Summary: Resolution Trust Corporation (RTC) controls over asset valuation reviews are so lax that the reasonableness of asset valuations for failed thrifts must be called into question. During its examination of asset review sheets, GAO found (1) limited documentation supporting the methods, the assumptions, and the conclusions used in doing these asset valuation reviews; (2) minimal evidence of contractor supervisory review of the individual asset review sheets that GAO had examined; and (3) lack of evidence indicating the level and the extent of review that RTC officials exercised in assessing the adequacy of the asset review sheets. These weaknesses put RTC at risk of using inaccurate or questionable data in cost tests, which seek to identify the least costly resolution method. In addition to correcting these weaknesses, RTC could further improve the asset valuation review process by making greater use of available data in developing the asset loss figure for the cost test. Finally, RTC considers its Asset Review Evaluation System fully functional even though it has never been tested under operational conditions. RTC will need to closely monitor the system's performance to ensure that all known system deficiencies have been corrected and that it is working properly.
