Financial Management

Status of the Defense Business Operations Fund Gao ID: AFMD-92-79 June 15, 1992

Potential benefits of the Defense Business Operations Fund include reducing the Defense Department's (DOD) operations costs by providing managers with better information for making decisions. Key policies and systems necessary to run the fund in a businesslike way have not been fully developed and implemented, however. Although DOD plans to implement most of the fund's policies by the end of this fiscal year, it does not plan to select standard systems until early next year. DOD officials said that it will take another three years to make these systems fully operational. By taking short-term actions to improve the data quality in existing systems, DOD can more quickly realize the fund's cost-saving potential.

GAO found that DOD: (1) has not finalized the Fund's key policies involving cash management, intrafund transactions, and capital asset accounting; (2) has made little progress in improving the existing cost accounting systems used by the stock and industrial funds and has not finalized the requirements for the cost accounting system it plans to develop; (3) must ensure that management expertise and staffing levels are sufficient and prioritize financial management; (4) must enhance existing financial systems, implement new systems more effectively, and consider cost implications in its decisionmaking; and (5) plans to meet the deadlines GAO proposed for periodic progress in implementation of the Fund.

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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