The accounting steps in closing a case

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1. Closure moves records, it does not end them

Chapter 3 of Volume 15 of the Financial Management Regulation (FMR) sets out the accounting side of closing Foreign Military Sales (FMS) and Building Partner Capacity (BPC) cases (FMR Vol. 15, Ch. 3, para. 10.1). Every proper charge and credit must be recorded against the right case. Closure does not stop billing or reporting. It re-categorizes the case records from active to inactive status, so later activity can still be recorded. Deadlines and the treatment of leftover money are covered in closure deadlines and leftover funds.

A case becomes a candidate for closure when all ordered items have been delivered and all services performed. A blanket order case also qualifies after 180 calendar days without activity, if the purchaser agrees none will follow (FMR Vol. 15, Ch. 3, para. 10.2.1). All other conditions of the offer must also be met. The implementing agency (IA) then checks for unresolved delivery issues, open supply discrepancy reports and litigation claims. Contracting officers review contracts not yet financially closed for possible significant adjustments.

2. Two closure procedures

Cases close under the accelerated case closure procedures (ACCP) or outside them (FMR Vol. 15, Ch. 3, para. 10.2.1.1). ACCP applies to countries that elect it, and every country with cases financed by Military Assistance Program merger funds or non-repayable Foreign Military Financing takes part unless the Defense Security Cooperation Agency (DSCA) excludes it. Once chosen, ACCP covers all of that country’s cases. Closure should start within 24 months after supply and services are complete, and delay beyond that needs DSCA approval. Outside ACCP, every logistical and financial transaction must be processed before closure can begin, and BPC cases always close that way (FMR Vol. 15, Ch. 3, para. 10.2.1.2).

3. Balancing the books first

The case manager must make the IA’s delivered value agree with the value recorded in the Defense Integrated Financial System (FMR Vol. 15, Ch. 3, para. 10.2.2.1). Under ACCP, two differences must equal the estimated unliquidated obligation (ULO) set by the IA. They are progress payments less liquidating deliveries, and total deliveries less total disbursements (FMR Vol. 15, Ch. 3, para. 10.2.2.1.1). Outside ACCP, progress payments must equal liquidating deliveries (FMR Vol. 15, Ch. 3, para. 10.2.2.1.2). In both cases the IA fixes any imbalance before issuing a Case Closure Certificate. Problem disbursements must be rectified (FMR Vol. 15, Ch. 3, para. 10.2.2.2) and every obligation validated (FMR Vol. 15, Ch. 3, para. 10.2.2.3). Validating the accuracy of disbursed values is a prerequisite for resolving problem disbursements. At closure, the accounting office uses the submitted certificate in place of an amendment or modification, unless the case meets the criteria for one (FMR Vol. 15, Ch. 3, para. 10.2.2.6).

4. Interim and final closure

Under ACCP, the IA sends a Case Closure Certificate to the accounting office within 24 months after supply and services are complete (FMR Vol. 15, Ch. 3, para. 10.2.2.5.1.1). A case with a ULO of zero is finally closed, with no more transactions of any kind. A case with a ULO above zero is interim closed, because further disbursements could follow, although the purchaser has already paid enough into the trust fund to cover them. The accounting office bills the partner for the remaining ULO, which forms part of the closure value (FMR Vol. 15, Ch. 3, para. 10.2.2.5.1.4), and records it in the Case Closure Suspense Account (FMR Vol. 15, Ch. 3, para. 10.2.2.5.1.5). A case outside ACCP cannot be interim closed (FMR Vol. 15, Ch. 3, para. 10.2.2.4.2).

The accounting office reports on the suspense account quarterly to DSCA and to the ACCP partners (FMR Vol. 15, Ch. 3, para. 10.2.2.5.1.8). When a partner’s account shows a negative balance of $100,000 or more for six consecutive months, DSCA may have the partner billed for the whole balance owed (FMR Vol. 15, Ch. 3, para. 10.2.2.5.1.9). The regulation’s example is negative balances of $100,000, $250,000 and $175,000 at three quarter ends, leading to a bill for $175,000 through the omnibus quarterly billing statement.

5. Activity after closure

Under ACCP, a finally closed case that needs a further disbursement is first moved back to interim closure (FMR Vol. 15, Ch. 3, para. 10.4.2.1). Where post-closure disbursements exceed $100,000 either way because of a verified pricing adjustment, the IA asks DSCA to reopen the case; if it is not reopened, the disbursement runs against the suspense account (FMR Vol. 15, Ch. 3, para. 10.4.2.2). Outside ACCP, all cases go back to implemented status except adjustments of $200 or less, which may be charged to the administrative surcharge account (FMR Vol. 15, Ch. 3, para. 10.4.3.1). Post-closure activity that pushes a case over its value needs a modification (FMR Vol. 15, Ch. 3, para. 10.4.3.3).

Closed cases are normally not reopened (FMR Vol. 15, Ch. 3, para. 10.5). If a purchaser asks to reactivate one, the first question is whether an existing implemented case is available or a new case should be written. Reopening an interim or final closed case is a last resort that needs DSCA approval.

6. Returning BPC money before it cancels

BPC cases use appropriated funds available only for a statutory period, unlike FMS cases, which may be funded with national money available indefinitely (FMR Vol. 15, Ch. 3, para. 10.6.1). Expired balances can still pay obligations properly incurred before expiry until the funds are canceled, typically at the end of the fifth fiscal year after expiry. IAs must identify outstanding obligations on a BPC case and adjust them to the highest financial requirement by March 31 of the cancellation year (FMR Vol. 15, Ch. 3, para. 10.6.2). They must close the case and liquidate all obligations by July 31 of that year, so the money can return to its parent account. Otherwise they use the alternate funds return process promptly.

Key terms

ACCP	The accelerated case closure procedures, which allow closure with estimated remaining obligations.
Unliquidated obligation	An obligation not yet paid, estimated and billed when an ACCP case is interim closed.
Interim closure	Closure of an ACCP case that may still see disbursements already funded by the purchaser.
Case Closure Certificate	The IA’s electronic notice that starts closure processing.
Alternate funds return	The process for returning BPC funds when a case cannot close by July 31.

Every statement above links to the document behind it. The full source list for this piece is on the sources page.

This page describes public United States government programs for general information. It is not legal, regulatory or procurement advice, and it does not address the facts of any particular case.

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