Financial Audit
Process for Preparing the Consolidated Financial Statements of the U.S. Government Continues to Need Improvement Gao ID: GAO-05-407 May 4, 2005For the past 8 years, since the first audit of the consolidated financial statements of the U.S. government (CFS), certain material weaknesses in internal control and in selected accounting and financial reporting practices have resulted in conditions that prevented GAO from expressing an opinion on the CFS. Specifically, GAO has reported that the U.S. government did not have adequate systems, controls, and procedures to properly prepare the CFS. In December 2004, GAO reported on weaknesses identified during its fiscal year 2004 audit of the CFS, including weaknesses relating to the Department of the Treasury's (Treasury) preparation of the CFS. The purpose of this report is to (1) discuss the details of the weaknesses relating to Treasury's preparation of the CFS, (2) recommend improvements to address those weaknesses, and (3) provide the status of corrective actions to address the 142 open recommendations GAO previously reported.
GAO identified weaknesses during its tests of Treasury's process for preparing the fiscal year 2004 CFS. Such weaknesses in the CFS preparation process impair the U.S. government's ability to ensure that the CFS is consistent with the underlying audited agency financial statements, properly balanced, and in conformity with U.S. generally accepted accounting principles. The weaknesses GAO identified during the fiscal year 2004 CFS audit involved directly linking audited federal agency financial statements to the CFS, controls over the compilation process, consolidated reporting guidance to agencies, intragovernmental activity and balances--explanations for material unreconciled transactions, consistency of the Department of Justice's and agencies' opinions on legal cases, and conformity with U.S. generally accepted accounting principles. During fiscal year 2004, Treasury made progress in laying the foundation to address certain long-standing material deficiencies in preparing the CFS. Foremost is the ongoing development of a new system, which is intended to directly link information from federal agencies' audited financial statements to amounts reported in the CFS. Additional actions are under way and planned. Of the 142 open recommendations that GAO reported in September 2004 regarding the process for preparing the CFS, 135 remained open as of December 6, 2004, the end of GAO's fieldwork for the fiscal year 2004 CFS audit. However, 86 of these 135 recommendations relate to specific disclosures required under U.S. generally accepted accounting principles. Treasury has taken action to begin addressing the conformity with U.S. generally accepted accounting principles issue. GAO plans to determine the status of corrective actions to address its open recommendations during its fiscal year 2005 audit of the CFS.
RecommendationsOur recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.
Director: Team: Phone:GAO-05-407, Financial Audit: Process for Preparing the Consolidated Financial Statements of the U.S. Government Continues to Need Improvement
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Report to the Secretary of the Treasury and the Director of the Office
of Management and Budget:
May 2005:
Financial Audit:
Process for Preparing the Consolidated Financial Statements of the U.S.
Government Continues to Need Improvement:
GAO-05-407:
GAO Highlights:
Highlights of GAO-05-407, a report to the Secretary of the Treasury and
the Director of the Office of Management and Budget:
Why GAO Did This Study:
For the past 8 years, since the first audit of the consolidated
financial statements of the U.S. government (CFS), certain material
weaknesses in internal control and in selected accounting and financial
reporting practices have resulted in conditions that prevented GAO from
expressing an opinion on the CFS. Specifically, GAO has reported that
the U.S. government did not have adequate systems, controls, and
procedures to properly prepare the CFS. In December 2004, GAO reported
on weaknesses identified during its fiscal year 2004 audit of the CFS,
including weaknesses relating to the Department of the Treasury‘s
(Treasury) preparation of the CFS. The purpose of this report is to (1)
discuss the details of the weaknesses relating to Treasury‘s
preparation of the CFS, (2) recommend improvements to address those
weaknesses, and (3) provide the status of corrective actions to address
the 142 open recommendations GAO previously reported.
What GAO Found:
GAO identified weaknesses during its tests of Treasury‘s process for
preparing the fiscal year 2004 CFS. Such weaknesses in the CFS
preparation process impair the U.S. government‘s ability to ensure that
the CFS is consistent with the underlying audited agency financial
statements, properly balanced, and in conformity with U.S. generally
accepted accounting principles.
The weaknesses GAO identified during the fiscal year 2004 CFS audit
involved the following six areas:
* directly linking audited federal agency financial statements to the
CFS,
* controls over the compilation process,
* consolidated reporting guidance to agencies,
* intragovernmental activity and balances”explanations for material
unreconciled transactions,
* consistency of the Department of Justice‘s and agencies‘ opinions on
legal cases, and
* conformity with U.S. generally accepted accounting principles.
During fiscal year 2004, Treasury made progress in laying the
foundation to address certain long-standing material deficiencies in
preparing the CFS. Foremost is the ongoing development of a new system,
which is intended to directly link information from federal agencies‘
audited financial statements to amounts reported in the CFS. Additional
actions are under way and planned.
Of the 142 open recommendations that GAO reported in September 2004
regarding the process for preparing the CFS, 135 remained open as of
December 6, 2004, the end of GAO‘s fieldwork for the fiscal year 2004
CFS audit. However, 86 of these 135 recommendations relate to specific
disclosures required under U.S. generally accepted accounting
principles. Treasury has taken action to begin addressing the
conformity with U.S. generally accepted accounting principles issue.
GAO plans to determine the status of corrective actions to address its
open recommendations during its fiscal year 2005 audit of the CFS.
What GAO Recommends:
GAO is making 20 new recommendations to address compilation and
reporting weaknesses identified during the fiscal year 2004 CFS audit.
Treasury and the Office of Management and Budget stated that they
generally concur with the findings in the report. Treasury also stated
that it is addressing many of the recommendations from GAO‘s prior
reports.
www.gao.gov/cgi-bin/getrpt?GAO-05-407.
To view the full product, including the scope and methodology, click on
the link above. For more information, contact Gary T. Engel at (202)
512-3406 or engelg@gao.gov.
[End of section]
Contents:
Letter:
Results in Brief:
Scope and Methodology:
Directly Linking Audited Federal Agency Financial Statements to the
CFS:
Controls over the Compilation Process:
Consolidated Reporting Guidance to Agencies:
Intragovernmental Activity and Balances--Explanations for Material
Unreconciled Differences:
Consistency of Justice's and Agencies' Opinions on Legal Cases:
Conformity with U.S. Generally Accepted Accounting Principles:
Agency Comments and Our Evaluation:
Appendixes:
Appendix I: Disclosure Issues:
Appendix II: Status of Treasury's and OMB's Progress in Addressing
GAO's Prior Year Recommendations for Preparing the CFS:
Appendix III: Comments from the Department of the Treasury:
Abbreviations:
CFS: consolidated financial statements of the U.S. government:
FASAB: Federal Accounting Standards Advisory Board:
GAAP: generally accepted accounting principles:
GFRS: Governmentwide Financial Reporting System:
Justice: Department of Justice:
OMB: Office of Management and Budget:
PBGC: Pension Benefit Guaranty Corporation:
SFFAS: Statement of Federal Financial Accounting Standards:
TFM: Treasury Financial Manual:
Treasury: Department of the Treasury:
VA: Department of Veterans Affairs:
Letter May 4, 2005:
The Honorable John W. Snow:
The Secretary of the Treasury:
The Honorable Joshua B. Bolten:
Director, Office of Management and Budget:
In our report dated December 6, 2004, we disclaimed an opinion on the
consolidated financial statements of the U.S. government (CFS) for the
fiscal years ended September 30, 2004 and 2003.[Footnote 1] For the
past 8 years, certain material weaknesses in internal control and in
selected accounting and financial reporting practices resulted in
conditions that prevented us from expressing an opinion on the CFS.
Specifically, we have reported that the federal government did not have
adequate systems, controls, and procedures to properly prepare its
consolidated financial statements. Many of these weaknesses in internal
control that contributed to our continuing disclaimers of opinion were
identified by agency financial statement auditors during their audits
of federal agencies' financial statements and were reported in detail
with recommendations to the agencies in separate reports. However, some
of the internal control weaknesses were identified during our tests of
the Department of the Treasury's (Treasury) process for preparing the
CFS.
Such weaknesses in the CFS preparation process impair the federal
government's ability to ensure that the CFS is consistent with the
underlying audited agency financial statements, properly balanced, and
in conformity with U.S. generally accepted accounting principles
(GAAP). Consequently, these weaknesses also contributed to our
inability to render an opinion on the CFS.
The purpose of this report is to (1) discuss the details of the
weaknesses we identified during our fiscal year 2004 audit regarding
financial reporting procedures and internal control over the process
for preparing the CFS, (2) recommend improvements to address those
weaknesses, and (3) provide the status of corrective actions to address
the open recommendations detailed in our prior reports and listed in
appendix II. We have discussed each of the new weaknesses identified
during our fiscal year 2004 audit with your staff and have incorporated
their comments as appropriate.
Results in Brief:
We identified weaknesses in the compilation and reporting processes
during our fiscal year 2004 audit. Specifically, we found that:
* Treasury's process for compiling the CFS does not yet ensure that
financial information from federal agencies' audited financial
statements and other financial data directly link to amounts reported
in the CFS;
* Treasury's process for compiling the CFS has weaknesses in internal
control, including a lack of adequate segregation of duties and
management reviews of certain key data;
* Treasury did not provide clear guidance to federal agencies about
certain financial information that they were required to provide
Treasury to be compiled in the CFS and Treasury and the Office of
Management and Budget (OMB) did not perform follow-up procedures to
ensure we had all the necessary audit documentation to perform certain
of our audit procedures relating to the compilation of the CFS;
* Treasury does not require federal agencies to provide detailed
explanations for all material differences identified in the
intragovernmental reconciliations that Treasury and OMB require the
agencies to perform;
* Treasury does not have specific policies and procedures to address
discrepancies of opinion between the Department of Justice's (Justice)
and applicable federal agencies' legal counsel for purposes of
providing legal representations to us at the governmentwide level; and:
* Treasury continues to lack an adequate process to ensure that the
financial statements, related notes, stewardship information, and
supplementary information in the CFS are presented in conformity with
GAAP.
During fiscal year 2004, Treasury made progress in laying the
foundation to address certain long-standing material deficiencies in
preparing the CFS. Foremost is the ongoing development of a new system,
which is intended to directly link information from federal agencies'
audited financial statements to amounts reported in the CFS. Additional
actions are under way and planned.
This report includes 20 new recommendations to address the weaknesses
we identified during our fiscal year 2004 CFS audit, including 6
related to three required GAAP disclosure areas identified in appendix
I. Consistent with our position on previously identified disclosure
weaknesses, we are recommending that the required disclosures that are
not included in the fiscal year 2004 CFS either be included in future
years' CFS or that the specific basis for their exclusion be
documented. Appendix II of this report reflects the status of actions
taken as of December 6, 2004, the date of completion of our fieldwork
on our fiscal year 2004 CFS audit, to address the open recommendations
from our previous reports and shows that 135 recommendations contained
in our prior reports remain open and 7 were closed during our fiscal
year 2004 audit. However, 86 of these 135 recommendations relate to
specific disclosures required under GAAP. Treasury has taken action to
begin addressing the conformity with GAAP issue. We plan to determine
the status of corrective actions to address our open recommendations
during our fiscal year 2005 audit of the CFS.
OMB stated that it generally agreed with the new findings and related
recommendations in this report. Treasury stated that it agrees that the
reporting process still needs improvement and that it is addressing
many of the recommendations in our previous reports. Treasury also
stated that it generally concurs with our new recommendations and that
it will work with OMB and the federal agencies to improve reporting
practices. Also, Treasury asked that we reconsider or modify our
recommendations in three areas: (1) controls over the compilation
process, (2) consistency of Justice's and agencies' opinions on legal
cases, and (3) directly linking audited federal agency financial
statements to the CFS. We modified recommendations in the first two
areas.
With regard to controls over the compilation process, we found that
Treasury did not have adequate supporting documentation for several
journal vouchers to adjust data submitted by agencies in their audited
closing packages. Treasury stated that it agrees that there are
instances where it should obtain agency approvals before changing
federal agencies' audited data when compiling the CFS, but it needs the
flexibility and authority to make appropriate adjustments when needed
regardless of whether agencies agree and asked that we modify our
recommendation accordingly. Treasury believes that agency approval is
not necessary when certain adjustments to agencies' closing package
data are made. Treasury is correct that certain circumstances may
require adjustments to agency closing package data. In such instances,
we believe that Treasury should contact agencies to resolve any
discrepancies between agencies' audited closing packages and audited
financial statements and discuss any other situations that require
adjustments to agencies' audited closing package data. The purpose of
our recommendation was to provide improved controls over adjustments
made to agencies' data and was not intended to limit Treasury's
flexibility in preparing the CFS. We have modified our recommendation
to clarify our intent.
With regard to consistency of Justice's and agencies' opinions on legal
cases, Treasury stated that it and OMB have agreed that Justice is the
final authority on legal liabilities and disclosure amounts at the
governmentwide level. Treasury also stated that it will work with OMB
to develop a policy to eliminate any inconsistencies between Justice's
and federal agencies' opinions on legal cases. We have modified our
recommendation to reflect that Treasury and OMB will work jointly to
address the issue.
With regard to directly linking audited federal agency financial
statements to the CFS, Treasury continues to disagree that additional
information should be collected from federal agencies' audited
financial statements to demonstrate consistency and completeness of
reporting for both the Reconciliation of Net Operating Cost and Unified
Budget Deficit and the Statement of Changes in Cash Balance from
Unified Budget and Other Activities. For fiscal year 2004, these two
financial statements included some amounts that Treasury could not
explain or fully support or for which Treasury could not demonstrate
the link to agencies' audited financial statements. We continue to
believe that the process of directly linking relevant audited federal
agencies' financial statement information to these two financial
statements would be the most efficient and effective manner for
Treasury, as the preparer of the CFS, to obtain and demonstrate the
necessary assurance on certain information reported in such financial
statements. As such, we have not modified our recommendations in this
area.
Scope and Methodology:
As part of our audit of the fiscal years 2004 and 2003 CFS, we
evaluated Treasury's financial reporting procedures and related
internal control and we followed up on the status of Treasury and OMB
corrective actions to address open recommendations regarding the
process for preparing the CFS that were in our prior years' reports. In
our report, which is included in the fiscal year 2004 Financial Report
of the United States Government, we reported material deficiencies
relating to Treasury's preparation of the CFS. These material
deficiencies contributed to our disclaimer of opinion on the CFS and
also constitute material weaknesses in internal control, which
contributed to our adverse opinion on internal control. We performed
sufficient audit procedures to provide the disclaimer of opinion in
accordance with U.S. generally accepted government auditing standards.
This report provides the details of the additional weaknesses we
identified in performing our fiscal year 2004 audit procedures and our
recommendations to correct those weaknesses, as well as the status of
corrective actions taken by Treasury and OMB to address open
recommendations contained in our prior years' reports.
We requested comments on a draft of this report from the Director of
OMB and the Secretary of the Treasury or their designees. OMB provided
oral comments, which are discussed in the Agency Comments and Our
Evaluation section of this report. Treasury's comments are reprinted in
appendix III and are also discussed in the Agency Comments and Our
Evaluation section.
Directly Linking Audited Federal Agency Financial Statements to the
CFS:
As we have reported in the past, Treasury's process for compiling the
CFS does not yet ensure that financial information from federal
agencies' audited financial statements and other financial data
directly link to amounts reported in the CFS. Statement of Federal
Financial Accounting Concepts No. 4, Intended Audience and Qualitative
Characteristics for the Consolidated Financial Report of the United
States Government, states that the consolidated financial report should
be a general purpose report that is aggregated from agency reports and
that it should tell users where to find information in other formats,
both aggregated and disaggregated, such as in individual agency
reports, on agency Web sites, and in the President's Budget. In our
prior report,[Footnote 2] we recommended that as Treasury continues to
design and further implement its new process for compiling the CFS, the
Secretary of the Treasury direct the Fiscal Assistant Secretary, in
coordination with the Controller of the OMB, to modify Treasury's
closing package to (1) require federal agencies to directly link their
audited financial statement notes to the CFS notes and (2) provide the
necessary information to demonstrate that all of the five principal
consolidated financial statements are consistent with the underlying
information in federal agencies' audited financial statements and other
financial data.
As discussed in our fiscal year 2004 audit report, Treasury made
progress in laying the foundation to address certain long-standing
material deficiencies in preparing the CFS. Foremost is the ongoing
development of a new system, the Governmentwide Financial Reporting
System (GFRS), to collect agency financial statement information taken
directly from federal agencies' audited financial statements rather
than using federal agencies' Standard General Ledger data, as Treasury
had done in previous years to compile the CFS. The goal of the new
system is to be able to directly link information from federal
agencies' audited financial statements to amounts reported in the CFS,
a concept that we strongly support. Once Treasury is able to achieve
this, a major impediment to our ability to audit the CFS would be
eliminated.
Based on our review of Treasury's new process for compiling the CFS, we
found that Treasury was unable to demonstrate that the information in
the fiscal year 2004 CFS directly linked to agencies' audited financial
statements. Even though Treasury required each significant
agency[Footnote 3] to submit its audited financial statement data in
the GFRS closing package and certify their accuracy, the closing
package does not require federal agencies to directly link their
audited financial statement notes to the closing package notes and does
not require the necessary information to compile all five of the
required consolidated financial statements. In some cases, we found
that Treasury was unable to demonstrate that the financial information
in the CFS directly linked to federal agencies' audited financial
statements because federal agencies provided Treasury with incomplete
and inaccurate financial information. Also, because of other internal
control weaknesses over the compilation process noted in this report,
Treasury could not fully ensure that the information in the CFS was
consistent with underlying information in agencies' audited financial
statements and other financial data.
Controls over the Compilation Process:
We continued to find that there are specific areas of internal control
in Treasury's process for compiling the CFS that need to be
strengthened. Treasury had to resort to last-minute, alternative
methods to gather the needed fiscal year 2004 information. These
problems were compounded by Treasury's reliance on internal controls
that were dependent on procedures that would attempt to identify any
errors after they were made by an agency (detective controls) rather
than on internal controls that may have prevented or minimized the
errors from occurring (preventive controls). Treasury had planned to
perform certain tests of its new fiscal year 2004 process and design
the necessary internal controls by collecting agencies' fiscal year
2003 financial information during the summer of fiscal year 2004.
Although Treasury did collect the fiscal year 2003 financial
information, it did not perform the necessary detailed tests to
identify and correct potential issues with its new reporting process
and develop adequate internal control for the fiscal year 2004
reporting process.
Internal control should provide, among other things, reasonable
assurance that financial reporting is reliable. GAO's Standards for
Internal Control in the Federal Government[Footnote 4] defines the
minimum level of quality acceptable for internal control in the federal
government and provides the standards against which internal control is
to be evaluated. These standards state that internal controls should
include (1) segregation of duties, (2) appropriate documentation of
transactions and internal control, (3) reviews by management at the
functional or activity level, and (4) access controls over information
systems. We found many internal controls in place, but we also
continued to identify areas that need to be improved, as well as the
need for a strong financial reporting infrastructure. As Treasury
continues to develop its new compilation process, implementing adequate
internal control remains important and needs to be considered during
the development process.
Segregation of Duties:
Segregation of duties is the practice of dividing the steps in a
critical function among different individuals in order to reduce the
risk of error, thus preventing a single individual from having full
control of a transaction or event. Lack of proper segregation of duties
for critical processes leaves the CFS vulnerable to errors and could
result in incomplete and inaccurate summarization of data within these
financial statements. During our fiscal year 2004 audit, we identified
a lack of segregation of duties over (1) Treasury's new process for
preparing governmentwide adjustments to the financial statements,(2)
the process for making changes to Excel spreadsheets that contain
audited agency financial information, and (3) access to federal
agencies' closing package data in Treasury's new system. The lack of
segregation of duties over these areas allowed a single Treasury
employee to perform functions that should have been divided among
several employees. In each of the following examples, a single Treasury
employee was allowed to:
* determine and approve the amount of a journal voucher to adjust the
financial statements,
* solely determine needed changes to the Excel spreadsheets and make
the changes without obtaining any approval, and:
* have access to agency closing package data entered in Treasury's new
system by individual agencies and edit the same information without
obtaining approval from the agency.
Appropriate Documentation of Transactions and Internal Control:
Agency management is responsible for developing appropriate detailed
policies, procedures, and practices to perform agency operations and
ensuring that internal control is an integral part of operations.
Although GAO's Standards for Internal Control in the Federal Government
calls for clear documentation of policies and procedures and
transactions, we continued to find that many key policies and
procedures were not documented in Treasury's standard operating
procedures and that Treasury did not have appropriate supporting
documentation for all transactions recorded in the CFS.
In our prior report,[Footnote 5] we recommended that the Secretary of
the Treasury direct the Fiscal Assistant Secretary to develop and fully
document policies and procedures for the consolidated financial
statement preparation process so that they are proper, complete, and
consistently applied among staff members. Without documented policies
and procedures, staff could apply practices inconsistently or not
perform necessary practices at all. However, during our fiscal year
2004 audit, we found that Treasury had not fully documented its
policies and procedures for preparing the CFS before the fiscal year
2004 process began and continued to develop its policies and procedures
throughout our audit and up to the end-of-fieldwork date. Treasury's
standard operating procedures did not include the following key
procedures:
* procedures for correcting any errors identified in agencies' closing
packages;
* detailed and comprehensive procedures for the allocation of certain
costs on the statement of net cost; and:
* procedures for compiling information that was not collected in GFRS
or Excel spreadsheets, such as how to properly analyze and compile
contingency information.
Also, Treasury did not have appropriate supporting documentation for
all transactions recorded in the CFS. Recording transactions in the
financial statements without adequate underlying support increases the
risk that inappropriate adjustments to balances in the financial
statements could be made. Specifically, we found that 20 of the 51
journal vouchers recorded in Treasury's journal voucher log did not
have adequate supporting documentation. Eighteen of these journal
vouchers were necessary because agencies submitted data in their
closing packages that did not agree to their audited financial
statements. Treasury did not document communications with these
agencies before recording such adjustments. For example, we found that
the supporting documentation for 13 fiscal year 2004 journal vouchers
to correct agency data was simply a printout from GFRS or a copy of a
page from an agency's financial statements without any agency
confirmation of the correction. We also found that some significant
changes were made directly to the CFS and not through the journal
voucher process or any other formal documentation process.
Management Review:
During our fiscal year 2004 audit, we found that Treasury management
did not review transactions within several key compilation processes.
Transactions and other significant events should be authorized and
executed only by persons acting within the scope of their authority.
Appropriate reviews by management of key decisions and data are vital
controls to ensure that only authorized actions occur. Inadequate
management reviews and lack of documentation of changes, reviews, and
approvals could allow the CFS to be manipulated or changed without any
supervisory control or review, resulting in the possibility that agency
data could be changed or incorrectly compiled in the CFS. For example,
we found that some changes to the Excel spreadsheets used to compile
agency financial information were not documented, and therefore, there
was no documentation of review and approval from management. We also
found that not all journal vouchers were approved by management before
being recorded in the CFS. In some cases, the lack of management review
was the result of improperly segregating duties as discussed above.
Access Controls over Information Systems:
During our fiscal year 2004 audit, we found that information system
control weaknesses, including inadequate access controls, existed
within the segments of GFRS used during the fiscal year 2004 reporting
process. Access controls should provide reasonable assurance that
computer resources are protected against unauthorized modification,
disclosure, loss, or impairment. Limiting access ensures that access to
very sensitive resources is limited to very few individuals and that
employees are restricted from performing incompatible functions or
functions beyond their responsibility. Treasury's lack of adequate
controls to prevent inappropriate access increases the risk of
unauthorized information or computer resource modification, disclosure,
loss, or impairment. Specifically, we found that inappropriate access
to GFRS was granted to certain Treasury personnel, and the GFRS
database was not configured to prevent the unauthorized alteration of
data submitted by federal agencies. We also found that the GFRS
production database was also used for testing, which could result in
inadvertent alteration of the production data used to compile the CFS.
Financial Reporting Infrastructure:
During our fiscal year 2004 audit, Treasury did not have the
infrastructure to address the magnitude of the fiscal year 2004
financial reporting challenges it faced, such as an incomplete
financial reporting system, compressed time frames for compiling the
financial information, and inaccurate and incomplete information
provided by certain federal agencies. As a result, we found that
Treasury's Financial Management Service personnel had excessive
workloads and that an extraordinary amount of effort and dedication was
required to compile the CFS. Also, too few Financial Management Service
personnel had the specialized financial reporting experience necessary
to ensure accurate and reliable financial reporting by the accelerated
reporting date. We found that there was a heavy reliance on just a few
personnel to perform key functions without any trained backup
employees. If these personnel were unavailable, Treasury's financial
reporting process would be negatively affected.
Recommendations for Executive Action:
In connection with Treasury's development of its new compilation system
and process, we recommend that the Secretary of the Treasury direct the
Fiscal Assistant Secretary to:
* segregate the duties of individuals performing key functions in
Treasury's processes for preparing governmentwide adjustments to the
financial statements, making changes to Excel spreadsheets that contain
audited agency financial information, and accessing federal agencies'
closing package data in Treasury's new system;
* require and maintain appropriate supporting documentation for all
journal vouchers recorded in the CFS;
* require that Treasury employees contact and document communications
with agencies before recording journal vouchers to change agency
audited closing package data;
* require and document management reviews of all procedures that result
in data changes to the CFS;
* configure the GFRS database to prevent Treasury personnel from
altering data submitted by federal agencies and to use separate GFRS
databases for testing and production; and:
* assess the infrastructure associated with the compilation process and
modify it as necessary to achieve a sound internal control environment.
Consolidated Reporting Guidance to Agencies:
The Treasury Financial Manual (TFM) prescribes how federal agencies are
to submit financial information to Treasury to be compiled in the CFS.
While our planned audit procedures were not to review the entire TFM to
determine if its guidance to agencies was clear, we found several areas
where the TFM did not give clear guidance to federal agencies about the
information that they were required to provide in the notes to the
financial statements. Specifically, we found that the TFM did not give
clear guidance for reporting note disclosures for loans receivable and
loan guarantees; property, plant, and equipment; federal employee and
veteran benefits payable; and contingencies. Also, the TFM did not
provide clear guidance on how to consistently report debit and credit
amounts throughout various notes so that like amounts are appropriately
added and subtracted. For example, we noted that the TFM did not
provide instructions about which line in the property, plant, and
equipment note should include land improvements. As a result, agencies
reported financial data inconsistently. This increases the risk of
incomplete and inaccurate summarization of data in the CFS.
The TFM required federal agencies to also provide GAO, as the principal
auditor of the CFS, a complete closing package consisting of the
special purpose audit opinion, the management representation letter for
the closing package, audit trail report (reclassification journal
voucher report), closing package financial statement report, trading
partner summary report, notes reports, and other data reports. Certain
federal agencies did not provide us with complete closing packages. For
example, many federal agencies did not provide the audit trail report,
which is a vital report demonstrating the linkage between agencies'
audited financial statement line items and the CFS line items. Treasury
and OMB did not perform follow-up procedures to obtain missing
information from those agencies to ensure that we had all the necessary
audit documentation to perform our audit procedures.
Recommendations for Executive Action:
We recommend that the Secretary of the Treasury direct the Fiscal
Assistant Secretary to review the TFM and any other guidance to federal
agencies to ensure that they provide clear instructions for reporting
accurate data to Treasury in the following specific areas:
* loans receivable and loan guarantees;
* property, plant, and equipment;
* federal employee and veteran benefits payable;
* contingencies; and:
* reporting debit and credit amounts.
We also recommend that the Director of OMB direct the Controller of the
Office of Federal Financial Management, in coordination with the Fiscal
Assistant Secretary, to ensure that federal agencies submit to GAO a
complete closing package, as required by the TFM as part of the
consolidation process, consisting of the:
* special purpose audit opinion,
* management representation letter for the closing package,
* audit trail report (reclassification journal voucher report),
* closing package financial statement reports,
* trading partner summary reports,
* notes reports, and:
* other data reports.
Intragovernmental Activity and Balances--Explanations for Material
Unreconciled Differences:
OMB and Treasury require federal agencies to reconcile selected
intragovernmental activity and balances with their "trading
partners"[Footnote 6] and report on the extent and results of the
reconciliation efforts to Treasury. As part of the reconciliation
report, federal agencies were required to categorize any material
differences, as determined by Treasury, with their trading partners at
fiscal year-end within five categories: (1) confirmed reporting (in
which the agency is stating that it has confirmed its balance to be
correct); (2) accounting methodology differences; (3) accounting or
reporting errors; (4) timing difference--current year, timing
difference--prior year; and (5) unknown/unreconciled. If a federal
agency selects the category "accounting methodology differences," it is
also required to provide a detailed explanation. However, Treasury does
not require federal agencies to provide any detailed explanations for
the material differences reported in any other category selected. Lack
of detailed explanations may hinder efforts to identify and correct
problems that federal agencies are experiencing in reconciling with
their trading partners.
Recommendation for Executive Action:
As Treasury continues to make strides to address issues related to
intragovernmental transactions, we recommend that the Secretary of the
Treasury direct the Fiscal Assistant Secretary, working in coordination
with the Controller of OMB, to require that federal agencies provide
detailed explanations for all material differences identified in the
intragovernmental reconciliations.
Consistency of Justice's and Agencies' Opinions on Legal Cases:
For each agency financial statement audit, generally accepted
government auditing standards require that the agency auditors obtain
written legal representations as part of the audit. Legal
representation letters, along with related management
schedules,[Footnote 7] are essential to properly reporting the possible
effects of litigation on federal agency financial statements. Legal
counsel's assessment of the likelihood of an unfavorable outcome and
the estimated potential losses on its agency's cases are the basis for
reporting legal contingencies in the financial statements and making
related disclosures in the notes. Inconsistent assessments on the
likelihood of an unfavorable outcome or estimated potential losses for
the same cases by Justice and agency legal counsel limit both the
ability of management to determine the proper accounting treatment in
the CFS in accordance with GAAP and GAO's ability to audit the CFS.
Generally, Justice is charged with the supervision of litigation to
which the U.S. government or its departments, agencies, officers, or
employees are a party and with providing advice and opinions to the
President and the heads of the executive departments of the U.S.
government, when requested. Accordingly, Justice has a special role in
ensuring that we receive legal representations to conduct our audit of
the CFS in accordance with generally accepted government auditing
standards. During our audit, we noted that the opinion of Justice's
legal counsel on certain agencies' legal cases differed from the
opinion of the respective individual federal agencies' legal counsel on
such cases. For example, one agency estimated its probable losses for
certain cases, yet Justice's legal counsel reported that it was not
able to estimate the potential losses for the same cases. In another
legal case involving multiple agencies, legal counsel from each of the
agencies had a differing assessment of the legal case's outcome, while
Justice's legal counsel was unable to provide an assessment. Treasury
did not have specific policies and procedures to address discrepancies
of opinion between Justice's and applicable agencies' legal counsel.
Recommendation for Executive Action:
We recommend that the Secretary of the Treasury direct the Fiscal
Assistant Secretary, working in coordination with the Controller of
OMB's Office of Federal Financial Management, to develop policies and
procedures to determine the proper resolution and the appropriate legal
representations to GAO at the governmentwide level when Justice's legal
counsel and agencies' legal counsel provide inconsistent opinions.
Conformity with U.S. Generally Accepted Accounting Principles:
As we have reported in previous years, and noted again during our
fiscal year 2004 audit, Treasury lacks an adequate process to ensure
that the financial statements, related notes, stewardship information,
and supplemental information in the CFS are presented in conformity
with GAAP. Statement of Federal Financial Accounting Standards No. 24,
Selected Standards for the Consolidated Financial Report of the United
States Government, states that the Federal Accounting Standards
Advisory Board (FASAB) standards apply to all federal agencies,
including the U.S. government as a whole, unless provision is made for
different accounting treatment in a current or subsequent standard. In
our prior report,[Footnote 8] we recommended that the Secretary of the
Treasury direct the Fiscal Assistant Secretary to establish a formal
process that will cause the financial statements, related notes,
stewardship information, and supplemental information in the CFS to be
presented in conformity with GAAP in all material respects. The process
should:
* timely identify GAAP requirements;
* make timely modifications to Treasury's closing package requirements
to obtain information needed;
* assess, qualitatively and quantitatively, the impact of any omitted
disclosures;[Footnote 9] and:
* document decisions reached and the rationale for such decisions.
However, during fiscal year 2004, Treasury did not implement our
recommendations. As a result of our prior audits, recommendations
related to 86 specific disclosures that may not have been in conformity
with applicable standards remain open. During our fiscal year 2004
audit, we identified 6 additional specific disclosures required by
applicable standards that were not included in the CFS. These
additional required disclosures are described in appendix I. Treasury
did not provide us with documentation of its rationale for excluding
this information. As a result of this and certain of the material
deficiencies identified during the fiscal year 2004 audit, we were
unable to determine if the missing information was material to the CFS.
Treasury has not yet begun an annual process to determine the proper
GAAP disclosures. However, in an effort to begin addressing this issue,
Treasury collected certain additional note information required by GAAP
in its new process for fiscal year 2004. However, due to the compressed
time frames to compile the CFS and because GFRS is still being
developed, Treasury did not analyze such information in preparing the
fiscal year 2004 CFS. Treasury plans to analyze this information in
fiscal year 2005 and determine how or whether to disclose this
information in future years' CFS.
Recommendations for Executive Action:
With respect to the six specific disclosures related to three
disclosure areas identified in appendix I for which information was
either not included in the CFS or was presented in a way that did not
meet GAAP standards, we recommend that the Secretary of the Treasury
direct the Fiscal Assistant Secretary to include each of the six
specific disclosures in the CFS or document the specific rationale for
excluding any of them.
Agency Comments and Our Evaluation:
OMB Comments:
In oral comments on a draft of this report, OMB stated that it
generally agreed with the new findings and related recommendations in
this report. In addition, OMB provided some technical comments, which
we have incorporated as appropriate.
Treasury Comments:
In written comments on a draft of this report, which are reprinted in
appendix III, Treasury stated that it agrees that the reporting process
still needs improvement and that it is addressing many of the
recommendations in our previous reports. Treasury also stated that it
generally concurs with our new recommendations and that it will work
with OMB and the federal agencies to improve reporting practices. Also,
Treasury asked that we reconsider or modify our recommendations in
three areas: (1) controls over the compilation process, (2) consistency
of Justice's and agencies' opinions on legal cases, and (3) directly
linking audited federal agency financial statements to the CFS. We
modified recommendations in the first two areas.
Controls over the Compilation Process:
Treasury stated that it agrees that there are instances where it should
obtain agency approvals before changing federal agencies' audited data
when compiling the CFS. However, Treasury also stated that it, as the
preparer of the CFS, needs the flexibility and authority to make
appropriate adjustments when needed regardless of whether federal
agencies agree and asked that we modify our recommendation accordingly.
Treasury believes that agency approval is not necessary when
adjustments are required to (1) make agency closing packages agree with
their financial statements, (2) apply a consistent application of an
accounting principle between agencies, and (3) make an agency conform
to GAAP. In this regard, the premise of the new compilation process is
that the federal agencies' audited closing package provides a direct
link from agencies audited financial statements to the CFS. Without
that link, a timely and effective audit is not possible. Federal
agencies receive audit opinions on their closing packages, and
therefore, any adjustments that are necessary to agencies' audited
closing package data should be discussed with the agencies. Treasury is
correct that certain circumstances may require adjustments to agency
closing package data. In such instances, Treasury should contact
agencies to resolve any discrepancies between agencies' audited closing
packages and audited financial statements and to discuss any other
situations that require adjustments to agencies' audited closing
package data.
These communications should be documented and maintained as supporting
documentation for any resulting journal vouchers. This could be done by
e-mail. During our fiscal year 2004 audit of the CFS, we found that
Treasury did not have adequate supporting documentation for several
journal vouchers to adjust data submitted by agencies in their audited
closing packages. Treasury's supporting documentation for some of these
journal vouchers was simply a printout from GFRS or a copy of a page
from an agency's financial statements. The purpose of our
recommendation is to provide improved controls over adjustments made to
federal agencies' closing package data and was not intended to limit
Treasury's flexibility in preparing the CFS. We have modified our
recommendation to clarify our intent that Treasury should contact and
document communications with agencies before recording journal vouchers
to change agencies' audited closing package data.
Consistency of Justice's and Agencies' Opinions on Legal Cases:
Treasury stated that with regard to the governmentwide legal letter,
Treasury and OMB have agreed that Justice is the final authority on
legal liabilities and disclosure amounts. Treasury also stated that it
will work with OMB to develop a policy to eliminate any inconsistencies
between Justice's and the agencies' opinions on legal cases. We have
modified our recommendation to reflect that Treasury and OMB will work
jointly to address the issue.
Directly Linking Audited Federal Agency Financial Statements to the
CFS:
Treasury stated that it recognizes the value and need for the CFS to be
consistent with the underlying agency financial statements, and it
looks to improve its process for compiling the CFS to allow for the
expanded traceability of the federal agencies' audited financial
statement note data to the CFS notes. However, Treasury continues to
disagree that additional information should be collected through the
closing package from federal agencies' audited financial statements to
demonstrate consistency and completeness of reporting for both the
Reconciliation of Net Operating Cost and Unified Budget Deficit and the
Statement of Changes in Cash Balance from Unified Budget and Other
Activities--two of the five principal financial statements.[Footnote
10]
Treasury acknowledged that problems with these two statements need to
be resolved, but does not believe that rolling up federal agencies'
reported data will help to improve these statements. Treasury stated
that the FASAB standard related to the two statements makes clear that
agency-reported data are not relevant to these statements. We disagree
with Treasury's underlying premise. While the FASAB standard does not
require the CFS to include the Statement of Budgetary Resources and
Statement of Financing, which are required financial statements at the
agency level, the standard should not be interpreted to mean that none
of the information reported in federal agency financial statements is
relevant to the Reconciliation of Net Operating Cost and Unified Budget
Deficit and the Statement of Changes in Cash Balance from Unified
Budget and Other Activities. For example, federal agencies report net
outlays in their Statements of Budgetary Resources, and net outlays for
all federal agencies are reflected in the budget deficit amount
reported in the Reconciliation of Net Operating Cost and Unified Budget
Deficit and Statement of Changes in Cash Balance from Unified Budget
and Other Activities in the CFS. During our fiscal year 2004 audit, we
identified material differences between net outlays reported by the
agencies and the records used by Treasury to report net outlays at the
consolidated level, totaling about $69 billion.
When differences arise between the amounts Treasury uses to compile the
CFS and related amounts federal agencies are reporting, it is important
for management of the federal government to understand and be able to
explain those differences and take corrective action where needed. For
fiscal year 2004, the Reconciliation of Net Operating Cost and Unified
Budget Deficit and Statement of Changes in Cash Balance from Unified
Budget and Other Activities included some amounts that Treasury could
not explain or fully support or for which Treasury could not
demonstrate the link to agencies' audited financial statements. We
continue to believe that the process of directly linking relevant
audited federal agencies' financial statement information to these two
financial statements would be the most efficient and effective manner
for Treasury, as the preparer of the CFS, to obtain and demonstrate the
necessary assurance on certain information reported in such financial
statements. As such, we have not modified our recommendations in this
area.
Treasury stated that it would welcome specific recommendations to
address problems with its Reconciliation of Net Operating Cost and
Unified Budget Deficit and Statement of Changes in Cash Balance from
Unified Budget and Other Activities. In this regard, we have previously
provided several specific recommendations to Treasury regarding the
preparation and reporting of these financial statements, and these
recommendations are included in appendix II of this report.[Footnote
11] Our recommendations are intended to allow some flexibility in
developing viable solutions to address the issues. At the same time, we
believe it is crucial that Treasury develop corrective actions to
address our recommendations now as it is still designing and further
implementing its new system and process for compiling the CFS.
Prolonging corrective actions could result in additional costs to
Treasury if it decides later to modify its new system to collect and
compile additional information.
This report contains recommendations to the Secretary of the Treasury
and the Director of OMB. The head of a federal agency is required by 31
U.S.C. 720 to submit a written statement on actions taken on these
recommendations. You should submit your statement to the Senate
Committee on Homeland Security and Governmental Affairs and the House
Committee on Government Reform within 60 days of the date of this
report. A written statement must also be sent to the House and Senate
Committees on Appropriations with the agency's first request for
appropriations made more than 60 days after the date of the report.
We are sending copies of this report to the Chairmen and Ranking
Minority Members of the Senate Committee on Homeland Security and
Governmental Affairs; the Subcommittee on Federal Financial Management,
Government Information, and International Security, Senate Committee on
Homeland Security and Governmental Affairs; the House Committee on
Government Reform; and the Subcommittee on Government Management,
Finance, and Accountability, House Committee on Government Reform. In
addition, we are sending copies to the Fiscal Assistant Secretary of
the Treasury and the Deputy Director for Management of OMB. Copies will
be made available to others upon request. This report is also available
at no charge on GAO's Web site at [Hyperlink, http://www.gao.gov].
We acknowledge and appreciate the cooperation and assistance provided
by Treasury and OMB during our audit. If you or your staff have any
questions or wish to discuss this report, please contact Jeffrey C.
Steinhoff, Managing Director, Financial Management and Assurance, on
(202) 512-2600 or Gary T. Engel, Director, Financial Management and
Assurance, on (202) 512-3406.
Signed by:
David M. Walker:
Comptroller General of the United States:
[End of section]
Appendixes:
Appendix I: Disclosure Issues:
U.S. generally accepted accounting principles (GAAP) require the six
specific disclosures related to three disclosure areas described below
to be included in the consolidated financial statements (CFS), if
material. If management determines that the required disclosures need
not be included, the specific rationale for their exclusion should be
sufficiently documented. However, the Department of the Treasury
(Treasury) neither included the disclosures in the CFS nor provided
documentation with the rationale for exclusion of these required
disclosures.
Federal Employee and Veteran Benefits Payable:
Treasury did not disclose certain required information on the
Department of Veterans Affairs' (VA) insurance benefit liabilities in
the CFS. Such information, as noted below, would include all components
of the liability for future policy benefits with a description of each
amount and an explanation of its projected use and any other potential
uses for noncancelable or renewable VA life insurance.
For noncancelable or renewable VA life insurance, Statement of Federal
Financial Accounting Standards (SFFAS) No. 5, Accounting for
Liabilities of the Federal Government, paragraph 110, table 9, states
that all components of the liability for future policy benefits should
be separately disclosed in a footnote with a description of each amount
and an explanation of its projected use and any other potential uses.
In accordance with SFFAS No. 5, paragraphs 117 and 118, all federal
reporting entities with whole life insurance programs should follow the
standards as prescribed in the private sector standards when reporting
the liability for future policy benefits, in addition to the following
required disclosures: liability for future policy benefits relating to
participating life insurance contracts should be equal to the sum of
(1) the net level premium reserve for death and endowment policy
benefits, (2) the liability for terminal dividends, and (3) any premium
deficiency.
Additionally, SFFAS No. 5, paragraph 121, states that all components of
the liability for future policy benefits (i.e., the net-level premium
reserve for death and endowment policy and the liability for terminal
dividends) should be separately disclosed in a footnote with a
description of each amount and an explanation of its projected use and
any other potential uses (e.g., reducing premiums, determining and
declaring dividends available, or reducing federal support in the form
of appropriations related to administrative cost or subsidies).
Cash and Other Monetary Assets:
The CFS note disclosure for cash and other monetary assets departed
from the disclosure requirements of SFFAS No. 1, Accounting for
Selected Assets and Liabilities, paragraph 30, which requires that
financial reports disclose the reasons for and nature of restricted
cash. SFFAS No. 1 defines restricted cash as restrictions usually
imposed on cash deposits (in escrow or other special accounts) by law,
regulation, or agreement. Treasury did not adequately ensure that the
note disclosure relating to Cash and Other Monetary Assets was
presented in conformity with GAAP. Specifically, while agencies are
required by Treasury to describe in the closing package the nature of
the amount reported in the line item Other Cash, they are not required
to designate whether such cash is restricted.
In addition, cash held by certain agencies, although not restricted as
it relates to the operations of those agencies, could be legally or
otherwise restricted from a governmentwide perspective. For example, as
disclosed by the Pension Benefit Guaranty Corporation (PBGC), the
Employee Retirement Income Security Act of 1974 and the Pension
Protection Act of 1987 established revolving funds in which premiums
collected and held are to be used for specific purposes related to the
operations of PBGC. As such, at the governmentwide level, the cash held
by PBGC relating to these revolving funds could be considered as
restricted for governmentwide reporting purposes. However, Treasury's
process did not require agencies to designate any amounts reported for
the "other cash" line items that are restricted with respect to the
federal government taken as a whole.
Other Liabilities:
The CFS includes life insurance liabilities in the Other Liabilities
line item. However, the CFS did not report indicators of the range of
uncertainty around insurance-related estimates and the sensitivity of
the estimates to changes in major assumptions, in accordance with SFFAS
No. 5, paragraph 114.
[End of section]
Appendix II: Status of Treasury's and OMB's Progress in Addressing
GAO's Prior Year Recommendations for Preparing the CFS:
This appendix includes open recommendations from two prior GAO reports:
Financial Audit: Process for Preparing the Consolidated Financial
Statements of the U.S. Government Needs Improvement,
[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-04-45] (Oct. 30,
2003), and Financial Audit: Process for Preparing the Consolidated
Financial Statements of the U.S. Government Needs Further Improvement,
[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-04-866] (Sept. 10,
2004). Recommendations that were closed in prior reports are not
included in this appendix. This appendix also includes the status of
the recommendations according to Treasury and the Office of Management
and Budget (OMB) and according to GAO. Explanations are included in the
GAO status of recommendations when Treasury and OMB disagreed with our
recommendation.
GAO-04-45 (results of the fiscal year 2002 audit):
Count: 1;
No.: 02-1;
Recommendations: The Secretary of the Treasury should direct the Fiscal
Assistant Secretary, in connection with Treasury's current compilation
process and the development of Treasury's new compilation system and
process, to segregate the duties of individuals who have the capability
to enter, change, and delete data within the Federal Agencies'
Centralized Trial Balance System (FACTS I) and the Hyperion database
and post adjustments to the CFS;
Status of recommendations: Per Treasury and OMB: Treasury established
significant policies and procedures to segregate duties with the new
fiscal year 2004 process. Treasury is currently addressing the
instances identified by GAO and expects to address this recommendation
completely in fiscal year 2005;
Status of recommendations: Per GAO: Closed during the fiscal year 2004
audit for FACTS I, but there are segregation of duties issues with the
new process used during fiscal year 2004.
Count: 2;
No.: 02-2;
Recommendations: The Secretary of the Treasury should direct the Fiscal
Assistant Secretary, in connection with Treasury's current compilation
process and the development of Treasury's new compilation system and
process, to develop and fully document policies and procedures for the
CFS preparation process so that they are proper, complete, and
consistently applied by staff members;
Status of recommendations: Per Treasury and OMB: Treasury developed
substantial documentation relative to our policies and procedures for
the new fiscal year 2004 process. Treasury is currently addressing the
instances identified by GAO and expects to address this recommendation
completely in fiscal year 2005;
Status of recommendations: Per GAO: Open.
Count: 3;
No.: 02-4;
Recommendations: As Treasury is designing its new financial statement
compilation process to begin with the fiscal year 2004 CFS, the
Secretary of the Treasury should direct the Fiscal Assistant Secretary,
in coordination with the Controller of OMB, to develop reconciliation
procedures that will aid in understanding and controlling the net
position balance as well as eliminate the plugs previously associated
with compiling the CFS;
Status of recommendations: Per Treasury and OMB: This is a long-
standing problem that Treasury will continue analyzing. However,
Treasury designed a process to eliminate intragovernmental activity and
balances using formal balanced accounting entries and developed a model
to provide an analysis of the unreconciled transactions that affect net
position (plug) for fiscal year 2004. Treasury will further analyze the
results of the 2004 process and continue to work on this issue in 2005
by starting to establish the reciprocal category for the General Fund
and analyzing the changes in net position from the beginning of the
year to the end of the year to eliminate or explain the adjustments to
net position;
Status of recommendations: Per GAO: Open.
Count: 4;
No.: 02-5;
Recommendations: As Treasury is designing its new financial statement
compilation process to begin with the fiscal year 2004 CFS, the
Secretary of the Treasury should direct the Fiscal Assistant Secretary,
in coordination with the Controller of OMB, to use balanced accounting
entries to account for the change in net position rather than simple
subtraction of liabilities from assets;
Status of recommendations: Per Treasury and OMB: See status of
recommendation No. 02-4;
Status of recommendations: Per GAO: Open.
Count: 5;
No.: 02-6;
Recommendations: As OMB continues to make strides to address issues
related to intragovernmental transactions, the Director of OMB should
direct the Controller of OMB to develop policies and procedures that
document how OMB will enforce the business rules provided in OMB
Memorandum M-03-01, Business Rules for Intragovernmental Transactions;
Status of recommendations: Per Treasury and OMB: OMB is reviewing the
business rules and also performing additional analysis on several
groupings of intragovernmental transactions. Upon the conclusion of the
review and analysis, OMB will determine how best to proceed with the
business rules;
Status of recommendations: Per GAO: Open.
Count: 6;
No.: 02-7;
Recommendations: As OMB continues to make strides to address issues
related to intragovernmental transactions, the Director of OMB should
direct the Controller of OMB to require that significant differences
noted between business partners be resolved and the resolution be
documented;
Status of recommendations: Per Treasury and OMB: OMB and Treasury are
performing additional analysis on several groupings of
intragovernmental transactions and will work with individual agencies
to resolve imbalances. As part of OMB's standard practice, resolutions
reached will be communicated to all parties;
Status of recommendations: Per GAO: Open.
Count: 7;
No.: 02-8;
Recommendations: The Secretary of the Treasury should direct the Fiscal
Assistant Secretary, in coordination with the Controller of OMB, to
implement the plan to require federal agencies to report in Treasury's
new closing package, beginning with fiscal year 2004, intragovernmental
activity and balances by trading partner and to indicate amounts that
have not been reconciled with trading partners and amounts, if any,
that are in dispute;
Status of recommendations: Per Treasury and OMB: Treasury is in the
process of identifying material differences so that OMB and Treasury
can work with agencies to resolve differences. Also, the Chief
Financial Officers Council Financial Reporting Acceleration Committee
has begun efforts to identify issues and impediments to
intragovernmental reconciliations and recommend solutions to mitigate
those issues;
Status of recommendations: Per GAO: Open.
Count: 8;
No.: 02-9;
Recommendations: The Secretary of the Treasury should direct the Fiscal
Assistant Secretary, in coordination with the Controller of OMB, to
design procedures that will account for the difference in
intragovernmental assets and liabilities throughout the compilation
process by means of formal consolidating and elimination accounting
entries;
Status of recommendations: Per Treasury and OMB: See status of
recommendation No. 02-4;
Status of recommendations: Per GAO: Open.
Count: 9;
No.: 02-10;
Recommendations: The Secretary of the Treasury should direct the Fiscal
Assistant Secretary, in coordination with the Controller of OMB, to
develop solutions for intragovernmental activity and balance issues
relating to federal agencies' accounting, reconciling, and reporting in
areas other than those OMB now requires be reconciled, primarily areas
relating to appropriations;
Status of recommendations: Per Treasury and OMB: See status of
recommendation No. 02-4;
Status of recommendations: Per GAO: Open.
Count: 10;
No.: 02-11;
Recommendations: The Secretary of the Treasury should direct the Fiscal
Assistant Secretary, in coordination with the Controller of OMB, to
reconcile the change in intragovernmental assets and liabilities for
the fiscal year, including the amount and nature of all changes in
intragovernmental assets or liabilities not attributable to cost and
revenue activity recognized during the fiscal year. Examples of these
differences would include capitalized purchases, such as inventory or
equipment, and deferred revenue;
Status of recommendations: Per Treasury and OMB: See status of
recommendation No. 02-4;
Status of recommendations: Per GAO: Open.
Count: 11;
No.: 02-12;
Recommendations: The Secretary of the Treasury should direct the Fiscal
Assistant Secretary to develop and implement a process that adequately
identifies and reports items needed to reconcile net operating cost and
unified budget surplus (or deficit). Treasury should report "net
unreconciled differences" included in the net operating results line
item as a separate reconciling activity in the reconciliation
statement;
Status of recommendations: Per Treasury and OMB: Treasury disagrees
with GAO on this item. No further action is contemplated for this
recommendation;
Status of recommendations: Per GAO: Open. Treasury disagrees with all
of our recommendations regarding the Statement of Changes in Cash
Balance from Unified Budget and Other Activities and the
Reconciliations of Net Operating Cost and Unified Budget Deficit even
though these statements include some amounts that Treasury cannot
explain or fully support or for which Treasury cannot demonstrate that
the amounts clearly link to agencies' audited financial statements.
Treasury has not developed any alternative solutions. We continue to
believe that implementation of our recommendations would result in the
most efficient and effective manner for Treasury, as the preparer of
the CFS, to obtain and demonstrate the necessary assurance on the
significant amounts reported in the Statement of Changes in Cash
Balance from Unified Budget and Other Activities and the Reconciliation
of Net Operating Cost and Unified Budget Deficit.
Count: 12;
No.: 02-13;
Recommendations: The Secretary of the Treasury should direct the Fiscal
Assistant Secretary to develop and implement a process that adequately
identifies and reports items needed to reconcile net operating cost and
unified budget surplus (or deficit). Treasury should develop policies
and procedures to ensure completeness of reporting and document how all
the applicable components reported in the other consolidated financial
statements (and related note disclosures included in the CFS) were
properly reflected in the reconciliation statement;
Status of recommendations: Per Treasury and OMB: Treasury disagrees
with GAO on this item. No further action is contemplated for this
recommendation;
Status of recommendations: Per GAO: Open. In fiscal year 2004, Treasury
developed standard operating procedures for preparing the
Reconciliations of the Net Operating Cost and Budget Deficit and
Statement of Changes in Cash Balance from Unified Budget and Other
Activities. However, the procedures merely covered the source of the
information, with no process for ensuring that (1) information obtained
was correct and consistent with underlying agency audited financial
statements and (2) reporting was complete.
Count: 13;
No.: 02-14;
Recommendations: The Secretary of the Treasury should direct the Fiscal
Assistant Secretary to develop and implement a process that adequately
identifies and reports items needed to reconcile net operating cost and
unified budget surplus (or deficit). Treasury should establish
reporting materiality thresholds for determining which agency financial
statement activities to collect and report at the governmentwide level
to assist in ensuring that the reconciliation statement is useful and
conveys meaningful information;
Status of recommendations: Per Treasury and OMB: Treasury disagrees
with GAO on this item. No further action is contemplated for this
recommendation;
Status of recommendations: Per GAO: Open. The standard operating
procedures that Treasury developed did not include considerations for
materiality thresholds in its financial reporting or reconciling
activities.
Count: 14;
No.: 02-15;
Recommendations: If Treasury chooses to continue using information from
both federal agencies' financial statements and the Central Accounting
and Reporting System (STAR), Treasury should demonstrate how the
amounts from STAR reconcile to federal agencies' financial statements;
Status of recommendations: Per Treasury and OMB: Treasury disagrees
with GAO on this item. No further action is contemplated for this
recommendation;
Status of recommendations: Per GAO: Open. See status of recommendation
No. 02-12.
Count: 15;
No.: 02-16;
Recommendations: If Treasury chooses to continue using information from
both federal agencies' financial statements and from STAR, Treasury
should identify and document the cause of any significant differences,
if any are noted;
Status of recommendations: Per Treasury and OMB: Treasury disagrees
with GAO on this item. No further action is contemplated for this
recommendation;
Status of recommendations: Per GAO: Open. See status of recommendation
No. 02-12.
Count: 16;
No.: 02-17;
Recommendations: The Secretary of the Treasury should direct the Fiscal
Assistant Secretary, in coordination with the Controller of OMB, to
develop and implement a process to ensure that the Statement of Changes
in Cash Balance from Unified Budget and Other Activities properly
reflects the activities reported in federal agencies' audited financial
statements. Treasury should document the consistency of the significant
line items on this statement to agencies' audited financial statements;
Status of recommendations: Per Treasury and OMB: Treasury disagrees
with GAO on this item. This statement is not prepared from the agency's
financial statements. As cited in GAO-04-866, p. 44, #3, para. 3: "It
is important to note that the "information" [referred to in SFFAS 24,
9. SFFAS 7, paras. 77-82] is not required therefore agency budgetary
data is not used nor was ever contemplated to be used in our reports.
Treasury maintains the source of original entry for budgetary
information in the STAR system and consider the use of other data not
only less accurate but also a waste of taxpayer resources to both
obtain and then correct the balances when Treasury already has the
information at their finger tips. There are no material differences
between outlays reported by us and those included in the President's
Budget. The standard does not require either receipts or outlays.";
Status of recommendations: Per GAO: Open. See status of recommendation
No. 02-12.
Count: 17;
No.: 02-18;
Recommendations: The Secretary of the Treasury should direct the Fiscal
Assistant Secretary, in coordination with the Controller of OMB, to
develop and implement a process to ensure that the Statement of Changes
in Cash Balance from Unified Budget and Other Activities properly
reflects the activities reported in federal agencies' audited financial
statements. Treasury should request, through its closing package, that
federal agencies provide the net outlays reported in their Combined
Statement of Budgetary Resources and explanations for any significant
differences between net outlay amounts reported in the Combined
Statement of Budgetary Resources and the budget of the U.S. government;
Status of recommendations: Per Treasury and OMB: Treasury disagrees
with GAO's recommendation to collect the agency Statement of Budgetary
Resources outlay data through the Closing Package process because
Treasury already collects agency outlay data for budgetary reporting
purposes. Treasury and OMB are working closely with the agencies to
assure that the outlays reported in their Statement of Budgetary
Resources match the outlays reported to Treasury for budgetary
reporting purposes;
Status of recommendations: Per GAO: Open. See status of recommendation
No. 02-12.
Count: 18;
No.: 02-19;
Recommendations: The Secretary of the Treasury should direct the Fiscal
Assistant Secretary, in coordination with the Controller of OMB, to
develop and implement a process to ensure that the Statement of Changes
in Cash Balance from Unified Budget and Other Activities properly
reflects the activities reported in federal agencies' audited financial
statements. Treasury should investigate the differences between net
outlays reported in federal agencies' Combined Statement of Budgetary
Resources and Treasury's records in STAR to ensure that the proper
amounts are reported in the Statement of Changes in Cash Balance from
Unified Budget and Other Activities;
Status of recommendations: Per Treasury and OMB: See status of
recommendation No. 02-18;
Status of recommendations: Per GAO: Open. Material unexplained
differences between net outlays reported by the agencies and the
central accounting records used to report net outlays at the
consolidated level remained, totaling about $69 billion in fiscal year
2004.
Count: 19;
No.: 02-20;
Recommendations: The Secretary of the Treasury should direct the Fiscal
Assistant Secretary, in coordination with the Controller of OMB, to
develop and implement a process to ensure that the Statement of Changes
in Cash Balance from Unified Budget and Other Activities properly
reflects the activities reported in federal agencies' audited financial
statements. Treasury should explain and document the differences
between the operating revenue amount reported on the Statement of
Operations and Changes in Net Position and unified budget receipts
reported on the Statement of Changes in Cash Balance from Unified
Budget and Other Activities;
Status of recommendations: Per Treasury and OMB: See status of
recommendation No. 02-17;
Status of recommendations: Per GAO: Open. In fiscal year 2004, there
was a $34.5 billion unexplained or unreported difference between the
unified budget receipts as a component of the deficit and the modified
cash operating revenue on the Statement of Operations and Changes in
Net Position.
Count: 20;
No.: 02-21;
Recommendations: The Secretary of the Treasury should direct the Fiscal
Assistant Secretary, in coordination with the Controller of OMB, to
develop and implement a process to ensure that the Statement of Changes
in Cash Balance from Unified Budget and Other Activities properly
reflects the activities reported in federal agencies' audited financial
statements. Treasury should provide support for how the line items in
the "other activities" section of this statement relate to either the
underlying Balance Sheet or related notes accompanying the CFS;
Status of recommendations: Per Treasury and OMB: Treasury disagrees
with GAO on this item. However, further research and discussion will
take place in fiscal year 2005;
Status of recommendations: Per GAO: Open. See status of recommendation
No. 02-12.
Count: 21;
No.: 02-22;
Recommendations: The Secretary of the Treasury should direct the Fiscal
Assistant Secretary, in coordination with the Controller of OMB, to
perform an assessment to define the reporting entity, including its
specific components, in conformity with the criteria issued by the
Federal Accounting Standards Advisory Board. Key decisions made in this
assessment should be documented, including the reason for including or
excluding components and the basis for concluding on any issue.
Particular emphasis should be placed on demonstrating that any
financial information that should be included but is not included is
immaterial;
Status of recommendations: Per Treasury and OMB: Treasury's Office of
the Fiscal Assistant Secretary (OFAS) has developed an action plan for
defining the reporting entity. Treasury will determine the relevant
information not currently received, and the Financial Management
Service will implement changes OFAS identifies;
Status of recommendations: Per GAO: Open.
Count: 22;
No.: 02-23;
Recommendations: The Secretary of the Treasury should direct the Fiscal
Assistant Secretary, in coordination with the Controller of OMB, to
provide in the financial statements all the financial information
relevant to the defined reporting entity, in all material respects.
Such information would include, for example, the reporting entity's
assets, liabilities, and revenues;
Status of recommendations: Per Treasury and OMB: See status of
recommendation No. 02-22;
Status of recommendations: Per GAO: Open.
Count: 23;
No.: 02-24;
Recommendations: The Secretary of the Treasury should direct the Fiscal
Assistant Secretary, in coordination with the Controller of OMB, to
disclose in the financial statements all information that is necessary
to inform users adequately about the reporting entity. Such disclosures
should clearly describe the reporting entity and explain the reason for
excluding any components that are not included in the defined reporting
entity;
Status of recommendations: Per Treasury and OMB: See status of
recommendation No. 02-22;
Status of recommendations: Per GAO: Open.
Count: 24;
No.: 02-25;
Recommendations: The Secretary of the Treasury should direct the Fiscal
Assistant Secretary to establish a formal process that will allow the
financial statements, related notes, and stewardship and supplemental
information in the CFS to be presented in conformity with GAAP. The
process should timely identify GAAP requirements;
Status of recommendations: Per Treasury and OMB: Treasury developed and
documented a process to compare federal accounting standards and the
closing package to ensure that all disclosures are requested from
federal agencies. Treasury is currently analyzing the reporting and
modifying the CFS to include GAAP requirements. Treasury expects to
address the majority of these items in the 2005 CFS by including the
appropriate disclosures in the CFS or documenting the rationale for
excluding inappropriate disclosures;
Status of recommendations: Per GAO: Open.
Count: 25;
No.: 02-26;
Recommendations: The Secretary of the Treasury should direct the Fiscal
Assistant Secretary to establish a formal process that will allow the
financial statements, related notes, and stewardship and supplemental
information in the CFS to be presented in conformity with GAAP. The
process should make timely modifications to Treasury's closing package
requirements to obtain information needed;
Status of recommendations: Per Treasury and OMB: See status of
recommendation No. 02-25;
Status of recommendations: Per GAO: Open.
Count: 26;
No.: 02-27;
Recommendations: The Secretary of the Treasury should direct the Fiscal
Assistant Secretary to establish a formal process that will allow the
financial statements, related notes, and stewardship and supplemental
information in the CFS to be presented in conformity with GAAP. The
process should assess, qualitatively and quantitatively, the impact of
the omitted disclosures;
Status of recommendations: Per Treasury and OMB: See status of
recommendation No. 02-25;
Status of recommendations: Per GAO: Open.
Count: 27;
No.: 02-28;
Recommendations: The Secretary of the Treasury should direct the Fiscal
Assistant Secretary to establish a formal process that will allow the
financial statements, related notes, and stewardship and supplemental
information in the CFS to be presented in conformity with GAAP. The
process should document decisions reached and the rationale for such
decisions;
Status of recommendations: Per Treasury and OMB: See status of
recommendation No. 02-25;
Status of recommendations: Per GAO: Open.
Count: 28;
No.: 02-29;
Recommendations: The Secretary of the Treasury should direct the Fiscal
Assistant Secretary, in coordination with the Controller of OMB, to
establish written policies and procedures for preparing the
governmentwide management representation letter to help ensure that it
is properly prepared and contains sufficient representations.
Specifically, these policies and procedures should require an analysis
of the agency management representations to determine if discrepancies
exist between what the agency auditor reported and the representations
made by the agency, including the resolution of such discrepancies;
Status of recommendations: Per Treasury and OMB: Discussions are
ongoing with GAO as to the use of the agencies' management
representation letters, supplemented with other procedures;
Status of recommendations: Per GAO: Open.
Count: 29;
No.: 02-30;
Recommendations: The Secretary of the Treasury should direct the Fiscal
Assistant Secretary, in coordination with the Controller of OMB, to
establish written policies and procedures for preparing the
governmentwide management representation letter to help ensure that it
is properly prepared and contains sufficient representations.
Specifically, these policies and procedures should require a
determination that the agency management representation letters have
been signed by the highest-level agency officials who are responsible
for and knowledgeable about the matters included in the agency
management representation letters;
Status of recommendations: Per Treasury and OMB: Treasury and OMB's
policy includes the following sentence: "Items included or not included
in the agencies' rep letters will generally not be challenged by
Treasury and OMB since they were obviously not a factor in that
agency's audit and, therefore, should not then rise to the consolidated
governmentwide audit level." Discussions are ongoing with GAO as to the
use of the agencies' management representation letters, supplemented
with other procedures;
Status of recommendations: Per GAO: Open. The policies and procedures
discuss signatures on agency management representation letters, but do
not include steps for Treasury's review of the signatures to determine
if the letters have been signed by the highest-level agency officials
who are responsible for and knowledgeable about the matters included in
the agency management representation letters.
Count: 30;
No.: 02-31;
Recommendations: The Secretary of the Treasury should direct the Fiscal
Assistant Secretary, in coordination with the Controller of OMB, to
establish written policies and procedures for preparing the
governmentwide management representation letter to help ensure that it
is properly prepared and contains sufficient representations.
Specifically, these policies and procedures should require an
assessment of the materiality thresholds used by federal agencies in
their respective management representation letters;
Status of recommendations: Per Treasury and OMB: When preparing the
governmentwide management representation letter, Treasury follows the
guidance in GAO's Financial Audit Manual (FAM) to calculate an amount
for materiality. The FAM is GAO's guidance for those entities that are
performing audits of federal entities. Treasury then executes the
following step, which is written in Treasury and OMB's policy: "We
check to ensure that the materiality amounts cited by those agencies
who do quantitatively discuss materiality are not larger than the
materiality cited in the FR management representation letter.";
Status of recommendations: Per GAO: Open. In the fiscal years 2003 and
2004 audits, we reported a limitation on the scope of our work due to
identified concerns with the adequacy of certain federal agencies'
management representations, on which Treasury and OMB depend to provide
their representations to us regarding the CFS. These concerns included
the omission of materiality thresholds. The policies and procedures do
not include steps to obtain and assess materiality thresholds from
agencies that do not quantitatively cite the amounts in their
management representation letters.
Count: 31;
No.: 02-32;
Recommendations: The Secretary of the Treasury should direct the Fiscal
Assistant Secretary, in coordination with the Controller of OMB, to
establish written policies and procedures for preparing the
governmentwide management representation letter to help ensure that it
is properly prepared and contains sufficient representations.
Specifically, these policies and procedures should require an
assessment of the impact, if any, of federal agencies' materiality
thresholds on the management representations made at the governmentwide
level;
Status of recommendations: Per Treasury and OMB: When preparing the
governmentwide management representation letter, Treasury follows the
guidance in GAO's FAM to calculate an amount for materiality. The FAM
is GAO's guidance for those entities that are performing audits of
federal entities. Treasury then executes the following step, which is
written in Treasury and OMB's policy: "We check to ensure that the
materiality amounts cited by those agencies who do quantitatively
discuss materiality are not larger than the materiality cited in the FR
management representation letter.";
Status of recommendations: Per GAO: Open. In the fiscal years 2003 and
2004 audits, we reported a limitation on the scope of our work due to
identified concerns with the adequacy of certain federal agencies'
management representations, on which Treasury and OMB depend to provide
their representations to us regarding the CFS. These concerns included
the omission of materiality thresholds. The policies and procedures do
not include steps to obtain and assess materiality thresholds from
agencies that do not quantitatively cite the amounts in their
management representation letters. In addition, the policies and
procedures are not sufficient to assess the impact of agencies'
materiality thresholds on the management representations made at the
governmentwide level.
Count: 32;
No.: 02-33;
Recommendations: The Secretary of the Treasury should direct the Fiscal
Assistant Secretary, in coordination with the Controller of OMB, to
establish written policies and procedures for preparing the
governmentwide management representation letter to help ensure that it
is properly prepared and contains sufficient representations.
Specifically, these policies and procedures should require an
evaluation and assessment of the omission of representations ordinarily
included in agency management representation letters;
Status of recommendations: Per Treasury and OMB: Treasury and OMB's
policy includes the following sentence: "Items included or not included
in the agencies' rep letters will generally not be challenged by
Treasury and OMB since they were obviously not a factor in that
agency's audit and, therefore, should not then rise to the consolidated
governmentwide audit level." Discussions are ongoing with GAO as to the
use of the agencies' management representation letters, supplemented
with other procedures;
Status of recommendations: Per GAO: Open. In the fiscal years 2003 and
2004 audits, we reported a limitation on the scope of our work due to
identified concerns with the adequacy of certain federal agencies'
management representations, on which Treasury and OMB depend to provide
their representations to us regarding the CFS. These concerns included
the omission and incompleteness of required representations. The
policies and procedures do not include steps to review the agencies'
management representation letters for omitted or incomplete
representations. In addition, the policies and procedures do not
include steps to assess the impact of omitted or incomplete
representations on the governmentwide management representation letter.
Count: 33;
No.: 02-34;
Recommendations: The Secretary of the Treasury should direct the Fiscal
Assistant Secretary, in coordination with the Controller of OMB, to
establish written policies and procedures for preparing the
governmentwide management representation letter to help ensure that it
is properly prepared and contains sufficient representations.
Specifically, these policies and procedures should require an analysis
and aggregation of the agencies' summary of unadjusted misstatements to
determine the completeness of the summaries and to ascertain the
materiality, both individually and in the aggregate, of such unadjusted
misstatements to the CFS taken as a whole;
Status of recommendations: Per Treasury and OMB: Financial Management
Service is currently updating the standard operating procedures for the
summaries of unadjusted misstatements;
Status of recommendations: Per GAO: Open. In the fiscal years 2003 and
2004 audits, we reported a limitation on the scope of our work due to
identified concerns with the adequacy of certain federal agencies'
management representations, on which Treasury and OMB depend to provide
their representations to us regarding the CFS. These concerns included
the omission and incompleteness of the summaries of unadjusted
misstatements, which are, attached to the agencies management
representation letters. The policies and procedures do not include
steps to ensure that all summaries of unadjusted misstatements have
been received from the agencies. In addition, the policies and
procedures do not include steps to obtain information missing from
summaries submitted by the agencies in order to adequately prepare the
governmentwide summary of unadjusted misstatements.
Count: 34;
No.: 02-35;
Recommendations: The Secretary of the Treasury should direct the Fiscal
Assistant Secretary, in coordination with the Controller of OMB, to
help ensure that agencies provide adequate information in their legal
representation letters regarding the expected outcome of the cases;
Status of recommendations: Per Treasury and OMB: OMB and Treasury will
work to ensure that adequate information is provided in the legal
representation letters regarding the expected outcome of cases;
Status of recommendations: Per GAO: Open.
Count: 35;
No.: 02-36;
Recommendations: The Secretary of the Treasury should direct the Fiscal
Assistant Secretary, in coordination with the Controller of OMB, to
help ensure that agencies provide related management schedules;
Status of recommendations: Per Treasury and OMB: OMB and Treasury will
follow up with agencies that have not provided their management
schedules to ensure they do so;
Status of recommendations: Per GAO: Open.
Count: 36;
No.: 02-37;
Recommendations: The Secretary of the Treasury should direct the Fiscal
Assistant Secretary, in coordination with the Controller of OMB, to
establish written policies and procedures to help ensure that major
treaty and other international agreement information is properly
identified and reported in the CFS. Specifically, these policies and
procedures should require that agencies develop a detailed schedule of
all major treaties and other international agreements that obligate the
U.S. government to provide cash, goods, or services, or that create
other financial arrangements that are contingent on the occurrence or
nonoccurrence of future events (a starting point for compiling these
data could be the State Department's Treaties in Force);
Status of recommendations: Per Treasury and OMB: OMB will analyze the
appropriateness of reporting "treaties" before developing specific
corrective actions;
Status of recommendations: Per GAO: Open.
Count: 37;
No.: 02-38;
Recommendations: The Secretary of the Treasury should direct the Fiscal
Assistant Secretary, in coordination with the Controller of OMB, to
establish written policies and procedures to help ensure that major
treaty and other international agreement information is properly
identified and reported in the CFS. Specifically, these policies and
procedures should require that agencies classify all such scheduled
major treaties and other international agreements as commitments or
contingencies;
Status of recommendations: Per Treasury and OMB: OMB will analyze the
appropriateness of reporting "treaties" before developing specific
corrective actions;
Status of recommendations: Per GAO: Open.
Count: 38;
No.: 02-39;
Recommendations: The Secretary of the Treasury should direct the Fiscal
Assistant Secretary, in coordination with the Controller of OMB, to
establish written policies and procedures to help ensure that major
treaty and other international agreement information is properly
identified and reported in the CFS. Specifically, these policies and
procedures should require that agencies disclose in the notes to the
CFS amounts for major treaties and other international agreements that
have a reasonably possible chance of resulting in a loss or claim as a
contingency;
Status of recommendations: Per Treasury and OMB: OMB will analyze the
appropriateness of reporting "treaties" before developing specific
corrective actions;
Status of recommendations: Per GAO: Open.
Count: 39;
No.: 02-40;
Recommendations: The Secretary of the Treasury should direct the Fiscal
Assistant Secretary, in coordination with the Controller of OMB, to
establish written policies and procedures to help ensure that major
treaty and other international agreement information is properly
identified and reported in the CFS. Specifically, these policies and
procedures should require that agencies disclose in the notes to the
CFS amounts for major treaties and other international agreements that
are classified as commitments and that may require measurable future
financial obligations;
Status of recommendations: Per Treasury and OMB: OMB will analyze the
appropriateness of reporting "treaties" before developing specific
corrective actions;
Status of recommendations: Per GAO: Open.
Count: 40;
No.: 02-41;
Recommendations: The Secretary of the Treasury should direct the Fiscal
Assistant Secretary, in coordination with the Controller of OMB, to
establish written policies and procedures to help ensure that major
treaty and other international agreement information is properly
identified and reported in the CFS. Specifically, these policies and
procedures should require that agencies take steps to prevent major
treaties and other international agreements that are classified as
remote from being recorded or disclosed as probable or reasonably
possible in the CFS;
Status of recommendations: Per Treasury and OMB: OMB will analyze the
appropriateness of reporting "treaties" before developing specific
corrective actions;
Status of recommendations: Per GAO: Open.
Count: 41;
No.: 02-42;
Recommendations: As Treasury is designing its new compilation process,
which it expects to implement beginning with the fiscal year 2004 CFS,
the Secretary of the Treasury should direct the Fiscal Assistant
Secretary, in coordination with the Controller of OMB, to design the
new compilation process to directly link information from federal
agencies' audited financial statements to amounts reported in all the
applicable CFS and related footnotes;
Status of recommendations: Per Treasury and OMB: Treasury developed and
implemented the new compilation process, which directly links agency
audited financial statements to the CFS except for Reconciliation of
Net Operating Cost and Statements of Changes in Cash Balance for fiscal
year 2004. For fiscal year 2005, for completeness, Treasury will
establish traceability from agency audited financial statement
footnotes to the CFS footnotes;
Status of recommendations: Per GAO: Open. Treasury's goal for the new
system is to directly link financial information from federal agencies'
audited financial statements to amounts reported in the CFS, a concept
that we strongly support. However, based on our review of Treasury's
new process, Treasury was unable to demonstrate that the information in
the CFS directly linked to agencies' audited financial statements.
Count: 42;
No.: 02-43;
Recommendations: As Treasury is designing its new compilation process,
which it expects to implement beginning with the fiscal year 2004 CFS,
the Secretary of the Treasury should direct the Fiscal Assistant
Secretary, in coordination with the Controller of OMB, to consider the
other applicable recommendations in this report when designing and
implementing the new compilation process;
Status of recommendations: Per Treasury and OMB: Treasury will continue
to consider applicable recommendations as the new compilation system is
enhanced;
Status of recommendations: Per GAO: Open.
Count: 43;
No.: 02-44;
Recommendations: The Secretary of the Treasury should direct the Fiscal
Assistant Secretary to ensure that the note disclosure for loans
receivable and loan guarantee liabilities meets the requirements of
Statement of Federal Financial Accounting Standards (SFFAS) No. 3,
Accounting for Inventory and Related Property, paragraph 91, which
requires the reporting entity to disclose the valuation basis for
foreclosed property;
Status of recommendations: Per Treasury and OMB: See status of
recommendation No. 02-25;
Status of recommendations: Per GAO: Open.
Count: 44;
No.: 02-45;
Recommendations: The Secretary of the Treasury should direct the Fiscal
Assistant Secretary to ensure that the note disclosure for loans
receivable and loan guarantee liabilities meets the requirements of
SFFAS No. 3, Accounting for Inventory and Related Property, paragraph
91, which requires the reporting entity to disclose the changes from
the prior year's accounting methods, if any;
Status of recommendations: Per Treasury and OMB: See status of
recommendation No. 02-25;
Status of recommendations: Per GAO: Open.
Count: 45;
No.: 02-46;
Recommendations: The Secretary of the Treasury should direct the Fiscal
Assistant Secretary to ensure that the note disclosure for loans
receivable and loan guarantee liabilities meets the requirements of
SFFAS No. 3, Accounting for Inventory and Related Property, paragraph
91, which requires the reporting entity to disclose the restrictions on
the use/disposal of property;
Status of recommendations: Per Treasury and OMB: See status of
recommendation No. 02-25;
Status of recommendations: Per GAO: Open.
Count: 46;
No.: 02-47;
Recommendations: The Secretary of the Treasury should direct the Fiscal
Assistant Secretary to ensure that the note disclosure for loans
receivable and loan guarantee liabilities meets the requirements of
SFFAS No. 3, Accounting for Inventory and Related Property, paragraph
91, which requires the reporting entity to disclose the balances by
categories (i.e., pre-1992 and post-1991 foreclosed property);
Status of recommendations: Per Treasury and OMB: See status of
recommendation No. 02-25;
Status of recommendations: Per GAO: Open.
Count: 47;
No.: 02-48;
Recommendations: The Secretary of the Treasury should direct the Fiscal
Assistant Secretary to ensure that the note disclosure for loans
receivable and loan guarantee liabilities meets the requirements of
SFFAS No. 3, Accounting for Inventory and Related Property, paragraph
91, which requires the reporting entity to disclose the number of
properties held and average holding period by type or category;
Status of recommendations: Per Treasury and OMB: See status of
recommendation No. 02-25;
Status of recommendations: Per GAO: Open.
Count: 48;
No.: 02-49;
Recommendations: The Secretary of the Treasury should direct the Fiscal
Assistant Secretary to ensure that the note disclosure for loans
receivable and loan guarantee liabilities meets the requirements of
SFFAS No. 3, Accounting for Inventory and Related Property, paragraph
91, which requires the reporting entity to disclose the number of
properties for which foreclosure proceedings are in process at the end
of the period for foreclosed assets acquired in full or partial
settlement of a direct or guaranteed loan;
Status of recommendations: Per Treasury and OMB: See status of
recommendation No. 02-25;
Status of recommendations: Per GAO: Open.
Count: 49;
No.: 02-50;
Recommendations: The Secretary of the Treasury should direct the Fiscal
Assistant Secretary to ensure that the note disclosure for loans
receivable and loan guarantee liabilities meets the requirements of
SFFAS No. 18, Amendments to Accounting Standards for Direct Loans and
Loan Guarantees, paragraph 9, which requires credit programs to
reestimate the subsidy cost allowance for outstanding direct loans and
the liability for outstanding loan guarantees. There are two kinds of
reestimates: (1) interest rate reestimates and (2) technical/default
reestimates. Entities should measure and disclose each program's
reestimates in these two components separately;
Status of recommendations: Per Treasury and OMB: See status of
recommendation No. 02-25;
Status of recommendations: Per GAO: Open.
Count: 50;
No.: 02-51;
Recommendations: The Secretary of the Treasury should direct the Fiscal
Assistant Secretary to ensure that the note disclosure for loans
receivable and loan guarantee liabilities meets the requirements of
SFFAS No. 18, Amendments to Accounting Standards for Direct Loans and
Loan Guarantees, paragraph 10, which requires the reporting entity to
display in the notes to the financial statements a reconciliation
between the beginning and ending balances of the subsidy cost allowance
for outstanding direct loans and the liability for outstanding loan
guarantees reported on the entity's balance sheet;
Status of recommendations: Per Treasury and OMB: See status of
recommendation No. 02-25;
Status of recommendations: Per GAO: Open.
Count: 51;
No.: 02-52;
Recommendations: The Secretary of the Treasury should direct the Fiscal
Assistant Secretary to ensure that the note disclosure for loans
receivable and loan guarantee liabilities meets the requirements of
SFFAS No. 18, Amendments to Accounting Standards for Direct Loans and
Loan Guarantees, paragraph 11, which requires disclosure of the total
amount of direct or guaranteed loans disbursed for the current
reporting year and the preceding reporting year;
Status of recommendations: Per Treasury and OMB: See status of
recommendation No. 02-25;
Status of recommendations: Per GAO: Open.
Count: 52;
No.: 02-53;
Recommendations: The Secretary of the Treasury should direct the Fiscal
Assistant Secretary to ensure that the note disclosure for loans
receivable and loan guarantee liabilities meets the requirements of
SFFAS No. 18, Amendments to Accounting Standards for Direct Loans and
Loan Guarantees, paragraph 11, which requires disclosure of the subsidy
expense by components, recognized for the direct or guaranteed loans
disbursed in the current reporting year and the preceding reporting
year;
Status of recommendations: Per Treasury and OMB: See status of
recommendation No. 02-25;
Status of recommendations: Per GAO: Open.
Count: 53;
No.: 02-54;
Recommendations: The Secretary of the Treasury should direct the Fiscal
Assistant Secretary to ensure that the note disclosure for loans
receivable and loan guarantee liabilities meets the requirements of
SFFAS No. 18, Amendments to Accounting Standards for Direct Loans and
Loan Guarantees, paragraph 11, which requires disclosure of the subsidy
reestimates by components for the current reporting year and the
preceding reporting year;
Status of recommendations: Per Treasury and OMB: See status of
recommendation No. 02-25;
Status of recommendations: Per GAO: Open.
Count: 54;
No.: 02-55;
Recommendations: The Secretary of the Treasury should direct the Fiscal
Assistant Secretary to ensure that the note disclosure for loans
receivable and loan guarantee liabilities meets the requirements of
SFFAS No. 18, Amendments to Accounting Standards for Direct Loans and
Loan Guarantees, paragraph 11, which requires disclosure, at the
program level, of the subsidy rates for the total subsidy cost and its
components for the interest subsidy costs, default costs (net of
recoveries), fees and other collections, and other costs estimated for
direct loans and loan guarantees in the current year's budget for the
current year's cohorts;
Status of recommendations: Per Treasury and OMB: See status of
recommendation No. 02-25;
Status of recommendations: Per GAO: Open.
Count: 55;
No.: 02-56;
Recommendations: The Secretary of the Treasury should direct the Fiscal
Assistant Secretary to ensure that the note disclosure for loans
receivable and loan guarantee liabilities meets the requirements of
SFFAS No. 18, Amendments to Accounting Standards for Direct Loans and
Loan Guarantees, paragraph 11, which requires the reporting entity to
disclose, discuss, and explain events and changes in economic
conditions, other risk factors, legislation, credit policies, and
subsidy estimation methodologies and assumptions that have had a
significant and measurable effect on subsidy rates, subsidy expense,
and subsidy reestimates;
Status of recommendations: Per Treasury and OMB: See status of
recommendation No. 02-25;
Status of recommendations: Per GAO: Open.
Count: 56;
No.: 02-57;
Recommendations: The Secretary of the Treasury should direct the Fiscal
Assistant Secretary to ensure that the note disclosure for inventories
and operating materials and supplies meets the requirements of SFFAS
No. 3, Accounting for Inventory and Related Property, paragraph 30,
which requires the difference between the carrying amount and the
expected net realizable value to be recognized as a loss or gain and
either separately reported or disclosed when inventory or operating
materials and supplies are declared excess, obsolete, or unserviceable;
Status of recommendations: Per Treasury and OMB: See status of
recommendation No. 02-25;
Status of recommendations: Per GAO: Open.
Count: 57;
No.: 02-58;
Recommendations: The Secretary of the Treasury should direct the Fiscal
Assistant Secretary to ensure that the note disclosure for inventories
and operating materials and supplies meets the requirements of SFFAS
No. 3, Accounting for Inventory and Related Property, paragraphs 35 and
50, which require disclosure of inventory and operating materials and
supplies general composition;
Status of recommendations: Per Treasury and OMB: See status of
recommendation No. 02-25;
Status of recommendations: Per GAO: Open.
Count: 58;
No.: 02-59;
Recommendations: The Secretary of the Treasury should direct the Fiscal
Assistant Secretary to ensure that the note disclosure for inventories
and operating materials and supplies meets the requirements of SFFAS
No. 3, Accounting for Inventory and Related Property, paragraphs 35 and
50, that require disclosure of any changes from the prior year in
accounting methods for inventory and operating materials and supplies;
Status of recommendations: Per Treasury and OMB: See status of
recommendation No. 02-25;
Status of recommendations: Per GAO: Open.
Count: 59;
No.: 02-60;
Recommendations: The Secretary of the Treasury should direct the Fiscal
Assistant Secretary to ensure that the note disclosure for inventories
and operating materials and supplies meets the requirements of SFFAS
No. 3, Accounting for Inventory and Related Property, paragraphs 35 and
50, which require the disclosure of any restrictions on the sale of
inventory and the use of operating materials and supplies;
Status of recommendations: Per Treasury and OMB: See status of
recommendation No. 02-25;
Status of recommendations: Per GAO: Open.
Count: 60;
No.: 02-61;
Recommendations: The Secretary of the Treasury should direct the Fiscal
Assistant Secretary to ensure that the note disclosure for inventories
and operating materials and supplies meets the requirements of SFFAS
No. 3, Accounting for Inventory and Related Property, paragraphs 35 and
50, which requires disclosure of any changes in the criteria for
categorizing inventory and operating materials and supplies;
Status of recommendations: Per Treasury and OMB: See status of
recommendation No. 02-25;
Status of recommendations: Per GAO: Open.
Count: 61;
No.: 02-62;
Recommendations: The Secretary of the Treasury should direct the Fiscal
Assistant Secretary to ensure that the note disclosure for stockpile
material meets the requirements of SFFAS No. 3, Accounting for
Inventory and Related Property, paragraph 56, which requires disclosure
of the basis for valuing stockpile material, including valuation method
and any cost flow assumptions;
Status of recommendations: Per Treasury and OMB: See status of
recommendation No. 02-25;
Status of recommendations: Per GAO: Open.
Count: 62;
No.: 02-63;
Recommendations: The Secretary of the Treasury should direct the Fiscal
Assistant Secretary to ensure that the note disclosure for stockpile
material meets the requirements of SFFAS No. 3, Accounting for
Inventory and Related Property, paragraph 56, which requires disclosure
of any changes from the prior year's accounting methods;
Status of recommendations: Per Treasury and OMB: See status of
recommendation No. 02-25;
Status of recommendations: Per GAO: Open.
Count: 63;
No.: 02-64;
Recommendations: The Secretary of the Treasury should direct the Fiscal
Assistant Secretary to ensure that the note disclosure for stockpile
material meets the requirements of SFFAS No. 3, Accounting for
Inventory and Related Property, paragraph 56, which requires disclosure
of restrictions on the use of stockpile material;
Status of recommendations: Per Treasury and OMB: See status of
recommendation No. 02-25;
Status of recommendations: Per GAO: Open.
Count: 64;
No.: 02-65;
Recommendations: The Secretary of the Treasury should direct the Fiscal
Assistant Secretary to ensure that the note disclosure for stockpile
material meets the requirements of SFFAS No. 3, Accounting for
Inventory and Related Property, paragraph 56, which requires disclosure
of the balances in each category of stockpile material (i.e., stockpile
material held and held for sale);
Status of recommendations: Per Treasury and OMB: See status of
recommendation No. 02-25;
Status of recommendations: Per GAO: Open.
Count: 65;
No.: 02-66;
Recommendations: The Secretary of the Treasury should direct the Fiscal
Assistant Secretary to ensure that the note disclosure for stockpile
material meets the requirements of SFFAS No. 3, Accounting for
Inventory and Related Property, paragraph 56, which requires disclosure
of the criteria for grouping stockpile material held for sale;
Status of recommendations: Per Treasury and OMB: See status of
recommendation No. 02-25;
Status of recommendations: Per GAO: Open.
Count: 66;
No.: 02-67;
Recommendations: The Secretary of the Treasury should direct the Fiscal
Assistant Secretary to ensure that the note disclosure for stockpile
material meets the requirements of SFFAS No. 3, Accounting for
Inventory and Related Property, paragraph 56, which requires disclosure
of changes in criteria for categorizing stockpile material held for
sale;
Status of recommendations: Per Treasury and OMB: See status of
recommendation No. 02-25;
Status of recommendations: Per GAO: Open.
Count: 67;
No.: 02-68;
Recommendations: The Secretary of the Treasury should direct the Fiscal
Assistant Secretary to ensure that the note disclosure for stockpile
material meets the requirements of SFFAS No. 3, Accounting for
Inventory and Related Property, paragraph 55, which requires disclosure
of any difference between the carrying amount (i.e., purchase price or
cost) of stockpile material held for sale and the estimated selling
price of such assets;
Status of recommendations: Per Treasury and OMB: See status of
recommendation No. 02-25;
Status of recommendations: Per GAO: Open.
Count: 68;
No.: 02-69;
Recommendations: The Secretary of the Treasury should direct the Fiscal
Assistant Secretary to ensure that the note disclosure for seized
material meets the requirements of SFFAS No. 3, Accounting for
Inventory and Related Property, paragraph 66, which requires disclosure
of the valuation method;
Status of recommendations: Per Treasury and OMB: See status of
recommendation No. 02-25;
Status of recommendations: Per GAO: Open.
Count: 69;
No.: 02-70;
Recommendations: The Secretary of the Treasury should direct the Fiscal
Assistant Secretary to ensure that the note disclosure for seized
material meets the requirements of SFFAS No. 3, Accounting for
Inventory and Related Property, paragraph 66, which requires disclosure
of any changes from the prior year's accounting methods;
Status of recommendations: Per Treasury and OMB: See status of
recommendation No. 02-25;
Status of recommendations: Per GAO: Open.
Count: 70;
No.: 02-71;
Recommendations: The Secretary of the Treasury should direct the Fiscal
Assistant Secretary to ensure that the note disclosure for seized
material meets the requirements of SFFAS No. 3, Accounting for
Inventory and Related Property, paragraph 66, which requires disclosure
of the analysis of change in seized property (including dollar value
and number of seized properties) that is on hand at the beginning of
the year, seized during the year, disposed of during the year, and on
hand at the end of the year, as well as known liens or other claims
against the property. This information should be presented by type of
seizure and method of disposition, when material;
Status of recommendations: Per Treasury and OMB: See status of
recommendation No. 02-25;
Status of recommendations: Per GAO: Open.
Count: 71;
No.: 02-72;
Recommendations: The Secretary of the Treasury should direct the Fiscal
Assistant Secretary to ensure that the note disclosure for forfeited
property meets the requirements of SFFAS No. 3, Accounting for
Inventory and Related Property, paragraph 78, which requires disclosure
of the valuation method;
Status of recommendations: Per Treasury and OMB: See status of
recommendation No. 02-25;
Status of recommendations: Per GAO: Open.
Count: 72;
No.: 02-73;
Recommendations: The Secretary of the Treasury should direct the Fiscal
Assistant Secretary to ensure that the note disclosure for forfeited
property meets the requirements of SFFAS No. 3, Accounting for
Inventory and Related Property, paragraph 78, which requires disclosure
of the analysis of the changes in forfeited property by type and dollar
amount that includes (1) number of forfeitures on hand at the beginning
of the year, (2) additions, (3) disposals and method of disposition,
and (4) end-of-year balances;
Status of recommendations: Per Treasury and OMB: See status of
recommendation No. 02-25;
Status of recommendations: Per GAO: Open.
Count: 73;
No.: 02-74;
Recommendations: The Secretary of the Treasury should direct the Fiscal
Assistant Secretary to ensure that the note disclosure for forfeited
property meets the requirements of SFFAS No. 3, Accounting for
Inventory and Related Property, paragraph 78, which requires disclosure
of any restriction on the use or disposition of the property;
Status of recommendations: Per Treasury and OMB: See status of
recommendation No. 02-25;
Status of recommendations: Per GAO: Open.
Count: 74;
No.: 02-75;
Recommendations: The Secretary of the Treasury should direct the Fiscal
Assistant Secretary to ensure that the note disclosure for forfeited
property meets the requirements of SFFAS No. 3, Accounting for
Inventory and Related Property, paragraph 78, which requires
disclosure, if available, of an estimate of the value of property to be
distributed to other federal, state, and local agencies in future
reporting periods;
Status of recommendations: Per Treasury and OMB: See status of
recommendation No. 02-25;
Status of recommendations: Per GAO: Open.
Count: 75;
No.: 02-76;
Recommendations: The Secretary of the Treasury should direct the Fiscal
Assistant Secretary to ensure that the note disclosure for goods held
under price support and stabilization programs meets the requirements
of SFFAS No. 3, Accounting for Inventory and Related Property,
paragraph 98, which requires that if a contingent loss is not
recognized because it is less than probable or it is not reasonably
measurable, disclosure of the contingency shall be made if it is at
least reasonably possible that a loss may occur;
Status of recommendations: Per Treasury and OMB: See status of
recommendation No. 02-25;
Status of recommendations: Per GAO: Open.
Count: 76;
No.: 02-77;
Recommendations: The Secretary of the Treasury should direct the Fiscal
Assistant Secretary to ensure that the note disclosure for goods held
under price support and stabilization programs meets the requirements
of SFFAS No. 3, Accounting for Inventory and Related Property,
paragraph 109, which requires disclosure of the basis for valuing
commodities, including valuation method and cost flow assumptions;
Status of recommendations: Per Treasury and OMB: See status of
recommendation No. 02-25;
Status of recommendations: Per GAO: Open.
Count: 77;
No.: 02-78;
Recommendations: The Secretary of the Treasury should direct the Fiscal
Assistant Secretary to ensure that the note disclosure for goods held
under price support and stabilization programs meets the requirements
of SFFAS No. 3, Accounting for Inventory and Related Property,
paragraph 109, which requires disclosure of any changes from the prior
year's accounting methods;
Status of recommendations: Per Treasury and OMB: See status of
recommendation No. 02-25;
Status of recommendations: Per GAO: Open.
Count: 78;
No.: 02-79;
Recommendations: The Secretary of the Treasury should direct the Fiscal
Assistant Secretary to ensure that the note disclosure for goods held
under price support and stabilization programs meets the requirements
of SFFAS No. 3, Accounting for Inventory and Related Property,
paragraph 109, which requires disclosure of any restrictions on the
use, disposal, or sale of commodities;
Status of recommendations: Per Treasury and OMB: See status of
recommendation No. 02-25;
Status of recommendations: Per GAO: Open.
Count: 79;
No.: 02-80;
Recommendations: The Secretary of the Treasury should direct the Fiscal
Assistant Secretary to ensure that the note disclosure for goods held
under price support and stabilization programs meets the requirements
of SFFAS No. 3, Accounting for Inventory and Related Property,
paragraph 109, which requires disclosure of the analysis of the change
in dollar amount and volume of commodities, including those (1) on hand
at the beginning of the year, (2) acquired during the year, (3)
disposed of during the year listed by method of disposition, (4) on
hand at the end of the year, (5) on hand at year-end and estimated to
be donated or transferred during the coming period, and (6) received as
a result of surrender of collateral related to nonrecourse loans
outstanding. The analysis should also show the dollar value and volume
of purchase agreement commitments;
Status of recommendations: Per Treasury and OMB: See status of
recommendation No. 02-25;
Status of recommendations: Per GAO: Open.
Count: 80;
No.: 02-81;
Recommendations: The Secretary of the Treasury should direct the Fiscal
Assistant Secretary to ensure that the note disclosure for property,
plant, and equipment (PP&E) meets the disclosure requirements of SFFAS
No. 6, Accounting for Property, Plant, and Equipment, paragraph 45,
which requires disclosure of the estimated useful lives for each major
class of PP&E;
Status of recommendations: Per Treasury and OMB: See status of
recommendation No. 02-25;
Status of recommendations: Per GAO: Open.
Count: 81;
No.: 02-82;
Recommendations: The Secretary of the Treasury should direct the Fiscal
Assistant Secretary to ensure that the note disclosure for PP&E meets
the disclosure requirements of SFFAS No. 6, Accounting for Property,
Plant, and Equipment, paragraph 45, which requires disclosure of
capitalization thresholds, including any changes in thresholds during
the period;
Status of recommendations: Per Treasury and OMB: See status of
recommendation No. 02-25;
Status of recommendations: Per GAO: Open.
Count: 82;
No.: 02-83;
Recommendations: The Secretary of the Treasury should direct the Fiscal
Assistant Secretary to ensure that the note disclosure for PP&E meets
the disclosure requirements of SFFAS No. 6, Accounting for Property,
Plant, and Equipment, paragraph 45, which requires disclosure of
restrictions on the use or convertibility of general PP&E;
Status of recommendations: Per Treasury and OMB: See status of
recommendation No. 02-25;
Status of recommendations: Per GAO: Open.
Count: 83;
No.: 02-85;
Recommendations: The Secretary of the Treasury should direct the Fiscal
Assistant Secretary to ensure that the note disclosure for PP&E meets
the disclosure requirements of SFFAS No. 10, Accounting for Internal
Use Software, paragraph 35, which requires disclosure of the estimated
useful life for each major class of software for internal use software;
Status of recommendations: Per Treasury and OMB: See status of
recommendation No. 02-25;
Status of recommendations: Per GAO: Open.
Count: 84;
No.: 02-86;
Recommendations: The Secretary of the Treasury should direct the Fiscal
Assistant Secretary to ensure that the note disclosure for PP&E meets
the disclosure requirements of SFFAS No. 10, Accounting for Internal
Use Software, paragraph 35, which requires disclosure of the method of
amortization for internal use software;
Status of recommendations: Per Treasury and OMB: See status of
recommendation No. 02-25;
Status of recommendations: Per GAO: Open.
Count: 85;
No.: 02-87;
Recommendations: The Secretary of the Treasury should direct the Fiscal
Assistant Secretary to ensure that the note disclosure for PP&E meets
the disclosure requirements of SFFAS No. 16, Amendments to Accounting
for Property, Plant, and Equipment, paragraph 9, which requires an
appropriate PP&E note disclosure to explain that "physical quantity"
information for the multiuse heritage assets is included in
supplemental stewardship reporting for heritage assets;
Status of recommendations: Per Treasury and OMB: See status of
recommendation No. 02-25;
Status of recommendations: Per GAO: Open.
Count: 86;
No.: 02-88;
Recommendations: The Secretary of the Treasury should direct the Fiscal
Assistant Secretary to ensure that the note disclosure for federal
employee and veteran benefits payable is completely and properly
reported, specifically, that (1) it include a line for the valuation of
plan amendments that occurred during the year and (2) the liability for
military pensions and note disclosure related to the "change in
actuarial accrued pension liability and components of related expenses"
agree with the information presented in the Department of Defense's
financial statements;
Status of recommendations: Per Treasury and OMB: See status of
recommendation No. 02-25;
Status of recommendations: Per GAO: Open.
Count: 87;
No.: 02-89;
Recommendations: The Secretary of the Treasury should direct the Fiscal
Assistant Secretary to ensure that the note disclosure for
environmental and disposal liabilities meets the requirements of SFFAS
No. 6, Accounting for Property, Plant, and Equipment, which requires
(1) estimation and recognition of cleanup costs associated with general
PP&E at the time the PP&E is placed in service and (2) recognition of a
liability for the portion of the estimated total cleanup cost
attributable to that portion of the physical capacity used or that
portion of the estimated useful life that has passed since the general
PP&E was placed in service;
Status of recommendations: Per Treasury and OMB: See status of
recommendation No. 02-25;
Status of recommendations: Per GAO: Open.
Count: 88;
No.: 02-90;
Recommendations: The Secretary of the Treasury should direct the Fiscal
Assistant Secretary to ensure that the note disclosure for
environmental and disposal liabilities meets the requirements of SFFAS
No. 6, Accounting for Property, Plant, and Equipment, which requires
inclusion of material changes in total estimated cleanup costs due to
changes in laws, technology, or plans;
Status of recommendations: Per Treasury and OMB: See status of
recommendation No. 02-25;
Status of recommendations: Per GAO: Open.
Count: 89;
No.: 02-91;
Recommendations: The Secretary of the Treasury should direct the Fiscal
Assistant Secretary to ensure that the note disclosure for capital
leases meets the requirements of Federal Accounting Standards Board
(FASB), Statement of Financial Accounting Standards (SFAS) No. 13,
Accounting for Leases, paragraph 16, which requires future minimum
lease payments as of the date of the latest balance sheet presented, in
the aggregate and for each of the 5 succeeding fiscal years, with
separate deductions from the total for the amount representing
executory costs, including any profit thereon, included in the minimum
lease payments, and for the amount of the imputed interest necessary to
reduce the net minimum lease payments to present value;
Status of recommendations: Per Treasury and OMB: See status of
recommendation No. 02-25;
Status of recommendations: Per GAO: Open.
Count: 90;
No.: 02-92;
Recommendations: The Secretary of the Treasury should direct the Fiscal
Assistant Secretary to ensure that the note disclosure for capital
leases meets the requirements of FASB, SFAS No. 13, Accounting for
Leases, paragraph 16, which requires a summary of assets under capital
lease by major asset category and the related total accumulated
amortization;
Status of recommendations: Per Treasury and OMB: See status of
recommendation No. 02-25;
Status of recommendations: Per GAO: Open.
Count: 91;
No.: 02-93;
Recommendations: The Secretary of the Treasury should direct the Fiscal
Assistant Secretary to ensure that the note disclosure for capital
leases meets the requirements of FASB, SFAS No. 13, Accounting for
Leases, paragraph 16, which requires a general description of the
lessee's leasing arrangements, including but not limited to (1) the
basis on which contingent rental payments are determined; (2) the
existence and terms of renewal or purchase options and escalation
clauses; and (3) restrictions imposed by lease agreements, such as
those concerning dividends, additional debt, and further leasing;
Status of recommendations: Per Treasury and OMB: See status of
recommendation No. 02-25;
Status of recommendations: Per GAO: Open.
Count: 92;
No.: 02-94;
Recommendations: The Secretary of the Treasury should direct the Fiscal
Assistant Secretary to ensure that the note disclosure for life
insurance liabilities meets the requirements of SFFAS No. 5, Accounting
for Liabilities of the Federal Government, paragraph 117, which
requires all federal reporting entities with whole life insurance
programs to follow applicable standards as prescribed in the private
sector standards when reporting the liability for future policy
benefits: FASB SFAS No. 60, Accounting and Reporting by Insurance
Enterprises; SFAS No. 97, Accounting and Reporting by Insurance
Enterprises for Certain Long-Duration Contracts and for Realized Gains
and Losses from the Sale of Investments; SFAS No. 120, Accounting and
Reporting by Mutual Life Insurance Enterprises and by Insurance
Enterprises for Certain Long-Duration Participating Contracts; and
American Institute of Certified Public Accountants Statement of
Position 95-1, Accounting for Certain Insurance Activities of Mutual
Life Insurance Enterprises;
Status of recommendations: Per Treasury and OMB: See status of
recommendation No. 02-25;
Status of recommendations: Per GAO: Open.
Count: 93;
No.: 02-95;
Recommendations: The Secretary of the Treasury should direct the Fiscal
Assistant Secretary to ensure that the note disclosure for life
insurance liabilities meets the requirements of SFFAS No. 5, Accounting
for Liabilities of the Federal Government, paragraph 5, which requires
all components of the liability for future policy benefits (i.e., the
net-level premium reserve for death and endowment policies and the
liability for terminal dividends) to be separately disclosed in a
footnote with a description of each amount and an explanation of its
projected use and any other potential uses (e.g., reducing premiums,
determining and declaring dividends available, and reducing federal
support in the form of appropriations related to administrative cost or
subsidies);
Status of recommendations: Per Treasury and OMB: See status of
recommendation No. 02-25;
Status of recommendations: Per GAO: Open.
Count: 94;
No.: 02-96;
Recommendations: The Secretary of the Treasury should direct the Fiscal
Assistant Secretary to ensure that the note disclosure on major
commitments and contingencies is consistent with disclosed information
in individual agencies' financial statements;
Status of recommendations: Per Treasury and OMB: See status of
recommendation No. 02-25;
Status of recommendations: Per GAO: Open.
Count: 95;
No.: 02-97;
Recommendations: The Secretary of the Treasury should direct the Fiscal
Assistant Secretary to ensure that the note disclosure on major
commitments and contingencies discloses sufficient information
(detailed discussion) regarding certain major commitments and
contingencies;
Status of recommendations: Per Treasury and OMB: See status of
recommendation No. 02-25;
Status of recommendations: Per GAO: Open.
Count: 96;
No.: 02-99;
Recommendations: The Secretary of the Treasury should direct the Fiscal
Assistant Secretary to ensure that the note disclosure for collections
and refunds of federal revenue meets the requirements of SFFAS No. 7,
Concepts for Reconciling Budgetary and Financial Accounting, paragraph
69.2, which requires collecting entities to provide in the other
accompanying information any relevant estimates of the annual tax gap
that become available as a result of federal government surveys or
studies;
Status of recommendations: Per Treasury and OMB: See status of
recommendation No. 02-25;
Status of recommendations: Per GAO: Open.
Count: 97;
No.: 02-100;
Recommendations: The Secretary of the Treasury should direct the Fiscal
Assistant Secretary to ensure that the note disclosure for dedicated
collections meets the requirements of SFFAS No. 7, Part I, Accounting
for Revenue and Other Financing Sources, paragraph 85, which requires
inclusion of condensed information about assets and liabilities showing
investments in Treasury securities, other assets, liabilities due and
payable to beneficiaries, other liabilities, and fund balance;
Status of recommendations: Per Treasury and OMB: See status of
recommendation No. 02-25;
Status of recommendations: Per GAO: Open.
Count: 98;
No.: 02-101;
Recommendations: The Secretary of the Treasury should direct the Fiscal
Assistant Secretary to ensure that the note disclosure for dedicated
collections meets the requirements of SFFAS No. 7, Part I, Accounting
for Revenue and Other Financing Sources, paragraph 85, which requires
inclusion of condensed information on net cost and changes to fund
balance, showing revenues by type (exchange/nonexchange), program
expenses, other expenses, other financing sources, and other changes in
fund balance;
Status of recommendations: Per Treasury and OMB: See status of
recommendation No. 02-25;
Status of recommendations: Per GAO: Open.
Count: 99;
No.: 02-102;
Recommendations: The Secretary of the Treasury should direct the Fiscal
Assistant Secretary to ensure that the note disclosure for dedicated
collections meets the requirements of SFFAS No. 7, Part I, Accounting
for Revenue and Other Financing Sources, paragraph 85, which requires
inclusion of any revenues, other financing sources, or costs
attributable to the fund under accounting standards but not legally
allowable as credits or charges to the fund;
Status of recommendations: Per Treasury and OMB: See status of
recommendation No. 02-25;
Status of recommendations: Per GAO: Open.
Count: 100;
No.: 02-103;
Recommendations: The Secretary of the Treasury should direct the Fiscal
Assistant Secretary to ensure that the note disclosure for Indian trust
funds meets the requirements of SFFAS No. 7, Part I, Accounting for
Revenue and Other Financing Sources, paragraph 85, which requires a
description of each fund's purpose, how the administrative entity
accounts for and reports the fund, and its authority to use those
collections;
Status of recommendations: Per Treasury and OMB: See status of
recommendation No. 02-25;
Status of recommendations: Per GAO: Open.
Count: 101;
No.: 02-104;
Recommendations: The Secretary of the Treasury should direct the Fiscal
Assistant Secretary to ensure that the note disclosure for Indian trust
funds meets the requirements of SFFAS No. 7, Part I, Accounting for
Revenue and Other Financing Sources, paragraph 85, which requires
disclosure of the sources of revenue or other financing for the period
and an explanation of the extent to which they are inflows of resources
to the government or the result of intragovernmental flows;
Status of recommendations: Per Treasury and OMB: See status of
recommendation No. 02-25;
Status of recommendations: Per GAO: Open.
Count: 102;
No.: 02-105;
Recommendations: The Secretary of the Treasury should direct the Fiscal
Assistant Secretary to ensure that the note disclosure for Indian trust
funds meets the requirements of SFFAS No. 7, Part I, Accounting for
Revenue and Other Financing Sources, paragraph 85, which requires
condensed information about assets and liabilities showing investments
in Treasury securities, other assets, liabilities due and payable to
beneficiaries, and other liabilities;
Status of recommendations: Per Treasury and OMB: See status of
recommendation No. 02-25;
Status of recommendations: Per GAO: Open.
Count: 103;
No.: 02-106;
Recommendations: The Secretary of the Treasury should direct the Fiscal
Assistant Secretary to ensure that the note disclosure for Indian trust
funds meets the requirements of SFFAS No. 7, Part I, Accounting for
Revenue and Other Financing Sources, paragraph 85, which requires
condensed information on net cost and changes to fund balance, showing
revenues by type (exchange/nonexchange), program expenses, other
expenses, other financing sources, and other changes in fund balance;
Status of recommendations: Per Treasury and OMB: See status of
recommendation No. 02-25;
Status of recommendations: Per GAO: Open.
Count: 104;
No.: 02-107;
Recommendations: The Secretary of the Treasury should direct the Fiscal
Assistant Secretary to ensure that the note disclosure for Indian trust
funds meets the requirements of SFFAS No. 7, Part I, Accounting for
Revenue and Other Financing Sources, paragraph 85, which requires
disclosure of any revenues, other financing sources, or costs
attributable to the fund under accounting standards, but not legally
allowable as credits or charges to the fund;
Status of recommendations: Per Treasury and OMB: See status of
recommendation No. 02-25;
Status of recommendations: Per GAO: Open.
Count: 105;
No.: 02-114;
Recommendations: The Secretary of the Treasury should direct the Fiscal
Assistant Secretary to ensure that the note disclosure for social
insurance meets the requirements of SFFAS No. 17, Accounting for Social
Insurance, paragraph 32(4), which requires individual program
sensitivity analyses for projection period cash flow in present value
dollars and annual cash flow in nominal dollars. The CFS includes only
present value sensitivity analyses for Social Security and Hospital
Insurance. Paragraph 32(4) states that at a minimum the summary should
present Social Security, Hospital Insurance, and Supplementary Medical
Insurance separately;
Status of recommendations: Per Treasury and OMB: See status of
recommendation No. 02-25;
Status of recommendations: Per GAO: Open.
Count: 106;
No.: 02-115;
Recommendations: The Secretary of the Treasury should direct the Fiscal
Assistant Secretary to ensure that the note disclosure for social
insurance meets the requirements of SFFAS No. 17, Accounting for Social
Insurance, paragraph 27(4)(a), which requires the individual program
sensitivity analyses for Social Security and Hospital Insurance to
include an analysis of assumptions regarding net immigration;
Status of recommendations: Per Treasury and OMB: See status of
recommendation No. 02-25;
Status of recommendations: Per GAO: Open.
Count: 107;
No.: 02-118;
Recommendations: The Secretary of the Treasury should direct the Fiscal
Assistant Secretary to ensure that the note disclosure for nonfederal
physical property included in stewardship information meets the
requirements of SFFAS No. 8, Supplementary Stewardship Reporting,
paragraph 87, which requires disclosure of the annual investment,
including a description of federally owned physical property
transferred to state and local governments. This information should be
provided for the year ended on the balance sheet date as well as for
each of the 4 preceding years. If data for additional years would
provide a better indication of investment, reporting of the additional
years' data is encouraged. Reporting should be at a meaningful category
or level;
Status of recommendations: Per Treasury and OMB: See status of
recommendation No. 02-25;
Status of recommendations: Per GAO: Open.
Count: 108;
No.: 02-119;
Recommendations: The Secretary of the Treasury should direct the Fiscal
Assistant Secretary to ensure that the note disclosure for nonfederal
physical property included in stewardship information meets the
requirements of SFFAS No. 8, Supplementary Stewardship Reporting,
paragraph 87, which requires a description of major programs involving
federal investments in nonfederal physical property, including a
description of programs or policies under which noncash assets are
transferred to state and local governments;
Status of recommendations: Per Treasury and OMB: See status of
recommendation No. 02-25;
Status of recommendations: Per GAO: Open.
Count: 109;
No.: 02-120;
Recommendations: The Secretary of the Treasury should direct the Fiscal
Assistant Secretary to ensure that the note disclosure for human
capital included in stewardship information meets the requirements of
SFFAS No. 8, Supplementary Stewardship Reporting, paragraph 94, which
requires a narrative description and the full cost of the investment in
human capital for the year being reported on as well as the preceding 4
years (if full cost data are not available, outlay data can be
reported);
Status of recommendations: Per Treasury and OMB: See status of
recommendation No. 02-25;
Status of recommendations: Per GAO: Open.
Count: 110;
No.: 02-121;
Recommendations: The Secretary of the Treasury should direct the Fiscal
Assistant Secretary to ensure that the note disclosure for human
capital included in stewardship information meets the requirements of
SFFAS No. 8, Supplementary Stewardship Reporting, paragraph 94, which
requires the full cost or outlay data for investments in human capital
at a meaningful category or level (e.g., by major program, agency, or
department);
Status of recommendations: Per Treasury and OMB: See status of
recommendation No. 02-25;
Status of recommendations: Per GAO: Open.
Count: 111;
No.: 02-122;
Recommendations: The Secretary of the Treasury should direct the Fiscal
Assistant Secretary to ensure that the note disclosure for human
capital included in stewardship information meets the requirements of
SFFAS No. 8, Supplementary Stewardship Reporting, paragraph 94, which
requires a narrative description of major education and training
programs considered federal investments in human capital;
Status of recommendations: Per Treasury and OMB: See status of
recommendation No. 02-25;
Status of recommendations: Per GAO: Open.
Count: 112;
No.: 02-123;
Recommendations: The Secretary of the Treasury should direct the Fiscal
Assistant Secretary to ensure that the note disclosure for research and
development included in stewardship information meets the requirements
of SFFAS No. 8, Supplementary Stewardship Reporting, paragraph 94,
which requires reporting of the annual investment made in the year
ended on the balance sheet date as well as in each of the 4 years
preceding that year. (As defined in this standard, "annual investment"
includes more than the annual expenditure reported by character class
for budget execution. Full cost shall be measured and accounted for in
accordance with SFFAS No. 4, Managerial Cost Accounting Standards for
the Federal Government.) If data for additional years would provide a
better indication of investment, reporting of the additional years'
data is encouraged. In those unusual instances when entities have no
historical data, only current reporting year data need be reported.
Reporting must be at a meaningful category or level, for example, a
major program or department;
Status of recommendations: Per Treasury and OMB: See status of
recommendation No. 02-25;
Status of recommendations: Per GAO: Open.
Count: 113;
No.: 02-124;
Recommendations: The Secretary of the Treasury should direct the Fiscal
Assistant Secretary to ensure that the note disclosure for research and
development included in stewardship information meets the requirements
of SFFAS No. 8, Supplementary Stewardship Reporting, paragraph 94,
which requires a narrative description of major research and
development programs;
Status of recommendations: Per Treasury and OMB: See status of
recommendation No. 02-25;
Status of recommendations: Per GAO: Open.
Count: 114;
No.: 02-125;
Recommendations: The Secretary of the Treasury should direct the Fiscal
Assistant Secretary to ensure that the note disclosure for deferred
maintenance meets the requirements of SFFAS No. 6, Accounting for
Property, Plant, and Equipment, paragraphs 83 and 84, which requires
inclusion of the method of measuring deferred maintenance for each
major class of PP&E;
Status of recommendations: Per Treasury and OMB: See status of
recommendation No. 02-25;
Status of recommendations: Per GAO: Open.
Count: 115;
No.: 02-126;
Recommendations: The Secretary of the Treasury should direct the Fiscal
Assistant Secretary to ensure that the note disclosure for deferred
maintenance meets the requirements of SFFAS No. 6, Accounting for
Property, Plant, and Equipment, paragraphs 83 and 84, which requires
that if the condition assessment survey method of measuring deferred
maintenance is used, the following should be presented for each major
class of PP&E: (1) description of requirements or standards for
acceptable operating condition, (2) any changes in the condition
requirements or standards, and (3) asset condition and a range estimate
of the dollar amount of maintenance needed to return the asset to its
acceptable operating condition;
Status of recommendations: Per Treasury and OMB: See status of
recommendation No. 02-25;
Status of recommendations: Per GAO: Open.
Count: 116;
No.: 02-127;
Recommendations: The Secretary of the Treasury should direct the Fiscal
Assistant Secretary to ensure that the note disclosure for deferred
maintenance meets the requirements of SFFAS No. 6, Accounting for
Property, Plant, and Equipment, paragraphs 83 and 84, which requires
that if the total life-cycle cost method is used, the following should
be presented for each major class of PP&E: (1) the original date of the
maintenance forecast and an explanation for any changes to the
forecast; (2) prior year balance of the cumulative deferred maintenance
amount; (3) the dollar amount of maintenance that was defined by the
professionals who designed, built, or managed the PP&E as required
maintenance for the reporting period; (4) the dollar amount of
maintenance actually performed during the period; (5) the difference
between the forecast and actual maintenance; (6) any adjustments to the
scheduled amounts deemed necessary by the managers of the PP&E; and (7)
the ending cumulative balance for the reporting period for each major
class of asset experiencing deferred maintenance;
Status of recommendations: Per Treasury and OMB: See status of
recommendation No. 02-25;
Status of recommendations: Per GAO: Open.
Count: 117;
No.: 02-128;
Recommendations: The Secretary of the Treasury should direct the Fiscal
Assistant Secretary, to ensure that the note disclosure for deferred
maintenance meets the requirements of SFFAS No. 6, Accounting for
Property, Plant, and Equipment, paragraphs 83 and 84, which requires
that if management elects to disclose critical and noncritical amounts,
the disclosure is to include management's definition of these
categories;
Status of recommendations: Per Treasury and OMB: See status of
recommendation No. 02-25;
Status of recommendations: Per GAO: Open.
Count: 118;
No.: 02-129;
Recommendations: The Secretary of the Treasury should direct the Fiscal
Assistant Secretary to ensure that the note disclosure for stewardship
responsibilities related to the risk assumed for federal insurance and
guarantee programs meets the requirements of SFFAS No. 5, Accounting
for Liabilities of the Federal Government, paragraph 106, which
requires that when financial information pursuant to FASB standards on
federal insurance and guarantee programs conducted by government
corporations is incorporated in general purpose financial reports of a
larger federal reporting entity, the entity should report as required
supplementary information what amounts and periodic change in those
amounts would be reported under the "risk assumed" approach;
Status of recommendations: Per Treasury and OMB: See status of
recommendation No. 02-25;
Status of recommendations: Per GAO: Open.
GAO-04-866 (results of the fiscal year 2003 audit):
Count: 119;
No.: 03-1;
Recommendations: The Secretary of the Treasury should direct the Fiscal
Assistant Secretary to ensure that if full-time equivalents (FTE) are
used as part of Treasury's methodology for allocating Office of
Personnel Management (OPM) costs, the FTEs used for the agencies listed
on the Statement of Net Cost agree with the FTEs listed in the
Analytical Perspectives, Budget of the United States Government as
currently stated in Treasury's methodology;
Status of recommendations: Per Treasury and OMB: Closed;
Status of recommendations: Per GAO: Closed during the fiscal year 2004
audit. Treasury changed its methodology and did not use the FTEs listed
in the Analytical Perspectives, Budget of the United States Government.
Count: 120;
No.: 03-2;
Recommendations: The Secretary of the Treasury should direct the Fiscal
Assistant Secretary to document any changes to the stated methodology
for allocating OPM costs and the rationale for these changes;
Status of recommendations: Per Treasury and OMB: Closed;
Status of recommendations: Per GAO: Closed during the fiscal year 2004
audit. Treasury changed its methodology and did not use the FTEs listed
in the Analytical Perspectives, Budget of the United States Government.
Count: 121;
No.: 03-3;
Recommendations: The Secretary of the Treasury should direct the Fiscal
Assistant Secretary to require reviews by Treasury management of the
accuracy of the allocated OPM costs;
Status of recommendations: Per Treasury and OMB: Closed;
Status of recommendations: Per GAO: Closed during the fiscal year 2004
audit. Treasury changed its methodology and did not use the FTEs listed
in the Analytical Perspectives, Budget of the United States Government.
Count: 122;
No.: 03-4;
Recommendations: The Director of OMB should direct the Controller of
OMB, in coordination with Treasury's Fiscal Assistant Secretary, to
work with the federal agencies so that the differences between net
outlays the agencies report in their Statement of Budgetary Resources
and the net outlay records Treasury uses to prepare the Statement of
Changes in Cash Balance are reconciled;
Status of recommendations: Per Treasury and OMB: See status of
recommendation No. 02-18;
Status of recommendations: Per GAO: Open.
Count: 123;
No.: 03-5;
Recommendations: The Secretary of the Treasury should direct the Fiscal
Assistant Secretary to determine and address the effects that any of
the differences between net outlays the agencies report in their
Statement of Budgetary Resources and Treasury's net outlay records may
have on the CFS;
Status of recommendations: Per Treasury and OMB: Treasury will wait to
see the results of the work between Treasury, OMB, and the agencies to
address GAO's recommendation for No. 02-18. Pending the results of that
work and analysis, this step may not be necessary;
Status of recommendations: Per GAO: Open.
Count: 124;
No.: 03-6;
Recommendations: The Secretary of the Treasury should direct the Fiscal
Assistant Secretary to develop a process that will allow full reporting
of the changes in cash balance of the U.S. government. Specifically,
the process should provide for reporting on the change in cash reported
on the consolidated balance sheet, which should be linked to cash
balances reported in federal agencies' audited financial statements;
Status of recommendations: Per Treasury and OMB: Treasury disagrees
with GAO. The total operating cash reported in the 2004 CFS was linked
to the amounts reported in the agencies' audited financial statements.
The Statement of Changes in Cash Balance reconciles to Operating Cash,
which is in accordance with SFFAS 24. SFFAS 24, paras. 12-13, requires
reconciliation to the Government Cash balance. It also references an
illustration that is not prescriptive;
Status of recommendations: Per GAO: Open. The Statement of Changes in
Cash Balance reported only the changes in the "operating" cash of the
U.S. government of $19.8 billion rather than the change in all cash
reported on the U.S. government's Balance Sheet of $22.6 billion, as of
September 30, 2004.
Count: 125;
No.: 03-7;
Recommendations: The Secretary of the Treasury should direct the Fiscal
Assistant Secretary to report gross amounts for receipts and
disbursements of cash related to direct loans and loan guarantees;
Status of recommendations: Per Treasury and OMB: Treasury disagrees
with GAO on this item. However, further research and discussion will
take place in fiscal year 2005;
Status of recommendations: Per GAO: Open. See status of recommendation
No. 02-12.
Count: 126;
No.: 03-8;
Recommendations: The Director of OMB should direct the Controller of
OMB, in coordination with Treasury's Fiscal Assistant Secretary, to
work with Justice and certain other executive branch agencies to ensure
that these agencies report or disclose relevant criminal debt
information in conformity with GAAP in their financial statements and
have such information subjected to audit;
Status of recommendations: Per Treasury and OMB: OMB is participating
in a multi-agency task force that will begin to address the issues
related to criminal debt;
Status of recommendations: Per GAO: Open.
Count: 127;
No.: 03-9;
Recommendations: The Secretary of the Treasury should direct the Fiscal
Assistant Secretary to include relevant criminal debt information in
the CFS or document the specific rationale for excluding such
information;
Status of recommendations: Per Treasury and OMB: See status of
recommendation No. 03-8;
Status of recommendations: Per GAO: Open.
Count: 128;
No.: 03-10;
Recommendations: The Secretary of the Treasury should direct the Fiscal
Assistant Secretary to include in the new system a request for federal
agencies to provide contingency loss information to assist Treasury in
disclosing contingencies in the CFS in accordance with GAAP;
Status of recommendations: Per Treasury and OMB: Treasury plans to
modify the new system to request contingency loss information for
fiscal year 2005;
Status of recommendations: Per GAO: Open.
Count: 129;
No.: 03-11;
Recommendations: The Secretary of the Treasury should direct the Fiscal
Assistant Secretary, in coordination with the Controller of OMB, to
modify Treasury's plans for the new closing package to (1) require
federal agencies to directly link their audited financial statement
notes to the CFS notes and (2) provide the necessary information to
demonstrate that all of the five principal consolidated financial
statements are consistent with the underlying information in federal
agencies' audited financial statements and other financial data;
Status of recommendations: Per Treasury and OMB: See status of
recommendation No. 02-42;
Status of recommendations: Per GAO: Open.
Count: 130;
No.: 03-12;
Recommendations: The Secretary of the Treasury should direct the Fiscal
Assistant Secretary to report prior period adjustments in accordance
with SFFAS No. 21 by (1) restating the prior year for corrections of
material errors and adjusting the beginning balance of cumulative
results of operations and disclosing the nature of the errors in the
notes to the CFS and (2) including corrections of immaterial errors in
the current year and not citing them as prior period adjustments on the
Statement of Changes in Net Position and not disclosing them in the
notes to the CFS;
Status of recommendations: Per Treasury and OMB: Closed;
Status of recommendations: Per GAO: Closed during the fiscal year 2004
audit.
Count: 131;
No.: 03-13;
Recommendations: The Secretary of the Treasury should direct the Fiscal
Assistant Secretary to include in Treasury's new closing package a
process that will allow federal agencies to clearly distinguish between
prior period adjustments and changes in accounting principles in
accordance with SFFAS No. 21;
Status of recommendations: Per Treasury and OMB: Closed;
Status of recommendations: Per GAO: Closed during the fiscal year 2004
audit.
Count: 132;
No.: 03-14;
Recommendations: The Secretary of the Treasury should direct the Fiscal
Assistant Secretary, to ensure that the note disclosure for federal
employees and veterans benefits payable meets the requirements of SFFAS
No. 5, Accounting for Liabilities of the Federal Government, paragraph
65, which requires that the actuarial assumptions be the basis of the
actual experience of the covered group, to the extent that credible
experience data are available, but should emphasize expected long-term
future trends rather than give undue weight to recent experience;
Status of recommendations: Per Treasury and OMB: Closed;
Status of recommendations: Per GAO: Closed during the fiscal year 2004
audit.
Count: 133;
No.: 03-15;
Recommendations: The Secretary of the Treasury should direct the Fiscal
Assistant Secretary, to ensure that the note disclosure for federal
employees and veterans benefits payable meets the requirements of SFFAS
No. 5, Accounting for Liabilities of the Federal Government, paragraph
83, which requires the reporting entity to disclose the assumptions
used for veterans compensation and burial benefits;
Status of recommendations: Per Treasury and OMB: See status of
recommendation No. 02-25;
Status of recommendations: Per GAO: Open.
Count: 134;
No.: 03-16;
Recommendations: The Secretary of the Treasury should direct the Fiscal
Assistant Secretary to ensure that the note disclosure for federal
employees and veterans benefits payable meets the requirements of SFFAS
No. 5, Accounting for Liabilities of the Federal Government, paragraph
72, which requires the reporting entity to disclose prior service costs
from plan amendments as a separate component;
Status of recommendations: Per Treasury and OMB: See status of
recommendation No. 02-25;
Status of recommendations: Per GAO: Open.
Count: 135;
No.: 03-17;
Recommendations: The Secretary of the Treasury should direct the Fiscal
Assistant Secretary to ensure that the note disclosure for federal
employees and veterans benefits payable meets the requirements of SFFAS
No. 5, Accounting for Liabilities of the Federal Government, paragraph
88, which requires the reporting entity to disclose gains or losses due
to a change in the medical inflation rate assumption for health
benefits as a separate component;
Status of recommendations: Per Treasury and OMB: See status of
recommendation No. 02-25;
Status of recommendations: Per GAO: Open.
Count: 136;
No.: 03-18;
Recommendations: The Secretary of the Treasury should direct the Fiscal
Assistant Secretary to ensure that the note disclosure for
environmental and disposal liabilities meets the requirements of SFFAS
No. 6, Accounting for Property, Plant, and Equipment, which requires
the reporting entity to disclose the method for assigning estimated
total cleanup costs to current operating periods;
Status of recommendations: Per Treasury and OMB: See status of
recommendation No. 02-25;
Status of recommendations: Per GAO: Open.
Count: 137;
No.: 03-19;
Recommendations: The Secretary of the Treasury should direct the Fiscal
Assistant Secretary to ensure that the note disclosure for
environmental and disposal liabilities meets the requirements of SFFAS
No. 6, Accounting for Property, Plant, and Equipment, which requires
the reporting entity to disclose, for cleanup costs associated with
general property, plant, and equipment, the unrecognized portion of
estimated total cleanup costs be disclosed;
Status of recommendations: Per Treasury and OMB: See status of
recommendation No. 02-25;
Status of recommendations: Per GAO: Open.
Count: 138;
No.: 03-20;
Recommendations: The Secretary of the Treasury should direct the Fiscal
Assistant Secretary to ensure that the note disclosure for
environmental and disposal liabilities meets the requirements of SFFAS
No. 6, Accounting for Property, Plant, and Equipment, which requires
the reporting entity to disclose the nature of estimates and
information regarding possible changes to the estimates resulting from
inflation, deflation, technology, or applicable laws and regulations;
Status of recommendations: Per Treasury and OMB: See status of
recommendation No. 02-25;
Status of recommendations: Per GAO: Open.
Count: 139;
No.: 03-21;
Recommendations: The Secretary of the Treasury should direct the Fiscal
Assistant Secretary to consider whether the reader would be interested
in understanding why the environmental and disposal liabilities amount
significantly changed during the year and include the explanation for
the change in the note disclosure;
Status of recommendations: Per Treasury and OMB: See status of
recommendation No. 02-25;
Status of recommendations: Per GAO: Open.
Count: 140;
No.: 03-22;
Recommendations: The Secretary of the Treasury should direct the Fiscal
Assistant Secretary to ensure that the information in stewardship
information for research and development meets the requirements of
SFFAS No. 8, Supplementary Stewardship Reporting, paragraph 99, which
requires the reporting entity to include a narrative discussion of the
major results achieved by the program along the lines of basic
research, applied research, and development;
Status of recommendations: Per Treasury and OMB: See status of
recommendation No. 02-25;
Status of recommendations: Per GAO: Open.
Count: 141;
No.: 03-23;
Recommendations: The Secretary of the Treasury should direct the Fiscal
Assistant Secretary to ensure that the information in stewardship
information for research and development meets the requirements of
SFFAS No. 8, Supplementary Stewardship Reporting, paragraph 99, which
requires the reporting entity to include a narrative description of the
major results achieved through the investments in basic research,
applied research, and development;
Status of recommendations: Per Treasury and OMB: See status of
recommendation No. 02-25;
Status of recommendations: Per GAO: Open.
Count: 142;
No.: 03-24;
Recommendations: The Secretary of the Treasury should direct the Fiscal
Assistant Secretary to ensure that the required supplemental
information for deferred maintenance meets the requirements of SFFAS
No. 6, Accounting for Property, Plant, and Equipment, paragraph 83,
which requires the reporting entity to disclose the identification of
each major class of asset (i.e., building and structures, furniture and
fixtures, equipment, vehicles, and land) for which maintenance has been
deferred;
Status of recommendations: Per Treasury and OMB: See status of
recommendation No. 02-25;
Status of recommendations: Per GAO: Open.
Source: GAO.
[End of table]
[End of section]
Appendix III: Comments from the Department of the Treasury:
DEPARTMENT OF THE TREASURY:
ASSISTANT SECRETARY:
WASHINGTON:
April 18, 2005:
Mr. Jeffrey C. Steinhoff:
Managing Director, Financial Management Assurance:
Government Accountability Office:
Washington, DC 20548:
Dear Mr. Steinhoff:
Thank you for the opportunity to comment on GAO's draft management
letter on the Fiscal Year 2004 financial audit, GAO-05-407, Process for
Preparing the Consolidated Financial Statements of the U.S. Government
Continues to Need Improvement.
Your report recognized the progress Treasury has made in preparing the
Consolidated Financial Report. Of special note was the development of
the first phase of the new Governmentwide Financial Report System
(GFRS), a closing package system which was implemented concurrently
with the accelerated reporting dates for the agency statements and the
government-wide statements. The audit report also noted that GFRS was
an on-going work in progress and we believe that this new system has
put us on the right track for improved report preparation. Treasury
will make further improvements to GFRS for this year's reporting cycle.
GAO's audit report clearly pointed out the issues we need to address in
continuing to develop and deploy our new closing package system to
collect and consolidate the data for preparing the consolidated
statements. We agree that the reporting process still needs
improvement, and, to that end, we have been addressing many of the
recommendations in previous reports through the continued development
of the new system and procedural changes to address items such as
segregation of duties, documentation, and management review.
The FY 2004 audit report offers 20 new recommendations for improving
report compilation and preparation and discusses six principal areas of
concern mentioned in previous audit reports. We generally concur with
these new recommendations and will work with OMB and the agencies to
adopt them and improve reporting practices. There are two areas;
however, where we would like you to reconsider your recommendations.
1. Directly linking audited federal agency financial statements to the
CFS. We recognize the value and need for the government-wide financial
statements to be consistent with the underlying agency financial
statements. During the year, we look to improve our process for
compiling the CFS to allow for the expanded traceability of the federal
agencies' audited financial statement note data to the CFS notes.
While three of the principal consolidated statements are now linked
directly to the agency statements, your report recommends that Treasury
require the necessary information from the agencies to compile all five
consolidated financial statements. We continue to disagree with the
assertion that the Closing Package should require this additional
information for two reasons. First, the FASAB standard relating to the
Statement of Changes in Cash Balance from Unified Budget and Other
Activities and the Reconciliation of Net Operating Cost and Unified
Budget Deficit makes it clear that the agency reported data is not
relevant to these consolidated reports and second, rolling up such data
will not help us improve the statements. We agree that the agency
Statements of Financing and Budgetary Resources should be improved and
we also agree that other problems with our reconciliation statements
need to be resolved. We would welcome specific recommendations as to
how to accomplish both objectives; however, we believe rolling up the
agency amounts will not be effective at achieving either one.
2. Controls over the compilation process. Your report recommends that
Treasury employees obtain and document approval from agencies before
changing agency data. We agree that there are instances where we should
obtain agency approvals prior to posting adjustments. We also agree
that all adjustments must be properly documented and approved by us;
however, we believe that the following are examples of situations that
do not require agency approval:
* Adjustments required to make agency closing packages agree with their
financial statements:
* Adjustments required to apply a consistent application of an
accounting principle between agencies:
* Adjustments required to make an agency conform to GAAP.
As the preparers of the statement, we must have the flexibility and
authority to make appropriate adjustments when needed regardless of
whether or not agencies agree. We would hope you would modify your
recommendation accordingly.
With regard to the government-wide legal letter, Treasury and OMB agree
that the Justice Department is the final authority on legal liability/
disclosure amounts. Treasury will assist OMB in developing a policy to
eliminate any inconsistencies between Justice and the agencies. Please
reflect this position in your recommendation.
In conclusion, we will continue to work with you on those many items on
which we agree improvements need to be made, and we will continue the
dialogue to try to resolve those areas in which we disagree with your
recommended approach. If you have any questions, please contact Robert
Reid at 622-0550.
Sincerely,
Signed by:
Donald V. Hammond:
Fiscal Assistant Secretary:
cc: Linda Combs:
David Zavada:
[End of section]
(198358):
FOOTNOTES
[1] The fiscal year 2004 Financial Report of the United States
Government includes our report and was completed by the Department of
the Treasury (Treasury) on December 15, 2004, and is available through
GAO's Web site at www.gao.gov/financial.html and Treasury's Web site at
www.fms.treas.gov/fr/index.html.
[2] GAO, Financial Audit: Process for Preparing the Consolidated
Financial Statements of the U.S. Government Needs Further Improvement,
GAO-04-866 (Washington, D.C.: Sept. 10, 2004).
[3] Treasury refers to the significant agencies as "verifying
agencies." They are the Chief Financial Officers Act agencies, the
Export-Import Bank of the United States, the Farm Credit System
Insurance Corporation, the Federal Communications Commission, the
Federal Deposit Insurance Corporation, the National Credit Union
Administration, the U.S. Postal Service, the Pension Benefit Guaranty
Corporation, the Railroad Retirement Board, the Securities and Exchange
Commission, the Smithsonian Institution, and the Tennessee Valley
Authority.
[4] GAO, Internal Control: Standards for Internal Control in the
Federal Government, GAO/AIMD-00-21.3.1 (Washington, D.C.: November
1999).
[5] GAO, Financial Audit: Process for Preparing the Consolidated
Financial Statements of the U.S. Government Needs Improvement, GAO-04-
45 (Washington, D.C.: Oct. 30, 2003).
[6] Trading partners are U.S. government agencies, departments, or
other components included in the CFS that do business with each other.
[7] Office of Management and Budget, Audit Requirements for Federal
Financial Statements, OMB-01-02 (Washington, D.C.: Oct. 16, 2000),
requires each agency chief financial officer to prepare a management
schedule that documents how the information obtained in the legal
counsel's response was considered in preparing the financial
statements.
[8] GAO-04-45.
[9] An item's omission or error is considered material if the
surrounding circumstances make it probable that the judgment of a
reasonable person relying on the information would have been changed or
influenced by the inclusion or correction of the item.
[10] The CFS has five principal financial statements--the Balance
Sheet, Statement of Net Cost, Statement of Operations and Changes in
Net Position, Reconciliation of Net Operating Cost and Unified Budget
Deficit, and Statement of Changes in Cash Balance from Unified Budget
and Other Activities.
[11] See recommendations 02-12 through 02-21 and 03-4 through 03-7 in
appendix II of this report.
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