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United States Government Accountability Office: 
GAO: 

Report to the Chairman and the Secretary of the American Battle 
Monuments Commission: 

July 2013: 

Financial Audit: 

American Battle Monuments Commission's Financial Statements for Fiscal 
Years 2012 and 2011: 

GAO-13-641: 

GAO Highlights: 

Highlights of GAO-13-641, a report to the Chairman and the Secretary, 
American Battle Monuments Commission. 

Why GAO Did This Study: 

Created in 1923, the Commission operates and maintains 24 American 
military cemeteries on foreign soil; 25 federal memorials, monuments, 
and markers; and 8 nonfederal memorials. 

In accordance with section 2103 of title 36, United States Code, GAO 
initiated work in July 2012 to conduct the annual audit of the 
Commission’s financial statements for fiscal years ended September 30, 
2012 and 2011. Subsequently, on December 28, 2012, the GAO Mandates 
Revision Act of 2012 was enacted, which repealed GAO’s annual 
requirement to audit the Commission’s financial statements. However, 
because the audit was in progress at the time the act was passed, GAO 
elected to complete it under the authority of the Comptroller General 
to conduct evaluations on GAO’s initiative. 

GAO audited the Commission’s 2012 and 2011 financial statements to 
determine whether, in all material respects, the financial statements 
were fairly presented. GAO also tested the Commission’s compliance 
with selected laws and regulations. 

What GAO Found: 

In GAO’s opinion, the financial statements of the American Battle 
Monuments Commission (the Commission) as of September 30, 2012 and 
2011, and for the fiscal years then ended, are presented fairly, in 
all material respects, in conformity with U.S. generally accepted 
accounting principles. However, GAO found two material weaknesses that 
resulted in ineffective internal control over financial reporting. GAO 
also found one area of noncompliance with laws and regulations it 
tested. 

The material weaknesses concern the Commission’s financial reporting 
process and its monitoring process. Because of these control 
weaknesses, GAO found significant errors in the Commission’s financial 
reporting that were not detected by the Commission. The Commission 
made the necessary adjustments and was able to prepare financial 
statements that were fairly stated in all material respects by fiscal 
year-end. However, these material weaknesses increase the risk that a 
material misstatement of the Commission’s financial statements will 
not be prevented, or detected and corrected, on a timely basis. GAO 
also found that a previously reported significant deficiency 
concerning foreign payroll processing continued to exist during fiscal 
year 2012. These material weaknesses and the significant deficiency in 
internal control warrant the attention of those charged with 
governance of the Commission. 

The area of noncompliance concerns the Commission not properly using 
its Foreign Currency Fluctuation Account for fluctuations in foreign 
currency exchange rates related to payments made in foreign currencies. 

Figure: The Commission’s Lorraine American Cemetery and Memorial in 
Lorraine, France: 

[Refer to PDF for image: photograph] 

Source: American Battle Monuments Commission. 

[End of figure] 

What GAO Recommends: 

GAO is not making any recommendations in this report, but will be 
reporting separately on the internal control matters identified during 
its audit and providing recommendations for corrective action. 

In commenting on a draft of this report, the Commission concurred with 
GAO’s findings and conclusions and stated that it has initiated 
corrective actions on the material weaknesses and significant 
deficiency. 

View [hyperlink, http://www.gao.gov/products/GAO-13-641]. For more 
information, contact Cheryl E. Clark at (202) 512-9377 or 
clarkce@gao.gov. 

[End of section] 

Contents: 

Letter: 

Auditor's Report3: 

Opinion on Financial Statements: 

Material Weaknesses in Internal Control over Financial Reporting: 

Significant Deficiency in Foreign Employee Payroll Processes: 

Compliance with Laws and Regulations: 

Required Supplementary Information: 

Other Information: 

Objectives, Scope, and Methodology: 

Commission's Comments: 

Management's Discussion and Analysis: 

Financial Statements: 

Consolidated Balance Sheets: 

Consolidated Statements of Net Cost: 

Consolidated Statements of Changes in Net Position: 

Consolidated Statements of Budgetary Resources: 

Notes to Consolidated Financial Statements: 

Required Supplementary Information: 

Other Information: 

Schedule of Heritage Assets: 

Schedule of Spending: 

Abbreviations: 

ABMC: American Battle Monuments Commission (the Commission): 

FASAB: Federal Accounting Standards Advisory Board: 

FCFA: Foreign Currency Fluctuation Account: 

FMFIA: Federal Managers' Financial Integrity Act of 1982: 

OMB: ;Office of Management and Budget: 

U.S. GAAP: U.S. generally accepted accounting principles: 

[End of section] 

GAO:
United States Government Accountability Office: 
441 G St. N.W. 
Washington, DC 20548: 

July 16, 2013: 

The Honorable Merrill McPeak: 
Chairman: 
The Honorable Max Cleland: 
Secretary: 
American Battle Monuments Commission: 

This report presents the results of our audits of the financial 
statements of the American Battle Monuments Commission (the 
Commission) as of and for the fiscal years ending September 30, 2012 
and 2011. These financial statements are the responsibility of the 
Commission. This report contains our (1) opinions on the Commission's 
financial statements, (2) results of our consideration of the 
Commission's internal control over financial reporting, and (3) 
results of our tests of the Commission's compliance with selected 
provisions of laws and regulations. 

In response to a recurring requirement to audit the Commission's 
financial statements in section 2103(h)(2)(B) of title 36, United 
States Code, we initiated work in July 2012 to conduct the annual 
audit of the Commission's financial statements for fiscal years 2012 
and 2011. Subsequently, on December 28, 2012, the GAO Mandates 
Revision Act of 2012 was enacted, which repealed GAO's annual 
requirement to audit the Commission's financial statements. (See Pub. 
L. No. 112-234, § 2(g), 126 Stat. 1624, 1625 (2012).) However, because 
we had made significant progress on the audit when the act was passed, 
we elected to complete the audit under the authority of the 
Comptroller General to conduct evaluations on GAO's initiative. We 
conducted our audit in accordance with U.S. generally accepted 
government auditing standards. 

We are sending copies of this report to the commissioners, interested 
congressional committees, the Director of the Office of Management and 
Budget, and other interested parties. In addition, the report is 
available at no charge on the GAO website at [hyperlink, 
http://www.gao.gov]. 

Should you or your staff have any questions concerning this report, 
please contact me at (202) 512-9377 or clarkce@gao.gov. Contact points 
for our Offices of Congressional Relations and Public Affairs may be 
found on the last page of this report. 

Signed by: 

Cheryl E. Clark: 
Director: 
Financial Management and Assurance: 

[End of section] 

GAO:
United States Government Accountability Office: 
441 G St. N.W. 
Washington, DC 20548: 

Independent Auditor’s Report: 

To the Chairman and Secretary of the American Battle Monuments 
Commission: 

In our audits of the American Battle Monuments Commission's (the 
Commission) financial statements for fiscal years 2012 and 2011, 
[Footnote 1] we found: 

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

* material weaknesses in internal control concerning the Commission's 
(1) financial reporting process and (2) monitoring process that 
resulted in ineffective internal control over financial reporting for 
fiscal year 2012;[Footnote 2] and: 

* a noncompliance with the laws governing the Commission's use of its 
Foreign Currency Fluctuations Account (FCFA).[Footnote 3] 

The following sections discuss (1) these conclusions; (2) required 
supplementary information (RSI) and other information included with 
the financial statements; (3) our audit objectives, scope, and 
methodology; and (4) the Commission's comments on a draft of this 
report. 

Opinion on Financial Statements: 

The Commission's financial statements, including the accompanying 
notes, present fairly, in all material respects, in conformity with 
U.S. GAAP, the Commission's assets, liabilities, and net position as 
of September 30, 2012 and 2011, and its net costs, changes in net 
position, and budgetary resources for the fiscal years then ended. 

However, misstatements may nevertheless occur in other financial 
information reported by the Commission and not be detected as a result 
of the deficiencies in internal control described in this report. 

Material Weaknesses in Internal Control over Financial Reporting: 

During our fiscal year 2012 audit, we identified two material 
weaknesses concerning the Commission's (1) financial reporting process 
and (2) monitoring process that resulted in ineffective internal 
control over financial reporting. We also determined that a 
significant deficiency in internal control over the Commission's 
foreign employee payroll processes,[Footnote 4] which we reported in 
last year's audit,[Footnote 5] continued to exist in fiscal year 2012. 
Because of the existence of the material weaknesses, the Commission's 
internal control did not provide reasonable assurance that 
misstatements, losses, or noncompliance material in relation to the 
financial statements would be prevented, or detected and corrected, on 
a timely basis. Further, as a result of the material weakness in its 
monitoring process, the Commission did not identify and therefore 
disclose the two material weaknesses in its fiscal year 2012 assertion 
on the effectiveness of internal control issued pursuant to Office of 
Management and Budget (OMB) Circular No. A-123, Revisions to OMB 
Circular A-123, Management's Responsibility for Internal Control (OMB 
A-123), and the Federal Managers' Financial Integrity Act of 1982 
(FMFIA).[Footnote 6] The Commission's assertion is presented in its 
Management's Discussion and Analysis, which accompanies the financial 
statements. 

In planning and performing our audit, we considered the Commission's 
internal control over financial reporting for the purpose of 
determining our procedures for auditing the financial statements, not 
to express an opinion on internal control. Accordingly, we do not 
express an opinion on the effectiveness of the Commission's internal 
control over financial reporting. We considered the material 
weaknesses and the significant deficiency in determining the nature, 
timing, and extent of our audit procedures. Based on the scope of our 
audit, our internal control work would not necessarily identify all 
deficiencies in internal control, including those that might be 
material weaknesses or significant deficiencies. We caution that our 
consideration of internal control, conducted for the limited purposes 
discussed above, may not be sufficient for other purposes. 

A significant factor contributing to the material weaknesses was that 
the Commission did not effectively assess the risks related to recent 
changes it made to its organizational and financial reporting 
structure and did not design its internal control processes to address 
the change in risks. Therefore, during fiscal year 2012, the 
Commission did not have appropriate policies, procedures, and 
mechanisms in place to effectively and consistently implement internal 
control over financial reporting. 

Although there were material weaknesses in internal control, the 
Commission made the necessary adjustments and was able to prepare 
financial statements that were fairly presented in all material 
respects for fiscal years 2012 and 2011. However, the material 
weaknesses may adversely affect any decisions by the Commission's 
management that are based, in whole or in part, on information that is 
inaccurate because of these weaknesses. 

We will be reporting separately to Commission management further 
details about the material weaknesses we found during this year's 
audit and providing recommendations for corrective action. Our 
recommendations concerning the significant deficiency over foreign 
payroll that we made in last year's audit remain open.[Footnote 7] We 
also identified other deficiencies in the Commission's system of 
internal control that we do not consider to be material weaknesses or 
significant deficiencies, but which we believe are important enough to 
warrant management's attention. We have communicated these matters to 
Commission management. 

Material Weakness in the Commission's Financial Reporting Process: 

During our audit of the Commission's fiscal year 2012 financial 
statements, we identified several deficiencies in the Commission's 
financial reporting process that collectively represent a material 
weakness. The deficiencies that constituted this material weakness 
include the Commission's (1) inadequate process for preparing the 
financial statements, (2) improper accounting for accrued foreign 
currency transactions, and (3) ineffective review of financial 
transactions. These deficiencies contributed to significant errors 
recorded in the Commission's accounting records and in the draft 
financial statements. As a result, adjustments were necessary to 
finalize the Commission's fiscal year 2012 financial statements to 
achieve fair presentation. A discussion of these deficiencies follows. 

Preparation of Financial Statements: 

Beginning with its fiscal year 2012 financial reporting period, the 
Commission used an external service organization to prepare its 
financial statements. However, the Commission did not have an 
effective quality control process or mechanisms in place to reasonably 
assure that the financial statements were properly prepared in 
accordance with U.S. GAAP and OMB guidance for federal agencies. As a 
result, the fiscal year 2012 draft financial statements the Commission 
provided to us to audit contained numerous errors, including 
significant amounts that were misclassified or reported on the wrong 
financial statement, adjustments that were incorrectly reflected in 
the financial statements, and budgetary and proprietary accounts that 
did not appropriately reconcile. In addition, the draft notes to the 
financial statements omitted certain required disclosures and 
contained information that was incomplete or did not properly 
correspond to related amounts in the financial statements. 

Accounting for Foreign Currency Transactions: 

During our fiscal year 2012 audit, we found that the Commission did 
not use the appropriate foreign currency exchange rate to recognize 
the value of accrued transactions originally denominated in foreign 
currencies in its financial statements. In financial statements 
denominated in U.S. dollars such as the Commission's, all amounts in 
the balance sheet that are originally denominated in foreign 
currencies should be translated into U.S. dollars at the U.S. 
Department of the Treasury (Treasury) exchange rate at the balance 
sheet date for financial reporting purposes.[Footnote 8] However, in 
its draft financial statements, the Commission translated these 
amounts using an internally developed exchange rate that for euro-
denominated accrued transactions, significantly understated the value 
compared to the value that would be derived if the Commission had used 
the Treasury exchange rate for these transactions.[Footnote 9] Since 
the preponderance of the Commission's accrued balances were originally 
denominated in euros, the draft financial statements were 
significantly misstated. 

Review of Financial Transactions: 

The Commission did not effectively review transactions to ensure that 
the transactions were accurate, valid, complete, and recorded in the 
appropriate accounting period. For example, the Commission did not 
review its open obligations to verify that they remained valid and 
that adjustments were made properly and timely.[Footnote 10] As a 
result, the Commission was not aware that as of September 30, 2012, at 
least $603,000 of recorded obligations were no longer valid, thereby 
restricting the availability of these funds for other purposes. In 
another example, we found amounts recorded in the general ledger that 
could not be reconciled to supporting detail, such as certain deposits 
of trust fund donations the Commission collected from donors to 
decorate grave sites with flowers and maintain and repair nonfederal 
war memorials. However, we were able to obtain sufficient, appropriate 
evidence that the related general ledger balance was not materially 
misstated. Further, our audit found numerous instances in which 
transactions were incorrectly recorded in the general ledger 
accounting system, including accounts payable amounts, budgetary 
entries, payroll accruals, and depreciation calculations. 

Material Weakness in Monitoring Internal Control: 

During fiscal year 2012, the Commission did not have an adequate 
process for monitoring the design and operating effectiveness of its 
internal control to identify, evaluate, and correct internal control 
deficiencies. For example, the Commission did not: 

* consider its internal control environment, which entails such 
elements as the tone at the top, ethical standards, and personnel 
management, and which can have a significant effect on how the 
organization functions and the integrity of its financial accounting 
and reporting; 

* adequately assess the risk of material misstatement to its financial 
statements; 

* document its OMB A-123 approach for assessing its internal control, 
or provide sufficient, appropriate evidence to support its conclusions 
on the effectiveness of its internal control activities;[Footnote 11] 
or: 

* establish a corrective action plan or process for addressing 
deficiencies that have been identified. 

In addition to not adequately monitoring its in-house control 
processes, the Commission did not adequately monitor the effectiveness 
of internal control at the service organizations that performed 
significant aspects of its financial transaction processing and 
reporting, including processing its federal employee payroll 
transactions, reconciling its fund balance with Treasury, and 
preparing its annual financial statements.[Footnote 12] Specifically, 
the Commission did not evaluate the service organizations' service 
auditor reports that contained information on the service 
organizations' controls and the effectiveness of those controls, and 
did not consider the impact of the findings and conclusions contained 
in the service auditor reports on the effectiveness of its internal 
control.[Footnote 13] Further, the Commission did not design and 
implement appropriate complementary user entity controls that were 
identified by the service auditors.[Footnote 14] 

As a result of its inadequate monitoring process, the Commission did 
not identify the deficiencies discussed above and therefore did not 
include these deficiencies in its FMFIA assurance statement for fiscal 
year 2012. The deficiencies in the Commission's monitoring process 
increase the risk that additional deficiencies in internal control 
over financial reporting beyond those identified in this report may 
exist. 

Significant Deficiency in Foreign Employee Payroll Processes: 

In our audit of the Commission's fiscal year 2011 and 2010 financial 
statements,[Footnote 15] we identified a significant deficiency in the 
Commission's internal control over payroll processes for its non-U.S. 
citizen employees (foreign employees) that increased the risk of 
financial reporting misstatements and unauthorized access and 
manipulation of the systems or their data.[Footnote 16] Specifically, 
we found that (1) two system administrators had inappropriate access, 
allowing them to not only make system changes but also to alter data 
in systems for which they were responsible; (2) the Commission had not 
installed critical updates and patches on several of its servers as 
outlined in its Computer Security Plan; and (3) the Commission did not 
have policies and procedures clearly delineating the responsibilities 
of both the Human Resources and Finance Directorates with respect to 
ensuring accurate payroll information for foreign employees. During 
fiscal year 2012, the Commission contracted with a consultant to 
assess information relating to the Commission's foreign payroll 
operations, analyze outsourcing options, and compare vendors for final 
selection and contract negotiations. However, as of September 30, 
2012, the Commission had not taken action to address the specific 
deficiencies we identified during our fiscal year 2011 audit 
concerning its foreign payroll processes. Consequently, the 
deficiencies we identified concerning the Commission's foreign payroll 
processes remained as of September 30, 2012, thus increasing the risk 
of undetected errors or irregularities in the processing of the 
Commission's foreign payroll and, ultimately, in its financial 
statements. 

Compliance with Laws and Regulations: 

Our tests of the Commission's compliance with selected provisions of 
laws and regulations for fiscal year 2012 disclosed one area of 
noncompliance that is reportable under U.S. generally accepted 
government auditing standards. This area relates to the Commission not 
properly charging its FCFA for fluctuations in foreign currency 
exchange rates related to payments made in foreign currencies. 
Specifically, the Commission did not comply with the FCFA's governing 
statutes in (1) section 2109 of title 36, United States Code, which 
authorizes the use of FCFA funds to pay the costs of salaries and 
expenses that exceed the amount appropriated for salaries and expenses 
because of fluctuations in currency exchange rates of foreign 
countries occurring after a budget request is submitted to Congress 
and (2) the Consolidated Appropriations Act, 2012, which appropriated 
an unlimited amount of FCFA funds for purposes authorized by section 
2109.[Footnote 17] 

To determine the portion of costs of salaries and expenses incurred 
because of fluctuations in foreign currency exchange rates that 
occurred after the submission of the budget request to Congress 
involves a comparison of the Treasury exchange rates in effect on the 
date of payment with those in effect on the date the Commission 
submitted its budget request. In instances where the Treasury exchange 
rate (from the foreign currency into U.S. dollars) in effect on the 
date of payment exceeds the Treasury exchange rate that was in effect 
on the date of budget submission, the Commission can use the FCFA to 
fund the resultant additional cost related to the exchange rate 
fluctuations. However, we found that the Commission's process for 
determining the amount to charge to the FCFA was based on the 
Commission comparing the Treasury exchange rate on the date of payment 
to internally developed exchange rates the Commission used for foreign 
currency transactions in its budget submission. Because the 
Commission's internal rate for euro transactions, which accounted for 
the predominance of foreign currency transactions, undervalued the 
euro on the date of budget submission, the Commission charged 
significantly more costs to the FCFA than were allowable by law in the 
transactions we evaluated.[Footnote 18] 

Specifically, in our testing of charges to the FCFA, we found certain 
instances where the Commission used FCFA funds to pay for portions of 
expenses for which FCFA funds were not available. Therefore, we are 
concluding that in these instances, the Commission was not in 
compliance with section 2109 of title 36, United States Code, and the 
Consolidated Appropriations Act, 2012. Based on our statistical 
evaluations, of the $8.6 million charged to the FCFA during fiscal 
year 2012, we estimate that as much as $7.3 million of that amount 
shares characteristics with the FCFA funds in the transactions we 
fully evaluated and found to be noncompliant.[Footnote 19] 

Except as noted above, our tests for compliance with 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. 

Required Supplementary Information: 

U.S. GAAP requires that the RSI be presented to supplement the 
financial statements.[Footnote 20] This information, although not a 
part of the financial statements, is required by the Federal 
Accounting Standards Advisory Board (FASAB), which considers it to be 
an essential part of financial reporting for placing the financial 
statements in appropriate operational, economic, or historical 
context. We did not audit and we do not express an opinion or provide 
any assurance on the RSI because the limited procedures we applied do 
not provide sufficient evidence to express an opinion or provide any 
assurance. 

Other Information: 

The Commission's other information contains a wide range of 
information, some of which is not directly related to the financial 
statements.[Footnote 21] This information is presented for purposes of 
additional analysis and is not a required part of the financial 
statements or the RSI. Our audit was conducted for the purpose of 
forming an opinion on the Commission's financial statements. We did 
not audit and do not express an opinion or provide any assurance on 
the other information. 

Objectives, Scope, and Methodology: 

Commission management is responsible for (1) preparing the financial 
statements in conformity with U.S. GAAP; (2) preparing, measuring, and 
presenting the RSI in accordance with the prescribed guidelines in 
U.S. GAAP; (3) preparing and presenting other information included in 
documents containing the audited financial statements and auditor's 
report, and ensuring the consistency of that information with the 
audited financial statements and the RSI; (4) establishing and 
maintaining effective internal control over financial reporting and 
evaluating its effectiveness; and (5) 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 
Commission's financial statements are presented fairly, in all 
material respects, in conformity with U.S. GAAP. We are also 
responsible for (1) obtaining a sufficient understanding of internal 
control over financial reporting to plan the audit, (2) testing 
compliance with selected provisions of laws and regulations that have 
a direct and material effect on the financial statements, and (3) 
applying certain limited procedures to the RSI and other information 
included with 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 Commission management; 

* evaluated the overall presentation of the Commission's financial 
statements; 

* obtained an understanding of the Commission 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 the Commission's financial 
reporting for the purposes of planning and performing our other audit 
procedures; 

* considered the Commission's process for evaluating and reporting on 
internal control over financial reporting under FMFIA; 

* tested compliance with selected provisions of the Antideficiency 
Act, as amended; Prompt Payment Act; Pay and Allowance System for 
Civilian Employees; Civil Service Retirement Act; Federal Employees 
Health Benefits Act of 1959, as amended; Federal Employees' Retirement 
System Act of 1986, as amended; Social Security Act of 1935, as 
amended; Tax Relief Unemployment Insurance Reauthorization and Job 
Creation Act of 2010; Temporary Payroll Tax Cut Continuation Act of 
2011; Middle Class Tax Relief and Job Creation Act of 2012; Continuing 
Appropriations Act, 2012; Consolidated Appropriations Act, 2012; the 
Commission's enabling legislation, codified at 36 U.S.C. Chapter 21; 
and public laws applicable to the World War II Memorial Fund; 

* conducted inquiries of management about the methods of preparing the 
RSI, and compared this information for consistency with management's 
responses to the auditor's inquiries, the financial statements, and 
other knowledge we obtained during the audit of the financial 
statements in order to report omissions or material departures from 
FASAB guidelines, if any, identified by these limited procedures; 

* read the other information included with the financial statements in 
order to identify material inconsistencies, if any, with the audited 
financial statements; 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. GAAP, and assets are safeguarded against loss from unauthorized 
acquisition, use, or disposition, and (2) transactions are executed in 
accordance with the laws governing the use of budget authority and 
other 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 as broadly established under FMFIA, such as those controls 
relevant to preparing statistical reports and ensuring efficient 
operations. Because of inherent limitations, internal control may not 
prevent, or detect and correct, misstatements caused by 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 because the degree of compliance with policies and procedures may 
deteriorate. 

We did not test compliance with all laws and regulations applicable to 
the Commission. We limited our tests of compliance to selected 
provisions of laws and regulations that have a direct and material 
effect on the Commission's financial statements for the fiscal year 
ended September 30, 2012. 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 audit in accordance with U.S. generally accepted 
government auditing standards. We believe our audit provides a 
reasonable basis for our opinion and other conclusions. 

Commission's Comments: 

We received e-mail comments on a draft of this report from the 
Commission's Chief Financial Officer on July 3, 2013, on behalf of the 
Commission. The Commission concurred with the findings concerning the 
material weaknesses and significant deficiency and stated that 
corrective actions have already been initiated on each of these 
findings. The Commission also concurred with the noncompliance with 
the laws governing the use of the FCFA, recognizing its misreading of 
the authorizing law. 

Signed by: 

Cheryl E. Clark: 
Director: 
Financial Management and Assurance: 

June 28, 2013: 

[End of section] 

Management's Discussion and Analysis: 

American Battle Monuments Commission: 
Annual Financial Report: 
Management's Discussion And Analysis (MDA): 
For The Fiscal Year Ended September 30, 2012: 

Mission: 

The American Battle Monuments Commission (the Commission) — guardian 
of America’s overseas commemorative cemeteries and memorials — honors 
the service, achievements and sacrifice of the United States armed 
forces. Since 1923, the Commission has executed this mission by (1) 
commemorating the achievements and sacrifices of America’s armed forces 
through the erection and maintenance of suitable memorial shrines in 
the U.S. when authorized by Congress and where they have served 
overseas since April 6, 1917; (2) designing, constructing, operating, 
and maintaining permanent American military burial grounds in foreign 
countries; and (3) controlling the design and construction on foreign 
soil of U.S. military memorials, monuments, and markers by other U.S. 
citizens and organizations, both public and private, and encouraging 
their maintenance. The Commission’s fiscal year 2012 appropriation 
supported its continued commitment to the worldwide responsibilities 
that flow from this mission. 

In performance of its mission, the Commission administers, operates, 
and maintains 24 permanent American military cemeteries; 25 federal 
memorials, monuments, and markers; and eight nonfederal memorials. 
Three memorials are located in the United States; the remaining 
memorials and all of the Commission’s cemeteries are located in 14 
foreign countries, the U.S. Commonwealth of the Northern Mariana 
Islands, and the British dependency of Gibraltar. These cemeteries and 
memorials are among the most beautiful and meticulously maintained 
shrines in the world. The Commission’s World War I, World War II, and 
Mexico City cemeteries are closed to future burials except for the 
remains of U.S. war dead discovered in World War I and II battle areas. 

In addition to grave sites, the World War I and II cemeteries, 
together with three memorials on U.S. soil, commemorate by name on 
Tablets of the Missing those U.S. service members who were missing in 
action or lost or buried at sea during the First and Second World Wars 
and the Korean and Vietnam Wars. 

The Commission also administers trust funds to (1) build memorials 
authorized by Congress, but financed primarily from private 
contributions, commemorative coin proceeds, and investment 
earnings; (2) decorate grave sites with flowers from private 
contributions; and (3) maintain and repair nonfederal war memorials 
with private contributions. 

During fiscal year 2012, the Commission continued to ensure that its 
commemorative cemeteries and memorials remain fitting shrines to those 
who have served our nation in uniform since America’s entry into World 
War I. 

The Commission’s mission statement: 

The American Battle Monuments Commission—guardian of America’s 
overseas commemorative cemeteries and memorials—honors the competence, 
courage, and sacrifice of United States armed forces. 

Organizational Structure: 

The Commission’s organizational structure for fiscal year 2012 is 
shown in figure 1. 

Top level: 
Commissioners[A]. 

Second level, reporting to Commissioners: 
* Secretary[B]; Deputy Secretary and Director Overseas Operations. 

Third level, reporting to Secretary: 
Headquarters: 
* Chief of Staff: 
- Director, HR & Administration; 
- Director, Finance; 
- Director, Public Affairs; 
- Chief Engineer; 
- Chief Information Officer. 
Overseas Operations: 
* Chief of Staff: 
- Director, Human Resources; 
- Director, Engineering & Maintenance; 
- Director, Logistics; 
- Director, Information Technology; 
- Director, Finance; 
- Director, Horticulture; 
- Director, Interpretation & Visitor Services; 
* Regional Director, World War II North: 7 Cemeteries; 
* Regional Director, World War II South: 6 Cemeteries; 
* Regional Director, World War I: 8 Cemeteries; 
* Regional Director, Central America: 2 Cemeteries; 
* Regional Director, Pacific: 1 Cemetery; 

[A] Chairman and up to 10 Commissioners appointed by the President. 

[B] Appointed by the President. 

[End of figure] 

The Commission’s policy-making body consists of a Board of 
Commissioners comprised of up to 11 members appointed by the President 
of the United States for an indefinite term and who serve without pay. 
However, the members of the Commission may receive reimbursement for 
actual expenses related to the work and travel of the Commission. The 
commissioners establish policy and ensure proper staff functioning in 
carrying out the mission of the Commission. During inspection visits 
to Commission cemeteries, they observe, inquire about, comment upon, 
and make recommendations on any and all aspects of Commission 
operations. The Commission’s daily operations are directed by an 
Executive Level Secretary, who is appointed by the President and 
assisted by a Deputy Secretary. 

The Commission’s headquarters is in Arlington, Virginia and an Office 
of Overseas Operations is located in Garches, France, just outside 
Paris. For fiscal year 2012, the Commission had a total of 393 full-
time equivalent (FTE) positions. 

Operations Management: 

Operations management activities in fiscal year 2012 focused on 
funding salaries and benefits, service fees, scheduled maintenance and 
repairs, supplies, materials, spare parts, replacement of 
uneconomically repairable equipment, and capital improvements. 

For fiscal year 2012, the Commission received $61,100,000 from 
appropriations in its Salaries and Expenses account. The Commission’s 
Foreign Currency Fluctuations Account appropriation for fiscal year 
2012 contained “such sums as may be necessary” language. For fiscal 
year 2012, the Commission estimated $16,000,000 be used to offset 
currency exchange losses. Figure 2 shows how the Commission obligated 
funding from its Salaries and Expenses account, by object class. 

Figure 2: Fiscal Year 2012 Obligations by Object Class: 

[Refer to PDF for image: pie-chart] 

Compensation & Benefits: 47%; 
Contracts, Services & Capital Improvements: 41%; 
Rent & Utilities: 3%; 
Printing & Supplies: 4%; 
Equipment: 2%; 
Travel & Transportation: 3%. 

[End of figure] 

The Commission has received funding for engineering, maintenance and 
horticulture programs that make the Commission’s facilities among the 
most beautiful memorials in the world. These shrines to America’s war 
dead require a formidable annual program of maintenance and repair of 
facilities, equipment, and grounds. 

The Commission prioritizes the use of its engineering, maintenance and 
horticulture funds carefully to ensure the most effective and 
efficient utilization of its available resources. This care includes 
upkeep of more than 131,000 graves and headstones and 73 memorial 
structures (within and external to the cemeteries) on approximately 
1,650 acres of land. Additionally, the Commission maintains 65 visitor 
facilities and quarters for assigned personnel; 67 miles of roads and 
paths; and 911 acres of ornamental trees, flowering plants, shrubs and 
hedges, fine lawns, and meadows. 

Care and maintenance of these resources requires exceptionally 
intensive labor at the Commission’s cemeteries and memorials. 
Compensation and benefits consumed approximately 47% of the Commission’
s fiscal year 2012 spending while the remaining 53% supported 
engineering, maintenance, horticulture, logistics, services, supplies 
and other administrative costs critical to its operations. 

Financial Analysis: 

Assets: 

The Combined Balance Sheet reflects total assets of $96.6 million at 
the end of FY 2012, an increase of $13.7 million over the $82.9 
million at the end of FY 2011. The Fund Balance with Treasury and 
Treasury Investment line items increased by $13.7 million, as 
construction projects had been obligated by fiscal year end, but 
payments had not yet commenced. The increase is also attributable to 
the Commission taking an in depth look at preserving the integrity of 
its heritage assets. Some projects designated to enhance heritage 
assets were postponed to the next fiscal year. The postponed projects 
were not part of regularly scheduled maintenance. The Commission’s 
assets reflected in the Combined Balance Sheet were as follows: 

Table: Assets By Type: 

Dollars in Thousands: 

Fund Balance with Treasury; 
2012: $89,766,221; 
Percentage: 93%; 
2011: $75,990,111; 
Percentage: 92%. 

Investments, Net: 
2012: $4,461,772; 
Percentage: 5%; 
2011: $4,531,154; 
Percentage: 5%. 

Cash and Foreign Accounts: 
2012: $147,368; 
Percentage: 0%; 
2011: $139,225; 
Percentage: 0%; 
2010: $163,540. 

Accounts Receivable and Employee Advances: 
2012: $17,919; 
Percentage: 0%; 
2011: $6,751; 
Percentage: 0%. 

General Property and Equipment, Net: 
2012: $2,208,337; 
Percentage: 2%; 
2011: $2,278,459; 
Percentage: 3%. 

Total Assets: 
2012: $96,601,617; 
Percentage: 100%; 
2011: $82,945,700; 
Percentage: 100%. 

[End of table] 

Liabilities: 

The Commission’s Combined Balance Sheet reflects total liabilities of 
$11.6 million at the end of FY 2012, which represents an increase from 
the previous year’s total liabilities of $9.0 million. The increase is 
mainly due to construction projects that had been obligated by year 
end, but payments had not yet commenced. Liabilities are categorized 
as intragovernmental liabilities or liabilities held with the public. 
Intragovernmental liabilities totaled $0.7 million in fiscal year 2012 
compared to $1.7 million in fiscal year 2011. The decrease is mainly 
attributable to the completion of the outsourcing of the new financial 
management system to the Department of Interior’s Interior Business 
Center. Liabilities held with the public totaled $11.0 million in 
fiscal year 2012 compared to $7.2 million in fiscal year 2011. The 
increase is mainly attributable to construction projects that had been 
obligated by year end, but payments had not yet commenced. The 
composition of the Commission’s liabilities was as follows: 

Table: Liabilities By Type: 

Accounts Payable: 
2012: $7,790,009
Percentage: 67%; 
2011: $5,319,786; 
Percentage: 59%. 

Other Liabilities: 
2012: $3,828,348; 
Percentage: 33%; 
2011: $3,690,157; 
Percentage: 41%. 

Total Liabilities: 
2012: $11,618,357
Percentage: 100%; 
2011: $9,009,943; 
Percentage: 100%. 

[End of table] 

Net Position: 

The Commission’s Combined Balance Sheet and Combined Statement of 
Changes in Net Position reflect a Net Position of $85.0 million at the 
end of FY 2012, a 15% increase from the $73.9 million net position in 
fiscal year 2011. The increase is mainly attributable to the increase 
in Fund Balance with Treasury. Net Position is the sum of Unexpended 
Appropriations and Cumulative Results of Operations. 

Net Costs: 

The Commission’s total net cost of operations for FY 2012 was $67.8 
million. This represents an decrease of $5.6 million of the Commission’
s net cost of operations of $73.4 million in FY 2011. The decrease is 
mainly attributable to the completion of the implementation of a new 
financial management system in FY 2011 and postponing of engineering 
and horticulture projects to the next fiscal year. All postponed 
projects were designated to enhance and add value to heritage assets, 
they were not part of any regularly scheduled maintenance. 

Budgetary Resources: 

The Combined Statement of Budgetary Resources provides information on 
how budgetary resources were made available to the Commission for the 
year and the status of these resources at fiscal year-end. For the 
2012 fiscal year, the Commission had total budgetary resources of 
$133.6 million, which represents a 5% increase from FY 2011 levels of 
$127.8 million. Gross Budget Authority of $77.2 million consisted of 
$77.1 million in appropriations received and $0.1 million in other 
receipts. The Commission incurred obligations totaling $80.5 million 
in fiscal year 2012 compared with FY 2011 obligations incurred of 
$78.0 million. 

Net Outlays reflect the actual cash disbursed against previously 
established obligations. For FY 2012, the Commission had net outlays 
of $64.0 million, compared to $70.9 million in net outlays in fiscal 
year 2011, a decrease of 10%. The decrease is mainly attributable to 
construction projects that had been obligated by fiscal year end, but 
payments had not yet commenced. 

Heritage Assets: 

Heritage assets are property, plant and equipment that are unique for 
one or more of the following reasons: historical or natural 
significance; cultural, educational, or artistic importance; 
or significant architectural characteristics. 

Heritage assets are significant to the mission of the Commission, 
which is to design, construct, and maintain historical cemeteries and 
memorials. The Commission presents its heritage assets in three 
categories: cemeteries, federal memorials, and nonfederal memorials. 
Through September 30, 2012, the Commission had 24 cemeteries, 25 
federal memorials and 8 nonfederal memorials. Presently, over 131,000 
U.S. war dead are interred in these cemeteries. Commemorated 
individually by name on stone tablets at the cemeteries and federal 
memorials are over 94,000 war dead, whose remains were not recovered. 
The cemeteries and federal memorials encompass over 1,600 acres. This 
land is provided to the Commission through host nation agreements for 
permanent use as cemeteries and memorials. 

High Priority Performance Goals and Results: 

Summarized below are the Commission’s performance goals and results. 

Goal 1: Provide an inspirational and educational visitor experience 
through effective outreach and interpretive programs. 

Objectives for Goal 1: 

* Educate the public about the Commission’s mission, and the 
competence, courage, and sacrifice of those honored at the agency’s 
commemorative sites. 

* Increase visitation to the Commission’s cemeteries, memorials, and 
website. 

* Educate and train all employees who provide visitor services in 
interpretive skills. 

* Leverage international events and relevant anniversary dates to 
interpret the Commission’s cemeteries. 

* Satisfy constituents’ needs through timely distribution of 
information and products. 

Strategy for Achieving Goal 1: 

We will develop educational materials and new technology capabilities 
to improve visitor education programs, both on-site and on our 
website. We will expand Web marketing and public/media outreach to 
increase visitation to our website and memorial sites. We will also 
develop a methodology to count visitors so that we can document both 
on-site and website visitation. We will expand training and mentoring 
opportunities to enhance professional and personal development of our 
employees. We will also create historical reference libraries to assist 
in the interpretive mission. We will leverage upcoming milestones to 
increase the public reach of the interpretive initiative, including D-
Day, Memorial Day, Veterans Day, the 100th anniversary of World War I, 
and the 70th anniversary of World War II. We will automate frequently 
requested services for our constituents in order to improve on-site 
and website customer service. 

Selected Performance Results toward Achieving Goal 1: 

* Work under a contract to produce 18 educational military campaign 
interactive programs for the agency website and visitor centers 
progressed well during the fiscal year. A World War II timeline 
interactive was completed and installed at the Normandy and Cambridge 
cemeteries and a web version was nearing completion; a World War I 
timeline program was to be completed in January 2013 and work was 
begun on several campaign interactive programs related to Cambridge 
and Sicily-Rome cemeteries. 

* The agency’s first mobile application for smart phones—-a tour of 
the Pointe du Hoc battlefield-—was in development as the fiscal year 
ended, with a projected launch in January 2013. With its completion, 
the Commission will begin work on mobile apps for Aisne-Marne, Meuse-
Argonne and St. Mihiel cemeteries, timed for the World War I 
Centennial, and an app for the Honolulu Memorial, where the missing 
from World War II in the Pacific, the Korean War, and the Vietnam War 
are memorialized. 

* Also underway was a total redesign of the agency website and war 
dead database, which will complement the agency’s emphasis on becoming 
a respected educational resource for students and teachers. The new 
website was expected to launch by April 2013. 

* Interest from military units, veterans groups, and local citizens 
and organizations continued, as they took opportunities to pay tribute 
to those honored at the Commission’s cemeteries by visiting 
individually or participating in ceremonies and “adopt a grave” 
programs. 

* The Commission continued to respond to customer requests for 
lithographs, no fee passport authorizations, flower placements, and 
general information about the overseas cemeteries and memorials we 
administer. 

Goal 2: Develop, operate, maintain, and improve the Commission’s 
facilities as the world’s best commemorative sites. 

Objective for Goal 2: 

* Review and evaluate facilities and execute approved maintenance, 
repair, and improvements. 

Strategy for Achieving Goal 2: 

We will continue to operate, maintain, and improve the Commission’s 
facilities and infrastructure in like-new condition, and implement our 
evaluation processes to ensure compliance with our high standards. We 
will work to reduce the growth of operational and routine maintenance 
costs and promote more effective long-term planning, operations, and 
resource management. 

Selected Performance Results toward Achieving Goal 2: 

* The following are examples of the engineering, maintenance and 
horticulture projects executed in fiscal year 2012: 
- Repaired the memorial terraces at Ardennes, Epinal and Henri-
Chapelle cemeteries; 
- Renovated the service areas at Rhone and North Africa cemeteries; 
- Cleaned and repainted the exteriors of memorials at Epinal, 
Netherlands and Luxembourg cemeteries and the federal monument at 
Montsec; 
- Repaired the Wall of the Missing at Rhone cemetery; 
- Repaired the stonework at Oudenaarde and Monfaucon federal monuments. 

* The Commission continued a headstone refurbishing program to keep 
the headstones in “like new” condition. 

Goal 3: Attract and retain quality employees through personal and 
professional investment and development. 

Objectives for Goal 3: 

* Establish baseline employee satisfaction through an employee survey. 

* Ensure timely and effective employee recognition. 

* Implement an enhanced performance management program with annual 
performance work plans tied to the strategic plan. 

* Balance employee personal and professional responsibilities through 
work/life initiatives. 

* Implement a professional development program responsive to agency 
and employee needs. 

Strategy for Achieving Goal 3: 

We will implement a professional training and development program, 
clearly map employee roles and responsibilities to the components of 
our strategic plan, develop a better understanding of employee needs 
and satisfaction, and make sure that truly outstanding performance is 
appropriately recognized. 

Selected Performance Results toward Achieving Goal 3: 

* The Commission continues to recognize employees for special acts in 
a timely manner. 

* New performance appraisal program was issued in January 2012 and 
used for interim and final performance appraisals. 

* Made progress in developing needed HR policies and 
streamlining/establishing procedures required for the proper 
functioning of a good HR program. Among the policies developed and 
issued were use of POV’s, and pass/fail performance appraisal system. 

* The Commission continues to make progress in providing management 
and supervisory training to its most visible and important positions—
its cemetery superintendents. Training for other employees is provided 
as the need is foreseen or arises. 

* Contracted for an outside party to conduct an employee satisfaction 
survey to be completed in early FY 2013. 

Goal 4: Continually improve business and resource management practices. 

Objectives for Goal 4: 

* Effectively manage resources. 

* Modernize business processes to utilize new technologies and IT 
practices. 

* Formalize processes for development and promulgation of policies and 
procedures. 

* Modernize the Financial Management System and fully utilize the 
capabilities of the new system. 

Strategy for Achieving Goal 4: 

We will focus our efforts on standardizing core processes, identifying 
opportunities to use technology to streamline their execution, 
improving our organizational standards for site evaluation, and 
regularly reviewing each site for compliance with standards. 

Selected Performance Results toward Achieving Goal 4: 

* The Commission’s allocation processes and procedures annually fully 
fund its mandatory and operational requirements in order to achieve 
its mission requirements. 

* During fiscal year 2012, the Commission completed an effort to 
upgrade the financial management system. 

* An internal control review was conducted in fiscal year 2012 to 
examine the Commission’s internal control mechanisms and business 
processes. 

Financial Statements and Limitations: 

Since FY 1997, the Commission has been required to produce financial 
statements and the Comptroller General of the United States has 
independently audited these statements. The Commission earned 
unqualified opinions, each year, on its financial statements from the 
Government Accountability Office. 

The financial statements have been prepared to report the financial 
position and results of operations of the Commission, pursuant to the 
requirements of 31 U.S.C. 3515 (b). While the statements have been 
prepared from the books and records of the Commission in accordance 
with generally accepted accounting principles for federal entities and 
the formats prescribed by the Office of Management and Budget, the 
statements are in addition to the financial reports used to monitor 
and control budgetary resources, which are prepared from the same 
books and records. The statements should be read with the 
understanding that the Commission is a component of the U.S. 
Government, a sovereign entity. 

Management Integrity: Systems, Controls, Legal Compliance: 

The Commission is cognizant of the importance of, and need for, 
management accountability and responsibility as the basis for quality 
and timeliness of program performance, mission accomplishment, 
productivity, cost-effectiveness, and compliance with applicable laws. 
It has taken management actions to ensure that the annual evaluation 
of these controls is performed in a conscientious and thorough manner 
according to Office of Management and Budget regulations and 
guidelines and in compliance with 31 U.S.C. 3512 (c), (d), commonly 
known as the Federal Manager’s Financial Integrity Act (FMFIA). The 
Commission’s evaluation of its information technology systems, 
internal management practices and controls during fiscal year 2012 
revealed a significant deficiency related to lack of documented 
policies and procedures. The objectives of the Commission’s internal 
management control policies and procedures are to provide reasonable 
assurance that: 

* obligations and costs are in compliance with applicable law; 

* funds, property, and other assets are safeguarded against waste, 
loss, unauthorized use, and misappropriation; 

* revenue and expenditures applicable to agency operations are 
promptly recorded and accounted for; and; 

* programs are efficiently and effectively carried out in accordance 
with applicable laws and management policy. 

Based on its evaluation, the Commission concluded that as of September 
30, 2012 it cannot provide reasonable assurance that it complies with 
the provisions of FMFIA. The reasonable assurance concept recognizes 
that the cost of internal controls should not exceed the benefits 
expected to be derived and that the benefits reduce the risk of 
failing to achieve stated objectives. 

Future Effects, Risks, and Uncertainties: 

Changes in the rate of exchange for foreign currencies have a 
significant impact on the Commission’s day-to-day operations. In order 
to insulate the Commission’s annual appropriation against major 
changes in its purchasing power, legislation was enacted in 1988 
(codified in 36 U.S.C. 2109) to establish a foreign currency 
fluctuation account in the U.S. Treasury. However, since the summer of 
2006, the U.S. dollar has fallen precipitously against the euro. The 
Commission has been closely monitoring this because its budget is 
disproportionately affected by foreign currency fluctuation. 
Legislation was enacted which included “such sums as may be necessary” 
language for the Commission’s fiscal year 2012 Foreign Currency 
Fluctuation Account (FCFA) appropriation. This allows the Commission 
to preserve its purchasing power against a suddenly falling U.S. 
dollar against the euro. With this language the Commission will 
continue to estimate and report its FCFA requirements as it has in the 
past. However, when a need arises where the amount forecast by the 
Commission for this account is insufficient, the Commission will 
submit an adjusted estimate to the Office of Management and Budget, 
and then to the Congress. 

Overall, by maintaining close scrutiny of the Commission’s obligation 
status, as well as monitoring and distributing the Foreign Currency 
Fluctuation Account balance, the Commission reduces its overall future 
financial risk to continued operations. 

[End of section] 

Financial Statements: 

Consolidated Balance Sheets: 

American Battle Monuments Commission: 
Consolidated Balance Sheets: 
As of September 30, 2012 and 2011: 
(in dollars) 

Assets: 

Intragovemmental: 

Fund balance with Treasury (note 2); 
Total 2012: $89,766,221; 
Total 2011: $75,990,111. 

Investments (note 3); 
Total 2012: $4,461,772; 
Total 2011: $4,531,154. 

Total Intragovemmental: 
Total 2012: $94,227,993; 
Total 2011: $80,521,265. 

Cash and other monetary assets (note 4): 
Total 2012: $147,368; 
Total 2011: $139,225. 

Accounts receivable, net: 
Total 2012: $4,747; 
Total 2011: $4,747. 

General property and equipment, net (note 6): 
Total 2012: $2,208,337; 
Total 2011: $2,278,459. 

Other: 
Total 2012: $13,172; 
Total 2011: $2,004. 

Total Assets: 
Total 2012: $96,601,617; 
Total 2011: $82,945,700. 

Liabilities: 

Intragovemmental: 

Accounts payable: 
Total 2012: $444,938; 
Total 2011: $1,383,041. 

Other (Note 7): 
Total 2012: $218,357; 
Total 2011: $348,853. 

Total Intragovemmental: Accounts payable: 
Total 2012: $663,295; 
Total 2011: $1,784,516. 

Accounts payable: 
Total 2012: $7,345,071; 
Total 2011: $3,884,123. 

Other (note 7): 
Total 2012: $3,609,991; 
Total 2011: $3,393,926. 

Total Liabilities: 
Total 2012: $11,618,357; 
Total 2011: $9,009,943. 

Net Position: 

Unexpended appropriations: 
Total 2012: $74,035,804; 
Total 2011: $63,578,453. 

Cumulative Results of Operations: 
Total 2012: $10,947,456; 
Total 2011: $10,357,304. 

Total Net Position: 
Total 2012: $84,983,260; 
Total 2011: $73,935,757. 

Total Liabilities and Net Position: 
Total 2012: $96,601,617; 
Total 2011: $82,945,700. 

The accompanying notes are an integral part of these statements. 

[End of Consolidating Balance Sheet] 

Consolidated Statements of Net Cost: 

American Battle Monuments Commission: 
Consolidated Statements of Net Cost: 
For the Years Ended September 30, 2012 and 2011: 
(in dollars): 

Gross Program costs: 

Operations and Maintenance: 

Gross costs: 
2012: $67,946,438;
2011: $73,504,370. 

Less: earned revenue (Note 1, N): 
2012: $160,961;
2011: $99,530. 

Net cost of operations (Note 9, 17): 
2012: $67,785,477;
2011: $73,404,840. 

The accompanying notes are an integral part of these statements. 

[End of Consolidated Statements of Net Cost] 

Consolidated Statements of Changes in Net Position: 

American Battle Monuments Commission: 
Consolidated Statements of Changes in Net Position: 
For the Years Ended September 30, 2012 and 2011: 
(in dollars): 

Cumulative Results of Operations: 

Beginning Balances: 
2012: $10,357,304; 
2011: $12,290,964. 

Budgetary Financing Sources: 

Appropriations used: 
2012: $66,642,649; 
2011: $69,914,171. 

Donations and forfeitures of cash and cash equivalents: 
2012: $737,232; 
2011: $457,301. 

Other Financing Sources (Non-Exchange): 
Imputed financing (Note 12) 
2012: $995,748; 
2011: $1,099,708. 

Total Financing Sources: 
2012: $68,375,629; 
2011: $71,471,180. 

Net Cost of Operations (Note 1, N): 
2012: ($67,785,477); 
2011: ($73,404,840). 

Net Change Other Financing Sources (Non-Exchange): 
2012: $590,152; 
2011: ($1,933,660). 

Cumulative Results of Operations: 
2012: $10,947,456; 
2011: $10,357,304. 

Unexpended Appropriations: 
Beginning Balance: 
2012: $63,578,453 
2011: $53,552,402. 

Budgetary Financing Sources: 

Appropriations received: 
2012: $77,100,000; 
2011: $80,039,600. 

Appropriations transferred in/out: 
2012: $0;
2011: ($29,787). 

Other adjustments: 
2012: $0;
2011: ($69,591). 

Appropriations Used: 
2012: ($66,642,649); 
2011: ($69,914,171). 

Total Budgetary Financing Resources: 
2012: $10,457,351; 
2011: $10,026,051. 

Total Unexpended Appropriations: 
2012: $74,035,804; 
2011: $63,578,453. 

Net Position: 
2012: $84,983,260; 
2011: $73,935,757. 

The accompanying notes are an integral part of these statements. 

[End of Consolidated Statements of Changes in Net Position] 

Consolidated Statements of Budgetary Resources: 

American Battle Monuments Commission: 
Consolidated Statements of Budgetary Resources: 
Consolidated Statements of Changes in Net Position: 
For the Years Ended September 30, 2012 and 2011: 
(in dollars): 

Budgetary Resources: 
Unobligated balance brought forward, October 1: 
2012: $49,810,192; 
2011: $47,349,229. 

Recoveries of prior year unpaid obligations: 
2012: $6,566,912; 
2011: $0. 

Other changes in unobligated balance: 
2012: ($391,763); 
2011: $0. 

Unobligated balance from prior year budget authority, net: 
2012: $56,377,104; 
2011: $47,349,229. 

Appropriations (discretionary and mandatory) (Note 1, N): 
2012: $77,100,000; 
2011: $80,039,600. 

Spending authority from offsetting collections (discret. and mandat.) 
(Note 1, N): 
2012: $848,321; 
2011: $450,077. 

Total budgetary resources: 
2012: $133,569,668; 
2011: $127,838,906. 

Status of Budgetary Resources: 

Obligations Incurred (Note 13): 
2012: $80,523,225; 
2011: $78,028,714. 

Unobligated balance, end of year: 
Apportioned (Note 1, N): 
2012: $45,584,619; 
2011: $39,400,688. 

Exempt from apportionment (Note 1, N): 
2012: $7,825,818; 
2011: $10,409,504 

Total unobligated balance, end of year: 
2012: $53,410,437; 
2011: $49,810,192. 

Total budgetary resources: 
2012: $133,933,662; 
2011: $127,838,906. 

Change in Obligated Balance: 

Unpaid obligations, brought forward, October 1 (gross): 
2012: $30,978,290; 
2011: $24,320,393. 

Obligations incurred (Note 13): 
2012: $80,523,225; 
2011: $78,028,714. 

Outlays (gross): 
2012: ($64,135,397); 
2011: ($71,370,817). 

Recoveries of prior year unpaid obligations: 
2012: ($6,566,912); 
2011: $0. 

Obligated balance, end of year (net): 
2012: $40,799,205; 
2011: $30,978,290. 

Budget Authority and Outlays, Net: 

Budget authority, gross (discretionary and mandatory) (Note 1, N): 
2012: $77,192,564; 
2011: $80,489,677. 

Actual offsetting collections (discretionary and mandatory) (Note 1, 
N): 
2012: ($848,321); 
2011: ($450,077). 

Budget authority, net (discretionary and mandatory): 
2012: $77,100,000; 
2011: $80,039,600. 

Outlays, gross (discretionary and mandatory): 
2012: $64,135,397; 
2011: $71,370,817. 

Actual offsetting collections (discretionary and mandatory) (Note 1, 
N): 
2012: ($848,321); 
2011: ($450,077). 

Agency outlays, net (discretionary and mandatory): 
2012: $64,042,833; 
2011: $70,920,740. 

The accompanying notes are an integral part of these statements. 

Notes To Consolidated Financial Statements: 

American Battle Monuments Commission: 
Notes To Consolidated Financial Statements: 
For the Fiscal Years Ended September 30, 2012 and 2011: 
(in dollars): 

Note 1. Significant Accounting Policies: 

A. Basis of Presentation: 

The accompanying consolidated financial statements present the 
financial position, net cost of operations, changes in net position, 
and budgetary resources of the American Battle Monuments Commission 
(the Commission) in conformity with U.S. generally accepted accounting 
principles as used by the federal government. There are no intra-
entity transactions to be eliminated. Certain assets, liabilities, and 
costs have been classified as intragovernmental throughout the 
financial statements and notes. Intragovernmental is defined as 
transactions made between two reporting entities within the federal 
government. 

B. Reporting Entity and Funding Sources: 

The Commission is an independent agency within the executive branch of 
the federal government and was created by the Act for creation of the 
American Battle Monuments Commission, March 4, 1923, 67 P.L. 534; 42 
Stat. 1509; 67 Cong. Ch. 283, the current provisions of which are now 
codified in 36 U.S.C. Chapter 21. The Commission’s mission is to 
commemorate the sacrifices and achievements of U.S. Armed Forces where 
they have served overseas since April 6, 1917, the date of the United 
States entry into World War I, and at locations within the United 
States and North America when directed by the Congress. The Commission 
designs, administers, constructs, operates, and maintains 24 American 
military cemeteries and 25 federal memorials, monuments, and markers 
(herein collectively referred to as memorials). Three of the memorials 
are located in the United States while all of the cemeteries and the 
remaining memorials are located on foreign soil in 14 foreign 
countries, the Marianas, and Gibraltar. The Commission is also 
responsible for maintaining 8 nonfederal memorials with funds received 
from the memorials’ sponsors. The Commission is headquartered in 
Arlington, Virginia. Field operations are conducted through offices 
located near Paris, France and Rome, Italy; and cemeteries in Manila, 
the Philippines; Mexico City, Mexico; and Panama City, Panama. 

The Commission also had responsibility for designing and constructing 
the National World War II Memorial located on the Mall in Washington, 
D.C. In accordance with 40 U.S.C. 8906(b), the Commission deposited 
$6.6 million into a separate Treasury account to offset the memorial’s 
costs of perpetual maintenance. On November 1, 2004, the Commission 
signed an agreement with the National Park Service to formally 
transfer the National World War II Memorial to the Service for its 
future care and maintenance. The Commission is responsible for 
remaining funds residing in a trust fund in the U.S. Treasury to be 
used solely to benefit the World War II Memorial for other than 
routine maintenance expense. 

Commission programs are funded primarily through appropriations 
available without fiscal year limitation (no-year). The Commission 
also administers several trust funds established to: (1) build 
memorials authorized by the Congress, but which are funded primarily 
by private contributions, commemorative coin sales proceeds, and 
investment earnings; (2) decorate gravesites; and (3) maintain and 
repair certain nonfederal war memorials. 

C. Basis of Accounting: 

The Commission’s proprietary accounts (assets, liabilities, equity, 
revenue, and expenses) are maintained on the accrual basis, where 
appropriated funds are accounted for by appropriation year; operating 
expenses are recorded as incurred; and depreciation is taken on 
property, and equipment not otherwise classified as heritage assets. 
Commission budgetary accounts are maintained on a budgetary basis, 
which facilitates compliance with legal constraints and statutory 
funds control requirements. The functional budget classification is 
Veterans’ Benefits and Services. 

D. Fund Balance with Treasury: 

The Commission’s cash receipts and disbursements are processed by the 
U.S. Treasury. Fund balances with Treasury are composed of 
appropriated general funds, appropriated foreign currency fluctuation 
funds, and trust funds. The Fund balance with Treasury is the 
aggregate amount for which the Commission is authorized to make 
expenditures and pay liabilities. 

E. Investments: 

In accordance with 36 U.S.C. 2113(b), the Commission is authorized to 
invest World War II Memorial Trust Fund receipts in U.S. Treasury 
securities. The Commission is also authorized under a modification to 
its original legislation to invest receipts from certain nonfederal 
war memorial organizations in U.S. Treasury securities. Treasury 
investments are recorded at par value plus unamortized premium or less 
unamortized discount. Premiums and discounts are amortized using the 
interest method. 

F. Foreign Currency: 

The Commission’s overseas offices maintain accounts of foreign 
currencies to be used in making payments in foreign countries. Amounts 
are recorded at a standard budget rate in U.S. dollars and a gain or 
loss recognized when paid in foreign currency. Appropriated monies are 
transferred from the Commission’s Foreign Currency Fluctuation Account 
to fund net currency losses. Cash accounts in foreign currencies are 
reported at the U.S. dollar equivalent using the Treasury exchange 
rate in effect on the last day of the fiscal year. 

G. Contributions and Revenue Recognition: 

The Commission recognizes unrestricted contributions or unconditional 
promises to give as revenue in the period of the initial pledge when 
sufficient verifiable evidence of the pledge exists. Conditional 
promises to give are recorded as revenue when the condition has been 
met. Unconditional promises to give may be temporarily restricted or 
permanently restricted. Temporarily restricted promises to give are 
released from restriction when the conditions have been met. 
Permanently restricted promises to give are recorded as revenue in the 
period donated; however, donors generally allow only the earned income 
to be used for general or specific purposes. In-kind contributions of 
goods and services are recognized at fair value by the Commission at 
the time the goods are received or the services are performed. 
Multiyear contributions due over a period of time are discounted to 
their present value based upon the short-term Treasury interest rate. 

H. Operating Materials and Supplies: 

The Commission has determined that operating materials and supplies 
located at its cemeteries are not significant amounts and that it is 
more cost beneficial to record them on the purchase method of 
accounting whereby items are expensed as purchased rather than when 
consumed. Consequently, the Commission reports no operating materials 
or supplies inventories. 

I. General Property and Equipment: 

General property and equipment is composed of real and personal 
property. Related purchases exceeding $25,000 are capitalized and 
depreciated on a straight line basis over the useful life of the item, 
which for (1) personal property is considered to be 5 years, and (2) 
real property is considered to be 30 years. Purchases of general 
property and equipment of $25,000 or less are expensed in the period 
of acquisition. 

J. Heritage Assets: 

Heritage assets are assets possessing significant cultural, 
architectural, or aesthetic characteristics. The Commission considers 
its cemeteries, and federal memorials, monuments, and markers acquired 
through purchase or donation to be noncollection heritage assets. 
Heritage assets acquired through purchase or donation are accounted 
for in the Commission’s property records, and are not presented in the 
balance sheet. Withdrawals of heritage assets are recorded upon formal 
agreement with recipients. Additional disclosure on individual 
heritage asset cemeteries and memorials are found in the Schedules of 
Heritage Assets presented as unaudited other information. Cemetery 
land is owned by the foreign countries in which cemeteries are located 
and is provided to the United States in perpetuity. 

K. Employee Benefits: 

The Commission’s civilian U.S. nationals hired after December 31, 1983 
are covered by the Federal Employees’ Retirement System (FERS), which 
was implemented on January 1, 1984. The Commission’s civilian U.S. 
nationals hired on or before December 31, 1983, could elect to 
transfer to FERS or remain with the Civil Service Retirement System 
(CSRS). For FERS employees, the Commission withholds .80 percent of 
base pay and as employer contributes 11.9 percent of base pay to this 
retirement system. For Federal Insurance Contribution Act (FICA) tax 
and Medicare, the Commission withholds 5.65 percent from FERS employees’
 earnings. In addition, the Commission contributes 7.65 percent and 
remits the total amount to the Social Security Administration. The 
Commission withholds 7.00 percent of base pay plus 1.45 percent for 
Medicare from CSRS employees’ earnings and as employer contributes 
7.00 percent of base pay plus 1.45 percent for Medicare. These 
deductions are then remitted to the Office of Personnel Management 
(OPM) and the Social Security Administration. OPM is responsible for 
government wide reporting of FERS and CSRS assets, accumulated plan 
benefits, and unfunded liabilities. 

On April 1, 1987, the federal government instituted the Thrift Saving 
Plan (TSP), a retirement savings and investment plan for employees 
covered by FERS and CSRS. The Commission contributes a minimum of 1 
percent of FERS employees’ base pay to TSP. For 2012, FERS employees 
could contribute up to $17,000 ($22,500 if at least age 50) on a tax-
deferred basis to TSP, which the Commission matches up to 4 percent of 
base pay. For 2012, CSRS employees may also contribute up to $17,000 
($22,500 if at least age 50) on a tax-deferred basis; however, they 
receive no matching contribution from the Commission. Retirement and 
other benefits for the Commission’s foreign national employees are 
paid by the Commission in accordance with the provisions of 10 host 
nation agreements negotiated by the U.S. Department of State. 

Annual leave is accrued as earned, and the resulting unfunded 
liability is reduced as leave is taken. Separation pay is provided in 
certain countries according to host nation agreements. Separation pay 
is accrued as earned, and the resulting unfunded liability is reduced 
when paid to the foreign national leaving the employ of the 
Commission. Each year balances in the accrued separation pay and 
annual leave accounts are adjusted to reflect current pay rates. To 
the extent that current or prior year appropriations are not available 
to fund annual leave and separation pay, funding will be obtained from 
future financing resources. Sick leave and other types of unvested 
leave are expensed when incurred. 

L. Program Costs: 

Program costs are broken out into two categories - "Intragovernmental" 
and "With the Public". Intragovernmental costs are costs the 
Commission incurs through contracting with other federal agencies for 
goods and/or services, such as rent paid to U.S. Department of State, 
payroll processing services received from the U.S. General Services 
Administration (GSA), and costs for retirement and other benefits paid 
by OPM. With the Public costs are costs the Commission incurs through 
contracting with the private sector for goods or services, payments 
for employee salaries, depreciation, annual leave and other non-
Federal entity expenses. 

M. Use of Estimates: 

The preparation of financial statements requires management to make 
estimates and assumptions that affect the reported amount of assets 
and liabilities, as well as the disclosure of contingent assets and 
liabilities at the date of the financial statements, and the amount of 
revenues and expenses reported during the reporting period. Actual 
results could differ from those estimates. 

N. Reclassification of Prior Year Balances: 

Previously reported fiscal year 2011 balances have been reclassified 
for consistency with the presentation of corresponding fiscal year 
2012 balances. 

Note 2. Fund Balance with Treasury: 

All undisbursed account balances with the U.S. Treasury, as reflected 
in the Commission’s records, as of September 30 are available and were 
as follows: 

Fund Balance: 

General Fund: 
2012: $63,116,046; 
2011: $46,440,675. 

Foreign Currency Fluctuation Fund: 
2012: $19,857,604; 
2011: $23,357,595. 

Trust Fund (Note 15): 
2012: $6,792,571; 
2011: $6,191,841. 

Total Fund Balance with Treasury: 
2012: $89,766,221; 
2011: $75,990,111. 

Status of Fund Balance with Treasury: 

Unobligated Balance: 

Available: 
2012: $48,921,907; 
2011: $44,961,203. 

Unavailable: 
2012: $45,108; 
2011: $52,622. 

Obligated Balance Not Yet Disbursed: 
2012: $40,799,206; 
2011: $30,976,286. 

Total Status of Fund Balance with Treasury: 
2012: $89,766,221; 
2011: $75,990,111. 

[End of Note 2. Fund Balance with Treasury] 

Note 3. Treasury Investments, Net: 

As of September 30, the Commission’s Trust Fund investments in U.S. 
Treasury notes, which are marketable securities due within 2 years, 
were as follows: 

Interest: 

FY: 2012; 
Cost: $4,368,932; 
Interest Rates: 4.250 to 4.50%; 
Net Premium: $0; 
Interest Receivable: $92,840; 
Net Investments: $4,461,772. 

FY: 2011: 
Cost: $4,368,932; 
Interest Rates: 4.250 to 4.50%; 
Net Premium: $162,222; 
Interest Receivable: $0; 
Net Investments: $4,531,154. 

Amortization is calculated on the interest method, and amortized cost 
approximated market value as of September 30. 

Note 4. Cash and other Monetary Assets: 

Outside the United States, the Commission makes payments in U.S. and 
foreign currencies through imprest cash funds and Treasury-designated 
depository commercial bank accounts, which as of September 30 were as 
follows: 

Imprest Cash Funds: 
2012: $1,328; 
2011: $2,284. 

Foreign Bank Accounts: 
2012: $146,040; 
2011: $136,941. 

Total: 
2012: $147,368;
2011: $139,225. 

Note 5. Contributions Receivable: 

The Commission has a pledge from a living trust valued at $141,776 as 
of September 30, 2012. However, due to the uncertainty of time and 
amount when the pledge is collected, the contribution will be 
recognized when received. In comparison, the pledge as of September 
30, 2011 was valued at $125,819. 

Note 6. General and Heritage Property and Equipment: 

Non-capitalized assets, such as general property and equipment 
acquisitions with an aggregate cost basis of $25,000 or less and all 
acquisitions of heritage assets, totaling $1,608,251 were expensed by 
the Commission in fiscal year 2012. In fiscal year 2011, $2,180,338, 
was expensed. 

Since the 1960s, the Commission’s Office of Overseas Operations near 
Paris, France, has occupied a residential structure owned by the U.S. 
Department of State. The Commission is responsible for all utilities, 
maintenance, and repairs. 

General property and equipment as of September 30 was as follows: 

Category: Buildings, Improvements, and Renovations; 
2012: 
Cost: $923,460; 
Accumulated Depreciation: $256,288; 
Net: $667,172; 
2011: 
Cost: $923,460; 
Accumulated Depreciation: $225,507; 
Net: $697,953. 

Category: Equipment; 
2012: 
Cost: $4,668,997; 
Accumulated Depreciation: $3,193,613; 
Net: $1,475,384; 
2011: 
Cost: $4,372,562; 
Accumulated Depreciation: $2,934,828; 
Net: $1,437,734. 

Category: Information Technology Software; 
2012: 
Cost: $384,951; 
Accumulated Depreciation: $319,170; 
Net: $65,781; 
2011: 
Cost: $384,951; 
Accumulated Depreciation: $242,179; 
Net: $142,772. 

Total: 
2012: 
Cost: $5,977,408; 
Accumulated Depreciation: $3,769,071; 
Net: $2,208,337; 
2011: 
Cost: $5,680,973; 
Accumulated Depreciation: $3,402,514; 
Net: $2,278,459. 

Heritage assets are significant to the mission of the Commission to 
design, construct, and maintain historical cemeteries and memorials. 
The Commission presents its heritage assets in three categories; 
cemeteries, federal memorials, and nonfederal memorials. Changes in 
heritage assets for fiscal year 2012 were as follows: 

Beginning of Year 10-1-11: 
Cemeteries: 24; 
Federal Memorials: 25; 
Nonfederal Memorials: 7. 

Number Acquired, Fiscal Year 2012: 
Cemeteries: 0; 
Federal Memorials: 0; 
Nonfederal Memorials: 1. 

Number Withdrawn, Fiscal Year 2012: 
Cemeteries: 0; 
Federal Memorials: 0; 
Nonfederal Memorials: 0. 

End of Year 9-30-12: 
Cemeteries: 24; 
Federal Memorials: 25; 
Nonfederal Memorials: 8. 

Note 7. Other Liabilities: 

Other liabilities as of September 30 were as follows: 

Intragovernmental Liabilities: 

Accrued Salaries and Benefits: 
2012: $218,357; 
2011: $348,853. 

Public Liabilities: 

Accrued Salaries and Benefits: 
2012: $876,401; 
2011: $717,552. 

Unfunded Separation Pay Liability: 
2012: $1,150,883; 
2011: $1,212,663. 

Unfunded Annual Leave: 
2012: $1,537,599; 
2011: $1,411,089. 

Liability for Non-Entity Assets-Proceeds from sale of equipment: 
2012: $45,108; 
2011: $52,622. 

Total Public Liabilities: 
2012: $3,609,991; 
2011: $3,393,926. 

These liabilities are all classified as current. 

Under a host nation agreement, the Commission’s Italian employees earn 
separation pay for each year of service with the Commission. The 
Commission recognized an unfunded liability for separation pay for 
these employees of $1,537,599 as of September 30, 2012, and $1,212, 
663 as of September 30, 2011. 

Note 8. Lease Agreements: 

The Commission has no capital leases. The Commission’s Arlington, 
Virginia, Headquarters Office is rented under a 5-year operating lease 
expiring in July 2017. Future minimum payments due on this operating 
lease as of September 30, 2012, are as follows: 

2013: $659,722; 
2014: $666,928; 
2015: $672,608; 
2016: $678,433; 
2015: $566,131; 
After 5 Years: $0; 
Total: $l,243,822. 

The Commission’s Rome Office moved from commercial leased space to the 
United States Embassy in Rome. Lease payments for the Rome office 
space, and for nine living quarters leases for the benefit of the 
Commission’s Office of Overseas Operations, are made through the 
International Cooperative Administrative Support Services (ICASS) 
program with the U.S. State Department. These leases are on a month-to-
month basis and the Commission has no obligation for future payments 
associated with these leases. 

Rent expense for all operating leases was $675,710 during fiscal year 
2012. In fiscal year 2011, rent expense for all operating leases was 
$829,154. 

Note 9. Reconciliation of Net Cost of Operations to Budget: 

Statement of Federal Financial Accounting Standards (SFFAS) No. 7 
requires a reconciliation of proprietary and budgetary information in 
a way that helps users determine how budget resources obligated for 
programs relate to net costs of operations. Prior to fiscal year 2007, 
this reconciliation was accomplished by presenting a Statement of 
Financing as a basic financial statement. Effective for fiscal year 
2007, the Office of Management and Budget in its Circular No. A-136, 
Financial Reporting Requirements, decided that this information for 
federal entities would be better placed and understood in a note. 
Consequently, this information is presented as follows: 

Reconciliation of Net Cost of Operations (Proprietary) to Budget: 
As of September 30, 2012 and 2011: 

Resources Used to Finance Activities: 

Current Year Gross Obligations Incurred: 
2012: $80,523,225; 
2011: $78,028,714. 

Budgetary Resources from Offsetting Collections: 

Spending Authority from Offsetting Collections: 
2012: ($92,564); 
2011: ($450,077). 

Recoveries of Prior Year Unpaid Obligations: 
2012: ($6,566,912); 
2011: $0. 

Offsetting Receipts (Note 1, N): 
2012: $713,776; 
2011: $328,860. 

Other Financing Resources: 

Imputed Financing Sources: 
2012: $995,748; 
2011: $1,099,708. 

Other Adjustments: 
2012: $0; 
2011: $35,085. 

Total Resources Used to Finance Activity: 
2012: $75,573,273;
2011: $79,042,290. 

Resources Used to Finance Items Not Part of the Net Cost of Operations: 

Budgetary Obligations and Resources not in the Net Cost of Operations: 

Change in Undelivered Orders (Note 1, N): 
2012: ($7,228,507); 
2011: ($6,041,277). 

Current Year Capitalized Purchases (Note 1, N): 
2012: ($501,783); 
2011: ($259,876). 

Resources/Adjustments that do not Affect Net Cost of Operations: 
2012: ($873,157); 
2011: $0. 

Components of Net Cost which do not Generate or Use Resources in the 
Reporting Period: 

Revenues without Current Year Budgetary Effect Change in NonFederal 
Receivables: 
2012: $92,840; 
2011: $0. 

Other Financing Sources Not in the Budget: 
2012: ($995,748); 
2011: ($1,099,708). 

Costs without Current Year Budgetary Effect: 

Accrued Annual Leave-Future Funded Expense: 
2012: ($115,646); 
2011: ($85,261). 

Disposition of Assets (Note 1, N): 
2012: ($8,596); 
2011: ($30,935). 

Depreciation and Amortization: 
2012: $847,053; 
2011: $746,539. 

Imputed costs: 
2012: $995,748; 
2011: $1,099,708. 

Other Expenses Not Requiring Budgetary Resources-In Kind Expenses: 
2012: $0; 
2011: $33,360. 

Net Cost of Operations: 
2012: $67,785,477;
2011: $73,404,840. 

Note 10. Fiduciary Activities and Net Assets: 

Fiduciary activities are the collection or receipt, and the 
management, protection, accounting, investment and disposition by the 
Federal Government of cash or other assets in which non-Federal 
individuals or entities have an ownership interest that the Federal 
Government must uphold. 

Fiduciary cash and other assets are not assets of the Federal 
Government and accordingly are not recognized on the balance sheet. 

The Scottish Widows Defined Benefit Scheme was established by a Trust 
Deed, which authorized the Commission to collect contributions on 
behalf of beneficiaries, foreign service national employees of the 
Commission’s two cemeteries in England. Fiduciary assets as of 
September 30 were as follows: 

Schedule of Fiduciary Activity: 

Contributions: 
2012: $144,615; 
2011: $280,926. 

Investment earnings: 
2012: $86,154; 
2011: $49,231. 

Increases in fiduciary fund balances: 
2012: $230,769; 
2011: $330,157. 

Fiduciary net assets, beginning of year: 
2012: $1,272,308; 
2011: $942,151. 

Fiduciary net assets, end of year: 
2012: $1,503,077; 
2011: $1,272,308. 

Fiduciary Net Assets: 

Fiduciary Assets: 

Investments
2012: $1,503,077; 
2011: $1,272,308. 

Total Fiduciary Assets: 
2012: $1,503,077; 
2011: $1,272,308. 

Note 11. Commitments and Contingencies: 

As of September 30, 2012 the Commission had commitments of $31.9 
million from undelivered orders as a result of open contracts and 
purchase orders. In comparison, the Commission had commitments of 
$24.5 million from undelivered orders as a result of open contracts 
and purchase orders as of September 30, 2011. Also as of September 30, 
2012, the Commission had contingencies related to pending 
administrative proceedings and personnel actions that will be resolved 
by future events. The Commission has determined the likelihood of an 
unfavorable outcome is remote and is not expected to have a material 
effect on the financial statements. 

Note 12. Imputed Financing: 

The Commission imputes financing for retirement and other benefits 
paid by OPM, financial audit costs incurred by the U.S. Government 
Accountability Office (GAO), and a heritage asset musical carillon 
generally donated each fiscal year. The Commission recognized these 
expenses and related imputed financing in its financial statements. 
The Commission did not receive a donation from AMVETS for a musical 
carillon in fiscal year 2012. In fiscal year 2011, the Commission 
received a donation of a carillon valued at $33,361. 

A portion of pension and other retirement benefits (ORB) expense is 
funded by an imputed financing source to recognize the amount of 
pension and ORB unfunded liabilities assumed by OPM. These costs are 
computed in accordance with cost factors provided by OPM. For fiscal 
year 2012, the Commission incurred $1,499,039 of pension and ORB 
costs, $336,949 of which was imputed. For fiscal year 2011, the 
Commission incurred $1,799,724 of pension and ORB costs, $550,708 of 
which was imputed. Total imputed costs of $995,748 for fiscal year 
2012 and $1,099,708 for fiscal year 2011 included audit services 
provided by GAO. 

Note 13. Obligations Incurred: 

All obligations incurred are characterized as category A on the 
Statement of Budgetary Resources. The Commission does not have any 
direct and reimbursable obligations incurred against amounts 
apportioned under category “B” or exempt from apportionment. 

Note 14. Budgetary Resource Comparisons to the Budget of the United 
States Government: 

Statement of Federal Financial Accounting Standards No. 7, "Accounting 
for Revenue and Other Financing Sources and Concepts for Reconciling 
Budgetary and Financial Accounting", calls for explanations of 
material differences between amounts reported in the Statement of 
Budgetary Resources and the actual balances published in the Budget of 
the United States Government (President's Budget). The President’s 
Budget for fiscal year 2014 was published in April 2013 and can be 
found at the OMB Web site: [hyperlink, 
http://www.whitehouse.gov/omb/]. A material difference was identified 
between obligations incurred as reported in the fiscal year 2012 
Statement of Budgetary Resources and the fiscal year 2012 “Actual” 
column in the 2014 Budget of the United States Government. The 
material difference of four million dollars was due to obligated 
balances in foreign currencies that were revalued at the U.S. dollar 
equivalent using the Treasury exchange rate in effect on the last day 
of the fiscal year. No other material differences were identified. 

Note 15. Trust Fund: 

The Commission’s combined financial statements consist of general and 
trust fund activity. The operational and maintenance expenses for FY 
12 were $4,091 for intragovernmental and $211,977 for program costs 
with the public. The trust fund has obligated balances of $3,128,734 
and unobligated balances of $8,032,769. The operational and 
maintenance expenses for FY 2011 were $1,807,468 for intragovernmental 
and $208,879 for program costs with the public. In FY 2011, the trust 
funds had obligated balances of $313,491 and unobligated balances of 
$10,409,504. 

Note 16. Liabilities not covered by Budgetary Resources: 

A. Intragovernmental and Public Liabilities: 

Public Liabilities: 

Liability for Non-Entity Assets: 
2012: $45,108; 
2011: $52,622. 

Other Unfunded Employment Related Liability: 
2012: $1,150,883; 
2011: $1,212,663. 

Unfunded Leave: 
2012: $1,537,599; 
2011: $1,411,089. 

Total Liabilities Not Covered by Budgetary Resources: 
2012: $2,733,590; 
2011: $2,676,374. 

Total Liabilities Covered by Budgetary Resources: 
2012: $8,884,767; 
2011: $6,333,569 

Total Liabilities: 
2012: $11,618,357; 
2011: $9,009,943. 

B. Other Information: 

Liabilities not covered by Budgetary Resources: 

Actuarial FECA Liability--The amount recorded by employer agencies for 
the actuarial present value of future Federal Employees’ Compensation 
Act benefits provided to Federal employees or their beneficiaries as a 
result of work-related deaths, disability, or occupational disease. 

Liability for Non-Entity Assets--The amount of non-entity assets held 
in a General Fund receipt account or other Treasury Account Symbol for 
transfer to other entities. 

Other Unfunded Employment Related Liability--Amounts of unfunded 
employment related liabilities not otherwise classified above that 
will be funded by future years’ budgetary resources. Include the 
unfunded liability for unemployment for Federal employees in this 
account. 

Unfunded Leave--The amount recorded by an employer agency for unpaid 
leaved earned that the employee is entitled to upon separation and 
that will be funded by future years’ budgetary resources. 

Liabilities covered by Budgetary Resources: Liabilities are considered 
covered by budgetary resources if they are to be funded by permanent 
indefinite appropriations, which have been enacted and signed into law 
and are available for use as of the balance sheet date, provided that 
the resources may be apportioned by OMB without further action by the 
Congress and without a contingency having to be met first. Examples 
are Accounts payable, Disbursements in Transit, Accrued Funded Payroll 
and Leave, Withholdings Payable, and Employer Contributions and 
Payroll Taxes Payable. 

Note 17. Intragovernmental Costs And Exchange Revenue: 

Intragovernmental costs represent goods and services exchange 
transactions made between two reporting entities within the Federal 
government, and are in contrast to those with non-federal entities 
(the public). Such costs are summarized as follows: 

Program Costs: 

Intragovernmental Costs: 
2012: $18,136,283; 
2011: $18,829,788. 

Public Costs: 
2012: $49,810,155; 
2011: $54,674,582. 

Total Program Costs: 
2012: $67,946,438;
2011: $73,504,370. 

Program Revenues: 

Intragovernmental Earned Revenue: 
2012: $69,210;
2011: $68,595. 

Public Earned Revenue: 
2012: $91,751; 
2011: $30,935. 

Total Program Revenues: 
2012: $160,961;
2011: $99,530. 

[End of Financial Statements section] 

Required Supplementary Information: 

American Battle Monuments Commission: 
Required Supplementary Information: 
September 30, 2012: 
(Unaudited): 

Required Supplementary Information: 

Maintenance, Repairs, and Improvements: 

The following unaudited information is required supplementary 
information on deferred maintenance and the condition of real property 
at Commission cemeteries and memorials: 

Deferred maintenance is maintenance that was not performed when it 
should have been or was scheduled to be and that, therefore, is put 
off or delayed for a future period. Maintenance and repairs performed 
on real property consisting of land improvements, buildings, and 
memorials totaled $7.2 million in fiscal year 2012 and $6.8 million in 
fiscal year 2011. For fiscal years 1998 through 2002, the Commission 
received $11.3 million of additional appropriations from the Congress 
that enabled it to entirely eliminate its deferred maintenance backlog 
as of September 30, 2002. No deferred maintenance backlog existed as 
of September 30, 2012, and 2011. 

In addition to condition assessment surveys, the Commission uses a 
Project Prioritization Methodology with a "plot area out" focus to 
identify current and future maintenance and repair projects at 
cemeteries and memorials in order to maintain real property in an 
acceptable condition. These surveys are reviewed and updated at least 
annually by the Commission's engineering staff. In addition, 
engineering projects identified improvements in cemetery irrigation, 
drainage, roads, parking areas, and buildings. As of September 30, 
2012, the Commission has identified 46 maintenance, repair, and 
improvement projects, with an estimated cost of $7.3 million, 
scheduled to be performed in fiscal year 2013, subject to available 
funding. 

[End of section] 

Other Information: 

Schedule of Heritage Assets: 

The following three pages present unaudited other information not 
required by U.S. generally accepted accounting principles on the 
Commission's 24 cemeteries; 25 federal memorials, monuments, and 
markers; and 7 nonfederal memorials as of September 30, 2012. 

24 Cemeteries: 

Name: Aisne Marne American Cemetery; 
Location: Belleau (Aisne), France; 
Interred: 2,289; 
Memorialized: 1,060; 
Acres: 42.5; 
War: WW I. 

Name: Ardennes American Cemetery; 
Location: Neupre, Belgium; 
Interred: 5,325; 
Memorialized: 462; 
Acres: 90.5; 
War: WW II. 

Name: Brittany American Cemetery; 
Location: St. James (Manche), France; 
Interred: 4,410; 
Memorialized: 498; 
Acres: 27.9; 
War: WW II. 

Name: Brookwood American Cemetery; 
Location: Brookwood, England; 
Interred: 468; 
Memorialized: 563; 
Acres: 4.5; 
War: WW I. 

Name: Cambridge American Cemetery; 
Location: Cambridge, England; 
Interred: 3,812; 
Memorialized: 5,127; 
Acres: 30.5; 
War: WW II. 

Name: Corozal American Cemetery; 
Location: Panama City, Panama; 
Interred: 5,407; 
Memorialized: 0; 
Acres: 16.0; 
War: Acquired by Executive Order from the former Panama Canal Zone. 

Name: Epinal American Cemetery; 
Location: Epinal (Vosges), France; 
Interred: 5,255; 
Memorialized: 424; 
Acres: 48.6; 
War: WW II. 

Name: Flanders Field American Cemetery; 
Location: Waregem, Belgium; 
Interred: 368; 
Memorialized: 43; 
Acres: 6.2; 
War: WW I. 

Name: Henri-Chapelle American Cemetery; 
Location: Henri-Chapelle, Belgium; 
Interred: 7,992; 
Memorialized: 450; 
Acres: 57.0; 
War: WW II. 

Name: Lorraine American Cemetery; 
Location: St. Avold (Moselle), France; 
Interred: 10,489; 
Memorialized: 444; 
Acres: 113.5; 
War: WW II. 

Name: Luxembourg American Cemetery; 
Location: Luxembourg City, Luxembourg; 
Interred: 5,076; 
Memorialized: 371; 
Acres: 50.5; 
War: WW II. 

Name: Meuse-Argonne American Cemetery; 
Location: Romagne (Meuse), France; 
Interred: 14,246; 
Memorialized: 954; 
Acres: 130.5; 
War: WW I. 

Name: Mexico City National Cemetery; 
Location: Mexico City, Mexico; 
Interred: 1,563; 
Memorialized: 0; 
Acres: 1.0; 
War: Acquired by Executive Order from the War Department. 

Name: Netherlands American Cemetery; 
Location: Margraten, Holland; 
Interred: 8,301; 
Memorialized: 1,722; 
Acres: 65.5; 
War: WW II. 

Name: Normandy American Cemetery; 
Location: Colleville-sur-Mer, France; 
Interred: 9,387; 
Memorialized: 1,557; 
Acres: 172.5; 
War: WW II. 

Name: North Africa American Cemetery; 
Location: Carthage, Tunisia; 
Interred: 2,841; 
Memorialized: 3,724; 
Acres: 27.0; 
War: WW II. 

Name: Oise-Aisne American Cemetery; 
Location: Fere-en-Tardenois, France; 
Interred: 6,012; 
Memorialized: 241; 
Acres: 36.5; 
War: WW I. 

Name: Rhone American Cemetery; 
Location: Draguignan, Var, France; 
Interred: 861; 
Memorialized: 294; 
Acres: 12.5; 
War: WW II. 

Name: St. Mihiel American Cemetery; 
Location: Thiaucourt, Meurthe, France; 
Interred: 4,153; 
Memorialized: 284; 
Acres: 40.5; 
War: WW I. 

Name: Sicily-Rome American Cemetery; 
Location: Nettuno, Italy; 
Interred: 7,861; 
Memorialized: 3,095; 
Acres: 77.0; 
War: WW II. 

Name: Somme American Cemetery; 
Location: Bony (Aisne), France; 
Interred: 1,844; 
Memorialized: 333; 
Acres: 14.3; 
War: WW I. 

Name: Suresnes American Cemetery; 
Location: Seine, France; 
Interred: 1,565; 
Memorialized: 974; 
Acres: 7.5; 
War: WW I/II. 

Subtotal for Cemeteries: 
Interred: 131,096; 
Memorialized: 60,314; 
Acres: 1,294.5. 

25 Federal Memorials, Monuments, And Markers: 

Name: East Coast Memorial; 
Location: New York City, NY; 
Memorialized: 4,609; 
Acres: 0.8; 
War: WW II. 

Name: Honolulu Memorial; 
Location: Honolulu, HI; 
Memorialized: 28,800; 
Acres: 1.0; 
War: WW II/Korea/Vietnam. 

Name: West Coast Memorial; 
Location: San Francisco, CA; 
Memorialized: 412; 
Acres: 1.3; 
War: WW II. 

Name: Audenarde Monument; 
Location: Audenarde, Belgium; 
Acres: 0.4; 
War: WW I. 

Name: Bellicourt Monument; 
Location: St. Quentin, France; 
Acres: 1.8; 
War: WW I. 

Name: Brest Naval Monument; 
Location: Brest, France; 
Acres: 1.0; 
War: WW I. 

Name: Cabanatuan Memorial; 
Location: Luzon, Phillipines; 
War: WW II. 

Name: Cantigny Monument; 
Location: Cantigny, France; 
Acres: 0.4; 
War: WW I. 

Name: Chateau-Thierry Monument; 
Location: Chateau-Thierry, France; 
Acres: 58.9; 
War: WW I. 

Name: Chaumont Marker; 
Location: Chaumont, France; 
War: WW I. 

Name: Gibraltar Naval Monument; 
Location: Gibraltar; 
Acres: 0.1; 
War: WW I. 

Name: Guadalcanal Memorial; 
Location: Guadalcanal; 
Acres: 0.5; 
War: WW II. 

Name: Kemmel Monument; 
Location: Ypres, Belgium; 
Acres: 0.2; 
War: WW I. 

Name: Marine Monument Belleau Wood; 
Location: Aisne, France; 
Acres: 199.6; 
War: WW I. 

Name: Montfaucon Monument; 
Location: Montfaucon, France; 
Acres: 9.6; 
War: WW I. 

Name: Montsec Monument; 
Location: Thiaucourt, France; 
Acres: 47.5; 
War: WW I. 

Name: Papua Marker; 
Location: Port Moresby, New Guinea; 
War: WW II. 

Name: Pointe du Hoc Ranger Monument; 
Location: St. Laurent-sur-Mer, France; 
Acres: 29.8; 
War: WW II. 

Name: Saipan Monument; 
Location: Saipan, Northern Mariana Islands; 
War: WW II. 

Name: Santiago Surrender Tree; 
Location: Santiago, Cuba; 
War: Spanish-American War. 

Name: Sommepy Monument; 
Location: Sommepy, France; 
Acres: 15.0; 
War: WW I. 

Name: Souilly Marker; 
Location: Souilly, France; 
War: WW I. 

Name: Tours Monument; 
Location: Tours, France; 
Acres: 0.5; 
War: WW I. 

Name: Utah Beach Monument; 
Location: Sainte Marie-du-Mont, France; 
Acres: 0.5; 
War: WW II. 

Name: Western Naval Task Force Memorial; 
Location: Casablanca, Morocco; 
War: WW II. 

Subtotal for Memorials; 
Interred: 0; 
Memorialized: 33,821; 
Acres: 368.9. 

Grand Total: 
Interred: 131,096; 
Memorialized: 94,135; 
Acres: 1,663.4. 

8 Nonfederal Memorials: 

Name: 29th Infantry Division Memorial; 
Location: Vierville-sur-Mer, France; 
War: WW II. 

Name: 30th Infantry Division Memorial; 
Location: Mortain, France; 
War: WW II. 

Name: 6th Engineering Special Brigade Memorial; 
Location: Vierville-sur-Mer, France; 
War: WW II. 

Name: 351st Bomb Group Memorial; 
Location: Oundle, England; 
War: WW II. 

Name: 147th Engineer Battalion Monument; 
Location: Englesqueville-la-Percee, France; 
War: WW II. 

Name: 507th Parachute Infantry Regiment Memorial; 
Location: Amfreville, France; 
War: WW II. 

Name: 398th Bomb Group Memorial; 
Location: Herdfordshire, England; 
War: WW II. 

Name: 381st Bomb Group Monment; 
Location: Ridgewell, England; 
War: Nonfederal memorial added in fiscal year 2012. 

Schedule of Spending: 

American Battle Monuments Commission: 
Schedule of Spending: 
September 30, 2012: 
(Unaudited): 

Section I of the Schedule of Spending: 

What Money is Available to Spend? 

Total Resources: $133,933,662; 
Apportioned: ($45,584,619); 
Exempt from Apportionment: ($7,825,818); 
Less Amount Available But Not Agreed to be Spent: ($53,410,437); 
Total Amounts Agreed to be Spent: $80,523,225. 

Section II of the Schedule of Spending: 

How was the Money Spent? 

Personnel Compensation and Benefits: $31,576,770; 
Contractual Services and Supplies: $22,577,491; 
Acquisition of Assets: $10,087,951; 
Grants and Fixed Charges: $0; 
Other: ($106,815); 
Total Spending: $64,135,397; 
Amounts Remaining to be Spent: $16,387,828; 
Total Amounts Agreed to be Spent: $80,523,225. 
        
Section III of the Schedule of Spending: 

Who Did the Money Go To? 

Federal Destinations: $2,143,282; 
Non-Federal Destinations: $78,379,943; 
Total Amounts Agreed to be Spent: $80,523,225. 

Section IV of the Schedule of Spending: 

How Was the Money Issued? 

Non-Financial Assistance Direct Payments: $33,935,584; 
Contracts: $46,743,412; 
Grants: $0; 
Loans and Guarantees: $0; 
Financial Assistance Direct Payments: $0; 
Insurance: $0; 
Interest and Dividends: $0; 
Other Payment Types: ($155,771); 
Total Amounts Agreed to be Spent: $80,523,225. 

[End of Other Information] 

[End of section] 

Footnotes: 

[1] In response to a recurring requirement to audit the Commission's 
financial statements in section 2103(h)(2)(B) of title 36, United 
States Code, we initiated work in July 2012 to conduct the annual 
audit of the Commission's financial statements for fiscal years 2012 
and 2011. Subsequently, on December 28, 2012, the GAO Mandates 
Revision Act of 2012 was enacted, which repealed GAO's annual 
requirement to audit the Commission's financial statements. Pub. L. 
No. 112-234, § 2(g), 126 Stat. 1624, 1625 (2012). However, because we 
had made significant progress on the audit when the act was passed, we 
elected to complete the audit of the Commission's financial statements 
for fiscal years 2012 and 2011 under the authority of the Comptroller 
General to conduct evaluations on GAO's initiative. 

[2] 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. 

[3] Congress created the FCFA in 1988. FCFA funds are only to be used 
to pay the cost of salaries and expenses that exceed the amount 
appropriated for salaries and expenses because of fluctuations in 
foreign currency exchange rates that occur after the Commission's 
budget request is submitted to Congress. 36 U.S.C. § 2109(a). 

[4] 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 the attention of those charged 
with governance. 

[5] GAO, Financial Audit: American Battle Monuments Commission's 
Financial Statements for Fiscal Years 2011 and 2010, [hyperlink, 
http://www.gao.gov/products/GAO-12-404] (Washington, D.C.: Mar. 1, 
2012). 

[6] 31 U.S.C. § 3512(c), (d), commonly known as FMFIA, requires the 
head of an agency, based on the agency's internal evaluation, to 
provide an annual Statement of Assurance on the effectiveness of the 
agency's management, administrative, and financial reporting controls. 
OMB A-123 implements FMFIA and defines management's responsibility for 
internal control in federal agencies. 

[7] GAO, Management Report: Improvements Are Needed to Strengthen the 
American Battle Monuments Commission's Internal Controls and 
Accounting Procedures, [hyperlink, 
http://www.gao.gov/products/GAO-12-830R] (Washington, D.C.: July 26, 
2012). 

[8] See Federal Accounting Standards Advisory Board 1, Accounting for 
Selected Assets and Liabilities, and Financial Accounting Standards 
Board 830, Foreign Currency Matters. In addition, the Treasury 
Financial Manual instructs federal agencies to use the Treasury 
exchange rate for this purpose. 

[9] The internal exchange rates the Commission used for recognizing 
transactions denominated in the other currencies were significantly 
closer to the statutory rate and the volume of transactions was 
considerably less than those denominated in euros. Consequently, the 
effect on these foreign currency transactions was not significant. 

[10] When the Commission initially places orders with vendors, it 
records budgetary obligations to reserve funds to pay for the goods 
and services. Once the goods have been received, the services have 
been performed, or a decision has been made that the goods or services 
are no longer needed, the related obligation is no longer valid and 
should be deobligated. 

[11] OMB A-123 defines management's responsibility for developing and 
maintaining internal control in federal agencies and provides guidance 
for federal managers to use in providing an annual FMFIA assurance 
statement on whether the agency's internal control met the objectives 
of effective and efficient operations, reliable financial reporting, 
and compliance with laws and regulations. The internal control 
assessment that OMB A-123 directs agencies to perform to support its 
annual FMFIA assurance statement is critical to effective monitoring 
of internal control over financial reporting. 

[12] In fiscal year 2012, the Commission contracted with one outside 
service organization to process its federal employee payroll 
transactions and another organization to reconcile its fund balance 
with Treasury and to prepare its financial statements. 

[13] In accordance with Statement of Standards on Attestation 
Engagements No. 16, Reporting on Controls at a Service Organization, 
the auditors of each of these external service organizations issued 
reports concerning the design and operating effectiveness of the 
service organizations' internal control over the processing of user 
transactions. Services provided by an external service organization 
are considered to be part of a user entity's information system 
relevant to the user entity's financial reporting if the services 
affect classes of transactions that are significant to the user 
entity's financial statements as well as the financial reporting 
process used to prepare the financial statements. 

[14] Service auditor reports identify any key complementary user 
entity controls that user entities should have in place to achieve the 
control objectives described in the service auditor reports. 

[15] [hyperlink, http://www.gao.gov/products/GAO-12-404]. 

[16] The Commission maintains three payroll systems for foreign 
employees located in the following countries: (1) Belgium, (2) the 
United Kingdom (England), (3) France, (4) Italy, (5) Luxembourg, (6) 
the Netherlands, and (7) Tunisia. 

[17] Pub. L. No. 112-74, div. H, title III, 125 Stat. 786, 1160 (2011). 

[18] The internally developed exchange rates the Commission used for 
recognizing transactions denominated in the other foreign currencies, 
including the Tunisian dinars, Philippine pesos, and Mexican pesos, 
were significantly closer to the Treasury rate, and the volume of 
these transactions was significantly less than that of those 
denominated in euros. Consequently, funds, if any, used from the FCFA 
for these other foreign currency transactions were less significant. 

[19] Our evaluation was based on a statistical sample from a 
population of 15,650 expenditures totaling $8.6 million charged to the 
FCFA during fiscal year 2012. Net and absolute dollar value totals for 
the population were $8.6 million and $9.1 million, respectively. We 
are 95 percent confident that the upper error limit total that should 
have been charged to the Commission's appropriations for salaries and 
expenses is $7.3 million if the use of FCFA funds was noncompliant in 
a similar fashion as in those transactions we fully evaluated. 

[20] The RSI comprises the Management's Discussion and Analysis and 
the Maintenance, Repairs, and Improvements sections that are included 
with the financial statements. 

[21] Other information consists of information included with the 
financial statements, other than the RSI and the auditor's report. 

[End of section] 

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