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GAO-14-691R 1 (2014-06-18)

handle is hein.gao/gaobaaiak0001 and id is 1 raw text is: GAO U.S. GOVERNMENT ACCOUNTABILITY OFFICE 441 G St. N.W. Washington, DC 20548 June 18, 2014 Mr. David Caperton Special Counsel, Legal Division Board of Governors of the Federal Reserve System Management Report: Areas for Improvement in the Federal Reserve Banks' Information Systems Controls Dear Mr. Caperton: In connection with our audit of the consolidated financial statements of the U.S. government,1 we audited and reported on the Schedules of Federal Debt Managed by the Bureau of the Fiscal Service (Fiscal Service) for the fiscal years ended September 30, 2013, and 2012.2 As part of these audits, we performed a review of information systems controls over key financial systems maintained and operated by the Federal Reserve Banks (FRB) on behalf of the Department of the Treasury (Treasury) relevant to the Schedule of Federal Debt. As we reported in connection with our audits of the Schedules of Federal Debt for the fiscal years ended September 30, 2013, and 2012, although internal controls could be improved, Fiscal Service maintained, in all material respects, effective internal control over financial reporting relevant to the Schedule of Federal Debt as of September 30, 2013, based on criteria established under 31 U.S.C. § 3512(c), (d), commonly known as the Federal Managers' Financial Integrity Act (FMFIA). Those controls provided reasonable assurance that misstatements material in relation to the Schedule of Federal Debt would be prevented, or detected and corrected, on a timely basis. We identified a significant deficiency in Fiscal Service's internal control over financial reporting, which although not a material weakness, is important enough to merit the attention of those charged with governance of Fiscal Service.' This deficiency concerns information systems controls at Fiscal Service. While we identified deficiencies in information systems controls over key financial systems maintained and operated by FRBs on behalf of Treasury that are relevant to the Schedule of Federal Debt, such 131 U.S.C. § 331 (e)(2). Federal debt and related activity and balances managed by the Fiscal Service during fiscal years 2013 and 2012 were also significant to the consolidated financial statements of the Department of the Treasury (see 31 U.S.C. § 3515(b)). 2GAO, Financial Audit. Bureau of the Fiscal Service's Fiscal Years 2013 and 2012 Schedules of Federal Debt, GAO- 14-173 (Washington, D.C.: Dec. 12, 2013). 3A material weakness is a deficiency, or a 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. 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. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. GAO-14-691R Information Systems Controls at FRBs Page 1

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