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NSIAD-83-13 1 (1983-07-26)

handle is hein.gao/gaobabnax0001 and id is 1 raw text is: UNITED STATES GENERAL ACCOUNTING OFFICE WASHINGTON. D.C. 20548 NATIONAL SECURITY AND NTERNAT1ONAL AFFAIRS DIVISION B-21 0991 JULY 26, 1983 The Honorable Caspar W. Weinberger The Secretary of Defense Attention: Office of GAO Report Analysis Dear Mr. Secretary: Subject: Unresolved Cost Accounting Standard 409 Noncompliance Issues at FMC and Northrop Corporation (GAO/NSIAD-83-13) This report summarizes our review of certain unresolved issues involving Cost Accounting Standard (CAS) 409, Deprecia- tion of Tangible Capital Assets, at FMC's Ordnance Division Operations and Northrop Corporation's Aircraft Division. These issues have remained unresolved since 1978, despite considerable Department of Defense (DOD) contract administration, audit, and review activity. We believe, as discussed in enclosure I, that there is a sufficient basis for the responsible administrative contracting officers (ACOs) to settle these issues. Further, we believe available information suggests a determination that: --FMC's Ordnance Division is in noncompliance with CAS 409 for (1) using a depreciation method which does not reasonably reflect the expected consumption of services for its buildings and (2) failing to estimate asset service lives as supported by historical records. --Northrop's Aircraft Division is in noncompliance with CAS 409 for using a depreciation method which does not reasonably reflect the expected consumption of services for its new aircraft and new buildings. These unresolved issues have negatively affected the contracting processes at these locations since 1978. Over this period, the Government and these two corporations have spent a great deal of administrative time and effort on these issues, and this should be reason enough to expedite a resolution of this matter. (942074) U O~Cz~3 ~/1r3-

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