Financial Audit

GAO examined the Farmers Home Administration's (FmHA): (1) financial statements for the year ended September 30, 1987; (2) internal accounting control system; and (3) compliance with laws and regulations.

GAO found that, although the financial statements presented fairly the FmHA financial condition, FmHA: (1) had a significantly deteriorating financial condition, with an accumulated deficit of $36 billion; (2) relies on Treasury loans to continue its operations and may require significantly increased congressional assistance to sustain operations; (3) had an operating loss of $22 billion for fiscal year (FY) 1987; and (4) owed the Treasury $85 billion, with $24 billion due in 1989. GAO also found that FmHA: (1) made loans at interest rates far below what it had to repay; (2) as a lender of last resort, made loans to individuals who were not otherwise creditworthy, resulting in a large number of delinquent loans; (3) did not record property it received by voluntary conveyance at fair-market value; (4) lacked a policy for writing off uncollectible loans and did not analyze the ultimate collectibility of its loan portfolio in accordance with Office of Management and Budget (OMB) requirements; (5) had numerous control weaknesses in its Automated Multiple Family Housing Accounting System (AMAS); (6) lacked adequate controls over the entry of guaranteed loans into its accounting system; and (7) did not reconcile its detailed property files with general ledger control accounts.

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.

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