Posted by Abdul Khan
The United States Government Accountability Office (GAO) and the President’s Council on Integrity and Efficiency (PCIE) issued in July 2008 the latest version of its financial audit manual (FAM). The FAM sets out a methodology for financial statement audits. The latest version updates the FAM for significant changes that have occurred in auditing financial statements in the federal government since 2004, when it was previously updated. The FAM is in three volumes. Volume 1 sets out audit methodologies, volume 2 contains audit tools, and volume 3 provides check lists for accounting, reporting and disclosures.
Regulatory System for Financial Institutions are “High Risk”
The GAO announced on January 22, 2009 that the regulatory system governing U.S. financial institutions and markets is considered at “high risk” for waste, fraud, abuse, and mismanagement or in need of broad-based transformation. Depending on your inclination to view glasses as half full or half empty, you may find this announcement either comforting that the GAO has identified the problem and therefore something might be done about it, or disconcerting that so much taxpapers’ money is being thrown at such institutions.
The revisions to the FAM are primarily due to changes in professional auditing and accounting standards and laws. These include the effects on financial audits of Federal Accounting Standards Advisory Board (FASAB) accounting concepts and standards issued through May 31, 2007, e.g., on social insurance, heritage assets, and earmarked funds. Major changes include:
• consistent with OMB audit guidance, performance measures are excluded from internal control definitions;
• identification of treasury processes and reports that are being substantially revised as a result of the implementation of the government wide accounting (GWA) system and other changes;
• a new section provides guidance on auditing the Statement of Social Insurance.