In addition to the net outlays made through its borrowing authority, CCC had net outlays for programs and activities that receive direct appropriations and/or other funding—principally several of its commodity export programs. CCC’s Available Funding Derived Primarily From Its Borrowing Authority

Most of CCC’s funds in fiscal years 1996 and 1997 derived from its borrowing authority. CCC replenished its borrowing authority through (1) annual appropriations—about $10.5 billion in fiscal year 1996 and $1.5 billion in fiscal year 1997—and (2) program receipts amounting to about $6.9 billion in fiscal year 1996 and $5.7 billion in fiscal year 1997. The appropriations provided for these programs were unrelated to the borrowing authority. As discussed, CCC’s net outlays for its income and commodity support programs were about $4.4 billion and $5.1 billion in fiscal years 1996 and 1997, respectively. CCC’s net outlays for the commodity export programs funded through its borrowing authority were about $391.2 million and $235.7 million for fiscal years 1996 and 1997, respectively. CCC’s administrative expenses include (1) the purchase of computer and telecommunications equipment and services and (2) reimbursements to agencies within USDA and other government entities for services they provide to support CCC’s operations. Some Net Outlays Were Associated With CCC Programs and Activities That Received Direct Appropriations and Other Funding

With regard to CCC’s spending from appropriations (excluding payments made to the Department of the Treasury to repay borrowing) and other funding, CCC’s aggregate net outlays totaled about $337.5 million in fiscal year 1996 and $41.3 million in fiscal year 1997. A Variety of Management Practices Are Used to Control CCC Funds

CCC uses a variety of management practices to control its funds: (1) controls over spending related to the annual budget and apportionment processes, (2) periodic reporting of its financial activities to the Congress, (3) FSA’s implementation of internal controls to protect CCC’s assets and account for its financial transactions, (4) program managers’ allocation and monitoring of CCC funds, and (5) periodic reviews of program activity by compliance staff from agencies responsible for implementing CCC programs. In addition, USDA’s Office of Inspector General (OIG) audits CCC’s annual financial statements, including its year-end expenditure reports. According to the OIG, the material weaknesses it noted in FSA’s internal control structure could adversely affect CCC’s ability to be reasonably assured that its transactions are properly recorded and accounted for so that it can prepare reliable financial statements and maintain accountability over its assets. To obtain information on whether CCC’s funding for administrative purposes—computer and telecommunications purchases and reimbursements paid to USDA agencies and other government entities—conformed with statutory funding caps in fiscal years 1996 and 1997, we compared the obligations made by CCC for these purposes with the statutory caps and related apportionments by OMB. To obtain information on whether the programs CCC funded had a statutory basis for using CCC funds, our Office of General Counsel reviewed relevant statutes to determine the source of funding for these programs.
Why GAO Did This Study

Pursuant to a congressional request, GAO provided information on how Commodity Credit Corporation (CCC) funds are spent and controlled, focusing on: (1) how much money CCC had available and spent in fiscal years (FY) 1996 and 1997, including the sources of these funds and the programs and activities for which they were used; (2) the management practices used to control CCC funds; (3) whether CCC's funding for administrative purposes fell within relevant statutory funding caps; and (4) whether the programs CCC funded had a statutory basis for using CCC funds.

What GAO Found

GAO noted that: (1) the amount of funds available to CCC through its $30-billion borrowing authority fluctuates as it alternately borrows against and replenishes the authority every business day; (2) to enable CCC to repay its debt associated with the borrowing authority, Congress made appropriations to CCC totalling $10.5 billion in FY 1996 and $1.5 billion in FY 1997; (3) CCC also received about $6.9 billion and $5.7 billion in program receipts--in FY 1996 and FY 1997, respectively--that is also used to replenish its borrowing authority; (4) in addition, CCC received separate appropriations and other funding totalling $2.1 billion in FY 1996 and $1.9 billion in FY 1997 to fund several of its commodity export programs that are not funded through its borrowing authority; (5) most of CCC's net outlays made through its borrowing authority were for its income and commodity support programs--about $4.4 billion and $5.1 billion, in FY 1996 and FY 1997, respectively; (6) the remaining outlays made in these years--about $640 million and $2.3 billion--were primarily for CCC's other programs; however, some were used for administrative purposes, such as purchasing computer and telecommunications equipment and reimbursing Department of Agriculture (USDA) agencies and other government entities for services provided to support CCC's operations; (7) in addition to the net outlays associated with its borrowing authority, CCC had net outlays of about $334.4 million in FY 1996 and $38.7 million in FY 1997 for the commodity export programs that received direct appropriations and other funding; (8) a range of management practices are used to control CCC's funds; (9) these practices include: (a) controls over spending related to the annual budget and apportionment process; (b) CCC's periodic reports of its financial activities to Congress; (c) the Farm Service Agency's implementation of internal controls to protect CCC's assets and account for its financial transactions; (d) program managers' allocation and monitoring of CCC's funds used in their programs; and (e) periodic reviews of program activity by compliance staff from the agencies that implement CCC's programs; (10) in addition, the USDA's Office of Inspector General (OIG) audits CCC's annual financial statements, including its year-end expenditure reports; and (11) in a July 1997 report, the OIG noted problems with some of the Farm Service Agency's internal controls which it believes could adversely affect CCC's ability to prepare reliable financial statements and account for its assets.