DEFENSE SECURITY COOPERATION AGENCY  2800 DEFENSE PENTAGON  WASHINGTON, D.C. 20301-2800

11/28/2023

MEMORANDUM FOR :

DEPUTY UNDER SECRETARY OF THE AIR FORCE FOR INTERNATIONAL AFFAIRS 
DEPUTY ASSISTANT SECRETARY OF THE ARMY FOR DEFENSE EXPORTS AND COOPERATION 
DEPUTY ASSISTANT SECRETARY OF THE NAVY FOR INTERNATIONAL PROGRAMS 
DIRECTOR, DEFENSE CONTRACT MANAGEMENT AGENCY 
DIRECTOR, DEFENSE INFORMATION SYSTEMS AGENCY 
DIRECTOR, DEFENSE LOGISTICS AGENCY 
DIRECTOR, DEFENSE THREAT REDUCTION AGENCY 
DIRECTOR, MISSILE DEFENSE AGENCY 
DIRECTOR, NATIONAL GEOSPATIAL-INTELLIGENCE AGENCY 
DIRECTOR FOR SECURITY ASSISTANCE, DEFENSE FINANCE AND ACCOUNTING SERVICE - INDIANAPOLIS OPERATIONS 
DIRECTOR OF CYBERSECURITY DIRECTORATE AND DEPUTY NATIONAL MANAGER FOR NATIONAL SECURITY SYSTEMS, NATIONAL SECURITY AGENCY

SUBJECT :

Defense Security Cooperation Agency Policy Memorandum 23-50, Contingent Legal Liabilities [SAMM E-Change 647]

REFERENCE :

1. Defense Security Cooperation Agency FY 2022 Financial Statement Audit Notice of Finding and Recommendations (NFR) SAA-2022-N0011
2. The Federal Managers Financial Integrity Act of 1982 (FMFIA) (31 U.S. Code (U.S.C.) 3512)
3. Department of Defense Financial Management Regulation (DoD FMR), Volume 4, Chapter 12: Other Liabilities, Section 4.3
4. Office of Management and Budget (OMB) Circular No. A-123
5. Office of Management and Budget (OMB) Circular No. A-136
6. Federal Financial Accounting Standard 5 and 12

This memorandum implements a corrective action identified in reference (a) for DSCA to develop policies and procedures requiring internal control activities that identifies, assesses, and reports actual and contingent legal liabilities in the Security Assistance Account (SAA) financial statements in accordance with references (b), (c), (d), (e), and (f). This memorandum is effective immediately.

The policy in the attachment requires the Implementing Agencies (IAs) to report to DSCA any litigation, claims, and assessments meeting the materiality threshold where a negative judgment would be paid, either in full or in part, from funds within the SAAs. DSCA (Front Office, Office of General Counsel (FO/OGC)) will track IAs' compliance with data calls or other requests for information related to contingent legal liabilities that should be recorded and/or disclosed in the SAAs' financial statements, ensure proper record keeping of contingent legal liability information provided by the IAs and DSCA, include interim and final Legal Representational Letters (LRLs) in the SAA's financial statements, and request subsequent events data calls on an annual basis in coordination with DSCA (Office of Business Operations (OBO)).

The policy is incorporated into the DSCA Security Assistance Management Manual (SAMM) at https://samm.dsca.mil.

If you have questions on this guidance, please contact Jennifer Robey, Financial Policy & Regional Execution Directorate, Financial Policy Division (FPRE/FP), (571) 236-0341, jennifer.e.robey.civ@mail.mil.

J. Aaron Harding 
Chief Operating Officer and Chief Financial Officer 
Defense Security Cooperation Agency

ATTACHMENT : 
- SAMM E-Change 647 - Contingent Legal Liabilities