Asset Valuation Reviews and Cost Test

GAO reviewed the Resolution Trust Corporation's (RTC) implementation of the cost test used in making resolution decisions, to determine whether RTC was applying the cost test properly and whether it was a valid reflection of market values. GAO noted that: (1) the RTC guidelines formerly in effect contained elements necessary to arrive at reasonable estimates of market value, although some weaknesses in the implementation of the asset valuation review (AVR) process cause concern as to the reasonableness of the asset valuations; and (2) in April 1992, RTC could not determine whether AVR were done in accordance with applicable policies and procedures, and whether the asset valuations were reasonable or reliable, due to poor or non-existent supporting documentation.