Smithsonian’s gift shop revenue to get closer look in 2011

Introduction

The Smithsonian Institution’s internal watchdog plans to take a closer look at how the world’s largest museum manages the money it generates from gift shops, magazines, books, and consumer product licensing deals.

In fiscal 2009, the museum’s retailing unit known as Smithsonian Enterprises (SE), earned about $26.9 million from $155 million in revenue. The latter represented about 13 percent of total Smithsonian operating revenue. Most of the rest of the institution’s $1 billion annual budget comes from Congress.

“Internal and external stakeholders have expressed concern about SE’s internal financial reporting operations, including skepticism over the reliability, timeliness, and transparency of accounting data,” the Smithsonian inspector general said in a new report listing a SE investigation among the watchdog’s priorities for fiscal 2011. “There is also a concern about internal financial policies and unclear roles and lines of authority, as well as high employee turnover in financial management.”

The new inspector general report said that while the retailing unit has received clean audit opinions from its outside auditors, the watchdog will make recommendations to improve the transparency of its financial management. Fiscal 2011 begins on Oct. 1.

In 2007, the Smithsonian’s retailing unit was rocked by controversy when its chief executive, who was paid more than $500,000 annually, resigned after an inspector general probe found he misused business credit cards and claimed undocumented expenses.

FAST FACT: Smithsonian Enterprises operates 23 museum gift shops, three Imax theaters, three flight simulators ($8 per ride), and an online store that sells products ranging from a brass letter opener inscribed with Charles Darwin’s signature ($67.50) to “tussie mussie” fresh flower bouquets ($34.99 to $74.99).

Other new reports released by the Government Accountability Office (GAO) or various federal Offices of Inspector General (OIG):

FINANCE

• Among lessons learned from the Barnes Banking Co. failure, which cost the FDIC insurance fund $266.3 million, is that bank examiners should attend a board of directors meeting when a bank’s financial condition rapidly changes (OIG)

ENVIRONMENT

• Federal fish, wildlife agencies should explain in writing why they oppose modifications sought by hydropower owners during relicensing (GAO)
• EPA and the state of Pennsylvania failed to collect groundwater samples from the Bruin Lagoon Superfund site for six years (OIG)
• Independent sampling of groundwater at the Wheeler Pit Superfund Site in Wisconsin confirmed previous measurements by EPA (OIG)

HEALTH CARE

• VA referred 4 percent of patients seeking medical care in Anchorage, Alaska, for specialty care in the lower 48 states in 2009 (OIG)

NATIONAL SECURITY

• Some officials at the U.S. embassy in Vientiane, Laos, gave the appearance of favoritism in hiring certain employees’ family members (OIG)
• State Dept. is addressing weak controls over personal property, but needs to take stronger measures on financial reporting and real property (OIG)

MISC.

• Internet protocol addresses used by EPA facilities in Cincinnati, Erlanger, Ky., Washington, D.C., and Atlanta have security vulnerabilities (OIG)
• Congressional Award Foundation, which promotes public service by young people, has “material weakness” in financial reporting controls (GAO)