Financial AuditFederal Financing Bank's 1993 and 1992 Financial Statements Gao ID: AIMD-95-4 December 6, 1994
This report presents the results of GAO's review of the independent certified public accountants' audits of the Federal Financing Bank's financial statements for fiscal years 1993 and 1992. In the auditors' opinions, the Bank's statements are presented fairly in accordance with generally accepted accounting principles. The independent auditors' reports on the Bank's internal accounting and administrative controls and on its compliance with laws and regulations are also provided. The Bank's fiscal year 1993 financial statements reflect an accumulated deficit of more than $2 billion. When it last audited the Bank in 1988, GAO reported material weaknesses in the Bank's internal control structure. Because of these long-standing weaknesses, GAO supports the independent certified public accountants' recommendation that the Treasury Department appoint an individual to oversee both the credit accounting and administrative functions of the Bank. Because the Bank will not be able to repay its liability to Treasury associated with loan prepayments under its current operating scenario, Treasury should consider eliminating this liability as well as the related account receivable on its books, including, if necessary, requesting legislation.
GAO found that: (1) the financial statements fairly presented the FFB financial position as of September 30, 1993 and 1992, in conformity with generally accepted accounting principles; (2) FFB filed a management report for fiscal year 1993 disclosing its internal control weaknesses in compliance with applicable laws and regulations; (3) FFB accumulated a $2-billion deficit due to borrowers' loan prepayments; (4) it is likely that FFB will carry its debt indefinitely because its net interest income will not be sufficient to liquidate its prepayment liability; and (5) although FFB has made some improvements to its overall internal control structure, material control weaknesses still persist.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: Team: Phone: