Pursuant to a legislative requirement, GAO reviewed the financial statements of a consortium of U.S. semiconductor manufacturers and the Department of Defense (DOD) for the year ending December 31, 1991.

GAO found that: (1) the SEMATECH 1991 financial statements were fairly presented in conformance with generally accepted accounting principles; (2) there were no material internal control weaknesses or noncompliance with laws and regulations; (3) DOD has agreed to modify its procedure for disbursing funds to SEMATECH in January 1993 by providing advance payments to SEMATECH on a monthly basis; (4) five member companies included a portion of their SEMATECH contributions as overhead costs on government contracts that they held; and (5) the Defense Advanced Research Projects Agency planned to revise its procedures in January 1993 to provide advance payments to SEMATECH on a monthly basis using SEMATECH quarterly expenditure projections.