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VOLUME 15, CHAPTER 3: “ACCOUNTING”
SUMMARY OF MAJOR CHANGES
Changes are identified in this table and also denoted by blue font.
Substantive revisions are denoted by an asterisk (*) symbol preceding the section,
paragraph, table, or figure that includes the revision.
Unless otherwise noted, chapters referenced are contained in this volume.
Hyperlinks are denoted by bold, italic, blue, and underlined font.
The previous version dated September 2022 is archived.
PARAGRAPH
EXPLANATION OF CHANGE/REVISION
PURPOSE
All
Updated hyperlinks and internal references throughout.
Revision
4.4
Updated to clarify that Military Departments and Defense
Agencies control and report security assistance assets within
their accountable property system of record and through the
Security Assistance Accounts consolidated annual financial
statements rather than on the Military Department or Defense
Agency financial statements.
Revision
4.8.2.3
Removed reference to Building Partner Capacity program
administration within the Foreign Military Sales (FMS) Trust
Fund and the Economy Act as the legal authority.
Deletion
11.1
Revised and updated to remove obsolete reference for FMS
problem disbursements greater than $2,500 to be brought to
the attention of the FMS Case Closure Executive Committee
for resolution. FMS
problem disbursements greater than
$2,500 should be brought to the attention of the Defense
Security Cooperation Agency Comptroller using procedures
outlined in the Security Assistance Management Manual.
Revision
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Table of Contents
VOLUME 15, CHAPTER 3: “ACCOUNTING” .......................................................................... 1
1.0 GENERAL......................................................................................................................... 4
1.1 Purpose ........................................................................................................................ 4
1.2 Authoritative Guidance ............................................................................................... 4
2.0 GENERAL ACCOUNTING GUIDANCE ....................................................................... 4
2.1 Accounting Characteristics ......................................................................................... 4
2.2 Responsibilities ........................................................................................................... 5
3.0 MANAGEMENT CONTROLS ........................................................................................ 7
4.0 FMS TRUST FUND ACCOUNTING REQUIREMENTS .............................................. 7
4.1 FMS Trust Fund .......................................................................................................... 7
4.2 FMS Standard General Ledger (GL) .......................................................................... 7
4.3 Accounting for Receivables ........................................................................................ 7
*4.4 Accounting for Inventory ............................................................................................ 8
4.5 Accounting for the FMS Program............................................................................... 8
4.6 Processing Accounting Transactions ........................................................................ 10
4.7 DFAS SCA Analysis of FMS Case Accounting Data .............................................. 10
4.8 DFAS SCA Surcharge Transactions ......................................................................... 10
5.0 IA ACCOUNTING REQUIREMENTS .......................................................................... 12
5.1 Allotments for Direct Citation .................................................................................. 12
5.2 Allotments for Reimbursable Orders ........................................................................ 12
5.3 FY-End Reporting Requirements ............................................................................. 13
6.0 ACTUAL ADMINISTRATIVE EXPENSE ACCOUNTING REQUIREMENTS ........ 13
6.1 Reimbursement for FMS Administrative Expenses ................................................. 13
6.2 Control of FMS Administrative and SC Organizations (SCO) Budget Allotment
Authority ................................................................................................................................ 13
6.3 Control of FMS Administrative and SCO Prior FY OA ........................................... 14
6.4 Control of Unliquidated Balances ............................................................................. 15
6.5 Administration and Implementation of the Monthly and End-of-Year Closeout
Guidance ................................................................................................................................ 15
6.6 DFAS Responsibilities for Expired and Canceled Accounts .................................... 16
7.0 BUDGET EXECUTION ................................................................................................. 16
7.1 Objectives ................................................................................................................. 16
7.2 Responsibilities ......................................................................................................... 17
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Table of Contents (Continued)
8.0 FMS TRUST FUND BUDGET EXECUTION REPORTS AND FINANCIAL
STATEMENTS ......................................................................................................................... 17
8.1 Budget Execution Reports ........................................................................................ 17
8.2 Financial Statements ................................................................................................. 18
9.0 CASE EXECUTION ....................................................................................................... 18
9.1 FY End ...................................................................................................................... 18
9.2 Reimbursement of Appropriations and Accounts ..................................................... 19
9.3 DD 2061, “Foreign Military Sales (FMS) Planning Directive,” or the Automated
Equivalent (Planning Directive) ............................................................................................. 19
10.0 FMS CASE CLOSURE REQUIREMENTS................................................................ 20
10.1 General ...................................................................................................................... 20
10.2 Initiating FMS Case Closure ..................................................................................... 20
10.3 Closure Certification ................................................................................................. 23
10.4 Billings After Case Closure ...................................................................................... 23
10.5 Reopening FMS Cases .............................................................................................. 24
11.0 WRITE-OFF AUTHORITY ........................................................................................ 24
*11.1 Problem Disbursements ............................................................................................ 24
11.2 Other FMS Financial Transactions ........................................................................... 24
12.0 ANTIDEFICIENCY ACT (ADA) VIOLATIONS AND ADVERSE FINANCIAL
CONDITION REPORTS .......................................................................................................... 25
12.1 ADA Violations ........................................................................................................ 25
12.2 Adverse Financial Conditions ................................................................................... 25
Figure 3-1. Format for the DoD Status-of-Allotment Report .............................................. 27
Table 3-1. Cost Elements ..................................................................................................... 28
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CHAPTER 3
ACCOUNTING
1.0 GENERAL
1.1 Purpose
This chapter establishes accounting requirements which:
1.1.1. Assure proper DoD control and accountability of cases implemented in the Foreign
Military Sales (FMS) Trust Fund;
1.1.2. Provide accounting information that can be used for preparation of Chief Financial
Officer (CFO) financial statements, quarterly bills to FMS purchasers, and financial status reports
to DoD case managers and Defense Security Cooperation Agency (DSCA) staff;
1.1.3. Integrate with physical delivery (logistics) reporting systems;
1.1.4. Serve as a basis for timely identification and reporting of financial management
problems; and
1.1.5. Establish internal controls to assure compliance with the payment requirements of
the Arms Export Control Act (AECA), Public Law 90-629, codified at
Title 22, United States Code (U.S.C.), Chapter 39.
1.2 Authoritative Guidance
Authoritative guidance for this chapter is as follows:
1.2.1. AECA, Public Law 90-629, codified as 22 U.S.C. Chapter 39;
1.2.2. Title 31 U.S.C. Chapter 15; and
1.2.3. Statement of Federal Financial Accounting Standards (SFFAS) 1: Accounting for
Selected Assets and Liabilities, issued by the Federal Accounting Standards Advisory Board.
2.0 GENERAL ACCOUNTING GUIDANCE
2.1 Accounting Characteristics
2.1.1. Each FMS case is an accounting unit similar to a commercial job order. A case
identifier is composed of the Security Cooperation (SC) customer code or international
organization code, implementing agency (IA) code, and a three-position case designator assigned
by the IA. See the DSCA Manual 5105.38-M, “Security Assistance Management Manual”
(SAMM), Table C4.T2, for more information. Obligational authority (OA) necessary to
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implement a case is released by case identifier and line-item number. All requisitions for materiel
or services have a case identifier and line-item number. Report accrued costs and cash
disbursements at this level of detail. Accumulate and report this accounting information to FMS
purchasers and DoD case managers to allow proper monitoring of case execution.
2.1.2. DoD manages cash at country level to ensure sufficient funds are available to meet
expenditure requirements and to determine arrearages of a country’s dependable undertaking. See
Volume 16, Chapter 6 for more information on arrearages. A cumulative summary cash account,
including all sub-accounts of the FMS Trust Fund 11X8242, “Advances, Foreign Military Sales,
Funds Appropriated to the President,” is needed to allow reconciliation with the U.S. Department
of the Treasury (Treasury) cash records. Cumulative summary accounts showing OA,
commitments, obligations, accounts payable, accounts receivable, accrued expenditures, and
expenses are required to complete budget execution reports on the FMS Trust Fund account.
2.1.3. DoD case management entails obtaining the necessary OA, releasing requisitions or
procurement work orders, and reporting physical delivery of required items. The first two actions
require efforts directed through the accounting system. Proper management controls require the
use of the same source document for reporting to both the financial and logistical systems
(including delivery reporting).
2.2 Responsibilities
2.2.1. DSCA. DSCA is responsible for providing oversight and monitoring usage of the
FMS Trust Fund, to include periodic reviews of funding levels and unused balances.
2.2.2. Defense Finance and Accounting Service (DFAS). DFAS performs the accounting,
billing, disbursing, and collecting functions for the FMS Trust Fund, as well as provides financial
management and accounting support for SC programs. DFAS ensures entries in the accounting
systems have audit trails to the source documents and generates financial statements. DFAS is
responsible for:
2.2.2.1. Monitoring for compliance, the centralized FMS case-line level accounts
prescribed in this chapter, and the Bureau of the Fiscal Service (Fiscal Service), “U.S. Standard
General Ledger (USSGL).” The DoD Standard Chart of Accounts are in the
Standard Financial Information Structure, DoD USSGL Transaction Library, and Volume 1,
Chapters 4 and 7. Use information accumulated in the accounts when preparing billing statements
to FMS purchasers and financial management reports to DoD case managers and DSCA staff;
2.2.2.2. Maintaining FMS Trust Fund budget execution records;
2.2.2.3. Identifying and notifying DSCA when an FMS Trust Fund arrearage
occurs as required in Volume 16, Chapter 6;
2.2.2.4. Summarizing all case-line level accounts at the FMS Trust Fund level,
reconciling the summary cash accounts to Treasury’s records per Treasury guidance, and using the
summary accounts as the basis for required reports on FMS Trust Fund operations;
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2.2.2.5. Maintaining audit trails and supporting documentation for entries made to
the accounting system; and
2.2.2.6. Preparing monthly, quarterly, and annual statements as required in
Volumes 6A and 6B.
2.2.3. IAs. IAs are responsible for:
2.2.3.1. Fulfilling FMS Trust Fund orders using these financing techniques:
2.2.3.1.1. Issuing and accepting reimbursable orders into a financing
appropriation or Defense Working Capital Fund (DWCF) account,
2.2.3.1.2. Issuing allotments/OA of the FMS Trust Fund to the performing
DoD Components, or
2.2.3.1.3. Authorizing direct citation of the FMS Trust Fund (11X8242);
2.2.3.2. Ensuring appropriation/fund budget execution records accurately reflect
the status of the reimbursable FMS Trust Fund program;
2.2.3.3. Performing and/or ensuring the completion of the Dormant Account Review
Quarterly (DAR-Q) of obligations and unfilled customer orders as described in Volume 3, Chapter 8,
section 16.0;
2.2.3.4. Maintaining audit trails between source documents and entries to the
accounting system; and
2.2.3.5. In coordination with DFAS, maintaining within the IAs respective accounting
system of record the centralized FMS case-line level accounts prescribed in this chapter and in the
USSGL.
2.2.4. Allotment Holders for Actual FMS Administrative Expenses. A DoD Component
that receives a DSCA allotment of FMS Administrative Budget Authority (BA) is responsible for:
2.2.4.1. Maintaining obligations and expenditures within the limitations of the
allotment,
2.2.4.2. Ensuring obligating documents and accrued expenditures meet the
requirements contained in this volume,
2.2.4.3. Returning unobligated OA to DSCA at the end of each fiscal year (FY),
and
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2.2.4.4. Performing the DAR-Q of obligations and unfilled customer orders as
described in Volume 3, Chapter 8, section 16.0.
3.0 MANAGEMENT CONTROLS
For management controls, Security Assistance activities will follow the guidance in
DoD Instruction 5010.40, “Managers' Internal Control Program Procedures.”
4.0 FMS TRUST FUND ACCOUNTING REQUIREMENTS
4.1 FMS Trust Fund
The FMS Trust Fund is a single account that is authorized to be credited with receipts that
may be obligated and expended in accordance with the AECA. FMS Trust Fund receipts must be
apportioned prior to obligation and expenditure; however, an official, designated under
31 U.S.C. § 1513, and as per 31 U.S.C. § 1516, may exempt trust funds from apportionment.
4.2 FMS Standard General Ledger (GL)
All financial accounting data applicable to the FMS program must be recorded in accounts
consistent with Volume 1, Chapter 7 and the USSGL accounts. The USSGL specifies the
accounting entries for these accounts. Subsidiary ledgers are used, where necessary, to provide
accounting control and management reports. The Deputy CFO, Office of the Under Secretary of
Defense (Comptroller) (OUSD(C)), must approve the use of any other GL Trust Fund accounts in
writing. Objective evidence, e.g., invoices, vouchers, receipts, or statements, must support all
entries in the accounting records and data reported on financial statements. Such evidence may be
either hard-copy documents or computer data, but in either case, the evidence must be verifiable.
4.3 Accounting for Receivables
4.3.1. General
4.3.1.1. Cash in advance of performance is required from FMS purchasers unless
a written determination is made pursuant to legal authority. See Chapter 4 for more information
on cash management. For FMS purchasers who are legally exempt from making cash advances,
record accounts receivable for each FMS country program accounted for in the FMS Trust Fund
in USSGL 131000, “Accounts Receivable.” SFFAS 1, paragraph 41 provides that a receivable
should be recognized when a federal entity establishes a claim to cash or other assets against other
entities, either based on legal provisions, such as a payment due date, or goods or services
provided. If the exact amount is unknown, a reasonable estimate should be made.
4.3.1.2. The offered and accepted FMS case is a binding requirement and calls for
an advance of funds from the FMS purchaser; thus, a non-entity account receivable is established
when the due date for payment is not met. Follow up and aging of delinquent accounts receivable
will be in accordance with Volume 16, Chapter 6. Accounts receivable are aged according to
Volume 4, Chapter 3, Figure 3-1.
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4.3.2. Application of Interest. Assess interest on FMS country-level arrearages in
accordance with the provisions of the affected country’s active cases and Volume 16, Chapter 6.
4.3.3. Reporting. DFAS submits the Fiscal Service, Debt Management Governmentwide
Reports: “Treasury Report on Receivables (TROR),” quarterly. Instructions for the TROR are in
Volume 4, Chapter 3.
*4.4 Accounting for Inventory
The Military Departments or Defense Agencies control and report security assistance assets
(equipment and related software, amounts invested in inventories, and work-in-process at
contractor’s plants) within their accountable property system of record and through the Security
Assistance Accounts consolidated annual financial statements.
4.5 Accounting for the FMS Program
The AECA and provisions of the Letter of Offer and Acceptance (LOA) require that the
FMS program operate at no cost to the U.S. Government. Therefore, recognize equity only for the
balance retained in the attrition account; see subparagraph 4.5.2.
4.5.1. Accounting for FMS Surcharges
4.5.1.1. Record the collection of surcharges established in accordance with
AECA §§ 21 and 43 as unearned revenue to ensure full recovery of costs incurred in operating the
FMS program.
4.5.1.2. Record and recognize revenue and expenses at the time disbursements are
made from the applicable FMS Surcharge account.
4.5.1.3. Revenues to fund these expenses are from the application of money
received from accrued costs, estimated actual costs, or rates charged. Maintain ledgers for each of
the categories of FMS Surcharges as subsidiary to the unearned revenue control account,
USSGL 231000, “Liability for Advances and Prepayments.”
4.5.1.4. Apply the Contract Administration Services (CAS) Surcharge to new
procurements; however, it may not be applicable under certain conditions detailed in AECA § 21.
DSCA provides funding directly to performing activities to reimburse for FMS and Building
Partner Capacity (BPC) CAS costs.
4.5.2. Accounting for Attrition Surcharges. When FMS training LOAs include the use of
training or operational equipment, an attrition surcharge rate may be applied pursuant to
SAMM, Table C9.T4. The Attrition Surcharge Account replaces equipment damaged or
destroyed during student training as a result of student negligence. Record attrition surcharges in
the attrition account; they are assets to the U.S. Government. At year end, record the balance in
the attrition account as equity in the FMS Trust Fund. Refer to Chapter 7, subparagraph 23.3.3 for
more information on the application of the attrition surcharge.
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4.5.3. Accounting for Bad Debts. Policy concerning compromise, termination, or
suspension of collection actions of a country-level bad debt is in Volume 16, Chapter 6, section 6.0.
Resolution of all foreign indebtedness resulting from FMS transactions will be staffed with the
Department of State (DoS) by DSCA via the Under Secretary of Defense for Policy. Within 30
calendar days of a determination by the DoS that a debt is uncollectible, DSCA will direct DFAS
Security Cooperation Accounting (SCA) to record the amount owed, including accrued interest,
in the GL. When a country is in arrears, and the debt is confirmed to be uncollectible:
4.5.3.1. All available funds for the affected country will be used to satisfy
outstanding liabilities according to a priority recommended by the Director of DFAS SCA and
approved by the DSCA Principal Director, Office of Business Operations (OBO);
4.5.3.2. DSCA will direct applicable case managers to request cancellation of all
outstanding commitments and adjustment of all outstanding obligations, to include an amount for
termination cost. The residual amount of debts shown will be transferred to the GL for the affected
country, to coincide with the termination of the FMS cases, based on the determination that the
country’s account is uncollectible. This highlights losses due to uncollectible amounts in the
accounts as required by SFFAS 1, paragraph 44; and
4.5.3.3. Aging of amounts recorded will continue. Accrue the accumulation of
interest, in accordance with the AECA and other applicable authorities, monthly on the balance in
the sub-account. The amount recorded in the account will include the amount of the arrearage,
termination liability costs, and accrued interest.
4.5.4. Accounting for Transactions Occurring Prior to January 1, 1989. A reconciliation
problem existed within the FMS Trust Fund for transactions that occurred prior to January 1, 1989,
and some reconciliations occurred as a result of management decisions. Adjustments to
transactions that occurred prior to January 1, 1989, will be reviewed by the FMS central accounting
site control point staff, and approved by the DSCA Comptroller, prior to posting in the Defense
Integrated Financial System (DIFS). The control point staff at DFAS SCA and DSCA will
maintain a complete audit trail of all adjustments received and processed. Documentation
supporting these adjustments will be retained by the originating organization. Transactions will
be approved by:
4.5.4.1. DFAS SCA and an appropriate representative of the applicable DoD
Component involved;
4.5.4.2. The Director of the applicable DFAS center submitting transactions to
DFAS SCA, if the amount of the transaction is in excess of $500,000; or
4.5.4.3. The Director, DFAS and the Director, DSCA, if the amount of the
transaction exceeds $1,000,000.
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4.6 Processing Accounting Transactions
In order to provide accounting services for the FMS Trust Fund, DFAS SCA uses DIFS
and records maintained in the IA’s source accounting systems. As a trust-fund level management
system, DIFS links IA records from bills, including supporting financial documents, issued to
purchasing countries for articles and/or services. See SAMM C13.6 for additional information.
Transactions entered into DIFS are a combination of installation-level transactions received
through the FMS Integrated Control System, and vouchers recorded at DFAS SCA, resulting from
billing, collection, and disbursement activities. Transactions recorded in DIFS are posted at the
trust fund-, country-, and case-level. This enables DFAS SCA to prepare required accountability
and fund status reports for the FMS Trust Fund. DFAS SCA relies on the accuracy and integrity
of the records maintained in IA’s source accounting systems. Source transactions must have all
of the information required to enable DFAS SCA to prepare required accounting reports and
perform financial management oversight.
4.7 DFAS SCA Analysis of FMS Case Accounting Data
DFAS SCA must continuously analyze case-level accounting data to identify developing
financial problems and alert IA case managers, DSCA country finance directors, and other
concerned DoD officials of the necessity for corrective action. The types of analysis performed
are as follows:
4.7.1. Adequacy of Cash Deposits and Timely Payments. Compare the net unreserved
cash balance to the accounts payable case-level accounts. If the accounts payable balance is
greater, request an IA review of the case payment schedules and coordinate with the IA to ensure
sufficient country funds are available to aid in the timely payment to vendors; and
4.7.2. Timely Case Closure Actions. When the expenditures approach OA value, DFAS
SCA should request an IA review of the case's financial and logistical status to determine if the
case should be closed.
4.8 DFAS SCA Surcharge Transactions
4.8.1. FMS Administrative Surcharge and Logistics Support Charge (LSC) Account
4.8.1.1. Accrual of Earned Surcharge. As accrued expenditures are calculated,
pursuant to FMS orders, the amount of FMS Administrative Surcharges applicable will be
determined and credited to the FMS Administrative Surcharge account.
4.8.1.1.1. $30,000 or less. If the computed FMS Administrative Surcharge
for the FMS case is $30,000 or less, the entire surcharge value must be included in the initial
deposit (SAMM Table C9.T17). This includes the value of any small case management line for
cases implemented August 1, 2006 through July 2, 2012 (SAMM paragraph C9.4.7).
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4.8.1.1.2. Over $30,000. If the computed FMS Administrative Surcharge
for the FMS case is greater than $30,000, 35 percent of the surcharge is collected upon case
implementation (SAMM Table C9.T17). Apply the remaining accruals over the life of the case
and finalize at case closure.
4.8.1.2. Actual FMS Administrative Surcharge. Transactions representing actual
expenses will be entered based on accrued expenditures reported in the DoD Status-of-Allotment
reports for FMS. See subparagraph 6.1.3.
4.8.1.3. LSC. LSC is applicable to articles delivered or services performed on or
after April 1, 1987 and prior to October 1, 2007. These charges are accounted for in the FMS
Administrative Surcharge account as described in subparagraphs 4.8.1.1 and 4.8.1.2. For more
information on LSC, see SAMM Table C9.T4.
4.8.2. Transportation Surcharge Account
4.8.2.1. Accrual of Earned Surcharge. When items are reported by the DoD
Components as physically delivered, applicable transportation surcharges are earned and credited
to the Transportation Surcharge account.
4.8.2.2. Actual Transportation Expense. Transactions showing actual
transportation cost, based on receipt of carrier bills, will be entered against the Transportation
Surcharge account.
4.8.3. CAS Cost Clearing Account Accrual of Earned Surcharge. When payments are
made to contractors (either progress payments or bills for incurred costs), the applicable CAS
surcharges are earned and credited to the CAS Cost Clearing Account.
4.8.4. Attrition Surcharge Account. Assess the applicable attrition surcharge for
applicable training cases (SAMM Table C9.T4). The IAs will identify the amounts earned as they
distribute collections for tuition, credit the attrition portion, and report it to DFAS SCA by country,
case, and line. Expenditures from this account represent orders to the DoD Components to fund
the cost of replacing damaged or destroyed equipment associated with student training. DFAS
SCA will maintain cumulative records of these deposits by country, case, and line item. Fund
withdrawal from the attrition account requires prior written approval from the DSCA Comptroller.
The cost in full of replacing damaged or destroyed equipment is reimbursed from the attrition
account.
4.8.5. Year-End Certification. Reporting entities now utilize the Governmentwide
Treasury Account Symbol Adjusted Trial Balance System (GTAS) and the Fiscal Service
Year-End Transaction Module to report unexpended appropriation and fund balances. The
Year-End Module, in addition to GTAS, is used to initiate year-end cancelation and adjustment
transactions previously presented on the Fiscal Service Form 2108. See Volume 6A, Chapter 4
and the Treasury Financial Manual, Volume 1, Part 2, Chapter 4700 for more information.
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4.8.6. Periodic/Year-End Analysis of Surcharge Accounts. DSCA and DFAS SCA
analyze activity in the surcharge accounts. This analysis will serve as a basis for decisions by
DSCA OBO to redistribute surcharge account balances between the accounts or to recommend
rate changes. DSCA OBO will coordinate any decision made to redistribute balances, to mitigate
shortfalls in one or more surcharge accounts, with DFAS SCA and OUSD(C). If a redistribution
between surcharge accounts is required, DSCA OBO will then notify OUSD(C) of the intended
redistribution action and seek concurrence. OUSD(C) should provide a response within 30
calendar days. With OUSD(C) concurrence, DSCA OBO will authorize DFAS SCA to redistribute
the funds. Once the receiving surcharge account is returned to an acceptable funding level, the
transferred funds will be redistributed back to the original account once the DSCA OBO receives
concurrence with OUSD(C). When a decision is made to revise rates, the revisions will be
coordinated with OUSD(C). See Chapter 7, paragraph 12.2 for more information on revising rates.
5.0 IA ACCOUNTING REQUIREMENTS
5.1 Allotments for Direct Citation
Amounts in Column 11, “Direct Cite Authority Required This FY,” of the
DoD (DD) Form 2060, FMS Obligational Authority, or automated equivalent (OA request),
which are coded “(A),” represent allotments of case contract authority. Allotment holders must
request expenditure authority (EA) from DFAS SCA prior to processing the disbursements against
the contract authority. DFAS SCA provides incremental EA from the FMS Trust Fund based on
the allottee’s need to disburse funds. Additional instructions for the DoD Status-of-Allotment
report are in section 6.0. Specific requirements include:
5.1.1. The DoD Component that holds an allotment of the FMS Trust Fund for direct
citation on contracts must maintain detailed commitment, obligation, and expenditure records on
an FMS case and line basis. That DoD Component must provide DFAS a monthly
DoD Status-of-Allotment report reflecting the case and line-level data. Delivery transactions in
an amount equal to the current month’s net change in accrued expenditures or cash advances to
contractors must support the status of expenditures. A manual DoD Status-of-Allotment format is
in Figure 3-1; and
5.1.2. Submit Monthly DoD Status-of-Allotment information, and associated reports of
reconciliation, to DFAS by the 20th calendar day following the close of each accounting month.
Use this information, with detailed supporting documentation, as the basis for the DFAS FMS
Trust Fund reconciliation with Treasury.
5.2 Allotments for Reimbursable Orders
For information on reimbursable orders, see Chapter 2, paragraph 3.4.
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5.3 FY-End Reporting Requirements
5.3.1. The DoD Components are required to submit a printed and certified, final, FY
consolidated OA request and DoD Status-of-Allotment information for direct cite funds to DFAS
SCA. Establish submission dates in accordance with special instructions issued by DFAS. The
forms submitted may be manual forms or automated equivalents.
5.3.2. The final OA request will have this certification: “I hereby certify that this report
reflects FMS Obligational Authority as required by DoD 7000.14-R, Volume 15, Chapter 2,
subparagraph 3.4.1.”
5.3.3. The final DoD Status-of-Allotment report must have this signed certification: “I
hereby certify that the amounts shown in this report are correct. All known transactions meeting
the criteria of 31 U.S.C. § 1501(a) have been obligated and are so reported.”
6.0 ACTUAL ADMINISTRATIVE EXPENSE ACCOUNTING REQUIREMENTS
6.1 Reimbursement for FMS Administrative Expenses
6.1.1. Price FMS administrative expenses in accordance with Chapter 7, section 5.0 and
charge directly to the allotment received for actual FMS administrative expenses.
DoD Status-of-Allotment reports must be submitted in the DoD standard format in Figure 3-1. If
the allotment is used as the basis for issuing reimbursable orders to appropriation accounts, a
schedule showing the dollar value of orders released to each appropriation must be attached to the
DoD Status-of-Allotment report. FMS administrative expenses may not be incurred in excess of
the allotment, nor are the DoD Components authorized to incur obligations against appropriated
fund operation accounts to finance FMS administrative budgets.
6.1.2. Upon review of the budget requests submitted in response to its administrative
budget call, DSCA will approve a single budget amount for each DoD Component and will issue
an allotment providing funding for the approved budget. The recipient will prepare a DoD
Status-of-Allotment report showing actual uses for administrative expense. Base the information
on the organization designated in the DSCA budget call. Allotments for administrative expenses
must be fully funded to cover obligations.
6.1.3. Support DoD Status-of-Allotment reports for FMS administrative expenses with
subsidiary allotment status reports of the executing organizations. Annotate subsidiary reports as
“Subsidiary report-(name of the organization).”
6.2 Control of FMS Administrative and SC Organizations (SCO) Budget Allotment Authority
6.2.1. Report the FY identity of budget allotment authority, obligations, and disbursements
for the current FY (CFY), and five preceding FYs, on the monthly DoD Status-of-Allotment
reports for administrative expenses. Accounts will remain open for the liquidation and adjustment
of valid obligations until the end of the canceled FY (five expired FYs and one canceling FY). See
the FY example in subparagraph 6.2.3.
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6.2.2. All fund holders are required to maintain FY identity of obligations, disbursements,
and budget allotment authority for the CFY and the five preceding FYs.
6.2.3. Provided is an example of FY identity using a CFY of 2024.
Description
At the end of FY 2024, and after completing the end-of-year
reporting and closeout cycle, cancel all unliquidated obligations
(ULOs). All amounts are withdrawn effective September 30, 2024
.
Following this action, FY 2019 cancels on October 1, 2024.
blank
blank
blank
blank
Out-of-scope increase to prior FY obligations (FY 2019 and prior)
will be charged against the CFY (FY 2024). The CFY becomes an
expired FY on October 1, 2024.
October 1, 2024, FY 2025 begins.
6.3 Control of FMS Administrative and SCO Prior FY OA
6.3.1. DSCA will not authorize increases to a prior year OA to record upward adjustments
for obligations that are the result of out-of-scope changes. Such changes constitute new obligations
and are funded from the current year OA. Upward adjustments, which are the result of
“within-scope” changes under the terms of the contract, are usually chargeable to the appropriate
FY account against which the original obligation was charged. Charge all valid upward
adjustments applicable to canceled years to the CFY.
6.3.2. All fund holders will establish procedures to review and validate all ULOs for the
CFY, and the preceding five FYs, on a monthly basis. If obligations are no longer valid, fund
holders will ensure these amounts are deobligated and the appropriate funds returned to DSCA for
withdrawal; see paragraph 6.5. Valid disbursements may be made from these expired accounts,
up to the amount of the ULO balances for that year's obligation. Additional funding to cover these
valid upward adjustments (within-scope price adjustments) may be requested from DSCA. This
request should provide the following: original obligation amount; additional required funding
authority needed; source or reason for additional obligation, including any subsidiary calculations
or source; applicable supporting documentation; and point of contact.
6.3.3. Deobligation of prior year funds, and the subsequent reobligation of these same
funds in the current or one of the five preceding FYs, is not authorized. Expired funds may only
be used for within-scope obligation adjustments until cancellation.
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6.4 Control of Unliquidated Balances
6.4.1. FMS Administrative and SCO accounts remain available for liquidating valid
obligations until the end of their fifth expired year; see the example in subparagraph 6.2.3. No
new obligations can be started for the CFY after September 30 of that FY.
6.4.2. The monthly DoD Status-of-Allotment reports for administrative expenses, showing
the DFAS departmental accounting position, will present the current allocation and account
balances (obligations and disbursements) for the end of that reporting month.
6.4.3. See paragraph 6.5 for the procedure used when canceling funds at the end of the
fifth year following their expiration and the process used when deobligations occur in the five
preceding FYs.
6.4.4. All fund holders will establish procedures to review and validate all ULOs for the
CFY and the five preceding FYs.
6.4.5. Reference SAMM Table C15.T2 for additional information on BPC programs and
authorities, periods of availability of associated funding, and fund cancellation dates.
6.5 Administration and Implementation of the Monthly and End-of-Year Closeout Guidance
6.5.1. All fund holders will review and use their respective monthly
DoD Status-of-Allotment reports for administrative expenses, which present the DFAS
departmental accounting position for that month. Use these reports to compare with the installation
accounting records. If there are disbursement differences between the departmental and
installation accounting records, use the departmental accounting records reconciled with Treasury
cash to establish the withdrawal amount.
6.5.2. DSCA will issue the annual end-of-year closeout guidance to all holders of FMS
Administrative and SCO funds.
6.5.3. When the fifth expired year is canceled, the budget allotment authority amount will
be decreased on September 30 to equal the departmental accounting disbursement amount that has
been reconciled with Treasury.
6.5.4. The fund holder will ensure that all obligations and disbursements are equal prior to
year-end closeout for the canceling year account (the fifth year following funds expiration) and
that no further disbursements are processed. The fund holders need to work closely with the DFAS
departmental accounting offices at finalizing the amounts to be withdrawn for the canceling year
(the fifth year following funds expiration).
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6.5.5. All fund holders will notify DSCA in writing when BA can be decreased on the
CFY and the five preceding FYs. Upon receipt of a written request from the fund holder, DSCA
will issue an FMS Administrative and SCO Allocation document withdrawing the unobligated
BA, citing the concurrence correspondence from the fund holder for the expired and canceling
FYs. All records will be maintained with the FY BA documents.
6.6 DFAS Responsibilities for Expired and Canceled Accounts
6.6.1. DFAS SCA will adjust EAto agree with the DSCA allocation values for the expired
and canceling FYs. All unobligated balances will be considered expired and not available for
incurring new obligations. FMS Administrative and SCO accounts remain available for
liquidating valid obligations until the end of their fifth expired year.
6.6.2. At the end of each FY, DFAS SCA will update the canceling FY's obligated and
disbursed balances for FMS and SCO Administrative Fund accounting records and maintain
related supporting documentation.
6.6.3. DFAS SCA will maintain memorandum records of the canceled obligations. Once
closed, an account is no longer available for obligation. If it becomes necessary to pay an
obligation, which otherwise would have been properly charged to the appropriation before it was
canceled, the obligation should be charged to and paid from the applicable CFY FMS or SCO
account. Post these obligations against the CFY account when disbursed. Use memorandum
records (or equivalent) to record the canceled “valid” obligations offline so that they may later be
recognized as valid when disbursed and recorded against the applicable FMS or SCO
Administrative CFY account. For more information, see Volume 3, Chapter 10.
6.6.4. Once all BPC cases associated with the transportation account are closed, DFAS, in
coordination with DSCA, will deposit all unliquidated balances into the Miscellaneous Receipts
of the Treasury (11X3230). BPC Transportation accounts will close when all appropriations
within the account have canceled.
7.0 BUDGET EXECUTION
7.1 Objectives
This section establishes the budget execution requirements that are applicable to the FMS
program. Specific objectives are to ensure that:
7.1.1. Mandatory budget execution reports that accurately reflect data recorded in
accounting records are submitted to Treasury in a timely manner;
7.1.2. Unnecessary FMS OA is withdrawn officially from all organizations participating
in execution of FMS cases at the end of each FY; and
7.1.3. FMS case records maintained by IAs are in agreement with DFAS SCA at the
case-line level throughout the life of each FMS case.
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7.2 Responsibilities
7.2.1. DFAS must provide accounting data on FMS Trust Fund operations to the DoD
Components.
7.2.2. DSCA must monitor the FMS program and submission of required FMS Trust Fund
Budget Execution reports in accordance with requirements outlined in Volume 6A, Chapter 2,
section 2.0.
7.2.3. IAs and the supporting DoD Components must:
7.2.3.1. Conduct year-end reviews of the unobligated FMS reimbursable program to
ensure unnecessary BA is identified and returned to the FMS Trust Fund;
7.2.3.2. Ensure that the FMS reimbursable program is properly reported in
appropriation or DWCF budget execution reports;
7.2.3.3. Submit financial Budget Execution reports accurately and timely in
accordance with section 8.0;
7.2.3.4. Reconcile IA FMS case records to DFAS SCA case-line level accounting
transactions on a periodic basis;
7.2.3.5. Partner with DFAS to resolve any variances or out of balance conditions
in support of monthly FMS financial reporting; and
7.2.3.6. Prepare Case Closure Certificates signifying IA completion of all actions
necessary for DFAS SCA to close the case as soon as possible after the case supply/services are
complete, but no longer than 24 months after such occurrence for cases applicable to countries
participating in Accelerated Case Closure Procedures (ACCP). See the SAMM, Appendix 7,
“Case Reconciliation and Closure Guide (RCG),” for the Case Closure Certificate format,
SAMM Chapter 16, and paragraph 10.2 for case closure information. For case closure procedures
required for non-ACCP, including BPC program cases, refer to paragraph 10.2.
8.0 FMS TRUST FUND BUDGET EXECUTION REPORTS AND FINANCIAL
STATEMENTS
8.1 Budget Execution Reports
DFAS submits the following budget execution reports on FMS Trust Fund operations:
8.1.1. Monthly Standard Form 133, Report on Budget Execution, for 11X8242. For
more information, see Volume 6A, Chapter 4, section 4.0;
8.1.2. GTAS. Fiscal Service discontinued use of the Fiscal Service Form 2108 and
removed references to the form from current Fiscal Service guidance. Budget execution
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information previously provided on Fiscal Service Form 2108 is now available to Treasury through
GTAS. For more information, see Volume 6A, Chapter 4; and
8.1.3. Appropriate sections of the annual CFO Financial Statements. For more
information, see paragraph 8.2.
8.2 Financial Statements
For financial statement guidance concerning the reporting of FMS amounts, see
Volume 6B, Chapters 2 and 10. The Security Assistance reporting entity also provides GTAS
submissions as a Significant Entity per Volume 6A, Chapter 3, subparagraph 3.4.2.
9.0 CASE EXECUTION
9.1 FY End
At the end of each FY, IAs should review the reimbursable OA received to implement each
FMS case. The total amount of reimbursable BA received is on the OA request. The review serves
as the basis to withdraw any unnecessary unobligated balances. Make the withdrawal by
submitting a year-end OA request. See Chapter 2, section 3.0 for instructions on the preparation
of OA requests.
9.1.1. Non-Expiring Accounts. At the close of each FY, retain reimbursable FMS OA in
a performing DoD account only to the extent that:
9.1.1.1. The amounts are required to cover certifiable obligations incurred by the
performing account because of performance of the order;
9.1.1.2. The amounts have been committed within a formal commitment
accounting system, for example, to cover normal administrative lead time on the next contract
escalation clauses; or
9.1.1.3. The items have been delivered from inventory or applicable DoD services
have been performed (cash earned reimbursement). Withdraw any reimbursable FMS OA not
required for these purposes from the performing accounts by September 30 each year. It is
recognized that year-end reviews must be made prior to the last day of the FY. Therefore, the
amount of OA retained may be somewhat greater than the goal. It is expected, however, that
estimating procedures must be improved continually until unnecessary unobligated balances are
eliminated.
9.1.2. Expiring and Expired Accounts. By the close of each FY, show reimbursable FMS
OA in an expiring account only to the extent that the amounts are earned reimbursements or are
required to cover certifiable obligations incurred against the performing account. Withdraw any
reimbursable FMS OA not required to cover obligations in the expiring account by September 30
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each year. During the FY, transfer amounts required in expired accounts from the Trust Fund, as
necessary, to cover upward obligation adjustments needed for within-scope changes to contracts
or similar transactions.
9.2 Reimbursement of Appropriations and Accounts
9.2.1. Reimburse DoD appropriations and fund accounts, or Miscellaneous Receipts
Account 3041, “Recoveries Under the Foreign Military Sales Program, Army, Navy, Air Force,
Defense,” upon delivery of items from inventory or performance of DoD services within
30 calendar days of the occurrence (i.e., date of shipment or performance) for:
9.2.1.1. Items sold under AECA § 21, or
9.2.1.2. Procurement actions made under AECA § 22, if direct cite procedures for
financing applicable contracts are not used.
9.2.2. The general rule applicable to the sale of DoD services is that the financing account
current at the time of performance is credited with applicable BA and subsequent cash collections.
The various cost elements that may be involved in the performance of an FMS order, and the
appropriations that are to be reimbursed, are in Table 3-1.
9.2.2.1. When items are sold from inventory, the financing account current at the
time items are dropped from inventory is credited with applicable BA and subsequent cash
collections.
9.2.2.2. When items not to be replaced (free or excess assets) are sold from
inventory, those receipts are credited to the Special Defense Acquisition Fund (SDAF). For more
information on SDAF, see SAMM, section 11.9 and Chapter 1, paragraph 2.2.2.
9.2.2.3. When appropriation or fund accounts are used to finance FMS
procurements, the account current at the time the order is accepted is credited with BA and
subsequent cash collections.
9.3 DD 2061, “Foreign Military Sales (FMS) Planning Directive,” or the Automated
Equivalent (Planning Directive)
Update the case Planning Directive as prescribed in Chapter 2, section 4.0. Update cost
elements and financing accounts to ensure full recoupment of the costs prescribed in Chapter 7
and to ensure timely identification of cost increases. The Planning Directive serves as the basis
for preparing all OA requests during the life of the case.
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10.0 FMS CASE CLOSURE REQUIREMENTS
10.1 General
All proper charges and credits must be recorded against the applicable FMS case. Case
closure does not stop the billing/reporting process but results in a re-categorization of the case
records from active status to inactive status to ensure accessibility for recording subsequent
activity. For further guidance on the reconciliation and closure of FMS cases, to include closure
checklists, see SAMM Chapter 16, SAMM A7.C4.3, and the RCG.
10.2 Initiating FMS Case Closure
10.2.1. When all ordered items have been physically delivered and all ordered services
performed (i.e., supply/services complete), or there is no activity on a blanket order case for
180 calendar days (and the purchaser agrees no further activity will occur), and all other conditions
of the LOA are fulfilled, an FMS case is a candidate for closure. At this time, the responsible IA
must determine if there are any unresolved delivery issues, outstanding Supply Discrepancy
Reports (SDRs), or litigation claims. Contracting officers must review any contracts that have not
been financially closed to determine if significant financial adjustments of open contracts may
occur. Cases can be closed under either ACCP or non-ACCP closure procedures.
10.2.1.1. ACCP. ACCP must be used only for those countries that explicitly elect
such procedures. However, all countries that have cases financed with Military Assistance
Program Merger/Foreign Military Financing (non-repayable) are mandatory participants in
ACCP, unless specifically excluded by DSCA. Once selected by a country, ACCP must apply to
all cases of that country and must govern any case that was opened (or closed) prior to the date of
ACCP implementation, unless a specific arrangement between DSCA and the FMS purchaser is
made as part of the implementation criteria. Under ACCP, case closure should be initiated within
24 months after the case is supply/services complete, to allow a country to initiate an SDR and
allow the IA to reconcile the case. The applicable DoD Component must request DSCA approval
to delay closure beyond 24 months.
10.2.1.2. Non-ACCP. Under non-ACCP case closure, all logistical and financial
transactions must be processed before case closure can be initiated.
10.2.2. The case manager must ensure the actions outlined in subparagraphs
10.2.2.1-10.2.2.6 are taken.
10.2.2.1. The IA-delivered value must agree with the delivered value recorded in
DIFS. If necessary to reconcile IA records, obtain historical transaction records from the DIFS
database or equivalent online repositories.
10.2.2.1.1. ACCP. If the case is being closed under ACCP, the difference
between progress payments and liquidating deliveries, and the difference between total deliveries
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and total disbursements in DIFS, must equal the estimated ULO value established by the IA. The
IA records must be in balance with each of these values; if not, the IA must submit applicable input
to bring the records into balance before issuing a Case Closure Certificate.
10.2.2.1.2. Non-ACCP. If the case is being closed under non-ACCP,
progress payments must equal liquidating deliveries in DIFS. The IA records must be in balance
with each of these values; if not, the IA must submit applicable input to bring the records into
balance before issuing a Case Closure Certificate.
10.2.2.2. Rectify all problem disbursements in accordance with
Volume 3, Chapter 11. A prerequisite for satisfactorily resolving problem disbursements is to
validate the accuracy of the disbursed values. Use the authorities in Volume 3, Chapter 11 to
facilitate efficient reconciliation and closure actions. Additionally, section 11.0 addresses the
applicable write-off authority for FMS problem disbursements.
10.2.2.3. Ensure the validity of all obligations in accordance with Volume 3,
Chapter 8. Many of those provisions address FMS-specific actions in this regard.
10.2.2.4. Use the guidance in subparagraphs 10.2.2.4.1-10.2.2.4.2 for all FMS
cases without remaining ULOs.
10.2.2.4.1. ACCP. If the case belongs to an ACCP country, the applicable
DoD Component must submit a final Case Closure Certificate (see the RCG) to DFAS SCA within
24 months after an FMS case is supply/services complete. If the IA determines that due to
reconciliation issues a case under ACCP cannot be closed within 24 months of supply/services
completion, then submit the case, along with identification of the problem or cause believed to
prevent case closure, to DSCA for resolution.
10.2.2.4.2. Non-ACCP. A supply/services complete case for a country not
participating in ACCP will not be submitted for closure until ULOs on accounting classification
reference numbers (ACRNs) citing the case are resolved. No case under non-ACCP closure
procedures can be interim closed, it must be marked final.
10.2.2.5. Use guidance in subparagraphs 10.2.2.5.1-10.2.2.5.2 for FMS cases with
remaining ULOs.
10.2.2.5.1. ACCP
10.2.2.5.1.1. The applicable IA must submit a Case Closure
Certificate to DFAS SCA within 24 months after an FMS case is supply/services complete. Cases
with a ULO of zero are final closed (there should be no more transactions of any kind on the case).
Cases with a ULO greater than zero are interim closed (there could be additional disbursements
on the case, but the purchaser has already paid the FMS Trust Fund enough to cover those
disbursements). See paragraph 10.3 and the RCG.
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10.2.2.5.1.2. The applicable IA must determine and report the value
of any remaining ULO relevant to that case. These amounts should be equal to those recorded in
the applicable DoD accounting system.
10.2.2.5.1.3. The applicable IA must request DSCA approval to
delay interim closure if the estimated ULO is of significant value and is likely to be deobligated
rather than disbursed. DSCA will then determine whether to approve the delay.
10.2.2.5.1.4. DFAS SCA must bill the applicable country using the
DoD Component’s remaining ULO via normal billing procedures. The ULO is part of the case
closure value.
10.2.2.5.1.5. DFAS SCA must record the estimated ULO value in a
summary account entitled Case Closure Suspense Account (CCSA). At the same time, DFAS
SCA must record applicable charges and credits, by country and case, in subsidiary accounts,
which total to the CCSA.
10.2.2.5.1.6. When final costs are known and reported by the IA
(i.e., liquidating the ULO), DFAS SCA must record such amounts against the CCSA and
subsidiary account by country and case.
10.2.2.5.1.7. Upon receipt and payment of final bills, and
reconciliation of the case, the IA must submit a final Case Closure Certificate.
10.2.2.5.1.8. On a quarterly basis, DFAS SCA must submit a status
report on the CCSA and subsidiary accounts to the DSCA OBO (Financial Reporting and
Compliance) and ACCP-participating FMS purchaser countries.
10.2.2.5.1.9. When a country’s CCSA has a negative balance
of $100,000 or more for a period of six consecutive months, DSCA may instruct DFAS SCA to
bill the country for the entire balance owed. For example, if the country’s suspense account has
negative balances of $100,000 on December 31, $250,000 on March 31, and $175,000 on June 30,
DFAS SCA will bill the country $175,000. Such billings will be made through the country’s
omnibus quarterly billing statement and will cite all the FMS case(s) involved. DSCA should
review the country’s CCSA periodically to determine if any refund is warranted.
10.2.2.5.2. Non-ACCP. For non-ACCP countries, the DoD Component
must submit Case Closure Certificates to DFAS SCA only after all applicable known costs have
been recorded and no ULOs exist on ACRNs citing the case.
10.2.2.6. At case closure, DFAS SCA must use the submitted closure
certificate/transaction in place of an LOA amendment or modification unless the case meets the
criteria for an LOA amendment or modification specified in SAMM, section C6.7.
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10.3 Closure Certification
10.3.1. The Case Closure Certificate alerts DFAS SCA to initiate actions needed to close
a case. The IA must send certificates electronically to DFAS SCA. If any reporting after the
issuance of a Case Closure Certificate has caused variances between DIFS and the certified values,
DFAS SCA must notify the IA of actions required to enable closure processing to continue. When
the IA and DFAS SCA FMS case records are reconciled, DFAS SCA must reclassify the case to
an inactive status and provide a final statement of account to the FMS purchaser for the final value
of the case. Once a final statement has been sent for an FMS case, the case must be reclassified
by the IA from active to inactive status. The IA then closes applicable case records.
10.3.2. All closed cases with post-closure activity on or after October 1, 1992, not subject
to ACCP, must be reopened as authorized by DSCA to report execution. The IA must cancel the
original closure certificate and submit a new certificate prior to case closure. Cases for countries
subject to ACCP may be reopened only as authorized by DSCA.
10.4 Billings After Case Closure
10.4.1. Any cases required to be reverted to implemented status must be approved by
DSCA.
10.4.2. The following requirements apply to all ACCP cases.
10.4.2.1. The DoD Component will submit an interface transaction to DIFS
moving the case from final to interim closure status. After the status is changed, the IA will send
an EA request to DFAS SCA. DFAS SCA will then move the cash from CCSA to the EA reserve
account and record the disbursement against the country, case, and line.
10.4.2.2. When post-closure disbursements exceed $100,000 (in either direction)
because of a verified pricing adjustment, the applicable IA must submit a request to DSCA, with
an information copy to DFAS SCA, that the case be reopened. Upon receipt of DSCA approval
to reopen the case, both the IA and DFAS records must be reclassified to implemented status. If
the case is not reopened, then the disbursement must be processed against the CCSA.
10.4.2.3. When all post-closure disbursements/credits have been reported and final
costs determined, the DoD Component must certify the case for final status by using the Case
Closure Certificate (see the RCG) and by reporting the transaction in DIFS.
10.4.3. The following requirements apply to all BPC cases and cases closed under
non-ACCP.
10.4.3.1. All cases must be reclassified to implemented status, except for those
with a transaction adjustment of $200 or less. Such adjustments may be charged to the FMS
Administrative Surcharge account. Otherwise, reestablish accounting records at the amounts
recorded at the time closure certification occurred. Reclassification to implemented status must
occur in both the IA and DFAS SCA records.
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10.4.3.2. All post-closure disbursements or credits must be recorded in an
undistributed account until case records are reactivated.
10.4.3.3. When post-closure activity results in exceeding the case value, a
modification to the case is required.
10.4.3.4. When cases are reactivated, the IA must request additional OA,
commence reporting status of funds data, request EA, process disbursement/credit transactions,
and report adjusted delivery information via the delivery transaction.
10.4.3.5. Once the disbursement/credit and billing processes are complete, DFAS
SCA must bill the FMS Trust Fund purchaser. The IA must recertify the case for closure as
specified in paragraph 10.3.
10.4.3.6. For FMS cases where funds have canceled, irrespective of funding
source, DSCA will provide guidance on how to proceed and how invoices will be paid.
10.5 Reopening FMS Cases
Normally, closed cases will not be reopened. If the FMS purchaser requests to reactivate
a closed case, first determine if there is a case already implemented and available or if a new case
should be developed. Opening a closed case (interim or final) is a last resort and requires DSCA
approval. See SAMM, Chapter 16, for additional information on reopening cases.
11.0 WRITE-OFF AUTHORITY
An IA that determines unresolved reconciliation issues exist for a case may write off those
imbalances using write-off authority guidelines. The IA is responsible for providing all vouchers
it prepares citing the FMS Administrative Surcharge account to DFAS SCA.
*11.1 Problem Disbursements
For problem disbursements (unmatched disbursements, negative unliquidated obligations,
and in-transit disbursements) up to $2,500 per transaction, refer to Volume 3, Chapter 11 for an
explanation of the problem disbursements policies. The DSCA OBO and DFAS SCA are
responsible for ensuring detailed procedures are issued to the FMS community. Problem
disbursements greater than $2,500 should be brought to the attention of DSCA Comptroller for
resolution, provided those problem disbursements have not exceeded the Volume 3, Chapter 11
processing timelines. See SAMM C16.2.16.1 for additional information.
11.2 Other FMS Financial Transactions
For all other types of FMS financial transactions, up to $200, charge the FMS
Administrative Surcharge account for the amount required to affect prompt financial reconciliation
as prescribed in the DSCA annual case review requirement in the SAMM, Chapter 16. For
write-off adjustments performed while readying a case for closure, DFAS SCA will provide DSCA
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OBO (Financial Reporting and Compliance) with a quarterly summary of closure certificates
received in which amounts have been charged in accordance with this paragraph. A comment
must be included in the remarks/comments section of the Case Closure Certificate when these
write offs are used.
12.0 ANTIDEFICIENCY ACT (ADA) VIOLATIONS AND ADVERSE FINANCIAL
CONDITION REPORTS
12.1 ADA Violations
For purposes of the ADA, appropriated funds are not limited to those funds specifically
appropriated by Congress to federal agencies from the general funds of Treasury. Funds available
to agencies are considered appropriated if made available for collection and expenditure pursuant
to specific statutory authority, regardless of their source. In applying the ADA, the FMS Trust
Fund is considered to be, and will be, treated as appropriated funds. Therefore, the ADA applies
to transactions involving the FMS Trust Fund.
12.1.1. Types of Potential Violations. Potential violations may occur in FMS Trust Fund
transactions when:
12.1.1.1. Issuing OA or awarding an FMS contract without a signed LOA;
12.1.1.2. Obligating or expending FMS case funds for an unauthorized purpose,
including purposes not provided for by law;
12.1.1.3. Violating apportionments or indemnity clauses; or
12.1.1.4. Incurring obligations on a BPC case where the financing appropriation's
period of availability to incur new obligations has expired. Additional information on potential
violations of the ADA is in Volume 14, Chapter 2.
12.1.2. Identifying and Reporting Potential Violations of the ADA. Detailed guidance for
identifying, investigating, and reporting violations under the ADA is in Volume 14. Due to the
complexities of provisions in the AECA, it is important to consult with appropriate legal counsel
and comptroller officials on potential violations of the ADA for FMS.
12.2 Adverse Financial Conditions
Other reportable events occur when FMS case records are out of balance, but these
conditions do not necessarily meet the criteria of violations discussed in paragraph 12.1. These
conditions are adverse financial conditions and occur when financial reports show that: OA
exceeds case or line-item level values, commitments or obligations exceed OA at case or line-item
level, total disbursements exceed obligations at case or line-item level, or EA is not requested prior
to disbursement. Adverse financial conditions are reported using the same format used for ADA
violations.
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12.2.1. Reporting Requirements for Adverse Financial Conditions
12.2.1.1. DFAS SCA has the responsibility for determining reportable conditions
and notifying IAs of adverse conditions involving EA. DFAS SCA must provide a monthly
analysis report to the DoD Components identifying if disbursements are greater than EA at the
country case level, or if EAwas requested, remained unused, and was not returned at the end of the
month. The DoD Components must review the listings within 15 calendar days of receipt and
provide DFAS SCA an explanation of the discrepancy, the required corrective action, and when
such action will be processed. This information will be shared with DSCA.
12.2.1.2. DoD Components and IAs have the responsibility to resolve adverse
conditions involving obligations or expenditures of funds in excess of approved authority at any
level lower than case level.
12.2.2. Exceptions to Reporting Adverse Financial Conditions. Reports need not be
submitted for within-scope cost increases in either of the following circumstances:
12.2.2.1. Obligation(s) in excess of the “Total Estimated Cost” shown on the LOA
occurs, and a modification is prepared by the DoD Component and submitted to the purchaser
through appropriate channels within 60 calendar days of the date of the transaction that resulted in
the unfavorable financial condition; or
12.2.2.2. Obligation(s) or expenditure(s) in excess of approved authority occurs,
the excess amount results from the posting of duplicate or erroneous obligation/expenditure
transactions or the posting of obligations from inventory systems, and corrective action is taken
within 60 calendar days of the transaction date. These conditions, however, could indicate
weaknesses in internal controls and administrative action may be required to improve systems
design or to prevent recurrence.
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Figure 3-1. Format for the DoD Status-of-Allotment Report
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Table 3-1. Cost Elements
Cost Element Appropriation Reimbursed
A. Services of Military Personnel BLANK
A.1. Composite standard military pay rate Military Personnel (MILPERS)
A.2. Leave and holiday factor when
applicable (see Chapter 7, paragraph
20.2)
MILPERS
A.3. Personnel support costs
Operation and Maintenance (O&M),
97*0130, “Defense Health Program,
Defense”
A.4. Retirement cost prior to October 1, 1984 Miscellaneous Receipts Account 3041
A.5.
Retirement cost after September 30, 1984
MILPERS
A.6. Medicare-Eligible Retiree Health Care
accrual
Miscellaneous Receipts Account 3041
B.
Services of Civilian Personnel including
DWCF Personnel
BLANK
B.1. Salary cost and wages
O&M, Research, Development, Test,
Evaluation (RDT&E), and DWCF as
applicable
B.2.
Leave and holiday factor when
applicable
O&M, RDT&E, and DWCF as applicable
(see Chapter 7, paragraph 20.1)
B.3. DoD-funded civilian retirement costs O&M, RDT&E, and DWCF as applicable
B.4. Health and life insurance and other
employee fringe benefits
O&M, RDT&E, and DWCF as applicable
B.5.
Civilian unfunded retirement costs and
post-retirement health benefits not
funded by DoD appropriations
Miscellaneous Receipts Account 3041
C. Inventory Items BLANK
C.1.
Non-excess procurement funded items
which require replacement
Financing procurement appropriations, as
applicable, current at the time items are
dropped from inventory
C.2.
Non-excess procurement funded item
that is not to be replaced within the
obligation availability of current
procurement appropriations
SDAF
C.3.
DWCF items, including the cost recovery
elements for operating costs
DWCF
C.4.
Excess procurement funded principal
items
Funds items in accordance with
Title 10, U.S.C. § 114(c)(2), Miscellaneous
Receipts Account 3041
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Table 3-1. Cost Elements (Continued)
Cost Element Appropriation Reimbursed
D.
Nonrecurring cost recoupment charges
(Collected as a result of FMS)
SDAF
E. Transportation
Financing appropriation/fund current at the
time transportation is supplied
F. LSC FMS Trust Fund Administrative Account
G. DoD Royalty fee charges Miscellaneous Receipts Account 3041
H.
Charges for the use of DoD assets
(includes depreciation on purchased
equipment)
Miscellaneous Receipts Account 3041
Depreciation which is included in DWCF
shop rates must be retained by the DWCF
I.
Asset Use
SDAF
J. FMS contract costs financed by DoD
appropriation or fund accounts
Financing procurement appropriation or
DWCF, as applicable
K.
Temporary Duty costs financed by
appropriation or fund accounts
O&M and RDT&E appropriations current at
the time travel is performed, or DWCF, as
applicable
L. Accessorial charge BLANK
L.1. Packing, crating, and handling (PC&H) FMS Trust Fund PC&H Account
L.2. Transportation FMS Trust Fund Transportation Accounts
M. FMS Administrative Surcharge FMS Trust Fund Administrative Account
N. FMS CAS Surcharge FMS Trust Fund CAS Account
O.
CAS (This is a combination of cost
elements A, B, and K)
MILPERS, O&M, DWCF, or
Miscellaneous Receipts Account 3041, as
applicable
P.
Interest charge resulting from late
payment of billings (DD 645, “Foreign
Military Sales Billing Statement”) for
accrued expenditures
Miscellaneous Receipts Account 3210,
“General Fund Proprietary Receipts,
Defense Military, Not Otherwise
Classified”
Q. Mailing fee, storage, and publications O&M or DWCF, as applicable
R. Inventory losses
Applicable procurement or DWCF, as
applicable
S. Attrition FMS Trust Fund Attrition Account
Note: DoD Components must maintain internal records of the dollar amounts applicable to each
category of collections deposited into Miscellaneous Receipts Account 3041. One decimal
sub-account must be used for each type of collection. For example, 3041.3 might be used to
designate dollar amounts applicable to non-recurring cost recoupment.