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![handle is hein.gao/gaobaawoe0001 and id is 1 raw text is:
DOCUhENT RESUME
04809 - 80245105] (gesiricted)
Cash and Investment 4anagement of Department of Defense
Nonappropriated Funds geed To Be Improved. FPCD-78-15; E-148581.
January 19, 1978. 19 pp. + 3 appendices (4 pp.).
Report to Rep. Jack prooks, Chairman, House Conmittee on
Government Operations: Legislation and National Security
Subcommittee; by Elmer B. Staats, Comptroller Generale
Issue Area: Personnel ainagement and Compensation (300).
Contact: Federal Personnel and Cokpensation Div.
Budqet Function: Natio'n~al Defense: Defense-reLated Activitie3
(054); General GOv nment: Central Fiscal Operations (803);
Interest: Ot1cr Intrest (902).
Organization concerned Department of Delense; Department of the
Air Force; Department of the Navy; Department cf the Army;
Department of the Treasury.
Congressional Relevance: House Committee on Government
Operations: Legislgtion and National Security Subcommittee.
Rep. J-qck Brooks.
The Peptrtmeat of Defense (LOD) supplements the cost of
morale, weltare, andtirecreation (MWR) programs with
nonappropriated funds.-These programs generate approximately $5
biii.ion in receipts gach year uhich are managed by central
offices in each military department. As of June 30, 1977,
central tunds had inyegtments totaling approximately $813
million. Findinqs/Conclusions: Several options were considered
for involving the Trqasury in holding and investing the -ash,
the most logical option being to transfer banking functions to
the Treasury and limit investments to Treasury obligations. This
practic? would be consistent with Federal fiscal and accounting
policies and would have the most safeguards, but it would reduce
interest income and investment flexibility. Management of NWR
activ-.ties did not maximize the effectiveness of cash and
investment functions, thus reducing interest earrings. while
many central activities used some centralized banking, the Army
and iarine corps did, not. In central banking, receipts from many
activities are pooled into one or a few banks, enabling central
management to inv-st jArger amounts of funds. Deficiencies noted
in investment management practices were: dtfe --'-teral
requirements were no+tbaing followed in all case ,-,
Navy, and Navy Resal,.5ysten Office had large percentages of
their central investkts concentrated in single banks or
qeoqraphic areas; thgArmy borrowed approximately $14 million to
invest at a higher rite of interest than allowed by DOD
instructions; the Aray lacked specific investment objectives and
policies; aiid the Marine Corps lacked central control over
revenues. Recommendations: The Secretary of Defense should:
direct the Army to a opt a centralized banking and accounting
system to establish formalized objectives, goals, and procedures
for cash flow management and to monitor its investment program;](ViewImageLocal?handle=hein.gao/gaobaawoe0001&div=1&collection=&method=preview&ext=.png&size=3)