Financial Audit: Independent and Special Counsel Expenditures for
the Six Months Ended March 31, 2006 (29-SEP-06, GAO-06-1054).
This report presents the results of our audits of expenditures
reported by one office of independent counsel and one office of
special counsel for the 6 months ended March 31, 2006. The
Department of Justice and independent counsels are required under
28 U.S.C. 594 (d)(2), (h) and 596 (c)(1) to report on a
semiannual basis the expenditures from a permanent, indefinite
appropriation established within the Department of Justice to
fund independent counsel activities. Under 28 U.S.C. 596 (c)(2),
we are required to audit the statements of expenditures prepared
by the independent counsels. We also audited the statement of
expenditures of Special Counsel Patrick J. Fitzgerald, who is
authorized by the Department of Justice to fund his operation
from the permanent, indefinite appropriation.
-------------------------Indexing Terms-------------------------
REPORTNUM: GAO-06-1054
ACCNO: A61610
TITLE: Financial Audit: Independent and Special Counsel
Expenditures for the Six Months Ended March 31, 2006
DATE: 09/29/2006
SUBJECT: Audit reports
Cash basis accounting
Financial records
Financial statement audits
Financial statements
Independent counsels
Internal controls
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GAO-06-1054
* Report to Congressional Committees
* September 2006
* financial audit
* Independent and Special Counsel Expenditures for the Six Months
Ended March 31, 2006
* Contents
* Background
* Opinions on Statements of Expenditures
* Opinions on Internal Control
* Compliance with Laws and Regulations
* Objectives, Scope, and Methodology
* Agency Comments
* Statement of Expenditures for Independent Counsel Barrett
* Statement of Expenditures for Special Counsel Fitzgerald
Report to Congressional Committees
September 2006
FINANCIAL AUDIT
Independent and Special Counsel Expenditures for the Six Months Ended
March 31, 2006
Contents
September 29, 2006Letter
Congressional Committees
Enclosed is our report on our audits of the statements of expenditures for
the two counsels-one office of independent counsel and one office of
special counsel-for the 6 months ended March 31, 2006. Our audits were
designed to determine whether the statements of expenditures were fairly
stated in all material respects. We were not required to express an
opinion on the reasonableness or appropriateness of any related
expenditures and we are not expressing any opinion thereon. We are sending
copies of this report to the Attorney General, the Director of the
Administrative Office of the U.S. Courts, the Independent Counsel and
Special Counsel included in our audits, and other interested parties.
Copies of this report will be made available to others upon request. This
report is also available at no charge on GAO's Web site at www.gao.gov .
Please contact me at (202) 512-3406 or [email protected] if you or your
staff have any questions concerning this report. Contact points for our
Offices of Congressional Relations and Public Affairs may be found on the
last page of this report. Key contributors to this report were Paul
Foderaro, Assistant Director; Kwabena Ansong; Michael Piekarz; and Matthew
Zaun.
Steven J. Sebastian Director Financial Management and Assurance
Congressional CommitteesAuditor's Report
This report presents the results of our audits of expenditures1 reported
by one office of independent counsel and one office of special counsel for
the 6 months ended March 31, 2006. The Department of Justice and
independent counsels are required under 28 U.S.C. S: 594 (d)(2), (h) and
S: 596 (c)(1) to report on a semiannual basis the expenditures from a
permanent, indefinite appropriation established within the Department of
Justice to fund independent counsel activities. Under 28 U.S.C. S: 596
(c)(2), we are required to audit the statements of expenditures prepared
by the independent counsels. We also audited the statement of expenditures
of Special Counsel Patrick J. Fitzgerald, who is authorized by the
Department of Justice to fund his operation from the permanent, indefinite
appropriation.
In our audits covering the 6 months ended March 31, 2006, we found
o the statements of expenditures presented in appendixes I and II, for the
office of the Independent Counsel David M. Barrett and for the office of
Special Counsel Patrick J. Fitzgerald, respectively, are presented fairly,
in all material respects, in conformity with the basis of accounting
described in note 1 of each counsel's statement, which is principally the
cash basis, a comprehensive basis of accounting other than U.S. generally
accepted accounting principles;
o each of the counsels had effective internal control over financial
reporting (including safeguarding assets) and compliance with laws and
regulations as of March 31, 2006; and
o no reportable noncompliance with laws and regulations we tested.
Our audits were designed to determine whether the statements of
expenditures were fairly stated in all material respects. We were not
required to express an opinion on the reasonableness or appropriateness of
any related expenditures and we are not expressing any opinion thereon.
The following sections provide background information; outline each
conclusion in more detail; and discuss the objectives, scope, and
methodology of our audits.
Background
The Ethics in Government Act of 1978 amended title 28 of the United States
Code to authorize the judicial appointment of independent counsels when
the Attorney General determines that reasonable grounds exist to warrant
further investigation of high-ranking government officials for certain
alleged crimes. The independent counsel law (28 U.S.C. S:S: 591-599),
which expired on June 30, 1999, was intended to preserve and promote the
accountability and integrity of public officials and of the institutions
of the federal government. Provisions of the law allowed the independent
counsels serving at the expiration date to continue investigating pending
matters until they determined that the investigations of such matters have
been completed.
The independent counsel law directs the Department of Justice to pay all
costs relating to the establishment and operation of any office of
independent counsel. A permanent, indefinite appropriation was established
within the Department of Justice to pay all necessary expenses for
investigations and prosecutions by independent counsels appointed pursuant
to the independent counsel law or other law. Also, the Department of
Justice determined that the appropriation established by Public Law
100-2022 to fund expenditures by independent counsels appointed pursuant
to the independent counsel law or other law is available to fund the
expenditures of U.S. Attorney Patrick J. Fitzgerald, who was appointed as
a special counsel within the Department of Justice by the then Acting
Attorney General.3
The independent counsel law also designates specific responsibilities to
the Administrative Office of the U.S. Courts (AOUSC) for the
administrative support of independent counsels. The Department of Justice
periodically disburses lump-sum payments to AOUSC for this purpose.
Opinions on Statements of Expenditures
The statements of expenditures, including the accompanying notes, for the
office of Independent Counsel David M. Barrett and the office of Special
Counsel Patrick J. Fitzgerald present fairly, in all material respects,
the expenditures of each of these counsels for the 6 months ended March
31, 2006, on the basis of accounting described in note 1 of each office's
statement.
The counsels prepared their statements of expenditures principally on a
cash basis of accounting, which is a comprehensive basis of accounting
other than U.S. generally accepted accounting principles. The basis of
accounting is described in note 1 of each counsel's statement. Each of the
counsels' statements includes only expenditures made from the permanent,
indefinite appropriation.
Opinions on Internal Control
Each of the counsels maintained, in all material respects, effective
internal control over financial reporting (including safeguarding assets)
and compliance as of March 31, 2006, that provided reasonable assurance
that misstatements, losses, or noncompliance material in relation to the
statements of expenditures would be prevented or detected on a timely
basis. Our opinion for each counsel is based on criteria we established in
our Standards for Internal Control in the Federal Government.4
Compliance with Laws and Regulations
Our tests for compliance with selected provisions of laws and regulations
disclosed no instances of noncompliance that would be reportable under
U.S. generally accepted government auditing standards. However, the
objective of our audit was not to provide an opinion on overall compliance
with laws and regulations. Accordingly, we do not express such an opinion.
Objectives, Scope, and Methodology
The independent counsels are responsible for preparing statements of
expenditures in conformity with the basis of accounting described in the
accompanying notes. Though not required to do so, the Special Counsel also
elected to prepare a statement of expenditures. The counsels are also
responsible for establishing and maintaining internal control to provide
reasonable assurance that the following internal control objectives are
met:
o Financial reporting: Transactions are properly recorded, processed, and
summarized to permit the preparation of the statements of expenditures in
conformity with the basis of accounting described in the notes to the
statements, and assets are safeguarded against loss from unauthorized
acquisition, use, or disposition.
o Compliance with laws and regulations: Transactions are executed in
accordance with laws and regulations that could have a direct and material
effect on the counsels' statements of expenditures.
We are responsible for obtaining reasonable assurance about whether (1)
each counsel's statement of expenditures is presented fairly, in all
material respects, in conformity with the basis of accounting described in
the notes accompanying their statements of expenditures; and (2) each
counsel maintained effective internal control over financial reporting and
compliance as of March 31, 2006. We are also responsible for testing
compliance with selected provisions of laws and regulations that could
have a direct and material effect on the statements of expenditures.
In order to fulfill these responsibilities, for each counsel, we (1)
examined, on a test basis, evidence supporting the amounts and disclosures
in the statement of expenditures; (2) assessed the accounting principles
used by management; (3) evaluated the overall presentation of the
statement of expenditures; (4) obtained an understanding of internal
control related to financial reporting (including safeguarding assets) and
compliance with laws and regulations; (5) tested relevant internal control
over financial reporting (including safeguarding assets) and compliance;
and (6) tested compliance with selected provisions of 28 U.S.C. S:S:
591-599, Title 5 of the U.S.Code, the Prompt Pay Act, and selected
provisions related to pay administration and travel regulations.
Our audits were designed to determine whether the statements of
expenditures were fairly stated in all material respects. We were not
required to, nor do we express an opinion on, the reasonableness or
appropriateness of any related expenditures.
We did not evaluate controls relevant to operating objectives, such as
controls relevant to ensuring efficient operations. We limited our
internal control testing to controls over financial reporting and
compliance. Because of inherent limitations in internal control,
misstatements due to error, 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
offices of the independent and special counsel. We limited our tests of
compliance to those laws and regulations that we deemed applicable to the
statements of expenditures for the 6 months ended March 31, 2006. 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 audits in accordance with U.S. generally accepted
government auditing standards.
Agency Comments
We provided drafts of this report to the office of special counsel
Fitzgerald, the Department of Justice, and AOUSC for review and comment.
These entities agreed with the facts and conclusions in our report.
Steven J. Sebastian Director Financial Management and Assurance
September 15, 2006
List of Committees
The Honorable Thad Cochran Chairman The Honorable Robert C. Byrd Ranking
Minority Member Committee on Appropriations United States Senate
The Honorable Susan M. Collins Chairman The Honorable Joseph I. Lieberman
Ranking Minority Member Committee on Homeland Security and Governmental
Affairs United States Senate
The Honorable Arlen Specter Chairman The Honorable Patrick J. Leahy
Ranking Minority Member Committee on the Judiciary United States Senate
The Honorable Jerry Lewis Chairman The Honorable David R. Obey Ranking
Minority Member Committee on Appropriations House of Representatives
The Honorable Tom Davis Chairman The Honorable Henry A. Waxman Ranking
Minority Member Committee on Government Reform House of Representatives
The Honorable F. James Sensenbrenner, Jr. Chairman The Honorable John
Conyers, Jr. Ranking Minority Member Committee on the Judiciary House of
Representatives
Appendix I
Statement of Expenditures for Independent Counsel Barrett
Appendix II
Statement of Expenditures for Special Counsel Fitzgerald
(196120)
*** End of document. ***