Summary

In connection with fulfilling our requirement to audit the financial statements of the U.S. government, we audited and reported on the Schedules of Federal Debt Managed by the Bureau of the Public Debt (BPD) for the fiscal years ended September 30, 2009 and 2008. As part of these audits, we performed a review of the general and application information security controls over key financial systems maintained and operated by the Federal Reserve Banks (FRB) on behalf of the Department of the Treasury's (Treasury) BPD relevant to the Schedule of Federal Debt. As we reported in connection with our audit of the Schedules of Federal Debt for the fiscal years ended September 30, 2009 and 2008, we concluded that BPD maintained, in all material respects, effective internal control relevant to the Schedule of Federal Debt related to financial reporting and compliance with applicable laws and regulations as of September 30, 2009, that provided reasonable assurance that misstatements, losses, or noncompliance material in relation to the Schedule of Federal Debt would be prevented or detected on a timely basis. However, we found deficiencies involving information security controls that we do not consider to be significant deficiencies. With regard to financial reporting and compliance with applicable laws and regulations, the potential effect of such control deficiencies was mitigated by the FRBs and BPD. The FRBs mitigated the potential effect of such control deficiencies with physical security measures and a program of monitoring user and system activity, and BPD with compensating management and reconciliation controls. Nevertheless, the control deficiencies relating to key financial systems maintained and operated by the FRBs on behalf of BPD warrant FRB management's attention and action. This report presents the control deficiencies we identified during our fiscal year 2009 testing of the general and application information security controls over key financial systems maintained and operated by the FRBs relevant to BPD's Schedule of Federal Debt.

Our fiscal year 2009 audit procedures identified four new general information security control deficiencies, related to security management and access controls. In the Limited Official Use Only report, we made five recommendations to address these control deficiencies. None of the control deficiencies we identified represented significant risks to the key financial systems maintained and operated by the FRBs on behalf of BPD. With regard to financial reporting and compliance with applicable laws and regulations, the potential effect of such control deficiencies was mitigated by the FRBs and BPD. The FRBs mitigated the potential effect of such control deficiencies with physical security measures and a program of monitoring user and system activity, and BPD with compensating management and reconciliation controls that are designed to detect potential misstatements in the Schedule of Federal Debt. Nevertheless, these findings warrant management's attention and action to limit the risk of unauthorized access, disclosure, loss, or impairment; modification of sensitive data and programs; and disruption of critical operations.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

Recommendations for Executive Action