oversight

Financial Audit: Independent Counsel Expenditures for the Six Months Ended September 30, 1998

Published by the Government Accountability Office on 1999-03-31.

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

                  United States General Accounting Office

GAO               Report to Congressional Committees




March 1999
                  FINANCIAL AUDIT

                  Independent Counsel
                  Expenditures for the
                  Six Months Ended
                  September 30, 1998




GAO/AIMD-99-105
      United States
GAO   General Accounting Office
      Washington, D.C. 20548                                                       Leter




      Accounting and Information
      Management Division

      B-281406                                                                Letter

      March 31, 1999

      Congressional Committees

      Enclosed is our opinion on the statements of expenditures of seven offices
      of independent counsel for the 6 months ended September 30, 1998. This
      audit was required by 28 U.S.C. 596(c)(2) (1994) and Public Law 100-202.

      We are sending copies of this report to the Attorney General, the Director
      of the Administrative Office of the U.S. Courts, the independent counsels
      included in our audit, and other interested parties. Copies will be made
      available to others upon request.




      David L. Clark
      Director, Audit Oversight and Liaison




      Page 1                                    GAO/AIMD-99-105 Independent Counsels
Contents



Letter                                                           1


Opinion Letter                                                   4


Appendix I                                                      12
Statement of
Expenditures for
Independent Counsel
Adams/Thompson

Appendix II                                                     15
Statement of
Expenditures for
Independent Counsel
Barrett

Appendix III                                                    18
Statement of
Expenditures for
Independent Counsel
Bruce

Appendix IV                                                     21
Statement of
Expenditures for
Independent Counsel
Lancaster




                      Page 2   GAO/AIMD-99-105 Independent Counsels
Appendix V                                                                                   24
Statement of
Expenditures for
Independent Counsel
Smaltz

Appendix VI                                                                                  27
Statement of
Expenditures for
Independent Counsel
Starr

Appendix VII                                                                                 31
Statement of
Expenditures for
Independent Counsel
von Kann




                      Abbreviations


                      AOUSC      Administrative Office of the U.S. Courts
                      FBI        Federal Bureau of Investigation
                      IRS        Internal Revenue Service
                      OIC        Office of Independent Counsel




                      Page 3                                GAO/AIMD-99-105 Independent Counsels
             United States
GAO          General Accounting Office
             Washington, D.C. 20548                                                                        Leter




             Accounting and Information
             Management Division

             B-281406                                                                                 Letter

             Congressional Committees

             This report presents the results of our audits of expenditures1 reported by
             seven offices of independent counsel (OIC) for the 6 months ended
             September 30, 1998. The Department of Justice and the independent
             counsels are required under 28 U.S.C. 594(d)(2),(h), and 596(c)(1) (1994) to
             report on expenditures from a permanent, indefinite appropriation
             established within Justice to fund independent counsel activities. To
             satisfy the requirements of 28 U.S.C. 596(c)(2) and Public Law 100-202, we
             audit the statements of expenditures prepared by the independent
             counsels.

             We found that the statements of expenditures presented in appendixes I
             through VII, for the offices of independent counsel Arlin M. Adams/Larry D.
             Thompson, David M. Barrett, Carol Elder Bruce, Ralph I. Lancaster,
             Donald C. Smaltz, Kenneth W. Starr, and Curtis E. von Kann, respectively,
             were reliable in all material respects. Our consideration of internal
             controls, which was limited for the purpose of determining our procedures
             for auditing the statements of expenditures, disclosed no material
             weaknesses. Further, our audits included limited tests of compliance with
             laws and regulations that disclosed no reportable instances of
             noncompliance with the laws and regulations we tested.

             The following sections provide background information, outline each
             conclusion in more detail, and discuss the scope of our audits.



Background   The Ethics in Government Act of 1978 amended title 28 of the United States
             Code to authorize the judicial appointment of independent counsels when
             the Attorney General determines that reasonable grounds exist to warrant
             further investigation of high-ranking government officials for certain
             alleged crimes. The independent counsel law (28 U.S.C. 591-599 (1994)) is
             intended to preserve and promote the accountability and integrity of public
             officials and of the institutions of the federal government. The
             Independent Counsel Reauthorization Act of 1994 further amended title 28
             of the United States Code to establish certain procedural requirements and
             extend the law's expiration date to June 30, 1999.




             1
                 The term expenditures as used in this report generally means cash disbursed.




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                        B-281406




                        The independent counsel law directs the Department of Justice to pay all
                        costs relating to the establishment and operation of independent counsel
                        offices and designates specific responsibilities to the Administrative Office
                        of the U.S. Courts (AOUSC) for independent counsels' administrative
                        support. Justice periodically disburses lump-sum payments to AOUSC for
                        this purpose.

                        In 1987, Public Law 100-202 established a permanent, indefinite
                        appropriation within Justice to fund expenditures by independent
                        counsels. Independent counsels are required to report their expenditures
                        from the appropriation for each 6-month period in which they have
                        operations. We are required to audit expenditures from the permanent,
                        indefinite appropriation and to report our findings to appropriate
                        congressional committees.

                        During any 6-month period, other significant costs incurred in support of
                        the work of independent counsels are paid from appropriations other than
                        the permanent, indefinite appropriation established to fund independent
                        counsel activities. These costs arise when an independent counsel uses
                        detailees from other federal agencies, such as the Federal Bureau of
                        Investigation (FBI). Independent counsels are not required to and do not
                        reflect such costs in their statements of expenditures. However, these
                        unaudited costs are identified and discussed in the notes to the statements
                        presented in the appendixes to this report.



Opinion on Statements   Independent counsels prepare their statements of expenditures principally
                        on a cash basis of accounting, which is a comprehensive basis of
of Expenditures         accounting other than generally accepted accounting principles. The bases
                        of accounting are described in note 1 of each counsel’s statement.

                        In our opinion, the statements of expenditures for the offices of
                        independent counsel Arlin M. Adams/Larry D. Thompson, David M. Barrett,
                        Carol Elder Bruce, Ralph I. Lancaster, Donald C. Smaltz, Kenneth W. Starr,
                        and Curtis E. von Kann present fairly, in all material respects, the
                        expenditures of these counsels for the 6 months ended September 30, 1998,
                        on the basis of accounting described in note 1 to each office’s statement.




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                         B-281406




Consideration of         We gained an understanding of internal controls whose objectives are to

Internal Control         • safeguard assets against loss from unauthorized acquisition, use, or
Structure                  disposition;
                         • assure the execution of transactions in accordance with laws governing
                           the use of budget authority and with other laws and regulations that
                           have a direct and material effect on the statements of expenditures; and
                         • properly record, process, and summarize transactions to permit the
                           preparation of reliable statements of expenditures and to maintain
                           accountability for assets.

                         The purpose of our consideration of internal controls was to determine our
                         procedures for auditing the statements of expenditures and, accordingly,
                         we do not express an opinion on internal controls. However, for the
                         controls we tested, we found no material weaknesses in the internal
                         control structure and its operations for the 6-month period ended
                         September 30, 1998. A material weakness is a condition in which the
                         design or operation of one or more of the internal control structure
                         elements does not reduce to a relatively low level the risk that errors or
                         irregularities in amounts that would be material to the statements of
                         expenditures may occur and not be detected promptly by employees in the
                         normal course of performing their duties. Our internal control work would
                         not necessarily disclose all material weaknesses.



Compliance With Laws     Our audit tests for compliance with selected provisions of laws and
                         regulations disclosed no instances of noncompliance that would be
and Regulations          reportable under generally accepted government auditing standards.
                         However, the objective of our audit was not to provide an opinion on
                         overall compliance with laws and regulations. Accordingly, we do not
                         express such an opinion.



Objectives, Scope, and   In order to carry out their financial operations and to ensure accountability,
                         independent counsels are responsible for
Methodology
                         • preparing statements of expenditures in conformity with the basis of
                           accounting described in the accompanying notes,
                         • establishing and maintaining an internal control structure to provide
                           reasonable assurance that the internal control objectives previously
                           mentioned are met, and


                         Page 6                                     GAO/AIMD-99-105 Independent Counsels
B-281406




• complying with applicable laws and regulations.

We are responsible for obtaining reasonable assurance about whether the
statements of expenditures reported by independent counsels are reliable
(free of material misstatement and presented fairly, in all material respects,
in conformity with the basis of accounting described in the accompanying
notes). Also, we are responsible for obtaining a sufficient understanding of
internal controls to plan the audits and for testing compliance with selected
provisions of laws and regulations.

In order to fulfill these responsibilities, for each independent counsel, we

• examined, on a test basis, evidence supporting the amounts and
  disclosures in the statement of expenditures and notes thereto, except
  items indicated as unaudited;
• assessed the accounting principles used by management;
• evaluated the overall presentation of the statement of expenditures;
• obtained an understanding of the internal control structure related to
  safeguarding assets, compliance with laws and regulations (including
  execution of transactions in accordance with budget authority), and
  financial reporting;
• tested relevant internal controls over safeguarding assets, compliance,
  and financial reporting; and
• tested compliance with certain aspects of selected provisions of the
  independent counsel provisions of 28 U.S.C. 591-599 (1994), 5 U.S.C.
  Chapter 55, and implementing regulations relating to pay
  administration.

We limited our internal control testing to those controls necessary to
achieve the objectives outlined in our statement on internal controls.
Because of inherent limitations in any internal control structure, losses,
noncompliance, or misstatements may nevertheless occur and not be
detected. We also caution that projecting our evaluation to future periods
is subject to the risk that controls may become inadequate because of
changes in conditions or that the degree of compliance with controls may
deteriorate.

We did not test compliance with all laws and regulations applicable to the
offices of independent counsel. We limited our tests of compliance to
those which we deemed applicable to the statements of expenditures. We
caution that noncompliance may occur and not be detected by these tests
and that such testing may not be sufficient for other purposes.



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B-281406




We obtained, but did not audit, information on costs that were not paid
from the permanent, indefinite appropriation established to fund
independent counsel activities. We obtained information on these costs
from the independent counsel offices; the Department of Justice, including
the FBI; the Internal Revenue Service; the Department of the Treasury; and
the Office of Inspector General for the Department of Agriculture.

We discussed the results of our work with representatives of the seven
offices of independent counsel and AOUSC and have incorporated their
comments where appropriate.

We performed our audits in accordance with generally accepted
government auditing standards.




David L. Clark
Director, Audit Oversight and Liaison

March 12, 1999




Page 8                                   GAO/AIMD-99-105 Independent Counsels
B-281406




List of Committees

The Honorable Ted Stevens
Chairman
The Honorable Robert C. Byrd
Ranking Minority Member
Committee on Appropriations
United States Senate

The Honorable Fred Thompson
Chairman
The Honorable Joseph I. Lieberman
Ranking Minority Member
Committee on Governmental Affairs
United States Senate

The Honorable Orrin G. Hatch
Chairman
The Honorable Patrick J. Leahy
Ranking Minority Member
Committee on the Judiciary
United States Senate

The Honorable C. W. Bill Young
Chairman
The Honorable David R. Obey
Ranking Minority Member
Committee on Appropriations
House of Representatives

The Honorable Dan Burton
Chairman
The Honorable Henry A. Waxman
Ranking Minority Member
Committee on Government Reform
House of Representatives




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B-281406




The Honorable Henry J. Hyde
Chairman
The Honorable John Conyers, Jr.
Ranking Minority Member
Committee on the Judiciary
House of Representatives




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Page 11   GAO/AIMD-99-105 Independent Counsels
Appendix I

Statement of Expenditures for Independent
Counsel Adams/Thompson                                           AppeIx
                                                                      ndi




              Page 12         GAO/AIMD-99-105 Independent Counsels
        Appendix I
        Statement of Expenditures for Independent
        Counsel Adams/Thompson




L
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        Appendix I
        Statement of Expenditures for Independent
        Counsel Adams/Thompson




L
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Appendix II

Statement of Expenditures for Independent
Counsel Barrett                                                  ApIpexndi




              Page 15         GAO/AIMD-99-105 Independent Counsels
        Appendix II
        Statement of Expenditures for Independent
        Counsel Barrett




L
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        Appendix II
        Statement of Expenditures for Independent
        Counsel Barrett




L
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Appendix III

Statement of Expenditures for Independent
Counsel Bruce                                                    AIpIexndi




               Page 18        GAO/AIMD-99-105 Independent Counsels
        Appendix III
        Statement of Expenditures for Independent
        Counsel Bruce




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        Appendix III
        Statement of Expenditures for Independent
        Counsel Bruce




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Appendix IV

Statement of Expenditures for Independent
Counsel Lancaster                                                ApV
                                                                   Ienxdi




              Page 21         GAO/AIMD-99-105 Independent Counsels
        Appendix IV
        Statement of Expenditures for Independent
        Counsel Lancaster




L
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        Appendix IV
        Statement of Expenditures for Independent
        Counsel Lancaster




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Appendix V

Statement of Expenditures for Independent
Counsel Smaltz                                                   ApV
                                                                   enxdi




              Page 24         GAO/AIMD-99-105 Independent Counsels
Appendix V
Statement of Expenditures for Independent
Counsel Smaltz




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        Appendix V
        Statement of Expenditures for Independent
        Counsel Smaltz




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Appendix VI

Statement of Expenditures for Independent
Counsel Starr                                                    ApV
                                                                   enxdiI




              Page 27         GAO/AIMD-99-105 Independent Counsels
        Appendix VI
        Statement of Expenditures for Independent
        Counsel Starr




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        Appendix VI
        Statement of Expenditures for Independent
        Counsel Starr




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        Appendix VI
        Statement of Expenditures for Independent
        Counsel Starr




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Appendix VII

Statement of Expenditures for Independent
Counsel von Kann                                                 AppV
                                                                    enxdiI




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        Appendix VII
        Statement of Expenditures for Independent
        Counsel von Kann




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                   Appendix VII
                   Statement of Expenditures for Independent
                   Counsel von Kann




(911901)   L
           ertet   Page 33                                     GAO/AIMD-99-105 Independent Counsels
Appendix VII
Statement of Expenditures for Independent
Counsel von Kann




Page 34                                     GAO/AIMD-99-105 Independent Counsels
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