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I® | U.S. ENVIRONMENTAL PROTECTION AGENCY
%%PR0^ OFFICE OF INSPECTOR GENERAL
Financial Management
Fiscal Years 2014 and 2013
Financial Statements for the
Pesticide Registration Fund
Report No. 16-F-0323
September 22, 2016
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Report Contributors: Paul Curtis
Robert Smith
Robert Hairston
Sheree James
Sabrina Jones
Mairim Lopez
Claire McWilliams
Guillermo Mejia
Cynthia Poteat
Lynda Taylor
Abbreviations
EPA U.S. Environmental Protection Agency
FMFIA Federal Managers' Financial Integrity Act
FY Fiscal Year
OIG Office of Inspector General
OMB Office of Management and Budget
PRIA Pesticide Registration Improvement Act
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September 22, 2016
* • U.S. Environmental Protection Agency 16-F-0323
w "z Office of Inspector General
® I
At a Glance
Why We Did This Review
The Pesticide Registration
Improvement Act (PRIA)
requires that we perform an
annual audit of the Pesticide
Registration Fund (known as
the PRIA Fund) financial
statements.
To expedite the registration
of certain pesticides,
Congress authorized the
U.S. Environmental Protection
Agency (EPA) to assess and
collect pesticide registration
fees. The fees collected are
deposited into the PRIA Fund.
The agency is required to
prepare financial statements
that present financial
information about the PRIA
Fund. PRIA also requires the
establishment of decision time
review periods for pesticide
registration actions, and
requires the Office of Inspector
General to perform an analysis
of the agency's compliance
with those review periods.
This report addresses the
following EPA goal or
cross-agency strategy:
• Embracing EPA as a high-
performing organization.
Send all inquiries to our public
affairs office at (202) 566-2391 or
visit www.epa.gov/oiq.
Fiscal Years 2014 and 2013 Financial
Statements for the Pesticide Registration Fund
Disclaimer of Opinion
We rendered a disclaimer of opinion on the
PRIA Fund financial statements for fiscal year
(FY) 2014, meaning that we were unable to
obtain sufficient evidence to determine if they
were fairly presented and free of material
misstatement. We had previously rendered an
unmodified, or clean, opinion on the EPA's
PRIA Fund financial statements for FY 2013,
meaning they were fairly presented and free of
material misstatement.
Due to the material
weakness in internal
controls noted, the agency
cannot provide reasonable
assurance that financial data
provided for the PRIA Fund
for FY 2014 accurately
reflect the agency's financial
activities and balances.
Internal Control Material Weakness Noted
We noted a material weakness in that the EPA cannot adequately support
$28 million of its FY 2014 PRIA Fund costs. The EPA's Office of Pesticide
Programs receives its funding from both fees paid by pesticide manufacturers
and amounts appropriated by the Congress. In FY 2014, the EPA allocated its
pesticide funding to use appropriated amounts, which would expire, and retained
funding received from fees. Therefore, significant payroll amounts paid from
appropriations were not charged directly to the PRIA Fund or other pesticide
programs. This resulted in the loss of the audit trail for reporting separate costs
and liabilities for the PRIA Fund and other pesticide programs.
Compliance With Applicable Laws and Regulations
We did not identify any instances of noncompliance that would result in a
material misstatement to the audited financial statements. For compliance with
decision time review periods, the agency was in substantial compliance with the
statutory decision time frames.
Agency Comments and Office of Inspector General Evaluation
The agency agreed with our finding and believes that the PeoplePlus payroll cost
allocation enhancement will allow forthe creation of an audit trail to capture
costs incurred by the PRIA Fund and by other appropriations that support
PRIA-related activities. The agency plans to go live with this new enhancement
by October 2017.
Listing of OIG reports.
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UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, D.C. 20460
OFFICE OF
INSPECTOR GENERAL
September 22, 2016
MEMORANDUM
SUBJECT: Fiscal Years 2014 and 2013 Financial Statements for the Pesticide Registration Fund
Report No. 16-F-0323
This is our report on the subject audit conducted by the Office of Inspector General (OIG) of the
U.S. Environmental Protection Agency (EPA). The project number for this audit was OA-FY15-0052.
This report contains findings that describe the problems the OIG has identified. This report represents
the opinion of the OIG and does not necessarily represent the final EPA position.
The offices with primary jurisdiction over the issues discussed in this report are the Office of Pesticide
Programs within the Office of Chemical Safety and Pollution Prevention, and the Office of the
Controller within the Office of the Chief Financial Officer.
Action Required
Because this report contains no recommendations, you are not required to respond to this report.
However, if you submit a response, it will be posted on the OIG's public website, along with our
memorandum commenting on your response. Your response should be provided as an Adobe PDF file
that complies with the accessibility requirements of Section 508 of the Rehabilitation Act of 1973, as
amended. The final response should not contain data that you do not want to be released to the public;
if your response contains such data, you should identify the data for redaction or removal along with
corresponding justification.
FROM: Paul C. Curtis, Director
Financial Statement Audits
TO:
Jim Jones, Assistant Administrator
Office of Chemical Safety and Pollution Prevention
David Bloom, Deputy Chief Financial Officer
Office of the Chief Financial Officer
We will post this report to our website at www.epa.gov/oig.
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Fiscal Years 2014 and 2013 Financial Statements
for the Pesticide Registration Fund
16-F-0323
Table of C
Inspector General's Report on the Fiscal Years 2014 and 2013
Financial Statements for the Pesticide Registration Fund
Report on the Financial Statements 1
Evaluation of Internal Controls 3
Tests of Compliance With Laws and Regulations 5
Management's Discussion and Analysis Section of the Financial Statements 5
Prior Audit Coverage 5
Agency Comments and Office of Inspector General Evaluation 6
Attachment
1 Material Weakness 7
EPA Cannot Adequately Support PRIA Fund Costs 8
Appendices
A Fiscal Years 2014 and 2013 Pesticide Registration Fund
Financial Statements
B Agency's Response to Draft Report
C Distribution
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Inspector General's Report on the
Fiscal Years 2014 and 2013 Financial Statements
for the Pesticide Registration Fund
The Administrator
U.S. Environmental Protection Agency
Report on the Financial Statements
We have audited the accompanying financial statements of the Pesticide
Registration Fund, known as the PRIA (Pesticide Registration Improvement Act)
Fund, which comprise the balance sheet as of September 30, 2014, and
September 30, 2013, and the related statements of net cost, changes in net
position, and statement of budgetary resources for the years then ended; and the
related notes to the financial statements.
Management's Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these
financial statements in accordance with accounting principles generally accepted
in the United States of America. This includes the design, implementation and
maintenance of internal controls relevant to the preparation and fair presentation
of financial statements that are free from material misstatement, whether due to
fraud or error.
Auditor's Responsibility
Our responsibility is to express an opinion on these financial statements based
upon our audit. We conducted our audit in accordance with generally accepted
government auditing standards; the standards applicable to financial statements
contained in Government Auditing Standards, issued by the Comptroller General
of the United States; and Office of Management and Budget (OMB) Bulletin
14-02, Audit Requirements for Federal Financial Statements. These standards
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatements.
An audit involves performing procedures to obtain audit evidence about the
amounts and disclosures in the financial statements. The procedures selected
depend on the auditor's judgment, including the assessment of the risks of
material misstatement of the financial statements, whether due to fraud or error. In
making those risk assessments, the auditor considers internal control relevant to
the entity's preparation and fair presentation of the financial statements in order to
design audit procedures that are appropriate in the circumstances. An audit also
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includes evaluating the appropriateness of accounting policies used and the
reasonableness of significant accounting estimates made by management, as well
as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate
to provide a basis for our audit opinion.
Basis for Disclaimer of Opinion
The U.S. Environmental Protection Agency (EPA) cannot adequately support
payroll liabilities on the PRIA Fund's Balance Sheet as of September 30, 2014, and
Income/Expense from other appropriations on the statements of PRIA's
Net Costs and Changes in Net Position of $27,729,000, which represents
approximately 63 percent of PRIA Fund costs for the year ended September 30,
2014.
In fiscal year (FY) 2014, the EPA allocated its pesticides appropriated funding to
pay for payroll costs. By paying significant payroll amounts from appropriations
versus from fees collected by the PRIA Fund, the EPA lost the audit trail to
properly support how much of the PRIA Fund payroll expenses were paid for by
appropriations. We were unable to satisfy ourselves by other audit procedures
concerning the adequacy of the amounts allocated, consistency of application, or
reasonableness of the payroll expenses between the PRIA Fund and the EPA's
other pesticide programs, including payroll accruals, as of and for the year ended
September 30, 2014. As a result, we were unable to determine whether any
adjustments were necessary relating to payroll and related accounts,
income/expense from other appropriations, and payroll liabilities.
Disclaimer of Opinion - FY 2014
Because of the matter described in the Basis for Disclaimer of Opinion section
above, we have not been able to obtain sufficient, appropriate audit evidence to
provide a basis for an audit opinion. Accordingly, we do not express an opinion
on the PRIA Fund's financial statements, and the related accompanying notes as
of and for the year ended September 30, 2014.
Unmodified Opinion - FY 2013
Our previous opinion on the PRIA Fund's 2013 financial statements, dated
July 10, 2015, expressed an unmodified opinion. In our opinion, the PRIA Fund's
financial statements, including the accompanying notes, presented fairly, in all
material respects, the assets, liabilities, net position, changes in net position, and
statement of budgetary resources as of and for the year ending September 30,
2013, in conformity with accounting principles generally accepted in the United
States of America.
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Evaluation of Internal Controls
As defined by OMB, internal control, as it relates to the financial statements, is a
process, effected by the agency's management and other personnel, that is
designed to provide reasonable assurance that the following objectives are met:
• Reliability of financial reporting—Transactions are properly recorded,
processed and summarized to permit the preparation of the financial
statements in accordance with generally accepted accounting principles,
and assets are safeguarded against loss from unauthorized acquisition, use
or disposition.
• Compliance with applicable laws, regulations and governmentwide
policies—Transactions are executed in accordance with laws governing
the use of budget authority, governmentwide policies, laws identified by
OMB, and other laws and regulations that could have a direct and material
effect on the financial statements.
Opinion on Internal Controls. In planning and performing our audit, we
considered the EPA's internal controls over financial reporting by obtaining an
understanding of the agency's internal controls, determining whether internal
controls had been placed in operation, assessing control risk, and performing tests
of controls. We did this as a basis for designing our auditing procedures for the
purpose of expressing an opinion on the financial statements and to comply with
OMB audit guidance, not to express an opinion on internal control. Accordingly,
we do not express an opinion on internal control over financial reporting nor on
management's assertion on internal controls included in Management's
Discussion and Analysis. We limited our internal control testing to those controls
necessary to achieve the objectives described in OMB Bulletin 14-02,
Audit Requirements for Federal Financial Statements. We did not test all internal
controls relevant to operating objectives as broadly defined by the Federal
Managers' Financial Integrity Act of 1982 (FMFIA), such as those controls
relevant to ensuring efficient operations.
Material Weakness and Significant Deficiencies. Our consideration of the
internal controls over financial reporting would not necessarily disclose all
matters in the internal control over financial reporting that might be significant
deficiencies. Under standards issued by the American Institute of Certified Public
Accountants, a significant deficiency is a deficiency, or combination of
deficiencies, that is less severe than a material weakness, yet important enough to
merit attention by those charged with governance. A material weakness is a
deficiency, or combination of deficiencies, such that there is a reasonable
possibility that a material misstatement of the entity's financial statements will
not be prevented, or detected and corrected in a timely manner. Because of
inherent limitations in internal controls, misstatements, losses or noncompliance
may nevertheless occur and not be detected. We noted a certain matter discussed
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below involving the internal control and its operation that we consider to be
material. This issue is summarized below and detailed in Attachment 1.
Material Weakness
The EPA cannot adequately support $28 million of its FY 2014 PRIA Fund costs.
OMB policy states that basic financial statements include a Balance Sheet and
Statement of Net Costs, and that the statement of net costs should include the net
costs of operations. The EPA's Office of Pesticide Programs receives its funding
from both fees paid by pesticide manufacturers and amounts appropriated by
Congress. In FY 2014, the EPA allocated its pesticide funding to use appropriated
amounts, which would expire, and retained funding received from fees. Therefore,
significant payroll amounts paid from appropriations were not charged directly to
the PRIA Fund or other pesticide programs. This resulted in the loss of the audit
trail for reporting separate costs and liabilities for the PRIA Fund and other
pesticide programs. The EPA developed an allocation methodology to distribute
costs funded by EPA appropriations back to the PRIA Fund, but the methodology
is based upon inconsistent charging of payroll costs between the PRIA Fund and
EPA appropriations. Because the EPA cannot adequately support total FY 2014
PRIA Fund costs and liabilities, and because we were unable to determine by other
audit procedures the adequacy of amounts allocated, consistency of application, or
reasonableness of net costs and liabilities, we disclaimed an opinion on the PRIA
Fund's FY 2014 financial statements. We consider the EPA's inability to support
PRIA Fund payroll costs a material weakness.
Comparison of EPA's FMFIA Report With Our Evaluation of
Internal Controls
OMB Bulletin 14-02, Audit Requirements for Federal Financial Statements,
requires us to compare material weaknesses disclosed during the audit with those
material weaknesses reported in the agency's FMFIA report that relate to the
financial statements, and identify material weaknesses disclosed by the audit that
were not reported in the agency's FMFIA report.
For financial statement, audit and financial reporting purposes, OMB defines
material weaknesses in internal control as a deficiency or combination of
deficiencies in internal control, such that there is a reasonable possibility that a
material misstatement of the financial statements will not be prevented or detected
and corrected on a timely basis. The agency did not report any material weakness
for FY 2014 impacting the PRIA Fund; however, we identified a material
weakness with the agency's financial statement preparation process. Details
concerning this material weakness are in Attachment 1. We previously reported
related issues in prior years. Those issues are listed in our prior audit coverage
section.
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Tests of Compliance With Laws and Regulations
As part of obtaining a reasonable assurance as to whether the agency's financial
statements are free of material misstatement, we tested compliance with those
laws and regulations that could either materially affect the PRIA Fund financial
statements or that we considered significant to the audit. The objective of our
audit, including our tests of compliance with applicable laws and regulations,
was not to provide an opinion on overall compliance with such provisions.
Accordingly, we do not express such an opinion. We did not identify any
instances of noncompliance that would result in a material misstatement to the
audited financial statements.
Management's Discussion and Analysis Section of the
Financial Statements
Our audit work related to the information presented in the Management's
Discussion and Analysis of the pesticide program included comparing the
overview information with information in the EPA's principal financial
statements for consistency. We did not identify any material inconsistencies
between the information presented in the two documents.
Prior Audit Coverage
During previous financial statement audits, we reported the following significant
deficiencies:
• The EPA materially overstated the expenses from other appropriations that
support the PRIA Fund. This occurred because the agency did not have an
effective system to accurately accumulate and report costs incurred by
other appropriations in support of PRIA Fund activities.
• The EPA materially understated the PRIA Fund payroll liabilities covered
by budgetary resources, as well as related payroll expense included in
gross costs. The agency's practice of transferring employees and expenses
and liabilities from the PRIA Fund to the Environmental Programs and
Management Fund for cash flow reasons led to the understatement.
• The EPA could not initially produce accurate, timely and complete
financial statements for the PRIA Fund. The agency was not preparing a
complete set of financial statements for FY 2013 because of its view that
such statements were not required. This delayed the preparation of the first
complete set of FY 2013 PRIA Fund financial statements until July 2014.
Because material errors in those statements and subsequent versions
delayed the audit, we considered this to be a material weakness.
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We previously reported the agency has taken action to correct these significant
deficiencies. However, we found continuing issues with payroll during our
FY 2014 audit that we believe are related to the findings previously reported.
Our findings on payroll issues are presented as a material weakness in this
report and is the reason for the disclaimer of opinion for the FY 2014
statements.
Agency Comments and Office of Inspector General Evaluation
The agency agreed with this finding and believes that the PeoplePlus payroll
cost allocation enhancement will allow for the creation of an audit trail to
capture costs incurred by the PRIA Fund and by other appropriations that
support PRIA-related activities. The agency plans to go live with this new
enhancement by October 2017.
Paul C. Curtis
Director, Financial Statement Audits
Office of Inspector General
U.S. Environmental Protection Agency
September 19, 2016
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Attachment 1
Material Weakness
Table of Contents
1 - EPA Cannot Adequately Support PRIA Fund Costs 8
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1 - EPA Cannot Adequately Support PRIA Fund Costs
The EPA cannot adequately support $28 million of its FY 2014 PRIA Fund costs. OMB policy states
that basic financial statements include a Balance Sheet and Statement of Net Costs, and that the
statement of net costs should include the net costs of operations. The EPA's Office of Pesticide
Programs receives its funding from both fees paid by pesticide manufacturers and amounts
appropriated by Congress. In FY 2014, the EPA allocated its pesticide funding to use appropriated
amounts, which would expire, and retained funding received from fees. Therefore, significant payroll
amounts paid from appropriations were not charged directly to the PRIA Fund or other pesticide
programs. This resulted in the loss of the audit trail for reporting separate costs and liabilities for the
PRIA Fund and other pesticide programs. The EPA developed an allocation methodology to
distribute costs funded by EPA appropriations back to the PRIA Fund, but the methodology is based
upon inconsistent charging of payroll costs between the PRIA Fund and EPA appropriations. Because
the EPA cannot adequately support total FY 2014 PRIA Fund costs and liabilities, and because we
were unable to determine by other audit procedures the adequacy of amounts allocated, consistency
of application, or reasonableness of net costs and liabilities, we disclaimed an opinion on the PRIA
Fund's FY 2014 financial statements. We consider the EPA's inability to support PRIA payroll costs
a material weakness.
PRIA requires that a set of financial statements be prepared to provide an annual accounting of
expenditures and collections for the PRIA program. OMB Circular A-136 requires that these
statements include a Statement of Net Costs, under which net costs of operations are reported.
The PRIA Fund's costs of operations are supported by several sources: maintenance fees,
registration and reregi strati on fees, and EPA appropriations. For FY 2014, the EPA reported total
PRIA Fund costs of $44 million, with about $28 million being supported by EPA appropriations.
In FY 2014, the EPA allocated its pesticide funding to use appropriated amounts that would
expire, and to retain funding received from fees. Significant payroll amounts were paid from
appropriations and not charged directly to the PRIA Fund. This resulted in the loss of the audit
trail for reporting separate PRIA Fund costs. The EPA adopted an allocation methodology to
determine the amount of appropriated dollars used to support the PRIA Fund and the EPA's
other pesticide programs. However, this methodology is based upon inconsistent and arbitrary
charging of the Office of Pesticide Programs' payroll costs between the PRIA Fund and the
EPA's other pesticide programs. The use of inconsistent and arbitrary charging makes the
allocation base unreliable, and the methodology cannot support $28 million in PRIA Fund
operations costs. We consider the inability of the EPA to support FY 2014 PRIA Fund costs to
be a material weakness.
We did not determine overall payroll costs for the EPA's pesticide programs to be inaccurate.
Our findings are limited to the specific allocation of appropriated amounts to cover payroll costs
of the EPA's pesticide programs and accounting for those costs at the program level. At the
program level (specifically, for PRIA funds), the agency could not provide adequate support, and
we could not audit the payroll costs for those funds paid for by appropriated amounts to opine on
the adequacy of such amounts.
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The EPA is aware that it needs to improve its accounting system to better account for PRIA Fund
costs. In FY 2015, the EPA indicated it made modifications to its accounting system, which
purportedly will address this material weakness. Therefore, we make no recommendations at this
time.
Agency Comments and Office of Inspector General Evaluation
The agency agreed with this finding and believes that the PeoplePlus payroll cost allocation
enhancement will allow for the creation of an audit trail to capture costs incurred by the PRIA
Fund and other appropriations that support PRIA-related activities. The agency plans to go live
with this new enhancement by October 2017. The Office of the Chief Financial Officer plans to
develop webinars and provide face-to-face training for all Office of Pesticide Programs
employees. The first phase is expected to consist of a methodology to track direct costs related to
PRIA activities. The second phase is expected to consist of a methodology to accumulate indirect
costs. The third phase is expected to consist of reporting actual hours worked on PRIA-related
activities, including direct and indirect costs. The fourth phase is expected to consist of
producing the financial statements.
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Appendix A
Fiscal Years 2014 and 2013 Pesticide Registration Fund
Financial Statements
Produced by the U.S. Environmental Protection Agency
Office of the Chief Financial Officer
Office of Financial Management
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TABLE OF CONTENTS
Management's Discussion and Analysis
Principal Financial Statements
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EPA's FY 2014 Annual PRIA Financial Statements
1
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Management's Discussion and Analysis
EPA's FY 2014 Annual PRIA Financial Statements
2
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Under the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA) and the Federal Food,
Drug, and Cosmetic Act (FFDCA), as amended by the Food Quality Protection Act (FQPA) of
1996, the EPA's Pesticide Program registers new pesticides and re-evaluates existing pesticides
to ensure that they can be used safely and that levels of residue in food and animal feed are safe
(there is a reasonable certainty of no harm). The agency must also conclude that, when used in
accordance with labeling and common practices, the product will not generally cause
unreasonable adverse effects on the environment.
The Pesticide Registration Improvement Act (PRIA) of 2003 established the Pesticide
Registration Fund. PRIA authorizes the collection of Registration service fees, which are
deposited into the Registration Fund and made available for obligation to the extent provided in
appropriation acts, and are available without fiscal year limitation.
Pesticide Registration
Under FIFRA and FFDCA pesticides must be registered by the EPA. The passage of PRIA
introduced deadlines for the agency to complete certain registration actions. EPA expedites the
registration of reduced-risk pesticide uses, which generally pose lower risks to people and the
environment. Accelerated pesticide reviews provide an incentive for industry to develop and
register lower risk pesticides, and the availability of these reduced-risk pesticides provides
alternatives to older, potentially more harmful products currently on the market.
PRIA prescribed the amount of the registration service fee and the corresponding decision
review time for various categories of registration action. The goal is to create a more predictable
evaluation process for affected pesticide registrants and couple the collection of individual fees
with specific decision-making periods. The legislation also promotes shorter decision review
periods for reduced-risk pesticide applications. PRIA 1, effective on March 23, 2004, authorized
collection of registration fees through FY 2008. The Pesticide Registration Improvement
Renewal Act (PRIA 2), effective on October 1, 2007, authorized collection of registration fees
through FY 2012. The Pesticide Registration Improvement Extension Act (PRIA 3) was
effective on October 1, 2012.
For a pending or a new application covered by PRIA to be deemed complete and subject to the
decision review periods, a registrant is required to pay the applicable fee or receive a waiver
from the fee. For most applications, the decision review period starts 21 days after submission of
the application, provided that the fee has been paid, fee waiver granted or in the case of a 75% or
50% fee waiver under PRIA 3, the waiver has been granted and the remaining fee has been paid.
The legislation provides fee waivers for certain categories of small businesses and minor uses1.
1 Minor use pesticides are those that produce relatively little revenue for their manufacturers, for a variety of
reasons. They may be registered for a seldom seen pest, or for a crop that is not grown by a large number of
producers. However, minor crops include some high revenue fruit, vegetable, and ornamental crops.
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EPA's FY 2014 Annual PRIA Financial Statements
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Exemption from the requirement to pay a registration service fee is continued under PRIA 3 for
applications solely associated with IR-4 petitions2. Applications from federal and state agencies
are also exempt from registration service fees. If the registrant requests a waiver or reduction of
the fee, the decision review period will begin when the agency grants such request or in the case
of small business fee waivers, no more than 60 days after receipt of the waiver application. If the
agency determines that a fee is required and the waiver is not granted, the decision review period
starts after the fee is collected.
Applications received prior to October 1, 2007, were covered by PRIA 1. Applications received
up to September 30, 2012, were covered by PRIA 23 and applications received on or after
October 1, 2012, are covered by PRIA 3. PRIA 3 contains the same audit provision as PRIA 2.
PRIA 3 includes new authority to reject an application if it fails a preliminary technical screen.
PRIA 3 also increases the fee categories or types of applications covered by PRIA from 140 to
189 and maintains set-asides to support worker protection and applicator training activities as
well as IPM grants at levels comparable to PRIA 2.
Enforcement and Compliance Assurance Program Description
The Pesticide Enforcement and Compliance Assurance Program focuses on pesticide product
and user compliance. These include problems relating to pesticide worker safety, certification
and training of applicators, ineffective antimicrobial products, food safety, adverse effects, risks
of pesticides to endangered species, pesticide containers and containment facilities, and e-
commerce and misuse. The enforcement and compliance assurance program provides
compliance assistance to the regulated community through its National Agriculture Compliance
Assistance Center, seminars, guidance documents, brochures, and other forms of communication
to ensure knowledge of and compliance with environmental laws.
EPA's grant support to state and tribal pesticide programs emphasizes its commitment to
maintaining a strong compliance and enforcement presence. Agency FIFRA Cooperative
Agreement priorities for FY 2015 - FY 2017 include the enforcement of worker protection
standards and pesticide applicator certification; compliance monitoring and enforcement
activities related to the pesticide container and containment rules, the revised soil fumigant
labels, compliance of supplemental distributor products, contact manufacturing and program
performance reporting. Core program activities include inspections of producing establishments;
2 The IR-4 (Interregional Research Project No.4) program is involved in making sure that pesticides are registered
for use on minor crops. IR-4 helps by conducting research on minor use pesticides, pesticides that would not
otherwise be profitable to manufacture.
3 Out of 4,015 actions completed during the first two years of PRIA 3 (FY'13 & FY'14), approximately 92.1% were
completed on or before the PRIA 3 due date.
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EPA's FY 2014 Annual PRIA Financial Statements
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dealers/distributors/retailers; e-commerce; imports and exports, and pesticide misuse.
Additionally, through the Cooperative Agreements we support inspector training and training for
state/tribal senior managers, scientists, and supervisors.
Highlights and Accomplishments
Registration Financial Perspective
During FY 2014, the Agency's obligations charged against the PRIA Fund for the cost of
registration were $16.0 million and 70.1 work-years. Of this amount, the Office of Pesticide
Programs (OPP) obligated $9.8 million in personnel compensation and benefits.
Appropriated funds are used in addition to Registration funds. In FY 2014, the Enacted
Operating Plan included approximately $27.7 million in appropriated funds for registration
activities. The unobligated balance in the Fund at the end of FY 2014 was $12.5 million.
The Fund has two types of receipts: fee collections and interest earned on investments. Of the
$16.6 million in FY 2014 net receipts, more than 99.9% were fee collections.
Registration Program Performance Measures
The following measures support the program's strategic goals of Healthy Communities and
Ecosystems as contained in the FY 2014 President's budget.
Measure 1: Number of new active ingredients registered.
Results: In FY 2014 EPA registered 22 new active ingredients, of which 16 are biopesticides, 1
is an antimicrobial pesticide, and 5 are conventional pesticides. In addition, EPA approved
import tolerances for 2 active ingredients. This measure includes both reduced-risk and non-
reduced-risk pesticides.
Measure 2: Progress in Registering Reduced-risk Pesticides.
Results: In FY 2014, EPA registered 1 conventional reduced-risk pesticide and 16 reduced-risk
biopesticides, giving us a total for the year of 17. Biological pesticides are derivedfrom such
natural materials as animals, plants, bacteria, and certain minerals. They are usually less toxic
and are typically considered safer pesticides than the traditional conventional chemicals;
therefore, the 16 biopesticide new active ingredients are counted as reduced-risk pesticides.
Conventional "reduced risk" pesticides have one or more of the following advantages over
currently registered pesticides: low impact on human health, low toxicity to non-target
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EPA's FY 2014 Annual PRIA Financial Statements
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organisms, low potential for groundwater contamination, lower use rates, low pest resistance
potential, and compatibility with integrated pest management strategies.
Measure 3: Number of New Food Uses Registered.
Results: EPA registered 185 new food uses for previously registered active ingredients. Of
these new uses, 169 food uses were for conventional pesticides, 14 were for antimicrobial
pesticides, and 2 were for biopesticides.
Measure 4: Progress in Registering Reduced-risk New Uses.
Results: Included in the new uses registered are 15 reduced-risk uses associated with 4
conventional pesticides and 1 was a biopesticide new use.
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EPA's FY 2014 Annual PRIA Financial Statements
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PRINCIPAL
FINANCIAL STATEMENTS
EPA's FY 2014 Annual PRIA Financial Statements
7
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PRINCIPAL FINANCIAL STATEMENTS
Financial Statements
Balance Sheet 9
Statement of Net Cost 10
Statement of Changes in Net Position 11
Statement of Budgetary Resources 12
Notes to Financial Statements
Note 1. Summary of Significant Accounting Policies 13
Note 2. Fund Balance with
Treasury 17
Note 3. General Property, Plant and Equipment 17
Note 4. Other Liabilities 17
Note 5. Payroll and Benefits Payable, Non-
Federal 18
Note 6. Income and Expenses from Other Appropriations 18
Note 7. Exchange Revenues, Statement of Net Cost 20
Note 8. Intragovernmental Costs and Exchange Revenue 20
Note 9. Reconciliation of Net Cost of Operations to Budget (formerly the
Statement of Financing) 21
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EPA's FY 2014 Annual PRIA Financial Statements
8
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United States Environmental Protection Agency
PRIA
Balance Sheet
As of September 30, 2014 and 2013
(Dollars in Thousands)
FY 2014 FY 2013
ASSETS
Intragovernmental:
Fund Balance With Treasury (Note 2)
$ 18,667
18,243
Total Intragovernmental
18,667
18,243
Property, Plant & Equipment, Net (Note 3)
2,205
2,248
Total Assets
20,872
20,491
Stewardship PP&E
LIABILITIES
Intragovernmental:
Accounts Payable and Accrued Liabilities
54
52
Other (Note 4)
135
56
Total Intragovernmental
189
108
Accounts Payable & Accrued Liabilities
645
442
Payroll & Benefits Payable (Note 5)
850
1,078
Other (Note 4)
17,307
17,461
Total Liabilities
18,991
19,089
NET POSITION
Cumulative Results of Operations
1,881
1,402
Total Net Position
1,881
1,402
Total Liabilities and Net Position
$ 20,872
20,491
The accompanying footnotes are an integral part of these financial statements
EPA's FY 2014 Annual PRIA Financial Statements
16-F-0323 9
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United States Environmental Protection Agency
PRIA
Statement of Net Cost
For the Fiscal Years Ending September 30, 2014 and 2013
(Dollars in Thousands)
FY 2014
FY 2013
COSTS
Gross Costs (Note 8) !
S 16,540
8,985
Expenses from Other Appropriations (Note 6)
27,729
31,359
Total Costs
44,269
40,344
Less:
Earned Revenue (Note 7 and 8)
18,754
9,389
NET COST OF OPERATIONS (Note 8 and 9) 1
$ 25,515
30,955
The accompanying footnotes are an integral part of these financial statements
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EPA's FY 2014 Annual PRIA Financial Statements
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United States Environmental Protection Agency
PRIA
Statement of Changes in Net Position
For the Fiscal Years Ending September 30, 2014 and 2013
(Dollars in Thousands)
FY 2014
FY 2013
Cumulative Results of Operations:
Net Position - Beginning of Period $
1,402
973
Beginning Balances, as Adjusted
1,402
973
Budgetary Financing Sources:
Nonexchange Revenue - Securities Investment
Nonexchange Revenue - Other
Transfers In/Out
Income from Other Appropriations (Note 6)
1
(1,926)
162
27,729
2
(12)
31,359
Total Budgetary Financing Sources
25,967
31,349
Other Financing Sources (Non-Exchange)
Imputed Financing Sources
28
35
Total Other Financing Sources
28
35
Net Cost of Operations
(25,515)
(30,955)
Net Change
479
429
Cumulative Results of Operations $ 1,881 1,402
The accompanying footnotes are an integral part of these financial statements
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EPA's FY 2014 Annual PRIA Financial Statements
11
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As of September 30, 2014 and 2013
PRIA
Statement of Budgetary Resources
For the Fiscal Years Ending September 30,2014 and 2013
(Dollars in Thousands)
FY 2014 FY 2013
BUDGETARY RESOURCES
Unobligated balance, brought forward, October 1:
$ 11,719
6,756
Unobligated Balance Brought Forward, October 1, as adjusted
11,719
6,756
Recoveries of prior year unpaid obligations
15
22
Unobligated balance from prior year budget authority, net
11,734
6,778
Appropriations (discretionary and mandatory)
16,817
14,795
Total Budgetary Resources
28,551
21,573
STATUS OF BUDGETARY RESOURCES
Obligations Incurred 16,041 9,854
Unobligated Balance, end of year:
Apportioned 273 11,184
Unapportioned 12,237 535
Total Unobligated balance, end of period 12,510 11,719
Total Status of Budgetary Resources 28,551 21,573
CHANGE IN OBLIGATED BALANCE
Unpaid Obligations:
Unpaid obligations, brought forward, October 1 (gross) 5,723 5,644
Obligated balance, start of year (net), before adjustments 5,723 5,644
Obligated balance, start of year (net), as adjusted 5,723 5,644
Obligations incurred, net 16,041 9,854
Outlays (gross) (16,411) (9,753)
Recoveries of prior year unpaid obligations (15) (22)
Obligated balance, end of period
Unpaid obligations, end of year (gross) 5,338 5,723
Obligated balance, end of period (net) 5,338 5,723
BUDGET AUTHORITY AND OUTLAYS, NET:
Budget authority, gross (discretionary and mandatory) 16,817 14,795
Budget Authority, net (discretionary and mandatory) 16,817 14,795
Outlays, gross (discretionary and mandatory) 16,411 9,753
Outlays, net (discretionary and mandatory) 16,411 9,753
Distributed offsetting receipts (16,674) (15,563)
Agency outlays, net (discretionary and mandatory $ (263) (5,810)
The accompanying footnotes are an integral part of these financial statements
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EPA's FY 2014 Annual PRIA Financial Statements
12
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Environmental Protection Agency
PRIA
Notes to Financial Statements
(Dollars in Thousands)
Note 1. Summary of Significant Accounting Policies
A. Reporting Entity
The U.S. Environmental Protection Agency (EPA or Agency) was created in 1970 by executive
reorganization from various components of other Federal agencies in order to better marshal and
coordinate federal pollution control efforts. The Agency is generally organized around the media
and substances it regulates — air, water, land, hazardous waste, pesticides and toxic substances.
The Pesticide Registration Fund (PRIA) is authorized under the Pesticide Registration
Improvement Act of 2003 (which amended the Federal Insecticide, Fungicide, and Rodenticide
Act (FIFRA)), and became effective on March 23, 2004. This Act authorizes the EPA to assess
and collect pesticide registration service fees on applications submitted to register pesticides
covered by this Act, as well as assess and collect fees to register new active ingredients not listed
in the Registration Division 2003 Work Plan of the Office of Pesticide Programs. The Pesticide
Registration Improvement Renewal Act (commonly referred to as PRIA II) extended the
authority to collect pesticide registration service fees through FY 2012. PRIA II became
effective October 1, 2007. PRIA II was reauthorized with the passage of the Pesticide
Registration Improvement Extension Act (referred to as PRIA III) on September 28, 2012 and
became effective 2 days later on October 1, 2012. The PRIA Fund is accounted for under
Treasury symbol number 68X5374.
The PRIA fund may charge some administrative costs directly to the fund and charge the
remainder of the administrative costs to Agency-wide appropriations. Costs funded by Agency-
wide appropriations for FYs 2014 and 2013 were $27,729 thousand and $31,359 thousand,
respectively. This amount was included as Income from Other Appropriations on the Statement
of Changes in Net Position and as Expenses from Other Appropriations on the Statement of Net
Cost for FYs 2014 and 2013. Costs for FY 2014 reflect a change in accounting principles to full
cost, as explained in Paragraph N below.
B. Basis of Presentation
These financial statements have been prepared to report the financial position and results of
operations of the EPA for the Pesticide Registration Fund (PRIA) as required by the Chief
Financial Officers Act of 1990 and the Pesticide Registration Improvement Act (PRIA) of 2003.
In the prior years, pesticide registration was included in the FIFRA financial statements. The
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EPA's FY 2014 Annual PRIA Financial Statements
13
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reports have been prepared from the books and records of the EPA in accordance with Office of
Management and Budget (OMB) Circular A-136 Financial Reporting Requirements, and the
EPA's accounting policies which are summarized in this note. These statements are therefore
different from the financial reports also prepared by the EPA pursuant to OMB directives that are
used to monitor and control the EPA's use of budgetary resources. The balances in these reports
have been updated from the EPA consolidated financial statements to reflect the use of FY 2014
cost factors for calculating imputed costs for Federal civilian benefits programs. These updates
impact the Balance Sheet, Statement of Net Cost, and Statement of Changes in Net Position.
C. Budgets and Budgetary Accounting
Funding for PRIA is provided by fees collected from industry to offset costs incurred by EPA in
carrying out these programs. Each year the EPA submits an apportionment request to OMB
based on the anticipated collections of industry fees.
D. Basis of Accounting
Generally Accepted Accounting Principles (GAAP) for Federal entities is the standard
prescribed by the Federal Accounting Standards Advisory Board (FASAB), which is the official
standard setting body for the federal government. The financial statements are prepared in
accordance with GAAP for federal entities.
Transactions are recorded on an accrual accounting basis and a budgetary basis. Under the
accrual method, revenues are recognized when earned and expenses are recognized when a
liability is incurred, without regard to receipt or payment of cash. Budgetary accounting
facilitates compliance with legal constraints and controls over the use of Federal funds. All
interfund balances and transactions have been eliminated.
E. Revenues and Other Financing Sources
For FYs 2014 and 2013, PRIA received funding from fees collected from registrants requesting
pesticide registrations. For FYs 2014 and 2013, revenues were recognized from fee collections
to the extent that expenses are incurred during the fiscal year.
F. Funds with the Treasury
The PRIA fund deposits receipts and processes disbursements through its operating account
maintained at the U.S. Department of the Treasury.
G. Investments in U. S. Government Securities
Investments in U. S. government securities are maintained by Treasury and are reported at
amortized cost net of unamortized discounts. Discounts are amortized over the term of the
16-F-0323
EPA's FY 2014 Annual PRIA Financial Statements
14
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investments and reported as interest income. PRIA holds the investments to maturity, unless
needed to finance operations of the fund. No provision is made for unrealized gains or losses on
these securities because, in the majority of cases, they are held to maturity.
H. General Property, Plant and Equipment
Purchases of the EPA-held personal equipment are capitalized if the equipment is valued at $25
thousand or more and has an estimated useful life of at least two years. Depreciation is taken on
a basic straight-line method over the specific asset's useful life, ranging from two to 15 years.
The EPA shows property, plant and equipment at net of depreciation on its audited financial
statements.
All funds (except for the Working Capital Fund) capitalize software if those investments are
considered Capital Planning and Investment Control (CPIC) or CPIC Lite systems with the
provisions of SFFAS No. 10, "Accounting for Internal Use Software." Once software enters the
production life cycle phase, it is depreciated using the straight-line method over the specific
asset's useful life ranging from two to 5 years.
I. Liabilities
Liabilities represent the amount of monies or other resources that are likely to be paid by the
Agency as the result of an Agency transaction or event that has already occurred and can be
reasonably estimated. However, no liability can be paid by the Agency without an appropriation
or other collections. Liabilities for which an appropriation has not been enacted are classified as
unfunded liabilities and there is no certainty that the appropriations will be enacted. For PRIA,
liabilities are liquidated from fee receipts, since PRIA receives no appropriation. Liabilities of
the Agency arising from anything other than contracts can be abrogated by the Government
acting in its sovereign capacity.
J. Accrued Unfunded Annual Leave
Annual, sick and other leave is expensed as taken during the fiscal year. Sick leave earned but
not taken is not accrued as a liability. Annual leave earned but not taken as of the end of the
fiscal year is accrued as an unfunded liability. Accrued unfunded annual leave is included in the
Balance Sheet as a component of "Payroll and Benefits Payable."
K. Retirement Plan
There are two primary retirement systems for Federal employees. Employees hired prior to
January 1, 1987, may participate in the Civil Service Retirement System (CSRS). On January 1,
1984, the Federal Employees Retirement System (FERS) went into effect pursuant to Public Law
99-335. Most employees hired after December 31, 1983, are automatically covered by FERS
and Social Security. Employees hired prior to January 1, 1984, elected to either join FERS and
16-F-0323
EPA's FY 2014 Annual PRIA Financial Statements
15
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Social Security or remain in CSRS. A primary feature of FERS is that it offers a savings plan to
which the Agency automatically contributes one percent of pay and matches any employee
contributions up to an additional four percent of pay. The Agency also contributes the
employer's matching share for Social Security.
With the issuance of SFFAS No. 5, "Accounting for Liabilities of the Federal Government,"
accounting and reporting standards were established for liabilities relating to the federal
employee benefit programs (Retirement, Health Benefits, and Life Insurance). SFFAS No. 5
requires that the employing agencies recognize the cost of pensions and other retirement benefits
during their employees' active years of service. SFFAS No. 5 requires that the Office of
Personnel Management (OPM), as administrator of the CSRS and FERS, the Federal Employees
Health Benefits Program, and the Federal Employees Group Life Insurance Program, provide
federal agencies with the actuarial cost factors to compute the liability for each program.
L. Offsetting Receipts
Beginning in FY 2007 OMB Circular A-13 6, Financial Reporting Requirements, requires that
the amount of distributed offsetting receipts reported in the Statement of Budgetary Resources
(SBR) should equal the amount recorded as offsetting receipts by the Department of the Treasury
(Treasury). Pesticide Registration Fees collected under PRIA are considered to be offsetting
receipts by Treasury.
M. Use of Estimates
The preparation of financial statements requires management to make certain estimates and
assumptions that affect the reported amounts of assets and liabilities and the reported amounts of
revenue and expenses during the reporting period. Actual results could differ from those
estimates.
N. Prior Period Adjustments and Restatements
Prior period adjustments, if any, are made in accordance with SFFAS No. 21, "Reporting Corrections of
Errors and Changes in Accounting Principles." Specifically, prior period adjustments will only be made
for material prior period errors to: (1) the current period financial statements, and (2) the prior period
financial statements presented for comparison. Adjustments related to changes in accounting principles
will only be made to the current period financial statements, but not to prior period financial statements
presented for comparison.
In fiscal year 2014, EPA elected to change an accounting principle and use the full cost of expenses from
other appropriations in accordance with SFFAS No. 4, "Managerial Costs Accounting Standards and
Concepts". See Note 6 for additional information.
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EPA's FY 2014 Annual PRIA Financial Statements
16
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Note 2. Fund Balance with Treasury
FY 2014 FY 2013
Revolving Funds: Entity Assets $ 18,667 $ 18,243
Note 3. General Property, Plant and Equipment
General property, plant and equipment consists of the EPA-Held personal property, software,
and software in development.
As of September 30, 2014 and 2013, General Property, Plant and Equipment consist of the
following:
FY 2014 FY 2013
Acquisition
Accumulated
Net Book
Acquisition
Accumulated
Net Book
Value
Depreciation
Value
Value
Depreciation
Value
EPA-Held Equipment
$ 411
(372)
39
411
(339)
72
Software
6,019
(3,853)
2,166
4,702
(2,526)
2,176
Total
$ 6,430
(4,225)
2,205
5,113
(2,865)
2,248
Note 4. Other Liabilities
For FYs 2014 and 2013, Payroll and Benefits Payable, non-federal, are presented on a separate
line of the Balance Sheet and in a separate footnote (see Note 6).
FY 2014 FY 2013
Other Intragoveramental Liabilities -
Covered by Budgetary Resources
Employer Contributions - Payroll $
135
56
Total
135
56
Other Non-Federal Liabilities - Covered
by Budgetary Resources
Advances from Non-Federal Entities
17,307
17,461
Total $
17,307
17,461
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EPA's FY 2014 Annual PRIA Financial Statements
17
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Note 5. Payroll and Benefits Payable, Non-Federal:
Covered by Budgetary Resources
Accrued Payroll Payable to Employees
Withholdings Payable
Thrift Savings Plan Benefits Payable
Total
Not Covered by Budgetary Resources
Unfunded Annual Leave
Total
FY 2014
FY 2013
$ 663
397
61
46
30
17
754
460
96
618
$ 96 618
At various periods throughout FY 2014 and FY 2013 employees with their associated payroll
costs were transferred from PRIA to the Environmental Programs and Management (EPM)
appropriation. (See graph in Note 6 below showing trend of hours charged per month to the
PRIA fund for FYs 2014 and 2013.) These employees were transferred in order to keep PRIA's
obligations and disbursements within budgetary limits.
This process has led to variations between the year-end liabilities of FYs 2014 and 2013. The
liabilities covered by budgetary resources (both intragovernmental and non-Federal) represent
unpaid payroll and benefits at year-end. For FY 2014 Pay Period 26, twenty employees were
charging a portion of their salary and benefits to PRIA. As of September 30, 2014, the liabilities
were $135 thousand and $734 thousand for employer contributions and accrued funded payroll
and benefits as compared to FY 2013 's balances of $56 thousand and $460 thousand,
respectively.
In contrast, the unfunded annual leave liability is a longer term liability than the funded
liabilities. At various periods throughout FY 2014 and FY 2013, approximately 207 and 56
employees, respectively, in total have been under PRIA's accountability. As of September 30,
2014 and 2013 liability balances for unfunded annual leave were accrued to cover these
employees for a total of $96 thousand and $618 thousand, respectively.
Note 6. Income and Expenses from Other Appropriations:
The Statement of Net Cost reports program costs that include the full costs of the program
outputs and consist of the direct costs and all other costs that can be directly traced, assigned on a
cause and effect basis, or reasonably allocated to program outputs.
During FYs 2014 and 2013, the EPA had two appropriations which funded a variety of
programmatic and non-programmatic activities across the Agency, subject to statutory
16-F-0323
EPA's FY 2014 Annual PRIA Financial Statements
18
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requirements. The EPM appropriation was created to fund personnel compensation and benefits,
travel, procurement, and contract activities. Transfers of employees from PRIA to EPM at
various times during FYs 2014 and 2013 (see Note 6 above) resulted in an increase in payroll
expenses in EPM, and these costs financed by EPM are reflected as an increase in the Expenses
from Other Appropriations on the Statement of Net Cost. The increased financing from EPM is
reported on the Statement of Changes in Net Position as Income from Other Appropriations.
In terms of hours charged to PRIA each month, the transfers of employees and their associated
costs during FYs 2014 and 2013 are shown below. Note that a decrease in hours charged to
PRIA normally signifies an increase in EPM's payroll costs, and vice versa.
PRIA - Employee Hours
PAY PER ODS
Hours-2014 Hours - 2013
The EPM costs related to PRIA are allocated based on specific EPM program codes which have
been designated for Pesticide registration activities. As illustrated below, there is no impact on
PRIA's Statement of Changes in Net Position.
Income from Other Expenses from Other Net
Appropriations Appropriations Effect
FY 2014 $ 27,729 27,729
FY 2013 $ 31,359 31,359
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EPA's FY 2014 Annual PRIA Financial Statements
19
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Note 7. Exchange Revenues, Statement of Net Cost
For FYs 2014 and 2013, the exchange revenues reported on the Statement of Net Cost consists of
non-Federal amounts.
Note 8. Intragovernmental Costs and Exchange Revenue
COSTS: FY 2014 FY 2013
Intragovernmental $ 3,256 1,440
With the Public 13,284 7,545
Expenses from Other Appropriations 27,729 31,359
Total Costs 44,269 40,344
REVENUE
With the Public 18,754 9,389
Total Revenue 18,754 9,389
NET COST OF OPERATIONS $ 25,515 30,955
Intragovernmental costs relate to the source of the goods or services not the classification of the
related revenue.
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EPA's FY 2014 Annual PRIA Financial Statements
20
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Note 9. Reconciliation of Net Cost of Operations to Budget (formerly the Statement of
Financing)
FY 2014
FY 2013
RESOURCES USED TO FINANCE ACTIVITIES:
Budgetary Resources Obligated
Obligations Incurred 3
Less: Spending Authority from Offsetting Collections and Recoveries
Obligations, Net of Offsetting Collections
Less: Offsetting Receipts
Net Obligations
Other Resources
Imputed Financing Sources
Income from Other Appropriations
; 16,041
(15)
16,026
(9,257)
6,769
28
27,729
9,854
(23)
9,831
(11)
9,820
35
31,359
Net Other Resources Used to Finance Activities
27,757
31,394
Total Resources Used To Finance Activities
34,526
41,214
RESOURCES USED TO FINANCE ITEMS
NOT PART OF THE NET COST OF OPERATIONS:
Change in Budgetary Resources Obligated
Resources that Fund Prior Periods Expenses
Offsetting Receipts Not Affecting Net Cost
Resources that Finance Asset Acquistion
1,488
(522)
9,257
(1,318)
(455)
(11)
(243)
Total Resources Used to Finance Items Not Part of the Net Cost of Operations
8,905
(709)
Total Resources Used to Finance the Net Cost of Operations
43,431
40,505
FY 2014
FY 2013
COMPONENTS OF THE NET COST OF OPERATIONS THAT WILL
NOT REQUIRE OR GENERATE RESOURCES IN THE CURRENT PERIOD:
Components Requiring or Generating Resources in Future Periods:
Increase in Annual Leave Liability
Increase in Public Exchange Revenue Receivables
Total Components of Net Cost of Operations that Require or
Generate Resources in Future Periods
(522)
(18,754)
(19,276)
(943)
(9,356)
(10,299)
Components Not Requiring/Generating Resources:
Depreciation and Amortization
1,360
749
Total Components of Net Cost that Will Not Require or Generate Resources
1,360
749
Total Components of Net Cost of Operations That Will Not Require or
Generate Resources in the Current Period
(17,916)
(9,550)
Net Cost of Operations S
i 25,515
30,955
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EPA's FY 2014 Annual PRIA Financial Statements
21
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Appendix B
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON DC 20460
«
MKMORANDI'M
SUBJECT: Response to Office of Inspector Genera! Draft Report No. OA-FY 15-0052
The following is the Oil Ice of Chemical Safety and Pollution Prevention's (OCSPP) response to
Draft Report No. OA-PY15-0052. "Fiscal Years 2014 and 2013 Financial Statements for the
Pesticides Registration fund," dated June 27. 2016.
While we recognize that there are no recommendations for our office in this Draft Report.
OCSPP wishes to express support for the OlG's findings, speeilieally:
* The EPA materially overstated the expenses from other appropriations that support the
PRIA fund, t his oecurred because the agency did not have an effective system to
accurately accumulate and report costs incurred by other appropriations in support of
PRIA Fund activities:
• The EPA materially understated the PRIA fund payroll liabilities covered by budgetary
resources, as well as related payroll expense included in the gross costs. "I he agency's
practice of transferring employees and expenses and liabilities from PRIA to the
Environmental Programs and Management Fund for cash flow reasons led to the
understatement; and
« The EPA eould not initially produce accurate, timely and complete financial statements
for the PRIA Fund. The agency was not preparing a complete set of financial .statements
for FY 2013 because of its view that such statements were not required. This delayed the
preparation of the first complete set of FY 2013 PRIA financial statements until July
2014. Because material errors in those statements and subsequent versions delayed the
audit, we considered this to be a material weakness.
"Fiscal Years 2014 and 20]3 Financial Statements for the Pesticide Registration
Fund. "
evention
FROM: James J. Jones. Assign Administrator • ' V
Office of Chemical Safety and Pollution Prevention
Arthur A. Flkins. Jr.
Inspector General
16-F-0323
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OCSPP is pleased to report that the Agency's efforts, led by the Office of the Chief Financial
Officer (OCFO) with the support of OCSPP, have already made substantial progress in
addressing these important findings.
OCSPP understands the importance of proper PRIA cost accounting and ice rale selling. in order
to implement an effective system to track and report costs incurred by appropriations that support
PRIA-related work, OCSPP's Office of Pesticide Programs (OPP) is actively participating in the
Office of the Chief financial Officer's (OCFO) f eehnical User Group to provide feedback and
recommendations for the PeoplePius Enhancement project. The PeoplePlus payroll cost
allocation enhancement will allow for {he creation of an audit frail to capture costs incurred by
the PRIA Fund and by other appropriations that support PRIA-related activities. This will
address the materia] weakness cited in the Drall Report. I he new enhancement will go live bv
October 2017.
Additionally. OCSPP's Office of Pesticide Programs has partnered with OCFO senior leaders to
develop a phased-pilot approach for all OPP employees to capture direct and indirect costs for
the PRIA program, OCFO will develop webinars and provide face-to-face training for all OPP
employees to ensure the same methodology is being used enterprise-wide. The 1st phase will
consist of a methodology to track direct costs related to PRIA activities. 1 he 2ntl phase will
consist of a methodology to accumulate indirect costs. The 3rd phase will consist of reporting
actual hours worked on PRIA-related activities including direct and indirect costs. The 4lh phase
will consist of producing ihe financial statements. I he results of these concerted efforts will he
realized in October 20)7
If you have any questions or require additional information, please contact Janet Weiner.
OCSPP's Audit Liaison, at (202) 564-231)*).
cc; Louise Wise
Oscar Morales
Bruce Berk lev
Janet Weiner
Jack Housenger
Arnold Layne
Rick Keigwin
Peter Caulkins
Delores Barber
Jeanne Conklin
Stefan Sil/cr
John O"Conner
Lorn a Washington
Paul Curtis
Robert Smith
Wanda Arrington
Shelia May
Vickie Richardson
Som a Brooks
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Appendix C
Distribution
Office of the Administrator
Chief Financial Officer
Assistant Administrator for Chemical Safety and Pollution Prevention
Agency Follow-Up Coordinator
General Counsel
Associate Administrator for Congressional and Intragovernmental Relations
Associate Administrator for Public Affairs
Director, Office of Pesticide Programs, Office of Chemical Safety and Pollution Prevention
Deputy Director, Office of Pesticide Programs, Office of Chemical Safety and Pollution Prevention
Senior Advisor, PRIA Implementation, Office of Pesticide Programs, Office of Chemical Safety
and Pollution Prevention
Director, Biopesticides and Pollution Prevention Division, Office of Pesticide Programs,
Office of Chemical Safety and Pollution Prevention
Director, Pesticide Re-Evaluation Division, Office of Pesticide Programs, Office of Chemical
Safety and Pollution Prevention
Director, Registration Division, Office of Pesticide Programs, Office of Chemical Safety and
Pollution Prevention
Director, Antimicrobials Division, Office of Pesticide Programs, Office of Chemical Safety and
Pollution Prevention
Director, Information Technology and Resources Management Division, Office of Pesticide
Programs, Office of Chemical Safety and Pollution Prevention
Controller, Office of the Controller, Office of the Chief Financial Officer
Deputy Controller, Office of the Controller, Office of the Chief Financial Officer
Director, Accounting and Cost Analysis Division, Office of the Chief Financial Officer
Director, Policy, Training and Accountability Division, Office of the Chief Financial Officer
Director, Washington Finance Center, Office of the Chief Financial Officer
Audit Follow-Up Coordinator, Office of the Chief Financial Officer
Audit Follow-Up Coordinator, Office of Chemical Safety and Pollution Prevention
PRIA Audit Coordinator, Office of Pesticide Programs, Office of Chemical Safety and
Pollution Prevention
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