UNITED STATES 

HOUSE OF REPRESENTATIVES

AUDIT REPORT

Audit of the Financial Statements

For the Fiscal Year Ended September 30, 2012

Report No. 13-HSW-01

May 1, 2013

Table of Contents

Office of Inspector General Audit Report Summary .......................................5

Management’s Discussion & Analysis............................................................9

Independent Auditors’ Report.....................................................................19

Chief Administrative Officer’s Audit Report Response..................................41

Fiscal Year 2012 Financial Statements..........................................................45 

 Consolidated Balance Sheets...........................................................................48

 Consolidated Statements of Net Cost..............................................................49

 Consolidated Statements of Changes in Net Position......................................50

 Combined Statements of Budgetary Resources ..............................................51

Notes to the Financial Statements...............................................................53

Required Supplementary Information..........................................................75

Other Accompanying Information................................................................79
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Office of Inspector General

 Audit Report Summary
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Office of Inspector General Audit Report Summary

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Management’s Discussion & Analysis
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Management’s Discussion and Analysis (Unaudited)

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Management’s Discussion and Analysis

Fiscal Year 2012

Introduction

Management’s Discussion and Analysis (MDA) provides a high level overview of the origin and

mission of the U.S. House of Representatives. Fiscal Year 2012 (October 1, 2011 – September

30, 2012) coincided with the 112th session of the U.S. Congress.  

Origin, History, and Mission

The U. S. House of Representatives (the House) is one of two legislative chambers that

comprise the Congress of the United States (the other is the U.S. Senate). Article I, Section 1 of

the Constitution, adopted by the Constitutional Convention on September 17, 1787, created

and vested all legislative powers to the Congress.   

Location, Size, and Organization

The House chamber is located in the U.S. Capitol in Washington, DC.    Other House

administrative buildings in Washington, DC include the Cannon, Longworth, Rayburn and Ford

House Office Buildings.  

Law fixes the number of voting representatives in the House at no more than 435,

proportionally representing the population of the 50 states. Also referred to as a congressman

or congresswoman, each representative is elected to a two‐year term serving the people of a

specific congressional district. Among other duties, representatives introduce bills and

resolutions, offer amendments and serve on committees. To be elected, a representative must

be at least 25 years old, a United States citizen for at least seven years and an inhabitant of the

state he or she represents.

Article 1, Section 2 of the Constitution provides for both the minimum and maximum sizes for

the House of Representatives. Currently, there are five delegates representing the District of

Columbia, the Virgin Islands, Guam, American Samoa, and the Commonwealth of the Northern

Mariana Islands. A resident commissioner represents Puerto Rico. The delegates and resident

commissioner possess the same powers as other members of the House, except that they may

not vote when the House is meeting as the House of Representatives.  

The Rules of the House, adopted at the beginning of each new Congress, allow for the creation

of standing, select and joint committees. The 112th Congress has 20 standing committees:   

Committee on Agriculture

Committee on Appropriations

Committee on Armed Services

Committee on the Budget

Committee on Education and the Workforce  
Management’s Discussion and Analysis (Unaudited)

12

Committee on Energy and Commerce

Committee on Ethics  

Committee on Financial Services

Committee on Foreign Affairs

Committee on Homeland Security

Committee on House Administration

Committee on the Judiciary

Committee on Natural Resources

Committee on Oversight and Government Reform

Committee on Rules

Committee on Science, Space, and Technology  

Committee on Small Business

Committee on Transportation and Infrastructure

There is a Permanent Select Committee on Intelligence, and five joint committees: The Joint

Economic Committee, The Joint Committee on Taxation, the Joint Committee on the Library,

the Joint Committee on Printing and the Joint Select Committee on Deficit Reduction.

House Leadership

Article I, Section 2 of the Constitution states, “The House of Representatives shall chuse (sic)

their Speaker and other officers.”  In addition to the Speaker, each political party in the House

has a leadership hierarchy, typically including a Majority Leader, Minority Leader, Majority

Whip, and Minority Whip.  

House Officers and Organizations

Rule II of the Rules of the House for the 112th Congress provided for the election of four officers

to support House operations: a Clerk, a Sergeant‐at‐Arms, a Chief Administrative Officer and a

Chaplain. The Rules of the House also established the Offices of Inspector General, Historian

and General Counsel.

Under House Rule II, the Chief Administrative Officer has “operational and financial

responsibility for functions as assigned by the Committee on House Administration and shall be

subject to the oversight of the Committee on House Administration.” According to Committee

on House Administration records, the Chief Administrative Office has been designated as the

disbursing officer for the House of Representatives since July 1, 1995.   Additionally, House Rule

II requires the Chief Administrative Officer to “fully cooperate with the appropriate offices and

persons in the performance of reviews and audits of financial records and administrative

operations.”  Accordingly, an audit of the financial statements of the House, as prepared by the

Chief Administrative Officer, is performed annually.   

   
Management’s Discussion and Analysis (Unaudited)

13

FINANCIAL STATEMENT HIGHLIGHTS

Basis of Accounting and Presentation

The consolidated financial statements for fiscal years (FYs) 2011 and 2012 present the financial

position, net cost of operations, changes in net position and budgetary resources of the House.  

These statements have been prepared in accordance with U.S. Generally Accepted Accounting

Principles (GAAP) issued by the Federal Accounting Standards Advisory Board (FASAB) and the

form and content requirements of the Office of Management and Budget’s (OMB) Circular No.

A‐136,  Financial Reporting Requirements.

The House’s accounting structure, in accordance with GAAP, utilizes both accrual and budgetary

accounting. Under accrual accounting, events are recognized as they occur, as opposed to when

cash is received or disbursed. Therefore, revenues are recorded when earned and expenses are

recorded when a liability is incurred, without regard to receipt or payment of cash. The

budgetary accounting, on the other hand, facilitates compliance with legal constraints on, and

controls over, the use of Federal funds.

Budgetary Resources

The House finances most of its operations through congressional appropriations of budget

authority. To the extent that revenue generated by some House entities does not cover

expenses, appropriations are required. The House receives annual, multi‐year and no‐year

appropriations that may be used, within statutory limits, for operating and capital

expenditures. A financing source is recognized for these appropriated funds received, less

appropriations transferred or not available through rescission or cancellation. The House

usually receives the full amount of its appropriation at the beginning of each fiscal year.  The

House reported total budgetary resources for FY 2012 of $1.5 billion, down 3 percent from FY

2011.  The House reported $88 million of total unpaid obligated balances as of September 30,

2012.

   

Dollars in Millions 2012 2011

%      

Change

Total Budgetary Resources 1,479 $     $    ‐ 1,526 3%

Obligations Incurred 1,351 $     $    ‐ 1,390 3%

Net Outlays $    1,364 $     ‐ 1,371 1%

Obligations Incurred  

and Net Outlays

Obligations Incurred

decreased by $39 million  

in FY 2012.  Net Outlays

decreased by $7 million  

in FY 2012.
Management’s Discussion and Analysis (Unaudited)

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Balance Sheet

Condensed Balance Sheet Data

  

Total Assets – The House reported total assets of $262 million as of September 30, 2012, a 19

percent decrease from prior year total assets of $325 million.  The Fund Balance with Treasury

(FBwT) of $215 million represents the primary asset on the Balance Sheet of the House (82

percent of total assets).    FBwT decreased due to a reduction in the House’s appropriation

coupled with reduced spending.

Property and Equipment is the second largest asset, with a net balance of $41 million.    The

major items in this category include computer software and hardware, equipment and work in

process.   The decrease of approximately $10 million can be attributed to the depreciation and

disposal of equipment.

Other Assets include Cash, Accounts Receivable, Inventory and Operating Materials and

Supplies, and Advances and Prepayments.  The 33% decrease in Other Assets is primarily due to

a decrease in Prepayments.  

Total Liabilities – The House reported total liabilities of $79 million as of September 30, 2012, a

7 percent increase from the prior year total of $74 million.    The primary categories include

Accounts Payable of $34 million (43 percent of total liabilities) and Actuarial Federal Employees’

Compensation Act (FECA) Liabilities of $26 million (33 percent of total liabilities).    Actuarial

FECA Liabilities significantly changed due to an increase in Workers’ Compensation expenses.  

Dollars in Millions 2012 2011

%      

Change

Fund Balance with Treasury $    215 $     ‐ 265 19%

Property and Equipment, Net         41          ‐ 51 20%

Other Assets           6            ‐ 9 33%

Total Assets $    262 $     ‐ 325 19%

Accounts Payable         34         32 6%

Actuarial Federal Employees' Compensation Act Liabilities 26                  21 24%

Other Liabilities         19          ‐ 21 10%

Total Liabilities $      79 $      74 7%

Unexpended Appropriations       148        ‐ 202 27%

Cumulative Results of Operations         35          ‐ 49 29%

Total Net Position $    183 $     ‐ 251 27%

Total Liabilities and Net Position $    262 $     ‐ 325 19%
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Management’s Discussion and Analysis (Unaudited)

Other Liabilities include categories such Accrued Payroll and Benefits, Accrued Annual Leave,

Capital Lease Liabilities, Employer Contributions and Payroll Taxes Payable, and Other Post

Employment Benefits Due and Payable.   

Total Net Position – The Net Position as of September 30, 2012 was $183 million, a decrease of

$68 million (27 percent) from the prior fiscal year.    The balance was primarily comprised of

Unexpended Appropriations of $148 million.  The decrease in net position is due to a decrease

in both Unexpended Appropriations and Cumulative Results of Operations.    Unexpended

Appropriations decreased as a result of a reduction in the House’s appropriation.   Cumulative

Results of Operations decreased as a result of the reduction in the book value of fixed assets

and disposal of equipment.

Statement of Net Cost

Net Cost of Operations – The Net Cost of Operations for FY 2012 was $1.6 billion, a slight 1

percent decrease from FY 2011, primarily comprised of Legislative Activities.    The difference

between Total Financing Sources and Net Cost of Operations is the Net Change of Cumulative

Results of Operations.   

Limitations of the Financial Statements

The principal financial statements have been prepared to report the financial position and

results of operations of the entity.   

While the statements have been prepared from the books and records of the entity in

accordance with GAAP for federal entities and in the formats prescribed by OMB, the

statements are in addition to the financial reports used to monitor and control budgetary

resources that are prepared from the same books and records.   

The statements should be read with the realization that they are for a component of the U.S.

Government, a sovereign entity.
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Management’s Discussion and Analysis (Unaudited)
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Management’s Discussion and Analysis (Unaudited)

Internal Control Assessment

OMB Circular A‐123 Appendix A Review

The Internal Control Assessment is a review of the design and operating effectiveness of key

internal control activities for the CAO’s business processes, for safeguarding of assets, and for

compliance with applicable laws and regulations.  The Program follows a risk‐based approach in

determining the key controls to be assessed during the current year in accordance with

Appendix A of OMB Circular A‐123, Management’s Responsibility for Internal Control over

Financial Reporting.

A Senior Assessment Team (SAT) exists to provide senior management oversight for assessment

of internal controls over financial reporting as they relate  to budgetary and financial policies,

standard operating procedures and business systems. The SAT conducts monthly meetings, as

needed, to report on the findings and status to date, and discuss remediation efforts.    The

Internal Controls Program supports the SAT in performing the day‐to‐day functions of the

program.

The SAT assessed and evaluated the CAO’s compliance with Appendix A of OMB Circular A‐123

requirements as of June 30, 2012, and determined that, of the deficiencies identified, none

were determined to be a material weakness.  The nature of each deficiency, the existence of

compensating controls, the dollar value of transactions potentially affected by the deficiency,

the level of risk, and the likelihood that an error may not be prevented or detected were

included in the assessment of the deficiencies.   

Additional deficiencies were detected subsequent to June 30 during the 2012 fiscal year‐end

financial reporting process.  These deficiencies were attributed to processing issues within the

financial application and were determined to be a continuation of processing issues detected in

prior years.  The deficiencies were classified as significant deficiencies.

As a result, the House is able to provide reasonable assurance that its internal control over

financial reporting was operating effectively, and no material weaknesses were found in the

design or operation of the internal controls over financial reporting.

Office of the Inspector General (OIG) Assessment for Previous Fiscal Year

Under House Rule II of the 112th Congress, the Office of the Inspector General (OIG) provides

“audit, investigative, and advisory services to the House and joint entities in a manner

consistent with government‐wide standards.”    For FY 2011, the previous fiscal year, the OIG

engaged Cotton & Company to perform the external audit of the House’s financial statements.  

For FY 2011, the House received an unqualified audit opinion. The audit report noted two

significant deficiencies.  The two significant deficiencies related to ineffective controls over the

financial reporting process and ineffective controls over information technology.  
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Independent Auditors’ Report
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Independent Auditors’ Report

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1

INDEPENDENT AUDITORS’ REPORT

To the Inspector General

U.S. House of Representatives

Cotton & Company LLP conducted the fiscal years (FYs) 2012 and 2011 financial statement audits of the

U.S. House of Representatives (House) in accordance with auditing standards generally accepted in the

United States of America (U.S.),  the standards applicable to financial audits contained in Government

Auditing Standards, issued by the Comptroller General of the U.S., and as applicable, Office of

Management and Budget (OMB) Bulletin No. 07‐04, Audit Requirements for Federal Financial

Statements, as amended. In our audits of the House’s FYs 2012 and 2011 financial statements, we

found:

 The financial statements are presented fairly, in all material respects, in conformity with U.S.

generally accepted accounting principles.

 No material weaknesses in internal control over financial reporting (including safeguarding

assets) and compliance with laws and regulations, although internal control could be improved.

 No reportable noncompliance in FY 2012 with laws and regulations we tested.

The following sections discuss in more detail (1) these conclusions; (2) our conclusions on

Management’s Discussion and Analysis and required supplementary information; (3) our audit

objectives, scope, and methodology; and (4) the House’s comments on a draft of this report.  

OPINION ON THE FINANCIAL STATEMENTS

The financial statements, including accompanying notes, present fairly, in all material respects, in

conformity with U.S. generally accepted accounting principles, the consolidated financial position of the

House, as of September 30, 2012 and 2011, and its consolidated net costs, consolidated changes in net

position, and combined budgetary resources for the fiscal years then ended.   

CONSIDERATION OF INTERNAL CONTROL

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. A material weakness is a deficiency, or combination

of deficiencies, in internal control, such that there is a reasonable possibility that a material

misstatement of an entity's financial statements will not be prevented, or detected and corrected on a

timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control
Independent Auditors’ Report

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that is less severe than a material weakness, yet important enough to merit attention by those charged

with governance.

In planning and performing our FY 2012 audit, we considered the House’s internal control over financial

reporting and over compliance with laws and regulations. We did this as a basis for designing our

auditing procedures for the purpose of expressing our opinion on the financial statements, but not for

the purpose of expressing an opinion on the effectiveness of the House’s internal control. Accordingly,

we do not express an opinion on internal control over financial reporting and over compliance with laws

and regulations, or on management’s assertion on internal control included in Management’s Discussion

and Analysis.

Our consideration of internal control was for the limited purpose described in the Objectives, Scope, and

Methodology section of this report. It was not designed to identify all deficiencies in internal control

that might be deficiencies, significant deficiencies, or material weaknesses; therefore, there can be no

assurance that all deficiencies, significant deficiencies, or material weaknesses have been identified. We

did not identify any deficiencies in internal control that we consider to be material weaknesses. We

consider the following deficiencies in the House’s internal control to be significant deficiencies:   

 Ineffective Controls Over the Financial Reporting Process

 Ineffective Controls Over Information Technology

These significant deficiencies are discussed in more detail in Appendix A to this report. We also

identified other deficiencies in the House’s system of internal control that we do not consider to be

material weaknesses or significant deficiencies. We have communicated these matters to House

management.

COMPLIANCE WITH LAWS AND REGULATIONS

Our tests of the House’s compliance with selected provisions of laws and regulations for FY 2012

disclosed no instances of noncompliance that would be reportable under U.S. generally accepted

government auditing standards or applicable OMB audit guidance. The objective of our audit was not,

however, to provide an opinion on overall compliance with laws and regulations. Accordingly, we do not

express such an opinion.  

REQUIRED SUPPLEMENTARY INFORMATION

U.S. generally accepted accounting principles require that required supplementary information,

including Management’s Discussion and Analysis, be presented to supplement the financial statements.

Such information, although not a part of the basic financial statements, is required by the Federal

Accounting Standards Advisory Board, who considers it to be an essential part of financial reporting for

placing the basic financial statements in an appropriate operational, economic, or historical context. We

have applied certain limited procedures to the required supplementary information in accordance with

auditing standards generally accepted in the U.S. which consisted of inquiries of management about the

methods of preparing the information and comparing the information for consistency with

management’s responses to our inquiries, the basic financial statements, and other knowledge we

obtained during our audit of the basic financial statements. We do not express an opinion or provide

any assurance on the information because the limited procedures do not provide us with sufficient

evidence to express an opinion or provide any assurance.  
Independent Auditors’ Report

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OTHER INFORMATION

The Schedule of Spending is presented for the purpose of additional analysis and is not a required part

of the basic financial statements or required supplementary information. Such information has not been

subjected to the auditing procedures applied in the audit of the basic financial statements, and

accordingly, we do not express an opinion or provide any assurance on it.

OBJECTIVES, SCOPE, AND METHODOLOGY

House management is responsible for:

1. Preparing the financial statements in conformity with U.S. generally accepted accounting

principles.

2. Establishing and maintaining effective internal control over financial reporting and evaluating its

effectiveness.

3. Complying with applicable laws and regulations.

Cotton & Company is responsible for planning and performing our audit to obtain reasonable assurance

and express an opinion about whether the financial statements are presented fairly, in all material

respects, in conformity with U.S. generally accepted accounting principles. We are also responsible for

(1) obtaining a sufficient understanding of internal control over financial reporting and compliance 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 laws for which OMB audit guidance requires testing,

and (3) applying certain limited procedures to the required supplementary information 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 accounting principles used and significant estimates made by management.

 Evaluated overall presentation of the financial statements.

 Obtained an understanding of the House and its operations, including its internal control related

to financial reporting (including safeguarding assets) and compliance with laws and regulations

(including execution of transactions in accordance with budget authority).

 Tested relevant internal controls over financial reporting and compliance, and evaluated the

design and operating effectiveness of internal control.

 Tested compliance with certain provisions of laws and regulations that have a direct and

material effect on the financial statements and those required by OMB as applicable.

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. In addition, we caution that our internal

control testing may not be sufficient for other purposes.
Independent Auditors’ Report

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We did not test compliance with all laws and regulations applicable to the House. We limited our tests

of compliance to selected provisions of laws and regulations that have a direct and material effect on

the financial statements and those required by OMB audit guidance that we deemed applicable to the

House’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 auditing standards, U.S. generally

accepted government auditing standards, and applicable OMB audit guidance. We believe our audit

provides a reasonable basis for our opinion and other conclusions.  

HOUSE COMMENTS AND OUR EVALUATION

In commenting on the draft of this report, House management concurred with the facts and conclusions

in our report. Management’s comments are in Appendix B. We did not audit management’s response,

and accordingly, we express no opinion on it.  

COTTON & COMPANY LLP

Matthew H. Johnson, CPA

Partner

February 15, 2013

Alexandria, Virginia
Independent Auditors’ Report

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APPENDIX A

SIGNIFICANT DEFICIENCIES NOTED DURING THE

FY 2012 FINANCIAL STATEMENT AUDIT
Independent Auditors’ Report

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A‐1

APPENDIX A

SIGNIFICANT DEFICIENCIES NOTED DURING THE

FY 2012 FINANCIAL STATEMENT AUDIT

During our audit of the House’s FY 2012 financial statements, we identified two significant deficiencies

in internal control over financial reporting, described in this appendix. We do not consider these to be

material weaknesses.  

Weakness 1: Ineffective Controls Over the Financial Reporting Process

Summary Status: Significant Deficiency

    Prior‐Year Condition

    Open

Since FY 2009, we have reported that the House does not have effective controls over financial

reporting. During FY 2012, the House made progress on addressing previously identified errors;

however, controls around budgetary accounting and reporting and those around month‐end closing

processes need improvement. We identified the following three areas within financial reporting where

controls are not effective and improvements are needed, which collectively represent a significant

deficiency.   

1. Errors were found in the budgetary accounting and reporting process.

2. The House did not regularly reconcile subsidiary ledgers (SL) to the general ledger (GL).

3. The House has inadequate controls over PeopleSoft accounting period management.

We discuss each of these areas below and provide our recommendations for improvement.

1. Errors were found in the budgetary accounting and reporting process.

During the FY 2012 audit, we found errors in the processes and controls the House has in place to

ensure that proper budgetary GL accounts are used and that budgetary amounts are reported

accurately in the financial reporting process. Specifically, we found the following:

Undelivered Orders  

PeopleSoft, the House’s core financial management system, is not properly processing purchase order

(PO) activity. At September 30, 2012, there were 125 POs containing errors totaling an absolute amount

of $3.0 million. While the House was able to detect these errors and make the necessary corrections, its

existing controls did not identify all errors timely, and corrections required an extensive and in‐depth

review of all undelivered order activity because the root cause of the errors had not been identified. As

a result, the delivery of the draft financial statements was delayed six days.

U.S. Government Accountability Office (GAO)’s Standards for Internal Control in the Federal

Government: Accurate and Timely Recording of Transactions and Events states, “Transactions should be

promptly recorded to maintain their relevance and value to management in controlling operations and

making decisions. In addition, control activities help to ensure that all transactions are completely and

accurately recorded.”

   
Independent Auditors’ Report

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A‐2

We recommend that the Office of the Chief Administrative Officer (CAO):

 Identify the root cause of known undelivered order processing errors and the necessary

modifications to PeopleSoft.  

 Develop and implement a control process to detect and correct erroneous PO activity in the SL

and GL as part of the month‐end closing process.

Unobligated Balances

Budgetary accounting tracks whether unobligated balances are available for new obligations using the

following GL accounts:

 Unobligated balances available for new obligations are tracked in GL account 4620, Unobligated

Funds Exempt From Apportionment.

 Unobligated balances that are no longer available for new obligations but are available for

adjustments to existing obligations are tracked in GL account 4650, Expired Funds.

The House did not properly record unobligated amounts when reversing prior‐year activity and adjusting

undelivered order and payroll activity. In addition, the correct unobligated balance GL account was not

used to record transfers of prior‐year balances because posting logic for this accounting event was not

configured in PeopleSoft. As a result, the following lines in the Statement of Budgetary Resources were

misstated by $5.2 million:

 Unobligated Balances: Available – Exempt from Apportionment (understated)  

 Unobligated Balances: Not Available (overstated)

Upon notification and discussion with the auditors, the House made the necessary corrections for the

above‐noted errors on the final FY 2012 financial statements.

GAO’s Standards for Internal Control in the Federal Government states, “Internal control should

generally be designed to assure that ongoing monitoring occurs in the course of normal operations. It is

performed continually and is ingrained in the agency’s operations. It includes regular management and

supervisory activities, comparisons, reconciliations, and other actions people take in performing their

duties.”  

We recommend that the CAO:

 Implement a quarterly review of budgetary balances to ensure that unobligated balances are

properly classified.  

 Ensure that PeopleSoft has appropriate posting logic for all House accounting events.

2. The House did not regularly reconcile subsidiary ledgers to the general ledger.

During the year, the House performed SL to GL reconciliations; however, the reconciliations were not

performed on a monthly basis until July 2012. In addition, the House did not always complete the

reconciliations timely, and the reconciliation process has not been documented in the form of a

standard operating procedure. We observed that the House:  

 Did not complete the SL to GL reconciliations for October 2011 through March 2012 until May

2012.
Independent Auditors’ Report

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A‐3

 Did not start the reconciliations for April through June 2012 until July 25, 2012.  

 Did not start the September 2012 reconciliation until October 26, 2012.  

Though these reconciliations did not identify material discrepancies, failure to perform the

reconciliation increases the risk that errors may not be detected in a timely manner, resulting in a GL

that may not be complete or accurate.  

GAO’s Standards for Internal Control in the Federal Government states, “Internal control and all

transactions and other significant events need to be clearly documented ... The documentation should

appear in management directives, administrative policies, or operating manuals...Internal control should

generally be designed to assure that ongoing monitoring occurs in the course of normal operations. It is

performed continually and is ingrained in the agency’s operations. It includes regular management and

supervisory activities, comparisons, reconciliations, and other actions people take in performing their

duties.”

We recommend that the CAO:

 Ensure that the PeopleSoft SL to GL reconciliation is completed on a monthly basis, no more

than 20 days after the end of the previous month.

 Document the SL to GL reconciliation procedure, which should include the frequency and

timeliness of the reconciliation as well as roles and responsibilities.

 Incorporate the reconciliation into the month‐end closing procedures.   

3. The House has inadequate controls over PeopleSoft accounting period management.

PeopleSoft allows multiple accounting periods to be open simultaneously. This flexibility enables the

House to process current‐period transactions and close the prior accounting period concurrently. In

addition, PeopleSoft subsystems may be closed prior to the GL, and periods may be reopened.  

The House does not have formal policies and procedures regarding the management of accounting

periods in PeopleSoft. In addition, an excessive number of CAO employees have system user permission

to open and close accounting periods in PeopleSoft. As a result of the House’s inadequate controls over

accounting period management, the House omitted an entry from the interim financial statements.

While this error was not material to the financial statements, poor accounting management controls

increase the risk of errors in the financial statements.  

GAO’s Standards for Internal Control in the Federal Government states, “... In implementing these

standards, management is responsible for developing the detailed policies, procedures, and practices to

fit their agency’s operations and to ensure that they are built into and an integral part of operations. ...

Internal control and all transactions and other significant events need to be clearly documented, and the

documentation should be readily available for examination. The documentation should appear in

management directives, administrative policies, or operating manuals and may be in paper or electronic

form. All documentation and records should be properly managed and maintained.”

We recommend that the CAO:  

 Develop and implement policies and procedures over the monthly opening and closing of

PeopleSoft accounting periods.  
Independent Auditors’ Report

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A‐4

 Limit the number of individuals with rights to open and close accounting periods in PeopleSoft.    

 Incorporate a month‐end close checklist into the monthly closing procedures.   

   
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A‐5

Weakness 2:    Ineffective Controls Over Information Technology

Summary Status: Significant Deficiency

    Prior‐Year Condition

    Open

During FY 2012, the House appointed a new Chief Information Officer (CIO) and Chief Information

Security Officer (CISO) that have refocused the House’s efforts in developing, documenting, and

implementing an effective IT governance and information security program, including a risk

management framework, for its major financial systems. The House made significant advances in FY

2012; however, there are still areas for improvement to strengthen controls surrounding the

completeness, accuracy, and reliability of financial data. We noted the following ten conditions related

to internal controls over information systems, which collectively represent a significant deficiency in the

control environment. We discuss each of these areas below and provide our recommendations for

improvement.

1. A process has not been fully implemented to ensure that all major systems within the House IT

environment have undergone a risk management process as defined by the National Institute of

Standards and Technology (NIST).

The House did not complete risk assessments in accordance with NIST guidance for the House network

and Active Directory. The United States House of Representatives Information Security Policy for the

Information Security Compliance Program (HISPOL 007.0) requires that all major systems, support

systems, and applications undergo a certification and accreditation (C&A) process before

implementation, and at least every two years thereafter.  

The CAO published House Information Security Publication (HISPUB) 007.1, Risk Management

Framework, which documents a high‐level overview of the risk management framework methodology

that the CAO will follow. The CAO has not updated HISPOL 007.0 or issued further guidance, however,

including procedures guiding the implementation of NIST risk management framework methodology

and the performance of risk assessments in accordance with NIST guidance. As a result, management

cannot obtain adequate assurance that all information systems and the general IT environment are

operating with an acceptable amount of risk.  

NIST Special Publication (SP) 800‐37, Revision 1, Guide for Applying the Risk Management Framework to

Federal Information Systems: A Security Life Cycle Approach, requires that organizational officials, in

collaboration with the senior information security officer, assess the information provided by the system

owner or common control provider regarding the current security state of the system and

recommendations for addressing any residual risks. Risk assessments are employed at the discretion of

the organization to provide needed information on threats, vulnerabilities, and potential impacts, as

well as the analyses for risk mitigation recommendations.

We recommend that the CAO:  

 Implement and enforce a risk management framework to ensure that all systems are identified

and undergo a security assessment process, to include risk assessments, in accordance with

House policy and industry best practices for federal information systems. This will ensure that

management’s authorizing officials are provided with adequate information to make system

authorization decisions.

   
Independent Auditors’ Report

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A‐6

2. System Security Plans (SSPs) for major financial systems have not been fully developed and

maintained in accordance with House policy and industry best practices.

We found that SSPs were inadequate for the House network, Active Directory, and Lawson. We noted

that the PeopleSoft SSP has been fully developed and maintained in accordance with House policy and

industry best practices, as a result of updates made in FY 2012. While we noted that the Lawson SSP had

been updated in FY 2012, no updates were made to the House network or Active Directory SSPs. The

SSPs for Lawson, the House network, and Active Directory did not document all minimum security

controls based on system criticality and data.  

CAO management has not adequately developed policies and procedures that provide guidance

regarding the implementation of a risk management framework as outlined by NIST SP 800‐37, Revision

1, including minimum security control selection, scoping, and tailoring. As a result, there is an increased

risk that potential threats and vulnerabilities will not be mitigated due to a lack of security controls

commensurate with the risk of the system security categorization.

In accordance with NIST SP 800‐18, Revision 1, Guide for Developing Security Plans for Federal

Information Systems, agencies must meet the minimum security requirements of Federal Information

Processing Standard (FIPS) 200, which represent a broad‐based, balanced information security program

that addresses the management, operational, and technical aspects of protecting the confidentiality,

integrity, and availability of federal information and information systems. Agencies meet the minimum

security requirements in FIPS 200 by applying security controls selected in accordance with NIST SP 800‐

53, Revision 3, Recommended Security Controls for Federal Information Systems and Organizations, and

the designated impact levels of the information systems.

We recommend that the CAO:

 Document and implement policies and procedures that provide guidance regarding the

implementation of a risk management framework as outlined by NIST SP 800‐37, Revision 1,

including system security categorization, minimum security control selection, scoping, and

tailoring.

3. Security control assessments were not conducted to test the design and operating effectiveness of

all required controls for the House network and financial systems.  

While the House conducted a security control assessment for Lawson in FY 2012, it did not test the

design and operating effectiveness of all required controls. The House did not perform security control

assessments for the House network, Active Directory, or PeopleSoft in FY 2012.

CAO management has not adequately developed policies and procedures that provide guidance

regarding the implementation of a risk management framework, including establishing minimum

security controls in accordance with FIPS 200 and NIST SP 800‐53, Revision 3, and performing security

control assessments commensurate with the risk and criticality of the system. As a result, there is an

increased risk that CAO management does not have a complete understanding of the risk to systems

and to the IT environment.

NIST SP 800‐37, Revision 1, Guide for Applying the Risk Management Framework to Federal Information

Systems: A Security Life Cycle Approach, requires that organizations assess the security controls in

accordance with the assessment procedures defined in the security assessment plan. Security control
Independent Auditors’ Report

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A‐7

assessments determine the extent to which the controls are implemented correctly, operating as

intended, and producing the desired outcome with respect to meeting the security requirements for the

information system.

We recommend that the CAO:

 Conduct and document security control assessments for the House network, Active Directory,

and financial systems to test the design and operating effectiveness of all required controls.  

 Include the description of the implemented control, test steps to be conducted, expected test

results, and actual test results in the documentation for each control tested.  

 Obtain and document evidence from testing to allow CAO management to make objective

determinations about the effectiveness of security controls and the security of the information

system.

4. A process has not been developed or implemented for identifying and tracking all known security

weaknesses and incidents across the agency and ensuring that appropriate corrective action is

taken.

While the House has developed HISPUB 007.2, Information Systems Security Certification Process for

Applications, and HISPUB 004.1, Computer Incident Response Team Handbook, to generally guide the

plan of action and milestones (POA&M) and computer incident response team (CIRT) processes,

respectively, they are not in accordance with industry best practices, and the House has not developed

detailed procedures guiding either process. A POA&M has not been fully developed or maintained for all

financial systems and applications.

CAO management has not documented a process to ensure that all security weaknesses and security

incidents throughout the IT environment are tracked and managed from an entity‐wide perspective.

Without identifying and tracking all security weaknesses, CAO management cannot ensure that

appropriate and timely corrective action is taken to address all known issues and weaknesses. As a

result, there is an increased risk that a significant security weakness will remain vulnerable for an

extended period of time.  

HISPOL 007.0 requires that vulnerabilities identified during the review process of a major or support

application, device, or the House network be documented and tracked throughout the remediation

process. Identified vulnerabilities are prioritized based on the risk each poses. Once a vulnerability is

identified, a corrective action should be formulated and a timeframe established for its implementation.  

Additionally, in accordance with NIST SP 800‐53, Revision 3, Recommended Security Controls for Federal

Information Systems and Organizations, organizations should track and document information system

security incidents. Documenting information system security incidents includes, for example,

maintaining records about each incident, the status of the incident, and other pertinent information

necessary for forensics, evaluation of incident details, trends, and handling.

   
Independent Auditors’ Report

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A‐8

We recommend that the CAO:  

 Develop, document, and implement a process to identify and track all security weaknesses and

incidents identified throughout the environment and ensure that appropriate corrective action

is taken.   

o The incident response process should ensure that the House maintains documentation

for all identified security incidents, and that appropriate follow‐up investigations are

performed.  

o The POA&M process should ensure that POA&Ms or equivalent documentation are

developed and maintained in accordance with industry best practices for all House

systems and applications. The POA&M management process should additionally ensure

that a process is in place for testing security controls identified as corrected, to ensure

actions taken adequately mitigate or correct identified weaknesses.

5. Account management controls were not adequately managed and enforced throughout CAO.  

The CAO made progress in FY 2012 regarding account management controls. We noted, however, that

the periodic recertification of the House network was not completed in accordance with industry best

practices, and access to FinMart infrastructure was not granted in accordance with the principle of least

privilege. Specifically, we noted the following:

 The quarterly network access recertification is completed based on the login activity of the

network account, not on the continued appropriateness of access.

 Enterprise Applications identified two individuals with unnecessary administrator access rights

to the operating system supporting the FinMart production database. All operating system

access was revoked for the two individuals.   

The network account management issue exists because CAO management has not adequately

implemented a process to periodically review CAO network accounts for continued appropriateness.

This failure to appropriately complete network access recertifications increases the risk that accounts

may be used by unauthorized individuals to conduct inappropriate or malicious acts.

The inappropriate FinMart operating system access issue exists because CAO management violated

principles of least privilege by granting unnecessary operating system access rights to the FinMart

production database server. Granting administrative operating system access to two users that did not

require it increased the risk that the confidentiality, integrity, and/or availability of data residing on the

FinMart database server may have been compromised, intentionally or unintentionally.

In accordance with NIST SP 800‐53, Revision 3, Recommended Security Controls for Federal Information

Systems and Organizations, organizations are to manage information system accounts, including

establishing, activating, modifying, disabling, and removing accounts, reviewing accounts at an

organization‐defined frequency, and granting access to the system based on: (i) a valid access

authorization; (ii) intended system usage; and (iii) other attributes as required by the organization or

associated mission/business functions.

   
Independent Auditors’ Report

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A‐9

We recommend that the CAO:

 Develop and implement an account management process to ensure that periodic user access

recertifications are performed. The process should also include a review of users’ access

requirements and their continued appropriateness.   

No recommendation is issued for FinMart user access, as CAO management resolved the issue during FY

2012.

6. Contingency planning and recovery policies and procedures have not been adequately developed

and implemented to ensure a comprehensive approach that includes the House network, Active

Directory, and Lawson.

In FY 2011 we noted that the House had not adequately developed contingency plans to coordinate

recovery activities between the House network, Active Directory, and Lawson. Recovery Procedure

Annexes (RPAs) for data network systems, Active Directory, and Lawson were still in draft at the time of

our testing, and multiple components of each RPA were not fully documented. The issues noted

regarding incomplete contingency plan development were due to the continued implementation of the

Business Continuity/Disaster Recovery (BC/DR) framework. No corrective actions were completed in FY

2012, and CAO management indicated that corrective actions were not scheduled for full completion

until FY 2013. As a result, there is an increased risk that House financial operations, data, or systems

may become unavailable for an extended period of time without sufficient alternate operating

procedures in place to carry out core requirements.

In accordance with NIST SP 800‐34, Revision 1, Contingency Planning Guide for Federal Information

Systems, information system contingency planning represents a broad scope of activities designed to

sustain and recover critical system services following an emergency event. An information system

contingency plan (ISCP) provides established procedures for the assessment and recovery of a system

following a system disruption. The ISCP provides key information needed for system recovery, including

roles and responsibilities, inventory information, assessment procedures, detailed recovery procedures,

and instructions for testing a system.   

NIST SP 800‐53, Revision 3, Recommended Security Controls for Federal Information Systems and

Organizations, Control CP‐2, Contingency Plan, requires the development of a contingency plan for all

information systems.   

We recommend that the CAO:  

 Coordinate contingency planning and recovery policies and procedures to ensure a

comprehensive approach that includes the House network, Active Directory, and all critical

financial systems.

7. Policies and procedures for separation of duties have not been fully developed.

Three Lawson users with administrative application privileges are also the operating system

administrators for the servers onto which the application logs are written. These administrators have

elevated access that would allow them to access the applications logs that are written to the underlying

operating system in both a read and write capacity. This represents a segregation of duties conflict in
Independent Auditors’ Report

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A‐10

that the users with system administrator access have the necessary privileges to review, and potentially

delete any evidence of, their own actions on the system.

Additionally, the CAO’s management control program identified a deficiency concerning powerful user

privileges in Lawson and separation of duties. The separation of security administration, development,

deployment, and change management functions were not adequate, and the application administrators

maintained super‐user access. Additionally, logging and monitoring at this level of access was not

adequate to detect unauthorized activities.

Finally, the House has not developed a formal separation of duties policy for the House network.

The separation of duties issue noted is attributable to the fact that policies and procedures have not

been developed, documented, and implemented for Lawson and the House network to identify

incompatible duties and enforce separation of duty controls at both the end‐user and administrative

levels. As a result, there is an increased risk that financial data may be manipulated by unauthorized

individuals. Subsequently, there is an increased risk that fraudulent acts may go undetected and

financial data may become inaccurate and unreliable.

In accordance with NIST SP 800‐53, Revision 3, Recommended Security Controls for Federal Information

Systems and Organizations, organizations should separate duties of individuals as necessary to prevent

malevolent activity without collusion, document separation of duties, and implement separation of

duties through assigned information system access authorizations.

We recommend that the CAO:

 Develop, document, and implement policies and procedures to ensure that separation of duties

is defined and implemented at the end‐user and administrative levels for Lawson and the

Network.

8. Audit logging and monitoring controls have not been adequately designed and implemented for

financial applications.

We noted inadequate monitoring of sensitive application transactions/table edits and inappropriate

separation of duties for security personnel reviewing system/application logs for PeopleSoft. We also

noted inadequate logging and monitoring of FinMart infrastructure components. Specifically, we noted

the following issues:

 At an application level, failed logon attempts and security role changes are the only auditable

events that are actively monitored for PeopleSoft. While management has established key fields

and tables for trigger‐based auditing, active monitoring and review of these logs is not

performed.

 The UNIX administrators supporting PeopleSoft, all of whom have SUDO access to root on the

production application, web, and database Solaris servers, are responsible for the

administration of the operating system as well as the monitoring of operating system security

logs. This represents a separation of duties conflict, as the administrators are potentially

reviewing their own actions. While a new process was implemented for SUDO monitoring in

October 2012, it was not in place during FY 2012 and was not evaluated in the period under

audit.
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A‐11

 Logging and monitoring is not performed over the modification or deletion of content in SQL

Server Agent jobs on the FinMart production SQL server. The SQL Server Agent Jobs manage the

daily data transfer with PeopleSoft, as well as the system assurance job that ensures data

integrity.

CAO management has not developed policies and procedures documenting all aspects of audit logging

and monitoring for financial applications. As a result, there is an increased risk that suspicious activity,

whether intentional or unintentional, affecting key financial data will not be detected in a timely

manner, and that a single individual could engage in malicious activity that could remain undetected.

In accordance with NIST SP 800‐53, Revision 3, Recommended Security Controls for Federal Information

Systems and Organizations, organizations should determine, based on a risk assessment and

mission/business needs, that the information system must be capable of auditing organizationally‐

defined auditable events. The organization should review and analyze information system audit records

for indications of inappropriate or unusual activity, and report findings to designated organizational

officials. Additionally, NIST SP 800‐53, Revision 3 states that organizations should separate duties of

individuals as necessary, to prevent malevolent activity without collusion. For example, security

personnel who administer access control functions should not administer audit functions.

We recommend that the CAO:  

 Develop and implement audit logging and monitoring policies and procedures for PeopleSoft

and FinMart to ensure that audit logs for sensitive financial records and tables, as well as for key

security activities, are actively monitored, and that all reviews and any follow‐up actions taken

are documented.

9. Security configuration baselines have not been adequately configured and monitored.

The House did not update security configuration baselines in FY 2012 to correct deficiencies noted in

prior years, including issues with the Microsoft Windows Server 2008 and Oracle for UNIX configuration

checklists. Specifically, CAO baselines deviate significantly from industry best practices, such as Center

for Internet Security (CIS) configuration benchmarks. Additionally, HISPOL 007.0, which documents the

process for baseline compliance reviews, has not been updated, and the process still indicates that

compliance reviews are only required once every three years.

CAO management has not implemented a process to ensure that security configuration baselines are

configured and monitored in accordance with industry best practices. As a result, settings deployed to

House operating systems and database management systems may not provide adequate security and

protection. This increases the risk that the integrity, confidentiality, and availability of House data could

be compromised.

In accordance with NIST SP 800‐53, Revision 3, Recommended Security Controls for Federal Information

Systems and Organizations, organizations should establish configuration settings for information

technology products employed within the information system that reflect the most restrictive mode

consistent with operational requirements and monitor changes to the configuration settings in

accordance with organizational policies and procedures.

   
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A‐12

We recommend that the CAO:

 Implement a process to ensure that security configuration baselines are appropriately

configured and monitored for all platforms, in accordance with industry best practices.

10. PeopleSoft shared group account access is not actively monitored and reviewed.

The House does not adequately monitor and review shared group accounts, including privileged

administrator accounts. We noted three group accounts, two with administrative access and one used

by the accounting department for accounts payable processing that did not have proper oversight and

accountability. While we noted that CAO management implemented a process in FY 2012 to periodically

monitor the IP addresses used to access these accounts, the design of the process does not provide

accountability for actions performed with the shared accounts, nor does it include a review of the

actions performed using the shared accounts.  

These issues are due to CAO management not having adequately established policies and procedures

guiding the usage and monitoring of shared group accounts, including privileged administrator accounts,

for PeopleSoft. There is an increased risk that inappropriate actions may be performed with a privileged

account within the financial system and go undetected; even if inappropriate actions are detected,

accountability for those actions cannot be determined.

In accordance with NIST SP 800‐53, Revision 3, Recommended Security Controls for Federal Information

Systems and Organizations, the information system should uniquely identify and authenticate

organizational users or processes acting on behalf of organizational users. Unique identification of

individuals in group accounts (e.g., shared privilege accounts) may need to be considered for detailed

accountability of activity.

We recommend that the CAO:

 Uniquely identify and authenticate users to the highest degree possible by establishing and

implementing policies and procedures concerning audit logging and monitoring, including

privileged administrator accounts.

   
Independent Auditors’ Report

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A‐13

Status of Prior‐Year Findings

In the audit report on the House’s FY 2011 financial statements, we noted several issues related to

internal controls over financial reporting. The table below presents a summary of our internal control

findings.

Control Deficiency 2011 Status 2012 Status

Ineffective Controls Over the Financial Reporting

Process Significant Deficiency Significant Deficiency

Ineffective Controls Over Information Technology Significant Deficiency Significant Deficiency
Independent Auditors’ Report

39

APPENDIX B

MANAGEMENT’S RESPONSE TO THE

FY 2012 FINANCIAL STATEMENT AUDIT REPORT
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41

Chief Administrative Officer’s

Audit Report Response
42
Chief Administrative Officer’s Audit Report Response

43
44

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45

Fiscal Year 2012 Financial Statements
46

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Financial Statements

47

Financial Statements Included in This Report

The U.S. House of Representatives (House) has prepared financial statements for fiscal year (FY)

2012 in accordance with U.S. Generally Accepted Accounting Principles (GAAP) issued by the

Federal Accounting Standards Advisory Board (FASAB) and the form and content requirements

of the Office of Management and Budget’s (OMB) Circular No. A‐136, Financial Reporting

Requirements. The responsibility for the integrity of the financial information included in these

statements rests with management of the House. The audit of the House’s financial statements

was performed by Cotton & Company LLP. The auditors’ report accompanies the financial

statements.

The House’s financial statements for FY 2012 consisted of the following:

• The Balance Sheet, which presents as of September 30, 2012 and 2011 those resources

owned or managed by the House that are available to provide future economic benefits

(assets); amounts owed by the House that will require payments from those resources or future

resources (liabilities); and residual amounts retained by the House comprising the difference

(net position).

• The Statement of Net Cost, which presents the net cost of the House’s operations for the

years ended September 30, 2012 and 2011. The House’s net cost of operations includes the

gross costs incurred by the House less any exchange revenue earned from House activities.  

• The Statement of Changes in Net Position, which presents the change in the House’s net

position resulting from the net cost of the House’s operations, budgetary financing sources

other than exchange revenues, and other financing sources for the years ended September 30,

2012 and 2011.

• The Statement of Budgetary Resources, which presents the budgetary resources available to

the House during FY 2012 and FY 2011, the status of these resources at September 30, 2012

and 2011, the change in obligated balances during FY 2012 and FY 2011, and net outlays of

budgetary resources for the years ended September 30, 2012 and 2011.
Financial Statements

48

U.S. HOUSE OF REPRESENTATIVES

Consolidated Balance Sheets

As of September 30, 2012 and 2011

2012 2011

ASSETS

 Intergovernmental:

Fund Balance with U.S. Treasury (Note 2) $ 215,313,390 $ 264,591,955 

Accounts Receivable, Net (Note 3) 66,867 536,949 

Advances and Prepayments (Note 7) 10,756 11,359 

Total Intragovernmental 215,391,013 265,140,263 

Cash and Other Monetary Assets (Note 2) 2,948 520 

Accounts Receivable, Net (Note 3) 447,332 472,324 

Inventory and Operating Materials and Supplies (Note 4) 1,366,626 1,370,614 

Property and Equipment, Net (Note 5) 40,462,006 51,177,082 

Advances and Prepayments (Note 7) 4,170,614 6,537,610 

Total Assets $ 261,840,539 $ 324,698,413 

 

Stewardship Property and Equipment (Note 6)

 

LIABILITIES

 Intragovernmental:

Accounts Payable $ 5,580,540 $ 4,879,398 

Advances from Others 113,286 55,167 

Capital Lease Liabilities (Note 9) 352,875 549,371 

Other Liabilities 3,989,542 5,033,931 

Total Intragovernmental 10,036,243 10,517,867 

Accounts Payable 28,888,518 27,391,752 

Actuarial Federal Employees’ Compensation Act Liabilities 25,969,234 21,290,084 

Accrued Payroll and Benefits 6,664,806 7,150,990 

Accrued Annual Leave 7,391,503 7,823,711 

Other Liabilities 159,493 174,548 

Total Liabilities (Note 8) $ 79,109,797 $ 74,348,952 

NET POSITION

Unexpended Appropriations $ 148,024,167 $ 201,799,706 

Cumulative Results of Operations 34,706,575 48,549,755 

Total Net Position $ 182,730,742 $ 250,349,461 

Total Liabilities and Net Position $ 261,840,539 $ 324,698,413 
Financial Statements

49

U.S. HOUSE OF REPRESENTATIVES

Consolidated Statements of Net Cost

For the Years Ended September 30, 2012 and 2011

2012 2011

NET COST OF OPERATIONS (Note 11)

Net Costs by Program Area

Legislative Activities

Gross Costs $ 1,617,106,848 $ 1,627,233,695 

Less: Earned Revenue (4,122,231) (4,793,398)

Net Program Costs 1,612,984,617 1,622,440,297 

Revolving Funds

Gross Costs 1,538,943 1,062,654 

Less: Earned Revenue (5,430,138) (6,226,386)

Net Program Costs (3,891,195) (5,163,732)

Net Cost of Operations $ 1,609,093,422 $ 1,617,276,565 
Financial Statements

50

U.S. HOUSE OF REPRESENTATIVES

Consolidated Statements of Changes in Net Position

For the Years Ended September 30, 2012 and 2011

2012 2011

Cumulative Results of Operations

Beginning Balance $ 48,549,755 $ 55,493,161 

Budgetary Financing Sources

Appropriations Used 1,370,491,022 1,373,260,349 

Nonexchange Revenue 26,600 - 

Donations 43,051 -

Other Adjustments (4,382,615) 1,326,770

Other Financing Sources

Imputed Financing from Costs Absorbed

 by Others (Note 15) 229,446,950 235,680,888 

Other Adjustments (374,766) 65,152 

Total Financing Sources 1,595,250,242 1,610,333,159 

Net Cost of Operations (1,609,093,422) (1,617,276,565)

Net Change (13,843,180) (6,943,406)

Total Cumulative Results of Operations $ 34,706,575 $ 48,549,755 

Unexpended Appropriations

Beginning Balance $ 201,799,706 $ 179,390,239

Budgetary Financing Sources

Appropriations Received 1,346,438,000 1,430,483,150

Appropriations Transferred-In/Out (8,975,000) -

Other Adjustments (20,747,517) (34,813,334)

Appropriations Used (1,370,491,022) (1,373,260,349)

Total Budgetary Financing Sources (53,775,539) 22,409,467

Total Unexpended Appropriations $ 148,024,167 $ 201,799,706 

Net Position $ 182,730,742 $ 250,349,461
51

 Financial Statements

U.S. HOUSE OF REPRESENTATIVES

Combined Statements of Budgetary Resources

For the Years Ended September 30, 2012 and 2011

2012 2011

Budgetary Resources:

Unobligated balance brought forward, Oct 1 $ 135,565,747 $ 98,588,145 

Adjustment to unobligated balance brought forward, Oct 1 - - 

 Unobligated balance brought forward, Oct 1, as adjusted 135,565,747 98,588,145 

Recoveries of prior year unpaid obligations 2,100,201 1,471,605 

Other changes in unobligated balance (32,211,858) (34,084,970)

Unobligated balance from prior year budget authority, net 105,454,090 65,974,780 

Appropriations (discretionary and mandatory) 1,346,438,000 1,430,483,150 

Borrowing authority (discretionary and mandatory) - - 

Contract authority (discretionary and mandatory) - - 

Spending authority from offsetting collections (discretionary and mandatory) 26,765,928 29,074,570 

Total budgetary resources $ 1,478,658,018 $ 1,525,532,500 

Status of Budgetary Resources:

Obligations incurred $ 1,350,963,400 $ 1,389,966,753 

Unobligated balance, end of year:

Apportioned - - 

Exempt from apportionment 121,986,647 72,061,195 

Unapportioned 5,707,971 63,504,552 

Total unobligated balance, end of year: 127,694,618 135,565,747 

Total budgetary resources $ 1,478,658,018 $ 1,525,532,500 

Change in Obligated balance:

Unpaid Obligations, brought forward, Oct 1 $ 130,426,238 $ 141,186,698 

Uncollected customer payments from Federal sources, brought forward, Oct 1 (536,418) - 

 Obligated balance, start of year (net), before adjustments 129,889,820 141,186,698 

Adjustment to obligated balance, start of year - - 

Obligated balance, start of year (net), as adjusted 129,889,820 141,186,698 

Obligations incurred 1,350,963,400 1,389,966,753 

Outlays (gross)

(1,390,809,061) (1,399,255,608)

Change in uncollected customer payments from Federal sources 536,418 (536,418)

Actual transfers, unpaid obligations (net) - - 

Actual transfers, uncollected customer payments from Federal sources (net) - - 

Recoveries of prior year unpaid obligations (2,100,201) (1,471,605)

Obligated balance, end of year

Unpaid obligations, end of year (gross) 88,480,376 130,426,238 

Uncollected customer payments from Federal sources, end of year - (536,418)

Obligated balance, end of year (net) $ 88,480,376 $ 129,889,820 

Budget Authority and Outlays, Net

Budget authority, gross (discretionary and mandatory) $ 1,373,203,928 $ 1,459,557,720 

Actual offsetting collections (discretionary and mandatory) (27,302,346) (28,538,152)

Change in uncollected customer payments from Federal sources 536,418 (536,418)

 (discretionary and mandatory)

Anticipated offsetting collections (discretionary and mandatory) - - 

Budget authority, net (discretionary and mandatory) $ 1,346,438,000 $ 1,430,483,150 

Outlays, gross (discretionary and mandatory) $ 1,390,809,061 $ 1,399,255,608 

Actual offsetting collections (discretionary and mandatory) (27,302,346) (28,538,152)

Outlays, net (discretionary and mandatory) 1,363,506,715 1,370,717,456

Distributed offsetting receipts - - 

Agency outlays, net (discretionary and mandatory) $ 1,363,506,715 $ 1,370,717,456 
52

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53

Notes to the Financial Statements
Notes to the Financial Statements

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Notes to the Financial Statements

55

NOTE 1 ‐ SIGNIFICANT ACCOUNTING POLICIES

A. Description of the Reporting Entity

The U.S. House of Representatives (House) is one of two separate legislative chambers that comprise the Congress of the

United States. The other is the U.S. Senate (Senate). All lawmaking powers of the Federal government are given to the

Congress under Article I of the Constitution of the United States. The House and Senate jointly agree on a budget for the

Legislative Branch and submit it to the President of the United States. The Members of the House serve two‐year terms of

office, which coincide with the sequential numbering of the entire Congress.  

To help carry out its constitutional duties, the House creates committees of Members and assigns them responsibility for

gathering information, identifying policy problems, proposing solutions, and reporting bills to the full chamber for

consideration. The House elects and appoints Officers and officials to administer both legislative and non‐legislative

functions, which support the institution and its Members in carrying out its legislative duties. The financial statements of

the House provide financial information on the activities of all entities, which are subject to the authority vested in the

House by the U.S. Constitution, public laws, and rules and regulations adopted by the membership of the House.

These financial statements reflect the organizational structure of the House under the 112th Congress. The fiscal year

2012 financial statements are comprised of two programs: Legislative Activities and Revolving Funds.   

Legislative Activities

Legislative Activities consist of all financial activity related to the operations of all Member Offices, both in Washington,

D.C. and Congressional districts; all Committees both Standing and Special and Select; Leadership Offices; House Officers

and Offices and Joint Functions that the House shares with the U.S. Senate including the Attending Physician and Joint

Committee on Taxation.

House Members are elected from congressional districts of approximately equal population. The financial information

aggregates transactions of the Member districts and Washington, D.C. offices, and includes 435 Representatives; five

Delegates, one each, from the District of Columbia, Guam, Virgin Islands, American Samoa and Northern Mariana Islands;

and one Resident Commissioner from Puerto Rico.  

The Committees financial information aggregates transactions of the Standing and Special and Select Committees of the

112th Congress. Committees are organized at the beginning of each Congress according to their jurisdictional boundaries

incorporated in the Rules of the House. The Committees of the House under 112th Congress are:

Committee on Agriculture

Committee on Appropriations

Committee on Armed Services

Committee on the Budget

Committee on Education and the Workforce  

Committee on Energy and Commerce

Committee on Ethics  

Committee on Financial Services

Committee on Foreign Affairs

Committee on Homeland Security

Committee on House Administration

Committee on the Judiciary

Committee on Natural Resources

Committee on Oversight and Government Reform

Committee on Rules

Committee on Science, Space, and Technology  

Committee on Small Business

Committee on Transportation and Infrastructure
Notes to the Financial Statements

56

Committee on Veterans’ Affairs

Committee on Ways and Means

Permanent Select Committee on Intelligence

The House Leadership Offices financial information aggregates transactions of:

Speaker of the House

Majority and Minority Leaders

Majority and Minority Whips

Party Steering Committees, Caucus or Conference, which consist of Representatives of the same political party

The Officers and Legislative Offices financial information aggregates transactions of all legislative support and

administrative functions provided to Members, Committees, and Leadership offices, including:

Chaplain

Chief Administrative Officer

Clerk of the House

Office of Congressional Ethics

Office of Interparliamentary Affairs

Office of the General Counsel

Office of the Historian

Office of Inspector General

Office of the Law Revision Counsel

Office of the Legislative Counsel

Parliamentarian

Sergeant at Arms

The Joint Functions financial information aggregates transactions of the joint activities of the House and the Senate to the

extent that the House funds these functions. House administrative management does not exert direct control over the

expenditures of these functions. The joint functions in these statements include:

Attending Physician

Joint Economic Committee

Joint Committee on the Library

Joint Committee on Printing

Joint Committee on Taxation

Joint Select Committee on Deficit Reduction

Revolving Funds  

Revolving Fund Activities consist of all financial activity related to the operations of all House revolving fund accounts.

The Revolving Funds financial information aggregates transactions of:

House Child Care Center

House Recording Studio  

House Services

Net Expenses of Equipment  

Net Expenses of Telecommunications

Stationery

B. Basis of Consolidation

The consolidated financial statements include the accounts and significant activities of the House. All significant

interoffice balances and transactions have been eliminated to arrive at consolidated financial information, except for the

Statement of Budgetary Resources which is presented on a combined basis in accordance with the Office of Management

and Budget’s (OMB) Circular No. A‐136, Financial Reporting Requirements.  
Notes to the Financial Statements

57

The financial statements do not include legislative agencies that support the House and that receive separate

appropriations. These agencies are:

Architect of the Capitol

Congressional Budget Office

Government Accountability Office

Government Printing Office

Library of Congress

U.S. Botanic Garden

U.S. Capitol Police

Functions jointly shared between the House and the Senate are included in the financial statements to the extent their

operations are funded by House appropriations. These consist of:

Attending Physician

Joint Economic Committee

Joint Committee on the Library

Joint Committee on Printing

Joint Committee on Taxation

Joint Select Committee on Deficit Reduction

C. Basis of Accounting and Presentation

The financial statements present the financial position, net cost of operations, changes in net position and budgetary

resources of the House. These statements have been prepared in accordance with U.S. Generally Accepted Accounting

Principles (GAAP) issued by the Federal Accounting Standards Advisory Board (FASAB) and the form and content

requirements of the OMB Circular No. A‐136, Financial Reporting Requirements.  

While the House is a Legislative Branch entity, it has elected to incorporate many of the Federal government Executive

Branch agency financial management and reporting standards that management deems necessary for the fair

presentation of financial statement information.

The House’s accounting structure, in accordance with GAAP, utilizes both accrual and budgetary accounting. Under

accrual accounting, events are recognized as they occur, as opposed to when cash is received or disbursed. Therefore,

revenues are recorded when earned and expenses are recorded when a liability is incurred, without regard to receipt or

payment of cash. The budgetary accounting, on the other hand, facilitates compliance with legal constraints on, and

controls over, the use of Federal funds.  

Throughout these financial statements, assets, liabilities, revenues and costs have been classified according to the type of

entity with whom the transactions were made. Intragovernmental assets and liabilities are those from or to other Federal

entities. Intragovernmental earned revenues are collections or accruals of revenue from other Federal entities, and

intragovernmental costs are payments or accruals to other Federal entities.  

While these statements have been prepared from the records of the House in accordance with GAAP and formats

prescribed in OMB Circular No. A‐136, Financial Reporting Requirements, these statements are in addition to the financial

reports used to monitor and control the budgetary resources that are prepared from the same records. These statements

should be read with the realization that they are for a component of the U.S. government, a sovereign entity.   

D. Fund Balance with the U.S. Treasury and Cash

The U.S. Treasury processes cash receipts and disbursements for the House through its cash management services. Fund

Balance with Treasury represents the aggregate amount of House fund accounts with the U.S. Treasury available to pay

current liabilities and finance authorized purchases. Fund Balance with Treasury consists of balances for general fund

expenditure accounts, revolving funds, and other fund types as of the end of the fiscal year. Fund Balance with Treasury

also includes the Congressional Use of Foreign Currency account, which is held at the U.S. Treasury and is maintained and

administered by the Department of State on behalf of the House. The House also maintains an account related to Special

Fund Receipts and Other Fund Types. Cash and other monetary assets include cash on hand that represents deposits in

transit and amounts held in a commercial bank account. (See Note 2)
Notes to the Financial Statements

58

The following describes the type of funds maintained by the House:

General Fund Expenditure Accounts are fund accounts used to record amounts appropriated by Congress for the general

support of the Federal government.  

Revolving Funds are fund accounts used to record funds authorized by specific provisions of law to finance a continuing

cycle of business–type operations. Receipts are credited directly to the revolving fund as offsetting collections and are

available for expenditure without further action by Congress.  

Special Fund Receipt Accounts are fund accounts used to record receipts from specific sources earmarked by law for

specific purposes.

Other Fund Types include General Fund Receipt and Deposit Fund accounts. General Fund Receipt accounts are used to

record all receipts not earmarked by law for a specific purpose. These receipts may include miscellaneous recoveries and

refunds and fines and penalties. The U.S. Treasury automatically transfers all cash balances in these receipt accounts to

the general fund of the Treasury at the end of each fiscal year. Deposit Fund accounts are used to record monies withheld

from Federal government payments for goods and services received pending payment; and receipts and disbursements

awaiting determination of the proper accounting classification.   

E. Accounts Receivable, Net

Accounts Receivable represents amounts due to the House from Federal entities, Members, employees and/or vendors

for money, goods, and services less an Allowance for Doubtful Accounts. Accounts Receivable primarily arises from

provision of goods and services, commissions, and overpayments. Allowance for Doubtful Accounts is based on an

analysis of outstanding accounts, aging methodologies and historical collection experience. Intragovernmental accounts

receivable are generally considered to be fully collectible. (See Note 3)

F. Inventory and Related Property, Net  

Inventory is tangible personal property that is held for sale. The Chief Administrative Office (CAO) Office Supply Service

and Gift Shop maintain an inventory of supplies and merchandise purchased for resale to the public. Inventories for sale

are valued at the moving weighted average method.  

Operating Material and Supplies are tangible personal property to be consumed during normal operations. The CAO

Logistics and Support Office maintains inventories of such items as hardwood, carpet, leather, fabric, furniture

components, and repair materials purchased by the House for use in its operations. The CAO House Information

Resources Office maintains inventories of such items as fiber jumpers to support network connectivity and patch cords to

support desktop computers. These items are not for sale and are reflected in the financial statements at an estimated

value based on the first in/first out inventory valuation method. (See Note 4)

G. General Property and Equipment, Net

General Property and Equipment consists of office and computer equipment, furniture, vehicles, software, assets

acquired under capital leases, leasehold improvements and work in process. The House capitalizes property and

equipment when the acquisition cost equals or exceeds an established threshold and has a useful life of two years or

more. The costs of such items are recognized as assets when acquired.  

Property and equipment are capitalized if the unit acquisition cost is equal to or greater than $25,000 and the item has a

useful life of two years or more with the exception of software. Software is capitalized if the unit acquisition cost is equal

to or greater than $10,000 and the item has a useful life of two years or more. Work in process consists of capitalized

costs associated with assets received, but not placed in service as of the end of the fiscal year.

An appropriate portion of an asset’s value is reduced and an expense for depreciation or amortization is recognized over

the accounting periods benefited by the asset’s use. The House calculates depreciation and amortization expense based

on the straight‐line method over an asset’s estimated useful life. Depreciation expense is applicable to tangible assets

such as equipment, furniture, and vehicles. Amortization expense is applicable to intangible assets such as software and

capital leases. Assets acquired under capital leases are generally amortized over the lease term. However, if a lease

agreement contains a bargain purchase option or otherwise transfers title of the asset to the House, the asset is

amortized on the same basis as similar categories of owned assets.  
Notes to the Financial Statements

59

A loss is recognized when the net book value of the asset at the time of disposal exceeds any proceeds received. A gain is

recognized when the net book value of the asset at the time of disposal is less than any proceeds received. (See Note 5)  

The House also entered into capital leases for building structures. Assets under capital leases are structured such that

their terms effectively finance the purchase of the item. Such leases convey the benefits and risks of ownership and are

classified as capital leases, if the lower of net present value or fair market value of the minimum lease payments due at

lease inception meets House capitalization criteria. Items acquired by capital leases are recorded as House assets. The

asset and corresponding liability are recorded at the lower of net present value of the minimum lease payments or fair

market value at lease inception. The portion of capital lease payments representing imputed interest is expensed as

interest on capital leases. (See Note 9)

House office buildings and land occupied by Members and employees in Washington, D.C. are under the custody of the

Architect of the Capitol (AOC) and are excluded from the House’s property and equipment accounts. The House

recognizes an imputed cost and related imputed financing source in its financial statements for the costs associated with

House office buildings. (See Notes 1K and 15)

H. Stewardship Property and Equipment

Stewardship Property, Plant and Equipment (PP&E) includes heritage assets and stewardship land. Heritage assets are

unique due to their historical or natural significance; cultural, educational, or artistic importance; or significant

architectural characteristics. Heritage assets consist of collection‐type heritage assets, such as objects gathered and

maintained for exhibition, for example, museum collections, art collections, and library collections; and non‐collection‐

type heritage assets, such as parks, memorials, monuments, and buildings. These assets are expected to be preserved

indefinitely. The House’s heritage assets are considered collection‐type heritage assets and consist primarily of historical

artwork and artifacts.  

Heritage assets can serve two purposes: a heritage function and a general government operational function. If a heritage

asset serves both purposes, but is predominantly used for general government operations, the heritage asset is

considered a multi‐use heritage asset, which is included in general PP&E on the Balance Sheet. The House office buildings

and land occupied and used by Members and employees in Washington, D.C. meet the criteria of multi‐use heritage

assets. Stewardship responsibility for these multi‐use heritage assets is maintained by the AOC and disclosed on its

financial statements. The House does not possess multi‐use heritage assets or stewardship land.

Heritage assets are disclosed on the Balance Sheet as a note reference with no asset amount shown, and are generally not

included in the general PP&E. The cost of improving, reconstructing, or renovating heritage assets is recognized as an

expense in the period incurred. Similarly, the cost to acquire or construct a heritage asset is recognized as an expense in

the period incurred. Due to their nature, matching costs with specific periods would not be meaningful. (See Note 6 and

Required Supplementary Information)

I. Advances and Prepayments

Advances and prepayments are transfers of cash to cover future expenses or the acquisition of assets. These goods

and/or services are delivered in increments that span several months. Advance payments are recorded as assets and

consist of payments to Federal government entities for contractual services and for mailings that require address

corrections or additional postage. As the goods and/or services are rendered, the Advance account is drawn down and

the appropriate asset or expense is recognized. Prepayments are payments made in advance of the receipt of goods and

services. Prepayments include payments for subscriptions and software integration activities and are initially recorded as

expenses. At year‐end, all such payments made for the current year are analyzed to determine the proper expense and

prepayment amounts applicable to the current accounting period for financial statement purposes. (See Note 7)

J.  Liabilities  

Liabilities represent the probable future outflow or other sacrifice of resources as a result of past transactions or events.  

Liabilities are amounts due to others as a result of items received, services rendered, expenses incurred, assets acquired

and construction or work in process regardless of whether invoices have been received. Liabilities also represent amounts

received that have not yet been earned. Liabilities covered by budgetary resources are liabilities incurred that will be

covered by available budgetary resources encompassing not only new budget authority but also other resources available

to cover liabilities for specified purposes in a given year. Liabilities not covered by budgetary resources include unfunded

liabilities incurred for which revenues or other sources of funds necessary to pay the liabilities have not been made

available through congressional appropriations or current earnings of the reporting entity. (See Note 8)
Notes to the Financial Statements

60

The House’s liabilities include:

Accounts Payable that represent amounts owed for the cost of goods and services received but not yet paid. The House

estimates certain accounts payable balances based on methodology that encompasses historical data and the first

month’s financial activity of the subsequent fiscal year.   

Advances from Others that represent advance payments received from other Federal government entities for shared

services, in advance of the delivery of these services. As the services are rendered the Advances from Others account is

drawn down and the appropriate revenue is recognized. The House received payments in advance of receipt of shared

services from the Library of Congress.  

Capital Lease Liability that represents the portion recorded at the lower of net present value or fair market value of the

minimum lease payments at lease inception.

Unfunded Workers’ Compensation Actuarial Liability that represents an estimate based on actuarial calculations using

historical payment patterns to predict what costs will be incurred in the future. The liability is adjusted annually by

applying actuarial procedures. Any upward or downward adjustment to the liability is recorded as an annual increase or

decrease to benefits expense. The House calculated the actuarial liability based on a model developed by the U.S.

Department of Labor (DOL). The Federal Employees’ Compensation Act (FECA) provides income and medical cost

protection to covered Federal civilian employees injured on the job, employees who have incurred a work‐related

occupational disease, and beneficiaries of employees whose death is attributable to a job‐related injury or occupational

disease. Claims incurred for the benefit of House employees under FECA are administered by DOL, which pays the initial

claim and obtains reimbursement from the House.  

Accrued Payroll and Benefits and Annual Leave that represent both a funded and unfunded liability. A funded liability has

a corresponding appropriation to liquidate it. An unfunded liability is a liability that is incurred during the current or prior

year but is not payable until a future fiscal year for which an appropriation has not yet been received.

Accrued payroll and benefits include salaries and associated benefits earned in the current fiscal year and paid in the

subsequent fiscal year.

Annual leave for the House Officers, the Inspector General and their employees is accrued as earned, and the liability is

reduced as leave is taken. The accrued annual leave balances are calculated according to Public Law 104‐53, November

19, 1995, Sec. 109 Stat. 522 (i.e., the lesser of the employee’s monthly pay or the monthly pay divided by 30 days and

multiplied by the number of days of accrued leave). The House utilizes actual hours to calculate the liability.  Sick and

other types of paid leave are expensed as they are taken. The Members’ and Committees’ Congressional Handbooks allow

offices to adopt personnel policies that provide for the accrual of annual leave and use of such leave. Leadership and

other select House offices have also adopted similar policies. While leave is tracked from one pay period to the next, a

consistent policy has not been formally adopted by these entities regarding the accrual and payment of leave time.

Therefore, an accrued leave liability for Members, Committees, Leadership and select House offices is estimated on the

financial statements. In FY 2012, the estimate was based on a three‐year average of actual annual leave paid.   

Other Intragovernmental Liabilities that represent the Accrued workers’ compensation amount billed by DOL that will be

paid in subsequent fiscal years and Unemployment compensation amounts owed to DOL.   

Other Public Liabilities that represent amounts held pending proper accounting disposition or amounts withheld from

payments for goods and services received pending payment.  

K. Revenue and Other Financing Sources

Appropriations

The House finances most of its operations through congressional appropriations of budget authority. To the extent that

revenue generated by some House entities does not cover expenses, appropriations are required. The House receives

annual, multi‐year and no‐year appropriations that may be used, within statutory limits, for operating and capital

expenditures. A financing source is recognized for these appropriated funds received, less appropriations transferred or

not available through rescission or cancellation. The House usually receives the full amount of its appropriation at the

beginning of each fiscal year.  
Notes to the Financial Statements

61

Exchange and Non‐Exchange Revenue

The House classifies revenues as either exchange revenue or non‐exchange revenue. Exchange revenue is derived from

transactions in which both the government and the other party receive value; and is recognized when goods have been

delivered or services rendered. The House’s exchange revenue consists of (1) sales of goods to the public for Office Supply

Service and Gift Shop sales; (2) sales of services to the public for child care fees, photography sales, postal fees and

Attending Physician fees; (3) interoffice sales between House entities for graphic services, telecommunications, office

supplies, framing, recording, office equipment, photography, and tape duplication; and (4) other revenue for vendor

commissions. Non‐exchange revenue is derived from the government’s sovereign right to demand payment from the

public (e.g., taxes, duties, fines, and penalties) but also includes donations. The House reports non‐exchange revenue

collected from donations for the Reduction of Public Debt and Ethics Fines.

Imputed Financing from Cost Absorbed by Others (and Related Imputed Costs)

The House must recognize the amount of cost incurred by a Federal entity for goods or services provided and paid for in

total, or in part, by other Federal entities. Since the cost is not actually reimbursed to these Federal entities, an imputed

financing source is also recognized to offset the costs financed by the entities. The imputed cost and imputed financing

source for costs are associated with the occupancy of the U.S. Capitol and House office buildings under the custody of the

AOC and the Federal Employee and Veterans’ Benefits. The imputed cost is recognized in the Statement of Net Cost and

the imputed financing source is recognized in the Statement of Changes in Net Position.  

Occupancy Cost:

The House must recognize an occupancy cost for the U.S. Capitol and House office buildings under the custody of the AOC

that are occupied by Members and staff in Washington, D.C. The House office buildings are comprised of the Cannon,

Ford, Longworth, Rayburn, and other buildings and facilities. The AOC receives an appropriation for the maintenance, care

and operations of the House office buildings, facilities and grounds; and costs associated with the acquisition and

maintenance of the land and buildings is accounted for by the AOC.  

The imputed occupancy cost for the U.S. Capitol and House office buildings is calculated by multiplying the gross square

footage of the buildings by the estimated per square foot value. A common area factor of 11% was applied to the gross

square footage. The industry standard rental rate increase of 1.7% over FY 2011 is reflected in the FY 2012 occupancy

costs.

Federal Employee and Veterans’ Benefits Cost:

Federal‐employing entities recognize their share of the cost of providing future pension benefits to eligible employees at

the time the employees’ services are rendered. The pension expense recognized in the Statement of Net Cost is the

current service cost for House employees less the amount contributed by the employee.  

The measurement of the service cost requires the use of actuarial cost methods and assumptions, with the factors applied

by the House provided by the Office of Personnel Management (OPM), the Federal agency that administers the plan. The

excess of the recognized pension expense over the amount contributed by the House represents the amount being

financed directly through the Civil Service Retirement and Disability Fund administered by OPM.  

The House does not receive an appropriation to fund this cost. Therefore, this portion of the pension cost is considered an

imputed financing source to the House, and is included in the Imputed Financing from Costs Absorbed by Others on the

Statement of Changes in Net Position.  

Federal‐employing entities also recognize a current period expense for the future cost of post‐retirement health benefits

and life insurance for its employees while they are still employed. This cost is included in the Statement of Net Cost.

Employees and the House do not currently make contributions to fund these future benefits, and the House does not

receive an appropriation to fund this expense. Therefore, this portion of the post‐retirement health benefits and life

insurance is considered an imputed financing source to the House, and is included in Imputed Financing from Costs

Absorbed by Others on the Statement of Changes in Net Position. (See Note 15)
Notes to the Financial Statements

62

L. Personnel and Benefits Compensation

House Members and employees are covered by either the Civil Service Retirement System (CSRS) or the Federal

Employees Retirement System (FERS). Both Members and employees are eligible for retirement benefits under CSRS or

FERS. A CSRS basic annuity, unreduced for age, debts to the fund, or survivor’s benefits, is calculated by multiplying the

highest 3 consecutive years’ average salary by a percentage factor which is based on the length of Federal service.

However, Members’ benefits are different from those of employees. For example, a Member covered by CSRS is eligible

to receive unreduced retirement benefits at age 60 if he or she has 10 years of Member service. An employee is eligible to

receive reduced benefits at age 50 with 20 years of service or at any age with 25 years of service. The FERS basic benefit

plan provides the same benefits for either Members or employees.  

CSRS employees contribute a portion of their earnings to the Civil Service Retirement Fund. The House also contributes an

amount to this fund. FERS employees, in addition to paying Social Security, contribute a portion of their base earnings to

the FERS retirement fund. The House also contributes an amount toward the FERS retirement and Social Security funds.  

Both FERS and CSRS employees can contribute to the Thrift Savings Plan (TSP) up to the IRS limit. FERS employees also

receive an automatic one percent House‐paid contribution, as well as an additional House matching TSP contribution up

to five percent of their basic pay. CSRS employee contributions to TSP do not receive matching House contributions. FERS

employees could receive benefits from FERS, the Social Security System, and TSP. CSRS employees could receive benefits

from CSRS and TSP. (See Note 12)

M. Net Position

The components of Net Position are:

Unexpended Appropriations

Appropriations are not considered expended until goods have been received or services have been rendered. The House

has single, multi and no‐year appropriations. For multi‐year appropriations the House alternates each fiscal year between

15‐month and 27‐month multi‐year funding. Funds cancel two years after expiration and are no longer available for

obligation or expenditure for any purpose and are returned to the U.S. Treasury.  

Cumulative Results of Operations

The net difference between expenses and revenue and financing sources including appropriations, revenues from

operations and imputed financing sources.

N. 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 revenue and expense reported during the period. Actual results could differ from

those estimates.
Notes to the Financial Statements

63

NOTE 2 ‐ FUND BALANCE WITH THE U.S. TREASURY AND CASH

Fund Balances with Treasury (FBWT) as of September 30, 2012 and 2011 were:

Fund Balance with Treasury 2012 2011

General and Other Funds

     House maintained $    153,191,222 $   205,533,568

     Congressional Use of Foreign Currency 34,831,086 34,778,677

Total General and Other Funds 188,022,308 240,312,245

Revolving Funds 27,291,082 24,279,710

Total   $    215,313,390 $   264,591,955

Status of Fund Balance with Treasury as of September 30, 2012 and 2011 were:

Status of Fund Balance with Treasury 2012 2011

Unobligated Balance

     Available $    121,986,647 $    72,061,195

     Unavailable 5,707,971 63,504,552

Obligated Balance not yet Disbursed 88,480,376 129,889,820

Other Funds (861,604) (863,612)

Total   $   215,313,390 $  264,591,955

Other funds represent deposit funds held at the U.S. Treasury.  

Cash and Other Monetary Assets as of September 30, 2012 and 2011 were:

Cash and Other Monetary Assets 2012 2011

Cash on Hand   $               2,948 $             520

Total   $               2,948 $             520

Funds that were canceled and returned to the U.S. Treasury as of September 30, 2012 and  

2011 were:

Appropriations 2012 2011

2010 (single year)   $     23,125,275 $                      ‐

2009 (single year)  ‐ 28,317,552

2008 (single year) ‐ ‐

2008/2009 (multi‐year)  ‐ 2,992,048

2007/2009 (multi‐year)  ‐ 119,404

Total   $    23,125,275 $    31,429,004

NOTE 3 ‐ ACCOUNTS RECEIVABLE, NET

Accounts Receivable, Net as of September 30, 2012 and 2011 were:

Accounts Receivable, Net 2012 2011

Intragovernmental

     Accounts Receivable   $           66,867        $         536,949

Total Intragovernmental                 66,867             536,949

With the Public

     Accounts Receivable              498,248             847,845

     Allowance for Doubtful Accounts     (50,916)    (375,521)

Total With the Public         447,332         472,324

Total $         514,199 $      1,009,273
Notes to the Financial Statements

64

NOTE 4 ‐ INVENTORY AND RELATED PROPERTY, NET

Inventory and Related Property, Net as of September 30, 2012 and 2011 were:

Inventory and Related Property, Net 2012 2011

Operating Materials and Supplies Held for Use $             494,183 $           605,982

Inventory Purchased for Resale 872,443            764,632

Total   $         1,366,626 $       1,370,614

NOTE 5 ‐ GENERAL PROPERTY AND EQUIPMENT, NET

General Property and Equipment, Net as of September 30, 2012 and 2011 and the related depreciation and amortization

expense were:

2012 Classes of  

Property and  

Equipment

Service

Life

(Years)

Acquisition

Cost

Depreciation Net Book  

Value

Depreciation

Expense

Work in Process N/A $      1,512,496 $                      ‐ $      1,512,496 $                       ‐

Computer Software in Development N/A 425,831 ‐ 425,831  ‐

Computer Software and Hardware 3 121,017,657 100,072,191 20,945,466 18,883,665

Assets Under Capital Lease 10 1,354,473 1,185,163 169,310 135,447

Computer Software and Hardware 5 514,368 514,368 ‐  ‐

Equipment 5 70,121,652 54,157,337 15,964,315 6,692,430

Motor Vehicles 5 10,514,590 10,335,711 178,879 94,979

Furnishings and Other Equipment 10 1,271,323 712,333 558,990 73,304

Leasehold Improvements 10 9,085,375 8,378,656 706,719 738,633

Total   $ 215,817,765 $ 175,355,759 $    40,462,006 $    26,618,458

   

2011 Classes of  

Property and  

Equipment

Service

Life

(Years)

Acquisition

Cost

Depreciation Net Book  

Value

Depreciation

Expense

Work in Process N/A $      7,135,646 $                      ‐   $      7,135,646 $                      ‐

Computer Software in Development N/A ‐ ‐ ‐  ‐

Computer Software and Hardware 3 117,328,100 90,497,664 26,830,436 16,524,948

Assets Under Capital Lease 10 1,354,473 1,049,717 304,756 920,326

Computer Software and Hardware 5 514,368 514,368 ‐  ‐

Equipment 5 64,189,651 49,634,910 14,554,741 6,495,089

Motor Vehicles 5 10,734,180 10,460,322 273,858 8,021

Furnishings and Other Equipment 10 1,520,060 887,766 632,294 46,690

Leasehold Improvements 10 9,085,375 7,640,024 1,445,351 908,538

Total   $   211,861,853 $ 160,684,771 $    51,177,082 $    24,903,612
Notes to the Financial Statements

65

NOTE 6 – STEWARDSHIP PROPERTY AND EQUIPMENT

Physical counts for collection‐type heritage assets as of September 30, 2012 and 2011 were:

Heritage Assets 2011 Additions Withdrawals 2012

Artwork 319               1 ‐ 320

Artifacts 4,511                256    131 4,636

Total   4,830                 257                131     4,956

The House’s heritage assets are directly related to its mission to document and preserve the legislative integrity and

traditions of the institution. Permanent authority for the Clerk of the House originated in the opening days of the First

Congress, when John Beckley was elected Clerk on April 1, 1789, pursuant to Article I of the Constitution: “The House of

Representatives shall chuse (sic) their Speaker and other Officers....” The Clerk’s responsibilities to document and

preserve the activities of Congress have grown over the centuries, and are found in Rules VII and XI of the House, and by

the Rules of the House of Representatives Fine Arts Board, established via 40 USC Sec. 188c (Public Law 100‐696 [Title X]).  

The House’s stewardship responsibility for its heritage assets includes those in or associated with the House, its legislative

history, Members and institutional heritage. Under the provisions of the House of Representatives Fine Arts Board, the

Clerk is responsible for the administration, maintenance, and display of the works of fine art and other similar property of

the Congress for display or for other use in the House wing of the Capitol, the House Office Buildings, or any other

location under the control of the House in accordance with Public Law 100‐696. The House’s heritage assets are curated

by the House Curator in the Clerk’s Office of History and Preservation. The House Curator maintains records, both paper

and electronic, for works of art and artifacts. Staff and resources are devoted to the conservation and preservation of

heritage assets, using professional standards established by the American Institute for Conservation and the National

Archives and Records Administration. These standards provide for cleaning, storing, displaying, handling and protecting

the House’s heritage assets.  

The House acquires heritage assets by purchase, transfer from Federal entities, gift, or by provision of federal law. Prior to

acquiring these assets, the House Curator, on behalf of the Clerk and the House of Representatives Fine Art Board,

ensures they meet minimum standards as required by the American Association of Museum’s ethics guidelines and

standards and best practices for accessioning of objects into museum collections. The House’s collections continue to

increase as it acquires additional assets and few items have been retired or disposed of to date.  

Deaccessioning of objects and related withdrawals or disposals will only occur if the House Curator, in accordance with

the American Association of Museum’s guidelines and best practices, determines the asset is in irretrievable condition;

does not meet the needs of the collection; or withdraws due to exchange or gift of unwanted or duplicate copies. Staff

ensure that heritage assets remain in good condition, carefully preserving and saving these treasures for present and

future generations.  

The Required Supplementary Information section of this report provides additional information on the condition of

stewardship heritage assets.

Descriptions of the types of heritage assets are:

Artwork

The House’s artwork encompasses oil and acrylic paintings, works on paper, and sculpture in bronze, marble and other

media.

Artifacts

The House’s historical artifacts include objects in all media, including but not limited to paper, metal, plaster, wood,

textile and stone.
Notes to the Financial Statements

66

NOTE 7 ‐ ADVANCES AND PREPAYMENTS

Advances and Prepayments as of September 30, 2012 and 2011 were:  

Advances and Prepayments 2012 2011

Intragovernmental      $           10,756       $        11,359

Public     4,170,614 6,537,610

Total   $     4,181,370 $    6,548,969

NOTE 8 ‐ LIABILITIES  

Liabilities are classified as either current or non‐current. Current liabilities refer to liabilities that are expected to settle

within 12 months of the Balance Sheet date. Non‐current refers to liabilities that are expected to settle more than 12

months of the Balance Sheet date.

Liabilities covered and not covered by budgetary resources as of September 30, 2012 and 2011 were:

Liabilities Covered by

Budgetary Resources

Liabilities Not Covered by  

Budgetary Resources

Liabilities Current Non‐Current Current Non‐Current 2012

Intragovernmental Liabilities

     Accounts Payable $     5,580,540 $                   ‐ $                   ‐ $                    ‐  $       5,580,540

     Advances from Others 113,286 ‐‐‐ 113,286

     Capital Lease Liability 19,586 ‐ 260,427 72,862 352,875

     Other Liabilities

          Accrued Benefits 2,025,772 ‐‐‐ 2,025,772

          Accrued Workers’ Compensation 2,258,804 ‐‐‐ 2,258,804

          Unemployment Compensation 562,991 ‐‐‐ 562,991

          Other Deposit Liabilities (858,025) ‐‐‐ (858,025)

     Total Other Liabilities 3,989,542 ‐‐‐ 3,989,542

Total Intragovernmental Liabilities 9,702,954 ‐ 260,427 72,862 10,036,243

Public Liabilities

     Accounts Payable 28,888,518 ‐‐‐ 28,888,518

     Actuarial FECA Liability ‐‐‐ 25,969,234 25,969,234

     Accrued Payroll and Benefits 6,664,806 ‐‐‐ 6,664,806

     Unfunded Accrued Annual Leave  ‐‐‐ 7,391,503 7,391,503

     Capital Lease Liability ‐‐‐‐  ‐

     Other Liabilities 159,493 ‐‐‐ 159,493

Total Public Liabilities 35,712,817 ‐ ‐ 33,360,737 69,073,554

Total $    45,415,771 $                 ‐ $      260,427 $   33,433,599 $    79,109,797
Notes to the Financial Statements

67

Liabilities Covered by

Budgetary Resources

Liabilities Not Covered by  

Budgetary Resources

Liabilities Current Non‐Current Current Non‐Current 2011

Intragovernmental Liabilities

     Accounts Payable $     4,879,398 $                   ‐ $                   ‐ $                    ‐  $       4,879,398

     Advances from Others 55,167 ‐‐‐ 55,167

     Capital Lease Liability ‐ ‐ 216,082 333,289 549,371

     Other Liabilities

          Accrued Benefits 1,996,751 ‐‐‐ 1,996,751

          Accrued Workers’ Compensation 1,960,697 849,611 ‐ ‐  2,810,308

          Unemployment Compensation 1,086,075 ‐‐‐ 1,086,075

          Other Deposit Liabilities (859,203) ‐‐‐ (859,203)

     Total Other Liabilities 4,184,320 849,611 ‐ ‐  5,033,931

Total Intragovernmental Liabilities 9,118,885 849,611 216,082 333,289 10,517,867

Public Liabilities

     Accounts Payable 27,391,752 ‐‐‐ 27,391,752

     Actuarial FECA Liability ‐‐‐ 21,290,084 21,290,084

     Accrued Payroll and Benefits 7,150,990 ‐‐‐ 7,150,990

     Unfunded Accrued Annual Leave  ‐‐‐ 7,823,711 7,823,711

     Capital Lease Liability ‐‐‐‐  ‐

     Other Liabilities 174,548 ‐‐‐ 174,548

Total Public Liabilities 34,717,290 ‐ ‐ 29,113,795 63,831,085

Total $    43,836,175 $             849,611 $      216,082 $   29,447,084 $    74,348,952

NOTE 9 ‐ LEASE COMMITMENTS  

Capital Leases  

Assets Under Capital Lease as of September 30, 2012 and 2011 were:

Summary of Assets Under Capital Lease 2012 2011

Building Structures          $    1,354,473        $    1,354,473

Accumulated Depreciation (1,185,163) (1,049,717)

Total   $        169,310 $       304,756

Future Capital Lease Payments Due as of September 30, 2012 were:

Year Building

Structures

2013     $    326,547

2014 75,154

2015 ‐ 

2016 ‐ 

2017 ‐ 

Thereafter ‐ 

Total Future Capital Lease Payments   401,701

Less:  Imputed Interest (48,826)

Less:  Executory Costs ‐ 

Net Capital Lease Liability $    352,875

The House maintained capital leases for building structures.  The occupancy agreement for the building structures lease

includes multi‐year funding obligations of the tenant that state the agreement is cancelable upon 30 days written notice.

Space relinquishment rights and obligations state the agreement is cancelable by providing 30 days written notice to the
Notes to the Financial Statements

68

U.S. General Services Administration. The House also agrees that its right to not renew the lease for a fiscal year is limited

solely to the House not obtaining an appropriation for the year in an amount equal to or in excess of lease payments for

the year. The House may terminate the agreement in whole or in part as prescribed in the agreed upon settlement

methodology.

Operating Leases

Future Operating Lease Payments Due as of September 30, 2012 were:

Year Vehicles Office Space Parking Total

2013 $         265,734 $   6,881,215 $       150,921 $   7,297,870

2014 131,549 912,359 73,641 1,117,549

Total   $        397,283 $   7,793,574 $      224,562 $   8,415,419

The House maintains operating leases for vehicles and district office space and parking. The lease agreements are in

accordance with House rules and regulations and agreed upon vendor terms and conditions. In accordance with the

Members’ Congressional Handbook, the House requires that leases entered into by Members for space be no longer than

the elected term of the Member. Members and Officers also enter into leases to rent vehicles for official business

purposes. A Member may lease a vehicle for a period that exceeds the current congressional term, but the Member

remains personally responsible for the lease liability if service to the House concludes prior to lease termination.

The House enters into operating leases for temporary usage of office space, vehicles, software, computers and other

equipment. Leases that convey the benefits and risks of ownership, but do not meet House capitalization criteria are also

recognized as operating leases. Operating lease payments are recorded as expenses. Future operating lease payments are

not accrued as liabilities. Members may lease office space in their districts through the U.S. General Services

Administration or may directly lease space from the private sector.  

NOTE 10 ‐ COMMITMENTS AND CONTINGENCIES

Contingencies should be recognized as a liability when a past transaction or event has occurred, a future outflow or other

sacrifice of resources is probable, and the related future outflow or sacrifice of resources is measurable. The House does

not have any contingencies where the sacrifice of resources is probable. The House is currently involved in two lawsuits

where the sacrifice of federal resources is reasonably possible. However, the House cannot predict at this time with any

degree of accuracy the range of potential loss in the event of an unfavorable outcome.
Notes to the Financial Statements

69

NOTE 11 ‐ INTRAGOVERNMENTAL COSTS AND EXCHANGE REVENUE  

Intragovernmental Costs and Exchange Revenue as of September 30, 2012 and 2011 were:

Intragovernmental Costs and Exchange Revenue 2012 2011

Legislative Activities

     Intragovernmental Costs $          311,774,166 $         305,071,890

     Public Costs 1,305,332,682 1,322,161,805

          Total Costs 1,617,106,848 1,627,233,695

     Intragovernmental Earned Revenue (3,622,335) (4,340,676)

     Public Earned Revenue (499,896) (452,722)

          Total Earned Revenue (4,122,231) (4,793,398)

Net Program Costs 1,612,984,617 1,622,440,297

Revolving Funds

     Intragovernmental Costs 213,094 310,732

     Public Costs 1,325,849 751,922

          Total Costs 1,538,943 1,062,654

     Intragovernmental Earned Revenue (2,051,851) (2,025,838)

     Public Earned Revenue (3,378,287) (4,200,548)

          Total Earned Revenue (5,430,138) (6,226,386)

Net Program Costs (3,891,195) (5,163,732)

Total  

     Intragovernmental Costs 311,987,260 305,382,622

     Public Costs 1,306,658,531 1,322,913,727

          Total Costs 1,618,645,791 1,628,296,349

     Intragovernmental Earned Revenue (5,674,186) (6,366,514)

     Public Earned Revenue (3,878,183) (4,653,270)

          Total Earned Revenue (9,552,369) (11,019,784)

Net Cost of Operations $       1,609,093,422 $     1,617,276,565

Intragovernmental costs and exchange revenue represent transactions made between two reporting entities within the

Federal government and are disclosed separately from costs and exchange revenue with the public (exchange

transactions made between the reporting entity and a non‐Federal entity). Intragovernmental expenses relate to the

source of goods and services purchased by the reporting entity and not to the classification of related revenue. The

purpose of this classification is to enable the Federal government to provide consolidated financial statements, and not to

match public and intragovernmental revenue with costs that are incurred to produce public and intragovernmental

revenue. The net cost of the House’s operations includes gross costs incurred by the House less any exchange revenue

earned from House activities.
Notes to the Financial Statements

70

NOTE 12 ‐ PERSONNEL AND BENEFITS COMPENSATION

  

Member and Employee Personnel and Benefits Compensation 2012 2011

Personnel Compensation $        770,981,237      $          799,432,590

Retirement Plan Contributions 155,132,137 154,883,688

Social Security 52,455,732 54,193,051

Health Insurance 54,496,708 53,535,627

Student Loan/Fitness Center Programs 15,270,909 15,000,442

Unemployment and Workers’ Compensation 5,005,870 8,695,409

Transit Benefits 2,619,738 2,929,905

Life Insurance 1,170,593 1,234,815

Death Benefits 731,845 1,066,549

Annual Leave (432,208) 1,131,424

Allowances 25,000 25,386

Workers’ Compensation Actuarial Adjustment 4,679,150                      1,169,510

Total $      1,062,136,711 $      1,093,298,396

NOTE 13 ‐ EMERGENCY PREPAREDNESS

The House continues to develop contingency plans to ensure the continuation of all House Operations in the event of an

emergency evacuation. Approximately $21 million and $16 million were expended in 2012 and 2011, respectively.

NOTE 14 ‐ EXCHANGE REVENUES

Reporting entities that provide goods and services to the public or another Government entity should disclose specific

information related to their pricing policies. In certain cases, the prices charged by the House for the sale of goods and

services are set by House rules and regulations, which for program and other reasons may not represent full cost. In other

cases, prices set for goods and services are intended to recover the full costs incurred by these activities (e.g., child care

fees, postal fees, and Gift Shop sales to the public).
Notes to the Financial Statements

71

NOTE 15 ‐ IMPUTED FINANCING FROM COST ABSORBED BY OTHERS

The House must recognize an imputed cost and imputed financing source for costs associated with the occupancy of the

U.S. Capitol and House office buildings and Federal Employee and Veterans’ Benefits. The imputed cost is recognized in

the Statement of Net Cost and the imputed financing source is recognized in the Statement of Changes in Net Position.

Imputed Cost and Financing Source 2012 2011

Occupancy Costs       $         162,390,135       $         159,547,757

Federal Employee and Veteran’s Benefits   

     Current Service Cost – Federal Employees Health Benefits           48,611,215             52,300,799

     Current Service Cost – Federal Pensions 18,198,342 23,713,369

     Current Service Cost – Federal Employees Group Life Insurance 114,593 118,963

Total Federal Employee and Veteran’s Benefits 66,924,150 76,133,131

Claims Paid by the U.S. Treasury’s Judgment Fund

  on behalf of the House 132,665  ‐

Total $        229,446,950 $       235,680,888

The House reached a settlement agreement in a lawsuit whereby the amount has not been determined nor paid from the

Judgment Fund.

NOTE 16 ‐ UNDELIVERED ORDERS AT THE END OF THE PERIOD

  

Undelivered Orders represent the amount of paid and unpaid orders for goods and/or services ordered which have not

been received.

Undelivered Orders as of September 30, 2012 and 2011 were:  

Undelivered Orders at the End of the Period 2012 2011

Undelivered Orders, Unpaid $           42,444,374 $          83,890,729

Undelivered Orders, Paid 4,181,370 6,548,969

Total $           46,625,744 $        90,439,698

NOTE 17 ‐ PERMANENT INDEFINITE APPROPRIATIONS

A permanent and indefinite appropriation is a standing appropriation which, once made, is always available for specified

purposes and does not require repeated action by Congress to authorize its use. Legislation authorizing an agency to

retain and use offsetting receipts tends to be permanent; if so, it is a form of permanent appropriation. This appropriation

is for an unspecified amount of money; and may appropriate all or part of the receipts from certain sources, the specific

amount of which is determinable only at some future date, or it may appropriate “such sums as may be necessary” for a

given purpose.  

The House has two permanent and indefinite appropriations. These appropriations include the Compensation of

Members and Related Administrative Expenses and Congressional Use of Foreign Currency.

 Compensation of Members and Related Administrative Expenses is maintained and administered by the House.

Public Law 97‐51, Sec. 130(c), Oct. 1, 1981, 95 Stat. 966, “Appropriation of funds for Compensation of Members

of Congress and for Administrative Expenses at Levels Authorized by Law and Recommended by the President for

Federal Employees”. The appropriation funds the payroll and benefits compensation for Members of Congress

and related administrative expenses in support of administering the fund.
Notes to the Financial Statements

72

 Congressional Use of Foreign Currency is maintained and administered by the Department of State on behalf of

the House. This account, which was established in 1948 and made permanent in 1981, is authorized by legislation

codified in Title 22, Sec. 1754 of the United States Code. The funds are available to Congressional Committees

and delegations to cover local currency expenses incurred while traveling abroad. Use of the foreign currency

account for Congressional delegations and other official foreign travel of the House is authorized by either the

Speaker of the House or the chairman of a Standing, Special and Select, or Joint Committee.   

NOTE 18 ‐ EXPLANATION OF DIFFERENCES BETWEEN THE STATEMENT OF BUDGETARY RESOURCES

AND THE BUDGET OF THE U.S. GOVERNMENT

The Budget of the U.S. Government with actual amounts for the year ended September 30, 2012 has not been published

as of the issue date of these financial statements.  This document will be available in February 2013.

Differences between the Statement of Budgetary Resources and the Budget of the U.S. Government as of  

September 30, 2011 were:

Differences between the Statement of Budgetary Resources

and the Budget of the U.S. Government

Budgetary

Resources

Net

Outlays

Statement of Budgetary Resources $         1,430,483,150 $          1,370,717,456

Reclassification of Rescission   (2,655,966)  ‐

Miscellaneous 172,816 (717,456)

Subtotal (2,483,150)                        (717,456)   

Budget of the U.S. Government $         1,428,000,000 $         1,370,000,000
73

Notes to the Financial Statements

NOTE 19 ‐ RECONCILIATION OF BUDGETARY RESOURCES OBLIGATED TO NET COST OF OPERATIONS

2012 2011

Resources Used to Finance Activities:    

Budgetary Resources Obligated    

Obligations incurred $     1,350,963,400 $     1,389,966,753

Less: Spending Authority from Offsetting Collections and Recoveries (28,866,129) (30,009,758)

Obligations Net of Offsetting Collections and Recoveries 1,322,097,271 1,359,956,995

Less: Offsetting Receipts ‐  ‐ 

Net Obligations 1,322,097,271 1,359,956,995

Other Resources

   

Donations/Forfeited Property ‐  ‐ 

Transfers in/out Without Reimbursement ‐  ‐ 

Imputed Financing from Costs Absorbed by Others 229,446,950 235,680,888

Net Other Resources Used to Finance Activities 229,446,950 235,680,888

Total Resources Used to Finance Activities 1,551,544,221 1,595,637,883

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

   

Change in Budgetary Resources Obligated for Goods, Services,  

and Benefits Ordered but not Yet Provided (43,872,073) (11,089,996)

Resources that Fund Expenses Recognized in Prior Periods ‐  1,584,775

Budgetary Receipts and Offsetting Collections that do not affect    

Statement of Net Cost (43,051) ‐ 

Resources that Finance the Acquisition of Assets 20,645,707 16,558,901

Other Resources or Adjustments to Net Obligated Resources that do not    

affect Net Cost (348,166) 65,152

Total Resources Used to Finance Items not Part of the Net Cost of Ops (23,617,583) 7,118,832

Total Resources Used to Finance the Net Cost of Operations $     1,575,161,804 $     1,588,519,051

Components of Net Cost of Operations That will not Require

   

or Generate Resources in the Current Period:    

Components Requiring or Generating Resources in Future Periods:    

Increase/(Decrease) in Annual Leave Liability $              (432,208)    $            1,131,424

(Increase)/Decrease in exchange revenue receivable 819,679 (435,275)

Other 4,679,150 1,930,783

Total Components of Net Cost of Operations Requiring or    

Generating Resources in Future Periods 5,066,621 2,626,932

Components not Requiring or Generating Resources:    

Depreciation and Amortization              26,618,458 24,903,612

Revaluation of Assets or Liabilities 81,299 149,820

Other 2,165,240 1,077,150

Total Components of Net Cost of Operations not Requiring or    

Generating Resources 28,864,997 26,130,582

Total Components of Net Cost of Operations that will not

   

Require or Generate Resources in the Current Period 33,931,618 28,757,514

Net Cost of Operations $     1,609,093,422 $     1,617,276,565
74

This Page Intentionally Left Blank
75

Required Supplementary Information
Required Supplementary Information (Unaudited)

76

Required Supplementary Information

Stewardship Property and Equipment

The U.S. House of Representatives (House) collection of heritage assets includes historical artwork and artifacts

that reflect the rich heritage and evolving nature of the House. The institution mirrors the changing face and

history of the nation. These ideals and trials of our history are also expressed in the heritage assets whose subject

matter includes prominent Americans and other distinguished individuals, significant moments in history, and

symbolic representations of the nation’s rich and diverse history.

The House’s Curator manages and cares for the House’s collection of works of art and artifacts under its

jurisdiction which are located throughout the U.S. Capitol complex including House office buildings and other

locations under the control of the House. Since these locations are not in a museum setting, works of art and

artifacts may be subject to damage from contact and surface deposits. However, it is the House’s goal to preserve

its heritage assets and manage the condition in accordance with the intended usage of the collection. The House

conducts periodic assessments to monitor, inspect and evaluate the condition of the heritage assets to determine

the current condition for preservation or restoration efforts. These assessments are performed in accordance with

House established practice and professional standards. General conditions are categorized as excellent, good, fair

and poor. The House has determined its heritage assets to be in good to excellent condition.  

The following tables present the general condition of the House’s heritage assets and indicate an aggregate

condition of the collection as of September 30, 2012:

Heritage Asset

Collection Description

2011 Increase Decrease 2012 General

Condition

Artwork The works of art include

oil and acrylic paintings,

works on paper, and

sculpture in bronze,

marble and other media.  

These items range from

portraits and historical

documents to statues

and other works of art.

319 1 ‐ 320 Good to

Excellent

Examples of the House’s collection of works of art include:

Oil Paintings

The House’s collection of oil paintings primarily consists of the portraits of House of Representatives’ Speakers

and Committee Chairmen. An example includes that of Speaker Henry Clay by Guiseppe Fagnani in 1852. His

portrait was the first of what became Speaker’s portraits series in the House Collection. This portrait series

became official with House Resolution 164 in 1910, which decreed that the service of every speaker be

commemorated with an oil portrait. All Speaker portraits hang in the Speaker’s Lobby and in the East and West

Chamber stairways that adjoin it.  

Acrylic Paintings

The House’s collection of acrylic paintings includes Committee portraits painted in acrylic on canvas. One such

example is the portrait of former Chairman of the Committee on Appropriations, George Mahon.
Required Supplementary Information (Unaudited)

77

Works on Paper

The House’s collection of works on paper includes items such as an early 19th century sketch of Speaker Jonathan

Dayton.  

Sculptures

The House’s collection of sculptures includes items such as several marble busts of former Speakers of the House,

including Speakers Thomas B. Reed, Joseph G. Cannon, James Beauchamp Clark, and Nicholas Longworth.

Heritage Asset

Collection Description

2011 Increase Decrease 2012 General

Condition

Artifacts The artifacts include

items in various types of

media, including but not

limited to paper, metal,

plaster, wood, textile and

stone. These items range

from photographs and

other historical images,

literature (e.g.,

newspapers, magazines,

and handbills), and

political campaign

buttons to engravings,

furniture, and other

types of historical

artifacts.

4,511 256 131 4,636 Good to

Excellent

Examples of the House’s collection of artifacts include:

Paper

The House’s collection of paper artifacts include items such as photographs of the House of Representatives Chamber in

1937; Visitor’s Gallery passes from various Representatives from the early 1900’s; detail of a tally sheet of the February  

9, 1825 Electoral College vote from the records of the U.S. House of Representatives with the names of Andrew Jackson

of Tennessee, John Quincy Adams of Massachusetts, William H. Crawford of Georgia, and Henry Clay of Kentucky

appearing written in longhand; and Campaign Cards and other memorabilia of various Representatives dating back to

the early 1900s.  

Metal

The House’s collection of metal artifacts includes items such as an artifact of the House Chamber, the historic inkwell

that sits on the Speakers desk when the House is in session, which dates back to the 19th century. The inkwell is known

to have been used as long ago as 1821 in the Old Hall of the House before the Members moved to the present chamber.

Plaster

The House’s collection of plaster artifacts include items such as several small 1932 busts of George Washington,

presented to Members of Congress on the bicentennial of the first president’s birth.   
Required Supplementary Information (Unaudited)

78

Wood

The House’s collection of wood artifacts includes items such as the gavel used by Speaker Nancy Pelosi to open the

110th Congress as the first woman to serve as the House’s presiding officer; and an 1819 desk and chair from the House

Chamber.  

Textile

The House’s collection of textile artifacts includes items such as a recent House Page uniform, donated to the collection

by a former Page.

Stone  

The House’s collection of stone artifacts includes items such as a small piece of the U.S. Capitol East front stairs.
79

Other Accompanying Information
Other Accompanying Information (Unaudited)

80

2012

What Money is Available to Spend?

Total Resources $             1,478,658,018

Less Amount Available but Not Agreed to be Spent                   (121,986,647)

Less Amount Not Available to be Spent                       (5,707,971)

Total Amounts Agreed to be Spent                 1,350,963,400

How was the Money Spent?

Object Class

11 Personnel Compensation                    773,739,044

12 Personnel Benefits                    284,123,491

13 Benefits to Former Personnel                        2,073,789

21 Travel                      33,147,378

22 Transportation of Things                            115,834

23 Rent, Communications, Utilities                      96,715,993

24 Printing and Reproduction                      28,728,711

25 Other Services                      76,018,402

26 Supplies and Materials                      28,443,654

31 Equipment                      67,700,961

42 Insurance Claims & Indemnities                                1,804

Total Spending                 1,390,809,061

Amount Remaining to be Spent                     (39,845,661)

Total Amounts Agreed to be Spent $             1,350,963,400

U.S. HOUSE OF REPRESENTATIVES

Schedule of Spending

For the Year Ended September 30, 2012