The Chief Financial Officers Act of 1990 requires the Inspector General to audit the agency’s financial statements each year, which is intended to help improve an agency’s financial management and controls over financial reporting. The Inspector General is also required to audit the Federal Student Aid (FSA) office’s financial statements, as it is a Performance-Based Organization.
FSA’s financial statements were presented fairly in all material respects, in accordance with generally accepted accounting principles. However, the auditors identified one material weakness in FSA’s controls over the reliability of underlying data used in credit reform re-estimates of the subsidy costs of its student loan programs. The auditors also noted three significant deficiencies, involving (1) information technology controls, (2) monitoring controls over service organizations, and (3) an entity-wide deficiency in its overall control environment.
The report made 16 recommendations, including that FSA, together with the Department, strengthen the risk assessment process by considering the impact of information technology control deficiencies on internal controls over the reliability of information in the Department’s systems. We also recommended that FSA design and implement additional review controls that operate at a sufficient level of precision over the completeness and accuracy of the underlying data used to develop the re-estimate.
Information Technology Security
See other OIG reports on financial statements.