Financial Management

Army Conventional Ammunition Production Not Effectively Accounted for or Controlled Gao ID: AFMD-92-57 August 31, 1992

The Army's Ammunition Command, which is responsible for providing the U.S. military with conventional ammunition, cannot accurately account for and properly control an estimated $3.7 billion in conventional ammunition and component parts for fiscal year 1991. It cannot track the flow of material between government plants, does not control government-furnished material sent to contractors, and lacks systems and data necessary to reconcile differences in inventory between its logistics records and plant records. Further, the Ammunition Command does not have comprehensive cost data. Without such essential controls and complete cost reporting, the Army has no assurance that loss or theft will be detected and cannot identify changing cost trends in time to take prompt corrective action.

GAO found that: (1) existing AMCCOM systems and procedures do not effectively account for and control ammunition component movements, government furnished material at contractor-owned and -operated facilities, and reconciliations between its records and individual plant inventory records; (2) AMCCOM cannot ensure proper accounting for its ammunition and component parts or promptly detect any loss or theft; (3) plant managers do not always follow procedures and sometimes circumvent systems controls; (4) AMCCOM has no logistics records of government-furnished materials held by contractors; (5) the lack of logistics records and the failure of plants to perform required annual physical inventories make it impossible for AMCCOM to reconcile its records with individual plant records; (6) AMCCOM acknowledges its inventory problems but has not satisfactorily resolved them, and its development project for inventory control will not correct all problems; and (7) the Army's accounting, control, and reporting systems do not provide a reliable basis for determining the total cost of producing conventional ammunition.

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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