The Government Accountability Office — the audit, evaluation and investigative arm of Congress — recently completed an audit of the Consumer Financial Protection Bureau’s fiscal years 2013 and 2012 financial statements.

GAO officials said they identified two significant deficiencies in CFPB’s internal control over financial reporting as of Sept. 30, 2013. Specifically, GAO found that CFPB did not effectively design or implement a plan in two areas:

• Internal control over its year-end accrual process to ensure accounts payable amounts recorded were complete and accurate.

• Controls to ensure accurate and complete recording of its property and equipment transactions.

“These deficiencies increase the risk that CFPB may not detect and correct errors in time to prevent misstatement of the financial statements,” GAO officials said. “GAO is making four new recommendations that are intended to improve management’s oversight and controls in these areas and reduce the risk of misstatements in CFPB’s accounts and financial statements.

“These recommendations are intended to improve CFPB’s oversight and controls in these areas as well as to bring CFPB into conformance with its own policies, standards for internal control in the federal government, federal accounting standards, or a combination thereof,” they continued.

Those recommendations included:

• Develop detailed guidance and provide training for CORs to further assist them in identifying and estimating accruals, including examples of expenses that should and should not be accrued at the end of an accounting period and how to calculate amounts to be accrued.

• Strengthen the design and implementation of control procedures regarding the review of the accounts payable estimates to include variance analysis of calculations and comprehensive review of obligating documents, invoices and the CORs’ accrual calculations.

• Strengthen the design and implementation of control procedures to require, as part of the CFO’s quarterly review procedures, review of underlying supporting documents, including tracking schedules, invoices and obligating documents, to ensure that property and equipment transactions are properly identified and capitalized or expensed as appropriate.

• Design and implement control procedures that require coordination between the Office of Procurement and other program offices at the time of capitalization to ensure that property and equipment costs, including costs associated with internal-use software, are properly capitalized or expensed as appropriate.

In a letter of response to Lawrence Malenich, the GOA’s director of financial management and assurance, CFPB director Richard Cordray agreed with the recommendations the audit report detailed.

“We appreciate the cooperation the Government Accountability Office during the CFPB’s annual financial statements audit, and we recognize the significant amount of work you are doing to help us improve the performance, transparency and accountability of the bureau,” Cordray said.

“We concur with the draft recommendations from GOA intended to improve management’s oversight and controls as well as to minimize risk to the bureau,” Cordray continued. “We will continue to implement corrective actions to resolve and mitigate the significant deficiencies identified,” he continued.

“The CFPB is dedicated to upholding our fiscal responsibilities and ensuring that proper management oversight and controls are implements to minimize risk to the bureau,” he went on to say. “We have found that the GAO audit process is especially helpful and important to our work in this area.”