The U.S. Equal Employment Opportunity Commission
US EEOC Performance and Accountability Report FY 2004


Letterhead: Cotton and Company LLP

Inspector General
Equal Employment Opportunity Commission

Independent Auditor's Report

Cotton & Company LLP audited the accompanying Consolidated Balance Sheets of the Equal Employment Opportunity Commission (EEOC) as of September 30, 2004 and 2003; the related Consolidated Statements of Net Cost of Operations, Changes in Net Position, and Financing; and the Combined Statement of Budgetary Resources for the years then ended. These financial statements are the responsibility of EEOC management and were prepared in accordance with Office of Management and Budget (OMB) Bulletin 01-09, Form and Content of Agency Financial Statements, as amended. Our responsibility is to express an opinion on the financial statements based on our audit.

Except as discussed in the following two paragraphs, we conducted our audits in accordance with Government Auditing Standards, auditing standards generally accepted in the United States of America, and OMB Bulletin 01-02, Audit Requirements for Federal Financial Statements. These standards 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 examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

We were unable to satisfy ourselves that the EEOC's fiscal year (FY) 2003 balance sheet estimate of $12.1 million for its future workers' compensation payment liability was fairly stated. This estimate is material to the financial statements and should have been, but was not, actuarially based.

Because beginning balances for FY 2003 were not audited, the scope of our work was not sufficient to enable us to express, and we do not express, an opinion on the Statements of Net Cost, Changes in Net Position, Budgetary Resources, and Financing for the year ended September 30, 2003.

In our opinion, the Balance Sheet as of September 30, 2004, the related Statements of Net Cost of Operations, Changes in Net Position, Budgetary Resources, and Financing for the year ended September 30, 2004, present fairly in all material respects the financial position of EEOC for the year ended September 30, 2004, in conformity with accounting principles generally accepted in the United States of America.

In our opinion, except for the effects of any adjustments that might have been necessary had an actuarial estimate of the liability for future workers' compensation payments been performed, the Balance Sheet as of September 30, 2003, presents fairly, in all material respects, the financial position of EEOC as of September 30, 2003, in conformity with accounting principles generally accepted in the United States of America.

We conducted our audit for the purpose of forming an opinion on the fiscal year 2004 and 2003 financial statements taken as a whole. Certain portions of the Performance and Accountability Report are not a required part of the basic financial statements, but are required by OMB Bulletin 01-09 and the Federal Accounting Standards Advisory Board's Statement of Federal Financial Accounting Standards No. 15, Management's Discussion and Analysis.

There are two types of material within EEOC's Performance and Accountability Report that are not a part of EEOC's basic financial statements: Management's Discussion and Analysis (MD&A) and other accompanying information. MD&A describes EEOC and its mission, activities, program and financial results, and financial condition. MD&A is required supplementary information. With respect to EEOC's MD&A, we made certain inquiries of management and compared the information for consistency with EEOC's audited financial statements and against other knowledge we obtained during our audit.

Other accompanying information consists of the full Performance and Accountability Report except for MD&A, basic financial statements and notes to the financial statements, and this auditor's report. With respect to other accompanying information, we compared the information for consistency with the audited financial statements. Based on these limited procedures, we found no material inconsistencies among the MD&A or other accompanying information and financial statements or notes. We did not audit MD&A or the other accompanying information and therefore express no opinion on them.

In accordance with Government Auditing Standards, we issued separate reports dated November 1, 2004, on EEOC's internal control and compliance with laws and regulations. Our reports on internal control and compliance are an integral part of an audit conducted in accordance with Government Auditing Standards and, in considering audit results, these reports should be read together with this report.

COTTON & COMPANY LLP

Signature of Colette Wilson

Colette Wilson, CPA

November 1, 2004
Alexandria, Virginia


This page was last modified on November 18, 2004

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