Correct Balance of Defense's Foreign Military Sales Trust Fund Unknown

Gao ID: FGMSD-80-47 June 3, 1980

A report was undertaken on the accounting differences between cash balances reported to foreign customers by the Department of Defense (DOD) and cash balances carried in those customer's trust fund accounts for all services, and on financial management problems DOD experienced in the administration of the Foreign Military Sales Program.

Specifically, GAO found that as of September 30, 1979, detailed accounting records for foreign military sales customers differed by $1.5 billion from trust fund records showing cash on hand. After considering normal processing delays, system deficiencies, and identifiable accounting errors, unexplained differences were still about $390 million. GAO was unable to determine the cause of these differences because DOD activities have not routinely reconciled all key accounting records. Unless and until these differences are explained, the correct cash balances held in trust for 97 foreign customers cannot be determined.

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: John F. Simonette Team: General Accounting Office: Financial and General Management Studies Division Phone: (202) 275-1581


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