An annual audit of the Department of Homeland Security’s (DHS) consolidated financial statements and internal control over financial reporting has been carried out by the independent public accounting firm KPMG LLP (KPMG).
KPMG noted that the financial statements present fairly, in all material respects, DHS’ financial position as of September 30, 2021 and 2020. KPMG issued an adverse opinion on DHS’ internal control over financial reporting as of September 30, 2021. The auditor identified material weaknesses in internal control in two areas and significant deficiencies in four areas. KPMG also reported two instances of noncompliance with laws or regulations.
Material weaknesses in internal control were found in information technology controls and information systems, and financial reporting. Significant deficiencies in internal control were found in custodial activities – namely drawbacks and seized/forfeited property, grants management and other needs assistance programs, insurance liabilities, and journal entries. Noncompliance with laws or regulations was found with regard to the Federal Managers’ Financial Integrity Act of 1982 and the Federal Financial Management Improvement Act of 1996.
KPMG has made 20 recommendations to help DHS address the shortcomings revealed in the audit. These include implementing internal controls processes, developing mitigation plans, monitoring IT vulnerabilities, providing training, and developing new policies where necessary. DHS has concurred with the recommendations.