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ID-78-33 1 (1978-04-07)

handle is hein.gao/gaobaawyl0001 and id is 1 raw text is: DOCUt RNSOIE 05(433 -(810059447) 9et'er Progra Eauageaent through Eliminating Exchange Rate Gains and Losses from DOD Budget Processes. ID-78-33; B-133102. April 7, 1978. Released April 17, 1978. 3 pp. * 3 appendices (13 pp.). Report to Rep, Len Lapin; by Etmer B. Staats4 Comptrolier General. Issue Area- International Economic and Hilitary ProgLams (600); Program and Budget Information for Congressional Use (3400). Contact: International Div. Budget function: fational Defense: Department oi Defense - Military (except procurement S co itracts) (051); International Affairs: Internatio.4al Financial Programs (155). Organization Concerned: Departmei. of the Air Force; Department of the Army; Department of Defense. Congrotsional Relevance: House tomaittee on Armed Services; Senate Committee on Avmed Services. Rep. Los Lspin. Bec;ause of an in- ixnational monetary crisis in 1973, major indt-stia, l -.antrlaa changed from fixed to floating exch nqo rates fom their currencies. The floating rates have caused problems for the Department of Defense (DOD) in managing programs financed with foreign currencies because the long leadtise between budget preparatioL and execution results in expenditures of foreign currencies at different exchange rates from those budgeted. lindiugs/Conclusions: If expenditures are made at less favorable exchange rates than those budgeted, DOD must either seek supplemental appropriations and reprogramming authority or absorb the increased costs. This causes delays and uncertainty in carrying out programs. If not enough funds are obtained in this way, -eductions iu approved programs must be made. Gains attained from favorable exchange rate fluctuations enable DOD to either offset unbudgeted costs or to finace unfunded requirements. An alternative funding method which would eliminate exchange rate gains and losses from the DOD budgetary process would insure that DOD does not supplement its appropriations through gains derived from favorable currency exchange rate fluctuations or suffer from lesses. Uecommendations: The Secretary of Defense should seek legislative authority to initiate an alternative funding method to eliminate exchange zate gains and losses from the DOD budgetary process. Such legislation should require the Secretary of Defense to provide the Congress with an annual accounting of exchange rate transactions by country. (Author/SC)

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