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25.

FINANCE

As of June 1950, a thorough 18-month examination had been completed of Finance -

programsand activities with a view toward initiating more effective service for management and better procedures for developing the SFO-wide weapons program. The examination indicated the advisability of a reorganization to distinguish between accounting and
auditing functions, to improve the compilation and analysis of cost data, and to transfer
greater responsibility to contractors.
The reorganization, with the attendant improvements, is reflected in two major

changes made during the present period.
Unit Cost System

The accounting system has been expandedto include a production or unit cost system.

This is in line with commercial accounting practices and is a major step forward. For the
first time it is possible to determine what weapons and weapon components cost, and to bill

AFSWP with a reasonably accurate cost of items furnished to them.

A basis is provided for

comparison to the costs of contractors performing similar work, and data are available
which are invaluable in support of budget requests. The short period during which the system has been in operation has indicated refinements which are necessary, but which will

prove the system to be of even greater value.
Audit Procedure

Audit procedures also have been greatly improved.

Detail examinations have been

eliminated, and commercial auditing practices have been substituted. This has permitted
a much greater flexibility, resulting in better audits at a decrease in man-hour requirements. In addition to normal financial audits, there has been superimposed a series of

management or procedural audits which will develop the extent to which both SFO contrac-

tors and SFO offices are living up to instructions and directives.

In line with these improvements, the Finance Division has increased its staff only
from 111 as of June 30, 1950, to 121 as of June 30, 1953. Its main branches, whose names

readily identify their respective functions, are: the Accounting Branch and Audit Branch,
each with its sections, and the Payroll and Accounts Payable sections.

In addition to the Finance Division staff at Albuquerque, SFO maintains duty-stationed

auditors at Kansas City, Denver, Los Angeles, Las Vegas, and Los Alamos.

These duty

stations have been selected at strategic points in order to make service more readily avail-

able and to decrease the cost of operation.

Operating Program Costs (Fiscal Years 1951 through 1953)
Program

1951

1952

1953

Weapons
Biology & Medicine
Community
Administrative

$123, 702,475
1, 455, 839
1, 100, 898
4, 060, 497

$179,908,742
1, 546, 085
235, 331
5, 188, 855

$233, 668, 356
2, 070, 809
(199, 899)
5, 270, 093

$130, 319, 709

$186, 879, 013

$240, 809, 359

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