Financial Audit: Bureau of Consumer Financial Protection's Fiscal Years 2014 and 2013 Financial Statements

What GAO Found

GAO found (1) the Consumer Financial Protection Bureau's (CFPB) financial statements as of and for the fiscal years ended September 30, 2014, and 2013, are presented fairly, in all material respects, in accordance with U.S. generally accepted accounting principles; (2) CFPB's internal control over financial reporting was not effective as of September 30, 2014, because of a material weakness in internal control over the reporting of accounts payable; and (3) no reportable noncompliance for fiscal year 2014 with provisions of applicable laws, regulations, contracts, and grant agreements GAO tested.

The material weakness is a result of serious control deficiencies that affected CFPB's determination and reporting of accounts payable. Specifically, GAO found that CFPB did not have effective procedures in place to determine and record an appropriate amount for goods and services received but not yet paid for as of September 30, 2014. Additionally, CFPB did not have effective review procedures to timely detect and correct inaccuracies in the accrual amounts. Despite the material weakness, CFPB made necessary and appropriate adjustments to its records and was therefore able to prepare financial statements that were fairly presented in all material respects for fiscal year 2014. However, the material weakness may adversely affect any decisions by CFPB's management that are based, in whole or in part, on information that is inaccurate because of this weakness.

GAO also found that although CFPB took actions to attempt to address a significant deficiency in internal control over accounting for property and equipment that GAO reported in fiscal year 2013, GAO's fiscal year 2014 audit continued to identify deficiencies in this area. GAO considered these deficiencies to collectively represent a significant deficiency in CFPB's internal control over financial reporting in fiscal year 2014 that merits attention by those charged with governance.

In commenting on a draft of this report, the Director of CFPB stated that he was pleased to receive an unmodified audit opinion on CFPB's fiscal years 2014 and 2013 financial statements. The Director also agreed with the material weakness over reporting of accounts payable and the significant deficiency over accounting for property and equipment that GAO reported, and added that CFPB will continue to work to enhance its system of internal control and ensure the reliability of its financial reporting.

For more information, contact J. Lawrence Malenich at (202) 512-3406 or malenichj@gao.gov.