Financial Audit

Although GAO audited the Army's financial statements for fiscal years 1991 and 1992, GAO was unable to express an opinion on them due to the Army's many accounting system inadequacies and missing financial records. GAO concludes that existing internal controls fell short in (1) protecting the Army's $293 billion in reported assets, (2) ensuring material compliance with laws and regulations governing budget authority, and (3) eliminating material misstatements from the financial statements. Overall, GAO notes a host of serious problems, ranging from weak controls over cash and check processing to an unreliable system governing the disposition of $53 billion in military equipment. In the case of the Army's military payroll, for example, more than 2,200 individuals who had left the service, including deserters, continued to be paid. These unauthorized payments totaled more than $6 million.

GAO found that: (1) the Army lacked adequate internal controls and an accurate, reliable accounting system; (2) the Army did not materially comply with Department of Defense (DOD) financial policies, record retention requirements, or program activity reporting requirements; (3) weak internal controls limited the Army's ability to protect its reported assets, prevent material misstatements in its financial statements, and ensure material compliance with its budget authority; and (4) the Army could not ensure that its financial information was reliable because it had not implemented performance measures.