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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United States Government Accountability Office:
GAO:
Report to the Congress:
May 2008:
Financial Audit:
Congressional Award Foundation�s Fiscal Years 2007 and 2006 Financial
Statements:
GAO-08-715:
Contents:
Letter:
Auditor�s Report:
Opinion on Financial Statements:
Opinion on Internal Control:
Compliance with Laws and Regulations:
Significant Matters:
Objectives, Scope, and Methodology:
Foundation�s 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 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.
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 Foundation�s 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 Foundation�s
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 fund�s 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
Foundation�s 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-raiser�s 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 Foundation�s 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-� 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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