Opportunities to Improve the Congressional Award Foundation's Internal Controls

AIMD-97-126R: Published: Jul 30, 1997. Publicly Released: Jul 30, 1997.

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Pursuant to a legislative requirement, GAO provided information on matters identified during GAO's fiscal year 1996 audit concerning the Congressional Award Foundation's policies and procedures relating to: (1) cost assignments and allocations; (2) monitoring the restrictive status of contributions; (3) receivables management; (4) documentation for financial reporting adjustments; (5) bank reconciliation procedures; and (6) transaction documentation and approval, and to provide suggestions for improvement.

GAO noted that: (1) the Foundation had no documented policies and procedures for assigning certain costs to the program, fundraising, and administrative functions; (2) the Foundation had no documented policy for determining the costs to be charged to temporarily restricted funds; (3) some reimbursable costs of the Foundation, though charged appropriately to temporarily restricted funds, had not been separately recognized as expenses of the Foundation; (4) the lack of a documented cost policy, and of associated procedures to implement such a policy, increases the risk that costs may be misclassified on the Foundation's financial statements; (5) it also increases the risk that management may not have the cost information it needs for effective management and proper accounting; (6) the supporting documentation for several large contributions GAO tested did not clearly indicate the restrictive status of these contributions; (7) the Foundation did not sufficiently monitor contributions and accounts receivable to ensure that they were collectible; (8) the Foundation adjusted the valuation of accounts and contributions receivable; (9) although the Foundation has improved the information by which it manages receivables based on suggestions from GAO's fiscal year 1995 audit, additional steps could be taken; (10) financial reporting adjustments prepared subsequent to the closing of the general ledger for financial statement presentation (i.e., worksheet adjustments) were not clearly documented; (11) this obscured the audit trail between the financial statements and supporting records and made it more difficult to verify that the adjustments were authorized and appropriate; (12) the Foundation did not always investigate and resolve differences uncovered in bank reconciliations promptly; (13) while the Foundation's accounting policies and procedures direct that bank reconciliations be performed, they do not prescribe how to do them; (14) GAO found several expense transactions that did not show evidence of supervisory review or were not supported by appropriate documentation; (15) the Foundation's accounting policies and procedures do not require written approval of transactions, nor do they address the nature of supporting documentation to be retained; (16) staff may misinterpret or misunderstand related management policies and not retain sufficient documentation for meaningful supervisory review; and (17) this also increases the risk of inappropriate transactions being processed and reported.

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