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entitled 'Financial Audit: Congressional Award Foundation's Fiscal 
Years 2011 and 2010 Financial Statements' which was released on May 
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United States Government Accountability Office: 
GAO: 

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

May 2012: 

Financial Audit: 

Congressional Award Foundation's Fiscal Years 2011 and 2010 Financial 
Statements: 

GAO-12-682: 

Contents: 

Letter: 

Auditor's Report: 

Opinion on Financial Statements: 

Consideration of Internal Control: 

Compliance with Laws and Regulations: 

Significant Matter: 

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 I: Comments from the Congressional Award Foundation: 

[End of section] 

United States Government Accountability Office: 
Washington, DC 20548: 

May 15, 2012: 

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

Dear Mr. Baker: 

This report presents the results of our audits of the financial 
statements of the Congressional Award Foundation (the Foundation) as 
of and for the fiscal years ending September 30, 2011, and 2010. These 
financial statements are the responsibility of the Foundation. This 
report contains our (1) unqualified opinions on the Foundation's 
financial statements, (2) results of our consideration of the 
Foundation's internal control over financial reporting, and (3) 
conclusion that our tests of the Foundation's compliance with selected 
provisions of laws and regulations disclosed no instances of 
reportable noncompliance during fiscal year 2011. The report also 
discusses a significant matter related to the Foundation's fiscal year 
2010 annual federal information return filing. 

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 sebastians@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 Peggy Smith, Assistant Director; Bethany Smith; Michael 
Bird; and Matthew Gardner. 

Sincerely yours, 

Signed by: 

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

[End of section] 

United States Government Accountability Office: 
Washington, DC 20548: 

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

In accordance with section 107 of the Congressional Award Act, as 
amended (2 U.S.C. § 807), we are responsible for conducting audits of 
the Congressional Award Foundation's (the Foundation) financial 
statements. In our audits of the Foundation's financial statements for 
fiscal years 2011 and 2010, we found: 

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

* no material weaknesses[Footnote 1] in internal control over 
financial reporting; and: 

* no reportable noncompliance with laws and regulations we tested. 

The following sections discuss in more detail (1) these conclusions; 
(2) a significant matter related to the Foundation's fiscal year 2010 
annual federal information return filing; (3) our audit objectives, 
scope, and methodology; and (4) the Foundation's comments. 

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, 2011, and 2010, and the results of 
its activities and its cash flows for the years then ended. 

Consideration of Internal Control: 

In planning and performing our audit of the Foundation's fiscal year 
2011 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, for the controls we tested, we found no 
material weaknesses in internal control over financial reporting. 

In our previous year's audit of the Foundation's fiscal year 2010 
financial statements,[Footnote 2] we reported a significant 
deficiency[Footnote 3] in the Foundation's internal control over 
financial reporting. Specifically, during fiscal year 2010, we found 
that the Foundation did not have comprehensive accounting policies and 
procedures. In addition, the Foundation's staff lacked sufficient 
knowledge of not-for-profit accounting requirements. This increased 
the Foundation's risk of preparing financial statements that were not 
fully accurate, complete, and in accordance with generally accepted 
accounting principles. 

During fiscal year 2011, the Foundation made substantial progress in 
correcting the underlying control issues that comprised the 
significant deficiency. Specifically, the Foundation completed a 
review of its accounting policies and procedures and made significant 
revisions, and added a requirement for staff responsible for any 
accounting or financial functions to obtain recurring training in not-
for-profit accounting. We found that the actions taken by the 
Foundation have reduced the risk of preparing financial statements and 
accompanying notes that are not fully accurate, complete, and in 
accordance with U.S. generally accepted accounting principles, and 
concluded that the Foundation had effectively addressed the internal 
control issues that comprised the significant deficiency we reported 
in our fiscal year 2010 audit. 

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

We identified other deficiencies in the Foundation's internal control 
that we do not consider to be material weaknesses or significant 
deficiencies, but which nonetheless merit Foundation management's 
attention and correction. We have communicated these matters to 
Foundation management. 

Compliance with Laws and Regulations: 

Our tests of the Foundation's compliance with selected provisions of 
laws and regulations for fiscal year 2011 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. 

Significant Matter: 

During our audit of the Foundation's fiscal years 2011 and 2010 
financial statements, we identified a significant matter that we 
believe is relevant to users and readers of the Foundation's financial 
statements and therefore warrants Foundation management's attention. 
This matter concerns an inconsistency between functional expenses 
reported in the Foundation's annual information return filed with the 
Internal Revenue Service (IRS) and the audited financial statements 
for fiscal year 2010. 

Specifically, the Foundation reported a statement of functional 
expenses in its annual Form 990, Return of Organization Exempt from 
Income Tax[Footnote 4], filed with the IRS for fiscal year 2010 that 
differed from functional expenses reported in its audited financial 
statements for the same year and did not reconcile the differences on 
the Form 990 Schedule D, Part XIII, Reconciliation of Expenses per 
Audited Financial Statements with Expenses per Return.[Footnote 5] The 
Form 990 statement of functional expenses reported program expenses of 
$390,563, administrative expenses of $145,570, fundraising expenses of 
$75,362, and total functional expenses of $611,494. In contrast, the 
audited financial statements for the same period reported program 
expenses of $417,500, administrative expenses of $140,321, fundraising 
expenses of $223,624, and total functional expenses of $781,445. 

The inconsistency in the presentation of functional expenses could 
confuse readers of the audited financial statements and Form 990 as to 
the Foundation's program expenses, administrative expenses, 
fundraising expenses, and total functional expenses. Foundation 
management confirmed that the Form 990 contained errors and that the 
Foundation intends to file an amended Form 990 for fiscal year 2010 to 
reflect information on its functional expenses consistent with that 
reported in its fiscal year 2010 financial statements. 

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 over financial reporting to provide reasonable 
assurance that the control objectives established in GAO's Standards 
for Internal Control in the Federal Government[Footnote 6] are met, 
and complying with applicable laws and regulations. 

We are responsible for planning and performing the 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 U.S. generally accepted 
accounting principles. 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 over financial reporting 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. 

An entity's 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 
U.S. generally accepted accounting principles, 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 all 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 also caution that projecting any 
evaluation of effectiveness 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 consideration of internal control may 
not be sufficient for other purposes. 

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, 2011. 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 
has made significant efforts over the past year to improve operations 
and ensure that proper internal controls over financial reporting are 
in place. The Foundation also stated that it agreed that the IRS Form 
990 for fiscal year 2010 should be amended to include a completed 
schedule to reconcile functional expenses reported on the IRS Form 990 
with those reported on the audited financial statements for that 
period. 

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

Signed by: 

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

May 9, 2012: 

[End of section] 

Financial Statements: 

Statements of Financial Position: 

The Congressional Award Foundation: 
Statements of Financial Position: 
As of September 30, 2011, and 2010: 

Assets: 

Cash: 
2011: $201,733; 
2010: $126,507. 

Certificate of Deposit (notes 4 & 13): 
2011: $20,135; 
2010: 0. 

Contributions receivable (note 3): 
2011: $95,075; 
2010: $94,025. 

Accounts receivable: 
2011: $10,732; 
2010: $9,840. 

Prepaid expense: 
2011: $4,864; 
2010: $32,289. 

Donated auction items: 
2011: 0; 
2010: $8,743. 

Equipment, furniture, and fixtures, net (note 5): 
2011: $3,058; 
2010: $8,493. 

Total assets: 
2011: $335,597; 
2010: $279,897. 

Liabilities and net assets: 

Accounts payable: 
2011: $6,670; 
2010: $3,936. 

Accrued payroll, related taxes, and leave: 
2011: $20,520; 
2010: $18,610. 

Refundable advance: 
2011: 0; 
2010: $26,142. 

Deferred revenue: 
2011: 0; 
2010: $10,601. 

Capital lease liability (note 6): 
2011: 0; 
2010: $3,113. 

Total liabilities: 
2011: $27.280; 
2010: $62,402. 

Net assets: 

Unrestricted: 
2011: $291,769; 
2010: $199,945. 

Temporarily restricted (note 7): 
2011: $16,548; 
2010: $17,550. 

Total net assets: 
2011: $308,317; 
2010: $217,495. 

Total liabilities and net assets: 
2011: $336,597; 
2010: $279,897. 

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, 2011, and 2010: 

Changes in unrestricted net assets: 

Operating revenue and other support: 

Contributions: 
2011: $289,711; 
2010: $313,933. 

Contributions - In-kind (note 8): 
2011: $58,277; 
2010: $80,962. 

Program and other revenues: 
2011: $542,440; 
2010: $437,626. 

Interest income: 
2011: $135; 
2010: 0. 

Net assets released from restrictions (note 7): 
2011: $1,002; 
2010: $1,496. 

Total operating revenue and other support: 
2011: $891,565; 
2010: $834,017. 

Operating expenses (note 9): 

Salaries, benefits, and payroll taxes: 
2011: $345,795; 
2010: $363,947. 

Program, promotion, and travel: 
2011: $18,308; 
2010: $36,075. 

Fund-raising expense: 
2011: $50,927; 
2010: $137,547. 

Costs of direct benefit to donors: 
2011: $162,749; 
2010: $28,862. 

Gold Award ceremony: 
2011: $64,743; 
2010: $78,052. 

Professional fees: 
2011: $68,500; 
2010: $66,953. 

Depreciation and amortization: 
2011: $5,435; 
2010: $6,155. 

Board of Directors expense: 
2011: $1,580; 
2010: $1,338. 

Administrative and other expense: 
2011: $70,704; 
2010: $62,516. 

Total operating expenses: 
2011: $799,741; 
2010: $781,445. 

Changes in unrestricted net assets: 
2011: $91,824; 
2010: $52,572. 

Changes in temporarily restricted net assets: 

Net assets released from restrictions (note 7): 
2011: ($1,002); 
2010: ($1,496). 

Decrease in temporarily restricted net assets: 
2011: ($1,002); 
2010: ($1,496). 

Increase/(decrease) in net assets: 
2011: $90,822; 
2010: $51,076. 

Net assets at beginning of year: 
2011: $217,495; 
2010: $166,419. 

Net assets at end of year: 
2011: $308,317; 
2010: $217,495. 

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, 2011, and 2010: 

Cash flows from operating activities: 

Increase (decrease) in net assets: 
2011: $90,822; 
2010: $51,076. 

Adjustments to reconcile change in net assets to net cash
from operating activities: Depreciation and amortization: 
2011: $5,435; 
2010: $6,155. 

Adjustments to reconcile change in net assets to net cash
from operating activities: Write-off of Uncollectible Pledges: 
2011: 0; 
2010: $1,500. 

Adjustments to reconcile change in net assets to net cash
from operating activities: Bad Debt Expense: 
2011: 0; 
2010: $200. 

Accrued interest income: 
2011: ($135); 
2010: 0. 

Change in operating assets: 

Contributions receivable: 
2011: ($1,050); 
2010: $1,275. 

Accounts receivable: 
2011: ($892); 
2010: ($509). 

Prepaid expenses: 
2011: $27,425; 
2010: ($19,108). 

Donated auction items: 
2011: $8,743; 
2010: ($6,903). 

Change in operating liabilities: 

Accounts payable: 
2011: $2,824; 
2010: ($9,306). 

Accrued payroll, related taxes, and leave: 
2011: $1,910; 
2010: $3,128. 

Refundable advance: 
2011: ($26,142); 
2010: ($222). 

Deferred revenue: 
2011: ($10,601); 
2010: $7,625. 

Net cash provided/(used) in operating activities: 
2011: $98,339; 
2010: $34,911. 

Cash flows from investing activities: 

Purchase of certificates of deposit: 
2011: ($20,000); 
2010: 0. 

Net cash used in investing activities: 
2011: ($20,000); 
2010: 0. 

Cash flows from financing activities: 

Principal payments under capital lease obligation (note 6): 
2011: ($3,113); 
2010: ($6,239). 

Net cash used in financing activities: 
2011: ($3,113); 
2010: ($6,239). 

Net increase in cash: 
2011: $75,226; 
2010: $28,672. 

Cash, beginning of year: 
2011: $126,507; 
2010: $97,835. 

Cash, end of year: 
2011: $201,733; 
2010: $126,507. 

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, 2011, and 2010: 

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
4,000 in fiscal year 2011. During fiscal year 2011, there were 
approximately 29,600 participants registered in the Foundation's Award 
program. Public Law 111-200, enacted on July 7, 2010, reauthorized the 
Congressional Award Foundation through September 30, 2013. 

Note 2. Summary of Significant Accounting Policies: 

A. Basis of Accounting: 

The financial statements are prepared on the accrual basis of 
accounting principles generally accepted in the United States 
applicable to not-for-profit organizations. 

B. Certificate of Deposit: 

Certificates of deposit purchased with original maturities greater 
than three months are stated at face value plus accrued interest. 

C. 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 one year are measured at net realizable value. The 
Foundation expects to receive all of the contributions receivable 
within one year. 

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

Through December 2010, the Foundation capitalized equipment, 
furniture, and fixtures with an individual asset acquisition cost of 
more than $2,500. Assets were stated at historical cost, and 
depreciation was computed using the straight-line method over 
estimated useful lives of 5 to 10 years. In January 2011, the
Foundation modified its policies to capitalize equipment, furniture, 
and fixtures with an individual asset acquisition cost of more than 
$500, over estimated useful lives of 2 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. 

For fiscal year 2010, 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. 

E. Classification of Net Assets: 

The net assets of the Foundation are reported as follows: 

* Unrestricted net assets represent the portion of expendable funds 
that are 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 as of 
September 30, 2011 and 2010. 

F. 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. The contribution 
portion paid, in excess of the fair value of the ticket for 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 deferred revenue and refundable advances are recorded as 
contributions. 

G. 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 9 of these 
financial statements. Accordingly, certain costs have been allocated 
among the programs and supporting services benefited. 

H. 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. 

I. In-kind Contributions: 

Contributed goods are recognized at fair value when received if the 
Foundation would have normally purchased them in the normal course of 
business. Contributed services are recognized at fair market value if 
the services received (a) create or enhance long-lived assets or (b) 
require specialized skills, are provided by individuals processing 
those skills, and would typically need to be purchased if not provided 
by donation. Contributions of tangible assets are recognized at fair 
market value when received. The amounts reflected in the accompanying 
financial statements as contributions in-kind are offset by like 
amounts included in expenses or additions to property and equipment. 

J. Direct Benefit to Donor: 

Direct benefit to donor includes all costs associated with an event in 
which the donor received a direct benefit in exchange for 
participating in the event in which they have made a contribution. 
These costs include meal, beverages, entertainment, and costs of the 
venue, services such as green fees and entrance fees, and various 
other items. 

In fiscal year 2011, the foundation made changes to its direct benefit 
to donor policy to reflect the overall benefits provided to donors for 
all of the events for the year, versus by the number of individuals 
attending each event. 

Note 3. Contributions Receivable: 

At September 30, 2011 and 2010, promises to give totaled $95,075 and 
$94,025, respectively; no promises to give were temporarily restricted 
by the donors. All amounts were due within one year. Allowance for 
uncollectible pledges is based on historical information regarding 
prior collectability of pledges and specific identification. 
Management has determined that no allowance was necessary for the 
years ending September 30, 2011 and 2010. 

Note 4. Fair Value Measurements: 

FASB ASC Topic 820, Fair Value Measurement, provides a framework for 
measuring fair value. That framework provides a fair value hierarchy 
that prioritizes the inputs to valuation techniques used to measure 
fair value. The three levels of the fair value hierarchy under FASB 
ASC Topic 820 are described below: 

Level 1—-Inputs to the valuation methodology are unadjusted quoted 
prices for identical assets or liabilities in active markets that the 
Foundation has the ability to access. 

Level 2-—Inputs to the valuation methodology include: 

* Quoted prices for similar assets or liabilities in active markets; 

* Quoted prices for identical or similar assets or liabilities in 
inactive markets; 

* Inputs other than quoted prices that are observable for the asset or 
liability; 

* Inputs that are derived principally from or corroborated by 
observable market data by correlation or other means. 

If the asset or liability has a specified (contractual) term, the 
Level 2 input must be observable for substantially the full term of 
the asset or liability. 

Level 3-—Inputs to the valuation methodology are unobservable and 
significant to the fair value measurement. 

The level of an asset's or liability's fair value measurement within 
the fair value hierarchy is based on the lowest level of any input 
that is significant to the fair value measurement. 

The certificate of deposit is valued at face value plus accrued 
interest, which approximates fair value. 

The following table sets forth, by level, within the fair value 
hierarchy, amounts recorded in the Foundation's financial statements 
at fair value as of September 30, 2011: 

Fair Value: Certificate of Deposit; 
Total: $20,135
Level 1: $20,135
Level 2: [Empty]; 
Level 3: [Empty]. 

Fair Value: Total; 
Total: $20,135
Level 1: $20,135
Level 2: [Empty]; 
Level 3: [Empty]. 

[End of table] 

Note 5. Equipment, Furniture, and Fixtures, Net: 

Equipment, furniture, and fixtures as of September 30, 2011, and 2010, 
are shown in the schedule below: 

Computer software: 
2011: $25,868; 
2010: $25,868. 

Furniture and equipment: 
2011: $76,576; 
2010: $76,576. 

Contributed equipment: 
2011: $15,100; 
2010: $15,100. 

Accumulated depreciation and amortization: 
2011: ($115,599); 
2010: ($115,356). 

Equipment - capital lease: 
2011: $20,129; 
2010: $20,129. 

Accumulated amortization - capital lease: 
2011: ($18,016); 
2010: ($13,824). 

Net capital lease: 
2011: $2,113; 
2010: $6,305. 

Total equipment, furniture, and fixtures, net: 
2011: $3,058; 
2010: $8,493. 

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

Note 6. Capital Lease Liability: 

For fiscal year 2010, the Foundation had an existing capital lease for 
computer equipment in the amount of $20,129, with the present value of 
the net minimum lease payments equaling $3,113. In May 2011, the 
capital lease matured and was paid in full. 

Note 7. Temporarily Restricted Net Assets: 

Temporarily restricted net assets as of September 30, 2011, and 2010 
were available for the following programs and future periods: 

Puerto Rico Council development: 
2011: $14,893; 
2010: $14,893. 

Nevada Council development: 
2011: $1,655; 
2010: $2,657. 

Total net assets temporarily restricted for use:  
2011: $16,548; 
2010: $17,550. 

Net assets released from restrictions during the years ended September 
30, 2011, and 2010 were as follows: 

Puerto Rico Council development: 
2011: $0; 
2010: $0. 

Nevada Council development: 
2011: $1,002; 
2010: $1,496. 

Total net assets temporarily restricted for use:  
2011: $1,002; 
2010: $1,496. 

Note 8. In-kind Contributions: 

During fiscal years 2011 and 2010, the Foundation received in-kind 
(non-cash) contributions from donors. The Foundation received the 
following contributions in-kind, estimated at fair market value, on 
the dates of donations, during the years ended September 30, 2011 and 
2010. 

The values of the in-kind contributions recognized were $58,277 and 
$80,962 for fiscal years 2011 and 2010, respectively. These non-cash 
contributions are as follows: 

Professional services: Legal: 
2011: $40,000; 
2010: $40,000. 

Professional services: Accounting--Tax preparation: 
2011: $1,500; 
2010: $1,500. 

Donations relating to fund-raising: 
2011: $16,500; 
2010: $28,838. 

Donations relating to program: 
2011: $277; 
2010: $10,624. 

Total in-kind contributions: 
2011: $58,277; 
2010: $80,962. 

During fiscal years 2011 and 2010, 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 9. 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, 2011, and 2010. Presented below are 
the Foundation's expenses by functional classification for the fiscal 
years ended September 30, 2011, and 2010: 

Program activities: 
2011: $379,875; 
2010: $417,500. 

Fund-raising activities: 
2011: $110,028; 
2010: $194,762. 

Costs of direct benefit to donors: 
2011: $162,749; 
2010: $28,862. 

Administrative activities: 
2011: $147,089; 
2010: $140,321. 

Total: 
2011: $799,741; 
2010: $781,445. 

Note 10. 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 2011 and 2010. 

Note 11. Related Party Activities: 

The Foundation engaged in numerous transactions with related parties 
during fiscal years 2011 and 2010. 

During fiscal years 2011 and 2010, the National Director utilized her 
credit card to purchase items for the Foundation. All amounts paid by 
the National Director were reimbursed in fiscal years 2011 and 2010. 

The following in-kind contributions were made by related parties and 
are included in note 10: 

* During fiscal years 2011 and 2010, an ex officio director of the 
board provided pro bono legal services to the Foundation. The value 
for fiscal years 2011 and 2010 was $40,000 per year. 

* During fiscal years 2011 and 2010, the controller, through his 
professional tax business, provided tax preparation services to the 
Foundation. The value for fiscal years 2011 and 2010 was $1,500 per 
year. 

* During fiscal year 2010, a board member, through his company, provided
services relating to the annual poker tournament. The value for fiscal 
year 2010 was $4,100. 

* During fiscal year 2010, a board member did not request 
reimbursement of expenses for participants to attend Mississippi and 
Washington, D.C., ceremonies. The value for fiscal year 2010 was 
$3,400. 

* During fiscal year 2010, a board member, through his company, provided
filming of the Gold Award Ceremony. The value for fiscal year 2010 was
$3,000. 

* During fiscal year 2010, a board member, through his company, provided
services relating to the Gold Award program. The value for fiscal year 
2010 was $1,400. 

* During fiscal year 2010, a board member, through his company, provided
services relating to the annual poker tournament. The value for fiscal 
year 2010 was $550. 

* During fiscal year 2010, a board member, through his company, provided
services relating to the annual poker tournament. The value for fiscal 
year 2010 was $500. 

Note 12. Income Taxes: 

The Foundation is a not-for-profit organization exempt from taxes 
under the provisions of Section 501(c)(3) of the Internal Revenue 
Code; therefore, no provision for income taxes has been made in these 
financial statements. The Foundation has also been classified as an 
entity that is not a private foundation with the meaning of Section 
509(a) and qualifies for deductible contributions as provided in 
Section 170(b)(1)(A)(vi). 

The Foundation has adopted the provisions of FASB ASC 740-10, 
Accounting for Uncertainty in Income Taxes. Under the provisions, an 
organization must recognize the tax benefit associated with tax 
positions taken for tax return purposes when it is more-likely-than-
not that the position will be sustained. The implementation of the 
provisions has had no impact on the Foundation's financial statements. 
The Foundation does not believe there are any material uncertain tax 
positions and, accordingly, it will not recognize any liability for 
unrecognized tax benefits. The Foundation has filed Internal Revenue 
Service's Form 990 as required and all other applicable returns where 
it is required. The Foundation believes that it is no longer subject 
to tax examinations by tax authorities for fiscal years before 2008. 
For the year ended September 30, 2011, there were no interest or 
penalties recorded or included in the statements of activities. 

Note 13. Commitments and Contingencies: 

In January 2011, the Foundation acquired a corporate credit card for 
the Foundation's business use. The credit agreement requires 
collateral in the form of a certificate of deposit in the amount of 
$20,000, the same face value as the amount of credit limit authorized 
on the card. 

Note 14. Subsequent Events: 

In connection with the preparation of the financial statements, the 
Foundation has evaluated subsequent events after the date of the 
statement of financial position of September 30, 2011, through May 9, 
2012, the date on which the Foundation's financial statements were 
available to be issued. 

[End of section] 

Appendix I: Comments from the Congressional Award Foundation: 

Congressional Award: 
174 Ford Office Building: 
Washington, DC 20515: 

May 9, 2012: 

Mr. Steven Sebastian: 
Director, Financial Management and Assurance: 
U.S. Government Accountability Office: 
441 G Street, N.W. 
Washington, DC 20545: 

Mr. Sebastian, 

This letter is in response to your audit report of the Congressional 
Award Foundation's statements of financial position as of September 
30, 2011 and 2010. 

We are extremely pleased that the GAO found the fiscal year 2011 
financial statements were presented fairly and in conformity with U.S. 
generally accepted accounting principles, and found no material 
weaknesses or reportable instances of noncompliance with laws and 
regulations. The Foundation has made significant efforts over the past 
year to improve operations and ensure that proper internal controls 
over financial reporting are in place. Your audit findings report the 
positive results of those efforts. 

We agree your assessment that the IRS Form 990 for fiscal year 2010 
should be amended to include a completed schedule to reconcile the 
reported Form 990 functional expenses to the audited financial 
statements for that time period. As the IRS requirements relating to 
the breakdown of functional classifications differ lions those 
guidelines required during the audit, a schedule will clarify for the 
reader how those differences are recorded. 

We appreciate the feedback and assistance or the GAO in strengthening 
the Foundation and its operations. 

Sincerely, 

Signed by: 

Erica W. Heyse: 
National Director: 

Signed by: 

Ed Blansitt: 
Audit Chairman: 

[End of section] 

Footnotes: 

[1] A material weakness is a deficiency, or a 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, Financial Audit: Congressional Award Foundation's Fiscal 
Years 2010 and 2009 Financial Statements, [hyperlink, 
http://www.gao.gov/products/GAO-11-597] (Washington, D.C.: May 12, 
2011). 

[3] A significant deficiency is a deficiency, or 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. 

[4] IRS Form 990 is used by tax-exempt organizations to provide the 
IRS with the information required by section 6033 of the Internal 
Revenue Code (IRC). An organization's completed Form 990 generally is 
available for public inspection as required by section 6104 of the 
IRC. Some members of the public rely on the Form 990 as the primary or 
sole source of information about a particular organization. How the 
public perceives an organization in such cases may be determined by 
the information presented on its return. Therefore, the return should 
be complete, accurate, and fully describe the organization's programs 
and accomplishments. Form 990 is due by the 15TH day of the 5TH month 
after the organization's fiscal year ends. Upon request, the due date 
for filing the 990 can be extended for 3 months without showing cause. 

[5] The Foundation filed its Form 990 for fiscal year 2010 on July 20, 
2011--approximately 2 months after our report on the results of our 
audit of the Foundation's fiscal year 2010 and 2009 financial 
statements was released. 

[6] 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). 

[End of section] 

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