Audit finds House lacks effective internal financial reporting

For the second consecutive year, the Office of the Inspector General has found the House to not have effective internal control of its financial reporting.

The results of a 2010 audit of the House’s financial statements were released Wednesday, in which the IG found evidence of the ongoing lack of internal controls within the Office of the Chief Administrative Officer.

The CAO concurred with the audit report, and the House Administration Committee has directed the office to take immediate corrective actions, according to a committee statement Wednesday.

{mosads}“Unfortunately, the past two independent audits have identified ineffective and unacceptable controls over the House’s financial reporting procedures under the previous CAO during the 111th Congress,” wrote Committee Chairman Rep. Dan Lungren (R-Calif.) in a separate statement Wednesday.

“It is our obligation to ensure this institution’s financial operations are handled in the most professional, accountable and transparent manner,” he added. “With that, this committee will continue to work with the CAO to ensure that the necessary corrective actions are taken to restore the House’s financial standing.” 

The negative findings in the IG audit lead back to the tenure of Dan Beard, who resigned as Chief Administrative Officer in July 2010 after the release of an unfavorable IG report on the House’s Office of Payroll & Benefits and Office of Financial Counseling.

Following his resignation, outgoing House Speaker Nancy Pelosi (D-Calif.) nominated Daniel Strodel to the position of CAO. Speaker John Boehner (R-Ohio) later upheld the nomination in a show of bipartisan support.

In testimony before the House Administration subcommittee on Oversight earlier this year, Inspector General Theresa Grafenstine said she found significant “material weaknesses” within the CAO during Beard’s tenure in an audit of the House’s fiscal year 2009 financial statements.

These included a lack of an internal controls program and a lack of control over information security.

Grafenstine reported significant improvements in the CAO under Strodel’s leadership, but warned in May that the CAO would likely receive another adverse opinion from the IG for fiscal year 2010, a prophecy that has now come true.

Strodel at the time reported that the CAO was on track to meet a Sept. 30 deadline to implement internal control recommendations, but the corrective actions were simply made too late to avoid another adverse opinion in the 2010 audit.