Financial Statement Audit Report: DOE-OIG-18-40

July 17, 2018

Management Letter on the Audit of the Department of Energy’s Consolidated Financial Statements for Fiscal Year 2017

This audit was conducted by the Department of Energy’s contracting auditor, KPMG LLP, with the objective of analyzing the Department’s internal control over financial reporting in Fiscal Year 2017 consolidated financial statements.

Based on auditing standards that are generally accepted in the United States of America, the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States and the Office of Management and Budget Bulletin No. 17-03, Audit Requirements for Federal Financial Statements, KPMG LLP considers a deficiency in internal control to exist when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis.  A material weakness is considered a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected, on a timely basis.  A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is considered less severe than a material weakness, yet important enough to merit attention by those charged with governance. 

During their audit, KPMG LLP identified a deficiency in internal controls over identifying and recording environmental liabilities accurately, completely, and timely that they considered to be a significant deficiency, and communicated their findings in this report.  Specifically, KPMG LLP noted 12 new findings and 17 recommendations that were issued during the course of the Fiscal Year 2017 Audit of the Department of Energy’s Consolidated Financial Statements, as well as the status of prior year findings.  These findings and recommendations, all of which have been discussed with the appropriate members of management, are intended to improve internal control or result in other operating efficiencies.  KPMG LLP issued a separate management letter addressing information technology control deficiencies.

Department management fully or partially concurred with all but two of KPMG LLP’s recommendations and had taken or planned to take corrective actions.  Management’s responses are included with each finding.

Topic: Management & Administration