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2006 Annual Report Highlights

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III. Financial Statements


FDIC
Federal Deposit Insurance Corporation
550 17th St. NW Washington, DC, 20429                  Deputy to the Chairman & Chief Financial Officer

February 8, 2007

Mr. David M. Walker
Comptroller General of the United States
U.S. Government Accountability Office
441 G Street, NW
Washington, DC 20548

Re: FDIC Management Response on the GAO 2006 Financial Statements Audit Report

Dear Mr. Walker:

Thank you for the opportunity to comment on the U.S. Government Accountability Office's (GAO) draft audit report titled, Financial Audit: Federal Deposit Insurance Corporation Funds' 2006 and 2005 Financial Statements, GAO-07-371. The report presents GAOís opinions on the calendar year 2006 and 2005 financial statements of the Deposit Insurance Fund (DIF) and the Federal Savings and Loan Insurance Corporation Resolution Fund (FRF). The report also presents GAOís opinion on the effectiveness of FDICís internal controls as of December 31, 2006, and GAOís evaluation of FDICís compliance with selected laws and regulations.

We are pleased to accept GAOís unqualified opinions on the DIF and the FRF financial statements and to note that there were no material weaknesses identified during the 2006 audits. The GAO reported that the fundsí financial statements were presented fairly, in all material respects, in conformity with U.S. generally accepted accounting principles; FDIC had effective internal control over financial reporting and compliance with laws and regulations for each fund; and there were no instances of noncompliance with laws and regulations that were tested.

In addition, we appreciate that GAO recognized the improvements that FDIC made over the past year to its information systems environment. We believe that our sustained commitment to enhancing information systems controls adequately addressed the concerns that GAO highlighted in the prior year report, thus enabling GAO to conclude that the remaining issues related to such controls do not constitute a significant deficiency. Our goal is to maintain an effective information security program going forward. Accordingly, we will work diligently to resolve any control issues that GAO identified during its 2006 audits, as well as any that may arise in the future.

We look forward to continuing our cooperative working relationship with the GAO in the coming year. Our collaborative efforts and open communication at all levels of our organizations should ensure continued success. If you have any questions or concerns, please do not hesitate to contact me.

Sincerely,

Steven O. App
Deputy to the Chairman and
Chief Financial Officer


Last Updated 05/22/2007 communications@fdic.gov