Office of Justice Programs Annual Financial Statement
Fiscal Year 1998

Report No. 99-17
May 1999
Office of the Inspector General

As the granting arm of the Department of Justice, the Office of Justice Programs (OJP) accomplishes its mission to provide federal leadership in developing the nation's capacity to prevent and control crime, improve the criminal and juvenile justice systems, increase knowledge about crime and related issues, and assist crime victims by establishing and supporting various programs aimed at improving the overall effectiveness of the criminal justice system.

This audit report contains the Annual Financial Statement of the OJP for the fiscal year ended September 30, 1998. The audit was performed by KPMG LLP and resulted in an unqualified opinion on the FY 1998 balance sheet. It also resulted in a disclaimer of opinion on the other FY 1998 financial statements. KPMG was also unable to obtain explanations of differences between certain statement of budgetary resources balances and similar balances reported on other OJP financial statements.

The OJP has taken corrective action to rectify the reportable conditions noted in the prior year's audit. The OJP modified its accrual formula used to estimate grantee expenses at year end, committed resources to improve the consistency and security of its Electronic Data Processing (EDP) function, reconciled its Fund Balance with Treasury, reinstated periodic account analysis, produced timely financial statements, and updated its property records. While recognizing the improvements made to date, the auditor's current year findings indicate that the corrective process is ongoing and further progress remains to be made specifically in the areas of EDP, reconciliation of Fund Balance with Treasury, and the development and documentation of accounting policies and guidance.

The OJP noted as part of "Management's Discussion and Analysis" that all of its mission critical systems, as well as many of its non-mission critical systems are Year 2000 compliant and that its programmatic risks of non-compliance are minimal. The Office of the Inspector General is unable to provide any assurance as to whether all mission critical systems will be compliant or that the OJP is at minimal risk.

For FY 1998, new reporting formats as required by Office of Management and Budget Bulletin No. 97-01, Form and Content of Agency Financial Statements, were implemented. For FY 1997, OJP prepared a statement of financial position and statement of operations and changes in net position. For FY 1998, OJP prepared a balance sheet, statement of net cost, statement of changes in net position, statement of budgetary resources, and statement of financing. Accordingly, comparative financial statements are not presented or required this year.