Agency Component Criteria

Pursuant to an agency request, GAO commented on the Office of Management and Budget's (OMB) proposed criteria and designation of agency components that should submit separate audited financial statements beginning in fiscal year 1996, focusing on: (1) strengthening the criteria to ensure that agency components are designated in a consistent manner; and (2) adding the Army, Navy, and Air Force components to the list of organizations required to submit audited financial statements. GAO noted that: (1) OMB proposed guidance could potentially ensure that appropriate military service support components are identified for financial statement audits; (2) the Department of Defense (DOD) plans to discontinue audited financial statement for the military services support organizations that the Defense Business Operations Fund finances; and (3) this DOD audit approach would diminish the potential value of audits in improving financial management within DOD.