Financial Audit: The Department of Agriculture's Fiscal Year 2004 Management Representation Letter on Its Financial Statements

GAO-05-595R Published: Jul 22, 2005. Publicly Released: Jul 22, 2005.
Jump To:
Skip to Highlights
Highlights

The Secretary of the Treasury, in coordination with the Director of the Office of Management and Budget (OMB), is required to annually prepare and submit audited financial statements of the U.S. government to the President and the Congress. We are required to audit these consolidated financial statements (CFS) and report on the results of our work. In connection with fulfilling our requirement to audit the fiscal year 2004 CFS, we evaluated the Department of the Treasury's (Treasury) financial reporting procedures and related internal control over the process for compiling the CFS, including the management representation letter provided us by Treasury and OMB. Written representation letters from management, required by U.S. generally accepted government auditing standards, ordinarily confirm oral representations given to the auditor, indicate and document the continuing appropriateness of those representations, and reduce the possibility of a misunderstanding between management and the auditor. The purpose of this report is to communicate our observations on the United States Department of Agriculture's (USDA) fiscal year 2004 management representation letter. Our objective is to help ensure that future management representation letters submitted by USDA are sufficient to help support Treasury and OMB's preparation of the CFS management representation letter and our ability to rely on the representations in that letter in combination with individual federal agency representation letters. We reviewed five key areas in each management representation letter: (1) signatures, (2) materiality thresholds, (3) representations, (4) summary of unadjusted misstatements, and (5) reliability of representations. In reviewing the management representation letters, we applied the American Institute of Certified Public Accountants' (AICPA) Codification of Auditing Standards, AU Section 333, Management Representations; OMB Bulletin 01-02, Audit Requirements for Federal Financial Statements; and the GAO/President's Council on Integrity and Efficiency (PCIE) Financial Audit Manual (FAM) section 1001, entitled "Management Representations."

Skip to Recommendations

Recommendations

Recommendations for Executive Action

Agency Affected Recommendation Status
Department of Agriculture USDA's Acting Chief Financial Officer should ensure that in the future the management representation letter fully include all representations from the FAM that are applicable to USDA.
Closed – Implemented
As part of our fiscal year (FY) 2005 audit of the consolidated financial statements (CFS) of the U.S government, we evaluated the agencies' management representation letters to determine whether all applicable representations from the FAM were fully provided. USDA's FY 2005 management representation letter fully provided all applicable representations from the FAM.
Department of Agriculture USDA's Acting Chief Financial Officer should ensure that in the future the management representation letter include a complete summary of unadjusted misstatements, if there are any uncorrected misstatements, that also provides a description of the misstatements.
Closed – Implemented
As part of our FY 2007 audit of the consolidated financial statements (CFS) of the U.S. government, we reviewed the Department of Agriculture's (USDA) Summary of Unadjusted Misstatements (SUM). USDA's FY 2007 SUM addressed our concerns by including all of the necessary information. As a result, USDA's SUM was sufficient to help support Treasury and GAO's preparation of the governmentwide SUM.
Department of Agriculture The USDA Inspector General should work with the department to help ensure that future management representation letters meet the key conditions noted as needing improvements in this report.
Closed – Implemented
As part of our fiscal year 2005, 2006, and 2007 audits of the consolidated financial statements (CFS) of the U.S. government, we evaluated the agencies' management representation letters to determine whether they were sufficient to help support Treasury and OMB's preparation of the CFS management representation letter. USDA's FY 2005 management representation letter fully provided all applicable representations from the FAM. USDA's FY 2007 SUM addressed our concerns by including all of the necessary information and was sufficient to help support Treasury and GAO's preparation of the governmentwide SUM. Thus, USDA's management representation letter has met the key conditions noted as needing improvements.

Full Report