OIG Transmittal

Bureau of the Comptroller and Global Financial Services
Report
November 21, 2017


 

 

Office of Inspector General Letterhead.

November 15, 2017

INFORMATION MEMO FOR THE SECRETARY
FROM: OIG – Steve A. LinickInitials of Steve A. Linick.
SUBJECT: Independent Auditor’s Report on the U.S. Department of State 2017 and 2016
Financial Statements (AUD-FM-18-05)

An independent external auditor, Kearney & Company, P.C., was engaged to audit the consolidated financial statements of the U.S. Department of State (Department) as of September 30, 2017 and 2016, and for the years then ended; to provide a report on internal control over financial reporting; to report on whether the Department’s financial management systems substantially complied with the requirements of the Federal Financial Management Improvement Act of 1996 (FFMIA); and to report any reportable noncompliance with laws, regulations, contracts, and grant agreements it tested. The contract required that the audit be performed in accordance with U.S. generally accepted government auditing standards and Office of Management and Budget audit guidance.

In its audit of the Department’s 2017 and 2016 financial statements, Kearney & Company found

  • the consolidated financial statements present fairly, in all material respects, the financial position of the Department as of September 30, 2017 and 2016, and its net cost of operations, changes in net position, and budgetary resources for the years then ended, in conformity with accounting principles generally accepted in the United States of America;
  • no material weaknesses1 in internal control over financial reporting;
  • four significant deficiencies2 in internal control, specifically in the areas of property and equipment, budgetary accounting, validity and accuracy of unliquidated obligations, and information technology; and
  • three instances of reportable noncompliance with laws, regulations, contracts, and grant agreements tested, specifically the Antideficiency Act, the Prompt Payment Act, and FFMIA.

Kearney & Company is responsible for the attached auditor’s report, which includes the Independent Auditor’s Report, the Report on Internal Control Over Financial Reporting, and the Report on Compliance With Laws, Regulations, Contracts, and Grant Agreements, dated November 15, 2017, and the conclusions expressed in the report. The Office of Inspector General (OIG) does not express an opinion on the Department’s financial statements or conclusions on internal control over financial reporting and compliance with laws, regulations, contracts, and grant agreements, including whether the Department’s financial management systems substantially complied with FFMIA.

Comments on the auditor’s report from the Bureau of the Comptroller and Global Financial Services are attached to the report.

OIG appreciates the cooperation extended to it and Kearney & Company by Department managers and staff during the conduct of this audit.

Attachment:
As stated


1 A material weakness is a deficiency, or combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected, on a timely basis. (back to text)

2 A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness yet important enough to merit attention by those charged with governance. (back to text)