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entitled 'Financial Audit: Senate Restaurants Revolving Fund for Fiscal 
Years 2007 and 2006' which was released on May 29, 2009. 

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

United States Government Accountability Office:
GAO: 

May 2008: 

Financial Audit: 

Senate Restaurants Revolving Fund for Fiscal Years 2007 and 2006: 

GAO-08-409: 

Contents: 

Letter: 

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: 

[End of section] 

United States Government Accountability Office:
Washington, DC 20548: 

May 29, 2008: 

The Honorable Charles E. Shumer: 
Chairman: 
The Honorable Robert F. Bennett: 
Ranking Member: 
Committee on Rules and Administration: 
United States Senate: 

The Honorable Stephen T. Ayers: 
Acting 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, 2007, and 2006, 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 reported that: 

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

* There were three significant deficiencies in internal control over 
financial reporting (including safeguarding assets) as of September 30, 
2008. 

* There was no reportable noncompliance in fiscal year 2008 with 
selected provisions of laws and regulations it tested. 

In planning and performing the audits of the Fundís fiscal years 2008 
and 2007 financial statements, Clifton Gunderson LLP considered the 
Fundís internal control over financial reporting and compliance. 
[Footnote 2] Clifton Gunderson LLP did this to determine its procedures 
for auditing the financial statements, not to express an opinion on 
internal control over financial reporting and compliance. 

Clifton Gunderson LLP identified certain deficiencies in internal 
control over financial reporting (including safeguarding assets) that 
it considers to be significant deficiencies[Footnote 3] which adversely 
affect the Fundís ability to meet internal control objectives described 
in the Standards for Internal Control in the Federal Government. 
Significant deficiencies Clifton Gunderson LLP identified were: 

* The Fund recognized an audit adjustment to record a liability for 
termination benefits for covered employees who (1) elected not to 
accept employment with the private company that took over the 
operations of the Senate Restaurants, and (2) terminated employment 
with the Architect of the Capitol (the Architect). According to 
restaurant management, the Fund did not include the liability for 
termination benefits in the draft financial statements because the 
amount could not be reasonably estimated at the time the financial 
statements were drafted. Subsequent to the fiscal year end, the 
accounting function responsibilities for the Fund were assumed by the 
Architect, but no formal procedures were developed by it to document 
its new oversight responsibility, which included monitoring the fiscal 
year 2008 financial reporting process for the Fund. By the completion 
of the audit, the liability amount for termination benefits could be 
reasonably estimated and an audit adjustment was proposed by Clifton 
Gunderson LLP and recorded by the Architect. 

* The Fund did not maintain and fully implement an effective entity-
wide security program. Clifton Gunderson LLP identified deficiencies in 
the areas of security program management (including policy 
administration), and certification and accreditation. Such conditions 
may lead to insufficient protection of sensitive or critical resources 
and disproportionately high expenditures for controls over low-risk 
resources. 

* The Fund did not effectively implement consistent controls to 
restrict access to its information systems. Clifton Gunderson LLPís 
tests of access controls relating to the Fundís general support systems 
and major applications identified access control weaknesses. Without 
adequate access controls, unauthorized parties may gain access to the 
Fundís computer system and network resources that could result in 
damage, deletion, or theft of computerized data. 

Clifton Gunderson LLP reported that it did not consider these 
significant deficiencies to be material weaknesses.[Footnote 4] 
However, Clifton Gunderson LLP reported that misstatements may 
nevertheless occur in other financial information reported by the Fund 
as a result of these internal control deficiencies. 

As disclosed in Clifton Gunderson LLPís report and note 8 to the 
financial statements, on September 16, 2008, the Architect contracted 
out all of the Senate Restaurantsí operations (including food service, 
catering, sundry shop, and vending operations) and transitioned the 
operations to a private company on December 7, 2008. The agreement with 
the contractor is for a term of 7 years with two 7-year options for 
renewal, subject to negotiations. The agreement provides for the 
Architect to receive commissions on catering and vending sales, which 
are statutorily required to be deposited in the miscellaneous items 
account within the contingent fund of the Senate.[Footnote 5] The 
contractor is wholly responsible for any operating losses. The 
agreement also provides for former Senate Restaurant employees who 
accepted employment with the contractor to retain their wages and 
benefits as of the transfer date, while employed by the contractor, 
subject to the availability of appropriated funds. Public Law No. 110-
279 requires the Architect, through a negotiated fee arrangement, to 
reimburse the contractor for the wage and benefit differential (i.e., 
the difference between what the employees were paid as federal 
employees versus what they will be paid as contractor employees) and 
administrative fees involved in retaining the former employees. The 
Architect will provide use of its facilities and equipment to the 
contractor. Going forward, the purpose and authority of the Senate 
Restaurant Revolving Fund is not changing, but the Fundís assets, 
liabilities, and transactions will be substantially different, due to 
the privatization of the restaurant operations. 

As disclosed in Clifton Gunderson LLPís report and note 1 to the Fundís 
financial statements, the financial statements present the financial 
position and the results of operations 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 operation of the 
Senate Restaurants is economically dependent on financial and other 
support provided through the Architect and by the U.S. Senate: 

* The Fundís financial statements for fiscal years 2008 and 2007 
reflect direct financial support of $2,706,259 and $850,000 
respectively, received from the Architect and the United States Senate 
through transferred appropriations. As disclosed in note 4 to the 
financial statements, $1,284,424 of the fiscal year 2008 transfer was 
provided to fund payment of liabilities and expenditures needed to 
prepare for privatizing the operation of the restaurants. 

* The Fundís financial statements for fiscal years 2008 and 2007 do not 
include other support that benefited the operation of the restaurants. 
Specifically, the Architect provided approximately $355,509 and 
$185,246 in fiscal years 2008 and 2007, respectively, for the purchase 
and maintenance of capital equipment (which remain the property of the 
Architect) and professional fees. The majority of the increase in the 
costs for fiscal year 2008 is attributable to consulting and other 
costs the Fund incurred preparing for privatizing the restaurantís 
operations. In addition, during fiscal years 2008 and 2007, the 
Architect and the Government Printing Office provided the Fund with 
other support services, such as space and utilities, the value of which 
cannot be readily determined. 

The Fundís financial statements for fiscal years 2008 and 2007 also do 
not include estimated future pension costs[Footnote 6] and estimated 
future postretirement health and life insurance[Footnote 7] costs of 
$682,560 and $821,786 in fiscal years 2008 and 2007, respectively. 
These costs are financed by the Office of Personnel Management on 
behalf of the Fund. 

As disclosed in Clifton Gunderson LLPís report and the Fundís financial 
statements, losses from operations totaled $1,433,687 and $1,340,637 in 
fiscal years 2008 and 2007, respectively. Financial support amounts 
provided in fiscal year 2008 through the Architect and by the United 
States Senate were used to help cover these losses. 

In connection with the audit of the Fundís financial statements, we 
reviewed Clifton Gunderson LLPís report and related audit documentation 
and, as necessary, met with Clifton Gunderson LLP representatives and 
the Fundís 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 Fundís financial statements and internal controls or 
conclude on its compliance with laws and regulations. Clifton Gunderson 
LLP is responsible for the accompanying auditorís report and for the 
conclusions expressed in the report. However, our review did not 
disclose any 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, and other interested parties. We are 
sending copies of this report to the Chairman and Ranking Member, 
Subcommittee on Legislative Branch, Senate Committee on Appropriations, 
and the Majority Leader and Minority Leader of the Senate. In addition, 
this report is also available at no charge on the GAO Web site at 
[hyperlink, http://www.gao.gov]. If you or your staff have any 
questions concerning this report, please contact me at (202) 512-3406 
or sebastians@gao.gov. Contact points for our Offices of Congressional 
Relations and Public Affairs may be found on the last page of this 
report. Contributors to this report were Julie T. Phillips, Bethany 
Smith, Vivian Gutierrez, and Liliam Coronado. 

Signed by: 

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

[End of section] 

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

Independent Auditor's Report: 

Clifton Gunderson LLP: 
Certified Public Accountants and Consultants: 
11710 Beltsville Drive: 
Suite 100: 
Calverton, Maryland 20705: 
tel. 301-931-2050: 
fax: 301-931-1710: 
[hyperlink, http://www.cliftoncpa.com] 

Independent Auditorís Report: 

Acting Comptroller General: 
United States Government Accountability Office: 

In our audits of the United States Senate Restaurants Revolving Fund 
(the Fund) for fiscal years 2008 and 2007, we found: 

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

* Three significant deficiencies in internal control over financial 
reporting (including safeguarding assets); and; 

* No reportable noncompliance in fiscal year 2008 with laws and 
regulations we tested. 

The following sections provide additional detail on (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, 2008 and 2007, and the results of its operations and 
cash flows for the fiscal years then ended. 

As discussed in Note 8 to the financial statements, on September 16, 
2008, the Architect of the Capitol (the Architect) contracted out all 
of the Senate Restaurantsí operations and transitioned its employees to 
a private company on December 7, 2008. The purpose and authority of the 
Senate Restaurant Revolving Fund is not changing, but the Fundís 
assets, liabilities, and transactions will be substantially different 
due to the privatization of the restaurant operations. 

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 for the 
benefit of the Fund are not reflected in the Fundís financial 
statements. Also, the financial statements do not include such costs as 
space and utilities provided by the Architect, 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 2008 and 2007, the Fund received 
$2,706,259 and $850,000, respectively, in direct financial support to 
help cover losses from operations, which totaled $1,433,687 and 
$1,340,637, respectively, and to fund payment of certain liabilities 
and expenditures needed to prepare for privatizing the operations of 
the Restaurants. The Architect is responsible for reimbursement to the 
Contractor for wage and benefit differentials of the former Senate 
Restaurant employees it retained. 

Consideration of Internal Control: 

In planning and performing our audits of the Fundís fiscal years 2008 
and 2007 financial statements, we considered the Fundís internal 
control over financial reporting and compliance.[Footnote 8] We did 
this to determine our procedures for auditing the financial statements, 
not to express an opinion on internal control. Accordingly, we do not 
express an opinion on internal control over financial reporting and 
compliance. 

A control deficiency exists when the design or operation of a control 
does not allow management or employees, in the normal course of 
performing their assigned functions, to prevent or detect misstatements 
on a timely basis. A significant deficiency is a control deficiency, or 
combination of control deficiencies, that adversely affects the 
entity's ability to initiate, authorize, record, process, or report 
financial data reliably in accordance with generally accepted 
accounting principles such that there is more than a remote likelihood 
that a misstatement of the entityís financial statements that is more 
than inconsequential will not be prevented or detected by the entityís 
internal control. 

We identified certain deficiencies in internal control over financial 
reporting (including safeguarding assets) that we consider to be 
significant deficiencies which adversely affect the Fundís ability to 
meet the internal control objectives listed in the objectives, scope, 
and methodology section of this report, or meet the criteria under 
Standards for Internal Control in the Federal Government. Significant 
deficiencies we noted are as follows: 

* The Fund recognized an audit adjustment to record a liability for 
termination benefits. 

* The Fund has not maintained and fully implemented an effective entity-
wide security program. 

* The Fund has not effectively implemented consistent controls to 
restrict access to its information systems. 

A material weakness is a significant deficiency, or combination of 
significant deficiencies, that results in more than a remote likelihood 
that a material misstatement of the financial statements will not be 
prevented or detected by the entityís internal control. We believe that 
none of the significant deficiencies described in this report are 
material weaknesses. However, misstatements may nevertheless occur in 
other financial information reported by the Fund as a result of the 
internal control deficiencies described in this report. 

Significant Deficiencies: 

1. The Fund Recognized an Audit Adjustment to Record a Liability for 
Termination Benefits: 

The draft financial statements of the Fund, provided to us at the 
beginning of the audit, did not recognize a $1.1 million liability for 
voluntary separation incentive payments (VSIP) for covered employees 
who (1) elected not to accept employment with the private company that 
took over operations of the Senate Restaurants; and (2) terminated 
employment with the Architect. According to restaurant management, the 
Fund did not include this liability in the draft financial statements 
because the amount could not be reasonably estimated at the time the 
financial statements were drafted. Subsequent to the fiscal year end, 
the accounting function responsibilities were assumed by the Architect, 
but no formal procedures were developed by it to document its new 
oversight responsibility, which included monitoring the fiscal year 
2008 financial reporting process for the Fund. By the completion of our 
audit, the liability amount could be reasonably estimated and an audit 
adjustment was proposed by the auditors and recorded by the Architect. 
In assuming the management of the Fund, the Architect should review 
existing accounting procedures, and revise them as necessary. 

2. The Fund Did Not Maintain and Fully Implement an Effective Entity-
Wide Security Program: 

The Fund did not maintain and fully implement its security program. Our 
current year audit found deficiencies in the areas of security program 
management, including policy administration, and certification and 
accreditation. Such conditions may lead to insufficient protection of 
sensitive or critical resources and disproportionately high 
expenditures for controls over low risk resources. An entity-wide 
security program should be in place to establish a framework and 
continuing cycle of activity to manage security risk, develop security 
policies, assign responsibilities, and monitor the adequacy of computer 
security related controls. It should also represent the foundation for 
an entityís security control structure and a reflection of senior 
managementís commitment to addressing security risks. OMB Circular No. 
A-130, Appendix III, Security of Federal Automated Information 
Resources, requires agencies to implement and maintain a program to 
assure that adequate security is provided for all agency information 
collected, processed, transmitted, stored, or disseminated in general 
support systems and major applications. The Fundís information system 
infrastructure is serviced by the Architect, which is responsible for 
information security, disaster recovery, and information support. 

3. The Fund Did Not Effectively Implement Consistent Controls to 
Restrict Access to its Information Systems: 

Our tests of logical access controls relating to the Fundís general 
support systems and major applications identified access control 
weaknesses. Without adequate access controls, unauthorized parties may 
gain access to the Fundís computer system and network resources that 
could result in damage, deletion, or theft of computerized data. Access 
controls should be in place to consistently limit, detect, or monitor 
access to computer programs, data, equipment, and facilities thereby 
protecting against unauthorized modification, disclosure, loss or 
impairment. Such controls include logical security controls to ensure 
that federal employees, contractors and staff will be given only the 
privileges necessary to perform business functions, i.e., access 
privileges. Federal Information Processing Standards Publication (FIPS 
PUB) 200, Minimum Security Requirements for Federal Information and 
Information Systems, specifies minimum access controls for federal 
systems. The Fundís information system owners must limit information 
system access to authorized users. 

Compliance with Laws and Regulations: 

Our tests for compliance in fiscal year 2008 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 Fundís 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; (2) obtaining a sufficient understanding of internal 
control over financial reporting and compliance with laws and 
regulations to plan the audits; and (3) 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 and notes; (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 those selected internal 
controls; (6) tested compliance in fiscal year 2008 with selected 
provisions of 2 U.S.C. 2042-2051, 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; and (7) reviewed 
contracting documents relating to privatizing the restaurantsí 
operations. 

Our consideration of internal controls over financial reporting and 
compliance with laws and regulations was limited to gaining an 
understanding of internal control needed to plan our audits for the 
purpose of expressing an opinion on the financial statements. 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. In 
addition, we caution that our testing of internal controls may not be 
sufficient for other purposes. 

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 years ended September 30, 2008 and 2007. 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 the draft of this report, the Fundís management 
concurred with the facts and conclusions in our report. 

Signed by: 

Clifton Gunderson LLP: 
Calverton, Maryland: 
May 22, 2009: 

[End of letter] 

Balance Sheets: 

United States Senate Restaurants Revolving Fund: 
Balance Sheets: 
September 30, 2008 and 2007: 

Assets: 

Cash: Funds with U.S Treasury: 
2008: $1,644,273; 
2007: $758,612. 
	
Petty cash and change funds: 
2008: $20,500; 
2007: $20,500. 

Total cash: 
2008: $1,664,773; 
2007: $779,112. 

Accounts receivable, Senate customer accounts (note 3): 
2008: $74,701; 
2007: $50,914. 

Vendor commissions and other income receivables: 
2008: $26,685; 
2007: $32,888. 

Food, beverage, and merchandise inventory: 
2008: $125,287; 
2007: $160,464. 

China, glassware, silverware, and tableware: 
2008: $212,074; 
2007: $224,108. 

Prepaid expenses: 
2008: $2,282; 
2007: $19,977. 

Total Assets: 
2008: $2,105,802; 
2007: $1,267,463. 

Liabilities And U.S. Government Equity:	 

Accounts payable and accrued expenses: Due to vendors and customers; 
2008: $260,843; 
2007: $348,423. 
		
Payroll and related benefits: 
2008: $256,606; 
2007: $224,303. 

Deferred income: 
2008: $38,057; 
2007: $34,998. 

Accrued employee termination expense (note 8): 
2008: $1,101,284; 
2007: 0. 

Total accounts payable and accrued expenses: 
2008: $1,656,790; 
2007: $607,724. 

Other liabilities: Employees' accrued leave: 
2008: $242,038; 
2007: $303,297. 
		
Total liabilities: 
2008: $1,898,828; 
2007: $911,021. 

U.S. government equity:	Appropriated capital (note 4); 
2008: $2,847,144; 
2007: $2,847,144. 
	
Cumulative results of operations (deficit): 
2008: ($2,640,170); 
2007: ($2,490,702). 

Total U.S. government equity: 
2008: $206,974; 
2007: $356,442. 

Total Liabilities And U.S. Government Equity: 
2008: $2,105,802; 
2007: $1,267,463. 
	
The accompanying notes are an integral part of these statements. 

[End of balance sheet] 

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, 2008 and 2007: 

Sales, Commissions, And Other Operating	Income (Note 5): 

Food services: 
2008: $5,111,409; 
2007: $4,891,851. 
		
Catering: 
2008: $3,957,005; 
2007: $4,141,505. 

Sundry shop sales: 
2008: $518,532; 
2007: $688,013. 

Vending machine and other commissions: 
2008: $298,647; 
2007: $306,123. 

Total: 
2008: $9,885,593; 
2007: $10,027,492. 

Cost Of Sales: 

Food and beverages: 
2008: $3,669,943; 
2007: $3,477,705. 
		
Sundry shop merchandise: 
2008: $367,263; 
2007: $484,589. 

Total: 
2008: $4,037,206; 
2007: $3,962,294. 

Income from sales, commissions,	and other operating income: 
2008: $5,848,387; 
2007: $6,065,198. 
		
Operating Expenses: 

Personnel and benefits (note 6): 
2008: $6,681,982; 
2007: $6,808,654. 
		
Supplies and materials: 
2008: $576,311; 
2007: $561,001. 

Miscellaneous: 
2008: $23,781; 
2007: $36,180. 

Total: 
2008: $7,282,074; 
2007: $7,405,835. 

Loss from operations: 
2008: ($1,433,687); 
2007: ($1,340,637). 

Other Funding And (Expenses): 

Direct financial support (notes 1 and 4): 
2008: $2,706,259; 
2007: $850,000. 
		
Employee termination expense (note 8): 
2008: ($1,101,284); 
2007: 0. 

Consultants: 
2008: ($170,756); 
2007: 0. 

Equipment upgrade: 
2008: ($150,000): 
2007: 0. 

Total: 
2008: $1,284,219: 
2007: $850,000. 

Net loss: 
2008: ($149,468); 
2007: ($490,637). 

U.S. Government Equity,	Beginning Of Year: 
2008: $356,442; 
2007: $847,079. 
		
U.S. Government Equity, End Of Year: 
2008: $206,974; 
2007: $356,442. 

The accompanying notes are an integral part of these statements. 

[End of Statements Of Operations And Changes In U.S. Government Equity] 

Statements Of Cash Flows: 

United States Senate Restaurants Revolving Fund: 
Statements Of Cash Flows: 
For the Fiscal Years Ended September 30, 2008 and 2007: 

Cash Flows From Operating Activities: 

Net loss: 
2008: ($149,468); 
2007: ($490,637). 
		
Adjustments to reconcile net income to net cash used in	operating 
activities: 
	
Effects of changes in operating assets and liabilities:	
	
Accounts receivable: 
2008: ($23,787); 
2007: $17,443. 

Vendor commissions receivable: 
2008: $6,203; 
2007: ($6,809). 

Food, beverage, and merchandise inventory: 
2008: $35,177; 
2007: ($19,014). 

China, glassware, silverware, and tableware: 
2008: $12,034; 
2007: ($24,754). 

Prepaid expenses: 
2008: $17,695; 
2007: ($17,232). 

Due to vendors and customers: 
2008: ($87,580); 
2007: $3,862. 

Payroll and related benefits: 
2008: $32,303; 
2007: ($9,060). 

Employees' accrued leave: 
2008: ($61,259); 
2007: $4,821. 

Deferred income: 
2008: $3,059; 
2007: $15,543. 

Accrued employee termination expense: 
2008: $1,101,284; 
2007: 0. 

Net cash provided by (used in) operating activities: 
2008: $885,661; 
2007: $(525,837). 

Cash, Beginning Of Year: 
2008: $779,112; 
2007: $1,304,949. 

Cash, End Of Year: 
2008: $1,664,773; 
2007: $779,112. 

The accompanying notes are an integral part of these statements. 

[End of Statements Of Cash Flows] 

Notes To Financial Statements: 

[This information is an integral part of the accompanying financial 
statements] 

United States Senate Restaurants Revolving Fund: 
Notes To Financial Statements: 
For the Fiscal Years Ended September 30, 2008 and 2007: 

Note 1 Ė 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 Committeeís 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 Fundís 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 
appropriations, loans, and transfers of appropriated capital (equity) 
to the Fund from the Senateís contingent fund used to finance the 
Fundís recurring operating losses. As noted in Note 8, restaurant 
operations were transitioned to a private company by contract dated 
September 16, 2008. Public Law 110-279, in conjunction with the 
operating agreement, provides for the Architect to reimburse the 
contractor for wage and benefit differential and administrative fees, 
subject to availability of appropriated funds, resulting from retaining 
former restaurant employees. 

In addition, as discussed in Note 4, funds were provided during fiscal 
year 2008 to cover certain costs needed to prepare for privatizing 
restaurant operations. 

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

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

Note 2 Ė Summary Of Significant Accounting Policies: 

(A) Basis Of Accounting: 

The financial statements are prepared on the accrual basis of 
accounting in conformity with U.S. generally accepted accounting 
principles. 

(b) 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 managementís 
estimates and assumptions. 

(c) 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. The balance at September 30, 2008, also includes 
additional funding provided during fiscal year 2008 to cover certain 
costs associated with privatizing restaurant operations. See Notes 4 
and 8 for further details. 

(d) 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 managementís assessment of the 
collectability of specific customer accounts and the aging of the 
accounts receivable. If there is a deterioration of a major customerís 
credit worthiness or actual defaults are higher than the historical 
experience, managementís estimates of the recoverability of amounts due 
the Fund could be adversely affected. 

(e) Vendor Commissions Receivable: 

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

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 Fundís statements of 
operations. 

(g) Deferred Income: 

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

(h) Employeesí 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. 

(i) Federal Employee Benefits: 

The Fund contributes to the costs of providing future pension benefits 
to eligible employees over the period of time they render services to 
the Fund. The costs recognized in the financial statements represent 
actual contributions made by the Fund. The Office of Personnel 
Management (OPM) supplies the Fund with factors to apply in calculating 
the estimated current year service cost. These factors are derived 
through actuarial cost methods and assumptions. The estimated future 
pension costs is the excess of the current year service costs less 
current agency and employee contributions and represents the amount 
being financed directly by OPM. This amount is disclosed in the 
financial statements (see Note 6). 

The Fund also discloses the current-period costs calculated for the 
estimated future costs of post retirement health benefits and life 
insurance for its employees while they are still working. The Fund 
discloses this cost in a manner similar to that used for pensions with 
the exception that employees and the Fund do not make current 
contributions to fund these future benefits (see Note 6). 

Note 3 Ė 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, 2008 and 2007 follows. 

Days outstanding: 0 to 30; 
2008: Amount $71,896; 
2008: Percentage 96.3; 
2007: Amount $48,340; 
2007: Percentage 94.9. 

Days outstanding: 31 to 60; 
2008: Amount $1,653; 
2008: Percentage 2.2; 
2007: Amount $2,286; 
2007: Percentage 4.5. 

Days outstanding: 61 to 90; 
2008: Amount $1,152; 
2008: Percentage 1.5; 
2007: Amount $288; 
2007: Percentage 0.6. 

Days outstanding: Total; 
2008: Amount $74,701; 
2008: Percentage 100.0; 
2007: Amount $50,914; 
2007: Percentage 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 statements, which include the current 
charge (with supporting receipt) to all accounts with a balance. 
Customers whose accounts are delinquent over 30 days will receive a 
telephone reminder. Customers whose accounts are delinquent over 60 
days will receive an e-mail reminder. 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. 

Note 4 Ė Financing Activities: 

In managing the Fund, the Architect has access to three types of 
supplemental funding: (1) appropriations, (2) loans, and (3) transfers 
of appropriated capital (equity). 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. For the fiscal years ended September 30, 2008 and 
2007, the Fundís financial statements include direct financial support 
received from the Architect and the Senate through transferred 
appropriations of $2,706,259 and $850,000, respectively. As discussed 
in Note 8, restaurant operations were transitioned to a private company 
by contract dated September 16, 2008. $1.3 million of the fiscal year 
2008 transfer was used to fund expenditures for September 2008 payroll 
and benefits, accounts payable to vendors, unpaid annual and sick leave 
for transferring employees, and replacement of the point of sale system 
as specified in the operating agreement. Public Law 110-279, in 
conjunction with the agreement, provides for the Architect to reimburse 
the contractor for wage and benefit differential and related 
administrative fees in retaining former restaurant employees, subject 
to availability of appropriated funds, for the term of the agreement. 

Also, 2 U.S.C. 2049 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 Senateís contingent fund, 
and loan repayments are deposited to the same account. The last loan 
requested was received in fiscal year 1998 and repaid in fiscal year 
2002. 

Under 2 U.S.C. 2044, the Secretary of the Senate, at the request of the 
Architect and with the approval of the Committee, may transfer funds 
from the Senateís contingent expenses appropriation account to the Fund 
as appropriated capital. The Fundís total appropriated capital is 
$2,847,144 as of September 30, 2008 and 2007. No appropriated capital 
transfers have been received by the Fund since fiscal year 1999. 

Note 5 Ė 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 
2008 and 2007. 

Regular food services: 

Catering: 
Fiscal Year 2008: Sales and Commissions: $3,957,005; 
Fiscal Year 2008: Operating Income (Loss): ($411,848); 
Fiscal Year 2007: Sales and Commissions: $4,141,505; 
Fiscal Year 2007: Operating Income (Loss): ($175,545). 
				
Capitol dining rooms: 
Fiscal Year 2008: Sales and Commissions: $339,483; 
Fiscal Year 2008: Operating Income (Loss): ($443,163); 
Fiscal Year 2007: Sales and Commissions: $301,611; 
Fiscal Year 2007: Operating Income (Loss): ($420,667). 

North Servery Cafeteria: 
Fiscal Year 2008: Sales and Commissions: $2,998,029; 
Fiscal Year 2008: Operating Income (Loss): ($520,824); 
Fiscal Year 2007: Sales and Commissions: $2,910,818; 
Fiscal Year 2007: Operating Income (Loss): ($774,826). 

South Buffet: 
Fiscal Year 2008: Sales and Commissions: $492,185; 
Fiscal Year 2008: Operating Income (Loss): ($83,848); 
Fiscal Year 2007: Sales and Commissions: $502,758; 
Fiscal Year 2007: Operating Income (Loss): ($23,797). 

Snack bar: 
Fiscal Year 2008: Sales and Commissions: $279,810; 
Fiscal Year 2008: Operating Income (Loss): ($146,699); 
Fiscal Year 2007: Sales and Commissions: $267,736; 
Fiscal Year 2007: Operating Income (Loss): ($123,301). 

Senate chef: 
Fiscal Year 2008: Sales and Commissions: $1,001,902; 
Fiscal Year 2008: Operating Income (Loss): ($84,057); 
Fiscal Year 2007: Sales and Commissions: $908,928; 
Fiscal Year 2007: Operating Income (Loss): ($70,065). 

Total regular food services: 
Fiscal Year 2008: Sales and Commissions: $9,068,414; 
Fiscal Year 2008: Operating Income (Loss): ($1,690,439); 
Fiscal Year 2007: Sales and Commissions: $9,033,356; 
Fiscal Year 2007: Operating Income (Loss): ($1,588,201). 
				
Sundry Shop operations: 

Southside Deli: 
Fiscal Year 2008: Sales and Commissions: $250,607; 
Fiscal Year 2008: Operating Income (Loss): ($27,834); 
Fiscal Year 2007: Sales and Commissions: $323,428; 
Fiscal Year 2007: Operating Income (Loss): ($24,724); 
			
Hart Office Building: 
Fiscal Year 2008: Sales and Commissions: $267,925; 
Fiscal Year 2008: Operating Income (Loss): ($14,061); 
Fiscal Year 2007: Sales and Commissions: $364,585; 
Fiscal Year 2007: Operating Income (Loss): ($33,835). 

Total Sundry Shop operations: 
Fiscal Year 2008: Sales and Commissions: $518,532; 
Fiscal Year 2008: Operating Income (Loss): ($41,895); 
Fiscal Year 2007: Sales and Commissions: $688,013; 
Fiscal Year 2007: Operating Income (Loss): ($58,559). 
				
Vending machine and other commissions: 
Fiscal Year 2008: Sales and Commissions: $298,647; 
Fiscal Year 2008: Operating Income (Loss): $298,647; 
Fiscal Year 2007: Sales and Commissions: $306,123; 
Fiscal Year 2007: Operating Income (Loss): $306,123. 
				
Total: 
Fiscal Year 2008: Sales and Commissions: $9,885,593; 
Fiscal Year 2008: Operating Income (Loss): ($1,443,687); 
Fiscal Year 2007: Sales and Commissions: $10,027,492; 
Fiscal Year 2007: Operating Income (Loss): ($1,340,637). 

[End of table] 

Note 6 Ė Personnel And Benefits: 

Personnel and benefits consist of salaries and wages for Fund 
employees; employee benefits for Fund employees; and contract labor, 
which includes on-call wait staff used for special functions and 
events. The following table presents a breakout of the amounts included 
in each category for the fiscal years ended September 30, 2008 and 
2007. 
	
Personnel and benefits: 

Salaries and wages: 
2008: $3,543,912; 
2007: $3,701,314. 
		
Employee benefits: 
2008: $1,819,784; 
2007: $1,893,468. 

Contract labor: 
2008: $1,318,286; 
2007: $1,213,872. 

Total: 
2008: $6,681,982; 
2007: $6,808,654. 

[End of table] 

Pension Benefits, Savings Plans and Postemployment Benefits		
Fund employees are covered by the Civil Service Retirement System 
(CSRS) or the Federal Employeesí Retirement System (FERS). Although the 
Fund contributed a portion of pension benefits for eligible employees, 
it does not account for the assets of either retirement system. The 
Fund also does not have actuarial data for accumulated plan benefits or 
the unfunded liability relative to eligible employees. These amounts 
are reported on and accounted for by the U.S. Office of Personnel 
Management (OPM). For employees covered by FERS, the Fund 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 OPM. Using the cost factors supplied by OPM, 
the Fund has calculated the estimated future pension costs and 
estimated future cost of postretirement health benefits and life 
insurance for its employees. These costs are financed by OPM on behalf 
of the Fund, and are not reflected in the Fundís financial statements. 

Federal employee retirement benefit costs paid by OPM on behalf of the 
Fund: 

Estimated future pension costs (CSRS/FERS): 
2008: $201,547; 
2007: $235,932. 
	
Estimated future postretirement health and life insurance 
(FEHBP/FEGLIP): 
2008: $481,013; 
2007: $585,854. 
		
Total: 
2008: $682,560; 
2007: $821,786. 

[End of table] 

Employee Benefits Included in the Fundís Financial Statements		
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. All of these payments are 
recognized as operating expenses in the Fundís financial statements.
This information is an integral part of the accompanying financial 
statements. 

Contributions made by the Fund for employee benefits during fiscal 
years 2008 and 2007 are listed in the following table. 

Employee benefits: 

FEHBP: 
2008: $563,344; 
2007: $584,874. 
	
FERS: 
2008: $430,084; 
2007: $458,566. 

Leave expense: 
2008: $297,233; 
2007: $303,298. 

FICA: 
2008: $182,972; 
2007: $188,178. 

TSP: 
2008: $109,911; 
2007: $117,375. 

Employee meals: 
2008: $83,485; 
2007: $88,847. 

Transit subsidy: 
2008: $44,603; 
2007: $44,120. 

HIT: 
2008: $53,623; 
2007: $54,492. 

CSRS: 
2008: $47,982; 
2007: $47,221. 

FEGLI: 
2008: $6,547; 
2007: $6,497. 

Total: 
2008: $1,819,784; 
2007: $1,893,468. 

[End of table] 

Note 7 Ė Other Funding Not In Financial Statements: 
		
Identifiable costs paid directly by the Architect for the benefit of 
the Fund that are not reflected in the Fund's financial statements 
include equipment maintenance, equipment purchases, and professional 
fees totaling $355,509 and $185,246 for fiscal years 2008 and 2007, 
respectively. The majority of the increase in the costs from fiscal 
year 2007 is due to consulting and other costs associated with 
privatizing the restaurantís operations. 

Note 8 Ė Privatization Of Senate Restaurants: 

On September 16, 2008, the Architect contracted out all of the Senate 
Restaurantsí operations, including food service, catering, sundry shop, 
and vending operations and transitioned the operations to a private 
company on December 7, 2008. The agreement with the contractor is for a 
term of seven years with two seven year options for renewal, subject to 
negotiations. The agreement provides for the Architect to receive 
commissions on catering and vending sales, which are statutorily 
required to be deposited in the miscellaneous items account within the 
contingent fund of the Senate. The contractor is wholly responsible for 
100 percent of operating losses (if any). The agreement also provides 
for former Senate Restaurant employees, who accepted employment with 
the contractor, to retain their wages and benefits as of the transfer 
date while employed by the contractor, subject to the availability of 
appropriated funds. Public Law 110-279 requires the Architect, through 
a negotiated fee arrangement, to reimburse the contractor for wage and 
benefit differential and administrative fees involved in retaining the 
former employees. The Architect will also provide use of its facilities 
and equipment to the contractor. 

Public Law 110-279 authorized, with congressional approval, the 
Architect to provide covered employees of the Senate Restaurants an 
option of receiving a Voluntary Separation Incentive Payment (VSIP). 
Under the VSIP, employees were given the option to go to work for the 
contractor taking over the operations of the restaurants, or terminate 
employment (i.e. retire/resign) with the Architect and receive a 
monetary payment based on time and service. Those employees electing to 
work for the contractor were given an additional 90-day grace period to 
retire/resign and still receive a VSIP based on time and service. Forty-
three individuals chose to retire/resign by the transition date; three 
individuals chose to retire/resign during the 90-day grace period; and 
the Fund provided VSIP to them totaling $1,026,284 and $75,000, 
respectively. Thus, the Fund recognized a $1,101,284 total liability 
for VSIP for those Senate Restaurants employees who voluntarily opted 
not to accept employment with the contractor by the transition date or 
during the 90-day grace period. All separating employees were paid for 
their accrued annual leave balances which amounted to $86,313. Per the 
legislation, employees that accepted employment with the contractor 
will continue to maintain their retirement, health and life insurance 
benefits as well as retain the pay they earned at the time of 
restaurant operations transition to the contractor. The Architect of 
the Capitol will reimburse the contractor, subject to available 
appropriations, for any authorized pay and benefit differential. 

Going forward, the purpose and authority of the Senate Restaurant 
Revolving Fund is not changing, but the Fundís assets, liabilities, and 
transactions will be substantially different due to the privatization 
of the restaurant operations effective December 7, 2008 (transition 
date). As of March 31, 2009, the Fundís cash balance with Treasury was 
$412,906; substantially all of the outstanding accounts receivable 
balances at September 30, 2008 had been collected by the Fund; and the 
unpaid accounts payable balance was $24,843. Leading up to the 
transition date, the Senate Restaurants reduced its acquisition of 
food, beverages, and supplies; therefore minimal amounts were 
transferred to the contractor. On the transition date, certain items of 
china, glassware and silverware were transferred to the contractor at 
no cost. Remaining items were transferred to a storage site for 
eventual disposal through the General Services Administration. 

Note 9 Ė Subsequent Event: 

Subsequent to fiscal year-end, the Fund received $850,000 of 
appropriated funds from the Architect for fiscal year 2009 for the 
support of management personnel and other operating expenses of the 
restaurants. 

[End of Notes To Financial Statements] 

[End of section] 

Footnotes: 

[1] The PCIE was an administratively established interagency council to 
promote integrity and effectiveness in federal programs. It primarily 
consisted of the presidentially appointed inspectors general (IG) under 
the IG Act, as amended. On October 14, 2008, the Inspector General 
Reform Act of 2008 replaced the PCIE with the Council of Inspectors 
General of Integrity and Efficiency (CIGIE). The CIGIE essentially 
combined what were formerly the PCIE and Executive Council on Integrity 
and Efficiency (ECIE). The ECIEís function was also to promote 
integrity and effectiveness in federal programs and primarily consisted 
of all civilian statutory Inspectors General not represented on the 
PCIE. 

[2] The objectives of financial reporting controls are to provide 
reasonable assurance that transactions are properly recorded, 
processed, and summarized to permit the preparation of the financial 
statements in conformity with U.S. generally accepted accounting 
principles, and assets are safeguarded against loss from unauthorized 
acquisition, use, or disposition. The objective of compliance controls 
is to provide reasonable assurance that transactions are executed in 
accordance with laws governing the use of budget authority and other 
laws and regulations that could have a direct and material effect on 
the financial statements. 

[3] A significant deficiency is a control deficiency, or combination of 
control deficiencies, that adversely affects the entityís ability to 
initiate, authorize, record, process, or report financial data reliably 
in accordance with generally accepted accounting principles such that 
there is more than a remote likelihood that a misstatement of the 
entityís financial statements that is more than inconsequential will 
not be prevented or detected by the entityís internal control. A 
control deficiency exists when the design or operation of a control 
does not allow management or employees, in the normal course of 
performing their assigned functions, to prevent or detect misstatements 
on a timely basis. 

[4] A material weakness is a significant deficiency, or combination of 
significant deficiencies, that results in more than a remote likelihood 
that a material misstatement of the financial statements will not be 
prevented or detected by the entityís internal control. 

[5] 2 U.S.C. ß2051(h)(1). 

[6] Fund employees are covered by the Civil Service Retirement System 
(CSRS) or the Federal Employeesí Retirement System (FERS). 

[7] Fund employees can elect to be covered by the Federal Employees 
Health Benefits Program (FEHBP) and/or the Federal Employees Group Life 
Insurance Program (FEGLIP). 

[8] The objectives of financial reporting controls are to provide 
reasonable assurance that transactions are properly recorded, 
processed, and summarized to permit the preparation of the financial 
statements in conformity with U.S. generally accepted accounting 
principles, and assets are safeguarded against loss from unauthorized 
acquisition, use, or disposition. The objective of compliance controls 
is to provide reasonable assurance that transactions are executed in 
accordance with laws governing the use of budget authority and other 
laws and regulations that could have a direct and material effect on 
the financial statements. 

[End of section] 

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