2013 Annual Report
March 6, 2014
Mr. James Dalkin
Director, Financial Management and Assurance
U.S. Government Accountability Office
441 G Street, NW
Washington, DC 20548
Re: FDIC Management Response on the GAO 2013 Financial Statements Audit Report
Dear Mr. Dalkin:
Thank you for the opportunity to review and comment on the U.S. Government Accountability Office's (GAO's) draft report titled, Financial Audit: Federal Deposit Insurance Corporation Funds' 2013 and 2012 Financial Statements, GA0-14-303. We are pleased that the Federal Deposit Insurance Corporation (FDIC) has received unmodified (unqualified) opinions for the twenty-second consecutive year on the financial statements of its funds: the Deposit Insurance Fund (DIF) and the FSLIC Resolution Fund (FRF). Also, GAO reported that the FDIC had effective internal control over financial reporting, and that there was no reportable noncompliance with provisions of applicable laws, regulations, contracts, and grant agreements that were tested.
During the audit year, the FDIC management and staff continued to take steps to strengthen and improve the internal control environment and will continue to concentrate on this area in the coming audit year. FDIC recognizes the important role a strong internal control program plays in an agency achieving its mission. Our dedication to sound financial management has been and will remain a top priority.
In complying with audit standards that require management to provide a written assertion about the effectiveness of its internal control over financial reporting, the FDIC has prepared Management's Report on Internal Control Over Financial Reporting (see attachment). The report acknowledges management's responsibility for establishing and maintaining internal control over financial reporting and provides the FDIC's conclusion regarding the effectiveness of its internal control.
We want to thank the GAO staff for their professionalism and dedication during the audit and look forward to a productive and successful relationship during the 2014 audit. If you have any questions or concerns, please do not hesitate to contact me.
Steven O. App
Deputy to the Chairman and Chief Financial Officer
Management's Report on Internal Control Over Financial Reporting
The Federal Deposit Insurance Corporation's (FDIC's) internal control over financial reporting relevant to the Deposit Insurance Fund (DIF) and the FSLIC Resolution Fund (FRF) is a process effected by those charged with governance, management, and other personnel, the objectives of which are to provide reasonable assurance that (1) transactions are properly recorded, processed, and summarized to permit the preparation of financial statements in accordance with U.S. generally accepted accounting principles, and assets are safeguarded against loss from unauthorized acquisition, use, or disposition; and (2) transactions are executed in accordance with the applicable laws, regulations, contracts, and grant agreements that could have a direct and material effect on the financial statements.
FDIC management is responsible for maintaining effective internal control over financial repo1ting, including the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. FDIC management evaluated the effectiveness of the FDIC's internal control over financial reporting relevant to the DIF and the FRF as of December 31, 2013, based on the criteria established under 31 U.S.C. 3512(c), (d) (commonly known as the Federal Managers' Financial Integrity Act (FMFIA). FDIC management performed this evaluation through its corporate risk management program that seeks to comply with the spirit of the following laws, standards, and guidance from the Office of Management and Budget (OMB) among others: FMFIA; Chief Financial Officers Act (CFO Act); Government Performance and Results Act (GPRA); Federal Information Security Management Act (FISMA); and OMB Circular A-123. In addition, other standards that the FDIC considers are the framework set forth by the Committee of Sponsoring Organizations of the Treadway Commission's Internal Control Integrated Framework and the U.S. Government Accountability Office's (GAO's) Standards for Internal Control in the Federal Government.
Based on the above evaluation, management concludes that, as of December 31, 2013, FDIC's internal control over financial reporting relevant to the DIF and the FRF was effective.
Federal Deposit Insurance Corporation
March 6, 2014