Pursuant to a legislative requirement, GAO audited the Resolution Trust Corporation's (RTC) financial statements for the years ended December 31, 1993 and 1992. GAO also reviewed: (1) RTC progress in addressing identified internal control weaknesses; (2) new internal control weaknesses; and (3) issues affecting estimated recoveries from failed thrifts.

GAO found that: (1) the RTC financial statements were reliable in all material respects; (2) the internal controls in effect as of December 31, 1993, were effective in safeguarding assets, ensured that transactions were in accordance with management authority and material laws and regulations, and ensured that there were no material misstatements; (3) there was no material noncompliance with applicable laws and regulations; (4) RTC adequately addressed previously identified material weaknesses and reportable conditions; (5) it was difficult to predict the recovery value of hard-to-sell assets and the costs of future resolutions; (6) although RTC has taken steps to improve its operating controls, it still has contractor performance problems that affect its recoveries; (7) based on current estimates, RTC may have $13 billion of unused loss funds after completing all its thrift resolutions; and (8) there are a number of nonmaterial deficiencies that RTC needs to correct.

Status Legend:

Review Pending-GAO has not yet assessed implementation status.

Open-Actions to satisfy the intent of the recommendation have not been taken or are being planned, or actions that partially satisfy the intent of the recommendation have been taken.

Closed-implemented-Actions that satisfy the intent of the recommendation have been taken.

Closed-not implemented-While the intent of the recommendation has not been satisfied, time or circumstances have rendered the recommendation invalid.

• Review Pending
• Open
• Closed - implemented
• Closed - not implemented

Recommendation for Executive Action

Recommendation: The RTC Chief Financial Officer should direct RTC staff to monitor implementation and progress of the corrective actions related to the weaknesses GAO identified in general controls over some RTC computerized information systems, posting securitization-related wire receipts, and reconciliations of receiverships' asset balances to detailed asset records.

Agency Affected: Resolution Trust Corporation

Status: Closed - Implemented

Comments: During a 1994 audit, GAO found that RTC improved its internal controls by implementing correction plans designed to address weaknesses in its general controls over some RTC computer systems, posting securitization-related wire receipts, and inputting correct receivership asset balances used in monthly reconciliations. Based on GAO's positive internal control test results for 1994, RTC adequately addressed the weaknesses that GAO identified. However, because GAO identified other EDP general control weaknesses during the 1994 audit, a general EDP control reportable condition was included in GAO's 1994 financial audit report.