FINANCIAL AUDIT

Bureau of the Fiscal 

Service’s Fiscal Year 

2018 Schedules of the 

General Fund

Report to the Fiscal Assistant Secretary, 

Department of the Treasury

May 2019

GAO-19-185

United States Government Accountability Office
United States Government Accountability Office

 

Highlights of GAO-19-185, a report to the 

Fiscal Assistant Secretary, Department of the 

Treasury

May 2019

FINANCIAL AUDIT

Bureau of the Fiscal Service’s Fiscal Year 2018 

Schedules of the General Fund

What GAO Found

Certain significant deficiencies in internal control over financial reporting and 

other limitations on the scope of GAO’s work resulted in conditions that 

prevented GAO from expressing an opinion on the Schedules of the General 

Fund as of and for the fiscal year ended September 30, 2018. Such scope 

limitations also prevented GAO from obtaining sufficient appropriate audit 

evidence to provide a basis for an opinion on the effectiveness of the Bureau of 

the Fiscal Service’s (Fiscal Service) internal control over financial reporting

relevant to the Schedules of the General Fund as of September 30, 2018. In 

addition, such scope limitations limited tests of compliance with selected 

provisions of applicable laws, regulations, contracts, and grant agreements for 

fiscal year 2018. 

Fiscal Service was unable to timely provide sufficient appropriate evidence to 

support certain information reported in the accompanying Schedules of the 

General Fund. The underlying scope limitations are the basis for GAO’s

disclaimer of opinion on the Schedules of the General Fund. These limitations 

primarily related to (1) the inability to readily identify and trace General Fund

transactions to determine whether they were complete and properly recorded in 

the correct general ledger accounts and line items within the Schedules of the 

General Fund, (2) inadequate Fiscal Service procedures to determine the effect 

of differences between General Fund’s records and the amounts reported by 

certain federal agencies on the Schedules of the General Fund, and (3) Fiscal 

Service’s inability to timely provide sufficient appropriate audit evidence to 

support the beginning balance of the Liability for Fund Balance with Treasury. 

GAO also identified two significant deficiencies contributing to the first two scope 

limitations discussed above. As a result of these limitations, readers are 

cautioned that amounts reported in the Schedules of the General Fund and 

related notes may not be reliable.

Further, GAO identified two additional significant deficiencies in Fiscal Service’s 

internal control over financial reporting relevant to the Schedules of the General 

Fund related to deficiencies in (1) information systems controls and (2) Fiscal 

Service’s risk assessment and monitoring controls. In addition, GAO identified

three other control deficiencies, which it does not consider to be material 

weaknesses or significant deficiencies. 

GAO recognizes that the fiscal year 2018 Schedules of the General Fund reflect 

the significant efforts of Fiscal Service over the past several years to develop the 

infrastructure to support the Schedules of the General Fund. Fiscal Service’s 

actions have substantially improved its ability to report on the General Fund, 

including the government-wide cash inflows and outflows. 

View GAO-19-185. For more information, 

contact J. Lawrence Malenich at (202) 512-

3406 or malenichj@gao.gov. 

Why GAO Did This Study

GAO audits the consolidated financial 

statements of the U.S. government. 

Because of the significance of the 

General Fund of the United States 

(General Fund) to the governmentwide financial statements, GAO 

audited the fiscal year 2018 Schedules 

of the General Fund, which are 

managed by Fiscal Service, to 

determine whether, in all material 

respects, (1) the schedules are fairly 

presented and (2) Fiscal Service 

management maintained effective 

internal control over financial reporting 

relevant to the Schedules of the 

General Fund. Further, GAO tested

compliance with selected provisions of 

applicable laws, regulations, contracts, 

and grant agreements related to the 

Schedules of the General Fund.

The General Fund is the reporting 

entity responsible for accounting for 

the cash activity of the U.S. 

government. In fiscal year 2018, the 

General Fund reported $14.2 trillion of 

cash inflows, including debt issuances 

and taxes collected, and $14.0 trillion 

of cash outflows, including debt 

repayments and Social Security and 

health care benefit payments. It also 

reported $21.6 trillion of federal debt 

securities held and managed by the 

Department of the Treasury as of 

September 30, 2018.

What GAO Recommends

GAO is making 12 recommendations 

to improve Fiscal Service’s internal 

control over financial reporting relevant 

to the Schedules of the General Fund.

In commenting on a draft of this report, 

Fiscal Service concurred with the 

results of GAO’s audit. 
Page i GAO-19-185 Schedules of the General Fund

Letter 1

Independent Auditor’s Report 7

Report on the Schedules of the General Fund 8

Report on Internal Control over Financial Reporting 11

Report on Compliance with Laws, Regulations, Contracts, and 

Grant Agreements 13

Agency Comments 14

Schedules of the General Fund of the United States 15

Notes to the Schedules of the General Fund of the United States 17

Appendix I Internal Control Deficiencies 37

Appendix II Comments from the Bureau of the Fiscal Service 55

Contents
Page ii GAO-19-185 Schedules of the General Fund

Abbreviations

BETC Business Event Type Code

CARS Central Accounting and Reporting System

CFS consolidated financial statements

DVS Direct Voucher System

FBWT Fund Balance with Treasury

Fiscal Service Bureau of the Fiscal Service

FMFIA Federal Managers’ Financial Integrity Act 

General Fund General Fund of the United States

GTAS Government-wide Treasury Account Symbol

 Adjusted Trial Balance System

IRS Internal Revenue Service

ITS.gov International Treasury Services

LFBWT Liability for Fund Balance with Treasury

OMB Office of Management and Budget

PAM Payment Automation Manager

RTN Routing Transit Number 

SDAS Summary Debt Accounting System

SFD Schedule of Federal Debt

TAS Treasury Account Symbol

Treasury Department of the Treasury

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Page 1 GAO-19-185 Schedules of the General Fund

441 G St. N.W.

Washington, DC 20548

May 15, 2019

Mr. David Lebryk

Fiscal Assistant Secretary

Department of the Treasury

Dear Mr. Lebryk:

The accompanying independent auditor’s report presents the results of 

our audit of the fiscal year 2018 Schedules of the General Fund 

(Schedules of the General Fund) managed by the Bureau of the Fiscal 

Service (Fiscal Service). This is the first year an audit was performed on 

the Schedules of the General Fund. In summary, we found the following:

• Certain significant deficiencies in internal control over financial 

reporting and other limitations on the scope of our work resulted in 

conditions that prevented us from expressing an opinion on the 

Schedules of the General Fund as of and for the fiscal year ended 

September 30, 2018.1

• Such scope limitations prevented us from obtaining sufficient 

appropriate audit evidence to provide a basis for an opinion on the 

effectiveness of the Fiscal Service’s internal control over financial 

reporting relevant to the Schedules of the General Fund as of 

September 30, 2018.

• Such scope limitations limited tests of compliance with selected 

provisions of applicable laws, regulations, contracts, and grant 

agreements for fiscal year 2018.

The General Fund of the United States (General Fund) is the entity 

responsible for reporting on the central activities fundamental to funding 

the federal government. The General Fund consists of assets and 

liabilities used to finance the daily and long-term operations of the U.S. 

 

1

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

over financial reporting that is less severe than a material weakness, yet important enough 

to merit attention by those charged with governance. A material weakness is a deficiency, 

or combination of deficiencies, in internal control over financial reporting, 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.

Letter
Page 2 GAO-19-185 Schedules of the General Fund

government. The fiscal year 2018 Schedules of the General Fund reflect 

the significant efforts of Fiscal Service over the past several years to 

develop the infrastructure to support the Schedules of the General Fund. 

These efforts, including actions taken during fiscal year 2018, are 

discussed below.

More specifically, the General Fund is the reporting entity responsible for 

accounting for the cash activity of the U.S. government. In fiscal year 

2018, the General Fund, whose management has been delegated to the 

Department of the Treasury’s (Treasury) Fiscal Service, reported 

$14.2 trillion of cash inflows, including debt issuances and taxes

collected, and $14.0 trillion of cash outflows, including debt repayments 

and Social Security and health care benefit payments. It also reported 

$21.6 trillion of federal debt securities held and managed by the Treasury 

as of September 30, 2018, consisting of federal debt securities held by 

the public and federal debt securities held by the government accounts. 

Further, the General Fund accounts for the annual budget deficit (budgets 

receipts less budget outlays). Finally, the General Fund interacts with 

other federal agencies through its reporting of assets and liabilities due 

from and to other federal agencies.2

Fiscal Service was delegated responsibility by Treasury for preparing the 

Financial Report of the United States Government, also known as the 

consolidated financial statements (CFS) of the United States. Fiscal 

Service anticipates that the preparation and audit of the General Fund’s 

Schedule of the Operations of the General Fund will enable it to fully 

account for and eliminate General Fund intragovernmental activity and 

balances with other reporting entities in the CFS. In connection with our 

fiscal year 2018 audit of the government-wide CFS,3 we reported that the 

federal government’s inability to adequately account for 

intragovernmental activity and balances between federal entities, 

including material unreconciled differences related to transactions 

between the General Fund and federal agencies, represented a material 

weakness in internal control over financial reporting.

 

2

In the context of the General Fund, federal agencies are defined as federal reporting 

entities that receive authority to incur obligations and make payments from the General 

Fund.

3

GAO, Financial Audit: Fiscal Years 2018 and 2017 Consolidated Financial Statements of 

the U.S. Government, GAO-19-294R (Washington, D.C.: Mar. 28, 2019).
Page 3 GAO-19-185 Schedules of the General Fund

Also, Fiscal Service anticipates that preparation and audit of the General 

Fund’s Schedule of Changes in Cash Balance from Budget and Other 

Activities will significantly contribute to resolving a separate material 

weakness we reported in connection with our fiscal year 2018 CFS audit 

related to Reconciliations of Net Operating Cost and Budget Deficit and 

Changes in Cash Balance from Budget and Other Activities 

(Reconciliation Statements). Specifically, Fiscal Service expects these 

efforts to help reasonably assure that the information in these statements 

is complete and consistent with the underlying information in the audited 

agencies’ financial statements and other financial data.

The fiscal year 2018 Schedules of the General Fund consist of two 

schedules—the Schedule of the Operations of the General Fund and the 

Schedule of Changes in Cash Balance from Budget and Other Activities.

Schedule of the Operations of the General Fund

The Schedule of the Operations of the General Fund presents the cash 

balance and cash activity for the year, General Fund assets and liabilities 

that are held and managed by the Treasury, other intragovernmental 

assets and liabilities, and net equity of the General Fund. The Cash held 

by Treasury section of this schedule reflects the cash activity of the U.S. 

government as well as its fiscal year-end cash balance. The largest 

inflows of cash are collections from debt issuances and taxes, while the 

largest outflows are debt repayments and Social Security and health care 

benefit payments. For fiscal year 2018, the Schedule of the Operations of 

the General Fund reported $14.2 trillion of cash inflows and $14.0 trillion 

of cash outflows. These amounts include cash activity related to debt 

issuances and repayments and tax collections that GAO audited as part 

of the fiscal year 2018 Schedules of Federal Debt and the Internal 

Revenue Service’s fiscal year 2018 financial statements audits. 

Specifically, for fiscal year 2018, the Schedules of Federal Debt reported 

borrowings from the public totaling $10.1 trillion and repayments of debt 

held by the public totaling $9.0 trillion.4 Tax collections by the Internal 

Revenue Service in fiscal year 2018 totaled $3.5 trillion.5 In addition to the 

 

4

See GAO, Financial Audit: Bureau of the Fiscal Service’s Years 2018 and 2017 

Schedules of Federal Debt, GAO-19-113 (Washington, D.C.: Nov. 8, 2018), for GAO’s 

audit of and more information about the schedules of federal debt. 

5

See GAO, Financial Audit: IRS’s Fiscal Years 2018 and 2017 Financial Statements, 

GAO-19-150 (Washington, D.C.: Nov. 9, 2018), for more information on tax collections 

and GAO’s audit of the Internal Revenue Service’s financial statements.
Page 4 GAO-19-185 Schedules of the General Fund

cash activity, the Schedules of the General Fund include other significant 

line items, which are discussed below.

Intragovernmental assets and liabilities are General Fund assets and 

liabilities that are held and managed by Treasury and other amounts 

owed by agencies to the General Fund and amounts owed by the 

General Fund to agencies, respectively. The General Fund’s largest asset 

is its loans and interest receivable held and managed by Treasury that is 

related to the Federal Borrowings Program ($1.5 trillion as of 

September 30, 2018), which facilitates loans to federal agencies that 

have the legal authority to borrow funds from the U.S. Treasury. Its 

largest liability is the outstanding federal debt and interest payable that is 

held and managed by Treasury ($21.6 trillion as of September 30, 2018).

The General Fund’s net equity consists of the cumulative results of 

General Fund’s fiscal year 2018 operations and the balance of 

outstanding appropriations owed to federal agencies.

Schedule of Changes in Cash Balance from Budget and Other 

Activities

The Schedule of Changes in Cash Balance from Budget and Other 

Activities reports how the annual budget deficit relates to the change in 

the cash held by Treasury. This schedule illustrates the government’s 

cash flows relative to the budget deficit and provides the adjustments that 

are needed to reconcile the budget deficit for fiscal year 2018 

($779.0 billion) to the change in the Cash Held by Treasury for 

Governmentwide Operations line item reported on the Schedule of the 

Operations of the General Fund ($225.1 billion), including information on 

the federal government’s investing and financing activities. This schedule 

presents three categories of reconciling items: (1) adjustments for 

noncash outlays included in the budget, (2) cash flow from activities not 

included in the budget, and (3) other General Fund activity. For fiscal year 

2018, interest accrued on federal debt securities during fiscal year 2018 

resulted in the largest adjustment for noncash activity to the budget deficit 

($268.5 billion), while the net cash flow from financing federal debt 

securities resulted in the largest adjustment for cash activity not included 

in the budget ($1.0 trillion).

Significant Efforts to Develop the Schedules of the General Fund

The fiscal year 2018 Schedules of the General Fund reflect the significant 

efforts of Fiscal Service over the past several years to develop the 

infrastructure to support the Schedules of the General Fund. In addition to 
Page 5 GAO-19-185 Schedules of the General Fund

developing an accounting model and reporting format for the General 

Fund, Fiscal Service created a method for federal agencies to identify and 

report their activity with the General Fund that would facilitate agency 

reconciliation of intragovernmental activity with the General Fund. Fiscal 

Service subsequently established extensive guidance in the Treasury 

Financial Manual for federal agencies on how to classify and record 

activity with the General Fund in order to facilitate the elimination of 

activity between federal agencies and thereby reduce intragovernmental 

differences.

Additionally, Fiscal Service added the General Fund to its process for 

quantifying intragovernmental differences reported between federal 

agencies. Further, Fiscal Service developed and documented its rationale 

and sources for the reconciling items currently presented on the Schedule 

of Changes in Cash Balance from Budget and Other Activities. In fiscal 

year 2015, Treasury consolidated the balances and activities reported by 

the General Fund, as a separate federal reporting entity, in the CFS.

Prior to the audit of the fiscal year 2018 Schedules of the General Fund, 

Fiscal Service focused its efforts on refining the processes and controls 

related to their preparation, including enhancing standard operating 

procedures for General Fund accounting and reporting processes and 

establishing reconciliations to verify intragovernmental balances with 

Treasury. Fiscal Service’s actions taken during fiscal year 2018 will help 

improve the General Fund’s audit readiness in future years. For example, 

Fiscal Service began reconciling the Payment Information Repository and 

Collections Information Repository—two key systems that feed cash 

activity information into the Central Accounting and Reporting System 

(CARS)—with the General Fund general ledger in 2018. These 

reconciliations improved Fiscal Service’s ability to verify the completeness 

of cash inflows and outflows in the General Fund general ledger.

In addition, Fiscal Service has also worked extensively to facilitate and 

encourage more federal agencies to provide their detailed cash inflow 

and outflow classification information each day using CARS. As the 

Schedules of the General Fund rely significantly on data transferred from 

CARS, Fiscal Service’s actions have substantially improved its ability to 

report on the General Fund, including the government-wide cash inflows 

and outflows.
Page 6 GAO-19-185 Schedules of the General Fund

We are making 12 recommendations to improve Fiscal Service’s internal 

control over financial reporting related to the Schedules of the General 

Fund. In addition, we are issuing a separate LIMITED OFFICIAL USE 

ONLY report that includes recommendations to address deficiencies in 

information systems controls.

This report contains recommendations to the Commissioner of the 

Bureau of the Fiscal Service. The head of a federal agency is required by 

31 U.S.C. § 720 to submit a written statement on actions taken or 

planned on our recommendations to the Senate Committee on Homeland 

Security and Governmental Affairs, the House Committee on Oversight 

and Reform, the congressional committees with jurisdiction over the 

agency programs and activities that are the subject of our 

recommendations, and GAO not later than 180 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 180 days after the date of this report. 

Please provide me with your statement of actions.

We are sending copies of this report to interested congressional 

committees, the Commissioner of the Bureau of the Fiscal Service, the 

Inspector General of the Department of the Treasury, the Director of the 

Office of Management and Budget, and other interested parties. In 

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

http://www.gao.gov. 

If you or your staff have any questions concerning this report, please 

contact me at (202) 512-3406 or malenichj@gao.gov. Contact points for 

our Offices of Congressional Relations and Public Affairs may be found 

on the last page of this report.

Sincerely yours,

J. Lawrence Malenich

Managing Director

Financial Management and Assurance
L

Page 7 GAO-19-185 Schedules of the General Fund

441 G St. N.W.

Washington, DC 20548

Independent Auditor’s Report

To the Commissioner of the Bureau of the Fiscal Service

In our audit of the fiscal year 2018 Schedules of the General Fund 

(Schedules of the General Fund) managed by the Bureau of the Fiscal 

Service (Fiscal Service), we found the following:

• Certain significant deficiencies in internal control over financial 

reporting and other limitations on the scope of our work resulted in 

conditions that prevented us from expressing an opinion on the 

Schedules of the General Fund as of and for the fiscal year ended 

September 30, 2018.1

• Such scope limitations prevented us from obtaining sufficient 

appropriate audit evidence to provide a basis for an opinion on the 

effectiveness of Fiscal Service’s internal control over financial 

reporting relevant to the Schedules of the General Fund as of 

September 30, 2018.

• Such scope limitations limited tests of compliance with selected 

provisions of applicable laws, regulations, contracts, and grant 

agreements for fiscal year 2018.

The following sections of this audit report discuss in more detail (1) our 

report on the Schedules of the General Fund, which includes an 

emphasis of matter paragraph on federal agencies’ classification of 

transactions; (2) our report on internal control over financial reporting; 

(3) our report on compliance with laws, regulations, contracts, and grant 

agreements; and (4) agency comments.

 

1

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

over financial reporting that is less severe than a material weakness, yet important enough 

to merit attention by those charged with governance. A material weakness is a deficiency, 

or combination of deficiencies, in internal control over financial reporting, 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 8 GAO-19-185 Schedules of the General Fund

In connection with fulfilling our requirement to audit the consolidated 

financial statements of the U.S. government,2 we conducted an audit of 

the Schedules of the General Fund as of, and for the year ended, 

September 30, 2018, because of the significance of the General Fund of 

the United States (General Fund) to the federal government’s 

consolidated financial statements.3 The Schedules of the General Fund 

present (1) assets and liabilities of the General Fund, including cash 

activity; (2) a reconciliation of the budget deficit to the change in Cash 

Held by Treasury for Government Operations; and (3) accompanying 

notes.

We conducted our audit in accordance with U.S. generally accepted 

government auditing standards. We performed sufficient audit work to 

provide this report on the Schedules of the General Fund. We considered 

the limitations on the scope of our work regarding the Schedules of the 

General Fund in forming our conclusions.

Fiscal Service management is responsible for (1) the preparation and fair 

presentation of the Schedules of the General Fund in accordance with 

U.S. generally accepted accounting principles and (2) maintaining 

effective internal control over financial reporting, including the design, 

implementation, and maintenance of internal control relevant to the

preparation and fair presentation of the Schedules of the General Fund 

that are free from material misstatement, whether due to fraud or error.

Our responsibility is to express an opinion on the Schedules of the 

General Fund based on conducting the audit in accordance with U.S. 

generally accepted government auditing standards. Because of the 

matters discussed in the Basis for Disclaimer Opinion on the Schedules 

of the General Fund below, we were unable to obtain sufficient 

appropriate evidence to provide a basis for an audit opinion on the 

Schedules of the General Fund.

 

2

Government Management Reform Act of 1994, Pub. L. No. 103-356, § 405(c), 108 Stat. 

3410, 3416-17 (Oct. 13, 1994), codified at 31 U.S.C. § 331(e)(2).

3

GAO, Financial Audit: Fiscal Years 2018 and 2017 Consolidated Financial Statements of 

the U.S. Government, GAO-19-294R (Washington, D.C.: Mar. 28, 2019).

Report on the 

Schedules of the 

General Fund

Management’s 

Responsibility

Auditor’s Responsibility
Page 9 GAO-19-185 Schedules of the General Fund

Fiscal Service was unable to timely provide sufficient appropriate 

evidence to support certain material information reported in the 

accompanying Schedules of the General Fund. The underlying scope 

limitations are the basis for our disclaimer of opinion on the Schedules of 

the General Fund. As a result of these limitations, readers are cautioned 

that amounts reported in the Schedules of the General Fund and related 

notes may not be reliable. These scope limitations primarily relate to the 

following.

Identifying and tracing transactions in the Schedules of the General 

Fund general ledgers: We were unable to readily identify and trace 

General Fund transactions to determine whether they were complete and 

properly recorded in the correct general ledger accounts and line items 

within the Schedules of the General Fund, respectively. These 

transactions affect several material line items on the Schedules of the 

General Fund, including cash inflows, cash outflows, and the budget 

deficit. As a result, we were unable to complete audit procedures 

designed to substantiate the activity reported in the affected line items on 

the Schedules of the General Fund.

Evaluating and resolving differences reported on the Schedules of 

the General Fund: We found that Fiscal Service does not have a 

mechanism to determine the effect of certain differences on the 

Schedules of the General Fund. Differences arise when Fiscal Service 

reconciles the amounts in the General Fund’s records with the amounts 

reported by certain federal agencies. Such differences, referred to as a 

Statement of Difference, totaled a net amount of $857 million as of 

September 30, 2018, and are included in the Liability for Fund Balance 

with Treasury (LFBWT) and separately disclosed in Note 9 of the 

Schedules of the General Fund. Without knowing how these differences 

affect the different line items on the Schedules of the General Fund, there 

is an increased risk of misstatements.

Supporting the liability for Fund Balance with Treasury beginning 

balance: Fiscal Service was unable to timely provide sufficient 

appropriate audit evidence to support the beginning balance of the 

General Fund’s LFBWT for fiscal year 2018. The balance for LFBWT was 

$2.0 trillion as of October 1, 2017, and represents the cumulative amount 

of a significant volume of activity that occurred over the past several 

decades. We requested documentation from Fiscal Service to 

substantiate a statistically representative sample of the activity included in 

this balance. Fiscal Service was able to provide some but not all of the 

requested documentation in time for us to complete the fiscal year 2018 

Basis for Disclaimer of 

Opinion on the Schedules 

of the General Fund
Page 10 GAO-19-185 Schedules of the General Fund

audit. As such, we were unable to complete our audit procedures 

designed to substantiate the beginning balance of LFBWT.

We also identified two significant deficiencies contributing to the first two 

scope limitations discussed above—identifying and tracing transactions in 

the Schedules of the General Fund general ledgers and evaluating and 

resolving differences reported on the Schedules of the General Fund. 

These significant deficiencies are discussed in more detail in appendix I.

Because of the significance of the matters described in the Basis for 

Disclaimer of Opinion on the Schedules of the General Fund above, we 

were unable to obtain sufficient appropriate audit evidence to provide a 

basis for an audit opinion on the Schedules of the General Fund. 

Accordingly, we do not express an opinion on the Schedules of the 

General Fund. Also, because of the limitations on the scope of our work 

discussed above, additional issues may exist that were not identified and 

could affect the Schedules of the General Fund.

The following key item deserves emphasis in order to put the information 

contained in the Schedules of the General Fund into context. However, 

our disclaimer of opinion noted above is not modified with respect to this 

matter.

As described in Note 1 of the Schedules of General Fund, federal 

agencies and financial institutions initiate cash activity transactions 

outside of the General Fund’s reporting entity structure. Fiscal Service 

implemented the Central Accounting and Reporting System (CARS) to 

capture the relevant data for these transactions. The federal agencies 

assign certain classifications in CARS for the transactions. This 

information determines how the activity is reported on the Schedules of 

the General Fund based on mapping rules Fiscal Service designed to 

generate journal entries that are posted to the General Fund general 

ledger. Fiscal Service provides guidance to federal agencies in the 

Treasury Financial Manual regarding the appropriate classifications to be 

used for different types of business transactions. Federal agencies are 

responsible for classifying transactions appropriately; as such, federal 

agencies maintain all of the detailed information supporting the 

transactions and are responsible for the related internal controls.

Disclaimer of Opinion on

the Schedules of the 

General Fund

Emphasis of Matter

Classification of Transactions 

by Federal Agencies
Page 11 GAO-19-185 Schedules of the General Fund

We were engaged to audit Fiscal Service’s internal control over financial 

reporting relevant to the Schedules of the General Fund based on the 

criteria established under 31 U.S.C. § 3512(c), (d), commonly known as 

the Federal Managers’ Financial Integrity Act (FMFIA).4

Fiscal Service management is responsible for (1) maintaining effective 

internal control over financial reporting, including the design, 

implementation, and maintenance of internal control relevant to the 

preparation and fair presentation of financial statements that are free from 

material misstatement, whether due to fraud or error, and (2) evaluating 

the effectiveness of internal control over financial reporting, based on 

criteria established under FMFIA.

Our responsibility is to express an opinion on Fiscal Service’s internal 

control over financial reporting relevant to the Schedules of the General 

Fund based on conducting the audit in accordance with U.S. generally 

accepted government auditing standards. Because of the matter 

described in the Basis for Disclaimer of Opinion on Internal Control over 

Financial Reporting below, we were unable to obtain sufficient 

appropriate audit evidence to provide a basis for an audit opinion.

Based on the effects of the scope limitations discussed in our Report on 

the Schedules of the General Fund above, our internal control work would 

not necessarily identify all deficiencies in internal control, including those 

that might be material weaknesses or significant deficiencies. Therefore, 

material weaknesses or additional significant deficiencies may exist that 

were not identified.

Internal control over financial reporting relevant to the Schedules of the 

General Fund is a process effected by those charged with governance, 

management, and other personnel, the objectives of which are to provide 

reasonable assurance that (1) transactions are properly recorded, 

processed, and summarized to permit the preparation of the Schedules of 

the General Fund in accordance with U.S. generally accepted accounting 

 

4

31 U.S.C. § 3512 (c), (d) (commonly referred to as FMFIA). This act requires executive 

agency heads to evaluate and report annually to the President and Congress on the 

adequacy of their internal control and accounting systems and on actions to correct 

significant problems.

Report on Internal 

Control over Financial 

Reporting

Management’s 

Responsibility

Auditor’s Responsibility

Definition and Inherent 

Limitations of Internal 

Control over Financial 

Reporting
Page 12 GAO-19-185 Schedules of the General Fund

principles, and (2) transactions are executed in accordance with 

provisions of applicable laws, regulations, contracts, and grant 

agreements, noncompliance with which could have a material effect on 

the Schedules of the General Fund. Because of its inherent limitations, 

internal control over financial reporting may not prevent, or detect and

correct, misstatements due to fraud or error.

The scope limitations described in the Report on the Schedules of the 

General Fund above prevented us from obtaining sufficient appropriate 

audit evidence about whether a material weakness exists.

Because of the significance of the matters described in the Basis for 

Disclaimer of Opinion on Internal Control over Financial Reporting above, 

we were unable to obtain sufficient appropriate audit evidence to provide 

a basis for an opinion on internal control over financial reporting. 

Accordingly, we do not express an opinion on the effectiveness of Fiscal 

Service’s internal control over financial reporting relevant to the 

Schedules of the General Fund.

In addition to the two significant deficiencies that contributed to our 

disclaimer of opinion on the Schedules of the General Fund, we found 

two other significant deficiencies in internal control related to

• information systems controls and

• management’s risk assessment and monitoring of internal control over 

financial reporting.

We discuss these significant deficiencies, and three additional control 

deficiencies that we do not consider to be significant deficiencies or 

material weaknesses, in more detail in appendix I.

Basis for Disclaimer of 

Opinion on Internal 

Control over Financial 

Reporting

Disclaimer of Opinion on 

Internal Control over 

Financial Reporting
Page 13 GAO-19-185 Schedules of the General Fund

Fiscal Service management is responsible for complying with laws, 

regulations, contracts, and grant agreements applicable to Fiscal Service 

as it relates to the Schedules of the General Fund.

An audit of federal financial statements includes testing compliance with 

selected provisions of laws, regulations, contracts, and grant agreements 

applicable to Fiscal Service that have a direct effect on the determination 

of material amounts and disclosures in the Schedules of the General 

Fund and performing certain other limited procedures. Accordingly, we 

did not test compliance with all laws, regulations, contracts, and grant 

agreements. Because of the limitations discussed below and the scope of 

our procedures, noncompliance may occur and not be detected by these 

tests.

Our objective was not to provide an opinion on compliance with laws, 

regulations, contracts, and grant agreements. Accordingly, we do not 

express such an opinion. Our work was performed in accordance with 

U.S. generally accepted government auditing standards.

Our work to test compliance with selected provisions of applicable laws, 

regulations, contracts, and grant agreements was limited by the scope 

limitations described in the Report on the Schedules of the General Fund. 

U.S. generally accepted government auditing standards and Office of 

Management and Budget guidance require auditors to report on entities’ 

compliance with selected provisions of applicable laws, regulations, 

contracts, and grant agreements.

Report on 

Compliance with 

Laws, Regulations, 

Contracts, and Grant 

Agreements

Management’s

Responsibility

Auditor’s Responsibility

Results of Our Tests of 

Compliance with Laws, 

Regulations, Contracts, 

and Grant Agreements
Page 14 GAO-19-185 Schedules of the General Fund

The purpose of this report is solely to describe the scope of our testing of 

compliance with selected provisions of applicable laws, regulations, 

contracts, and grant agreements and the results of that testing, and not to 

provide an opinion on compliance. This report is an integral part of an 

audit performed in accordance with U.S. generally accepted government 

auditing standards in considering compliance. Accordingly, this report on 

compliance with laws, regulations, contracts, and grant agreements is not 

suitable for any other purpose.

In commenting on a draft of this report, Fiscal Service concurred with the 

results of our audit and stated that it looks forward to the opportunity to 

implement the corrective actions needed to overcome the barriers to 

auditability of the Schedules of the General Fund. Additionally, Fiscal 

Service stated that it maintains controls to confirm the integrity of the 

government’s cash flow. The complete text of Fiscal Service’s response is 

reproduced in appendix II.

Beryl H. Davis

Director

Financial Management and Assurance

April 15, 2019

Intended Purpose of 

Report on Compliance 

with Laws, Regulations, 

Contracts, and Grant 

Agreements

Agency Comments
Schedules of the General Fund of the United 

States

Page 15 GAO-19-185 Schedules of the General Fund

Schedules of the General Fund of the United 

States
Schedules of the General Fund of the United 

States

Page 16 GAO-19-185 Schedules of the General Fund
Notes to the Schedules of the General Fund of 

the United States

Page 17 GAO-19-185 Schedules of the General Fund

Notes to the Schedules of the General Fund 

of the United States
Notes to the Schedules of the General Fund of 

the United States

Page 18 GAO-19-185 Schedules of the General Fund
Notes to the Schedules of the General Fund of 

the United States

Page 19 GAO-19-185 Schedules of the General Fund
Notes to the Schedules of the General Fund of 

the United States

Page 20 GAO-19-185 Schedules of the General Fund
Notes to the Schedules of the General Fund of 

the United States

Page 21 GAO-19-185 Schedules of the General Fund
Notes to the Schedules of the General Fund of 

the United States

Page 22 GAO-19-185 Schedules of the General Fund
Notes to the Schedules of the General Fund of

the United States

Page 23 GAO-19-185 Schedules of the General Fund
Notes to the Schedules of the General Fund of 

the United States

Page 24 GAO-19-185 Schedules of the General Fund
Notes to the Schedules of the General Fund of 

the United States

Page 25 GAO-19-185 Schedules of the General Fund
Notes to the Schedules of the General Fund of 

the United States

Page 26 GAO-19-185 Schedules of the General Fund
Notes to the Schedules of the General Fund of 

the United States

Page 27 GAO-19-185 Schedules of the General Fund
Notes to the Schedules of the General Fund of 

the United States

Page 28 GAO-19-185 Schedules of the General Fund
Notes to the Schedules of the General Fund of 

the United States

Page 29 GAO-19-185 Schedules of the General Fund
Notes to the Schedules of the General Fund of 

the United States

Page 30 GAO-19-185 Schedules of the General Fund
Notes to the Schedules of the General Fund of 

the United States

Page 31 GAO-19-185 Schedules of the General Fund
Notes to the Schedules of the General Fund of 

the United States

Page 32 GAO-19-185 Schedules of the General Fund
Notes to the Schedules of the General Fund of 

the United States

Page 33 GAO-19-185 Schedules of the General Fund
Notes to the Schedules of the General Fund of 

the United States

Page 34 GAO-19-185 Schedules of the General Fund
Notes to the Schedules of the General Fund of 

the United States

Page 35 GAO-19-185 Schedules of the General Fund
Notes to the Schedules of the General Fund of 

the United States

Page 36 GAO-19-185 Schedules of the General Fund
Appendix I: Internal Control Deficiencies

Page 37 GAO-19-185 Schedules of the General Fund

The significant deficiencies discussed below contributed to our disclaimer 

of opinion on the Schedules of the General Fund.

During our audit, we identified a significant deficiency related to 

identifying and tracing transactions in the Schedules of the General Fund 

general ledgers. Specifically, this significant deficiency involves activities 

related to the following three areas: (1) identifying journal entries, 

(2) tracing payment schedules to payment vouchers, and (3) identifying 

transactions in certain line items.

Identifying journal entries: The information the Bureau of the Fiscal 

Service (Fiscal Service) uses to prepare the Schedules of the General 

Fund is derived from two different general ledgers: the General Fund 

general ledger populates the Schedule of the Operations of the General 

Fund and the Central Summary general ledger populates the Schedule of 

Changes in Cash Balance from Budget and Other Activities. To record 

transactions in these general ledgers, Fiscal Service designed mapping 

rules to translate the data in the Central Accounting and Reporting 

System (CARS) into general ledger journal entries.

Fiscal Service uses a complex automated interface between CARS and 

the general ledgers to apply these mapping rules and generate the 

journal entries posted to the general ledgers. The mapping rules may 

generate a significant number of journal entries, some of which are used 

for control purposes, for each transaction. Fiscal Service has designed 

certain controls over the interface process. For example, each month 

Fiscal Service reconciles the federal agencies’ account balances in CARS 

with the Liability for Fund Balance with Treasury (LFBWT) amount 

recorded in the General Fund general ledger to ensure that the amounts 

agree. While the automated interface records most journal entries in the 

general ledgers, Fiscal Service records some journal entries manually 

using available agency information.

Tracing payment schedules to payment vouchers: Fiscal Service 

processes payments for most federal agencies. Federal agencies compile 

payment requests into payment schedules and certify these schedules for 

Appendix I: Internal Control Deficiencies

Significant 

Deficiencies That 

Contributed to Our 

Disclaimer of Opinion 

on the Schedules of 

the General Fund

Identifying and Tracing 

Transactions in the 

Schedules of the General 

Fund General Ledgers
Appendix I: Internal Control Deficiencies

Page 38 GAO-19-185 Schedules of the General Fund

payment when they submit them to Fiscal Service for processing. To 

process these payments on behalf of the federal agencies, Fiscal Service 

employs different systems, such as the Payment Automation Manager 

(PAM) and the International Treasury Services (ITS.gov).1

The Federal Reserve Bank processes certain payments using the Direct 

Voucher System (DVS).

2 DVS further groups payments into vouchers 

based on the Routing Transit Number (RTN) and other factors.3 In doing 

so, DVS may add other payment schedules into the same voucher if they 

meet specified criteria. As a result, each voucher recorded in the 

Schedules of the General Fund general ledgers could potentially be 

composed of several payment schedules. These payment schedules in 

turn could be made up of thousands of individual payments.

Identifying transactions in certain line items: CARS serves as the 

electronic system of record for the federal government’s financial data, 

providing streamlined agency reporting and supporting government-wide 

standardization. The system allows federal agencies that fully implement 

it to classify payments, collections, and intragovernmental transactions 

upon initiation, including the assignment of Treasury Account Symbols 

(TAS) and Business Event Type Codes (BETC).4 Fiscal Service 

establishes the TAS and BETC attributes and provides federal agencies 

guidance on how to classify transactions using them. The classification of 

 

1

PAM is a Fiscal Service application developed by the Federal Reserve Bank. It performs 

validation checks on the certified payment files, screens the payment files for potential 

improper payments and offsets, and organizes the files into payment groups for 

downstream processing. ITS.gov is a Fiscal Service web-based application that processes 

international payments.

2

For fiscal year 2018, Fiscal Service had agreements with several Federal Reserve Banks 

to act as fiscal agents in carrying out different activities related to transactions recorded in 

the General Fund. For purposes of this report, we collectively refer to them as the Federal 

Reserve Bank.

3

DVS captures payment activity, excluding checks, processed by the Federal Reserve 

Bank. 

4

A TAS is used to represent the federal agency’s individual appropriation, receipt, outlay, 

and other fund account symbols as assigned by the Department of the Treasury. A BETC 

is an eight-digit character code that indicates the type of activity reported, such as 

payments, collections, investments, borrowings, repayments, and so forth. The TAS and 

BETC information assigned to this activity is used to classify transactions into the various 

sections of the Schedule of Changes in Cash Balance from Budget and Other Activities. 

The TAS and BETC information also affect how amounts are reported in the General Fund 

Receipt Accounts, Liability for Fund Balance with Treasury, and Equity line items on the 

Schedule of the Operations of the General Fund. 
Appendix I: Internal Control Deficiencies

Page 39 GAO-19-185 Schedules of the General Fund

transactions in CARS determines how they are recorded into both general 

ledgers and subsequently determines how transactions are reported on 

the Schedules of the General Fund based on the mapping rules. As 

previously mentioned, some transactions are not recorded using these 

mapping rules but are instead recorded by Fiscal Service manually.

Condition. During our audit, we were unable to readily identify and trace 

General Fund of the United States (General Fund) transactions to 

determine whether they were complete and properly recorded in the 

correct general ledger accounts and line items within the schedules. 

Specifically, as discussed below, we experienced difficulties in 

(1) identifying the complete set of journal entries for certain transactions, 

(2) tracing payment schedules to payment vouchers, and (3) identifying 

the transactions that constitute certain line items.

• Identifying journal entries: During our audit, we were unable to 

readily identify all the journal entries for selected transactions. The 

mapping rules may create a significant number of journal entries when 

data are transferred from CARS to the general ledgers via the 

automated interface. We requested that Fiscal Service identify all the 

journal entries related to certain transactions we had selected for 

testing, but this required extensive manual effort on its part. Fiscal 

Service was able to provide some but not all of the requested 

documentation in time for us to complete our audit procedures on the 

fiscal year 2018 audit.

• Tracing payment schedules to payment vouchers: During our 

audit, we found that payment vouchers recorded on the general 

ledgers, most of which are included in the Cash Out line item of the 

Schedule of the Operations of the General Fund, could not be readily 

traced to certain payment schedules that the federal agencies 

certified. Specifically, Fiscal Service did not have a process in place 

that would allow it to readily provide a direct link between the payment 

schedule(s) and the payment voucher amounts recorded in the 

general ledgers. Fiscal Service was able to track and provide us 

information such as payment schedules and the TAS information for 

some of the payments using a time-consuming manual process that 

required extensive research into multiple payment systems. However, 

Fiscal Service was unable to provide all of the requested 

documentation in time for us to complete our audit procedures on the 

fiscal year 2018 audit.

• Identifying transactions in certain line items: During our audit, we 

found that amounts recorded in certain line items were summarized 
Appendix I: Internal Control Deficiencies

Page 40 GAO-19-185 Schedules of the General Fund

and lacked sufficient details that were needed to trace the amounts to 

specific transactions. Specifically, Fiscal Service was unable to use 

data from the Central Summary general ledger to identify transactions 

reported in certain line items of the Schedule of Changes in Cash 

Balance from Budget and Other Activities, including the budget deficit. 

For example, Fiscal Service could not identify the transactions in the 

Central Summary general ledger supporting certain material line items 

on the Schedules of Changes in Cash Balance from Budget and 

Other Activities, such as the components of federal debt activity. In 

order to determine the amounts reported in these line items, Fiscal 

Service used sources external to the General Fund, such as the 

Government-wide Treasury Account Symbol Adjusted Trial Balance 

System (GTAS) and the Summary Debt Accounting System (SDAS).5

In addition, we found manual journal entries Fiscal Service recorded 

in certain general ledger accounts that we could not trace to other 

general ledger accounts that should have been affected by the same 

journal entries. For example, Fiscal Service records a manual journal 

entry monthly to reflect the effect of certain transactions on net equity. 

However, the amount recorded for net equity is summarized and 

cannot be readily tied to specific transactions recorded on other 

general ledger accounts. While Fiscal Service performs certain 

reconciliations between the summary amounts recorded on the 

general ledgers and the different sources of information (e.g., GTAS 

and SDAS), these reconciliations are at a summary level. As a result, 

we were unable to determine the accuracy or completeness of the 

related line item balances. As specifically related to the reconciliation 

performed for the Schedule of Changes in Cash Balance from Budget 

and Other Activities, we were unable to determine whether the 

transactions were properly included or excluded from the budget 

deficit calculation.

Criteria. Auditing standards state that the auditor’s objective is to design 

and perform audit procedures that enable the auditor to obtain sufficient 

appropriate audit evidence with which to draw reasonable conclusions on 

which to base the auditor’s opinion. The auditor’s report must be modified 

if the auditor is unable to obtain sufficient appropriate audit evidence to 

 

5

GTAS and SDAS are systems that Fiscal Service maintains outside of the General Fund 

that are primarily used for purposes other than supporting the General Fund. Specifically, 

GTAS contains monthly federal agency submissions of budget execution information and 

proprietary financial reporting information for each TAS, and SDAS contains data on all 

outstanding public debt and related interest.
Appendix I: Internal Control Deficiencies

Page 41 GAO-19-185 Schedules of the General Fund

conclude that the financial statements as a whole are free from material 

misstatement.6

Cause. We were unable to readily identify and trace General Fund 

transactions for the following reasons:

• Identifying journal entries: The complexity of the automated 

interface and underlying mapping rules impaired our ability to replicate 

the journal entries or perform alternative procedures using currently 

available information to determine whether transactions were 

completely and accurately recorded and reported in the appropriate 

general ledger accounts and line items within the Schedules of the 

General Fund, respectively. The process Fiscal Service designed for 

generating journal entries in the Schedules of the General Fund 

general ledgers does not create an audit trail that shows how each 

transaction was actually recorded in the general ledgers. For 

example, there was no systematic approach we could use, such as 

filtering by a unique identifier, to identify all the journal entries related 

to a specific transaction.

• Tracing payment schedules to payment vouchers: Fiscal Service 

experienced difficulties in linking the payment schedule(s) to the 

payment voucher amounts, in part, because of the many different 

systems involved in the processing of payments and how the 

information continues to be summarized as it flows from one system 

to another. By the time a voucher is recorded in the general ledgers, 

some of the key information that would facilitate traceability is not 

carried forward during the summarization process. For example, the 

general ledgers do not include information such as the payment 

schedule number and RTN, which facilitate the tracing of the voucher 

information to the information that the federal agencies requested and 

certified.

• Identifying transactions in certain line items: Fiscal Service did not 

design sufficient agency reporting requirements, such as a sufficient 

variety of TAS and BETC attributes in CARS, that the federal 

agencies could use to provide Fiscal Service with information, at a 

transaction level, to support financial reporting for certain line items on 

the Schedules of the General Fund. For example, federal agencies do 

not have a way to associate outflows to appropriated or 

 

6

Auditing Standards Board, Overall Objectives of the Independent Auditor and the 

Conduct of an Audit in Accordance With Generally Accepted Auditing Standards, AU-C 

200, and Modifications to the Opinion in the Independent Auditor’s Report, AU-C 705. 
Appendix I: Internal Control Deficiencies

Page 42 GAO-19-185 Schedules of the General Fund

nonappropriated balances when classifying transactions in CARS. As 

a result, Fiscal Service estimates the amount and records a manual 

journal entry monthly to reflect the effect on the net equity line item 

and note disclosure. However, the amounts recorded for these journal 

entries are summarized and cannot be directly linked to distinct 

transactions.

Similarly, transactions for certain activities are netted based on the 

TAS and BETC assigned by the federal agencies and recorded to 

broadly categorized general ledger accounts at a summarized level. 

This prevents Fiscal Service from obtaining the necessary details from 

its records to identify the specific activities reported on certain line 

items on the Schedule of Changes in Cash Balance from Budget and 

Other Activities, including the budget deficit.

Effect. The effect associated with each of the deficiencies discussed 

above follows:

• Identifying journal entries: Without the ability to readily identify and 

trace General Fund transactions from initiation all the way through the 

recording in the Schedules of the General Fund general ledgers, we 

cannot determine whether transactions are completely and accurately 

recorded and reported in the appropriate general ledger accounts and 

line items within the schedules, respectively.

• Tracing payment schedules to payment vouchers: Without 

maintaining direct links between the payment schedule(s) and the 

payment voucher(s), Fiscal Service cannot readily provide 

documentation to us to determine whether transactions agree to the 

information certified by the federal agency.

• Identifying transactions in certain line items: Without sufficient 

TAS and BETC attributes to provide the appropriate level of detail in 

the general ledgers for certain transactions, we cannot determine 

whether certain line items on the Schedule of Changes in Cash 

Balance from Budget and Other Activities, including the deficit, are 

properly supported.

Recommendations for Executive Action. We are making the following 

three recommendations to Fiscal Service:

• The Commissioner of Fiscal Service should develop and implement a 

mechanism to reasonably assure that all the journal entries recorded 

in the Schedules of the General Fund general ledgers can be readily 

identified and traced, such as through a unique identifier, to determine 
Appendix I: Internal Control Deficiencies

Page 43 GAO-19-185 Schedules of the General Fund

the effect of a transaction on all applicable general ledger accounts 

and line items of the Schedules of the General Fund, including the 

budget deficit. (Recommendation 1)

• The Commissioner of Fiscal Service should develop and implement a 

mechanism to reasonably assure that payment transactions recorded 

in the Schedules of the General Fund general ledgers capture all of 

the key information needed, including payment schedules if 

applicable, to readily trace transactions to the information certified by 

the federal agency. (Recommendation 2)

• The Commissioner of Fiscal Service should develop and implement 

additional reporting requirements with related guidance for federal 

agencies that better align with the General Fund financial reporting 

objectives and enable Fiscal Service to capture the effect of a 

transaction on all applicable general ledger accounts and line items of 

the Schedules of the General Fund, including the budget deficit. 

(Recommendation 3)

Several federal agencies have not yet fully implemented CARS as their 

primary system of record and, as a result, do not report and classify their 

transactions on a daily basis. Instead, these non-CARS federal agencies 

submit summary-level information to CARS through two forms—a 

Statement of Accountability and a Statement of Transactions—on a 

monthly basis. However, these agencies’ daily cash activity is tracked in 

the General Fund’s source system records based on information that the 

Federal Reserve Bank reports. Each month, Fiscal Service reconciles the 

data the non-CARS federal agencies report on these forms to information 

in the General Fund’s source system records. 

Cumulative differences, if any, are reflected in Statement of Difference 

general ledger accounts in the General Fund’s records until the federal 

agencies resolve their respective differences. These differences are 

included in the LFBWT amount recorded on the Schedule of the 

Operations of the General Fund and are separately disclosed as the 

“Statement of Difference” on Note 9 of the Schedules of the General 

Fund. However, these differences are not included in the calculation of 

the budget deficit until they are resolved by the federal agencies, which 

could take years. The Statement of Difference totaled $857 million (net) 

as of September 30, 2018.

Condition. During our audit, we found that Fiscal Service does not have 

a mechanism to determine the effect that these differences have on the 

different line items of the Schedules of the General Fund. For example, 

Evaluating and Resolving 

Differences Reported on 

the Schedules of the 

General Fund
Appendix I: Internal Control Deficiencies

Page 44 GAO-19-185 Schedules of the General Fund

Fiscal Service’s procedures do not include obtaining information about 

(1) the general nature and causes of the differences or (2) the extent to 

which the differences may result from errors within the General Fund’s 

records.

Criteria. Internal control standards state that management should design 

control activities to achieve objectives and respond to risks.7 For financial 

reporting, such objectives include the existence, completeness, and 

appropriate valuation of reported amounts.8

Cause. Differences arise because the information submitted by the nonCARS federal agencies varies in detail and timing when compared with 

the information in the General Fund’s source system records.

Effect. Until all federal agencies implement CARS or Fiscal Service 

develops a process to determine the effect these differences have on the 

different line items of the Schedules of the General Fund, including the 

budget deficit, there is an increased risk of misstatements on the 

Schedules of the General Fund.

Recommendation for Executive Action. We recommend that the 

Commissioner of Fiscal Service develop and implement a process that 

would enable Fiscal Service to obtain the information necessary to 

effectively assess the effect of the Statement of Difference on the 

Schedules of the General Fund for those federal agencies that have not 

implemented CARS. (Recommendation 4)

In addition to the significant deficiencies discussed above that contributed 

to our disclaimer of opinion on the Schedules of the General Fund, we

found two other significant deficiencies in internal control.

During our audit, we identified ineffective controls over certain Fiscal 

Service information systems relevant to the Schedules of the General 

Fund. We identified 26 information systems general and application 

 

7

GAO, Standards for Internal Control in the Federal Government, GAO-14-704G

(Washington, D.C.: September 2014). 

8

Auditing Standards Board, Understanding the Entity and Its Environment and Assessing 

the Risks of Material Misstatement, AU-C 315.

Other Significant 

Deficiencies

Information Systems 

Controls
Appendix I: Internal Control Deficiencies

Page 45 GAO-19-185 Schedules of the General Fund

control deficiencies related to access controls, configuration 

management, segregation of duties, contingency planning, and business 

process controls. The majority of the control deficiencies identified 

affected payment systems. For fiscal year 2018, the General Fund 

reported more than $14 trillion in cash outflows; however, debt 

repayments and tax refunds collectively represent most of the payment 

transactions. Debt repayments and tax refunds are reported in the 

Schedules of Federal Debt (SFD) and the Internal Revenue Service’s 

(IRS) fiscal years 2018 and 2017 financial statements, respectively, which 

GAO audited separately.9 Further, agencies have daily access to their 

payment activity and can verify whether the General Fund’s payments 

amounts match their own records. This lessens the likelihood of a 

material misstatement of cash outflows on the Schedules of the General 

Fund. Because of their sensitive nature, details of these deficiencies are 

reported in a LIMITED OFFICIAL USE ONLY report that we issued 

concurrently.10 The information in our concurrently issued report is 

sensitive and must be protected from public disclosure. Therefore, further 

discussion about the information system control deficiencies we identified 

is omitted from this report.

In addition to the 26 deficiencies discussed above, the General Fund 

reported a liability for Federal Debt & Accrued Interest Payable held and 

managed by the Department of the Treasury (Treasury) of more than 

$21.6 trillion as of September 30, 2018. During our 2018 audit of the SFD, 

we identified and reported a significant deficiency in SFD information 

system general controls that also affects this line item.11 Similarly, the 

General Fund reported custodial tax collections and refunds as cash in 

and cash out that are also reported as custodial tax collections and 

refunds in IRS’s financial statements.12 During our fiscal year 2018 audit 

of IRS’s financial statements, we identified and reported a significant 

 

9

See GAO, Financial Audit: IRS’s Fiscal Years 2018 and 2017 Financial Statements, 

GAO-19-150 (Washington, D.C.: Nov. 9, 2018), and Financial Audit: Bureau of the Fiscal 

Service’s Fiscal Years 2018 and 2017 Schedules of Federal Debt, GAO-19-113

(Washington, D.C.: Nov. 8, 2018). 

10See GAO, Management Report: Improvements Needed in the Bureau of the Fiscal 

Service’s Information System Controls Related to the Schedules of the General Fund, 

GAO-19-463RSU (Washington, D.C.: May 15, 2019).

11GAO-19-113. 

12GAO-19-150. 
Appendix I: Internal Control Deficiencies

Page 46 GAO-19-185 Schedules of the General Fund

deficiency in IRS’s internal control over financial reporting systems that 

also affects the General Fund.

Management uses internal control to help the organization achieve its 

objectives. Risk assessments provide management the basis for 

developing appropriate risk responses as it seeks to achieve those 

objectives. Monitoring controls are activities that management establishes 

and operates to assess the quality of performance over time and promptly 

resolve the findings of audits and other reviews. For years, Fiscal Service 

has been assessing risks and monitoring internal control over its entire 

bureau. Beginning in fiscal year 2018, Fiscal Service assumed the 

responsibility for internal controls over financial reporting related to the 

Schedules of the General Fund.

Condition. We found that Fiscal Service did not fully assess the General 

Fund’s risks and related internal controls for all material line items on the 

Schedules of the General Fund or adequately monitor the effectiveness of 

those internal controls. Specifically, we found that Fiscal Service did not 

adequately (1) identify or test all relevant controls over material financial 

statement line items and (2) document its test plans to reflect internal 

control test procedures performed.

• Identifying and testing all relevant controls: Fiscal Service 

designed an internal control evaluation process that was intended to 

identify and assess the effectiveness of key controls applicable to the 

processes significant to compiling the financial report of the 

Schedules of the General Fund. Its methodology includes steps for 

assessing the significant financial reports, identifying the key business 

processes that contribute to the significant financial reports, and 

creating a crosswalk between the financial statement line items to the 

processes and subprocesses. However, we found that Fiscal Service 

did not conduct the assessment as designed. As a result, we 

identified several significant controls within processes and 

subprocesses that contribute to developing the Schedules of the 

General Fund that Fiscal Service either did not (1) include in its test 

plans because they were not part of its list of controls already 

undergoing review as part of the internal control evaluation process or 

(2) adequately test because the controls had not been designed to 

respond to risks specific to the General Fund. In addition, Fiscal 

Service did not review test results of other Treasury components to 

determine whether any of the component internal control processes 

covering material General Fund line items, such as Due from 

Management’s Risk 

Assessment and 

Monitoring of Internal 

Control over Financial 

Reporting
Appendix I: Internal Control Deficiencies

Page 47 GAO-19-185 Schedules of the General Fund

Treasury, had any effect on the internal control over financial reporting 

for the General Fund.

• Documenting test plans to reflect test procedures performed: To 

evaluate internal control, Treasury developed guidance for each of its 

components to follow based on Office of Management and Budget 

(OMB) Circular No. A-123.13 The guidance states that work performed 

is subject to Office of the Deputy Chief Financial Officer and 

Treasury’s auditors review and that the documentation must be 

maintained at a sufficient level of detail to withstand management or 

auditor scrutiny. To address this requirement, Fiscal Service 

developed test plans to document its testing of its significant internal 

control activities to document its conclusions. However, we have 

found several instances in which Fiscal Service did not accurately 

document the internal control test plans to reflect the test procedures 

performed. For example, Fiscal Service documented that it tested 

internal controls over a report by randomly selecting three monthly 

report reconciliations. However, Fiscal Service officials confirmed that 

the test plan was not updated to reflect that the reconciliation was 

actually a quarterly procedure and that only 1 month of the three listed 

as being reviewed was actually tested, and agreed that Fiscal 

Service’s test documentation was incorrect. In another instance, 

Fiscal Service’s documentation described a quarterly Risk 

Governance Process work group as a key control to reasonably 

assure proper responses to organizational change. However, when 

we requested meeting minutes of the work group, Fiscal Service 

informed us that the work group had disbanded in 2016 and prior to 

that it was not performing the control function referenced in the 

documentation.

Criteria. Internal control standards state that management should define 

objectives clearly to enable the identification for risks and define risk 

tolerances. Further, management should identify, analyze, and respond to 

risks related to achieving defined objectives.14 Once an adequate internal 

control system is in place, management can properly establish and 

operate monitoring activities to monitor the internal control system and 

evaluate the results, which aid management in identifying internal control 

 

13Office of Management and Budget, Management’s Responsibility for Enterprise Risk 

Management and Internal Control, OMB Circular No. A-123 (revised July 2016).

14GAO-14-704G. 
Appendix I: Internal Control Deficiencies

Page 48 GAO-19-185 Schedules of the General Fund

issues and remediating identified internal control deficiencies on a timely 

basis. 

Cause. We found that management did not adequately identify and 

assess risks for the General Fund as an independent reporting entity in 

order to properly evaluate significant internal controls within the General 

Fund and adequately monitor their effectiveness.

Effect. Without properly considering the General Fund as a separate 

reporting entity, Fiscal Service cannot adequately assess risks related to 

the Schedules of the General Fund and determine whether appropriate 

internal controls are designed and implemented. Further, without 

establishing proper monitoring activities, management will be unable to 

effectively identify internal control issues to evaluate and develop 

remediation plans to address those issues in a timely manner.

Recommendation for Executive Action. We recommend that the 

Commissioner of Fiscal Service design and implement procedures to 

evaluate risks and monitor internal controls over financial reporting 

relevant to the Schedules of the General Fund. (Recommendation 5)

In addition to the significant deficiencies discussed above, we identified 

the following three deficiencies in internal control, which we do not 

consider to be material weaknesses or significant deficiencies.

During our audit, we identified a control deficiency related to Fiscal 

Service’s agency-submitted information. Specifically, this deficiency 

involves activities related to the following two areas: (1) providing BETC 

guidance and (2) reviewing Agency Submission Forms.

BETC guidance: As discussed previously, Fiscal Service uses federal 

agencies’ classification, including TAS and BETC attributes, to record 

transactions in the general ledger. These transactions affect the cash and 

LFBWT activity presented within various line items throughout the 

Schedules of the General Fund. To assist federal agencies in selecting 

the appropriate BETC attributes, Fiscal Service provides guidance on its 

website, including a listing and brief description of all BETCs.

Agency Submission Forms: In order to report other activity with the 

General Fund that is not reported in CARS, federal agencies submit 

information through Agency Submission Forms on a quarterly basis. The 

Other Control 

Deficiencies

Agency-Submitted 

Information
Appendix I: Internal Control Deficiencies

Page 49 GAO-19-185 Schedules of the General Fund

Agency Submission Form is a standardized electronic form that allows 

federal agencies to specify the type of transaction, general ledger 

account, amount, and other attributes. Using the information provided by 

federal agencies, Fiscal Service records manual journal entries in the 

General Fund general ledger that correspond with the federal agencies’ 

activities with the General Fund in order to eliminate intragovernmental 

transactions in the consolidated financial statements of the U.S. 

government. These transactions are included in the Due from Agencies - 

Accrual Amounts, Due from Agencies - Other Debt, and Other Liabilities 

line items on the Schedule of the Operations of the General Fund.

Condition. The condition associated with the deficiencies for each area is 

as follows:

• BETC guidance: During our audit, we identified an instance in which 

a federal agency used an incorrect BETC when classifying a 

transaction. Specifically, we identified a credit reform subsidy expense 

transaction that was classified using an incorrect BETC, which caused 

the transaction to be erroneously included in the Loan 

Disbursements/Default Payments line item of the Schedule of the 

Changes in Cash Balance from Budget and Other Activities.

• Agency Submission Forms: During our audit, we found that Fiscal 

Service did not independently obtain and review supporting 

documentation for activity reported in the Schedules of the General 

Fund that relied solely on information included in Agency Submission 

Forms. Also, Fiscal Service did not have procedures to assess the 

overall completeness of the activity related to the Due from Agencies - 

Accrual Amounts, Due from Agencies - Other Debt, and Other 

Liabilities line items. Further, we identified an instance in which Fiscal 

Service did not adequately review a journal entry resulting from an 

Agency Submission Form for adherence to relevant accounting 

criteria.

Criteria. Internal control standards state that management should design 

control activities to achieve objectives and respond to risks.15 For financial 

reporting, such objectives include the completeness and accuracy of 

reported amounts. Further, the Treasury Financial Manual includes 

requirements for agencies to follow a standard set of processes that 

support the recording, reporting, reconciliation, and measurement of 

intragovernmental activity.

 

15GAO-14-704G. 
Appendix I: Internal Control Deficiencies

Page 50 GAO-19-185 Schedules of the General Fund

Cause. The cause associated with each of the deficiencies discussed 

above is as follows:

• BETC guidance: Although Fiscal Service maintains a listing of 

BETCs on its website, this guidance does not comprehensively define 

each BETC or describe its proper use and related accounting 

implications. Further, Fiscal Service does not have a mechanism for 

evaluating the agencies’ use of BETCs for consistency with existing 

guidance.

• Agency Submission Forms: While Fiscal Service has procedures to 

record transactions that correspond to federal agencies’ activity 

reported on Agency Submission Forms related to the General Fund, 

the procedures do not require Fiscal Service to (1) obtain and review 

supporting documentation for the reported activity or (2) assess the 

overall completeness of federal agency-reported activity with the 

General Fund. In addition, the journal voucher review process does 

not require Fiscal Service to review relevant accounting criteria that 

apply to activity reported by agencies.

Effect. The effect associated with each of the deficiencies discussed 

above is as follows:

• BETC guidance: Without sufficient guidance that defines and 

describes the proper use of BETCs available to federal agencies and 

a mechanism for evaluating agencies’ use of them, Fiscal Service is 

at increased risk that federal agencies may not properly classify their 

transactions.

• Agency Submission Forms: By not obtaining and reviewing 

supporting documentation or requiring a review of accounting policies 

applicable to amounts reported on Agency Submission Forms, Fiscal 

Service does not have the data necessary to assess whether 

transactions included in the forms are appropriately recorded and 

reflected in the Schedules of the General Fund.

Recommendations for Executive Action. We are making the following 

four recommendations to Fiscal Service:

• The Commissioner of Fiscal Service should enhance guidance 

available to federal agencies to comprehensively define and describe 

the proper use and related accounting implications of each BETC. 

(Recommendation 6)
Appendix I: Internal Control Deficiencies

Page 51 GAO-19-185 Schedules of the General Fund

• The Commissioner of Fiscal Service should develop and implement a 

mechanism for evaluating agencies’ use of BETCs based on the 

enhanced guidance. (Recommendation 7)

• The Commissioner of Fiscal Service should design and implement 

procedures to (1) obtain and review supporting documentation for 

reported activity included on Agency Submission Forms and 

(2) assess the overall completeness of federal agency activity 

reported on Agency Submission Forms. (Recommendation 8)

• The Commissioner of Fiscal Service should enhance journal voucher 

review procedures to include a review of relevant accounting criteria 

before recording transactions based on Agency Submission Forms. 

(Recommendation 9)

The General Fund transacts with federal agencies that receive 

appropriation authority and maintains an intragovernmental relationship 

with these federal agencies. Fiscal Service, which manages the General 

Fund, issues warrants to federal agencies, which reflect the amount 

authorized to be obligated and expended from the General Fund for the 

specified purpose and period of availability provided by law. Upon 

receiving its warrant, a federal agency records the amount as Fund 

Balance with Treasury (FBWT)—an asset account that reflects its 

available budget authority—in its accounting records. In turn, the General 

Fund records a corresponding amount in its LFBWT to provide for the 

central accounting of appropriations. The amounts are recorded at the 

TAS level, which includes designating the type of account and period the 

funding is available.

Condition. During our audit, we found that the population of TAS 

accounts that compose the General Fund’s LFBWT account included 

(1) an erroneous TAS balance of approximately $9.0 billion that Fiscal 

Service identified in fiscal year 2016, but had not corrected in its records 

as of September 30, 2018; (2) two accounts that should have been closed 

in the early 1990s; and (3) accounts with long-standing negative 

balances.

Criteria. Internal control standards state that management should design 

control activities to achieve objectives and respond to risks.16 For financial 

reporting, such objectives include the existence, completeness, and 

 

16GAO-14-704G. 

Validating LFBWT 

Balances
Appendix I: Internal Control Deficiencies

Page 52 GAO-19-185 Schedules of the General Fund

appropriate valuation of reported amounts.17 Also, intragovernmental 

balances should agree, as unresolved differences could represent 

misstatements in reported amounts in the federal agency’s records as 

well as in the consolidated U.S. government financial statements. Further, 

the Treasury Financial Manual includes requirements for entities to follow 

a standard set of processes that support the recording, reporting, 

reconciliation, and measurement of intragovernmental activity.18 It also 

requires that entities involved in intragovernmental transactions reconcile 

and resolve any differences between each other on a routine basis.

Cause. Agencies are responsible for reconciling their FBWT account to 

General Fund records. Fiscal Service has not established procedures to 

periodically review all active TAS accounts to determine whether they are 

valid and the related General Fund account balances are consistent with 

federal agency records. Further, while Fiscal Service has procedures in 

place to monitor negative TAS balances, the procedures are limited and 

do not include TAS accounts with indefinite periods of availability.

Effect. Without procedures to independently determine whether all active 

Treasury accounts are valid and the related account balances are 

consistent with the federal agency records, Fiscal Service cannot 

determine whether LFBWT balances are properly recorded and the 

reported amounts are consistent with agency records. In addition, without 

procedures requiring Fiscal Service to monitor and follow up on the status 

of TAS accounts with indefinite periods of availability, Fiscal Service is at 

increased risk that misstatements to the Schedules of the General Fund 

may occur.

Recommendations for Executive Action. We are making the following 

two recommendations to Fiscal Service:

• The Commissioner of Fiscal Service should design and implement 

procedures to periodically review all active Treasury accounts to 

determine whether they are valid and the related General Fund 

account balances are consistent with federal agency records. 

(Recommendation 10)

 

17Auditing Standards Board, Understanding the Entity and Its Environment and Assessing 

the Risks of Material Misstatement. 

18Bureau of the Fiscal Service, Treasury Financial Manual, Chapter 4700, Agency 

Reporting Requirements for the Financial Report of the United States Government, 

accessed March 22, 2019, https://tfm.fiscal.treasury.gov/v1/p2/c470.html.
Appendix I: Internal Control Deficiencies

Page 53 GAO-19-185 Schedules of the General Fund

• The Commissioner of Fiscal Service should enhance current 

procedures for reviewing negative balances to include Treasury 

accounts with indefinite periods of availability. (Recommendation 11)

Fiscal Service and federal agencies may identify and record transactions 

in the current year that should have been recorded in a prior fiscal year, 

for example, to correct an error or reclassify a transaction. Generally, 

such transactions are recorded based on agency consultation with Fiscal 

Service and OMB.

Condition. During our audit, we identified 23 prior period transactions 

that Fiscal Service recorded in the fiscal year 2018 Schedule of the 

Operations of the General Fund that according to Fiscal Service officials 

relate primarily to federal agencies’ corrections to activity or balances 

reported in prior years. The transactions, which were not material in 

relation to the Schedules of the General Fund as a whole, primarily 

affected the Warrants Issued line item in Note 2, Adjustments line item in 

Note 2, and LFBWT activity in Note 9. Recording these transactions in a 

prior fiscal year would have affected the beginning balance for these line 

items rather than fiscal year 2018 activity.

Criteria. Statement of Federal Financial Accounting Standards 21 states 

that “prior period financial statements should only be restated for 

corrections of errors that would have caused any statements presented to 

be materially misstated.”19 

Cause. Fiscal Service’s standard operating procedures for such 

transactions do not require an assessment of materiality to determine the 

appropriateness of recording them as current year adjustments or 

adjustments to beginning balances. Instead, the procedures call for 

recording a journal entry that corresponds to the federal agency’s 

accounting treatment of the transaction, without assessing the effect on 

the Schedule of the Operations of the General Fund.

Effect. By not assessing the materiality of prior period transactions 

recorded by federal agencies, Fiscal Service is unable to determine 

 

19Federal Accounting Standards Advisory Board, Reporting Corrections of Errors and 

Changes in Accounting Principles, Amendment of SFFAS 7, Accounting for Revenue and 

Other Financing Sources, Statement of Federal Financial Accounting Standards 21.

Recording Prior Period 

Transactions in the 

General Fund General 

Ledger
Appendix I: Internal Control Deficiencies

Page 54 GAO-19-185 Schedules of the General Fund

whether it should restate the Schedule of the Operations of the General 

Fund for prior periods.

Recommendation for Executive Action. We recommend that the 

Commissioner of Fiscal Service enhance the standard operating 

procedures for prior period transactions to include a requirement for 

Fiscal Service to assess the materiality of transactions to determine the 

appropriateness of recording them as a current year adjustment or 

restating the prior period. (Recommendation 12)
Appendix II: Comments from the Bureau of the 

Fiscal Service

Page 55 GAO-19-185 Schedules of the General Fund

Appendix II: Comments from the Bureau of 

the Fiscal Service

(102531)
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