State of the art of proprietary financial reporting in the Department of the Navy

Abstract

With the enactment of the Chief Financial Officers (CFO) Act of 1990, the Department of the Navy (DON) is required to produce proprietary financial statements for fiscal year 1996 and beyond. Proprietary financial reporting focuses on the creation, management, and use of all resources (assets) of an organization, not just on expendable funds. This thesis provides a comprehensive overview of the state of the art of proprietary financial reporting in the DON. To address this issue, a review of the laws, policies and agencies which affect proprietary reporting was conducted, along with a comparison between Federal government and private sector financial reporting. An analysis of the form and content of the primary proprietary reports, the Statement of Financial Position and the Statement of Operations and Change in Net Position, and an analysis of the information systems, which are used to gather the data, was conducted. The DON is operating in a time of expanding requirements with limited resources. This review of proprietary financial reporting in the DON has shown that the statements required by the CFO Act can be produced. However, the deficiency of the information systems, which affect the accuracy of the data, combined with inadequate performance measurements, lessens the current value of the proprietary financial statements.