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GAO-13-419R 1 (2013-05-09)

handle is hein.gao/gaobachep0001 and id is 1 raw text is: i AGA ~GA 0 .Accauntability *integrity 'Rdtqhility United States Government Accountability Office Washington, DC 20548 May 9, 2013 Dave Caperton Special Counsel, Legal Division Board of Governors of the Federal Reserve System Subject: Federal Reserve Banks: Areas for Improvement in Information Systems Controls Dear Mr. Caperton: In connection with fulfilling our requirement to audit 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 Public Debt (BPD) for the fiscal years ended September 30, 2012 and 201 1.2 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 audit of the Schedules of Federal Debt for the fiscal years ended September 30, 2012 and 2011, we concluded that BPD maintained, in all material respects, effective internal control over financial reporting relevant to the Schedule of Federal Debt as of September 30, 2012, that provided reasonable assurance that misstatements, losses, or noncompliance material in relation to the Schedule of Federal Debt would be prevented, or detected and corrected, on a timely basis. However, we identified information systems deficiencies affecting internal control over financial reporting which, while we do not consider them individually or collectively to be either material weaknesses or significant deficiencies, nevertheless warrant the attention and action of management.3 This report presents the deficiencies we identified during our fiscal year 2012 testing of information systems controls over key financial systems maintained and operated by FRBs 131 U.S.C. § 331 (e)(2). Federal debt and related activity and balances managed by BPD during fiscal years 2012 and 2011 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 Public Debt's Fiscal Years 2012 and 2011 Schedules of Federal Debt, GAO-13-114 (Washington, D.C.: Nov. 8,2012). 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-13-419R Information Systems Controls at FRBs Page 1

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