oversight

Audit of the Office of Personnel Management's Fiscal Year 2013 Consolidated Financial Statements

Published by the Office of Personnel Management, Office of Inspector General on 2013-12-13.

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

                            UNITED STATES OFFICE OF PERSONNEL MANAGEMENT
                                                   Washington. DC 20415

  Office of the
lrt!in<\Ctnr General                         December 13, 2013

                                                                           Report No. 4A-CF-00-13-034


             MEMORANDUM FOR KATHERINE ARCHULETA
                            Director

             FROM:                     PATRICKE.McFARLAND                 {!'~£.~~
                                       Inspector General                                             - -     .      (

             SUBJECT:                  Audit of the Office of Personnel Managemenfs Fiscal Year
                                       2013 Consolidated Financial Statements


             This memorandum transmits KPMG L.LP's (KPMG) report on its financial statement
             audit of the Office of Personnel Management's (OPM) Fiscal Year2013 Consolidated
             Financial Statements and the results ofthe Office of the Inspector General's (OIG)
             oversight ofthe audit and review ofthatreport. OPM's consolidated financial statements
             include the Retirement Program, Health Benefits Program, Life Insurance Program,
             Revolving Fund Programs (RF) and Salaries & Expenses funds (S&E).

             Audit Reports on Financial Statements, Internal Controls .and Compliance
             with Laws and Regulations

             The Chief Financial Officers (CFO) Act of 1990 (P.L. 101-576) requires OPM's Inspector
             General or an independent external auditor, as determined by the Inspector General, to
             audit the agency's financial statements in accordance with Government Auditing
             Standards (GAS) issued by the Comptroller General of the United States. We contracted
             with the independent certified public accounting firm KPMG LLP to audit OPM's
             consolidated fmancial statements as of September 30, 2013 and for the fiscal year then
             ended. The contract requires that the audit be performed in accordance with generally
             accepted government auditing standards and the Office of Management and Budget
             (OMB) Bulletin No. 14-02, Audit Requirements for Federal Financial Statements.

              KPMG's audit report for Fiscal Year 2013 includes: (1) opinions on the consolidated
              financial statements and the individual statements for the three benefit programs, (2) a




          www.opm.gov                                                                             www.usajobs.gov
Honorable Katherine Archuleta                                                                 2


report on internal controls, and (3) a report on compliance with laws and regulations. In
its audit of OPM, KPMG found:

   •   The consolidated financial statements were fairly presented, in all material
       respects, in conformity with U.S. generally accepted accounting principles.

   •   KPMG’s report identified no material weaknesses in the internal controls.

       A material weakness is a deficiency, or combination of deficiencies, in internal
       control, such that there is a reasonable possibility that a material misstatement of
       the entity’s financial statements will not be prevented, or detected and corrected
       on a timely basis.

   •   KPMG’s report identified one significant deficiency:

                Information Systems Control Environment

       A significant deficiency is a deficiency, or combination of deficiencies, in internal
       control that is less severe than a material weakness, yet important enough to merit
       attention by those charged with governance.

OIG Evaluation of KPMG’s Audit Performance

In connection with the audit contract, we reviewed KPMG’s report and related documentation
and made inquiries of its representatives regarding the audit. To fulfill our audit
responsibilities under the CFO Act for ensuring the quality of the audit work performed, we
conducted a review of KPMG’s audit of OPM’s Fiscal Year 2013 Consolidated Financial
Statements in accordance with GAS. Specifically, we:

   •   provided oversight, technical advice, and liaison to KPMG auditors;

   •   ensured that audits and audit reports were completed timely and in accordance
       with the requirements of Generally Accepted Government Auditing Standards
       (GAGAS), OMB Bulletin 14-02, and other applicable professional auditing
       standards;

   •   documented oversight activities and monitored audit status;

   •   reviewed responses to audit reports and reported significant disagreements to the
       audit follow-up official per OMB Circular No. A-50, Audit Follow-up;

   •   coordinated issuance of the audit report; and

   •   performed other procedures we deemed necessary.

Our review, as differentiated from an audit in accordance with GAGAS, was not intended
to enable us to express, and we do not express, opinions on OPM’s financial statements or
Honorable Katherine Archuleta                                                              3


internal controls or on whether OPM’s financial management systems substantially
complied with the Federal Financial Management Improvement Act of 1996 or
conclusions on compliance with laws and regulations. KPMG is responsible for the
attached auditor’s report dated December 13, 2013, and the conclusions expressed in the
report. However, our review disclosed no instances where KPMG did not comply, in all
material respects, with the generally accepted GAS.

In accordance with the OMB Circular A-50 and Public Law 103-355, all audit findings
must be resolved within six months of the date of this report. The OMB Circular also
requires that agency management officials provide a timely response to the final audit
report indicating whether they agree or disagree with the audit findings and
recommendations. When management is in agreement, the response should include
planned corrective actions and target dates for achieving them. If management disagrees,
the response must include the basis in fact, law or regulation for the disagreement.

To help ensure that the timeliness requirement for resolution is achieved, we ask that the
CFO coordinate with the OPM audit follow-up office, Internal Oversight and Compliance
(IOC), to provide their initial responses to us within 30 days, as outlined in OMB Circular
A-50. IOC should be copied on all final report responses. Subsequent resolution activity
for all audit findings should also be coordinated with IOC. The CFO should provide
periodic reports through IOC to us, no less frequently than each March and September,
detailing the status of corrective actions, including documentation to support this activity,
until all findings have been resolved.

In closing, we would like to congratulate OPM’s financial management staff for once
again issuing the consolidated financial statements by the due date. Their
professionalism, courtesy, and cooperation allowed us to overcome the many challenges
encountered during OPM’s preparation, KPMG’s audit, and the OIG’s oversight of the
financial statement audit this year.

If you have any questions about KPMG’s audit or our oversight, please contact me at
606-1200 or you may have a member of your staff contact Michael R. Esser, Assistant
Inspector General for Audits, at       .

cc: Dennis Coleman
    Chief Financial Officer


   Deputy Chief Financial Officer