An independent auditor last week issued an adverse opinion on the Department of Homeland Security’s internal controls over its financial reporting due to various weaknesses and deficiencies, although KPMG gave the department a clean opinion on its financial statements.
The clean opinion on the department’s consolidated financial statements marks the 10th straight year of success in this area.
“In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the financial position of DHS as of September 30, 2022 and 2021, and its net costs, changes in net position, budgetary resources, and custodial activity for the years then ended in accordance with U.S. generally accepted accounting principles,” KPMG says.
The audit was released last Thursday by the DHS Office of Inspector General.
Internal control weaknesses have been a persistent problem at DHS for years. The audit found four material weakness in this area: information technology controls and information systems; financial reporting; insurance liabilities; and new system obligations. Significant deficiencies were found related to seized and forfeited property, and grants management, and non-compliance with the Federal Managers’ Financial Integrity Act of 1982 and Federal Financial Management Improvement Act of 1996.
Stacy Marcott, the acting chief financial officer at DHS, agreed with the audit’s conclusions.
“The department continues to prioritize maturing information technology controls and is implementing an aggressive plan to modernize or financial systems,” Marcott said in a Nov. 14 memorandum to the DHS IG. “In early FY 2022, the United States Coast Guard (USCG) migrated to our new Financial Systems Modernization Solution. Migrating a complex system to a new platform presented challenges we worked to overcome throughout the year. Our focus for FY 2023 is to apply these lessons learned and opportunities to refine USCG financial system performance, accounting, and reporting.”