Financial Audit

Pursuant to a legislative requirement, GAO reviewed the Commodity Credit Corporation's (CCC): (1) financial statements for the fiscal years ended September 30, 1989 and 1988; (2) internal accounting controls and compliance with laws and regulations for the year ended September 30, 1989; and (3) financial operations.

GAO found that: (1) the financial statements presented fairly, in all material aspects, the CCC financial position as of September 30, 1989 and 1988, the results of its operations, and its cash flows for the years then ended, in conformity with generally accepted accounting principles; (2) CCC corrected a material weakness concerning the processing of accounting transactions; (3) CCC restated its 1988 financial statements to recognize the appropriate allowance and liability for the $2.9 billion in lapsed unobligated appropriations it failed to return to the Treasury as of September 30, 1988; (4) the net cost of CCC operations declined by almost one-half from 1988 due to reduced price support payments to producers and lower net costs on commodities managed and sold, or donated; (5) outstanding CCC loans declined 42 percent because of reduced loan rates and increased prices; (6) CCC inventories declined to a 6-year low of $3 billion which may affect donation programs by reducing the quantities or types of commodities available for donation; (7) CCC transferred $400 million to the Federal Crop Insurance Corporation (FCIC) to maintain FCIC solvency by providing funds to pay insurance claims from producers, bringing the cumulative total of transactions to $2.3 billion; and (8) CCC noted that additional losses may subsequently occur due to the Gulf War.