Examination of Fiscal Year 1981 Overseas Private Investment Corporation Financial Statements and Related Issues

DIF loans outstanding as of September 30, 1984 are only 3 percent of total assets. The delinquent/nonearning assets contained therein are entirely encompassed by the allowance and are accordingly immaterial to total assets and would, therefore, not require disclosure.

The recommendation is based on an interpretation of congressional intent that DIF be charged with administrative costs and credited with interest income. Provisions of the OPIC Amendments Act of 1981 nullify this interpretation and make the recommendation no longer valid.

Statutory instruction on transferring funds to DIF is unclear and contradictory. Increased disclosure in current year footnotes accommodates these contradictions, and DIF new loan commitments are now limited by annual appropriation acts. OPIC feels it is in compliance with congressional intent and with changes in the DIF footnote. GAO does not feel the reader will be misled.

After the issue was raised in the FY 1981 audit, OPIC took steps to limit luncheon meetings, so as not to embarrass either OPIC or the client. Since that time, "representational expenses" have been significantly below the $35,000 spending limitation. As $35,000 is immaterial when compared to a net imcome of $97 million, no further action is deemed necessary.

Since the 1981 audit, OPIC has completed its Accounting and Cash Procedures and Procurement Manual. While additional formal written manuals may be desirable, GAO feels that existing directives are consistent with the small size and professional makeup of the organization.

GAO continues to stress the need for improved OPIC internal review and oversight of administrative practices, but believes that recent management actions to tighten controls, cost/benefit considerations, and congressional concern over possible duplication of audit effort combine to render this recommendation no longer effective.