Arms Sales Ceiling Based on Inconsistent and Erroneous Data

FGMSD-78-30: Published: Apr 12, 1978. Publicly Released: Apr 12, 1978.

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In November 1977, the Defense Security Assistance Agency (DSAA) disclosed that its previously reported estimate of $9.9 billion for fiscal year (FY) 1977 foreign military sales was understated by $1.4 billion. The President based FY 1978 arms sales ceiling of $8.6 billion on FY 1977 sales.

There were substantial accounting inconsistencies and errors relating to the $1.4 billion adjustment. As a result, FY 1977 sales of weapons and weapons-related items subject to the ceiling were overstated by $594 million. Using the corrected sales figures, the ceiling now represents only a $66 million reduction from FY sales rather than the $695 million reduction originally estimated. DSAA inconsistently accounted for price changes and made other accounting errors, and efforts to correct the accounting records at FY end largely failed.

Matter for Congressional Consideration

  1. Status: Closed

    Comments: Please call 202/512-6100 for additional information.

    Matter: The Secretary of Defense should have DSAA: (1) make its accounting practices consistent by requiring that all price changes be accounted for as an adjustment to sales totals for FY in which the original sales agreement was signed; (2) correct its accounting records for 1977 sales, taking into account the errors found to date; (3) formally report the revised sales totals to the President and Congress; and (4) review its accounting for arms sales, especially for scope and price changes, to ensure that inconsistencies and errors were not made and correct the accounting records where necessary.

 

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