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~Aao*Comptoller General
of the United StAwe
WaJomghz. D.Q0648
B-247667
February 28, 1992
The Honorable John Glenn
Chairman 146069
The Honorable William V. Roth, Jr.
Ranking Minority Member
Committee on Governmental Affairs
United States Senate
At our February 6, 1992 testimony before your committee,
the Chairman asked for our reaction to the Administration's
proposed accrual budget treatment of deposit insurance and
pension guarantees. This letter provides our views.
In summary, we believe that the current, cash-based budget
treatment of deposit insurance and pension guarantees does
not disclose the true costs of those programs and that the
concept of reporting accruals in the budget is sound and
could result in improved disclosure of program costs.
However, the accrual calculations of the Administration's
current proposal go well beyond tested accrual accounting
conventions and are suspect because of the uncertain
assumptions and poor data that underlie the calculations.
Therefore, we conclude that the Administration's current
proposal is flawed and should be rejected by the Congress
pending further study.
In a June 1991 report on the subject of budgeting accruals,
the director of the Office of Management and Budget (OMB)
discussed similar data limitations and the need to further
develop and test the complex accrual projections models,
concluding that another two or three years of study would
be required, after which, By then we should be able to see
whether and how to bring these [accrual] estimates into the
budget.' We fully agree with this earlier OMB assessment.
'Office of Management and Budget, Budgeting for Federal
Deposit Insurance, June 1991, p. 5.
GAO/AFMD-92-49R Accrual Budgeting
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