Best Long-Range Solution to Financial Management Problems of the Foreign Military Sales Program

FGMSD-79-33: Published: May 17, 1979. Publicly Released: May 24, 1979.

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John F. Simonette
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For many years, the Department of Defense (DOD) has experienced serious financial management problems with regard to accounting, billing, and collecting for its foreign military sales (FMS) program.

DOD has not had an adequate program-wide financial management plan since the program's inception. Each military department and the Security Assistance Accounting Center designed their own systems, which have not provided accurate or timely data. As a result, DOD is unable to provide foreign governments with a proper accounting of how their money was spent. Policy implementation has been inconsistent and attempts at standardization have failed. Although some improvements have been made, progress has been slow and many longstanding problems remain uncorrected.

Matter for Congressional Consideration

  1. Status: Closed - Not Implemented

    Comments: DOD did not agree with the recommendation and, since several more recent reports have been issued and the House Appropriations Committee did not choose to direct centralization, the recommendation is no longer valid.

    Matter: Congress should require the Secretary of Defense to produce a plan for centralizing accounting and financial management of the FMS program, which should include obligation and expenditure accounting and disbursing of funds, and should ensure that all costs properly chargeable to the program are fully recovered. The plan should: (1) specify the responsibilities of the central accounting organization and the external support required from all organizations involved with the program; (2) establish detailed policies and procedures for centralization and define systems requirements; (3) identify personnel needs, including a description of duties; (4) establish milestones for development, testing, and implementation to include the transfer of existing personnel positions to the centralized accounting organization; and (5) require that the new system be developed and designed in accordance with the Comptroller General's accounting principles and standards and submitted to him for formal approval.

Recommendation for Executive Action

  1. Status: Closed - Implemented

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: The Secretary of Defense should strengthen the existing Defense steering committee charged with identifying and ranking according to priority FMS financial management problems.

    Agency Affected: Department of Defense


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