Financial Audit: Independent and Special Counsel Expenditures for the Six
Months Ended March 31, 2000 (Letter Report, 09/26/2000, GAO/AIMD-00-310).
Pursuant to a congressional request, GAO audited the expenditures of
seven offices of independent counsel and one office of special counsel
for the 6 months ended March 31, 2000.
GAO noted that: (1) the statements of expenditures presented for the
offices of seven independent counsel and one special counsel were fairly
presented in all material respects; (2) GAO's consideration of internal
controls disclosed no material weaknesses; and (3) GAO's audits included
limited tests of compliance with laws and regulations that disclosed no
reportable instances of noncompliance with the laws and regulations GAO
tested.
--------------------------- Indexing Terms -----------------------------
REPORTNUM: AIMD-00-310
TITLE: Financial Audit: Independent and Special Counsel
Expenditures for the Six Months Ended March 31, 2000
DATE: 09/26/2000
SUBJECT: Financial statement audits
Independent counsels
Financial records
Internal controls
Reporting requirements
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GAO/AIMD-00-310
Appendix I: Statement of Expenditures for Independent Counsel Adams/Thompson
12
Appendix II: Statement of Expenditures for Independent Counsel
Barrett
15
Appendix III: Statement of Expenditures for Independent Counsel
Bruce
18
Appendix IV: Statement of Expenditures for Independent Counsel Lancaster
21
Appendix V: Statement of Expenditures for Independent Counsel
Pearson
24
Appendix VI: Statement of Expenditures for Independent Counsel
Smaltz
27
Appendix VII: Statement of Expenditures for Independent Counsel Starr/Ray
30
Appendix VIII: Statement of Expenditures for Special Counsel
Danforth
34
ADP automatic data processing
AOUSC Administrative Office of the U.S. Courts
FBI Federal Bureau of Investigation
IRS Internal Revenue Service
OIC Office of Independent Counsel
OSC Office of Special Counsel
Accounting and Information
Management Division
B-286132
September 29, 2000
Congressional Committees
Enclosed is our opinion on the statements of expenditures of seven offices
of independent counsel and one office of special counsel for the 6 months
ended March 31, 2000. We are sending copies of this report to the Attorney
General, the Director of the Administrative Office of the U.S. Courts, the
independent counsels and special counsel included in our audit, and other
interested parties. Copies will be made available to others upon request.
David L. Clark
Director, Audit Oversight and Liaison
Accounting and Information
Management Division
B-286132
Congressional Committees
This report presents the results of our audits of expenditures1 reported by
seven offices of independent counsel and one office of special counsel for
the 6 months ended March 31, 2000. The Department of Justice and the
independent counsels are required under 28 U.S.C. 594(d)(2), (h), and
596(c)(1) (1994) to report on expenditures from a permanent, indefinite
appropriation established within Justice to fund independent counsel
activities. We are required under 28 U.S.C. 596(c)(2), to audit the
statements of expenditures prepared by the independent counsels. We also
audited the statements of expenditures of Special Counsel John C. Danforth,
who is authorized by the Department of Justice to fund his operations from
the permanent, indefinite appropriation.
We found that the statements of expenditures presented in appendixes I
through VIII, for the offices of independent counsel Arlin M. Adams/Larry D.
Thompson, David M. Barrett, Carol Elder Bruce, Ralph I. Lancaster, Daniel S.
Pearson, Donald C. Smaltz, and Kenneth W. Starr/Robert W. Ray, and special
counsel John C. Danforth, respectively, were fairly presented in all
material respects. Our consideration of internal controls, which was limited
for the purpose of determining our procedures for auditing the statements of
expenditures, disclosed no material weaknesses. Further, our audits included
limited tests of compliance with laws and regulations that disclosed no
reportable instances of noncompliance with the laws and regulations we
tested.
The following sections provide background information, outline each
conclusion in more detail, and discuss the scope of our audits.
The Ethics in Government Act of 1978 amended title 28 of the United States
Code to authorize the judicial appointment of independent counsels when the
Attorney General determines that reasonable grounds exist to warrant further
investigation of high-ranking government officials for certain alleged
crimes. The independent counsel law (28 U.S.C. 591-599 (1994)) was intended
to preserve and promote the accountability and integrity of public officials
and of the institutions of the federal government. The independent counsel
law expired on June 30, 1999. Provisions of the law allow the independent
counsels serving at the expiration date to continue investigating pending
matters until they determine that the investigations of such matters have
been completed. Also, the Department of Justice determined that the
appropriation established by Public Law 100-202 to fund expenditures by
independent counsels appointed pursuant to
28 U.S.C. 591-599, or other law, is available to fund the expenditures of
John C. Danforth, who was appointed as a Special Counsel within the
Department of Justice by the Attorney General.
The independent counsel law directs the Department of Justice to pay all
costs relating to the establishment and operation of independent counsel
offices and designates specific responsibilities to the Administrative
Office of the U.S. Courts (AOUSC) for independent counsels' administrative
support. Justice periodically disburses lump-sum payments to AOUSC for this
purpose.
During any 6-month period, there may be other significant costs incurred in
support of the work of the counsels, which are paid from appropriations
other than the permanent, indefinite appropriation established to fund
independent counsel activities. These costs arise when a counsel uses
detailees from other federal agencies, such as the Federal Bureau of
Investigation (FBI). Independent counsels are not required to reflect such
costs in their statements of expenditures and neither the independent
counsels nor special counsel do so. However, to the extent practicable the
counsels identified and discussed these costs in the notes to their
statements presented in the appendixes to this report.
These statements and related notes do not include certain expenditures
related to the investigation by independent counsel Curtis E. von Kann's
(formerly Independent Counsel Sealed-1996) office which officially closed
effective November 30, 1998, and accordingly, no longer prepares financial
statements. However, $3,513 in expenditures occurred during this period for
installation of a security system in 1998.
The counsels prepared their statements of expenditures principally on a cash
basis of accounting, which is a comprehensive basis of accounting other than
generally accepted accounting principles. The bases of accounting are
described in note 1 of each counsel's statement.
In our opinion, the statements of expenditures including the accompanying
notes for the offices of independent counsel Arlin M. Adams/Larry D.
Thompson, David M. Barrett, Carol Elder Bruce, Ralph I. Lancaster, Daniel S.
Pearson, Donald C. Smaltz, and Kenneth W. Starr/Robert W. Ray, and for the
office of special counsel John C. Danforth present fairly, in all material
respects, the expenditures of these counsels for the 6 months ended March
31, 2000, on the basis of accounting described in note 1 to each office's
statement.
We gained an understanding of internal controls whose objectives are to
(1) safeguard assets against loss from unauthorized acquisition, use, or
disposition; (2) assure the execution of transactions in accordance with
laws governing the use of budget authority and with other laws and
regulations that have a direct and material effect on the statements of
expenditures; and (3) properly record, process, and summarize transactions
to permit the preparation of reliable statements of expenditures and to
maintain accountability for assets.
The purpose of our consideration of internal controls was to determine our
procedures for auditing the statements of expenditures and, accordingly, we
do not express an opinion on internal controls. However, for the controls we
tested, we found no material weaknesses or other reportable conditions in
the internal control structure and its operations for the
6-month period ended March 31, 2000. A material weakness is a reportable
condition in which the design or operation of one or more of the internal
control components does not reduce to a relatively low level the risk that
misstatements caused by error or fraud in amounts that would be material in
relation to the financial statements being audited may occur and not be
detected within a timely period by employees in the normal course of
performing their duties. Our internal control work would not necessarily
identify all material weaknesses.
Our tests for compliance with selected provisions of laws and regulations
disclosed no instances of noncompliance that would be reportable under
generally accepted government auditing standards. However, the objective of
our audit was not to provide an opinion on overall compliance with laws and
regulations. Accordingly, we do not express such an opinion.
In order to carry out their financial operations and to ensure
accountability, independent counsels are responsible for preparing
statements of expenditures in conformity with the bases of accounting
described in the accompanying notes. Though not required to do so, the
special counsel also elected to prepare statements of expenditures. The
counsels are also responsible for establishing and maintaining an internal
control structure to provide reasonable assurance that the internal control
objectives previously mentioned are met, and for complying with applicable
laws and regulations.
In carrying out our work, we are responsible for obtaining reasonable
assurance about whether the statements of the counsels are presented fairly,
in all material respects, in conformity with the bases of accounting
described in the accompanying notes. Also, we are responsible for obtaining
a sufficient understanding of internal controls to plan the audits and for
testing compliance with selected provisions of laws and regulations.
In order to fulfill these responsibilities, for each counsel, we (1)
examined, on a test basis, evidence supporting the amounts and disclosures
in the statement of expenditures and notes attached thereto, except items
indicated as unaudited; (2) assessed the accounting principles used by
management; (3) evaluated the overall presentation of the statement of
expenditures; (4) obtained an understanding of the internal control
structure related to safeguarding assets, compliance with laws and
regulations (including execution of transactions in accordance with budget
authority), and financial reporting; (5) tested relevant internal controls
over safeguarding assets, compliance, and financial reporting; and
(6) tested compliance with certain aspects of selected provisions of
28 U.S.C. 591-599 (1994), 5 U.S.C. Chapter 55, and regulations relating to
pay administration.
We limited our internal control testing to those controls necessary to
achieve the objectives outlined in our statement on internal controls.
Because of inherent limitations in any internal control structure, losses,
noncompliance, or misstatements may nevertheless occur and not be detected.
We also caution that projecting our evaluation to future periods is subject
to the risk that controls may become inadequate because of changes in
conditions or that the degree of compliance with controls may deteriorate.
We did not test compliance with all laws and regulations applicable to the
offices of independent and special counsel. We limited our tests of
compliance to those which we deemed applicable to the statements of
expenditures. We caution that noncompliance may occur and not be detected by
these tests and that such testing may not be sufficient for other purposes.
We obtained, but did not audit, information on costs that were not paid from
the permanent, indefinite appropriation as well as information on receipts.
We obtained information on these costs and receipts from the independent and
special counsel offices; the Department of Justice, including the FBI; the
Department of the Treasury, including the Internal Revenue Service; the U.S.
Postal Service; and the Office of Inspector General for the Department of
Agriculture.
We discussed the results of our work with representatives of the seven
offices of independent counsel, the office of the special counsel, the
Department of Justice, and AOUSC, and have incorporated their comments where
appropriate.
We performed our audits in accordance with generally accepted government
auditing standards.
David L. Clark
Director, Audit Oversight and Liaison
September 8, 2000
List of Committees
The Honorable Ted Stevens
Chairman
The Honorable Robert C. Byrd
Ranking Minority Member
Committee on Appropriations
United States Senate
The Honorable Fred Thompson
Chairman
The Honorable Joseph I. Lieberman
Ranking Minority Member
Committee on Governmental Affairs
United States Senate
The Honorable Orrin G. Hatch
Chairman
The Honorable Patrick J. Leahy
Ranking Minority Member
Committee on the Judiciary
United States Senate
The Honorable C. W. Bill Young
Chairman
The Honorable David R. Obey
Ranking Minority Member
Committee on Appropriations
House of Representatives
The Honorable Dan Burton
Chairman
The Honorable Henry A. Waxman
Ranking Minority Member
Committee on Government Reform
House of Representatives
The Honorable Henry J. Hyde
Chairman
The Honorable John Conyers, Jr.
Ranking Minority Member
Committee on the Judiciary
House of Representatives
Statement of Expenditures for Independent Counsel Adams/Thompson
Statement of Expenditures for Independent Counsel Barrett
Statement of Expenditures for Independent Counsel Bruce
Statement of Expenditures for Independent Counsel Lancaster
Statement of Expenditures for Independent Counsel Pearson
Statement of Expenditures for Independent Counsel Smaltz
Statement of Expenditures for Independent Counsel Starr/Ray
Statement of Expenditures for Special Counsel Danforth
(911971)
1. The term expenditures as used in this report generally means cash
disbursed.
*** End of document. ***