The Air Force Has Incurred Numerous Overobligations in Its Industrial Fund

Highlights

GAO reviewed aspects of financial operations in the Air Force industrial fund to determine whether procedures for the financing of, accounting for, and reporting results of Air Force industrial fund operations were in accordance with existing statutes, the intent of Congress, and applicable federal guidance and regulations. GAO made this review pursuant to its responsibilities under the Accounting and Auditing Act for reviewing agency accounting systems from time to time.

Recommendations

Matter for Congressional Consideration

Matter	Status	Comments
If Congress wishes the Air Force to continue to fund these contracts through the industrial fund, it should enact legislation that will provide the budgetary resources to finance the contracts. To provide sufficient budgetary resources, Congress should authorize the industrial fund to be given contract authority. Such authority should be made subject to appropriate controls similar to those now being applied to certain Defense stock funds which currently have contract authority.	Closed – Not Implemented	Congress took partial action on the report and those actions have been completed. The remaining open issues were addressed in a separate review, the results of which were reported to the Senate Committee on Appropriations on July 27, 1983, and superseded all of the outstanding issues in this report.

Recommendations for Executive Action

Agency Affected	Recommendation	Status
Department of Defense	The Secretary of Defense should have the Secretary of the Air Force: (1) stop the practice of obligating the Air Force industrial fund in excess of available budgetary resources; (2) report only those budgetary resources as defined by OMB on year-end financial reports; and (3) determine the correct industrial fund account balances since fiscal year (FY) 1970, together with all pertinent facts and circumstances concerning the overobligations, and report all overobligations to the President and Congress, as required by law.	Closed – Not Implemented Congress took partial action on the report and those actions have been completed. The remaining open issues were addressed in a separate review, the results of which were reported to the Senate Committee on Appropriations on July 27, 1983, and superseded all of the outstanding issues in this report.
Department of the Air Force	The Secretary of Defense should have the Secretary of the Air Force: (1) stop the practice of obligating the Air Force industrial fund in excess of available budgetary resources; (2) report only those budgetary resources as defined by OMB on year-end financial reports; and (3) determine the correct industrial fund account balances since fiscal year (FY) 1970, together with all pertinent facts and circumstances concerning the overobligations, and report all overobligations to the President and Congress, as required by law.	Closed – Not Implemented Congress took partial action on the report and those actions have been completed. The remaining open issues were addressed in a separate review, the results of which were reported to the Senate Committee on Appropriations on July 27, 1983, and superseded all of the outstanding issues in this report.
Department of Defense	The responsible officials in the Air Force, DOD, and OMB should make sure that their procedures for reviewing monthly and year-end financial reports are adequate to detect improper reporting practices and balances that indicate fund deficiencies.	Closed – Implemented Please call 202/512-6100 for information.
Department of the Air Force	The responsible officials in the Air Force, DOD, and OMB should make sure that their procedures for reviewing monthly and year-end financial reports are adequate to detect improper reporting practices and balances that indicate fund deficiencies.	Closed – Implemented Please call 202/512-6100 for information.
Office of Management and Budget	The responsible officials in the Air Force, DOD, and OMB should make sure that their procedures for reviewing monthly and year-end financial reports are adequate to detect improper reporting practices and balances that indicate fund deficiencies.	Closed – Implemented Please call 202/512-6100 for information.

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National Defense

Accounting systemsAppropriated fundsAuditsBudget obligationsFinancial disclosureFunds managementIndustrial fundsReports managementRevolving fundsMilitary forces