Financial Management

During fiscal year 1992, foreign governments, private groups, and individuals contributed more than $5 billion to the Defense Department (DOD), mainly to defray the costs of Operations Desert Shield and Desert Storm. GAO found that DOD credited all cash contributions to the Defense Cooperation Account and administered these funds in accordance with legal and accounting requirements. Through various memoranda, DOD also established procedures for tracking, reporting, and valuing in-kind support. DOD corrected reporting discrepancies that GAO had noted in an earlier report. DOD's fiscal year 1992 reports to Congress reflected adjustments to the estimated value of in-kind contributions. DOD's formal regulations on the Defense Cooperation Account and related contributions of cash and goods have not been issued. This lack of formal guidance may have caused the proceeds from the sale of contributed goods to be deposited in an account other than the Defense Cooperation Account.

GAO found that: (1) during fiscal year (FY) 1992, deposits to the Defense Cooperation Account totalled $5.3 billion; (2) DOD transferred $10.8 billion to DOD accounts and other agencies to fund incremental costs of Operations Desert Shield and Desert Storm; (3) DOD implemented adequate accounting procedures and internal controls to administer the account; (4) as of September 30, 1992, foreign governments had contributed goods and services valued at $5.7 billion; (5) DOD drafted regulations governing the Defense Cooperation Account and the deposit of proceeds from the sale of donated goods; and (6) FY 1992 contributions to DOD and related Defense Cooperation Account transactions were considerably less than in FY 1991.

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.

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