The Department is please to respond to your audit report on the Highway Trust Fund (HTF) FY 2004 and FY 2003 Financial Statements. For the sixth consecutive year we have achieved an unqualified audit opinion on the HTF Financial Statements.
We concur with the four material weaknesses and the reportable conditions contained in your report. The Department plans to submit a detailed Action Plan to the Inspector General no later than December 15, 2004, to address the findings contained in your report. We generally agree with the recommendations contained in the report and will use them as a basis for our corrective action measures.
The Statement of Budgetary Resources was restated for FY 2003, per Office of Management and Budget (OMB) guidance. The revised amounts reflect adjustments to correct several years of inaccurate reporting to the Highway Trust Fund by the Department of Treasury's (Treasury) Bureau of Public Debt (BPD). The revised amounts accurately reflect the total budgetary resources and the status of budgetary resources pursuant to the requirements of Treasury and the Standard General Ledger crosswalk FY 2004 amounts have been reported accurately, per Treasury and OMB guidance.
The Department recognizes that achieving an unqualified audit was accomplished through our joint efforts. The problems identified during the FY 2004 and FY 2003 audits revealed weaknesses in accounting practices and policies that have existed for many years. With the FY 2003 audit begin completed at the end of January 2004 and the FY 2004 audit beginning in mid July, there was little time available to accomplish corrective actions. During FY 2004, the Federal Highway Administration (FHWA) took aggressive actions to implement corrective measures. FHWA did, however, experience a number of issues that impacted their success in the short time available. These included, the complexity of researching old differences between feeder systems and the accounting system, the time needed to train new staff and implement reconciliation procedures, and the loss of the senior FHWA accountant responsible for preparing the financial statements.
We are committed to continue to work with FHWA as they continue implementing corrective action measures and take steps to enhance the processes by supplementing existing staff with more experienced contractors or Federal employees.
The Department's Office of Financial Management will work closely with the HTF OAs and provide guidance on the corrective action implementations to ensure the Department is complying with OMB and Treasury standards.
I would like to thank you and your staff for effort and continuing professionalism exhibited during the course of the audit.
Cc: Kenneth Mead
 Inspector General
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