Financial Audit

This report presents the results of our audits of expenditures reported by one office of independent counsel and one office of special counsel for the 6 months ended September 30, 2006. The Department of Justice and the independent counsels are required under 28 U.S.C. 594 (d)(2), (h) and 596 (c)(1) to report on a semiannual basis the expenditures from a permanent, indefinite appropriation established within the Department of Justice to fund independent counsel activities. Under 28 U.S.C. 596 (c)(2), we are required to audit the statements of expenditures prepared by the independent counsels. We also audited the statement of expenditures of Special Counsel Patrick J. Fitzgerald, who is authorized by the Department of Justice to fund his operation from the permanent, indefinite appropriation.

In our audits covering the 6 months ended September 30, 2006, we found the statements of expenditures for the office of the Independent Counsel David M. Barrett and for the office of Special Counsel Patrick J. Fitzgerald, respectively, are presented fairly, in all material respects, in conformity with the basis of accounting described in note 1 of each counsel's statement, which is principally the cash basis, a comprehensive basis of accounting other than U.S. generally accepted accounting principles; Special Counsel Fitzgerald had effective internal control over financial reporting (including safeguarding assets) and compliance with laws and regulations as of September 30, 2006; for Independent Counsel Barrett, no material weaknesses in internal control over financial reporting (including safeguarding assets) and compliance with laws and regulations. Since the office of Independent Counsel Barrett was terminated on May 3, 2006, we considered internal control in planning and performing the audit of the statement of expenditures and not as a basis for expressing an opinion on internal control; and no reportable noncompliance with laws and regulations we tested.