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ID-81-54 1 (1981-08-21)

handle is hein.gao/gaobabcia0001 and id is 1 raw text is: UNITED STATES GENERAL ACCOUNTING OFFICE 0V WASINGTON, D.C. 208/ INT1Dt4A)CtAAL DIVISIO B-146749 AUGUST 21, 1981 The Honorable Caspar W. Weinberger The Secretary of Defense Dear Mr. Secretary: 116186 Subject: oreign Currency Exchange Rate Fluctuation Funds (ID-81-54) We reviewed the contingency funds approved by the Congress to cover shortages in Defense's overseas programs caused by foreign currency exchange rate fluctuations. The objective of our review was to evaluate the effectiveness of procedures for using and accounting for these funds, which total $1.1 billion. We found the procedures to be generally effective, but noted inconsistencies among the Military Services in handling exchange rate fluctuations for some programs and activities and a few rela- tively minor operating deficiencies. (See enc. 1.) Therefore, we recommend that the Secretary of Defense: --Issue guidelines to ensure that the Services uniformly account for gains and losses due to foreign currency exchange rate fluctuations in military construction and family housing programs. As long as this contin- gency funding approach is continued, this accounting should be made whether or not funds had been made available in the current year. --Determine whether gains and losses from foreign cur- rency fluctuations for travel expenses are significant, and then establish a uniform policy for handling these transactions. Defense officials commented that there are unresolved dif- ferences of opinion within Defense as to whether the Military Services should account for gains and losses due to currency exchange rate fluctuations in fiscal year 1981 military construc- tion and family housing programs. Some officials contend that, since no contingency funds were made available in fiscal year 1981, it is not necessary to account for exchange rate fluctua- tions. We disagree with this position, because Congress intended that any gains should be accounted for and held for possible trans- fer to the contingency funds. Gains would have been recorded in fiscal year 1981 due to the favorable U.S. dollar fluctuations. (481600)

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