Page 1 GAO-05-597R DOE’s Management Representation Letter

United States Government Accountability Office

Washington, D.C. 20548

A

July 14, 2005

The Honorable Susan J. Grant

Chief Financial Officer

Department of Energy

The Honorable Gregory H. Friedman

Inspector General

Department of Energy

Subject: Financial Audit: The Department of Energy’s Fiscal Year 2004 

Management Representation Letter on Its Financial Statements

As you know, the Secretary of the Treasury, in coordination with the 

Director of the Office of Management and Budget (OMB), is required to 

annually prepare and submit audited financial statements of the U.S. 

government to the President and the Congress. We are required to audit 

these consolidated financial statements (CFS) and report on the results of 

our work.1

 In connection with fulfilling our requirement to audit the fiscal 

year 2004 CFS, we evaluated the Department of the Treasury’s (Treasury) 

financial reporting procedures and related internal control over the process 

for compiling the CFS, including the management representation letter 

provided us by Treasury and OMB. Written representation letters from 

management, required by U.S. generally accepted government auditing 

standards, ordinarily confirm oral representations given to the auditor, 

indicate and document the continuing appropriateness of those 

representations, and reduce the possibility of a misunderstanding between 

management and the auditor. 

In our report, which is included in the fiscal year 2004 Financial Report of 

the United States Government,

2

 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 

1

The Government Management Reform Act of 1994 has required such reporting, covering 

the executive branch of government, beginning with financial statements prepared for fiscal 

year 1997. 31 U.S.C. § 331 (e). The federal government has elected to include certain 

financial information on the legislative and judicial branches in the CFS as well.

2

The fiscal year 2004 Financial Report of the United States Government was completed by 

the Department of the Treasury on December 15, 2004, and is available through both GAO’s 

Web site at www.gao.gov and Treasury’s Web site at www.fms.treas.gov/fr/index.html.
Page 2 GAO-05-597R DOE’s Management Representation Letter

depend to provide their representations to us regarding the CFS. 

Specifically, Treasury and OMB stated that their representation letter to us 

on the CFS was based primarily on the individual federal agency 

representation letters. Consequently, our audit considered the content of 

the individual federal agency letters, and the incompleteness of certain of 

these letters impaired our ability to obtain sufficient evidence in support of 

our audit of the CFS. This limitation contributed to our disclaimer of 

opinion on the CFS. We performed sufficient audit work to provide the 

disclaimer of opinion and issued our audit report, dated December 6, 2004, 

in accordance with U.S. generally accepted government auditing standards. 

As part of our audit of the fiscal year 2004 CFS, we received and reviewed 

selected federal agencies’ management representation letters to assess 

their adequacy in support of our audit of the CFS. As the federal 

government gets closer to an opinion on its financial statements, it 

becomes more important that the federal agencies’ management 

representation letters be complete and reliably prepared.

The purpose of this report is to communicate our observations on the 

Department of Energy’s (DOE) fiscal year 2004 management representation 

letter. Our objective is to help ensure that future management 

representation letters submitted by DOE are sufficient to help support 

Treasury and OMB’s preparation of the CFS management representation 

letter and our ability to rely on the representations in that letter in 

combination with individual federal agency representation letters. We 

reviewed five key areas in each management representation letter: 

(1) signatures, (2) materiality thresholds, (3) representations, (4) summary 

of unadjusted misstatements, and (5) reliability of representations. In 

reviewing the management representation letters, we applied the American 

Institute of Certified Public Accountants’ (AICPA) Codification of 

Auditing Standards, AU Section 333, Management Representations; OMB 

Bulletin 01-02, Audit Requirements for Federal Financial Statements; and 

the GAO/President’s Council on Integrity and Efficiency (PCIE) Financial 

Audit Manual (FAM) section 1001, entitled “Management 

Representations.”3

3

GAO, GAO/PCIE: Financial Audit Manual: Update, GAO-04-1015G (Washington, D.C.: July 

30, 2004), an update to Financial Audit Manual: Volumes 1 and 2, GAO-01-765G

(Washington, D.C.: Aug. 1, 2001).
Page 3 GAO-05-597R DOE’s Management Representation Letter

Results in Brief DOE’s fiscal year 2004 management representation letter did not provide all 

the information necessary to support Treasury and OMB’s preparation of 

the CFS management representation letter. This in turn impacted our 

ability to rely on the representations in the CFS management 

representation letter in combination with individual federal agency 

representation letters.

We identified some needed improvements in two of the five key areas we 

reviewed. First, the letter included 28 of the 29 representations4

 from the 

FAM that were applicable to DOE. The other representation was not fully 

included. In addition, DOE did not provide a summary of unadjusted 

misstatements that distinguishes between misstatements affecting 

intragovernmental accounts and misstatements affecting accounts with the 

public. 

We believe that these matters can be easily addressed. We are making two 

recommendations to DOE’s Chief Financial Officer targeted to specific 

changes needed. Also, we are recommending that the DOE Inspector 

General, with the contracted independent public accountant, work with the 

department to help ensure that future management representation letters 

meet the key conditions noted as needing improvements in this report.

In commenting on a draft of this report, the offices of DOE’s Chief 

Financial Officer and Inspector General, in separate letters, stated that they 

agreed with our recommendations and will work to ensure that future 

management representation letters include the information noted in our 

report. 

Background In conducting agency financial statement audits, U.S. generally accepted 

government auditing standards incorporate financial auditing fieldwork 

and reporting standards issued by the AICPA. Such auditing standards (AU 

4

The FAM lists 27 representations that are ordinarily included, if applicable, in the 

management representation letter that an agency provides to the auditor. For 4 of the 

representations, the agency is required to address three separate components. As such, each 

agency is ordinarily expected to make a total of 35 representations. Six of the 35 

representations are not applicable unless the agency received an opinion on its internal 

control. Since DOE did not receive an opinion on its internal control for fiscal year 2004, 

only 29 of the 35 representations were applicable to DOE’s fiscal year 2004 management 

representation letter.
Page 4 GAO-05-597R DOE’s Management Representation Letter

Section 333) require auditors to obtain certain representations from agency 

management. These representations are part of the evidential matter to be 

considered by the auditor in its audit of the agency’s financial statements. 

The representations obtained will depend on the circumstances of the 

engagement and the nature and basis of presentation of the financial 

statements. AU Section 333 discusses specific representations that should 

be obtained from management, including a requirement to attach a 

schedule of unadjusted financial statement misstatements for entities with 

uncorrected misstatements. 

In addition, OMB Bulletin 01-02 and FAM section 1001 contain guidance on 

preparing federal agencies’ management representation letters. According 

to the FAM, in addition to the representations included in AU Section 333, 

the auditor generally should consider the need to obtain representations on 

other matters based on the circumstances of the audited entity. FAM 

section 1001A lists 35 specific representations ordinarily included in the 

management representation letter and also includes a requirement to 

attach a schedule of unadjusted financial statement misstatements for 

entities with uncorrected misstatements. (See enc. I for these 

representations.) Representations listed in FAM section 1001A should be 

customized to the situation of the entity being audited or excluded if 

inapplicable. We perform our audit of the CFS in accordance with the FAM 

and related auditing standards. 

Treasury and OMB are to receive management representation letters from 

certain federal agencies. This is important because U.S. generally accepted 

government auditing standards require that Treasury and OMB provide us, 

as principal auditor of the CFS, a management representation letter, and 

their letter depends on the information in such agencies’ management 

representation letters. In their representation letter to us for the audit of 

the fiscal year 2004 CFS, Treasury and OMB stated that their 

representations are based primarily on the representations of those 

agencies covered by the Chief Financial Officers (CFO) Act and other 

selected agencies that were made in connection with the preparation of 

these entities’ respective financial statements and provided to OMB and 

Treasury. For this reason, it is important that all federal agency 

representation letters be complete and reliable. 

Objectives, Scope, and 

Methodology

In connection with our audit of the fiscal year 2004 CFS, we evaluated 

Treasury’s financial reporting procedures and related internal control, 

including the CFS management representation letter. For the fiscal year 
Page 5 GAO-05-597R DOE’s Management Representation Letter

2004 CFS, 33 of the 35 “verifying agencies” submitted audited financial 

statements along with their management representation letters to 

Treasury.5

 In our review of these 33 management representation letters, our 

overall objective was to assess their adequacy as it relates to our audit of 

the CFS. Specifically, we reviewed each agency management 

representation letter to determine whether the following five key 

conditions were met:

• the management representation letter was signed by appropriate agency 

officials;

• the management representation letter included designation as to the 

amounts above which matters were considered material (materiality 

thresholds);

• the management representation letter included applicable 

representations from the FAM;

• the management representation letter included a properly prepared 

summary of unadjusted misstatements for agencies with uncorrected 

misstatements; and

• the representations in the management representation letter were 

reliable based on a review of findings in the auditor’s report.

This report is based on the audit work we performed for the audit of the 

fiscal year 2004 CFS, which was performed in accordance with U.S. 

generally accepted government auditing standards.

We requested comments on a draft of this report from DOE’s Chief 

Financial Officer and Inspector General or their designees. Written 

comments from DOE’s Chief Financial Officer and Deputy Inspector 

General for Audit Services are reprinted in enclosures II and III, 

5

See Treasury Financial Manual, vol. I, part 2, ch. 4700, for a list of the 35 agencies. These 

agencies, for fiscal year 2004, consisted of 23 CFO Act agencies and 12 material other 

agencies. The 33 agencies we reviewed did not include the U.S. Securities and Exchange 

Commission and the Smithsonian Institution because these audits were not complete before 

the fiscal year 2004 Financial Report of the United States Government was issued. The 

Department of Homeland Security (DHS) Financial Accountability Act, Pub. L. No. 108-330, 

118 Stat. 1275 (Oct. 16, 2004), added DHS to the list of CFO Act agencies, increasing the 

number of CFO Act agencies again to 24 for fiscal year 2005. 
Page 6 GAO-05-597R DOE’s Management Representation Letter

respectively, and are also discussed in the Agency Comments and Our 

Evaluation section.

Identified Issues with 

DOE’s Fiscal Year 2004 

Management 

Representation Letter

With respect to DOE’s fiscal year 2004 management representation letter, 

we identified the following two areas that need some improvement: 

(1) fully including applicable representations from the FAM and

(2) including a complete summary of unadjusted misstatements that 

distinguishes between misstatements affecting intragovernmental accounts 

and misstatements affecting accounts with the public. Details regarding 

these issues are as follows.

Fully Including Applicable 

Representations from the 

FAM

Written representations from management ordinarily confirm oral 

representations made to the auditor during the audit, document the 

continuing appropriateness of those representations, and reduce the 

possibility of a misunderstanding. To meet auditing standards and OMB 

requirements, federal agencies’ management and auditors need to ensure 

that management representation letters are complete and accurate.

We found that DOE’s fiscal year 2004 management representation letter 

included 28 of the 29 representations from the FAM that were applicable to 

DOE. For the incomplete representation, the management representation 

letter included the following representation intended to cover the 

identification and disclosure of all laws and regulations that have a direct 

and material effect on the financial statements as called for by FAM 26. 

(See enc. I for this representation.)

“The Department is responsible for the Department’s compliance with applicable laws and 

regulations and has disclosed all instances of noncompliance with laws and regulations. In 

addition, the Department is responsible for the identification of and compliance with all 

aspects of applicable laws, regulations, contracts, or grants that could have a direct and 

material effect on the determination of consolidated financial statement amounts in the 

event of noncompliance and has disclosed all instances of noncompliance with laws, 

regulations, contracts, or grants to you.” 

While this representation addresses the identification of laws and 

regulations, it should also address the disclosure to the auditor of the laws 

and regulations as called for by FAM 26.

When agencies include incomplete representations in their management 

representation letters, it impairs our ability to audit the CFS and Treasury 
Page 7 GAO-05-597R DOE’s Management Representation Letter

and OMB’s ability to make these types of representations in the CFS 

management representation letter. 

Including a Complete 

Summary of Unadjusted 

Misstatements that 

Distinguishes between 

Misstatements Affecting 

Intragovernmental 

Accounts and 

Misstatements Affecting 

Accounts with the Public

U.S. generally accepted government auditing standards require that for 

each federal agency with uncorrected misstatements, a summary of 

unadjusted misstatements be attached to the agency’s management 

representation letter. Treasury and OMB use the summaries of unadjusted 

misstatements to assess the impact of federal agencies’ unadjusted 

misstatements on the CFS and make appropriate management 

representations to us at the governmentwide level. The summaries are also 

used by us, as principal auditor of the CFS, to develop an overall 

governmentwide summary of unadjusted misstatements, which is then 

attached to the CFS management representation letter prepared by 

Treasury and OMB. 

Also, in a matter related to the compilation process for the CFS, in fiscal 

year 2004, Treasury required agencies to submit a summary of unadjusted 

misstatements as part of the closing package using the standardized format 

provided for in the Treasury Financial Manual (TFM). The TFM, 

however, required additional details to be added to the summary of 

unadjusted misstatements than those called for by the FAM. Specifically, 

agencies were to also (1) include a description of the misstatements and 

(2) distinguish between misstatements affecting intragovernmental 

accounts and misstatements affecting accounts with the public. We need 

this additional information to develop the overall governmentwide 

summary of unadjusted misstatements. In order to avoid duplication of 

effort by the agencies in preparing two summaries of unadjusted 

misstatements, the additional information should also be included in the 

summary of unadjusted misstatements attached to the management 

representation letter. As such, we plan to work with PCIE to modify the 

FAM to call for these two additional disclosures to be included in the 

summary of unadjusted misstatements attached to the management 

representation letter. 

DOE included a summary of unadjusted misstatements with its 

management representation letter that provided all information called for 

by the FAM. In addition, DOE submitted a summary of unadjusted 

misstatements as part of its closing package to Treasury as required by the 

TFM, but the summary did not distinguish between misstatements affecting 

intragovernmental accounts and misstatements affecting accounts with the 

public. 
Page 8 GAO-05-597R DOE’s Management Representation Letter

Without a complete summary of unadjusted misstatements from each of 

the verifying agencies with uncorrected misstatements, it is not possible 

for us, as principal auditor of the CFS, to reasonably determine the audit 

risk exposure for each of the line items in the CFS or to prepare an 

adequate summary of unadjusted misstatements at the governmentwide 

level.

Conclusions In two of the five key areas we reviewed, DOE’s fiscal year 2004 

management representation letter did not provide all the information 

necessary to support Treasury and OMB’s preparation of the CFS 

management representation letter and our ability to rely on the 

representations in that letter in combination with individual federal agency 

representation letters, including that of DOE. The additional information 

needed from DOE is straightforward and should be easy to address. 

Recommendations for 

Executive Action

We recommend to DOE’s Chief Financial Officer that in the future the 

management representation letter 

• fully include all representations from the FAM that are applicable to 

DOE and

• include a complete summary of unadjusted misstatements, if there are 

any uncorrected misstatements, that distinguishes between 

misstatements affecting intragovernmental accounts and misstatements 

affecting accounts with the public.

We recommend that the DOE Inspector General, with the contracted 

independent public accountant, work with the department to help ensure 

that future management representation letters meet the key conditions 

noted as needing improvements in this report.

Agency Comments and 

Our Evaluation

In written comments on a draft of this report, which are reprinted in 

enclosures II and III, the offices of DOE’s Chief Financial Officer and 

Inspector General, in separate letters, stated that they agreed with our 

recommendations and will work to ensure that future management 

representation letters include the information noted in our report. 

Regarding the summary of unadjusted misstatements, DOE’s Chief 

Financial Officer stated that the summary submitted as part of its closing 
Page 9 GAO-05-597R DOE’s Management Representation Letter

package clearly distinguished between lines that were non-federal versus 

federal. In DOE’s summary of unadjusted misstatements, the word “nonfederal” was noted for some of the line items. However, the term “federal” 

was not noted on any of the line items. It was not clear during our review 

as to how this presentation fully provided the information called for by the 

TFM. A complete summary of unadjusted misstatements is needed by GAO 

from each of the verifying agencies with uncorrected misstatements to 

prepare an adequate summary of unadjusted misstatements at the 

governmentwide level. We appreciate DOE’s commitment to ensure future 

submissions of DOE’s summary of unadjusted misstatements will 

distinguish between unadjusted misstatements affecting intragovernmental 

accounts and those affecting accounts with the public. 

Within 60 days of the date of this report, we would appreciate receiving a 

written statement on actions taken to address these recommendations.

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 Controller 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 www.gao.gov. 

We appreciate the courtesy and cooperation extended to us by your staff 

throughout our work. We look forward to continuing to work with your 

offices to help improve financial management in the federal government. If 
Page 10 GAO-05-597R DOE’s Management Representation Letter

you have any questions about the contents of this report, please contact me 

at (202) 512-3406.

Gary T. Engel

Director

Financial Management and Assurance

Enclosures -- 3
Page 11 GAO-05-597R DOE’s Management Representation Letter

Enclosure I: Representations in FAM 1001A

Guidance contained in FAM 1001 and FAM 1001A deals with the 

management representations that the auditor should obtain from current 

management as part of the audit. This guidance also acknowledges that 

judgment needs to be exercised to obtain representations that depend on 

the circumstances of the engagement and the nature and basis of 

presentation of the financial statements. Representations given in FAM 

section 1001A should be customized to the situation of the entity being 

audited, and additional representations may need to be obtained.

FAM 1001A lists 27 representations that are ordinarily included, if 

applicable, in the management representation letter that an agency 

provides to the auditor. For representations 3, 11, 16, and 18, the agency 

should address three separate components. As such, each agency is 

ordinarily expected to make a total of 35 representations. Representations 

18, 19, 20, and 21 are not applicable unless the agency received an opinion 

on its internal control. In addition, representations 22, 23, and 24 address 

the three requirements of the Federal Financial Management Improvement 

Act of 1996 and are only applicable to the 24 CFO Act agencies. The 35 

representations in FAM 1001A are as follows.

1. We are responsible for the fair presentation of the financial statements 

and stewardship information in conformity with U.S. generally 

accepted accounting principles.

2. The financial statements are fairly presented in conformity with U.S. 

generally accepted accounting principles.

3. We have made available to you all

a. financial records and related data;

b. where applicable, minutes of meetings of the Board of Directors [or 

other similar bodies, such as congressional oversight committees] or 

summaries of actions of recent meetings for which minutes have not 

been prepared; and

c. communications from the Office of Management and Budget (OMB) 

concerning noncompliance with or deficiencies in financial reporting 

practices.
Enclosure I: Representations in FAM 1001A

Page 12 GAO-05-597R DOE’s Management Representation Letter

4. There are no material transactions that have not been properly 

recorded in the accounting records underlying the financial statements 

or disclosed in the notes to the financial statements.

5. We believe that the effects of the uncorrected financial statement 

misstatements summarized in the accompanying schedule are 

immaterial, both individually and in the aggregate, to the financial 

statements taken as a whole. [If management believes that certain of 

the identified items are not misstatements, management’s belief may be 

acknowledged by adding to the representation, for example, “We 

believe that items XX and XX do not constitute misstatements because 

[description of reason].”]

6. The [entity] has satisfactory title to all owned assets, including 

stewardship property, plant, and equipment; such assets have no liens 

or encumbrances; and no assets have been pledged.

7. We have no plans or intentions that may materially affect the carrying 

value or classification of assets and liabilities.

8. Guarantees under which the [entity] is contingently liable have been 

properly reported or disclosed.

9. Related party transactions and related accounts receivable or payable, 

including assessments, loans, and guarantees, have been properly 

recorded and disclosed.

10. All intraentity transactions and balances have been appropriately 

identified and eliminated for financial reporting purposes, unless 

otherwise noted. All intragovernmental transactions and balances have 

been appropriately recorded, reported, and disclosed. We have 

reconciled intragovernmental transactions and balances with the 

appropriate trading partners for the four fiduciary transactions 

identified in Treasury’s Intra-governmental Fiduciary

Transactions Accounting Guide, and other intragovernmental 

asset, liability, and revenue amounts as required by the applicable OMB 

Bulletin.
Enclosure I: Representations in FAM 1001A

Page 13 GAO-05-597R DOE’s Management Representation Letter

11. There are no

a. possible violations of laws or regulations whose effects should be 

considered for disclosure in the financial statements or as a basis for 

recording a loss contingency,

b. material liabilities or gain or loss contingencies that are required to 

be accrued or disclosed that have not been accrued or disclosed, or

c. unasserted claims or assessments that are probable of assertion and 

must be disclosed that have not been disclosed.

12. We have complied with all aspects of contractual agreements that 

would have a material effect on the financial statements in the event of 

noncompliance.

13. No material events or transactions have occurred subsequent to 

September 30, 20X2 [or date of latest audited financial statements], that 

have not been properly recorded in the financial statements and 

stewardship information or disclosed in the notes.

14. We are responsible for establishing and maintaining internal control.

15. We acknowledge our responsibility for the design and implementation 

of programs and controls to prevent and detect fraud (intentional 

misstatements or omissions of amounts or disclosures in financial 

statements and misappropriation of assets that could have a material 

effect on the financial statements).

16. We have no knowledge of any fraud or suspected fraud affecting the 

[entity] involving:

a. management,

b. employees who have significant roles in internal control, or

c. others where the fraud could have a material effect on the financial 

statements. 

[If there is knowledge of any such instances, they should be described.]
Enclosure I: Representations in FAM 1001A

Page 14 GAO-05-597R DOE’s Management Representation Letter

17. We have no knowledge of any allegations of fraud or suspected fraud 

affecting the [entity] received in communications from employees, 

former employees, or others. [If there is knowledge of any such 

allegations, they should be described.]

18. Pursuant to 31 U.S.C. 3512(c), (d) (commonly known as the Federal 

Managers’ Financial Integrity Act), we have assessed the effectiveness 

of the [entity's] internal control in achieving the following objectives:

a. reliability of financial reporting—transactions are properly recorded, 

processed, and summarized to permit the preparation of financial 

statements and stewardship information in accordance with U.S. 

generally accepted accounting principles, and assets are safeguarded 

against loss from unauthorized acquisition, use or disposition;

b. compliance with applicable laws and regulations—transactions are 

executed in accordance with (i) laws governing the use of budget 

authority and with other laws and regulations that could have a 

direct and material effect on the financial statements and (ii) any 

other laws, regulations, and governmentwide policies identified by 

OMB in its audit guidance; and

c. reliability of performance reporting—transactions and other data that 

support reported performance measures are properly recorded, 

processed, and summarized to permit the preparation of 

performance information in accordance with criteria stated by 

management. 

[If the entity bases its internal control assessment on suitable criteria 

other than 31 U.S.C. 3512(c), (d), this item should cite the criteria used 

(for example, Internal Control—Integrated Framework issued by the 

Committee of Sponsoring Organizations (COSO) of the Treadway 

Commission).]

19. Those controls in place on September 30, 20X2 [or date of latest audited 

financial statements], and during the years ended 20X2 and 20X1, 

provided reasonable assurance that the foregoing objectives are met. 

[If there are material weaknesses, the foregoing representation should 

be modified to read: 

Those controls in place on September 30, 20X2, and during the years 

ended 20X2 and 20X1, provided reasonable assurance that the 
Enclosure I: Representations in FAM 1001A

Page 15 GAO-05-597R DOE’s Management Representation Letter

foregoing objectives are met except for the effects of the material 

weaknesses discussed below or in the attachment. 

or: Internal controls are not effective. 

or: Internal controls do not meet the foregoing objectives.]

20. We have disclosed to you all significant deficiencies in the design or 

operation of internal control that could adversely affect the entity's 

ability to meet the internal control objectives and identified those we 

believe to be material weaknesses. 

21. There have been no changes to internal control subsequent to 

September 30, 20X2 [or date of latest audited financial statements], or 

other factors that might significantly affect it. [If there were changes, 

describe them, including any corrective actions taken with regard to 

any significant deficiencies or material weaknesses.] 

22. We are responsible for implementing and maintaining financial 

management systems that substantially comply with federal financial 

management systems requirements, federal accounting standards (U.S. 

generally accepted accounting principles), and the U.S. Government 

Standard General Ledger at the transaction level. 

23. We have assessed the financial management systems to determine 

whether they substantially comply with these federal financial 

management systems requirements. Our assessment was based on 

guidance issued by OMB. 

24. The financial management systems substantially complied with federal 

financial management systems requirements, federal accounting 

standards, and the U.S. Government Standard General Ledger at the 

transaction level as of [date of the latest financial statements]. 

[If the financial management systems substantially comply with only 

one or two of the above elements, this representation should be 

modified as follows: 

As of [date of financial statements], the [entity’s] financial 

management systems substantially comply with [specify which of the 

three elements for which there is substantial compliance (e.g., 

federal accounting standards and the SGL at the transaction level)], 
Enclosure I: Representations in FAM 1001A

Page 16 GAO-05-597R DOE’s Management Representation Letter

but did not substantially comply with [specify which of the elements 

for which there was a lack of substantial compliance (e.g., federal 

financial management systems requirements)], as described below 

(or in an attachment).] 

[If the financial management systems do not substantially comply with 

any of the three elements, the following paragraph should be used 

instead: 

As of [date of financial statements], the [entity's] financial 

management systems do not substantially comply with the federal 

financial management systems requirements.] 

[If there is a lack of substantial compliance with one or more of the 

three requirements, identify herein or in an attachment all the facts 

pertaining to the noncompliance, including the nature and extent of the 

noncompliance and the primary reason or cause of the 

noncompliance.]

25. We are responsible for the [entity's] compliance with applicable laws 

and regulations.

26. We have identified and disclosed to you all laws and regulations that 

have a direct and material effect on the determination of financial 

statement amounts.

27. We have disclosed to you all known instances of noncompliance with 

laws and regulations.
Page 17 GAO-05-597R DOE’s Management Representation Letter

Enclosure II: Comments From the Office of 

the Chief Financial Officer at the Department 

of Energy
Enclosure II: Comments From the Office of 

the Chief Financial Officer at the Department 

of Energy

Page 18 GAO-05-597R DOE’s Management Representation Letter
Page 19 GAO-05-597R DOE’s Management Representation Letter

Enclosure III: Comments From the Office of 

the Inspector General at the Department of 

Energy

Note: GAO comments 

supplementing those in 

the report text appear 

at the end of this 

enclosure.

See comment 1.
Enclosure III: Comments From the Office of 

the Inspector General at the Department of 

Energy

Page 20 GAO-05-597R DOE’s Management Representation Letter

The following is our comment on the Department of Energy’s (DOE) Office 

of the Inspector General’s letter dated June 2, 2005.

GAO Comments 1. DOE’s Deputy Inspector General for Audit Services stated that his 

office considered the issues cited to be minor in nature and, in their 

judgment, did not have a material impact on the audit of DOE’s 

consolidated financial statements. As noted in the report, the purpose 

of our review was to assess the adequacy of selected agencies’ 

management representation letters in supporting our audit of the U.S. 

government’s consolidated financial statements (CFS). We did not 

conclude on or report as to the specific effect of the issues we 

identified on the audit of any of the respective agencies’ financial 

statements, as this was not a focus of our review. The issues we 

identified and reported for DOE, in combination with issues related to 

several other federal agencies’ management representation letters, 

represented a limitation on the scope of our work and contributed to 

our disclaimer of opinion on the fiscal year 2004 CFS. 

(198377)
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