The Board Can Benefit from Implementing an Agency-Wide Process for Maintaining and Monitoring Administrative Internal Control

September 5, 2013

Memorandum

Attached is the Office of Inspector General's (OIG's) final report on the subject audit. We conducted this audit to determine the processes for establishing, maintaining, and monitoring internal control within the Board of Governors of the Federal Reserve System (Board). We focused on internal control over the effectiveness and efficiency of operations and compliance with laws and regulations, i.e., administrative internal control.

We provided you with a copy of our draft report for review and comment. In your response, you stated that you concurred with the intent of our recommendation, and that you planned to evaluate whether, and in what form, an agency-wide framework makes sense and that you will coordinate with the Executive Committee of the Board to implement any additional requirements. The Inspector General Act, as amended, requires that we report in our Semiannual Report to Congress on recommendations for which no management decision has been made. The act defines a management decision as the issuance of a final decision by management concerning its response to audit findings and recommendations, including actions concluded to be necessary. Since your response indicates that you have not yet determined the final actions you will take to address our report's findings we request that you provide to us within 90 calendar days a final management decision describing the actions you have taken or that you plan to take to address our recommendation. We have included your response as appendix B to our report.

We appreciate the cooperation that we received from the Board's Office of the Chief Operating Officer and the divisions with which we met. Please contact Cynthia Gray, Senior OIG Manager, or me if you would like to discuss this report or any related issues.

Attachment