DATE: May 19, 2017
SUBJECT: Treasury Audit Resolution, Follow-Up, and Closure
- PURPOSE. This Directive establishes the policy and assigns responsibilities for audit management, finding resolution, implementing and monitoring corrective actions, audit follow-up activities, and audit closure within the Department of the Treasury (the Department).
- SCOPE. This directive applies to all bureaus, offices, and organizations, including the offices of inspectors general (excluding the Special Inspector General for TARP), within the Department. The provisions of this directive shall not be construed to interfere with or impede the authorities or independence of the Treasury Inspector General or the Treasury Inspector General for Tax Administration.
- POLICY. It is the policy of the Department that audit management is an essential component of sound management and internal controls. The management of audits and their findings, recommendations, and planned corrective actions is a shared responsibility between the Department, bureau and office management, and auditors.
- The Deputy Secretary of the Department of the Treasury (Deputy Secretary) makes final management decisions on actions to be taken in response to the Department’s inspectors general audit recommendations when disagreement exists and resolution cannot be reached between the bureau or office and Inspector General officials.
- The Assistant Secretary for Management (ASM) is responsible for:
- Working with bureau or office management and Inspector General officials when they cannot reach an agreement on appropriate action in response to audit recommendations; and
- Ensuring that appropriate audit follow-up policies and procedures are in place Department-wide, and taking action to strengthen the Department’s audit follow-up performance based upon the recommendations of the audit organizations.
- The Treasury Deputy Chief Financial Officer (TDCFO) is responsible for:
- Ensuring the centralized tracking of audit reports, from final report issuance through corrective action implementation, validation, and closure, through the Department’s official audit tracking system or through other designated systems;
- Monitoring bureau and office actions and providing periodic reports for senior Departmental management officials, including reports for the Secretary required by the Section 5 of the IG Act;
- Performing periodic analyses of audit recommendations and corrective actions to determine Department-wide trends and problems, and to recommend solutions;
- Evaluating audit follow-up performance Department-wide and ensuring that these evaluations are an integral part of the Department’s Federal Managers Financial Integrity Act of 1982 (FMFIA) and Federal Financial Management Improvement Act (FFMIA) programs; and
- Designating the audit follow-up officer(s) for DO.
- Bureau and Office Heads are responsible for:
- Designating a bureau or office audit follow-up officer;
- Ensuring that all recommendations are appropriately addressed and corrective actions are well-defined, address and resolve the root causes and impact of the problem, are taken in a timely fashion, and are verified through independent verification;
- Evaluating audit follow-up performance bureau-wide and ensuring that these evaluations are an integral part of the bureau’s FMFIA and FFMIA programs; and
- Submitting written statements to the appropriate Congressional committees and/or to the Director of OMB, as required by statute or regulation for audit reports issued by the GAO (see Treasury Directive 40-02, "Corresponding with the Government Accountability Office").
- Bureau and Office Audit Follow-Up Officers (AFO) are responsible for:
- Coordinating the bureau or office written response to draft audit reports and other TDCFO requests for information in a timely fashion;
- Representing the bureau or office in the audit resolution process;
- Maintaining and tracking audit recommendations and corrective actions and their status through the use of the Department’s official audit tracking system or other applicable systems as designated by the TDCFO.
- The Department’s Inspectors General are responsible for:
- Ensuring that a copy of draft and final audit reports is provided on a timely manner to the appropriate bureau or office follow-up officer, TDCFO, and all other key stakeholders;
- Reviewing bureau or office responses to draft audit reports in a timely manner and engaging with bureau or office officials to discuss any disagreements;
- Immediately notifying the TDCFO when a matter will be referred to the ASM for resolution if the bureau or office response to a draft audit or management decisions on corrective actions are deemed to be insufficient or otherwise unsatisfactory;
- Providing timely information and data to the TDCFO for use in Departmental audit follow-up tracking purpose; and
- Conducting periodic reviews of bureau and office audit follow-up performance, including the actual implementation of recommendations and corrective actions.
- OMB Circular A-50 “Audit Follow-up” (September 29, 1982)
- Inspector General Act of 1978, as amended, 5 U.S.C. Appendix 3
- Federal Managers Financial Integrity Act of 1982 (P.L. 97-255), codified at 31 U.S.C. 3512
- Federal Financial Management Improvement Act of 1996, Title VIII of Section 101(f) of Title I, Division A of P.L. 104-208, as codified at 31 U.S.C. 3512
- Government Accountability Office, "Standards for Internal Control in the Federal Government," GAO-14-704G
- TD 40-02, "Corresponding with the Government Accountability Office"
- TD 40-04, "Treasury Internal (Management) Control Program"
- CANCELLATION. TD 40-03, "Treasury Audit Resolution, Follow-Up, and Closure," February 2, 2001, is superseded.
- OFFICE OF PRIMARY INTEREST. Risk and Control Group, Office of the Deputy Chief Financial Officer, and Office of the Assistant Secretary for Management.
Kody H. Kinsley
Assistant Secretary for Management