U.S. Department of State Fiscal Year 2019 Agency Financial Report

We fully understand and embrace our leadership role in promoting strong and effective internal controls. This commitment is fundamental to our business and success. The Department maintains a robust system of internal controls that are validated by senior leadership. For 2019, no material weaknesses in internal controls were identified by senior leadership and no material weaknesses in internal controls over financial reporting were identified by the Senior Assessment Team or the Management Control Steering Committee. As a result, the Secretary was able to provide reasonable assurance on the effectiveness of the Department’s overall internal controls and the internal controls over financial reporting in accordance with the Federal Managers’ Financial Integrity Act (FMFIA). As highlighted in the AFR, the Department does not have any programs at risk for making significant improper payments. We continuously conduct payment risk assessments and recapture audits, as well as verifications against Treasury’s Do Not Pay databases. In their annual assessment, the OIG found the Department’s improper payments program to be in compliance with the Improper Payments Information Act (IPIA), as amended. Finally, I am pleased to report that last year, in recognition of the exceptional quality of our AFR, the Association of Government Accountants awarded the Department the prestigious Certificate of Excellence in Accountability Reporting . The independent external annual audit process is another essential part of our commitment to strong corporate governance and effective internal controls. The audited Financial Statements in the AFR represent the culmination of a rigorous process with our partners, the Office of the Inspector General (OIG) and the Independent Auditor, Kearney & Company. Given the financial complexities and unpredictability of the global operating environment of the Department, there are always opportunities and challenges to address and issues that require further clarification as we meet Government-wide compliance and accounting standards. This year was no different. As communicated to the Office of Management and Budget (OMB) in August, a transition of independent financial auditors late in the fiscal year required the OIG and the Department to jointly request a 60-day extension to January 18, 2020, to fully complete the audit work on the Department’s financial statements. We appreciate the thoughtful consideration of all parties to ensure a comprehensive result was reached. I would like to thank all involved for their collaborative and professional efforts throughout the audit process. For the year in which the Department celebrated its 230th anniversary, I am pleased to report the Department has received an unmodified (“clean”) audit opinion on its 2019 Financial Statements, with no material weaknesses in internal controls over financial reporting identified by the Independent Auditor. While we are pleased with what was accomplished this year, we recognize there are several items noted in the AFR and the Independent Auditor’s Report that will require our continued attention and new focus. I also know the Department’s outstanding team of financial professionals around the world and in the Bureau of the Comptroller and Global Financial Services, of which I am extremely privileged to be a part, are up to the task. As champions of American Diplomacy, we are committed to be efficient and effective stewards of the Department’s limited resources to further its vital mission. Sincerely, Jeffrey C. Mounts Acting Comptroller January 17, 2020 2019 A gency F inancial R eport U nited S tates D epartment of S tate | 43 MESSAGE FROM THE COMPTROLLER | FINANCIAL SECTION