OFFICES, BOARDS AND DIVISIONS AND
THE UNITED STATES MARSHALS SERVICE
ANNUAL FINANCIAL STATEMENT
FISCAL YEAR 1996
Audit Report 97-33, (9/97)
TABLE OF CONTENTS
OFFICE OF THE INSPECTOR GENERAL COMMENTARY AND SUMMARY
REPORT OF INDEPENDENT ACCOUNTANTS
REPORT OF INDEPENDENT ACCOUNTANTS ON INTERNAL CONTROLS
REPORT OF INDEPENDENT ACCOUNTANTS ON COMPLIANCE WITH LAWS AND REGULATIONS
CONSOLIDATED PRINCIPAL FINANCIAL STATEMENTS
NOTES TO PRINCIPAL FINANCIAL STATEMENTS
CONSOLIDATING FINANCIAL STATEMENTS
SUPPLEMENTAL FINANCIAL AND MANAGEMENT'S INFORMATION
APPENDIX I - AUDIT DIVISION ANALYSIS AND SUMMARY OF ACTIONS NECESSARY TO CLOSE THE REPORT
OFFICE OF THE INSPECTOR GENERAL
COMMENTARY AND SUMMARY
This audit report contains the Annual Financial Statement of the Offices, Boards and Divisions, and the United States Marshals Service (OBD/USMS) for the fiscal year ended September 30, 1996. The report includes management's overview, the principal financial statements and related notes, supplemental financial and management's information, and the independent accountants' reports on the principal financial statements, internal controls, and compliance with laws and regulations. The annual financial statement is the responsibility of the OBD/USMS management. This audit was performed as part of the Department of Justice's (DOJ) effort to implement the Government Management Reform Act of 1994 (GMRA), which requires an annual financial statement audit of the DOJ beginning with FY 1996. The results of the annual financial statement audit of the OBD/USMS as presented in this report was also used by Price Waterhouse LLP in its performance of the consolidated financial statement audit of the DOJ, which was issued in a separate report by the Office of the Inspector General (OIG), Report Number 97-24A.
The OIG contracted with Price Waterhouse LLP, Certified Public Accountants, to perform the FY 1996 audit of the OBD/USMS consolidated Statement of Financial Position. The audit was conducted in accordance with generally accepted government auditing standards and Office of Management and Budget Bulletin No. 93-06, "Audit Requirements for Federal Financial Statements." The OIG performs an oversight role in the audit process and ensures compliance with the GMRA by monitoring the progress of the audit, reviewing supporting workpapers, coordinating the issuance of reports, and following up on findings and management letter issues.
As part of the DOJ-wide audit effort, Price Waterhouse LLP performed a general controls
review of the Justice Data Centers which process OBD/USMS data. The results of this work
was also considered by Price Waterhouse LLP in performing its audit of the OBD/USMS.
Additional work was performed by Price Waterhouse LLP at the OBD/USMS level, as considered
necessary to complete its audit.
Reporting Entity
The components comprising the OBD/USMS include U.S. Attorneys, U.S. Trustees, U.S. Marshals Service, Executive Office for Immigration Review, Legal Activities and General Programs. These components' responsibilities include representing the American people in all legal matters involving the United States Government; supervising the administration of bankruptcy cases and private trustees in the Federal Bankruptcy Courts; protecting the Federal judiciary and witnesses, executing warrants and court orders, managing seized assets, and providing for the custody and transportation of unsentenced prisoners; improving the immigration hearing and appeal process and providing a uniform interpretation and application of immigration law to ensure fair treatment for all involved parties; upholding the civil rights of all Americans; enforcing laws to protect the environment; and safeguarding the consumer from fraudulent activity.
Audit Results
The audit resulted in a disclaimer of opinion on the consolidated Statement of Financial Position. The independent accountants were unable to substantiate the accounts payable balance of $1 billion and the property and equipment balance of $24.5 million. The independent accountants were unable to apply audit procedures sufficiently to determine whether these balances were fairly stated. As a result, the scope of the independent accountants' work was not sufficient for the accountants to express an opinion.
The independent accountants' report on internal controls identified four reportable conditions regarding: (1) the processing, recording, and monitoring of unliquidated obligations and accounts payable; (2) the accounting and control of property and equipment; (3) the security at DOJ data centers and for OBD/USMS financial management systems; and (4) the use of accrual-based accounting principles. Conditions 1, 2, and 3 were also considered to be material weaknesses. In its report on compliance with laws and regulations, the independent accountants disclosed that two material weaknesses identified by the independent accountants during the OBD/USMS financial statement audit were also not reported in the DOJ's FY 1996 Federal Managers' Financial Integrity Act Report (Conditions 1 and 2).
Other conditions involving the internal control structure were noted by the independent accountants and will be communicated, under separate letter, to management. The independent accountants were not contracted to perform control testing sufficient to enable the accountants to express an opinion on management's assertions over the effectiveness of the internal control structure or compliance with laws and regulations. Accordingly, the independent accountants did not express such opinions.
Financial and Other Operating Highlights
The FY 1996 budget for the OBD/USMS was approximately $4.5 billion; and expenses totaled $4 billion. Approximately $1.7 billion (43 percent) was expended on Personnel Services and Benefits; approximately $1.2 billion (30 percent) was expended on Contractual Services; and approximately $600 million (15 percent) was expended on Grants, Subsidies and Contributions.
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