Better Accounting Needed for Foreign Countries' Deposits for Arms Purchases
AFMD-81-28
Published: Jan 30, 1981. Publicly Released: Feb 06, 1981.
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Highlights
Concern was expressed about the policy allowing foreign countries to transfer moneys not needed to meet current obligations from their trust fund account to interest-bearing accounts. Specifically, GAO was asked to evaluate this policy and determine whether: (1) established collection procedures are being followed; and (2) safeguards are being established that will keep adequate funds in the United States to insure against loss in the event of arms purchase agreement cancellation.
Recommendations
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Department of Defense | The Secretary of Defense should protect the interests of the United States by establishing controls to ensure that funds received for possible contract termination are not used for routine contract payments. These controls would help ensure the availability of needed funds if a foreign customer should abruptly and unilaterally cancel its foreign military sales agreement. |
Closed – Implemented
When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
|
| Department of Defense | The Secretary of Defense should protect the interests of the United States by developing guidance for administration of interest-bearing accounts to specify what funds are available for such accounts, and the extent to which Defense personnel may be involved in selecting commercial depositories. |
Closed – Implemented
When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
|
| Department of Defense | The Secretary of Defense should protect the interests of the United States by including provisions in future agreements establishing interest-bearing accounts to ensure that foreign customers are aware that any losses sustained as a result of investments made in commercial accounts are borne by the customer. Foreign customers with existing commercial bank accounts should be advised in writing of the risks they have assumed. |
Closed – Implemented
When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
|
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Topics
Advance paymentsCollection proceduresContract terminationFederal agency accounting systemsFinancial management systemsForeign military arms salesPolicy evaluationTrust fundsForeign military salesAccounts