DEPARTMENT OF DEFENSE ACCOUNTING SYSTEM FOR FOREIGN MILITARY SALES - REVIEW (FROM CASES IN ACCOUNTABILITY, P 145-154, 1979, BY ERASMUS H KLOMAN - SEE NCJ-69444)

• NCJ Number: 69450
• Author(s): D W SMITH
• Date Published: 1979
• Length: 10 pages
• Sale Source: Westview Press, Inc
• Language: English
• Country: United States of America

Annotation

THE FINANCIAL AND GENERAL MANAGEMENT STUDIES DIVISION (FGMSD) OF THE GENERAL ACCOUNTING OFFICE (GAO) HAS REVIEWED THE DEPARTMENT OF DEFENSE'S (DOD) ACCOUNTING SYSTEM FOR FOREIGN MILITARY SALES.

Abstract

THE REVIEWS HAVE DEALT WITH RECOVERY OF COSTS OF TRAINING FOREIGN MILITARY STUDENTS; RECOVERY OF COSTS INCURRED IN THE USE OF GOVERNMENT PLANT AND EQUIPMENT IN THE PRODUCTION OF FOREIGN MILITARY SALES ITEMS; RECOVERY OF PERSONNEL COSTS; AND RECOVERY OF NORMAL INVENTORY STOCK LOSSES. THESE REVIEWS HAVE RESULTED IN ESTIMATED SAVINGS OF OVER $215 MILLION FOR JUST THE 3 YEARS SINCE FGMSD BEGAN ITS REVIEWS. OF THAT AMOUNT, APPROXIMATELY $130 MILLION IS A RECURRING SAVINGS TO THE U.S. IN ADDITION, THE REVIEWS HAVE IDENTIFIED AT LEAST $50 MILLION OF POTENTIAL SAVINGS. FIRST, WITH REGARD TO TRAINING FOREIGN MILITARY STUDENTS, FGMSD DISCOVERED THAT ACCOUNTING SYSTEMS HAVE NOT BEEN DEVELOPED TO ADEQUATELY ACCUMULATE COSTS, PRICING POLICIES HAVE NOT BEEN UNIFORMLY APPLIED BY THE MILITARY DEPARTMENTS, PRICING POLICIES HAVE NOT ALWAYS BEEN IMPLEMENTED, AND SUFFICIENT MANAGEMENT ATTENTION HAS NOT BEEN GIVEN TO THE PROGRAM. SECOND, COSTS DURING FISCAL YEAR 1976 IN PROVIDING TRAINING AND TECHNICAL ASSISTANCE TO FOREIGN COUNTRIES HAVE NOT BEEN RECOVERED. MOREOVER, THE GAO REPORTS THAT THE DOD HAD NOT CHARGED FOR USING GOVERNMENT-OWNED ASSETS; THUS GAO RECOMMENDS THAT THE SECRETARY OF DEFENSE REQUIRE THE MILITARY SERVICES TO TAKE ACTION ON INTERNAL AUDIT FINDINGS AND ATTEMPT TO RECOVER THE COSTS INCURRED. IN ADDITION, THEY SHOULD ATTEMPT TO RECOVER FROM FOREIGN GOVERNMENTS CHARGES FOR USING GOVERNMENT-OWNED ASSETS IN CONTRACTOR-OWNED AND OPERATED FACILITIES. THIRD, PERSONNEL COSTS FOR THE FOREIGN MILITARY SALES PROGRAM ALSO WERE NOT FULLY RECOVERED, AS WAS TRUE OF NORMAL INVENTORY LOSSES. IT WAS RECOMMENDED THAT DOD IMPLEMENTED A STANDARD MANPOWER ACCOUNTING SYSTEM AND THAT DOD CHANGE ITS INVENTORY PRICING POLICY. FURTHER ALLEGATIONS REGARDING DOD'S ACCOUNTING ERRORS ARE SCHEDULED TO BE EXAMINED BY GAO. APPENDIXES LIST VARIOUS REPORTS ON DOD'S FOREIGN MILITARY SALES AND ONE NOTE AND EIGHT STUDY QUESTIONS ARE PROVIDED.