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1 1 (February 3, 2016)

handle is hein.crs/crsmthabezv0001 and id is 1 raw text is: CRS INSIGHT CFTC's Auditor Finds Material Error in FY2015 Financial Statements February 3, 2016 (IN10439) Related Author Rai Cnanarai ah Raj Gnanarajah, Analyst in Financial Economics (rgnanarajahC&,crs loc.gov, 7-2175) The Commodities Futures Trading Commission's (CFTC's) independent auditor, KPMG LLP, contends that CFTC understated its liabilities by $194 million in FY2015 and $212 million in FY2014. At issue is how CFTC has accounted for costs related to office space leases that span several years. The point of contention between KPMG and CFTC's management is whether only the current year lease expenses should be recognized on the financial statements or should the expenses related to the full term of the lease contracts be recognized. KPMG also found material weaknesses in .inter-nal control over financial reporting. The House Appropriations Subcommit n Agriculture is scheduled to hold a hearing on CFTC's budget on February 10, 2016. CFTC's FY2015 Audit Opinion and Management Response Based on the issues surrounding lease expenses, KPMG issued a qualified opinion on CFTC's financial statements for 2015 and 2014 instead of an unqualified opinion as it has in the previous years. The qualified opinion is based on how lease obligations are reported on CFTC's statements of budgetary resources and in the related notes (Notel10). An unqualified audit opinion communicates that the financial statements are presented fairly, in all material respects (meaning there are no significant issues). A qualified opinion communicates that the financial statements are materially mistatL Material misstatements of financial statements may arise for a n r f r , including * the appropriateness of the selected accounting policies; * the application of the selected accounting policies; and * the appropriateness of the financial statement presentation or the appropriateness of adequacy of disclosures in the financial statements. KPMG determined that all prior period financial statements audited by KPMG (2004-2008, 2010-2014) contained . CFTC's independent auditor for 2009 was Clifton Gunderson LLP. CFTC's management is responsible for preparing the financial statements; the auditor only expresses an opinion on the financial statements. In its 2015 Independent Auditors Renort, KPMG noted that except for the issues surrounding lease obligations, the financial statements are presented fairly in all material respects. CFTC's practice of entering into lease contracts and how they are reported, however, might be a potential violation of the Anti-Dficic (ADA, (31 U.S.C §1341(a)

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