Unresolved Cost Accounting Standard 409 Noncompliance Issues at FMC and Northrop CorporationGao ID: NSIAD-83-13 July 26, 1983
GAO summarized its review of certain unresolved issues involving Cost Accounting Standard (CAS) 409, the depreciation of tangible assets, at FMC's Ordnance Division and Northrop Corporation's Aircraft Division.
GAO found that: (1) FMC Corporation's Ordnance Division is improperly using a depreciation method which does not reasonably reflect the expected consumption of services for its buildings and it is failing to estimate asset service lives as supported by historical records; and (2) Northrop's Aircraft Division is improperly using a method which does not reasonably reflect the expected consumption of services for its new aircraft and new buildings. GAO noted that these practices are not in compliance with CAS 409, and they have negatively affected the contracting processes at these locations since 1978. GAO also noted that these problems have often caused the Government to reimburse the contractors for excess depreciation charges.Recommendations
Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.Director: Paul F. Math Team: General Accounting Office: National Security and International Affairs Division Phone: (202) 275-4587