Independent Auditor's Report – USAID's Intragovernmental Transactions Remain Unreconciled (Repeat Finding)
| Summary: The U.S. Treasury reported a $2.8 billion net difference in intragovernmental transactions between USAID and other Federal agencies at the 2006 fiscal year-end, with an absolute value of $6.1 billion. OMB Circular A-136 requires Federal agencies to perform quarterly reconciliations of intragovernmental transactions in accordance with the FMS Federal Intragovernmental Transactions Accounting Policies Guide. The differences between USAID’s records and those of its trading partners occurred because USAID did not consistently reconcile material differences identified by FMS in its quarterly Material Differences/Status of Disposition Certification (MD/SD) Report and other differences equal to or greater than $50 million, and it did not consistently reconcile other significant differences by reciprocal category with its Federal trading partners throughout FY 2006. USAID did demonstrate significant progress from 2005, when fiscal year-end unreconciled net differences were $6.0 billion. Until intragovernmental transactions are reconciled, USAID’s financial statements are subject to error. |
Treasury FMS has informed Federal agencies that if trading partner “confirmed reporting” exceeds the $50 million threshold it has established, Agency CFOs will be required to provide FMS a “plan of action” to address these differences, as required by Treasury Financial Manual, Vol. I, Part 2-Chapter 4700, Section 4706.30, Agency Reporting Requirements for the Financial Report of the United States Government.
USAID has made some progress in reconciling its trading partner activities and has reduced the difference reported by Treasury by 46 % from the third quarter to the fourth quarter of 2006. Significant differences persist, however. While some timing differences may ultimately be resolved, differences due to accounting errors or different accounting methodologies require a special effort by USAID and its trading partners for timely resolution. The Federal Intragovernmental Transactions Accounting Policy Guide suggests that agencies should work together to estimate accruals and to record corresponding entries in each set of records so that they are in agreement and so that long term accounting policy differences can be identified. Until these reconciliations are complete, USAID’s year-end balances related to intragovernmental line items reported on the financial statements are subject to error.
Although we identified $4 billion of unreconciled general fund transactions between USAID and Treasury that are not required to be reconciled, FMS does suggest that Federal agencies confirm that these differences represent general fund activities. USAID did not consistently document these confirmations.
We made a recommendation to improve the intragovernmental reconciliation process in our previous audit report1. We will not make a new recommendation, but will continue to monitor USAID’s progress in reducing intragovernmental balances, in future audits.
1 Audit of USAID’s Financial Statements for Fiscal Years 2005 and 2004, p. 9, November 14,
2005, http://www.usaid.gov/oig/public/fy06rpts/0-000-06-001-c.pdf. (back to text)
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