Pentagon Audit: Navy Spent $870M on ERP System, Did Not Use Asset Mgmt Function

The U.S. Navy spent $870 million to implement a new enterprise resource planning system but did not use the systems’ asset management functionality to manage military equipment.

Department of the Navy Office of Financial Operations officials were supposed to use the ERP system to manage more than $416 million in military equipment assets as counted in the Pentagon’s reporting system for audited financial statements, according to a Defense Department inspector general report dated July 18.

OFO officials also did not re-engineer the business process to record military equipment assets in the Navy ERP system, resulting in what the IG referred to as a “material weakness.”

According to the IG, the Navy having unauditable military equipment assets puts the Pentagon at risk of not achieving its goal of being audit-ready by fiscal year 2017.

The IG office recommends OFO officials re-engineer the business process used to record military equipment and
implement processes in the ERP system to record and support military equipment assets as required under the “DoD Financial Management Regulation.”