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GAO-04-672R 1 (2004-05-12)

handle is hein.gao/gaocrptaqev0001 and id is 1 raw text is: SGAO Accountability * Integrity Reliability United States General Accounting Office Washington, DC 20548 May 12, 2004 Louise L. Roseman, Director Division of Reserve Bank Operations and Payment Systems Board of Governors of the Federal Reserve System Subject: Federal Reserve Banks: Areas for Improvement in Computer Controls Dear Ms. Roseman: In connection with fulfilling our requirement to audit the financial statements of the U.S. government,' we audited and reported on the Schedules of Federal Debt Managed by the Bureau of the Public Debt (BPD) for the fiscal years ended September 30, 2003 and 2002.' As part of these audits, we performed a review of the general and application computer controls over key financial systems maintained and operated by the Federal Reserve Banks (FRB) on behalf of the Department of the Treasury's BPD. Many of the FRBs perform fiscal agent services on behalf of the U.S. government, including BPD. The debt-related services primarily consist of issuing, servicing, and redeeming Treasury securities and processing secondary market securities transfers. In fiscal year 2003, the FRBs issued about $4.1 trillion in federal debt securities to the public, redeemed about $3.8 trillion of debt held by the public, and processed about $125 billion in interest payments on debt held by the public. FRBs maintain and operate key financial applications on behalf of BPD and an array of financial and information systems to process and reconcile monies disbursed and collected on behalf of BPD. The scope of our work for fiscal year 2003 included a review of the general and application computer controls over key financial systems maintained and operated by the FRBs on behalf of BPD and follow-up on unresolved vulnerabilities identified in prior years' audits of these systems. We use a risk-based and rotation approach for testing general computer controls. Each general control area is subjected to a full- scope review, including testing, at least once every 3 years. The computer control areas we review are defined in the Federal Information System Controls Audit '31 U.S.C. § 331(e) (2000). 'U.S. General Accounting Office, Financial Audit: Bureau of the Public Debt's Fiscal Years 2003 and 2002 Schedules of Federal Debt, GAO-04-177 (Washington, D.C.: Nov. 7, 2003). GAO-04-672R Computer Controls at FRBs Page 1

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