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	Cover Letter Summary of Results Background Audit Objective Report on USAID's Financial Statements Report on Internal Control Accruals Reporting System Process for Reconciling Fund Balance with the U.S. Treasury Intragovernmental Transactions Controls Over Treasury Symbols Need Improvement Process for Accumulating Foreign Currency Information Support/Quality of Data Used in the MD&A Need Improvement Report on Compliance with Laws and Regulations Account De-obligation and Closing Processes Need Improvement Lease Obligation Antideficiency Act Violations Evaluation of Management Comments Appendix I - Scope and Methodology Appendix II - Management Comments Appendix III - Status of Prior Year Findings and Recommendations
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Report of Independent Auditor – Cover Letter

With this memorandum, the Office of Inspector General (OIG) is transmitting its final report on the Audit of USAID’s Financial Statements for Fiscal Years 2006 and 2005. Under the Government Management Reform Act of 1994, USAID is required to prepare consolidated fiscal year-end financial statements. In accordance with OMB Circular A-136, USAID is also required to submit a Performance and Accountability Report, including audited financial statements, to the Office of Management and Budget (OMB) and the U.S. Department of the Treasury by November 15, 2006.

The OIG has issued unqualified opinions on all five of USAID’s principal financial statements for fiscal years 2006 and 2005.

With respect to internal control, our report discusses one material internal control weakness and five reportable conditions identified during the audit. The material internal control weakness addresses USAID’s accounting for accruals. The reportable conditions address USAID’s 1) reconciliations of its fund balance with the U.S. Treasury, 2) reconciliations of its
intragovernmental transactions, 3) controls over its Treasury symbols, 4) accounting for foreign currency transactions, and 5) Management’s Discussion and Analysis data.

The results of our tests indicate that USAID substantially complied with Federal financial
management systems requirements, accounting standards, and the U.S. Standard General
Ledger at the transaction level, as required by Section 803(a) of the Federal Financial
Management Improvement Act. Our report on compliance identifies areas for improvement over several financial system processes, not affecting substantial compliance, and two Antideficiency Act violations.

This report contains seven recommendations to improve USAID’s internal control over financial reporting and the preparation of its annual financial statements.

We appreciate the cooperation and courtesies that your staff extended to the OIG during the
audit. The Office of Inspector General is looking forward to working with you on our audit of the fiscal year 2007 financial statements.

U.S. Agency for International Development
1300 Pennsylvania Avenue, NW
Washington, DC 20523
http://www.usaid.gov

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