The Chief Financial Officers Act of 1990, as amended by the Federal Financial Management Act of 1994, requires DoD to prepare annual audited financial statements. This is the first in a series of reports related to the DoD Agency-wide Financial Statements for FY 1998. The DoD Agency-wide Financial Statements for FY 1998 are compiled from the financial statements of the DoD reporting entities: the Army, Navy, and Air Force General Funds; the Army, Navy, Air Force, Defense Logistics Agency, and Defense Finance and Accounting Service Working Capital Funds; the Military Retirement Trust Fund; the U.S. Army Corps of Engineers, Civil Works Program; and financial data for the Other Defense Organizations General Fund and Working Capital Fund. In FY 1998, the DoD Components reported total assets of $606 billion, total liabilities of $976 billion, total net costs of operations of $260 billion, and total budgetary resources of $606 billion. We used data reported on the DoD Component financial statements for FY 1998 for our overall audit conclusions. The reported assets of DoD did not include approximately $618 billion of assets identified as National Defense Property, Plant, and Equipment. National Defense Property, Plant, and Equipment assets were included as supplementary stewardship information in the financial statements.