C9.12.1. Level of Accounting. FMS monies reimburse U.S. appropriations or are cited directly on payments to U.S. contractors. In accordance with the LOA, cash deposits may be disbursed for the financial requirements of any of that purchaser’s implemented cases. Accounting for FMS transactions is at least at the case level (many accounting transactions are recorded at the line level).

C9.12.2. Expenditure Authority. The total DoD available cash for each FMS purchaser is equal to the amount of undisbursed and/or unreserved monies on deposit for the purchaser in the FMS Trust Fund. The available cash is reduced by all reservations of funds (e.g., termination liability and expenditure authority). Based on the amount of a disbursement request and available funds, DFAS Indianapolis advises the expenditure authority requestor whether the expenditure authority is approved and the disbursement can occur. If a country does not have enough available cash, expenditure authority is not approved and the disbursement is placed on hold. The IA ensures the disbursement limit is not exceeded when paying contractors or reimbursing U.S. appropriations.

C9.12.3. Segregating and Accounting for FMS Costs. The AECA, sections 22 (22 U.S.C. 2762) and 29 (22 U.S.C. 2769) require accurate and prompt segregation and accounting of incremental costs to ensure that DoD appropriations are not adversely impacted by contractual payments on behalf of FMS orders. DoD policy requires contractors to request separate progress payments when more than one purchaser’s requirements (including the United States) are included in the same contract. Payments to contractors are reported by the proponent activity (e.g., IA) to DFAS Indianapolis to ensure that billings reflect the disbursement rate. If scheduled payments are not adequate, the IA modifies the payment schedule using an Amendment or Modification to the FMS case.