Date Released: Monday, November 26, 2007
Source: NASA Office of Inspector General
15 Nov 2007
TO: AdministratorChief Financial Officer
FROM: Inspector General
SUBJECT: Audit of the National Aeronautics and Space Administration's Fiscal Year 2007 Financial Statements (Report No. IG-08-001)
Under the Chief Financial Officers Act of 1990, NASA's financial statements are to be audited in accordance with generally accepted government auditing standards. The Office of Inspector General contracted with the independent certified public accounting firm Ernst & Young LLP (E&Y) to audit NASA's financial statements in accordance with Government Auditing Standards and Office of Management and Budget's Bulletin No. 07-04, Audit Requirements for Federal Financial Statements.
In the Report of Independent Auditors (Enclosure 1), E&Y disclaimed an opinion on NASA's financial statements for the fiscal years ended September 30, 2007 and 2006. The disclaimer resulted from NASA's inability to provide E&Y auditable financial statements and sufficient evidence to support the financial statements throughout the fiscal year and at year-end.
The E&Y Report on Internal Control (Enclosure 2) includes two significant deficiencies, which are considered to be material weaknesses. Material weaknesses were found in NASA's controls for (1) financial systems, analyses, and oversight used to prepare the financial statements, and (2) assuring that property, plant, and equipment and materials are presented fairly in the financial statements. These material weaknesses have been reported for several years.
The E&Y Report on Compliance with Laws and Regulations (Enclosure 3) identifies several instances in which NASA's financial management systems did not substantially comply with the requirements of the Federal Financial Management Improvement Act of 1996 (FFMIA). For example, the report notes that certain subsidiary systems, including property, are not integrated with the Core Financial module and are not complemented by sufficient manual preventative and detect type controls.