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GAO-01-37R 1 (2000-10-27)

handle is hein.gao/gaobaalmt0001 and id is 1 raw text is: GAO Acc ounta bity Integrity * Reliability United States General Accounting Office Washington, DC 20548 October 27, 2000 Mr. Charles P. Nemfakos Senior Civilian Official for the Office of the Assistant Secretary of the Navy (Financial Management and Comptroller) Subject: Financial Management: Improvements Needed in the Navy's Reporting of General Fund Inventory Dear Mr. Nemfakos: As a part of our annual audit of the governmentwide financial statements, we reviewed the compilation of the inventory line item included in the Department of the Navy's fiscal year 1999 Principal Financial Statements, which report general fund operations.2 Inventory reported by the general fund consists primarily of operating materials and supplies, which includes sponsor owned material,3 ammunition, contractor held material, and other classifications of inventory. The Navy does not have central reporting of general fund inventory, and the systems used to maintain accountability over inventory are not integrated with core accounting systems. Therefore, the Navy relies on manual data calls to compile inventory data for financial reporting. To review the compilation of the inventory line item, we reviewed the Navy information obtained through the data call process to evaluate the completeness and accuracy of reported inventory and to determine whether inventory was properly classified. However, because of the lack of system integration and central inventory management, it is not possible to ensure that all inventory owned by the Navy is identified through the data call process or 'Federal accounting standards define inventory as tangible personal property that is held for sale, operating materials and supplies consumed in normal operations, and stockpile materials held due to statutory requirements for use in national defense. 2General fund activities are funded by direct appropriations. In contrast, other Navy activities are funded by working capital funds, which are revolving funds used as a source of financing for supplies and services that will be paid for by the customer. 3Sponsor owned materials are items purchased, held, and managed by Navy program managers to support mission requirements for the production, life-cycle maintenance, and installation of weapon systems. GAO-01-37R Navy's Inventory Reporting

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