Summary: Pursuant to a legislative requirement, GAO reviewed the Panama Canal Commission's (PCC): (1) financial statements for the year ended September 30, 1990; (2) internal accounting controls; and (3) compliance with laws and regulations.
GAO found that: (1) the financial statements presented fairly in all material aspects, the PCC financial position as of September 30, 1990, and the results of its operations, changes in the investment of the U.S. government, and cash flows for the year then ended, in conformity with generally accepted accounting principles; (2) as provided by the Panama Canal Treaty of 1977, PCC will terminate on December 31, 1999, when the Republic of Panama will assume full responsibility for the management, operation, and maintenance of the Panama Canal; (3) PCC ended fiscal year (FY) 1990 with net revenues of $7 million, compared to a net loss of $7.3 million for FY 1989; (4) FY 1990 total operating revenues increased to $475 million, up 8.9 percent over FY 1989, primarily due to a 9.8-percent toll rate increase, offset slightly by fewer ships transiting the canal with 2.3-percent less tonage; (5) nontoll revenue increased to $119 million during FY 1990, primarily due to a 20-percent surcharge imposed from April 1, 1990 to February 28, 1991, to cover additional costs incurred by PCC during Panama's previous regime and the 1989 U.S. intervention; (6) from 1986 through 1990, total operating expenses increased an average of 3 percent annually; (7) between 1989 and 1990, total assets declined by less than 1 percent to $876 million, total liabilities declined by less than 2 percent to $403 million, and U.S. government capital remained at approximately $473 million; and (8) from FY 1980 through FY 1990, PCC net reported costs under the treaty amounted to $516 million, which was less than the Panama Canal Act of 1979 inflation-adjusted target of $1.186 billion as of September 30, 1990.
