United States Department of Transportation
i
Air Mobility Command Financial Reporting of Property, Plant, and Equipment
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1997-03-19
[PDF-1.26 MB]
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Abstract:Introduction. This is the first in a series of reports from our audit of the Property, Plant, and Equipment Accounts in the FY 1996 Financial Statements of the Defense Business Operations Fund. The Air Mobility Command is a subordinate command of the U.S. Transportation Command. In 1987, the Secretary of Defense established the U.S. Transportation Command as a unified command to integrate global air, land, and sea transportation. The Air Mobility Command is the largest component of the U.S. Transportation Command. The Air Mobility Command's mission is to airlift passengers and cargo for DoD and other authorized users. In FY 1996, the Air Mobility Command was expected to generate $2.4 billion in revenue, which represented over half of the U.S. Transportation Command's $4 billion in expected revenue. In the beginning balance for FY 1996 Defense Business Operations Fund financial statements, The Air Mobility Command reported $1.1 billion of Property, Plant, and equipment. Audit Objective. The objective of this part of the audit was to determine whether the Air Mobility Command and the Defense Finance and Accounting Service Denver Center took sufficient action to improve the accuracy of the amounts that the Defense Business Operations Fund financial statements showed for the Air Mobility Command's property, plant, and equipment. Audit Results. The Air Mobility Command and the Defense Finance and Accounting Service Denver Center did not take the actions needed to accurately report Air Mobility Command property, plant, and equipment in the Defense Business Operations Fund financial statements. Prior audits had concluded that the property, plant, and equipment accounts were understated by at least $155.5 million, and that $277.6 million was unsupported. The only change that the Air Mobility Command made to its accounts in FY 1996 was to record $64.1 million that it had budgeted for depreciation. Management made no other efforts to adjust the amounts reported. As a result, the $1.1 billion reported as property, plant, and equipment by the Air Mobility Command will continue to be materially misstated by as much as $433.1 million; inaccurate financial data may be used to make management decisions; and any further use of the statements will be adversely affected. The recommendations in this report, if implemented, will improve the reliability and usefulness of the Air Mobility Command's financial reporting of its property, plant, and equipment accounts.
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