Bureau of Alcohol, Tobacco, Firearms and Explosives
Annual Financial Statement
Fiscal Year 2004
Audit Report 05-15
Office of the Inspector General
This audit report contains the Annual Financial Statement of the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) for the fiscal year ended September 30, 2004, and the period from January 24, 2003 to September 30, 2003. Pursuant to the Homeland Security Act of 2002, Public Law 107-296, the ATF was transferred from the Department of Treasury and became a new bureau of the Department of Justice on January 24, 2003. Under the direction of the Office of the Inspector General (OIG), KPMG LLP performed the ATF audit.
The ATF received a qualified opinion on its FY 2004 financial statements. The qualification was because the ATF did not provide adequate documentation to support the amounts recorded as accounts payable. A qualified opinion means that the financial statements are presented fairly in all material respects, except for matters identified in the Independent Auditors’ Report on Financial Statements. The ATF received an unqualified opinion on its FY 2003 financial statements. An unqualified opinion means that the financial statements present fairly, in all material respects, the financial position and the results of the entity’s operations.
In its Independent Auditors’ Report on Internal Control Over Financial Reporting, the auditors noted two reportable conditions. The ATF received a material weakness on its process for recording accounts payable. The ATF also received a repeat reportable condition regarding its need to implement effective IT general access controls to address vulnerabilities. In its Independent Auditors’ Report on Compliance and Other Matters, the auditors noted that the ATF’s financial management systems did not substantially comply with applicable Federal accounting standards.
The OIG reviewed KPMG’s report and related documentation and made necessary inquiries of its representatives. Our review, as differentiated from an audit in accordance with U.S. generally accepted government auditing standards, was not intended to enable us to express, and we do not express, an opinion on the ATF’s financial statements, conclusions about the effectiveness of internal control, conclusions on whether the ATF’s financial management systems substantially complied with FFMIA, or conclusions on compliance with laws and regulations. KPMG is responsible for the attached auditor’s report dated November 4, 2004 and the conclusions expressed in the report. However, our review disclosed no instances where KPMG did not comply, in all material respects, with generally accepted government auditing standards.