Financial Management: Audit of the White House Commission on the 
National Moment of Remembrance for Fiscal Year 2004 (21-JUL-05,  
GAO-05-791R).							 
                                                                 
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's purpose is to  
sustain the American spirit through acts of remembrance, not only
on Memorial Day but also throughout the year, for those who died 
serving our country. Congress appropriated $1 million to the	 
Commission to fund its operations for fiscal years 2002 through  
2004. In fiscal year 2004, the Commission received net		 
appropriations of approximately $249,000, along with cash and	 
in-kind donations of approximately $102,000 from individuals and 
businesses. In addition, it had approximately $240,000 in	 
unexpended appropriations from prior fiscal years. The Commission
expended approximately $257,000 of appropriated funds and funded 
costs of approximately $102,000 with cash and in-kind donations  
received during the fiscal year. The act requires us to audit the
financial transactions of the Commission, and this report covers 
our work on its fiscal year 2004 financial transactions.	 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-05-791R					        
    ACCNO:   A30657						        
  TITLE:     Financial Management: Audit of the White House Commission
on the National Moment of Remembrance for Fiscal Year 2004	 
     DATE:   07/21/2005 
  SUBJECT:   Accountability					 
	     Accounting procedures				 
	     Accounting standards				 
	     Data integrity					 
	     Financial management				 
	     Financial records					 
	     Financial statement audits 			 
	     Internal controls					 
	     Nonprofit organizations				 
	     Reporting requirements				 

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GAO-05-791R

United States Government Accountability Office Washington, DC 20548

July 21, 2005

The Honorable Arlen Specter
Chairman
The Honorable Patrick J. Leahy
Ranking Minority Member
Committee on the Judiciary
United States Senate

The Honorable Jim 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 on the
National Moment of Remembrance forFiscal Year 2004

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's purpose is to sustain the
American spirit through acts of remembrance, not only on Memorial Day but
also throughout the year, for those who died serving our country. Congress
appropriated $1 million to the

2

Commission to fund its operations for fiscal years 2002 through 2004. In
fiscal year 2004, the Commission received net appropriations of
approximately $249,000, along with cash and in-kind3 donations of
approximately $102,000 from individuals and businesses. In addition, it
had approximately $240,000 in unexpended appropriations from prior fiscal
years. The Commission expended approximately $257,000 of appropriated
funds and funded costs of approximately $102,000 with cash and in-kind

1Pub. L. No. 106-579, 114 Stat. 3078 (Dec. 28, 2000) (codified at 36
U.S.C. S: 116 note).

2Congress appropriated $500,000 in fiscal year 2002 and $250,000 per year
in fiscal years 2003 and 2004. See, respectively, Pub. L. No. 107-117, 115
Stat. 2230, 2299 (Jan. 10, 2002); Pub. L. No. 108-7, div. J, title IV, 117
Stat. 11, 460 (Feb. 20, 2003); and Pub. L. No. 108-199, div. F, title IV,
118 Stat. 3, 340 (Jan. 23, 2004).

3In-kind donations are noncash assets and contributed services-such as
product design, editorial services, and the use of facilities and staff.

GAO-05-791R Commission on the National Moment of Remembrance

donations received during the fiscal year. The act requires us to audit
the financial transactions of the Commission, and this report covers our
work on its fiscal year 2004 financial transactions.

Results in Brief

Our detailed testing of the Commission's fiscal year 2004 financial
transactions indicated that most were supported and approved. Nonetheless,
we found numerous opportunities for the Commission to improve its internal
control over its financial transactions. Specifically, we found that the
Commission did not prepare and maintain underlying support in the form of
employee-signed time sheets for salary expenditures of about $135,000, nor
did it maintain support for its intragovernmental transactions. The
Commission also did not routinely reconcile its recorded expenditures and
donations to those processed by the Department of Veterans Affairs (VA) on
behalf of the Commission, resulting in a difference of approximately
$59,000 between the two entities' records. In May 2005, the Commission and
VA reconciled their records and made accounting adjustments for the
differences. Additionally, the Commission did not code its
non-salary-related expenditures by budget object class to properly
identify the type of expenditure. The Commission also did not always
adhere to federal procurement regulations when procuring goods or services
from commercial vendors, and to federal travel regulations for travel by
federal civilian employees. Many of these issues are attributable to the
small size of the Commission, which makes establishing and maintaining
basic internal control problematic.

During our audit, we found that the Commission's activities and its
distinction from those of No Greater Love, a nonprofit organization
founded in 1971 by the Commission's current Executive Director and White
House Liaison, could be misperceived by interested parties because of the
long-term involvement of the Commission's Executive Director and White
House Liaison with No Greater Love for approximately 30 years. For
example, the distinction between the two organizations could be
misperceived because the business card of the Commission's Executive
Director and White House Liaison listed No Greater Love's e-mail address
and fax number. We raised this concern in our prior audit of the
Commission's fiscal year 2003 and 2002 financial transactions.4

In our prior audit of the Commission's fiscal years 2003 and 2002
financial transactions, we also found that the Commission had difficulties
maintaining its financial records and that it lacked basic internal
controls. We acknowledge the efforts the Commission has made to improve
its record keeping and internal controls since our prior work. We also
recognize the impact that the Commission's size has on its ability to
establish and maintain effective internal control, particularly with
respect to segregation of duties. Nevertheless our audit of the
Commission's fiscal year 2004 financial transactions indicates the need
for the Commission to take further actions to improve its internal
control.

4GAO, Financial Management: Audit of the White House Commission on the
National Moment of Remembrance for Fiscal Years 2003 and 2002, GAO-04-497R
(Washington, D.C.: May 20, 2004).

We are making 10 recommendations to the Commission to strengthen its
overall financial management and internal control. In its comments on our
draft report, the Commission agreed with our report's recommendations.

Background

Section 6 of the National Moment of Remembrance Act5 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

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

In fiscal year 2004, Congress appropriated $250,000 to the Commission.6
This appropriation was subject to a 0.59 percent across-the-board
rescission, which reduced the Commission's appropriation to $248,525. The
Commission also received various cash and in-kind donations totaling
$101,620 from individuals and businesses during the fiscal year to support
its mission and operations.

The Commission utilizes VA-through an interagency agreement-for
administrative support services, including payment of the Commission's
bills and personnel and payroll services.7 VA processed the Commission's
obligations, expenditures, and cash and in-kind donation transactions
recorded during fiscal year 2004. VA also prepares annual financial
statements and monthly standard forms on budget execution for the
Commission. The Commission hired a part-time bookkeeper in May 2004 to
help maintain its financial records, including producing year-end
summaries and reconciliations.

5Pub. L. No. 106-579, S: 6(a), 114 Stat. 3078, 3080-81.

6Pub. L. No. 108-199, div. F, title IV, 118 Stat. 3, 340 (Jan. 23, 2004).

7Under the interagency agreement, VA charges the Commission an hourly rate
of $96.34 for the services of its senior professional staff. VA is to (1)
provide financial and administrative services that include advice on the
propriety of obligations and expenditure of funds; (2) function as an
agent cashier and research checks with insufficient support documentation
to determine the disposition of items; and (3) prepare, submit, and
reconcile financial reports. VA also is required to provide payroll
services and process payroll.

When the Commission was initially funded in 2002, it assumed several of
the program activities of No Greater Love,8 a nonprofit organization
established in 1971, and the founder of No Greater Love was appointed as
the Commission's Executive Director and White House Liaison. The founder
resigned her position with No Greater Love in April 2002 and since then
has been the Commission's only full-time employee. During most of fiscal
year 2004, the Commission shared office space, services, and personnel
with No Greater Love. According to the Commission, it ceased sharing
office space with No Greater Love at the end of June 2004.

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 agreements that involve private, as well as government,
entities to assist the Commission in carrying out its duties. The act
further authorizes the Commission to

                                       9

accept program support from nonprofit organizations. An example of a
fiscal year 2004 Commission program is the Sands of Remembrance program at
Omaha Beach, Normandy, to honor D-Day's fallen victims. The program cost
about $46,000 and was funded from three sources: federal funds, cash
donations from businesses, and inkind donations from No Greater Love.

The act also provides that the Commission will receive six employees-one
from each the Army, Air Force, Navy, Marine Corps, VA, and Department of
Education- detailed to assist the Commission in carrying out the act.
However, during fiscal year 2004, only one detailee served with the
Commission for approximately 7 months.

The Commission, as reflected in an Office of Management and Budget (OMB)
memorandum,10 became subject to the Accountability of Tax Dollars Act of
2002.11 This act requires the Commission to annually prepare and submit
audited financial statements to OMB and Congress. The Commission was
granted an exemption from OMB for fiscal year 2004 and thus did not
prepare and submit an annual audited financial statement for that year.12

8The activities assumed are "remembrance programs," which have as their
purpose promoting the remembrance of those who have died for our country,
those who have served our country, and those who continue to serve our
country.

9Pub. L. No. 106-579, S: 8(g), 114 Stat. 3078, 3084.

10OMB, Memorandum for the Heads of Executive Departments and Agencies,
Chief Financial Officers and Inspectors General: Amendments to OMB
Bulletin No. 01-02, Audit Requirements for Federal Financial Statements,
M-04-22, at 13 (Washington, D.C.: July 27, 2004).

11Pub. L. No. 107-289, 116 Stat. 2049 (Nov. 7, 2002).

12Under the Accountability of Tax Dollars Act of 2002, the Director of the
Office of Management and Budget may, under certain conditions, exempt
certain covered executive agencies from the financial statement
requirements of the Accountability of Tax Dollars Act of 2002 for a
particular fiscal year. See Pub. L. No. 107-289, S: 2(a)(4), 116 Stat.
2049 (Nov. 7, 2002) (codified at 31 U.S.C. S: 3515(e)).

Objective, Scope, and Methodology

Our objective was to audit the Commission's fiscal year 2004 financial
transactions (expenditures and donations) to ensure that there was proper
supporting documentation and management approval. To satisfy this
objective, we reviewed and compared the Commission's transaction records
with those of VA's------the Commission's accounting service
provider------for completeness. There is a risk that there could be
unrecorded transactions for donations or services that the Commission did
not document in its records or forward to VA for processing and recording.
We examined the documentation for all of the Commission's payroll
transactions and the cash and in-kind donations it received during the
fiscal year. For the Commission's 172 non-salary-related transactions,
including travel and procurement transactions, we traced them to
supporting documentation, including invoices, credit card statements, and
travel vouchers. For procurement transactions of $2,500 or more with
commercial vendors, we reviewed documentation for evidence that the
Commission solicited bids from vendors in accordance with federal
procurement regulations. We also evaluated the internal control effect of
the results

13

of our testing of the Commission's fiscal year 2004 financial
transactions.

We performed our work in Washington, D.C., from March through May 2005 in
accordance with U.S. generally accepted government auditing standards for
performance audits. We requested written comments on a draft of this
report from the Commission's Executive Director and White House Liaison.
On July 18, 2005, we received written comments from the Commission's
Executive Director and White House Liaison which are reprinted in
Enclosure I of this report.

Internal Control over Financial Transactions Needs Improvement

In fiscal year 2004, the Commission received net federal appropriations of
$248,525

                                       14

and had funds left over from prior-year appropriations. VA------the
Commission's accounting service provider------reported that the Commission
expended appropriated funds of about $257,000 and also incurred about
$102,000 of costs that were funded with cash and in-kind donations during
fiscal year 2004. (See table 1.)15

13According to GAO's Standards for Internal Control in the Federal
Government, GAO/AIMD-00-21.3.1 (Washington, D.C.: November 1999),
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.

14Congress previously appropriated $250,000 and $500,000 to the Commission
in fiscal years 2003 and 2002, respectively, and the Commission expended
approximately $510,000 of those appropriations during the 2-year period.

15As discussed later in this report, the amounts reported include
accounting adjustments resulting from the Commission and VA reconciling
their records on the Commission's fiscal year 2004 financial transactions
in May 2005.

Table 1: White House Commission on National Moment of Remembrance's Fiscal
Year 2004 Schedule of Expended Appropriations and Costs Funded with
Donations

                                       Expended         Costs funded          
               Description             appropriations with donations Combined
         Personnel compensation              $135,145        $23,464 $158,609 
           Personnel benefits                  36,093            416   36,509 
      Travel and transportation of                                            
                 persons                        3,344          4,342    7,686
        Transportation of things                    -          1,323    1,323 
Rent, communications, and utilities         12,592           -889   11,703 
        Printing and reproduction              10,912          4,716   15,628 
       Other contractual services              51,120         41,589   92,709 
         Supplies and materials                 3,968          8,518   12,486 
                Equipment                       4,104              -    4,104 
       Building and facilities-not                  -                         
               capitalized                                    18,141   18,141
                  Total                      $257,278       $101,620 $358,898 

Source: VA.

Although we found adequate support and evidence of approval for most of
the Commission's fiscal year 2004 financial transactions, we identified
shortcomings in the Commission's internal control. Specifically, we found
areas for improvement in the Commission's internal control with respect to
the following: payroll, benefits, and VA payments; reconciliations with
VA; coding of financial transactions; procurement actions; travel
reimbursements; and cash and in-kind donations. Some of these internal
control shortcomings involved immaterial amounts, and many may be the
result of the Commission only having one employee.

GAO's Standards for Internal Control in the Federal Government16
identifies the minimum level of internal control in the federal government
and provides the basis against which internal control is to be evaluated.
Control activities, one of the five standards of internal control, include
diverse activities such as authorizations, approvals, verifications,
reconciliations, and the creation and maintenance of related records that
provide evidence of the execution of these activities as well as
appropriate documentation. The Commission's internal control shortcomings
could hinder its effective stewardship of public resources.

Documentation for Payroll, Benefits, and VA Payments Not Readily Available

In reviewing the Commission's payroll of about $135,000, we found
supporting documentation in the form of VA-prepared biweekly payroll
reports. However, the Commission's Executive Director and White House
Liaison did not prepare or submit employee-signed biweekly time sheets to
VA during fiscal year 2004 to support the expense. GAO's Standards for
Internal Control in the Federal Government states that the creation and
maintenance of related records is a procedure that provides evidence of
the execution of activities as well as appropriate documentation.
According to the Commission, time sheets were not required because it had
only one employee compensated with appropriated funds. We recognize that
this is an inherent limitation in an entity of this size. Nonetheless,
because the Commission did not have employee-prepared time sheets that
could be independently reviewed by

16GAO/AIMD-00-21.3.1.

either a Commission representative or VA as part of its payroll-processing
function, it did not have proof of the actual hours the employee worked to
support the salary paid.

In examining employee benefits of approximately $36,000, we found that the
Commission did not maintain documentation for the benefits, such as health
care and retirement contributions by the employer, and relied solely on VA
for the information. According to GAO's Standards for Internal Control in
the Federal Government, all transactions need to be clearly documented,
and the documentation should be readily available for examination. In
response to our request for documentation, we received from VA support for
the Commission's salary-related benefits. However, by not having
documentation on the costs incurred and paid for employee benefits, the
Commission did not have complete assurance that its financial decisions
were based on complete and accurate information.

In addition, we found that the Commission did not maintain supporting
documentation for approximately $44,000 paid to VA for payroll and
accounting services pertaining to both fiscal years 2004 and 2003.17 This
occurred because the Commission had not established procedures for
maintaining support for intragovernmental transactions. According to GAO's
Standards for Internal Control in the Federal Government, all transactions
need to be clearly documented to maintain their relevance and value to
management in controlling operations and making decisions. In response to
our request for documentation, VA provided support for its charges for
payroll and accounting services provided to the Commission. Because the
Commission did not have documentation on its costs, it did not know if
such charges were valid and reasonable. Additionally, given its limited
financial resources and the proportion of its appropriations used to fund
the payroll and accounting services provided by VA (over 17 percent in
fiscal year 2004), such support could assist the Commission in determining
whether it would be costbeneficial to seek such services elsewhere at a
lower cost.

Reconciliations with VA Were Not Routinely Performed

We found that the Commission did not reconcile its recorded expenditures
and donations to those processed and recorded by VA on behalf of the
Commission. In reviewing support for the expenditures and donations, we
determined that the Commission had initially recorded approximately
$59,000 more in fiscal year 2004 expenditures and costs funded with
donations than those recorded by VA. GAO's internal control standards18
state that regular reviews and comparisons of different sets of data to
one another should be done to determine their accuracy and to make
appropriate adjustments when necessary. In discussing the difference with
both Commission and VA officials, we ascertained that neither was aware of
the difference until we brought it to each's attention. We also found that
the difference occurred

17This amount represented approximately 17 percent of the Commission's
fiscal year 2004 expended appropriations.

18GAO/AIMD-00-21.3.1.

because the Commission was unaware that it should have provided VA with
all information on in-kind donations------such as staff time, facilities,
and Web site design. The Commission and VA reconciled their records on the
Commission's fiscal year 2004 financial transactions in May 2005 and made
accounting adjustments arising from those reconciliations. Nonetheless,
because reconciliations were not routinely performed, the Commission and
VA lacked assurance that expenditures and costs recorded for the
Commission were complete and accurate.

Transactions Were Not Properly Coded

In testing the Commission's non-salary-related expenditures, we found that
the Commission did not include budget object class19 codes that indicated
the type of expenditure on the documentation it submitted to VA for
processing transactions. Although VA had established a system for the
standardized coding, recording, and reporting of the Commission's
financial transactions, the Commission had not implemented procedures to
have its financial transactions coded in accordance with VA's guidelines20
prior to providing VA with the documentation. As a result, certain costs
had to be classified by VA without full knowledge of the type of
expenditure being made. For example, the Commission purchased computers
that VA charged to "supplies and materials"; however, the computers should
have been charged to "equipment." This error was corrected through the
reconciliations performed by the Commission and VA in response to our
audit inquiry. Because it did not code its expenditures in accordance with
VA guidelines, the Commission lacked accurate information on how its
financial resources were used.

Procurement Regulations Were Not Followed

In reviewing the Commission's five federally funded procurement
transactions that exceeded the $2,500 micro-purchase threshold, we found
that in all cases-totaling approximately $24,000-the Commission did not
adhere to the Federal Acquisition Regulations (FAR) regarding the ordering
process for contracted goods or services from commercial vendors.
Specifically, the FAR requires that when a simplified acquisition exceeds
the $2,500 threshold, the federal agency is to solicit quotes or

                                       21

offers from at least three commercial vendors. However, we found that the
Commission did not solicit offers from three vendors for information
technology services, video services, and other goods and services procured
during fiscal year 2004 because it was not fully cognizant of the FAR
requirements. Rather than follow federal guidelines, the Commission would
contact and select a vendor if it considered the vendor's cost estimate
reasonable. By not adhering to federal procurement regulations, the
Commission could incur greater costs than necessary for goods or services.

19Budget object classes are categories in a classification system that
present obligations by the items or services purchased by the federal
government. See OMB Circular No. A-11, Preparation, Submission and
Execution of the Budget, S: 83.1 (June 21, 2005).

20VA, Budget Object Codes, VA Handbook 4671.2 (Jan. 16, 2003).

21See 48 C.F.R. (FAR) S: 13.104(b) (2004).

Travel Reimbursements Exceeded Allowable Rates

In testing the expenditures of the Commission's Executive Director and
White House Liaison for long-distance travel processed by VA, we found
that for three of the six business trips made during fiscal year 2004,
payments for meals and incidental expenses were made in error or exceeded
the allowable rates established in the Federal Travel Regulation22 by
immaterial amounts ranging from $23 to $85. In two instances, the
Executive Director and White House Liaison reported meals and incidental
expenses for a full day's travel, yet actual travel was for less than a
full day. This resulted in total overpayments of $49 by the federal
government. For the third business trip, the Executive Director and White
House Liaison was overpaid $85 for meals and incidental expenses because
travel advances were not reported on the travel voucher. The Commission
has not been reimbursed for these payments. While the amounts involved in
all three cases, both individually and collectively, were not significant,
the lack of controls to properly record travel costs and independently
review them to determine adherence to federal regulations may allow travel
costs in excess of allowable rates to be processed and paid.

Cash and In-kind Donations Were Not Always Recorded

In reviewing the cash donations that the Commission received during fiscal
year 2004, we found a $10,000 check dated April 16, 2004, that was made
out to No Greater Love but that was deposited in the Department of the
Treasury's account for the Commission. In response to our inquiries, the
Commission informed us that the check was to be used for the Commission's
purposes and was processed without an endorsement by No Greater Love. The
Commission provided a May 2005 letter from the donor explaining that the
check was meant for the Commission's benefit. GAO's internal control
standards require that all significant events be clearly documented and
that the documentation be readily available for examination. Because the
check was made out to another entity, the Commission did not have
appropriate documentation readily available to clearly identify the
intended recipient before the check was deposited.

We also found documentation supporting two in-kind donations to the
Commission from businesses for about $400 that were not recorded in either
the Commission's financial records or those maintained by VA. In addition,
we found that the Commission did not record as an in-kind donation the
estimated value of one night of lodging funded by a donor. The unrecorded
donations occurred because the Commission did not have procedures in place
to record in-kind donations or obtain

                                       23

estimates of the value of in-kind donations. We also found that the
Commission

22The Federal Travel Regulation implements statutory requirements and
executive branch policies for travel by federal civilian employees. It is
promulgated by the General Services Administration and codified at 41
C.F.R., chapters 300-304.

23If such donations are reported, they should be measured at fair value
according to Financial Accounting Standards Board Statement No. 116,
Accounting for Contributions Received and Contributions Made (June 1993).

created a public service announcement that at least 370 radio stations
downloaded and aired free of charge across the United States over the 2004
Memorial Day weekend, but the Commission was unable to estimate the value
of the radio broadcasts. GAO's internal control standards state that
transactions should be promptly recorded to maintain their relevance and
value to management in controlling operations and making decisions.
Because all of its in-kind donations were not recorded, the Commission
lacked assurance that amounts recorded for inkind donations, and costs
funded with those donations, were complete and accurate.

Greater Distinction between the Commission and No Greater Love Is Needed

As discussed in our previous report24 and earlier in this report, the
Commission's activities overlap with those of No Greater Love. During most
of fiscal year 2004, the Commission shared office space and services with
No Greater Love, a nonprofit organization founded in 1971 by the
Commission's current Executive Director and White House Liaison. According
to the Commission, it ceased sharing office space with No Greater Love at
the end of June 2004 and did not cosponsor any programs with the
organization during the fiscal year.

In conducting our audit, we found that the Commission's activities and its
distinction from those of No Greater Love could be misperceived by
interested parties because of the long-term involvement of the
Commission's Executive Director and White House Liaison with No Greater
Love for approximately 30 years. For example, the distinction between the
two organizations could be misperceived because the business card of the
Commission's Executive Director and White House Liaison listed No Greater
Love's e-mail address and fax number. Additionally, during fiscal year
2004, the Commission's Executive Director and White House Liaison used an
automobile owned by No Greater Love-that bears a license plate of "NGL
01"-for Commission activities. While section 8(f) of the act allows the
Commission to be closely involved with other entities in carrying out its
duties through the use of cooperative agreements, the Commission-because
it receives federal appropriations-has an increased responsibility to
ensure a clear distinction between the Commission and No Greater Love.
Without this, donors and Congress are at risk of not knowing which
programs their funds are supporting.

Commission Has Taken Some Actions to Improve Accountability

In our prior work, we found that the Commission had difficulties with
maintaining its

25

financial records due in part to a lack of staffing and financial
expertise. Our prior report also found that the Commission lacked basic
internal controls, such as ensuring that all transactions were supported
by appropriate documentation and that invoices were approved prior to
payment, to ensure that funds were used as intended.

24GAO-04-497R.

25GAO-04-497R.

Our prior report included a matter for Congress to consider amending the
National Moment of Remembrance Act to make the Commission an independent
entity within VA as a mechanism to address the substantial deficiencies we
noted. As an alternative, we made a number of recommendations to the
Commission for corrective actions to improve its basic accountability for,
and internal control over, its financial transactions. In response to our
prior report, the Commission has taken a number of corrective actions in
response to our prior recommendations for executive action, including the
following:

o  	hiring a local bookkeeper on a part-time basis to maintain a log of
financial transactions and produce year-end summaries;

o  	maintaining a record or log of Commission financial transactions,
including appropriations, donations, and nonsalary expenditures; and

o  developing and implementing procedures to approve invoices prior to
payment.

We acknowledge the efforts that the Commission has made to improve its
record keeping and internal controls since our prior work. We also
recognize the impact the size of the Commission has on its ability to
establish and maintain effective internal control, particularly with
respect to the segregation of duties. Nevertheless, our audit of the
Commission's fiscal year 2004 financial transactions indicates the need
for the Commission to take further actions to improve its internal
control.

Conclusions

The limited size of the Commission makes it problematic for it to
establish and maintain effective internal control over its financial
transactions. The Commission has made progress in addressing several of
the internal control issues it faces. Nevertheless, without such basic
internal controls as complete transaction and documentation records,
regular reconciliations of recorded data, and the coding of transactions,
the Commission does not have reasonable assurance that its financial
information is complete and accurate and that financial and programmatic
decisions are based on complete and accurate information. Although
administrative support services are provided by VA, the Commission's
management is responsible for preparing accurate and reliable financial
reports reflecting its activities and for complying with federal
procurement and other applicable federal regulations. The Commission is
also responsible for establishing, maintaining, and monitoring controls to
provide reasonable assurance that internal control objectives as detailed
in GAO's Standards for Internal Control in the Federal Government are met.

Recommendations for Executive Action

To improve the Commission's accountability and internal control, we
recommend that the Executive Director and White House Liaison of the
Commission take the following 10 actions:

1. 	Prepare biweekly time sheets and regularly submit them to VA for
approval and processing as evidence of actual hours worked.

2. Strengthen the procedures to ensure that appropriate documentation for
all financial transactions------including payroll, payroll-related, and
intragovernmental transactions------is maintained and readily available
for review.

3. 	Assess the cost of VA's services to determine if comparable services
may be available from other sources at a lower cost.

4. 	Establish procedures to (a) timely reconcile, on a monthly basis, the
Commission's financial data to the financial records maintained by its
accounting services provider, VA, and (b) communicate all differences to
VA as the provider so that the two entities' records can be appropriately
reconciled.

5. 	While continuing to use VA's services, code all invoices in accordance
with VA guidelines to indicate the type of expenditure prior to submitting
them to VA for processing.

6. 	Solicit offers or quotes from at least three commercial vendors when
goods or services are expected to exceed the $2,500 micro-purchase
threshold for federal procurements and when otherwise required by the FAR.

7. 	Strengthen procedures over preparing travel vouchers by (a) adhering
to allowable rates in accordance with federal regulations and (b) ensuring
that travel-related overcharges and traveler reimbursements are timely
collected or offset against amounts due.

8. 	Strengthen procedures over cash donations by immediately obtaining and
retaining documentation that evidences the purpose and intent of the
donation.

9. 	Develop procedures to obtain and retain supporting documentation for
the estimated value of in-kind donations and require that the financial
information be recorded.

10. Discontinue listing No Greater Love's e-mail address and fax number on
the Commission's business cards to assist in furthering the distinction of
the Commission's and No Greater Love's management and activities.

Agency Comments

We received written comments from the Executive Director and White House
Liaison of the White House Commission on the National Moment of
Remembrance. In its comments, the Commission agreed with our report's
recommendations and stated that it has already taken steps to further
improve internal control over its financial transactions. For example, the
Commission stated that it (1) has been submitting biweekly employee time
sheets to its financial services provider since May 2005 as evidence of
actual hours worked; (2), along with its financial services provider, has
established new procedures to reconcile its financial data to the
financial records maintained by the financial services provider; and (3)
has strengthened its procedures for preparing travel vouchers and cash and
in-kind donations. The Commission's comments are reproduced in their
entirety in enclosure I. In addition,

the Commission provided technical and clarifying comments, which we
incorporated as appropriate.

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; the Director,
Office of
Management and Budget; and other interested parties. This report will also
be
available on the GAO Web site at http://www.gao.gov.

If you or your staff have any questions, please contact me at (202)
512-3406 or by
e-mail at [email protected]. Contact points for our Offices of
Congressional
Relations and Public Affairs may be found on the last page of this report.
Contributors to this report were Julie T. Phillips, Charles E. Norfleet,
and Teressa
Broadie-Gardner.

Steven J. Sebastian
Director
Financial Management and Assurance

Enclosure

Enclosure I

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

(196026)
Page 15 GAO-05-791R Commission on the National Moment of Remembrance

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