REPORT OF INDEPENDENT ACCOUNTANTSUnited States Attorney General and
The Office of the Inspector General
United States Department of Justice
We have audited the accompanying consolidated balance sheets of the U.S. Department of Justice and its components as of September 30, 2001 and 2000, and the related consolidated statements of net cost, changes in net position and custodial activity, and the related combined statements of budgetary resources and financing, for the years then ended.† These financial statements are the responsibility of the Departmentís management.† Our responsibility is to express an opinion on these financial statements based on our audits.† We did not audit the financial statements of certain components of the Department, including the Office of Justice Programs, Drug Enforcement Administration, Federal Bureau of Investigation, Immigration and Naturalization Service, U.S. Marshals Service, Bureau of Prisons, and Federal Prison Industries, Inc., which statements reflect total combined assets of $23.4 and $21.2 billion and total combined net costs of $16.7 and $16.9 billion for the years ended September 30, 2001 and 2000, respectively.† Those statements were audited by other auditors whose reports thereon have been furnished to us, and our opinion expressed herein, insofar as it relates to the amounts included for these components, is based solely on the reports of the other auditors.
Except as discussed in the following paragraph, we conducted our audits in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and Office of Management and Budget (OMB) Bulletin No. 01-02, Audit Requirements for Federal Financial Statements.† Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.† An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.† An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.† We believe that our audits provide a reasonable basis for our opinion.
Because of inadequate records supporting the number of pending immigration and naturalization benefit applications as of October 1, 1999, the auditors of the Immigration and Naturalization Service (INS) were unable to obtain sufficient evidential matter to form an opinion regarding the earned revenues offset portion of Immigration Program Costs for the year ended September 30, 2000.† The INS's earned revenues offset portion of Immigration Program Costs represents 32% of the Department's fiscal year 2000 consolidated earned revenues.
In our opinion, based on our audits and the reports of other auditors, except for the effects of such adjustments, if any, as might have been determined to be necessary in the fiscal year 2000 statements of net cost, changes in net position, budgetary resources, and financing, had other auditors been able to obtain sufficient evidential matter concerning the earned revenues offset portion of Immigration Program Costs of the Immigration and Naturalization Service, the consolidated and combined financial statements referred to above, after giving effect to the restatements described in Note 19, present fairly, in all material respects, the financial position of the Department of Justice and its components, at September 30, 2001 and 2000, and their net cost, changes in net position, budgetary resources, financing and custodial activity for the years then ended, in conformity with accounting principles generally accepted in the United States of America.
As discussed in Note 1.H. and Note 19, respectively, the Department implemented Statement of Federal Financial Accounting Standards No. 10, Accounting for Internal Use Software, and No. 21, Reporting on Corrections of Errors and Changes in Accounting Principles, during fiscal year 2001.
Our audits were conducted for the purpose of forming an opinion on the Departmentís consolidated and combined financial statements taken as a whole.† The consolidating and combining information is presented for purposes of additional analysis of the Departmentís consolidated and combined financial statements rather than to present the financial position, net costs, changes in net position, budgetary resources, financing, and custodial activity of the Departmentís components.† The consolidating and combining information has been subjected to the auditing procedures applied in the audits of the Departmentís consolidated and combined financial statements and, in our opinion, except for the effects of such adjustments, if any, as might have been determined to be necessary in the fiscal year 2000 statements of net cost, changes in net position, budgetary resources, and financing, had other auditors been able to obtain sufficient evidential matter concerning the earned revenues offset portion of Immigration Program Costs of the Immigration and Naturalization Service, after giving effect to the restatements described in Note 19, the consolidating and combining information is fairly stated in all material respects in relation to the Departmentís consolidated and combined financial statements taken as a whole.
The Managementís Discussion and Analysis (MD&A) and Required Supplementary Information (RSI) are not required parts of the financial statements but are supplementary information required by the Federal Accounting Standards Advisory Board and OMB Bulletin No. 97-01, Form and Content of Agency Financial Statements, as amended.† We did not audit the information and express no opinion on it.† However, we and other auditors have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the MD&A and RSI.† The Department was not able to fully complete the reconciliation of non-fiduciary transactions with their intra-governmental trading partners as required by OMB Bulletin No. 97-01, as amended.
In accordance with Government Auditing Standards, we have also issued a report dated February 14, 2002 on our consideration of the Department's internal control and a report dated February 14, 2002 on its compliance with laws and regulations.† Those reports are an integral part of an audit performed in accordance with Government Auditing Standards and should be read in conjunction with this report in considering the results of our audits.†
February 14, 2002