Financial Management
Audit of the White House Commission on the National Moment of Remembrance for Fiscal Year 2004 Gao ID: GAO-05-791R July 21, 2005The White House Commission on the National Moment of Remembrance (Commission) was created on December 28, 2000, by the National Moment of Remembrance Act (act). The Commission's purpose is to sustain the American spirit through acts of remembrance, not only on Memorial Day but also throughout the year, for those who died serving our country. Congress appropriated $1 million to the Commission to fund its operations for fiscal years 2002 through 2004. In fiscal year 2004, the Commission received net appropriations of approximately $249,000, along with cash and in-kind donations of approximately $102,000 from individuals and businesses. In addition, it had approximately $240,000 in unexpended appropriations from prior fiscal years. The Commission expended approximately $257,000 of appropriated funds and funded costs of approximately $102,000 with cash and in-kind donations received during the fiscal year. The act requires us to audit the financial transactions of the Commission, and this report covers our work on its fiscal year 2004 financial transactions.
Our detailed testing of the Commission's fiscal year 2004 financial transactions indicated that most were supported and approved. Nonetheless, we found numerous opportunities for the Commission to improve its internal control over its financial transactions. Specifically, we found that the Commission did not prepare and maintain underlying support in the form of employee-signed time sheets for salary expenditures of about $135,000, nor did it maintain support for its intragovernmental transactions. The Commission also did not routinely reconcile its recorded expenditures and donations to those processed by the Department of Veterans Affairs (VA) on behalf of the Commission, resulting in a difference of approximately $59,000 between the two entities' records. In May 2005, the Commission and VA reconciled their records and made accounting adjustments for the differences. Additionally, the Commission did not code its non-salary-related expenditures by budget object class to properly identify the type of expenditure. The Commission also did not always adhere to federal procurement regulations when procuring goods or services from commercial vendors, and to federal travel regulations for travel by federal civilian employees. Many of these issues are attributable to the small size of the Commission, which makes establishing and maintaining basic internal control problematic. During our audit, we found that the Commission's activities and its distinction from those of No Greater Love, a nonprofit organization founded in 1971 by the Commission's current Executive Director and White House Liaison, could be misperceived by interested parties because of the long-term involvement of the Commission's Executive Director and White House Liaison with No Greater Love for approximately 30 years. For example, the distinction between the two organizations could be misperceived because the business card of the Commission's Executive Director and White House Liaison listed No Greater Love's e-mail address and fax number. We raised this concern in our prior audit of the Commission's fiscal year 2003 and 2002 financial transactions. In our prior audit of the Commission's fiscal years 2003 and 2002 financial transactions, we also found that the Commission had difficulties maintaining its financial records and that it lacked basic internal controls. We acknowledge the efforts the Commission has made to improve its record keeping and internal controls since our prior work. We also recognize the impact that the Commission's size has on its ability to establish and maintain effective internal control, particularly with respect to segregation of duties. Nevertheless our audit of the Commission's fiscal year 2004 financial transactions indicates the need for the Commission to take further actions to improve its internal control.
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.
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July 21, 2005:
The Honorable Arlen Specter:
Chairman:
The Honorable Patrick J. Leahy:
Ranking Minority Member:
Committee on the Judiciary:
United States Senate:
The Honorable Jim Sensenbrenner, Jr.
Chairman:
The Honorable John Conyers, Jr.
Ranking Minority Member:
Committee on the Judiciary:
House of Representatives:
Subject: Financial Management: Audit of the White House Commission on
the National Moment of Remembrance for Fiscal Year 2004:
The White House Commission on the National Moment of Remembrance
(Commission) was created on December 28, 2000, by the National Moment
of Remembrance Act (act).[Footnote 1] The Commission's purpose is to
sustain the American spirit through acts of remembrance, not only on
Memorial Day but also throughout the year, for those who died serving
our country. Congress appropriated $1 million to the Commission to fund
its operations for fiscal years 2002 through 2004.[Footnote 2] In
fiscal year 2004, the Commission received net appropriations of
approximately $249,000, along with cash and in-kind[Footnote 3]
donations of approximately $102,000 from individuals and businesses. In
addition, it had approximately $240,000 in unexpended appropriations
from prior fiscal years. The Commission expended approximately $257,000
of appropriated funds and funded costs of approximately $102,000 with
cash and in-kind donations received during the fiscal year. The act
requires us to audit the financial transactions of the Commission, and
this report covers our work on its fiscal year 2004 financial
transactions.
Results in Brief:
Our detailed testing of the Commission's fiscal year 2004 financial
transactions indicated that most were supported and approved.
Nonetheless, we found numerous opportunities for the Commission to
improve its internal control over its financial transactions.
Specifically, we found that the Commission did not prepare and maintain
underlying support in the form of employee-signed time sheets for
salary expenditures of about $135,000, nor did it maintain support for
its intragovernmental transactions. The Commission also did not
routinely reconcile its recorded expenditures and donations to those
processed by the Department of Veterans Affairs (VA) on behalf of the
Commission, resulting in a difference of approximately $59,000 between
the two entities' records. In May 2005, the Commission and VA
reconciled their records and made accounting adjustments for the
differences. Additionally, the Commission did not code its non-salary-
related expenditures by budget object class to properly identify the
type of expenditure. The Commission also did not always adhere to
federal procurement regulations when procuring goods or services from
commercial vendors, and to federal travel regulations for travel by
federal civilian employees. Many of these issues are attributable to
the small size of the Commission, which makes establishing and
maintaining basic internal control problematic.
During our audit, we found that the Commission's activities and its
distinction from those of No Greater Love, a nonprofit organization
founded in 1971 by the Commission's current Executive Director and
White House Liaison, could be misperceived by interested parties
because of the long-term involvement of the Commission's Executive
Director and White House Liaison with No Greater Love for approximately
30 years. For example, the distinction between the two organizations
could be misperceived because the business card of the Commission's
Executive Director and White House Liaison listed No Greater Love's e-
mail address and fax number. We raised this concern in our prior audit
of the Commission's fiscal year 2003 and 2002 financial
transactions.[Footnote 4]
In our prior audit of the Commission's fiscal years 2003 and 2002
financial transactions, we also found that the Commission had
difficulties maintaining its financial records and that it lacked basic
internal controls. We acknowledge the efforts the Commission has made
to improve its record keeping and internal controls since our prior
work. We also recognize the impact that the Commission's size has on
its ability to establish and maintain effective internal control,
particularly with respect to segregation of duties. Nevertheless our
audit of the Commission's fiscal year 2004 financial transactions
indicates the need for the Commission to take further actions to
improve its internal control.
We are making 10 recommendations to the Commission to strengthen its
overall financial management and internal control. In its comments on
our draft report, the Commission agreed with our report's
recommendations.
Background:
Section 6 of the National Moment of Remembrance Act[Footnote 5] states
that the Commission's duties are to:
1. encourage the people of the United States to give something back to
their country, which provides them so much freedom and opportunity;
2. encourage national, state, local, and tribal participation by
individuals and entities in commemoration of Memorial Day and the
National Moment of Remembrance, including participation by:
a. national humanitarian and patriotic organizations;
b. elementary, secondary, and higher education institutions;
c. veterans' societies and civic, patriotic, educational, sporting,
artistic, cultural, and historical organizations;
d. federal departments and agencies; and:
e. museums, including cultural and historical museums; and:
3. provide national coordination for commemorations in the United
States of Memorial Day and the National Moment of Remembrance.
In fiscal year 2004, Congress appropriated $250,000 to the
Commission.[Footnote 6] This appropriation was subject to a 0.59
percent across-the-board rescission, which reduced the Commission's
appropriation to $248,525. The Commission also received various cash
and in-kind donations totaling $101,620 from individuals and businesses
during the fiscal year to support its mission and operations.
The Commission utilizes VA--through an interagency agreement--for
administrative support services, including payment of the Commission's
bills and personnel and payroll services.[Footnote 7] VA processed the
Commission's obligations, expenditures, and cash and in-kind donation
transactions recorded during fiscal year 2004. VA also prepares annual
financial statements and monthly standard forms on budget execution for
the Commission. The Commission hired a part-time bookkeeper in May 2004
to help maintain its financial records, including producing year-end
summaries and reconciliations.
When the Commission was initially funded in 2002, it assumed several of
the program activities of No Greater Love,[Footnote 8] a nonprofit
organization established in 1971, and the founder of No Greater Love
was appointed as the Commission's Executive Director and White House
Liaison. The founder resigned her position with No Greater Love in
April 2002 and since then has been the Commission's only full-time
employee. During most of fiscal year 2004, the Commission shared office
space, services, and personnel with No Greater Love. According to the
Commission, it ceased sharing office space with No Greater Love at the
end of June 2004.
The act allows for the Commission's close involvement with other
entities. Section 8(f) of the act explicitly authorizes the Commission
to enter into cooperative agreements that involve private, as well as
government, entities to assist the Commission in carrying out its
duties. The act further authorizes the Commission to accept program
support from nonprofit organizations.[Footnote 9] An example of a
fiscal year 2004 Commission program is the Sands of Remembrance program
at Omaha Beach, Normandy, to honor D-Day's fallen victims. The program
cost about $46,000 and was funded from three sources: federal funds,
cash donations from businesses, and in-kind donations from No Greater
Love.
The act also provides that the Commission will receive six employees--
one from each the Army, Air Force, Navy, Marine Corps, VA, and
Department of Education--detailed to assist the Commission in carrying
out the act. However, during fiscal year 2004, only one detailee served
with the Commission for approximately 7 months.
The Commission, as reflected in an Office of Management and Budget
(OMB) memorandum,[Footnote 10] became subject to the Accountability of
Tax Dollars Act of 2002.[Footnote 11] This act requires the Commission
to annually prepare and submit audited financial statements to OMB and
Congress. The Commission was granted an exemption from OMB for fiscal
year 2004 and thus did not prepare and submit an annual audited
financial statement for that year.[Footnote 12]
Objective, Scope, and Methodology:
Our objective was to audit the Commission's fiscal year 2004 financial
transactions (expenditures and donations) to ensure that there was
proper supporting documentation and management approval. To satisfy
this objective, we reviewed and compared the Commission's transaction
records with those of VA's--the Commission's accounting service
provider--for completeness. There is a risk that there could be
unrecorded transactions for donations or services that the Commission
did not document in its records or forward to VA for processing and
recording. We examined the documentation for all of the Commission's
payroll transactions and the cash and in-kind donations it received
during the fiscal year. For the Commission's 172 non-salary-related
transactions, including travel and procurement transactions, we traced
them to supporting documentation, including invoices, credit card
statements, and travel vouchers. For procurement transactions of $2,500
or more with commercial vendors, we reviewed documentation for evidence
that the Commission solicited bids from vendors in accordance with
federal procurement regulations. We also evaluated the internal control
effect of the results of our testing of the Commission's fiscal year
2004 financial transactions.[Footnote 13]
We performed our work in Washington, D.C., from March through May 2005
in accordance with U.S. generally accepted government auditing
standards for performance audits. We requested written comments on a
draft of this report from the Commission's Executive Director and White
House Liaison. On July 18, 2005, we received written comments from the
Commission's Executive Director and White House Liaison which are
reprinted in Enclosure I of this report.
Internal Control over Financial Transactions Needs Improvement:
In fiscal year 2004, the Commission received net federal appropriations
of $248,525 and had funds left over from prior-year appropriations.
[Footnote 14] VA--the Commission's accounting service provider--
reported that the Commission expended appropriated funds of about
$257,000 and also incurred about $102,000 of costs that were funded
with cash and in-kind donations during fiscal year 2004. (See table
1.)[Footnote 15]
Table 1: White House Commission on National Moment of Remembrance's
Fiscal Year 2004 Schedule of Expended Appropriations and Costs Funded
with Donations:
Description: Personnel compensation;
Expended appropriations: $135,145;
Costs funded with donations: $23,464;
Combined: $158,609.
Description: Personnel benefits;
Expended appropriations: $36,093;
Costs funded with donations: $416;
Combined: $36,509.
Description: Travel and transportation of persons;
Expended appropriations: $3,344;
Costs funded with donations: $4,342;
Combined: $7,686.
Description: Transportation of things;
Expended appropriations: -;
Costs funded with donations: $1,323;
Combined: $1,323.
Description: Rent, communications, and utilities;
Expended appropriations: $12,592;
Costs funded with donations: -$889;
Combined: $11,703.
Description: Printing and reproduction;
Expended appropriations: $10,912;
Costs funded with donations: $4,716;
Combined: $15,628.
Description: Other contractual services;
Expended appropriations: $51,120;
Costs funded with donations: $41,589;
Combined: $92,709.
Description: Supplies and materials;
Expended appropriations: $3,968;
Costs funded with donations: $8,518;
Combined: $12,486.
Description: Equipment;
Expended appropriations: $4,104;
Costs funded with donations: -;
Combined: $4,104.
Description: Building and facilities”not capitalized;
Expended appropriations: -;
Costs funded with donations: $18,141;
Combined: $18,141.
Total;
Expended appropriations: $257,278;
Costs funded with donations: $101,620;
Combined: $358,898.
Source: VA.
[End of table]
Although we found adequate support and evidence of approval for most of
the Commission's fiscal year 2004 financial transactions, we identified
shortcomings in the Commission's internal control. Specifically, we
found areas for improvement in the Commission's internal control with
respect to the following: payroll, benefits, and VA payments;
reconciliations with VA; coding of financial transactions; procurement
actions; travel reimbursements; and cash and in-kind donations. Some of
these internal control shortcomings involved immaterial amounts, and
many may be the result of the Commission only having one employee.
GAO's Standards for Internal Control in the Federal Government[Footnote
16] identifies the minimum level of internal control in the federal
government and provides the basis against which internal control is to
be evaluated. Control activities, one of the five standards of internal
control, include diverse activities such as authorizations, approvals,
verifications, reconciliations, and the creation and maintenance of
related records that provide evidence of the execution of these
activities as well as appropriate documentation. The Commission's
internal control shortcomings could hinder its effective stewardship of
public resources.
Documentation for Payroll, Benefits, and VA Payments Not Readily
Available:
In reviewing the Commission's payroll of about $135,000, we found
supporting documentation in the form of VA-prepared biweekly payroll
reports. However, the Commission's Executive Director and White House
Liaison did not prepare or submit employee-signed biweekly time sheets
to VA during fiscal year 2004 to support the expense. GAO's Standards
for Internal Control in the Federal Government states that the creation
and maintenance of related records is a procedure that provides
evidence of the execution of activities as well as appropriate
documentation. According to the Commission, time sheets were not
required because it had only one employee compensated with appropriated
funds. We recognize that this is an inherent limitation in an entity of
this size. Nonetheless, because the Commission did not have employee-
prepared time sheets that could be independently reviewed by either a
Commission representative or VA as part of its payroll-processing
function, it did not have proof of the actual hours the employee worked
to support the salary paid.
In examining employee benefits of approximately $36,000, we found that
the Commission did not maintain documentation for the benefits, such as
health care and retirement contributions by the employer, and relied
solely on VA for the information. According to GAO's Standards for
Internal Control in the Federal Government, all transactions need to be
clearly documented, and the documentation should be readily available
for examination. In response to our request for documentation, we
received from VA support for the Commission's salary-related benefits.
However, by not having documentation on the costs incurred and paid for
employee benefits, the Commission did not have complete assurance that
its financial decisions were based on complete and accurate
information.
In addition, we found that the Commission did not maintain supporting
documentation for approximately $44,000 paid to VA for payroll and
accounting services pertaining to both fiscal years 2004 and
2003.[Footnote 17] This occurred because the Commission had not
established procedures for maintaining support for intragovernmental
transactions. According to GAO's Standards for Internal Control in the
Federal Government, all transactions need to be clearly documented to
maintain their relevance and value to management in controlling
operations and making decisions. In response to our request for
documentation, VA provided support for its charges for payroll and
accounting services provided to the Commission. Because the Commission
did not have documentation on its costs, it did not know if such
charges were valid and reasonable. Additionally, given its limited
financial resources and the proportion of its appropriations used to
fund the payroll and accounting services provided by VA (over 17
percent in fiscal year 2004), such support could assist the Commission
in determining whether it would be cost- beneficial to seek such
services elsewhere at a lower cost.
Reconciliations with VA Were Not Routinely Performed:
We found that the Commission did not reconcile its recorded
expenditures and donations to those processed and recorded by VA on
behalf of the Commission. In reviewing support for the expenditures and
donations, we determined that the Commission had initially recorded
approximately $59,000 more in fiscal year 2004 expenditures and costs
funded with donations than those recorded by VA. GAO's internal control
standards[Footnote 18] state that regular reviews and comparisons of
different sets of data to one another should be done to determine their
accuracy and to make appropriate adjustments when necessary. In
discussing the difference with both Commission and VA officials, we
ascertained that neither was aware of the difference until we brought
it to each's attention. We also found that the difference occurred
because the Commission was unaware that it should have provided VA with
all information on in-kind donations--such as staff time, facilities,
and Web site design. The Commission and VA reconciled their records on
the Commission's fiscal year 2004 financial transactions in May 2005
and made accounting adjustments arising from those reconciliations.
Nonetheless, because reconciliations were not routinely performed, the
Commission and VA lacked assurance that expenditures and costs recorded
for the Commission were complete and accurate.
Transactions Were Not Properly Coded:
In testing the Commission's non-salary-related expenditures, we found
that the Commission did not include budget object class[Footnote 19]
codes that indicated the type of expenditure on the documentation it
submitted to VA for processing transactions. Although VA had
established a system for the standardized coding, recording, and
reporting of the Commission's financial transactions, the Commission
had not implemented procedures to have its financial transactions coded
in accordance with VA's guidelines[Footnote 20] prior to providing VA
with the documentation. As a result, certain costs had to be classified
by VA without full knowledge of the type of expenditure being made. For
example, the Commission purchased computers that VA charged to
"supplies and materials"; however, the computers should have been
charged to "equipment." This error was corrected through the
reconciliations performed by the Commission and VA in response to our
audit inquiry. Because it did not code its expenditures in accordance
with VA guidelines, the Commission lacked accurate information on how
its financial resources were used.
Procurement Regulations Were Not Followed:
In reviewing the Commission's five federally funded procurement
transactions that exceeded the $2,500 micro-purchase threshold, we
found that in all cases--totaling approximately $24,000--the Commission
did not adhere to the Federal Acquisition Regulations (FAR) regarding
the ordering process for contracted goods or services from commercial
vendors. Specifically, the FAR requires that when a simplified
acquisition exceeds the $2,500 threshold, the federal agency is to
solicit quotes or offers from at least three commercial
vendors.[Footnote 21] However, we found that the Commission did not
solicit offers from three vendors for information technology services,
video services, and other goods and services procured during fiscal
year 2004 because it was not fully cognizant of the FAR requirements.
Rather than follow federal guidelines, the Commission would contact and
select a vendor if it considered the vendor's cost estimate reasonable.
By not adhering to federal procurement regulations, the Commission
could incur greater costs than necessary for goods or services.
Travel Reimbursements Exceeded Allowable Rates:
In testing the expenditures of the Commission's Executive Director and
White House Liaison for long-distance travel processed by VA, we found
that for three of the six business trips made during fiscal year 2004,
payments for meals and incidental expenses were made in error or
exceeded the allowable rates established in the Federal Travel
Regulation[Footnote 22] by immaterial amounts ranging from $23 to $85.
In two instances, the Executive Director and White House Liaison
reported meals and incidental expenses for a full day's travel, yet
actual travel was for less than a full day. This resulted in total
overpayments of $49 by the federal government. For the third business
trip, the Executive Director and White House Liaison was overpaid $85
for meals and incidental expenses because travel advances were not
reported on the travel voucher. The Commission has not been reimbursed
for these payments. While the amounts involved in all three cases, both
individually and collectively, were not significant, the lack of
controls to properly record travel costs and independently review them
to determine adherence to federal regulations may allow travel costs in
excess of allowable rates to be processed and paid.
Cash and In-kind Donations Were Not Always Recorded:
In reviewing the cash donations that the Commission received during
fiscal year 2004, we found a $10,000 check dated April 16, 2004, that
was made out to No Greater Love but that was deposited in the
Department of the Treasury's account for the Commission. In response to
our inquiries, the Commission informed us that the check was to be used
for the Commission's purposes and was processed without an endorsement
by No Greater Love. The Commission provided a May 2005 letter from the
donor explaining that the check was meant for the Commission's benefit.
GAO's internal control standards require that all significant events be
clearly documented and that the documentation be readily available for
examination. Because the check was made out to another entity, the
Commission did not have appropriate documentation readily available to
clearly identify the intended recipient before the check was deposited.
We also found documentation supporting two in-kind donations to the
Commission from businesses for about $400 that were not recorded in
either the Commission's financial records or those maintained by VA. In
addition, we found that the Commission did not record as an in-kind
donation the estimated value of one night of lodging funded by a donor.
The unrecorded donations occurred because the Commission did not have
procedures in place to record in-kind donations or obtain estimates of
the value of in-kind donations.[Footnote 23] We also found that the
Commission created a public service announcement that at least 370
radio stations downloaded and aired free of charge across the United
States over the 2004 Memorial Day weekend, but the Commission was
unable to estimate the value of the radio broadcasts. GAO's internal
control standards state that transactions should be promptly recorded
to maintain their relevance and value to management in controlling
operations and making decisions. Because all of its in-kind donations
were not recorded, the Commission lacked assurance that amounts
recorded for in-kind donations, and costs funded with those donations,
were complete and accurate.
Greater Distinction between the Commission and No Greater Love Is
Needed:
As discussed in our previous report[Footnote 24] and earlier in this
report, the Commission's activities overlap with those of No Greater
Love. During most of fiscal year 2004, the Commission shared office
space and services with No Greater Love, a nonprofit organization
founded in 1971 by the Commission's current Executive Director and
White House Liaison. According to the Commission, it ceased sharing
office space with No Greater Love at the end of June 2004 and did not
cosponsor any programs with the organization during the fiscal year.
In conducting our audit, we found that the Commission's activities and
its distinction from those of No Greater Love could be misperceived by
interested parties because of the long-term involvement of the
Commission's Executive Director and White House Liaison with No Greater
Love for approximately 30 years. For example, the distinction between
the two organizations could be misperceived because the business card
of the Commission's Executive Director and White House Liaison listed
No Greater Love's e-mail address and fax number. Additionally, during
fiscal year 2004, the Commission's Executive Director and White House
Liaison used an automobile owned by No Greater Love--that bears a
license plate of "NGL 01"--for Commission activities. While section
8(f) of the act allows the Commission to be closely involved with other
entities in carrying out its duties through the use of cooperative
agreements, the Commission--because it receives federal appropriations--
has an increased responsibility to ensure a clear distinction between
the Commission and No Greater Love. Without this, donors and Congress
are at risk of not knowing which programs their funds are supporting.
Commission Has Taken Some Actions to Improve Accountability:
In our prior work, we found that the Commission had difficulties with
maintaining its financial records due in part to a lack of staffing and
financial expertise.[Footnote 25] Our prior report also found that the
Commission lacked basic internal controls, such as ensuring that all
transactions were supported by appropriate documentation and that
invoices were approved prior to payment, to ensure that funds were used
as intended.
Our prior report included a matter for Congress to consider amending
the National Moment of Remembrance Act to make the Commission an
independent entity within VA as a mechanism to address the substantial
deficiencies we noted. As an alternative, we made a number of
recommendations to the Commission for corrective actions to improve its
basic accountability for, and internal control over, its financial
transactions. In response to our prior report, the Commission has taken
a number of corrective actions in response to our prior recommendations
for executive action, including the following
* hiring a local bookkeeper on a part-time basis to maintain a log of
financial transactions and produce year-end summaries;
* maintaining a record or log of Commission financial transactions,
including appropriations, donations, and nonsalary expenditures; and:
* developing and implementing procedures to approve invoices prior to
payment.
We acknowledge the efforts that the Commission has made to improve its
record keeping and internal controls since our prior work. We also
recognize the impact the size of the Commission has on its ability to
establish and maintain effective internal control, particularly with
respect to the segregation of duties. Nevertheless, our audit of the
Commission's fiscal year 2004 financial transactions indicates the need
for the Commission to take further actions to improve its internal
control.
Conclusions:
The limited size of the Commission makes it problematic for it to
establish and maintain effective internal control over its financial
transactions. The Commission has made progress in addressing several of
the internal control issues it faces. Nevertheless, without such basic
internal controls as complete transaction and documentation records,
regular reconciliations of recorded data, and the coding of
transactions, the Commission does not have reasonable assurance that
its financial information is complete and accurate and that financial
and programmatic decisions are based on complete and accurate
information. Although administrative support services are provided by
VA, the Commission's management is responsible for preparing accurate
and reliable financial reports reflecting its activities and for
complying with federal procurement and other applicable federal
regulations. The Commission is also responsible for establishing,
maintaining, and monitoring controls to provide reasonable assurance
that internal control objectives as detailed in GAO's:
Standards for Internal Control in the Federal Government are met.
Recommendations for Executive Action:
To improve the Commission's accountability and internal control, we
recommend that the Executive Director and White House Liaison of the
Commission take the following 10 actions:
1. Prepare biweekly time sheets and regularly submit them to VA for
approval and processing as evidence of actual hours worked.
2. Strengthen the procedures to ensure that appropriate documentation
for all financial transactions--including payroll, payroll-related, and
intragovernmental transactions--is maintained and readily available for
review.
3. Assess the cost of VA's services to determine if comparable services
may be available from other sources at a lower cost.
4. Establish procedures to (a) timely reconcile, on a monthly basis,
the Commission's financial data to the financial records maintained by
its accounting services provider, VA, and (b) communicate all
differences to VA as the provider so that the two entities' records can
be appropriately reconciled.
5. While continuing to use VA's services, code all invoices in
accordance with VA guidelines to indicate the type of expenditure prior
to submitting them to VA for processing.
6. Solicit offers or quotes from at least three commercial vendors when
goods or services are expected to exceed the $2,500 micro-purchase
threshold for federal procurements and when otherwise required by the
FAR.
7. Strengthen procedures over preparing travel vouchers by (a) adhering
to allowable rates in accordance with federal regulations and (b)
ensuring that travel-related overcharges and traveler reimbursements
are timely collected or offset against amounts due.
8. Strengthen procedures over cash donations by immediately obtaining
and retaining documentation that evidences the purpose and intent of
the donation.
9. Develop procedures to obtain and retain supporting documentation for
the estimated value of in-kind donations and require that the financial
information be recorded.
10. Discontinue listing No Greater Love's e-mail address and fax number
on the Commission's business cards to assist in furthering the
distinction of the Commission's and No Greater Love's management and
activities.
Agency Comments:
We received written comments from the Executive Director and White
House Liaison of the White House Commission on the National Moment of
Remembrance. In its comments, the Commission agreed with our report's
recommendations and stated that it has already taken steps to further
improve internal control over its financial transactions. For example,
the Commission stated that it (1) has been submitting biweekly employee
time sheets to its financial services provider since May 2005 as
evidence of actual hours worked; (2), along with its financial services
provider, has established new procedures to reconcile its financial
data to the financial records maintained by the financial services
provider; and (3) has strengthened its procedures for preparing travel
vouchers and cash and in-kind donations. The Commission's comments are
reproduced in their entirety in enclosure I. In addition, the
Commission provided technical and clarifying comments, which we
incorporated as appropriate.
We are sending copies of this report to the Chairmen and Ranking
Minority Members of the Senate Committee on Appropriations and the
House Committee on Appropriations; the Chairman of the White House
Commission on the National Moment of Remembrance; the Secretary of
Veterans Affairs; the Director, Office of Management and Budget; and
other interested parties. This report will also be available on the GAO
Web site at http://www.gao.gov.
If you or your staff have any questions, 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. Contributors to this report were Julie T.
Phillips, Charles E. Norfleet, and Teressa Broadie-Gardner.
Signed by:
Steven J. Sebastian:
Director:
Financial Management and Assurance:
Enclosure:
Enclosure I:
Comments from the White House Commission on the National Moment of
Remembrance:
THE WHITE HOUSE COMMISSION ON THE NATIONAL MOMENT OF REMEMBRANCE:
July 18, 2005:
Mr. Steven J. Sebastian:
Director:
Financial Management and Assurance:
U.S. General Accounting Office:
Washington, DC 20548:
Dear Mr. Sebastian:
We appreciate the opportunity to comment on the draft report containing
the results of your review on the financial transactions of the White
House Commission on the National Moment of Remembrance for fiscal year
2004.
We would like to thank GAO for acknowledging the efforts the Commission
has taken to improve its recordkeeping since its review last year (Page
19) and recognizing that the Commission's ability to maintain internal
control is greatly impacted because the Commission only has one
permanent employee (Page 19.)
As you know, under its enabling legislation, the Commission is to carry
out its mission using 6 detailees from the Army, Air Force, Navy,
Marine Corps, VA, and Education; but only received the limited services
of one detailee for 7 months (page 7.) This situation has exacerbated
the ability of the Commission to maintain detailed financial and
performance records and separation of duties that would normally be
expected in a fully staffed entity while performing the remembrance
mission.
The Commission concurs with GAO's recommendations and has already taken
steps to further improve the effective internal control over its
financial transactions. However, the Commission would like to add the
following comments:
* Because it was not informed by its financial services provider, the
Commission did not submit time-sheets for its sole employee. Since May
2005, the Commission's employee has been submitting biweekly time
sheets to the financial services provider.
* In addition to the bi-weekly pay stubs and monthly electronic
statements that the Commission received in fiscal year 2004, the
Commission requested that its financial services provider submit all
documents they have regarding payroll, payroll-related and
intergovernmental transactions. As in fiscal year 2004, all other
transactions will be documented and recorded at the Commission.
* To ensure the Commission is not over paying for financial services,
it is looking into comparable services vendors.
* The Commission and VA Financial Services have now established new
procedures to reconcile records appropriately. As GAO noted in the
report: "In May 2005, the Commission and VA reconciled their records
and made accounting adjustments for the differences" (page 2.)
* The Commission was not informed by its financial services provider of
the coding requirements so it coded its transactions with its own
coding in fiscal year 2004. The Commission is now coding all the
invoices it receives in accordance with its financial services
provider's guidelines which indicate how the expenditures should be
coded prior to submitting them for processing.
* The Commission will solicit offers from three commercial vendors
before purchasing goods or services for an amount exceeding $2,500 and
has strengthened its procedures for preparing travel vouchers, cash and
in-kind donations.
* The Commission received new business cards. The Commission used
leftover cards from 2001 because regular business cards were not
available. If those cards were to be used, we made sure not to give
contacts inaccurate information by crossing out the e-mail address and
informing them of the correct one. The number 202-783-1168 is the
Commission's fax number.
The Commission would also like to reiterate what was stated in the 2003
GAO report: No Greater Love still donates the time of one of its
employees to the Commission; as of the end of June 2004 both entities
have separate facilities, separate phones and fax numbers. The White
House Commission on the National Moment of Remembrance and No Greater
Love are two different entities and their purposes are different. None
of No Greater Love programs were supported by the Commission.
Finally, the Commission would like to request that the report be
clarified in some areas so that a full account is available regarding
the circumstances reported. We have included these items with this
letter.
Sincerely,
Signed by:
Carmella LaSpada:
Executive Director and White House Liaison:
[End of section]
(196026):
FOOTNOTES
[1] Pub. L. No. 106-579, 114 Stat. 3078 (Dec. 28, 2000) (codified at 36
U.S.C. § 116 note).
[2] Congress appropriated $500,000 in fiscal year 2002 and $250,000 per
year in fiscal years 2003 and 2004. See, respectively, Pub. L. No. 107-
117, 115 Stat. 2230, 2299 (Jan. 10, 2002); Pub. L. No. 108-7, div. J,
title IV, 117 Stat. 11, 460 (Feb. 20, 2003); and Pub. L. No. 108-199,
div. F, title IV, 118 Stat. 3, 340 (Jan. 23, 2004).
[3] In-kind donations are noncash assets and contributed services--such
as product design, editorial services, and the use of facilities and
staff.
[4] GAO, Financial Management: Audit of the White House Commission on
the National Moment of Remembrance for Fiscal Years 2003 and 2002, GAO-
04-497R (Washington, D.C.: May 20, 2004).
[5] Pub. L. No. 106-579, § 6(a), 114 Stat. 3078, 3080-81.
[6] Pub. L. No. 108-199, div. F, title IV, 118 Stat. 3, 340 (Jan. 23,
2004).
[7] Under the interagency agreement, VA charges the Commission an
hourly rate of $96.34 for the services of its senior professional
staff. VA is to (1) provide financial and administrative services that
include advice on the propriety of obligations and expenditure of
funds; (2) function as an agent cashier and research checks with
insufficient support documentation to determine the disposition of
items; and (3) prepare, submit, and reconcile financial reports. VA
also is required to provide payroll services and process payroll.
[8] The activities assumed are "remembrance programs," which have as
their purpose promoting the remembrance of those who have died for our
country, those who have served our country, and those who continue to
serve our country.
[9] Pub. L. No. 106-579, § 8(g), 114 Stat. 3078, 3084.
[10] OMB, Memorandum for the Heads of Executive Departments and
Agencies, Chief Financial Officers and Inspectors General: Amendments
to OMB Bulletin No. 01-02, Audit Requirements for Federal Financial
Statements, M-04-22, at 13 (Washington, D.C.: July 27, 2004).
[11] Pub. L. No. 107-289, 116 Stat. 2049 (Nov. 7, 2002).
[12] Under the Accountability of Tax Dollars Act of 2002, the Director
of the Office of Management and Budget may, under certain conditions,
exempt certain covered executive agencies from the financial statement
requirements of the Accountability of Tax Dollars Act of 2002 for a
particular fiscal year. See Pub. L. No. 107-289, § 2(a)(4), 116 Stat.
2049 (Nov. 7, 2002) (codified at 31 U.S.C. § 3515(e)).
[13] According to GAO's Standards for Internal Control in the Federal
Government, GAO/AIMD-00-21.3.1 (Washington, D.C.: November 1999),
management's internal control responsibility encompasses controls
related to (1) the effectiveness and efficiency of operations,
including the use of resources; (2) the reliability of financial
reporting, including internal and external reports on the use of
resources and financial statements; and (3) compliance with applicable
laws and regulations. Within each of these categories, management is
responsible for establishing controls to prevent or promptly detect
unauthorized acquisition, use, or disposition of assets.
[14] Congress previously appropriated $250,000 and $500,000 to the
Commission in fiscal years 2003 and 2002, respectively, and the
Commission expended approximately $510,000 of those appropriations
during the 2-year period.
[15] As discussed later in this report, the amounts reported include
accounting adjustments resulting from the Commission and VA reconciling
their records on the Commission's fiscal year 2004 financial
transactions in May 2005.
[16] GAO/AIMD-00-21.3.1.
[17] This amount represented approximately 17 percent of the
Commission's fiscal year 2004 expended appropriations.
[18] GAO/AIMD-00-21.3.1.
[19] Budget object classes are categories in a classification system
that present obligations by the items or services purchased by the
federal government. See OMB Circular No. A-11, Preparation, Submission
and Execution of the Budget, § 83.1 (June 21, 2005).
[20] VA, Budget Object Codes, VA Handbook 4671.2 (Jan. 16, 2003).
[21] See 48 C.F.R. (FAR) § 13.104(b) (2004).
[22] The Federal Travel Regulation implements statutory requirements
and executive branch policies for travel by federal civilian employees.
It is promulgated by the General Services Administration and codified
at 41 C.F.R., chapters 300-304.
[23] If such donations are reported, they should be measured at fair
value according to Financial Accounting Standards Board Statement No.
116, Accounting for Contributions Received and Contributions Made (June
1993).
[24] GAO-04-497R.
[25] GAO-04-497R.
