The Federal Reserve Board released the 2022 combined annual audited financial statements for the Reserve Banks. An independent public accounting firm engaged by the Board issued unqualified opinions, asserting that its audit found the financial statements for the Board and the Reserve Banks to be free of material misstatements in accordance with the applicable auditing standards. The Board released preliminary income and expense data earlier this year.
Additionally, the Board released individual statements for the 12 Federal Reserve Banks, the Board and three limited liability companies (LLCs) related to lending facilities established to support the Federal Reserve's pandemic response. The audited financial statements provide information about the assets, liabilities, and earnings of the Federal Reserve Banks, the Board, and the LLCs as of Dec. 31, 2022.
The Federal Reserve Act requires the Reserve Banks to remit excess earnings to the U.S. Treasury after providing for operating costs, payments of dividends, and any amount necessary to maintain surplus at the statutory limit. During a period when earnings are less than these costs, a deferred asset is recorded, representing a shortfall in earnings from the most recent point that remittances to the Treasury were suspended.
During 2022, the Reserve Banks transferred $76.0 billion from weekly earnings as compared to $109 billion in 2021, and in the fall, they first suspended weekly remittances to the Treasury and began accumulating a deferred asset, which totaled $16.6 billion by the end of the year. A deferred asset has no implications for the Federal Reserve's conduct of monetary policy, its operations, or its ability to meet its financial obligations.
Additional information in the audited financial statements of the Reserve Banks includes:
Total assets of the Reserve Banks as of Dec. 31, 2022, were approximately $8.6 trillion, a decrease of $187.0 billion from the previous year. Total assets were composed primarily of $8.4 trillion of U.S. Treasury securities, and federal agency and government-sponsored enterprise mortgage-backed securities acquired through open market operations. The Federal Reserve Bank of New York provides additional detailed information about open market operations and securities holdings on an ongoing basis on its website.
The Board engaged KPMG LLP to audit the financial statements of the Reserve Banks and the LLCs in accordance with standards issued by the American Institute of Certified Public Accountants and the Public Company Accounting Oversight Board, and the audit of the Board's financial statements was also conducted in accordance with the Generally Accepted Government Auditing Standards. KPMG also conducted audits of internal controls over financial reporting for the 12 individual Reserve Banks and the Board.