GAO

United States General Accounting Office

Report to Congressional Requesters

October 1999 DC COURTS

Improvements Needed 

in Accounting for 

Escrow and Other 

Funds

GAO/AIMD/OGC-00-6

Page 1 GAO/AIMD/OGC-00-6 DC Courts Accounting for Escrow and Other Funds

United States General Accounting Office

Washington, D.C. 20548

Accounting and Information

Management Division

B-282924 Letr

October 29, 1999

The Honorable Thomas M. Davis, III

Chairman

Subcommittee on the District of Columbia

Committee on Government Reform

House of Representatives

The Honorable Ernest J. Istook

Chairman

The Honorable James P. Moran

Ranking Democratic Member

Subcommittee on the District of Columbia

Committee on Appropriations

House of Representatives

Your offices asked that we look at the District of Columbia Courts’ 

(DC Courts)1

 (1) obligations, (2) spending plan and obligations of funds, 

(3) payments to court-appointed attorneys, (4) voucher processing 

procedures, and (5) accounting for the other funds under its control. We 

recently issued our report on the first four items that related to DC Courts’ 

use of appropriated funds during fiscal year 1998.2

 This report covers the 

fifth item−accounting for other funds under DC Courts’ control−and 

addresses whether DC Courts (1) properly reconciled its bank accounts, 

(2) had adequate controls over fines and fees collected, and (3) had 

authority to retain amounts deposited into the Crime Victims Fund 

account.

Results in Brief DC Courts did not properly account for the funds in half of its 18 bank 

accounts during fiscal year 1998, as evidenced by its problems in 

determining its cash balances and reconciling its accounting records to 

1

DC Courts is comprised of the Court of Appeals, Superior Court, and the Court System of 

the District of Columbia. The Joint Committee on Judicial Administration is a policy-making 

body of the DC Courts and has among its responsibilities accounting and auditing functions.

2

District of Columbia Courts: Planning and Budgeting Difficulties During Fiscal Year 

1998 (GAO/AIMD/OGC-99-226, September 16, 1999).
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supporting documentation. Although DC Courts improved its 

reconciliation procedures during fiscal year 1999 and was able to reconcile 

fiscal year-end balances for 15 accounts, it continued to have difficulty in 

properly accounting for the funds in 3 of its accounts−Child Support, Civil 

Escrow, and Juror Fees. As a result, DC Courts did not have assurance that 

funds collected in the Child Support account were properly accounted for 

and appropriately disbursed, that all payments made for Juror Fees were 

properly reimbursed with appropriated funds, and that funds held in the 

Civil Escrow account for payment of claims and settlements were 

appropriately safeguarded.

In addition, DC Courts did not have adequate controls and procedures in 

place during fiscal year 1998 to ensure that fines and fees collected were 

accurately recorded. For example, fines and fees collected were recorded 

in two different systems without procedures to ensure that both sets of 

records were in agreement. In addition, accounting and auditing functions 

were not properly segregated within DC Courts’ Financial Operations 

Division. This situation increased the risk of errors occurring and not being 

detected and corrected.

Although DC Courts was authorized to deposit fines, fees, and penalties 

specified in District law into the Crime Victims Fund to provide financial 

assistance to crime victims, in fiscal years 1998 and 1999 DC Courts also 

deposited other fines, fees, and penalties into the Fund that should have 

been deposited in the U.S. Treasury. According to DC Courts’ records as of 

June 30, 1999, the amounts retained in the Crime Victims Fund account 

without the requisite authority totaled over $11 million. However, as of 

October 15, 1999, the Congress was considering legislation that, if enacted, 

would address this problem.

This report includes recommendations to DC Courts aimed at improving 

controls over and ensuring accountability of funds in its accounts. In its 

comments on a draft of this report, DC Courts agreed with and stated it had 

implemented our recommendations. DC Courts did, however, disagree with 

our conclusion regarding its retention of certain types of fines and fees, but 

acknowledged that provisions in the District of Columbia Appropriations 

Act, 2000, if enacted, would address this issue.

Background Since 1970, the financial operations of DC Courts have been managed by 

the Financial Operations Division within the Court System. This division is 

comprised of (1) the Accounting Branch, which is responsible for 
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maintaining accounting records and processing payments, (2) the Financial 

Revenue Branch, which processes child support payments; collects all fees, 

fines, and forfeitures; and accounts for moneys held (escrow funds) in the 

Registry of the Court, and (3) the Internal Audit Branch, which audits all 

accounts of the Courts (including moneys collected and deposited in the 

Registry of the Court, grants, and appropriations).

The Financial Operations Division is responsible for managing DC Courts’ 

18 different bank accounts, which consist of

• two accounts supporting DC Courts’ operations (one checking and one 

interest-bearing account) that are funded primarily through the annual 

federal payment to the Joint Committee on Judicial Administration for 

court operations;

• two imprest accounts3

 (checking accounts) to process juror and witness 

fees that are funded with amounts transferred from DC Courts’ 

appropriation accounts;

• twelve escrow accounts, which include the child support account and 

accounts for civil settlements, criminal restitution, probate, and 

individuals, and

• two accounts supporting the Crime Victims Fund (one checking account 

and one interest-bearing account).

For fiscal year 1998, DC Courts contracted with the General Services 

Administration (GSA) to provide the payroll and financial-related 

administrative support services formerly provided by the District 

government4

 for the two accounts supporting DC Courts’ operations. Under 

this contract, GSA processes financial and budgetary information prepared 

by DC Courts, records and reports obligations and expenditures, and 

makes payroll and voucher payments with funds transferred from the two 

accounts. DC Courts’ Financial Operations Division is responsible for all 

the financial-related administrative support services for the remaining 

16 accounts, using a combination of automated financial systems and 

manual records.

3

An imprest bank account makes a specific amount of cash available for a limited purpose. 

Funds in an imprest account are periodically reimbursed from general funds upon receipt of 

vouchers supporting disbursements made from the imprest account.

4

District of Columbia Appropriation Acts for Fiscal Years 1998 (P.L. 105-100, November 19, 

1997) and 1999 (P.L. 105-277, October 21, 1998) required DC Courts to contract with GSA to 

perform payroll and financial-related services.
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Objectives, Scope, and 

Methodology

Our objective was to determine whether DC Courts properly accounted for 

the funds in its 18 accounts. Specifically, we determined whether DC 

Courts properly reconciled its bank accounts, adequately controlled fines 

and fees collected, and properly retained amounts deposited into the Crime 

Victims Fund account. To accomplish these objectives, we

• interviewed the chief judges, DC Courts’ Executive Officer, Fiscal 

Officer, Internal Auditor, financial operations and systems employees, 

and an official from the District’s Office of Corporation Counsel (OCC);

• obtained and reviewed unaudited financial information5

 and 

correspondence prepared by DC Courts and statements from the banks 

in which those accounts were maintained; 

• obtained copies of DC Courts’ reconciliations for 17 of its 18 bank 

accounts6

 for the month ended September 30, 1998, and for the 

unreconciled accounts for the month ended April 30, 1999,7 and traced 

the book balances and transaction activity to bank statements and 

subledgers,8

 and traced reconciling items to detailed supporting records; 

and

• reviewed relevant legislation, including the Crime Victims Act and the 

Revitalization Act.

We did our work in accordance with generally accepted government 

auditing standards from December 1998 through July 1999. We requested 

comments on a draft of this report from the Executive Officer of DC 

Courts. The Executive Officer, on behalf of the Joint Committee on Judicial 

Administration in the District of Columbia, provided us with written 

comments that are discussed in the “DC Courts’ Comments and Our 

Evaluation” section and are reprinted in appendix I.

5

On May 19, 1999, DC Courts awarded a contract to perform the first audit of its financial 

statements for the year ended September 30, 1998, as required by the Revitalization Act.

6

DC Courts could not provide a bank reconciliation for the Child Support account.

7

As of July 1999, this was the most recent month that the bank reconciliations were 

available.

8

These subledgers reflect detailed transactions that are summarized in general ledger 

control accounts.
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Weaknesses in 

Reconciliation 

Procedures

During our review of DC Courts’ reconciliations of its 18 bank accounts for 

the month ended September 30, 1998, we noted that DC Courts did not 

reconcile or had improperly reconciled 9 of the accounts. As a result, DC 

Courts officials lacked accurate information on account balances and 

could not provide assurance that it was properly accounting for financial 

activity in the 9 accounts. Standard accounting practices include 

performing a monthly reconciliation of the recorded cash balance and the 

bank balance to assure the accuracy of the cash balances and to correct 

any bookkeeping errors. Accounting practices also include reconciling the 

adjusted book balances to the detailed subledgers and supporting 

documentation to ensure that the cash balance and the related accounting 

records agree. DC Courts’ reconciliation procedures require that all bank 

accounts be reconciled each month.

Once we notified DC Courts officials of these problems, they properly 

reconciled the book balances to the bank balances and detailed subledger 

or supporting documentation for 15 of 18 bank accounts. However, as of 

July 1999, the Child Support Escrow (Child Support) account had not been 

reconciled since May 1998, when a new child support system was 

implemented. Also, the Civil Escrow and Juror Fees accounts were not 

properly reconciled and included unsupported or inadequately supported 

differences between the book and bank balances. The results of our review 

of these three accounts and their status during fiscal year 1999 are 

discussed below.

Child Support Account Since implementation of a new automated child support system in May 

1998, the Child Support account balances and monthly activity had not 

been reconciled to the related bank account activity. In addition, DC 

Courts’ accounting staff had not received specific training in using the 

financial component of the new system. Throughout our review, DC Courts 

officials cited problems with the financial component of the new system 

and its Checkbook Ledger, which has an automatic reconciliation feature, 

as the primary reason the account could not be reconciled. However, in the 

interim, DC Courts did not make use of alternative means of obtaining and 

reviewing all relevant information to verify collection and disbursement 

activity against bank transactions and determine the cash balance in the 

account. Without accurate information on the account balance and all child 

support activity, DC Courts could not provide assurance that all child 

support payments collected were being appropriately disbursed and that 

there were no duplicate payments or misappropriated funds.
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DC Courts has responsibility for child support collections and 

disbursements. It serves as an intermediary between noncustodial and 

custodial parents to ensure that court-ordered child support payments are 

made. According to DC Courts’ Fiscal Officer, approximately 28,000 child 

support checks are mailed out by DC Courts each month, representing total 

monthly payments of over $4 million.

Prior to the implementation of a new child support system in May 1998, 

information about DC Courts’ child support cases was maintained in 

separate records in different automated systems. DC Courts maintained 

collection and payment records and operated a financial system that 

processed the collections and disbursements and accounted for all related 

financial activity. OCC maintained child support records and the District’s 

Department of Human Services (DHS)9

 maintained paternity records on the 

same mainframe system. The new child support system was developed to 

meet new federal guidelines that called for a unified child support system 

that would consolidate all financial and programmatic records.

With the implementation of the new system, DC Courts would no longer 

directly receive all child support collection data or process the child 

support payments. OCC’s contractor, which designed and maintained the 

new child support system, inputted electronically transferred child support 

payments into the new system that automatically allocated child support 

check payments, which are printed and mailed by DC Courts. Meanwhile, 

DC Courts continued to receive and deposit all child support payments 

made in person and from checks mailed directly to DC Courts and was 

responsible for inputting this collection data into the new system. In 

addition, the contractor maintained all collection and disbursement 

information in the system.

When the new system was implemented as of May 1, 1998, DC Courts’ 

Internal Audit Branch continued the reconciliation procedure it had used 

for the former system. Daily, an auditor reconciled child support amounts 

collected by DC Courts cashiers to amounts deposited into the Child 

Support account. However, this reconciliation was no longer providing a 

complete picture of collections, since it did not include electronic 

transfers. To get a sense of how much financial activity this reconciliation 

was capturing, we reviewed DC Courts’ collection report for the month of 

9

DHS’ Office of Paternity and Child Support merged with OCC’s Child Support Enforcement 

Division in April 1998.
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June 1999. We discussed this report with the Chief of the Child Support 

Enforcement Branch who identified the types of payments that DC Courts 

included in its daily collection reconciliations. These payments represented 

about $3.9 million (71 percent) of child support receipts collected by DC 

Courts in June 1999.

DC Courts and OCC officials told us that the new child support system was 

intended to allow DC Courts to easily access historical data on amounts 

collected and paid for each case. They also stated that a Checkbook Ledger 

feature available in the new system would provide daily child support 

transactions and bank activity, which would improve accountability of 

collections and disbursements and automatically reconcile the bank 

account. As of July 1999, DC Courts officials stated that the Checkbook 

Ledger feature did not work and accounting staff had not received training 

in its use.

However, the financial component of the new system provides data that 

would enable DC Courts to perform manual reconciliation procedures. It 

contains (1) detailed lists of all checks disbursed with detail on whether 

they cleared the bank10 and checks that were outstanding, (2) a monthly 

summary of collections, and (3) the ability to perform a data search to 

corroborate certain information on a child support case. Using this 

information, its daily reconciliations, and the detail provided to DC Courts 

for all electronic fund transfers, DC Courts should have complete 

information to verify all collection and disbursement activity against bank 

statement activity and to determine the cash balance in the account. 

However, DC Courts’ Child Support Branch Chief stated that the 

accounting staff does not periodically review the information provided by 

the system for completeness and accuracy, nor do they use this information 

to report or reconcile amounts. The Child Support Branch Chief also stated 

that the check register and outstanding check lists do not include checks 

issued on May 19 and May 28, 1998, because the check numbers used for 

those 2 days did not appear in the system. Since the disbursement data are 

not reviewed and the checks with missing numbers have not been tracked 

to determine whether the amounts cleared the bank, DC Courts does not 

have complete information on disbursements.

10DC Courts’ Child Support Branch Chief stated that the contractor upgraded the system to 

include the checks cleared by the bank in November 1998.
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As of July 1999, DC Courts had not attempted to reconcile the child support 

information in the new system with bank activity. DC Courts’ Child Support 

Branch Chief stated that they are waiting for the Checkbook Ledger to 

automatically perform the required reconciliation. In August 1999, a 

contractor manager stated that along with OCC and DC Courts, they were 

trying to resolve DC Courts’ outstanding concerns regarding the financial 

component of the new system. The manager also stated that a contractor 

employee was trained in the use of the Checkbook Ledger and was 

preparing to train DC Courts’ staff by the end of fiscal year 1999.

Civil Escrow Account Funds 

Loaned to Juror Fees 

Account

During our review of the Civil Escrow and Juror Fees accounts 

reconciliations for the month of September 30, 1998, we noted that DC 

Courts could not determine the correct cash balances or provide adequate 

documentation to support identified amounts. As a result, DC Courts could 

not ensure that funds in these accounts were properly collected and 

disbursed.

The Civil Escrow account holds individual small claims, landlord and 

tenant settlements, and other civil claims awarded by DC Courts for which 

the claimant has not yet received payment. As of September 30, 1998, the 

recorded cash balance was more than $2.7 million for a total of about 

5,000 active escrow subledger accounts, each representing an outstanding 

settlement or a claim. In reviewing this account, we found that for almost 

2 years, portions of the accumulated balance in the Civil Escrow account 

had been temporarily loaned to the Juror Fees account to pay daily juror 

fees until amounts could be reimbursed with appropriated funds. This use 

of escrow funds increased the risk that sufficient funds would not be 

available to pay all claims and settlements.

The Juror Fees account was established as a $100,000 imprest fund to 

enable DC Courts to pay jurors daily and periodically receive 

reimbursement with appropriated funds. During fiscal year 1998, the Juror 

Fees account averaged more than 9,800 transactions totaling about 

$136,000 each month. Based upon the imprest level established and 

monthly activity, DC Courts would have to request reimbursement from 

GSA every 2 weeks to ensure that sufficient funds were available to pay 

juror fees. However, we found that rather than promptly reimbursing the 

Juror Fees account with appropriated funds, DC Courts decided in 

February 1997 to allow the account to be reduced to a zero balance and 

arranged for the automatic transfer of funds from the Civil Escrow account 

to cover cleared Juror Fee checks and prevent checks from being returned 
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for insufficient funds. DC Courts linked the two accounts so that the Civil 

Escrow account would provide overdraft protection to the Juror Fees 

account. Then, periodically, DC Courts would submit documentation of 

paid amounts to GSA for reimbursement of the Civil Escrow account, 

through the Juror Fees account, from appropriated funds.

Some of the specific problems we found in reviewing the Civil Escrow and 

Juror Fees accounts’ September 30, 1998, bank reconciliations were as 

follows:

• DC Courts’ records indicated that the Civil Escrow account had an 

unreconciled difference between the adjusted book balance and its 

subledger account of $2,000, an unsupported difference in the amount of 

adjustments made to the subledger of almost $15,000, as well as 

inadequate detail to support $286,000 in amounts loaned by the Civil 

Escrow account to the Juror Fees account that were not reimbursed for 

a 2 1/2 month period.

• The Juror Fees account’s reconciliation had unsupported outstanding 

checks of $78,000 and anticipated deposits of over $465,000 for which 

reimbursement had not yet been requested and which DC Courts 

labeled as deposits-in-transit. Of the $465,000 that DC Courts stated 

were deposits-in-transits, it had not requested reimbursement for 

$146,000 of this amount for over a year. This represented unreimbursed 

juror fee payments from April 1998 that were not deposited into the 

Juror Fees account until June 24, 1999. DC Courts officials could not 

explain why they did not request reimbursement of these amounts from 

GSA until after the fiscal year ended.

These problems continued into the summer of 1999. As of July 1999, 

DC Courts’ most recent bank reconciliations, which were for the month 

ended April 30, 1999, still reflected unreconciled amounts and unsupported 

reconciling items. For example, the Civil Escrow account’s reconciliation 

still reflected a $2,000 difference and a lack of documentation to support 

almost $15,000 of adjustments and the unreimbursed funds loaned to the 

Juror Fees account. DC Courts could not provide an explanation for these 

problems. These situations resulted in DC Courts still not being able to 

support its cash balances in its Civil Escrow and Juror Fees accounts as of 

July 1999.
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Other Internal Control 

Weaknesses

During our review of DC Courts’ September 30, 1998, reconciliation 

process, we identified two additional internal control weaknesses related 

to (1) inadequate procedures to ensure the accuracy of fines and fees11

recorded in two different systems and (2) accounting and auditing 

functions that were not segregated.

Inadequate Procedures to 

Ensure Accurate 

Accounting of Fines and 

Fees

DC Courts did not have adequate procedures for accounting for the 

collection of fines and fees or for maintaining records for the amounts 

transferred to the Crime Victims Fund account each month from the 

Register of Wills, Criminal, and Family escrow accounts. DC Courts 

separately input the fines and fees data into two unconnected 

(nonintegrated) systems−the DC Courts’ Finance and Remittance (CFAR) 

system, which reported fines and fees collected and an accounting system12

that maintained the general ledger and was the source of information used 

to reconcile the cash balance to the bank balance. Because these 

transactions were entered twice manually, DC Courts should have verified 

the accuracy of the data in both systems to reduce the risk of data entry 

errors occurring and not being detected promptly. After we discussed the 

need for this reconciliation with DC Courts, the Fiscal Officer attempted to 

reconcile the collection data between the CFAR system and accounting 

records for fiscal year 1998. At the conclusion of our fieldwork, there was 

an unresolved difference of about $2,400. Further, with fundamental 

problems in DC Courts’ reconciliations to bank activity and detailed 

subledgers, there was a greater risk that errors would not be detected.

During fiscal year 1999, DC Courts had made changes to start addressing 

these issues raised during our work. The changes included (1) establishing 

one automated accounting system for all court operations and (2) hiring a 

contractor to create an interface between the CFAR system and the new 

accounting system, which would eliminate the need to separately input 

data and perform monthly reconciliations of collection data each month. In 

July 1999, DC Courts installed the new accounting system and was 

developing the interface. DC Courts continued to manually enter collection 

data into both systems without verifying the accuracy of the data.

11Fines and fees are collected by DC Superior Court’s Civil, Criminal, Family, and Probate 

Divisions and by the DC Court of Appeals.

12During fiscal year 1998, DC Courts used several different accounting applications and 

manual records to account for fines and fees and other nonappropriated funds.
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Lack of Segregation of 

Duties

During fiscal year 1998, DC Courts’ audit function was not organizationally 

separated from its accounting function. Specifically, Internal Audit Branch 

staff who performed independent audits of accounts and other court 

operations also performed monthly bank and daily collection 

reconciliations. This situation resulted in auditors performing accounting 

tasks that they could also be responsible for auditing, which is an 

inappropriate mix of operational and oversight roles.

In March 1999, DC Courts Executive Officer stated that he had transferred 

the staff that performed bank reconciliations and other accounting 

functions from the Internal Audit Branch to another branch of the Financial 

Operations Division. More importantly, however, as of July 1999, the 

Internal Auditor continued to have the primary operational responsibility 

for reviewing monthly reconciliations. While the risk of loss is somewhat 

less because we did not identify any internal audit staff that handled cash, 

mixing operational and audit responsibilities has long been viewed as 

inappropriate from an internal control perspective. Until the Internal Audit 

Branch is completely segregated from accounting and other operational 

tasks, the risk of errors or fraud is increased. To the extent that internal 

audit staff perform operational and accounting functions, they would not 

be available to perform their central role of performing independent 

reviews.

Unauthorized Deposits 

to the Crime Victims 

Fund

During fiscal years 1998 and 1999, DC Courts deposited some court fines, 

fees, and penalties in the Crime Victims Fund, rather than in the U.S. 

Treasury as required. Specifically, DC Courts’ records indicated that as of 

June 1999, over $11 million in fines and fees were inappropriately retained. 

As of October 15, 1999, legislation was being considered that would provide 

DC Courts with the authority to deposit all court fines, fees, and penalties 

in the Crime Victims Fund, use funds necessary to operate the program, 

and return any unobligated amounts in excess of a specified level to the 

U.S. Treasury.
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In April 1997, a District law13 established the Crime Victims Compensation 

Program under DC Courts’ jurisdiction prior to the enactment of the 

Revitalization Act.14 The District law provides that payments of up to 

$25,000 from the fund can be made to crime victims for economic loss. 

Payments can also be made for shelter, burial costs, or medical expenses. 

The District law also provides that the Crime Victims Fund may be credited 

with (1) appropriations made to it, (2) fines assessed on persons either 

convicted of serious traffic or misdemeanor offenses or persons convicted 

or pleading guilty or no contest to felony offenses, (3) amounts recovered 

by the District from offenders or third parties by subrogation to the victim’s 

rights as a result of payments of claims to victims, (4) repayments of 

overpayments or false claims payments from claimants, and (5) amounts 

received from any source, including grants from the federal government.15

The authority to deposit specified collections to the Crime Victims Fund 

was an exception to the general requirement in section 450 of the Home 

Rule Act that DC Courts deposit collections to the District General Fund.16 

However, the Revitalization Act, under which the federal government 

assumed responsibility as of fiscal year 1998 for funding DC Courts, 

amended section 450 of the D.C. Home Rule Act to change its effect on 

DC Courts. Instead of being required to deposit moneys in the District’s 

General Fund or in the Crime Victims Fund, the Revitalization Act amended 

section 450 to provide that all moneys received by DC Courts be deposited 

in the U.S. Treasury or the Crime Victims Fund.17 Following passage of the 

13The Victims of Violent Crime Compensation Act of 1996, D.C. Law 11-243, 44 D.C. Reg. 

1142, 2601 (April 9, 1997), DC Code Ann. Sections 3-421 through 3-438 (1999 Supp.).

14National Capital Revitalization and Self-Government Improvement Act of 1997, Public Law 

No. 105-33, Title XI, 111 Stat. 712 (1997).

15DC Code Ann. Section 3-435 (1999 Supp.).

16Prior to January 2, 1975, DC Courts’ Fiscal Officer was required to deposit all fines, 

forfeitures, fees, unclaimed deposits, and other money in the U.S. Treasury. P.L. 91-358, 

Section 111, 84 Stat. 473, 511 (1970), as amended, DC Code Ann. Section 11-1723 (1981). 

Section 450 was enacted as part of the Home Rule Act and provides in its first sentence that 

the “General Fund of the District shall be composed of the District revenues which on 

January 2, 1975, are paid into the Treasury of the United States and credited either to the 

General Fund of the District or its miscellaneous receipts....” DC Code Ann. Section 47-130 

(1981). Accordingly, fines, forfeitures, fees, unclaimed deposits, and other moneys that were 

DC Courts revenues deposited in the U.S. Treasury before the Home Rule Act became part 

of the General Fund of the District under Section 450 prior to the Revitalization Act.

17DC Code Ann. Section 47-130 (1999 Supp.).
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Revitalization Act, DC Courts began to deposit in the Crime Victims Fund 

all the money it received from fines, fees, and penalties.

In our opinion, the Revitalization Act’s amendment to section 450 did not 

alter the District law governing the Crime Victims Program and the Crime 

Victims Fund or otherwise address the authorized sources for funding the 

Crime Victims Fund identified in the District law. Accordingly, we conclude 

that the Revitalization Act did not expand DC Courts’ authority to deposit 

collections in the Crime Victims Fund beyond amounts collected from the 

sources identified in the District law governing the Fund. DC Courts should 

have deposited collections from other sources in the U.S. Treasury. DC 

Courts’ records indicated that it retained about $11 million in fines and fees 

as of June 1999 that should have been deposited in the U.S. Treasury.

On June 29, 1999, we briefed your offices on this matter. As of October 15, 

1999, the Congress was considering legislation that, if enacted, would allow 

DC Courts to deposit all fines, fees, and penalties in the Crime Victims 

Fund account to be used to pay crime victim claims.18 This legislation 

would be retroactive to April 1997,19 and would require that all unobligated 

amounts in the account in excess of $250,000 as of September 30, 2000, be 

returned to the U.S. Treasury annually beginning with fiscal year 2000.20

Conclusions Without performing regular and proper reconciliations between the 

recorded cash balances, bank balances, and the related supporting 

documentation, DC Courts could not properly account for the funds in the 

Child Support, Civil Escrow, and Juror Fees accounts and increased the 

risk of these funds being inappropriately spent. Rather than waiting for the 

new child support system to automatically reconcile the child support 

account, DC Courts should have manually reconciled the account to 

thoroughly account for amounts collected and disbursed. In regard to the 

Civil Escrow and Juror Fees accounts, DC Courts’ improper reconciliation 

procedures and inadequate documentation to support reconciling amounts 

increased the risk of errors in these accounts. Also, DC Courts’ failure to 

18Section 160 (c) of H.R. 3064. Identical language was included in Section 160 of H.R. 2587, 

which was vetoed by the President.

19Section 160 (e) of H.R. 3064.

20Section 160 (d) of H.R. 3064.
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request the reimbursement of juror fee payments regularly and the lack of 

detailed documentation to support the amounts loaned from the Civil 

Escrow account to the Juror Fees account made it more difficult to 

properly account for financial activity in the two accounts.

Meanwhile, a lack of segregation of duties between DC Courts’ Internal 

Audit Branch and other Financial Operations Division’s staff increased the 

risk of errors occurring and not being detected and corrected and reduced 

resources available for independent reviews. Improving its accounting for 

the funds in its accounts would enable DC Courts to provide better 

assurance to the citizens of the District that moneys entrusted to DC Courts 

are properly safeguarded and spent for the intended purposes.

Recommendations To improve DC Courts’ accounting for and controls over funds it maintains 

in accounts, we recommend that the Joint Committee direct the Fiscal 

Officer to do the following:

• Adhere to existing procedures that require that every account be 

reconciled to the bank statement and supporting detail and/or 

subledgers each month. These reconciliations should be completed 

promptly, such as within 30 days of the receipt of the bank statement. In 

regard to the Child Support account, DC Courts should review all 

collections and disbursements and perform a manual reconciliation 

each month, until the automated reconciliation function of the new child 

support system can be used.

• Request reimbursement of all unreimbursed juror fee payments. Once 

all amounts are reimbursed, DC Courts should immediately transfer to 

the Civil Escrow account all amounts that were temporarily borrowed 

and terminate the overdraft protection relationship between the Civil 

Escrow and Juror Fees accounts. 

• Determine the appropriate level to reestablish the Juror Fees account as 

an imprest fund and the appropriate time intervals to request 

reimbursement of juror fee payments to replenish the fund. The 

established fund level combined with the reimbursement interval should 

ensure that there are sufficient funds for the Juror Fees account to 

operate independently.

• Transfer all bank reconciliation responsibilities and related accounting 

functions from the Internal Audit Branch to other branches within the 

Financial Operations Division in order to appropriately segregate duties.
B-282924

Page 15 GAO/AIMD/OGC-00-6 DC Courts Accounting for Escrow and Other Funds

DC Courts’ Comments 

and Our Evaluation 

DC Courts acknowledged its difficulties in properly accounting for 

financial activity in three of its accounts. DC Courts stated that our 

observations and recommendations made during this review have assisted 

it in identifying areas of its financial operations that needed improvement 

and in taking measures to address each of these areas. DC Courts stated 

that it has implemented all recommendations. It did, however, disagree 

with our conclusions regarding its retention of certain types of fines and 

fees. Following our discussion of this issue with the House Appropriations 

Committee, Subcommittee on the District of Columbia, provisions were 

added to the District of Columbia Appropriations Act, 2000, which, if 

enacted, would address DC Courts’ retention of fines and fees. DC Courts 

acknowledges that these provisions, if enacted, would address this issue.

We are sending copies of this report to Representative Eleanor Holmes 

Norton, Ranking Minority Member, Subcommittee on the District of 

Columbia, House Committee on Government Reform; Senator Kay Bailey 

Hutchinson, Chairwoman, Subcommittee on the District of Columbia, 

Senate Committee on Appropriations; Senator Richard Durbin, Ranking 

Minority Member, Subcommittee on the District of Columbia, Senate 

Committee on Appropriations and Subcommittee on Oversight of 

Government Management, Restructuring and the District of Columbia, 

Senate Committee on Governmental Affairs; and Senator George 

Voinovich, Chairman, Subcommittee on Oversight of Government 

Management, Restructuring and the District of Columbia, Senate 

Committee on Governmental Affairs. We are also sending copies to the 

Honorable Annice Wagner, Chairwoman, Joint Committee on Judicial 

Administration, DC Courts; the Honorable Jacob J. Lew, Director, Office of 

Management and Budget; and Grace Mastelli, Deputy Assistant Attorney 

General, Department of Justice. Copies will be available to others upon 

request.
B-282924

Page 16 GAO/AIMD/OGC-00-6 DC Courts Accounting for Escrow and Other Funds

If you have any questions, please contact me or Steven Haughton at 

(202) 512-4476. Key contributors to this assignment were Marcia 

Washington, Lou Fernheimer, Jeffrey Jacobson, and Richard Cambosos.

Gloria L. Jarmon

Director, Health, Education and Human Services

Accounting and Financial Management Issues
Page 17 GAO/AIMD/OGC-00-6 DC Courts Accounting for Escrow and Other Funds
Page 18 GAO/AIMD/OGC-00-6 DC Courts Accounting for Escrow and Other Funds

Appendix I

Comments From the District of Columbia 

Courts ApendxiI
Appendix I

Comments From the District of Columbia 

Courts

Page 19 GAO/AIMD/OGC-00-6 DC Courts Accounting for Escrow and Other Funds
Appendix I

Comments From the District of Columbia 

Courts

Page 20 GAO/AIMD/OGC-00-6 DC Courts Accounting for Escrow and Other Funds
Appendix I

Comments From the District of Columbia 

Courts

Page 21 GAO/AIMD/OGC-00-6 DC Courts Accounting for Escrow and Other Funds
Appendix I

Comments From the District of Columbia 

Courts

Page 22 GAO/AIMD/OGC-00-6 DC Courts Accounting for Escrow and Other Funds
Appendix I

Comments From the District of Columbia 

Courts

(916285) Letr Page 23 GAO/AIMD/OGC-00-6 DC Courts Accounting for Escrow and Other Funds
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