Opportunities for Improvement in the Bureau of Consumer Financial Protection's Internal Controls and Accounting Procedures

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Opportunities for Improvement in the Bureau of Consumer Financial Protection’s Internal Controls and Accounting Procedures

Opportunities for Improvement in the Bureau of Consumer Financial Protection’s Internal Controls and Accounting Procedures

What GAO Found

During our audit of CFPB’s fiscal year 2011 financial statements, we identified seven internal control issues that could adversely affect CFPB’s ability to meet its internal control objectives. We do not consider these issues to represent material weaknesses or significant deficiencies in relation to CFPB’s financial statements. Nonetheless, we believe they warrant management’s attention and action. These issues concern necessary controls to ensure

  • complete and finalized documentation of CFPB’s accounting processes and procedures,in relation to CFPB’s financial statements. Nonetheless, we believe they warrant management’s attention and action. These issues concern necessary controls to ensure
  • an effective internal control assessment process supporting management’s internal control assertion,
  • security over CFPB’s data and information systems,
  • accurate calculation and timely recording of CFPB undelivered orders balances,
  • accurate calculation and timely disbursement of CFPB payroll transactions,
  • proper prior approval of CFPB travel transactions, and
  • timely recording of CFPB prepaid expenses as assets.

These issues increase the risk of CFPB not preventing or promptly detecting and correcting (1) misappropriation of assets because of reliance on insufficient internal controls; (2) unauthorized access, modification, or both of its data; and (3) misstatements in its financial statements. At the end of our discussion of each of these issues in the sections that follow, we present our related recommendations. These recommendations are intended to improve management’s oversight and controls and minimize the risk of misappropriation of assets, misstatements in CFPB’s accounts and financial statements, and unidentified vulnerabilities over the security of its data.

Why GAO Did This Study

In November 2011, we issued our opinion on the Bureau of Consumer Financial Protection’s (CFPB) fiscal year 2011 financial statements. Our report also included our opinion on the effectiveness of CFPB’s internal control over financial reporting as of September 30, 2011, and our evaluation of CFPB’s compliance with provisions of selected laws and regulations for the fiscal year ended September 30, 2011.

Title X of the Dodd-Frank Wall Street Reform and Consumer Protection Act, referred to as the Consumer Financial Protection Act of 2010, created CFPB. The act charged it with the responsibility of regulating the offering and provision of consumer financial products or services under the federal consumer financial laws. The act also requires CFPB to annually prepare financial statements, and further requires GAO to audit these statements. The Full-Year Continuing Appropriations Act, 2011, also requires that GAO audit CFPB’s financial statements. While CFPB began operations in 2010, fiscal year 2011 was its first full year of operations. As a newly established entity, CFPB spent the majority of fiscal year 2011 forming its structure and commencing operations.

The purpose of this report is to present additional information on the internal control and accounting procedure issues we identified during our audit of CFPB’s fiscal year 2011 financial statements and to provide our recommended actions to address those issues.

What GAO Recommends

We are making 10 recommendations for strengthening CFPB’s internal controls and accounting procedures.

For more information, contact contact Steven J. Sebastian at (202) 512-3406 or sebastians@gao.gov or Gregory C. Wilshusen at (202) 512-6244 or wilshuseng@gao.gov.

Source: http://www.gao.gov

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