Financial Management: Audit of the White House Commission on the 
National Moment of Remembrance for Fiscal Years 2003 and 2002	 
(20-MAY-04, GAO-04-497R).					 
                                                                 
The White House Commission on the National Moment of Remembrance 
(Commission) was created on December 28, 2000, by the National	 
Moment of Remembrance Act (Act). The Commission received	 
appropriated funds in fiscal years 2003 and 2002. Its purpose is 
to sustain the American spirit through acts of remembrance for	 
those who died serving their country, not only on Memorial Day,  
but also throughout the year. We are required by the Act to audit
the financial transactions of the Commission, and this report	 
covers our work on its fiscal years 2003 and 2002 financial	 
transactions.							 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-04-497R					        
    ACCNO:   A10131						        
  TITLE:     Financial Management: Audit of the White House Commission
on the National Moment of Remembrance for Fiscal Years 2003 and  
2002								 
     DATE:   05/20/2004 
  SUBJECT:   Accountability					 
	     Accounting procedures				 
	     Accounting standards				 
	     Data integrity					 
	     Financial management				 
	     Financial records					 
	     Financial statement audits 			 
	     Internal controls					 
	     Reporting requirements				 

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GAO-04-497R

United States General Accounting Office Washington, DC 20548

May 20, 2004

The Honorable Orrin G. Hatch
Chairman
The Honorable Patrick J. Leahy
Ranking Minority Member
Committee on the Judiciary
United States Senate

The Honorable F. James Sensenbrenner, Jr.
Chairman
The Honorable John Conyers, Jr.
Ranking Minority Member
Committee on the Judiciary
House of Representatives

Subject: Financial Management: Audit oftheWhite House Commission onthe
National Moment of Remembrance for Fiscal Years 2003 and 2002

The White House Commission on the National Moment of Remembrance
(Commission) was created on December 28, 2000, by the National Moment of
Remembrance Act (Act).1 The Commission received appropriated funds in
fiscal years 2003 and 2002. Its purpose is to sustain the American spirit
through acts of remembrance for those who died serving their country, not
only on Memorial Day, but also throughout the year. We are required by the
Act to audit the financial transactions of the Commission, and this report
covers our work on its fiscal years 2003 and 2002 financial transactions.

Results in Brief

We found that the Commission's financial records for fiscal years 2003 and
2002 were incomplete and that its financial record keeping lacked basic
internal controls. As a result, we were unable to audit the Commission's
financial transactions, and the Commission does not have reasonable
assurance that its records are accurate, that it has adequate information
for decision making, or that its funds are being spent as intended.

The Commission's records of financial transactions for fiscal years 2003
and 2002, including receipts and expenditures, were incomplete and not
regularly reconciled to the statements produced by the Department of
Veterans Affairs (VA) or General Services Administration (GSA), agencies
that provided the Commission with administrative and financial processing
services. In addition, significant amounts of

1Pub. L. No. 106-579, 114 Stat. 3078 (2000).

the Commission's expenditures for fiscal years 2003 and 2002 were not
supported by documentation.

Without such basic internal controls as documentation to support
transactions and the reconciliation of transactions recorded by the
Commission to the actual receipts and expenditures processed by VA and
GSA, the Commission does not have reasonable assurance that its financial
information is complete and accurate, that its funds are being spent as
intended, and that financial and programmatic decisions are based on
complete and accurate information.

The Commission's difficulties in financial record keeping and internal
controls result, in part, from the Commission's lack of staffing and
financial expertise. The Commission depends on temporary and part-time
detailees from other agencies, and has never had the full level of
staffing called for in its authorizing legislation.

When the Commission received its initial appropriations in 2002, the
Commission assumed several program activities2 of No Greater Love, a
nonprofit organization founded in 1971 by the Commission's current White
House Liaison and Executive Director. The Commission also shares office
space, services, and personnel with No Greater Love. Although the Act
allows the Commission to enter into cooperative agreements with private
entities in carrying out its duties, the respective program sponsorship
costs borne by the Commission and No Greater Love have not been accounted
for and documented clearly. Without clear accountability and transparency
of activities and related costs for each entity, donors and Congress are
at risk of not knowing which programs they are supporting.

Congress may wish to consider amending the National Moment of Remembrance
Act to make the Commission an independent entity within VA. Retaining the
Act's provisions regarding the Commission's duties and powers but placing
the Commission within VA would require VA to assume responsibility for the
Commission's administrative functions. These would include maintaining the
Commission's accounting records, processing the Commission's transactions,
and performing personnel and payroll services. The Commission currently
has an interagency agreement with VA for administrative services, but
making the Commission an entity within VA could streamline this
arrangement and make it more efficient. In addition, the Commission's
mission of remembering those who have served the country is related to
that of VA, and the two organizations could achieve synergy by working
together on their complementary missions.

If Congress chooses not to act upon the matter for congressional
consideration discussed above, we are recommending that the Commission
develop and implement basic financial record keeping and internal
controls; consider hiring accounting or bookkeeping assistance; and
clearly account for its finances separately from those of No Greater Love.
The Commission agreed with our recommendations for executive action and is
taking initial steps to implement some of the recommendations. However,
the Commission expressed concerns regarding the matter for

2The activities assumed are "remembrance programs," which have as their
purpose promoting remembrance of those who have died for our country,
those who have served our country, and those who continue to serve our
country.

congressional consideration. We continue to believe that making the
Commission an independent entity within VA presents a viable and practical
alternative for resolving the Commission's internal control and financial
reporting weaknesses described in this report.

Objective, Scope, and Methodology

Our objective was to audit the Commission's financial transactions
(donations and expenditures) recorded during fiscal years 2003 and 2002
for proper supporting documentation and management approval. Because the
Commission did not maintain complete accounting records, we were unable to
perform an audit. Instead, our work was limited to a review of those
transactions recorded for the Commission by VA and GSA. Therefore there is
a risk that there could be unrecorded transactions for services that the
Commission purchased but for which it did not forward invoices to VA or
GSA for payment. When possible, we traced the recorded transactions to
supporting documentation, including contracts, invoices, credit card
statements, and travel vouchers. However, because the Commission lacked
supporting documentation for a significant portion of its transactions, we
were unable to perform an audit of the Commission's transactions.

We obtained an understanding of the accounting procedures and related
internal controls of the Commission and the financial accounting and other
services provided by VA and GSA.

We performed our work in Washington, D.C., from November 2003 through
March 2004 in accordance with U.S. generally accepted government auditing
standards. We requested comments on a draft of this report from the White
House Liaison and Executive Director of the White House Commission on the
National Moment of Remembrance and from the Secretary of Veterans Affairs.
We received written responses from both the Commission and VA. Those
comments are addressed in a later section of this report and included in
enclosures I and II, respectively.

Background

Section 6 of the Act3 states that the Commission's duties are to

(1) encourage the people of the United States to give something back to
their country, which provides them so much freedom and opportunity;

(2) encourage national, state, local, and tribal participation by
individuals and entities in commemoration of Memorial Day and the National
Moment of Remembrance, including participation by

(a) national humanitarian and patriotic organizations,

(b) elementary, secondary, and higher education institutions,

(c) veterans' societies and civic, patriotic, educational, sporting,
artistic,

cultural, and historical organizations, (d) federal departments and
agencies, and (e) museums, including cultural and historical museums; and

3114 Stat. at 3080.

(3) provide national coordination for commemorations in the United States
of Memorial Day and the National Moment of Remembrance.

In fiscal year 2003, Congress appropriated $250,000 directly to the
Commission.4 In fiscal year 2002, Congress provided that $500,000 of a
larger appropriation was available for the Commission.5

We met with the Commission's Executive Director and staff on several
occasions late in 2002 to gain an understanding of the financial records
and internal control environment. We held discussions with the Executive
Director on key accounting issues and internal controls that should be
established in order to achieve accountability over operations and to
facilitate future audits. In January 2003, we issued a letter to the
Commission stating that the fiscal year 2002 audit would be delayed until
the end of fiscal year 2003, so that the Commission could get its
financial records in order.

Although administrative support services were provided by other agencies,
the Commission's management is responsible for preparing accurate and
reliable financial reports reflecting its activities. The Commission is
also responsible for establishing, maintaining, and assessing internal
control6 to provide reasonable assurance that internal control objectives
are met. The Commission engaged VA in fiscal year 2003 and GSA in fiscal
year 2002 for administrative support services, including payment of the
Commission's bills and personnel and payroll services. VA processed the
Commission's obligations, expenditures, and cash donation transactions
recorded during fiscal year 2003. GSA processed the Commission's
obligation and expenditure transactions during fiscal year 2002. The
Commission entered into interagency agreements with both VA and GSA for
their services. The interagency agreements provided the terms of payment
for the services.

When the Commission was funded in 2002, it assumed several of the program
activities of No Greater Love, a nonprofit established in 1971, and the
founder of No Greater Love was appointed as the Commission's White House
Liaison and Executive Director. The founder resigned her position with No
Greater Love in April 2002. According to No Greater Love's 2002 financial
statements, the organization's primary program is to sponsor programs of
friendship for and care of children of servicemen missing or killed in
action, hospitalized veterans, servicemen overseas, and senior citizens
without families.

The Act allows for the Commission's close involvement with other entities.
Section 8(f) of the Act explicitly authorizes the Commission to enter into
cooperative

4Pub. L. No. 108-7, 117 Stat. 11, 460 (2003).
5Pub. L. No. 107-117, Stat. 2230, 2299 (2002).
6According to our Standards for Internal Control in the Federal
Government, management's internal
control responsibility encompasses controls related to (1) the
effectiveness and efficiency of
operations, including the use of resources; (2) the reliability of
financial reporting, including internal
and external reports on the use of resources and financial statements; and
(3) compliance with
applicable laws and regulations. Within each of these categories,
management is responsible for
establishing controls to prevent or promptly detect unauthorized
acquisition, use, or disposition of
assets. See U.S. General Accounting Office, Standards for Internal Control
in the Federal
Government, GAO/AIMD-00-21.3.1 (Washington, D.C.: November 1999).

agreements that involve private, as well as government, entities in
assisting the Commission to carry out its duties. The Act further
authorizes the Commission to

                                       7

accept program support from nonprofit organizations. While the Commission
may accept assistance and support from other entities, and in so doing
engage in jointly funded activities, the Act does not provide for the
Commission to use its appropriations for anything other than carrying out
its statutory duties.

The Act also provides that the Commission will receive six employees-one
each from the Army, Air Force, Navy, Marines, VA, and Department of
Education- detailed to assist the Commission in carrying out the Act.
During fiscal years 2003 and 2002, the assignment and service of the
details was inconsistent. The Commission never had more than two detailees
at one time except for 30 working days in 2002 and 2003, and most of the
staff detailed from the other agencies did not complete their full terms.

Commission Financial Records Were Incomplete and Lacked Supporting
Documentation

We found that the Commission's financial records for fiscal years 2003 and
2002 were incomplete. The Commission also lacked basic documentation for
its expenditures. As a result, it does not have reasonable assurance that
its financial records are accurate or that its funds are being spent as
intended. (See table 1.)

                    7Pub. L. No. 106-579, 114 Stat. at 3084.

Table 1: White House Commission on National Moment of Remembrance Schedule
of Management and Documentation Support for Fiscal Years 2003 and 2002
Expenditures (Unaudited)

                 Expenditures Fiscal year 2003 Fiscal year 2002

    (January -September) White House Liaison and Executive $164,366 $111,953

a

Director salary and benefits

b

                          Programs and administration

          Supported by documents and              48,245               45,869 
            approved by management                            
        Supported by documents but not            13,075               10,415 
            approved by management                            
           Unsupported by documents              51,279c              66,968d 
       Programs and administration total         $112,599            $123,252 
                     Total                       $276,965            $235,205 

Sources: VA, GSA, and the White House Commission on National Moment of
Remembrance.

aFor fiscal year 2003, VA records showed salary and benefits of $164,366,
and for fiscal year 2002, GSA records showed salary and benefits of
$111,953; however, the Commission did not maintain support for salary and
benefits.

bFor fiscal year 2003, the program and administration amount presented is
from VA records of amounts processed, which showed $7,105 more than the
recorded expenditures in the Commission's database. For fiscal year 2002,
the amount presented is from GSA records of amounts processed, which
showed $29,204 more than the recorded expenditures in the Commission's
database.

cThe Commission's contract with VA to provide payroll and accounting
services for fiscal year 2003 totaled $34,237; however, the Commission did
not maintain support for the actual amounts paid.

dThe Commission's contract with GSA to provide payroll and accounting
services for fiscal year 2002 totaled $46,513; however, the Commission did
not maintain support for the actual amounts paid.

Fiscal Year 2003

In fiscal year 2003, the Commission received an appropriation of $250,000.
According to VA, the Commission also received cash donations of $5,140
during fiscal year 2003. According to the Commission, it also received
various in-kind donations------such as calendars, phone service, and Web
site design and hosting at a value estimated by the Commission as
approximately $43,149 during fiscal year 2003. Office space was also
donated, but the Commission did not provide an estimated value. The
Commission did not record the cash donations or completely record in-kind
donations received in fiscal year 2003.

We also found that the Commission did not reconcile its recorded
expenditures to those processed by VA on behalf of the Commission. As a
result, the Commission lacks assurance that its recorded expenditures are
complete and accurate. Of the Commission's $276,965 expenditures processed
by VA for fiscal year 2003, $164,366 was for the White House Liaison and
Executive Director's salary and benefits. Of the remaining $112,599
recorded by the Commission as spent on programs and administration for
fiscal year 2003, $61,320 was supported by documentation and $51,279
lacked supporting documentation. Of the $61,320 in supported transactions,
$13,075 did not have documentation indicating approval by management. (See
table 1.) During our review, we noted expenditure transactions that were
recorded more than once in the Commission's financial records and
transactions that were not recorded at all.

Fiscal Year 2002

In fiscal year 2002, the Commission similarly lacked basic supporting
documentation and reconciliation procedures for its expenditure
transactions. For fiscal year 2002, the Commission received an
appropriation of $500,000. Because the funding was provided in January
2002, the Commission was operational for approximately 9 months of the
fiscal year (January 10, 2002, through September 30, 2002). According to
the Commission, it received no cash donations for fiscal year 2002 but did
receive various in-kind donations-including office supplies, phone
service, and Web site design and hosting at a value estimated by the
Commission as approximately $91,353. The Commission did not record the
in-kind donations received in 2002 in its financial records. Of the
$235,205 in expenditures processed by GSA during fiscal year 2002,
$111,953 was for the White House Liaison and Executive Director's salary
and benefits. Of the remaining $123,252 recorded by the Commission for
programs and administration, $56,284 was supported by documentation and
the remaining $66,968 lacked documentation. Of the $56,284 in supported
transactions, $10,415 did not have documentation indicating approval by
management. (See table 1.)

Fiscal Years 2003 and 2002

For both fiscal years 2003 and 2002, basic internal controls did not exist
for recording transactions and reconciling recorded transactions to funds
received and expenditures. In addition, the majority of the Commission's
fiscal year 2002 expenditures were not coded by expense category or
obligation number. As a result, VA or GSA had to designate, without
knowledge of the nature of the transactions, what type of expenditure was
being made in each transaction. For both fiscal years 2003 and 2002, we
noted that the Commission's financial records were not reconciled to the
VA and GSA records, respectively. Without such basic internal controls as
documentation, management approvals, complete transaction records, and
reconciliation, the Commission does not have reasonable assurance that its
financial information is complete and accurate, that its funds are being
spent as intended, and that financial and programmatic decisions can be
based on complete and accurate information. Retaining supporting
documentation, such as invoices for goods or services purchased;
management approval; and recording transactions are all basic internal
control activities.

Because the financial records and documentation for fiscal years 2003 and
2002 were incomplete, unsupported, and not reconciled, we were not able to
audit the Commission's financial records.

The Commission's difficulties in maintaining its financial records result,
in part, from the lack of staffing and financial expertise. The only
full-time employee is the White House Liaison and Executive Director. The
Commission has had the assistance of several detailees from the military
service branches and VA, as authorized by legislation; however, it has
never had its full authorized staffing levels called for in its
authorizing legislation, and except for one, the detailees assigned to the
Commission did not serve the full period to which the military service
branch or VA had committed. No Greater Love has loaned staff to the
Commission, but the staff were generally short term and did not have a
financial background.

Commission's Mission, Operations, and Use of Resources Overlap with Those
of a Related Organization

The Commission lacks accountability for and internal control over its own
transactions, as well as accountability and internal control over
resources and activities it shares with No Greater Love. The Commission
operates in the same location and with a similar purpose as No Greater
Love. Both organizations share personnel and services and have cosponsored
programs. However, the respective costs born by each entity in sponsoring
programs have not been accounted for and documented clearly.

Even though the Act allows the Commission to be closely involved with
entities in carrying out its duties, because the Commission receives
federal appropriations, there is an increased fiduciary responsibility for
all parties to account for the funds received and activities conducted.
Without the clear accountability of each entity for its own activities and
costs and without transparency in those activities and costs, donors and
Congress are at risk of not knowing which programs their funds are
supporting.

Matter for Congressional Consideration

Congress may wish to consider amending the National Moment of Remembrance
Act to make the Commission an independent entity within VA. Retaining the
Act's current provisions regarding the Commission's duties and powers, but
placing the Commission within VA, would require VA to assume
responsibility for the Commission's administrative functions. This would
include maintaining the Commission's accounting records, processing the
Commission's transactions, and performing personnel and payroll services.
The Commission currently has an interagency agreement with VA for
administrative services, but making the Commission an entity within VA
could streamline this arrangement and make it more efficient. In addition,
the Commission's mission of remembering those who have served the country
is related to that of VA, and the two organizations could achieve synergy
by working together on their complementary missions.

Recommendations for Executive Action

If Congress chooses not to act on the matter for congressional
consideration, then in order to achieve basic accountability for, and
internal control over, its transactions and properly account for
related-party activities, we recommend that the White House Liaison and
Executive Director of the Commission

o  	consider hiring a bookkeeping service on a part-time basis to help
maintain the Commission's financial records, including producing year-end
summaries and reconciliations;

o  	maintain a complete record or log of Commission financial
transactions, including all appropriations, donations, revenues,
obligations, and expenditures;

o  	develop and implement procedures to properly approve all invoices
prior to payment;

o  	require that all invoices are properly coded to indicate type of
expense on a timely basis;

o  	develop procedures to ensure that all transactions are supported by
appropriate documentation;

o  	reconcile, at least monthly, the Commission's financial records or
logs to the statements showing obligations and expenditures that were
actually processed; and

o  	develop a clear accountability for expenditures8 related to the
Commission's operations, including transactions with No Greater Love.

Agency Comments and Our Evaluation

We received written comments from the Executive Director and White House
Liaison of the Commission and the Secretary of Veterans Affairs. These
comments are reprinted in enclosures I and II, respectively. The
Commission agreed with our recommendations for executive action and is
taking initial steps to implement some of the recommendations. For
example, the Commission is working to finalize procedures for processing,
reviewing, and approving financial transactions and plans to retain an
accountant to perform monthly financial reconciliations. In addition, the
Commission has stated that in order to achieve better accountability for
the two organizations, it will no longer cosponsor any programs with No
Greater Love, and as of the end of June 2004, the Commission will no
longer share office space with No Greater Love.

The Commission did not agree with the matter we raised for congressional
consideration, that the Commission be made an independent entity within
VA. The Commission stated that its mission requires it to work with
numerous departments throughout the government and becoming an entity
within VA might create the appearance of a conflict of interest. The
Commission's Executive Director also believes that making the Commission
an entity within VA would be limiting to the Commission's unique and
specific mission and detrimental to its ability to meet changing demands
and priorities. The Commission also expressed concern that the matter for
congressional consideration does not ensure that it will receive
resources------funds and people------necessary to accomplish its mission.
The Commission also suggested that Congress may want to consider
alternative methods for providing the Commission with resources and
funding.

We agree that there are alternative methods for strengthening the
Commission and providing resources to the Commission. We continue to
believe that the alternative presented in this letter------making the
Commission an independent entity within VA-----is a viable and practical
alternative. We believe that the Commission should work with both VA and
its congressional stakeholders to arrive at mutually agreeable

8Expenditures related to office space, personnel, office equipment, and
joint remembrance projects.

solutions for achieving accountability, streamlined administrative
processes, appropriate staffing levels, and the autonomy needed to achieve
the Commission's mission.

VA deferred to the Commission's views in regards to the matter for
congressional consideration.

We are sending copies of this report to the Chairmen and Ranking Minority
Members
of the Senate Committee on Appropriations and the House Committee on
Appropriations; the Chairman of the White House Commission on the National
Moment of Remembrance; the Secretary of Veterans Affairs; and other
interested
parties. This report will also be available on our home page at
http://www.gao.gov.

If you or your staff have any questions, please contact me at (202)
512-9471 or by
e-mail at [email protected] or Julie T. Phillips, Assistant Director, at
(202) 512-5121 or
by e-mail at [email protected]. Key contributors to this report were
Kimberley A.
McGatlin and Kara M. Scott.

Jeanette M. Franzel
Director
Financial Management and Assurance

Enclosures -- 2

--

Enclosure I

 Comments from the White House Commission on the National Moment of Remembrance

Enclosure II Comments from the Department of Veterans Affairs

                                    (194381)
*** End of document. ***