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GAO-06-768R 1 (2006-06-29)

handle is hein.gao/gaocrptatop0001 and id is 1 raw text is: SGAO Accountability * Integrity * Reliability United States Government Accountability Office Washington, DC 20548 June 29, 2006 Inspectors General Subject: Financial Audit: Guidance for Auditing Federal Employee and Veteran Benefit Payable Actuarial Estimates In our role as principal auditor of the consolidated financial statements of the U.S. government (CFS), we plan to use the work of the inspectors general and contracted independent public accountants who audit the agency-level financial statements. The development of the joint PCIE/GAO Financial Audit Manual (FAM) has provided a common framework and methodology for federal financial statement auditing. Adherence to the FAM will enable us to readily review the work of other auditors as a basis for using that work under auditing standards. We want to all be on the same page so that we are in the position to use your work. Certain CFS line items that will be subject to our concurrent review because of their significance, such as the federal employee and veteran benefits payable line item, involve federal agencies' significant actuarial estimations. Statement on Auditing Standards (SAS) No. 57, Auditing Accounting Estimates applies to such estimations. In addition, Statement of Federal Financial Accounting Standard (SFFAS) No. 5 requires that federal agencies disclose specific information in their financial statements for pensions, other retirement benefits, and other postemployment benefits. Additional related audit guidance was provided in November 2004 when the American Institute of Certified Public Accountants (AICPA) issued its Statement of Position (SOP) 04-1, Auditing the Statement of Social Insurance,1 effective for periods beginning after September 30, 2005. This audit guidance discusses the auditor's responsibility under SAS No. 57 and includes specific illustrative control and audit procedures that are applicable to auditing actuarial estimates to achieve SAS No. 57 objectives. Actuarial estimates for both social security and the federal employee and veteran benefit payable line item are developed by methods which calculate for the projection period covered by an actuarial valuation, the excess of (a) the present value of projected benefits of the group included in an actuarial valuation over (b) the actuarial value of program-related assets. Although the SOP 04-1 was specifically developed for use in auditing federal agencies' statements of social insurance, we consider the internal control and audit procedures discussed in SOP 04-1 to be appropriate for auditing the significant actuarial estimates in the federal employee and veteran benefit payable line item as well. Beginning in fiscal year 2006, 1This document is available from the AICPA at ht as://wwy2biz.con (last visited May 22, 2006). Once at this site, search on SOP 04-1. GAO-06-768R Guidance for Auditing Federal Employee and Veteran Benefits Payable

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