WORKING CAPITAL FUND
ANNUAL FINANCIAL STATEMENT
FISCAL YEAR 1996

 

 

Audit Report 97-30A, (9/97)

 

 

 

TABLE OF CONTENTS

 

OFFICE OF THE INSPECTOR GENERAL COMMENTARY AND SUMMARY

MANAGEMENT'S OVERVIEW

INDEPENDENT AUDITOR'S REPORT ON THE FINANCIAL STATEMENTS

INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL

INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE

PRINCIPAL FINANCIAL STATEMENTS

STATEMENT OF FINANCIAL POSITION

STATEMENT OF OPERATIONS AND CHANGES IN NET POSITION

NOTES TO THE FINANCIAL STATEMENTS

SUPPLEMENTAL FINANCIAL AND MANAGEMENT INFORMATION

REVENUE AND WORKYEARS (FTE) BY WCF ACTIVITY

SUMMARY OF NON-OPERATING CHANGES

PERFORMANCE MEASUREMENTS

DATA PROCESSING SERVICES

FINANCIAL MANAGEMENT SYSTEMS

PERSONNEL SERVICES DRUG-FREE WORKPLACE

APPENDIX I - JUSTICE MANAGEMENT DIVISION COMMENTS ON THE REPORT

APPENDIX II - AUDIT DIVISION ANALYSIS AND SUMMARY OF ACTIONS NECESSARY TO CLOSE THE REPORT

 

 

OFFICE OF THE INSPECTOR GENERAL
COMMENTARY AND SUMMARY

 

This audit report contains the Annual Financial Statement of the Working Capital Fund (WCF) for the fiscal year ended September 30, 1996. The report includes the WCF management's overview, principal financial statements and related notes, supplemental financial and management information, and the independent auditor's reports on the principal financial statements, internal control, and compliance with laws and regulations. The preparation of the Annual Financial Statement is the responsibility of the Justice Management Division (JMD). This audit was performed as part of the Department of Justice's (DOJ) effort to implement the Government Management Reform Act of 1994 (GMRA), which requires an annual financial statement audit of the DOJ beginning with FY 1996. The results of the annual financial statement audit of the WCF as presented in this report will be relied upon by Price Waterhouse LLP in its performance of the consolidated financial statement audit of the DOJ, which will be issued as a separate report by the Office of the Inspector General (OIG).

The OIG contracted with Brown & Company, Certified Public Accountants, to perform the audits of the WCF's FY 1996 and FY 1995 financial statements. The audits were conducted in accordance with generally accepted government auditing standards and Office of Management and Budget Bulletin No. 93-06, "Audit Requirements for Federal Financial Statements." The OIG performs an oversight role in the audit process and ensures compliance with the GMRA by monitoring the progress of the audit, reviewing supporting workpapers, coordinating the issuance of reports, and following up on findings and management letter issues.

As part of the DOJ-wide audit effort, Price Waterhouse LLP performed a general controls review of the Justice Data Centers, which process WCF's data. The results of this work were considered by Brown & Company in performing its audit of the WCF. Additional work was performed by Brown & Company at the WCF level, as considered necessary to complete the audit.

Reporting Entity

The WCF is a revolving fund authorized to finance, on a break-even basis, administrative services provided by the JMD to Offices, Boards, Divisions and Bureaus of the DOJ and to other Federal agencies. These services are generally commercial functions, such as data processing, publications, buildingservices, financial operations, personnel services, telecommunications, property management, and space management.

The WCF is also authorized to receive transfers of unobligated balances of appropriations from other DOJ components. These transfers may be used to fund the acquisition of capital equipment, develop and implement law enforcement or litigation related automated data processing systems, and improve and implement the DOJ's financial management and payroll/personnel systems. The Congress must be notified of the DOJ's intention to use these funds.

Audit Results

The audit resulted in an unqualified opinion on the principal financial statements. The independent auditor's report on internal control identified one material weakness concerning an unreconciled Treasury account, and its report on compliance with laws and regulations did not identify any instances of material noncompliance. Other conditions involving the internal control structure and its operations were noted by the independent auditor and will be communicated, under separate letter, to management.

Brown & Company also reviewed management's process for evaluating and reporting on internal controls and accounting systems as required by the Federal Managers' Financial Integrity Act (FMFIA), and compared the agency's most recent FMFIA reports with the evaluation it conducted of the WCF's internal control structure. The independent auditor was not contracted to perform control testing sufficient to enable the auditor to express an opinion on management's assertions about the effectiveness of the internal control structure as a whole or compliance with laws and regulations. Accordingly, the independent auditor did not express such opinions.

Financial and Other Operating Highlights

Total revenue for FY 1996 increased approximately 3 percent, to $543 million, while the excess of revenue over expenses decreased approximately 50 percent, to $13.1 million. The decrease was primarily due to significant increases in expenses related to Future Compensation Benefits; Travel and Transportation; Communications, Rent and Utilities; and Other Contractual Services.

During FY 1996, $115 million in unobligated balances were transferred into the WCF from other DOJ appropriations and $99 million was transferred out. The amounts transferred out included $65 million in rescissions, $26 million in authorized uses of transferred capital, and a net $8 million in transfers to other Departmental appropriations.


Management's Overview

Management's Overview

Management's Overview

Management's Overview

Management's Overview

Management's Overview

Management's Overview

Management's Overview

Management's Overview

Independent Auditor's Report on the Financial Statements

Independent Auditor's Report on the Financial Statements

Independent Auditor's Report on Internal Control

Independent Auditor's Report on Internal Control

Independent Auditor's Report on Internal Control

Independent Auditor's Report on Compliance

Statement of Financial Position As of September 30, 1996 and 1995 (in thousands of dollars)

Statement of Financial Position (Continued)

Statement of Operations and Changes in Net Position For the Fiscal Years Ended September 30, 1996 and 1995 (in thousands of dollars)

Notes to the Financial Statements

Notes to the Financial Statements

Notes to the Financial Statements

Notes to the Financial Statements

Notes to the Financial Statements

Notes to the Financial Statements

Notes to the Financial Statements

Notes to the Financial Statements

Notes to the Financial Statements

Notes to the Financial Statements

Notes to the Financial Statements

Notes to the Financial Statements

Schedule A - Revenue and Workyears (FTE) by WCF Activity For the Fiscal Years Ended September 30, 1996 and 1995 (in thousands of dollars)

Schedule B - Summary of Non-Operating Changes For the Fiscal Year Ended September 30, 1996 (in thousands of dollars)

Performance Measurements

DPS - Data Processing Services

DPS - Data Processing Services

DPS - Data Processing Services

DPS - Data Processing Services

FMS - Financial Management Systems

FMS - Financial Management Systems

FMS - Financial Management Systems

FMS - Financial Management Systems

FMS - Financial Management Systems

Personnel Services - Drug-Free Workplace

Personnel Services - Drug-Free Workplace

Personnel Services - Drug-Free Workplace

Appendix I - Justice Management Division Comments on the Report

Appendix I - Justice Management Division Comments on the Report

Appendix I - Justice Management Division Comments on the Report

Appendix I - Justice Management Division Comments on the Report

 

APPENDIX II

OFFICE OF THE INSPECTOR GENERAL, AUDIT DIVISION
ANALYSIS AND SUMMARY OF ACTIONS NECESSARY
TO CLOSE THE REPORT

Recommendation Number:

  1. Resolved. In order to close this recommendation, please provide a copy of the updated procedures for the performance and documentation of reconciliations between the TFS 6653 and the DMS General Ledger.
  2. Resolved. In order to close this recommendation, please provide a copy of the policy and procedure bulletin that assigns responsibility for identifying and reconciling accounts and resolving any differences between the DMS General Ledger and Treasury.

#####