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AIMD-96-135R 1 (1996-07-29)

handle is hein.gao/gaobaclgc0001 and id is 1 raw text is: GAO United States GAO) General Accounting Office Washington, D.C. 20548 Accounting and Information Management Division B-262036 July 29, 1996 The Honorable Ricki Helfer Chairman, Board of Directors Federal Deposit Insurance Corporation Dear Madam Chairman: On July 2, 1996, we issued our opinions on the Resolution Trust Corporation's (RTC) 1995 financial statements and management's assertions regarding the effectiveness of its system of internal controls as of December 31, 1995. We also reported on RTC's compliance with selected laws and regulations during 1995 (GAO/AIMD-96-123, July 2, 1996). The purpose of this letter is to advise you of matters identified during the audit relating to errors in the accumulation of reliable and relevant data used for accounting estimates presented in RTC's financial statements and to suggest related improvements to strengthen those internal controls weaknesses. These matters include the need to properly value the recovery of receivership securities, to exclude expired contracts from the representation and warranty estimate, and to properly verify data and formulas used to estimate recoveries of securitization reserves. Although these matters were not material in relation to the financial statements, we believe that they warrant the attention of management because they address internal control weaknesses that, if not corrected, could continue under FDIC management. We provided FDIC officials with a draft of this letter and discussed the matter addressed in it with them. The FDIC officials agreed with our findings and suggestions. ESTIMATED RECOVERIES FOR RECEIVERSHIP SECURITIES NOT PROPERLY VALUED RTC's financial statements reflect an allowance for loss against subrogated claims that is partly based on the valuation of the assets held for sale by RTC's GAO/AIMD-96-135R RTC Management Letter

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