U.S. Department of State Fiscal Year 2020 Agency Financial Report

ongoing transformational efforts and our ability to improve accountability, measure performance and enhance data- informed decision making. Our support of these efforts, together with our need to be responsible stewards of data, requires that we continuously assess and enhance our financial systems and data. To that end, as required by the Digital Accountability and Transparency Act of 2014 (DATA Act), the Department reports financial and payment information on the Department’s spending to the public using USASpending.gov , and continues to work to achieve 100 percent accuracy of this data submitted from all around the world. We are dedicated to delivering quality financial services, backed by our ISO-9001 certified operations and Capability Maturity Model Integration (CMMI) standard for financial systems development. These quality management programs allow us to continuously improve our services and drive new automation and efficiencies into mission furthering support services. We know strong and effective internal controls are fundamental to our success, and we embrace our leadership role in promoting them. We are pleased to report that the Department maintains a robust system of internal controls that are validated by senior leadership. For 2020, no material weaknesses in internal controls 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 internal controls in accordance with the Federal Managers’ Financial Integrity Act (FMFIA). The Secretary also provided assurance that the Department’s financial systems were in substantial compliance with the Federal Financial Management Information Act. 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 most recent 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 following pages 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 in 2020, there are always opportunities to improve, challenges to address, and issues that require further clarification as we meet Government-wide compliance and accounting standards. For 2020, I am pleased to report the Department received an unmodified (“clean”) audit opinion on its 2020 and 2019 Financial Statements, with no material weaknesses in internal controls over financial reporting identified by the Independent Auditor. We value this result and applaud what was accomplished by the Department this year. However, we fully recognize there are several items noted in the Independent Auditor’s Report that require our continued attention and additional focus. I am confident 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. Sincerely, Jeffrey C. Mounts Comptroller November 16, 2020 2020 A gency F inanci al R eport U ni ted S tates D epartment of S tate | 43 MESSAGE FROM THE COMPTROLLER | FINANCIAL SECTION