United States General Accounting Office Report to the Clerk of the House of GAO Representatives March 1990 FINANCIAL AUDIT House Stationery Revolving Fund Statements June 30, l 1989 and 1988 United States GAO General Accounting Office Washington, D.C. 20548 Comptroller General of the United States B-l 14862 March 29.1990 The Honorable Donnald K. Anderson Clerk of the House of Representatives Dear Mr. Anderson: As requested in your letter of April 3, 1989, we have audited the bal- ance sheets of the House of Representatives Stationery Revolving Fund as of June 30, 1989 and 1988, and the related statements of operations and cash flows for the years then ended. We completed our audit work on November 30, 1989. These financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audits in accordance with generally accepted govern- ment auditing standards. Those standards require that we plan and per- form the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in t,he financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the House of Represen- tatives Stationery Revolving Fund as of June 30, 1989 and 1988, and the results of its operations and cash flows for the years then ended, in con- formity with generally accepted accounting principles. Page 1 GAO/AFMD-So64 House Stationery Revolving Fund Page 3 GAO/~-So64 House Stationery Revolving Fund Page 6 GAO/AFMD-90-64 House Stationery Revolving Fund Report on lntemai Accounting Controls and Compliance With Laws and Regulations Our study and evaluation of internal accounting controls was made for the purpose described above in the second paragraph. It was more lim- ited than would be necessary to express an opinion on the system of internal accounting controls taken as a whole or on any categories of controls specifically identified, and it would not necessarily disclose all material weaknesses in the system. Accordingly, we do not express an opinion on the Fund’s system of internal accounting controls taken as a whole or on any of the categories of controls identified. However, our study and evaluation disclosed no condition that we believed to be a material weakness that would affect our expressing an opinion on the Fund’s financial statements. As part of our audit, we also tested the Fund’s compliance with terms and provisions of 2 USC 46b-1 and 106-l 10 and regulations in the House of Representatives edition of the Congressional Handbook relat- ing to service charges applicable to items sold to Members or staff for personal use. In our opinion the House of Representatives Stationery Revolving Fund complied with the terms and provisions of 2 USC. 46b-1 and 106-l 10 and the just mentioned Congressional Handbook reg- ulations for the transactions tested that could have materially affected its financial statements. Nothing came to our attention, in connection with our audit, that caused us to believe that the Fund was not in com- pliance with the terms and provisions of 2 USC. 46b-1 and 106-110 and the previously stated regulations for those transactions not tested. Page 7 GAO/AFMD+W4 House Stationery R.evolving Fund Statements of Operations Fiscal years ended June 30, 19119 1988 Revenue Net sales $%,255,237 $8,139,634 Sewce charaes 170.218 153,945 Miscellaneous income (note 4) ____-_-- 269 0 Total revenue 0,425,724 8,293,579 Ooeratino Exoenses (note 3) Cost of sales 03227,236 8,034,775 Deoreclation exoense 17.235 20.793 Loss on accounts receivable 0 257 Miscellaneous exDense (note 5) 1 389 0 Total operating expenses 8,245,860 8,055,825 Net income S179.864 $237.754 The accompanying notes are an integral part of these statements Page9 GAO/-4 Howe Stationery Itevolving Fund Notes to Financial Statements Note 1. Significant The House of Representatives Stationery Revolving Fund, established July 17, 1947 (2 U.S.C. 46b-l),‘is administered by the Office Supply Ser- Accounting Policies vice under the jurisdiction of the Clerk of the House of Representatives and is subject to the rules and regulations of the Committee on House Administration. The Office Supply Service furnishes House Members, committees, departments, and officers with stationery and supplies. Office Supply Service operations are financed from the House of Repre- sentatives Stationery Revolving Fund and appropriations to the Clerk of the House and the Architect of the Capitol. All receipts from operations are deposited into the revolving fund and are available for operations. Employees’ salaries and benefits and certain other benefits and services such as space, building repairs, maintenance, and utilities are paid from appropriated funds and are not charged to the revolving fund. (See note 3.) Inventories are stated at cost using the weighted-average method of valuation. Equipment purchased prior to fiscal year 1982 is depreciated over a lo- year life using the straight-line method with no salvage value. Equip- ment purchased in fiscal year 1982 and later years is depreciated over a 5-year life using the straight-line method with no salvage value. A lo-percent service charge is added to all nonofficial sales, which con- sist primarily of sales to congressional staff. Accounts receivable include amounts owed to the Office Supply Service at year-end by committees and officers of the House, and the value of merchandise returned to vendors for credit, replacement, or repairs. Deferred income represents amounts to be recognized as revenue in sub- sequent periods when prepaid special order merchandise is delivered. Cost of sales includes the value of obsolete and damaged merchandise written off and merchandise marked down and sold below cost. Note 2. Purchase Order Obligations for undelivered orders amounted to $619,076 as of June 30, Commitments 1989, and $603,492 as of June 30,1988. Page 11 GAO/AFMJMWM House Stationery Revolving Fund . Requests for copies of GAO reports should be sent to: U.S. General Accounting Office Post Office Box 6015 Gaithersburg, Maryland 20877 Telephone 202-275-6241 The first five copies of each report are free. Additional copies are $2.00 each. There is a 25% discount on orders for 100 or more copies mailed to a single address. i Orders must be prepaid by cash or by check or money order made out to 1rFs~~rn .Ie Notes to Financial Statements Note 3. Other Operating Certain costs of operating the Office Supply Service are not paid from the revolving fund. The costs related to space occupancy, building main- costs tenance, lighting, and temperature control cannot be readily determined. Identifiable costs paid from appropriated funds for the fiscal years ended June 30,1989 and 1988, follow. Table 1: Identifiable Operating Costs Paid With Appropriated Funds Amount 1989 1988 Gross salanes $869,033 $819,733 Government contnbutions 174,799 156,326 Equipment maintenance 43,992 46,931 Office supplies 32,618 23,605 Telephone service 4,150 5,587 Comwter serwce 2 774 0 Property supply 1,084 1,468 Travel exDense 0 128 Total $1,128,450 w53,77a Note 4. Miscellaneous The $269 in miscellaneous income for 1989 consists of (1) fees charged Income to congressional staff members for handling bank checks returned gen- erally because of insufficient funds and (2) service charges collected on prior-year sales which were converted from official to nonofficial sales. Note 5. Miscellaneous For fiscal year 1989, supplies in the amount of $1,389 were purchased Expense and recorded in the miscellaneous expense account. In past years, such expenses were paid from appropriated funds. Note 6. Donated Computer equipment was donated by the United States Senate Station- Equipment ery Room on May 23, 1988. The fair market value of this equipment was estimated to be $5,000. At June 30, 1989, this equipment had not yet been installed or operated. Therefore, the fair market value was not depreciated for the years ended June 30,1989 and 1988. (916749) Page 12 GAO/AFMD-SO-64 House Stationery Revolving Fund Statements of Cash Flows Fiscal years ended June 30, 1989 1980 Cash Flows From Operating Activities Net mcome $179,864 $237,754 Adjustments to reconcile net income to net cash provided by (used in) operatmg actlvitles Depreciation 17,235 20,793 Purchase of equtpment (5,026) (6,135) Decrease (Increase) In assets. - Accounts receivable (18,858) 6,593 Merchandtse Inventory (64,741) (47,006) Increase (decrease) In liabilltles: Accounts payable 7,196 (106,346) Deferred Income (25.084) 9 753 Net cash provided by operating activities - 90,586 115,406 Cash at begmnlng of year 2.496,198 2,380,792 Cash Balance at End of Year 92,586,7%4 $2,496,198 The accompanying notes are an mtegral part of these statements Page 10 GAO/AFMD-SO-64 House Stationery Revolving Fund Balance Sheets June 30, 1989 1988 Assets Current Assets Cash rn U S Treasury $2,584,784 $2,494,198 Petty cash 2,000 2,000 Accounts recewable 63,568 44.710 Merchandtse Inventory , 1.320,329 1.255588 Total current assets 3,970,681 3,796,496 Frxed Assets Equrpment 237.899 257,894 Less accumulated depreciation 214,076 221,862 Total fixed assets 23,823 36,032 Total Assets $3,994,504 $3432,528 Liabilities and Government Equity Lrabrlrtres Accounts payable $312,981 $305,785 Deferred Income 72,220 97,304 Total liabilities 385,201 403,089 Government Equity Contrrbuted caprtal 1.600.000 1 600 000 Donated equrpment (note 6) 5.000 5,000 Fund balance Balance at begrnning of year I ,824,439 1,586.685 Net Income 179,864 237,754 Balance at end of year 2,004,303 1.824.439 Total government equity 3,609,303 3,429,439 Total Liabilities and Government Equity 83,994,504 $3,%32,528 The accompanyrng notes are an rntegral part of these statements Page 8 GAO/~90.64 House Stationery Revolving Fund Report on Internal Accounting Controls and Compliance With Laws and Regulations We have audited the financial statements of the House of Representa- tives Stationery Revolving Fund for the fiscal years ended June 30, 1989 and 1988. Our audits were made in accordance with generally accepted government auditing standards and, accordingly, included such tests of the accounting records and such other auditing procedures, including tests of compliance with laws and regulations, as we considered neces- sary in the circumstances. This report pertains only to our study and evaluation of the system of internal accounting controls and our review of compliance with laws and regulations for the fiscal year ended June 30, 1989. Our report on internal accounting controls and compli- ance with laws and regulations for the fiscal year ended June 30,1988, is presented in GAO/AFMD89-10, dated December 14, 1988. As part of our audit, we made a study and evaluation of the Fund’s sys- tem of internal accounting controls to the extent we considered neces- sary to evaluate the system as required by generally accepted government auditing standards. The purpose of our study and evalua- tion was to determine the nature, timing, and extent of the auditing pro- cedures necessary for expressing an opinion on the Fund’s financial statements. For the purpose of this report, we have categorized the significant inter- nal accounting controls as receipts, disbursements, equipment, inven- tory, and receivables. Our study and evaluation included all of these control categories. The management of the Fund is responsible for establishing and main- taining a system of internal accounting controls. In fulfilling this respon- sibility, management makes estimates and judgments required to assess the expected benefits and related costs of control procedures. The objec- t’ves of a system are to provide management with reasonable, but not absolute, assurance that (1) assets are safeguarded against loss from unauthorized use or disposition and (2) transactions are executed in accordance with management’s authorization and recorded properly to permit the preparation of financial statements in accordance with gener- ally accepted accounting principles. Because of inherent limitations in any system of internal accounting controls, errors or irregularities may nevertheless occur and not be detected. Also, projection of any evaluation of the system to future peri- ods is subject to the risk that procedures may become inadequate because of changes in conditions or that the degree of compliance with the procedures may deteriorate. Page 6 GAO/AFMD.9@64 House Stationery Revolving Fund Contents Opinion Letter 1 Report on Internal 6 Accounting Controls and Compliance With Laws and Regulations Balance Sheets 8 Statements of 9 Operations Statements of Cash 10 Flows Notes to Financial 11 Statements Table Table 1: Identifiable Operating Costs Paid With 12 Appropriated Funds page 4 GAO/AF%iWM4 House. Stationery Eevo1vin.g Fhd Our report on internal accounting controls and compliance with laws and regulations for the year ended June 30,1989, together with the Fund’s financial statements and accompanying notes for the fiscal years ended June 30,1989 and 1988, is included in this report. We are sending a copy of this report to the Chairman of the Committee on House Administration, Charles A. Bowsher Comptroller General of the United States Page 2 GAO/Al-DW64 House Stationery Revolving Fund
Financial Audit: House Stationery Revolving Fund Statements--June 30, 1989 and 1988
Published by the Government Accountability Office on 1990-03-29.
Below is a raw (and likely hideous) rendition of the original report. (PDF)