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AIMD-96-37R 1 (1996-02-12)

handle is hein.gao/gaobaclbl0001 and id is 1 raw text is: GA O United States General Accounting Office Washington, D.C. 20548 Accounting and Information Management Division B-271042 February 12, 1996 Ms. Phyllis A. Hudson, Director, Defense Finance and Accounting Service, Cleveland Center 1240 East Ninth Street Cleveland, Ohio 44199-2055 Dear Ms. Hudson: As part of our broad review of the Navy's fiscal year 1994 financial operations, we examined appropriation balances reported for undelivered orders, along with related balances for accounts payable, for the approximately 200 appropriations reported by the Navy as of September 30, 1994. Our review was conducted in accordance with generally accepted government auditing standards. We identified two appropriations where Defense Finance and Accounting Service, Cleveland (DFAS-Cleveland) staff reduced undelivered orders with unsupported adjustments totaling about $72 million. DFAS-Cleveland staff said they made these adjustments pursuant to their practice of routinely eliminating negative undelivered orders balances from the Report on Budget Execution (DD 1176) whenever such balances arose without first researching the transactions on which they were based. Your staff advised us that they have discontinued this practice as a result of our having brought it to their attention during our review. The purpose of this letter is to bring to your attention the conditions we found regarding the handling of negative undelivered orders by DFAS-Cleveland and to request supporting documentation regarding process changes and accounting adjustments discussed below. Eliminating Negative Undelivered Orders Can Be Misleading A negative balance for undelivered orders is a red flag, signaling a problem that needs to be investigated and resolved.' It could indicate that (1) obligations 'The situation where disbursements exceed obligations is part of a larger (continued...) GAO/AIMD-96-37R Navy Negative Undelivered Orders (Q (5-b

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