Financial Audit

Pursuant to a congressional request, GAO reviewed key aspects of the work that was done throughout the Army, the Navy, and the Air Force to verify the existence of military equipment as part of the fiscal year 1997 financial statement audit.

GAO noted that: (1) in June 1997, the Department of Defense Inspector General, the Army Audit Agency, the Air Force Audit Agency, the Naval Audit Service, and GAO began a cooperative effort to test the recorded number of items of military equipment in each of the military services; (2) the asset verification site visits were conducted from September 1997 through November 1997; (3) tests in the Navy involved seven categories of military equipment; (4) 8 of the Navy's 11 asset categories passed the existence test within established tolerances; (5) the remaining three categories had errors which exceeded the pre-established tolerances; (6) the sample of Army equipment was taken from property records at the unit level, not its central logistics system, using a two-stage sampling process; (7) tests in the Army involved five categories of military equipment; (8) each Army category passed its existence test within established tolerances at the unit level; (9) tests in the Air Force involved four categories of equipment; and (10) each Air Force asset category passed its existence test within established tolerances.