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entitled 'Financial Audit: Material Weaknesses in Internal Control 
Continue to Impact Preparation of the Consolidated Financial Statements 
of the U.S. Government' which was released on April 22, 2009. 

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Report to the Secretary of the Treasury and the Director of the Office 
of Management and Budget: 

United States Government Accountability Office: 
GAO: 

April 2009: 

Financial Audit: 

Material Weaknesses in Internal Control Continue to Impact Preparation 
of the Consolidated Financial Statements of the U.S. Government: 

GAO-09-387: 

GAO Highlights: 

Highlights of GAO-09-387, a report to the Secretary of the Treasury and 
the Director of the Office of Management and Budget. 

Why GAO Did This Study: 

Since GAO’s first audit of the fiscal year 1997 consolidated financial 
statements of the U.S. government (CFS), material weaknesses in 
internal control and other limitations on the scope of our work have 
prevented GAO from expressing an opinion on the accrual basis CFS. 
Certain of those material weaknesses relate to inadequate systems, 
controls, and procedures to properly prepare the CFS. The purpose of 
this report is to (1) provide details of the continuing material 
weaknesses related to the preparation of the CFS, (2) recommend 
improvements, and (3) provide the status of corrective actions taken to 
address GAO’s previous 56 recommendations in this area. 

What GAO Found: 

During its audit of the fiscal year 2008 CFS, GAO identified continuing 
and new control deficiencies in the federal government’s processes used 
to prepare the CFS. These control deficiencies contribute to material 
weaknesses in internal control over the federal government’s ability to 
(1) adequately account for and reconcile intragovernmental activity and 
balances between federal agencies; (2) ensure that the CFS was 
consistent with the underlying audited agency financial statements, 
properly balanced, and in conformity with U.S. generally accepted 
accounting principles; and (3) identify and either resolve or explain 
material differences between components of the budget deficit reported 
in the Department of the Treasury’s records, used to prepare the 
Reconciliation of Net Operating Cost and Unified Budget Deficit and 
Statement of Changes in Cash Balance from Unified Budget and Other 
Activities, and related amounts reported in federal agencies’ financial 
statements and underlying financial information and records. 

The control deficiencies GAO identified involved: 

* establishing and documenting policies and procedures for identifying 
and eliminating federal agencies’ intragovernmental payroll tax amounts 
when compiling the CFS, 

* establishing and documenting policies and procedures for preparing 
and reviewing information included in key sections of the Financial 
Report of the U.S. Government, 

* establishing criteria for identifying federal entities’ significance 
to the CFS and annually assessing which entities meet such criteria, 

* enhancing procedures for analyzing and reviewing data used when 
compiling the Statements of Net Cost, and, 

* various other control deficiencies identified in previous years’ 
audits (see appendix I). 

Of the 56 open recommendations GAO reported in June 2008, 16 were 
closed and 40 remained open as of December 9, 2008, the date of our 
report on our audit of the fiscal year 2008 CFS. GAO will continue to 
monitor the status of corrective actions taken to address the 4 new 
recommendations as well as the 40 open recommendations from prior 
years. 

What GAO Recommends: 

GAO is making four new recommendations to address control deficiencies 
identified during the fiscal year 2008 CFS audit that relate to the 
federal government’s processes used to prepare the CFS. In commenting 
on our draft report, The Department of the Treasury and the Office of 
Management and Budget stated that they generally concurred with our 
recommendations. 

To view the full product, including the scope and methodology, click on 
[hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-09-387]. For more 
information, contact Gary Engel, (202) 512-3406, engelg@gao.gov. 

[End of section] 

Contents: 

Letter: 

Scope and Methodology: 

Treatment of Intragovernmental Payroll Tax Amounts in Compiling the 
CFS: 

Consistency and Accuracy of Key Sections of the Financial Report: 

Identifying Federal Entities Significant to the CFS: 

Procedures for Reviewing the Statements of Net Cost: 

Agency Comments and Our Evaluation: 

Appendix I: Status of Treasury's and OMB's Progress in Addressing GAO's 
Prior Year Recommendations for Preparing the CFS: 

Appendix II: Comments from the Department of the Treasury: 

Appendix III: GAO Contact and Staff Acknowledgments: 

Tables: 

Table 1: Status of Treasury's and OMB's Progress in Addressing GAO's 
Prior Year Recommendations for Preparing the CFS (as of December 9, 
2008): 

Abbreviations: 

CFOC: Chief Financial Officers' Council: 

CFS: Consolidated financial statements of the U.S. Government: 

FASAB: Federal Accounting Standards Advisory Board: 

GAAP: Generally Accepted Accounting Principles: 

GFRS: Governmentwide Financial Report System: 

IDRC: Intragovernmental Dispute Resolution Committee: 

Justice: Department of Justice: 

MD&A: Management's Discussion and Analysis: 

OMB: Office of Management and Budget: 

SFFAS: Statement of Federal Financial Accounting Standard: 

SNC: Statement of Net Cost: 

SOP: Standard Operating Procedure: 

STAR: Treasury's Central Accounting and Reporting System: 

TFM: Treasury Financial Manual: 

Treasury: Department of the Treasury: 

[End of section] 

United States Government Accountability Office:
Washington, DC 20548: 

April 21, 2009: 

The Honorable Timothy F. Geithner: 
The Secretary of the Treasury: 

The Honorable Peter Orszag: 
Director, Office of Management and Budget: 

In our report dated December 9, 2008,[Footnote 1] we disclaimed an 
opinion on the consolidated financial statements of the U.S. government 
(CFS) for the fiscal years ended September 30, 2008 and 2007,[Footnote 
2] except for the 2008 and 2007 Statements of Social Insurance, which 
received unqualified opinions. Since GAO's first audit of the fiscal 
year 1997 CFS, material weaknesses in financial reporting and other 
limitations on the scope of our work have prevented us from expressing 
an opinion on the federal government's accrual basis consolidated 
financial statements.[Footnote 3] We have reported that the federal 
government did not have adequate systems, controls, and procedures for 
preparing the CFS to ensure that the consolidated financial statements 
are consistent with the underlying audited agency financial statements, 
properly balanced, and in conformity with U.S. generally accepted 
accounting principles (GAAP). 

On behalf of the federal government, the Department of the Treasury 
(Treasury), in coordination with the Office of Management and Budget 
(OMB),[Footnote 4] prepares the CFS. Many of the material weaknesses 
[Footnote 5] in internal control that have contributed to our 
continuing disclaimers of opinion were identified by other auditors 
during their audits of individual federal agencies' financial 
statements and were reported in detail with recommendations to the 
agencies in separate reports. This report presents the additional 
material weaknesses that we identified during our tests of the federal 
government's processes used to prepare the CFS. 

The purpose of this report is to (1) provide more detailed information 
on the material weaknesses that we identified during our audit of the 
fiscal year 2008 CFS that relate to internal control over the processes 
used to prepare the CFS, (2) recommend improvements to address these 
weaknesses, and (3) provide the status of corrective actions by 
Treasury and OMB to address the 56 recommendations detailed in our 
previous reports that remained open at the end of the fiscal year 2007 
audit (see appendix I). We have discussed each of the new control 
deficiencies identified during our fiscal year 2008 audit with your 
staff and have incorporated their comments as appropriate. 

Scope and Methodology: 

As part of our audit of the fiscal years 2008 and 2007 CFS, we 
evaluated the federal government's financial reporting procedures and 
related internal control. Also, we determined the status of corrective 
actions by Treasury and OMB to address open recommendations relating to 
the processes used to prepare the CFS detailed in our previous reports. 
In our audit report on the fiscal year 2008 CFS, which is included in 
the fiscal year 2008 Financial Report of the United States Government 
(Financial Report), we discussed the material weaknesses related to the 
federal government's processes used to prepare the CFS. These material 
weaknesses contributed to our disclaimer of opinion on the accrual 
basis consolidated financial statements and also contributed to our 
adverse opinion on internal control. We performed sufficient audit 
procedures to provide the disclaimer of opinion on the accrual basis 
consolidated financial statements in accordance with U.S. generally 
accepted government auditing standards. This report provides the 
details of the material weaknesses identified during the fiscal year 
2008 audit that relate to the processes used to prepare the CFS and our 
recommendations to correct these weaknesses, as well as the status of 
corrective actions by Treasury and OMB to address recommendations from 
previous reports. 

We requested comments on a draft of this report from the Director of 
OMB and the Secretary of the Treasury or their designees. OMB provided 
oral comments, which are summarized in the Agency Comments and Our 
Evaluation section of this report. Treasury's comments are reprinted in 
appendix II and are also summarized in the Agency Comments section. 

Treatment of Intragovernmental Payroll Tax Amounts in Compiling the 
CFS: 

Treasury did not establish policies and procedures to provide assurance 
that federal agencies' intragovernmental payroll tax amounts are 
identified and eliminated at the governmentwide level when compiling 
the CFS. Consolidated financial statements are intended to present the 
results of operations and financial position of all of the components 
that make up the reporting entity as if the entity were a single 
enterprise. Therefore, when preparing the CFS, Treasury should ensure 
that intragovernmental activity and balances between federal agencies 
are eliminated. Federal agencies, as well as other employers, are 
required to pay, among other taxes, a matching amount of Social 
Security and Medicare taxes for their employees (payroll taxes). 
Federal agencies' payments of payroll taxes to the Internal Revenue 
Service represent intragovernmental transactions. If these amounts are 
not eliminated at the governmentwide level when compiling the CFS, 
revenues and expenses become overstated in the CFS. However, in 
disclosing the types of revenues included in the Statement of 
Operations and Changes in Net Position in the draft CFS, Treasury's 
description stated that "individual income tax and tax withholdings 
include….payroll taxes collected from other agencies." We inquired of 
Treasury as to why these amounts would be included in the CFS and not 
eliminated during the preparation process. Treasury subsequently 
deleted the language regarding the inclusion of federal agency payroll 
taxes from the CFS. However, Treasury was unable to provide any 
documentation demonstrating that these amounts were appropriately 
classified as intragovernmental transactions and eliminated from the 
CFS. Without adequate policies and procedures to accurately identify 
and eliminate intragovernmental payroll tax amounts in the process used 
to prepare the CFS, the federal government's ability to determine the 
impact of these amounts on the CFS is impaired and, consequently, the 
CFS may be misstated. 

Recommendation for Executive Action: 

We recommend that the Secretary of the Treasury direct the Fiscal 
Assistant Secretary to design, document, and implement policies and 
procedures to identify and eliminate intragovernmental payroll tax 
amounts at the governmentwide level when compiling the CFS. 

Consistency and Accuracy of Key Sections of the Financial Report: 

Treasury, in coordination with OMB, did not take the steps necessary to 
help assure that certain key information related to significant 
financial events and conditions were consistent and accurately 
presented throughout the fiscal year 2008 Financial Report.[Footnote 6] 
Specifically, Treasury, in coordination with OMB, has not fully 
established an effective process for preparing and reviewing 
information included in the Management's Discussion and Analysis 
(MD&A), and "The Federal Government's Financial Health: A Citizen's 
Guide to the Financial Report of the United States Government" 
(Citizen's Guide) sections of the Financial Report. According to 
Statement of Federal Financial Accounting Standards No. 15, 
Management's Discussion and Analysis, the MD&A should highlight key 
information and increase the understanding and usefulness of the 
Financial Report. Similarly, the Citizen's Guide is intended to provide 
readers with a brief, high-level summary of key financial information 
from the Financial Report on our nation's current fiscal condition and 
the long-term sustainability. Further, data presented in both the MD&A 
and Citizen's Guide must be consistent with related data in the CFS. 

Treasury, in coordination with OMB, performed certain procedures to 
prepare and review the MD&A and Citizen's Guide. However, these 
procedures were not effective in helping assure that (1) information 
was consistently reported in the CFS and these related sections of the 
Financial Report and (2) information reported in the MD&A and Citizen's 
Guide was consistent, complete, and accurate. During our comparison of 
information reported in draft versions of the MD&A and Citizen's Guide 
with information reported in the fiscal year 2008 draft CFS, we 
identified (1) several inconsistencies and (2) numerous instances in 
which information was omitted from, or incorrectly reported in, these 
draft sections of the Financial Report that were not detected by 
Treasury's review process. For example, information in the draft MD&A 
and Citizen's Guide regarding certain federal actions for addressing 
the financial crisis was incomplete or incorrectly reported. In 
addition, the $339 billion change in veterans benefit liability in 
fiscal year 2008 reported in the draft CFS was incorrectly reported as 
$365 billion in the draft versions of the MD&A and Citizen's Guide. We 
communicated our findings to Treasury officials who corrected the data 
presented in the MD&A and Citizen's Guide sections of the final 
Financial Report. Without effective procedures for preparing and 
reviewing the MD&A and Citizen's Guide to ensure that the information 
is complete, accurate, and consistent with the information reported in 
the CFS, Treasury is at risk that information provided in these key 
sections of the Financial Report will not be reliable. 

A contributing factor to the reporting errors and inconsistencies we 
detected is that Treasury does not have documented procedures for 
preparing and reviewing the MD&A and Citizen's Guide sections of the 
Financial Report in comparison with data presented in the CFS. As 
preparer of the Financial Report, Treasury management, in coordination 
with OMB, is responsible for developing and documenting detailed 
policies, procedures, and practices and for ensuring that internal 
control is built into and is an integral part of operations to ensure 
that information is consistent and accurate throughout the Financial 
Report. GAO's Standards for Internal Control in the Federal Government 
calls for clear documentation of policies and procedures.[Footnote 7] 
Although, Treasury has documented policies and procedures used to 
compile the CFS in its Standard Operating Procedures (SOP) entitled 
"Preparing the Financial Report of the U.S. Government," the SOP does 
not provide procedures for preparing and reviewing the MD&A and 
Citizen's Guide--two key report sections providing information to the 
Congress and the public regarding the fiscal condition of the U.S. 
government--to help assure they are consistent and accurate in 
comparison with related information presented elsewhere in the 
Financial Report. 

Recommendation for Executive Action: 

We recommend that the Secretary of the Treasury direct the Fiscal 
Assistant Secretary, in coordination with the Controller of OMB, to 
develop, document, and implement processes and procedures for preparing 
and reviewing the MD&A and Citizen's Guide sections of the Financial 
Report to help assure that information reported in these sections is 
complete, accurate, and consistent with related information reported 
elsewhere in the Financial Report. 

Identifying Federal Entities Significant to the CFS: 

Treasury, in coordination with OMB, has not established and documented 
criteria for identifying which federal entities are significant to the 
CFS for purposes of verifying and validating the information submitted 
by federal entities for inclusion in the CFS. Treasury, through the 
Treasury Financial Manual (TFM), identified 35 significant federal 
agencies and entities, referred to as "verifying agencies."[Footnote 8] 
Those agencies are required to perform a number of procedures to 
provide audit assurance over the information submitted to Treasury for 
the CFS. However, Treasury and OMB have not (1) established and 
documented criteria for designating federal entities as "verifying 
agencies" significant to the CFS, and (2) established policies and 
procedures for assessing and documenting, on an annual basis, which 
entities meet the criteria. 

Treasury, in coordination with OMB, is required to prepare the CFS. 
According to the Federal Accounting Standards Advisory Board's 
Statement of Federal Financial Accounting Concepts No. 4, Intended 
Audience and Qualitative Characteristics for the Consolidated Financial 
Report of the United States Government, the consolidated financial 
report should be a general purpose report that is aggregated from 
federal agencies' and other federal entities' financial reports. The 
TFM provides policies and procedures on how federal agencies are to 
provide their financial data to Treasury for consolidation. 

In accordance with the TFM, verifying agencies are required to submit 
their financial data to Treasury using a Closing Package. The verifying 
agency's Chief Financial Officer must certify the accuracy of the data 
in the Closing Package and have the Closing Package audited by the 
agency's Inspector General. In addition, the Closing Package process 
requires verifying agencies to reclassify their audited financial 
statements to the Closing Package "special purpose financial 
statements." Verifying agencies must also identify trading partners 
[Footnote 9] and enter certain financial statement notes. The special 
purpose financial statements are audited to obtain reasonable assurance 
about whether the financial statements are (1) free of material 
misstatements, (2) in conformity with accounting principles generally 
accepted in the United States, and (3) presented pursuant to the 
requirements of the TFM. Because the Closing Package process requires 
verifying agencies to verify and validate the information in the 
special purpose financial statements with their audited information and 
receive an audit opinion, Treasury is provided a level of assurance 
that it is compiling the CFS with audited financial information. All 
other federal entities that contribute financial information to the CFS 
are classified by Treasury as "nonverifying agencies." Over 100 
nonverifying federal agencies and entities submitted data for fiscal 
year 2008. Currently these entities are only required to submit 
adjusted trial balance data to Treasury instead of an audited Closing 
Package. Because of a lack of criteria for determining an entity's 
significance to the CFS, it is unclear whether any of these 
"nonverifying agencies" should be classified as "verifying agencies.": 

One of Treasury's and OMB's goals for preparing the CFS is to link the 
agencies' audited financial statements to the CFS. To accomplish this 
goal, Treasury needs an appropriate level of assurance that it compiles 
the CFS using audited Closing Packages from the federal entities 
contributing the most significant amounts of financial information. 
However, without establishing the criteria for identifying federal 
entities as significant to the CFS and establishing related policies 
and procedures to assess, on an annual basis, which entities meet such 
criteria, Treasury and OMB cannot obtain this level of assurance. 

Recommendations for Executive Action: 

We recommend that the Secretary of the Treasury direct the Fiscal 
Assistant Secretary, in coordination with the Controller of OMB, to (1) 
establish and document criteria to be used in identifying federal 
entities as significant to the CFS for purposes of obtaining assurance 
over the information being submitted by those entities for the CFS and 
(2) develop and implement policies and procedures for assessing and 
documenting, on an annual basis, which entities met such criteria. 
These actions will help provide Treasury and OMB with assurance that 
the information being used to prepare the CFS is consistent with the 
audited financial statements of the federal agencies, in all material 
respects. 

Procedures for Reviewing the Statements of Net Cost: 

During fiscal year 2008, Treasury enhanced its SOP entitled "Preparing 
the Financial Report of the U.S. Government" to require an overall 
analysis of the consolidated numbers in the financial statements to 
include a review for reasonableness of changes from the prior year to 
the current year. However, because of a lack of details on the 
objectives of the analysis and the procedures to be performed, the 
overall analysis did not detect significant errors in amounts used to 
prepare the Statements of Net Cost (SNC). 

Internal control should provide, among other things, reasonable 
assurance that financial reporting is reliable. GAO's Standards for 
Internal Control in the Federal Government[Footnote 10] defines the 
minimum level of quality acceptable for internal control in the federal 
government and provides the standards against which internal control is 
to be evaluated. These standards state that internal controls should 
include, among other items, reviews by management at the functional or 
activity level. 

Treasury categorizes and allocates costs in the SNC by agency. For 
example, most of the costs associated with pension and health benefits 
that are reported by the Office of Personnel Management (OPM) in its 
financial statements are allocated to the costs of OPM's federal user 
agencies for governmentwide federal reporting purposes. Treasury uses 
head count figures reported by OPM in its Closing Package to perform 
the allocation of pension and health benefit costs across all user 
federal agencies. However, we found that Treasury did not detect a 
significant variance in head count between certain federal entities 
from 2007 to 2008, which resulted in significant errors in the draft 
SNC. Specifically, we found that, in fiscal year 2007, the head count 
used for the Department of Defense (DOD) was 497,724, and the head 
count used for "all other entities" was 92,566.[Footnote 11] In fiscal 
year 2008, we found that the head counts were erroneously reversed. The 
head count used for DOD was 95,157, while the head count used for "all 
other entities" was 495,673. Treasury's review process and overall 
analysis did not detect this error. As a result, Treasury's draft SNC 
understated DOD's reported costs on the fiscal year 2008 SNC by 
approximately $10 billion and costs for the "all other entities" line 
item was equally overstated. Without sufficiently detailed procedures 
including guidance for performing the analysis and review of data used 
in the allocation process for compiling the SNC, significant errors 
could occur in the SNC and not be detected. 

Recommendation for Executive Action: 

We reaffirm our recommendation that the Secretary of the Treasury 
direct the Fiscal Assistant Secretary to further enhance the SOP 
entitled "Standard Operating Procedures for Preparing the Financial 
Report of the U.S. Government" to better ensure that CFS compilation 
practices are proper, complete, and can be consistently applied, 
including detailed procedures for conducting reviews and documenting 
reasonableness of data used in the process for compiling the CFS. 

Agency Comments and Our Evaluation: 

OMB Comments: 

In oral comments on a draft of this report, OMB stated that it 
generally concurred with the new findings and related recommendations 
in this report. In addition, OMB provided technical comments, which we 
have incorporated as appropriate. 

Treasury Comments: 

In its April 15, 2009, written comments on a draft of this report, 
which are reprinted in appendix II, Treasury stated that it concurs 
with the new recommendations and expects to implement them by the end 
of fiscal year 2009. We will evaluate the actions taken to address our 
recommendations as part of our fiscal year 2009 CFS audit. 

This report contains recommendations to the Secretary of the Treasury. 
The head of a federal agency is required by 31 U.S.C. § 720 to submit a 
written statement on actions taken on these recommendations. You should 
submit your statement to the Senate Committee on Homeland Security and 
Governmental Affairs and the House Committee on Oversight and 
Government Reform within 60 days of the date of this report. A written 
statement must also be sent to the House and Senate Committees on 
Appropriations with the agency's first request for appropriations made 
more than 60 days after the date of the report. 

We are sending copies of this report to the Chairman and Ranking Member 
of the Senate Committee on Homeland Security and Governmental Affairs 
and its Subcommittee on Federal Financial Management, Government 
Information, Federal Services, and International Security and the 
Chairman and Ranking Member of the House Committee on Oversight and 
Government Reform and its Subcommittee on Government Management, 
Organization, and Procurement. In addition, we are sending copies to 
the Fiscal Assistant Secretary of the Treasury, the Director of OMB, 
the Deputy Director for Management of OMB, and the Acting Controller of 
OMB's Office of Federal Financial Management. This report is also 
available at no charge on GAO's Web site at [hyperlink, 
http://www.gao.gov]. 

We acknowledge and appreciate the cooperation and assistance provided 
by Treasury and OMB during our audit. If you or your staff have any 
questions or wish to discuss this report, please contact me (202) 512- 
3406 or engelg@gao.gov. Key contributors to this report are listed in 
appendix III. 

Signed by: 

Gary T. Engel: 
Director Financial Management and Assurance: 

[End of section] 

Appendix I: Status of Treasury's and OMB's Progress in Addressing GAO's 
Prior Year Recommendations for Preparing the CFS: 

This appendix includes the status of recommendations from the following 
six reports that were open at the beginning of our fiscal year 2008 
audit: 

Financial Audit: Process for Preparing the Consolidated Financial 
Statements of the U.S. Government Needs Improvement, [hyperlink, 
http://www.gao.gov/products/GAO-04-45] (Washington, D.C.: Oct. 30, 
2003); 

Financial Audit: Process for Preparing the Consolidated Financial 
Statements of the U.S. Government Needs Further Improvement, 
[hyperlink, http://www.gao.gov/products/GAO-04-866] (Washington, D.C.: 
Sept. 10, 2004); 

Financial Audit: Process for Preparing the Consolidated Financial 
Statements of the U.S. Government Continues to Need Improvement, 
[hyperlink, http://www.gao.gov/products/GAO-05-407] (Washington, D.C.: 
May 4, 2005); 

Financial Audit: Significant Internal Control Weaknesses Remain in 
Preparing the Consolidated Financial Statements of the U.S. Government, 
[hyperlink, http://www.gao.gov/products/GAO-06-415] (Washington, D.C.: 
Apr. 21, 2006); 

Financial Audit: Significant Internal Control Weaknesses Remain in the 
Preparation of the Consolidated Financial Statements of the U.S. 
Government, [hyperlink, http://www.gao.gov/products/GAO-07-805] 
(Washington, D.C.: July 23, 2007); and: 

Financial Audit: Material Weaknesses in Internal Control over the 
Processes Used to Prepare the Consolidated Financial Statements of the 
U.S. Government, [hyperlink, http://www.gao.gov/products/GAO-08-748] 
(Washington, D.C.: June 17, 2008). 

Recommendations from these reports that were closed in prior years are 
not included in this appendix. This appendix includes the status of the 
56 remaining open recommendations, according to the Department of the 
Treasury (Treasury) and the Office of Management and Budget (OMB), as 
well as our own assessments. Explanations are included in the status of 
recommendations per GAO when Treasury and OMB disagreed with our 
recommendation or our assessment of the status of a recommendation. We 
will continue to monitor Treasury's and OMB's progress in addressing 
GAO's recommendations. 

Of the 56 recommendations relating to the processes used to prepare the 
consolidated financial statements of the U.S. government (CFS) that are 
listed in this appendix, 16 were closed and 40 remained open as of 
December 9, 2008, the date of our report on the audit of the fiscal 
year 2008 CFS. 

Table 1: Status of Treasury's and OMB's Progress in Addressing GAO's 
Prior Year Recommendations for Preparing the CFS (as of December 9, 
2008): 

GAO-04-45 (results of the fiscal year 2002 audit): 

Count: 1; 
No.: 02-4; 
Recommendation: As the Department of the Treasury (Treasury) is 
designing its new financial statement compilation process to begin with 
the fiscal year 2004 CFS, the Secretary of the Treasury should direct 
the Fiscal Assistant Secretary, in coordination with the Controller of 
the Office of Management and Budget (OMB), to develop reconciliation 
procedures that will aid in understanding and controlling the net 
position balance as well as eliminate the plugs previously associated 
with compiling the CFS; 
Status of recommendation: Per Treasury and OMB: To eliminate or explain 
adjustments to net position, Treasury has continued to eliminate, at 
the consolidated level, intragovernmental activity and balances using 
formal balanced accounting entries (via Reciprocal Categories) and has 
continued its analysis of transactions that contribute to the unmatched 
transactions and balances adjustment. Major contributors to the plug 
are transactions with the General Fund (Reciprocal Category 29). In 
fiscal year 2008, a Treasury Task Force was formed to develop an 
accounting model for the General Fund. Treasury continues to separately 
identify General Fund transactions to facilitate their agency 
reconciliation. Also in fiscal year 2008, Treasury focused its efforts 
on particular areas (fiduciary and employee benefits) and increased its 
analysis and monitoring efforts on agencies' explanations of material 
differences with their trading partners; 
Status of recommendation: Per GAO: Open. Treasury has continued 
developing reconciliation procedures to aid in understanding the net 
position balance but remains unable to eliminate the plugs associated 
with compiling the CFS. In addition, there are hundreds of billions of 
dollars of unreconciled differences between the General Fund and 
federal agencies related to appropriation and other intragovernmental 
transactions. The ability to reconcile these transactions is hampered 
because not all General Fund transactions are reported in the 
Department of the Treasury's financial statements. 

Count: 2; 
No.: 02-6; 
Recommendation: As OMB continues to make strides to address issues 
related to intragovernmental transactions, the Director of OMB should 
direct the Controller of OMB to develop policies and procedures that 
document how OMB will enforce the business rules provided in OMB 
Memorandum M-07-03, Business Rules for Intragovernmental Transactions; 
Status of recommendation: Per Treasury and OMB: The business rules were 
revised in fiscal year 2006 to expand and enhance the standard 
practices for how federal agencies do business with each other. The 
revised rules are published in Treasury Financial Manual (TFM) Bulletin 
2007-03; OMB, Treasury, and the Chief Financial Officers' Council 
(CFOC) are distributing quarterly, a "Watchlist" of the largest dollar 
imbalances between two federal agencies and/or federal agencies not 
reporting a trading partner. Federal agencies on the "Watchlist" meet 
with OMB and Treasury to discuss the root causes of the imbalances and 
come to resolution on how to mitigate the root causes. At the same 
time, OMB, Treasury, and the CFOC are continuing their efforts toward 
establishing the Intragovernmental Dispute Resolution Committee (IDRC), 
as referenced in the business rules. The IDRC will be a vehicle for 
resolving accounting disputes between federal agencies. The dispute 
resolution process is also predicated on the principle that federal 
agencies have implemented the business rules and will require the 
disputing federal agencies to provide evidence of compliance with the 
business rules during arbitration; 
Status of recommendation: Per GAO: Open. 

Count: 3; 
No.: 02-7; 
Recommendation: As OMB continues to make strides to address issues 
related to intragovernmental transactions, the Director of OMB should 
direct the Controller of OMB to require that significant differences 
noted between business partners be resolved and the resolution be 
documented; 
Status of recommendation: Per Treasury and OMB: OMB will continue to 
work with individual federal agencies to resolve imbalances that are 
referred to OMB on a case-by-case basis. As part of OMB's standard 
practice, resolutions reached will be communicated to all parties. As 
noted above, OMB, Treasury, and the CFOC are documenting the imbalances 
identified on the "Watchlist" and subsequent resolutions. OMB, 
Treasury, and the CFOC will continue to work toward establishing the 
IDRC, as referenced in the business rules, and it will be used as a 
vehicle for federal agencies to resolve their accounting disputes. The 
IDRC will incorporate a standard practice of documenting all 
resolutions and communicating the resolutions to all parties involved; 
Status of recommendation: Per GAO: Open. 

Count: 4; 
No.: 02-9; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary, in coordination with the Controller of OMB, to 
design procedures that will account for the difference in 
intragovernmental assets and liabilities throughout the compilation 
process by means of formal consolidating and elimination accounting 
entries; 
Status of recommendation: Per Treasury and OMB: Treasury has designed 
formal consolidating and eliminating procedures to account for these 
differences and has implemented them. See the status for recommendation 
No. 02-4; 
Status of recommendation: Per GAO: Open. Treasury's formal 
consolidating and eliminating accounting entries could not fully 
account for the difference in intragovernmental assets and liabilities 
during the fiscal year 2008 compilation process. For example, there are 
hundreds of billions of dollars of unreconciled differences between the 
General Fund and federal agencies related to appropriation and other 
intragovernmental transactions. These amounts are not eliminated by 
Treasury's formal consolidating and elimination accounting entries due 
to the fact that Treasury's ability to reconcile these transactions is 
hampered because not all General Fund transactions are reported in the 
Department of the Treasury's financial statements. As indicated in 
Treasury's response to recommendation No. 02-4, additional analysis of 
the General Fund is necessary to account for all differences in 
intragovernmental assets and liabilities. 

Count: 5; 
No.: 02-10; Recommendation: The Secretary of the Treasury should direct 
the Fiscal Assistant Secretary, in coordination with the Controller of 
OMB, to develop solutions for intragovernmental activity and balance 
issues relating to federal agencies' accounting, reconciling, and 
reporting in areas other than those OMB now requires be reconciled, 
primarily areas relating to appropriations; 
Status of recommendation: Per Treasury and OMB: Treasury continues to 
provide to federal agencies information from its Central Accounting and 
Reporting System (STAR) related to appropriations, transfers, and fund 
balance with Treasury for the agencies' use in reconciling with this 
centrally reported data. The agencies will be required to reconcile 
with this information in fiscal year 2009; 
Status of recommendation: Per GAO: Open. Treasury and OMB did not 
provide federal agencies instructions on how to reconcile and report to 
Treasury any differences between their records and Treasury's central 
accounting records. Further, although Treasury's analysis of agencies' 
transactions with the General Fund is ongoing, the ability to reconcile 
these transactions is hampered because not all General Fund 
transactions are reported in the Department of the Treasury's financial 
statements. 

Count: 6; 
No.: 02-11; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary, in coordination with the Controller of OMB, to 
reconcile the change in intragovernmental assets and liabilities for 
the fiscal year, including the amount and nature of all changes in 
intragovernmental assets or liabilities not attributable to cost and 
revenue activity recognized during the fiscal year. Examples of these 
differences would include capitalized purchases, such as inventory or 
equipment, and deferred revenue; 
Status of recommendation: Per Treasury and OMB: The current 
reconciliation of intragovernmental activity does account for 
differences caused by asset capitalization and agency advances or 
deferred revenue. Given current intragovernmental differences, further 
resolution of this activity is contingent on these differences being 
materially resolved. See status of recommendation No. 02-4; 
Status of recommendation: Per GAO: Open. 

Count: 7; 
No.: 02-12; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary to develop and implement a process that adequately 
identifies and reports items needed to reconcile net operating cost and 
unified budget surplus (or deficit). Treasury should report "net 
unreconciled differences" included in the net operating results line 
item as a separate reconciling activity in the reconciliation 
statement; 
Status of recommendation: Per Treasury and OMB: These unmatched 
transactions and balances will continue to be reflected in the 
Statements of Operations and Changes in Net Position until they are 
materially resolved. However, based on its analyses of these unmatched 
transactions and balances, Treasury believes that these unmatched 
transactions and balances are primarily caused by unreconciled 
transactions that affect only the amounts reported on an accrual basis 
of accounting (net operating cost) and, therefore, these unmatched 
transactions and balances should not be included as a separate 
reconciling item on this statement. Treasury will continue its analysis 
in fiscal year 2009; 
Status of recommendation: Per GAO: Open. Treasury has not implemented a 
process that demonstrates the amount, if any, of unmatched transactions 
and balances should be included as a separate reconciling item in the 
reconciliation statement. 

Count: 8; 
No.: 02-13; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary to develop and implement a process that adequately 
identifies and reports items needed to reconcile net operating cost and 
unified budget surplus (or deficit). Treasury should develop policies 
and procedures to ensure completeness of reporting and document how all 
the applicable components reported in the other consolidated financial 
statements (and related note disclosures included in the CFS) were 
properly reflected in the reconciliation statement; 
Status of recommendation: Per Treasury and OMB: Treasury will continue 
to improve the completeness and consistency of the information in this 
reconciliation statement and will continue to resolve significant 
inconsistencies, if any, to the applicable and related components 
reported in the other basic financial statements, and in the related 
note disclosures, included in the CFS; 
Status of recommendation: Per GAO: Open. While Treasury has made 
progress in developing certain Standard Operating Procedures (SOP), it 
has not fully developed policies and procedures to ensure the 
completeness of reporting of information on the reconciliation 
statement and to document how all applicable components reported 
elsewhere in the CFS are properly reflected in the reconciliation 
statement. 

Count: 9; 
No.: 02-14; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary to develop and implement a process that adequately 
identifies and reports items needed to reconcile net operating cost and 
unified budget surplus (or deficit). Treasury should establish 
reporting materiality thresholds for determining which agency financial 
statement activities to collect and report at the governmentwide level 
to assist in ensuring that the reconciliation statement is useful and 
conveys meaningful information; 
Status of recommendation: Per Treasury and OMB: During fiscal year 
2009, Treasury will revise its reporting materiality policy to address 
any remaining concerns about the policy; 
Status of recommendation: Per GAO: Open. 

Count: 10; 
No.: 02-15; 
Recommendation: If Treasury chooses to continue using information from 
both federal agencies' financial statements and STAR, Treasury should 
demonstrate how the amounts from STAR reconcile to federal agencies' 
financial statements; 
Status of recommendation: Treasury has elected to continue the use of 
information from STAR and has identified the material areas where STAR 
data does not reconcile to federal agencies' financial statements. 
Treasury intends to provide these specific items to agencies for their 
reconciliation in fiscal year 2009; 
Status of recommendation: Per GAO: Open. 

Count: 11; 
No.: 02-16; 
Recommendation: If Treasury chooses to continue using information from 
both federal agencies' financial statements and from STAR, Treasury 
should identify and document the cause of any significant differences, 
if any are noted; 
Status of recommendation: Per Treasury and OMB: See status of 
recommendation No. 02-15; 
Status of recommendation: Per GAO: Open. 

Count: 12; 
No.: 02-17; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary, in coordination with the Controller of OMB, to 
develop and implement a process to ensure that the Statement of Changes 
in Cash Balance from Unified Budget and Other Activities properly 
reflects the activities reported in federal agencies' audited financial 
statements. Treasury should document the consistency of the significant 
line items on this statement to federal agencies' audited financial 
statements; 
Status of recommendation: Per Treasury and OMB: Treasury has elected to 
continue to use information from STAR. Treasury will document the 
consistency of the significant line items on this statement to federal 
agencies' audited financial statements as possible during fiscal year 
2009. See status of recommendation No. 02-15; 
Status of recommendation: Per GAO: Open. 

Count: 13; 
No.: 02-20; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary, in coordination with the Controller of OMB, to 
develop and implement a process to ensure that the Statement of Changes 
in Cash Balance from Unified Budget and Other Activities properly 
reflects the activities reported in federal agencies' audited financial 
statements. Treasury should explain and document the differences 
between the operating revenue amount reported on the Statement of 
Operations and Changes in Net Position and unified budget receipts 
reported on the Statement of Changes in Cash Balance from Unified 
Budget and Other Activities; 
Status of recommendation: Per Treasury and OMB: Treasury will continue 
with its efforts to reconcile budgetary receipts to net operating 
revenue. During fiscal year 2008, Treasury made significant progress 
with identifying and documenting the larger differences between 
budgetary receipts and net operating revenue. Efforts will continue in 
fiscal year 2009, including looking into automating a portion of this 
reconciliation in the Governmentwide Financial Reporting System (GFRS); 
Status of recommendation: Per GAO: Open. 

Count: 14; 
No.: 02-22; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary, in coordination with the Controller of OMB, to 
perform an assessment to define the reporting entity, including its 
specific components, in conformity with the criteria issued by the 
Federal Accounting Standards Advisory Board (FASAB). Key decisions made 
in this assessment should be documented, including the reason for 
including or excluding components and the basis for concluding on any 
issue. Particular emphasis should be placed on demonstrating that any 
financial information that should be included but is not included is 
immaterial; 
Status of recommendation: Per Treasury and OMB: Treasury continues to 
define and document the reporting entity and made corresponding changes 
to the reporting entity disclosure in the fiscal year 2008 CFS; 
Status of recommendation: Per GAO: Open. Key decisions by the Fiscal 
Assistant Secretary and the Controller of OMB have not been documented 
showing the basis for including and excluding certain federal entities. 

Count: 15; 
No.: 02-23; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary, in coordination with the Controller of OMB, to 
provide in the financial statements all the financial information 
relevant to the defined reporting entity, in all material respects. 
Such information would include, for example, the reporting entity's 
assets, liabilities, and revenues; 
Status of recommendation: Per Treasury and OMB: See status of 
recommendation No. 02-22; 
Status of recommendation: Per GAO: Open. See status of recommendation 
No. 02-22. 

Count: 16; 
No.: 02-24; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary, in coordination with the Controller of OMB, to 
disclose in the financial statements all information that is necessary 
to inform users adequately about the reporting entity. Such disclosures 
should clearly describe the reporting entity and explain the reason for 
excluding any components that are not included in the defined reporting 
entity; 
Status of recommendation: Per Treasury and OMB: See status of 
recommendation No. 02-22; 
Status of recommendation: Per GAO: Open. See status of recommendation 
No. 02-22. 

Count: 17; 
No.: 02-29; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary, in coordination with the Controller of OMB, to 
establish written policies and procedures for preparing the 
governmentwide management representation letter to help ensure that it 
is properly prepared and contains sufficient representations. 
Specifically, these policies and procedures should require an analysis 
of the agency management representations to determine if discrepancies 
exist between what the agency auditor reported and the representations 
made by the agency, including the resolution of such discrepancies; 
Status of recommendation: Per Treasury and OMB: Treasury and OMB 
revised their policies and procedures in fiscal year 2008 to improve 
internal control over this process; 
Status of recommendation: Per GAO: Closed. 

Count: 18; 
No.: 02-33; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary, in coordination with the Controller of OMB, to 
establish written policies and procedures for preparing the 
governmentwide management representation letter to help ensure that it 
is properly prepared and contains sufficient representations. 
Specifically, these policies and procedures should require an 
evaluation and assessment of the omission of representations ordinarily 
included in agency management representation letters; 
Status of recommendation: Per Treasury and OMB: Treasury and OMB 
revised their policies and procedures in fiscal year 2008 to improve 
internal control over this process; 
Status of recommendation: Per GAO: Closed. 

Count: 19; 
No.: 02-34; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary, in coordination with the Controller of OMB, to 
establish written policies and procedures for preparing the 
governmentwide management representation letter to help ensure that it 
is properly prepared and contains sufficient representations. 
Specifically, these policies and procedures should require an analysis 
and aggregation of federal agencies' summary of unadjusted 
misstatements to determine the completeness of the summaries and to 
ascertain the materiality, both individually and in the aggregate, of 
such unadjusted misstatements to the CFS taken as a whole; 
Status of recommendation: Per Treasury and OMB: Treasury updated the 
SOP for the aggregation and analysis of federal agencies' summary of 
unadjusted misstatements. Treasury also tracked federal agencies' 
submissions of this information and prepared a CFS-level summary that 
showed that federal agencies' unadjusted misstatements were immaterial 
in the aggregate to the CFS; 
Status of recommendation: Per GAO: Closed. 

Count: 20; 
No.: 02-35; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary, in coordination with the Controller of OMB, to 
help ensure that federal agencies provide adequate information in their 
legal representation letters regarding the expected outcomes of the 
cases; 
Status of recommendation: Per Treasury and OMB: During fiscal year 
2008, Treasury and OMB continued to work with federal agencies to 
ensure that adequate information was provided in the legal 
representation letters regarding the expected outcomes of the cases; 
Status of recommendation: Per GAO: Open. Treasury and OMB did not 
ensure that all federal agencies reported adequate information relating 
to expected outcomes of legal cases. 

Count: 21; 
No.: 02-37; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary, in coordination with the Controller of OMB, to 
establish written policies and procedures to help ensure that major 
treaty and other international agreement information is properly 
identified and reported in the CFS. Specifically, these policies and 
procedures should require that federal agencies develop a detailed 
schedule of all major treaties and other international agreements that 
obligate the U.S. government to provide cash, goods, or services, or 
that create other financial arrangements that are contingent on the 
occurrence or nonoccurrence of future events (a starting point for 
compiling these data could be the State Department's Treaties in 
Force); 
Status of recommendation: Per Treasury and OMB: Based on the work 
Treasury and OMB performed in fiscal year 2008, OMB believes it is 
reasonable to continue disclosing treaties and other international 
agreements in the CFS notes with the acknowledgment that the U.S. 
government is a party to them and may have certain responsibilities 
under them; also, the Note should include a reference to where more 
detailed information is available (e.g., State Department's Treaties In 
Force) similar to other notes. To that end, OMB proposed updating the 
requisite Note and believes that this proposed Note meets the intent 
and substance of Statement of Federal Financial Accounting Standard 
(SFFAS) No. 32, Consolidated Financial Report of the United States 
Government Requirements: Implementing Statement of Federal Financial 
Concepts 4 "Intended Audience and Qualitative Characteristics for the 
Consolidated Financial Report of the United States Government" because 
the audience to whom the CFS is mainly directed is citizens and their 
intermediaries and, as such, this information should be timely and 
understandable to that audience. However, GAO has since provided some 
additional insight to OMB regarding the recommendation, and OMB 
established a working group of the OMB Circular No. A-136, Financial 
Reporting Requirements (A-136) Subcommittee of the CFOC to address the 
topic. Finally, OMB looks forward to meeting with GAO this year to 
discuss the recommendation further; 
Status of recommendation: Per GAO: Open. 

Count: 22; 
No.: 02-38; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary, in coordination with the Controller of OMB, to 
establish written policies and procedures to help ensure that major 
treaty and other international agreement information is properly 
identified and reported in the CFS. Specifically, these policies and 
procedures should require that federal agencies classify all such 
scheduled major treaties and other international agreements as 
commitments or contingencies; 
Status of recommendation: Per Treasury and OMB: See status of 
recommendation No. 02-37; 
Status of recommendation: Per GAO: Open. 

Count: 23; 
No.: 02-39; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary, in coordination with the Controller of OMB, to 
establish written policies and procedures to help ensure that major 
treaty and other international agreement information is properly 
identified and reported in the CFS. Specifically, these policies and 
procedures should require that federal agencies disclose in the notes 
to the CFS amounts for major treaties and other international 
agreements that have a reasonably possible chance of resulting in a 
loss or claim as a contingency; 
Status of recommendation: Per Treasury and OMB: See status of 
recommendation No. 02-37; 
Status of recommendation: Per GAO: Open. 

Count: 24; 
No.: 02-40; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary, in coordination with the Controller of OMB, to 
establish written policies and procedures to help ensure that major 
treaty and other international agreement information is properly 
identified and reported in the CFS. Specifically, these policies and 
procedures should require that federal agencies disclose in the notes 
to the CFS amounts for major treaties and other international 
agreements that are classified as commitments and that may require 
measurable future financial obligations; 
Status of recommendation: Per Treasury and OMB: See status of 
recommendation No. 02-37; 
Status of recommendation: Per GAO: Open. 

Count: 25; 
No.: 02-41; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary, in coordination with the Controller of OMB, to 
establish written policies and procedures to help ensure that major 
treaty and other international agreement information is properly 
identified and reported in the CFS. Specifically, these policies and 
procedures should require that federal agencies take steps to prevent 
major treaties and other international agreements that are classified 
as remote from being recorded or disclosed as probable or reasonably 
possible in the CFS; 
Status of recommendation: Per Treasury and OMB: OMB questions this 
recommendation, as it is not known whether any treaties or 
international agreements are different than any other commitments or 
contingencies. Additionally, if the difference were known, those that 
were classified as "remote" contingencies would not be recorded or 
disclosed as probable or reasonably possible in the CFS. Therefore, 
until these can be established as actually being different than any 
other commitments or contingencies, this recommendation should be 
removed; 
Status of recommendation: Per GAO: Open. Treasury, OMB, and the federal 
agencies have not yet performed the necessary work to determine whether 
commitments or contingencies exist under treaties and international 
agreements with foreign countries that would be required to be 
reported. In addition, Treasury and OMB have not established written 
policies and procedures to help ensure that major treaty and other 
international agreement information is properly identified and reported 
in the CFS. 

Count: 26; 
No.: 02-129; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary to ensure that the note disclosure for stewardship 
responsibilities related to the risk assumed for federal insurance and 
guarantee programs meets the requirements of SFFAS No. 5, Accounting 
for Liabilities of the Federal Government, paragraph 106, which 
requires that when financial information pursuant to Financial 
Accounting Standards Board standards on federal insurance and guarantee 
programs conducted by government corporations is incorporated in 
general purpose financial reports of a larger federal reporting entity, 
the entity should report as required supplementary information what 
amounts and periodic change in those amounts would be reported under 
the "risk assumed" approach; 
Status of recommendation: Per Treasury and OMB: This required 
information was requested from federal agencies for disclosure in the 
required supplementary information (risk assumed) section of the fiscal 
year 2008 CFS. Further discussions with federal agencies will take 
place in fiscal year 2009 to ensure proper and complete disclosure of 
this information; 
Status of recommendation: Per GAO: Open. 

GAO-04-866 (results of the fiscal year 2003 audit): 

Count: 27; 
No.: 03-6; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary to develop a process that will allow full reporting 
of the changes in cash balance of the U.S. government. Specifically, 
the process should provide for reporting on the change in cash reported 
on the consolidated balance sheet, which should be linked to cash 
balances reported in federal agencies' audited financial statements; 
Status of recommendation: Per Treasury and OMB: In fiscal year 2008, 
Treasury disclosed the change in cash balances as reported on the 
Balance Sheet on the Statement of Changes in Cash Balance;
Status of recommendation: Per GAO: Open. Although Treasury took steps 
to improve the readability of the Statement of Changes in Cash Balance, 
Treasury has not developed a process that will allow full reporting of 
the changes in cash balance. For example, Treasury was unable to 
identify and explain certain changes necessary to account for the 
changes in cash and other monetary assets reported on the Statement of 
Changes in Cash Balance. 

Count: 28; 
No.: 03-8; 
Recommendation: The Director of OMB should direct the Controller of 
OMB, in coordination with Treasury’s Fiscal Assistant Secretary, to 
work with the Department of Justice (Justice) and certain other 
executive branch federal agencies to ensure that these federal agencies 
report or disclose relevant criminal debt information in conformity 
with generally accepted accounting principles (GAAP) in their financial 
statements and have such information subjected to audit; 
Status of recommendation: Per Treasury and OMB: OMB will continue 
working with Justice to develop a reasonable approach for the reporting 
or disclosing of this information; 
Status of recommendation: Per GAO: Open. 

Count: 29; 
No.: 03-9; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary to include relevant criminal debt information in 
the CFS or document the specific rationale for excluding such 
information; 
Status of recommendation: Per Treasury and OMB: Treasury will include 
criminal debt information in the CFS as it becomes available. See 
status of recommendation No. 03-8; 
Status of recommendation: Per GAO: Open. 

Count: 30; 
No.: 03-11; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary, in coordination with the Controller of OMB, to 
modify Treasury’s plans for the new closing package to (1) require 
federal agencies to directly link their audited financial statement 
notes to the CFS notes and (2) provide the necessary information to 
demonstrate that all of the five principal consolidated financial 
statements are consistent with the underlying information in federal 
agencies’ audited financial statements and other financial data; 
Status of recommendation: Per Treasury and OMB: Treasury continues to 
use its CFS compilation process, GFRS, to provide direct linkage from 
the agency audited financial statements to most of the CFS principal 
statements. However, additional work is needed related to the two 
budgetary principal financial statements. See status of recommendation 
No. 02-17. With regard to note disclosures, GFRS note references 
(linkages), with additional Treasury analysis, ensure direct linking of 
the CFS and agency note disclosures; 
Status of recommendation: Per GAO: Open. Treasury has showed progress 
by demonstrating that amounts in the Statement of Social Insurance were 
consistent with the underlying federal agencies’ audited financial 
statements and that the Balance Sheet and the Statement of Net Cost 
were consistent with federal agencies’ financial statements prior to 
eliminating intragovernmental activity and balances. However, 
Treasury’s closing package process did not ensure that the information 
in the remaining three principal financial statements were fully 
consistent with the underlying information in federal agencies’ audited 
financial statements and other financial data. 

GAO-05-407 (results of the fiscal year 2004 audit): 

Count: 31; 
No.: 04-02; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary to require and maintain appropriate supporting 
documentation for all journal vouchers recorded in the CFS; 
Status of recommendation: Per Treasury and OMB: Treasury will continue 
its efforts to better ensure that journal vouchers include appropriate 
supporting documentation; 
Status of recommendation: Per GAO: Open. Treasury did not have 
appropriate supporting documentation for all journal vouchers recorded 
in the CFS. 

Count: 32; 
No.: 04-03; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary to require that Treasury employees contact and 
document communications with federal agencies before recording journal 
vouchers to change agency audited closing package data; 
Status of recommendation: Per Treasury and OMB: Treasury will continue 
its efforts to better ensure that journal vouchers are communicated to 
the federal agencies before recording them in GFRS. However, because of 
year-end time constraints, Treasury will make changes without agency 
contact under the following circumstances: (1) adjustments to agree 
closing packages to financial statements, (2) adjustments to ensure 
consistency of GAAP between federal agencies, and (3) adjustments to 
conform an agency to GAAP; 
Status of recommendation: Per GAO: Open. We believe that Treasury 
should be required to contact federal agencies to resolve any 
discrepancies between federal agencies’ audited closing packages and 
audited financial statements and discuss any other situations that 
require adjustments to federal agencies’ audited closing package data 
because Treasury could incorrectly adjust federal agencies’ audited 
information. 

Count: 33; 
No.: 04-04; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary to require and document management reviews of all 
procedures that result in data changes to the CFS; 
Status of recommendation: Per Treasury and OMB: Treasury will continue 
its efforts to ensure that data changes have appropriate management 
review; 
Status of recommendation: Per GAO: Open. Not all of Treasury’s 
procedures were effective for fiscal year 2008. We identified certain 
adjustments and key spreadsheets that lacked documentation evidencing 
management review. 

Count: 34; 
No.: 04-06; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary to assess the infrastructure associated with the 
compilation process and modify it as necessary to achieve a sound 
internal control environment; 
Status of recommendation: Per Treasury and OMB: Treasury continued to 
make improvements to its internal control infrastructure during fiscal 
year 2008. Treasury has updated its documentation to help ensure 
control procedures are in place at all critical areas of the CFS 
preparation process and is working with a contractor to ensure that 
these controls are adequately monitored and assessed each year; 
Status of recommendation: Per GAO: Open. Treasury has not completed an 
assessment to ensure it has sufficient personnel with specialized 
financial reporting experience to achieve a sound internal control 
environment to carry out the compilation process and help ensure 
reliable financial reporting by the reporting date. For example, for 
fiscal year 2008, Treasury did not provide the final accrual basis CFS 
and related supporting documentation in time for us to complete all of 
our planned audit procedures. 

Count: 35; 
No.: 04-19; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary to ensure that federal agencies designate in the 
note disclosure for cash and other monetary assets any amounts reported 
for the “other cash” line items that are restricted with respect to the 
federal government taken as a whole; 
Status of recommendation: Per Treasury and OMB: This required 
information was disclosed in Note 2, Cash and Other Monetary Assets, in 
the fiscal year 2008 CFS; 
Status of recommendation: Per GAO: Closed. 

Count: 36; 
No.: 04-20; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary to ensure that the note disclosure for other 
liabilities meets the requirements of SFFAS No. 5, paragraph 114, which 
requires the reporting of indicators of the range of uncertainty around 
insurance-related estimates and the sensitivity of the estimates to 
changes in major assumptions; 
Status of recommendation: Per Treasury and OMB: The required 
information related to life insurance in the other liabilities note 
disclosure was not material to the fiscal year 2008 CFS; 
Status of recommendation: Per GAO: Closed. 

GAO-06-415 (results of the fiscal year 2005 audit): 

Count: 37; 
No.: 05-02; 
Recommendation: The Director of OMB should direct the Controller of the 
Office of Federal Financial Management, in coordination with the 
Treasury Fiscal Assistant Secretary, to develop an alternative solution 
for obtaining audit assurance related to the Federal Deposit Insurance 
Corporation’s funds, National Credit Union Administration, and Farm 
Credit System Insurance Corporation, which includes the requirement for 
adequate audit procedures to be performed over significant information 
included in the CFS for these federal agencies; 
Status of recommendation: Per Treasury and OMB: OMB has developed an 
alternative solution and documented related procedures for obtaining 
audit assurance related to those verifying entities that have a 
calendar year-end and determined to be significant to the CFS. The 
solution entails the requirement that these entities have an 
examination attestation engagement performed; 
Status of recommendation: Per GAO: Closed. 

Count: 38; 
No.: 05-03; 
Recommendation: The Director of OMB should direct the Controller of the 
Office of Federal Financial Management to consider, in order to provide 
audit assurance over federal agencies’ closing packages, not waiving 
the closing package audit requirement for any verifying agency in 
future years, such as Tennessee Valley Authority; 
Status of recommendation: Per Treasury and OMB: OMB generally agrees 
with the recommendation; however, it will continue to weigh the costs 
against the benefits of global requirements during extenuating 
circumstances. OMB and Treasury will continue to work with agencies 
that are also subject to Securities and Exchange Commission filing 
requirements; 
Status of recommendation: Per GAO: Open. For fiscal year 2008, OMB did 
not ensure that all verifying entities met the closing package audit 
requirements. 

Count: 39; 
No.: 05-04; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary, in coordination with the Controller of OMB, to 
develop policies and procedures for monitoring internal control to help 
ensure that (1) audit findings are promptly evaluated; (2) proper 
actions are determined in response to audit findings and 
recommendations, such as a documented plan of action with milestones 
for short-term and long-range solutions; and (3) all actions that 
correct or otherwise resolve the audit findings are completed within 
established time frames; 
Status of recommendation: Per Treasury and OMB: OMB concurs with the 
recommendation and is committed to improving the corrective action 
plans and monitoring progress against those plans; 
Status of recommendation: Per GAO: Open. 

Count: 40; 
No.: 05-06; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary to ensure that the TFM and any other guidance to 
federal agencies provide clear instructions for providing reliable data 
to Treasury for restricted cash; 
Status of recommendation: Per Treasury and OMB: Treasury revised its 
guidance related to restricted cash and ensured that sufficient 
information was requested to determine these amounts at the 
governmentwide level; 
Status of recommendation: Per GAO: Closed. 

Count: 41; 
No.: 05-08; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary to ensure that the TFM and any other guidance to 
federal agencies provide clear instructions for providing reliable data 
to Treasury for summaries of unadjusted misstatements; 
Status of recommendation: Per Treasury and OMB: Treasury updated the 
TFM in fiscal year 2008 related to the guidance to federal agencies 
concerning agency management representations and related summaries of 
unadjusted misstatements; 
Status of recommendation: Per GAO: Closed. 

GAO-07-805 (results of the fiscal year 2006 audit): 

Count: 42; 
No.: 06-1; 
Recommendation: The Director of OMB and Secretary of the Treasury 
should direct the Controller of the Office of Federal Financial 
Management and Fiscal Assistant Secretary, respectively, to develop 
formal processes and procedures for identifying and either resolving or 
explaining any material differences in undistributed offsetting receipt 
amounts between Treasury’s central accounting records and information 
reported in agency financial statements and underlying agency financial 
information and records; 
Status of recommendation: Per Treasury and OMB: Treasury has policies 
and procedures for identifying and either resolving or explaining any 
material differences in undistributed offsetting receipt amounts 
between Treasury’s central accounting records and information reported 
in agency financial statements and underlying agency financial 
information and records, and demonstrated their effectiveness during 
fiscal year 2008; 
Status of recommendation: Per GAO: Closed. 

Count: 43; 
No.: 06-2; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary to develop formal processes and procedures for 
ensuring that intragovernmental activity and balances related to 
undistributed offsetting receipts, including intragovernmental 
interest, are fully eliminated in the calculation of the budget 
deficit; 
Status of recommendation: Per Treasury and OMB: Treasury has processes 
and procedures for ensuring that intragovernmental activity and 
balances, including intragovernmental interest, are fully eliminated in 
the calculation of the budget deficit, and demonstrated their 
effectiveness during fiscal year 2008; 
Status of recommendation: Per GAO: Closed. 

Count: 44; 
No.: 06-6; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary, working in coordination with the Controller of OMB’
s Office of Federal Financial Management, to establish effective 
processes and procedures to ensure that appropriate information 
regarding litigation and claims is included in the governmentwide legal 
representation letter; 
Status of recommendation: Per Treasury and OMB: In fiscal year 2008, 
GAO drafted an approach for addressing the recommendation and OMB tried 
to implement it via its governmentwide legal request letter it sends to 
Justice annually. Due to unintended circumstances, all parties were not 
able to come together to discuss the approach’s additional requirements 
if it was to be implemented in fiscal year 2008. Thereafter, OMB held a 
meeting with GAO and Justice to discuss implementing the approach for 
fiscal year 2009. However, Justice concluded that the approach’s 
requirements were not “executable” because it did not believe the 
approach was cost effective, given its resources. OMB plans to meet 
with GAO this year to discuss a workable solution for addressing this 
recommendation; 
Status of recommendation: Per GAO: Open. Treasury, in coordination with 
OMB, has not established effective processes and procedures to ensure 
that appropriate information regarding litigation and claims is 
included in the governmentwide legal representation letter. 

Count: 45; 
No.: 06-6; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary, working in coordination with the Controller of OMB’
s Office of Federal Financial Management, to develop a process for 
obtaining sufficient information from federal agencies to enable 
Treasury and OMB to adequately monitor federal agencies’ efforts to 
reconcile intragovernmental activity and balances with their trading 
partners. This information should include (1) the nature and a detailed 
description of the significant differences that exist between trading 
partners’ records of intragovernmental activity and balances, (2) 
detailed reasons why such differences exist, (3) details of steps taken 
or being taken to work with federal agencies’ trading partners to 
resolve the differences, and (4) the potential outcome of such steps; 
Status of recommendation: Per Treasury and OMB: During fiscal year 
2008, Treasury continued a process for obtaining sufficient information 
from federal agencies to enable Treasury and OMB to adequately monitor 
federal agencies’ efforts to reconcile intragovernmental activity and 
balances with their trading partners. This information included (1) the 
nature and a detailed description of the significant differences that 
exist between trading partners’ records of intragovernmental activity 
and balances, (2) detailed reasons why such differences exist, (3) 
details of steps taken or being taken to work with federal agencies’ 
trading partners to resolve the differences, and (4) the potential 
outcome of such steps. In addition, in fiscal year 2008, Treasury 
required the federal agencies to provide additional information related 
to their intragovernmental differences that would allow Treasury to 
correct these differences within GFRS. This effort will continue in 
fiscal year 2009 including following-up with any federal agencies that 
either did not comply or provided incomplete information related to 
this new requirement; 
Status of recommendation: Per GAO: Open. 

Count: 46; 
No.: 06-11; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary to disclose the balance of foreign currencies held 
at fiscal year end in the Cash and Other Monetary Assets footnote to 
the CFS; 
Status of recommendation: Per Treasury and OMB: Treasury disclosed 
these balances in Note 2, Cash and Other Monetary Assets, in the fiscal 
year 2008 CFS; 
Status of recommendation: Per GAO: Closed. 

GAO-08-748 (results of the fiscal year 2007 audit): 

Count: 47; 
No.: 07-1; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary to enhance and fully document all practices 
referred to in the SOP entitled “Standard Operating Procedures for 
Preparing the Financial Report of the U.S. Government” to better ensure 
that practices are proper, complete, and can be consistently applied by 
staff members; 
Status of recommendation: Per Treasury and OMB: In fiscal year 2008, 
Treasury updated this SOP by significantly expanding the functions 
covered by this SOP and increasing the level of detail related to all 
the key procedures. Treasury will update this SOP during fiscal year 
2009, as necessary; 
Status of recommendation: Per GAO: Open. Although Treasury made 
significant improvements to this SOP during fiscal year 2008, we found 
that additional enhancements are needed to help ensure that all 
procedures referred to in the SOP are correctly performed and 
consistently applied by all staff members. 

Count: 48; 
No.: 07-2; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary to enhance its checklist or design an alternative 
and use it to adequately and timely document Treasury’s assessment of 
the relevance, usefulness, or materiality of information reported by 
the federal agencies for use at the governmentwide level; 
Status of recommendation: Per Treasury and OMB: During fiscal year 
2008, Treasury enhanced its analysis procedures to take into account 
agency-specific disclosures and assess their impact at the 
governmentwide level. Treasury will update its checklist during fiscal 
year 2009, as necessary; 
Status of recommendation: Per GAO: Open. Although Treasury made 
significant improvements in documenting its assessment of agency 
information, we found that the assessment and documentation were not 
adequately or timely completed. 

Count: 49; 
No.: 07-3; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary to enhance its checklist or design an alternative 
and use it to adequately and timely document Treasury’s consideration 
of relevant accounting standards other than those issued by FASAB; 
Status of recommendation: Per Treasury and OMB: Treasury’s checklist 
was revised in fiscal year 2008 to address these concerns; 
Status of recommendation: Per GAO: Closed. 

Count: 50; 
No.: 07-4; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary to enhance its checklist or design an alternative 
and use it to adequately and timely document Treasury’s final decisions 
regarding the inclusion or exclusion of federal agencies’ disclosure 
information in the existing notes to the CFS; 
Status of recommendation: Per Treasury and OMB: Treasury’s checklist 
was revised in fiscal year 2008 to address these concerns; 
Status of recommendation: Per GAO: Closed. 

Count: 51; 
No.: 07-5; 
Recommendation: The Director of OMB should direct the Controller of OMB’
s Office of Federal Financial Management, in coordination with Treasury’
s Fiscal Assistant Secretary, to develop formal processes and 
procedures for identifying and resolving any material differences in 
distributed offsetting receipt amounts included in the net outlay 
calculation of federal agencies’ Statement of Budgetary Resources and 
the amounts included in the computation of the budget deficit in the 
CFS; 
Status of recommendation: Per Treasury and OMB: OMB is currently 
updating its policies and procedures for identifying and resolving 
material differences in distributed offsetting receipt amounts. In 
addition, OMB worked with agencies on this issue throughout fiscal year 
2008 and made significant progress; 
Status of recommendation: Per GAO: Open. 

Count: 52; 
No.: 07-6; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary to establish effective internal control to ensure 
the spreadsheets used to compile the CFS are protected from inadvertent 
change; 
Status of recommendation: Per Treasury and OMB: Treasury revised its 
internal control policies and procedures to ensure that the 
spreadsheets were protected from inadvertent change; 
Status of recommendation: Per GAO: Closed. 

Count: 53; 
No.: 07-7; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary to establish effective internal control to ensure 
the spreadsheets used to compile the CFS are documented to facilitate 
detection and tracking of changes to key formulas and data; 
Status of recommendation: Per Treasury and OMB: Treasury revised its 
internal control policies and procedures to ensure that the 
spreadsheets were documented to address these concerns; 
Status of recommendation: Per GAO: Closed. 

Count: 54; 
No.: 07-8; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary to ensure that columns within key spreadsheets used 
to compile the CFS are labeled and properly aligned to reflect the data 
contained within; 
Status of recommendation: Per Treasury and OMB: Treasury revised its 
internal control policies and procedures to ensure that the 
spreadsheets were labeled and aligned to address these concerns; 
Status of recommendation: Per GAO: Closed. 

Count: 55; 
No.: 07-9; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary, in coordination with the Controller of OMB’s 
Office of Federal Financial Management, to develop and implement 
effective processes for monitoring and assessing the effectiveness of 
internal control over the processes used to prepare the CFS; 
Status of recommendation: Per Treasury and OMB: Treasury is currently 
reviewing its internal control procedures to develop a formal mechanism 
for monitoring and assessing the effectiveness of internal control over 
the preparation of the CFS. See status of recommendation No. 04-6; 
Status of recommendation: Per GAO: Open. 

Count: 56; 
No.: 07-10; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary, working in coordination with the Controller of OMB’
s Office of Federal Financial Management, to develop and implement 
alternative solutions to performing almost all of the compilation 
effort at the end of the year, including obtaining and utilizing 
interim financial information from federal agencies; 
Status of recommendation: Per Treasury and OMB: Treasury will continue 
to consider what information can be obtained during the interim period 
to facilitate the year-end CFS preparation process; 
Status of recommendation: Per GAO: Open. 

Source: GAO. 

[End of table] 

[End of section] 

Appendix II: Comments from the Department of the Treasury: 

Department Of The Treasury: 
Assistant Secretary: 
Washington, D.C. 

April 15, 2009L 

Mr. Gary T. Engel: 
Director, Financial Management and Assurance: 
Government Accountability Office: 
Washington, DC 20548: 

Dear Mr. Engel: 

Thank you for the opportunity to comment on the Government 
Accountability Office's (GAO) draft report on the Fiscal Year (FY) 2008 
audit, GAO-09-387, Material Weaknesses in Internal Control Continue to 
Impact Preparation of the Consolidated Financial Statements of the US. 
Government. 

The FY 2008 draft report identifies four new recommendations for 
improving the Consolidated Financial Statements (CFS) preparation 
process through documented policies and standard operating procedures. 
We concur with GAO on these recommendations and expect to implement the 
recommendations by the end of FY 2009. 

During FY 2008, we continued to make significant progress in improving 
the preparation of the CFS, leading to the closure of 16 of 56 
recommendations outstanding from previous CFS audit reports. In 
addition. the procedural and automated changes to our reporting 
processes implemented during the year improved the internal controls 
related to the preparation of the CFS. Our efforts included improved 
Financial Report disclosures, new data reconciliations, and increased 
data security. 

Thank you, again, for the opportunity to review and comment on the 
draft report. We look forward to working with you and your staff in 
making the CFS more meaningful and usable to its readers. 

Sincerely, 

Kenneth E. Carfine: 
Fiscal Assistant Secretary: 

Cc: Dania Werfel, OMB: 

[End of section] 

Appendix III: GAO Contact and Staff Acknowledgments: 

GAO Contact: 

Gary Engel, (202) 512-3406 or engelg@gao.gov: 

Acknowledgments: 

In addition to the above contact, the following individuals made key 
contributions to this report: Louise DiBenedetto, Assistant Director; 
Lynda Downing, Assistant Director; Cole Haase; Dragan Matic; Maria 
Morton; Thanomsri Piyapongroj; and Taya Tasse. 

[End of section] 

Footnotes: 

[1] The fiscal year 2008 Financial Report of the United States 
Government includes our report and was issued by the Department of the 
Treasury (Treasury) on December 15, 2008, and is available through 
GAO's Web site at [hyperlink, http://www.gao.gov/financial.html] and 
Treasury's Web site at [hyperlink, 
http://www.fms.treas.gov/fr/index.html]. 

[2] The consolidated financial statements for the fiscal years ended 
September 30, 2008 and 2007, consist of the Statements of Net Cost, 
Statements of Operations and Changes in Net Position, Reconciliations 
of Net Operating Cost and Unified Budget Deficit, Statements of Changes 
in Cash Balance from Unified Budget and Other Activities, Balance 
Sheets, and the Statements of Social Insurance, including the related 
notes to these financial statements. 

[3] As used in this report, accrual basis consolidated financial 
statements refer to all of the consolidated financial statements and 
notes, except those related to the Statement of Social Insurance. 

[4] The Government Management Reform Act of 1994 has required such 
reporting, covering the executive branch of government, beginning with 
financial statements prepared for fiscal year 1997. 31 U.S.C. 331(e). 

[5] A material weakness is a significant deficiency, or combination of 
significant deficiencies, that results in more than a remote likelihood 
that a material misstatement of the financial statements will not be 
prevented or detected. A significant deficiency is a control 
deficiency, or combination of control deficiencies, that adversely 
affects the entity's ability to initiate, authorize, record, process, 
or report financial data reliably in accordance with generally accepted 
accounting principles such that there is more than a remote likelihood 
that a misstatement of the entity's financial statements that is more 
than inconsequential will not be prevented or detected. A control 
deficiency 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 misstatements on a timely 
basis. 

[6] The Financial Report is intended to provide an understanding of 
both the government's current financial position and prospects for 
moving forward. 

[7] GAO, Internal Control: Standards for Internal Control in the 
Federal Government, [hyperlink, 
http://www.gao.gov/products/GAO/AIMD-00-21.3.1] (Washington, D.C.: 
November 1999). 

[8] Treasury refers to the significant agencies as "verifying 
agencies." They are the 24 Chief Financial Officers Act agencies, the 
Export-Import Bank of the United States, the Farm Credit System 
Insurance Corporation, the Federal Communications Commission, the 
Federal Deposit Insurance Corporation, the National Credit Union 
Administration, the U.S. Postal Service, the Pension Benefit Guaranty 
Corporation, the Railroad Retirement Board, the Securities and Exchange 
Commission, the Smithsonian Institution, and the Tennessee Valley 
Authority. 

[9] "Trading partners" are U.S. government agencies, departments, or 
other components included in the CFS that do business with each other. 

[10] [hyperlink, http://www.gao.gov/products/GAO/AIMD-00-21.3.1]. 

[11] "All other entities," a line item on the Statement of Net Cost 
(SNC), consists of entities not individually listed on the SNC. The 
entities in the "all other entities" line item are individually not 
deemed significant agencies by Treasury. 

[End of section] 

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