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FGMSD-80-26 1 (1980-01-28)

handle is hein.gao/gaobabagr0001 and id is 1 raw text is: 
RELEASED


RESTRICTED - Not to be released outsrce the ueneral
Accounting Office except on the basis of specific approvAl
by the Office of Congressional Relations.


REPORT BY THE                                                       26 7..


Comptroller General


OF THE UNITED STATES


How Military Sales Trust Funds Operate:

Saudi Arabian And Iranian

Funds Compared

This report answers questions concerning the
Saudi Arabian trust fund, the operation of all
U.S. military sales trust funds, and the need
for a central clearinghouse controlling dis-
bursements from these trust funds.

Acting on a recommendation in our July 25,
1979, report (FGMSD-79-47), Defense is re-
quiring the military departments to estimate
potential termination liability reserves for
foreign military sales agreements. This re-
quirement, however, is not uniformly im-
plemented. In addition, Defense has es-
tablished procedures for pricing items di-
verted to second buyers but these procedures
are not always followed. As a result, Defense
cannot be certain that all funds transferred
into the Iranian trust fund account from
second buyers are valid.


GAO is recommending that the Secretary of
Defense ensure that the military services
(1) uniformly implement Defense's proce-
dures for computing termination liability
reserves, (2) collect such amounts promptly,
and (3) ensure that these amounts are unavail-
able for routine contractor payments.


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     FGMSD-80-26
JANUARY 28, 1980


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