oversight

Financial Audit: Civic Achievement Award Program Financial Statements for September 30, 1989 and 1988

Published by the Government Accountability Office on 1990-09-27.

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

____..__
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Svpt,c~trrtwr     I!b!N
                                                     FINANCIAL AUDIT
                                                     Civic Achievement
                                                     Award Program
                                                     Financial Statements
                                                     for September 30,
                                                     1989and1988



                                                                                       142325




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              -...I.-_--                            _.^.
                           -_...-._ -_._--.-- .-_._._. ,._._.._
                                                           -- _..-- -l -   -.- -   -
(;AO/AII’MI)-!)O-102
-____---.   __---l.-,-ll”--lll..   ---   ~-
4




      United State6
GAO   General Accounting Office
      Washington, D.C. 20548

      Comptroller General
      of the United States

      B-236316

      September 27,199O

      To the Speaker of the House of Representatives
      and the Librarian of Congress

      This report presents our opinion on the financial statements of the Civic
      Achievement Award Program in Honor of the Office of Speaker of the
      House of Representatives for fiscal years 1989 and 1988. Reports on the
      program’s internal accounting control structure and on its compliance
      with laws and regulations are also provided. We completed our review
      on May 24,199O.

      Public Law loo-168 established the program which is administered by
      the Close Up Foundation and funded through the Library of Congress.
      The program was designed to inspire the learning of American history,
      government, geography, economics, and current events in the fifth
      through eighth grades and to recognize achievement in civic literacy by
      students, classes, and schools throughout the nation.

      We are required to conduct an audit of the program each year under
      provisions of Public Law 100-168. The Close Up Foundation contracted
      with an independent certified public accounting firm, KPMG Peat
      Mar-wick, to perform financial audits of the program’s 1989 and 1988
      financial statements, including reports on internal accounting control
      structure and compliance with laws and regulations. To fulfill our
      responsibility, we reviewed KPMG Peat Marwick’s approach and plan-
      ning of audits; reviewed and tested KPMG Peat Marwick’s working
      papers; and performed other procedures as we deemed necessary. Our
      examinations were conducted in accordance with generally accepted
      government auditing standards.

      In our opinion, and consistent with the opinion of KPMG Peat Marwick,
      the program’s financial statements present fairly, in all material
      respects, its financial position as of September 30,1989 and 1988, and
      the results of its operations for the years then ended in conformity with
      generally accepted accounting principles.

      The KPMG Peat Marwick reports to the Board of Directors, Close Up
      Foundation, on internal accounting control structure and on compliance
      with laws and regulations did not disclose any material internal control
      weaknesses or noncompliance with laws and regulations.




      Page 1                          GAO/AFMD-B&102 Civic Achievement Award Program
We are sendingcopiesof this report to the President and the Board of
Directors of the CloseUp Foundation; the Chairman of the Committee
on HouseAdministration; the Chairman of the Subcommitteeon
Libraries and Memorials, Committee on HouseAdministration; and the
Chairman of the SenateCommittee on Rules and Administration.



                       r
Charles A. Bowsher         t-
Comptroller General
of the United States




page 2                          GAO/AFMD-B@102 Civic Achievement Award Program
Page 3   GAO/AFMD-90-102 Civic Achievement Award Program
Letter                                                                                           1

Auditors’ Opinion                                                                                6

Auditors’ Report on                                                                              7
Internal Accounting
Control Structure
Auditors’ Report on                                                                              9
Compliance With
Laws and Regulations
Financial Statements                                                                           10
                       Statementsof Assets and Liabilities                                     10
                       Statementsof Support and Jkpenses                                       11
                       Notes to Financial Statements                                           12




                       p-4                          GAO/AFMDSO-102 Civic Achievement Award Program
Page 6   GAO/AFMD-90-102 Civic Achievement Award Program
                                                                                                                                                                .,.
Auditors’ Opinion



        M                    Peat Marwick
                             Certified    Public Accounlants

                             2001 M Street. N W
                             Washtnyton. DC 20036




        The Board of Dirsctors
        CloAe Up Foundation:

        We hsve      AuditAd      the   Accompanying      AtAtementA      of         aeAetA    and liabilitioa         of the
        Civic     Achievement       AwArd ProgrAm in lionor         of the          Office    of Speakor of the House
        of RoproAontAtiveA            conducted      by the Clove      Up          Foundation      AA of     Septombor    30,
        1989 and 1988,           And the relAted         stAtementA      of          support     And expsneos       for   the
        yeArA     then ended.          TheAA fitlAtlCiA1      AtAtemOntA            Are the reApOnAibility            Of the
        FoundAtion’A         managamont.       Our reaponribility        iA         t0 eXpreAA an Opinion          on theso
        financial       Atatements      based on our Auditr.

        We      conducted           our      Audits        in       accordance
                                                                             with      generally      Accepted       Auditing
        AtAndArdP          And   GovsrnmantAudifinn                             iAAued by tho COmptrOller               General
        of the United           StAtAA.       Thor0      AtAndardA      roquiro       that    wo plan And perform              the
        audit      t0 obtain        reAAOnAble       AAAurAnce        About     whether      tho financial       AtAtOmentA
        are    fros      of material        miAAtatsment         And whether          management      hAA complied           with
        laws And rogulationr.                kl    Audit      in   ACCOrdAnCe        with    theAA    AtAndArdA       include6
        sxamining,         on a toet baeir,          evidence      Aupporting        the AmountA And dirclorures                 in
        the financial          AtatemsntA        And compliance          with     1awA And regulAtionA.              An Audit
        also      inCludeA        ASAAASing        tho     accounting         principleA         ueed    And    AignifiCAnt
        oAt.imates        made by management,              as well       AA evsluating           the overall       financial
        statement        proaontation.          We believe       that    our   AUditA      provide    A roasonablo         basis
        for our opinion.

        Am explained          in note         1, the financial          etatemento      being   presented       Are only for
        the Civic        Achiewmnent           Award Program         referred      to Above And do not include                the
        other     a#AotA,       IiAbilitieA,          fund bAlAnCeA,            revMUos.      expen~ee      and Changes         in
        fund bAlAnCOA           of CIoAe          Up FoundAtion           recorded     in itr     financial       etatWoentA.
        Accordingly,         tho Accompanying            financiA1         AtAtsmentA     Are not intended         to prssont
        the financial           poAition         of Clore       Up Foundation         me of    September       30. 1989 and
        1988, or ite reAultA                 of operAtionA        for the year8 then ended in conformity                   with
        generally       Accepted         accounting      principleA.

        In our opinion,         the financial        Atatementr       referred     to above prermt        fairly,       in
        ~11 material        raApectA,      the financial        poeition       of the Civic    Achievcrmont        Award
        Program    in Aonor        of the     Office      of Speaker         of tho Roure of Representatives
        conducted      by the Clove        Up FoundAtion        At Septmber         30, 1989 and 1988,          and tho
        roAultA     of    itr     operationA       for     tho   yearr       then    ended  in   conformity         with
        gOnerAlly      Accepted            ACCOIUIting          PrinCiplAA.



        January      11,     1990




                                              Page 6                                              GAO/AFMD-f@102 Civic                Achievement   Award   Program
.

Auditors’ Report on Internal Accounting
Control Structure



                             Certified   Public Accountants

                             2001 M Street. NW
                             WashIngton. DC 20036




         To the Board of Directors
         Cloee Up Foundation:

        We have     eudited     the    financial     statements       of    the  Civic     Achievement      Award
        Program   in Honor      of the Office        of Speaker       of the House of Representatives
        conducted    by the Close        Up Foundation      for    the years    ended September         30, 1989
        and 1988,     and have issued         our report     thereon     dated  January       11, 1990.     These
        financial    statements      are the responsibility            of the Foundation’8          management.
        Our responsibility         ie to express         an opinion       on these     financial     statements
        based on our audits.

        We conducted        our     audits      in   accordance      with      generally     accepted    auditing
        standards    and GovstMlenf                                     issued     by the Comptroller      General
        of the United       States.        Those standards       req'uire     that    we plan and perform         the
        audit     to obtain     reasonable       aaaurance     about    whether      the financial    statements
        are free of material         misstatement.

         In planning        and performing       our audits     of     the financial      statements       of the
         Foundation     for    the years    ended September      30, 1989 and 1980, we considered             its
         internal     control     structure    in order    to determine      our auditing       procedures    for
         the purpose       of expreeeing      our opinion     on the financial       statements      and not to
         provide    assurance     on the internal     control    structure.

        The      management         of     the      Foundation           is      responsible               for       establishing         and
        maintaining       an internal           control      trtructure.            In fulfilling              this      responsibility,
        estimates       and judgments             by management              are      required          to a88es8             the expected
        benefits       and      related         cost6      of      internal           control          structure             policies     and
        procedures.          The objectivee             of an internal               control         structure           are to provide
        management        with      reasonable,           but      not      absolute,            assurance            that       assets   are
        safeguarded         against        loss      from      unauthorized              we       or      disposition,              and that
        transactione         are executed            in accordance             with       management’s              authorization         and
        recorded       properly         to     permit       the      preparation              of     financial             statements       in
        accordance       with    generally         accepted        accounting           principles.              Because of inherent
        limftetions        in any internal               control       structure,            errors         or irregulerities            may
        neverthelese        occur      and not be detected.                   Also,      projection            of any evaluation           of
        the structure          to future          periods        is subject            to the risk              that      procedures     may
        become inadequate             becauee       of changes          in conditions              or that           the effectiveness
        of the design         and operation           of policies          and procedures              may deteriorate.




                                           Page 7                                                        GAO/AF’MD-ml02                 Civic Achievement Award Program
                                  AudiLora’       Report on Intamnl            Accountin#
                                  Cc&r01 Stnwture




    For the     purpose       of this        report,    ne have classified            the significant            internal
    accounting        control        structure        policies       and     procedures       in     the       following
    categories!         revenues/receipts            and expenses/disbursements.                Our consideration
    of the internal          control       structure      included    all    of the categories           listed       above
    at the boundary,          however       we did not consider           the accounting        controls        over the
    proceasind      informetion          streams      because      a substantive        audit    approach         is more
    cost beneficial.

    Our connideration            of   the      internal          control       structure         would       not      necessarily
    disclose      all matters       in the internal               control       structure       that might            be material
    wsaknersss under standards                 established          by the American              Institute          of Certified
    Public     Accountants.         A material           weakness         is a reportable               condition         in which
     the design        or operation          of one or more of                     the    specific         internal          control
    structure       elements      does not reduce               to a relatively             low level            the risk         that
    errors     or irregularitiss           in amounts          that would be material                   in relation           to the
    financial       statements       being       audited       may occur           and not be detacted                    within       a
    timely     period     by employees          in the normal             course      of performing             their      assigned
    functionr.         We noted no matters               involving          the internal          control         structure        and
    ite operation        that we consider           to be material             waaknerses        as defined           nbove.

    However,       we noted       certain       mattera    involving          the internal   control structure    and
    the operatione   of the Close                  Up Foundation            during   our June 30, 1989 audit    that
    we reported    to management                    of  the     Close        Up Foundation      in a letter    dated
    September 15, 1989.

    This    report       is intended         solely   for   the use of the Board      of Directors                                and
    management.           This   restriction        is not    intended to limit    the distribution                                  of
    this    report,       which,    upon acceptance        by the Foundation    ir a matter of                                public
    record.




    .JMuary      11,   1990




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                                   Page 8                                                        GAO/AF’MD-ml02                Civic Achievement Award Program
Auditors’ Report on ComplianceWith Laws
and Regulations



                          Certified Public Accounlant~

                          2001 M Street. N.W


                                                                      torn’      Reoort        on


        To the Board of Directors
        Close Up Foundation:

        We have         audited    the    financial       statements       of       the   Civil     Achievement       Award
        Program       in Honor     of the Office          of Speaker       of the House of Representatives
        conducted        by the Close       Up Foundation        a8 of and for          the years       ended September
        30, 1989 and 1988, and have issued                   our report       thereon      dated January        11, 1990.
        These      financial       atatemente       are      the     responsibility             of   the    Foundation’s
        management.           Our responsibility        ia to express            an opinion        on these     financial
        atatementn        baaed on our audita.

        We conducted        our     audit6      in    accordance       with      generally     accepted    auditing
        standard.9   and Govsrnmsnt                                       issued     by the Comptroller      General
        of the United       States.        Thoee standard8        re&ire        that    we plan and perform         the
        audit     to obtain     reasonable       a.esurance     about     whether      the financial    statements
        are free of material         sirstatement.

        Compliance       with      law,      regulations,          contracts,       and grants      applicable       to the
        Foundation       ir the reeponsibility               of the Foundation’s            management.        As part     of
        obtaining      reasonable         aa#urance      about whether         the financial      statements      are free
        of material         miratatement,          we performed          tests    of the Foundation’s           compliance
        with    Public     Law 100-158         which provides         support     for the Civic      Achiavement       Award
        Program      and the agreement              between      the Library        of Congress      and the Close         Up
        Foundation       which      authorize8        the Library        of Congress      to make disbursements            to
        the Foundation.              However,       our    objective        war not     to provide        an opinion       on
        overall     compliance        with such provisions.

        The result6     of our tests      indicate      that,   with               respect    to the items      tested.    the
        Foundation    complied     in all    material      respects,                with   the provisions       referred     to
        in the preceding       paragraph.      With respect        to            items not tested,        nothing      came to
        our attention     that    caueed u.e to believe          that              the Foundation      had not complied,
        in all material      respectr,    with     thoae provisions.

        Thie   report       ia intended        for       the information           of        the Board   of Directors      and
        management.          This  restriction             ia not   intended            to     limit  the distribution      of
        this  report,       which  is a matter            of public    record.




        January     11.    1990




                                     Page 9                                                         GAO/AFMD-W102 Civic Achievement Award Program
Financial Statements


Statement8 of Assets and Liabilities

                                                      September   30, 1989 and 1988




                    Due from Library      of Congress                                        $ 100,000      580,734
                    Prepaid expenses                                                           27.[)29-

                                                                                             $Li&w580.734



                    Obligation  for undelivered         goods                                                12,510
                    Due to Close Up Foundation                                                 127,029      568,224

                    Comaitmente   (note    3)




                   See accompanying       notes    to financial   statements.




                                                  Page 10                             GAO/~SO-102        Civic Achievement Award Program
  .
                                                   Finandd     Stabawnt8




Statements of Support and Expenres

                                             Yeare ended September                30, 1989 and 1988


                                                                                                         JLW!       Leaa
                 Support    - Library      of Congre88                                                $480.000572.919
                 Expenrer :
                    Salaries    and fringe    benefit8                                                  298,670    141,553
                    Telephone,    poetage,     supplieo            and printing                          91,055     71,358
                    Profe88ional    rervices                                                             90,355     78,123
                    Travel                                                                               31,088     23,291
                    Office   rent                                                                        46,182     26,061
                    Public information       rervicer                                                     8,849     10,366
                    Capital   expenditure8                                                                         140,903
                    Other 8upport 8ervicer                                                              8.920        9.w

                                                                                                        575,119    500,916

                     Indirect    co8t8,     net     (note    2)                                         AQ!hwu22.903

                                                                                                        -572.919

                                   Excerr         of 8upport       over    expennre8                  $ Lh




                 See accompanying         note8     to financial          rtatementr.




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                                                  Page 11                                    GAO/AFZiJbW1O2 Civic Achievement Award Program
                                                 Financial Statements




    Notes to Financial Statements

                                                      September   30, 1989 and 1988




                           Close Up Foundation       (Foundation)     is a nonprofit,      nonstock       corporation
                           organized    in June 1971 to foster      a better  understanding      and appreciation
                           of     government    by     conducting       and  sponsoring       participation           in
                           government-related    education   programs.

                           The Foundation    is exempt from income taxes under Section    501(c)(3)   of the
                           Internal   Revenue Code.     It is not a private  foundation  and donations     to
                           the Foundation    are deductible   by a donor as charitable  contributions    for
                           federal  income tax purposes.

                           In 1987, Congress authorized       the Foundation  to establish   and conduct the
                           Civic Achievement     Award Program in Honor of the Office      of Speaker of the
.                          House of Representatives       (CAAP).  CAAP has been designed     to improve the
                           level of civic  literacy    of American students  in the 5th through 8th grades.

                           CAAP is funded through an annual appropriation             from the U.S.     Congress   with
                           the funds being administered by the Librarian            of Congress.

                      (2) Summarv of Q
                           (a) Financial
                               The financial     statements being presented   are only for the Foundation’s
                               CAAP and do not include      the other assets,    liabilities, fund balance,
                               revenues,    expenses and changes in fund balance of the Foundation.



                               Support    to be received   from the Library of Congress is recognized   at
                               the   lesser      of the amount appropriated   by Congress  or allowable
                               expenses     incurred.   For the years ended September 30, 1989 and 1988
                               the amount appropriated     was $680,000.




                                                                                                     (Continued)




                                                 Page 12                                GAO/AFMD-W-102 Civic Achievement Award Program
           4




  .




                   Dua     to      the      cost   reimbursement  nature   of     the    Congressional
                   appropriation         to support CAAP, expens4s at4 recogniz4d     as follows:

                           Direct      costs     of CAAP are     recognized    as axpensee     when an
                           obligation      to incur the cost is established,       in accordance   with
                           instructions      received   from the budget office    of the Librarian    of
                           Congress.        Obligations    for undeliver4d   goods amounted to non4
                           and $12,510 at September 30, 1989 and 1988, respectively.

                           Capital   expendituras     are expansed rather  than capitalized  as the
                           goods are not          owned by CAAP or the        Foundation.   Rather,
                           ownarrhip    and possession     of tha goods is assumed to revert       to
                           the U.S. government upon completion       of CAAP.

                           Indirect    costs allocated     to CAAP by the Foundation  are based
                           upon the Foundation’s       ratio   of allowabla  indirect  costs   to
                           direct   program costs raduced by the amount that total      expenses
                           exceeded support.      At September’ 30, 1989 and 1988 this amount
                           was $3,011 and none, respectivaly.

                           Program expsnses are subject         to rsviaw by the U.S. government.
                           Therefors,     the recorded amounts of direct       and indirect      expenses,
                           ar well      as ths rslat4d      racognizad     support,     are potentially
                           subject    to adjustmant.     Management believes        that no provisions
                           for much adjustments      are required    in the financial      statements.

               (d) S                     the Wmuktbn’n     Gsnaral
                   The   Foundation     is reimbursed     by the Librarian     of Congress upon request
                   for    costs    incurred       in dsveloping    and conducting       the CAAP.     The
                   Foundation      financially       support8   the activities      of CAAP with      its
                   general    operating      funds during the program year until        reimbursement   is
                   received.



               The Foundation has leased office   space for ths us4 of personnel   working on
               CAAP. The approximate    future  minimum annual rental  commitments   for this
               office space at Saptember 30, 1989 follows:



                                                   1990                   $ 42,000
                                                   1991




(ele7ae)                                 Page 13                             GAO/AF’MD-W-102 Civic Achievement Award Program
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