Resolution Trust Corporation:
Oversight of SAMDA Property Management Contractors Needs Improvement
GGD-94-5: Published: Nov 30, 1993. Publicly Released: Nov 30, 1993.
- Full Report:
GAO reviewed the actions that the Resolution Trust Corporation's (RTC) Standard Asset Management and Disposition Agreement (SAMDA) contractors have taken to monitor the performance of property management companies (PMC).
GAO found that: (1) most of the SAMDA contractors reviewed have not audited PMC accounting records to ensure that all revenues and expenditures are properly recorded; (2) none of the SAMDA contractors has completed on-site reviews of their PMC to ensure that they are satisfactorily performing their contractual duties; (3) most PMC are unclear about their responsibilities for managing RTC properties and remitting all funds due to RTC; (4) SAMDA contracts do not specifically require that contractors make on-site reviews or periodically audit PMC accounts; (5) RTC guidance on SAMDA contractor responsibility for monitoring PMC is vague; (6) RTC has improved its oversight of contractors and subcontractors by distributing memos and a performance checklist that clarify the guidance; (7) RTC plans to revise its asset management and disposition manual to include a PMC oversight program; and (8) RTC lacks a process to ensure that its contractors oversee their PMC on a regular basis.
Recommendation for Executive Action
Status: Closed - Implemented
Comments: In April 1994, RTC issued Circular 10100.53 containing policies, procedures, and guidelines for the oversight of property management contractors and to improve control over financial management, cash management, and recordkeeping done by property managers hired by RTC or its SAMDA/SAMA contractors. This directive requires the SAMDA/SAMA contractors to oversee the property managers they hire. They are required to make periodic on-site property inspections and review the subcontractors' budgets, periodic reports, and bank statements. They are to also reconcile monthly reports with the bank statements pertaining to each property. In addition, RTC revised the Asset Management Contractor Performance Visitation Checklist to include specific subcontractor performance measures for property management activities. RTC has provided documentary evidence that the periodic reviews are being done, and that the revised checklist is being used.
Recommendation: When revising the Asset Management and Disposition Manual, the President and Chief Executive Officer, RTC, should either: (1) change RTC SAMDA performance reviews by completing them more than once a year and during those reviews include specific steps focused on the SAMDA contractors' efforts to oversee their PMC; or (2) require the SAMDA contractors to regularly report on steps taken to oversee their PMC.
Agency Affected: Resolution Trust Corporation