Financial Audit: Special Counsel Expenditures for the Six Months
Ended September 30, 2007 (31-MAR-08, GAO-08-541).
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 September 30, 2007. The independent
counsels were required under 28 U.S.C. 596 (c)(1) to prepare a
statement of expenditures on a semiannual basis. Under 28 U.S.C.
596 (c)(2 ), we were required to conduct a financial review of a
midyear statement and a financial audit of a year-end statement.
We satisfied this requirement through semiannual financial audits
of the statement of expenditures. For the 6 months ended
September 30, 2007, there were no active independent counsels.
However, we are required to perform a semiannual financial review
of expenditures from the permanent indefinite appropriation used
to pay special counsel Fitzgerald's expenses. While not required
under the permanent indefinite appropriation to perform a
financial audit, we have done so for special counsel
Fitzgerald--as we previously performed for independent counsels
approved under the expired law.
-------------------------Indexing Terms-------------------------
REPORTNUM: GAO-08-541
ACCNO: A81460
TITLE: Financial Audit: Special Counsel Expenditures for the Six
Months Ended September 30, 2007
DATE: 03/31/2008
SUBJECT: Accounting standards
Auditing procedures
Auditing standards
Cash basis accounting
Financial analysis
Financial management
Financial records
Financial statement audits
Financial statements
Internal audits
Internal controls
Strategic planning
Voluntary compliance
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GAO-08-541
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Report to Congressional Committees:
March 2008:
Financial Audit:
Special Counsel Expenditures for the Six Months Ended September 30,
2007:
GAO-08-541:
Contents:
Letter:
Auditor's Report:
Background:
Opinion on Statement of Expenditures:
Opinion on Internal Control:
Compliance with Laws and Regulations:
Objectives, Scope, and Methodology:
Agency Comments:
Appendix:
Appendix I: Statement of Expenditures for Special Counsel Fitzgerald:
Abbreviations:
GAO: Government Accountability Office:
FBI: Federal Bureau of Investigation:
OSC: Office of Special Counsel:
Letter:
March 31, 2008:
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 September 30, 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. In addition, the report is available at no cost on GAO's Web
site at [hyperlink, 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 Judy Lee.
Steven J. Sebastian:
Director:
Financial Management and Assurance:
Auditor's Report Congressional Committees:
This report presents the results of our audit of expenditures[Footnote
1] reported by the Office of Special Counsel Patrick J. Fitzgerald for
the 6 months ended September 30, 2007. The independent counsels were
required under 28 U.S.C. 596 �(c)(1) to prepare a statement of
expenditures on a semiannual basis. Under 28 U.S.C. 596 �(c)(2 ), we
were required to conduct a financial review of a midyear statement and
a financial audit of a year-end statement. We satisfied this
requirement through semiannual financial audits of the statement of
expenditures.
For the 6 months ended September 30, 2007, there were no active
independent counsels. However, we are required to perform a semiannual
financial review of expenditures from the permanent indefinite
appropriation[Footnote 2] used to pay special counsel Fitzgerald's
expenses. While not required under the permanent indefinite
appropriation to perform a financial audit, we have done so for special
counsel Fitzgerald--as we previously performed for independent counsels
approved under the expired law.
In our audit covering the 6 months ended September 30, 2007, we found:
* 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;
* Special Counsel Fitzgerald had effective internal control over
financial reporting (including safeguarding assets) and compliance with
laws and regulations as of September 30, 2007; and:
* 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 opinions and compliance with laws and
regulations; and discuss the objectives, scope, and methodology of our
audit and the disposition of agency comments.
Background:
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
expired independent counsel law or other law. The Department of Justice
determined that the appropriation established by Public Law 100-202 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.[Footnote 3]
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 September 30, 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
September 30, 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 in the Standards for Internal
Control in the Federal Government.[Footnote 4]
Compliance with Laws and Regulations:
Our tests for compliance with selected provisions of laws and
regulations disclosed no instances of noncompliance with respect to
Special Counsel Fitzgerald 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:
Though not required to do so, Special Counsel Fitzgerald 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:
* 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.
* 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 September 30, 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 Payment 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.
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
September 30, 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 a draft of this report to the office of Special Counsel and
the Department of Justice for review and comment. The special counsel
provided comments to clarify matters discussed in the notes to the
statement of expenditures, which we have incorporated as appropriate.
In commenting on our report, the entities agreed with the facts and
conclusions in the report.
Signed by:
Steven J. Sebastian:
Director:
Financial Management and Assurance:
March 31, 2008:
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 Thomas 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:
[End of section]
Appendix I: Statement of Expenditures for Special Counsel Fitzgerald:
PATRICK J. FITZGERALD:
Office of Special Counsel:
Statement of Expenditures:
(Principally cash basis - see Note 1):
Six Months Ended September 30, 2007:
Personnel compensation and benefits: $96, 019;
Witness expenses (note 2): $440;
Travel (note 3): $68,550;
Contractual services (note 4): $22,139
Supplies and materials (note 5): $272
Total expenditures: $187,420.
The accompanying notes are an integral part of this statement.
Patrick J. Fitzgerald:
Office of Special Counsel:
Notes to the Statement of Expenditures:
Note 1 - Accounting policies:
Reporting entity: The accompanying statement of expenditures presents
the expenditures of the Office of Special Counsel-Patrick J. Fitzgerald
(OSCFitzgerald) for the 6 months ended September 30, 2007. The
statement of expenditures includes only expenditures made from the
permanent, indefinite appropriation for OSC-Fitzgerald that are
processed during the period through the Department of Justice. On
December 30, 2003, the then Acting Attorney General appointed U.S.
Attorney Patrick J. Fitzgerald as a Special Counsel to investigate
whether officials of the current administration illegally disclosed the
identity of an undercover Central Intelligence Agency officer. In March
2007, an administration official was convicted of perjury, lying to the
Federal Bureau of Investigation, and obstruction of justice in the
investigation. Expenditures during this period principally relate to
the sentencing and appeal of this official on perjury and obstruction
of justice charges, as well as some expenses paid during this period
which were reimbursements of travel and lodging expenses incurred
during the trial.
On July 2, 2007, the president of the United States commuted the prison
term imposed by the sentencing judge upon the administration official
who was convicted after a jury trial. On December 11, 2007 the
administration official dropped his appeal of his convictions. This
matter is now concluded for all practical purposes, but the office of
special counsel will continue for limited purposes, such as responding
to Congressional requests for information.
Basis of accounting: The accompanying statement of expenditures was
prepared principally on the cash basis of accounting, which is a
comprehensive basis of accounting other than U.S. generally accepted
accounting principles. Under this method, except for personnel
compensation and benefits, expenditures are recorded when the funds are
disbursed by the Department of Justice. Generally, personnel
compensation and benefits are recorded at the end of the pay period
when earned.
Note 2 - Witness expenses:
Witness expenses consist of fact and expert witness fees and expenses
which are required to be paid to witnesses who testify on behalf of the
government.
Note 3 - Travel:
Travel primarily consists of expenditures for investigation and trial-
related travel for office of special counsel personnel.
Note 4 - Contractual services:
Contractual services primarily consist of expenditures for maintaining
and servicing office equipment and for research and data transcription
services in areas of interest to the investigation and trial.
Note 5 - Supplies and materials:
The supplies and materials expenditures are primarily for supplies for
office use.
[End of section]
Footnotes:
[1] The term expenditures as used in this report generally means cash
disbursed.
[2] The permanent, indefinite appropriation was established by Pub. L.
No. 100-202, � 101(a), title II, 101 Stat. 1329, 1329-9 (Dec. 22,
1987), 28 U.S.C. � 591 note.
[3] We 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 use was not an illegal, improper, or
unauthorized use of the appropriation. B-302582 (Sept. 30, 2004).
[4] GAO, Standards for Internal Control in the Federal Government, GAO/
AIMD-00-21.3.1 (Washington, D.C.: November 1999). [hyperlink,
http://www.gao.gov/special.pubs/ai00021p.pdf].
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