The Defense Department's Systems of Accounting for the Value of Foreign Military Sales Need Improvement

FGMSD-79-21: Published: Mar 16, 1979. Publicly Released: Mar 22, 1979.

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The procedures by which the Department of Defense (DOD) computes the value of foreign military sales agreements and the yearly foreign military sales ceiling were reviewed.

Approximately $1.1 billion of inconsistencies and errors in accounting for fiscal year (FY) 1977 arms sales were identified. Had the correct sales figures been known, the President's FY 1978 arms sales ceiling, based on FY 1977 sales, might have been set $420 million lower.

Recommendation for Executive Action

  1. Status: Closed

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

    Recommendation: The Secretary of Defense should require that the Defense Security Assistance Agency and the Security Assistance Accounting Center closely coordinate actions to improve their automated systems of accounting for the value of foreign military sales. A single system which would include adequate automated computer controls should be developed to eliminate the maintenance of duplicate systems. DOD should also: (1) make its accounting practices for price changes consistent; (2) correct its accounting records, taking into account the errors GAO identified; and (3) have its internal auditors review from time to time the accounting for foreign sales values to ensure the effectiveness of efforts by the Agency and Center to improve their system.

    Agency Affected:


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