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Diplomacy in Action

Financial Highlights


Bureau of Resource Management
Report
February 24, 2012

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The Department of State and USAID Agency Financial Reports (AFR) disclose the agencies’ financial status and provide transparency and accountability to the American people, Congress, and the President—including both successes and challenges. The reports provide a snapshot in time of the immense financial work undertaken by each agency’s financial personnel to exercise good stewardship and management of public funds. The AFRs present each agency’s audited financial statements and footnotes, Management’s Discussion and Analysis, and performance and other required information.

Below are summary highlights of the AFRs for both the Department of State and USAID for FY 2011. Following the highlights are tables containing key financial information on each agency’s assets, liabilities, and net position in a Balance Sheet Summary; information on each agency’s net cost of operations in a Net Cost of Operations Summary; and available resources in a Budgetary Resources Summary. Both agencies’ AFRs are posted online. For a complete Department of State AFR, see the Agency Financial Report for Fiscal Year 2011. For the USAID AFR, see the Fiscal Year 2011 Agency Financial Report.

Department of State: The scale and complexity of the Department’s activities and corresponding financial management requirements continued to grow in the face of a wide range of global and regional issues. Financial staff operates in more than 270 locations, 180 countries, and in over 135 currencies and foreign languages, often in the most challenging environments. For FY 2011, the Department again worked with unity of purpose to build on past successes and make improvements to our financial management processes and activities worldwide. Staff focused on meeting the challenges of addressing audit and compliance requirements, managing and prioritizing improvements in the financial processes and systems, supporting the President’s Accountable Governance Initiative and meeting day-to-day financial management support obligations.

The external audit has become a year-around process and focus as the Department strives to deliver meaningful financial statements by November 15 and demonstrate the Department’s strong financial management practices. The Department’s Independent Auditor (IA) issued an unqualified opinion on time for the Department’s FY 2011 Combined Statement of Budgetary Resources and Consolidated Statement of Net Cost, and a qualified opinion for the Consolidated Balance Sheet and Consolidated Statement of Changes in Net Position. The qualified opinion was due to a material weakness in the reporting of after-employment benefits for locally employed overseas staff. Specifically, accounting for the financial aspects of these complex compensation plans throughout the world presents unique challenges, and there was insufficient time for the IA to perform auditing procedures and satisfy themselves as to the accuracy of these amounts in time to meet the November 15, 2011 deadline.

The Department maintains a robust system of internal controls overseen by senior leadership. A material weakness was identified by the Department regarding the effective oversight of the Summer Work Travel Program for students traveling to the United States for temporary and seasonal employment during their academic breaks. Except for this material weakness, and the aforementioned material weakness in financial reporting of after-employment benefits for locally employed overseas staff, the Secretary was able to provide assurance for the Department’s internal controls in accordance with the Federal Managers’ Financial Integrity Act.

USAID: The agency received an unqualified opinion for the ninth consecutive year from the OIG, affirming that USAID’s financial statements for year-end September 30, 2011 were presented fairly in all material aspects and prepared in conformance with Generally Accepted Accounting Principles. The Independent Auditor’s Report is included in the FY 2011 Agency Financial Report (AFR). The auditor identified one material weakness related to unreconciled differences between the Agency’s Fund Balance and its cash balance reported by the U.S. Treasury, and six significant deficiencies. Notable progress was made in resolving these findings during FY 2011, and corrective action plans are in place to resolve these issues and related audit recommendations by September 30, 2012.

The following summarized financial statement information is based on the same underlying data as that which USAID presented in the FY 2011 AFR. This condensed information provides a high level analysis of each agency’s financial performance and should not be viewed as a substitute for the financial statements and notes contained in the AFR.

 




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