Financial Audit: Capitol Preservation Fund's Fiscal Years 2001
and 2000 Financial Statements (17-MAY-02, GAO-02-587).
GAO audited the financial statements of the Capitol Preservation
Fund for fiscal years 2001 and 2000. GAO found that the financial
statements (1) were presented fairly in conformity with U.S.
generally accepted accounting principles, (2) contained no
material weaknesses in internal control over financial reporting
and compliance with laws and regulations, and (3) complied with
the provisions of laws and regulations tested.
-------------------------Indexing Terms-------------------------
REPORTNUM: GAO-02-587
ACCNO: A03368
TITLE: Financial Audit: Capitol Preservation Fund's Fiscal Years
2001 and 2000 Financial Statements
DATE: 05/17/2002
SUBJECT: Accounting procedures
Auditing standards
Financial statement audits
Fund audits
Internal controls
Reporting requirements
Capitol Preservation Fund
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GAO-02-587
A
Report to the Congress
May 2002 FINANCIAL AUDIT Capitol Preservation Fund?s Fiscal Years 2001 and
2000 Financial Statements
GAO- 02- 587
Letter 1 Auditor?s Report 3
Opinion on Financial Statements 3 Consideration of Internal Control 3
Compliance with Laws and Regulations 4 Objectives, Scope, and Methodology 4
Commission Comments 6
Financial Statements 8 Statements of Financial Position 8
Statements of Activities 9 Statements of Cash Flows 10 Notes to Financial
Statements 11
Letter
May 17, 2002 To the President of the Senate and the Speaker of the House of
Representatives This report presents our opinion on the financial statements
of the Capitol Preservation Fund (the Fund) for the fiscal years ended
September 30, 2001, and 2000. It also discusses our consideration of the
Fund?s internal control and our tests of compliance with laws and
regulations during fiscal year 2001. We conducted our audit pursuant to 40
U. S. C. 188a- 3 and in accordance with U. S. generally accepted government
auditing standards. We appreciate the cooperation and assistance of the
Office of the Secretary of the Senate, the Office of the Clerk of the House
of Representatives, and the staffs of the Architect of the Capitol and the
Library of Congress provided during our audit. We are sending copies of this
report to the members of the Capitol
Preservation Commission; the Honorable Jeri Thomson, Secretary of the
Senate; the Honorable Jeffrey T. Trandahl, Clerk of the House of
Representatives; the Honorable Alan M. Hantman, Architect of the Capitol;
the Honorable James H. Billington, Librarian of Congress; and other
interested parties. If you or your staff have any questions concerning this
report, please
contact me at (202) 512- 9406 or John Reilly, Assistant Director, at (202)
5129517. You can also reach us by e- mail at franzelj@ gao. gov or
reillyj@ gao. gov. Key contributors to this report were Greg Ziombra,
Kwabena Ansong, Robert Preshlock, and Bridget Skjoldal.
Jeanette M. Franzel Acting Director Financial Management and Assurance
Audi tor? Report s To the Members of the Capitol Preservation Commission We
have audited the statements of financial position of the Capitol
Preservation Fund (the Fund) as of September 30, 2001, and 2000, and the
related statements of activities and statements of cash flows for the fiscal
years then ended. We found
the financial statements are presented fairly, in all material respects,
in conformity with U. S. generally accepted accounting principles;
no material weaknesses in internal control over financial reporting
(including safeguarding assets) and compliance with laws and regulations;
and
no reportable noncompliance with the provisions of laws and regulations we
tested.
The following sections provide additional detail about our conclusions and
the scope of our audit.
Opinion on Financial The financial statements and accompanying notes present
fairly, in all
Statements material respects, in conformity with U. S. generally accepted
accounting
principles, the Capitol Preservation Fund's financial position as of
September 30, 2001, and 2000, and the results of its activities and its cash
flows for the fiscal years then ended.
Consideration of In planning and performing our audit of the Fund?s fiscal
year 2001 financial
statements, we considered the Fund?s internal control over financial
Internal Control
reporting and compliance. 1 We did this to determine our procedures for
auditing the financial statements, not to express an opinion on internal
control over financial reporting and compliance. Accordingly, we do not
1 The objectives of financial reporting control are to provide reasonable
assurance that transactions are properly recorded, processed, and summarized
to permit the preparation of the financial statements in conformity with U.
S. generally accepted accounting principles, and assets are safeguarded
against loss from unauthorized acquisition, use, or disposition. The
objective of compliance control is to provide reasonable assurance that
transactions are executed in accordance with laws governing the use of
budget authority and other laws and regulations that could have a direct and
material effect on the financial statements.
express an opinion on internal control. However, for the controls we tested,
we found no material weaknesses in internal controls over financial
reporting (including safeguarding assets) and compliance. A material
weakness is a condition in which the design or operation of internal control
does not reduce to a relatively low level the risk that errors, fraud, or
noncompliance in amounts that would be material in relation to the financial
statements may occur and not be detected promptly by employees in the normal
course of performing their duties. Our consideration of internal control
would not necessarily disclose all material weaknesses.
Compliance with Laws Our tests for compliance with selected provisions of
laws and regulations
and Regulations disclosed no instances of noncompliance that would be
reportable under
U. S. 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.
Objectives, Scope, and The management of the Capitol Preservation Commission
is responsible
Methodology for
preparing the Fund's financial statements in conformity with U. S.
generally accepted accounting principles; establishing, maintaining, and
assessing internal control to provide
reasonable assurance that the objectives of internal control are met; and
complying with applicable laws and regulations. We are responsible for
obtaining reasonable assurance about whether the financial statements
are presented fairly, in all material respects, in conformity with U. S.
generally accepted accounting principles;
obtaining a sufficient understanding of internal control over financial
reporting and compliance with laws and regulations to plan the audit; and
testing compliance with selected provisions of laws and regulations that
have a direct and material effect on the financial statements.
In order to fulfill these responsibilities, we (1) examined, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements and notes, (2) assessed the accounting principles used and
significant estimates made by management, (3) evaluated the overall
presentation of the financial statements and notes, (4) obtained an
understanding of the design and operation of internal control related to
financial reporting (including safeguarding assets) and compliance with
laws and regulations and tested selected internal controls, and (5) tested
compliance with selected provisions of the following laws and/ or
regulations.
Capitol Preservation Commission and Capitol Preservation Fund enabling
legislation, 40 U. S. C. 188a- 188a- 5.
United States Capitol Visitor Center Commemorative Coin Act of 1999, Title
II, Public Law 106- 126.
We did not test all internal controls relevant to the operations of the
Capitol Preservation Fund. We limited our consideration to internal control
over financial reporting and compliance with laws and regulations for the
purpose of planning our audit. Because of inherent limitations in internal
control, misstatements due to error or fraud, losses, or noncompliance may
nevertheless occur and not be detected. We also caution that projecting our
consideration of internal control 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. In addition, we
caution that our internal control testing may not be sufficient for other
purposes. We did not test compliance with all laws and regulations
applicable to the Capitol Preservation Fund. We limited our tests of
compliance to selected provisions of laws and regulations that we deemed
applicable to the Fund?s financial statements for the fiscal year ended
September 30, 2001. We caution that non- compliance may occur and not be
detected by our tests
and such testing may not be sufficient for other purposes. We performed our
work in accordance with U. S. generally accepted government auditing
standards.
Commission We provided a draft of our report to representatives of the
Capitol Comments
Preservation Commission for their review and comment. The Commission?s
representatives agreed with the contents of our report. Jeanette M. Franzel
Acting Director Financial Management and Assurance
March 27, 2002
Financial Statements
Statements of Financial Position
CAPITOL PRESERVATION FUND STATEMENTS OF FINANCIAL POSITION
As of September 30 2001 2000
Assets
Cash $ 1,059 $ 953 Investments, net ( note 3) 35,809,577 29,087,824 Accrued
interest receivable on investments 299,930 419,941
Total assets $ 36,110,566 $ 29,508,718 Liabilities and net assets
Accounts payable $ 267,449 $ 0
Total liabilities 267,449 0 Net assets ( note 4)
Unrestricted 30,843,117 29,508,718 Temporarily r r 5,000,000 0
Total net assets 35,843,117 29,508,718 Total liabilities and net assets $
36,110,566 $ 29,508,718
The accompanying notes are an integral part of these financial statements.
Statements of Activities
CAPITOL PRESERVATION FUND STATEMENTS OF ACTIVITIES
For the Fiscal Years Ended September 30 2001 2000
Changes in unrestricted net assets Revenues ( note 5)
Interest $ 1,601,848 $ 1,599,011
Total unrestricted revenues 1,601,848 1,599,011 Program expenses ( note 6)
Capitol Visitor Center 262,999 2,891 Art, furnishings and historical items
4,450 17,475
Total program expenses 267,449 20,366 Increase in unrestricted net assets
1,334,399 1,578,645 Changes in temporarily restricted net assets
Contributions ( note 4) 5,000,000 0
Increase in temporarily restricted net assets 5,000,000 0 Increase in net
assets 6,334,399 1,578,645
Net assets at beginning of year 29,508,718 27,930,073
Net assets at end of year $ 35,843,117 $ 29,508,718
The accompanying notes are an integral part of these financial statements.
Statements of Cash Flows
CAPITOL PRESERVATION FUND STATEMENTS OF CASH FLOWS
For the Fiscal Years Ended September 30 2001 2000
Cash flows from operating activities
Temporarily restricted contributions received $ 5,000,000 $ 0 Interest
received 1,721,859 1,478,019 Cash paid for expenses 0 ( 20,366)
Net cash provided from operating activities 6,721,859 1,457,653 Cash flows
from investing activities
Purchases of Treasury securities ( 80,540,174) ( 59,512,753) Maturities of
Treasury securities 73,818,421 58,051,981
Net cash used by investing activities ( 6,721,753) ( 1,460,772)
Net increase ( decrease) in cash 106 ( 3,119) Cash at beginning of year 953
4,072
Cash at end of year $ 1,059 $ 953 Reconciliation of change in net assets to
net cash provided from operating activities
Change in net assets $ 6,334,399 $ 1,578,645
Adjustments to reconcile change in net assets to net cash provided from
operating activities
Increase in accounts payable 267,449 0 Decrease ( increase) in accrued
interest 120,011 ( 120,992)
Total adjustments 387,460 ( 120,992)
Net cash provided from operating activities $ 6,721,859 $ 1,457,653
The accompanying notes are an integral part of these financial statements.
Notes to Financial Statements
CAPITOL PRESERVATION FUND NOTES TO FINANCIAL STATEMENTS
NOTE 1: DESCRIPTION OF ENTITY
The Capitol Preservation Commission (the Commission) was established under
Title VIII of Public Law 100- 696 in November 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 and other locations under the control of the Congress. In September
1999, the Capitol Preservation Commission was given the responsibility,
pursuant to Public Law 106- 57, for approving the planning, engineering,
design, and construction milestones of the Capitol Visitor Center. The
center is intended to provide greater security for all persons working in or
visiting the Capitol and to enhance the educational experience of those who
come to learn about the Capitol building and the Congress.
To finance improvement, preservation, and acquisition activities of the
Commission, Title VIII of Public Law 100- 696 established the Capitol
Preservation Fund (the Fund) within the U. S. Treasury. In addition, Public
Law 107- 117 (January 2002) authorized the Commission to transfer amounts
from the Fund to the Architect of the Capitol for use in planning,
engineering, design, or construction of the Capitol Visitor Center. The Fund
consists of assets derived from deposits of charitable contributions,
surcharge proceeds from the secretary of the treasury 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.
Since its establishment, the Fund has been designated to receive coin
surcharge proceeds from three commemorative coin programs authorized by the
Congress.
Coin surcharge proceeds authorized by the Bicentennial of the United
States Congress Commemorative Coin Act and the Bicentennial of the United
States Capitol Commemorative Coin Act were received by the Fund without
restriction and remain available to the Commission for use in funding
improvement, preservation, and acquisition projects. All proceeds from these
coin programs have been received and deposited in the Fund.
Coin surcharge proceeds authorized by the United States Capitol Visitor
Center Commemorative Coin Act of 1999, and received by the Fund will be
restricted to use in the construction, maintenance, and preservation of the
Capitol Visitor Center. The Capitol Visitor Center Commemorative Coin sales
program, operated by the U. S. Mint, ended in March 2002.
In accordance with its rules, the Commission may fund or assist in the
funding of improvements to the Capitol Building and surrounding grounds if
such improvements are authorized, undertaken, and completed under the
procedures established by the
1
Congress for such purposes. With respect to works of fine art and other
property for display, the Commission is authorized to expend $400,000 ($
200,000 for the House of Representatives and $200,000 for the Senate) 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 Congress for which such purchases are made.
However, the Commission may not maintain any collection of fine or
decorative art, or other property, but may assist in the transfer of such
items to a congressional entity (such as the Senate Commission on Art, the
House Fine Arts Board, or the Joint Committee on the Library) or facilitate
the disposal of items.
The Architect of the Capitol, the Senate Commission on Art, and the House of
Representatives Fine Arts Board are required by Public Law 100- 696 (1988)
to provide staff support and assistance to the Commission. As necessary, the
Architect of the Capitol awards contracts and procures goods and services to
complete projects approved by the Commission, and ensures that the project-
related goods and services purchased from vendors are received. Similarly,
the Library of Congress, pursuant to Public Law 101- 45, (1989) is required
to provide financial management services for the Commission. These services
include coordinating activities with the Department of the Treasury for the
deposit, disbursement, investment, and management of the Capitol
Preservation Fund. In addition to these congressional entities, the
secretary of the Senate and the clerk of the House of Representatives,
pursuant to Commission rules, provide general administrative- type support
and assistance.
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Fund?s financial statements have been prepared on the accrual basis in
accordance with U. S. generally accepted accounting principles. They reflect
the receipt and use of the Fund?s assets to finance Commission- approved
improvement, preservation, and acquisition activities. The Fund?s
investments are recorded at cost, net of discounts, which approximates fair
market value. The Fund?s investments are invested in short term (3 and 6
month) interest- bearing Treasury obligations. Historically, Fund assets
have been used to fund specific improvement, preservation, and acquisition
activities. The Commission?s assets have not been used to fund management or
fundraising activities.
Once approved and funded by the Commission, completed improvement,
preservation, and acquisition projects are transferred to the Architect of
the Capitol and/ or other congressional entities. Through their transfer,
these assets become the accounting responsibility of other congressional
entities and are not considered assets of the Fund.
The Architect of the Capitol, the Library of Congress, and other
congressional entities are required by law to provide support services to
the Commission (see note 1). The costs of these mandated services, which are
financed with appropriated funds of the other entities, are not considered
operating expenses of the Fund.
2
NOTE 3: INVESTMENTS, NET
Deposits to the Fund from contributions, coin surcharges, and interest on
invested funds that are not needed currently to finance improvement,
preservation, and acquisition activities are invested in interest- bearing
obligations of the United States, which are purchased from the U. S.
Treasury at a discount. The Commission has directed the Library of Congress
to invest funds derived from contributions in 3- month Treasury securities
and funds derived from coin surcharges in 6- month Treasury securities. Due
to the short- term nature of the investments, the carrying values of
investments approximate their fair market values. The value of investments
outstanding as of September 30, 2001, and 2000, net of discounts was
$35,809,577 and $29,087,824, respectively. Annual investment rates ranged
from 2.23 percent to 6.23 percent in fiscal year 2001 and from 4.67 percent
to 6.14 percent in fiscal year 2000.
Outstanding Investments as of September 30 2001 2000 Face value of
investments $ 36,353,000 $ 29,952,000 Less: discounts (543,423) (864,176)
Investments, net of discounts $ 35,809,577 $ 29,087,824
NOTE 4: NET ASSETS
As of September 30, 2001, the net assets of the Fund consist of unrestricted
and temporarily restricted assets. To date, the Commission has not received
permanently restricted net assets. Permanently restricted net assets result
from donor- imposed restrictions stipulating that the assets be permanently
maintained.
Unrestricted net assets represent assets available to the Commission to
finance current and future operations without donor- imposed restrictions.
They arise from the receipt of unrestricted contributions, the expiration of
temporary restrictions on assets, and interest earned on invested funds.
Unrestricted net assets totaled $30,843,117 as of September 30, 2001, and
$29,508,718 as of September 30, 2000.
Temporarily restricted net assets represent funds received by the
Commission with donor- imposed restrictions that, in some way, limit the
Commission?s ability to use the funds. By their nature, the restrictions may
be with respect to either time or intended use. When the restriction is
satisfied, that is, when a stipulated time restriction ends or the purpose
of the restriction is accomplished, temporarily restricted net assets are
reclassified as unrestricted net assets and reported in the statement of
activities as net assets released from restrictions.
In fiscal year 2001, the Commission received a $5 million contribution from
a
3
private source that was restricted for the purpose of aiding in the
construction, maintenance, and preservation of the Capitol Visitor Center.
As planned, the Capitol Visitor Center will be a facility, located under the
East Plaza of the Capitol, that is designed to enhance the experience of the
visitors to the Capitol through improved visitor orientation and related
services, strengthened Capitol security, and integration of the center?s
design concept with the appropriate improvements to the Capitol?s East
Plaza. Temporarily restricted net assets totaled $5,000,000 as of September
30, 2001. There were no temporarily restricted net assets as of September
30, 2000.
Until restrictions are satisfied, temporarily restricted net assets are
invested in short- duration Treasury securities. At the Commission?s
direction, interest earned on these securities is considered to be
unrestricted revenue.
NOTE 5: REVENUES
Revenue earned from interest on United States Treasury obligations for
fiscal years 2001 and 2000 was $1,601,848 and $1,599,011, respectively. All
revenue earned was unrestricted.
NOTE 6: PROGRAM EXPENSES
A. CAPITOL VISITOR CENTER Commission- approved expenses associated with the
proposed Capitol Visitor Center were as follows.
Fiscal Year 2001-- In October 2000, the Commission approved the
expenditure of up to $700,000 from the Fund for services related to the
design and engineering of a proposed tunnel connecting the Thomas Jefferson
Building of the Library of Congress to the proposed Capitol Visitor Center.
In April and May 2001, the Architect contracted, on behalf of the
Commission, for design and engineering services for this project totaling
approximately $640,000. Through September 30, 2001, incurred expenses
against the contracts totaled $262,999.
Fiscal Year 2000- In June 2000, the Commission authorized the Architect of
the Capitol to purchase ceremonial shovels and a granite plaque costing
$2,891 for use in the Capitol Visitor Center groundbreaking ceremony.
B. ACQUISITION OF ART, FURNISHINGS, AND HISTORICAL ITEMS Commission rules
permit the limited use of funds to purchase items of art, furnishings, or
items of historical interest for each House of Congress (see note 1).
Fiscal Year 2001-- Commission members approved the use of $4,450 in Fund
assets
4
for the purchase of antique furnishings for display in Senate offices.
Fiscal Year 2000- Commission members approved the use of $17,475 in Fund
assets for the purchase of antique furnishings for display in Senate offices
and artwork for future display in the U. S. Senate offices in the Capitol.
5
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