Accession Number:

ADA621508

Title:

Army Needs to Improve Processes Over Government-Furnished Material Inventory Actions

Descriptive Note:

Corporate Author:

OFFICE OF THE INSPECTOR GENERAL (DEPARTMENT OF DEFENSE) ARLINGTON VA

Personal Author(s):

Report Date:

2015-05-21

Pagination or Media Count:

43.0

Abstract:

We determined whether the Logistics Modernization Program LMP system correctly recorded Army inventory actions for Government-furnished material GFM in the general ledger accounts and accountability records. The Army did not correctly record GFM inventory actions in Army financial and accountability records. Specifically, in FY 2014, Army Working Capital Fund AWCF activities expensed about 40.2 million in GFM upon shipment to contractors. This occurred because Assistant Secretary of the Army Financial Management and Comptroller ASAFMC and Army Materiel Command AMC provided LMP Product Management Office an erroneous functional requirement. Army General Fund AGF activities inappropriately expensed 85 million in GFM transactions during FY 2014 that originated in LMP. This occurred because Army inappropriately used the purchase method when it accounted for GFM. Additionally, LMP s Management Control Activity MCA table did not contain complete and accurate data necessary to maintain visibility or meet reporting requirements of GFM. This occurred because Army did not build the business process functionality or provide sufficient oversight to ensure the reasonableness and quality of data entered into the LMP MCA table met financial reporting requirements. As a result, Army did not report GFM in the AGF and AWCF financial statements, understating Army assets and overstating expense accounts by at least 125.2 million, placing Army s audit readiness at an increased risk for not meeting FY 2017 auditability goals. In addition, without proper accountability records to maintain adequate control over GFM, the Army must rely on individual contractors to report the status of GFM in their respective reporting systems.

Descriptors:

• *INVENTORY
• *LOGISTICS MANAGEMENT
• ACCOUNTABILITY
• AUDITING
• LIFE CYCLE MANAGEMENT
• MATERIALS
• RECORDS
• REQUIREMENTS

Subject Categories:

• Administration and Management
• Logistics, Military Facilities and Supplies

Distribution Statement:

APPROVED FOR PUBLIC RELEASE