B-140389, AUG 21, 1974

B-140389, AUG 21, 1974

PRECIS-UNAVAILABLE

CAPTAIN L. E. HOPKINS:

WE REFER TO YOUR LETTER DATED JUNE 26, 1974, WITH ENCLOSURES, FURNISHING FOR OUR REVIEW AND COMMENT PROPOSED CHANGES TO ASPR POLCIY AND PROCEDURES TO ENCOMPASS THE FINANCIAL ACCOUNTING FOR GOVERNMENT OWNED PROPERTY IN THE POSSESSION OF CONTRACTORS AS CONTAINED IN ASPR APPENDICES B AND C AND ASPR SUPPLEMENT 3.

THE PROPOSED CHANGES RESULTED FROM REPORTS BY GAO AND DOD AUDITORS RECOMMENDING THE NEED FOR STRONGER FINANCIAL CONRTROLS OVER GOVERNMENT OWNED PROPERTY IN THE POSSESSION OF CONTRACTORS. DURING 1971 AND 1972 REPRESENTATIVES OF A DOD TASK GROUP CONSULTED WITH VARIOUS INDUSTRY REPRESENTATIVES IN ATTEMPTING TO DEVELOP PROPOSALS FOR FINANCIAL RECORD KEEPING BY CONTRACTORS IN ADDITION TO THE PRESENT PHYSICAL ITEM ACCOUNTABILITY MAINTAINED OVER GOVERNMENT-OWNED PROPERTY WHICH IN ITSELF HAS NOT BEEN CONSIDERED TOTALLY SATISFACTORY.

THE RESULTANT PROPOSED CHANGES INCLUDE: (1) THE ESTABLISHMENT BY CONTRACTORS OF FINANCIAL CONTROL AND SUBSIDIARY ACCOUNTS BY CONTRACT FOR EACH DOD AGENCY FOR ALL TYPES OF GOVERNMENT-OWNED PROPERTY, EXCLUDING REAL PROPERTY AND MATERIAL; (2) THE QUARTERLY RECONCILIATION OF PHYSICAL ITEM PROPERTY RECORDS WITH THE FINANCIAL CONTROL AND SUBSIDIARY ACCOUNTS FOR EACH CONTRACT; (3) REVIEW BY THE DEFENSE COUNTRACT AUDIT AGENCY FOR EACH CONTRACTOR'S ACCOUNTS, SYSTEMS, AND PROCEDURES FOR ADEQUATE FINANCIAL CONTROL OF GOVERNMENT-OWNED PROPERTY; AND (4) A MAXIMUM ONE-YEAR PERIOD FOR TOTAL IMPLEMENTATION OF THE PROPOSED NEW REQUIREMENTS INCLUDING THE SPECIFIC MODIFICATION OF APPLICABLE EXISTING CONTRACTS TO PROVIDE FOR AND CARRY OUT THE REQUIRED FINANCIAL ACCOUTNING.

WE HAVE NO FURTHER COMMENTS TO OFFER REGARDING THE PROPOSED CHANGES.