowance, Active and Reserve, (7 percent) resulting from incorrect reporting of the entitlement. • Miscellaneous categories, including results from underpayments, account for 29 percent of all improper payments. (Miscellaneous categories are comprised of over 25 different entitlements.) Nearly 100 percent of overpayments for Military Pay either were recovered or have an action in place to recover the overpayment. Collections for overpayments from current service members amounted to 61 percent of total recoveries with additional amounts identified through review of out of service debts (debts established and recovered after separation). Corrective Actions. The Department, primarily through DFAS, continues to work with the Military Services to advise them of the results of payment reviews and the associated reasons for the errors. Of specific interest, DFAS provides the Military Service financial managers with monthly reports on the results of random reviews, reasons for and dollar value of errors, and year-todate trends. Civilian Pay. As shown in Figure A-3, the Department projects 0.14 percent improper payments in Civilian gross pay, primarily overpayments, for FY 2012. Nearly 100 percent of the overpayments were identified through review of the accounts receivable due from current civilian employees. Because the A-56 Figure A-3. Improper Payment Rate – Civilian Pay 0.35% 0.30% 0.25% 0.20% 0.15% 0.10% 0.05% 0.00% B10-39 0.27% FY 2012 Target 0.16% 0.16% 0.14% 0.14% 0.14% 0.14% FY 2010 FY 2011 FY 2012 FY 2013 Target FY 2014 Target FY 2015 Target Addendum A
Department of Defense Agency Financial Report for FY 2012 employees remain employed with the Department, there is an action in place to recover the overpayment, generally through payroll offset. Root Causes. The Civilian Pay improper payments are primarily caused by untimely or inaccurate entry of information into the pay systems. • Time and attendance, 45 percent • Overseas and other allowances, 32 percent • Late personnel actions, 23 percent Because most government payroll systems base their time and attendance submissions on anticipated versus actual hours worked, the Department must correct overpayments and underpayments in a subsequent pay period. Collections of overpayments in the overseas Civilian Pay accounts often are attributed to repayment of overseas pay allowances that continued after the individual returned to the United States. These improper payments often result from initial inaccurate personnel actions generated by human resources offices. Corrections subsequently are generated by human resource offices and transmitted to the civilian payroll system. These corrections result in re-computing pay and allowances and creating a collection (Accounts Receivable) action to offset the overpayment. The initial improper payments are discovered through various sources, such as agency reviews, bi-weekly exception reports, and employee or supervisor notification. Corrective Actions. The Department, primarily through DFAS, continues to advise Components of the results of payment reviews and the associated reasons for errors that result in improper payments to civilian employees. The DFAS advises Components on best business practices to prevent future improper payments and participates at various conferences to instruct personnel on how to correctly submit information, such as changes to entitlements and to travel vouchers. Military Retirement. Based on FY 2012 reviews, DFAS projects approximately 0.02 percent in improper payments for the total outlays in the Military Retirement program (refer to Figure A-4), with almost the entire amount related to payments made to deceased retirees and annuitants. The primary reason for the decrease from 0.14 percent in FY 2010 to 0.02 percent in FY 2012 is due to DFAS re- A-57 Figure A-4. Improper Payment Rate – Military Retirement 0.16% 0.14% 0.12% 0.10% 0.08% 0.06% 0.04% 0.02% 0.00% B10-40 establishing a formal post-pay review section for Retired and Annuitant Pay, insourcing the function from a private sector contractor. This action enabled DFAS to expand reviews and 0.14% 0.04% FY 2012 Target 0.04% 0.02% FY 2010 FY 2011 FY 2012 FY 2013 Target 0.04% 0.04% 0.04% FY 2014 Target FY 2015 Target Addendum A
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