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GAO-01-45R 1 (2000-10-24)

handle is hein.gao/gaobaalml0001 and id is 1 raw text is: I Accountability * Integrity * Reliability United States General Accounting Office Washington, DC 20548 October 24, 2000 The Honorable Helen T. McCoy Assistant Secretary of the Army for Financial Management and Comptroller General John G. Coburn, USA Commanding General, U.S. Army Materiel Command Mr. Thomas R. Bloom Director, Defense Finance and Accounting Service Subject: Financial Management: Reporting of Army Conventional Ammunition as Operating Materials and Supplies As part of our audit of the fiscal year 1999 governmentwide financial statements, we evaluated the Army's accounting practices and processes for reporting assets as operating materials and supplies (OM&S) on the Army's General Fund Balance Sheet.' Our evaluation identified problems in the financial reporting process for OM&S assets that caused a material understatement of the value of these assets reported on the Army's balance sheet for fiscal year 1999. These problems also resulted in errors in consistently reporting missile quantities as national defense equipment (NDE) in the Army's Supplementary Stewardship Report. In general, these problems can be attributed to the use of undocumented manual procedures for accumulating these balances at fiscal year-end. Such manual procedures are in place because DOD and the Army have not yet developed and implemented automated processes for accumulating these data. The purpose of this letter is to inform you of these issues and provide recommendations for improving the financial reporting of OM&S in the short term and ensuring that these issues are addressed in plans for automating this process in the future. Background Virtually all of the $18.9 billion the Army reported as OM&S assets for fiscal year 1999 consisted of ammunition stored in ammunition depots, on prepositioned ships, at government and contractor-owned production facilities, and at various Army installations worldwide. Assets stored in depots, on prepositioned ships, and at production facilities and managed by Army commodity managers assigned to the Army Materiel Command are referred to in Army terminology as wholesale-level assets. The Army manages wholesale-level ammunition assets using its wholesale logistics system, the Commodity Command Standard System (CCSS). On a monthly and year-end basis, the Defense Finance and Accounting 'Operating materials and supplies are reported on the Army General Fund Balance Sheet as a component of the Inventory and Related Property, Net line item. GAO-01-45R Army OM&S Financial Reporting

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