Navy Supply:

Naval Air Stations Have Inventory Accuracy Problems

NSIAD-90-45: Published: Dec 7, 1989. Publicly Released: Dec 7, 1989.

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GAO reviewed the Navy's inventory management procedures and practices at naval air stations, focusing on the Norfolk, North Island, and Oceana Naval Air Stations.

GAO found that: (1) 38 percent of the Norfolk station's inventory records and 21 percent of the Oceana station's records included errors; (2) the Navy's system for inventory error evaluation and correction was inadequate, because it had only partially implemented its quality control programs and its inventory management oversight needed improvement; (3) the Oceana station often exceeded error preadjustment deadlines; (4) the Norfolk and Oceana stations often missed deadlines for causative research into inventory errors, but the North Island station generally conducted its error research within required time frames; (5) inventory accuracy indicators did not reflect the total error percentage, and management was therefore limited in its inventory analyses; (6) mandated internal control assessments revealed significant inventory management deficiencies and the need for further assessments; (7) the Department of Defense (DOD) was issuing new inventory evaluation reporting requirements; and (8) the Navy was planning to implement computer software designed for statistical inventory sampling.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: Inventory accuracy workshops have been conducted for all East and West Coast air stations. One of the topics covered was the process, use, and requirements of causative research.

    Recommendation: The Secretary of the Navy should direct the Commander, Naval Supply Systems Command, to improve internal controls over air station inventories. Specifically, the Commander should review the research program and develop approaches to assist activities in completing effective causative research within the specified times in order to increase the likelihood of identifying and correcting inventory problems.

    Agency Affected: Department of Defense: Department of the Navy

  2. Status: Closed - Implemented

    Comments: NAVSUP Instruction 4440.184A was issued on December 18, 1989. It reemphasizes specific requirements for independent quality control of physical inventory functions.

    Recommendation: The Secretary of the Navy should direct the Commander, Naval Supply Systems Command (NAVSUP), to improve internal controls over air station inventories. Specifically, the Commander should direct air stations to fully implement the required independent quality control program for appraising physical inventory functions.

    Agency Affected: Department of Defense: Department of the Navy

  3. Status: Closed - Implemented

    Comments: The air station commands have: (1) established a personal computer database to monitor inventory adjustment trends; (2) conducted a quarterly analysis to highlight problem areas; (3) provided feedback reporting on problems identified; and (4) published all air station results to foster competition.

    Recommendation: The Secretary of the Navy should direct the Commander, Naval Supply Systems Command, to improve internal controls over air station inventories. Specifically, the Commander should direct air stations' commands to properly document their oversight of air station inventory management practices and their corrective actions for improving inventory record accuracy.

    Agency Affected: Department of Defense: Department of the Navy

  4. Status: Closed - Implemented

    Comments: The training module was given during air station inventory accuracy workshops. In addition, both instructor and student guides were provided for subsequent training at the local level.

    Recommendation: The Secretary of the Navy should direct the Commander, Naval Supply Systems Command, to improve internal controls over air station inventories. Specifically, the Commander should ensure that the Navy's training module addressing error classification code selection and analysis is fully implemented at all field activities and their higher commands.

    Agency Affected: Department of Defense: Department of the Navy

  5. Status: Closed - Implemented

    Comments: As part of the FMFIA process, the Navy designated the effectiveness of controls over property for review by Navy commands and activities during fiscal years 1990 and 1991.

    Recommendation: To provide an additional focus on this area, the Secretary of the Navy should designate inventory management improvement as an issue that will receive special emphasis in Financial Integrity Act (FMFIA) assessments. This should be one of the areas targeted for an overall evaluation by the Navy.

    Agency Affected: Department of Defense: Department of the Navy

  6. Status: Closed - Implemented

    Comments: All stock points with the UADPS computer system have implemented a statistical sampling program. The remaining stockpoints, which account for less than 10 percent of the total inventory value, have designed statistical sampling capabilities into their plans for modernized automatic data processing replacement systems.

    Recommendation: The Secretary of the Navy should direct the Commander, Naval Supply Systems Command, to evaluate plans to implement statistical sampling programs at all Navy supply activities and determine if they can be expedited or if alternative programs can be used in the interim.

    Agency Affected: Department of Defense: Department of the Navy

 

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