This is the accessible text file for GAO report number GAO-06-415 
entitled 'Financial Audit: Significant Internal Control Weaknesses 
Remain in Preparing the Consolidated Financial Statements of the U.S. 
Government' which was released on April 21, 2005. 

This text file was formatted by the U.S. Government Accountability 
Office (GAO) to be accessible to users with visual impairments, as part 
of a longer term project to improve GAO products' accessibility. Every 
attempt has been made to maintain the structural and data integrity of 
the original printed product. Accessibility features, such as text 
descriptions of tables, consecutively numbered footnotes placed at the 
end of the file, and the text of agency comment letters, are provided 
but may not exactly duplicate the presentation or format of the printed 
version. The portable document format (PDF) file is an exact electronic 
replica of the printed version. We welcome your feedback. Please E-mail 
your comments regarding the contents or accessibility features of this 
document to[hyperlink Webmaster@gao.gov]. 

This is a work of the U.S. government and is not subject to copyright 
protection in the United States. It may be reproduced and distributed 
in its entirety without further permission from GAO. Because this work 
may contain copyrighted images or other material, permission from the 
copyright holder may be necessary if you wish to reproduce this 
material separately. 

GAO: 

Report to the Secretary of the Treasury and the Director of the Office 
of Management and Budget: 

April 2006: 

Financial Audit: 

Significant Internal Control Weaknesses Remain in Preparing the 
Consolidated Financial Statements of the U.S. Government: 

GAO-06-415: 

[End of Section] 

GAO Highlights: 

Highlights of GAO-06-415, a report to the Secretary of the Treasury and 
the Director of the Office of Management and Budget: 

Why GAO Did This Study: 

For the past 9 years, since our first audit of the consolidated 
financial statements of the U.S. government (CFS), certain material 
weaknesses in internal control and in selected accounting and financial 
reporting practices have resulted in conditions that prevented GAO from 
expressing an opinion on the CFS. Specifically, GAO has reported that 
the U.S. government did not have adequate systems, controls, and 
procedures to properly prepare the CFS. Included with GAO’s December 
2005 disclaimer of opinion on the fiscal year 2005 CFS was its 
discussion of continuing weaknesses relating to the Department of the 
Treasury’s (Treasury) preparation of the CFS. The purpose of this 
report is to (1) provide details of those additional weaknesses, (2) 
recommend improvements, and (3) describe the status of corrective 
actions on GAO’s previous 154 recommendations. 

What GAO Found: 

GAO identified weaknesses during its tests of Treasury’s process for 
preparing the fiscal year 2005 CFS. Such weaknesses in the CFS 
preparation process impair the U.S. government’s ability to ensure that 
the CFS is consistent with the underlying audited agency financial 
statements, properly balanced, and in conformity with U.S. generally 
accepted accounting principles. 

The weaknesses GAO identified during the fiscal year 2005 CFS audit 
involved the following areas: 

* directly linking audited federal agency financial statements to the 
CFS, 

* comparability of financial statements,
 
* audit assurance over certain federal agencies’ closing packages, 

* internal control monitoring, 

* consolidated reporting guidance to federal agencies, 

* reconciling of intragovernmental activity and balances, and 

* various other internal control weaknesses that were identified in 
previous years’ audits but remained in fiscal year 2005 (see app. I). 

Of the 154 recommendations GAO reported in May 2005 regarding the 
process for preparing the CFS, 131 remained open as of December 2, 
2005, when GAO completed its fieldwork for the audit of the fiscal year 
2005 CFS. However, 76 of these 131 recommendations relate to specific 
disclosures required under U.S. generally accepted accounting 
principles. Treasury has submitted a proposal to the Federal Accounting 
Standards Advisory Board (FASAB) seeking to amend previously issued 
standards and eliminate or lessen the disclosure requirements for the 
consolidated financial statements so that U.S. generally accepted 
accounting principles would no longer require certain of the 
information Treasury has not been reporting. Comments on the exposure 
draft of a proposed FASAB standard, based on the Treasury proposal, 
were due March 1, 2006. GAO will continue to monitor the status of 
corrective actions to address open recommendations during its fiscal 
year 2006 audit of the CFS. 

What GAO Recommends: 

GAO is making 12 new recommendations to address compilation and 
reporting weaknesses identified during the fiscal year 2005 CFS audit. 
The Office of Management and Budget stated that it generally agreed 
with the new findings in this report. Treasury stated that it concurs 
with 11 of our recommendations. For the twelfth recommendation, 
Treasury offered an alternative solution that we believe should address 
our concern if it is effectively implemented. 

To view the full product, including the scope
and methodology, click on the link above.
For more information, contact Gary T. Engel at (202) 512-3406 
or engelg@gao.gov. 

Contents: 

Letter: 

Results in Brief: 

Scope and Methodology: 

Directly Linking Audited Federal Agency Financial Statements to the 
CFS: 

Comparability of Financial Statements: 

Audit Assurance over Certain Federal Agencies' Closing Packages: 

Internal Control Monitoring: 

Consolidated Reporting Guidance to Federal Agencies: 

Reconciling of Intragovernmental Activity and Balances: 

Agency Comments and Our Evaluation: 

Appendixes: 

Appendix I: Status of Treasury's and OMB's Progress in Addressing GAO's 
Prior Year Recommendations for Preparing the CFS: 

Appendix II: Comments from the Department of the Treasury: 

Appendix III: GAO Contacts and Staff Acknowledgments: 

Table: 

Table 1: Status of Treasury's and OMB's Progress in Addressing GAO's 
Prior Year Recommendations for Preparing the CFS: 

[End of Section] 

Letter: 

April 21, 2006: 

The Honorable John W. Snow: 
The Secretary of the Treasury: 

The Honorable Clay Johnson III: 
Acting Director, Office of Management and Budget: 

In our report dated December 2, 2005, we disclaimed an opinion on the 
consolidated financial statements of the U.S. government (CFS) for the 
fiscal years ended September 30, 2005, and 2004.[Footnote 1] For the 
past 9 years, certain material weaknesses in internal control and in 
selected accounting and financial reporting practices resulted in 
conditions that prevented us from expressing an opinion on the CFS. 
Specifically, we have reported that the federal government did not have 
adequate systems, controls, and procedures to properly prepare its 
consolidated financial statements. Many of these weaknesses in internal 
control that contributed to our continuing disclaimers of opinion were 
identified by agency financial statement auditors during their audits 
of federal agencies' financial statements and were reported in detail 
with recommendations to the agencies in separate reports. However, some 
of the internal control weaknesses were identified during our tests of 
the Department of the Treasury's (Treasury) process for preparing the 
CFS. 

The purpose of this report is to (1) discuss the details of the 
additional weaknesses we identified during our audit of the fiscal year 
2005 CFS regarding financial reporting procedures and internal control 
over the process for preparing the CFS, (2) recommend improvements to 
address those weaknesses, and (3) provide the status of corrective 
actions on the recommendations detailed in our prior reports and listed 
in appendix I. We have discussed each of the new weaknesses identified 
during our fiscal year 2005 audit with your staff and have incorporated 
their comments as appropriate. We also assessed Treasury's ongoing 
effort to develop and implement the Governmentwide Financial Report 
System (GFRS) and are providing the results of our assessment along 
with our recommendations in a separate report.[Footnote 2] 

Results in Brief: 

We identified weaknesses in the compilation and reporting processes 
during our audit of the fiscal year 2005 CFS. Such weaknesses impair 
the federal government's ability to ensure that the CFS are consistent 
with the underlying audited agency financial statements, balanced, and 
in conformity with U.S. generally accepted accounting principles 
(GAAP). Consequently, these weaknesses also contributed to our 
inability to render an opinion on the CFS. Specifically, we found that: 

* Treasury's process for compiling the CFS does not yet fully ensure 
that financial information from federal agencies' audited financial 
statements and other financial data directly link to amounts reported 
in the CFS. 

* Treasury lacked a process to ensure that fiscal years 2005 and 2004 
consolidated financial statements and notes were comparable. 

* Treasury and the Office of Management and Budget (OMB) did not have 
audit assurance on closing packages received from 4 of the 35 agencies 
that they have identified as significant to the CFS. 

* Treasury, in coordination with OMB, had not developed policies and 
procedures for monitoring internal control or provided us with adequate 
documentation evidencing an executable plan of action and milestones 
for short-term and long-range solutions for certain internal control 
weaknesses we have previously reported regarding the process for 
preparing the CFS, which may result in the findings of audits not being 
properly and timely resolved and internal control weaknesses continuing 
to exist. 

* Treasury did not provide clear guidance to federal agencies about 
certain financial information that agencies were required to provide in 
the closing package and as a result agencies reported certain financial 
information inconsistently, which increased the risk of incomplete and 
inaccurate summarization of data in the CFS. 

* As part of the intragovernmental reconciliation reporting process, 
Treasury and OMB have not provided sufficiently clear guidance for 
selecting the "confirmed reporting" category of the intragovernmental 
reconciliation report and do not have an effective process to obtain 
clarification for inconsistent explanations provided by federal 
agencies in this category. Also, Treasury and OMB did not require 
federal agencies' Inspectors General (IGs) to complete and report on 
the results of intragovernmental agreed-upon procedures until over 2 
weeks after federal agencies' audited financial statements were 
required to be issued to OMB, which did not optimize their value to the 
preparation of the agencies' financial statements or the CFS. 

* Various other internal control weaknesses identified in previous 
years' audits still existed during fiscal year 2005 (see app. I). 

This report includes 12 new recommendations to address the additional 
weaknesses we identified during our audit of the fiscal year 2005 CFS. 
Appendix I of this report reflects the status of actions taken as of 
December 2, 2005, the date of completion of our fieldwork on our audit 
of the fiscal year 2005 CFS, to address the recommendations from our 
previous reports. Our work showed that 131 recommendations contained in 
our prior reports remained open and 23 were closed. Of the 131 open 
recommendations, 76 relate to specific disclosures required under GAAP. 
Treasury has submitted a proposal to the Federal Accounting Standards 
Advisory Board (FASAB) seeking to amend previously issued standards and 
eliminate or lessen the disclosure requirements for the consolidated 
financial statements so that GAAP would no longer require certain of 
the information Treasury has not been reporting. Comments on the 
exposure draft of a proposed FASAB standard, based on the Treasury 
proposal, were due March 1, 2006. Treasury stated that it is waiting 
for FASAB approval and issuance of this proposed standard to determine 
the disclosures that will be required in future consolidated financial 
statements. We will continue to determine the status of corrective 
actions on our open recommendations during our fiscal year 2006 audit 
of the CFS. 

In commenting on a draft of this report, OMB stated that it generally 
agreed with the new findings and related recommendations in this 
report. Treasury stated that it concurs with all of the new 
recommendations in this report except for the recommendation to 
accelerate the due date for IGs to complete the agreed-upon procedures 
on the intragovernmental activity and balances. For fiscal year 2006, 
Treasury does not plan to accelerate the due date for completing these 
intragovernmental agreed-upon procedures. However, Treasury stated that 
for fiscal year 2006, it plans to expand the audit coverage for 
intragovernmental activity and balances by requiring the IGs to opine 
on such information in their audit of the closing package, which is due 
to Treasury by November 17, 2006. This is an appropriate alternative 
solution to accelerating the due date for the IGs to complete the 
intragovernmental agreed-upon procedures. We have modified our 
recommendation to also include developing an alternative solution to 
address this finding. 

Scope and Methodology: 

As part of our audit of the fiscal years 2005 and 2004 CFS, we 
evaluated Treasury's financial reporting procedures and related 
internal control, and we followed up on the status of Treasury and OMB 
corrective actions to address open recommendations regarding the 
process for preparing the CFS that were in our prior years' reports. In 
our disclaimer of opinion on the fiscal year 2005 CFS, which is 
included in the fiscal year 2005 Financial Report of the United States 
Government, we discussed material deficiencies relating to Treasury's 
preparation of the CFS. These material deficiencies contributed to our 
disclaimer of opinion on the CFS and also constitute a material 
weakness in internal control, which contributed to our adverse opinion 
on internal control. We performed sufficient audit procedures to 
provide the disclaimer of opinion in accordance with U.S. generally 
accepted government auditing standards. This report provides the 
details of the additional weaknesses we identified in performing our 
fiscal year 2005 audit procedures related to the process for preparing 
the CFS and our recommendations to correct those weaknesses, as well as 
the status of corrective actions taken by Treasury and OMB to address 
recommendations in our prior reports. 

We requested comments on a draft of this report from the Director of 
OMB and the Secretary of the Treasury or their designees. OMB provided 
oral comments, which are discussed in the Agency Comments and Our 
Evaluation section of this report. Treasury's comments are reprinted in 
appendix II and are also discussed in the Agency Comments and Our 
Evaluation section. 

Directly Linking Audited Federal Agency Financial Statements to the 
CFS: 

As discussed in our fiscal year 2005 audit report, fiscal year 2005 was 
the second year that Treasury used GFRS to collect agency financial 
statement information taken directly from federal agencies' audited 
financial statements. The goal of GFRS is to be able to directly link 
information from federal agencies' audited financial statements to 
amounts reported in the consolidated financial statements and resolve 
many of the weaknesses we previously identified in the process for 
preparing the consolidated financial statements, a goal we strongly 
support. For both the fiscal year 2005 and 2004 reporting processes, 
GFRS was able to capture agency financial information submitted to 
Treasury, but GFRS is still under development and not at the stage that 
it could be used to fully compile the consolidated financial statements 
from the information captured. 

As we have reported in the past, Treasury's process for compiling the 
CFS does not yet fully ensure that financial information from federal 
agencies' audited financial statements and other financial data 
directly link to amounts reported in the CFS. In our fiscal year 2005 
audit report, we noted that Treasury made progress in demonstrating 
amounts in the Balance Sheet and the Statement of Net Cost were 
consistent with federal agencies' audited financial statements prior to 
eliminating intragovernmental activity and balances. However, about 25 
percent of the significant[Footnote 3] federal agencies' auditors 
reported internal control weaknesses related to the processes the 
agencies perform to provide financial statement information to Treasury 
for preparing the consolidated financial statements. 

In our prior report,[Footnote 4] we recommended that as Treasury 
continues to design and further implement its new process for compiling 
the CFS, the Secretary of the Treasury should direct the Fiscal 
Assistant Secretary, in coordination with the Controller of OMB, to 
modify Treasury's closing package to (1) require federal agencies to 
directly link their audited financial statement notes to the CFS notes 
and (2) provide the necessary information to demonstrate that all of 
the five principal consolidated financial statements are consistent 
with the underlying information in federal agencies' audited financial 
statements and other financial data. 

Progress was made during fiscal year 2005. Treasury has been continuing 
to design and further implement its new process for compiling the CFS 
with the development of GFRS. We continue, though, to be concerned that 
the disciplined processes necessary to reduce risks to acceptable 
levels have not yet been effectively implemented. For example, Treasury 
moved forward with the project before ensuring that certain key 
elements, such as a concept of operations, were developed or even 
defining and documenting the financial reporting weaknesses that were 
expected to be addressed by the system. Not effectively implementing 
such disciplined processes creates an unnecessary risk that the system 
will cost more and take longer than expected to deploy, while not 
providing all of the intended system functionality. The implementation 
of any major system, such as GFRS, is not without risk; however, 
organizations that follow and effectively implement accepted best 
practices in systems development and implementation have been shown to 
reduce these risks to acceptable levels. A more detailed discussion of 
our assessment of Treasury's ongoing effort to develop and implement 
GFRS, along with recommendations to reduce the risk noted above, can be 
found in a separate report.[Footnote 5] 

Comparability of Financial Statements: 

The CFS includes 2 years of financial information. Because comparative 
financial statements are intended to furnish useful data about the 
differences in activity and balances between the 2 years shown, 
consistency in how amounts are reported for the 2 years is a major 
factor in creating comparability. We found that Treasury lacked a 
process to ensure that consolidated financial statements and notes for 
fiscal years 2005 and 2004 were consistently reported and therefore 
comparable. During fiscal year 2005, Treasury requested that agencies 
resubmit fiscal year 2004 financial information along with their fiscal 
year 2005 financial information. Some agencies resubmitted fiscal year 
2004 amounts in fiscal year 2005 that differed from what Treasury 
published in fiscal year 2004. Also, certain information reported for 
fiscal 2004 may have required reclassification to be comparable to the 
fiscal year 2005 amounts. Treasury did not analyze the fiscal year 2004 
information submitted in fiscal year 2005 or reclassify amounts within 
various financial statement line items and notes to achieve 
comparability and chose to continue to report what was published for 
fiscal year 2004. For example, the Reconciliations of Net Operating 
Cost and Unified Budget Deficit showed $47.8 billion and $.2 billion 
for property, plant, and equipment disposals and revaluations for 
fiscal years 2005 and 2004, respectively. However, based on the audited 
financial information provided by agencies to Treasury in GFRS in 
fiscal year 2005, the fiscal year 2004 amount should be $25.4 billion, 
rather than $.2 billion. The difference should have been reclassified 
from the Net Amount of All Other Differences line item on the 
Reconciliations of Net Operating Cost and Unified Budget Deficit. 

Recommendation for Executive Action: 

We recommend that the Secretary of the Treasury direct the Fiscal 
Assistant Secretary to develop a process to help ensure that, for each 
reporting year, the 2 years of consolidated financial statements and 
note information presented are consistently and comparably reported, in 
all material respects. 

Audit Assurance over Certain Federal Agencies' Closing Packages: 

Treasury and OMB did not require closing packages from 4 of the 35 
verifying agencies to be audited. Specifically, the Treasury Financial 
Manual (TFM) states that the Inspector General or a contracted 
independent public accountant for each federal verifying agency--except 
those agencies whose fiscal year ends on a date other than September 
30--must opine on the closing package data entered by the Chief 
Financial Officer into GFRS. Because of these year-end differences, the 
TFM does not require the Federal Deposit Insurance Corporation's Funds, 
National Credit Union Administration, and Farm Credit System Insurance 
Corporation--all of which have a year end other than September 30--to 
have their closing package data be audited. In addition, for fiscal 
years 2004 and 2005, OMB waived the closing package audit requirement 
for the Tennessee Valley Authority (TVA), which does have a September 
30 fiscal year end.[Footnote 6] In these four cases, Treasury and OMB 
did not develop any alternative solutions that include the requirement 
for adequate audit procedures to be performed over significant 
information included in the CFS. As a result, unaudited September 30 
information was included in the CFS for 4 agencies that Treasury and 
OMB consider to be significant. Treasury, therefore, has less assurance 
that the information included in the CFS for these agencies is fairly 
stated and directly links to the agencies' audited financial 
statements. 

Recommendation for Executive Action: 

We recommend that the Director of OMB direct the Controller of the 
Office of Federal Financial Management, in coordination with the 
Treasury Fiscal Assistant Secretary, to develop an alternative solution 
for obtaining audit assurance related to the Federal Deposit Insurance 
Corporation's Funds, National Credit Union Administration, and Farm 
Credit System Insurance Corporation, which includes the requirement for 
adequate audit procedures to be performed over significant information 
included in the CFS for these agencies. 

We also recommend that the Director of OMB direct the Controller of the 
Office of Federal Financial Management to consider not waiving the 
closing package audit requirement for any verifying agency in future 
years, such as TVA. 

Internal Control Monitoring: 

GAO's Standards for Internal Control in the Federal Government states 
that internal control is a major part of managing an organization and 
should include monitoring.[Footnote 7] Monitoring of internal control 
should include assessing the quality of performance over time and 
implementing policies and procedures for the timely follow-up and 
resolution of findings of audits and other reviews. The goal of these 
policies and procedures is to ensure that managers (1) promptly 
evaluate findings from audits and other reviews, including those 
showing deficiencies and recommendations reported by auditors and 
others who evaluate agencies' operations; (2) determine proper actions 
in response to findings and recommendations from audits and reviews; 
and (3) complete, within established time frames, all actions that 
correct or otherwise resolve the matters brought to management's 
attention. However, Treasury, in coordination with OMB, had not 
developed policies and procedures for monitoring internal control or 
provided us with adequate documentation evidencing an executable plan 
of action and milestones for short-term and long-range solutions for 
certain internal control weaknesses we have previously reported 
regarding the process for preparing the CFS. Without effective 
monitoring of internal control, findings of audits may not be resolved 
timely and properly. 

Recommendation for Executive Action: 

We recommend that the Secretary of the Treasury direct the Fiscal 
Assistant Secretary, in coordination with the Controller of OMB, to 
develop: 

* policies and procedures for monitoring internal control to help 
ensure that (1) audit findings are promptly evaluated, (2) proper 
actions are determined in response to audit findings and 
recommendations such as a documented plan of action with milestones for 
short-term and long-range solutions, and (3) all actions that correct 
or otherwise resolve the audit findings are completed within 
established time frames; and: 

* an executable plan of action and milestones for short-term and long- 
range solutions for certain internal control weaknesses we have 
previously reported regarding the process for preparing the CFS. 

Consolidated Reporting Guidance to Federal Agencies: 

The TFM prescribes how federal agencies are to submit financial 
information to Treasury to be used in compiling the CFS. While our 
planned audit procedures were not to review the entire TFM to determine 
if its guidance to agencies was clear, we found several areas where the 
TFM did not give clear guidance to federal agencies about the 
information that they were required to provide to Treasury, GAO, and 
OMB. Specifically, we found that the TFM did not give clear guidance 
for (1) reporting note disclosures for restricted cash, (2) reporting 
note disclosures for accounts payable, (3) preparing summaries of 
unadjusted misstatements to be included with federal agencies' closing 
package management representation letters, and (4) certain information 
to be reported by OPM to Treasury that is used to allocate costs on the 
Statement of Net Cost. For example, the TFM defines restricted cash as 
"amounts of cash that an entity holds and does not have authority to 
spend" and cash that is not restricted as "amounts of cash that an 
entity holds for which it has the authority to spend." Although these 
definitions are accurate at the agency level, these definitions are not 
accurate at the CFS level. For example, an agency may hold cash that it 
does not have the authority to spend because of a certain law or 
regulation, but when this cash is consolidated at the governmentwide 
level, the federal government as a whole may have the authority to 
spend the cash. Therefore, this cash would appropriately be restricted 
at the agency level, but not at the governmentwide level. As a result 
of the unclear guidance, agencies reported certain financial 
information inconsistently. This increases the risk of incomplete and 
inaccurate summarization of data in the CFS. 

Recommendations for Executive Action: 

We recommend that the Secretary of the Treasury direct the Fiscal 
Assistant Secretary to ensure that the TFM and any other guidance to 
federal agencies provide clear instructions for providing reliable data 
to Treasury in the following specific areas: 

* restricted cash, 

* accounts payable, 

* summaries of unadjusted misstatements, and: 

* certain information reported by OPM that is used to allocate costs on 
the Statement of Net Cost. 

Reconciling of Intragovernmental Activity and Balances: 

OMB and Treasury require federal agencies to reconcile selected 
intragovernmental activity and balances with their "trading 
partners"[Footnote 8] and report on the extent and results of the 
reconciliation efforts to Treasury. As part of the reconciliation 
report, federal agencies were required to categorize any material 
differences, as determined by Treasury, with their trading partners at 
fiscal year end within five categories: (1) confirmed reporting; (2) 
accounting methodology differences; (3) accounting or reporting errors; 
(4) timing difference--current year, timing difference--prior year; and 
(5) unknown/unreconciled. According to Treasury, confirmed reporting, 
the first category listed above, is intended to indicate that the 
agency has verified that the amount it has reported is accurate. The 
TFM requires a federal agency that selects the category "confirmed 
reporting" to provide a detailed explanation to support its response. 
However, we found that in many cases where a federal agency selected 
the "confirmed reporting" category, the agency did not provide detailed 
explanations. We also found cases where both trading partners selected 
"confirmed reporting" for the same material difference and the agencies 
did not provide detailed explanations for how both trading partners' 
amounts could be accurate when the material difference remained. When 
this situation occurs, we found that Treasury and OMB do not have an 
effective process to obtain clarification for inconsistent explanations 
provided and that agencies may be unclear as to when to select this 
category. Incorrect use of the confirmed reporting category and lack of 
detailed explanations may hinder efforts to identify and correct 
problems that federal agencies are experiencing in reconciling with 
their trading partners. 

Further, Treasury received the closing packages that contained each 
agency's intragovernmental activity and balances amounts on November 
18, 2005, and provided agencies with reconciliation reports that showed 
material differences with their trading partners on November 21, 2005. 
Treasury and OMB also require federal agencies' IGs to annually perform 
agreed-upon procedures on the intragovernmental activity and balances 
reported in the closing package. For fiscal year 2005, Treasury 
required agency IGs for the 35 verifying agencies to complete and 
report on these agreed-upon procedures by December 2, 2005. The timing 
of these procedures did not optimize their value because (1) this 
reporting date is over 2 weeks after federal agencies' audited 
financial statements were required to be issued to OMB, and (2) did not 
allow Treasury sufficient time to review the results and make any 
necessary adjustments to the CFS. 

Recommendation for Executive Action: 

We recommend that the Secretary of the Treasury direct the Fiscal 
Assistant Secretary, working in coordination with the Controller of 
OMB, to: 

* provide clear guidance to federal agencies as to when the "confirmed 
reporting" category in the intragovernmental reconciliation report 
should be selected, 

* develop an effective process for obtaining clarification from federal 
agencies for inconsistent or incomplete explanations provided in all 
material difference categories, and: 

* accelerate the due date for IGs to complete and report on the results 
of agreed-upon procedures on the intragovernmental activity and 
balances or develop an alternative solution that would allow Treasury 
sufficient time to review the results and make any necessary 
adjustments to the CFS. 

Agency Comments and Our Evaluation: 

OMB Comments: 

In oral comments on a draft of this report, OMB stated that it 
generally agreed with the new findings and related recommendations in 
this report. In addition, OMB provided some technical comments, which 
we have incorporated as appropriate. 

Treasury Comments: 

In written comments on a draft of this report, which are reprinted in 
appendix II, Treasury stated that it agrees that the preparation 
process still needs improvement and that it is addressing many of the 
recommendations in our previous reports. Treasury also stated that it 
concurs with all of the new recommendations in this report except for 
the recommendation to accelerate the due date for IGs to complete the 
agreed-upon procedures on the intragovernmental activity and balances. 
For fiscal year 2006, Treasury does not plan to accelerate the due date 
for completing these intragovernmental agreed-upon procedures. However, 
Treasury stated that for fiscal year 2006, it plans to expand the audit 
coverage for intragovernmental activity and balances by requiring the 
IGs to opine on such information in their audit of the closing package, 
which is due to Treasury by November 17, 2006. This is an appropriate 
alternative solution to accelerating the due date for the IGs to 
complete the intragovernmental agreed-upon procedures. We have modified 
our recommendation to also include developing an alternative solution 
to address this finding. 

This report contains recommendations to the Secretary of the Treasury 
and the Director of OMB. The head of a federal agency is required by 31 
U.S.C. 720 to submit a written statement on actions taken on these 
recommendations. You should submit your statement to the Senate 
Committee on Homeland Security and Governmental Affairs and the House 
Committee on Government Reform within 60 days of the date of this 
report. A written statement must also be sent to the House and Senate 
Committees on Appropriations with the agency's first request for 
appropriations made more than 60 days after the date of the report. 

We are sending copies of this report to the Chairmen and Ranking 
Minority Members of the Senate Committee on Homeland Security and 
Governmental Affairs; the Subcommittee on Federal Financial Management, 
Government Information, and International Security, Senate Committee on 
Homeland Security and Governmental Affairs; the House Committee on 
Government Reform; and the Subcommittee on Government Management, 
Finance, and Accountability, House Committee on Government Reform. In 
addition, we are sending copies to the Fiscal Assistant Secretary of 
the Treasury and the Deputy Director for Management of OMB. Copies will 
be made available to others upon request. This report is also available 
at no charge on GAO's Web site at [Hyperlink, http://www.gao.gov]. 

We acknowledge and appreciate the cooperation and assistance provided 
by Treasury and OMB during our audit. If you or your staff have any 
questions or wish to discuss this report, please contact Jeffrey C. 
Steinhoff, Managing Director, Financial Management and Assurance, on 
(202) 512-2600, or Gary T. Engel, Director, Financial Management and 
Assurance, on (202) 512-3406. Staff contacts and other key contributors 
to this report are listed in appendix II. 

Signed By: 

David M. Walker: 
Comptroller General of the United States: 

[End of section] 

Appendix I: Status of Treasury's and OMB's Progress in Addressing GAO's 
Prior Year Recommendations for Preparing the CFS: 

This appendix includes open recommendations from three of our prior 
reports: Financial Audit: Process for Preparing the Consolidated 
Financial Statements of the U.S. Government Needs Improvement, GAO-04-
45 (Washington, D.C.: Oct. 30, 2003); Financial Audit: Process for 
Preparing the Consolidated Financial Statements of the U.S. Government 
Needs Further Improvement, GAO-04-866 (Washington, D.C.: Sept. 10, 
2004); and Financial Audit: Process for Preparing the Consolidated 
Financial Statements of the U.S. Government Continues to Need 
Improvement, GAO-05-407 (Washington, D.C.: May 4, 2005). 
Recommendations that were closed in prior reports are not included in 
this appendix. This appendix includes the status of the recommendations 
according to the Department of the Treasury (Treasury) and the Office 
of Management and Budget (OMB) as well as our own assessments. 
Explanations are included in the status of recommendations per GAO when 
Treasury and OMB disagreed with our recommendation. 

Of the 154 recommendations regarding the process for preparing the CFS 
that are listed in this appendix, 131 remained open as of December 2, 
2005, the end of GAO's fieldwork for the audit of the fiscal year 2005 
CFS. Of these 131 recommendations, 76 relate to specific disclosures 
required under U.S. generally accepted accounting principles (GAAP). 
Treasury has submitted a proposal to the Federal Accounting Standards 
Advisory Board (FASAB) seeking to amend previously issued standards and 
eliminate or lessen the disclosure requirements for the consolidated 
financial statements so that GAAP would no longer require certain of 
the information Treasury has not been reporting. Comments on the 
exposure draft of a proposed FASAB standard, based on the Treasury 
proposal, are due March 1, 2006. Treasury stated that it is waiting for 
FASAB approval and issuance of this proposed standard to determine the 
disclosures that will be required in future consolidated financial 
statements. 

Table 1: 

Status of Treasury's and OMB's Progress in Addressing GAO's Prior Year 
Recommendations for Preparing the CFS: 

GAO-04-45 (results of the fiscal year 2002 audit). Count: 1; No. 02-2: 

Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary, in connection with Treasury's current compilation 
process and the development of Treasury's new compilation system and 
process, to develop and fully document policies and procedures for the 
CFS preparation process so that they are proper, complete, and 
consistently applied by staff members; 

Status of recommendation: Per Treasury and OMB: 

Treasury further revised and documented all of its major policies and 
procedures for the fiscal year 2005 compilation process to ensure the 
propriety, accuracy, and consistency of application. 

Status of recommendation: Per GAO: Open. Treasury needs to further 
document its policies and procedures. 

GAO-04-45 (results of the fiscal year 2002 audit). Count: 2; No. 02-4: 

Recommendation: As Treasury is designing its new financial statement 
compilation process to begin with the fiscal year 2004 CFS, the 
Secretary of the Treasury should direct the Fiscal Assistant Secretary, 
in coordination with the Controller of OMB, to develop reconciliation 
procedures that will aid in understanding and controlling the net 
position balance as well as eliminate the plugs previously associated 
with compiling the CFS. 

Status of recommendation: Per Treasury and OMB: 

To eliminate or explain adjustments (plugs) to net position, Treasury 
designed a process to eliminate, at the consolidated level, 
intragovernmental activity and balances using formal balanced 
accounting entries and developed a model to analyze unreconciled 
transactions that affected net position (i.e., contributed to the 
plug). Based on fiscal year 2005 data, the model disclosed the 
magnitude of the intragovernmental elimination differences, by 
reciprocal category that contributed to the net position elimination 
plug. In fiscal year 2005, Treasury also started an analysis to 
establish the reciprocal category for the General Fund. 

Status of recommendation: Per GAO: Open. 

GAO-04-45 (results of the fiscal year 2002 audit). Count: 3; No. 02-5: 
Recommendation: As Treasury is designing its new financial statement 
compilation process to begin with the fiscal year 2004 CFS, the 
Secretary of the Treasury should direct the Fiscal Assistant Secretary, 
in coordination with the Controller of OMB, to use balanced accounting 
entries to account for the change in net position rather than simple 
subtraction of liabilities from assets.
Status of recommendation: Per Treasury and OMB: See status of 
recommendation; No. 02-4; Status of recommendation: Per GAO: Open. 

GAO-04-45 (results of the fiscal year 2002 audit). Count: 4; No. 02-6:
Recommendation: 
As OMB continues to make strides to address issues related to 
intragovernmental transactions, the Director of OMB should direct the 
Controller of OMB to develop policies and procedures that document how 
OMB will enforce the business rules provided in OMB Memorandum M-03-01, 
Business Rules for Intragovernmental Transactions.
Status of recommendation: Per Treasury and OMB: OMB, Treasury, and the 
Chief Financial Officers' Council are reviewing 
the business rules and are also performing additional analysis on 
several groupings of intragovernmental transactions. Upon the 
conclusion of the review and analysis, a determination will be made how 
best to proceed with and enforce the business rules. 
Status of recommendation: Open. 

GAO-04-45 (results of the fiscal year 2002 audit). Count: 5; No.02-7: 

Recommendation: As OMB continues to make strides to address issues 
related to intragovernmental transactions, the Director of OMB should 
direct the Controller of OMB to require that significant differences 
noted between business partners be resolved and the resolution be 
documented. 

Status of recommendation: Per Treasury and OMB: 

OMB will continue to work with individual agencies to resolve 
imbalances that are referred to OMB on a case-by- case basis. As part 
of OMB's standard practice, resolutions reached will be communicated to 
all parties. 

Status of recommendation: Per GAO: Open. 

GAO-04-45 (results of the fiscal year 2002 audit). Count: 6; No. 02-8: 

Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary, in coordination with the Controller of OMB, to 
implement the plan to require federal agencies to report in Treasury's 
new closing package, beginning with fiscal year 2004, intragovernmental 
activity and balances by trading partner and to indicate amounts that 
have not been reconciled with trading partners and amounts, if any, 
that are in dispute. 

Status of recommendation: Per Treasury and OMB: 

Beginning in fiscal year 2004, Treasury has continued to identify 
material differences on a quarterly basis and work with OMB and the 
agencies to resolve differences. Treasury has provided and discussed 
with OMB a list of items in dispute. Treasury is working with the 
agencies to resolve these differences. Also, the Chief Financial 
Officers Council Intragovernmental Subcommittee has begun efforts to 
identify and resolve or mitigate issues or practices that result in 
significant differences. 

Status of recommendation: Closed. 

GAO-04-45 (results of the fiscal year 2002 audit). Count: 7; No. 02-9: 

Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary, in coordination with the Controller of OMB, to 
design procedures that will account for the difference in 
intragovernmental assets and liabilities throughout the compilation 
process by means of formal consolidating and elimination accounting 
entries.
 
Status of recommendation: Per Treasury and OMB: 

See status of recommendation; No. 02-4. 

Status of recommendation: Per GAO: Open. 

GAO-04-45 (results of the fiscal year 2002 audit). Count: 8; No. 02- 
10: 

Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary, in coordination with the Controller of OMB, to 
develop solutions for intragovernmental activity and balance issues 
relating to federal agencies' accounting, reconciling, and reporting in 
areas other than those OMB now requires be reconciled, primarily areas 
relating to appropriations. 

Status of recommendation: Per Treasury and OMB: 

See status of recommendation; No. 02-4. 

Status of recommendation: Open. 

GAO-04-45 (results of the fiscal year 2002 audit). Count: 9; No. 02- 
11: 

Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary, in coordination with the Controller of OMB, to 
reconcile the change in intragovernmental assets and liabilities for 
the fiscal year, including the amount and nature of all changes in 
intragovernmental assets or liabilities not attributable to cost and 
revenue activity recognized during the fiscal year. Examples of these 
differences would include capitalized purchases, such as inventory or 
equipment, and deferred revenue. 

Status of recommendation: Per Treasury and OMB: 

See status of recommendation; No. 02-4. 

Status of recommendation: Open. 

GAO-04-45 (results of the fiscal year 2002 audit). Count: 10; No. 02- 
12: 

Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary to develop and implement a process that adequately 
identifies and reports items needed to reconcile net operating cost and 
unified budget surplus (or deficit). Treasury should report "net 
unreconciled differences" included in the net operating results line 
item as a separate reconciling activity in the reconciliation 
statement. 

Status of recommendation: Per Treasury and OMB: 

Treasury disagrees with this recommendation. Treasury's position is 
that the unknown nature of the plug argues for placement in net 
position, not net cost. Treasury also does not believe that these 
unreconciled transactions affecting the change in net position are also 
differences between the two (accrual and budget) bases of accounting 
being reconciled in this statement. Therefore, the "net unreconciled 
differences" plug should not be included as a separate reconciling item 
on this statement. 

Status of recommendation: Per GAO: Open. Treasury currently reports on 
the Statement of Operations and Changes in Net Position the plug as 
part of net operating cost, not as a separate component of net 
position. In addition, the reconciliation statement begins with the net 
operating cost amount and ends with the budget deficit amount. As such, 
unless the plug is also part of the unified budget deficit, then the 
plug amount should be included as a reconciling item on the 
reconciliation statement. 

GAO-04-45 (results of the fiscal year 2002 audit). Count: 11; No. 02- 
13: 

Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary to develop and implement a process that adequately 
identifies and reports items needed to reconcile net operating cost and 
unified budget surplus (or deficit). Treasury should develop policies 
and procedures to ensure completeness of reporting and document how all 
the applicable components reported in the other consolidated financial 
statements (and related note disclosures included in the CFS) were 
properly reflected in the reconciliation statement. 

Status of recommendation: Per Treasury and OMB: 

Treasury will continue to improve the completeness and consistency of 
the information in this reconciliation statement and will continue to 
resolve significant inconsistencies, if any, to the applicable and 
related components reported in the other basic financial statements, 
and in the related note disclosures, included in the CFS. 

Status of recommendation: Open. 

GAO-04-45 (results of the fiscal year 2002 audit). Count: 12; No. 02- 
14: 

Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary to develop and implement a process that adequately 
identifies and reports items needed to reconcile net operating cost and 
unified budget surplus (or deficit). Treasury should establish 
reporting materiality thresholds for determining which agency financial 
statement activities to collect and report at the governmentwide level 
to assist in ensuring that the reconciliation statement is useful and 
conveys meaningful information. 

Status of recommendation: Per Treasury and OMB: 

Treasury communicated its disagreement with GAO on the need to report 
items at a lower level of detail. However, Treasury will consider the 
need for establishing a materiality threshold related to this statement 
as part of the overall process to eventually eliminate the "net amount 
of all other differences (plug)" included in this statement. 

Status of recommendation: Per GAO: Open. Treasury disagrees with all of 
our recommendations regarding the Statement of Changes in Cash Balance 
from Unified Budget and Other Activities and the Reconciliations of Net 
Operating Cost and Unified Budget Deficit even though these statements 
include some amounts that Treasury cannot explain or fully support or 
for which Treasury cannot demonstrate that the amounts clearly link to 
agencies' audited financial statements. Treasury has not developed any 
alternative solutions. We continue to believe that implementation of 
our recommendations would result in the most efficient and effective 
manner for Treasury, as the preparer of the CFS, to obtain and 
demonstrate the necessary assurance on the significant amounts reported 
in the Statement of Changes in Cash Balance from Unified Budget and 
Other Activities and the Reconciliation of Net Operating Cost and 
Unified Budget Deficit. Consistent reporting throughout the federal 
government is an important goal. 

GAO-04-45 (results of the fiscal year 2002 audit): Count: 13; No.:02-
15: 

Recommendation: If Treasury chooses to continue using information from 
both federal agencies' financial statements and the Central Accounting 
and Reporting System (STAR), Treasury should demonstrate how the 
amounts from STAR reconcile to federal agencies' financial statements. 

Status of recommendation: Per Treasury and OMB: 

Treasury has previously communicated its disagreement with GAO on the 
need for this reconciliation. Treasury does not use agency results in 
preparing this statement. 

Status of recommendation: Open. See status of recommendation No. 02-14. 

GAO-04-45 (results of the fiscal year 2002 audit): Count: 14; No.02- 
16; 

Recommendation: If Treasury chooses to continue using information from 
both federal agencies' financial statements and from STAR, Treasury 
should identify and document the cause of any significant differences, 
if any are noted. 

Status of recommendation: Per Treasury and OMB: 

Treasury has previously communicated its disagreement with GAO on the 
need for this reconciliation. Treasury does not use agency results in 
preparing this statement. 

Status of recommendation: Per GAO: Open. See status of recommendation 
No. 02- 14. 

GAO-04-45 (results of the fiscal year 2002 audit): Count: 15; No.02- 
17; 

Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary, in coordination with the Controller of OMB, to 
develop and implement a process to ensure that the Statement of Changes 
in Cash Balance from Unified Budget and Other Activities properly 
reflects the activities reported in federal agencies' audited financial 
statements. Treasury should document the consistency of the significant 
line items on this statement to agencies' audited financial statements. 

Status of recommendation: Per Treasury and OMB: 

Treasury has previously communicated its disagreement with GAO related 
to the use of data other than from STAR in the preparation of this 
statement. There are no material differences between outlays reported 
by us and those included in the President's Budget, nor is there a need 
to reconcile to agency financial statements. Also, GAAP does not 
require the disclosure of either receipts or outlays in this statement. 

Status of recommendation: Per GAO: Open. GAO's recommendation does not 
dictate the source of data Treasury should use to compile the Statement 
of Changes in Cash Balance from Unified Budget and Other Activities, 
but does recommend Treasury ensure consistency in reporting between 
significant line items on the statement to agencies' audited financial 
statements. We agree that GAAP does not specifically require the 
disclosure of receipts and outlays in the Statement of Changes in Cash 
Balance from Unified Budget or Other Activities. In previous years, 
this statement reported budget outlays and budget receipts. However, 
beginning in fiscal year 2004, the federal government chose not to 
disclose budget outlays and budget receipts in this financial statement 
and only included the budget deficit. As we have reported since fiscal 
year 2003, we found material differences between the total net outlays 
reported in selected federal agencies' Statements of Budgetary 
Resources (SBR) and Treasury's central accounting record, which 
Treasury uses to prepare the Statement of Changes in Cash Balance from 
Unified Budget and Other Activities. Consistent reporting throughout 
the federal government is an important goal. 

GAO-04-45 (results of the fiscal year 2002 audit): Count: 16; No.02- 
18; 

Recommendation:
 
The Secretary of the Treasury should direct the Fiscal Assistant 
Secretary, in coordination with the Controller of OMB, to develop and 
implement a process to ensure that the Statement of Changes in Cash 
Balance from Unified Budget and Other Activities properly reflects the 
activities reported in federal agencies' audited financial statements. 
Treasury should request, through its closing package, that federal 
agencies provide the net outlays reported in their Combined Statement 
of Budgetary Resources and explanations for any significant differences 
between net outlay amounts reported in the Combined Statement of 
Budgetary Resources and the budget of the U.S. government. 

Status of recommendation: Per Treasury and OMB: 

Treasury disagrees with GAO's recommendation to collect the agency SBR 
outlay data through the closing package process because Treasury 
already collects agency outlay data for budgetary reporting purposes. 
In addition, there is no requirement to disclose outlays in this 
statement. Treasury and OMB are working closely with the agencies to 
assure that the outlays reported in agency SBRs match the outlays 
reported to Treasury for budgetary reporting purposes. 

Status of recommendation: Per GAO: Open. See status of recommendation; 
No.'s 02-14 and 02-17. 
GAO-04-45 (results of the fiscal year 2002 audit): Count: 17; No. 02- 
19; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary, in coordination with the Controller of OMB, to 
develop and implement a process to ensure that the Statement of Changes 
in Cash Balance from Unified Budget and Other Activities properly 
reflects the activities reported in federal agencies' audited financial 
statements. Treasury should investigate the differences between net 
outlays reported in federal agencies' Combined Statement of Budgetary 
Resources and Treasury's records in STAR to ensure that the proper 
amounts are reported in the Statement of Changes in Cash Balance from 
Unified Budget and Other Activities. 
Status of recommendation: Per Treasury and OMB: 
See status of recommendation No.'s 02-17 and 02-18. 

Status of recommendation: Per GAO: Open. See status of recommendation; 
No.'s 02-14 and 02-17. 
GAO-04-45 (results of the fiscal year 2002 audit): Count: 18; No. 02-
20; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary, in coordination with the Controller of OMB, to 
develop and implement a process to ensure that the Statement of Changes 
in Cash Balance from Unified Budget and Other Activities properly 
reflects the activities reported in federal agencies' audited financial 
statements. Treasury should explain and document the differences 
between the operating revenue amount reported on the Statement of 
Operations and Changes in Net Position and unified budget receipts 
reported on the Statement of Changes in Cash Balance from Unified 
Budget and Other Activities. 
Status of recommendation: Per Treasury and OMB: GAO-04-45 
See status of recommendation No.'s 02-17 and 02-18. 

Status of recommendation: Per GAO: GAO-04-45 
Open. See status of recommendation; No.'s 02-14 and 02-17. 
GAO-04-45 (results of the fiscal year 2002 audit): Count: 19; No.:02- 
21; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary, in coordination with the Controller of OMB, to 
develop and implement a process to ensure that the Statement of Changes 
in Cash Balance from Unified Budget and Other Activities properly 
reflects the activities reported in federal agencies' audited financial 
statements. Treasury should provide support for how the line items in 
the "other activities" section of this statement relate to either the 
underlying Balance Sheet or related notes accompanying the CFS. 
Status of recommendation: Per Treasury and OMB: 
Treasury disagrees with GAO as to the need to link all the items in the 
"other activities" section of this statement to other components of the 
CFS. With the exception of loan-related items and total operating cash, 
the source for these items is STAR, and Treasury believes that the use 
of any other data would be less accurate. 

Status of recommendation: Per GAO: Open. See status of recommendation; 
No.'s 02- 14 and 02-17. 
GAO-04-45 (results of the fiscal year 2002 audit): Count: 20; No.02- 
22; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary, in coordination with the Controller of OMB, to 
perform an assessment to define the reporting entity, including its 
specific components, in conformity with the criteria issued by the 
Federal Accounting Standards Advisory Board (FASAB). Key decisions made 
in this assessment should be documented, including the reason for 
including or excluding components and the basis for concluding on any 
issue. Particular emphasis should be placed on demonstrating that any 
financial information that should be included but is not included is 
immaterial. 
Status of recommendation: Per Treasury and OMB: 
Treasury defined and documented the reporting entity for fiscal year 
2005. 

Status of recommendation: Per GAO: Open. Documentation was not provided 
to GAO as part of the fiscal year 2005 audit. GAO plans to review such 
documentation during its audit of the fiscal year 2006 CFS. 
GAO-04-45 (results of the fiscal year 2002 audit): Count: 21; No.02- 
23; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary, in coordination with the Controller of OMB, to 
provide in the financial statements all the financial information 
relevant to the defined reporting entity, in all material respects. 
Such information would include, for example, the reporting entity's 
assets, liabilities, and revenues. 
Status of recommendation: Per Treasury and OMB: 
Treasury will implement changes to the reporting entity. See status of 
recommendation No. 02- 22 

Status of recommendation: Per GAO: Open. 
GAO-04-45 (results of the fiscal year 2002 audit): Count: 22; No.:02- 
24; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary, in coordination with the Controller of OMB, to 
disclose in the financial statements all information that is necessary 
to inform users adequately about the reporting entity. Such disclosures 
should clearly describe the reporting entity and explain the reason for 
excluding any components that are not included in the defined reporting 
entity. 
Status of recommendation: Per Treasury and OMB: 
See status of recommendation No. 02-23. 
Status of recommendation: Per GAO: Open. 
GAO-04-45 (results of the fiscal year 2002 audit): Count: 23; No.:02- 
25; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary to establish a formal process that will allow the 
financial statements, related notes, and stewardship and supplemental 
information in the CFS to be presented in conformity with GAAP. The 
process should timely identify GAAP requirements. 
Status of recommendation: Per Treasury and OMB: 
Treasury established a formal process and completed an analysis of 
fiscal year 2005 required agency financial statement and note 
disclosures and made the appropriate disclosures in the fiscal year 
2005 CFS. For items not disclosed, Treasury will discuss with agency 
personnel and GAO any additional data needed to finalize the required 
disclosures. In addition, in October 2005, FASAB issued an exposure 
draft specific to the CFS that would result in the elimination or 
reduction for certain disclosures. Treasury plans no further action on 
these specific disclosures pending the outcome of this proposed 
standard. 

Status of recommendation: Per GAO: Open. Treasury's fiscal year 2005 
process did not completely analyze the fiscal year 2005 disclosures. 
Treasury stated that they planned no further action pending the outcome 
of a proposed FASAB standard. 
GAO-04-45 (results of the fiscal year 2002 audit): Count: 24; No.02-26; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary to establish a formal process that will allow the 
financial statements, related notes, and stewardship and supplemental 
information in the CFS to be presented in conformity with GAAP. The 
process should make timely modifications to Treasury's closing package 
requirements to obtain information needed; Status of recommendation: 
Per Treasury and OMB: 
See status of recommendation No. 02-25. 

Status of recommendation: Per GAO: Open. See status of recommendation; 
No. 02-25. 
GAO-04-45 (results of the fiscal year 2002 audit): Count: 25; No.02-27; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary to establish a formal process that will allow the 
financial statements, related notes, and stewardship and supplemental 
information in the CFS to be presented in conformity with GAAP. The 
process should assess, qualitatively and quantitatively, the impact of 
the omitted disclosures. 
Status of recommendation: Per Treasury and OMB: 
See status of recommendation No. 02-25; 

Status of recommendation: Per GAO: Open. See status of recommendation; 
No. 02-25. 
GAO-04-45 (results of the fiscal year 2002 audit): Count: 26; No.02-28; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary to establish a formal process that will allow the 
financial statements, related notes, and stewardship and supplemental 
information in the CFS to be presented in conformity with GAAP. The 
process should document decisions reached and the rationale for such 
decisions. 
Status of recommendation: Per Treasury and OMB: 
See status of recommendation No. 02-25. 

Status of recommendation: Per GAO: Open. See status of recommendation; 
No. 02-25. 
GAO-04-45 (results of the fiscal year 2002 audit): Count: 27; No.02- 
29; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary, in coordination with the Controller of OMB, to 
establish written policies and procedures for preparing the 
governmentwide management representation letter to help ensure that it 
is properly prepared and contains sufficient representations. 
Specifically, these policies and procedures should require an analysis 
of the agency management representations to determine if discrepancies 
exist between what the agency auditor reported and the representations 
made by the agency, including the resolution of such discrepancies. 
Status of recommendation: Per Treasury and OMB: 
Treasury and OMB's policy and procedures include an analysis of the 
agency management representations to determine if discrepancies exist 
between what the agency auditor reported and the representations made 
by the agency. Any discrepancies found are listed as exceptions on an 
enclosure that is submitted with the governmentwide management 
representation letter. 

Status of recommendation: Per GAO: Open. Treasury's policies and 
procedures are not adequate to identify all possible discrepancies 
between the agencies' management representation letters and the 
auditors' findings. Specifically, the policies and procedures only 
identify and report discrepancies that relate to material weaknesses. 
In addition, Treasury's policies and procedures state that items that 
resulted in an agency disclaimer of opinion or qualification will be 
included in an enclosure to the CFS management representation letter. 
However, the governmentwide representation letter prepared by Treasury 
is based primarily on the individual federal agency representation 
letters. Any identified discrepancies at the agency level, whether they 
affected the opinion or not, need to be considered so that Treasury and 
OMB can adequately provide us representations at the governmentwide 
level. 
GAO-04-45 (results of the fiscal year 2002 audit): Count: 28; No.02-30; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary, in coordination with the Controller of OMB, to 
establish written policies and procedures for preparing the 
governmentwide management representation letter to help ensure that it 
is properly prepared and contains sufficient representations. 
Specifically, these policies and procedures should require a 
determination that the agency management representation letters have 
been signed by the highest-level agency officials who are responsible 
for and knowledgeable about the matters included in the agency 
management representation letters. 
 Status of recommendation: Per Treasury and OMB: 
OMB Bulletin No. 01-02, Audit Requirements for Federal Financial 
Statements references the audit guidance on management representation 
letters provided in the AICPA auditing standard AU § 333, Management 
Representations; these are authoritative for audits of federal 
financial statements. The AU § 333.09 instructs that the management 
representation letters should be signed by management with the overall 
responsibility and knowledge about the items covered by the 
representations. Unless explicitly noted by an agency's auditor, 
Treasury and OMB infer from the auditors' acceptance of agencies' 
management representation letters that the proper signatures are 
included. Treasury and OMB's policy is to rely on the integrity of the 
agency audits, including the determination of the adequacy of the 
agencies' signatories. 

Status of recommendation: Per GAO: Open. The policies and procedures 
discuss signatures on agency management representation letters, but do 
not include steps for Treasury's review of the signatures to determine 
if the letters have been signed by the highest-level agency officials 
who are responsible for and knowledgeable about the matters included in 
the agency management representation letters. Letters that have not 
been appropriately signed impair Treasury's and OMB's ability to 
provide representation at the governmentwide level. In connection with 
our audit of the fiscal year 2004 CFS, we issued reports to 24 federal 
agencies discussing areas, including signatures, where the agencies' 
fiscal year 2004 management representation letters did not provide all 
the information necessary to support Treasury's and OMB's preparation 
of the CFS management representation letter. For example, in the report 
we issued to one of the significant agencies, we made a recommendation 
regarding signatures. In this agency's response to the report, it 
represented that it would include the appropriate signatures on future 
letters. However, the agency's fiscal year 2005 management 
representation letter did not include such signatures. 
GAO-04-45 (results of the fiscal year 2002 audit): Count: 29; No.02-31; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary, in coordination with the Controller of OMB, to 
establish written policies and procedures for preparing the 
governmentwide management representation letter to help ensure that it 
is properly prepared and contains sufficient representations. 
Specifically, these policies and procedures should require an 
assessment of the materiality thresholds used by federal agencies in 
their respective management representation letters. 
Status of recommendation: Per Treasury and OMB: 
Neither OMB Bulletin No. 01-02, Audit Requirements for Federal 
Financial Statements, nor OMB Circular A-136, Financial Reporting 
Requirements, Part B, requires agencies to quantitatively disclose its 
materiality in the management representation letters; these are 
authoritative for audits of federal financial statements. This practice 
is consistent with the AICPA auditing standard AU § 333 Management 
Representations. Treasury continues to calculate the materiality 
threshold for the governmentwide management representation letter using 
the guidance provided in the PCIE/GAO Financial Audit Manual (FAM). 
This guidance does not include consideration of component entities' 
materiality thresholds. 

Status of recommendation: Per GAO: Open. In preparing the 
governmentwide management representation letter, Treasury and OMB limit 
certain representations in the letter to matters that are considered to 
be material. In doing so, OMB, Treasury, and GAO should confer on the 
materiality level to be used at the governmentwide level. Treasury and 
OMB need the agency thresholds in providing a materiality threshold for 
the governmentwide management representation letter to represent that 
all matters material to the CFS were properly considered and included. 
This situation contributed to our scope limitation relating to the 
fiscal year 2005 governmentwide management representation letter. 
Specifically, one of the significant federal entities used a 
materiality threshold in its management representation letter that far 
exceeded what would be in conformity with the FAM, which in turn 
negatively impacted Treasury's and OMB's ability to provide us with 
representations at the governmentwide level within the materiality 
threshold we had established for the governmentwide letter. 
GAO-04-45 (results of the fiscal year 2002 audit): Count: 30; No. 02-
32; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary, in coordination with the Controller of OMB, to 
establish written policies and procedures for preparing the 
governmentwide management representation letter to help ensure that it 
is properly prepared and contains sufficient representations. 
Specifically, these policies and procedures should require an 
assessment of the impact, if any, of federal agencies' materiality 
thresholds on the management representations made at the governmentwide 
level. 
Status of recommendation: Per Treasury and OMB:
See status of recommendation No. 02-31. 

Status of recommendation: Per GAO: Open. See status of recommendation 
No. 02-31. 
GAO-04-45 (results of the fiscal year 2002 audit): Count: 31; No. 02-
33; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary, in coordination with the Controller of OMB, to 
establish written policies and procedures for preparing the 
governmentwide management representation letter to help ensure that it 
is properly prepared and contains sufficient representations. 
Specifically, these policies and procedures should require an 
evaluation and assessment of the omission of representations ordinarily 
included in agency management representation letters. 
Status of recommendation: Per Treasury and OMB: 
OMB Bulletin No. 01-02, Audit Requirements for Federal Financial 
Statements references the audit guidance on management representation 
letters provided in the AICPA auditing standard AU § 333, Management 
Representations; these are authoritative for audits of federal 
financial statements. The AU § 333.08 allows for the management 
representations to be limited to items that are material to the 
financial statements, with noted exceptions, provided that management 
has reached an understanding with its auditors on materiality. Unless 
explicitly noted by an agency's auditor, Treasury and OMB infer from 
the auditors' acceptance of agencies' management representation letters 
that the representations omitted from the agencies' letters are not 
material to the respective agencies' financial statements. It is 
Treasury and OMB's policy to rely on the integrity of the agency 
audits, including the determination of the adequacy of the agencies' 
management representation letters. 

Status of recommendation: Per GAO: Open. Treasury's policies and 
procedures do not include steps to review the agencies' management 
representation letters for omitted or incomplete representations. In 
addition, the policies and procedures do not include steps to assess 
the impact of omitted or incomplete representations on the 
governmentwide management representation letter. When agencies do not 
provide all representations or include incomplete representations in 
their management representation letter, it impairs GAO's ability to 
audit the CFS and Treasury's and OMB's ability to make these types of 
representations in the governmentwide management representation letter. 
As noted above, we issued reports to 24 federal agencies in which we 
cited issues with such agencies' fiscal year 2004 management 
representation letters. These issues included omitted or incomplete 
representations. 
GAO-04-45 (results of the fiscal year 2002 audit): Count: 32; No. 02-
34; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary, in coordination with the Controller of OMB, to 
establish written policies and procedures for preparing the 
governmentwide management representation letter to help ensure that it 
is properly prepared and contains sufficient representations. 
Specifically, these policies and procedures should require an analysis 
and aggregation of the agencies' summary of unadjusted misstatements to 
determine the completeness of the summaries and to ascertain the 
materiality, both individually and in the aggregate, of such unadjusted 
misstatements to the CFS taken as a whole. 
Status of recommendation: Per Treasury and OMB: 
In fiscal year 2005, Treasury updated the standard operating procedure 
(SOP) for the summaries of unadjusted misstatements. 

Status of recommendation: Per GAO: Open. Although Treasury did update 
its SOP, it was not clear that these procedures called for Treasury to 
review both the summaries of unadjusted misstatements included with 
agencies' management representation letters and the summaries of 
unadjusted misstatements submitted with the agencies' closing packages. 
This analysis is necessary to ensure that all unadjusted misstatements 
applicable to the CFS are aggregated. In addition, Treasury did not 
include unadjusted misstatements for three significant agencies in its 
fiscal year 2005 analysis. 
GAO-04-45 (results of the fiscal year 2002 audit): Count: 33; No. 02-
35; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary, in coordination with the Controller of OMB, to 
help ensure that agencies provide adequate information in their legal 
representation letters regarding the expected outcome of the cases. 
Status of recommendation: Per Treasury and OMB: 
OMB and Treasury will work with agencies to ensure that adequate 
information is provided in the legal representation letters regarding 
the expected outcome of the cases. 

Status of recommendation: Per GAO: Open. 
GAO-04-45 (results of the fiscal year 2002 audit): Count: 34; No. 02-
36; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary, in coordination with the Controller of OMB, to 
help ensure that agencies provide related management schedules. 
Status of recommendation: Per Treasury and OMB: 
OMB and Treasury will follow up with agencies that have not provided 
their management schedules to ensure they do so. 

Status of recommendation: Per GAO: Open.
GAO-04-45 (results of the fiscal year 2002 audit): Count: 35; No.:02-
37; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary, in coordination with the Controller of OMB, to 
establish written policies and procedures to help ensure that major 
treaty and other international agreement information is properly 
identified and reported in the CFS. Specifically, these policies and 
procedures should require that agencies develop a detailed schedule of 
all major treaties and other international agreements that obligate the 
U.S. government to provide cash, goods, or services, or that create 
other financial arrangements that are contingent on the occurrence or 
nonoccurrence of future events (a starting point for compiling these 
data could be the State Department's Treaties in Force). 
Status of recommendation: Per Treasury and OMB: 
To ensure a reasonable approach, OMB will analyze the appropriateness 
of reporting "treaties" before developing specific corrective actions.

Status of recommendation: Per GAO: Open. 
GAO-04-45 (results of the fiscal year 2002 audit): Count: 36; No.:02-
38; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary, in coordination with the Controller of OMB, to 
establish written policies and procedures to help ensure that major 
treaty and other international agreement information is properly 
identified and reported in the CFS. Specifically, these policies and 
procedures should require that agencies classify all such scheduled 
major treaties and other international agreements as commitments or 
contingencies. 
Status of recommendation: Per Treasury and OMB: 
See status of recommendation No. 02-37. 

Status of recommendation: Per GAO: Open. 
GAO-04-45 (results of the fiscal year 2002 audit): Count: 37; No.02-39; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary, in coordination with the Controller of OMB, to 
establish written policies and procedures to help ensure that major 
treaty and other international agreement information is properly 
identified and reported in the CFS. Specifically, these policies and 
procedures should require that agencies disclose in the notes to the 
CFS amounts for major treaties and other international agreements that 
have a reasonably possible chance of resulting in a loss or claim as a 
contingency. 
Status of recommendation: Per Treasury and OMB: 
See status of recommendation No. 02-37. 

Status of recommendation: Per GAO: Open. 
GAO-04-45 (results of the fiscal year 2002 audit): Count: 38; No.02-40; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary, in coordination with the Controller of OMB, to 
establish written policies and procedures to help ensure that major 
treaty and other international agreement information is properly 
identified and reported in the CFS. Specifically, these policies and 
procedures should require that agencies disclose in the notes to the 
CFS amounts for major treaties and other international agreements that 
are classified as commitments and that may require measurable future 
financial obligations. 
Status of recommendation: Per Treasury and OMB: 
See status of recommendation No. 02-37. 

Status of recommendation: Per GAO: Open. 
GAO-04-45 (results of the fiscal year 2002 audit): Count: 39; No.02-41; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary, in coordination with the Controller of OMB, to 
establish written policies and procedures to help ensure that major 
treaty and other international agreement information is properly 
identified and reported in the CFS. Specifically, these policies and 
procedures should require that agencies take steps to prevent major 
treaties and other international agreements that are classified as 
remote from being recorded or disclosed as probable or reasonably 
possible in the CFS. 
Status of recommendation: Per Treasury and OMB: 
See status of recommendation No. 02-37; 

Status of recommendation: Per GAO: Open. 
GAO-04-45 (results of the fiscal year 2002 audit): Count: 40; No.:02-
42; 
Recommendation: As Treasury is designing its new compilation process, 
which it expects to implement beginning with the fiscal year 2004 CFS, 
the Secretary of the Treasury should direct the Fiscal Assistant 
Secretary, in coordination with the Controller of OMB, to design the 
new compilation process to directly link information from federal 
agencies' audited financial statements to amounts reported in all the 
applicable consolidated financial statements and related footnotes. 
Status of recommendation: Per Treasury and OMB: 
Treasury used its revised CFS compilation process, first implemented in 
fiscal year 2004, to directly link agency audited financial statements 
to three of the five CFS principal statements. The exceptions are the 
Reconciliation of Net Operating Cost and Unified Budget Deficit (or 
Surplus) and the Statement of Changes in Cash Balance, which Treasury 
does not plan to link to agency financial statements. With regard to 
note disclosures, the revised compilation process included direct 
linkage between the CFS note disclosures and the related agencies' 
audited note disclosures. 

Status of recommendation: Per GAO: Open. Treasury's process for 
compiling the consolidated financial statements did not ensure that the 
information in all of the five principal financial statements and notes 
were fully consistent with the underlying information in federal 
agencies' audited financial statements and other financial data. 
Treasury made progress in demonstrating amounts in the Balance Sheet 
and the Statement of Net Cost were consistent with federal agencies' 
audited financial statements prior to eliminating intragovernmental 
activity and balances. 
GAO-04-45 (results of the fiscal year 2002 audit): Count: 41; No.02- 
43; 
Recommendation: As Treasury is designing its new compilation process, 
which it expects to implement beginning with the fiscal year 2004 CFS, 
the Secretary of the Treasury should direct the Fiscal Assistant 
Secretary, in coordination with the Controller of OMB, to consider the 
other applicable recommendations in this report when designing and 
implementing the new compilation process. 
Status of recommendation: Per Treasury and OMB: 

Treasury will continue to consider applicable recommendations as the 
current CFS compilation system is revised and enhanced. 

Status of recommendation: Per GAO: Open. 
GAO-04-45 (results of the fiscal year 2002 audit): Count: 42; No.02- 
44; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary to ensure that the note disclosure for loans 
receivable and loan guarantee liabilities meets the requirements of 
Statement of Federal Financial Accounting Standards (SFFAS) No. 3, 
Accounting for Inventory and Related Property, paragraph 91, which 
requires the reporting entity to disclose the valuation basis for 
foreclosed property. 
Status of recommendation: Per Treasury and OMB: 
See status of recommendation No. 02-25. In addition, this disclosure 
would be directly affected by the implementation of the FASAB exposure 
draft mentioned in the status of recommendation No; 02-25. 

Status of recommendation: Per GAO: Open. See status of recommendation; 
No. 02-25. 
GAO-04-45 (results of the fiscal year 2002 audit): Count: 43; No.02-45; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary to ensure that the note disclosure for loans 
receivable and loan guarantee liabilities meets the requirements of 
SFFAS No. 3, Accounting for Inventory and Related Property, paragraph 
91, which requires the reporting entity to disclose the changes from 
the prior year's accounting methods, if any. 
Status of recommendation: Per Treasury and OMB: 
See status of recommendation No. 02-25. In addition, this disclosure 
would be directly affected by the implementation of the FASAB exposure 
draft mentioned in the status of recommendation No; 02-25. 

Status of recommendation: Per GAO: Open. See status of recommendation; 
No. 02-25. 
GAO-04-45 (results of the fiscal year 2002 audit): Count: 44; No.02-46; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary to ensure that the note disclosure for loans 
receivable and loan guarantee liabilities meets the requirements of 
SFFAS No. 3, Accounting for Inventory and Related Property, paragraph 
91, which requires the reporting entity to disclose the restrictions on 
the use/ disposal of property. 
Status of recommendation: Per Treasury and OMB: 
See status of recommendation No. 02-25. In addition, this disclosure 
would be directly affected by the implementation of the FASAB exposure 
draft mentioned in the status of recommendation No; 02-25. 

Status of recommendation: Per GAO: Open. See status of recommendation; 
No. 02-25. 
GAO-04-45 (results of the fiscal year 2002 audit): Count: 45; No.02-47; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary to ensure that the note disclosure for loans 
receivable and loan guarantee liabilities meets the requirements of 
SFFAS No. 3, Accounting for Inventory and Related Property, paragraph 
91, which requires the reporting entity to disclose the balances by 
categories (i.e., pre-1992 and post-1991 foreclosed property). 
Status of recommendation: Per Treasury and OMB: 
See status of recommendation No. 02-25. In addition, this disclosure 
would be directly affected by the implementation of the FASAB exposure 
draft mentioned in the status of recommendation No; 02- 25. 

Status of recommendation: Per GAO: Open. See status of recommendation; 
No. 02- 25. 
GAO-04-45 (results of the fiscal year 2002 audit): Count: 46; No.02-48; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary to ensure that the note disclosure for loans 
receivable and loan guarantee liabilities meets the requirements of 
SFFAS No. 3, Accounting for Inventory and Related Property, paragraph 
91, which requires the reporting entity to disclose the number of 
properties held and average holding period by type or category. 
Status of recommendation: Per Treasury and OMB: 
See status of recommendation No. 02-25. In addition, this disclosure 
would be directly affected by the implementation of the FASAB exposure 
draft mentioned in the status of recommendation No; 02- 25. 

Status of recommendation: Per GAO: Open. See status of recommendation; 
No. 02- 25. 
GAO-04-45 (results of the fiscal year 2002 audit): Count: 47; No.:02-
49; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary to ensure that the note disclosure for loans 
receivable and loan guarantee liabilities meets the requirements of 
SFFAS No. 3, Accounting for Inventory and Related Property, paragraph 
91, which requires the reporting entity to disclose the number of 
properties for which foreclosure proceedings are in process at the end 
of the period for foreclosed assets acquired in full or partial 
settlement of a direct or guaranteed loan. 
Status of recommendation: Per Treasury and OMB: 
See status of recommendation No. 02-25. In addition, this disclosure 
would be directly affected by the implementation of the FASAB exposure 
draft mentioned in the status of recommendation No; 02-25. 

Status of recommendation: Per GAO: Open. See status of recommendation; 
No. 02-25. 
GAO-04-45 (results of the fiscal year 2002 audit): Count: 48; No.02-50; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary to ensure that the note disclosure for loans 
receivable and loan guarantee liabilities meets the requirements of 
SFFAS No. 18, Amendments to Accounting Standards for Direct Loans and 
Loan Guarantees, paragraph 9, which requires credit programs to 
reestimate the subsidy cost allowance for outstanding direct loans and 
the liability for outstanding loan guarantees. There are two kinds of 
reestimates:(1) interest rate reestimates and (2) technical/default 
reestimates. Entities should measure and disclose each program's 
reestimates in these two components separately. 
Status of recommendation: Per Treasury and OMB: 
See status of recommendation No. 02-25. In addition, this disclosure 
would be directly affected by the implementation of the FASAB exposure 
draft mentioned in the status of recommendation No; 02- 25. 

Status of recommendation: Per GAO: Open. See status of recommendation; 
No. 02- 25. 
GAO-04-45 (results of the fiscal year 2002 audit): Count: 49; No.:02-
51; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary to ensure that the note disclosure for loans 
receivable and loan guarantee liabilities meets the requirements of 
SFFAS No. 18, Amendments to Accounting Standards for Direct Loans and 
Loan Guarantees, paragraph 10, which requires the reporting entity to 
display in the notes to the financial statements a reconciliation 
between the beginning and ending balances of the subsidy cost allowance 
for outstanding direct loans and the liability for outstanding loan 
guarantees reported on the entity's balance sheet. 
Status of recommendation: Per Treasury and OMB: 
See status of recommendation No. 02-25. In addition, this disclosure 
would be directly affected by the implementation of the FASAB exposure 
draft mentioned in the status of recommendation No. 02- 25. 

Status of recommendation: Per GAO: Open. See status of recommendation; 
No. 02- 25. 
GAO-04-45 (results of the fiscal year 2002 audit): Count: 50; No.02-52; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary to ensure that the note disclosure for loans 
receivable and loan guarantee liabilities meets the requirements of 
SFFAS No. 18, Amendments to Accounting Standards for Direct Loans and 
Loan Guarantees, paragraph 11, which requires disclosure of the total 
amount of direct or guaranteed loans disbursed for the current 
reporting year and the preceding reporting year. 
Status of recommendation: Per Treasury and OMB: 
See status of recommendation No. 02-25. In addition, this disclosure 
would be directly affected by the implementation of the FASAB exposure 
draft mentioned in the status of recommendation No. 02-25. 

Status of recommendation: Per GAO: Open. See status of recommendation; 
No. 02-25. 
GAO-04-45 (results of the fiscal year 2002 audit): Count: 51; No.02-53; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary to ensure that the note disclosure for loans 
receivable and loan guarantee liabilities meets the requirements of 
SFFAS No. 18, Amendments to Accounting Standards for Direct Loans and 
Loan Guarantees, paragraph 11, which requires disclosure of the subsidy 
expense by components, recognized for the direct or guaranteed loans 
disbursed in the current reporting year and the preceding reporting 
year. 
Status of recommendation: Per Treasury and OMB: 
See status of recommendation No. 02-25. In addition, this disclosure 
would be directly affected by the implementation of the FASAB exposure 
draft mentioned in the status of recommendation No. 02-25. 

Status of recommendation: Per GAO: Open. See status of recommendation; 
No. 02-25. 
GAO-04-45 (results of the fiscal year 2002 audit): Count: 52; No.02-54; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary to ensure that the note disclosure for loans 
receivable and loan guarantee liabilities meets the requirements of 
SFFAS No. 18, Amendments to Accounting Standards for Direct Loans and 
Loan Guarantees, paragraph 11, which requires disclosure of the subsidy 
reestimates by components for the current reporting year and the 
preceding reporting year. 
Status of recommendation: Per Treasury and OMB: 
See status of recommendation No. 02-25. In addition, this disclosure 
would be directly affected by the implementation of the FASAB exposure 
draft mentioned in the status of recommendation No. 02-25. 

Status of recommendation: Per GAO: Open. See status of recommendation; 
No. 02-25. 
GAO-04-45 (results of the fiscal year 2002 audit): Count: 53; No.02-55; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary to ensure that the note disclosure for loans 
receivable and loan guarantee liabilities meets the requirements of 
SFFAS No. 18, Amendments to Accounting Standards for Direct Loans and 
Loan Guarantees, paragraph 11, which requires disclosure, at the 
program level, of the subsidy rates for the total subsidy cost and its 
components for the interest subsidy costs, default costs (net of 
recoveries), fees and other collections, and other costs estimated for 
direct loans and loan guarantees in the current year's budget for the 
current year's cohorts. 
Status of recommendation: Per Treasury and OMB: 
See status of recommendation No. 02-25. In addition, this disclosure 
would be directly affected by the implementation of the FASAB exposure 
draft mentioned in the status of recommendation No. 02-25. 

Status of recommendation: Per GAO: Open. See status of recommendation; 
No. 02-25. 
GAO-04-45 (results of the fiscal year 2002 audit): Count: 54; No.02-56; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary to ensure that the note disclosure for loans 
receivable and loan guarantee liabilities meets the requirements of 
SFFAS No. 18, Amendments to Accounting Standards for Direct Loans and 
Loan Guarantees, paragraph 11, which requires the reporting entity to 
disclose, discuss, and explain events and changes in economic 
conditions, other risk factors, legislation, credit policies, and 
subsidy estimation methodologies and assumptions that have had a 
significant and measurable effect on subsidy rates, subsidy expense, 
and subsidy reestimates. 
Status of recommendation: Per Treasury and OMB: 
See status of recommendation No. 02-25. In addition, this disclosure 
would be directly affected by the implementation of the FASAB exposure 
draft mentioned in the status of recommendation No. 02-25. 

Status of recommendation: Per GAO: Open. See status of recommendation; 
No. 02-25. 
GAO-04-45 (results of the fiscal year 2002 audit): Count: 55; No.02-57; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary to ensure that the note disclosure for inventories 
and operating materials and supplies meets the requirements of SFFAS 
No. 3, Accounting for Inventory and Related Property, paragraph 30, 
which requires the difference between the carrying amount and the 
expected net realizable value to be recognized as a loss or gain and 
either separately reported or disclosed when inventory or operating 
materials and supplies are declared excess, obsolete, or unserviceable. 
Status of recommendation: Per Treasury and OMB: 
See status of recommendation No. 02-25. In addition, this disclosure 
would be directly affected by the implementation of the FASAB exposure 
draft mentioned in the status of recommendation No. 02-
25. 

Status of recommendation: Per GAO: Open. See status of recommendation; 
No. 02-25. 
GAO-04-45 (results of the fiscal year 2002 audit): Count: 56; No.02-58; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary to ensure that the note disclosure for inventories 
and operating materials and supplies meets the requirements of SFFAS 
No. 3, Accounting for Inventory and Related Property, paragraphs 35 and 
50, which require disclosure of inventory and operating materials and 
supplies general composition. 
Status of recommendation: Per Treasury and OMB: 
See status of recommendation No. 02-25. In addition, this disclosure 
would be directly affected by the implementation of the FASAB exposure 
draft mentioned in the status of recommendation No. 02-25. 

Status of recommendation: Per GAO: Open. See status of recommendation; 
No. 02-25. 
GAO-04-45 (results of the fiscal year 2002 audit): Count: 57; No.02-59; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary to ensure that the note disclosure for inventories 
and operating materials and supplies meets the requirements of SFFAS 
No. 3, Accounting for Inventory and Related Property, paragraphs 35 and 
50, that require disclosure of any changes from the prior year in 
accounting methods for inventory and operating materials and supplies. 
Status of recommendation: Per Treasury and OMB: 
See status of recommendation No. 02-25. In addition, this disclosure 
would be directly affected by the implementation of the FASAB exposure 
draft mentioned in the status of recommendation No. 02-25. 

Status of recommendation: Per GAO: Open. See status of recommendation; 
No. 02-25. 
GAO-04-45 (results of the fiscal year 2002 audit): Count: 58; No.02-60; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary to ensure that the note disclosure for inventories 
and operating materials and supplies meets the requirements of SFFAS 
No. 3, Accounting for Inventory and Related Property, paragraphs 35 and 
50, which require the disclosure of any restrictions on the sale of 
inventory and the use of operating materials and supplies. 
Status of recommendation: Per Treasury and OMB: 
See status of recommendation No. 02-25. In addition, this disclosure 
would be directly affected by the implementation of the FASAB exposure 
draft mentioned in the status of recommendation No. 02- 25. 

Status of recommendation: Per GAO: Open. See status of recommendation; 
No. 02- 25. 
GAO-04-45 (results of the fiscal year 2002 audit): Count: 59; No.02-61; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary to ensure that the note disclosure for inventories 
and operating materials and supplies meets the requirements of SFFAS 
No. 3, Accounting for Inventory and Related Property, paragraphs 35 and 
50, which requires disclosure of any changes in the criteria for 
categorizing inventory and operating materials and supplies. 
Status of recommendation: Per Treasury and OMB: 
See status of recommendation No. 02-25. In addition, this disclosure 
would be directly affected by the implementation of the FASAB exposure 
draft mentioned in the status of recommendation No. 02- 25. 

Status of recommendation: Per GAO: Open. See status of recommendation; 
No. 02- 25. 
GAO-04-45 (results of the fiscal year 2002 audit): Count: 60; No.02-62; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary to ensure that the note disclosure for stockpile 
material meets the requirements of SFFAS No. 3, Accounting for 
Inventory and Related Property, paragraph 56, which requires disclosure 
of the basis for valuing stockpile material, including valuation method 
and any cost flow assumptions. 
Status of recommendation: Per Treasury and OMB: 
See status of recommendation No. 02-25. In addition, this disclosure 
would be directly affected by the implementation of the FASAB exposure 
draft mentioned in the status of recommendation No. 02-25. 

Status of recommendation: Per GAO: Open. See status of recommendation; 
No. 02-25. 
GAO-04-45 (results of the fiscal year 2002 audit): Count: 61; No.02-63; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary to ensure that the note disclosure for stockpile 
material meets the requirements of SFFAS No. 3, Accounting for 
Inventory and Related Property, paragraph 56, which requires disclosure 
of any changes from the prior year's accounting methods. 
Status of recommendation: Per Treasury and OMB: 
See status of recommendation No. 02-25. In addition, this disclosure 
would be directly affected by the implementation of the FASAB exposure 
draft mentioned in the status of recommendation No. 02- 25. 

Status of recommendation: Per GAO: Open. See status of recommendation; 
No. 02- 25. 
GAO-04-45 (results of the fiscal year 2002 audit): Count: 62; No.02-64; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary to ensure that the note disclosure for stockpile 
material meets the requirements of SFFAS No. 3, Accounting for 
Inventory and Related Property, paragraph 56, which requires disclosure 
of restrictions on the use of stockpile material. 
Status of recommendation: Per Treasury and OMB: 
See status of recommendation No. 02-25. In addition, this disclosure 
would be directly affected by the implementation of the FASAB exposure 
draft mentioned in the status of recommendation No. 02- 25. 

Status of recommendation: Per GAO: Open. See status of recommendation; 
No. 02- 25. 
GAO-04-45 (results of the fiscal year 2002 audit): Count: 63; No.02-65; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary to ensure that the note disclosure for stockpile 
material meets the requirements of SFFAS No. 3, Accounting for 
Inventory and Related Property, paragraph 56, which requires disclosure 
of the balances in each category of stockpile material (i.e., stockpile 
material held and held for sale). 
Status of recommendation: Per Treasury and OMB: 
This required information was disclosed in Note 5, Inventories and 
Related Property, Net, in the fiscal year 2005 CFS. 
Status of recommendation:
Per GAO: Closed. 
GAO-04-45 (results of the fiscal year 2002 audit): Count: 64; No.02-66; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary to ensure that the note disclosure for stockpile 
material meets the requirements of SFFAS No. 3, Accounting for 
Inventory and Related Property, paragraph 56, which requires disclosure 
of the criteria for grouping stockpile material held for sale. 
Status of recommendation: Per Treasury and OMB: 
See status of recommendation No. 02-25. In addition, this disclosure 
would be directly affected by the implementation of the FASAB exposure 
draft mentioned in the status of recommendation No. 02- 25. 

Status of recommendation: Per GAO: Open. See status of recommendation; 
No. 02- 25. 
GAO-04-45 (results of the fiscal year 2002 audit): Count: 65; No.02-67; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary to ensure that the note disclosure for stockpile 
material meets the requirements of SFFAS No. 3, Accounting for 
Inventory and Related Property, paragraph 56, which requires disclosure 
of changes in criteria for categorizing stockpile material held for 
sale. 
Status of recommendation: Per Treasury and OMB: 
See status of recommendation No. 02-25. In addition, this disclosure 
would be directly affected by the implementation of the FASAB exposure 
draft mentioned in the status of recommendation No. 02- 25. 

Status of recommendation: Per GAO: Open. See status of recommendation; 
No. 02- 25. 
GAO-04-45 (results of the fiscal year 2002 audit): Count: 66; No.02-68; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary to ensure that the note disclosure for stockpile 
material meets the requirements of SFFAS No. 3, Accounting for 
Inventory and Related Property, paragraph 55, which requires disclosure 
of any difference between the carrying amount (i.e., purchase price or 
cost) of stockpile material held for sale and the estimated selling 
price of such assets. 
Status of recommendation: Per Treasury and OMB: 
See status of recommendation No. 02-25. In addition, this disclosure 
would be directly affected by the implementation of the FASAB exposure 
draft mentioned in the status of recommendation No. 02-25; 
Status of recommendation: Per GAO: Open. See status of recommendation; 
No. 02-25. 
GAO-04-45 (results of the fiscal year 2002 audit): Count: 67; No.02-69; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary to ensure that the note disclosure for seized 
material meets the requirements of SFFAS No. 3, Accounting for 
Inventory and Related Property, paragraph 66, which requires disclosure 
of the valuation method. 
Status of recommendation: Per Treasury and OMB: 
See status of recommendation No. 02-25. In addition, this disclosure 
would be directly affected by the implementation of the FASAB exposure 
draft mentioned in the status of recommendation No. 02-25. 

Status of recommendation: Per GAO: Open. See status of recommendation; 
No. 02-25. 
GAO-04-45 (results of the fiscal year 2002 audit): Count: 68; No.02-70; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary to ensure that the note disclosure for seized 
material meets the requirements of SFFAS No. 3, Accounting for 
Inventory and Related Property, paragraph 66, which requires disclosure 
of any changes from the prior year's accounting methods. 
Status of recommendation: Per Treasury and OMB: 
See status of recommendation No. 02-25. In addition, this disclosure 
would be directly affected by the implementation of the FASAB exposure 
draft mentioned in the status of recommendation No. 02-25. 

Status of recommendation: Per GAO: Open. See status of recommendation; 
No. 02-25. 
GAO-04-45 (results of the fiscal year 2002 audit): Count: 69; No.02-71; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary to ensure that the note disclosure for seized 
material meets the requirements of SFFAS No. 3, Accounting for 
Inventory and Related Property, paragraph 66, which requires disclosure 
of the analysis of change in seized property (including dollar value 
and number of seized properties) that is on hand at the beginning of 
the year, seized during the year, disposed of during the year, and on 
hand at the end of the year, as well as known liens or other claims 
against the property. This information should be presented by type of 
seizure and method of disposition, when material. 
Status of recommendation: Per Treasury and OMB: 
See status of recommendation No. 02-25. In addition, this disclosure 
would be directly affected by the implementation of the FASAB exposure 
draft mentioned in the status of recommendation No. 02-25. 

Status of recommendation: Per GAO: Open. See status of recommendation; 
No. 02-25. 
GAO-04-45 (results of the fiscal year 2002 audit): Count: 70; No.02-72; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary to ensure that the note disclosure for forfeited 
property meets the requirements of SFFAS No. 3, Accounting for 
Inventory and Related Property, paragraph 78, which requires disclosure 
of the valuation method. 
Status of recommendation: Per Treasury and OMB: 
See status of recommendation No. 02-25. In addition, this disclosure 
would be directly affected by the implementation of the FASAB exposure 
draft mentioned in the status of recommendation No. 02-25; 
Status of recommendation: Per GAO: Open. See status of recommendation; 
No. 02-25. 
GAO-04-45 (results of the fiscal year 2002 audit): Count: 71; No.02-73; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary to ensure that the note disclosure for forfeited 
property meets the requirements of SFFAS No. 3, Accounting for 
Inventory and Related Property, paragraph 78, which requires disclosure 
of the analysis of the changes in forfeited property by type and dollar 
amount that includes (1) number of forfeitures on hand at the beginning 
of the year, (2) additions, (3) disposals and method of disposition, 
and (4) end-of-year balances. 
Status of recommendation: Per Treasury and OMB: 
See status of recommendation No. 02-25. In addition, this disclosure 
would be directly affected by the implementation of the FASAB exposure 
draft mentioned in the status of recommendation No. 02-25. 

Status of recommendation: Per GAO: Open. See status of recommendation; 
No. 02-25. 
GAO-04-45 (results of the fiscal year 2002 audit): Count: 72; No.02-74; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary to ensure that the note disclosure for forfeited 
property meets the requirements of SFFAS No. 3, Accounting for 
Inventory and Related Property, paragraph 78, which requires disclosure 
of any restriction on the use or disposition of the property. 
Status of recommendation: Per Treasury and OMB: 
See status of recommendation No. 02-25. In addition, this disclosure 
would be directly affected by the implementation of the FASAB exposure 
draft mentioned in the status of recommendation No. 02- 25. 

Status of recommendation: Per GAO: Open. See status of recommendation; 
No. 02- 25. 
GAO-04-45 (results of the fiscal year 2002 audit): Count: 73; No.02-75; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary to ensure that the note disclosure for forfeited 
property meets the requirements of SFFAS No. 3, Accounting for 
Inventory and Related Property, paragraph 78, which requires 
disclosure, if available, of an estimate of the value of property to be 
distributed to other federal, state, and local agencies in future 
reporting periods. 
Status of recommendation: Per Treasury and OMB: 
See status of recommendation No. 02-25. In addition, this disclosure 
would be directly affected by the implementation of the FASAB exposure 
draft mentioned in the status of recommendation No. 02-25. 

Status of recommendation: Per GAO: Open. See status of recommendation; 
No. 02-25. 
Count:74; No.02-76; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary to ensure that the note disclosure for goods held 
under price support and stabilization programs meets the requirements 
of SFFAS No. 3, Accounting for Inventory and Related Property, 
paragraph 98, which requires that if a contingent loss is not 
recognized because it is less than probable or it is not reasonably 
measurable, disclosure of the contingency shall be made if it is at 
least reasonably possible that a loss may occur. 
Status of recommendation: Per Treasury and OMB: 
See status of recommendation No. 02-25. In addition, this required 
information was requested from the agencies for inclusion in Note 19, 
Contingencies, in the fiscal year 2005 CFS. However, no related data 
were received in fiscal year 2005; therefore, there is no disclosure 
related to this requirement. 

Status of recommendation: Per GAO: Open. See status of recommendation; 
No. 02-
25. 
GAO-04-45 (results of the fiscal year 2002 audit): Count: 75; No.02-77; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary to ensure that the note disclosure for goods held 
under price support and stabilization programs meets the requirements 
of SFFAS No. 3, Accounting for Inventory and Related Property, 
paragraph 109, which requires disclosure of the basis for valuing 
commodities, including valuation method and cost flow assumptions. 
Status of recommendation: Per Treasury and OMB: 
See status of recommendation No. 02-25. In addition, this disclosure 
would be directly affected by the implementation of the FASAB exposure 
draft mentioned in the status of recommendation No. 02- 25. 

Status of recommendation: Per GAO: Open. See status of recommendation; 
No. 02- 25. 
GAO-04-45 (results of the fiscal year 2002 audit): Count: 76; No.02-78; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary to ensure that the note disclosure for goods held 
under price support and stabilization programs meets the requirements 
of SFFAS No. 3, Accounting for Inventory and Related Property, 
paragraph 109, which requires disclosure of any changes from the prior 
year's accounting methods. 
Status of recommendation: Per Treasury and OMB: 
See status of recommendation No. 02-25. In addition, this disclosure 
would be directly affected by the implementation of the FASAB exposure 
draft mentioned in the status of recommendation No. 02-25. 

Status of recommendation: Per GAO: Open. See status of recommendation; 
No. 02-25. 
GAO-04-45 (results of the fiscal year 2002 audit): Count: 77; No.02-79; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary to ensure that the note disclosure for goods held 
under price support and stabilization programs meets the requirements 
of SFFAS No. 3, Accounting for Inventory and Related Property, 
paragraph 109, which requires disclosure of any restrictions on the 
use, disposal, or sale of commodities. 
Status of recommendation: Per Treasury and OMB: 
See status of recommendation No. 02-25. In addition, this disclosure 
would be directly affected by the implementation of the FASAB exposure 
draft mentioned in the status of recommendation No. 02-25. 

Status of recommendation: Per GAO: Open. See status of recommendation; 
No. 02-25. 
GAO-04-45 (results of the fiscal year 2002 audit): Count: 78; No.02-80; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary to ensure that the note disclosure for goods held 
under price support and stabilization programs meets the requirements 
of SFFAS No. 3, Accounting for Inventory and Related Property, 
paragraph 109, which requires disclosure of the analysis of the change 
in dollar amount and volume of commodities, including those (1) on hand 
at the beginning of the year, (2) acquired during the year, (3) 
disposed of during the year listed by method of disposition, (4) on 
hand at the end of the year, (5) on hand at year-end and estimated to 
be donated or transferred during the coming period, and (6) received as 
a result of surrender of collateral related to nonrecourse loans 
outstanding. The analysis should also show the dollar value and volume 
of purchase agreement commitments. 
Status of recommendation: Per Treasury and OMB: 
See status of recommendation No. 02-25. In addition, this disclosure 
would be directly affected by the implementation of the FASAB exposure 
draft mentioned in the status of recommendation No. 02-25. 

Status of recommendation: Per GAO: Open. See status of recommendation; 
No. 02-25. 
GAO-04-45 (results of the fiscal year 2002 audit): Count: 79; No.02-81; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary to ensure that the note disclosure for property, 
plant, and equipment (PP&E) meets the disclosure requirements of SFFAS 
No. 6, Accounting for Property, Plant, and Equipment, paragraph 45, 
which requires disclosure of the estimated useful lives for each major 
class of PP&E. 
Status of recommendation: Per Treasury and OMB: 
See status of recommendation No. 02-25. In addition, this disclosure 
would be directly affected by the implementation of the FASAB exposure 
draft mentioned in the status of recommendation No. 02-25. 

Status of recommendation: Per GAO: Open. See status of recommendation; 
No. 02-25. 
GAO-04-45 (results of the fiscal year 2002 audit): Count: 80; No.02-82; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary to ensure that the note disclosure for PP&E meets 
the disclosure requirements of SFFAS No. 6, Accounting for Property, 
Plant, and Equipment, paragraph 45, which requires disclosure of 
capitalization thresholds, including any changes in thresholds during 
the period. 
Status of recommendation: Per Treasury and OMB: 
See status of recommendation No. 02-25. In addition, this disclosure 
would be directly affected by the implementation of the FASAB exposure 
draft mentioned in the status of recommendation No. 02-25; 
Status of recommendation: Per GAO: Open. See status of recommendation; 
No. 02-25. 
GAO-04-45 (results of the fiscal year 2002 audit): Count: 81; No.02-83; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary to ensure that the note disclosure for PP&E meets 
the disclosure requirements of SFFAS No. 6, Accounting for Property, 
Plant, and Equipment, paragraph 45, which requires disclosure of 
restrictions on the use or convertibility of general PP&E. 
Status of recommendation: Per Treasury and OMB: 
See status of recommendation No. 02-25. In addition, this disclosure 
would be directly affected by the implementation of the FASAB exposure 
draft mentioned in the status of recommendation No. 02- 25. 

Status of recommendation: Per GAO: Open. See status of recommendation; 
No. 02- 25. 
GAO-04-45 (results of the fiscal year 2002 audit): Count: 82; No.02-85; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary to ensure that the note disclosure for PP&E meets 
the disclosure requirements of SFFAS No. 10, Accounting for Internal 
Use Software, paragraph 35, which requires disclosure of the estimated 
useful life for each major class of software for internal use software. 
Status of recommendation: Per Treasury and OMB: 
See status of recommendation No. 02-25. In addition, this disclosure 
would be directly affected by the implementation of the FASAB exposure 
draft mentioned in the status of recommendation No. 02-25; 
Status of recommendation: Per GAO: Open. See status of recommendation; 
No. 02-25. 
GAO-04-45 (results of the fiscal year 2002 audit): Count: 83; No.02-86; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary to ensure that the note disclosure for PP&E meets 
the disclosure requirements of SFFAS No. 10, Accounting for Internal 
Use Software, paragraph 35, which requires disclosure of the method of 
amortization for internal use software. 
Status of recommendation: Per Treasury and OMB: 
This required information was disclosed in Note 6, Property, Plant, and 
Equipment, Net, in the fiscal year 2005 CFS. 

Status of recommendation: Per GAO: Closed. 
GAO-04-45 (results of the fiscal year 2002 audit): Count: 84; No.02-87; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary to ensure that the note disclosure for PP&E meets 
the disclosure requirements of SFFAS No. 16, Amendments to Accounting 
for Property, Plant, and Equipment, paragraph 9, which requires an 
appropriate PP&E note disclosure to explain that "physical quantity" 
information for the multiuse heritage assets is included in 
supplemental stewardship reporting for heritage assets. 
Status of recommendation: Per Treasury and OMB: 
This information was disclosed in the required supplementary 
stewardship information section of the fiscal year 2005 CFS. 

Status of recommendation: Per GAO: Closed. 
GAO-04-45 (results of the fiscal year 2002 audit): Count: 85; No.02-88; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary to ensure that the note disclosure for federal 
employee and veteran benefits payable is completely and properly 
reported, specifically, that (1) it include a line for the valuation of 
plan amendments that occurred during the year and (2) the liability for 
military pensions and note disclosure related to the "change in 
actuarial accrued pension liability and components of related expenses" 
agree with the information presented in the Department of Defense's 
financial statements. 
Status of recommendation: Per Treasury and OMB: 
This required information was disclosed in Note 11, Federal Employee 
and Veteran Benefits Payable, in the fiscal year 2005 CFS. 

Status of recommendation: Per GAO: Closed. 
GAO-04-45 (results of the fiscal year 2002 audit): Count: 86; No.02-89; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary to ensure that the note disclosure for 
environmental and disposal liabilities meets the requirements of SFFAS 
No. 6, Accounting for Property, Plant, and Equipment, which requires 
(1) estimation and recognition of cleanup costs associated with general 
PP&E at the time the PP&E is placed in service and (2) recognition of a 
liability for the portion of the estimated total cleanup cost 
attributable to that portion of the physical capacity used or that 
portion of the estimated useful life that has passed since the general 
PP&E was placed in service. 
Status of recommendation: Per Treasury and OMB: 
See status of recommendation No. 02-25. In addition, this required 
information was requested from the agencies for inclusion in Note 12, 
Environmental and Disposal Liabilities, in the fiscal year 2005 CFS. 
However, further data are needed from one agency with significant 
environmental and disposal liabilities as of September 30, 2005, to 
fully comply with this specific disclosure requirement. 

Status of recommendation: Per GAO: Open. 
GAO-04-45 (results of the fiscal year 2002 audit): Count: 87; No.02-90; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary to ensure that the note disclosure for 
environmental and disposal liabilities meets the requirements of SFFAS 
No. 6, Accounting for Property, Plant, and Equipment, which requires 
inclusion of material changes in total estimated cleanup costs due to 
changes in laws, technology, or plans. 
Status of recommendation: Per Treasury and OMB: 
See status of recommendation No. 02-25. In addition, this disclosure 
would be directly affected by the implementation of the FASAB exposure 
draft mentioned in the status of recommendation No. 02-25. 

Status of recommendation: Per GAO: Open. See status of recommendation 
No. 02-25. 
GAO-04-45 (results of the fiscal year 2002 audit): Count: 88; No.02-91; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary to ensure that the note disclosure for capital 
leases meets the requirements of Federal Accounting Standards Board 
(FASB), Statement of Financial Accounting Standards (SFAS) No. 13, 
Accounting for Leases, paragraph 16, which requires future minimum 
lease payments as of the date of the latest balance sheet presented, in 
the aggregate and for each of the 5 succeeding fiscal years, with 
separate deductions from the total for the amount representing 
executory costs, including any profit thereon, included in the minimum 
lease payments, and for the amount of the imputed interest necessary to 
reduce the net minimum lease payments to present value. 
Status of recommendation: Per Treasury and OMB: 
See status of recommendation No. 02-25. 

Status of recommendation: Per GAO: Open. 
GAO-04-45 (results of the fiscal year 2002 audit): Count: 89; No.02-92; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary to ensure that the note disclosure for capital 
leases meets the requirements of FASB, SFAS No. 13, Accounting for 
Leases, paragraph 16, which requires a summary of assets under capital 
lease by major asset category and the related total accumulated 
amortization. 
Status of recommendation: Per Treasury and OMB: 
See status of recommendation No. 02-25. 

Status of recommendation: Per GAO: Open. 
GAO-04-45 (results of the fiscal year 2002 audit): Count: 90; No.02-93; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary to ensure that the note disclosure for capital 
leases meets the requirements of FASB, SFAS No. 13, Accounting for 
Leases, paragraph 16, which requires a general description of the 
lessee's leasing arrangements, including but not limited to (1) the 
basis on which contingent rental payments are determined; (2) the 
existence and terms of renewal or purchase options and escalation 
clauses; and (3) restrictions imposed by lease agreements, such as 
those concerning dividends, additional debt, and further leasing. 
Status of recommendation: Per Treasury and OMB: 
See status of recommendation No. 02-25. 

Status of recommendation: Per GAO: Open. 
GAO-04-45 (results of the fiscal year 2002 audit): Count: 91; No.:02-
94; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary to ensure that the note disclosure for life 
insurance liabilities meets the requirements of SFFAS No. 5, Accounting 
for Liabilities of the Federal Government, paragraph 117, which 
requires all federal reporting entities with whole life insurance 
programs to follow applicable standards as prescribed in the private 
sector standards when reporting the liability for future policy 
benefits:
FASB SFAS No. 60, Accounting and Reporting by Insurance Enterprises; 
SFAS No. 97, Accounting and Reporting by Insurance Enterprises for 
Certain Long-Duration Contracts and for Realized Gains and Losses from 
the Sale of Investments; SFAS No. 120, Accounting and Reporting by 
Mutual Life Insurance Enterprises and by Insurance Enterprises for 
Certain Long- Duration Participating Contracts; and American Institute 
of Certified Public Accountants Statement of Position 95-1, Accounting 
for Certain Insurance Activities of Mutual Life Insurance Enterprises. 
Status of recommendation: Per Treasury and OMB: 
See status of recommendation No. 02-25. In addition, this disclosure 
would be directly affected by the implementation of the FASAB exposure 
draft mentioned in the status of recommendation No. 02- 25. 

Status of recommendation: Per GAO: Open. See status of recommendation 
No. 02-25. 
GAO-04-45 (results of the fiscal year 2002 audit): Count: 92; No.02-95; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary to ensure that the note disclosure for life 
insurance liabilities meets the requirements of SFFAS No. 5, Accounting 
for Liabilities of the Federal Government, paragraph 121, which 
requires all components of the liability for future policy benefits 
(i.e., the net-level premium reserve for death and endowment policies 
and the liability for terminal dividends) to be separately disclosed in 
a footnote with a description of each amount and an explanation of its 
projected use and any other potential uses (e.g., reducing premiums, 
determining and declaring dividends available, and reducing federal 
support in the form of appropriations related to administrative cost or 
subsidies). 
Status of recommendation: Per Treasury and OMB: 
See status of recommendation No. 02-25. In addition, this disclosure 
would be directly affected by the implementation of the FASAB exposure 
draft mentioned in the status of recommendation No. 02-25. 

Status of recommendation: Per GAO: Open. See status of recommendation 
No. 02-25. 
GAO-04-45 (results of the fiscal year 2002 audit): Count: 93; No.02-96; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary to ensure that the note disclosure on major 
commitments and contingencies is consistent with disclosed information 
in individual agencies' financial statements. 
Status of recommendation: Per Treasury and OMB: 
See status of recommendation No.'s 02-25 and 02-42. In addition, this 
required information was disclosed in Note 19, Contingencies, and Note 
20, Commitments, in the fiscal year 2005 CFS. 

Status of recommendation: Per GAO: Open. See status of recommendation 
No.'s 02-25 and 02-42. 
GAO-04-45 (results of the fiscal year 2002 audit): Count: 94; No.02-97; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary to ensure that the note disclosure on major 
commitments and contingencies discloses sufficient information 
(detailed discussion) regarding certain major commitments and 
contingencies. 
Status of recommendation: Per Treasury and OMB: 
See status of recommendation No. 02-96. 

Status of recommendation: Per GAO: Closed. 
GAO-04-45 (results of the fiscal year 2002 audit): Count: 95; No.02-99; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary to ensure that the note disclosure for collections 
and refunds of federal revenue meets the requirements of SFFAS No. 7, 
Concepts for Reconciling Budgetary and Financial Accounting, paragraph 
69.2, which requires collecting entities to provide in the other 
accompanying information any relevant estimates of the annual tax gap 
that become available as a result of federal government surveys or 
studies. 
Status of recommendation: Per Treasury and OMB: 
This information was disclosed in the required supplementary 
information section of the fiscal year 2005 CFS. 

Status of recommendation: Per GAO: Closed. 
GAO-04-45 (results of the fiscal year 2002 audit): Count: 96; No.02-
100; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary to ensure that the note disclosure for dedicated 
collections meets the requirements of SFFAS No. 7, Part I, Accounting 
for Revenue and Other Financing Sources, paragraph 85, which requires 
inclusion of condensed information about assets and liabilities showing 
investments in Treasury securities, other assets, liabilities due and 
payable to beneficiaries, other liabilities, and fund balance. 
Status of recommendation: Per Treasury and OMB: 
This required information was disclosed in Note 21, Dedicated 
Collections, in the fiscal year 2005 CFS. 

Status of recommendation: Per GAO: Closed. 
GAO-04-45 (results of the fiscal year 2002 audit): Count: 97; No.02-
101; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary to ensure that the note disclosure for dedicated 
collections meets the requirements of SFFAS No. 7, Part I, Accounting 
for Revenue and Other Financing Sources, paragraph 85, which requires 
inclusion of condensed information on net cost and changes to fund 
balance, showing revenues by type (exchange/nonexchange), program 
expenses, other expenses, other financing sources, and other changes in 
fund balance.
 Status of recommendation: Per Treasury and OMB: 
This required information was disclosed in Note 21, Dedicated 
Collections, in the fiscal year 2005 CFS. 

Status of recommendation: Per GAO: Closed. 
GAO-04-45 (results of the fiscal year 2002 audit): Count: 98; No.02-
102; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary to ensure that the note disclosure for dedicated 
collections meets the requirements of SFFAS No. 7, Part I, Accounting 
for Revenue and Other Financing Sources, paragraph 85, which requires 
inclusion of any revenues, other financing sources, or costs 
attributable to the fund under accounting standards but not legally 
allowable as credits or charges to the fund. 
Status of recommendation: Per Treasury and OMB: 
See status of recommendation No. 02-25. In addition, this required 
information was requested from the agencies for inclusion in Note 21, 
Dedicated Collections, in the fiscal year 2005 CFS. However, no data 
were received in fiscal year 2005, and therefore, no disclosure was 
needed related to this requirement. 

Status of recommendation: Per GAO: Open. Treasury expected the required 
information from applicable agencies as requested in the TFM. When no 
disclosure information was provided by such agencies, Treasury did not 
have any policies and procedures for following up with agencies to 
determine why the information was not provided. 
GAO-04-45 (results of the fiscal year 2002 audit): Count: 99; No.02-
103; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary to ensure that the note disclosure for Indian trust 
funds meets the requirements of SFFAS No. 7, Part I, Accounting for 
Revenue and Other Financing Sources, paragraph 85, which requires a 
description of each fund's purpose, how the administrative entity 
accounts for and reports the fund, and its authority to use those 
collections. 
Status of recommendation: Per Treasury and OMB: 
See status of recommendation No. 02-25. 

Status of recommendation: Per GAO: Open. 
GAO-04-45 (results of the fiscal year 2002 audit): Count: 100; No.02-
104; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary to ensure that the note disclosure for Indian trust 
funds meets the requirements of SFFAS No. 7, Part I, Accounting for 
Revenue and Other Financing Sources, paragraph 85, which requires 
disclosure of the sources of revenue or other financing for the period 
and an explanation of the extent to which they are inflows of resources 
to the government or the result of intragovernmental flows. 
Status of recommendation: Per Treasury and OMB: 
See status of recommendation No. 02-25. 

Status of recommendation: Per GAO: Open. 
GAO-04-45 (results of the fiscal year 2002 audit): Count: 101; No.02-
105; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary to ensure that the note disclosure for Indian trust 
funds meets the requirements of SFFAS No. 7, Part I, Accounting for 
Revenue and Other Financing Sources, paragraph 85, which requires 
condensed information about assets and liabilities showing investments 
in Treasury securities, other assets, liabilities due and payable to 
beneficiaries, and other liabilities. 
Status of recommendation: Per Treasury and OMB: 
This required information was disclosed in Note 22, Indian Trust Funds, 
in the fiscal year 2005 CFS. 

Status of recommendation: Per GAO: Closed. 
GAO-04-45 (results of the fiscal year 2002 audit): Count: 102; No.02-
106; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary to ensure that the note disclosure for Indian trust 
funds meets the requirements of SFFAS No. 7, Part I, Accounting for 
Revenue and Other Financing Sources, paragraph 85, which requires 
condensed information on net cost and changes to fund balance, showing 
revenues by type (exchange/nonexchange), program expenses, other 
expenses, other financing sources, and other changes in fund balance. 
Status of recommendation: Per Treasury and OMB: 
See status of recommendation No. 02-25. 

Status of recommendation: Per GAO: Open. 
GAO-04-45 (results of the fiscal year 2002 audit): Count: 103; No.02-
107; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary to ensure that the note disclosure for Indian trust 
funds meets the requirements of SFFAS No. 7, Part I, Accounting for 
Revenue and Other Financing Sources, paragraph 85, which requires 
disclosure of any revenues, other financing sources, or costs 
attributable to the fund under accounting standards, but not legally 
allowable as credits or charges to the fund. 
Status of recommendation: Per Treasury and OMB: 
See status of recommendation No. 02-25. 

Status of recommendation: Per GAO: Open. 
GAO-04-45 (results of the fiscal year 2002 audit): Count: 104; No.02-
114; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary to ensure that the note disclosure for social 
insurance meets the requirements of SFFAS No. 17, Accounting for Social 
Insurance, paragraph 32(4), which requires individual program 
sensitivity analyses for projection period cash flow in present value 
dollars and annual cash flow in nominal dollars. The CFS includes only 
present value sensitivity analyses for Social Security and Hospital 
Insurance. Paragraph 32(4) states that at a minimum the summary should 
present Social Security, Hospital Insurance, and Supplementary Medical 
Insurance separately. 
Status of recommendation: Per Treasury and OMB: 
See status of recommendation No. 02-25. 

Status of recommendation: Per GAO: Open. 
GAO-04-45 (results of the fiscal year 2002 audit): Count: 105; No.02-
115; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary to ensure that the note disclosure for social 
insurance meets the requirements of SFFAS No. 17, Accounting for Social 
Insurance, paragraph 27(4)(a), which requires the individual program 
sensitivity analyses for Social Security and Hospital Insurance to 
include an analysis of assumptions regarding net immigration. 
Status of recommendation: Per Treasury and OMB: 
This information was disclosed in the required supplementary 
stewardship information section of the fiscal year 2005 CFS. 

Status of recommendation: Per GAO: Closed. 
GAO-04-45 (results of the fiscal year 2002 audit): Count: 106; No.02-
118; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary to ensure that the note disclosure for nonfederal 
physical property included in stewardship information meets the 
requirements of SFFAS No. 8, Supplementary Stewardship Reporting, 
paragraph 87, which requires disclosure of the annual investment, 
including a description of federally owned physical property 
transferred to state and local governments. This information should be 
provided for the year ended on the balance sheet date as well as for 
each of the 4 preceding years. If data for additional years would 
provide a better indication of investment, reporting of the additional 
years' data is encouraged. Reporting should be at a meaningful category 
or level. 
Status of recommendation: Per Treasury and OMB: 
Treasury reports stewardship assets and stewardship investments in 
accordance with SFFAS No. 8, paragraph 39 which requires the disclosure 
in the CFS of such "summary (stewardship) information or selected 
information as is feasible." Therefore, the component entity required 
reporting for stewardship assets and stewardship investments is not 
applicable to the CFS and the current CFS reporting of this stewardship 
information is in accordance with GAAP. 
Furthermore, SFFAS No. 24, Selected Standards for the Consolidated 
Financial Report of the United States Government, did not change this 
situation since SFFAS No. 24, paragraph 8 indicates that provisions for 
different accounting treatments made in current or subsequent SFFAS 
override the general rule of universal applicability. For example, 
until SFFAS No 29, Heritage Assets and Stewardship Land, becomes 
effective, CFS reporting for stewardship heritage assets will be done 
in accordance with the requirements of SFFAS No. 8, paragraph 39. 
Similarly, until FASAB provides specific CFS disclosure requirements 
for stewardship investments, CFR reporting for stewardship investments 
will be done in accordance with the requirements of SFFAS No. 8, 
paragraph 39. 
As Treasury has disclosed the stewardship information deemed feasible 
to present, no further related disclosure is required. 

Status of recommendation: Per GAO: Open. SFFAS No. 8, paragraph 39 also 
states that until further FASAB deliberations, the CFS should include 
such summary or selected information as is feasible and that 
experimentation is encouraged, as is the reporting of such additional 
information as will enhance the CFS. Treasury has not documented in its 
policies or procedures how stewardship information should be reported 
in the CFS or the basis for its determination that the disclosure of 
the stewardship information in accordance with the related paragraph in 
SFFAS No. 8 is not feasible. In addition, Treasury requests information 
on stewardship investments in the TFM and certain agencies report such 
information in their Performance and Accountability Reports. 
GAO-04-45 (results of the fiscal year 2002 audit): Count: 107; No.02-
119; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary to ensure that the note disclosure for nonfederal 
physical property included in stewardship information meets the 
requirements of SFFAS No. 8, Supplementary Stewardship Reporting, 
paragraph 87, which requires a description of major programs involving 
federal investments in nonfederal physical property, including a 
description of programs or policies under which noncash assets are 
transferred to state and local governments. 
Status of recommendation: Per Treasury and OMB: 
See status of recommendation No. 02-118. 

Status of recommendation: Per GAO: Open. See status of recommendation 
No. 02-118. 
GAO-04-45 (results of the fiscal year 2002 audit): Count: 108; No.02-
120; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary to ensure that the note disclosure for human 
capital included in stewardship information meets the requirements of 
SFFAS No. 8, Supplementary Stewardship Reporting, paragraph 94, which 
requires a narrative description and the full cost of the investment in 
human capital for the year being reported on as well as the preceding 4 
years (if full cost data are not available, outlay data can be 
reported). 
Status of recommendation: Per Treasury and OMB: 
See status of recommendation No. 02-118; 

Status of recommendation: Per GAO: Open. See status of recommendation 
No. 02-118. 
GAO-04-45(results of the fiscal year 2002 audit): Count: 109; No.:02-
121; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary to ensure that the note disclosure for human 
capital included in stewardship information meets the requirements of 
SFFAS No. 8, Supplementary Stewardship Reporting, paragraph 94, which 
requires the full cost or outlay data for investments in human capital 
at a meaningful category or level (e.g., by major program, agency, or 
department). 
Status of recommendation: Per Treasury and OMB: 
See status of recommendation No. 02-118. 

Status of recommendation: Per GAO: Open. See status of recommendation 
No. 02- 118. 
GAO-04-45 (results of the fiscal year 2002 audit): Count: 110; No.02-
122; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary to ensure that the note disclosure for human 
capital included in stewardship information meets the requirements of 
SFFAS No. 8, Supplementary Stewardship Reporting, paragraph 94, which 
requires a narrative description of major education and training 
programs considered federal investments in human capital. 
Status of recommendation: Per Treasury and OMB: 
See status of recommendation No. 02-118. 
Status of recommendation: Open. See status of recommendation No. 02-
118. 
GAO-04-45 (results of the fiscal year 2002 audit):Count:111; No.02-123; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary to ensure that the note disclosure for research and 
development included in stewardship information meets the requirements 
of SFFAS No. 8, Supplementary Stewardship Reporting, paragraph 100, 
which requires reporting of the annual investment made in the year 
ended on the balance sheet date as well as in each of the 4 years 
preceding that year. (As defined in this standard, "annual investment" 
includes more than the annual expenditure reported by character class 
for budget execution. Full cost shall be measured and accounted for in 
accordance with SFFAS No. 4, Managerial Cost Accounting Standards for 
the Federal Government.) If data for additional years would provide a 
better indication of investment, reporting of the additional years' 
data is encouraged. In those unusual instances when entities have no 
historical data, only current reporting year data need be reported. 
Reporting must be at a meaningful category or level, for example, a 
major program or department. 
Status of recommendation: Per Treasury and OMB: 
See status of recommendation No. 02-118. 

Status of recommendation: Per GAO: Open. See status of recommendation 
No. 02-118. 
Count:112; No.02-124; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary to ensure that the note disclosure for research and 
development included in stewardship information meets the requirements 
of SFFAS No. 8, Supplementary Stewardship Reporting, paragraph 100, 
which requires a narrative description of major research and 
development programs. 
Status of recommendation: Per Treasury and OMB: 
See status of recommendation No. 02-118. 

Status of recommendation: Per GAO: Open. See status of recommendation 
No. 02-118. 
GAO-04-45 (results of the fiscal year 2002 audit): Count: 113; No.02-
125; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary to ensure that the note disclosure for deferred 
maintenance meets the requirements of SFFAS No. 6, Accounting for 
Property, Plant, and Equipment, paragraphs 83 and 84, which requires 
inclusion of the method of measuring deferred maintenance for each 
major class of PP&E. 
Status of recommendation: Per Treasury and OMB: 
See status of recommendation No. 02-25. In addition, this disclosure 
would be directly affected by the implementation of the FASAB exposure 
draft mentioned in the status of recommendation No. 02-25. 

Status of recommendation: Per GAO: Open. See status of recommendation 
No. 02-25. 
GAO-04-45 (results of the fiscal year 2002 audit): Count: 114; No.02-
126; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary to ensure that the note disclosure for deferred 
maintenance meets the requirements of SFFAS No. 6, Accounting for 
Property, Plant, and Equipment, paragraphs 83 and 84, which requires 
that if the condition assessment survey method of measuring deferred 
maintenance is used, the following should be presented for each major 
class of PP&E:
(1) description of requirements or standards for acceptable operating 
condition, (2) any changes in the condition requirements or standards, 
and (3) asset condition and a range estimate of the dollar amount of 
maintenance needed to return the asset to its acceptable operating 
condition. 
Status of recommendation: Per Treasury and OMB: 
See status of recommendation No. 02-25. In addition, this disclosure 
would be directly affected by the implementation of the FASAB exposure 
draft mentioned in the status of recommendation No. 02-25. 

Status of recommendation: Per GAO: Open. See status of recommendation 
No. 02-25. 
GAO-04-45 (results of the fiscal year 2002 audit): Count: 115; No.02-
127; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary to ensure that the note disclosure for deferred 
maintenance meets the requirements of SFFAS No. 6, Accounting for 
Property, Plant, and Equipment, paragraphs 83 and 84, which requires 
that if the total life-cycle cost method is used, the following should 
be presented for each major class of PP&E:(1) the original date of the 
maintenance forecast and an explanation for any changes to the 
forecast; (2) prior year balance of the cumulative deferred maintenance 
amount; (3) the dollar amount of maintenance that was defined by the 
professionals who designed, built, or managed the PP&E as required 
maintenance for the reporting period; (4) the dollar amount of 
maintenance actually performed during the period; (5) the difference 
between the forecast and actual maintenance; (6) any adjustments to the 
scheduled amounts deemed necessary by the managers of the PP&E; and (7) 
the ending cumulative balance for the reporting period for each major 
class of asset experiencing deferred maintenance. 
Status of recommendation: Per Treasury and OMB: 
See status of recommendation No. 02-25. In addition, this disclosure 
would be directly affected by the implementation of the FASAB exposure 
draft mentioned in the status of recommendation No. 02-25. 

Status of recommendation: Per GAO: Open. See status of recommendation 
No. 02-25. 
GAO-04-45 (results of the fiscal year 2002 audit): Count: 116; No.02-
128; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary, to ensure that the note disclosure for deferred 
maintenance meets the requirements of SFFAS No. 6, Accounting for 
Property, Plant, and Equipment, paragraphs 83 and 84, which requires 
that if management elects to disclose critical and noncritical amounts, 
the disclosure is to include management's definition of these 
categories. 
Status of recommendation: Per Treasury and OMB: 
See status of recommendation No. 02-25. In addition, this disclosure 
would be directly affected by the implementation of the FASAB exposure 
draft mentioned in the status of recommendation No. 02- 25. 

Status of recommendation: Per GAO: Open. See status of recommendation 
No. 02-25. 
GAO-04-45 (results of the fiscal year 2002 audit) Count:117; No.02-129; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary to ensure that the note disclosure for stewardship 
responsibilities related to the risk assumed for federal insurance and 
guarantee programs meets the requirements of SFFAS No. 5, Accounting 
for Liabilities of the Federal Government, paragraph 106, which 
requires that when financial information pursuant to FASB standards on 
federal insurance and guarantee programs conducted by government 
corporations is incorporated in general purpose financial reports of a 
larger federal reporting entity, the entity should report as required 
supplementary information what amounts and periodic change in those 
amounts would be reported under the "risk assumed" approach. 
Status of recommendation: Per Treasury and OMB: 
See status of recommendation No. 02-25. 

Status of recommendation: Per GAO: Open. 
Count:
GAO-04-866 (results of the fiscal year 2003 audit). Count:118; No.03-4; 
Recommendation: The Director of OMB should direct the Controller of 
OMB, in coordination with Treasury's Fiscal Assistant Secretary, to 
work with the federal agencies so that the differences between net 
outlays the agencies report in their Statement of Budgetary Resources 
and the net outlay records Treasury uses to prepare the Statement of 
Changes in Cash Balance are reconciled; 
Status of recommendation: Per Treasury and OMB: 
See status of recommendation No. 02-18; 
Status of recommendation: Per GAO: Open. See status of recommendation 
No.'s 02-14 and 02-17. 
GAO-04-866 (results of the fiscal year 2002 audit)Count: 119; No.03-5; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary to determine and address the effects that any of 
the differences between net outlays the agencies report in their 
Statement of Budgetary Resources and Treasury's net outlay records may 
have on the CFS 
Status of recommendation: Per Treasury and OMB: 
See status of recommendation No. 02-18. 

Status of recommendation: Per GAO: Open. See status of recommendation 
No.'s 02-14 and 02-17. 
GAO-04-866 (results of the fiscal year 2002 audit)Count: 120; No.03-6; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary to develop a process that will allow full reporting 
of the changes in cash balance of the U.S. government. Specifically, 
the process should provide for reporting on the change in cash reported 
on the consolidated balance sheet, which should be linked to cash 
balances reported in federal agencies' audited financial statements. 
Status of recommendation: Per Treasury and OMB: 
Treasury disagrees with this recommendation. Total operating cash 
reported in the fiscal year 2005 CFS was linked to amounts reported in 
agencies' audited financial statements. The Statement of Changes in 
Cash Balance reconciles to Operating Cash. SFFAS No. 24, paragraphs 12 
and 13, require reconciliation to the government's cash balance. It 
also references an illustration that is not prescriptive. 

Status of recommendation: Per GAO: Open. We agree that SFFAS No. 24 
requires the reconciliation of the federal government's cash balance. 
However, the Statement of Changes in Cash Balance reconciles to 
operating cash of $28.3 billion rather than the cash reported on the 
Balance Sheet of $85.8 billion, as of September 30, 2005. 
GAO-04-866 (results of the fiscal year 2002 audit)Count: 121; No. 03-7; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary to report gross amounts for receipts and 
disbursements of cash related to direct loans and loan guarantees. 
Status of recommendation: Per Treasury and OMB: 
Treasury disagrees with this recommendation. SFFAS No. 24 shows gross 
receipt and disbursement amounts as an illustration, but does not 
require their disclosure. 

Status of recommendation: Per GAO: Open. See status of recommendation 
No. 02-14. 
GAO-04-866 (results of the fiscal year 2002 audit)Count: 122; No. 03-8; 
Recommendation: The Director of OMB should direct the Controller of 
OMB, in coordination with Treasury's Fiscal Assistant Secretary, to 
work with Justice and certain other executive branch agencies to ensure 
that these agencies report or disclose relevant criminal debt 
information in conformity with GAAP in their financial statements and 
have such information subjected to audit. 
Status of recommendation: Per Treasury and OMB: 
An interagency task force has been established under the direction of 
the Attorney General and has developed a strategic plan for improving 
criminal debt collection and has provided the plan to Congress. The 
task force includes representatives from DOJ, Treasury, OMB, and the 
Administrative Office of the U.S. Courts. The task force continues to 
make progress in implementing new policies and procedures. 

Status of recommendation: Per GAO: Open. 
GAO-04-866 (results of the fiscal year 2002 audit)Count: 123; No. 03-9; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary to include relevant criminal debt information in 
the CFS or document the specific rationale for excluding such 
information. 
Status of recommendation: Per Treasury and OMB: 
Treasury will include criminal debt information as it becomes 
available. See status of recommendation No. 03-08. 

Status of recommendation: Per GAO: Open. 
GAO-04-866 (results of the fiscal year 2002 audit)Count: 124; No. 03-
10; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary to include in the new system a request for federal 
agencies to provide contingency loss information to assist Treasury in 
disclosing contingencies in the CFS in accordance with GAAP. 
Status of recommendation: Per Treasury and OMB: 
This required information was disclosed in Note 19, Contingencies, in 
the fiscal year 2005 CFS. 

Status of recommendation: Per GAO: Closed. 
GAO-04-866 (results of the fiscal year 2002 audit)Count: 125; No. 03-
11; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary, in coordination with the Controller of OMB, to 
modify Treasury's plans for the new closing package to (1) require 
federal agencies to directly link their audited financial statement 
notes to the CFS notes and (2) provide the necessary information to 
demonstrate that all of the five principal consolidated financial 
statements are consistent with the underlying information in federal 
agencies' audited financial statements and other financial data. 
Status of recommendation: Per Treasury and OMB: 
See status of recommendation No. 02-42. 

Status of recommendation: Per GAO: Open. See status of recommendation 
No. 02-42. 
GAO-04-866 (results of the fiscal year 2002 audit)Count: 126; No. 03-
15; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary to ensure that the note disclosure for federal 
employees and veterans benefits payable meets the requirements of SFFAS 
No. 5, Accounting for Liabilities of the Federal Government, paragraph 
83, which requires the reporting entity to disclose the assumptions 
used for veterans compensation and burial benefits. 
Status of recommendation: Per Treasury and OMB: 
This required information was disclosed in Note 11, Federal Employee 
and Veteran Benefits Payable, in the fiscal year 2005 CFS. 

Status of recommendation: Per GAO: Closed. 
GAO-04-866 (results of the fiscal year 2002 audit)Count: 127; No. 03-
16; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary to ensure that the note disclosure for federal 
employees and veterans benefits payable meets the requirements of SFFAS 
No. 5, Accounting for Liabilities of the Federal Government, paragraph 
72, which requires the reporting entity to disclose prior service costs 
from plan amendments as a separate component. 
Status of recommendation: Per Treasury and OMB: 
This required information was disclosed in Note 11, Federal Employee 
and Veteran Benefits Payable, in the fiscal year 2005 CFS; 

Status of recommendation: Per GAO: Closed. 
GAO-04-866 (results of the fiscal year 2002 audit)Count: 128; No. 03-
17; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary to ensure that the note disclosure for federal 
employees and veterans benefits payable meets the requirements of SFFAS 
No. 5, Accounting for Liabilities of the Federal Government, paragraph 
88, which requires the reporting entity to disclose gains or losses due 
to a change in the medical inflation rate assumption for health 
benefits as a separate component. 
Status of recommendation: Per Treasury and 
OMB: 
This required information was disclosed in Note 11, Federal Employee 
and Veteran Benefits Payable, in the fiscal year 2005 CFS. 

Status of recommendation: Per GAO: Closed. 
GAO-04-866 (results of the fiscal year 2002 audit)Count: 129; No. 03-
18; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary to ensure that the note disclosure for 
environmental and disposal liabilities meets the requirements of SFFAS 
No. 6, Accounting for Property, Plant, and Equipment, which requires 
the reporting entity to disclose the method for assigning estimated 
total cleanup costs to current operating periods. 
Status of recommendation: Per Treasury and OMB: 
See status of recommendation No. 02-25. In addition, this disclosure 
would be directly affected by the implementation of the FASAB exposure 
draft mentioned in the status of recommendation No. 02-25. 

Status of recommendation: Per GAO: Open. See status of recommendation 
No. 02-25. 
GAO-04-866 (results of the fiscal year 2002 audit)Count: 130; No. 03-
19; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary to ensure that the note disclosure for 
environmental and disposal liabilities meets the requirements of SFFAS 
No. 6, Accounting for Property, Plant, and Equipment, which requires 
the reporting entity to disclose, for cleanup costs associated with 
general property, plant, and equipment, the unrecognized portion of 
estimated total cleanup costs be disclosed. 
Status of recommendation: Per Treasury and OMB: 
See status of recommendation No. 02-25. In addition, this required 
information was requested from the agencies for inclusion in Note 12, 
Environmental and Disposal Liabilities, in the fiscal year 2005 CFS. 
However, further data are needed from one agency with significant 
environmental and disposal liabilities as of September 30, 2005, to 
fully comply with this specific disclosure requirement. 

Status of recommendation: Per GAO: Open. 
GAO-04-866 (results of the fiscal year 2002 audit)Count: 131; No. 03-
20; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary to ensure that the note disclosure for 
environmental and disposal liabilities meets the requirements of SFFAS 
No. 6, Accounting for Property, Plant, and Equipment, which requires 
the reporting entity to disclose the nature of estimates and 
information regarding possible changes to the estimates resulting from 
inflation, deflation, technology, or applicable laws and regulations. 
Status of recommendation: Per Treasury and OMB: 
See status of recommendation No. 02-25. In addition, this disclosure 
would be directly affected by the implementation of the FASAB exposure 
draft mentioned in the status of recommendation No. 02- 25. 

Status of recommendation: Per GAO: Open. See status of recommendation 
No. 02-25. 
GAO-04-866 (results of the fiscal year 2002 audit)Count: 132; No. 03-
21; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary to consider whether the reader would be interested 
in understanding why the environmental and disposal liabilities amount 
significantly changed during the year and include the explanation for 
the change in the note disclosure. 
Status of recommendation: Per Treasury and OMB: 
See status of recommendation No. 02-25. In addition, this required 
information was requested from the agencies for inclusion in Note 12, 
Environmental and Disposal Liabilities, in the fiscal year 2005 CFS. 
However, no data were received in fiscal year 2005, and therefore, 
there was no disclosure related to this requirement. 

Status of recommendation: Per GAO: Open. Treasury expected the required 
information from applicable agencies as requested in the TFM. When no 
disclosure information was provided by such agencies, Treasury did not 
have any policies and procedures for following up with agencies to 
determine why the information was not provided. 
GAO-04-866 (results of the fiscal year 2002 audit) Count: 133; No. 03-
22; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary to ensure that the information in stewardship 
information for research and development meets the requirements of 
SFFAS No. 8, Supplementary Stewardship Reporting, paragraph 99, which 
requires the reporting entity to include a narrative discussion of the 
major results achieved by the program along the lines of basic 
research, applied research, and development. 
Status of recommendation: Per Treasury and OMB: 
See status of recommendation No. 02-118. 

Status of recommendation: Per GAO: Open. See status of recommendation 
No. 02-118. 
GAO-04-866 (results of the fiscal year 2002 audit)Count: 134; No. 03-
24; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary to ensure that the required supplemental 
information for deferred maintenance meets the requirements of SFFAS 
No. 6, Accounting for Property, Plant, and Equipment, paragraph 83, 
which requires the reporting entity to disclose the identification of 
each major class of asset (i.e., building and structures, furniture and 
fixtures, equipment, vehicles, and land) for which maintenance has been 
deferred. 
Status of recommendation: Per Treasury and OMB: 
This information was disclosed in the required supplementary 
information section of the fiscal year 2005 CFS. 

Status of recommendation: Per GAO: Closed. 
GAO-05-407 (results of the fiscal year 2004 audit): Count: 135; No. 04-
1; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary to segregate the duties of individuals performing 
key functions in Treasury's processes for preparing governmentwide 
adjustments to the financial statements, making changes to Excel 
spreadsheets that contain audited agency financial information, and 
accessing federal agencies' closing package data in Treasury's new 
system. 
Status of recommendation: Per Treasury and OMB: 
Treasury further revised and documented its major procedures in fiscal 
year 2005 related to the CFS compilation process, including those 
related to the duties of the individuals with the capability to enter, 
change, and delete data within the GFRS database and the posting of 
adjustments to the CFS to address segregation of duties. 

Status of recommendation: Per GAO: Open. Treasury's procedures were not 
effective for fiscal year 2005. Treasury was unable to explain why 
numerous GFRS users appeared to have inappropriate access to GFRS 
agency information or demonstrate that the appropriate segregation of 
duties exists. 
GAO-05-407 (results of the fiscal year 2004 audit): Count: 136; No. 04-
2; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary to require and maintain appropriate supporting 
documentation for all journal vouchers recorded in the CFS. 
Status of recommendation: Per Treasury and OMB: 
Treasury will follow its standard operating procedure that includes 
maintaining documentation for all recorded journal vouchers, except in 
certain circumstances described in the status of recommendation 04-3. 

Status of recommendation: Per GAO: Open. Treasury did not have 
appropriate supporting documentation for all transactions recorded in 
the CFS. Recording transactions in the financial statements without 
adequate underlying support increases the risk that inappropriate 
adjustments to balances in the financial statements could be made. 
GAO-05-407 (results of the fiscal year 2004 audit): Count: 137; No. 04-
3; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary to require that Treasury employees contact and 
document communications with agencies before recording journal vouchers 
to change agency audited closing package data. 
Status of recommendation: Per Treasury and OMB: 
Treasury policy is to notify agencies before making needed data 
changes. However, due to time constraints, Treasury needs the 
flexibility to make changes without prior agency contact. Nevertheless, 
as time permits, Treasury will make an effort to contact the agencies 
prior to making changes. Treasury believes that agency approval is not 
needed when making the following types of changes:
(1) adjustments to agree closing packages to financial statements, (2) 
adjustments to ensure consistency of GAAP between agencies, and (3) 
adjustments to conform an agency to GAAP. 

Status of recommendation: Per GAO: Open. We believe that Treasury 
should contact agencies to resolve any discrepancies between agencies' 
audited closing packages and audited financial statements and discuss 
any other situations that require adjustments to agencies' audited 
closing package data because Treasury could incorrectly adjust 
agencies' audited information. 
GAO-05-407 (results of the fiscal year 2004 audit): Count: 138; No. 04-
4; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary to require and document management reviews of all 
procedures that result in data changes to the CFS. 
Status of recommendation: Per Treasury and OMB: 
Treasury further revised its procedures to ensure management reviews of 
data changes to the CFS. Also, see status of recommendation No. 04-1. 

Status of recommendation: Per GAO: Open. Treasury's procedures were not 
effective for fiscal year 2005. Undetected errors occurred in key 
templates used to compile the CFS. 
GAO-05-407 (results of the fiscal year 2004 audit): Count: 139; No. 04-
5; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary to configure the GFRS database to prevent Treasury 
personnel from altering data submitted by federal agencies and to use 
separate GFRS databases for testing and production. 
Status of recommendation: Per Treasury and OMB: 
Treasury revised its automated processes in fiscal year 2005 to prevent 
unauthorized changes to agency-submitted data. 

Status of recommendation: Per GAO: Open. Information system weaknesses 
existed within the segments of GFRS that were used during the fiscal 
years 2005 and 2004 reporting processes. We found that the GFRS 
database (1) was not configured to prevent the alteration of data 
submitted by federal agencies and (2) was used for both production and 
testing during the reporting processes. Therefore, information 
submitted by federal agencies within GFRS is not adequately protected 
against unauthorized modification or loss. 
GAO-05-407 (results of the fiscal year 2004 audit): Count: 140; No. 04-
6; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary to assess the infrastructure associated with the 
compilation process and modify it as necessary to achieve a sound 
internal control environment. 
Status of recommendation: Per Treasury and OMB: 
Treasury has recruited and is currently recruiting highly qualified 
personnel to be trained in the CFS compilation process and in the 
associated internal controls related to the CFS compilation. 

Status of recommendation: Per GAO: Open. 
GAO-05-407 (results of the fiscal year 2004 audit): Count: 141; No. 04-
7; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary to review the TFM and any other guidance to federal 
agencies to ensure that they provide clear instructions for reporting 
accurate data to Treasury in the area of loans receivable and loan 
guarantees. 
Status of recommendation: Per Treasury and OMB: 
Treasury updated the TFM in fiscal year 2005 related to the required 
GAAP disclosures to ensure accurate financial data reporting by federal 
agencies. 

Status of recommendation: Per GAO: Closed. 
GAO-05-407 (results of the fiscal year 2004 audit): Count: 142; No. 04-
8; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary to review the TFM and any other guidance to federal 
agencies to ensure that they provide clear instructions for reporting 
accurate data to Treasury in the area of property, plant, and 
equipment. 
Status of recommendation: Per Treasury and OMB: 
See status of recommendation No. 04-7. 

Status of recommendation: Per GAO: Closed. 
GAO-05-407 (results of the fiscal year 2004 audit): Count: 143; No. 04-
9; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary to review the TFM and any other guidance to federal 
agencies to ensure that they provide clear instructions for reporting 
accurate data to Treasury in the area of federal employee and veteran 
benefits payable. 
Status of recommendation: Per Treasury and OMB: 
See status of recommendation No. 04-7. 

Status of recommendation: Per GAO: Open. The TFM continues to need 
updates in this area. 
GAO-05-407 (results of the fiscal year 2004 audit): Count: 144; No. 04-
10; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary to review the TFM and any other guidance to federal 
agencies to ensure that they provide clear instructions for reporting 
accurate data to Treasury in the area of contingencies. 
Status of recommendation: Per Treasury and OMB: 
See status of recommendation No. 04-7. 

Status of recommendation: Per GAO: Closed. 
GAO-05-407 (results of the fiscal year 2004 audit): Count: 145; No. 04-
11; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary to review the TFM and any other guidance to federal 
agencies to ensure that they provide clear instructions for reporting 
accurate debit and credit amounts to Treasury. 
Status of recommendation: Per Treasury and OMB: 
See status of recommendation No. 04-7. 

Status of recommendation: Per GAO: Closed. 
GAO-05-407 (results of the fiscal year 2004 audit): Count: 146; No. 04-
12; 
Recommendation: The Director of OMB should direct the Controller of the 
Office of Federal Financial Management, in coordination with the Fiscal 
Assistant Secretary, to ensure that federal agencies submit to GAO a 
complete closing package, as required by the TFM as part of the 
consolidation process, consisting of the (1) special purpose audit 
opinion, (2) management representation letter for the closing package, 
(3) audit trail report (reclassification journal voucher report), (4) 
closing package financial statement reports, (5) trading partner 
summary reports, (6) notes reports, and (7) other data reports. 
Status of recommendation: Per Treasury and OMB: 
Treasury updated the TFM instructions requiring agencies to submit a 
complete closing package to GAO. OMB also referenced the TFM, in OMB 
Circular A-136, Part B, for a listing of the required documents to be 
submitted with the closing package. 

Status of recommendation: Per GAO: Closed. 
GAO-05-407 (results of the fiscal year 2004 audit): Count: 147; No. 04-
13; 
Recommendation: As Treasury continues to make strides to address issues 
related to intragovernmental transactions, the Secretary of the 
Treasury should direct the Fiscal Assistant Secretary, working in 
coordination with the Controller of OMB, to require that federal 
agencies provide detailed explanations for all material differences 
identified in the intragovernmental reconciliations. 
Status of recommendation: Per Treasury and OMB: 
Treasury updated the TFM with instructions requiring agencies to 
provide detailed explanations for material differences. 

Status of recommendation: Per GAO: Closed. 
GAO-05-407 (results of the fiscal year 2004 audit): Count: 148; No. 04-
14; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary, working in coordination with the Controller of 
OMB's Office of Federal Financial Management, to develop policies and 
procedures to determine the proper resolution and the appropriate legal 
representations to GAO at the governmentwide level when Justice's legal 
counsel and agencies' legal counsel provide inconsistent opinions. 
Status of recommendation: Per Treasury and OMB: 
OMB and Treasury will work with Department of Justice to discuss 
possible solutions to this issue. 

Status of recommendation: Per GAO: Open. 
GAO-05-407 (results of the fiscal year 2004 audit): Count: 149; No. 04-
15; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary to ensure that the note disclosure for federal 
employee and veteran benefits payable meets the requirements of SFFAS 
No. 5, Accounting for Liabilities of the Federal Government, paragraph 
110, table 9, which states that all components of the liability for 
future policy benefits should be separately disclosed in a footnote 
with a description of each amount and an explanation of its projected 
use and any other potential uses. 
Status of recommendation: Per Treasury and OMB: 
See status of recommendation No. 02-25. In addition, this required 
information was requested from the agencies for inclusion in Note 11, 
Federal Employee and Veteran Benefits Payable, in the fiscal year 2005 
CFS. However, no data were received in fiscal year 2005, and therefore, 
there was no disclosure related to this requirement. Treasury plans to 
discuss these disclosure requirements further with the agencies and 
with GAO during fiscal year 2006 to ensure that all relevant data are 
being received from the agencies. 

Status of recommendation: Per GAO: Open. 
GAO-05-407 (results of the fiscal year 2004 audit): Count: 150; No. 04-
16; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary to ensure that the note disclosure for federal 
employee and veteran benefits payable meets the requirements of SFFAS 
No. 5, Accounting for Liabilities of the Federal Government, paragraphs 
117 and 118, which states that all federal reporting entities with 
whole life insurance programs should follow the standards as prescribed 
in the private sector standards when reporting the liability for future 
policy benefits, in addition to the following required disclosures:
liability for future policy benefits relating to participating life 
insurance contracts should be equal to the sum of (1) the net level 
premium reserve for death and endowment policy benefits, (2) the 
liability for terminal dividends, and (3) any premium deficiency. 
Status of recommendation: Per Treasury and OMB: 
See status of recommendation No. 02-25. In addition, this disclosure 
would be directly affected by the implementation of the FASAB exposure 
draft mentioned in the status of recommendation No. 02-25. 

Status of recommendation: Per GAO: Open. See status of recommendation 
No. 02-25. 
GAO-05-407 (results of the fiscal year 2004 audit): Count: 151; No. 04-
17; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary to ensure that the note disclosure for federal 
employee and veteran benefits payable meets the requirements of SFFAS 
No. 5, Accounting for Liabilities of the Federal Government, paragraph 
121, which states that all components of the liability for future 
policy benefits (i.e., the net-level premium reserve for death and 
endowment policy and the liability for terminal dividends) should be 
separately disclosed in a footnote with a description of each amount 
and an explanation of its projected use and any other potential uses 
(e.g., reducing premiums, determining and declaring dividends 
available, or reducing federal support in the form of appropriations 
related to administrative cost or subsidies). 
Status of recommendation: Per Treasury and OMB: 
See status of recommendation No. 02-25. In addition, this disclosure 
would be directly affected by the implementation of the FASAB exposure 
draft mentioned in the status of recommendation No. 02-25. 

Status of recommendation: Per GAO: Open. See status of recommendation 
No. 02-25. 
GAO-05-407 (results of the fiscal year 2004 audit): Count: 152; No. 04-
18; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary to ensure that the note disclosure for cash and 
other monetary assets meets the requirements of SFFAS No. 1, Accounting 
for Selected Assets and Liabilities, paragraph 30, which requires that 
financial reports disclose the reasons for and nature of restricted 
cash. SFFAS No. 1 defines restricted cash as restrictions usually 
imposed on cash deposits (in escrow or other special accounts) by law, 
regulation, or agreement. 
Status of recommendation: Per Treasury and OMB: 
This required information was disclosed in Note 2, Cash and Other 
Monetary Assets, in the fiscal year 2005 CFS. 

Status of recommendation: Per GAO: Closed. 
GAO-05-407 (results of the fiscal year 2004 audit): Count: 153; No. 04-
19; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary to ensure that agencies designate in the note 
disclosure for cash and other monetary assets any amounts reported for 
the "other cash" line items that are restricted with respect to the 
federal government taken as a whole. 
Status of recommendation: Per Treasury and OMB: 
See status of recommendation No. 02-25. In addition, this required 
information was requested from the agencies for inclusion in Note 2, 
Cash and Other Monetary Assets, in the fiscal year 2005 CFS. Treasury 
plans to discuss these disclosure requirements further with the 
agencies and with GAO during fiscal year 2006 to ensure that all 
relevant data are being received from the agencies. 

Status of recommendation: Per GAO: Open. 
GAO-05-407 (results of the fiscal year 2004 audit): Count: 154; No. 04-
20; 
Recommendation: The Secretary of the Treasury should direct the Fiscal 
Assistant Secretary to ensure that the note disclosure for other 
liabilities meets the requirements of SFFAS No. 5, paragraph 114, which 
requires the reporting of indicators of the range of uncertainty around 
insurance-related estimates and the sensitivity of the estimates to 
changes in major assumptions. 
Status of recommendation: Per Treasury and OMB: 
See status of recommendation No. 02-25. In addition, this required 
information was requested from the agencies for inclusion in Note 15, 
Other Liabilities, in the fiscal year 2005 CFS. However, no data were 
received in fiscal year 2005, and therefore, there was no disclosure 
related to this requirement. Treasury plans to discuss these disclosure 
requirements further with the agencies and with GAO during fiscal year 
2006 to ensure that all relevant data are being received from the 
agencies. 

Status of recommendation: Per GAO: Open. 

Source: GAO.
 
[End of table]
 
[End of section] 

Appendix II:

Comments from the Department of the Treasury: 
Department Of The Treasury: 
Washington, D.C. 
Assistant Secretary: 

April 3, 2006: 

Mr. Gary T. Engel:
Director, Financial Management And Assurance:
Government Accountability Office:

Washington, D.C. 20548: 

Dear Mr. Engel: 

Thank you for the opportunity to comment on GAO's draft management 
letter on the Fiscal Year 2005 audit, GAO-06-415, Significant Internal 
Control Weaknesses Remain in Preparing the Consolidated Financial 
Statements of the U.S. Government. 

Your report clearly pointed out the issues we need to address in 
continuing to develop and deploy our closing package system to collect 
and consolidate the data for preparing the consolidated statements. 
While significant improvements have been made in the compilation 
process and the usefulness and accuracy of the FR, we agree that the 
preparation process still needs improvement. We have been addressing 
many of the recommendations in previous reports through procedural 
changes to address items such as documentation and management review. 

The FY 2005 audit report offers 12 new recommendations for improving 
the internal control weaknesses in the preparation process. We concur 
with all of the new recommendations except the acceleration of the due 
date for the IGs to complete the agreed-upon procedures on the 
intragovernmental activity and balances. For FY06 reporting, the IGs 
will be required to submit their AUP reports on January 16, 2007. 
However, this year we plan to expand the audit coverage to 
intragovermental transactions by requiring the IGs to opine upon the 
intragovernmental activity and balances in their audit of the closing 
package which is due November 17, 2006. We will continue to work with 
OMB and the agencies to adopt the other new recommendations and improve 
preparation and reporting practices. We have developed detailed 
corrective action plans to address the items in this report, some of 
which can be implemented in a short period of time while others will 
take longer than a year to resolve. 

While we continue to disagree with some of your recommendations 
relating to the Statement of Changes in Cash Balance from Unified 
Budget and Other Activities, the Reconciliation of Net Operating Cost 
and Unified Budget Deficit, and the adjustment process, we will 
continue to work with your staff on alternative ways to satisfactorily 
address these recommendations. 

We concur that a significant material weakness is the intragovernmental 
out-of-balance condition and have taken steps to work with the CFO 
Council to develop new "business rules" for intragovernmental 
transactions that we believe will bring about more consistent 
accounting transactions. In addition we have developed new steps for 
the agency auditors to review the out-of-balance condition between 
their agency and its trading partners in the hope that greater auditor 
involvement will encourage the agencies to accurately record these 
transactions and correct the imbalances. 

In conclusion, we will continue to work with you on the items on which 
improvement needs to be made, and we will continue the dialogue to try 
to resolve those areas in which we differ with your recommended 
approach. 

Sincerely, 

Signed By: 

Donald V. Hammond: 
Fiscal Assistant Secretary: 

cc:Linda Combs: 
cc:Daniel Werfel: 

GAO Comments: 

1. See "Agency Comments and Our Evaluation" section. 

2. We continue to believe that our recommendations relating to the 
Statement of Changes in Cash Balance from Unified Budget and Other 
Activities, Reconciliations of Net Operating Cost and Unified Budget 
Deficit, and the adjustment process are sound. Our recommendations are 
intended to allow flexibility in developing viable solutions to address 
the issues. We will consider any alternative action that Treasury may 
take to satisfactorily address the recommendations with which it has 
disagreed. See appendix I for the status of related recommendations. 

[End of section] 

Appendix III: GAO Contacts and Staff Acknowledgments: 

GAO Contacts: 
Gary Engel, (202) 512-3406: 

Staff Acknowledgments: 
In addition to the above contact, the following individuals made key 
contributions to this report: Lynda Downing, Assistant Director; Keith 
Kronin; Katherine Schirano; and Taya Tasse. 

(198414): 

[End of Section] 

FOOTNOTES 
[1] The fiscal year 2005 Financial Report of the United States 
Government includes our report and was completed by the Department of 
the Treasury (Treasury) on December 15, 2005, and is available through 
GAO's Web site at[hyperlink: www.gao.gov/financial.html] and Treasury's 
Web site at [hyperlink www.fms.treas.gov/fr/index.html]. 

[2] GAO, Financial Management Systems: Lack of Disciplined Processes 
Puts Effective Implementation of FMS' Governmentwide Financial Report 
System at Risk, GAO-06-413 (Washington, D.C. Apr. 21, 2006). 

[3] Treasury defines the verifying agencies as the 24 Chief Financial 
Officer (CFO) Act agencies, Export-Import Bank of the United States, 
Farm Credit System Insurance Corporation, Federal Communications 
Commission, Federal Deposit Insurance Corporation, National Credit 
Union Administration, U.S. Postal Service, Pension Benefit Guaranty 
Corporation, Railroad Retirement Board, Securities and Exchange 
Commission, Smithsonian Institution, and Tennessee Valley Authority. 
FMS considers the verifying agencies to be significant agencies to the 
CFS. 

[4] GAO, Financial Audit: Process for Preparing the Consolidated 
Financial Statements of the U.S. Government Needs Further Improvement, 
GAO-04-866 (Washington, D.C. Sept. 10, 2004). 

[5] GAO-06-413. 

[6] OMB stated that for fiscal year 2005 TVA was faced with challenges 
in obtaining an audit opinion on its closing package, and therefore OMB 
instead required TVA to perform agreed-upon procedures on TVA's closing 
package data. However, these procedures did not provide audit assurance 
over certain significant information included in the CFS for this 
agency. 

[7] GAO, Internal Control: Standards for Internal Control in the 
Federal Government, GAO/AIMD-00-21.3.1 (Washington, D.C. November 
1999). These standards define the minimum level of quality acceptable 
for internal control in the federal government and provide the 
standards against which internal control is to be evaluated. 

[8] Trading partners are U.S. government agencies, departments, or 
other components included in the CFS that do business with each other. 

GAO's Mission: 

The Government Accountability Office, the investigative arm of 
Congress, exists to support Congress in meeting its constitutional 
responsibilities and to help improve the performance and accountability 
of the federal government for the American people. GAO examines the use 
of public funds; evaluates federal programs and policies; and provides 
analyses, recommendations, and other assistance to help Congress make 
informed oversight, policy, and funding decisions. GAO's commitment to 
good government is reflected in its core values of accountability, 
integrity, and reliability. 

Obtaining Copies of GAO Reports and Testimony: 

The fastest and easiest way to obtain copies of GAO documents at no 
cost is through the Internet. GAO's Web site [hyperlink www.gao.gov] 
contains abstracts and full-text files of current reports and testimony 
and an expanding archive of older products. The Web site features a 
search engine to help you locate documents using key words and phrases. 
You can print these documents in their entirety, including charts and 
other graphics. 

Each day, GAO issues a list of newly released reports, testimony, and 
correspondence. GAO posts this list, known as "Today's Reports," on its 
Web site daily. The list contains links to the full-text document 
files. To have GAO e-mail this list to you every afternoon, go to 
[hyperlink www.gao.gov] and select "Subscribe to e-mail alerts" under 
the "Order GAO Products" heading. 

Order by Mail or Phone: 

The first copy of each printed report is free. Additional copies are $2 
each. A check or money order should be made out to the Superintendent 
of Documents. GAO also accepts VISA and Mastercard. Orders for 100 or 
more copies mailed to a single address are discounted 25 percent. 

Orders should be sent to: 
U.S. Government Accountability Office 
441 G Street NW, Room LM 
Washington, D.C. 20548: 

To order by Phone: 
Voice:
(202) 512-6000: 
TDD:
(202) 512-2537: 
Fax:
(202) 512-6061: 

To Report Fraud, Waste, and Abuse in Federal Programs: 

Contact: 

Web site:
www.gao.gov/fraudnet/fraudnet.htm 

E-mail:
fraudnet@gao.gov 

Automated answering system:
(800) 424-5454 or (202) 512-7470: 

Public Affairs: 
Jeff Nelligan, managing director, 
NelliganJ@gao.gov 
(202) 512-4800 
U.S. Government Accountability Office, 
441 G Street NW, Room 7149 
Washington, D.C. 20548: