Financial Audit: Senate Restaurants Revolving Fund for Fiscal Years 1994
and 1993 (Letter Report, 07/31/95, GAO/AIMD-95-173).

GAO audited the balance sheets of the Senate Restaurants Revolving Fund
for fiscal years 1994 and 1993 and the related statements of operations
and cash flows for those years.  The Fund operates restaurants serving
Senators, Senate employees, and the public. GAO found that the financial
statements were reliable in all material respects; that management
fairly stated that its internal controls effectively safeguarded assets
from material loss, ensuring compliance with laws and regulations and
ensuring that there were no material misstatements in the financial
statements; and that there was no reportable noncompliance with laws and
regulations.

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

 REPORTNUM:  AIMD-95-173
     TITLE:  Financial Audit: Senate Restaurants Revolving Fund for 
             Fiscal Years 1994 and 1993
      DATE:  07/31/95
   SUBJECT:  Financial statement audits
             Internal controls
             Revolving funds
             Financial management
             Financial records
             Accountability
             Fund audits
             Dining facilities
IDENTIFIER:  Senate Restaurant Revolving Fund
             
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Cover
================================================================ COVER


Report to the Architect of the Capitol

July 1995

FINANCIAL AUDIT - SENATE
RESTAURANTS REVOLVING FUND FOR
FISCAL YEARS 1994 AND 1993

GAO/AIMD-95-173

Senate Restaurants Revolving Fund


Abbreviations
=============================================================== ABBREV


Letter
=============================================================== LETTER


B-260874

July 31, 1995

The Honorable George M.  White
Architect of the Capitol

Dear Mr.  White: 

This report presents our opinion on the financial statements of the
Senate Restaurants for fiscal year 1994 as well as our opinion on
management's assertions regarding the effectiveness of its system of
internal controls as of September 30, 1994.  This report also
discusses our evaluation of the Restaurants' compliance with laws and
regulations for the period ended September 30, 1994.  This review was
conducted pursuant to your request and section 5 of the act of July
6, 1961 (40 U.S.C.  174j-5). 

We are sending copies of this report to interested congressional
committees and other interested parties.  Copies will be made
available to others on request. 

Sincerely yours,

Charles A.  Bowsher
Comptroller General
of the United States


Letter
=============================================================== LETTER


B-260874

The Honorable George M.  White
Architect of the Capitol

Dear Mr.  White: 

Pursuant to your request and section 5 of the act of July 6, 1961 (40
U.S.C.  174j-5), we audited the balance sheets of the United States
Senate Restaurants Revolving Fund (the Fund) as of October 1, 1994
and October 2, 1993, and the related statements of operations and
cash flows for the years then ended.  We found

  the financial statements were reliable in all material respects;

  management fairly stated that internal controls in place on October
     1, 1994, were effective in safeguarding assets from material
     loss, assuring material compliance with laws and regulations,
     and assuring that there were no material misstatements in the
     financial statements; and

  no reportable noncompliance with laws and regulations we tested. 

The following sections outline each conclusion in more detail and
discuss the scope of our audits. 


   OPINION ON FINANCIAL STATEMENTS
------------------------------------------------------------ Letter :1

The financial statements and accompanying notes of the Senate
Restaurants Revolving Fund as of October 1, 1994 and October 2, 1993,
present fairly, in conformity with generally accepted accounting
principles, the Fund's

  assets, liabilities, and government equity;

  results of operations; and

  cash flows. 

As discussed in note 3, the financial statements present the results
of activities financed through the Senate Restaurants Revolving Fund
and are not intended to present the financial position and results of
operations of the Senate Restaurants as a whole.  Other readily
identifiable costs, such as management personnel salaries and
benefits, and capital expenditures amounting to nearly $2.2 million
in fiscal year 1994 and nearly $1.8 million in fiscal year 1993,
which are financed by funds appropriated to the Architect of the
Capitol, are not included on the financial statements.  Also, the
statements do not include such costs as space and utilities, which
are not readily identifiable. 

The Senate Restaurants Revolving Fund began incurring losses in
fiscal year 1987.  As of October 1, 1994, the Fund had cumulative
losses totaling over $1.4 million.  The Fund has relied on loans and
appropriated fund transfers to offset these losses and continue to
pay Fund expenses.  The Senate Restaurants Revolving Fund reported a
profit of $41,615 in fiscal year 1993.  However, in fiscal year 1994,
the Fund incurred a loss of $368,306.  If trends continue, in
addition to the appropriated funds required for other identifiable
and nonidentifiable costs mentioned above, the Fund itself will
continue to require supplemental funding, such as additional loans or
appropriated fund transfers, to support its future operations. 


   OPINION ON MANAGEMENT'S
   ASSERTION ABOUT THE
   EFFECTIVENESS OF INTERNAL
   CONTROLS
------------------------------------------------------------ Letter :2

We evaluated management's assertion about the effectiveness of its
internal controls designed to: 

  safeguard assets against loss from unauthorized use or disposition;

  assure the execution of transactions in accordance with laws and
     regulations; and

  properly record, process, and summarize transactions to permit the
     preparation of financial statements and maintain accountability
     for assets. 

Management of the Senate Restaurants fairly stated that those
controls in place on October 1, 1994, provided reasonable assurance
that losses, noncompliance, or misstatements material to the
financial statements would be prevented or detected on a timely
basis.\1 Management made this assertion based on criteria provided in
GAO's Standards for Internal Controls in the Federal Government. 


--------------------
\1 Our reports on the Fund's internal control structure and
compliance with laws and regulations for fiscal year 1993 are
presented in GAO/AIMD-95-1, dated October 12, 1994. 


   COMPLIANCE WITH LAWS AND
   REGULATIONS
------------------------------------------------------------ Letter :3

Our current year audit 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.  We do not express an opinion on overall compliance with
such provisions. 


   OBJECTIVES, SCOPE, AND
   METHODOLOGY
------------------------------------------------------------ Letter :4

Management is responsible for

  preparing annual financial statements in conformity with generally
     accepted accounting principles;

  establishing, maintaining, and assessing the internal control
     structure to provide reasonable assurance that the internal
     control objectives mentioned above are met; and

  complying with applicable laws and regulations. 

We are responsible for obtaining reasonable assurance about whether
(1) the financial statements are reliable (free of material
misstatement and presented fairly in conformity with generally
accepted accounting principles) and (2) management's assertion about
the effectiveness of internal controls is fairly stated in all
material respects based upon criteria mentioned above.  We are also
responsible for testing compliance with selected provisions of laws
and regulations. 

In order to fulfill these responsibilities, we

  examined, on a test basis, evidence supporting the amounts and
     disclosures in the financial statements;

  assessed the accounting principles used and significant estimates
     made by management;

  evaluated the overall presentation of the financial statements;

  obtained an understanding of the internal control structure related
     to safeguarding assets, compliance with laws and regulations,
     and financial reporting;

  tested relevant internal controls over safeguarding, compliance,
     and financial reporting, and evaluated management's assertion
     about the effectiveness of internal controls; and

  tested compliance with selected provisions of 40 U.S.C.  174j-1
     through j-9, Department of the Treasury regulations on cash,
     Office of Personnel Management regulations on employee benefits
     and employer costs, and Internal Revenue Service regulations on
     federal income and social security tax withholdings. 

We limited our internal control testing to accounting and other
controls necessary to achieve the objectives outlined in our opinion
on management's assertion about the effectiveness of 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 performed our work in accordance with generally accepted
government auditing standards. 

Sincerely yours,

Charles A.  Bowsher
Comptroller General
of the United States

June 16, 1995


FINANCIAL STATEMENTS
=========================================================== Appendix 0

   Balance Sheets

   (See figure in printed
   edition.)

   Statements of Operations

   (See figure in printed
   edition.)

   Statements of Cash Flows

   (See figure in printed
   edition.)

   Notes to Financial Statements

   (See figure in printed
   edition.)



   (See figure in printed
   edition.)



   (See figure in printed
   edition.)



   (See figure in printed
   edition.)



   (See figure in printed
   edition.)



   (See figure in printed
   edition.)



   (See figure in printed
   edition.)



   (See figure in printed
   edition.)


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