oversight

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)

                   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
    .




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        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