Kennedy Center: Audit Duplication Can Be Prevented (Letter Report,
08/19/97, GAO/GGD-97-161).

Pursuant to a legislative requirement, GAO examined the potential for
duplication of effort arising from multiple audit requirements involving
the John F. Kennedy Center for the Performing Arts' appropriated funds,
focusing on whether: (1) the Center's contracted auditor planned and
carried out an audit that complied with the standards set forth in the
Government Auditing Standards; and (2) GAO should continue the work
necessary to plan and do its own audit. GAO did not perform a detailed
review of all of the documentation contained in the auditor's files
supporting its audit of appropriated funds nor reperform tests conducted
by the auditor.

GAO noted that: (1) the information and documentation GAO obtained from
the Center and the auditor and the auditor's records GAO reviewed
demonstrated that GAO's audit, if implemented, would duplicate those
portions of the auditor's work involving the understanding of internal
controls, sampling of expenditures, and testing for compliance with the
limitation on the use of the appropriated funds; (2) further, the
auditor planned and executed the audit under the Government Auditing
Standards, which governs GAO audit work as well; (3) in the future,
according to Center officials, the Center plans to continue to annually
contract with a public accounting firm for a financial statement audit
that will include the use of appropriated funds and require that its
auditor's work be subject to the Government Auditing Standards; (4)
further, at GAO's suggestion, Center officials revised the contract with
the auditor, beginning with the fiscal year 1997 audit, to require that
the auditor's report specifically state the tests undertaken for
compliance with the limitation on the use of appropriated funds and the
results of those tests; (5) on the basis of the information GAO
developed, GAO believes that efficient use of its audit resources would
best be achieved by the continuation of a single annual audit of the
Center's financial statements by its auditor that is subject to
Government Auditing Standards and includes both the use of the
appropriated funds and compliance with limitations on the use of those
funds; and (6) therefore, GAO is seeking legislative relief from the
requirement for it to periodically audit the Center's use of
appropriated funds.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  GGD-97-161
     TITLE:  Kennedy Center: Audit Duplication Can Be Prevented
      DATE:  08/19/97
   SUBJECT:  Financial statement audits
             Internal controls
             Appropriated funds
             Audit reports
             Auditing standards
             Accounting procedures
             Accountants
             Audit authority

             
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Cover
================================================================ COVER


Report to Congressional Committees

August 1997

KENNEDY CENTER - AUDIT DUPLICATION
CAN BE PREVENTED

GAO/GGD-97-161

Audit Duplication

(240221)


Abbreviations
=============================================================== ABBREV


Letter
=============================================================== LETTER


B-277198

August 19, 1997

The Honorable John H.  Chafee
Chairman
The Honorable Max Baucus
Ranking Minority Member
Committee on Environment and Public Works
United States Senate

The Honorable Bud Shuster
Chairman
The Honorable James L.  Oberstar
Ranking Minority Member
Committee on Transportation and Infrastructure
House of Representatives

Since its inception, The John F.  Kennedy Center for the Performing
Arts (the Center) has annually contracted with a public accounting
firm (the auditor) to perform an audit of its financial statements
and provide it with a report on whether those statements present
fairly the financial position of the Center.  According to Center
officials, the financial statement audit is undertaken for several
reasons, including the following:  first, in response to the
requirement in 20 U.S.C.  76l (c) that the Board of Trustees submit
to Congress an annual report of its operations, which includes a
detailed statement of all public and private money received and
disbursed; second, to provide grantors from whom the Center receives
funding an accounting of the use of such funds; and third, to assist
the Board in carrying out its trust responsibilities under the
statute.  For these reasons, the officials to whom we spoke said
that, in their opinion, the general fiduciary standards governing the
responsibilities of the Kennedy Center trustees and officers
effectively require an annual audit of its financial statements. 

The John F.  Kennedy Center Act Amendments of 1994\1 (the Amendments)
provide that not less than once every 3 years we are to audit and
review the accounts of the Center for the purpose of examining
expenditures of funds appropriated in fiscal years 1995 through 1999
for maintenance, repair, and security, and capital projects under the
Amendments and for compliance with the Amendments' limitation on the
use of those funds for performing arts functions.  Beginning with the
Center's fiscal year 1995 financial statements, the appropriations
were included in the Center's financial statements and, therefore,
were subject to the financial statement audit.  Thus, our initial
audit under the Amendments would cover appropriated funds for fiscal
years 1995 through 1996, while our subsequent audit would cover
fiscal years 1997 through 1999. 

As we performed the work necessary to plan our own audit, we
recognized that because the appropriated funds were included in the
financial statements and those financial statements were audited
annually, the Center's use of those funds would, if we performed our
audit, be subject to multiple audits.  In the past, in other
instances of possible multiple audit requirements, Congress and the
executive branch have provided guidance that emphasizes the need for
the efficient use of audit resources through the coordination of
audit work and the elimination of duplication. 

We discussed with your offices the potential for duplication of
effort arising from multiple audit requirements involving the
Center's appropriated funds.  We agreed to determine whether we
should continue the work necessary to plan and do our own audit, and
if continuation of our work did not appear prudent, to seek
legislative relief from the audit requirement.  In this regard, we
looked to see whether the auditor planned and carried out an audit
that complied with the standards set forth in the Government Auditing
Standards since both our audit and the auditor's are subject to those
standards.  We developed information and obtained documentation about
the auditor's planned and executed audit work, reviewed some working
papers prepared by the auditor, and obtained the reports on the
financial statements and compliance with laws and regulations that
the auditor had prepared and issued to Center management. 


--------------------
\1 Section 5(d) of the John F.  Kennedy Center Act Amendments of
1994, Public Law 103-279, 108 Stat.  1409, 1415-1416 (1994), which
amended Section 6 of the John F.  Kennedy Act, 20 U.S.C.  76l. 


   RESULTS IN BRIEF
------------------------------------------------------------ Letter :1

The information and documentation we obtained from the Center and the
auditor and the auditor's records we reviewed demonstrated that our
audit, if implemented, would duplicate those portions of the
auditor's work involving the understanding of internal controls,
sampling of expenditures, and testing for compliance with the
limitation on the use of the appropriated funds.  Further, the
auditor planned and executed the audit under the Government Auditing
Standards, which governs our audit work as well. 

In the future, according to Center officials, the Center plans both
to continue to annually contract with a public accounting firm for a
financial statement audit that will include the use of appropriated
funds and to require that its auditor's work be subject to the
Government Auditing Standards.  Further, at our suggestion, Center
officials revised the contract with the auditor, beginning with the
fiscal year 1997 audit, to require that the auditor's report
specifically state the tests undertaken for compliance with the
limitation on the use of appropriated funds and the results of those
tests. 

On the basis of the information we developed, we believe that
efficient use of our audit resources would best be achieved by the
Center's continued contracting for a single annual audit of its
financial statements subject to the Government Auditing Standards. 
This audit would include both the use of the appropriated funds and
compliance with limitations on the use of those funds.  Therefore, as
agreed with your offices, we are seeking legislative relief from the
requirement for us to periodically audit the Center's use of
appropriated funds. 


   BACKGROUND
------------------------------------------------------------ Letter :2

The Kennedy Center, established in 1964\2 as both a national cultural
arts center and a living memorial to the 35th President, opened in
September 1971.  Shortly thereafter, in 1972, the Secretary of the
Interior, through the National Park Service, assumed responsibility
for building maintenance, security, interpretative, janitorial, and
all other services necessary for the operations of the Kennedy Center
not related to the performing arts. 

In 1994, the Amendments transferred responsibility for the work
performed by the National Park Service to the Kennedy Center Board of
Trustees and also authorized the appropriation of funds, beginning in
fiscal year 1995, to the Board for this work.  The Center's financial
statements for fiscal years 1995 and 1996 reflected the appropriation
received as either operating revenue and expense or capital assets. 

Under 31 U.S.C.  712, we are authorized to "investigate all matters
related to the receipt, disbursement, and use of public money." In
addition, the John F.  Kennedy Center Act Amendments of 1994 provide
that we are to audit and review the accounts funded by appropriations
authorized by those amendments at least once every 3 years. 


--------------------
\2 In 1958, The National Cultural Center Act, authorized a National
Cultural Center in the District of Columbia, which on Jan.  23, 1964,
was renamed the John F.  Kennedy Center for the Performing Arts. 


   OBJECTIVES, SCOPE, AND
   METHODOLOGY
------------------------------------------------------------ Letter :3

As agreed with your offices, our objective was to determine whether
an audit by us would duplicate work done by the Center's auditor. 
Further, if we determined that duplication was a problem we would
seek legislative relief from the requirement to do our own audit of
the Center's use of appropriated funds.\3 In this regard, we

  -- examined the auditor's audit scope and plan;

  -- reviewed the reports issued by the auditor;

  -- developed independently our own understanding of the Center's
     internal control process for managing federal appropriations
     authorized by the Amendments; and

  -- developed an understanding of the auditor's actual performance
     of the audit through (1) discussions with staff of the auditor
     and Center staff involved in the audit, (2) comparison with
     requirements in the Government Auditing Standards, and (3)
     review of selected working papers prepared by the auditor and
     documentation related to the audit provided by the auditor and
     the Center. 

The field work standards in the Government Auditing Standards set
forth general guidelines for undertaking the detailed audit work
necessary to evaluate an auditee's financial statements.  The field
work standards include properly planning the audit to (1) consider
materiality in determining the audit procedures, (2) follow up on
prior findings and recommendations, (3) obtain a sufficient
understanding of internal controls to plan the audit, and (4) provide
reasonable assurance of detecting irregularities that have a direct
and material impact on the financial statements. 

The Government Auditing Standards also contain general guidelines for
reporting on financial audits.  Regarding reporting on compliance
with laws and regulations, the reporting standards require that the
auditor report both the scope of testing of compliance with laws and
regulations and the results of those tests either in the financial
statement report or a separate report. 

Because both our work and that of the Center's auditor are subject to
the Government Auditing Standards, we looked for elements of the
standards in the audit scope and plan of the auditor.  Our rationale
was that the presence of these elements in the auditor's planned work
would constitute evidence of the duplication that would have occurred
when we prepared and carried out our audit scope and plan in
accordance with the standards.  To ensure that the auditor performed
the audit work detailed in its audit plan, we checked for evidence of
this work in the auditor's records involving sampled expenditure
transactions. 

To address how to proceed when we were confronted with the multiple
audit situation at the Center, we looked at selected federal program
audit guidance.\4

We found that this guidance, both in federal law and executive branch
policy, provides direction regarding what an auditor is to do when
confronted with an auditee subject to multiple audits.  This
direction is as follows: 

  -- Audits by different auditors should be coordinated,

  -- Duplication of audit work should be avoided,

  -- Auditors should reduce the burden on the auditee, and

  -- Audit resources should be efficiently used. 

To document the scope of the auditor's plan for staffing and
undertaking the audit work in accordance with Government Auditing
Standards, we obtained

  -- the audit plan for testing appropriated funds;

  -- the internal control memorandum prepared by the auditor in
     planning the work;

  -- reports issued to the Center as a result of the work;

  -- documentation on the audit staff's qualifications, independence,
     and prior experience at the Center and with federal appropriated
     funds audits; and

  -- the external critique of the auditor's practice as reflected by
     the external peer review opinion. 

We did not, as part of our work, perform a detailed review of all of
the documentation contained in the auditor's files supporting its
audit of appropriated funds nor reperform tests conducted by the
auditor because it was not our intent to use the auditor's work to
develop our own report or opinion on the Center's use of appropriated
funds and its compliance with the restrictions on the use of the
appropriations.  However, we completed the work we deemed necessary
to confirm the auditor's documented understanding of internal
controls.  In addition, we did conduct a limited review of the
auditor's documentation for some of the sampled transactions and held
discussions with the auditor's and Center's staffs to obtain an
understanding of the work performed concerning compliance with
appropriation law.  For example, we reviewed some of the auditor's
records to verify that they contained evidence of an examination of a
sample of the Center's appropriated funds transactions. 

On August 5, 1997, we provided a draft of this report to the Chairman
of the Kennedy Center for review and comment.  The Center's comments
are discussed at the end of this report. 


--------------------
\3 Our approach was discussed in our May 28, 1997, letter to the
Chairmen and Ranking Minority Members of the Senate Subcommittee on
Transportation and Infrastructure and the House Subcommittee on
Public Buildings and Economic Development, in which we described our
objectives, scope, and methodology for this assignment. 

\4 The Single Audit Act of 1984, 31 U.S.C.  7501-7507; Audits of
State and Local Governments, Office of Management and Budget,
Circular No.  A-128, Apr.  12, 1985; and Audits of Institutions of
Higher Education and Other Nonprofit Institutions, Office of
Management and Budget, Circular No.  A-133, Mar.  8, 1990. 


   THE WORK OF THE AUDITOR WAS
   GOVERNED BY CONTRACTUAL
   AGREEMENT AND IMPLEMENTED USING
   AN AUDIT PLAN
------------------------------------------------------------ Letter :4

We assessed the potential for our duplicating the auditor's work by
focusing on the objectives and audit work envisioned by the two
documents that guided that work--the engagement letter (the
contractual agreement) and the audit plan.  These documents
established the objectives that the audit had to fulfill and defined
how the auditor was to proceed to achieve those objectives.  The
letter specified (1) the agreed-upon scope of work, (2) the general
limitations of the audit, and (3) the reports to be provided to the
Center as a result of the general work.  To implement the terms and
conditions of the engagement letter, the auditor developed a detailed
plan, known as the audit plan, that laid out the specific steps for
testing appropriated expenditures, including sample selection, tests
of sampled transactions, and internal summaries and documents to be
produced. 


      THE ENGAGEMENT LETTER
      ESTABLISHED THE FINANCIAL
      STATEMENT AUDIT OBJECTIVES
---------------------------------------------------------- Letter :4.1

We obtained the July 21, 1996, engagement letter between the Center
and the auditor that set forth the contractual terms for the Center's
fiscal year 1996 financial statement audit.  The engagement letter
included both a statement of the scope of the audit and the terms and
conditions for completing the work.  The auditor's scope included
work at The John F.  Kennedy Center for the Performing Arts; the
National Symphony Orchestra; the Kennedy Center Productions, Inc.;
and the Kennedy Center Electronic Media Technologies, Inc. 

Reflecting the field work standard requirements of the Government
Auditing Standards, the engagement letter set forth the terms of the
audit in a section entitled Audit Responsibilities and Limitations. 
This section required that (1) the audit be conducted in accordance
with generally accepted auditing standards, the standards contained
in the Government Auditing Standards;\5 and OMB Circular A-133,
"Audits of Institutions of Higher Education and Other Non-Profit
Institutions;" (2) the auditor conduct the audit by examining, on a
test basis, the evidence supporting the amounts and disclosures in
the financial statements; and (3) in addition to the opinion on the
financial statements, a report, or reports, on the Center's internal
controls and compliance with laws and regulations be issued to Center
management. 


--------------------
\5 The Government Auditing Standards for financial audits incorporate
the American Institute of Certified Public Accountants Statements on
Auditing Standards, often referred to as generally accepted auditing
standards (GAAS). 


      THE AUDIT PLAN LAID OUT THE
      STEPS FOR ACHIEVING THE
      AUDIT OBJECTIVES
---------------------------------------------------------- Letter :4.2

To manage the work necessary to meet the requirements of the audit as
specified in the engagement letter, the auditor developed a
step-by-step audit plan for testing of appropriated expenditures. 
The audit plan included specific objectives for the work, such as
determining whether (1) appropriations were properly recorded; (2)
accounting procedures and controls conformed to established
procedures, and that such procedures were operating effectively and
provided proper control over appropriated funds disbursements; and
(3) capital project fund balances had been properly classified using
the following categories:  invested capital, obligated but not
invoiced, and unobligated. 

The audit plan laid out the specific steps to be undertaken to test
expenditures of appropriated funds.  These steps included

  -- obtaining an understanding of the flow of federal transactions
     through discussions with appropriate personnel;

  -- completing a random disbursement test for operation and
     maintenance and capital expenditures by sampling the universe of
     each type of transaction;

  -- obtaining documentation for each sample transaction and testing
     it for approvals, signatures, recording of vendor and amount in
     the financial records, receipt of purchased item(s); and

  -- testing compliance with statutory limitations on the use of
     appropriations. 

Our review of some auditor documentation of its tests, discussions
with the auditor's staff about those tests, and discussions with
audited Center staff confirmed that the auditor did carry out the
audit steps set forth in its audit plan regarding the Center's use of
appropriated funds. 


      AUDITOR ISSUED VARIOUS
      REPORTS TO KENNEDY CENTER
      MANAGERS AT AUDIT CONCLUSION
---------------------------------------------------------- Letter :4.3

The auditor's engagement letter, reflecting the reporting standards
in the Government Auditing Standards, provided that the auditor was
to issue several reports to Center management at the conclusion of
its work, which gave the Kennedy Center a clean opinion on its
financial statements for fiscal years 1995 and 1996.  On November 27,
1996, the auditor issued reports covering the financial statements
audit as well as work done as part of the financial statement work on
internal controls and compliance with laws and regulations. 
Specifically, these reports were entitled

(1) Financial Statements As of September 29, 1996, and October 1,
1995, Together With Auditors' Report, to the Board of Trustees;

(2) OMB Circular A-133 Supplementary Financial Report For the Fiscal
Year Ended September 29, 1996, Together with Auditors' Reports, to
the Board of Trustees; and

(3) Comments and Suggestions for Consideration For the Year Ended
September 29, 1996, to the President of the Kennedy Center. 

We also noted that the auditor, again reflecting the reporting
requirements of the Government Auditing Standards, included an update
of prior-year audit comments and suggestions in the Comments and
Suggestions letter. 


   AREAS OF POTENTIAL DUPLICATION
   EXIST IN OUR WORK AND THE WORK
   OF THE AUDITOR
------------------------------------------------------------ Letter :5

The work we undertook in planning our own audit convinced us that had
we performed our own audit of the Center's use of appropriated funds,
we would have duplicated the work of the auditor.  The areas of
duplication included

  -- developing an understanding of the Center's internal control
     process for appropriated expenditures;

  -- testing expenditure transactions for compliance with law and
     with the limitation on the use of appropriated funds; and

  -- preparing and issuing a report, or reports, on the use of
     appropriated funds, internal controls, and compliance with the
     law and the limitation on the use of these funds. 

To assess the likelihood of duplication, we obtained documentation
from the auditor, reviewed some documentation in the auditor's
records of the testing of sampled transactions, and discussed the
audit work with the auditor's staff and Center staff involved in the
audit.  We focused on the auditor's understanding of internal
controls, tests of transactions, and compliance with the limitation
on the use of the appropriated funds. 


      AUDITOR DEVELOPED
      UNDERSTANDING OF INTERNAL
      CONTROLS IN PLANNING
      AUDIT WORK
---------------------------------------------------------- Letter :5.1

The auditor, in applying the field work standards for developing an
understanding of internal controls, prepared an August 19, 1996,
internal control memorandum entitled "Purchasing Procedures for
Federal Acquisitions." The memorandum, according to auditor staff,
represented the auditor's understanding, from discussions with Center
staff, of the process by which the Center makes purchases using the
appropriated funds. 

In completing the work necessary in planning our own audit, we
discussed appropriated funds procedures with Center staff and
obtained Center appropriated funds financial reports and
documentation from several purchase/contract files to develop our own
understanding of the Center's process for making purchases using
appropriated funds.  Although we did not prepare an internal control
memorandum, we were able to confirm the process that the auditor
presented in the August 19, 1996, memorandum.  We found the auditor's
memorandum accurately reflected our own understanding of the Center's
controls over the use of appropriated funds. 


      AUDITOR TESTED SAMPLES OF
      APPROPRIATION EXPENDITURE
      TRANSACTIONS
---------------------------------------------------------- Letter :5.2

The auditor, in applying the field work standards for testing of
transactions, selected a sample of the operation and maintenance and
capital improvement appropriations expenditures for use in testing
transactions.  The auditor advised us that its sample was selected
from the universe of expenditures in the fiscal year for each type of
funding.  To plan for our own tests of the use of appropriated funds,
we identified and obtained expenditure records from the Center that
provided the universe of expenditures by fiscal year and type of
funding.  Although we did not proceed to select and test our own
sample, on the basis of the auditor's audit plan and the sampling
used by the auditor, we concluded that the auditor's planned
procedures were adequate. 

By reviewing the auditor's plan and the documentation we obtained
from the records prepared by the auditor related to the testing of
transactions, and our discussions with both the auditor's staff and
staff at the Center, we developed an understanding of the work
performed by the auditor in its specific testing of documentation
supporting each sampled expenditure.  The auditor's plan included
verifying that documentation existed, that appropriate signatures and
approvals were thereon, and that the financial aspects of the
transaction were recorded.  The documentation we obtained from the
auditor showed that it sampled 37 maintenance, repair, and security
expenditure transactions and 36 capital projects expenditure
transactions.  We believe that had we proceeded to do our own audit,
our approach would have been similar to the one used by the Center's
auditor. 


      AUDITOR'S REPORT DID NOT
      SPECIFICALLY REFLECT
      COVERAGE OF TESTS FOR
      COMPLIANCE WITH LIMITATION
      ON USE OF FUNDS
---------------------------------------------------------- Letter :5.3

In addition to the uses for which funds were authorized--namely,
maintenance, repair, and security, and capital projects--the
Amendments imposed a specific limitation on the use of funds to
support performing functions.  This limitation provided that

"No funds appropriated pursuant to this section may be used for any
direct expense incurred in the production of a performing arts
attraction, for personnel who are involved in performing arts
administration (including any supply or equipment used by the
personnel), or for production, staging, public relations, marketing,
fundraising, ticket sales, or education."\6

The auditor's plan, audit records, and our discussions with both the
auditor's staff and staff of the Center provided us with an
understanding of the work both planned and performed by the auditor
in the testing of compliance with the limitation on the use of
appropriated funds in support of performing functions.  For each
sampled transaction, the auditor considered whether the expenditure
was consistent with the act's limitation.  Had we continued with the
work necessary to plan and do our own audit, we would have developed
and executed tests to determine whether expenditures were consistent
with the Amendments' limitation. 

Although the auditor tested transactions for compliance with the
statutory limitation on the use of appropriated funds, its report on
compliance with provisions of laws neither listed this limitation
among those for which compliance was tested nor provided information
specifically relating to the Center's compliance with the limitation
as evidenced by the auditor's tests.  We brought this matter to the
attention of Center officials.  We suggested that they include a
contractual requirement in future financial statement audit
engagement letters requiring that the auditor include in its report
to the Center information about specific tests of compliance with the
limitation on the use of funds that it had undertaken and a statement
of the results of those tests. 

In response, Center officials agreed with our suggestion to revise
future contracts and included a requirement in the fiscal year 1997
financial statement audit contract that the auditor, in its report,
include specific information about tests conducted and the results of
those tests. 


--------------------
\6 Section 12(c) of the John F.  Kennedy Center Act Amendments of
1994, Public Law 103-279, 108 Stat.  1409, 1416 (1994), 20 U.S.C. 
76r. 


   CONCLUSION
------------------------------------------------------------ Letter :6

The funds appropriated to the Center for maintenance, repair, and
security, and capital projects are currently subject to duplicative
audit work.  The Amendments provide that we are to review and audit
the accounts that use these appropriated funds.  But because these
appropriated funds are also included in the financial statements of
the Center, they are also subject to the Center's annual financial
statement audit. 

Our discussions with Center officials and the auditor's staff, as
well as our review of the auditor's audit plan, documentation from
the auditor's records, and Center documents, convinced us that our
audit would have duplicated the work of the auditor, would not have
been an efficient use of our audit resources, and would have imposed
an unnecessary burden on Center staff. 

As long as Center officials continue retaining an auditor whose work
is subject to Government Auditing Standards, and Center officials
require the auditor to specifically address its tests of compliance
with the limitation on the use of appropriated funds and the results
of those tests in its audit report, we believe Congress would receive
little, if any, benefit from our duplicative audit of funds
appropriated to the Center.  If Congress is concerned that the Center
may not continue to retain an auditor to perform an annual audit in
compliance with the Government Auditing Standards, it could impose a
statutory requirement that the Kennedy Center continue to have annual
audits performed.  Furthermore, even if the statutory language that
specifically provides for audits by the Comptroller General of the
Center's use of appropriated funds is repealed, Congress could still
request that we review and examine the Center's use of those funds
under our general authority in 31 U.S.C.  712. 


   RECOMMENDATION
------------------------------------------------------------ Letter :7

We recommend that Congress delete the requirement that the
Comptroller General audit the funds appropriated.  To statutorily
ensure continued audits of those funds, Congress may wish to consider
including, in the reauthorization legislation, a requirement that the
Center (1) continue contracting for annual financial statement
audits, subject to the Government Auditing Standards, to ensure that
appropriated funds are properly obligated and expended in compliance
with statutory authorities and limitations and (2) communicate the
results of such audits to Congress annually. 


   AGENCY COMMENTS
------------------------------------------------------------ Letter :8

We provided copies of a draft of this report to the Chairman, John F. 
Kennedy Center, for comment.  On August 11, 1997, the Center's Vice
President, Facilities; Chief Financial Officer; General Counsel; and
Controller provided us with oral comments on the draft report.  These
officials advised us that they generally agreed with the information
in the report and the recommendation to Congress.  They also stated
that in the Kennedy Center's view, it is not necessary to amend the
Kennedy Center Act to specify auditing requirements because the
trustees and officers already have an obligation to ensure that
expenditures of funds are audited in accordance with current auditing
standards.  However, they said that the Kennedy Center has no
objection to amending the act as recommended. 

The Kennedy Center officials also provided comments to clarify some
of the information presented in the report, which we have
incorporated where appropriate. 


---------------------------------------------------------- Letter :8.1

We are sending copies of this report to the Chairman of the Senate
Subcommittee on Transportation and Infrastructure, Committee on
Environment and Public Works; the Chairman and Ranking Minority
Member of the House Subcommittee on Public Buildings and Economic
Development, Committee on Transportation and Infrastructure; the
Chairman of the John F.  Kennedy Center for the Performing Arts; and
other interested committees and subcommittees.  Copies will be made
available to others upon request. 

Major contributors to this report are listed in the appendix.  If you
have any questions about the report, please call me on (202)
512-8387. 

Bernard L.  Ungar
Director, Government Business
  Operations Issues


MAJOR CONTRIBUTORS TO THIS REPORT
==================================================== Appendix Appendix


   GENERAL GOVERNMENT DIVISION,
   WASHINGTON, D.C. 
-------------------------------------------------- Appendix Appendix:1

Ronald King, Assistant Director
Thomas Johnson, Evaluator-in-Charge
Hazel Bailey, Communications Analyst
John Parulis, Senior Evaluator


   ACCOUNTING INFORMATION
   MANAGEMENT DIVISION
-------------------------------------------------- Appendix Appendix:2

Robert Gramling, Director of Corporate Audits and Standards
Jeannette Franzel, Assistant Director, Corporate Audits and Standards


   OFFICE OF THE GENERAL COUNSEL
-------------------------------------------------- Appendix Appendix:3

Alan Belkin, Acting Associate General Counsel
Susan Michal-Smith, Senior Attorney


*** End of document. ***