RESTRICTED - Not to be released outside the General Accounting Office except on the basis of specific approval by the Office of Legislative Liaison, a record of which is kept by the Distribution Section, Publications Branch, OAS RELEASED Audit of Senate Employees Barber Shop, Calendar Year 1970 B.133046 United States Senate BY THE COMPTROLLER GENERAL OF THE UNITED STATES JUH'1E 9 1 1 97 COMPTROLLER GENERAL OF THE UNITED STATES WASHINGTON. D.C. 20548 B-133046 Dear Mr. Dunphy: We have examined into the financial transactions of the SENATE EMPLOYEES BARBER SHOP for the calendar year 1970 pur- suant to your request dated December 22, 1970. Our examina- tion included appropriate tests, to the extent permitted by the accounting records, and such other auditing procedures as we considered necessary. We did not obtain the head barber's comments on the matters discussed in this report. GENERAL COMMENTS The barber shop was established about 1928 to provide convenient, efficient, and economical services to employees of the Senate. The shop was managed by the head barber, under the direction of the Senate Committee on Rules and Administra- tion and the Sergeant at Arms of the Senate. At December 31, 1970, the staff consisted of the head barber, four regular bar- bers, and a shoeshine boy who also served as a part-time jani- tor. Each barber held a license from the District of Columbia Board of Barber Examiners. Income was received principally from barber services per- formed for the following fees. Haircut $1.5 0 a Shave 1.00 Tonic .35 Massage 1.75 Shampoo 1.75 Shoeshine .25 aIncreased from $1.25, effective May 1, 1970. In addition to the fees received from barber services, other income was received from the sale of combs and nail clippers. The head barber collected the receipts from all barber ser- vices and paid the other barbers as compensation 75 percent of the receipts for the services they had performed. The head barber retained 100 percent of the receipts for the services 50TH ANNIVERSARY 1921-1971 B-133046 he had performed. The head barber deducted from the compensa- tion of each of the other barbers Federal income taxes, Dis- trict of Columbia income taxes, and uniform rental and laundry expenses. The shoeshine boy, who provided his necessary sup- plies, retained all receipts from shoeshine operations. The head barber, in addition to participating in the receipts, received a management fee consisting of the net in- come from shop operations, that is, the total income less the compensation of the barbers and shop expenses. Appropriated funds were used to supplement the earnings of the barber shop employees. An annual salary of $4,476 was paid to the head barber and to each of the other barbers. The shoeshine boy was paid $2,220, on the basis of an hourly rate, to supplement the income from his operations for the year. The barbers are classified as custodial employees of the Archi- tect of the Capitol, under sections 501 and 502 of the Federal Employees Pay Act of 1945, as amended (2 U.S.C. 60e-3, 60e-4). COMMENTS ON ACCOUNTING RECORDS The head barber is responsible for maintaining the ac- counting records of the shop. The only formal records main- tained are cash register tapes, payroll records--payments to the barbers--and summary ledger sheets. The ledger sheets sum- marized the weekly amounts paid to each barber as gross pay; the deductions for taxes, etc.; net pay; and the amounts paid for supplies and laundry service. Receipts from barber services were recorded through the use of a cash register. Each barber was assigned a number, which appeared on the register tape next to his recorded re- ceipts. At the end of each week, the head barber totaled the receipts for each barber, prepared the payroll record, and paid each barber on the basis of his recorded receipts. We found that the payroll records contained numerous arithmetical errors. Although the net dollar effect of these errors was not considered significant, the number of errors indicated that not enough care was being given to the preparation of the payrolls. 2 B-133046 Expenses of the barber shop are paid in cash, except for magazine expenses and taxes, both of which are paid by the head barber's personal check. The head barber maintains a file of paid invoices, which are used as source documents to record the expenses in the summary ledger sheets. STATUS OF ITEMS PREVIOUSLY REPORTED In our report for calendar year 1969, we commented on the sale of sundry items, the declaration of tips, and the leave system. During our review for calendar year 1970, we noted that: -- The head barber started recording the sale of sundry items (combs and nail clippers) on a monthly basis be- ginning in August 1969. He failed, however, to rec- ord or report any of these sales for the second half of 1970 to your office. (For statement purposes, we estimated the sales for the year on the basis of the selling price of goods purchased for resale.) --All barbers had filed weekly declarations of tips. We noted that one barber, despite the amount of his gross receipts, had reported receiving no tips during the entire year. -- The head barber, contrary to requirements, had not re- ported leave usage to your office quarterly during cal- endar year 1970, nor had he maintained individual leave records. The daily time sheets showed that the five barbers employed during the year had taken a total of 16 weeks and 3 days of annual leave and 21 weeks of sick leave. COMMENTS ON THE SHOP OPERATION Recorded receipts from the barber services for the calen- dar year 1970 was $685 less than those for calendar year 1969, as shown below. B-133046 Receipts Increase or Quarter 1970 1969 decrease(-) First $ 4,070 $ 4,742 -$672 Second 4,644 4,465 179 Third 4,694 4,516 178 Fourth 4,331 4,701 -370 Total $17,739 $18,424 -$685 COMMENTS ON FINANCIAL STATEMENT The accompanying comparative statement of income and ex- penses and compensation to barbers was prepared by us from records maintained and information furnished by the head bar- ber. The statement does not include the cost of certain bene- fits and services furnished to the barber shop without charge, such as space, utilities, telephone service, permanent equip- ment, furniture, painting, and repairs. Because of the small size and character of the operations of the barber shop, the usual accounting controls do not exist. We believe that, under these circumstances, the reliance that can be placed upon the financial statement depends upon the degree of confidence in the manner in which the financial rec- ords have been maintained. Our audits of the Senate Employees Barber Shop give us serious doubt as to whether the financial records maintained by the head barber are accurate and com- plete. Therefore we are not expressing an opinion on the ac- companying financial statement. Sincerely yours, Comptroller General of the United States Enclosure The Honorable Robert G. Dunphy Sergeant at Arms United States Senate 4 SCHEDULE 1 SENATE EMPLOYEES BARBER SHOP COMPARATIVE STATEMENT OF INCOME AND EXPENSES AND COMPENSATION TO BARBERS FOR CALENDAR YEARS 1970 AND 1969 1970 1969 INCOME (note a): Barber services $17,739 $18,424 Merchandise sales (estimated) 50 53 Total income $17,789 $18,477 COMPENSATION: Barbers (note a): Alexander C. Culver $ 4,446 $ 4,221 Alonzo G. Nicholson 1,528 1,159 Philip Johnson 3,212 2,668 John F. Nicholson - 919 Henry T. Hampton - 2,539 Edward Bronson 2,545 2,323 John Martin 2,685 1,188 Earl Anderson - 146 Total compensation 14,416 15,163 OPERATING EXPENSES: Supplies 348 320 Laundry 374 406 Magazines (note b) 54 180 Total operating expenses 776 906 MANAGEMENT FEE TO ALEXANDER C. CULVER, HEAD BARBER 2,597 2,408 Total compensation, operating expenses, and management fee $17,789 $18,477 aExclusive of tips and of salary paid by the Architect of the Capitol from appropriated funds. bContrary to requirements, magazine expense was not posted in the ledger, nor was it reported to the Sergeant at Arms each quarter. U.S. GAO, Wash., D.C.
Audit of Senate Employees Barber Shop, Calendar Year 1970
Published by the Government Accountability Office on 1971-06-18.
Below is a raw (and likely hideous) rendition of the original report. (PDF)