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PAD-80-32 1 (1980-04-09)

handle is hein.gao/gaobabalc0001 and id is 1 raw text is: COMPTROLLER GENERAL OF THE UNITED STATES WASHINGTON. 0.0. 13 B-i14873 The Honorable Robert N. Giaimo Chairman, Committee on the Budget House of Representatives Dear Mr. Chairman: Subject: Legislative Change Needed To Improve Budget Treatment of Certificates of Beneficial Ownershi 7(PAD-80-32) We have completed a report to the Budget Process Task Force, House Committee on the Budget, entitled Federal Budget Outlay Estimates: A Growing Problem (PAD-79-20, February 9, 1979). As part of that analysis, we performed a series of case studies, one of which involved Department of Agriculture programs in the Farmers Home Administration (FmHA). This letter addresses an issue noted during our study which, while not included in our report, is nevertheless significant and warrants your attention. FmHA administers three public enterprise revolving funds which are largely financed through the sale of interest bear- ing Certificates of Beneficial Ownership (CBOs). The three funds are: Rural Housing Insurance Fund, Agricultural Credit Insurance Fund, and Rural Development Insurance Fund. We have\found that a number of undesirable consequences result from he legal requirement that FmHA record the sale of Certificates f Beneficial Ownership as a sale of assets in the budget. he reporting procedure that FmHA is required to use (1) does not conform to established reporting principles, (2) results in an understatement of, FmHA and Federal outlays, and (3) creates inconsistency in the budget. The following procedure is used by FmHA to finance oper- ations through the sale of CBOs. FmHA makes loans to farmers or other rural borrowers. Then FmHA gathers the loans into a pool and sells shares of interest in the pool to the Federal Financing Bank (FFB) in the form of Certificates of Beneficial Ownership. The Federal Financing Bank is an off-budget insti- tution which functions as a financial go-between, purchasing the debt and guaranteed obligations of other Federal agencies and substituting its own borrowing for that of the agencies. FFB borrows from the U.S. Treasury. 990115 , t 112oqO APRIL 9, 1980 111111111111111 112040 I - - 10 14 5,j Z) o cor 4 / M COIA

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