News – Improved accounting recovers millions – DVIDS

The Acquisition and Cross-Servicing Agreements (ACSA) initiative is an important diplomatic program between the United States, NATO and coalition partners that allows for the exchange of support and services like food, fuel and equipment. Money is paid in exchange for these services, but more importantly the program strengthens strategic relationships with partner nations around the world, ensuring that when help is needed – it’s available.

The proper accounting for these goods and services is crucial to maintaining positive relationships, and with that in mind, in 2019, the U.S. Army partnered with Defense Finance and Accounting Service (DFAS) and the Defense Logistics Agency (DLA) to form a working group to gain greater visibility into the program. This working group and a Government Accountability Office (GAO) audit found weaknesses and risks within the ACSA program. The audit highlighted seven findings primarily focused on the U.S. not properly pursuing collections for services provided to partner nations.

“Reviewing the findings from the audit, we knew that we needed to fix our process, form a better relationship with the Army and everyone involved, and start fixing what we knew was wrong,” Alyssa Ursi, a DFAS Rome accountant, and leader of the working group said.

Understanding the primary problems

The root of the main accounting issues stemmed from the fact that there is no integration between the DoD system of record, ACSA Global Automated Tracking and Reporting System (AGATRS) and the accounting systems. Simply put, these systems don’t automatically share data with one another.

AGATRS is logistics system that the Army uses for procurement or to provide goods or services, and all ACSA transactions must be initiated there. When order data from AGATRS is manually transferred to the accounting systems it has to have certain key data points such as partner country, location, what was provided and dollar value. If some of this data is missing, or categorized incorrectly, it won’t be picked up by the accounting systems.

“One of the biggest issues occurred when someone in logistics marked an order as complete before handing it off to accounting,” Ursi said. “If an order status is marked as complete that means the whole process is complete and payment was collected, not just complete from a logistics standpoint. So, those orders never showed up in accounting and if they’re not found within five years the goods or services are essentially provided for free.”

When orders are missed in accounting due to these issues it leads to a loss of purchasing power for the Army because the cost has to be absorbed, which in turn affects future appropriations and budget allocation.

The second biggest problem occurred after DFAS collected funds from the partner nation and notified Army finance that the order needed to be closed out in AGATRS. Closing out the order was a very manual process that required dual documentation between different systems. Additionally, the Army lacked the personnel needed to get the job done. These two problems compounded and created a significant backlog.

The impact of these problems

Though it’s not an accounting systems, AGATRS is the reporting system that Congress reviews. So, when Congress looks at a report and it shows the U.S. owes different amounts to partner nations and those nations owe certain amounts to the U.S., the numbers can be incorrect.

“Congress uses the reports from AGATRS to allocate budgets and run the ACSA program and when these errors happen, it’s not giving them a clear picture of what’s needed,” Ursi said.

In addition to the issue with Congress, and the loss of purchasing power for the Army, bad data had the potential to strain relationships with partner nations.

“If one system shows that a partner nation only owes 1 million dollars, and another system shows they owe 100 million dollars then the U.S. could try to collect on the wrong amount. That can create a bad relationship and the primary purpose for the ACSA program is to build positive relationships. So, it’s important to make sure the balances match.”

Collaborating to improve ACSA

To solve these issues it took a lot of collaboration between the Army and DFAS. The working group looked at how much time was spend on the current process, how much time could be saved through automation and whether improvements could be accomplished with current staffing levels.

The first task was bridging the gap between AGATRS and the accounting systems. After running an initial reconciliation comparing the accounting systems to AGATRS they found a 97 percent match rate. This means that most of what’s being reported in the accounting systems is also in the AGATRS system, which is positive. But, when they compared AGATRS to the accounting systems they only found a 77 percent match rate, which means that 23 percent of the orders in AGATRS were not found in the accounting systems due to the previously mentioned integration and misclassification issues.

Fixing the primary issue of missing key information or erroneous statuses in AGATRS, the working group focused on providing proper training for the logistics personnel putting orders in the system.

Then, to fix the problem with the backlog of orders that needed to be closed out, U.S. Army Central Command (ARCENT) worked with other commands to reduce the backlog and simplify the process for closing out orders in AGATRS.

This continuous effort to provide quality training and support to the Army logistics and finance communities led to some amazing results:

-The match rate from AGATRS to accounting increased from 77 percent to 84 percent.
-The backlog of order status completion was reduced by 27 percent.
-The total open accounts receivable balance was reduced by $35.3 million.
-The uncollectable balance was reduced by $10.9 million.
-The delinquent balance was reduced by $25.4 million.

The efforts to improve the accounting for ACSA are ongoing, but the work thus far proves that with determination and collaboration come remarkable outcomes.