Army Commissary Accounting for Gains and Losses Needs Improvement

FGMSD-78-43: Published: Jul 17, 1978. Publicly Released: Jul 17, 1978.

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Army commissaries are financed from appropriated funds, a revolving stock fund, and revenues from retail sales. Although by law merchandise must be sold at cost, a surcharge may be added to pay certain operating expenses. Money collected in excess of the amount required to reimburse the stock fund for operating expenses is used for commissary construction and improvements. Except for inventory losses and changes in inventory levels, sales receipts should generally equal the cost of purchases paid from the stock fund.

From July 1974 through September 1976, the Army stock fund absorbed $9.5 million in commissary losses from unidentifiable causes. These losses should be borne by commissary customers. Also, discounts earned by the fund from prompt payment for purchases, which totalled $1.2 million for the first 9 months of 1977, should have been passed on to the commissary patrons but were not.

Recommendation for Executive Action

  1. Status: Closed

    Comments: Please call 202/512-6100 for additional information.

    Recommendation: The Secretary of Defense should: (1) require the Secretary of the Army to revise procedures to provide that the Army stock fund be reimbursed for all inventory losses resulting from identifiable causes beginning with fiscal year 1977; (2) reimburse the Army stock fund for operating losses from unidentifiable causes which were absorbed at the time inventory accountability was transferred to the Troop Support Agency; (3) complete processing of reports of the survey which were initiated before the transfer of accountability; (4) revise procedures to provide that all discounts earned by prompt payment be transferred to the surcharge trust fund; and (5) establish a variance account to separately record the difference between purchase prices and shelf prices.

    Agency Affected:


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