Financial Management

Air Force Systems Command Is Unaware of Status of Negative Unliquidated Obligations Gao ID: AFMD-91-42 August 29, 1991

Pursuant to a congressional request, GAO examined the negative unliquidated obligations (ULO) associated with the purchase of weapon systems and equipment at the Air Force Systems Command (AFSC), focusing on: (1) the magnitude, age, and causes of negative ULO for contracts jointly administered by AFSC product divisions and the related Air Force payment activity handled by the Defense Finance and Accounting Service (DFAS); and (2) the adequacy of controls to ensure that any overpayments that could cause negative ULO are promptly recorded as receivables and collected.

GAO found that: (1) since the AFSC managers lacked information on the status of negative ULO they were responsible for, they were unable to determine the magnitude, age, and causes of negative ULO and could not ensure that they were promptly corrected; (2) the product divisions did not have routine reports on the magnitude and age of negative ULO in their accounting records; (3) a GAO analysis of $126 million in negative ULO disclosed that the causes for $69 million were unknown, and of the remaining $57 million, $54 million of negative ULO were caused by processing errors and $3 million were related to overpayments; (4) about $50 million of the $126 million in negative ULO were at least 2 years old, ranging to over 6 years; (5) since the Air Force did not record identified overpayments as receivables in its accounting records, it could not ensure prompt collection action or that reported receivable balances were accurate; and (6) not aggressively identifying and correcting the cause of negative ULO could result in obligations in excess of available appropriations, result in losses if caused by overpayments, and conceal availability of funds that could be used to meet other Air Force requirements.

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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