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Financial Management
EPA's Fiscal Years 2016
and 2015 Hazardous Waste
Electronic Manifest System
Fund Financial Statements
Report No. 17-F-0363 August 14, 2017
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Report Contributors: Paul Curtis
Wanda Arlington
Mairim Lopez
Sheree James
Abbreviations
EPA U.S. Environmental Protection Agency
FMFIA Federal Managers' Financial Integrity Act of 1982
OIG Office of Inspector General
OMB Office of Management and Budget
Cover photo: Diagram illustrating manifests submission through a hybrid approach.
(EPA image)
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U.S. Environmental Protection Agency
Office of Inspector General
At a Glance
17-F-0363
August 14, 2017
Why We Did This Review
We performed this audit pursuant to
the Hazardous Waste Electronic
Manifest Establishment Act. The act
requires the U.S. Environmental
Protection Agency (EPA) to prepare,
and the Office of Inspector General
(OIG) to audit, the Hazardous
Waste Electronic Manifest System
Fund financial statements each
year. Our primary objectives were to
determine whether:
• The financial statements were
fairly stated in all material
respects.
• The EPA's internal controls over
financial reporting were in place.
• EPA management complied with
applicable laws and regulations.
The e-Manifest system is being
designed to create a means to track
off-site shipments of hazardous
waste from a generator's site to the
site of the receipt, and disposition of
the hazardous waste.
This report addresses the
following EPA goal or
cross-agency strategy:
• Embracing EPA as a high-
performing organization.
EPA's Fiscal Years 2016 and 2015
Hazardous Waste Electronic Manifest
System Fund Financial Statements
What We Found
We rendered an unmodified opinion on the
EPA's fiscal years 2016 and 2015 Hazardous
Waste Electronic Manifest System Fund
financial statements, meaning that the
statements were fairly presented and free of
material misstatement.
We did not identify any matters that we consider to be material weaknesses
or significant deficiencies in the fund.
We identified no significant matters involving compliance with laws and
regulations that came to our attention during the course of the audit.
There are no recommendations in this report.
We found the fund's
financial statements to
be fairly presented and
free of material
misstatements.
Send all inquiries to our public affairs
office at (202) 566-2391
or visit www.epa.gov/oia.
Listing of OIG reports.
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UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, D.C. 20460
OFFICE OF
INSPECTOR GENERAL
August 14, 2017
MEMORANDUM
SUBJECT: EPA's Fiscal Years 2016 and 2015 Hazardous Waste Electronic Manifest System Fund
Financial Statements
Report No. 17-F-0363
FROM: Paul C. Curtis, Director
Financial Statement Audits
TO: David Bloom, Acting Chief Financial Officer
Office of the Chief Financial Officer
Barry Breen, Acting Assistant Administrator
Office of Land and Emergency Management
Donna Vizian, Acting Assistant Administrator
Office of Administration and Resources Management
This is our report on the audit of the U.S. Environmental Protection Agency's (EPA's) Hazardous Waste
Electronic Manifest System Fund financial statements for fiscal years 2016 and 2015, conducted by the
Office of Inspector General (OIG). The project number for this audit was OA-FY17-0146.
This report contains no recommendations, and 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.
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We will post this report to our website at www.epa.gov/oig.
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EPA's Fiscal Years 2016 and 2015
Hazardous Waste Electronic Manifest System
Fund Financial Statements
17-F-0363
Table of C
Inspector General's Report on EPA's Fiscal Years 2016 and 2015
Hazardous Waste Electronic Manifest System Fund Financial
Statements
Report on the Financial Statements 1
Management's Discussion and Analysis 2
Report on Internal Control Over Financial Reporting 3
Tests of Compliance With Laws, Regulations and Contracts 4
Prior Audit Coverage 4
Agency Comments 5
Appendices
A For the Fiscal Years Ending September 30, 2016 and 2015
Hazardous Waste Electronic Manifest System (e-Manifest) Fund
Financial Statements
B Distribution
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Inspector General's Report on EPA's Fiscal Years
2016 and 2015 Hazardous Waste Electronic
Manifest System Fund Financial Statements
The Administrator
U.S. Environmental Protection Agency
Report on the Financial Statements
We have audited the accompanying financial statements of the U.S. Environmental
Protection Agency's (EPA's) Hazardous Waste Electronic Manifest System Fund
(known as the e-Manifest fund), which comprise the balance sheet for the fiscal
year ended September 30, 2016, and September 30, 2015, and the related
statements of net cost and changes in net position; the statement of budgetary
resources for the years then ended; and the related notes to the financial statements.
Management's Responsibilities 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
15-02, 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 audit 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.
Opinion
In our opinion, the Hazardous Waste Electronic Manifest System Fund financial
statements, including the accompanying notes, present fairly, in all material
respects, the assets, liabilities, net position, net cost, changes in net position and
budgetary resources of the EPA as of September 30, 2016, and September 30,
2015, in conformity with accounting principles generally accepted in the United
States of America.
Specific Audit Requirements of the Hazardous Waste Electronic
Manifest Establishment Act
The Hazardous Waste Electronic Manifest Establishment Act (e-Manifest Act)
requires the Office of Inspector General (OIG) to include an analysis of (1) the
fees collected and disbursed, (2) the reasonableness of the fee structure in place,
(3) the level of use of the system by users, and (4) the success to date of the
system in operating on a self-sustaining basis and improving the efficiency of
tracking waste shipments and transmitting waste shipment data. As the fund has
not yet established a fee structure and started use of the system, no such analyses
were performed.
Management's Discussion and Analysis
Our audit was conducted for the purpose of forming an opinion on the financial
statements as a whole. The Management's Discussion and Analysis are presented
for purposes of additional analysis and are not a required part of the basic
financial statements. Such information is the responsibility of management.
We obtained information from the fund's management about its methods for
preparing the Management's Discussion and Analysis, and reviewed this
information for consistency with the financial statements.
We did not identify any material inconsistencies between the information
presented in the fund's financial statements and the information presented in the
Management's Discussion and Analysis.
Our audit was not designed to express an opinion and, accordingly, we do not
express an opinion on the fund's Management's Discussion and Analysis.
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Report on Internal Control Over Financial Reporting
Opinion on Internal Controls. In planning and performing our audit, we
considered the fund's internal controls over financial reporting by obtaining an
understanding of the agency's internal controls, determining whether internal
controls had been placed in operations, assessing control risk, and performing
tests of controls. We did this as a basis for designing our audit 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 No. 15-02,
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).
Material Weaknesses 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. A deficiency in internal controls exists when the design or operation
of a control does not allow management or employees, in the normal course of
performing their assigned functions, to prevent, or detect and correct,
misstatements on a timely basis. A material weakness is a deficiency, or a
combination of deficiencies, in internal control, 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, on a timely basis. A significant
deficiency is a deficiency, or a combination of deficiencies, in internal control that
is less severe than a material weakness, yet important enough to merit attention by
those charged with governance.
Because of inherent limitations in internal controls, misstatements, losses or
noncompliance may nevertheless occur and not be detected.
We did not note any matters that we consider to be material weaknesses or
significant deficiencies in the fund.
Comparison of EPA's FMFIA Report With Our Evaluation of Internal
Controls
OMB Bulletin No. 15-02, Audit Requirements for Federal Financial Statements,
requires the OIG 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. The agency's FMFIA report is
prepared and submitted at the consolidated level, of which the e-Manifest fund is a
17-F-0363
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component. The agency reported one material weakness in fiscal year 2016
regarding capitalized software, which may impact the fund. Capitalized software
continues to be reported as a material weakness in the design and operation of
internal controls. While capitalized software continues to be a material weakness for
the agency, the EPA is in the process of accumulating costs in the development of
software, and as a result, it is too early to determine whether the fund will be
impacted.
Tests of Compliance With Laws, Regulations and Contracts
EPA management is responsible for complying with laws, regulations and
contracts applicable to the agency and the fund. As part of obtaining reasonable
assurance about whether the fund's financial statements are free of material
misstatement, we performed tests of its compliance with certain provisions of
laws and regulations, noncompliance with which could have a direct and material
effect on the determination of financial statement amounts, and certain other laws
and regulations specified in OMB Bulletin No. 15-02, Audit Requirements for
Federal Financial Statements. The OMB guidance requires that we evaluate
compliance with federal financial management system requirements, including
the requirements referred to in the Federal Financial Management Improvement
Act of 1996. We limited our tests of compliance to these provisions and did not
test compliance with all laws and regulations applicable to the EPA's Hazardous
Waste Electronic Manifest System Fund.
Opinion on Compliance With Laws and Regulations
Providing an opinion on compliance with certain provisions of laws and
regulations was not an objective of our audit and, accordingly, we do not express
such an opinion.
We did not identify any noncompliance that would result in a material
misstatement to the audited financial statements.
Prior Audit Coverage
During our previous financial statements audit, we reported a noncompliance with
the e-Manifest Act.
In fiscal year 2015, the EPA used e-Manifest appropriated funds totaling $22,294
to cover contract costs unrelated to the e-Manifest project. According to the
e-Manifest Act, at Section 2, Subsection (d)(2)(C), the EPA shall take all
necessary measures to ensure that amounts in the e-Manifest fund are used only to
carry out the goals of establishing, operating, maintaining, upgrading, managing,
supporting and overseeing the e-Manifest system. The EPA did not have adequate
oversight to prevent the inappropriate use of the e-Manifest fund. As a result, the
EPA was not in compliance with the e-Manifest Act.
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The agency agreed with our fiscal year 2015 audit finding and recommendations.
In response to our recommendations, the agency implemented and completed all
corrective actions. As part of its corrective actions, the agency:
• Refunded the e-Manifest fund for all the amounts paid for costs unrelated
to the e-Manifest project during fiscal year 2015.
• Included reminders in financial reports and issued guidance affirming that
e-Manifest funds may only be used for e-Manifest work.
• Added "proper invoice processing" as a performance standard to the
performance agreements.
During our current audit, we identified additional contract costs covered with
e-Manifest appropriated funds during fiscal year 2016 that were unrelated to the
project. However, the agency is in the process of reimbursing the fund for these
costs. As a result, we are not issuing any recommendations in our fiscal year 2016
audit report.
There are no recommendations in this report, and the agency had no comments.
Paul C. Curtis
Certified Public Accountant
Director, Financial Statement Audits
Office of Inspector General
U.S. Environmental Protection Agency
August 11, 2017
Agency Comments
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Appendix A
For the Fiscal Years Ending September 30,2016 and 2015
Hazardous Waste Electronic Manifest System (e-Manifest) Fund
Financial Statements
(M)
Produced by the U.S. Environmental Protection Agency
Office of the Chief Financial Officer
Office of the Controller
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Table of Contents
Management's Discussion and Analysis 1
Introduction 1
Current EPA RCRA Manifest Program 1
e-Manifest System Planning Activities 1
Acquisition Strategy Change 3
e-Manifest System Development 4
Principal Financial Statements: 7
Blance Sheet 7
Statement of Net Cost 8
Statement of Changes in Net Position 9
Statement of Budgetary Resources 10
Notes to Financial Statements 11
Note 1. Summary of Significant Accounting Policies 11
A. Reporting Entity 11
B. Basis of Presentation 11
C. Budgets and Budgetary Accounting 12
D. Basis of Accounting 12
E. Revenues and Other Financing Sources 12
F. Funds with the Treasury 12
G. Investments in U. S. Government Securities 12
H. General Property, Plant and Equipment 12
I. Liabilities 13
J. Accrued Unfunded Annual Leave 13
K. Retirement Plan 13
L. Use of Estimates 13
Note 2. Fund Balance with Treasury 14
Note 3. Other Assets 14
Note 4. General Property, Plant and Equipment 14
Note 5. Other Liabilities 14
Note 6. Payroll and Benefits Payable, non-Federal 14
Note 7. Income and Expenses from Other Appropriations 15
Note 8. Reconciliation of Net Cost of Operations to Budget 16
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Management's Discussion and Analysis
Introduction
The Hazardous Waste Electronic Manifest System fund (e-Manifest) was established as a result
of the Hazardous Waste Manifest Establishment Act (Public Law 112-195, October 5, 2012).
The e-Manifest Act requires the United States Environmental Protection Agency ('EPA' or 'the
Agency') to establish and own a hazardous waste electronic manifest program information
technology ('IT') system that will enable electronic manifesting as a means to augment or
replace the use of paper manifests for tracking hazardous waste shipments. The e-Manifest Act
requires that the e-Manifest system:
1. Meet the needs of the user community;
2. Attract sufficient user participation and service revenues to ensure the viability of the
system (the e-Manifest Act authorizes EPA to collect reasonable user fees); and
3. Decrease the administrative burden on the user community.
Current EPA RCRA Manifest Program
The EPA Office of Land and Emergency Management (OLEM) provides policy, guidance and
direction for the Agency's emergency response and waste programs. The Office of Resource
Conservation and Recovery (ORCR) within OLEM works to protect human health and the
environment by ensuring responsible national management of hazardous and nonhazardous
waste. Working with delegated state waste programs, ORCR implements the 1976 Resource
Conservation and Recovery Act (RCRA), and ensures that the resource conservation, recovery
and waste management goals of RCRA are met. All states with the exception of Iowa and Alaska
have been delegated RCRA authority, meaning that states implement many if not all aspects of
RCRA policy.
The manifest program as implemented by EPA and the states ensures that hazardous waste
shipments are consistently tracked, and that hazardous wastes in fact arrive at permitted waste
management facilities. The manifest program is based on both RCRA and Department of
Transportation (DOT) hazardous materials law (The Hazardous Materials Transportation Act
(HMTA)). These laws together require uniformity in the content and use of the hazardous waste
manifest form.
e-Manifest System Planning Activities
Discussion of the e-Manifest system itself has taken place over many years; beginning back in
the 1990's when the concept of an electronic manifest system was first taking shape. Further
activities continued over the years to envision the e-Manifest system through various stakeholder
discussions and pilots. For more information on EPA's efforts prior to the passage of the e-
Manifest Act in 2012, Please visit http:/www.epa.gov/osw/hazard/transportation/manifest/e-man-
pastmeetings.htm.
EPA's FY 2016 e-Manifest Financial Statements
1
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In early calendar year 2013, EPA conducted various stakeholder requirements meetings to
reengage with the user community. The purpose of these meetings was to build on past e-
Manifest work to determine high level system functional requirements. Following this, a system
alternatives analysis was conducted to look at various system implementation approaches, all
assuming (among other things) a full electronic mobile workflow. The alternatives analysis
recommended that EPA leverage cloud hosting for initial system development and system
launch, and for long term operations and maintenance, consider re-negotiating the cloud contract
model or potentially migrate to an on premise hosting model to keep costs down.
Also as a part of the planning work, a system Concept of Operations (CONOPS) was completed
that, at a high level, outlines both what the current manifest process entails for highway and rail
transporters as well as what the future system may look like. The CONOPS document provides a
process and conceptual model for how data will flow from stakeholder to stakeholder and
through the system during the manifest workflow.
The technical architecture for e-Manifest was completed in FY 2015. This architecture includes
the specific components and data flows as currently defined to illustrate a technical solution for
the e-Manifest system. In doing so, it defines the specific boundaries of the e-Manifest system
and how the different parts of the system work together to provide the required services based on
current requirements. For example, areas such as system Cross-Media Electronic Reporting
Regulation (CROMERR) integration, paper manifest processing and manifest data quality
assurance (QA) were analyzed as a part of this effort.
As a part of this technical architecture planning work, EPA conducted targeted meetings with
states and industry separately in order to further flesh out current processes as well as
expectations for the above areas. The meetings were more detailed than previous discussions,
and provided critical information to inform system requirements.
The technical architecture work completed in FY 2015 serves as baseline for the current manifest
program and provides very strong foundation for future system buildout. It meets user needs and
provides flexibility for future iterations of the system.
Building on FY 2015, in FY 2016 the e-Manifest program realized significant progress while
leveraging existing ORCR software applications. EPA initially conceived e-Manifest as a
standalone system and allowed the system architects to consider a broad range of approaches
without inherent constraints from an existing system design. However, as designs matured, it
was recognized that the e-Manifest technical solution aligned closely with RCRAInfo in terms of
end user functionality, data integration, and required technical infrastructure. These factors led to
the decision to implement e-Manifest as a unique module of RCRAInfo.
Many of the new capabilities of e-Manifest can be implemented in RCRAInfo using the existing
modular architecture present in RCRAInfo. In addition, some of the more innovative design
aspects of e-Manifest could also be incorporated into RCRAInfo, improving both systems.
EPA's FY 2016 e-Manifest Financial Statements
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By leveraging e-Manifest and RCRAInfo modules, opportunities for reuse of existing technology
investments were present, reducing the burden of e-Manifest implementation. These factors led
to the decision to develop e-Manifest and RCRAInfo modules as distinct, but as interrelated
entities which will meet the current and future needs of industry, government and the public.
Acquisition Strategy Change
The EPA's system development work is focused on ensuring user needs are met from day one of
national system deployment. To accomplish this, the agency is conducting user-centered design
and development, and is utilizing agile software development methodologies. This approach
embodies continuous improvement through pilots and testing, using iterative processes, and
continued regular engagement with users and stakeholders throughout the process to provide on-
going opportunities for input.
Instead of locking in on one source, the new e-Manifest program services contract (multi-vendor
indefinite delivery/indefinite quantity (IDIQ)) will utilize a variety of vehicles for the following
segments of the system:
• Project management including integration services.
• Paper manifest processing.
• User help desk and user training.
Quality assurance for manifest data amongst industry, states, and the EPA.
Services to calculate, collect, and support reporting of user fees for paper and electronic
manifest processing.
Support for stakeholder communication, including outreach and meeting support.
Research has shown that using this type of lean start-up methodology, with agile techniques,
lowers the cost of system development by addressing uncertainties promptly, and by ensuring
that the work being completed brings real value to users.
The agency engaged with the U.S. General Services Agency's "18F" government IT
development support group. In September 2015, the EPA completed an initial system
demonstration. The EPA worked with several industry users to complete this initial system
functionality, and is compiling their technical feedback/testing results on how to improve or
better meet their needs.
The agency will continue to work closely with users, adding more functionality in an incremental
manner, evolving to a minimum viable product, and providing continuous improvement for the
lifetime of the system. By taking this iterative approach the EPA will refine remaining
uncertainties from our architecture planning work in the most cost effective manner.
EPA's FY 2016 e-Manifest Financial Statements
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e-Manifest System Development
As a follow-on to the completed technical and conceptual architecture, e-Manifest embarked on a
pilot to create initial system functionality with the General Service Administrations (GSA) 18F
consulting shop. The 18F group provided the IT expertise to create the foundation of e-Manifest
and also provided agile project management support. Specifically, 18F:
• Introduced user-centered design/development, which engages industry/state users in the
early phases of development;
• Created the development platform and hosting environment for e-Manifest; and
• Leveraged open source technologies (Trello, GitHub, biweekly online meetings
showcasing recent system updates) to allow users and other stakeholders to follow and
participate in system development.
As part of the agile development focus, in September 2015, EPA, in partnership with 18F,
completed an initial system demonstration. This focused on a key aspect of the system: the
transaction at the end of the chain-of-custody when the hazardous waste arrives at the designated
waste management facility and that facility signs the electronic manifest to verify that all the
hazardous waste types and quantities were received. Getting the system to properly electronically
execute this all-important manifest transaction was a critical first step. EPA worked with several
industry users to complete this initial system functionality.
Although not as straightforward as standard government IT development projects, this course
correction from traditional lifecycle system development ("waterfall") methodology to agile will
ultimately deliver a better system in a quicker, more value-added method going forward.
Starting with this initial system, EPA has been adding more functionality in an incremental
manner. Research has shown that using this type of lean start-up methodology with agile
techniques lowers the cost of current and future system development by addressing uncertainties
sooner rather than later. Therefore, EPA has been conducting user-centered design and
development, starting with the small scale demonstration phase. Open source code and project
engages industry and state users in the early phases of development, creation of a development
platform, and a hosting environment. EPA will expand engagement efforts to all users over time
(e.g., states with no systems, large and small generators, etc.).
The agile software development methodology embodies continuous improvement through
iterative development and delivers software in sprints. Agile embraces change, continuous and
regular feedback and improvement, value-driven delivery, full-team collaboration, and learning
through discovery. Agile techniques cannot eliminate the challenges intrinsic to high-discovery
software development but by focusing on continuous delivery of incremental value and shorter
feedback cycles. They expose challenges as early as possible to allow for immediate correction.
EPA has adopted lean start-up product development strategies with agile, user-centered software
design/development methodologies, and has implemented the following:
EPA's FY 2016 e-Manifest Financial Statements
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• Two-week sprint intervals;
• Modular development practices, relying heavily on available off-the-shelf software
modules, by building individual working pieces of the system and integrating them into
the whole;
• Early engagement with users and stakeholders, addressing uncertainties that arose during
the initial architecture planning work;
• Upfront risk management, bringing down the cost of current and future development by
ensuring that the work being completed brings actual value to stakeholders and users; and
• Continuous improvement, using iterative processes, and engaging regularly with users
and stakeholders throughout the life of the program.
EPA has made every effort to involve industry users in the development process to build the
strongest possible system. During the system development phase, the e-Manifest team is working
alongside industry, states, and other stakeholders, by focusing on issues raised and addressing the
issues, including the following:
• Assessing how the national e-Manifest system will connect with state and industry
systems;
• Engaging users in testing the web application; and
• Addressing state data access needs
The e-Manifest team communicates regularly with states, industry, and related stakeholders
about ongoing developments (i.e., continued release and testing of system iterations), updates on
e-Manifest related rules (i.e., user fees for the e-Manifest system and amendments to manifest
regulations), and the national launch of the e-Manifest system.
Our primary methods of communication include the following:
• The e-Manifest website
• User testing
• Conferences
• Site visits
• Listserv (general interest and development-focused)
• Public webinars
• Blog posts
• GitHub - code repository and project management
EPA's FY 2016 e-Manifest Financial Statements
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• FACA Meetings
• Meetings with stakeholders.
Provided e-Manifest is fully-funded; we will follow this path of milestones to system launch in
the spring of 2018.
• September 2015- initial system functionality completed.
• Spring of 2016 - minimal viable product development.
• Spring through fall of 2016 - early full scale development.
• Fall of 2016 through winter of 2018 - rolling iterative releases/testing of system.
• Calendar year 2018 - national deployment (collecting user fees).
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EPA's FY 2016 e-Manifest Financial Statements
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Principal Financial Statements:
Environmental Protection Agency
e-Manifest
BALANCE SHEET
As of September 30, 2016 and 2015
(Dollars in Thousands)
Assets:
Intragovernmental:
Fund Balance with Treasury (Note 2)
Other (Note 3)
Total Intragovernmental
Property, Plant & Equipment, Net (Note 4)
Total Assets
Liabilities:
Intragovernmental:
Accounts Payable and Accrued Liabilities
Other (Note 5)
Total Intragovernmental
Accounts Payable & Accrued Liabilities
Payroll & Benefits Payable (Note 6)
Total Liabilities
Net Position:
Unexpended Appropriations
Cumulative Results of Operations
Total Net Position
Total Liabilities and Net Position
FY 2016 FY 2015
$ 5,230 $ 3,411
5_ 7
5,235 3,418
944 -
$ 6,179 $ 3,418
$ 9 $ 4
20_ 12
29 16
39 109
149 122
$ 217 $ 247
$ 5,086 $ 3,240
876 (69)
5,962 3,171
$ 6,179 $ 3,418
The accompanying footnotes are an integral part of these financial statements.
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Environmental Protection Agency
e-Manifest
STATEMENT OF NET COST
For the Fiscal Years Ended September 30, 2016 and 2015
(Dollars in Thousands)
Costs:
Gross costs
Expenses from Other Appropriations (Note 7)
Less:
Earned revenue
Net cost of operations
FY 2016
$ 962 $
205
1,167 $
FY 2015
2,157
2,157
The accompanying footnotes are an integral part of these financial statements.
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Environmental Protection Agency
e-Manifest
STATEMENT OF CHANGES IN NET POSITION
For the Fiscal Years Ended September 30, 2016 and 2015
(Dollars in Thousands)
FY 2016 FY 2015
Cumulative Results of Operations:
Net Position - Beginning of Period $ (69) $ (69)
Budgetary Financing Sources:
Appropriations Used $ 1,828 $ 2,090
Income from Other Appropriations (Note 7) 205 -_
Total Budgetary Financing Sources 2,033 2,090
Other Financing Sources (Non-Exchange):
Imputed Financing Sources $ 80_ $ 66_
Total Other Financing Sources 80 66
Net Cost of Operations (1,167) (2,157)
Net Change 946 -_
Cumulative Results of Operations $ 876 $ (69)
Unexpended Appropriations:
Net Position - Beginning of Period $ 3,240 $ 1,656
Budgetary Financing Sources:
Appropriations Received $ 3,674 $ 3,674
Appropriations Used (1,828) (2,090)
Total Budgetary Financing Sources 1,846 1,584
Total Unexpended Appropriations 5,086 3,240
Net Position $ 5,962 $ 3,171
The accompanying footnotes are an integral part of these financial statements.
EPA's FY 2016 e-Manifest Financial Statements
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Environmental Protection Agency
e-Manifest
STATEMENT OF BUDGETARY RESOURCES
For the Fiscal Years Ended September 30, 2016 and 2015
(Dollars in Thousands)
FY 2016 FY 2015
Budgetary Resources:
Unobligated balance, brought forward, October 1: $ 3,220 $ 1,013
Recoveries of prior year unpaid obligations 37 17
Unobligated balance from prior year budget authority, net 3,257 1,030
Appropriations (discretionary and mandatory) 3,674 3,674
Total Budgetary Resources $ 6,931 $ 4,704
Status of Budgetary Resources:
Obligations Incurred $ 2,965 $ 1,484
Unobligated Balance, end of year:
Apportioned 3,966 3,220
Total Unobligated balance, end of period 3,966 3,220
Total Status of Budgetary Resources $ 6,931 $ 4,704
Change in Obligated Balance Unpaid Obligations:
Unpaid obligations, brought forward, October 1 (gross) $ 191 $ 854
Obligations incurred, net 2,965 1,484
Outlays (gross) (1,855) (2,130)
Recoveries of prior year unpaid obligations (37) (17)
Unpaid obligations, end of year (gross) 1,264 191
Memorandum entries:
Obligated balance, start of year $ 191 $ 854
Obligated balance, end of year (net) $ 1,264 $ 191
Budget Authority and Outlays, Net:
Budget authority, net $ 3,674 $ 3,674
Agency outlays, net $ 1,855 $ 2,130
The accompanying footnotes are an integral part of these financial statements.
EPA's FY 2016 e-Manifest Financial Statements
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Environmental Protection Agency
e-Manifest
Notes to Financial Statements
For the Fiscal Years Ended September 30, 2016 and 2015
(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 Hazardous Waste Electronic Manifest System Fund (e-Manifest) was authorized by the
establishment of the Hazardous Waste Electronic Manifest System Act. The act mandates that
the Agency, within three years, establish a hazardous waste electronic manifest system that can
be accessed by any user. The act authorized the administrator to impose on users' fees to pay the
costs incurred in developing, operating, maintaining, and upgrading the system, including any
costs incurred in collecting and processing data from paper manifests submitted to the system
after the date on which the system enters operations.
The e-Manifest fund charges some administrative costs directly to the fund, and charges the
remainder of the indirect administrative costs to Agency-wide appropriations. These amounts are
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.
B. Basis of Presentation
These financial statements have been prepared to report the financial position and results of
operations of the EPA for the e-Manifest Fund in accordance with the Chief Financial Officers
Act of 1990 and the Government Management Reform Act of 1994. The 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 2016 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.
EPA's FY 2016 e-Manifest Financial Statements
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C. Budgets and Budgetary Accounting
Funding of the e-Manifest Fund will be provided by fees collected from users to offset costs
incurred by the EPA in carrying out these programs. Since inception in October 5, 2012 through
fiscal year 2016, funding for the e-Manifest fund was from appropriated funds. EPA did not
collect fees from inception of the fund through FY 2016.
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 issues
standards 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.
E. Revenues and Other Financing Sources
In FY 2016, EPA did not collect any user fees for the e-Manifest fund, as the system is still in
development.
F. Funds with the Treasury
The e-Manifest Fund did not have any receipts for fiscal year 2016.
G. Investments in U. S. Government Securities
Investments in U. S. Government securities are maintained by Treasury (Bureau of Fiscal
Services) and are reported at amortized cost net of unamortized discounts. Discounts are
amortized over the term of the investments and reported as interest income. E-Manifest will hold
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. Only fees collected will be invested in U.S. Government securities. As of
September 30, 2016 the e-Manifest fund had not collected any fees.
H. General Property, Plant and Equipment
General property, plant and equipment for e-Manifest consists of software in development. EPA
(except for the Working Capital Fund) capitalizes software if those investments are considered
Capital Planning and Investment Control (CPIC) or CPIC Lite systems with the provisions of the
Statement of Federal Financial Accounting Standard (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 five years.
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I. Liabilities
Liabilities represent the amount of monies or other resources that are more likely than not 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.
J. Accrued Unfunded Annual Leave
Annual, sick and other leave is expensed as taken during the fiscal year. Annual leave earned but
not taken at 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."
Sick leave earned but not taken is not accrued as a liability. It is expensed as it is used.
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 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. 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 may differ from those
estimates.
EPA's FY 2016 e-Manifest Financial Statements
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Note 2. Fund Balance with Treasury
FY 2016 FY 2015
Entity Assets $ 5,230 $ 3,411
Note 3. Other Assets
FY 2016 FY 2015
Other Intragovernmental Assets:
Advance to Working Capital Fund $ 5_ $ 7_
Note 4. General Property, Plant and Equipment
As of September 30, 2016, e-Manifest incurred $944 thousand in costs related to the development
of information technology software associated with the Hazardous Waste Electronic Manifest
System.
Note 5. Other Liabilities
The Payroll and Benefits Payable, non-Federal, are presented on a separate line of the Balance
Sheet and in a separate footnote (see Note 7).
FY 2016 FY 2015
Other Intragovernmental Liabilities:
Covered by Budgetary Resources Employer
Contribution- Payroll $ 20 $ 12_
Note 6. Payroll and Benefits Payable, non-Federal
FY 2016 FY 2015
Covered by Budgetary Resources:
Accrued Payroll Payable to Employees $
77
$
35
Withholdings Payable
3
17
Thrift Savings Plan Benefits payable
2
1
Total
82
53
Not Covered by Budgetary Resources:
Unfunded Annual Leave Liability $
67
$
69
Total $
149
$
122
EPA's FY 2016 e-Manifest Financial Statements
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Note 7. 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.
Beginning with fiscal year 2016, the Agency began applying an indirect rate to account for
administrative expenses paid through other appropriations. For FY 2016, the indirect rate was
21.38%. As illustrated below, there is no impact on e-Manifest's Statement of Changes in Net
Position. Had full cost been implemented in FY 2015, the amount of expenses paid by other
appropriations would have been $461 thousand.
FY 2016
Income from Other Appropriations
Expenses from Other Appropriations
$
(205)
205
Net Effect
$
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EPA's FY 2016 e-Manifest Financial Statements
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Note 8. Reconciliation of Net Cost of Operations to Budget
FY 2016
FY 2015
Resources Used to Finance Activities:
Budgetary Resources Obligated
Obligations Incurred
Less: Spending Authority from Offsetting
Collections and Recoveries
Obligations, Net of Offsetting Collections
Other Resources:
Imputed Financing Sources
Income from Other Appropriations
Net Other Resources Used to Finance Activities
Total Resources Used to Finance Activities
Resources Used to Finance Items
Not Part of the Net Cost of Operations:
Change in Budgetary Resources Obligated
Resources that Finance Asset Acquisition
Total Resources Used to Finance Items Not Part of the
Net Cost of Operations
Total Resources Used to Finance the Net Cost of Operations
$ 2,965 $ 1,484
(37)
2,928
80
205
285
$ 3,213 $
$ (1,104) $
(944)
(2,048)
$ 1,165 $
(17)
1,467
66
66
1,533
624
624
2,157
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
Total Components of Net Cost of Operations that Require or
Generate Resources in Future Periods
Total Components of Net Cost of Operations That Will Not
Require or Generate Resources in the Current Period
Net Cost of Operations
FY 2016
FY 2015
1,167 $
2,157
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EPA's FY 2016 e-Manifest Financial Statements
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Appendix B
Distribution
The Administrator
Chief of Staff
Chief of Staff for Operations
Deputy Chief of Staff for Operations
Chief Financial Officer
Agency Follow-Up Coordinator
Assistant Administrator for Land and Emergency Management
Assistant Administrator for Administration and Resources Management
General Counsel
Associate Administrator for Congressional and Intergovernmental Relations
Associate Administrator for Public Affairs
Controller, Office of the Controller, Office of the Chief Financial Officer
Deputy Controller, Office of the Controller, Office of the Chief Financial Officer
Director, Financial Services Division, Office of the Chief Financial Officer
Director, Accounting and Cost Analysis Division, Office of the Chief Financial Officer
Chief, General Ledger Analysis and Reporting Branch, Accounting and Cost Analysis Division,
Office of the Chief Financial Officer
Principal Deputy Assistant Administrator, Office of Land and Emergency Management
Deputy Assistant Administrator, Office of Land and Emergency Management
Director, Office of Resource Conservation and Recovery, Office of Land and Emergency
Management
Deputy Director, Office of Resource Conservation and Recovery, Office of Land and Emergency
Management
Associate Director, Program Implementation and Information Division, Office of Resource
Conservation and Recovery, Office of Land and Emergency Management
Branch Chief, Permits Branch, Office of Resource Conservation and Recovery, Office of Land
and Emergency Management
Branch Chief, Information Collection and Analysis Branch, Office of Resource Conservation
and Recovery, Office of Land and Emergency Management
Associate Branch Chief, Information Collection and Analysis Branch, Office of Resource
Conservation and Recovery, Office of Land and Emergency Management
Chair, Fee Rule Workgroup, Permits Branch, Office of Resource Conservation and Recovery,
Office of Land and Emergency Management
Deputy Assistant Administrator, Office of Administration and Resources Management
Director, Office of Acquisition Management, Office of Administration and Resources
Management
Audit Follow-Up Coordinator, Office of the Administrator
Audit Follow-Up Coordinator, Office of the Chief Financial Officer
Audit Follow-Up Coordinator, Office of the Controller, Office of the Chief Financial Officer
Audit Follow-Up Coordinator, Office of Land and Emergency Management
Audit Follow-Up Coordinator, Office of Resource Conservation and Recovery, Office of Land
and Emergency Management
Audit Follow-Up Coordinator, Office of Administration and Resources Management
Audit Follow-Up Coordinator, Office of Acquisition Management, Office of Administration and
Resources Management
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