The Defense Finance and Accounting Service (DFAS) is an agency of the United States Department of Defense (DOD), headquartered in Indianapolis, IN. DFAS was established in 1991 under the authority, direction, and control of the Under Secretary of Defense (Comptroller)/Chief Financial Officer to strengthen and reduce costs of financial management and operations within DOD. DFAS is responsible for all payments to servicemembers, employees, vendors, and contractors. It provides business intelligence and finance and accounting information to DOD decisionmakers. DFAS is also responsible for preparing annual financial statements and the consolidation, standardization, and modernization of finance and accounting requirements, functions, processes, operations, and systems for DOD.
One of the most visible responsibilities of DFAS is handling military pay. DFAS pays all DoD military and civilian personnel, retirees and annuitants, as well as major DoD contractors and vendors. DFAS also supports customers outside the DoD in support of electronic government initiatives. Customers include the Executive Office of the President, the Department of Energy, the Department of Veterans Affairs, the Department of Health and Human Services and the Broadcasting Board of Governors.
DFAS is a working capital fund agency financed by reimbursement of operating costs from its governmental customers (mostly the military service departments) rather than through direct appropriations. DFAS remains the world's largest finance and accounting operation.
In FY 2016, DFAS:
- Processed 122.4 million pay transactions (6.4 million people/accounts)
- Made 5.8 million travel payments
- Paid 11.7 million commercial invoices
- Maintained 151.8 million General Ledger accounts
- Managed $899 billion in Military Retirement and Health Benefits Funds
- Made $534.5 billion in disbursements
- Managed $479 billion in Foreign Military Sales (reimbursed by foreign governments)
- Accounted for 1,359 active DoD appropriations
Video Defense Finance and Accounting Service
History
Prior to 1990 each of the three (3) military departments (Department of the Army, Department of the Navy, and Department of the Air Force) and the other major governmental agencies developed and implemented their own accounting, budgeting, and financial management systems. This freedom of operation lead to numerous specialized systems that were incapable of communicating with one another. In 1990, there were 878 independent finance and accounting systems maintained within Federal Government Agencies.
In 1991 Secretary of Defense Dick Cheney created the Defense Finance and Accounting Service to reduce the cost of Defense Department finance and accounting operations and to strengthen financial management through consolidation of finance and accounting activities across the department. Since its inception, DFAS has consolidated more than 300 installation-level finance and accounting offices into 10 sites, and reduced the work force from about 27,000 to about 13,000 personnel.
In 2003 DFAS was selected by the Office of Personnel Management to be one of four governmental entities to provide payroll services for the U.S. government. In 2004, Nielsen Norman Group named the Defense Finance and Accounting Service's portal (ePortal) among the 10 best government intranets in the world. Experts at the Nielsen reviewed hundreds of intranets before naming the top ten which shared traits like good usability and organization, performance metrics and incremental improvements.
The 2005 round of Base Realignment and Closure cuts required DFAS to be completely restructured. Many sites were integrated into major centers. Since its inception, the agency has consolidated more than 300 installation-level offices into nine DFAS sites and reduced the number of systems in use from 330 to 111. As a result of BRAC efforts begun in FY 2006, DFAS has closed 20 sites, realigned headquarters from Arlington to Indianapolis and established a liaison location in Alexandria, Virginia.
Establishing legislation
The Chief Financial Officers Act of 1990 (31 USC 501, Pub. L. 101-576, title I, §101, Nov. 15, 1990, 104 Stat. 2838) and 10 USC 113 laid the groundwork for the Secretary of Defense to establish a more streamlined federal financial management structure. In late 1990, under the guidelines of the Department of Defense Directive (DoDD) 5118.5, the establishment of DFAS was announced in the Federal Register (55 FR 50179 (1990)). These guidelines were later codified in the Code of Federal Regulations in (32 CFR Part 352a).
Related agencies
The United States Department of Defense is the parent agency of DFAS. Defense Finance and Accounting Service Garnishment Operations Center and the Defense Finance and Accounting Service Out-of-Service Debt Management Center are subordinate agencies of DFAS.
Major events in the history of the agency
- 1991 DFAS founded
- 1992 Began consolidation of 300 field sites into 26 DFAS centers
- 1994 Began paying all DoD civilian employees; established centralized disbursing
- 1995 DoD establishes DFAS as a Fourth Estate Human Resources Regional Service Center
- 1998 Consolidated military pay operations into one system
- 2000 First unmodified financial statement audit opinion
- 2002 Received first unmodified audit opinion for Defense Commissary Agency and Defense Contract Audit Agency
- 2005 Base Realignment and Closure realigns DFAS into 10 sites
- 2006 Initiated Wounded-in-Action program providing real-time financial support to wounded service members
- 2007 Wounded Warrior Family Support Debit Card Program implemented providing funds to families of wounded warfighters
- 2010 Created Audit Readiness Directorate
- 2013 Achieved unmodified opinions on Statement on Standards for Attestation Engagement No. 16 for Civilian Pay, Military Pay, and Disbursing
- 2016 Achieved the 17th unmodified audit opinion for DFAS WCF Financial Statements
Maps Defense Finance and Accounting Service
Major laws associated with and/or enforced by agency
DFAS must "establish and enforce requirements, principles, standards, systems, procedures, and practices necessary to comply with finance and accounting statutory and regulatory requirements applicable to the Department of Defense." The DFAS responsibilities and authorities are outlined in DoD 7000.14-R, "DoD Financial Management Regulation (DoD FMR)."
Accounting Irregularities
A Department of Defense Inspector General's report noted that DFAS makes unjustified changes to accounting data in order to reconcile discrepancies, arbitrarily correcting numbers to match. The report also noted that DFAS could not produce accurate financial statements for the Army's General Fund because more than 16,000 financial data files were missing from its computer system. Jack Armstrong, a former Defense Inspector General, has reported that DFAS engages in "plugging", accounting jargon for making up numbers, and that DFAS staff refer to preparation of year-end statements as the "Grand Plug".
Locations
- Current locations:
- Major Sites
- Indianapolis, Indiana (Headquarters) - DFAS is headquartered in the MG Emmett J. Bean Finance Center, a 1,600,000-square-foot (150,000 m2) building that was part of Fort Benjamin Harrison. A solar panel system was installed on the roof of the building in 2010, allowing the building to generate 1.8-MW. Prior to housing DFAS, this location was known as the Finance Center, U.S. Army (1953-1972); U.S. Army Finance Support Agency (1972-1974); U.S. Army Finance and Accounting Center (1975-1991).
- Cleveland, Ohio
- Columbus, Ohio
- Limestone, Maine
- Rome, New York
- Europe
- Japan
- Smaller scaled back sites
- Alexandria, Virginia
- Texarkana, Texas
- Bratenahl, Ohio
- Major Sites
- Closed sites:
- Patuxent River, Maryland
- Charleston, South Carolina
- Dayton, Ohio
- Denver, Colorado - Lowry Air Force Base
- Kansas City, Missouri - Richards-Gebaur Air Force Base
- Lawton, Oklahoma
- Lexington, Kentucky
- Norfolk, Virginia
- Omaha, Nebraska
- Oakland, California
- Orlando, Florida - Naval Training Center Orlando
- Honolulu, Hawaii
- Pacific
- Pensacola, Florida
- Rock Island, Illinois
- St. Louis, Missouri
- San Antonio, Texas
- San Bernardino, California - Norton Air Force Base
- San Diego, California
- Seaside, California
See also
- Air Reserve Personnel Center, Denver, CO, former Lowry AFB
References
Further reading
- Scot J. Paltrow (November 18, 2013), "Faking It: Behind the Pentagon's Doctored Ledgers, a Running Tally of Epic Waste", Unaccountable: the High Cost of the Pentagon's Bad Bookkeeping, Reuters (2) -- The "second installment in a series in which Reuters delves into the Defense Department's inability to account for itself." Reports on the U.S. Defense Finance and Accounting Service and other agencies.
- Keating, E.G., Gates, S.M., Pace, J.E., Paul C., and Alles, M.G.. (2001). Improving the Defense Finance and Accounting Service's Interactions With Its Customers. Santa Monica, CA: RAND Corporation.
- United States. General Accounting Office. (May 28, 1998). Financial Management: Profile of Defense Finance and Accounting Service Financial Managers. Retrieved April 3, 2017.
- United States. Government Accountability Office. (June 23, 2014). DOD Financial Management: The Defense Finance and Accounting Service Needs to Fully Implement Financial Improvements for Contract Pay. Retrieved April 3, 2017.
- Under Secretary of Defense (Comptroller): Financial Management Reports. (n.d.). Retrieved April 3, 2017.
- McConnell, D. and Wang, R. (May 12, 2014). The Chief Financial Officers Act of 1990 and Financial Management at Department of Defense. Briefing paper number 48. Harvard Law School: Briefing Papers on Federal Budget Policy. Retrieved April 12, 2017.
- Defense Finance and Accounting Service. (2016). 2016 DFAS Annual Financial Report. Retrieved on April 11, 2017.
- Department of Defense. (2012, April 20). DoDD 5118.03, Under Secretary of Defense (Comptroller)/Chief Financial Officer, Department of Defense (USD(C)/CFO). Accessed on April 12, 2017.
- Department of Defense. (2012, April 20). DoDD 5118.05, Defense Finance and Accounting Service (DFAS). Accessed on April 11, 2017.
External links
- DFAS Official website
- Defense Acquisition Portal
Source of article : Wikipedia
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