WASHINGTON — Although the Government Accountability Office gave the Federal Deposit Insurance Corp. its stamp of approval for 2010 and 2011 financial statements, the watchdog yet again said that the FDIC had overestimated the cost of certain of loss-sharing deals.

While the agency has taken steps meant to improve controls over how failed-bank losses are estimated, the GAO said Thursday, the most recent errors "collectively represent a significant deficiency in FDIC's internal control over financial reporting for the" Deposit Insurance Fund.

The FDIC's most common method of disposing institutions since the start of the crisis has been to sell most if not all of a failed bank to an acquirer while agreeing to share losses with the buyer from the sale. But the GAO has numerous times cited the FDIC for faulty estimates of its own losses from these agreements. In 2010, an audit said the errors amounted to a "material weakness." The next year, the GAO said although the agency's model for calculating losses had improved, there were still "internal control issues that … warrant management's attention and action."

The errors cited in the most recent report, which covered the FDIC's yearend 2011 statement, were a drop in the bucket compared to total failure-related expenses.

Out of nearly $43 billion in estimated losses from shared-loss agreements at yearend 2011, the GAO highlighted errors in loss provisions totaling $769 million in the agency's draft financial statements. In the finalized statements, those loss estimates had been reduced by a total of $274 million.

"While these deficiencies, individually and collectively, do not constitute a material weakness in internal control over financial reporting, they nevertheless increase the risk of additional undetected errors or irregularities in the DIF's financial statements," the GAO report said.

The audit said the FDIC had responded to the GAO's previous findings about its loss estimates, but "the controls put in place were not sufficient to prevent, detect, and correct errors in the shared loss model."

More generally, though, the report validated the agency's reporting. "Although certain internal controls associated with the DIF's financial reporting should be improved, FDIC maintained, in all material respects, effective internal control over financial reporting as of December 31, 2011," the GAO said.

In a response letter included with the report, Steven App, the FDIC's chief financial officer, said the agency continues to address improvements in the loss-estimate models.

"During the audit year, the FDIC management and staff continued to take steps to strengthen and improve controls over the shared loss estimation process and will continue to focus on this area in the coming audit year," App wrote in an April 11 letter.

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