Capitol Preservation Fund
Audit of Fiscal Years 2008 through 2010 Transactions Gao ID: GAO-12-85R October 14, 2011In November 1988, the Capitol Preservation Commission (Commission) was established for the purpose of providing for improvements in, preservation of, and acquisitions for the United States Capitol. At the same time, the Capitol Preservation Fund (Fund) was established within the U.S. Treasury (Treasury) and was made available to the Commission to provide financing for the Commission to carry out its purpose. The Library of Congress (Library) provides financial management services and support to the Commission. GAO is required to audit the transactions of the Commission and report the results to the Congress. This report presents the results of our audit of the Commission's transactions as recorded in the Fund during fiscal years 2008 through 2010. Our audit objectives were to determine whether (1) the Fund's recorded transactions for fiscal years 2008 through 2010 were authorized in advance, supported by documentation, accurately accounted for, and in compliance with applicable laws: and (2) operating, reporting, and oversight practices were documented and in place at the Commission and the Library to help ensure that Fund transactions were properly executed and Fund assets were adequately safeguarded.
For fiscal years 2008 through 2010, the Fund's recorded transactions consisted of 159 investment transactions recorded and accounted for by the Library. With one exception, the Fund's recorded transactions were authorized in advance, supported by documentation, and accurately accounted for. We also found that all recorded transactions were in compliance with the applicable laws that we deemed significant to the objectives of our audit. For fiscal years 2008 through 2010, operating and oversight practices were documented and in place at the Commission. For the same period, with the exception of investment and reporting practices, the Fund's operating practices were documented and in place at the Library. The documented practices at both the Commission and the Library helped to ensure that Fund transactions were properly executed and Fund assets were adequately safeguarded. The Commission had documented operating practices used to account for the receipts, disbursements, investments, and oversight of the Fund. These practices are described in legislation, the Rules of the Commission, and memoranda from the Commission to the Library. The Library had documented operating practices used to account for Fund disbursements in its payment directive. However, the Library's investment and reporting practices used in providing services to the Commission were not documented and approved. Until the Library's investment practices are documented and approved, the Commission and the Library are at risk that funds will not be consistently invested in accordance with applicable operating practices, and Fund assets will not be adequately safeguarded against loss or unauthorized use or distribution. Furthermore, having documented reporting practices at the Library would provide further assurance that the Commission is provided information on a routine basis to adequately monitor the Fund. We are making a recommendation to the Secretary of the Senate and the Clerk of the House of Representatives to work with the Library to ensure that the Library documents and approves practices used to carry out the Library's investment and reporting responsibilities supporting the Capitol Preservation Fund. The Chief Financial Officer of the Library of Congress, the Secretary of the Senate, and the Clerk of the House of Representatives agreed with our recommendation and worked together to complete procedures to address our recommendation.
RecommendationsOur recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.
Director: Steven J. Sebastian Team: Government Accountability Office: Financial Management and Assurance Phone: (202) 512-9521GAO-12-85R, Capitol Preservation Fund: Audit of Fiscal Years 2008 through 2010 Transactions
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GAO-12-85R:
United States Government Accountability Office:
Washington, DC 20548:
October 14, 2011:
The Honorable Daniel K. Inouye:
Co-Chairman:
The Honorable John A. Boehner:
Co-Chairman:
Capitol Preservation Commission:
The Honorable Charles E. Schumer:
Chairman:
The Honorable Lamar Alexander:
Ranking Member:
Committee on Rules and Administration:
United States Senate:
The Honorable Daniel E. Lungren:
Chairman:
The Honorable Robert A. Brady:
Ranking Member:
Committee on House Administration:
House of Representatives:
Subject: Capitol Preservation Fund: Audit of Fiscal Years 2008 through
2010 Transactions:
In November 1988, the Capitol Preservation Commission (Commission) was
established for the purpose of providing for improvements in,
preservation of, and acquisitions for the United States Capitol. At
the same time, the Capitol Preservation Fund (Fund) was established
within the U.S. Treasury (Treasury) and was made available to the
Commission to provide financing for the Commission to carry out its
purpose. The Library of Congress (Library) provides financial
management services and support to the Commission. GAO is required to
audit the transactions of the Commission and report the results to the
Congress.[Footnote 1]
This report presents the results of our audit of the Commission's
transactions as recorded in the Fund during fiscal years 2008 through
2010. Our audit objectives were to determine whether (1) the Fund's
recorded transactions for fiscal years 2008 through 2010 were
authorized in advance, supported by documentation, accurately
accounted for, and in compliance with applicable laws: and (2)
operating, reporting, and oversight practices[Footnote 2] were
documented and in place at the Commission and the Library to help
ensure that Fund transactions were properly executed and Fund assets
were adequately safeguarded.
To address these objectives, we reviewed the Fund's enabling
legislation and the operating practices[Footnote 3] established by the
Commission and Library staff to determine whether the Fund's recorded
transactions and related events were authorized in advance, supported
by documentation, and accurately accounted for. We reviewed the Fund's
transactions and related supporting documentation to determine whether
established operating practices were followed and whether the Fund's
transactions were in compliance with laws considered significant to
our audit objectives. We also determined whether operating, reporting,
and oversight practices were documented and in place at the Commission
and the Library to help ensure that Fund transactions were properly
executed and Fund assets were adequately safeguarded.
We conducted this performance audit between January 2011 and September
2011 in accordance with generally accepted government auditing
standards. Those standards require that we plan and perform the audit
to obtain sufficient, appropriate evidence to provide a reasonable
basis for our findings and conclusions, based on our audit objectives.
We believe that the evidence obtained provides a reasonable basis for
our findings and conclusions based on our audit objectives. See
enclosure I for a more detailed discussion of our scope and
methodology.
Results in Brief:
For fiscal years 2008 through 2010, the Fund's recorded transactions
consisted of 159 investment transactions recorded and accounted for by
the Library. With one exception, the Fund's recorded transactions were
authorized in advance, supported by documentation, and accurately
accounted for. We also found that all recorded transactions were in
compliance with the applicable laws that we deemed significant to the
objectives of our audit.
For fiscal years 2008 through 2010, operating and oversight practices
were documented and in place at the Commission. For the same period,
with the exception of investment and reporting practices, the Fund's
operating practices were documented and in place at the Library. The
documented practices at both the Commission and the Library helped to
ensure that Fund transactions were properly executed and Fund assets
were adequately safeguarded. The Commission had documented operating
practices used to account for the receipts, disbursements,
investments, and oversight of the Fund. These practices are described
in legislation, the Rules of the Commission, and memoranda from the
Commission to the Library. The Library had documented operating
practices used to account for Fund disbursements in its payment
directive. However, the Library's investment and reporting practices
used in providing services to the Commission were not documented and
approved. Until the Library's investment practices are documented and
approved, the Commission and the Library are at risk that funds will
not be consistently invested in accordance with applicable operating
practices, and Fund assets will not be adequately safeguarded against
loss or unauthorized use or distribution. Furthermore, having
documented reporting practices at the Library would provide further
assurance that the Commission is provided information on a routine
basis to adequately monitor the Fund.
We are making a recommendation to the Secretary of the Senate and the
Clerk of the House of Representatives to work with the Library to
ensure that the Library documents and approves practices used to carry
out the Library's investment and reporting responsibilities supporting
the Capitol Preservation Fund. The Chief Financial Officer of the
Library of Congress, the Secretary of the Senate, and the Clerk of the
House of Representatives agreed with our recommendation and worked
together to complete procedures to address our recommendation.
Background:
The Capitol Preservation Commission was established on November 18,
1988, for the purpose of providing for improvements in, preservation
of, and acquisitions (including works of fine art and other property
for display) for the United States Capitol.[Footnote 4] Pursuant to
Public Law 100-696, the Capitol Preservation Fund was established
within the U.S. Treasury and is available to the Commission for (1)
improvement and preservation projects for the U.S. Capitol, (2)
disbursement with respect to works of fine art and other property, and
(3) such other payments as may be required to carry out the
Commission's purpose. The Fund's assets consist of amounts derived
from contributions and surcharge proceeds from the Secretary of the
Treasury (U.S. Mint) arising from the sale of commemorative coins, and
interest earned on the invested portions of the Fund's assets. Fund
assets not needed to finance current improvement, preservation, or
acquisition projects are invested in interest-bearing obligations of
the United States.
The Fund is authorized to receive proceeds from coin surcharges from
three commemorative coin programs authorized by the Congress: (1) the
Bicentennial of the United States Congress Commemorative Coin Act, (2)
the Bicentennial of the United States Capitol Commemorative Coin Act,
and (3) the United States Capitol Visitor Center Commemorative Coin
Act. The proceeds from the Capitol Visitor Center commemorative coins
were used to partially fund the construction of the Capitol Visitor
Center and were fully expended by 2006.
The Commission is also authorized to accept gifts of (1) works of fine
arts, (2) money, and (3) other property, and can also purchase and
dispose of property. In 1991, the Rules of the Commission authorized
the use of $400,000 ($200,000 for the House of Representatives and
$200,000 for the Senate) from the Fund 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 body of the Congress for which such purchases are made. The
Commission may not maintain any collection of fine art and other
property that it receives or acquires. Instead, it may assist in the
transfer of such items to a congressional entity (such as the Senate
Commission on Art, the House of Representatives Fine Arts Board, or
the Joint Committee on the Library) or dispose of such property by
sale or other transaction. The Architect of the Capitol, the Senate
Commission on Art, and the House of Representatives Fine Arts Board
are required to provide staff support and assistance to the
Commission.[Footnote 5]
On behalf of the Commission, the Secretary of the Senate and the Clerk
of the House of Representatives, pursuant to Commission Rules, provide
general operational support and assistance for activities financed by
the Fund, including managing and overseeing the authorization,
approval, and processing of operating disbursements and amounts
received by the Commission for deposit to the Fund. They are
responsible for ensuring that (1) Fund transactions are authorized,
supported by documentation, and in accordance with applicable laws:
and (2) related operating practices and internal controls[Footnote 6]
are established and followed. In a 1989 memorandum, the Commission
delegated the investment responsibilities of the Fund to the Library,
specifying that all funds not needed to meet current withdrawals are
to be invested in U.S. Treasury securities that have 3 or 6 month
maturities.
Pursuant to Public Law 101-45,[Footnote 7] the Library is to provide
financial management services and support to the Commission. As such,
the Library's Chief Financial Officer (CFO) staff provide principal
services and support for the Fund, including the purchase and
redemption of U.S. Treasury investments with funds not needed to
finance current operations, the processing of receipt and disbursement
transactions, and the development and maintenance of the Fund's
accounting records and related support. Further, as the Fund's
financial management provider, the Library, through its CFO, is also
responsible for ensuring that appropriate operating practices and
internal controls related to its service and support to the Commission
are appropriately documented and followed.
Fund Transactions Were Properly Authorized, Supported, Recorded and in
Compliance with Applicable Laws:
For fiscal years 2008 through 2010, the Fund's recorded transactions
consisted of 159 investment transactions recorded and accounted for by
the Library. With the exception of one investment purchase, the Fund's
recorded transactions for this period were authorized in advance,
supported by documentation, and accurately accounted for. We also
found that all recorded transactions were in compliance with the
applicable laws that we deemed significant to the objectives of our
audit.
Fund Activity for Fiscal Years 2008 through 2010:
As summarized in table 1, the Fund's 159 investment-related
transactions represented (1) the use of available Fund resources to
purchase U.S. Treasury securities, and (2) amounts received and
deposited to the Fund resulting from the redemption of U.S. Treasury
securities. The Fund's investment-related transactions consisted of 79
purchases of investments and 80 redemptions of investments. During our
audit period, there were no Fund receipt or disbursement (operating-
related) transactions. Table 1 presents a summary of Fund-related
financial information covering fiscal years 2008 through 2010, as
recorded by the Library.
Table 1: Summary of Total Recorded Fund Transactions and Balances for
Fiscal Years 2008-2010:
Fiscal year: 2008;
Beginning Fund balance: $10,096,868;
Operating related: Disbursements: 0;
Operating related: Receipts: 0;
Investment related: Net cash provided by investments: $386,404;
Ending Fund balance: $10,483,272.
Fiscal year: 2009;
Beginning Fund balance: $10,483,272;
Operating related: Disbursements: 0;
Operating related: Receipts: 0;
Investment related: Net cash provided by investments: $104,233;
Ending Fund balance: $10,587,505.
Fiscal year: 2010;
Beginning Fund balance: $10,587,505;
Operating related: Disbursements: 0;
Operating related: Receipts: 0;
Investment related: Net cash provided by investments: $20,467;
Ending Fund balance: $10,607,972[A].
Source: GAO analysis of Library of Congress records for the Capitol
Preservation Fund:
[A] During fiscal year 2010, an obligation was created for the
purchase of an artist's sketches; however, the disbursement for this
purchase occurred in fiscal year 2011.
[End of table]
There was one operational disbursement from the Fund after the end of
fiscal year 2010 that we included in our audit because it occurred
shortly after the end of fiscal year 2010. Specifically, on September
30, 2010, the Senate Commission on Art, under authority of the
Commission, entered into an obligation to purchase four sketches
painted by artist Constantino Brumidi. During fiscal year 2010, the
U.S. Senate Curator Office's staff provided operational support and
assistance to the Senate Commission on Art for this purchase by
gathering background, appraisal, and authenticity information on the
sketches. The disbursement for the sketches was made on October 5,
2010 using $155,175 in funds from the Senate's previously authorized
$200,000. On October 6, 2010, the Curator's office, on behalf of the
Senate Commission on Art, took physical possession of the sketches.
Advance Authorization of Investment Purchases:
To help ensure that only valid transactions and events are initiated
or entered into, federal internal control standards provide that such
transactions should be authorized by appropriate officials.[Footnote
8] With one exception, we found the Fund's investment purchases were
authorized in advance by written authorization in accordance with the
Library's established but undocumented investment practices.
Specifically, we found written authorization for 78 of 79 Fund
investment purchases of U.S. Treasury securities by appropriate
officials at the Library prior to the investment purchase. However,
the Library could not locate a "Request for Investment/Redemption"
form documenting evidence of advanced authorization for one
transaction.
Supporting Documentation of Recorded Transactions:
Federal internal control standards also provide that transactions and
related events should be clearly documented and that the documentation
should be readily available for examination. With one exception, our
review of supporting documentation found that the Fund's investment
transactions were fully supported by documentation in accordance with
the Library's established but undocumented investment practices.
* The Fund's 79 investment purchases were fully supported by
documentation from the Department of the Treasury's Bureau of the
Public Debt.
* With the exception of the missing authorization documentation
discussed previously, the other 78 investment purchases were fully
supported by documentation from the Library.
* All 80 investment redemptions were fully supported by documentation
from the Library and the Department of the Treasury's Bureau of the
Public Debt.
Accounting for Recorded Transactions:
Federal internal control standards provide that transactions should be
promptly recorded to maintain their relevance and value to management
in controlling operations and making decisions. In addition, generally
accepted accounting principles provide that transactions and other
accounting events should be promptly and accurately recognized. During
our audit, we found that all Fund transactions were promptly and
accurately recorded.
Compliance with Significant Laws for Recorded Transactions:
Management is responsible for developing operating practices to help
ensure compliance with relevant laws. In reviewing the Fund's
transactions, we determined that there were three statutory provisions
within the enabling legislation related to our audit objectives. The
three significant statutory provisions we identified involved (1)
investment of Fund assets, (2) use of Fund assets for investment and
other purposes, and (3) required approvals for Fund disbursements.
* Investment of Fund assets--Pursuant to the Fund's enabling
legislation, Fund assets not needed to meet current withdrawals are to
be invested in an interest bearing obligation of the United States or
an obligation guaranteed as to principal and interest by the United
States that, as determined by the Commission, has a maturity of 3 or 6
months.[Footnote 9] Our review of the recorded transactions of the
Fund found that each of the Fund's 79 investment purchases complied
with this provision regarding the investment of Fund assets in U.S.
Treasury securities.
* Use of Fund assets--Under the Fund's enabling legislation, Fund
assets are available to the Commission for payment of transaction
costs and similar expenses incurred under 2 U.S.C. § 2082; improvement
and preservation projects for the United States Capitol; disbursement
with respect to works of fine art and other property; and such other
payments as may be required to carry out the purpose of the
Commission.[Footnote 10] During the period covered by our audit, there
were no funds used for any of these purposes.
* Required approvals for use of Fund assets--Under the Fund's enabling
legislation, except for improvement and preservation projects for the
Capitol, which require appropriation committee approval, funds are to
be available to the Commission. Disbursements from the Fund are to be
made on vouchers approved by the Commission and signed by the Co-
Chairmen.[Footnote 11] Commission Rules authorize the Co-Chairmen to
approve incidental expenses on behalf of the Commission. During the
period covered by our audit, there were no funds used for any of the
purposes stated in the previous paragraph and therefore no approvals
for the use of the Fund assets were needed.[Footnote 12]
Documented Commission Practices Were in Place but the Library's
Investment and Reporting Practices Were Not Documented:
For fiscal years 2008 through 2010, operating and oversight practices
were documented and in place at the Commission. For the same period,
with the exception of investment and reporting practices, the Fund's
operating practices were in place and documented at the Library. The
documented practices at both the Commission and the Library helped to
ensure that Fund transactions were properly executed and Fund assets
were adequately safeguarded. The Commission had documented operating
practices used to account for the receipts, disbursements,
investments, and oversight of the Fund. These practices are described
in legislation, the Rules of the Commission, and memoranda from the
Commission to the Library. The Library had documented operating
practices used to account for Fund disbursements in its payment
directive. However, the Library's investment and reporting practices
used in providing services to the Commission were not documented and
approved. Without documented and approved Library investment
practices, the Commission and the Library are at risk that funds will
not be consistently invested in accordance with applicable operating
practices and Fund assets will not be adequately safeguarded against
loss or unauthorized use or distribution. Furthermore, having
documented reporting practices at the Library would provide further
assurance that the Commission is provided information on a routine
basis to adequately monitor the Fund.
Commission Practices for Fund Operations and Oversight:
The Commission has documented operating practices over the receipts,
disbursements, investments, and oversight of the Fund. These practices
are documented in legislation, the Rules of the Commission, and
memoranda from the Commission to the Library.
Receipts: The Commission's documented practices over receipts provide
that the Commission is to accept money only in the form of a check or
similar instrument made payable to the Fund or to the U.S. Treasury
for the account of the Fund and any such instruments are to be
deposited in the Fund at the Treasury. During the period covered by
our audit, the Commission's receipts practices were in place; however,
there were no Commission receipts.
Disbursements: The Commission's documented practices for disbursements
provide that all transactions are to be directly related to the
purposes of the Commission. The Commission's disbursement practices
also direct the Library to take the necessary steps to ensure funds
are available in advance of disbursement. The practices also provide
that disbursements from the Fund are to be made using vouchers
approved by the Commission and signed by the Co-Chairmen. During the
period covered by our audit, the Commission's disbursement practices
were in place. There were no disbursements during the period of our
audit; however, as discussed previously, a disbursement transaction
subsequent to this period related to the purchase of the Brumidi
sketches was executed in accordance with the Commission's disbursement
practices. Specifically, we found that the:
Commission communicated to the Library its intent to purchase the
sketches;
* purchase was approved and made by the Senate Commission on Art
[Footnote 13] using a portion of the Fund available specifically to
the Senate, as stated previously;
* Commission appropriately transmitted the bill of sale for the
purchase to the Library to notify it of the scheduled disbursement;
and:
* sketches were properly safeguarded and transferred to the fine arts
inventory of the Senate Commission on Art.
Investments: The Commission's documented practices over investments
provide that any portion of the Fund that is not needed to meet
current withdrawals is to be invested in an interest-bearing
obligation of the United States or an obligation guaranteed as to
principal and interest by the United States. During the period covered
by our audit, we found that the Commission's documented investment
practices were in place. All funds not needed to meet current
withdrawals were invested in U.S. Treasury securities.
Oversight: The Commission's documented practices for oversight set out
required steps for how acquisitions, gifts, disbursements,
communication, and investments are to be processed and accounted for
at the Commission and the Library. Federal internal control standards
provide that monitoring and oversight activities are to be
incorporated into an entity's normal operations. The Commission's
oversight practices, which were consistent with federal internal
control standards, were in place during the audit period and were
designed to ensure that transactions were properly executed and assets
of the Fund were adequately safeguarded. The Library's financial
management services on behalf of the Fund include reporting to the
Commission on the activity of the Fund. During the period covered by
our audit, the Library provided the Commission annual unaudited
financial statements which enabled the Commission to monitor the
financial activity of the Fund.
Library Practices Supporting Fund Operations and Reporting:
The Library's payment directive provided documented operating
practices for Fund disbursements. However, the Library did not have
documented practices for Fund investments and reporting. Without
documented and approved Library investment practices, the Commission
and the Library are at risk that funds will not be consistently
invested in accordance with applicable operating practices and
internal controls. In addition, the Library had established but
undocumented practices in place to report to the Commission on the
activity of the Fund.
Disbursements: The Library issued a payment directive in 2009 that
documented its operating practices for paying vendors on behalf of the
Commission. The directive is consistent with federal internal control
standards and sets out required steps for the Library to ensure Fund
payments are properly authorized, accurate, approved, recorded, and
made on a timely basis. The directive also requires the Library to
have the appropriate segregation of duties between authorizing,
approving, and recording the payment. During the period covered by our
audit, we found that the Library's payment practices were in place.
While there were no disbursements during the audit period, there was
one disbursement subsequent to this period (discussed previously)
related to the purchase of the Brumidi sketches that we found was
executed in accordance with the Library's disbursement practices.
Specifically we found that the:
* Library followed its payment directive appropriately to ensure the
payment was properly authorized, accurate, approved, recorded, and
made on a timely basis; and:
* Brumidi transaction was fully supported by documentation, and the
Library had the proper segregation of duties over the processing of
the payment.
Investments: During the period covered by our audit, we found that
while the Library had established investment practices, it had not
documented such practices. Federal internal control standards provide
that procedures should be clearly documented to effectively support
management in controlling operations and making decisions. While the
Library's undocumented investment practices generally resulted in
transactions that were authorized in advance, supported by
documentation, accurately accounted for, and in compliance with law,
we also identified instances where they were not followed.
Specifically, we found the following:
* 64 of 78[Footnote 14] investment purchases contained secondary
supervisory review prior to the investment purchase as required by the
Library's undocumented investment practices. Fourteen investment
purchases did not contain any form of secondary supervisory review
prior to the purchase.
* 75 of the 79 investment purchases were invested in accordance with
the maturity date directed by the Commission.
- 4 investment purchases were not invested in accordance with the
maturity date directed by the Commission. One investment purchase was
mistakenly invested in a security with a 3-month maturity rather than
a security with a 6-month maturity as directed by the Commission. This
occurred due to human error and was not caught by the primary reviewer
who checks the maturity date and related investment information. For
the 3 other investment purchases, investments were made in securities
that matured 1 week prior to the time frame directed by the
Commission. The Library stated that it invested in these securities to
obtain a greater return on the investments. However, the reasons why
the investments were made for time frames different than directed by
the Commission were not explained and documented in the support for
the transactions.
Reporting: The Library's practices for reporting on the Fund
activities to the Commission were not documented. Federal internal
control standards provide that pertinent information, such as Fund
transaction activities, should be reported in a form and timeframe
that enables those who need the information to carry out their
responsibilities effectively and efficiently. These standards also
provide that practices should be clearly documented to effectively
support management in controlling operations and making decisions.
Having documented reporting practices provides further assurance that
the Commission will receive reports on the activity of the Fund on a
routine basis. During the period covered by our audit, we found that
although the Library did not have documented reporting practices,
established reporting practices were in place and otherwise consistent
with federal internal control standards. Furthermore, we found no
instances where the Library deviated from its undocumented reporting
practices intended to provide adequate information to the Commission
to monitor the activities of the Fund. Specifically, we found the
following:
* The Library annually provided unaudited financial statements
reporting on the activity of the Fund to the Commission, and:
* During our audit, the Library adopted the practice of reporting the
transactions of the Fund on a quarterly basis to the Commission to be
consistent with its reporting on another Fund for which the Library
provides cross servicing.
Conclusions:
Prompt action by the Commission to work with the Library to document
and approve its investment and reporting practices for the Fund will
help ensure that Fund transactions are consistently executed as
intended, that Fund assets are adequately safeguarded, and that the
Commission has adequate information to monitor the Fund.
Recommendation for Executive Action:
We recommend that the Secretary of the Senate and the Clerk of the
House of Representatives work with the Library's Chief Financial
Officer to ensure that the Library documents and approves operating
practices for its investment and reporting responsibilities supporting
the Capitol Preservation Fund.
Agency Comments and Our Evaluation:
We provided a draft of our report to the Chief Financial Officer of
the Library of Congress, the Secretary of the Senate, and the Clerk of
the House to obtain official comments on the draft report's findings
and recommendation. In commenting on the draft report (see enclosure
2), the Library's Chief Financial Officer concurred with the draft
report's recommendation and stated that it completed action to
document the Library's investment and reporting practices for the
Fund. In oral comments received on the draft report, the Secretary of
the Senate and the Clerk of the House also stated they agreed with the
draft report's recommendation.
We are sending copies of this report to the Secretary of the Senate,
the Clerk of the House of Representatives, and the Chief Financial
Officer of the Library of Congress. The report also is available at no
charge on the GAO website at [hyperlink, http://www.gao.gov].
If you or your staff have any questions about this report, please
contact me at (202)512-3406 or by e-mail at sebastians@gao.gov.
Contact points for our Offices of Congressional Relations and Public
Affairs may be found on the last page of this report. Key contributors
to this report include Julie Phillips (Assistant Director), Cole
Haase, Alan MacMullin, Jacquelyn N. Hamilton, and Meg Mills.
Signed by:
Steven J. Sebastian:
Director:
Financial Management and Assurance:
Enclosures-2:
[End of section]
Enclosure I: Scope and Methodology:
To achieve our audit objectives, we reviewed the Capitol Preservation
Commission's (Commission) and the Capitol Preservation Fund's (Fund)
enabling legislation and federal internal control standards and met
with staff from the Commission and the Library of Congress's Office of
the Chief Financial Officer to discuss the nature and extent of the
Fund's financial transactions and related transaction execution,
processing, and accounting practices; available supporting
documentation; and accounting records. We used our discussions with
Commission and Library staff, and our reviews of available supporting
documentation to develop an understanding of the operating practices
established by the Commission and the Library related to the execution
and processing of the Fund's investments and operating receipt and
disbursement transactions. We also considered whether the established
operating practices were consistent with federal internal control
standards.
We used the Commission's and the Library's established operating
practices as our criteria for determining whether the Fund's
transactions and related events for fiscal years 2008 through 2010
were authorized in advance, supported by documentation, and accurately
accounted for. To do so, we reviewed and reconciled all transactions
for fiscal years 2008 through 2010 with supporting documentation
maintained by the Library and the Commission. Furthermore, we verified
the Library's recorded transactions with the Bureau of the Public
Debt's (BPD) FedInvest Transaction History Reports[Footnote 15] and
Treasury's Governmentwide Accounting and Reporting (GWA) Account
Statements.[Footnote 16]
We reviewed applicable laws and regulations to determine if any were
significant to our audit objectives. We concluded that there were
three statutory provisions within the enabling legislation related to
the objectives of our performance audit. The three significant
statutory provisions we identified involved (1) investment of Fund
assets, (2) use of Fund assets for investment and other purposes, and
(3) required approvals for Fund disbursements. To assess whether
transactions were executed in compliance with laws considered
significant to our audit objectives, we reviewed the relevant
statutory requirements, supporting documentation, and accounting for
all Fund transactions. We did not identify any regulations we
considered significant to our audit objectives.
With regard to whether operating, reporting, and oversight practices
were documented and in place at the Commission and the Library to help
ensure that Fund transactions were properly executed and assets of the
Fund were adequately safeguarded, we obtained an understanding of the
Commission's and Library's operating, reporting, and oversight
practices by reviewing the available documented practices and
conducting walk-throughs. We reviewed documentation supporting
communications between and among the Library and the Commission staff
regarding recorded transactions and activities of the Fund. We also
considered federal internal control standards when reviewing
supporting documentation related to these activities.
We conducted this performance audit between January 2011 and September
2011 in accordance with generally accepted government auditing
standards. Those standards require that we plan and perform the audit
to obtain sufficient, appropriate evidence to provide a reasonable
basis for our findings and conclusions, based on our audit objectives.
We believe that the evidence obtained provides a reasonable basis for
our findings and conclusions based on our audit objectives.
[End of section]
Enclosure II: Comments from the Library of Congress:
The Library of Congress:
Office Of The Chief Financial Officer:
101 Independence Avenue, S.E.
Washington, D.C. 20540-9100
September 20, 2011:
Mr. Steven J. Sebastian:
Director:
Financial Management and Assurance:
U.S. Government Accountability Office:
Washington, DC 20548:
Dear Mr. Sebastian,
I have reviewed your report entitled Capitol Preservation Fund: Audit
of Fiscal Years 2008 Through 2010 Transactions. I concur with your
recommendation to document the Library's investment and reporting
practices for the Fund. We have completed an OCFO Directive and a
Standard Operating Procedure which fully document our processes and
responsibilities.
Sincerely,
Signed by:
Jeffrey Page:
Chief Financial Officer:
Library of Congress:
202-707-7350:
[End of section]
Footnotes:
[1] Pub. L. No. 100-696, 102 Stat. 4610 (Nov. 18, 1988); 2 U.S.C. §
2084.
[2] Practices, for the purposes of this report, are the Commission's
and Library's established operating procedures, which have not
necessarily been documented or approved.
[3] Operating practices are those related to authorization;
documentation; accounting of receipts, disbursements and investments;
and compliance with laws to ensure that Fund transactions are properly
executed.
[4] Pub. L. No. 100-696, title VIII, § 801, 102 Stat. 4608, classified
at 2 U.S.C. § 2081.
[5] Pub. L. No. 100-696, title VIII § 801(e), 102 Stat. 4608 (Nov. 18,
1988); classified at 2 U.S.C. § 2081(e).
[6] Federal internal control standards recognize that an entity's
management is responsible for designing and implementing appropriate
internal controls to achieve objectives related to (1) the
effectiveness and efficiency of operations, including the use of
resources; (2) the reliability of internal and external financial
reporting; and (3) compliance with applicable laws and regulations. A
subset of each of these control objectives is the need to safeguard
assets and to design related internal controls to provide reasonable
assurance regarding the prevention or prompt detection of unauthorized
acquisition, use, or disposition of assets. An entity's management is
also responsible for monitoring and evaluating the effectiveness of
internal control. See GAO Standards for Internal Control in the
Federal Government, GAO/AIMD-00-21.3.1 (Washington, D.C.: November
1999).
[7] See 2 U.S.C. § 142i.
[8] [hyperlink, http://www.gao.gov/products/GAO/AIMD-00.21.3.1].
[9] Pub. L. No. 100-696, title VIII, § 803(e), 102 Stat. 4609 (Nov.
18, 1988); classified at 2 U.S.C. § 2083(e).
[10] See 2 U.S.C. § 2083(b).
[11] See 2 U.S.C. § 2083(d).
[12] The purchase of the Brumidi sketches was made after our audit
period. The sketches were purchased using Fund monies available to the
Senate and approved by the Commission as noted previously in this
report.
[13] The Senate members of the Commission delegated its approval for
Senate expenditures of art, furnishing, and other items of historical
interest to the Senate Commission on Art.
[14] During the period under audit, there were 79 total investment
purchases; as noted earlier in this report, one investment purchase
lacked documentation.
[15] BPD maintains the Fund's transaction records which provided third-
party verification of the Library's records of Fund transactions.
[16] The GWA account statements provide the Fund's balance and
transaction information at Treasury and were used to verify the
Library's records of Fund transactions.
[End of section]
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