Defense Finance and Accounting Service

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Defense Finance and Accounting Service
Defense Finance Accounting Services (DFAS) Official Seal.png
Official seal
Defense Finance Accounting Services (DFAS) Official Logo.png
Official logo
Agency overview
Formed 1991
Headquarters Indianapolis, IN
Employees 12,000
Agency executives
  • ~Teresa (Terri) McKay, Director
  • ~Audrey Davis, Principal Deputy Director
  • ~ Dave McDermott, Deputy Director, Operations
  • ~ Jonathan Witter, Deputy Director, Strategy and Support[1]
Parent department Department of Defense
Website www.dfas.mil

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.[2]

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.[3]

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.[3]

In FY 2016, DFAS:[3]

  • 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

History[edit]

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.[4]

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.[3]

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.[5]

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.[3]

Establishing legislation[edit]

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.[4] 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[edit]

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.[6]

Major events in the history of the agency[edit]

  • 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[7]

Major laws associated with and/or enforced by agency[edit]

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).”[8]

Accounting Irregularities[edit]

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".[9]

Locations[edit]

See also[edit]

References[edit]

  1. ^ DFAS Leadership
  2. ^ Office of the Federal Register. (n.d.). Defense Finance and Accounting Service. In the United States Government Manual. Accessed on April 11, 2017.
  3. ^ a b c d e Defense Finance and Accounting Service. (2016, December 21). Agency Overview. Accessed on April 11, 2017.
  4. ^ a b Southerland, G. W. (1997). A Feasibility Study into the Use of a Single Local Financial Management System for the Department of the Navy (Unpublished thesis). Naval Postgraduate School, Monterey, California.
  5. ^ DFAS Portal Named Among the World's 10 Best Government Intranets – DSSResources.com
  6. ^ USA.gov. (n.d.). Defense Finance and Accounting Service. Accessed on April 11, 2017.
  7. ^ Defense Finance and Accounting Service. (2016). 2016 DFAS Annual Financial Report. Accessed on April 11, 2017.
  8. ^ Under Secretary of Defense (Comptroller). (current edition). DoD 7000.14-R, “DoD Financial Management Regulation.”
  9. ^ https://www.reuters.com/article/us-usa-audit-army-idUSKCN10U1IG
  10. ^ "Major General Emmett J. Bean Finance Center – Building History". U.S. General Services Administration. Archived from the original on April 28, 2011. Retrieved April 27, 2011. 
  11. ^ "Major General Emmett J. Bean Federal Center". U.S. General Services Administration. Retrieved April 27, 2011. 
  12. ^ "SunPower Solar Technology Selected for Multiple U.S. Federal Government Facilities". Electrical Line Magazine. Retrieved April 27, 2011. 
  13. ^ Carnes, W.H. Jr. (1994). U.S. Army Finance Center; in The Encyclopedia of Indianapolis (p. 1369). Indiana University Press.

Further reading[edit]

External links[edit]