Financial Audit: Bureau of the Fiscal Service's FY 2022 Schedules of the General Fund
Fast Facts
Treasury's Fiscal Service manages the General Fund, which finances daily and long-term government operations. In FY 2022, $23.2 trillion flowed into the General Fund and $22.8 trillion flowed out of it.
Fiscal Service continued to make progress in addressing the issues identified in our prior audits. However, we don't have enough information to give an opinion on the reliability of the FY 2022 Schedules because of issues that aren't expected to be resolved for several years, such as:
Modernizing Treasury's information systems
Getting agencies to cooperate in using Treasury's financial reporting system
Highlights
What GAO Found
Certain deficiencies in internal control over financial reporting resulted in scope limitations that
- prevented GAO from expressing an opinion on the Schedules of the General Fund as of and for the fiscal year ended September 30, 2022;
- prevented GAO from obtaining sufficient appropriate audit evidence to provide a basis for an opinion on the effectiveness of the Bureau of the Fiscal Service's internal control over financial reporting relevant to the Schedules of the General Fund as of September 30, 2022; and
- limited tests of compliance with selected provisions of applicable laws, regulations, contracts, and grant agreements for fiscal year 2022.
The scope limitations and underlying control deficiencies related to Fiscal Service's inability to readily (1) identify and trace General Fund transactions to determine whether they were complete and properly recorded in the correct general ledger accounts and line items within the Schedules of the General Fund, which GAO determined to be a significant deficiency, and (2) provide sufficient appropriate audit evidence to support the account attributes assigned to active Treasury Account Symbols that determine how transactions are reported in the line items of the Schedules of the General Fund. As a result of these limitations, GAO cautions that amounts Fiscal Service reported in the Schedules of the General Fund and related notes may not be reliable.
In addition to the deficiencies that contributed to GAO's disclaimer of opinion on the Schedules of the General Fund, GAO found two other significant deficiencies in internal control related to (1) information systems controls (which includes information system control deficiencies that were reported in connection with the audits of the Department of the Treasury's consolidated financial statements and the Schedules of Federal Debt) and (2) management's monitoring of internal control over financial reporting.
GAO is making six new recommendations to improve Fiscal Service's internal control over financial reporting related to the Schedules of the General Fund. During fiscal year 2022, based on Fiscal Service's actions taken, GAO closed 14 of the 19 recommendations that remained open from GAO's previous audits and continued to make progress on remediating the remaining five recommendations that remain open as of September 30, 2022. Fiscal Service continued to express its commitment to remediating these deficiencies.
Why GAO Did This Study
The General Fund of the U.S. government is the reporting entity responsible for accounting for the cash activity of the U.S. government. The Secretary of the Treasury has delegated management of the General Fund to Fiscal Service. In fiscal year 2022, the General Fund reported $23.2 trillion of cash inflows, including debt issuances and tax collections, and $22.8 trillion of cash outflows, including debt repayments. It also reported a budget deficit of $1.4 trillion, which includes both cash and noncash activity.
GAO audits the consolidated financial statements of the U.S. government. Because of the significance of the General Fund to the government-wide financial statements, GAO audited the fiscal year 2022 Schedules of the General Fund to determine whether, in all material respects, (1) the Schedules of the General Fund are fairly presented and (2) Fiscal Service management maintained effective internal control over financial reporting relevant to the Schedules of the General Fund. Further, GAO tested compliance with selected provisions of applicable laws, regulations, contracts, and grant agreements related to the Schedules of the General Fund.
Recommendations
GAO is making six recommendations to improve Fiscal Service's internal control over financial reporting relevant to the Schedules of the General Fund.
In commenting on a draft of this report, Fiscal Service concurred with the results of GAO's audit and stated that it will factor corrective actions into the audit remediation plan.
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Bureau of the Fiscal Service |
Priority Rec.
The Commissioner of Fiscal Service should develop (1) reporting criteria for CIHO and funds held outside of Treasury and (2) a methodology for full-CARS reporters to report CIHO to CARS. (Recommendation 1) |
As of February 2024, Fiscal Service concluded that the nature of transactions defined as cash and other investments held outside of Treasury (CIHO) is the same as the nature of transactions defined as funds held outside of Treasury (FHOT) and therefore determined that CIHO should be accounted for and reported in the same manner as FHOT in the Schedules of the General Fund. Fiscal Service further noted that federal entities, including full-CARS reporters, should use the Treasury Financial Manual, Part 2, Chapter 3400 to account for these transactions. Fiscal Service is still in the process of evaluating how to account for and report CIHO reported by Treasury, which includes mutilated currency.
|
| Bureau of the Fiscal Service |
Priority Rec.
The Commissioner of Fiscal Service should design and implement controls to identify and close TASs established during the annual fiscal year-end rollover process that do not subsequently have corresponding appropriations supporting the period of availability. (Recommendation 2) |
As of February 2024, Fiscal Service developed a report to identify rolled over TASs that have no activity in subsequent years (i.e., potentially lack appropriations for the rolled forward period of availability). Fiscal Service is still developing procedures to follow-up on the TASs identified in the report in order to determine which ones lack appropriations to support the rolled forward period of availability .
|
| Bureau of the Fiscal Service |
Priority Rec.
The Commissioner of Fiscal Service should develop and implement a mechanism to reasonably assure that postpayment voucher transactions recorded in the Schedules of the General Fund general ledgers are readily traceable to the cancellation schedules and the returned or canceled payments that are credited to federal entities. (Recommendation 3) |
As of February 2024, Fiscal Service traced various postpayment vouchers to the cancellation schedules to plan for a potential reconciliation process. Fiscal Service anticipates the corrective actions to continue through fiscal year 2024.
|
| Bureau of the Fiscal Service |
Priority Rec.
The Commissioner of Fiscal Service should enhance the methodology for classifying cash activity, sufficient to support accurate reporting of line items on the Schedules of the General Fund, to include all transaction types as well as adequate review procedures. (Recommendation 4) |
As of February 2024, Fiscal Service continued to evaluate the current classification of cash activity to identify any transactions that should be classified to the other cash line item for proper reporting. Fiscal Service anticipates resolution of this recommendation in fiscal year 2026.
|
| Bureau of the Fiscal Service |
Priority Rec.
The Commissioner of Fiscal Service should enhance the design and implementation of the oversight policy and the FAAs to effectively monitor the financial agents. (Recommendation 5) |
In June 2023, Fiscal Service developed a corrective action plan to address the recommendation. As of February 2024, Fiscal Service updated its corrective action plan with additional action items related to designing and implementing a monitoring process over the financial agents. Fiscal Service anticipates the corrective actions to continue through fiscal year 2024.
|
| Bureau of the Fiscal Service |
Priority Rec.
The Commissioner of Fiscal Service should design and implement policies and procedures to effectively monitor the fiscal agents. (Recommendation 6) |
In June 2023, Fiscal Service developed a corrective action plan to address the recommendation. As of February 2024, Fiscal Service updated its corrective action plan with additional action items related to designing and implementing a monitoring process over the fiscal agents. Fiscal Service anticipates the corrective actions to continue through fiscal year 2024.
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