NATO:

U.S. Contributions to the Airborne Early Warning and Control Program

NSIAD-88-132: Published: Apr 14, 1988. Publicly Released: Apr 25, 1988.

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In response to a congressional request, GAO reviewed the financial controls over U.S. contributions to the North Atlantic Treaty Organization's (NATO) Airborne Early Warning and Control Program to determine whether U.S. performance in this program was consistent with: (1) the Memorandum of Understanding establishing the program; and (2) U.S. laws and regulations covering contributions to such multilateral efforts.

GAO found that: (1) the United States and other participating countries provided contributions to the program in advance of requirements; (2) NATO deposited the funds in commercial, interest-bearing accounts, which resulted in NATO earnings of about $250 million; (3) U.S. contributions earned about $80 million in interest; (4) NATO committed all earned interest to original program requirements or to outstanding claims payments; and (5) the advance payments resulted in increased borrowing and interest costs for the Treasury. GAO also found that Department of Defense (DOD) representatives: (1) did not violate any U.S. laws, but failed to comply with Department of the Treasury principles and guidelines for providing funds to international organizations; (2) did not request that NATO adjust or delay U.S. contributions or support efforts to identify and return any interest earned on those contributions; (3) supported the use of the accumulated interest rather than appropriated funds for program requirements; and (4) failed to inform Congress in its summary financial information of the accumulation and use of the interest.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: Treasury agreed with the intent of this recommendation, and has updated its Financial Manual to stress agency compliance with Treasury fiscal policies. DOD concurred and stated that it has changed its procedures which will preclude interest income from recurring in the future.

    Recommendation: The Secretaries of Defense and the Treasury should ensure that U.S. contributions to NATO programs are provided by appropriations and that appropriate U.S. Treasury fiscal policies are adhered to.

    Agency Affected: Department of the Treasury

  2. Status: Closed - Implemented

    Comments: Treasury agreed with the intent of this recommendation, and has updated its Financial Manual to stress the need for agency compliance with Treasury fiscal policies.

    Recommendation: The Secretaries of Defense and the Treasury should ensure that U.S. contributions to NATO programs are provided by appropriations and that appropriate U.S. Treasury fiscal policies are adhered to.

    Agency Affected: Department of Defense

  3. Status: Closed - Implemented

    Comments: DOD concurred and stated that it has changed its procedures which will preclude interest income from recurring in the future.

    Recommendation: The Secretary of Defense should direct his representatives to NATO organizations to support U.S. fiscal policies regarding contributions to international organizations and the return of interest, as contained in the Treasury's principles and guidelines for transactions with countries and international organizations.

    Agency Affected: Department of Defense

  4. Status: Closed - Implemented

    Comments: Treasury's Financial Manual has been modified to implement this recommendation.

    Recommendation: The Secretary of the Treasury should continue to stress to other U.S. departments and agencies the need to ensure that they comply with Treasury's fiscal principles and guidelines when providing funds to international organizations.

    Agency Affected: Department of Defense

 

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