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