United States General Accounting Office GAO Report to the Congress August 1999 FINANCIAL AUDIT Capitol Preservation Fund's Fiscal Years 1998 and 1997 Financial Statements lei G A Accountability * Integrity * Reliability GAO/AIMD-99-240 = GAO _Ancountablllty * Integrity * ReliabIlIty United States General Accounting Office Accounting and Information Washington, D.C. 20548 Management Division B-282548 August 16, 1999 To the President of the Senate and the Speaker of the House of Representatives This report presents our opinion on the financial statements of the Capitol Preservation Fund for the fiscal years ended September 30, 1998 and 1997. It also discusses our (1) consideration of internal controls in conducting our audit and (2) evaluation of compliance with laws and regulations during fiscal year 1998. We conducted our audit pursuant to 40 U.S.C. 188a-3 and in accordance with generally accepted government auditing standards. We are sending copies of this report to the members of the Capitol Preservation Commission; the Honorable Alan M. Hantman, Architect of the Capitol; the Honorable James H. Billington, Librarian of Congress; and other interested parties. Robert W. Gramling Director, Corporate Audits and Standards Page 1 GAO/AIMD-99-240 Capitol Preservation Fund Contents Letter 1 Opinion Letter 4 Financial Statements 8 Statements of Financial Position 8 Statements of Activities 9 Statements of Cash Flows 10 Notes to the Financial Statements 11 Page 2 GAO/AIMD-99-240 Capitol Preservation Fund Page 3 GAO/AIMD-99-240 Capitol Preservation Fund &... GAO Accountability * Integrity * Reliability United States General Accounting Office Accounting and Information Washington, D.C. 20548 Management Division B-282548 To the President of the Senate and the Speaker of the House of Representatives We have audited the statements of financial position of the Capitol Preservation Fund as of September 30, 1998 and 1997, and the related statements of activities and statements of cash flows for the fiscal years then ended. We found * the financial statements were fairly presented in all material respects, * no material weaknesses in the internal controls we tested, and * no reportable noncompliance with selected provisions of laws and regulations we tested for the fiscal year ended September 30, 1998. The following sections provide additional detail concerning our conclusions and the scope of our audit. Opinion on Financial The financial statements and accompanying notes present fairly, in all material respects, in conformity with generally accepted accounting Statements principles, the Capitol Preservation Fund's financial position as of September 30, 1998 and 1997, and the results of its activities and its cash flows for the fiscal years then ended. Consideration of We gained an understanding of internal controls designed to Internal Controls * safeguard assets against loss from unauthorized acquisition, use, or disposition; * assure the execution of transactions in accordance with management's authority and with laws and regulations that could have a direct and material effect on the financial statements; and * properly record, process, and summarize transactions to permit the preparation of reliable financial statements and to maintain accountability over assets. The objective of our internal control work was to determine procedures for auditing the financial statements, not to express an opinion on internal controls. Accordingly, we do not express such an opinion. However, for the controls we tested, we found no material weaknesses in the system of Page 4 GAO/AIMD-99-240 Capitol Preservation Fund B-282548 internal control and its operations for the fiscal year ended September 30, 1998. A material weakness is a reportable condition' in which the design or operation of the internal controls does not reduce to a relatively low level the risk that losses, noncompliance, or misstatements in amounts that would be material in relation to the financial statements may occur and not be detected promptly by employees in the normal course of their assigned duties. Our internal control work would not necessarily disclose all material weaknesses. Compliance With Laws Our tests for compliance with selected provisions of laws and regulations disclosed no instances of noncompliance that would be 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 The Fund's management is responsible for Methodology . preparing the Fund's annual financial statements in conformity with generally accepted accounting principles, · establishing and maintaining the Fund's internal controls to provide reasonable assurance that the internal control objectives mentioned above are met, and · complying with applicable laws and regulations. We are responsible for obtaining reasonable assurance about whether the financial statements are free of material misstatements and presented fairly, in all material respects, in conformity with generally accepted accounting principles. Also, we are responsible for obtaining a sufficient understanding of internal controls to plan the audit and for testing compliance with selected provisions of laws and regulations. In order to fulfill these responsibilities, we 'Reportable conditions involve matters coming to the auditor's attention relating to significant deficiencies in the design or operation of internal controls that, in the auditor's judgment, could adversely affect an entity's ability to (1) safeguard assets against loss from unauthorized acquisition, use, or disposition, (2) ensure the execution of transactions in accordance with management's authority and with laws and regulations, and (3) properly record, process, and summarize transactions to permit the preparation of financial statements and to maintain accountability for assets. Page 5 GAO/AIMD-99-240 Capitol Preservation Fund B-282548 * examined evidence supporting the amounts and disclosures in the financial statements and notes; * assessed the accounting principles used by management; * evaluated the overall presentation of the financial statements; * obtained an understanding of the internal controls related to safeguarding assets, compliance with laws and regulations, and financial reporting; and * tested compliance with selected provisions of laws and regulations. We conducted our audit from April 1, 1999, through July 9, 1999, in accordance with generally accepted government auditing standards. Architect of the Capitol We provided a draft of our report to the Architect of the Capitol and to the Director of Financial Services for the Library of Congress for review and and Library of comment. The Office of the Architect of the Capitol provides project Congress Comments support and assistance to the Capitol Preservation Commission and the Library of Congress provides financial management services for the Capitol Preservation Fund, including preparing the Fund's financial statements. The Architect and the Director agreed with the contents of our report. We appreciate the cooperation and assistance the Architect of the Capitol and the Library of Congress management and staff provided during our audit of the Capitol Preservation Fund's fiscal years 1998 and 1997 financial statements. If you have any questions regarding this report, please contact me or John J. Reilly at (202) 512-9406. Key contributors to this assignment were Patricia Blumenthal, Patricia Summers, and Greg Ziombra. Robert W. Gramling Director, Corporate Audits and Standards July 9, 1999 Page 6 GAO/AIMD-99-240 Capitol Preservation Fund Page 7 GAO/AIMD-99-240 Capitol Preservation Fund Financial Statements Statements of Financial Position CAPITOL PRESERVATION FUND STATEMENTS OF FINANCIAL POSITION as of September 30 1998 1997 Assets Cash $ 13,010 $ 23,148 Investments, net (note 3) 26,358,601 25,019,755 Accrued interest receivable on investments 283.875 264.635 Total assets $26.5.i86 $25aZ0753 Liabilities and Net Assets Total liabilities 0 0 Net Assets Unrestricted net assets $26.fi 46 $25,307.538 Total net assets $26fi55486 $25.3075 38 Total Liabilities and Net Assets $6 $25.07538 The accompanying notes are an integral part of these financial statements. Page 8 GAO/AIMD-99-240 Capitol Preservation Fund Financial Statements Statements of Activities CAPITOL PRESERVATION FUND STATEMENTS OF ACTIVITIES for the Fiscal Years Ended September 30 1998 1997 Changes in Unrestricted Net Assets Operating Revenues Interest (note 4) $ 1,350,848 $ 1,297,350 Total operating revenues $ 1,350,848 $ 1,297,350 Operating Expenses Publications 2.900 0 Total operating expenses $ 2,900 $ 0 Increase in unrestricted net assets $ 1,347,948 $ 1,297,350 Increase in Net Assets $ 1,347,948 $ 1,297,350 Net Assets at Beginning of Year $25.307.538 $24.010.188 Net Assets at Year-End $26655.486 $25307.538 The accompanying notes are an integral part of these financial statements. Page 9 GAO/AIMD-99-240 Capitol Preservation Fund Financial Statements Statements of Cash Flows CAPITOL PRESERVATION FUND STATEMENTS OF CASH FLOWS for the Fiscal Years Ended September 30 1998 1997 Cash Flows From Operating Activities Interest received $1,331,608 $1,349,083 Coin surcharge received 0 12,145 Cash paid for expenses (2.900) 0 Net cash provided from operating activities $1,328,708 $1,361,228 Cash Flows From Investing Activities Purchases of Treasury securities $(53,997,219) $(53,027,936) Maturities of Treasury securities 52.658.373 51.670.917 Net cash provided from investing activities $ (1,338,846) $ (1,357,019) Net (Decrease) Increase in Cash $(10,138) $ 4,209 Cash at beginning of year 23.148 18.939 Cash at end of year $ 13.1 $2 Reconciliation of Changes in Net Assets to Net Cash From Operating Activities Changes in Net Assets $1,347,948 $1,297,350 Adjustments to reconcile changes in net assets to net cash provided from operating activities Decrease in accounts receivable - surcharges 0 12,145 Decrease (increase) in accrued interest (19.240) 51.733 Total Adjustments (19,240) 63,878 Net Cash From Operating Activities $1.328708i $ The accompanying notes are an integral part of these financial statements. Page 10 GAO/AIMD-99-240 Capitol Preservation Fund Financial Statements Notes to the Financial Statements CAPITOL PRESERVATION FUND NOTES TO THE FINANCIAL STATEMENTS Note 1. Description of Entity The Capitol Preservation Commission (the Commission) was established under Title Vil of Public Law 100-696 in November 1988 for the purpose of providing for improvements in, preservation of, and acquisitions for the United States Capitol and providing works of fine art and other property for display in the United States Capitol and other locations under the control of the Congress. To finance improvement, preservation, and acquisition activities of the Commission, Title VIII of Public Law 100-696 established the Capitol Preservation Fund (the Fund) within the U.S. Treasury. The Fund consists of assets provided through deposits of charitable contributions, surcharges received by the Secretary of the Treasury from the sale of coins under the Bicentennial of the United States Congress Commemorative Coin Act and the Bicentennial of the United States Capitol Commemorative Coin Act, and interest on the invested portions of the Fund's assets. Fund assets not required to finance current improvement, preservation, and acquisition activities are invested in interest-bearing obligations of the United States. In accordance with its rules, the Commission may fund or assist in the funding of improvements to the Capitol Building and surrounding grounds if such improvements are authorized, undertaken, and completed under the procedures established by the Congress for such purposes. With respect to works of fine art and other property for display, the Commission is authorized to expend $400,000 ($200,000 for the House of Representatives and $200,000 for the Senate) for the purchase of art, furnishings, or items of historical interest provided that such expenses are approved by a majority of the members of the Commission from the House of Congress for which such purchases are made. However, the Commission may not maintain any collection of fine or decorative art, or other property, but may assist in the transfer of such items to a congressional entity (such as the Senate Commission on Art, the House Fine Arts Board, or the Joint Committee on the Library) or facilitate the disposal of items. The Architect of the Capitol, the Senate Commission on Art, and the House of Representatives Fine Arts Board are required by Public Law 100-696 (1988) to provide staff support and assistance to the Commission. As necessary, the Architect of the Capitol awards contracts and procures goods and services to complete projects established by the Commission, and ensures that goods and services purchased from vendors are received. Similarly, the Library of Congress, pursuant to Public Law 101-45 (1989), is required to provide financial management services for the Commission. These services include coordinating activities with the Department of the Treasury for the deposit, disbursement, investment, and management of the Capitol Preservation Fund. In addition to these congressional entities, the Secretary of the Senate and the Clerk of the House of Representatives, pursuant to Commission Rules, provide additional support and assistance. Page 11 GAO/AIMD-99-240 Capitol Preservation Fund Financial Statements NQte 2. Summary of Significant Accounting Policies The Fund's financial statements have been prepared in accordance with generally accepted accounting principles and reflect--on an accrual basis--the receipt and use of the Fund's assets to finance the Commission's improvement, preservation, and acquisition activities. Effective for fiscal year 1996, the Fund's financial statements became subject to accounting and disclosure requirements applicable to not-for-profit organizations--specifically Statements of Financial Accounting Standards Nos. 116, 117, and 124. These requirements include accounting and disclosure guidelines for investments, contributions received and made, and the form and content of financial statements. However, these requirements have had only limited impact on the Fund's financial statements because (1) the Fund received no contributions during fiscal years 1998 and 1997 and no prior year contributions contained outstanding restrictions, (2) the Fund's assets are unrestricted, and (3) the Fund's investments are invested in relatively short-term (3- and 6-month) interest-bearing Treasury obligations. The Architect of the Capitol, the Library of Congress, and other congressional entities are required by law to provide support services to the Commission. The cost of these services are, by their nature, indirect, difficult to quantify, and financed with appropriated funds of the other entities. To the extent that these services are provided, they are not considered operating expenses of the Fund. Once approved and funded by the Commission, the improvements, preservation, and acquisitions are transferred to the Architect of the Capitol and/or other congressional entities. Through their transfer, these assets become the accounting responsibility of other congressional entities and are not considered assets of the Fund. Note 3. Investments. Net Deposits to the Fund from contributions, coin surcharges, and interest on invested funds that are not needed currently to finance improvement, preservation, and acquisition activities are invested in interest-bearing obligations of the United States, which are purchased from the U. S. Treasury at a discount. The Commission has directed the Library of Congress to invest funds derived from contributions in 3-month Treasury securities and funds derived from coin surcharges in 6-month Treasury securities. The values of investments outstanding as of September 30, 1998 and 1997, net of discounts were $26,358,601 and $25,019,755, respectively. Annual effective yield ranged from 4.58 percent to 5.46 percent in fiscal year 1998, and from 4.78 percent to 5.39 percent in fiscal year 1997. Page 12 GAO/AIMD-99-240 Capitol Preservation Fund. Financial Statements Outstanding Investments as of September 30 1998 1997 Face value of investments $26,999,000 $25,665,000 Less: discounts (640.399) (645,245) Investments, Net of Discounts $26358601 $25019.755 Note 4. Revenues Earned revenues during fiscal year 1998 of $1,350,848 consisted only of interest on United States Treasury obligations. During fiscal year 1997, earned revenue consisted of $1,297,350 in interest on Treasury obligations. (917743) Page 13 GAO/AIMD-99-240 Capitol Preservation Fund
Financial Audit: Capitol Preservation Fund's Fiscal Years 1998 and 1997 Financial Statements
Published by the Government Accountability Office on 1999-08-16.
Below is a raw (and likely hideous) rendition of the original report. (PDF)