Financial Audit

GAO audited the principal financial statements of the Federal Family Education Loan Program, formerly the Guaranteed Student Loan Program, and its internal controls and compliance with laws and regulations during fiscal year 1992. Although GAO was unable to give an opinion on the principal statements as a whole, GAO recognizes the effort that the Department of Education made in preparing the first comprehensive financial statement for the program. This was a difficult task, made even more so because the Department's systems were not designed to yield the reliable financial management information needed to effectively manage and report on the program's operations. GAO notes that internal controls were ineffective in protecting assets and ensuring that there were no material misstatements in the principal statements. The controls were effective, however, in ensuring material compliance with laws related to the use of budget authority and with significant provisions of other laws and regulations.

GAO found that: (1) the program's statement of cash flows was reliable in all material respects; (2) the statements contained material weaknesses, since loan guarantee liabilities data were unreliable; (3) the accuracy of projected program costs was questionable, since the costs were based on unreliable data; (4) Education took significant actions to implement the requirements of the Chief Financial Officers Act and planned to take additional actions to improve its financial management operations; (5) the program's internal controls contained numerous material weaknesses and did not ensure that assets were safeguarded against loss or that transactions were properly recorded, processed, and summarized; and (6) there was no evidence of noncompliance with selected laws and regulations.