If they are adopted, the standards are published as Statements of Federal Financial Accounting Standards (SFFAS) by OMB and by GAO. We also reviewed congressional committee reports that requested ammunition disposal cost information. DOD Has Not Implemented SFFAS No. 5. In addition, the DOD Comptroller, who is responsible for developing and issuing guidance on accounting standards, and the Under Secretary of Defense (Acquisition and Technology), who is responsible for the operational activities associated with ammunition disposal, have not provided implementation guidance to the services to assist them in estimating the disposal costs for ammunition. 5 for reporting of a liability is that an amount be reasonably estimable. Although a number of critical factors would have to be considered, including the reliability of the historical data as discussed in the following section, the cost estimates developed for the MIDAS families can be used as a starting point to estimate the ammunition disposal liability. In commenting on our recent report on the aircraft disposal liability, DOD agreed to implement SFFAS No. This guidance should address the key liability estimation factors identified in this report, including data reliability, data completeness, and the need for updated information. For this reason, Defense officials stated that it will not be feasible to report the estimated ammunition disposal liability in the DOD’s financial statements prior to fiscal year 1998.
Why GAO Did This Study

Pursuant to a legislative requirement, GAO reviewed the Department of Defense's (DOD) implementation of the requirement to disclose the liability associated with the disposal of various types of assets, specifically conventional ammunition.

What GAO Found

GAO noted that: (1) DOD has not yet implemented the federal accounting standard that requires recognizing and reporting liabilities such as those associated with ammunition disposal, nor has it provided guidance to the military services; (2) in commenting on GAO's recent report on the aircraft disposal liability, DOD agreed with GAO's recommendation to incorporate statements of federal financial accounting standard (SFFAS) No. 5 in its Financial Management Regulation; (3) ammunition disposal is an ongoing process that results from materials with a limited shelf-life or that otherwise will not be used in operations, and the cost can be reasonably estimated; (4) accordingly, these activities meet the criteria for a reportable liability; (5) the cost information that DOD developed in response to requests from congressional committees can be used as a starting point to estimate the ammunition disposal liability; and (6) a number of additional factors will have to be addressed, including data reliability, data completeness, and the need for periodic updates.