Financial Audit: American Battle Monuments Commission's Financial
Statements for Fiscal Years 2006 and 2005 (01-MAR-07,
GAO-07-321).
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, 2006, and 2005. The audits were done to
determine whether, in all material respects, (1) the Commission's
financial statements were presented fairly, and (2) Commission
management maintained effective internal control over financial
reporting and compliance with laws and regulations. Also, GAO
tested Commission management's compliance with selected laws and
regulations. The 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 six nonfederal memorials
with funds provided by those memorials' sponsors.
-------------------------Indexing Terms-------------------------
REPORTNUM: GAO-07-321
ACCNO: A66366
TITLE: Financial Audit: American Battle Monuments Commission's
Financial Statements for Fiscal Years 2006 and 2005
DATE: 03/01/2007
SUBJECT: Accounting standards
Auditing standards
Financial management
Financial records
Financial statement audits
Internal controls
Reporting requirements
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GAO-07-321
* [1]Report to Congressional Committees
* [2]March 2007
* [3]FINANCIAL AUDIT
* [4]American Battle Monuments Commission's Financial Statements
for Fiscal Years 2006 and 2005
* [5]Contents
* [6]Opinion on Financial Statements
* [7]Opinion on Internal Control
* [8]Reportable Condition
* [9]Deficient Controls over Information Technology Systems
* [10]Corrected Condition on Property and Payables Recognition
* [11]Compliance With Laws and Regulations
* [12]Consistency of Other Information
* [13]Objectives, Scope, and Methodology
* [14]Commission Comments
* [15]Management's Discussion and Analysis
* [16]Financial Statements
* [17]Other Information
United States Government Accountability Office
GAO
March 2007
FINANCIAL AUDIT
American Battle Monuments Commission's Financial Statements for Fiscal Years
2006 and 2005
a
[18]GAO-07-321
FINANCIAL AUDIT
American Battle Monuments Commission's Financial Statements for Fiscal
Years 2006 and 2005
What GAO Found
In GAO's opinion, the financial statements of the American Battle
Monuments Commission as of September 30, 2006, and 2005, 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
GAO's opinion, although certain internal controls should be improved, the
Commission maintained effective internal control over financial reporting
(including safeguarding of assets) and compliance with laws and
regulations as of September 30, 2006. In addition, GAO found no instances
of Commission noncompliance in fiscal year 2006 with selected provisions
of laws and regulations GAO tested.
The internal controls that should be improved as of September 30, 2006,
which GAO considered to be a reportable condition, relate to two areas of
information technology. Specifically, user documentation is lacking for
the Commission's Foreign Service National employee payroll, and security
program and access controls over the computer system were not effective at
all Commission locations. The Commission is working to improve its
internal controls over information technology. During fiscal year 2006,
the Commission strengthened its accounting for property and accounts
payable such that GAO no longer considers it to be a reportable condition
as of September 30, 2006.
For fiscal year 2006, the Commission incurred program costs of $53.8
million to maintain its 24 cemeteries and 25 federal memorials that were
financed from appropriated funds. Another $2.9 million of program costs
were financed by other trust funds for final construction costs and
administration related to the World War II Memorial, grave site flowers,
and the repair and maintenance of nonfederal memorials that are funded by
private contributions.
The Commission's Brittany American Cemetery, St. James, France
Contents
[19]Letter
[20]Auditor's Report 3
[21]Opinion on Financial Statements 3
[22]Opinion on Internal Control 3
[23]Reportable Condition 4
[24]Compliance With Laws and Regulations 6
[25]Consistency of Other Information 6
[26]Objectives, Scope, and Methodology 6
[27]Commission Comments 9
[37]Management's Discussion and Analysis
Financial Statements
[28]Consolidating Balance Sheet 18
[29]Consolidating Statement of Net Cost and Changes in Net
[30]Position 19
[31]Consolidating Statement of Budgetary Resources 20
[32]Consolidating Statement of Financing 21
[33]Notes to the Consolidating and Consolidated Financial
[34]Statements 22
Other Information
[35]Required Supplementary Information 30
[36]Schedules of Heritage Assets 31
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
work may contain copyrighted images or other material, permission from the
copyright holder may be necessary if you wish to reproduce this material
separately.
United States Government Accountability Office Washington, D.C. 20548
March 1, 2007
The Honorable Daniel K. Akaka
Chairman
The Honorable Larry Craig
Ranking Minority Member
Committee on Veterans' Affairs
United States Senate
The Honorable Bob Filner
Chairman
The Honorable Steve Buyer
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 financial statements of the American Battle Monuments
Commission's (the Commission) for the fiscal years ended September 30,
2006, and 2005.
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. Key contributors to this engagement
were Roger R. Stoltz, Patricia A. Summers, Mark Canter, Cara Bauer, Bret
Kressin, Chelsea Lounsbury, and Heather Bergstrom. Contact points for our
Offices of Congressional Relations and Public Affairs may be found on
Steven J. Sebastian
Director
Financial Management and Assurance
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 2006 and 2005, we found
o the consolidating financial statements as of and for the fiscal year
ended September 30, 2006, and comparative consolidated totals as of
and for the fiscal year ended September 30, 2005, 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, 2006; 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 Statements
The Commission's consolidating balance sheet as of September 30, 2006, and
its related consolidating statements of 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, 2005, are presented fairly, in all
material respects, in conformity with U.S. generally accepted accounting
principles.
Opinion on Internal Control
Although certain internal controls should be improved, the Commission
maintained, in all material respects, effective internal control over
financial reporting (including safeguarding assets) and compliance as of
September 30, 2006. Internal control provided reasonable assurance that
misstatements, losses, or noncompliance material in relation to the
consolidating financial statements 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's
Responsibility for Internal Control (Dec. 21, 2004).
Our work identified the need to improve certain internal controls, as
described below, that we consider a reportable condition. 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 this reportable condition.
Reportable Condition
During our audit, we noted deficiencies in controls over information
technology systems as of September 30, 2006. A prior year condition
regarding the recognition of property and accounts payable was corrected
by the Commission during fiscal year 2006. Commission management disclosed
the information technology condition in its fiscal year 2006 FMFIA report
and is working to implement corrections for all internal control
deficiencies.
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,
it did not provide user documentation to support its older legacy
subsystems that were still used primarily for payroll during fiscal year
2006. 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, but have limited support to explain how subsystems functions
should be performed and to answer questions.
In January 2004, this condition was partially corrected when payroll
processing for the Commission's General Schedule employees was converted
to the General Services Administration system, which provided sufficient
user documentation. During fiscal year 2005, a contractor began designing
and documenting a new payroll system for the Commission's Foreign Service
National employees, which is projected to be operational sometime in
fiscal year 2007. Further efforts to improve user documentation are
ongoing.
o Security program and access controls: During our fiscal year 2006 audit,
we continued to identify some security controls over the Commission's
computer system, such as administrative controls over network
configuration, passwords, encryption, and access to files, that were not
effective at all Commission locations as of September 30, 2006. This
condition may allow unauthorized parties access to the Commission's
computer system and network resources that could result in damage,
deletion, or theft of computerized data. 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 through
2005 audits, we communicated detailed information and made specific
recommendations to strengthen Commission internal controls in information
technology, accounting procedures, and financial reporting. While the
Commission has implemented many of these recommendations, further efforts
are needed.
Corrected Condition on Property and Payables Recognition
In our previous audit of the Commission's financial statements,^1 we
disclosed a reportable condition related to the Commission's improper
recognition of property and accounts payable. This resulted in audit
adjustments to correct property balances by $0.4 million and accounts
payable by $0.6 million as of September 30, 2005. We noted that proper
expensing of heritage asset additions, while capitalizing and depreciating
general property additions over accounting policy limits, was necessary
for accountability and proper presentation. In addition, proper cutoff of
accrued liabilities for goods, services, and benefits received during the
current fiscal year but invoiced and paid in the next fiscal year was also
necessary for accountability and proper presentation. During our current
audit, we found that training, new personnel, and increased review by
Commission accounting staff during fiscal year 2006 and at year end
resulted in improved accounting for property and payables. Therefore, we
no longer considered this a reportable condition as of September 30, 2006.
^1GAO, Financial Audit: American Battle Monuments Commission's Financial
Statements for Fiscal Years 2005 and 2004, GAO-06-348 (Washington, D.C.:
Mar. 1, 2006).
Compliance With Laws and Regulations
Our tests of the Commission's compliance with selected provisions of laws
and regulations for fiscal year 2006 disclosed no instances of
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 other information
related to heritage assets 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. On the
basis of 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 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 other information in conformity with U.S. generally accepted
accounting
o 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 the Commission's 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 and
regulations:
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 Military Quality of Life and Veterans Affairs Appropriations Act,
2006,
o Emergency Supplemental Appropriations to Address Hurricanes in the
Gulf of Mexico and Pandemic Influenza, 2006 (Section 3801, one percent
across-the-board rescission),
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 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 selected provisions of
laws and regulations that have a direct and material effect on the
financial statements and those required by OMB audit guidance that we
deemed applicable to the Commission's financial statements for the fiscal
year ended September 30, 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 work in accordance with U.S. generally accepted
government auditing standards and OMB audit guidance.
Commission Comments
Commission management was provided with a draft of this report and
concurred with its facts and conclusions.
Steven J. Sebastian
Director
Financial Management and Assurance
January 31, 2007
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, 2006
Commission Profile
The American Battle Monuments Commission (the Commission)--guardian of
America's overseas commemorative cemeteries and memorials--honors the
service, achievements and sacrifice of United States Armed Forces. Since
1923, the Commission has executed this mission by (1) commemorating the
achievements and sacrifices of United States Armed Forces where they have
served overseas since April 6, 1917, through the erection and maintenance
of suitable memorial shrines; (2) designing, constructing, operating and
maintaining permanent American military burial grounds in foreign
countries; and (3) controlling 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 encouraging their
maintenance. Our fiscal year 2006 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 six nonfederal memorials. While three
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 in the world. As of September 30,
2006, interred in the cemeteries are almost 125,000 U.S. war dead: about
31,000 from World War I, over 93,000 from World War II, and 750 from the
Mexican American War. Additionally, over 6,000 American veterans and
others are interred in our Mexico City and Corozal cemeteries. The
Commission's World War I, World War II, and Mexico City cemeteries are
closed to future burials except for the remains of U.S. war dead
discovered in World War I and II battle areas.
In addition to grave sites, the World War I and II cemeteries, together
with three memorials on
U.S. soil, commemorate by name on Tablets of the Missing over 94,000 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.
The Commission also administers trust funds to (1) build memorials
authorized by Congress, but financed primarily from private contributions,
commemorative coin proceeds, and investment earnings; (2) decorate grave
sites with flowers from private contributions; and (3) maintain and repair
nonfederal war memorials with private contributions.
Operations Management
The Commission's fiscal year 2006 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 Interpretive Center.
The Commission's fiscal year 2006 appropriation of $36.25 million was
available for salaries and expenses. Of this total, $3.1 million was
allocated for the design and construction of the Normandy Interpretive
Center. A government-wide rescission of 1% reduced the Commission's
Salaries and Expenses appropriation by $362,500, causing it to reduce
spending in much-needed engineering projects to accommodate this loss.
For fiscal year 2006, Congress also appropriated $15.25 million into the
Commission's Foreign Currency Fluctuation Account, less $152,500 for the
1% rescission. This appropriation is used to offset foreign exchange
losses to the U.S. Dollar primarily by the European Euro. This funding
also reduces the Commission's risk that the funding appropriated for its
operations (in the Salaries and Expenses appropriation) would be
jeopardized due to vagaries in currency fluctuations.
Most of our facilities range in age from 46 to 92 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. Within its fiscal year
2006 appropriation, the Commission targeted $1.0 million to continue the
Infrastructure Modernization Program. This 50% decrease from fiscal year
2005 hindered our efforts to upgrade or replace outdated and deteriorating
systems.
The shrines to America's war dead entrusted to the Commission's care
require a significant annual program of maintenance and repair of
facilities, equipment, and grounds. This care includes upkeep of more than
131,000 graves and headstones and 73 memorial structures (within and
external to the cemeteries) on over 1,600 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. All of the plantings,
including the lawns and to some extent the meadows, must be cut and
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.
Care and maintenance of these resources is exceptionally labor intensive;
thus personnel costs accounted for more than half of the Commission's
fiscal year 2006 obligations. Figure 2 shows the obligation of funds by
object class under the Commission's fiscal year 2006 obligations.
President's Management Agenda Initiatives
The Commission made significant progress in the implementation of each
item within the five initiatives of the President's Management Agenda as
follows.
Strategic Management of Human Capital
In fiscal year 2002, we began a worldwide manpower study that outlined our
manpower requirements, position descriptions, workloads, and manpower
distribution. This effort was to ensure that we deploy our workforce so
that we have the right person with the right skills in every position. We
expect to implement the study recommendations through fiscal year 2007 if
funding allows.
Competitive Sourcing
We have used competitive sourcing initiatives in a number of ways to
improve performance and save costs. Our fiscal year 2006 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 increasing the size of our
financial management staff. 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 so that they can make informed decisions. The fiscal
year 2006 budget not only supported our daily accounting 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 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. During fiscal year 2006, we transitioned our
public Web site from an internal operation to an outside Web hosting
service. This move improved Web site availability and expanded our ability
to provide multimedia information over the internet. Specifically, the Web
site now has greater capacity to support videos and increased public use.
Other improvements include the ability for the public to access our job
postings and to email regions and cemeteries directly.
Budget and Performance Integration
A key element in linking budget and performance is having timely and
reliable financial data. We 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
fiscal year 2006, we initiated top-to-bottom cemetery reviews. These
reviews are used to match requirements to resources across engineering,
logistics, and horticulture, and form the basis for future budget
requirements.
Selected Performance Goals and Results
During fiscal year 2006, the Commission demonstrated an ability to achieve
performance results 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 non-fee passports for members of the immediate
family traveling overseas primarily to visit the cemetery; incountry
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 Tablet 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. We also purchases floral
decorations with donor funds and the donor is provided with a
photograph of the headstone or Tablet of the Missing with the
decoration in place.
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. We provide cemetery lithographs, photos, and other
information throughout the year.
3. The Commission's Web site 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 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.
During fiscal year 2006, the Commission developed a database of
burials at our Corozal American Cemetery in Panama that will be made
available to the public through the Web site in fiscal year 2007.
4. Most Americans and foreign citizens who visit Commission cemeteries
pay homage collectively to the interred war dead. Many have more
personal reasons for visiting a friend or relative who never returned
home from war. Regardless of the visitors' motivations, Commission
employees dedicate themselves to making each visit gratifying and
memorable. The Commission's overseas commemorative sites are
recognized for their beauty and inspirational qualities, yet few
Americans are aware of their existence; the Commission estimates that
85 percent of its visitors are foreign citizens. As a result, the
Commission continued its efforts to increase public awareness of these
sites so that more Americans add
them to their itineraries when traveling overseas. The Commission
developed traveling
displays and worked closely with the travel and tour industry, as well as
general and travel
media, to bring greater visibility to our cemeteries and memorials.
5. Throughout the year, at its commemorative sites around the world, the
Commission hosted a variety of special events and commemorations
including ceremonies on Memorial 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. The President of the United States and the First Lady,
joined by an honor guard of American veterans, placed a wreath at
Corozal American Cemetery on November 7, 2005, during their state
visit to Panama.
6. 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 May 2006 dedicated a carillon at the Ardennes American Cemetery
in Belgium, the 17th donated over the years.
7. 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. Based on the success of the first engraving machine, we
ordered a second headstone engraving machine in fiscal year 2006 for
the Meuse-Argonne American Cemetery.
8. For fiscal years 2002 through 2006, the Commission allocated a total
of $30 million of appropriations, net of rescissions, to build an
expanded visitor interpretive center at the Normandy American
Cemetery. This will be the Commission's first such center and will
help us tell the story of those that participated in the D-Day
invasion and ensuing operations of the Normandy campaign. The
construction of this facility started at the end of fiscal year 2005
and dedication is planned for the anniversary of D-Day, June 6, 2007.
The Commission will continue to review and revise 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 2006 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; and
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 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
Changes in the rate of exchange for foreign currencies have a significant
impact on 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. By
maintaining close scrutiny on the Commission's obligation status, as well
as monitoring and distributing the Foreign Currency Fluctuation Account
balance, our overall future financial risk to operations is reduced.
Financial Statements
Consolidating Balance Sheet
AMERICAN BATTLE MONUMENTS COMMISSION
CONSOLIDATING BALANCE SHEET
As of September 30, 2006
(With Comparative Consolidated Total as of September 30, 2005)
General Fund Trust Funds Total Funds Total Funds
WWII and
Cemeteries and Other
Memorials Trust Funds Total 2006 Total 2005
Assets
Intragovernmental:
Fund balance with $40,012,391 $15,057,733 $55,070,124 $48,356,286
Treasury (note 2)
Treasury investments, 58,137 58,137 7,960,248
net (note 3)
Total Intragovernmental 40,012,391 15,115,870 55,128,261 56,316,534
Cash and foreign 89,383 185 89,568 87,490
accounts (note 4)
Accounts receivable 31,425
Contributions
receivable, net (note 110,000 110,000 207,040
5)
General property and 1,921,881 1,921,881 1,995,704
equipment, net (note 6)
Heritage property (note 0 0 0 0
6)
Total Assets $42,023,655 $15,226,055 $57,249,710 $58,638,193
Liabilities
Intragovernmental:
Accounts payable $138,580 $1,700,236 1,838,816 $3,935,262
Accrued salaries and 85,511 85,511 79,845
benefits
Total 224,091 1,700,236 1,924,327 4,015,107
Intragovernmental
Accounts payable 4,550,967 57,094 4,608,061 1,636,030
Other liabilities 4,020,367 518 4,020,885 3,104,865
(note 7)
Total Liabilities 8,795,425 1,757,848 10,553,273 8,756,002
Commitments and contingencies (note 8)
Net Position (note 9)
Unexpended 33,809,576 33,809,576 34,749,909
appropriations
Cumulative Results of (581,346) 13,468,207 12,886,861 15,132,282
Operations (deficit)
Total Net Position 33,228,230 13,468,207 46,696,437 49,882,191
Total Liabilities and
Net Position $42,023,655 $15,226,055 $57,249,710 $58,638,193
The accompanying notes are an integral part of these statements.
Financial Statements
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, 2006
(With Comparative Consolidated Total for the Year Ended September 30,
2005)
General Fund Trust Funds Total Funds Total Funds
Cemeteries and WWII and Other
Memorials Trust Funds Total 2006 Total 2005
PROGRAM COSTS
Intragovernmental program costs:
Operations
and $2,932,680 $2,932,680 $2,927,952
maintenance
Design and $1,858,309 1,858,309 2,702,633
construction
Program costs with the public:
Operations and 31,877,044 240,279 32,117,323 29,440,526
maintenance
Fund raising 46,644
Administrative 324,278 324,278 685,496
Design and 653,218
construction
Memorial costs 439,841 439,841 52,738
Property and
equipment 9,626,263 58 9,626,321 2,234,441
(note 6)
Foreign 9,334,477 9,334,477 8,377,092
currency
losses, net
Net Cost of $53,770,464 $2,862,765 $56,633,229 $47,120,740
Operations
CHANGES IN NET POSITION
Cumulative
Results (122,568)$ 15,254,850$ $15,132,282 $18,611,215
(Deficit) -
Start of Year
Budgetary Financing Sources
Appropriations 52,642,968 52,642,968 41,906,879
used
Total Budgetary
Financing 52,642,968 52,642,968 41,906,879
Sources
Other Financing Sources
Contributions 843,913 843,913 1,071,129
Treasury investment 232,209 232,209 96,508
earnings
Other revenue 7,645 7,645
Imputed financing 661,073 661,073 567,291
Total Other Financing 668,718 1,076,122 1,744,840 1,734,928
Sources
Total Financing 53,311,686 1,076,122 54,387,808 43,641,807
Sources
Less: Net Cost of 53,770,464 2,862,765 56,633,229 47,120,740
Operations
Net Increase
(Decrease) for the (458,778) (1,786,643) (2,245,421) (3,478,933)
Year
Cumulative Results
(Deficit) - End of (581,346) 13,468,207 12,886,861 15,132,282
Year
Unexpended
Appropriations -Start 34,749,909 34,749,909 23,981,588
of Year
Budgetary Financing Sources
Appropriations 50,985,000 50,985,000 52,675,200
received
Other offsetting
receipts and 717,635 717,635
adjustments
Appropriations (52,642,968) (52,642,968) (41,906,879)
used
Increase in (940,333) (940,333) 10,768,321
unexpended
appropriations
Unexpended
Appropriations 33,809,576 33,809,576 34,749,909
-End of Year
TOTAL NET
POSITION- END OF
YEAR $33,228,230 $13,468,207 $46,696,437 $49,882,191
The accompanying notes are an integral part of these statements.
Page 19 GAO-07-321 ABMC 2006 and 2005 Financial Audit
Consolidating Statement of Budgetary Resources
AMERICAN BATTLE MONUMENTS COMMISSION
CONSOLIDATING STATEMENT OF BUDGETARY RESOURCES
For the Year Ended September 30, 2006
(With Comparative Consolidated Total for the Year Ended September 30,
2005)
General Fund Trust Funds Total Funds Total Funds
WWII and
Cemeteries and Other
Memorials Trust Funds Total 2006 Total 2005
Budgetary Resources
Budgetary Authority:
Appropriations $51,500,000 $51,500,000 $53,100,000
Net transfer in for net 7,929,796 7,929,796 8,949,331
foreign exchange loss
Other (receipts 591,141 $1,475,990 2,067,131 1,679,131
collected)
Less: Rescinded (515,000) (515,000) (424,800)
Unobligated Balances:
Start of year 15,661,856 14,177,900 29,839,756 33,148,353
Net transfer (out) for (7,929,796) (7,929,796) (8,949,331)
net foreign exchange
(loss)
Other adjustments (37,743) (37,743)
Recoveries of prior year 10,041 10,041 (411,746)
obligations
Total Budgetary Resources $67,210,295 $15,653,890 $82,864,185 $87,090,938
Status of Budgetary Resources
Obligations incurred - $47,304,280 $5,625,762 $52,930,042 $57,007,992
direct
Unobligated balances 19,906,015 10,028,128 29,934,143 30,082,946
available
Total Status of Budgetary $67,210,295 $15,653,890 $82,864,185 $87,090,938
Resources
Net Outlays
Obligations incurred $47,304,280 $5,625,762 $52,930,042 $57,007,992
Plus: Obligated balances,
start of year:
Undelivered orders 19,088,053 566,285 19,654,338 8,615,513
Delivered orders - unpaid 3,086,109 3,432,965 6,519,074 4,668,389
Less: Obligated balances,
end of year:
Undelivered orders 13,903,561 3,329,750 17,233,311 (19,654,338)
Delivered orders - unpaid 6,090,489 1,757,330 7,847,819 (6,519,074)
Total Net Outlays $49,484,392 $4,537,932 $54,022,324 $44,118,482
The accompanying notes are an integral part of these statements.
Consolidating Statement of Financing
AMERICAN BATTLE MONUMENTS COMMISSION
CONSOLIDATING STATEMENT OF FINANCING
For the Year Ended September 30, 2006
(With Comparative Consolidated Total for the Year Ended September 30,
2005)
General Fund Trust Funds Total Funds Total Funds
Cemeteries and WWII and Other
Memorials Trust Funds Total 2006 Total 2005
Resources Used To Finance Activities
Obligations
incurred -
direct $47,304,280 $5,625,762 $52,930,042 $57,007,992
Offsetting
collections ($601,182) ($601,182)
and recoveries
Imputed
retirement and 661,073 661,073 567,291
audit services
Other (624,171) (624,171) (247,057)
adjustments
Total 46,740,000 5,625,762 52,365,762 57,328,226
Resources Used
to Finance
Activities
Resources That Do Not Fund Net Cost of Operations
General property
capitalized on the 636,720 636,720 86,428
balance sheet
Decrease in unfunded (12,704)
annual leave
Undelivered orders - 19,088,053 566,285 19,654,338 8,615,513
start of year
Less: Undelivered (13,903,561) (3,329,750) (17,233,311) (19,654,338)
orders - end of year
Total Resources That Do Not Fund Net Cost of Operations
Components of Net Cost of Operations Not Requiring Resources in the
Current Period
Components Requiring Resources in Future Periods: Increase in unfunded
annual leave Increase in unfunded separation pay liability Increase in
accounts receivable
Components Not Requiring Resources: Depreciation In-kind expenses
5,821,212 (2,763,465) 3,057,747
290,706 468 291,174 177,353 177,353
710,543 710,543 30,650 30,650
(10,965,101)
98067,06831,425
627,28230,860
Total Costs Not Requiring Resources in the Current Period 1,209,252 468
1,209,720 757,615
Net Cost of Operations $53,770,464 $2,862,765 $56,633,229 $47,120,740
The accompanying notes are an integral part of these statements.
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, 2006 and 2005
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 6 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 had 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. 8906 (b), the Commission provided $6.6 million
for deposit in a separate Treasury account to offset the memorial's costs
of perpetual maintenance. On November 1, 2004, the Commission signed an
agreement with the National Park Service to formally transfer the National
World War II Memorial to the Service for its future care and maintenance.
Remaining funds reside in a trust fund in the U.S. Treasury to be used
solely to benefit the World War II Memorial for other than routine
maintenance expense.
Commission programs are funded primarily through appropriations available
without fiscal year limitation (no-year). 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.
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 36 U.S.C. 2113(b), 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. Amounts are recorded
at a standard budget rate in U.S. dollars and a gain or loss recognized
when paid in foreign currency. Appropriated monies are transferred from
the Commission's Foreign Currency Fluctuation Account to fund net currency
losses. Cash accounts in foreign currencies 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. OperatingMaterials 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.
I. Property and Equipment
Purchases of general property 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 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 disclosure on individual heritage asset cemeteries and
memorials are found in the Schedules of Heritage Assets presented as
unaudited other 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. For 2006, FERS employees could contribute up
to $15,000 ($20,000 if at least age 50) on a tax-deferred basis to TSP,
which the Commission matches up to 4 percent of base pay. For 2006, CSRS
employees may also contribute up to $15,000 ($20,000 if at least age 50)
on a tax-deferred basis; however, they 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 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 imputes financing for retirement and other benefits paid by
OPM, financial audit costs incurred by the Government Accountability
Office (GAO), and a heritage asset musical carillon donated each fiscal
year. 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.
M. Adoption of New Accounting Standard
The Commission early-adopted FASAB Statement No. 29, Heritage Assets and
Stewardship Land, for fiscal year 2005. The adoption resulted in
additional disclosure with no effect on financial statement amounts or
restatement of prior year's presentation.
N. Reformatting of Prior Year's Presentation
Certain prior year accounts on the Statement of Net Cost and Changes in
Net Position were reformatted to conform to the current year presentation
in accordance with Office of Management and Budget's Circular No. A-136,
Financial Reporting Requirements.
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:
2006 2005
General Fund Trust Funds Total Total
Appropriated Funds $28,422,604 $28,422,604 $34,095,973
Currency Fluctuation 11,589,787 11,589,787 3,740,045
Other Trust Funds __________ $15,057,733 15,057,733 10,520,268
$40,012,391 $15,057,733 $55,070,124 $48,356,286
Note 3. Treasury Investments, Net
As of September 30, the Commission's Trust Fund investments in U.S.
Treasury notes, which are marketable securities due within 2 years were as
follows:
Net Premium Interest
FY Cost Interest Rates /(Discount) Receivable Net Investment
06 $ 58,000 4.00% $ (48) $ 185 $ 58,137
05 $7,658,000 4.00% to 7.00% $190,755 $111,493 $7,960,248
Amortization is on the interest method, and amortized cost approximated
market as of September 30.
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:
2006 2005 Imprest Cash Funds $42,664 $41,158 Foreign Bank Accounts 46,719
46,023 Undeposited Cash--Trust 185 309
$89,568 $ 87,490
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 $110,000 is temporarily restricted
until collected. Amounts due in future years are as follows:
Fiscal Year Due
2007 $110,000Net Contributions Receivable $110,000
The Commission believes that all contributions receivable are fully
collectible, and therefore no allowance for uncollectible accounts has
been established.
Additionally, the Commission has a pledge from a living trust valued at
$178,838 as of September 30, 2006. However, due to the uncertainty of time
and amount when the pledge is collected, the contribution will be
recognized at the amount when received.
Note 6. General and Heritage Property and Equipment
General property and equipment with an aggregate cost basis of $25,000 or
less and all heritage assets were expensed by the Commission and totaled
$9,626,263 in fiscal year 2006, which included $6,879,901 of costs related
to the construction of the Normandy Interpretive Center as a heritage
asset and $2,232,441 in fiscal year 2005. WWII Memorial equipment totaling
$58 in fiscal year 2006 and $2,000 in fiscal year 2005 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.
General property and equipment as of September 30 was as follows:
2006 2005________
Accumulated Accumulated
Category Cost Depreciation Net Cost Depreciation Net
Buildings $ 923,461 $ 73,063 $ 850,398 $ 923,461 $ 42,311 $
881,150
Accounting System 1,760,065 0 1,760,065 1,408,052 352,013
1,760,065
Equipment 2,746,362 1,674,879 1,071,483 2,167,228 1,404,687 762,541
$5,429,888 $3,508,007 $1,921,881 $2,855,050
$4,850,754 $1,995,704
Heritage assets are significant to the mission of the Commission to
design, construct, and maintain historical cemeteries and memorials. The
Commission presents its heritage assets in three categories; cemeteries,
federal memorials, and nonfederal memorials. Changes in heritage assets
for fiscal year 2006 were as follows:
Federal Nonfederal
Cemeteries Memorials Memorials Beginning of Year 10-1-05 24 25 6 Number
Acquired, Fiscal Year 2006 0 0 0 Number Withdrawn, Fiscal Year 2006 0 0 0
End of Year 9-30-06 24 25 6
During fiscal year 2006, the Commission did not assume responsibility for
any additional private memorials. Through September 30, 2006, Commission
cemeteries contain over 131,000 interments. Over 94,000 Honored War Dead,
whose remains were not recovered, are memorialized in the cemeteries and
federal memorials that encompass over 1,600 acres. This land is provided
to the Commission through host agreements with foreign countries for
permanent use as cemeteries and memorials.
Note 7. Other Liabilities
Other liabilities as of September 30 were as follows:
2006 2005
Accrued Salaries and Benefits $1,315,431 $867,937
Unfunded Separation Pay Liability 1,492,136 1,314,784
Unfunded Annual Leave 1,213,318 922,144
$4,020,885 $3,104,865
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 $1,492,136 as of September 30, 2006, and $1,314,784 as of
September 30, 2005.
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 2006, the
Commission incurred $1,071,577 of pension and ORB costs, $314,073 of which
was imputed. For fiscal year 2005, the Commission incurred $1,047,468 of
pension and ORB costs, $287,291 of which was imputed. Total imputed costs
of $661,073 for fiscal year 2006 and $567,291 for fiscal year 2005
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 Commission's Mediterranean Regional Office occupies commercial office
space under a 6-year operating lease expiring in May 2007. The
Mediterranean Regional Office Director's living quarters are rented under
a 6-year operating lease expiring in December 2007. Two operating leases
for cemetery superintendent's temporary living quarters expired in March
and June 2006, respectively. Rent expense for fiscal year 2006 operating
leases was $541,501. Future minimum payments due on operating leases as of
September 30, 2006, are as follows:
Fiscal Year 2007 $435,987 2008 25,729 2009 11,396
$473,112
Note 9. Net Position
Net position balances as of September 30, 2006, were as follows:
General Fund Trust Funds Total
Unexpended Appropriations: Unobligated $19,906,015^1 $19,906,015
Undelivered Orders 13,903,561 13,903,561
$33,809,576 $33,809,576 Cumulative Results of
Operations (deficit): Unrestricted $ (581,346) $ 10,028,457 $ 9,447,111
Undelivered Orders 3,329,750 3,329,750 Temporarily Restricted 110,000
110,000 Permanently Restricted -__ -_
$ (581,346) $ 13,468,207 $ 12,886,861
Total Net Position $33,228,230 $ 13,468,207 $46,696,437
Net position balances as of September 30, 2005, were as follows:
General Fund Trust Funds Total
Unexpended Appropriations:
Unobligated $15,661,8562 $15,661,856
Undelivered Orders 19,088,053 _ 19,088,053
$34,749,909 $ - $34,749,909
Cumulative Results of
Operations (deficit):
Unrestricted $(122,568) $14,481,525 $14,358,957
Undelivered Orders 566,285 566,285
Temporarily Restricted 207,040 207,040
Permanently Restricted -
$(122,568) $15,254,850 $15,132,282
Total Net Position $34,627,341 $15,254,850 $49,882,191
1
Includes $7,113,322 for design and construction of the Normandy Interpretive
Center, consisting of $98,145
unobligated from a $5,000,000 no-year appropriation earmark for FY 2002;
$479,574 unobligated (after a $26,000 rescission) from a $4,000,000
no-year appropriation for FY 2003; $26,735 unobligated (after a $53,100
rescission) from a $9,000,000 no-year appropriation for FY 2004;
$3,439,868 unobligated (after a $72,800 rescission) from a $9,100,000
no-year appropriation for FY 2005; and $3,069,000 unobligated (after a
$31,000 rescission) from a $3,100,000 no-year appropriation for FY 2006.
Includes $10,003,138 for design and construction of the Normandy
Interpretive Center, consisting of $194,029 unobligated from a $5,000,000
no-year appropriation earmark for FY 2002; $503,577 unobligated (after a
$26,000 rescission) from a $4,000,000 no-year appropriation for FY 2003;
$285,832 unobligated (after a $53,100 rescission) from a $9,000,000
no-year appropriation for FY 2004; and $9,019,700 unobligated (after a
$72,800 rescission) from a $9,100,000 no-year appropriation for FY 2005.
Other Information
Required Supplementary Information
American Battle Monuments Commission Other Information September 30, 2006
(Unaudited)
Maintenance, Repairs, and Improvements
The following unaudited information is required supplementary information
on deferred maintenance and the condition of real property at Commission
cemeteries and memorials:
Deferred maintenance is maintenance that was not performed when it should
have or was scheduled to be and which, therefore, is put off or delayed
for a future period. Maintenance and repairs performed on real property
consisting of land improvements, buildings, and memorials totaled $2.9
million in fiscal year 2006 and $4.9 million in fiscal year 2005. 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, 2005, and 2006.
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, 2006, the Commission has identified over 200 maintenance,
repair, and improvement projects, with an estimated cost of $12.6 million,
to be performed in future years, subject to available funding.
Schedules of Heritage Assets
The following three pages present unaudited other information not required
by U.S. generally accepted accounting principles on the Commission's 24
cemeteries; 25 federal memorials, monuments, and markers; and six
nonfederal memorials as of September 30, 2006.
Schedules of Heritage Assets
American Battle Monuments Commission
Schedule of Heritage Assets
September 30, 2006
(Unaudited)
24 CEMETERIES
Name Location Interred Memorialized Acres War
European Region
Aisne Marne American Belleau
Cemetery (Aisne), 2,289 1,060 42.5 WW I
France
Ardennes American Cemetery Neupre, 5,329 462 90.5 WW II
Belgium
Brittany American Cemetery St. James 4,410 498 27.9 WW II
(Manche),
France
Brookwood American Brookwood, 468 563 4.5 WW I
Cemetery England
Cambridge American Cambridge, 3,812 5,126 30.5 WW II
Cemetery England
Epinal American Cemetery Epinal 5,255 424 48.6 WW II
(Vosges),
France
Flanders Field American Waregem, 368 43 6.2 WW I
Cemetery Belgium
Henri-Chapelle American Cemetery 7,992 450 57.0 WW II
Henri-Chapelle, Belgium
Lorraine American St. Avold 10,489 444 113.5 WW II
Cemetery (Moselle), France
Luxembourg American Luxembourg City, 5,076 371 50.5 WW II
Cemetery Luxembourg
Meuse-Argonne American Cemetery 14,246 954 130.5 WW I
Romagne (Meuse), France
Netherlands Margraten, Holland 8,301 1,723 65.5 WW II
American
Cemetery
Normandy Colleville-sur-Mer, 9,387 1,557 172.5 WW II
American France
Cemetery
Oise-Aisne Fere-en-Tardenois,
American France 6,012 241 36.5 WW I
Cemetery
Somme American Bony (Aisne), France 1,844 333 14.3 WW I
Cemetery
St. Mihiel Thiaucourt, Meurthe, 4,153 284 40.5 WW I
American France
Cemetery
Suresnes Seine, France 1,565 974 7.5 WW
American I/II
Cemetery
Mediterranean Region
Florence American Florence, 4,402 1,409 70.0 WW II
Cemetery Italy
North Africa American Carthage, 2,841 3,724 27.0 WW II
Cemetery Tunisia
Rhone American Draguignan, 861 294 12.5 WW II
Cemetery Var, France
Sicily-Rome American Nettuno, 7,861 3,095 77.0 WW II
Cemetery Italy
Other
Corozal American Panama City,
Cemetery Panama 5,336 16.0 *
Mexico City Mexico City, 1,563 1.0 Mex Am
American Cemetery Mexico
Manila American Luzon, 17,202 36,285 152.0 WW II
Cemetery Phillipines
Subtotal for 131,062 60,314 1,294.5
Cemeteries
*Acquired by Executive Order from the former
Panama Canal Zone.
American Battle Monuments Commission Schedule of Heritage Assets September 30,
2006 (Unaudited)
25 FEDERAL MEMORIALS, MONUMENTS, AND MARKERS
Name Location Interred Memorialized
East Coast Memorial New York City, NY 4,609
Honolulu Memorial Honolulu, HI 28,800
West Coast Memorial San Francisco, CA 412
Audenarde Monument Audenarde, Belgium
Bellicourt Monument St. Quentin, France
Brest Naval Monument Brest, France
Cabanatuan Memorial Luzon, Phillipines
Cantigny Monument Cantigny, France
Chateau-Thierry Monument Chateau-Thierry, France
Chaumont Marker Chaumont, France
Gibraltar Naval Monument Gibraltar
Guadalcanal Memorial Guadalcanal
Kemmel Monument Ypres, Belgium
Marine Monument Belleau Wood Aisne, France
Montfaucon Monument Montfaucon, France
Montsec Monument Thiaucourt, France
Papua Marker Port Moresby, New
Guinea
Pointe du Hoc Ranger St. Laurent-sur-Mer,
Monument France
Saipan Monument Saipan, Northern Mariana Islands
Santiago Surrender Tree Santiago, Cuba
Sommepy Monument Sommepy, France
Souilly Marker Souilly, France
Tours Monument Tours, France
Utah Beach Monument Sainte Marie-du-Mont, France
Western Naval Task
Force Memorial Casablanca, Morocco
Subtotal for Memorials 0 33,821 368.9
Grand Total 131,062 94,135 1,663.4
Acres
0.8
1.0
1.3
0.4
1.8
1.0
0.4
58.9
0.1
0.5
0.2
199.6
9.6
47.5
29.8
15.0
0.5
0.5
War
WW II WW II/Korea/Vietnam WW II WW I WW I WW I WW II WW I WW I WW I WW I WW II
WW I WW I WW I WW I WW II WW II WW II Sp American War WW I WW I WW I WW II
WW II
American Battle Monuments Commission
Schedule of Heritage Assets
September 30, 2006
(Unaudited)
6 NONFEDERAL MEMORIALS
Name Location War
29th Infantry Division Memorial Vierville-sur-Mer, France WW II
30th Infantry Division Memorial Mortain, France WW II
6th Engineering Special Brigade Vierville-sur-Mer, France WW II
Memorial
351st Bomb Group Memorial Oundle, England WW II
147th Engineer Battalion Monument Englesqueville-la-Percee, France WW II
507th Parachute Infantry Regiment Amfreville, France WW II
Memorial
(196121) Page 33 GAO-07-321 ABMC 2006 and 2005 Financial Audit
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