This is the accessible text file for GAO report number GAO-06-485 
entitled 'Financial Audit: Independent and Special Counsel Expenditures 
for the Six Months Ended September 30, 2005' which was released on 
March 31, 2006. 

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

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

Report to Congressional Committees: 

March 2006: 

Financial Audit: 

Independent and Special Counsel Expenditures for the Six Months Ended 
September 30, 2005: 

[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-06-485]: 

Contents: 

Letter: 

Auditor's Report: 

Background: 

Opinions on Statements of Expenditures: 

Opinions on Internal Control: 

Compliance with Laws and Regulations: 

Objectives, Scope, and Methodology: 

Agency Comments: 

Appendixes: 

Appendix I: Statement of Expenditures for Independent Counsel Barrett: 

Appendix II: Statement of Expenditures for Special Counsel Fitzgerald: 

Abbreviations: 

AOUSC: Administrative Office of the U.S. Courts: 

GAO: Government Accountability Office: 

OIC: Office of Independent Counsel: 

OSC: Office of Special Counsel: 

Letter March 31, 2006: 

Congressional Committees: 

Enclosed is our report on our audits of the statements of expenditures 
for the two active counsels--one office of independent counsel and one 
office of special counsel--for the 6 months ended September 30, 2005. 
Our audits were designed to determine whether the statements of 
expenditures were fairly stated in all material respects. We were not 
required to express an opinion on the reasonableness or appropriateness 
of any related expenditures and we are not expressing any opinion 
thereon. We are sending copies of this report to the Attorney General, 
the Director of the Administrative Office of the U.S. Courts, the 
Independent Counsel and Special Counsel included in our audits, and 
other interested parties. Copies of this report will be made available 
to others upon request. This report is also available at no charge on 
GAO's Web site at [Hyperlink, http://www.gao.gov]. 

Please contact me at (202) 512-3406 or [Hyperlink, sebastians@gao.gov] 
if you or your staff have any questions concerning this report. 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 Paul Foderaro, Assistant Director; Kwabena Ansong; Joel 
Rodriguez; and Bethany Smith. 

Signed by: 

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

Auditor's Report: 

Congressional Committees: 

This report presents the results of our audits of expenditures[Footnote 
1] reported by one office of independent counsel and one office of 
special counsel for the 6 months ended September 30, 2005. The 
Department of Justice and the independent counsel are required under 28 
U.S.C.  594 (d)(2), (h) and  596 (c)(1) to report on a semiannual 
basis the expenditures from a permanent, indefinite appropriation 
established within the Department of Justice to fund independent 
counsel activities. Under 28 U.S.C.  596 (c)(2), we are required to 
audit the statements of expenditures prepared by the independent 
counsels. We also audited the statement of expenditures of Special 
Counsel Patrick J. Fitzgerald, who is authorized by the Department of 
Justice to fund his operation from the permanent, indefinite 
appropriation. 

In our audits covering the 6 months ended September 30, 2005, we found: 

* the statements of expenditures presented in appendixes I and II, for 
the office of the Independent Counsel David M. Barrett and for the 
office of Special Counsel Patrick J. Fitzgerald, respectively, are 
presented fairly, in all material respects, in conformity with the 
basis of accounting described in note 1 of each counsel's statement, 
which is principally the cash basis, a comprehensive basis of 
accounting other than U.S. generally accepted accounting principles; 

* each of the counsels had effective internal control over financial 
reporting (including safeguarding assets) and compliance with laws and 
regulations as of September 30, 2005; and: 

* no reportable noncompliance with laws and regulations we tested. 

Our audits were designed to determine whether the statements of 
expenditures were fairly stated in all material respects. We were not 
required to express an opinion on the reasonableness or appropriateness 
of any related expenditures and we are not expressing any opinion 
thereon. 

The following sections provide background information; outline each 
conclusion in more detail; and discuss the objectives, scope, and 
methodology of our audits. 

Background: 

The Ethics in Government Act of 1978 amended title 28 of the United 
States Code to authorize the judicial appointment of independent 
counsels when the Attorney General determines that reasonable grounds 
exist to warrant further investigation of high-ranking government 
officials for certain alleged crimes. The independent counsel law (28 
U.S.C.  591-599), which expired on June 30, 1999, was intended to 
preserve and promote the accountability and integrity of public 
officials and of the institutions of the federal government. Provisions 
of the law allowed the independent counsels serving at the expiration 
date to continue investigating pending matters until they determined 
that the investigations of such matters have been completed. 

The independent counsel law directs the Department of Justice to pay 
all costs relating to the establishment and operation of any office of 
independent counsel. A permanent, indefinite appropriation was 
established within the Department of Justice to pay all necessary 
expenses for investigations and prosecutions by independent counsels 
appointed pursuant to the independent counsel law or other law. Also, 
the Department of Justice determined that the appropriation established 
by Public Law 100-202[Footnote 2] to fund expenditures by independent 
counsels appointed pursuant to the independent counsel law or other law 
is available to fund the expenditures of U.S. Attorney Patrick J. 
Fitzgerald, who was appointed as a special counsel within the 
Department of Justice by the then Acting Attorney General.[Footnote 3] 

The independent counsel law also designates specific responsibilities 
to the Administrative Office of the U.S. Courts (AOUSC) for the 
administrative support of independent counsels. The Department of 
Justice periodically disburses lump-sum payments to AOUSC for this 
purpose. 

The statements of expenditures and related notes included in this 
report do not include expenditures related to the investigation by 
Independent Counsel Julie F. Thomas, which was officially closed 
effective March 23, 2004, and accordingly, no longer prepares a 
statement of expenditures. However, during the 6 months ended September 
30, 2005, the U.S. Court of Appeals for the D.C. Circuit awarded 
reimbursements of approximately $49,587 for attorney fees and expenses 
of individuals who had been investigated by the office of Independent 
Counsel Thomas but not indicted, as authorized by 28 U.S.C.  
593(f)(1). Of this award, $41,439 was paid out as of September 30, 
2005, $7,448 was paid out in November 2005, and $700 has not yet been 
submitted for payment. The reimbursement was made from the permanent 
indefinite appropriation for the payment of Judgments.[Footnote 4] 

Opinions on Statements of Expenditures: 

The statements of expenditures, including the accompanying notes, for 
the office of Independent Counsel David M. Barrett and the office of 
Special Counsel Patrick J. Fitzgerald present fairly, in all material 
respects, the expenditures of each of these counsels for the 6 months 
ended September 30, 2005, on the basis of accounting described in note 
1 of each office's statement. 

The counsels prepared their statements of expenditures principally on a 
cash basis of accounting, which is a comprehensive basis of accounting 
other than U.S. generally accepted accounting principles. The basis of 
accounting is described in note 1 of each counsel's statement. Each of 
the counsel's statements includes only expenditures made from the 
permanent, indefinite appropriation. 

Opinions on Internal Control: 

Each of the counsels maintained, in all material respects, effective 
internal control over financial reporting (including safeguarding 
assets) and compliance as of September 30, 2005, that provided 
reasonable assurance that misstatements, losses, or noncompliance 
material in relation to the statements of expenditures would be 
prevented or detected on a timely basis. Our opinion for each counsel 
is based on criteria we established in our Standards for Internal 
Control in the Federal Government.[Footnote 5] 

Compliance with Laws and Regulations: 

Our tests for compliance 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 independent counsels are responsible for preparing statements of 
expenditures in conformity with the basis of accounting described in 
the accompanying notes. Though not required to do so, the special 
counsel also elected to prepare a statement of expenditures. The 
counsels are also responsible for establishing and maintaining internal 
control to provide reasonable assurance that the following internal 
control objectives are met. 

* Financial reporting: Transactions are properly recorded, processed, 
and summarized to permit the preparation of the statements of 
expenditures in conformity with the basis of accounting described in 
the notes to the statements, and assets are safeguarded against loss 
from unauthorized acquisition, use, or disposition. 

* Compliance with laws and regulations: Transactions are executed in 
accordance with laws and regulations that could have a direct and 
material effect on the counsels' statements of expenditures. 

We are responsible for obtaining reasonable assurance about whether (1) 
each counsel's statement of expenditures is presented fairly, in all 
material respects, in conformity with the basis of accounting described 
in the notes accompanying their statements of expenditures; and (2) 
each counsel maintained effective internal control over financial 
reporting and compliance as of September 30, 2005. We are also 
responsible for testing compliance with selected provisions of laws and 
regulations that could have a direct and material effect on the 
statements of expenditures. 

In order to fulfill these responsibilities, for each counsel, we (1) 
examined, on a test basis, evidence supporting the amounts and 
disclosures in the statement of expenditures; (2) assessed the 
accounting principles used by management; (3) evaluated the overall 
presentation of the statement of expenditures; (4) obtained an 
understanding of internal control related to financial reporting 
(including safeguarding assets) and compliance with laws and 
regulations; (5) tested relevant internal control over financial 
reporting (including safeguarding assets) and compliance; and (6) 
tested compliance with selected provisions of 28 U.S.C.  591-599, 5 
U.S.C., the Prompt Pay Act, and selected provisions related to pay 
administration and travel regulations. 

Our audits were designed to determine whether the statements of 
expenditures were fairly stated in all material respects. We were not 
required to nor do we express an opinion on the reasonableness or 
appropriateness of any related expenditures. 

We did not evaluate controls relevant to operating objectives, such as 
controls relevant to ensuring efficient operations. We limited our 
internal control testing to controls over financial reporting and 
compliance. Because of inherent limitations in internal control, 
misstatements due to error, fraud, losses, or noncompliance may 
nevertheless occur and not be detected. We also caution that projecting 
our evaluation to future periods is subject to the risk that controls 
may become inadequate because of changes in conditions or that the 
degree of compliance with controls may deteriorate. 

We did not test compliance with all laws and regulations applicable to 
the offices of the independent and special counsel. We limited our 
tests of compliance to those laws and regulations that we deemed 
applicable to the statements of expenditures for the 6 months ended 
September 30, 2005. 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 audits in accordance with U.S. generally accepted 
government auditing standards. 

Agency Comments: 

We provided drafts of this report to the office of independent counsel 
Barrett, the office of special counsel Fitzgerald, the Department of 
Justice, and AOUSC for review and comment. These entities agreed with 
the facts and conclusions in our report. 

Signed by: 

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

March 16, 2006: 

List of Committees: 

The Honorable Thad Cochran: 
Chairman: 
The Honorable Robert C. Byrd: 
Ranking Minority Member: 
Committee on Appropriations: 
United States Senate: 

The Honorable Susan M. Collins: 
Chairman: 
The Honorable Joseph I. Lieberman: 
Ranking Minority Member: 
Committee on Homeland Security and Governmental Affairs: 
United States Senate: 

The Honorable Arlen Specter: 
Chairman: 
The Honorable Patrick J. Leahy: 
Ranking Minority Member: 
Committee on the Judiciary: 
United States Senate: 

The Honorable Jerry Lewis: 
Chairman: 
The Honorable David R. Obey: 
Ranking Minority Member: 
Committee on Appropriations: 
House of Representatives: 

The Honorable Tom Davis: 
Chairman: 
The Honorable Henry A. Waxman: 
Ranking Minority Member: 
Committee on Government Reform: 
House of Representatives: 

The Honorable F. James Sensenbrenner, Jr.: 
Chairman: 
The Honorable John Conyers, Jr.: 
Ranking Minority Member: 
Committee on the Judiciary: 
House of Representatives: 

[End of section] 

Appendixes: 

Appendix I: Statement of Expenditures for Independent Counsel Barrett: 

DAVID M. BARRETT: 

Office of Independent Counsel: 
Statement of Expenditures (Cash basis): 
Six Months Ended September 30, 2005: 

Personnel compensation and benefits: $426,028. 

Travel (note 2): $1,103. 

Rent, communications, and utilities (note 3): $278,612. 

Contractual services (note 4): $116,863. 

Supplies and materials (note 5): $5,263. 

Acquisition of equipment (note 6): $6,179. 

Administrative services (note 7): $32,223. 

Total expenditures: $866,271. 

[End of table] 

The accompanying notes are an integral part of this statement. 

DAVID M. BARRETT: 
Office of Independent Counsel: 
Notes to the Statement of Expenditures: 

Note 1 - Accounting policies: 

Reporting entity: The accompanying statement of expenditures presents 
the expenditures of the Office of Independent Counsel-David M. Barrett 
(OIC-Barrett) for the 6 months ended September 30, 2005. The statement 
of expenditures includes only expenditures made from the permanent, 
indefinite appropriation for the OIC that are processed during the 
period through the Administrative Office of the U.S. Courts (AOUSC) and 
the OIC. Mr. Barrett was appointed on May 24, 1995, to investigate 
certain allegations against a former Secretary of Housing and Urban 
Development. On March 17, 2003, the Special Division of the U.S. Court 
of Appeals for the D.C. Circuit (Special Division) ordered that the 
independent counsel continue his office to the extent necessary or 
appropriate to perform the non investigative and nonprosecutorial tasks 
remaining as required to conclude the functions of his office. On 
August 13, 2004, the OIC filed its Final Report under seal with the 
Special Division. This was followed by a statutory review and comment 
period for persons named in the Report which lasted from March to 
November 2005. The Final Report was released to the public on January 
19, 2006 pursuant to orders of the Special Division dated October 24, 
2005 and December 13, 2005. The OIC is continuing in operation solely 
to fulfill its remaining noninvestigative and prosecutorial duties 
pursuant to law and orders of the Special Division. 

Basis of accounting: The accompanying statement of expenditures was 
prepared principally on the cash basis of accounting, which is a 
comprehensive basis of accounting other than U.S. generally accepted 
accounting principles. Under this method, except for personnel 
compensation and benefits, expenditures are recorded when the funds are 
disbursed by AOUSC or, for noncash transfers, when charged by AOUSC. 
Generally, personnel compensation and benefits are recorded at the end 
of the pay period when earned. 

Note 2 - Travel: 

Travel primarily consisted of expenditures for local travel paid for 
OIC-Barrett personnel. 

Note 3 - Rent, communications, and utilities: 

Approximately $250,291 in office rent is included in rent, 
communications, and utilities. 

Note 4 - Contractual services: 

Contractual services primarily consist of expenditures for the services 
of contractors relating to sealed matters in front of the Special 
Division concerning the final report. 

Note 5 - Supplies and materials: 

Supplies and materials expenditures are for supplies for office use, 
including archiving records. 

Note 6 - Acquisition of equipment: 

The expenditures are for noncapitalized personal property, such as 
general office equipment and computer equipment. This equipment will 
remain the property of the federal government at the conclusion of the 
investigation. 

Note 7 - Administrative services: 

AOUSC receives an administrative fee equal to 3 percent of OIC 
expenditures for performing disbursement and accounting functions for 
OIC-Barrett. Payment of these fees generally occurs in the month 
following the services. Also included in administrative services are 
other costs, amounting to $6,378 incurred by the Special Division in 
providing administrative guidance and support with respect to 
independent counsel offices. These costs were certified by AOUSC, paid 
from the independent counsel appropriation, and allocated solely to OIC 
Barrett. 

[End of section] 

Appendix II: Statement of Expenditures for Special Counsel Fitzgerald: 

PATRICK J. FITZGERALD: 
Office of Special Counsel: 
Statement of Expenditures (Cash basis): 
Six Months Ended September 30, 2005. 

Personnel compensation and benefits (note 2): $169,383. 

Travel (note 3): $5,088. 

Contractual services: $3,573. 

Supplies and materials: $33. 

Total expenditures: $178.077. 

[End of table] 

The accompanying notes are an integral part of this statement. 

PATRICK J. FITZGERALD: 

Office of Special Counsel Notes to the Statement of Expenditures: 

Note 1 - Accounting policies: 

Reporting entity: The accompanying statement of expenditures presents 
the expenditures of the Office of Special Counsel-Patrick J. Fitzgerald 
(OSC-Fitzgerald) for the 6 months ended September 30, 2005. The 
statement of expenditures includes only expenditures made from the 
permanent, indefinite appropriation for OSC-Fitzgerald that are 
processed during the period through the Department of Justice. On 
December 30, 2003, the then Acting Attorney General appointed U.S. 
Attorney Patrick J. Fitzgerald as a Special Counsel to investigate 
whether officials of the current administration illegally disclosed the 
identity of an undercover Central Intelligence Agency officer. 

Basis of accounting: The accompanying statement of expenditures was 
prepared principally on the cash basis of accounting, which is a 
comprehensive basis of accounting other than U.S. generally accepted 
accounting principles. Under this method, except for personnel 
compensation and benefits, expenditures are recorded when the funds are 
disbursed by the Department of Justice. Generally, personnel 
compensation and benefits are recorded at the end of the pay period 
when earned. 

Note 2 - Personnel Costs: 

This reporting period included approximately $35,195 for salaries and 
benefits associated with employees in the Criminal Division of the 
Department of Justice incurred during the period ended March 31, 2005. 

Note 3 - Travel: 

Travel primarily consists of expenditures for investigation-related 
travel for OSC-Fitzgerald personnel. 

[End of section] 

(196079): 

FOOTNOTES 

[1] The term expenditures as used in this report generally means cash 
disbursed. 

[2] The permanent, indefinite appropriation was established by Pub. L. 
No. 100-202,  101(a), title II, 101 Stat. 1329, 1329-9 (Dec. 22, 
1987), 28 U.S.C.  591 note. 

[3] We reviewed the legal authority for the Department of Justice to 
use the permanent, indefinite appropriation to fund the expenditures 
relating to Special Counsel Fitzgerald's investigation and, in our 
opinion to the Chairmen of the House and Senate Appropriations 
Committees, concluded that such was not an illegal, improper, or 
unauthorized use of the appropriation. B-302582 (Sept. 30, 2004). 

[4] See, 31 U.S.C. 1304. 

[5] GAO, Standards for Internal Control in the Federal Government, 
GAO/AIMD-00-21.3.1 (Washington, D.C.: November 1999). 
http://www.gao.gov/special.pubs/ai00021p.pdf. 

GAO's Mission: 

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

Obtaining Copies of GAO Reports and Testimony: 

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

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

Order by Mail or Phone: 

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

U.S. Government Accountability Office 

441 G Street NW, Room LM 

Washington, D.C. 20548: 

To order by Phone: 

Voice: (202) 512-6000: 

TDD: (202) 512-2537: 

Fax: (202) 512-6061: 

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

Contact: 

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

E-mail: fraudnet@gao.gov 

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

Public Affairs: 

Jeff Nelligan, managing director, 

NelliganJ@gao.gov 

(202) 512-4800 

U.S. Government Accountability Office, 

441 G Street NW, Room 7149 

Washington, D.C. 20548: