oversight

Library of Congress: Special Events Gift Fund Operations and Accountability

Published by the Government Accountability Office on 2003-01-23.

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

United States General Accounting Office
Washington, DC 20548




          January 23, 2003


          The Honorable Charles H. Taylor
          Chairman
          Subcommittee on Interior and Related Agencies
          Committee on Appropriations
          House of Representatives

          The Honorable James P. Moran
          Ranking Minority Member
          Subcommittee on Legislative
          Committee on Appropriations
          House of Representatives


          Subject: Library of Congress: Special Events Gift Fund Operations and
                   Accountability

          Pursuant to your request, we are reporting on selected aspects of the Special Events
          Gift Fund of the Library of Congress. We are also providing a copy of this report
          today to the incoming Chairman of the Subcommittee on Legislative, House
          Committee on Appropriations.

          The Library of Congress holds a variety of special event activities in its public areas,
          including official receptions, dinners, conferences, and cultural, educational, and
          scholarly presentations. To facilitate the planning and coordination of its special
          event activities, the Library maintains a special events support staff, which is part of
          the Library’s Office of Special Events and Public Programs (OSEPP). For fiscal year
          2001, the Library reported that the special events support staff planned over 490
          individual event activities, which were recognized in the Library’s supporting records,
                                                1
          as approximately 360 special events. Of these, about one-third, or approximately 120,
          were accounted for in the Special Events Gift Fund (Gift Fund).2 Events accounted
          for in the Gift Fund can be sponsored or cosponsored by the Library, members of

          1
            For final accounting and control purposes, the Library treats related special event activities as a single
          event.
          2
            Pursuant to its gift fund authority and a 1990 donation, the Library created the Special Events Gift
          Fund to make funds available for food, beverages, entertainment, personnel, and other miscellaneous
          expenses related to hosting special events.

                                                     GAO-03-312R Library of Congress: Special Events Gift Fund
Congress, and outside organizations. The approximately 240 other special events held
in fiscal year 2001 were, according to Library officials, accounted for in other funds
available to the Library, which include other gift and appropriated funds.

The Library’s event-specific costs associated with holding the approximately 120
events accounted for in the Gift Fund are financed through contributions received
from the sponsors of those events. To finance the salary and benefit costs of the
Library staff 3 who plan and coordinate all of the Library’s annual special event
activities, the Library requests from outside sponsors or cosponsors of events an
additional contribution to the Gift Fund that is based on the particular room
requested for the event. The room contributions on which the Library depends the
most to fund its special events staff payroll come from a limited number of events
that involve the use of the Great Hall in the Library’s Jefferson Building. The Library
reported that it held a total of 13 Great Hall events in 2001, for which it requested and
received room contributions.

The current suggested room contribution levels associated with the limited number
of outside-sponsored events in the Great Hall are $50,000 for for-profit organizations
and $15,000 for nonprofit organizations. These amounts were increased in January
2001 from the previous levels of $25,000 for for-profit organizations and $8,000 for
nonprofit organizations. The increase in suggested room contributions responded to
the Library’s 5-year forecast that showed that funding needed to pay for increased
salary and benefit costs associated with the Library’s event staff would deplete the
Gift Fund’s available balance. According to Library officials, the increased salary and
benefit costs were associated with needed increases in the full-time staffing level for
the Special Events program and projected annual increases in the salary and benefit
costs for the event staff.

You requested that we review the Library’s Special Events Gift Fund. As agreed with
your staff, we focused our review on the Library’s analysis supporting its June 2000
decision to increase suggested room contributions associated with the Great Hall
effective January 2001, and key policies, procedures, and controls associated with
holding the approximately 120 fiscal year 2001 special events that were accounted for
in the Gift Fund. Specifically, we agreed with your staff to

(1) review and comment on the analysis behind the Library’s January 2001 increase in
the suggested room contributions from outside sponsors of events held in the Great
Hall of the Jefferson Building;

(2) identify key policies and procedures applicable to requesting, approving, and
planning those special events accounted for through the Gift Fund and determine
whether the Library is following those policies and procedures; and



3
 The Gift Fund pays salaries and benefits of all OSEPP staff except for the Special Events Officer, who
is currently paid from appropriated funds.


2                                        GAO-03-312R Library of Congress: Special Events Gift Fund
(3) identify key accounting and control policies and procedures over receipts,
expenditures, and the fund balance of the Gift Fund and determine whether the
Library is following those policies and procedures.

Results in Brief

The January 2001 increase in the suggested room contributions from outside-
sponsored Great Hall events was based on the Library’s decision to fund the
projected salary and benefit costs of its special events support staff with
contributions from outside sponsors of those events while trying to limit the number
of such events in response to concerns about the wear and tear on the Great Hall. To
identify the level of contributions needed to fund the forecast salary and benefit costs
of special events support staff over a 5-year period, in May 2000, the Library analyzed
alternative combinations of contribution levels and numbers of outside-sponsored
Great Hall events.4

In performing the analysis, the Library did not take into account alternatives for
funding the forecast salary and benefit costs other than suggested room contributions
and sponsorship for Great Hall events. According to Library officials, at the time of
the analysis, demand for use of the Great Hall had been increasing. However, in the
aftermath of the terrorist attacks and the anthrax incidents on Capitol Hill, the
Library received less in suggested room contributions from outside sponsors and
cosponsors of Great Hall events for 2001 than it had projected in its the analysis.
Specifically, the Library reported 3 fewer (13 instead of 16) total events than
projected for 2001: 4 fewer (5 instead of 9) for-profit sponsored events and one
additional non-profit event.

The types of special event activities that can be held at the Library are governed by
Library regulations, which also establish policies and procedures that guide the
processes through which events are requested, approved, planned, and held. Library
procedures provide for documenting the implementation of these policies and
procedures, and OSEPP establishes what it refers to as event files to maintain this
documentation. We examined files for 93 events that, according to Library officials,
involved Gift Fund receipts, disbursements, or both, and we found that, at the time of
our review, key supporting documentation was missing from 73 of those event files.
Among the missing items were letters requesting approval to hold events, direct
evidence of the Library’s approval for events, key agreements required for the use of
the facilities, and certificates of tax status for nonprofit sponsors. In four cases,
OSEPP had difficulty finding entire files, which according to OSEPP staff had been
misplaced following an office move. However, based on additional inquiries and
procedures, we were able to conclude that the Library had generally followed its
policies and procedures for requesting, approving, and planning these special events.



4
Because the Library could not provide data or other information used in preparing the analysis, we
were unable to review the support underlying the assumptions about projected costs.


3                                       GAO-03-312R Library of Congress: Special Events Gift Fund
In addition to event-related policies and procedures, OSEPP has established
accounting and internal control–related policies and procedures for Gift Fund
receipts and expenditures. While Library records showed that these policies and
procedures were generally followed, we found that the policies and procedures were
not sufficient to achieve full accountability over Gift Fund transactions and funds.
Specifically, OSEPP lacked basic financial management records for events involving
the Gift Fund, such as schedules of receipts and expenditures approved by OSEPP,
and thus did not have a basis for reconciling approved receipts and expenditures to
the receipts and expenditures recorded in the Library’s financial management system
(FMS) for the Gift Fund. We found errors that could have been identified by Library
staff if the basic financial records for events had been maintained and reconciled to
the Library’s financial management system. Also, OSEPP did not have a policy or
related controls to ensure that final accountings for events were performed within an
established time period. We found that for the files we reviewed, final accountings
were performed on average about 5 months after their respective events, with some
final accountings occurring roughly a year or more after the event.

We are making recommendations to the Librarian of Congress to analyze the
Library’s options for funding OSEPP staff and to strengthen internal control to
improve the integrity of event files and strengthen accountability over event finances
and reporting.

In commenting on a draft of this report, the Chief of Staff of the Library agreed with
our recommendations and has described planned actions to respond to them.

Background

Library Special Events

Library of Congress regulations describe special events as gatherings in the Library’s
public areas that involve guests and that may involve food and beverage service. It is
the Library’s policy to encourage the planning and implementation of special events
and public programs that relate to its mission, that share the treasures of its
collections and the talents of its staff with members of other cultural and scholarly
organizations, and that attract targeted groups and individuals who normally might
not come to the Library, potentially expanding the Library’s base of support.

As a general rule, the Library limits the use of its facilities to Library-sponsored
functions. However, the Great Hall and other public spaces may be used for special
                                                                 5
events sponsored or cosponsored by members of Congress and, since 1993, by
outside organizations—both for-profit and nonprofit—that satisfy certain terms and
conditions. According to Library regulations, special events sponsored by outside




5
    Congressionally cosponsored events involve a member of Congress and an outside organization.


4                                         GAO-03-312R Library of Congress: Special Events Gift Fund
                                                     6
organizations must be under the full control of the Library, must be hosted by the
Library, and must involve Library staff and the Library’s collections.

The unit responsible for carrying out Library policy for special events is OSEPP,
under the Chief of Staff of the Library. OSEPP provides the overall coordination and
management of all special events at the Library. Depending on the nature of the
event, OSEPP’s specific responsibilities can range from scheduling and coordinating
the set-up of a room to planning and coordinating all event-related activities including
preparing budgets; arranging for caterers, entertainment, security, parking, Library
displays, and cleanup; and preparing the final accounting for events.

According to the Library, the special events support staff planned more than 490
individual event activities during fiscal year 2001, including, in some cases, multiple
activities related to what the Library categorized as one event. The Library treats
related special event activities as a single event for purposes of budgeting and
maintaining supporting documentation. According to Library records, the more than
490 special event activities identified by the Library were related to approximately
360 special events. For purposes of our review, events with multiple event activities
were treated as a single event.

Special Event Gift Fund Operations

Section 160 of Title 2 of the United States Code authorizes the Librarian of Congress
to accept gifts or bequests of money for immediate disbursement by the Librarian in
the interest of the Library, its collections, or its service. Contributions are to be
deposited into the Gift Fund and are to be used consistent with the purposes of the
gift as indicated by its donor. Pursuant to its gift authority, the Library, in 1990,
accepted a donation to establish the Special Events Gift Fund. In establishing the Gift
Fund, the donor requested that the funds be made available for food, beverage, and
entertainment expenses as well as the costs of special events personnel and
miscellaneous related expenses. The donor also requested that others be permitted to
contribute and add to the Gift Fund subject to the purposes and conditions for which
it was established. Of the approximate 360 special events held by the Library in fiscal
year 2001, Library officials identified 123 special events involving receipts to or
disbursements from the Special Events Gift Fund.

Sponsoring organizations wishing to hold approved special events are expected to
contribute the amount needed to pay the event-specific costs of holding the event.
Library regulations refer to these event costs as “recoverable costs.” It is OSEPP’s
responsibility to ensure that it receives and deposits into the Gift Fund the
contribution needed to pay all estimated recoverable costs of a planned special event
before obligating money for the event. OSEPP staff identify and estimate the
anticipated recoverable costs for each event. Recoverable costs include, but are not

6
 Library of Congress regulations (LCR) define “full control” as final approval of and responsibility for
invitation texts, guest lists, budgets, caterers, support personnel, and facilities management (LCR 1818-
3 Section 4.B.1.b, reviewed May 28, 1998).


5                                         GAO-03-312R Library of Congress: Special Events Gift Fund
necessarily limited to, the direct costs of services such as food and beverage,
audiovisual and lighting, overtime for Library staff, a tent at the Great Hall loading
dock, production of signs and printed materials, and vendor charges for cleaning and
other services. In addition to these direct costs associated with the event, Library
policies require OSEPP to add an indirect-cost charge of 9.79 percent of applicable
direct costs.7

It is also Library policy to use funds available in the Gift Fund to pay the salaries and
benefits of all but one of the special events support staff, which consists of six full-
                              8
time OSEPP staff members and two full-time staff of the Public Program Services
Division. In addition, the Gift Fund is used to cover the costs of special events for
which event-specific donations were not made. To cover these staff and event costs,
the Library suggests specific room contributions for events sponsored by outside
                9
organizations. OSEPP is responsible for maintaining a schedule of suggested room
contributions applicable to outside sponsors. The schedule provides for lower
suggested room contributions for events that are sponsored or cosponsored by
nonprofit organizations. In addition, for Madison Building events that are
cosponsored by a member of Congress and an outside organization, the Library
requests a room contribution that is half the amount that would apply to an event
sponsored solely by an outside organization.

Scope and Methodology

To accomplish our objectives, we

•   reviewed the Library’s May 2000 analysis of alternative Great Hall room
    contributions to cover salary and benefits paid through the Gift Fund;

•   reviewed the Library’s policies and procedures for requesting, approving, and
    planning special events;

•   determined, through review of Library regulations and discussions with Library
    staff, Library policies and procedures for accounting for and controlling receipts,
    expenditures, and the fund balance of the Gift Fund;

•   reviewed 93 of 123 fiscal year 2001 special events identified by the Library as
    being accounted for through the Gift Fund to determine whether the special event
    folder contained documentation to support (1) compliance with the Library’s

7
  The indirect-cost charge is intended to recover for the library indirect costs associated with support
provided to the special events activities by various Library administrative functions, including financial
services, general building overhead, information technology support, and management and human
resources.
8
  The salary and benefits of the Special Events Officer, one of the six OSEPP full-time staff, are
currently paid from appropriated funds.
9
  The suggested room contribution applies to outside sponsors who request the use of the Great Hall,
which is located in the Jefferson Building, and the Montpelier Room, Mumford Room, Pickford
Theater, Madison Hall, and selected dining rooms, which are located in the Madison Building.


6                                         GAO-03-312R Library of Congress: Special Events Gift Fund
     policies and procedures for requesting, approving, and planning special events,
     (2) the recoverable costs for event sponsors, and (3) the basis for the suggested
     room contribution;

•    reviewed the Library’s statutory gift authority; and

•    interviewed Library officials and staff with responsibilities for special events
     operations, the Gift Fund, and related financial reporting, budgeting, and human
     resources.

In selecting the 93 special events for review, we included all events held in the Great
Hall, all events for which a room contribution was received, and all events for which
the Gift Fund absorbed some or all of the recoverable costs of the event. In addition,
we reviewed one-half of the remaining Library- and congressionally sponsored
events. In performing our review of the Gift Fund we considered, where appropriate,
Standards for Internal Control in the Federal Government.10

Also, we obtained written comments on a draft of this report from the Chief of Staff
of the Library, which are included in enclosure I.

We did our work in accordance with generally accepted government auditing
standards from January 2002 through November 2002.

Library’s Analysis of Suggested Contributions for Great Hall Events

In January 2001, the Library increased its suggested contribution for use of the Great
Hall from $25,000 to $50,000 for for-profit organizations and from $8,000 to $15,000
for nonprofit organizations.11 These increases followed a May 2000 Library analysis of
alternative combinations of suggested room contributions and numbers of outside-
sponsored Great Hall events that would support the Library’s projected level of funds
needed to pay forecast salary and benefit costs for special events support staff over
the next 5 years. Following the analysis, the Librarian of Congress notified the
members of the Joint Committee on the Library that, effective January 1, 2001, the
Library would raise the suggested room contribution.

According to Library officials, the May analysis resulted from concerns raised during
an annual internal budget review of the Gift Fund’s 5-year budget forecast for fiscal
years 2001 through 2005. The Library projected that, at the existing contribution
levels for the Great Hall, the costs that the Gift Fund would incur in filling the full-
time special events staffing needs would, under the Library’s policy of funding special
events support staff salaries and benefits, deplete the fund’s available resources
within 2 years. The May 2000 analysis focused on identifying increases in the

10
   U. S. General Accounting Office, Standards for Internal Control in the Federal Government,
GAO/AIMD-00-21.3.1 (Washington, D.C.: November 1999).
11
   The suggested room contributions for the various Madison Building rooms (which range from $500 to
$5,000) were not changed.


7                                       GAO-03-312R Library of Congress: Special Events Gift Fund
suggested contribution levels for a relatively small number of outside-sponsored
Great Hall events, which, the Library believed at the time of its analysis, would be
achievable. According to Library officials, at the time of the analysis, demand for use
of the Great Hall had been increasing. The analysis matched different contribution
levels with different totals and mixes of event sponsorships that could be expected to
generate sufficient funds over the 5-year period. The objective of the analysis was to
ensure that room contributions and the available Gift Fund balance would be
sufficient to cover the forecast salary and benefit costs associated with seven full-
time special events support staff assuming 10 percent yearly increases in the salary
and benefit expense. Earlier, the Architect of the Capitol had raised concerns about
the wear and tear such events might be having on the Great Hall. In light of those
concerns, the Library’s analysis sought to identify the level of suggested room
contributions needed to fund forecast salary and benefit costs while limiting the
number of outside-sponsored events.

The contribution alternative selected was based on annually holding 16 Great Hall
events sponsored by outside organizations, with 9 involving for-profit sponsors and 7
involving nonprofit sponsors. This alternative stayed within the Library’s general
parameters limiting the number of outside-sponsored Great Hall events to help lessen
wear and tear on the Great Hall, and was expected to provide sufficient funding over
the 5-year period of the analysis to ensure that the Gift Fund had adequate resources
to pay the salary and benefit costs of the seven full-time support staff positions
charged to the Gift Fund and sufficient additional funding to allow the Gift Fund to
cover the costs associated with the one remaining OSEPP staff person currently paid
from appropriated funds.

Library officials told us that the staffing level considered in the analysis was the level
needed to support the Library’s overall special events operations. However, the
Library had no workload-related or other data to support the staffing level
considered. For example, the Library could not provide data that related the staffing
level of eight full-time positions to the event planning efforts associated with the
annual number of special events handled by the staff. In addition, the Library could
not provide support for its assumption that the annual cost of funding those positions
would increase by 10 percent per year, except to say that the increase was intended
to cover annual cost-of-living increases, promotions, and in-grade step increases. In
this regard, while Office of Management and Budget (OMB) current budget guidelines
for these factors (excluding promotions) is about half of what the Library used, OMB
expects that agencies should base their estimates on their own individual data.12
Although the Library’s staffing assumptions were key to determining the amount of
and need for the suggested room contributions for the Great Hall, because there were
no supporting data, we were unable to review the Library’s basis for its staffing levels
or the 10 percent annual cost increase.

Also, in the aftermath of the terrorist attacks and anthrax incidents on Capitol Hill in
the fall of 2001, the Library has reported a drop in the expected number of outside-

12
     While OMB guidance in not applicable to the Library of Congress, we used it for contextual purposes.


8                                           GAO-03-312R Library of Congress: Special Events Gift Fund
sponsored Great Hall events. For calendar year 2001, OSEPP reported a total of 13
outside-sponsored Great Hall events, including 5 for-profit events and 8 nonprofit
events. This compares to the combination of 9 for-profit and 7 nonprofit events that
served as the basis for the contribution level needed to meet OSEPP’s salary and
benefit costs as considered in the May 2000 analysis. The drop from the expected 16
to 13 Great Hall events for calendar year 2001 is even more significant given that
actual events sponsored by for-profit organizations, which are asked to make the
$50,000 room contribution, dropped from 9 to 5 for the year. This trend in the
combinations of outside-sponsored Great Hall events continued in calendar year
2002, with the Library reporting 3 for-profit and 11 nonprofit Great Hall events.
Library officials also noted that the state of the economy has likely contributed to this
decline.

The drop in outside-sponsored Great Hall events has, according to Library officials,
resulted in lower than expected amounts available to the Gift Fund to pay special
events support staff salaries and benefits. Given that the Library has limited the
number of outside-sponsored Great Hall events to lessen excess wear and tear on the
facility, it relies on relatively few events to fully fund special events support staff
payroll. This has, at least in the short-term, raised a question about the Library’s
ability to fund special events support staff salary and benefit costs. A drop of even
two or three, especially for-profit events, can significantly affect the Library’s ability
to fund all of the Library’s special events support staff salary and benefit costs from
these events.

Event Approval and Planning Is Guided by Policies and Procedures, but
Related Documentation Was Missing for Many Events

Through regulations, operating guidelines, and practices, the Library has established
policies and procedures applicable to special events sponsored or cosponsored by
the Library, members of Congress, and outside organizations. These policies and
procedures guide the processes of requesting, approving, and planning events, and
they provide for the development of supporting documentation applicable to each
stage of preparation for an event. OSEPP is responsible for maintaining this
documentation in event files.

Although specific policies and procedures for reviewing and approving requests for
special events vary by type of sponsorship, the basic control aspects of review and
approval remain the same, as the following illustrate.

•   Library procedures call for requests to be documented through either a request
    form or letter submitted in advance of the event. Library sponsors are to submit a
    Special Event Request Form; outside and congressional sponsors are to submit a
    proposal letter.
•   Outside sponsors that are nonprofit organizations are required to submit a copy of
    their Certificate of Tax Status showing that they meet the definition of a nonprofit
    organization as described in Title 26, United States Code, Section 501(c)(3). This



9                                   GAO-03-312R Library of Congress: Special Events Gift Fund
     evidence of their status is needed to support the Library’s policy of suggesting
     lower room contributions for nonprofit organizations.
•    Although the specific process varies depending on the type of sponsor requesting
     the event, all requests are reviewed and considered for approval. Requests for
     events sponsored exclusively by outside sponsors are to be reviewed by the
     Library’s Facilities Committee, requests from members of Congress are to be
     reviewed and considered for approval by the Library’s Congressional Relations
     Office, and requests for Library-sponsored events are to be reviewed and
     approved by Library division chiefs.

Once an event has been approved, OSEPP staff work with the event’s sponsor to
establish the nature and size of the event and then develop a budget for the estimated
event costs. For those events sponsored or cosponsored by outside organizations,
Library policy requires that event sponsors pay for the estimated recoverable costs
prior to the event. The Library requests the applicable room contribution when the
budget of recoverable costs is presented.

Along with written estimates of the amounts needed to fund event costs, OSEPP staff
provide outside sponsors with guidance on how to transmit the contribution to the
Library. Also, Library policy requires that outside sponsors sign a written agreement
to abide by Library regulations and policies related to sponsoring events. OSEPP staff
provide additional planning assistance and event oversight and control by requiring
that guest lists, invitations and other printed material, seating arrangements, and
entertainment and photography requirements be submitted for approval.

While the Standards for Internal Control in the Federal Government recognize that
transactions and other significant events should be clearly documented and the
documentation properly managed and readily available for examination, our review
found problems with key supporting documents in many of the events files we
reviewed. Specifically, we found misplaced files, missing request letters or forms,
missing evidence that events had been approved, and a lack of explanation or support
for apparent departures from applicable policies.

At the time of our review, we noted the following examples of missing, misplaced, or
incomplete event documentation involving 73 of the 93 event files we reviewed:

•    Files for 4 events were misplaced during a relocation of OSEPP and were not
     located until after we requested the files for our review.
•    While 72 of the events required request letters, 12 were missing from the event
     files.
•    Evidence of the Library’s approval for 54 of the total 93 events we reviewed was
     missing from the files.
•    Agreements with 12 of 28 outside sponsors were missing from the files or were
     incomplete.




10                                 GAO-03-312R Library of Congress: Special Events Gift Fund
•      The Certificate of Tax Status (showing that the sponsor met the IRS definition of a
       nonprofit organization)13 was missing from 11 of 20 nonprofit event files.

Federal internal control standards require that adequate supporting documentation
be maintained and readily available to provide evidence that significant events have
occurred and internal controls have been complied with. Without such
documentation, the Library cannot readily demonstrate that special events are
conducted in accordance with key policies and procedures or explain exceptions.
Incomplete documentation also exposes OSEPP staff and Library management to
increased risk that their event-related decisions may be called into question and that
they will be unable to adequately explain or defend their decisions.

While more than three-fourths of the OSEPP event files we reviewed were incomplete
to some extent, we were able to conclude that the Library generally followed its
policies and procedures related to requesting, approving, and planning those events
through our (1) review of other documents in the event files, (2) understanding of the
Library’s procedures for requesting, approving, and planning events, and (3) follow-
up with OSEPP staff concerning missing records and information.

Policies and Procedures for Receipts, Expenditures, and Fund Balance Are
Followed, but They Are Not Sufficient for Full Accountability

OSEPP has established policies and procedures for processing Gift Fund receipts and
expenditures. While our review showed that these policies were being followed, we
noted that OSEPP’s ability to achieve full accountability by effectively accounting for
and controlling amounts recorded in the Gift Fund was inhibited by a lack of basic
accounting and management records; reconciliations of receipts, expenditures, and
fund balance; and controls over event final accountings.

Established Policies and Procedures over Gift Fund Receipts, Expenditures, and
Fund Balance Were Generally Followed

OSEPP has instituted event planning and close-out policies and procedures that are
intended to account for and control event-related receipts and expenditures. These
policies and procedures include requirements for event budgets, advance payments,
and final accountings. Regarding budgets, OSEPP policy requires that a budget be
developed for all the recoverable costs of special events. Budgets assist OSEPP
management in planning and monitoring event costs and support the Library’s
request to sponsors for contributions to cover the estimated recoverable costs of the
event and, where applicable, for suggested room contributions. Event budgets are to
itemize estimated event costs and include direct costs (such as catering, tent rental,
sound systems, set-up and cleaning service, and overtime for Library personnel),
indirect costs (9.79 percent of direct costs), and applicable suggested room
contributions. After developing the event budget, OSEPP staff are to inform the
sponsor and request that a contribution for the estimated amount be made to the Gift
13
     26 U.S.C. 501(c)(3),


11                                    GAO-03-312R Library of Congress: Special Events Gift Fund
Fund. We found that the Library had prepared budgets as applicable for the 93 events
we reviewed.

OSEPP policy requires that the Library receive all funds in advance for those events
sponsored or cosponsored by outside organizations. Requiring advance funding helps
to ensure that the Gift Fund receives the amount it needs to pay for all recoverable
event costs. The policy requires sponsors to fund an amount equal to 50 percent of
the event budget no later than 30 days after notification that the Library has approved
the event. The remaining balance is due no later than 30 days prior to the event.
While we did not test the specific time frames provided for in the policy, our review
of the 93 event files showed that the Library generally received the contributions it
requested prior to the events’ being held. There were eight exceptions to this policy
in which funds were not received in advance of the event, but the supporting
documentation in the file did not provide a reason for the exceptions. Five of the
eight were received within 13 days after the event. For the other three events, funds
were not received prior to the Library’s final accounting.

After an event has been held, OSEPP policy requires that a final accounting be
performed once OSEPP staff have received and approved invoices from vendors and
all event-related expenditures have been made. The final accounting represents a key
control that helps ensure that the Gift Fund receives funds for all recoverable event
costs and that it refunds any over-funding by sponsors. OSEPP prepares a final
accounting that itemizes event-related expenditures and compares the expenses to
the advance contribution received. If a sponsor’s advance contribution is less than
the actual costs identified in the final accounting, OSEPP is to request an additional
payment from the sponsor. If the sponsor’s advance contribution exceeds actual
expenditures, the Library is to offer the donor the choice of requesting a refund or
donating the excess to the Gift Fund. At the time of our review, final accountings had
been completed for 88 of the 93 fiscal year 2001 events we reviewed. Additional
information on final accountings is presented in table 1 later in this report.

Additional Receipt and Expenditure Policies Are Needed to Strengthen
Accountability

While existing policies for financial operations were generally followed for the events
we reviewed, we determined that they were not sufficient to achieve full
accountability over Gift Fund activity. Specifically, policies did not call for OSEPP to
maintain certain accounting records that could be used to reconcile event receipts
and expenses to the separate Gift Fund records maintained in the Library’s FMS.
Also, final accounting policy did not call for final accounting to be completed
promptly.

Lack of OSEPP Accounting Records Limits Accountability

The Library accounts for Gift Fund transactions and the fund balance in its FMS.
While OSEPP, as discussed previously, is to maintain individual event files, there
were no policies and procedures for effectively monitoring and comparing OSEPP-


12                                 GAO-03-312R Library of Congress: Special Events Gift Fund
approved receipts and expenditures to amounts recorded in the Library’s FMS to
ensure that all Gift Fund transactions are completely, promptly, and accurately
recorded.

In addition, OSEPP staff did not maintain basic accountability records needed to
show the status of efforts to complete final accountings, collect amounts owed, and
refund excess amounts. Such records would normally include journals of payments
received and expenses approved, records detailing how much is owed to the Gift
Fund and how long it has been outstanding, and status reports summarizing, by
event, all special event financial transactions. Status reports can include information
such as the event date and sponsor, the budget estimate number,14 contributions
received, estimated and actual expenses, the date final accounting is completed, the
amount owed by or to the sponsor, and the date the final payment is received or paid.

The importance of OSEPP’s having the accounting information described above and
reconciling that information to comparable information recorded in the Library’s
FMS is demonstrated by the errors noted below, which thorough and timely
reconciliations would be expected to identify.

•    OSEPP staff did not include approximately $839 in food costs in the final
     accounting for one event. Because OSEPP expense records were not reconciled
     with Gift Fund expenses recorded by the Financial Services Office, OSEPP staff
     did not detect the omission.

•    OSEPP did not identify nine Gift Fund expenditures, totaling more than $85,000,
     that were recorded in the wrong fiscal year in FMS records. A comparison of a
     complete list of events held in fiscal year 2001 to the FMS records would have
     disclosed the error.

•    OSEPP did not identify approximately 12 hours of erroneous overtime charges to
     the Gift Fund totaling about $350. A comparison of overtime charges paid from
     the Gift Fund to OSEPP supporting records would have disclosed these erroneous
     charges.

Our review of event files identified other matters that would likely have been
identified by OSEPP staff if basic accounting records were maintained. Accounting
records that record, summarize, and report amounts owed and received would have
allowed OSEPP management to identify that the following transactions were not
properly completed.

•    A sponsor’s refundable contribution of $1,604 was not identified as needing to be
     refunded until we brought the matter to OSEPP’s attention in August 2002, even
     though the event, scheduled for September 12, 2001, had been canceled.

14
 The budget estimate number is the unique number assigned to each event on the form Estimated
Expenditure of Funds for Entertainment. The library uses the budget estimate form internally to
approve the budgets for each special event.


13                                      GAO-03-312R Library of Congress: Special Events Gift Fund
•    A $100 sponsor’s check was put into an event file and not processed for deposit by
     OSEPP staff. OSEPP staff said that the check was not deposited because the
     event file was one of a group of files that was lost for several months during an
     OSEPP office move.

Weak Controls over Final Accounting Contribute to Unresolved Errors

OSEPP’s accounting procedures require a final accounting for all Gift Fund events.
When performed promptly after all event-related expenditures are made, final
accounting helps ensure that amounts owed, whether to sponsors or to the Library,
are identified and paid. However, at the time of our review, the Library did not have a
policy or related controls to ensure that final accountings for events were performed
within an established time period. In addition, the Library did not have controls to
ensure the final accountings properly included all relevant costs or that no costs were
inappropriately charged to the Gift Fund. For example, overtime charged by Library
staff to the Gift Fund is to be verified during the final accounting. However, for the
payroll records we tested, we found that about $1,300 in overtime involving six events
was incorrectly charged to the Gift Fund. The costs of these six events should have
been charged to other funds available to the Library. Four of these six events were
held between November 2000 and March 2001, but as of September 2002, the final
accounting for these events had not yet been completed.

In fiscal year 2001, all events held in the Great Hall were to be assessed a tent fee to
recover the Library’s cost of leasing a tent to shelter catering preparations on the
Great Hall loading dock. Library officials told us that the fee assessed for use of the
tent varied by the type of event sponsor. For-profit sponsors were to be assessed a
fee of $1,250; nonprofits sponsors, $1,000; and Library sponsors, $750. However,
OSEPP did not have written guidance to assist OSEPP staff in preparing the final
accounting for these events. Our review of 33 final accountings for events involving
the use of tents showed that for 14 events the Library’s policy on tent fees was not
consistently applied. In some cases sponsors were charged too much, in other cases
sponsors were not charged at all.

Although an OSEPP official stated that OSEPP’s efforts in fiscal year 2001 were
focused on completing the final accounting of events sponsored by outside
organizations, the Library had generally not established an overall policy for promptly
completing final accountings. Our review of 87 final accountings completed for fiscal
year 2001 events showed that on the average they were completed 5.1 months after
an event was held. Table 1 also shows that for nine events, the final accounting took
roughly a year or more to complete.




14                                 GAO-03-312R Library of Congress: Special Events Gift Fund
Table 1: Timing of Final Accounting for 87 Special Events at the Library of Congress
                                                                           Average number
                                                                            of days between
                             Aging of account from day of                     event and final
                               event to final accounting                         accounting

                         Over     Over     Over    Over    Over     Over    Total
                   30      30       60       90     120     180      360    events
Oustide-
sponsored
events             0       2        5      11       8          2        0      28           110
Library-
sponsored
events             0       1        3       7       6          0        2      19           153
Congress-
sponsored
events             0       1        6      10      13          3        7      40           183
Total events       0       4       14      28      27          5        9      87
Average days                                                                                153
Source: GAO analysis based on Library of Congress data.

Note: Of the 93 events we reviewed, final accounting for 1 event was undated, 2 were in process, and
final accountings for 3 other events were not being prepared for various reasons.

The 87 final accountings that had been performed by the Library identified about
$19,200 in refunds owed to 40 sponsors and about $68,900 due from 46 sponsors. In
its comments on our report, the Library stated that all monies have been refunded or
collected in full except for one event (see enclosure I). We did not attempt to verify
the refunds or collections.

OSEPP management has indicated that the office has recently begun to follow an
unwritten policy of completing final accounting for all outside-sponsored events
within 3 months of the event. According to OSEPP management, due to time and
staffing limitations, more time is allowed for completing the final accountings for
internally sponsored events.

Conclusions

The Library’s May 2000 analysis of funding the projected salary and benefits costs of
its special events support staff over the next 5 years only considered suggested room
contributions from outside sponsors of Great Hall events. This approach leaves the
funding of special events support staff salaries and benefits dependent on the room
contributions for relatively few events. In addition, the Library could not provide data
or information to support the key assumptions it made in conducting its analysis. In
the aftermath of the terrorist attacks and anthrax incidents on Capitol Hill in the fall
of 2001, the Library has not held the number of outside-sponsored Great Hall events
assumed in the analysis. Whether or not the reduced number of events is a short-
term or longer-term issue is unknown. However, the drop in outside-sponsored


15                                       GAO-03-312R Library of Congress: Special Events Gift Fund
events raises a question about the Library’s ability to rely on a limited number of
events to fully fund the salary and benefit costs of the staff needed to support the
Library’s special events program.

The Library of Congress has policies and procedures to guide OSEPP in managing
special events at the Library. Because special event records were missing from many
of the event files we reviewed, the Library did not have ready assurance that special
events were conducted in accordance with Library policies and procedures and that
departures from policy had been approved. Unless OSEPP takes actions to
strengthen its control over its event files, it may not be able to show that its events
are being conducted in accordance with its policies and procedures or to explain
exceptions. Also, OSEPP has instituted policies and procedures to account for and
control event-related receipts and expenses, which it generally follows. However, it
does not have the basic accounting and management records it needs to provide full
accountability for the Gift Fund. Without accounting information that can be readily
summarized, reviewed, and reconciled, those responsible for the Gift Fund cannot
adequately monitor final accountings for events or the appropriateness and
completeness of the receipts and expenditures recorded in the Gift Fund.

Recommendations

To help ensure that the Library of Congress has the ability to fund the salary and
benefit costs of personnel who support the Library’s overall special events activities,
the Librarian of Congress should direct the Library’s Financial Services Director to
work with OSEPP to conduct a new analysis that considers various options for
funding forecast salary and benefits costs of special events support staff. In
conducting this analysis, the Library should develop and maintain documentation to
support the assumptions incorporated into the analysis.

To help improve the Library’s internal control over event files and their contents, the
Librarian of Congress should direct the Library’s Financial Services Director to work
with OSEPP to

•    develop documentation standards for maintaining event files,
•    require periodic review of event folders to ensure compliance with Library
     policies and procedures, and
•    develop policies for including in events files documentation for exceptions or
     deviations from policies.

To improve the Library’s accounting for and control of the funds in the Special
Events Gift Fund, the Librarian should direct the Financial Services Director to work
with OSEPP to

•    establish basic accounting records in OSEPP for the Gift Fund, including receipts,
     expenses, amounts due, and amounts owed by event;




16                                  GAO-03-312R Library of Congress: Special Events Gift Fund
•    establish a policy to reconcile, on a monthly basis, OSEPP’s Gift Fund receipts
     and disbursements to amounts maintained in the Library’s FMS;
•    compile a monthly status report as a tool for monitoring the operations and
     finances of the Gift Fund. The report could include event-specific information,
     such as event date, sponsor, budget event number, budgeted expenses, payments
     received to date, expenses incurred to date, amount and date of final billing, and
     amount owed to or from event sponsor; and
•    establish a policy for completing all final accountings on a timely basis.

Agency Comments

We provided the Chief of Staff of the Library with a draft of our report for review and
comment. In written comments on the draft, the Chief of Staff agreed with our
recommendations and noted the Library’s planned actions to respond to our
recommendations. In addition, the Chief of Staff’s comments noted the need for a few
technical clarifications, which have been incorporated into our final report as
appropriate.

The Chief of Staff’s comments are reprinted in enclosure I.

                                       --------------

We are sending copies of this report to the Chairman, Subcommittee on Legislative,
House Committee on Appropriations; the chairmen and ranking minority members of
the House Committee on Government Reform; the Senate Committee on
Governmental Affairs; and the Subcommittee on Legislative Branch, Senate
Committee on Appropriations. We are also sending it to the Chairman and Vice
Chairman of the Joint Committee on the Library and the Librarian of Congress. This
report will also be available on the GAO’s home page at http://www.gao.gov.

If you have any questions concerning this report, please contact me at (202) 512-9406,
or by e-mail at franzelj@gao.gov, or John Reilly, Assistant Director, at (202) 512-9517
or by e-mail at reillyj@gao.gov. Key contributors to this report were Louis
Fernheimer, Jacquelyn N. Hamilton, Benjamin W. Smith, and Gail F. Vallieres.




Jeanette M. Franzel
Director
Financial Management and Assurance
Enclosure




17                                  GAO-03-312R Library of Congress: Special Events Gift Fund
Enclosure I




18            GAO-03-312R Library of Congress: Special Events Gift Fund
Enclosure I




19            GAO-03-312R Library of Congress: Special Events Gift Fund
Enclosure I




20            GAO-03-312R Library of Congress: Special Events Gift Fund
Enclosure I




(194110)




21            GAO-03-312R Library of Congress: Special Events Gift Fund