Financial Management:

Agencies' Actions to Eliminate 'M' Accounts and Merged Surplus Authority

AFMD-93-7: Published: Apr 2, 1993. Publicly Released: Apr 7, 1993.

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Jeffrey C. Steinhoff
(202) 512-9454


Office of Public Affairs
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Pursuant to congressional requests, GAO reviewed federal agencies' implementation of Public Law 101-510, focusing on: (1) accountability for expired appropriation accounts; and (2) elimination of M accounts and merged surplus authority.

GAO found that: (1) the Department of Defense (DOD) accounted for 47 percent of federal agency merged surplus authority restorations; (2) some DOD actions were unsupported, incomplete, or inappropriate; (3) DOD actions were inconsistent with the purpose and objective of the public law; (4) in 1992, Congress limited DOD reobligation of M account balances and required it to report monthly on reobligations and cancellations of M account funds until it completes its required audit of M account balances; (5) DOD has used current year appropriations to fund contract changes that should have been funded with expired appropriations but, in 1992, Congress authorized DOD to use current year funds for such charges; and (6) the Office of Management and Budget (OMB) and the Department of the Treasury issued guidelines to cancel obligated M account balances, but they did not require agencies to disclose in their financial reports the total amounts of obligations related to canceled budget authority.

Recommendations for Executive Action

  1. Status: Closed - Not Implemented

    Comments: DOD is continuing to review its balances. However, effective October 1, 1993, all "M" account balances will be cancelled. Therefore, this recommendation will not be applicable after September 30, 1993.

    Recommendation: The Secretary of Defense should direct the DOD Comptroller to implement policies and procedures that require the military services and other Defense agencies to deobligate the unsupported restorations of merged surplus authority.

    Agency Affected: Department of Defense

  2. Status: Closed - Implemented

    Comments: The Navy has completed its review and determined that no violations occurred. The Air Force has begun its investigation and acknowledges that it probably has incurred Antideficiency Act violations. Any violations identified will be reported as required.

    Recommendation: The Secretary of Defense should direct the DOD Comptroller to implement policies and procedures that require the Air Force and Navy to investigate the charges related to the within scope contract changes that were made to current year appropriations to: (1) determine whether they would have violated the Antideficiency Act if they had properly charged the expired accounts; and (2) immediately report to Congress and the President any Antideficiency Act violations confirmed by the investigations.

    Agency Affected: Department of Defense

  3. Status: Closed - Implemented

    Comments: OMB issued interim guidance for FY 1992 financial statement reporting. Final guidance will be issued by October 1993 in OMB Bulletin 93-02. The guidance will require footnotes to the financial reports to disclose the amount of cancelled balances.

    Recommendation: The Director, OMB, should require federal agencies to disclose, in their financial reports, obligated amounts that have been canceled as a result of Public Law 101-510 until such time that it is determined that no claims requiring payment remain outstanding.

    Agency Affected: Executive Office of the President: Office of Management and Budget


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