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

2/6/2024

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, SECURITY COOPERATION ACCOUNTING DIRECTORATE, 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 24-20, Contingent Liabilities to the Security Assistance Accounts [SAMM E-Change 679]

REFERENCE :

1. Defense Security Cooperation Agency FY 2022 Financial Statement Audit Notice of Finding and Recommendations (NFR) SAA-2022-N0012
2. The Federal Managers Financial Integrity Act of 1982 (FMFIA) (31 U.S. Code (U.S.C.) 3512)
3. The Government Accountability Office's (GAO's) Standards for Internal Control in the Federal Government, Principle 10, Design Control Activities
4. The Government Accountability Office's (GAO's) Standards for Internal Control in the Federal Government, Principle 12, Implement Internal Control Activities
5. Department of Defense Financial Management Regulation (DoD FMR), Volume 4, Chapter 12: Other Liabilities, Section 4.3, Contingent Liability
6. Office of Management and Budget (OMB) Circular No. A-123 - Management's Responsibility for Enterprise Risk Management and Internal Control

This memorandum implements a corrective action identified in reference (a) for DSCA to review Implementing Agencies' (IAs) processes, systems, and guidance to include the DoD Financial Management Regulation (FMR) and Security Assistance Management Manual (SAMM) in order to document gaps that impede contingent liabilities from being reported completely and accurately in the Security Assistance Account (SAA) financial statements in accordance with references (b), (c), (d), (e), and (f). In accordance with reference (e), contingent liabilities are defined as an existing condition, situation, or set of circumstances involving uncertainty as to possible gain or loss to an entity. This memorandum is effective immediately

DSCA, in coordination with the IAs, will perform a documented assessment of SAA programs and activities to identify the types and sources of contingent liabilities that may exist related to SAA programs and activities. The assessment should include treaties and other international agreements, warranties related to foreign military sales, and other items determined by DSCA.

The policy is incorporated into the DSCA SAMM at https://samm.dsca.mil.

If you have questions on this guidance, please contact Derrick Lee, Financial Policy & Regional Execution Directorate, Financial Policy Division (FPRE/FP), (703) 697-9207, derrick.v.lee2.civ@mail.mil.

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

ATTACHMENT : 
SAMM E-Change 679 - Contingent Liabilities to the Security Assistance Accounts