Capitol Concerts: Audit of the Receipt and Use of 1999 Funding (Letter
Report, 09/25/2000, GAO/AIMD-00-258).

Pursuant to a congressional request, GAO audited the National Park
Service's (NPS), the National Symphony Orchestra (NSO), and Capital
Concerts, Incorporated's (CCI) receipt and use of concert designated
funding.

GAO noted that: (1) through the application of GAO's procedures at
National Park Service, National Symphony Orchestra, and Capital Concerts
Incorporated, GAO verified all the receipt and use information
separately identified and tracked in each organization's system of
records; (2) with the exception of certain administrative and oversight
costs of NSO, which are described further below, the receipts and uses
GAO verified represented all the known receipts and uses of funding
specifically designed for support of the 1999 concerts; (3) of the total
$3.9 million in funding designated for support of the 1999 concert
series, $2.5 million (or 64 percent) was provided by federal sources;
(4) the remaining $1.4 million (or 36 percent) was provided by public
broadcasting fees and grants, private donations, and other income; (5)
of the amount NPS received, it retained $100,000 in concert-related
funding and used that full amount plus an additional $7,010 from
appropriations available to support the general operations of the NPS'
National Capitol Region for a total of $107,010 in concert-related
funding; (6) of the amount NSO received, it retained $681,900 in
concert-related funding and used $680,564 to support the 1999 concert
series; (7) the $1,336 in remaining concert-related receipts was
available to NSO to offset other operating costs; (8) GAO was unable to
verify NSO's costs related to administering concert-related grants and
contracts and overseeing NSO rehearsal and concert activities on the
Capitol grounds; (9) NSO officials advised GAO that their operating
practices do not require that NSO separately track and prepare
supporting documentation for the salary and related benefit costs for
staff involved in administering grants and contracts and in overseeing
NSO's activities on the Capitol grounds; (10) without cost information
that has been tracked and supported with adequate documentation, GAO
could not apply its verification procedures, and the actual amount of
these costs is unknown; (11) CCI received and retained $3,155,437 in
concert-related funding and used $2,846,727 to support the 1999 Memorial
Day and July 4th concerts; (12) the $308,710 in remaining
concert-related receipts for 1999 represented an increase in CCI's net
assets; and (13) the increase in net assets for 1999, along with CCI's
$733,084 in unrestricted net assets that existed at the start of 1999,
remains available to fund future activities of CCI, including but not
limited to the production and broadcast of future Memorial Day and July
4th concerts.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  AIMD-00-258
     TITLE:  Capitol Concerts: Audit of the Receipt and Use of 1999
	     Funding
      DATE:  09/25/2000
   SUBJECT:  Federal funds
	     Financial statement audits
	     Financial records

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GAO/AIMD-00-258
Accounting and Information
Management Division

B-285848

September 25, 2000

The Honorable Trent Lott
Majority Leader
United States Senate

The Honorable Tom Daschle
Minority Leader
United States Senate

The Honorable Mitch McConnell
Chairman
Committee on Rules and Administration
Unites States Senate

The Honorable Christopher Dodd
Ranking Minority Member
Committee on Rules and Administration
United States Senate

Since 1981, the National Park Service (NPS) has sponsored an annual series
of National Symphony Orchestra (NSO) concerts on the Capitol grounds. Since
then, the annual concert series, which is currently funded with a
combination of federal and private funds, has grown significantly in terms
of size, scope, popularity, and cost.

Putting on each of the concerts involves (1) obtaining funding,
(2) determining each concert's artistic program, (3) arranging for
performing artists, talent, and production staff, (4) producing the concert,
and (5) for the Memorial Day and July 4th concerts, arranging for the

television broadcast of the concerts. NPS, 1 NSO,2 and Capital Concerts,
Inc. (CCI)3 each played a major role in carrying out these activities for
the 1999 concert series.

As sponsor for the 1999 concert series, NPS entered into a licensing
agreement with the Architect of the Capitol that established general
conditions governing the use of the Capitol grounds for the three concerts.
Through a cooperative agreement, NPS provided NSO with federal funding to
support the production of the three 1999 concerts. Most of the federal
funding provided by NPS was transferred to NPS from an appropriation to the
Department of the Army that was available to support the concerts.

In exchange for the federal funding, NSO agreed to perform at the three
concerts and assumed responsibility for producing and promoting them,
including television production of the Memorial Day and July 4th concerts.
NSO contracted with CCI on a reimbursable basis for concert production and
television broadcast services for the 1999 Memorial Day and July 4th
concerts as part of a multiyear contract. CCI used funding provided by NSO
and funds raised from broadcasting fees, concert-related grants, donations,
and other income to support its production and broadcast efforts on the 1999
Memorial Day and July 4th concerts. NSO also retained responsibility for
planning and producing the artistic program and performing at the 1999 Labor
Day concert.

NPS, NSO, and CCI used funding received for the 1999 concert series to pay
their concert-related costs. In general, the concert-related costs incurred
by the three organizations included fees and related expenses paid for
artistic talent and production staff, vendor payments for a wide variety of
concert-related contract services, and organizational support and
administration costs related to supporting the 1999 concert series.

To assist you in your role in overseeing the concert series held on the
Capitol grounds, you asked that we audit the funding and costs associated
with the 1999 concert series. Specifically, you asked that we verify the
receipt and use of funds derived from concert-related federal grants and
private fund-raising activities to pay for the 1999 Memorial Day, July 4th,
and Labor Day concerts. To satisfy your request, we obtained and reviewed
supporting documentation and related accounting records for each
organization's receipt and use of concert-designated funding. Our
verification procedures included (1) comparing the amounts recorded in each
entity's accounting records to the amounts reflected in the supporting
documentation, (2) examining the adequacy and completeness of the supporting
documentation, and (3) examining the classification and timing of each
receipt and use in relation to the 1999 concerts. See the "Objective, Scope,
and Methodology" section for more details.

Through the application of our procedures at each organization, we verified
all the receipt and use information separately identified and tracked in
each organization's system of records. With the exception of certain
administrative and oversight costs of NSO, which are described further
below, the receipts and uses we verified represented all the known receipts
and uses of funding specifically designated for support of the 1999
concerts.

In summary, our verification work at NPS, NSO, and CCI disclosed the
following.

ï¿½ Of the total $3.9 million in funding designated for support of the 1999
concert series, $2.5 million (or 64 percent) was provided by federal
sources. The remaining $1.4 million (or 36 percent) was provided by public
broadcasting fees and grants, private donations, and other income.

ï¿½ Of the amount NPS received, it retained $100,000 in concert-related
funding and used that full amount plus an additional $7,010 from
appropriations available to support the general operations of the NPS'
National Capital Region for a total of $107,010 in concert-related funding.

ï¿½ Of the amount NSO received, it retained $681,900 in concert-related
funding and used $680,564 to support the 1999 concert series. The
$1,336 in remaining concert-related receipts was available to NSO to offset
other operating costs. We were unable to verify NSO's costs related to
administering concert-related grants and contracts and overseeing NSO
rehearsal and concert activities on the Capitol grounds. NSO officials
advised us that their operating practices do not require that NSO separately
track and prepare supporting documentation for the salary and related
benefit costs for staff involved in administering grants and contracts and
in overseeing NSO's activities on the Capitol grounds. Without cost
information that has been tracked and supported with adequate documentation,
we could not apply our verification procedures, and the actual amount of
these costs is unknown.

ï¿½ CCI received and retained $3,155,437 in concert-related funding and used
$2,846,727 to support the 1999 Memorial Day and July 4th concerts. The
$308,710 in remaining concert-related receipts for 1999 represented an
increase in CCI's net assets. The increase in net assets for 1999, along
with CCI's $733,084 in unrestricted net assets that existed at the start of
1999, remains available to fund future activities of CCI, including but not
limited to the production and broadcast of future Memorial Day and July 4th
concerts.

Further details on the results of our verification work at NPS, NSO, and CCI
are presented in the schedule of receipts and uses of funding for the 1999
concert series with applicable explanatory notes in appendix I. The schedule
presents, in separate columns and by type of receipt and use of
concert-related funding, the amounts we verified as attributable to each
organization. The schedule also contains a memorandum total column, which
combines the receipts and uses of 1999 concert-related funding for the three
organizations. However, the accounting for receipts and uses of
concert-related funding applicable to each organization is separate, and any
remaining receipts of one organization are not available to offset or
otherwise fund an excess of uses over receipts by another organization.

The objective of our audit was to identify and verify the receipt and use of
funding specifically designated for support of the 1999 concerts, which was
derived from federal funds and private fund-raising activities. We performed
our work at NPS, NSO, and CCI, the only organizations known to have received
and used funding specifically designated for the support of the 1999
concerts.

To achieve our objective, we met with officials from each organization and
discussed the specific nature and characteristic of their organization's
receipt and use of concert-related funding. Also, we discussed with these
officials the manner in which they record and track concert-related receipt
and use activity in their respective systems of records. Based on the
understanding gained, we developed verification procedures that we applied
to each organization's receipts and uses of 1999 concert-related funding.
Our approach to verifying each organization's receipt and use of
concert-related funding was essentially the same, though the specific
procedures applied at each organization were tailored to the specific types
of receipts and uses and the underlying system of record in which the
receipts and uses were documented and tracked.

The information and documentation needed to verify individual receipts and
uses of concert-related funding varied depending on the type of receipt and
use as well as each organization's accounting and documentation procedures.
For each type of receipt and use activity, we identified the universe of
receipt or use transactions recorded in the organization's system of
records. For each concert-related receipt and use identified, we

ï¿½ obtained and reviewed the available supporting documentation,

ï¿½ compared the amounts supported by the documentation to the amounts
recorded in the organization's system of records,

ï¿½ examined the adequacy and completeness of the supporting documentation,
and

ï¿½ reviewed the classification and timing of each receipt and use to
determine its relationship to the three 1999 concerts.

When we had questions concerning either the supporting documentation or the
amounts recorded in an organization's system of records, we followed up with
officials for the organization and, when appropriate, suggested adjustments
to their handling of the recorded amounts.

Given that none of the organizations had overall responsibility for and/or
access to each other's receipt and use information, we developed a schedule
with accompanying explanatory notes that displays each organization's
receipt and use of 1999 concert-related funds. The schedule also displays
the combined total for the three organizations. Our objective, in developing
the schedule, was to consistently present the various types and related
amounts of each organization's receipt and use of 1999 concert-related
funding.

To help ensure the completeness and accuracy of the schedule and explanatory
notes and to gain concurrence from each organization with the presentation
of its information, we provided each organization with a copy of its
schedule and the applicable note text. We asked each organization to review
the form and content of the overall schedule and note presentation as well
as the dollar amounts and note text applicable to its own receipt and use of
concert-related funding. Also, from each organization's management, we
obtained applicable audit-related representations including representations
related to the sources and completeness of concert-related funding, the
existence and nature of related-party transactions, the availability of
books and records, and the schedule and note presentation of receipt and use
of concert-related funding. In conducting our audit, we complied with
applicable provisions of generally accepted government auditing standards.
We performed our audit from January 7, 2000, through July 14, 2000.

To help ensure the accuracy and completeness of 1999 concert-related
information applicable to each organization, we provided officials of NPS,
NSO, and CCI with a draft of our report for their review and comment. In
commenting on the draft, these officials said that they agreed with the
report's presentation of their organizations' roles in supporting the 1999
concerts and receipt and use of 1999 concert-related funds. NPS and NSO made
no further comments. In addition to providing oral comments on the report's
presentation of its 1999 concert-related information, CCI provided written
comments on various concert-related matters that it wished to emphasize.
CCI's written comments have been reprinted in appendix II. As the matters
raised in CCI's written comments were beyond the scope of our audit, which
involved the verification of funds received and used in support of the 1999
concert, we did not verify them.

We are sending copies of the report to the Regional Director of the National
Park Service's National Capital Region, the President of the National
Symphony Orchestra Association, and the President of the Board of

Directors of Capital Concerts, Inc. Copies will be made available to others
upon request. Should you or your staffs have any questions concerning our
audit, please contact me or John Reilly, Assistant Director, on (202)
512-9508.

Linda M. Calbom
Director, Corporate Audits
and Standards

Schedule and Notes for the 1999 Capitol Concert Series

Comments From Capital Concerts, Inc.

(917616)

  

1. The Congress authorized NPS, a bureau of the Department of the Interior,
through House Concurrent Resolution 133 (May 21, 1981), to annually sponsor
a series of NSO concerts on the Capitol grounds. NPS has had a long history
of involvement with the orchestra dating back to its founding.

2. The NSO Association of Washington, D.C. is a year-round symphony
orchestra, which is affiliated with the John F. Kennedy Center for the
Performing Arts in Washington, D.C. Under terms of the affiliation, the
Kennedy Center provides NSO with fund-raising, sales, marketing, public
affairs, accounting operations, and administrative support (other than that
directly associated with the NSO artistic operations).

3. In 1997, CCI was incorporated in Washington, D.C., as an unaffiliated
nonprofit corporation to provide creative solutions for educational and
cultural problems through the use of the arts, public television, and
collaborative activities by providing educational programs and cultural
events for the country. In 1998, Pathmakers Inc., a nonprofit organization
incorporated in Pennsylvania for the purpose of education and civil projects
was merged with CCI. The production and broadcast of the annual Memorial Day
and July 4th concerts have been major activities of each organization.
*** End of document. ***