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2004 Annual Report
Message from the Chief Financial Officer
I am pleased to report that the funds managed by the FDIC maintained their strong financial condition in 2004 and to highlight some of our accomplishments in this area.
The U.S. Government Accountability Office (GAO) again issued unqualified audit opinions for all three funds administered by the Corporation (Bank Insurance Fund, Savings Association Insurance Fund, and the Federal Savings and Loan Insurance Corporation (FSLIC) Resolution Fund). This marks the 13th consecutive year that we received unqualified opinions, and demonstrates our continued dedication to sound financial management and the reliability of the financial data upon which we make critical decisions. I would like to extend my sincere appreciation to the many individuals whose hard work allowed the FDIC to achieve this milestone.
Financial highlights during 2004 include:
We continued our efforts to reduce operating costs in 2004. The Board of Directors approved a 2005 Corporate Operating Budget that was virtually unchanged from the 2004 Corporate Operating Budget, despite absorbing higher salary and benefits cost and inflation in non-personnel costs. Total estimated 2005 spending (including 2005 spending for previously approved multi-year investment projects) is estimated to be about $36 million or 2.9 percent lower than in 2004. The FDICís Capital Investment Review Committee (CIRC) also continued to focus on sound development of large-scale IT-related projects as well as improvements in the management of investment spending. Several major IT projects were re -baselined in 2004, and the Corporation is committed to completing these projects within their revised schedules and budgets.
The FDIC also made considerable progress in 2004 in enhancing its information security programs, taking positive actions in a number of key security program areas. The FDIC provided security awareness training to its employees and contractors, and is working diligently to address recent and emerging IT security standards and guidelines developed by the National Institute of Standards and Technology (NIST). Information technology and systems security remain high priorities at the FDIC, and we are continuously working to strengthen controls in these areas. The Office of Inspector General (OIG) recently completed its annual evaluation of information systems security at the FDIC, as mandated by the Federal Information Security Management Act of 2002, and identified no significant deficiencies that warrant consideration as potential material weaknesses.
The FDIC evaluated its risk management and internal control systems in accordance with the reporting requirements of the Federal Managersí Financial Integrity Act of 1982 (FMFIA) and GAO internal control standards. We have identified no material weaknesses that would affect the accuracy of the financial statements. This report describes our continuing efforts to provide timely and useful performance information to FDIC managers, OMB, and the Congress. Based on these internal management evaluations, and in conjunction with the results of GAOís independent financial statements audits, I can certify with reasonable assurance that the FDIC's risk management and internal control systems, taken as a whole, are in conformance with the standards prescribed by GAO and that we are in compliance with the requirements of FMFIA.
In 2005, the FDIC will continue to focus on effective cost management, produce timely and reliable financial information, and maintain a strong enterprise-wide risk management and internal control program.
Steven O. App
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