Financial

KPMG LLP (KPMG), under contract with the Department of Homeland Security Office of Inspector General, conducted an integrated audit of DHS’ fiscal year 2021 consolidated financial statements and internal control over financial reporting.  KPMG issued an unmodified (clean) opinion on the financial statements, reporting that they present fairly, in all material respects, DHS’ financial position as of September 30, 2021.  However, KPMG identified material weaknesses in internal control in two areas and other significant deficiencies in four areas.  Consequently, KPMG issued an adverse opinion on DHS’ internal control over financial reporting.  KPMG also reported noncompliance with two laws and regulations.  KPMG made 19 recommendations to improve the Department’s internal control over financial reporting.

The Chief Financial Officers Act of 1990 (Public Law 101-576) and the Department Of Homeland Security Financial Accountability Act (Public Law 108-330) require us to conduct an annual audit of the Department of Homeland Security’s (DHS) consolidated financial statements and internal control over financial reporting. KPMG noted that the financial statements present fairly, in all material respects, DHS’ financial position as of September 30, 2018.

KPMG issued an adverse opinion on DHS’ internal control over financial reporting of its financial statements as of September 30, 2018. The report identifies the following six significant deficiencies in internal control, the first two of which are considered material weaknesses, and four instances where DHS did not comply with laws and regulations.

KPMG, under contract with DHS OIG, audited the National Protection and Programs Directorate’s financial statements and internal control over financial reporting.  The resulting management letter discusses 14 observations related to internal control for management’s consideration.  The auditors identified internal control deficiencies in several processes including revenue accrual, personnel actions, journal entry reviews, performance reviews, contract expense approvals, time keeping, and intra-governmental payment and collection expense approvals.  These deficiencies are not considered significant and were not required to be reported in our Independent Auditors' Report on DHS’ FY 2016 Financial Statements and Internal Control over Financial Reporting, dated November 14, 2016, included in the DHS FY 2016 Agency Financial Report.

KPMG, under contract with DHS OIG, audited the United States Coast Guard’s financial statements and internal control over financial reporting.  The resulting management letter discusses 12 observations related to internal control for management’s consideration.  The auditors identified internal control deficiencies in several processes including financial disclosure reports; accounts receivable; civilian and military payroll; financial reporting process; and accounts payable accrual.  These deficiencies are not considered significant and were not required to be reported in our Independent Auditors' Report on DHS’ FY 2016 Financial Statements and Internal Control over Financial Reporting, dated November 14, 2016, included in the DHS FY 2016 Agency Financial Report.

KPMG, under contract with DHS OIG, audited Customs and Border Protection’s (CBP) fiscal year (FY) 2016 consolidated financial statements.  The resulting management letter discusses 12 observations related to internal control for management’s consideration.  The auditors identified internal control deficiencies in a number of processes, including deobligation of undelivered orders, review of Federal Employee Compensation Act claims, and the seized and forfeited property inventory.  These deficiencies are not considered significant and were not required to be reported in our Independent Auditors' Report on U.S. Customs and Border Protection’s FY 2016 Consolidated Financial Statements, dated January 18, 2017, included in CBP’s FY 2016 Performance and Accountability Report.

KPMG LLP, under contract with DHS OIG, audited the United States Secret Service’s financial statements and internal control over financial.  The resulting management letter discusses four observations related to internal control for management’s consideration.  The auditors identified internal control deficiencies in several processes including financial reporting; time and attendance approval; invoice entry and disbursements; and confidential financial disclosure reporting.  These deficiencies are not considered significant and were not required to be reported in our Independent Auditors' Report on DHS’ FY 2016 Financial Statements and Internal Control over Financial Reporting, dated November 14, 2016, included in the DHS FY 2016 Agency Financial Report.

KPMG LLP, under contract with DHS OIG, audited USCIS’ financial statements and internal control over financial reporting.  The resulting management letter discusses four observations related to internal control for management’s consideration.  The auditors identified internal control deficiencies in several processes including monitoring and recording employee completion of the annual ethics and integrity training; review and approval of H1-B and L fraud fee journal entries; recording of property, plant, and equipment; and inaccurate and unsupported data in some systems.  These deficiencies are not considered significant and were not required to be reported in our Independent Auditors' Report on DHS’ FY 2016 Financial Statements and Internal Control over Financial Reporting, dated November 14, 2016, included in the DHS FY 2016 Agency Financial Report.

KPMG LLP, under contract with DHS OIG, audited the S&T financial statements and internal control over financial reporting.  The resulting management letter discusses three observations related to internal control for management’s consideration.  The auditors identified internal control deficiencies in several processes including journal entry review processes; procurement and financial management system reconciliations; and intra-governmental payment and collection expense review and approval.  These deficiencies are not considered significant and were not required to be reported in our Independent Auditors' Report on DHS’ FY 2016 Financial Statements and Internal Control over Financial Reporting, dated November 14, 2016, included in the DHS FY 2016 Agency Financial Report.

Most of the deficiencies identified by the independent public accounting firm KPMG, LLP were related to access controls for TSA’s core financial and feeder systems. The deficiencies collectively limited TSA’s ability to ensure that critical financial and operational data were maintained in such a manner as to ensure their confidentiality, integrity, and availability. We recommend that TSA, in coordination with the Department of Homeland Security’s Chief Information Officer and Acting Chief Financial Officer, make improvements to TSA’s financial management systems and associated information technology security program.