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The Component did not adequately review inventory accounting adjustments or correct the erroneous, missing, or duplicate supply transactions causing discrepancies in inventory balances recorded in the supply systems. Not reviewing and correcting adjustments results in inaccurate inventory records; distorted reports that inventory managers use to make decisions to buy, repair, and excess material; and unreliable and inaccurate financial reports used to measure the performance.
Example#1: The inventory reconciliation process at the Component did not adequately fulfill DOD financial and operational requirements. Specifically, the automated portion of the process did not accurately select reconciliation items for causative research in accordance with DOD criteria, calculate accurate adjustments, post adjustments reversals to the proper general ledger accounts, and maintain sufficient audit trails. Further, personnel responsible for manual causative research did not perform all required research, consistently perform adequate causative research and post proper adjustments, complete causative research in a timely manner, and request special physical inventories when necessary. The control weaknesses impact the overall integrity of the inventory records that DOD managers rely on for operational mission decisions and financial reporting purposes. |