U.S. Equal Employment Opportunity Commission
Equal Employment Opportunity Commission
INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL
We audited the Consolidated Balance Sheets of the Equal Employment Opportunity Commission (EEOC) as of September 30, 2005, and 2004; the related Consolidated Statements of Net Cost, Changes in Net Position, and Financing; and the Combined Statement of Budgetary Resources for the years then ended. We have issued our report thereon dated November 2, 2005. We conducted our audits in accordance with generally accepted auditing standards; standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and Office of Management and Budget (OMB) Bulletin 01-02, Audit Requirements for Federal Financial Statements.
In planning and performing our audit, we considered EEOC's internal control over financial reporting by obtaining an understanding of the agency's internal control, determining if internal control had been placed in operation, assessing control risk, and performing tests of controls to determine auditing procedures for the purpose of expressing our opinion on the financial statements. We limited internal control testing to those controls necessary to achieve objectives described in OMB Bulletin 01-02. We did not test all internal controls relevant to operating objectives as broadly defined by the Federal Managers' Financial Integrity Act of 1982, such as those controls relevant to ensuring efficient operations. The objective of our audit was not to provide assurance on internal control. Consequently, we do not provide an opinion on internal control.
Our consideration of internal control over financial reporting would not necessarily disclose all matters in the internal control over financial reporting that might be reportable conditions. Under standards issued by the American Institute of Certified Public Accountants, reportable conditions are matters coming to our attention relating to significant deficiencies in the design or operation of internal control that, in our judgment, could adversely affect an agency's ability to record, process, summarize, and report financial data consistent with management assertions in the financial statements. Material weaknesses are reportable conditions in which the design or operation of one or more of the internal control components does not reduce to a relatively low level the risk that misstatements in amounts that would be material in relation to the financial statement being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. Because of inherent limitations in internal control, misstatements, losses, or noncompliance may nevertheless occur and may not be detected. We noted no matters involving the internal control and its operation that we considered to be reportable conditions as defined above.
Status of Prior-Year Internal Control Weaknesses
In the 2004 report on internal control, we described a matter involving the financial reporting process that we considered to be a material weakness. EEOC had not established an effective quality assurance system to verify the work of individuals preparing financial statements and footnotes. EEOC resolved this material weakness before it prepared its FY 2005 financial statements.
With respect to internal control related to significant performance measures included in Management's Discussion and Analysis, we obtained an understanding of the design of internal control relating to the existence and completeness assertions, as required by OMB Bulletin 01-02. Our procedures were not designed to provide assurance on internal control over reported performance measures and, accordingly, we do not express an opinion on such controls.
We noted other nonreportable matters involving internal control and its operation that we will communicate in a separate management letter.
This report is intended solely for the information and use of EEOC management, OMB, and Congress. It is not intended to be and should not be used by anyone other than these specified parties.
COTTON & COMPANY LLP
Colette Wilson, CPA
November 2, 2005