Financial Management

Pursuant to a congressional request, GAO reviewed the Army's stock fund balance, focusing on: (1) whether the Army could operate with less than an 11-day cash balance; (2) how refunds made to stock fund customers affected the 11-day cash balance; and (3) how stock fund customers used the refunds.

GAO found that: (1) from 1987 through 1989, the Army's stock fund operating cash balances ranged from 1.3 to 9 days; (2) the Army's stock fund could operate with less than 11 days of cash; (3) the Department of Defense established an 11-day requirement to ensure that cash was available to pay bills; (4) from fiscal years 1986 through 1989, the average operating cash balance monthly fluctuation was only 1.8 days; (5) in the past 5 years, the Army's stock fund has refunded $736 million to customers, resulting in a reduced operating cash level; (6) the Army merged over $600 million into other accounts, so it could not determine the monetary disposition; (7) the Army used $88 million in remaining refunds to improve readiness, support training, and purchase supplies; and (8) the Army used $28 million of the refunds for clothing, repair parts, and equipment purchases.