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 public accounting firm retained by the Board's Office of Inspector General (OIG). The public accounting firm 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 public accounting firm 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 management challenge related to the creation of the Board's emergency lending programs and facilities and updated three previously identified challenges to account for new aspects presented by the pandemic. The OIG also initiated multiple audits and evaluations, with other work planned, in key risk areas and opened investigations of alleged fraud related to these programs.

During 2021, the OIG issued 17 reports (table C.1). In addition, the OIG issued to the Board and to the CFPB eight memorandums on information technology issues and two risk-assessment memorandums. Because of the sensitive nature of some of the material, six of the information technology 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, 68 investigations were opened and 36 investigations were closed during the year. OIG investigative work resulted in 38 arrests, 7 criminal complaints, 19 criminal informations, 43 indictments, 38 convictions, and 4 prohibitions from the banking industry, as well as $24,084,492 in criminal fines, restitution, and special assessments. The OIG also issued two semiannual reports to Congress. The OIG performed 30 reviews of legislation and regulations related to the operations of the Board, the CFPB, or the OIG.

Table C.1. OIG reports issued in 2021
Report title Month issued
The Board Economics Divisions Can Enhance Some of Their Planning Processes for Economic Analysis February
Forensic Evaluation of the Bureau's Vendor Payment Process February
Federal Financial Institutions Examination Council Financial Statements as of and for the Years Ended December 31, 2020 and 2019, and Independent Auditors' Reports February
Board of Governors of the Federal Reserve System Financial Statements as of and for the Years Ended December 31, 2020 and 2019, and Independent Auditors' Reports March
The Board Can Improve the Management of Its Renovation Projects March
The Bureau Can Strengthen Its Hiring Practices and Can Continue Its Efforts to Cultivate a Diverse Workforce March
Independent Accountants' Report on the Bureau's Fiscal Year 2020 Compliance With the Payment Integrity Information Act of 2019 April
The Board's Payroll Controls Are Generally Effective June
The Bureau Can Improve Its Controls for Issuing and Managing Interagency Agreements July
Evaluation of the Bureau's Implementation of Splunk (nonpublic report) September
The Board's Implementation of Enterprise Risk Management Continues to Evolve and Can Be Enhanced September
The Board Can Improve the Efficiency and Effectiveness of Certain Aspects of Its Consumer Compliance Examination and Enforcement Action Issuance Processes October
Independent Auditors' Report on the Bureau's Fiscal Year 2021 Compliance With the Digital Accountability and Transparency Act of 2014 October
2021 Audit of the Board's Information Security Program October
2021 Audit of the Bureau's Information Security Program October
The Bureau Can Improve Aspects of Its Quality Management Program for Supervision Activities November
The Bureau Can Further Enhance Certain Aspects of Its Approach to Supervising Nondepository Institutions December

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.

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 2021, the GAO completed 17 projects that involved the Federal Reserve (table C.2). Thirteen projects were ongoing as of December 31, 2021 (table C.3).

Table C.2. GAO reports issued in 2021
Report title Report number Month issued
Macroprudential Oversight: Principles for Evaluating Policies to Assess and Mitigate Risks to Financial System Stability GAO-21-230SP January
COVID-19: Critical Vaccine Distribution, Supply Chain, Program Integrity, and Other Challenges Require Focused Federal Attention GAO-21-265 January
COVID-19: Sustained Federal Action Is Crucial as Pandemic Enters Its Second Year GAO-21-387 March
Retirement Security: Debt Increased for Older Americans over Time, but the Implications Vary by Debt Type GAO-21-170 May
Home Mortgage Disclosure Act: Reporting Exemptions Had a Minimal Impact on Data Availability, but Additional Information Would Enhance Oversight GAO-21-350 May
Fair Lending: CFPB Needs to Assess the Impact of Recent Changes to Its Fair Lending Activities GAO-21-393 June
Financial Services Industry: Factors Affecting Careers for Women with STEM Degrees GAO-21-490 June
COVID-19: Continued Attention Needed to Enhance Federal Preparedness, Response, Service Delivery, and Program Integrity GAO-21-551 July
National Flood Insurance Program: Congress Should Consider Updating the Mandatory Purchase Requirement GAO-21-578 July
Federal Debt Management: Treasury Quickly Financed Historic Government Response to the Pandemic and Is Assessing Risks to Market Functioning GAO-21-606 August
Federal Reserve Lending Programs: Credit Markets Served by the Programs Have Stabilized, but Vulnerabilities Remain GAO-22-104640 October
COVID-19: Additional Actions Needed to Improve Accountability and Program Effectiveness of Federal Response GAO-22-105051 October
Financial Audit: Bureau of the Fiscal Service's FY 2021 and FY 2020 Schedules of Federal Debt GAO-22-104592 November
Countering Illicit Finance and Trade: Better Information Sharing and Collaboration Needed to Combat Trade-Based Money Laundering GAO-22-447 December
Mortgage Lending: Use of Alternative Data Is Limited but Has Potential Benefits GAO-22-104380 December
Bank Secrecy Act: Views on Proposals to Improve Banking Access for Entities Transferring Funds to High-Risk Countries GAO-22-104792 December
Real Estate Appraisals: Most Residential Mortgages Received Appraisals, but Waiver Procedures Need to Be Better Defined GAO-22-104472 December
Table C.3. Projects active at year-end 2021
Subject of project Month initiated Status
The housing finance system in the pandemic August 2020 Closed 1/13/2022
Welfare of federal working dogs September 2020 Open
Access to banking services October 2020 Closed 3/7/2022
HMDA loan volume thresholds October 2020 Open
Financial regulator privacy practices October 2020 Closed 1/13/2022
Native American Direct Loan program December 2020 Open
Financial regulatory oversight during COVID-19 April 2021 Open
Trafficking, online marketplaces, and virtual currencies May 2021 Closed 2/14/2022
403(b) retirement savings plans for nonprofits and public June 2021 Open
Consumer credit card debt June 2021 Open
Blockchain in financial services August 2021 Open
Monitoring and oversight of response to COVID-19 pandemic (January 2022 report) October 2021 Closed 1/27/2022
Monitoring and oversight of response to COVID-19 pandemic (April 2022 report) October 2021 Open

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

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Last Update: August 12, 2022