Senate Preservation Fund:

Key Transaction-Related Operating Practices Have Been Established but Additional Practices Are Needed

GAO-09-89R: Published: Jul 28, 2009. Publicly Released: Jul 28, 2009.

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In September 2003, the Senate Preservation Fund (Fund) was established within the U.S. Treasury. The Fund is available to the Senate Commission on Art (Commission) to fund various activities related to works of art, historical objects, documents, and materials relating to historical matters, or exhibits in the Capitol and Senate Office buildings. The Library of Congress (Library) provides financial management and disbursing services and support to the Commission. The Government Accountability Office (GAO) is required to audit the Fund and report the results to the Commission. This report presents the results of our audit of the Fund's transactions during the first 5 years of its operations, fiscal years 2004 through 2008. Our audit objectives were to determine whether the Commission and Library had established operating practices to help ensure that (1) the Fund's transactions were authorized in advance, supported by documentation, accurately accounted for, and in compliance with significant provisions of laws and (2) regular transaction reporting and monitoring were in place to effectively oversee transaction execution and safeguard Fund assets.

For the Fund's initial 5 years of operations, Commission and Library staff established operating practices that generally resulted in transactions being authorized in advance, supported by documentation, accurately accounted for, and in compliance with selected statutory provisions considered significant to our audit objectives. These practices were generally consistent with federal internal control standards. However, many of these practices--those related to processing operating receipts and disbursements--had not been documented and formally approved, which may have contributed to instances in which they were not followed, including selected events and transactions not being authorized in advance, fully supported, or accurately accounted for. We also noted that, although compliance was achieved later through the Commission's ratification, the established practices did not provide for timely compliance with one statutory provision we reviewed. In addition, the established operating practices did not provide for (1) regular reporting by the Library of transaction information, (2) using the reported information to monitor transaction execution, or (3) conducting needed follow-up to help prevent or timely detect transaction errors and safeguard Fund assets. Establishing and effectively implementing such practices could have helped to prevent or more timely detect various transaction processing and accounting errors we identified. Without effective approved operating practices related to processing transactions and related reporting, monitoring, and follow-up, the Commission and Library are at risk that other Fund transaction errors or problems may occur in the future and not be timely detected.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: During our audit of the SPF fiscal years 2009 and 2010 transactions, we found the Library of Congress (Library) and the Senate Commission on Art (Commission) took action by 9/30/2011 to address our recommendations. Specifically, the Library in coordination with the Commission issued accounting guidelines for the Fund which formally documented and approved the processing of Fund-related receipt and disbursement transactions. The guidelines also require that the Library prepare a report highlighting Fund financial transaction activities and send it to the Commission on a quarterly basis. Furthermore, the guidelines include procedures for the entities to follow-up on Fund related matters and highlight the responsibilities of the Commission to monitor fund transactions and safeguard assets. These formally documented and approved procedures over transaction processing, reporting, monitoring, and follow-up will help prevent or timely detect errors. The formally documented procedures will also help ensure fund transactions are properly executed and processed.

    Recommendation: The Senate Commission on Art's Executive Secretary should work with the Library's Chief Financial Officer (CFO) to ensure that the Library documents and formally approves its operating practices related to the Library's (1) processing of Fund-related operating receipt and disbursement transactions, (2) regular reporting to the Commission's Executive Secretary on Fund transaction processing and balance information (e.g., quarterly), and (3) conducting timely follow-up and coordination with the Commission on Fund-related matters warranting further action.

    Agency Affected: Senate Commission on Art

  2. Status: Closed - Implemented

    Comments: During our audit of the SPF fiscal years 2009 and 2010 transactions, we found the Library of Congress (Library) and the Senate Commission on Art (Commission) took action by 9/30/2011 to address our recommendation. Specifically, the Library in coordination with the Commission issued accounting guidelines for the Fund which formally documented and approved the processing of Fund-related receipt and disbursement transactions. The guidelines also require that the Library prepare a report highlighting Fund financial transaction activities and send it to the Commission on a quarterly basis. Furthermore, the guidelines include procedures for the entities to follow-up on Fund related matters and highlight the responsibilities of the Commission to monitor fund transactions and safeguard assets. These formally documented and approved procedures over transaction processing, reporting, monitoring, and follow-up will help prevent or timely detect errors. The formally documented procedures will also help ensure fund transactions are properly executed and processed.

    Recommendation: The Senate Commission on Art's Executive Secretary should work with Commission staff to document and formally approve operating practices related to the Commission's (1) processing of Fund-related operating receipts and disbursement transactions, (2) use of Fund-related financial information to monitor Fund transactions and safeguard Fund assets, and (3) conducting timely follow-up and coordination with the Library on Fund-related matters warranting further action.

    Agency Affected: Senate Commission on Art

 

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