Financial Audit

GAO discussed its first comprehensive review of the Army's financial operations. GAO noted that: (1) as of September 30, 1991, the Army's financial statements reported a $17-billion inventory of spare parts and supplies, although the Army has acknowledged that the accuracy of its inventory records has been diminished by its failure to perform required physical inventories; (2) it does not agree that the Army's internal control weaknesses and the inaccuracies noted in the GAO financial audit provide reasonable assurance that the objectives of the Federal Managers' Financial Integrity Act were achieved; (3) the Department of Defense (DOD) has made significant changes in its financial organization and operations and is now moving to centralize control of financial operations, previously handled individually by the military services; (4) DOD initiated a number of comprehensive, long-term projects to streamline its administrative operations, such as implementing new or improved business methods through the use of modern automated systems, and improving the standardization, quality, and consistency of data from DOD automated information systems; (5) although DOD plans can be accomplished within the time frames stated, it will be some years before migratory systems are implemented and later still before new modern systems are seen; and (6) as federal agencies cope with weaknesses disclosed by audits, overall improvement in the financial management activities, as well as savings and benefits from reduced costs and efficiency improvements, can be anticipated.