Also, we determined the status of corrective  actions Treasury and OMB have taken to address open  recommendations relating to their processes to prepare the CFS that  were detailed in our previous reports. We performed  our audit of the fiscal years 2014 and 2013 CFS in accordance with U.S.  generally accepted government auditing standards. Control Deficiencies Identified during Our Fiscal Year 2014 Audit

During our audit of the fiscal year 2014 CFS, we identified three new  internal control deficiencies in Treasury’s processes used to prepare the  CFS. Specifically, we found that Treasury did not have (1) a sufficient  process to work with key federal entities prior to the end of the fiscal year  to reasonably assure that new or substantially revised federal accounting  standards were consistently implemented by the entities to allow  appropriate consolidation at the government-wide level, (2) procedures  for determining whether entities and transactions for which it does not  have audit assurance are significant in the aggregate to the CFS, and    (3) sufficient procedures for (a) identifying significant increases or  decreases in all CFS line items and disclosures from prior fiscal year  reported amounts and (b) understanding the reasons for such changes. Status of Recommendations from Prior Reports

At the end of the fiscal year 2013 audit, 31 recommendations from our  prior reports regarding control deficiencies in the processes used to  prepare the CFS were open. While progress  was made, 24 recommendations from our prior reports remained open as  of February 19, 2015, the date of our report on the audit of the fiscal year  2014 CFS. We will continue to monitor Treasury’s  and OMB’s progress in addressing our recommendations as part of our  fiscal year 2015 CFS audit. Agency Comments

		OMB Comments

In oral comments on a draft of this report, OMB generally concurred with  the findings and recommendations of this report. Treasury also provided details on its ongoing efforts to address the  material weaknesses that relate to the federal government’s processes  used to prepare the CFS. Recommendation and

No. Count  GAO-08-748 (results of the fiscal year 2007 audit)  16  07-9    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. Legend: CFS= consolidated financial statements of the U.S. government; OMB = Office of Management and Budget; Treasury = Department of the  Treasury. I is as of February 19, 2015, the date of our report  on the audit of the fiscal year 2014 CFS. The recommendations in our prior reports related to material weaknesses in the following areas:   Preparation: The material weakness related to the federal government’s inability to reasonably  assure that the consolidated financial statements are (1) consistent with the underlying audited  entities’ financial statements, (2) properly balanced, and (3) in accordance with U.S. GAAP. Budget statements: The material weakness related to the federal government’s inability to  reasonably assure that the information in the Reconciliation of Net Operating Cost and Unified Budget  Deficit and the Statement of Changes in Cash Balance from Unified Budget and Other Activities is  complete and consistent with the underlying information in the audited entities’ financial statements  and other financial data. Intragovernmental: The material weakness related to the federal government’s inability to  adequately account for and reconcile intragovernmental activity and balances between federal  entities.
Why GAO Did This Study

Treasury, in coordination with OMB, prepares the Financial Report of the United States Government , which contains the CFS. Since GAO's first audit of the fiscal year 1997 CFS, certain material weaknesses and other limitations on the scope of its work have prevented GAO from expressing an opinion on the accrual-based CFS. As part of the fiscal year 2014 CFS audit, GAO identified material weaknesses and other control deficiencies in the processes used to prepare the CFS. The purpose of this report is to provide (1) details on the control deficiencies GAO identified related to the processes used to prepare the CFS, along with related recommendations, and (2) the status of corrective actions Treasury and OMB have taken to address GAO's prior recommendations relating to the processes used to prepare the CFS that remained open at the end of the fiscal year 2013 audit.

What GAO Found

During its audit of the fiscal year 2014 consolidated financial statements of the U.S. government (CFS), GAO identified control deficiencies in the Department of the Treasury's (Treasury) and the Office of Management and Budget's (OMB) processes used to prepare the CFS. These control deficiencies contributed to material weaknesses in internal control over the federal government's ability to
adequately account for and reconcile intragovernmental activity and balances between federal entities;
reasonably assure that the consolidated financial statements are (1) consistent with the underlying audited entities' financial statements, (2) properly balanced, and (3) in accordance with U.S. generally accepted accounting principles; and
reasonably assure that the information in the Reconciliation of Net Operating Cost and Unified Budget Deficit and the Statement of Changes in Cash Balance from Unified Budget and Other Activities is complete and consistent with the underlying information in the audited entities' financial statements and other financial data.
During its audit of the fiscal year 2014 CFS, GAO identified three new internal control deficiencies. Specifically, GAO found that Treasury did not have
a sufficient process to work with key federal entities prior to the end of the fiscal year to reasonably assure that new or substantially revised federal accounting standards were consistently implemented by the entities to allow appropriate consolidation at the government-wide level,
procedures for determining whether entities and transactions for which it does not have audit assurance are significant in the aggregate to the CFS, and
sufficient procedures for (1) identifying significant increases or decreases in all CFS line items and disclosures from prior fiscal year reported amounts and (2) understanding the reasons for such changes.
In addition, GAO found that various other control deficiencies identified in previous years' audits with respect to the processes used to prepare the CFS continued to exist. Specifically, 24 of the 31 recommendations from GAO's prior reports regarding control deficiencies in the processes used to prepare the CFS remained open as of February 19, 2015, the date of GAO's report on its audit of the fiscal year 2014 CFS. GAO will continue to monitor the status of corrective actions taken to address the 3 new recommendations made in this report as well as the 24 open recommendations from prior years as part of its fiscal year 2015 CFS audit.

What GAO Recommends

GAO is making three new recommendations to Treasury to address the control deficiencies identified during the fiscal year 2014 CFS audit. In commenting on GAO's draft report, Treasury and OMB generally concurred with GAO's recommendations.