Industrial Funds

DOD Should Improve Its Accounting for Asset Capitalization Program Funds Gao ID: NSIAD-86-112 May 23, 1986

GAO reviewed the implementation of the Department of Defense (DOD) Asset Capitalization Program (ACP) to evaluate its progress and problems after 2 years of operation.

GAO found that: (1) although ACP is in its fourth year of operation, DOD accounting procedures do not separate ACP funds from those generated through charges to customers for goods or services; (2) DOD does not have the financial data to ensure that funds will be available for equipment acquisition when needed; (3) information on ACP is not sufficient to assure Congress that program requirements are being met; and (4) since fiscal year 1983, the funds available for industrial fund purchases have increased. GAO also found that: (1) although DOD has not updated its industrial fund regulations to provide for ACP accounting procedures, it has developed internal accounting reporting requirements, which will include ACP; (2) cash generated through ACP, if not separately accounted for, is used to finance operating costs other than ACP purchases; (3) the influx of ACP cash has enhanced the position of the industrial funds and avoided cash shortages; (4) DOD does not track the status or use of ACP funds; and (5) the establishment of separate cash accounts, reflecting ACP revenues, is one way that DOD can provide the controls necessary to ensure the availability of ACP funds.

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.

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