Management Report:

Improvements Needed in CFPB's Internal Controls and Accounting Procedures

GAO-16-522R: Published: Jun 13, 2016. Publicly Released: Jun 13, 2016.

Additional Materials:

Contact:

J. Lawrence Malenich
(202) 512-3406
malenichj@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

What GAO Found

During its audit of the Consumer Financial Protection Bureau’s (CFPB) fiscal years 2015 and 2014 financial statements, GAO identified deficiencies in CFPB’s internal control over accounting for property, equipment, and software that collectively constituted a significant deficiency in CFPB’s internal control over financial reporting. Specifically, GAO found that CFPB did not effectively design or implement controls to (1) reasonably assure accurate and timely classification and recording of software costs and (2) maintain ongoing accuracy and completeness of property and equipment inventory records. In addition, GAO identified deficiencies that it did not consider to be material weaknesses or significant deficiencies, either individually or collectively, but nonetheless warrant CFPB management’s attention. These control deficiencies are related to reviewing and approving financial statements.

GAO found that CFPB had completed corrective actions on two of the four recommendations from GAO’s prior management report that remained open at the beginning of GAO’s fiscal year 2015 audit. As a result, CFPB currently has seven financial audit-related GAO recommendations to address: the previous two open recommendations and the five recommendations GAO is making in this report.

Why GAO Did This Study

GAO’s November 16, 2015, report containing its audit opinion on CFPB’s fiscal years 2015 and 2014 financial statements identified one significant deficiency in CFPB’s internal control over financial reporting related to its recorded property, equipment, and software amount.

The purpose of this report is to (1) present additional information regarding the significant deficiency GAO identified in its November 2015 financial audit report, along with related recommendations; (2) communicate other less significant deficiencies identified but not reported during GAO’s fiscal year 2015 audit; and (3) provide the status of GAO’s prior recommendations reported in its May 2, 2014, management report to CFPB.

What GAO Recommends

GAO is making five recommendations to CFPB to address the significant deficiency related to CFPB’s year-end recorded property, equipment, and software amount and other less significant deficiencies related to reviewing and approving financial statements that were identified by GAO during the fiscal year 2015 CFPB audit. CFPB stated that it agreed with the recommendations GAO made in the report and has implemented or is in the process of implementing actions to address the issues GAO identified. GAO will evaluate CFPB’s actions for addressing the deficiencies identified in the report as part of GAO’s fiscal year 2016 audit.

For more information, contact J. Lawrence Malenich at (202) 512-3406 or malenichj@gao.gov.

Recommendations for Executive Action

  1. Status: Open

    Comments: During our fiscal year 2016 audit, we continued to find control deficiencies over CFPB's accounting for its property, equipment, and software. CFPB was still in the process of working with its Office of Procurement and program offices to require more detailed invoices with costs broken out by project. We will continue to evaluate CFPB's actions to address this recommendation during our fiscal year 2017 financial statement audit.

    Recommendation: To provide reasonable assurance that the property, equipment, and software transactions are properly tracked and capitalized or expensed as appropriate, the Director of CFPB should direct the program offices to require vendors to provide detailed invoices with costs broken out by project.

    Agency Affected: Consumer Financial Protection Bureau

  2. Status: Open

    Comments: Although CFPB took actions to attempt to address this recommendation, as of September 30, 2016, there were still some unidentified costs in the OCFO's financial records. In addition, our fiscal year 2016 audit continued to identify deficiencies over the recording of property, equipment, and software costs. We will continue to evaluate CFPB's actions to address this recommendation during our fiscal year 2017 financial statement audit.

    Recommendation: To provide reasonable assurance that the property, equipment, and software transactions are properly tracked and capitalized or expensed as appropriate, the Director of CFPB should direct the Chief Financial Officer to update OCFO's financial records to include costs by project.

    Agency Affected: Consumer Financial Protection Bureau

  3. Status: Open

    Comments: During our fiscal year 2016 audit, we continued to find incomplete and inaccurate information in CFPB's inventory records. We will continue to evaluate CFPB's actions to address this recommendation during our fiscal year 2017 financial statement audit.

    Recommendation: The Director of CFPB should direct the Office of Technology and Innovation's Chief Information Officer to develop and document training materials that are consistent with CFPB's policies and procedures and provide training to employees, on a recurring basis, on how to conduct inventory of electronic equipment and how to update and maintain accurate inventory records.

    Agency Affected: Consumer Financial Protection Bureau

  4. Status: Open

    Comments: During our fiscal year 2016 audit, we continued to find incomplete and inaccurate information in CFPB's inventory records. We will continue to evaluate CFPB's actions to address this recommendation during our fiscal year 2017 financial statement audit.

    Recommendation: The Director of CFPB should direct the Chief Financial Officer and Chief Information Officer to develop and implement procedures that require coordination between the OCFO and the Office of Technology and Innovation to provide reasonable assurance that the records maintained by both divisions are accurate, consistent, complete, and comparable for inventory and accounting purposes.

    Agency Affected: Consumer Financial Protection Bureau

  5. Status: Open

    Comments: During our fiscal year 2016 audit, we continued to find errors and inconsistent disclosures in CFPB's financial statements, some of which resulted in post-closing adjusting entries. We will continue to evaluate CFPB's actions to address this recommendation during our fiscal year 2017 financial statement audit.

    Recommendation: The Director of CFPB should direct the Chief Financial Officer to design and implement effective procedures over the preparation of CFPB financial statements and note disclosures, including procedures such as completing the FAM 2010 and 2020 checklists at fiscal year-end, to provide reasonable assurance that the financial statements as of fiscal year-end are prepared in accordance with GAAP and note disclosures are adequate.

    Agency Affected: Consumer Financial Protection Bureau

 

Explore the full database of GAO's Open Recommendations »

Nov 16, 2017

Nov 15, 2017

Nov 9, 2017

Oct 20, 2017

Sep 26, 2017

Looking for more? Browse all our products here