Federal Bureau of Investigation Annual Financial Statement, Fiscal Year 2006

Audit Report 07-09
January 2007
Office of the Inspector General

Table of Contents

This audit report contains the Annual Financial Statement of the Federal Bureau of Investigation (FBI) for the fiscal years (FY) ended September 30, 2006, and September 30, 2005. Under the direction of the Office of the Inspector General (OIG), KPMG LLP (KPMG) performed the FBI audit. The audit resulted in an unqualified opinion on the FY 2006 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. For FY 2005, the FBI also received an unqualified opinion on its financial statements (OIG Report No. 06-06).

The Independent Auditors’ Report on Internal Control identified one material weakness. The material weakness, “Weaknesses Continue to Exist in Information Systems Controls,” has been a long standing issue that was first reported as a material weakness in FY 1998. The recommendation associated with the material weakness and related necessary corrective actions are detailed in the limited distribution OIG Report “Review of the Federal Bureau of Investigation Headquarters’ Information System Controls Environment, Fiscal Year 2006.” As a result, the recommendation is considered closed in this report.

While modest progress was made in correcting information system control weaknesses during FY 2006, the FBI made significant improvements to controls over financial reporting and property and equipment eliminating one material weakness and one reportable condition. These issues also were long standing conditions for the FBI, first being reported in FY 2001 and FY 1999, respectively.

In its Report on Compliance and Other Matters, the auditors concluded that the FBI’s financial management systems did not substantially comply with federal financial management system requirements, applicable federal accounting standards, and use of the United States Standard General Ledger at the transaction level as required by the Federal Financial Management Improvement Act of 1996 (FFMIA). This noncompliance with FFMIA has been reported since FY 1997.

The OIG reviewed KPMG’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 FBI’s financial statements, conclusions about the effectiveness of internal control, conclusions on whether the FBI’s financial management systems substantially complied with FFMIA, or conclusions on compliance with laws and regulations. KPMG is responsible for the attached auditors’ reports dated October 26, 2006, and the conclusions expressed in the reports. However, our review disclosed no instances where KPMG did not comply, in all material respects, with generally accepted government auditing standards.

Return to OIG Home Page