oversight

Audit of the Stationery Revolving Fund, Fiscal Year 1971

Published by the Government Accountability Office on 1971-11-17.

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

I

    ,




            I-”   -I   .-   -
        I




                                epresentatives




             Y
            OF
                        COMPTROLLER       GENERAL     OF      THE       UNITED     STATES
                                        WASHINGTON.    D.C.         20548




        R-114862




9       Dear     Mr.   Jennings:

                 The accompanying          report        summarizes      the results      of our
        audit    of the Stationery      Revolving         Fund,    House   of Representa-
        tives,    for the fiscal    year ended          June 30, 1971.      The audit was
        made     pursuant     to your request          dated    May 26, 1971.

                A copy of this         report     is being              sent     to the     Chairman,
 A Pr   Committee     on House          Administration.                                                 /’ )   (I’ / “I’ I
2;
                                                       Sincerely                 yours,




                                                       Comptroller                      General
                                                       of the United                    States


        The Honorable        W, Pat Jennings
        Clerk of the      House  of Representatives




                                50TH   ANNIVERSARY                   1921-       1971
I
I           COMPTROLLER GENERAL ‘S                      AUDIT OF THE STATIONERY REVOLVING
I           REPORT TO THE CLER.U OF                     FUND, FISCAL YEAR 1971 B-114862
I           THE HOUSE OF REPRESENTATIVES
I

I            DIGEST
I           --M-w-

I
I           WHY THE AUDIT     WAS MADE

                  The General Accounting Office    (GAO) has made an audit of the S~oB~e-ry
                           &u,nd at the request    of the Clerk of the House of Representa-
                            See app. I.)                         $ v 2 !>'! .:?7‘ ,..
                                                                                  "

I           FINDINGS     AND CONCLUSIONS
I
I
I                 GAO found that several problems noted in its reports for fiscal     years
I
I                 1969 and 1970 had been eliminated--control    over the storeroom had been
    I             strengthened    and a realignment of duties had resulted  in a more effi-
    I
    I
                  cient operation.     (See p. 6.)

                  GAO believes that greater attention   should be given to the following
                  areas--sales to members, the display and pricing    of merchandise in the
                  salesroom, and the recording  of purchase returns and allowances.
                  (See p. 6.)

                  In GAO's opinion the accompanying f~~a,l+st&t~~e$s.,            prepared on a
                  basis consistent     with that of the preceding year and in accordance with
                  the accounting practice      and financial  arrangement described on page 8,
                  present fairly    the financial    position of the Stationery   Revolving Fund
                  at June 30, 1971, the results       of its operations,   and the sources and
                  application    of its funds for the year then ended.




        I
        I   Tear Sheet
                                                                        NOV.lf,l971
                         Contents
                                                         Page

DIGEST                                                    1
CHAPTER

  1        INTRODUCTICN
  2        OPERATIONS

  3        MANAGENENT
                    AND PROCEDURALCHANGES
  4        IMPROVEMENTSIN OPERATIONSAND MANAGEMENT
  5        SCOPEOF AUDIT
  6        OPINION OF FINANCIAL STATEMENTS
FINANCIAL STATEMENTS

SCHEDULE
  1        Comparative statement of assets and liabil-
             ities,  June 30, 1971 and 1970               10
  2        Comparative statement of operations and
             retained income for fiscal years ended
             June 30, 1971 and 1970                       11

  3        Comparative statement of sources and ap-
             plication of funds for fiscal years ended
             June 30, 1971 and 1970                       12
  4        Statement of members' stationery accounts
             for the fiscal year ended June 30, 1971      13
APPENDIX
  I        Letter from Clerk of the House of Represen-
             tatives, dated May 26, 1971                  15
                         ABBREVIATIONS

GAO   General    Accounting    Office

oss   Office    Supply   Service
COMPTROLLERGENERAL'S                        AUDIT OF THE STATIONERY REVOLVING
REPORTTO THE CLERK OF                       FUND, FISCAL YEAR 1971 B-114862
THE HOUSEOF REPRESENTATIVES


 DIGEST
-_----

WHYTHE AUDIT WASMADE

     The General Accounting Office     (GAO) has made an audit of the Stationery
     Revolving   Fund at the request   of the Clerk of the House of Representa-
     tives.    (See app. I.)


FINDINGS AND CONCLUSIONS
     GAO found that several problems noted in its reports for fiscal years
     1969 and 1970 had been eliminated--control    over the storeroom had been
     strengthened    and a realignment of duties had resulted  in a more effi-
     cient operation.     (See p. 6.)

     GAO believes that greater attention   should be given to the following
     areas--sales to members5 the display and pricing    of merchandise in the
     salesroom, and the recording  of purchase returns and allowances.
     (See p. 6.)

     In GAO's opinion the accompanying financial        statements,  prepared on a
     basis consistent     with that of the preceding year and in accordance with
     the accounting practice      and financial  arrangement described on page 8,
     present fairly    the financial    position of the Stationery   Revolving Fund
     at June 30, 1971, the results of its operations,         and the sources and
     application    of its funds for the year then ended.
                            CHAPTER1

                          INTRODUCTION

       The Stationery Revolving Fund, established     by the act
of July 17, 1947 (2 U.S.C. 46b-11, is administered by the
Office Supply Service (OSS) under the jurisdiction        of the
Clerk of the House of Representatives,     subject to rules and
regulations    of the Committee on House Administration.,     oss
supplies members, committees, departments, and officers        of
the House with stationery     and office supplies at cost (ex-
elusive of salaries and other operating expenses).
      The act of July 2, 1954, as amended (2 U.S.C. 46b),
authorizes a stationery      allowance of $3,800 for each member
and for the Resident Commissioner from Puerto Rico for a
full regular session.       The act of February 27, 1956 (2 U.S.C.
46b-21, authorizes a pro rata allowance for each member
elected for a part of a term. House Resolution 1276, effec-
tive December 2, 1970, authorizes an additional       allowance
of $500, upon request, for each member and for the Resident
Commissioner from Puerto Rico, This resolution        was made a
permanent law by Public Law 91-665, approved January 8,
1971. Public Law 91-405, approved September 22, 1970, ex-
tended these allowances to the Delegate to the House of Rep-
resentatives     from the District    of Columbia. Funds for these
allowances are provided for in the annual legislative        branch
appropriation      acts for contingent expenses of the House of
Representatives.
       The members' stationery  allowances are credited to
their individual   accounts at the beginning of each session,
or at such other times as new members qualify,     and may be
withdrawn in cash or applied to purchases from OSS. When a
member's service is terminated,     any stationery allowance re-
maining to his credit is payable in cash to him or his heirs.
       OSS furnishes stationery   to officers,    committees, and
others upon receipt of requisitions       approved by the Chair-
man, Committee on House Administration.         The Stationery Re-
volving Fund is reimbursed monthly for this stationery         from
funds appropriated   for miscellaneous     items and for special
and select committees of the House, Stationery and supplies


                                 2
.   D




        are also furnished     on a reimbursable basis to other autho-
        rized House officials     and committees having funds not under
        direct  control   of the Committee on House Administration.
                                  CHAPTER 2

                                 OPERATIONS

       A comparative      statement     of operations       and retained      in-
come for fiscal       years ended June 30, 1971 and 1970, is
presented     as schedule 2. Sales of merchandise               amounted to
$1,526,629      in fiscal    year 1971 compared with $1,339,231               in
fiscal    year 1970.      Sales of services        amounted to $234,898
in fiscal     year 1971 compared with $176,274 in fiscal                 year
1970.     The services      included    printing     services   rendered      the
majority     and minority      printing    clerks    of the House and rental
fees for photocopying          equipment as authorized         by the Com-
mittee    on House Administration.             Net income for fiscal        year    ~
1971 amounted to $11,625 compared tiith $14,728 for fiscal
year 1970.




                                        4
        .
’   ,




                                           CHAPTER3

                            MANAGEMENT AND PROCEDURAL CHANGES

                  Mr. John Penn retired   as chief of OSS on March 31, 1971,
            and Mr. Benny Miller   assumed the position     as of April  1,
            1971.    Mr. Roger Copenhaver  continues   as the  assistant  chief.

                   As of July 1, 1971, OSS adopted the         practice  of deposit-
            ing all collections    of funds in the U.S.        Treasury daily.
            Previously   such funds had been deposited         only twice a month.

                   A realignment      of duties    was effected    by the former chief
            of oss,     The new chief designed a new organization            scheme
            which involved      a redefinition       of job duties and a further    re-
            alignment     of functions,       such as the designation     of a head
             salesman.     This proposal       was forwarded    to the Clerk of the
            House, but as of September 9, 1971, it had not been forwarded
            to the Committee on House Administration.




                                                5
                                CHAPTER 4

                     IMPROVEMENTS IN OPERATIONS

                            AND MANAGEMENT

       In our report    for fiscal   year 1970 (B-114862,         Jan. 8,
1971), we stated     that certain    management functions         had been
assigned to intermediate-grade        personnel,      pursuant    to a
recommendation    in our fiscal     year 1969 report        (B-114862,
Dec. 19, 1969).      Octr current   examination      of various     recorded
information    and observations     showed that this realignment
had resulted    in a more efficient       operation     and that action
had been taken to strengthen        control.       To strengthen      control
over the stockroom:

      --The cage in the stockroom for            sensitive  items is
         kept locked when not occupied           and the key is kept         un-
         der control of the head stock           clerk.

      --The back door of the stockroom is kept closed                 when
         merchandise is not being received or issued.

      --Merchandise      is not stocked      on delivery     equipment      in
         the hallway,

        Although       OSS is generally  a well-run operation        and
responsive        to the needs of the members, we believe          that
greater      attention     should be given to the following        areas,

      --Contrary    to established      policy,     credit  sales to mem-
         bers continue     to be made. There is no authorization
         for OSS to sell on credit.           A list    of members with
         debit balances      is kept at each sales invoice        machine,
         Sales personnel       are supposed to check this list        be-
         fore making a sale, but we found that sales were made
         to members even though their           names were on this list.
         We believe    that the head salesman should see that
         sales are not made to members with debit balances.

      --A      few supply items were incorrectly      priced  in the
            salesroom.    Some sensitive     items in the cage were not
            on display.    We believe    that the sales staff   should


                                        6
            .




        .
-   I




                       give more attention   to ensuring  that        all sales   prices
                       are correct  and that all merchandise          available   for
                       sale is on display.

                     --The present bookkeeiing         system does not provide      for
                        keeping    a record of purchase returns        and allowances
                        to ensure that credits        are received   for all returns
                        and allowances      and that the credits     are subsequently
                        applied    against   vendors'    invoices.   OSS adopted our
                        suggestion     that a summary of purchase returns         and
                        allowances     be maintained     in the voucher register,

                       The above findings and suggestions were discussed     with
                the Chief of OSS, who agreed to take necessary    corrective
                actions.
                                                                                           I   .




                                     CHAPTER 5


                                .-SCOPE OF AUDIT

      Our audit      of the Stationery            Revolving      Fund, House of
Representatives,         was made in accordance              with generally       ac-
cepted auditing        standards.         The audit       included     a review    of
the operating       activities       of OSS and of the applicable                Federal
laws, an observation           of the physical          count of stock on hand,
an examination       of selected        financial       transactions       and rec-
ords, a verification           of members’ stationery              account    balances
through    positive      confirmations,         and such other auditing             pro-
cedures    as we considered          necessary.
                                   CHAPTER6
                                   --

                    OPINION OF FINANCIAL S'TATEMENTS
                                         ---
       The comparative       statements     of assets   and liabilities
(sch.    11, operations      and retained     income (sch.     2) ) and
sources and application           of funds (sch.     31, included       in this
report    were prepared      by us from the books and records             of QSS.
Salaries     and other operating        expenses   of OSS are provided          for
under separate      appropriations       for the House of Representa-
tives    and are not required        to be included     as expenses       in the
de termination    of the net income of the revolving              fund.

        In our opinion        the accompanying     financial     statements,
which were prepared          on a basis consistent         with that of the
preceding     year and in accordance          with the accounting          practice
and financial        arrangement    described     above, present       fairly      the
financial     position      of the Stationery      Revolving     Fund at
June 30, 1971, the results            of its operations,        and the sources
and applications         of its fund for the year then ended.
SCHEDULE1


            HOUSE            OF        REPRESENTATIVES


                            STATIONERY REVOLVING FUND


             COMPARATIVE STATEMENT OF ASSETS AND LIABILITIES

                                 JUNE 30, 1971 AND 1970


                                                      1971                         1970

                 ASSETS

 CASH:
     In U.S. Treasury                      $630,544                    $734,949
    Undeposited receipts                                 $630,544        14,320        $749,269

 ACCOUNTSRECEIVABLE:
     Committees, officers         of the
       House, and others                        22,547                     25,615
     Members --stationery        ac-
       counts overdrawn                          1,304                           429
    Vendors                                      4,101
     Contingent     fund                         5.500        33,452         -             26,044

 MERCHANDISEINVENTORY, at cost                               303.606                      200,401

         Total    assets                                 $967.&Q                       $975.714

        LIABILITIES AND
        RETAINED INCOME


 ACCOUNTSPAYABLE (note       a>:
     Due vendors                                         $ 31,451                      $ 45,420

 AMOUNTDUE MEMBERS(sch.           4)                         726,861                      729,629

 ALLOWANCEAPPROPRIATED BUT NOT
   ALLOTTED:
     Beginning balance                     $     3,000                 $       150
     Current year                              -3,000           -           2,850           3,000

 RETAINED INCOME (sch.      2)                               209.290                      197,665

         Total liabilities      and
           retained      income                          $9&7,602                      $975,714

 aObligations  for undelivered orders            amounted to $8,626 at June 30,1971,
  and $103,383 at June 30, 1970.

                                           10
.   .                                                                                                            SCHEDULE ‘2



                                HOUSE                  OF      REPRESENTATIVES




                                                  STATIONERY REVOLVING FUND

                            COMPARATIVE STATEMENTOF OPERATIONS AND RETAINED INCOME

                                     FOR FISCAL YEARS ENDED JUNE 30, 1971 AND 1970




                                                              1971                                                1970
                                         Merchan-                                              Merchan-
                                           dise             Services             Combined        dise         Services        Combined

    NET SALES:
        Members                          $1,319,361         $234,544         $1,553,905        $1,140,836    $176,274 $1,317,110
        Committees, officers
          of the House, and
          others                             207,268                  354           207,622       198,395         -            198,395

                Total     net sales       1,526,629          234,898             1,761,527      1,339,231     176,274        1,515,505

    COST OF SALES:
        Beginning inventory                  200,401              -                 200,401       183,833         -            183,833
       Purchases,   less re-
          turns and dis-
          counts                          1,618,209          234,898             1,853,107      -L-.--L
                                                                                                1 341 077     176,268        1,517,345
                                                                                                                             -__-
                Total                     1,818,610          234,898             2,053,508      1,524,910     176,268        1,71'1,li8

            Less ending     inven-
               tory                          303,606              -                 303,606       200,4.01        -          _ 200,401

                Cost of sales             1,515,004          234,898             1,749,902      1,324,509     -176,268       ___--
                                                                                                                             1,500,777

    NET INCOME FOR THE
      PERIOD

    RETAINED INCOME:
        Balance beginning of period                                          $ 197,665                                   $      182,937
        Add net income for period                                                     11,625                                     14,728

            Balance     end of period     (sch.        1)                    $      209,290                              $      197,665



    Note:      Fiscal     year 1971 salaries            of $221,748 ($215,741 in 19701, employee benefits      of
               $16,717 ($14,978 in 19701,                 and other operating    expenses of the Office Supply
               Service were provided for                under separate appropriations     for the House of Rep-
               resentatives     and were not            required   to be included as expense in determining    net
               income.




                                                                            11
SCHFDULT?,3


      HOUSE                OF     REPRESENTATIVES


                      STATIONERY REVOLVING FUND

                      COMPARATIVE STATEMENT OF

                  SOURCESAND APPLICATION      OF FUNDS

        FOR FISCAL YEARS ENDED JUNE 30, 1971 AND 1970


                                                    1971          1970

FUNDS PROVIDED:
    Appropriation      for stationery
       allowances                             $1,308,000       $1,308,000
    Transfer      from House contingent
       fund                                         256,250         2,350
    Sales to other than members                     210,690       187,697
    Cash deposits      by members                   456,178       350,662
    Refunds from vendors                                  23        4,314
    Decrease in cash                                118,725        80,026

          Total    funds    provided          $2,349,8,66      $1,933,049

FUNDS APPLIED:
    Payment to vendors                        $1,871,200       $1,544,883
    Cash withdrawals    by members               455,171           388,166
    Cash returned    to U.S. Treasury              23,495            -

          Total    funds    applied           $2,349,866       $1,933,049




                                       12
                                                               SCHEDULE 4


      HOUSE            OF      REPRESENTATIVES

                      STATIONERY REVOLVING FUND


           STATEMENT OF MEMBERS' STATIONERY ACCOUNTS

            FOR THE FISCAL YEAR ENDED JUNE 30, 1971


AMOUNT DUE MEMBERS AT JULY 1, 1970                             $ 729,629
ADDITIONS:
    Amount provided      by Legislative
       Branch Appropriation       Act, 1971
        (Pub. L. 91-3821,      for 1st ses-
       sion, 92d Congress                       $1,308,000
    Amount provided      by previous    leg-
       islative   branch appropriations               3,000
    Amount transferred       from House
       contingent    fund for new mem-
       bers serving     parts of terms
       and for members requesting         ad-
       ditional   funds                             256,250
     Amount due from the contingent
       fund                                           5,500
                                                 1,572,750
     Cash deposits   by members                     456,178
     Increase   in debit balance         of
        members' accounts                                875    2,029,803
          Total   available                                     2,759,432
DEDUCTIONS:
    Stationery   purchases                       1,319,361
    Service authorized                              234,544
    Cash withdrawals                                455,171
    Amount returned    to U.S.     Treasury          23,495     2,032,571

AMOUNT DUE MEMBERS AT JUNE 30, 1971                            $=726,861




                                    13
                                                                                                         APPENDIX I




                                                                    May 26,            1971




Honorable      Elmer   B.              Staats
Comptroller       General               of the      United          States
General     Accounting                 Office.
Washington,       D. C.

Dear     Mr.     Staats:

                  I would             appreciate       it     very      much      if     you would        arrange   for

a physical             inventory          and audit          to     be made       of     the    Office     Supply   Service

of     the     House      of    Representatives               for      Fiscal          Year    1971.

                  With         kind      regards,      I am

                                                                     Sincerely,




                                                             15