Financial Audit: Bureau of the Public Debt's Fiscal Years 2005	 
and 2004 Schedules of Federal Debt (07-NOV-05, GAO-06-169).	 
                                                                 
GAO is required to audit the consolidated financial statements of
the U.S. government. Due to the significance of the federal debt 
held by the public to the governmentwide financial statements,	 
GAO has also been auditing the Bureau of the Public Debt's (BPD) 
Schedules of Federal Debt annually. The audit of these schedules 
is done to determine whether, in all material respects, (1) the  
schedules are reliable and (2) BPD management maintained	 
effective internal control relevant to the Schedule of Federal	 
Debt. Further, we test compliance with selected provisions of	 
significant laws related to the Schedule of Federal Debt. Federal
debt managed by BPD consists of Treasury securities held by the  
public and by certain federal government accounts, referred to as
intragovernmental debt holdings. The level of debt held by the	 
public reflects how much of the nation's wealth has been absorbed
by the federal government to finance prior federal spending in	 
excess of federal revenues. Intragovernmental debt holdings	 
represent balances of Treasury securities held by federal	 
government accounts, primarily federal trust funds such as Social
Security, that typically have an obligation to invest their	 
excess annual receipts over disbursements in federal securities. 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-06-169 					        
    ACCNO:   A41097						        
  TITLE:     Financial Audit: Bureau of the Public Debt's Fiscal Years
2005 and 2004 Schedules of Federal Debt 			 
     DATE:   11/07/2005 
  SUBJECT:   Data integrity					 
	     Debt held by public				 
	     Federal debt					 
	     Financial statement audits 			 
	     Financial statements				 
	     Internal controls					 
	     Reporting requirements				 
	     Bureau of the Public Debt Schedule of		 
	     Federal Debt					 
                                                                 

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GAO-06-169

     

     * Report to the Secretary of the Treasury
          * November 2005
     * financial audit
          * Bureau of the Public Debt's Fiscal Years 2005 and 2004 Schedules
            of Federal Debt
     * Contents
          * Opinion on Schedules of Federal Debt
          * Opinion on Internal Control
          * Compliance with Laws and Regulations
          * Consistency of Other Information
          * Objectives, Scope, and Methodology
          * Agency Comments
     * Overview, Schedules, and Notes
     * Comments from the Bureau of the Public Debt
     * GAO Contact and Staff Acknowledgments

www.gao.gov/cgi-bin/getrpt? GAO-06-169 .

For a fuller understanding of GAO's opinion on BPD's fiscal years 2005 and
2004 Schedules of Federal Debt, readers should refer to the complete audit
report, available by clicking the link above, which includes information
on audit objectives, scope, and methodology. For more information, contact
Gary T. Engel at (202) 512-3406 or [email protected].

Highlights of GAO-06-169 , a report to the Secretary of the Treasury

November 2005

FINANCIAL AUDIT

Bureau of the Public Debt's Fiscal Years 2005 and 2004 Schedules of
Federal Debt

GAO is required to audit the consolidated financial statements of the U.S.
government. Due to the significance of the federal debt held by the public
to the governmentwide financial statements, GAO has also been auditing the
Bureau of the Public Debt's (BPD) Schedules of Federal Debt annually. The
audit of these schedules is done to determine whether, in all material
respects, (1) the schedules are reliable and (2) BPD management maintained
effective internal control relevant to the Schedule of Federal Debt.
Further, we test compliance with selected provisions of significant laws
related to the Schedule of Federal Debt.

Federal debt managed by BPD consists of Treasury securities held by the
public and by certain federal government accounts, referred to as
intragovernmental debt holdings. The level of debt held by the public
reflects how much of the nation's wealth has been absorbed by the federal
government to finance prior federal spending in excess of federal
revenues. Intragovernmental debt holdings represent balances of Treasury
securities held by federal government accounts, primarily federal trust
funds such as Social Security, that typically have an obligation to invest
their excess annual receipts over disbursements in federal securities.

In GAO's opinion, BPD's Schedules of Federal Debt for fiscal years 2005
and 2004 were fairly presented in all material respects and BPD maintained
effective internal control related to the Schedule of Federal Debt as of
September 30, 2005. GAO also found no instances of noncompliance in fiscal
year 2005 with selected provisions of the statutory debt limit and debt
issuance suspension period laws we tested.

As of September 30, 2005 and 2004, federal debt managed by BPD totaled
about $7,918 billion and $7,379 billion, respectively. At the end of
fiscal year 2005, debt held by the public as a percentage of the U.S.
economy is estimated at 37.5 percent, compared to 33.0 percent at the end
of fiscal year 2001. Further, certain trust funds (e.g., Social Security)
continue to run surpluses, resulting in increased intragovernmental debt
holdings. These debt holdings are backed by the full faith and credit of
the U.S. government and represent a priority call on future budgetary
resources. As a result, total gross federal debt has increased 37 percent
between the end of fiscal years 2001 and 2005. During fiscal year 2005, a
debt issuance suspension period was invoked to avoid breaching the
statutory debt limit. On November 19, 2004, legislation was enacted to
raise the debt limit by $800 billion to $8,184 billion.

As shown below, total federal debt increased over each of the last 4
fiscal years. Debt held by the public increased during this 4-year period
primarily as a result of annual unified budget deficits. Intragovernmental
debt holdings steadily increased during this 4-year period primarily due
to excess receipts over disbursements in federal trust funds.
*** End of document. ***