Commodity Credit Corporation's Refunds of Export Guarantee Fees
NSIAD-87-185: Published: Aug 19, 1987. Publicly Released: Aug 28, 1987.
- Full Report:
In response to a congressional request, GAO reviewed the Commodity Credit Corporation's (CCC) export credit guarantee fee refund policies and procedures to determine why it failed to refund a firm over $270,000 in failed export sales.
GAO found that: (1) the CCC denial of the firm's refund request was consistent with its policy to retain guarantee fees when exporters did not have a firm sale at the time they obtained coverage; (2) CCC determined that the firm had obtained coverage in anticipation of a later sale, since the firm could not demonstrate that it had a firm export sale; (3) although CCC claimed to have informed the exporter that a firm sale was required and that the fees were nonrefundable, CCC could not ensure that the exporter understood those policies when it applied for coverage; (4) CCC incurred financial risk, since the guarantee never became effective; and (5) it was not clear that CCC provided adequate information to the exporter.
Recommendation for Executive Action
Status: Closed - Not Implemented
Comments: FAS has issued an announcement concerning the need for a firm sale at the time of application and CCC refund policy. FAS is considering conducting an evaluation to examine processes used by exporters in making sales, with the objective of determining at what point a firm sale exists.
Recommendation: The Secretary of Agriculture should direct the General Sales Manager, Foreign Agricultural Service (FAS), to amend the credit guarantee program regulations to: (1) clarify the circumstances that must exist for users to obtain credit guarantee application approvals, including the need for and definition of a firm sale; (2) provide that users must have a firm sale to be considered for a guarantee fee refund should an export sale not be consummated; and (3) require that program users acknowledge their understanding of the application requirements and refund policy on the guarantee applications.
Agency Affected: Department of Agriculture