MANAGEMENT 

REPORT

Improvements Needed 

in Controls over the 

Preparation of the 

U.S. Consolidated 

Financial Statements

Report to Agency Officials

June 2012

GAO-12-529

United States Government Accountability Office

GAO
United States Government Accountability Office

Highlights of GAO-12-529, a report to agency 

officials

June 2012

MANAGEMENT REPORT

Improvements Needed in Controls over the 

Preparation of the U.S. Consolidated Financial 

Statements

Why GAO Did This Study

Treasury, in coordination with OMB, is 

primarily responsible for preparing the 

Financial Report, which contains the 

CFS. Since GAO’s first audit of the 

fiscal year 1997 CFS, certain material 

weaknesses and other limitations on 

the scope of GAO’s work have 

prevented GAO from expressing an 

opinion on the CFS, exclusive of the 

Statement of Social Insurance (SOSI). 

Also, GAO was unable to express 

opinions on the 2011 and 2010 SOSI 

and the 2011 Statement of Changes in 

Social Insurance Amounts because of 

significant uncertainties, primarily 

related to the achievement of projected 

reductions in Medicare cost growth, 

reflected in these statements. 

As part of the fiscal year 2011 CFS 

audit, GAO identified material 

weaknesses and other control 

deficiencies in the processes used to 

prepare the CFS. The purpose of this 

report is to (1) provide details on new 

control deficiencies GAO identified 

related to the preparation of the CFS, 

(2) recommend improvements, and 

(3) provide the status of corrective 

actions taken to address GAO’s prior 

recommendations in this area that 

remained open at the end of the fiscal 

year 2010 audit.

What GAO Recommends

GAO is making 10 recommendations 

—9 to Treasury and 1 to OMB—to 

address new control deficiencies. In 

commenting on GAO’s draft report, 

Treasury and OMB generally 

concurred with GAO’s findings.

What GAO Found

During its audit of the fiscal year 2011 consolidated financial statements of the 

U.S. government (CFS), GAO identified new and continuing 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 over the 

federal government’s ability to 

• adequately account for and reconcile intragovernmental activity and balances 

between federal entities; 

• ensure that the federal government’s accrual-based consolidated financial 

statements were consistent with the underlying audited entities’ financial 

statements, properly balanced, and in conformity with U.S. generally 

accepted accounting principles; and 

• identify and either resolve or explain material differences between

(1) components of the budget deficit that are used to prepare certain 

information in the CFS and (2) related amounts reported in federal entities’ 

financial statements and underlying financial information and records. 

GAO identified new control deficiencies involving the need to 

• develop or revise and implement written procedures for appropriate Treasury 

and OMB officials to (1) review and approve the drafts of the Financial 

Report of the United States Government (Financial Report) before they are 

provided to GAO and (2) better ensure that key federal entity personnel are 

actively involved in the process for preparing and reviewing the Financial 

Report; 

• enhance procedures for timely review, approval, and use of the CFS 

disclosure checklist;

• develop procedures for pursuing indications that financial information 

provided by federal entities for inclusion in the CFS may not be in conformity 

with applicable accounting standards; 

• enhance Treasury’s intragovernmental data validation process; and

• enhance procedures for timely identifying, notifying, and obtaining closing 

packages from federal entities as they first become significant to the 

Financial Report. 

In addition, GAO found that various other control deficiencies identified in 

previous years’ audits with respect to the CFS preparation continued to exist. 

Specifically, of the 50 open recommendations from GAO’s prior reports regarding 

control deficiencies in the CFS preparation process,12 were closed and 38 

remained open as of December 12, 2011, the date of GAO’s report on its audit of 

the fiscal year 2011 CFS. GAO will continue to monitor the status of corrective 

actions taken to address the 10 new recommendations as well as the 38 open 

recommendations from prior years as part of its fiscal year 2012 CFS audit.

View GAO-12-529. For more information, 

contact Gary Engel at (202) 512-3406 or 

engelg@gao.gov.
Page i GAO-12-529 U.S. CFS Management Report

Letter 1 

Scope and Methodology 3

Review and Approval of the Financial Report 4

Timely Review and Approval of the Financial Reporting Disclosure 

Checklist 6

Review of Federal Entities’ Financial Information for Inclusion in 

the CFS 8

Treasury’s Intragovernmental Data Validation Process 9

Timely Submission of Audited Closing Packages by Newly 

Identified Significant Federal Entities 11

Status of Recommendations from Prior Reports 12

Agency Comments 12

Appendix I Status of Treasury’s and OMB’s Progress in Addressing GAO’s Prior 

Year Recommendations for Preparing the CFS 14

Appendix II Comments from the Department of the Treasury 33

Contents
Page ii GAO-12-529 U.S. CFS Management Report

Abbreviations

AGA Association of Government Accountants

CFO chief financial officer

CFS consolidated financial statements of the U.S.

 government

FASAB Federal Accounting Standards Advisory Board

FEVBP Federal Employee and Veteran Benefits Payable 

Financial Report Financial Report of the United States Government

FMS Financial Management Service

FRD Financial Reports Division

GAAP generally accepted accounting principles 

GFRS Governmentwide Financial Report System

IRAS Intragovernmental Reporting and Analysis

 System

Justice Department of Justice 

MD&A Management’s Discussion and Analysis 

OFAS Office of the Fiscal Assistant Secretary 

OMB Office of Management and Budget 

SFFAS Statement of Federal Financial Accounting 

 Standards 

SOP standard operating procedure 

SOSI Statement of Social Insurance 

STAR/CARS Treasury’s central accounting and reporting system 

Treasury Department of the Treasury 

TVA Tennessee Valley Authority

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Page 1 GAO-12-529 U.S. CFS Management Report

United States Government Accountability Office

Washington, DC 20548

June 27, 2012

The Honorable Timothy F. Geithner

Secretary of the Treasury

The Honorable Jeffrey Zients

Acting Director

Office of Management and Budget

In our report dated December 12, 2011,1 we disclaimed an opinion on the 

consolidated financial statements of the U.S. government (CFS) for the 

fiscal years ended September 30, 2011 and 2010,2 except for the 2009, 

2008, and 2007 Statements of Social Insurance (SOSI), which received 

unqualified opinions.3 Since GAO’s first audit of the fiscal year 1997 CFS, 

certain material weaknesses in internal control over financial reporting 

and other limitations on the scope of our work have resulted in conditions 

that prevented us from expressing an opinion on the federal government’s 

accrual-based consolidated financial statements.4

 

1

The 2011 Financial Report of the United States Government includes our report and was 

issued by the Department of the Treasury on December 23, 2011, and is available through 

GAO’s website at 

These include material 

weaknesses that relate to the federal government’s processes used to 

prepare the CFS. Such material weaknesses involve the federal 

government’s inability to

http://www.gao.gov/financial.html and Treasury’s website at 

http://www.fms.treas.gov/fr/index.html. 

2

The CFS for the fiscal years ended September 30, 2011 and 2010, consist of the 

Statements of Net Cost, Statements of Operations and Changes in Net Position, 

Reconciliations of Net Operating Cost and Unified Budget Deficit, Statements of Changes 

in Cash Balance from Unified Budget and Other Activities, Balance Sheets, the 2011, 

2010, 2009, 2008, and 2007 Statements of Social Insurance, and the 2011 Statement of 

Changes in Social Insurance Amounts, including the related notes to these financial 

statements.

3

Because of significant uncertainties (discussed in Note 26 to the consolidated financial 

statements), primarily related to the achievement of projected reductions in Medicare cost 

growth reflected in the 2011 and 2010 SOSI, we were unable to, and did not, express 

opinions on the 2011 and 2010 SOSI as well as on the 2011 Statement of Changes in 

Social Insurance Amounts. We were, however, able to render unqualified opinions on the 

2009, 2008, and 2007 SOSI. 

4

As used in this report, accrual-based consolidated financial statements refer to all of the 

consolidated financial statements and notes, except for those related to the SOSI and the 

Statement of Changes in Social Insurance Amounts.

 
 

Page 2 GAO-12-529 U.S. CFS Management Report

• adequately account for and reconcile intragovernmental activity and 

balances between federal entities;

• ensure that the federal government’s accrual-based consolidated 

financial statements were consistent with the underlying audited 

entities’ financial statements, properly balanced, and in conformity 

with U.S. generally accepted accounting principles; and

• identify and either resolve or explain material differences between

(1) certain components of the budget deficit reported in the 

Department of the Treasury’s (Treasury) central accounting records 

that are used to prepare the Reconciliation of Net Operating Cost and 

Unified Budget Deficit, the Statement of Changes in Cash Balance 

from Unified Budget and Other Activities, and the Fiscal Projections 

for the U.S. Government (included in Supplemental Information) and 

(2) related amounts reported in federal entities’ financial statements 

and underlying financial information and records.

Treasury, in coordination with the Office of Management and Budget 

(OMB), prepares the CFS on behalf of the federal government.5 Several 

of the material weaknesses6

The purpose of this report is to provide (1) detailed information on new 

control deficiencies identified during our fiscal year 2011 audit that relate 

to the processes used to prepare the CFS, (2) 10 recommendations to 

address these new control deficiencies, and (3) the status of corrective 

actions taken by Treasury and OMB to address the 50 recommendations 

relating to the processes used to prepare the CFS detailed in our 

previous reports that remained open at the end of the fiscal year 2010 

in internal control over financial reporting 

that have contributed to our continuing disclaimers of opinion on the 

federal government’s accrual-based consolidated financial statements 

were identified by other auditors during their audits of individual federal 

entities’ financial statements and were reported in detail with 

recommendations to the entities in separate reports.

 

5

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). 

6

A material weakness is a deficiency, or combination of deficiencies, in internal control, 

such that there is a reasonable possibility that a material misstatement of the entity’s 

financial statements will not be prevented, or detected and corrected on a timely basis. A 

deficiency in internal control exists when the design or operation of a control does not 

allow management or employees, in the normal course of performing their assigned 

functions, to prevent, or detect and correct misstatements on a timely basis. 
 

Page 3 GAO-12-529 U.S. CFS Management Report

audit. We closed 12 of the 50 recommendations at the end of the fiscal 

year 2011 audit. We closed 4 of these recommendations based on 

Treasury’s progress to date and opened new recommendations that are 

better aligned with the current status of the remaining internal control 

deficiencies related to these areas. Appendix I provides a summary of the 

status of actions taken to address the open recommendations from our 

previous reports as of December 12, 2011, the date of our report on the 

audit of the fiscal year 2011 CFS.

As part of our audit of the fiscal years 2011 and 2010 CFS, we 

considered the federal government’s financial reporting procedures and 

related internal control. Also, we determined the status of corrective 

actions taken by Treasury and OMB to address open recommendations 

relating to the processes used to prepare the CFS detailed in our 

previous reports. Based on the scope of our work and the effects of the 

other limitations on the scope of our audit noted throughout our audit 

report on the fiscal year 2011 CFS, our internal control work would not 

necessarily identify all deficiencies in internal control, including those that 

might be material weaknesses or significant deficiencies.7

We requested comments on a draft of this report from the Acting Director 

of OMB and the Secretary of the Treasury or their designees. OMB 

provided oral comments, which are summarized in the Agency Comments 

section of this report. Treasury’s Fiscal Assistant Secretary provided 

written comments on June 7, 2012, which are reprinted in their entirety in 

appendix II and are also summarized in the Agency Comments section.

We have 

communicated each of the new control deficiencies to your staff. We 

performed our audit of the fiscal years 2011 and 2010 CFS in accordance 

with U.S. generally accepted government auditing standards. We believe 

that our audit provided a reasonable basis for our conclusions in this 

report.

 

7

A significant deficiency is a deficiency, or a combination of deficiencies, in internal control 

that is less severe than a material weakness, yet important enough to merit attention by 

those charged with governance. 

Scope and 

Methodology 
 

Page 4 GAO-12-529 U.S. CFS Management Report

Over the past several years, Treasury and OMB have improved the 

process for preparing the Financial Report of the United States 

Government (Financial Report)8

While Treasury maintains standard operating procedures for preparing, 

reviewing, and approving the Financial Report, the extent of errors, 

inconsistencies, and omissions we identified is evidence of deficiencies in 

Treasury’s process for preparing and reviewing the draft Financial Report, 

particularly with respect to relatively new areas and in more complex 

areas. Treasury procedures did not provide for key federal entity 

personnel with technical expertise in the relatively new and the more 

complex areas to be actively involved in the preparation and review 

process of the Financial Report. More active involvement of such key 

federal entity personnel can help prevent or detect and correct incorrect 

and have addressed several of the 

issues underlying prior years’ recommendations, including our 

recommendation regarding the preparation and review of the 

Management’s Discussion and Analysis and Citizen’s Guide sections of 

the Financial Report. However, we continued to identify numerous 

incorrect amounts and inconsistent and incomplete disclosures in the 

draft 2011 Financial Report, including the consolidated financial 

statements, and the Notes and Supplemental Information sections of the 

Financial Report. These errors, inconsistencies, and omissions occurred 

more frequently in the relatively new and in more complex areas of the 

Financial Report. For example, several note disclosures in the draft 

Financial Report related to social insurance, the Troubled Asset Relief 

Program, Government-Sponsored Enterprises, and federal employee and 

veteran benefits were inconsistent with related disclosures in federal 

agencies’ Performance and Accountability Reports or Agency Financial 

Reports, and in some cases were not accurate or complete. The errors, 

inconsistencies, and omissions were not identified through Treasury’s and 

OMB’s processes for preparing and reviewing the draft Financial Report. 

We communicated these matters to Treasury and OMB officials who 

revised the Financial Report, as appropriate.

 

8

The Financial Report comprises the consolidated financial statements, related notes, 

stewardship information, supplemental information, and other accompanying information, 

including the Citizen’s Guide and Management’s Discussion and Analysis. The Citizen’s 

Guide presents information regarding the financial position and condition of the U.S. 

government and discusses key financial topics. The Management’s Discussion and 

Analysis assists in (1) communicating management’s insights about the reporting entity, 

(2) increasing the understandability and usefulness of the financial report, and 

(3) providing information about the reporting entity and its operations and challenges.

Review and Approval 

of the Financial 

Report
 

Page 5 GAO-12-529 U.S. CFS Management Report

amounts and inconsistent and incomplete disclosures. Further, Treasury’s 

procedures for preparing and reviewing the Financial Report did not 

require review and approval of drafts of the Financial Report by 

appropriate higher-level Treasury officials of the Office of the Fiscal 

Assistant Secretary before they were provided to GAO for audit.9

According to Standards for Internal Control in the Federal Government, 

one of the key objectives of an organization’s internal control over 

financial reporting is to provide reasonable assurance as to the reliability 

of its financial reporting, including its financial statements.

Also, 

although OMB had certain informal procedures for its Office of Federal 

Financial Management’s review and approval of drafts of the Financial 

Report before they were provided to GAO, it had not documented these 

procedures. Documented procedures that clearly delineate the roles and 

responsibilities of the appropriate Treasury and OMB officials can help to 

provide an effective review process.

10 Without 

effectively implemented preparation, review, and approval processes for 

drafts of the Financial Report, Treasury and OMB are at risk of presenting 

information that is incorrect, inconsistent, or incomplete.

We recommend that the Acting Director of OMB direct the Controller of 

OMB to develop and implement written procedures specifying the steps 

required for effectively reviewing and approving the drafts of the Financial 

Report before they are provided to GAO, to include clear delineation of 

the review and approval roles and responsibilities of designated 

appropriate higher-level officials in OMB’s Office of Federal Financial 

Management, including the Controller of OMB.

We also recommend that the Secretary of the Treasury direct the Fiscal 

Assistant Secretary to revise and implement Treasury’s procedures 

 

9

The Secretary of the Treasury, in coordination with the Director of OMB, is required to 

annually submit financial statements of the U.S. government to the President and the 

Congress. The Office of the Fiscal Assistant Secretary and the Office of Federal Financial 

Management are the respective offices within Treasury and OMB that have primary 

responsibility for performing this function.

10GAO, Standards for Internal Control in the Federal Government, GAO/AIMD-00-21.3.1

(Washington, D.C.: November 1999). These standards define the minimum level of quality 

acceptable for internal control in the government and provide the basis against which 

internal control is to be evaluated.

Recommendations for 

Executive Action
 

Page 6 GAO-12-529 U.S. CFS Management Report

related to preparing and reviewing the drafts of the Financial Report

before they are provided to GAO, to include clear delineation of the 

review and approval roles and responsibilities of designated appropriate 

higher-level officials in the Office of the Fiscal Assistant Secretary, 

including the Fiscal Assistant Secretary.

We further recommend that the Secretary of the Treasury direct the Fiscal 

Assistant Secretary, working in coordination with the Controller of OMB, 

to develop and implement procedures to provide for the active 

involvement of key federal entity personnel with technical expertise in 

relatively new areas and more complex areas in the preparation and 

review process of the Financial Report. 

For many years, we have reported that Treasury had not established a 

formal process to reasonably assure that the CFS, including the related 

notes, were presented in conformity with generally accepted accounting 

principles (GAAP).11

In response to our prior recommendation, Treasury developed 

procedures, including use of its CFS disclosure checklist, to help 

determine that all disclosures required by GAAP are included in the CFS. 

Several years ago, Treasury established a standard operating procedure 

(SOP), entitled “The FR Disclosure List,” to update the CFS disclosure 

checklist to reflect new disclosures that are required to be included in the 

Over the past several years, Treasury has 

developed procedures utilizing a financial reporting disclosure checklist 

(CFS disclosure checklist) that is intended to significantly improve 

Treasury’s ability to timely identify GAAP requirements, assess the effect 

of any omitted disclosures, and document decisions reached with regard 

to the omission of any disclosures and the rationale for such decisions. 

However, during our audit of the fiscal year 2011 CFS, we determined 

that Treasury’s assessment and documentation regarding the reporting of 

certain financial information required by GAAP continued to be impaired. 

Specifically, we found that Treasury officials did not complete and 

document their required review and approval of the CFS disclosure 

checklist within the time frames established by Treasury’s policies and 

procedures.

 

11The Federal Accounting Standards Advisory Board is the body designated by the 

American Institute of Certified Public Accountants as the source of generally accepted 

accounting principles for federal reporting entities.

Timely Review and 

Approval of the 

Financial Reporting 

Disclosure Checklist
 

Page 7 GAO-12-529 U.S. CFS Management Report

CFS. In fiscal year 2011, Treasury further enhanced the SOP to include 

procedures for periodically updating the CFS disclosure checklist and 

documenting preparer sign-offs and managerial approvals. Specifically, 

the fiscal year 2011 enhancement to the SOP requires the CFS 

disclosure checklist to be revised annually, as necessary, to incorporate 

any (1) new and amended disclosure requirements effective for the 

current year’s reporting and (2) additional information necessary to 

address GAO audit recommendations related to financial disclosure. The 

SOP was also modified to require a final review and sign-off on the CFS 

disclosure checklist by the Financial Reports Division (FRD) Director in 

Treasury’s Financial Management Service (FMS) by December 5, 2011, 

to help provide reasonable assurance that the disclosures are in 

conformity with GAAP.12

As a result, Treasury was limited in its ability to rely on the CFS 

disclosure checklist to reasonably assure that the CFS was prepared in 

conformity with GAAP as intended by the SOP. Specifically, the lack of 

timely review and approval of the CFS disclosure checklist limited 

Treasury’s ability to reasonably assure that all GAAP-required disclosures 

are included in the CFS.

However, we found that the final review and 

approval by the FRD Director was not completed and documented by 

December 5, 2011, as required by the SOP. We also noted that the SOP 

did not require Treasury to use the CFS disclosure checklist to assist in 

preparing the format draft that Treasury prepares in advance of the yearend consolidation. Using the CFS disclosure checklist to assist in 

preparing the format draft could assist Treasury in completing the final 

checklist on a timely basis.

To help to provide reasonable assurance that the information reported in 

the CFS is complete, accurate, and in conformity with GAAP, the 

Secretary of the Treasury should direct the Fiscal Assistant Secretary to 

(1) establish a mechanism to ensure that Treasury’s CFS disclosure 

checklist is reviewed and approved by the date in Treasury’s policies and 

procedures and (2) revise the SOP to include requirements for using the 

CFS disclosure checklist to prepare the format draft of the CFS and to 

 

12Treasury’s SOP is modified annually to include new due dates for updating the CFS 

disclosure checklist to correspond with the current fiscal year CFS reporting requirements. 

In fiscal year 2011, Treasury required the CFS disclosure checklist to be reviewed and 

approved by December 5, 2011.

Recommendations for 

Executive Action
 

Page 8 GAO-12-529 U.S. CFS Management Report

update the CFS disclosure checklist as necessary when subsequent 

drafts of the CFS are prepared.

Over the past several years, Treasury has made progress in developing, 

documenting, and implementing numerous improvements to its SOPs 

intended to enhance internal control over the process for preparing the 

CFS. However, in fiscal year 2011, we identified a control deficiency 

involving Treasury’s review of audited closing packages.13

Treasury’s SOP entitled “Data Analysis” includes procedures for Treasury 

staff to compare financial information submitted by federal entities 

through their audited closing packages to the entities’ audited financial 

statements for consistency and to work with the entities to correct any

material inconsistencies identified by Treasury. However, Treasury’s SOP 

did not include steps to pursue instances where the information provided 

to Treasury contains indications that federal entities’ financial information 

submitted through the closing package, even if consistent with the 

entities’ audited financial statements, may not be in conformity with 

GAAP. Steps to pursue these instances would be particularly relevant 

when a new federal accounting standard is implemented to reasonably 

assure appropriate and consistent application across government. For 

example, as part of its fiscal year 2011 CFS compilation process, 

Treasury did not identify federal entities’ potential GAAP exceptions 

related to Statement of Federal Financial Accounting Standards No. 33, 

Pensions, Other Retirement Benefits, and Other Postemployment 

Benefits: Reporting the Gains and Losses from Changes in Assumptions 

and Selecting Discount Rates and Valuation Dates, which was first 

implemented in fiscal year 2010. As part of our fiscal year 2011 audit, we 

In connection 

with Treasury’s role as preparer of the CFS, Treasury management is 

responsible for developing and documenting detailed policies and 

procedures for preparing the CFS and ensuring that appropriate internal 

control is built into and is an integral part of the CFS compilation process. 

Standards for Internal Control in the Federal Government calls for clear 

documentation of policies and procedures.

 

13The closing package methodology links federal entities’ audited consolidated 

department-level financial statements to the CFS. Verifying entities’ chief financial officers 

must verify the consistency of the closing package data with these entities’ audited 

financial statements. In addition, for most verifying entities, the full closing package is 

required to be audited. 

Review of Federal 

Entities’ Financial 

Information for 

Inclusion in the CFS
 

Page 9 GAO-12-529 U.S. CFS Management Report

raised concerns that the financial information presented at the 

governmentwide level, which was provided by federal entities, may not be 

in conformity with GAAP. However, there was not sufficient time for 

Treasury to pursue and resolve our concerns. As a result, Treasury was 

unable to reasonably assure that such Federal Employee and Veteran 

Benefits Payable information in the fiscal year 2011 CFS was presented 

in conformity with GAAP. Inadequate policies and procedures increase 

the risk that errors in the compilation process could go undetected and 

result in misstatements in the financial statements or incomplete and 

inaccurate disclosure of information within the Financial Report. 

To help to provide reasonable assurance that financial information is 

properly reported in the CFS, we recommend that the Secretary of the 

Treasury direct the Fiscal Assistant Secretary to enhance the SOP 

entitled “Data Analysis” to include required steps for pursuing any 

instances where the information provided to Treasury contains indications 

that financial information provided by federal entities for inclusion in the 

CFS may not be in conformity with GAAP, particularly with respect to any 

recent changes in GAAP.

The Treasury Financial Manual section entitled “Agency Reporting 

Requirements for the Financial Report of the United States Government” 

requires federal entities to report intragovernmental balances quarterly to 

Treasury and work with their trading partners to reconcile and resolve 

intragovernmental differences. Treasury developed the Intragovernmental 

Reporting and Analysis System (IRAS) to begin to address the longstanding weakness we reported regarding the federal government’s 

inability to adequately account for and reconcile intragovernmental activity 

and balances. Using IRAS, Treasury generates reports on a quarterly 

basis to assist federal entities in identifying, reconciling, and resolving 

intragovernmental differences with their trading partners prior to year-end 

reporting. Further, Treasury personnel use IRAS reports to monitor 

entities’ progress in reconciling their intragovernmental differences both 

quarterly and at year-end. Treasury’s SOP entitled “Intragovernmental 

Quarterly Reporting Process and Analysis” includes IRAS validation 

procedures for Treasury personnel to validate the IRAS reports for 

accuracy prior to providing them to federal entities. However, during our 

fiscal year 2011 audit, we found control deficiencies over the design and 

implementation of the IRAS data validation process.

Recommendation for 

Executive Action

Treasury’s 

Intragovernmental 

Data Validation 

Process 
 

Page 10 GAO-12-529 U.S. CFS Management Report

Specifically, during our fiscal year 2011 audit, we found that one 

individual at Treasury, who was the developer of IRAS, also had several 

other incompatible roles and responsibilities, including serving as the 

IRAS administrator as well as a review accountant for one of the federal 

entities included in the IRAS process. In these various roles, his 

responsibilities included uploading the federal entities’ reported 

intragovernmental data into IRAS, using IRAS to process the data and 

generate the IRAS reports, and monitoring his assigned entity’s progress 

in reconciling and resolving the intragovernmental differences with its 

trading partners. As such, his roles included responsibilities for much of 

the process for identifying, reconciling, and resolving intragovernmental 

differences.

Standards for Internal Control in the Federal Government calls for 

segregation of duties among different people in order to reduce the risk of 

error or fraud, thus preventing a single individual from having full control 

of a transaction or event. Treasury noted that it reduced the risk of error 

through the required quarterly IRAS validation process, which provides for 

the IRAS administrator to verify randomly selected federal entities’ 

submitted data for consistency and completeness with IRAS reports. The 

process also calls for the IRAS team leader to review and approve the 

IRAS administrator’s testing documentation prior to the distribution of 

IRAS reports to the federal entities. In addition, the process includes 

completing a checklist to document that these procedures have been 

performed. If properly designed and effectively implemented, this process 

could reduce the risk of error caused by inadequate segregation of duties. 

However, we found that although the IRAS validation process calls for 

testing of randomly selected federal entities’ data with IRAS reports for 

consistency and completeness, this procedure did not require testing of 

the federal entity that the administrator was responsible for under his 

review accountant’s role. Further, we found that since the IRAS validation 

checklist has been in place—the third and fourth quarters of fiscal year 

2011—the completed checklists did not always include the IRAS team 

leader’s signature to document that the required review took place. We 

also noted that the data from IRAS were provided to federal entities for 

use prior to the validations, increasing the risk of entities receiving 

inaccurate reports.

These deficiencies in the design and implementation of the IRAS 

validation process impair Treasury’s assurance that it has reduced the 

risk of error in the IRAS reports that Treasury and federal entities depend 

on to help identify and reconcile intragovernmental differences between 

federal entities and their trading partners.
 

Page 11 GAO-12-529 U.S. CFS Management Report

To help to provide reasonable assurance that appropriate controls are in 

place to reduce the risk of errors in IRAS reports, we recommend that the 

Secretary of the Treasury direct the Fiscal Assistant Secretary to 

(1) enhance the IRAS validation procedures, at a minimum, to include 

specific steps for testing intragovernmental data of the administrator’s 

assigned entity and (2) establish a mechanism for ensuring that all steps 

in the required validation process are completed, documented, and 

reviewed prior to the distribution of IRAS reports.

Treasury’s SOP entitled “Significant Federal Entities Identification” 

includes procedures for Treasury to annually14

In fiscal year 2011, we found that Treasury’s and OMB’s processes were 

not effective in ensuring timely submission of audited closing packages by 

entities newly identified as significant to the Financial Report because of 

deficiencies in the design of Treasury’s related policies and procedures. 

Specifically, we found that Treasury’s SOP did not include procedures to 

(1) identify any federal entities that became significant to the Financial 

Report during the fiscal year but were not identified as significant in the 

prior fiscal year and (2) obtain audited closing packages from newly 

identified entities in the year they are determined to be significant, 

including timely written notification to newly identified significant entities. 

Without these procedures, Treasury is unable to reasonably assure that it 

has appropriate audit assurance over financial information for all federal 

entities that are significant to the Financial Report. 

assess whether federal 

entities that were previously determined nonsignificant, have become 

significant to the Financial Report. The SOP also includes procedures for 

Treasury, in coordination with OMB, to help provide reasonable 

assurance that any newly identified significant entities comply with the 

reporting requirements for significant entities. Treasury’s assessments 

are based on prior year financial information. In addition, the SOP 

requires federal entities identified as significant to the Financial Report to 

submit a closing package to Treasury that includes audited special 

purpose financial statements that have been appropriately reclassified in 

accordance with CFS reporting requirements for inclusion in the Financial 

Report. 

 

14Prior to fiscal year 2011, Treasury’s SOP called for biennial assessments for entities 

with a fiscal year end and for triennial assessments for entities with a calendar year end. 

In fiscal year 2011, Treasury revised this SOP to require annual assessments. 

Recommendations for 

Executive Action

Timely Submission of 

Audited Closing 

Packages by Newly 

Identified Significant 

Federal Entities
 

Page 12 GAO-12-529 U.S. CFS Management Report

To help to provide reasonable assurance that Treasury timely receives 

the audited closing package from those federal entities that are newly 

identified as being significant to the Financial Report, we recommend that 

the Secretary of the Treasury direct the Fiscal Assistant Secretary, 

working in coordination with the Controller of OMB, to enhance the SOP 

entitled “Significant Federal Entities Identification” to include procedures 

for (1) identifying any entities that become significant to the Financial 

Report during the fiscal year but were not identified as significant in the 

prior fiscal year and (2) obtaining audited closing packages from newly 

identified significant entities in the year they become significant, including 

timely written notification to newly identified significant entities.

Of our 50 recommendations from our prior reports regarding control 

deficiencies in the CFS preparation process that were open at the end of 

the fiscal year 2010 audit, we were able to close 12 during our fiscal year 

2011 audit, generally as a result of corrective actions taken by Treasury. 

The other 38 recommendations remained open as of December 12, 2011, 

the date of our report on the audit of the fiscal year 2011 CFS.

Appendix I summarizes the status as of December 12, 2011, for the 50 

open recommendations from our prior years’ reports. Specifically, 

appendix I includes the status according to Treasury and OMB, as well as 

our own assessments where appropriate. The status of recommendations 

per GAO includes explanatory comments on Treasury’s and OMB’s 

information. We will continue to monitor Treasury’s and OMB’s progress 

in addressing our recommendations as part of our fiscal year 2012 CFS 

audit.

In oral comments on a draft of this report, OMB generally concurred with 

the findings in this report.

In written comments on a draft of this report, Treasury concurred with our 

findings and noted that the agency has made significant progress in 

enhancing its policies and procedures for the CFS preparation since the 

issuance of the fiscal year 2011 audit report. Also, Treasury stated that it 

expects to implement additional recommendations by the end of fiscal 

year 2012, and that it will use our findings to continue to improve the 

Recommendations for 

Executive Action

Status of 

Recommendations 

from Prior Reports

Agency Comments

OMB Comments

Treasury Comments
 

Page 13 GAO-12-529 U.S. CFS Management Report

central accounting and compilation activities associated with the CFS. In 

addition, Treasury stated that it has given great management attention 

and staff resources to resolving material intragovernmental differences 

along with developing or improving process controls within FMS and the 

federal agencies. Treasury also stated that its strategy includes the use of 

multiple focus groups that have identified both short- and long-term

solutions through analysis of material differences and working closely with 

agencies to identify root causes of differences. Further, Treasury stated 

that it has developed General Fund accounts that will provide Treasury 

with the capability to reconcile to federal agency financial reporting data.

This report contains recommendations to you. The head of a federal 

agency is required by 31 U.S.C. 720 to submit a written statement on 

actions taken on our recommendations to the Senate Committee on 

Homeland Security and Governmental Affairs and to the House 

Committee on Oversight and Government Reform not later than 60 days 

after the date of this report. A written statement must also be sent to the 

Senate and House Committees on Appropriations with the agency’s first 

request for appropriations made more than 60 days after the date of this 

report.

We are sending copies of this report to interested congressional 

committees, the Fiscal Assistant Secretary of the Treasury, and the 

Controller of OMB’s Office of Federal Financial Management. In addition, 

this report is available at no charge on the GAO website at 

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 me at (202) 

512-3406 or engelg@gao.gov. Contact points for our Offices of 

Congressional Relations and Public Affairs may be found on the last page 

of this report.

Gary T. Engel

Director

Financial Management and Assurance
Appendix I: Status of Treasury’s and OMB’s 

Progress in Addressing GAO’s Prior Year 

Recommendations for Preparing the CFS

Page 14 GAO-12-529 U.S. CFS Management Report

Count No. Recommendation

Status of recommendationa

Per Treasury and OMB Per GAO 

GAO-04-45 (results of the fiscal year 2002 audit)

1 02-4 As the Department of the Treasury (Treasury) 

is designing its new financial statement 

compilation process to begin with the fiscal 

year 2004 consolidated financial statements 

of the U.S. government (CFS), the Secretary 

of the Treasury should direct the Fiscal 

Assistant Secretary, in coordination with the 

Controller of the Office of Management and 

Budget (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.

To eliminate or explain adjustments 

to net position, Treasury eliminates, 

at the consolidated level, 

intragovernmental activity and

balances using formal balanced 

accounting entries (via Reciprocal 

Categories) and analyzes 

transactions that contribute to the 

unmatched transactions and 

balances adjustment i.e., the plug. 

Major contributors to the plug are 

transactions with the General Fund 

(within Reciprocal Category 29).

A Treasury task group is currently 

developing the Schedule of 

General Fund Authority, with the 

goal to enter audited data for fiscal 

year 2013 into the Governmentwide 

Financial Report System (GFRS) 

and to remove General Fund 

transactions from the plug. In the 

interim, Treasury will separately 

identify certain General Fund 

transactions by providing agencies 

with monthly STAR/CARS (Central 

Accounting Reporting System) data 

to facilitate reconciliation on a 

quarterly basis. In addition, 

Treasury has revised the guidance 

related to the appropriate use of 

“Trading Partner 99” (General 

Fund). This guidance will be issued 

in fiscal year 2012, to be effective 

in fiscal year 2013.

Also throughout fiscal year 2012, 

Treasury will continue to identify 

and resolve, via communications 

to, and assistance from, agencies, 

material differences related to 

fiduciary, employee benefits, 

buy/sell and transfer activity 

through the continued efforts of 

Treasury focus groups to identify 

and mitigate root causes and 

implement short- and long-term 

solutions.

Open.

Appendix I: Status of Treasury’s and OMB’s 

Progress in Addressing GAO’s Prior Year 

Recommendations for Preparing the CFS
Appendix I: Status of Treasury’s and OMB’s 

Progress in Addressing GAO’s Prior Year 

Recommendations for Preparing the CFS

Page 15 GAO-12-529 U.S. CFS Management Report

Count No. Recommendation

Status of recommendationa

Per Treasury and OMB Per GAO 

2 02-6 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-07-03, Business 

Rules for Intragovernmental Transactions.

Treasury has taken the lead role for 

resolving intragovernmental 

disputes and major differences 

between trading partners. In fiscal 

year 2011, Treasury published the 

updated Intragovernmental 

Business Rules, which include 

dispute resolution procedures for 

trading partner agencies to follow. 

Treasury’s dispute resolution 

process includes a new 

Intragovernmental Dispute 

Resolution Request Form to be 

certified by federal entity chief 

financial officers (CFO). Treasury 

as the enforcer of the updated 

business rules, working with OMB 

as necessary, will work with 

agencies, to help ensure the 

effectiveness of the dispute 

resolution process during each 

fiscal year and will document the 

resolutions.

Closed.

3 02-7 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.

See the status for recommendation 

No. 02-6.

Closed.
Appendix I: Status of Treasury’s and OMB’s 

Progress in Addressing GAO’s Prior Year 

Recommendations for Preparing the CFS

Page 16 GAO-12-529 U.S. CFS Management Report

Count No. Recommendation

Status of recommendationa

Per Treasury and OMB Per GAO 

4 02-9 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.

Treasury has designed and 

implemented formal consolidating 

and eliminating procedures with 

regard to intragovernmental assets 

and liabilities, but some issues 

remain. During fiscal year 2012, 

Treasury is revising existing 

guidance and policies, and 

developing new guidance and 

policies as needed, for these 

remaining issues. Upon 

implementation of the revised 

guidance and policies by the 

agencies, Treasury’s consolidation 

and elimination accounting entries 

should effectively account for the 

difference in intragovernmental 

assets and liabilities. Final 

resolution is contingent on fully 

resolving material 

intragovernmental differences. See 

the status for recommendation No. 

02-4.

Open.

5 02-10 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.

See the status for recommendation 

No. 02-4.

Open.

6 02-11 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.

Treasury’s consolidating 

procedures request information 

from the agencies related to asset 

capitalization and agency advances 

or deferred revenue to assist in 

ensuring the proper reporting of this 

activity. During fiscal year 2012, 

Treasury will finalize guidance 

related to intragovernmental 

capitalized purchases to be 

effective in fiscal year 2013. See 

the status of recommendation No. 

02-4 and No. 02-9.

Open.
Appendix I: Status of Treasury’s and OMB’s 

Progress in Addressing GAO’s Prior Year 

Recommendations for Preparing the CFS

Page 17 GAO-12-529 U.S. CFS Management Report

Count No. Recommendation

Status of recommendationa

Per Treasury and OMB Per GAO 

7 02-12 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.

These unmatched transactions and 

balances will be reflected only in 

the Statements of Operations and 

Changes in Net Position until

intragovernmental differences are 

materially resolved. At that point, 

unresolved reconciling items, if any, 

needed to reconcile net operating 

cost to the unified budget deficit 

can be separately identified in the 

reconciliation statements. See the 

status of recommendation No. 02-

13.

Open.

8 02-13 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.

During fiscal year 2012, Treasury is 

refining its methodology for 

reconciling operating revenue to 

budgetary receipts (a component of 

the unified budget deficit), in 

collaboration with agencies, and is 

in the process of readying the 

methodology for review and 

comment from all agencies and 

GAO.

In addition, during fiscal year 2012, 

Treasury will work with OMB to 

further identify and define all 

sources of budgetary receipts 

reported to STAR/CARS. Treasury 

will take into account GAO review 

comments, if any, during 

finalization of the methodology for 

the CFS and the resolution of 

unresolved differences.

Lastly, a group formed by the 

Association of Government 

Accountants (AGA group) is 

performing an independent review 

of the compilation of the 

reconciliation statement and cash 

statement and will provide shortand long-term solutions for 

improving the completeness of 

these statements and consistency 

with underlying agency financial 

statement data. Treasury will 

consider AGA group’s 

recommendations in revising its 

reconciliation methodology. 

Open.
Appendix I: Status of Treasury’s and OMB’s 

Progress in Addressing GAO’s Prior Year 

Recommendations for Preparing the CFS

Page 18 GAO-12-529 U.S. CFS Management Report

Count No. Recommendation

Status of recommendationa

Per Treasury and OMB Per GAO 

9 02-14 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.

During fiscal year 2012, as 

Treasury works on its reconciliation 

methodology, it will request more 

information from agencies related 

to certain items in the reconciliation 

statement due to their reporting of 

certain activity on a net basis 

instead of on a disaggregated 

basis.

Based on the results of this work, 

Treasury will determine what 

additional information is needed 

from the agencies. Once all 

disaggregated information is 

obtained, Treasury can implement 

its reporting materiality policy to 

provide more meaningful and 

useful information in the CFS. See 

also the status of recommendation 

No. 02-13.

Open.

10 02-15 If Treasury chooses to continue using 

information from both federal agencies’ 

financial statements and Treasury’s central 

accounting and reporting system (STAR), 

Treasury should demonstrate how the 

amounts from STAR reconcile to federal 

agencies’ financial statements.

Treasury has chosen to use 

information from STAR/CARS and 

has identified material areas where 

STAR/CARS data does not 

reconcile to federal agencies’ 

financial statements. Treasury will 

continue to work on its 

reconciliation methodology during 

fiscal year 2012 to further resolve 

these reconciliation issues. In 

addition, the reconciliation 

methodology will be revised 

pending implementation of the AGA 

group’s recommendations. See 

also the status of recommendation 

No. 02-13.

Open.

11 02-16 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.

See the status of recommendation 

No. 02-13.

Open.
Appendix I: Status of Treasury’s and OMB’s 

Progress in Addressing GAO’s Prior Year 

Recommendations for Preparing the CFS

Page 19 GAO-12-529 U.S. CFS Management Report

Count No. Recommendation

Status of recommendationa

Per Treasury and OMB Per GAO 

12 02-17 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 

federal agencies’ audited financial 

statements.

Treasury has chosen to use 

information from STAR/CARS. 

During fiscal year 2012, Treasury 

will continue to work on its 

reconciliation statement 

methodology which also affects 

related line items on the cash 

statement. Once fully developed, 

the reconciliation methodology will 

also provide consistency of 

significant line items on the cash 

statement to the underlying federal 

agencies’ audited financial 

statements. In addition, the 

reconciliation methodology will be 

revised pending implementation of 

the AGA group’s recommendations. 

See also the status of 

recommendation No. 02-13 and 

No. 02-15.

Open.

13 02-20 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.

Treasury will refine its reconciliation 

methodology for reconciling 

budgetary receipts to net operating 

revenue during fiscal year 2012. 

Treasury will again work with the 

agencies that contribute to the 

largest unreconciled differences to 

identify the causes of the 

differences and to resolve them. 

Treasury will take into account 

GAO comments, if any, as it 

finalizes the reconciliation 

methodology for resolving these 

differences, as well as consider the 

AGA group’s recommendations 

related to the compilation of the 

reconciliation statement and cash 

statement. 

Open.
Appendix I: Status of Treasury’s and OMB’s 

Progress in Addressing GAO’s Prior Year 

Recommendations for Preparing the CFS

Page 20 GAO-12-529 U.S. CFS Management Report

Count No. Recommendation

Status of recommendationa

Per Treasury and OMB Per GAO 

14 02-22 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 (FASAB). 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.

During fiscal year 2012, Treasury 

will address some of the issues 

raised by FASAB’s Reporting Entity 

Task Force and Treasury is 

supporting and participating in the 

task force’s efforts to help gain 

clarity and finality on this issue.

Open.

15 02-23 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.

See the status of recommendation 

No. 02-22.

Open.

16 02-24 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.

See the status of recommendation 

No. 02-22.

Open.
Appendix I: Status of Treasury’s and OMB’s 

Progress in Addressing GAO’s Prior Year 

Recommendations for Preparing the CFS

Page 21 GAO-12-529 U.S. CFS Management Report

Count No. Recommendation

Status of recommendationa

Per Treasury and OMB Per GAO 

17 02-35 The Secretary of the Treasury should direct 

the Fiscal Assistant Secretary, in coordination 

with the Controller of OMB, to help ensure 

that federal agencies provide adequate 

information in their legal representation letters 

regarding the expected outcomes of the 

cases.

During fiscal year 2011, with few 

exceptions, the agencies provided 

Treasury and OMB adequate 

information in their legal 

representation letters regarding the 

expected outcomes of the cases. 

Treasury and OMB will work with 

the few agencies to provide all 

required information in fiscal year 

2012. Treasury has already held a 

“lessons learned” meeting related 

to the fiscal year 2011 process and 

will work during the year with the 

Department of Justice (Justice), 

OMB and GAO and the agencies to 

determine if further changes in 

policy and/or guidance (e.g., OMB 

Memorandum 01-02) is needed for 

all agencies to provide the required 

information regarding the expected 

outcomes of legal cases in their 

legal representations.

Open.
Appendix I: Status of Treasury’s and OMB’s 

Progress in Addressing GAO’s Prior Year 

Recommendations for Preparing the CFS

Page 22 GAO-12-529 U.S. CFS Management Report

Count No. Recommendation

Status of recommendationa

Per Treasury and OMB Per GAO 

18 02-37 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 federal 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). 

Agencies are currently required to 

report contingencies in their 

financial statements and notes 

pursuant to generally accepted 

accounting principles (GAAP) 

guidance. In addition, OMB Circular 

A-136, specifically references the 

inclusion of treaties and 

international agreements within 

“Commitments and Contingencies.” 

Further, agencies include specific 

representations with respect to 

material liabilities or contingencies 

in their management 

representations. In addition, the 

financial statements of most 

significant entities and many other 

federal entities received unqualified 

audit opinions. However, no 

additional analysis of treaties has 

been performed to reasonably 

ensure that all of the federal 

government’s treaties are 

considered in agency analyses or 

that agencies are consistently 

analyzing treaties for recognition or 

disclosure. Treasury will annually 

review agency financial statements, 

audit reports and management 

representation letters for any 

references to treaties and 

international agreements, and if 

deemed material will disclose in the 

CFS.

Open. Until a 

comprehensive analysis 

of major treaty and other 

international agreement 

information has been 

performed, Treasury and 

OMB are precluded from 

determining if additional 

disclosure is required by 

GAAP in the CFS, and 

we are precluded from 

determining whether the 

omitted information is 

material.

19 02-38 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 federal agencies classify 

all such scheduled major treaties and other 

international agreements as commitments or 

contingencies.

See the status of recommendation 

No. 02-37.

Open. See the status of 

recommendation 

No. 02-37.
Appendix I: Status of Treasury’s and OMB’s 

Progress in Addressing GAO’s Prior Year 

Recommendations for Preparing the CFS

Page 23 GAO-12-529 U.S. CFS Management Report

Count No. Recommendation

Status of recommendationa

Per Treasury and OMB Per GAO 

20 02-39 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 federal 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.

See the status of recommendation 

No. 02-37.

Open. See the status of 

recommendation 

No. 02-37.

21 02-40 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 federal 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.

See the status of recommendation 

No. 02-37.

Open. See the status of 

recommendation 

No. 02-37.

22 02-41 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 federal 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.

See the status of recommendation 

No. 02-37.

Open. See the status of 

recommendation 

No. 02-37.
Appendix I: Status of Treasury’s and OMB’s 

Progress in Addressing GAO’s Prior Year 

Recommendations for Preparing the CFS

Page 24 GAO-12-529 U.S. CFS Management Report

Count No. Recommendation

Status of recommendationa

Per Treasury and OMB Per GAO 

23 02-129 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 Statement of 

Federal Financial Accounting Standards 

(SFFAS) No. 5, Accounting for Liabilities of 

the Federal Government, paragraph 106, 

which requires that when financial information 

pursuant to Financial Accounting Standards 

Board 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.

This information was requested 

from federal agencies for disclosure 

in the fiscal year 2011 CFS. 

Treasury will work with agencies to 

improve the consistency of this 

disclosure in the fiscal year 2012 

CFS and will also monitor the work 

of the FASAB task force that is 

reviewing the reporting for risk 

assumed.

Open. Treasury’s 

reporting in this area is 

not complete. The CFS 

should include all major 

federal insurance 

programs in the risk 

assumed reporting and 

analysis. Also, since 

future events are 

uncertain, risk assumed 

information should 

include indicators of the 

range of uncertainty 

around expected 

estimates, including 

indicators of the 

sensitivity of the estimate 

to changes in major 

assumptions.

GAO-04-866 (results of the fiscal year 2003 audit)

24 03-6 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.

Treasury will analyze cash 

transactions, and work with its 

Cash Policy area to achieve 

complete and consistent reporting 

of cash transactions, to provide full 

reporting of the changes in the 

cash balance of the U.S. 

government.

Open. Treasury has not 

established and 

implemented effective 

processes and 

procedures for identifying 

and reporting all items 

needed to prepare the 

Statement of Changes in 

Cash Balance from 

Unified Budget and Other 

Activities.

25 03-8 The Director of OMB should direct the 

Controller of OMB, in coordination with 

Treasury’s Fiscal Assistant Secretary, to work 

with the Department of Justice (Justice) and 

certain other executive branch federal 

agencies to ensure that these federal 

agencies report or disclose relevant criminal 

debt information in conformity with generally 

accepted accounting principles (GAAP) in 

their financial statements and have such 

information subjected to audit.

OMB, working with Treasury, 

Justice, and certain other agencies, 

will continue working to address 

this recommendation.

Open.

26 03-9 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.

Treasury will disclose criminal debt 

information in the CFS if material 

as reflected in the agencies’ 

financial statements. See the status 

of recommendation No. 03-8.

Open.
Appendix I: Status of Treasury’s and OMB’s 

Progress in Addressing GAO’s Prior Year 

Recommendations for Preparing the CFS

Page 25 GAO-12-529 U.S. CFS Management Report

Count No. Recommendation

Status of recommendationa

Per Treasury and OMB Per GAO 

27 03-11 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.

Treasury’s current CFS compilation 

process provides for direct linkage 

from the 35 significant federal 

agencies audited financial 

statements to most of the CFS 

principal statements and to the 

related note disclosures. However, 

additional work is needed related to 

the two budgetary principal 

financial statements. Treasury will 

take into account GAO comments, 

if any, as it develops its 

reconciliation methodology during 

fiscal year 2012. Treasury will also 

consider the AGA group’s 

comments and recommendations 

to improve the compilation of the 

reconciliation statement and cash 

statement. See the status of 

recommendation No. 02-13 and 

No. 02-15.

Open. Treasury’s 

process for compiling the 

CFS generally 

demonstrated that 

amounts in the 

Statement of Social 

Insurance and the 

Statement of Changes in 

Social Insurance 

Amounts were consistent 

with the underlying 

federal entities’ financial 

statements and that the 

Balance Sheet and the 

Statement of Net Cost 

were also consistent with 

the 35 significant federal 

entities’ financial 

statements prior to 

eliminating 

intragovernmental activity 

and balances. However, 

Treasury’s process did 

not ensure that the 

information in the 

remaining three principal 

financial statements was 

fully consistent with the 

underlying information in 

the 35 significant federal 

entities’ audited financial 

statements and other 

financial data.

GAO-05-407 (results of the fiscal year 2004 audit)

28 04-3 The Secretary of the Treasury should direct 

the Fiscal Assistant Secretary to require that 

Treasury employees contact and document 

communications with federal agencies before 

recording journal vouchers to change agency 

audited closing package data.

During fiscal year 2012, Treasury 

will fully implement and enforce its 

procedures to document 

communications to the agencies in 

the supporting documentation for 

journal vouchers.

Open.
Appendix I: Status of Treasury’s and OMB’s 

Progress in Addressing GAO’s Prior Year 

Recommendations for Preparing the CFS

Page 26 GAO-12-529 U.S. CFS Management Report

Count No. Recommendation

Status of recommendationa

Per Treasury and OMB Per GAO 

29 04-6 The Secretary of the Treasury should direct 

the Fiscal Assistant Secretary to assess the 

infrastructure associated with the compilation 

process and modify it as necessary to 

achieve a sound internal control environment.

During fiscal year 2011, with the 

assistance of its contractor, 

Treasury continued to make 

improvements to its internal control 

infrastructure. Treasury updated, 

and will revise and improve, its 

standard operating procedures 

(SOP) to document that key 

controls are in place at all critical 

areas of the CFS preparation 

process. Treasury will monitor and 

assess its efforts to determine its 

progress in achieving a sound 

internal control environment.

Also, during fiscal year 2011, 

Treasury restructured the 

management of the organization 

responsible for the CFS compilation 

process to provide additional 

oversight and accountability over 

the year-end CFS process.

In addition, during fiscal year 2012, 

Treasury plans to obtain additional 

personnel, via details from other 

agencies, with financial reporting 

expertise, to assist with 

enhancements and improvements 

to internal controls.

Open.

GAO-06-415 (results of the fiscal year 2005 audit)

30 05-3 The Director of OMB should direct the 

Controller of the Office of Federal Financial 

Management to consider, in order to provide 

audit assurance over federal agencies’ 

closing packages, not waiving the closing 

package audit requirements for any verifying 

agency in future years, such as Tennessee 

Valley Authority (TVA).

For fiscal year 2011, OMB did not 

waive the closing package audit 

requirements for any verifying 

agency. In addition, over the last 3 

fiscal years, TVA progressively 

moved closer to submitting its 

closing package by the required 

financial reporting deadline and is 

now submitting the closing package 

timely.

Closed.

GAO-07-805 (results of the fiscal year 2006 audit)

31 06-6 The Secretary of the Treasury should direct 

the Fiscal Assistant Secretary, working in 

coordination with the Controller of OMB’s 

Office of Federal Financial Management, to 

establish effective processes and procedures 

to ensure that appropriate information 

regarding litigation and claims is included in 

the governmentwide legal representation 

letter.

Treasury, in coordination with OMB 

and Justice, will work during fiscal 

year 2012 to establish effective 

processes and procedures to 

require that appropriate information 

regarding litigation and claims is 

included in the governmentwide 

legal representation letter.

Open.
Appendix I: Status of Treasury’s and OMB’s 

Progress in Addressing GAO’s Prior Year 

Recommendations for Preparing the CFS

Page 27 GAO-12-529 U.S. CFS Management Report

Count No. Recommendation

Status of recommendationa

Per Treasury and OMB Per GAO 

32 06-7 The Secretary of the Treasury should direct 

the Fiscal Assistant Secretary, working in 

coordination with the Controller of OMB’s 

Office of Federal Financial Management, to 

develop a process for obtaining sufficient 

information from federal agencies to enable 

Treasury and OMB to adequately monitor 

federal agencies’ efforts to reconcile 

intragovernmental activity and balances with 

their trading partners. This information should 

include (1) the nature and a detailed 

description of the significant differences that 

exist between trading partners’ records of 

intragovernmental activity and balances, 

(2) detailed reasons why such differences 

exist, (3) details of steps taken or being taken 

to work with federal agencies’ trading 

partners to resolve the differences, and 

(4) the potential outcome of such steps.

During fiscal year 2012, Treasury 

will continue its intragovernmental 

collection, analysis, and reporting 

process as enhanced in fiscal year 

2011, for obtaining sufficient 

information from federal agencies 

to enable Treasury and OMB to 

adequately monitor federal 

agencies’ efforts to reconcile 

intragovernmental activity and 

balances with their trading partners. 

The information obtained includes 

(1) the nature and a detailed 

description of the significant 

differences that exist between 

trading partners’ records of 

intragovernmental activity and 

balances, (2) detailed reasons why 

such differences exist, (3) details of 

steps taken or being taken to work 

with federal agencies’ trading 

partners to resolve the differences, 

(4) the potential outcome of such 

steps, and (5) additional 

information related to their 

intragovernmental differences that 

would allow Treasury to correct 

these differences within GFRS. 

This effort was successful during 

fiscal year 2011 in reducing the 

amount, both on a net and absolute 

value basis, of the total amount of 

intragovernmental differences. 

Open. Treasury furthered 

its commitment to resolve 

differences in 

intragovernmental activity 

and balances, for 

example, by expanding 

focus groups’ monitoring 

and outreach efforts that 

involved quarterly 

analysis and ongoing 

collaboration with entities 

to resolve 

intragovernmental 

differences.

However, we found that a 

significant number of 

CFOs continue to cite 

differing accounting 

methodologies, 

accounting errors, and 

timing differences for 

material differences with 

their trading partners. 

Some CFOs indicated 

that they did not know 

the reason for the 

differences.

GAO-08-748 (results of the fiscal year 2007 audit)

33 07-1 The Secretary of the Treasury should direct 

the Fiscal Assistant Secretary to enhance and 

fully document all practices referred to in the 

standard operating procedure (SOP) entitled 

“Preparing the Financial Report of the U.S. 

Government” to better ensure that practices 

are proper, complete, and can be consistently 

applied by staff members.

Treasury will document all of its 

current practices for preparing the 

CFS in the SOP.

Open.
Appendix I: Status of Treasury’s and OMB’s 

Progress in Addressing GAO’s Prior Year 

Recommendations for Preparing the CFS

Page 28 GAO-12-529 U.S. CFS Management Report

Count No. Recommendation

Status of recommendationa

Per Treasury and OMB Per GAO 

34 07-2 The Secretary of the Treasury should direct 

the Fiscal Assistant Secretary to enhance 

Treasury’s checklist or design an alternative 

and use it to adequately and timely document 

Treasury’s assessment of the relevance, 

usefulness, or materiality of information 

reported by the federal agencies for use at 

the governmentwide level.

Treasury addressed many of 

GAO’s concerns related to the 

checklist during fiscal year 2011, 

specifically the inclusion of 

disclosure items related to the 

principal financial statements and 

management’s discussion and 

analysis.

Closed. Over the past 

few years, Treasury has 

taken several actions to 

address this 

recommendation. To 

provide 

recommendations that 

are better aligned with 

the current status of 

remaining deficiencies 

related to this area, we 

have (1) closed this 

recommendation based 

on Treasury’s significant 

progress and (2) included 

in this report under 

“Timely Review and 

Approval of the Financial 

Reporting Disclosure 

Checklist” new 

recommendations for 

corrective actions for the 

remaining deficiencies.

35 07-5 The Director of OMB should direct the 

Controller of OMB’s Office of Federal 

Financial Management, in coordination with 

Treasury’s Fiscal Assistant Secretary, to 

develop formal processes and procedures for 

identifying and resolving any material 

differences in distributed offsetting receipt 

amounts included in the net outlay calculation 

of federal agencies’ Statement of Budgetary 

Resources and the amounts included in the 

computation of the budget deficit in the CFS.

Treasury will work with OMB to 

perform this analysis and to 

develop policies and procedures, 

as part of developing its 

reconciliation methodology, to 

resolve these differences. OMB 

and Treasury, as applicable, will 

continue their efforts to implement 

the completed methodology. 

Treasury will also be working with 

OMB to further identify and define 

all sources of distributed offsetting 

receipts reported to STAR/CARS.

Open.

36 07-9 The Secretary of the Treasury should direct 

the Fiscal Assistant Secretary, in coordination 

with the Controller of OMB’s Office of Federal 

Financial Management, to develop and 

implement effective processes for monitoring 

and assessing the effectiveness of internal 

control over the processes used to prepare 

the CFS.

Treasury is in the process of 

reviewing its documentation of 

internal control procedures, as 

completed during fiscal year 2011, 

to determine what internal control 

design gaps remain and what 

further controls are needed related 

to new or revised procedures. See 

also the status of recommendation 

No. 04-6.

Open.
Appendix I: Status of Treasury’s and OMB’s 

Progress in Addressing GAO’s Prior Year 

Recommendations for Preparing the CFS

Page 29 GAO-12-529 U.S. CFS Management Report

Count No. Recommendation

Status of recommendationa

Per Treasury and OMB Per GAO 

37 07-10 The Secretary of the Treasury should direct 

the Fiscal Assistant Secretary, working in 

coordination with the Controller of OMB’s 

Office of Federal Financial Management, to 

develop and implement alternative solutions 

to performing almost all of the compilation 

effort at the end of the year, including 

obtaining and utilizing interim financial 

information from federal agencies.

Treasury is leading a subgroup with 

governmentwide participation on 

the OMB Circular No. A-136 

subcommittee to determine what 

information can be obtained during 

the third and fourth quarters of 

fiscal year 2012 to facilitate the 

year-end CFS preparation process. 

Depending on the results of this 

effort, Treasury will consider what 

additional requirements related to 

third quarter information in fiscal 

year 2013 are needed to facilitate 

the year-end compilation effort.

Open.

GAO-09-387 (results of the fiscal year 2008 audit)

38 08-01 The Secretary of the Treasury should direct 

the Fiscal Assistant Secretary to design, 

document, and implement policies and 

procedures to identify and eliminate 

intragovernmental payroll tax amounts at the 

governmentwide level when compiling the 

CFS.

During fiscal year 2012, Treasury 

will evaluate the adequacy of the 

payroll tax amounts reported in the 

Monthly Treasury Statement by 

discussing the methodology for 

preparing this amount with the 

providing agency. If deemed 

adequate, policies and procedures 

will be modified to reflect the results 

of the analysis and document how 

this amount is identified and used 

when compiling the CFS.

Open.
Appendix I: Status of Treasury’s and OMB’s 

Progress in Addressing GAO’s Prior Year 

Recommendations for Preparing the CFS

Page 30 GAO-12-529 U.S. CFS Management Report

Count No. Recommendation

Status of recommendationa

Per Treasury and OMB Per GAO 

39 08-02 The Secretary of the Treasury should direct 

the Fiscal Assistant Secretary, in coordination 

with the Controller of OMB, to develop, 

document, and implement processes and 

procedures for preparing and reviewing the 

Management’s Discussion and Analysis 

(MD&A) and “The Federal Government’s 

Financial Health: A Citizen’s Guide to the 

Financial Report of the United States 

Government” sections of the Financial Report 

of the U.S. Government (Financial Report) to 

help assure that information reported in these 

sections is complete, accurate, and 

consistent with related information reported 

elsewhere in the Financial Report. 

The Office of the Fiscal Assistant 

Secretary (OFAS) first implemented 

SOPs concerning the preparation 

of the MD&A and Citizen’s Guide 

for the fiscal year 2009 Financial 

Report. Since that time, instances

of inaccuracies, inconsistency, and 

incompleteness have been 

consistently lower than in prior 

years. OFAS will update its SOPs 

as needed to reflect new reporting 

requirements and/or process 

improvements. 

Closed. Over the past 

few years, Treasury, in 

coordination with OMB, 

has taken several actions 

to address this 

recommendation. To 

provide 

recommendations that 

are better aligned with 

the current status of 

remaining deficiencies 

related to this area, we 

have (1) closed this 

recommendation based 

on Treasury’s and OMB’s 

significant progress, and 

(2) included in this report 

under “Review and 

Approval of the Financial 

Report” new 

recommendations for 

corrective actions for the 

remaining deficiencies.

40 08-03 The Secretary of the Treasury should direct 

the Fiscal Assistant Secretary, in coordination 

with the Controller of OMB, to establish and 

document criteria to be used in identifying 

federal entities as significant to the CFS for 

purposes of obtaining assurance over the 

information being submitted by those entities 

for the CFS.

During fiscal year 2011, Treasury 

and OMB established and 

documented the criteria to identify 

all federal entities that are 

significant to the CFS.

Closed.

41 08-04 The Secretary of the Treasury should direct 

the Fiscal Assistant Secretary, in coordination 

with the Controller of OMB, to develop and 

implement policies and procedures for 

assessing and documenting, on an annual 

basis, which entities meet the criteria 

established for identifying federal entities as 

significant to the CFS. 

During fiscal year 2011, Treasury 

used the significant entity criteria to 

assess which entities are 

considered significant to the CFS, 

and will perform this assessment 

on an annual basis. 

Open. During fiscal year 

2011, Treasury did not 

properly implement its 

procedures for assessing 

which entities meet its 

criteria for identifying 

federal entities as 

significant to the CFS.

GAO-10-757 results of the fiscal year 2009 audit)

42 09-03 The Secretary of the Treasury should direct 

the Fiscal Assistant Secretary to enhance the 

SOP entitled “Analyzing Agency 

Restatements” to include procedures for 

analyzing the overall impact of entities’ 

restatements on the CFS and documenting 

the analysis and related conclusion.

During fiscal year 2011, Treasury 

complied with its enhanced 

procedures for analyzing the impact 

of entities’ restatements on the 

CFS, documenting its analysis and 

related conclusions, and correctly 

incorporating the impact of the 

entities’ restatements into the CFS.

Closed.
Appendix I: Status of Treasury’s and OMB’s 

Progress in Addressing GAO’s Prior Year 

Recommendations for Preparing the CFS

Page 31 GAO-12-529 U.S. CFS Management Report

Count No. Recommendation

Status of recommendationa

Per Treasury and OMB Per GAO 

43 09-04 The Secretary of the Treasury should direct 

the Fiscal Assistant Secretary to develop, 

implement, and document procedures for 

identifying, analyzing, compiling, and 

reporting all significant accounting policies 

and related party transactions at the 

governmentwide level.

Treasury will fully implement its 

procedures for identifying, 

analyzing, compiling, and reporting 

all related party transactions at the 

governmentwide level in fiscal year 

2012 by verifying the related party 

information received in the closing 

packages to the agencies’ 

underlying audited financial 

statements, and will document this 

verification procedure. In addition, 

Treasury will monitor the work of 

FASAB’s Reporting Entity Task 

Force as it relates to related party 

disclosures.

Open.

44 09-06 The Secretary of the Treasury should direct 

the Fiscal Assistant Secretary to enhance the 

SOP entitled “Statement of Social Insurance, 

Social Insurance Note, and Required 

Supplementary Information” to implement and 

document procedures for assuring the 

accuracy of staff’s work related to preparing 

the social insurance information for the CFS.

In fiscal year 2012, Treasury will 

comply with its enhanced 

Statement of Social Insurance SOP 

to document that all the social 

insurance information in the CFS is 

consistent with the agencies’ social 

insurance information.

Open.

. 

45 09-08 The Secretary of the Treasury should direct 

the Fiscal Assistant Secretary to implement 

and document procedures for assuring the 

accuracy of staff’s work related to preparing 

the Schedule of Differences.

In fiscal year 2011, Treasury 

improved the implementation and 

documentation of its procedures to 

help assure completeness and 

accuracy of documenting the 

inconsistencies between the 

amounts provided by the agencies.

Closed.

46 09-10 The Secretary of the Treasury should direct 

the Fiscal Assistant Secretary to implement 

and document procedures for assuring the 

accuracy of staff’s work related to performing 

analytical procedures.

During fiscal year 2012 Treasury 

will improve the implementation 

and documentation of its 

procedures to address remaining 

GAO issues related to assuring the 

accuracy of staff’s work related to 

performing analytical procedures, 

specifically strengthening the 

explanations for all significant 

variances found during the yearend analyses.

Open.
Appendix I: Status of Treasury’s and OMB’s 

Progress in Addressing GAO’s Prior Year 

Recommendations for Preparing the CFS

Page 32 GAO-12-529 U.S. CFS Management Report

Count No. Recommendation

Status of recommendationa

Per Treasury and OMB Per GAO 

GAO-11-525 (results of the fiscal year 2010 audit)

47 10-01 The Secretary of the Treasury should direct 

the Fiscal Assistant Secretary to enhance the 

applicable SOPs to include required steps for 

assuring conformity with SFFAS No. 33 and 

the consistency of amounts between the 

Statement of Net Cost and the Federal 

Employee and Veteran Benefits Payable 

(FEVBP) note disclosure.

During fiscal year 2011, Treasury 

enhanced and implemented the 

applicable SOPs to verify the 

conformity with SFFAS No. 33 and 

the consistency of amounts 

between the Statement of Net Cost 

and FEVBP note disclosure.

Closed. Treasury has 

taken several actions to 

address this 

recommendation. To 

provide 

recommendations that 

are better aligned with 

the current status of 

remaining deficiencies 

related to this area, we 

have (1) closed this 

recommendation based

on Treasury’s significant 

progress and (2) included 

in this report under 

“Review of Federal 

Entities’ Financial 

Information for Inclusion 

in the CFS” a new 

recommendation for 

corrective actions for the 

remaining deficiencies.

48 10-02 The Secretary of the Treasury should direct 

the Fiscal Assistant Secretary to implement 

and document procedures for assuring 

conformity with SFFAS No. 33 and the 

consistency of amounts between the 

Statement of Net Cost and the FEVBP note 

disclosure.

See the status of recommendation 

No. 10-01.

Closed. See the status of 

recommendation 

No. 10-01. 

49 10-03 The Director of OMB should direct the 

Controller of OMB to enhance its procedures 

for preparing the appendixes to include 

required steps to assure the accuracy and 

consistency of the accompanying information 

presented in the appendixes to the Financial 

Report related to the federal government’s

financial management.

During fiscal year 2011, OMB 

reported this information on the 

newly released Performance.gov

website and no longer included this 

in the Other Accompanying 

Information section of the Financial 

Report. 

Closed.

50 10-04 The Director of OMB should direct the 

Controller of OMB to enhance its procedures 

for preparing the appendixes to include 

required steps to maintain documentation 

supporting the accompanying information 

presented in the appendixes to the Financial 

Report related to the federal government’s

financial management.

See the status of recommendation 

No. 10-03.

Closed.

Sources: GAO, Treasury, and OMB. 

a

The status of the recommendations listed in app. I is as of December 12, 2011, the date of our report 

on the audit of the fiscal year 2011 CFS.
Appendix II: Comments from the Department 

of the Treasury

Page 33 GAO-12-529 U.S. CFS Management Report

Appendix II: Comments from the Department 

of the Treasury
Appendix II: Comments from the Department 

of the Treasury

Page 34 GAO-12-529 U.S. CFS Management Report (198705)
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