Financial Audit: Congressional Award Foundation's Fiscal Years
2002 and 2001 Financial Statements (15-MAY-03, GAO-03-737).
GAO audited the financial statements of the Congressional Award
Foundation for fiscal years 2002 and 2001 and the related
statements of activities and cash flows.
-------------------------Indexing Terms-------------------------
REPORTNUM: GAO-03-737
ACCNO: A06897
TITLE: Financial Audit: Congressional Award Foundation's Fiscal
Years 2002 and 2001 Financial Statements
DATE: 05/15/2003
SUBJECT: Internal controls
Financial statement audits
Reporting requirements
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GAO-03-737
A
To the President of the Senate and the
Audi tor* Report s Speaker of the House of Representatives We have audited
the statements of financial position of the Congressional Award Foundation
(the Foundation) as of September 30, 2002, and 2001, 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,
although substantial doubt exists about the Foundation*s ability to
continue as a going concern;
the Foundation had effective 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 Foundation*s financial position as of September 30, 2002,
and 2001, and the results of its activities and its cash flows for the
fiscal years then ended.
As discussed in a later section of this report and in Note 11 to the
financial statements, the Foundation is experiencing increasing
difficulties in meeting its financial obligations. The Foundation*s
continuing financial difficulties and deteriorating financial condition
raise substantial doubt about its ability to continue as a going concern.
The financial statements have been prepared under the assumption that the
Foundation will continue as a going concern, and do not include any
adjustments that might need to be made if the operations of the Foundation
were to cease.
Opinion on Internal The Foundation maintained, in all material respects,
effective internal
Control control over financial reporting (including safeguarding assets)
and
compliance as of September 30, 2002, that provided reasonable assurance
that misstatements, losses, or noncompliance material in relation to the
financial statements would be prevented or detected on a timely basis. Our
opinion is based on criteria established in our Standards for Internal
Control in the Federal Government. 1 We found matters involving internal
control that we do not consider to be reportable conditions. 2 We will
communicate these matters separately to the Foundation*s management along
with our suggestions for improvement. Compliance With Laws
Our tests for compliance with selected provisions of laws and regulations
and Regulations
for fiscal year 2002 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.
Foundation*s Ability to The Foundation incurred losses (decreases in net
assets) of $330,726 and
Continue as a Going $443, 962 in 2002 and 2001, respectively. The
decreases in net assets were a
result of operating losses and unrealized losses in the value of the
Concern
Foundation*s investments in the Congressional Award Trust. Due to ongoing
cash flow problems associated with its daily operations, Foundation
management liquidated $130,000 of investments from the Foundation*s
permanently restricted trust assets and used the proceeds to cover
operating expenses during fiscal year 2002. The market value of the Trust
assets at September 30, 2002, was $164, 612, which was $99,845 below
the permanently restricted amount of $264,457 as defined by the terms of 1
Standards for Internal Control in the Federal Government (GAO/ AIMD- 00-
21. 3. 1, November 1999). 2 Reportable conditions are matters coming to
our attention that, in our judgment, should be communicated because they
represent significant deficiencies in the design or operation of internal
control that could adversely affect an organization*s ability to meet the
objectives of reliable financial reporting and compliance with applicable
laws and regulations.
the Trust Declaration (agreement). 3 Also, as a result of its ongoing cash
flow problems, the Foundation*s accounts payable balance increased by
approximately 600 percent from $39,068 at September 30, 2001, to $274, 661
at September 30, 2002. During fiscal year 2002, the Foundation also
borrowed the maximum amount allowable of $100,000 against its line of
credit, which remained outstanding at September 30, 2002. At September 30,
2002, over half of the Foundation*s assets, or $360,013, consisted of
contributions receivable from donors. The majority of the contributions
receivable was restricted for future periods. As a result of these
restrictions on its contributions receivable, its decreases in assets, and
increases in liabilities, the Foundation showed a deficit in its
unrestricted operating assets of $408,537 at September 30, 2002.
Note 11 to the financial statements acknowledges the Foundation*s
increasing difficulties in meeting its financial obligations. While the
Foundation is taking steps to decrease its expenditures, those steps may
not be sufficient to allow it to continue operations. Unaudited financial
data compiled by the Foundation as of March 31, 2003, showed that the
Foundation*s financial condition has not improved, thus raising
substantial doubt about the Foundation*s ability to continue as a going
concern. The financial statements have been prepared under the assumption
that the Foundation will continue as a going concern, and do not include
any adjustments that might need to be made if the operations of the
Foundation were to cease. Objectives, Scope, and
The Foundation*s management is responsible for Methodology
preparing the annual financial statements in conformity with U. S.
generally accepted accounting principles;
establishing, maintaining, and assessing the Foundation*s internal
control to provide reasonable assurance that the Foundation*s control
objectives are met; and
3 At the time the distributions were made, they were made from Trust Fund
income as defined by the Trust agreement and did not use permanently
restricted amounts. The balance of the Trust Fund dropped below the
permanently restricted amount due to adverse market conditions.
complying with applicable laws and regulations. We are responsible for
obtaining reasonable assurance about whether (1) the financial statements
are presented fairly, in all material respects, in conformity with U. S.
generally accepted accounting principles and (2) management maintained
effective internal control, the objectives of which are the following:
financial reporting * transactions are properly recorded, processed, and
summarized to permit the preparation of financial statements, in
conformity with U. S. generally accepted accounting principles, and assets
are safeguarded against loss from unauthorized acquisition, use, or
disposition; and
compliance with laws and regulations * transactions are executed in
accordance with laws and regulations that could have a direct and material
effect on the financial statements.
We are also responsible for 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 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 Foundation management; evaluated the overall presentation of the
financial statements and notes; obtained an understanding of the
internal control related to financial
reporting (including safeguarding assets) and compliance with laws and
regulations;
tested relevant internal control over financial reporting and compliance
and evaluated the design and operating effectiveness of internal control;
and
tested compliance with selected provisions of the Congressional Award
Act, as amended.
We did not evaluate internal controls relevant to operating objectives,
such as controls relevant to ensuring efficient operations. We limited our
internal control testing to controls over financial reporting and
compliance. 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
the results of our tests 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.
We did not test compliance with all laws and regulations applicable to the
Foundation. We limited our tests of compliance to those provisions of laws
and regulations that we deemed to have a direct and material effect on the
financial statements for the fiscal year ended September 30, 2002. We
caution that noncompliance may occur and not be detected by our tests
and that such testing may not be sufficient for other purposes. We
performed our work in accordance with U. S. generally accepted government
auditing standards.
Foundation*s We provided a draft of our report to Congressional Award
Foundation Comments
officials for their review and comment. Foundation officials agreed with
the contents of our report. Jeanette M. Franzel Director Financial
Management and Assurance
April 25, 2003
Financial Statements
Statements of Financial Position
The Congressional Award Foundation Statements of Financial Position As of
September 30, 2002, and 2001
2002 2001 Assets
Cash and cash equivalents $ 14,448 ( $ 7,629) Investments ( note 8) 50,000
Contributions receivable, net ( note 3) 360,013 205,000 Prepaid expense
2,534 4,441 Congressional Award Fellowship Trust ( note 4) 164,612 356,934
Equipment, furniture, and fixtures, net 49,222 65,245
Total assets $ 640,829 $ 623,991 Liabilities and net assets
Accounts payable 274,661 39,068 Line of credit ( note 8) 100,000 Accrued
payroll, related taxes, and leave 47,311 31,721 Obligation under capital
lease 2,745 6,364
Total liabilities 424,717 77,153 Net assets
Unrestricted ( 408,537) 30,047 Temporarily restricted 360,192 252,334
Permanently restricted ( note 4) 264,457 264,457
Total net assets 216,112 546,838 Total liabilities and net assets $
640,829 $ 623,991
The accompanying notes are an integral part of these financial statements.
Statements of Activities
The Congressional Award Foundation Statements of Activities For the Fiscal
Years Ended September 30, 2002, and 2001
2002 2001 Changes in unrestricted net assets:
Operating revenue and other support
Contributions $ 659,856 $ 519,041 Contributions - In- kind ( note 5)
325,585 74,642 Program and other revenues 108,267 53,464 Interest and
dividends applied to current operations 4,070 7,778 Net assets released
from restrictions ( note 6) 241,592 125,939
Total operating revenue and other support 1,339,370 780,864 Operating
expenses ( note 10)
Salaries, benefits, and payroll taxes 643,186 482,485 Program, promotion,
and travel 457,366 163,525 Fund- raising expense 354,034 131,761 Gold
Award ceremony 48,933 34,541 Professional fees 91,123 181,087 Depreciation
18,935 18,601 Board of Directors expense 132 12,136 Administrative and
other expense 101,863 70,611
Total operating expenses 1,715,572 1,094,747 Subtotal ( 376,202) (
313,883) Other changes
Unrealized investment losses not applied to current operations ( 66,523) (
304,889) Realized investment gains ( losses) not applied to current
operations 4,141 ( 1,301)
Increase ( decrease) in unrestricted net assets ( 438,584) ( 620,073)
Changes in temporarily restricted net assets:
Contributions 449,450 302,050 Bad debt loss on contributions receivable (
100,000) Net assets released from restrictions ( note 6) ( 241,592) (
125,939)
Increase ( decrease) in temporarily restricted net assets 107,858 176,111
Increase ( decrease) in net assets ( 330,726) ( 443,962)
Net assets at beginning of year 546,838 990,800
Net assets at end of year $ 216,112 $ 546,838
The accompanying notes are an integral part of these financial statements.
Statements of Cash Flows
The Congressional Award Foundation Statements of Cash Flows For the Fiscal
Years Ended September 30, 2002, and 2001
2002 2001 Cash flows from operating activities:
Contributions received $ 854,293 $ 616,091 Cash received from councils and
independents 108,267 53,464 Interest and dividends received 4,070 7,778
Cash paid to employees ( 491,813) ( 373,359) Cash paid to vendors (
624,843) ( 582,411)
Net cash provided/ ( used) from operating activities ( 150,026) ( 278,437)
Cash flows from investing activities:
Purchase of equipment ( 4,278) ( 14,337) Proceeds from sales of assets (
260) Purchase of Investments ( 50,000) Proceeds from sale of investments
130,000 _ _ _ _ _ _ _
Net cash provided/ ( used) in investing activities 75,722 ( 14,597) Cash
flows from financing activities:
Draws on line of credit 100,000 Payments on capital lease ( 3,619) (
2,772)
Net cash provided/ ( used) in financing activities 96,381 ( 2,772)
Net increase ( decrease) in cash 22,077 ( 295,806) Cash at beginning of
the year ( 7,629) 288,177
Cash at end of year $ 14,448 ( $ 7,629) Reconciliation of change in net
assets to net cash provided/ ( used) from operating activities
Change in net assets ( $ 330,726) ( $ 443,962) Adjustments to reconcile
change in net assets to net cash used/ provided from operating activities:
Investment losses not applied to operations 62,321 306,190 Loss on
disposal 1,367 Depreciation expense 18,935 18,601 ( Increase) in
contributions receivable ( 155,013) ( 205,000) Decrease ( increase) in
prepaid expenses 1,907 ( 49) Decrease in other assets 170 Increase in
accounts payable 235,593 39,068 Increase in accrued payroll, related
taxes, and leave 15,590 6,545
Net cash provided/ ( used) from operating activities ( $ 150,026) ( $
278,437)
The accompanying notes are an integral part of these financial statements.
Notes to Financial Statements THE CONGRESSIONAL AWARD FOUNDATION Notes to
Financial Statements For the Fiscal Years Ended September 30, 2002, and
2001 Note 1. Organization
The Congressional Award Foundation (the Foundation) was formed in 1979
under Public Law 96- 114 and is a private, nonprofit, tax- exempt
organization under Section 501( c)( 3) of the Internal Revenue Service
code established to promote initiative, achievement, and excellence among
young people in the areas of public service, personal development,
physical fitness, and expedition. New program participants totaled 3,709
in fiscal year 2002, an increase of about 50 percent over fiscal year
2001. As of September 30, 2002, there were over 11,000 active participants
in the program. In October 1999, the president signed Public Law 106- 63,
Section 1( d) of which reauthorized the Congressional Award Foundation
through September 30, 2004.
Note 2. Summary of Significant Accounting Policies
A. Basis of Accounting The financial statements are prepared on the
accrual basis of accounting in conformity with U. S. generally accepted
accounting principles applicable to not- for- profit organizations.
B. Cash Equivalents The Foundation considers funds held in savings
accounts and all highly liquid investments with an original maturity of 3
months or less to be cash equivalents. Money market funds held in the
Foundation*s Congressional Award Fellowship Trust
(the Trust) are not considered cash equivalents. C. Contributions
Receivable
Unconditional promises to give are recorded as revenue when the promise is
made. Contributions receivable over multiple years are discounted to their
present value using the applicable interest rate. D. Equipment, Furniture
and Fixtures, and Related Depreciation
Equipment, furniture, and fixtures are stated at cost. Depreciation of
furniture and equipment is computed using the straight- line method over
estimated useful lives of 5 to 10 years. Leasehold improvements are
amortized over the lesser of their estimated useful lives or the remaining
life of the lease. Expenditures for major additions and betterments are
capitalized; expenditures for maintenance and repairs are charged to
expense when incurred. Upon retirement or disposal of assets, the cost and
accumulated depreciation are eliminated from the accounts and the
resulting gain or loss is included in revenue or expense, as appropriate.
THE CONGRESSIONAL AWARD FOUNDATION Notes to Financial Statements For the
Fiscal Years Ended September 30, 2002, and 2001
E. Investments Investments consist of a certificate of deposit and are
carried at purchase price, which approximates fair value.
F. Classification of Net Assets The net assets of the Foundation are
reported as follows:
Unrestricted net assets represent the portion of expendable funds that are
available for the general support of the Foundation.
Temporarily restricted net assets represent amounts that are specifically
restricted by donors or grantors for specific programs or future periods.
Permanently restricted net assets result from donor- imposed restrictions
stipulating that the resources donated be maintained permanently. The
Foundation's permanently restricted net assets consist of contributions to
the Foundation's Congressional Award Fellowship Trust Fund (see note 4).
G. Revenue Recognition Contribution revenue is recognized when received or
promised and recorded as temporarily restricted if the funds are received
with donor or grantor stipulations that limit the use of the donated
assets to a particular purpose or for specific periods. When a stipulated
time restriction ends or purpose of the restriction is met, temporarily
restricted net assets are reclassified to unrestricted net assets and
reported in the statement of activities as net assets released from
restrictions.
H. Functional Allocation of Expenses The costs of providing the various
programs and other activities have been summarized on a functional basis
as described in note 10. Accordingly, certain costs have been allocated
among the programs and supporting services benefited .
During the year ended September 30, 2001, the Foundation adopted the
provisions of Statement of Position 98- 2, *Accounting for Costs of
Activities of Not- for- Profit Organizations and State and Local
Governmental Entities that Include Fund Raising,* and allocated joint
costs related to the annual gala between program and
fundraising activities. I. Estimates
The preparation of financial statements in conformity with U. S. generally
accepted accounting principles requires management to make estimates and
assumptions that
THE CONGRESSIONAL AWARD FOUNDATION Notes to Financial Statements For the
Fiscal Years Ended September 30, 2002, and 2001
affect certain reported amounts and disclosures. Accordingly, actual
results could differ from those estimates.
Note 3. Contributions Receivable
At September 30, 2002, and 2001, promises to give totaled $360,013 and
$205,000, respectively, of which $310,000 and $200,000, respectively, were
temporarily restricted by the donors for future periods. At September 30,
2002, and 2001, $200,000 and $105,000,
respectively, were due within 1 year and $160,000 and $100,000 were due
within 2 years. All amounts are considered fully collectible. The promises
to give were a result of the new *Charter for Youth* fundraising
initiative. Charter for Youth benefactors are requested to contribute a
minimum of $100,000 per year for 3 consecutive years for the direct
support of The Congressional Award and its initiatives for participant
recruitment and awardee recognition. Charter for Youth members have the
opportunity to participate in Congressional Award events, and receive
recognition as benefactors at the international, national, and regional
events and meetings.
Note 4. Congressional Award Fellowship Trust
The Congressional Award Fellowship Trust (the Trust Fund) was established
in 1990 to benefit the charitable and educational purposes of the
Foundation. The Trust Fund has received $264,457 of contributions since
1990, which were designated as permanently restricted by the donors when
the donations were originally made. In accordance with the terms of the
Trust Agreement (the Agreement), the Foundation is permitted to use all
Trust Fund income for the benefit of the charitable and educational
purposes of the Foundation. Trust Fund income represents the value of the
Trust Fund*s assets (including interest and
dividends earned and realized and unrealized gains and losses on Trust
Fund investments) in excess of the aggregate amount received as endowment
donations. Net gains and losses on investments can only be used in
operations with approval of the Foundation*s Board. The agreement
describes endowment donations as the aggregate fair market value (as of
the contribution date) of all donations to the Trust Fund. As defined by
the agreement, this represents the amount of the Trust Fund*s assets that
the Foundation cannot use or distribute.
During the fiscal year ended September 30, 2002, the Foundation*s Board
approved the use of $130,000 of the Trust Fund to support 2002 operations.
As of September 30, 2002, the value of the Trust Fund*s investments was
below the permanently restricted amount of $264,457 by $99,845. At the
time the distributions were made, they were made from the Trust Fund
income as defined by the Trust agreement and did not use permanently
restricted amounts. The balance of the Trust Fund dropped below the
permanently restricted amount due to adverse market conditions.
THE CONGRESSIONAL AWARD FOUNDATION Notes to Financial Statements For the
Fiscal Years Ended September 30, 2002, and 2001
At September 30, 2002, and 2001, the Trust Fund*s investments at fair
value consisted of the following:
September 30, Description 2002 2001 Equity and debt securities $157,670
300,924 Money market funds 6,942 56,010
Total $ 164,612 $356,934
Activity in the Trust Fund for the fiscal years ended September 30, 2002,
and 2001 was as follows:
September 30, 2002 2001 Interest and dividends $ 4,130 $ 4,779 Net
realized gains (losses) 4,141 (1,301) Net unrealized losses (66,523)
(304,889)
Total investment losses (58,252) (301,411) Transfer to operations
(130,000) Investment earnings applied to current operations (4,070)
(4,519) Net change in Trust Fund investments (192,322) (305,930) Trust
Fund investments, beginning of year 356,934 662,864
Trust Fund investments, end of year $ 164,612 $ 356,934
Value of Trust Fund (below) or above permanently restricted balance ($
99,845) $ 92,477
THE CONGRESSIONAL AWARD FOUNDATION Notes to Financial Statements For the
Fiscal Years Ended September 30, 2002, and 2001 Note 5. In- kind
Contributions
During fiscal years 2002 and 2001, the Foundation received in- kind
(noncash) contributions from donors, which are accounted for as
contribution revenue and either as current period operating expenses or
additions to capital assets. These noncash contributions are as follows:
2002 2001 Promotional support $ 281,221 $ 630 Professional services (legal
and web hosting) 44,364 37,712 Supplies for fund- raising gala 26,300
Airline tickets 10,000
Total in- kind contributions $325,585 $ 74,642
In addition, Section 7( c) of Public Law 101- 525, the Congressional Award
Amendments of 1990, provided that "the Board may benefit from in- kind and
indirect resources provided by the Offices of Members of Congress or the
Congress." Resources so provided include use of office space, office
furniture, and certain utilities. In addition, section 3 of the
Congressional Award Act, as amended, provides that the United States Mint
may charge the United States Mint Public Enterprise Fund for the cost of
striking Congressional Award Medals. The costs of these resources cannot
be readily determined and, thus, are not included in the financial
statements.
Note 6. Temporarily Restricted Net Assets
Temporarily restricted net assets at September 30, 2002, and 2001 were
available for the following programs and future periods:
2002 2001 Contributions restricted for use in 2004 $ 160,000 Contributions
restricted for use in 2003 160,000 $100,000 Contributions restricted for
use in 2002 100,000 Puerto Rico Council development 17,930 25,000 Nevada
Council development 16,126 18,547 Oklahoma Council development 6,136 7,105
Mississippi Council development 1,682
Total $360,192 $252,334
THE CONGRESSIONAL AWARD FOUNDATION Notes to Financial Statements For the
Fiscal Years Ended September 30, 2002, and 2001
Net assets released from restrictions during the years ended September 30,
2002, and 2001 were as follows:
2002 2001 Contributions restricted for use in fiscal
years 2002 and 2001, respectively $225,000 $100,000 Puerto Rico Council
development 7,070 Nevada Council development 2,421 5,067 Mississippi
Council development 1,682 15,708 Oklahoma Council development 969 2,154 DC
Council development 2,000 2,631 South Bronx/ New York Project 2,450 379
Total $241,592 $125,939 Note 7. Employee Retirement Plan
For the benefit of its employees, the Foundation participates in a
voluntary 403( b) taxdeferred annuity plan, which was activated on August
27, 1993. Under the plan, the Foundation may, but is not required to, make
employer contributions to the plan. For 2002 and 2001, the Board voted to
make matching contributions to qualified employees of up to 6 percent,
which amounted to $9,658 and $8,610 in 2002 and 2001, respectively.
Note 8. Line of Credit
The Foundation has a $100,000 line of credit with its bank that bears
interest at 6 percent per annum. The line of credit is partially secured
by the Foundation*s investment in a $50,000 certificate of deposit held by
the same bank. At September 30, 2002, the outstanding balance on the line
of credit was $100,000. There was no outstanding line of credit at
September 30, 2001.
Note 9. Related Party Activities
In June 2002, the CEO, Director of Finance, and the Director of
Development of the Foundation used their personal credit cards to advance
deposits and other costs related to the 2002 Gala in the amount of
$39,077. Due to lower than expected Gala sponsorships, funds were not
available to reimburse these persons in a timely manner. As of September
30, 2002, the balance owed to these individuals was $38,111, which
included finance charges of $843.
THE CONGRESSIONAL AWARD FOUNDATION Notes to Financial Statements For the
Fiscal Years Ended September 30, 2002, and 2001
On October 26, 2002, the CEO advanced the Foundation an additional $1,280
by paying the answering service used to field program calls, thus avoiding
cancellation of this service. On November 2, 2002, the CEO attended a
donor reception in London, England and advanced the Foundation $4,041 to
pay for a reception and dinner.
The balance due to the Director of Development of $1,945 was paid on
October 16, 2002. Various amounts due to the CEO and Director of Finance
have been paid since September 30, 2002, leaving a balance of $13,396
still owed to those two individuals at March 31, 2003.
During fiscal year 2001, an ex- officio director of the Board provided pro
bono legal services to the Foundation. The value of legal services has
been included in the in- kind contributions and professional fees line
items (see note 5).
In addition, a director of the Board served as portfolio manager with the
brokerage firm responsible for managing the Congressional Award Fellowship
Trust account during fiscal years 2002 and 2001. An investment committee
of the Board establishes investment guidelines and monitors the
portfolio's performance.
Note 10. Expenses by Functional Classification
As permitted by SFAS No. 117, the Foundation has presented its operating
expenses by natural classification in the accompanying Statements of
Activities for the fiscal years ending September 30, 2002, and 2001.
Presented below are the Foundation's expenses by functional classification
for the fiscal years ended September 30, 2002, and 2001.
2002 2001 Program activities $ 852,375 $ 619,178 Fund- raising activities
616,018 278,392 Administrative activities 247,179 197,176
Total $ 1,715,572 $1,094,746
For the year ended September 30, 2002, the Foundation incurred joint costs
of $248,632 related to the annual gala, of which $108,260 and $140,372
were allocated to program and fundraising, respectively.
In addition, total direct benefits provided to donors at the annual gala
of $12,000 and $29,945 are included in program expense for the years ended
September 30, 2002, and 2001, respectively.
THE CONGRESSIONAL AWARD FOUNDATION Notes to Financial Statements For the
Fiscal Years Ended September 30, 2002, and 2001 Note 11. The Foundation*s
Ability to Continue as a Going Concern
The Congressional Award Foundation is dependent on contributions to fund
its operations and, to a far lesser extent, other revenues, interest, and
dividends. The Foundation incurred decreases in net assets of $330,726 and
$443,962 in 2002 and 2001, respectively. The decreases in net assets were
a result of operating losses and unrealized losses in the value of the
Foundation*s investments in the Congressional Award Trust. As a result,
the Foundation is experiencing increasing difficulty in meeting its
obligations. While the Foundation is taking some steps to decrease its
expenses, those steps may not be sufficient to enable it to continue
operations.
Unaudited financial data compiled by the Foundation as of March 31, 2003,
showed that the Foundation*s financial condition has not improved. The
continuing deterioration in the Foundation*s financial condition raises
substantial doubt about its ability to continue as a going concern.
(194181)
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Report to the Congress
May 2003 FINANCIAL AUDIT Congressional Award Foundation*s Fiscal Years
2002 and 2001 Financial Statements
GAO- 03- 737
Letter 1 Auditor*s Report 2
Opinion on Financial Statements 2 Opinion on Internal Control 3 Compliance
With Laws and Regulations 3 Foundation*s Ability to Continue as a Going
Concern 3 Objectives, Scope, and Methodology 4 Foundation*s Comments 6
Financial Statements 7 Statements of Financial Position 7
Statements of Activities 8 Statements of Cash Flows 9 Notes to Financial
Statements 10
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GAO United States General Accounting Office
Page i GAO- 03- 737 Contents
Page 1 GAO- 03- 737 United States General Accounting Office Washington, D.
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Page 1 GAO- 03- 737 A
May 15, 2003 Letter
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
Congressional Award Foundation for the fiscal years ended September 30,
2002, and 2001. These financial statements are the responsibility of the
Congressional Award Foundation. This report also presents (1) our opinion
on the effectiveness of the Foundation*s related internal control as of
September 30, 2002, and (2) our conclusion on the Foundation*s compliance
in fiscal year 2002 with selected provisions of laws and regulations we
tested. We conducted our audit pursuant to section 8 of the Congressional
Award Act, as amended (2 U. S. C. 807), and in accordance with U. S.
generally accepted government auditing standards.
If you or your staff have any questions concerning this report, please
contact me at (202) 512- 9406 or Julie Phillips, Assistant Director, at
(202) 512- 5121. You can also reach us by e- mail at franzelj@ gao. gov or
phillipsjt@ gao. gov. Key contributors to this report were Greg Ziombra
and Teressa Broadie- Gardner.
Jeanette M. Franzel Director Financial Management and Assurance
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