Office of Justice Programs Annual Financial Statement, Fiscal Year 2007

Audit Report 08-11
March 2008
Office of the Inspector General

Commentary and Summary

This audit report contains the Annual Financial Statement of the Office of Justice Programs (OJP) for the fiscal years (FY) ended September 30, 2007, and September 30, 2006. Under the direction of the Office of the Inspector General (OIG), the audit was performed by KPMG LLP (KPMG) and resulted in an unqualified opinion on the FY 2007 financial statements. An unqualified opinion means that the financial statements present fairly, in all material respects, the financial position and the results of operations in conformity with the generally accepted accounting principles in the United States. The OJP also received an unqualified opinion on its FY 2006 financial statements (OIG Report No. 07-21).

KPMG also issued reports on internal control, and on compliance and other matters. The auditors identified three significant deficiencies, in the Independent Auditors’ Report on Internal Control, which have been reported annually since the FY 2003 restated report. The first significant deficiency relates to the information system controls environment. The auditors found weaknesses in the following areas categorized by the Government Accountability Office’s Federal Information System Controls Audit Manual: entity-wide security program, access controls, change controls, system software, and application controls. The second significant deficiency relates to OJP’s processes for estimating grant advances and payables. While the auditors found that OJP made significant improvement in addressing the prior year control finding, they noted that further improvement is still needed in OJP’s controls and methodology for quarterly estimating grant advance and payable amounts. The third significant deficiency notes the need for improvements to the de-obligation and closeout process for grant undelivered orders.

In their Independent Auditors’ Report on Compliance and Other Matters, the auditors reported no issues, including no instances of noncompliance with the requirements of the Federal Financial Management Improvement Act (FFMIA) of 1996.

The OIG reviewed KPMG’s reports and related documentation and made necessary inquiries 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 OJP’s financial statements, conclusions about the effectiveness of internal control, conclusions on whether OJP’s financial management systems substantially complied with FFMIA, or conclusions on compliance with laws and regulations. KPMG is responsible for the attached auditor’s reports dated October 31, 2007, and the conclusions expressed in the reports. However, our review disclosed no instances where KPMG did not comply, in all material respects, with generally accepted government auditing standards.

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