Financial Audit: Bureau of the Fiscal Service's FY 2020 Schedules of the General Fund
Fast Facts
The Department of Treasury manages the General Fund that finances daily and long-term government operations, including annual cash activity of more than $20 trillion.
Treasury made significant progress in addressing the issues we identified in our audit of the FY 2018 Schedules of the General Fund, and resolved some of them. But remaining issues, which could take several years to resolve, continued to prevent us from having enough information to give an opinion on the reliability of the FY 2020 Schedules. For example, transactions could not be readily traced through General Fund systems to determine if they were properly recorded in the Schedules.
Highlights
What GAO Found
Deficiencies in internal control over financial reporting and other limitations on the scope of GAO's work resulted in conditions that prevented GAO from expressing an opinion on the Schedules of the General Fund as of and for the fiscal year ended September 30, 2020. Such scope limitations also prevented GAO from obtaining sufficient appropriate audit evidence to provide a basis for an opinion on the effectiveness of the Bureau of the Fiscal Service's (Fiscal Service) internal control over financial reporting relevant to the Schedules of the General Fund as of September 30, 2020. In addition, such scope limitations limited tests of compliance with selected provisions of applicable laws, regulations, contracts, and grant agreements for fiscal year 2020.
Fiscal Service was unable to readily provide sufficient appropriate evidence to support certain information reported in the accompanying Schedules of the General Fund. Specifically, Fiscal Service was unable to readily (1) identify and trace General Fund transactions to determine whether they were complete and properly recorded in the correct general ledger accounts and line items within the Schedules of the General Fund and (2) provide documentation to support the account attributes assigned to Treasury Account Symbols that determine how transactions are reported in the Schedules of the General Fund. The resulting scope limitations, the first of which GAO reported in its fiscal year 2018 audit, are the basis for GAO's disclaimer of opinion on the Schedules of the General Fund. As a result of these limitations, GAO cautions that amounts Fiscal Service reported in the Schedules of the General Fund and related notes may not be reliable.
Three significant deficiencies in Fiscal Service's internal control over financial reporting relevant to the Schedules of the General Fund, which GAO reported in its fiscal year 2018 audit, continue to exist. One of the continuing significant deficiencies contributed to the first scope limitation discussed above. In addition, GAO identified four other control deficiencies, three newly identified and one reported in its fiscal year 2018 audit, which GAO does not consider to be material weaknesses or significant deficiencies.
Fiscal Service worked extensively, both internally and with other federal agencies, to address two scope limitations from GAO's fiscal year 2018 audit, such that GAO no longer considers these to be scope limitations for fiscal year 2020. Fiscal Service also (1) took action to close six of the 12 recommendations that GAO issued as a result of its fiscal year 2018 audit, (2) is implementing plans for remediating the remaining six recommendations over the next few years, and (3) plans to develop corrective actions for the three new recommendations issued in this report. Fiscal Service expressed its commitment to remediating the scope limitations and significant deficiencies reported for fiscal year 2020, acknowledging that it expects to take several years to resolve them, given the nature and complexity of certain identified issues.
In addition, GAO is issuing a separate LIMITED OFFICIAL USE ONLY report on information systems controls.
Why GAO Did This Study
Because GAO audits the consolidated financial statements of the U.S. government and the significance of the General Fund of the United States (General Fund) to the government-wide financial statements, GAO audited the fiscal year 2020 Schedules of the General Fund to determine whether, in all material respects, (1) the schedules are fairly presented and (2) Fiscal Service management maintained effective internal control over financial reporting relevant to the Schedules of the General Fund. Further, GAO tested compliance with selected provisions of laws, regulations, contracts, and grant agreements related to the Schedules of the General Fund.
As the reporting entity responsible for accounting for the cash activity of the U.S. government, in fiscal year 2020, the General Fund reported over $23 trillion of cash inflows and nearly $22 trillion of cash outflows. It also reported a budget deficit of $3.1 trillion, the largest recorded federal deficit in history. The CARES Act, enacted in March 2020, and other COVID-19 pandemic relief laws, contained a number of funding provisions that resulted in a significant increase in the cash activity and budget deficit reported by the General Fund during fiscal year 2020.
Recommendations
GAO is making three recommendations to improve Fiscal Service's internal control over financial reporting relevant to the Schedules of the General Fund.
In commenting on a draft of this report, Fiscal Service concurred with the results of GAO's audit.
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Commissioner of Fiscal Service |
Priority Rec.
The Commissioner of Fiscal Service should design and implement procedures to periodically review and maintain documentation to support account attributes for all active TASs to reasonably assure that activity recorded to each account is properly recognized in the Schedules of the General Fund. (Recommendation 1) |
Open – Partially Addressed
Fiscal Service is developing and implementing a procedure to review active Treasury Account Symbols (TAS) and to compile a standard support package for attributes assigned to them. As of February 2024, Fiscal Service compiled support packages for about 9,300 TASs out of a total of approximately 17,600 active TASs. In addition, Fiscal Service is developing criteria and procedures for assigning and maintaining BETCs available to active TASs. Fiscal Service anticipates resolving this recommendation by approximately fiscal year 2027.
|
| Commissioner of Fiscal Service | The Commissioner of Fiscal Service should design and implement procedures to reasonably assure that federal agencies reconcile their account balances per their internal records to CARS at the appropriate detailed level to provide for accurate reporting of line items on the Schedules of the General Fund. (Recommendation 2) |
Closed – Implemented
In November 2022, Fiscal Service designed and implemented procedures to determine the impact of subsidiary-level account activity on the Schedules of the General Fund. Fiscal Service engaged with federal entities to obtain an understanding of the nature of the account activity and to reconcile the account balances at the subsidiary-level in order to assess whether the account activity is accurately recorded on the Schedules of the General Fund.
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| Commissioner of Fiscal Service |
Priority Rec.
The Commissioner of Fiscal Service should establish controls to restrict access to each TAS to only those federal agencies to which the account belongs. (Recommendation 3) |
Open – Partially Addressed
Fiscal Service determined that developing the capability to systematically restrict Treasury Account Symbol (TAS) access is not feasible prior to fiscal year 2027 and is working to develop a detective control in the meantime. As of February 2024, Fiscal Service completed an analysis that identified the relationships that federal entities (i.e., Agency Location Codes (ALC)) have with each TAS. It subsequently used this analysis to implement a monthly process to 1) analyze the monthly TAS activity and 2) work with federal entities to identify valid TAS-ALC relationships based on the monthly activity. Fiscal Service plans to use the information obtained from this monthly process to compile a list of valid TAS-ALC relationships that could be used in the future as the basis for a detective control.
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