Financial Audit:

Resolution Trust Corporation's 1991 and 1990 Financial Statements

AFMD-92-74: Published: Jun 30, 1992. Publicly Released: Jun 30, 1992.

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GAO reviewed the Resolution Trust Corporation's (RTC): (1) financial statements for the years ended December 31, 1991, and 1990; and (2) internal accounting controls and compliance with applicable laws and regulations.

GAO found that: (1) the financial statements presented fairly, in all material respects, the RTC financial position for the year ending December 31, 1991, in conformity with generally accepted accounting principles; (2) it could not give an unqualified position about the 1991 RTC statement of revenues, expenses, and accumulated deficit, due to internal control weaknesses in RTC receivership operations, flaws in the RTC methodology for estimating recoveries, and significant RTC exposure to losses from resolved and unresolved thrifts; (3) RTC has addressed previously identified internal control problems in its receiverships and also implemented a statistical methodology for sampling receivership assets and projecting estimated values of all receivership assets; (4) RTC based its projections of recoveries on the best available information, but economic uncertainties which are beyond RTC control could result in fewer than projected recoveries and higher than estimated costs; (5) RTC does not have the estimated $109 billion to $114 billion in loss funds that it needs to resolve all receiverships and currently identified probable and possible thrift failures; and (6) RTC has issued a circular that should address GAO concerns about receivership documentation of cash receipts and disbursement processing.