Resolution Trust Corporation: Better Analyses Needed Before Terminating
Asset Management Contracts (Letter Report, 07/08/94, GAO/GGD-94-147).

The Resolution Trust Corporation (RTC) hired private sector contractors
under Standard Asset Management and Disposition Agreements (SAMDA) to
manage and dispose of assets from failed financial institutions; as of
October 1993, nearly $24 billion in assets were being handled under
nearly 300 SAMDA contracts. In April 1993, SAMDA established the
Accelerated Expiration Program to cut its administrative expenses by
terminating SAMDA contracts before their original expiration date. RTC's
procedures for the program, however, did not ensure that RTC made cost
effective decisions that were in its best interests. Although the
program requirement for a written justification that accelerated
expiration of a contract was in RTC's best interests, RTC had not
estimated program benefits or related costs. Although program procedures
include final contract reviews by independent auditors to determine
whether the SAMDA contractors met their obligations, these reviews have
been hindered because the SAMDA contractors did not have adequate
records and some of the costs charged to RTC were based on unofficial
contract interpretations made by local RTC oversight managers. In
addition, few of the recommendations from the final reports were
implemented because RTC officials believed that RTC's many contract
interpretations made strict adherence to the recommendations
impractical. RTC can remove the barriers to completion of the
independent auditors' final reviews by requesting that its SAMDA
oversight managers work with contractors to ensure that their record
keeping complies with contract requirements before the independent
auditors conduct their final reviews.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  GGD-94-147
     TITLE:  Resolution Trust Corporation: Better Analyses Needed Before 
             Terminating Asset Management Contracts
      DATE:  07/08/94
   SUBJECT:  Assets
             Bank failures
             Financial records
             Auditing procedures
             Corporate audits
             Contractor performance
             Contract monitoring
             Savings and loan associations
             Accounting procedures
             Internal controls
IDENTIFIER:  RTC Accelerated Expiration Program
             RTC Standard Asset Management and Disposition Agreement
             
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