GAO-23-106707

UnitedStatesGovernmentAccountabilityOffice

ReporttoAgencyOfficials

August2023

U.S.

CONSOLIDATEDFINANCIALSTATEMENTS

Improvements

NeededinInternalControlsoverTreasuryandOMBPreparation

Processes

Highlightsof

GAO-23-106707

,areporttoagencyofficials

WhyGAODidThisStudy

TheSecretaryoftheTreasury,incoordinationwiththeDirectorofOMB,preparestheFinancialReportoftheUnitedStatesGovernment,whichincludestheCFS.SinceGAO’sfirstauditofthefiscalyear1997CFS,certainmaterialweaknessesandotherlimitationsonthescopeofitsworkhavepreventedGAOfromexpressinganopinionontheaccrual-basedconsolidatedfinancialstatements.Aspartofthefiscalyear2022CFSaudit,GAOidentifiedcontinuingmaterialweaknessesandothercontroldeficienciesintheprocessesusedtopreparetheCFS.

Theobjectivesofthisreportaretoprovide(1)detailsonnewcontroldeficienciesGAOidentifiedrelatedtotheprocessesTreasuryusedtopreparetheCFS,alongwithrelatedrecommendations,and(2)thestatusofcorrectiveactionsthatTreasury,incoordinationwithOMB,hastakentoaddressGAO’spriorrecommendationsrelatedtotheprocessesusedtopreparetheCFSthatremainedopenasofthecompletionofGAO’sauditofthefiscalyear2021CFS.

WhatGAORecommends

GAOismakingfivenewrecommendationstoTreasurytoaddressthecontroldeficienciesidentifiedduringthefiscalyear2022CFSaudit.IncommentingonGAO’sdraftreport,Treasuryconcurredwiththefivenewrecommendationsandnoteditsongoingcommitmenttoimprovingfederalfinancialreporting.OMBgenerallyagreedwiththedraftreportandnoteditscontinuingcommitmenttoachievingsoundfinancialmanagementacrossthefederalgovernment.

View

GAO-23-106707

.Formoreinformation,contactDawnB.Simpsonat(202)512-3406or

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August2023

U.S.CONSOLIDATEDFINANCIAL

STATEMENTS

ImprovementsNeededinInternalControlsoverTreasuryandOMBPreparationProcesses

WhatGAOFound

GAO’sauditofthefiscalyear2022consolidatedfinancialstatementsoftheU.S.government(CFS)identifiedcontroldeficienciesintheprocessestheDepartmentoftheTreasury,incoordinationwiththeOfficeofManagementandBudget(OMB),usedtopreparetheCFS.Thesecontroldeficienciescontributedtomaterialweaknessesininternalcontrolthatinvolvethefederalgovernment’sinabilityto

?adequatelyaccountforintragovernmentalactivityandbalancesbetweenfederalentities;

?reasonablyassurethattheconsolidatedfinancialstatementsare

(1)consistentwiththeunderlyingauditedentities’financialstatements,

(2)properlybalanced,and(3)inaccordancewithU.S.generallyacceptedaccountingprinciples(U.S.GAAP);and

?reasonablyassurethattheinformationinthe(1)ReconciliationsofNetOperatingCostandBudgetDeficitand(2)StatementsofChangesinCashBalancefromBudgetandOtherActivitiesiscomplete,properlysupported,andconsistentwiththeunderlyinginformationintheauditedentities’financialstatementsandotherfinancialdata.

GAOfoundthatTreasury,aspartofaworkinggroup,hasmadesignificantprogressinaddressingthecontroldeficienciesrelatedtotreatiesandotherinternationalagreements(TIA)identifiedinpreviousyears.GAOclosedthefiverecommendationsrelatedtoTIAsandmadetwonewTIArecommendationsinthisreportthatarebetteralignedwiththecurrentstatusoftheremainingcontroldeficienciesrelatedtoTIAs.

GAOalsoidentifiedtwonewcontroldeficienciesintheprocessesTreasuryusedtopreparetheCFS.

1.TreasurydidnotsufficientlyidentifyinformationsignificantcomponententitiessubmittedforinclusionintheCFSthatdidnotlinkdirectlytoinformationreportedintherespectiveentities’auditedfinancialstatements.

2.Treasurydidnotreasonablyassurethereliabilityofinformationusedfromsourcesotherthansignificantcomponententities’auditedfinancialstatementstopreparethesocialinsurancesectionsoftheCFS.

ThesedeficienciesincreasetheriskthatmaterialamountsanddisclosuresmaynotbepresentedintheCFSinaccordancewithU.S.GAAP.InadditiontothefiveclosedTIA-relatedrecommendations,Treasuryimplementedcorrectiveactionsthatresolvedoneotheropenrecommendation.Aspartofitsfiscalyear2023CFSaudit,GAOwillcontinuetomonitorthestatusofcorrectiveactionstoaddressthefivenewrecommendationsmadeinthisreportaswellasthenineopenrecommendationsfromprioryears.

UnitedStatesGovernmentAccountabilityOffice

Contents

Letter

ScopeandMethodology

ControlDeficienciesIdentifiedduringOurFiscalYear2022AuditStatusofRecommendationsfromPriorReports

Conclusions

AgencyComments

1

3

3

11

12

12

AppendixI

StatusofGAO’sPriorRecommendationsRelatedtotheProcessesUsedtoPreparetheCFS

14

AppendixII

CommentsfromtheDepartmentoftheTreasury

21

AppendixIII

GAOContactandStaffAcknowledgments

24

Table

Table1:StatusofGAO’sPriorRecommendationsRelatedtothe

ProcessesUsedtoPreparetheCFS14

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GAO-23-106707CFSPreparationProcesses

Abbreviations

CFS

consolidatedfinancialstatementsoftheU.S.government

CMS

CentersforMedicare&MedicaidServices

DI

DisabilityInsurance

EDA

entitydataanalysis

FinancialReport

FinancialReportoftheU.S.Government

FRD

FinancialReportsDivision

GeneralFund

GeneralFundoftheU.S.Government

GLID

GeneralLedgerandIntragovernmentalTransaction

Division

HHS

DepartmentofHealthandHumanServices

OASI

Old-AgeandSurvivorsInsurance

OMB

OfficeofManagementandBudget

RSI

RequiredSupplementaryInformation

SCSIA

StatementofChangesinSocialInsuranceAmounts

SFFAS

StatementofFederalFinancialAccountingStandards

SMI

SupplementaryMedicalInsurance

SOP

standardoperatingprocedure

SOSI

StatementofSocialInsurance

SSA

SocialSecurityAdministration

TIA

treatiesandotherinternationalagreements

U.S.GAAP

U.S.generallyacceptedaccountingprinciples

ThisisaworkoftheU.S.governmentandisnotsubjecttocopyrightprotectionintheUnitedStates.ThepublishedproductmaybereproducedanddistributedinitsentiretywithoutfurtherpermissionfromGAO.However,becausethisworkmaycontaincopyrightedimagesorothermaterial,permissionfromthecopyrightholdermaybenecessaryifyouwishtoreproducethismaterialseparately.

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GAO-23-106707CFSPreparationProcesses

Letter

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GAO-23-106707CFSPreparationProcesses

441GSt.N.W.

Washington,DC20548

August15,2023

TheHonorableJanetYellen

SecretaryoftheTreasury

TheHonorableShalandaYoung

Director

OfficeofManagementandBudget

InourFebruary2023reportontheresultsofourauditoftheconsolidatedfinancialstatementsoftheU.S.government(CFS)asofandforthefiscalyearsendedSeptember30,2022,and2021,

1

wedisclaimedanopiniononthefederalgovernment’saccrual-basedconsolidatedfinancialstatementsandonthesustainabilityfinancialstatements.SinceourfirstauditoftheCFS,forfiscalyear1997,certainmaterialweaknesses

2

ininternalcontroloverfinancialreportingandotherlimitationsonthescopeofourworkhaveresultedinconditionsthatpreventedusfromexpressinganopiniononthefederalgovernment’saccrual-basedconsolidatedfinancialstatements.

3

Wedescribedthesematerialweaknessesinour

1TheCFSasofandforthefiscalyearsendedSeptember30,2022,and2021,consistoftheaccrual-basedconsolidatedfinancialstatements(StatementsofNetCost;StatementsofOperationsandChangesinNetPosition;ReconciliationsofNetOperatingCostandBudgetDeficit;StatementsofChangesinCashBalancefromBudgetandOtherActivities;andBalanceSheets,includingtherelatednotestothesefinancialstatements)andthesustainabilityfinancialstatements(2022and2021StatementsofLong-TermFiscalProjections;2022,2021,2020,2019,and2018StatementsofSocialInsurance;and2022and2021StatementsofChangesinSocialInsuranceAmounts,includingtherelatednotestothesefinancialstatements).SeeGAO,FinancialAudit:FY2022andFY2021ConsolidatedFinancialStatementsoftheU.S.Government,

GAO-23-105837

(Washington,D.C.:Feb.16,2023).

2Amaterialweaknessisadeficiency,orcombinationofdeficiencies,ininternalcontroloverfinancialreporting,suchthatthereisareasonablepossibilitythatamaterialmisstatementoftheentity’sfinancialstatementswillnotbeprevented,ordetectedandcorrected,onatimelybasis.Adeficiencyininternalcontrolexistswhenthedesignoroperationofacontroldoesnotallowmanagementoremployees,inthenormalcourseofperformingtheirassignedfunctions,toprevent,ordetectandcorrect,misstatementsonatimelybasis.

3Wehavereportedthatsignificantuncertaintiespreventedusfromexpressinganopiniononthesustainabilityfinancialstatements(StatementsofSocialInsuranceforfiscalyears2010through2022andStatementsofLong-TermFiscalProjectionsforfiscalyears2015through2022).TheStatementsofSocialInsurancewerefirstpresentedforfiscalyear2006,andtheStatementsofLong-TermFiscalProjectionswerefirstpresentedforfiscalyear2015.

reportontheauditofthefiscalyear2022CFS.

4

Otherauditorsalsoreported,intheirauditreportsonindividualfederalentities’financialstatements,internalcontroldeficienciesrelatedtoseveralofthesematerialweaknessesalongwithrelatedrecommendations.

Severalofthematerialweaknesseswedescribedinourauditreportrelatedtothefederalgovernment’sprocessesusedtopreparetheCFS.

5

Suchmaterialweaknessesinvolvethefederalgovernment’sinabilityto

?adequatelyaccountforintragovernmentalactivityandbalancesbetweenfederalentities;

?reasonablyassurethattheconsolidatedfinancialstatementsare(1)consistentwiththeunderlyingauditedentities’financialstatements,

(2)properlybalanced,and(3)inaccordancewithU.S.generallyacceptedaccountingprinciples(U.S.GAAP);and

?reasonablyassurethattheinformationinthe(1)ReconciliationsofNetOperatingCostandBudgetDeficitand(2)StatementsofChangesinCashBalancefromBudgetandOtherActivitiesiscomplete,properlysupported,andconsistentwiththeunderlyinginformationintheauditedentities’financialstatementsandotherfinancialdata.

TheSecretaryoftheTreasury,incoordinationwiththeDirectoroftheOfficeofManagementandBudget(OMB),prepares,onbehalfofthefederalgovernment,theFinancialReportoftheUnitedStatesGovernment,whichincludestheCFS.

6

Theobjectivesofthismanagementreportaretoprovide

?detailedinformationoncontroldeficienciesidentifiedduringourfiscalyear2022auditthatrelatetotheprocessesusedtopreparetheCFS,alongwithrelatedrecommendations,and

4See

GAO-23-105837

,app.II.

5OurFebruary2023reportalsodiscussedmaterialweaknessesandscopelimitationsthatdidnotrelatetotheprocessesusedtopreparetheCFSbutpreventedusfromexpressinganopiniononthefederalgovernment’saccrual-basedconsolidatedfinancialstatements(see

GAO-23-105837

,app.II).

6TheGovernmentManagementReformActof1994hasrequiredthepreparationofthegovernment-widefinancialstatements,coveringtheexecutivebranchofthegovernment,beginningwithfinancialstatementspreparedforfiscalyear1997.See31U.S.C.§331(e).Theconsolidatedfinancialstatementsalsoincludethelegislativeandjudicialbranches.

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?thestatusofcorrectiveactionsthattheDepartmentoftheTreasuryandOMBhavetakentoaddressthe15recommendationsrelatingtotheprocessesusedtopreparetheCFSthatweredetailedinourpreviousreportsandremainedopenasofthecompletionofourfiscal

year2021audit.

7

Scopeand

Methodology

Aspartofourfiscalyear2022CFSaudit,weconsideredthefederalgovernment’sfinancialreportingproceduresandrelatedinternalcontrol.WedeterminedthestatusofcorrectiveactionsTreasuryandOMBhavetakentoaddressrecommendationsrelatingtotheirprocessestopreparetheCFSthatremainedopenasofthecompletionofourfiscalyear2021audit(seeapp.I).AfulldiscussionofourscopeandmethodologyisincludedinourFebruary2023reportontheauditofthefiscalyear2022CFS.

8

Wehavecommunicatedthestatusofeachoftherecommendationsdiscussedinthisreportwithyourstaff.WeperformedourauditinaccordancewithU.S.generallyacceptedgovernmentauditingstandards.Webelievethatourauditprovidesareasonablebasisforourfindingsandrecommendationsinthisreport.

Duringourauditofthefiscalyear2022CFS,wefoundthatTreasury,aspartofaworkinggroup,hasmadesignificantprogressinaddressingthecontroldeficienciesrelatedtotreatiesandotherinternationalagreements(TIA)identifiedinpreviousyears.WeupdatedthedescriptionoftheremainingcontroldeficienciesrelatedtoTIAs.

WealsoidentifiedtwonewcontroldeficienciesinTreasury’sprocessesusedtopreparetheCFS.Specifically,wefoundthefollowing:

ControlDeficiencies

IdentifiedduringOur

FiscalYear2022

Audit

1.TreasurydidnotsufficientlyidentifyinformationsignificantcomponententitiessubmittedforinclusionintheCFSthatdidnotlinkdirectlytoinformationreportedintherespectiveentities’auditedfinancialstatements.

9

2.Treasurydidnotreasonablyassurethereliabilityofinformationusedfromsourcesotherthansignificantcomponententities’audited

7GAO,ManagementReport:ImprovementsNeededintheControlsovertheProcessesTreasuryandOMBUsedtoPreparetheU.S.ConsolidatedFinancialStatements,

GAO-22-105851

(Washington,D.C.:Aug.16,2022).

8GAO-23-105837

.

9Significantcomponententitiesconsistofthe24ChiefFinancialOfficersActagenciesand16additionalentitiesTreasuryidentifiedthatarematerialtotheCFS.AfederalentityisgenerallydeemedmaterialtotheCFSifitcontributesmorethan$1billiontoaCFSlineitemornotedisclosure.

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financialstatementstopreparethesocialinsurancesectionsofthe

CFS.

Reportingof

ContingenciesRelatedtoTreatiesandOtherInternationalAgreements

Duringourfiscalyear2022CFSaudit,wefoundthatTreasurycontinuedtobeunabletoreasonablyassurethatcontingenciesrelatedtoTIAsarereportedintheCFSinaccordancewithU.S.GAAP.Treasury,aspartofaworkinggroupwiththeDepartmentofState,hastakencertainactionsoverthepastfewyearstoaddresscontroldeficienciesweidentifiedinthisareaduringourfiscalyear2002CFSaudit.

10

Inthisreport,wesummarizetheactionstakenandprovideanupdateddescriptionoftheremainingcontroldeficiencies.

TIAsmayleadtocontingenciesthatshouldberecognizedordisclosedintheCFS,

11

inaccordancewiththeFederalAccountingStandardsAdvisoryBoard’sStatementofFederalFinancialAccountingStandard(SFFAS)5,AccountingforLiabilitiesoftheFederalGovernment,asamendedbySFFAS12,RecognitionofContingentLiabilitiesArisingfromLitigation.Acontingencyisanexistingcondition,situation,orsetofcircumstancesinvolvinguncertaintyastopossiblegainorlosstoanentitythatwillultimatelyberesolvedwhenoneormorefutureeventsoccurorfailtooccur.Thelikelihoodthattherewillbealoss,alongwiththeabilitytoreasonablyestimatethepotentialloss,determinestheappropriatefinancialreportingtreatment.

InresponsetoourfiverecommendationsrelatingtoTIAsfromourfiscalyear2002CFSaudit,TreasuryissuedguidancetofederalentitiesandformedaworkinggroupthatdevelopedamultiphasemethodologytoreviewTIAs.

12

ThisincludedTreasuryaddingasectiontoitsTreasuryFinancialManualprovidingguidancetofederalentitiesforidentifyingandreportingTIAs.

10GAO,FinancialAudit:ProcessforPreparingtheConsolidatedFinancialStatementsoftheU.S.GovernmentNeedsImprovement,

GAO-04-45

(Washington,D.C.:Oct.30,2003).

11Theterm“recognize”meanstoformallyrecordorincorporateanitemintothefinancialstatementsofanentityasanasset,liability,revenue,expense,etc.Theterm“disclose”meanstoreportinformationinnotesornarrativethatisregardedasintegraltothefinancialstatements.

12InOctober2019,TreasuryformedtheChiefFinancialOfficersCouncil’sTreatiesWorkingGroup(theworkinggroup),alongwithStateandotherfederalentitiesthathavesignificantTIAs.

InreviewingthecorrectiveactionsTreasuryhastakentoaddresscontroldeficiencieswepreviouslyidentifiedrelatedtoTIAs,wedeterminedthatsignificantprogresswasmadeinaddressingmanyaspectsoftheissuesweoriginallyidentified.Forexample,infiscalyears2020and2021,theworkinggroupanalyzedState-determinedcategoriesofTIAsthroughOctober31,2019,toidentifythosecategorieslikelytohavepotentialcontingencies.Infiscalyear2022,theworkinggroupthenperformedreviewsofselectedTIAsintheidentifiedcategoriestodeterminewhethercontingenciesexisted.

However,thecorrectiveactionsdidnotincludedevelopingandimplementingpoliciesandproceduresfor(1)identifying,atthetimetheTIAsenterintoforce,thosewithcontingenciesor(2)monitoringTIAswithidentifiedcontingenciesforeventsthatmaygiverisetorecognitionofacontingentliabilityordisclosureofacontingency.Thecorrectiveactionsalsodidnotincludedevelopingandimplementingpoliciesandproceduresfordetermining,incoordinationwithapplicablefederalentities,inwhichreportingentity’sfinancialstatementstoreportanyidentifiedcontingencies.Wenotedduringourfiscalyear2022CFSauditthattheworkinggroupdidnotreviewanyTIAsissuedorrecordedafterOctober31,2019.Subsequenttotheendofourfiscalyear2022audit,theworkinggroupreviewedselectedtreatiesrecordedfromNovember1,2019,throughSeptember30,2022.

SFFAS5,AccountingforLiabilitiesoftheFederalGovernment,asamendedbySFFAS12,RecognitionofContingentLiabilitiesArisingfromLitigation,establishesstandardsforcontingenciesinthefederalgovernment.Inaddition,StandardsforInternalControlintheFederalGovernmentstatesthatmanagementshoulddesigncontrolactivitiestoachieveobjectivesandrespondtorisks.Financialreportingobjectivesincludegatheringandcommunicatinginformationmanagementneedstosupportfinancialstatementpreparation.Thestandardsfurtherstatethatmanagementshouldimplementcontrolactivitiesthroughpolicies.Thepoliciesaretobedocumentedintheappropriatelevelofdetailtoallowforeffectivemanagementreview.

13

13GAO,StandardsforInternalControlintheFederalGovernment,

GAO-14-704G

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

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Recommendationsfor

ExecutiveAction

WithoutsufficientpoliciesandproceduresoverTIAs,TreasuryisatincreasedriskthatmaterialamountsanddisclosuresmaynotbepresentedintheCFSinaccordancewithU.S.GAAP.

TheFiscalAssistantSecretaryoftheTreasury,incoordinationwiththeworkinggroup,shoulddevelopandimplementpoliciesandproceduresforidentifying,atthetimeofentryintoforce,theTIAsthathavecontingencies,andformonitoringtheTIAsthathavecontingenciesforeventsthatmaygiverisetotherecognitionofacontingentliabilityordisclosureofacontingency.(Recommendation1)

TheFiscalAssistantSecretaryoftheTreasury,incoordinationwiththeworkinggroup,shoulddevelopandimplementpoliciesandproceduresfordetermining,incoordinationwithapplicablefederalentities,inwhichreportingentity’sfinancialstatementstoreportanyidentifiedcontingencies.(Recommendation2)

EntityDataAnalysis

Procedures

Duringourfiscalyear2022CFSaudit,wefoundthatTreasury’sGeneralLedgerandIntragovernmentalTransactionDivision(GLID),aspartofitsentitydataanalysis(EDA)process,didnotsufficientlyidentifyinformationsignificantcomponententitiessubmittedthatdidnotlinkdirectlytoinformationreportedintherespectiveentities’auditedfinancialstatements.Forexample:

?FortheStatementofOperationsandChangesinNetPosition,GLIDdidnotidentifyanddocumentthatsomerevenueamountsincludedinsignificantcomponententitydatasubmissionsfortheCFSdidnotlinktotheamountsreportedintheentities’auditedfinancialstatements.Specifically,weidentified10significantcomponententitiesforwhichrevenueamountsincludedinentitydatasubmissionscouldnotbelinkedtoentityauditedfinancialstatementsorrelatednoteinformation.

?FortheBalanceSheet,GLIDdidnotsufficientlyidentifyanddocumentwhethersomeamountsincludedinsignificantcomponententitydatasubmissions,suchasAdvancesandPrepaymentsandBenefitsDueandPayable,agreedtotheamountsreportedinthe

entities’auditedfinancialstatements.Thoughsomeofthisinformationwasincludedintheentities’relatednotestothefinancialstatementsasprovidedinOMBCircularNo.A-136,FinancialReporting

Requirements,

14

GLIDdidnotincludesufficientsupportinitsEDAdocumentationtolinktheinformationtotheentities’financialstatements.Also,GLIDdidnotidentifyanddocumentthatTreasury’sdepartmentalfinancialstatementsdidnotseparatelyreportAdvancesandPrepayments,BenefitsDueandPayable,andAccountsPayableonitsBalanceSheetordisclosethebreakoutoftheseamountsinthenotestoitsfinancialstatements.

?FortheStatementofNetCost,GLIDdidnotconsistentlyidentifyanddocumentwhensignificantcomponententitiesdidnotseparatelyreportsubcomponentsofnetcost,suchasgrosscostandearnedrevenue,tosupportthebreakoutofnetcostsubcomponentsintheCFS.

ToreasonablyassurethatinformationreportedintheCFSisreliable,GLIDestablishedanEDAprocesstoverifythatdatasignificantcomponententitiessubmittedforinclusionintheCFSarebasedonauditedentityfinancialstatements.Forthisprocess,GLIDaccountantsdeterminewhethertheentity-submitteddatausedintheCFSconsolidationprocesslinktotheentities’auditedfinancialstatementlineitems.Treasury’sFinancialReportsDivision(FRD)alsoperformsanannualanalysistodeterminetheaggregateimpactontheCFSofamountsnotobtainedfromsignificantcomponententityauditedfinancialstatements.Thefiscalyear2022aggregateanalysisconsideredsomeunauditedamountsincludedintheCFS,suchasjournalentriesthatFRDprocessedthatwerenotbasedonauditedfinancialdata.

However,inourfiscalyear2022CFSaudit,wefoundthatGLID’sEDAstandardoperatingprocedure(SOP)didnotincludedetailedstepsforaccountantstorecordtheresultsoftheirEDAreviews.Forexample,wefoundthefollowing:

?AccountantsincludedcheckmarksintheEDAdocumentationbesideamountsthatsignificantcomponententitiessubmittedforinclusionintheCFS,butasnotedintheexamplesabove,theamountswithcheckmarkswerenotalwayssupportedbyinformationreportedinthe

14OMBCircularNo.A-136issuedJune3,2022,sectionII.3.2.2,BalanceSheetTemplate,states“ifalinetitleisimmaterialtoanentity,theentitymustdooneofthefollowing:(1)usethenumberedlinetitlewiththeimmaterialamountpresented,(2)presenttheimmaterialamountinthenumberedlinetitleasadiscretecomponentunderOtherAssetsorOtherLiabilities,or(3)disclosetheamountforthenumberedlinetitleunderOtherAssetsorOtherLiabilities.”

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significantcomponententityauditedfinancialstatements.Asaresult,itwasnotclearwhatthecheckmarksindicated.

?TheSOPdidnotincludeproceduresforaccountantsto(1)notatewhenentityfinancialstatementamountsneededtobecombinedor

(2)includeexcerptsfromentitynotedisclosuresusedinlinkingamountstosignificantcomponententities’auditedfinancialstatements.

?AlthoughtheSOPrequiredaccountantstopreparecorrectingjournalvouchersformaterialdifferencesidentified,theSOPdidnotincludedetailedstepsfordocumentingallamountsthatdidnotlinktosignificantcomponententities’auditedfinancialstatements.

Inaddition,theSOPdidnotrequireconsiderationofunsupportedamountsidentifiedintheEDAprocessintheaggregateanalysistodeterminetheimpactoftheseamountsontheCFS.

StatementofFederalFinancialAccountingConcepts4,IntendedAudienceandQualitativeCharacteristicsfortheConsolidatedFinancialReportoftheUnitedStatesGovernment,statesthattheconsolidatedfinancialreportshouldbeageneralpurposereportthatisaggregatedfromagencyreports.Additionally,StandardsforInternalControlintheFederalGovernmentstatesthatmanagementshoulddesigncontrolactivitiestoachieveobjectivesandrespondtorisks.Financialreportingobjectivesin