Our objectives were to audit the consolidated financial statements for the fiscal years ended September 30, 2012 and 2011, including the Statements of Changes in Social Insurance Amounts for 2012 and 2011, and the 2012, 2011, 2010, 2009, and 2008 Statements of Social Insurance, along with reporting on internal control over financial reporting and on compliance with selected provisions of laws and regulations.
The Chief Financial Officers Act of 1990 (CFO Act), as expanded by the Government Management Reform Act of 1994 (GMRA), requires the inspectors general of the 24 CFO Act agencies to be responsible for annual audits of agencywide financial statements prepared by these agencies.24 GMRA requires GAO to be responsible for the audit of the U.S. governmentís consolidated financial statements,25 and the Accountability of Tax Dollars Act of 2002 (ATDA) requires most other executive branch entities to prepare and have audited annual financial statements.26 The Office of Management and Budget and the Department of the Treasury (Treasury) have identified 35 federal entities that are significant to the U.S. governmentís consolidated financial statements, consisting of the 24 CFO Act agencies, several other federal executive branch agencies, and some government corporations (35 significant entities).27 Our work was performed in coordination and cooperation with the inspectors general and independent public accountants for these 35 significant entities to achieve our respective audit objectives. Our audit approach regarding the accrual-based consolidated financial statements primarily focused on determining the current status of the material weaknesses that contributed to our disclaimer of opinion on the accrual-based consolidated financial statements and the other material weaknesses affecting internal control that we had reported in our report on the consolidated financial statements for fiscal year 2011.28 We also separately audited the financial statements of certain federal entities and federal agency components, including the following.
In addition, we considered the CFO Act agencies’ and certain other federal entities’ fiscal years 2012 and 2011 financial statements and the related auditors’ reports prepared by the inspectors general or contracted independent public accountants. Financial statements and audit reports for the 35 significant entities provide information about the operations of each of these entities. The entity audit reports also contain details regarding any audit findings and related recommendations for the respective entity. We did not audit, and we do not express an opinion on, any of these individual federal entity financial statements.
We considered the Department of Defense’s (DOD) assertion in the DOD Agency Financial Report for Fiscal Year 2012 regarding its noncompliant financial systems and lack of reasonable assurance that internal controls over financial reporting were effective. In addition, in the DOD Inspector General’s fiscal year 2012 report on internal control over financial reporting, the Inspector General cited material weaknesses in several areas, including (1) property, plant, and equipment; (2) inventory and operating material and supplies; (3) environmental liabilities; (4) intragovernmental eliminations; and (5) material amounts of unsupported accounting entries needed to prepare DOD’s annual consolidated financial statements.
Because of the significance of the amounts presented in the Statements of Social Insurance and Statements of Changes in Social Insurance Amounts related to the Social Security Administration (SSA) and the Department of Health and Human Services (HHS), our audit approach regarding these statements focused primarily on these two agencies. For each federal entity preparing a Statement of Social Insurance and Statement of Changes in Social Insurance Amounts,37 we considered the entity’s 2012, 2011, 2010, 2009, and 2008 Statements of Social Insurance and the 2012 and 2011 Statements of Changes in Social Insurance Amounts, as well as the related auditor’s reports prepared by the inspectors general or contracted independent public accountants. We believe our audit, including internal control and substantive audit procedures, reperformance procedures, and review of the other auditors’ Statement of Social Insurance-related audit work, provides a reasonable basis for our opinions on the 2009 and 2008 Statements of Social Insurance.
We performed sufficient audit work to provide this report on the consolidated financial statements, internal control, and compliance with selected provisions of laws and regulations. We considered the limitations on the scope of our work regarding the accrual-based consolidated financial statements; the 2012, 2011, and 2010 Statements of Social Insurance; and the 2012 and 2011 Statements of Changes in Social Insurance Amounts in forming our conclusions. Our work was performed in accordance with U.S. generally accepted government auditing standards.
2431 U.S.C. 3521(e). GMRA authorized the Office of Management and Budget to designate agency components that also would receive a financial statement audit. See 31 U.S.C. 3515(c). (Back to Content)
25GMRA, Pub. L. No. 103-356, ß 405(c), 108 Stat. 3410, 3416-17 (Oct. 13, 1994), codified at 31 U.S.C. 331 (e)(2). (Back to Content)
26ATDA, Pub. L. No. 107-289, 116 Stat. 2049 (Nov. 7, 2002), codified at 31 U.S.C. 3515. (Back to Content)
27See Treasury Financial Manual, volume I, part 2, chapter 4700, for a listing of the 35 entities. (Back to Content)
28For our report on the U.S. governmentís consolidated financial statements for fiscal year 2011, see Department of the Treasury, 2011 Financial Report of the United States Government (Washington, D.C.: December 2011), 211- 231, which can be found on GAOís website at www.gao.gov/financial.html. (Back to Content)
29GAO, Financial Audit: IRSís Fiscal Years 2012 and 2011 Financial Statements, GAO-13-120 (Washington, D.C.: Nov. 9, 2012). (Back to Content)
30GAO, Financial Audit: Bureau of the Public Debtís Fiscal Years 2012 and 2011 Schedules of Federal Debt, GAO- 13-114 (Washington, D.C.: Nov. 8, 2012). (Back to Content)
31The public holding federal debt is comprised of individuals, corporations, state and local governments, the Federal Reserve Banks, foreign governments, and central banks. (Back to Content)
32Intragovernmental debt holdings represent federal debt issued by Treasury and held by certain federal government accounts such as the Social Security and Medicare trust funds. (Back to Content)
33GAO, Financial Audit: Securities and Exchange Commission Fiscal Years 2012 and 2011 Financial Statements, GAO-13-122R (Washington, D.C.: Nov. 15, 2012). (Back to Content)
34GAO, Financial Audit: Federal Housing Finance Agencyís Fiscal Years 2012 and 2011 Financial Statements, GAO- 13-124R (Washington, D.C.: Nov. 15, 2012). (Back to Content)
35GAO, Financial Audit: Office of Financial Stability (Troubled Asset Relief Program) Fiscal Years 2012 and 2011 Financial Statements, GAO-13-126R (Washington, D.C.: Nov. 9, 2012). (Back to Content)
36GAO, Financial Audit: Bureau of Consumer Financial Protectionís Fiscal Years 2012 and 2011 Financial Statements, GAO-13-125R (Washington, D.C.: Nov. 15, 2012). (Back to Content)
37These entities are SSA, HHS, the Railroad Retirement Board, and the Department of Labor. (Back to Content)
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