Management Report: Improvements Needed in Controls over the Preparation of the U.S. Consolidated Financial Statements
Published: 2013-06-28T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: Treasury, in coordination with OMB, prepares the Financial Report of the United States Government, 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 its work have prevented GAO from expressing an opinion on the CFS, exclusive of the Statements of Social Insurance (SOSI). Also, GAO was unable to express opinions on the 2012, 2011, and 2010 SOSI and 2012 and 2011 Statements 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 2012 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 by Treasury and OMB to address GAO's prior recommendations relating to the preparation of the CFS that remained open at the end of the fiscal year 2011 audit.
section_title: What GAO Found
paragraphs: During its audit of the fiscal year 2012 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 (1) consistent with the underlying audited entities' financial statements, (2) properly balanced, and (3) 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.
Specifically, for fiscal year 2012, GAO found that Treasury's procedures were not effectively designed to
reasonably assure the timely submission of audited material line items for significant calendar year-end federal entities,
determine the effect of restatements and reclassifications submitted by significant federal entities on related line items and notes presented in the CFS, and
ensure that the budget statements included in the CFS were prepared in a reliable manner.
GAO also notified OMB of a reporting requirement in OMB Circular No. A-136, Financial Reporting Requirements , that may result in inconsistent and inaccurate reporting of compliance with the Federal Financial Management Improvement Act of 1996.
In addition, GAO found that various other control deficiencies identified in previous years' audits with respect to the CFS preparation continued to exist. Specifically, 31 of the 48 recommendations from GAO's prior reports regarding control deficiencies in the CFS preparation process remained open as of January 9, 2013, the date of GAO's report on its audit of the fiscal year 2012 CFS. GAO will continue to monitor the status of corrective actions taken to address the 6 new recommendations as well as the 31 open recommendations from prior years as part of its fiscal year 2013 CFS audit.
section_title: What GAO Recommends
paragraphs: GAO is making six recommendations -- five to Treasury and one to OMB--to address the new control deficiencies identified by GAO during the fiscal year 2012 CFS audit. In commenting on GAO's draft, OMB and Treasury generally concurred on 5 of the 6 recommendations, and Treasury will consider implementation of the other recommendation.

section_title: Letter
paragraphs: In our January 2013 report on the results of our audit of the consolidated  financial statements of the U.S. government (CFS) for the fiscal years  ended September 30, 2012 and 2011, we disclaimed an opinion on the  CFS, except for the 2009 and 2008 Statements of Social Insurance  (SOSI), which received unqualified opinions. 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. These include material weaknesses that relate to the federal  government’s processes used to prepare the CFS.weaknesses involve the federal government’s inability 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 (1) consistent with the underlying audited  entities’ financial statements, (2) properly balanced, and (3) 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) 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 the unaudited Required Supplementary  Information section of the 2012 Financial Report of the United States  Government (Financial Report)) 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.of the material weaknesses 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   Several  reported in detail along with related recommendations by other auditors in  their audit reports on individual federal entities’ financial statements.
The purpose of this report is to provide (1) detailed information on new  control deficiencies identified during our fiscal year 2012 audit that relate  to the processes used by Treasury and OMB to prepare the CFS, (2) 6  recommendations to address these new control deficiencies, and (3) the  status of corrective actions taken by Treasury and OMB to address the 48  recommendations relating to the processes used by them to prepare the  CFS, detailed in our previous reports, that remained open at the end of  the fiscal year 2011 audit.recommendations at the end of the fiscal year 2012 audit. Of the 17  recommendations that have been closed, 7 were closed as a result of  corrective actions taken by Treasury. We closed the other 10  recommendations by making 2 new recommendations in this report that  are better aligned with the current status of the remaining internal control  deficiencies associated with the budget statements included in the CFS  and that reflect certain actions taken by Treasury. Appendix I provides a  summary of the status of actions taken to address the open  recommendations from our previous reports as of January 9, 2013, the  date of our report on the audit of the fiscal year 2012 CFS.
subsections: section_title: Scope and Methodology
paragraphs: As part of our audit of the fiscal years 2012 and 2011 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 by them to prepare the CFS that were  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 2012 CFS, our internal control work  would not necessarily identify all deficiencies in internal control, including  those that might be material weaknesses or significant deficiencies. We  have communicated each of the new control deficiencies to your staff. We  performed our audit of the fiscal years 2012 and 2011 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.
We requested comments on a draft of this report from the Director of  OMB and the Secretary of the Treasury or their designees. OMB provided  oral comments, which are summarized in the Agency Comments and Our  Evaluation section of this report. Treasury’s Fiscal Assistant Secretary  provided written comments on June 6, 2013, which are reprinted in their  entirety in appendix II and are also summarized in the Agency Comments  and Our Evaluation section.
section_title: New Control Deficiencies Identified
paragraphs: During our audit of the fiscal year 2012 CFS, we identified several new  internal control deficiencies in Treasury’s and OMB’s processes used to  prepare the CFS. Specifically, we found that Treasury’s procedures were  not effectively designed to (1) reasonably assure the timely submission of  audited material line items for significant calendar year-end federal  entities, (2) determine the effect of restatements and reclassifications  submitted by significant federal entities on related line items and notes  presented in the CFS, and (3) ensure that the budget statements included  in the CFS were prepared in a reliable manner. We also notified OMB of a  reporting requirement in OMB Circular No. A-136, Financial Reporting  Requirements, that may result in inconsistent and inaccurate reporting  of compliance with the Federal Financial Management Improvement Act  of 1996 (FFMIA).
subsections: section_title: Timely Submission of Audited Material Line Items for Significant Calendar Year-End Federal Entities
paragraphs: Treasury’s procedures were not effectively designed to reasonably assure  the timely submission of audited material line items for significant  calendar year-end federal entities. Significant federal entities are required  to submit a closing package to Treasury. The closing package  methodology is intended to link federal entities’ audited consolidated  department-level financial statements to certain statements of the CFS.  Chief financial officers (CFO) of significant federal entities are required to  verify the consistency of the closing package data with their respective  entities’ audited financial statements. In addition, entity auditors are  required to separately audit and report on the financial information in the  closing packages. For the three significant federal entities with a calendar  year-end of December 31, rather than a fiscal year-end of September 30,  the entity auditors are only required to audit and report on the financial  information in the closing packages that contributes material amounts to  line items in the CFS, as identified by Treasury.
Treasury’s standard operating procedure (SOP) entitled “Significant  Federal Entities Identification” includes procedures for Treasury to  annually assess significant calendar year-end entities’ financial statement  line items to determine which line items are material to the Financial  Report. Treasury’s assessments are based on prior year financial  information. The SOP also includes procedures for Treasury to notify  OMB of changes in previously identified material line items. OMB is  responsible for coordinating with each of the respective significant  calendar year-end federal entities to obtain audit assurance over  identified material line items through the closing package process.
During our audit of the fiscal year 2012 CFS, we found that Treasury’s  SOP did not include procedures to identify any material line items for  significant calendar year-end entities that become material to the CFS  during the current fiscal year, but that were not identified as material in  the analysis using prior year financial information. In addition, we found  that Treasury’s SOP did not reasonably assure that identified material line  items were audited as part of the significant calendar year-end entities’  closing package process in the year a line item becomes material,  including affording OMB adequate time to provide timely written  notification to the significant calendar year-end entities of the line items  that require audit coverage in the closing package process. Standards for  Internal Control in the Federal Government provides that control activities  are the policies, procedures, techniques, and mechanisms that enforce  management’s directives. The standards also provide that agencies are  to ensure accurate and timely recording of transactions. Without the  above-noted procedures, Treasury and OMB are unable to reasonably  assure that they have appropriate audit assurance over material financial  information for all significant calendar year-end entity line items.
To help provide reasonable assurance that Treasury timely receives  audited information for the material line items as part of the closing  package process for the significant calendar year-end entities, 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 material line items for significant  calendar year-end entities that become material to the CFS during the  current fiscal year but were not identified as material in the analysis using  prior year financial information and (2) obtaining audit assurance over  such identified material line items in the year they become material.
section_title: Analyzing Significant Federal Entities’ Restatements and Reclassifications
paragraphs: Treasury’s procedures were not effectively designed to determine the  effect of restatements and reclassifications submitted by significant  federal entities on related line items and notes presented in the CFS.  Changes to amounts shown in previously issued financial statements can  occur from restatements and reclassifications. A restatement is the  process of revising previously issued financial statements to reflect the  correction of an error in those financial statements. A reclassification is  the movement of a prior year amount in comparative financial statements  in order to conform to the current year presentation. Reclassifications can  be from one line item to another, such as from inventory to other assets,  or within components of a note to the financial statements. Significant  federal entities that restate or reclassify their financial statements or notes  are required to submit such changes to prior year amounts to Treasury as  part of the entities’ closing package.
Treasury’s SOP entitled “Prior Period Adjustments” includes procedures  for Treasury to analyze restatements and reclassifications submitted by  the significant federal entities. During the preparation of the fiscal year  2012 CFS, Treasury analyzed the effect, in the aggregate, of  restatements and reclassifications submitted by significant federal entities  on the net position and net cost reported in the CFS for the prior fiscal  year. Treasury determined that the effect was not material with respect to  prior fiscal year net position and net cost at the government-wide level  and, as such, adjustments to the prior year financial statements were not  needed. However, we found that Treasury’s SOP did not include  procedures to analyze whether the effect of federal entity-submitted  restatements and reclassifications on related line items and notes  presented in the CFS was material. Standards for Internal Control in the  Federal Government provides that control activities are the policies,  procedures, techniques, and mechanisms that enforce management’s  directives. The standards also provide that agencies are to ensure  accurate and timely recording of transactions. Although we did not find  any instances in our fiscal year 2012 audit, a material change in a line  item or note related to significant federal entities’ submitted restatements  and reclassifications could occur and not be identified, resulting in  inconsistent reporting between current and prior fiscal year amounts,  which may mislead readers of the Financial Report.
To reasonably assure the comparability of the CFS between the current  and prior fiscal year, we recommend that the Secretary of the Treasury  direct the Fiscal Assistant Secretary to enhance the SOP entitled “Prior  Period Adjustments” to include procedures for analyzing and assessing  the effects of significant federal entities’ restatements and  reclassifications on related line items and notes presented in the CFS.
section_title: Preparation of the Budget Statements Included in the CFS
paragraphs: Treasury’s procedures were not effectively designed to ensure that the  CFS budget statements, which consist of the Reconciliation of Net  Operating Cost and Unified Budget Deficit and Statement of Changes in  Cash Balance from Unified Budget and Other Activities, were prepared in  a reliable manner. Treasury uses a different approach for gathering  federal entity data for the CFS budget statements than that of the closing  package process used for the other CFS accrual-based financial  statements. Specifically, the two CFS budget statements are not required  statements at the federal entity level. As such, for these statements,  Treasury uses the data, including the unified budget deficit amount (the  difference between outlays and receipts) from its Central Summary  General Ledger system (CSGL), which is unaudited.
During our audit of the fiscal year 2012 CFS, we found that although  Treasury has made changes to its procedures and now documents its  process for preparing the CFS budget statements, Treasury had not  established and implemented effective processes and procedures to  reconcile (1) outlays and receipts as recorded in the CSGL to outlays and  receipts reported in the federal entities’ audited financial statements and  other financial data, (2) the operating results to the budget results, and   (3) changes in cash and other monetary assets to the budget results. We  identified several errors in the draft CFS budget statements that may  have been prevented had these reconciliations been effectively  completed. Further, both of the CFS budget statements had at least one  line item that included amounts that were unsupported but were needed  to make the statement balance. As a result, Treasury continues to be  unable to demonstrate that it has fully identified and reported all items  needed to adequately prepare the CFS budget statements.
The Federal Accounting Standards Advisory Board’s Statement of  Federal Financial Accounting Concepts No. 4, Intended Audience and  Qualitative Characteristics for the Consolidated Financial Report of the  United States Government, states that the consolidated financial report is  a general purpose report that is aggregated from agency reports and tells  users where to find information in other formats, both aggregated and  disaggregated, such as individual agency reports, agency websites, and  the President’s Budget. Until Treasury is able to prepare the CFS budget  statements in a manner that is fully consistent with the financial  information from significant federal entities’ audited financial statements,  the CFS budget statements may not be reliable.
To improve the reliability of the information presented in the CFS budget  statements, we recommend that the Secretary of the Treasury direct the  Fiscal Assistant Secretary, working in coordination with the Controller of  OMB’s Office of Federal Financial Management, to establish and  implement effective procedures for (1) reporting amounts in the CFS  budget statements that are fully consistent with the underlying information  in significant federal entities’ audited financial statements and other  financial data and (2) identifying and reporting all items needed to prepare  the CFS budget statements.
section_title: OMB’s FFMIA Reporting Requirement
paragraphs: During our audit of the fiscal year 2012 CFS, we notified OMB of a  reporting requirement in OMB Circular No. A-136 that may result in  inconsistent and inaccurate reporting of compliance with FFMIA. Under  FFMIA, both CFO Act entities and their auditors are required to make an  annual determination as to whether an entity’s financial management  systems substantially comply with (1) federal financial management  systems requirements, (2) applicable federal accounting standards, and  (3) the U.S. Standard General Ledger at the transaction level. Consistent  with the act, OMB Circular No. A-136 requires the CFO Act entities to  report annually on their determination, as well as their auditors’  determination, of compliance with each of the three FFMIA requirements  in the Summary of Management Assurances table in their respective  annual financial reports or performance and accountability reports.  However, the circular also requires the CFO Act entities to report on  “overall substantial compliance”. The requirement to report such  information may create an appearance that the three separate system  requirements are not equally important, and result in inconsistent and  inaccurate reporting among entities and in the Management’s Discussion  and Analysis section of the Financial Report. In discussions with OMB  officials, they stated that OMB plans to resolve the matter by removing  the “overall substantial compliance” requirement in connection with  OMB’s ongoing efforts to revise the circular.
To help assure the consistency and clarity of FFMIA compliance reporting  in CFO Act entities’ annual financial reports or performance and  accountability reports and the Management’s Discussion and Analysis  section of the Financial Report, we recommend that the Director of OMB  ensure that OMB continues its efforts to remove the requirement for  reporting “overall substantial compliance” from OMB Circular No. A-136,  Financial Reporting Requirements.
section_title: Status of Recommendations from Prior Reports
paragraphs: Of our 48 recommendations from our prior reports regarding control  deficiencies in the CFS preparation process that were open at the end of  the fiscal year 2011 audit, we closed 17 recommendations during our  fiscal year 2012 audit. Of the 17 closed recommendations, we closed 7 as  a result of corrective actions taken by Treasury. We closed the other 10  recommendations, which were related to the CFS budget statements, by  making 2 new recommendations in this report that are better aligned with  the current status of the remaining internal control deficiencies associated  with the budget statements and that reflect certain actions taken by  Treasury. Thirty-one recommendations from our prior reports remained  open as of January 9, 2013, the date of our report on the audit of the  fiscal year 2012 CFS.
Appendix I summarizes the status as of January 9, 2013, of the 48 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 2013 CFS  audit.
section_title: Agency Comments and Our Evaluation
subsections: section_title: OMB Comments
paragraphs: In oral comments on a draft of this report, OMB generally concurred with  the findings and recommendations in this report. OMB also provided  technical comments, which were incorporated as appropriate.
section_title: Treasury Comments
paragraphs: In written comments on a draft of this report, which are reprinted in  appendix II, Treasury concurred with four of the five recommendations  and stated that it will consider the recommendation related to the  restatement and reclassification assessment. We continue to believe that  this assessment will help assure the comparability of the CFS between  the current and prior fiscal year.
To address the long-standing material weakness related to  intragovernmental transactions, Treasury stated that it is continuing to  develop the General Fund reporting entity to address the  intragovernmental elimination differences that occur when a federal entity  records the General Fund as a trading partner. Treasury is also working  with federal entities and the audit community to develop and strengthen  policy and guidance for reporting of intragovernmental transactions,  including a number of measures intended to enhance the identification,  resolution, and prevention of intragovernmental imbalances. In addition,  Treasury noted that it is continuing its efforts to reconcile the budget  deficit to federal entities’ audited financial statements for the compilation  of the two budget statements included in the CFS.
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 the Office of Management and Budget’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.
section_title: Appendix I: Status of Treasury’s and OMB’s Progress in Addressing GAO’s Prior Year Recommendations for Preparing the CFS
subsections: section_title: Count GAO-04-45 (results of the fiscal year 2002 audit) 1 02-4
paragraphs: No.
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. A Treasury task group  has developed the Schedule of  General Fund Authority and will  enter fiscal year 2013 General  Fund data via journal voucher  into the Government-wide  Financial Report System  (GFRS). In the interim, Treasury  provides agencies with selected  General Fund data on a  monthly basis to facilitate  reconciliation of agency  transactions with the General  Fund on a quarterly basis. In  addition, Treasury issued new  guidance in fiscal year 2013 for  recording intragovernmental  transactions and for resolving  material differences. In addition,  throughout fiscal year 2013,  Treasury will identify and  resolve, via communications to,  and assistance from, agencies,  material differences related to  fiduciary, benefits, buy/sell, and  transfer activity via quarterly  metrics and scorecard data to  assist the agencies in  identifying and mitigating root  causes for differences and to  implement both short- and long- term solutions.
Open.
section_title: Count 2
paragraphs: Recommendation  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.
Per Treasury and OMB   See the status of  recommendation No. 02-4.
Per GAO   Open.
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 of  recommendation No. 02-4.
Open.
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 include requests for  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  2013, Treasury will continue  working on guidance related to  intragovernmental capitalized  purchases that was begun  during fiscal year 2012. See the  status of recommendation No.  02-4.
Open.
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.
Treasury has taken certain  actions regarding the two CFS  budget statements to address  GAO’s past recommendations.  Treasury is committed to  continuing its efforts to address  the remaining control  deficiencies in this area.
Closed. Over the past few  years, Treasury has taken  certain actions to address  recommendations related to the  two CFS budget statements. To  provide recommendations that  are better aligned with the  remaining control deficiencies in  this area, we have (1) closed  this recommendation and   (2) included in this report under  “Preparation of the Budget  Statements Included in the  CFS” new recommendations for  corrective action.
section_title: Count 6
paragraphs: Recommendation  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.
Per Treasury and OMB   See the status of  recommendation No. 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  establish reporting materiality thresholds for  determining which agency financial statement  activities to collect and report at the  government-wide level to assist in ensuring  that the reconciliation statement is useful and  conveys meaningful information.
See the status of  recommendation No. 02-12.
Per GAO   Closed. Over the past few  years, Treasury has taken  certain actions to address  recommendations related to the  two CFS budget statements. To  provide recommendations that  are better aligned with the  remaining control deficiencies in  this area, we have (1) closed  this recommendation and   (2) included in this report under  “Preparation of the Budget  Statements Included in the  CFS” new recommendations for  corrective action.  Closed. Over the past few  years, Treasury has taken  certain actions to address  recommendations related to the  two CFS budget statements. To  provide recommendations that  are better aligned with the  remaining control deficiencies in  this area, we have (1) closed  this recommendation and   (2) included in this report under  “Preparation of the Budget  Statements Included in the  CFS” new recommendations for  corrective action.
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.
See the status of  recommendation No. 02-12.
Closed. Over the past few  years, Treasury has taken  certain actions to address  recommendations related to the  two CFS budget statements. To  provide recommendations that  are better aligned with the  remaining control deficiencies in  this area, we have (1) closed  this recommendation and   (2) included in this report under  “Preparation of the Budget  Statements Included in the  CFS” new recommendations for  corrective action.
section_title: Count 9
paragraphs: Recommendation  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.
Per Treasury and OMB   See the status of  recommendation No. 02-12.
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.
See the status of  recommendation No. 02-12.
Per GAO   Closed. Over the past few  years, Treasury has taken  certain actions to address  recommendations related to the  two CFS budget statements. To  provide recommendations that  are better aligned with the  remaining control deficiencies in  this area, we have (1) closed  this recommendation and   (2) included in this report under  “Preparation of the Budget  Statements Included in the  CFS” new recommendations for  corrective action.  Closed. Over the past few  years, Treasury has taken  certain actions to address  recommendations related to the  two CFS budget statements. To  provide recommendations that  are better aligned with the  remaining control deficiencies in  this area, we have (1) closed  this recommendation and   (2) included in this report under  “Preparation of the Budget  Statements Included in the  CFS” new recommendations for  corrective action.
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.
See the status of  recommendation No. 02-12.
Closed. Over the past few  years, Treasury has taken  certain actions to address  recommendations related to the  two CFS budget statements. To  provide recommendations that  are better aligned with the  remaining control deficiencies in  this area, we have (1) closed  this recommendation and   (2) included in this report under  “Preparation of the Budget  Statements Included in the  CFS” new recommendations for  corrective action.
section_title: Count 12
paragraphs: Recommendation  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.
Per Treasury and OMB   During fiscal year 2013,  Treasury will completely  document Treasury’s  assessment as to whether  entities are to be included or  excluded in the reporting entity  in accordance with the FASAB  criteria. As part of this  assessment, Treasury will also  take into account FASAB’s  Reporting Entity standard, once  it is finalized.
Per GAO   Open.
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.
During fiscal year 2013,  Treasury will work with certain  entities that do not currently  submit financial statement data  to ensure that financial  information relevant to the  defined reporting entity, in all  material respects, is submitted.
Open.
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.
Pending results of actions taken  pursuant to recommendation  Nos. 02-22 and 02-23.
Open.
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 2013,  Treasury will work with the  Department of Justice, OMB,  and GAO and the agencies to  determine if further changes in  policy and/or guidance (e.g.,  OMB Circular A-136) are  needed for all agencies to  provide the required information  regarding the expected  outcomes of legal cases in their  legal representations.
Open.
section_title: Count 16
paragraphs: Recommendation  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).
Per Treasury and OMB   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.
Per GAO   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.
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.
section_title: Count 18
paragraphs: Recommendation  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.
Per Treasury and OMB   See the status of  recommendation No. 02-37.
Per GAO   Open. See the status of  recommendation No. 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 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.
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.
section_title: Count 21
paragraphs: No.  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 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.
Per Treasury and OMB   This information continues to be  requested from federal  agencies for disclosure in the  CFS. Treasury, along with  OMB, will work with agencies to  improve the consistency of this  disclosure in the fiscal year  2013 CFS and will also monitor  the work of the FASAB task  force that is reviewing the  reporting for risk assumed.
Per GAO   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.
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.
See the status of  recommendation No. 02-12.
Closed. Over the past few  years, Treasury has taken  certain actions to address  recommendations related to the  two CFS budget statements. To  provide recommendations that  are better aligned with the  remaining control deficiencies in  this area, we have (1) closed  this recommendation and   (2) included in this report under  “Preparation of the Budget  Statements Included in the  CFS” new recommendations for  corrective action.
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 and certain  other executive branch federal agencies to  ensure that these federal agencies report or  disclose relevant criminal debt information in  conformity with GAAP in their financial  statements and have such information  subjected to audit.
During fiscal year 2013,  Treasury and OMB will assess  options as to what  methodologies or approaches to  be used for obtaining the  additional information needed  from the agencies.
Open.
section_title: Count 24
paragraphs: Recommendation  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.
Per Treasury and OMB   See the status of  recommendation No. 03-8.
Per GAO   Open.
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  financial statements.
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’  audited 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 (Statement  of Operations and Changes in  Net Position, Reconciliation of  Net Operating Cost and Unified  Budget Deficit, and Statement  of Changes in Cash Balance  from Unified Budget and Other  Activities) was fully consistent  with the underlying information  in the 35 significant federal  entities’ audited financial  statements and other financial  data. With regard to directly  linking the last two statements  to federal entities’ audited  financial statements and other  financial data, we have  incorporated this issue along  with other control deficiencies  related to the two CFS budget  statements into new  recommendations for corrective  action in this report under  “Preparation of the Budget  Statements Included in the  CFS.”
section_title: Count GAO-05-407 (results of the fiscal year 2004 audit) 26 04-3
paragraphs: No.
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 2013,  Treasury will fully implement  and enforce its procedures to  document communications with  the agencies in the supporting  documentation for journal  vouchers.
Open.
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 2012,  Treasury continued to make  improvements to its internal  control infrastructure. Treasury  updated and revised 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 during fiscal year 2013 to  determine its progress in  achieving a sound internal  control environment.
Open.
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 government-wide legal representation  letter.
Treasury, in coordination with  OMB and Justice, will work  during fiscal year 2013 to  establish effective processes  and procedures to require that  appropriate information  regarding litigation and claims is  included in the government- wide legal representation letter.
Open.
section_title: Count 29
paragraphs: Recommendation  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.
Per Treasury and OMB   The monitoring of  intragovernmental differences  and their resolution effort is  being significantly increased in  fiscal year 2013 via quarterly  intragovernmental metrics and  scorecard meetings with the  agencies. This expanded  monitoring and resolution effort  commenced during the first  quarter of fiscal year 2013 and  will continue throughout the  remaining quarters and at  yearend. The agencies will  provide corrective actions  based on these meetings.  Treasury will monitor their  corrective actions during the  remaining quarters and at  yearend with the ultimate goal  to reduce intragovernmental  differences to an immaterial  level.  In addition to this expanded  monitoring and resolution  activity, agencies can seek out  further resolution of their  differences via a dispute  resolution process.  See also the status of  recommendation No. 02-4.
Per GAO   Open.
The Secretary of the Treasury should direct  the Fiscal Assistant Secretary to enhance and  fully document all practices referred to in the  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.
See the status of  recommendation No. 02-12.
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 “Preparation of the  Budget Statements Included in  the CFS” new  recommendations for corrective  actions for the remaining  deficiencies.
section_title: Count 31
paragraphs: Recommendation  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’ Statements of Budgetary  Resources and the amounts included in the  computation of the budget deficit in the CFS.
Per Treasury and OMB   See the status of  recommendation No. 02-12.
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.
See the status of  recommendation No. 04-6.
Per GAO   Closed. Over the past few  years, Treasury has taken  certain actions to address  recommendations related to the  two CFS budget statements. To  provide recommendations that  are better aligned with the  remaining control deficiencies in  this area, we have (1) closed  this recommendation and   (2) included in this report under  “Preparation of the Budget  Statements Included in the  CFS” new recommendations for  corrective action.  Open.
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.
During fiscal year 2012,  Treasury obtained and utilized  third quarter information from  agencies, focusing on key  topics and issues to facilitate  year-end CFS preparation.  Treasury expects to expand the  use of third quarter information  in fiscal year 2013 to further  facilitate year-end compilation.
Open.
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  government-wide level when compiling the  CFS.
During fiscal year 2013,  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.
section_title: Count 35
paragraphs: Recommendation  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.
Per Treasury and OMB   During fiscal year 2012,  Treasury implemented 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.
Per GAO   Closed.
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  government-wide level.
During fiscal year 2012,  Treasury developed,  implemented, and documented  procedures for identifying,  analyzing, compiling, and  reporting all significant  accounting policies and related  party transactions at the  government-wide level.
Closed.
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 2013, Treasury will  fully 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.  .
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 implemented and  documented procedures for  assuring the accuracy of staff’s  work related to performing  analytical procedures.
Closed.
The Acting Director of OMB should 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 of  the United States Government (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.
OMB developed and  implemented written procedures  specifying the OMB review  process of the Financial Report.
Open. OMB’s written  procedures state that the Office  of Federal Financial  Management provides  certification that the Financial  Report was reviewed and  approved by OMB  management. However, these  procedures do not clearly  delineate the review and  approval roles and  responsibilities of designated  appropriate higher-level  officials, including the Controller  of OMB.
section_title: Count 40
paragraphs: Recommendation  The Secretary of the Treasury should direct  the Fiscal Assistant Secretary to revise and  implement Treasury’s procedures 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.
Per Treasury and OMB   During fiscal year 2012,  Treasury revised and  implemented its procedures  related to preparing the  Financial Report before they are  provided to GAO, including  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.
Per GAO   Closed.
The Secretary of the Treasury should 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.
During fiscal year 2013,  Treasury will identify complex  areas needing key federal entity  involvement and will obtain their  review of the Financial Report  related to their specific area  prior to the completion of the  first draft of the report.
Open.
The Secretary of the Treasury should direct  the Fiscal Assistant Secretary to establish a  mechanism to ensure that Treasury’s CFS  disclosure checklist is reviewed and approved  by the date in Treasury’s policies and  procedures.
During fiscal year 2012,  Treasury established a  mechanism to ensure that the  CFS disclosure checklist is  revised and approved by the  date in its policies and  procedures.
Closed.
The Secretary of the Treasury should direct  the Fiscal Assistant Secretary to revise the  SOP to include requirements for using the  CFS disclosure checklist to prepare the  format draft of the CFS and to update the  CFS disclosure checklist as necessary when  subsequent drafts of the CFS are prepared.
During fiscal year 2013,  Treasury will utilize the CFS  disclosure checklists for all  drafts of the CFS, including the  format draft.
Open.
The Secretary of the Treasury should 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.
During fiscal year 2012,  Treasury enhanced 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.
Closed.
section_title: Count 45
paragraphs: Recommendation  The Secretary of the Treasury should direct  the Fiscal Assistant Secretary to enhance the  Intragovernmental Reporting and Analysis  System (IRAS) validation procedures, at a  minimum, to include specific steps for testing  intragovernmental data of the administrator’s  assigned entity.
Per Treasury and OMB   During fiscal year 2012,  Treasury enhanced the IRAS  validation procedures to, among  other things, include specific  steps for testing  intragovernmental data of the  administrator’s assigned entity.
Per GAO   Closed.
The Secretary of the Treasury should direct  the Fiscal Assistant Secretary to 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.
During fiscal year 2013,  Treasury will complete and  document all steps in the  required IRAS validation  process prior to the distribution  of the IRAS reports.
Open.
The Secretary of the Treasury should 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 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.
Treasury will work with OMB to  assess an approach for  identifying new entities that  become significant to the  Financial Report during the  fiscal year.
Open.
The Secretary of the Treasury should 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 obtaining audited closing packages from  newly identified significant entities in the year  they become significant, including timely  written notification to newly identified  significant entities.
Treasury will work with OMB to  assess an approach for  obtaining timely audited closing  packages from these newly  identified entities in the fiscal  year that they become  significant to the Financial  Report.
Open.
The status of the recommendations listed in app. I is as of January 9, 2013, the date of our report on  the audit of the fiscal year 2012 CFS.
section_title: Appendix II: Comments from the Department of the Treasury