United States Government Publishing Office publisher pbl distributor dst United States Government Accountability Office author aut Government Organization text government publication eng GAOREPORTS Legislative Agency Publications gao legislative 2010-08-12 U.S. Government Printing Office 2005-06-16 monographic deposited born digital 8 p. GA 1.13:GAO-05-800R https://www.govinfo.gov/app/details/GAOREPORTS-GAO-05-800R P0b002ee180385b07 f:d05800r DGPO 2010-08-12 2011-03-28 GAOREPORTS-GAO-05-800R machine generated eng fdlp REPORT GAOREPORTS-GAO-05-800R GAO-05-800R Budget obligations Budgeting Defense budgets Foreign currency Foreign currency exchanges Foreign exchange rates Defense economic analysis Correspondence A26777 The Department of Defense (DOD) expends a significant amount of funds overseas, particularly from its Operation and Maintenance (O&M) and Military Personnel (MILPERS) appropriations. As the rate of overseas currencies fluctuates on a daily basis, such fluctuations have an impact on the various expenditures that DOD makes. For budgeting purposes, DOD establishes foreign currency exchange rates to determine its O&M and MILPERS funding needs. During the fiscal year, DOD incurs expenditures at the actual exchange rate, which varies from the budgeted rate. For example, if the dollar depreciates in value, more dollars are needed to pay for goods and services than originally budgeted. Concerned about whether DOD's method for selecting foreign currency rates has produced realistic estimates in its budget submissions, Congress required DOD to consider alternative methods. Specifically, the Ronald W. Reagan National Defense Authorization Act for Fiscal Year 2005 required the Secretary of Defense to submit a report on the foreign currency exchange rate projections used in annual DOD budget presentations. The act required that DOD identify alternative approaches, including the feasibility of using private economic forecasting and approaches used by other federal departments and agencies, for selecting foreign currency exchange rates that would produce more realistic estimates of the amounts required for DOD to accommodate foreign currency exchange rate fluctuations. DOD also was required to discuss the advantages and disadvantages of each approach and to identify the department's preferred approach among the alternatives and provide a rationale for preferring that approach. Finally, the act further required that we review DOD's report, including the basis for the Secretary's conclusions for the preferred approach. DOD submitted its report to Congress on April 15, 2005. In response to the act, we examined (1) the extent to which DOD evaluated alternative approaches for selecting budgeted foreign currency rates--such as private economic forecasting companies or approaches used by other federal departments' and DOD's basis for selecting its preferred rate selection approach and (2) the extent to which DOD's preferred approach for forecasting foreign currency exchange rates would produce a more realistic estimate than its historical approach. https://www.govinfo.gov/content/pkg/GAOREPORTS-GAO-05-800R/html/GAOREPORTS-GAO-05-800R.htm https://www.govinfo.gov/content/pkg/GAOREPORTS-GAO-05-800R/pdf/GAOREPORTS-GAO-05-800R.pdf GAO-05-800R https://www.govinfo.gov/app/details/GAOREPORTS-GAO-05-800R Correspondence GAO-05-800R; Review of DOD's Report on Budgeting for Exchange Rates for Foreign Currency Fluctuations; Budget obligations Budgeting Defense budgets Foreign currency Foreign currency exchanges Foreign exchange rates Defense economic analysis Public Law 108-375