B-121541, B-122279, FEB 10, 1956

B-121541,B-122279: Feb 10, 1956

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THE REMAINING REPORTS WERE RECEIVED ON JANUARY 31. A COPY OF WHICH WAS SENT TO THIS OFFICE. THIS SUPPLEMENTARY INFORMATION HAS NOT BEEN INCLUDED IN THE ATTACHED REPORTS AND WE ARE EXPLORING THE QUESTION OF WHETHER SUCH INFORMATION CAN BE OBTAINED RETROACTIVELY FROM THE REPORTING AND ACCOUNTING SYSTEMS IN EFFECT DURING FISCAL YEAR 1955.". REFERRED TO IN THE QUOTED EXCERPT FROM THE SECRETARY'S COMMUNICATION IS B 121541. A COPY OF WHICH WAS FURNISHED TO YOU AS WELL AS THE CHAIRMAN. IT MUST BE CONCLUDED EITHER THAT THE LETTER'S IMPORT HAS BEEN MISUNDERSTOOD OR THAT THE DEPARTMENT'S INABILITY TO FURNISH THE REQUIRED INFORMATION IS PREDICATED ON A FAILURE TO COMPLY WITH THE STATUTORY RESPONSIBILITIES ORIGINALLY IMPOSED UPON THE SECRETARY IF DEFENSE BY SECTION 110.

B-121541, B-122279, FEB 10, 1956

PRECIS-UNAVAILABLE

HONORABLE CLARENCE CANNON:

CHAIRMAN, COMMITTEE ON APPROPRIATIONS

HOUSE OF REPRESENTATIVES

UNDER REQUIREMENTS CONTAINED IN SECTION 1311(B) OF PUBLIC LAW 663, 83RD CONGRESS, 2D SESSION, THE DEPARTMENT OF DEFENSE HAS FORWARDED BY TRANSMITTALS DATED OCTOBER 8, OCTOBER 18, DECEMBER 1, DECEMBER 14, DECEMBER 23, 1955, AND JANUARY 11, 1956, TO THE CONGRESS, THE BUREAU OF THE BUDGET, AND THIS OFFICE, REPORTS AND CERTIFICATIONS OF CERTAIN APPROPRIATIONS OF THE OFFICE OF THE SECRETARY OF DEFENSE AND THE DEPARTMENTS OF THE ARMY, NAVY, AND THE AIR FORCE. IN HIS LETTER OF JANUARY 11, THE SECRETARY OF DEFENSE ADVISED THAT THE REMAINING REPORTS AND CERTIFICATIONS REQUIRED BY SECTION 1311(B), FOR APPROPRIATIONS OF THE DEPARTMENT OF THE ARMY WOULD BE FORWARDED AS SOON AS POSSIBLE. THE REMAINING REPORTS WERE RECEIVED ON JANUARY 31, 1956.

IN THE THIRD PARAGRAPH OF THE LETTER DATED OCTOBER 8, 1955, TO THE CHAIRMAN, HOUSE COMMITTEE ON APPROPRIATIONS, A COPY OF WHICH WAS SENT TO THIS OFFICE, THE SECRETARY OF DEFENSE STATED:

"SUBSEQUENT TO THE END OF FISCAL YEAR 1955, A COMPTROLLER GENERAL LETTER OF 19 AUGUST 1955 REQUESTED THAT THE REPORTS REQUIRED BY SECTION 1311(B) INCLUDE SUPPLEMENTARY INFORMATION NOT PREVIOUSLY REQUIRED TO BE INCLUDED IN OUR OBLIGATION RECORDS FOR EACH SEPARATE ACCOUNT WITH REGARD TO THE AMOUNTS RESERVED UNDER SECTION 110, PUBLIC LAW 778, FOR COMMON-ITEM ORDERS FROM MILITARY ASSISTANCE APPROPRIATIONS. THIS SUPPLEMENTARY INFORMATION HAS NOT BEEN INCLUDED IN THE ATTACHED REPORTS AND WE ARE EXPLORING THE QUESTION OF WHETHER SUCH INFORMATION CAN BE OBTAINED RETROACTIVELY FROM THE REPORTING AND ACCOUNTING SYSTEMS IN EFFECT DURING FISCAL YEAR 1955."

THE ACTING COMPTROLLER GENERAL'S LETTER OF AUGUST 19, 1955, REFERRED TO IN THE QUOTED EXCERPT FROM THE SECRETARY'S COMMUNICATION IS B 121541, B- 122279, A COPY OF WHICH WAS FURNISHED TO YOU AS WELL AS THE CHAIRMAN, COMMITTEE ON APPROPRIATIONS, U.S. SENATE, THE SECRETARY OF THE TREASURY AND THE DIRECTOR, BUREAU OF THE BUDGET. AS EVIDENCED BY THAT LETTER, AND AS SUMMARIZED IN THE ATTACHED REPORT, SUCH INSTRUCTION PLACED NO RESPONSIBILITIES ON THE DEPARTMENT OF DEFENSE OTHER THAN THOSE ALREADY IMPOSED BY LAW FOR THE DEVELOPMENT OF DATA REQUIRED FOR INCLUSION IN SECTION 1311 REPORTS. ACCORDINGLY, IT MUST BE CONCLUDED EITHER THAT THE LETTER'S IMPORT HAS BEEN MISUNDERSTOOD OR THAT THE DEPARTMENT'S INABILITY TO FURNISH THE REQUIRED INFORMATION IS PREDICATED ON A FAILURE TO COMPLY WITH THE STATUTORY RESPONSIBILITIES ORIGINALLY IMPOSED UPON THE SECRETARY IF DEFENSE BY SECTION 110, PUBLIC LAW 778, 83RD CONGRESS APPROVED SEPTEMBER 3, 1954, AND SECTION 1311(B) OF THE SUPPLEMENTAL APPROPRIATION ACT, 1955 (PUBLIC LAW 663, 83D CONGRESS) AND THE APPLICABLE DEPARTMENT OF DEFENSE DIRECTIVE (NUMBER 2110.16, DATED MAY 17, 1955) IN WHICH THE BUREAU OF THE BUDGET AND THIS OFFICE CONCURRED. IN EITHER EVENT, AS THE MATTER NOW STANDS, WE MUST ADVISE THE CONGRESS THAT THE DEPARTMENT HAS NOT COMPLIED WITH THE REPORTING REQUIREMENTS OF SECTION 1311(B) OF PUBLIC LAW 663 WITH RESPECT TO REPORTING THE AMOUNTS UNOBLIGATED JUNE 30, 1955, UNDER THE APPLICABLE MILITARY APPROPRIATIONS, NOR WITH THE REQUIREMENTS OF SECTION 110 OF PUBLIC LAW 778, AS SUCCEEDED BY SECTION 108 OF THE MUTUAL SECURITY APPROPRIATION ACT, 1956, PUBLIC LAW 208, APPROVED AUGUST 2, 1955.

BOTH THE UNOBLIGATED AND UNEXPENDED AMOUNTS AS REPORTED AND CERTIFIED UNDER SECTION 1311(B) ARE CONSIDERABLY UNDERSTATED AND THE REPORTS ARE INCOMPLETE BY REASON OF THE FAILURE OF THE DEPARTMENT OF DEFENSE TO INCLUDE THE AMOUNTS OF ADDITIONAL OBLIGATIONAL AUTHORITY PROVIDED UNDER THE APPLICABLE MILITARY APPROPRIATIONS REPRESENTING ANTICIPATED REIMBURSEMENTS AS COVERED BY ORDERS ISSUED BY THE SECRETARY OF DEFENSE AGAINST MILITARY ASSISTANCE APPROPRIATIONS. THE EXTENT OF THIS UNDERSTATEMENT AS OF JUNE 30, 1955, OF OBLIGATIONAL AUTHORITY AVAILABILITY IN THE REPORTS REQUIRED PURSUANT TO SECTION 1311(B) AMOUNTS TO MORE THAN $4 BILLION FOR 1955 FUND RESERVATIONS AS SHOWN IN THE PRESIDENT'S BUDGET FOR FISCAL YEAR 1957.

THE AMOUNT OF THIS ADDITIONAL OBLIGATIONAL AUTHORITY AVAILABILITY HAS BEEN DISCLOSED UNDER EACH APPLICABLE MILITARY APPROPRIATION IN THE PRESIDENT'S BUDGET FOR FISCAL YEAR 1957 IDENTIFIED AS "UNOBLIGATED BALANCE CARRIED FORWARD (ANTICIPATED REIMBURSEMENTS TO BE EARNED IN FUTURE YEARS FROM MILITARY ASSISTANCE FUND RESERVATIONS)" IN THE DETAIL OF THE BUDGET AUTHORIZATIONS, EXPENDITURES AND BALANCES BEGINNING ON PAGE 533. (SEE ALSO "SUMMARY OF MILITARY ASSISTANCE FUND RESERVATIONS FOR PAYMENT TO DEPARTMENT OF DEFENSE APPROPRIATIONS" PP 603-604.)

AS YOU KNOW SECTION 1311(B) OF PUBLIC LAW 663, REQUIRES THE HEAD OF EACH FEDERAL AGENCY TO REPORT, NOT LATER THAN SEPTEMBER 30 OF EACH YEAR, AS TO EACH APPROPRIATION OR FUND UNDER THE CONTROL OF SUCH AGENCY, THE AMOUNT REMAINING OBLIGATED BY UNEXPENDED AND THE AMOUNT THEREOF REMAINING UNOBLIGATED ON JUNE 30 OF SUCH YEAR. SINCE THERE HAS NOT BEEN COMPLIANCE WITH THE STATUTE, WE RECOMMEND THAT THIS PROBLEM BE REVIEWED WITH THE DEPARTMENT TO DETERMINE WHAT ACTION IS NECESSARY.

A COPY OF THIS LETTER IS BEING TRANSMITTED TO THE CHAIRMAN, COMMITTEE ON APPROPRIATIONS, U.S. SENATE, SECRETARY OF THE TREASURY, DIRECTOR, BUREAU OF THE BUDGET, AND THE SECRETARY OF DEFENSE.

SUMMARY OF LEGISLATIVE AND ADMINISTRATIVE BACKGROUND RELATING TO THE ACCOUNTING AND REPORTING REQUIREMENTS PURSUANT TO SECTION 110, PUBLIC LAW 778 AND SECTION 1311(B), PUBLIC LAW 663.

THE ACCOUNTING AND FINANCIAL REPORTING RESPONSIBILITIES OF THE DEPARTMENT OF DEFENSE WITH RESPECT TO SECTION 1311 OF PUBLIC LAW 663 AND SECTION 110 OF PUBLIC LAW 778, COVER AN EXTENSIVE LEGISLATIVE AND ADMINISTRATIVE BACKGROUND, AND, IN ORDER TO PRECLUDE ANY FURTHER MISUNDERSTANDING AS TO THE PRECISE REQUIREMENTS OF BOTH, IT APPEARS DESIRABLE TO REVIEW AND SUMMARIZE THE ACTIONS RELATING TO THESE MATTERS.

THE CONGRESS, WITH THE ADVICE AND RECOMMENDATION OF THE DIRECTOR OF THE BUREAU OF THE BUDGET, THE DIRECTOR OF THE FOREIGN OPERATIONS ADMINISTRATION, SECRETARY OF DEFENSE, AND THE THEN COMPTROLLER GENERAL, ENACTED SECTION 110 OF THE MUTUAL SECURITY APPROPRIATION ACT OF 1955 (PUBLIC LAW 778, 83D CONGRESS, APPROVED SEPTEMBER 3, 1954) TO PROVIDE MUCH NEEDED AUTHORITY TO THE SECRETARY OF DEFENSE FOR THE INTEGRATED FINANCING OF THE MILITARY ASSISTANCE PROGRAM WITH THAT FOR THE SAME OR EARLIER PROCUREMENT OF ITEMS IN THE MILITARY DEPARTMENTS. UNDER THIS LEGISLATION, THE DEPARTMENT OF DEFENSE WAS PROVIDED A MEANS FOR PROCEEDING IN AN ORDERLY MANNER TO COMBINE OR CONSOLIDATE THE PROCUREMENT FOR MDAP ITEMS WITH THOSE FOR THEIR OWN ACCOUNTS, WITH RESULTING PROCUREMENT AND SUPPLY MANAGEMENT ECONOMIES. THIS WAS ACCOMPLISHED BY AUTHORIZING THE DEPARTMENT OF DEFENSE "TO INCUR, IN APPLICABLE APPROPRIATIONS, OBLIGATIONS IN ANTICIPATION OF REIMBURSEMENTS" FROM ALLOCATIONS OF MDAP FUNDS EQUAL TO THE VALUE OF ORDERS PLACED WITH THE MILITARY DEPARTMENTS BY THE SECRETARY OF DEFENSE. PROVISION WAS ALSO MADE IN THIS LEGISLATION FOR RESERVING SUCH AMOUNTS UNDER MUTUAL SECURITY APPROPRIATIONS FOR THE VALUE OF UNDELIVERED ORDERS PLACED BY THE SECRETARY OF DEFENSE WITH THE MILITARY DEPARTMENTS FOR REIMBURSEMENT TO MILITARY APPROPRIATIONS AS THE ITEMS OR SERVICES WERE DELIVERED. THE TOTAL AMOUNT RESERVED CANNOT BE ALTERED, EXCEPT UPON CERTIFICATION BY THE SECRETARY OF DEFENSE, AS PROVIDED IN SECTION 110, PUBLIC LAW 778, AND REMAINS AVAILABLE FOR REIMBURSEMENT TO MILITARY APPROPRIATIONS WHEN THE COMPLETED END ITEMS HAVE ACTUALLY BEEN SHIPPED UNTIL JUNE 30, 1957 (NOW EXTENDED TO JUNE 30, 1958 BY SECTION 108, PUBLIC LAW 208, APPROVED AUGUST 2, 1955).

THE LEGISLATION THUS PROVIDED A RELATIVELY SIMPLE ACCOUNTING AND REPORTING BASIS OF THE PROGRAM PERFORMANCE IN TERMS OF END ITEMS DELIVERED AND SERVICES RENDERED UNDER MDAP AS CONTRASTED WITH FORMER OVERLY COMPLEX AND RELATIVELY UNCOORDINATED SYSTEM OF FINANCING MDAP PROCUREMENT WHEREIN THE DEPARTMENT ENDEAVORED FROM INCEPTION OF THE PROGRAM IN 1950 THROUGH THE KOREAN EMERGENCY TO SEGREGATE, ON AN ARTIFICIAL AND UNREALISTIC BASIS, THE IDENTITY OF THESE COMMON ITEMS THROUGH THE PROCUREMENT AND STORAGE PROCESSES.

SINCE THE BASIC AUTHORITY TO INCUR, IN THE APPLICABLE MILITARY APPROPRIATIONS, OBLIGATIONS IN ANTICIPATION OF REIMBURSEMENT FROM THE MILITARY ASSISTANCE APPROPRIATIONS IS CONTAINED IN SECTION 110 OF PUBLIC LAW 778, THIS LEGISLATION UPON ENACTMENT ON SEPTEMBER 3, 1954, IMPOSED UPON THE SECRETARY OF DEFENSE A RESPONSIBILITY FOR ACCOUNTING AND REPORTING ON THE AMOUNTS OF ADDITIONAL OBLIGATING AUTHORITY THUS PROVIDED FOR EACH OF THE REGULAR MILITARY APPROPRIATIONS UNDER WHICH THE PROCUREMENT OR ISSUE WOULD BE ACCOMPLISHED.

SHORTLY AFTER ENACTMENT OF SECTION 110 ON SEPTEMBER 3, 1954, REPRESENTATIVES OF THE BUREAU OF THE BUDGET AND THE GENERAL ACCOUNTING OFFICE COOPERATED WITH DEPARTMENT OF DEFENSE REPRESENTATIVES IN THE DEVELOPMENT OF THE BASIC PRINCIPLES, POLICIES, AND PROCEDURES NECESSARY FOR CARRYING OUT THE ABOVE, AS WELL AS OTHER RESPONSIBILITIES PLACED UPON THE DEPARTMENT. CONSISTENT WITH THE INTENT OF CONGRESS, PROVISION WAS MADE IN INTERIM PROCEDURES (REVISED ON DECEMBER 7, 1954) FOR CLEARING UP THE UNSATISFACTORY FINANCIAL AND ACCOUNTING SITUATION AND PROVIDING UNDERSTANDABLE AND WORKABLE ACCOUNTING PRACTICES UNDER WHICH THERE WOULD BE A FULL AND COMPLETE DISCLOSURE FOR MANAGEMENT AND THE CONGRESS OF THE STATUS OF FUNDS ON BOTH MDAP AND REGULAR MILITARY APPROPRIATIONS, AND THE PERFORMANCE UNDER APPROVED MDAP PROGRAMS AS MEASURED IN TERMS OF DELIVERIES OF GOODS AND SERVICES. THE MILITARY DEPARTMENTS WERE REQUESTED ON DECEMBER 14, 1954 TO IMPLEMENT THE PROVISIONS OF A REVISED DRAFT DIRECTIVE TO THE FULLEST EXTENT POSSIBLE, PENDING THE RECEIPT OF COMMENT AND/OR APPROVAL FROM THE DIRECTOR, BUREAU OF THE BUDGET AND THE COMPTROLLER GENERAL. ON MARCH 11, 1955 (B 122279) THIS OFFICE FURNISHED CERTAIN COMMENTS TO THE DEPARTMENT AND ADVISED THE SECRETARY THAT THE PROPOSED DIRECTIVE, IF PROPERLY CARRIED OUT, WOULD ACCOMPLISH THE PURPOSES INTENDED.

DEPARTMENT OF DEFENSE DIRECTIVE NUMBER 2110.16, WAS ISSUED ON MAY 17, 1955, STATING THE BASIC PRINCIPLES AND POLICIES AND PRESCRIBING PROCEDURES FOR FINANCING, FUNDING, ACCOUNTING AND REPORTING TO CARRY OUT THE PROVISIONS RELATING TO THE FISCAL ASPECTS OF MILITARY ASSISTANCE UNDER THE MUTUAL SECURITY ACT OF 1954 AND RELATED APPROPRIATION ACTS. THIS DIRECTIVE (MORE SPECIFICALLY PARAGRAPH IX-I THEREOF) PROVIDED SPECIAL ACCOUNTING PROCEDURES NECESSARY TO ESTABLISH ACCOUNTING CONTROL AND AN AUDITABLE RECORD OF THE VALUE OF THE OUTSTANDING ORDERS ISSUED PURSUANT TO THE AUTHORITY OF THE SECRETARY OF DEFENSE AND THE AMOUNTS AVAILABLE IN APPLICABLE MILITARY APPROPRIATIONS REPRESENTING ANTICIPATED REIMBURSEMENTS.

IN CONSIDERATION OF THE RELATED REPORTING REQUIREMENTS TO ADEQUATELY REFLECT THE FISCAL STATUS OF ALL FUNDS FOR THE FISCAL YEAR ENDED JUNE 30, 1955, FOR WHICH THE DEPARTMENT OF DEFENSE WAS ACCOUNTABLE INCLUDING THOSE RELATING TO AMOUNTS RECEIVED UNDER SECTION 110, PUBLIC LAW 778, FOR COMMON ITEM ORDERS FROM MILITARY ASSISTANCE APPROPRIATIONS, REPRESENTATIVES OF THE TREASURY DEPARTMENT, BUREAU OF THE BUDGET AND THIS OFFICE, DURING THE LATTER PART OF JULY 1955, AGREED THAT, FOR PURPOSES OF CONSISTENCY IN REPORTING IN THE PRESIDENT'S BUDGET, THE TREASURY COMBINED STATEMENT, AND THE REPORTS REQUIRED UNDER SECTION 1311(B) OF PUBLIC LAW 663, APPROPRIATE DISCLOSURE SHOULD BE MADE BY THE DEPARTMENT OF DEFENSE OF THE AMOUNTS OF ADDITIONAL OBLIGATIONAL AUTHORITY PROVIDED UNDER THE APPLICABLE MILITARY APPROPRIATIONS FOR WHICH THE DEPARTMENT WAS ACCOUNTABLE UNDER SPECIFIC PROVISIONS OF LAW. SUCH ACTION WAS TAKEN IN ACCORDANCE WITH THE INTENT OF CONGRESS AS EXPRESSED IN HOUSE REPORT 493, PAGE 9 (MAY 5, 1955), THAT ACCURATE FINANCIAL INFORMATION BE PREPARED FROM THE ACCOUNTS AND SUBMITTED TO THE CONGRESS IRRESPECTIVE OF THE VARIOUS REPORTING FORMATS CURRENTLY USED BY THE VARIOUS REGULATORY AGENCIES TO SERVE THE PURPOSES AND FUNCTIONS FOR WHICH SUCH AGENCIES ARE RESPONSIBLE.

IT WAS FURTHER AGREED, AFTER THE MATTER WAS DISCUSSED WITH DEPARTMENT OF DEFENSE REPRESENTATIVES, THAT THIS OFFICE WOULD SUPPLEMENT THE PROVISIONS OF ACCOUNTING SYSTEMS MEMORANDUM NO. 35, TO REQUIRE THAT THE AMOUNTS REPRESENTING ANTICIPATED REIMBURSEMENTS TO THE APPLICABLE REGULAR DEFENSE APPROPRIATIONS FOR WHICH THE DEPARTMENT OF DEFENSE WAS ACCOUNTABLE (AS PROVIDED UNDER PARAGRAPH IX, OF DEPARTMENT OF DEFENSE REGULATION 2110.16), BE REPORTED IN A MANNER THAT WOULD PROVIDE APPROPRIATE DISCLOSURE OF THE AMOUNTS INVOLVED.

ALTHOUGH DEPARTMENT OF DEFENSE REPRESENTATIVES SUGGESTED DURING THE FIRST PART OF AUGUST 1955, AS AN ALTERNATIVE, THAT ONLY THAT AMOUNT OF ADDITIONAL OBLIGATIONAL AUTHORITY NECESSARY TO COVER THE AMOUNT OF OBLIGATIONS INCURRED ABOVE THE AMOUNTS APPROPRIATED DIRECTLY UNDER THE REGULAR MILITARY APPROPRIATIONS BE REPORTED, IT WAS EXPLAINED THAT THEIR SUGGESTION WAS UNACCEPTABLE SINCE IT COULD NOT BE CONSIDERED AS A PROPER ACCOUNTING OR A FULL DISCLOSURE OF THE TOTAL OBLIGATIONAL AUTHORITY AVAILABLE FOR INCURRING OBLIGATIONS FOR THE PERIOD SUBSEQUENT TO JUNE 30, 1955. ACCORDINGLY, AFTER CONSULTATION WITH THE HOUSE AND SENATE APPROPRIATION COMMITTEE STAFFS, AND WITH THE CONCURRENCE OF THE BUREAU OF THE BUDGET AND THE TREASURY, THIS OFFICE ISSUED APPROPRIATE INSTRUCTIONS IN THE ACTING COMPTROLLER GENERAL'S LETTER OF AUGUST 19, 1955 (B-121541, B -122279) TO THE DEPARTMENT OF DEFENSE WHICH PROVIDED AN APPROPRIATE BASIS FOR CONSISTENTLY REPORTING THE FINANCIAL DATA REQUIRED UNDER APPLICABLE STATUTORY PROVISIONS SO AS TO SHOW THE ACTUAL STATUS OF FUNDS AS RELATED TO MILITARY ASSISTANCE AS WELL AS THE STATUS OF THE COMBINED PROGRAMS IN TERMS OF OUTSTANDING OBLIGATIONS AND UNOBLIGATED BALANCES. RELATED INSTRUCTIONS WERE ISSUED BY THE ACTING DIRECTOR, BUREAU OF THE BUDGET ON SEPTEMBER 1, 1955, TO THE SECRETARY OF DEFENSE WHICH PROVIDED, AMONG OTHER REQUIREMENTS, THAT:

"TOTAL AVAILABILITY IN DEPARTMENT OF DEFENSE APPROPRIATIONS RECEIVING MILITARY ASSISTANCE COMMON ITEM ORDERS IS THE SUM OF BOTH THE NORMAL OBLIGATIONAL AVAILABILITY AND THE SPECIAL OBLIGATIONAL AVAILABILITY GENERATED BY ESTABLISHING FUND RESERVATIONS IN THE MILITARY ASSISTANCE ACCOUNT. IN NO INSTANCE SHOULD PORTIONS OF FUND RESERVATIONS APPLICABLE TO A PARTICULAR DEPARTMENT OF DEFENSE ACCOUNT BE DISREGARDED IN CALCULATING TOTAL AVAILABILITY BECAUSE THERE IS EXPECTATION THE ACCOUNT WILL NOT INCUR OBLIGATIONS FOR SOME MILITARY ASSISTANCE ITEMS DURING THE CURRENT FISCAL YEAR."

IN VIEW OF THE FOREGOING, IT WAS OBVIOUS THAT THE TOTAL AMOUNT OF OBLIGATIONAL AUTHORITY UNDER THE MILITARY APPROPRIATIONS SHOULD BE CERTIFIED UNDER SECTION 1311(B) EVEN THOUGH AN EQUIVALENT AMOUNT OF OBLIGATIONS WAS NOT INCURRED DURING THE CURRENT YEAR. THEREFORE, IT WAS DEEMED NECESSARY TO INSIST IN THE LETTER OF AUGUST 19, 1955, FROM THIS OFFICE, THAT SUCH AMOUNTS BE "ACCOUNTED FOR AND BE RECORDED IN THE MILITARY ASSISTANCE ACCOUNTS (ORDERING ACCOUNT) AND IN THE REGULAR DEFENSE APPROPRIATION ACCOUNT (RECEIVING ACCOUNT) IN A MANNER WHICH WILL PROVIDE PROPER ACCOUNTING CONTROL AND AN AUDITABLE RECORD OF THE VALUE OF THE OUTSTANDING ORDER ISSUED PURSUANT TO THE AUTHORITY OF THE SECRETARY OF DEFENSE AND THE AMOUNTS AVAILABLE IN APPLICABLE APPROPRIATIONS REPRESENTING ANTICIPATED REIMBURSEMENTS."

THUS, BY REFERENCE TO THE UNDER SCORED PORTION OF INSTRUCTIONS IN THE PRECEDING PARAGRAPHS, THE ATTENTION OF THE SECRETARY WAS SPECIFICALLY DIRECTED TO THIS MATTER BY THE BUREAU OF THE BUDGET AND THIS OFFICE AS TO THE REQUIREMENTS UNDER THE LAW. FURTHER, IF THE DEPARTMENT HAS PROPERLY CARRIED OUT THE REQUIREMENTS CONTAINED IN DEPARTMENT OF DEFENSE DIRECTIVE NUMBER 2110.16, SUCH INFORMATION WOULD BE AVAILABLE FOR REVIEW AND CONSIDERATION OF THE CONGRESS IN THE REPORTS REQUIRED PURSUANT TO SECTION 1311(B).