Financial Audit: Significant Internal Control Weaknesses Remain
in Preparing the Consolidated Financial Statements of the U.S.
Government (21-APR-06, GAO-06-415).
For the past 9 years, since our first audit of the consolidated
financial statements of the U.S. government (CFS), certain
material weaknesses in internal control and in selected
accounting and financial reporting practices have resulted in
conditions that prevented GAO from expressing an opinion on the
CFS. Specifically, GAO has reported that the U.S. government did
not have adequate systems, controls, and procedures to properly
prepare the CFS. Included with GAO's December 2005 disclaimer of
opinion on the fiscal year 2005 CFS was its discussion of
continuing weaknesses relating to the Department of the
Treasury's (Treasury) preparation of the CFS. The purpose of this
report is to (1) provide details of those additional weaknesses,
(2) recommend improvements, and (3) describe the status of
corrective actions on GAO's previous 154 recommendations.
-------------------------Indexing Terms-------------------------
REPORTNUM: GAO-06-415
ACCNO: A52219
TITLE: Financial Audit: Significant Internal Control Weaknesses
Remain in Preparing the Consolidated Financial Statements of the
U.S. Government
DATE: 04/21/2006
SUBJECT: Accounting
Accounting procedures
Accounting standards
Financial management
Financial records
Financial statement audits
Financial statements
Internal controls
Regulatory agencies
Reporting requirements
Reports management
Corrective action
Financial reporting
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GAO-06-415
* Report to the Secretary of the Treasury and the Director of the Office
of Management and Budget
* April 2006
* FINANCIAL AUDIT
* Significant Internal Control Weaknesses Remain in Preparing the
Consolidated Financial Statements of the U.S. Government
* Contents
* Results in Brief
* Scope and Methodology
* Directly Linking Audited Federal Agency Financial Statements to
the CFS
* Comparability of Financial Statements
* Recommendation for Executive Action
* Audit Assurance over Certain Federal Agencies' Closing Packages
* Recommendation for Executive Action
* Internal Control Monitoring
* Recommendation for Executive Action
* Consolidated Reporting Guidance to Federal Agencies
* Recommendations for Executive Action
* Reconciling of Intragovernmental Activity and Balances
* Recommendation for Executive Action
* Agency Comments and Our Evaluation
* OMB Comments
* Treasury Comments
* Status of Treasury's and OMB's Progress in Addressing GAO's Prior Year
Recommendations for Preparing the CFS
* Comments from the Department of the Treasury
* GAO Contacts and Staff Acknowledgments
Report to the Secretary of the Treasury and the Director of the Office of
Management and Budget
April 2006
FINANCIAL AUDIT
Significant Internal Control Weaknesses Remain in Preparing the
Consolidated Financial Statements of the U.S. Government
Contents
Table
April 21, 2006Letter
The Honorable John W. Snow The Secretary of the Treasury
The Honorable Clay Johnson III Acting Director, Office of Management and
Budget
In our report dated December 2, 2005, we disclaimed an opinion on the
consolidated financial statements of the U.S. government (CFS) for the
fiscal years ended September 30, 2005, and 2004.1 For the past 9 years,
certain material weaknesses in internal control and in selected accounting
and financial reporting practices resulted in conditions that prevented us
from expressing an opinion on the CFS. Specifically, we have reported that
the federal government did not have adequate systems, controls, and
procedures to properly prepare its consolidated financial statements. Many
of these weaknesses in internal control that contributed to our continuing
disclaimers of opinion were identified by agency financial statement
auditors during their audits of federal agencies' financial statements and
were reported in detail with recommendations to the agencies in separate
reports. However, some of the internal control weaknesses were identified
during our tests of the Department of the Treasury's (Treasury) process
for preparing the CFS.
The purpose of this report is to (1) discuss the details of the additional
weaknesses we identified during our audit of the fiscal year 2005 CFS
regarding financial reporting procedures and internal control over the
process for preparing the CFS, (2) recommend improvements to address those
weaknesses, and (3) provide the status of corrective actions on the
recommendations detailed in our prior reports and listed in appendix I. We
have discussed each of the new weaknesses identified during our fiscal
year 2005 audit with your staff and have incorporated their comments as
appropriate. We also assessed Treasury's ongoing effort to develop and
implement the Governmentwide Financial Report System (GFRS) and are
providing the results of our assessment along with our recommendations in
a separate report.2
Results in Brief
We identified weaknesses in the compilation and reporting processes during
our audit of the fiscal year 2005 CFS. Such weaknesses impair the federal
government's ability to ensure that the CFS are consistent with the
underlying audited agency financial statements, balanced, and in
conformity with U.S. generally accepted accounting principles (GAAP).
Consequently, these weaknesses also contributed to our inability to render
an opinion on the CFS. Specifically, we found that
o Treasury's process for compiling the CFS does not yet fully ensure that
financial information from federal agencies' audited financial statements
and other financial data directly link to amounts reported in the CFS.
o Treasury lacked a process to ensure that fiscal years 2005 and 2004
consolidated financial statements and notes were comparable.
o Treasury and the Office of Management and Budget (OMB) did not have
audit assurance on closing packages received from 4 of the 35 agencies
that they have identified as significant to the CFS.
o Treasury, in coordination with OMB, had not developed policies and
procedures for monitoring internal control or provided us with adequate
documentation evidencing an executable plan of action and milestones for
short-term and long-range solutions for certain internal control
weaknesses we have previously reported regarding the process for preparing
the CFS, which may result in the findings of audits not being properly and
timely resolved and internal control weaknesses continuing to exist.
o Treasury did not provide clear guidance to federal agencies about
certain financial information that agencies were required to provide in
the closing package and as a result agencies reported certain financial
information inconsistently, which increased the risk of incomplete and
inaccurate summarization of data in the CFS.
o As part of the intragovernmental reconciliation reporting process,
Treasury and OMB have not provided sufficiently clear guidance for
selecting the "confirmed reporting" category of the intragovernmental
reconciliation report and do not have an effective process to obtain
clarification for inconsistent explanations provided by federal agencies
in this category. Also, Treasury and OMB did not require federal agencies'
Inspectors General (IGs) to complete and report on the results of
intragovernmental agreed-upon procedures until over 2 weeks after federal
agencies' audited financial statements were required to be issued to OMB,
which did not optimize their value to the preparation of the agencies'
financial statements or the CFS.
o Various other internal control weaknesses identified in previous years'
audits still existed during fiscal year 2005 (see app. I).
This report includes 12 new recommendations to address the additional
weaknesses we identified during our audit of the fiscal year 2005 CFS.
Appendix I of this report reflects the status of actions taken as of
December 2, 2005, the date of completion of our fieldwork on our audit of
the fiscal year 2005 CFS, to address the recommendations from our previous
reports. Our work showed that 131 recommendations contained in our prior
reports remained open and 23 were closed. Of the 131 open recommendations,
76 relate to specific disclosures required under GAAP. Treasury has
submitted a proposal to the Federal Accounting Standards Advisory Board
(FASAB) seeking to amend previously issued standards and eliminate or
lessen the disclosure requirements for the consolidated financial
statements so that GAAP would no longer require certain of the information
Treasury has not been reporting. Comments on the exposure draft of a
proposed FASAB standard, based on the Treasury proposal, were due March 1,
2006. Treasury stated that it is waiting for FASAB approval and issuance
of this proposed standard to determine the disclosures that will be
required in future consolidated financial statements. We will continue to
determine the status of corrective actions on our open recommendations
during our fiscal year 2006 audit of the CFS.
In commenting on a draft of this report, OMB stated that it generally
agreed with the new findings and related recommendations in this report.
Treasury stated that it concurs with all of the new recommendations in
this report except for the recommendation to accelerate the due date for
IGs to complete the agreed-upon procedures on the intragovernmental
activity and balances. For fiscal year 2006, Treasury does not plan to
accelerate the due date for completing these intragovernmental agreed-upon
procedures. However, Treasury stated that for fiscal year 2006, it plans
to expand the audit coverage for intragovernmental activity and balances
by requiring the IGs to opine on such information in their audit of the
closing package, which is due to Treasury by November 17, 2006. This is an
appropriate alternative solution to accelerating the due date for the IGs
to complete the intragovernmental agreed-upon procedures. We have modified
our recommendation to also include developing an alternative solution to
address this finding.
Scope and Methodology
As part of our audit of the fiscal years 2005 and 2004 CFS, we evaluated
Treasury's financial reporting procedures and related internal control,
and we followed up on the status of Treasury and OMB corrective actions to
address open recommendations regarding the process for preparing the CFS
that were in our prior years' reports. In our disclaimer of opinion on the
fiscal year 2005 CFS, which is included in the fiscal year 2005 Financial
Report of the United States Government, we discussed material deficiencies
relating to Treasury's preparation of the CFS. These material deficiencies
contributed to our disclaimer of opinion on the CFS and also constitute a
material weakness in internal control, which contributed to our adverse
opinion on internal control. We performed sufficient audit procedures to
provide the disclaimer of opinion in accordance with U.S. generally
accepted government auditing standards. This report provides the details
of the additional weaknesses we identified in performing our fiscal year
2005 audit procedures related to the process for preparing the CFS and our
recommendations to correct those weaknesses, as well as the status of
corrective actions taken by Treasury and OMB to address recommendations in
our prior reports.
We requested comments on a draft of this report from the Director of OMB
and the Secretary of the Treasury or their designees. OMB provided oral
comments, which are discussed in the Agency Comments and Our Evaluation
section of this report. Treasury's comments are reprinted in appendix II
and are also discussed in the Agency Comments and Our Evaluation section.
Directly Linking Audited Federal Agency Financial Statements to the CFS
As discussed in our fiscal year 2005 audit report, fiscal year 2005 was
the second year that Treasury used GFRS to collect agency financial
statement information taken directly from federal agencies' audited
financial statements. The goal of GFRS is to be able to directly link
information from federal agencies' audited financial statements to amounts
reported in the consolidated financial statements and resolve many of the
weaknesses we previously identified in the process for preparing the
consolidated financial statements, a goal we strongly support. For both
the fiscal year 2005 and 2004 reporting processes, GFRS was able to
capture agency financial information submitted to Treasury, but GFRS is
still under development and not at the stage that it could be used to
fully compile the consolidated financial statements from the information
captured.
As we have reported in the past, Treasury's process for compiling the CFS
does not yet fully ensure that financial information from federal
agencies' audited financial statements and other financial data directly
link to amounts reported in the CFS. In our fiscal year 2005 audit report,
we noted that Treasury made progress in demonstrating amounts in the
Balance Sheet and the Statement of Net Cost were consistent with federal
agencies' audited financial statements prior to eliminating
intragovernmental activity and balances. However, about 25 percent of the
significant3 federal agencies' auditors reported internal control
weaknesses related to the processes the agencies perform to provide
financial statement information to Treasury for preparing the consolidated
financial statements.
In our prior report,4 we recommended that as Treasury continues to design
and further implement its new process for compiling the CFS, the Secretary
of the Treasury should direct the Fiscal Assistant Secretary, in
coordination with the Controller of OMB, to modify Treasury's closing
package to (1) require federal agencies to directly link their audited
financial statement notes to the CFS notes and (2) provide the necessary
information to demonstrate that all of the five principal consolidated
financial statements are consistent with the underlying information in
federal agencies' audited financial statements and other financial data.
Progress was made during fiscal year 2005. Treasury has been continuing to
design and further implement its new process for compiling the CFS with
the development of GFRS. We continue, though, to be concerned that the
disciplined processes necessary to reduce risks to acceptable levels have
not yet been effectively implemented. For example, Treasury moved forward
with the project before ensuring that certain key elements, such as a
concept of operations, were developed or even defining and documenting the
financial reporting weaknesses that were expected to be addressed by the
system. Not effectively implementing such disciplined processes creates an
unnecessary risk that the system will cost more and take longer than
expected to deploy, while not providing all of the intended system
functionality. The implementation of any major system, such as GFRS, is
not without risk; however, organizations that follow and effectively
implement accepted best practices in systems development and
implementation have been shown to reduce these risks to acceptable levels.
A more detailed discussion of our assessment of Treasury's ongoing effort
to develop and implement GFRS, along with recommendations to reduce the
risk noted above, can be found in a separate report.5
Comparability of Financial Statements
The CFS includes 2 years of financial information. Because comparative
financial statements are intended to furnish useful data about the
differences in activity and balances between the 2 years shown,
consistency in how amounts are reported for the 2 years is a major factor
in creating comparability. We found that Treasury lacked a process to
ensure that consolidated financial statements and notes for fiscal years
2005 and 2004 were consistently reported and therefore comparable. During
fiscal year 2005, Treasury requested that agencies resubmit fiscal year
2004 financial information along with their fiscal year 2005 financial
information. Some agencies resubmitted fiscal year 2004 amounts in fiscal
year 2005 that differed from what Treasury published in fiscal year 2004.
Also, certain information reported for fiscal 2004 may have required
reclassification to be comparable to the fiscal year 2005 amounts.
Treasury did not analyze the fiscal year 2004 information submitted in
fiscal year 2005 or reclassify amounts within various financial statement
line items and notes to achieve comparability and chose to continue to
report what was published for fiscal year 2004. For example, the
Reconciliations of Net Operating Cost and Unified Budget Deficit showed
$47.8 billion and $.2 billion for property, plant, and equipment disposals
and revaluations for fiscal years 2005 and 2004, respectively. However,
based on the audited financial information provided by agencies to
Treasury in GFRS in fiscal year 2005, the fiscal year 2004 amount should
be $25.4 billion, rather than $.2 billion. The difference should have been
reclassified from the Net Amount of All Other Differences line item on the
Reconciliations of Net Operating Cost and Unified Budget Deficit.
Recommendation for Executive Action
We recommend that the Secretary of the Treasury direct the Fiscal
Assistant Secretary to develop a process to help ensure that, for each
reporting year, the 2 years of consolidated financial statements and note
information presented are consistently and comparably reported, in all
material respects.
Audit Assurance over Certain Federal Agencies' Closing Packages
Treasury and OMB did not require closing packages from 4 of the 35
verifying agencies to be audited. Specifically, the Treasury Financial
Manual (TFM) states that the Inspector General or a contracted independent
public accountant for each federal verifying agency-except those agencies
whose fiscal year ends on a date other than September 30-must opine on the
closing package data entered by the Chief Financial Officer into GFRS.
Because of these year-end differences, the TFM does not require the
Federal Deposit Insurance Corporation's Funds, National Credit Union
Administration, and Farm Credit System Insurance Corporation-all of which
have a year end other than September 30-to have their closing package data
be audited. In addition, for fiscal years 2004 and 2005, OMB waived the
closing package audit requirement for the Tennessee Valley Authority
(TVA), which does have a September 30 fiscal year end.6 In these four
cases, Treasury and OMB did not develop any alternative solutions that
include the requirement for adequate audit procedures to be performed over
significant information included in the CFS. As a result, unaudited
September 30 information was included in the CFS for 4 agencies that
Treasury and OMB consider to be significant. Treasury, therefore, has less
assurance that the information included in the CFS for these agencies is
fairly stated and directly links to the agencies' audited financial
statements.
Recommendation for Executive Action
We recommend that the Director of OMB direct the Controller of the Office
of Federal Financial Management, in coordination with the Treasury Fiscal
Assistant Secretary, to develop an alternative solution for obtaining
audit assurance related to the Federal Deposit Insurance Corporation's
Funds, National Credit Union Administration, and Farm Credit System
Insurance Corporation, which includes the requirement for adequate audit
procedures to be performed over significant information included in the
CFS for these agencies.
We also recommend that the Director of OMB direct the Controller of the
Office of Federal Financial Management to consider not waiving the closing
package audit requirement for any verifying agency in future years, such
as TVA.
Internal Control Monitoring
GAO's Standards for Internal Control in the Federal Government states that
internal control is a major part of managing an organization and should
include monitoring.7 Monitoring of internal control should include
assessing the quality of performance over time and implementing policies
and procedures for the timely follow-up and resolution of findings of
audits and other reviews. The goal of these policies and procedures is to
ensure that managers (1) promptly evaluate findings from audits and other
reviews, including those showing deficiencies and recommendations reported
by auditors and others who evaluate agencies' operations; (2) determine
proper actions in response to findings and recommendations from audits and
reviews; and (3) complete, within established time frames, all actions
that correct or otherwise resolve the matters brought to management's
attention. However, Treasury, in coordination with OMB, had not developed
policies and procedures for monitoring internal control or provided us
with adequate documentation evidencing an executable plan of action and
milestones for short-term and long-range solutions for certain internal
control weaknesses we have previously reported regarding the process for
preparing the CFS. Without effective monitoring of internal control,
findings of audits may not be resolved timely and properly.
Recommendation for Executive Action
We recommend that the Secretary of the Treasury direct the Fiscal
Assistant Secretary, in coordination with the Controller of OMB, to
develop
o policies and procedures for monitoring internal control to help ensure
that (1) audit findings are promptly evaluated, (2) proper actions are
determined in response to audit findings and recommendations such as a
documented plan of action with milestones for short-term and long-range
solutions, and (3) all actions that correct or otherwise resolve the audit
findings are completed within established time frames; and
o an executable plan of action and milestones for short-term and
long-range solutions for certain internal control weaknesses we have
previously reported regarding the process for preparing the CFS.
Consolidated Reporting Guidance to Federal Agencies
The TFM prescribes how federal agencies are to submit financial
information to Treasury to be used in compiling the CFS. While our planned
audit procedures were not to review the entire TFM to determine if its
guidance to agencies was clear, we found several areas where the TFM did
not give clear guidance to federal agencies about the information that
they were required to provide to Treasury, GAO, and OMB. Specifically, we
found that the TFM did not give clear guidance for (1) reporting note
disclosures for restricted cash, (2) reporting note disclosures for
accounts payable, (3) preparing summaries of unadjusted misstatements to
be included with federal agencies' closing package management
representation letters, and (4) certain information to be reported by OPM
to Treasury that is used to allocate costs on the Statement of Net Cost.
For example, the TFM defines restricted cash as "amounts of cash that an
entity holds and does not have authority to spend" and cash that is not
restricted as "amounts of cash that an entity holds for which it has the
authority to spend." Although these definitions are accurate at the agency
level, these definitions are not accurate at the CFS level. For example,
an agency may hold cash that it does not have the authority to spend
because of a certain law or regulation, but when this cash is consolidated
at the governmentwide level, the federal government as a whole may have
the authority to spend the cash. Therefore, this cash would appropriately
be restricted at the agency level, but not at the governmentwide level. As
a result of the unclear guidance, agencies reported certain financial
information inconsistently. This increases the risk of incomplete and
inaccurate summarization of data in the CFS.
Recommendations for Executive Action
We recommend that the Secretary of the Treasury direct the Fiscal
Assistant Secretary to ensure that the TFM and any other guidance to
federal agencies provide clear instructions for providing reliable data to
Treasury in the following specific areas:
o restricted cash,
o accounts payable,
o summaries of unadjusted misstatements, and
o certain information reported by OPM that is used to allocate costs on
the Statement of Net Cost.
Reconciling of Intragovernmental Activity and Balances
OMB and Treasury require federal agencies to reconcile selected
intragovernmental activity and balances with their "trading partners"8 and
report on the extent and results of the reconciliation efforts to
Treasury. As part of the reconciliation report, federal agencies were
required to categorize any material differences, as determined by
Treasury, with their trading partners at fiscal year end within five
categories: (1) confirmed reporting; (2) accounting methodology
differences; (3) accounting or reporting errors; (4) timing
difference-current year, timing difference-prior year; and (5)
unknown/unreconciled. According to Treasury, confirmed reporting, the
first category listed above, is intended to indicate that the agency has
verified that the amount it has reported is accurate. The TFM requires a
federal agency that selects the category "confirmed reporting" to provide
a detailed explanation to support its response. However, we found that in
many cases where a federal agency selected the "confirmed reporting"
category, the agency did not provide detailed explanations. We also found
cases where both trading partners selected "confirmed reporting" for the
same material difference and the agencies did not provide detailed
explanations for how both trading partners' amounts could be accurate when
the material difference remained. When this situation occurs, we found
that Treasury and OMB do not have an effective process to obtain
clarification for inconsistent explanations provided and that agencies may
be unclear as to when to select this category. Incorrect use of the
confirmed reporting category and lack of detailed explanations may hinder
efforts to identify and correct problems that federal agencies are
experiencing in reconciling with their trading partners.
Further, Treasury received the closing packages that contained each
agency's intragovernmental activity and balances amounts on November 18,
2005, and provided agencies with reconciliation reports that showed
material differences with their trading partners on November 21, 2005.
Treasury and OMB also require federal agencies' IGs to annually perform
agreed-upon procedures on the intragovernmental activity and balances
reported in the closing package. For fiscal year 2005, Treasury required
agency IGs for the 35 verifying agencies to complete and report on these
agreed-upon procedures by December 2, 2005. The timing of these procedures
did not optimize their value because (1) this reporting date is over 2
weeks after federal agencies' audited financial statements were required
to be issued to OMB, and (2) did not allow Treasury sufficient time to
review the results and make any necessary adjustments to the CFS.
Recommendation for Executive Action
We recommend that the Secretary of the Treasury direct the Fiscal
Assistant Secretary, working in coordination with the Controller of OMB,
to
o provide clear guidance to federal agencies as to when the "confirmed
reporting" category in the intragovernmental reconciliation report should
be selected,
o develop an effective process for obtaining clarification from federal
agencies for inconsistent or incomplete explanations provided in all
material difference categories, and
o accelerate the due date for IGs to complete and report on the results of
agreed-upon procedures on the intragovernmental activity and balances or
develop an alternative solution that would allow Treasury sufficient time
to review the results and make any necessary adjustments to the CFS.
Agency Comments and Our Evaluation
OMB Comments
In oral comments on a draft of this report, OMB stated that it generally
agreed with the new findings and related recommendations in this report.
In addition, OMB provided some technical comments, which we have
incorporated as appropriate.
Treasury Comments
In written comments on a draft of this report, which are reprinted in
appendix II, Treasury stated that it agrees that the preparation process
still needs improvement and that it is addressing many of the
recommendations in our previous reports. Treasury also stated that it
concurs with all of the new recommendations in this report except for the
recommendation to accelerate the due date for IGs to complete the
agreed-upon procedures on the intragovernmental activity and balances. For
fiscal year 2006, Treasury does not plan to accelerate the due date for
completing these intragovernmental agreed-upon procedures. However,
Treasury stated that for fiscal year 2006, it plans to expand the audit
coverage for intragovernmental activity and balances by requiring the IGs
to opine on such information in their audit of the closing package, which
is due to Treasury by November 17, 2006. This is an appropriate
alternative solution to accelerating the due date for the IGs to complete
the intragovernmental agreed-upon procedures. We have modified our
recommendation to also include developing an alternative solution to
address this finding.
This report contains recommendations to the Secretary of the Treasury and
the Director of OMB. The head of a federal agency is required by 31 U.S.C.
720 to submit a written statement on actions taken on these
recommendations. You should submit your statement to the Senate Committee
on Homeland Security and Governmental Affairs and the House Committee on
Government Reform within 60 days of the date of this report. A written
statement must also be sent to the House and Senate Committees on
Appropriations with the agency's first request for appropriations made
more than 60 days after the date of the report.
We are sending copies of this report to the Chairmen and Ranking Minority
Members of the Senate Committee on Homeland Security and Governmental
Affairs; the Subcommittee on Federal Financial Management, Government
Information, and International Security, Senate Committee on Homeland
Security and Governmental Affairs; the House Committee on Government
Reform; and the Subcommittee on Government Management, Finance, and
Accountability, House Committee on Government Reform. In addition, we are
sending copies to the Fiscal Assistant Secretary of the Treasury and the
Deputy Director for Management of OMB. Copies will be made available to
others upon request. This report is also available at no charge on GAO's
Web site at http://www.gao.gov .
We acknowledge and appreciate the cooperation and assistance provided by
Treasury and OMB during our audit. If you or your staff have any questions
or wish to discuss this report, please contact Jeffrey C. Steinhoff,
Managing Director, Financial Management and Assurance, on (202) 512-2600,
or Gary T. Engel, Director, Financial Management and Assurance, on (202)
512-3406. Staff contacts and other key contributors to this report are
listed in appendix II.
David M. Walker Comptroller General of the United States
Status of Treasury's and OMB's Progress in Addressing GAO's Prior Year
Recommendations for Preparing the CFS Appendix I
This appendix includes open recommendations from three of our prior
reports: Financial Audit: Process for Preparing the Consolidated Financial
Statements of the U.S. Government Needs Improvement, GAO-04-45
(Washington, D.C.: Oct. 30, 2003); Financial Audit: Process for Preparing
the Consolidated Financial Statements of the U.S. Government Needs Further
Improvement, GAO-04-866 (Washington, D.C.: Sept. 10, 2004); and Financial
Audit: Process for Preparing the Consolidated Financial Statements of the
U.S. Government Continues to Need Improvement, GAO-05-407 (Washington,
D.C.: May 4, 2005). Recommendations that were closed in prior reports are
not included in this appendix. This appendix includes the status of the
recommendations according to the Department of the Treasury (Treasury) and
the Office of Management and Budget (OMB) as well as our own assessments.
Explanations are included in the status of recommendations per GAO when
Treasury and OMB disagreed with our recommendation.
Of the 154 recommendations regarding the process for preparing the CFS
that are listed in this appendix, 131 remained open as of December 2,
2005, the end of GAO's fieldwork for the audit of the fiscal year 2005
CFS. Of these 131 recommendations, 76 relate to specific disclosures
required under U.S. generally accepted accounting principles (GAAP).
Treasury has submitted a proposal to the Federal Accounting Standards
Advisory Board (FASAB) seeking to amend previously issued standards and
eliminate or lessen the disclosure requirements for the consolidated
financial statements so that GAAP would no longer require certain of the
information Treasury has not been reporting. Comments on the exposure
draft of a proposed FASAB standard, based on the Treasury proposal, are
due March 1, 2006. Treasury stated that it is waiting for FASAB approval
and issuance of this proposed standard to determine the disclosures that
will be required in future consolidated financial statements.
Table 1: Status of Treasury's and OMB's Progress in Addressing GAO's Prior
Year Recommendations for Preparing the CFS
Status of
recommendation
Count No. Recommendation Per Treasury and Per GAO
OMB
GAO-04-45
(results
of the
fiscal
year 2002
audit)
1 02-2 The Secretary of the Treasury further Open. Treasury
Treasury should direct revised and needs to further
the Fiscal Assistant documented all of document its
Secretary, in its major policies and
connection with policies and procedures.
Treasury's current procedures for
compilation process and the fiscal year
the development of 2005 compilation
Treasury's new process to ensure
compilation system and the propriety,
process, to develop and accuracy, and
fully document policies consistency of
and procedures for the application.
CFS preparation process
so that they are
proper, complete, and
consistently applied by
staff members.
2 02-4 As Treasury is To eliminate or Open.
designing its new explain
financial statement adjustments
compilation process to (plugs) to net
begin with the fiscal position,
year 2004 CFS, the Treasury designed
Secretary of the a process to
Treasury should direct eliminate, at the
the Fiscal Assistant consolidated
Secretary, in level,
coordination with the intragovernmental
Controller of OMB, to activity and
develop reconciliation balances using
procedures that will formal balanced
aid in understanding accounting
and controlling the net entries and
position balance as developed a model
well as eliminate the to analyze
plugs previously unreconciled
associated with transactions that
compiling the CFS. affected net
position (i.e.,
contributed to
the plug). Based
on fiscal year
2005 data, the
model disclosed
the magnitude of
the
intragovernmental
elimination
differences, by
reciprocal
category that
contributed to
the net position
elimination plug.
In fiscal
year 2005,
Treasury also
started an
analysis to
establish the
reciprocal
category for the
General Fund.
3 02-5 As Treasury is See status of Open.
designing its new recommendation
financial statement
compilation process to No. 02-4.
begin with the fiscal
year 2004 CFS, the
Secretary of the
Treasury should direct
the Fiscal Assistant
Secretary, in
coordination with the
Controller of OMB, to
use balanced accounting
entries to account for
the change in net
position rather than
simple subtraction of
liabilities from
assets.
4 02-6 As OMB continues to OMB, Treasury, Open.
make strides to address and the Chief
issues related to Financial
intragovernmental Officers' Council
transactions, the are reviewing the
Director of OMB should business rules
direct the Controller and are also
of OMB to develop performing
policies and procedures additional
that document how OMB analysis on
will enforce the several groupings
business rules provided of
in OMB Memorandum intragovernmental
M-03-01, Business Rules transactions.
for Intragovernmental Upon the
Transactions. conclusion of the
review and
analysis, a
determination
will be made how
best to proceed
with and enforce
the business
rules.
5 02-7 As OMB continues to OMB will continue Open.
make strides to address to work with
issues related to individual
intragovernmental agencies to
transactions, the resolve
Director of OMB should imbalances that
direct the Controller are referred to
of OMB to require that OMB on a
significant differences case-by-case
noted between business basis. As part of
partners be resolved OMB's standard
and the resolution be practice,
documented. resolutions
reached will be
communicated to
all parties.
6 02-8 The Secretary of the Beginning in Closed.
Treasury should direct fiscal year 2004,
the Fiscal Assistant Treasury has
Secretary, in continued to
coordination with the identify material
Controller of OMB, to differences on a
implement the plan to quarterly basis
require federal and work with OMB
agencies to report in and the agencies
Treasury's new closing to resolve
package, beginning with differences.
fiscal year 2004, Treasury has
intragovernmental provided and
activity and balances discussed with
by trading partner and OMB a list of
to indicate amounts items in dispute.
that have not been Treasury is
reconciled with trading working with the
partners and amounts, agencies to
if any, that are in resolve these
dispute. differences.
Also, the Chief
Financial
Officers Council
Intragovernmental
Subcommittee has
begun efforts to
identify and
resolve or
mitigate issues
or practices that
result in
significant
differences.
7 02-9 The Secretary of the See status of Open.
Treasury should direct recommendation
the Fiscal Assistant
Secretary, in No. 02-4.
coordination with the
Controller of OMB, to
design procedures that
will account for the
difference in
intragovernmental
assets and liabilities
throughout the
compilation process by
means of formal
consolidating and
elimination accounting
entries.
8 02-10 The Secretary of the See status of Open.
Treasury should direct recommendation
the Fiscal Assistant
Secretary, in No. 02-4.
coordination with the
Controller of OMB, to
develop solutions for
intragovernmental
activity and balance
issues relating to
federal agencies'
accounting,
reconciling, and
reporting in areas
other than those OMB
now requires be
reconciled, primarily
areas relating to
appropriations.
9 02-11 The Secretary of the See status of Open.
Treasury should direct recommendation
the Fiscal Assistant
Secretary, in No. 02-4.
coordination with the
Controller of OMB, to
reconcile the change in
intragovernmental
assets and liabilities
for the fiscal year,
including the amount
and nature of all
changes in
intragovernmental
assets or liabilities
not attributable to
cost and revenue
activity recognized
during the fiscal year.
Examples of these
differences would
include capitalized
purchases, such as
inventory or equipment,
and deferred revenue.
10 02-12 The Secretary of the Treasury Open. Treasury
Treasury should direct disagrees with currently reports
the Fiscal Assistant this on the Statement
Secretary to develop recommendation. of Operations and
and implement a process Treasury's Changes in Net
that adequately position is that Position the plug
identifies and reports the unknown as part of net
items needed to nature of the operating cost,
reconcile net operating plug argues for not as a separate
cost and unified budget placement in net component of net
surplus (or deficit). position, not net position. In
Treasury should report cost. Treasury addition, the
"net unreconciled also does not reconciliation
differences" included believe that statement begins
in the net operating these with the net
results line item as a unreconciled operating cost
separate reconciling transactions amount and ends
activity in the affecting the with the budget
reconciliation change in net deficit amount.
statement. position are also As such, unless
differences the plug is also
between the two part of the
(accrual and unified budget
budget) bases of deficit, then the
accounting being plug amount
reconciled in should be
this statement. included as a
Therefore, the reconciling item
"net unreconciled on the
differences" plug reconciliation
should not be statement.
included as a
separate
reconciling item
on this
statement.
11 02-13 The Secretary of the Treasury will Open.
Treasury should direct continue to
the Fiscal Assistant improve the
Secretary to develop completeness and
and implement a process consistency of
that adequately the information
identifies and reports in this
items needed to reconciliation
reconcile net operating statement and
cost and unified budget will continue to
surplus (or deficit). resolve
Treasury should develop significant
policies and procedures inconsistencies,
to ensure completeness if any, to the
of reporting and applicable and
document how all the related
applicable components components
reported in the other reported in the
consolidated financial other basic
statements (and related financial
note disclosures statements, and
included in the CFS) in the related
were properly reflected note disclosures,
in the reconciliation included in the
statement. CFS.
12 02-14 The Secretary of the Treasury Open. Treasury
Treasury should direct communicated its disagrees with
the Fiscal Assistant disagreement with all of our
Secretary to develop GAO on the need recommendations
and implement a process to report items regarding the
that adequately at a lower level Statement of
identifies and reports of detail. Changes in Cash
items needed to However, Treasury Balance from
reconcile net operating will consider the Unified Budget
cost and unified budget need for and Other
surplus (or deficit). establishing a Activities and
Treasury should materiality the
establish reporting threshold related Reconciliations
materiality thresholds to this statement of Net Operating
for determining which as part of the Cost and Unified
agency financial overall process Budget Deficit
statement activities to to eventually even though these
collect and report at eliminate the statements
the governmentwide "net amount of include some
level to assist in all other amounts that
ensuring that the differences Treasury cannot
reconciliation (plug)" included explain or fully
statement is useful and in this support or for
conveys meaningful statement. which Treasury
information. cannot
demonstrate that
the amounts
clearly link to
agencies' audited
financial
statements.
Treasury has not
developed any
alternative
solutions. We
continue to
believe that
implementation of
our
recommendations
would result in
the most
efficient and
effective manner
for Treasury, as
the preparer of
the CFS, to
obtain and
demonstrate the
necessary
assurance on the
significant
amounts reported
in the Statement
of Changes in
Cash Balance from
Unified Budget
and Other
Activities and
the
Reconciliation of
Net Operating
Cost and Unified
Budget Deficit.
Consistent
reporting
throughout the
federal
government is an
important goal.
13 02-15 If Treasury chooses to Treasury has Open. See status
continue using previously of recommendation
information from both communicated its No. 02-14.
federal agencies' disagreement with
financial statements GAO on the need
and the Central for this
Accounting and reconciliation.
Reporting System Treasury does not
(STAR), Treasury should use agency
demonstrate how the results in
amounts from STAR preparing this
reconcile to federal statement.
agencies' financial
statements.
14 02-16 If Treasury chooses to Treasury has Open. See status
continue using previously of recommendation
information from both communicated its No. 02-14.
federal agencies' disagreement with
financial statements GAO on the need
and from STAR, Treasury for this
should identify and reconciliation.
document the cause of Treasury does not
any significant use agency
differences, if any are results in
noted. preparing this
statement.
15 02-17 The Secretary of the Treasury has Open. GAO's
Treasury should direct previously recommendation
the Fiscal Assistant communicated its does not dictate
Secretary, in disagreement with the source of
coordination with the GAO related to data Treasury
Controller of OMB, to the use of data should use to
develop and implement a other than from compile the
process to ensure that STAR in the Statement of
the Statement of preparation of Changes in Cash
Changes in Cash Balance this statement. Balance from
from Unified Budget and There are no Unified Budget
Other Activities material and Other
properly reflects the differences Activities, but
activities reported in between outlays does recommend
federal agencies' reported by us Treasury ensure
audited financial and those consistency in
statements. Treasury included in the reporting between
should document the President's significant line
consistency of the Budget, nor is items on the
significant line items there a need to statement to
on this statement to reconcile to agencies' audited
agencies' audited agency financial financial
financial statements. statements. Also, statements. We
GAAP does not agree that GAAP
require the does not
disclosure of specifically
either receipts require the
or outlays in disclosure of
this statement. receipts and
outlays in the
Statement of
Changes in Cash
Balance from
Unified Budget or
Other Activities.
In previous
years, this
statement
reported budget
outlays and
budget receipts.
However,
beginning in
fiscal year 2004,
the federal
government chose
not to disclose
budget outlays
and budget
receipts in this
financial
statement and
only included the
budget deficit.
As we have
reported since
fiscal year 2003,
we found material
differences
between the total
net outlays
reported in
selected federal
agencies'
Statements of
Budgetary
Resources (SBR)
and Treasury's
central
accounting
record, which
Treasury uses to
prepare the
Statement of
Changes in Cash
Balance from
Unified Budget
and Other
Activities.
Consistent
reporting
throughout the
federal
government is an
important goal.
16 02-18 The Secretary of the Treasury Open. See status
Treasury should direct disagrees with of recommendation
the Fiscal Assistant GAO's
Secretary, in recommendation to No.'s 02-14 and
coordination with the collect the 02-17.
Controller of OMB, to agency SBR outlay
develop and implement a data through the
process to ensure that closing package
the Statement of process because
Changes in Cash Balance Treasury already
from Unified Budget and collects agency
Other Activities outlay data for
properly reflects the budgetary
activities reported in reporting
federal agencies' purposes. In
audited financial addition, there
statements. Treasury is no requirement
should request, through to disclose
its closing package, outlays in this
that federal agencies statement.
provide the net outlays Treasury and OMB
reported in their are working
Combined Statement of closely with the
Budgetary Resources and agencies to
explanations for any assure that the
significant differences outlays reported
between net outlay in agency SBRs
amounts reported in the match the outlays
Combined Statement of reported to
Budgetary Resources and Treasury for
the budget of the U.S. budgetary
government. reporting
purposes.
17 02-19 The Secretary of the See status of Open. See status
Treasury should direct recommendation of recommendation
the Fiscal Assistant No.'s 02-17 and
Secretary, in 02-18. No.'s 02-14 and
coordination with the 02-17.
Controller of OMB, to
develop and implement a
process to ensure that
the Statement of
Changes in Cash Balance
from Unified Budget and
Other Activities
properly reflects the
activities reported in
federal agencies'
audited financial
statements. Treasury
should investigate the
differences between net
outlays reported in
federal agencies'
Combined Statement of
Budgetary Resources and
Treasury's records in
STAR to ensure that the
proper amounts are
reported in the
Statement of Changes in
Cash Balance from
Unified Budget and
Other Activities.
18 02-20 The Secretary of the See status of Open. See status
Treasury should direct recommendation of recommendation
the Fiscal Assistant No.'s 02-17 and
Secretary, in 02-18. No.'s 02-14 and
coordination with the 02-17.
Controller of OMB, to
develop and implement a
process to ensure that
the Statement of
Changes in Cash Balance
from Unified Budget and
Other Activities
properly reflects the
activities reported in
federal agencies'
audited financial
statements. Treasury
should explain and
document the
differences between the
operating revenue
amount reported on the
Statement of Operations
and Changes in Net
Position and unified
budget receipts
reported on the
Statement of Changes in
Cash Balance from
Unified Budget and
Other Activities.
19 02-21 The Secretary of the Treasury Open. See status
Treasury should direct disagrees with of recommendation
the Fiscal Assistant GAO as to the
Secretary, in need to link all No.'s 02-14 and
coordination with the the items in the 02-17.
Controller of OMB, to "other
develop and implement a activities"
process to ensure that section of this
the Statement of statement to
Changes in Cash Balance other components
from Unified Budget and of the CFS. With
Other Activities the exception of
properly reflects the loan-related
activities reported in items and total
federal agencies' operating cash,
audited financial the source for
statements. Treasury these items is
should provide support STAR, and
for how the line items Treasury believes
in the "other that the use of
activities" section of any other data
this statement relate would be less
to either the accurate.
underlying Balance
Sheet or related notes
accompanying the CFS.
20 02-22 The Secretary of the Treasury defined Open.
Treasury should direct and documented Documentation was
the Fiscal Assistant the reporting not provided to
Secretary, in entity for fiscal GAO as part of
coordination with the year 2005. the fiscal year
Controller of OMB, to 2005 audit. GAO
perform an assessment plans to review
to define the reporting such
entity, including its documentation
specific components, in during its audit
conformity with the of the fiscal
criteria issued by the year 2006 CFS.
Federal Accounting
Standards Advisory
Board (FASAB). Key
decisions made in this
assessment should be
documented, including
the reason for
including or excluding
components and the
basis for concluding on
any issue. Particular
emphasis should be
placed on demonstrating
that any financial
information that should
be included but is not
included is immaterial.
21 02-23 The Secretary of the Treasury will Open.
Treasury should direct implement changes
the Fiscal Assistant to the reporting
Secretary, in entity. See
coordination with the status of
Controller of OMB, to recommendation
provide in the No. 02-22.
financial statements
all the financial
information relevant to
the defined reporting
entity, in all material
respects. Such
information would
include, for example,
the reporting entity's
assets, liabilities,
and revenues.
22 02-24 The Secretary of the See status of Open.
Treasury should direct recommendation
the Fiscal Assistant
Secretary, in No. 02-23.
coordination with the
Controller of OMB, to
disclose in the
financial statements
all information that is
necessary to inform
users adequately about
the reporting entity.
Such disclosures should
clearly describe the
reporting entity and
explain the reason for
excluding any
components that are not
included in the defined
reporting entity.
23 02-25 The Secretary of the Treasury Open. Treasury's
Treasury should direct established a fiscal year 2005
the Fiscal Assistant formal process process did not
Secretary to establish and completed an completely
a formal process that analysis of analyze the
will allow the fiscal year 2005 fiscal year 2005
financial statements, required agency disclosures.
related notes, and financial Treasury stated
stewardship and statement and that they planned
supplemental note disclosures no further action
information in the CFS and made the pending the
to be presented in appropriate outcome of a
conformity with GAAP. disclosures in proposed FASAB
The process should the fiscal standard.
timely identify GAAP year 2005 CFS.
requirements. For items not
disclosed,
Treasury will
discuss with
agency personnel
and GAO any
additional data
needed to
finalize the
required
disclosures. In
addition, in
October 2005,
FASAB issued an
exposure draft
specific to the
CFS that would
result in the
elimination or
reduction for
certain
disclosures.
Treasury plans no
further action on
these specific
disclosures
pending the
outcome of this
proposed
standard.
24 02-26 The Secretary of the See status of Open. See status
Treasury should direct recommendation of recommendation
the Fiscal Assistant No. 02-25.
Secretary to establish No. 02-25.
a formal process that
will allow the
financial statements,
related notes, and
stewardship and
supplemental
information in the CFS
to be presented in
conformity with GAAP.
The process should make
timely modifications to
Treasury's closing
package requirements to
obtain information
needed.
25 02-27 The Secretary of the See status of Open. See status
Treasury should direct recommendation of recommendation
the Fiscal Assistant No. 02-25.
Secretary to establish No. 02-25.
a formal process that
will allow the
financial statements,
related notes, and
stewardship and
supplemental
information in the CFS
to be presented in
conformity with GAAP.
The process should
assess, qualitatively
and quantitatively, the
impact of the omitted
disclosures.
26 02-28 The Secretary of the See status of Open. See status
Treasury should direct recommendation of recommendation
the Fiscal Assistant No. 02-25.
Secretary to establish No. 02-25.
a formal process that
will allow the
financial statements,
related notes, and
stewardship and
supplemental
information in the CFS
to be presented in
conformity with GAAP.
The process should
document decisions
reached and the
rationale for such
decisions.
27 02-29 The Secretary of the Treasury and Open. Treasury's
Treasury should direct OMB's policy and policies and
the Fiscal Assistant procedures procedures are
Secretary, in include an not adequate to
coordination with the analysis of the identify all
Controller of OMB, to agency management possible
establish written representations discrepancies
policies and procedures to determine if between the
for preparing the discrepancies agencies'
governmentwide exist between management
management what the agency representation
representation letter auditor reported letters and the
to help ensure that it and the auditors'
is properly prepared representations findings.
and contains sufficient made by the Specifically, the
representations. agency. Any policies and
Specifically, these discrepancies procedures only
policies and procedures found are listed identify and
should require an as exceptions on report
analysis of the agency an enclosure that discrepancies
management is submitted with that relate to
representations to the material
determine if governmentwide weaknesses. In
discrepancies exist management addition,
between what the agency representation Treasury's
auditor reported and letter. policies and
the representations procedures state
made by the agency, that items that
including the resulted in an
resolution of such agency disclaimer
discrepancies. of opinion or
qualification
will be included
in an enclosure
to the CFS
management
representation
letter. However,
the
governmentwide
representation
letter prepared
by Treasury is
based primarily
on the individual
federal agency
representation
letters. Any
identified
discrepancies at
the agency level,
whether they
affected the
opinion or not,
need to be
considered so
that Treasury and
OMB can
adequately
provide us
representations
at the
governmentwide
level.
28 02-30 The Secretary of the OMB Bulletin No. Open. The
Treasury should direct 01-02, Audit policies and
the Fiscal Assistant Requirements for procedures
Secretary, in Federal Financial discuss
coordination with the Statements signatures on
Controller of OMB, to references the agency management
establish written audit guidance on representation
policies and procedures management letters, but do
for preparing the representation not include steps
governmentwide letters provided for Treasury's
management in the AICPA review of the
representation letter auditing standard signatures to
to help ensure that it AU S: 333, determine if the
is properly prepared Management letters have been
and contains sufficient Representations; signed by the
representations. these are highest-level
Specifically, these authoritative for agency officials
policies and procedures audits of federal who are
should require a financial responsible for
determination that the statements. The and knowledgeable
agency management AU S: 333.09 about the matters
representation letters instructs that included in the
have been signed by the the management agency management
highest-level agency representation representation
officials who are letters should be letters. Letters
responsible for and signed by that have not
knowledgeable about the management with been
matters included in the the overall appropriately
agency management responsibility signed impair
representation letters. and knowledge Treasury's and
about the items OMB's ability to
covered by the provide
representations. representation at
Unless explicitly the
noted by an governmentwide
agency's auditor, level. In
Treasury and OMB connection with
infer from the our audit of the
auditors' fiscal year 2004
acceptance of CFS, we issued
agencies' reports to 24
management federal agencies
representation discussing areas,
letters that the including
proper signatures signatures, where
are included. the agencies'
Treasury and fiscal year 2004
OMB's policy is management
to rely on the representation
integrity of the letters did not
agency audits, provide all the
including the information
determination of necessary to
the adequacy of support
the agencies' Treasury's and
signatories. OMB's preparation
of the CFS
management
representation
letter. For
example, in the
report we issued
to one of the
significant
agencies, we made
a recommendation
regarding
signatures. In
this agency's
response to the
report, it
represented that
it would include
the appropriate
signatures on
future letters.
However, the
agency's fiscal
year 2005
management
representation
letter did not
include such
signatures.
29 02-31 The Secretary of the Neither OMB Open. In
Treasury should direct Bulletin No. preparing the
the Fiscal Assistant 01-02, Audit governmentwide
Secretary, in Requirements for management
coordination with the Federal Financial representation
Controller of OMB, to Statements, nor letter, Treasury
establish written OMB Circular and OMB limit
policies and procedures A-136, Financial certain
for preparing the Reporting representations
governmentwide Requirements, in the letter to
management Part B, requires matters that are
representation letter agencies to considered to be
to help ensure that it quantitatively material. In
is properly prepared disclose its doing so, OMB,
and contains sufficient materiality in Treasury, and GAO
representations. the management should confer on
Specifically, these representation the materiality
policies and procedures letters; these level to be used
should require an are authoritative at the
assessment of the for audits of governmentwide
materiality thresholds federal financial level. Treasury
used by federal statements. This and OMB need the
agencies in their practice is agency thresholds
respective management consistent with in providing a
representation letters. the AICPA materiality
auditing standard threshold for the
AU S: 333 governmentwide
Management management
Representations. representation
Treasury letter to
continues to represent that
calculate the all matters
materiality material to the
threshold for the CFS were properly
governmentwide considered and
management included. This
representation situation
letter using the contributed to
guidance provided our scope
in the PCIE/GAO limitation
Financial Audit relating to the
Manual (FAM). fiscal year 2005
This guidance governmentwide
does not include management
consideration of representation
component letter.
entities' Specifically, one
materiality of the
thresholds. significant
federal entities
used a
materiality
threshold in its
management
representation
letter that far
exceeded what
would be in
conformity with
the FAM, which in
turn negatively
impacted
Treasury's and
OMB's ability to
provide us with
representations
at the
governmentwide
level within the
materiality
threshold we had
established for
the
governmentwide
letter.
30 02-32 The Secretary of the See status of Open. See status
Treasury should direct recommendation of recommendation
the Fiscal Assistant No. 02-31. No. 02-31.
Secretary, in
coordination with the
Controller of OMB, to
establish written
policies and procedures
for preparing the
governmentwide
management
representation letter
to help ensure that it
is properly prepared
and contains sufficient
representations.
Specifically, these
policies and procedures
should require an
assessment of the
impact, if any, of
federal agencies'
materiality thresholds
on the management
representations made at
the governmentwide
level.
31 02-33 The Secretary of the OMB Bulletin No. Open. Treasury's
Treasury should direct 01-02, Audit policies and
the Fiscal Assistant Requirements for procedures do not
Secretary, in Federal Financial include steps to
coordination with the Statements review the
Controller of OMB, to references the agencies'
establish written audit guidance on management
policies and procedures management representation
for preparing the representation letters for
governmentwide letters provided omitted or
management in the AICPA incomplete
representation letter auditing standard representations.
to help ensure that it AU S: 333, In addition, the
is properly prepared Management policies and
and contains sufficient Representations; procedures do not
representations. these are include steps to
Specifically, these authoritative for assess the impact
policies and procedures audits of federal of omitted or
should require an financial incomplete
evaluation and statements. The representations
assessment of the AU S: 333.08 on the
omission of allows for the governmentwide
representations management management
ordinarily included in representations representation
agency management to be limited to letter. When
representation letters. items that are agencies do not
material to the provide all
financial representations
statements, with or include
noted exceptions, incomplete
provided that representations
management has in their
reached an management
understanding representation
with its auditors letter, it
on materiality. impairs GAO's
Unless explicitly ability to audit
noted by an the CFS and
agency's auditor, Treasury's and
Treasury and OMB OMB's ability to
infer from the make these types
auditors' of
acceptance of representations
agencies' in the
management governmentwide
representation management
letters that the representation
representations letter. As noted
omitted from the above, we issued
agencies' letters reports to 24
are not material federal agencies
to the respective in which we cited
agencies' issues with such
financial agencies' fiscal
statements. It is year 2004
Treasury and management
OMB's policy to representation
rely on the letters. These
integrity of the issues included
agency audits, omitted or
including the incomplete
determination of representations.
the adequacy of
the agencies'
management
representation
letters.
32 02-34 The Secretary of the In fiscal year Open. Although
Treasury should direct 2005, Treasury Treasury did
the Fiscal Assistant updated the update its SOP,
Secretary, in standard it was not clear
coordination with the operating that these
Controller of OMB, to procedure (SOP) procedures called
establish written for the summaries for Treasury to
policies and procedures of unadjusted review both the
for preparing the misstatements. summaries of
governmentwide unadjusted
management misstatements
representation letter included with
to help ensure that it agencies'
is properly prepared management
and contains sufficient representation
representations. letters and the
Specifically, these summaries of
policies and procedures unadjusted
should require an misstatements
analysis and submitted with
aggregation of the the agencies'
agencies' summary of closing packages.
unadjusted This analysis is
misstatements to necessary to
determine the ensure that all
completeness of the unadjusted
summaries and to misstatements
ascertain the applicable to the
materiality, both CFS are
individually and in the aggregated. In
aggregate, of such addition,
unadjusted Treasury did not
misstatements to the include
CFS taken as a whole. unadjusted
misstatements for
three significant
agencies in its
fiscal year 2005
analysis.
33 02-35 The Secretary of the OMB and Treasury Open.
Treasury should direct will work with
the Fiscal Assistant agencies to
Secretary, in ensure that
coordination with the adequate
Controller of OMB, to information is
help ensure that provided in the
agencies provide legal
adequate information in representation
their legal letters regarding
representation letters the expected
regarding the expected outcome of the
outcome of the cases. cases.
34 02-36 The Secretary of the OMB and Treasury Open.
Treasury should direct will follow up
the Fiscal Assistant with agencies
Secretary, in that have not
coordination with the provided their
Controller of OMB, to management
help ensure that schedules to
agencies provide ensure they do
related management so.
schedules.
35 02-37 The Secretary of the To ensure a Open.
Treasury should direct reasonable
the Fiscal Assistant approach, OMB
Secretary, in will analyze the
coordination with the appropriateness
Controller of OMB, to of reporting
establish written "treaties" before
policies and procedures developing
to help ensure that specific
major treaty and other corrective
international agreement actions.
information is properly
identified and reported
in the CFS.
Specifically, these
policies and procedures
should require that
agencies develop a
detailed schedule of
all major treaties and
other international
agreements that
obligate the U.S.
government to provide
cash, goods, or
services, or that
create other financial
arrangements that are
contingent on the
occurrence or
nonoccurrence of future
events (a starting
point for compiling
these data could be the
State Department's
Treaties in Force).
36 02-38 The Secretary of the See status of Open.
Treasury should direct recommendation
the Fiscal Assistant No. 02-37.
Secretary, in
coordination with the
Controller of OMB, to
establish written
policies and procedures
to help ensure that
major treaty and other
international agreement
information is properly
identified and reported
in the CFS.
Specifically, these
policies and procedures
should require that
agencies classify all
such scheduled major
treaties and other
international
agreements as
commitments or
contingencies.
37 02-39 The Secretary of the See status of Open.
Treasury should direct recommendation
the Fiscal Assistant No. 02-37.
Secretary, in
coordination with the
Controller of OMB, to
establish written
policies and procedures
to help ensure that
major treaty and other
international agreement
information is properly
identified and reported
in the CFS.
Specifically, these
policies and procedures
should require that
agencies disclose in
the notes to the CFS
amounts for major
treaties and other
international
agreements that have a
reasonably possible
chance of resulting in
a loss or claim as a
contingency.
38 02-40 The Secretary of the See status of Open.
Treasury should direct recommendation
the Fiscal Assistant No. 02-37.
Secretary, in
coordination with the
Controller of OMB, to
establish written
policies and procedures
to help ensure that
major treaty and other
international agreement
information is properly
identified and reported
in the CFS.
Specifically, these
policies and procedures
should require that
agencies disclose in
the notes to the CFS
amounts for major
treaties and other
international
agreements that are
classified as
commitments and that
may require measurable
future financial
obligations.
39 02-41 The Secretary of the See status of Open.
Treasury should direct recommendation
the Fiscal Assistant No. 02-37.
Secretary, in
coordination with the
Controller of OMB, to
establish written
policies and procedures
to help ensure that
major treaty and other
international agreement
information is properly
identified and reported
in the CFS.
Specifically, these
policies and procedures
should require that
agencies take steps to
prevent major treaties
and other international
agreements that are
classified as remote
from being recorded or
disclosed as probable
or reasonably possible
in the CFS.
40 02-42 As Treasury is Treasury used its Open. Treasury's
designing its new revised CFS process for
compilation process, compilation compiling the
which it expects to process, first consolidated
implement beginning implemented in financial
with the fiscal year fiscal year 2004, statements did
2004 CFS, the Secretary to directly link not ensure that
of the Treasury should agency audited the information
direct the Fiscal financial in all of the
Assistant Secretary, in statements to five principal
coordination with the three of the five financial
Controller of OMB, to CFS principal statements and
design the new statements. The notes were fully
compilation process to exceptions are consistent with
directly link the the underlying
information from Reconciliation of information in
federal agencies' Net Operating federal agencies'
audited financial Cost and Unified audited financial
statements to amounts Budget Deficit statements and
reported in all the (or Surplus) and other financial
applicable consolidated the Statement of data. Treasury
financial statements Changes in Cash made progress in
and related footnotes. Balance, which demonstrating
Treasury does not amounts in the
plan to link to Balance Sheet and
agency financial the Statement of
statements. With Net Cost were
regard to note consistent with
disclosures, the federal agencies'
revised audited financial
compilation statements prior
process included to eliminating
direct linkage intragovernmental
between the CFS activity and
note disclosures balances.
and the related
agencies' audited
note disclosures.
41 02-43 As Treasury is Treasury will Open.
designing its new continue to
compilation process, consider
which it expects to applicable
implement beginning recommendations
with the fiscal year as the current
2004 CFS, the Secretary CFS compilation
of the Treasury should system is revised
direct the Fiscal and enhanced.
Assistant Secretary, in
coordination with the
Controller of OMB, to
consider the other
applicable
recommendations in this
report when designing
and implementing the
new compilation
process.
42 02-44 The Secretary of the See status of Open. See status
Treasury should direct recommendation of recommendation
the Fiscal Assistant No. 02-25. In
Secretary to ensure addition, this No. 02-25.
that the note disclosure would
disclosure for loans be directly
receivable and loan affected by the
guarantee liabilities implementation of
meets the requirements the FASAB
of Statement of Federal exposure draft
Financial Accounting mentioned in the
Standards (SFFAS) No. status of
3, Accounting for recommendation
Inventory and Related No.
Property, paragraph 91,
which requires the 02-25.
reporting entity to
disclose the valuation
basis for foreclosed
property.
43 02-45 The Secretary of the See status of Open. See status
Treasury should direct recommendation of recommendation
the Fiscal Assistant No. 02-25. In
Secretary to ensure addition, this No. 02-25.
that the note disclosure would
disclosure for loans be directly
receivable and loan affected by the
guarantee liabilities implementation of
meets the requirements the FASAB
of SFFAS No. 3, exposure draft
Accounting for mentioned in the
Inventory and Related status of
Property, paragraph 91, recommendation
which requires the No.
reporting entity to
disclose the changes 02-25.
from the prior year's
accounting methods, if
any.
44 02-46 The Secretary of the See status of Open. See status
Treasury should direct recommendation of recommendation
the Fiscal Assistant No. 02-25. In
Secretary to ensure addition, this No. 02-25.
that the note disclosure would
disclosure for loans be directly
receivable and loan affected by the
guarantee liabilities implementation of
meets the requirements the FASAB
of SFFAS No. 3, exposure draft
Accounting for mentioned in the
Inventory and Related status of
Property, paragraph 91, recommendation
which requires the No.
reporting entity to
disclose the 02-25.
restrictions on the
use/disposal of
property.
45 02-47 The Secretary of the See status of Open. See status
Treasury should direct recommendation of recommendation
the Fiscal Assistant No. 02-25. In
Secretary to ensure addition, this No. 02-25.
that the note disclosure would
disclosure for loans be directly
receivable and loan affected by the
guarantee liabilities implementation of
meets the requirements the FASAB
of SFFAS No. 3, exposure draft
Accounting for mentioned in the
Inventory and Related status of
Property, paragraph 91, recommendation
which requires the No.
reporting entity to
disclose the balances 02-25.
by categories (i.e.,
pre-1992 and post-1991
foreclosed property).
46 02-48 The Secretary of the See status of Open. See status
Treasury should direct recommendation of recommendation
the Fiscal Assistant No. 02-25. In
Secretary to ensure addition, this No. 02-25.
that the note disclosure would
disclosure for loans be directly
receivable and loan affected by the
guarantee liabilities implementation of
meets the requirements the FASAB
of SFFAS No. 3, exposure draft
Accounting for mentioned in the
Inventory and Related status of
Property, paragraph 91, recommendation
which requires the No.
reporting entity to
disclose the number of 02-25.
properties held and
average holding period
by type or category.
47 02-49 The Secretary of the See status of Open. See status
Treasury should direct recommendation of recommendation
the Fiscal Assistant No. 02-25. In
Secretary to ensure addition, this No. 02-25.
that the note disclosure would
disclosure for loans be directly
receivable and loan affected by the
guarantee liabilities implementation of
meets the requirements the FASAB
of SFFAS No. 3, exposure draft
Accounting for mentioned in the
Inventory and Related status of
Property, paragraph 91, recommendation
which requires the No.
reporting entity to
disclose the number of 02-25.
properties for which
foreclosure proceedings
are in process at the
end of the period for
foreclosed assets
acquired in full or
partial settlement of a
direct or guaranteed
loan.
48 02-50 The Secretary of the See status of Open. See status
Treasury should direct recommendation of recommendation
the Fiscal Assistant No. 02-25. In
Secretary to ensure addition, this No. 02-25.
that the note disclosure would
disclosure for loans be directly
receivable and loan affected by the
guarantee liabilities implementation of
meets the requirements the FASAB
of SFFAS No. 18, exposure draft
Amendments to mentioned in the
Accounting Standards status of
for Direct Loans and recommendation
Loan Guarantees, No.
paragraph 9, which
requires credit 02-25.
programs to reestimate
the subsidy cost
allowance for
outstanding direct
loans and the liability
for outstanding loan
guarantees. There are
two kinds of
reestimates: (1)
interest rate
reestimates and (2)
technical/default
reestimates. Entities
should measure and
disclose each program's
reestimates in these
two components
separately.
49 02-51 The Secretary of the See status of Open. See status
Treasury should direct recommendation of recommendation
the Fiscal Assistant No. 02-25. In
Secretary to ensure addition, this No. 02-25.
that the note disclosure would
disclosure for loans be directly
receivable and loan affected by the
guarantee liabilities implementation of
meets the requirements the FASAB
of SFFAS No. 18, exposure draft
Amendments to mentioned in the
Accounting Standards status of
for Direct Loans and recommendation
Loan Guarantees, No. 02-25.
paragraph 10, which
requires the reporting
entity to display in
the notes to the
financial statements a
reconciliation between
the beginning and
ending balances of the
subsidy cost allowance
for outstanding direct
loans and the liability
for outstanding loan
guarantees reported on
the entity's balance
sheet.
50 02-52 The Secretary of the See status of Open. See status
Treasury should direct recommendation of recommendation
the Fiscal Assistant No. 02-25. In
Secretary to ensure addition, this No. 02-25.
that the note disclosure would
disclosure for loans be directly
receivable and loan affected by the
guarantee liabilities implementation of
meets the requirements the FASAB
of SFFAS No. 18, exposure draft
Amendments to mentioned in the
Accounting Standards status of
for Direct Loans and recommendation
Loan Guarantees, No. 02-25.
paragraph 11, which
requires disclosure of
the total amount of
direct or guaranteed
loans disbursed for the
current reporting year
and the preceding
reporting year.
51 02-53 The Secretary of the See status of Open. See status
Treasury should direct recommendation of recommendation
the Fiscal Assistant No. 02-25. In
Secretary to ensure addition, this No. 02-25.
that the note disclosure would
disclosure for loans be directly
receivable and loan affected by the
guarantee liabilities implementation of
meets the requirements the FASAB
of SFFAS No. 18, exposure draft
Amendments to mentioned in the
Accounting Standards status of
for Direct Loans and recommendation
Loan Guarantees, No. 02-25.
paragraph 11, which
requires disclosure of
the subsidy expense by
components, recognized
for the direct or
guaranteed loans
disbursed in the
current reporting year
and the preceding
reporting year.
52 02-54 The Secretary of the See status of Open. See status
Treasury should direct recommendation of recommendation
the Fiscal Assistant No. 02-25. In
Secretary to ensure addition, this No. 02-25.
that the note disclosure would
disclosure for loans be directly
receivable and loan affected by the
guarantee liabilities implementation of
meets the requirements the FASAB
of SFFAS No. 18, exposure draft
Amendments to mentioned in the
Accounting Standards status of
for Direct Loans and recommendation
Loan Guarantees, No. 02-25.
paragraph 11, which
requires disclosure of
the subsidy reestimates
by components for the
current reporting year
and the preceding
reporting year.
53 02-55 The Secretary of the See status of Open. See status
Treasury should direct recommendation of recommendation
the Fiscal Assistant No. 02-25. In
Secretary to ensure addition, this No. 02-25.
that the note disclosure would
disclosure for loans be directly
receivable and loan affected by the
guarantee liabilities implementation of
meets the requirements the FASAB
of SFFAS No. 18, exposure draft
Amendments to mentioned in the
Accounting Standards status of
for Direct Loans and recommendation
Loan Guarantees, No. 02-25.
paragraph 11, which
requires disclosure, at
the program level, of
the subsidy rates for
the total subsidy cost
and its components for
the interest subsidy
costs, default costs
(net of recoveries),
fees and other
collections, and other
costs estimated for
direct loans and loan
guarantees in the
current year's budget
for the current year's
cohorts.
54 02-56 The Secretary of the See status of Open. See status
Treasury should direct recommendation of recommendation
the Fiscal Assistant No. 02-25. In
Secretary to ensure addition, this No. 02-25.
that the note disclosure would
disclosure for loans be directly
receivable and loan affected by the
guarantee liabilities implementation of
meets the requirements the FASAB
of SFFAS No. 18, exposure draft
Amendments to mentioned in the
Accounting Standards status of
for Direct Loans and recommendation
Loan Guarantees, No. 02-25.
paragraph 11, which
requires the reporting
entity to disclose,
discuss, and explain
events and changes in
economic conditions,
other risk factors,
legislation, credit
policies, and subsidy
estimation
methodologies and
assumptions that have
had a significant and
measurable effect on
subsidy rates, subsidy
expense, and subsidy
reestimates.
55 02-57 The Secretary of the See status of Open. See status
Treasury should direct recommendation of recommendation
the Fiscal Assistant No. 02-25. In
Secretary to ensure addition, this No. 02-25.
that the note disclosure would
disclosure for be directly
inventories and affected by the
operating materials and implementation of
supplies meets the the FASAB
requirements of SFFAS exposure draft
No. 3, Accounting for mentioned in the
Inventory and Related status of
Property, paragraph 30, recommendation
which requires the No. 02-25.
difference between the
carrying amount and the
expected net realizable
value to be recognized
as a loss or gain and
either separately
reported or disclosed
when inventory or
operating materials and
supplies are declared
excess, obsolete, or
unserviceable.
56 02-58 The Secretary of the See status of Open. See status
Treasury should direct recommendation of recommendation
the Fiscal Assistant No. 02-25. In
Secretary to ensure addition, this No. 02-25.
that the note disclosure would
disclosure for be directly
inventories and affected by the
operating materials and implementation of
supplies meets the the FASAB
requirements of SFFAS exposure draft
No. 3, Accounting for mentioned in the
Inventory and Related status of
Property, paragraphs 35 recommendation
and 50, which require No. 02-25.
disclosure of inventory
and operating materials
and supplies general
composition.
57 02-59 The Secretary of the See status of Open. See status
Treasury should direct recommendation of recommendation
the Fiscal Assistant No. 02-25. In
Secretary to ensure addition, this No. 02-25.
that the note disclosure would
disclosure for be directly
inventories and affected by the
operating materials and implementation of
supplies meets the the FASAB
requirements of SFFAS exposure draft
No. 3, Accounting for mentioned in the
Inventory and Related status of
Property, paragraphs 35 recommendation
and 50, that require No. 02-25.
disclosure of any
changes from the prior
year in accounting
methods for inventory
and operating materials
and supplies.
58 02-60 The Secretary of the See status of Open. See status
Treasury should direct recommendation of recommendation
the Fiscal Assistant No. 02-25. In
Secretary to ensure addition, this No. 02-25.
that the note disclosure would
disclosure for be directly
inventories and affected by the
operating materials and implementation of
supplies meets the the FASAB
requirements of SFFAS exposure draft
No. 3, Accounting for mentioned in the
Inventory and Related status of
Property, paragraphs 35 recommendation
and 50, which require No. 02-25.
the disclosure of any
restrictions on the
sale of inventory and
the use of operating
materials and supplies.
59 02-61 The Secretary of the See status of Open. See status
Treasury should direct recommendation of recommendation
the Fiscal Assistant No. 02-25. In
Secretary to ensure addition, this No. 02-25.
that the note disclosure would
disclosure for be directly
inventories and affected by the
operating materials and implementation of
supplies meets the the FASAB
requirements of SFFAS exposure draft
No. 3, Accounting for mentioned in the
Inventory and Related status of
Property, paragraphs 35 recommendation
and 50, which requires No. 02-25.
disclosure of any
changes in the criteria
for categorizing
inventory and operating
materials and supplies.
60 02-62 The Secretary of the See status of Open. See status
Treasury should direct recommendation of recommendation
the Fiscal Assistant No. 02-25. In
Secretary to ensure addition, this No. 02-25.
that the note disclosure would
disclosure for be directly
stockpile material affected by the
meets the requirements implementation of
of SFFAS No. 3, the FASAB
Accounting for exposure draft
Inventory and Related mentioned in the
Property, paragraph 56, status of
which requires recommendation
disclosure of the basis No. 02-25.
for valuing stockpile
material, including
valuation method and
any cost flow
assumptions.
61 02-63 The Secretary of the See status of Open. See status
Treasury should direct recommendation of recommendation
the Fiscal Assistant No. 02-25. In
Secretary to ensure addition, this No. 02-25.
that the note disclosure would
disclosure for be directly
stockpile material affected by the
meets the requirements implementation of
of SFFAS No. 3, the FASAB
Accounting for exposure draft
Inventory and Related mentioned in the
Property, paragraph 56, status of
which requires recommendation
disclosure of any No. 02-25.
changes from the prior
year's accounting
methods.
62 02-64 The Secretary of the See status of Open. See status
Treasury should direct recommendation of recommendation
the Fiscal Assistant No. 02-25. In
Secretary to ensure addition, this No. 02-25.
that the note disclosure would
disclosure for be directly
stockpile material affected by the
meets the requirements implementation of
of SFFAS No. 3, the FASAB
Accounting for exposure draft
Inventory and Related mentioned in the
Property, paragraph 56, status of
which requires recommendation
disclosure of No. 02-25.
restrictions on the use
of stockpile material.
63 02-65 The Secretary of the This required Closed.
Treasury should direct information was
the Fiscal Assistant disclosed in Note
Secretary to ensure 5, Inventories
that the note and Related
disclosure for Property, Net, in
stockpile material the fiscal year
meets the requirements 2005 CFS.
of SFFAS No. 3,
Accounting for
Inventory and Related
Property, paragraph 56,
which requires
disclosure of the
balances in each
category of stockpile
material (i.e.,
stockpile material held
and held for sale).
64 02-66 The Secretary of the See status of Open. See status
Treasury should direct recommendation of recommendation
the Fiscal Assistant No. 02-25. In
Secretary to ensure addition, this No. 02-25.
that the note disclosure would
disclosure for be directly
stockpile material affected by the
meets the requirements implementation of
of SFFAS No. 3, the FASAB
Accounting for exposure draft
Inventory and Related mentioned in the
Property, paragraph 56, status of
which requires recommendation
disclosure of the No. 02-25.
criteria for grouping
stockpile material held
for sale.
65 02-67 The Secretary of the See status of Open. See status
Treasury should direct recommendation of recommendation
the Fiscal Assistant No. 02-25. In
Secretary to ensure addition, this No. 02-25.
that the note disclosure would
disclosure for be directly
stockpile material affected by the
meets the requirements implementation of
of SFFAS No. 3, the FASAB
Accounting for exposure draft
Inventory and Related mentioned in the
Property, paragraph 56, status of
which requires recommendation
disclosure of changes No. 02-25.
in criteria for
categorizing stockpile
material held for sale.
66 02-68 The Secretary of the See status of Open. See status
Treasury should direct recommendation of recommendation
the Fiscal Assistant No. 02-25. In
Secretary to ensure addition, this No. 02-25.
that the note disclosure would
disclosure for be directly
stockpile material affected by the
meets the requirements implementation of
of SFFAS No. 3, the FASAB
Accounting for exposure draft
Inventory and Related mentioned in the
Property, paragraph 55, status of
which requires recommendation
disclosure of any No. 02-25.
difference between the
carrying amount (i.e.,
purchase price or cost)
of stockpile material
held for sale and the
estimated selling price
of such assets.
67 02-69 The Secretary of the See status of Open. See status
Treasury should direct recommendation of recommendation
the Fiscal Assistant No. 02-25. In
Secretary to ensure addition, this No. 02-25.
that the note disclosure would
disclosure for seized be directly
material meets the affected by the
requirements of SFFAS implementation of
No. 3, Accounting for the FASAB
Inventory and Related exposure draft
Property, paragraph 66, mentioned in the
which requires status of
disclosure of the recommendation
valuation method. No. 02-25.
68 02-70 The Secretary of the See status of Open. See status
Treasury should direct recommendation of recommendation
the Fiscal Assistant No. 02-25. In
Secretary to ensure addition, this No. 02-25.
that the note disclosure would
disclosure for seized be directly
material meets the affected by the
requirements of SFFAS implementation of
No. 3, Accounting for the FASAB
Inventory and Related exposure draft
Property, paragraph 66, mentioned in the
which requires status of
disclosure of any recommendation
changes from the prior No. 02-25.
year's accounting
methods.
69 02-71 The Secretary of the See status of Open. See status
Treasury should direct recommendation of recommendation
the Fiscal Assistant No. 02-25. In
Secretary to ensure addition, this No. 02-25.
that the note disclosure would
disclosure for seized be directly
material meets the affected by the
requirements of SFFAS implementation of
No. 3, Accounting for the FASAB
Inventory and Related exposure draft
Property, paragraph 66, mentioned in the
which requires status of
disclosure of the recommendation
analysis of change in No. 02-25.
seized property
(including dollar value
and number of seized
properties) that is on
hand at the beginning
of the year, seized
during the year,
disposed of during the
year, and on hand at
the end of the year, as
well as known liens or
other claims against
the property. This
information should be
presented by type of
seizure and method of
disposition, when
material.
70 02-72 The Secretary of the See status of Open. See status
Treasury should direct recommendation of recommendation
the Fiscal Assistant No. 02-25. In
Secretary to ensure addition, this No. 02-25.
that the note disclosure would
disclosure for be directly
forfeited property affected by the
meets the requirements implementation of
of SFFAS No. 3, the FASAB
Accounting for exposure draft
Inventory and Related mentioned in the
Property, paragraph 78, status of
which requires recommendation
disclosure of the No. 02-25.
valuation method.
71 02-73 The Secretary of the See status of Open. See status
Treasury should direct recommendation of recommendation
the Fiscal Assistant No. 02-25. In
Secretary to ensure addition, this No. 02-25.
that the note disclosure would
disclosure for be directly
forfeited property affected by the
meets the requirements implementation of
of SFFAS No. 3, the FASAB
Accounting for exposure draft
Inventory and Related mentioned in the
Property, paragraph 78, status of
which requires recommendation
disclosure of the No. 02-25.
analysis of the changes
in forfeited property
by type and dollar
amount that includes
(1) number of
forfeitures on hand at
the beginning of the
year, (2) additions,
(3) disposals and
method of disposition,
and (4) end-of-year
balances.
72 02-74 The Secretary of the See status of Open. See status
Treasury should direct recommendation of recommendation
the Fiscal Assistant No. 02-25. In
Secretary to ensure addition, this No. 02-25.
that the note disclosure would
disclosure for be directly
forfeited property affected by the
meets the requirements implementation of
of SFFAS No. 3, the FASAB
Accounting for exposure draft
Inventory and Related mentioned in the
Property, paragraph 78, status of
which requires recommendation
disclosure of any No. 02-25.
restriction on the use
or disposition of the
property.
73 02-75 The Secretary of the See status of Open. See status
Treasury should direct recommendation of recommendation
the Fiscal Assistant No. 02-25. In
Secretary to ensure addition, this No. 02-25.
that the note disclosure would
disclosure for be directly
forfeited property affected by the
meets the requirements implementation of
of SFFAS No. 3, the FASAB
Accounting for exposure draft
Inventory and Related mentioned in the
Property, paragraph 78, status of
which requires recommendation
disclosure, if No. 02-25.
available, of an
estimate of the value
of property to be
distributed to other
federal, state, and
local agencies in
future reporting
periods.
74 02-76 The Secretary of the See status of Open. See status
Treasury should direct recommendation of recommendation
the Fiscal Assistant No. 02-25. In
Secretary to ensure addition, this No. 02-25.
that the note required
disclosure for goods information was
held under price requested from
support and the agencies for
stabilization programs inclusion in Note
meets the requirements 19,
of SFFAS No. 3, Contingencies, in
Accounting for the fiscal year
Inventory and Related 2005 CFS.
Property, paragraph 98, However, no
which requires that if related data were
a contingent loss is received in
not recognized because fiscal year 2005;
it is less than therefore, there
probable or it is not is no disclosure
reasonably measurable, related to this
disclosure of the requirement.
contingency shall be
made if it is at least
reasonably possible
that a loss may occur.
75 02-77 The Secretary of the See status of Open. See status
Treasury should direct recommendation of recommendation
the Fiscal Assistant No. 02-25. In
Secretary to ensure addition, this No. 02-25.
that the note disclosure would
disclosure for goods be directly
held under price affected by the
support and implementation of
stabilization programs the FASAB
meets the requirements exposure draft
of SFFAS No. 3, mentioned in the
Accounting for status of
Inventory and Related recommendation
Property, paragraph No. 02-25.
109, which requires
disclosure of the basis
for valuing
commodities, including
valuation method and
cost flow assumptions.
76 02-78 The Secretary of the See status of Open. See status
Treasury should direct recommendation of recommendation
the Fiscal Assistant No. 02-25. In
Secretary to ensure addition, this No. 02-25.
that the note disclosure would
disclosure for goods be directly
held under price affected by the
support and implementation of
stabilization programs the FASAB
meets the requirements exposure draft
of SFFAS No. 3, mentioned in the
Accounting for status of
Inventory and Related recommendation
Property, paragraph No. 02-25.
109, which requires
disclosure of any
changes from the prior
year's accounting
methods.
77 02-79 The Secretary of the See status of Open. See status
Treasury should direct recommendation of recommendation
the Fiscal Assistant No. 02-25. In
Secretary to ensure addition, this No. 02-25.
that the note disclosure would
disclosure for goods be directly
held under price affected by the
support and implementation of
stabilization programs the FASAB
meets the requirements exposure draft
of SFFAS No. 3, mentioned in the
Accounting for status of
Inventory and Related recommendation
Property, paragraph No. 02-25.
109, which requires
disclosure of any
restrictions on the
use, disposal, or sale
of commodities.
78 02-80 The Secretary of the See status of Open. See status
Treasury should direct recommendation of recommendation
the Fiscal Assistant No. 02-25. In
Secretary to ensure addition, this No. 02-25.
that the note disclosure would
disclosure for goods be directly
held under price affected by the
support and implementation of
stabilization programs the FASAB
meets the requirements exposure draft
of SFFAS No. 3, mentioned in the
Accounting for status of
Inventory and Related recommendation
Property, paragraph No. 02-25.
109, which requires
disclosure of the
analysis of the change
in dollar amount and
volume of commodities,
including those (1) on
hand at the beginning
of the year, (2)
acquired during the
year, (3) disposed of
during the year listed
by method of
disposition, (4) on
hand at the end of the
year, (5) on hand at
year-end and estimated
to be donated or
transferred during the
coming period, and (6)
received as a result of
surrender of collateral
related to nonrecourse
loans outstanding. The
analysis should also
show the dollar value
and volume of purchase
agreement commitments.
79 02-81 The Secretary of the See status of Open. See status
Treasury should direct recommendation of recommendation
the Fiscal Assistant No. 02-25. In
Secretary to ensure addition, this No. 02-25.
that the note disclosure would
disclosure for be directly
property, plant, and affected by the
equipment (PP&E) meets implementation of
the disclosure the FASAB
requirements of SFFAS exposure draft
No. 6, Accounting for mentioned in the
Property, Plant, and status of
Equipment, paragraph recommendation
45, which requires No. 02-25.
disclosure of the
estimated useful lives
for each major class of
PP&E.
80 02-82 The Secretary of the See status of Open. See status
Treasury should direct recommendation of recommendation
the Fiscal Assistant No. 02-25. In
Secretary to ensure addition, this No. 02-25.
that the note disclosure would
disclosure for PP&E be directly
meets the disclosure affected by the
requirements of SFFAS implementation of
No. 6, Accounting for the FASAB
Property, Plant, and exposure draft
Equipment, paragraph mentioned in the
45, which requires status of
disclosure of recommendation
capitalization No. 02-25.
thresholds, including
any changes in
thresholds during the
period.
81 02-83 The Secretary of the See status of Open. See status
Treasury should direct recommendation of recommendation
the Fiscal Assistant No. 02-25. In
Secretary to ensure addition, this No. 02-25.
that the note disclosure would
disclosure for PP&E be directly
meets the disclosure affected by the
requirements of SFFAS implementation of
No. 6, Accounting for the FASAB
Property, Plant, and exposure draft
Equipment, paragraph mentioned in the
45, which requires status of
disclosure of recommendation
restrictions on the use No. 02-25.
or convertibility of
general PP&E.
82 02-85 The Secretary of the See status of Open. See status
Treasury should direct recommendation of recommendation
the Fiscal Assistant No. 02-25. In
Secretary to ensure addition, this No. 02-25.
that the note disclosure would
disclosure for PP&E be directly
meets the disclosure affected by the
requirements of SFFAS implementation of
No. 10, Accounting for the FASAB
Internal Use Software, exposure draft
paragraph 35, which mentioned in the
requires disclosure of status of
the estimated useful recommendation
life for each major No. 02-25.
class of software for
internal use software.
83 02-86 The Secretary of the This required Closed.
Treasury should direct information was
the Fiscal Assistant disclosed in Note
Secretary to ensure 6, Property,
that the note Plant, and
disclosure for PP&E Equipment, Net,
meets the disclosure in the fiscal
requirements of SFFAS year 2005 CFS.
No. 10, Accounting for
Internal Use Software,
paragraph 35, which
requires disclosure of
the method of
amortization for
internal use software.
84 02-87 The Secretary of the This information Closed.
Treasury should direct was disclosed in
the Fiscal Assistant the required
Secretary to ensure supplementary
that the note stewardship
disclosure for PP&E information
meets the disclosure section of the
requirements of SFFAS fiscal year 2005
No. 16, Amendments to CFS.
Accounting for
Property, Plant, and
Equipment, paragraph 9,
which requires an
appropriate PP&E note
disclosure to explain
that "physical
quantity" information
for the multiuse
heritage assets is
included in
supplemental
stewardship reporting
for heritage assets.
85 02-88 The Secretary of the This required Closed.
Treasury should direct information was
the Fiscal Assistant disclosed in Note
Secretary to ensure 11, Federal
that the note Employee and
disclosure for federal Veteran Benefits
employee and veteran Payable, in the
benefits payable is fiscal year 2005
completely and properly CFS.
reported, specifically,
that (1) it include a
line for the valuation
of plan amendments that
occurred during the
year and (2) the
liability for military
pensions and note
disclosure related to
the "change in
actuarial accrued
pension liability and
components of related
expenses" agree with
the information
presented in the
Department of Defense's
financial statements.
86 02-89 The Secretary of the See status of Open.
Treasury should direct recommendation
the Fiscal Assistant No. 02-25. In
Secretary to ensure addition, this
that the note required
disclosure for information was
environmental and requested from
disposal liabilities the agencies for
meets the requirements inclusion in Note
of SFFAS No. 6, 12, Environmental
Accounting for and Disposal
Property, Plant, and Liabilities, in
Equipment, which the fiscal year
requires (1) estimation 2005 CFS.
and recognition of However, further
cleanup costs data are needed
associated with general from one agency
PP&E at the time the with significant
PP&E is placed in environmental and
service and (2) disposal
recognition of a liabilities as of
liability for the September 30,
portion of the 2005, to fully
estimated total cleanup comply with this
cost attributable to specific
that portion of the disclosure
physical capacity used requirement.
or that portion of the
estimated useful life
that has passed since
the general PP&E was
placed in service.
87 02-90 The Secretary of the See status of Open. See status
Treasury should direct recommendation of recommendation
the Fiscal Assistant No. 02-25. In No. 02-25.
Secretary to ensure addition, this
that the note disclosure would
disclosure for be directly
environmental and affected by the
disposal liabilities implementation of
meets the requirements the FASAB
of SFFAS No. 6, exposure draft
Accounting for mentioned in the
Property, Plant, and status of
Equipment, which recommendation
requires inclusion of No. 02-25.
material changes in
total estimated cleanup
costs due to changes in
laws, technology, or
plans.
88 02-91 The Secretary of the See status of Open.
Treasury should direct recommendation
the Fiscal Assistant No. 02-25.
Secretary to ensure
that the note
disclosure for capital
leases meets the
requirements of Federal
Accounting Standards
Board (FASB), Statement
of Financial Accounting
Standards (SFAS) No.
13, Accounting for
Leases, paragraph 16,
which requires future
minimum lease payments
as of the date of the
latest balance sheet
presented, in the
aggregate and for each
of the 5 succeeding
fiscal years, with
separate deductions
from the total for the
amount representing
executory costs,
including any profit
thereon, included in
the minimum lease
payments, and for the
amount of the imputed
interest necessary to
reduce the net minimum
lease payments to
present value.
89 02-92 The Secretary of the See status of Open.
Treasury should direct recommendation
the Fiscal Assistant No. 02-25.
Secretary to ensure
that the note
disclosure for capital
leases meets the
requirements of FASB,
SFAS No. 13, Accounting
for Leases, paragraph
16, which requires a
summary of assets under
capital lease by major
asset category and the
related total
accumulated
amortization.
90 02-93 The Secretary of the See status of Open.
Treasury should direct recommendation
the Fiscal Assistant No. 02-25.
Secretary to ensure
that the note
disclosure for capital
leases meets the
requirements of FASB,
SFAS No. 13, Accounting
for Leases, paragraph
16, which requires a
general description of
the lessee's leasing
arrangements, including
but not limited to (1)
the basis on which
contingent rental
payments are
determined; (2) the
existence and terms of
renewal or purchase
options and escalation
clauses; and (3)
restrictions imposed by
lease agreements, such
as those concerning
dividends, additional
debt, and further
leasing.
91 02-94 The Secretary of the See status of Open. See status
Treasury should direct recommendation of recommendation
the Fiscal Assistant No. 02-25. In No. 02-25.
Secretary to ensure addition, this
that the note disclosure would
disclosure for life be directly
insurance liabilities affected by the
meets the requirements implementation of
of SFFAS No. 5, the FASAB
Accounting for exposure draft
Liabilities of the mentioned in the
Federal Government, status of
paragraph 117, which recommendation
requires all federal No. 02-25.
reporting entities with
whole life insurance
programs to follow
applicable standards as
prescribed in the
private sector
standards when
reporting the liability
for future policy
benefits: FASB SFAS No.
60, Accounting and
Reporting by Insurance
Enterprises; SFAS No.
97, Accounting and
Reporting by Insurance
Enterprises for Certain
Long-Duration Contracts
and for Realized Gains
and Losses from the
Sale of Investments;
SFAS No. 120,
Accounting and
Reporting by Mutual
Life Insurance
Enterprises and by
Insurance Enterprises
for Certain
Long-Duration
Participating
Contracts; and American
Institute of Certified
Public Accountants
Statement of Position
95-1, Accounting for
Certain Insurance
Activities of Mutual
Life Insurance
Enterprises.
92 02-95 The Secretary of the See status of Open. See status
Treasury should direct recommendation of recommendation
the Fiscal Assistant No. 02-25. In No. 02-25.
Secretary to ensure addition, this
that the note disclosure would
disclosure for life be directly
insurance liabilities affected by the
meets the requirements implementation of
of SFFAS No. 5, the FASAB
Accounting for exposure draft
Liabilities of the mentioned in the
Federal Government, status of
paragraph 121, which recommendation
requires all components No. 02-25.
of the liability for
future policy benefits
(i.e., the net-level
premium reserve for
death and endowment
policies and the
liability for terminal
dividends) to be
separately disclosed in
a footnote with a
description of each
amount and an
explanation of its
projected use and any
other potential uses
(e.g., reducing
premiums, determining
and declaring dividends
available, and reducing
federal support in the
form of appropriations
related to
administrative cost or
subsidies).
93 02-96 The Secretary of the See status of Open. See status
Treasury should direct recommendation of recommendation
the Fiscal Assistant No.'s 02-25 and No.'s 02-25 and
Secretary to ensure 02-42. In 02-42.
that the note addition, this
disclosure on major required
commitments and information was
contingencies is disclosed in Note
consistent with 19,
disclosed information Contingencies,
in individual agencies' and Note 20,
financial statements. Commitments, in
the fiscal year
2005 CFS.
94 02-97 The Secretary of the See status of Closed.
Treasury should direct recommendation
the Fiscal Assistant No. 02-96.
Secretary to ensure
that the note
disclosure on major
commitments and
contingencies discloses
sufficient information
(detailed discussion)
regarding certain major
commitments and
contingencies.
95 02-99 The Secretary of the This information Closed.
Treasury should direct was disclosed in
the Fiscal Assistant the required
Secretary to ensure supplementary
that the note information
disclosure for section of the
collections and refunds fiscal year 2005
of federal revenue CFS.
meets the requirements
of SFFAS No. 7,
Concepts for
Reconciling Budgetary
and Financial
Accounting, paragraph
69.2, which requires
collecting entities to
provide in the other
accompanying
information any
relevant estimates of
the annual tax gap that
become available as a
result of federal
government surveys or
studies.
96 02-100 The Secretary of the This required Closed.
Treasury should direct information was
the Fiscal Assistant disclosed in Note
Secretary to ensure 21, Dedicated
that the note Collections, in
disclosure for the fiscal year
dedicated collections 2005 CFS.
meets the requirements
of SFFAS No. 7, Part I,
Accounting for Revenue
and Other Financing
Sources, paragraph 85,
which requires
inclusion of condensed
information about
assets and liabilities
showing investments in
Treasury securities,
other assets,
liabilities due and
payable to
beneficiaries, other
liabilities, and fund
balance.
97 02-101 The Secretary of the This required Closed.
Treasury should direct information was
the Fiscal Assistant disclosed in Note
Secretary to ensure 21, Dedicated
that the note Collections, in
disclosure for the fiscal year
dedicated collections 2005 CFS.
meets the requirements
of SFFAS No. 7, Part I,
Accounting for Revenue
and Other Financing
Sources, paragraph 85,
which requires
inclusion of condensed
information on net cost
and changes to fund
balance, showing
revenues by type
(exchange/nonexchange),
program expenses, other
expenses, other
financing sources, and
other changes in fund
balance.
98 02-102 The Secretary of the See status of Open. Treasury
Treasury should direct recommendation expected the
the Fiscal Assistant No. 02-25. In required
Secretary to ensure addition, this information from
that the note required applicable
disclosure for information was agencies as
dedicated collections requested from requested in the
meets the requirements the agencies for TFM. When no
of SFFAS No. 7, Part I, inclusion in Note disclosure
Accounting for Revenue 21, Dedicated information was
and Other Financing Collections, in provided by such
Sources, paragraph 85, the fiscal agencies,
which requires year 2005 CFS. Treasury did not
inclusion of any However, no data have any policies
revenues, other were received in and procedures
financing sources, or fiscal year 2005, for following up
costs attributable to and therefore, no with agencies to
the fund under disclosure was determine why the
accounting standards needed related to information was
but not legally this requirement. not provided.
allowable as credits or
charges to the fund.
99 02-103 The Secretary of the See status of Open.
Treasury should direct recommendation
the Fiscal Assistant No. 02-25.
Secretary to ensure
that the note
disclosure for Indian
trust funds meets the
requirements of SFFAS
No. 7, Part I,
Accounting for Revenue
and Other Financing
Sources, paragraph 85,
which requires a
description of each
fund's purpose, how the
administrative entity
accounts for and
reports the fund, and
its authority to use
those collections.
100 02-104 The Secretary of the See status of Open.
Treasury should direct recommendation
the Fiscal Assistant No. 02-25.
Secretary to ensure
that the note
disclosure for Indian
trust funds meets the
requirements of SFFAS
No. 7, Part I,
Accounting for Revenue
and Other Financing
Sources, paragraph 85,
which requires
disclosure of the
sources of revenue or
other financing for the
period and an
explanation of the
extent to which they
are inflows of
resources to the
government or the
result of
intragovernmental
flows.
101 02-105 The Secretary of the This required Closed.
Treasury should direct information was
the Fiscal Assistant disclosed in Note
Secretary to ensure 22, Indian Trust
that the note Funds, in the
disclosure for Indian fiscal year 2005
trust funds meets the CFS.
requirements of SFFAS
No. 7, Part I,
Accounting for Revenue
and Other Financing
Sources, paragraph 85,
which requires
condensed information
about assets and
liabilities showing
investments in Treasury
securities, other
assets, liabilities due
and payable to
beneficiaries, and
other liabilities.
102 02-106 The Secretary of the See status of Open.
Treasury should direct recommendation
the Fiscal Assistant No. 02-25.
Secretary to ensure
that the note
disclosure for Indian
trust funds meets the
requirements of SFFAS
No. 7, Part I,
Accounting for Revenue
and Other Financing
Sources, paragraph 85,
which requires
condensed information
on net cost and changes
to fund balance,
showing revenues by
type
(exchange/nonexchange),
program expenses, other
expenses, other
financing sources, and
other changes in fund
balance.
103 02-107 The Secretary of the See status of Open.
Treasury should direct recommendation
the Fiscal Assistant No. 02-25.
Secretary to ensure
that the note
disclosure for Indian
trust funds meets the
requirements of SFFAS
No. 7, Part I,
Accounting for Revenue
and Other Financing
Sources, paragraph 85,
which requires
disclosure of any
revenues, other
financing sources, or
costs attributable to
the fund under
accounting standards,
but not legally
allowable as credits or
charges to the fund.
104 02-114 The Secretary of the See status of Open.
Treasury should direct recommendation
the Fiscal Assistant No. 02-25.
Secretary to ensure
that the note
disclosure for social
insurance meets the
requirements of SFFAS
No. 17, Accounting for
Social Insurance,
paragraph 32(4), which
requires individual
program sensitivity
analyses for projection
period cash flow in
present value dollars
and annual cash flow in
nominal dollars. The
CFS includes only
present value
sensitivity analyses
for Social Security and
Hospital Insurance.
Paragraph 32(4) states
that at a minimum the
summary should present
Social Security,
Hospital Insurance, and
Supplementary Medical
Insurance separately.
105 02-115 The Secretary of the This information Closed.
Treasury should direct was disclosed in
the Fiscal Assistant the required
Secretary to ensure supplementary
that the note stewardship
disclosure for social information
insurance meets the section of the
requirements of SFFAS fiscal year 2005
No. 17, Accounting for CFS.
Social Insurance,
paragraph 27(4)(a),
which requires the
individual program
sensitivity analyses
for Social Security and
Hospital Insurance to
include an analysis of
assumptions regarding
net immigration.
106 02-118 The Secretary of the Treasury reports Open. SFFAS No.
Treasury should direct stewardship 8, paragraph 39
the Fiscal Assistant assets and also states that
Secretary to ensure stewardship until further
that the note investments in FASAB
disclosure for accordance with deliberations,
nonfederal physical SFFAS No. 8, the CFS should
property included in paragraph 39 include such
stewardship information which requires summary or
meets the requirements the disclosure in selected
of SFFAS No. 8, the CFS of such information as is
Supplementary "summary feasible and that
Stewardship Reporting, (stewardship) experimentation
paragraph 87, which information or is encouraged, as
requires disclosure of selected is the reporting
the annual investment, information as is of such
including a description feasible." additional
of federally owned Therefore, the information as
physical property component entity will enhance the
transferred to state required CFS. Treasury has
and local governments. reporting for not documented in
This information should stewardship its policies or
be provided for the assets and procedures how
year ended on the stewardship stewardship
balance sheet date as investments is information
well as for each of the not applicable to should be
4 preceding years. If the CFS and the reported in the
data for additional current CFS CFS or the basis
years would provide a reporting of this for its
better indication of stewardship determination
investment, reporting information is in that the
of the additional accordance with disclosure of the
years' data is GAAP. stewardship
encouraged. Reporting information in
should be at a Furthermore, accordance with
meaningful category or SFFAS No. 24, the related
level. Selected paragraph in
Standards for the SFFAS No. 8 is
Consolidated not feasible. In
Financial Report addition,
of the United Treasury requests
States information on
Government, did stewardship
not change this investments in
situation since the TFM and
SFFAS No. 24, certain agencies
paragraph 8 report such
indicates that information in
provisions for their Performance
different and
accounting Accountability
treatments made Reports.
in current or
subsequent SFFAS
override the
general rule of
universal
applicability.
For example,
until SFFAS No
29, Heritage
Assets and
Stewardship Land,
becomes
effective, CFS
reporting for
stewardship
heritage assets
will be done in
accordance with
the requirements
of SFFAS No. 8,
paragraph 39.
Similarly, until
FASAB provides
specific CFS
disclosure
requirements for
stewardship
investments, CFR
reporting for
stewardship
investments will
be done in
accordance with
the requirements
of SFFAS No. 8,
paragraph 39.
As Treasury has
disclosed the
stewardship
information
deemed feasible
to present, no
further related
disclosure is
required.
107 02-119 The Secretary of the See status of Open. See status
Treasury should direct recommendation of recommendation
the Fiscal Assistant No. 02-118. No. 02-118.
Secretary to ensure
that the note
disclosure for
nonfederal physical
property included in
stewardship information
meets the requirements
of SFFAS No. 8,
Supplementary
Stewardship Reporting,
paragraph 87, which
requires a description
of major programs
involving federal
investments in
nonfederal physical
property, including a
description of programs
or policies under which
noncash assets are
transferred to state
and local governments.
108 02-120 The Secretary of the See status of Open. See status
Treasury should direct recommendation of recommendation
the Fiscal Assistant No. 02-118. No. 02-118.
Secretary to ensure
that the note
disclosure for human
capital included in
stewardship information
meets the requirements
of SFFAS No. 8,
Supplementary
Stewardship Reporting,
paragraph 94, which
requires a narrative
description and the
full cost of the
investment in human
capital for the year
being reported on as
well as the preceding 4
years (if full cost
data are not available,
outlay data can be
reported).
109 02-121 The Secretary of the See status of Open. See status
Treasury should direct recommendation of recommendation
the Fiscal Assistant No. 02-118. No. 02-118.
Secretary to ensure
that the note
disclosure for human
capital included in
stewardship information
meets the requirements
of SFFAS No. 8,
Supplementary
Stewardship Reporting,
paragraph 94, which
requires the full cost
or outlay data for
investments in human
capital at a meaningful
category or level
(e.g., by major
program, agency, or
department).
110 02-122 The Secretary of the See status of Open. See status
Treasury should direct recommendation of recommendation
the Fiscal Assistant No. 02-118. No. 02-118.
Secretary to ensure
that the note
disclosure for human
capital included in
stewardship information
meets the requirements
of SFFAS No. 8,
Supplementary
Stewardship Reporting,
paragraph 94, which
requires a narrative
description of major
education and training
programs considered
federal investments in
human capital.
111 02-123 The Secretary of the See status of Open. See status
Treasury should direct recommendation of recommendation
the Fiscal Assistant No. 02-118. No. 02-118.
Secretary to ensure
that the note
disclosure for research
and development
included in stewardship
information meets the
requirements of SFFAS
No. 8, Supplementary
Stewardship Reporting,
paragraph 100, which
requires reporting of
the annual investment
made in the year ended
on the balance sheet
date as well as in each
of the 4 years
preceding that year.
(As defined in this
standard, "annual
investment" includes
more than the annual
expenditure reported by
character class for
budget execution. Full
cost shall be measured
and accounted for in
accordance with SFFAS
No. 4, Managerial Cost
Accounting Standards
for the Federal
Government.) If data
for additional years
would provide a better
indication of
investment, reporting
of the additional
years' data is
encouraged. In those
unusual instances when
entities have no
historical data, only
current reporting year
data need be reported.
Reporting must be at a
meaningful category or
level, for example, a
major program or
department.
112 02-124 The Secretary of the See status of Open. See status
Treasury should direct recommendation of recommendation
the Fiscal Assistant No. 02-118. No. 02-118.
Secretary to ensure
that the note
disclosure for research
and development
included in stewardship
information meets the
requirements of SFFAS
No. 8, Supplementary
Stewardship Reporting,
paragraph 100, which
requires a narrative
description of major
research and
development programs.
113 02-125 The Secretary of the See status of Open. See status
Treasury should direct recommendation of recommendation
the Fiscal Assistant No. 02-25. In No. 02-25.
Secretary to ensure addition, this
that the note disclosure would
disclosure for deferred be directly
maintenance meets the affected by the
requirements of SFFAS implementation of
No. 6, Accounting for the FASAB
Property, Plant, and exposure draft
Equipment, paragraphs mentioned in the
83 and 84, which status of
requires inclusion of recommendation
the method of measuring No. 02-25.
deferred maintenance
for each major class of
PP&E.
114 02-126 The Secretary of the See status of Open. See status
Treasury should direct recommendation of recommendation
the Fiscal Assistant No. 02-25. In No. 02-25.
Secretary to ensure addition, this
that the note disclosure would
disclosure for deferred be directly
maintenance meets the affected by the
requirements of SFFAS implementation of
No. 6, Accounting for the FASAB
Property, Plant, and exposure draft
Equipment, paragraphs mentioned in the
83 and 84, which status of
requires that if the recommendation
condition assessment No. 02-25.
survey method of
measuring deferred
maintenance is used,
the following should be
presented for each
major class of PP&E:
(1) description of
requirements or
standards for
acceptable operating
condition, (2) any
changes in the
condition requirements
or standards, and (3)
asset condition and a
range estimate of the
dollar amount of
maintenance needed to
return the asset to its
acceptable operating
condition.
115 02-127 The Secretary of the See status of Open. See status
Treasury should direct recommendation of recommendation
the Fiscal Assistant No. 02-25. In No. 02-25.
Secretary to ensure addition, this
that the note disclosure would
disclosure for deferred be directly
maintenance meets the affected by the
requirements of SFFAS implementation of
No. 6, Accounting for the FASAB
Property, Plant, and exposure draft
Equipment, paragraphs mentioned in the
83 and 84, which status of
requires that if the recommendation
total life-cycle cost No. 02-25.
method is used, the
following should be
presented for each
major class of PP&E:
(1) the original date
of the maintenance
forecast and an
explanation for any
changes to the
forecast; (2) prior
year balance of the
cumulative deferred
maintenance amount; (3)
the dollar amount of
maintenance that was
defined by the
professionals who
designed, built, or
managed the PP&E as
required maintenance
for the reporting
period; (4) the dollar
amount of maintenance
actually performed
during the period; (5)
the difference between
the forecast and actual
maintenance; (6) any
adjustments to the
scheduled amounts
deemed necessary by the
managers of the PP&E;
and (7) the ending
cumulative balance for
the reporting period
for each major class of
asset experiencing
deferred maintenance.
116 02-128 The Secretary of the See status of Open. See status
Treasury should direct recommendation of recommendation
the Fiscal Assistant No. 02-25. In No. 02-25.
Secretary, to ensure addition, this
that the note disclosure would
disclosure for deferred be directly
maintenance meets the affected by the
requirements of SFFAS implementation of
No. 6, Accounting for the FASAB
Property, Plant, and exposure draft
Equipment, paragraphs mentioned in the
83 and 84, which status of
requires that if recommendation
management elects to No. 02-25.
disclose critical and
noncritical amounts,
the disclosure is to
include management's
definition of these
categories.
117 02-129 The Secretary of the See status of Open.
Treasury should direct recommendation
the Fiscal Assistant No. 02-25.
Secretary to ensure
that the note
disclosure for
stewardship
responsibilities
related to the risk
assumed for federal
insurance and guarantee
programs meets the
requirements of SFFAS
No. 5, Accounting for
Liabilities of the
Federal Government,
paragraph 106, which
requires that when
financial information
pursuant to FASB
standards on federal
insurance and guarantee
programs conducted by
government corporations
is incorporated in
general purpose
financial reports of a
larger federal
reporting entity, the
entity should report as
required supplementary
information what
amounts and periodic
change in those amounts
would be reported under
the "risk assumed"
approach.
GAO-04-866
(results
of the
fiscal
year 2003
audit)
118 03-4 The Director of OMB See status of Open. See status
should direct the recommendation of recommendation
Controller of OMB, in No. 02-18. No.'s 02-14 and
coordination with 02-17.
Treasury's Fiscal
Assistant Secretary, to
work with the federal
agencies so that the
differences between net
outlays the agencies
report in their
Statement of Budgetary
Resources and the net
outlay records Treasury
uses to prepare the
Statement of Changes in
Cash Balance are
reconciled.
119 03-5 The Secretary of the See status of Open. See status
Treasury should direct recommendation of recommendation
the Fiscal Assistant No. 02-18. No.'s 02-14 and
Secretary to determine 02-17.
and address the effects
that any of the
differences between net
outlays the agencies
report in their
Statement of Budgetary
Resources and
Treasury's net outlay
records may have on the
CFS.
120 03-6 The Secretary of the Treasury Open. We agree
Treasury should direct disagrees with that SFFAS No. 24
the Fiscal Assistant this requires the
Secretary to develop a recommendation. reconciliation of
process that will allow Total operating the federal
full reporting of the cash reported in government's cash
changes in cash balance the fiscal year balance. However,
of the U.S. government. 2005 CFS was the Statement of
Specifically, the linked to amounts Changes in Cash
process should provide reported in Balance
for reporting on the agencies' audited reconciles to
change in cash reported financial operating cash of
on the consolidated statements. The $28.3 billion
balance sheet, which Statement of rather than the
should be linked to Changes in Cash cash reported on
cash balances reported Balance the Balance Sheet
in federal agencies' reconciles to of $85.8 billion,
audited financial Operating Cash. as of September
statements. SFFAS No. 24, 30, 2005.
paragraphs 12 and
13, require
reconciliation to
the government's
cash balance. It
also references
an illustration
that is not
prescriptive.
121 03-7 The Secretary of the Treasury Open. See status
Treasury should direct disagrees with of recommendation
the Fiscal Assistant this No. 02-14.
Secretary to report recommendation.
gross amounts for SFFAS No. 24
receipts and shows gross
disbursements of cash receipt and
related to direct loans disbursement
and loan guarantees. amounts as an
illustration, but
does not require
their disclosure.
122 03-8 The Director of OMB An interagency Open.
should direct the task force has
Controller of OMB, in been established
coordination with under the
Treasury's Fiscal direction of the
Assistant Secretary, to Attorney General
work with Justice and and has developed
certain other executive a strategic plan
branch agencies to for improving
ensure that these criminal debt
agencies report or collection and
disclose relevant has provided the
criminal debt plan to Congress.
information in The task force
conformity with GAAP in includes
their financial representatives
statements and have from DOJ,
such information Treasury, OMB,
subjected to audit. and the
Administrative
Office of the
U.S. Courts. The
task force
continues to make
progress in
implementing new
policies and
procedures.
123 03-9 The Secretary of the Treasury will Open.
Treasury should direct include criminal
the Fiscal Assistant debt information
Secretary to include as it becomes
relevant criminal debt available. See
information in the CFS status of
or document the recommendation
specific rationale for No. 03-08.
excluding such
information.
124 03-10 The Secretary of the This required Closed.
Treasury should direct information was
the Fiscal Assistant disclosed in Note
Secretary to include in 19,
the new system a Contingencies, in
request for federal the fiscal year
agencies to provide 2005 CFS.
contingency loss
information to assist
Treasury in disclosing
contingencies in the
CFS in accordance with
GAAP.
125 03-11 The Secretary of the See status of Open. See status
Treasury should direct recommendation of recommendation
the Fiscal Assistant No. 02-42. No. 02-42.
Secretary, in
coordination with the
Controller of OMB, to
modify Treasury's plans
for the new closing
package to (1) require
federal agencies to
directly link their
audited financial
statement notes to the
CFS notes and (2)
provide the necessary
information to
demonstrate that all of
the five principal
consolidated financial
statements are
consistent with the
underlying information
in federal agencies'
audited financial
statements and other
financial data.
126 03-15 The Secretary of the This required Closed.
Treasury should direct information was
the Fiscal Assistant disclosed in Note
Secretary to ensure 11, Federal
that the note Employee and
disclosure for federal Veteran Benefits
employees and veterans Payable, in the
benefits payable meets fiscal year 2005
the requirements of CFS.
SFFAS No. 5, Accounting
for Liabilities of the
Federal Government,
paragraph 83, which
requires the reporting
entity to disclose the
assumptions used for
veterans compensation
and burial benefits.
127 03-16 The Secretary of the This required Closed.
Treasury should direct information was
the Fiscal Assistant disclosed in Note
Secretary to ensure 11, Federal
that the note Employee and
disclosure for federal Veteran Benefits
employees and veterans Payable, in the
benefits payable meets fiscal year 2005
the requirements of CFS.
SFFAS No. 5, Accounting
for Liabilities of the
Federal Government,
paragraph 72, which
requires the reporting
entity to disclose
prior service costs
from plan amendments as
a separate component.
128 03-17 The Secretary of the This required Closed.
Treasury should direct information was
the Fiscal Assistant disclosed in Note
Secretary to ensure 11, Federal
that the note Employee and
disclosure for federal Veteran Benefits
employees and veterans Payable, in the
benefits payable meets fiscal year 2005
the requirements of CFS.
SFFAS No. 5, Accounting
for Liabilities of the
Federal Government,
paragraph 88, which
requires the reporting
entity to disclose
gains or losses due to
a change in the medical
inflation rate
assumption for health
benefits as a separate
component.
129 03-18 The Secretary of the See status of Open. See status
Treasury should direct recommendation of recommendation
the Fiscal Assistant No. 02-25. In No. 02-25.
Secretary to ensure addition, this
that the note disclosure would
disclosure for be directly
environmental and affected by the
disposal liabilities implementation of
meets the requirements the FASAB
of SFFAS No. 6, exposure draft
Accounting for mentioned in the
Property, Plant, and status of
Equipment, which recommendation
requires the reporting No. 02-25.
entity to disclose the
method for assigning
estimated total cleanup
costs to current
operating periods.
130 03-19 The Secretary of the See status of Open.
Treasury should direct recommendation
the Fiscal Assistant No. 02-25. In
Secretary to ensure addition, this
that the note required
disclosure for information was
environmental and requested from
disposal liabilities the agencies for
meets the requirements inclusion in Note
of SFFAS No. 6, 12, Environmental
Accounting for and Disposal
Property, Plant, and Liabilities, in
Equipment, which the fiscal year
requires the reporting 2005 CFS.
entity to disclose, for However, further
cleanup costs data are needed
associated with general from one agency
property, plant, and with significant
equipment, the environmental and
unrecognized portion of disposal
estimated total cleanup liabilities as of
costs be disclosed. September 30,
2005, to fully
comply with this
specific
disclosure
requirement.
131 03-20 The Secretary of the See status of Open. See status
Treasury should direct recommendation of recommendation
the Fiscal Assistant No. 02-25. In No. 02-25.
Secretary to ensure addition, this
that the note disclosure would
disclosure for be directly
environmental and affected by the
disposal liabilities implementation of
meets the requirements the FASAB
of SFFAS No. 6, exposure draft
Accounting for mentioned in the
Property, Plant, and status of
Equipment, which recommendation
requires the reporting No. 02-25.
entity to disclose the
nature of estimates and
information regarding
possible changes to the
estimates resulting
from inflation,
deflation, technology,
or applicable laws and
regulations.
132 03-21 The Secretary of the See status of Open. Treasury
Treasury should direct recommendation expected the
the Fiscal Assistant No. 02-25. In required
Secretary to consider addition, this information from
whether the reader required applicable
would be interested in information was agencies as
understanding why the requested from requested in the
environmental and the agencies for TFM. When no
disposal liabilities inclusion in Note disclosure
amount significantly 12, Environmental information was
changed during the year and Disposal provided by such
and include the Liabilities, in agencies,
explanation for the the fiscal year Treasury did not
change in the note 2005 CFS. have any policies
disclosure. However, no data and procedures
were received in for following up
fiscal year 2005, with agencies to
and therefore, determine why the
there was no information was
disclosure not provided.
related to this
requirement.
133 03-22 The Secretary of the See status of Open. See status
Treasury should direct recommendation of recommendation
the Fiscal Assistant No. 02-118. No. 02-118.
Secretary to ensure
that the information in
stewardship information
for research and
development meets the
requirements of SFFAS
No. 8, Supplementary
Stewardship Reporting,
paragraph 99, which
requires the reporting
entity to include a
narrative discussion of
the major results
achieved by the program
along the lines of
basic research, applied
research, and
development.
134 03-24 The Secretary of the This information Closed.
Treasury should direct was disclosed in
the Fiscal Assistant the required
Secretary to ensure supplementary
that the required information
supplemental section of the
information for fiscal year 2005
deferred maintenance CFS.
meets the requirements
of SFFAS No. 6,
Accounting for
Property, Plant, and
Equipment, paragraph
83, which requires the
reporting entity to
disclose the
identification of each
major class of asset
(i.e., building and
structures, furniture
and fixtures,
equipment, vehicles,
and land) for which
maintenance has been
deferred.
GAO-05-407
(results
of the
fiscal
year 2004
audit)
135 04-1 The Secretary of the Treasury further Open. Treasury's
Treasury should direct revised and procedures were
the Fiscal Assistant documented its not effective for
Secretary to segregate major procedures fiscal year 2005.
the duties of in fiscal year Treasury was
individuals performing 2005 related to unable to explain
key functions in the CFS why numerous GFRS
Treasury's processes compilation users appeared to
for preparing process, have
governmentwide including those inappropriate
adjustments to the related to the access to GFRS
financial statements, duties of the agency
making changes to Excel individuals with information or
spreadsheets that the capability to demonstrate that
contain audited agency enter, change, the appropriate
financial information, and delete data segregation of
and accessing federal within the GFRS duties exists.
agencies' closing database and the
package data in posting of
Treasury's new system. adjustments to
the CFS to
address
segregation of
duties.
136 04-2 The Secretary of the Treasury will Open. Treasury
Treasury should direct follow its did not have
the Fiscal Assistant standard appropriate
Secretary to require operating supporting
and maintain procedure that documentation for
appropriate supporting includes all transactions
documentation for all maintaining recorded in the
journal vouchers documentation for CFS. Recording
recorded in the CFS. all recorded transactions in
journal vouchers, the financial
except in certain statements
circumstances without adequate
described in the underlying
status of support increases
recommendation the risk that
inappropriate
04-3. adjustments to
balances in the
financial
statements could
be made.
137 04-3 The Secretary of the Treasury policy Open. We believe
Treasury should direct is to notify that Treasury
the Fiscal Assistant agencies before should contact
Secretary to require making needed agencies to
that Treasury employees data changes. resolve any
contact and document However, due to discrepancies
communications with time constraints, between agencies'
agencies before Treasury needs audited closing
recording journal the flexibility packages and
vouchers to change to make changes audited financial
agency audited closing without prior statements and
package data. agency contact. discuss any other
Nevertheless, as situations that
time permits, require
Treasury will adjustments to
make an effort to agencies' audited
contact the closing package
agencies prior to data because
making changes. Treasury could
Treasury believes incorrectly
that agency adjust agencies'
approval is not audited
needed when information.
making the
following types
of changes: (1)
adjustments to
agree closing
packages to
financial
statements, (2)
adjustments to
ensure
consistency of
GAAP between
agencies, and (3)
adjustments to
conform an agency
to GAAP.
138 04-4 The Secretary of the Treasury further Open. Treasury's
Treasury should direct revised its procedures were
the Fiscal Assistant procedures to not effective for
Secretary to require ensure management fiscal year 2005.
and document management reviews of data Undetected errors
reviews of all changes to the occurred in key
procedures that result CFS. Also, see templates used to
in data changes to the status of compile the CFS.
CFS. recommendation
No. 04-1.
139 04-5 The Secretary of the Treasury revised Open. Information
Treasury should direct its automated system weaknesses
the Fiscal Assistant processes in existed within
Secretary to configure fiscal year 2005 the segments of
the GFRS database to to prevent GFRS that were
prevent Treasury unauthorized used during the
personnel from altering changes to fiscal years 2005
data submitted by agency-submitted and 2004
federal agencies and to data. reporting
use separate GFRS processes. We
databases for testing found that the
and production. GFRS database (1)
was not
configured to
prevent the
alteration of
data submitted by
federal agencies
and (2) was used
for both
production and
testing during
the reporting
processes.
Therefore,
information
submitted by
federal agencies
within GFRS is
not adequately
protected against
unauthorized
modification or
loss.
140 04-6 The Secretary of the Treasury has Open.
Treasury should direct recruited and is
the Fiscal Assistant currently
Secretary to assess the recruiting highly
infrastructure qualified
associated with the personnel to be
compilation process and trained in the
modify it as necessary CFS compilation
to achieve a sound process and in
internal control the associated
environment. internal controls
related to the
CFS compilation.
141 04-7 The Secretary of the Treasury updated Closed.
Treasury should direct the TFM in fiscal
the Fiscal Assistant year 2005 related
Secretary to review the to the required
TFM and any other GAAP disclosures
guidance to federal to ensure
agencies to ensure that accurate
they provide clear financial data
instructions for reporting by
reporting accurate data federal agencies.
to Treasury in the area
of loans receivable and
loan guarantees.
142 04-8 The Secretary of the See status of Closed.
Treasury should direct recommendation
the Fiscal Assistant No. 04-7.
Secretary to review the
TFM and any other
guidance to federal
agencies to ensure that
they provide clear
instructions for
reporting accurate data
to Treasury in the area
of property, plant, and
equipment.
143 04-9 The Secretary of the See status of Open. The TFM
Treasury should direct recommendation continues to need
the Fiscal Assistant No. 04-7. updates in this
Secretary to review the area.
TFM and any other
guidance to federal
agencies to ensure that
they provide clear
instructions for
reporting accurate data
to Treasury in the area
of federal employee and
veteran benefits
payable.
144 04-10 The Secretary of the See status of Closed.
Treasury should direct recommendation
the Fiscal Assistant No. 04-7.
Secretary to review the
TFM and any other
guidance to federal
agencies to ensure that
they provide clear
instructions for
reporting accurate data
to Treasury in the area
of contingencies.
145 04-11 The Secretary of the See status of Closed.
Treasury should direct recommendation
the Fiscal Assistant No. 04-7.
Secretary to review the
TFM and any other
guidance to federal
agencies to ensure that
they provide clear
instructions for
reporting accurate
debit and credit
amounts to Treasury.
146 04-12 The Director of OMB Treasury updated Closed.
should direct the the TFM
Controller of the instructions
Office of Federal requiring
Financial Management, agencies to
in coordination with submit a complete
the Fiscal Assistant closing package
Secretary, to ensure to GAO. OMB also
that federal agencies referenced the
submit to GAO a TFM, in OMB
complete closing Circular A-136,
package, as required by Part B, for a
the TFM as part of the listing of the
consolidation process, required
consisting of the (1) documents to be
special purpose audit submitted with
opinion, (2) management the closing
representation letter package.
for the closing
package, (3) audit
trail report
(reclassification
journal voucher
report), (4) closing
package financial
statement reports, (5)
trading partner summary
reports, (6) notes
reports, and (7) other
data reports.
147 04-13 As Treasury continues Treasury updated Closed.
to make strides to the TFM with
address issues related instructions
to intragovernmental requiring
transactions, the agencies to
Secretary of the provide detailed
Treasury should direct explanations for
the Fiscal Assistant material
Secretary, working in differences.
coordination with the
Controller of OMB, to
require that federal
agencies provide
detailed explanations
for all material
differences identified
in the
intragovernmental
reconciliations.
148 04-14 The Secretary of the OMB and Treasury Open.
Treasury should direct will work with
the Fiscal Assistant Department of
Secretary, working in Justice to
coordination with the discuss possible
Controller of OMB's solutions to this
Office of Federal issue.
Financial Management,
to develop policies and
procedures to determine
the proper resolution
and the appropriate
legal representations
to GAO at the
governmentwide level
when Justice's legal
counsel and agencies'
legal counsel provide
inconsistent opinions.
149 04-15 The Secretary of the See status of Open.
Treasury should direct recommendation
the Fiscal Assistant No. 02-25. In
Secretary to ensure addition, this
that the note required
disclosure for federal information was
employee and veteran requested from
benefits payable meets the agencies for
the requirements of inclusion in Note
SFFAS No. 5, Accounting 11, Federal
for Liabilities of the Employee and
Federal Government, Veteran Benefits
paragraph 110, table 9, Payable, in the
which states that all fiscal year 2005
components of the CFS. However, no
liability for future data were
policy benefits should received in
be separately disclosed fiscal year 2005,
in a footnote with a and therefore,
description of each there was no
amount and an disclosure
explanation of its related to this
projected use and any requirement.
other potential uses. Treasury plans to
discuss these
disclosure
requirements
further with the
agencies and with
GAO during fiscal
year 2006 to
ensure that all
relevant data are
being received
from the
agencies.
150 04-16 The Secretary of the See status of Open. See status
Treasury should direct recommendation of recommendation
the Fiscal Assistant No. 02-25. In No. 02-25.
Secretary to ensure addition, this
that the note disclosure would
disclosure for federal be directly
employee and veteran affected by the
benefits payable meets implementation of
the requirements of the FASAB
SFFAS No. 5, Accounting exposure draft
for Liabilities of the mentioned in the
Federal Government, status of
paragraphs 117 and 118, recommendation
which states that all No. 02-25.
federal reporting
entities with whole
life insurance programs
should follow the
standards as prescribed
in the private sector
standards when
reporting the liability
for future policy
benefits, in addition
to the following
required disclosures:
liability for future
policy benefits
relating to
participating life
insurance contracts
should be equal to the
sum of (1) the net
level premium reserve
for death and endowment
policy benefits, (2)
the liability for
terminal dividends, and
(3) any premium
deficiency.
151 04-17 The Secretary of the See status of Open. See status
Treasury should direct recommendation of recommendation
the Fiscal Assistant No. 02-25. In No. 02-25.
Secretary to ensure addition, this
that the note disclosure would
disclosure for federal be directly
employee and veteran affected by the
benefits payable meets implementation of
the requirements of the FASAB
SFFAS No. 5, Accounting exposure draft
for Liabilities of the mentioned in the
Federal Government, status of
paragraph 121, which recommendation
states that all No. 02-25.
components of the
liability for future
policy benefits (i.e.,
the net-level premium
reserve for death and
endowment policy and
the liability for
terminal dividends)
should be separately
disclosed in a footnote
with a description of
each amount and an
explanation of its
projected use and any
other potential uses
(e.g., reducing
premiums, determining
and declaring dividends
available, or reducing
federal support in the
form of appropriations
related to
administrative cost or
subsidies).
152 04-18 The Secretary of the This required Closed.
Treasury should direct information was
the Fiscal Assistant disclosed in Note
Secretary to ensure 2, Cash and Other
that the note Monetary Assets,
disclosure for cash and in the fiscal
other monetary assets year 2005 CFS.
meets the requirements
of SFFAS No. 1,
Accounting for Selected
Assets and Liabilities,
paragraph 30, which
requires that financial
reports disclose the
reasons for and nature
of restricted cash.
SFFAS No. 1 defines
restricted cash as
restrictions usually
imposed on cash
deposits (in escrow or
other special accounts)
by law, regulation, or
agreement.
153 04-19 The Secretary of the See status of Open.
Treasury should direct recommendation
the Fiscal Assistant No. 02-25. In
Secretary to ensure addition, this
that agencies designate required
in the note disclosure information was
for cash and other requested from
monetary assets any the agencies for
amounts reported for inclusion in Note
the "other cash" line 2, Cash and Other
items that are Monetary Assets,
restricted with respect in the fiscal
to the federal year 2005 CFS.
government taken as a Treasury plans to
whole. discuss these
disclosure
requirements
further with the
agencies and with
GAO during fiscal
year 2006 to
ensure that all
relevant data are
being received
from the
agencies.
154 04-20 The Secretary of the See status of Open.
Treasury should direct recommendation
the Fiscal Assistant No. 02-25. In
Secretary to ensure addition, this
that the note required
disclosure for other information was
liabilities meets the requested from
requirements of SFFAS the agencies for
No. 5, paragraph 114, inclusion in Note
which requires the 15, Other
reporting of indicators Liabilities, in
of the range of the fiscal year
uncertainty around 2005 CFS.
insurance-related However, no data
estimates and the were received in
sensitivity of the fiscal year 2005,
estimates to changes in and therefore,
major assumptions. there was no
disclosure
related to this
requirement.
Treasury plans to
discuss these
disclosure
requirements
further with the
agencies and with
GAO during fiscal
year 2006 to
ensure that all
relevant data are
being received
from the
agencies.
Source: GAO.
Comments from the Department of the Treasury Appendix II
1.See "Agency Comments and Our Evaluation" section.
2.We continue to believe that our recommendations relating to the
Statement of Changes in Cash Balance from Unified Budget and Other
Activities, Reconciliations of Net Operating Cost and Unified Budget
Deficit, and the adjustment process are sound. Our recommendations are
intended to allow flexibility in developing viable solutions to address
the issues. We will consider any alternative action that Treasury may take
to satisfactorily address the recommendations with which it has disagreed.
See appendix I for the status of related recommendations.
GAO Contacts and Staff Acknowledgments Appendix III
Gary Engel, (202) 512-3406, [email protected]
In addition to the above contact, the following individuals made key
contributions to this report: Lynda Downing, Assistant Director; Keith
Kronin; Katherine Schirano; and Taya Tasse.
(198414)
www.gao.gov/cgi-bin/getrpt? GAO-06-415 .
To view the full product, including the scope
and methodology, click on the link above.
For more information, contact Gary T. Engel at (202) 512-3406 or
[email protected].
Highlights of GAO-06-415 , a report to the Secretary of the Treasury and
the Director of the Office of Management and Budget
April 2006
FINANCIAL AUDIT
Significant Internal Control Weaknesses Remain in Preparing the
Consolidated Financial Statements of the U.S. Government
For the past 9 years, since our first audit of the consolidated financial
statements of the U.S. government (CFS), certain material weaknesses in
internal control and in selected accounting and financial reporting
practices have resulted in conditions that prevented GAO from expressing
an opinion on the CFS. Specifically, GAO has reported that the U.S.
government did not have adequate systems, controls, and procedures to
properly prepare the CFS. Included with GAO's December 2005 disclaimer of
opinion on the fiscal year 2005 CFS was its discussion of continuing
weaknesses relating to the Department of the Treasury's (Treasury)
preparation of the CFS. The purpose of this report is to
(1) provide details of those additional weaknesses,
(2) recommend improvements, and
(3) describe the status of corrective actions on GAO's previous 154
recommendations.
What GAO Recommends
GAO is making 12 new recommendations to address compilation and reporting
weaknesses identified during the fiscal year 2005 CFS audit. The Office of
Management and Budget stated that it generally agreed with the new
findings in this report. Treasury stated that it concurs with 11 of our
recommendations. For the twelfth recommendation, Treasury offered an
alternative solution that we believe should address our concern if it is
effectively implemented.
GAO identified weaknesses during its tests of Treasury's process for
preparing the fiscal year 2005 CFS. Such weaknesses in the CFS preparation
process impair the U.S. government's ability to ensure that the CFS is
consistent with the underlying audited agency financial statements,
properly balanced, and in conformity with U.S. generally accepted
accounting principles.
The weaknesses GAO identified during the fiscal year 2005 CFS audit
involved the following areas:
o directly linking audited federal agency financial statements to
the CFS,
o comparability of financial statements,
o audit assurance over certain federal agencies' closing
packages,
o internal control monitoring,
o consolidated reporting guidance to federal agencies,
o reconciling of intragovernmental activity and balances, and
o various other internal control weaknesses that were identified
in previous years' audits but remained in fiscal year 2005 (see
app. I).
Of the 154 recommendations GAO reported in May 2005 regarding the process
for preparing the CFS, 131 remained open as of December 2, 2005, when GAO
completed its fieldwork for the audit of the fiscal year 2005 CFS.
However, 76 of these 131 recommendations relate to specific disclosures
required under U.S. generally accepted accounting principles. Treasury has
submitted a proposal to the Federal Accounting Standards Advisory Board
(FASAB) seeking to amend previously issued standards and eliminate or
lessen the disclosure requirements for the consolidated financial
statements so that U.S. generally accepted accounting principles would no
longer require certain of the information Treasury has not been reporting.
Comments on the exposure draft of a proposed FASAB standard, based on the
Treasury proposal, were due March 1, 2006. GAO will continue to monitor
the status of corrective actions to address open recommendations during
its fiscal year 2006 audit of the CFS.
*** End of document. ***