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AIMD-94-7R 1 (1993-10-12)

handle is hein.gao/gaobackku0001 and id is 1 raw text is: ISooqi United States General Accounting Office Washington, D.C. 20548 Accounting and Information Management Division B-249045 October 12, 1993 The Honorable William J. Perry Deputy Secretary of Defense Dear Dr. Perry: In April 1993, the Secretary of Defense directed a Department of Defense (DOD) wide review of the implementation and operation of the Defense Business Operations Fund. This letter provides our comments on the results of the DOD-wide review and suggestions for improving the implementation of the Fund. The DOD-wide review endorsed the continuation of the Fund but, at the same time, confirmed the problems that we have identified with the Fund's implementation and operation.' To correct these known problems, DOD developed the Defense Business Operations Fund Improvement Plan. We have reviewed the Improvement Plan and have the following overall concerns: (1) exclusion of certain overhead support costs from the prices charged customers is contrary to the total cost concept of the Fund, (2) immediate actions are needed to correct the serious cash management problems, (3) short-term actions are needed to improve the accuracy and reliability of the financial reports, and (4) completion dates for correcting the Fund's Implementation problems appear overly optimistic. In addition, although DOD has established a management approach for correcting the Fund's problems, we have concerns largely because that management structure lacks the overall authority for ensuring that the Fund's problems are corrected. We are convinced of the soundness of the Fund's concept and principles-end--have-been supportive of this initiative. Clearly, a properly functioning Fund is essential to DOD achieving the cost efficiencies the new administration has set as a goal. The benefits which can be derived from the 'Appendix I lists the products we have issued on the Fund. GAO/AIMD-94-7R Defense Business Operations Fund

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