Examination of the Rural Telephone Bank's Financial Statements

Published by the Government Accountability Office on 1977-03-15.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

 .A....                             UNITED STATES GENERAL ACCOUNTING OFFICE                               Op
  \~~P',?:."~:J°J                                WASHINGTON REGIONAL OFFICE
                                                           FIFTH FLOOR
                                                     803 WEST BROAD STREET
                                                  FALLS CHURCH, VIRGINIA      22046

       Mr. Joseph Vellone
       Assistant Administrator, Management
       Rural Electrification Administration
       Department of Agriculture
       Independence Avenue between
         12th and 14th Streets, SW.
       Washington, D.C.  20250

       Dear Mr. Vellone:

                    We have completed our                      exami ntion of the Rural Telephone
oCZ    Bank:s (RTB) financial statementslfor the 15-month period
       ended September 30, 1976, and our report to the Congress is
       currently being processed.  A matter not included in that
       report, but which we believe demands your attention, concerns
       an improper allocation of certain expenses by the Rural
       Telephone Bank Board.

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       and Patronage Capital for the 12-month period ended June 30,
       1976, we determined that expenses charged to the account
       "Proportionate Share of Telephone Expenses," in the amount of
       $170,000, were improper.

            RTB's board of directors adopted a resolution on
       February 6, 1976, which directed the Governor of the Bank to
       expend telephone bank funds to reimburse the Rural Electrifi-
       cation Administration (REA) for a proportionate share, not in
       excess of $170,000, of expenses to be incurred for joint
       operations of the REA/RTB telephone program during the
       remainder of fiscal year 1976.

                    A memorandum accompanying the resolution stated that due
       to increased per diem rates and mileage allowances for use
       in Government travel, REA was faced with either making
       significant reductions in operations or finding other ways of
       absorbing the increased cost.

            The memorandum further stated that REA had explored other
       alternatives and

                    "*   * a determination was made that the agency could
                    absorb a portion of the increased cost without impairing
                    the ability to carry out the loan programs which had

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