AUDIT ADVISORY In late 1992, the Audit Advisory Committee was established to advise the Comptroller General on the U.S. General Accounting Office's (GAO) financial operations. As part of that responsibility, the Committee has been discussing GAO's external financial audit coverage and discussing with GAO management and the internal and the external auditors the effectiveness of GAO's internal controls over financial operations and its compliance with selected provisions of applicable laws and regulations. The Committee has also been reviewing the findings of the internal and the external auditors and discussing GAO's responses to those findings to ensure that GAO's corrective action plans include appropriate and timely followup measures. In addition, the Committee has been involved in reviewing and commenting on drafts of GAO's annual report, including the principal statements. The Committee met three times during both fiscal years 1993 and 1994 with the Comptroller General and with GAO's external auditors. On occasion, the Committee also met with the external auditors without GAO management being present. shawreh Sheldon S. Cohen Audit Advisory Committee KPMG Peat Marwick LLP As described in Note 1, the General Accounting Office prepares its Principal Statements in conformity with the hierarchy of accounting principles and standards approved by the principals of the Federal Accounting Standards Advisory Board. This hierarchy is a comprehensive basis of accounting other than generally accepted accounting principles. OPINION ON MANAGEMENT'S ASSERTION ON THE INTERNAL CONTROL STRUCTURE OVER FINANCIAL REPORTING We have examined management's assertion, included in the accompanying management report on internal controls, that the General Accounting Office has an effective internal control structure over financial reporting in place as of September 30, 1994. These internal controls are designed by management to provide reasonable, but not absolute, assurance that the following objectives are met: obligations and costs are in compliance with applicable laws and regulations; funds, property, and other assets are safeguarded against loss from unauthorized acquisition, use, or disposition; and revenue and expenditures applicable to the General Accounting Office's operations are properly recorded and accounted for to enable the General Accounting Office to prepare accounts and reliable financial reports and to maintain accountability over its assets. In our opinion, management's assertion that the General Accounting Office has an effective internal control structure over financial reporting in place as of September 30, 1994 is fairly stated, in all material respects, based upon criteria established under the Federal Managers' Financial Integrity Act of 1982, and the Office of Management and Budget Bulletin A-123, Internal Control Systems, insofar as the objectives stated above pertain to the timely prevention or detection of errors and irregularities in amounts that would be material to the financial statements. In addition, nothing came to our attention to indicate that the General Accounting Office's report on internal controls dated December 15, 1994 voluntarily prepared under the Federal Managers' Financial Integrity Act of 1982, conflicts materially with the results of our examination. COMPLIANCE WITH LAWS AND REGULATIONS The objective of our audit of the Principal Statements, including our tests of compliance with selected provisions of applicable laws and regulations, was not to provide an opinion on overall compliance with such provisions. Accordingly, we do not express such an opinion. However, our tests of compliance with selected provisions of applicable laws and regulations disclosed no material instances of noncompliance. Also, with respect to items not tested, nothing came to our attention that caused us to believe that material noncompliance with such provisions occurred. These conclusions with respect to our tests of compliance with selected provisions of applicable laws and regulations are intended solely for the information of Congress and the General Accounting Office's management. Further, management has elected to comply with substantially all of the provisions of the Federal Managers' Financial Integrity Act of 1982. Our responsibility is to express opinions on the Principal Statements and management's assertion that the General Accounting Office has an effective internal control structure over financial reporting based on our audits and examination, respectively. Accordingly, we planned and performed the audits and examination to obtain reasonable assurance about whether (1) the Principal Statements are free of material misstatement and presented fairly in accordance with the basis of accounting described in Note 1 to the Principal Statements, and (2) management's assertion that the General Accounting Office has an effective internal control structure over financial reporting in place as of September 30, 1994 is fairly stated, in all material respects, based upon criteria established under the Federal Managers' Financial Integrity Act of 1982, and the Office of Management and Budget Bulletin A-123, Internal Control Systems. We are also responsible for testing compliance with selected provisions of applicable laws and regulations that may materially affect the Principal Statements. Anti-deficiency Act; Fair Labor Standards Act; Civil Service Retirement Act; General Accounting Office Personnel Act of 1980; Federal Employees' Compensation Act; Federal Employees' Health Benefits Act of 1959; and Federal Employees' Group Life Insurance Act of 1980. performed other procedures as we considered necessary in the circumstances; and at management's request, compared the General Accounting Office's most recent Federal Managers' Financial Integrity Act of 1982 report on internal controls dated December 15, 1994, with the results of our examination of management's assertion, included in the accompanying management report on internal controls, that the General Accounting Office has an effective internal control structure over financial reporting in place as of September 30, 1994. We did not evaluate the internal controls relevant to operating objectives as broadly defined by the Federal Managers' Financial Integrity Act of 1982, such as those controls relevant to ensuring efficient operations. We limited our work to accounting and other controls necessary to achieve the objectives identified in our opinion on management's assertion on the internal control structure over financial reporting. Because of inherent limitations in any internal control structure, errors or irregularities may nevertheless occur and not be detected. We also caution that projecting the results of our examination 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. Our audits were conducted in accordance with generally accepted auditing standards; Government Auditing Standards (1988 revision), as issued by the Comptroller General of the United States; and OMB Bulletin 93-06, Audit Requirements for Federal Financial Statements. Our examination of management's assertion, included in the accompanying management report on internal controls. that the General Accounting Office has an effective internal control structure over financial reporting in place as of September 30, 1994, was conducted in accordance with standards established by the American Institute of Certified Public Accountants. We believe that our audits and examination provide a reasonable basis for our opinions. Consistency of Other Information. The Overview of Operations and Financial Management and other supplemental information in A Message from the Comptroller General and in Highlights of General Accounting Office Reports and Testimony contain a wide range of data, some of which is not directly related to the Principal Statements. Professional standards require the auditor to read this information and consider whether such information, or the manner of its presentation, is materially inconsistent with the information, or the manner of its presentation, appearing in the Principal Statements. If based on such reading the auditor concludes that there is a material inconsistency, the auditor should determine whether the Principal Statements, the report, or the other information require revision. KPMG Past Manich LLP December 16, 1994 |