Memorandum
U.S. Department of Transportation
Office of the Secretary of Transportation
Office of the Inspector General
Subject: ACTION: Quality Control Review of Audited Financial Statements for Fiscal Year 2006, Highway Trust Fund Report Number: QC-2007-008
Date: November 14, 2006
From: Calvin L. Scovel III
Inspector General
Reply to Attn. of: JA-20
To: The Secretary
The audit of the Highway Trust Fund (HTF) Financial Statements as of and for the year ended September 30, 2006, was completed by KPMG LLP of Washington, DC (see Attachment). We performed a quality control review of the audit work to ensure that it complied with applicable standards. These standards include the Chief Financial Officers Act; Generally Accepted Government Auditing Standards; and Office of Management and Budget (OMB) Bulletin 06-03, "Audit Requirements for Federal Financial Statements."
On August 17, 2006, OMB granted a waiver to the Department for not having to prepare comparative financial statements for fiscal years 2006 and 2005, as a result of legislative changes to the surface transportation reauthorization law. KPMG concluded that the consolidated financial statements presented fairly, in all material respects, the financial position of HTF as of September 30, 2006, and its net costs, changes in net position, budgetary resources, and reconciliations of net costs to budgetary obligations for the year then ended, in conformity with accounting principles generally accepted in the United States.
The report presented one material internal control weakness, three reportable conditions, and one instance of noncompliance with laws and regulations.
Material Weakness
- Financial Management, Reporting, and Oversight
Reportable Condition
- General Controls over Financial Management Systems
- Undelivered Orders
- Fund Balance with Treasury Reconciliation
Noncompliance with Laws and Regulations
- Federal Financial Management Improvement Act of 1996 (FFMIA)
KPMG made 21 recommendations for corrective action; we agree with them and, therefore, are making no additional recommendations. The Assistant Secretary for Budget and Programs/Chief Financial Officer concurred with the material weakness and reportable conditions; generally agreed with the recommendations; and planned to complete corrective actions. In accordance with DOT Order 8000.1C, the corrective actions taken in response to the recommendations are subject to follow-up.
In our opinion, the audit work performed by KPMG complied with applicable standards.
We appreciate the cooperation and assistance of representatives of the HTF agencies, the Office of Financial Management, and KPMG. If we can answer any questions, please call me at (202) 366-1959 or Rebecca C. Leng, Assistant Inspector General for Financial and Information Technology Audits, at (202) 366-1496.
Attachment
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