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AIMD-95-91R 1 (1995-02-21)

handle is hein.gao/gaobacktg0001 and id is 1 raw text is: r1AO United States General Accounting Office Washington, D.C. 20548 Accounting and Information Management Division B-260468 February 21, 1995 The Honorable John A. Koskinen Deputy Director for Management Office of Management and Budget Dear Mr. Koskinen: This letter is in response to a December 19, 1994, request for comments on the Office of Management and Budget's (OMB) proposed criteria and the tentative designation of agency components that should submit separate audited financial statements beginning with fiscal year 1996. We support the overall thrust of OMB's proposed guidance, but we believe that the criteria should be strengthened to direct that agency components be designated in a manner consistent with agency management operations and responsibilities. Consistent with this change in criteria would be the addition of the Army, Navy, and Air Force components of the Defense Business Operations Fund (the Fund) to the final list of organizations required to submit audited financial statements. OMB's proposed guidance, if it incorporates our suggested modifications, would go a long way toward ensuring that appropriate military service support components are identified for financial statement preparation and audit. As we have discussed with OMB staff, we are very concerned about the Department of Defense's (DOD) plans to abandon its current approach of having audited financial statements for the military services' support organizations that the Fund finances. In our view, this planned approach is clearly inconsistent with (1) DOD and congressional views on the Fund's operational and financial management alignment and (2) the Federal Accounting Standards Advisory Board's (FASAB) proposed recommendation setting out criteria to be used in defining entities that should submit audited financial statements. Further, we believe that this change to DOD's audit approach would greatly diminish the potential value of the audits in improving financial management within DOD. GAO/AIMD-95-91R Agency Component Criteria

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