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Report on the Audited Financial Statements for Fiscal Year 2017 - Saint Lawrence Seaway Development Corporation

Required by the Government Corporation Control Act of 1945
Project ID: 
FI2018003
What We Looked At
In accordance with the Government Corporation Control Act of 1945, we have audited the financial statements of the Saint Lawrence Seaway Development Corporation (SLSDC), a U.S. Government Corporation, comprising SLSDC’s statement of financial position as of September 30, 2017; statements of operations and changes in cumulative results of operations, cash flows, budgetary resources and actual expenses, and changes in equity of the U.S. Government for the year then ended; and the related notes to the financial statements. SLSDC’s financial statements for the year ended September 30, 2016, were audited by other auditors who expressed an unmodified opinion on those financial statements in their report dated October 14, 2016.
 
What We Found
Regarding controls over financial reporting of FECA actuarial liabilities—In its draft fiscal year 2017 and prior financial statements, SLSDC presented Worker’s Compensation Benefits as an asset but did not record them in its accounting records or have support for the asset. SLSDC acknowledged this presentation error, corrected the presentation for fiscal year 2017, and restated the fiscal year 2016 financial statements to remove it.
 
Regarding controls over reporting financial activities for the Seaway International Bridge—SLSDC did not record revenues from bridge operations or expenses associated with service job orders in its accounts throughout the fiscal year. Furthermore, evidence of past transactions resulting in current obligations did not support the liability for bridge repairs as of October 1, 2016. SLSDC had to restate its fiscal year 2016 financial statements to recognize and present surplus allocations, interest, and gains/losses totaling $225,030, and bridge repair expenses totaling $245,093.
 
Regarding controls over property, plant and equipment (PP&E)—In a statistically selected sample of 73 PP&E assets, we found that depreciation for numerous assets was not recorded correctly due to conversion to a new financial management system. For example, two assets were depreciated using incorrect depreciation schedules and five were depreciated using incorrect or inappropriate useful lives.
 
A potential violation of 31 U.S.C. § 9107(b)—SLSDC allowed the Seaway International Bridge Corporation (SIBC), a Canadian corporation to hold $3,171,712 on its behalf in foreign bank and investment accounts. Without a waiver from the Secretary of Treasury, this could be a violation of 31 U.S.C. § 9107(b).
 
Recommendations
We made 11 recommendations to help SLSDC improve its financial management practices and controls. SLSDC concurred with all of our recommendations.

Recommendations

Open

Closed

Closed on 07.31.2018
No. 1 to SLSDC

Improve and implement reconciliation (walkthrough) procedures during the financial statement preparation process to ensure information included in its financial statements is supported by underlying accounting records and transactions.

Closed on 09.19.2019
No. 2 to SLSDC

Develop and implement accounting policies and procedures to recognize and record SLSDC's share of activities related to the operation of the South Channel Span of the Seaway International Bridge.

Closed on 09.19.2019
No. 3 to SLSDC

Develop and implement accounting policies and procedures to recognize and record SLSDC's expense activity associated with executed bridge repair service job orders.

No. 4 to SLSDC

Develop and implement accounting policies and procedures to recognize and record SLSDC's liabilities with SIBC for open service job orders.

Closed on 07.31.2018
No. 5 to SLSDC

Establish controls to ensure the appropriate useful lives of assets are recorded in the accounting system when new assets are placed into service.

Closed on 07.31.2018
No. 6 to SLSDC

Establish controls to review the nature and scope of projects prior to closure and conversion to PP&E to ensure that assets are properly recorded in the PP&E records.

Closed on 05.30.2018
No. 7 to SLSDC

Update asset disposal policy to better define procedures for disposal and establish specific parameters for timely completion.

Closed on 05.30.2018
No. 8 to SLSDC

Enhance certificates of disposal to include asset ID numbers to expedite disposal actions.

Closed on 12.19.2018
No. 9 to SLSDC

Perform a complete physical inventory of PP&E as required by SLSDC policy and research any differences identified.

Closed on 05.30.2018
No. 10 to SLSDC

Update the property records to include the serial numbers for buoys.

Closed on 05.30.2018
No. 11 to SLSDC

Coordinate with the Department of the Treasury to determine the appropriate treatment and custody of its funds currently held by SIBC.