United States General Accounting Office

GAO Report to Congressional Committees

March 1995 FINANCIAL AUDIT

Expenditures by Four

Independent Counsels

for the Six Months

Ended March 31, 1994

GAO/AIMD-95-112

GAO United States

General Accounting Office

Washington, D.C. 20548

Accounting and Information

Management Division

B-260395 

March 31, 1995

Congressional Committees

This report presents the results of our audits of expenditures reported by

four independent counsels for the 6 months ended March 31, 1994.

Independent counsels and the Department of Justice are required under 28

U.S.C. 594 to report on expenditures from a permanent, indefinite

appropriation established within Justice to fund independent counsel

activities. We are required under 28 U.S.C. 596, and Public Law 100-202 to

audit those expenditures. We found the statements of expenditures

presented in appendixes I, II, III, and IV for independent counsels Arlin M.

Adams, Joseph E. diGenova, Robert B. Fiske, Jr., and Lawrence E. Walsh

were reliable in all material respects.

Further, our audits included limited tests of internal controls and

compliance with laws and regulations that disclosed

• a material weakness in internal controls over reporting of expenditures

and

• no material noncompliance with laws and regulations we tested.

The following sections provide background information, outline each

conclusion in more detail, and discuss the scope of our audits.

Background The independent counsel provisions of the Ethics in Government Act of

1978 (28 U.S.C. 591-599) established a process for the appointment of

independent counsels to preserve and promote the accountability and

integrity of public officials and of institutions of the federal government.

The law provides for the judicial appointment of temporary, special

prosecutors1

 when the Attorney General determines that reasonable

grounds exist to warrant further investigation of high-ranking government

officials for certain alleged crimes. The independent counsel law expired

on December 15, 1992; however, the law’s provisions allowed the three

independent counsels serving in that position on that date—Mr. Adams,

Mr. diGenova, and Mr. Walsh—to continue their work until completed.

On June 30, 1994, and subsequent to this audit period, the Independent

Counsel Reauthorization Act of 1994 (Public Law 103-270) was enacted,

reauthorizing the independent counsel law for an additional 5 years. The

1

In 1983, the title of these positions was changed from special prosecutor to independent counsel.

Page 1 GAO/AIMD-95-112 Independent Counsels
B-260395 

act contains various amendments aimed at addressing problems identified

in our prior independent counsel reports.2

 For example, these

amendments require added cost controls over independent counsel

expenditures and designate specific responsibilities to the Administrative

Office of the United States Courts (AOUSC) for independent counsels’

administrative support.

The independent counsel law directs the Department of Justice to pay all

costs relating to the establishment and operation of independent counsel

offices. In 1987, Public Law 100-202 established a permanent, indefinite

appropriation within Justice to fund expenditures by independent

counsels. Independent counsels are required to report their expenditures

from the appropriation for each 6-month period in which they have

operations. We are required to audit expenditures from the independent

counsel appropriation and to report our findings to appropriate

committees of the Congress.

In January 1994, the Department of Justice determined that the

appropriation established by Public Law 100-202 to fund expenditures by

independent counsels appointed pursuant to 28 U.S.C. 591-599 could also

fund the expenditures of Robert B. Fiske, Jr., who was appointed as a

regulatory independent counsel3

 within Justice by the Attorney General on

January 20, 1994. Since we are required to audit all expenditures from that

appropriation, the expenditures of Mr. Fiske’s office made from the date of

his appointment through March 31, 1994, are included in this report.

Subsequent to this audit period, Mr. Fiske’s investigation was turned over

to Kenneth W. Starr, who was appointed independent counsel under the

reauthorized independent counsel law in August 1994.

Independent counsels may also incur costs that are paid from

appropriations other than the permanent, indefinite appropriation

established to fund independent counsel activities. These costs arise, for

example, from the use of detailees from other federal agencies, such as the

Federal Bureau of Investigation (FBI). While independent counsels are not

required to and do not include the cost of all their activities in reported

expenditures, the nature of these other costs is identified and discussed in

the notes to the statements of expenditures presented in the appendixes to

this report.

2

Financial audits of expenditures by independent counsels (GAO/AFMD-93-1, October 9, 1992;

GAO/AFMD-93-60, April 21, 1993; and GAO/AIMD-94-76, April 15, 1994).

3

Regulatory independent counsels are appointed pursuant to 5 U.S.C. 301; 25 U.S.C. 509, 510, and 543.

See also 28 C.F.R. Parts 601 and 603 (1994).

Page 2 GAO/AIMD-95-112 Independent Counsels
B-260395 

Opinion on

Statements of

Expenditures

The statements of expenditures for independent counsels Arlin M. Adams,

Joseph E. diGenova, Robert B. Fiske, Jr., and Lawrence E. Walsh present

fairly, in all material respects, the respective expenditures of these

independent counsel offices for the 6 months ended March 31, 1994. The

statements of expenditures and related notes regarding bases of

accounting and additional pertinent information are provided in

appendixes I through IV.

Consideration of

Internal Control

Structure

For this audit period, the internal controls we considered for each of the

four independent counsels and for AOUSC and Justice regarding the

administrative support and accounting services they perform for

independent counsels were those designed to

• safeguard assets against loss from unauthorized use or disposition;

• assure the execution of transactions in accordance with management

authority and with laws and regulations; and

• properly record, process, and summarize transactions to permit the

preparation of expenditure statements in accordance with applicable

bases of accounting.

In this audit period, we continued to find a material weakness in internal

controls over the reporting of expenditures. A material weakness is a

condition in which the design or operation of one or more of the internal

control structure elements does not reduce to a relatively low risk that

errors or irregularities in amounts that would be material to the

expenditure statements may occur and not be detected promptly by

employees in the normal course of performing their duties.

In 1986, Justice entered into an agreement with AOUSC to transfer the

processing of payments for independent counsel expenditures from

Justice to AOUSC, and Justice periodically disburses lump-sum payments to

AOUSC for this purpose. Independent counsel offices typically submit

payment vouchers, payroll information, and supporting documentation to

AOUSC. On the independent counsels’ behalf, AOUSC expends funds and

records the expenditures in its payroll and accounting systems. AOUSC also

prepares monthly summarized expenditure reports and submits them to

independent counsels. Justice performed similar functions for Mr. Fiske’s

independent counsel office.

Independent Counsels Adams and diGenova fulfilled their financial

reporting requirements by using the summarized expenditure reports

Page 3 GAO/AIMD-95-112 Independent Counsels
B-260395 

prepared by AOUSC. During this audit period, and as discussed in our prior

reports,4 AOUSC expenditure reports had errors, thus requiring us to

propose—and independent counsels to accept—audit adjustments. During

this audit period, Mr. Walsh’s office continued to maintain its own

separate accounting system and performed procedures to reconcile AOUSC

reports to its own records, enabling it to identify any errors in the AOUSC

reports. We believe that independent counsels may continue to experience

problems reporting their expenditures until AOUSC establishes effective

internal controls for accurately summarizing independent counsel

expenditures.

In our prior reports, we identified other internal control weaknesses at

independent counsel offices and AOUSC including, for example, inadequate

segregation of duties and inadequate procedures to ensure compliance

with applicable laws. We attributed many of the problems regarding

independent counsels’ noncompliance with certain laws and regulations to

a lack of comprehensive guidance, either in the independent counsel law

or elsewhere, regarding the financial management structure and operation

of independent counsel offices. In response to our prior reports,

independent counsels and AOUSC officials acknowledged that corrective

action was needed and have taken steps to improve internal controls

through greater segregation of duties, increased interaction between

independent counsel and AOUSC employees, and the ongoing development

of handbooks and other written guidance.

Also, since the issuance of our prior reports, and subsequent to this audit

period, the Congress addressed many of the problems we found by passing

the Independent Counsel Reauthorization Act of 1994. The act amends the

independent counsel law by requiring independent counsels to generally

comply with the established policies of the Department of Justice

regarding expenditure of funds and by establishing additional restrictions

on the compensation and travel expenses paid to independent counsels or

their employees.

Compliance With

Laws and Regulations

Our tests for compliance with selected provisions of laws and regulations

disclosed no material instances of noncompliance during the 6 months

ended March 31, 1994.

4

Financial audits of expenditures by independent counsels (GAO/AFMD-93-1, October 9, 1992;

GAO/AFMD-93-60, April 21, 1993; and GAO/AIMD-94-76, April 15, 1994).

Page 4 GAO/AIMD-95-112 Independent Counsels
B-260395 

Objectives, Scope,

and Methodology

In order to carry out their financial operations and to ensure

accountability, independent counsels are responsible for

• preparing statements of expenditures,

• establishing and maintaining internal controls and systems to provide

reasonable assurance that the internal control objectives previously

mentioned are met, and

• complying with applicable laws and regulations.

We are responsible for obtaining reasonable assurance about whether the

statements of expenditures reported by independent counsels are reliable

(free of material misstatement and presented fairly in accordance with the

bases of accounting described in accompanying notes). We are also

responsible for considering the internal control structure in order to

determine our auditing procedures for expressing an opinion on the

statements of expenditures, not to provide assurance on the internal

control structure. In addition, we are responsible for testing compliance

with selected provisions of laws and regulations.

In order to fulfill these responsibilities, for each independent counsel, we

• examined, on a test basis, evidence supporting the amounts and

disclosures in the statement of expenditures and notes thereto, except

items indicated as unaudited;

• assessed the accounting principles used and significant estimates made by

management;

• evaluated the overall presentation of the statement of expenditures;

• obtained an understanding of the design of relevant internal control

structure policies and procedures, determined whether they had been

placed in operation, assessed the associated control risk, and conducted

limited tests of relevant internal controls, including those over

expenditure authorizations and financial reporting; and

• tested compliance with certain aspects of selected provisions of the

independent counsel provisions of the Ethics in Government Act of 1978

(28 U.S.C. 591-599), 5 U.S.C. Chapter 55, and implementing regulations,

relating to pay administration.

It is important to note that because of inherent limitations in any internal

control structure, losses, noncompliance, or misstatements may

nevertheless occur and not be detected. Also, projecting any evaluation to

future periods is subject to the risk that controls may become inadequate

because of changes in conditions or that the degree of compliance with

Page 5 GAO/AIMD-95-112 Independent Counsels
B-260395 

controls may deteriorate. As a result of the material internal control

weakness over reported expenditures previously discussed, we extended

our substantive testing in order to opine on the expenditure reports

presented in the appendixes to this report.

We obtained, but did not audit, information on costs that were not paid

from the permanent, indefinite appropriation established to fund

independent counsel activities. We obtained information on these costs

from the independent counsel offices; the Department of Justice, including

the FBI; the Internal Revenue Service; and the Office of Inspector General

of the Department of Housing and Urban Development.

We discussed the results of our work with the four independent counsels

or their representatives and with representatives of AOUSC and

incorporated their comments where appropriate.

We performed our audits in accordance with generally accepted

government auditing standards. We completed our audit work on

March 22, 1995.

We are sending copies of this report to the Attorney General, the Director

of the Administrative Office of the U.S. Courts, the four independent

counsels included in our audit, and other interested parties. Copies will be

made available to others upon request.

David L. Clark

Director, Legislative Reviews

 and Audit Oversight

Page 6 GAO/AIMD-95-112 Independent Counsels
B-260395 

List of Committees

The Honorable Mark O. Hatfield

Chairman

The Honorable Robert C. Byrd

Ranking Minority Member

Committee on Appropriations

United States Senate

The Honorable William V. Roth, Jr.

Chairman

The Honorable John Glenn

Ranking Minority Member

Committee on Governmental Affairs

United States Senate

The Honorable Orrin G. Hatch

Chairman

The Honorable Joseph R. Biden, Jr.

Ranking Minority Member

Committee on the Judiciary

United States Senate

The Honorable Robert L. Livingston

Chairman

The Honorable David R. Obey

Ranking Minority Member

Committee on Appropriations

House of Representatives

The Honorable William F. Clinger, Jr.

Chairman

The Honorable Cardiss Collins

Ranking Minority Member

Committee on Government Reform and Oversight

House of Representatives

The Honorable Henry J. Hyde

Chairman

The Honorable John Conyers, Jr.

Ranking Minority Member

Committee on the Judiciary

House of Representatives

Page 7 GAO/AIMD-95-112 Independent Counsels
Contents

Letter 1

Appendix I 

Statement of

Expenditures for

Independent Counsel

Adams

10

Appendix II 

Statement of

Expenditures for

Independent Counsel

diGenova

13

Appendix III 

Statement of

Expenditures for

Independent Counsel

Fiske

15

Appendix IV 

Statement of

Expenditures for

Independent Counsel

Walsh

18

Abbreviations

AOUSC Administrative Office of the U.S. Courts

FBI Federal Bureau of Investigation

Page 8 GAO/AIMD-95-112 Independent Counsels
Page 9 GAO/AIMD-95-112 Independent Counsels
Appendix I 

Statement of Expenditures for Independent

Counsel Adams

ARLIN M. ADAMS

Office of Independent Counsel

Statement of Expenditures

(Cash basis)

Six Months Ended March 31, 1994

Personnel compensation and benefits (note 2)

Travel

Rent, communications, and utilities (note 3)

Contractual services (note 4)

Supplies and materials

Acquisition of capital assets

Administrative services (note 5)

Total expenditures

$1,399,375

119,993

338,261

970,382

13,709

9,285

85,537

$2,936,542

The accompanying notes are an integral part of this statement.

Page 10 GAO/AIMD-95-112 Independent Counsels
Appendix I 

Statement of Expenditures for Independent

Counsel Adams

ARLIN M. ADAMS

Office of Independent Counsel

Notes to Statement of Expenditures

Note 1 - Accounting policies

Reporting entity: The accompanying statement of expenditures presents the expenditures

of the Office of Independent Counsel - Arlin M. Adams (OIC-Adams) for the 6 months

ended March 31, 1994. The statement of expenditures includes only expenditures made

from the permanent, indefinite appropriation for the offices of independent counsel that

are processed through the Administrative Office of the U.S. Courts (AOUSC) and the

OIC. Mr. Adams was appointed on March 1, 1990, to investigate the administration of

various programs of the Department of Housing and Urban Development from 1983 to

1989. OIC-Adams’ investigation is ongoing.

Basis of accounting: The accompanying statement of expenditures was prepared

principally on the cash basis of accounting, which is a comprehensive basis of accounting

other than generally accepted accounting principles. Under this method, except for

payroll and employee benefits, expenditures are recorded when the funds are disbursed

by AOUSC or, for noncash transfers, when charged by AOUSC. Most payroll and related

employee benefits are recorded at the end of the pay period when earned. The cost of

retroactive retirement coverage discussed in note 2 is recorded when paid. The cost of

purchased capital assets, which principally consist of office equipment and furniture, is

recorded in the statement of expenditures when paid. These assets will remain with the

federal government when they are no longer needed by the OIC.

Note 2 - Retroactive retirement coverage

Under the laws governing federal employee retirement coverage and the regulations

implemented by the Office of Personnel Management, federal employees appointed for

periods exceeding 1 year generally are covered by federal employee retirement

programs. Certain employees of the office of independent counsel with qualifying

appointments were erroneously not provided retirement coverage. In August 1992,

AOUSC determined that these employees should be retroactively provided retirement

plan coverage and has been reviewing individual employee personnel files to determine

specific coverage requirements. In December 1992, qualified employees, then employed

by the OIC, became members of the retirement plan and began receiving current

retirement coverage. Included in personnel compensation and benefits is approximately

$193,000 in retroactive retirement contributions paid during the period for current and

former OIC employees.

Page 11 GAO/AIMD-95-112 Independent Counsels
Appendix I 

Statement of Expenditures for Independent

Counsel Adams

Note 3 - Rent, communications, and utilities

Approximately $289,000 in office rent is included in rent, communications, and utilities.

Note 4 - Contractual services

Contractual services primarily consists of court reporting services and outside consulting

services in support of litigation.

Note 5 - Administrative services

AOUSC receives an administrative fee equal to 3 percent of OIC expenditures for

performing disbursement and accounting functions for OIC-Adams. Payment of these

fees generally occurs in the month following the services.

Note 6 - Other operating costs (unaudited)

Certain costs relating to employees assigned to work with the OIC by the Federal Bureau

of Investigation (FBI), Internal Revenue Service (IRS), and Inspector General of the

Department of Housing and Urban Development (HUD IG) were financed through funds

appropriated to these agencies and, accordingly, are not included in the statement of

expenditures. These agencies are not reimbursed for these costs. The schedule below

shows the estimated costs (unaudited) of the assistance provided to the OIC during the 6-

month period, based on information provided by officials of these agencies.

Costs

(unaudited)

FBI

IRS

HUD IG

$195,000

2,000

84,000

$281,000

Page 12 GAO/AIMD-95-112 Independent Counsels
Appendix II 

Statement of Expenditures for Independent

Counsel diGenova

JOSEPH E. diGENOVA

Office of Independent Counsel

Statement of Expenditures

(Cash basis)

Six Months Ended March 31, 1994

Personnel compensation and benefits

Travel

Rent, communications, and utilities (note 2)

Contractual services

Supplies and materials

Acquisition of capital assets

Administrative services (note 3)

Total expenditures

$290,708

36,710

100,716

809

2,714

9,768

13,305

$454,730

The accompanying notes are an integral part of this statement.

Page 13 GAO/AIMD-95-112 Independent Counsels
Appendix II 

Statement of Expenditures for Independent

Counsel diGenova

JOSEPH E. diGENOVA

Office of Independent Counsel

Notes to Statement of Expenditures

Note 1 - Accounting policies

Reporting entity: The accompanying statement of expenditures presents the expenditures

of the Office of Independent Counsel - Joseph E. diGenova (OIC-diGenova), for the

6 months ended March 31, 1994. The statement of expenditures includes only

expenditures made from the permanent, indefinite appropriation for the offices of

independent counsel that are processed through the Administrative Office of the U.S.

Courts (AOUSC) and the OIC. Mr. diGenova was appointed in December 1992 to

investigate a preelection search of passport files. OIC-diGenova’s investigation is

ongoing.

Basis of accounting: The accompanying statement of expenditures was prepared

principally on the cash basis of accounting, which is a comprehensive basis of accounting

other than generally accepted accounting principles. Under this method, except for

payroll and employee benefits, expenditures are recorded when the funds are disbursed

by AOUSC or, for noncash transfers, when charged by AOUSC. Most payroll and related

employee benefits are recorded at the end of the pay period when earned.

Note 2 - Rent, communications, and utilities

Approximately $61,000 in office rent is included in rent, communications, and utilities.

Note 3 - Administrative services

AOUSC receives an administrative fee equal to 3 percent of OIC expenditures for

performing disbursement and accounting functions for OIC-diGenova. Payment of these

fees generally occurs in the month following the services.

Note 4 - Other operating costs (unaudited)

Certain costs relating to employees assigned to work with the OIC by the Federal Bureau

of Investigation (FBI) were financed through funds appropriated to the FBI and,

accordingly, are not included in the statement of expenditures. The FBI is not reimbursed

for these costs. The estimated cost (unaudited) of the other assistance provided to the

OIC during the period, based on information provided by FBI officials, was $127,000.

Page 14 GAO/AIMD-95-112 Independent Counsels
Appendix III 

Statement of Expenditures for Independent

Counsel Fiske

ROBERT B. FISKE, JR.

Office of Independent Counsel

Statement of Expenditures

(Cash basis)

Period From January 24, 1994 Through March 31, 1994

Personnel compensation and benefits

Travel

Rent, communications, and utilities (note 2)

Other services (note 3)

Supplies and materials

Acquisition of capital assets (note 4)

Total expenditures

$127,775

10,855

8,633

8,559

1,546

88,923

$246,291

The accompanying notes are an integral part of this statement.

Page 15 GAO/AIMD-95-112 Independent Counsels
Appendix III 

Statement of Expenditures for Independent

Counsel Fiske

ROBERT B. FISKE, JR.

Office of Independent Counsel

Notes to Statement of Expenditures

Note 1 - Accounting policies

Reporting entity: The accompanying statement of expenditures presents the expenditures

of the Office of Independent Counsel - Robert B. Fiske, Jr. (OIC-Fiske), for the period

from his appointment on January 24, 1994, through March 31, 1994. The statement of

expenditures includes only expenditures made from the permanent, indefinite

appropriation for OIC-Fiske processed through the Department of Justice.

Robert B. Fiske, Jr. was appointed by Attorney General Janet Reno to investigate criminal

and civil violations of the U.S. Code in Re: Madison Guaranty Savings and Loan. On

August 5, 1994, pursuant to 28 U.S.C. 592 (C)(1)(A), the U.S. Court of Appeals for the

District of Columbia appointed Kenneth W. Starr to conduct the investigation. After

completing a transition of operation to Mr. Starr, Robert B. Fiske, Jr. terminated his

appointment on October 6, 1994.

Basis of accounting: The accompanying statement of expenditures was prepared

principally on the cash basis of accounting, which is a comprehensive basis of accounting

other than generally accepted accounting principles. Under this method, expenditures are

recorded when the funds are disbursed by the Department of Justice. Most payroll and

related employee benefits are recorded at the end of the pay period when earned.

Note 2 - Rent, communications, and utilities

As of March 31, 1994, office space and administrative support functions had been

established, but all expenses for those items had not yet been paid. These expenditures

will be included in future expenditure reports when the Department of Justice processes,

pays, and records them.

Note 3 - Other services

Other services includes computer hardware and software, litigative services, and court

reporting services.

Note 4 - Capital assets

The capital assets expenditures are for office furniture and equipment. As of March 31,

1994, office space and administrative support functions had been established, but many

expenses for office furniture and equipment had not been paid. These expenditures will

Page 16 GAO/AIMD-95-112 Independent Counsels
Appendix III 

Statement of Expenditures for Independent

Counsel Fiske

be included in future expenditure reports when the Department of Justice processes,

pays, and records them. These assets will remain the property of the federal government

at the conclusion of the investigation.

Note 5 - Other operating costs (unaudited)

Certain costs relating to employees assigned to work with the OIC by the Federal Bureau

of Investigation and other assistance provided to the OIC by the Department of Justice

were financed through funds appropriated to Justice and, accordingly, are not included in

the statement of expenditures. However, the schedule below shows the estimated costs

(unaudited) of the other assistance provided to the OIC during the period, based on

information provided by Justice officials.

Costs

(unaudited)

FBI

Other Justice

$642,000

2,000

$644,000

Page 17 GAO/AIMD-95-112 Independent Counsels
Appendix IV 

Statement of Expenditures for Independent

Counsel Walsh

LAWRENCE E. WALSH

Office of Independent Counsel

Statement of Expenditures

(Modified-cash basis)

Six Months Ended March 31, 1994

Personnel compensation and benefits (note 2)

Travel

Rent, communications, and utilities (note 3)

Contractual services (note 4)

Supplies and materials

Acquisition of capital assets

Administrative services (note 5)

Total expenditures

$1,057,354

11,200

295,262

53,958

2,789

6,807

47,695

$1,475,065

The accompanying notes are an integral part of this statement.

Page 18 GAO/AIMD-95-112 Independent Counsels
Appendix IV 

Statement of Expenditures for Independent

Counsel Walsh

LAWRENCE E. WALSH

Office of Independent Counsel

Notes to Statement of Expenditures

Note 1 - Accounting policies

Reporting entity: The accompanying statement of expenditures presents the costs of the

Office of Independent Counsel - Lawrence E. Walsh (OIC-Walsh) for the 6 months ended

March 31, 1994. The statement of expenditures includes only expenditures made from

the permanent, indefinite appropriation for the offices of independent counsel that are

processed through the Administrative Office of the U.S. Courts (AOUSC) and the OIC.

Mr. Walsh was appointed on December 19, 1986, to investigate allegations of crimes

relating to the sales of arms to Iran and the diversion of funds to, and other support of,

the Nicaraguan Contras, and to prosecute any indictments stemming from the

investigation. Mr. Walsh’s final report covering his independent counsel activities was

released to the public by the U.S. Court of Appeals for the District of Columbia Circuit on

January 18, 1994. Mr. Walsh’s office officially closed on March 30, 1994.

Basis of accounting: The accompanying statement of expenditures was prepared on a

modified-cash basis of accounting, which is a comprehensive basis of accounting other

than generally accepted accounting principles. Under this method, most expenditures for

goods and services are recorded when invoices are received and certified for payment.

Certain major expenditures such as rent, utilities, and administrative fees, are accrued on

a monthly basis. No accrual is made for salaries and benefits earned but not yet paid at

the end of the reporting period. The cost of retroactive employment coverage discussed

in note 2 is to be recorded when paid. The cost of purchased capital assets, consisting

of office furniture and equipment, is expensed and no provision is made for depreciation.

As Mr. Walsh’s operations were downsized, capital assets were distributed to other

federal entities, including other independent counsel offices. Mr. Walsh’s office closed on

March 30, 1994, and any costs not accrued as of March 31, 1994, will be reported in

future expenditure reports as they are paid by AOUSC.

Note 2 - Retroactive retirement coverage

Under the laws governing federal employee retirement coverage and the regulations

implemented by the Office of Personnel Management, federal employees appointed for

periods exceeding 1 year generally are covered by federal employee retirement

programs. Certain employees of the office of independent counsel with qualifying

appointments were erroneously not provided retirement coverage. In August 1992,

AOUSC determined that these employees should be retroactively provided retirement

plan coverage and has been reviewing individual employee personnel files to determine

specific coverage requirements. In December 1992, qualified employees, then employed

by the OIC, became members of the retirement plan and began receiving current

retirement coverage. The total cost of providing retroactive retirement contributions for

Page 19 GAO/AIMD-95-112 Independent Counsels
Appendix IV 

Statement of Expenditures for Independent

Counsel Walsh

current and former OIC employees is estimated to be approximately $1 million. Included

in personnel compensation and benefits is approximately $529,000 in retroactive

retirement contributions paid during the 6-month period.

Note 3 - Rent, communications, and utilities

Office rent totaled about $8,400 during the 6-month period. Also included in rent,

communications, and utilities are costs of $252,000 for printing and distributing the

independent counsel’s final report, which included the comments of 46 individuals and

attorneys who submitted responses to the report.

Note 4 - Contractual services

Contractual services consists primarily of guard and equipment maintenance services.

Note 5 - Administrative services

AOUSC receives an administrative fee equal to 3 percent of OIC expenditures for

performing disbursement and accounting functions for OIC-Walsh. These fees are

generally recorded in the period when the services are rendered.

Note 6 - Legal representation fees

Upon the request of an individual who was the subject of an independent counsel’s

investigation but who was not indicted, a special division of the U.S. Court of Appeals for

the D.C. Circuit may award reimbursement of reasonable attorneys’ fees to that individual.

During the six-month period ended March 31, 1994, approximately $380,000 in awarded

legal representation fees were paid from independent counsel funds. These payments

should have been made from a special judgement fund established for awarding such fee

reimbursements and the independent counsel appropriation will therefore receive

reimbursement for these payments from the judgement fund. Accordingly, the legal

representation fees are not included in the statement of expenditures.

Page 20 GAO/AIMD-95-112 Independent Counsels
Appendix IV 

Statement of Expenditures for Independent

Counsel Walsh

Note 7 - Other operating costs (unaudited)

Certain costs relating to employees assigned to work with the OIC by the Internal

Revenue Service (IRS) and the Federal Bureau of Investigation as well as other

assistance provided by the Department of Justice were financed through funds

appropriated to those agencies and, accordingly, are not included in the statement of

expenditures. These agencies were not reimbursed for these costs. The schedule below

shows the estimated costs (unaudited) of the other assistance provided to the OIC during

the 6-month period, based on information provided by agency officials.

Costs

(unaudited)

Justice

IRS

$13,000

10,000

$23,000

(911694) Page 21 GAO/AIMD-95-112 Independent Counsels
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