United States Marshals Service Annual Financial Statement
Fiscal Year 1999

Report No. 00-25
September 2000
Office of the Inspector General

The United States Marshals Service (USMS) is a component of the United States Department of Justice. Its mission is to protect the Federal courts and ensure the effective operation of the Federal judicial system. The USMS operations are organized into four primary lines of business including: investigation and prosecution of criminal offenses; legal representation, enforcement of Federal laws, and defense of interests; detention and incarceration; and protection of the Federal judiciary and improvement of the justice system.

This audit report contains the Annual Financial Statement of the USMS for the fiscal year ended September 30, 1999. The audit was performed by Urbach Kahn & Werlin PC and resulted in an unqualified opinion. An unqualified opinion means the financial statements present fairly, in all material respects, the financial position and results of operating activity of the entity. The FY 1998 financial statement audit resulted in a disclaimer of opinion (Office of the Inspector Report 99-31).

During FY 1999, the USMS made improvements in its financial reporting process, but weaknesses still existed. Material weaknesses were identified in the areas of financial statement preparation and account reconciliation. During the preparation of the financial statements, the auditors found numerous technical and clerical errors. These errors were eventually corrected, but contributed to delays in submitting the financial statements to the Department. Weaknesses in the account reconciliation process were found in several accounts, critical to the fair presentation of the financial statements. Reconciliation issues represent a significant deficiency in the financial accounting control system and could adversely impact USMS' ability to record, process and report financial transactions timely and accurately.

The auditors noted additional reportable conditions related to weaknesses in the USMS' financial systems and operating inventories. In assessing controls over the financial systems, the auditors found the USMS had not implemented risk assessments and formalized contingency plans, and concluded that access controls needed improvement. The auditors also noted the USMS did not properly account for and were unable to provide supporting documentation for spare parts and supplies and maintenance equipment inventories.

In the Report on Compliance with Laws and Regulations, the auditors reported that the USMS's financial management systems did not comply with the requirements of Federal Financial Management Improvement Act of 1996. Specifically, the financial systems did not meet federal financial systems requirements.