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

UNCLASSIFIED January 17, 2020 INFORMATION MEMO FOR THE SECRETARY FROM: OIG – Steve A. Linick SUBJECT: Independent Auditor’s Report on the U.S. Department of State FY 2019 and FY 2018 Consolidated Financial Statements (AUD-FM-20-18) An independent external auditor, Kearney & Company, P.C., was engaged to audit the consolidated financial statements of the U.S. Department of State (Department) as of September 30, 2019 and 2018, and for the years then ended; to provide a report on internal control over financial reporting; to report on whether the Department’s financial management systems substantially complied with the requirements of the Federal Financial Management Improvement Act of 1996 (FFMIA); and to report any reportable noncompliance with laws, regulations, contracts, and grant agreements it tested. The contract required that the audit be performed in accordance with auditing standards generally accepted in the United States of America and Office of Management and Budget audit guidance. In its audit of the Department’s FY 2019 and FY 2018 financial statements, Kearney & Company found • the consolidated financial statements present fairly, in all material respects, the financial position of the Department as of September 30, 2019 and 2018, and its net cost of operations, changes in net position, and budgetary resources for the years then ended, in accordance with accounting principles generally accepted in the United States of America; • no material weaknesses 1 in internal control over financial reporting; • six significant deficiencies 2 in internal control, specifically in the areas of property and equipment, budgetary accounting, validity and accuracy of unliquidated obligations, intragovernmental revenue, financial reporting, and information technology; and 1 A material weakness is a deficiency, or 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. 2 A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Office of Inspector General | U.S. Department of State | 1700 North Moore Street | Arlington, Virginia 22209 www.stateoig.gov UNCLASSIFIED 44 | U nited S tates D epartment of S tate 2019 A gency F inancial R eport FINANCIAL SECTION | OIG TRANSMITTAL