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FOD-76-15 1 (1976-05-17)

handle is hein.gao/gaobaaeii0001 and id is 1 raw text is: PESTRICTED - Not to be rc.~d ristslda 14io'3a r~ 4.kccounin~g e~C xce~t on tI1C of spe-c-~inc op by tile Cffice of Conrrc~i- .; vs oqo L I D~I COMPTROLL-eR 17ENvrAL. OF THE UN!TED ST.-.rES LM090810 B-l483 RELEASED Cnai rman S ommittee on Merchant Marine and Fisheries. house of Representatives Chairman . Subcommittee on the Pa'iama Canal Committee on Merchant Marine and Fisheries House of R-Drese2ntativs 'fr 1 , -T ( , In your letter of February 2, 1976. you asked us to -O comment on several questions relating to certain a;count~ing and other financial practices of the P. aina Caril oirganiza- %- tion; i.e., the Panama Canal Company -nd the Cana) one Gov- eznme. c, Your questions and our comments thereon are nr- sented beic.-. I. Accounting changes in fisciJ years 1973 thrcuqh '975. 1. lihat would the lirnract on fiscal year 1973 tilrouq 1975 Canal finnces have been if Che Can.l oTCjo ; .tcr had not made the various accounting changes tLnt were im- plementee during those years? The effect of the various accounting rhanges on the Canal orqanization's expenses for fiscal year 1973 through ,175 is shown in enclosure I. We estimate that th tccount- ing changes had the effect of increasing the Canal organiza- tion's expenses by about $30 million over the 3-year period. Since the Company absorbs the net cost of the Canal Zone Government and the effect of the governme.,t's accountin . changes is thereby generally reflected in the Cumpany's finan- cial statements, we have consolidated the effects o1 the vari- ous accounting changes for our reply. It is noted, however, that, although the accountina cnanges increased expenses by about $30 million ovtor the 3-.vear period, their impact on the operating lone:. of the Company was not in the same amount. Tn corputinq tht- in- creased toll rates which were implemeited in vscaJ year 1975, the Company included the estimated effect of tric ari- ous accounting changes. Thus the additional ux['int:e. re- sulting from the changes were recovered, to a carwtar' eytrnt, through the increase in tolls revenue in fiscal yn r 1975. 2. Does the GAO believe that the Canal crganLzatior has revised its accounting practices appronr ntly to make changes leading to decreased current iesenr as well as increase, ones? ~kf~ L Mao, -71 CU Ci 9 0-6-10 0£,

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