Financial Audit: Congressional Award Foundation's Fiscal Years	 
2007 and 2006 Financial Statements (15-MAY-08, GAO-08-715).	 
                                                                 
This report presents our opinion on the financial statements of  
the Congressional Award Foundation (the Foundation) for the	 
fiscal years ended September 30, 2007, and 2006. These financial 
statements are the responsibility of the Foundation. This report 
also presents (1) our opinion on the effectiveness of the	 
Foundation's related internal control as of September 30, 2007,  
and (2) the results of our tests of the Foundation's compliance  
in fiscal year 2007 with selected provisions of laws and	 
regulations. We conducted our audit pursuant to section 107 of	 
the Congressional Award Act, as amended (2 U.S.C. 807), and in	 
accordance with U.S. generally accepted government auditing	 
standards.							 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-08-715 					        
    ACCNO:   A82129						        
  TITLE:     Financial Audit: Congressional Award Foundation's Fiscal 
Years 2007 and 2006 Financial Statements			 
     DATE:   05/15/2008 
  SUBJECT:   Accounting procedures				 
	     Accounting standards				 
	     Federal funds					 
	     Financial management				 
	     Financial records					 
	     Financial statement audits 			 
	     Financial statements				 
	     Foundations (organizations)			 
	     Fund audits					 
	     Funds management					 
	     Internal controls					 
	     Tax expenditures					 
	     Tax return audits					 

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GAO-08-715

   

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material separately. 

United States Government Accountability Office: 
GAO: 

Report to the Congress: 

May 2008: 

Financial Audit: 

Congressional Award Foundationï¿½s Fiscal Years 2007 and 2006 Financial 
Statements: 

GAO-08-715: 

Contents: 

Letter: 

Auditorï¿½s Report: 

Opinion on Financial Statements: 

Opinion on Internal Control: 

Compliance with Laws and Regulations: 

Significant Matters: 

Objectives, Scope, and Methodology: 

Foundationï¿½s Comments: 

Financial Statements: 

Statements of Financial Position: 

Statements of Activities: 

Statements of Cash Flows: 

Notes to Financial Statements: 

[End of section] 

United States Government Accountability Office: 
Washington, D.C. 20548: 

May 15, 2008: 

The President of the Senate: 
The Speaker of the House of Representatives: 

This report presents our opinion on the financial statements of the 
Congressional Award Foundation (the Foundation) for the fiscal years 
ended September 30, 2007, and 2006. These financial statements are the 
responsibility of the Foundation. This report also presents (1) our 
opinion on the effectiveness of the Foundationï¿½s related internal 
control as of September 30, 2007, and (2) the results of our tests of 
the Foundationï¿½s compliance in fiscal year 2007 with selected 
provisions of laws and regulations. We conducted our audit pursuant to 
section 107 of the Congressional Award Act, as amended (2 U.S.C. ï¿½ 
807), and in accordance with U.S. generally accepted government 
auditing standards. 

If you or your staff have any questions concerning this report, please 
contact me at (202) 512-3406 or by e-mail at [email protected]. 
Contact points for our Offices of Congressional Relations and Public 
Affairs may be found on the last page of this report. Key contributors 
to this report were Julie Phillips, Assistant Director; Sunny T. Chang; 
Vivian M. Gutierrez; and Peggy Smith. 

Signed by: 

Steven J. Sebastian: 
Director: 
Financial Management and Assurance: 

[End of letter] 

United States Government Accountability Office: 
Washington, D.C. 20548: 

The President of the Senate: 
The Speaker of the House of Representatives: 

We have audited the accompanying statements of financial position of 
the Congressional Award Foundation (the Foundation) as of September 30, 
2007, and 2006, and the related statements of activities and statements 
of cash flows for the fiscal years then ended. We found: 

* the financial statements are presented fairly, in all material 
respects, in conformity with U.S. generally accepted accounting 
principles; 

* the Foundation had effective internal control over financial 
reporting (including safeguarding assets) and compliance with laws and 
regulations; and: 

* no reportable instances of noncompliance with laws and regulations we 
tested. 

* The following sections provide additional detail about our 
conclusions and the scope of our audit. 

Opinion on Financial Statements: 

The financial statements and accompanying notes present fairly, in all 
material respects, in conformity with U.S. generally accepted 
accounting principles, the Foundation's assets, liabilities, and net 
position as of September 30, 2007, and 2006, and the results of its 
activities and its cash flows for the fiscal years then ended. 

Opinion on Internal Control: 

The Foundation maintained, in all material respects, effective internal 
control over financial reporting (including safeguarding assets) and 
compliance as of September 30, 2007, that provided reasonable assurance 
that misstatements, losses, or noncompliance material in relation to 
the financial statements would be prevented or detected on a timely 
basis. Our opinion is based on criteria established in the Standards 
for Internal Control in the Federal Government.[Footnote 1] 

Compliance with Laws and Regulations: 

Our tests for compliance with selected provisions of laws and 
regulations disclosed no instances of noncompliance that would be 
reportable under U.S. generally accepted government auditing standards. 
However, the objective of our audit was not to provide an opinion on 
overall compliance with laws and regulations. Accordingly, we do not 
express such an opinion. 

Significant Matters: 

In our previous report on the results of our audit of the Foundation's 
fiscal years 2006 and 2005 financial statements, we discussed two 
significant matters related to the Foundation's financial statements. 
These matters concerned (1) the Foundation's ability to continue as a 
going concern, which has been resolved, and (2) inconsistency between 
functional expenses reported in the Foundation's annual information 
return (Form 990) filed with the Internal Revenue Service (IRS) and the 
audited financial statements for fiscal year 2005. 

Resolution of the Foundation's Ability to Continue as a Going Concern: 

Our previous report on the results of our audit of the Foundation's 
fiscal years 2006 and 2005 financial statements raised substantial 
doubt about the Foundation's ability to continue as a going concern 
because of the continued deterioration of its financial condition. In 
fiscal year 2006, the Foundation had incurred a loss of almost $44,000 
in part because of increased salary costs and fund-raising expenses. 
Two employees of the Foundation had loaned funds to the organization 
during fiscal year 2006 to cover operating costs and payroll needs. 
Also, to help fund operating costs, the Foundation sold $15,000 worth 
of equity securities in January 2006 and an additional $20,000 in 
equity securities in November 2006. As of September 30, 2006, the 
Foundation's net assets had declined to under $8,500. 

During fiscal year 2007, the Foundation made significant improvements 
in its financial position. A substantial increase in contribution 
revenue, coupled with a decline in operating expenses, resulted in the 
Foundation increasing its net assets to nearly $125,000 by September 
30, 2007. As a result, for fiscal year 2007, we no longer report the 
Foundation's ability to continue as a going concern as a significant 
matter. 

Inconsistency between Information Return Filed with IRS and Audited 
Financial Statements: 

In our previous report on the results of our audit of the Foundation's 
fiscal years 2006 and 2005 financial statements, we reported that the 
Foundation provided a statement of functional expenses on its annual 
Form 990, Return of Organization Exempt from Income Tax,[Footnote 2] 
filed with IRS for fiscal year 2005 that differed significantly from 
functional expenses as reported in its audited financial statements for 
the same year.[Footnote 3] The Form 990 reported total program-related 
expenses of $392,605, while the audited financial statements for the 
same period reported total program expenses of $282,245--a difference 
of $110,360. We stated in our previous audit report that readers of the 
audited financial statements and Form 990 may view program expenses 
more favorably than administrative and fund-raising expenses when 
making decisions regarding charitable contributions. Therefore, the 
accuracy of the Foundation's allocation of expenses may inappropriately 
influence readers of both the financial statements and the Form 990 
information return in making charitable contribution decisions. 

In March 2008, the Foundation filed an amended Form 990 with IRS for 
fiscal year 2005. In reviewing the amended return, we found that the 
presentation of functional expenses in the amended Form 990 still 
differed materially from the audited financial statements for fiscal 
year 2005. However, the Foundation has filed a Form 990 for the 
subsequent year (fiscal year 2006) that agrees with the audited 
financial statements for that year. As this most current Form 990 is 
available for use by the public in making decisions regarding 
charitable contributions to the Foundation, we do not believe this 
continues to be a significant matter. 

Objectives, Scope, and Methodology: 

The Foundation's management is responsible for: 

* preparing the annual financial statements in conformity with U.S. 
generally accepted accounting principles; 

* establishing, maintaining, and assessing the Foundation's internal 
control to provide reasonable assurance that the Foundation's control 
objectives are met; and: 

* complying with applicable laws and regulations. 

We are responsible for obtaining reasonable assurance about whether (1) 
the financial statements are presented fairly, in all material 
respects, in conformity with U.S. generally accepted accounting 
principles and (2) management maintained effective internal control, 
the objectives of which are the following: 

* Financial reporting: Transactions are properly recorded, processed, 
and summarized to permit the preparation of financial statements in 
conformity with U.S. generally accepted accounting principles, 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 financial statements. 

We are also responsible for testing compliance with selected provisions 
of laws and regulations that have a direct and material effect on the 
financial statements. 

In order to fulfill these responsibilities, we: 

* examined, on a test basis, evidence supporting the amounts and 
disclosures in the financial statements; 

* assessed the accounting principles used and significant estimates 
made by Foundation management; 

* evaluated the overall presentation of the financial statements and 
notes; 

* obtained an understanding of the Foundation and its operations, 
including its internal control related to financial reporting 
(including safeguarding assets) and compliance with laws and 
regulations; 

* tested relevant internal control over financial reporting and 
compliance and evaluated the design and operating effectiveness of 
internal control; and: 

* tested compliance with selected provisions of the Congressional Award 
Act, as amended. 

We did not evaluate internal 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 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 Foundation. We limited our tests of compliance to those provisions 
of laws and regulations that we deemed to have a direct and material 
effect on the financial statements for the fiscal years ended September 
30, 2007, and 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. 

Foundation's Comments: 

We provided a draft of our report to Congressional Award Foundation 
officials for their review and comment. Foundation officials agreed 
with the content of our report. 

Signed by: 

Steven J. Sebastian: 
Director: 
Financial Management and Assurance: 

May 6, 2008: 

[End of section] 

Financial Statements: 

Statement of Financial Position: 

The Congressional Award Foundation: 
Statements of Financial Position: 
As of September 30, 2007, and 2006: 

Assets: Cash and cash equivalents; 
2007: $15,937; 
2006: $8,561. 

Assets: Certificate of deposit; 
2007: $59,610; 
2006: $56,952. 

Assets: Contributions receivable (note 3); 
2007: $132,600; 
2006: $51,300. 

Assets: Prepaid expense; 
2007: $2,602; 
2006: $2,972. 

Assets: Congressional Award Fellowship Trust (note 4); 
2007: $29,118; 
2006: $38,852. 

Assets: Equipment, furniture, and fixtures, net (note 5); 
2007: $29,355; 
2006: $5,981. 

Total assets: 
2007: $269,222; 
2006: $164,618. 

Liabilities and net assets: Accounts payable; 
2007: $14,662; 
2006: $11,242. 

Liabilities and net assets: Line of credit (note 6); 
2007: $100,000; 
2006: $100,000. 

Liabilities and net assets: Accrued payroll, related taxes, and leave; 
2007: $7,430; 
2006: $17,778. 

Liabilities and net assets: Loan from National Director (note 7); 
2007: $664; 
2006: $23,321. 

Liabilities and net assets: Liability for tax penalty and interest; 
(note 8); 
2007: $3,317; 
2006: $0. 

Liabilities and net assets: Capital lease liability (note 9); 
2007: $18,344; 
2006: $0. 

Total liabilities: 
2007: $144,407; 
2006: $156,141. 

Net assets: Unrestricted; 
2007: $102,058; 
2006: ($16,985). 

Net assets: Temporarily restricted (note 10); 
2007: $22,757; 
2006: $25,462. 

Total net assets: 
2007: $124,815; 
2006: $8,477. 

Total liabilities and net assets: 
2007: $269,222; 
2006: $164,618. 

The accompanying notes are an integral part of these financial 
statements. 

[End of Statement of Financial Position] 

Statements of Activities: 

The Congressional Award Foundation: 
Statements of Activities: 
For the Fiscal Years Ended September 30, 2007, and 2006: 

Changes in unrestricted net assets: Operating revenue and other 
support: Contributions; 
2007: $526,825; 
2006: $359,520. 

Changes in unrestricted net assets: Operating revenue and other 
support: Contributions - In-kind (note 11); 
2007: $71,486; 
2006: $128,660. 

Changes in unrestricted net assets: Operating revenue and other 
support: Program and other revenues; 
2007: $179,776; 
2006: $162,410. 

Changes in unrestricted net assets: Operating revenue and other 
support: Interest and dividends; 
2007: $3,131; 
2006: $2,568. 

Changes in unrestricted net assets: Operating revenue and other 
support: Net assets released from restrictions (note 10); 
2007: $2,704; 
2006: $3,106. 

Total operating revenue and other support: 
2007: $783,922; 
2006: $656,264. 

Operating expenses (note 12): Salaries, benefits, and payroll taxes; 
2007: $282,547; 
2006: $312,654. 

Operating expenses (note 12): Program, promotion, and travel; 
2007: $38,886; 
2006: $14,164. 

Operating expenses (note 12): Fund-raising expense; 
2007: $111,504; 
2006: $148,535. 

Operating expenses (note 12): Gold Award ceremony; 
2007: $111,998; 
2006: $100,083. 

Operating expenses (note 12): Professional fees; 
2007: $52,736; 
2006: $47,354. 

Operating expenses (note 12): Depreciation and amortization; 
2007: $4,853; 
2006: $3,823. 

Operating expenses (note 12): Board of Directors expense; 
2007: $1,062; 
2006: $630. 

Operating expenses (note 12): Administrative and other expense; 
2007: $71,087; 
2006: $64,100. 

Total operating expenses: 
2007: $674,673; 
2006: $691,343. 

Subtotal: 
2007: $109,249; 
2006: ($35,079). 

Other changes: Net unrealized investment losses; 
2007: ($3,776); 
2006: ($14,343). 

Other changes: Net realized investment gains; 
2007: $13,569; 
2006: $8,823. 

Increase/(decrease) in unrestricted net assets: 
2007: $119,042; 
2006: ($40,599). 

Changes in temporarily restricted net assets: Net assets released from 
restrictions (note 10); 
2007: ($2,704); 
2006: ($3,106). 

Decrease in temporarily restricted net assets: 
2007: ($2,704); 
2006: ($3,106). 


Increase/(decrease) in net assets: 
2007: $116,338; 
2006: ($43,705). 

Net assets at beginning of year: 
2007: $8,477; 
2006: $52,182. 

Net assets at end of year: 
2007: $124,815; 
2006: $8,477. 

The accompanying notes are an integral part of these financial 
statements. 

[End of Statement of Activities] 

Statement of Cash Flows: 

The Congressional Award Foundation: 
Statements of Cash Flows: 
For the Fiscal Years Ended September 30, 2007, and 2006: 

Cash flows from operating activities: Increase/(decrease) in net 
assets; 
2007: $116,338; 
2006: ($43,705). 

Cash flows from operating activities: Adjustments to reconcile change 
in net assets to net cash from operating activities: Depreciation and 
amortization 
2007: $4,853; 
2006: $3,823. 

Cash flows from operating activities: Adjustments to reconcile change 
in net assets to net cash from operating activities: Net unrealized 
losses on investments; 
2007: $3,776; 
2006: $14,343. 

Cash flows from operating activities: Adjustments to reconcile change 
in net assets to net cash from operating activities: Net realized gains 
on sale of investments; 
2007: ($13,569); 
2006: ($8,823). 

Cash flows from operating activities: Adjustments to reconcile change 
in net assets to net cash from operating activities: Interest income on 
certificate of deposit and trust fund; 
2007: ($3,131); 
2006: ($1,939). 

Change in operating assets: Contributions receivable; 
2007: ($81,300); 
2006: ($6,300). 

Change in operating assets: Prepaid expenses; 
2007: $370; 
2006: ($92). 

Change in operating liabilities: Accounts payable; 
2007: $3,420; 
2006: ($4,575). 

Change in operating liabilities: Accrued payroll, related taxes and 
leave; 
2007: ($10,348); 
2006: $7,806. 

Change in operating liabilities: Liability for tax penalty and 
interest; 
2007: ($483); 
2006: $3,800. 

Net cash provided/(used) in operating activities: 
2007: $19,926; 
2006: ($35,662). 

Cash flows from investing activities: Purchase of computer equipment; 
2007: ($8,098); 
2006: $0. 

Cash flows from investing activities: Proceeds from sale of 
investments; 20,000 
2007: $20,000; 
2006: $14,159. 

Net cash provided by investing activities: 
2007: $11,902; 
2006: $14,159. 

Cash flows from financing activities: Principal payments under capital 
lease obligation; 
2007: ($1,795); 
2006: $0. 

Cash flows from financing activities: Proceeds from loans; 
2007: $0; 
2006: $27,821. 

Cash flows from financing activities: Repayment of loans; 
2007: ($22,657); 
2006: ($4,500). 

Net cash (used)/provided by financing activities: 
2007: ($24,452); 
2006: $23,321. 

Net increase in cash and cash equivalents: 
2007: $7,376; 
2006: $1,818. 

Cash and cash equivalents, beginning of year: 
2007: $8,561; 
2006: $6,743. 

Cash and cash equivalents, end of year: 
2007: $15,937; 
2006: $8,561. 

Supplemental data: Cash paid during year for interest; 
2007: $12,590; 
2006: $8,727. 

Supplemental data on noncash investing and financing activities:
A capital lease obligation of $20,129 was incurred when the Foundation 
entered into a lease for new equipment. 

The accompanying notes are an integral part of these financial 
statements. 

[End of Statement of Cash Flows] 

Notes to Financial Statements: 

The Congressional Award Foundation: 
Notes to Financial Statements: 
For the Fiscal Years Ended September 30, 2007, and 2006: 

Note 1. Organization: 

The Congressional Award Foundation (the Foundation) was formed in 1979 
under Public Law 96-114 and is a private, nonprofit, tax-exempt 
organization under Section 501(c)(3) of the Internal Revenue Code 
established to promote initiative, achievement, and excellence among 
young people in the areas of public service, personal development, 
physical fitness, and expedition. New program participants totaled over
3,200 in fiscal year 2007. During fiscal year 2007, there were over 
23,000 participants registered in the Foundationï¿½s Award program. In 
December, 2005, the President signed Public Law 109-143, which 
reauthorized the Congressional Award Foundation through September 30, 
2009. 

Note 2. Summary of Significant Accounting Policies: 

A. Basis of Accounting: 

The financial statements are prepared on the accrual basis of 
accounting in conformity with U.S. generally accepted accounting 
principles applicable to not-for-profit organizations. 

B. Cash Equivalents and Certificate of Deposit: 

The Foundation considers funds held in its checking account and all 
highly liquid investments with an original maturity of 3 months or less 
to be cash equivalents. Money market funds held in the Foundationï¿½s 
Congressional Award Fellowship Trust (the trust) are not considered 
cash equivalents for financial statement reporting purposes. 

The Foundation has a $50,000 certificate of deposit, which is pledged 
as collateral on the $100,000 line of credit (see note 6). 

C. Contributions Receivable: 

Unconditional promises to give are recorded as revenue when the 
promises are made. Contributions receivable to be collected within less 
than 1 year are measured at net realizable value. 

D. Equipment, Furniture and Fixtures, and Related Depreciation: 

The Foundation capitalizes equipment, furniture, and fixtures with an 
individual asset acquisition cost of more than $2,500. Assets are 
stated at cost, and depreciation is computed using the straight-line 
method over estimated useful lives of 5 to 10 years. Expenditures for 
major additions and betterments are capitalized; and expenditures for 
maintenance and repairs are charged to expense when incurred. Upon 
retirement or disposal of assets, the cost and accumulated depreciation 
are eliminated from the accounts and the resulting gain or loss is
included in revenue or expense, as appropriate. Donated equipment is 
recorded at fair value. 

The capital lease liability represents the lesser of the net present 
value of future lease payments or the fair value of the asset acquired. 
Amortization of the capital lease is included in depreciation expense. 

E. Congressional Award Fellowship Trust - Investments: 

The trust investments consist of equity securities and money market 
funds, which are stated at fair value. 

F. Classification of Net Assets: 

The net assets of the Foundation are reported as follows: 

* Unrestricted net assets represent the portion of expendable funds 
that are available for the general support of the Foundation. 

* Temporarily restricted net assets represent amounts that are 
specifically restricted by donors or grantors for specific programs or 
future periods. 

The Foundation has no permanently restricted net assets. 

G. Revenue Recognition: 

Contribution revenue is recognized when received or promised and 
recorded as temporarily restricted if the funds are received with donor 
or grantor stipulations that limit the use of the donated assets to a 
particular purpose or for specific periods. When a stipulated time 
restriction ends or purpose of the restriction is met, temporarily 
restricted net assets are reclassified to unrestricted net assets and
reported in the statement of activities as net assets released from 
restrictions. 

H. Functional Allocation of Expenses: 

The costs of providing the various programs and other activities have 
been summarized on a functional basis as described in note 12. 
Accordingly, certain costs have been allocated among the programs and 
supporting services benefited. 

I. Estimates: 

The preparation of financial statements in conformity with U.S. 
generally accepted accounting principles requires management to make 
estimates and assumptions that affect certain reported amounts and 
disclosures. Accordingly, actual results could differ from those 
estimates. 

Note 3. Contributions Receivable: 

At September 30, 2007, and 2006, promises to give totaled $132,600 and 
$51,300, respectively, none of which were temporarily restricted by the 
donors. All amounts were due within 1 year. All but $10,000 of the 
$132,600 receivable at September 30, 2007, was received by May 1, 2008. 

Note 4. Congressional Award Fellowship Trust: 

The trust was established in 1990 to benefit the charitable and 
educational purposes of the Foundation. During the fiscal year ended 
September 30, 2007, the trustees authorized using $20,000 of the trust 
fund to support fiscal year 2007 operations. 

As of September 30, 2007, and 2006, the trust fundï¿½s investments at 
fair value consisted of the following: 

Description: Equity and debt securities; 
September 30, 2007: $27,414; 
September 30, 2006: $36,947. 

Description: Money market funds; 
September 30, 2007: $1,704; 
September 30, 2006: $1,905. 

Description: Total; 
September 30, 2007: $29,118; 
September 30, 2006: $38,852. 

Activity in the trust fund for the fiscal years ended September 30, 
2007, and 2006, was as follows: 

Interest and dividends: 
September 30, 2007: $473; 
September 30, 2006: $629. 

Net realized gains: 
September 30, 2007: $13,569; 
September 30, 2006: $8,823. 

Net unrealized losses: 
September 30, 2007: ($3,776); 
September 30, 2006: ($14,343). 

Total investment gains (losses); 
September 30, 2007: $10,266; 
September 30, 2006: ($4,891). 

New contributions to investment fund: 
September 30, 2007: 0; 
September 30, 2006: $1,000. 

Investments and earnings transferred to current operations: 
September 30, 2007: ($20,000); 
September 30, 2006: ($15,788). 

Net change in trust fund investments; 
September 30, 2007: ($9,734); 
September 30, 2006: ($19,679). 

Trust fund investments, beginning of year; 
September 30, 2007: $38,852; 
September 30, 2006: $58,531. 

Trust fund investments, end of year: 
September 30, 2007: $29,118; 
September 30, 2006: $38,852. 

Note 5. Equipment, Furniture, and Fixtures: 

Equipment, furniture, and fixtures as of September 30, 2007, and 2006, 
is shown in the schedule below.: 

Computer software: 
September 30, 2007: $25,868; 
September 30, 2006: $17,771. 

Equipment - capital lease: 
September 30, 2007: $20,129; 
September 30, 2006: $0. 

Furniture and equipment: 
September 30, 2007: $76,576; 
September 30, 2006: $76,576. 

Contributed equipment: 
September 30, 2007: $15,100; 
September 30, 2006: $15,100. 

Accumulated depreciation: 
September 30, 2007: ($106,822); 
September 30, 2006: ($103,466). 

Accumulated amortization - capital lease: 
September 30, 2007: ($106,822); 
September 30, 2006: $0. 

Equipment, furniture, and fixtures, net: 
September 30, 2007: $29,355; 
September 30, 2006: $5,981. 

Equipment under capital lease is pledged as collateral under the terms 
of the lease agreements. 

Note 6. Line of Credit: 

The Foundation has a $100,000 revolving line of credit with its bank 
that bears interest at 8.75 percent per annum. Interest paid on this 
line of credit during fiscal years 2007 and 2006 was $9,620 and $8,727, 
respectively. The line of credit is partially secured by the 
Foundationï¿½s investment in a $50,000 certificate of deposit held by the 
same bank. As of September 30, 2007, and 2006, the outstanding balance 
on the line of credit was $100,000. 

Note 7. Loan from National Director: 

During fiscal year 2006, the National Director loaned the Foundation 
$23,321. By December 2006, the amount had been repaid. During fiscal 
year 2007, the National Director used her credit card to purchase items 
for the Foundation, of which $664 remained unpaid as of September 30, 
2007. 

Note 8. Liability for Tax Penalty and Interest: 

The Foundation filed its annual Internal Revenue Service Form 990 
information return for fiscal year 2005 in July 2006. The Internal 
Revenue Service issued a letter to the Foundation in December 2006, 
advising it that the information return was filed late and penalties 
and interest had accrued in the amount of $3,580 as of January 8, 2007. 
On January 24, 2007, the Foundation appealed this decision. On February 
23, 2007, the Internal Revenue Service advised the Foundation that it 
had not yet made a determination and was still reviewing the appeal. In 
November 2007, the Internal Revenue Service forwarded the request and 
all applicable documents to an appeals coordinator for final 
determination. The tax liability of $3,800 was reduced by a $483
holdback from the Internal Revenue Service, leaving a balance owed at 
September 30, 2007, of $3,317. 

On March 7, 2008, the Foundation received notification from the Appeals 
Section of the Internal Revenue Service that its request for appeal 
regarding the accrual of penalties and interest stemming from the 
Foundation's late filing of its fiscal year 2005 Form 990 information 
return was declined. On March 18, 2008, the Foundation paid the full
amount of the obligation of $3,520. 

Note 9. Capital Lease Liability: 

During fiscal year 2007, the Foundation entered into a capital lease 
for new computer equipment for $20,129. 

The following is a schedule (by fiscal year) of future minimum lease 
payments under capital leases together with the present value of the 
net minimum lease payments for the 4-year period, net of interest, as 
of September 30, 2007. 

Years ending September 30:
2008: $7,197; 
2009: $7,197; 
2010: $6,973; 
2011: $3,886; 
Total minimum lease payments: $25,253; 
Less: amount representing interest: ($6,919); 
Present value of net minimum lease payments: $18,334. 

Note 10. Temporarily Restricted Net Assets: 

Temporarily restricted net assets as of September 30, 2007, and 2006, 
were available for the following programs and future periods: 

Puerto Rico Council development: 
September 30, 2007: $16,237; 
September 30, 2006: $17,396. 

Nevada Council development: 
September 30, 2007: $6,520; 
September 30, 2006: $8,066. 

Total net assets temporarily restricted for use: 
September 30, 2007: $22,757; 
September 30, 2006: $25,462. 

Net assets released from restrictions during the fiscal years ended 
September 30, 2007, and 2006, were as follows: 

Puerto Rico Council development: 
September 30, 2007: $1,159; 
September 30, 2006: $0. 

Nevada Council development: 
September 30, 2007: $1,545; 
September 30, 2006: $2,315. 

Oklahoma Council development: 
September 30, 2007: $0; 
September 30, 2006: $791. 

Total temporarily restricted net assets released for use: 
September 30, 2007: $2,704; 
September 30, 2006: $3,106. 

Note 11. In-kind Contributions: 

During fiscal year 2007, the Foundation received in-kind (noncash) 
contributions from donors. Donated professional services are accounted 
for as contribution revenue and as current period operating expenses. 
During fiscal years 2007 and 2006, the Foundation employed the services 
of unpaid interns. Amounts for the intern services are not included in 
these financial statements because the value of the services is not
readily determinable. 

The value of the in-kind contributions recognized was $71,486 and 
$128,660 for fiscal years 2007 and 2006, respectively. These noncash 
contributions are as follows: 

Professional services: Legal; 
2007: $30,000; 
2006: $33,354. 

Professional services: Web-hosting; 
2007: $13,520; 
2006: $8,680. 

Fund-raising: 
2007: $27,966; 
2006: $86,626. 

Total in-kind contributions: 
2007: $71,486; 
2006: $128,660. 

In addition, Section 106 (e) of the Congressional Award Act, as 
amended, provides that "the Board may benefit from in-kind and indirect 
resources provided by the Offices of Members of Congress or the 
Congress." Resources so provided include use of office space, office 
furniture, and certain utilities. In addition, Section 102 of the 
Congressional Award Act, as amended, provides that the United States 
Mint may charge the United States Mint Public Enterprise Fund for the 
cost of striking Congressional Award Medals. The costs of these 
resources cannot be readily determined and, thus, are not included in 
the financial statements. 

Note 12. Expenses by Functional Classification: 

The Foundation has presented its operating expenses by natural 
classification in the accompanying Statements of Activities for the 
fiscal years ending September 30, 2007, and 2006. Presented below are 
the Foundation's expenses by functional classification for the fiscal 
years ended September 30, 2007, and 2006. 

Program activities: 
2007: $433,326; 
2006: $391,296. 

Fund-raising activities: 
2007: $127,041; 
2006: $169,276. 

Administrative activities: 
2007: $114,306; 
2006: $130,771. 

Total: 
2007: $674,673; 
2006: $691,343. 

Note 13. Employee Retirement Plan: 

For the benefit of its employees, the Foundation participates in a 
voluntary 403(b) tax deferred annuity plan, which was activated on 
August 27, 1993. Under the plan, the Foundation may, but is not 
required to, make employer contributions to the plan. There were no 
contributions to the plan in fiscal years 2007 and 2006. 

Note 14. Related Party Activities: 

The Foundation engaged in numerous transactions with related parties 
during fiscal years 2007 and 2006. 

During fiscal years 2007 and 2006, the Foundation had an agreement with 
a professional fund-raiser. The professional fund-raiserï¿½s spouse is on 
the board of directors of the Foundation. In May 2006, the fund-raising 
commission was changed from a commission rate of 15 percent to a 
monthly retainer of $1,500. Disbursements by the Foundation during 
fiscal years 2007 and 2006 to the related party totaled $18,000 and 
$9,000, respectively. 

During fiscal years 2007 and 2006, an ex officio director of the board 
provided pro bono legal services to the Foundation. The value of legal 
services has been included in the in-kind contributions and 
professional fees line items (see note 11). 

During fiscal year 2006, the board chairman did not request 
reimbursement of airfare for his attendance at statewide ceremonies, 
the value of which was $578. During fiscal year 2007, there were no in-
kind services provided by the board chairman. 

During fiscal year 2006, a board member, through his company, provided 
press releases at no cost, the value of which was $2,500. During fiscal 
year 2007, the board member retired from the board and did not provide 
in-kind services. 

During fiscal years 2007 and 2006, a board member did not request 
reimbursement of expenses for participants to attend Mississippi 
ceremonies. The value for fiscal years 2007 and 2006 was $2,800 and 
$2,370, respectively. 

During fiscal year 2006, a board member, through his company, provided 
filming of the Gold Award Ceremony, the value of which was $10,000. 
During fiscal year 2007, the board member did not film the Gold Award 
Ceremony. 

During fiscal year 2006, a board member, through his company, paid for 
a fund-raising breakfast with the New Jersey delegation, the value of 
which was $1,049. During fiscal year 2007, this board member made a 
direct contribution to the Foundation to cover costs associated with a 
breakfast with the New Jersey delegation in the amount of $1,416. 

During fiscal year 2007, a board member, through his company, paid for 
fund-raising events, the value of which was $1,548. This board member, 
through his company, also provided a prize for a fund-raising event, 
the value of which was $136. 

During fiscal year 2006, the National Director used her credit card to 
cover costs of $23,321 associated with the Gold Award Ceremony, which 
was repaid in December 2006. During fiscal year 2007, the National 
Director used her credit card for all credit card purchases during the 
year, as the Foundation does not hold a credit card. She was reimbursed 
for all credit card purchases except for a balance of $664 that was 
still owed to her as of September 30, 2007. 

During fiscal year 2006, the Controller provided a loan to the 
Foundation in the amount of $4,500. This was repaid during fiscal year 
2006. In addition, the Controller, through his professional tax 
business, prepared the Foundationï¿½s annual Internal Revenue Service 
Form 990 information returns. His firm was compensated $940 and $750 
during fiscal years 2007 and 2006, respectively. 

Note 15. Subsequent Events: 

In October 2007, the Board of Directors of the Foundation requested 
that the trustees of the Congressional Award Trust approve distribution 
of the assets of the trust to the Foundation, approved termination the 
trust, and directed that the assets of the trust (together with the 
certificate of deposit and other funds) be used for repayment of the
Foundation's line of credit. The trustees approved distribution of the 
assets of the trust, and in November 2007, the Foundation received such 
assets and the trust was terminated. 

On October 4, 2007, the Board of Directors elected Mr. Paxton Baker as 
Chairman of the National Board of Directors and Mr. John Falk was 
elected Chairman Emeritus. 

In February 2008, the Foundation negotiated a new line of credit for 
$50,000 that bears interest at prime plus 2 percent. The $50,000 
certificate of deposit was used to pay down the original $100,000 line 
of credit. 

[End of Notes to Financial Statements] 

Footnotes: 

[1] GAO, Standards for Internal Control in the Federal Government, 
[hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO/AIMD-00-21.3.1] 
(Washington, D.C.: Nov. 1999). 

[2] IRS Form 990 is used by tax-exempt organizations to provide IRS 
with the information required by section 6033 of the Internal Revenue 
Code (I.R.C.). An organization's completed Form 990 is available for 
public inspection as required by section 6104 of the I.R.C. Some 
members of the public rely on the Form 990 as the primary or sole 
source of information about a particular organization. How the public 
perceives an organization in such cases may be determined by the 
information presented on its return. Therefore, the return should be 
complete and accurate and fully describe the organization's programs 
and accomplishments. Form 990 is due by the 15th day of the 5th month 
after the end of the organization's fiscal year. 

[3] The Foundation filed its Form 990 for fiscal year 2005 on July 31, 
2006--approximately 2-ï¿½ months after our report on the results of our 
audit of the Foundation's fiscal year 2005 and 2004 financial 
statements was released. See GAO, Financial Audit: Congressional Award 
Foundation's Fiscal Years 2006 and 2005 Financial Statements, 
[hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-07-786] (Washington, 
D.C.: May 15, 2007). 

[End of section] 

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