Summary: Pursuant to a legislative requirement, GAO provided information on the Congressional Award Foundation's fiscal year (FY) 1997 financial statements and on management's assertions regarding the Foundation's system of internal controls as of September 30, 1997, focusing on: (1) the need to establish and document certain internal control policies and procedures suggested as a result of GAO's FY 1996 audit; and (2) additional matters identified during GAO's FY 1997 audit that relate to those previously identified weaknesses.
GAO noted that: (1) in conducting its FY 1997 audit, GAO found that the Foundation had made progress in addressing each of the accounting and internal control weaknesses GAO identified during its FY 1996 audit; (2) the Foundation had assessed the collectibility of its fiscal yearend accounts receivable; (3) however, it had not yet included information such as invoice numbers in its subsidiary accounts receivable records, which would facilitate followup on outstanding receivables; (4) it had not initiated procedures to reconcile receivable subsidiary data to other pertinent information; (5) the lack of subsidiary account data and these internal controls contributed to errors in the Foundation's FY 1997 accounting records; (6) the Foundation improved its tracking of restricted contributions by creating separate funds and related general ledger accounts; (7) however, it did not develop and implement the policies and procedures needed to help ensure that donor-imposed restrictions are identified and properly satisfied; (8) in preparing its FY 1997 financial statements, the Foundation engaged a public accounting firm to compile its financial statements and to develop the supporting documentation for the necessary worksheet adjustments; (9) while hiring a firm to prepare the statements and provide supporting documentation reduces the risk that worksheet adjustments would not be clearly documented, it is not a substitute for formalizing internal control policies and procedures for management's required review and approval of the adjustments; (10) as part of GAO's FY 1997 audit, it noted that the Foundation had taken steps to improve its handling of its in-transit deposits, which resulted in fewer reconciling items at fiscal yearend; (11) however, as of September 30, 1997, the Foundation had not established internal control policies and procedures requiring: (a) a monthly reconciliation of the Foundation's recorded cash balance with the balance reported by the bank; (b) the prompt and effective followup of any reconciling items identified; and (c) appropriate supervisory review; (12) while GAO's FY 1997 audit did not identify any unauthorized or unsupported transactions, the Foundation was sometimes authorizing payments to vendors based on facsimiles of invoices; and (13) because facsimiles do not contain original signatures, it is more difficult to identify duplicates.
