Adverse Opinion on the Financial Statements of the Student Loan Insurance Fund for FY 1980

As required by the enabling legislation of the Guaranteed Student Loan Program, GAO reported to Congress its opinion on the Student Loan Insurance Fund's financial statements for the fiscal year (FY) ended September 30, 1980.

Since the fund's inception, serious accounting and reporting problems have resulted from inadequate internal controls and noncompliance with generally accepted accounting principles. Although GAO has regularly reported these problems since 1969, fund management has done little to correct them. In the opinion of GAO, the fund's financial statements do not fairly present its financial position at September 30, 1980, or the results of its operations and the changes in its financial position for FY 1980. This adverse opinion was necessary because: (1) control account balances, representing 64 percent of the fund's assets, could not be reconciled with computerized subsidiary records; (2) procedures have not been developed for several accounts, resulting in material misstatements; (3) cancelled checks totalling $14 million were added to the fund's cash balance without determining whether they had been recorded when initially issued; (4) supervisory reviews and other verification procedures were frequently ineffective; and (5) the uncollectible portion of insurance premiums receivable was not recorded.

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: Dennis J. Duquette Team: General Accounting Office: Accounting and Financial Management Division Phone: (202) 275-9406