Federal Bureau of Investigation Annual Financial Statement
Fiscal Year 2001

Report No. 02-36
September 2002
Office of the Inspector General


The Federal Bureau of Investigation (FBI) has investigative jurisdiction over violations of more than 200 categories of federal crimes. Its priority programs include counterterrorism, drugs/organized crime, foreign counterintelligence, violent and white-collar crimes, and crimes against children. The FBI maintains 56 field offices, approximately 400 resident agencies, 4 specialized field installations, and 44 foreign posts. The FBI's total FY 2001 direct and reimbursable budget authority available was $4 billion.

This audit report contains the financial statements of the FBI for the fiscal year ended September 30, 2001 and September 30, 2000. Under the direction of the Office of the Inspector General (OIG), KPMG LLP performed the audit, which resulted in an unqualified opinion on the FY 2001 financial statements. An unqualified opinion means that the financial statements present fairly, in all material respects, the financial position and results of operations of the entity. The FBI also received an unqualified opinion on its FY 2000 financial statements (OIG Report 01-14).

The FBI had three material weaknesses and one reportable condition in FY 2001 compared to two material weaknesses and one reportable condition in FY 2000. Material weaknesses exist in controls over the FBI's information systems, the ability to accurately account for and report on property and equipment, and the timely preparation and submission of financial statement information. The reportable condition was identified in the area of cash management and involves the FBI's late payment of vendor invoices. The material weaknesses in property and information systems are repeat issues from the FY 2000 and FY 1999 audits. The material weakness related to the timely preparation and submission of financial statement information, along with the reportable condition on cash management, are new issues.

In its Report on Compliance with Laws and Regulations, the auditors reported that the FBI's financial management systems did not substantially comply with the requirements of the Federal Financial Management Improvement Act of 1996. The auditors specifically cited issues related to the three material weaknesses noted above as causing the noncompliance.

The OIG is particularly concerned about the material weaknesses in financial statement preparation and property. With the accelerated reporting deadlines imposed by the Department and the Office of Management and Budget, the FBI must improve on its ability to prepare timely financial information. The process must include participation of personnel outside the finance office and the use of system generated data. The FBI must also correct weaknesses in property management, which have caused significant prior period adjustments over the last three years and resulted in a restatement of the FY 2000 financial statements.