Management Report: Opportunities for Improvements in FDIC's Internal Controls and Accounting Procedures Page: 2 of 16
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relation to DIF's and FRF's financial statements, we believe that they warrant management's
attention and action. These issues concern the following:
* Written policies and procedures were not updated to document FDIC's new methodology
used to determine the estimated cash recovery of receivership assets.
* Controls did not ensure that correct amounts were paid for services provided by contractors
and that operating expenses were appropriately allocated among the funds FDIC administers.
* Oversight of contracted lockbox operations did not provide adequate assurance that controls
were effectively designed to minimize the risk of loss, theft, and misreporting of receivership
* Controls over the processing of receivership receipt transactions did not result in transactions
being timely applied to the appropriate receivership accounts.
These issues increase the risk that FDIC would not prevent or timely detect (1) errors or
inconsistencies in valuing failed bank assets, (2) erroneous payments and errors in allocating
operating expenses, (3) loss or theft of receivership receipts processed at a contractor-operated
lockbox facility, or (4) misstatements in receivership accounts.
At the end of our discussion of each of these issues in the following sections, we make
recommendations for strengthening FDIC's internal controls or accounting procedures. These
recommendations are intended to improve management's oversight and controls, decrease the
risk of theft or misappropriation of assets, and minimize the risk of misstatements in DIF's and
FRF's financial statements.
In its comments, FDIC agreed with our recommendations and described actions it has taken or
plans to take to address the control weaknesses described in this report. At the end of our
discussion of each of the issues in this report, we have summarized FDIC's related comments
and our evaluation.
Scope and Methodology
As part of our audits of the 2008 and 2007 financial statements of the two funds administered by
FDIC, we evaluated FDIC's internal controls and tested its compliance with selected provisions
of laws and regulations. We designed our audit procedures to test relevant controls over financial
reporting, including those designed to provide reasonable assurance that transactions are properly
recorded, processed, and summarized to permit the preparation of DIF' s and FRF' s financial
statements in conformity with U.S. generally accepted accounting principles, and that assets are
safeguarded against loss from unauthorized acquisition, use, or disposition.
GAO-09-943R FDIC Management Report 2008
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United States. Government Accountability Office. Management Report: Opportunities for Improvements in FDIC's Internal Controls and Accounting Procedures, text, September 15, 2009; Washington D.C.. (digital.library.unt.edu/ark:/67531/metadc300241/m1/2/: accessed January 22, 2019), University of North Texas Libraries, Digital Library, digital.library.unt.edu; crediting UNT Libraries Government Documents Department.