oversight

OPM's FY 2017 Closing Package Financial Statements

Published by the Office of Personnel Management, Office of Inspector General on 2017-11-16.

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
Inspector General
                                                             November 16, 2017

                                                                                          Report No. 4A-CF-00-17-029

     MEMORANDUM FOR KATHLEEN M. McGETTIGAN 

                    Acting Director                                                   


     FROM:                         N
                                   	 ORBERT E. VINT

                                   Acting Inspector General 


     SUBJECT: 	                    Audit of the U.S. Office of Personnel Management’s Fiscal Year 2017
                                   Closing Package Financial Statements


     This memorandum transmits Grant Thornton LLP’s (Grant Thornton) report on the U.S. Office
     of Personnel Management’s (OPM) Fiscal Year 2017 Closing Package Financial Statements and
     the results of the Office of the Inspector General’s (OIG) oversight of the audit and review of
     that report. OPM’s Closing Package Financial Statement Reports include the Governmentwide
     Treasury Account Symbol Adjusted Trial Balance System (GTAS) Reconciliation Report –
     Reclassified Balance Sheet as of September 30, 2017; the related GTAS Reconciliation Reports
     – Reclassified Statement of Net Cost and Reclassified Statement of Operations and Changes in
     Net Position for the year then ended; and the related notes to the financial statements (hereinafter
     referred to as the closing package financial statements). The notes to the financial statements
     comprise the following:

          	 The GTAS Closing Package Lines Loaded Report, and

          	 Financial Report (FR) Notes Report (except for information in the FR Notes Report
             entitled “2016 – September,” “Prior Year,” “PY,” “Previously Reported,” “Line Item
             Changes,” “Threshold,” and the information as of and for the year ended September 30,
             2016, in the “Text Data” of the FR Notes Reports.)

     These closing package financial statements link the agency’s audited consolidated financial
     statements to the Financial Report of the United States.

     We contracted with the independent certified public accounting firm Grant Thornton to audit
     OPM’s closing package financial statements as of September 30, 2017 and 2016. The contract
     requires that the audit be done in accordance with auditing standards generally accepted in the
     United States of America; the standards applicable to financial audits contained in U.S.
     Government Auditing Standards, issued by the Comptroller General of the United States; and the
     Office of Management and Budget (OMB) Bulletin No.17-03, Audit Requirements for Federal
     Financial Statements.




 www.opm.gov        Recruit, Retain, and Honor a Word Class Workforce to Serve the American People          www.usajobs.gov
Kathleen M. McGettigan                                                                      2


Grant Thornton reported that OPM’s closing package financial statements present fairly,
in all material respects, the financial position of OPM as of September 30, 2017, and its
net costs and changes in net position for the year then ended in accordance with
accounting principles generally accepted in the United States of America.

Grant Thornton noted no matters involving the internal control over the financial process
for the closing package financial statements that are considered a material weakness or
significant deficiency. Grant Thornton disclosed no instances of noncompliance or other
matters that are required to be reported.

The objectives of Grant Thornton’s audits of the closing package financial statements did
not include expressing an opinion on internal controls or compliance with laws and
regulations, and Grant Thornton, accordingly, does not express such opinions.

OIG Evaluation of Grant Thornton’s Audit Performance

In connection with the audit contract, we reviewed Grant Thornton’s report and related
documentation and made inquiries of its representatives regarding the audit. To fulfill our
audit responsibilities under the Chief Financial Officers Act for ensuring the quality of the
audit work performed, we conducted a review of Grant Thornton’s audit of OPM’s Fiscal
Year 2017 and 2016 closing package financial statements in accordance with Government
Auditing Standards. Specifically, we:

   	 provided oversight, technical advice, and liaison to Grant Thornton auditors;

   	 ensured that audits and audit reports were completed timely and in accordance
      with the requirements of GAGAS, OMB Bulletin 17-03, and other applicable
      professional auditing standards;

   	 documented oversight activities and monitored audit status;

   	 reviewed responses to audit reports and reported significant disagreements, if any,
      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 generally accepted
government auditing standards, was not intended to enable us to express, and we do not
express, opinions on OPM’s closing package financial statements. Grant Thornton is
responsible for the attached auditor’s report dated November 13, 2017, and the
conclusions expressed in the report. However, our review disclosed no instances where
Grant Thornton did not comply, in all material respects, with auditing standards generally
accepted in the United States of America.
Kathleen M. McGettigan                                                                    3




If you have any questions about Grant Thornton’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        .


Attachment

cc: Patrick J. Young
    Acting Chief of Staff

   Dennis D. Coleman
   Chief Financial Officer and Acting Chief Management Officer

   Daniel K. Marella
   Deputy Chief Financial Officer

   David A. Garcia
   Chief Information Officer

   Janet L. Barnes 

   Director, Internal Oversight and Compliance 



   Chief, Policy and Internal Control
                                                                                     Grant Thornton LLP
                                                                                     1000 Wilson Boulevard., 14th Floor
                                                                                     Arlington, VA 22209
                                                                                     T 703.847.7500
                                                                                     F 703.848.9580
                                                                                     www.GrantThornton.com

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS




Kathleen M. McGettigan, Acting Director
United States Office of Personnel Management

Norbert E. Vint, Acting Inspector General
United States Office of Personnel Management

Report on the closing package financial statements

We have audited the accompanying Closing Package Financial Statement Report of the United
States Office Of Personnel Management (the Agency), which comprise the Government-wide
Treasury Account Symbol Adjusted Trial Balance System (GTAS) Reconciliation Report –
Reclassified Balance Sheet as of September 30, 2017, and the related GTAS Reconciliation
reports – Reclassified Statement of Net Cost and Reclassified Statement of Operations and
Changes in Net Position for the year then ended, and the related notes to the financial statements
(hereinafter referred to as the “closing package financial statements”). The notes to the financial
statements comprise the following:

                The GTAS Closing Package Lines Loaded Report, and
                Financial Report (FR) Notes Report (except for information in the FR Notes Report
                 entitled “2016 – September,” “Prior Year,” “PY,” “Previously Reported,” “Line Item
                 Changes,” “Threshold,” and the information as of and for the year ended September 30,
                 2016 in the “Text Data” of the FR Notes Reports.

Management’s responsibility for the closing package financial statements

Management is responsible for the preparation and fair presentation of these closing package
financial statements in accordance with accounting principles generally accepted in the United
States of America; this includes the design, implementation, and maintenance of internal control
relevant to the preparation and fair presentation of closing package financial statements that are
free from material misstatement, whether due to fraud or error.




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Auditor’s responsibility

Our responsibility is to express an opinion on these closing package financial statements based
on our audit. We conducted our audit 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 Office
of Management and Budget (OMB) Bulletin No. 17-03, Audit Requirements for Federal Financial
Statements. Those standards and OMB Bulletin No. 17-03 require that we plan and perform the
audit to obtain reasonable assurance about whether the closing package financial statements are
free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the closing package financial statements. The procedures selected depend on the
auditor’s judgment, including the assessment of the risks of material misstatement of the closing
package financial statements, whether due to fraud or error. In making those risk assessments,
the auditor considers internal control relevant to ’s preparation and fair presentation of the
closing package financial statements in order to design audit procedures that are appropriate in
the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
Agency’s internal control. Accordingly, we express no such opinion. An audit also includes
evaluating the appropriateness of accounting policies used and the reasonableness of significant
accounting estimates made by management, as well as evaluating the overall presentation of the
closing package financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our audit opinion.

Opinion

In our opinion, the closing package financial statements referred to above present fairly, in all
material respects, the financial position of the U.S. Office of Personnel Management as of
September 30, 2017, and its net costs and changes in net position for the year then ended in
accordance with accounting principles generally accepted in the United States of America.

Emphasis of matter

We draw attention to FR Note No. 1 to the closing package financial statements, which describes
that the accompanying closing package financial statements were prepared to comply with the
requirements of the U.S. Department of the Treasury’s Treasury Financial Manual (TFM) Volume
1, Part 2, Chapter 4700 (TFM Chapter 4700) for the purpose of providing financial information
to the U.S. Department of the Treasury and the U.S. Government Accountability Office (GAO)
to use in preparing and auditing the Financial Report of the U.S. Government, and are not intended to
be a complete presentation of the consolidated balance sheet of the Agency as of September 30,
2017, and the related consolidated statements of net cost, changes in net position, combined
statement of budgetary resources for the year ended September 30, 2017 (hereinafter referred to
as “general-purpose financial statements”). The notes to the closing package financial statements



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are those that the U.S. Department of the Treasury deemed relevant to the Financial Report of the
U.S. Government. Our opinion is not modified with respect to this matter.
Other matters

Opinion on the general-purpose financial statements

We have audited, 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. 17-03
the general-purpose financial statements of the U.S. Office of Personnel Management as of and
for the years ended September 30, 2017 and 2016, and our report thereon, dated November 13,
2017, expressed an unmodified opinion on those financial statements.

Required supplementary information

Accounting principles generally accepted in the United States of America require that the
information, except for such information entitled “2016 – September,” “Prior Year,” “PY,”
“Previously Reported,” “Line Item Changes,” “Threshold,” and the information as of and for
the year ended September 30, 2016 included in the “Text Data” of the FR Notes Reports and
“Other Text Data’ of the Other Data Report, included in Other Data Report Nos. 1 (Other Data
Info Section A and B only), 3 through 9, 12 (Other Data Info Section A only), 14, 17, and 18 be
presented to supplement the basic closing package financial statements.

Such information, although not a required part of the basic closing package financial statements,
is required by the Federal Accounting Standards Advisory Board (FASAB), who considers it to
be an essential part of financial reporting for placing the basic closing package financial
statements in an appropriate operational, economic, or historical context. This required
supplementary information is the responsibility of management. We have applied certain limited
procedures to the required supplementary information in accordance with auditing standards
generally accepted in the United States of America. These limited procedures consisted of
inquiries of management about the methods of preparing the information and comparing the
information for consistency with management’s responses to our inquiries, the basic closing
package financial statements, and other knowledge we obtained during our audit of the basic
closing package financial statements. Although our opinion on the basic closing package financial
statements is not affected, Other Data Report Nos. 9, 17 and 18 contain material departures from
the prescribed guidelines because the information included in these Other Data Reports presents
the required information for the Financial Report of the U.S. Government and not the required
information for the Agency’s financial statements. We do not express an opinion or provide any
assurance on the information because the limited procedures do not provide us with sufficient
evidence to express an opinion or provide any assurance.

Management has omitted the Management’s Discussion and Analysis and the combining
schedule of budgetary resources that accounting principles generally accepted in the United States
of America require to be presented to supplement the basic closing package financial statements.
Such missing information, although not a part of the basic closing package financial statements,



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is required by the FASAB who considers it to be an essential part of financial reporting for placing
the basic closing package financial statements in an appropriate operational, economic, or
historical context. Our opinion on the basic closing package financial statements is not affected
by this missing information.

Other information

Our audit was conducted for the purpose of forming an opinion on the closing package financial
statements as a whole. The information other than that described in the first paragraph and the
paragraph labeled Required Supplementary Information are presented for purposes of additional
analysis in accordance with TFM Chapter 4700 and are not a required part of the closing package
financial statements. We read the other information included with the closing package financial
statements in order to identify material inconsistencies, if any, with the audited closing package
financial statements. Such information has not been subjected to the auditing procedures applied
in the audit of the closing package financial statements as of and for the year ended September
30, 2017, and accordingly, we do not express an opinion or provide any assurance on it.

Restriction on use of the report on the closing package financial statements

This report is intended solely for the information and use of the management of the U.S. Office
of Personnel Management, the U.S. Department of the Treasury, OMB, and GAO in connection
with the preparation and audit of the Financial Report of the U.S. Government and is not intended to
be and should not be used by anyone other than these specified parties.
Other reporting required by Government Auditing Standards

In accordance with Government Auditing Standards and OMB Bulletin No. 17-03, we have also
issued our reports dated November 13, 2017, on our consideration of the Agency’s internal
control over financial reporting and on our tests of its compliance with certain provisions of laws,
regulations, contracts, grant agreements and other matters. Those reports are an integral part of
an audit performed in accordance with Government Auditing Standards and OMB Bulletin No. 17-
03 in considering the Agency’s internal control over financial reporting and compliance, and
should be read in conjunction with this report in considering the results of our audit of the closing
package financial statements.

Our audit of the general-purpose financial statements as of and for the year ended September 30,
2017 disclosed the following material weakness and noncompliance and other matters.

                                  Material Weakness – Information Systems Control Environment

In accordance with the Federal Managers’ Financial Integrity Act of 1982 and the requirements
of the OMB Circular A-123 Management's Responsibility for Enterprise Risk Management and Internal
Control, Agency management is responsible for establishing and maintaining internal controls to
achieve specific internal control objectives related to operations, reporting, and compliance. This
includes establishing information systems controls as management relies extensively on
information systems for the administration and processing of its programs, to both process and
account for their expenditures, as well as for financial reporting. Lack of internal controls over



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these environments could compromise the reliability and integrity of the program’s data and
increases the risk of misstatements whether due to fraud or error.

Our internal control testing covered both general and application controls. General controls
encompass the security management program, access controls (physical and logical),
configuration management, segregation of duties, and service continuity or contingency planning.
General controls provide the foundation for the integrity of systems including applications and
the system software which make up the general support systems for an Agency’s major
applications. General controls, combined with application level controls, are critical to ensure
accurate and complete processing of transactions and integrity of stored data. Application
controls include controls over input, processing of data, and output of data as well as interface
and other user controls. These controls provide assurance over the completeness, accuracy, and
validity of data. Our audit included testing of OPM’s mainframe, networks, databases,
applications, and other supporting systems and was conducted at headquarters.

During Fiscal Year (FY) 2017, OPM made progress in strengthening controls over its information
systems to address the material weakness over its information system (IS) control environment
reported in FY 2016. However, our FY 2017 testing identified similar control issues in both
design and operation of key controls. We believe that, in many cases, these deficiencies continue
to exist because of one, or a combination, of the following:

        	 Risk mitigation strategies and related control enhancements require additional time to be
           fully implemented or to effectuate throughout the environment,

        	 Lack of centralized or comprehensive policies and procedures,

        	 The design of enhanced or newly designed controls did not completely address risks and
           recommendations provided over past audits, and

        	 Oversight and governance was insufficient to enforce policies and address deficiencies.

The information system issues identified in FY 2017 remain consistent with prior years. We also
noted new deficiencies. The noted deficiencies in OPM’s IS control environment in the areas of
Security Management, Logical and Physical Access, and Configuration Management, in the
aggregate, are considered to be a Material Weakness.

Security Management

Appropriate security management controls provide reasonable assurance that the security of an
Agency’s IS control environment is effective. Such controls include, amongst others, security
management programs, periodic assessments and validation of risk, security control policies and
procedures, and security awareness training. We noted the following deficiencies during our
review of OPM’s security management controls:

        	 System Security Plans, Risk Assessments, Security Assessment and Authorization
           Packages and Information System Continuous Monitoring documentation were
           incomplete,


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        	 OPM did not have a centralized process in place to maintain a complete and accurate
           listing of systems and devices to be able to provide security oversight or risk mitigation
           in the protection of its resources,

        	 Instances of applications were not scanned during the first quarter of FY 2017 and in
           July 2017,

        	 OPM did not have a system in place to identify and generate a complete and accurate
           listing of OPM contractors and their employment status,

        	 Documentation of the periodic review of Plan of Action and Milestones (POA&Ms) did
           not exist,

        	 Several instances of known security weaknesses did not correspond to a POA&M,

        	 OPM did not have a system in place to identify and generate a complete and accurate
           listing of users with significant information systems responsibilities, and

        	 Entity level policies and procedures are outdated and / or incomplete.

Without a comprehensive understanding of all devices, software and systems within OPM’s
boundaries, OPM is unable to provide comprehensive security oversight or risk mitigation in the
protection of its resources. Furthermore, without comprehensive tracking of vulnerabilities or
known system weaknesses, OPM is unable to determine whether they have been remediated
within a timely manner. This increases the risk of systems being compromised and may result in
the unauthorized use, modification, or disclosure of data. Further, the lack of insight into the
presence of similar or aging vulnerabilities throughout all systems and devices connected to the
network increases the risk of unauthorized access to sensitive information or system resources.

Logical and Physical Access

Access controls limit or detect inappropriate access to computer resources, protecting them from
unauthorized modification, loss, and disclosure. Such controls include both logical and physical
access controls. Logical access controls require users to authenticate themselves while limiting
the files and other resources that authenticated users can access and actions they can execute.
Physical access controls involve restricting physical access to computer resources and protecting
them from intentional or unintentional loss or impairment. We noted the following deficiencies
during our review of OPM’s logical and physical access to controls:

        	 OPM did not comply with their policies regarding the periodic recertification of the
           appropriateness of user access,

        	 Users are not appropriately provisioned and de-provisioned access from OPM’s
           information systems and the data center,

        	 Six of the six financial applications assessed were not compliant with OMB-M-11-11


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                 Continued Implementation of Homeland Security Presidential Directive (HSPD) 12 Policy for a
                 Common Identification Standard for Federal Employees and Contractors or Personal Identity
                 Verification (PIV) and OPM policy which requires the two-factor authentication,

        	 Active Directory password settings were not compliant with OPM policy,

        	 OPM could not provide a system generated listing of all users who have access to
           systems,

        	 System roles and associated responsibilities or functions, including the identification of
           incompatible role assignments were not documented,

        	 Security events were not reviewed in a timely manner, and

        	 A comprehensive review of audit logs was not performed.

By not obtaining authorization for new hires and reassignments there is a risk that individuals are
provided access to functions or data that is not required to perform their job responsibilities.
This could allow for erroneous data entry or data changes. Further, by not removing access in a
timely fashion, a terminated individual may be able to access systems or data. Finally, users who
have the ability to perform functions outside of their job responsibilities or execute key processes
or transactions from initiation to completion, increases the risk of inaccurate, invalid and/or
unauthorized transactions being processed by the system. Therefore, there is a risk of
unauthorized access to financially relevant transactions or data.

Configuration Management

Appropriate configuration management controls provide reasonable assurance that changes to
information system resources are authorized, and systems are configured and operated securely
and as intended. Such controls include, amongst others, effective configuration management
policies, plans, and procedures; proper authorization, testing, approval, and tracking of all
configuration changes; and routine monitoring of the systems configuration. We noted the
following deficiencies during our review of OPM’s configuration management controls:

        	 OPM had not developed comprehensive configuration management policies and
           procedures governing changes that is formally approved and disseminated to OPM
           personnel,

                OPM did not have the ability to generate a complete and accurate listing of modifications
                 made to configuration items to systems,

                OPM did not maintain a security configuration checklist for platforms,

                One instance of patches were not applied in a timely manner, and

                Two instances of anti-virus were not configured or reported during the audit period.

Without formalized and comprehensive configuration management policies and procedures, the
risk of having incomplete and / or inaccurate review and approval processes, audit trails of


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configuration changes, and configuration management documentation increases, which may in
turn increase the risk that unauthorized or erroneous changes to OPM’s information systems
environment may be introduced without detection by system owners. Furthermore, well
established configuration management controls prevent unauthorized changes to financial
applications and provide reasonable assurance that systems are configured and operating securely
and as intended. Included in these configuration management controls is the ability to
systematically track all changes, including patches migrated or applied to the production
environment. The issue noted above presents a risk that unauthorized or erroneous changes
could be introduced without detection by system owners.

Recommendations

We recommend that the Office of the Chief Information Officer (OCIO), in coordination with
system owners, enforce and monitor the implementation of corrective actions to:

Security Management

        	 Review, update and approve policies and procedures in accordance with frequencies
           prescribed by OPM policy,

        	 Implement processes to update the FISMA inventory listing to include interconnections,
           and review the FISMA inventory listing on a periodic basis for completeness and
           accuracy,

        	 Implement processes to associate software and hardware assets to system boundaries,

        	 Implement backup procedures to ensure continuous security scans over web
           applications,

        	 Implement a system or control that tracks the employment status of OPM contractors,

        	 Assign specific individuals with overseeing and monitoring POA&Ms to ensure security
           weaknesses correspond to a POA&M so that they are addressed in a timely manner,

        	 Establish a means of developing a complete and accurate listing of users with Significant
           Information System Responsibilities that are required to complete role-based training,
           and

        	 Continue to follow its project management plan to review and approve newly prepared
           policies so that the policies can be disseminated to stakeholders.

Logical and Physical Access

        	 Perform a comprehensive periodic review of the appropriateness of personnel with
           access to systems,

        	 Implement physical security access reviews to ensure access to the data center is limited
           to personnel that require access based on their job responsibilities,

        	 Implement two-factor authentication for applications,


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        	 Document access rights to systems to include roles, role descriptions, and privileges or
           activities associated with each role and role or activity assignments that may cause a
           segregation of duties conflict,

        	 Ensure policies and procedures governing the provisioning and de-provisioning of
           access to information systems are followed in a timely manner and documentation of
           completion of these processes is maintained,

        	 Review audit logs on a pre-defined periodic basis for violations or suspicious activity and
           identify individuals responsible for follow up or elevation of issues to the appropriate
           team members for review. The review of audit logs should be documented for record
           retention purposes, and

        	 Establish a means of documenting all users who have access to systems.

Configuration Management

        	 Establish a comprehensive configuration management plan that includes roles and
           responsibilities and outlines details supporting authorization, testing and documentation
           requirements,

        	 Establish a methodology to systematically track all configuration items that are migrated
           to production and be able to produce a complete and accurate listing of all configuration
           items for both internal and external audit purposes, which will in turn support closer
           monitoring and management of the configuration management process, and

        	 Enforce existing policy developed by OPM, vendors or federal agencies requiring
           mandatory security configuration settings and implement a process to periodically
           validate the settings are appropriate.

Views of Responsible Officials and Planned Corrective Actions
The Agency concurs with the findings and recommendations described above and will implement
a corrective action plan to address these deficiencies in the new fiscal year.

                                                       Noncompliance and Other Matters

Under the Federal Financial Management Improvement Act (FFMIA), we are required to report
whether the Agency’s financial management systems substantially comply with FFMIA Section
803(a) requirements. To meet this requirement, we performed tests of compliance with the
federal financial management systems requirements, applicable federal accounting standards, and
the United States Government Standard General Ledger (USSGL) at the transaction level. However,
providing an opinion on compliance with FFMIA was not an objective of our audit, and
accordingly we do not express such an opinion. Our work on FFMIA would not necessarily
disclose all instances of lack of compliance with FFMIA requirements.

The results of our tests of FFMIA Section 803(a) requirements disclosed instances, as described
above in the section titled Material Weakness – Information Systems Control Environment, in




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which OPM’s financial management systems did not substantially comply with the Federal
financial management systems requirements.

The results of our tests of FFMIA Section 803(a) requirements disclosed no instances of
substantial noncompliance with the applicable Federal accounting standards and the USSGL at
the transaction level that are required to be reported under FFMIA.

The Agency’s response to findings

The Agency’s response to the findings identified in our audit are described in the accompanying
section titled Material Weakness – Information Systems Control Environment above. The
Agency’s response was not subjected to the auditing procedures applied in the audit of the closing
package financial statements and, accordingly, we express no opinion on it.

Internal control over financial reporting specific to the closing package financial statements

In planning and performing our audit of the closing package financial statements as of and for
the year ended September 30, 2017, we also considered the Agency’s internal control over
financial reporting (internal control) to design audit procedures that are appropriate in the
circumstances for the purpose of expression our opinion on the closing package financial
statements, but not for the purpose of expressing an opinion on the effectiveness of the Agency’s
internal control. Accordingly, we do not express an opinion on the effectiveness of the Agency’s
internal control.

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

Our consideration of internal control was for the limited purpose described in the first paragraph
of this section and was not designed to identify all deficiencies in internal control that might be
material weaknesses or significant deficiencies. Given these limitations, during our audit we did
not identify any deficiencies in the Agency’s internal control that we consider to be material
weaknesses. However, material weaknesses may exist that have not been identified.

Compliance and other matters specific to the closing package financial statements

As part of obtaining reasonable assurance about whether the Agency’s closing package financial
statements are free from material misstatement, we performed tests of its compliance with certain
provisions of laws, regulations, contracts, and grant agreements, noncompliance with which
could have a direct and material effect on the determination of closing package financial



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statement amounts. However, providing an opinion on compliance with those provisions was
not an objective of our audit, and accordingly, we do not express such an opinion. The results of
our tests disclosed no instances of noncompliance or other matters that are required to be
reported under Government Auditing Standards and OMB Bulletin No. 17-03.

Purpose of the Other Reporting Required by Government Auditing Standards

The purpose of the communication provided in the Other Reporting Required by Government
Auditing Standards section is solely to describe the scope of our testing of internal control and
compliance and the results of that testing, and not to provide an opinion on the effectiveness of
the Agency’s internal control or on compliance. This communication is an integral part of an
audit performed in accordance with U.S. Government Auditing Standards in considering internal
control and compliance with provisions of laws, regulations, contracts, and grant agreements,
noncompliance with which could have a material effect on the closing package financial
statements. Accordingly, this communication is not suitable for any other purpose.




Arlington, VA
November 13, 2017




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