Would GAAP-Based Accounting Practices Improve Financial Management and Decision-Making in the Department of Defense

摘要

This paper analyzes whether the General Accounting Office's (GAO's) proposedinitiatives of accounting and financial reporting based on Generally Accepted Accounting Principles (GAAP) would improve the financial management and decision-making in the federal government, specifically, in the Department of Defense (DoD). The current federal government accounting model as structured in the DoD and in the Department of the Navy (DON) is analyzed as its effect on financial management and decision-making. The GAO's approach to financial management reform is then analyzed, concentrating on the GAO's primary focus on financial statements based on Generally Accepted Accounting Principles (GAAP), double entry bookkeeping based on accrual accounting and a standard general ledger, and the publication and dissemination of annual financial statements. Both the pros and cons of GAAP, in general, are investigated, and proposed alternatives to federal financial management reform are presented. The conclusion is that although reforms are necessary, they must have consensus, and be demonstrable as to usefulness and necessity to both external and internal users and managers. In addition, it is concluded that GAAP, as currently and internal users and managers. In addition, it is concluded that GAAP, as currently structured, has not be sufficiently demonstrated as the best approach to federal financial management system reforms. Eleven recommendations are offered.