Financial Audit: American Battle Monuments Commission's Financial
Statements for Fiscal Year 2004 and 2003 (01-MAR-05, GAO-05-298).
In accordance with 36 U.S.C. 2103, GAO is responsible for
conducting audits of the agencywide financial statements of the
American Battle Monuments Commission (the Commission). GAO
audited the financial statements of the Commission for the fiscal
years ended September 30, 2004, and 2003. The audits were done to
determine whether, in all material respects, (1) the Commission's
financial statements were reliable, and (2) Commission management
maintained effective internal control over financial reporting
and compliance with laws and regulations. Also, we tested
Commission management's compliance with selected laws and
regulations. The American Battle Monuments Commission was created
in 1923 to commemorate the sacrifices and achievements of U.S.
Armed Forces where they have served overseas since April 6, 1917,
and locations within the United States as directed by Congress.
The Commission designs, administers, operates, and maintains 24
American military cemeteries on foreign soil and 25 federal
memorials, monuments, and markers, 22 of which are on foreign
soil. The Commission was also responsible for designing and
constructing the national World War II Memorial on the Capitol
Mall in Washington, D.C., and for maintaining 4 nonfederal
memorials with funds provided by those memorials' sponsors.
-------------------------Indexing Terms-------------------------
REPORTNUM: GAO-05-298
ACCNO: A18481
TITLE: Financial Audit: American Battle Monuments Commission's
Financial Statements for Fiscal Year 2004 and 2003
DATE: 03/01/2005
SUBJECT: Accounting standards
Auditing standards
Financial management
Financial records
Financial statement audits
Financial statements
Internal controls
Reports management
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GAO-05-298
United States Government Accountability Office
GAO Report to Congressional Committees
March 2005
FINANCIAL AUDIT
American Battle Monuments Commission's Financial Statements for Fiscal Years
2004 and 2003
a
GAO-05-298
[IMG]
March 2005
FINANCIAL AUDIT
American Battle Monuments Commission's Financial Statements for Fiscal Years
2004 and 2003
What GAO Found
In our opinion, the financial statements of the American Battle Monuments
Commission as of September 30, 2004, and 2003, and for the fiscal years
then ended, are presented fairly, in all material respects, in conformity
with U.S. generally accepted accounting principles. Also in our opinion,
the Commission maintained effective internal control over financial
reporting (including safeguarding of assets) and compliance with laws and
regulations as of September 30, 2004. In addition, we found no instances
of Commission noncompliance in fiscal year 2004 with selected provisions
of laws and regulations we tested.
However, our work identified inadequate controls over information
technology in two areas and improper recognition of property additions and
accrued liabilities as of September 30, 2004, that we considered to be
reportable conditions. The Commission recorded accounting adjustments to
correct its property and accrued liabilities at year-end and is working to
improve internal controls in all these areas during fiscal year 2005.
For fiscal year 2004, the Commission spent $40.4 million of appropriated
funds to maintain its 24 cemeteries and 25 federal memorials. It also
spent $47.5 million of private contributions and investment earnings,
primarily for construction-in-progress of the World War II Memorial that
was dedicated on Memorial Day weekend in May 2004. On November 1, 2004,
the Commission formally transferred the World War II Memorial to the
National Park Service, which assumed responsibility for its perpetual
care.
May 2004: President Bush Dedicates the WWII Memorial, Washington, D.C.
Source: Commission photo by Richard Latoff.
United States Government Accountability Office
Contents
Letter 1
Auditor's Report 3
Opinion on Financial Statements 3
Opinion on Internal Control 3
Reportable Conditions 4
Compliance with Laws and Regulations 6
Consistency of Other Information 6
Objectives, Scope, and Methodology 6
Commission Comments 9
Appendix
Appendix I:
Annual Financial Report of the American Battle Monuments
Commission 10
Annual Financial Report 10
Management's Discussion and Analysis 11
Consolidating Balance Sheet 20
Consolidating Statement of Net Cost and Changes in Net
Position 21
Consolidating Statement of Budgetary Resources 22
Consolidating Statement of Financing 23
Notes to the Consolidating and Consolidated Financial
Statements 24
Required Supplementary Stewardship Information 32
Statements of Heritage Assets 33
Note to Statements of Heritage Assets 36
Abbreviations
FMFIA Federal Managers' Financial Integrity Act of 1982
OMB Office of Management and Budget
This is a work of the U.S. government and is not subject to copyright
protection in the United States. It may be reproduced and distributed in
its entirety without further permission from GAO. However, because this
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separately.
A
United States Government Accountability Office Washington, D.C. 20548
March 1, 2005
The Honorable Larry E. Craig
Chairman
The Honorable Daniel K. Akaka
Ranking Minority Member
Committee on Veterans' Affairs
United States Senate
The Honorable Steve Buyer
Chairman
The Honorable Lane Evans
Ranking Minority Member
Committee on Veterans' Affairs
House of Representatives
In accordance with 36 U.S.C. 2103, this report presents the results of our
audits of the American Battle Monuments Commission's (the Commission)
financial statements for the fiscal years ended September 30, 2004, and
2003.
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. We are also sending copies to the Secretary
of the Treasury, the Director of the Office of Management and Budget, the
Chairman of the Commission, and other interested parties. In addition,
this
report will be available at no charge on the GAO Web site at
http://www.gao.gov.
Should you or your staffs have any questions concerning this report,
please
contact me at (202) 512-3406 or Roger R. Stoltz, Assistant Director, at
(202)
512-9408. Key contributors to this engagement were Patricia A. Summers,
West E. Coile, Brooks A. Bare, Cara L. Bauer, Kimberly A. Tibbs, James S.
Maziasz, and Joel Rodriguez.
Steven J. Sebastian
Director
Financial Management and Assurance
A
United States Government Accountability Office Washington, D.C. 20548
To the Chairman of the American Battle Monuments Commission
In accordance with 36 U.S.C. 2103, we are responsible for conducting
audits of the agencywide financial statements of the American Battle
Monuments Commission (the Commission). In our audits of the Commission's
financial statements for fiscal years 2004 and 2003, we found
o the consolidating financial statements as of and for the fiscal year
ended September 30, 2004, and comparative consolidated totals as of and
for the fiscal year ended September 30, 2003, are presented fairly, in all
material respects, in conformity with U.S. generally accepted accounting
principles;
o although internal controls should be improved, the Commission
maintained effective internal control over financial reporting (including
safeguarding assets) and compliance with laws and regulations as of
September 30, 2004; and
o no reportable noncompliance with laws and regulations we tested.
The following sections discuss in more detail (1) these conclusions and
our conclusions on Management's Discussion and Analysis and other
supplementary information and (2) the objectives, scope, and methodology
of our audit.
Opinion on Financial The American Battle Monuments Commission's
consolidating balance sheet as of September 30, 2004, and its related
consolidating statements of
Statements net cost and changes in net position; budgetary resources; and
financing, with accompanying notes for the fiscal year then ended, and
comparative consolidated totals as of and for the fiscal year ended
September 30, 2003, are presented fairly, in all material respects, in
conformity with U.S. generally accepted accounting principles.
Opinion on Internal The Commission maintained, in all material respects,
effective internal control over financial reporting (including
safeguarding assets) and
Control compliance as of September 30, 2004, that provided reasonable
assurance that misstatements, losses, or noncompliance material in
relation to the
consolidating financial statements or to stewardship information would be
prevented or detected on a timely basis. Our opinion is based upon
criteria established under 31 U.S.C. 3512 (c), (d) [Federal Managers'
Financial Integrity Act (FMFIA)], and Office of Management and Budget
(OMB) Circular No. A-123, Management Accountability and Control (June 21,
1995).
However, our work identified the need to improve certain internal
controls, as described below, that we consider reportable conditions.
Reportable conditions are significant deficiencies in the design or
operation of internal control that, in our judgment, could adversely
affect the Commission's ability to meet internal control objectives or
meet OMB criteria for reporting matters under FMFIA. In addition,
misstatements may occur in other Commission financial information not
included in this report as a result of these reportable conditions.
Reportable Conditions During our audit we noted deficiencies in controls
over information technology systems and improper recognition of property
additions and accrued liabilities as of September 30, 2004. Commission
management disclosed the information technology and accrued liability
conditions in its fiscal year 2004 FMFIA report and is working to
implement corrections for all internal control deficiencies. The issue of
improper recognition of property additions for fiscal year 2004 was
identified by us after the Commission had filed its 2004 FMFIA report.
Deficient Controls over Information Technology Systems
Inadequate controls over information technology systems were identified in
the two following areas.
o User documentation: While the Commission's existing accounting system,
implemented on October 1, 2001, has adequate user documentation, there
continued to be a lack of user documentation to support its older legacy
subsystems that were still used during fiscal year 2004, primarily for
payroll. This condition has existed since our first audit of the
Commission's financial statements in fiscal year 1997 and includes the
Clipper system used by the European Regional Office and the dBase IV
system used by the Mediterranean Regional Office. Commission personnel
have learned how to use these legacy subsystems over the years primarily
through on-the-job training and have limited support to explain how
subsystems functions should be
performed and to answer questions. In January 2004, payroll processing for
the Commission's General Schedule employees was converted to the General
Services Administration. Payroll processing for all of the Commission's
Foreign Service National employees was in negotiation for conversion later
in fiscal year 2005. Thus, while the Commission has made some progress,
further efforts to improve user documentation are needed.
o Security program and access controls: During our fiscal year 2004
audit, we continued to identify some security controls over the
Commission's computer system, such as administrative controls over network
configuration, passwords, and access to files, that were not effective at
all Commission locations as of September 30, 2004. Since the installation
of the Commission's automated accounting system in fiscal year 2002, we
have conducted annual security and general controls reviews. In separate
Limited Official Use reports issued after our fiscal years 2002 and 2003
audits, we communicated detailed information and made 49 and 105 specific
recommendations, respectively, to strengthen Commission internal controls
in information technology, accounting procedures, financial reporting, and
cash management. While the Commission has implemented a number of these
recommendations, further efforts will be needed to correct the remaining
weaknesses during fiscal year 2005.
Improper Recognition of Property Additions and Accrued Liabilities
As of September 30, 2004, the Commission's European Regional Office had
not properly recognized almost $1 million of property additions and
omitted $0.3 million of accrued liabilities for accounts payable and
accrued salaries and benefits from the Commission's accounting records.
This condition also resulted in misstating General Fund fiscal year 2004
expenses by a corresponding amount. While the cutoff of accrued
liabilities at the Commission's European Regional Office has improved in
fiscal year 2004 compared to the $1.1 million of unrecorded accrued
liabilities we identified in fiscal year 2003, it continues to be a
reportable condition. We believe that the fiscal year 2004 condition was
caused by early year-end closing of the accounting records and a lack of
understanding at the Commission's European Regional Office of
capitalization concepts and proper year-end cutoff as required by accrual
accounting. Proper expensing of heritage asset additions, while
capitalizing and depreciating general property additions over $25,000, is
necessary for proper presentation. Proper cutoff of accrued liabilities
for goods, services, and benefits received in fiscal year 2004, but
invoiced and
paid in fiscal year 2005, is also necessary for proper presentation. The
Commission subsequently recognized these property additions and accrued
liabilities through accounting adjustments in order to fairly present its
financial statements for fiscal year 2004 in conformity with U.S.
generally accepted accounting principles.
Compliance with Laws Our tests of the Commission's compliance with
selected provisions of laws and regulations for fiscal year 2004 disclosed
no instances of
and Regulations noncompliance reportable under U.S. generally accepted
government auditing standards or OMB audit guidance. 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.
Consistency of Other Information
The Commission's Management Discussion and Analysis and stewardship
statements of heritage assets and an accompanying note contain a wide
range of data, some of which are not directly related to the financial
statements. We do not express an opinion on this information. However, we
compared this information for consistency with the financial statements
and discussed the methods of measurement and presentation with officials
of the Commission. Based upon this limited work, we found no material
inconsistencies with the financial statements or nonconformance with OMB
guidance.
Objectives, Scope, and Methodology
Commission management is responsible for (1) preparing the financial
statements in conformity with U.S. generally accepted accounting
principles; (2) establishing, maintaining, and assessing internal control
to provide reasonable assurance that the broad internal control objectives
of FMFIA are met; and (3) complying with applicable laws and regulations.
We are responsible for obtaining reasonable assurance about whether (1)
the Commission's financial statements are presented fairly, in all
material respects, in conformity with U.S. generally accepted accounting
principles and (2) Commission management maintained effective internal
control that provides reasonable, but not absolute, assurance that the
following objectives were met.
o Financial reporting: Transactions are properly recorded, processed, and
summarized to permit the preparation of financial statements and
stewardship information in conformity with U.S. generally accepted
accounting principles, and assets are safeguarded against loss from
unauthorized acquisition, use, or disposition.
o Compliance with applicable laws and regulations: Transactions are
executed in accordance with (1) laws governing the use of budgetary
authority; (2) other laws and regulations that could have a direct and
material effect on the financial statements; and (3) any other laws,
regulations, or governmentwide policies identified by OMB guidance.
We are also responsible for (1) testing compliance with selected
provisions of laws and regulations that have a direct and material effect
on the financial statements and for which OMB guidance requires testing
and (2) performing limited procedures with respect to certain other
information appearing in the Commission's annual financial report. In
order to fulfill these responsibilities, we
o examined, on a test basis, evidence supporting the amounts and
disclosures in the financial statements;
o assessed the accounting principles used and significant estimates made
by Commission management;
o evaluated the overall presentation of the financial statements;
o obtained an understanding of internal control related to financial
reporting (including safeguarding assets) and compliance with laws and
regulations (including execution of transactions in accordance with budget
authority);
o obtained an understanding of the recording, processing, and summarizing
of performance measures as reported in Management's Discussion and
Analysis;
o tested relevant internal controls over financial reporting and
compliance, and evaluated the design and operating effectiveness of
internal control;
o considered the process for evaluating and reporting on internal control
and financial management systems under FMFIA; and
o tested compliance with selected provisions of the following laws:
o The Commission's enabling legislation codified in 36 U.S.C. Chapter 21,
o Public laws applicable to the World War II Memorial Fund,
o Departments of VA and HUD, and Independent Agencies Appropriations Act
2004,
o Antideficiency Act,
o Pay and Allowance System for Civilian Employees, and
o Prompt Payment Act.
We did not evaluate all internal controls relevant to operating objectives
as broadly defined by FMFIA, such as those controls relevant to preparing
statistical reports and ensuring efficient operations. We limited our
internal control testing to those 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
our evaluation to future periods is subject to the risk that controls may
become inadequate because of changes in conditions or that the degree of
compliance with controls may deteriorate.
We did not test compliance with all laws and regulations applicable to the
Commission. We limited our tests of compliance to those required by OMB
audit guidance that we deemed applicable to the Commission's financial
statements for the fiscal year ended September 30, 2004. We caution that
noncompliance may occur and not be detected by these tests and that such
testing may not be sufficient for other purposes.
We performed our work in accordance with U.S. generally accepted
government auditing standards and OMB audit guidance.
Commission Commission management was provided with a draft of this report
and Comments concurred with its facts and conclusions.
Steven J. Sebastian
Director
Financial Management and Assurance
January 31, 2005
Appendix I
Annual Financial Report of the American Battle Monuments Commission
Annual Financial Report
ANNUAL FINANCIAL REPORT
THE AMERICAN BATTLE MONUMENTS COMMISSION
FOR THE YEAR ENDED SEPTEMBER 30, 2004
Appendix I Annual Financial Report of the American Battle Monuments
Commission
Management's Discussion and Analysis
AMERICAN BATTLE MONUMENTS COMMISSION
ANNUAL FINANCIAL REPORT
MANAGEMENT'S DISCUSSION AND ANALYSIS (MDA)
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2004
Commission Profile
Since 1923, the mission of the American Battle Monuments Commission (the
Commission) has been to (1) commemorate the achievements and sacrifices of
United States Armed Forces where they have served since April 6, 1917,
through the erection and maintenance of suitable memorial shrines; (2)
design, construct, operate and maintain permanent American military burial
grounds in foreign countries; (3) control the design and construction on
foreign soil of U.S. military memorials, monuments, and markers by other
U.S. citizens and organizations, both public and private; and (4)
encourage U.S. governmental agencies and private individuals and
organizations to adequately maintain the memorials, monuments, and markers
erected by them on foreign soils. Our fiscal year 2004 appropriation
supported our continued commitment to the worldwide responsibilities that
flow from this mission.
In performance of its mission, the Commission administers, operates and
maintains 24 permanent American military cemeteries; 25 federal memorials,
monuments, and markers; and 4 nonfederal memorials. While 3 memorials are
located in the United States, the remaining memorials and all of our
cemeteries are located in 14 foreign countries, the U.S. Commonwealth of
the Northern Mariana Islands, and the British dependency of Gibraltar.
These cemeteries and memorials are among the most beautiful and
meticulously maintained shrines of their nature in the world. Interred in
the cemeteries are 124,917 U.S. War Dead: 30,922 of World War I, 93,245 of
World War II, and 750 of the Mexican American War. Additionally, 6,114
American Veterans and others are interred in the Mexico City and Corozal
Cemeteries. The World Wars and Mexico City Cemeteries are closed to future
burials except for the remains of U.S. War Dead found from time to time in
the World War I and II battle areas.
In addition to grave sites, the World War I and II cemeteries, together
with 3 memorials on U.S. soil, commemorate by name on Walls of the Missing
the 94,132 U.S. servicemen and women who were Missing in Action or lost or
buried at sea in their general region during the World Wars and the Korean
and Vietnam Wars.
Most of our facilities range in age from 44 to 90 years old with our
Mexico City Cemetery being over 150 years old. The permanent structures
and plantings, which make our facilities among the most beautiful
memorials in the world, are aging and require increased funding to
maintain them at the current standards. Accordingly, we prioritize the use
of our maintenance and engineering funds very carefully to ensure the most
effective utilization of our available resources. All of the plantings,
including the lawns and to some extent the meadows, must be cut and/or
shaped, fed and treated with insecticides and fungicides at regular
intervals during the growing season. The plantings also must be replaced
when their useful lives are exhausted or they receive major storm damage.
Appendix I Annual Financial Report of the American Battle Monuments
Commission
Appendix I Annual Financial Report of the American Battle Monuments
Commission
Operations Management
The Commission's fiscal year 2004 funding focused on personnel costs,
service fees, scheduled maintenance and repairs, supplies, materials,
spare parts, replacement of uneconomically repairable equipment, and
capital improvements, as well as funding toward completion of the design
and construction of the Normandy Cemetery Interpretive Center.
The Commission's fiscal year 2004 appropriation of $41,300,000 was
available for salaries and expenses of $32,300,000 and the design and
construction of the Normandy Cemetery Interpretive Center of $9,000,000. A
government-wide rescission of .0059 reduced the Commission's appropriation
by $243,670, causing it to reduce spending in much needed engineering
projects to accommodate this loss.
Within its fiscal year 2004 appropriation, the Commission also targeted
$2.0 million to continue an Infrastructure Modernization Program. As
previously noted, our cemeteries and their infrastructure are aging. With
the help of Congress and the Office of Management and Budget over the last
5 years, we have eliminated our backlog of deferred maintenance projects.
We must now continue our efforts to replace and/or upgrade outdated and
deteriorating systems.
The Infrastructure Modernization Program enables us to take a systemic
look at our infrastructure and address areas that will: (1) reduce the
growth of operational and routine maintenance costs; and (2) promote more
effective long-term planning and budgeting. The first phase of this
program, conducted during fiscal years 2000 and 2001, established a
baseline assessment of our installations by utilizing in-depth technical
surveys. These surveys, conducted by professional engineering firms
applying current industry standards, regulations, and technological
advances, assessed our electrical and structural systems and identified
what needed to be accomplished to our facilities. A subsequent study,
conducted in fiscal year 2002, examined our diverse water systems at each
facility. The second phase, which began in fiscal year 2002, addresses
corrective actions in electrical and structural systems. This phase will
continue through fiscal year 2006.
The shrines to America's War Dead entrusted to the Commission's care
require a formidable annual program of maintenance and repair of
facilities, equipments, and grounds. This care includes upkeep of over
131,000 graves and headstones and 73 memorial structures (within and
external to the cemeteries) on 1,641.2 acres of land. Additionally, the
Commission maintains 41 residential quarters for assigned personnel; 24
maintenance facilities; 67 miles of roads and walkways; 911 acres of
flowering plants, fine lawns, and meadows; nearly 3 million square feet of
shrubs and hedges; and over 11,000 ornamental trees.
Care and maintenance of these resources is exceptionally labor intensive,
thus personnel costs accounted for 61 percent of the Commission's fiscal
year 2004 obligations. The remaining 39 percent funded other operating
costs. Figure 2 below shows the obligation of funds by object class under
the Commission's fiscal year 2004 obligations.
Appendix I Annual Financial Report of the American Battle Monuments
Commission
Appendix I Annual Financial Report of the American Battle Monuments
Commission
Goal 4. Modernize the Commission's accounting systems and funding
processes to ensure funding obtained is utilized and accounted for in the
most effective manner.
Goal 5. Establish a World War II Memorial in the Washington, D.C. area to
honor those who served in the Armed Forces of the United States during
World War II and commemorate the participation of the nation in that war.
Performance against these goals was measured within the framework
established by the President's Management Agenda and the Commission's
strategic plan.
President's Management Agenda Initiatives
The Commission made significant progress in the implementation of each
item within the President's Management Agenda as follows.
Strategic Management of Human Capital
Managing our human capital demands that we have the right person with the
right skills in every position. In fiscal year 2002 we began a worldwide
manpower study, which would outline our manpower requirements, position
descriptions, workloads, and manpower distribution to ensure that we
deploy our workforce properly. We expect to receive the final report in
the second quarter of fiscal year 2005 and will review and implement the
study recommendations through the remainder of the year and into fiscal
year 2006.
Competitive Sourcing
We have used competitive sourcing initiatives in a number of ways to
improve performance and save costs. Our fiscal year 2004 budget contained
funding for upgrades, hosting, and 24-hour support of our financial
management system. These funds allowed us to outsource support to
contractors experienced in providing such services and enabled us to
support our worldwide operations without doubling the size of our
financial management staff. The resources devoted to our Infrastructure
Modernization Program and engineering programs largely supported
competitive sourcing of our infrastructure improvement efforts, allowing
our government employees to focus on our daily mission of maintaining our
cemeteries while implementing complex systems and upgrading our physical
plant. Most of our construction and engineering projects were contracted
out, since these projects are usually unique and beyond the capability of
our limited staff.
Improved Financial Performance
Since fiscal year 1997, the Commission has been required to produce
financial statements and the Comptroller General of the United States has
been required to independently audit these statements. Each year, the
Commission has earned an unqualified opinion on its financial statements
from the Government Accountability Office. However, we recognize that
improved financial performance is more than achieving an unqualified audit
opinion. It is about putting useful and timely information in the hands of
Commission management with which they can make informed decisions. The
fiscal year 2004 budget not only supported our daily accounting
Appendix I Annual Financial Report of the American Battle Monuments
Commission
operations and proper internal controls, but allowed us to identify
additional management needs and reports to provide the best financial
information available.
Expanded E-Government
Over the last several years, the Commission has expanded access to
valuable information through the use of online tools. We maintain a Web
site that allows visitors to gather information on our organization, and
our cemeteries and memorials with their locations. We will continue our
efforts to enable citizens to make contributions to our flower funds
electronically through the use of credit cards. This will allow greater
ability for citizens to arrange for flowers to memorialize the memory of
loved ones who have made the ultimate sacrifice for our nation.
We also support the Administration's efforts to reduce the number of
payroll providers with the federal government. During fiscal year 2004,
the General Services Administration began providing payroll service to the
Commission for General Service employees. This service includes online
leave and earnings statements and other key pay and benefits information.
Budget and Performance Integration
A key element in linking budget and performance is having timely and
reliable financial data. We have achieved that with our integrated
financial system. Another key element is the process by which the
Commission ties performance within the organization to the budget
formulation process. In late fiscal year 2004, we began implementing a
Cemetery Evaluation Review System that uses existing policies and
standards to assess and prioritize both requirements and resources.
Evaluations and reviews form the basis for future budget requirements.
We are pressing forward in the budget process to ensure that our funding
requests support the objectives of the agency and the President's
Management Agenda.
Selected Performance Goals and Results
During fiscal year 2004, the Commission demonstrated an ability to achieve
performance results for its goals through a number of specific projects
that tie directly to its strategic goals as follows.
1. In support of next of kin and other customers who use our services, the
Commission provides burial and memorialization site information; letters
authorizing nonfee passports for members of the immediate family traveling
overseas primarily to visit the cemetery; in-country travel and
accommodation information; and upon arrival at the cemetery, escort to the
appropriate grave or memorialization site. Requesters are provided a
photograph that is taken of the appropriate headstone or section on the
Wall of the Missing, which is mounted on a color lithograph of the
cemetery or memorial where a serviceman or woman is buried or commemorated
by name. The Commission also purchases floral decorations with donor
funds, and the donor is provided with a photograph of the headstone or
Wall of the Missing with the decoration in place.
Appendix I Annual Financial Report of the American Battle Monuments
Commission
2. In addition to responding to inquiries by friends and relatives of the
War Dead interred or memorialized at its sites, the Commission also
provides information to the Executive Branch, Members of Congress, other
government agencies, historians, and other interested individuals. During
fiscal year 2004, the Commission responded to approximately 2,600
telephone calls, 3,400 letters, and 4,200 e-mail inquiries. In addition,
the Commission mailed out almost 3,000 cemetery lithographs and photos
during the year.
3. The Commission's Internet Website at www.abmc.gov provides visitors a
convenient, user friendly, method to access information on the Commission,
as well as its cemeteries, memorials, monuments, markers, and headquarters
operations. In addition, information on the U.S. War Dead from the Korean
War and those interred or commemorated at its World War I and World War II
cemeteries are accessible on the Web-site. The Commission redesigned its
Web site to be fully compliant with Section 508 of the Rehabilitation Act
(29 U.S.C. 794d), as amended by the Workforce Investment Act of 1998 (P.L.
105-220, Aug. 7, 1998). In this redesign effort, the Commission focused on
making electronic and information technology accessible to people with
disabilities.
4. For fiscal year 2004, more than 3 million American and foreign citizens
visited Commission cemeteries. Most visitors paid homage collectively to
the interred Honored War Dead. Many had more personal reasons for visiting
a friend or relative who never returned home from war. Regardless of the
visitors' motivations, Commission employees dedicated themselves to making
each visit gratifying and memorable.
5. Throughout the year, at sites around the world, the Commission hosted a
variety of special events and commemorations including celebrations for
Memorial Day, Independence Day, and Veterans Day. In addition, military
units held ceremonies to honor their fallen comrades, and local
organizations paid tribute to those who died while liberating their
regions. While some ceremonies received national attention, such as the
dedication of the World War II Memorial, or the 60th anniversary of D-Day,
many drew local attention only. All ceremonies reflected a solemn respect
for America's Honored War Dead, and appreciation for the sacrifices of all
veterans. The Commission also completed the major elements of the design
of the Normandy Cemetery Interpretive Center building during fiscal year
2004. Additionally, it hosted a groundbreaking ceremony on August 28,
2004.
6. With the dedication by the President of the United States of the World
War II Memorial on May 29, 2004, the Commission successfully completed its
largest construction project of the past 50 years. The dedication ceremony
concluded an 11-year effort to design, fund, and build the memorial, which
now stands on the National Mall as a lasting tribute to the service and
sacrifice of America's World War II generation. The memorial is one of
only four major structures on the Mall's central axis, a reflection of the
significance of the event it commemorates. The Commission's fund-raising
success and project stewardship resulted in an $18.3 million balance in
the WWII Memorial Trust Fund as of September 30, 2004, that will be
administered by the Commission solely to the benefit of the WWII Memorial
and its related programs.
Appendix I Annual Financial Report of the American Battle Monuments
Commission
7. The Commission completed the installation and dedication of the Vietnam
Veterans Memorial Plaque. In June 2000, the Commission acquired this
mission under P.L. 106214 to install a plaque that commemorates all those
who died after the end of the Vietnam conflict but as a direct result of
their service in that war. The Commission hosted an unveiling ceremony for
the new plaque on the renovated plaza at the Vietnam Veterans Memorial in
Washington, D.C. in July 2004.
8. The American Veterans of WWII, Korea, and Vietnam (AMVETS) and the
Robert R. McCormick Tribune Foundation have generously donated
chromatically tuned bells in carillons to enhance our overseas cemeteries.
AMVETS installed the first carillon in our Manila cemetery in 1985. They
subsequently formed a partnership with the foundation, and in April 2004
delivered a carillon to the Luxembourg American Cemetery, the 15th it has
donated over the years.
9. The Commission initiated a replacement and renovation program for old
headstones at the Oise-Aisne American Cemetery in Fere-en-Tardenois,
France, in fiscal year 2004. This program uses a computer controlled
engraving machine to renovate and refinish severely degraded headstones.
It took several years of planning to acquire the custom machine and
special tooling, as well as to establish the required training and
procedures for the program to work effectively and efficiently. Fiscal
year 2004 marks the start of this program, which will continue for many
years and will result in a marked improvement in the overall quality of
our cemetery headstones at a reduced cost.
The Commission will be reviewing and revising its mission, goals, and
performance criteria during the upcoming budget year.
Management Integrity: Controls, Systems, Compliance, and Challenges
The Commission is cognizant of the importance of, and need for, management
accountability and responsibility as the basis for quality and timeliness
of program performance, mission accomplishment, increased productivity,
cost effectiveness, and compliance with applicable laws. It has taken
measures to ensure that the annual evaluation of these controls is
performed in a conscientious and thorough manner according to OMB
regulations and guidelines and in compliance with 31 U.S.C. 3512 (c), (d),
commonly known as the Federal Managers' Financial Integrity Act (FMFIA).
The Commission's evaluation of its system of internal management practices
and controls during fiscal year 2004 revealed no material weaknesses. The
objectives of the Commission's internal management control policies and
procedures are to provide reasonable assurance that:
1. Obligations and costs are in compliance with applicable law.
2. Funds, property, and other assets are safeguarded against waste, loss,
unauthorized use, and misappropriation.
3. Revenue and expenditures applicable to agency operations are promptly
recorded and accounted for.
Appendix I Annual Financial Report of the American Battle Monuments
Commission
4. Programs are efficiently and effectively carried out in accordance with
applicable laws and management policy.
Based on its evaluation, the Commission concluded that there is reasonable
assurance that on the whole, it complies with the provisions of FMFIA. The
reasonable assurance concept recognizes that the cost of internal controls
should not exceed the benefits expected to be derived and that the
benefits reduce the risk of failing to achieve stated objectives.
Future Risks and Reactions
Current foreign currency losses threaten our ability to sustain our
day-to-day operations. In order to insulate the Commission's annual
appropriation against major changes in its purchasing power, Congress
enacted legislation in 1988 (codified in 36 U.S.C. 2109) to establish a
foreign currency fluctuation account in the U.S. Treasury. Cumulative
gains and losses brought the balance for this account to $5.5 million as
of September 30, 2003, after a $3.7 million net loss for fiscal year 2003.
Due primarily to unfavorable exchange rates between the U.S. dollar and
the European euro in fiscal year 2004, our foreign currency fluctuation
account experienced significant losses that reduced its balance to $0.8
million as of September 30, 2004. As a result, the Commission was forced
to curtail some engineering projects.
Current foreign currency losses also threaten special projects such as the
Normandy Interpretive Center. Beginning in fiscal year 2002, Congress
directed and provided appropriated funds to the Commission for the design
and construction of an interpretive center at the Normandy American
Cemetery near St. Laurent-sur-Mer, France. Congress appropriated $5.0
million in fiscal year 2002, $4.0 million in fiscal year 2003, and $9.0
million in fiscal year 2004, for a total of $18.0 million. For fiscal year
2005, the Commission requested and received $9.1 million to bring the
1
total project funding to $27.1 million. However, we estimate that from
$5.7 million to $7.2 million of additional funds from the foreign currency
fluctuation account will be required to maintain the equivalent buying
power during the construction. We appealed to the Office of Management and
Budget and Congress to support additional foreign currency appropriations
in fiscal year 2005 to support both our day-to-day operations and the
Normandy Interpretive Center and received $12.0 million of appropriations
for the foreign currency fluctuation account.
The Commission also faces additional risk in losing funds via
governmentwide rescissions to support ongoing operations in Afghanistan
and Iraq, or to support Homeland Security issues. In fiscal year 2004, the
Commission experienced a .0059 rescission totaling $243,670 and reduced
its spending in much-needed engineering projects to accommodate this loss
in funding. For fiscal year 2005 and beyond, the Commission expects
further governmentwide rescissions, which will require a reexamination of
priorities and a shift in funding to maintain its essential operations.
1 Less .0065 rescission of $26,000 in fiscal year 2003, .0059 rescission
of $53,100 in fiscal year 2004, and .0080 rescission of $72,800 in fiscal
year 2005.
Appendix I Annual Financial Report of the American Battle Monuments
Commission
Consolidating Balance Sheet
AMERICAN BATTLE MONUMENTS COMMISSION
CONSOLIDATING BALANCE SHEET
As of September 30, 2004
(With Comparative Consolidated Total as of September 30, 2003)
General Fund Trust Funds Total Funds Total Funds 2004 2003 Cemeteries
World Other and War II Trust Assets Memorials Memorial Funds Total Funds
Total
Intragovernmental: Fund balances with Treasury (note 2) $26,920,505
$13,773,377 $310,940 $41,004,822 $32,275,498 Treasury investments, net
(note 3) 5,102,869 8,280 5,111,149 58,188,624
Total 26,920,505 18,876,246 319,220 46,115,971 90,464,122
intragovernmental
Cash and foreign 576
accounts (note 4) 111,442 112,018 69,884
Property sale 352,671
receivable
Contributions
receivable, net 733,769 733,769 1,380,777
(note 5)
General property,
plant, & 2,481,017 2,481,017 1,514,384
equipment, net
(note 6)
Total Assets $29,512,964 $19,610,015 $319,796 $49,442,775 $93,781,838
Liabilities
Intragovernmental: Accounts payable $279,438 $787,015 $1,066,453
$3,733,912 Accrued salaries and benefits 389,963 389,963 139,435
Total intragovernmental 669,401 787,015 1,456,416 3,873,347
Accounts payable 1,855,067 506,676 $4,117 2,365,860 2,051,847
Other liabilities (note 7) 3,014,942 12,754 3,027,696 2,696,182
Total Liabilities 5,539,410 1,306,445 4,117 6,849,972 8,621,376
Commitments and contingencies (note 8)
Net Position (notes 9, 10)
Unexpended appropriations 23,981,588 23,981,588 22,804,842 Cumulative
results of operations (deficit) (8,034) 18,303,570 315,679 18,611,215
62,355,620
Total Net Position 23,973,554 18,303,570 315,679 42,592,803 85,160,462
Total Liabilities and Net Position $29,512,964 $19,610,015 $319,796
$49,442,775 $93,781,838
The accompanying notes are an integral part of these statements.
Appendix I Annual Financial Report of the American Battle Monuments
Commission
Consolidating Statement of Net Cost and Changes in Net Position
AMERICAN BATTLE MONUMENTS COMMISSION CONSOLIDATING STATEMENT OF NET COST
AND CHANGES IN NET POSITION For the Year Ended September 30, 2004 (With
Comparative Consolidated Total for the Year Ended September 30, 2003)
General Fund Trust Funds Total Funds Total Funds 2004 2003 Cemeteries
World Other and War II Trust Memorials Memorial Funds Total Total PROGRAM
COSTS (note 10)
Intragovernmental
program costs:
Operations and $2,610,749 $2,610,749 $2,385,701
maintenance
Design and $25,695,105 25,695,105 36,687,726
construction
Program costs
with the public:
Operations and 26,052,849 $156,154 26,209,003 28,881,843
maintenance
Fund raising 2,370,080 2,370,080 1,884,054
Administrative 1,712,123 1,712,123 1,080,009
Design and 17,614,518 79,009 17,693,527 2,063,817
construction
Memorial costs 111,708 111,708 158,887
Property, plant
and equipment 3,592,586 2,404 3,594,990 2,882,529
(note 6)
Foreign currency
losses, net 8,123,747 8,123,747 3,721,818
Net Cost of Operations $40,379,931 $47,505,938 $235,163 $88,121,032 $79,746,384
CHANGES IN NET POSITION
Net Position - Start of the Year $22,819,563 $62,060,540 $280,359
$85,160,462 $121,918,088
Budgetary Financing Sources
Appropriations used 39,719,420 39,719,420 36,487,234 Increase (decrease)
in unexpended appropriations 1,176,746 1,176,746 (1,470,149)
Total Budgetary Financing Sources 40,896,166 40,896,166 35,017,085
Other Financing Sources
Contributions 29,340 3,113,731 269,576 3,412,647 5,130,525 Treasury
investment earnings 635,237 907 636,144 1,837,284 Gain on property sales
420,181 Imputed financing (note 7) 608,416 608,416 583,683
Total Other
Financing 637,756 3,748,968 270,483 4,657,207 7,971,673
Sources
Total
Financing 41,533,922 3,748,968 270,483 45,553,373 42,988,758
Sources
Net Cost of 40,379,931 47,505,938 235,163 88,121,032 79,746,384
Operations
Net Position
- End of the
Year $23,973,554 $18,303,570 $315,679 $42,592,803 $85,160,462
The accompanying notes are an integral part of these statements.
Appendix I Annual Financial Report of the American Battle Monuments
Commission
Consolidating Statement of Budgetary Resources
AMERICAN BATTLE MONUMENTS COMMISSION CONSOLIDATING STATEMENT OF BUDGETARY
RESOURCES For the Year Ended September 30, 2004 (With Comparative
Consolidated Total for the Year Ended September 30, 2003)
General Fund Trust Funds Total Funds Total Funds 2004 2003 Cemeteries
World Other and War II Trust Memorials Memorial Funds Total Total
Budgetary Resources
Budgetary
Authority:
Appropriations $41,300,000 $41,300,000 $35,246,000
Net transfer in
(out) for net 4,746,681 4,746,681 3,721,818
foreign exchange
loss (gain)
Other
(contributions 408,031 $5,223,561 $310,429 5,942,021 11,754,933
collected)
Less: Rescinded (243,670) (243,670) (229,099)
Unobligated
Balances:
Start of year 10,048,160 49,738,426 215,143 60,001,729 91,995,796
Net transfer (out)
in for net foreign (4,746,681) (4,746,681) (3,721,818)
exchange (loss)
gain
Recoveries of
prior year
obligations 20,614
Total Budgetary Resources $51,512,521 $54,961,987 $525,572 $107,000,080
$138,788,244
Status of Budgetary Resources
Obligations incurred - direct $34,576,844 $39,059,050 $215,833 $73,851,727
$78,786,515 Unobligated balances available 16,935,677 15,902,937 309,739
33,148,353 60,001,729
Total Status of Budgetary Resources $51,512,521 $54,961,987 $525,572
$107,000,080 $138,788,244
Outlays
Obligations $34,576,844 $39,059,050 $215,833 $73,851,727 $78,786,515
incurred
Plus: Obligated
balances, start
of year:
Undelivered 12,756,682 9,922,037 69,338 22,748,057 22,471,299
orders
Delivered orders 2,250,071 4,437,984 5,440 6,693,495 8,015,635
- unpaid
Less: Obligated
balances, end of
year:
Undelivered (7,045,911) (1,519,594) (50,008) (8,615,513) (22,748,057)
orders
Delivered orders
- unpaid (3,370,582) (1,293,690) (4,117) (4,668,389) (6,693,495)
Total Outlays $39,167,104 $50,605,787 $236,486 $90,009,377 $79,831,897
The accompanying notes are an integral part of these statements.
Appendix I Annual Financial Report of the American Battle Monuments
Commission
Consolidating Statement of Financing
AMERICAN BATTLE MONUMENTS COMMISSION
CONSOLIDATING STATEMENT OF FINANCING
For the Year Ended September 30, 2004
(With Comparative Consolidated Total for the Year Ended September 30, 2003)
General Fund Trust Funds Total Funds Total Funds 2004 2003 Cemeteries
World Other and War II Trust Memorials Memorial Funds Total Total
Resources Used To Finance Activities
Obligations incurred - direct $34,576,844 $39,059,050 $215,833 $73,851,727
$78,786,515 Imputed retirement and audit services 608,416 608,416 583,683
Other transfers and adjustments 0 26,893
Total Resources Used to Finance Activities 35,185,260 39,059,050 215,833
74,460,143 79,397,091
Resources That Do Not Fund Net Cost of Operations
General property capitalized on the balance sheet (1,370,130) (1,370,130)
(211,544) Decrease in unfunded annual leave (2,046) (2,046) (4,237)
Undelivered orders - start of year 12,756,682 9,922,037 69,338 22,748,057
22,471,299 Less: Undelivered orders - end of year (7,045,911) (1,519,594)
(50,008) (8,615,513) (22,748,057)
Total Resources That Do Not Fund Net Cost of Operations 4,340,641
8,400,397 19,330 12,760,368 (492,539)
Components of Net Cost of Operations Not Requiring Resources in the
Current Period
Components Requiring Resources in Future
Periods:
Increase in Unfunded Annual Leave 83,574 83,574 98,536
Increase in Unfunded Separation Pay 172,174 172,174 196,550
Components Not Requiring Resources:
Depreciation 568,942 3,570 572,512 501,956
In-kind expenses 29,340 42,921 72,261 44,790
Total Costs Not Requiring Resources in the Current Period 854,030 46,491 0
900,521 841,832
Net Cost of Operations $40,379,931 $47,505,938 $235,163 $88,121,032
$79,746,384
The accompanying notes are an integral part of these statements.
Appendix I Annual Financial Report of the American Battle Monuments
Commission
Notes to the Consolidating and Consolidated Financial Statements
AMERICAN BATTLE MONUMENTS COMMISSION NOTES TO THE CONSOLIDATING AND
CONSOLIDATED FINANCIAL STATEMENTS For the Fiscal Years Ended September 30,
2004 and 2003
Note 1. Significant Accounting Policies
A. Basis of Presentation
The accompanying consolidating and consolidated financial statements
present the financial position, net cost of operations, changes in net
position, budgetary resources, and financing of the American Battle
Monuments Commission (the Commission) in conformity with U.S. generally
accepted accounting principles as used by the federal government. There
are no intra-entity transactions to be eliminated.
B. Reporting Entity and Funding Sources
The Commission is an independent agency within the executive branch of the
federal government and was created by an Act of March 4, 1923, the current
provisions of which are now codified in 36 U.S.C. Chapter 21. The
Commission's mission is to commemorate the sacrifices and achievements of
U.S. Armed Forces where they have served overseas since April 6, 1917, the
date of the United States entry into World War I, and at locations within
the United States when directed by the Congress. The Commission designs,
administers, constructs, operates, and maintains 24 American military
cemeteries and 25 federal memorials, monuments, and markers (herein
collectively referred to as memorials). Three of the memorials are located
in the United States while all of the cemeteries and the remaining
memorials are located on foreign soil in 14 foreign countries, the
Marianas, and Gibraltar. The Commission is also responsible for
maintaining 4 nonfederal memorials with funds received from the memorials'
sponsors. The Commission is headquartered in Arlington, Virginia. Field
operations are conducted through regional offices located near Paris,
France; and in Rome, Italy; and cemeteries in Manila, the Philippines;
Mexico City, Mexico; and Panama City, Panama.
The Commission also has responsibility for designing and constructing the
National World War II Memorial located on the Mall in Washington, D.C. In
accordance with 40 U.S.C. 8909, the Secretary of the Interior is to assume
responsibility for maintenance of the memorial after its completion (see
note 11). Also in accordance with 40 U.S.C. 8906 (b), the Commission
provided $6.6 million for deposit in a separate Treasury account to offset
the memorial's costs of perpetual maintenance.
Commission programs are funded primarily through appropriations available
without fiscal year limitation. The Commission also administers several
trust funds established to: (1) build memorials authorized by the
Congress, but which are funded primarily by private contributions,
commemorative coin sales proceeds, and investment earnings; (2) decorate
grave sites; and (3) maintain and repair certain nonfederal war memorials.
Appendix I Annual Financial Report of the American Battle Monuments
Commission
C. Basis of Accounting
The Commission's proprietary accounts (assets, liabilities, equity,
revenue, and expenses) are maintained on the accrual basis, where
appropriated funds are accounted for by appropriation year; operating
expenses are recorded as incurred; and depreciation is taken on property,
plant, and equipment not otherwise classified as heritage assets.
Commission budgetary accounts are maintained on a budgetary basis, which
facilitates compliance with legal constraints and statutory funds control
requirements. The functional budget classification is Veterans' Benefits
and Services.
D. Fund Balances with Treasury
The Commission's cash receipts and disbursements are processed by the U.S.
Treasury. Fund balances with Treasury are comprised of appropriated
general funds and trust funds.
E. Investments
In accordance with Public Law 103-32, the Commission is authorized to
invest World War II Memorial Trust Fund receipts in U.S. Treasury
securities. The Commission is also authorized under a modification to its
original legislation to invest receipts from certain nonfederal war
memorial organizations in U.S. Treasury securities. Treasury investments
are recorded at par value plus unamortized premium or less unamortized
discount. Premiums and discounts are amortized using the interest method.
F. Foreign Currency
The Commission's overseas offices maintain accounts of foreign currencies
to be used in making payments in foreign countries. These accounts are
reported at the U.S. dollar equivalent using the Treasury exchange rate in
effect on the last day of the fiscal year.
G. Contributions and Revenue Recognition
The Commission recognizes unrestricted contributions or unconditional
promises to give as revenue in the period of the initial pledge when
sufficient verifiable evidence of the pledge exists. Conditional promises
to give are recorded as revenue when the condition has been met.
Unconditional promises to give may be temporarily restricted or
permanently restricted. Temporarily restricted promises to give are
released from restriction when the conditions have been met. Permanently
restricted promises to give are recorded as revenue in the period donated,
however, donors generally allow only the earned income to be used for
general or specific purposes. In-kind contributions of goods and services
are recognized at fair value by the Commission at the time the goods are
received or the services are performed. Multiyear contributions due over a
period of time are discounted to their present value based upon the short
term Treasury interest rate.
H. Operating Materials and Supplies Inventories
The Commission has determined that operating materials and supplies
located at its cemeteries are not significant amounts and that it is more
cost beneficial to record them on the purchase method of accounting
whereby items are expensed as purchased rather than when consumed.
Consequently, the Commission reports no operating materials or supplies
inventories.
Appendix I Annual Financial Report of the American Battle Monuments
Commission
I. Property, Plant, and Equipment
Purchases of general property, plant, and equipment of $25,000 or less are
expensed in the year of acquisition. Purchases of personal property
exceeding $25,000 are capitalized and depreciated on a straight-line basis
over 5 years. Expenditures relating to real property exceeding $25,000 are
capitalized and depreciated on a straight-line basis over 30 years.
Heritage assets are assets possessing significant cultural, architectural,
or aesthetic characteristics. The Commission considers its cemeteries, and
federal memorials, monuments, and markers acquired through purchase or
donation to be noncollection heritage assets. Heritage assets are acquired
through purchase or donation, are accounted for in the Commission's
property records, and are not presented in the balance sheet. Withdrawals
of heritage assets are recorded upon formal agreement with recipients.
Additional unaudited information concerning heritage assets is found in
the Statements of Heritage Assets as required supplementary stewardship
information. Cemetery land is owned by the foreign countries in which
cemeteries are located and is provided to the United States in perpetuity.
J. Employee Benefits
The Commission's civilian U.S. nationals hired after December 31, 1983 are
covered by the Federal Employees' Retirement System (FERS), which was
implemented on January 1, 1984. The Commission's civilian U.S. nationals
hired on or before December 31, 1983, could elect to transfer to FERS or
remain with the Civil Service Retirement System (CSRS). For FERS
employees, the Commission withholds .80 percent of base pay and as
employer contributes 10.7 percent of base pay to this retirement system.
For Federal Insurance Contribution Act (FICA) tax and Medicare, the
Commission withholds 7.65 percent from FERS employees' earnings, matches
this amount on a dollar-for-dollar basis, and remits the total amount to
the Social Security Administration. The Commission withholds 7.00 percent
of base pay plus 1.45 percent for Medicare from CSRS employees' earnings
and as employer contributes 7.00 percent of base pay plus 1.45 percent for
Medicare. These deductions are then remitted to the Office of Personnel
Management (OPM) and the Social Security Administration. OPM is
responsible for governmentwide reporting of FERS and CSRS assets,
accumulated plan benefits, and unfunded liabilities.
On April 1, 1987, the federal government instituted the Thrift Saving Plan
(TSP), a retirement savings and investment plan for employees covered by
FERS and CSRS. The Commission contributes a minimum of 1 percent of FERS
employees' base pay to TSP. FERS employees have the option of contributing
up to 13 percent of their base pay on a tax-deferred basis to TSP, which
the Commission matches up to 4 percent of base pay. CSRS employees may
contribute up to 8 percent of their base pay to TSP on a tax-deferred
basis and receive no matching contribution from the Commission.
Retirement and other benefits for the Commission's foreign national
employees are paid by the Commission in accordance with the provisions of
10 host nation agreements negotiated by the U.S. Department of State.
Annual leave is accrued as earned, and the resulting unfunded liability is
reduced as leave is taken. Separation pay is provided in certain countries
according to host nation agreements. Separation pay is accrued as earned,
and the resulting unfunded liability is reduced when paid to the foreign
national leaving the employ of the Commission. Each year balances in the
accrued separation pay and annual leave accounts are adjusted to reflect
current pay rates. To the extent that current or
Appendix I Annual Financial Report of the American Battle Monuments
Commission
prior year appropriations are not available to fund annual leave and
separation pay, funding will be obtained from future financing resources.
Sick leave and other types of unvested leave are expensed when incurred.
K. Imputed Financing
The Commission imputed financing for retirement and other benefits paid by
OPM and financial audits paid by the Government Accountability Office
(GAO) during fiscal year 2004. The Commission recognized these expenses
and related imputed financing in its financial statements.
L. Use of Estimates
The preparation of financial statements requires management to make
estimates and assumptions that affect the reported amount of assets and
liabilities, as well as the disclosure of contingent assets and
liabilities at the date of the financial statements, and the amount of
revenues and expenses reported during the reporting period. Actual results
could differ from those estimates.
Note 2. Fund Balances with Treasury
All undisbursed account balances with the U.S. Treasury, as reflected in
the Commission's records, as of September 30 are available and were as
follows:
2004 2003
General Trust Funds Total Total
Fund
Appropriated $26,135,129 $26,135,129 $19,522,806
Funds
Currency 785,376 785,376 5,532,057
Fluctuation
WW II
Memorial $13,773,377 13,773,377 6,989,421
Fund
Other Trust _ 310,940 ___310,940 ___231,214
Funds _________
$26,920,505 $14,084,317 $41,004,822 $32,275,498
Note 3. Treasury Investments, Net
As of September 30, the Commission's investments in U.S. Treasury notes,
which are marketable securities due within 2 years were as follows:
Interest FY Cost Interest Rates Net Premium Receivable Net Investment
04 $5,008,000 2.00% to 7.50% $61,626 $41,523 $5,111,149
03 $57,168,000 2.00% to 7.50% $503,949 $516,675 $58,188,624
Amortization is on the interest method, and amortized cost approximated
market as of September 30.
Appendix I Annual Financial Report of the American Battle Monuments
Commission
Note 4. Cash and Foreign Accounts
Outside the United States the Commission makes payments in U.S. and
foreign currencies through imprest cash funds and Treasury designated
depository commercial bank accounts, which as of September 30 were as
follows:
2004 2003
Imprest Cash Funds $39,042 $37,564
Foreign Bank 72,400 23,530
Accounts
Undeposited Cash 576 __8,790
$112,018 $69,884
Note 5. Contributions Receivable
The Commission has pledges from the private sector to be used for the
World War II Memorial, with substantial pledges by major corporations and
foundations. These pledges are recorded as contributions receivable and
revenue in the fiscal year pledged, and $733,769 is temporarily restricted
until collected. Amounts due in future years are as follows:
Fiscal Year Due
2005 $331,250 2006 160,000 2007 150,000 2008 100,000 After 2008 173,688
Total amount due 914,938 Less: Present value discount at 2% Treasury rate
(181,169) Net Receivable $733,769
The Commission believes that all contributions receivable are fully
collectible, and therefore no allowance for uncollectible accounts has
been established.
As of September 30, 2004, $200 of conditional promises to give to the
memorial was outstanding.
Note 6. General Property, Plant, and Equipment and Heritage Assets
General property, plant, and equipment with an aggregate cost basis of
$25,000 or less and all heritage assets were expensed by the Commission
and totaled $3,592,586 in fiscal year 2004 and $2,872,802 in fiscal year
2003. WWII Memorial equipment totaling $2,404 in fiscal year 2004 and
$9,727 in fiscal year 2003 was also expensed.
Since the 1960s, the Commission's European regional office near Paris,
France, has occupied a residential structure owned by the United States
government. The Commission is responsible for all utilities, maintenance,
and repairs. While the structure has the characteristics of a heritage
asset, it has been used as general property. However, it is now fully
depreciated, and no value is contained in the Commission's financial
statements.
Appendix I Annual Financial Report of the American Battle Monuments
Commission
General property, plant, and equipment as of September 30 was as follows:
2004 2003_________
Accumulated Accumulated Category Cost Depreciation Net Cost Depreciation
Net Buildings $1,015,247 $9,142 $1,006,105 Accounting System 1,760,065
1,056,039 704,026 $1,760,065 $704,026 $1,056,039 Equipment 1,989,014
1,218,128 770,886 1,525,116 1,066,771 __458,345
$4,764,326 $2,283,309 $2,481,017 $3,285,181 $1,770,797 $1,514,384
There was no change in the number of physical units or acreage of
cemeteries and federal memorials and no change in the number of nonfederal
memorials in fiscal year 2004.
Note 7. Other Liabilities
Other liabilities as of September 30 were as follows:
2004 2003 Accrued Salaries and Benefits $846,112 $768,301 Unfunded
Separation Pay Liability 1,247,716 1,075,542 Unfunded Annual Leave 933,868
852,339
$3,027,696 $2,696,182
Under a host nation agreement, the Commission's Italian employees earn
separation pay for each year of service with the Commission. The
Commission recognized an unfunded liability for separation pay for these
employees of $1,247,716 as of September 30, 2004, and $1,075,542 as of
September 30, 2003.
A portion of pension and other retirement benefits (ORB) expense is funded
by an imputed financing source to recognize the amount of pension and ORB
unfunded liabilities assumed by OPM. These costs are computed in
accordance with cost factors provided by OPM. For fiscal year 2004, the
Commission incurred $1,016,195 of pension and ORB costs, $303,416 of which
was imputed. For fiscal year 2003, the Commission incurred $1,002,933 of
pension and ORB costs, $325,683 of which was imputed. Total imputed costs
of $608,416 for fiscal year 2004 and $583,683 for fiscal year 2003
included audit services provided by GAO.
Note 8. Lease Agreements
The Commission has no capital leases. The Commission's Arlington,
Virginia, headquarters, including office space for the WWII Memorial
Project, are rented under a 10-year operating lease expiring in July 2007.
The European Director's living quarters are rented under a yearly
agreement. The Commission's Mediterranean Office occupies commercial
office space under a 6-year operating lease expiring in May 2007. The
Mediterranean Director's living quarters are rented under a 6-year
operating lease expiring in December 2007. Rent expense for these fiscal
year 2004 operating leases was $562,181. Future minimum payments due on
these operating leases as of September 30, 2004, are as follows:
Appendix I Annual Financial Report of the American Battle Monuments
Commission
Fiscal Year 2005 $511,432 2006 501,963 2007 411,046 2008 10,456
$1,434,897
Note 9. Net Position
Net position balances as of September 30, 2004, were as follows: General
Fund Trust Funds Total
WWII Other
Unexpended Appropriations:
Unobligated $16,935,6771 $16,935,677
Undelivered Orders 7,045,911 7,045,911
$23,981,588 $ - $ - $23,981,588
Cumulative Results of Operations
(deficit):
Unrestricted $(8,034) $16,050,207 $265,671 $16,307,844
Undelivered Orders 1,519,594 50,008 1,569,602
Temporarily Restricted 733,769 - 733,769
Permanently Restricted -- - -
$(8,034) $18,303,570 $315,679 $18,611,215
Total Net Position $23,973,554
$18,303,570 $315,679 $42,592,803
Net position balances as of September 30, 2003, were as follows: General
Fund Trust Funds Total
WWII Other
Unexpended Appropriations:
Unobligated $10,048,1602 $10,048,160
Undelivered Orders 12,756,682 12,756,682
$22,804,842 $ - $ - $22,804,842
Cumulative Results of Operations:
Unrestricted $14,721 $50,757,726 $211,021 $50,983,468
Undelivered Orders 9,922,037 69,338 9,991,375
Temporarily Restricted 1,380,777 -1,380,777
Permanently Restricted _____ ---
$14,721 $62,060,540 $280,359 $62.355,620 Total Net Position $22,819,563
$62,060,540 $280,359 $85,160,462
1 Includes $13,433,494 for design and construction of the Normandy
Interpretive Center, consisting of $512,594 unobligated from a $5,000,000
no-year appropriation earmark for FY 2002, $3,974,000 unobligated (after a
$26,000 rescission) from a $4,000,000 no-year appropriation for FY 2003,
and $8,946,900 unobligated (after a $53,100 rescission) from a $9,000,000
no-year appropriation for FY 2004.
2
Includes $4,246,028 added for design and construction of the Normandy
Interpretive Center, consisting of $272,028 unobligated from a $5,000,000
no-year appropriation earmark for FY 2002 and $3,974,000 unobligated
(after a $26,000 rescission) from a $4,000,000 no-year appropriation for
FY 2003.
Appendix I Annual Financial Report of the American Battle Monuments
Commission
Note 10. Trust Fund - World War II Memorial Fund Program
Financial progress since the inception of the fund in fiscal year 1993
through fiscal year 2004 is as follows:
Total Costs 2004 1993-2004*
Fundraising $2,370,080 $36,567,258
Administration 1,712,123 9,558,713
Memorial project costs 111,708 1,919,617
Property, plant and equipment 2,404 264,686
Education - 426,834
Subtotal 4,196,315 48,737,108
Design and Construction 43,309,623 130,029,989
Net Cost of Operations 47,505,938 178,767,097
Financing Sources
Coin surcharge proceeds 4,797,329
Department of Defense 5,000,000
Sale of titanium 6,000,000
General support 3,113,731 165,836,556
Contributions 3,113,731 181,633,885
Investment earnings 635,237 15,436,782
Total Financing Sources 3,748,968 197,070,667
Net Results of Operations $(43,756,970) $18,303,570
*The amounts for prior fiscal years 1993 through 2003 were audited by GAO
and presented in its reports GAO/AIMD-95-9 for fiscal year 1993;
GAO/AIMD-96-24 for fiscal year 1994; GAO/AIMD-97-68R for fiscal years 1995
and 1996; GAO/AIMD-98-129R for fiscal year 1997; GAO/AIMD-99-74 for fiscal
year 1998; GAO/AIMD-00-85 for fiscal year 1999; GAO-01-375 for fiscal year
2000; GAO-02-390 for fiscal year 2001, GAO-03-444 for fiscal year 2002,
and GAO-04404 for fiscal year 2003.
Note 11. Subsequent Events
On December 8, 2004, Public Law 108-447 appropriated $41.1 million of
no-year funds for the Commission's salaries and expenses for fiscal year
2005. The Commission plans to use $9.1 million of this appropriation
toward the construction of a new interpretive and visitors' center at the
American Cemetery in Normandy, France, according to H.R. Conf. Rep. No.
108792 (Nov. 19, 2004). This brings appropriated funding for the center
for fiscal years 2002 through 2005 to a total of $27.1 million for design
and construction. Public Law 108-447 also provided $12.0 million of
no-year appropriations for the Foreign Currency Fluctuation Account.
On November 1, 2004, the Commission signed an agreement with the National
Park Service to formally transfer the National WWII Memorial to the
Service for its future care and maintenance.
Appendix I Annual Financial Report of the American Battle Monuments
Commission
Required Supplementary Stewardship Information
REQUIRED SUPPLEMENTARY STEWARDSHIP INFORMATION
Appendix I Annual Financial Report of the American Battle Monuments
Commission
Statements of Heritage Assets
American Battle Monuments Commission
Statement of Heritage Assets
September 30, 2004
(Unaudited)
24 Cemeteries
Name Location Interred Memorialized Acres War
European Region
Aisne Marne American Cemetery Belleau (Aisne), France 2,290 1,060 42.5 WW
I
Ardennes American Cemetery Neupre, Belgium 5,328 462 90.5 WW II
Brittany American Cemetery St. James (Manche), France 4,410 498 7.5 WW II
Brookwood American Cemetery Brookwood, England 468 563 4.5 WW I
Cambridge American Cemetery Cambridge, England 3,812 5,126 30.5 WW II
Epinal American Cemetery Epinal (Vosges), France 5,255 424 48.6 WW II
Flanders Field American Cemetery Waregem, Belgium 368 43 6.2 WW I
Henri-Chapelle American Cemetery Henri-Chapelle, Belgium 7,992 450 57.0 WW
II
Lorraine American Cemetery St. Avold (Moselle), France 10,489 444 113.5 WW
II
Luxembourg American Cemetery Luxembourg 5,076 371 48.7 WW II
Meuse-Argonne American Cemetery Romagne (Meuse), France 14,246 954 130.5
WW I
Netherlands American Cemetery Margraten, Holland 8,301 1,723 65.5 WW II
Normandy American Cemetery Colleville Sur-Mer, France 9,387 1,557 172.5 WW
II
Oise-Aisne American Cemetery Fere-en-Tardenois, France 6,012 241 36.5 WW I
Somme American Cemetery Bony (Aisne), France 1,844 333 14.3 WW I
St. Mihiel American Cemetery Thiacourt, Meurthe, France 4,153 284 40.5 WW
I
Suresnes American Cemetery Seine, France 1,565 974 7.5 WW I/II
Mediterranean Region
Florence American Cemetery Florence, Italy 4,402 1,409 70.0 WW II
North Africa American Cemetery Carthage, Tunisia 2,841 3,724 27.0 WW II
Rhone American Cemetery Draguignan, Var, France 861 294 12.5 WW II
Sicily-Rome American Cemetery Nettuno, Italy 7,861 3,095 77.0 WW II
Other
Corozal American Cemetery Panama City, Panama 5,301 16.0 *
Mexico City American Cemetery Mexico City, Mexico 1,563 1.0 Mex Am
Manila American Cemetery Luzon, Phillipines 17,206 36,282 152.0 WW II
Subtotal for Cemeteries 131,031 60,311 1,272.3
*Acquired by Executive Order from the former Panama Canal Zone.
Appendix I Annual Financial Report of the American Battle Monuments
Commission
American Battle Monuments Commission
Statement of Heritage Assets
September 30, 2004
(Unaudited)
25 FEDERAL MEMORIALS, MONUMENTS, AND MARKERS
Name Location Interred Memorialized Acres War
East Coast Memorial New York City, NY 4,609 0.8 WW II
Honolulu Memorial Honolulu, HI 28,800 1.0 WW II/Korea/Vietnam
West Coast Memorial San Francisco, CA 412 1.3 WW II
Audenarde Monument Audenarde, Belgium 0.4 WW I
Bellicourt Monument St. Quentin, France 1.8 WW I
Brest Naval Monument Brest, France 1.0 WW I
Cabanatuan Memorial Luzon, Phillipines WW II
Cantigny Monument Cantigny, France 0.4 WW I
Chateau-Thierry Monument Chateau-Thierry, France 58.9 WW I
Chaumont Marker Chaumont, France WW I
Gibraltar Naval Monument Gibraltar 0.1 WW I
Guadalcanal Memorial Guadalcanal 0.5 WW II
Kemmel Monument Ypres, Belgium 0.2 WW I
Marine Monument Belleau Wood Aisne, France 199.6 WW I
Montfaucon Monument Montfaucon, France 9.6 WW I
Montsec Monument Thiacourt, France 47.5 WW I
Papua Marker Port Moresby, New Guinea WW II
Point du Hoc Ranger Monument St. Laurent-sur-Mer, France 29.8 WW II
Saipan Monument Saipan, Northern Mariana Islands WW II
Santiago Surrender Tree Santiago, Cuba Sp American War
Sommepy Monument Sommepy, France 15.0 WW I
Souilly Marker Souilly, France WW I
Tours Monument Tours, France 0.5 WW I
Utah Beach Monument Sainte Marie-du-Mont, France 0.5 WW II
Western Naval Task
Force Memorial Casablanca, Morocco WW II
Subtotal for Memorials 0 33,821 368.9
Grand Total 131,031 94,132 1,641.2
Appendix I
Annual Financial Report of the American
Battle Monuments Commission
American Battle Monuments Commission
Statement of Heritage Assets
September 30, 2004
(Unaudited)
4 NONFEDERAL MEMORIALS
Name Location War
29th Infantry Division Vierville-sur-Mer, France WW II
30th Infantry Division Memorial Mortain, France WW II
6th Engineering Special Brigade Memorial Vierville-sur-Mer, France WW II
351st Bomb Group Memorial Oundle, England WW II
Appendix I Annual Financial Report of the American Battle Monuments
Commission
Note to Statements of Heritage Assets
American Battle Monuments Commission 8Note to Statement of Heritage Assets
8September 30, 2004 8(Unaudited)8
Maintenance, Repairs, and Improvements
Maintenance and repairs performed on real property consisting of land
improvements, buildings, and memorials totaled $4.7 million in fiscal year
2004 and $4.0 million in fiscal year 2003. For fiscal years 1998 through
2002, the Commission received $11.3 million of additional appropriations
from the Congress that enabled it to entirely eliminate its deferred
maintenance backlog as of September 30, 2002. No deferred maintenance
backlogs existed as of September 30, 2003, and 2004.
Condition assessment surveys, using a five-point scale of one (excellent)
to five (very poor), identify needed future maintenance and repair
projects at cemeteries and memorials in order to maintain real property in
an acceptable condition of three (fair) or better. These surveys are
reviewed and updated at least annually by the Commission's engineering
staff. In addition, engineering projects identified improvements in
cemetery irrigation, drainage, roads, parking areas, and buildings. As of
September 30, 2004, the Commission has identified a total of 360
maintenance, repair, and improvement projects, with an estimated cost of
$11.1 million, to be performed in future years, subject to available
funding.
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