This audit report contains the Annual Financial Statement of the Offices, Boards and Divisions (OBDs) for the fiscal years (FY) ended September 30, 2007, and September 30, 2006. Under the direction of the Office of the Inspector General (OIG), KPMG LLP (KPMG) performed the OBDs’ audit. Beginning in FY 2007 the activities and balances of the Department of Justice’s Working Capital Fund (WCF), previously reported separately, are included in the OBDs’ consolidated and combined financial statements.
The audit resulted in an unqualified opinion on the FY 2007 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 conformity with accounting principles generally accepted in the United States. For FY 2006, the OBDs also received an unqualified opinion on its financial statements (OIG Report Nos. 07-08 (OBDs) and 07-16 (WCF)).
For FY 2007, the Independent Auditors’ Report on Internal Control identified two new significant deficiencies and one repeat significant deficiency, compared to three reportable conditions in FY 2006.1 Effective for FY 2007, the term “reportable condition” was changed to the term “significant deficiency,” and new definitions of material weakness and significant deficiency were introduced in auditing standards generally accepted in the United States. See Government Auditing Standards and Office of Management and Budget Bulletin No. 07-04, Audit Requirements for Federal Financial Statements. The new significant deficiencies relate to weaknesses in quarterly reviews of open obligation status and in the design and operation of controls over journal vouchers, specifically the review and approval process. The repeat significant deficiency concerns weaknesses in the Department of Justice information system general controls environment. The auditors reported no compliance issues for the OBDs in FY 2007 and FY 2006.
The OIG reviewed KPMG’s reports 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 OBDs’ financial statements, conclusions about the effectiveness of internal control, conclusions on whether the OBDs’ financial management systems substantially complied with the Federal Financial Management Improvement Act of 1996, or conclusions on compliance with laws and regulations. KPMG is responsible for the attached auditors’ reports dated November 7, 2007, and the conclusions expressed in the reports. However, our review disclosed no instances where KPMG did not comply, in all material respects, with generally accepted government auditing standards.