Defense Finance and Accounting Service

Defense Finance and Accounting Service

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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]
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. This service-provider relationship with its customers has resulted in a continuous innovation and improvement in the quality of services DFAS provides. DFAS has steadily reduced its operating costs and has returned these savings to customers in the form of decreased costs. DFAS remains the world's largest finance and accounting operation.[3]

In FY 2016, DFAS:[3]

Mission, Vision, and Core Values

Mission

"To lead our customers in finance and accounting by ensuring the delivery of efficient, exceptional quality pay and financial information."

Vision

"To be a recognized leader in financial management by consistently delivering first-class service and products."

Core Values

Integrity: Doing what is right

Service: Striving to be a trusted financial partner 

Innovation: Applying creativity to increase value to DoD

History

Prior to 1990, each of the three 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

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).

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

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).”[8]

Major agency publications

The Department of Defense Financial Management Regulation (DoD FMR) is the major publication produced by DFAS. The FMR is issued under the authority of DoD Instruction 7000.14, DoD Financial Management Policy and Procedures. The DoD FMR directs statutory and regulatory financial management requirements, systems, and functions for all appropriated and non-appropriated, working capital, revolving, and trust fund activities.[8]

Many other reports, forms, and tables are generated by DFAS. Current and historical reports can be found on the Under Secretary of Defense (Comptroller) Financial Management Reports page. A few examples of reports include:

Forms and tables are published for by DFAS for use and for reference on the DFAS Military Members page. Examples of some forms that are available include:

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".[9]

Locations

See also

References

  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. 1 2 3 4 5 6 Defense Finance and Accounting Service. (2016, December 21). Agency Overview. Accessed on April 11, 2017.
  4. 1 2 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. 1 2 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

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