[Independent Auditorsâ Report on the Bureau of Reclamationâs Financial Statements for Fiscal Years 2002 and 2001]
[From the U.S. Government Printing Office, www.gpo.gov]

Report No. 2003-I-0020

Title: Independent Auditorsï¿½ Report on the Bureau of Reclamationï¿½s
       Financial Statements for Fiscal Years 2002 and 2001

  

Date:  February 21, 2003

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Memorandum

To:  Commissioner, Bureau of Reclamation

From:  Roger La Rouche, Assistant Inspector General for Audits

Subject:  Independent Auditorsï¿½ Report on the Bureau of Reclamationï¿½s Financial Statements for Fiscal Years 2002 and 2001 (No. 2003-I-0020)

We contracted with KPMG LLP, an independent certified public accounting firm, to audit the Bureau of Reclamationï¿½s (BOR) financial statements as of September 30, 2002 and for ATTACHMENT 2 the year then ended.  The contract required that KPMG conduct its audit in accordance with the Comptroller General of the United States of Americaï¿½s Government Auditing Standards, the Office of Management and Budgetï¿½s Bulletin 01-02 Audit Requirements for Federal Financial Statements, and the General Accounting Office/Presidentï¿½s Council on Integrity and Efficiencyï¿½s Financial Audit Manual.

In its report (Attachment 1), KPMG issued an unqualified opinion on BORï¿½s financial statements.  KPMG identified seven reportable conditions related to the following internal control areas and financial operations:  (1) land inventory, (2) security and internal controls over information technology systems, (3) construction-in-progress and structures and facilities accounts, (4) accrued liabilities, (5) revenue cut-off, (6) quality control program, and (7) accounting for intra-Departmental transactions.  KPMG considers the reportable condition related to land inventory to be a material weakness.  With regard to compliance with laws and regulations, KPMG found BOR noncompliant with portions of the Federal Financial Management Improvement Act (FFMIA).  Specifically, BORï¿½s financial management systems did not substantially comply with Federal financial management systems requirements and the Federal accounting standards.  

In connection with the contract, we monitored the progress of the audit at key points, reviewed KPMGï¿½s report and selected related working papers, and inquired of its representatives.  Our review, as differentiated from an audit in accordance with the Government Audit Standards, was not intended to enable us to express, and we do not express, an opinion on the BORï¿½s financial statements, conclusions about the effectiveness of internal controls, conclusions on whether BORï¿½s financial management systems substantially complied with the three requirements of FFMIA, or conclusions on compliance with laws and regulations.  KPMG is responsible for the auditorsï¿½ report and for the conclusions expressed in the report.  Our review disclosed no instances where KPMG did not comply in all material respects with the Government Auditing Standards.	

In the January 15, 2003 response to the draft report from the Commissioner, BOR, (Attachment 2) BOR concurred with Recommendations A through G.  BOR did not concur that it was in noncompliance with the Federal Financial Management Improvement Act of 1996, specifically with the Federal accounting standards.  However, BOR has implemented a plan to correct the deficiencies noted.  Based on the response, all seven recommendations are considered resolved but not implemented.  The seven recommendations will be referred to the Assistant Secretary for Policy, Management and Budget for tracking of implementation.

Section 5(a) of the Inspector General Act (5 U.S.C. App. 3) requires the Office of Inspector General to list this report in its semiannual report to the Congress.


Attachments