Followup on Actions Needed To Protect Depositors at Federally Examined Grain Warehouses
RCED-83-159: Published: Jul 18, 1983. Publicly Released: Jul 28, 1983.
- Full Report:
Pursuant to a congressional request, GAO provided information on actions taken by the Department of Agriculture (USDA) in response to recommendations contained in a 1981 GAO report.
In that report, GAO found that the development and use of a reliable formula for predicting warehouses that may go bankrupt in the foreseeable future would make the Federal warehouse examination program more effective. Accordingly, appropriate action was recommended to the Secretary of Agriculture. As a result, USDA is in the process of developing a predictive formula. GAO also noted that, in response to a recommendation calling for stricter financial reporting requirements, the Agricultural Marketing Service (AMS) and the Commodity Credit Corporation (CCC) amended their regulations. AMS regulations now require that warehouse financial statements be audited or reviewed by an independent certified public accountant and that they will be accepted with the understanding that the warehouse may be subject to an onsite examination and audit. CCC regulations provide that financial statements may be accompanied by a report of audit or review conducted by an independent certified public accountant. GAO stated that, because review and compilation reports do not contain an accountant's opinion, they do not provide USDA with sufficiently reliable financial information on warehouses.
Recommendation for Executive Action
Status: Closed - Implemented
Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Recommendation: Although USDA has made changes in its financial reporting regulations, USDA should revise its regulations to require that federally examined warehouses submit annual financial statements accompanied by an audit report prepared by an independent certified public accountant or independent public accountant.
Agency Affected: Department of Agriculture