Financial Management:

Army Records Contain Millions of Dollars in Negative Unliquidated Obligations

AFMD-90-41: Published: May 2, 1990. Publicly Released: May 2, 1990.

Additional Materials:

Contact:

Jeffrey C. Steinhoff
(202) 275-9454
contact@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

Pursuant to a congressional request, GAO reviewed the Army Materiel Command's (AMC) procedures to monitor outstanding negative unliquidated obligations (ULO) related to supply and equipment inventory purchases.

GAO found that: (1) six major subordinate commands had negative ULO balances totalling about $328 million; (2) commands did not always resolve negative balances promptly; (3) coordination problems between the commands and other Department of Defense (DOD) organizations caused delays in resolving negative balances; (4) actions to correct negative ULO were slow because information on obligations, payments, or collection transactions was inaccurate or incomplete; and (5) contractor overpayments were the cause of $7.6 million in negative ULO and tied up Army funds that could have been used to meet other Army requirements. GAO also found that commands did not: (1) produce reports that showed how long their negative ULO balances had been outstanding; and (2) initiate adequate follow-up procedures to ensure that outstanding negative balances were resolved.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: On April 21, 1990, agreement was reached that DLA would respond to Army inquiries within 15 days. The Army and DLA established a working subcommittee to address the problems and ensure adequate coordination.

    Recommendation: The Secretary of Defense should direct the Secretary of the Army and the Director, Defense Logistics Agency (DLA), to establish policies and procedures to ensure that adequate coordination and cooperation exists between the subordinate commands and Defense Contract Administration Services Regions (DCASR) to resolve negative ULO already recorded in the subordinate commands' accounting records and collect any overpayments made to contractors.

    Agency Affected: Department of Defense

  2. Status: Closed - Implemented

    Comments: A review committee of senior Army and DLA accounting managers was established in July 1990 to implement this recommendation. This is an ongoing process which is being addressed under the DOD Corporate Information Management (CIM) initiative. This action is considered responsive to the recommendation.

    Recommendation: The Secretary of Defense should direct the Secretary of the Army and the Director, DLA, to establish policies and procedures to ensure that adequate coordination and cooperation exists between the subordinate commands and DCASR to determine the control weaknesses that have caused negative ULO and institute controls to correct those problems with the intent of eliminating negative ULO.

    Agency Affected: Department of Defense

  3. Status: Closed - Implemented

    Comments: On May 24, 1990, major Army commands were directed to comply with the recommendation. AMC will provide monthly reports, by subordinate commands, on the status of balances.

    Recommendation: The Secretary of the Army should direct the subordinate commands to: (1) comply with existing regulations on aging negative balances and taking immediate action to correct negative ULO; and (2) report summary level data on the total amount and age of negative ULO to AMC on a quarterly basis.

    Agency Affected: Department of Defense: Department of the Army

  4. Status: Closed - Implemented

    Comments: Both the Army and DOD reported the Army's negative ULO as a material weakness in their December 1990 FMFIA reports.

    Recommendation: The Secretary of the Army should identify negative ULO as a material weakness in the Army's annual Federal Managers' Financial Integrity Act (FMFIA) report to the Secretary of Defense until this weakness is corrected.

    Agency Affected: Department of Defense: Department of the Army

 

Explore the full database of GAO's Open Recommendations »

Jun 30, 2015

Jun 24, 2015

Jun 17, 2015

May 29, 2015

May 15, 2015

Apr 30, 2015

Mar 27, 2015

Mar 16, 2015

Feb 27, 2015

Looking for more? Browse all our products here