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Federal Bureau of Investigation
Annual Financial Statement
Fiscal Year 1999

Report No. 00-15
July 2000
Office of the Inspector General


The Federal Bureau of Investigation (FBI) is the principal investigative arm of the United States Department of Justice, and has jurisdiction over violations of more than 200 categories of federal crimes. Its five priority programs are counterterrorism, drugs/organized crime, foreign counterintelligence, violent crimes and financial crimes. The FBI maintains 56 field offices, approximately 400 resident agencies, 4 specialized field installations, and 35 foreign posts. The FBI received $2,966 million in direct appropriations and $597 million in reimbursable funding in FY 1999.

This audit report contains the Annual Financial Statement of the FBI for the fiscal year ended September 30, 1999. The audit was performed by KPMG LLP and resulted in an unqualified opinion. An unqualified opinion means that the financial statements present fairly, in all material respects, the financial position and results of operations of the entity. The FBI also received an unqualified opinion on its financial statements in FY 1998 (OIG Report 99-20).

Although the auditors issued an unqualified opinion, numerous internal control weaknesses were found to exist, including several previously reported issues that the FBI did not adequately address. Concerns remain over the FBI's ability to prepare financial statements timely and weaknesses in its information systems controls. After previously being identified as reportable conditions, these issues were elevated to material weaknesses in FY 1999. The FBI also encountered difficulty in accounting, reporting and reconciling property and equipment, which resulted in a third material weakness being reported. Inadequacies in FBI's evidence management system and related controls, and weaknesses in other information systems controls were identified again as reportable conditions. In total, the FBI had 3 material weaknesses and 2 reportable conditions in FY 1999 compared to no material weaknesses and 3 reportable conditions in FY 1998.

In its Report on Compliance with Laws and Regulations, the auditors reported that the FBI's financial management systems did not substantially comply with the requirements of the Federal Financial Management Improvement Act of 1996. The auditors specifically cited issues related to the 3 material weaknesses noted above as causing the noncompliance.

Similar to the prior year, the FBI's Annual Financial Statement consists of a balance sheet, statement of net cost, statement of changes in net position, statement of budgetary resources, and statement of financing. However, comparative financial statements were not required this year and are therefore not presented.