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United States Government Accountability Office: 
GAO: 

Report to the Chairman of the Board, Congressional Award Foundation: 

May 2010: 

Financial Audit: 

Congressional Award Foundation's Fiscal Years 2009 and 2008 Financial 
Statements: 

GAO-10-646: 

Contents: 

Letter: 

Auditor's Report: 
Opinion on Financial Statements: Consideration of Internal Control: 
Compliance with Laws and Regulations: Objectives, Scope, and 
Methodology: Foundation's Comments: 

Financial Statements: 
Statements of Financial Position: Statements of Activities: 
Statements of Cash Flows: 
Notes to Financial Statements: 

Appendix: 

Appendix I: Comments from the Congressional Award Foundation: 

[End of section] 

United States Government Accountability Office: 
Washington, D.C. 20548: 

May 14, 2010: 

Mr. Paxton K. Baker: 
Chairman of the Board Congressional Award Foundation: 

Dear Mr. Baker: 

This report presents our opinion on the financial statements of the 
Congressional Award Foundation (the Foundation) for the fiscal years 
ended September 30, 2009, and 2008. These financial statements are the 
responsibility of the Foundation. This report also presents the 
results of our consideration of the Foundation's related internal 
control. We identified a material internal control weakness in the 
Foundation's financial reporting process that resulted in material 
misstatements in the draft financial statements that management did 
not detect during the financial statement preparation and review 
process for fiscal year 2009. As described in our report, we 
identified errors during our audit and brought them to management's 
attention. In response, management made material adjustments 
(corrections) that are reflected in the accompanying financial 
statements. In addition, this report presents the results of our tests 
of the Foundation's compliance during fiscal year 2009 with selected 
provisions of laws and regulations. We conducted our audit pursuant to 
section 107 of the Congressional Award Act, as amended (2 U.S.C. § 
807), and in accordance with U.S. generally accepted government 
auditing standards. 

If you or your office have any questions concerning this report, 
please contact me at (202) 512-3406 or s [Hyperlink, 
sebastians@gao.gov] ebastians@gao.gov. Contact points for our Offices 
of Congressional Relations and Public Affairs may be found on the last 
page of this report. Key contributors to this report were Julie 
Phillips, Assistant Director; Edmund Fernandez; Sophie Simonard-
Norman; and Bethany Smith. 

Sincerely yours, 

Signed by: 

Steven J. Sebastian: 
Director Financial Management and Assurance: 

[End of letter] 

United States Government Accountability Office: 
Washington, D.C. 20548: 

Mr. Paxton K. Baker: 
Chairman of the Board: 
Congressional Award Foundation: 

We have audited the accompanying statements of financial position of 
the Congressional Award Foundation (the Foundation) as of September 
30, 2009, and 2008, and the related statements of activities and 
statements of cash flows for the years then ended. Overall, we found: 

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

* a material weakness[Footnote 1] in the Foundation's internal control 
over financial reporting; and: 

* no reportable instances of noncompliance with laws and regulations 
we tested. 

The following sections discuss in more detail (1) these conclusions; 
(2) our audit objectives, scope, and methodology; and (3) the 
Foundation's comments and our evaluation. 

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 Foundation's assets, liabilities, 
and net assets as of September 30, 2009, and 2008, and the results of 
its activities and its cash flows for the years then ended. 

However, misstatements may occur in other financial information 
reported by the Foundation and not be detected or corrected as a 
result of the material weakness in internal control described in this 
report. 

Consideration of Internal Control: 

In planning and performing our audit of the Foundation's fiscal year 
2009 financial statements, we considered the Foundation's internal 
control over financial reporting for the purpose of determining our 
procedures for auditing the financial statements, not to express an 
opinion on the effectiveness of internal control. Accordingly, we do 
not express an opinion on the Foundation's internal control over 
financial reporting. 

However, during our audit of the Foundation's fiscal year 2009 
financial statements, we identified a material weakness in the 
Foundation's internal control over financial reporting. Specifically, 
we found that the Foundation lacked sufficient and appropriate 
policies, procedures, and resources to prepare the financial 
statements and accompanying notes accurately, completely, and in 
accordance with U.S. generally accepted accounting principles. This 
resulted in the need for material adjustments in finalizing the 
Foundation's fiscal year 2009 financial statements to achieve a fair 
presentation. 

In the draft financial statements prepared by the Foundation, total 
operating revenues and other support were overstated by nearly 
$89,000, and total operating expenses were overstated by nearly 
$49,000. This, in turn, resulted in the Foundation overstating its net 
assets by over $40,000. These errors also resulted in material 
inaccuracies in the draft notes accompanying the financial statements. 
After we identified these misstatements, the Foundation recorded 
adjustments to correct these errors in finalizing its financial 
statements and accompanying notes. 

For example, in the draft financial statements: 

* The Foundation incorrectly recognized contribution revenues of over 
$81,000 and associated expenses of nearly $37,000 for a fund-raising 
event that was held in fiscal year 2010. The contribution revenue 
associated with this fund-raising event, although promised in fiscal 
year 2009, should have been recognized in fiscal year 2010 because the 
contributions were conditional upon the fund-raising event taking 
place. Similarly, the expenses associated with the event should also 
have been recognized in fiscal year 2010. 

* The Foundation incorrectly accounted for certain in-kind 
contributions. For example, in fiscal year 2009, the Foundation 
recorded an in-kind contribution for professional legal services of 
over $9,800, of which only about $550 related to fiscal year 2009. 
Additionally, we found a $20,000 in-kind contribution for donated 
legal services for the second half of fiscal year 2009 that was not 
recorded. 

* The Foundation made other erroneous entries, or failed to record 
appropriate entries, affecting reported expense, revenue, and cash 
accounts for fiscal year 2009, which required numerous additional 
adjusting entries. For example, the Foundation did not record an 
expense for professional services at year-end, even though it had 
received the services and the related invoice of over $3,000 in 
September 2009. In another example, while the Foundation properly 
accrued (unpaid) expenses in accounts payable totaling over $3,400 at 
the end of fiscal year 2008, the Foundation incorrectly recorded the 
payment of these expenses in fiscal year 2009 by increasing expenses 
instead of decreasing accounts payable. As a result, both accounts 
payable and operating expenses were overstated by this amount at the 
end of fiscal year 2009. We also found three checks totaling over 
$2,000 that the Foundation recorded as disbursements, even though the 
Foundation had not disbursed the checks to the recipients because the 
amounts were no longer due. As a result, the Foundation's reported 
expenses were overstated and its cash balance was understated by over 
$2,000 at September 30, 2009. 

Standards for Internal Control in the Federal Government[Footnote 2] 
requires the accurate and timely recording of transactions and events. 
This includes determining the appropriate fiscal year in which assets, 
liabilities, revenues, and expenses are recognized under U.S. 
generally accepted accounting principles (GAAP). Additionally, the 
standards require that transactions be promptly recorded to maintain 
their relevance and value to management in controlling operations and 
making decisions. Consequently, entities should have sufficient and 
appropriate policies, procedures, and resources to initiate, 
authorize, record, process, and report entity transactions in 
conformity with GAAP, as well as to perform a management review of the 
financial statements to identify and correct misstatements. However, 
the Foundation lacked sufficient and appropriate policies, procedures, 
and resources to provide management with reasonable assurance that 
financial activities of the Foundation in fiscal year 2009 were 
reported completely, accurately, and in conformity with GAAP. In 
addition, the Foundation did not have an effective management review 
process to detect and correct misstatements to the financial 
statements and inaccuracies in the notes accompanying the statements. 

The material weakness in internal control may adversely affect any 
decision by Foundation management that is based, in whole or in part, 
on information that is inaccurate because of the material weakness. In 
addition, unaudited financial information reported by the Foundation 
may also contain misstatements resulting from this material weakness. 

Our audit would not necessarily disclose all deficiencies in internal 
control that might be material weaknesses or significant 
deficiencies.[Footnote 3] We considered the Foundation's material 
weakness in determining the nature, timing, and extent of our audit 
procedures on the financial statements and forming our conclusions. 

We will be reporting additional details concerning the material 
weakness separately to Foundation management, along with 
recommendations for corrective action. Additionally, we identified 
other deficiencies in the Foundation's internal control that we do not 
consider to be material weaknesses or significant deficiencies, but 
which merit Foundation management's attention and correction. We have 
communicated these matters to Foundation management informally and, as 
appropriate, will also be reporting separately to Foundation 
management on these matters. 

Compliance with Laws and Regulations: 

Our tests of the Foundation's compliance with selected provisions of 
laws and regulations for fiscal year 2009 disclosed no instances of 
noncompliance that would be reportable under U.S. generally accepted 
government auditing standards. 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 Foundation's management is responsible for preparing the annual 
financial statements in conformity with U.S. generally accepted 
accounting principles, establishing and maintaining the Foundation's 
internal control to provide reasonable assurance that the Foundation's 
control objectives established in Standards for Internal Control in 
the Federal Government are met, and complying with applicable laws and 
regulations. 

We are responsible for planning and performing our audit to obtain 
reasonable assurance and provide our opinion about whether the 
Foundation's financial statements are presented fairly, in all 
material respects, in conformity with GAAP. We are also responsible 
for (1) obtaining a sufficient understanding of internal control over 
financial reporting to plan the audit and (2) 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: 

* examined, on a test basis, evidence supporting the amounts and 
disclosures in the financial statements; 

* assessed the accounting principles used and significant estimates 
made by Foundation management; 

* evaluated the overall presentation of the financial statements and 
notes; 

* obtained an understanding of the Foundation and its operations, 
including its internal control over financial reporting; 

* assessed the risk that a material misstatement exists in the 
financial statements; 

* tested relevant internal controls for the purposes of planning and 
performing our other audit procedures; 

* tested compliance with selected provisions of the Congressional 
Award Act, as amended; and: 

* performed such other procedures as we considered necessary in the 
circumstances. 

Internal control over financial reporting is a process effected by 
those charged with governance, management, and other personnel, the 
objectives of which are to provide reasonable assurance that (1) 
transactions are properly recorded, processed, and summarized to 
permit the preparation of financial statements in conformity with 
GAAP, and assets are safeguarded against loss from unauthorized 
acquisition, use, or disposition and (2) transactions are executed in 
accordance with laws and regulations that could have a direct and 
material effect on the financial statements. 

We did not evaluate internal controls relevant to operating 
objectives, such as controls relevant to ensuring efficient 
operations. We limited our internal control testing to controls over 
financial reporting. Because of inherent limitations, internal control 
may not prevent or detect and correct misstatements due to error or 
fraud, losses, or noncompliance. 

We did not test compliance with all laws and regulations applicable to 
the Foundation. We limited our tests of compliance to those provisions 
of laws and regulations that have a direct and material effect on the 
Foundation's financial statements for the fiscal year ended September 
30, 2009. 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. We believe our audit provides a 
reasonable basis for our opinion and other conclusions. 

Foundation's Comments: 

In commenting on a draft of this report, the Foundation stated that it 
will establish appropriate policies and procedures to ensure that all 
revenue and expenses are recorded in the proper period, especially in 
the case of any future events that are delayed to the next fiscal year. 

A complete text of the Foundation's comments is reprinted in appendix 
I. 

Signed by: 

Steven J. Sebastian: 
Director Financial Management and Assurance: 

May 11, 2009: 

[End of section] 

Financial Statements: 

Statements of Financial Position: 

The Congressional Award Foundation: 
Statements of Financial Position: 
As of September 30, 2009, and 2008: 

Assets: 

Cash: 
2009: $97,835; 
2008: $120,691; 

Contributions receivable (note 3): 
2009: $96,800; 
2008: $137,400. 

Accounts receivable: 
2009: $9,531; 
2008: $9,820. 

Prepaid expense: 
2009: $13,181; 
2008: $4,073. 

Donated auction items: 
2009: $1,840; 
2008: [Empty]. 

Equipment, furniture, and fixtures, net (note 4): 
2009: $14,649; 
2008: $21,812. 

Total assets: 
2009: $233,836; 
2008: $293,796. 

Liabilities and net assets: 

Accounts payable: 
2009: $13,242; 
2008: $5,764. 

Accrued payroll, related taxes, and leave: 
2009: $15,482; 
2008: $14,170. 

Refundable advance: 
2009: $26,364; 
2008: [Empty]. 

Deferred revenue: 
2009: $2,976; 
2008: [Empty]. 

Capital lease liability (note 5): 
2009: $9,353; 
2008: $14,266. 

Total liabilities: 
2009: $67,417; 
2008: $34,200. 

Net assets: 

Unrestricted: 
2009: $147,372; 
2008: $239,630. 

Temporarily restricted (note 6): 
2009: $19,047; 
2008: $19,966. 

Total net assets: 
2009: $166,419; 
2008: $259,596. 

Total liabilities and net assets: 
2009: $233,836; 
2008: $293,796. 

The accompanying notes are an integral part of these financial 
statements. 

Statements of Activities: 

The Congressional Award Foundation: 
Statements of Activities: 
For the Fiscal Years Ended September 30, 2009, and 2008: 

Changes in unrestricted net assets: 

Operating revenue and other support: 

Contributions: 
2009: $434,049; 
2008: $619,316. 

Contributions - In-kind (note 7): 
2009: $71,757; 
2008: $89,989. 

Program and other revenues: 
2009: $239,105; 
2008: $246,486; 

Interest and dividends: 
2009: [Empty]; 
2008: $1,420. 

Net assets released from restrictions (note 6): 
2009: $919; 
2008: $2,792. 

Total operating revenue and other support: 
2009: $745,830; 
2008: $960,003. 

Operating expenses (note 8): 

Salaries, benefits, and payroll taxes: 
2009: $397,189; 
2008: $349,140. 

Program, promotion, and travel: 
2009: $14,161; 
2008: $49,454. 

Fund-raising expense: 
2009: $89,535; 
2008: $127,642. 

Costs of direct benefit to donors: 
2009: $22,638; 
2008: $13,135. 

Gold Award ceremony: 
2009: $170,835; 
2008: $142,134. 

Professional fees: 
2009: $76,620; 
2008: $63,635. 

Depreciation and amortization: 
2009: $7,165; 
2008: $7,543. 

Board of Directors expense: 
2009: $1,259; 
2008: [Empty]. 

Administrative and other expense: 
2009: $58,686; 
2008: $69,896. 

Total operating expenses: 
2009: $838,088; 
2008: $822,579. 

Subtotal: 
2009: ($92,258); 
2008: $137,424. 

Other changes: 

Net realized investment gains (note 10): 
2009: [Empty]; 
2008: $149. 

Increase/(decrease) in unrestricted net assets 
2009: ($92,258); 
2008: $137,573. 

Changes in temporarily restricted net assets: 

Net assets released from restrictions (note 6): 
2009: ($919); 
2008: ($2,792). 

Decrease in temporarily restricted net assets: 
2009: ($919); 
2008: ($2,792). 

Increase/(decrease) in net assets: 
2009: ($93,177); 
2008: $134,781. 

Net assets at beginning of year: 
2009: $259,596; 
2008: $124,815. 

Net assets at end of year: 
2009: $166,419; 
2008: $259,596. 

The accompanying notes are an integral part of these financial 
statements. 

Statements of Cash Flows: 

The Congressional Award Foundation: 
Statements of Cash Flows: 
For the Fiscal Years Ended September 30, 2009, and 2008: 

Cash flows from operating activities: 

Increase (decrease) in net assets: 
2009: ($93,177); 
2008: $134,781. 

Adjustments to reconcile change in net assets to net cash
from operating activities: Depreciation and amortization: 
2009: $7,165: 
2008: $7,543. 

Net realized gains on sale of investments (note 10): 
2009: [Empty]; 
2008: ($149). 

Change in operating assets: 

Contributions receivable: 
2009: $40,600; 
2008: ($4,800). 

Accounts receivable: 
2009: $289; 
2008: ($9,820). 

Prepaid expenses: 
2009: ($9,108); 
2008: ($1,471). 

Donated auction items: 
2009: ($1,840); 
2008: [Empty]. 

Change in operating liabilities: 

Accounts payable: 
2009: $7,478; 
2008: ($8,898). 

Line of credit note payable (note 11): 
2009: [Empty]; 
2008: ($100,000). 

Accrued payroll, related taxes, and leave: 
2009: $1,312; 
2008: $6,740. 

Refundable advance: 
2009: $26,364; 
2008: [Empty]. 

Deferred revenue: 
2009: $2,976; 
2008: [Empty]. 

Liability for tax penalty and interest (note 12): 
2009: [Empty]; 
2008: ($3,317). 

Net cash provided/(used) in operating activities: 
2009: ($17,941); 
2008: $20,609. 

Cash flows from investing activities: 

Proceeds from certificate of deposit (note 11): 
2009: [Empty]; 
2008: $59,610. 

Net proceeds from sale of investments (note 10): 
2009: [Empty]; 
2008: $29,267. 

Net cash provided by investing activities: 
2009: [Empty]; 
2008: $88,877. 

Cash flows from financing activities: 

Principal payments under capital lease obligation (note 5): 
2009: ($4,915); 
2008: ($4,068). 

Repayment of loans: 
2009: [Empty]; 
2008: ($664). 

Net cash provided by financing activities: 
2009: ($4,915); 
2008: ($4,732). 

Net increase in cash: 
2009: ($22,856); 
2008: $104,754. 

Cash, beginning of year: 
2009: $120,691; 
2008: $15,937. 

Cash, end of year: 
2009: $97,835; 
2008: $120,691. 

Supplemental data: 

Cash paid during year for interest: 
2009: [Empty]; 
2008: $7,239. 

The accompanying notes are an integral part of these financial 
statements. 

Notes to Financial Statements: 

The Congressional Award Foundation: 
Notes to Financial Statements: 
For the Fiscal Years Ended September 30, 2009, and 2008: 

Note 1. Organization: 

The Congressional Award Foundation (the Foundation) was formed in 1979 
under Public Law 96-114 and is a private, nonprofit, tax-exempt 
organization under Section 501(c)(3) of the Internal Revenue Code 
established to promote initiative, achievement, and excellence among 
young people in the areas of public service, personal development, 
physical fitness, and expedition. New program participants totaled over
3,900 in fiscal year 2009. During fiscal year 2009, there were 
approximately 27,700 participants registered in the Foundation’s award 
program. Public Law 109-143, enacted in December 2005, reauthorized 
the Foundation through September 30, 2009 (see note 14). 

Note 2. 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 applicable to not-for-profit organizations. 

B. Contributions Receivable: 

Unconditional promises to give are recorded as revenue when the 
promises are made. Conditional promises to give are recorded as 
revenue when the conditions on which the promises have been made are 
substantially met. Contributions receivable to be collected within 
less than 1 year are measured at net realizable value. The Foundation 
expects to receive all of the contributions receivable within 1 year. 

C. Equipment, Furniture, and Fixtures and Related Depreciation: 

The Foundation capitalizes equipment, furniture, and fixtures with an 
individual asset acquisition cost of more than $2,500. Assets are 
stated at cost, and depreciation is computed using the straight-line 
method over estimated useful lives of 5 to 10 years. Expenditures for 
major additions and betterments are capitalized and expenditures for 
maintenance and repairs are charged to expense when incurred. Upon 
retirement or disposal of assets, the cost and accumulated 
depreciation are eliminated from the accounts and the resulting gain 
or loss is included in revenue or expense, as appropriate. Donated 
equipment is recorded at fair value. 

The capital lease liability represents the lesser of the net present 
value of future lease payments or the fair value of the asset 
acquired. Amortization of the capital lease is included in 
depreciation expense. 

D. Classification of Net Assets: 

The net assets of the Foundation are reported as follows: 

* Unrestricted net assets represent the portion of expendable funds 
that is available for the general support of the Foundation. 

* Temporarily restricted net assets represent amounts that are 
specifically restricted by donors or grantors for specific programs or 
future periods. 

The Foundation has no permanently restricted net assets. 

E. Revenue Recognition: 

Contribution revenue is recognized when received or promised and 
recorded as temporarily restricted if the funds are received with 
donor or grantor stipulations that limit the use of the donated assets 
to a particular purpose or for specific periods. When a stipulated 
time restriction ends or purpose of the restriction is met, 
temporarily restricted net assets are reclassified to unrestricted net 
assets and reported in the statement of activities as net assets 
released from restrictions. 

Deferred revenue, equal to the fair value of a ticket to a fund-
raising event, is recorded for amounts received during the current 
fiscal year to be used during the next fiscal year. Once the event 
takes place, these amounts are reported as costs of direct benefit to 
donors reported in the Statements of Activities. The contribution
portion paid, in excess of the fair value of the ticket to the fund-
raising event, is recorded as a refundable advance for funds received 
the fiscal year before the event takes place. After the event takes 
place, the refundable advances are recorded as contributions. 

F. Functional Allocation of Expenses: 

The costs of providing the various programs and other activities have 
been summarized on a functional basis as described in note 8. 
Accordingly, certain costs have been allocated among the programs and 
supporting services benefited. 

G. Estimates: 

The preparation of financial statements in conformity with U.S. 
generally accepted accounting principles requires management to make 
estimates and assumptions that affect certain reported amounts and 
disclosures. Accordingly, actual results could differ from those 
estimates. 

Note 3. Contributions Receivable: 

At September 30, 2009, and 2008, contributions receivable totaled 
$96,800 and $137,400, respectively, none of which were temporarily 
restricted by the donors. All amounts were due within 1 year. All but 
$29,500 of the $96,800 receivable at September 30, 2009, was received 
by April 28, 2010. 

Note 4. Equipment, Furniture, and Fixtures: 

Equipment, furniture, and fixtures as of September 30, 2009, and 2008, 
are shown in the schedule below. 

Computer software: 
September 30, 2009: $25,868; 
September 30, 2008: $25,868. 

Equipment - capital lease (note 5): 
September 30, 2009: $20,129; 
September 30, 2008: $20,129. 

Furniture and equipment: 
September 30, 2009: $76,576; 
September 30, 2008: $76,576. 

Contributed equipment: 
September 30, 2009: $15,100; 
September 30, 2008: $15,100. 

Accumulated depreciation: 
September 30, 2009: ($113,477); 
September 30, 2008: ($110,339). 

Accumulated amortization - capital lease: 
September 30, 2009: ($9,547); 
September 30, 2008: ($5,522). 

Equipment, furniture, and fixtures, net: 
September 30, 2009: $14,649; 
September 30, 2008: $21,812. 

Equipment under capital lease is pledged as collateral under the terms 
of the lease agreements. 

Note 5. Capital Lease Liability: 

During fiscal year 2007, the Foundation entered into a capital lease 
for new computer equipment for $20,129 (see note 4). 

The following is a schedule (by fiscal year) of future minimum lease 
payments under capital leases together with the present value of the 
net minimum lease payments for the 2-year period remaining, net of 
interest, as of September 30, 2009. 

Years ending September 30, 2010: $6,973; 
Years ending September 30, 2011: $3,886; 
Total minimum lease payments: $10,859; 
Less: amount representing interest: ($1,506); 
Present value of net minimum lease payments: $9,353. 

Note 6. Temporarily Restricted Net Assets: 

Temporarily restricted net assets as of September 30, 2009, and 2008, 
were available for the following programs and future periods: 

Puerto Rico Council development: 
September 30, 2009: $14,893; 
September 30, 2008: $15,024. 

Nevada Council development: 
September 30, 2009: $4,154; 
September 30, 2008: $4,942. 

Total net assets temporarily restricted for use: 
September 30, 2009: $19,047; 
September 30, 2008: $19,966. 

Net assets released from restrictions during the years ended September 
30, 2009, and 2008, were as follows: 

Puerto Rico Council development: 
2009: $131; 
2008: $1,214. 

Nevada Council development: 
2009: $788; 
2008: $1,578. 

Total temporarily restricted net assets released for use: 
2009: $919; 
2008: $2,792. 

Note 7. In-kind Contributions: 

During fiscal years 2009 and 2008, the Foundation received in-kind 
(noncash) contributions from donors. In-kind contributions are 
accounted for as contribution revenue and as current period operating 
expenses, in the period goods and services are provided. 

The values of the in-kind contributions recognized were $71,757 and 
$89,989 for fiscal years 2009 and 2008, respectively. There were no in-
kind contributions related to Web site design in fiscal year 2009. 
These noncash contributions are as follows. 

Professional services: Legal: 
2009: $35,548; 
2008: $30,000. 

Professional services: Tax preparation services: 
2009: $500; 
2008: 0. 

Professional services: Web site: 
2009: 0; 
2008: $10,000. 

Donations relating to fund-raising: 
2009: $29,731; 
2008: $33,260. 

Donations relating to program: 
2009: $5,978; 
2008: $16,729. 

Total in-kind contributions: 
2009: $71,757; 
2008: $89,989. 

During fiscal years 2009 and 2008, the Foundation employed the 
services of unpaid interns. However, amounts for the intern services 
are not included in these financial statements because the value of 
the services is not readily determinable. 

In addition, Section 106(e) of the Congressional Award Act, as 
amended, provides that "the Board may benefit from in-kind and 
indirect resources provided by the Offices of Members of Congress or 
the Congress." Resources so provided include use of office space, 
office furniture, and certain utilities. In addition, section 102 of 
the Congressional Award Act, as amended, provides that the United 
States Mint may charge the United States Mint Public Enterprise Fund 
for the cost of striking Congressional Award Medals. The costs of 
these resources cannot be readily determined and, thus, are not included
in the financial statements. 

Note 8. Expenses by Functional Classification: 

The Foundation has presented its operating expenses by natural 
classification in the accompanying Statements of Activities for the 
fiscal years ending September 30, 2009, and 2008. Presented below are 
the Foundation's expenses by functional classification for the fiscal 
years ended September 30, 2009, and 2008. 

Program activities: 
2009: $521,312; 
2008: $536,844. 

Fund-raising activities: 
2009: $142,369; 
2008: $152,879. 

Costs of direct benefit to donors: 
2009: $22,638; 
2008: $13,135. 

Administrative activities: 
2009: $151,769; 
2008: $119,721. 

Total: 
2009: $838,088; 
2008: $822,579. 

Note 9. Employee Retirement Plan: 

For the benefit of its employees, the Foundation participates in a 
voluntary 403(b) tax deferred annuity plan, which was activated on 
August 27, 1993. Under the plan, the Foundation may, but is not 
required to, make employer contributions to the plan. There were no 
contributions to the plan in fiscal years 2009 and 2008. 

Note 10. Congressional Award Fellowship Trust: 

The trust was established in 1990 to benefit the charitable and 
educational purposes of the Foundation. In October 2007, the Board of 
Directors of the Foundation requested that the trustees of the 
Congressional Award Trust approve distribution of the assets of the 
trust to the Foundation, approved termination of the trust, and 
directed that the assets of the trust (together with a certificate of 
deposit and other funds) be used for repayment of the Foundation's 
line of credit (see note 11). The trustees approved distribution of 
the assets of the trust, and in November 2007, the Foundation received
such assets and the trust was terminated. 

The trust investments at the beginning of fiscal year 2008 were 
$29,118. In fiscal year 2008, the investment gains of the trust were 
$149. During the fiscal year ended September 30, 2008, the trustees 
authorized the use of $29,267 of the trust fund to support fiscal year 
2008 operations. The trust balance at September 30, 2008 was $0. 

Note 11. Line of Credit: 

During fiscal year 2008, the Foundation had a $100,000 revolving line 
of credit with its bank that bore interest at the Wall Street Journal 
prime rate plus 2 percent. Interest paid on this line of credit during 
fiscal year 2008 was $4,145. The line of credit was partially secured 
by the Foundation’s investment in a certificate of deposit held by the 
same bank. In February 2008, the proceeds from the certificate of 
deposit of $59,610 were used to pay down the original $100,000 line of 
credit. In May 2008, the remaining balance on the $100,000 line of 
credit was paid in its entirety. 

In February 2008, the Foundation negotiated a new line of credit for 
$50,000 that bore interest at prime plus 2 percent and was secured by 
a lien on all business assets. This line of credit was canceled on 
September 29, 2009. 

Note 12. Tax Penalty and Interest: 

The Foundation incurred penalties and interest for filing its annual 
Internal Revenue Service Form 990 information return for fiscal year 
2005 after its due date. On March 18, 2008, the Foundation paid $3,317 
in penalties (plus interest). 

For fiscal year 2008, there were no outstanding taxes payable or other 
issues as they relate to the filing of Form 990 informational return. 
For fiscal year 2009, the Foundation requested and received an 
extension for filing its fiscal year 2009 Form 990 informational 
return. 

Note 13. Related Party Activities: 

The Foundation engaged in numerous transactions with related parties 
during fiscal years 2009 and 2008. 

During fiscal years 2009 and 2008, the Foundation had an agreement 
with a professional fund-raiser. The professional fund-raiser’s spouse 
is on the Board of Directors of the Foundation. Disbursements by the 
Foundation during fiscal years 2009 and 2008 to the related party 
totaled $18,000 and $18,000, respectively. 

During fiscal years 2009 and 2008, the Controller, through his 
professional tax business, prepared the Foundation’s annual Internal 
Revenue Service Form 990 informational returns. His firm was 
compensated $1,500 and $900 during fiscal years 2009 and 2008, 
respectively. 

During fiscal years 2009 and 2008, the National Director utilized her 
credit card to purchase items for the Foundation. All amounts paid by 
the National Director were reimbursed. 

The following in-kind contributions were made by related parties and 
are included in note 7: 

* During fiscal years 2009 and 2008, an ex officio director of the 
board provided pro bono legal services to the Foundation. The values 
for fiscal years 2009 and 2008 were $35,548 and $30,000, respectively. 

* During fiscal year 2009, the Controller, through his professional 
tax business, provided donated services of $500. 

* During fiscal year 2008, a board member, through his company, 
provided services relating to the annual poker tournament. The value 
for fiscal year 2008 was $3,700. The Foundation did not hold a poker 
tournament during fiscal year 2009. 

* During fiscal years 2009 and 2008, a board member did not request
reimbursement of expenses for participants to attend Mississippi and 
Washington, D.C., ceremonies. The values for fiscal years 2009 and 
2008 were $2,900 and $2,950, respectively. 

* During fiscal years 2009 and 2008, a board member, through his 
company, provided filming of the Gold Award Ceremony. The values for 
fiscal years 2009 and 2008 were $3,079 and $8,000, respectively. 

* During fiscal year 2008, a board member did not request 
reimbursement of expenses for transportation costs to assist with 
Foundation events in Washington, D.C., and Pennsylvania, the value of 
which was $1,049. 

Note 14. Subsequent Events: 

On March 17, 2010, a bill reauthorizing the Congressional Award 
Program through October 1, 2013 (S. 2865), passed the U.S. Senate 
without amendment by unanimous consent. The bill was referred to the 
House Committee on Education and Labor on March 18, 2010. 

The Foundation holds an annual poker tournament as a fund-raising 
event. Because of a scheduling conflict, the Fourth Annual 
Congressional Award Charity Poker Tournament scheduled for July 2009 
was rescheduled for October 14, 2009, which moved it 2 weeks into 
fiscal year 2010. At September 30, 2009, the Foundation had $54,000 in 
conditional promises from donors to attend the event. In addition, in 
fiscal year 2009, the Foundation received $27,500 in cash donations 
for the event. These amounts, along with cash donations received at 
the event, will be recorded as contribution revenues in fiscal year 
2010. The Foundation will also recognize all of the expenses related 
to this event in fiscal year 2010. 

[End of section] 

Appendix I: Comments from the Congressional Award Foundation: 

Congressional Award: 
Public Law 96.114. The Congressional Award Act: 
379 Ford House Office Building: 
Washington, DC 20515: 
(202) 226-0130: 
Fax: (202) 226-0131: 
Mailing Address: 
Post Office Box 77440: 
Washington, DC 20013: 

May 10, 2010: 

Mr. Gene Dodaro: 
Acting Comptroller General of the United States: 
U.S. Government Accountability Office: 
441 G Street, NW: 
Washington, DC 20548: 

Dear Mr. Dodaro: 

This letter is in response to your audit report of the Congressional 
Award Foundation's statements of financial position as of September 
30, 2009 and 2008. 

The Foundation will establish appropriate policies and procedures to 
ensure all revenue and expenses are recorded in the proper period, 
especially in the case of any future events which are delayed to the 
next fiscal year. 

As explained in Note 14 to the financial statements, because the poker 
event was delayed two-weeks into fiscal 2010, all amounts were 
reversed from 2009 and recorded in fiscal 2010. 

Sincerely, 

Signed by: 

Daniel Scherder: 
Treasurer: 

Signed by: 

Erica Wheelan Heyse: 
National Director: 

[End of section] 

Footnotes: 

[1] A material weakness is a deficiency, or combination of 
deficiencies, in internal control such that there is a reasonable 
possibility that a material misstatement of the entity's financial 
statements will not be prevented or detected and corrected on a timely 
basis. A deficiency in internal control 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 and correct misstatements on a timely basis. 

[2] GAO, Standards for Internal Control in the Federal Government, 
[hyperlink, http://www.gao.gov/products/GAO/AIMD-00-21.3.1] 
(Washington, D.C.: November 1999). 

[3] A significant deficiency is a deficiency, or a combination of 
deficiencies, in internal control that is less severe than a material 
weakness, yet important enough to merit attention by those charged 
with governance. 

[End of section] 

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