Audit Report

OIG-07-025

Agreed-Upon Procedures for the Department of the Treasury’s 

Fiscal Year 2006 Intragovernmental Activity and Balances 

January 16, 2007 

Office of 

Inspector General 

Department of the Treasury 
Contents 

Transmittal Memorandum 

Independent Accountants’ Report on Applying Agreed-Upon 

Procedures for Intragovernmental Activity and Balances 
OFFICE OF 

INSPECTOR GENERAL

DEPARTMENT OF THE TREASURY

WASHINGTON, D.C. 20220

January 16, 2007 

MEMORANDUM FOR RICHARD HOLCOMB, ACTING CHIEF FINANCIAL OFFICER 

DEPARTMENT OF THE TREASURY 

FAYE McCREARY, DIRECTOR 

FINANCIAL REPORTS DIVISION 

 FINANCIAL MANAGEMENT SERVICE 

 LYNDA DOWNING, ASSISTANT DIRECTOR 

 FINANCIAL MANAGEMENT AND ASSURANCE 

 GOVERNMENT ACCOUNTABILITY OFFICE 

FROM: Joel A. Grover 

Deputy Assistant Inspector General 

 for Financial Management and Information 

 Technology Audits 

SUBJECT: Agreed-Upon Procedures for the Department of the 

Treasury’s Fiscal Year 2006 Intragovernmental Activity and 

Balances 

I am pleased to transmit the attached report on agreed-upon procedures for the 

Department of the Treasury’s (Department) fiscal year (FY) 2006 intragovernmental 

activity and balances. Under a contract monitored by the Office of Inspector 

General, KPMG LLP, an independent certified public accounting firm, performed the 

agreed-upon procedures for the Department’s FY 2006 intragovernmental activity 

and balances. The contract required that the agreed-upon procedures be performed 

in accordance with generally accepted government auditing standards. KPMG LLP 

issued the attached Independent Accountants’ Report on Applying Agreed-Upon 

Procedures for Intragovernmental Activity and Balances. 

In connection with the contract, we reviewed KPMG LLP’s report and related 

documentation and inquired of its representatives. Our review, as differentiated 

from an agreed-upon procedures engagement performed in accordance with 

generally accepted government auditing standards, was not intended to enable us 

to report, and we do not report, findings based on agreed-upon procedures 

performed on the Department’s intragovernmental activity and balances. KPMG LLP 

is responsible for the attached report dated January 11, 2007 and the conclusions 

expressed in the report. However, our review disclosed no instances where 

KPMG LLP did not comply, in all material respects, with generally accepted 

government auditing standards. 
Page 2 

Should you have any questions, please contact me at (202) 927-5400, or a 

member of your staff may contact Mike Fitzgerald, Director, Financial Audits at 

(202) 927-5789. 

Attachment 
Independent Accountants’ Report on Applying Agreed-Upon 

Procedures for Intragovernmental Activity and Balances 
KPMG LLP 

2001 M Street, NW 

Washington, DC 20036 

Independent Accountants’ Report on Applying Agreed-Upon Procedures 

for Intragovernmental Activity and Balances 

Inspector General 

U.S. Department of the Treasury: 

We have performed the procedures enumerated in Exhibit I (attached), which were based on the procedures 

stated in the U.S. Department of the Treasury’s (Department) Treasury Financial Manual, Volume 1, Part 

2, Chapter 4700, Section 4705.80 IG Agreed-Upon Procedures for Federal Intragovernmental Activity and 

Balances, solely to assist the Department’s Office of Inspector General (OIG) and the U.S. Government 

Accountability Office (GAO) in evaluating the Department’s assertion that it properly reported 

intragovernmental activity and balances in the Department’s consolidated financial statements as of and for 

the year ended September 30, 2006, and in its 2006 Financial Report of the United States Government 

Closing Package (Closing Package). The Department’s management is responsible for the proper 

accounting, presentation and reporting of its intragovernmental activity and balances, consolidated 

financial statements, and Closing Package. 

This agreed-upon procedures engagement was conducted in accordance with attestation standards 

established by the American Institute of Certified Public Accountants and the standards applicable to 

attestation engagements contained in Government Auditing Standards issued by the Comptroller General of 

the United States. The sufficiency of these procedures is solely the responsibility of the Treasury Financial 

Management Service (FMS), GAO, and the Office of Management and Budget (OMB). Consequently, we 

make no representation regarding the sufficiency of the procedures described in Exhibit I either for the 

purpose for which this report has been requested or for any other purpose. The procedures we performed 

and our associated findings are presented in Exhibit I. 

We were not engaged to, and did not, conduct an examination of the information presented herein, the 

objective of which would be the expression of an opinion on such information. Accordingly, we do not 

express such an opinion. Had we performed additional procedures, other matters might have come to our 

attention that would have been reported to you. 

This report is intended solely for the information and use of the Department, the Department’s OIG, FMS, 

GAO, and OMB, and is not intended to be and should not be used by anyone other than these specified 

parties. 

January 11, 2007 

KPMG LLP. KPMG LLP, a U.S. limited liability partnership, is 

a member of KPMG International, a Swiss cooperative. 
Exhibit I 

U.S. DEPARTMENT OF THE TREASURY 

Agreed-Upon Procedures for Intragovernmental Activity and Balances 

Procedures and Findings 

Procedure 1 

Obtain the Department’s policies and procedures that describe the Department's activities to record, process, 

summarize, reconcile, and report intragovernmental activity/balances by trading partner. Determine if the items 

identified in the CFO-provided reconciliation schedule were recorded at year end in accordance with the 

Department's policies and procedures. 

Finding 1 

We obtained the Department’s policies and procedures titled “Departmental Guidelines for Reconciling and 

Reporting Intra-Departmental Transactions,” dated June 14, 2006, that include procedures for the Department’s 

activities to record, process, summarize, reconcile, and report intragovernmental activity/balances by trading 

partner. 

We obtained the CFO-provided reconciliation schedule titled “Material Differences for Fiscal Year End 2006 

Greater than $250M” dated December 19, 2006 (reconciliation schedule), that included the Department’s 

explanations (See Attachment A). We agreed each of the Department’s balances reported in column four of the 

reconciliation schedule titled “Reporting Agency” to the respective consolidated intragovernmental balances 

recorded in the Department’s general ledger at September 30, 2006, and noted one exception as described 

below. 

A component of the Department (Internal Revenue Service) did not record intragovernmental transactions at 

year end in accordance with the Department's policies and procedures. The IRS incorrectly recorded 

$565,000,000 of interest owed to the Social Security Administration as “Public” instead of 

“intragovernmental.” 

No additional procedures were performed with respect to management’s explanations as to the reasons 

for the differences. 

Procedure 2 

a. In the event of nonreporting by trading partners, report those differences and indicate that the difference is 

due to nonreporting by the trading partner. Cooperation between IG offices of the trading partners is 

encouraged. 

b. Compare items related to the balances identified by FMS in Step 1 of the CFO procedures recorded after year 

end to supporting documentation to determine if they were recorded in the proper year. 

2 (Continued) 
Exhibit I 

U.S. DEPARTMENT OF THE TREASURY 

Agreed-Upon Procedures for Intragovernmental Activity and Balances 

Finding 2 

a. Based on the trading partner reported amount in the fourth column of the reconciliation schedule and the 

Department’s explanations, we identified one difference due to nonreporting by a trading partner of the 

Department as follows: 

Table 1 – Nonreporting Trading Partner Differences 

Transaction 

Description 

Reporting 

Agency 

Trading Partner 

(1) Difference Explanation 

Investment Interest 

Expense/Revenue $791,000,000 $0 $791,000,000 (2) 

(1) Trading Partner is the Department of Veterans Affairs. 

(2) Trading Partner did not report a balance. 

b. Step 1 of the CFO procedures described in the Treasury Financial Manual, Volume 1, Part 2, Chapter 4700, 

Section 4705.75d, Section III, New CFO Requirements for IG AUPs, states “Receive from FMS an e-mail 

that identifies certain material differences by reciprocal category and trading partner from agencies’ 

offsetting GFRS Module GF004 input.” 

We requested items (adjustments) made by the Department after year end related to the Department’s 

intragovernmental balances identified by FMS in Step 1 of the CFO procedures. The Department confirmed 

that no adjustments were recorded by the Department after year end to the Department’s intragovernmental 

balances reported to FMS. 

Procedure 3 

Identify and include copies of audit findings related to the transactions identified in Procedures 1 and 2, that were 

reported during the audit of the Department’s fiscal year 2006 consolidated financial statements, such as reasons 

for disclaimer and/or qualification, material weaknesses, reportable conditions, noncompliance with laws and 

regulations and items cited in the management letter. Also identify and report auditor-proposed 

intragovernmental adjustments that were waived by the Department relating to these transactions. 

Finding 3 

We identified no internal control findings during our audit of the Department’s fiscal year 2006 consolidated 

financial statements related to the transactions identified in Procedures 1 and 2 for inclusion in our report on 

internal control over financial reporting. 

We identified a finding during our audit of the Department’s fiscal year 2006 consolidated financial statements 

related to the transactions identified in Procedures 1 and 2, that will be reported as a comment in the 

Department’s fiscal year 2006 management letter. 

3 (Continued) 
Exhibit I 

U.S. DEPARTMENT OF THE TREASURY 

Agreed-Upon Procedures for Intragovernmental Activity and Balances 

We identified two auditor-proposed intragovernmental account adjustments related to these transactions during 

our audit of the Department’s fiscal year 2006 consolidated financial statements that were waived by the 

Department. These adjustments are presented in Attachment B to this report. 

4
December 19, 2006 

Material Differences for Fiscal Year End 2006 Greater than $250M*

Agency Code/Name: Dept. of Treasury

Agency Contact/Ph/Email: Joe McAndrew/(202)622-0622

Treasury Ref Mat Diffs ComparisonTP RC Next Tab aP_or_S Rptg_Agy Trdg_Partner Material_Diff

12 02 S 709,000,000 427,000,000 282,000,000 (1)

Timing / Accounting Methodology difference FFB and Agriculture 

12 05 S 5,247,000,000 4,484,000,000 763,000,000 (2)

Treasury is continuing to work with Ag regarding this difference. See e-mails

14 01 S 8,670,000,000 8,069,224,000 600,776,000 (3)

Interior cites SFFAS No. 27. E-Mail to Dave Horn 12-11-06. He refers to par. 38. He stated that the DOI f/s auditors asked that DOI to adjust their balances. A portion of the DOI balances are attributable to Coast Guard and the Army Corps of Engineeers. JMc informed BPD, DHS and USACE by e-mail 12-11-

06

19 18 S 0 (905,762,000) 905,762,000 (4) Partner Error

27 01 S 4,418,000,000 4,708,476,000 290,476,000 (5)

See Additonal Info from FCC TP 27. email 12-12-06 from Jacquie Harvey

28 05 S 0 565,000,000 565,000,000 (6)

IRS Error 11-21-06 e-mail from IRS -Mark Brey

28 24 S 98,000,000 737,000,000 639,000,000 (7)

CP RC Logic - No real difference. acknowledged by FMS 11-21-06 e-mail from Ben Sussman. 

36 01 S 12,683,000,000 13,666,000,000 983,000,000 (8) Partner Error

36 03 S 791,000,000 0 791,000,000 (9) Partner Error

36 17 S 982,000,000 0 982,000,000 (10) Partner Error51 01 S 51,640,000,000 51,894,899,151 254,899,151 (11)

BPD does not recognize market affects on GAS Securities

51 03 S 2,588,000,000 2,968,622,387 380,622,387 (12)

BPD does not recognize market affects on GAS Securities

70 05 S 539,000,000 0 539,000,000 (13) Partner Error

aP=Primary, S=Secondary

* This list represents the fiscal year 2006 material differences with your trading partnergreater than $250M. Should you choose to perform the IG Agreed-upon Procedures per I TFM 2-4705.75d please follow the instructions in the cover e-mail.
Reporting Agency 20-Department of the Treasury

Trading Partner/ Reported Material Adjusted Unknown/

 Reciprocal Category Amount Difference Adjustments* Reporting Unreconciled Explanation(s)

Partner 12-Department of Agriculture

RC 02-Interest Receivable/Payable Reporting Agency $709,000,000 $0 $709,000,000 Accounting Methodology Difference

Trading Partner $427,000,000 $282,000,000 $0 $427,000,000 $282,000,000 Accounting Methodology Difference

Reporting Agency Basis of Accounting: Accrual vs. Cash

Trading Partner Basis of Accounting: Not Stated

Reporting Agency Remarks: FFB v. Department of Agriculture -- Difference of $281,297,401 is due to timing. Difference of $702,599 is attributed to Accounting Methodology. FFB 

uses the accrual basis whereas Agriculture uses cash basis.

(1) Trading Partner Remarks: End of acctg period falls on weekend and payment to FFB not due until first business day of next acctg period.

Partner 12-Department of Agriculture

RC 05-Borrowings Interest 

Revenue/Expense

Reporting Agency $5,247,000,000 $0 $5,247,000,000 Accounting Methodology Difference

Trading Partner $4,484,000,000 $763,000,000 $0 $4,484,000,000 $763,000,000 Accounting Methodology Difference

Reporting Agency Basis of Accounting: Accrual vs. Cash

Trading Partner Basis of Accounting: Not Stated

Reporting Agency Remarks: SGL 6330 is a legislative mandated expense. It was incorrectly added to SGL 5312. The correct posting is a deduction to SGL 5312. This difference was 

also due to timing.

(2) Trading Partner Remarks: Difference in methodologies for recording interest credit on FFB CBO's.

Partner 14-Department of Interior

RC 01-Investments/Debt Reporting Agency $8,670,000,000 $0 $8,670,000,000 Confirmed Reporting

Trading Partner $8,069,224,000 $600,776,000 $0 $8,069,224,000 $600,776,000 Accounting Methodology Difference

Trading Partner Basis of Accounting: SFFAS 27

Reporting Agency Remarks: BPD v. Department of Interior -- BPD confirmed with IFCS. The difference with AFS 20X8147, is being researched. For AFS 14X5198, ($22,955.23), the 

difference is due to amortization calculation for effective interest methods used by BPD vs. DOI. 

(3) Trading Partner Remarks: During 4th Quarter, Interior implemented SFFAS 27, which requires removal of component entity amounts from the trial balance

Partner 15-Department of Justice

RC 01-Investments/Debt Reporting Agency $1,246,000,000 $0 $1,246,000,000 Confirmed Reporting

Trading Partner $2,082,266,000 $836,266,000 $0 $2,082,266,000 $836,266,000 Accounting Methodology Difference

Trading Partner Basis of Accounting: Not Stated

Reporting Agency Remarks: BPD confirms with agency in IFCS. Agency figure in IFCS did not match what was reported in IRAS. However, the difference is due to Deposit Funds 

being included in IRAS for 15X6874 and 15X6118 but not in IFCS. The BPD does not report Deposit Funds in IFCS

Trading Partner Remarks: The DOJ records investments for Seized Assets Deposit Fund (15x6874) and the U.S. Attorney's Office (15x6118) as intragovernmental activity. However, 

these are excluded from intragovernmental reporting by Treasury. 

Partner 15-Department of Justice

RC 26-Benefit Contributions 

Revenue/Expense

Reporting Agency $0 $0 $0 Confirmed Reporting

Trading Partner $155,092,000 $155,092,000 ($155,092,000) $0 $0 Accounting Error

Reporting Agency Remarks: Treasury does not receive benefit payments from other Federal Agencies. It would appear that DOJ is coding Treasury (20) for FICA payments that should 

be coded as General Fund of the Treasury (99).

Trading Partner Remarks: The DOJ correctly reported this amount with Trading Partner (TP) 99 in the initial IRAS submission, however the TP was incorrectly reported with TP 20 in 

Partner 16R-Pension Benefit Guaranty Corporation

RC 03-Investment Interest 

Expense/Revenue -Exchange

Reporting Agency ($348,000,000) $0 ($348,000,000) Confirmed Reporting

Trading Partner $2,392,000,000 $2,740,000,000 $0 $2,392,000,000 $2,740,000,000 Accounting Methodology Difference

Trading Partner Basis of Accounting: GAAP-FAS35

Reporting Agency Remarks: BPD confirms with IFCS. Difference equals amount reported to IRAS by agency in SGL 7180 (Unrealized Gains).

Trading Partner Remarks: PBGC marks it's securities to market in accordance with GAAP and Treasury uses absolute value reporting methodology.

Partner 19-Department of State

RC 18-Transfers in/Out without 

Reimbursement

Reporting Agency $0 $0 $0 Confirmed Reporting

Trading Partner ($905,762,000) $905,762,000 $905,762,000 $0 $0 Accounting Error

Reporting Agency Remarks: Treasury does not recognize a transfer involving the State Department. It would appear that State transferred funds to the General Fund of the Treasury (99) 

and incorrectly identified Treasury (20) as the partner.

(4) Trading Partner Remarks: Input error coded to Partner 20 - should've been coded to F.99

Partner 27-Federal Communications Commission

RC 01-Investments/Debt Reporting Agency $4,418,000,000 $0 $4,418,000,000 Accounting Methodology Difference

Trading Partner $4,708,476,000 $290,476,000 $0 $4,708,476,000 $290,476,000 Confirmed Reporting

Reporting Agency Basis of Accounting: Not stated

(5) Reporting Agency Remarks: As of 9/30/06, BPD's calculation is not based on actual purchase price/discount and holding period.

Partner 27-Federal Communications Commission

RC 03-Investment Interest 

Expense/Revenue -Exchange

Reporting Agency $235,000,000 $0 $235,000,000 Accounting Methodology Difference

Trading Partner $183,697,000 $51,303,000 $0 $183,697,000 $51,303,000 Confirmed Reporting

Reporting Agency Basis of Accounting: Not Stated

Reporting Agency Remarks: As of 9/30/06, BPD's calculation is not based on actual purchase price/discount and holding period. Estimate is overstated

Partner 27-Federal Communications Commission

RC 22-Buy-Sell Related 

Receivable/Payable

Reporting Agency $0 $225,000,000 $225,000,000 Accounting Error

Trading Partner $225,000,000 $225,000,000 $0 $225,000,000 $0 Confirmed Reporting

Reporting Agency Remarks: (T-Bill Cusip # 912828CW8 matured on 9/30/06. Funds were not received as of 9/30/06. Face amount totals $225,000,000 was reclassified to Accounts 

Receivable.

Partner 28-Social Security Administration

RC 05-Borrowings Interest 

Revenue/Expense

Reporting Agency $0 $565,000,000 $565,000,000 Accounting Error

Trading Partner $565,000,000 $565,000,000 $0 $565,000,000 $0 Confirmed Reporting

(6) Reporting Agency Remarks: The Internal Revenue Service should have coded an “F” expense with SSA. Instead they coded an “N” refund with the public

Partner 28-Social Security Administration

RC 24-Buy-Sell Revenue/Expense Reporting Agency $98,000,000 $0 $98,000,000 Confirmed Reporting

Trading Partner $737,000,000 $639,000,000 $0 $737,000,000 $639,000,000 Confirmed Reporting

(7) Reporting Agency Remarks: Difference due to Recip. Category classification structure as reflected in IRAS (exchange/nonexchange). No real recip. Difference

Intragovernmental Reporting & Analysis System

Intragovernmental Comparative Closing Package Explanation of Differences Report

Year End 2006

1
Partner 36-Department of Veterans Affairs

RC 01-Investments/Debt Reporting Agency $12,683,000,000 $0 $12,683,000,000 Confirmed Reporting

Trading Partner $13,666,000,000 $983,000,000 ($983,000,000) $12,683,000,000 $0 Accounting Error

Reporting Agency Remarks: BPD confirms with IFCS. Agency confirmed with BPD in IFCS but did not report the same balance in the Closing Package

(8) Trading Partner Remarks: VA should have reported $12,683 million on the GFRS, the amount VA reported on the 4th quarter IRAS. VA's loans payable were erroneously added to VA's 

Treasury securities

Partner 36-Department of Veterans Affairs

RC 03-Investment Interest 

Expense/Revenue -Exchange

Reporting Agency $791,000,000 $0 $791,000,000 Confirmed Reporting

Trading Partner $0 $791,000,000 $790,736,615 $790,736,615 $263,385 Accounting Error

Reporting Agency Remarks: BPD confirms with IFCS. Agency confirmed with BPD in IFCS but did not report a balance in the Closing Package.

(9) Trading Partner Remarks: VA should have reported $790.7 million on the GFRS, the amount VA reported on the 4th quarter IRAS. The interest revenue was excluded in error.

Partner 36-Department of Veterans Affairs

RC 17-Loans Receivable/Payable Reporting Agency $982,000,000 $0 $982,000,000 Confirmed Reporting

Trading Partner $0 $982,000,000 $982,000,000 $982,000,000 $0 Accounting Error

Reporting Agency Remarks: BPD & FFB confirmed with IFCS. Veterans has a $980 million dollar loan with BPD and a $2 million dollar loan with FFB. However they did not report a 

balance in the Closing Package.

(10) Trading Partner Remarks: VA should have reported $982 million on the GFRS, the amount VA reported on the 4th quarter IRAS.

Partner 47-General Services Administration

RC 22-Buy-Sell Related 

Receivable/Payable

Reporting Agency $119,000,000 $0 $119,000,000 Accounting Methodology Difference

Trading Partner $281,000,000 $162,000,000 $0 $281,000,000 $162,000,000 Accounting Methodology Difference

Reporting Agency Basis of Accounting: Allowance (1319)

Trading Partner Basis of Accounting: Not Stated

Reporting Agency Remarks: Treasury reports SGL 1319 against a liability that GSA has for Judgment Fund disbursements. GSA reports the full balance of this liability on their books.

Trading Partner Remarks: Treasury reduces their A/R balance by an Allowance for Loss on A/R. GSA records amount of full liability on their books.

Partner 50-Securities and Exchange Commission

RC 01-Investments/Debt Reporting Agency $0 $0 $0 Accounting Methodology Difference

Trading Partner $3,674,528,000 $3,674,528,000 $0 $3,674,528,000 $3,674,528,000 Confirmed Reporting

Reporting Agency Basis of Accounting: Non-federal deposit fund

Reporting Agency Remarks: Difference is due to SEC reporting Deposit Fund balances whereas BPD does not.

Partner 51-Federal Deposit Insurance Corporation

RC 01-Investments/Debt Reporting Agency $51,640,000,000 $0 $51,640,000,000 Confirmed Reporting

Trading Partner $51,894,899,151 $254,899,151 $0 $51,894,899,151 $254,899,151 Accounting Methodology Difference

Trading Partner Basis of Accounting: Not Stated

Reporting Agency Remarks: BPD confirms with IFCS. Agency confirmed with BPD in IFCS but reported a different balance in the Closing Package.

(11) Trading Partner Remarks: FDIC confirms reporting; however, diference is due to accounting methodology for treatment of market adjustment on AFS securities (SGL 1618) recognized 

FDIC but not by UST.

Partner 51-Federal Deposit Insurance Corporation

RC 03-Investment Interest 

Expense/Revenue -Exchange

Reporting Agency $2,588,000,000 $0 $2,588,000,000 Confirmed Reporting

Trading Partner $2,968,622,387 $380,622,387 $0 $2,968,622,387 $380,622,387 Accounting Methodology Difference

Trading Partner Basis of Accounting: Not Stated

Reporting Agency Remarks: BPD confirms with IFCS. Agency confirmed with BPD in IFCS but did not report a figure in the Closing Package.

(12) Trading Partner Remarks: FDIC confirms reporting; however, diference is due to accounting methodology for treatment of unrealized loss on AFS securities (SGL 7280) recognized by 

FDIC but not by UST and diferent methods for accruing interest earned on securities (SGL 1340).

Partner 60-Railroad Retirement Board

RC 01-Investments/Debt Reporting Agency $1,893,000,000 $0 $1,893,000,000 Confirmed Reporting

Trading Partner $1,200,466,000 $692,534,000 $0 $1,200,466,000 $692,534,000 Accounting Methodology Difference

Trading Partner Basis of Accounting: Not stated

Reporting Agency Remarks: BPD confirms with IFCS. The agency did not report the same balance for 60X8118 in IRAS.

Trading Partner Remarks: Difference due to NRRIT securities not reflected in IRAS

Partner 69-Department of Transportation

RC 01-Investments/Debt Reporting Agency $19,625,000,000 $0 $19,625,000,000 Accounting Methodology Difference

Trading Partner $19,739,054,000 $114,054,000 $0 $19,739,054,000 $114,054,000 Accounting Methodology Difference

Reporting Agency Basis of Accounting: Deposit fund treated as non-federal

Trading Partner Basis of Accounting: Not Stated

Reporting Agency Remarks: difference is due to DOT reporting Deposit Fund balances whereas BPD does not.

Trading Partner Remarks: Deposit fund activity.

Partner 70-Department of Homeland Security

RC 05-Borrowings Interest 

Revenue/Expense

Reporting Agency $539,000,000 $0 $539,000,000 Confirmed Reporting

Trading Partner $0 $539,000,000 $539,000,000 $539,000,000 $0 Accounting Error

Reporting Agency Remarks: FEMA incorrectly reported $507 million against TP 99 -- it should have been TP 20. DHS will report an error in their FY 2006 4th quarter Material 

Difference Report. FEMA will make a correction reflected in their first quarter FY 2007 IRAS.

(13) Trading Partner Remarks: DHS/FEMA recorded the transactions to TP99 instead of TP20.

Partner 78R-Farm Credit System Insurance Corp

RC 01-Investments/Debt Reporting Agency $2,107,000,000 $0 $2,107,000,000 Confirmed Reporting

Trading Partner $2,107,433,000 $433,000 $0 $2,107,433,000 $433,000 Confirmed Reporting

Reporting Agency Remarks: Rounding in GFRS

Partner 78R-Farm Credit System Insurance Corp

RC 02-Interest Receivable/Payable Reporting Agency $17,000,000 $0 $17,000,000 Confirmed Reporting

Trading Partner $17,469,000 $469,000 $0 $17,469,000 $469,000 Confirmed Reporting

Reporting Agency Remarks: difference is attributed to rounding. Treasury rounded to millions, the partners rounded to thousands.

Partner 78R-Farm Credit System Insurance Corp

RC 03-Investment Interest 

Expense/Revenue -Exchange

Reporting Agency $85,000,000 $0 $85,000,000 Confirmed Reporting

Trading Partner $84,705,000 $295,000 $0 $84,705,000 $295,000 Confirmed Reporting

Reporting Agency Remarks: difference is attributed to rounding. Treasury rounded to millions, the partners rounded to thousands.

Partner 78R-Farm Credit System Insurance Corp

RC 24-Buy-Sell Revenue/Expense Reporting Agency $0 $0 $0 Confirmed Reporting

Trading Partner $251,000 $251,000 $0 $251,000 $251,000 Confirmed Reporting

Reporting Agency Remarks: The difference is attributed to rounding. Treasury rounded to millions, the partners rounded to thousands.

Partner 83-Export-Import Bank of the United States

RC 17-Loans Receivable/Payable Reporting Agency $4,911,000,000 $0 $4,911,000,000 Confirmed Reporting

Trading Partner $4,910,700,000 $300,000 $0 $4,910,700,000 $300,000 Accounting Methodology Difference

Trading Partner Basis of Accounting: Difference in methodology for reporting rounded am

Reporting Agency Remarks: The difference is attributed to rounding. Treasury rounded to millions, the partners rounded to thousands.

2
Partner 86-Department of Housing and Urban Development

RC 03-Investment Interest 

Expense/Revenue -Exchange

Reporting Agency $1,527,000,000 $0 $1,527,000,000 Confirmed Reporting

Trading Partner $1,531,000,000 $4,000,000 $0 $1,531,000,000 $4,000,000 Confirmed Reporting

Reporting Agency Remarks: BPD’s IFCS figure is greater than IRAS by $171,182. This is due to Inflation Compensation for 9/30/06 which was reported in IFCS but not in IRAS. The 

weekend inflation issue is being worked on by BPD. Agency reporting in IFCS and IRAS match.

Partner 89-Department of Energy

RC 01-Investments/Debt Reporting Agency $25,050,000,000 $0 $25,050,000,000 Accounting Methodology Difference

Trading Partner $23,767,000,000 $1,283,000,000 $0 $23,767,000,000 $1,283,000,000 Accounting Methodology Difference

Reporting Agency Basis of Accounting: Level Yield amortization

Trading Partner Basis of Accounting: DOE uses the eff yield method of amortizing zero c

Reporting Agency Remarks: The Market Value Adjustment of $1,361,550,328 is part of the difference because the BPD does not have an SGL to classify the MV adjustment. It is put in 

SGL 2533, but DOE uses SGL 1638 and SGL 1639 which zero each other out. 

Partner 89-Department of Energy

RC 03-Investment Interest 

Expense/Revenue -Exchange

Reporting Agency $693,000,000 $0 $693,000,000 Accounting Methodology Difference

Trading Partner $1,166,000,000 $473,000,000 $0 $1,166,000,000 $473,000,000 Accounting Methodology Difference

Reporting Agency Basis of Accounting: Gain/loss recognition

Trading Partner Basis of Accounting: DOE uses the eff yield meth of amortizing zero cou

Reporting Agency Remarks: Difference of 463,483,317.96 is because DOE does not recognize unrealized gains/losses on the Zero coupon bonds because they hold them until maturity.

*Represents 'accounting error' and 'current year timing' differences only.

3
KPMG U.S. Department of the Treasury

Fiscal Year 2006

Summary of Uncorrected Audit Differences Audit of the Consolidated Financial Statements 

Impact of audit differences on consolidated financial statement captions- Debit/(Credit)

Type of Error Statement of Changes in Net Position Effect Balance Sheet Effect

Known Audit 

Difference (KD) Audit Difference arising in

W/P Ref # Description

Most Likely Audit 

Difference (MLD) Current Period Prior Period Total Net Position Assets Liabilities Disposition

Current year effect of prior period uncorrected audit differences: 

BPD-RJE Public Debt KD (336,502,000) Passed InBPD-RJE Intragovernmental Debt KD 336,502,000 Passed Acc

To reclassify the Treasury's funds from intragovernmental debt holdings to Debt Held by the Public as of 9/30/05 Uncorrected audit differences (before tax) in the current period - 

BPD-RJE Public Debt KD (188,785,000) Passed BPD-RJE Intragovernmental Debt KD 188,785,000 Passed 

To reclassify the Treasury's funds from intragovernmentaldebt holdings to Debt Held by the Public as of 9/30/06

FMS-JE Federal Debt Interest (Restitution of Foregone Interest - FY 2006) KD 156,774,563 156,774,563 156,774,563 Passed

FMS-JE Other Federal Costs KD (156,774,563) (156,774,563) (156,774,563) Passed

To record forgone interest during the fiscal year 2006 debtissuance suspension period that, as required by statute, wasrestored by Treasury through the restitution of foregone interest - appropriation - 

 -  -  -  -  -  -  -  -  - 

0 - 0 0 - - -

0 - 0 0 - - -

Financial statement amounts (as per final financial statements)

n/a n/a n/a n/a n/a n/a n/a

Uncorrected audit differences as a percentage of financial statement amounts n/a n/a n/a n/a n/a n/a n/a