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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 National Credit Union Administration's (NCUA) National Credit Union Share Insurance Fund's (NCUSIF) fiscal year 2003 management representation letter. Our objective is to help ensure that future management representation letters submitted by VA 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."

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Recommendations

Recommendations for Executive Action

Agency Affected Recommendation Status
National Credit Union Administration NCUA's Chief Financial Officer should ensure that in the future the management representation letter fully include all representations from the FAM that are applicable to NCUSIF.
Closed - Implemented
As part of our FY 2006 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. NCUA's calendar year 2005 management representation letter provided all applicable representations from the FAM.
National Credit Union Administration The NCUA Acting Inspector General, with the contracted independent public accountant, should work with the agency to help ensure that future management representation letters meet the key condition noted as needing improvements in this report.
Closed - Implemented
As part of our FY 2006 audit 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's and OMB's preparation of the CFS management representation letter. NCUA's calendar year 2005 management representation letter included all applicable representations from the FAM. As a result, NCUA's calendar year 2005 management representation letter met the key condition noted as needing improvements.

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