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Resolution Trust Corporation: Better Analyses Needed Before Terminating Asset Management Contracts

GGD-94-147 Published: Jul 08, 1994. Publicly Released: Jul 08, 1994.
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Highlights

GAO reviewed the Resolution Trust Corporation's (RTC) Accelerated Expiration Program procedures, focusing on whether the procedures ensured that Standard Asset Management and Disposition Agreement (SAMDA) contractors satisfactorily met their contractual obligations before their contracts expired.

Recommendations

Recommendations for Executive Action

Agency Affected Recommendation Status
Resolution Trust Corporation To ensure that RTC makes more informed decisions about expirations of SAMDA contracts, the Deputy and Acting Chief Executive Officer, RTC, should revise RTC procedures to require an assessment of the known costs and benefits associated with these contracts. The cost benefit analyses should include: (1) an estimate of anticipated administrative savings or other benefits related to terminating SAMDA contracts; (2) a fee comparison between the expiring contract and the replacement contract; and (3) an analysis of the expenses associated with all unsold assets before waiving the retention provision.
Closed – Not Implemented
RTC cancelled the program for the early expiration of SAMDA contracts. The early expiration program included certain benefits which were the basis for the cost and benefits analysis recommendation. Because the program was cancelled, the recommendation is no longer applicable.
Resolution Trust Corporation To improve Office of Contractor Oversight and Surveillance final reviews of all SAMDA contracts and better ensure that the contractors have fulfilled their obligations, the Deputy and Acting Chief Executive Officer, RTC, should require SAMDA contract oversight managers to work with SAMDA contractors to help them prepare, summarize, and reconcile their asset activity records before the final reviews.
Closed – Implemented
RTC issued guidelines for the orderly closing of asset management contracts and implemented procedures to help contractors prepare records for final audit. RTC also revised its internal control review guidelines to include verification that oversight managers have taken the steps necessary to help contractors prepare their records for the final Office of Contractor Oversight and Surveillance (OCOS) audits, as the guidelines require. Through active participation of oversight managers and department heads working with contractors, RTC was able to better prepare contractors for the OCOS final audit and resolve them before the contracts were terminated.

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Topics

Accounting proceduresAssetsAuditing proceduresBank failuresContract oversightContract performanceCorporate auditsFinancial recordsInternal controlsSavings and loan associations