Library of Congress: Special Events Gift Fund Operations and
Accountability (23-JAN-03, GAO-03-312R).
The Chairman of the House Subcommittee on Interior and Related
Agencies, Committee on Appropriations, and the Ranking Minority
Member, House Subcommittee on Legislative, Committee on
Appropriations, requested that we review the Library's Special
Events Gift Fund. As agreed, we focused on the Library's analysis
supporting its June 2000 decision to increase suggested room
contributions associated with the Great Hall effective January
2001, and key policies, procedures, and controls associated with
holding the approximately 120 fiscal year 2001 special events
that were accounted for in the Gift Fund. Specifically, we agreed
to (1) review and comment on the analysis behind the Library's
January 2001 increase in the suggested room contributions from
outside sponsors of events held in the Great Hall of the
Jefferson Building; (2) identify key policies and procedures
applicable to requesting, approving, and planning those special
events accounted for through the Gift Fund and determine whether
the Library is following those policies and procedures; and (3)
identify key accounting and control policies and procedures over
receipts, expenditures, and the fund balance of the Gift Fund and
determine whether the Library is following those policies and
procedures.
-------------------------Indexing Terms-------------------------
REPORTNUM: GAO-03-312R
ACCNO: A05939
TITLE: Library of Congress: Special Events Gift Fund Operations
and Accountability
DATE: 01/23/2003
SUBJECT: Accounting procedures
Fiscal policies
Gifts or gratuities
Libraries
Special fund accounts
Library of Congress Special Events Gift
Fund
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GAO-03-312R
GAO- 03- 312R Library of Congress: Special Events Gift Fund
United States General Accounting Office Washington, DC 20548
January 23, 2003 The Honorable Charles H. Taylor Chairman Subcommittee on
Interior and Related Agencies Committee on Appropriations House of
Representatives
The Honorable James P. Moran Ranking Minority Member Subcommittee on
Legislative Committee on Appropriations House of Representatives
Subject: Library of Congress: Special Events Gift Fund Operations and
Accountability Pursuant to your request, we are reporting on selected
aspects of the Special Events
Gift Fund of the Library of Congress. We are also providing a copy of this
report today to the incoming Chairman of the Subcommittee on Legislative,
House Committee on Appropriations.
The Library of Congress holds a variety of special event activities in its
public areas, including official receptions, dinners, conferences, and
cultural, educational, and scholarly presentations. To facilitate the
planning and coordination of its special event activities, the Library
maintains a special events support staff, which is part of the Library*s
Office of Special Events and Public Programs (OSEPP). For fiscal year
2001, the Library reported that the special events support staff planned
over 490 individual event activities, which were recognized in the
Library*s supporting records, as approximately 360 special events. 1 Of
these, about one- third, or approximately 120, were accounted for in the
Special Events Gift Fund (Gift Fund). 2 Events accounted for in the Gift
Fund can be sponsored or cosponsored by the Library, members of
1 For final accounting and control purposes, the Library treats related
special event activities as a single event. 2 Pursuant to its gift fund
authority and a 1990 donation, the Library created the Special Events Gift
Fund to make funds available for food, beverages, entertainment,
personnel, and other miscellaneous expenses related to hosting special
events.
2 GAO- 03- 312R Library of Congress: Special Events Gift Fund Congress,
and outside organizations. The approximately 240 other special events held
in fiscal year 2001 were, according to Library officials, accounted for in
other funds
available to the Library, which include other gift and appropriated funds.
The Library*s event- specific costs associated with holding the
approximately 120 events accounted for in the Gift Fund are financed
through contributions received from the sponsors of those events. To
finance the salary and benefit costs of the Library staff 3 who plan and
coordinate all of the Library*s annual special event activities, the
Library requests from outside sponsors or cosponsors of events an
additional contribution to the Gift Fund that is based on the particular
room requested for the event. The room contributions on which the Library
depends the most to fund its special events staff payroll come from a
limited number of events that involve the use of the Great Hall in the
Library*s Jefferson Building. The Library reported that it held a total of
13 Great Hall events in 2001, for which it requested and received room
contributions.
The current suggested room contribution levels associated with the limited
number of outside- sponsored events in the Great Hall are $50,000 for for-
profit organizations and $15,000 for nonprofit organizations. These
amounts were increased in January 2001 from the previous levels of $25,000
for for- profit organizations and $8,000 for nonprofit organizations. The
increase in suggested room contributions responded to the Library*s 5-
year forecast that showed that funding needed to pay for increased salary
and benefit costs associated with the Library*s event staff would deplete
the Gift Fund*s available balance. According to Library officials, the
increased salary and benefit costs were associated with needed increases
in the full- time staffing level for the Special Events program and
projected annual increases in the salary and benefit costs for the event
staff.
You requested that we review the Library*s Special Events Gift Fund. As
agreed with your staff, we focused our review on the Library*s analysis
supporting its June 2000 decision to increase suggested room contributions
associated with the Great Hall effective January 2001, and key policies,
procedures, and controls associated with holding the approximately 120
fiscal year 2001 special events that were accounted for in the Gift Fund.
Specifically, we agreed with your staff to
(1) review and comment on the analysis behind the Library*s January 2001
increase in the suggested room contributions from outside sponsors of
events held in the Great Hall of the Jefferson Building;
(2) identify key policies and procedures applicable to requesting,
approving, and planning those special events accounted for through the
Gift Fund and determine whether the Library is following those policies
and procedures; and
3 The Gift Fund pays salaries and benefits of all OSEPP staff except for
the Special Events Officer, who is currently paid from appropriated funds.
3 GAO- 03- 312R Library of Congress: Special Events Gift Fund (3) identify
key accounting and control policies and procedures over receipts,
expenditures, and the fund balance of the Gift Fund and determine whether
the
Library is following those policies and procedures.
Results in Brief The January 2001 increase in the suggested room
contributions from outsidesponsored Great Hall events was based on the
Library*s decision to fund the projected salary and benefit costs of its
special events support staff with contributions from outside sponsors of
those events while trying to limit the number of such events in response
to concerns about the wear and tear on the Great Hall. To identify the
level of contributions needed to fund the forecast salary and benefit
costs of special events support staff over a 5- year period, in May 2000,
the Library analyzed alternative combinations of contribution levels and
numbers of outside- sponsored Great Hall events. 4 In performing the
analysis, the Library did not take into account alternatives for
funding the forecast salary and benefit costs other than suggested room
contributions and sponsorship for Great Hall events. According to Library
officials, at the time of the analysis, demand for use of the Great Hall
had been increasing. However, in the aftermath of the terrorist attacks
and the anthrax incidents on Capitol Hill, the Library received less in
suggested room contributions from outside sponsors and cosponsors of Great
Hall events for 2001 than it had projected in its the analysis.
Specifically, the Library reported 3 fewer (13 instead of 16) total events
than projected for 2001: 4 fewer (5 instead of 9) for- profit sponsored
events and one additional non- profit event.
The types of special event activities that can be held at the Library are
governed by Library regulations, which also establish policies and
procedures that guide the processes through which events are requested,
approved, planned, and held. Library procedures provide for documenting
the implementation of these policies and procedures, and OSEPP establishes
what it refers to as event files to maintain this documentation. We
examined files for 93 events that, according to Library officials,
involved Gift Fund receipts, disbursements, or both, and we found that, at
the time of our review, key supporting documentation was missing from 73
of those event files. Among the missing items were letters requesting
approval to hold events, direct evidence of the Library*s approval for
events, key agreements required for the use of the facilities, and
certificates of tax status for nonprofit sponsors. In four cases, OSEPP
had difficulty finding entire files, which according to OSEPP staff had
been
misplaced following an office move. However, based on additional inquiries
and procedures, we were able to conclude that the Library had generally
followed its policies and procedures for requesting, approving, and
planning these special events.
4 Because the Library could not provide data or other information used in
preparing the analysis, we were unable to review the support underlying
the assumptions about projected costs.
4 GAO- 03- 312R Library of Congress: Special Events Gift Fund In addition
to event- related policies and procedures, OSEPP has established
accounting and internal control* related policies and procedures for Gift
Fund
receipts and expenditures. While Library records showed that these
policies and procedures were generally followed, we found that the
policies and procedures were not sufficient to achieve full accountability
over Gift Fund transactions and funds. Specifically, OSEPP lacked basic
financial management records for events involving the Gift Fund, such as
schedules of receipts and expenditures approved by OSEPP, and thus did not
have a basis for reconciling approved receipts and expenditures to the
receipts and expenditures recorded in the Library*s financial management
system (FMS) for the Gift Fund. We found errors that could have been
identified by Library staff if the basic financial records for events had
been maintained and reconciled to the Library*s financial management
system. Also, OSEPP did not have a policy or related controls to ensure
that final accountings for events were performed within an established
time period. We found that for the files we reviewed, final accountings
were performed on average about 5 months after their respective events,
with some final accountings occurring roughly a year or more after the
event.
We are making recommendations to the Librarian of Congress to analyze the
Library*s options for funding OSEPP staff and to strengthen internal
control to improve the integrity of event files and strengthen
accountability over event finances and reporting.
In commenting on a draft of this report, the Chief of Staff of the Library
agreed with our recommendations and has described planned actions to
respond to them.
Background Library Special Events Library of Congress regulations describe
special events as gatherings in the Library*s public areas that involve
guests and that may involve food and beverage service. It is the Library*s
policy to encourage the planning and implementation of special events and
public programs that relate to its mission, that share the treasures of
its collections and the talents of its staff with members of other
cultural and scholarly organizations, and that attract targeted groups and
individuals who normally might not come to the Library, potentially
expanding the Library*s base of support.
As a general rule, the Library limits the use of its facilities to
Library- sponsored functions. However, the Great Hall and other public
spaces may be used for special events sponsored or cosponsored by members
of Congress 5 and, since 1993, by outside organizations* both for- profit
and nonprofit* that satisfy certain terms and conditions. According to
Library regulations, special events sponsored by outside
5 Congressionally cosponsored events involve a member of Congress and an
outside organization.
5 GAO- 03- 312R Library of Congress: Special Events Gift Fund
organizations must be under the full control 6 of the Library, must be
hosted by the Library, and must involve Library staff and the Library*s
collections.
The unit responsible for carrying out Library policy for special events is
OSEPP, under the Chief of Staff of the Library. OSEPP provides the overall
coordination and management of all special events at the Library.
Depending on the nature of the event, OSEPP*s specific responsibilities
can range from scheduling and coordinating the set- up of a room to
planning and coordinating all event- related activities including
preparing budgets; arranging for caterers, entertainment, security,
parking, Library displays, and cleanup; and preparing the final accounting
for events.
According to the Library, the special events support staff planned more
than 490 individual event activities during fiscal year 2001, including,
in some cases, multiple activities related to what the Library categorized
as one event. The Library treats related special event activities as a
single event for purposes of budgeting and maintaining supporting
documentation. According to Library records, the more than 490 special
event activities identified by the Library were related to approximately
360 special events. For purposes of our review, events with multiple event
activities were treated as a single event.
Special Event Gift Fund Operations Section 160 of Title 2 of the United
States Code authorizes the Librarian of Congress to accept gifts or
bequests of money for immediate disbursement by the Librarian in the
interest of the Library, its collections, or its service. Contributions
are to be deposited into the Gift Fund and are to be used consistent with
the purposes of the gift as indicated by its donor. Pursuant to its gift
authority, the Library, in 1990, accepted a donation to establish the
Special Events Gift Fund. In establishing the Gift Fund, the donor
requested that the funds be made available for food, beverage, and
entertainment expenses as well as the costs of special events personnel
and miscellaneous related expenses. The donor also requested that others
be permitted to contribute and add to the Gift Fund subject to the
purposes and conditions for which it was established. Of the approximate
360 special events held by the Library in fiscal year 2001, Library
officials identified 123 special events involving receipts to or
disbursements from the Special Events Gift Fund.
Sponsoring organizations wishing to hold approved special events are
expected to contribute the amount needed to pay the event- specific costs
of holding the event. Library regulations refer to these event costs as
*recoverable costs.* It is OSEPP*s responsibility to ensure that it
receives and deposits into the Gift Fund the contribution needed to pay
all estimated recoverable costs of a planned special event before
obligating money for the event. OSEPP staff identify and estimate the
anticipated recoverable costs for each event. Recoverable costs include,
but are not
6 Library of Congress regulations (LCR) define *full control* as final
approval of and responsibility for invitation texts, guest lists, budgets,
caterers, support personnel, and facilities management (LCR 18183 Section
4. B. 1. b, reviewed May 28, 1998).
6 GAO- 03- 312R Library of Congress: Special Events Gift Fund necessarily
limited to, the direct costs of services such as food and beverage,
audiovisual and lighting, overtime for Library staff, a tent at the Great
Hall loading
dock, production of signs and printed materials, and vendor charges for
cleaning and other services. In addition to these direct costs associated
with the event, Library policies require OSEPP to add an indirect- cost
charge of 9.79 percent of applicable direct costs. 7 It is also Library
policy to use funds available in the Gift Fund to pay the salaries and
benefits of all but one of the special events support staff, which
consists of six fulltime OSEPP staff members 8 and two full- time staff of
the Public Program Services Division. In addition, the Gift Fund is used
to cover the costs of special events for which event- specific donations
were not made. To cover these staff and event costs, the Library suggests
specific room contributions for events sponsored by outside organizations.
9 OSEPP is responsible for maintaining a schedule of suggested room
contributions applicable to outside sponsors. The schedule provides for
lower suggested room contributions for events that are sponsored or
cosponsored by nonprofit organizations. In addition, for Madison Building
events that are cosponsored by a member of Congress and an outside
organization, the Library requests a room contribution that is half the
amount that would apply to an event sponsored solely by an outside
organization.
Scope and Methodology To accomplish our objectives, we
reviewed the Library*s May 2000 analysis of alternative Great Hall room
contributions to cover salary and benefits paid through the Gift Fund;
reviewed the Library*s policies and procedures for requesting, approving,
and planning special events;
determined, through review of Library regulations and discussions with
Library staff, Library policies and procedures for accounting for and
controlling receipts, expenditures, and the fund balance of the Gift Fund;
reviewed 93 of 123 fiscal year 2001 special events identified by the
Library as being accounted for through the Gift Fund to determine whether
the special event folder contained documentation to support (1) compliance
with the Library*s
7 The indirect- cost charge is intended to recover for the library
indirect costs associated with support provided to the special events
activities by various Library administrative functions, including
financial services, general building overhead, information technology
support, and management and human resources. 8 The salary and benefits of
the Special Events Officer, one of the six OSEPP full- time staff, are
currently paid from appropriated funds. 9 The suggested room contribution
applies to outside sponsors who request the use of the Great Hall,
which is located in the Jefferson Building, and the Montpelier Room,
Mumford Room, Pickford Theater, Madison Hall, and selected dining rooms,
which are located in the Madison Building.
7 GAO- 03- 312R Library of Congress: Special Events Gift Fund policies and
procedures for requesting, approving, and planning special events, (2) the
recoverable costs for event sponsors, and (3) the basis for the suggested
room contribution;
reviewed the Library*s statutory gift authority; and
interviewed Library officials and staff with responsibilities for special
events operations, the Gift Fund, and related financial reporting,
budgeting, and human resources.
In selecting the 93 special events for review, we included all events held
in the Great Hall, all events for which a room contribution was received,
and all events for which the Gift Fund absorbed some or all of the
recoverable costs of the event. In addition, we reviewed one- half of the
remaining Library- and congressionally sponsored events. In performing our
review of the Gift Fund we considered, where appropriate,
Standards for Internal Control in the Federal Government. 10 Also, we
obtained written comments on a draft of this report from the Chief of
Staff of the Library, which are included in enclosure I. We did our work
in accordance with generally accepted government auditing standards from
January 2002 through November 2002.
Library*s Analysis of Suggested Contributions for Great Hall Events In
January 2001, the Library increased its suggested contribution for use of
the Great Hall from $25,000 to $50,000 for for- profit organizations and
from $8,000 to $15,000 for nonprofit organizations. 11 These increases
followed a May 2000 Library analysis of alternative combinations of
suggested room contributions and numbers of outsidesponsored Great Hall
events that would support the Library*s projected level of funds needed to
pay forecast salary and benefit costs for special events support staff
over the next 5 years. Following the analysis, the Librarian of Congress
notified the members of the Joint Committee on the Library that, effective
January 1, 2001, the
Library would raise the suggested room contribution. According to Library
officials, the May analysis resulted from concerns raised during an annual
internal budget review of the Gift Fund*s 5- year budget forecast for
fiscal years 2001 through 2005. The Library projected that, at the
existing contribution levels for the Great Hall, the costs that the Gift
Fund would incur in filling the fulltime special events staffing needs
would, under the Library*s policy of funding special events support staff
salaries and benefits, deplete the fund*s available resources within 2
years. The May 2000 analysis focused on identifying increases in the
10 U. S. General Accounting Office, Standards for Internal Control in the
Federal Government,
GAO/ AIMD- 00- 21. 3. 1 (Washington, D. C.: November 1999). 11 The
suggested room contributions for the various Madison Building rooms (which
range from $500 to $5, 000) were not changed.
8 GAO- 03- 312R Library of Congress: Special Events Gift Fund suggested
contribution levels for a relatively small number of outside- sponsored
Great Hall events, which, the Library believed at the time of its
analysis, would be
achievable. According to Library officials, at the time of the analysis,
demand for use of the Great Hall had been increasing. The analysis matched
different contribution levels with different totals and mixes of event
sponsorships that could be expected to generate sufficient funds over the
5- year period. The objective of the analysis was to ensure that room
contributions and the available Gift Fund balance would be sufficient to
cover the forecast salary and benefit costs associated with seven fulltime
special events support staff assuming 10 percent yearly increases in the
salary and benefit expense. Earlier, the Architect of the Capitol had
raised concerns about the wear and tear such events might be having on the
Great Hall. In light of those concerns, the Library*s analysis sought to
identify the level of suggested room contributions needed to fund forecast
salary and benefit costs while limiting the number of outside- sponsored
events.
The contribution alternative selected was based on annually holding 16
Great Hall events sponsored by outside organizations, with 9 involving
for- profit sponsors and 7 involving nonprofit sponsors. This alternative
stayed within the Library*s general parameters limiting the number of
outside- sponsored Great Hall events to help lessen wear and tear on the
Great Hall, and was expected to provide sufficient funding over the 5-
year period of the analysis to ensure that the Gift Fund had adequate
resources to pay the salary and benefit costs of the seven full- time
support staff positions charged to the Gift Fund and sufficient additional
funding to allow the Gift Fund to cover the costs associated with the one
remaining OSEPP staff person currently paid from appropriated funds.
Library officials told us that the staffing level considered in the
analysis was the level needed to support the Library*s overall special
events operations. However, the Library had no workload- related or other
data to support the staffing level considered. For example, the Library
could not provide data that related the staffing level of eight full- time
positions to the event planning efforts associated with the annual number
of special events handled by the staff. In addition, the Library could not
provide support for its assumption that the annual cost of funding those
positions would increase by 10 percent per year, except to say that the
increase was intended to cover annual cost- of- living increases,
promotions, and in- grade step increases. In this regard, while Office of
Management and Budget (OMB) current budget guidelines for these factors
(excluding promotions) is about half of what the Library used, OMB expects
that agencies should base their estimates on their own individual data. 12
Although the Library*s staffing assumptions were key to determining the
amount of
and need for the suggested room contributions for the Great Hall, because
there were no supporting data, we were unable to review the Library*s
basis for its staffing levels or the 10 percent annual cost increase.
Also, in the aftermath of the terrorist attacks and anthrax incidents on
Capitol Hill in the fall of 2001, the Library has reported a drop in the
expected number of outside
12 While OMB guidance in not applicable to the Library of Congress, we
used it for contextual purposes.
9 GAO- 03- 312R Library of Congress: Special Events Gift Fund sponsored
Great Hall events. For calendar year 2001, OSEPP reported a total of 13
outside- sponsored Great Hall events, including 5 for- profit events and 8
nonprofit
events. This compares to the combination of 9 for- profit and 7 nonprofit
events that served as the basis for the contribution level needed to meet
OSEPP*s salary and benefit costs as considered in the May 2000 analysis.
The drop from the expected 16 to 13 Great Hall events for calendar year
2001 is even more significant given that actual events sponsored by for-
profit organizations, which are asked to make the $50,000 room
contribution, dropped from 9 to 5 for the year. This trend in the
combinations of outside- sponsored Great Hall events continued in calendar
year 2002, with the Library reporting 3 for- profit and 11 nonprofit Great
Hall events. Library officials also noted that the state of the economy
has likely contributed to this
decline. The drop in outside- sponsored Great Hall events has, according
to Library officials, resulted in lower than expected amounts available to
the Gift Fund to pay special events support staff salaries and benefits.
Given that the Library has limited the number of outside- sponsored Great
Hall events to lessen excess wear and tear on the facility, it relies on
relatively few events to fully fund special events support staff payroll.
This has, at least in the short- term, raised a question about the
Library*s ability to fund special events support staff salary and benefit
costs. A drop of even two or three, especially for- profit events, can
significantly affect the Library*s ability to fund all of the Library*s
special events support staff salary and benefit costs from these events.
Event Approval and Planning Is Guided by Policies and Procedures, but
Related Documentation Was Missing for Many Events Through regulations,
operating guidelines, and practices, the Library has established
policies and procedures applicable to special events sponsored or
cosponsored by the Library, members of Congress, and outside
organizations. These policies and procedures guide the processes of
requesting, approving, and planning events, and they provide for the
development of supporting documentation applicable to each stage of
preparation for an event. OSEPP is responsible for maintaining this
documentation in event files.
Although specific policies and procedures for reviewing and approving
requests for special events vary by type of sponsorship, the basic control
aspects of review and approval remain the same, as the following
illustrate.
Library procedures call for requests to be documented through either a
request form or letter submitted in advance of the event. Library sponsors
are to submit a Special Event Request Form; outside and congressional
sponsors are to submit a proposal letter.
Outside sponsors that are nonprofit organizations are required to submit a
copy of their Certificate of Tax Status showing that they meet the
definition of a nonprofit organization as described in Title 26, United
States Code, Section 501( c)( 3). This
10 GAO- 03- 312R Library of Congress: Special Events Gift Fund evidence of
their status is needed to support the Library*s policy of suggesting lower
room contributions for nonprofit organizations.
Although the specific process varies depending on the type of sponsor
requesting the event, all requests are reviewed and considered for
approval. Requests for events sponsored exclusively by outside sponsors
are to be reviewed by the Library*s Facilities Committee, requests from
members of Congress are to be reviewed and considered for approval by the
Library*s Congressional Relations Office, and requests for Library-
sponsored events are to be reviewed and approved by Library division
chiefs.
Once an event has been approved, OSEPP staff work with the event*s sponsor
to establish the nature and size of the event and then develop a budget
for the estimated event costs. For those events sponsored or cosponsored
by outside organizations, Library policy requires that event sponsors pay
for the estimated recoverable costs prior to the event. The Library
requests the applicable room contribution when the
budget of recoverable costs is presented. Along with written estimates of
the amounts needed to fund event costs, OSEPP staff provide outside
sponsors with guidance on how to transmit the contribution to the Library.
Also, Library policy requires that outside sponsors sign a written
agreement to abide by Library regulations and policies related to
sponsoring events. OSEPP staff provide additional planning assistance and
event oversight and control by requiring that guest lists, invitations and
other printed material, seating arrangements, and entertainment and
photography requirements be submitted for approval.
While the Standards for Internal Control in the Federal Government
recognize that transactions and other significant events should be clearly
documented and the documentation properly managed and readily available
for examination, our review found problems with key supporting documents
in many of the events files we reviewed. Specifically, we found misplaced
files, missing request letters or forms, missing evidence that events had
been approved, and a lack of explanation or support for apparent
departures from applicable policies.
At the time of our review, we noted the following examples of missing,
misplaced, or incomplete event documentation involving 73 of the 93 event
files we reviewed: Files for 4 events were misplaced during a relocation
of OSEPP and were not
located until after we requested the files for our review.
While 72 of the events required request letters, 12 were missing from the
event files.
Evidence of the Library*s approval for 54 of the total 93 events we
reviewed was missing from the files.
Agreements with 12 of 28 outside sponsors were missing from the files or
were incomplete.
11 GAO- 03- 312R Library of Congress: Special Events Gift Fund The
Certificate of Tax Status (showing that the sponsor met the IRS definition
of a nonprofit organization) 13 was missing from 11 of 20 nonprofit event
files.
Federal internal control standards require that adequate supporting
documentation be maintained and readily available to provide evidence that
significant events have occurred and internal controls have been complied
with. Without such documentation, the Library cannot readily demonstrate
that special events are conducted in accordance with key policies and
procedures or explain exceptions. Incomplete documentation also exposes
OSEPP staff and Library management to increased risk that their event-
related decisions may be called into question and that they will be unable
to adequately explain or defend their decisions.
While more than three- fourths of the OSEPP event files we reviewed were
incomplete to some extent, we were able to conclude that the Library
generally followed its policies and procedures related to requesting,
approving, and planning those events through our (1) review of other
documents in the event files, (2) understanding of the Library*s
procedures for requesting, approving, and planning events, and (3)
followup with OSEPP staff concerning missing records and information.
Policies and Procedures for Receipts, Expenditures, and Fund Balance Are
Followed, but They Are Not Sufficient for Full Accountability OSEPP has
established policies and procedures for processing Gift Fund receipts and
expenditures. While our review showed that these policies were being
followed, we noted that OSEPP*s ability to achieve full accountability by
effectively accounting for and controlling amounts recorded in the Gift
Fund was inhibited by a lack of basic accounting and management records;
reconciliations of receipts, expenditures, and fund balance; and controls
over event final accountings.
Established Policies and Procedures over Gift Fund Receipts, Expenditures,
and Fund Balance Were Generally Followed OSEPP has instituted event
planning and close- out policies and procedures that are
intended to account for and control event- related receipts and
expenditures. These policies and procedures include requirements for event
budgets, advance payments, and final accountings. Regarding budgets, OSEPP
policy requires that a budget be developed for all the recoverable costs
of special events. Budgets assist OSEPP management in planning and
monitoring event costs and support the Library*s request to sponsors for
contributions to cover the estimated recoverable costs of the event and,
where applicable, for suggested room contributions. Event budgets are to
itemize estimated event costs and include direct costs (such as catering,
tent rental, sound systems, set- up and cleaning service, and overtime for
Library personnel), indirect costs (9.79 percent of direct costs), and
applicable suggested room contributions. After developing the event
budget, OSEPP staff are to inform the sponsor and request that a
contribution for the estimated amount be made to the Gift
13 26 U. S. C. 501( c)( 3),
12 GAO- 03- 312R Library of Congress: Special Events Gift Fund Fund. We
found that the Library had prepared budgets as applicable for the 93
events we reviewed.
OSEPP policy requires that the Library receive all funds in advance for
those events sponsored or cosponsored by outside organizations. Requiring
advance funding helps to ensure that the Gift Fund receives the amount it
needs to pay for all recoverable event costs. The policy requires sponsors
to fund an amount equal to 50 percent of the event budget no later than 30
days after notification that the Library has approved the event. The
remaining balance is due no later than 30 days prior to the event. While
we did not test the specific time frames provided for in the policy, our
review of the 93 event files showed that the Library generally received
the contributions it requested prior to the events* being held. There were
eight exceptions to this policy in which funds were not received in
advance of the event, but the supporting documentation in the file did not
provide a reason for the exceptions. Five of the eight were received
within 13 days after the event. For the other three events, funds were not
received prior to the Library*s final accounting. After an event has been
held, OSEPP policy requires that a final accounting be
performed once OSEPP staff have received and approved invoices from
vendors and all event- related expenditures have been made. The final
accounting represents a key control that helps ensure that the Gift Fund
receives funds for all recoverable event costs and that it refunds any
over- funding by sponsors. OSEPP prepares a final accounting that itemizes
event- related expenditures and compares the expenses to the advance
contribution received. If a sponsor*s advance contribution is less than
the actual costs identified in the final accounting, OSEPP is to request
an additional payment from the sponsor. If the sponsor*s advance
contribution exceeds actual expenditures, the Library is to offer the
donor the choice of requesting a refund or donating the excess to the Gift
Fund. At the time of our review, final accountings had been completed for
88 of the 93 fiscal year 2001 events we reviewed. Additional information
on final accountings is presented in table 1 later in this report.
Additional Receipt and Expenditure Policies Are Needed to Strengthen
Accountability While existing policies for financial operations were
generally followed for the events
we reviewed, we determined that they were not sufficient to achieve full
accountability over Gift Fund activity. Specifically, policies did not
call for OSEPP to maintain certain accounting records that could be used
to reconcile event receipts and expenses to the separate Gift Fund records
maintained in the Library*s FMS. Also, final accounting policy did not
call for final accounting to be completed promptly.
Lack of OSEPP Accounting Records Limits Accountability The Library
accounts for Gift Fund transactions and the fund balance in its FMS. While
OSEPP, as discussed previously, is to maintain individual event files,
there were no policies and procedures for effectively monitoring and
comparing OSEPP-
13 GAO- 03- 312R Library of Congress: Special Events Gift Fund approved
receipts and expenditures to amounts recorded in the Library*s FMS to
ensure that all Gift Fund transactions are completely, promptly, and
accurately
recorded. In addition, OSEPP staff did not maintain basic accountability
records needed to show the status of efforts to complete final
accountings, collect amounts owed, and refund excess amounts. Such records
would normally include journals of payments received and expenses
approved, records detailing how much is owed to the Gift Fund and how long
it has been outstanding, and status reports summarizing, by event, all
special event financial transactions. Status reports can include
information such as the event date and sponsor, the budget estimate
number, 14 contributions received, estimated and actual expenses, the date
final accounting is completed, the amount owed by or to the sponsor, and
the date the final payment is received or paid.
The importance of OSEPP*s having the accounting information described
above and reconciling that information to comparable information recorded
in the Library*s FMS is demonstrated by the errors noted below, which
thorough and timely reconciliations would be expected to identify.
OSEPP staff did not include approximately $839 in food costs in the final
accounting for one event. Because OSEPP expense records were not
reconciled with Gift Fund expenses recorded by the Financial Services
Office, OSEPP staff
did not detect the omission.
OSEPP did not identify nine Gift Fund expenditures, totaling more than
$85,000, that were recorded in the wrong fiscal year in FMS records. A
comparison of a complete list of events held in fiscal year 2001 to the
FMS records would have disclosed the error.
OSEPP did not identify approximately 12 hours of erroneous overtime
charges to the Gift Fund totaling about $350. A comparison of overtime
charges paid from the Gift Fund to OSEPP supporting records would have
disclosed these erroneous
charges. Our review of event files identified other matters that would
likely have been identified by OSEPP staff if basic accounting records
were maintained. Accounting records that record, summarize, and report
amounts owed and received would have allowed OSEPP management to identify
that the following transactions were not properly completed.
A sponsor*s refundable contribution of $1,604 was not identified as
needing to be refunded until we brought the matter to OSEPP*s attention in
August 2002, even though the event, scheduled for September 12, 2001, had
been canceled.
14 The budget estimate number is the unique number assigned to each event
on the form Estimated Expenditure of Funds for Entertainment. The library
uses the budget estimate form internally to approve the budgets for each
special event.
14 GAO- 03- 312R Library of Congress: Special Events Gift Fund A $100
sponsor*s check was put into an event file and not processed for deposit
by OSEPP staff. OSEPP staff said that the check was not deposited because
the
event file was one of a group of files that was lost for several months
during an OSEPP office move.
Weak Controls over Final Accounting Contribute to Unresolved Errors
OSEPP*s accounting procedures require a final accounting for all Gift Fund
events. When performed promptly after all event- related expenditures are
made, final accounting helps ensure that amounts owed, whether to sponsors
or to the Library, are identified and paid. However, at the time of our
review, the Library did not have a policy or related controls to ensure
that final accountings for events were performed within an established
time period. In addition, the Library did not have controls to ensure the
final accountings properly included all relevant costs or that no costs
were inappropriately charged to the Gift Fund. For example, overtime
charged by Library staff to the Gift Fund is to be verified during the
final accounting. However, for the payroll records we tested, we found
that about $1,300 in overtime involving six events was incorrectly charged
to the Gift Fund. The costs of these six events should have been charged
to other funds available to the Library. Four of these six events were
held between November 2000 and March 2001, but as of September 2002, the
final accounting for these events had not yet been completed.
In fiscal year 2001, all events held in the Great Hall were to be assessed
a tent fee to recover the Library*s cost of leasing a tent to shelter
catering preparations on the Great Hall loading dock. Library officials
told us that the fee assessed for use of the tent varied by the type of
event sponsor. For- profit sponsors were to be assessed a fee of $1,250;
nonprofits sponsors, $1,000; and Library sponsors, $750. However, OSEPP
did not have written guidance to assist OSEPP staff in preparing the final
accounting for these events. Our review of 33 final accountings for events
involving the use of tents showed that for 14 events the Library*s policy
on tent fees was not consistently applied. In some cases sponsors were
charged too much, in other cases sponsors were not charged at all.
Although an OSEPP official stated that OSEPP*s efforts in fiscal year 2001
were focused on completing the final accounting of events sponsored by
outside organizations, the Library had generally not established an
overall policy for promptly completing final accountings. Our review of 87
final accountings completed for fiscal year 2001 events showed that on the
average they were completed 5.1 months after an event was held. Table 1
also shows that for nine events, the final accounting took roughly a year
or more to complete.
15 GAO- 03- 312R Library of Congress: Special Events Gift Fund Table 1:
Timing of Final Accounting for 87 Special Events at the Library of
Congress Aging of account from day of
event to final accounting Average number of days between
event and final accounting
30 Over 30 Over
60 Over 90 Over
120 Over 180 Over
360 Total events Oustidesponsored
events 0 2 5 11 8 2 0 28 110
Library sponsored events 0 1 3 7 6 0 2 19 153
Congress sponsored events 0 1 6 10 13 3 7 40 183
Total events 0 4 14 28 27 5 9 87 Average days 153
Source: GAO analysis based on Library of Congress data. Note: Of the 93
events we reviewed, final accounting for 1 event was undated, 2 were in
process, and final accountings for 3 other events were not being prepared
for various reasons. The 87 final accountings that had been performed by
the Library identified about
$19,200 in refunds owed to 40 sponsors and about $68,900 due from 46
sponsors. In its comments on our report, the Library stated that all
monies have been refunded or collected in full except for one event (see
enclosure I). We did not attempt to verify the refunds or collections.
OSEPP management has indicated that the office has recently begun to
follow an unwritten policy of completing final accounting for all outside-
sponsored events within 3 months of the event. According to OSEPP
management, due to time and staffing limitations, more time is allowed for
completing the final accountings for internally sponsored events.
Conclusions The Library*s May 2000 analysis of funding the projected
salary and benefits costs of its special events support staff over the
next 5 years only considered suggested room contributions from outside
sponsors of Great Hall events. This approach leaves the funding of special
events support staff salaries and benefits dependent on the room
contributions for relatively few events. In addition, the Library could
not provide data or information to support the key assumptions it made in
conducting its analysis. In the aftermath of the terrorist attacks and
anthrax incidents on Capitol Hill in the fall of 2001, the Library has not
held the number of outside- sponsored Great Hall events assumed in the
analysis. Whether or not the reduced number of events is a shortterm or
longer- term issue is unknown. However, the drop in outside- sponsored
16 GAO- 03- 312R Library of Congress: Special Events Gift Fund events
raises a question about the Library*s ability to rely on a limited number
of events to fully fund the salary and benefit costs of the staff needed
to support the
Library*s special events program. The Library of Congress has policies and
procedures to guide OSEPP in managing special events at the Library.
Because special event records were missing from many of the event files we
reviewed, the Library did not have ready assurance that special events
were conducted in accordance with Library policies and procedures and that
departures from policy had been approved. Unless OSEPP takes actions to
strengthen its control over its event files, it may not be able to show
that its events are being conducted in accordance with its policies and
procedures or to explain exceptions. Also, OSEPP has instituted policies
and procedures to account for and control event- related receipts and
expenses, which it generally follows. However, it does not have the basic
accounting and management records it needs to provide full accountability
for the Gift Fund. Without accounting information that can be readily
summarized, reviewed, and reconciled, those responsible for the Gift Fund
cannot adequately monitor final accountings for events or the
appropriateness and completeness of the receipts and expenditures recorded
in the Gift Fund.
Recommendations To help ensure that the Library of Congress has the
ability to fund the salary and benefit costs of personnel who support the
Library*s overall special events activities, the Librarian of Congress
should direct the Library*s Financial Services Director to work with OSEPP
to conduct a new analysis that considers various options for funding
forecast salary and benefits costs of special events support staff. In
conducting this analysis, the Library should develop and maintain
documentation to support the assumptions incorporated into the analysis.
To help improve the Library*s internal control over event files and their
contents, the Librarian of Congress should direct the Library*s Financial
Services Director to work with OSEPP to
develop documentation standards for maintaining event files,
require periodic review of event folders to ensure compliance with Library
policies and procedures, and
develop policies for including in events files documentation for
exceptions or deviations from policies.
To improve the Library*s accounting for and control of the funds in the
Special Events Gift Fund, the Librarian should direct the Financial
Services Director to work with OSEPP to
establish basic accounting records in OSEPP for the Gift Fund, including
receipts, expenses, amounts due, and amounts owed by event;
17 GAO- 03- 312R Library of Congress: Special Events Gift Fund establish a
policy to reconcile, on a monthly basis, OSEPP*s Gift Fund receipts and
disbursements to amounts maintained in the Library*s FMS;
compile a monthly status report as a tool for monitoring the operations
and finances of the Gift Fund. The report could include event- specific
information, such as event date, sponsor, budget event number, budgeted
expenses, payments received to date, expenses incurred to date, amount and
date of final billing, and amount owed to or from event sponsor; and
establish a policy for completing all final accountings on a timely basis.
Agency Comments We provided the Chief of Staff of the Library with a draft
of our report for review and comment. In written comments on the draft,
the Chief of Staff agreed with our recommendations and noted the Library*s
planned actions to respond to our recommendations. In addition, the Chief
of Staff*s comments noted the need for a few technical clarifications,
which have been incorporated into our final report as appropriate.
The Chief of Staff*s comments are reprinted in enclosure I.
We are sending copies of this report to the Chairman, Subcommittee on
Legislative, House Committee on Appropriations; the chairmen and ranking
minority members of the House Committee on Government Reform; the Senate
Committee on Governmental Affairs; and the Subcommittee on Legislative
Branch, Senate Committee on Appropriations. We are also sending it to the
Chairman and Vice Chairman of the Joint Committee on the Library and the
Librarian of Congress. This report will also be available on the GAO*s
home page at http:// www. gao. gov.
If you have any questions concerning this report, please contact me at
(202) 512- 9406, or by e- mail at franzelj@ gao. gov, or John Reilly,
Assistant Director, at (202) 512- 9517 or by e- mail at reillyj@ gao. gov.
Key contributors to this report were Louis Fernheimer, Jacquelyn N.
Hamilton, Benjamin W. Smith, and Gail F. Vallieres.
Jeanette M. Franzel Director Financial Management and Assurance Enclosure
Enclosure I 18 GAO- 03- 312R Library of Congress: Special Events Gift Fund
Enclosure I 19 GAO- 03- 312R Library of Congress: Special Events Gift Fund
Enclosure I 20 GAO- 03- 312R Library of Congress: Special Events Gift Fund
Enclosure I 21 GAO- 03- 312R Library of Congress: Special Events Gift Fund
(194110)
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