The audit was performed in compliance with the Chief Financial Officers Act of 1990 (Public Law 101-576) and the Federal Financial Management Act of 1994 (Public Law 103-356). Public Law 103-356 requires DoD and other Government agencies to prepare consolidated financial statements for FY 1996 and each succeeding year. The DoD Deputy Chief Financial Officer notified the DoD Components on June 6, 1995, of the requirement to prepare and submit financial statements in accordance with the Federal Financial Management Act of 1994. In September 1994, the Defense Finance and Accounting Service (DFAS) transferred the responsibility for preparing the departmental accounting reports for Department 971 appropriations to the DFAS Indianapolis Center. The transfer was effective April 1, 1995. Objectives. The overall audit objective was to evaluate the process for reporting Department 97 appropriations through the Federal Financial System (previously the General ledger Accounting and Reporting System) at the DFAS Indianapolis Center. Specifically, we reviewed the Federal Financial System process the DFAS Indianapolis Center used to receive, adjust, and consolidate the general ledger trial balances on the Army Reserve portion of the National Guard and Reserve Equipment appropriation. We also evaluated management controls over the process the DFAS Indianapolis Center used to receive, adjust, and consolidate the general ledger trial balances received from fiscal stations.