Financial Management: Army Records Contain Millions of Dollars in Negative Unliquidated Obligations
AFMD-90-41
Published: May 02, 1990. Publicly Released: May 02, 1990.
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Highlights
Pursuant to a congressional request, GAO reviewed the Army Materiel Command's (AMC) procedures to monitor outstanding negative unliquidated obligations (ULO) related to supply and equipment inventory purchases.
Recommendations
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Department of Defense | The Secretary of Defense should direct the Secretary of the Army and the Director, Defense Logistics Agency (DLA), to establish policies and procedures to ensure that adequate coordination and cooperation exists between the subordinate commands and Defense Contract Administration Services Regions (DCASR) to resolve negative ULO already recorded in the subordinate commands' accounting records and collect any overpayments made to contractors. |
Closed – Implemented
On April 21, 1990, agreement was reached that DLA would respond to Army inquiries within 15 days. The Army and DLA established a working subcommittee to address the problems and ensure adequate coordination.
|
| Department of Defense | The Secretary of Defense should direct the Secretary of the Army and the Director, DLA, to establish policies and procedures to ensure that adequate coordination and cooperation exists between the subordinate commands and DCASR to determine the control weaknesses that have caused negative ULO and institute controls to correct those problems with the intent of eliminating negative ULO. |
Closed – Implemented
A review committee of senior Army and DLA accounting managers was established in July 1990 to implement this recommendation. This is an ongoing process which is being addressed under the DOD Corporate Information Management (CIM) initiative. This action is considered responsive to the recommendation.
|
| Department of the Army | The Secretary of the Army should direct the subordinate commands to: (1) comply with existing regulations on aging negative balances and taking immediate action to correct negative ULO; and (2) report summary level data on the total amount and age of negative ULO to AMC on a quarterly basis. |
Closed – Implemented
On May 24, 1990, major Army commands were directed to comply with the recommendation. AMC will provide monthly reports, by subordinate commands, on the status of balances.
|
| Department of the Army | The Secretary of the Army should identify negative ULO as a material weakness in the Army's annual Federal Managers' Financial Integrity Act (FMFIA) report to the Secretary of Defense until this weakness is corrected. |
Closed – Implemented
Both the Army and DOD reported the Army's negative ULO as a material weakness in their December 1990 FMFIA reports.
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Topics
Army procurementArmy suppliesBudget obligationsContractor paymentsEquipment inventoriesFederal agency accounting systemsInteragency relationsInternal controlsOverpaymentsReporting requirements