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Foreign Currency Reports DoD Financial Management Regulation Volume 6, Chapter 7 CHAPTER 7 FOREIGN CURRENCY REPORTS 0701 GENERAL B. The OUSD(C) will manage the appropriation for Foreign Currency Fluctuations, 070101 Purpose. This chapter establishes Defense (FCF,D). Amounts will be transferred reporting requirements for tracking all by OUSD(C) to the operating appropriations by transactions that increase or decrease the foreign means of a Nonexpenditure Transfer currency fluctuations accounts. It provides Authorization (SF 1151). These transferred funds guidance to DoD Components on the recording will be available only for funding a centrally of obligations for expenses payable in certain managed allotment (CMA) that each foreign currencies. Component’s operating appropriation has established to cover net losses in direct programs 070102 Overview due to unfavorable fluctuations in foreign exchange rates in the selected currencies. These A. The provisions of this chapter transfers may not fully fund such losses, but will apply to all DoD Components unless specific be based on need, on the funds available to exceptions have been granted in writing by the cover such losses DoD-wide, and on other Under Secretary of Defense (Comptroller) budgetary considerations. (USD(C)). C. Since the FCF,D appropriation is B. The reports discussed in this only available to fund net losses, gains and chapter are as follows: losses will be accumulated in the CMA in each affected operating appropriation, and if a net 1. DD-COMP(M)1506 gain results, the balance must be returned to Foreign Currency Fluctuations, Defense. FCF,D prior to the funds lapsing. Prior to passage of the 1979 appropriation act, the CMA 2. DD-COMP(M)1761 had to be funded entirely by the operating Foreign Currency Fluctuations, Construction, appropriation. However, now that the Defense appropriation is available, prompt action will be taken to provide funding based on justified 070103 Foreign Currency Fluctuation, requests received by USD(C). Operation and Maintenance D. The following statutes provide A. Beginning in Fiscal Year 1979, the authority for the FCF,D appropriation: Congress authorized the transfer of funds to Department of Defense operating appropriations 1. Public Law 96-38, to cover significant losses from foreign exchange "Supplemental Appropriation, 1979" allows rate fluctuations. Significant net gains from previously transferred FCF,D funds to be foreign currency exchange rate fluctuations must transferred back to the FCF,D appropriation from also be transferred to this new account. The the appropriation to which they were transferred operations and maintenance appropriations are if the funds are not needed to finance increased the only appropriations affected. The purpose of obligations due to fluctuations in currency the new appropriation is to alleviate the adverse exchange rates because of subsequent favorable effect of significant fluctuations in the specified fluctuations in currency exchange rates or currency exchange rates on authorized DoD because other funds are, or become, available to programs subsequent to September 30, 1978. finance these cost increases. The title of the appropriation is the "Foreign Currency Fluctuations, Defense Appropriation 2. Section 767A of Public Law (FCF,D)," Symbol 97X0801. 96-527, "DoD Appropriations Act, 1981," 169 Volume 6, Chapter 7 DoD Financial Management Regulation prohibits the transfer of funds from the FCF,D B. The OUSD(C) will centrally appropriation to Military Personnel administer the FCF,C,D appropriation. Initial appropriations for obligations incurred after capitalization for the account is to be September 30, 1980. accomplished by transferring unobligated balances from the family housing and military 3. Section 791 of Public Law 97- construction appropriations to the FCF,C,D 377, "DoD Appropriations Act, 1983," permits FY account. Unobligated balances may be 1982 and subsequent O&M unobligated balances transferred up to 5 fiscal years after they have to be transferred to the FCF,D appropriation expired for original obligation purposes. The provided the transfers are made prior to the capitalized amount is available for obligation or funds lapsing. The general provision limits the expenditure during FY 1987, or thereafter, for use of this authority so that the amount in the military construction, expenses of family FCF,D appropriation does not exceed $970.0 housing, or NATO Infrastructure programs for million at the time the unobligated balance the Military Departments and Defense Agencies transfer is made. resulting from foreign currency fluctuations. Military Departments should retain sufficient 4. Section 774 of Public Law 98- balances in each account as required to cover 212, "DoD Appropriations Act, 1984," requires contingencies. that for FY 1984 and all subsequent fiscal years for the FCF,D appropriation the foreign currency C. All amounts to be transferred from exchange rates in preparing the budget this appropriation to other appropriations submissions shall be the foreign currency available for construction will require the specific exchanges rates as adjusted or modified by the approval of the USD(C). Upon determination of congressional committee reports. amounts to be transferred from the FCF,C,D accounts, the OUSD(C) will request the DFAS 5. Section 9092 of Public Law Indianapolis Center to initiate action for transfer 99-591, "DoD Appropriations Act, 1987," allows of funds to applicable appropriations by means the Department to transfer unobligated FY 1983 of Nonexpenditure Transfer Authorization (SF Procurement funds, except for Shipbuilding and 1151). Conversion, Navy funds, to the FCF,D appropriation provided that the transfers are 070105 Definitions made by September 30, 1987 and provided that at the time the transfer is made using this A. Foreign Currency Unliquidated or authority, the balance in the FCF,D appropriation Liquidated Obligations. These are obligations does not exceed $970.0 million. payable either in a specified foreign currency or in U.S. dollars, the amount of which is 070104 Foreign Currency Fluctuation, Military determined by the budget rate in effect at the Construction, Family Housing and NATO time of the transaction. Infrastructure B. Accrued Variance. The accrued A. Beginning in Fiscal Year 1987, variance is the difference between unliquidated Congress established a foreign currency obligations at the budget rate and the current fluctuation account to protect DoD Military foreign currency exchange rate. Construction, Family Housing and North Atlantic Treaty Organization infrastructure C. Realized Variance. The realized programs from substantial gains or losses variance is the difference between liquidated resulting from foreign currency fluctuations. The obligations at the budget rate and the foreign title of this appropriation is the "Foreign currency exchange rate at the time of payment. Currency Fluctuation, Construction, Defense The variance is equal to the amount disbursed Appropriation (FCF,C,D)," Symbol 97X0803. from the applicable centrally managed allotments. 170 DoD Financial Management Regulation Volume 6, Chapter 7 070106 Standards OUSD(C). Foreign currency obligations are those obligations that are either payable in A. The foreign currency fluctuation specified foreign currency or payable in dollars, legislation limits the use of funds provided the the amount of which is determined by the rate of two appropriations (FCF,D and FCF,C,D) solely exchange. When payment is made, the to losses sustained owing to unfavorable foreign disbursing officer will charge the variance currency fluctuations. The appropriations are between the budget rate and the current rate not available to finance cost increases resulting directly to the applicable CMA. Other obligation from changes in the scope of programs, inflation adjustments, such as a change in scope of the increases, or other such changes. Other contract, will necessitate an adjustment, at the important features of the foreign currency budget rate, in the obligation on the installation’s fluctuations appropriations language are the books prior to any adjustment for the currency following provisions relating to rate variance. obligation/expenditure limitations and financial accounting procedures, relative to foreign D. The Component’s central currency exchange fluctuations: accounting activity will determine the total foreign currency unliquidated obligations at the 1. Authorizations or limitations budget exchange rate for each appropriation. An now or hereafter contained within appropriations "accrued variance," will be determined at the end or other provisions of law limiting the amounts of each month based on the difference between that may be obligated or expended are hereby unliquidated obligations at the budget rate and increased to the extent necessary to reflect unliquidated obligations at the current rate, fluctuations in foreign currency exchange rates using the exchange rate on the last day of the from those used in preparing the applicable month. The accrued variance will never be budget submission. obligated in the official accounting documents The exchange rate will be provided by the 2. Contracts or other obligations OUSD(C). Appropriate favorable variances must entered into payable in foreign currencies may be identified and accumulated as well as be recorded as obligations based on currency unfavorable variances. exchange rates used in preparing budget submissions, as amended by the Congress, and E. It is the responsibility
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