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AIMD-96-73R 1 (1996-03-22)

handle is hein.gao/gaobaclcj0001 and id is 1 raw text is: United States GA O General Accounting Office Washington, D.C. 20548 Accounting and Information Management Division B-271490 March 22, 1996 The Honorable John R. Kasich Chairman Committee on the Budget House of Representatives Dear Mr. Chairman: In your September 6, 1995, letter to the Comptroller General, you expressed concern that the cash budget does not provide the Congress with complete information on the costs of federal insurance programs. In 1990, the Congress recognized this shortcoming for purposes of. controlling and budgeting for loan and loan guarantee programs and passed the Federal Credit Reform Act, which required accrual reporting for credit programs. Based on this experience, you asked GAO to identify options for using accrual concepts in the budget for federal insurance programs' and to highlight trade-offs and implementation issues associated with the alternatives. This letter provides an interim report on our work. The federal government insures individuals and entities against a wide variety of risks ranging from natural disasters to bank failures and pension plan insolvencies. Historically, the private sector has been unwilling or unable to provide insurance against these hazards. The fact that these risks tend to be difficult to predict and catastrophic in size has hindered the development of actuarially sound premium rates and loss reserves. In some cases, the federal government subsidizes insurance in order to achieve public policy objectives. Through insurance programs, the federal government is committed to costs that are uncertain and that are not recognized in the budget when the Congress authorizes the insurance to be provided. 'The enclosure lists the 13 programs included in our study. GAO/AIMD-96-73R Budgeting for Federal Insurance

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