Independent Auditor's Report – USAID's Process for Reconciling Its Fund Balance with the U.S. Treasury Needs Improvement (Repeat Finding)
Summary: USAID had large undocumented differences between its Fund Balance and
its cash balance reported by Treasury throughout 2006. As of September 30, 2006,
these differences totaled to a cumulative net value of $66 million. The differences
remained undocumented because USAID was not consistently investigating and
resolving reconciling items, and is not completing reconciliations of its Fund Balance in
accordance with Treasury Financial Manual (TFM) 2-5100. As a result, USAID recorded
adjustments at the 2006 fiscal year-end to ensure that its Fund Balance with the U.S.
Treasury reported on its Form 2108, Year End Closing Statement, agreed with the
balance in Treasury’s records, without fully documenting and investigating the reasons
for the differences. |
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. 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.
USAID Chief Financial Officer Bulletin 06-1001, Reconciliation With U.S. Treasury, requires USAID to perform timely monthly reconciliations with the U.S. Treasury. The Bulletin also requires a written justification for carrying forward unpaid and unsupported transactions over 90 days old, provides specific written guidance for write-offs, and requires a certification that reconciliations have been performed in accordance with TFM Volume 1, Part 2-5100. Bulletin 06-1001 has not been fully implemented.
As of the fiscal 2006 year-end, USAID reported its Fund Balance as $19.3 billion - $66 million more than the balance reported by Treasury on its September 30, 2006 account statement. This occurred partly because Treasury symbol changes were not routinely updated to ensure that transactions in Phoenix were recorded against the correct appropriation (see finding in Reportable Conditions Section). Also, $12 million of cash transactions were fully processed at the Department of Treasury, as of the fiscal year-end, but remained in a suspense status at USAID pending additional information. USAID could not identify the reasons for many other differences, including some items that have not been reconciled with Treasury since 2002. For financial reporting purposes, USAID adjusted its Fund Balance to match the cash balance reported by Treasury without fully documenting the reasons for the unreconciled conditions.
USAID made some attempts to resolve unreconciled Treasury items by working with accounting divisions in Washington, but did not always document the efforts made to investigate and reconcile the differences. USAID’s overseas missions also continue to have large unreconciled balances which are not resolved in a timely manner. Of the ten missions that were audited, five had total unreconciled differences of approximately $50 million and one mission was not performing any fund balance reconciliations.
Recommendation No. 2.1: We recommend that USAID’s Office of the Chief Financial Officer document monthly reconciliations of its Fund Balance with Treasury as required by TFM 2-5100, and ensure that overseas missions are performing and documenting monthly Fund Balance reconciliations.
Recommendation No. 2.2: We recommend that USAID’s Office of the Chief Financial Officer implement policies to ensure that all transactions recorded in the general ledger are reported to Treasury on the SF 224 and that all differences and suspense items are investigated and resolved in a timely manner.
Back to Top ^ | < Previous Page | Next Page >
|
