Industrial Funds

The Department of Defense's Management of ACP Funds Gao ID: NSIAD-90-202FS June 28, 1990

Pursuant to a congressional request, GAO provided information on aspects of the Department of Defense's (DOD) management of Asset Capitalization Program (ACP) funds, focusing on the DOD policy allowing industrial fund activities to obligate ACP funds without reserving the necessary assets to fund obligations as they became due.

GAO found that: (1) from fiscal years (FY) 1983 through 1989, Congress appropriated DOD total ACP obligation authority of about $5 billion for its five industrial funds; (2) during FY 1983 through 1989, DOD industrial fund activities disbursed about $4 billion for ACP contracts; (3) DOD had obligated an additional $1 billion for ACP contracts, but did not liquidate the funds; (4) DOD policies and procedures did not require industrial fund activities to retain the unexpended ACP funds or to establish cash reserves to pay the unliquidated obligations, and DOD believed that the industrial fund activities commingled unexpended ACP funds with other industrial fund assets which DOD spent on other industrial operations; and (5) since DOD did not establish cash reserves to pay the unliquidated ACP obligations, DOD funded prior-year obligations with current-year assets.



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