Financial Audit

GAO examined the Farmers Home Administration's (FmHA): (1) consolidated financial statements as of September 30, 1989 and 1988; (2) internal accounting control structure; (3) compliance with laws and regulations; and (4) operating results for the fiscal year (FY) then ended.

GAO found that: (1) FmHA used inaccurate accounting records to support its reported amount of acquired property and did not properly reconcile reports produced by the Acquired Property Tracking System with its field offices' detailed acquired property files; (2) FmHA complied with laws and regulations for FY 1989; and (3) the new FmHA farm loan system lacked sufficient internal controls and was unable to project loan losses. In addition, GAO found that FmHA financial operations for FY 1987 through FY 1989 showed that: (1) FmHA consistently operated at a loss, since it paid higher interest than it received from borrowers and many borrowers did not repay loans; (2) FmHA total loan portfolio book value decreased from $60.9 billion in FY 1987 to $54.5 billion in FY 1989; (3) emergency farm loans represented a high delinquency and default risk; (4) nonfarm loans totalled $32 billion as of September 30, 1989 and continued to represent 59 percent of total outstanding FmHA loans; and (5) FmHA loan guarantees increased to $4.5 billion. GAO also noted that it: (1) and the Office of Management and Budget identified FmHA as a high-risk area within the federal government; and (2) was conducting detailed reviews to determine the nature and extent of problems associated with FmHA systems and programs.

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.

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