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Audit of the House Beauty Shop, Calendar Year 1970

Published by the Government Accountability Office on 1971-06-09.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

Audit Of The
t-louse Beauty Shop
Calendar Year 1970
                           8.162878


House Of Representatives




BY THE COMPTROLLER    GENERAL
OF THE UNITED  STATES



                                  JUNE   9,%9-V
                          e
                  z                                                 Y
                                                        4



                           COMPTROLUER       GENERAL         Ol-    THE       UNITED   STATES
                                           WASHINGTON          DC         20548




B- 162878



Dear     Madam        Chairman*

          The General         Accounting        Office     has made         an audit     of the fmanclal
transactions          of the House       Beauty      Shop for calendar             year 1970 as re-
quired      by the Leglslatrve           Branch      Approprlatlon           Act, 1970 (83 Stat. 338).
Our audrt was made              m accordance           with generally           accepted      auditing
standards        and mcluded        an exammnatlon            of selected        fmancaal      transac-
tions,     appropriate       tests of the accounting               records,       and such other        au-
dltmg      procedures       as we considered             necessary.

GENERAL          CO MMX       NTS

        The House    Beauty     Shop provides        convenient     beauty    facllltles       for
Congresswomen,       wives     of Congressmen,           and congressional          employees,
as well   as the general     public.     The shop IS operated           by Mrs.        Betty    Jane
Oszust,    Manager,   under     a fuced-fee     contract.        As of December           31, 1970,
the staff of the Beauty      Shop consisted        of the manager,         14 beauticians,
three   manrcurlsts,     two maids,      a receptlomst,         and an electrologist.

          The House      Beauty       Shop was orrgmally               established         about     1932.
The shop was reorganized                 on December            11, 1967, pursuant             to House
Resolution         1000, Ninetreth       Congress,       which        created        a Select     Commlt-
tee on the House          Beauty      Shop, placed       management               of the shop and all
matters       connected      therewith     under      the direction            of the Select        Commlt-
tee, and authorized           the Committee          to use not more               than $15,000        of the
House      contingent     fund for the purchase              of lmtlal        equipment        and mate-
rials.     As of December            31, 1970, the entrre             $15,000        had been repaid        to
the Clerk        of the House      for deposrt      to the contingent               fund as shown m
the comparatrve          statement       of assets,      lrabllitles,          and equity       (schedule      1).

         As  shown in the comparative             statement     of income,      expenses,      and
retained    earnings     (schedule     2), the shop realized          a net income      of
$9,288    in calendar     year     1970 compared          with $8,625     m calendar      year
 1969.   The Increase       was partially       attributable      to a June 1970 increase
in shop prices       for all beauty     services,        except  services    for wigs      and
wIglets




                        50TH ANNIVERSARY                    1921- 1971
B-162878



LEGISLATIVE           BRANCH        APPROPRIATION             ACT,     1970

        The Leglslatlve       Branch    Approprlatron      Act, 1970, made the Select
Commattee      on the House      Beauty    Shop a permanent      commrttee   and pro-
vided   for annual     audits  of the operations      of the Beauty   Shop by the Gen-
eral Accountnng       Office

         The act establlshed,          effective    January       1, 1970, a self-sustalmng        re-
volving    fund in the Treasury            of the United      States   for the Beauty       Shop   All
recerpts      of the Beauty       Shop are deposIted         m the fund and are avarlable
without    fiscal    year limltatlon        for disbursement         by the Clerk      of the House
for payment        of expenses       of the Beauty      Shop.

        Prior     to the ebtablishment      of the fund, a checking      account     for de-
posit   of receipts     and payment      of expenses    was maintained      wrth the Na-
tional   Savings     and Trust     Company,    Washmgton,    D C. During         1970 the
account     was closed     and the funds were transferred          to the revolving      fund

           The act also requred        that the net income          from     shop operatrons,         as
 established     by our annual      audit,   after    restoring     any impairment          of capital
 and provldmg       for replacement        of equnpment,        be transferred        to the general
fund of the Treasury.           We computed        the net income        to be transferred         to
the Treasury       for calendar      year 1970 and prior           years     as follows.

Retamed       earnings       as of December       31, 1970                                $21,067      30
Capital     authorized        pursuant   to H Res      1000,
    90th Gong.                                                   $15,000      00
Provrsion       for replacement         of equipment     (ac-
    cumulated        depreclatlon      as of December        31,
    1970)                                                           3,916     46            18,916     46

       Net    mcome     to be transferred                                                 $ 2,150.84

ACCOUNTING            SYSTEM

         Durmg       1970 employees      of the General      Accounting      Office,   other     than
those    responsible      for the au&t     of the records,       assisted   the manager         of
the Beauty       Shop in maintalmng        the accountmg        records      The manager,
however,       continued     to maintain    the payroll    records.       We suggested       that

                                                  2
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    B-162878



    the manager         employ  a part-time     bookkeeper    to maintarn     all the account-
    ing records        for the Beauty     Shop   The manager     stated   that a part-time
    bookkeeper         would be employed       m the near future

            In Aprrl     I970 the     Select Committee                 approved       the     accounting     system
    which     we had     designed     for the Beauty               Shop

    FINANCIAL          STATE~YXNTS

             The accompanpng                 fmancral      statements        for the House      Beauty      Shop
    were prepared             by us from        records      furmshed        by the manager       of the shop
    In preparrng           the statements,          we adJusted       the shop* s records,        whxh      were
    mantamed             on a cash basis,         to present      the frnancnal      posltlon    and operat-
    mg results           of the House        Beauty     Shop on an accrual          basrs      These     state-
    ments     do aot Include          the cost of certam            benefits     and services-      -such     as
     space,   utllltles,       local    telephone       servxe,      and repairs--furmshed             to the
    Beauty     Shop wrthout          charge

              In our oplmon,        the accompanymg            statements        (schedules      1, 2, and
    31, which       were prepared        on a basis      consistent       -Pnth that of the preced-
    mg year and m accordance                 with the fmanclal          arrangements          described
    above,      present      fairly  the financial    posatzon       of the House        Beauty     Shop at
    December          31, 1970, the results        of its operations,          and the sources          and
    applxatlon         of Its funds for the year then ended

            As required      by the       Leglslatlve             Branch  Approprlatlon              Act,    1970,
     copies   of thxs report    are       being      sent       to the Speaker      of the        House     and to
    the Clerk     of the House

                                                                Sincerely    your     6,




                                                                Comptroller         General
                                                                of the Umted        States

    The Honorable          Martha    W. Grlfflths,        Chairman
    Select Commrttee           on the House        Beauty     Shop
    House  of Repre        sentatlve  s

                                                            3
                                                                               SCHEDULE1

                          HOUSE               BEAUTY            SHOP


         COMPARATIVESTATEMENTOF ASSETS, LIABILITIES,                   AND WUlTY
                              DECEMBER31, 1970 AND 1969


                                            ASSETS
                                                                              1970        1969
CURRENTASSETS
   Cash                                                                     $ 6,862     $ 6,305
   Accounts receivable                                                           128         109
    Inventory of rnerchandlse          and supplies       (at cost)           4.589       4,043
   Prepaid insurance                                                            -514         425
                  Total     current       assets                             12,093      10,882
FIXED ASSETS
    Equipment and fixtures                                                   15,827      14,040
         Less allowance for          depreciation                             3,916       2,498
                  Total    fixed      assets                                 11,911      11,542
                  Total    assests                                          $24,004     $22,424


                LIABILITIES                             AND      EQUITY
CURRENTLIABILITIES
   Accounts payable                                                         $ 2,029     $ 1,742
   Employees' Federal and State taxes withheld                                   693      2,515
   Employer's payroll     taxes payable                                          215      1,354
    Sales taxes collected                                                                     34
                  Total     current       liablllties                         2,937       5,645
EQUITY OF THE HOUSEOF REPRESENTATIVES
    Capital provided pursuant toH. Res.1000,                  90th Gong..
         Balance at beginning of year                                         5,000      15,000
              Less repayments                                                 5,, 000    10,000
         Balance at end of year                                                           5,000
    Retained   earnings                                                      21,067      11,779
                  Total     equity                                           21,067      16,779
                  Total     liabilities          and equity                 $24,004     $22,424
                                                                                         -I__
 SCHEDULE 2

                      HOUSE                BEAUTY                SHPP

                 CoMFmTIm             s            OF INC       t EPENSES,

                                ANDRETAINED              INGS

                                                  s 1970 AND 1969

                                                                 1970                    1969


        Beauty operations                                          $156,150            $153,225
        Sales of merehandfse                            $9,442                            5,356
        Less cost of goods sold           (note    a)    7,009           2,433

GROSS PROFIT FROM OPERATIONS                                        158,583             158,581

OPERATING EXPENSES:
    Salaries :
         Beauticians                                                    87,000           86,274
         Mamcurists                                                     10,879            8,269
         Receptionist                                                    6,349            5,574
         Maids                                                           4,717            4,284

                 Total     salaries                                 108,945             104,401
        Supphes                                                         13,236           18,275
        Managerial     fee                                              14,168           14,499
        Bonus to manager                                                 1,000
        Payroll    tax                                                   7,173            6,395
        Laundry                                                             624           1,378
        Office                                                              883              606
        Insurance                                                        1,265            1,462
        Depreciataon                                                     1,523            1,398
        Accounting                                                                           600
        Miscellaneous                                                    636                 942
                  Total operating         expenses                  149,453             149,956
NET INCOME FROM OPERATIONS                                               9,130            8,625
MISCELLANEOUS INCOME                                                       158

NET INCOME FOR THE YEAR                                            $ 9,288             $ 8,625

RETAINED EARNINGS:
    Balance at begmning of year                                    $ 11,779            $ 3,154
    Add net Income for year                                           9,288               8,625
                 Balance     at end of year                        $ 21,067            $ 11,779
'Cost     of goods sold In 1969 was included                in expenses          for   supplaes.
                                                                             4
                                                                SCHEDULE 3


                 HOUSE           BEAUTY           SHOP



                 COMPARATIVE STATEMENT OF S@URCES

                      AND APPLICATION       OF FUNDS

                   CALENDAR YEARS 1970 AND 1969
                                                       1970        1969

FUNDS PROVIDED:
    Sales                                         $165,593       $158,581
    Miscellaneous Income                                228
    Decrease In working  capital                                      514
         Total    funds    provided               $165,821       $159,095
FUNDS APPLIED:
    Operating    expenses                         $154,939       $148,558
    Eqzaipment addltlons                              1,963            537
    Return of capital     provided        pur-
       suant to H. Res. 1000,
       90th Cong.                                       5,000      10,000
    Increase   in working    capital                    3,919
         Total     funds   applied                 $165,821      $159,095