Recommendations for Executive Action

1. Status: Closed - Implemented

   Comments: The Library of Congress performs the accounting for the Capitol Preservation Fund (CPF), including the preparation of its financial statements. During our audits of the CPF's fiscal years 2005 and 2004 financial statements, we identified significant errors in the CPF's fiscal year 2005 financial statements that were not detected during the Library of Congress' preparation and review of the financial statements. These errors represented significant deficiencies in the Library's CPF-related financial reporting controls. Specifically, we found that the fiscal year 2005 financial statements (1) contained significant, though offsetting, errors in amounts received from and used by investing activities in the Statement of Cash Flows; (2) did not correctly identify and present the amount of the change in net assets as part of the reconciliation of the change to the net cash provided/used by operating activities in the Statement of Cash Flows; and (3) did not correctly identify and present the amount of temporarily restricted net assets released from restrictions during the year in the Statement of Activities. It is important for the Library to maintain internal controls over the preparation and review of the CPF's financial statements in order to provide adequate assurance that errors and omissions in the financial statements are prevented or detected on a timely basis. We recommended that the Librarian of Congress direct the Library's Chief Financial Officer to strengthen the Library's CPF-related financial statement preparation and review process by establishing procedures that specify the nature and source of financial information needed to prepare and support accurate CPF financial statement balances and classifications and facilitate their review. In response to our recommendations, in May 2007 the Library provided procedures specifying the nature and source of financial information needed to prepare and support the financial statements. This actions should improve the Library of Congress' controls over preparation of CPF financial statements.

   Recommendation: To improve the reliability of CPF financial statements provided to potential users, the Librarian of Congress should direct the Library's Chief Financial Officer to strengthen the Library's CPF-related financial statement preparation and review process by establishing procedures that specify the nature and source of financial information needed to prepare and support accurate CPF financial statement balances and classifications and facilitate their review.

   Agency Affected: Library of Congress

2. Status: Closed - Implemented

   Comments: During our audit of the Capitol Preservation Fund's (CPF) fiscal years 2005 and 2004 financial statements, we found that the Library of Congress, which performs the accounting for the CPF, did not have adequate controls and procedures to ensure that the CPF had sufficient cash in its account with the U.S. Treasury prior to approving payments from the account. Specifically, over a 4-week period covering late September and early October 2004, the Library made five CPF disbursements that exceeded the CPF's available cash balance, resulting in negative balances in the CPF's cash account with Treasury. Adequate controls and procedures are important to ensure that the CPF has sufficient funds available before disbursements are made. We recommended that all CPF-related payment recommendations receive supervisory review and approval that includes reviewing evidence confirming that sufficient funds will be available to fund the planned payments at the time they will be made. In response to our recommendations, beginning in May 2007, the Library conducts supervisory review and approval of the evidence of available cash, prior to disbursement. These actions should ensure that the CPF has sufficient cash in its account with the U.S. Treasury to cover planned payments.

   Recommendation: To help strengthen internal controls over CPF-related payments for vendor invoices and investments in Treasury the Librarian of Congress should direct the Library's Chief Financial Officer to revise applicable processes and procedures to require that all CPF-related payment recommendations receive supervisory review and approval that includes reviewing evidence confirming that sufficient funds will be available to fund the recommended payment.

   Agency Affected: Library of Congress

3. Status: Closed - Implemented

   Comments: During our audit of the Capitol Preservation Fund's (CPF) fiscal years 2005 and 2004 financial statements, we found that the Library of Congress, which performs the accounting for the CPF, did not have adequate controls and procedures to ensure that the CPF had sufficient cash in its account with the U.S. Treasury prior to approving payments from the account. Specifically, over a 4-week period covering late September and early October 2004, the Library made five CPF disbursements that exceeded the CPF's available cash balance, resulting in negative balances in the CPF's cash account with Treasury. Adequate controls and procedures are important to ensure that the CPF has sufficient funds available before disbursements are made. We recommended that all CPF-related payment recommendations be based on available cash balance data that have been reconciled with the CPF general ledger and other reliable source information to confirm that the CPF will have sufficient cash to fund the planned payments at the time they will be made. In response to our recommendations, beginning in May FY 2007, the Library reconciles the cash balance data with the general ledger to verify that sufficient cash is available prior to disbursement. These actions should ensure that the CPF has sufficient cash in its account with the U.S. Treasury to cover planned payments.

   Recommendation: To help strengthen internal controls over CPF-related payments for vendor invoices and investments in Treasury securities, the Librarian of Congress should direct the Library's Chief Financial Officer to revise applicable processes and procedures to require that all CPF-related payment recommendations be based on available cash balance data that have been reconciled with the CPF general ledger and other reliable source information to confirm that the CPF will have sufficient cash to fund the planned payments at the time they will be made.

   Agency Affected: Library of Congress

4. Status: Closed - Implemented

   Comments: The Library of Congress performs the accounting for the Capitol Preservation Fund (CPF), including the preparation of its financial statements. During our audits of the CPF's fiscal years 2005 and 2004 financial statements, we identified significant errors in the CPF's fiscal year 2005 financial statements that were not detected during the Library of Congress' preparation and review of the financial statements. These errors represented significant deficiencies in the Library's CPF-related financial reporting controls. Specifically, we found that the fiscal year 2005 financial statements (1) contained significant, though offsetting, errors in amounts received from and used by investing activities in the Statement of Cash Flows; (2) did not correctly identify and present the amount of the change in net assets as part of the reconciliation of the change to the net cash provided/used by operating activities in the Statement of Cash Flows; and (3) did not correctly identify and present the amount of temporarily restricted net assets released from restrictions during the year in the Statement of Activities. It is important for the Library to maintain internal controls over the preparation and review of the CPF's financial statements in order to provide adequate assurance that errors and omissions in the financial statements are prevented or detected on a timely basis. We recommended that the Librarian of Congress direct the Library's Chief Financial Officer to strengthen the Library's CPF-related financial statement preparation and review process by establishing procedures that require review of the CPF's financial statements and the related supporting financial information used in their preparation. In response to our recommendations, in May 2007 the Library documented supervisory review of the FY 2006 and FY 2007 financial statements and related financial information. This actions should improve the Library of Congress' controls over preparation and review of CPF financial statements.

   Recommendation: To improve the reliability of CPF financial statements provided to potential users, the Librarian of Congress should direct the Library's Chief Financial Officer to strengthen the Library's CPF-related financial statement preparation and review process by establishing procedures that require review of the CPF's financial statements and the related supporting financial information used in their preparation.

   Agency Affected: Library of Congress

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