GAO/AIMD-00-318R Needle Exchange Funds

United States General Accounting Office

Washington, DC 20548

Accounting and Information

Management Division

B-286141

September 15, 2000

The Honorable Kay Bailey Hutchison

Chairwoman, Subcommittee on the District

of Columbia

Committee on Appropriations

United States Senate

Subject: District of Columbia: Source of Funding for Needle Exchange Programs

Dear Madam Chairwoman:

In your July 25, 2000, letter, you asked us to determine whether the funds used for the needle

exchange program in the District complied with section 150 (a) and (b) of the Fiscal Year

2000 Appropriations Act for the District of Columbia (P.L. 106-113). Section 150 (a) of the

Fiscal Year 2000 Appropriations Act for the District of Columbia prohibits the use of

appropriated funds--either local or federal--for needle exchange programs. Furthermore,

section 150 (b) of the act requires that any individual or entity that receives District

appropriated funds and conducts a needle exchange program account for the private funds

used for the program separately from its appropriated dollars. On August 29, 2000, using the

slides in the enclosure to this letter, we briefed the Subcommittee staff on the results of our

work.

To identify individuals or entities conducting a needle exchange program within the District

during fiscal year 2000, we (1) interviewed officials from the Office of the Mayor, the

District’s Department of Health, the Whitman-Walker Clinic, and Prevention Works,

(2) reviewed the sources of funding of needle exchange programs to determine whether any

contributors were recipients of fiscal year 2000 District appropriated funds, (3) performed a

walk-through of Whitman-Walker Clinic’s financial management system to determine

whether its system segregates restricted fund activity, and (4) reviewed the independent

public accountants’ reports for Whitman-Walker Clinic’s financial statements and single

audit reports for fiscal years 1998 and 1999. We conducted our work in July and August

2000 in accordance with generally accepted government auditing standards. We obtained oral

comments on a draft of the slides from the Senior Deputy Director for Substance Abuse

Service, District’s Department of Health; the Director of Finance, Whitman-Walker Clinic;

and the Executive Director, Prevention Works. The officials agreed with the content of the

slides.
B-286141

Page 2 GAO/AIMD-00-318R Needle Exchange Funds

Results in Brief

Our work did not identify any noncompliance with the legislative prohibition against using

appropriated funds for a needle exchange program in the District during fiscal year 2000.

According to District officials, Prevention Works was the only organization that conducted a

needle exchange program in the District during fiscal year 2000. A Prevention Works

official said that organization received no funding from the District of Columbia for the

period October 1999 to August 2000. However, one contributor to Prevention Works--

Whitman-Walker Clinic-- was a recipient of District fiscal year 2000 appropriated funds.

Officials from Whitman-Walker Clinic, which conducted the needle exchange program prior

to fiscal year 1999, told us that all funds it contributed to Prevention Works were from

private contributions.

A walk-through of Whitman-Walker Clinic’s financial management system demonstrated

that the system has in place internal controls to segregate private funds from District

appropriated funds. These safeguards appear to meet the requirements of Section 150 (a) and

(b) of the Fiscal Year 2000 Appropriations Act for the District of Columbia. In addition, an

independent public accounting firm performed certain procedures on the clinic’s financial

records in meeting the audit requirements of the Single Audit Act for fiscal years 1998 and

1999. The accounting firm reported no material internal control weakness or material

noncompliance with laws, regulations, and contracts or grant provisions.

As agreed with your office, unless you publicly announce the content of this letter earlier, we

will not distribute it until 30 days from its date. At that time, we will send copies to Senator

George Voinovich, Senator Richard Durbin, Representative Ernest J. Istook, Representative

James P. Moran, Representative Thomas M. Davis III, and Representative Eleanor Holmes

Norton, in their capacities as Chair or Ranking Minority Member of Senate or House

Subcommittees. Copies will be made available to others upon request.

-----

We appreciate the opportunity to be of assistance. If you or your staff have any questions

regarding the briefing or this letter, or if we can be of further assistance, please contact me at

(202) 512-4476 or Steven Haughton, Assistant Director, at (202) 512-5999. I may also be

reached by e-mail at jarmong.aimd@gao.gov. Key contributors to this assignment were

Keith Thompson, Louis Fernheimer, LaShawnda Wilson, and Richard Cambosos.

Sincerely yours,

Gloria L. Jarmon

Director, Health, Education and Human Services

Accounting and Financial Management Issues

Enclosure
Enclosure

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August 29, 2000, Briefing on the Needle Exchange Program

ACCOUNTING AND INFORMATION

MANAGEMENT DIVISION

District of Columbia: Sources of Funds for Needle Exchange

Program.

Briefing for the Senate Committee on Appropriations,

Subcommittee on District of Columbia

August 29, 2000
Enclosure

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Objectives

• Identify the organizations within the District of Columbia for

fiscal year 2000 that are conducting needle exchange

programs.

• Determine the sources of funding used for needle exchange

programs.

• Evaluate the sources of funding for needle exchange

programs to determine if they comply with section 150 (a)

and (b) of the fiscal year 2000 Appropriations Act for the

District of Columbia (P.L. 106-113).
Enclosure

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Scope and Methodology

• Interviewed officials from the Mayor’s Office, District of

Columbia Department of Health, Whitman-Walker Clinic

Inc., and Prevention Works to determine which

organizations within the District were conducting needle

exchange programs for fiscal year 2000.

• Reviewed the sources of funding of needle exchange

programs to determine whether any contributors were

recipients of fiscal year 2000 District appropriated funds.

• Performed walk-through of Whitman-Walker Clinic’s

financial management system to determine whether its

system can segregate restricted fund activity.
Enclosure

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Scope and Methodology

• Reviewed the independent public accountant’s report for

Whitman-Walker Clinic’s financial statements and single

audit report for fiscal years 1998 and 1999, the most recent

ones available.

• Conducted our work during July 2000 and August 2000 in

accordance with generally accepted government auditing

standards.
Enclosure

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Background

• Section 150 (a) of the FY 2000 Appropriations Act for the

District of Columbia prohibits the use of appropriated funds

−either local or federal, for needle exchange programs.

• Section 150 (b) requires that any individual or entity that

receives District appropriated funds and conducts a needle

exchange program shall account for the use of such funds

separately from its appropriated dollars.

• On October 21, 1998, the Whitman-Walker Clinic ceased

operating its needle exchange program.
Enclosure

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Background

• Prevention Works, a private not-for-profit organization

established in October 1998, operates the only needle

exchange program in the District of Columbia.
Enclosure

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7

Results in Brief

• According to District officials, one organization,Prevention

Works, operates a needle exchange program in the District.

• Prevention Works received no funding from the District of

Columbia for the period of October 1999 to August 2000.

• One contributor to Prevention Works,Whitman-Walker

Clinic,was a recipient of District fiscal year 2000

appropriation funds.

• Whitman-Walker Clinic told us that all funds contributed to

Prevention Works were from private contributions.
Enclosure

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Results in Brief

• Whitman-Walker Clinic’s financial management system has

internal controls in place to segregate private funds from

District appropriated funds. These safeguards appear to

meet the requirements of Section 150 (a) and (b) of the

fiscal year 2000 Appropriations Act for the District of

Columbia.

• Independent public accountants reported no material

internal control weakness or material noncompliance with

laws, regulations, contracts, or grant provisions. The

independent public accountant performed certain

procedures of Whitman-Walker Clinic’s financial records in

meeting the audit requirements of the Single Audit Act

(OMB Circular A-133).
Enclosure

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Prevention Works Needle Exchange

Funding

Information on the funding of Prevention Works’ needle exchange program.

Table 1: Needle Exchange Program Funding October 1999 to August 2000

Funding source Funding amount

Private foundations $297,000

Angelica Foundation

Broadway Cares

Drug Policy Foundation

Elizabeth Taylor AIDS Foundation

Public Welfare Foundation

Scott Opier Foundation

Tides Foundation

Washington AIDS Foundation

North American Syringe Exchange Network $1,400

Whitman-Walker Clinic Inc.(a) $10,000

Corporate In-Kind Donation (AMES and

Target)

$75

Contributions from Individuals $3,245

Total $311,720

(a) Recipient of District appropriated funds.
Enclosure

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Sources of Funding: Whitman-Walker

Clinic

Information on the sources of funding for the Whitman-Walker Clinic

Table 2: Source of Funding October 1999 to June 2000

Funding source Funding amount

District of Columbia appropriated funds (local) $1,423,758

Federal funds (pass-through and grants) $6,914,005

Local area jurisdiction funds $182,813

Private funds $7,699,895

Total $16,220,471
Enclosure

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Whitman-Walker Clinic

Status of Compliance with section 150 (a) and (b) of the fiscal

year 2000 Appropriations Act for the District of Columbia.

• Contribution to Prevention Works ($10,000) made from

private funds.

• Whitman-Walker Clinic’s accounting system separately

identifies all private funds and federal funds.

• Revenues are tracked by private funds and federal

funds.

• Expenses are tracked by private funds and federal

funds.
Enclosure

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Whitman-Walker Clinic

• Whitman-Walker Clinic stated that it rents space to

Prevention Works under what it referred to as an armslength, market-rate lease. Prevention Works pays the Clinic

$1,155 per month for 544 square feet of office space

($25.50 per square feet).
Enclosure

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Whitman-Walker Clinic

Independent Auditor’s report of Whitman-Walker Clinic’s

Financial Position as of September 30, 1999 and 1998.

• Financial Statement Items

• Unqualified opinion issued.

• No reportable conditions reported.

• No noncompliance issues material to the financial

statements.

• Single Audit Items

• No reportable conditions in internal controls over major

programs.

• Unqualified opinion issued relating to compliance for

major programs.

• No audit findings required to be reported under section

510 (a) of OMB Circular A-133.

(916374)