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DOCUMENT RESUME
07389 - [C27879031
(Accounting Systems for Repair and Replacoment of Equipment Sold
to Foreign Governments]. FGNSD-78-60; B-174901. September 29.
1978. 6 pp.
Report to Secretary, Departneat of Defense; by D. L.
Scantlebury, Director, Financial asdf General management Studies
DiV.
Issue Area: Accounting and Financal Reporting (2800).
Contact: Financial and General Management Studies Div.
Budget runction: Mliscellaneous: Pinancial Management and
Information Systems (1002).
organization Concerned: Department of the Air Force; Department
of the Army; Department of the Navy.
Congressional Relevance: House Committee on Armed Services;
Senate Committee on armed Services.
authority: International Security Assistance and Arms Export
Control Act of 1976 (22 U.S.C. 2151).
A review was conducted of the military services'
systems of accounting for unserviceable equipment returned by
foreign governments under the foreign vilitary sales progr . In
fiscal year 1977, foreign military sales amounted to over !
billion, and equipment accounted for a substantial portion
that amount. The Army and Navy offer foreign governments two
options for having unserviceable equipment reppired: (1)
contract with the military service to have equipment repaired or
returned; or (2) exchange unserviceable equipment for
serviceable equipment. Tn both cases, the foreign qovernmert is
charged. These systems are, for the most part, working
satisfactorily. The Air Force has, however, been accepting all
unserviceable equipment and giring foreign o., vernments credit
(75% of the equipment's current inventory price) without
determsninq, as required, whether the Air Force han a need for
it. As a result, the Air ForcQ accepted tor credit millions of
dollars of worn and broken equipment for which it had no use.
Because coordination between .esponsible &ir Force organizations
has been ineffective, the air Force has experienced difficulties
in making needed changes. The Air Porce needs to have adequate
controls to assure that foreign governments are properly charged
for repair costs incurzed. The Secretary of the Air fece should
designate a representative to see that the system is elfecti-ell
implemented and require that the Air Force Audit Agency review
the system after it becomes operational to determine _e
effectiveness. (DRS)](ViewImageLocal?handle=hein.gao/gaobaaycv0001&div=1&collection=&method=preview&ext=.png&size=3)