United States Government Accountability Office
Washington, D.C. 20548
To the Board of Directors The Federal Deposit Insurance Corporation
We audited the Federal Deposit Insurance Corporation's (FDIC) balance sheets as of December 31, 2006 and 2005, for the two funds administered by FDIC (the Deposit Insurance Fund (DIF) and the FSLIC Resolution Fund (FRF)), the related statements of income and fund balance (accumulated deficit), and the statements of cash flows for the years then ended, and in our report dated January 31, 2007, we expressed an unqualified opinion on those statements.
In that report, we stated that we found the following:
the financial statements of each fund are presented fairly, in all material respects, in conformity with U.S. generally accepted accounting principles;
FDIC had effective internal control over financial reporting and compliance with laws and regulations for each fund; and
no reportable noncompliance with the laws and regulations we tested.
In addition, we referred the reader to note 1 of the DIFís financial statements that discussed the enactment, on February 8, 2006, of the Federal Deposit Insurance Reform Act of 2005 (the Act). The Act called for the merger of the Bank Insurance Fund (BIF) and Savings Association Insurance Fund (SAIF) into a single deposit insurance fund. In accordance with the Act, on March 31, 2006, FDIC established the DIF with the merger of the BIF and SAIF. As further discussed in note 2 to DIFís financial statements, the merger resulted in a new reporting entity. The financial results of the newly formed DIF were retrospectively applied as though they had been combined at the beginning of the reporting year as well as for prior periods presented for comparative purposes.
In our opinion, the information set forth in the accompanying condensed financial statements is presented fairly, in all material respects, in relation to the financial statements from which it has been derived.
As discussed in our January 31, 2007 report, in our prior year audit, we reported on weaknesses in FDICís information system controls that increased the risk of unauthorized modification and disclosure of critical FDIC financial and sensitive personnel information, disruption of critical operations, and loss of assets. During 2006, FDIC corrected many of these weaknesses and implemented mitigating controls. These actions enabled us to conclude that the remaining issues, along with other control deficiencies identified during our 2006 audits, do not constitute a significant deficiency.
We performed our work in accordance with U.S. generally accepted government auditing standards.
David M. Walker Comptroller General of the United States