Financial Audit: Bureau of the Fiscal Service’s FY 2020 Schedules of the General Fund

What GAO Found

Deficiencies in internal control over financial reporting and other limitations on the scope of GAO’s work resulted in conditions that prevented GAO from expressing an opinion on the Schedules of the General Fund as of and for the fiscal year ended September 30, 2020. Such scope limitations also prevented GAO from obtaining sufficient appropriate audit evidence to provide a basis for an opinion on the effectiveness of the Bureau of the Fiscal Service’s (Fiscal Service) internal control over financial reporting relevant to the Schedules of the General Fund as of September 30, 2020. In addition, such scope limitations limited tests of compliance with selected provisions of applicable laws, regulations, contracts, and grant agreements for fiscal year 2020.

Fiscal Service was unable to readily provide sufficient appropriate evidence to support certain information reported in the accompanying Schedules of the General Fund. Specifically, Fiscal Service was unable to readily (1) identify and trace General Fund transactions to determine whether they were complete and properly recorded in the correct general ledger accounts and line items within the Schedules of the General Fund and (2) provide documentation to support the account attributes assigned to Treasury Account Symbols that determine how transactions are reported in the Schedules of the General Fund. The resulting scope limitations, the first of which GAO reported in its fiscal year 2018 audit, are the basis for GAO’s disclaimer of opinion on the Schedules of the General Fund. As a result of these limitations, GAO cautions that amounts Fiscal Service reported in the Schedules of the General Fund and related notes may not be reliable.

Three significant deficiencies in Fiscal Service’s internal control over financial reporting relevant to the Schedules of the General Fund, which GAO reported in its fiscal year 2018 audit, continue to exist. One of the continuing significant deficiencies contributed to the first scope limitation discussed above. In addition, GAO identified four other control deficiencies, three newly identified and one reported in its fiscal year 2018 audit, which GAO does not consider to be material weaknesses or significant deficiencies.

Fiscal Service worked extensively, both internally and with other federal agencies, to address two scope limitations from GAO’s fiscal year 2018 audit, such that GAO no longer considers these to be scope limitations for fiscal year 2020. Fiscal Service also (1) took action to close six of the 12 recommendations that GAO issued as a result of its fiscal year 2018 audit, (2) is implementing plans for remediating the remaining six recommendations over the next few years, and (3) plans to develop corrective actions for the three new recommendations issued in this report. Fiscal Service expressed its commitment to remediating the scope limitations and significant deficiencies reported for fiscal year 2020, acknowledging that it expects to take several years to resolve them, given the nature and complexity of certain identified issues.

In addition, GAO is issuing a separate LIMITED OFFICIAL USE ONLY report on information systems controls.

Why GAO Did This Study

Because GAO audits the consolidated financial statements of the U.S. government and the significance of the General Fund of the United States (General Fund) to the government-wide financial statements, GAO audited the fiscal year 2020 Schedules of the General Fund to determine whether, in all material respects, (1) the schedules are fairly presented and (2) Fiscal Service management maintained effective internal control over financial reporting relevant to the Schedules of the General Fund. Further, GAO tested compliance with selected provisions of laws, regulations, contracts, and grant agreements related to the Schedules of the General Fund.

As the reporting entity responsible for accounting for the cash activity of the U.S. government, in fiscal year 2020, the General Fund reported over $23 trillion of cash inflows and nearly $22 trillion of cash outflows. It also reported a budget deficit of $3.1 trillion, the largest recorded federal deficit in history. The CARES Act, enacted in March 2020, and other COVID-19 pandemic relief laws, contained a number of funding provisions that resulted in a significant increase in the cash activity and budget deficit reported by the General Fund during fiscal year 2020.

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    Vivint Smart Home Inc. (Vivint), based in Provo, Utah, has agreed to pay the United States $3.2 million to resolve allegations under the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA) that Vivint employees made false statements to secure financing for customers’ purchases of Vivint’s home monitoring products, the Justice Department announced today. FIRREA imposes civil penalties on any person or entity that violates certain predicate federal statutes.
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  • Readout of Attorney General Merrick B. Garland’s Call with the United Kingdom’s Home Secretary Priti Patel
    In Crime News
    Attorney General Merrick B. Garland spoke by phone yesterday with Priti Patel, the United Kingdom’s Home Secretary. In this inaugural conversation, the Attorney General and Home Secretary reaffirmed their shared commitment to deepening cooperation on countering common threats, including those posed by international terrorism.
    [Read More…]
  • The 10th Anniversary of the Great East Japan Earthquake
    In Crime Control and Security News
    Antony J. Blinken, [Read More…]
  • Secretary Pompeo’s Meeting with Qatari Amir Sheikh Tamim bin Hamad Al Thani
    In Crime Control and Security News
    Office of the [Read More…]
  • Puerto Rico Legislator and Two Capitol Employees Indicted for Theft and Bribery
    In Crime News
    On Wednesday, a federal grand jury in the District of Puerto Rico returned an eight-count indictment against legislator Nelson Del Valle Colon (Del Valle), a member of the Puerto Rico House of Representatives, as well as two of his employees, Nickolle Santos-Estrada (Santos) and her mother Mildred Estrada-Rojas (Estrada), for their alleged participation in a multi-year theft, bribery, and kickback conspiracy.
    [Read More…]
  • Joint Statement on Rocket Attacks in Erbil
    In Crime Control and Security News
    Office of the [Read More…]
  • Briefing with Bureau of Western Hemisphere Affairs Acting Assistant Secretary Julie J. Chung On Secretary Blinken’s Upcoming Virtual Trip to Canada and Mexico
    In Crime Control and Security News
    Julie J. Chung, Acting [Read More…]
  • J&F Investimentos S.A. Pleads Guilty and Agrees to Pay Over $256 Million to Resolve Criminal Foreign Bribery Case
    In Crime News
    J&F Investimentos S.A. (J&F), a Brazil-based investment company that owns and controls companies involved in multiple industries, including the meat and agriculture industry, has agreed to pay a criminal monetary penalty of $256,497,026 to resolve the department’s investigation into violations of the Foreign Corrupt Practices Act (FCPA).  The resolution arises out of J&F’s scheme to pay millions of dollars in bribes to government officials in Brazil in exchange for obtaining financing and other benefits for J&F and J&F-owned entities.
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  • Former Construction Executive Sentenced to 51 Months in Prison for Tax Evasion and Bribery Scheme
    In Crime News
    A New York construction executive was sentenced today in Manhattan federal court to 51 months in prison for evading taxes on more than $1.8 million in bribes he received from building subcontractors.
    [Read More…]
  • Special Representative Khalilzad Travels to Qatar, Pakistan, and Uzbekistan
    In Crime Control and Security News
    Office of the [Read More…]
  • Meet and Greet with U.S. Tri-Mission Italy
    In Crime Control and Security News
    Antony J. Blinken, [Read More…]
  • Central African Republic National Day
    In Crime Control and Security News
    Michael R. Pompeo, [Read More…]
  • On the Extension of the New START Treaty with the Russian Federation
    In Crime Control and Security News
    Antony J. Blinken, [Read More…]
  • Florida Man Charged with COVID Relief Fraud, Health Care Fraud and Money Laundering
    In Crime News
    A Florida man has been charged regarding allegations that he fraudulently obtained a Paycheck Protection Program (PPP) loan and an Economic Injury Disaster Loan (EIDL), and that he orchestrated a conspiracy to submit false and fraudulent claims for reimbursement to Medicare and CareCredit, and to defraud his own patients by charging them thousands of dollars for chiropractic services under false pretenses.
    [Read More…]
  • Jury Convicts Medical Equipment Company Owners of $27 Million Fraud
    In Crime News
    A federal jury convicted Dallas area owners and operators of two durable medical equipment companies Thursday of one count of conspiracy to defraud the United States and to pay and receive health care kickbacks and one count of conspiracy to commit money laundering.
    [Read More…]
  • Bulgaria Travel Advisory
    In Travel
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  • Secretary Pompeo’s Call with Mongolia’s President Battulga
    In Crime Control and Security News
    Office of the [Read More…]
  • Department of State Participation in Taiwan-hosted Event on Open Government and Anti-Corruption
    In Crime Control and Security News
    Office of the [Read More…]
  • Disaster Resilience: FEMA Should Take Additional Steps to Streamline Hazard Mitigation Grants and Assess Program Effects
    In U.S GAO News
    From fiscal years 2010 through 2018, the Federal Emergency Management Agency (FEMA) obligated over $11 billion through four grant programs that fund state and local hazard mitigation efforts. FEMA awarded about 88 percent of this amount through the two grant programs that fund hazard mitigation post-disaster. State and local officials from selected jurisdictions reported challenges with FEMA's hazard mitigation grant programs. Specifically, officials GAO interviewed from 10 of the 12 jurisdictions said grant application processes were complex and lengthy. To address this, FEMA officials augmented guidance and began monitoring application review time frames for one program and said they intend to assess two other programs to identify opportunities to streamline. However, they did not have a documented plan for doing so. By developing and implementing a plan to identify ways to streamline applications and reviews for all four programs, FEMA could reduce barriers to investments in hazard mitigation. Officials from eight of the 12 jurisdictions also cited challenges with applicants' technical capacity to successfully apply for grants. To address this, FEMA developed training and guidance, but GAO found that these resources are listed on different parts of its website and can be difficult for state and local officials to locate. Creating a centralized inventory of resources could improve applicant capacity to successfully develop mitigation projects and apply for grants. Examples of Hazard Mitigation Projects FEMA has assessed some effects of grant-funded hazard mitigation projects, but could expand efforts and better share results. FEMA uses benefit-cost analysis, which estimates the benefits over the life of a project, and post-disaster loss avoidance studies, which estimate project benefits from actual hazard events, to assess project effects. However, the loss avoidance studies have been limited to hurricanes, floods, and tornados, and have not assessed wildfires, winter storms, or other disasters. FEMA officials stated that they would like to expand these studies but do not have specific plans to do so. In addition, FEMA requires some states to assess the effectiveness of their mitigation projects, but does not share these studies. Developing a plan to conduct loss avoidance studies for other hazards and sharing the state studies could help FEMA and stakeholders make better informed mitigation investment decisions. The rising number of natural disasters and increasing reliance on federal assistance are key sources of federal fiscal exposure. FEMA has four grant programs to increase disaster resilience through hazard mitigation projects. The Additional Supplemental Appropriations for Disaster Relief Act, 2019, included a provision for GAO to review the federal response to disasters in 2018. This report addresses 1) FEMA's use of grants to support hazard mitigation; 2) challenges reported by selected jurisdictions applying for grants; and 3) how FEMA has assessed the effects of its hazard mitigation projects and shared the results. GAO analyzed FEMA's grant data for fiscal years 2010 through 2018 to capture the most complete recent data, conducted nongeneralizable site visits with 12 state and local jurisdictions selected to capture a range of grant funding levels and hazards, reviewed FEMA grant documents, and interviewed FEMA mitigation officials. GAO is making six recommendations, including that FEMA develop a plan to assess and streamline its hazard mitigation grant programs, create a centralized inventory of related resources, develop a plan to conduct more loss avoidance studies, and share state studies on hazard mitigation effectiveness. The Department of Homeland Security concurred with our recommendations. For more information, contact Chris Currie at (404) 679-1875 or CurrieC@gao.gov.
    [Read More…]