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Report of the Independent Auditors

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KPMG LLP
2001 M Street, NW
Washington, DC 20036-3389

Independent Auditors’ Report

Chairman and Inspector General of the
U.S. Commodity Futures Trading Commission:

We have audited the accompanying balance sheet of the Commodity Futures Trading Commission (CFTC) as of September 30, 2010, and the related statements of net cost, changes in net position, custodial activity, and budgetary resources (hereinafter referred to as “ financial statements”) for the year then ended. The objective of our audit was to express an opinion on the fair presentation of these financial statements. In connection with our fiscal year 2010 audit, we also considered CFTC’s internal control over financial reporting and tested CFTC’s compliance with certain provisions of applicable laws, regulations, and contracts that could have a direct and material effect on the financial statements. The accompanying financial statements as of September 30, 2009, were audited by other auditors whose report thereon, dated November 13, 2009, expressed an unqualified opinion on those financial statements.

Summary

As stated in our opinion on the financial statements, we concluded that CFTC’s financial statements as of and for the year ended September 30, 2010, are presented fairly, in all material respects, in conformity with U.S. generally accepted accounting principles. The accompanying financial statements as of September 30, 2009, were audited by other auditors whose report thereon, dated November 13, 2009, expressed an unqualified opinion on those financial statements.

Our consideration of internal control over financial reporting was not designed to identify all deficiencies in internal control over financial reporting that might be deficiencies, significant deficiencies, or material weaknesses. We did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses as defined in the Internal Control Over Financial Reporting section of this report.

The results of our tests of compliance with certain provisions of laws, regulations, and contracts disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards, issued by the Comptroller General of the United States, and Office of Management and Budget (OMB) Bulletin No. 07-04, Audit Requirements for Federal Financial Statements, as amended.

The following sections discuss our opinion on CFTC’s financial statements; our consideration of CFTC’s internal control over financial reporting; our tests of CFTC’s compliance with certain provisions of applicable laws, regulations, and contracts; and management’s and our responsibilities.

Opinion on the Financial Statements

We have audited the accompanying balance sheet of the Commodity Futures Trading Commission as of September 30, 2010, and the related statements of net cost, changes in net position, custodial activity, and budgetary resources for the year then ended. The accompanying financial statements as of September 30, 2009, were audited by other auditors whose report thereon, dated November 13, 2009, expressed an unqualified opinion on those financial statements.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Commodity Futures Trading Commission as of September 30, 2010, and its net costs, changes in net position, custodial activity, and budgetary resources for the year then ended, in conformity with U.S. generally accepted accounting principles.

The information in the Management’s Discussion and Analysis section is not a required part of the financial statements, but is supplementary information required by U.S. generally accepted accounting principles. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of this information. However, we did not audit this information and, accordingly, we express no opinion on it.

Internal Control Over Financial Reporting

A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected on a timely basis.

Our consideration of internal control over financial reporting was for the limited purpose described in the Responsibilities section of this report and was not designed to identify all deficiencies in internal control over financial reporting that might be deficiencies, significant deficiencies, or material weaknesses. In our fiscal year 2010 audit, we did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses, as defined above.

Compliance and Other Matters

The results of our tests of compliance described in the Responsibilities section of this report, exclusive of those referred to in FFMIA, disclosed no instances of noncompliance or other matters that are required to be reported herein under Government Auditing Standards or OMB Bulletin No. 07-04.

The results of our tests of FFMIA disclosed no instances in which CFTC’s financial management systems did not substantially comply with the (1) Federal financial management systems requirements, (2) applicable Federal accounting standards, and (3) the United States Government Standard General Ledger at the transaction level.

* * * * * * *

Responsibilities

Management’s Responsibilities. Management is responsible for the financial statements; establishing and maintaining effective internal control; and complying with laws, regulations, and contracts applicable to CFTC.

Auditors’ Responsibilities. Our responsibility is to express an opinion on the fiscal year 2010 financial statements of CFTC based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and OMB Bulletin No. 07-04. Those standards and OMB Bulletin No. 07-04 require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of CFTC’s internal control over financial reporting. Accordingly, we express no such opinion.

An audit also includes:

We believe that our audit provides a reasonable basis for our opinion.

In planning and performing our fiscal year 2010 audit, we considered CFTC’s internal control over financial reporting by obtaining an understanding of CFTC’s internal control, determining whether internal controls had been placed in operation, assessing control risk, and performing tests of controls as a basis for designing our auditing procedures for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of CFTC’s internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of CFTC’s internal control over financial reporting. We did not test all internal controls relevant to operating objectives as broadly defined by the Federal Managers’ Financial Integrity Act of 1982.

As part of obtaining reasonable assurance about whether CFTC’s fiscal year 2010 financial statements are free of material misstatement, we performed tests of CFTC’s compliance with certain provisions of laws, regulations, and contracts, noncompliance with which could have a direct and material effect on the determination of the financial statement amounts, and certain provisions of other laws and regulations specified in OMB Bulletin No. 07-04, including the provisions referred to in Section 803(a) of FFMIA. We limited our tests of compliance to the provisions described in the preceding sentence, and we did not test compliance with all laws, regulations, and contracts applicable to CFTC. However, providing an opinion on compliance with laws, regulations, and contracts was not an objective of our audit and, accordingly, we do not express such an opinion.

This report is intended solely for the information and use of CFTC’s management, CFTC’s Office of Inspector General, OMB, the U.S. Government Accountability Office, and the U.S. Congress and is not intended to be and should not be used by anyone other than these specified parties.

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November 10, 2010

 

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