Army Needs to Improve Processes Over Government-Furnished Material Inventory Actions

Abstract

We determined whether the Logistics Modernization Program (LMP) system correctly recorded Army inventory actions for Government-furnished material (GFM) in the general ledger accounts and accountability records. The Army did not correctly record GFM inventory actions in Army financial and accountability records. Specifically, in FY 2014, Army Working Capital Fund (AWCF) activities expensed about $40.2 million in GFM upon shipment to contractors. This occurred because Assistant Secretary of the Army (Financial Management and Comptroller) (ASA[FM&C]) and Army Materiel Command (AMC) provided LMP Product Management Office an erroneous functional requirement. Army General Fund (AGF) activities inappropriately expensed $85 million in GFM transactions during FY 2014 that originated in LMP. This occurred because Army inappropriately used the purchase method when it accounted for GFM. Additionally, LMP s Management Control Activity (MCA) table did not contain complete and accurate data necessary to maintain visibility or meet reporting requirements of GFM. This occurred because Army did not build the business process functionality or provide sufficient oversight to ensure the reasonableness and quality of data entered into the LMP MCA table met financial reporting requirements. As a result, Army did not report GFM in the AGF and AWCF financial statements, understating Army assets and overstating expense accounts by at least $125.2 million, placing Army s audit readiness at an increased risk for not meeting FY 2017 auditability goals. In addition, without proper accountability records to maintain adequate control over GFM, the Army must rely on individual contractors to report the status of GFM in their respective reporting systems.

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Document Details

Document Type
Technical Report
Publication Date
May 21, 2015
Accession Number
ADA621508

Entities

Organizations

  • Office of the Inspector General, U.S. Department of Defense

Tags

Communities of Interest

  • Human Systems
  • Weapons Technologies

DTIC Thesaurus Topics

  • Acquisition
  • Business Administration
  • Contract Administration
  • Contracts
  • Department Of Defense
  • End Items
  • Financial Management
  • Governments
  • Inventory
  • Life Cycle Management
  • Life Cycles
  • Logistics
  • Management Personnel
  • Materials
  • Money
  • Munitions
  • Teamwork

Readers

  • Defense Financial Management and Audit.
  • Logistics and Supply Chain Management.