oversight

Savings Available by Transferring Army Inventory Accounting From Stock Funds to Industrial Funds at Installation Level

Published by the Government Accountability Office on 1971-07-30.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                     Illllllllllllllllllllllllllllllllllll
                            LM095552




Savings Available By
Transferring Army Inventory
Accounting From Stock Funds
                                          I
To Industrial Funds At
Installation Level 8.159797




BY THE COMPTROLLER GENERAL
OF THE UNITED STATES
                     COMPTROLLER     GENERAL     OF      THE    UNITED   STATES

                                   WASHINGTON.    D.C.     20548




     B- 159797




     To the President   of the Senate and the
ci   Speaker  of the House of Representatives
I
             This is our report          on savings  available                by transferring
     Army    inventory       accounting     from stock funds                to industrial
     funds   at installation      level.

             Our review    was made pursuant   to the Budget and Ac-
     counting   Act, 1921 (31 U.S.C. 53), and the Budget and Ac-
     counting   Procedures    Act of 1950 (31 U.S.C. 65).

             Copies of this report     are being sent to the Director,
     Office of Management        and Budget; the Secretary    of the
     Treasury;     the Secretary    of Defense;  and the Secretary     of
     the Army.




                                                 Comptroller               General
                                                 of the United             States




                           50TH ANNIVERSARY                    1921- 1971
COMPTROLLERGENERAL'S                                  SAVINGS AVAILABLE BY TRANSFERRING ARMY
REPORTTO THE CONGRESS                                 INVENTORY ACCOUNTING FROM STOCK FUNDS TO
                                                      INDUSTRIAL FUNDS AT INSTALLATION LEVEL
                                                      B&9797


DIGEST
------


WHYTHE REVIEW WASMADE
      Under the Budget and Accounting       Procedures Act of 1950, the General Ac-
      counting  Office   (GAO) has the responsibility       for reviewing    the account-
      ing systems of executive    agenci2K      The ~ct~provides~that      einphzgis be
      placed on simplified    and effective     accounting,    financial  reporting,   and
      budgeting  and auditing   and on elimination       of requirements   and procedures
      which cause duplication    and waste.

      In prescribing       accounting    principles,       standards,    and related   require-
      ments for the guidance of executive               agencies,     the Comptroller    General
      specified    the need for simplicity           in procedures.        Simplicity  requires
      that records which serve no significant                 purpose not be kept and that
      excessive    details     and unnecessary       refinements      in recordkeeping    be
      avoided.     GAO made this review to examine into whether it would be prac-
      ticable   to transfer      inventory      accounting     from stock funds to industrial
      funds at the installation          level.     ~


FINDINGS AND CONCLUSIONS
       At the Aberdeen Proving Ground, GAO found that the maintenance                                of an
       industrial   fund accounting   system and a stock fund accounting                            system
       had resulted    in duplication  of certain functions  and records.                             (See p. 4.

       Separate accounting     systems are being maintained            at the direction   of the
       Army Materiel   Command. (See p. 3.)            GAO believes     that the Aberdeen in-
       dustrial   fund can be used as the principal            accounting    means to finance
       and account for inventories         now controlled      by the stock fund and to pro-
       cess related   accounting     transactions.        If the stock fund accounting       sys-
       tem were eliminated,      savings derived would include:

             --Annual      personnel        savings   of almost     $100,000.       (See p. 4.)

             --Reduction    in computer           processing      time   of about   45 hours      a month.
                (See pa 5.)

             --Potential        reduction      in keypunch     and verification        effort.      (See p. 5.)

       Aberdeen         officials,       in concurring with the feasibility      of GAO's pro-
       posal,       stated      that   there would be no significant      changeover costs or



Tear Sheet
     major   revisions    to the industrial        fund   accounting     procedures    or to ma-         *
     chine   programs.


RECOI@lENDATIOfJSOR SUGGESTIONS

      Because of the potential    savings to be derived,   GAO             recommends that      gL
    ) the Secretary   of Defens e direct  the Secretary  of the             Army to eliminate    /
  L the stock fund accounting       system at Aberdeen and to              capitalize   the in-
  -/ventories     now owned by the stock fund and to control                 them under the in-
      dustrial  fund.   (See p. 9.)

     Because the industrial       fund-stock      fund arrangement     being used at Aber-
     deen is typical     of installation       organization    at many military    installa-
     tions,  GAO recommends further         that the Secretary      of Defense identify
     those insta77ations     where similar        actions   are practicable    and direct
     that they be accomplished.          (See p. 9.)


AGEliC! ACTIONS AND iX?RESOLVZDISSUES

     The Department        of Defense (DOD) agreed that the simplification                    of ac-
     counting      systems and the elimination             of duplication      were desirable      ob-
     jectives;      however, DOD believed           that the financial        procedure    recommended
     by GAO was not in accordance with the provisions                      of 10 U.S.C. 2208 which
     authorized      working capital       funds.       DOD believed      also that the intiustrial
     fund was not created merely as an interim                  financing      medium.     DOD stated
     that its current          policy recognized        that the use of an industrial           fund
     to finance       inventories     other than those required             in the operation      of
      industrial-commercia7-type           activities       was contrary      to provisions     of
      10 U.S.C. 2208.          (See PP. 13 and 15.)

     GAO believes    that its recommendations    are not contrary       to the intent      of
     10 U.S.C. 2208 but are merely an extension         of the current      practice
     whereby the industrial     fund finances   and controls    inventories       needed for
     its own use.      In GAO's opinion   the management control      features     of the
     industrial   fund concept would not be lost merely because the industrial
     fund financed     the cost of inventories.     Therefore,    in the interest       of
     economy and efficiency,      DOD should reconsider     its position     and should
     implement the recommendations      made in this report.


JKl'YERS FOR COIW'IDERATIOJI BY THE C0JJGRE.S

     In view of the potential   for savings throughout    the military     departments
     and in view of DOD's statement   that it does not intend to take any ac-
     tion to implement GAO's recommendations,     the appropriate      committees  of
     the Congress may wish to discuss    this matter with DOD officials.
                          Contents
                                                              Page

DIGEST                                                          1

CHAPTER

  1        INTRODUCTION                                         3

  2        OPPORTUNITIESFOR SAVINGS BY ELIMINATING
           THE STOCKFUND ACCOUNTINGSYSTEM                       4
               Savings to be realized                           5

  3        AGENCYCOMMENTS
                        AND OUR EVALUATION

  4        CONCLUSIONSAND RECOMMENDATIONS
              Conclusions
              Recommendations

APPENDIX

       6   Ietter    dated October 20, 1970, from the
              Assistant   Secretary of Defense (Comptrol-
              ler) to the General Accounting Office            13

      XI   Principal     officials     of the Department of
              Defense and the Department of the Army
              responsible       for the administration   of
              activities      discussed in this report         17

                            ABBREVIATIONS

DOD        Department   of Defense

GAO        General   Accounting   Office
COMPTROLLERGENERdL'S                            SAVINGS AVAILABLE BY TRANSFERRING ARMY
REPORTTO THE CONGRESS                           INVENTORY ACCOUNTING FROM STOCK FUNDS TO
                                                INDUSTRIAL FUNDS AT INSTALLATION LEVEL
                                                B-159797


DIGEST
----_-


WHYTHE REVIEW WASMADE
     Under the Budget and Accounting       Procedures Act of 1950, the General Ac-
     counting  Office   (GAO) has the responsibility       for reviewing        the account-
     ing systems of executive    agencies.      The act provides        that emphasis be
     placed on simplified    and effective     accounting,    financial      reporting,   and
     budgeting  and auditing   and on elimination       of requirements       and procedures
     which cause duplication    and waste.

     In prescribing       accounting    principles,       standards,    and related   require-
     ments for the guidance of executive               agencies9 the Comptroller       General
     specified    the need for simplicity           in procedures.        Simplicity  requires
     that records which serve no significant                 purpose not be kept and that
     excessive    details     and unnecessary refinements            in recordkeeping    be
     avoided.     GAO made this review to examine into whether it would be prac-
     ticable   to transfer      inventory      accounting     from stock funds to industrial
     funds at the installation          level.


FINDINGS AND CONCLUSIONS
     At the Aberdeen Proving Ground, GAO found that the maintenance                            of an
     industrial   fund accounting   system and a stock fund accounting                        system
     had resulted    in duplication of certain  functions  and records.                        (See p- 4.)

     Separate accounting     systems are being maintained           at the direction   of the
     Army Materiel   Command. (See p. 3.)           GAO believes     that the Aberdeen in-
     dustrial   fund can be used as the principal           accounting    means to finance
     and account for inventories         now controlled      by the stock fuqd and to pro-
     cess related   accounting     transactions.        If the stock fund accounting      sys-
     tem were eliminated,      savings derived would include:

         --Annual      personnel      savings   of almost     $100,000.       (See p* 4.)

         --Reduction    in computer         processing      time   of about   45 hours      a month.
            (See pa 5.)

         --Potential      reduction      in keypunch     and verification        effort.      (See p. 5.)

     Aberdeen officials,             in concurring with the feasibility      of GAO's pro-
     posal, stated that            there would be no significant      changeover costs or
     major   revisions    to the industrial       fund   accounting     procedures     or'to   ma-
     chine   programs.


RECOMMENDATIONSOR SUGGESTIOUS

     Because of the potential     savings to be derived,   GAO             recommends that
     the Secretary    of Defens e direct  the Secretary  of the             Army to eliminate
     the stock fund accounting     system at Aberdeen and to               capitalize   the in-
     ventories    now owned by the stock fund and to control                 them under the in-
     dustrial   fund.   (See p. 9.)

     Because the industrial       fund-stock      fund arrangement     being used at Aber-
     deen is typical     of installation       organization    at many military     installa-
     tions,  GAO recommends further         that the Secretary      of Defense identify
     those installations     where similar        actions   are practicable     and direct
     that they be accomplished.          (See p. 9.)


AGEhW'; ACTIONS AND UNRZSOLVZD ISSUES

     The Departtent       of Defense (DOD) agreed that the simplification                    of ac-
     counting     systems and the elimination             of duplication       were desirable     ob-
     jectives;     however, DOD believed           that the financial        procedure    recommended
     by GAO was not in accordance with the provisions                      of 10 U.S.C. 2208 which
     authorized     working capital       funds.       DOD believed      also that the intiustrial
     fund was not created merely as an interim                 financing       medium.    DOD stated
     that its current        policy   recognized       that the use of an industrial           fund
     to finance     inventories     other than those required              in the operation      of
     industrial-commercial-type           activities       was contrary      to provisions     of
     10 U.S.C. 2208.         (See PP. 13 and 15.)

     GAO believes    that its recommendations    are not contrary       to the intent      of
     10 U.S.C. 2208 but are merely an extension         of the current      practice
     whereby the industrial     fund finances   and controls    inventories       needed for
     its own use.      In GAO's opinion   the management control      features     of the
     industrial   fund concept would not be lost merely because the industrial
     fund financed     the cost of inventories.     Therefore,    in the interest       of
     economy and efficiency,      DOD should reconsider     its position     and should
     implement the recommendations      made in this report.


MATTERS FOR COJSIDERATION BY THE COIJGRESS

     In view of the potential   for savings throughout    the military     departments
     and in view of DOD's statement   that it does not intend to take any ac-
     tion to implement GAO's recommendations,     the appropriate      committees  of
     the Congress may wish to discuss    this matter with DOD officials.
                               CHAPTER1

                              INTRODUCTION
       The Aberdeen Proving Ground is one of the test activi-
ties under the jurisdiction         of the U.S. Army Test and Eval-
uation Command, which is subordinate            to the Army Materiel
Command. The main mission of Aberdeen is to support Army
research and development programs through test and evalua-
tion of weapons, ammunition, tanks, combat vehicles,              and
motorized transport.        In addition,     Aberdeen provides ac-
counting,   administrative,      and logistical      support to eight
tenant activities.       A tenant activity        is an operating  unit
which is located on an installation           with a host operating
unit and which is attached to the host unit for administra-
tive and/or logistical        support.

       Aberdeen's test work and base-support          costs are fi-
nanced through an industrial         fund which was established          in   *
1957. An industrial        fund is a working capital         fund designed
so that industrial-      and'commercial-type      activities       of the
Department of Defense may be operated and managed like sim-V
ilar activities      in private   industry.     At the time this in-
dustrial    fund was established,       it was responsible       for fi-
nancing all activities        then constituting    the Aberdeen Prov-
ing Ground command. This included the financing                 of all in-
ventories    required by organizations . located at Aberdeen.

        The
        -__.-..Army.stock
                 --         fun& which was established       at Aberdeen
as of July 1, 1964, ---took over the supply function            previously
handled by the industrial           fund.  A stock fund is a working
capital     fund established      to finance inventories      of consumable
materiel.        The stock fund capitalized      the inventories     pre-
viously financed under the Aberdeen industrial              fund.    The
current Aberdeen stock fund inventory,            valued at about
$3.5 million,        comprises 15 commodity classes which are sold
to all organizations          at Aberdeen.

        Our review covered the accounting          systems for the host
installation     industrial      fund, its eight tenants,       and the
stock fund.      We reviewed the accounting         procedures set forth
in Test and Evaluation          Command accounting manuals and in ap-
propriate    Army regulations        to examine into whether it would
be practicable      to transfer      inventory   accounting   from stock
funds to industrial         funds at installation      level.
                                    3
                                    CHAPTER 2.


             OPPORTUNITIES- FOR SAVINGS BY ELIMINATING

                  THE STOCK FUND ACCOUNTING SYSTEM

       Maintenance         of separate     accounting     systems for the
Aberdeen      industrial       fund and stock fund results            in duplica-
tion of certain          functions     and records.       Elimination      of the
stock fund accounting             system by using the Aberdeen           indus-
trial    fund to finance          and control      all inventories      and to
process     related      accounting     transactions      would simplify       ac-
counting      procedures,        save almost      $100,000 a year in person-
nel costs,       and reduce computer          processing     time.

          The stock fund accounting           system maintained        by Aberdeen
requires       its own set of accounts,           records,   financial       and bud-
get reports,          and computer programs         and codes to process        stock
fund transactions.              When a stock fund is not in use at an in-
dustrially         funded activity,       Army procedures      provide     for the
accounting         of supplies     under the industrial        fund.     Aberdeen
officials        informed    us that it would be practicable             to imple-
ment these procedures             and that there would be no loss of con-
trol     over inventories.           They stated     that there would be no
significant          changeover     costs or major revisions         to the indus-
trial      fund accounting        procedures    or to machine programs.

         Financing    of inventories     would be assumed by the in-
dustrial      fund, and adequate       controls    over such inventories
would be maintained         as prescribed       by industrial    fund ac-
counting      procedures.      We were informed       that control    over
inventories        had been satisfactory        in the past when this had
been the responsibility           of the industrial        fund at Aberdeen.

         Reports   issued by the industrial         fund would be pre-
pared in a manner that would distinguish                between inventory
required      by the industrial      fund and inventory       required   by
each tenant.         Appropriate    action   would be taken to preclude
distortion       of the inventory      account   and to enable management
to use industrial         fund statements      in the same manner it does
currently.




                                         4
SAVINGS      TO BE REALIZED

        Assumption        of the stock          fund operations          by the indus-
trial     fund would        eliminate        the entire       stock    fund     accounting
and reporting          system.        Although       some personnel         now used to
process      stock     fund     transactions         would    be needed       to process
similar      transactions          under     the industrial         fund,     there      would
be a net reduction             of nine positions.              The need for         a stock
fund manager,          a budget       analyst,       six accounting         technicians,
and the’equivalent             of an automatic            data processing          man would
be eliminated.            The combined          salaries      and fringe        benefits       of
this    group     is almost         $100,000      a year.

        In addition      to the savings        discussed     above,    Aberdeen      of-
ficials    estimate      that    about    45 hours     of computer     processing
time could      be saved      each month by eliminating             the stock     fund
and that     a proportionate         reduction      in input    data   would    result
in less    keypunching        and verification        work.




                                                5
                                    CHAPTER 3


                  AGENCY COMMENTS AND OUR EVALUATION

        We brought    our finding   to the attention    of the Secre-
tary of Defense and proposed          that appropriate    action  be
taken to eliminate       the stock fund accounting      system at Ab-
erdeen.       We also suggested   that he identify     other military
installations       where similar   action  could be taken.

        The Assistant      Secretary     of Defense     (Comptroller),        in
commenting      on our finding       in a letter    dated October        20,
1970 (see app. I), concurred              that the simplification          of ac-
counting     systems and the elimination           of duplication        were
desirable      objectives.       The Assistant     Secretary      advised     us,
however,     that he believed        that the financing        procedures
recommended in our draft           report     were not in accordance          with
the provisions         of 10 U.S.C. 2208 which authorized              working
capital    funds.       He cited   the following      provisions       of 10 U.S.C.
2208 as the basis for his conclusion.

      "(a) To control    and account   more effectively       for
      the cost of programs     and work performed       in the De-
      partment   of Defense,   the Secretary    of Defense may
      require  the establishment     of working    capital    funds
      in the Department     of Defense to -

                (1) finance   inventories       of such    supplies        as
                he may designate;      and

                 (2) provide     working      capital  for such
                industrial-type        activities     and commercial-
                type activities        that provide      common services
                within      or among departments       and agencies    of
                the Department       of Defense,      as he may desig-
                nate."
            *               *            *             *              *


      "(c) Working        capital funds       shall   be charged,         when
      appropriate,        with the cost       of -

                (1) supplies    that are procured     or otherwise
                acquired,    manufactured,  repaired,    issued,   or
                used; and
                                          6
                 (2) services     or wbrk performed,          including      ap-
                 plicable   administrative        expenses,      and be re-
                 imbursed   from available        appropriations         or
                 otherwise    credited      for those costs,        including
                 applicable     administrative      expenses and costs
                 of using equipment."
             *               *              *             *              *


       "(h) The Secretary           of Defense shall      prescribe          reg-
       ulations  governing          the operation    of activities             and
       use of inventories           authorized    by this    section         ***.'I

        The Assistant     Secretary      apparently     construes      10 U.S.C.
2208 as requiring       the establishment           of separate    working
capital    funds to (1) finance          inventories     of supplies        and
(2) provide     working    capital     for industrial-type         activities
and commercial-type        activities.         It is our view, however,
that neither      the language nor the legislative              history       of
the law requires       such an interpretation.

        House Report 1064, Eighty-first                  Congress,    which ac-
companied the bill         that subsequently             was enacted as the
National     Security    Act Amendments of 1949 and which provided
for the establishment           of working        capital     funds,    describes
the purpose for which working               capital       funds are needed and
indicates     that separate        funds could be established                for dif-
ferent    purposes.       There is no indication,               however,     of any
intent     to preclude     the use of a single              working    capital    fund
to accomplish       more than one purpose when warranted                     by the
circumstances.         In fact,      the report        states     that the intent
behind establishing          working      capital      funds is to provide          for
businesslike      operations       and for financing            of inventories        in
a manner which will          permit     the most economical            and efficient
means of operation.

        Under 10 U.S.C.     2208, the Secretary       of Defense was
authorized     to 'I*** prescribe    regulations      governing        the op-
eration    of activities      and use of inventories         ***."       In com-
menting    on this power of designation          which was to be granted
to the Secretary,        House Report 1064 stated        that,     I'***    [it]
is intended      to permit    the most economical      and efficient
grouping     of inventory     items and activities       ***.'I
         Secretaries         of Defense have exercised               the discretionary
authority        granted       to them by the law.            For example,       only      ‘
certain      types of items and certain                 types of industrial           or
commercial        activities         have been financed           by working     capital
funds.       As part of the exercise               of such authority,          regula-
tions     have been prescribed             governing       industrial      fund opera-
tions     that permit          working    capital     funds established          for
such operations            to finance      inventories        of materials       and sup-
plies     that are peculiar             to and used in such operations.
We believe        that our proposal            to include       in the Aberdeen        in-
dustrial       fund the inventories              now owned by the Army stock
fund at Aberdeen             is merely a continuation              of this authority
and is not precluded               by the provisions          of 10 U.S.C.       2208.

         In our opinion      the management control           features     of the
industrial       fund concept would not be lost merely because
the industrial        fund financed         the cost of inventories.           At
Aberdeen we were informed             that no lessening         of management
control      had resulted      from financing        of inventories       by the
Aberdeen      Proving    Ground Industrial          Fund during     the period
1957 to 1964.         Appropriate       coding of transactions          in in-
dustrial      fund records       to identify      tenant   and major activi-
ties     should result     in information         for management use that
would not be significantly              different     from the information
now available.




                                             8
                                 CtiPTER 4

                  CONCLUSIONSAND RECOMMENDATIONS

CONCLUSIONS

         We believe that the industrial         fund accounting      and re-
porting system provides adequate controls                over funds, as-
sets, liabilities,        and revenues and expenses and contributes
to efficient       and effective     management and use of funds.            In
the past the Aberdeen industrial            fund has been used to.fi-
nance and control       inventories,      and it possesses the capa-
bilities     to perform such functions         currently.      We believe
that such use is not contrary           to the intent of existing
legislation.        In our opinion it would simplify           accounting
procedures without reducing the quality               of financial    man-      *
agement data produced and would result              in significant      per-
sonnel and other savings.            Aberdeen officials      have concurred
in its practicability.

RECOMMENDATIONS

       We recommend that the Secretary of Defense reconsider
his position     and direct the Secretary of the Army to elimi-
nate the stock fund accounting        system at Aberdeen.     We
recommend also that, to accomplish this, inventories           now
owned by the Army stock fund be capitalized        and controlled
by the Aberdeen industrial       fund. -The cost of operating      the
supply activity     should continue to be financed under the
operation    and maintenance appropriation.      The principles,
standards,     and general design of the revised Aberdeen in-
dustrial    fund accounting   system should be submitted to GAO
for evaluation     and approval at an appropriate     time.

       Since it is probable that separate industrial       fund and
stock fund accounting     systems exist at other military      instal-
lations,    we recommend further    that the Secretary of Defense
determine the installations      at which it is practicable      for
industrial    funds to finance and control    inventories    and
take action to eliminate      unneeded stock fund accounting
systems.




                                       9
.




    APPENDIXES
                                                                      APPENDIX I




                                                        20 OCT 1970

Mr. 0. Id. Bailey
Director,  Defense Division
U.S. General Accounting Office

Dear Mr. Bailey:

      We have reviewed your draft report of August 4,      1970, on the benefits
available by eliminating   multiple accounting systems     at the Aberdeen
Proving Ground, Maryland (OSD Case #3155). We concur        with the objectives
stated in the draft report; however, we do not concur       with the recom-
mendations for reasons discussed below.

      We believe that the financing procedures recommended in the draft
report are not in accordance with the provisions    of 10 U.S.C. 2208 which
authorizes working capital funds.   Pertinent  provisions  of 10 U.S.C. 2208
are:

           "(a)    To control and account more effectively    for the cost
                   of programs and work performed in' the Department of
                   Defense, the Secretary of Defense may require the
                   establishment  of working capital   funds in the Depart-
                   ment of Defense to -

                   (1)   finance inventories   of such supplies     as he may
                         designate; and      '

                   (2)   provide working capital for such industrial-type
                         activities and commercial-type  activities    that
                         provide common services within or among depart-
                         ments and agencies of the Department of Defense,
                         as he may designate."

           "(c)    Working-capital  funds shall   be charged,     when appropriate,
                   with the cost of

                   (1)   Supplies that   are procured or otherwise acquired,
                         manufactured,   repaired,  issued, or used; and

                   (2)   services or work performed, including applicable
                         administrative expenses, and be reimbursed from
                         available appropriations  or otherwise credited for
                         those costs, including applicable   administrative
                         expenses and costs of using equipment.
APPZNDIX I
                                                                            .     I .

          '#(h)   The Secretary of Defense shall prescrtbe regulations
                  governing the operatfon of aativities   and use of
                  inventories  authorized by this section . . . ."

         To implement the above the Secretary of Defense established industrial
 funds to provide working capital for industrial-type    and commercial-type
 activities e. and- stock funds mm
                                to finance
                                    -      inventories.




                   [See.GAO note,     p.     16.1




                                        14
                                                                            APPENDIX I
*       .




      [See   GAO note,     pe 16.1




        With regard to the financing of inventories,        industrial    fund
activities    are permitted to finance inventories        to be used in the perform-
ance of orders received by them. However, as-stated above, the stock fund
was established     as the primary means of financing materials          and supplies.
The stock fund is also more than merely a financing device for inventories.
It is intended as a means of assisting       inventory managers in management of
their inventories.        It also makes it possible to charge using appropriations
with the cost of supplies and materials        as they are consumed. Current
policy of the DOD recognizes that use of an industrial             fund to fiaance
inventories    other than those required in the operation of the industrial-
commercial type activities       is coqtrary to provisions of 10 U.S.C. 2208.
When an industrial      fund activity  has responsibility      for supply support for
other activities,     it must 'also maintain stock fund inventories          as required
for such support.       In these instances the policy is to eliminate any
duplication    of items in these inventories.       If a stock fund item is re-
quired for the supply support of other activities,            all quantities    of that
item should be carried in the stock fund. The industrial               fund will purchase
the item from the stock fund at the time of withdrawal             for its use.

        Aberdeen Proving Ground is the host activity  for several tenant
activities    whose requirements for stock funded items are substantially
in excess of, as well as different    from, those of the industrial   fund
agtivity.
               [-See GAO note, p* 16.1 -




     We support   your stated     objective   of simplifying   accounting systems
and eliminating   duplications.       However, we feel that    one of the primary




                                            15
APPENDIX I




  purposes of accounting and reporting  is to serve management. We cannot
  concur in actions which would have an adverse effect on management con-
  cepts and systems solely for the purpose of simplifying    the accounting
  system and which, in addition,  are contrary to the provisions   of
  10 U.S.C. 2208.

                                       Sincerely,




                                            Robert C. Moot
                               Assistant     Secretary of Defense




  GAO note:    The deleted   comments relate to matters which we‘re
               included in our draft report but omitted from this
               final report.




                                       16
                                                    APPENDIX-II


                    PRINCIPAL OFFICIALS

               OF THE- DEPARTMENTOF DEFENSE

              AND THE DEPARTMENTOF THE ARMY

           RESPONSIBLEFOR THE ADMINISTRATION OF

            ACTIVITIES DISCUSSEDIN THIS R,EPORT


                                          Tenure of office
                                          From            To

                   DEPARTMENTOF DEFENSE

SECRETARYOF DEFENSE:
   Melvin R. Laird                 Jan.      1969    Present
   Clark M. Clifford               Mar.      1968    Jan. 1969

DEPUTY SECRETARYOF DEFENSE:
   David Packard                   Jan*      1969    Present
   Paul H. Nitze                   July      1967    Jail.   1969

ASSISTANT SECRETARY'
                   OF DEFENSE
  (COMPTROLLER):
    Robert C. Moot        n        Aug.      1968    Present


               - DEPARTMENTOF THE ARMY

SECRETARYOF TI-3423
                 ARM-Y:
   Stanley R, Resor                July      $965    Present

ASSISTANT SECRETARYQF THE ARMY
  (FINANCIAL WA~~~=U~NT):
    Eugene M. Becker               July      1967    Present

ASSISTANT SECRETARYOF THE ARMY
  (INSTALLATIONS AND LOGISTICS):
     J. Ronald Fox                 June 1969         Present
     Vincent P, Huggard (acting)   Mar. 1969         June 1969
     Robert A. Brooks              Qct a 1965        Feb. 1969


                            17
APPENDIX II
                                                                              *
                                                                                       I




                                                  Tenure of office
                                           1      From            -To
                     DEPARTMENT
                              OF THE ARMY (continued)

COMPTROLLER   OF THE ARMY:
    Lt.   Gen. John M. Wright,       Jr.       Sept.   1970     Present
    Lt.   Gen. F. J. Sackton                   Aug.    1967     Aug. 1970
CHIEF  OF STAFF,   UNITED   STATES
  ARMY:
    Gen. W. C. Westmoreland                    July     1968    Present
    Gen. Harold K. Johnson                     July    .1964    July    1968

COMMANDING GENERAL, UNITED STATES
  ARMYMATERIEL COMMAND:
    Gen. H. A. Miley                           Nov.    1970     Present
    Gen, F. J. Chesarek                        Mar.    1969     Ott 0 1970
    Gen. Frank S. Besson, Jr.                  July    1962     Mar. 1969




                                                               U.S. GAO. Wash.. D.C.
                                     18