Financial Audit
Independent Counsel Expenditures for the Six Months Ended March 31, 2003 Gao ID: GAO-03-1098 September 30, 2003Pursuant to a legislative requirement, GAO audited the expenditures of two offices of independent counsel for 6 months ended March 31, 2003.
GAO found: (1)the statements of expenditures presented for the offices of independent counsel David M. Barrett and Julie F. Thomas, respectively, are presented fairly, in all material respects, in conformity with the basis of accounting described in each counsel's statement, which is principally the cash basis, a comprehensive basis of accounting other than U.S. generally accepted accounting principles; (2) no material weaknesses in internal control over financial reporting (including safeguarding assets) and compliance with laws and regulations; and (3) no reportable noncompliance with laws and regulations we tested.
GAO-03-1098, Financial Audit: Independent Counsel Expenditures for the Six Months Ended March 31, 2003
This is the accessible text file for GAO report number GAO-03-1098
entitled 'Financial Audit: Independent Counsel Expenditures for the Six
Months Ended March 31, 2003' which was released on September 30, 2003.
This text file was formatted by the U.S. General Accounting Office
(GAO) to be accessible to users with visual impairments, as part of a
longer term project to improve GAO products' accessibility. Every
attempt has been made to maintain the structural and data integrity of
the original printed product. Accessibility features, such as text
descriptions of tables, consecutively numbered footnotes placed at the
end of the file, and the text of agency comment letters, are provided
but may not exactly duplicate the presentation or format of the printed
version. The portable document format (PDF) file is an exact electronic
replica of the printed version. We welcome your feedback. Please E-mail
your comments regarding the contents or accessibility features of this
document to Webmaster@gao.gov.
This is a work of the U.S. government and is not subject to copyright
protection in the United States. It may be reproduced and distributed
in its entirety without further permission from GAO. Because this work
may contain copyrighted images or other material, permission from the
copyright holder may be necessary if you wish to reproduce this
material separately.
Report to Congressional Committees:
September 2003:
FINANCIAL AUDIT:
Independent Counsel Expenditures for the Six Months Ended March 31,
2003:
[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-03-1098] GAO-03-
1098:
Contents:
Letter:
Auditor's Report:
Background:
Opinion on Statements of Expenditures:
Consideration of Internal Control :
Compliance with Laws and Regulations:
Objectives, Scope, and Methodology:
Agency Comments:
Appendixes:
Appendix I: Statement of Expenditures for Independent Counsel
Barrett:
Appendix II: Statement of Expenditures for Independent Counsel
Thomas:
Abbreviations:
AOUSC: Administrative Office of the U.S. Courts:
FBI: Federal Bureau of Investigation:
OIC: Office of Independent Counsel:
Letter September 30, 2003:
Congressional Committees:
Enclosed is our report on the statements of expenditures of two offices
of independent counsel for the 6 months ended March 31, 2003. 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 of this
report will be made available to others upon request. This report will
also be available at no charge on GAO's Web site at [Hyperlink,
www.gao.gov.] www.gao.gov.
If you or your staffs have any questions concerning this report, please
contact me at (202) 512-6906 or Hodge Herry, Assistant Director, at
(202) 512-9469. You can also reach us by E-mail at [Hyperlink,
williamsM1@gao.gov] w [Hyperlink, williamsm1@gao.gov]
illiamsM1@gao.gov or [Hyperlink, herryh@gao.gov] h [Hyperlink,
herryh@gao.gov] erryh@gao.gov. Key contributors to this report were
Carol Keightley, Kwabena Ansong, and Heather Dunahoo.
McCoy Williams
Director
Financial Management and Assurance:
Signed by McCoy Williams:
Congressional Committees:
This report presents the results of our audits of expenditures[Footnote
1] reported by two offices of independent counsel for the 6 months
ended March 31, 2003. The Department of Justice and the independent
counsels are required under 28 U.S.C. 594 (d)(2), (h) and 596 (c)(1)
(2000) to report on expenditures from a permanent, indefinite
appropriation established within the Department of Justice to fund
independent counsel activities. We are required under 28 U.S.C. 596
(c)(2) to audit the statements of expenditures prepared by the
independent counsels.
In our audits covering the 6 months ended March 31, 2003, we found:
* the statements of expenditures presented in appendixes I and II, for
the offices of independent counsel (OIC) David M. Barrett and Julie F.
Thomas, respectively, are presented fairly, in all material respects,
in conformity with the basis of accounting described in note 1 of each
counsel's statement, which is principally the cash basis, a
comprehensive basis of accounting other than U.S. generally accepted
accounting principles;
* no material weaknesses in internal control over financial reporting
(including safeguarding assets) and compliance with laws and
regulations; and:
* no reportable noncompliance with 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 (2000)) was intended to preserve and promote the
accountability and integrity of public officials and of the
institutions of the federal government. The independent counsel law
expired on June 30, 1999. Provisions of the law allow the independent
counsels serving at the expiration date to continue investigating
pending matters until they determine that the investigations of such
matters have been completed.
The independent counsel law directs the Department of Justice to pay
all costs relating to the establishment and operation of independent
counsel offices from the permanent, indefinite appropriation
established to fund independent counsel activities. The independent
counsel law also designates specific responsibilities to the
Administrative Office of the U.S. Courts (AOUSC) for independent
counsels' administrative support. The Department of Justice
periodically disburses lump-sum payments to AOUSC for this purpose.
During any 6-month reporting period, there may be other significant
costs incurred in support of the work of the counsels. These costs are
paid from appropriations other than the permanent, indefinite
appropriation established to fund independent counsel activities. These
costs arise when a counsel uses detailees from other federal agencies,
such as the Federal Bureau of Investigation (FBI). Independent counsels
are not required to reflect such costs in their statements of
expenditures nor do they do so. For the 6 months ended March 31, 2003,
there were no costs reported by other agencies in support of
independent counsel activities.
Also, these statements and related notes do not include certain
expenditures related to the investigation by former independent counsel
Daniel M. Pearson. Mr. Pearson's office officially closed in April
2002, and accordingly, no longer prepares financial statements.
However, OIC Pearson had $2,585 in expenditures this period for payment
of late contractor billings. Further, a lump-sum leave payment is
expected to be made from the independent counsel permanent, indefinite
appropriation at some future point pending the satisfactory completion
of administrative responsibilities by a former OIC Pearson employee.
In addition, these statements and related notes do not include certain
expenditures related to the investigation by Special Counsel John C.
Danforth. The investigation by Special Counsel Danforth was officially
terminated when Mr. Danforth closed his office in March 2001.
Accordingly, Special Counsel Danforth no longer prepares financial
statements. However, the Department of Justice paid $22,612 from the
permanent, indefinite appropriation during this period for delayed
billings for rental of copying equipment and a correction to the
account for background investigation services provided by the Office of
Personnel Management for the Office of Special Counsel Danforth.
Justice originally mistakenly charged the latter to another unit within
the Department of Justice.
The office of independent counsel Ralph I. Lancaster is also officially
closed and no longer prepares financial statements. However, the U.S.
Court of Appeals for the D.C. Circuit awarded reimbursement of $32,437
for attorneys' fees and expenses of individuals who had been
investigated by Mr. Lancaster but not indicted, as authorized by 28
U.S.C. 593(f)(1). The reimbursement was made from the permanent fund
established for the payment of judgments.
Opinion on Statements of Expenditures:
The statements of expenditures, including the accompanying notes for
the offices of independent counsel David M. Barrett and Julie F.
Thomas, present fairly, in all material respects, the expenditures of
these counsels for the 6 months ended March 31, 2003, on the basis of
accounting described in note 1 of each office's statement.
The counsels prepared their statements of expenditures principally on a
cash basis of accounting, which is a comprehensive basis of accounting
other than U.S. generally accepted accounting principles. The basis of
accounting is described in note 1 of each counsel's statement.
Consideration of Internal Control:
In planning and performing our audits, we considered internal control
over financial reporting and compliance.[Footnote 2] We did this to
determine our procedures for auditing the statements of expenditures,
not to express an opinion on internal control. Accordingly, we do not
express an opinion on internal control over financial reporting and
compliance. However, for the controls we tested, we found no material
weaknesses in internal control over financial reporting (including
safeguarding assets) and compliance for the 6-month period ended March
31, 2003. A material weakness is a condition in which the design or
operation of one or more of the internal control components does not
reduce to a relatively low level the risk that errors, fraud, or
noncompliance 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 and Regulations:
Our tests for compliance with selected provisions of laws and
regulations disclosed no instances of noncompliance that would be
reportable under U.S. 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 Methodology:
The independent counsels are responsible for preparing statements of
expenditures in conformity with the basis of accounting described in
the accompanying notes. The counsels are also responsible for
establishing, maintaining, and assessing internal control to provide
reasonable assurance that the following internal control objectives are
met and for complying with applicable laws and regulations.
* Financial reporting: Transactions are properly recorded, processed,
and summarized to permit the preparation of the statements of
expenditures in conformity with the basis of accounting described in
the notes to the statements, and assets are safeguarded against loss
from unauthorized acquisition, use, or disposition.
* Compliance with laws and regulations: Transactions are executed in
accordance with laws and regulations that could have a direct and
material effect on the counsels' statements of expenditures.
We are responsible for (1) obtaining reasonable assurance about whether
the counsels' statements of expenditures are presented fairly, in all
material respects, in conformity with the basis of accounting described
in the notes accompanying their statements of expenditures, (2)
obtaining a sufficient understanding of internal control over financial
reporting and compliance to plan the audits, and (3) testing compliance
with selected provisions of laws and regulations that have a direct and
material effect on the statements.
In order to fulfill these responsibilities, for each counsel, we (1)
examined, on a test basis, evidence supporting the amounts and
disclosures in the statement of expenditures, (2) assessed the
accounting principles used by management, (3) evaluated the overall
presentation of the statement of expenditures, (4) obtained an
understanding of internal control related to financial reporting
(including safeguarding assets) and compliance with laws and
regulations, and (5) tested compliance with selected provisions of 28
U.S.C. 591-599 (2000), 5 U.S.C. Chapter 55, and regulations relating to
pay administration.
We limited our internal control testing to controls over financial
reporting and compliance. Because of inherent limitations in internal
control, misstatements due to error, fraud, losses, or noncompliance
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. In addition, we
caution that our internal control testing may not be sufficient for
other purposes.
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 laws and regulations that 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. We performed our audits in accordance
with U.S. generally accepted government auditing standards.
Agency Comments:
We provided drafts of this report to the offices of independent
counsel, the Department of Justice, and AOUSC for review and comment.
These entities agreed with the facts and conclusions in our report.
McCoy Williams
Director
Financial Management and Assurance:
Signed by McCoy Williams:
September 15, 2003:
:
List of Committees:
The Honorable Ted Stevens
Chairman
The Honorable Robert C. Byrd
Ranking Minority Member
Committee on Appropriations
United States Senate:
The Honorable Susan M. Collins
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 Tom Davis
Chairman
The Honorable Henry A. Waxman
Ranking Minority Member
Committee on Government Reform
House of Representatives:
The Honorable F. James Sensenbrenner, Jr.
Chairman
The Honorable John Conyers, Jr.
Ranking Minority Member
Committee on the Judiciary
House of Representatives:
[End of section]
Appendixes:
[End of section]
Appendix I: Statement of Expenditures for Independent Counsel Barrett:
[See PDF for image]
[End of figure]
[End of section]
Appendix II Statement of Expenditures for Independent Counsel Thomas:
[See PDF for image]
[End of figure]
[End of section]
(195013):
FOOTNOTES
[1] The term expenditures as used in this report generally means cash
disbursed.
[2] The objectives of internal control are to provide reasonable
assurance that management maintained effective internal control over
financial reporting (including safeguarding assets) and compliance with
laws and regulations.
GAO's Mission:
The General Accounting Office, the investigative arm of Congress,
exists to support Congress in meeting its constitutional
responsibilities and to help improve the performance and accountability
of the federal government for the American people. GAO examines the use
of public funds; evaluates federal programs and policies; and provides
analyses, recommendations, and other assistance to help Congress make
informed oversight, policy, and funding decisions. GAO's commitment to
good government is reflected in its core values of accountability,
integrity, and reliability.
Obtaining Copies of GAO Reports and Testimony:
The fastest and easiest way to obtain copies of GAO documents at no
cost is through the Internet. GAO's Web site ( www.gao.gov ) contains
abstracts and full-text files of current reports and testimony and an
expanding archive of older products. The Web site features a search
engine to help you locate documents using key words and phrases. You
can print these documents in their entirety, including charts and other
graphics.
Each day, GAO issues a list of newly released reports, testimony, and
correspondence. GAO posts this list, known as "Today's Reports," on its
Web site daily. The list contains links to the full-text document
files. To have GAO e-mail this list to you every afternoon, go to
www.gao.gov and select "Subscribe to e-mail alerts" under the "Order
GAO Products" heading.
Order by Mail or Phone:
The first copy of each printed report is free. Additional copies are $2
each. A check or money order should be made out to the Superintendent
of Documents. GAO also accepts VISA and Mastercard. Orders for 100 or
more copies mailed to a single address are discounted 25 percent.
Orders should be sent to:
U.S. General Accounting Office
441 G Street NW,
Room LM Washington,
D.C. 20548:
To order by Phone:
Voice: (202) 512-6000:
TDD: (202) 512-2537:
Fax: (202) 512-6061:
To Report Fraud, Waste, and Abuse in Federal Programs:
Contact:
Web site: www.gao.gov/fraudnet/fraudnet.htm E-mail: fraudnet@gao.gov
Automated answering system: (800) 424-5454 or (202) 512-7470:
Public Affairs:
Jeff Nelligan, managing director, NelliganJ@gao.gov (202) 512-4800 U.S.
General Accounting Office, 441 G Street NW, Room 7149 Washington, D.C.
20548:
