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![handle is hein.gao/gaobadatr0001 and id is 1 raw text is:
UNITED STATES GENERAL ACCOUNTING OFFIC
WASHINGTON, D.C. 20548i
EFENSE DIVISION SEP 7 1967
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General Counsel E. n r-
A decision is requested regarding a procedure incorporated in
Department of Defense Directive 7410.4, Regulations Governing Indus-
trial Fund Operations, dated March 13, 1967, which generally requires
that proceeds from the sale of .scrap be deposited -to the-industrial fund.
In addition to the question of legality, the effect of the DOD procedure
would be to increase an industrial fund corpus without going through the
appropriation process, particularly in any case where a substantial
amount of scrap is generated under a project and sold. Since this direc-
tive has been submitted to the GAO by the DOD for approval under Section
112(b) of the Budget and Accounting Procedures Act of 1950, an approval
by us of this directive would be an acceptance of this procedure.
A decision is requested as to whether net proceeds from the sale of
scrap should properly be credited to the industrial fund for disposition
at the Fund's discretion, to a miscellaneous receipts account of the
. Ti-easury, or to the O&M or Procurement appropriation of the customer from
whose materiel the scrap was generated, where such credits can be identi-
fied. (The procurement appropriation would be involved where the indus-
trial activity performed modifications, rather than repairs. See para-
graph VI.C., DOD Instruction 7040.5, September 1, 1966).
Paragraph VII.F. of DOD Directive 7410.4 requires that:
Proceeds from sale of scrap shall be deposited to the
industrial fund when such property is held in the fund * and
shall not be deposited in the Treasury as miscellaneous receipts.
In 31 U.S.C. 487, Proceeds of sales of materials, it provides that
All proceeds of sales of old material, condemned stores,
supplies, or other public property of any kind, except * as
provided in Section 485 of Title 40, or in other law, shall be
deposited and covered into the Treasury as miscellaneous receipts.
The exception cited, 40 U.S.C. 485, Proceeds from transfer, sale,
etc., of property, states in part (c) Credit to reimbursable fund or
appropriation on certain transactions, that:
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