Budget Authority for Foreign Military Sales Is Substantially Understated

Gao ID: PAD-78-72 July 27, 1978

The Office of Management and Budget (OMB) and the Department of Defense (DOD) recently changed the method of recording budget authority within the foreign military sales (FMS) trust fund. Before fiscal year (FY) 1977, each year's FMS trust fund budget authority corresponded to the dollar total of FMS new acceptances. Under the new procedure, the budget authority for a given year is made to match the portion of acceptances, old and new, which result in FMS trust fund implementing obligations during the year.

The budget authority for FMS for FY 1977 was understated by $2.6 billion. The change introduced a significant element of inconsistency into FMS trust fund procedures and reporting without achieving offsetting improvements, and it is contrary to the usual meaning of budget authority. The change eliminates from the budget totals and schedules reporting on the maximum potential FMS obligations which the executive agencies may incur as a result of the new authority that new acceptances create. It also eliminates standard reporting on FMS unobligated acceptances which is important for evaluating budget and program execution. The budget authority change is contrary to sound budgetary policy and dilutes appropriate congressional budgetary control.

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: Kenneth W. Hunter Team: General Accounting Office: Program Analysis Division Phone: (202) 275-4649


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