7 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 ALaS SPey DAD 150 ey L )s3