Financial Management: DOD's Liability for the Disposal of Conventional Ammunition Can Be Estimated
AIMD-98-32
Published: Dec 19, 1997. Publicly Released: Dec 19, 1997.
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Highlights
Pursuant to a legislative requirement, GAO reviewed the Department of Defense's (DOD) implementation of the requirement to disclose the liability associated with the disposal of various types of assets, specifically conventional ammunition.
Recommendations
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Department of Defense | The Secretary of Defense should ensure that the DOD Comptroller and the Under Secretary of Defense (Acquisition and Technology) promptly issue joint implementing guidance for the services on the SFFAS No. 5 requirements for recognition of a liability for ammunition disposal costs. This guidance should address the key liability estimation factors identified in this report, including data reliability, data completeness, and the need for updated information. |
Closed – Implemented
The Comptroller's office, in coordination with the Under Secretary of Defense (Acquisition and Technology), issued guidance for disposal cost liabilities in August 1999, that addresses conventional munitions.
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| Department of Defense | The Secretary of Defense should ensure that the DOD and military service comptrollers include the estimated ammunition disposal liability in DOD's fiscal year 1997 financial statements. |
Closed – Implemented
In response to this report (AIMD-98-32) and a subsequent report (GAO-01-372) requiring DOD to calculate and record the demilitarization liability for excess ammunition in its financial statements, Army calculated a $1,195,508,248 liability for its fiscal year 2002 statements. This calculation included Army's demilitarization stockpile plus the forecast of expected additions to the stockpile over the next 5 years. However, Army did not include excess ammunition overseas or excess Army-owned war reserve ammunition. Therefore, GAO sent another letter to DOD (GAO-02-553R) indicating that the Army's reported liability was not complete. In response, Army re-calculated its demilitarization liability for its fiscal year 2002 financial statements to include overseas and war-reserve excess ammunition. As a result, Army will report a $1,693,878,127 liability for demilitarizing excess ammunition in its fiscal year 2002 financial statements.
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Topics
Accounting proceduresAmmunitionCost analysisData integrityFederal agency accounting systemsFinancial statementsGovernment liability (legal)Inventory control systemsProperty disposalU.S. Army