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FGMSD-78-30 1 (1978-04-12)

handle is hein.gao/gaobaaxbq0001 and id is 1 raw text is: DOCUMENT RESUME 05676 - [B1086045 O Arms Sales Ceiling Based on Inconsistect and Erroneous Lata. FGHSD-78-30; B-174901. April 12, 1976. Released April 19, 1978. 2 pp. + 2 appendices (8 pp.). Report to Rep. Lee H. Hamilton; by Elmer B. Staats, Comptrcller General. Issue Aj:ea: Accountinq and Financial Reporting: Government Operations and Useful Information (2811); international Economic and Military Programs: 1creign Military Sales (605). Contact: Financial and General Management Studies Div. Budget Function: Miscellaneous: Financial Management and Information Systems (1002). Orqanization Concerned: Defense Security Assistance Agency. Congressional Relevance: Rep. Lee H. Haniltcn. In November 1977, the Defense Security Assistazce Agency disclosed that its previously reported estimate cf $9.9 billion for fiscal year 1977 foreign military sales was understated by $1.4 billion. The President based the fiscal year 1978 arms sales ceiling of $8.6 billion on fiscal year 1977 sales. Findinqs/Conclusions: There were substauti',' accounting inconsistencies and errors relating to the S1.4 b.;'Llion adjustment. As a result, fiscal year 1977 sales ' ± wEapcns and weapons-related items subject to thbr ceiling were overstated by $594 million. Using the corrected sales figures, th- ceiling now represents only a $66 million reduction from fiscal year sales rather than the $695 million reduction originally *'jtimated. The Agency inconsistently accountod for price changes amd made other accounting errors, and efforts to correct the accounting records at fiscal year end largely failed. Recommendations: The Secretary of Defense should have the Defense Security Assistance Agency: make its accounting practices covsistert ty requiring that all price changes be accounted for as an adjustment to sales totals for the fiscal year in which the criginal sales aqreement was signed; correct its accounting records for 1977 sales, taking into account the errors found to date; formally report the revised sales totals to the Presidert and the Congress; and review its accounting for arms Eales, especially for scope and price changes, to assure that inccnsistencies and errors were not made and correct the acccurting records there necessary. (RBS)

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