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Financial Management: Improvements Needed in the Navy's Reporting of General Fund Inventory

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As a part of the General Accounting Offices GAO annual audit of the governmentwide financial statements, it reviewed the compilation of the inventory line item included in the Department of the Navys fiscal year 1999 Principal Financial Statements, which report general fund operations. Inventory reported by the general fund consists primarily of operating materials and supplies, which includes sponsor owned material, ammunition, contractor held material, and other classifications of inventory. The Navy does not have central reporting of general fund inventory, and the systems used to maintain accountability over inventory are not integrated with core accounting systems. Therefore, the Navy relies on manual data calls to compile inventory data for financial reporting. To review the compilation of the inventory line item, GAO reviewed the Navy information obtained through the data call process to evaluate the completeness and accuracy of reported inventory and to determine whether inventory was properly classified. However, because of the lack of system integration and central inventory management, it is not possible to ensure that all inventory owned by the Navy is identified through the data call process or by our review. As GAO has previously testified, deficient logistics systems continue to impair the Navys ability to both effectively maintain visibility and prepare reliable financial reports for these assets. Over the long-term, the Navy will need to develop and implement integrated financial and logistical systems to provide for accurate financial reporting and improved visibility.

Subject Categories:

  • Administration and Management
  • Economics and Cost Analysis
  • Logistics, Military Facilities and Supplies

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