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Financial Audit: Financial Reporting and Internal Controls at the Air Force Systems Command

AFMD-91-22 Published: Jan 23, 1991. Publicly Released: Jan 23, 1991.
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Highlights

GAO provided information on the Air Force Systems Command's (AFSC) financial management operation, focusing on AFSC need for improved internal controls and financial reporting.

Recommendations

Recommendations for Executive Action

Agency Affected Recommendation Status
Air Force Systems Command The Commander, AFSC, should direct the AFSC Comptroller to ensure that account balances of all AFSC organizations and activities are included in the consolidated trial balances.
Closed – Not Implemented
The Department of Defense (DOD) partially concurred in this recommendation. It stated that the Air Force would implement short-term corrective actions but that ultimate corrective actions would result from the Corporate Information Management effort, which was ongoing. DFAS reviewed existing practices for the general funds trial balance and found no conflicts with DOD accounting policy. AFSC has now been merged with AFLC into the Air Force Materiel Command (AFMC).
Air Force Systems Command The Commander, AFSC, should direct the AFSC Comptroller to enforce Air Force policy and regulations requiring trial balances to be accurate, complete, and supported by reliable documentation.
Closed – Implemented
DOD stated that it has stressed to comptrollers and staffs the need for accurate accounting data and that the System Command will continue implementing appropriate corrective action.
Air Force Systems Command The Commander, AFSC, should require the AFSC product divisions to identify the appropriate authorization document on each purchase request.
Closed – Not Implemented
DOD did not concur in this recommendation and plans no action. It stated that the Air Force had complied with pertinent federal acquisition regulation requirements.
Air Force Systems Command The Commander, AFSC, should require AFSC product divisions to document the determinations of contractors' eligibility.
Closed – Not Implemented
DOD did not agree with this recommendation and plans no action. It stated that the Air Force had complied with pertinent FAR requirements.
Air Force Systems Command The Commander, AFSC, should direct the AFSC Comptroller to ensure that commitments, obligations, and expenditures are promptly recorded in the Air Force General Accounting and Finance System.
Closed – Implemented
DOD stated that the Systems Command would emphasize adequate staffing and training for reporting activities to resolve the deficiency GAO had reported. DFAS, in August 1993, reemphasized the requirement for accounting offices to promptly record all commitment, obligation, and disbursement transactions.
Air Force Systems Command The Commander, AFSC, should direct the AFSC Comptroller to ensure that the accounting and finance offices promptly conduct required reconciliations of disbursements and obligations and follow up on differences.
Closed – Implemented
DOD stated that Air Force regulations and related directives require such reconciliations and that DFAS will now oversee and evaluate the reconciliation processes.
Defense Logistics Agency The Director, Defense Logistics Agency (DLA), should ensure that the Contract Management Division's efforts to correct liability reporting problems are promptly completed and that its new report and liability data are validated.
Closed – Implemented
DOD stated that the methodology for calculating liabilities has been revised and refined to improve the reliability of resulting data.
Defense Logistics Agency The Director, DLA, should direct the Contract Management Division to disclose its liability reporting problems, if uncorrected, as a material weakness in its annual statement of assurance on the status of internal controls for FY 1990.
Closed – Implemented
DOD stated that the formula for calculating liabilities was corrected before FY 1991. Also, the system used to report liabilities was modified to use actual, not estimated, amounts.
Defense Logistics Agency The Director, DLA, should direct the Contract Management Division to continue counting Treasury checks on hand when performing monthly inventories.
Closed – Implemented
DOD stated that the verification of unused Treasury checks is now performed monthly.
Defense Logistics Agency The Director, DLA, should direct contracting officers administering Division contracts to comply with Air Force Regulation 177-102 by notifying the division when a demand for payment is made of a contractor.
Closed – Implemented
DOD stated that the regulatory requirement for contracting officers to notify DLA when contract debts are incurred has been reemphasized to the officers.
Defense Logistics Agency The Director, DLA, should make each Air Force plant representative office responsible for forwarding approved progress payment requests to the paying office.
Closed – Implemented
DOD stated that DLA Manual 8105.1 now requires contracting officers to forward approved progress payment requests to the proper paying office.
Defense Logistics Agency The Director, DLA, should require Air Force plant representative offices to perform the follow-up necessary to ensure that progress payment requests are accurate and appropriately relate to incurred cost and physical progress.
Closed – Implemented
DOD stated that DLA Manual 8105.1 now requires contracting officers to perform periodic reviews of contractor progress payment requests to ensure the validity of costs.
Defense Logistics Agency The Director, DLA, should direct Air Force plant representative offices to monitor more comprehensively and more frequently contractor systems and compliance procedures for recording and reporting government-owned property.
Closed – Implemented
DOD stated that steps had been taken to improve contractor monitoring. DLA Manual 8135.1 now prescribes policies for ensuring compliance with procedures for reporting government-owned property. Controls have been established that provide for reporting contractor deficiencies and time limits for contractors to take corrective actions.

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Topics

Accounting errorsAir Force procurementContract administrationFederal agency accounting systemsFinancial managementFinancial management systemsFinancial recordsFinancial statement auditsInternal controlsMilitary cost controlReporting requirements