Financial Audit:

Federal Financing Bank's Financial Statements for Fiscal Years 1985 and 1984

AFMD-87-31: Published: Sep 30, 1987. Publicly Released: Sep 30, 1987.

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GAO examined the Federal Financing Bank's (FFB) financial statements as of September 30, 1985 and 1984, its system of internal accounting controls, the related statements of income and changes in retained earnings, and the changes in its financial position for the years then ended.

GAO found that the Bank: (1) had significant weaknesses in its internal accounting control system; (2) did not have adequate safeguards for its assets, properly recorded transactions, or reliable financial reporting; and (3) did not have the formal accounting policies and procedures manuals to maintain correct records for its business activities. GAO also found that the financial statements presented fairly the bank's financial position as of September 30, 1985 and 1984, and the results of its operations and the changes in its financial position for the years then ended, in conformity with generally accepted accounting principles applied on a consistent basis.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: A formal accounting policy and procedure manual has been developed and distributed to the appropriate personnel.

    Recommendation: The Secretary of the Treasury should direct the Bank's president, the Treasury Under Secretary for Finance, to develop formal accounting policies and procedures manuals, including examples of typical accounting entries for loan transactions.

    Agency Affected: Department of the Treasury

  2. Status: Closed - Implemented

    Comments: The FFB Accounting Manager stated that all subsidiary records are reconciled to the general ledger and that these reconciliations are being done on a monthly basis.

    Recommendation: The Secretary of the Treasury should direct the Bank's president, the Treasury Under Secretary for Finance, to maintain the general ledger and subsidiary ledgers on a routine basis and perform periodic reconciliations of the ledgers.

    Agency Affected: Department of the Treasury

  3. Status: Closed - Implemented

    Comments: Cash reconciliations between the general ledger and the amount reported to and by Treasury is done monthly.

    Recommendation: The Secretary of the Treasury should direct the Bank's president, the Treasury Under Secretary for Finance, to perform periodic reconciliations of cash between the bank's general ledger and the reports from Treasury.

    Agency Affected: Department of the Treasury

  4. Status: Closed - Not Implemented

    Comments: The lack of reconciliation external reports does not affect the Bank's fiscal year end financial statements as the Bank's loan account balance is verified by the annual audit. The Bank does not intend to implement the recommendation for the above reasons.

    Recommendation: The Secretary of the Treasury should direct the Bank's president, the Treasury Under Secretary for Finance, to review and reconcile external reports, particularly Treasury reports on the loan accounts.

    Agency Affected: Department of the Treasury

  5. Status: Closed - Implemented

    Comments: The Bank currently records transactions gross and is maintaining the proper support for each transaction.

    Recommendation: The Secretary of the Treasury should direct the Bank's president, the Treasury Under Secretary for Finance, to record transactions properly and consistently.

    Agency Affected: Department of the Treasury

 

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