Federal Bureau of Prisons Annual Financial Statement, Fiscal Year 2006

Audit Report 07-23
March 2007
Office of the Inspector General

Table of Contents

This audit report contains the financial statements of the Federal Bureau of Prisons (BOP) for the fiscal years (FY) ended September 30, 2006, and September 30, 2005. Under the direction of the Office of the Inspector General (OIG), PricewaterhouseCoopers LLP (PwC) performed the audit, which resulted in an unqualified opinion on the FY 2006 financial statements. An unqualified opinion means that the financial statements present fairly, in all material respects, the financial position and results of the entityís operations in conformity with generally accepted accounting principles in the United States. The FY 2005 audit also resulted in an unqualified opinion (OIG Report No. 06-19).

PwC also issued reports on internal control and on compliance and other matters. The auditors identified one reportable condition in the Report of Independent Auditors on Internal Control, which has been reported since the FY 2002 annual financial statement audit. The reportable condition noted that improvements have been made in the BOPís information security program and system change control procedures. However, weaknesses continue to exist in the area of access controls and the Financial Management Information System accounting system maintained by the Department of Justiceís (DOJ) Justice Management Division. The report also notes that improvements are needed in the consolidated DOJ information systems general controls environment, which provides general control support to the BOP. The Report of Independent Auditors on Compliance and Other Matters identified no issues.

The OIG reviewed PwCís report and related documentation and inquired of its representatives. Our review, as differentiated from an audit in accordance with U.S. generally accepted government auditing standards, was not intended to enable us to express, and we do not express, an opinion on the BOPís financial statements, conclusions about the effectiveness of internal control, conclusions on whether the BOPís financial management systems substantially complied with the Federal Financial Management Improvement Act of 1996, or conclusions on compliance with laws and regulations. PwC is responsible for the attached auditorsí reports dated October 27, 2006, and the conclusions expressed in the reports. However, our review disclosed no instances where PwC did not comply, in all material respects, with generally accepted government auditing standards.

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