Financial Audit:

First Audit of the Library of Congress Discloses Significant Problems

AFMD-91-13: Published: Aug 22, 1991. Publicly Released: Aug 22, 1991.

Additional Materials:

Contact:

Robert W. Gramling
(202) 512-9406
contact@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

GAO audited the financial operations of the Library of Congress for the fiscal year (FY) ended September 30, 1988, focusing on the Library's: (1) available financial information; (2) internal accounting controls; and (3) compliance with laws and regulations.

GAO found that: (1) the Library could not substantiate the number or value of items in its collection, support its accounts receivable or its advances from others, or effectively prevent duplicate or incorrect payments; (2) the Library did not follow generally accepted accounting principles; (3) the Library lacked centralized policies and procedures needed to control and integrate its financial management system; (4) the Library lacked policies and procedures requiring routine reconciliation of the general ledger control accounts with subsidiary records; (5) the Library could not identify and correct any errors in the accounts before they adversely affected the reliability or accuracy of its financial statements and other financial management information; (6) weaknesses in the Library's controls over its Federal Library and Information Network (FEDLINK) adversely affected its ability to achieve intended program objectives, comply with applicable laws and regulations, and ensure proper fund control; (7) the Library used expired funds and amounts in excess of authorized obligation limits to pay for FEDLINK services and obligated FEDLINK funds without proper authorization or documentation; (8) the Library did not satisfy competition requirements before awarding FEDLINK contracts, and could not demonstrate that its automated data processing contract awards under the program were properly authorized; (9) the Library made unauthorized use of revolving gift funds and improperly accepted nonappropriated fund reimbursements as gifts; and (10) since the review, the Library has taken a number of steps to improve the identified weaknesses.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: The Librarian of Congress has implemented a policy of periodic studies by consultants to determine the cost of providing services and establishing new cost recovery schedules. The studies are now done once every 2 years. Results of the third study were used to modify cost recovery rates for FYs 1995 and 1996. A new study in FY 1996 will be used to set rates for FYs 1997 and 1998. Over time, refinements to the new accounting system will allow it to better determine time spent on the various program activity codes. However, this is not a high priority since the biennial study gives a reasonable basis for cost recovery rates.

    Recommendation: To address the compliance issues discussed, the Librarian of Congress should ensure that prices charged customers under the FEDLINK program reflect the Library's actual costs.

    Agency Affected: Library of Congress

  2. Status: Closed - Implemented

    Comments: The Librarian of Congress terminated the practice of accepting nonappropriated funds as reimbursement for FEDLINK services. Action was reported complete by IG in audit report 92-201, dated August 21, 1992.

    Recommendation: To address the compliance issues, the Librarian of Congress should stop accepting nonappropriated funds as reimbursements for FEDLINK services.

    Agency Affected: Library of Congress

  3. Status: Closed - Implemented

    Comments: The Librarian of Congress submitted legislation for authority to operate revolving funds. In June 1991, Senator Claiborne Pell introduced S. 1416. On the basis of comments from interested parties and hearings held in July 1992, revised legislation was submitted in late 1992 (S. 2748) and in January 1993 (S. 345). The Senate Committee on Rules and Administration reported out an amended version of S. 345 on May 26, 1993, and recommended approval. H.R. 4945 was introduced in the House in 1994 and S. 2419 in the Senate, but it was too late in the session for action. In 1995 the Library again submitted legislation to its oversight committees. Congress has not taken action. Price Waterhouse found this reportable noncompliance situation continued to exist.

    Recommendation: To address the compliance issues discussed, the Librarian of Congress should seek statutory authority to use gifts for self-sustaining activities as revolving funds.

    Agency Affected: Library of Congress

  4. Status: Closed - Implemented

    Comments: The Librarian of Congress implemented procedures in fiscal year 1991 to provide assurance that appropriations transferred from other agencies are used in the appropriate year, which the Inspector General verified in a August 21, 1992 report (92-101).

    Recommendation: To address the compliance issues discussed, the Librarian of Congress should ensure that appropriations transferred to the Library from other federal agencies are expended only for services provided during the fiscal year for which the appropriations are available.

    Agency Affected: Library of Congress

  5. Status: Closed - Implemented

    Comments: The Librarian of Congress has developed a financial management improvement plan with milestones for corrective actions. This plan provides for limited reviews by program managers. The Library is working toward bibliographic, inventory, and physical control of its collection (adding cameras and limiting access to the collection), but this is a long-term project. Through a contract with Price Waterhouse, GAO audited the Library for FY 1995 and testified before the Joint Committee on the Library of Congress on May 7, 1996 (GAO/T-GGD/AIMD-96-115). Price Waterhouse found that the Library had corrected many of the weaknesses previously identified by GAO. Price Waterhouse was able to opine on the Library's statement of financial position. Price Waterhouse also identified 11 reportable conditions and made recommendations to correct these weaknesses.

    Recommendation: To help the Library bring about lasting improvements in its internal controls, the Librarian of Congress should develop an overall financial management improvement plan to: (1) carry out a physical inventory of the Library's national treasure; (2) assist in setting priorities and fixing accountability and responsibility; and (3) specify corrective actions and milestones that will lead to the production of an effective set of internal controls, an integrated financial management system established in accordance with Title 2, and an annual report that includes financial statements. The plan should provide for periodic reviews of the Library's financial operations by financial managers and for periodic independent financial audits to ensure the continued integrity and reliability of data produced by financial systems.

    Agency Affected: Library of Congress

  6. Status: Closed - Implemented

    Comments: The Librarian of Congress has adopted GAO internal control and financial management standards and selected accounting standards from title 2. Other standards are being developed. A comprehensive financial systems requirements document was prepared and a request for proposals for a new financial management system was put out in July 1993. A new financial management system (Federal Financial System from American Management Systems), which uses the Standard General Ledger and meets the Joint Financial Management Improvement Program's core financial system requirements, was purchased in November 1993. It was implemented satisfactorily, including front-end systems such as Desk Top Procurement, and used for all of fiscal year 1995. Prior-year information was also converted to the new financial management system. The Library is now working toward integrating the financial system with its program division systems.

    Recommendation: To help the Library bring about lasting improvements in its internal controls, the Librarian of Congress should establish accounting and internal control policies and procedures to ensure compliance with Title 2 requirements. Those policies and procedures should include provisions to address the specific weaknesses noted in this report, including provisions to: (1) account for and control assets and liabilities; (2) establish a complete, integrated financial management system; (3) ensure that required reconciliations are performed routinely; and (4) ensure that FEDLINK program obligations are properly authorized.

    Agency Affected: Library of Congress

  7. Status: Closed - Implemented

    Comments: Although he has not designated anyone with the title chief financial officer, the Librarian of Congress has identified the Director of Financial Services as the person responsible for overseeing the Library's day-to-day financial operations and providing policy advice. The Director now provides agencywide leadership on financial management matters and reports directly to the Librarian.

    Recommendation: To help the Library bring about lasting improvements in its internal controls, the Librarian of Congress should designate a chief financial officer to act as the focal point for its accounting and financial management functions. This official should be responsible for developing and implementing internal-control and accounting-system policies and procedures, and for directing, integrating, and reviewing the operation of financial management systems throughout the Library.

    Agency Affected: Library of Congress

  8. Status: Closed - Implemented

    Comments: The number of staff positions financed from Economy Act reimbursements has diminished dramatically. In FY 1992 and FY 1993, only 29 and 31 positions were budgeted whereas 66 positions were authorized. The Library does not yet have a cost accounting system to ensure reimbursements of only indirect costs are used to fund these positions.

    Recommendation: To address the compliance issues discussed, the Librarian of Congress should ensure that the number of staff positions financed from Economy Act reimbursements complies with the limitation imposed by law.

    Agency Affected: Library of Congress

 

Explore the full database of GAO's Open Recommendations »

Sep 20, 2016

Sep 6, 2016

Aug 19, 2016

Aug 12, 2016

Jul 29, 2016

Jul 28, 2016

Jul 13, 2016

Jul 11, 2016

Jun 13, 2016

Looking for more? Browse all our products here