Financial Audit: Special Counsel Expenditures for the Six Months
Ended March 31, 2007 (28-SEP-07, GAO-07-1205).
This report presents the results of our audit of expenditures
reported by the Office of Special Counsel Patrick J. Fitzgerald
for the 6 months ended March 31, 2007. The Department of Justice
and the 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 statement of expenditures prepared by any active
independent counsels. For the 6 months ended March 31, 2007,
there were no active independent counsels. However, we audited
the statement of expenditures of Special Counsel Fitzgerald, who
is authorized by the Department of Justice to fund his operation
from the permanent, indefinite appropriation. 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, 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. As ordered by the Special Division, the Office of
Independent Counsel Barrett, the last independent counsel to
serve under the law, was terminated on May 3, 2006, and
accordingly, no longer prepares a statement of expenditures.
However, after that date, the Administrative Office of the United
States Courts (AOUSC) continued to perform administrative
responsibilities and maintain the administrative records for the
terminated office. During the 6 months ended March 31, 2007,
several payments on that counsel's behalf were made, including
$26,922 primarily for severance pay, $6,991 for printing of the
final report, and $1,113 for support services rendered by AOUSC.4
However, we are not expressing an opinion on these amounts.
-------------------------Indexing Terms-------------------------
REPORTNUM: GAO-07-1205
ACCNO: A76809
TITLE: Financial Audit: Special Counsel Expenditures for the Six
Months Ended March 31, 2007
DATE: 09/28/2007
SUBJECT: Accounting procedures
Accounting standards
Appropriations
Audit reports
Cash basis accounting
Federal regulations
Financial analysis
Financial management
Financial statement audits
Financial statements
Independent counsels
Internal controls
Reporting requirements
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GAO-07-1205
* [1]Auditor's Report
* [2]Background
* [3]Opinion on Statement of Expenditures
* [4]Opinion on Internal Control
* [5]Compliance with Laws and Regulations
* [6]Objectives, Scope, and Methodology
* [7]Agency Comments
* [8]GAO's Mission
* [9]Obtaining Copies of GAO Reports and Testimony
* [10]Order by Mail or Phone
* [11]To Report Fraud, Waste, and Abuse in Federal Programs
* [12]Congressional Relations
* [13]Public Affairs
United States Government Accountability Office
Report to Congressional Committees
GAO
September 2007
FINANCIAL AUDIT
Special Counsel Expenditures for the Six Months Ended March 31, 2007
GAO-07-1205
Contents
Letter 1
Auditor's Report [14]BackgroundOpinion on Statement of Expenditures 2 3 4
Opinion on Internal Control Compliance with Laws 4 4 5
and Regulations Objectives, Scope, and Methodology 6
Agency Comments
Appendix I [15]Statement of Expenditures for Special Counsel
Fitzgerald 9
Abbreviations
AOUSC Administrative Office of the U.S. Courts
GAO Government Accountability Office
FBI Federal Bureau of Investigation
OIC Office of Independent Counsel
OSC Office of Special Counsel
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United States Government Accountability Office
Washington, DC 20548
September 28, 2007
Congressional Committees
Enclosed is our report on our audit of the statement of expenditures for
the Office of Special Counsel Patrick J. Fitzgerald for the 6 months ended
March 31, 2007. Our audit was designed to determine whether the statement
of expenditures was 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 Special Counsel, and
other interested parties. Copies of this report will be made available to
others upon request. In addition, the report will be available at no
charge on GAO's Web site at http://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. GAO staff who made major contributions to this
report are Julie Phillips, Assistant Director; Kwabena Ansong; and Alyson
Mahan.
Steven J. Sebastian
Director
Financial Management and Assurance
United States Government Accountability Office
Washington, DC 20548
Congressional Committees
This report presents the results of our audit of expenditures ^[16]1
reported by the Office of Special Counsel Patrick J. Fitzgerald for the 6
months ended March 31, 2007. The Department of Justice and the 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 statement of expenditures prepared by any active
independent counsels. For the 6 months ended March 31, 2007, there were no
active independent counsels. However, we audited the statement of
expenditures of Special Counsel Fitzgerald, who is authorized by the
Department of Justice to fund his operation from the permanent, indefinite
appropriation.
In our audit covering the 6 months ended March 31, 2007, we found
o the statement of expenditures presented in appendix I for the Office
of Special Counsel Patrick J. Fitzgerald, is presented fairly, in all
material respects, in conformity with the basis of accounting
described in note 1 of the counsel's statement, which is principally
the cash basis, a comprehensive basis of accounting other than U.S.
generally accepted accounting principles;
o Special Counsel Fitzgerald had effective internal control over
financial reporting (including safeguarding assets) and compliance
with laws and regulations as of March 31, 2007; and
o no reportable noncompliance with laws and regulations we tested.
Our audit was designed to determine whether the statement of expenditures
is 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 our
conclusions with respect to our opinion and compliance with laws and
regulations; discuss the objectives, scope, methodology of our audit; and
contain agency comments.
^1The term expenditures as used in this report generally means cash
disbursed.
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. SS 591599), 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 directed 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. The Department of Justice
determined that the appropriation established by Public Law 100202 ^[17]2
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. ^[18]3
As ordered by the Special Division, the Office of Independent Counsel
Barrett, the last independent counsel to serve under the law, was
terminated on May 3, 2006, and accordingly, no longer prepares a statement
of expenditures. However, after that date, the Administrative Office of
the United States Courts (AOUSC) continued to perform administrative
responsibilities and maintain the administrative records for the
terminated office. During the 6 months ended March 31, 2007, several
payments on that counsel's behalf were made, including $26,922 primarily
for severance pay, $6,991 for printing of the final report, and $1,113 for
support services rendered by AOUSC. ^[19]4 However, we are not expressing
an opinion on these amounts.
^2The permanent, indefinite appropriation was established by Pub. L. No.
100-202, S 101(a), title II, 101 Stat. 1329, 1329-9 (Dec. 22, 1987), 28
U.S.C. S 591 note.
^3We reviewed the legal authority for the Department of Justice to use the
permanent, indefinite appropriation to fund the expenditures relating to
Special Counsel Fitzgerald's investigation and, in our opinion to the
Chairmen of the House and Senate Appropriations Committees, concluded that
such was not an illegal, improper, or unauthorized use of the
appropriation. B-302582 (Sept. 30, 2004).
Opinion on Statement of Expenditures
The statement of expenditures, including the accompanying notes, for the
Office of Special Counsel Patrick J. Fitzgerald presents fairly, in all
material respects, the expenditures of the counsel for the 6 months ended
March 31, 2007, on the basis of accounting described in note 1 of the
counsel's statement.
The counsel prepared the statement 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 the counsel's statement. The
counsel's statement includes only expenditures made from the permanent,
indefinite appropriation.
Opinion on Internal Control
Special Counsel Fitzgerald maintained, in all material respects, effective
internal control over financial reporting (including safeguarding assets)
and compliance with laws and regulations as of March 31, 2007, that
provided reasonable assurance that misstatements, losses, or noncompliance
material in relation to the statement of expenditures would be prevented
or detected on a timely basis. Our opinion is based on criteria we
established in our Standards for Internal Control in the
[20]5 Federal Government.
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
Laws and Regulations 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.
^4The Independent Counsel Law designated specific responsibilities to AOUSC
for the administrative support of independent counsels. The Department of
Justice periodically disburses lump-sum payments to AOUSC for this
purpose.
^5GAO, Standards for Internal Control in the Federal Government,
GAO/AIMD-00-21.3.1 (Washington, D.C.: November 1999).
http://www.gao.gov/special.pubs/ai00021p.pdf.
Objectives, Scope, and Methodology
Though not required to do so, the special counsel elected to prepare a
statement of expenditures in conformity with the basis of accounting
described in the accompanying notes. Additionally, the counsel is
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 statement of
expenditures in conformity with the basis of accounting described in
the notes to the statement, 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 counsel's statement of expenditures.
We are responsible for obtaining reasonable assurance about whether
(1) the counsel's statement of expenditures is presented fairly,
in all material respects, in conformity with the basis of
accounting described in the notes accompanying the statement
of expenditures; and (2) the special counsel maintained
effective internal control over financial reporting and
compliance as of March 31, 2007. We are also responsible for
testing compliance with selected provisions of laws and
regulations that could have a direct and material effect on
the counsel's statement of expenditures. In order to fulfill
these responsibilities, 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
Title 5 of the United States Code, the Prompt Pay Act, and
selected provisions related to pay administration and travel
regulations.
Our audit was designed to determine whether the statement of expenditures
was 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.
Agency Comments
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
Office of the Special Counsel. We limited our tests of compliance to those
laws and regulations that could have a direct and material effect on the
statement of expenditures for the 6 months ended March 31, 2007. 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 audit in accordance with U.S. generally accepted
government auditing standards.
Agency Comments
We provided drafts of this report to the Office of Special Counsel, 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 20, 2007
List of Committees
The Honorable Robert C. Byrd
Chairman
The Honorable Thad Cochran
Ranking Member
Committee on Appropriations
United States Senate
The Honorable Joseph I. Lieberman
Chairman
The Honorable Susan M. Collins
Ranking Member
Committee on Homeland Security
and Governmental Affairs United States Senate
The Honorable Patrick J. Leahy
Chairman
The Honorable Arlen Specter
Ranking Member
Committee on the Judiciary
United States Senate
The Honorable David R. Obey
Chairman
The Honorable Jerry Lewis
Ranking Member
Committee on Appropriations
House of Representatives
The Honorable Henry A. Waxman
Chairman
The Honorable Tom M. Davis
Ranking Member
Committee on Oversight and Government Reform
House of Representatives
The Honorable John Conyers, Jr.
Chairman
The Honorable Lamar S. Smith
Ranking Member
Committee on the Judiciary
House of Representatives
Appendix I: Statement of Expenditures for Special Counsel Fitzgerald
(196164)
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