Reportable Condition: Independent Auditor's Report – USAID's Process for Reconciling Its Fund Balance with the U.S. Treasury Needs Improvement (Repeat Finding)
Summary: USAID reconciled its Fund Balance with Treasury with the balance reported
by U.S Treasury but did not always investigate and resolve the reconciling items. As a
result, USAID was required to make significant end-of-year adjustments to bring its
balance into agreement with Treasury's balance. At the end of FY 2005, USAID's net
unreconciled condition with the U.S. Treasury grew from $95 million to $115 million.
USAID recorded adjustments throughout 2005 to ensure that its Fund Balance with the
U.S. Treasury reported on Form 2108, Year End Closing Statement, agreed with the
balance in Treasury's records, instead of investigating and resolving the differences.
USAID did not develop written narratives documenting the reasons for its year-end
adjustments on unreconciled conditions of its fund balance accounts.
U.S. Treasury reconciliation procedures state that an agency (1) may not arbitrarily
adjust its fund balance with the U.S. Treasury account, and (2) can adjust its fund
balance with the U.S. Treasury account balance only after clearly establishing the
causes for any errors and properly correcting those errors. USAID's written narratives
should have been developed for the unreconciled conditions of its Fund Balance with
Treasury accounts.
The U.S. Department of Treasury's guidance for reconciling fund balances requires that
Federal agencies research and resolve differences reported by the U.S. Treasury on a
monthly basis. Agencies must also resolve all differences between the balances
reported in their general ledger fund with Treasury accounts and the balances reported
by the U.S. Treasury. This guidance stipulates three months as a reasonable period for
clearing the differences. In addition, the procedures state that an agency should
document "month cleared" (the accounting month that the discrepancy was adjusted),
accounting periods, required explanations, and brief narratives that disclose the cause of
the discrepancy.
The OIG identified several problems that continue to limit USAID's ability to investigate
and correct differences between its reported fund balances and the balances reported by
Treasury's Financial Management Service (FMS). Specifically, USAID did not document
the issues that resulted in unreconciled conditions and did not implement procedures to
quickly research and resolve unreconciled items. USAID's responsible personnel did not
review, certify, or sign monthly reconciliation documents, in accordance with Treasury
Financial Manual (TFM) 5100 requirements. The OIG determined that because of these
problems, it was not clear whether USAID clearly established and reported the
conditions to the USAID managers for the function and whether USAID properly
corrected reconciling items and unreconciled conditions of the fund balance accounts.
Moreover, USAID's overseas missions continue to have large unreconciled balances
because they have not been able to implement procedures to resolve reconciling items
in a timely manner and because accounting stations responsible for several client
missions do not consistently receive documentation to support unreconciled
transactions. As a result, USAID had to make a significant adjustment to reconcile its
Fund Balance with the U.S. Treasury.
In October 2005, USAID issued Chief Financial Officer Bulletin No. 06-1001, (the
Bulletin) Reconciliation With U.S. Treasury, describing policy procedures directed at
USAID and the Mission Controller Offices. This document requires that USAID and
Mission Controllers perform timely and complete monthly reconciliations with the U.S.
Treasury Disbursing Offices, including certifying and documenting the results to the
Deputy Chief Financial Officer in Washington. Specifically, this document calls on
USAID and Mission Controllers to document and justify in writing (narrative form) the
rationale for carrying forward any unpaid and unsupported transactions over 90 days old.
Furthermore, the Bulletin stipulates that documentation and narratives must be
maintained by the appropriate accounting office and made available to the Agency's
management, auditors, and the U.S. Treasury as requested. The Bulletin also calls on
USAID and Mission Controllers to follow USAID's specific written guidance for write-offs
of unreconciled transactions, and to certify that the reconciliation process with the U.S.
Treasury has been performed according to TFM Volume 1. Part 2-5100.
To ensure that USAID conducts its prescribed reconciliation procedures, we are making
the following recommendation:
Recommendation No. 2: We recommend that the Office of the Chief Financial
Officer ensure that USAID financial managers and mission controllers implement the
reconciliation guidelines specified by Chief Financial Officer Bulletin No. 06-1001,
Reconciliation with U. S. Treasury, dated October 2005 to ensure Fund Balance with
Treasury accounts are reconciled in a timely manner, reconciling items are
investigated and resolved, and that adequate documentation is retained to support
the reconciliation procedures performed.
Back to Top ^ | < Previous Page | Next Page >
|
