Followup on Actions Needed To Protect Depositors at Federally Examined Grain Warehouses

Pursuant to a congressional request, GAO provided information on actions taken by the Department of Agriculture (USDA) in response to recommendations contained in a 1981 GAO report.

In that report, GAO found that the development and use of a reliable formula for predicting warehouses that may go bankrupt in the foreseeable future would make the Federal warehouse examination program more effective. Accordingly, appropriate action was recommended to the Secretary of Agriculture. As a result, USDA is in the process of developing a predictive formula. GAO also noted that, in response to a recommendation calling for stricter financial reporting requirements, the Agricultural Marketing Service (AMS) and the Commodity Credit Corporation (CCC) amended their regulations. AMS regulations now require that warehouse financial statements be audited or reviewed by an independent certified public accountant and that they will be accepted with the understanding that the warehouse may be subject to an onsite examination and audit. CCC regulations provide that financial statements may be accompanied by a report of audit or review conducted by an independent certified public accountant. GAO stated that, because review and compilation reports do not contain an accountant's opinion, they do not provide USDA with sufficiently reliable financial information on warehouses.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

Director: Brian P. Crowley Team: General Accounting Office: Resources, Community, and Economic Development Division Phone: (202) 512-9450