Drug Enforcement Administration
Annual Financial Statement
Fiscal Year 2002
Report No. 03-23
Office of the Inspector General
This audit report contains the Annual Financial Statement of the Drug Enforcement Administration (DEA) for the fiscal years ended September 30, 2002 and September 30, 2001. Under the direction of the Office of the Inspector General (OIG), the audit was performed by KPMG LLP and resulted in an unqualified opinion for FY 2002. 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. For FY 2001, the DEA also received an unqualified opinion on its financial statements (OIG Report No. 02-40).
During FY 2002, the DEA made significant progress towards correcting previously reported internal control problems. In FY 2001 the auditors reported four material weaknesses in the areas of Fund Balance with Treasury, financial reporting, information technology and the status of obligations. Improvements were made in all four areas, with no additional material weaknesses identified. Specifically, the long-standing material weakness in Fund Balance with Treasury was corrected, along with the weakness in financial reporting. The other material weaknesses in the areas of information technology and the status of obligations were sufficiently improved to reduce their status to reportable conditions. No compliance issues were reported.
While the DEA has made significant strides in correcting outstanding internal control issues, a continued commitment must be sustained. The accelerated year-end deadlines imposed by the Department and the Office of Management and Budget represent an area of significant risk that must be continually addressed if the DEA is to continue to maintain its progress. Interim financial reporting must be improved and become routine. The DEA must maximize the use of system-generated data and reduce their dependency on manual processes. Additionally, senior management must ensure personnel outside the finance office remain involved in the process.