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

Uni ted States Department of State Comptroller Washington D.C. 20520 November 15, 2020 UNCLASSIFIED MEMORANDUM TO: OIG – Diana Shaw, Deputy Inspector General FROM: CGFS – Jeffrey C. Mounts, Comptroller SUBJECT: Draft Report on the Department of State’s Fiscal Year 2020 Financial Statements This memo is in response to your request for comments on the Draft Report of the Independent Auditor’s Report on Internal Control Over Financial Reporting, and Report on Compliance With Applicable Provisions of Laws, Regulations, Contracts, and Grant Agreements. As the OIG is aware, the Department operates in over 270 locations in over 180 countries in some of the most challenging environments. The scale and complexity of Department activities and corresponding financial management operations and requirements are immense. We understand and take this dynamic into account as we pursue an efficient, accountable, and transparent financial management platform that supports the Department’s and broader U.S. Government’s foreign affairs mission. Part of our accountability is the essential discipline of the annual external audit process and the issuance of the Department’s audited financial statements. Few outside the financial community likely realize the time and effort that go into producing the audit and the Agency Financial Report (AFR), as we all work to demonstrate our commitment to strong financial management and to producing meaningful financial statements. It is a rigorous process and has been a concerted and dedicated effort this year by all stakeholders involved. While we may not agree on every aspect of the process and findings, we appreciate and extend our sincere thanks for the professionalism and commitment by all parties, including the OIG and Kearney & Company, to work together in a constructive manner, in a concentrated timeframe, to complete the comprehensive audit process. We know there will always be new challenges and concerns given our global operating environment and scope of compliance requirements. Efforts to meet the process requirements and cadence of the audit this year reflect remarkable resilience and flexibility by all parties. The overall results of the audit reflect the continuous improvement and strong performance we strive to achieve in the Bureau of the Comptroller and Global Financial Services and across the Department’s financial management community. As expressed in the Independent Auditor’s Report, we are pleased the Department has received an unmodified (“clean”) audit opinion on its FY 2019 and FY 2020 principal financial statements; with no material weaknesses reported by the Independent Auditor. We remain committed to strong corporate governance and internal controls as demonstrated by our robust system of internal controls overseen by our Senior Assessment Team (SAT), Management Control Steering Committee (MCSC), and validated by senior leadership. We 2020 A gency F inanci al R eport U ni ted S tates D epartment of S tate | 61 COMPTROLLER RESPONSE TO THE OIG | FINANCIAL SECTION Appendix A