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Ӏ  0    CRight ParRight-Aligned Paragraph NumbersI.A.1.a.(1)(a)i)a)3|x3(`(NewCenturySchlbkXXr PyQXP$ `*Times New RomanTTW P&QP<6X9`(CourierchlbkXXx6X@QX@ d0($ 3Q3E3333V333 {3vP&z @U  P.L. GMRAxxxxxxxxxRaines CFOsFFMIA xxxxxxxxxxxxxx IGsi SGLFASABSFFASsSFFASnonfederalthroughsforcastsWALKTHROUGHSLOOKBACKparticularilyFMFIA TtheJFMIPFFMSRFFMIAFederalFollowupunasserted AUPs OPF CSRS FERS FEHB APOsFEGLI CEKQW]emsAutoList5a.a.a.a.(i)(A)a.a.(O;$0  2#  a  .3  0` (#(#(b$0  0` (#(#2#   .3  0 ` (#` (#(xir$0  0` (#(#0 ` (#` (#2#(  0  )3  0 (# (#($0  0` (#(#0 ` (#` (#0 (# (#2#(  a  )3  0h(#(#(EEGOW_gowAutoList11(a)(a)(a)(a)(a)(a)(a)(a)(EEGOW_gowAutoList12(a)(a)(a)(a)(a)(a)(a)(a)(5EGMSY_ekqAutoList16a.a.a.a.a.a.a.a. M/EGMS[agmsAutoList17a.a.(1)a.a.a.a.a. PEGMSW_ekqAutoList18a.a."(a)a.a.a.a.($0  0` (#(#0 ` (#` (#0 (# (#0h(#(#0h(#h(#2#  0  )3  0(#(#(hCEKQW]cioAutoList8a.a.a.a.a.a.a.a. hCEKQW]cioAutoList9a.a.a.a.a.a.a.a.({$0  0` (#(#0 ` (#` (#0 (# (#0h(#(#0h(#h(#0(#(#2#  a  )3  0p(#(#`8G_cgmquy}Bullet ListBullet List1. EEGOW_gowAutoList14(a)(a)(a)(a)(i)(a)(a)(a)  [$Ӏ  5    _XSXXXԀAnillustrativeauditor'sreportoncompliancewithlawsandregulationsisprovidedinAppendixG.  Useofthisguidanceisoptional.(  Z6Times New Roman Regular(hH  Z 6Times New Roman Regulara, b, c,Level 1Level 2Level 3Level 4Level 5C:\PROGS\WP\STANDARD.WPT6#`n4Quick a.   .0 (5hCEKQW]cioAutoList1a.a.a.a.a.a.a.a.3#37=CIQYag1.a.i.(1)(a)(i)1)a)($    (;3$2#  0  .3  0  (EhCEKQW]cioAutoList2a.a.a.a.a.a.a.a.(UhCEKQW]cioAutoList3a.a.a.a.a.a.a.a.(ehCEKQW]cioAutoList4a.a.a.a.a.a.a.a.(F$0  0` (#(#0 ` (#` (#0 (# (#0h(#(#2#(   )3  0h(#h(#<:Default Para q [$Ӏ  1    _XSXXXԀThislist was is includedinOMBBulletin9701 .AtthetimeofissuanceofthisBulletin,OMBis  consideringmodifyingthelistofstatementsthatcomprisethePrincipalStatements.Auditorsshallrefertothemostcurrentversionof ( OMB'sFormandContentBulletin Ԁtodetermine ), which statementsshall  betreatedas prescribesthe PrincipalStatements for th efiscalyearforwhichthefinancialstatements  were atshallbe prepared.(hH  Z 6Times New Roman Regular<:footnote ref<j^: footnote teQ\  `$Times NewRomanQXXXE2 `CG TimesE-%(EGMSY_ekqAutoList32A.A.A.A.A.A.A.A.&$1<:endnote refe(eEGMSY_ekqAutoList191.1.1.1.1.1.1.1.&$2$35;AGOW_e31.a.i.(1)(a)(i)1.a.\  `$Times NewRoman2 `CG Times(EGMSY_ekqAutoList201.1.1.1.1.1.1.1.(zEGMSY_ekqAutoList21A.A.A.A.A.A.A.A.1, 2, 3,Level 1Level 2Level 3Level 4Level 54#hN2Quick 1.  .0  % [$Ӏ  2    _ ThefollowingXSXXX Federalfinancialmanagementsystemsrequirements tobetesteddonotincludethose  containedintheFrameworkforFederalFinancialManagementSystemsandTravelSystem  Requirements.Thesesystemsrequirementsdonotaffectanagencys donotrequiretestingastheydo  notaffectthereportingentitys abilitytopreparefinancialstatementsinaccordancewithFederal  accountingstandards :  L 8` L 3   3 283  0    requirementscontainedintheFrameworkforFederalFinancialManagementSystems;and3 8݌ (#(# Ќ   3   3283  0    requirementsforsystemsthatproduceinformationwhichisnotmaterialtothefinancial   statements,e . g.,travelsystems. (hH  Z 6Times New Roman Regulari., ii., iii.,Level 1Level 2Level 3Level 4Level 56#in4Quick i.   .0 ((3/g$ !   d  + [$Ӏ  4    _XSXXXԀAnillustrativeauditorsreportoninternalcontrolisprovidedinAppendixF.Useofthisguidance  isoptional.#XSXXXS^#(  Z6Times New Roman Regular  [$Ӏ  8    _XSXXXԀInverylimitedcircumstances,reportableconditionsthatsignificantlyimpairanentitysabilityto  meetFederalfinancialmanagementsystemsrequirements(suchasreportableconditionsrelatedtocomputersecurityoverfinancialinformationcoveredbyOMBCircularA130,Appendix3)mayrepresentconditionsreportableunderFFMIA.#XSXXXS^##y  <<= 8C J [$Ӏ  9    _XSXXX#XSXXXS^#XSXXXSԀInverylimitedcircumstances,reportableconditionsthatsignificantlyimpairanentitysabilityto  meetFederalfinancialmanagementsystemsrequirements(suchasreportableconditionsrelatedtocomputersecurityoverfinancialinformationcoveredbyOMBCircularA130,Appendix3)mayrepresentconditionsreportableunderFFMIA.#XSXXXS# L !  _    10  ڀXSXXXThisillustrativemanagementrepresentationlettermustbecustomizedtothesituationofthe  auditedentity.Representationsnumber113relatetotheopiniononthefinancialstatements;numbers1416relatetomanagement'sassertionabouttheeffectivenessofinternalcontrol;numbers1719relatetomanagement'sassertionaboutthefinancialmanagementsystems'substantialcompliancewithFederalfinancialmanagementsystemrequirements;andnumbers2022relatetocompliancewithlawsandregulations.AUSection333,"ManagementRepresentations,"CodificationofStatementson   AuditingStandards,providesexamplesofadditionalrepresentationsthatmaybeappropriate.q&c P [$Ӏ  11    _ԀXSXXXIftheobjectiveistoexpressanopinionontheagencysinternalcontrol s overfinancialreporting,  theauditorshouldfollow  StatementonStandardsforAttestationEngagementsNo.2  , Reportingonan  EntitysInternalControlOverFinancialReporting,issuedbytheAmericanInstituteofCertifiedPublicAccountants.#XSXXXS`#64Heading 3  5+ ` hp x (#5XXXE2 `CG TimesE    8.` hp x (#8S\  `&Times New RomanS:ao8Body Text 2XXXE2 `CG TimesE S\  `&Times New RomanS 86Block Text X X 2( ` hp x 2XXXE2 `CG TimesE   8.` hp x (#8S\  `&Times New RomanS\  `&Times New Roman  [$Ӏ  13    _ԀXSXXXIftheobjectiveistoexpressanopinionontheagencyscompliancewithlawsandregulations,the  auditorshouldfollow  StatementonStandardsforAttestationEngagementsNo.3  , Compliance  Attestation,issuedbytheAmericanInstituteofCertifiedPublicAccountants.<ll:Endnote TextXXXS\  `&Times New RomanSS\  `&Times New RomanS64Body Text8.` hp x (#8XXXE2 `CG TimesE8.` hp x (#8S\  `&Times New RomanS<:Body Text In X 5+ ` hp x (#5XXXE2 `CG TimesE  8.` hp x (#8S\  `&Times New RomanS6&&4Hyperlink            $359=AEIMQ4 1111111$35;?CGKOS5i.1111111($     mailto:finance@opm.gov6yz4Heading 1  XXXE2 `CG TimesE     S\  `&Times New RomanS  H [$Ӏ  12    _ԀXSXXXFFMIAdoesnotimposeanycompliancerequirements;rather,itrequiresreportingonwhetheran  agency'sfinancialmanagementsystemssubstantiallycomplywiththefinancialmanagementsystemsrequirementscontainedingovernmentwidepolicies,e.g.,OMBCircularA127,"FinancialManagementSystems;"  StatementsofFederalFinancialAccountingStandards  ;andtheUnitedStates  GovernmentStandardGeneralLedgerpublishedbytheDepartmentoftheTreasury.FFMIAimposesadditionalreportingrequirementswhentestsdiscloseinstancesinwhichagencysystemsdonotsubstantiallycomplywiththeforegoingrequirements.#XSXXXS`# d(5EGMSY_ekqAutoList221.1.1.1.1.1.1.1.&$ d d% %dK KdTABLE A(EGOW_gowAutoList23(1)(1)(1)(1)(1)(1)(1)(1)(UEGMSY_ekqAutoList241.1.1.1.1.1.1.1.(eEGMSY_ekqAutoList251.1.1.1.1.1.1.1.(EGOW_gowAutoList26(1)(1)(1)(1)(1)(1)(1)(1) EGMSY_ekqAutoList27a.a.1.a.a.a.a.a.(EGMSY_ekqAutoList28A.A.A.A.A.A.A.A.(EGMSY_ekqAutoList29a.a.a.a.a.a.a.a.(hH  Z 6Times New Roman Regular EGMS[agmsAutoList301.1.(1)1.1.1.1.1.(eEGMSY_ekqAutoList31a.a.a.a.a.a.a.a.  [$Ӏ  14    _XSXXXManagementandtheauditorshouldagreeonamaterialityleveltouseintheletterofinquiry.A  guidelineforsettingthematerialitylevelforthelegalletteris0.5percentofplanningmateriality,asdefinedinthePCIEPolicyManual:FederalFinancialStatementAuditManualandGAOsFinancial  AuditManual.#XSXXXS_#(EGMSY_ekqAutoList331.1.1.1.1.1.1.1.  '  _?(XX  OMBBulletin99__0 @` AuditsofAgencyFinancialStatements󀀀 DRAFT07/22/99#XSX?(.#   [$Ӏ  7    _Theauditorisnotexpectedtotestallprovisionsofeachlawpresented.However,theauditoris  expectedtotest,ataminimum,theprovisionscitedabove.(EGOW_gowAutoList34(1)(1)(1)(1)(1)(1)(1)(1)(EGMSY_ekqAutoList35a.a.a.a.a.a.a.a.(դEGMSY_ekqAutoList38a.a.a.a.a.a.a.a.(EGMSY_ekqAutoList361.1.1.1.1.1.1.1. [$Ӏ  15    _ThisillustrativeresponseisbasedonexamplespresentedinAUSection337CoftheCodification  ofStatementsonAuditingStandards.(EGOW_gowAutoList40(1)(1)(1)(1)(1)(1)(1)(1) ( [$Ӏ  16    _SeeParagraph3oftheAmericanBarAssociation(ABA)StatementofPolicyandthe  accompanyingCommentaryforguidancewheretheresponseislimitedtomaterialitems.hͶEGKOSW[_cAutoList37"""""""")1)a)('EGOW_gowAutoList42(1)(1)(1)(1)(1)(1)(1)(1)  [$Ӏ  3    _ForthoserequirementswhichwereupdatedandreissuedduringFY1999,auditorsshouldtest  systemsforcompliancewithpreFY1999requirementsandareencouragedtoadviseentitymanagementofpotentialnoncompliancewithnewrequirementsthatcometotheauditorsattention.AuditorsshouldtestforcompliancewithFY1999requirementsduringFY2000audits.  [$Ӏ  1    _Asrequiredbyparagraph8.b.ofOMBBulletinNo.99__,theCFOshallprepareandtheauditorshallreviewasummaryofthe  informationcontainedinthelegalcounselsresponseusingthisformat.AnelectronicversionofthisformisavailableinMircosoftExcelatOMBs_website_ԀontheInternetathttp://www.whitehouse.gov/WH/EOP/omb.<6X9`(Courier    L [$Ӏ  1    _Asrequiredbyparagraph8.b.ofOMBBulletinNo.99__,theCFOshallprepareandtheauditorshallreviewasummaryofthe  informationcontainedinthelegalcounselsresponseusingthisformat.AnelectronicversionofthisformisavailableinMircosoftExcelatOMBs_website_ԀontheInternetathttp://www.whitehouse.gov/3WH/EOP/33omb33OMB/(under333biu333Bulletins)3. TABLE B(EGMSY_ekqAutoList41a.a.a.a.a.a.a.a. !  _WXSXXX    o[Xr` hp x (#%'0*,.8135@8:<H?AXo8+ +XXdd8TRX3'X3' Letter3' Letter3'T,P.+ (#(#K(# [OMBletterhead]   OMBBULLETIN NO.9808 99__    TOTHEHEADSANDINSPECTORSGENERALOFEXECUTIVEDEPARTMENTSANDESTABLISHMENTSSUBJECT:AuditRequirementsforFederalFinancialStatements1.Purpose.ThisBulletin,whichincludesanAttachmentandAppendicesAthrough H I ,establishes i  minimumrequirementsforauditsofFederalfinancialstatements.TheBulletinisissuedundertheauthorityoftheBudgetandAccountingActof1921,asamended,andtheBudgetandAccountingProceduresActof1950,asamended.ItimplementstheauditprovisionsoftheChiefFinancialOfficers(CFOs)Actof1990(P.L.101-576),asamended,theGovernmentManagementReformAct(GMRA)of1994(P.L.103356),andtheFederalFinancialManagementImprovementActof1996(P.L.104208).TherequirementsofthisBulletinaresetforthintheAttachment.2.Applicability.TheprovisionsoftheBulletinapplytoauditsoffinancialstatementsofexecutive 9 departmentsandagenciesandcertaincomponentsoftheseagencies,listedinAppendicesAandB,respectively.3.EffectiveDate.TheprovisionsofthisBulletinareeffectiveforauditsoffinancialstatementsforfiscal !j yearsendingonorafterSeptember30,199 8 9 .Auditreportsshallbesubmittedtotheagencyheadin d sufficienttimetoenabletheagencyheadtomeettheduedateforsubmittingtheauditedfinancialstatementunderGMRA,nolaterthanMarch1followingtheendofthefiscalyearforwhichthefinancialstatements were are prepared.  "R 4.Inquiries.FurtherinformationconcerningthisBulletinmaybeobtainedbycontactingtheOfficeof #F ManagementandBudget(OMB),OfficeofFederalFinancialManagement,Washington,DC20503,telephone(202)395-3993.5.Copies.IndividualcopiesofthisBulletinmaybeobtainedfromthe ExecutiveOfficeofthe '."# President,PublicationsOfficeat(202)3957332,andfromthe OMBhomepageontheInternetat ((#$ _  http://www.whitehouse.gov/WH/EOP/omb  . 33 _     p      x  )"$%  JacobJ.Lew  r  `     h      p  Director  ,'(  Attachment#XSXXXSN#  - () ,P ,  ,  **/ddd Xdd Xdd X(#(#, dd ,* dd ,X dd +    XSXXXS  L7XXS SignificantRevisionstoOMBBulletinNo.98-08, d Q4Xr` hp x (#Xr` XQ"AuditRequirementsforFederalFinancialStatements,asamended #XSXL7e##XSXXXS:# * ;  *Y  OMB9808,asamended 8 LocationReference ' 2  '  OMB99__ 8 TechnicalChange ' 2  'd  PurposeofChange  2"  XXSParagraph6.a.(1)(c)  w   Deletedsection.  w   StatementofFederalFinancial w   AccountingStandards(SFFAS)No.14, AmendmentstoDeferred  R  MaintenanceReporting,whichiseffectiveforperiodsbeginningafterSeptember30,1998,changedthelocationofdeferredmaintenanceinformationfromanotetotheprincipalstatementstorequiredsupplementalinformation.    Paragraph6.a.(2)  . NochangeforFY1999audits.Addedsentencestodescribefuturerequirements. w ForFY2000andbeyond,OMBwillrequireexaminationlevelassuranceforstewardshipPP&EusingtheAICPAsattestationstandards.ThisrequirementiscontingentonmodificationstotheaccountingstandardsrelatingtoreportingtheconditionofstewardshipPP&E.<Z Xx:xj(XXr` X<  ?" Paragraph6.a.(3)  S# NochangeforFY1999audits.Addedsentenceto_descibe_Ԁfuturerequirements.  .& ForFY2000andbeyond,willrequireexaminationlevelassuranceforstewardshipinvestmentsusingtheAICPAsattestationstandards..  * Paragraph6.a.(5)   T+ NochangeforFY1999audits.Addedsentencetodescribefuturerequirements.  !. ToadviseauditorsofOMBsintenttorevisetheauditrequirementsforL 8`3Lsocialinsuranceinformationforsubsequentperiodsinwhichtheapplicableaccountingstandardsbecomeeffective.@Xr` XZ Xx:xj(X@ #A4 Paragraph6.e.  U%5 UpdatedlistofJFMIPfunctionalrequirementsforFederalfinancialsystems.  &0!8 Updatedforfunctionalrequirementsreissuedin1999.ClarifiedwhenauditorsshouldtestforcompliancewithJFMIPrequirementsissuedduringthecurrentyear.  y("= Paragraph6._i._  )$> RelocateddiscussionoflegalletterstoParagraph8.  *$@ Providesadditionalguidanceonthepreparationoflegalletters.  *$B AppendixC  +E&C Addedspecificprovisionsofgenerallawstobetested.  ,'E ToclarifythatallprovisionsofthegenerallawslistedinAppendixCneednotbetested.  -'H .+ . .  AppendixF&G  d RevisedillustrativeauditorsreportstoreflectrequirementsofStatementsonAuditingStandards(SAS)#87, RestrictingtheUseofanAuditors_Report._  ?  IllustratesrequirementsofSAS#87andclarifiestheauditorsresponsibilityforinternalcontrolandcompliance.  v  AppendixH     OPMsAgreedUponProcedures(AUPs),formerlypresentedinAppendixH,havebeenredesignatedAppendixI.OPMsAUPsrevisedtoreflecttheuseofRITSdatavs.datafromForm2812.   Revisionsreflectmorewidespreaduseofelectronicinformation.  e  NewAppendix  /  AddednewAppendixH,withthreedistinctdocuments(H1,H2,H3).IncludedanewrequirementforCFOstoprepareandauditorstoreviewasummaryoftheinformationprovidedinlegalresponsesusingaprescribedformat.  e ProvidesadditionalguidanceonthepreparationoflegalletterstomorecloselycomportwithAUSection337requirementsoftheCodification A  ofStatementonAuditingStandards,  S ! andtofacilitatethecollectionofdataconcerninglitigation,claims,andassessmentsforagencywideandgovernmentwidereporting. .w%   'p% XSX   OMBBulletinNo. 9808 99__  h    0    (#(#   r  `     h   AUDITSOFFEDERALFINANCIALSTATEMENTS1.BACKGROUND.TheGovernmentManagementReformAct(GMRA)of1994amendedtherequirementsoftheChiefFinancialOfficers(CFOs)Actof1990byrequiring,amongotherthings,theannualpreparationandauditoforganizationwidefinancialstatementsof24executivedepartmentsandagencies(AppendixA).TheGMRAalsorequiresauditedfinancialstatementsofcomponentsofexecutivedepartmentsandagenciesdesignatedbytheDirectoroftheOfficeofManagementandBudget(OMB),whichareidentifiedinAppendixB.Inaddition,theFederalFinancialManagementImprovementAct(FFMIA)of1996requires,amongotherthings,thatthereportontheseauditsstatewhethertheagencyfinancialmanagementsystemscomplysubstantiallywithFederalfinancialmanagementsystemsrequirements,applicableFederalaccountingstandards,andtheU.S.GovernmentStandardGeneralLedgeratthetransactionlevel.2.DEFINITIONS.ForthepurposesofthisBulletin,thefollowingdefinitionsapply:0 r a.0` r(#r(#"AnnualFinancialStatement"meansthefinancialstatementofareportingentityas ] describedinSection3515ofTitle31oftheUnitedStatesCodeandOMBBulletin9701,"FormandContentofAgencyFinancialStatements"andsubsequentissuances(OMB'sFormandContentBulletin),and,shallbecomprisedof: ` (#` (# 0 r 0` r(#r(#(1)0 ` (#` (#OverviewoftheReportingEntity(alsocalledManagement'sDiscussionand ? Analysis).  (# (# 0 r 0` r(#r(#(2)0 ` (#` (#PrincipalStatementsandRelatedNotes.ThePrincipalStatements   1      ׀includethe 3 followingfinancialstatementsandnotesthereto:  (# (# 0 r 0` r(#r(#0 ` (#` (#(a)0 (# (#BalanceSheet.!!(#(# 0 r 0` r(#r(#0 ` (#` (#(b)0 (# (#StatementofNetCost."(#(# 0 r 0` r(#r(#0 ` (#` (#(c)0 (# (#StatementofChangesinNetPosition.#(#(# 0 r 0` r(#r(#0 ` (#` (#(d)0 (# (#StatementofBudgetaryResources.$ (#(# 0 r 0` r(#r(#0 ` (#` (#(e)0 (# (#StatementofFinancing.% !(#(# 0 r 0` r(#r(#0 ` (#` (#(f)0 (# (#StatementofCustodialActivity,ifapplicable.(#(# 0 r 0` r(#r(#0 ` (#` (#(g)0 (# (#NotestoPrincipalStatements.(#(# 0 r 0` r(#r(#(3)0 ` (#` (#RequiredSupplementaryStewardshipInformation,ifapplicable. (# (# 0 r 0` r(#r(#(4)0 ` (#` (#RequiredSupplementaryInformation,ifapplicable.  (# (# 0 r 0` r(#r(#(5)0 ` (#` (#OtherAccompanyingInformation,ifapplicable.  (# (# L h(`L 3   0 r 302h  b  .3  0` r(#r(#  CodificationofStatementsonAuditingStandardsisacodificationofStatementson   AuditingStandardsissuedbytheAmericanInstituteofCertifiedPublicAccountants(AICPA).TheAICPA'sstandardsoffieldworkandreportingareincorporatedintheirentiretyinGovernmentAuditingStandardsbyreference.300݌{ ` (#` (# Ќ  L h((L 3    r 332h  c  .3  0 `   "Federalaccountingstandards"arethosestandardsincludedinthehierarchyofFederal o  accountingstandardsdescribedinparagraph5ofthisBulletin.3393݌ ` (#` (# Ќ  L Uh((L 3    r 342Uh  d  .3  0 `   "Federalfinancialmanagementsystemsrequirements"arethoserequirementsdescribed ] inOMBCircularA127, FinancialManagementSystems.344݌ ` (#` (# Ќ   r &  e.0 ` GovernmentAuditingStandardsarethosestandardsissuedbytheComptrollerGeneral K oftheUnitedStates.'KB6 ` (#` (# 0 r f.0` r(#r(#"Independentauditor"meansanauditorwhomeetstheindependencestandards 9 specifiedintheGovernmentAuditingStandards.3|` (#` (# 0 r g.0` r(#r(#"Internalcontrol,"asitrelatestothePrincipalStatementsandRequiredSupplementary 'p StewardshipInformation,isaprocess,effectedbytheagency'smanagementandotherpersonnel,designedtoprovidereasonableassurancethatthefollowingobjectivesaremet: ` (#` (# Ѐ0 r 0` r(#r(#0 ` (#` (#0 (# (#0h(#(#0h(#h(#0(#(#0p(#(#0p(#p(#0 (#(#0x (# (#0 x(#x(#0@ $ $!X (# (# 0 r 0` r(#r(#&  (1)0 ` (#` (#Reliabilityoffinancialreportingtransactionsareproperlyrecorded,  "R processed,andsummarizedtopermitthepreparationofthePrincipalStatementsandRequiredSupplementaryStewardshipInformationinaccordancewithFederalaccountingstandards,andthesafeguardingofassetsagainstlossfromunauthorizedacquisition,use,ordisposition;' "r:  (# (# 0 r 0` r(#r(# ` (#` (# 0 r 0` r(#r(#(2)0 ` (#` (#Compliancewithapplicablelawsandregulationstransactionsareexecutedin '."# accordancewith:(a)lawsgoverningtheuseofbudgetauthorityandotherlawsandregulationsthatcouldhaveadirectandmaterialeffectonthePrincipal StatementsorRequiredSupplementaryStewardshipInformation,and(b)any *%& otherlaws,regulations,andgovernmentwidepoliciesidentifiedbyOMBinAppendixCofthisBulletin;and  (# (#  0 r 0` r(#r(#(3)0 ` (#` (#Reliabilityofperformancereportingtransactionsandotherdatathatsupport  reportedperformancemeasuresareproperlyrecorded,processed,andsummarizedtopermitthepreparationofperformanceinformationinaccordancewithcriteriastatedbymanagement.  (# (#  0 r h.0` r(#r(#"Managementletter"meansaletterpreparedbytheauditorwhichdiscussesfindings   andrecommendationsforimprovementsininternalcontrol,thatwereidentifiedduringtheauditandwerenotrequiredtobeincludedintheauditor'sreportoninternalcontrol,andothermanagementissues.SeeChapter5,paragraph5.28ofGovernmentAuditing u  Standards.o ` (#` (# in  0 r inAi  .0` r(#r(#  "Materialweaknessesininternalcontrol"arereportableconditionsinwhichthedesign c  oroperationoftheinternalcontroldoesnotreducetoarelativelylowleveltheriskthaterrors,fraudornoncomplianceinamountsthatwouldbematerialinrelationtothePrincipalStatementsorRequiredSupplementaryStewardshipInformationbeingauditedormaterialtoaperformancemeasureoraggregationofrelatedperformancemeasuresmayoccurandnotbedetectedwithinatimelyperiodbyemployeesinthenormalcourseofperformingtheirassignedfunctions.Theauditorshallusethisdefinitionofmaterialweaknessestoreportonanentity'sinternalcontrolinaccordancewiththerequirementsofGovernmentAuditingStandardsandthisBulletinratherthan 3| thedefinitionofmaterialweaknessesusedbymanagementtoprepareanagency'sFederalManagers'FinancialIntegrityAct(FMFIA)of1982report.inAAی ` (#` (# Ќ  ݀0 r j.0` r(#r(#"OverviewoftheReportingEntity"meansabriefnarrativeoverview,preparedby d management,alsocalledManagement'sDiscussionandAnalysis(MD&A),whichdescribesthereportingentityanditsmission,activities,programandfinancialresults,andfinancialcondition.OMBsFormandContentBulletinfurtherdefinesthe"OverviewoftheReportingEntity." ` (#` (#  `n  0 r `n,Hk  .0` r(#r(#  "Reportableconditions"arematterscomingtotheauditor'sattentionthat,inthe $@  auditor'sjudgment,shouldbecommunicatedbecausetheyrepresentsignificantdeficienciesinthedesignoroperationofinternalcontrol,thatcouldadverselyaffecttheorganization'sabilitytomeettheobjectivesinparagraph2.g.ofthisBulletin.`n,HSH ی ` (#` (# Ќ  0 r l.0` r(#r(#"ReportingEntity"meansoneoftheexecutivedepartmentsandagenciesand )"$% componentsofsuchdepartmentsandagencieslistedinAppendicesAandB,oranagency,bureau,orotherorganizationthatrepresentsameaningfulunitforprogram +&' management,forwhichafinancialstatementisprepared,andforwhichmanagementchosetohaveanauditperformedinaccordancewiththisBulletin.OMBsFormandContentBulletinfurtherdefines"ReportingEntity." ` (#` (# 0 r  r(#r(#  L eh((L r m.0 ` "UnitedStatesGovernmentStandardGeneralLedger(SGL)"meanstheuniformchart   ofaccountsprescribedbytheDepartmentoftheTreasuryinitsTreasuryFinancial   Manual. ` (#` (# 3.FREQUENCYOFAUDIT.Auditsshallbeperformedannually.4.RESPONSIBILITYFORAUDIT.ForpurposesofthisBulletin,thefollowingresponsibilitiesapply:0 r a.0` r(#r(#Forthe24executivedepartmentsandagenciesandselectedcomponentsofsuch i  departmentsandagencieslistedinAppendicesAandB,theauditsoffinancialstatementsshallbeperformedbythe IG InspectorGeneral(IG) oftheexecutive ] departmentoragencyorbyanindependentauditorasdeterminedbytheIG. ` (#` (# 0 r b.0` r(#r(#GMRAprovidesthat,inlieuofanauditotherwiserequired,theComptrollerGeneralof K theUnitedStatesmay,athisorherdiscretionandfollowingconsultationwiththeIG,performtheaudit. ` (#` (# 5.ACCOUNTINGPRINCIPLESANDSTANDARDS.TheFederalAccountingStandardsAdvisoryBoard(FASAB)wasestablishedbytheSecretaryoftheTreasury,theDirectorofOMB,andtheComptrollerGeneral(thePrincipals)torecommendFederalaccountingstandardstothePrincipals.SpecificstandardsagreeduponbythePrincipalsareissuedbytheDirectorofOMBandtheComptrollerGeneralasStatementsofFederalFinancialAccountingStandards(SFFASs).FederalagenciesarerequiredtofollowthesestandardsinthepreparationoffinancialstatementspursuanttoGMRA.RecognizingthattheSFFASsmaynotexplicitlyaddressalltransactionsofdepartmentsandagencies,thePrincipalsadoptedthefollowinghierarchyofFederalaccountingstandards ,which  "R constitutesgenerallyacceptedaccountingprinciplesfortheFederalGovernment : #L 0 r a.0` r(#r(#Individualstandards(SFFASs)agreedtobytheDirectorofOMB,theComptroller $@  General,andtheSecretaryoftheTreasuryandpublishedbyOMBandtheGeneralAccountingOffice. ` (#` (# 0 r b.0` r(#r(#InterpretationsrelatedtotheSFFASsissuedbyOMBinaccordancewiththe ((#$ proceduresoutlinedinOMBCircularA134,"FinancialAccountingPrinciplesandStandards." ` (#` (#  +&' 0 r c.0` r(#r(#RequirementscontainedinOMB'sFormandContentBulletinineffectfortheperiod  coveredbythefinancialstatements. ` (#` (# 0 r d.0` r(#r(#Accountingprinciplespublishedbyotherauthoritativestandardsettingbodiesandother  authoritativesources(a)intheabsenceofotherguidanceinthefirstthreepartsofthishierarchy,and(b)iftheuseofsuchaccountingprinciplesimprovesthemeaningfulnessofthefinancialstatements. ` (#` (# 6.SCOPEOFAUDIT.FinancialstatementsshallbeauditedinaccordancewithGovernment   AuditingStandardsandtheprovisionsofthisBulletin.    L  (Lf0 r &  a.0` r(#r(#WithrespecttothePrincipalStatementsandRequiredSupplementaryStewardship u  Information,theauditorshall: ` (#` (# 0 r 0` r(#r(#(1)0 ` (#` (#'uZDeterminewhetherthePrincipalStatementspresentfairly,inallmaterial ^  respects,inconformitywithFederalaccountingstandards,theassets,liabilities,andnetposition;netcosts;changesinnetposition;budgetaryresources;reconciliationofnetcoststobudgetaryobligations;and,ifapplicable,custodialactivity.  (# (#  0 r 0` r(#r(#0 ` (#` (#(a)0 (# (#Ifconsolidatingstatementsarepresented,theauditorshallconsiderthe U consolidatingstatementssupplementalinformation&  andreportinaccordancewithparagraph7.c.(1)(a)ofthisBulletin,unlesstheauditor'sobjectiveistoexpressanopinionontheconsolidatingstatements.'5^ (#(# 0 r 0` r(#r(#0 ` (#` (#(b)0 (# (#IftheauditorisunabletodeterminewhetherthePrincipalStatements  arefairlypresentedbecause,forexample,oftheauditor'sinabilitytoobtainsufficientcompetentevidentialmatterduetoinadequateaccountingrecords,theauditorshall,totheextentpracticable,obtainsufficientevidenceaboutclosingbalancestoenabletheauditortoopineonthesubsequentyear'sfinancialstatements. (#(#  0 r 0` r(#r(#0 ` (#` (#(c)0 (# (#Whendeferredmaintenanceinformationispresentedinthenotestothe #! PrincipalStatements,theauditorisnotexpectedtoauditsuchinformationand,inthiscircumstance,thedisclosuresmaybeidentifiedas"unaudited"or"notcoveredbytheauditor'sreport."Theauditorshouldreadthedeferredmaintenanceinformationandconsiderwhethersuchinformation,orthemannerofitspresentation,ismateriallyinconsistentwithinformation,orthemannerofitspresentation,appearinginthePrincipalStatements. (#(#   *$)  0 r 0` r(#r(#(2)0 ` (#` (#Considerstewardshipproperty,plant,andequipment(PP&E)required   supplementaryinformationandperformtheproceduresdescribedinAUSection558,"RequiredSupplementaryInformation,"oftheCodificationof w StatementsonAuditingStandards. 򀀀Pendingmodificationsoftheapplicable W accountingstandardsthatrequirereportingontheconditionofstewardshipPP&E,forfiscalyear2000andbeyond,OMBwillrequireexaminationlevelassuranceforstewardshipPP&EusingtheAICPAsAttestationStandards.  @ (# (# 0 r 0` r(#r(#(3)0 ` (#` (#Considerstewardshipinvestments(includingnonFederalphysicalproperty   (suchashighways),humancapital(expendituresfortrainingandeducation),andresearchanddevelopment)requiredsupplementaryinformationandperformtheproceduresdescribedinAUSection558,"RequiredSupplementaryInformation,"oftheCodificationofStatementsonAuditing 7  Standards. Forfiscalyear2000andbeyond,OMBwillrequireexamination `  levelassuranceforstewardshipinvestmentsusingtheAICPAsAttestationStandards.   (# (# L   L 3   0 r 0` r(#r(#3pi2(  4  )3  0 ` (#` (#  Determinewhetherriskassumedinformation(includingprojectionsofpension,  deposit,andotherinsuranceprogramsrequiredbySFFASNo.5,"AccountingforLiabilitiesoftheFederalGovernment")ispresentedfairlyinallmaterialrespects,inaccordancewiththerequirementsofSFFASNo.5,andanysubsequentrevisions.Inassessingthereasonablenessofriskassumedinformation,theauditorshallconsidertheneedtofollowtheguidanceinAuditing(AU)Section336, UsingtheWorkofaSpecialist,oftheCodificationofStatementsonAuditingStandards.3pii݌ (# (# Ќ  0 r 0` r(#r(#_ 33 _ ` (#` (# fZ    um0 r 0` r(#r(#2(  5  )3  0 ` (#` (#  Considersocialinsuranceinformation,whenpresented,otheraccompanying w information.SeeAUSection551,CodificationofStatementsonAuditing q Standards. Ԁ Forfutureperiods,OMBwillmodifytheauditrequirementsfor k socialinsuranceinformationwhentheapplicableaccountingstandardsbecomeeffective. umm݌_  (# (# Ќ   r L M/  L 3   0 r 3p2M/  b  .3  0` r(#r(#  Withrespecttotheinternalcontrolobjectivesdescribedinparagraphs2.g.(1)and(2) S"  ofthisBulletinrelatingtothePrincipalStatementsandRequiredSupplementaryStewardshipInformation,theauditorshallobtainanunderstandingofthecomponentsofinternalcontrol(seeAUSection319.07,CodificationofStatementsonAuditing A%# Standards)andassessthelevelofcontrolriskrelevanttotheassertionsembodiedin ;& $ theclassesoftransactions,accountbalances,anddisclosurecomponentsofthefinancialstatements.SuchcontrolsincluderelevantEDPgeneralandapplicationcontrols andcontrolsrelatingtointraagencyandintragovernmentaltransactionsand ))r#' balances .Forthoseinternalcontrolsthathavebeenproperlydesignedandplacedin #*l$( operation,theauditorshallperformsufficientteststosupportalowassessedlevelofcontrolrisk.SeeAUSection319.45.63oftheCodificationofStatementsonAuditing ,`&* Standards.Thoseinternalcontrolsthathavenotbeenproperlydesignedorplacedin  operationandthoseinternalcontrolsthatarefoundtobeineffectiveshallbereportedinaccordancewithparagraph7ofthisBulletin.3pp݌ ` (#` (# Ќ      |v0 r 0` r(#r(#2M/(  1  )3  0 ` (#` (#  Inobtaininganunderstandingofthecomponentsofinternalcontrol,particularly   theriskassessmentcomponent,andassessingcontrolrisk,theauditorshallobtainanunderstandingoftheprocessbywhichtheagencyidentifiesandevaluatesweaknessesrequiredtobereportedunderFMFIAandrelatedagencyimplementingprocedures.|vv݌  (# (# Ќ      x0 r 0` r(#r(#2M/(  2  )3  0 ` (#` (#  Theauditorshallcomparematerialweaknessesdisclosedduringtheauditwith {  thosematerialweaknessesreportedintheagency'sFMFIAreportthatrelatetothefinancialstatementsoftheentityunderauditanddocumentmaterialweaknessesdisclosedbyauditthatwerenotreportedintheagencysFMFIAreport.Theauditorshouldconsiderwhetherthefailuretodetectandreportmaterialweaknessesconstitutesareportableconditionormaterialweaknessintheentitysinternalcontrol.xx݌  (# (# Ќ  0 r c.0` r(#r(#Withrespecttotheinternalcontrolobjectivedescribedinparagraph2.g.(3)ofthis K Bulletinrelatingtoperformancemeasures,theauditorshallobtainanunderstandingofthecomponentsofinternalcontrolrelatingtotheexistenceandcompletenessassertionsrelevanttotheperformancemeasuresincludedintheOverviewoftheReportingEntity.Thoseinternalcontrolsthathavenotbeenproperlydesignedandplacedinoperationshallbereportedinaccordancewithparagraph7ofthisBulletin.Theobjectiveofgaininganunderstandingofinternalcontrolinthissubparagraphistoreportdeficienciesinthedesignofinternalcontrol,ratherthantoplanthefinancialstatementaudit. For !j futureperiods,OMBisconsideringexpandingauditcoveragetoincludegaininganunderstandingofcomponentsofinternalcontrolrelatingtoeachofthefiveassertions(existenceoroccurrence;completeness;rightsandobligations;valuationorallocation;andpresentationanddisclosure)relevanttotheperformancemeasuresincludedintheOverviewoftheReportingEntity. #L` (#` (# 0 r d.0` r(#r(#Withrespecttocompliancewithapplicablelawsandregulations,theauditorshall $@  performtestsofcompliancewithlawsandregulationsthatcouldhaveadirectandmaterialeffectonthePrincipalStatementsandRequiredSupplementaryStewardshipInformation,andanyotherlaws,regulations,andgovernmentwidepoliciesidentifiedbyOMBinAppendixCofthisBulletin. ` (#` (# L P  L0 r e.0` r(#r(#WithrespecttocompliancewithgovernmentwidepoliciescontainedinOMBCircular *%& A127,usingtheguidanceinAppendixD,theauditorshallperformtestsofcompliance +&' withFederalfinancialmanagementsystemsrequirements   2      ,applicableFederal  accountingstandards,andtheSGLatthetransactionlevel.ThisprovisiononlyappliestoauditsofentitieslistedinAppendicesAandB.CircularA127requirestheagencytoestablishandmaintainasingle,integratedfinancialmanagementsystemthatcomplieswithcharacteristicsstatedtherein,thatincludemaintainingaccountingdatatopermitreportinginaccordancewithFederalaccountingstandards,applicationoftheSGLatthetransactionlevel,andincorporationofthefunctionalrequirementsissuedbytheJointFinancialManagementImprovementProgram(JFMIP)initsseriesFederalFinancial   ManagementSystemsRequirements(FFMSR).AsofthedateofthisBulletin,the   issuancesinthisseriesare: ` (#` (#   r  `      0 r 0` r(#r(#0 ` (#` (#FrameworkforFederalFinancialManagementSystems,FFMSR0,January u  1995,o  (# (# 0 r 0` r(#r(#0 ` (#` (#CoreFinancialSystemRequirements, FFMSR1 JFMIPSR994 , i   September February 199 5 9 , * c  (# (# 0 r 0` r(#r(#0 ` (#` (# HumanResourcesand PersonnelPayrollSystemRequirements, FFMSR ] 2 JFMIPSR995 , May April 199 0 9 , * W (# (# 0 r 0` r(#r(#0 ` (#` (#TravelSystemRequirements,FFMSR3,January1991,Q (# (# 0 r 0` r(#r(#0 ` (#` (#Seized/ForfeitedAssetSystemRequirements,FFMSR4,March1993,K (# (# 0 r 0` r(#r(#0 ` (#` (#DirectLoanSystemRequirements, FFMSR5 JFMIPSR998 , E  December June 199 3, 9* ? (# (# 0 r 0` r(#r(#0 ` (#` (#GuaranteedLoanSystemRequirements,FFMSR6,December1993,9 (# (# 0 r 0` r(#r(#0 ` (#` (#InventorySystemRequirements,FFMSR7,June1995,and3| (# (# 0 r 0` r(#r(#0 ` (#` (#ManagerialCostAccounting,FFMSR8,February1998.-v (# (# L %Ͷh L  r  ` *denotesrequirementsthathavebeenupdatedandreissuedduringFY1999'`    3       !j Ї 0 r f.0` r(#r(#WithrespecttoinformationaccompanyingthePrincipalStatements,theauditorshall  assesswhethertheinformationandmannerofitspresentationintheOverviewoftheReportingEntity(orMD&A)andanyotheraccompanyinginformationismateriallyinconsistentwiththeinformationinthePrincipalStatements. ` (#` (#   r 0 r g.0` r(#r(#Withrespecttorequiredsupplementaryinformationreferredtoinparagraph2.a.(4)of   thisBulletin,theauditorshallperformtheproceduresdescribedinAUSection558,CodificationofStatementsonAuditingStandards. ` (#` (# 0 r h.0` r(#r(#Theauditorshallobtainwrittenrepresentationfrommanagementaspartofanaudit   conductedinaccordancewiththisBulletin.SeeAUSection333,"ManagementRepresentations,"oftheCodificationofStatementsonAuditingStandards.An u  illustrativemanagementrepresentationletterisprovidedinAppendixE. ` (#` (#  0 r i.0` r(#r(#Theauditorshallrequestentitymanagementtosendaletterofinquirytothoselawyers c  withwhommanagementconsultedconcerninglitigation,claims,andassessments.SeeAUSection337,"InquiryofaClient'sLawyerConcerningLitigation,Claims,andAssessments,"oftheCodificationofStatementsonAuditingStandards.Q` (#` (# 0 r 0` r(#r(#(1)0 ` (#` (#TheletterofinquiryshallbesenttolegalcounselnolaterthanOctober15and E shallincludearequestforaninterimresponsetobeeffectivenoearlierthanDecember1,exceptasnotedinparagraph6.i.(3),andsubmittedtotheauditorbyDecember15followingtheendofthefiscalyearforwhichthefinancialstatementsareprepared.Inaddition,theletterofinquiryshallincludearequestforanupdatedresponsetobeeffectivenoearlierthanFebruary15andsubmittedtotheauditorbyMarch1followingtheendofthefiscalyearforwhichthefinancialstatementsareprepared.  (# (# 0 r 0` r(#r(#(2)0 ` (#` (#TheInspectorGeneralshallsubmittoOMB(DeputyController,Officeof !X FederalFinancialManagement),DepartmentoftheTreasury(Commissioner,FinancialManagementService),andtheGeneralAccountingOffice(AssistantComptrollerGeneral,AccountingandInformationManagementDivision)copiesoftheinterimandupdatedlegalresponsesdescribedinparagraph6.i.(1)byDecember31andMarch10,respectively.  (# (# 0 r 0` r(#r(#(3)0 ` (#` (#IftheauditiscompletedpriortoDecember1,thelegalresponseprovidedin '."# connectionwiththeauditmaybeusedinplaceoftheinterimresponsedescribedinparagraph6.i.(1).Inaddition,anupdatedlegalresponsetobeeffectivenoearlierthanFebruary15shallbeprovided.Theselegalresponsesshallbesubmittedinaccordancewithparagraph6.i.(2).+&' (# (# Ї 7.AUDITREPORT.  0 r a.0` r(#r(#Anauditreport,orseparateauditreports,onthePrincipalStatements,internalcontrol,  andcomplianceshallbepreparedatthecompletionoftheaudit.Theauditreport(s)shallbesubmittedtotheagencyheadinsufficienttimetoenabletheagencyheadtomeettheduedateforsubmittingtheauditedfinancialstatementunderGMRA,nolaterthanMarch1followingtheendofthefiscalyearforwhichthefinancialstatementswereprepared.Theauditresultsshallbediscussedwithmanagementassoonaspracticablebut,inanycase,priortoissuanceoftheauditreport. ԀIGsareencouragedtoworkwith   CFOstoacceleratethepreparationoffinancialstatements,andtoacceleratethecompletionofaudits. { ` (#` (# 0 r b.0` r(#r(#Theauditreport(s)shallstatethattheauditwasmadeinaccordancewithGovernment o  AuditingStandardsandtheprovisionsofthisBulletin.i ` (#` (# 0 r c.0` r(#r(#Theauditreport(s)shallinclude:]` (#` (# 0 r 0` r(#r(#(1)0 ` (#` (#Anopinionastowhetherthereportingentity'sPrincipalStatementsarefairly Q presentedinallmaterialrespectsinconformitywithFederalaccountingstandards.SeeAUSection623.05oftheCodificationofStatementson E AuditingStandards.? (# (# 0 r 0` r(#r(#0 ` (#` (#(a)0 (# (#Withrespecttoreportingonotheraccompanyinginformation,which 3| includestheinformationreferredtoinparagraphs2.a.(1),2.a.(5),and6.a.(5)ofthisBulletin,theauditorshallfollowAUSection551,CodificationofStatementsonAuditingStandards.!j(#(# 0 r 0` r(#r(#0 ` (#` (#(b)0 (# (#WhenstewardshipPP&Eandstewardshipinvestmentsreferredtoin  ^ paragraphs6.a.(2)and(3),respectively,andrequiredsupplementaryinformationreferredtoinparagraph2.a.(4)ofthisBulletinarepresented,theauditorshallfollowAUSection551.15,Codificationof #L StatementsonAuditingStandards.#F(#(# 0 r 0` r(#r(#0 ` (#` (#(c)0 (# (#IfthePrincipalStatementsarenotpreparedinaccordancewithFederal %: ! accountingstandards,theauditorshallreportthedeparture(s)fromthosestandardsand,ifpracticable,theeffectsofthedeparture(s)onassets,liabilities,andnetposition;netcosts;changesinnetposition;budgetaryresources;reconciliationofnetcoststobudgetaryobligations;and,ifapplicable,custodialactivityeitherdirectlyintheauditor'sreportonthePrincipalStatementsorbyreferenceinthe +&' auditor'sreporttoanexplanatorynoteintheNotestoPrincipalStatementspreparedbymanagement. (#(# 0 r 0` r(#r(#0 ` (#` (#(d)0 (# (#Iftheauditordisclaimsanopinion,thereportshalldescribewhythe  auditorwasunabletoconducttheauditinaccordancewithGovernmentAuditingStandardsandthisBulletin.Ifmaterial   weaknessesandotherreportableconditionspreventedtheconductoftheauditinaccordancewithGovernmentAuditingStandardsandthis   Bulletin,suchconditionsshallbeincludedinthereportoninternalcontroldescribedinparagraph7.c.(2),alongwithrecommendationsforcorrectingthecondition(s). (#(# 0 r 0` r(#r(#0 ` (#` (#(e)0 (# (#Whenthereisachangeinaccountingprinciples,forexample,changes o  tocomplywithSFFASs,theauditorsreportonthePrincipalStatementsshallincludeanexplanatoryparagraphidentifyingthenatureofthechangeandreferringthereadertothenotetothePrincipalStatementsthatdiscussesthechangeindetail. (#(# 0 r 0` r(#r(#(2)0 ` (#` (#Areportoninternalcontrol   4      ,whichshallataminimum:K (# (# 0 r 0` r(#r(#0 ` (#` (#(a)0 (# (#Statethat,withrespecttointernalcontroloverfinancialreportingas ? describedinparagraphs2.g.(1)and(2)ofthisBulletin,theauditorobtainedanunderstandingofthedesignofinternalcontrols,determinedwhethertheyhavebeenplacedinoperation,assessedcontrolrisk,and&  performedtestsofthereportingentity'sinternalcontrols.'  (#(#  0 r 0` r(#r(#0 ` (#` (#(b)0 (# (#Statethat,withrespecttotheinternalcontrolobjectivedescribedin d paragraph2.g.(3)ofthisBulletin,andrelatingtotheperformancemeasuresincludedintheOverviewoftheReportingEntity,theauditorobtainedanunderstandingofthedesignofinternalcontrolsrelatingtotheexistenceandcompletenessassertionsanddeterminedwhethertheyhavebeenplacedinoperation. (#(# 0 r 0` r(#r(#0 ` (#` (#(c)0 (# (#Statewhetherornotthetestsperformedprovidedsufficientevidenceto %: ! supportanopiniononinternalcontrols. (#(#  '."# 0 r 0` r(#r(#0 ` (#` (#(d)0 (# (#Describereportableconditionsandmaterialweaknessesidentified  duringtheaudit. (#(# 0 r 0` r(#r(#0 ` (#` (#(e)0 (# (#Identifythosematerialweaknessesdisclosedbyauditthatwerenot  reportedinthereportingentitysFMFIAreport. (#(# _ 33 _0 r 0` r(#r(#(3)0 ` (#` (#Areportonthereportingentity'scompliancewithapplicablelaws,regulations,   andgovernmentwidepolicyrequirements.   5        (# (#  0 r 0` r(#r(#0 ` (#` (#(a)0 (# (#Theauditorshallreportnoncompliancewithlawsandregulations   disclosedbyaudit,exceptforthoseinstancesofnoncompliancethat,intheauditor'sjudgment,areclearlyinconsequential.Inmeetingthisrequirement,theauditorshalllistthoselawsandregulationsthattestsdisclosedreportableinstancesofnoncompliance. (#(# L E h%L 3   0 r 0` r(#r(#0 ` (#` (#32E(  c  )3  0 (# (#  Withrespecttolawsandregulationstestedforwhichtheaudit ] disclosednoreportableinstancesonnoncompliance,thereportshallstatethattheauditdisclosednoreportableinstancesofnoncompliancewiththeselawsandregulations.Alistingoftheselawsandregulationsisnotrequired.3X݌ (#(# Ќ  0 r 0` r(#r(#0 ` (#` (#(c)0 (# (#Forcompliancewithgovernmentwidepolicyrequirementscontainedin 9 OMBCircularA127andreferredtoinFFMIA,theauditorshallreportwhetherthereportingentitysfinancialmanagementsystemssubstantiallycomplywithFederalfinancialmanagementsystemsrequirements,Federalaccountingstandards,andtheSGLatthetransactionlevel.Tomeetthisrequirement,theauditorsreportshallstatetheauditorsreportingrequirementandthattheauditorperformedtestsofcomplianceinaccordancewiththerequirementsofthisBulletin(seeAppendixD).TheauditreportshallreflectinstancesinwhichthereportingentityssystemsdidnotsubstantiallycomplywiththethreeFederalfinancialmanagementsystemsrequirements,orstatethattheauditdisclosednoinstancesinwhichthereportingentityssystemsdidnotsubstantiallycomplywiththethreerequirements.Inaddition,as requiredbyFFMIA,wheretestsdisclosedthatthereportingentitys &4!" systemsdidnotsubstantiallycomplywiththethreerequirements,theauditorsreportoncomplianceshall: (#(#      80 r 0` r(#r(#0 ` (#` (#0 (# (#2E(  i  )3  0h(#(#  Identifytheentityororganizationresponsibleforthefinancial  managementsystemsthatwerefoundnottocomplywiththerequirements.8c݌ h(#h(# Ќ      0 r 0` r(#r(#0 ` (#` (#0 (# (#2E(  ii  )3  0h(#(#  Includeallfactspertainingtothenoncompliance,includingthe   natureandextentofthenoncompliance,theprimaryreasonorcauseofthenoncompliance,andanyrelevantcommentsfromreportingentitymanagementoremployeesresponsibleforthenoncompliance.݌ h(#h(# Ќ  0 r 0` r(#r(#0 ` (#` (#0 (# (#(iii)0h(#(#Providerecommendedremedialactionsandthetimeframesto i  implementsuchactions. h(#h(# L E( L 3   0 r 0` r(#r(#0 ` (#` (#3]2E(  d  )3  0 (# (#  Withrespecttotheobjectivesoftestsofcompliancegenerally,the W auditorsreportoncomplianceshallstatewhetherornotprovidinganopiniononcompliancewasanobjectiveoftheauditandwhetherornotthetestsperformedprovidedsufficientevidencetosupportanopinion.3]݌ (#(# Ќ  0 r d.0` r(#r(#Inpreparingthereportsinparagraph7.c.,theauditorshallreportthestatusofknown 9 butuncorrectedmaterialfindingsandrecommendationsfrompriorauditsthataffectthecurrentauditobjectives.SeeChapter4,paragraphs4.7,4.10, and 4.11of -v GovernmentAuditingStandards.'p` (#` (# 0 r e.0` r(#r(#Thereportingentityshallprovidecommentsontheauditor'sfindingsand d recommendationsincludedintheauditreport,includingcorrectiveactionstakenorplannedandcommentsonthestatusofcorrectiveactionstakenonpriorfindings.Totheextentpractical,thesecommentsshallbeincludedintheauditreportsoninternalcontrolorreportoncompliance.Ifcorrectiveactionsarenotnecessary,anexplanatorystatementshallbeincludedintheapplicableauditreport. ` (#` (# 0 r f.0` r(#r(#Copiesoftheauditreportshallbedistributedtotheheadoftheexecutivedepartment %: ! oragencyandsubsequentlyincludedintheCFOsannualreportortheagencysAccountabilityReport. ` (#` (#   r 8.LEGALLETTERS.Theauditorshallrequestentitymanagementtosendaletterofinquirytothose lawyerswithwhommanagementconsultedconcerninglitigation,claims,andassessments.SeeAU *%& Section337,"InquiryofaClient'sLawyerConcerningLitigation,Claims,andAssessments,"oftheCodificationofStatementsonAuditingStandards.   0 r a.0` r(#r(#TheletterofinquiryshallbesenttolegalcounselnolaterthanOctober15andshall  includearequestforaninterimresponsetobeeffectivenoearlierthanDecember1,exceptasnotedinparagraph8.d,andsubmittedtotheauditorbyDecember15followingtheendofthefiscalyearforwhichthefinancialstatementsareprepared.Inaddition,theletterofinquiryshallincludearequestforanupdatedresponsetobeeffectivenoearlierthanFebruary15andsubmittedtotheauditorbyMarch1followingtheendofthefiscalyearforwhichthefinancialstatementsareprepared.(SeeAppendixH1forillustrativeletterofinquiryfromentitymanagementtolegalcounselandAppendixH2forillustrativeletterofresponsefromlegalcounseltotheauditor.) ` (#` (# 0 r b.0` r(#r(#TheCFOshallprepareandtheauditorshallreviewasummaryoftheinformation i  containedinthelegalcounselsresponse.(SeeAppendixH3forformattobeusedtocompilelegalrepresentationletterdataforfinancialreportingpurposes.) ` (#` (# 0 r c.0` r(#r(#TheIGshallsubmittoOMB(DeputyController,OfficeofFederalFinancial Q Management),DepartmentoftheTreasury(Commissioner,FinancialManagementService),andtheGeneralAccountingOffice(AssistantComptrollerGeneral,AccountingandInformationManagementDivision)copiesoftheinterimandupdatedlegalresponsesdescribedinparagraph8.a.,andacopyoftheCFOssummarydescribedinparagraph8.b.byDecember31andMarch10,respectively. ` (#` (# L դ((L0 r  3   3.2դ  d  .3  0` r(#r(#  IftheauditiscompletedpriortoDecember1,thelegalresponseprovidedin 'p connectionwiththeauditmaybeusedinplaceoftheinterimresponsedescribedinparagraph8.a.Inaddition,anupdatedlegalresponsetobeeffectivenoearlierthanFebruary15shallbeprovided.TheselegalresponsesandcopiesoftheCFOssummariesdescribedinparagraph8.b.shallbesubmittedinaccordancewithparagraph8.c. 3.Y݌ "R` (#` (# Ќ  8 9 .MANAGEMENTLETTER.Conditionsthatarenotrequiredtobeincludedintheauditreport, #F butthattheauditorconsidersnecessarytocommunicate,shouldbeseparatelycommunicatedtomanagementofthereportingentityinamanagementletter.Ifamanagementletterisissued,theauditorshallrefertothatmanagementletterintheauditor'sreportoninternalcontrol(seeparagraph5.28ofGovernmentAuditingStandards). '."#   9 10 . Ԁ XSXXXSAGREEDUPONPROCEDURES:RETIREMENT,HEALTH BENEFITS ,ANDLIFE )"$% INSURANCEWITHHOLDINGS/CONTRIBUTIONSANDSUPPLEMENTALSEMIANNUALHEADCOUNTREPORTSUBMITTEDTOTHEOFFICEOFPERSONNELMANAGEMENT +&' (OPM). The agreeduponp AgreedUponP rocedures listed (AUPs)enumerated inAppendix H I1   shallbe appliedseparatelyforeachAgencyPayrollOffice(APO)thatservices30,000ormore  employeesperyearfortheagencies performedannuallyforeachentity listedinAppendixA Ԁduringthe  courseofconductingauditsinaccordancewiththisBulletin.Additionally,theagreeduponproceduresshallbeappliedeachyeartoatleastoneAPOperCFOsActagency(listedinAppendixA).Theperiodsubjecttotheagreeduponproceduresshallbeforthe12monthsendedSeptember30ofeachyear.Reportsontheapplicationoftheseproceduresshallbeaddressedand_submitted_ԀtotheInspectorGeneralofOPM.ReportcopiesshallbeprovidedtoOPM'sCFOandAssociateDirectorforRetirementandInsurance.ThesereportsshallbesubmittednolaterthanDecember15followingtheendofthefiscalyearforwhichthefinancialstatementsareprepared.Theprovisionsofthisparagrapharesubjectto .#XSXXXS7#See AUSection622,"EngagementstoApplyAgreedUponProcedurestoSpecified {  Elements,Accounts,orItemsofaFinancialStatement , " ofthe CodificationofStatementsonAuditing u  Standards.XSXXXS  o  10 TheAUPsaredesignedtoassistOPMinassessingthereasonablenessoftheRetirement,Health c  Benefits,andLifeInsurancewithholdings/contributionsaswellassemiannualHeadcountinformationsubmittedbyagencies.TheAUPsshallbeappliedtothe12monthsendedSeptember30ofeachyear.#XSXXXS# Q L (( L 3   XSXXXS r 32  a  .3  0 `   TheAUPsshallbeappliedseparately,andtheresultsreportedseparately,foreach E AgencyPayrollOffice(APO)thatservices30,000ormoreemployees.3M݌ ` (#` (# Ќ   r L  (L    0 r 0` r(#r(#2(  1  )3  0 ` (#` (#  IfanagencydoesnothaveanAPOthatservices30,000ormoreemployees,it 3| shallperformtheAUPsonitslargestAPO.݌  (# (# Ќ   X XE( ` hp x Xr` XEXSXXXSXE XXXSXSX XXE  #XSXXXS"#XSXXXSc  c݌̌ X X'Xr` XX'XSXXXSXSXXXS   r  ` (2)0 Ifanagencyperformspayrollcrossservicingfunctionsforotheragencies !j (referredtoasclientagencies),theauditorofthecrossservicingagencywillbetheprincipalauditorforthepurposeofapplyingtheseAUPs.Accordingly,theauditorforanagencyperformingpayrollcrossservicingfunctionsshallapplytheAUPsandreporttheresultsseparatelyforeachAPOthatservices30,000ormoreemployees.#XSXXXSb#XSXXXSԀTheextentofparticipationbytheauditorsfortheclient #L APOsshouldbedeterminedinconjunctionwiththeprincipalauditor.#XSXXXSG##F (# (# L e( L 3    r 32e  b  .3  0 `   Thereportontheapplicationoftheseproceduresshallbesubmittednolaterthanthe %: ! December15followingtheendofthefiscalyearforwhichthefinancialstatementsare &4!" prepared.Totheextentpractical,managementscommentsontheauditorsfindingsshallbeincludedinthereport.AgenciesshallnotifyOPMbyNovember15ofeach ((#$ yearofanyanticipateddelaysordifficultiesincompletingtheAUPsandsubmittingtherequiredreportbytheDecember15deadline.3݌*%&` (#` (# Ќ   +&'  r c.0 ` Agenciesshallsubmitthreecopiesofthereportontheapplicationoftheseprocedures  totheInspectorGeneralofOPMatthefollowingaddress: ` (#` (#  K.` hp x (#Xr` XK0   `  U.S.OfficeofPersonnelManagement (#(#    `  OfficeofInspectorGeneralXSXXXSE.` hp x (#XE   0   `  Room6400 (#(# 0   `  1900EStreet,_N.W._ (#(# 0   `  Washington,DC20415 (#(#  E.` hp x (#XE#XSXXXS#&  XSXXXS11 .INSPECTORGENERALOVERSIGHT.   L h (L ;   ;10  2h  a  .3  0` (#(#  IGsshall:;1\݌u ` (#` (# Ќ  0  0` (#(#(1)0 ` (#` (#Ensurethatauditsareperformedandauditreportscompletedinatimely i  mannerandinaccordancewiththerequirements'ԀofthisBulletin.ThisresponsibilitypertainstoauditsconducteddirectlybyIGstaffandauditsconductedbyindependentauditorsundercontract.  (# (# 0  0` (#(#(2)0 ` (#` (#Providetechnicaladviceandliaisontoagencyofficialsandindependent K externalauditors.  (# (# 0  0` (#(#(3)0 ` (#` (#Obtainormakequalitycontrolreviewsofauditsmadebyindependentexternal 9 auditorsandprovidetheresults,whenappropriate,tootherinterestedorganizations.  (# (# 0  0` (#(#(4)0 ` (#` (#Monitorandreportonmanagement'sprogressinresolvingauditfindingsrelated !j toauditsmadepursuanttothisBulletin,inaccordancewiththeInspectorGeneralActof1978,asamended,theprovisionsofOMBCircularA-50,"AuditFollowup,"andFFMIA.  (# (# L ( L    3   382  b  .3  0 `   IGsareencouragedtoworkwithCFOstoacceleratethepreparationoffinancial #L statements,andtoacceleratethecompletionofaudits.38c݌ ` (#` (# Ќ   %: !         TableofAppendices   AppendixA:0 ` ExecutiveDepartmentsandAgenciesRequiredtoPrepareFinancialStatements` (#` (# AppendixB:0 ` ComponentsofExecutiveDepartmentsandAgenciesRequiredtoPrepareFinancial   Statements ` (#` (# AppendixC:0 ` GeneralLaws ` (#` (# AppendixD:0 ` TheFederalFinancialManagementImprovementActof 1996OMB 1996!OMB    ImplementationGuidanceforCFOsandIGs ` (#` (# AppendixE:0 ` IllustrativeManagementRepresentationLettero ` (#` (# AppendixF:0 ` IllustrativeAuditorsReportonInternalControlc ` (#` (# AppendixG:0 ` IllustrativeAuditorsReportonCompliancewithLawsandRegulationsW` (#` (#  AppendixH:0 ` GuidanceRegardingLegalLetters#XSXXXS#XSXXXSK` (#` (#  Appendix H I :0 ` AgreedUponProcedures:Retirement,Health Benefits ,andLifeInsurance ? Withholdings/ContributionsandSupplementalSemiannualHeadcountReportSubmittedtotheOfficeofPersonnelManagement#XSXXXS#XSXXXS3|` (#` (#   'p    APPENDIXA     EXECUTIVEDEPARTMENTSANDAGENCIESREQUIREDTOPREPAREFINANCIAL  STATEMENTS     DepartmentofAgricultureDepartmentofCommerceDepartmentofDefenseDepartmentofEducationDepartmentofEnergyDepartmentofHealthandHumanServicesDepartmentofHousingandUrbanDevelopmentDepartmentoftheInteriorDepartmentofJusticeDepartmentofLaborDepartmentofStateDepartmentofTransportationDepartmentoftheTreasuryDepartmentofVeteransAffairsAgencyforInternationalDevelopmentEnvironmentalProtectionAgencyFederalEmergencyManagementAgencyGeneralServicesAdministrationNationalAeronauticsandSpaceAdministrationNationalScienceFoundationNuclearRegulatoryCommissionOfficeofPersonnelManagementSmallBusinessAdministrationSocialSecurityAdministration  !X    APPENDIXB  }  COMPONENTSOFEXECUTIVEDEPARTMENTSANDAGENCIESREQUIREDTOPREPAREFINANCIALSTATEMENTS   6          DepartmentofAgriculture   0  FoodandNutritionService (#(# 0  ForestService (#(# 0  RuralDevelopmentMissionArea (#(# DepartmentofDefense u  0  DepartmentofArmyGeneralFunds (#(# 0  DepartmentofNavyGeneralFunds (#(# 0  DepartmentofAirForceGeneralFunds (#(# 0  MilitaryRetirementTrustFund0h(#(#]h(#h(# 0  U.S.ArmyCorpsofEngineersCivilWorksProgram (#(# 0  DepartmentofArmyWorkingCapitalFund (#(# 0  DepartmentofNavyWorkingCapitalFund (#(# 0  DepartmentofAirForceWorkingCapitalFund (#(# 0  DefenseFinanceandAccountingServiceWorkingCapitalFund?(#(# 0  DefenseLogisticsAgencyWorkingCapitalFund (#(#  DepartmentofHealthandHumanServices -v 0  HealthCareFinancingAdministration (#(# &  DepartmentofLabor d 0  UnemploymentTrustFund (#(# '#v DepartmentofTransportation  "R 0  FederalAviationAdministration (#(# 0  HighwayTrustFund (#(#   $@  &   DepartmentoftheTreasury  0  BureauofAlcohol,Tobacco , andFirearms0(#(#(#(# 0  InternalRevenueService (#(# 0  UnitedStatesCustomsService (#(# OfficeofPersonnelManagement   0  CivilServiceRetirementandDisabilityFund (#(# 0  FederalEmployeesHealthBenefitsProgram (#(# 0  FederalEmployeesLifeInsuranceProgram'   (#(#   APPENDIXC  V  GENERALLAWS       7        @* Anti-DeficiencyAct(codifiedasamendedin31U.S.C.1341,1342,1351,1517) 5 ~ L 8`(L  3     3.283  0 `   31U.S.C.1341(a)(1)(A)and(C)3.e݌/ x` (#` (# Ќ   3     3 283  0 `   31U.S.C.1517(a)3 D݌) r` (#` (# Ќ  ProvisionsGoverningClaimsoftheUnitedStatesGovernmentasprovidedprimarilyinsections37113720EofTitle31,UnitedStatesCode(includingprovisionsoftheDebtCollectionImprovementActof1996,Pub.L.No.104134,110Stat.1321358,whichalsoiscodifiedinvarioussectionsof5U.S.C.,18U.S.C.,26U.S.C.,28U.S.C.,31U.S.C.,42U.S.C.)#XSXXXS#XSXXXS    3   3283  0 `   21U.S.C.371121#XSXXXSn#XSXXXS3݌N ` (#` (# Ќ     3   3283  0 `   21U.S.C.3717(a),(b),(c),(e)and(f)#XSXXXSA#XSXXXS3݌H ` (#` (# Ќ     3   3283  0 `   21U.S.C.3719#XSXXXSl#XSXXXS 3݌B` (#` (# Ќ  FederalCreditReformActof1990,Pub.L.No.101-508,104Stat.1388-610(codifiedinvarioussectionsof2U.S.C.)#XSXXXS|#XSXXXS 0   3   3283  0` (#(#  2U.S.C.661c(b)and(e) 3݌*` (#` (# Ќ  PayandAllowanceSystemforCivilianEmployeesasprovidedprimarilyinChapters5159ofTitle5,UnitedStatesCode#XSXXXS{#XSXXXS  3   0  3<283  0` (#(#  5U.S.C.5332and53433<s݌` (#` (# Ќ   3     3283  0 `   29U.S.C.2063Q݌ ` (#` (# Ќ  PromptPaymentAct(codifiedasamendedin31U.S.C.39013907)#XSXXXS#XSXXXS 30  3  3   3283  0` (#(#  31U.S.C.3902(a)and(b)3݌` (#` (# Ќ   3   0  3283  0` (#(#  31U.S.C.3902(f)3݌ ` (#` (# Ќ   3   0  3\283  0` (#(#  31U.S.C.39043\݌!` (#` (# Ќ   3   0  32283  0` (#(#  31U.S.C.3906(a)(1)32i݌ "` (#` (# Ќ    APPENDIXD       THEFEDERALFINANCIALMANAGEMENTIMPROVEMENTACTOF1996  OMBIMPLEMENTATIONGUIDANCEFORCFOsandIGs   V  Introduction    TheFederalFinancialManagementImprovementActof1996(FFMIA),31U.S.C.3512,fundamentallydoestwothings:L 8``L 3   3!283  0    establishesinstatutecertainfinancialmanagementsystemrequirementsthatarealready {  establishedbyExecutiveBranchpolicies,and3!"݌ (#(# Ќ   3   39#283  0    establishesnewrequirementsforauditorstoreportonagencycompliancewiththesebasic i  requirements,andforagencyheadsandagencymanagementtocorrectdeficiencieswithinacertaintimeperiod.39#d#݌ (#(# Ќ  Th is e ActappliesonlytoauditsoftheentitieslistedinAppendicesAandBof OMB the Bulletin Ԁ9808 . Q  Substantivestatutoryrequirement  E The1997OmnibusConsolidatedAppropriationsActincludesTitleVIII,theFederalFinancialManagementImprovementActof1996.Section803(a)ofth is e Actstates: 3| 0  In General--Each General!Each agencyshallimplementandmaintainfinancialmanagement 'p systemsthatcomplysubstantiallywithFederalfinancialmanagementsystemsrequirements,applicableFederalaccountingstandards,andtheUnitedStatesGovernmentStandardGeneralLedger(SGL)atthetransactionlevel. (#(# Thesethree requirements--Federal requirements!Federal financialmanagementsystemrequirements,  "R applicableFederalaccountingstandards,andthe SGL--are SGL!are alreadywell-establishedin #L ExecutiveBranchpolicydocuments.Thesedocuments,whicharedescribedinmoredetailbelow,include:OMBCirculars(A-127, FinancialManagementSystemsandA-134, FinancialAccountingPrinciplesandStandards),JointFinancialManagementImprovementProgram(JFMIP)documents(suchastheCoreSystemRequirements),andTreasuryDepartmentpolicies.Section803(a)ofFFMIAdoesnotestablishanynewfinancialsystemrequirements ,butitprovides ((#$ statutoryauthorityforexistingExecutiveBranchfinancialsystemrequirements . )"$%   *%& OthersectionsofFFMIAestablishnewproceduralrequirements.However,thesenewrequirements followthebasicprinciplesestablishedinFederalauditpolicies: 3   3,283  0    Section803(b)(1)requiresthatauditorsreportwhetheragencysystemssubstantiallycomply  withFederalfinancialmanagementsystemsrequirements;3,-݌ (#(# Ќ   3   3I.283  0    Section803(c)(1)requiresthattheheadofeachagencydeterminewhethertheagencys   financialmanagementsystemscomplywiththeAct,basedonareviewofthereportontheapplicable agencywide agencywide auditedfinancialstatementandanyotherinformationthe   headoftheagencyconsidersrelevantandappropriate;3I.t.݌ (#(# Ќ   3   30283  0    Section803(c)(3)requiresthat,whentheagencyheaddisagreeswiththeauditorsfindings, u  theDirectorofOMBshallreviewsuchdeterminationsandprovideareportonthefindingstotheappropriatecommitteesoftheCongress;300݌ (#(# Ќ   3   3;2283  0    Section803(c)(3)requiresthatwhentheagencyheadagreeswiththeauditorsfindingsof ] noncompliance,a_remediation_Ԁplanshallbedeveloped,inconsultationwithOMB,thatdescribestheresourcesandmilestonesforachievingcompliance;and3;2f2݌ (#(# Ќ   3   34283  0    Section804(b)requiresthattheInspectorGeneral(IG)reportonagencyprogressinachieving E complianceintheIGssemiannualreportrequiredbytheIGAct,asamended.34@4݌ (#(# Ќ  Inadditiontothesereportingrequirements,bothOMBandGAOhaveannualreportingrequirementsundertheAct.Moredetailedinformationregardingagencyresponsibilitiesfollows. RelationshiptoSection4ofFMFIA(theIntegrityAct)  !j Thereisaclose,ifnotoverlapping,relationshipbetweenFFMIAandtheFederalManagersFinancialIntegrityAct(FMFIA).Sincetheacronymsaresimilar,thisguidancereferstoFMFIAastheIntegrityAct.TheIntegrityActrequiresthattheagencyhead,onanannualbasisnolaterthanDecember31,provideanassurancestatementwithrespecttoagencymanagementcontrols(Section2)andagencycompliancewithfinancialmanagementsystemrequirements(Section4).Forthemostpart,inmanyagencies,theIntegrityActstatementofassuranceforSection4providesmanagementsassertionofcompliancewithsection803(a)ofFFMIA. Section803,ImplementationofFFMIA  '."# Section803(a),citedabove,states: InGeneral--Eachagencyshallimplementandmaintainfinancial managementsystemsthatcomplysubstantiallywithFederalfinancialmanagementsystems *%& requirements,applicableFederalaccountingstandards,andtheUnitedStatesGovernmentStandardGeneralLedger(SGL)atthetransactionlevel. Thissectionoftheguidancemorefullydescribes(1)Federalfinancialmanagementsystemsrequirements;(2)applicableFederalaccountingstandards;and(3)theSGLatthetransactionlevel.Ineachsection,informationisprovidedonsubstantialcomplianceandtypesofindicatorstobeusedinassessingwhetheranagencyisinsubstantialcompliance.Thecriteriaarebroadandflexible;yet,theyprovideapracticalbasisformeasuringachievementincomplyingwiththeFFMIArequirements.(1)Federalfinancialmanagementsystemsrequirements   CircularA-127prescribespoliciesandstandardsforagenciestofollowindeveloping,operating,evaluating,andreportingonfinancialmanagementsystems.Inaddition,CircularA-127alsoincorporatesbyreference:CircularA-123, ManagementAccountabilityandControl;CircularA-130, ManagementofFederalInformationResources;otheroperatingpoliciesandrelatedrequirementsprescribedbyOMB;andFederalFinancialManagementSystemsRequirementsissuedbyJFMIP.ThefinancialmanagementsystemssubjecttotherequirementsofFFMIAareincludedintheinventoryoffinancialmanagementsystemssubjecttotherequirementsofSection4oftheIntegrityAct.CompliancewiththefinancialmanagementsystemsrequirementsofFFMIAappliestoallfinancialmanagementsystemsessentialtomeetingfinancialstatementpreparationandbudgetaryreportingrequirements.AnagencyoftheFederalGovernmentisconsideredtobeinsubstantialcompliancewithfinancialmanagementsystemrequirementsif: 3   3+A283  0    FinancialmanagementsystemsmeetCircularA-127requirementswhich,forpurposesof !X complyingwiththisAct,callforsystemsto:supportmanagementsfiduciaryrole;supportthelegal,regulatory,andotherspecialmanagementrequirementsoftheagency;supportthebudgetexecutionfunctions;supportfiscalmanagementofprogramdeliveryandprogramdecisionmaking;complywithinternalandexternalreportingrequirements,including,asnecessary,therequirementforfinancialstatementspreparedinaccordancewiththeformandcontentprescribedbyOMBandreportingrequirementsprescribedbyTreasury;andbemonitoredbyagencystafftoensuretheintegrityoffinancialdata.Thisisaccomplishedthroughaunifiedsetofsystemscomprisedoffinancialsystemsandfinancialportionsofmixedsystems.ThesesystemsmayormaynotbeoperatedbytheCFOsoffice.3+AVA݌ (#(#    *%&  3   3E283  0    FinancialmanagementsystemsfollowrequirementspublishedinJFMIPsFederalFinancial   ManagementSystemRequirementsserieswhichprescribethefunctionsthatmustbeperformedbysystemstocaptureinformationforfinancialstatementpreparation.3EE݌ (#(# Ќ   3   3GG283  0    Compensatingproceduresareappliedtofinancialmanagementinformationproducedbythird   parties,suchasservicebureaus,whenitisdeterminedthatsystemsusedbythirdpartiestoprovidethoseservicesdonotcomplywiththeprovisionsoftheFFMIA.3GGrG݌ (#(# Ќ   3   3I283  0    SecurityoverfinancialinformationisprovidedinaccordancewithCircularA-130,Appendix3.3I1I݌ (#(# Ќ   3   3J283  0    Internalcontrolsoverfinancialmanagementsystemsaredesignedproperlyandoperating {  effectively.Internalcontrolsaredescribedin paragraph2of OMBBulletin 9808 99__ .Itis u  notexpectedthatthescopeoftheauditorsworkinthisareawouldextendbeyondtherequirementsoftheBulletin.3JDJ݌ (#(# Ќ  Indicators: 3   3]L283  0    AnnualassurancestatementissuedpursuanttotheSection4IntegrityActreportdoesnot Q reflectanymaterialnonconformancerelatedtofinancialmanagementsystemscoveredbyFFMIA.3]LL݌ (#(# Ќ   3   3M283  0    Auditproceduresperformedforthepurposeofobtainingevidenceinsupportoftheauditors 9 opiniononthefinancialstatementsdidnotdisclosematerialweaknessesornoncompliancewithlegalorregulatoryrequirementsoftheagency.   8      3MN݌-v(#(# Ќ   3   3O283  0    Standardbudgetexecutioninformation (e.g.,FACTSIIreportingforthoseaccountsrequired !j tocomplywithFACTSII) isprovidedonatimelybasistoOMBandTreasuryinthemanner d requestedandisconsistentwithbudgetexecutioninformationusedinternallywithintheagency.3O P݌ (#(# Ќ   3   3Q283  0    Agencyseniormanagementandprogrammanagershaveaccesstotimelyfinancialinformation  "R onthestatusoffunds(commitments,reservationandobligations)byoperatingunitsandprogramsthatallowsanalysisofdatafordecisionmaking.3QQ݌ (#(#    $@   3   3S283  0    Fundscontroldecisionsarebasedoninformationprovidedfromtheagencysfinancial   managementsystems.3SS݌ (#(# Ќ   3   3T283  0    Theagencycorefinancialsystem,supportedbyothersystemscontainingthedetaileddata  summarizedinthecorefinancialsystem,isthesourceofinformationusedinthepreparationoftheannualfinancialstatementsandotherinternalandexternalreportingrequirements ,including   certainactualdatapresentedinthePresidentsBudget .Detailedinformationcontainedinthese   othersystemsalsomaybeusedasthesourceinformationforreportingwheresummarizedinformationcontainedintheagencycoresystemdoesnotprovidethedetailsnecessarytomeetreportingrequirements.3TT݌ (#(# Ќ  0   (#(#  3   34X283  0    Theagencyhasamanagementcontrolprogramthatidentifiesandreportsdeficienciesin u  financialmanagementsystems,includingdeficienciesresultinginalackofsubstantialcompliancewiththethreerequirementsofFFMIA,andensuressuchdeficienciesarecorrected.34X_X݌ (#(# Ќ  &  (2)FederalAccountingStandards ] AnagencyoftheFederalGovernmentwillbeconsideredinsubstantialcompliancewithFederalaccountingstandardsiftheagencypreparesauditedfinancialstatementsinaccordancewiththe']ZhierarchyofFederalaccountingstandardsincludedinparagraph5ofOMBBulletin 9808 99__ . E SubstantialcompliancedoesnotrequirealltransactionstobeinfullcompliancewithFederalaccountingstandardsatthepointoforiginalentry,butthatfinancialinformationusedinthepreparationoffinancialstatements,basedonsuchtransactions,isadequatelysupportedbydetailedfinancialrecords(automatedormanual).Indicators:L 8``L 3   3a]283  0    Anunqualifiedopinionontheagencysfinancialstatements.Foraqualifiedopinion,areviewof  ^ theunderlyingreasonsforthequalifiedopinionisneededtodeterminewhetherornottheagencyisinsubstantialcompliancewiththisrequirement.Inlimitedcircumstances,aqualifiedopinionontheagencysfinancialstatementsmayindicatesubstantialcompliancewiththisrequirementwhenitissolelyduetoreasonsotherthantheagencysabilitytoprepare_auditable_financialstatements.Further,adisclaimerofopinionmaynotindicatethatthereisalackofsubstantialcompliancewiththisrequirementwhenitresultsfromamaterialuncertainty,suchasresolutionoflitigationorprojectingfutureeconomicevents.3a]]݌ (#(#    '."#  3!   3Ga283  0    Theauditdisclosednomaterialweaknessesininternalcontrolsthataffecttheagencysabilityto  prepare_auditable_Ԁfinancialstatementsandrelateddisclosures.   9      3Gara݌(#(#   (3)SGLattheTransactionLevel  ImplementingtheSGLatthetransactionlevelrequiresthattheCoreFinancialSystemGeneralLedgerManagementFunctionisinfullcompliancewiththeSGLchartofaccountsdescriptions ,related   attributes, andpostingrules;transactionsfromfeedersystemsaresummarizedandfedintotheCore   FinancialSystem'sGeneralLedgerfollowingSGLrequirementsthroughaninterface(automatedormanual);detailsupportingtheinterfacetransactionscanbetracedbacktothesourcetransactionsinthefeedersystems;andthefeedersystemsprocesstransactionsconsistentwithSGLaccountdescriptions , {  relatedattributes, andposting rules . u  AnagencyoftheFederalGovernmentwillbeconsideredinsubstantialcompliancewiththeSGLatthetransactionlevelrequirementiftheagencysclassificationoffinancialeventsforitsfinancialstatementsandrequiredfinancialinformationprovidedtotheDepartmentoftheTreasuryandOMB ,including ] yearendbudgetreporting, isconsistentwiththeaccountdescriptions ,relatedattributes, andposting W rules , asapprovedbytheSGLBoardandpublishedbytheTreasuryDepartmentsFinancial Q ManagementServiceintheTreasuryFinancialManual. K Indicators:L 8``L 3"   3Fi283  0    TheagencyscorefinancialsystemusestheSGLnumbertocapturefinancialinformation,orthe 3| agencyusesanalternativecode(pseudo-code)followingthesameaccountdescriptions , -v relatedattributes, andpostingrulesthatareusedbytheSGLtocapturefinancialinformation, 'p andtheinformationcanbeappropriatelymatchedtoSGLcodesforreportingtoOMBorTreasuryandforpreparingfinancialstatements.TheuseoftheSGLcodeinthefeedersystemisnotnecessaryaslongasthecodedefinitionsusedtocaptureinformationareconsistentwiththeSGLdefinitions.3Fiqi݌ (#(# Ќ  L 8``L 3#   3l283  0    SystemsmustcaptureinformationusingthesamedescriptionsandpostingrulesasintheSGL. #L DetailedinformationcapturedinfeedersystemscanbesummarizedintheCoreFinancialSystem;however,informationshallbecapturedandsummarizedsothatitfollowstheSGLdescriptionsandpostingrulesandiscapturedatthelevelnecessarytomeetOMBorTreasury %: ! reportingrequirements (e.g.,FACTSIIreportingforthoseaccountsrequiredtocomplywith  FACTSII) andforpreparingfinancialstatements.3ll݌(#(# Ќ   3$   3o283  0    Transactionscanbetracedbacktothesource/point-of-entryinthefeedersystemsandto  supportinginformation.3oo݌ (#(# Ќ   AuditConsiderations    Basedontheforegoing,theauditorshalluseprofessionaljudgmentindeterminingsubstantialcompliancewiththesystemsrequirementsofFFMIA.However,lackofsubstantialcompliancewiththerequirementsinanyoneormoreofthethreeareasincludedin FFMIA--Federal FFMIA!Federal  {  financialmanagementsystemrequirements,Federalaccountingstandards,andthe SGL-- u  would SGL!would resultinlackofsubstantialcompliancewithFFMIA. o  Further,alackofsubstantialcompliancewithanyoneormoreoftheindicatorsdescribedhereinwouldtypicallyresultinalackofsubstantialcompliancewithoneormoreofthethreeareasdescribedaboveand,thus,alackofsubstantialcompliancewiththesystemsrequirementsofFFMIA.Judgmentshallbeusedindeterminingalackofsubstantialcompliancewithanindicator.Forinstance,ifanauditorfindsthatafewbudgetexecutionreportsweresubmittedlatetoOMBandcontainedminorinaccuracies,thismaynotresultinalackofsubstantialcompliancewiththeindicatorregardingstandardbudgetexecutioninformation.  ?   APPENDIXE   v  ILLUSTRATIVEMANAGEMENTREPRESENTATIONLETTER   10            [EntityLetterhead]v[Dateofauditor'sreport]0    (#(# [Nameandtitleofheadofauditorganization][Addressofauditorganization]Dear[nameofheadofauditorganization]:Thisletterisinconnectionwithyourauditsofthe[entity's]PrincipalStatements(alsoreferredtoas financialstatements")[listPrincipalStatements]asof[endofyear(s)coveredbyPrincipalStatementsandfortheyear(s)thenended]forthepurposesof(1)expressinganopinionastowhetherthePrincipalStatementsarepresentedfairly,inallmaterialrespects,inconformitywithFederalaccountingstandards,and(2)reportingwhethertheagencysfinancialmanagementsystemssubstantiallycomplywithFederalfinancialmanagementsystemsrequirements,applicableFederalaccountingstandards,andtheU.S.GovernmentStandardGeneralLedgeratthetransactionlevelasof[theendoftheperiod(s)coveredbythefinancialstatements].Weconfirm,tothebestofourknowledgeandbelief,thefollowingrepresentationsmadetoyouduringyouraudits,thattheserepresentationsareasofthedateofyourauditorsreport,andpertaintotheperiod[orperiods]coveredbythefinancialstatements.[Ifcomparativestatementsarepresented !j thefollowingsentenceshouldbeadded: Theserepresentationsupdatetherepresentationswe d providedinconjunctionwithyourauditofthefinancialstatementsasofandfortheyearended(stateyear).]   "R _1.0  WeareresponsibleforthefairpresentationofthePrincipalStatementsandRequired   SupplementaryStewardshipInformationinconformitywithFederalaccountingstandards[or,whereapplicable,forthefairpresentationofthefinancialstatementsinconformitywithgenerallyacceptedaccountingprinciples]. (#(# 2.0  ThefinancialstatementsarefairlypresentedinconformitywithFederalaccountingstandards   [or,whereapplicable,generallyacceptedaccountingprinciples]. (#(# 3.0  Wehavemadeavailabletoyou,all0(#(#0(#(#0p(#(#0p(#p(#0 (#(#0x (# (#0 x(#x(#0@ $ $  (# (# 0  a.0` (#(#financialrecordsandrelateddata , ; { ` (#` (#  `n  0  `nCb  .0` (#(#  whereapplicable,minutesofmeetingsoftheBoardofDirectors[orothersimilar o  bodies]orsummariesofactionsofrecentmeetingsforwhichminuteshavenotbeenprepared , ; and`nCjیc ` (#` (# Ќ  `n  0  `nc  .0` (#(#  communicationsfromOMBconcerningnoncompliancewithordeficienciesinfinancial W reportingpractices. `n-ی ` (#` (# Ќ  4.0  Therearenomaterialtransactionsthathavenotbeenproperlyrecordedintheaccounting E recordsunderlyingthefinancialstatementsordisclosedinthenotestothefinancialstatements. (#(# 5.0  The[entity]hassatisfactorytitletoallownedassets,includingstewardshipproperty,plant,and 3| equipment;suchassetshavenoliensorencumbrances,norhaveanyassetsbeenpledged. (#(# 6.0  Wehavenoplansorintentionsthatmaymateriallyaffectthecarryingvalueorclassificationof !j assetsandliabilities. (#(# hN  hN7  .0    Guaranteesunderwhichtheagencyiscontingentlyliablehavebeenproperlyreportedor !X disclosed.hN:ی (#(# Ќ  hN  hNI8  .0    Relatedpartytransactionsandrelatedaccountsreceivableorpayable,includingassessments, #F loans,andguaranteeshavebeenproperlyrecordedanddisclosed.hNIdی (#(# Ќ  9.0  All intraagencytransactionsandbalanceshavebeenappropriatelyidentifiedandeliminatedfor &4!" financialreportingpurposes,unlessotherwisenoted.All intragovernmentaltransactionsand '."#  activities balances havebeenappropriatelyrecorded,reported,anddisclosed. Also,wehave ((#$ reconciledsignificantintragovernmentaltransactionsandbalanceswiththeappropriatetradingpartners,includingthefollowingtypeofactivities:InvestmentsinPublicDebtSecurities,_Borrowings_ԀfromTreasury,_Borrowings_ԀfromtheFederalFinancingBank,interest(revenue, +&' expense,receivable,payable)relatedtoinvestmentsanddebt,agencycontributionstoemployeebenefitplans(e.g.,OPMandDepartmentofLabor),andintragovernmentalrevenue. (#(# 10.0  Thereareno: (#(# 0  a.0` (#(#possibleviolationsoflawsorregulationswhoseeffectsshouldbeconsideredfor   disclosureinthefinancialstatementsorasabasisforrecordingalosscontingency , ;  ` (#` (# 0  b.0` (#(#materialliabilitiesorgainorlosscontingenciesthatarerequiredtobeaccruedor   disclosed,thathavenotbeenaccruedordisclosed , ; or{ ` (#` (# (#(#K(#0  c.0` (#(#unassertedclaimsorassessmentsthatareprobableofassertionandthatmustbe o  disclosed,thathavenotbeendisclosed. ` (#` (# 11.0  Wehavecompliedwithallaspectsofcontractualagreementsthatwouldhaveamaterialeffect ] onthefinancialstatementsintheeventofnoncompliance. (#(# 12.0  Nomaterialeventsortransactionshaveoccurredsubsequentto[thedateoflatestaudited K financialstatements]thathavenotbeenproperlyrecordedinthePrincipalStatementsandRequiredSupplementaryStewardshipInformationordisclosedinthenotesthereto. (#(# 13.0  Therehasbeennomaterialfraud(intentionalmisstatementsoromissionsofamountsor 3| disclosuresinfinancialstatementsandmisappropriationofassetsthatcouldhaveamaterialaffectonthePrincipalStatementsorRequiredSupplementaryStewardshipInformation)oranyfraudinvolvingmanagementoremployeeswhohavesignificantrolesininternalcontrol.[Fraudmeetingforegoingcriteriashouldbedescribed.] (#(# 14.0  Weareresponsibleforestablishingandmaintaininginternalcontrol.!X(#(# 15.0  PursuanttotheFederalManagersFinancialIntegrityAct,wehaveassessedtheeffectivenessof #L [entity's]internalcontrolinachievingthefollowingobjectives: (#(# 0  &  a.0` (#(#Reliabilityoffinancialreportingtransactionsareproperlyrecorded,processed,and %: ! summarizedtopermitthepreparationofthePrincipalStatementsandRequiredSupplementaryStewardshipInformationinaccordancewithFederalaccountingstandards,andthesafeguardingofassetsagainstlossfromunauthorizedacquisition,use,ordisposition;'%* ` (#` (#  0  0` (#(#*%&` (#` (# 0  b.0` (#(#Compliancewithapplicablelawsandregulationstransactionsareexecutedin   accordancewith:(i)lawsgoverningtheuseofbudgetauthorityandotherlawsandregulationsthatcouldhaveadirectandmaterialeffectonthefinancialstatements,and(ii)anyotherlaws,regulations,and governmentwide governmentwide policiesidentified  bytheOfficeofManagementandBudget(OMB)inAppendixCofOMBBulletin 98   08 99__ ;and ` (#` (# 0  c.0` (#(#Reliabilityofperformancereportingtransactionsandotherdatathatsupportreported   performancemeasuresareproperlyrecorded,processed,andsummarizedtopermitthepreparationofperformanceinformationinaccordancewithcriteriastatedbymanagement. ` (#` (# 0   (#(# 16.0  ThosecontrolsinplaceonSeptember30,_XXXX_Ԁ[ordateoflatestauditedfinancial o  statements]providedreasonableassurancethattheforegoingobjectivesaremet. (#(# 0  Iftherearematerialweaknessesininternalcontrol,theforgoingrepresentationshould ] bemodifiedtoread: ThosecontrolsinplaceonSeptember30,_XXXX_,providedreasonableassurancethattheforegoingobjectivesaremetexceptfortheeffectsofthematerialweaknessesdiscussedbeloworintheattachment,orastatementthat K  internalcontrolsarenoteffectiveor donotmeettheforegoingobjectives.E(#(# 17.0  Weareresponsibleforimplementingandmaintainingfinancialmanagementsystemsthatcomply 9 substantiallywithFederalfinancialmanagementsystemsrequirementscontainedinOMBCircularA127, FinancialManagementSystems,applicableFederalaccountingstandards,andtheUnitedStatesGovernmentStandardGeneralLedger(SGL)atthetransactionlevel. (#(# 18.0  Wehaveassessedthefinancialmanagementsystemstodeterminewhethertheycomply d substantiallywiththeseFederalfinancialmanagementsystemsrequirements.OurassessmentwasbasedoncriteriaestablishedunderOMBCircularA127andguidanceissuedbyOMBandincludedinAppendixDofOMBBulletin 9808 99___ . "R(#(# 19.0  ThefinancialmanagementsystemscompliedsubstantiallywithFederalfinancialmanagement #F systemsrequirements,applicableFederalaccountingstandards,andtheSGLatthetransactionlevelasofthe[dateoffinancialstatements]. (#(# 0  [Ifthefinancialmanagementsystemsdidnotsubstantiallycomply,thefollowing '."# paragraphsshouldbeusedinstead: (#(# 0  Asof[dateoffinancialstatements],theentity'sfinancialmanagementsystemsdonotcomplysubstantiallywiththeFederalfinancialmanagementsystemsrequirements.+&'(#(# Ї0  Identifyhereinorinanattachmentallthefactspertainingtothenoncompliance,includingthenatureandextentofthenoncomplianceandtheprimaryreasonorcauseofthenoncompliance. (#(# 0  Thisrepresentationdoesnotchangetherepresentationinparagraph2ofthisletter.](#(# 20.0  Weareresponsiblefor[entity's]compliancewithapplicablelawsandregulations. (#(# 21.0  Wehaveidentifiedanddisclosedtoyoualllawsandregulationsthathaveadirectandmaterial   effectonthedeterminationoffinancialstatementamounts. (#(# 22.0  Wehavedisclosedtoyouallknowninstancesofnoncompliancewithlawsandregulations.{ (#(# 0  [SignedbyAgencyHead] (#(# 0  [SignedbyChiefFinancialOfficer] (#(#   c     APPENDIXF   4   ILLUSTRATIVEAUDITORSREPORTONINTERNALCONTROL     [Addressee]   WehaveauditedthePrincipalStatements(hereinafterreferredtoas"financialstatements")of[Nameof   FederalAgency]asofandfortheyearendedSeptember30,_XXXX_,andhaveissuedourreport   thereondated_____________.Weconductedourauditinaccordancewithgenerallyacceptedauditingstandards;thestandardsapplicabletofinancialauditscontainedinGovernmentAuditing {  Standards,issuedbytheComptrollerGeneraloftheUnitedStates;and,OfficeofManagementand u  Budget(OMB)BulletinNo. 9808 99 ,"AuditRequirementsforFederalFinancialStatements." o  Inplanningandperformingouraudit,weconsidered[NameofFederalAgency]'sinternalcontrolover c  financialreportingbyobtaininganunderstandingoftheagencysinternalcontrol s ,determinedwhether ] theseinternalcontrolshadbeenplacedinoperation,assessedcontrolrisk,andperformedtestsofcontrolsinordertodetermineourauditingproceduresforthepurposeofexpressingouropiniononthefinancialstatements Ԁand .Welimitedourinternalcontroltestingtothosecontrolsnecessarytoachieve K theobjectivesdescribedinOMBBulletin99__.WedidnottestallinternalcontrolsrelevanttooperatingobjectivesasbroadlydefinedbytheFederalManagersFinancialIntegrityActof1982,suchasthosecontrolsrelevanttoensuringefficientoperations.Theobjectiveofourauditwas notto 9 provideassuranceon the internalcontrol Ԁoverfinancialreporting .Consequently,wedonotprovidean 3| opiniononinternalcontrol s .   11       -v Ourconsiderationoftheinternalcontroloverfinancialreportingwouldnotnecessarilydiscloseallmattersintheinternalcontroloverfinancialreportingthatmightbereportableconditions.UnderstandardsissuedbytheAmericanInstituteofCertifiedPublicAccountants,reportableconditionsarematterscomingtoourattentionrelatingtosignificantdeficienciesinthedesignoroperationoftheinternalcontrolthat,inourjudgment,couldadverselyaffecttheagencysabilitytorecord,process,summarize,andreportfinancialdataconsistentwiththeassertionsbymanagementinthefinancialstatements.Materialweaknessesarereportableconditionsinwhichthedesignoroperationofoneormoreoftheinternalcontrolcomponentsdoesnotreducetoarelativelylowleveltheriskthat $@  misstatementsinamountsthatwouldbematerialinrelationtothefinancialstatementsbeingauditedmayoccurandnotbedetectedwithinatimelyperiodbyemployeesinthenormalcourseofperformingtheirassignedfunctions. Becauseofinherentlimitationsininternalcontrols,misstatements,losses,or  noncompliancemayneverthelessoccurandnotbedetected. However,wenotedcertainmatters  [discussedinthefollowingparagraphsoraccompanyingschedule]involvingtheinternalcontrol   anditsoperationthatweconsidertobereportableconditions[andmaterialweaknesses].       `     h      p 8  Ifnoneofthereportableconditionsisbelievedtobeamaterialweakness,the   reportshouldstatethefollowing: However,noneofthereportableconditionsisbelievedtobeamaterialweakness.    8      8  Ifnoreportableconditionswerenotedduringtheaudit,thereportshouldstate u  thefollowing: However,wenotednomattersinvolvingtheinternalcontrolanditsoperationthatweconsideredtobematerialweaknessesasdefinedabove.i    Inaddition,weconsidered[NameofFederalAgency]sinternalcontroloverRequired ] SupplementaryStewardshipInformationbyobtaininganunderstandingoftheagencysinternalcontrols,determinedwhethertheseinternalcontrolshadbeenplacedinoperation,assessedcontrolrisk,andperformedtestsofcontrolsasrequiredbyOMBBulletin 9808 99__ andnottoprovide K assuranceontheseinternalcontrols.Accordingly,wedonotprovideassuranceonsuchcontrols.Finally,withrespecttointernalcontrolsrelatedtoperformancemeasuresreportedin[refertosection 9 offinancialstatementoraccountabilityreport],weobtainedanunderstandingofthedesignof 3| significantinternalcontrolsrelatingtotheexistenceandcompletenessassertions,asrequiredbyOMBBulletin 9808 99__ .Ourprocedureswerenotdesignedtoprovideassuranceoninternalcontrolover 'p reportedperformancemeasures,and,accordingly,wedonotprovideanopiniononsuchcontrols.0  Ifconditionscametotheauditorsattentionthatinhisorherjudgmentrepresent  ^ significantdeficienciesinthedesignoroperationofinternalcontroloverperformancemeasures,whichcouldadverselyaffecttheagencysabilitytocollect,process,record,andsummarizeperformanceinformationandreportperformancemeasuresinaccordancewithmanagementscriteria,thefollowingsentenceshouldbeaddedtotheforegoingparagraph. However,wenotedcertainsignificantdeficienciesininternalcontroloverreportedperformancemeasures[discussedinthefollowingparagraphsoraccompanyingschedule]that,inourjudgment,couldadverselyaffecttheagencysabilitytocollect,process,record,andsummarizeperformanceinformationandreportperformancemeasuresinaccordancewithmanagementscriteria. (#(# Thisreportisintended solely fortheinformation anduse ofthemanagementof[NameofFederal *%& Agency],OMBandCongress .However,thisreportisamatterofpublicrecordanditsdistribution_is +&' notlimited ,andisnotintendedtobeandshouldnotbeusedbyanyoneotherthanthesespecified  parties.Wecautionthatmisstatements,losses,andnoncompliancemayoccurandnotbedetectedbythetestingperformedandthatsuchtestingmaynotbesufficientforotherpurposes .  [Signature]     [Date]       _ 3   3 APPENDIX_ԀG   4   ILLUSTRATIVEAUDITORSREPORTONCOMPLIANCEWITHLAWSAND  REGULATIONS    [Addressee]   WehaveauditedthePrincipalStatements(hereinafterreferredtoas"financialstatements")of[Nameof   FederalAgency]asofandfortheyearendedSeptember30,_XXXX_,andhaveissuedourreport   thereondated______________.Weconductedourauditinaccordancewith:generallyacceptedauditingstandards;thestandardsapplicabletofinancialauditscontainedinGovernmentAuditing u  Standards,issuedbytheComptrollerGeneraloftheUnitedStates;and,OfficeofManagementand o  Budget(OMB)BulletinNo. 9808 99 ,"AuditRequirementsforFederalFinancialStatements." i  Themanagementof[NameofFederalAgency]isresponsibleforcomplyingwithlawsandregulations ] applicabletotheagency.Aspartofobtainingreasonableassuranceaboutwhethertheagencysfinancialstatementsarefreeofmaterialmisstatement,weperformedtestsofitscompliancewithcertainprovisionsoflawsandregulations,noncompliancewithwhichcouldhaveadirectandmaterialeffectonthedeterminationoffinancialstatement , amountsandcertainotherlawsandregulationsspecifiedin E OMBBulletin 9808 99__ ,includingtherequirementsreferredtointheFederalFinancialManagement ? ImprovementAct(FFMIA)of1996. Welimitedourtestsofcompliancetotheseprovisionsandwe 9 didnottestcompliancewithalllawsandregulationsapplicableto[NameofAgency].  3| TheresultsofourtestsofcompliancewiththelawsandregulationsdescribedintheprecedingparagraphexclusiveofFFMIA   12      ׀disclosedinstancesofnoncompliancewiththefollowinglawsand !j regulationsthatarerequiredtobereportedunderGovernmentAuditingStandardsandOMBBulletin d  9808 99__ ,whicharedescribedbelow.  ^   !X 0  Describeanyinstancesofnoncompliancerequiredtobereportedandlistlawsand  regulationsforwhichnoncompliancewasdisclosedexclusiveofFFMIA[orprovidesuch  informationinanaccompanyingschedule](#(#  _TheresultsofourtestsofcompliancedisclosednoinstancesofnoncompliancewithotherlawsandregulationsdiscussedintheprecedingparagraphexclusiveofFFMIAthatarerequiredtobereportedunderGovernmentAuditingStandardsorOMBBulletin 9808 99__ .   UnderFFMIA,wearerequiredtoreportwhethertheagencysfinancialmanagementsystemssubstantiallycomplywiththeFederalfinancialmanagementsystemsrequirements,Federalaccountingstandards,andtheUnitedStatesGovernmentStandardGeneralLedgeratthetransactionlevel.Tomeetthisrequirement,weperformedtestsofcomplianceusingtheimplementationguidanceforFFMIAincludedinAppendixDofOMBBulletin 9808 99 . o  Theresultsofourtestsdisclosednoinstancesinwhichtheagencysfinancialmanagementsystemsdidnotsubstantiallycomplywiththethreerequirementsdiscussedintheprecedingparagraph.[Iftheresultsoftestsdisclosedthattheagencyssystemsdidnotsubstantiallycomplywiththe Q foregoingrequirements,theprecedingsentenceshouldbereplacedwiththefollowing: K 0  Theresultsofourtestsdisclosedinstances,describedbelow(ordescribedinan ? accompanyingschedule),wheretheagencysfinancialmanagementsystemsdidnotsubstantiallycomplywiththethreerequirementsdiscussedintheprecedingparagraph.3|(#(# Inaddition,whentestsdisclosedthattheagencyssystemsdidnotsubstantiallycomplywiththe 'p foregoingrequirements,theauditorsreportoncomplianceoranaccompanyingscheduleshouldprovidethefollowinginformationasrequiredbyFFMIAandparagraph7.c.(3)(c)ofOMBBulletin 9808 99__ .  ^ L Eh(`L1.0  Theentityororganizationresponsibleforthefinancialmanagementsystemsthatwere  "R foundnottocomplywiththerequirements. (#(#    ` 2.0  Allfactspertainingtothenoncompliance,including:(a)%thenatureandextentofthe $@  noncompliance,(b)theprimaryreasonorcauseofthenoncompliance,and(c)anyrelevantcommentsfromreportingentitymanagementoremployeesresponsibleforthenoncompliance. (#(# 3.0  Recommendedremedialactionsandthetimeframestoimplementsuchactions.])"$%(#(#  L Uh((L *%& Providinganopiniononcompliancewithcertainprovisionsoflawsandregulationswasnotanobjective ofourauditand,accordingly,wedonotexpresssuchanopinion.   13        Thisreportisintended solely fortheinformation anduse ofthemanagementof[NameofFederal  Agency],OMB ,andCongress.However,thisreportisamatterofpublicrecord,anditsdistributionis   notlimited. andCongress,andisnotintendedtobeandshouldnotbeusedbyanyoneotherthanthese   specifiedparties.Wecautionthatnoncompliancemayoccurandnotbedetectedbythetestsperformedandthatsuchtestingmaynotbesufficientforotherpurposes.    [Signature]   _[Date]  u     APPENDIXH   33333  3AGREEDUPONPROCEDURES:RETIREMENT,HEALTH,ANDLIFEINSURANCEWITHHOLDINGS/CONTRIBUTIONSANDSUPPLEMENTALSEMIANNUALHEADCOUNTREPORTSUBMITTEDTOTHEOFFICEOFPERSONNELMANAGEMENT3S3Objective:ToperformtheproceduresenumeratedbelowtoassisttheOfficeofPersonnelManagement(_OPM_)inassessingthereasonablenessofretirement,health,andlifeinsurancewithholdings/contributionsandemployeeheadcountdatasubmittedbyagencies.(Questionsmaybedirectedto_OPM_'sFinancialPolicyStaffat(202)6060606.)Procedures:GainanunderstandingoftheAgencyPayrollOffices(APOs)proceduresforreconcilingpayrollregisterstoForm2812,ReportofWithholdingsandContributionsforHealthBenefits,LifeInsuranceandRetirement.ObtaintheAPOsmostrecentSupplementalSemiannualHeadcountReportsubmittedto_OPM_ԀandthesummaryofForm2812submissionsandrelatedpaymentsto_OPM_Ԁforthecurrentfiscalyear.RandomlyselecttwoForm2812ssubmittedforthecurrentfiscalyear,andalsoobtaintheForm2812thatcoincideswiththemostrecentSupplementalSemiannualHeadcountReport.ObtainpayrollregistersorpayrolldatafilesfortheperiodscoveredbytheForm2812sselected.1.Performthefollowingprocedures:0  a.0` (#(#Footthepayrollregisterorpayrolldatafilethatcontainsthepayroll 'p informationassociatedwiththethreeForm2812sselected. ` (#` (# 0  b.0` (#(#Traceemployeewithholdinginformationshownonthepayrollregisteror  ^ derivedfromfilesfootedinstep1.a.forretirement,health,andlifeinsurancebenefits(asadjustedforreconcilingitems)totherelatedamountsshownontheForm2812sforthecorrespondingperiod. ` (#` (# 0  c.0` (#(#Obtainsupportfordifferencesbetweenamountsshownonthepayrollregister $@  orderivedfromfilesfootedinstep1.a.andamountsshownontheForm2812sselected. ` (#` (# 0  d.0` (#(#Tracereconcilingitemstosupportingdocumentationandverifyagreement.((#$` (#` (# 0  e.0` (#(#FooteachForm2812selected.*%&` (#` (#  +&' Reportanydifferencesorexceptionsthatareunsupportedorunsubstantiated,orrepresentanerror.Totheextentpractical,management'scommentsontheauditor'sfindingsshallbeincludedinthereport.2.Forthethreepayperiodsselected,reviewtheAPO'sreconciliationofthepayrolldatafiletothegeneralledgeraccountsor,ifsuchareconciliationdoesnotexist,performthereconciliation.ReportwhentheAPOdidnotpreparethereconciliation.Alsoreportanyunsupportedorunsubstantiateddifferences(i.e.,grossratherthannet)inthetotalpayrollpaidfortheselectedpayperiodandtheamountrecordedinthegeneralledgerthatexceeds5%oftotalpayroll.Totheextentpractical,management'scommentsontheauditor'sfindingsshallbeincludedinthereport.3.FromthepayrollregisterscorrespondingtothethreeForm2812sselectedfortestinginstep1,randomlyselectatotaloftwentyfiveindividualsfromthepayrollregistersorfilesfootedinstep1.a.thathaveretirement,health,andlifeinsuranceandatleastoneoptionallifecoverage.Forstep3.d.only,randomlyselectadditionalindividualsasnecessarysothattenindividualsareselectedforeachlifeinsuranceoption(i.e.,OptionsA,B,andC).Foreachindividualselected,performthefollowingprocedures:0  a.0` (#(#Verifythatthebasesalaryshownonthepayrollregistersagreeswithapproved E amountsreflectedontheemployeesPersonnelActionForm,Form50or52. ` (#` (# 0  b.0` (#(#Forretirementwithholdings(contributions),verifythatretirementwithholdings 3| forparticipantsintheCivilServiceRetirementSystem(CSRS)andFederalEmployeesRetirementSystem(FERS)aretheamountsrequiredbylaw. ` (#` (# 0  c.0` (#(#Forhealthinsurancewithholdings(contributions),verifythatthewithholdings d agreewiththecontributionrateoramountforcoverageselectedasdocumentedintheemployeespersonnelfile. ` (#` (# 0  d.0` (#(#Forlifeinsurancewithholdings(contributions),verifythatthecontributions #L agreewiththecontributionrate(amount)forthecoverageselectedasdocumentedintheemployeespersonnelfile(oratthecontributionrateoramountforbasiccoverageifnootheroptionwasselected). ` (#` (# Reportanydifferencesorexceptionsthatareunsupportedorunsubstantiated,orrepresentanerror.Totheextentpractical,management'scommentsontheauditor'sfindingsshallbeincludedinthereport.  *%& 4.Randomlyselectatotaloftenemployeeswhodonothaveeitherhealthorlifeinsurance withholdingsfromthepayrollregistersorrelatedfilesfootedinstep1.a.andverifyfromareviewofpersonnelrecordsthattheemployeeselectedtobeexcludedfromhealthand/orlifeinsurancecoverage.Reportanydifferencesorexceptionsthatareunsupportedorunsubstantiated,orrepresentanerror.Totheextentpractical,management'scommentsontheauditor'sfindingsshallbeincludedinthereport.5.RecalculatetheheadcountreflectedontheSupplementalSemiannualHeadcountReportselectedfortestingaboveasfollows:0  a.0` (#(#HaveAPOpersonnelperformthepayrollsystemqueriesthatsummarize {  detailedpayrolldata. ` (#` (# 0  b.0` (#(#Calculatetheheadcountby:(1)countingthenumberofemployeeslistedona i  payrollregisterpage(estimatethenumberperpagebycountingtheemployeeslistedonseveralpages),(2)countingthenumberofpagesinthepayrollregister,and(3)multiplyingthenumberofemployeesbythenumberofpages,orcount(usingacomputerauditroutine)thenumberofemployeesonthepayrolldatafilefortheperiod. ` (#` (# 0  c.0` (#(#Comparethecalculatedheadcountfromstep5.b.withthesummaryinformation ? queriedinstep5.a.andinformationshownonheadcountreports. ` (#` (# 0  d.0` (#(#Reportanydifferences(i.e.,grossratherthannet)greaterthan2%between -v theheadcountreportingontheagencysSupplementalSemiannualHeadcountReportandthecalculatedheadcountfromstep5.b.Totheextentpractical,management'scommentsontheauditor'sfindingsshallbeincludedinthereport. ` (#` (# 6.Forthethreepayperiodsselected,determinethetotalnumberofemployeesenrolledineachretirementplan(CSRSandFERS)andthecorrespondingpayrollbasesubjecttotherespectivecontributionrate,thetotalnumberofemployeesenrolledineachhealthinsuranceplanandplanoptions,andthetotalnumberofemployeesenrolledineachlifeinsuranceoptionandbaseplanandthecorrespondingtotallifeinsurancebasicpay.Totheextentpractical,management'scommentsontheauditor'sfindingsshallbeincludedinthereport.0  a.0` (#(#Calculatethetotalretirementemployeewithholdingsandemployer ((#$ contributionsforthethreepayperiodsselectedasfollows: ` (#` (#   *%& 0  0` (#(#i.0 ` (#` (#MultiplytheCSRSandFERSpayrollbasebythewithholdingand   employercontributionratesrequiredbylaw.  (# (# 0  0` (#(#ii.0 ` (#` (#ComparethecalculatedtotalswithrelatedamountsshownontheForm  2812s.Reportanyvariances(i.e.,grossratherthannet)betweenthecalculatedamountsandtheamountsreportedontheForm2812sgreaterthan5%.  (# (# 0  b.0` (#(#Calculatethehealthinsurancewithholdingsandemployercontributionsforthe   threepayperiodsselectedasfollows: ` (#` (# 0  0` (#(#i.0 ` (#` (#Multiplythenumberofemployeesenrolledineachhealthinsurance u  planandplanoptionbytheemployeeandemployerpremiumsfortheplanandoption.  (# (# 0  0` (#(#ii.0 ` (#` (#Sumthetotalsinstep6._b.i._Ԁandcomparetheresultwiththehealth ] insurancewithholdingandcontributionamountsshownontheForm2812s.Reportanyvariances(i.e.,grossratherthannet)betweenthecalculatedamountsandtheamountsreportedontheForm2812sgreaterthan5%.  (# (# 0  c.0` (#(#Calculatethebasiclifeinsuranceemployeewithholdingsandemployer 9 contributionsforthethreepayperiodsselectedasfollows: ` (#` (#    ` i.0 Forwithholdings:Addtheproductof2000timesthenumberof 'p employeeswithbasiccoveragetothetotalbasicpayforallemployeesselected.Thisrepresentstheestimatedtotalbasiclifeinsurancecoverage.Dividethistotalby1,000andmultiplyby$0.165(forAPOswithbiweeklypayperiods)or$0.3575(forAPOswithmonthlypayperiods).  (# (#    ` ii.0 Comparetheresultinstep6._c.i._Ԁtothewithholdingsforbasiclife #F coveragereportedontheForm2812.Reportanydifference(i.e.,grossratherthannet)betweentheestimateandtheamountofwithholdingsreportedontheForm2812greaterthan5%.  (# (#    ` iii.0 Foremployercontributions:Dividetheresultsofstep6._c.i._Ԁbyonehalf. ((#$ Thisapproximatesemployercontributions,whichareonehalfofemployeewithholdings.  (# (#  +&'    ` iv.0 Comparetheresultinstep6._c.iii_.totheamountreportedontheForm  2812.Reportanydifferences(i.e.,grossratherthannet)betweentheestimateandtheamountreportedontheForm2812greaterthan5%.  (# (#   d.0 ` CalculatetheOptionAandOptionCcoveragewithholdingsforthethreepay   periodsselectedasfollows: ` (#` (#    ` i.0 IftheAPOcanprovidethenumberofemployees,byagegroup,who   electedOptionsAandCduringthepayperiodsselected,performthefollowingprocedures:  (# (#    `  (a)0  Multiplythenumberofemployeesineachagegrouptimesthe u  appropriaterateforOptionAorOptionC,inaccordancewiththeratesforagegroupsprovidedintheFEGLIDescriptionandCertificateHandbook.Reportanydifferences(i.e.,grossratherthannet)greaterthan2%foreachOptiontested. (#(# 0  0` (#(#0 ` (#` (#(b)0 (# (#ContributionsforOptionBcannotbetestedforreasonableness Q bythesemethodsbecauseofthenumberofvariablesinvolvedinelectingthisoption. (#(# 7.Forthethreepayperiodsselected,comparethegrandtotalofthetotalcolumnontheForm2812swiththeactualamounttransferred.Reportanydifferences(i.e.,grossratherthannet)betweentheamountsreportedontheForm2812sandtheamountstransferredgreaterthan1%.Totheextentpractical,management'scommentsontheauditor'sfindingsshallbeincludedinthereport.33   ^ 33IllustrativeIndependentAccountantsReportontheApplicationofAgreedUponProceduresTotheInspectorGeneralU.S.OfficeofPersonnelManagement: TextWasMovedFromHere:1   3 3Insertthefollowingunlesstheproceduresandfindingsareinanattachment.   Theproceduresandtheassociatedfindingsareasfollows:   `  [Insertproceduresandfindings] i     `    Wewerenotengagedto,anddidnot,performanaudit,theobjectiveofwhichwouldbetheexpressionofanopiniononthewithholdingsandcontributionsforhealthbenefits,lifeinsurance,andretirement,andemployeeheadcountofthe[nameofagency].Accordingly,we Q donotexpresssuchanopinion.Hadweperformedadditionalprocedures,othermattersmighthavecometoourattentionthatwouldhavebeenreportedtoyou.ThisreportisintendedsolelyfortheuseoftheInspectorGeneral,ChiefFinancialOfficer,andtheAssociateDirectorforRetirementandInsuranceof_OPM_Ԁandshouldnotbeusedbythosewhohavenotagreedtotheproceduresandtakenresponsibilityforthesufficiencyoftheproceduresfortheirpurposes.[Signature] d [Date] !X c: 1  #L 33  3  #F 3 ILLUSTRATIVELETTEROFINQUIRYFROMAGENCYMANAGEMENTTOLEGAL  COUNSELCONCERNINGCONTINGENTLIABILITIESFORLITIGATION,CLAIMS,ORASSESSMENTS   0[CFOOfficeLetterhead]B.` hp x (#XBDate:   ` [NolaterthanOctober15]   To:   ` GeneralCounsel {  From:   ` ChiefFinancialOfficer  o  Subject: ` [Auditors]AuditoftheFiscalYearXXX0FinancialStatements c  Pursuantto31U.S.C.3515,the[Auditorname]isconductinganauditofthefinancialstatementsofthe[Governmententity]asofandforthefiscalyearendedSeptember30,XXX0.Inperformingauditsofgovernmententities,auditorsarerequiredtofollowGovernmentAuditingStandardsissuedbythe K ComptrollerGeneraloftheUnitedStates(the YellowBook).Forfinancialstatementaudits,GovernmentAuditingStandardsincorporatethefieldworkandreportingstandardsoftheAmerican ? InstituteofCertifiedPublicAccountants(AICPA)andtheStatementsonAuditingStandardsthatinterpretthem.ConsistentwiththeprocedurescontainedinAU337oftheAICPAsCodificationof 3| StatementsonAuditingStandards,[Auditor]hasinquiredaboutlitigation,claims,andassessmentsto -v satisfyitselfastothefinancialaccountingandreportingofsuchmatterswithrespecttothefinancialstatements.Thepurposeofthisletteristorequestyourassistanceinrespondingtothatinquiry.TheAmericanBarAssociation StatementofPolicyRegardingLawyers  ResponsestoAuditorsRequestforInformation(December1975)providesrelevantguidanceforthelawyersresponsetotheauditorsrequest.InaccordancewithStatementofFederalFinancialAccountingStandards(SFFAS)Number5, #L  AccountingforLiabilitiesoftheFederalGovernment,asamendedbySFFASNumber12,and #F InterpretationNumber2ofSFFASNumbers4and5,[Governmententity]reportscertaininformation $@  initsfinancialstatementsandnotesconcerningcontingentliabilitiesforlitigation,claims,andassessments.Werequestthatyouprovide[Auditor](withacopytome)withinformationinvolvingmatterswithrespecttowhichyouhavebeenengagedandtowhichyouhavedevotedsubstantiveattentiononbehalfofthe[Governmententity]intheformoflegalconsultationorrepresentation.YoushouldfurnishaninterimresponsebyDecember15,XXX0,includingmattersthatexistedasof September30,XXIX,andfromthatdatethroughatleastDecember1,XXX0.Youshouldfurnishan *%& _updatedresponsebyMarch1,XXX1,includingmattersthatexistedasofSeptember30,XXX0,andfromthedateoftheinterimresponsethroughnoearlierthanFebruary15,XXX1. Includeanycaseswithrespecttowhichyouhavebeenengagedandtowhichyouhavedevotedsubstantiveattentiononbehalfofthe[Governmententity]intheformoflegalconsultationorrepresentation,eventhosecaseswhereyoubelievetheJudgmentFundorsomefinancingsourceotherthan[Governmententity]sbudgetaryresourceswillpayanypotentialloss.UnderFederalaccountingstandards,suchamountsshouldbeincludedasliabilitiesordisclosureitemsonthe[Governmententity]sfinancialstatements.PendingorThreatenedLitigation(excludingunassertedclaims) {  Weand[Auditor]havedeterminedthatanymatterswheretheamountofpotentiallossexceeds$X !, o  individuallyorintheaggregate,couldbematerialtothefinancialstatements.Pleaseprovideto[Auditor]theinformationdescribedbelowaboutpendingorthreatenedlitigationwheretheamountofpotentiallossexceeds$X   14      : ]   %nW  2W%ǹ1.  Thenatureofthematter.(Includeadescriptionofthecaseandamountclaimed,ifspecified.) Q Ѐ2.  Theprogressofthecasetodate. K 0   3.  Thegovernment'sresponseorplannedresponse(forexample,tocontestthecasevigorouslyor E toseekanout-of-courtsettlement). (#(#  XK7p` hp x (#XK Ӏ4.  Anevaluationofthelikelihoodofunfavorableoutcome.(Categorizelikelihoodasprobable, 9 reasonablypossible,orremote.)  XT.` hp x (#p` XT0   5.  Anestimateoftheamountorrangeofpotentialloss,ifonecanbemade,forlossesconsidered -v tobeprobableorreasonablypossible. (#(# 0   6.  Thenameofthe[Governmententity]sattorneyhandlingthecaseandnamesofanyoutside !j legalcounsel/otherlawyersrepresentingoradvisingthegovernmentinthematter(DepartmentofJusticeoroutsidelawfirms). (#(# UnassertedClaimsandAssessments  "R Pleaseprovidethefollowinginformationforallunassertedclaimsandassessmentsthatyouconsiderto #F  beprobableofassertionandwhich,ifasserted,wouldhaveatleastareasonablepossibilityofan $@  unfavorableoutcomeinanamountover$X,involvingmatterstowhichyouhavedevotedsubstantiveattention. ̀1.  Adescriptionofthenatureofthematter.  Ѐ2.  Thegovernment'splannedresponseiftheclaimisasserted.   0   3.  Anevaluationofthelikelihoodofanunfavorableoutcome.(Categorizelikelihoodasprobable   orreasonablypossible.) (#(# Ѐ4.  Anestimateoftheamountorrangeofpotentialloss,ifonecanbemade.   Pleasespecificallyconfirmto[Auditor]thatourunderstandingofthefollowingiscorrect:whenever,inthecourseofperforminglegalservicesforus,withrespecttoamatterrecognizedtoinvolveanunassertedpossibleclaimorassessmentthatmaycallforfinancialstatementdisclosure,ifyouhaveformedaprofessionalconclusionthatweshoulddiscloseorconsiderdisclosureconcerningsuchpossibleclaimorassessment,asamatterofprofessionalresponsibilitytous,youwill:(1)adviseusofyourconclusion,and(2)consultwithusconcerningthequestionofsuchdisclosureandtheapplicablerequirementsofSFFASNo.5,asamended. ] Pleaseseparatelyidentifyanycaseswithrespecttowhichyouhavebeenengagedandtowhichyouhavedevotedsubstantiveattentiononbehalfofthe[Governmententity]intheformoflegalconsultationorrepresentationforwhichyoubelieveanothergovernmententitywillberesponsibleforanypotentialliability.Pleasespecificallyidentifythenatureofandreasonsforanylimitationsonyourresponsetothisrequest.Pleaseaddressyourreplyto[Auditor],andcontacthim/herat(phonenumber),whenyourreplyisavailableforpickup,andsendacopyofyourreplytome.Donothesitatetocontactmeor[Auditor]ifyouhaveanyquestionsregardingthisrequest.[Signedby]ChiefFinancialOfficer  %: !   APPENDIXH27  ILLUSTRATIVERESPONSEFROMLEGALCOUNSELCONCERNINGLITIGATION,CLAIMS,ANDASSESSMENTS"   15        7 [GeneralCounselLetterhead]   B.` hp x (#XBDate:   `    To:   ` InspectorGeneral/IndependentAuditor {  From:   ` GeneralCounsel o  Subject  Subject:0 ` LegalResponseinconnectionwiththeXXX0FinancialStatementAuditof[agency c  name] ]` (#` (#    AsGeneralCounselof[NameofAgency],IamwritinginresponsettheletterofinquiryfromtheAgencysChiefFinancialOfficerdated____,inconnectionwiththeauditof[NameofAgency]sfinancialstatementsasofandforthefiscalyearendedSeptember30,XXX0.  IcallyourattentiontothefactthatasGeneralCounselfortheAgency,IhavegeneralsupervisionoftheAgencyslegalaffairs.[Ifthegenerallegalsupervisoryresponsibilitiesofthepersonsigningtheletterarelimited,setforthacleardescriptionofthoselegalmattersoverwhichsuchpersonexercisesgeneralsupervision,indicatingexceptionstosuchsupervisionandsituationswhereprimaryrelianceshouldbeplacedonothersources.]Insuchcapacity,IhavereviewedlitigationandclaimsthreatenedorassertedinvolvingtheAgencyandhaveconsultedwithoutsidelegalcounselwithrespecttheretowhereIhavedeemedappropriate.  Subjecttotheforegoingandtothelastparagraphofthisletter,Iadviseyouthatsince[insertdateofbeginningoffiscalyearperiodunderaudit]neitherI,noranyofthelawyersoverwhomIexercisegenerallegalsupervision,havegivensubstantiveattentionto,orrepresentedtheAgencyinconnectionwith[material$   16      ]losscontingenciescomingwithinthescopeofclause(a)ofParagraph5of $@  theStatementofPolicyreferredtointhelastparagraphofthisletter,exceptasfollows: x   %: ! Ї[Describelitigationandclaimswhichfittheforegoingcriteriaasfollows:]L !((L PendingorThreatenedLitigation(excludingunassertedclaims )    0 x x(#x(# L Uh((!L a.0  Natureofthematter(includeadescriptionofthecaseandamountclaimed,if  specified). (#(# L 1((L 3   3C2  b  .3  0    Progressofthecasetodate.3CC݌ (#(# Ќ   3   3wD2  c  .3  0    Currentorintendedresponse.3wDD݌ (#(# Ќ  L  (1Ld.0  Evaluationofthelikelihoodofanunfavorableoutcome(categorizelikelihoodas   probable,reasonablypossible,orremote). (#(# e.0  Estimatedamountorrangeofpotentialloss,ifdeterminable,forlossesconsideredto   beprobableorreasonablypossible. (#(# L ( Lf.0  Nameof[Governmententity]sattorneyhandlingthecaseandnamesofanyoutside u  legalcounselrepresentingoradvisingthegovernmentinthematter. o (#(#   Withrespecttomatterswhichhavebeenspecificallyidentifiedascontemplatedbyclauses(b)or(c)ofparagraph5oftheABAStatementofPolicy,Iadviseyou,subjecttothelastparagraphofthis ] letter,asfollows:L e((L%L ((L UnassertedClaimsandAssessments(consideredtobeprobableofassertionandwhich,if K asserted,wouldhaveatleastareasonablepossibilityofanunfavorableoutcome)  E L z((L a.0  Natureofthematter.?(#(# b.0  Intendedresponseifclaimwouldbeasserted.9(#(# c.0  Evaluationofthelikelihoodofanunfavorableoutcome.(Categorizelikelihoodas 3| probableorreasonablypossible.) (#(# L E (Ld.0  Estimatedamountorrangeofpotentialloss,ifdeterminable. 'p(#(#   Theinformationsetforthhereinis[(asofthedateofthisletter)or(asof(insertdate),thedateonwhichwecommencedourinternalreviewproceduresforpurposesofpreparingthisresponse)],exceptasotherwisenoted,andIdisclaimanyundertakingtoadviseyouofchangeswhichthereaftermaybebroughttomyattentionortheattentionofourlawyersoverwhomIexercisegenerallegalsupervision.  Thisresponseislimitedby,andinaccordancewith,theABAStatementofPolicyRegarding $@  LawyersResponsestoAuditorsRequestsforInformation(December1975);withoutlimitingthe %: ! generalityoftheforegoing,thelimitationssetforthinsuchStatementonthescopeanduseofthisresponse(Paragraphs2and7)arespecificallyincorporatedhereinbyreference,andanydescriptionhereinofany losscontingenciesisqualifiedinitsentiretybyParagraph5oftheStatementandtheaccompanyingCommentary(whichisanintegralpartoftheStatement).ConsistentwiththelastsentenceofParagraph6oftheABAStatementofPolicy,thiswillconfirmascorrecttheAgencysunderstandingthatwhenever,inthecourseofperforminglegalservicesfortheAgencywithrespecttoa +&' matterrecognizedtoinvolveanunassertedpossibleclaimorassessmentthatmaycallforfinancialstatementdisclosure,IhaveformedaprofessionalconclusionthattheAgencymustdiscloseorconsiderdisclosureconcerningsuchpossibleclaimorassessment,I,asamatterofprofessionalresponsibilitytotheAgency,willsoadvisetheAgencyandwillconsultwiththeAgencyconcerningthequestionofsuchdisclosureandtheapplicablerequirementsofStatementofFederalFinancialAccountingStandards   (SFFAS)Number5, AccountingforLiabilitiesoftheFederalGovernment,asamendedbySFFAS   Number12,andInterpretationNumber2ofSFFASNumbers4and5.[Describeanyotheror   additionallimitationasindicatedbyParagraph4oftheStatement.]cc:ChiefFinancialOfficer   _ o  TRP$'3 Letter LandscapeX3''3 Letter Landscape3' LetterTAPPENDIXH3   U FORMATFORSUMMARIZINGINFORMATIONCONTAINEDINLEGALRESPONSES  FORFINANCIALREPORTINGPURPOSES _3-33(3   1      _  *d d dd * dd * X dd X */..,dd ,dd ,dd ,dd ,dd ,dd ,dd ,dd ,Fdd +  >4    ?1?> 1 e[1 F"  ?1 ?  @2@e 2 e[1 F"  @2 @  @3@e 3 e[1 F"  @3 @  @4@e 4 i_1 F "  @4 @  @5@i 5 h^4 F "  @5 @  @6@h 6 e[1 F "  @6 @  @7@e 7 A71 F "  @7 @ A{WXXSW  ReferenceKey 3)#f  xx 3]  AmountClaimed 3)#f  xx 3^  NameofCase/RelatedCases 3)#f  xx 3|^  LikelihoodofLoss 3)#f  xx 3^  Amountorrangeofpotentialloss %   %J_  DispositioninFinancialStatements @, #XSX{W]# %T   %  M   M   M   M _{WXXS  (a)#XSX{W`#ԀP{WXXS   `  (b)#XSX{W`#R/P{WXXS   #XSX{Wa#{WXXSLa  (c)#XSX{Wa#ԀUpper   {WXXSAmt.Recorded   #XSX{Wgb#{WXXSNoteDisclosure#XSX{Wb#    b  ? ! $  ? "   ? #   ? $ $  ? % $  ? & $  ? ' $  ? (  ? )    Column:  c * 3L #( L3_3 3%   3d2(  38  )3  0    333(1)333__%L &'( L 3   3e2'(  1  )3  0    3 Reference_ԀKey: {WXXSPagenumberofthelegalrepresentationletterobtainedfromGeneralCounseldiscussingthecase,orotherreferenceinformation.#XSX{Wf#3ef݌] +.. Ќ   3   3g2'(  2  )3  0    AmountClaimed: {WXXSAmountclaimedinthelitigation,claim,orassessment(ifspecified).#XSX{W)h#3gg݌W,.. Ќ   3   3h2'(  3  )3  0    NameofCase/RelatedCases 3hi݌Q-.. Ќ   3   3i2'(  4  )3  0    LikelihoodofLoss: {WXXSListtheGeneralCounselsevaluationofthelikelihoodofloss:#XSX{W}j#3i j݌K... Ќ    Options:0 P:0 . .ProbableE/..   0 ` 0 ` .` .R/P:0 . .ReasonablyPossible?0..   0 ` 0 ` .` .R:0 . .Remote91..   0 ` 0 ` .` .U:0 . .LegalCounselUnabletoDetermine3|2..  3   3m2'(  5  )3  0    AmountorRangeofPotentialLoss: 3m-m݌-v3.. Ќ    Options:0 5a:0 . .{WXXSProbable(P):Providesingleestimateorlowerendofrange,ifknown.Enter U,ifunknown.(Also,providecolumn  totals.)#XSX{W^n#..   0 ` 0 ` .` .5b:0 . .{WXXSReasonablyPossible(R/P):providesingleestimateorlowerendofrange,ifknown.Enter U,ifunknown.#XSX{Wo#{WXXSԀ(Also,provide z column.)#XSX{WMp#t..   0 ` 0 ` .` .5c:0 . .{WXXSIftheestimatein5aor5bisarange,provideupperendofrange;otherwise,enter n/a.#XSX{Wq#= ..   3   3q2'(  6  )3  0    DispositioninFinancialStatements:#XSXXXSO#XSXXXSԀAmountRecorded: {WXXSIfapplicable,providedollaramountrecordedasaliabilityinthefinancial 1 z statements.(Also,providecolumntotals.)#XSX{Wr#3qr݌+ t.. Ќ   3   3s2'(  7  )3  0    DispositioninFinancialStatements#XSXXXSr#XSXXXS:NoteDisclosure: {WXXSIfapplicable,indicatebynotereferencenumberwhethercaseinformationis  = separatelydisclosedorincludedinamountsdisclosed#XSX{Wt#{WXXSinnotestothefinancialstatements.#XSX{Wu#3s't݌ 7 .. Ќ  =d   v  #XSXXXSt#XSXXXS   `     TRX3' LetterP$'3 Letter Landscape3' Letter'3 Letter LandscapeTAPPENDIXI1    AGREEDUPONPROCEDURES:RETIREMENT,HEALTHBENEFITS,ANDLIFEINSURANCEWITHHOLDINGS/CONTRIBUTIONSANDSUPPLEMENTALSEMIANNUALHEADCOUNTREPORTSUBMITTEDTOTHEOFFICEOFPERSONNELMANAGEMENT    x OBJECTIVE   B.` hp x (#XBXSXXXSXE XXXSXSX XXE  XSXXXSy  yz݌̌ XXXSXXXSXSXXXSXSXXXS  B.` hp x (#XBXSXXXSXE XXXSXSX XXE  XSXXXSD{  AssisttheOfficeofPersonnelManagement(OPM)inassessingthereasonablenessofRetirement, {  HealthBenefits,andLifeInsurancewithholdingsand/contributionsaswellasenrollmentinformationsubmittedviatheSemiannualHeadcountReport.D{|݌̌ XXXSXXXSXSXXXSXSXXXS  B.` hp x (#XBXSXXXSXE XXXSXSX XXE  XSXXXS}  }~݌̌ XXXSXXXSXSXXXSXSXXXS  B.` hp x (#XBXSXXXSXE XXXSXSX XXE  XSXXXS  Y݌̌ XXXSXXXSXSXXXSXSXXXS  B.` hp x (#XBXSXXXSXE XXXSXSX XXE  XSXXXS  BACKGROUND݌ ] Ќ XXXSXXXSXSXXXSXSXXXS  B.` hp x (#XBXSXXXSXE XXXSXSX XXE  XSXXXSт  т݌̌ XXXSXXXSXSXXXSXSXXXS  B.` hp x (#XBXSXXXSXE XXXSXSX XXE  XSXXXSl  TheAgreedUponProcedures(AUPs)relatingtothesubmissiontoOPMofwithholdings/contributions Q forRetirement,HealthBenefits,andLifeInsurancerelatetotheuseoftheRetirementandInsuranceTransferSystem(_RITS_)._RITS_ԀistheauthorizedmethodofsubmissionofwithholdingandcontributioninformationtoOPM.Agencypayrolloffices(APOs)thataretechnicallyunabletotransmitbenefitinformationtoOPMvia_RITS_ԀmaycontinuetosubmitwithholdingsandcontributionsviathehardcopySF2812(andSF2812A), ReportofWithholdingsandContributionsforHealthBenefits,LifeInsuranceandRetirementtoOPM..TheAUPstobeappliedtothoseAPOssubmittingwithholdingsandcontributionstoOPMviathehardcopySF2812formsaresimilartothosefor_RITS_.lE݌̌ XXXSXXXSXSXXXSXSXXXS  B.` hp x (#XBXSXXXSXE XXXSXSX XXE  XSXXXS  ݌̌ XXXSXXXSXSXXXSXSXXXS  B.` hp x (#XBXSXXXSXE XXXSXSX XXE  XSXXXSH  H!݌̌ XXXSXXXSXSXXXSXSXXXS  B.` hp x (#XBXSXXXSXE XXXSXSX XXE  XSXXXS  PROCEDURES݌  ^ Ќ XXXSXXXSXSXXXSXSXXXS  B.` hp x (#XBXSXXXSXE XXXSXSX XXE  XSXXXS  r݌̌ XXXSXXXSXSXXXSXSXXXS  B.` hp x (#XBXSXXXSXE XXXSXSX XXE  XSXXXS1   GainanunderstandingoftheAPOsproceduresforreconcilingpayrollinformationto_RITS_  "R submissions.ObtaintheAPOsmostrecentSemiannualHeadcountReportsubmittedtoOPMandasummaryof_RITS_Ԁsubmissionsforthecurrentfiscalyear.Randomlyselectthree_RITS_Ԁsubmissionsforthecurrentfiscalyear,oneofwhichcoincideswiththemostrecentSemiannualHeadcountReport.Obtainpayrollinformationfortheperiodscoveredbythe_RITS_Ԁsubmissionsselected.1 ݌̌ XXXSXXXSXSXXXSXSXXXS  B.` hp x (#XBXSXXXSXE XXXSXSX XXE  XSXXXS=  =݌̌ XXXSXXXSXSXXXSXSXXXS  B.` hp x (#XBXSXXXSXE XXXSXSX XXE  XSXXXSՕ  h h?+ ` hp x X?Notethat,asusedintheseAUPs,thetermpayrollinformationreferstoallpayroll '."# information,whetheritbeapayrollregister,payrolldatafile,orotherpayrollsupportdata. Օ݌ )"$% Ќ! XX!XSXXXSXSXXXSXSXXXS   *%& B.` hp x (#XBXSXXXSXE XXXSXSX XXE  XSXXXSϘ  h h 1.Compare_RITS_Ԁsubmissiondatawithpayrollinformationbyperformingthefollowingprocedures:Ϙ݌  Ќ XXXSXXXSXSXXXSXSXXXS  XSXXXSXE XXXSXSX XXE  XSXXXS  ݀݌  ЌXSXXXSXSXXXSXSXXXS  B.` hp x (#XBXSXXXSXE XXXSXSX XXE  XSXXXSk  B.` hp x (#XB1.a.Footthepayrollinformation.Iftheauditorchoosestouseasubsetofpayrollinformation,the  subsetmustberepresentativeofallpayrollinformationandbesubjecttothesamecontrolproceduresoverpayrollinformationassociatedwiththethree_RITS_Ԁsubmissionsselected.kD݌̌ XXXSXXXSXSXXXSXSXXXS  B.` hp x (#XBXSXXXSXE XXXSXSX XXE  XSXXXS  {݌̌ XXXSXXXSXSXXXSXSXXXS  B.` hp x (#XB1.b.Traceemployeewithholdinginformationshownonthepayrollinformationfootedinstep1.a.   forRetirement,HealthBenefits,andLifeInsurance(asadjustedforreconcilingitems)totherelatedamountsshownonthe_RITS_Ԁsubmissionforthecorrespondingperiod. B.` hp x (#XB B.` hp x (#XB1.c.Obtainsupportfordifferencesbetweenamountsshownonthepayrollregisterorderivedfromfilesfootedinstep1.a.andamountsshownonthe_RITS_Ԁsubmissionselected.1.d.Tracereconcilingitemstosupportingdocumentationandverifyagreement.1.e.Footeach_RITS_Ԁsubmissionselected. B.` hp x (#XBReportanydifferencesorexceptionsthatareunsupportedorunsubstantiated,orrepresentanerror.2.Revieworperformareconciliationofpayrollinformation,including_RITS_Ԁdata,totheagencysgeneralledger.Forthethreepayperiodsselected,reviewtheagencysreconciliationofpayrolltransactionstoitsgeneralledgerexpenseandcashdisbursementaccountsor,ifsuchreconciliationdoesnotexist,performthereconciliation.Effectivein1999,agenciesshouldpostRetirement,HealthBenefits,andLifeInsurancewithholdingandcontributionstoStandardGeneralLedger(SGL)account6400!BenefitsProgramExpense;withholdingsto6400Nandcontributionsto6400G.(For1998, 'p postingtoaccount6100!OperatingExpenses/ProgramCosts!wasacceptable.)ReportwhentheAPOdidnotpreparethereconciliation.Alsoreportanyunsupportedorunsubstantiateddifferences(i.e.,grossratherthannet)inthetotalpayrollpaidfortheselectedpayperiodandtheamountrecordedinthegeneralledgerthatexceeds5percentoftotalpayroll.Reportanydifferences(i.e.,grossratherthannet)betweenthewithholdingandcontributionsreportedonthe_RITS_ԀsubmissionsandtheamountspostedtotheSGLaccountsgreaterthan1percent.Also,for_RITS_Ԁdata,reportpostingstoanySGLaccount,otherthanaccount6400.B.` hp x (#XB3.AgreeemployeesalaryandcontributionstotheSF50( NotificationofPersonnelAction),authorizedwithholding/contributions,andbenefitprogramelections.Fromthepayrollinformationcorrespondingtothethree_RITS_Ԁsubmissionsselectedfortestingabove,randomlyselectatotalof25individualswhoarecoveredbyRetirement,HealthBenefits,BasicLifeInsurance,andatleastoneLifeInsuranceOption(A,B,orC).ObtaintheOfficialPersonnelFile(OPF)foreachindividualselected,andperformthefollowingprocedures:XSXXXSXE XXXSXSX XXE  XSXXXS  "݌ +&' ЌXSXXXSXSXXXSXSXXXS  B.` hp x (#XB3.a.Verifythatthebasesalaryusedforpayrollpurposesanduponwhichwithholdingsand  contributionsgenerallyarebasedagreeswiththebasesalaryreflectedontheemployees'SF50.3.b.ForRetirement,verifythatamountswithheldandcontributedforparticipantsintheCivilServiceRetirementSystem(CSRS)andtheFederalEmployeesRetirementSystem(FERS)arecorrect,basedupontheofficialwithholdingsandcontributionratesrequiredbylaw.[SeePayrollOffice   LettersP9710andP9707.] B.` hp x (#XB B.` hp x (#XB3.c.ForHealthBenefits,verifythatemployeewithholdingsandagencycontributionsagreewiththeofficialsubscriptionratesissuedbyOPMfortheplanandoptionelectedbytheemployees,asdocumentedbyaHealthBenefitsRegistrationForm(SF2809)intheemployees'OPF.See {  PayrollOfficeLetterP9810,for1999rates. u  XSXXXSXE XXXSXSX XXE   XSXXXS n  h h?+ ` hp x X?Ifanemployeeelectedhis/hercurrenthealthplanviaEmployeeExpress,therelikely i  willnotbedocumentationintheOPF.Inthesecircumstances,theauditormustseektoobtainenrollmentdocumentationfromEmployeeExpress,whichmaintainsahistoryofallFEHBtransactionsenteredbyemployees.RatherthanrequestingdocumentationdirectlyfromEmployeeExpress,auditorsshouldworkthrougheachagencyspersonneloffice.EmployeeExpresskeyrepresentativeshavebeenapprizedofthispotential_requirement.n ݌ E ЌXSXXXSXSXXXS3 3  h hE.` hp x (#XEB.` hp x (#XBXSXXXSXE XXXSXSX XXE  XSXXXS  B.` hp x (#XB3.d.ForLifeInsurance,verifythatBasicLifeInsurancewaselectedbytheemployees,as 9 documentedbyaLifeInsuranceElectionForm(SF2817),inhis/herOPFandthatwithholdingsandcontributionsarecorrect.݌̌ XXXSXXXSXSXXXSXSXXXS  B.` hp x (#XBXSXXXSXE XXXSXSX XXE  XSXXXS|  B.` hp x (#XB|U݌̌ XXXSXXXSXSXXXSXSXXXS  B.` hp x (#XBXSXXXSXE XXXSXSX XXE  XSXXXSV  B.` ` hp x (#XB P  i. ` Foremployeewithholdings:Roundtheemployeesannualbasesalarytothenearest !j thousanddollarsandadd$2,000.Forpayperiodsendingbefore4/24/99,dividethistotalby1,000andmultiplyby$0.165(forAPOswithbiweeklypayperiods)or$0.3575(forAPOswithmonthlypayperiods).Forpayperiodsbeginningonorafter4/24/99,dividethistotalby1,000andmultiplyby$0.155(forAPOswithbiweeklypayperiods)or$0.3358(forAPOswithmonthlypayperiods.V/݌̌ X` XXSXXXSXSXXXSXSXXXS  PB.` hp x (#XBXSXXXSXE XXXSXSX XXE  XSXXXSj  jC݌̌ XXXSXXXSXSXXXSXSXXXS  B.` hp x (#XBXSXXXSXE XXXSXSX XXE  XSXXXS  B.` ` hp x (#XB P  ii. ` Foragencycontributions:Dividetheemployeewithholdingsderivedinstep3.d.i.by $@  two.݌̌ X` XXSXXXSXSXXXSXSXXXS  PB.` hp x (#XBXSXXXSXE XXXSXSX XXE  XSXXXS  |݌̌ XXXSXXXSXSXXXSXSXXXS  B.` hp x (#XBXSXXXSXE XXXSXSX XXE  XSXXXSI  3.e.Also,forLifeInsurance,verifyOptionalcoveragewaselected,asdocumentedbyanSF2817in '."# theemployeesOPF,andthatwithholdingsarecorrect.ThewithholdingratesforOptionsA,B,andCarebasedupontheageoftheemployeeandtheamountofcoverageelected.[Seethe FEGLI )"$% DescriptionandCertificateHandbookforwithholdingratesapplicabletopayperiodsendingbefore4/24/99andtheappropriate FEGLIProgramBookletforpayperiodsbeginningonor +&' after4/24/99.]Reportanydifferencesorexceptionsthatareunsupportedorunsubstantiated,or  representanerror.I"݌̌ XXXSXXXSXSXXXSXSXXXS  B.` hp x (#XBXSXXXSXE XXXSXSX XXE  XSXXXS  s݌̌ XXXSXXXSXSXXXSXSXXXS  B.` hp x (#XBXSXXXSXE XXXSXSX XXE  XSXXXS2   ?+ ` hp x X?Note:Forstep3.e.only,randomlyselectadditionalindividualsasnecessarysothat  tenindividualsareselectedforeachLifeInsuranceoption(i.e.,OptionsA,B,andC).2 ݌̌ XXXSXXXSXSXXXSXSXXXS  B.` hp x (#XBXSXXXSXE XXXSXSX XXE  XSXXXS>  >݌̌XSXXXSXSXXXSXSXXXS  B.` hp x (#XBXSXXXSXE XXXSXSX XXE  XSXXXS  4.Randomlyselectatotaloftenemployees,whohavenoHealthBenefitswithholdings,fromthe   payrollinformationcorrespondingtothethree_RITS_Ԁsubmissionsselectedfortestingabove.VerifyfromareviewoftheOPFthattheemployeesdidnotelectHealthBenefitscoveragethismaybeprovenbytheabsenceofanelectionformSF2809intheOPF,iftheemployeeneverelectedcoverage.Alternatively,foranemployeewhocanceledenrollmentafterhavingbeenenrolledintheHealthBenefitsProgramlookforaSF2809withSectionEchecked,indicatingelectionofcoveragecancellation.Reportanyexceptionsthatareunsupportedorunsubstantiated,orrepresentanerror.]݌̌ XXXSXXXSXSXXXSXSXXXS  X X?+ ` hp x X?Toconcludewithfinalitythattherewasnoelectionofhealthbenefits,theauditor c  mustfirstconfirmwithEmployeeExpress,viatheagencyspersonneloffice,thatnoelectionwasmadeorcoveragecanceledbythismeans. X XB.` hp x (#XBB.` hp x (#XBXSXXXSXE XXXSXSX XXE  XSXXXS  5.RandomlyselectatotaloftenemployeeswhohavenoLifeInsurancewithholdingsfromthepayroll K informationcorrespondingtothethree_RITS_Ԁsubmissionsselectedfortestingabove.VerifythattheemployeeseitherwaivedorcanceledLifeInsurancecoverage.ThiswillbeprovenbythepresenceintheOPFofanSF2817,bywhichanemployeewaivesorcancelsBasicLifeInsurancecoverage.Reportanyexceptions.݌̌ XXXSXXXSXSXXXSXSXXXS  C $(&C-- ,E1` hp x (#XE 2  6  .3    CalculatetheheadcountreflectedontheSemiannualHeadcountReportselectedfortestingabove, 'p asfollows.  ,H.` hp x (#,` XHӀ ,B.` hp x (#XB6.a.ObtainexistingpayrollinformationsupportingtheselectedSupplementalSemiannualHeadcountreport.Ifexistingpayrolldataisnotavailable,haveAPOpersonnelperformapayrollsystemquerythatsummarizesdetailedpayrolldatasupportingtheSupplementalSemiannualHeadcountReport,asfollows: ,C  $$C--E.44` hp x (#XE 2 3   4 BenefitCategory[seeSemiannualHeadcountReport]. $@  H.44` hp x (#44` XH2 3   4 DollarAmountofwithholdingsandcontributions. %: ! H.44` hp x (#44` XH2 3   4 NumberEnrolled(deductionsmade/nodeductions). &4!" H.44` hp x (#44` XH2 3   4 CentralPersonnelDataFileCode. '."# H.44` hp x (#44` XH2 3   4 AggregateBaseSalary. ((#$   ,H.` hp x (#44` XH   `  ItmaybethatthepayrollinformationneededtorecalculatetheselectedHeadcountReportisnolongeravailableonthepayrollsystem.Ifsuchisthecase,querythepayrollinformationcurrently +&' residingonthepayrollsystemandcompareittotheselectedHeadcountReport.Accountforanysignificantpersonnelchangesthatmayaffectwithholdings,contributions,andnumbersofemployeesenrolled. X,B+ ` hp x (#XBXSXXXSXE XXXSXSX XXE  XSXXXS"  ,XB.` hp x (#XB6.b.RecalculatetheHeadcountreflectedontheSemiannualHeadcountReport.Asuggested   methodofrecalculatingtheHeadcountisasfollows:(1)estimatethenumberofemployeesperpayrollregisterpagebycountingtheemployeeslistedonseveralpages,(2)countthenumberofpagesinthepayrollregister,and(3)multiplythenumberofemployeesperpagebythenumberofpages,orcount(usingacomputerauditroutine)thenumberofemployeesonthepayrolldatafilefortheperiod." ݌̌ ,,$ XX$XSXXXSXSXXXSXSXXXS   X,B+ ` hp x (#XBXSXXXSXE XXXSXSX XXE  XSXXXS-  ,XB.` hp x (#XB-݌̌ ,,$ XX$XSXXXSXSXXXSXSXXXS   X,B+ ` hp x (#XBXSXXXSXE XXXSXSX XXE  XSXXXS7  ,XB.` hp x (#XB6.c.Comparetheresultsofpayrollinformationfromstep6.awiththecalculatedheadcountfrom u  step6.btotheinformationshownontheSemiannualHeadcountReport.7݌̌ ,,$ XX$XSXXXSXSXXXSXSXXXS   X,B+ ` hp x (#XBXSXXXSXE XXXSXSX XXE  XSXXXS  ,XB.` hp x (#XB݌̌ ,,$ XX$XSXXXSXSXXXSXSXXXS  E.` hp x (#XEXSXXXSXE XXXSXSX XXE  XSXXXS  B.` hp x (#XB6.d.Reportanydifferences(i.e.,grossratherthannet)greaterthan2percentbetweenthe c  headcountreportingontheagency'sSemiannualHeadcountReportandpayrollinformationfromstep6.aandthecalculatedHeadcountfromstep6.b.݌̌$ XX$XSXXXSXSXXXSXSXXXS  ,E.` hp x (#XEC $$C ,E1` hp x (#XE 7.  CalculateemployerandemployeecontributionsforRetirement,HealthBenefits,andLifeInsurance. K   ,H.` hp x (#,` XH   ` hB.` hp x (#XB7.a.CalculateRetirementwithholdingsandcontributionsforthethreepayperiodsselected,asfollows: hB.` hp x (#XB X?+ ` hp x (#X?XSXXXSXE XXXSXSX XXE  XSXXXS  C  $$C-- X<(` ` hp x (#X< 2  i  .3   ` MultiplytheCSRSandFERSpayrollbasebythewithholdingandemployer -v contributionratesrequiredbylaw.݌̌  X` ` XXSXXXSXSXXXSXSXXXS   X?+ ` hp x (#X?XSXXXSXE XXXSXSX XXE  XSXXXSF  XB.` hp x (#XBF*݌̌  XXXSXXXSXSXXXSXSXXXS   X?+ ` hp x (#X?XSXXXSXE XXXSXSX XXE  XSXXXSG  X<(` ` hp x (#X< 2  ii  .3   ` Comparethecalculatedtotalswithrelatedamountsshownonthe_RITS_Ԁsubmissions. d Reportanyvariances(i.e.,grossratherthannet)betweenthecalculatedamountsandtheamountsreportedonthe_RITS_Ԁsubmissionsgreaterthan5percent.G+݌̌  X` ` XXSXXXSXSXXXSXSXXXS   X?+ ` hp x (#X?XSXXXSXE XXXSXSX XXE  XSXXXS  XB.` hp x (#XB݌̌  XXXSXXXSXSXXXSXSXXXS  hB.` hp x (#XB7.b.CalculateemployeewithholdingsandemployercontributionsforHealthBenefitsforthethree #L payperiodsselected,asfollows: hB.` hp x (#XB X?+ ` hp x (#X?XSXXXSXE XXXSXSX XXE  XSXXXS)  C  $$C-- X<(` ` hp x (#X< 2  i  .3   ` MultiplythenumberofemployeesenrolledineachHealthBenefitplanandplanoption %: ! bytheemployeewithholdingsandemployercontributionsfortheplanandoption.) ݌̌  X` ` XXSXXXSXSXXXSXSXXXS   X?+ ` hp x (#X?XSXXXSXE XXXSXSX XXE  XSXXXS  X<(` ` hp x (#X<݌ '."# Ќ  X` ` XXSXXXSXSXXXSXSXXXS   X?+ ` hp x (#X?XSXXXSXE XXXSXSX XXE  XSXXXS  X<(` ` hp x (#X<ii. ` Sumthetotalsinstep7._b.i._ԀandcomparetheresultwiththeHealthBenefitwithholding ((#$ andcontributionamountsshownonthe_RITS_Ԁsubmissions.Reportanyvariances(i.e.,grossratherthannet)betweenthecalculatedamountsandtheamountsreportedonthe_RITS_Ԁsubmissionsgreaterthan5percent.݌ +&' Ќ  X` ` XXSXXXSXSXXXSXSXXXS   X?+ ` hp x (#X?XSXXXSXE XXXSXSX XXE  XSXXXS    h ݌̌ X XXXSXXXSXSXXXSXSXXXS   X?+ ` hp x (#X?XSXXXSXE XXXSXSX XXE  XSXXXS5   hXB.` hp x (#XB7.c.CalculatetheBasicLifeInsuranceemployeewithholdingsandemployercontributionsforthe  threepayperiodsselectedasfollows:5  ݌̌ h! XX!XSXXXSXSXXXSXSXXXS   X?+ ` hp x (#X?XSXXXSXE XXXSXSX XXE  XSXXXS  XB.` hp x (#XB݌̌  XXXSXXXSXSXXXSXSXXXS   X?+ ` hp x (#X?XSXXXSXE XXXSXSX XXE  XSXXXS  C  $$C-- X<(` ` hp x (#X< 2  i  .3   ` HaveAPOpersonnelperformapayrollsystemquerytodeterminethetotalnumberof   employeeswithBasicLifeInsuranceProgramcoverageandtheaggregateannualbasicpayforallemployeeswithBasicLifeInsuranceProgramcoverage.(Seethe   CSRS/FERSHandbook,Section30A1.12fordefinitionofbasicpay.)݌   Ќ  X` ` XXSXXXSXSXXXSXSXXXS   X?+ ` hp x (#X?XSXXXSXE XXXSXSX XXE  XSXXXS%  XB.` hp x (#XB% ݌̌  XXXSXXXSXSXXXSXSXXXS  <(` ` hp x (#X< 2  ii  .3   ` Foremployeewithholdings:Addtheproductof2,000timesthenumberofemployees   withBasicLifeInsurancecoveragetotheaggregateannualbasicpayforallemployeesselected.ThisrepresentstheestimatedtotalBasicLifeInsurancecoverage.Forpayperiodsendingbefore4/24/99,dividethistotalby1,000andmultiplyby$0.165(forAPOswithbiweeklypayperiods)or$0.3575(forAPOswithmonthlypayperiods).Forpayperiodsbeginningonorafter4/24/99,dividethistotalby1,000andmultiplyby$0.155(forAPOswithbiweeklypayperiods)or$0.3358(forAPOswithmonthlypayperiods).  X?+ ` hp x (#` ` X?C  $$C X<(` ` hp x (#X< 2  iii  .3   ` Comparetheresultinstep7._c.ii_.tothewithholdingsforBasicLifeInsurancecoverage K reportedonthe_RITS_Ԁsubmission.Reportanydifference(i.e.,grossratherthannet)betweentheestimateandtheamountofwithholdingsreportedonthe_RITS_Ԁsubmissiongreaterthan5percent.  X?+ ` hp x (#` ` X? X<(` ` hp x (#X< 2  iv  .3   ` Foragencycontributions:Dividetheresultsofstep7._c.ii_.bytwothisapproximates -v agencycontributions,whichareonehalfofemployeewithholdings.Comparethisresulttotheamountreportedonthe_RITS_Ԁsubmission.andreportanydifferences(i.e.,grossratherthannet)betweentheestimateandtheamountreportedonthe_RITS_submissiongreaterthan5percent.  B.` hp x (#` ` XBB.` hp x (#XBXSXXXSXE XXXSXSX XXE  XSXXXSf   hB.` hp x (#XB7.d.CalculatetheOptionAandOptionCLifeInsurancecoveragewithholdingsforthethreepay  "R periodsselectedbyusingtheresultsofpayrollsystemqueriesfromstep6.aorhavetheAPOpersonnelperformapayrollsystemquerythatsummarizesthenumberofemployees,byagegroup,whoelectedOptionsAandCduringthepayperiodsselected.f ?!݌̌ XXXSXXXSXSXXXSXSXXXS  hB.` hp x (#XB B.` ` hp x (#XB P  i. ` MultiplythenumberofemployeesineachagegroupbytheappropriaterateforOption &4!" AorOptionC,inaccordancewiththeratesforagegroupsprovidedintheFEGLIDescriptionandCertificateHandbookforpayperiodsendingbefore4/24/99andtheFEGLIProgramBookletforpayperiodsbeginningonorafter4/24/99.Reportanydifferences(i.e.,grossratherthannet)greaterthan2percentforOptionAand/orOptionC. +&'  P X?+ ` hp x (#` X? X<(` ` hp x (#X< ii. ` ContributionsforOptionBcannotbetestedforreasonablenessbythesemethods  becauseofthenumberofvariablesinvolvedinelectingthisoption. B.` hp x (#` ` XBXSXXXSXE XXXSXSX XXE  XSXXXS'  '(݌̌ ` ` XXXSXXXSXSXXXSXSXXXS  B.` hp x (#` ` XBXSXXXSXE XXXSXSX XXE  XSXXXSy)  INQUIRIES y)R*݌   Ќ ` ` XXXSXXXSXSXXXSXSXXXS  B.` hp x (#` ` XBXSXXXSXE XXXSXSX XXE  XSXXXS:+  QuestionsontheapplicationoftheAUPsshouldbedirectedtoOPMsFinancialPolicyStaffat(202)   6060606,orviatheInternetat4_<   5        http://www.finance@opm.gov!-       6,,` 3 33 3  7_-. :+,݌   Ќ ` ` XXXSXXXSXSXXXS  _  ] APPENDIXI2ILLUSTRATIVEINDEPENDENTACCOUNTANT'SREPORTONTHE  XSXXXSXE XXXSXSX XXE    XSXXXS  H/  APPLICATIONOFAGREED-UPONPROCEDURESH/0 /Ԍ  Ќ  XSXXXSXSXXXS  TotheInspectorGeneral   U.S.OfficeofPersonnelManagement: TextMovedHere:1    Wehaveperformedtheproceduresdescribedbelow(orintheattachment),whichwereagreedtoby {  theInspectorGeneral,ChiefFinancialOfficer,andtheAssociateDirectorforRetirementandInsuranceoftheU.S.OfficeofPersonnelManagement(_OPM_),solelytoassistwithrespecttotheemployeewithholdingsandemployercontributionsreportedontheReportofWithholdingsandContributionsforHealthBenefits,LifeInsurance,andRetirementforthepayrollperiodsended[ 3333 statedates]and  c  Supplemental SemiannualHeadcountReportasof[ 3333 statedate].Thisengagementtoapplyagreed ] uponprocedureswasperformedinaccordancewiththestandardsestablishedbytheAmericanInstituteofCertifiedPublicAccountants.ThesufficiencyoftheproceduresissolelytheresponsibilityoftheInspectorGeneral,ChiefFinancialOfficer,andtheAssociateDirectorforRetirementandInsuranceof_OPM_.Consequently,wemakenorepresentationregardingthesufficiencyoftheproceduresdescribedbeloweitherforthepurposeforwhichthisreporthasbeenrequestedorforanyotherpurpose.  9  EndOfMovedText 3|  Insertthefollowingunlesstheproceduresandfindingsareinanattachment. 'p Theproceduresandtheassociatedfindingsareasfollows:   `  [Insertproceduresandfindings] !X Wewerenotengagedto,anddidnot,performanaudit,theobjectiveofwhichwouldbetheexpressionofanopiniononthewithholdingsandcontributionsforHealthBenefits,LifeInsurance,andRetirement,andtheHeadcountReportofthe[nameofagency].Accordingly,wedonotexpresssuchanopinion.Hadweperformedadditionalprocedures,othermattersmighthavecometoourattentionthatwouldhavebeenreportedtoyou.ThisreportisintendedsolelyfortheuseoftheInspectorGeneral,ChiefFinancialOfficer,andtheAssociateDirectorforRetirementandInsuranceof_OPM_Ԁandshouldnotbeusedbythosewhohavenotagreedtotheproceduresandtakenresponsibilityforthesufficiencyoftheproceduresfortheirpurposes. +&' [Signature]  [Date]  cc:  ChiefFinancialOfficer of_OPM_   򀀀   AssociateDirector _for of_ RetirementandInsuranceof_OPM_#XSXXXSv#