Summary

The Defense Department (DOD) needs accurate financial information and appropriate internal controls to effectively manage its vast resources--more than $1 trillion in assets, 3 million in military and civilian personnel, and a budget of more than $250 billion for fiscal year 1995. Unfortunately, DOD suffers from serious and pervasive financial management problems, ranging from the inability to account for billions of dollars in disbursements to a breakdown in an ability to protect assets from waste, fraud, and abuse. No military service or other major DOD component has been able to withstand the scrutiny of an independent financial statement audit. Although DOD recognizes the problem, it faces serious challenges in implementing its "blueprint" for reform. GAO continues to believe that DOD should establish an independent, outside board of experts to provide counsel, oversight, and perspective to DOD's reform efforts. Such experts could provide valuable advice and expertise in three challenging areas: systems development, personnel needs assessment, and organizational structure.