The CFPB has issued its financial report for its 2014 fiscal year, which ended on September 30, 2014. Perhaps most illustrative of the CFPB’s growth are the report’s statistics on the CFPB’s employees and funding. The report indicates that the number of CFPB employees grew from 663 in FY 2011 to 1,443 in FY 2014. Transfers to the CFPB from the Fed (which are capped by Dodd-Frank at a pre-set percentage of the Fed’s total 2009 operating expenses, subject to an annual adjustment) increased from $162 million in FY 2011 to $534 million in FY 2014. The report also indicates that as of the end of FY 2014, 45% of the CFPB’s employees were in its Supervision, Enforcement and Fair Lending Division.
The report includes the CFPB’s annual report on its civil penalty fund (CPF). It states that as of September 30, 2014, the CPF had $112.8 million in funds available for future allocation to harmed consumers and/or financial education. Curiously, the report indicates that $13.38 million of the CPF was allocated for financial education in FY 2013 but there was no allocation in FY 2014. The report includes information on civil penalties collected by the CFPB in FYs 2013 and 2014, which amounted to, respectively, $49.5 million and $77.5 million. It also provides information on allocations made to consumers from the CPF during FYs 2013 and 2014.
The report contains an independent auditor’s report from the U.S. Government Accountability (GAO). In the audit report, the GAO states that during its FY 2014 audit, it found “serious control deficiencies that affected CFPB’s determination and reporting of accounts payable accruals. Specifically, we found that CFPB did not have effective procedures in place to determine and record an appropriate amount for goods and services received but not yet paid as of September 30, 2014. Additionally, CFPB did not have effective review procedures to timely detect and correct inaccuracies in the accrual amounts.”
The GAO concluded that these deficiencies “represent a material weakness” in the CFPB’s internal controls. The GAO notes that it had reported a significant deficiency in the CFPB’s reporting of accounts payable in its FY 2013 audit opinion but the corrective actions taken by the CFPB were insufficient to remedy the deficiency. (According to the GAO, a “significant deficiency is a deficiency in internal controls “that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.”) The GAO’s report outlines the steps the CFPB needs to take to remedy the deficiencies and warns that “because CFPB continues to grow as an agency, which has resulted in higher volumes of transactions each year, it is imperative that it address these issues in an effective and timely manner.” The GAO also found a significant deficiency in the CFPB’s internal controls over accounting for property and equipment.
In a letter responding to the GAO’s audit report, Director Cordray outlines various corrective steps the CFPB plans to take in FY 2015 to remediate the deficiencies found by the GAO.