Problems With the U.S. Management of Foreign Currency Transactions for NATO Programs

GAO examined allegations concerning the management and adequacy of internal auditing of foreign currency transactions in support of U.S. participation in the North Atlantic Treaty Organization (NATO) infrastructure and international military programs. GAO also reviewed actions taken by Army officials in Europe to correct foreign currency purchasing and timing of payments deficiencies.

The NATO/SHAPE(Supreme Headquarters Allied Powers Europe) Support Group which is responsible for financial administration of U.S. participation in NATO international programs greatly reduced the scope of its internal review program over the past 4 years. Since 1977, actions taken by support group management have left it with inadequate and ineffective internal review capability. The effectiveness of the internal review program was undermined by the Support Group management efforts to reduce staff, divert them to other offices, and assign them to operational duties. The current line of authority and command problem among the applicable support groups is a complex one which has an impact on the overall U.S. administration and management of the NATO infrastructure and international military programs. Some corrective actions have been taken on earlier GAO recommendations, but a problem persists with the timing of payments to NATO because adequate procedures have not been developed and followed. The prior report noted that the Support Group was accelerating or delaying NATO payments in an attempt to obtain favorable exchange rates. Speculative efforts such as this are contrary to the intent of Treasury regulations. Army and Support Group officials have agreed that the problems exist and have begun to correct them. In addition, GAO found considerable confusion among the major participants in the process over specific responsibilities, timing, information to be provided one another, and the definition and use of key financial dates.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

Director: Harry R. Finley Team: General Accounting Office: International Division Phone: (202) 512-5187