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GAO: Work needed to correct errors in TARP financial statements
Monday - 2/27/2012, 12:12pm EST
In the report, GAO said the Office of Financial Stability, the Treasury agency which implements TARP, improved its review and approval process for preparing its financial statements, but work still needs to be done to identify errors in draft documents.
"When you're talking about a material weakness, you're talking about a deficiency or a combination of deficiencies in internal control where there's a reasonable possibility that a material misstatement in the entity's financial statement won't be prevented or won't be corrected on a timely basis," said Gary Engel, GAO's director of financial management.
The control weaknesses on the part of OFS did not signal a real loss of money, rather they exposed a risk of potential misstatements of the amounts reported in the financial statements, Engel told The Federal Drive with Tom Temin.
GAO is required by law to conduct an annual audit of TARP's financial statements. GAO has made recommendations in the past to OFS and made four new recommendations in this report, including:
- Revise OFS's procedures related to recording and review of non-cash transactions.
- Establish a mechanism for the effective implementation of the review process for recording warrant adjustments.
- Develop and implement written procedures to provide reasonable assurance that Public-Private Investment Fund equity distributions are properly recorded in the general ledger.
- Establish procedures for coordinating with Treasury's chief information officer to ensure the timely installation of patches to the Core Information Transaction Flow (CITF) system.
"Remaining uncorrected deficiencies along with new issues that we had identified in fiscal year 2011 collectively represented a continuing significant deficiency in its controls over its accounting and financial reporting process," Engel said.
Over the years, OFS has taken GAO's input seriously and taken corrective action on a timely basis, according to Engel.
"They still need to establish a mechanism for effective implementation of their review and approval process for preparing their statements," Engel said. "It will be important for OFS to remain committed to maintaining the progress that it has achieved to date and to build upon that progress to make the remaining needed improvements that we've identified."
Since its inception in 2008, TARP has dispersed more that $400 billion. Engel said TARP is currently in a "winding down stage," with a focus on maintaining outstanding investments.