FINANCIAL AUDIT Air Force Does Not Effectively Account for Billions of Dollars_part9 pot

Air Force headquarters, Washington, D.C.; l Air Force Accounting and Finance Center, Lowry Air Force Base, Den- ver, Colorado; l Air Force Systems Command Headquarters, Andrews Air F

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Appendix I Consolidated Financial Statements of the U.S

Air Force for the Fiscal Year Ending September 30,1999

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Appendix II

-

U.S AIR FORCE COMPARISON BETWEEN CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AND TREASURY REPORT ON FINANCIAL POSITION

AS OF SEPTEMBER 30, 1988

Assets:

Funds With u S Treasury Appropriations to be provided Accounts receivable, neta Governmental

Public Inventories Property and Equipment:

Equipment Buildings Aircraft and Missiles Less accumulated depreciation Land

Other real property Construction in progress Aircraft under construction Missiles under construction Uninstalled propulsion units Other assets

Total Assets Liabilities:

Accounts payable Governmental Public Personnel accruals Annual leave Military leave Accrued payroll Separation allowance Deposit and trust fund Other

Total Liabilities Equity:

Invested capital Cumulative results of operations Unexpended appropriations

Total Equity TOTAL Liabilities and Equity

Consolidated statement (Dollars

$ 79.7 2.1 1.0

.7 63.8 26.8

19.7 92.2 (47.1)

.3

!*I:

14:9

3.3 6.9

17.5

.7 1.6

0 2

.l -43

183.0 4.8

Treasury

2.2 8 74.2 25.5 27.3

97.1

.2 1.6

$308

$ 13.9

5.0 6 9

.l 7k-k 221.1

4.3

aThese amounts include advances and prepayments which are shown as

separate line items in the Treasury Report

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Appendix II comparisons Between Air Force Financial Statementi and Treasury Reports

-,

U.S AIR FORCE CONSOLIDATED STATEMENT OF OPERATIONS AND TREASURY REPORT ON OPERATIONS

FOR THE YEAR ENDING SEPTEMBER 30, 1988

statement

9 (Dollars in billions Operating Revenues and

Financing Sources:

Real property maintenance

Total Operating Revenues

Other

Excess of Operating Expenses Over

aThis amount represents total industrial funds (i.e., airlift services, depot maintenance, real property maintenance and other)

Y

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III

Appcrdix

Objectives, Scope, and Methodology

During fiscal year 1988, the Air Force developed its first set of consolidated financial statements for external use We coordinated with the Air Force throughout this effort by providing technical assistance in developing the statements and footnote disclosures We also reviewed the accounts that comprise the financial statements and reviewed the Air Force’s financial management operations As a result of our review, we identified issues that need to be resolved not only to enable the Air Force to prepare accurate financial statements but also to improve its accountability and financial management This was the first comprehensive assessment of the Air Force’s financial management operations and, without a doubt, the largest, and arguably, the most complex audit ever undertaken

Our specific objectives for this review were to:

develop an understanding of the Air Force’s internal control environment;

identify and document the internal controls, both manual and auto- mated, that relate to recording, processing, summarizing, and reporting financial data;

identify and document the information streams of financial transactions from inception of a transaction to the reporting of the information to the Finance Center;

evaluate the adequacy and effectiveness of significant internal accounting controls; and

test events, transactions, or account balances to substantiate their accu- racy, completeness, and propriety

This review included coverage of the Air Force’s financial management operations and accountability for the primary resources-personnel, facilities, inventory, and equipment-it uses to accomplish its mission

We reviewed the Air Force’s policies relating to its organization, accountability procedures, and financial management We also consid- ered previous reports by GAO, Air Force Audit Agency, Department of Defense Office of the Inspector General, and Air Force pursuant to the Federal Managers’ Financial Integrity Act We discussed financial management operations and accountability procedures, functions, and processes with managers throughout the Air Force We identified internal controls in the accounting systems and operations for the primary resources Our audit tests focused on the key internal controls specifically related to financial management and accountability for resources Field work was performed at the following locations:

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Appendix III

Objectives, Scope, and Methodology

Air Force headquarters, Washington, D.C.;

l Air Force Accounting and Finance Center, Lowry Air Force Base, Den- ver, Colorado;

l Air Force Systems Command Headquarters, Andrews Air Force Base, Maryland;

9 Aeronautical Systems Division, Wright-Patterson Air Force Base, Ohio; Space Systems Division, Los Angeles Air Force Station, California;

l Electronic Systems Division, Hanscom Air Force Base, Massachusetts;

9 Contract Management Division, Kirtland Air Force Base, New Mexico; Air Force Wright Research and Development Center, Wright-Patterson Air Force Base, Ohio;

l Rome Air Development Center, Griffiss Air Force Base, New York; 4960th Test Wing, Wright-Patterson Air Force Base, Ohio;

l Air Force Office of Scientific Research, Bolling Air Force Base, Washing- ton, D.C.;

Air Force Logistics Command Headquarters, Wright-Patterson Air Force Base, Ohio;

9 Ogden Air Logistics Center, Hill Air Force Base, Utah;

San Antonio Air Logistics Center, Kelly Air Force Base, Texas;

l Warner Robins Air Logistics Center, Robins Air Force Base, Georgia; Oklahoma City Air Logistics Center, Oklahoma;

Randolph Air Force Base, Texas;

l Wurtsmith Air Force Base, Michigan;

Nellis Air Force Base, Nevada;

l MacDill Air Force Base, Florida;

l Langley Air Force Base, Virginia;

l Griffiss Air Force Base, New York;

Sembach Air Base, West Germany;

l Royal Air Force Lakenheath, England;

Hickam Air Force Base, Hawaii;

Kadena Air Base, Japan;

l Andrews Air Force Base, Maryland;

Air Force District of Washington, Bolling Air Force Base, Washington, D.C.;

l Tactical Air Command Headquarters, Langley Air Force Base, Virginia; Strategic Air Command Headquarters, Offutt Air Force Base, Nebraska;

9 Air Training Command Headquarters, Randolph Air Force Base, Texas;

l United States Air Forces in Europe, Ramstein Air Base, West Germany;

l Pacific Air Forces, Hickam Air Force Base, Hawaii;

l Military Airlift Command Headquarters, Scott Air Force Base, Illinois;

l Dover Air Force Base, Delaware;

l Travis Air Force Base, California; and

Rhein-Main Air Base, West Germany

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‘Appendix IV

Note: GAO comments

supplepenting those in the

report text appear at the

end of this appendix

See ccimment 1,

See comment 2

See comment 3

Y

COMPTROLLER OF THE DEPARTMENT OF DEFENSE

WASHINGTON DC 20301-1100

Mr Donald H Chapin Assistant Comptroller General Accounting and Financial Management Division U.S General Accounting Office

Washington, DC 29548-0001 Dear Mr Chapin:

This is the Department of Defense (DOD) response to the GAO draft report “FINANCIAL MANAGEMENT: Billion-dollar Decisions Made Using Inaccurate and Unreliable Air Force Data,” dated February 1, 1990 (GAO Code 917118/OSD Case 8193-A)

The Department is concerned that the report may mislead some readers into thinking that the Air Force has misstated the cost of its aircraft or other programs to the Congress

Accurate costs are reported to the Congress for weapon systems

through the Selected Acquisition Report data, as well as annually in the Procurement, Research and Development, and Construction appendices to the President’s Budget The DOD is aware that the Air Force accounting system, including financial controls over inventories and Government furnished property provided to contractors, needs improvement

The Defense Management Report embodies several major initiatives that specifically address the problems identified in the report These initiatives include major effort8 to improve accounting and material management systems and operations In addition, the Department has recently made several major policy changes to improve the management of inventories and equipment

Several of these initiatives are incorporated in the FY 1991 budget request recently submitted to the Congress

Implementation of these policy changes and initiatives will

resolve the problems cited in the report

The Department emphasizes that the Air Force has demonstrated its interest in enhancing ixs accounting efforts by

its willingness to prepare the prototype reports solicited by the GAO Notwithstanding the draft report contents, the Air Force continues to seek appropriate improvements, where warranted The DOD will endeavor to make accounting and reporting data more consistent in future reports

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comment* From the Department of Defense

2

The DOD responses to the recommendations are enclosed

Unfortunately, due to the short time available for providing

comments, the Department was unable to provide its Usual

comprehensive response, including the milestone/completion dates

for the corrective actions A comprehensive response will be

provided on the final report The DOD appreciates the

opportunity to comment on this draft report

Cordially,

Enclosure

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Appendix IV Commenta From the Department of Defense

See comment 4

GAO DRAFT REPORT - DATED FEBRUARY 1, 1990 (GAO CODE 917118) OSD CASE 8193-A

"FINANCIAL MANAGEMENT: BILLION-DOLLAR DECISIONS MADE USING

INACCURATE AND UNRELIABLE AIR FORCE DATA"

RX.OMMNDATIONS

* l * * *

0 Recommendation No 1: The GAO recommended that the Secretary

of the Air Force develop an overall plan specifying corrective actions and milestones for the Air Force to produce

consolidated financial statements in accordance with Title 2 that will be submitted to us for audit

DoD Response: Partially Concur The Air Force will be required to develop a plan for taking appropriate corrective actions needed to adhere to required Executive Branch financial statement requirements

of the Air Force give high priority to developing an integrated accounting system capable of generating reliable financial management reports on a timely basis

DoD Response: Partially Concur A Defense Management Report initiative provides for the development of DOD-wide financial management functional requirements This initiative enjoys a high DOD priority

of the Air Force develop management reports designed to assist

to achieve cost-effectiveness and efficiency

DoD ResDonse: Partially Concur A Defense Management Report initiative provides for the development of DOD-wide financial management functional requirements

o Recommendation No 4: The GAO recommended that the Secretary

of the Air Force direct his Chief Financial Officer to correct deficiencies identified in existing systems to the fullest extent possible

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A p p e n d i x W

C o m m e n t s F r o m the D e p a r t m e n t of D e f e n s e

S e e c o m m e n t 4

Q o D R e m o n s ~ r Concur R e q u i r e m e n t s currently exist in the Air F o r c e r e q u i r i n g correction of these deficiencies T h e Air

F o r c e will r e e m p h a s i z e these requirements

0 R e c o m a k e n d a t i o n No 5 T h e G A O r e c o m m e n d e d that the Secretary

of the Air F o r c e dir&t his Chief Financial O fficer to investigate u n u s u a l a n d a b n o r m a l account balances

D o 0 R e a w n s e a Concur R e q u i r e m e n t s currently exist in the Air F o r c e for the investigation of u n u s u a l a n d a b n o r m a l account balances

requirements T h e Air F o r c e will r e e m p h a s i z e these

0 R e c o m m e n d a t i o n No 4: T h e G A O r e c o m m e n d e d that the Secretary

of the Air F o r c e direct his Chief Financial O fficer to p e r f o r m

a periodic c o m p a r a t i v e analysis of account b a l a n c e s from o n e

p e r i o d to the next a n d follow u p a n d e x p l a i n significant variances

D o D R e s w n s e : Concur R e q u i r e m e n t s currently exist in the Air F o r c e r e q u i r i n g periodic c o m p a r a t i v e analysis of account balances T h e Air F o r c e will r e e m p h a s i z e these requirements

o R e c o m m e n d a t i o n No 7: T h e G A O r e c o m m e n d e d that the Secretary

of the Air F o r c e direct his Chief Financial O fficer to perform, to the fullest extent possible in light of existing systems deficiencies, c o m p a r a t i v e a n a l y s e s of o p e r a t i n g units across tim e p e r i o d s a n d of other cost centers to d e t e r m i n e efficiency of operations

D o 0 R e s p o n s e : Concur R e q u i r e m e n t s currently exist in the Air F o r c e r e q u i r i n g c o m p a r a t i v e a n a l y s e s to d e t e r m i n e

efficiency of operations T h e Air F o r c e will r e e m p h a s i z e these requirements

o R e c o m m e n d a t i o n No 8 T h e G A O r e c o m m e n d e d that the Secretary

of the Air F o r c e direct his Chief Financial O fficer to

a c c u m u l a t e a n d report actual costs of e q u i p m e n t in a c c o r d a n c e with Title 2

D o D R e s D o n s e r Partially Concur A D e f e n s e M a n a g e m e n t R e p o r t initiative p r o v i d e s for the d e v e l o p m e n t of D O D - w i d e financial

m a n a g e m e n t functional requirements

0 R e c o m m e n d a t i o n No 9 T h e G A O r e c o m m e n d e d that the Secretary

of the Air F o r c e dir&t his Chief Financial O fficer to

g e n e r a t e m o r e reliable a n d c o m p l e t e financial information for reports to the D e p a r t m e n t of the T r e a s u r y a n d for a n n u a l consolidated financial statements

D o 0 R e s w n s e t Concur A p p r o p r i a t e action will b e initiated consistent with Executive B r a n c h requirements

P a g e 1 0 4 G A O /A F M D - S O - 2 3 A i r F o r c e Financial A u d i t

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Appendix IV Comments From the Department of Defense

of the Air Force direct the Chief Financial Officer to report the internal control problems with reconciliations and documentation for adjustments in Federal Managers’ Financial Integrity Act reports to the Secretary of Defense

Concyr

nternal controls will be identified in future Air Force

Federal Managers’ Financial Integrity Act reports

of the Air Force direct the Chief Financial Officer to reconcile subsidiary records periodically to the control accounts and correct errors and weaknesses

DoD Response: Concur Current DOD accounting policies require periodic reconciliations Incidents cited by the GAO represent instances of noncompliance with these policies

Appropriate corrective action will be directed

of the Air Force direct the Chief Financial dfficer to reconcile disbursements with obligations and promptly correct

errors

DOD Response: Concur The most significant problems exist when payments are made for the Air Force by others Solutions

to these problems are being aggressively pursued as a result

of the Defense Management Report initiatives

of the Air Force direct the Chief Financial Officer to document all adjustments to subsidiary records and control accounts

DoD Response Concur Air Force directives currently require documentation for adjustments to subsidiary records and control accounts These requirements are not being followed in all cases This results in a compliance problem requiring increased management attention The Defense Management Report initiatives are also expected to help resolve such problems

of the Air Force direct the Chief Financial Officer to enforce Air Force’s requirement that supervisors and managers review and approve all significant adjustments

DoD Response: Concur The need for adjustments to be

reviewed and approved will receive greater emphasis

Tiêu đề	Financial Audit Air Force Does Not Effectively Account For Billions Of Dollars
Trường học	U.S. Air Force
Chuyên ngành	Financial Audit
Thể loại	Báo cáo tài chính
Năm xuất bản	1999
Thành phố	Washington

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Số trang	12
Dung lượng	863,38 KB