Financial Audit

Expenditures by Three Independent Counsels Gao ID: AFMD-93-60 April 21, 1993

During recent six-month periods audited by GAO, three independent counsels reported spending $5.7 million--$2.9 million by Arlin M. Adams, $2.8 million by Lawrence E. Walsh, and $27,000 by an individual whose identity is sealed by court order. GAO found the reported expenditures to be reliable. In an October 1992 report (GAO/AFMD-93-1), GAO found several serious internal control weaknesses at independent counsels' offices and at the Administrative Office of the U.S. Courts, which handles disbursements and accounting for independent counsels. These weaknesses included inadequate procedures to ensure that expenditures were charged properly and inadequate segregation of duties. In its current audit, GAO discovered many of the same weaknesses, along with questionable expenditures for pay and travel. The independent counsels and the Administrative Office of the U.S. Courts have begun taking steps to bolster controls and ensure compliance with laws and regulations. These actions include increasing segregation of duties and discontinuing some kinds of expenditures that GAO considers inconsistent with laws and regulations. Future GAO audits will review these measures to determine their success in resolving the problems.

GAO found that: (1) the three independent counsels have reported spending $5.7 million; (2) their statements of expenditures present fairly, in all material respects, the expenditures of their offices; (3) serious internal weaknesses have included inadequate procedures for properly charging expenditures and inadequate segregation of duties; (4) one counsel has hired a financial officer to track financial expenditures and maintain detailed accounting records for verification of financial information; (5) in response to GAO concerns, the Administrative Office of the United States Courts has improved its automated systems and internal procedures to ensure that it properly charges the counsels' expenditures; (6) two counsels have segregated financial duties and improved procedures for authorizing and reviewing expenditures; (7) although the counsels report that they have taken action to strengthen internal controls and ensure compliance, instances of noncompliance continue for travel expenditures not specifically authorized by independent counsel law; and (8) if Congress reauthorizes independent counsel law, it needs to delineate the administrative responsibilities of independent counsels, the Department of Justice, and any other government agencies involved and assign responsibility for developing comprehensive guidance for the independent counsels on applicable laws and regulations.

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