CCI received both federal and nonfederal funding to support the  production of the 2012 through 2014 Memorial Day and Fourth of July  concerts. CCI received federal funding from NPS through a cooperative  agreement. As shown in figure 1, funding provided through the  cooperative agreement included funding that NPS received through an  interagency agreement with the Department of the Army (Army) and  funding from NPS’s own budget through the National Capital Area  Performing Arts Program. CCI obtained nonfederal funding through  corporate sponsorship agreements, grant agreements with the  Corporation for Public Broadcasting, and license agreements from the  Public Broadcasting Service (PBS). CCI also received funding from other  sources, such as interest revenue, but these sources represent a minor  portion of total funding. CCI Disbursed from $8.3 Million to $8.9 Million Each Year for the 2012 through 2014 Concerts

CCI disbursed from $8.3 million to $8.9 million each year to produce the  2012 through 2014 Memorial Day and Fourth of July concerts,  approximately 1.1 to 3.7 percent less than the annual funding received. These errors occurred, in part, because CCI’s Procurement and Accounts  Payable Policy has not been updated since November 2008 and does not  include all internal control activities to be performed when authorized  management may be out of the office and regular check authorization  procedures cannot be followed. Without incorporating all control activities over payment approvals into its  policy and procedures, CCI increases its risk that the control activities will  not be implemented consistently and that improper payments, fraud, and  abuse may not be prevented or detected. Recommendation for Executive Action

We recommend that CCI’s Chief Financial Officer update its existing  Procurement and Accounts Payable Policy to fully document CCI’s  management approval controls over payments made by check, including  exemptions to regular procedures. This should include approval  procedures to be followed during periods when only one authorized  manager is available to sign checks for payment. Nonetheless, CCI stated that its Board of  Directors will take appropriate action to address our recommendation. Appendix I: Objectives, Scope, and Methodology

Our objectives were to examine (1) how much funding, federal and  nonfederal, was received and used by Capital Concerts, Inc. (CCI) for the  2012 through 2014 Memorial Day and Fourth of July concerts and (2) to  what extent CCI’s recorded receipts and disbursements related to these  concerts were supported by adequate documentation, approved by  authorized management, and recorded in the appropriate year. The scope of our audit was limited to the receipts and disbursements of  CCI as the majority of funding received and disbursed to produce the  Memorial Day and Fourth of July concerts held on U.S. Capitol Grounds  rests with this organization. We obtained CCI  management’s concurrence with our classifications.
Why GAO Did This Study

CCI, a private nonprofit organization in the District of Columbia, has produced the annual Memorial Day and Fourth of July concerts held on the U.S. Capitol Grounds for over 25 years and over 35 years, respectively.
GAO was asked to audit all concerts hosted by CCI for the past 3 years. This report examines (1) how much funding, federal and nonfederal, was received and used by CCI for the 2012 though 2014 Memorial Day and Fourth of July concerts and (2) to what extent CCI's recorded receipts and disbursements related to these concerts were supported by adequate documentation, approved by authorized management, and recorded in the appropriate year. GAO performed data reliability procedures over CCI's 2012 through 2014 receipt and disbursement transactions, classified transactions by funding sources, obtained CCI management's concurrence with the classifications, and selected transactions for each year to test key controls.

What GAO Found

Capital Concerts, Inc. (CCI) received both federal and nonfederal funding to support the production of the Memorial Day and Fourth of July concerts held on the U.S. Capitol Grounds from 2012 through 2014. CCI received federal funding through a cooperative agreement with the Department of the Interior's National Park Service (NPS) that included funding that NPS received through an interagency agreement with the Department of the Army and funding from NPS's own budget through the National Capital Area Performing Arts Program. CCI obtained nonfederal funding through corporate sponsorship agreements, grant agreements with the Corporation for Public Broadcasting, and license agreements from the Public Broadcasting Service. CCI also received funding from other sources, such as interest revenue, but these transactions represent a minor portion of total funding.
CCI received funding for the 2012 through 2014 Memorial Day and Fourth of July concerts ranging from $8.5 million to $9.2 million each year. CCI disbursed from $8.3 million to $8.9 million each year to produce these concerts, approximately 1.1 to 3.7 percent less than the annual funding received.
Procurement and Accounts Payable Policy has not been updated since November 2008 and does not include all internal control activities over payment approvals. Without incorporating all control activities over payment approvals into its policy and procedures, CCI increases its risk that the control activities will not be implemented consistently and that improper payments, fraud, and abuse may not be prevented or detected.

What GAO Recommends

GAO recommends that CCI update its existing policy to fully document CCI's management approval controls over payments made by check, including exemptions to regular procedures. The update should include approval procedures to be followed during periods when only one authorized manager is available to sign checks for payment. In commenting on a draft of this report, CCI maintained that all disbursements were properly approved but GAO disagreed as noted in the report. CCI stated it will take appropriate action to address GAO's recommendation.