Status of General Accounting Office Reviews of the Library of Congress
(Testimony, 11/29/95, GAO/T-GGD-96-49).
This testimony discusses the status of GAO's reviews at the Library of
Congress. It briefly summarizes GAO's August 1991 report
(GAO/AFMD-91-13) on the Library's financial management and its response
to GAO's recommendations. The testimony also explains the scope and
status of GAO's current review, which broadly assesses the Library's
management and updates the 1991 financial audit.
--------------------------- Indexing Terms -----------------------------
REPORTNUM: T-GGD-96-49
TITLE: Status of General Accounting Office Reviews of the Library
of Congress
DATE: 11/29/95
SUBJECT: General management reviews
Financial statement audits
Legislative bodies
Libraries
Internal controls
Financial management systems
Chief financial officers
Computer networks
Reporting requirements
Accounting procedures
IDENTIFIER: Federal Library and Information Network
GMR
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Cover
================================================================ COVER
Before the Joint Committee on the Library of Congress
United States Senate
For Release
on Delivery
Expected at
9:30 a.m. EST
Wednesday
November 29, 1995
- STATUS OF GENERAL ACCOUNTING
OFFICE REVIEWS OF THE LIBRARY OF
CONGRESS
Statement of J. William Gadsby
Director, Government Business Operations Issues
General Government Division
GAO/T-GGD-96-49
GAO/GGD-96-49T
(240194)
Abbreviations
=============================================================== ABBREV
STATUS OF GENERAL ACCOUNTING
OFFICE REVIEWS OF THE LIBRARY OF
CONGRESS
============================================================ Chapter 0
Mr. Chairman and Members of the Committee:
We are pleased to be here to discuss the status of our reviews at the
Library of Congress. I will first briefly summarize our 1991 report
on the Library's financial management and its response to our
recommendations. Then I will explain the scope and status of our
current review requested just last month by Senators Hatfield and
Mack, who asked that we conduct a broad assessment of the Library's
management, including an update of the 1991 financial audit.
1991 FINANCIAL AUDIT REPORT ON
THE LIBRARY
---------------------------------------------------------- Chapter 0:1
In August 1991 we issued a report on the Library's 1988 balance
sheet, Financial Audit: First Audit of the Library of Congress
Discloses Significant Problems (GAO/AFMD-91-13). Since that time, we
periodically contacted Library officials to discuss their planned
corrective actions to address our recommendations. We also testified
on our report before the Subcommittee on Libraries and Memorials,
Committee on House Administration, in November 1991. In addition,
the Library's Inspector General followed up on our work and issued an
audit report in August 1992.
Our 1991 audit disclosed three main areas of weakness in the
Library's financial operations that precluded us from giving an
opinion on the Library's financial statements--a situation we have
encountered in initially reviewing the financial operations of a
number of federal agencies. First, the Library's financial records
and controls were in such poor condition that we were unable to audit
a significant portion of its assets and liabilities. The weaknesses
in the Library's financial management operations also greatly limited
the Library's ability to effectively account for and control its
collection of about 89 million books and other items.
Second, the Library was unable to produce reliable financial
information. It had not uniformly prescribed, documented, or
followed the policies and procedures required to effectively account
for, control, reconcile, and report financial management information.
For example, our audit disclosed that the Library had little or no
assurance that it was recovering the cost of reimbursable services
provided.
Third, the Library's controls over the Federal Library and
Information Network (FEDLINK) program were weak. As a result, its
ability to achieve intended program objectives, namely to provide
bibliographic and information retrieval services to federal
libraries, and to comply with applicable laws and regulations was
adversely affected.
Our recommendations fell into two categories. The first related to
financial reporting and internal controls. Here we recommended that
the Library: (1) designate a chief financial officer, (2) establish
accounting and internal control policies and procedures to assure
compliance with federal government accounting principles, and (3)
develop an overall financial management improvement plan, which would
include audited financial statements as well as an inventory of the
collection. The second category related to compliance issues. Here
we recommended that the Library: (1) ensure appropriations
transferred to the Library from other federal agencies were expended
only for services provided during the fiscal year for which the
appropriations were available, (2) seek statutory authority to
establish revolving funds to use gifts for self-sustaining
activities, (3) stop accepting nonappropriated funds as
reimbursements for FEDLINK services, (4) ensure that prices charged
customers under the FEDLINK program reflect the Library's actual
costs, and (5) ensure that the number of staff positions financed
from Economy Act reimbursements complied with the limitation imposed
by law.
In response to our recommendations, Library officials advised us that
the Library had designated the Director of Financial Services as
chief financial officer, adopted accounting and internal control
policies and procedures to comply with federal government accounting
principles and GAO internal control standards, purchased and
implemented a new financial management system to comply with the
standard general ledger and core financial system requirements, and
implemented controls in the FEDLINK program. However, the Library
has not had a comprehensive financial audit since our initial audit,
although its financial management improvement plans called for it to
prepare financial statements in 1996 and have them audited.
Although Library officials have taken various actions to implement
our recommendations, a detailed assessment is needed to evaluate the
effectiveness of the Library's actions. We have recently engaged an
independent accounting firm to perform a comprehensive financial
audit to evaluate the progress made by the Library and to assess the
current reliability of the Library's financial statements, the status
of internal controls, and compliance with laws and regulations. This
audit will better position the Library to prepare annual, audited
financial statements for all Library operations. We believe the
legislative and judicial branch agencies should prepare annual
audited financial statements\1 in order to put them on a par with
major executive branch agencies which are required to have audited
financial statements by the Chief Financial Officers Act, as amended
by the Government Management Reform Act. Annual independent
financial audits are needed to ensure the integrity and reliability
of data produced by financial systems.
--------------------
\1 Testimony by the Comptroller General before the Subcommittee on
Government Management, Information and Technology, Committee on
Government Reform and Oversight, House of Representatives on July 25,
1995, entitled Financial Management: Momentum Must Be Sustained to
Achieve the Reform Goals of the Chief Financial Officers Act
(GAO/T-AIMD-95-204).
ONGOING MANAGEMENT REVIEW OF
THE LIBRARY
---------------------------------------------------------- Chapter 0:2
In August and September 1995 there were several news articles
concerning the Library's handling of the investigation and reporting
of thefts of rare documents as well as other matters related to
financial and human resources management. On October 11, 1995,
Senators Hatfield and Mack asked that we undertake a review of the
overall management of the Library and complete our work by March
1996. Given the time constraints and our recent downsizing, we
consulted and reached agreement with the Senators that it will be
necessary to accomplish portions of the work using contractors. We
are presently doing some preliminary work to assess the Library's
operations and identify various management issues that need further
study. We are contracting with a management consulting firm to
perform the general management aspects of this study. As mentioned
earlier, we have also engaged an independent auditing firm to do a
financial audit.
We began our work on October 18, 1995, by meeting with the Librarian
and asking for his cooperation and arranging for briefings from the
various service and management support units within the Library.
Since then we have been briefed by Library managers and observed many
of the Library's varied operations. We have focused our early
inquiries on how the Library plans and directs its operations, makes
decisions, executes plans, organizes its people and functions,
manages its human resources, reviews and evaluates performance, and
manages its collections. We expect to complete the preliminary work
and identify issues to pursue by mid-December.
Mr. Chairman, that concludes my prepared statement. My colleagues
and I would be pleased to answer any questions the Committee may
have.
*** End of document. ***