Board of Governors of the Federal Reserve System

Federal Reserve System Audits

The Board of Governors, the Federal Reserve Banks, and the Federal Reserve System as a whole are all subject to several levels of audit and review.

The Board's financial statements and internal controls over financial reporting are audited annually by an independent outside auditor retained by the Board's Office of Inspector General (OIG). The outside auditor also tests the Board's compliance with certain provisions of laws, regulations, and contracts affecting those statements.

The Reserve Banks' financial statements are audited annually by an independent outside auditor retained by the Board of Governors. In addition, the Reserve Banks are subject to annual examination by the Board. As discussed in section 5, "Payment System and Reserve Bank Oversight," the Board's examination includes a wide range of ongoing oversight activities conducted on site and off site by staff of the Board's Division of Reserve Bank Operations and Payment Systems.

The audited annual financial statements of the Board of Governors, the Reserve Banks, and the Federal Reserve System as a whole are available on the Board's website at https://www.federalreserve.gov/aboutthefed/audited-annual-financial-statements.htm.

In addition, the OIG conducts audits, evaluations, investigations, and other reviews relating to the Board's programs and operations as well as to Board functions delegated to the Reserve Banks. Certain aspects of Federal Reserve operations are also subject to review by the Government Accountability Office.

Office of Inspector General Activities

The OIG for the Federal Reserve Board, which is also the OIG for the Consumer Financial Protection Bureau (CFPB), operates in accordance with the Inspector General Act of 1978, as amended. The OIG plans and conducts audits, inspections, evaluations, investigations, and other reviews relating to Board and CFPB programs and operations, including functions that the Board has delegated to the Federal Reserve Banks. It also retains an independent public accounting firm to annually audit the Board's and the Federal Financial Institutions Examination Council's financial statements. These activities promote economy and efficiency; enhance policies and procedures; and prevent and detect waste, fraud, and abuse. In addition, the OIG keeps the Congress, the Board of Governors, and the CFPB director fully informed about serious abuses and deficiencies.

Most recently, the OIG has focused significant resources on oversight of the Board's pandemic response efforts. Specifically, the OIG has identified a new management challenge that has arisen due to the creation of the Board's new emergency lending programs and facilities and updated three previously identified challenges to account for new aspects presented by the pandemic. The OIG also initiated an audit and a monitoring effort, with other audits planned, in key risk areas and opened investigations of alleged fraud related to these programs.

During 2020, the OIG issued 14 reports (table C.1). In addition, the OIG issued to the Board and to the CFPB 18 memorandums on information technology and management and operations issues. Because of the sensitive nature of some of the material, 14 of these memorandums are nonpublic. The OIG also conducted follow-up reviews to evaluate actions taken on recommendations for corrective action. Regarding the OIG's investigative work related to the Board and the CFPB, 70 investigations were opened and 14 investigations were closed during the year. OIG investigative work resulted in 21 arrests, 12 criminal complaints, 15 criminal informations, 15 indictments, 13 convictions, and 4 prohibitions from the banking industry, as well as $7,767,550 in criminal fines and restitution and $3,011,250,000 in civil judgments. The OIG also issued a review on the CFPB's budget and funding processes and two semiannual reports to Congress. The OIG performed approximately 37 reviews of legislation and regulations related to the operations of the Board, the CFPB, or the OIG.

For more information and to view the OIG's publications, visit the OIG's website at https://oig.federalreserve.gov/. Specific details about the OIG's body of work also may be found in the OIG's Work Plan and semiannual reports to Congress.

Table C.1. OIG reports issued in 2020

Government Accountability Office Reviews

The Federal Banking Agency Audit Act (Pub. L. No. 95–320) authorizes the Government Accountability Office (GAO) to audit certain aspects of Federal Reserve System operations. The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, as well as the Coronavirus Aid, Relief, and Economic Security Act of 2020, directs the GAO to conduct additional audits with respect to these operations. In 2020, the GAO completed 16 projects that involved the Federal Reserve (table C.2). Twenty-one projects were ongoing as of December 31, 2020 (table C.3).

For more information and to view GAO reports, visit the GAO's website at https://www.gao.gov.

Table C.2. GAO reports issued in 2020

Table C.3. Projects active at year-end 2020