The Federal Deposit Insurance Corporation (FDIC) helps maintain stability and public confidence in the nation's financial system.
During our 2019-2020 financial statement audit of the two funds that the FDIC administers (the Deposit Insurance Fund and the Federal Savings and Loan Insurance Corporation Resolution Fund), we found issues—what auditors call a "significant deficiency." These issues related to how the FDIC ensures that its payments to contractors are correct.
In this report to FDIC's management, we made some recommendations to address these issues.
What GAO Found
During the audit of the 2020 and 2019 financial statements of the two funds the Federal Deposit Insurance Corporation (FDIC) administers—the Deposit Insurance Fund (DIF) and the Federal Savings and Loan Insurance Corporation Resolution Fund (FRF)—GAO identified deficiencies in FDIC's controls over contract-payment review processes that collectively represent a significant deficiency in FDIC's internal control over financial reporting that merits attention by those charged with FDIC governance. GAO communicated to FDIC management detailed information regarding these control deficiencies and made two new recommendations to address this significant deficiency that are intended to improve FDIC's internal controls over financial reporting, as well as to bring FDIC into conformance with its own policies and Standards for Internal Control in the Federal Government. In commenting on a draft of this report, FDIC stated it is committed to implementing appropriate improvements to ensure it maintains effective internal controls. FDIC agreed with GAO's two recommendations and described planned actions to address each recommendation.
Why GAO Did This Study
The purpose of this report is to present the internal control deficiencies identified during GAO's audit of FDIC's 2020 and 2019 financial statements of the DIF and the FRF. This report provides two new recommendations to address these internal control deficiencies. GAO had no prior open recommendations to FDIC related to the financial statement audit or internal controls over financial reporting. This report is intended for FDIC management use.
GAO is making two new recommendations to address the significant deficiency identified during its audit of FDIC’s 2020 and 2019 financial statements. These recommendations are intended to help FDIC reasonably assure that it follows its own policies and procedures for contract-payment review processes. FDIC agreed with GAO’s two recommendations and described planned actions to address each recommendation.
Recommendations for Executive Action
|Federal Deposit Insurance Corporation||1. The Chief Financial Officer and the Chief Operating Officer should direct oversight managers and processing approvers to review and follow FDIC's existing policies and procedures for contract-payment review processes, to reasonably assure FDIC sufficiently documents and properly supports contract payments. (Recommendation 1)|
|Federal Deposit Insurance Corporation||2. The Chief Risk Officer should establish a process to coordinate with the Division of Administration and the Division of Finance, as appropriate, to periodically train, monitor, and ensure that oversight managers and processing approvers sufficiently and accurately follow FDIC's existing policies and procedures for contract payments. (Recommendation 2)|