Defense Inventory:

Army Needs to Strengthen and Follow Procedures to Control Shipped Items

NSIAD-00-109: Published: Jun 23, 2000. Publicly Released: Jul 19, 2000.

Additional Materials:

Contact:

Charles I. Patton, Jr
(202) 512-3000
contact@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

Pursuant to a congressional request, GAO reviewed the Army's procedures for tracking and controlling spare parts and other inventory items that have been shipped from one location to another to support military forces, focusing on the: (1) extent to which the Army can identify inventory lost during shipment; and (2) Army's adherence to procedures for controlling shipped inventory.

GAO noted that: (1) the Army does not know the extent to which shipped inventory is lost or stolen because of weaknesses in inventory controls and financial management practices; (2) the Army reported inventory shipment losses of $297,000 for fiscal year (FY) 1998; (3) however, GAO's analysis of available logistics and accounting records indicated that the Army could not account for about $900 million in shipped inventory in FY 1998; (4) GAO found that many of the shipments it reviewed had in fact been received, but had not been documented in the required manner; (5) this unaccounted for inventory included classified and sensitive items, such as guided missile components and night vision equipment; (6) GAO's review of shipments made during FY 1998 indicates that Army personnel did not consistently follow required internal control procedures for shipped inventory; (7) Army units receiving inventory items have not always properly entered the receipt of shipments on inventory records, sent receipt acknowledgements to the inventory control point, or reported shipment discrepancies; (8) issuing units also have not consistently sent notifications of shipment cancellations; (9) no dominant cause for failure to follow internal control procedures emerged in GAO's discussions with Army officials; (10) poorly integrated accounting and logistics systems have led to inaccuracies regarding the status of shipped material; (11) in addition, personnel at the Army's largest inventory control point have not adequately monitored receipts of items it reportedly purchased, and they have not adhered to federal policies and procedures for documenting follow up on material shipped to warehouses that have not been acknowledged as received; and (12) moreover, from a broader perspective, the Army has not routinely assessed shipping discrepancies to maintain adequate oversight of shipped inventory.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: Under the direction of the Army, the Defense Finance and Accounting Service has initiated efforts to make its accounting services compatible with other Army logistics functions being modernized through the Wholesale Logistics Modernization Program. These efforts, with the Army's modernization initiatives, will fully implement GAO's recommendation.

    Recommendation: To acquire accurate and complete data on inventory losses and to improve the tracking of inventory being shipped, the Secretary of Defense should direct the Secretary of the Army to revise accounting procedures in order to establish a separate account to capture all shipment losses in one place.

    Agency Affected: Department of Defense

  2. Status: Closed - Implemented

    Comments: The Army is finalizing changes to two of its automation systems (the Wholesale Logistics Modernization Program and the Global Combat Support System) so that they retain records of unconfirmed warehoused material shipments consistent with federal internal control standards. Changes to the Wholesale Logistics Modernization Program System were piloted at the Communications-Electronics Command in July 2003, with subsequent fieldings to the remaining Army Materiel Command Integrated Materiel Management Centers through fiscal year 2004. Phased implementation changes to the Army's Global Combat Support System are scheduled to begin in fiscal year 2006. Consequently, the Army's automated systems will track unconfirmed shipments and perform follow-up on receipts.

    Recommendation: To acquire accurate and complete data on inventory losses and to improve the tracking of inventory being shipped, the Secretary of Defense should direct the Secretary of the Army to modify the Army's logistics and accounting systems so that they retain records of unconfirmed warehoused material shipments consistent with federal internal control standards.

    Agency Affected: Department of Defense

  3. Status: Closed - Implemented

    Comments: A United States Army Materiel Command Headquarters memo, dated October 27, 2000, instructed Army item managers to comply with Army and DOD Internal Control procedures for shipped inventory.

    Recommendation: To acquire accurate and complete data on inventory losses and to improve the tracking of inventory being shipped, the Secretary of Defense should direct the Secretary of the Army to emphasize to the Army Materiel Command, Aviation and Missile Command, and Army unit personnel the need to comply with existing Army and Department of Defense internal control procedures for shipped inventory.

    Agency Affected: Department of Defense

  4. Status: Closed - Implemented

    Comments: The Army's Acting Director of Supply and Maintenance has issued instructions to establish integrated product teams to review and analyze the Army's in-transit inventory in both the logistics and financial areas. Those teams are expected to initiate and execute near-term and long-term actions to improve visibility of the Army's in-transit inventory.

    Recommendation: To acquire accurate and complete data on inventory losses and to improve the tracking of inventory being shipped, the Secretary of Defense should direct the Secretary of the Army to maintain proper program oversight as required to reduce the vulnerability of shipped inventory to undetected loss or misplacement.

    Agency Affected: Department of Defense

 

Explore the full database of GAO's Open Recommendations »

Sep 22, 2016

Sep 21, 2016

Sep 19, 2016

Sep 12, 2016

Sep 8, 2016

Sep 7, 2016

Sep 6, 2016

Aug 25, 2016

Looking for more? Browse all our products here