UNITED STATES 

HOUSE OF REPRESENTATIVES

AUDIT REPORT

Audit of the Financial Statements

For the Fiscal Year Ended September 30, 2010

Report No. 11-HSW-15

September 21, 2011

Table of Contents

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

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

Independent Auditors’ Report.....................................................................15

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

Fiscal Year 2010 Financial Statements..........................................................45

Consolidated Balance Sheet....................................................................... 48

Consolidated Statement of Net Cost.......................................................... 49

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

Statement of Budgetary Resources............................................................ 51

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

Required Supplementary Information..........................................................75
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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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Office of Inspector General Audit Report Summary

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Management’s Discussion & Analysis
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Management’s Discussion and Analysis

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Management’s Discussion and Analysis

FY 2010

Introduction

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

mission of the House of Representatives. Fiscal Year 2010 (October 1, 2009 – September 30,

2010) coincided with the 111th session of the U.S. Congress.

Origin, History, and Mission

The United States 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 Capitol Building 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 twoͲyear 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 allow for the creation of standing, select and joint committees. During

the 111th Congress there were 20 standing committees of the House: Agriculture;

Appropriations; Armed Services; the Budget; Education and Labor; Energy and Commerce;

Financial Services; Foreign Affairs; Homeland Security; House Administration; the Judiciary;

Natural Resources; Oversight and Government Reform; Rules; Science and Technology; Small

Business; Standards of Official Conduct; Transportation and Infrastructure; Veterans' Affairs;

and Ways and Means.
Management’s Discussion and Analysis

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HOUSE LEADERSHIP

Article 1, Section 1 of the Constitution states, “The House of Representatives shall choose 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 OFFICES

Rule II of the Rules of the House for the 111th Congress provided for the election of four

officers to support House operations: a Clerk, a SergeantͲatͲArms, a Chief Administrative Officer

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

Historian and General Counsel.

Under the Rules of the House for the 111th Congress, the Chief Administrative Officer held

operational and financial responsibility for functions of the House as assigned by the

Committee on House Administration, subject to the oversight of the Committee. 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.  In

addition, 111th Congress, 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.

FINANCIAL STATEMENT HIGHLIGHTS

Basis of Accounting and Presentation

The consolidated financial statements for fiscal years (FY) 2009 and 2010 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.

AͲ136, "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, multiͲyear and noͲyear
Management’s Discussion and Analysis

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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 2010 of $1.6 billion, up 8 percent from FY

2009.The House reported $141 million of total unpaid obligated balances as of fiscal year end

(FYE) 2010.

Balance Sheet

Total Assets – The House reported total assets of $312 million as of FYE 2010, a 10 percent

increase from the prior year $284 million. The Fund Balance with Treasury of $240 million

represents the primary asset on the Balance Sheet of the House (77 percent of total assets),

followed by Property and Equipment with a net balance of $67 million.

Total Liabilities – The House reported total liabilities of $78 million as of FYE 2010, a 12 percent

decrease from the prior year total of $88 million.  The primary categories include Accounts

Payable of $35 million (45 percent of total liabilities) and Actuarial Federal Employees’

Compensation Act Liabilities of $20 million (26 percent of total liabilities).

Total Net PositionͲThe Net Position as of FYE 2010 was $235 million, an increase of $40 million

(20 percent) from the prior fiscal year.The balance was primarily comprised of Unexpended

Appropriations of $179 million.

Statement of Net Cost

Net Cost of Operations – The Net Cost of Operations for FY 2010 was $1.7 billion, a slight

increase from $1.6 billion reported for FY 2009, primarily comprised of Legislative Activities.

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.

INTERNAL CONTROLS

The House considers internal controls to be an integral part of all systems and processes that

the organization utilizes in managing its daily operations and achieving its strategic goals and

objectives. The House holds its managers accountable for efficiently and effectively performing
Management’s Discussion and Analysis

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their duties in compliance with applicable laws and regulations and for maintaining the integrity

of their activities through the use of internal controls.

The House fiscal year 2010 financial statement audit reported two material weaknesses and a

significant deficiency.The material weaknesses related to the lack of an internal control over

financial reporting program and controls over information technology at the House.  The

significant deficiency related to financial reporting processes.

The Office of Management and Budget (OMB) Circular AͲ123, Management’s Responsibility for

Internal Controls emphasize management’s responsibility for establishing and maintaining

effective internal controls over financial reporting, which includes safeguarding of assets and

complying with applicable laws and regulations.The House is committed to fully implementing

a program to assess the effectiveness of the organization’s internal controls over financial

reporting.  However, the House is in the early stages of standingͲup an internal controls

program that meets the intent of OMB Circular AͲ123 and, thus, are unable to provide

assurance that our internal controls over financial reporting are operating effectively.

The House has initiated actions to implement an internal controls program that will

substantially resolve the reported weaknesses.These actions include the creation of a Senior

Assessment Team responsible for the oversight and implementation activities of the program

that has set the tone from the top.In addition, the House has designated an individual to assist

in the design, implementation, monitoring, and modification of a House internal controls

program.The internal controls program will be implemented during fiscal year 2011.

In addition, the House has taken significant actions to remediate the information technology

material weakness.These actions include revisions to the system security plans and testing of

information technology controls.  Actions are scheduled to be completed during FY 2011 in

relation to key financial and general support systems.
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Independent Auditors’ Report
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Independent Auditors’ Report

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INDEPENDENT AUDITORS’ REPORT

To the Inspector General

U.S. House of Representatives

Cotton & Company LLP conducted the fiscal years (FYs) 2010 and 2009 financial statement audits of the

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

United States of America and standards applicable to financial statement audits contained in

Government Auditing Standards, issued by the Comptroller General of the United States. In our audits of

House FYs 2010 and 2009 financial statements, we found:

x The financial statements were presented fairly, in all material respects, in conformity with U.S.

generally accepted accounting principles.

x The House did not have effective internal control over financial reporting as of September 30,

2010 (including safeguarding assets).

x We identified no reportable noncompliance with laws and regulations we tested.

The House received an unqualified opinion on FYs 2010 and 2009 financial statements. Although the

House was able to produce financial statements that were fairly presented, it lacked a management

control program to ensure effective internal control over financial reporting. Specifically, the House did

not have a risk assessment program or a monitoring program. We identified the lack of a management

control program as a material weakness1

. Additionally, we identified controls over information

technology as a material weakness.

House management focused on improving internal controls during FY 2010. This effort included hiring

an individual with responsibility over a management control program and contracting with a

professional services firm to implement a management control program. The House, however, did not

implement the program in FY 2010, but has targeted it to be in place during FY 2011.

The following sections discuss these conclusions in more detail as well as our conclusions on

Management’s Discussion and Analysis and required supplementary information; our objectives, scope,

and methodology; and House comments and our evaluation.



1 A material weakness is a deficiency, or a combination of deficiencies, in internal control such that there is a

reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented or

detected and corrected on a timely basis.
Independent Auditors’ Report

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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 House’s assets, liabilities, and net

position as of September 30, 2010, and September 30, 2009, and net costs, changes in net position, and

budgetary resources for the fiscal years then ended.

OPINION ON INTERNAL CONTROL

Because of the material weaknesses in internal control discussed below, the House did not maintain, in

all material respects, effective internal control over financial reporting as of September 30, 2010, and

thus did not provide reasonable assurance that losses, misstatements, or noncompliance material in

relation to the financial statements would be prevented or detected and corrected on a timely basis.

Our opinion is based on criteria established under 31 U.S.C. 3512(c), (d), commonly known as the

Federal Managers’ Financial Integrity Act of 1982 (FMFIA) and in the Committee of Sponsoring

Organizations of the Treadway Commission (COSO) framework for Internal Control. Additionally,

guidance provided by Office of Management and Budget (OMB) Circular AͲ123, Management’s

Responsibility for Internal Control, is issued under authority of FMFIA and provides guidance to Federal

managers on improving the accountability and effectiveness of Federal programs and operations by

establishing, assessing, correcting, and reporting on internal control. The COSO framework and OMB

Circular AͲ123 represent Industry best practices for establishing a successful management control

program. For the remainder of this report, we will refer to guidance prescribed by COSO and OMB

Circular AͲ123 as industry best practices.

During our audit of the House’s FY 2010 financial statements, we identified three significant

deficiencies2

. The first two issues identified below represent material weaknesses in internal control

over financial reporting. The three significant deficiencies identified below were reported in prior years

and are discussed in Appendix A of this report:

1. Lack of a Management Control Program (Material Weakness)

2. Ineffective Controls over Information Technology (Material Weakness)

3. Ineffective Financial Reporting Controls and General Ledger System Reporting Limitations

The two material weaknesses created significant management challenges that:

x Resulted in House management’s inability to provide reasonable assurance that its

financial statements are complete, accurate, and prepared in a timely manner.

x Reduced assurance that data processed by the House’s information systems are reliable

and appropriately protected.

For significant errors and issues that were identified, the House made necessary adjustments to the

financial statements, notes accompanying the financial statements, and other required supplementary

information, as appropriate, and was therefore able to prepare financial statements that were fairly



2 A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than

a material weakness, yet important enough to merit attention by those charged with governance.
Independent Auditors’ Report

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stated in all material respects for FYs 2010 and 2009. However, the material weaknesses in the House’s

internal control over financial reporting noted may adversely affect information used by House

management that is based, in whole or in part, on information that is inaccurate because of these

weaknesses. In addition, unaudited financial information reported by the House may also contain

misstatements resulting from these weaknesses.

We considered the material weaknesses identified above in determining the nature, timing, and extent

of our audit procedures on the House’s FY 2010 financial statements. We caution that misstatements

may occur and not be detected by our tests and that such testing may not be sufficient for other

purposes.

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

material weaknesses or significant deficiencies, but which merit House management attention and

correction. We have communicated these matters to House management informally and, as

appropriate, will report them in writing to the House.

COMPLIANCE WITH LAWS AND REGULATIONS

Our tests of the House’s compliance with selected provisions of laws and regulations for FY 2010

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

government auditing standards or 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.

CONSISTENCY OF OTHER INFORMATION

The House’s Management’s Discussion and Analysis and required supplementary information contain a

wide range of information, some of which is not directly related to the financial statements. We do not

express an opinion on this information. We did, however, compare this information for consistency with

the financial statements and discussed the methods of measurement and presentation with House

officials. On the basis of this limited work, we found no material inconsistencies with the financial

statements, U.S. generally accepted accounting principles, or OMB guidance.

OBJECTIVES, SCOPE, AND METHODOLOGY

House management is responsible for:

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

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

effectiveness.

3. Complying with applicable laws and regulations.

We are responsible for planning and performing the audit to obtain reasonable assurance and provide

our opinion about whether House financial statements are presented fairly, in all material respects, in

conformity with U.S. generally accepted accounting principles, and whether House management

maintained, in all material respects, effective internal control over financial reporting as of September

30, 2010. We are also responsible for testing compliance with selected provisions of laws and
Independent Auditors’ Report

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requirements that have a direct and material effect on the financial statements and performing limited

procedures with respect to certain other information accompanying the financial statements.

To fulfill these responsibilities, we:

x Examined, on a test basis, evidence supporting amounts and disclosures in the financial

statements.

x Assessed accounting principles used and significant estimates made by management.

x Evaluated overall presentation of the financial statements.

x Obtained an understanding of the House and its operations, including its internal

control over financial reporting (including safeguarding assets), and compliance with

laws and regulations (including execution of transactions in accordance with budget

authority).

x Assessed the risk that a material misstatement exists in the financial statements and the

risk that a material weakness exists in internal control over financial reporting.

x Evaluated the design and operating effectiveness of internal control over financial

reporting based on assessed risk.

x Tested relevant internal controls over financial reporting and compliance and evaluated

design and operating effectiveness of internal control.

x Tested compliance with selected provisions of laws and regulations specific to the

House, which are contained in the Members’ Congressional Handbook and Committees’

Congressional Handbook.

An entity’s internal control over financial reporting is a process affected by those charged with

governance, management, and other personnel. The objectives of internal control over financial

reporting are:

x Financial reporting: Transactions are properly recorded, processed, and summarized to

permit preparation of financial statements in conformity with U.S. generally accepted

accounting principles, and assets are safeguarded against loss from unauthorized

acquisition, use, or disposition.

x Compliance with laws and regulations: Transactions are executed in accordance with

selected provision of laws and regulations that have a direct and material effect on the

financial statements.

We did not evaluate all internal controls relevant to operating objectives as broadly established by

under FMFIA, such as those controls relevant to preparing statistical reports and ensuring efficient

operations. We limited our internal control testing to controls over financial reporting and compliance.

Our internal control testing was for the purpose of expressing an opinion on the effectiveness of internal

control over financial reporting and may not be sufficient for other purposes. Consequently, our audit

may not identify all deficiencies in internal control over financial reporting that are less severe than a
Independent Auditors’ Report

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





 








Independent Auditors’ Report

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APPENDIX A

MATERIAL WEAKNESSES AND SIGNIFICANT DEFICIENCIES

NOTED DURING FY 2010 FINANCIAL STATEMENT AUDIT
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APPENDIX A

MATERIAL WEAKNESSES AND SIGNIFICANT DEFICIENCIES

NOTED DURING FY 2010 FINANCIAL STATEMENT AUDIT

During our audit of the House’s FY 2010 financial statements, we identified three significant deficiencies

in internal control over financial reporting, which are described in this appendix. We consider two of

these to be material weaknesses that created significant management challenges. These weaknesses:

x Resulted in House management’s inability to provide reasonable assurance that its

financial statements are complete, accurate, and prepared in a timely manner.

x Reduced assurance that data processed by the House’s information systems are reliable

and appropriately protected.

Weakness 1:  Lack of a Management Control Program

Summary Status: Material Weakness

PriorͲYear Condition

Open

House management lacked a management control program that ensured effective internal control over

financial reporting. Specifically, the House did not have a risk assessment program or monitoring

program to ensure effective internal controls. Although the House was able to produce financial

statements that were fairly presented in all material respects, it lacked a management control program

that ensured effective internal control over financial reporting.

OMB Circular AͲ123, Appendix A, Internal Control over Financial Reporting, addresses the assessment,

documentation, and reporting on the effectiveness of internal control over financial reporting to assure

Congress and the public that the Federal government is committed to safeguarding its assets and

providing reliable financial information. Internal control is broadly defined as a process designed to

provide reasonable assurance regarding the achievement of objectives in the following categories:

x Effectiveness and efficiency of operations.

x Reliability of financial reporting.

x Compliance with applicable laws and regulations.

The objectives relevant to internal control over financial reporting are those pertaining to reliability of

financial reporting.

Internal control consists of the following five interrelated components:

1. Control Environment. The control environment sets the tone of an organization and is the

foundation for all other components of internal control.

2. Risk Assessment. For an agency to exercise effective control, it must establish objectives and

understand the risks that could undermine achievement of those objectives. Risk assessment is the

identification and analysis of relevant risks to achieving objectives, forming a basis for determining
Independent Auditors’ Report

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how risks should be managed. For purposes of assessing internal control over financial reporting,

management should identify the risks of a material misstatement in the financial statements.

3. Control Activities. Control activities are policies and procedures that help ensure that

management’s directives are carried out. Control activities occur throughout the organization, at all

levels and in all functions. They include the fundamentals of internal control, such as approvals,

authorizations, verifications, reconciliations, reviews of operating performance, and segregation of

duties.

4. Information and Communication. Pertinent information must be identified, captured, and

communicated in an effective manner to enable individuals to carry out their responsibilities.

Information systems produce reports containing operational, financial, and complianceͲrelated

information that make it possible to run and control the business. These systems not only deal with

internallyͲgenerated data, but also with information about external events necessary for informed

business decisionͲmaking and external reporting (e.g., industry, economic, and regulatory

information). Effective communication must also occur throughout and among all levels of the

organization.

5. Monitoring. Monitoring is the continuous process that management uses to assess the quality of

internal control over time. Ongoing monitoring occurs in the ordinary course of operations and

includes regular management and supervisory activities. Periodic monitoring involves less frequent

activities performed by senior management. Monitoring also encompasses a process for reporting

deficiencies and undertaking remediation efforts.

The illustration below depicts an effective management control program that includes all five

components of an internal control framework as it relates to financial reporting objectives:

While each component is important in establishing an effective internal control program, risk

assessment is the first critical step in the process to determine the extent of controls necessary to

ensure effective internal control over financial reporting. Monitoring is the strength behind an internal

control program, because it identifies poorly designed or ineffective controls and measures the

effectiveness of all internal control activities.
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Lack of Risk Assessment and Monitoring

The House has not identified both internal and external risks that may prevent the agency from meeting

its objectives. The process of identifying and analyzing risk is a critical component of an effective internal

control system that includes how management identifies risks relevant to the preparation of financial

statements and information; assesses the likelihood of the manifestation of those risks; and decides

upon actions to manage and mitigate those risks. The House also has not analyzed these risks for their

potential effect or impact on the agency.

During FY 2010, House management focused on improving internal controls by hiring an individual with

responsibility over a management control program. It also contracted with a professional services firm

to implement a management control program.

As of September 30, 2010, House management had not implemented a monitoring program to include

periodic reviews, reconciliations, or comparisons of data to determine if existing control activities are

designed and operating effectively. Furthermore, House management had not redesigned or improved

its controls found to be deficient or communicated internal control objectives to ensure that the agency

is committed to sustaining an effective control environment.

These identified weaknesses give rise to significant management challenges that reduce assurance that

losses, misstatements, or noncompliance material in relation to the financial statements would be

prevented or detected and corrected in a timely manner. Successfully implementing a management

control program is critical to the House for achieving accountability and transparency.

Recommendation

We recommend that the Chief Administrative Officer (CAO) continue to work with its contractor to

implement an annual management controls evaluation program to ensure controls are designed,

implemented, and operating effectively. We recommend that the House consider implementing a

program consistent with that outlined by OMB Circular AͲ123, Appendix A. We further recommend that

the House use the Chief Financial Officer’s Council’s Implementation Guide for OMB Circular AͲ123 (July

2005). This guide recommends the following steps for establishing an effective management control

program.

x Planning. Establish a Senior Assessment Team and determine the overall approach, to

include determining the scope (identify significant reports), determining materiality,

considering organizational structure, determining key processes, assessing risk,

integrating and coordinating review activities, planning monitoring and testing

approaches, and developing documentation standards.

x Evaluating Internal Control at the Entity Level. Document and assess entityͲwide

controls.

x Evaluating Internal Control at the Process Level. Gain an understanding of key financial

reporting processes, including general and application controls, identify key controls,

and assess the adequacy of control design.

 
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x Testing Control Design and Operating Effectiveness at the Transaction Level. Test and

document the operating effectiveness of controls.

x Concluding, Reporting and Correcting. Determine if controls are operationally effective

based on test results, assessments of compensating controls, and identified material

weaknesses in internal control over financial reporting.

 
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Weakness 2:  Ineffective Controls over Information Technology

Summary Status: Material Weakness

 PriorͲYear Condition

 Open

The House has not adopted an information technology (IT) controls framework or implemented an

overarching IT security program that ensures a strong general controls environment for information

systems and data processing. Management has not implemented, documented, or tested sufficient

internal controls over the general IT environment to ensure that financial data are complete, accurate,

and reliable. We noted the following 12 conditions related to internal controls over information systems

that collectively represent a material weakness in the control environment.

a. A process or program has not been created to identify, document, and assess IT internal controls

to provide reasonable assurance regarding the accuracy and reliability of data processing for

financial reporting.

Management has not assigned responsibility for managing IT internal controls and developing a program

to assess IT internal controls over financial reporting. Management has not assessed IT internal controls

to provide assurance that IT internal controls are effective and operating as intended. This increases the

risk that the financial reporting process could produce incomplete, inaccurate, or even fraudulent data.

During FY 2010, House management engaged a contractor to establish a management controls program.

The House did not implement these efforts in FY 2010, but has targeted them to be in place during FY

2011.

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

environment have undergone a risk management process, such as the Certification and

Accreditation (C&A) process defined by National Institute of Standards and Technology (NIST).

House Information Security Policy (HISPOL) for the Information Security Compliance Program 007.0

requires that all major systems, support systems, and applications undergo a C&A process before

implementation and at least every 2 years thereafter. The House has not tracked the progress or

implementation status for HISPOL 007.0 and has not developed a formal information systems inventory

identifying all systems and applications operating within the House environment. Without identification

of all systems and applications, management cannot effectively implement and ensure compliance with

HISPOL 007.0.

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

in accordance with House policy and industry best practices.

SSPs were inadequate for the House network, Lawson, Procurement Desktop (PD), Member Payroll

(MP), and Fixed Asset and Inventory Management System (FAIMS). Management has not enforced

policies ensuring that all systems have accurate and complete security control documentation. SSPs did

not enumerate and document minimum security controls based on system criticality and data.

Additionally, SSPs were not maintained and updated in accordance with HISPOL 007.0. SSPs for the

House network, Lawson, PD, MP, and FAIMS have not been updated on an annual basis. Because

management did not enforce policies requiring accurate and complete SSP documentation, the risk
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increases that all recommended system security controls, based on the criticality of data processed, are

not in place. Also, because minimum security controls are not identified and enumerated, testing of

individual controls is not possible.

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

implemented controls for the House network and financial systems. Management relied on

system scans to substitute for control assessments.

Management has not identified and documented specific minimum security controls for the House

network and financial systems in respective SSPs and thus cannot conduct security control assessments.

Further, if it has not conducted security control assessments, management cannot gain assurance that

all required controls are in place and operating effectively. This increases the risk that the

confidentiality, integrity, and availability of financial data within systems may be compromised. By

placing reliance on system scans alone, which test some technical controls, management cannot gain

assurance over management or operational controls.

e. The information systems change control process for financial systems and data did not include

adequate documentation to ensure that all changes were adequately managed, tested, and

approved.

Evidence of testing system changes before implementation was not retained. Evidence of testing,

including test plans, expected results, and actual results, was not developed and maintained for changes

made to the major payroll system, Lawson. Additionally, supporting evidence for the upgrade and

migration of MP into Lawson completed in FY 2010 was not sufficiently documented to detail change

specifications, test plans, expected tested results, key decisions, and approvals. Some decisions made

during the project among external contractors, project owners, and business owners were made during

meetings and were verbal in nature.

Without a thorough change control process, the risk increases that changes are not being managed

effectively and efficiently. Without documentation of testing, the risk increases that changes are being

implemented in the absence of sufficient testing, thereby introducing possible system errors or even

malicious code into the House production environment. Without change specifications, management

cannot review or manage the change process to ensure that the impact of changes has been fully

addressed. Furthermore, without a structured and documented change management process,

management cannot ensure the ongoing confidentiality, integrity, and availability of its systems and

data.

f. 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.

Records of security incidents identified by Information Security were not maintained, and followͲup

investigations were not conducted. A process to document, track, and test corrective actions related to

audit recommendations and ensure that identified weaknesses are corrected was not in place. Also, a

Plan of Action and Milestones (POA&M) has not been developed or maintained for financial systems and

applications.
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By not identifying and tracking all security weaknesses, management cannot ensure that appropriate

and timely corrective action is taken to address all known issues and weaknesses. This increases the risk

that a significant security weakness will remain vulnerable for an extended period of time.

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

Account management policies and procedures have not been adequately implemented or followed by

CAO management. Access requests and approvals were not appropriately captured for accounts at the

network level (Active Directory), inactive accounts and accounts for terminated individuals at both the

network and financial application levels were not removed in a timely manner, and periodic

recertification of the House network and financial applications was not completed in accordance with

House policies. We noted the following:

x 19 of the 45 selected network accounts created in FY 2010 did not have a help desk ticket

tracking the account request and approval, as required by House policies.

x One employee retained active user access to Federal Financial System (FFS) after the individual’s

termination date.

x The quarterly Lawson access recertification was not initiated by the Lawson system owner, and

it also did not involve the data owners who recertify user access, as required by House policies.

x The semiͲannual access recertification of FFS was not performed, as required by House policies.

x The quarterly network access recertification was completed based on the login activity of the

network account, rather than on the continued appropriateness of access.

For 1,209 CAO active directory accounts:

x 60 accounts were previously logged in (4.96% of total accounts), but were inactive longer than

180 days. Of those 60 accounts, only 23 were disabled.

x 166 accounts have never been logged into (13.73% of total accounts). Of those 166 accounts,

133 were disabled.

x 9 accounts (8 created in FY 2010) did not require a password to log into the House network.

Also, one of the 13 contractors noted as terminated during the FY 2009 financial statement audit

continued to have active network access in FY 2010.

The risk that accounts may be used by unauthorized individuals to conduct inappropriate or malicious

acts increases by failure to remove inactive and terminated users in a timely manner, complete access

recertifications appropriately, and document access requests and approvals.

h. Management has not conducted adequate oversight of the outsourced financial system, FFS.

In accordance with Statement on Auditing Standards (SAS) 70, Service Organizations, management

should review the Report on Controls Placed in Operation and Tests of Operating Effectiveness provided
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by its service provider, National Business Center (NBC). Additionally, management should complete an

assessment of user control considerations identified by NBC that are necessary to achieve NBC’s control

objectives included in the SAS 70 report.

During FY 2010, CAO management documented the review of the FFS SAS 70 report and its risk

acceptance related to oversight of FFS, because FFS was soon to be replaced when the House

implemented a new accounting system in FY 2011. The risk acceptance process did not, however,

include an assessment of system controls to ensure that House financial data are being adequately

protected.

Without reviewing and assessing FFS controls, the risk is increased that the confidentiality, integrity, and

availability of FFS data may be compromised, thus leading to the possibility of inaccurate or fraudulent

financial reporting.

A recommendation is no longer provided for this, because FFS was discontinued at the end of FY 2010.

This condition did, however, exist during the fiscal year under audit.

i. Contingency planning and recovery policies and procedures have not been developed and

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

critical financial systems.

Contingency plans to coordinate recovery activities between the House network and all critical financial

systems have not been developed. Without developed and tested contingency plans, the risk is

increased 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.

j. Active Directory domain controllers were not adequately configured and monitored to ensure

compliance with House policy and industry best practices.

Management has not enforced HISPOL 007.1.11, Windows 2003 Server Security Checklist, developed by

House Information Security, to ensure that domain controller configuration settings comply with House

policy. We reviewed settings deployed to production domain controllers and identified 49 settings that

deviated from the Center for Information Security (CIS) Windows Server 2003 Benchmark, which is

considered an industry best practice. Of these 49 deviations:

x 22 did not comply with HISPOL 007.1.11.

x 14 resulted from configuration settings not covered in HISPOL 007.1.11.

x 13 complied with HISPOL 007.1.11, but the HISPOL configurations did not match the CIS

benchmark.

k. Policies and procedures for segregation of duties within financial systems have not been

developed.

Policies and procedures have not been developed and implemented to ensure that principles of proper

segregation of incompatible duties are understood by key personnel and enforced by financial

applications. Specifically, policies and procedures have not been developed, documented, and
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implemented to ensure that CAO financial systems identify incompatible duties and enforce

segregationͲofͲduty controls both at the endͲuser and administrative levels. Without proper

segregationͲofͲduties controls in place for financial applications, financial data may be manipulated by

unauthorized individuals. Subsequently, the risk increases that fraudulent acts may go undetected, and

financial data may become inaccurate and unreliable.

l. Physical access controls have not been adequately designed, managed, and enforced for the

House datacenter at Site 3.

CAO management has not appropriately identified controls restricting the number of individuals with

physical access to sensitive information resources. The datacenter is a coͲlocated facility supporting

other legislative branch organizations in addition to the House. Servers supporting the House financial

applications are not physically separated from other datacenter tenants. Therefore, personnel with

access permissions to the datacenter have physical access to the financial application servers. Overall,

access to the House datacenter and servers is permitted to more individuals, including some supporting

other organizations, than is needed for House business requirements.

Additionally, House management does not have an effective process to authorize and review access to

the Site 3 datacenter. The House manually maintains a Site 3 access listing for the annual physical access

recertification. The House access list does not reconcile to the proximity card system maintained by

United States Capitol Police, which is responsible for control of physical access to the datacenter.

Lack of proper physical controls over critical servers and infrastructure increases the risk that an

unauthorized individual will be able to gain access to financial systems and compromise the

confidentiality, integrity, and availability of the financial applications.

Recommendations

We recommend that the CAO:

2a. Develop and implement a process to identify, document, and assess IT internal controls in

accordance with OMB Circular AͲ123.

2b. Implement and enforce a risk management framework to ensure that all systems are identified and

undergo a security assessment process in accordance with House policy and industry best practices

for federal information systems.

2c. Update SSPs for the House network and all financial systems to include enumerating minimum

security controls based on the criticality and environment of the system and documenting these

controls in accordance with industry best practices.

2d. Conduct and document security control assessments for the House network and financial systems to

test the design and operating effectiveness of all implemented controls. For each control tested, we

recommend that documentation include the description of the implemented control, test steps to

be conducted, expected test results, and actual test results.
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2e. Develop and implement a change control process for all financial systems that ensures all changes

are tracked, tested, and approved. This includes developing and maintaining documentation for all

changes, including change specifications, approvals, test plans, and test results.

2f. 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, to include the following:

x Developing a procedure to test security controls identified as corrected to ensure that actions

taken adequately mitigate or correct identified weaknesses.

x Developing and maintaining a POA&M, or equivalent documentation, for all House systems and

applications to track security weaknesses as well as issues noted as a result of audits.

x Maintaining documentation for all identified security incidents throughout the House and

ensuring that appropriate followͲup investigations are performed.

2g. Develop, document, and implement a comprehensive account management process for network

and financialͲapplication levels to ensure that:

x Inactive accounts and accounts for terminated employees and contractors are disabled and

removed in a timely manner.

x Account recertifications are completed on an approved, predefined schedule by appropriate

staff and determine whether continued access is required and that the access type is

appropriate.

x Requests for access are documented, approved, and maintained.

2h. No recommendation.

2i. Coordinate contingency planning and recovery policies and procedures to ensure a comprehensive

approach that includes the House network and all critical financial systems.

2j. Ensure that configuration settings documented in HISPOL 007.1.11 include industry best practices,

such as benchmarks approved by NIST, and document any deviations. Additionally, ensure that

configuration settings documented in HISPOL 007.1.11 are enforced for all domain controllers.

2k. Develop, document, and implement policies and procedures to ensure that:

x CAO financial systems identify incompatible duties and enforce segregationͲofͲduty

controls both at the endͲuser and administrative levels.

x SegregationͲofͲduty principles are understood by key personnel, such as system and

data owners and program managers.

2l. Develop, document, and implement a process to ensure that physical access to House information

systems is appropriately limited to only those personnel with a valid business need by performing a
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periodic, complete physical access recertification and further securing the financial application

infrastructure by limiting access to only House personnel.
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Weakness 3: Ineffective Financial Reporting Controls and General Ledger System Reporting

Limitations

Summary Status: Significant Deficiency

 PriorͲYear Condition

 Open

Weaknesses in procedures used to ensure the completeness and accuracy of yearend financial

statements and footnote disclosures adversely affected the House’s ability to initiate, authorize, record,

process, or report financial data reliability in accordance with U.S. generally accepted accounting

principles and guidance contained in OMB Circular AͲ136.

OMB Circular AͲ123 states:

Internal control over financial reporting is a process designed to provide reasonable

assurance regarding the reliability of financial reporting. Reliability of financial reporting

means that management can reasonably make the following assertions:

1. All reported transactions actually occurred during the reporting period and all assets

and liabilities exist as of the reporting date (existence and occurrence);

2. All assets, liabilities, and transactions that should be reported have been included

and no unauthorized transactions or balances are included (completeness);

3. All assets are legally owned by the agency and all liabilities are legal obligations of

the agency (rights and obligations);

4. All assets and liabilities have been properly valued, and where applicable, all costs

have been properly allocated (valuation);

5. The financial report is presented in the proper form and any required disclosures are

present (presentation and disclosure);

6. The transactions are in compliance with applicable laws and regulations

(compliance);

7. All assets have been safeguarded against fraud and abuse; and

8. Documentation for internal control, all transactions, and other significant events is

readily available for examination.

We identified weaknesses in three of the eight assertions identified above (Nos. 1, 5, and 8). Our

findings and associated recommendations for corrective actions are provided below in order of

significance.

a. Financial transactions were not recorded in FFS (Assertion No. 8).

Members’ payroll and benefits as well as related operating expenses, which total over $100 million

annually, were not recorded in the House financial system of record, FFS. Rather, financial activity was
Independent Auditors’ Report

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tracked and recorded using QuickBooks. Financial activity was reported at the summary level as a

Hyperion adjustment on the financial statements at yearend.

In accordance with GAO’s Standards for Internal Control in the Federal Government, transactions should

be promptly recorded in the system of record to maintain their relevance and value to management in

controlling operations and making decisions. Controls over design and use of records do not provide

reasonable assurance that transactions and events are recorded accurately.

b. Manual worksheet adjustments were required to compile the financial statements and were not

recorded in FFS (Assertion No. 8).

The House used worksheet adjustments recorded outside of FFS and Hyperion to compile financial

statements. These worksheet adjustments record both currentͲperiod activities and correct beginning

balances. The complexity of worksheet adjustments increases the risk of errors in reported amounts.

The current reporting work flow is as follows:

Beginning balance adjustments are necessary, because the effect of Hyperion and worksheet

adjustments is not recorded in FFS.

Adjustments were also used to record the effect of budgetary accounting events not recorded before FY

2009. In FY 2009, the House first prepared financial statements using U.S. generally accepted accounting

principles forfederal entities. The House determined the accounting for budgetary accounting events

not recorded before FY 2009, but required for financial reporting, and tracked closing amounts in MS

Excel worksheets. These worksheet adjustments were not recorded in FFS. The House continued to

manually track these adjustments during FY 2010.

Based on GAO’s Standards for Internal Control in the Federal Government, 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.

c. The House overstated its upward and downward adjustments to priorͲyear obligations (Assertion

No. 1).

FFS did not record upward and downward adjustments of priorͲyear obligations. The Accounting

Department developed a manual methodology to determine these balances based on accounting
Independent Auditors’ Report

36

events, transaction codes, and transaction types. The methodology included transactions that are not

upward or downward adjustments to priorͲyear obligations such as:

x Recognizingtransactions that did not reference an obligation at the time of payment as upward

adjustments.

x Recognizing transactions as both upward and downward adjustments when orders changed

from undelivered to delivered and from unpaid to paid even if the obligation amount did not

increase or decrease(i.e. from GL 4801: Undelivered Orders, Unpaid, to 4901: Delivered Order,

Unpaid, or 4902: Delivered Orders, Paid).

The U.S. Standard General Ledger (USSGL) states that upward and downward adjustments of priorͲyear

obligation accounts represent the amount of current year upward or downward adjustments to

obligations originally recorded in a prior fiscal year.

As a result, the House overstated its upward adjustment balance by $80 million and overstated its

downward adjustment balance by $56 million.

d. The House did not properly report unobligated balances (Assertion No. 5).

The House did not properly report unobligated balances in the Statement of Budgetary Resources (SBR).

It reported $40 million of available unobligated balances as apportioned. Because the House’s budgetary

resources do not require OMB apportionment before obligation, these amounts should be reported in

the Unobligated Balances – Available: Exempt from Apportionment line of the SBR.

FFS uses USSGL Accounts 4510, Apportionments, and 4610, Allotments – Realized Resources, to

recognize appropriated money available for obligation, instead of correctly recording these balances in

USSGL 4620, Unobligated Funds Exempt from Apportionment.

e. The House reported obligated balances incurred improperly on the SBR (Assertion No. 5).

The House did not report approximately $27 million of Reimbursable Obligations incurred on the SBR.

Rather, it reported all obligations incurred as direct. OMB Circular AͲ11, Preparation, Submission and

Execution of the Budget, states that:

...if your account includes reimbursable obligations, show the obligations financed by

reimbursements separately from direct obligations... [a] reimbursable obligation means

an obligation financed by offsetting collections credited to an expenditure account in

payment for goods and services provided by that account.

f. The House recorded accounts receivable activity as summaryͲlevel entries (Assertion No. 8)

The Accounting Department recorded receivables for duplicate payments and payroll overpayments

quarterly at a summary level. Transactions were summarized by Members, Committees, Leadership,

Offices, and Joint Items and then recorded to FFS. TransactionͲlevel details of the entries are maintained

in MS Excel. As amounts were collected or resolved, accounts receivable was reduced at transactional

level in FFS.
Independent Auditors’ Report

37

Statement on Federal Financial Accounting Standards (SFFAS) 1, Accounting for Selected Assets and

Liabilities, states:

A receivable should be recognized when a federal entity establishes a claim to cash or

other assets against other entities, either based on legal provisions, such as a payment

due date, (e.g., taxes not received by the date they are due), or goods or services

provided. If the exact amount is unknown, a reasonable estimate should be made.

These receivables are not recorded when the claim is established. The lack of a clear audit trail in the

financial system of record leaves the House susceptible to error and increases the risk of misstatements.

In addition, users are unable to efficiently analyze receivables or determine open amounts.

Recommendations

We recommend that the CAO:

3a.Ensure that all Members’ payroll and benefits and related financial activity is recorded in the system

of record as transactions occur.

3b.Discontinue the use of worksheet adjustments and ensure that all worksheet adjustments reported

to date are recorded in the system of record.

3c.Ensure that the posting logic for upward and downward adjustments of priorͲyear obligations is

configured properly and in use in the system of record.

3d.Ensure that the posting logic in the system of records available unobligated balances in USSGL 4620,

Unobligated Balances Exempt from Apportionment, and ensure that balances are reported on the

Unobligated Balances – Available: Exempt from Apportionment line on the SBR.

3e.Ensure that direct and reimbursable obligations are tracked and properly reported on the SBR.

3f.Develop standard operating procedures related to recording duplicate payments and payroll

overpayments and ensure that accounts receivable transactions are recorded in the system of

record at the transaction level.

 
Independent Auditor’s Report

38

Status of PriorͲYear Findings

In the audit report on the House’s FY 2009 financial statements, several issues were noted related to

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

findings.

Control Deficiency 2009 Status 2010 Status

Lack of a Management Control Program Material Weakness Material Weakness

Ineffective Controls over Information Technology Material Weakness Material Weakness

Ineffective Financial Reporting Controls and General

Ledger System Reporting Limitations Significant Deficiency Significant Deficiency

Weakness in Processing and Reporting Payroll Data Significant Deficiency Deficiency
Independent Auditor’s Report

39

APPENDIX B

MANAGEMENT’S RESPONSE TO

FY 2010 FINANCIAL STATEMENT AUDIT REPORT
Independent Auditors’ Report

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41

Chief Administrative Officer’s

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

43
Chief Administrative Officer’s Audit Report Response

44
45

Fiscal Year 2010 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)

2010 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. AͲ136, 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 2010 consisted of the following:

• The Balance Sheet, which presents as of September 30, 2010 and 2009 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

year ended September 30, 2010 and 2009. 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 year ended September 30,

2010 and 2009.

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

the House during FY 2010 and FY 2009, the status of these resources at September 30, 2010

and 2009, the change in obligated balance during FY 2010 and FY 2009, and net outlays of

budgetary resources for the year ended September 30, 2010 and 2009.
Financial Statements

48

U.S. HOUSE OF REPRESENTATIVES

Consolidated Balance Sheet

As of September 30, 2010 and 2009

2010 2009

ASSETS

 Intergovernmental:

 Fund Balance with U.S. Treasury (Note 2) $ 239,582,640 $ 213,204,524 

 Accounts Receivable, Net (Note 3) 78,437 192,014 

 Advances and Prepayments (Note 7) 13,776 -

 Total Intragovernmental 239,674,853 213,396,538 

 Cash and Other Monetary Assets (Note 2) 1,092 1,653 

 Accounts Receivable, Net (Note 3) 138,469 197,560 

 Inventory and Operating Materials and Supplies (Note 4) 1,342,359 1,368,211 

 Property and Equipment, Net (Note 5) 67,323,285 63,212,805 

 Advances and Prepayments (Note 7) 4,011,514 5,454,320 

Total Assets $ 312,491,572 $ 283,631,087 

 

Stewardship Property and Equipment (Note 6)

 

LIABILITIES

 Intragovernmental:

 Accounts Payable $ 1,481,153 $ 1,308,443 

 Advances from Others 1,578,859 641,483 

 Capital Lease Liabilities 728,659 877,417 

 Other Liabilities 2,412,889 2,478,995 

 Total Intragovernmental 6,201,560 5,306,338 

 Accounts Payable 33,784,385 43,104,203 

 Actuarial Federal Employees’ Compensation Act Liabilities 20,120,574 21,458,664 

 Accrued Payroll and Benefits 9,042,252 9,170,015 

 Accrued Annual Leave 6,692,287 6,628,475 

 Capital Lease Liabilities 1,588,093 2,520,766 

 Other Liabilities 179,021 155,310 

Total Liabilities (Note 8) $ 77,608,172 $ 88,343,771 

NET POSITION

 Unexpended Appropriations $ 179,390,239 $ 155,434,854 

 Cumulative Results of Operations 55,493,161 39,852,462 

Total Net Position (Note 15) $ 234,883,400 $ 195,287,316 

Total Liabilities and Net Position $ 312,491,572 $ 283,631,087 
Financial Statements

49

U.S. HOUSE OF REPRESENTATIVES

Consolidated Statement of Net Cost

For the Years Ended September 30, 2010 and 2009

2010 2009

NET COST OF OPERATIONS (Note 11)

Net Costs by Program Area

 Legislative Activities

 Gross Costs $ 1,699,580,701 $ 1,574,306,418 

 Less: Earned Revenue (11,411,145) (10,419,254)

 Net Program Costs 1,688,169,556 1,563,887,164 

 Revolving Funds

 Gross Costs 2,588,160 3,300,414 

 Less: Earned Revenue (4,156,296) (3,762,366)

 Net Program Costs (1,568,136) (461,952)

Net Cost of Operations $ 1,686,601,420 $ 1,563,425,212 
Financial Statements

50

U.S. HOUSE OF REPRESENTATIVES

Consolidated Statement of Changes in Net Position

For the Years Ended September 30, 2010 and 2009

2010 2009

Unexpended Appropriations

Beginning Balance $ 155,434,854 $ 101,638,132 

Budgetary Financing Sources

Appropriations Received 1,494,157,000 1,420,662,438 

Appropriations Used (1,456,300,736) (1,361,899,910)

Other Adjustments (13,900,879) (4,965,806)

Total Budgetary Financing Sources 23,955,385 53,796,722 

Total Unexpended Appropriations $ 179,390,239 $ 155,434,854 

Cumulative Results of Operations

Beginning Balance $ 39,852,462 $ 43,096,510 

Budgetary Financing Sources

Appropriations Used 1,456,300,736 1,361,899,910 

Other Adjustments 7,010,612 (16,634,657)

Other Financing Sources

Imputed Financing from Costs Absorbed

 by Others (Note 16) 239,350,821 214,915,911 

Other Adjustments (420,050) -

Total Financing Sources 1,702,242,119 1,560,181,164

Net Cost of Operations (1,686,601,420) (1,563,425,212)

Net Change 15,640,699 (3,244,048)

Total Cumulative Results of Operations $ 55,493,161 $ 39,852,462 

Net Position $ 234,883,400 $ 195,287,316 
51

 Financial Statements

U.S. HOUSE OF REPRESENTATIVES

Statement of Budgetary Resources

For the Years Ended September 30, 2010 and 2009

2010 2009

Budgetary Resources

Unobligated Balance, Brought Forward, October 1 $ 101,003,290 $ 58,406,661 

Recoveries of Prior Year Unpaid Obligations 4,057,123 5,478,689 

Budget Authority:

Appropriations Received 1,494,157,000 1,420,662,438 

Borrowing Authority - - 

Contract Authority - - 

Spending Authority from Offsetting Collections:

Earned:

Collected 28,517,145 33,931,073 

Change in Receivable from Federal Sources - - 

Change in Unfilled Customer Orders:

Advances Received 1,498,029 (3,990,085)

Without Advance from Federal Sources - - 

Anticipated for Rest of Year, Without Advances - - 

Previously Unavailable - - 

Expenditure Transfers from Trust Funds - - 

Subtotal Budget Authority $ 1,524,172,174 $ 1,450,603,426 

Nonexpenditure Transfers, Net, Anticipated and Actual - -

Temporarily Not Available Pursuant to Public Law - - 

Permanently Not Available (Cancelled) (4,930,523) (13,349,739)

Total Budgetary Resources $ 1,624,302,064 $ 1,501,139,037 

Status of Budgetary Resources

Obligations Incurred:

Direct $ 1,498,490,639 $ 1,374,707,884 

Reimbursable 27,223,280 25,427,863 

Total Obligations Incurred 1,525,713,919 1,400,135,747 

Unobligated Balances - Available:

Apportioned - - 

Exempt from Apportionment 39,575,858 41,529,592 

Total Unobligated Balance - Available 39,575,858 41,529,592

Unobligated Balance - Not Available 59,012,287 59,473,698 

Total Status of Budgetary Resources $ 1,624,302,064 $ 1,501,139,037 

Change in Obligated Balance

Obligated Balance, Brought Forward, October 1

Unpaid Obligations $ 111,821,812 $ 110,088,474 

Less: Uncollected Customer Payments from Federal Sources - - 

Total Unpaid Obligated Balance, Brought Forward, October 1 111,821,812 110,088,474 

Obligations Incurred, Net 1,525,713,919 1,400,135,747 

Less: Gross Outlays (1,492,291,910) (1,392,923,720)

Obligated Balance Transferred, Net:

Actual Transfers, Unpaid Obligations - - 

Actual Transfers, Uncollected Customer Payments from Federal Sources - - 

Total Unpaid Obligated Balance Transferred, Net - - 

Less: Recoveries of Prior Year Unpaid Obligations, Actual (4,057,123) (5,478,689)

Change in Uncollected Customer Payments from Federal Sources - - 

Obligated Balance, Net, End of Period:

Unpaid Obligations 141,186,698 111,821,812 

Less: Uncollected Payments from Federal Sources - - 

Total Unpaid Obligated Balance, Net, End of Period $ 141,186,698 $ 111,821,812 

Net Outlays

Gross Outlays $ 1,492,291,910 $ 1,392,923,720 

Less: Offsetting Collections (30,015,174) (29,940,988)

Total Net Outlays $ 1,462,276,736 $ 1,362,982,732 
52

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53

Notes to the Financial Statements
Notes to the Financial Statements

54

NOTE 1ͲSIGNIFICANT 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 twoͲyear 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 appoints unelected Officers to administer both legislative and nonͲlegislative 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 111th Congress. The fiscal year 2010

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

111th 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 the 111th Congress are:

Committee on Agriculture

Committee on Appropriations

Committee on Armed Services

Committee on the Budget

Committee on Education and Labor

Committee on Energy and Commerce

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 and Technology

Committee on Small Business

Committee on Standards of Official Conduct

Committee on Transportation and Infrastructure
Notes to the Financial Statements

55

Committee on Veterans’ Affairs

Committee on Ways and Means

Permanent Select Committee on Intelligence

Select Committee on Energy Independence and Global Warming

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 Emergency Planning, Preparedness and Operations

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 in whole or in part. House administrative management does not exert direct

control over the expenditures of these functions. The joint functions in these statements include:

Attending Physician

Joint Committee on Taxation, which has members from both the House and the Senate

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 Recording Studio

House Services

Net Expenses of Equipment

Net Expenses of Telecommunications

Page School

Stationery
Notes to the Financial Statements

56

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. AͲ136, Financial Reporting Requirements.

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 Committee on Taxation, which has members from both the House and the Senate

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. AͲ136, 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. AͲ136, 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
Notes to the Financial Statements

57

Fund Receipts. 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)

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 Assets,

Furnishings and Logistics 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. The change in work in process is

due to several projects not placed in service during 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 straightͲline method over an asset’s estimated useful life. Depreciation expense is applicable to tangible assets such as
Notes to the Financial Statements

58

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.

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 enters into capital leases for building structures and computer hardware. 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 16)

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 collectionͲtype heritage assets, such as objects gathered and maintained for

exhibition, for example, museum collections, art collections, and library collections; and nonͲcollectionͲtype heritage assets,

such as parks, memorials, monuments, and buildings. These assets are expected to be preserved indefinitely. The House’s

heritage assets are considered collectionͲtype 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 multiͲuse 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 multiͲuse heritage assets.

Stewardship responsibility for these multiͲuse heritage assets is maintained by the AOC and disclosed on its financial

statements. The House does not possess multiͲuse 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 licenses and are recorded as expenses. At yearͲend, 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
Notes to the Financial Statements

59

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)

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 financial activity determined on a threeͲyear averaging methodology.

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 workͲrelated occupational disease, and beneficiaries

of employees whose death is attributable to a jobͲrelated 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 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 104Ͳ53, 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). 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 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, and Leadership offices is estimated on the financial

statements. In 2010, the estimate was based on a threeͲyear 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 primarily related to Page School Security Deposits, amounts held pending

proper accounting disposition or amounts withheld from payments for goods and services received pending payment.
Notes to the Financial Statements

60

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, multiͲyear and noͲyear 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. (See Note 15)



Exchange and NonͲExchange Revenue

The House classifies revenues as either exchange revenue or nonͲexchange 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 Page School

room and board and vendor commissions. NonͲexchange 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.

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 3% over FY 2009 is reflected in the FY 2010 occupancy costs.

Federal Employee and Veterans’ Benefits Cost:

FederalͲemploying 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.

FederalͲemploying entities also recognize a current period expense for the future cost of postͲretirement 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
Notes to the Financial Statements

61

receive an appropriation to fund this expense. Therefore, this portion of the postͲretirement 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 16)

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 HouseͲpaid 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. 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

62

NOTE 2ͲFUND BALANCE WITH THE U.S. TREASURY AND CASH

Fund Balances with Treasury (FBWT) as of September 30, 2010 and 2009 were:

Fund Balance with Treasury 2010 2009

General and Other Funds

House maintained $180,734,103 $158,804,843

Congressional Use of Foreign Currency 38,321,898 33,706,776

Total General and Other Funds 219,056,001 192,511,619

Revolving Funds 20,526,639 20,692,905

Total $239,582,640 $213,204,524

Status of Fund Balance with Treasury as of September 30, 2010 and 2009 were:

Status of Fund Balance with Treasury 2010 2009

Unobligated Balance

Available $39,575,858 $41,529,592

Unavailable 59,012,287 59,473,698

Obligated Balance not yet Disbursed 141,186,698 111,821,812

Other Funds (192,203) 379,422

Total $239,582,640 $213,204,524

Other funds represent deposit funds held at the U.S. Treasury.

Cash and Other Monetary Assets as of September 30, 2010 and 2009 were:

Cash and Other Monetary Assets 2010 2009

Cash on Hand $1,092 $1,653

Total $1,092 $1,653

NOTE 3ͲACCOUNTS RECEIVABLE, NET

Accounts Receivable, Net as of September 30, 2010 and 2009 were:

Accounts Receivable, Net 2010 2009

Accounts Receivable, Gross $949,519 $1,289,880

Less:Allowance for Doubtful Accounts (732,613) (900,306)

Total $216,906 $389,574

NOTE 4ͲINVENTORY AND RELATED PROPERTY, NET

Inventory and Related Property, Net as of September 30, 2010 and 2009 were:

Inventory and Related Property, Net 2010 2009

Operating Materials and Supplies Held for Use $343,339 $427,955

Inventory Purchased for Resale 999,020 940,256

Total $1,342,359 $1,368,211
Notes to the Financial Statements

63

NOTE 5ͲGENERAL PROPERTY AND EQUIPMENT, NET

General Property and Equipment, Net as of September 30, 2010 and 2009 and the related depreciation and amortization

expense were:

2010 Classes of Service  Accumulated Amortization

Property and Life Acquisition Amortization Net Book Depreciation

Equipment (Years) Value Depreciation Value Expense

Work in Process N/A $9,001,668 $Ͳ $9,001,668 $Ͳ

Computer Software in Development N/A 16,189,010 Ͳ 16,189,010 Ͳ

Computer Software and Hardware 3 97,909,184 79,851,739 18,057,445 9,456,787

Assets Under Capital Lease 3/10 3,923,168 1,770,501 2,152,667 991,679

Computer Software and Hardware 5 514,368 514,368   Ͳ Ͳ

Equipment 5 62,985,272 43,755,240 19,230,032 7,533,635

Motor Vehicles 5 10,666,880 10,368,555 298,325 1,598,560

Furnishings and Other Equipment 10 1,141,104 1,100,855 40,249 11,452

Leasehold Improvements 10 9,085,375 6,731,486 2,353,889 908,538

Total $211,416,029 $144,092,744 $67,323,285 $20,500,651

2009 Classes of Service  Accumulated Amortization

Property and Life Acquisition Amortization Net Book Depreciation

Equipment (Years) Value Depreciation Value Expense

Work in Process N/A $11,112,825 $Ͳ $11,112,825 $Ͳ

Computer Software in Development N/A 13,651,049 Ͳ 13,651,049 Ͳ

Computer Software and Hardware 3 87,676,143 74,847,751 12,828,392 5,397,421

Assets Under Capital Lease 3/10 5,354,657 889,938 4,464,719 2,260,175

Computer Software and Hardware 5 514,368 514,368 Ͳ Ͳ

Equipment 5 54,241,493 38,343,134 15,898,359 5,526,155

Motor Vehicles 5 10,686,103 8,820,869 1,865,234 1,508,871

Furnishings and Other Equipment 10 1,519,035 1,389,234 129,801 18,289

Leasehold Improvements 10 9,085,375 5,822,949 3,262,426 908,538

Total $193,841,048 $130,628,243 $63,212,805 $15,619,449
Notes to the Financial Statements

64

NOTE 6ͲSTEWARDSHIP PROPERTY AND EQUIPMENT

Physical counts for collectionͲtype heritage assets as of September 30, 2010 and 2009 were:

Heritage Assets 2009 Additions Withdrawals 2010

Artwork 305 6 Ͳ 311

Artifacts 3,124 476 Ͳ 3,600

Total 3,429 482 Ͳ 3,911

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 100Ͳ696 [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 100Ͳ696. 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

65

NOTE 7ͲADVANCES AND PREPAYMENTS

Advances and Prepayments as of September 30, 2010 and 2009 were:

Advances and Prepayments 2010 2009

Advances $13,776 $18,641

Prepayments 4,011,514 5,435,679

Total $4,025,290 $5,454,320

NOTE 8ͲLIABILITIES

Liabilities covered and not covered by budgetary resources as of September 30, 2010 and 2009 were:

Liabilities 2010

Current NonͲCurrent Current NonͲCurrent

Intragovernmental Liabilities

Accounts Payable $1,481,153 $Ͳ $Ͳ $Ͳ $1,481,153

Advances from Others 1,578,859 Ͳ Ͳ Ͳ 1,578,859

Capital Lease Liability Ͳ Ͳ 179,287 549,372 728,659

Other Liabilities

Accrued Workers’ Compensation ͲͲͲ 2,049,036 2,049,036

Unemployment Compensation 363,853 Ͳ Ͳ Ͳ 363,853

Total Other Liabilities 363,853 Ͳ Ͳ 2,049,036 2,412,889

Total Intragovernmental Liabilities 3,423,865 Ͳ 179,287 2,598,408 6,201,560

Public Liabilities

Accounts Payable 33,784,385 Ͳ Ͳ Ͳ 33,784,385

Actuarial FECA Liability ͲͲͲ 20,120,574 20,120,574

Accrued Payroll and Benefits 9,042,252 Ͳ Ͳ Ͳ 9,042,252

Unfunded Accrued Annual Leave ͲͲͲ 6,692,287 6,692,287

Capital Lease Liability ͲͲͲ 1,588,093 1,588,093

Other Liabilities 179,021 Ͳ Ͳ Ͳ 179,021

Total Public Liabilities 43,005,658 Ͳ Ͳ 28,400,954 71,406,612

Total $46,429,523 $Ͳ $179,287 $30,999,362 $77,608,172

Liabilities Covered by Budgetary

Resources

Liabilities Not Covered by Budgetary

Resources
Notes to the Financial Statements

66

Liabilities 2009

Current NonͲCurrent Current NonͲCurrent

Intragovernmental Liabilities

Accounts Payable $1,308,443 $Ͳ $Ͳ $Ͳ $1,308,443

Advances from Others 641,483 Ͳ Ͳ Ͳ 641,483

Capital Lease Liability Ͳ Ͳ 148,755 728,662 877,417

Other Liabilities

Accrued Workers’ Compensation ͲͲͲ 2,248,334 2,248,334

Unemployment Compensation 230,661 Ͳ Ͳ Ͳ 230,661

Total Other Liabilities 230,661 Ͳ Ͳ 2,248,334 2,478,995

Total Intragovernmental Liabilities 2,180,587 Ͳ 148,755 2,976,996 5,306,338

Public Liabilities

Accounts Payable 43,104,203 Ͳ Ͳ Ͳ 43,104,203

Actuarial FECA Liability ͲͲͲ 21,458,664 21,458,664

Accrued Payroll and Benefits 9,170,015 Ͳ Ͳ Ͳ 9,170,015

Unfunded Accrued Annual Leave ͲͲͲ 6,628,475 6,628,475

Capital Lease Liability 2,520,766 Ͳ Ͳ Ͳ 2,520,766

Other Liabilities 155,310 Ͳ Ͳ Ͳ 155,310

Total Public Liabilities 54,950,294 Ͳ Ͳ 28,087,139 83,037,433

Total $57,130,881 $Ͳ $148,755 $31,064,135 $88,343,771

Liabilities Covered by Budgetary

Resources

Liabilities Not Covered by Budgetary

Resources

NOTE 9ͲLEASE COMMITMENTS

Capital Leases

Assets Under Capital Lease as of September 30, 2010 and 2009 were:

Summary of Assets Under Capital Lease 2010 2009

Buildings Structures $1,354,473 $1,354,473

Computer Hardware 2,568,695 4,000,184

Accumulated Amortization (1,770,501) (889,938)

Total $2,152,667 $4,464,719

Future Capital Lease Payments Due as of September 30, 2010 were:

Building

Structures Hardware

2011 $301,428 $Ͳ $301,428

2012 301,428 596,497 897,925

2013 301,428 596,497 897,925

2014 75,156 596,497 671,653

2015 Ͳ Ͳ Ͳ

Thereafter Ͳ Ͳ Ͳ

Total Future Capital Lease Payments 979,440 1,789,491 2,768,931

Less:Imputed Interest (250,781) (201,398) (452,179)

Less:Executory Costs Ͳ Ͳ Ͳ

Net Capital Lease Liability $728,659 $1,588,093 $2,316,752

Year Total
Notes to the Financial Statements

67

The House maintains capital leases for building structures and hardware. The occupancy agreement for the building

structures lease includes multiͲyear 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 U.S General Services Administration. The terms and conditions for the hardware lease indicate the House’s

agreement to pay for products for the full multiͲyear lease term with the option to renew for fiscal years beyond the initial

fiscal year. 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, 2010 were:

Year Vehicles Office Space Parking Total

2011 $467,787 $6,602,185 $44,456 $7,114,428

2012 107,441 43,282 Ͳ 150,723

Total $575,228 $6,645,467 $44,456 $7,265,151

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. The House requires that leases

entered into by Members for space be no longer than the elected term of the Member. The Members’ Congressional

Handbook states that a Member cannot enter into a lease for office space beyond his/her elected term. 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 10ͲCOMMITMENTS 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 is not

currently involved in any lawsuit where the sacrifice of federal resources is probable and the amount can be reasonably

estimated.
Notes to the Financial Statements

68

NOTE 11ͲINTRAGOVERNMENTAL COSTS AND EXCHANGE REVENUE

Intragovernmental Costs and Exchange Revenue as of September 30, 2010 and 2009 are:

Intragovernmental Costs and Exchange Revenue 2010 2009

Legislative Activities

Intragovernmental Costs $297,466,477 $249,792,974

Public Costs 1,402,114,224 1,324,513,444

Total Costs 1,699,580,701 1,574,306,418

Intragovernmental Earned Revenue (3,957,652) (3,905,893)

Public Earned Revenue (7,453,493) (6,513,361)

Total Earned Revenue (11,411,145) (10,419,254)

Net Program Costs 1,688,169,556 1,563,887,164

Revolving Funds

Intragovernmental Costs 378,589 170,482

Public Costs 2,209,571 3,129,932

Total Costs 2,588,160 3,300,414

Intragovernmental Earned Revenue (2,300,239) (2,037,361)

Public Earned Revenue (1,856,057) (1,725,005)

Total Earned Revenue (4,156,296) (3,762,366)

Net Program Costs (1,568,136) (461,952)

Total

Intragovernmental Costs 297,845,066 249,963,456

Public Costs 1,404,323,795 1,327,643,376

Total Costs 1,702,168,861 1,577,606,832

Intragovernmental Earned Revenue (6,257,891) (5,943,254)

Public Earned Revenue (9,309,550) (8,238,366)

Total Earned Revenue (15,567,441) (14,181,620)

Net Cost of Operations $1,686,601,420 $1,563,425,212

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 nonͲFederal 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

69

NOTE 12ͲPERSONNEL AND BENEFITS COMPENSATION

Member and EmployeePersonnel and Benefits Compensation 2010 2009

Personnel Compensation $812,722,162 $785,018,829

Retirement Plan Contributions 152,317,745 144,764,684

Social Security 55,133,875 52,846,066

Health Insurance 51,707,028 46,594,336

Student Loan/Fitness Center Programs 16,867,989 12,613,054

Unemployment and Workers’ Compensation 2,839,906 3,473,080

Transit Benefits 2,764,903 2,406,554

Life Insurance 1,251,004 1,218,081

Death Benefits 1,316,386 1,032,411

Annual Leave 63,814 496,691

Workers' Compensation Actuarial Adjustment (1,338,090) (933,772)

Total $1,095,646,722 $1,049,530,014

NOTE 13ͲEMERGENCY PREPAREDNESS

The House continues to develop contingency plans to ensure the continuation of all House Operations in the event of an

emergency evacuation. Approximately $19 million and $20 million were expended in 2010 and 2009, respectively.

NOTE 14ͲEXCHANGE 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

70

NOTE 15ͲNET POSITION

The components of Net Position are:

• Unexpended Appropriations Ͳ Appropriations are not considered expended until goods have been received or

services have been rendered.The House has single and multiͲyear appropriations.For multiͲyear appropriations

the House alternates each fiscal year between 15Ͳmonth and 27Ͳmonth multiͲyear 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.

• Total Cumulative Results of Operations:

Cumulative Results of Operations Ͳ The net difference between expenses and revenue and financing sources

including appropriations, revenues from operations and imputed financing sources.

Invested Capital Ͳ Funds used to finance capital assets such as computer hardware and software, vehicles,

equipment, and inventory.

Future Funding RequirementsͲKnown liabilities to be funded by future appropriations for accrued Annual Leave

and Workers’ Compensation.

Funds that were canceled and returned to the U.S. Treasury as of September 30, 2010 and 2009 were:

Appropriations 2010 2009

2008 (single) $4,930,523 $Ͳ

2007 (single) Ͳ 12,641,660

2006/2007 (multi) Ͳ 382,270

2005/2007 (multi) Ͳ 325,809

Total $4,930,523 $13,349,739

Net Position as of September 30, 2010 and 2009 for Appropriated Funds and Revolving Funds, including the House

Recording Studio, Net Expenses of Equipment, Page School, House Services, Net Expenses of Telecommunications, and

Stationery revolving funds are shown in the following table:

Net Position

Unexpended Appropriations $179,390,239 $155,434,854

Cumulative Results of Operations:

Cumulative Results of Operations $15,936,431 $6,756,768

Invested Capital 66,369,591 61,182,833

Future Funding Requirements (26,812,861) (28,087,139)

Total Cumulative Results of Operations 55,493,161 39,852,462

Total Net Position $234,883,400 $195,287,316

2010 2009

Changes in net position may include prior period adjustments, excesses or shortages of revenue and financing sources over

expenses, and nonͲoperating changes, such as investments in capital assets and inventory. Increases (or decreases) in nonͲ

operating changes result when amounts invested in capital assets and inventory exceed (or are less than) the amounts of

liabilities to be funded by future appropriations.

The Net Position table above reflects an additional cumulative results of operations line which further disaggregates activity

other than invested capital or future funding requirements.
Notes to the Financial Statements

71

NOTE 16ͲIMPUTED 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 2010 2009

Federal Employee and Veteran’s Benefits

Current Service CostͲFederal Employees Health Benefits $54,471,038 $50,740,579

Current Service CostͲFederal Pensions 31,242,088 13,439,610

Current Service CostͲFederal Employees Group Life Insurance 123,037 118,949

Total Federal Employee and Veteran’s Benefits 85,836,163 64,299,138

Occupancy Costs 153,514,658 150,616,773

Total $239,350,821 $214,915,911

NOTE 17ͲPERMANENT 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.

x Compensation of Members and Related Administrative Expenses is maintained and administered by the House.

Public Law 97Ͳ51, 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.

x 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.
Notes to the Financial Statements

72

NOTE 18 Ͳ EXPLANATION OF DIFFERENCES BETWEEN THE STATEMENT OF BUDGETARY RESOURCES

AND THE BUDGET OF THE U.S. GOVERNMENT

The Budget of the United States Government with actual amounts for the year ended September 30, 2010 has not been

published as of the issue date of these financial statements.This document will be available in February 2011.

Differences between the Statement of Budgetary Resources and the Budget of the U.S. Government as of September 30,

2009 were:

Net

Outlays

Statement of Budgetary Resources $1,420,662,438 $1,362,982,732

Difference (1,662,438) 1,017,268

Budget of the U.S. Government $1,419,000,000 $1,364,000,000

Differences between the Statement of Budgetary Resources

and the Budget of the U.S. Government

Budgetary

Resources

The House deems the variances between the amounts reported in the Statement of Budgetary Resources and the actual

amounts reported in the Budget of the U.S. Government for budgetary resources and net outlays to be immaterial and/or

insignificant. As such, reconciliation of this item is not necessary and therefore not included.

NOTE 19ͲUNDELIVERED ORDERS AT THE END OF THE PERIOD



Undelivered Orders as of September 30, 2010 and 2009 were:

  

Undelivered Orders at the End of the Period 2010 2009

Undelivered Orders, Unpaid $97,449,237 $58,008,337

Undelivered Orders, Paid 4,043,931 5,454,320

Total $101,493,168 $63,462,657

Undelivered Orders represent the amount of paid and unpaid orders for goods and/or services ordered which have not

been received.
Notes to the Financial Statements

73

NOTE 20ͲRECONCILIATION OF BUDGETARY RESOURCES OBLIGATED TO NET COST OF OPERATIONS

2010 2009

$1,525,713,919 $1,400,135,747

(34,072,297) (35,419,677)

1,491,641,622 1,364,716,070

Ͳ Ͳ

1,491,641,622 1,364,716,070

Ͳ Ͳ

Ͳ Ͳ

239,350,821 214,915,911

239,350,821 214,915,911

1,730,992,443 1,579,631,981

and Benefits Ordered but not Yet Provided 40,378,171 8,087,112

1,802,616 2,567,117

Statement of Net Cost Ͳ Ͳ

24,187,212 29,616,181



affect Net Cost 420,050 Ͳ

66,788,049 40,270,410

$1,664,204,394 $1,539,361,571

$63,812 $496,691

172,668 254,374

265,228 1,352,957

501,708 2,104,022

20,500,651 15,619,449

547,835 1,757,092

846,832 4,583,078

21,895,318 21,959,619

22,397,026 24,063,641

$1,686,601,420 $1,563,425,212

Transfers in/out Without Reimbursement

Imputed Financing from Costs Absorbed by Others

Resources Used to Finance Activities:

Budgetary Resources Obligated

Obligations incurred

Less: Spending Authority from Offsetting Collections and Recoveries

Obligations Net of Offsetting Collections and Recoveries

Less: Offsetting Receipts

Net Obligations

Other Resources

Donations/Forfeited Property

Total Resources Used to Finance the Net Cost of Operations

Components of Net Cost of Operations That will not Require

Net Other Resources Used to Finance Activities

Total Resources Used to Finance Activities

Resources Used to Finance Items not Part of the Net Cost of

Operations:

Change in Budgetary Resources Obligated for Goods, Services,

Resources that Fund Expenses Recognized in Prior Periods

Generating Resources in Future Periods

Components not Requiring or Generating Resources:

Budgetary Receipts and Offsetting Collections that do not affect

Resources that Finance the Acquisition of Assets

Other Resources or Adjustments to Net Obligated Resources that do not

Total Resources Used to Finance Items not Part of the Net Cost of Ops

or Generate Resources in the Current Period:

Components Requiring or Generating Resources in Future Periods:

Increase in Annual Leave Liability

(Increase)/Decrease in exchange revenue receivable

Other

Total Components of Net Cost of Operations Requiring or

Require or Generate Resources in the Current Period

Net Cost of Operations

Depreciation and Amortization

Revaluation of Assets or Liabilities

Generating Resources

Total Components of Net Cost of Operations that will not

Other

Total Components of Net Cost of Operations not Requiring or
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Required Supplementary Information
Required Supplementary Information

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, 2010:

Heritage Asset

Collection Description

2009 Increase Decrease 2010 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.

305 6 0 311 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

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

2009 Increase Decrease 2010 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.

3,124 476 0 3,600 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

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.