Management Report: Improvements Needed in Controls over the Preparation of the U.S. Consolidated Financial Statements
GAO-10-757
Published: Jul 30, 2010. Publicly Released: Jul 30, 2010.
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Highlights
Since GAO's first audit of the fiscal year 1997 consolidated financial statements of the U.S. government (CFS), material weaknesses in internal control and other limitations on the scope of GAO's work have prevented GAO from expressing an opinion on the consolidated financial statements, other than the Statement of Social Insurance (accrual-based consolidated financial statements). The Department of the Treasury (Treasury), in coordination with the Office of Management and Budget (OMB), is responsible for preparing the CFS. As part of the fiscal year 2009 CFS audit, GAO identified material weaknesses and other control deficiencies in Treasury's processes used to prepare the CFS that warrant management's attention and corrective action. The purpose of this report is to (1) provide details on new control deficiencies GAO identified during its audit of the fiscal year 2009 CFS that related to the preparation of the CFS, (2) recommend improvements, and (3) provide the status of corrective actions taken to address GAO's previous 44 recommendations in this area.
Recommendations
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Department of the Treasury | To help assure that prior period adjustments are properly identified and reported in the CFS, the Secretary of the Treasury should direct the Fiscal Assistant Secretary to enhance the SOP entitled "Analyzing Agency Restatements" to fully document all procedures related to identifying, analyzing, and reporting restated closing package data as well as changes in accounting principles. |
As of the completion of our fiscal year 2010 CFS audit, this recommendation was closed. During fiscal year 2010, Treasury fully documented its procedures related to identifying, analyzing and reporting restated closing package data as well as prior period adjustments due to changes in accounting principles.
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| Department of the Treasury | To help assure that prior period adjustments are properly identified and reported in the CFS, the Secretary of the Treasury should direct the Fiscal Assistant Secretary to enhance the SOP entitled "Analyzing Agency Restatements" to clarify who is responsible for performing the procedures contained in the SOP. |
As of the completion of our fiscal year 2010 CFS audit, this recommendation was closed. During fiscal year 2010, Treasury ensured that its procedures related to identifying, analyzing and reporting restated closing package data as well as prior period adjustments due to changes in accounting principles, clarified the roles and responsibilities for the assigned Treasury staff.
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| Department of the Treasury | To help assure that prior period adjustments are properly identified and reported in the CFS, the Secretary of the Treasury should direct the Fiscal Assistant Secretary to enhance the SOP entitled "Analyzing Agency Restatements" to include procedures for analyzing the overall impact of entities' restatements on the CFS and documenting the analysis and related conclusion. |
As of the completion of our fiscal year 2011 CFS audit, this recommendation was closed. We found that during fiscal year 2011 Treasury enhanced its procedures for analyzing the impact of entities restatements on the CFS and documenting its analysis and related conclusions.
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| Department of the Treasury | To help assure complete and accurate disclosure of significant accounting policies and related party transactions in Note 1 to the CFS, the Secretary of the Treasury should direct the Fiscal Assistant Secretary to develop, implement, and document procedures for identifying, analyzing, compiling, and reporting all significant accounting policies and related party transactions at the governmentwide level. |
As of the completion of our fiscal year 2012 CFS audit, this recommendation was closed. We found that during our fiscal year 2012 audit, Treasury developed, implemented, and documented procedures for identifying, analyzing, compiling, and reporting all significant accounting policies and related party transactions at the governmentwide level.
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| Department of the Treasury | The Secretary of the Treasury should direct the Fiscal Assistant Secretary to enhance the SOP entitled "Statement of Social Insurance, Social Insurance Note, and Required Supplemental Information" to include procedures for assuring the accuracy of staff's work related to preparing the social insurance information for the CFS. |
As of the completion of our fiscal year 2010 CFS audit, this recommendation was closed. During fiscal year 2010, Treasury fully documented its procedures for assuring the accuracy of staff's work related to preparing the social insurance information for the CFS.
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| Department of the Treasury | The Secretary of the Treasury should direct the Fiscal Assistant Secretary to implement and document procedures for assuring the accuracy of staff's work related to preparing the social insurance information for the CFS. |
As of the completion of our fiscal year 2013 CFS audit, this recommendation was closed. During fiscal year 2013, we noted substantial improvement in the completeness and accuracy of the social insurance information in the draft CFS and determined that Treasury had implemented its procedures to help ensure that the amounts in the SOSI, SCSIA, and other social insurance data in the 2013 FR were consistent with the data in the annual financial reports and performance and accountability reports of the individual federal agencies.
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| Department of the Treasury | The Secretary of the Treasury should direct the Fiscal Assistant Secretary to enhance the SOP entitled "Federal Agency Legal Letter Analysis" to include procedures for assuring the accuracy of staff's work related to preparing the Schedule of Differences. |
As of the completion of our fiscal year 2010 CFS audit, this recommendation was closed. During fiscal year 2010, Treasury's SOP included procedures for assuring the accuracy of staff's work related to preparing the Schedule of Differences.
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| Department of the Treasury | The Secretary of the Treasury should direct the Fiscal Assistant Secretary to implement and document such procedures for assuring the accuracy of staff's work related to preparing the Schedule of Differences noted in the SOP entitled "Federal Agency Legal Letter Analysis." |
As of the completion of our fiscal year 2011 CFS audit, this recommendation was closed. We found that in fiscal year 2011, Treasury improved the implementation and documentation of its procedures to help assure the accuracy of staffs work related to preparing the Schedule of Differences. Treasury documented its analysis of differences between agencies and DOJs legal assessment supporting reported contingent liability amounts in the Schedule of Differences.
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| Department of the Treasury | The Secretary of the Treasury should direct the Fiscal Assistant Secretary to enhance the SOP entitled "Preparing the Financial Report of the U.S. Government" to include procedures for assuring the accuracy of staff's work related to performing analytical procedures. |
As of the completion of our fiscal year 2010 CFS audit, this recommendation was closed. During fiscal year 2010, Treasury included procedures for assuring the accuracy of staff's work related to performing analytical procedures.
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| Department of the Treasury | The Secretary of the Treasury should direct the Fiscal Assistant Secretary to implement and document procedures for assuring the accuracy of staff's work related to performing analytical procedures noted in the SOP entitled "Preparing the Financial Report of the U.S. Government." |
As of the completion of our fiscal year 2012 CFS audit, this recommendation was closed. We found that during our fiscal year 2012 audit, Treasury implemented and documented procedures for assuring the accuracy of staff's work related to performing analytical procedures.
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Topics
AccountingAccounting standardsAuditing proceduresFinancial disclosureFinancial managementFinancial recordsFinancial statement auditsFinancial statementsInternal controlsMaterialityRegulatory agenciesReporting requirementsTreasury accountsCorrective actionFinancial reportingPolicies and procedures