Liquidation of Failed Bank Assets at Risk Due to Inadequate Manual and Automated Processes
T-AIMD-94-56: Published: Nov 9, 1993. Publicly Released: Nov 9, 1993.
Pursuant to a congressional request, GAO discussed the automated systems that the Federal Deposit Insurance Corporation (FDIC) uses in liquidating failed bank assets. GAO noted that: (1) FDIC does not have basic internal controls in place to ensure that manual and computerized asset files accurately reflect the actual status of assets; (2) manual and automated files are not properly updated; (3) assets are grossly overvalued and cash receipts are not accounted for; (4) FDIC has taken steps to correct internal control problems, but it has not determined if its actions are adequate to resolve the problems or whether internal control problems exist at other offices; (5) FDIC does not maximize cash recoveries on the assets because of systematic weaknesses and inadequate systems design; and (6) FDIC has taken steps to improve its manual and computerized asset liquidation processes, but it is too soon to determine if the implementation of these improvements will resolve internal control problems.