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2005 Annual Report Highlights

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III. Financial Statements - GAO's Condensed Audit Opinion

GAO logo. Accountability * Integrity * Reliability

Comptroller General
of the United States

United States Government Accountability Office
Washington, D.C. 20548

To the Board of Directors
The Federal Deposit Insurance Corporation

We audited the Federal Deposit Insurance Corporation's (FDIC) balance sheets as of
December 31, 2005 and 2004, for the three funds administered by FDIC (the Bank Insurance
Fund (BIF), the Savings Association Insurance Fund (SAIF), and the FSLIC Resolution Fund),
the related statements of income and fund balance (accumulated deficit), and the statements
of cash flows for the years then ended, and in our report dated January 31, 2006, we expressed
an unqualified opinion on those statements.

In that report, we stated that we found the following:

  • the financial statements of each fund are presented fairly, in all material respects,
    in conformity with U.S. generally accepted accounting principles;
  • although certain internal controls should be improved, FDIC had effective internal control
    over financial reporting and compliance with laws and regulations for each fund; and
  • no reportable noncompliance with the laws and regulations we tested.
In addition, we referred the reader to note 1 of the BIF's and SAIF's financial statements that
discuss the enactment, on February 8, 2006, of the Federal Deposit Insurance Reform Act
of 2005, which calls for the merger of BIF and SAIF into a single Deposit Insurance Fund.

In our opinion, the information set forth in the accompanying condensed financial statements
is presented fairly, in all material respects, in relation to the financial statements from which
it has been derived.

As discussed in our January 31, 2006 report, we identified a reportable condition in FDIC's
information system controls which, while not considered a material weakness, does represent
a significant deficiency in the design or operation of internal control that could adversely affect
FDIC's ability to meet its internal control objectives. Specifically, we identified information
system control weaknesses that increased the risk of unauthorized modification and disclosure
of critical FDIC financial and sensitive personnel information, disruption of critical operations,
and loss of assets. These weaknesses affected FDIC's ability to ensure that users only had the
access needed to perform their assigned duties and that its systems were sufficiently protected
from unauthorized users.

We performed our work in accordance with U.S. generally accepted government auditing

David M. Walker

David M. Walker
Comptroller General
of the United States
January 31, 2006


Last Updated 04/13/2006

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