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Financial Introduction


FY 2007 Department of State/USAID Joint Highlights
Bureau of Resource Management
February 2008
Report
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Transparent reporting on our stewardship and management of public funds is an integral part of the Department of State and USAID's collaborative efforts to improve accountability to our customers, constituents, and the public. The following is a summary of both the Department of State and USAID's Agency Financial Reports (AFR) for FY 2007. The AFR is one in a series of reports prepared to convey financial and management information in a way that is useful for a technical reader, while this Highlights Report is prepared for a reader with little technical background.

The following pages include financial information on each agency's assets, liabilities, and net position in a Condensed Balance Sheet, cost of operations in a Net Cost Summary, and available resources in a Budgetary Resources Summary. In addition, summary financial information from each agency's FY 2007 principal financial statements is included. Both agencies' AFRs are posted online. For a complete version of State's AFR see http://www.state.gov/s/d/rm/rls/perfrpt/2007/ and for USAID's AFR see http://www.usaid.gov/policy/afr07/. The AFRs include statements from the Secretary of State, the USAID Administrator, and both Chief Financial Officers (CFOs).

In the 17 years since the enactment of the Chief Financial Officer's Act, there has been a clear cultural change in how financial management is viewed and carried out and a recognition of the value and need for sound financial management. Both the Department of State and USAID have CFOs who bring to the job proven track records in financial management and who work to achieve the same strategic goals.

DEPARTMENT OF STATE: The Department of State's financial statements are audited by the independent accounting firm of Leonard G. Birnbaum and Company, LLP. Working closely with the Independent Auditor, the Department has a proud tradition of unqualified opinions on its financial statements for the past decade. For the Department's financial statements for the year ending September 30, 2007, the Independent Auditor was unable to express an opinion because of limitations on the scope of their work. Due to complexities involved with installing a new core financial system, the Department was unable to fully provide supporting evidential documentation in a timely manner and the Independent Auditor was unable to perform other auditing procedures to satisfy themselves as to the accuracy of the financial statements in time to meet the November 15, 2007, deadline imposed by OMB for issuing the report. The Independent Auditor reported two material weaknesses: one related to the management of unliquidated obligations, which the Department continues to address, and the other related to the accounting for personal property. Management respectfully disagreed with the second material weakness on accounting for personal property, because of the progress made by the Department in addressing the causes of the weakness that had been reported as a significant deficiency during the FY 2006 audit.

USAID: USAID's financial statements are audited by the agency's Office of the Inspector General (OIG). The OIG awarded USAID an unqualified opinion for the fifth consecutive year, and reported no material weaknesses. In addition, USAID completed all corrective actions related to accrual accounting and reporting - the one material weakness identified by the OIG during the FY 2006 audit.

 


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