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Local TV Act: Progress Made, but Timeliness and Cost Accounting Issues Need to be Addressed

GAO-04-134 Published: Oct 31, 2003. Publicly Released: Oct 31, 2003.
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Highlights

The LOCAL TV Act required that GAO perform an annual audit of the (1) administration of the provisions of the Act, and (2) financial position of each applicant who receives a loan guarantee under the Act, including the nature, amount, and purpose of investments made by the applicant. In fiscal year 2002, the LOCAL TV Program was funded; however, because it was not fully implemented in that year, there were no loan guarantee applicants for GAO to audit. Therefore, this report primarily addresses whether program administration during fiscal year 2002 satisfied the provisions of the Act.

Recommendations

Recommendations for Executive Action

Agency Affected Recommendation Status
LOCAL Television Loan Guarantee Board To help ensure future timely implementation of the Program, the LOCAL Television Loan Guarantee Board and the Administrator, the Rural Utilities Service, should work collaboratively to issue the Program regulations and underwriting criteria in an expeditious manner.
Closed – Implemented
The LOCAL TV Board (Board), of which the Administrator is a member, took actions to ensure that the program regulations and underwriting criteria were issued more timely. On November 26, 2003, the Board requested that the Office of Management and Budget clear the program regulations. Subsequently, the Board issued the Final Rule, which was published in the Federal Register on December 23, 2003. The Final Rule contains all of the mandatory requirements of the Program, including the program regulations and the general policies and procedures, as well as the Notice of Application Filing Deadline. The underwriting criteria, which provides guidance to the Board to assess the creditworthiness of a loan guarantee applicant, was issued simultaneously with the Final Rule and published on the LOCAL TV Board's web site. As a result of the issuance of the program regulations and underwriting criteria, the Board will be able to begin accepting loan guarantee applications, and, ultimately, target areas throughout the United States will realize improved television reception.
LOCAL Television Loan Guarantee Board To help ensure better program management and that loan application and loan guarantee origination fees are sufficient to fully cover certain costs of administering the Program, the LOCAL Television Loan Guarantee Board and the Administrator, the Rural Utilities Service, should develop a process to ensure that future costs of the Program are accumulated, documented, and reported in accordance with federal accounting standards and related guidance.
Closed – Implemented
A number of actions have been taken that are consistent with the intent of our recommendation. The President's Budgets for Fiscal Years 2006 and 2007 provided that (1) the unobligated budget authority for the program had been rescinded and (2) that the administration was not proposing additional funds for this program. Since inception of the Program, no loan guarantees have been approved for the program. Further, as of December 31, 2006, the Board no longer has authority to approve loan guarantees. Of the $2 million that was appropriated for administrative expenses, approximately $1.3 million remained unobligated. On December 13, 2004, the LOCAL TV Act Board authorized closing out one of two existing contracts after expending about $600,000. The other contract expired on December 31, 2005. Because the costs for operating the program were accounted for and that funds are no longer available for loans or loan guarantees, this recommendation was implemented.

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Topics

Accounting standardsFederal fundsFunds managementLoansTelevision broadcastingAuditsNoncomplianceSchedule slippagesProgram evaluationInteragency relations