United States Government Publishing Office publisher pbl distributor dst United States Government Accountability Office author aut Government Organization text government publication eng GAOREPORTS Legislative Agency Publications gao legislative 2010-08-12 U.S. Government Printing Office 2005-09-20 monographic deposited born digital 12 p. GA 1.13:GAO-05-814R https://www.govinfo.gov/app/details/GAOREPORTS-GAO-05-814R P0b002ee18037b924 f:d05814r DGPO 2010-08-12 2011-03-28 GAOREPORTS-GAO-05-814R machine generated eng fdlp REPORT GAOREPORTS-GAO-05-814R GAO-05-814R Accounting procedures Accounting standards Errors Financial statement audits Financial statements Reporting requirements Corrective action Transparency Correspondence A37438 The Secretary of the Treasury, in coordination with the Director of the Office of Management and Budget (OMB), is required to annually prepare and submit audited financial statements of the U.S. government to the President and Congress. We are required to audit these consolidated financial statements (CFS) and report on the results of our work. An issue meriting concern and close scrutiny that emerged during our fiscal year 2004 CFS audit was the growing number of Chief Financial Officers (CFO) Act agencies that restated certain of their financial statements for fiscal year 2003 to correct errors. Errors in financial statements can result from mathematical mistakes, mistakes in the application of accounting principles, or oversight or misuse of facts that existed at the time the financial statements were prepared. Frequent restatements to correct errors can undermine public trust and confidence in both the entity and all responsible parties. Further, when restatements do occur, it is important that financial statements clearly communicate and readers of the restated financial statements understand that the financial statements originally issued by management in the previous year and the opinion thereon should no longer be relied on and instead the restated financial statements and related auditor's opinion should be used. Nine of the 11 agencies that had restatements for fiscal year 2003 received unqualified opinions on their originally issued fiscal year 2003 financial statements. The auditors for 6 of these 9 agencies issued unqualified opinions on the restated financial statements, replacing the previous unqualified opinions on the respective agencies' original fiscal year 2003 financial statements. The auditors for 2 of these 9 withdrew their unqualified opinions on the fiscal year 2003 financial statements and issued other than unqualified opinions on the respective agencies' restated fiscal year 2003 financial statements because they could not determine whether there were any additional misstatements and the effect of any such misstatements on the restated fiscal year 2003 financial statements. For the remaining agency, the principal auditor of the agency's fiscal year 2004 financial statements was not the principal auditor of the agency's fiscal year 2003 financial statements, and an audit opinion on the agency's restated fiscal year 2003 financial statements was not issued. Because of the varying nature and circumstances surrounding the restatements, we are issuing a number of separate reports on the matter. This report communicates our observations regarding State's fiscal year 2003 restatements. We reviewed four key areas with respect to the restatements of State's fiscal year 2003 financial statements: (1) the nature and cause of the errors that necessitated the restatements, including planned corrective actions by the agency and its auditors; (2) the timing of communicating the material misstatement to users of the financial statements; (3) the extent of transparency exhibited in disclosing the nature and impact of the material misstatement in the financial statements and the reissued auditor's report; and (4) audit issues that contributed to the failure to detect the errors that necessitated the restatements during the audit of the agency's fiscal year 2003 financial statements. https://www.govinfo.gov/content/pkg/GAOREPORTS-GAO-05-814R/html/GAOREPORTS-GAO-05-814R.htm https://www.govinfo.gov/content/pkg/GAOREPORTS-GAO-05-814R/pdf/GAOREPORTS-GAO-05-814R.pdf GAO-05-814R https://www.govinfo.gov/app/details/GAOREPORTS-GAO-05-814R Correspondence GAO-05-814R; Financial Audit: Restatements to the Department of State's Fiscal Year 2003 Financial Statements; Accounting procedures Accounting standards Errors Financial statement audits Financial statements Reporting requirements Corrective action Transparency Volume 118 Page 1275 118 Stat. 1275 Public Law 108-330