Status of DOD Efforts To Improve Accounting for Foreign Military Sales

GAO discussed Department of Defense (DOD) efforts to improve its foreign military sales (FMS) accounting procedures and to resolve discrepancies in FMS accounting records. GAO found that: (1) major accounting and internal control weaknesses prevented proper management and control of the FMS Trust Fund; (2) DOD delayed implementation of the new central FMS accounting system because of changes in system design caused by unexpected complexities in the multiple support systems; (3) a series of system design and interfacing requirements changes caused further delays; (4) when system testing fell behind schedule, DOD failed to adjust milestones, causing all the test results to be of questionable use; (5) under a proposed new test schedule, the system would be operational in 1989; and (6) as of December 1987, the estimated cost of the system increased by $30.8 million, to $75.3 million. GAO believes that, to successfully implement new FMS accounting procedures, DOD and the services must work together to: (1) reevaluate problems and determine what improvements are possible; (2) ensure system accuracy and timeliness; (3) carefully document and control final resolutions of existing problems; and (4) ensure the continuing effectiveness of any corrective actions.