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Navy Financial Reports

AIMD-94-166R Published: Aug 11, 1994. Publicly Released: Aug 11, 1994.
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Highlights

GAO analyzed the changes in financial data in the Navy's annual financial reports for fiscal years (FY) 1992 and 1993, focusing on the discrepancies in the amounts shown for property, plants, and equipment. GAO noted that: (1) the valuations for Navy property, plants, and equipment in the FY 1992 and 1993 reports were $17.7 billion and $163.3 billion, respectively, which were less than the amounts shown in the supporting documentation submitted by various Navy commands; (2) the differences in valuations occurred because the Defense Finance and Accounting Service (DFAS) entered erroneous amounts on the consolidation data sheets; (3) DFAS and the Navy did not detect the accounting errors because they did not compare prior-year financial reports to identify significant variances in individual line items; and (4) inaccurate financial reports could result in questionable user analyses.

Recommendations

Recommendations for Executive Action

Agency Affected Recommendation Status
Other The Director, DFAS, Cleveland Center, should amend the Navy's fiscal year 1993 report of financial position to correct the errors GAO identified.
Closed – Implemented
DFAS corrected the errors in the Navy's fiscal year 1993 financial reports identified by GAO and submitted the revised reports to Treasury.
Other The Director, DFAS, Cleveland Center, should ensure that controls over the development of the SF-220 are improved by requiring the Deputy Director for Accounting Operations to: (1) have the amounts compiled for the report independently verified; and (2) independently compare--in cooperation with the Office of the Assistant Secretary of the Navy for Financial Management--the amounts reported on the current year's SF-220 with amounts reported in prior years and investigate the reasons for any significant differences.
Closed – Not Implemented
Agencies are no longer required to compile and report financial data using the SF-220 format. In addition, GAO has issued a subsequent report directed at the following up and expanding on the intent of this report. GAO's report, "CFO Act Financial Audits: Increased Attention Must Be Given to Preparing Navy's Financial Reports" (GAO/AIMD-96-7, March 27, 1996), contains a number of recommendations intended to improve the accuracy and reliability of the Navy's annual financial reporting required to meet the objectives of the CFO Act.

Full Report

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Topics

Accounting errorsAudit oversightDefense auditsFederal agency accounting systemsFinancial recordsFinancial statementsMilitary inventoriesNaval facilitiesNaval suppliesReporting requirements