Air Force Working Capital Fund: Actions Needed to Manage Cash Balances to Required Levels
Abstract
The AFWCF relies on sales revenue rather than regular appropriations to finance its continuing operations. The AFWCF is intended to (1) generate sufficient resources to cover the full cost of its operations and (2) operate on a break-even basis over time that is, neither make a gain nor incur a loss. Customers primarily use appropriated funds to finance orders placed with the AFWCF. Cash generated from the sale of goods and services is the AFWCF s primary means of maintaining an adequate level of cash to sustain its operations. The ability to generate cash consistent with DOD s regulations depends on (1) accurately projecting workload, such as the number of aircraft, engines, missiles, and components needed to be repaired during the year or annual transportation requirements needed to move United States forces, equipment, and supplies around the globe, and (2) accurately setting prices to recover the full costs of producing goods and services. DOD policy requires the AFWCF to establish its sales prices prior to the start of each fiscal year and to apply these predetermined or stabilized prices to most orders received during the year regardless of when the work is accomplished or what costs are incurred. Stabilized prices provide customers with protection during the year of execution from prices greater than those assumed in the budget and permits customers to execute their programs as approved by Congress. Developing accurate prices is challenging because the process to determine the prices begins about 2 years in advance of when the work is actually received and performed. In essence, the AFWCF s budget development has to coincide with the development of its customers budgets so that they both use the same set of assumptions.
Document Details
- Document Type
- Technical Report
- Publication Date
- Jul 01, 2014
- Accession Number
- ADA607464
Entities
Organizations
- United States Government Accountability Office