Management Report: Improvements Needed in Controls over the Processes Used to Prepare the U.S. Consolidated Financial Statements, GAO-16-621: Published: Jul 13, 2016. Publicly Released: Jul 13, 2016.
“During its audit of the fiscal year 2015 consolidated financial statements of the U.S. government (CFS), GAO identified control deficiencies in the Department of the Treasury’s (Treasury) and the Office of Management and Budget’s (OMB) processes used to prepare the CFS. These control deficiencies contributed to material weaknesses in internal control that involve the federal government’s inability to adequately account for and reconcile intragovernmental activity and balances between federal entities; reasonably assure that the consolidated financial statements are (1) consistent with the underlying audited entities’ financial statements, (2) properly balanced, and (3) in accordance with U.S. generally accepted accounting principles; and reasonably assure that the information in the (1) Reconciliations of Net Operating Cost and Unified Budget Deficit and (2) Statements of Changes in Cash Balance from Unified Budget and Other Activities is complete and consistent with the underlying information in the audited entities’ financial statements and other financial data. During its audit of the fiscal year 2015 CFS, GAO identified two new internal control deficiencies. Specifically, GAO found that Treasury did not have sufficient procedures for verifying the accuracy of certain data transfers of federal entity-reported financial data used in the CFS preparation process and determining whether user accounts already exist before establishing or recertifying user accounts in certain federal financial systems used in the CFS preparation process to help ensure that users are not assigned incompatible roles.
In addition, GAO found that various other control deficiencies identified in previous years’ audits with respect to the processes used to prepare the CFS were resolved or continued to exist. For 5 of the 27 recommendations from GAO’s prior reports regarding control deficiencies in the processes used to prepare the CFS, Treasury implemented corrective actions during fiscal year 2015 that resolved the related control deficiencies, and as a result, these recommendations were closed. While progress was made, 22 of the 27 recommendations remained open as of February 17, 2016, the date of GAO’s report on its audit of the fiscal year 2015 CFS. GAO will continue to monitor the status of corrective actions taken to address the 2 new recommendations made in this report as well as the 22 open recommendations from prior years as part of its fiscal year 2016 CFS audit….”