Federal Reserve Banks: Areas for Improvement in Information Security Controls
Highlights
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, 2007 and 2006. 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 (FRBs) on behalf of the Department of the Treasury's BPD relevant to the Schedule of Federal Debt. In our audit report on the Schedules of Federal Debt for the fiscal years ended September 30, 2007 and 2006, 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, 2007, 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 matters involving information security controls that we do not consider to be significant deficiencies. As it relates to controls over 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 matters 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 identified during our fiscal year 2007 testing of the general and application information security controls over key financial systems maintained and operated by the FRBs on behalf of the Department of theTreasury's BPD relevant to the Schedule of Federal Debt. In a separately issued Limited Official Use Only report, we communicated detailed information regarding our findings to FRB management.
Recommendations
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Division of Reserve Bank Operations and Payment Systems | The Director of the Division of Reserve Bank Operations and Payment Systems should direct the appropriate FRB officials to implement the 14 detailed recommendations set forth in the separately issued Limited Official Use Only version of this report. |
Closed – Implemented
In connection with our audits of the fiscal years 2008, 2009, and 2010 Schedules of Federal Debt, we reviewed the status of actions taken to address the open information security control recommendations at the Federal Reserve Banks (FRB) identified during our prior years' audit. As detailed in separate accomplishments, we found that FRB management had taken steps to implement the 14 recommendations and strengthen its information security controls.
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