This is the accessible text file for GAO report number GAO-06-363 
entitled 'Financial Audit: Senate Restaurants Revolving Fund for Fiscal 
Years 2005 and 2004' which was released on March 31, 2006. 

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Report to the Committee on Rules and Administration, U.S. Senate, and 
the Architect of the Capitol: 

March 2006: 

Financial Audit: 

Senate Restaurants Revolving Fund for Fiscal Years 2005 and 2004: 

[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-06-363]: 

Contents: 

Letter: 

Appendix: 

Appendix I: Report on Audit of the U.S. Senate Restaurants Revolving 
Fund: 

Independent Auditor's Report: 

Balance Sheets: 

Statements of Operations and Changes in U.S. Government Equity: 

Statements of Cash Flows: 

Notes to Financial Statements: 

Letter March 31, 2006: 

The Honorable Trent Lott: 
Chairman: 
The Honorable Christopher J. Dodd: 
Ranking Minority Member: 
Committee on Rules and Administration: 
United States Senate: 

The Honorable Alan M. Hantman: 
Architect of the Capitol: 

As requested, we provided for audits of the financial statements of the 
U.S. Senate Restaurants Revolving Fund (the Fund) for the fiscal years 
ended September 30, 2005 and 2004, by contracting with the independent 
public accounting firm of Clifton Gunderson LLP. The contract required 
that the audit be conducted in accordance with U.S. generally accepted 
government auditing standards and the joint GAO/President's Council on 
Integrity and Efficiency (PCIE)[Footnote 1] Financial Audit Manual. 

In its audit of the Fund, Clifton Gunderson LLP found the following: 

* The financial statements were presented fairly, in all material 
respects, in conformity with U.S. generally accepted accounting 
principles. 

* The Fund maintained effective internal control over financial 
reporting (including safeguarding assets) and compliance with laws and 
regulations. 

* There was no reportable noncompliance with selected provisions of 
laws and regulations it tested. 

Although Clifton Gunderson LLP found that the Fund maintained effective 
internal control, it did identify certain matters involving the Fund's 
control environment that while not significant enough to be considered 
reportable conditions,[Footnote 2] deserve management attention. 
Clifton Gunderson LLP is reporting these matters along with its 
recommendations for improvement to management in a separate letter. 

As disclosed in Clifton Gunderson LLP's report and in more detail in 
the notes to the Fund's financial statements, the operation of the 
Senate Restaurants is economically dependent on financial and other 
support provided through the Architect of the Capitol (the Architect) 
and by the U.S. Senate. The financial statements present the financial 
position and the results of activities financed through the Fund and 
are not intended to present the financial position and results of 
operations of the Senate Restaurants as a whole. 

* The Fund's financial statements for fiscal years 2005 and 2004 
include direct financial support received from the Architect and the 
Senate totaling $850,000 and $1,100,000, respectively, from transferred 
appropriations. 

* The Fund's financial statements for fiscal years 2005 and 2004 do not 
include other support that benefits the operation of the restaurants. 
Specifically, the Architect provided approximately $161,183 and 
$217,407 in fiscal years 2005 and 2004, respectively, for the purchase 
and maintenance of restaurant-related capital items, which remain the 
property of the Architect, and professional fees. In addition, during 
fiscal years 2005 and 2004, the Architect and the Government Printing 
Office provided the Fund with support services, the value of which 
cannot be readily determined. 

As disclosed in Clifton Gunderson LLP's report and note 1 to the Fund's 
financial statements, losses from operations totaled $680,965 and 
$1,058,543 in fiscal years 2005 and 2004, respectively. If losses from 
operations continue, the Fund will continue to require future support 
to maintain operations. 

In connection with the audit of the Fund's financial statements 
performed by Clifton Gunderson LLP, we reviewed its report and related 
audit documentation and, as necessary, met with Clifton Gunderson LLP 
representatives and the Fund's management. Our review, as 
differentiated from an audit in accordance with U.S. generally accepted 
government auditing standards, was not intended to enable us to 
express, and we do not express, opinions on the Fund's financial 
statements and about the effectiveness of its internal control or 
conclude on its compliance with laws and regulations. Clifton Gunderson 
LLP is responsible for the accompanying auditor's report and for the 
conclusions expressed in the report. However, our review disclosed no 
instances in which Clifton Gunderson LLP did not comply, in all 
material respects, with U.S. generally accepted government auditing 
standards and the joint GAO/PCIE Financial Audit Manual. 

This report is a matter of public record and is intended for the use of 
the U.S. Senate, the Architect, the management of the Senate 
Restaurants, and other interested parties. We are sending copies of 
this report to the Chairman and Ranking Minority Member, Subcommittee 
on Legislative Branch, Senate Committee on Appropriations, and the 
Majority Leader and Minority Leader of the Senate. Copies of this 
report will be made available to others upon request. This report is 
also available at no charge on the GAO Web site at [Hyperlink, 
http://www.gao.gov]. 

If you or your staff have any questions concerning this report, please 
contact me at (202) 512-3406 or [Hyperlink, sebastians@gao.gov]. 
Contact points for our Offices of Congressional Relations and Public 
Affairs may be found on the last page of this report. Contributors to 
this report were Julie T. Phillips, Assistant Director, and Kwabena 
Ansong. 

Signed by: 

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

[End of section] 

Appendixes: 

Appendix I: Report on Audit of the U.S. Senate Restaurants Revolving 
Fund: 

Independent Auditor's Report: 

Clifton Gunderson LLP: 
Certified Public Accountants & Consultants: 

Independent Auditor's Report: 

Comptroller General: 
United States Government Accountability Office: 

in our audits of the United States Senate Restaurants Revolving Fund 
(the Fund) for fiscal years 2005 and 2004, we found: 

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

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

* no reportable noncompliance in fiscal year 2005 with laws and 
regulations we tested. 

The following sections discuss in more detail (1) these conclusions and 
(2) the scope of our audits. 

Opinion on Financial Statements: 

The financial statements, including the accompanying notes, present 
fairly, in all material respects, in conformity with U.S. generally 
accepted accounting principles, the financial position of the Fund as 
of September 30, 2005 and 2004, and the results of its operations and 
cash flows for the fiscal years then ended. 

As discussed in note 1, the financial statements present the financial 
position and the results of operations of the Fund and are not intended 
to present the financial position and results of operations of the 
Senate Restaurants as a whole. Amounts for capital expenditures and 
related repairs and maintenance purchased by the Architect of the 
Capitol (the Architect) for the benefit of the Fund are not reflected 
in the Fund's financial statements. Also, the financial statements do 
not include such costs as space and utilities, which are not readily 
identifiable. 

As discussed in Note 1, the operations of the Fund are economically 
dependent on direct support provided through the Architect and by the 
United States Senate. In fiscal years 2005 and 2004, the Fund received 
$850,000 and $1,100,000, respectively, in direct financial support to 
cover losses from operations, which totaled $680,965 and $1,058,543, 
respectively, during the same period. If losses from operations 
continue, the Fund will continue to require financial support to 
maintain operations. 

Opinion on Internal Control: 

The Fund maintained, in all material respects, effective internal 
control over financial reporting (including safeguarding assets) and 
compliance as of September 30, 2005, that provided reasonable assurance 
that misstatements, losses, or noncompliance material in relation to 
the financial statements would be prevented or detected on a timely 
basis. Our opinion is based on criteria established by the U.S. 
Government Accountability Office (GAO) Standards for Internal Control 
in the Federal Government. 

We found certain matters involving the control environment that we do 
not consider reportable conditions. [NOTE 1] We are communicating these 
matters to the Fund's management, along with our recommendations for 
improvement, in a separate letter. 

Compliance with Laws and Regulations: 

Our tests for compliance in fiscal year 2005 with selected provisions 
of laws and regulations disclosed no instances of noncompliance that 
would be reportable under U.S. generally accepted government auditing 
standards. However, the objective of our audit was not to provide an 
opinion on overall compliance with laws and regulations. Accordingly, 
we do not express such an opinion. 

Objectives, Scope, and Methodology: 

The Fund's management is responsible for (1) preparing the financial 
statements in conformity with U.S. generally accepted accounting 
principles; (2) establishing, maintaining, and assessing internal 
control to provide reasonable assurance that control objectives are 
met; and (3) complying with applicable laws and regulations. 

We are responsible for obtaining reasonable assurance about whether (1) 
the financial statements are presented fairly, in all material 
respects, in conformity with U.S. generally accepted accounting 
principles, and (2) management maintained effective internal control as 
of September 30, 2005, the objectives of which are the following: 

* Financial reporting: Transactions are properly recorded, processed, 
and summarized to permit the preparation of financial statements in 
conformity with U.S. generally accepted accounting principles, and 
assets are safeguarded against loss from unauthorized acquisition, use, 
or disposition. 

* Compliance with applicable laws and regulations: Transactions are 
executed in accordance with laws governing the use of budget authority 
and with other laws and regulations that could have a direct and 
material effect on the financial statements. 

NOTE: 

[1] Reportable conditions involve matters coming to our attention 
relating to significant deficiencies in the design or operation of the 
internal control that, in our judgment, could adversely affect the 
organization's ability to record, process, summarize, and report 
financial data consistent with the assertions of management in the 
financial statements. 

We are also responsible for testing compliance with selected provisions 
of laws and regulations that have a direct and material effect on the 
financial statements. 

In order to fulfill these responsibilities, we (1) examined, on a test 
basis, evidence supporting the amounts and disclosures in the financial 
statements; (2) assessed the accounting principles used and significant 
estimates made by management; (3) evaluated the overall presentation of 
the financial statements; (4) obtained an understanding of internal 
control related to financial reporting (including safeguarding assets) 
and compliance with laws and regulations (including execution of 
transactions in accordance with budget authority); (5) tested relevant 
internal control over financial reporting (including safeguarding 
assets) and compliance, and evaluated the design and operating 
effectiveness of internal control for the fiscal year ended September 
30, 2005; and (6) tested compliance in fiscal year 2005 with selected 
provisions of 2 U.S.C. 2042-2050, certain provisions of the Legislative 
Branch Appropriations Act, Department of the Treasury regulations on 
cash, Office of Personnel Management regulations on employee benefits 
and employer costs, and Internal Revenue Service regulations on federal 
income and Social Security tax withholdings. 

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

We did not test compliance with all laws and regulations applicable to 
the Fund. We limited our tests of compliance to those laws and 
regulations that we deemed applicable to the financial statements for 
the fiscal year ended September 30, 2005. We caution that noncompliance 
may occur and not be detected by these tests and that such testing may 
not be sufficient for other purposes. 

We performed our work in accordance with U.S. generally accepted 
government auditing standards and the joint GAO/President's Council on 
Integrity and Efficiency (PCIE) Financial Audit Manual. 

Agency Comments and Our Evaluation: 

In commenting on the draft of this report, the Fund's management 
concurred with the facts and conclusions in our report. 

Signed by: 

Clifton Gunderson, LLP: 

Calverton, Maryland: 
December 16, 2005: 

[See PDF for financial statements] 

[End of section] 

(196076): 

FOOTNOTES 

[1] PCIE is an interagency council that is charged with promoting 
integrity and effectiveness in federal programs and primarily consists 
of the presidentially appointed inspectors general (IG) under the IG 
Act, as amended. 

[2] Reportable conditions are matters coming to the auditor's attention 
that in the auditor's judgment should be communicated because they 
represent significant deficiencies in the design or operation of 
internal control, which could adversely affect the entity's ability to 
meet the internal control objectives described in the report. 

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