Auditing and Financial Management:

Navy Financial Reports

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

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Lisa G. Jacobson
(202) 512-9542
contact@gao.gov

 

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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.

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: The Director, DFAS, Cleveland Center, should amend the Navy's fiscal year 1993 report of financial position to correct the errors GAO identified.

    Agency Affected: Department of Defense: Defense Finance and Accounting Service: Cleveland Center, OH

    Status: Closed - Implemented

    Comments: DFAS corrected the errors in the Navy's fiscal year 1993 financial reports identified by GAO and submitted the revised reports to Treasury.

    Recommendation: 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.

    Agency Affected: Department of Defense: Defense Finance and Accounting Service: Cleveland Center, OH

    Status: Closed - Not Implemented

    Comments: 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.

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