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
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)