Commodity Credit Corporation

As the federal government's financing arm for an array of domestic and international agricultural programs, the government-owned and -operated Commodity Credit Corporation (CCC) finances an array of income and commodity support programs through direct payments and loans. These programs assist producers in the production and marketing of agricultural commodities, such as feed grains, wheat, rice, and cotton. In addition, CCC's mission has expanded in recent years to include the financing of a range of commodity export, resource conservation, and disaster assistance programs. These programs are intended to enhance the price competitiveness of U.S. commodities in foreign markets, help producers implement conservation practices on their farms, and indemnify producers for crop or livestock losses resulting from weather-related disasters and pest infestations. This report provides information on (1) how much money CCC had available and spent in fiscal years 1996 and 1997, including the sources of these funds and the programs and activities for which they were used; (2) what management practices are used to control CCC funds; and (3) whether CCC's funding for administrative purposes, such as the purchase of computer and telecommunications equipment, fell within statutory funding caps in fiscal years 1996 and 1997 and whether the programs CCC funded had a statutory basis for using CCC funds.

GAO noted that: (1) the amount of funds available to CCC through its $30-billion borrowing authority fluctuates as it alternately borrows against and replenishes the authority every business day; (2) to enable CCC to repay its debt associated with the borrowing authority, Congress made appropriations to CCC totalling $10.5 billion in FY 1996 and $1.5 billion in FY 1997; (3) CCC also received about $6.9 billion and $5.7 billion in program receipts--in FY 1996 and FY 1997, respectively--that is also used to replenish its borrowing authority; (4) in addition, CCC received separate appropriations and other funding totalling $2.1 billion in FY 1996 and $1.9 billion in FY 1997 to fund several of its commodity export programs that are not funded through its borrowing authority; (5) most of CCC's net outlays made through its borrowing authority were for its income and commodity support programs--about $4.4 billion and $5.1 billion, in FY 1996 and FY 1997, respectively; (6) the remaining outlays made in these years--about $640 million and $2.3 billion--were primarily for CCC's other programs; however, some were used for administrative purposes, such as purchasing computer and telecommunications equipment and reimbursing Department of Agriculture (USDA) agencies and other government entities for services provided to support CCC's operations; (7) in addition to the net outlays associated with its borrowing authority, CCC had net outlays of about $334.4 million in FY 1996 and $38.7 million in FY 1997 for the commodity export programs that received direct appropriations and other funding; (8) a range of management practices are used to control CCC's funds; (9) these practices include: (a) controls over spending related to the annual budget and apportionment process; (b) CCC's periodic reports of its financial activities to Congress; (c) the Farm Service Agency's implementation of internal controls to protect CCC's assets and account for its financial transactions; (d) program managers' allocation and monitoring of CCC's funds used in their programs; and (e) periodic reviews of program activity by compliance staff from the agencies that implement CCC's programs; (10) in addition, the USDA's Office of Inspector General (OIG) audits CCC's annual financial statements, including its year-end expenditure reports; and (11) in a July 1997 report, the OIG noted problems with some of the Farm Service Agency's internal controls which it believes could adversely affect CCC's ability to prepare reliable financial statements and account for its assets.