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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: