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Financial Management: DOD Needs to Expedite Plans to Implement Deferred Maintenance Accounting Standard

AIMD-97-159R Published: Sep 30, 1997. Publicly Released: Sep 30, 1997.
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Highlights

GAO reviewed the status of the Department of Defense's (DOD) efforts to develop agencywide policies to address the deferred maintenance standard for mission assets and to emphasize the importance of developing timely DOD-wide guidance.

Recommendations

Recommendations for Executive Action

Agency Affected Recommendation Status
Office of the Under Secretary of Defense for Acquisition, Technology, and Logistics The acting Under Secretary of Defense (Comptroller) and the acting Under Secretary of Defense (Acquisition and Technology) should ensure that the DOD-wide policy is in place as soon as possible so that DOD can comply with the FY 1998 effective date of the deferred maintenance standard.
Closed – Implemented
Although the planned issuance of a DOD-wide policy for preparing deferred maintenance estimates did not occur by the FY 1998 effective date, DOD, through an approved action plan, has been working to issue such policy by leading an interagency group tasked with developing government-wide methods for estimating deferred maintenance. DOD has expanded its current financial statement reporting requirements for deferred maintenance by including multi-use heritage assets and deferred maintenance on ships as reportable categories of General PP&E and National Defense PP&E, respectively. GAO believes these actions satisfy the intent of the recommendation.
Under Secretary of Defense (Comptroller) The acting Under Secretary of Defense (Comptroller) and the acting Under Secretary of Defense (Acquisition and Technology) should ensure that the DOD-wide policy is in place as soon as possible so that DOD can comply with the FY 1998 effective date of the deferred maintenance standard.
Closed – Implemented
Although the planned issuance of a DOD-wide policy for preparing deferred maintenance estimates did not occur by the FY 1998 effective date, DOD, through an approved action plan, has been working to issue such policy by leading an interagency group tasked with developing government-wide methods for estimating deferred maintenance. DOD has expanded its current financial statement reporting requirements for deferred maintenance by including multi-use heritage assets and deferred maintenance on ships as reportable categories of General PP&E and National Defense PP&E, respectively. GAO believes these actions satisfy the intent of the recommendation.
Office of the Under Secretary of Defense for Acquisition, Technology, and Logistics The acting Under Secretary of Defense (Comptroller) and the acting Under Secretary of Defense (Acquisition and Technology) should establish milestones for key actions in the policy development process to help ensure issuance of the policy no later than March 1998.
Closed – Implemented
DOD's planned issuance of a DOD-wide policy on deferred maintenance did not occur by March 1998. However, DOD subsequently developed and issued an approved action plan--including milestones and key actions--for guiding and directing the development of a DOD policy in this area.
Under Secretary of Defense (Comptroller) The acting Under Secretary of Defense (Comptroller) and the acting Under Secretary of Defense (Acquisition and Technology) should establish milestones for key actions in the policy development process to help ensure issuance of the policy no later than March 1998.
Closed – Implemented
DOD's planned issuance of a DOD-wide policy on deferred maintenance did not occur by March 1998. However, DOD subsequently developed and issued an approved action plan--including milestones and key actions--for guiding and directing the development of a DOD policy in this area.
Office of the Under Secretary of Defense for Acquisition, Technology, and Logistics The acting Under Secretary of Defense (Comptroller) and the acting Under Secretary of Defense (Acquisition and Technology) should modify the proposed study with the Logistics Management Institute to accelerate completion of the deliverables to help achieve the March 1998 time frame.
Closed – Implemented
Although the study conducted by the Logistics Management Institute (LMI) was accelerated, the March timeframe for issuing policy was not achieved. The LMI final report, which provided recommendations for disclosing deferred maintenance on national defense property, plant, and equipment, was issued in November 1998. These recommendations, including several focused on the applicability of disclosing deferred maintenance at depot-level and field-level activities, are being considered in the policy development process.
Under Secretary of Defense (Comptroller) The acting Under Secretary of Defense (Comptroller) and the acting Under Secretary of Defense (Acquisition and Technology) should modify the proposed study with the Logistics Management Institute to accelerate completion of the deliverables to help achieve the March 1998 time frame.
Closed – Implemented
Although the study conducted by the Logistics Management Institute (LMI) was accelerated, the March timeframe for issuing policy was not achieved. The LMI final report, which provided recommendations for disclosing deferred maintenance on national defense property, plant, and equipment, was issued in November 1998. These recommendations, including several focused on the applicability of disclosing deferred maintenance at depot-level and field-level activities, are being considered in the policy development process.

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Topics

Accounting proceduresFederal agency accounting systemsFinancial statementsMaintenance costsMaintenance standardsMilitary materielReporting requirementsDeferred maintenanceFinancial managementMilitary forces