Navy Maintenance:

Naval Aviation Depots' Asset Capitalization Program Needs Improvement

NSIAD-88-134: Published: Apr 28, 1988. Publicly Released: Apr 28, 1988.

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GAO evaluated the naval aviation depots' (NADEP) implementation of the Department of Defense's (DOD) Asset Capitalization Program (ACP) to determine: (1) whether NADEP benefited from the program; (2) the adequacy of the internal controls for managing the program; and (3) the status of the ACP budget execution.

GAO found that NADEP: (1) did not effectively implement ACP to achieve its full potential for increasing efficiency and productivity; (2) did not fully justify many ACP projects; (3) lacked adequate guidance and effective procedures to identify and acquire beneficial investment projects; (4) achieved few benefits from 21 of 52 equipment modernization projects installed between 1985 and 1987; and (5) did not develop an effective internal control system to provide reliable feedback to managers, safeguard assets, and provide accurate accounting for revenues and expenditures. GAO also found that NADEP: (1) did not follow proper accounting techniques for depreciation expenses, resulting in inaccurate records; (2) collected program funds from customers long before they needed the funds; and (3) had a program fund which significantly exceeded the level obligated at the end of the budget year.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: On December 22, 1988, the Navy issued a comprehensive instruction (NAVAIRINST 11010.5) on management of the naval aviation ACP program. This instruction covers the matters included in this recommendation.

    Recommendation: The Secretary of the Navy should direct the Commander, Naval Air Systems Command, to place additional management emphasis on the NADEP ACP. Specifically, the Commander should: (1) issue ACP guidance that includes well-defined procedures for justifying, ranking, reviewing, and approving projects to ensure that only valid beneficial projects are approved; (2) develop a systematic approach for identifying investment opportunities, including planning that emphasizes work process improvements; (3) ensure prompt implementation of approved projects so that anticipated benefits can be obtained as quickly as possible; and (4) initiate post-investment analyses or other measures to determine if anticipated benefits are being realized and if changes in program management are needed.

    Agency Affected: Department of Defense: Department of the Navy

  2. Status: Closed - Implemented

    Comments: Depreciation accounting is included in NAVAIRINST 11010.5. In addition, depreciation accounting and safeguarding assets is being pursued at all depots and is receiving extraordinary attention during Inspector General audits.

    Recommendation: The Secretary of the Navy should direct the Commander, Naval Air Systems Command, to improve internal controls for the NADEP ACP program by ensuring accurate ACP depreciation accounting within NADEP and emphasizing adherence to existing controls for safeguarding assets.

    Agency Affected: Department of Defense: Department of the Navy

  3. Status: Closed - Implemented

    Comments: The amended budget for fiscal years (FY) 1988 through 1989 and the biannual budget for FY 1990 through 1991 were based on actual obligations rather than commitments. In addition, the Navy reduced the FY 1988 and 1989 equipment obligation authority for the ACP program by $197.3 million.

    Recommendation: The Secretary of the Navy should: (1) report actual ACP obligations to the Secretary of Defense and Congress; and (2) limit future funding for the NADEP ACP to that which can be successfully obligated each year, considering actual requirements and resources assigned to execute the program.

    Agency Affected: Department of Defense: Department of the Navy

 

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