Office of Justice Programs Annual Financial Statement
Fiscal Year 2005
Audit Report 06-17
Office of the Inspector General
This audit report contains the Annual Financial Statement of the Office of Justice Programs (OJP) for the fiscal years ended September 30, 2005, and September 30, 2004 (as restated). Under the direction of the Office of the Inspector General (OIG), the audit was performed by KPMG LLP (KPMG) and resulted in an unqualified opinion for FY 2005. An unqualified opinion means that the financial statements present fairly, in all material respects, the financial position and the results of operations. OJP also received an unqualified opinion on its restated FY 2004 financial statements (OIG Report No. 05-38).
In its FY 2005 Report on Internal Control over Financial Reporting, KPMG identified four reportable conditions, three of which were considered to be material weaknesses. All four reportable conditions are repeated from the restated FY 2004 report. The first material weakness relates to OJP’s process for estimating grant advances and payables. While the auditors found that OJP has made progress in this area, the auditors continued to find many data validity, completeness, and calculation errors in grant data underlying the advance and payable amounts. As part of this finding, the auditors also found that OJP needs to make improvements to its grant monitoring procedures.
The second material weakness relates to controls over financial reporting, monitoring, analysis, and documentation. The auditors found that OJP still needs to improve its financial statement preparation process, specifically its posting of final adjusting journal entries. The auditors also noted that OJP does not have policies and procedures in place for financial system queries that are necessary to reconcile the cost posting module to the general ledger balances and has not maintained adequate support for all transactions.
The third material weakness relates to the general and application controls for electronic data processing. The auditors found weaknesses in all of the Government Accountability Office’s Federal Information System Controls Audit Manual areas: entity-wide security program, access controls, change controls, system software, service continuity, and application controls. The one reportable condition notes the need for significant improvements to the de-obligation/closeout process for grant and non-grant undelivered orders.
In its Report on Compliance and Other Matters, KPMG reported that OJP’s financial management systems were not in compliance with the Federal Financial Management Improvement Act of 1996 with regard to federal financial management systems requirements and applicable federal accounting standards. KPMG also reported non-compliance with the Inspector General Act of 1978, Prompt Management Decisions and Implementation of Audit Recommendations, on timeliness of follow-up actions.
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 OJP’s financial statements, conclusions about the effectiveness of internal control, or conclusions on compliance with laws and regulations. KPMG is responsible for the attached auditor’s report dated October 20, 2005, 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.