CHAPTER 2
FINANCIAL MANAGEMENT OF RESOURCES
Each year the Navy must have billions of
dollars to carry out its mission. This money comes
from the taxpayers of the United States as
determined by Congress.
The Navy must keep accounts to show how
the money is spent. The accounts show the receipt
and expenditure of public funds; the amount of
government money, materials, and property on
hand; and the cost of all operations, broken down
by projects and programs. All these functions are
part of financial management. Financial manage-
ment is necessary to guarantee that government
property and money are economically used in the
public interest. Cost data assembled by projects
and programs are used for budget planning and
justification.
Although as an Aviation Storekeeper (AK),
you are not an accountant or bookkeeper, you
will often account for large amounts of public
funds in the form of materials and stores. You
are also involved in the preparation and process-
ing of requisitions that constitute an expenditure
of public funds. In addition, in keeping ship’s
operating target (OPTAR) records and submitting
required reports, you are accounting for public
funds.
Accounting for material and accounting for
cash are basically the same. All government
accounting is performed with the objective of
guaranteeing that expenditures are made accord-
ing to the desires expressed by Congress when
the program was approved and the funds
appropriated. According to this objective, records
must be kept so that transactions can be examined
at a later date and reconstruction of events made.
Also within this objective, the disposition of funds
and material must be provable. The logic of this
recordkeeping is easy to understand if you have
some knowledge of the overall financial operation
of the government.
RESOURCE MANAGEMENT SYSTEM
The resource management system (RMS) is a
series of systems designed to promote better
management procedures throughout the Depart-
ment of Defense (DOD) by providing managers
with improved methods of obtaining and con-
trolling resources required to accomplish the
assigned missions.
A resource manager is any individual, either
military or civilian, who is accountable and
responsible for carrying out a significant mission
or function and who makes decisions that will
have a significant effect on the resources used.
As an AK you have daily contact with some
aspect of the RMS. An understanding of the
background, objectives, and terms used will
provide you with a clearer picture of the system.
The following paragraphs contain some RMS
definitions and information about the background
and objectives applicable to all activities within
the DOD.
DEFINITIONS
For a better understanding of the RMS, take
a look at the following definitions of terms used
throughout the AK community.
Accrual accounting is the method used where
operating costs are accounted for in the fiscal
(accounting) period during which the costs of
resources consumed or applied are received.
Aviation Operating Forces include aviation
squadrons, units, staffs, and ships supporting air-
craft (for aviation funds only) assigned to the fleet
accounting and disbursing centers (FAADCs) for
accounting purposes.
Expense element codes are codes established
by DOD to classify expenses for cost accounting
and reporting purposes. They are listed and
defined in the Navy Comptroller (NAVCOMPT)
Manual, volume 2, chapter 4.
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