United States Marshals Service Annual Financial Statement
Fiscal Year 2002

Report No. 03-26
July 2003
Office of the Inspector General


This audit report contains the Annual Financial Statement of the United States Marshals Service (USMS) for the fiscal years ended September 30, 2002 and 2001. Under the direction of the Office of the Inspector General (OIG), Urbach Kahn & Werlin LLP performed the audit, which 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 operating activity of the entity. The USMS also received an unqualified opinion for its FY 2001 financial statements (OIG Report 02-39).

During FY 2002, the auditors noted two reportable conditions related to the USMS internal control structure. First, the auditors continue to report that improvements are needed in processes for timely preparation of financial reports. The USMS does not have adequate financial management systems to facilitate the recording of routine transactions. As a result, the USMS relies on labor-intensive manual compensating procedures. Second, the USMS made significant progress in correcting the material weakness reported last year on the USMS's information systems control environment, and it was reduced in status to a reportable condition. However, improvements are still needed in access controls.

In its Report on Compliance with Laws and Regulations, the auditors reported no issues. This is an improvement from the prior year, which disclosed instances where the USMS did not substantially comply with the requirements of the Federal Financial Management Improvement Act of 1996.