The state of the art of budgetary financial reporting in the Navy

Abstract

The purpose of this thesis was to investigate current budgetary financial reporting practices in the Navy, and provide a comprehensive overview of budgetary reporting in that department. This thesis reviewed and discussed appropriation life cycles, along with the organizations, accounting systems and reports involved in Navy budgetary financial reporting. Each appropriation enacted and allotted down the financial chain of command is accounted for through budgetary financial reporting. The organizations involved in budgetary reporting are categorized into two groups; field level and service level. Five reports are currently in use: Trial Balance Report, Expense Element Report, Fund Status Report, Report on Budget Execution and Appropriation Status Report. The Navy is streamlining its current budgetary financial and accounting reporting use of 37 systems down to two primary budgetary accounting systems; the Standard Accounting and Reporting System and the Naval Headquarters Financial System. A comparison of budgetary reporting with private sector financial reporting illuminated similarities in the basic accounting model underlying the financial reports, but differences in reporting objectives and practices. Budgetary financial reporting serves the objective of reporting budget execution status well but is limited in its ability to communicate financial position.