Financial Management:

Navy Needs to Improve Its Accounting for Ship Fuel Purchases

AFMD-91-54: Published: Jul 23, 1991. Publicly Released: Jul 23, 1991.

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Pursuant to a congressional request, GAO reviewed the Navy's practices for acquiring ship fuel, focusing on whether the Navy had adequate controls to ensure that its financial management systems accurately accounted for ship fuel purchases.

GAO found that: (1) since the Atlantic Fleet failed to follow its own procedures for ensuring that fuel purchase accounting records were accurate, it could not detect or correct erroneous fuel purchase records; (2) the Atlantic Fleet either omitted or inaccurately recorded 67 percent of its fuel transactions, totalling $5.9 million, in its accounting records, since personnel failed to correct processing errors and ships failed to report correctly; (3) unrecorded ship fuel purchases accounted for $5 million, or 85 percent, of the identified inaccurate transactions; (4) incorrect amounts caused by duplicate transactions reporting and other accounting errors accounted for $900,000, or 15 percent, of the identified inaccurate balances; (5) the Atlantic Fleet Comptroller did not know if $49.5 million of outstanding fiscal year 1989 fuel purchase transactions recorded in the accounting system were correct or had been paid, since the Atlantic Fleet did not promptly review unpaid purchases; (6) although it did not identify any instances in which the Navy paid for unreceived fuel, Fleet Comptroller officials did not monitor related accounts to ensure that this would not occur; (7) Atlantic Fleet Comptroller officials acknowledged that their accounting system did not accurately and promptly record ship fuel purchases; and (8) it was impossible to determine whether the Pacific Fleet Comptroller's office correctly recorded its ship fuel purchases, since it did not maintain detailed information on ship fuel purchases necessary to monitor the accuracy of obligations and expenditures recorded in its accounting system.

Status Legend:

More Info
  • Review Pending-GAO has not yet assessed implementation status.
  • Open-Actions to satisfy the intent of the recommendation have not been taken or are being planned, or actions that partially satisfy the intent of the recommendation have been taken.
  • Closed-implemented-Actions that satisfy the intent of the recommendation have been taken.
  • Closed-not implemented-While the intent of the recommendation has not been satisfied, time or circumstances have rendered the recommendation invalid.
    • Review Pending
    • Open
    • Closed - implemented
    • Closed - not implemented

    Recommendations for Executive Action

    Recommendation: To improve the Pacific Fleet's accounting controls over Navy ship fuel purchases, the Secretary of the Navy should direct the Commander in Chief, Pacific Fleet, to require its ships to provide the requisition number and quantity for each fuel purchase in the Navy Energy Usage Reporting System reports.

    Agency Affected: Department of Defense: Department of the Navy

    Status: Closed - Implemented

    Comments: In September 1991, Pacific Fleet ships began including the requisition number and quantity for each fuel purchase in their reports.

    Recommendation: To improve the Pacific Fleet's accounting controls over Navy ship fuel purchases, the Secretary of the Navy should direct the Commander in Chief, Pacific Fleet, to produce monthly reports for Fleet accounting managers to use in reviewing fuel purchase transactions and resolving accounting errors.

    Agency Affected: Department of Defense: Department of the Navy

    Status: Closed - Implemented

    Comments: In late 1991, the Pacific Fleet implemented new procedures that require more detailed reporting of ship fuel purchases. With these new procedures, the Fleet is producing monthly reconciliation reports on unmatched expenditures and the aging of unpaid fuel purchases.

    Recommendation: To ensure that timely and reliable data on ship fuel purchases are recorded in the Fleets' accounting records, the Secretary of the Navy should direct the Commanders in Chief, Atlantic and Pacific Fleets, to record obligation data on ship fuel purchases promptly and accurately in the accounting system.

    Agency Affected: Department of Defense: Department of the Navy

    Status: Closed - Implemented

    Comments: The Chief of Naval Operations reemphasized to the fleets the need to record transactions promptly and correctly in accordance with DOD and Navy Comptroller instructions.

    Recommendation: To ensure that timely and reliable data on ship fuel purchases are recorded in the Fleets' accounting records, the Secretary of the Navy should direct the Commanders in Chief, Atlantic and Pacific Fleets, to conduct prompt reviews of the unpaid account balances in accordance with the Defense regulation.

    Agency Affected: Department of Defense: Department of the Navy

    Status: Closed - Implemented

    Comments: The Atlantic Fleet began conducting more extensive reviews in October 1990. The Pacific Fleet, in late 1991, implemented procedures to identify and monitor unpaid account balances in accordance with Defense regulations.

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