Condition: Reconciliation of Net Cost of Operations to Budget

Description
	SFFAS No. 7, "Accounting for Revenue and Other Financing Sources," requires a reconciliation of proprietary and budgetary information to assist users in understanding the relationship between the net cost of operations and the budgetary resources obligated by the entity during the period." (DODIG Report 2010-002, p.14). Example #1: In 24 of the reports, we discussed deficiencies in DOD's reconciliation of net cost of operations to budget. DOD acknowledged that it is unable to reconcile budgetary obligations to net costs without making unsupported adjustments. Specifically, budgetary data does not agree with proprietary expenses and capitalized assets. DOD made unsupported adjustments of $7 billion (absolute value) to reconcile obligations to the Statement of Net Cost. While none of the standard audit reports discussed this area directly, 24 of the 40 disclaimers cited the issue as one of the internal control weaknesses that led to the disclaimer.
Parent Condition (1)
	Material Weakness
Child Condition(s) (0)

Condition Source

Busines Rule(s) (0)

Operational Activity(ies) (0)

BPM Process(es) (0)

Measure(s) (1)
	Procure to Pay Reconciliation