United States Marshals Service Annual Financial Statement, Fiscal Year 2008

Audit Report 09-13
February 2009
Office of the Inspector General

Commentary and Summary

This audit report contains the Annual Financial Statement of the United States Marshals Service (USMS) for the fiscal years (FY) ended September 30, 2008, and September 30, 2007. Under the direction of the Office of the Inspector General (OIG), Cotton & Company LLP performed the USMS audit, which resulted in an unqualified opinion on the FY 2008 financial statements. An unqualified opinion means that the financial statements present fairly, in all material respects, the financial position and the results of the entity’s operations in conformity with U.S. generally accepted accounting principles. For FY 2007, the USMS also received an unqualified opinion on its financial statements (OIG Report No. 08-15).

Cotton & Company LLP also issued reports on internal control and on compliance and other matters. For FY 2008, the Independent Auditors’ Report on Internal Control identified one material weakness and two significant deficiencies. The material weakness relates to inadequate funds management controls. Financial and compliance controls are not adequate to ensure that obligation transactions are executed and recorded in accordance with laws and regulations, and related open obligation balances are accurate and complete. Additionally, a significant deficiency was reported for the USMS’s information system controls. The auditors reported that improvements are needed in the areas of change controls, system software, and access controls. A significant deficiency was also reported for the USMS’s financial accounting and reporting quality control and assurance. The USMS’s management-review controls over the completeness and accuracy of the underlying accounting transactions, data, and account balances continue to need improvement. This deficiency was classified as a material weakness in the prior year. However, the USMS implemented several new quality control procedures during FYs 2008 and 2007 that enhanced its ability to prepare interim and final financial statements within prescribed timeframes and with more accuracy.

The Independent Auditors’ Report on Compliance and Other Matters stated that the USMS’s financial management systems did not substantially comply with the federal financial management system requirements and applicable federal accounting standards as required by the Federal Financial Management Improvement Act of 1996 (FFMIA). The auditors also reported unauthorized financial commitments that were not in accordance with the Federal Acquisition Regulation.

The OIG reviewed Cotton & Company LLP’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 the USMS’s financial statements, conclusions about the effectiveness of internal control, conclusions on whether the USMS’s financial management systems substantially complied with the FFMIA, or conclusions on compliance with laws and regulations. Cotton & Company LLP is responsible for the attached auditors’ reports dated November 3, 2008, and the conclusions expressed in the reports. However, our review disclosed no instances where Cotton & Company LLP did not comply, in all material respects, with U.S. generally accepted government auditing standards.


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