Credit Reform: Review of OMB's Credit Subsidy Model
Highlights
Pursuant to a legislative requirement, GAO reviewed the Office of Management and Budget's (OMB) Credit Management Subsidy Model (CSM), focusing on whether the CSM: (1) conforms with relevant provisions of applicable legislation and accounting standards; (2) provides reliable results; and (3) is maintained and operated under a system of adequate controls. An additional objective was to identify supplemental audit steps that auditors should perform to ensure that federal credit agencies are using the CSM properly. GAO contracted with the independent public accounting firm of Ernst & Young LLP to evaluate OMB's written representations (assertions) about the CSM's capabilities and opine on whether they are fairly stated in all material respects.
Recommendations
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Office of Management and Budget | Based on GAO's review of OMB's assertions and Ernst & Young's report, the Director, OMB, should ensure that guidance is provided to user agencies to establish logical access controls surrounding use of the CSM. |
OMB has acted on this recommendation. In its "Management Assertions" covering the methods used by the revised model to calculate subsidy cost, OMB includes information on the responsibilities of federal agencies using the credit subsidy model. The responsibilities specifically include ensuring that access is appropriately controlled, ensuring that the model has not been corrupted, and providing an appropriate level of computer security. OMB's "Management Assertions" have been attested to by an independent public accounting firm. OMB's "Management Assertions" and the related attestation opinion has been made available to federal agencies using the revised credit subsidy model.
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| Office of Management and Budget | The Director, OMB, should ensure that the following steps are taken in developing the next revision to the CSM: (1) revise the discounting equations in the CSM to follow standard finance theory; (2) strengthen controls over the CSM by implementing a VV&T process; (3) improve the CSM documentation to correct for the mistakes and omissions noted in OMB's assertions and Ernst & Young's report; and (4) enhance the CSM printout with additional data so that users and auditors are able to specifically identify which data were used by the CSM in the subsidy calculations. |
OMB has revised its credit subsidy model and implemented the recommendations.
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