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entitled 'Financial Audit: American Battle Monuments Commission's 
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Report to Congressional Committees: 

March 2005: 

Financial Audit: 

American Battle Monuments Commission's Financial Statements for Fiscal 
Years 2004 and 2003: 

GAO-05-298: 

GAO Highlights: 

Highlights of GAO-05-298, a report to the Senate and House Committees 
on Veterans' Affairs

Why GAO Did This Study: 

In accordance with 36 U.S.C. 2103, GAO is responsible for conducting 
audits of the agencywide financial statements of the American Battle 
Monuments Commission (the Commission). GAO audited the financial 
statements of the Commission for the fiscal years ended September 30, 
2004, and 2003. The audits were done to determine whether, in all 
material respects, (1) the Commission’s financial statements were 
reliable, and (2) Commission management maintained effective internal 
control over financial reporting and compliance with laws and 
regulations. Also, we tested Commission management’s compliance with 
selected laws and regulations. 

The American Battle Monuments Commission was created in 1923 to 
commemorate the sacrifices and achievements of U.S. Armed Forces where 
they have served overseas since April 6, 1917, and locations within the 
United States as directed by Congress. The Commission designs, 
administers, operates, and maintains 24 American military cemeteries on 
foreign soil and 25 federal memorials, monuments, and markers, 22 of 
which are on foreign soil. The Commission was also responsible for 
designing and constructing the national World War II Memorial on the 
Capitol Mall in Washington, D.C., and for maintaining 4 nonfederal 
memorials with funds provided by those memorials’ sponsors.

What GAO Found: 

In our opinion, the financial statements of the American Battle 
Monuments Commission as of September 30, 2004, and 2003, and for the 
fiscal years then ended, are presented fairly, in all material 
respects, in conformity with U.S. generally accepted accounting 
principles. Also in our opinion, the Commission maintained effective 
internal control over financial reporting (including safeguarding of 
assets) and compliance with laws and regulations as of September 30, 
2004. In addition, we found no instances of Commission noncompliance in 
fiscal year 2004 with selected provisions of laws and regulations we 
tested.

However, our work identified inadequate controls over information 
technology in two areas and improper recognition of property additions 
and accrued liabilities as of September 30, 2004, that we considered to 
be reportable conditions. The Commission recorded accounting 
adjustments to correct its property and accrued liabilities at year-end 
and is working to improve internal controls in all these areas during 
fiscal year 2005.

For fiscal year 2004, the Commission spent $40.4 million of 
appropriated funds to maintain its 24 cemeteries and 25 federal 
memorials. It also spent $47.5 million of private contributions and 
investment earnings, primarily for construction-in-progress of the 
World War II Memorial that was dedicated on Memorial Day weekend in May 
2004. On November 1, 2004, the Commission formally transferred the 
World War II Memorial to the National Park Service, which assumed 
responsibility for its perpetual care. 

May 2004: President Bush Dedicates the WWII Memorial, Washington, D.C.: 

[See PDF for image]

Source: Commission photo by Richard Latoff.

[End of figure]

What GAO Recommends: 

www.gao.gov/cgi-bin/getrpt?GAO-05-298.

To view the full product, including the scope and methodology, click on 
the link above. For more information, contact Steven J. Sebastian at 
(202) 512-3406 or sebastians@gao.gov.

[End of section]

Contents: 

Letter: 

Auditor's Report: 

Opinion on Financial Statements: 

Opinion on Internal Control: 

Reportable Conditions: 

Compliance with Laws and Regulations: 

Consistency of Other Information: 

Objectives, Scope, and Methodology: 

Commission Comments: 

Appendix: 

Appendix I: Annual Financial Report of the American Battle Monuments 
Commission: 

Annual Financial Report: 

Management's Discussion and Analysis: 

Consolidating Balance Sheet: 

Consolidating Statement of Net Cost and Changes in Net Position: 

Consolidating Statement of Budgetary Resources: 

Consolidating Statement of Financing: 

Notes to the Consolidating and Consolidated Financial Statements: 

Required Supplementary Stewardship Information: 

Statements of Heritage Assets: 

Note to Statements of Heritage Assets: 

Letter March 1, 2005: 

The Honorable Larry E. Craig: 
Chairman: 
The Honorable Daniel K. Akaka: 
Ranking Minority Member: 
Committee on Veterans' Affairs: 
United States Senate: 

The Honorable Steve Buyer: 
Chairman: 
The Honorable Lane Evans: 
Ranking Minority Member: 
Committee on Veterans' Affairs: 
House of Representatives: 

In accordance with 36 U.S.C. 2103, this report presents the results of 
our audits of the American Battle Monuments Commission's (the 
Commission) financial statements for the fiscal years ended September 
30, 2004, and 2003.

We are sending copies of this report to the Chairmen and Ranking 
Minority Members of the Senate Committee on Appropriations and the 
House Committee on Appropriations. We are also sending copies to the 
Secretary of the Treasury, the Director of the Office of Management and 
Budget, the Chairman of the Commission, and other interested parties. 
In addition, this report will be available at no charge on the GAO Web 
site at [Hyperlink, http://www.gao.gov].

Should you or your staffs have any questions concerning this report, 
please contact me at (202) 512-3406 or Roger R. Stoltz, Assistant 
Director, at (202) 512-9408. Key contributors to this engagement were 
Patricia A. Summers, West E. Coile, Brooks A. Bare, Cara L. Bauer, 
Kimberly A. Tibbs, James S. Maziasz, and Joel Rodriguez.

Signed by: 

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

Auditor's Report To the Chairman of the American Battle Monuments 
Commission: 

In accordance with 36 U.S.C. 2103, we are responsible for conducting 
audits of the agencywide financial statements of the American Battle 
Monuments Commission (the Commission). In our audits of the 
Commission's financial statements for fiscal years 2004 and 2003, we 
found: 

* the consolidating financial statements as of and for the fiscal year 
ended September 30, 2004, and comparative consolidated totals as of and 
for the fiscal year ended September 30, 2003, are presented fairly, in 
all material respects, in conformity with U.S. generally accepted 
accounting principles;

* although internal controls should be improved, the Commission 
maintained effective internal control over financial reporting 
(including safeguarding assets) and compliance with laws and 
regulations as of September 30, 2004; and: 

* no reportable noncompliance with laws and regulations we tested.

The following sections discuss in more detail (1) these conclusions and 
our conclusions on Management's Discussion and Analysis and other 
supplementary information and (2) the objectives, scope, and 
methodology of our audit.

Opinion on Financial Statements: 

The American Battle Monuments Commission's consolidating balance sheet 
as of September 30, 2004, and its related consolidating statements of 
net cost and changes in net position; budgetary resources; and 
financing, with accompanying notes for the fiscal year then ended, and 
comparative consolidated totals as of and for the fiscal year ended 
September 30, 2003, are presented fairly, in all material respects, in 
conformity with U.S. generally accepted accounting principles.

Opinion on Internal Control: 

The Commission maintained, in all material respects, effective internal 
control over financial reporting (including safeguarding assets) and 
compliance as of September 30, 2004, that provided reasonable assurance 
that misstatements, losses, or noncompliance material in relation to 
the consolidating financial statements or to stewardship information 
would be prevented or detected on a timely basis. Our opinion is based 
upon criteria established under 31 U.S.C. 3512 (c), (d) [Federal 
Managers' Financial Integrity Act (FMFIA)], and Office of Management 
and Budget (OMB) Circular No. A-123, Management Accountability and 
Control (June 21, 1995).

However, our work identified the need to improve certain internal 
controls, as described below, that we consider reportable conditions. 
Reportable conditions are significant deficiencies in the design or 
operation of internal control that, in our judgment, could adversely 
affect the Commission's ability to meet internal control objectives or 
meet OMB criteria for reporting matters under FMFIA. In addition, 
misstatements may occur in other Commission financial information not 
included in this report as a result of these reportable conditions.

Reportable Conditions: 

During our audit we noted deficiencies in controls over information 
technology systems and improper recognition of property additions and 
accrued liabilities as of September 30, 2004. Commission management 
disclosed the information technology and accrued liability conditions 
in its fiscal year 2004 FMFIA report and is working to implement 
corrections for all internal control deficiencies. The issue of 
improper recognition of property additions for fiscal year 2004 was 
identified by us after the Commission had filed its 2004 FMFIA report.

Deficient Controls over Information Technology Systems: 

Inadequate controls over information technology systems were identified 
in the two following areas.

* User documentation: While the Commission's existing accounting 
system, implemented on October 1, 2001, has adequate user 
documentation, there continued to be a lack of user documentation to 
support its older legacy subsystems that were still used during fiscal 
year 2004, primarily for payroll. This condition has existed since our 
first audit of the Commission's financial statements in fiscal year 
1997 and includes the Clipper system used by the European Regional 
Office and the dBase IV system used by the Mediterranean Regional 
Office. Commission personnel have learned how to use these legacy 
subsystems over the years primarily through on-the-job training and 
have limited support to explain how subsystems functions should be 
performed and to answer questions. In January 2004, payroll processing 
for the Commission's General Schedule employees was converted to the 
General Services Administration. Payroll processing for all of the 
Commission's Foreign Service National employees was in negotiation for 
conversion later in fiscal year 2005. Thus, while the Commission has 
made some progress, further efforts to improve user documentation are 
needed.

* Security program and access controls: During our fiscal year 2004 
audit, we continued to identify some security controls over the 
Commission's computer system, such as administrative controls over 
network configuration, passwords, and access to files, that were not 
effective at all Commission locations as of September 30, 2004. Since 
the installation of the Commission's automated accounting system in 
fiscal year 2002, we have conducted annual security and general 
controls reviews. In separate Limited Official Use reports issued after 
our fiscal years 2002 and 2003 audits, we communicated detailed 
information and made 49 and 105 specific recommendations, respectively, 
to strengthen Commission internal controls in information technology, 
accounting procedures, financial reporting, and cash management. While 
the Commission has implemented a number of these recommendations, 
further efforts will be needed to correct the remaining weaknesses 
during fiscal year 2005.

Improper Recognition of Property Additions and Accrued Liabilities: 

As of September 30, 2004, the Commission's European Regional Office had 
not properly recognized almost $1 million of property additions and 
omitted $0.3 million of accrued liabilities for accounts payable and 
accrued salaries and benefits from the Commission's accounting records. 
This condition also resulted in misstating General Fund fiscal year 
2004 expenses by a corresponding amount. While the cutoff of accrued 
liabilities at the Commission's European Regional Office has improved 
in fiscal year 2004 compared to the $1.1 million of unrecorded accrued 
liabilities we identified in fiscal year 2003, it continues to be a 
reportable condition. We believe that the fiscal year 2004 condition 
was caused by early year-end closing of the accounting records and a 
lack of understanding at the Commission's European Regional Office of 
capitalization concepts and proper year-end cutoff as required by 
accrual accounting. Proper expensing of heritage asset additions, while 
capitalizing and depreciating general property additions over $25,000, 
is necessary for proper presentation. Proper cutoff of accrued 
liabilities for goods, services, and benefits received in fiscal year 
2004, but invoiced and paid in fiscal year 2005, is also necessary for 
proper presentation. The Commission subsequently recognized these 
property additions and accrued liabilities through accounting 
adjustments in order to fairly present its financial statements for 
fiscal year 2004 in conformity with U.S. generally accepted accounting 
principles.

Compliance with Laws and Regulations: 

Our tests of the Commission's compliance with selected provisions of 
laws and regulations for fiscal year 2004 disclosed no instances of 
noncompliance reportable under U.S. generally accepted government 
auditing standards or OMB audit guidance. 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.

Consistency of Other Information: 

The Commission's Management Discussion and Analysis and stewardship 
statements of heritage assets and an accompanying note contain a wide 
range of data, some of which are not directly related to the financial 
statements. We do not express an opinion on this information. However, 
we compared this information for consistency with the financial 
statements and discussed the methods of measurement and presentation 
with officials of the Commission. Based upon this limited work, we 
found no material inconsistencies with the financial statements or 
nonconformance with OMB guidance.

Objectives, Scope, and Methodology: 

Commission management is responsible for (1) preparing the financial 
statements in conformity with U.S. generally accepted accounting 
principles; (2) establishing, maintaining, and assessing internal 
control to provide reasonable assurance that the broad internal control 
objectives of FMFIA are met; and (3) complying with applicable laws and 
regulations.

We are responsible for obtaining reasonable assurance about whether (1) 
the Commission's financial statements are presented fairly, in all 
material respects, in conformity with U.S. generally accepted 
accounting principles and (2) Commission management maintained 
effective internal control that provides reasonable, but not absolute, 
assurance that the following objectives were met.

* Financial reporting: Transactions are properly recorded, processed, 
and summarized to permit the preparation of financial statements and 
stewardship information in conformity with U.S. generally accepted 
accounting principles, and assets are safeguarded against loss from 
unauthorized acquisition, use, or disposition.

* Compliance with applicable laws and regulations: Transactions are 
executed in accordance with (1) laws governing the use of budgetary 
authority; (2) other laws and regulations that could have a direct and 
material effect on the financial statements; and (3) any other laws, 
regulations, or governmentwide policies identified by OMB guidance.

We are also responsible for (1) testing compliance with selected 
provisions of laws and regulations that have a direct and material 
effect on the financial statements and for which OMB guidance requires 
testing and (2) performing limited procedures with respect to certain 
other information appearing in the Commission's annual financial 
report. 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 Commission management;

* evaluated the overall presentation of the financial statements;

* obtained an understanding of internal control related to financial 
reporting (including safeguarding assets) and compliance with laws and 
regulations (including execution of transactions in accordance with 
budget authority);

* obtained an understanding of the recording, processing, and 
summarizing of performance measures as reported in Management's 
Discussion and Analysis;

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

* considered the process for evaluating and reporting on internal 
control and financial management systems under FMFIA; and: 

* tested compliance with selected provisions of the following laws: 

* The Commission's enabling legislation codified in 36 U.S.C. Chapter 
21,

* Public laws applicable to the World War II Memorial Fund,

* Departments of VA and HUD, and Independent Agencies Appropriations 
Act 2004,

* Antideficiency Act,

* Pay and Allowance System for Civilian Employees, and: 

* Prompt Payment Act.

We did not evaluate all internal controls relevant to operating 
objectives as broadly defined by FMFIA, such as those controls relevant 
to preparing statistical reports and ensuring efficient operations. We 
limited our internal control testing to those 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 Commission. We limited our tests of compliance to those required by 
OMB audit guidance that we deemed applicable to the Commission's 
financial statements for the fiscal year ended September 30, 2004. 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 and OMB audit guidance.

Commission Comments: 

Commission management was provided with a draft of this report and 
concurred with its facts and conclusions.

Signed by: 

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

January 31, 2005: 

[End of section]

Appendixes: 

Appendix I: Annual Financial Report of the American Battle Monuments 
Commission: 

Annual Financial Report: 

ANNUAL FINANCIAL REPORT:

THE AMERICAN BATTLE MONUMENTS COMMISSION:

FOR THE YEAR ENDED SEPTEMBER 30, 2004:

Management's Discussion and Analysis: 

AMERICAN BATTLE MONUMENTS COMMISSION: 
ANNUAL FINANCIAL REPORT: 
MANAGEMENT'S DISCUSSION AND ANALYSIS (MDA) FOR THE FISCAL YEAR ENDED 
SEPTEMBER 30, 2004:

Commission Profile:

Since 1923, the mission of the American Battle Monuments Commission 
(the Commission) has been to (1) commemorate the achievements and 
sacrifices of United States Armed Forces where they have served since 
April 6, 1917, through the erection and maintenance of suitable 
memorial shrines; (2) design, construct, operate and maintain permanent 
American military burial grounds in foreign countries; (3) control the 
design and construction on foreign soil of U.S. military memorials, 
monuments, and markers by other U.S. citizens and organizations, both 
public and private; and (4) encourage U.S. governmental agencies and 
private individuals and organizations to adequately maintain the 
memorials, monuments, and markers erected by them on foreign soils. Our 
fiscal year 2004 appropriation supported our continued commitment to 
the worldwide responsibilities that flow from this mission.

In performance of its mission, the Commission administers, operates and 
maintains 24 permanent American military cemeteries; 25 federal 
memorials, monuments, and markers; and 4 nonfederal memorials. While 3 
memorials are located in the United States, the remaining memorials and 
all of our cemeteries are located in 14 foreign countries, the U.S. 
Commonwealth of the Northern Mariana Islands, and the British 
dependency of Gibraltar. These cemeteries and memorials are among the 
most beautiful and meticulously maintained shrines of their nature in 
the world. Interred in the cemeteries are 124,917 U.S. War Dead: 30,922 
of World War I, 93,245 of World War II, and 750 of the Mexican American 
War. Additionally, 6,114 American Veterans and others are interred in 
the Mexico City and Corozal Cemeteries. The World Wars and Mexico City 
Cemeteries are closed to future burials except for the remains of U.S. 
War Dead found from time to time in the World War I and II battle areas.

In addition to grave sites, the World War I and II cemeteries, together 
with 3 memorials on U.S. soil, commemorate by name on Walls of the 
Missing the 94,132 U.S. servicemen and women who were Missing in Action 
or lost or buried at sea in their general region during the World Wars 
and the Korean and Vietnam Wars.

Most of our facilities range in age from 44 to 90 years old with our 
Mexico City Cemetery being over 150 years old. The permanent structures 
and plantings, which make our facilities among the most beautiful 
memorials in the world, are aging and require increased funding to 
maintain them at the current standards. Accordingly, we prioritize the 
use of our maintenance and engineering funds very carefully to ensure 
the most effective utilization of our available resources. All of the 
plantings, including the lawns and to some extent the meadows, must be 
cut and/or shaped, fed and treated with insecticides and fungicides at 
regular intervals during the growing season. The plantings also must be 
replaced when their useful lives are exhausted or they receive major 
storm damage.

 

The Commission also administers trust funds to (1) build memorials 
authorized by Congress, but financed primarily from private 
contributions, commemorative coin proceeds, and investment earnings; 
(2) decorate grave sites with flowers from private contributions; and 
(3) maintain and repair nonfederal war memorials with private 
contributions.

Organizational Structure:

The Commission's organizational structure is presented in Figure 1 
below.

Figure 1. The Commission's Organizational Structure:

[See PDF for image]

[End of figure]

The Commission's policymaking body consists of an 11 member Board of 
Commissioners appointed by the President of the United States for an 
indefinite term and whose members serve without pay. The commissioners 
establish policy and ensure proper staff functioning in carrying out 
the mission of the Commission. During inspections, they observe, 
inquire, comment upon, and make recommendations on any and all aspects 
of Commission operations. The Commission's daily operations are 
directed by an Executive Level Secretary, who is appointed by the 
President and assisted by an Executive Director, a member of the Senior 
Executive Service.

The Commission's headquarters office is in Arlington, Virginia and 
regional offices are located in Garches, France, just outside Paris, 
and in Rome, Italy.

For fiscal year 2004, the Commission maintained its authorization for 
390 full-time equivalent (FTE) positions. U.S. citizens constituted 66 
members of the staff, while the remaining 324 were Foreign Service 
Nationals employed at our regional offices and at the cemeteries in the 
countries where the Commission operates.
 
Operations Management:

The Commission's fiscal year 2004 funding focused on personnel costs, 
service fees, scheduled maintenance and repairs, supplies, materials, 
spare parts, replacement of uneconomically repairable equipment, and 
capital improvements, as well as funding toward completion of the 
design and construction of the Normandy Cemetery Interpretive Center.

The Commission's fiscal year 2004 appropriation of $41,300,000 was 
available for salaries and expenses of $32,300,000 and the design and 
construction of the Normandy Cemetery Interpretive Center of 
$9,000,000. A government-wide rescission of .0059 reduced the 
Commission's appropriation by $243,670, causing it to reduce spending 
in much needed engineering projects to accommodate this loss.

Within its fiscal year 2004 appropriation, the Commission also targeted 
$2.0 million to continue an Infrastructure Modernization Program. As 
previously noted, our cemeteries and their infrastructure are aging. 
With the help of Congress and the Office of Management and Budget over 
the last 5 years, we have eliminated our backlog of deferred 
maintenance projects. We must now continue our efforts to replace and/ 
or upgrade outdated and deteriorating systems.

The Infrastructure Modernization Program enables us to take a systemic 
look at our infrastructure and address areas that will: (1) reduce the 
growth of operational and routine maintenance costs; and (2) promote 
more effective long-term planning and budgeting. The first phase of 
this program, conducted during fiscal years 2000 and 2001, established 
a baseline assessment of our installations by utilizing in-depth 
technical surveys. These surveys, conducted by professional engineering 
firms applying current industry standards, regulations, and 
technological advances, assessed our electrical and structural systems 
and identified what needed to be accomplished to our facilities. A 
subsequent study, conducted in fiscal year 2002, examined our diverse 
water systems at each facility. The second phase, which began in fiscal 
year 2002, addresses corrective actions in electrical and structural 
systems. This phase will continue through fiscal year 2006.

The shrines to America's War Dead entrusted to the Commission's care 
require a formidable annual program of maintenance and repair of 
facilities, equipments, and grounds. This care includes upkeep of over 
131,000 graves and headstones and 73 memorial structures (within and 
external to the cemeteries) on 1,641.2 acres of land. Additionally, the 
Commission maintains 41 residential quarters for assigned personnel; 24 
maintenance facilities; 67 miles of roads and walkways; 911 acres of 
flowering plants, fine lawns, and meadows; nearly 3 million square feet 
of shrubs and hedges; and over 11,000 ornamental trees.

Care and maintenance of these resources is exceptionally labor 
intensive, thus personnel costs accounted for 61 percent of the 
Commission's fiscal year 2004 obligations. The remaining 39 percent 
funded other operating costs. Figure 2 below shows the obligation of 
funds by object class under the Commission's fiscal year 2004 
obligations.

Figure 2. The Commission's Fiscal Year 2004 Obligations by Object Class:

[See PDF for image]

[End of figure]

Mission and Goals:

The Commission's mission has four primary components:

1. Commemorating the services and achievements of United States Armed 
Forces where they have served since April 6, 1917 (the date of entry of 
the United States into World War 1), through the erection of suitable 
memorial shrines.

2. Designing, constructing, operating and maintaining permanent U.S. 
military cemeteries and memorials in foreign countries.

3. Controlling the design and construction of U.S. military monuments 
and markers in foreign countries by other U.S. citizens and 
organizations, both public and private.

4. Encouraging the maintenance of such monuments and markers by their 
sponsors.

To support this mission, the Commission has focused on the following 
goals:

Goal 1. To provide the most extensive and best possible support to the 
next of kin and our many customers who utilize the services of the 
American Battle Monuments Commission.

Goal 2. Conduct an effective Infrastructure Modernization Program at 
all Commission cemeteries, memorials, and monuments in order to 
modernize our facilities and maintain the desired standards.

Goal 3. Determine if technology, outsourcing, and automation can 
improve efficiency and/or reduce the costs of foreign manpower.

Goal 4. Modernize the Commission's accounting systems and funding 
processes to ensure funding obtained is utilized and accounted for in 
the most effective manner.

Goal 5. Establish a World War II Memorial in the Washington, D.C. area 
to honor those who served in the Armed Forces of the United States 
during World War II and commemorate the participation of the nation in 
that war.

Performance against these goals was measured within the framework 
established by the President's Management Agenda and the Commission's 
strategic plan.

President's Management Agenda Initiatives:

The Commission made significant progress in the implementation of each 
item within the President's Management Agenda as follows.

Strategic Management of Human Capital:

Managing our human capital demands that we have the right person with 
the right skills in every position. In fiscal year 2002 we began a 
worldwide manpower study, which would outline our manpower 
requirements, position descriptions, workloads, and manpower 
distribution to ensure that we deploy our workforce properly. We expect 
to receive the final report in the second quarter of fiscal year 2005 
and will review and implement the study recommendations through the 
remainder of the year and into fiscal year 2006.

Competitive Sourcing:

We have used competitive sourcing initiatives in a number of ways to 
improve performance and save costs. Our fiscal year 2004 budget 
contained funding for upgrades, hosting, and 24-hour support of our 
financial management system. These funds allowed us to outsource 
support to contractors experienced in providing such services and 
enabled us to support our worldwide operations without doubling the 
size of our financial management staff. The resources devoted to our 
Infrastructure Modernization Program and engineering programs largely 
supported competitive sourcing of our infrastructure improvement 
efforts, allowing our government employees to focus on our daily 
mission of maintaining our cemeteries while implementing complex 
systems and upgrading our physical plant. Most of our construction and 
engineering projects were contracted out, since these projects are 
usually unique and beyond the capability of our limited staff.

Improved Financial Performance:

Since fiscal year 1997, the Commission has been required to produce 
financial statements and the Comptroller General of the United States 
has been required to independently audit these statements. Each year, 
the Commission has earned an unqualified opinion on its financial 
statements from the Government Accountability Office. However, we 
recognize that improved financial performance is more than achieving an 
unqualified audit opinion. It is about putting useful and timely 
information in the hands of Commission management with which they can 
make informed decisions. The fiscal year 2004 budget not only supported 
our daily accounting operations and proper internal controls, but 
allowed us to identify additional management needs and reports to 
provide the best financial information available.

Expanded E-Government:

Over the last several years, the Commission has expanded access to 
valuable information through the use of online tools. We maintain a Web 
site that allows visitors to gather information on our organization, 
and our cemeteries and memorials with their locations. We will continue 
our efforts to enable citizens to make contributions to our flower 
funds electronically through the use of credit cards. This will allow 
greater ability for citizens to arrange for flowers to memorialize the 
memory of loved ones who have made the ultimate sacrifice for our 
nation.

We also support the Administration's efforts to reduce the number of 
payroll providers with the federal government. During fiscal year 2004, 
the General Services Administration began providing payroll service to 
the Commission for General Service employees. This service includes 
online leave and earnings statements and other key pay and benefits 
information.

Budget and Performance Integration:

A key element in linking budget and performance is having timely and 
reliable financial data. We have achieved that with our integrated 
financial system. Another key element is the process by which the 
Commission ties performance within the organization to the budget 
formulation process. In late fiscal year 2004, we began implementing a 
Cemetery Evaluation Review System that uses existing policies and 
standards to assess and prioritize both requirements and resources. 
Evaluations and reviews form the basis for future budget requirements.

We are pressing forward in the budget process to ensure that our 
funding requests support the objectives of the agency and the 
President's Management Agenda.

Selected Performance Goals and Results:

During fiscal year 2004, the Commission demonstrated an ability to 
achieve performance results for its goals through a number of specific 
projects that tie directly to its strategic goals as follows.

1. In support of next of kin and other customers who use our services, 
the Commission provides burial and memorialization site information; 
letters authorizing nonfee passports for members of the immediate 
family traveling overseas primarily to visit the cemetery; in-country 
travel and accommodation information; and upon arrival at the cemetery, 
escort to the appropriate grave or memorialization site. Requesters are 
provided a photograph that is taken of the appropriate headstone or 
section on the Wall of the Missing, which is mounted on a color 
lithograph of the cemetery or memorial where a serviceman or woman is 
buried or commemorated by name. The Commission also purchases floral 
decorations with donor funds, and the donor is provided with a 
photograph of the headstone or Wall of the Missing with the decoration 
in place.

2. In addition to responding to inquiries by friends and relatives of 
the War Dead interred or memorialized at its sites, the Commission also 
provides information to the Executive Branch, Members of Congress, 
other government agencies, historians, and other interested 
individuals. During fiscal year 2004, the Commission responded to 
approximately 2,600 telephone calls, 3,400 letters, and 4,200 e-mail 
inquiries. In addition, the Commission mailed out almost 3,000 cemetery 
lithographs and photos during the year.

3. The Commission's Internet Website at www.abmc.gov provides visitors 
a convenient, user friendly, method to access information on the 
Commission, as well as its cemeteries, memorials, monuments, markers, 
and headquarters operations. In addition, information on the U.S. War 
Dead from the Korean War and those interred or commemorated at its 
World War I and World War II cemeteries are accessible on the Website. 
The Commission redesigned its Web site to be fully compliant with 
Section 508 of the Rehabilitation Act (29 U.S.C. 794d), as amended by 
the Workforce Investment Act of 1998 (P.L. 105-220, Aug. 7, 1998). In 
this redesign effort, the Commission focused on making electronic and 
information technology accessible to people with disabilities.

4. For fiscal year 2004, more than 3 million American and foreign 
citizens visited Commission cemeteries. Most visitors paid homage 
collectively to the interred Honored War Dead. Many had more personal 
reasons for visiting a friend or relative who never returned home from 
war. Regardless of the visitors' motivations, Commission employees 
dedicated themselves to making each visit gratifying and memorable.

5. Throughout the year, at sites around the world, the Commission 
hosted a variety of special events and commemorations including 
celebrations for Memorial Day, Independence Day, and Veterans Day. In 
addition, military units held ceremonies to honor their fallen 
comrades, and local organizations paid tribute to those who died while 
liberating their regions. While some ceremonies received national 
attention, such as the dedication of the World War II Memorial, or the 
60th anniversary of D-Day, many drew local attention only. All 
ceremonies reflected a solemn respect for America's Honored War Dead, 
and appreciation for the sacrifices of all veterans. The Commission 
also completed the major elements of the design of the Normandy 
Cemetery Interpretive Center building during fiscal year 2004. 
Additionally, it hosted a groundbreaking ceremony on August 28, 2004.

6. With the dedication by the President of the United States of the 
World War II Memorial on May 29, 2004, the Commission successfully 
completed its largest construction project of the past 50 years. The 
dedication ceremony concluded an 11-year effort to design, fund, and 
build the memorial, which now stands on the National Mall as a lasting 
tribute to the service and sacrifice of America's World War II 
generation. The memorial is one of only four major structures on the 
Mall's central axis, a reflection of the significance of the event it 
commemorates. The Commission's fund-raising success and project 
stewardship resulted in an $18.3 million balance in the WWII Memorial 
Trust Fund as of September 30, 2004, that will be administered by the 
Commission solely to the benefit of the WWII Memorial and its related 
programs.

7. The Commission completed the installation and dedication of the 
Vietnam Veterans Memorial Plaque. In June 2000, the Commission acquired 
this mission under P.L. 106-214 to install a plaque that commemorates 
all those who died after the end of the Vietnam conflict but as a 
direct result of their service in that war. The Commission hosted an 
unveiling ceremony for the new plaque on the renovated plaza at the 
Vietnam Veterans Memorial in Washington, D.C. in July 2004.

8. The American Veterans of WWII, Korea, and Vietnam (AMVETS) and the 
Robert R. McCormick Tribune Foundation have generously donated 
chromatically tuned bells in carillons to enhance our overseas 
cemeteries. AMVETS installed the first carillon in our Manila cemetery 
in 1985. They subsequently formed a partnership with the foundation, 
and in April 2004 delivered a carillon to the Luxembourg American 
Cemetery, the 15th it has donated over the years.

9. The Commission initiated a replacement and renovation program for 
old headstones at the Oise-Aisne American Cemetery in Fere-en- 
Tardenois, France, in fiscal year 2004. This program uses a computer 
controlled engraving machine to renovate and refinish severely degraded 
headstones. It took several years of planning to acquire the custom 
machine and special tooling, as well as to establish the required 
training and procedures for the program to work effectively and 
efficiently. Fiscal year 2004 marks the start of this program, which 
will continue for many years and will result in a marked improvement in 
the overall quality of our cemetery headstones at a reduced cost.

The Commission will be reviewing and revising its mission, goals, and 
performance criteria during the upcoming budget year.

Management Integrity: Controls, Systems, Compliance, and Challenges:

The Commission is cognizant of the importance of, and need for, 
management accountability and responsibility as the basis for quality 
and timeliness of program performance, mission accomplishment, 
increased productivity, cost effectiveness, and compliance with 
applicable laws. It has taken measures to ensure that the annual 
evaluation of these controls is performed in a conscientious and 
thorough manner according to OMB regulations and guidelines and in 
compliance with 31 U.S.C. 3512 (c), (d), commonly known as the Federal 
Managers' Financial Integrity Act (FMFIA). The Commission's evaluation 
of its system of internal management practices and controls during 
fiscal year 2004 revealed no material weaknesses. The objectives of the 
Commission's internal management control policies and procedures are to 
provide reasonable assurance that:

1. Obligations and costs are in compliance with applicable law.

2. Funds, property, and other assets are safeguarded against waste, 
loss, unauthorized use, and misappropriation.

3. Revenue and expenditures applicable to agency operations are 
promptly recorded and accounted for.

4. Programs are efficiently and effectively carried out in accordance 
with applicable laws and management policy.

Based on its evaluation, the Commission concluded that there is 
reasonable assurance that on the whole, it complies with the provisions 
of FMFIA. The reasonable assurance concept recognizes that the cost of 
internal controls should not exceed the benefits expected to be derived 
and that the benefits reduce the risk of failing to achieve stated 
objectives.

Future Risks and Reactions:

Current foreign currency losses threaten our ability to sustain our day-
to-day operations. In order to insulate the Commission's annual 
appropriation against major changes in its purchasing power, Congress 
enacted legislation in 1988 (codified in 36 U.S.C. 2109) to establish a 
foreign currency fluctuation account in the U.S. Treasury. Cumulative 
gains and losses brought the balance for this account to $5.5 million 
as of September 30, 2003, after a $3.7 million net loss for fiscal year 
2003. Due primarily to unfavorable exchange rates between the U.S. 
dollar and the European euro in fiscal year 2004, our foreign currency 
fluctuation account experienced significant losses that reduced its 
balance to $0.8 million as of September 30, 2004. As a result, the 
Commission was forced to curtail some engineering projects.

Current foreign currency losses also threaten special projects such as 
the Normandy Interpretive Center. Beginning in fiscal year 2002, 
Congress directed and provided appropriated funds to the Commission for 
the design and construction of an interpretive center at the Normandy 
American Cemetery near St. Laurent-sur-Mer, France. Congress 
appropriated $5.0 million in fiscal year 2002, $4.0 million in fiscal 
year 2003, and $9.0 million in fiscal year 2004, for a total of $18.0 
million. For fiscal year 2005, the Commission requested and received 
$9.1 million to bring the total project funding to $27.1 million. [NOTE 
1] However, we estimate that from $5.7 million to $7.2 million of 
additional funds from the foreign currency fluctuation account will be 
required to maintain the equivalent buying power during the 
construction. We appealed to the Office of Management and Budget and 
Congress to support additional foreign currency appropriations in 
fiscal year 2005 to support both our day-to-day operations and the 
Normandy Interpretive Center and received $12.0 million of 
appropriations for the foreign currency fluctuation account.

The Commission also faces additional risk in losing funds via 
governmentwide rescissions to support ongoing operations in Afghanistan 
and Iraq, or to support Homeland Security issues. In fiscal year 2004, 
the Commission experienced a .0059 rescission totaling $243,670 and 
reduced its spending in much-needed engineering projects to accommodate 
this loss in funding. For fiscal year 2005 and beyond, the Commission 
expects further governmentwide rescissions, which will require a 
reexamination of priorities and a shift in funding to maintain its 
essential operations.

Consolidating Balance Sheet: 

AMERICAN BATTLE MONUMENTS COMMISSION: 
CONSOLIDATING BALANCE SHEET: 
As of September 30, 2004 (With Comparative Consolidated Total as of 
September 30, 2003):

[See PDF for image]

[End of table]

The accompanying notes are an integral part of these statements.

Consolidating Statement of Net Cost and Changes in Net Position: 

AMERICAN BATTLE MONUMENTS COMMISSION: 
CONSOLIDATING STATEMENT OF NET COST AND CHANGES IN NET POSITION: 
For the Year Ended September 30, 2004 (With Comparative Consolidated 
Total for the Year Ended September 30, 2003):

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[End of table]

The accompanying notes are an integral part of these statements.

Consolidating Statement of Budgetary Resources: 

AMERICAN BATTLE MONUMENTS COMMISSION: 
CONSOLIDATING STATEMENT OF BUDGETARY RESOURCES: 
For the Year Ended September 30, 2004 (With Comparative Consolidated 
Total for the Year Ended September 30, 2003):

[See PDF for image]

[End of table]

The accompanying notes are an integral part of these statements.

Consolidating Statement of Financing: 

AMERICAN BATTLE MONUMENTS COMMISSION:
CONSOLIDATING STATEMENT OF FINANCING: 
For the Year Ended September 30, 2004 (With Comparative Consolidated 
Total for the Year Ended September 30, 2003):

[See PDF for image]

[End of table]

The accompanying notes are an integral part of these statements.

Notes to the Consolidating and Consolidated Financial Statements: 

AMERICAN BATTLE MONUMENTS COMMISSION:
NOTES TO THE CONSOLIDATING AND CONSOLIDATED FINANCIAL STATEMENTS: 
For the Fiscal Years Ended September 30, 2004 and 2003:

Note 1. Significant Accounting Policies:

A. Basis of Presentation:

The accompanying consolidating and consolidated financial statements 
present the financial position, net cost of operations, changes in net 
position, budgetary resources, and financing of the American Battle 
Monuments Commission (the Commission) in conformity with U.S. generally 
accepted accounting principles as used by the federal government. There 
are no intra-entity transactions to be eliminated.

B. Reporting Entity and Funding Sources:

The Commission is an independent agency within the executive branch of 
the federal government and was created by an Act of March 4, 1923, the 
current provisions of which are now codified in 36 U.S.C. Chapter 21. 
The Commission's mission is to commemorate the sacrifices and 
achievements of U.S. Armed Forces where they have served overseas since 
April 6, 1917, the date of the United States entry into World War I, 
and at locations within the United States when directed by the 
Congress. The Commission designs, administers, constructs, operates, 
and maintains 24 American military cemeteries and 25 federal memorials, 
monuments, and markers (herein collectively referred to as memorials). 
Three of the memorials are located in the United States while all of 
the cemeteries and the remaining memorials are located on foreign soil 
in 14 foreign countries, the Marianas, and Gibraltar. The Commission is 
also responsible for maintaining 4 nonfederal memorials with funds 
received from the memorials' sponsors. The Commission is headquartered 
in Arlington, Virginia. Field operations are conducted through regional 
offices located near Paris, France; and in Rome, Italy; and cemeteries 
in Manila, the Philippines; Mexico City, Mexico; and Panama City, 
Panama.

The Commission also has responsibility for designing and constructing 
the National World War II Memorial located on the Mall in Washington, 
D.C. In accordance with 40 U.S.C. 8909, the Secretary of the Interior 
is to assume responsibility for maintenance of the memorial after its 
completion (see note 11). Also in accordance with 40 U.S.C. 8906 (b), 
the Commission provided $6.6 million for deposit in a separate Treasury 
account to offset the memorial's costs of perpetual maintenance.

Commission programs are funded primarily through appropriations 
available without fiscal year limitation. The Commission also 
administers several trust funds established to: (1) build memorials 
authorized by the Congress, but which are funded primarily by private 
contributions, commemorative coin sales proceeds, and investment 
earnings; (2) decorate grave sites; and (3) maintain and repair certain 
nonfederal war memorials.

C. Basis of Accounting:

The Commission's proprietary accounts (assets, liabilities, equity, 
revenue, and expenses) are maintained on the accrual basis, where 
appropriated funds are accounted for by appropriation year; operating 
expenses are recorded as incurred; and depreciation is taken on 
property, plant, and equipment not otherwise classified as heritage 
assets. Commission budgetary accounts are maintained on a budgetary 
basis, which facilitates compliance with legal constraints and 
statutory funds control requirements. The functional budget 
classification is Veterans' Benefits and Services.

D. Fund Balances with Treasury:

The Commission's cash receipts and disbursements are processed by the 
U.S. Treasury. Fund balances with Treasury are comprised of 
appropriated general funds and trust funds.

E. Investments:

In accordance with Public Law 103-32, the Commission is authorized to 
invest World War 11 Memorial Trust Fund receipts in U.S. Treasury 
securities. The Commission is also authorized under a modification to 
its original legislation to invest receipts from certain nonfederal war 
memorial organizations in U.S. Treasury securities. Treasury 
investments are recorded at par value plus unamortized premium or less 
unamortized discount. Premiums and discounts are amortized using the 
interest method.

F. Foreign Currency:

The Commission's overseas offices maintain accounts of foreign 
currencies to be used in making payments in foreign countries. These 
accounts are reported at the U.S. dollar equivalent using the Treasury 
exchange rate in effect on the last day of the fiscal year.

G. Contributions and Revenue Recognition:

The Commission recognizes unrestricted contributions or unconditional 
promises to give as revenue in the period of the initial pledge when 
sufficient verifiable evidence of the pledge exists. Conditional 
promises to give are recorded as revenue when the condition has been 
met. Unconditional promises to give may be temporarily restricted or 
permanently restricted. Temporarily restricted promises to give are 
released from restriction when the conditions have been met. 
Permanently restricted promises to give are recorded as revenue in the 
period donated, however, donors generally allow only the earned income 
to be used for general or specific purposes. In-kind contributions of 
goods and services are recognized at fair value by the Commission at 
the time the goods are received or the services are performed. 
Multiyear contributions due over a period of time are discounted to 
their present value based upon the short term Treasury interest rate.

H. Operating Materials and Supplies Inventories:

The Commission has determined that operating materials and supplies 
located at its cemeteries are not significant amounts and that it is 
more cost beneficial to record them on the purchase method of 
accounting whereby items are expensed as purchased rather than when 
consumed. Consequently, the Commission reports no operating materials 
or supplies inventories.

I. Property, Plant, and Equipment:

Purchases of general property, plant, and equipment of $25,000 or less 
are expensed in the year of acquisition. Purchases of personal property 
exceeding $25,000 are capitalized and depreciated on a straight-line 
basis over 5 years. Expenditures relating to real property exceeding 
$25,000 are capitalized and depreciated on a straight-line basis over 
30 years. Heritage assets are assets possessing significant cultural, 
architectural, or aesthetic characteristics. The Commission considers 
its cemeteries, and federal memorials, monuments, and markers acquired 
through purchase or donation to be noncollection heritage assets. 
Heritage assets are acquired through purchase or donation, are 
accounted for in the Commission's property records, and are not 
presented in the balance sheet. Withdrawals of heritage assets are 
recorded upon formal agreement with recipients. Additional unaudited 
information concerning heritage assets is found in the Statements of 
Heritage Assets as required supplementary stewardship information. 
Cemetery land is owned by the foreign countries in which cemeteries are 
located and is provided to the United States in perpetuity.

J. Employee Benefits:

The Commission's civilian U.S. nationals hired after December 31, 1983 
are covered by the Federal Employees' Retirement System (FERS), which 
was implemented on January 1, 1984. The Commission's civilian U.S. 
nationals hired on or before December 31, 1983, could elect to transfer 
to FERS or remain with the Civil Service Retirement System (CSRS). For 
FERS employees, the Commission withholds .80 percent of base pay and as 
employer contributes 10.7 percent of base pay to this retirement 
system. For Federal Insurance Contribution Act (FICA) tax and Medicare, 
the Commission withholds 7.65 percent from FERS employees' earnings, 
matches this amount on a dollar-for-dollar basis, and remits the total 
amount to the Social Security Administration. The Commission withholds 
7.00 percent of base pay plus 1.45 percent for Medicare from CSRS 
employees' earnings and as employer contributes 7.00 percent of base 
pay plus 1.45 percent for Medicare. These deductions are then remitted 
to the Office of Personnel Management (OPM) and the Social Security 
Administration. OPM is responsible for govemmentwide reporting of FERS 
and CSRS assets, accumulated plan benefits, and unfunded liabilities.

On April 1, 1987, the federal government instituted the Thrift Saving 
Plan (TSP), a retirement savings and investment plan for employees 
covered by FERS and CSRS. The Commission contributes a minimum of 1 
percent of FERS employees' base pay to TSP. FERS employees have the 
option of contributing up to 13 percent of their base pay on a tax- 
deferred basis to TSP, which the Commission matches up to 4 percent of 
base pay. CSRS employees may contribute up to 8 percent of their base 
pay to TSP on a tax-deferred basis and receive no matching contribution 
from the Commission.

Retirement and other benefits for the Commission's foreign national 
employees are paid by the Commission in accordance with the provisions 
of 10 host nation agreements negotiated by the U.S. Department of State.

Annual leave is accrued as earned, and the resulting unfunded liability 
is reduced as leave is taken. Separation pay is provided in certain 
countries according to host nation agreements. Separation pay is 
accrued as earned, and the resulting unfunded liability is reduced when 
paid to the foreign national leaving the employ of the Commission. Each 
year balances in the accrued separation pay and annual leave accounts 
are adjusted to reflect current pay rates. To the extent that current 
or prior year appropriations are not available to fund annual leave and 
separation pay, funding will be obtained from future financing 
resources. Sick leave and other types of unvested leave are expensed 
when incurred.

K. Imputed Financing:

The Commission imputed financing for retirement and other benefits paid 
by OPM and financial audits paid by the Government Accountability 
Office (GAO) during fiscal year 2004. The Commission recognized these 
expenses and related imputed financing in its financial statements.

L. Use of Estimates:

The preparation of financial statements requires management to make 
estimates and assumptions that affect the reported amount of assets and 
liabilities, as well as the disclosure of contingent assets and 
liabilities at the date of the financial statements, and the amount of 
revenues and expenses reported during the reporting period. Actual 
results could differ from those estimates.

Note 2. Fund Balances with Treasury:

All undisbursed account balances with the U.S. Treasury, as reflected 
in the Commission's records, as of September 30 are available and were 
as follows:

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[End of table]

Note 3. Treasury Investments, Net:

As of September 30, the Commission's investments in U.S. Treasury 
notes, which are marketable securities due within 2 years were as 
follows:

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[End of table]

Note 4. Cash and Foreign Accounts:

Outside the United States the Commission makes payments in U.S. and 
foreign currencies through imprest cash funds and Treasury designated 
depository commercial bank accounts, which as of September 30 were as 
follows:

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[End of table]

Note 5. Contributions Receivable:

The Commission has pledges from the private sector to be used for the 
World War II Memorial, with substantial pledges by major corporations 
and foundations. These pledges are recorded as contributions receivable 
and revenue in the fiscal year pledged, and $733,769 is temporarily 
restricted until collected. Amounts due in future years are as follows:

Fiscal Year Due: 

2005; $331,250.
2006; $160,000.
2007; $150,000.
2008; $100,000.
After 2008; $173,688.
Total amount due; $914,938.
Less: Present value discount at 2% Treasury rate; ($181,169). 
Net Receivable; $733,769.

[End of table]

The Commission believes that all contributions receivable are fully 
collectible, and therefore no allowance for uncollectible accounts has 
been established.

As of September 30, 2004, $200 of conditional promises to give to the 
memorial was outstanding.

Note 6. General Property, Plant, and Equipment and Heritage Assets: 

General property, plant, and equipment with an aggregate cost basis of 
$25,000 or less and all heritage assets were expensed by the Commission 
and totaled $3,592,586 in fiscal year 2004 and $2,872,802 in fiscal 
year 2003. WWII Memorial equipment totaling $2,404 in fiscal year 2004 
and $9,727 in fiscal year 2003 was also expensed.

Since the 1960s, the Commission's European regional office near Paris, 
France, has occupied a residential structure owned by the United States 
government. The Commission is responsible for all utilities, 
maintenance, and repairs. While the structure has the characteristics 
of a heritage asset, it has been used as general property. However, it 
is now fully depreciated, and no value is contained in the Commission's 
financial statements.

General property, plant, and equipment as of September 30 was as 
follows:

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[End of table]

There was no change in the number of physical units or acreage of 
cemeteries and federal memorials and no change in the number of 
nonfederal memorials in fiscal year 2004.

Note 7. Other Liabilities:

Other liabilities as of September 30 were as follows:

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[End of table]

Under a host nation agreement the Commission's Italian employees earn 
separation pay for each year of service with the Commission. The 
Commission recognized an unfunded liability for separation pay for 
these employees of $1,247,716 as of September 30, 2004, and $1,075,542 
as of September 30, 2003.

A portion of pension and other retirement benefits (ORB) expense is 
funded by an imputed financing source to recognize the amount of 
pension and ORB unfunded liabilities assumed by OPM. These costs are 
computed in accordance with cost factors provided by OPM. For fiscal 
year 2004, the Commission incurred $1,016,195 of pension and ORB costs, 
$303,416 of which was imputed. For fiscal year 2003, the Commission 
incurred $1,002,933 of pension and ORB costs, $325,683 of which was 
imputed. Total imputed costs of $608,416 for fiscal year 2004 and 
$583,683 for fiscal year 2003 included audit services provided by GAO.

Note 8. Lease Agreements:

The Commission has no capital leases. The Commissions Arlington, 
Virginia, headquarters, including office space for the WWII Memorial 
Project are rented under a 10-year operating lease expiring in July 
2007. The European Director's living quarters are rented under a yearly 
agreement. The Commission's Mediterranean Office occupies commercial 
office space under a 6-year operating lease expiring in May 2007. The 
Mediterranean Director's living quarters are rented under a 6-year 
operating lease expiring in December 2007. Rent expense for these 
fiscal year 2004 operating leases was $562,181. Future minimum payments 
due on these operating leases as of September 30, 2004, are as follows:

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[End of table]

Note 9. Net Position:

Net position balances as of September 30, 2004, were as follows: 

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[End of table]

Note 10. Trust Fund—World War II Memorial Fund Program: 

Financial progress since the inception of the fund in fiscal year 1993 
through fiscal year 2004 is as follows:

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*The amounts for prior fiscal years 1993 through 2003 were audited by 
GAO and presented in its reports GAO/AIMD-95-9 for fiscal year 1993; 
GAO/AIMD-96-24 for fiscal year 1994; GAO/AIMD-97-689 for fiscal years 
1995 and 1996; GAO/AIMD-98-1299 for fiscal year 1997; GAO/AIMD-99-74 
for fiscal year 1998; GAO/AIMD-00-85 for fiscal year 1999; GAO-01-375 
for fiscal year 2000; GAO-02-390 for fiscal year 2001, GAO-03-444 for 
fiscal year 2002, and GAO-04-404 for fiscal year 2003.

[End of table]

Note 11. Subsequent Events:

On December 8, 2004, Public Law 108-447 appropriated $41.1 million of 
no-year funds for the Commission's salaries and expenses for fiscal 
year 2005. The Commission plans to use $9.1 million of this 
appropriation toward the construction of a new interpretive and 
visitors' center at the American Cemetery in Normandy, France, 
according to H.R. Conf. Rep. No. 108-792 (Nov. 19, 2004). This brings 
appropriated funding for the center for fiscal years 2002 through 2005 
to a total of $27.1 million for design and construction. Public Law 108-
447 also provided $12.0 million of no-year appropriations for the 
Foreign Currency Fluctuation Account.

On November 1, 2004, the Commission signed an agreement with the 
National Park Service to formally transfer the National W WII Memorial 
to the Service for its future care and maintenance.

REQUIRED SUPPLEMENTARY STEWARDSHIP INFORMATION:

Statements of Heritage Assets: 

American Battle Monuments Commission Statement of Heritage Assets 
September 30, 2004 (Unaudited):

24 Cemeteries:

European Region:

Name: Aisne Marne American Cemetery; 
Location: Belleau (Aisne), France; 
Interred: 2,290; 
Memorialized: 1,060; 
Acres: 42.5; 
War: WW I.

Name: Ardennes American Cemetery; 
Location: Neupre, Belgium; 
Interred: 5,328; 
Memorialized: 462; 
Acres: 90.5; 
War: WW II.

Name: Brittany American Cemetery; 
Location: St. James (Manche), France; 
Interred: 4,410; 
Memorialized: 498; 
Acres: 7.5; 
War: WW II.

Name: Brookwood American Cemetery; 
Location: Brookwood, England; 
Interred: 468; 
Memorialized: 563; 
Acres: 4.5; 
War: WW I.

Name: Cambridge American Cemetery; 
Location: Cambridge, England; 
Interred: 3,812; 
Memorialized: 5,126; 
Acres: 30.5; 
War: WW II.

Name: Epinal American Cemetery; 
Location: Epinal (Vosges), France; 
Interred: 5,255; 
Memorialized: 424; 
Acres: 48.6; 
War: WW II.

Name: Flanders Field American Cemetery; 
Location: Waregem, Belgium; 
Interred: 368; 
Memorialized: 43; 
Acres: 6.2; 
War: WW I.

Name: Henri-Chapelle American Cemetery; 
Location: Henri-Chapelle, Belgium; 
Interred: 7,992; 
Memorialized: 450; 
Acres: 57.0; 
War: WW II.

Name: Lorraine American Cemetery; 
Location: St. Avold (Moselle), France; 
Interred: 10,489; 
Memorialized: 444; 
Acres: 113.5; 
War: WW II.

Name: Luxembourg American Cemetery; 
Location: Luxembourg; 
Interred: 5,076; 
Memorialized: 371; 
Acres: 48.7; 
War: WW II.

Name: Meuse-Argonne American Cemetery; 
Location: Romagne (Meuse), France; 
Interred: 14,246; 
Memorialized: 954; 
Acres: 130.5; 
War: WW I.

Name: Netherlands American Cemetery; 
Location: Margraten, Holland; 
Interred: 8,301; 
Memorialized: 1,723; 
Acres: 65.5; 
War: WW II.

Name: Normandy American Cemetery; 
Location: Colleville Sur-Mer, France; 
Interred: 9,387; 
Memorialized: 1,557; 
Acres: 172.5; 
War: WW II.

Name: Oise-Aisne American Cemetery; 
Location: Fere-en-Tardenois, France; 
Interred: 6,012; 
Memorialized: 241; 
Acres: 36.5; 
War: WW I.

Name: Somme American Cemetery; 
Location: Bony (Aisne), France; 
Interred: 1,844; 
Memorialized: 333; 
Acres: 14.3; 
War: WW I.

Name: St. Mihiel American Cemetery; 
Location: Thiacourt, Meurthe, France; 
Interred: 4,153; 
Memorialized: 284; 
Acres: 40.5; 
War: WW I.

Name: Suresnes American Cemetery; 
Location: Seine, France; 
Interred: 1,565; 
Memorialized: 974; 
Acres: 7.5; 
War: WW I/II.

Mediterranean Region: 

Name: Florence American Cemetery; 
Location: Florence, Italy; 
Interred: 4,402; 
Memorialized: 1,409; 
Acres: 70.0; 
War: WW II.

Name: North Africa American Cemetery; 
Location: Carthage, Tunisia; 
Interred: 2,841; 
Memorialized: 3,724; 
Acres: 27.0; 
War: WW II.

Name: Rhone American Cemetery; 
Location: Draguignan, Var, France; 
Interred: 861; 
Memorialized: 294; 
Acres: 12.5; 
War: WW II.

Name: Sicily-Rome American Cemetery; 
Location: Nettuno, Italy; 
Interred: 7,861; 
Memorialized: 3,095; 
Acres: 77.0; 
War: WW II.

Other: 

Name: Corozal American Cemetery; *
Location: Panama City, Panama; 
Interred: 5,301; 
Acres: 16.0.

Name: Mexico City American Cemetery; 
Location: Mexico City, Mexico; 
Interred: 1,563; 
Acres: 1.0; 
War: Mex Am.

Name: Manila American Cemetery; 
Location: Luzon, Philippines; 
Interred: 17,206; 
Memorialized: 36,282; 
Acres: 152.0; 
War: WW II.

Subtotal for Cemeteries; 
Interred: 131,031; 
Memorialized: 60,311; 
Acres: 1,272.3.

* Acquired by Executive Order from the former Panama Canal Zone.

[End of table]

25 FEDERAL MEMORIALS, MONUMENTS, AND MARKERS:

Name: East Coast Memorial; 
Location: New York City, NY; 
Memorialized: 4,609; 
Acres: 0.8; 
War: WW II.

Name: Honolulu Memorial; 
Location: Honolulu, HI; 
Memorialized: 28,800; 
Acres: 1.0; 
War: WW II/Korea/Vietnam.

Name: West Coast Memorial; 
Location: San Francisco, CA; 
Memorialized: 412; 
Acres: 1.3; 
War: WW II.

Name: Audenarde Monument; 
Location: Audenarde, Belgium; 
Memorialized: 
Acres: 0.4; 
War: WW I.

Name: Bellicourt Monument; 
Location: St. Quentin, France; 
Acres: 1.8; 
War: WW I.

Name: Brest Naval Monument; 
Location: Brest, France; 
Acres: 1.0; 
War: WW I.

Name: Cabanatuan Memorial; 
Location: Luzon, Philippines; 
War: WW II.

Name: Cantigny Monument; 
Location: Cantigny, France; 
Acres: 0.4; 
War: WW I.

Name: Chateau-Thierry Monument; 
Location: Chateau-Thierry, France; 
Acres: 58.9; 
War: WW I.

Name: Chaumont Marker; 
Location: Chaumont, France; 
War: WWI.

Name: Gibraltar Naval Monument; 
Location: Gibraltar; 
Acres: 0.1; 
War: WW I.

Name: Guadalcanal Memorial; 
Location: Guadalcanal; 
Acres: 0.5; 
War: WW II.

Name: Kemmel Monument; 
Location: Ypres, Belgium; 
Acres: 0.2; 
War: WW I.

Name: Marine Monument Belleau Wood; 
Location: Aisne, France; 
Acres: 199.6; 
War: WW I.

Name: Montfaucon Monument; 
Location: Montfaucon, France; 
Acres: 9.6; 
War: WW I.

Name: Montsec Monument; 
Location: Thiacourt, France; 
Acres: 47.5; 
War: WW I.

Name: Papua Marker; 
Location: Port Moresby, New Guinea; 
War: WW II.

Name: Point du Hoc Ranger Monument; 
Location: St. Laurent-sur-Mer, France; 
Acres: 29.8; 
War: WW II.

Name: Saipan Monument; 
Location: Saipan, Northern Mariana Islands; 
War: WW II.

Name: Santiago Surrender Tree; 
Location: Santiago, Cuba; 
War: Sp American War.

Name: Sommepy Monument; 
Location: Sommepy, France; 
Acres: 15.0; 
War: WW I.

Name: Souilly Marker; 
Location: Souilly, France; 
War: WW I.

Name: Tours Monument; 
Location: Tours, France; 
Acres: 0.5; 
War: WW I.

Name: Utah Beach Monument; 
Location: Sainte Marie-du-Mont, France; 
Acres: 0.5; 
War: WW II.

Name: Western Naval Task Force Memorial;
Location: Casablanca, Morocco; 
War: WW II.

Subtotal for Memorials; 
Memorialized: 33,821; 
Acres: War: 368.9

Grand Total; 
Interred: 131,031; 
Memorialized: 94,132; 
Acres: 1,641.2.

[End of table]

4 NONFEDERAL MEMORIALS:

Name: 29th Infantry Division; 
Location: Vierville-sur-Mer, France; 
War: WW II.

Name: 30th Infantry Division Memorial; 
Location: Mortain, France; 
War: WW II.

Name: 6th Engineering Special Brigade Memorial; 
Location: Vierville-sur-Mer, France; 
War: WW II.

Name: 351st Bomb Group Memorial; 
Location: Oundle, England; 
War: WW II.

[End of table]

Note to Statements of Heritage Assets: 

American Battle Monuments Commission: 
Note to Statement of Heritage Assets: 
September 30, 2004 (Unaudited):

Maintenance, Repairs, and Improvements:

Maintenance and repairs performed on real property consisting of land 
improvements, buildings, and memorials totaled $4.7 million in fiscal 
year 2004 and $4.0 million in fiscal year 2003. For fiscal years 1998 
through 2002, the Commission received $11.3 million of additional 
appropriations from the Congress that enabled it to entirely eliminate 
its deferred maintenance backlog as of September 30, 2002. No deferred 
maintenance backlogs existed as of September 30, 2003, and 2004.

Condition assessment surveys, using a five-point scale of one 
(excellent) to five (very poor), identify needed future maintenance and 
repair projects at cemeteries and memorials in order to maintain real 
property in an acceptable condition of three (fair) or better. These 
surveys are reviewed and updated at least annually by the Commission's 
engineering staff. In addition, engineering projects identified 
improvements in cemetery irrigation, drainage, roads, parking areas, 
and buildings. As of September 30, 2004, the Commission has identified 
a total of 360 maintenance, repair, and improvement projects, with an 
estimated cost of $11.1 million, to be performed in future years, 
subject to available funding.

NOTES: 

[1] Less .0065 rescission of $26,000 in fiscal year 2003, .0059 
rescission of $53,100 in fiscal year 2004, and .0080 rescission of 
$72,800 in fiscal year 2005.

[End of section]

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