This is the accessible text file for GAO report number GAO-05-297 
entitled 'Financial Audit: Senate Restaurants Revolving Fund for Fiscal 
Years 2004 and 2003' which was released on March 10, 2005.

This text file was formatted by the U.S. Government Accountability 
Office (GAO) to be accessible to users with visual impairments, as part 
of a longer term project to improve GAO products' accessibility. Every 
attempt has been made to maintain the structural and data integrity of 
the original printed product. Accessibility features, such as text 
descriptions of tables, consecutively numbered footnotes placed at the 
end of the file, and the text of agency comment letters, are provided 
but may not exactly duplicate the presentation or format of the printed 
version. The portable document format (PDF) file is an exact electronic 
replica of the printed version. We welcome your feedback. Please E-mail 
your comments regarding the contents or accessibility features of this 
document to Webmaster@gao.gov.

This is a work of the U.S. government and is not subject to copyright 
protection in the United States. It may be reproduced and distributed 
in its entirety without further permission from GAO. Because this work 
may contain copyrighted images or other material, permission from the 
copyright holder may be necessary if you wish to reproduce this 
material separately.

Report to the Committee on Rules and Administration, U.S. Senate, and 
the Architect of the Capitol:

March 2005:

Financial Audit:

Senate Restaurants Revolving Fund for Fiscal Years 2004 and 2003:

[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-05-297]:

Contents:

Letter:

Appendix:

Appendix I: Report on Audit of the U.S. Senate Restaurants Revolving 
Fund:

Independent Auditor's Report:

Balance Sheets:

Statements of Operations and Changes in U.S. Government Equity:

Statements of Cash Flows:

Notes to Financial Statements:

Letter March 8, 2005:

The Honorable Trent Lott: 
Chairman: 
The Honorable Christopher J. Dodd: 
Ranking Minority Member: 
Committee on Rules and Administration: 
United States Senate:

The Honorable Alan M. Hantman: 
Architect of the Capitol:

As requested, we provided for audits of the financial statements of the 
U.S. Senate Restaurants Revolving Fund (the Fund) for the fiscal years 
ended September 30, 2004 and 2003, by contracting with the independent 
public accounting firm of Clifton Gunderson LLP. The contract required 
that the audit be conducted in accordance with U.S. generally accepted 
government auditing standards and the joint GAO/President's Council on 
Integrity and Efficiency (PCIE)[Footnote 1] Financial Audit Manual.

In its audit of the Fund, Clifton Gunderson LLP found the following:

* The financial statements were presented fairly, in all material 
respects, in conformity with U.S. generally accepted accounting 
principles.

* The Fund maintained effective internal control over financial 
reporting (including safeguarding assets) and compliance with laws and 
regulations.

* There was no reportable noncompliance with selected provisions of 
laws and regulations it tested.

Although Clifton Gunderson LLP found that the Fund maintained effective 
internal control, it did identify certain matters involving the Fund's 
control environment that while not significant enough to be considered 
reportable:

conditions,[Footnote 2] deserve management attention. Clifton Gunderson 
LLP reported these matters to management in a separate letter.

As disclosed in Clifton Gunderson LLP's report and note 1 to the Fund's 
financial statements, the operation of the Senate Restaurants is 
economically dependent on financial and other support provided through 
the Architect of the Capitol (the Architect) and by the U.S. Senate. 
The financial statements present the financial position and the results 
of activities financed through the Fund and are not intended to present 
the financial position and results of operations of the Senate 
Restaurants as a whole.

* The Fund's financial statements for fiscal years 2004 and 2003 
include direct financial support received from the Architect and the 
Senate totaling $1,100,000 and $1,095,000, respectively, from 
transferred appropriations.

* The Fund's financial statements for fiscal years 2004 and 2003 do not 
include other support that benefits the operation of the restaurants. 
Specifically, the Architect provided approximately $128,218 and 
$176,300 in fiscal years 2004 and 2003, respectively, for the purchase 
and maintenance of restaurant-related capital items, which remain the 
property of the Architect. In addition, during fiscal years 2004 and 
2003, the Architect and the Government Printing Office provided the 
Fund with support services, the value of which cannot be readily 
determined.

As disclosed in Clifton Gunderson LLP's report and note 1 to the Fund's 
financial statements, if losses from operations, which totaled 
$1,058,543 and $678,211 in fiscal years 2004 and 2003, respectively, 
continue, the Fund will continue to require future support to maintain 
operations.

In connection with the audit of the Fund's financial statements 
performed by Clifton Gunderson LLP, we reviewed its report and related 
working papers and, as necessary, met with Clifton Gunderson LLP 
representatives and the Fund's management. Our review, as 
differentiated from an audit in accordance with U.S. generally accepted 
government auditing standards, was not intended to enable us to 
express, and we do not express, opinions on the Fund's financial 
statements and about the effectiveness of its internal control or 
conclude on its compliance with laws and regulations. Clifton Gunderson 
LLP is responsible for the accompanying auditor's report and for the 
conclusions expressed in the report. However, our review disclosed no 
instances in which Clifton Gunderson LLP did not comply, in all 
material respects, with U.S. generally accepted government auditing 
standards and the joint GAO/PCIE Financial Audit Manual.

This report is a matter of public record and is intended for the use of 
the U.S. Senate, the Architect, the management of the Senate 
Restaurants, and other interested parties. We are sending copies of 
this report to the Chairman and Ranking Minority Member, Subcommittee 
on Legislative Branch, Senate Committee on Appropriations, and the 
Majority Leader and Minority Leader of the Senate. Copies of this 
report will be made available to others upon request. This report is 
also available at no charge on GAO's Web site at [Hyperlink, 
http://www.gao.gov]. Should you or your staff have any questions 
concerning our review of the audits, please contact me on (202) 512- 
3406 or Hodge Herry, Assistant Director, on (202) 512-9469. You can 
also reach us at [Hyperlink, sebastians@gao.gov] or [Hyperlink, 
herryh@gao.gov].

Signed by: 

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

[End of section]

Appendixes:

Appendix I: Report on Audit of the U.S. Senate Restaurants Revolving 
Fund:

Independent Auditor's Report:

Clifton Gunderson LLP:

Certified Public Accountants & Consultants:

Independent Auditor's Report:

Comptroller General:

United States Government Accountability Office:

In our audits of the United States Senate Restaurants Revolving Fund 
(the Fund) for fiscal years 2004 and 2003, we found:

* the financial statements are presented fairly, in all material 
respects, in conformity with U.S. generally accepted accounting 
principles;

* the Fund had effective internal control over financial reporting 
(including safeguarding assets) and compliance with laws and 
regulations as of September 30, 2004; and:

* no reportable noncompliance in fiscal year 2004 with laws and 
regulations we tested.

The following sections discuss in more detail (1) these conclusions and 
(2) the scope of our audits.

Opinion on Financial Statements:

The financial statements, including the accompanying notes, present 
fairly, in all material respects, in conformity with U.S. generally 
accepted accounting principles, the financial position of the Fund as 
of September 30, 2004 and 2003, and the results of its operations and 
cash flows for the fiscal years then ended.

As discussed in note 1, the financial statements present the financial 
position and the results of operations of the Fund and are not intended 
to present the financial position and results of operations of the 
Senate Restaurants as a whole. Amounts for capital expenditures and 
related repairs and maintenance purchased by the Architect of the 
Capitol (Architect) for the benefit of the Fund are not reflected in 
the Fund's financial statements. Also, the financial statements do not 
include such costs as space and utilities, which are not readily 
identifiable.

As discussed in note 1, the operations of the Fund are economically 
dependent on direct support provided through the Architect and by the 
United States Senate. In fiscal years 2004 and 2003, the Fund received 
$1,100,000 and $1,095,000, respectively, in direct financial support to 
cover losses from operations, which totaled $1,058,543 and $678,211, 
respectively, during the same period. If losses from operations 
continue, the Fund will continue to require financial support to 
maintain operations.

Opinion on Internal Control:

The Fund 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 financial statements would be prevented or detected on a timely 
basis. Our opinion is based on criteria established by the U.S. 
Government Accountability Office (GAO) (formerly the General Accounting 
Office) Standards for Internal Control in the Federal Government.

We found certain matters involving the control environment that we do 
not consider reportable conditions. [Note 1] We have communicated these 
matters to the Fund's management, along with our recommendations for 
improvement, in a separate letter.

Compliance with Laws and Regulations:

Our tests for compliance in fiscal year 2004 with selected provisions 
of laws and regulations disclosed no instances of noncompliance that 
would be reportable under U.S. generally accepted government auditing 
standards. 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.

Objectives, Scope, and Methodology:

The Fund's 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 control objectives are 
met; and (3) complying with applicable laws and regulations.

We are responsible for obtaining reasonable assurance about whether (1) 
the financial statements are presented fairly, in all material 
respects, in conformity with U.S. generally accepted accounting 
principles, and (2) management maintained effective internal control as 
of September 30, 2004, the objectives of which are the following:

* Financial reporting: Transactions are properly recorded, processed, 
and summarized to permit the preparation of financial statements 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 laws governing the use of budget authority 
and with other laws and regulations that could have a direct and 
material effect on the financial statements.

We are also responsible for testing compliance with selected provisions 
of laws and regulations that have a direct and material effect on the 
financial statements.

In order to fulfill these responsibilities, we (1) examined, on a test 
basis, evidence supporting the amounts and disclosures in the financial 
statements; (2) assessed the accounting principles used and significant 
estimates made by management; (3) evaluated the overall presentation of 
the financial statements; (4) 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); (5) tested relevant 
internal control over financial reporting (including safeguarding 
assets), and compliance, and evaluated the design and operating 
effectiveness of internal control for the fiscal year ended September 
30, 2004; and (6) tested compliance in fiscal year 2004 with selected 
provisions of 2 U.S.C. 2042-2050 (formerly 40 U.S.C. 174j-1 through j- 
10), certain provisions of the Legislative Branch Appropriations Act, 
Department of the Treasury regulations on cash, Office of Personnel 
Management regulations on employee benefits and employer costs, and 
Internal Revenue Service regulations on federal income and Social 
Security tax withholdings.

We limited our internal control testing to 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 Fund. We limited our tests of compliance to those laws and 
regulations that we deemed applicable to the 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 the joint GAO/President's Council on 
Integrity and Efficiency (PCIE) Financial Audit Manual.

Agency Comments and Our Evaluation:

In commenting on a draft of this report, the Fund's management concured 
with the facts and conclusions in our report.

Signed by: 

Clifton Gunderson, LLP: 

Calverton, Maryland: 
December 17, 2004:

Balance Sheets:

UNITED STATES SENATE RESTAURANTS REVOLVING FUND BALANCE SHEETS: 
As of September 30, 2004 and 2003:

ASSETS:

Cash: Funds with U.S. Treasury; 
2004: $1,150,920; 
2003: $993,674.

Cash: Petty cash and change funds; 
2004: $20,500; 
2003: $20,500.

Total cash; 
2004: $1,171,420; 
2003: $1,014,174.

Accounts receivable, Senate customer accounts (note 3); 
2004: $91,314; 
2003: $189,545.

Vendor commissions and other income receivables; 
2004: $25,946; 
2003: $27,361.

Food, beverage, and merchandise inventory; 
2004: $159,130; 
2003: $157,037.

China, glassware, silverware, and tableware; 
2004: $163,515; 
2003: $137,646.

Prepaid expenses; 
2004: $11,048; 
2003: $34,376.

TOTAL ASSETS; 
2004: $1,622,373; 
2003: $1,560,139.

LIABILITIES AND U.S. GOVERNMENT EQUITY:

Accounts payable and accrued expenses: Due to vendors and customers; 
2004: $278,414; 
2003: $269,962.

Accounts payable and accrued expenses: Payroll and related benefits; 
2004: $217,545; 
2003: $158,036.

Accounts payable and accrued expenses: Deferred income; 
2004: $25,073; 
2003: $70,646.

Total accounts payable and accrued expenses; 
2004: $521,032; 
2003: $498,644.

Other liabilities: Employees' accrued leave; 
2004: $253,917; 
2003: $255,528.

Total liabilities; 
2004: $774,949; 
2003: $754,172.

U.S. government equity: Appropriated capital (note 4); 
2004: $2,847,144; 
2003: $2,847,144.

U.S. government equity: Cumulative results of operations (deficit); 
2004: ($1,999,720); 
2003: ($2,041,177).

Total U.S. government equity; 
2004: $847,424; 
2003: $805,967.

TOTAL LIABILITIES AND U.S. GOVERNMENT EQUITY; 
2004: $1,622,373; 
2003: $1,560,139.

The accompanying notes are an integral part of these statements.

[End of table]

Statements of Operations and Changes in U.S. Government Equity:

UNITED STATES SENATE RESTAURANTS REVOLVING FUND STATEMENTS OF 
OPERATIONS AND CHANGES IN U.S. GOVERNMENT EQUITY: 
For the Fiscal Years Ended September 30, 2004 and 2003:

SALES AND OTHER OPERATING INCOME (NOTE 5): 

Sales: Food services; 
2004: $3,935,428; 
2003: $3,764,873.

Sales: Catering; 
2004: $4,529,533; 
2003: $4,616,692.

Sales: Sundry shop sales; 
2004: $647,642; 
2003: $672,917.

Sales: Vending machine and other commissions; 
2004: $324,746; 
2003: $325,728.

Sales: Total; 
2004: $9,437,349; 
2003: $9,380,210.

COST OF SALES: 

Food and beverages; 
2004: $2,944,689; 
2003: $2,775,081.

Sundry shop merchandise; 
2004: $450,135; 
2003: $462,851.

Total; 
2004: $3,394,824; 
2003: $3,237,932.

Gross income from sales and other operating income; 
2004: $6,042,525; 
2003: $6,142,278.

OPERATING EXPENSES: 

Personnel and benefits (note 6); 
2004: $6,579,896; 
2003: $6,284,513.

Supplies and materials; 
2004: $485,965; 
2003: $515,524.

Miscellaneous; 
2004: $35,207; 
2003: $20,452.

Total operating expenses; 
2004: $7,101,068; 
2003: $6,820,489.

Loss from operations; 
2004: ($1,058,543); 
2003: ($678,211).

OTHER FUNDING: 

Direct financial support (notes 1 and 7); 
2004: $1,100,000; 
2003: $1,095,000.

Net income; 
2004: $41,457; 
2003: $416,789.

U.S. GOVERNMENT EQUITY, BEGINNING OF YEAR; 
2004: $805,967; 
2003: $389,178.

U.S. GOVERNMENT EQUITY, END OF YEAR; 
2004: $847.424; 
2003: $805,967.

[End of table]

The accompanying notes are an integral part of these statements. 

Statements of Cash Flows:

UNITED STATES SENATE RESTAURANTS REVOLVING FUND STATEMENTS OF CASH 
FLOWS: 
For the Fiscal Years Ended September 30, 2004 and 2003:

CASH FLOWS FROM OPERATING ACTIVITIES: 

Net income; 
2004: $41,457; 
2003: $416,789.

Adjustments to reconcile net income to net cash provided by operating 
activities: Effects of changes in operating assets and liabilities: 
Accounts receivable; 
2004: $98,231; 
2003: $110,091.

Adjustments to reconcile net income to net cash provided by operating 
activities: Effects of changes in operating assets and liabilities: 
Vendor commissions receivable; 
2004: $1,415; 
2003: $-.

Adjustments to reconcile net income to net cash provided by operating 
activities: Effects of changes in operating assets and liabilities: 
Food, beverage, and merchandise inventory; 
2004: ($2,093); 
2003: ($19,474).

Adjustments to reconcile net income to net cash provided by operating 
activities: Effects of changes in operating assets and liabilities: 
China, glassware, silverware, and tableware; 
2004: ($25,869); 
2003: ($21,400).

Adjustments to reconcile net income to net cash provided by operating 
activities: Effects of changes in operating assets and liabilities: 
Prepaid expenses; 
2004: $23,328; 
2003: ($33,047).

Adjustments to reconcile net income to net cash provided by operating 
activities: Effects of changes in operating assets and liabilities: Due 
to vendors; 
2004: $8,452; 
2003: $74,405.

Adjustments to reconcile net income to net cash provided by operating 
activities: Effects of changes in operating assets and liabilities: 
Payroll and related benefits; 
2004: $59,509; 
2003: $24,093.

Adjustments to reconcile net income to net cash provided by operating 
activities: Effects of changes in operating assets and liabilities: 
Employees' accrued leave; 
2004: ($1,611); 
2003: $4,423.

Adjustments to reconcile net income to net cash provided by operating 
activities: Effects of changes in operating assets and liabilities: 
Deferred income; 
2004: ($45,573); 
2003: $42,323.

Adjustments to reconcile net income to net cash provided by operating 
activities: Effects of changes in operating assets and liabilities: Net 
cash provided by operating activities; 
2004: $157,246; 
2003: $598,203.

CASH, BEGINNING OF YEAR; 
2004: $1,014,174; 
2003: $415,971.

CASH, END OF YEAR; 
2004: $1,171.420; 
2003: $1,014.174.

[End of table]

The accompanying notes are an integral part of these statements. 

Notes to Financial Statements:

UNITED STATES SENATE RESTAURANTS REVOLVING FUND NOTES TO FINANCIAL 
STATEMENTS: 
For the Fiscal Years Ended September 30, 2004 and 2003:

NOTE 1-ORGANIZATION:

The United States Senate Restaurants Revolving Fund (the Fund) operates 
facilities for senators, employees of the Senate, and (in certain 
locations) the general public. The Architect of the Capitol (the 
Architect), under the direction of the Senate Committee on Rules and 
Administration (the Committee), is responsible for managing the 
restaurants. The restaurant management recommends price changes, which 
are subject to the Committee's approval.

The financial statements present the financial position and the results 
of operations of the Fund and are not intended to present the financial 
position and results of operations of the Senate Restaurants as a whole.

ECONOMIC DEPENDENCY:

The Fund's operations are economically dependent on direct financial 
support provided through the Architect and by the United States Senate 
(the Senate). Under 2 U.S.C. 2050, the Architect is required to 
transfer appropriated funds to the Fund for use in paying certain 
management personnel and miscellaneous operating expenses of the 
restaurants. Support provided directly by the Senate consists of loans 
and transfers of appropriated capital (equity) to the Fund from the 
Senate's contingent fund. Loan proceeds and increases in appropriated 
capital provided by the Senate are used to finance the Fund's recurring 
operating losses. If losses from operations continue, the Fund will 
continue to require future support to maintain operations.

The Architect also provides other financial support that is not 
included in the Fund's financial statements. The Architect uses 
appropriated funds to purchase and maintain restaurant-related capital 
items, which remain the property of the Architect and are thus not 
reflected in the Fund's financial statements.

In addition, the Architect and the Government Printing Office use 
appropriated funds-the value of which cannot readily be determined-to 
provide the Fund with space, utilities, garbage disposal, and printing 
in support of restaurant operations. These costs do not appear in the 
Fund's financial statements.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

(a) USE OF ESTIMATES:

The preparation of financial statements in conformity with U.S. 
generally accepted accounting principles requires management to make 
estimates and assumptions that affect the reported amounts of assets 
and liabilities and the disclosure of contingent assets and liabilities 
at the date of the financial statements. Estimates and assumptions may 
also affect the reported revenues and expenses during the reporting 
period. Actual results of those amounts could differ from management's 
estimates and assumptions.

This information is an integral part of the accompanying financial 
statements.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):

(b) FUNDS WITH U.S. TREASURY:

Cash receipts from sales and commissions are deposited in the U.S. 
Treasury and credited to the Fund for use in operating the various 
restaurant facilities.

(c) ACCOUNTS RECEIVABLE:

Accounts receivable are uncollateralized customer obligations, which 
generally require payment within 30 days from the invoice date. 
Accounts receivable are stated at the invoice amount. Payments of 
accounts receivable are applied to the specific invoices identified on 
the customer's remittance advice or, if unspecified, to the earliest 
unpaid invoices. Interest accrues at 2 percent per month on balances 
over 60 days past due.

Management has determined that there is no need for an allowance for 
doubtful accounts, which is based on management's assessment of the 
collectibility of specific customer accounts and the aging of the 
accounts receivable. If there is a deterioration of a major customer's 
credit worthiness or actual defaults are higher than the historical 
experience, management's estimates of the recoverability of amounts due 
the Fund could be adversely affected.

(d) VENDOR COMMISSIONS RECEIVABLE:

Vendor commissions receivable represents vending machine commissions 
earned in the current fiscal year but not received until next fiscal 
year.

(e) INVENTORY:

Under its authority to use funds as necessary for restaurant 
operations, the Fund acquires various types of inventory items (food, 
beverage, merchandise, china, glassware, silverware, and tableware). 
These inventories are valued at lower of cost or market using the first-
in, first-out method.

Charges for breakage and shortages of china, glassware, silverware, and 
tableware purchased by the Fund are based on periodic physical counts 
and are treated as current period expenses in the Fund's statements of 
operations.

Additionally, the Architect may use Senate Office Building and Capitol 
Building appropriations to purchase china, glassware, silverware, and 
tableware for restaurant operations. Because these assets are owned by 
the Architect and not the Fund, they are not recorded in the Fund's 
financial statements.

This information is an integral part of the accompanying financial 
statements.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):

(f) DEFERRED INCOME:

Deferred income represents catering deposits received as of September 
30 for events that will occur subsequent to year-end.

(g) EMPLOYEES' ACCRUED LEAVE:

Employees accrue annual leave on a biweekly basis. Full-time hourly and 
salaried workers accrue leave at rates ranging from 4 to 8 hours, 
depending on length of service. Part-time employees accrue leave at 
fluctuating biweekly rates, based on the amount of hours worked each 
pay period. Employees may carry over a maximum of 240 hours each 
calendar year.

(h) RECLASSIFICATION:

Certain amounts in the prior year's presentation have been reclassified 
to conform with the current year's presentation. These 
reclassifications have no effect on previously reported net income.

NOTE 3 - ACCOUNTS RECEIVABLE, SENATE CUSTOMER ACCOUNTS:

The Committee allows senators, former senators, and certain Senate 
officials to have customer accounts. A comparison of the aged customer 
accounts receivable at September 30, 2004 and 2003 follows.

Days outstanding: 0 to 30; 
2004 Amount: $79,643; 
2004 Percent: 87.2%; 
2003 Amount: $88,437; 
2003 Percent: 46.7%.

Days outstanding: 31 to 60; 
2004 Amount: $680; 
2004 Percent: .8%; 
2003 Amount: $9,344; 
2003 Percent: 4.9%.

Days outstanding: 61 to 90; 
2004 Amount: $4,235; 
2004 Percent: 4.6%; 
2003 Amount: $26,867; 
2003 Percent: 14.2%.

Days outstanding: Over 90; 
2004 Amount: $6,756; 
2004 Percent: 7.4%; 
2003 Amount: $64,897; 
2003 Percent: 34.2%.

Total; 
2004 Amount: $91,314; 
2004 Percent: 100.0%; 
2003 Amount: $189,545; 
2003 Percent: 100.0%.

[End of table]

Management actively pursues collection of all past due amounts. In 
accordance with policies established by the Committee, the Fund's 
accounting office mails monthly delinquent notice letters to customers 
whose accounts are delinquent over 30 days. Additional collection 
procedures are pursued on all balances that are delinquent for over 120 
days, or accounts that are over 60 days delinquent with balances over 
$10,000. The ultimate collection of all delinquent receivables is 
ensured through closeout procedures, which require payment of all past 
due balances at the time a senator leaves office. As of December 17, 
2004, substantially all balances outstanding over 60 days have been 
collected.

This information is an integral part of the accompanying financial 
statements.

NOTE 4 - FINANCING ACTIVITIES:

In managing the Fund, the Architect has access to two types of 
supplemental funding: (1) appropriations and (2) loans. Under 2 U.S.C. 
2044 (formerly 40 U.S.C. 174j-4), the Secretary of the Senate, at the 
request of the Architect and with the approval of the Committee, may 
transfer funds from the Senate's contingent expenses appropriation 
account to the Fund as appropriated capital. The Fund's total 
appropriated capital is $2,847,144 as of September 30, 2004 and 2003. 
No appropriated capital transfers have been received by the Fund since 
fiscal year 1999.

Also, 2 U.S.C. 2049 (formerly 40 U.S.C. 174j-9) allows the Architect, 
with the approval of the Committee, to borrow from the Senate 
contingent fund the amounts necessary to manage the Fund. The Committee 
establishes the loan amounts and repayment periods. The loaned funds 
come from the miscellaneous appropriation account of the Senate's 
contingent fund, and loan repayments are deposited to the same account.

NOTE 5 - SALES, COMMISSIONS, AND OTHER OPERATING INCOME:

The following schedule provides a comparison of sales, commissions, and 
operating income for the various Fund activities during fiscal years 
2004 and 2003.

Regular food services: Catering; 
Fiscal year 2004: Sales and commissions: $4,529,533; 
Fiscal year 2004: Operating income (loss): ($40,716); 
Fiscal year 2003: Sales and commissions: $4,616,692; 
Fiscal year 2003: Operating income (loss): $368,903.

Regular food services: Capitol dining rooms; 
Fiscal year 2004: Sales and commissions: $291,677; 
Fiscal year 2004: Operating income (loss): ($395,256); 
Fiscal year 2003: Sales and commissions: $267,166; 
Fiscal year 2003: Operating income (loss): ($391,876).

Regular food services: North Servery Cafeteria; 
Fiscal year 2004: Sales and commissions: $2,365,654; 
Fiscal year 2004: Operating income (loss): ($555,378); 
Fiscal year 2003: Sales and commissions: $2,242,215; 
Fiscal year 2003: Operating income (loss): ($690,007).

South Buffet; 
Fiscal year 2004: Sales and commissions: $349,468; 
Fiscal year 2004: Operating income (loss): ($90,863); 
Fiscal year 2003: Sales and commissions: $312,545; 
Fiscal year 2003: Operating income (loss): (108,695).

Snack bar; 
Fiscal year 2004: Sales and commissions: $195,334; 
Fiscal year 2004: Operating income (loss): ($114,434); 
Fiscal year 2003: Sales and commissions: $202,874; 
Fiscal year 2003: Operating income (loss): ($100,728).

Senate chef; 
Fiscal year 2004: Sales and commissions: $733,295; 
Fiscal year 2004: Operating income (loss): ($140,819); 
Fiscal year 2003: Sales and commissions: $740,073; 
Fiscal year 2003: Operating income (loss): ($64,330).

Total; 
Fiscal year 2004: Sales and commissions: $8,464,961; 
Fiscal year 2004: Operating income (loss): ($1,337,466); 
Fiscal year 2003: Sales and commissions: $8,381,565; 
Fiscal year 2003: Operating income (loss): ($986,733).

Sundry shop operations: Southside Deli; 
Fiscal year 2004: Sales and commissions: $293,366; 
Fiscal year 2004: Operating income (loss): ($25,917); 
Fiscal year 2003: Sales and commissions: $303,428; 
Fiscal year 2003: Operating income (loss): ($16,546).

Sundry shop operations: Hart Office Building; 
Fiscal year 2004: Sales and commissions: $354,276; 
Fiscal year 2004: Operating income (loss): ($19,906); 
Fiscal year 2003: Sales and commissions: $369,489; 
Fiscal year 2003: Operating income (loss): ($660).

Total sundry; 
Fiscal year 2004: Sales and commissions: $647,642; 
Fiscal year 2004: Operating income (loss): ($45,823); 
Fiscal year 2003: Sales and commissions: $672,917; 
Fiscal year 2003: Operating income (loss): ($17,206).

Vending machine and other commissions; 
Fiscal year 2004: Sales and commissions: $324,746; 
Fiscal year 2004: Operating income (loss): $324,746; 
Fiscal year 2003: Sales and commissions: $325,728; 
Fiscal year 2003: Operating income (loss): $325,728.

Total; 
Fiscal year 2004: Sales and commissions: $9,437,349; 
Fiscal year 2004: Sales and commissions: ($1,058,543); 
Fiscal year 2003: Sales and commissions: $9,380,210; 
Fiscal year 2003: Operating income (loss): ($678.211).

[End of table]

This information is an integral part of the accompanying financial 
statements. 

NOTE 6-PERSONNEL BENEFITS:

Fund employees are covered by the Civil Service Retirement System 
(CSRS) or the Federal Employees' Retirement System (FERS), to which the 
Fund contributes. For employees covered by FERS, the Fund also 
contributes 1 percent of pay to the Thrift Savings Plan (TSP) and 
matches employee contributions to the TSP, up to an additional 4 
percent of pay. While the Fund has no liability for benefit payments to 
its former employees under the pension programs, the federal government 
is liable for the benefit payments through the Office of Personnel 
Management.

The Fund also contributes to other employee benefits, including health 
insurance (FEHBP), life insurance (FEGLI), Social Security (FICA), 
Medicare (HIT), leave expense, employee meals, local transportation 
assistance, and employee physicals.

Contributions made by the Fund for employee benefits during fiscal 
years 2004 and 2003 are listed in the following table.

Employee benefits: FEHBP; 
2004: $535,330; 
2003: $494,183.

Employee benefits: FERS; 
2004: $438,208; 
2003: $423,901.

Employee benefits: Leave expense; 
2004: $283,462; 
2003: $259,972.

Employee benefits: FICA; 
2004: $201,632; 
2003: $199,204.

Employee benefits: TSP; 
2004: $110,282; 
2003: $105,507.

Employee benefits: Employee meals; 
2004: $79,600; 
2003: $74,394.

Employee benefits: Transportation; 
2004: $55,765; 
2003: $56,960.

Employee benefits: HIT; 
2004: $54,825; 
2003: $56,940.

Employee benefits: CSRS; 
2004: $56,845; 
2003: $56,188.

Employee benefits: FEGLI; 
2004: $6,654; 
2003: $6,645.

Total employee benefits; 
2004: $1,822,603; 
2003: $1,733,894.

[End of table]

NOTE 7-OTHER FUNDING:

For the fiscal years ended September 30, 2004 and 2003, the Fund's 
financial statements include direct financial support received from the 
Architect and the Senate through transferred appropriations of 
$1,100,000 and $1,095,000, respectively.

This information is an integral part of the accompanying financial 
statements.

NOTE 7-OTHER FUNDING (CONTINUED):

Identifiable costs paid directly by the Architect on behalf of the 
Fund, which are not reflected in the Fund's financial statements, 
include the following for fiscal years 2004 and 2003.

Equipment maintenance; 
2004: $24,007; 
2003: $24,941.

Equipment purchases; 
2004: $104,211; 
2003: $151,359.

Total; 
2004: $128,218; 
2003: $176,300.

[End of table]

NOTE 8-SUBSEQUENT EVENT:

In November 2004, the Fund received $850,000 of appropriated funds from 
the Architect for fiscal year 2005 for the support of management 
personnel and other operating expenses of the restaurants.

This information is an integral part of the accompanying financial 
statements.

NOTES: 

[1] Reportable conditions involve matters coming to our attention 
relating to significant deficiencies in the design or operation of the 
internal control that, in our judgment, could adversely affect the 
organization's ability to record, process, summarize, and report 
financial data consistent with the assertions of management in the 
financial statements.

(196023):

FOOTNOTES

[1] PCIE is an interagency council that is charged with promoting 
integrity and effectiveness in federal programs and primarily consists 
of the presidentially appointed inspectors general (IG) under the IG 
Act, as amended.

[2] Reportable conditions are matters coming to the auditor's attention 
that in the auditor's judgment should be communicated because they 
represent significant deficiencies in the design or operation of 
internal control, which could adversely affect the entity's ability to 
meet the internal control objectives described in the report.

GAO's Mission:

The Government Accountability Office, the investigative arm of 
Congress, exists to support Congress in meeting its constitutional 
responsibilities and to help improve the performance and accountability 
of the federal government for the American people. GAO examines the use 
of public funds; evaluates federal programs and policies; and provides 
analyses, recommendations, and other assistance to help Congress make 
informed oversight, policy, and funding decisions. GAO's commitment to 
good government is reflected in its core values of accountability, 
integrity, and reliability.

Obtaining Copies of GAO Reports and Testimony:

The fastest and easiest way to obtain copies of GAO documents at no 
cost is through the Internet. GAO's Web site ( www.gao.gov ) contains 
abstracts and full-text files of current reports and testimony and an 
expanding archive of older products. The Web site features a search 
engine to help you locate documents using key words and phrases. You 
can print these documents in their entirety, including charts and other 
graphics.

Each day, GAO issues a list of newly released reports, testimony, and 
correspondence. GAO posts this list, known as "Today's Reports," on its 
Web site daily. The list contains links to the full-text document 
files. To have GAO e-mail this list to you every afternoon, go to 
www.gao.gov and select "Subscribe to e-mail alerts" under the "Order 
GAO Products" heading.

Order by Mail or Phone:

The first copy of each printed report is free. Additional copies are $2 
each. A check or money order should be made out to the Superintendent 
of Documents. GAO also accepts VISA and Mastercard. Orders for 100 or 
more copies mailed to a single address are discounted 25 percent. 
Orders should be sent to:

U.S. Government Accountability Office

441 G Street NW, Room LM

Washington, D.C. 20548:

To order by Phone:



Voice: (202) 512-6000:

TDD: (202) 512-2537:

Fax: (202) 512-6061:

To Report Fraud, Waste, and Abuse in Federal Programs:

Contact:

Web site: www.gao.gov/fraudnet/fraudnet.htm

E-mail: fraudnet@gao.gov

Automated answering system: (800) 424-5454 or (202) 512-7470:

Public Affairs:

Jeff Nelligan, managing director,

NelliganJ@gao.gov

(202) 512-4800

U.S. Government Accountability Office,

441 G Street NW, Room 7149

Washington, D.C. 20548: