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, 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 and currently informed about serious abuses and deficiencies.
The OIG has continued to focus resources on oversight of the Board's pandemic response efforts, including the Board's emergency lending programs and facilities. The OIG has completed multiple audits and evaluations in key risk areas and continued to investigate alleged fraud related to these programs.
During 2023, the OIG issued 19 reports (table C.1). Because of the sensitive nature of some of the material, 3 of the 19 reports are nonpublic, as indicated. In addition, the OIG issued to the Board and to the CFPB five memorandums on information technology issues. Because of the sensitive nature of some of the material, three of these information technology memorandums are nonpublic. The OIG also issued an OIG Insights paper and two semiannual reports to Congress, and it 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, 40 investigations were opened and 53 investigations were closed during the year. OIG investigative work resulted in 50 arrests, 5 criminal complaints, 30 criminal informations,1 28 indictments, 63 convictions, and 3 prohibitions from the banking industry, as well as $568,974,114 in criminal fines, restitution, and special assessments. The OIG performed 13 reviews of legislation and regulations related to the operations of the Board, the CFPB, or the OIG.
Table C.1. OIG reports issued in 2023
| Report title | Month issued |
|---|---|
| The Board Can Enhance Enterprise Practices for Data Management Roles and Responsibilities | January |
| Federal Financial Institutions Examination Council Financial Statements as of and for the Years Ended December 31, 2022 and 2021, and Independent Auditors' Reports | February |
| Board of Governors of the Federal Reserve System Financial Statements as of and for the Years Ended December 31, 2022 and 2021, and Independent Auditors' Reports | March |
| Independent Accountants' Report on the CFPB's Fiscal Year 2022 Compliance With the Payment Integrity Information Act of 2019 | March |
| Following Established Processes Helped FRB New York and the Board Reduce Risks Associated With Lending Facility Contracts | April |
| The Board Can Further Enhance the Design and Effectiveness of the FOMC's Investment and Trading Rules | April |
| Board Purchase Card Program Controls Are Generally Effective and Can Be Further Strengthened | May |
| Report on the Independent Audit of the CFPB's Agile Systems/Software Development Life Cycle Processes | May |
| The Board Can Enhance Its Procedures and Controls for Protecting Confidential Information in Supervision Central | June |
| Results of Scoping of the Evaluation of the Board and Reserve Banks' Cybersecurity Incident Response Process for Supervised Institutions | June |
| The Board and FRB Boston Generally Followed Their Process for Purchasing MSLP Loan Participations but Can Formally Document Some Key Processes | July |
| The CFPB Can Improve Its Controls for Exercising Contract Options | September |
| Material Loss Review of Silicon Valley Bank | September |
| Review of the Supervision of Silvergate Bank (nonpublic report) | September |
| 2023 Audit of the CFPB's Information Security Program | September |
| 2023 Audit of the Board's Information Security Program | September |
| FRB Boston Followed Its Processes for Monitoring the Credit Quality of Main Street Lending Program Loans | October |
| Results of Security Control Testing of a Videoconferencing Platform Used by the Board (nonpublic report) | November |
| Results of Scoping of the Evaluation of the Board's Intelligence Programs (nonpublic report) | 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 and the Coronavirus Aid, Relief, and Economic Security Act of 2020 direct the GAO to conduct additional audits with respect to these operations. In 2023, the GAO completed 11 projects that involved the Federal Reserve (table C.2). Fourteen projects were ongoing as of December 31, 2023 (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 2023
| Report title | Report number | Month publicly released |
|---|---|---|
| Financial Technology: Products Have Benefits and Risks to Underserved Consumers, and Regulatory Clarity Is Needed | GAO-23-105536 | March |
| Bank Regulation: Preliminary Review of Agency Actions Related to March 2023 Bank Failures | GAO-23-106736 | April |
| Blockchain in Finance: Legislative and Regulatory Actions Are Needed to Ensure Comprehensive Oversight of Crypto Assets | GAO-23-105346 | July |
| Financial Stability Oversight Council: Assessing Effectiveness Could Enhance Response to Systemic Risks | GAO-23-105708 | September |
| Financial Technology: Agencies Can Better Support Workforce Expertise and Measure the Performance of Innovation Offices | GAO-23-106168 | October |
| Credit Cards: Pandemic Assistance Likely Helped Reduce Balances, and Credit Terms Varied Among Demographic Groups | GAO-23-105269 | October |
| Financial Audit: Bureau of the Fiscal Service's FY 2023 and FY 2022 Schedules of Federal Debt | GAO-24-106340 | November |
| Economic Downturns: Effects of Automatic Spending Programs and Taxes | GAO-24-106056 | December |
| Work Arrangements: Improved Collaboration Could Enhance Labor Force Data | GAO-24-105651 | December |
| Small Business Administration: Procedures for Reporting on Veteran-Owned Businesses Need Improvement | GAO-24-106071 | December |
| Federal Reserve Lending Programs: Status of Monitoring and Main Street Lending Program | GAO-24-106482 | December |
Table C.3. Projects active at year-end 2023
| Subject of project | Month initiated | Status |
|---|---|---|
| Technology needs of community development financial institutions and minority depository institutions | October 2022 | Closed 4/11/24 |
| Federal Reserve stress tests and capital requirements | October 2022 | Open |
| Eviction data collection | March 2023 | Closed 2/28/24 |
| Currency Transaction Reports | March 2023 | Open |
| Communication and escalation of supervisory concerns | May 2023 | Open |
| Use of minority- and women-owned asset management firms in federal retirement plans and endowments | June 2023 | Open |
| Communication and escalation of supervisory concerns for Silicon Valley Bank and Signature Bank | July 2023 | Closed 3/6/24 |
| The Federal Home Loan Banks and the failures of First Republic Bank, Signature Bank, and Silicon Valley Bank | August 2023 | Closed 4/8/24 |
| The 2023 systemic risk determinations | August 2023 | Open |
| Older workers' employment and finances during the pandemic | September 2023 | Open |
| Executive compensation at failed banks | October 2023 | Open |
| Debt limit impasse effects | November 2023 | Open |
| Peer-to-peer payment app scams | November 2023 | Open |
| Authorized payment fraud | November 2023 | Open |
Footnotes
1. A criminal information is a written accusation made by a public prosecutor, without the intervention of a grand jury. Return to text