Department of Defense implementation of the Chief Financial Officer Act.

Abstract

This thesis analyzes the provisions of the Chief Financial Officers (CFO) Act of 1990 as they apply to the Department of Defense (DOD). It identifies the background environment in which the CFO Act was formulated and the steps that DOD is taking to implement the law. Particular attention is given to the development of the federal financial management improvement process, including congressional committee hearings and arguments for and against the use of Generally Accepted Accounting Principles in the federal sector. The DOD implementation plan focuses on three key Defense Management Report initiatives as the means to attain the goals and objectives of the CFO Act. Accordingly, the initiatives of Corporate Information Management, Defense Finance and Accounting Service, and the Defense Business Operations Fund are discussed. In addition, government-wide and DOD efforts to develop and institute audited financial statements and establish CFO qualification standards are explored. Problems in implementation are presented. Specifically, problems with the integration of budgeting and accounting, valuation of weapon systems, accuracy of tracking and reporting inventories, and the adequacy of internal controls are reviewed. Finally, a comparison is made between DOD's efforts relative to action underway in other government agencies.