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Highlights

In February 2005, we issued our opinions on the calendar year 2004 financial statements of the Bank Insurance Fund (BIF), the Savings Association Insurance Fund (SAIF), and the FSLIC Resolution Fund (FRF). We also issued our opinion on the effectiveness of the Federal Deposit Insurance Corporation's (FDIC) internal controls as of December 31, 2004, and our evaluation of FDIC's compliance with significant provisions of selected laws and regulations for the three funds for the year ended December 31, 2004. The purpose of this report is to discuss issues identified during our audits of the 2004 financial statements regarding accounting procedures and internal controls that could be improved, and to recommend improvements to address these issues. Although these issues were not material in relation to the financial statements, we believe they warrant management's attention.

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Recommendations

Recommendations for Executive Action

Agency Affected Recommendation Status
Federal Deposit Insurance Corporation FDIC should issue a formal notice to all individuals who perform primary and secondary reviews of asset valuations reminding them of their responsibility to ensure that assets are valued in accordance with the Standard Asset Valuation Estimation methodology.
Closed - Implemented
In response to our recommendation, FDIC issued a a formal notice to primary and secondary reviewers.
Federal Deposit Insurance Corporation In light of the errors we found in FDIC employees' TSP accounts and continued serious internal controls deficiencies cited over NFC's payroll processing functions, FDIC should review its existing compensating controls over NFC-processed payroll information to determine whether additional controls, such as periodically verifying NFC's mathematical calculations related to FDIC's payroll data at the individual employee level, are needed to ensure that other NFC mathematical calculations related to FDIC's payroll data are correct.
Closed - Implemented
FDIC agreed with our recommendation and has reviewed its existing compensating control over NFC-processed payroll information and determined that additional controls are not warranted.
Federal Deposit Insurance Corporation FDIC should issue a formal notice to all individuals who review and approve invoices reminding them of their responsibility to compare each invoice to the terms of the contract prior to approving the invoice for payment.
Closed - Implemented
FDIC agreed with our recommendation and issued a memorandum on May 10, 2005, reminding oversight managers of their critical responsibility for reviewing and approving contractor invoices.

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