a

GAO

United States General Accounting Office

Report to the Congress

May 2002 FINANCIAL AUDIT

Capitol Preservation 

Fund’s Fiscal Years 

2001 and 2000 

Financial Statements

GAO-02-587
Page i GAO-02-587 Capitol Preservation Fund

Contents

Letter 1

Auditor’s Report 3

Opinion on Financial Statements 3

Consideration of Internal Control 3

Compliance with Laws and Regulations 4

Objectives, Scope, and Methodology 4

Commission Comments 6

Financial Statements 8

Statements of Financial Position 8

Statements of Activities 9

Statements of Cash Flows 10

Notes to Financial Statements 11
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Page 1 GAO-02-587 Capitol Preservation Fund

United States General Accounting Office

Washington, D.C. 20548

A

May 17, 2002 Letr

To the President of the Senate and the

Speaker of the House of Representatives

This report presents our opinion on the financial statements of the Capitol 

Preservation Fund (the Fund) for the fiscal years ended September 30, 

2001, and 2000. It also discusses our consideration of the Fund’s internal 

control and our tests of compliance with laws and regulations during fiscal 

year 2001. We conducted our audit pursuant to 40 U.S.C. 188a-3 and in 

accordance with U.S. generally accepted government auditing standards. 

We appreciate the cooperation and assistance of the Office of the Secretary 

of the Senate, the Office of the Clerk of the House of Representatives, and 

the staffs of the Architect of the Capitol and the Library of Congress 

provided during our audit. 

We are sending copies of this report to the members of the Capitol 

Preservation Commission; the Honorable Jeri Thomson, Secretary of the 

Senate; the Honorable Jeffrey T. Trandahl, Clerk of the House of 

Representatives; the Honorable Alan M. Hantman, Architect of the Capitol; 

the Honorable James H. Billington, Librarian of Congress; and other 

interested parties. 

If you or your staff have any questions concerning this report, please 

contact me at (202) 512-9406 or John Reilly, Assistant Director, at (202) 512-

9517. You can also reach us by e-mail at franzelj@gao.gov or 

reillyj@gao.gov. Key contributors to this report were Greg Ziombra, 

Kwabena Ansong, Robert Preshlock, and Bridget Skjoldal.

Jeanette M. Franzel

Acting Director

Financial Management and Assurance
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Page 3 GAO-02-587 Capitol Preservation Fund

United States General Accounting Office

Washington, D.C. 20548

A

To the Members of the Capitol Preservation Commission AudtoRsir’eport

We have audited the statements of financial position of the Capitol 

Preservation Fund (the Fund) as of September 30, 2001, and 2000, and the 

related statements of activities and statements of cash flows for the fiscal 

years then ended. We found

• the financial statements are presented fairly, in all material respects, in 

conformity with U.S. generally accepted accounting principles;

• no material weaknesses in internal control over financial reporting 

(including safeguarding assets) and compliance with laws and 

regulations; and

• no reportable noncompliance with the provisions of laws and 

regulations we tested.

The following sections provide additional detail about our conclusions and 

the scope of our audit.

Opinion on Financial 

Statements

The financial statements and accompanying notes present fairly, in all 

material respects, in conformity with U.S. generally accepted accounting 

principles, the Capitol Preservation Fund's financial position as of 

September 30, 2001, and 2000, and the results of its activities and its cash 

flows for the fiscal years then ended.

Consideration of 

Internal Control

In planning and performing our audit of the Fund’s fiscal year 2001 financial 

statements, we considered the Fund’s internal control over financial 

reporting and compliance.1

 We did this to determine our procedures for 

auditing the financial statements, not to express an opinion on internal 

control over financial reporting and compliance. Accordingly, we do not 

1

 The objectives of financial reporting control are to provide reasonable assurance that 

transactions are properly recorded, processed, and summarized to permit the preparation of 

the financial statements in conformity with U.S. generally accepted accounting principles, 

and assets are safeguarded against loss from unauthorized acquisition, use, or disposition. 

The objective of compliance control is to provide reasonable assurance that transactions 

are executed in accordance with laws governing the use of budget authority and other laws 

and regulations that could have a direct and material effect on the financial statements.
Page 4 GAO-02-587 Capitol Preservation Fund

express an opinion on internal control. However, for the controls we 

tested, we found no material weaknesses in internal controls over financial 

reporting (including safeguarding assets) and compliance. A material 

weakness is a condition in which the design or operation of internal control 

does not reduce to a relatively low level the risk that errors, fraud, or 

noncompliance in amounts that would be material in relation to the 

financial statements may occur and not be detected promptly by employees 

in the normal course of performing their duties. Our consideration of 

internal control would not necessarily disclose all material weaknesses.

Compliance with Laws 

and Regulations

Our tests for compliance with selected provisions of laws and regulations 

disclosed no instances of noncompliance that would be reportable under 

U.S. generally accepted government auditing standards. However, the 

objective of our audit was not to provide an opinion on overall compliance 

with laws and regulations. Accordingly, we do not express such an 

opinion. 

Objectives, Scope, and 

Methodology

The management of the Capitol Preservation Commission is responsible 

for

• preparing the Fund's financial statements in conformity with U.S. 

generally accepted accounting principles;

• establishing, maintaining, and assessing internal control to provide 

reasonable assurance that the objectives of internal control are met; and

• complying with applicable laws and regulations.

We are responsible for 

• obtaining reasonable assurance about whether the financial statements 

are presented fairly, in all material respects, in conformity with U.S. 

generally accepted accounting principles; 

• obtaining a sufficient understanding of internal control over financial 

reporting and compliance with laws and regulations to plan the audit; 

and
Page 5 GAO-02-587 Capitol Preservation Fund

• testing compliance with selected provisions of laws and regulations that 

have a direct and material effect on the financial statements.

In order to fulfill these responsibilities, we (1) examined, on a test basis, 

evidence supporting the amounts and disclosures in the financial 

statements and notes, (2) assessed the accounting principles used and 

significant estimates made by management, (3) evaluated the overall 

presentation of the financial statements and notes, (4) obtained an 

understanding of the design and operation of internal control related to 

financial reporting (including safeguarding assets) and compliance with 

laws and regulations and tested selected internal controls, and (5) tested 

compliance with selected provisions of the following laws and/or 

regulations.

• Capitol Preservation Commission and Capitol Preservation Fund 

enabling legislation, 40 U.S.C. 188a-188a-5.

• United States Capitol Visitor Center Commemorative Coin Act of 1999, 

Title II, Public Law 106-126.

We did not test all internal controls relevant to the operations of the Capitol 

Preservation Fund. We limited our consideration to internal control over 

financial reporting and compliance with laws and regulations for the 

purpose of planning our audit. Because of inherent limitations in internal 

control, misstatements due to error or fraud, losses, or noncompliance may 

nevertheless occur and not be detected. We also caution that projecting 

our consideration of internal control to future periods is subject to the risk 

that controls may become inadequate because of changes in conditions or 

that the degree of compliance with controls may deteriorate. In addition, 

we caution that our internal control testing may not be sufficient for other 

purposes.

We did not test compliance with all laws and regulations applicable to the 

Capitol Preservation Fund. We limited our tests of compliance to selected 

provisions of laws and regulations that we deemed applicable to the Fund’s 

financial statements for the fiscal year ended September 30, 2001. We 

caution that non-compliance may occur and not be detected by our tests 

and such testing may not be sufficient for other purposes.

We performed our work in accordance with U.S. generally accepted 

government auditing standards.
Page 6 GAO-02-587 Capitol Preservation Fund

Commission 

Comments

We provided a draft of our report to representatives of the Capitol 

Preservation Commission for their review and comment. The 

Commission’s representatives agreed with the contents of our report.

Jeanette M. Franzel

Acting Director

Financial Management and Assurance

March 27, 2002
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Page 8 GAO-02-587 Capitol Preservation Fund

Financial Statements

Statements of Financial Position

CAPITOL PRESERVATION FUND 

STATEMENTS OF FINANCIAL POSITION

2001 2000

Assets

Cash $ 1,059 $ 953

Investments, net (note 3) 35,809,577 29,087,824

Accrued interest receivable on investments 299,930 419,941

 Total assets $ 36,110,566 $ 29,508,718

Liabilities and net assets

Accounts payable $ 267,449 $ 0

 Total liabilities 267,449 0

Net assets (note 4)

Unrestricted 30,843,117 29,508,718

Temporarily restrictedr 5,000,000 0

 Total net assets 35,843,117 29,508,718

Total liabilities and net assets $ 36,110,566 $ 29,508,718

As of September 30

The accompanying notes are an integral part of these financial statements.
Financial Statements

Page 9 GAO-02-587 Capitol Preservation Fund

Statements of Activities

CAPITOL PRESERVATION FUND 

STATEMENTS OF ACTIVITIES

2001 2000

Changes in unrestricted net assets

Revenues (note 5)

Interest $ 1,601,848 $ 1,599,011

 Total unrestricted revenues 1,601,848 1,599,011

Program expenses (note 6)

Capitol Visitor Center 262,999 2,891

Art, furnishings and historical items 4,450 17,475

 Total program expenses 267,449 20,366

 Increase in unrestricted net assets 1,334,399 1,578,645

Changes in temporarily restricted net assets

Contributions (note 4) 5,000,000 0

 Increase in temporarily restricted net assets 5,000,000 0

Increase in net assets 6,334,399 1,578,645

Net assets at beginning of year 29,508,718 27,930,073

Net assets at end of year $ 35,843,117 $ 29,508,718

 The accompanying notes are an integral part of these financial statements.

For the Fiscal Years Ended September 30
Financial Statements

Page 10 GAO-02-587 Capitol Preservation Fund

Statements of Cash Flows

CAPITOL PRESERVATION FUND 

STATEMENTS OF CASH FLOWS

For the Fiscal Years Ended September 30

2001 2000

Cash flows from operating activities

 Temporarily restricted contributions received $ 5,000,000 $ 0

 Interest received 1,721,859 1,478,019

 Cash paid for expenses 0 (20,366)

 Net cash provided from operating activities 6,721,859 1,457,653

Cash flows from investing activities

 Purchases of Treasury securities (80,540,174) (59,512,753)

 Maturities of Treasury securities 73,818,421 58,051,981

 Net cash used by investing activities (6,721,753) (1,460,772)

Net increase (decrease) in cash 106 (3,119)

Cash at beginning of year 953 4,072

Cash at end of year $ 1,059 $ 953

Reconciliation of change in net assets to

 net cash provided from operating activities

Change in net assets $ 6,334,399 $ 1,578,645

Adjustments to reconcile change in net assets to

net cash provided from operating activities

Increase in accounts payable 267,449 0

Decrease (increase) in accrued interest 120,011 (120,992)

Total adjustments 387,460 (120,992)

Net cash provided from operating activities $ 6,721,859 $ 1,457,653

The accompanying notes are an integral part of these financial statements.
Financial Statements

Page 11 GAO-02-587 Capitol Preservation Fund

Notes to Financial Statements

1

CAPITOL PRESERVATION FUND

NOTES TO FINANCIAL STATEMENTS

NOTE 1: DESCRIPTION OF ENTITY

The Capitol Preservation Commission (the Commission) was established under Title VIII

of Public Law 100-696 in November 1988 for the purpose of providing for improvements

in, preservation of, and acquisitions (including works of fine art and other property for

display) for the United States Capitol and other locations under the control of the

Congress. In September 1999, the Capitol Preservation Commission was given the

responsibility, pursuant to Public Law 106-57, for approving the planning, engineering,

design, and construction milestones of the Capitol Visitor Center. The center is intended

to provide greater security for all persons working in or visiting the Capitol and to

enhance the educational experience of those who come to learn about the Capitol

building and the Congress. 

To finance improvement, preservation, and acquisition activities of the Commission,

Title VIII of Public Law 100-696 established the Capitol Preservation Fund (the Fund)

within the U.S. Treasury. In addition, Public Law 107-117 (January 2002) authorized the

Commission to transfer amounts from the Fund to the Architect of the Capitol for use in

planning, engineering, design, or construction of the Capitol Visitor Center. The Fund

consists of assets derived from deposits of charitable contributions, surcharge proceeds

from the secretary of the treasury arising from the sale of commemorative coins, and

interest earned on the invested portions of the Fund’s assets. Fund assets not needed to

finance current improvement, preservation, or acquisition projects are invested in

interest-bearing obligations of the United States.

Since its establishment, the Fund has been designated to receive coin surcharge

proceeds from three commemorative coin programs authorized by the Congress.

• Coin surcharge proceeds authorized by the Bicentennial of the United States

Congress Commemorative Coin Act and the Bicentennial of the United States

Capitol Commemorative Coin Act were received by the Fund without restriction

and remain available to the Commission for use in funding improvement,

preservation, and acquisition projects. All proceeds from these coin programs

have been received and deposited in the Fund.

• Coin surcharge proceeds authorized by the United States Capitol Visitor Center

Commemorative Coin Act of 1999, and received by the Fund will be restricted to

use in the construction, maintenance, and preservation of the Capitol Visitor

Center. The Capitol Visitor Center Commemorative Coin sales program, operated

by the U.S. Mint, ended in March 2002. 

In accordance with its rules, the Commission may fund or assist in the funding of

improvements to the Capitol Building and surrounding grounds if such improvements

are authorized, undertaken, and completed under the procedures established by the
Financial Statements

Page 12 GAO-02-587 Capitol Preservation Fund

2

Congress for such purposes. With respect to works of fine art and other property for

display, the Commission is authorized to expend $400,000 ($200,000 for the House of

Representatives and $200,000 for the Senate) for the purchase of art, furnishings, or

items of historical interest provided that such expenses are approved by a majority of the

members of the Commission from the body of Congress for which such purchases are

made. However, the Commission may not maintain any collection of fine or decorative

art, or other property, but may assist in the transfer of such items to a congressional

entity (such as the Senate Commission on Art, the House Fine Arts Board, or the Joint

Committee on the Library) or facilitate the disposal of items.

The Architect of the Capitol, the Senate Commission on Art, and the House of

Representatives Fine Arts Board are required by Public Law 100-696 (1988) to provide

staff support and assistance to the Commission. As necessary, the Architect of the

Capitol awards contracts and procures goods and services to complete projects

approved by the Commission, and ensures that the project-related goods and services

purchased from vendors are received. Similarly, the Library of Congress, pursuant to

Public Law 101-45, (1989) is required to provide financial management services for the

Commission. These services include coordinating activities with the Department of the

Treasury for the deposit, disbursement, investment, and management of the Capitol

Preservation Fund. In addition to these congressional entities, the secretary of the

Senate and the clerk of the House of Representatives, pursuant to Commission rules,

provide general administrative-type support and assistance.

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The Fund’s financial statements have been prepared on the accrual basis in accordance

with U.S. generally accepted accounting principles. They reflect the receipt and use of

the Fund’s assets to finance Commission-approved improvement, preservation, and

acquisition activities. The Fund’s investments are recorded at cost, net of discounts,

which approximates fair market value. The Fund’s investments are invested in short

term (3 and 6 month) interest-bearing Treasury obligations. Historically, Fund assets

have been used to fund specific improvement, preservation, and acquisition activities. 

The Commission’s assets have not been used to fund management or fundraising

activities. 

Once approved and funded by the Commission, completed improvement, preservation,

and acquisition projects are transferred to the Architect of the Capitol and/or other

congressional entities. Through their transfer, these assets become the accounting

responsibility of other congressional entities and are not considered assets of the Fund.

The Architect of the Capitol, the Library of Congress, and other congressional entities

are required by law to provide support services to the Commission (see note 1). The

costs of these mandated services, which are financed with appropriated funds of the

other entities, are not considered operating expenses of the Fund.
Financial Statements

Page 13 GAO-02-587 Capitol Preservation Fund

3

NOTE 3: INVESTMENTS, NET

Deposits to the Fund from contributions, coin surcharges, and interest on invested funds

that are not needed currently to finance improvement, preservation, and acquisition

activities are invested in interest-bearing obligations of the United States, which are

purchased from the U.S. Treasury at a discount. The Commission has directed the

Library of Congress to invest funds derived from contributions in 3-month Treasury

securities and funds derived from coin surcharges in 6-month Treasury securities. Due

to the short-term nature of the investments, the carrying values of investments

approximate their fair market values. The value of investments outstanding as of

September 30, 2001, and 2000, net of discounts was $35,809,577 and $29,087,824,

respectively. Annual investment rates ranged from 2.23 percent to 6.23 percent in fiscal

year 2001 and from 4.67 percent to 6.14 percent in fiscal year 2000.

 

 Outstanding Investments as of September 30

 

 2001 2000

Face value of investments $ 36,353,000 $ 29,952,000

Less: discounts (543,423) (864,176)

Investments, net of discounts $ 35,809,577 $ 29,087,824

NOTE 4: NET ASSETS

As of September 30, 2001, the net assets of the Fund consist of unrestricted and

temporarily restricted assets. To date, the Commission has not received permanently

restricted net assets. Permanently restricted net assets result from donor-imposed

restrictions stipulating that the assets be permanently maintained. 

• Unrestricted net assets represent assets available to the Commission to finance

current and future operations without donor-imposed restrictions. They arise

from the receipt of unrestricted contributions, the expiration of temporary

restrictions on assets, and interest earned on invested funds. Unrestricted net

assets totaled $30,843,117 as of September 30, 2001, and $29,508,718 as of

September 30, 2000. 

• Temporarily restricted net assets represent funds received by the Commission

with donor-imposed restrictions that, in some way, limit the Commission’s ability

to use the funds. By their nature, the restrictions may be with respect to either

time or intended use. When the restriction is satisfied, that is, when a stipulated

time restriction ends or the purpose of the restriction is accomplished,

temporarily restricted net assets are reclassified as unrestricted net assets and

reported in the statement of activities as net assets released from restrictions.

In fiscal year 2001, the Commission received a $5 million contribution from a
Financial Statements

Page 14 GAO-02-587 Capitol Preservation Fund

4

private source that was restricted for the purpose of aiding in the construction,

maintenance, and preservation of the Capitol Visitor Center. As planned, the

Capitol Visitor Center will be a facility, located under the East Plaza of the

Capitol, that is designed to enhance the experience of the visitors to the Capitol

through improved visitor orientation and related services, strengthened Capitol

security, and integration of the center’s design concept with the appropriate

improvements to the Capitol’s East Plaza. Temporarily restricted net assets

totaled $5,000,000 as of September 30, 2001. There were no temporarily restricted

net assets as of September 30, 2000.

Until restrictions are satisfied, temporarily restricted net assets are invested in

short-duration Treasury securities. At the Commission’s direction, interest earned

on these securities is considered to be unrestricted revenue. 

NOTE 5: REVENUES

Revenue earned from interest on United States Treasury obligations for fiscal years 2001

and 2000 was $1,601,848 and $1,599,011, respectively. All revenue earned was

unrestricted. 

NOTE 6: PROGRAM EXPENSES

A. CAPITOL VISITOR CENTER

Commission-approved expenses associated with the proposed Capitol Visitor Center

were as follows.

• Fiscal Year 2001--In October 2000, the Commission approved the expenditure of

up to $700,000 from the Fund for services related to the design and engineering of

a proposed tunnel connecting the Thomas Jefferson Building of the Library of

Congress to the proposed Capitol Visitor Center. In April and May 2001, the

Architect contracted, on behalf of the Commission, for design and engineering

services for this project totaling approximately $640,000. Through September 30,

2001, incurred expenses against the contracts totaled $262,999.

• Fiscal Year 2000—In June 2000, the Commission authorized the Architect of the

Capitol to purchase ceremonial shovels and a granite plaque costing $2,891 for use

in the Capitol Visitor Center groundbreaking ceremony.

B. ACQUISITION OF ART, FURNISHINGS, AND HISTORICAL ITEMS

Commission rules permit the limited use of funds to purchase items of art, furnishings,

or items of historical interest for each House of Congress (see note 1). 

• Fiscal Year 2001--Commission members approved the use of $4,450 in Fund assets
Financial Statements

Page 15 GAO-02-587 Capitol Preservation Fund

5

for the purchase of antique furnishings for display in Senate offices.

• Fiscal Year 2000—Commission members approved the use of $17,475 in Fund

assets for the purchase of antique furnishings for display in Senate offices and

artwork for future display in the U.S. Senate offices in the Capitol. 

 

(194089)
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