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Exhibit II-27

OFFICERS QUALIFIED FOR CONTINUOUS ACIP AS OF END OF FY 1981

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Source: Annual Report to Congress of the Aviation Career
Incentive Act of 1974, as of FY 1981.

Exhibit II-28

ESTIMATED SAVINGS IF ACIP RATES ARE REDUCED FOR MEMBERS
WITH MORE THAN 12 YEARS OF SERVICE

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Footnotes to Exhibit II-28

ESTIMATED SAVINGS IF ACIP RATES ARE REDUCED FOR MEMBERS WITH MORE THAN 12 YEARS OF SERVICE

1/

2/

Based on the assumption that in FY 1982, of the 32,890
members receiving ACIP at the rate for 6-18 years of
service (YOS), 30 percent were in the 12-18 YOS range
(9867). Within the 12-18 YOS range, it is assumed
that members were equally distributed among the three
categories.

Based on the assumption that approximately 20 percent
of those with more than 12 YOS are assigned to active
flight duty. The remaining 80 percent would not
receive ACIP under our recommendation that it be elimi-
nated for members not on active flight duty. (See
savings calculation in Savings and Impact Analysis.)

II. ISSUE AND RECOMMENDATION SUMMARIES (CONT'D)

F.

FINANCIAL ISSUES

OVERVIEW

The Office of the Secretary of Defense (OSD) Task Force has found that there is no usable management information system in the Department of Defense. Line item detail prescribed for the Federal budget cannot be used effectively for the financial analysis of areas of operation.

A

Since top DOD officials do not have as ready access to management information as would be normal in private sector operations, frequent resort is made to special studies. major obstacle occurs because of the delay in obtaining relevant data and because basic decisions tend to be put off in the press of other problems.

Because of the operational deficiencies of the basic accounting system, great reliance must be placed upon financial controls and internal auditing. Added focus in this area should result from the recent creation of the position of Inspector General for the DOD.

The OSD Task Force makes two further recommendations to enable the Secretary to maximize the value of the internal audit function. Since the scope of internal audits in the procurement area has been far too limited for the size of the weapons acquisition program, the establishment of a Procurement Audit Service is recommended.

The private sector has found that corporate audit committees, comprised of outside directors, considerably improve the quality of internal auditing and the scope of the internal audit program. The OSD Task Force recommends that DOD establish an outside audit committee to perform a similar function for the Secretary of Defense.

II. ISSUE AND RECOMMENDATION SUMMARIES (CONT'D)

F. FINANCIAL ISSUES (CONT'D)

OSD 36: DEPARTMENT OF DEFENSE PUBLIC AUDIT COMMITTEE

Summary Recommendation

The Department of Defense (DOD) should seek legislation that will permit it to establish a public audit committee comprised of members from the private sector appointed by the President of the United States. The role of the DOD Public Audit Committee would be comparable to that of private sector audit committees, which serve in an advisory capacity to corporate boards of directors. The primary responsibility of the DOD Public Audit Committee would be to conduct thorough and independent reviews of DOD internal audit practices, procedures, and controls, and to evaluate the adequacy of the internal audit responsibilities, mission, and scope for DOD.

Financial Impact

The formation of a DOD Public Audit Committee would enhance the effectiveness and visibility of the audit functions within DOD and provide an independent review of overall audit and management policy compliance. The full effects of this recommendation in terms of financial savings and increases in operating efficiencies and program effectiveness are difficult to measure. However, based on our . review of DOD internal audits and follow-up on audit recommendations, the Office of the Secretary of Defense (OSD) Task Force feels that the increased importance placed on the audit function will result in substantial savings. Further, the resulting long-term improvements in internal controls will generate additional opportunities for savings.

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