oversight

Report 2011-002-FIN - Audit of the Equal Employment Opportunity Commission's Fiscal Year 2011Financial Statements

Published by the Equal Employment Opportunity Commission, Office of Inspector General on 2011-11-11.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                                          Independent Auditors’ Report

Inspector General
U.S. Equal Employment Opportunity Commission

We have audited the accompanying consolidated balance sheets of the U.S. Equal Employment
Opportunity Commission (EEOC), as of September 30, 2011 and 2010, and the related consolidated
statements of net cost and changes in net position, and combined statement of budgetary resources, for
the years then ended. These financial statements are the responsibility of EEOC management. Our
responsibility is to express an opinion on these financial statements based on our audits.

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 OMB Bulletin No. 07-04, Audit
Requirements for Federal Financial Statements, as amended.

Those standards require that we plan and perform the audits 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.

In our audits of the EEOC for fiscal years 2011 and 2010, we found

   •   the financial statements are presented fairly, in all material respects, in conformity with U.S.
       generally accepted accounting principles,
   •   no material weaknesses in internal control over financial reporting (including safeguarding of
       assets) and compliance with laws and regulations, and
   •   no reportable noncompliance with laws and regulations we tested.

The following sections discuss in more detail (1) these conclusions, (2) conclusions on Management’s
Discussion and Analysis and other supplementary information, and (3) auditors’ and management’s
responsibilities.

Opinion on the Financial Statements
In our opinion, the financial statements including the accompanying notes present fairly, in all material
respects, the financial position of EEOC as of September 30, 2011 and 2010, and its net cost of
operations, changes in net position, and budgetary resources for the years then ended, in conformity with
accounting principles generally accepted in the United States of America.




                        Harper, Rains, Knight & Company, P.A. • Certified Public Accountants • Consultants
                 One Hundred Concourse • 1052 Highland Colony Parkway, Suite 100 • Ridgeland, Mississippi 39157
                             Telephone 601.605.0722 • Facsimile 601.605.0733 • www.hrkcpa.com
Inspector General
U.S. Equal Employment Opportunity Commission - Continued

Consideration of Internal Control
In planning and performing our audits, we considered EEOC’s internal control over financial reporting
and compliance. We did this in order to determine our audit procedures for the purpose of expressing
our opinion on the financial statements and not to provide an opinion on internal control. We limited our
internal control testing to those controls necessary to achieve the objectives described in OMB Bulletin
No. 07-04, as amended. We did not test all internal controls relevant to the operating objectives as
broadly defined by the Federal Managers' Financial Integrity Act of 1982. Providing an opinion on
internal control was not the objective of our audit. Accordingly, we do not express an opinion on
EEOC’s internal control over financial reporting and compliance or on management’s assertion on
internal control included in Managements’ Discussion and Analysis. However, for the controls we
tested, we found no material weaknesses in internal control over financial reporting (including
safeguarding of assets) and compliance.

A control deficiency exists when the design or operation of a control does not allow management or
employees, in the normal course of performing their assigned functions, to prevent or detect
misstatements on a timely basis. A significant deficiency is a deficiency in internal control, or a
combination of deficiencies, that adversely affects the entity's ability to initiate, authorize, record,
process, or report financial data reliably in accordance with generally accepted accounting principles
such that there is more than a remote likelihood that a misstatement of the entity's financial statements
that is more than inconsequential will not be prevented or detected. A material weakness is a significant
deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that
the design or operation of one or more internal controls will not allow management or employees, in the
normal course of performing their duties, to promptly detect or prevent errors, fraud, or noncompliance
in amounts that would be material to the financial statements. Our internal control work would not
necessarily disclose all deficiencies in internal control that might be material weaknesses or other
significant deficiencies.

We noted certain additional matters that we will report to management of EEOC in a separate letter.

Compliance with Applicable Laws and Regulations
The management of EEOC is responsible for complying with laws and regulations applicable to EEOC.
As part of obtaining reasonable assurance about whether EEOC’s financial statements are free of
material misstatement, we performed tests of its compliance with selected provisions of laws and
regulations including laws governing the use of budgetary authority and government-wide policies
identified in OMB Bulletin No. 07-04, as amended, non-compliance with which could have a direct and
material effect on the determination of consolidated and combined financial statements. Our tests
disclosed no instances of noncompliance with laws and regulations which would be reportable under
U.S. generally accepted government auditing standards or OMB audit guidance.

We limited our tests of compliance to the provisions of laws and regulations referred to in the preceding
paragraph. Providing an opinion on compliance with those provisions was not an objective of our audit.
Accordingly, we do not express such an opinion.
Inspector General
U.S. Equal Employment Opportunity Commission - Continued

Consistency of Other Information
Management’s Discussion and Analysis (MD&A) is not a required part of the financial statements but is
supplementary information required by the Federal Accounting Standards Advisory Board and OMB
Circular A-136, Financial Reporting Requirements. We have applied certain limited procedures, which
consisted principally of inquiries of management regarding the methods of measurement and
presentation of the MD&A. However, we did not audit the information and accordingly, we express no
opinion on it.

Responsibilities
EEOC’s management is responsible for (1) preparing the financial statements in conformity with
accounting principles generally accepted in the United States of America, (2) establishing, maintaining,
and assessing internal control to provide reasonable assurance that the broad control objectives of the
Federal Managers’ Financial Integrity Act are met, and (3) complying with applicable laws and
regulations.

We are responsible for obtaining reasonable assurance about whether the financial statements are
presented fairly, in all material respects, in conformity with accounting principles generally accepted in
the United States of America. We are also responsible for (1) obtaining a sufficient understanding of
internal control over financial reporting and compliance to plan the audit, (2) testing compliance with
selected provisions of laws and regulations that have a direct and material effect on the financial
statements and laws for which OMB audit guidance requires testing, and (3) performing limited
procedures with respect to certain other information appearing in the Annual Financial Statement.

In order to fulfill these responsibilities, we

    •   examined, on a test basis, evidence supporting the amounts and disclosures in the financial
        statements;
    •   assessed the accounting principles used and significant estimates made by management;
    •   evaluated the overall presentation of the financial statements;
    •   obtained an understanding of the entity and its operations, including its internal control related to
        financial reporting (including safeguarding assets), and compliance with laws and regulations
        (including execution of transactions in accordance with budget authority);
    •   tested relevant internal controls over financial reporting, and compliance, and evaluated the
        design and operating effectiveness of internal control;
    •   considered the design of the process for evaluating and reporting on internal control and financial
        management systems under the Federal Managers’ Financial Integrity Act; and
    •   tested compliance with selected provisions of laws and regulations that have a direct and material
        effect on the financial statements and those required by OMB Bulletin No. 07-04, as amended.

We did not evaluate all internal controls relevant to operating objectives as broadly defined by the
Federal Managers’ Financial Integrity Act, such as those controls relevant to preparing statistical reports
and ensuring efficient operations. We limited our internal control testing to controls over financial
reporting and compliance. Because of inherent limitations in internal control, misstatements due to error
or fraud, losses, or noncompliance may nevertheless occur and not be detected. We also caution that
projecting our evaluation to future periods is subject to the risk that controls may become inadequate
because of changes in conditions or that the degree of compliance with controls may deteriorate. In
addition, we caution that our internal control testing may not be sufficient for other purposes.
Inspector General
U.S. Equal Employment Opportunity Commission - Continued

We did not test compliance with all laws and regulations applicable to EEOC. We limited our tests of
compliance to selected provisions of laws and regulations that have a direct and material effect on the
financial statements and those required by OMB audit guidance that we deemed applicable to the
EEOC’s financial statements for the fiscal year ended September 30, 2011. We caution that
noncompliance may occur and not be detected by these tests and that such testing may not be sufficient
for other purposes.

We performed our audit in accordance with auditing standards generally accepted in the United States of
America and audit guidance in OMB Bulletin No. 07-04, Audit Requirements for Federal Financial
Statements, as amended.

Our audits were conducted for the purpose of forming an opinion on the financial statements of EEOC
taken as a whole. The other accompanying information included in this performance and accountability
report is presented for purposes of additional analysis and is not a required part of the financial
statements. Such information has not been subjected to the auditing procedures applied in the audit of
the financial statements and, accordingly, we express no opinion on them.

This report is intended solely for the information and use of the management of the U.S. Equal
Employment Opportunity Commission, the U.S. Office of Management and Budget, the U.S.
Government Accountability Office, and the U.S. Congress and is not intended to be and should not be
used by anyone other than these specified parties.




November 11, 2011
Inspector General
U.S. Equal Employment Opportunity Commission - Continued

Appendix A
Status of Management’s Actions on Prior Year Recommendations


                                                                                    Status as of
Recommendation                                                                      11-11-2011
OHR should review and refine controls in place over time-and-attendance reporting
to ensure that all employees report accurate and complete information to
timekeepers. Additionally, OHR should implement a policy requiring return of
                                                                                     Resolved
timesheets with incorrect or incomplete information to employees for correction
before certification of time-and-attendance information in EEOC’s online
timekeeping system.
The CFO should work with the Director of RFD to ensure that documentation is
                                                                                     Resolved
maintained to support all transactions recorded in the general ledger.