U.S. ENVIRONMENTAL PROTECTION AGENCY
OFFICE OF INSPECTOR GENERAL
Fiscal Years 2011 and 2010
Financial Statements for the
Pesticide Registration Fund
Report No. 12-1-0522
June 6, 2012

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Report Contributors:	Paul Curtis
Robert Smith
Bill Samuel
Sabrina Berry
Mairim Lopez
Sheila May
Demetrios Papakonstantinou
Cynthia Poteat
Myka Sparrow
Alexandra Zapata-Torres
Abbreviations
ARS
Accounting and Reporting Section
EPA
U.S. Environmental Protection Agency
EPM
Environmental Programs and Management
FIFRA
Federal Insecticide, Fungicide, and Rodenticide Act
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
PRIA2
Pesticide Registration Improvement Renewal Act
Hotline
To report fraud, waste, or abuse, contact us through one of the following methods:
e-mail:	OIG Hotiirie@epa.aov	write: EPA Inspector General Hotline
phone:	1-888-546-8740	1200 Pennsylvania Avenue NW
fax:	202-566-2599	Mailcode 2431T
online:	http://www.epa.aov/oia/hotline.htm	Washington, DC 20460

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*. U.S. Environmental Protection Agency	12-1-0522
#	Office of Inspector General	June 6,2012
13SJ
- ° At a Glance
Why We Did This Review
The Pesticide Registration
Improvement Act (PRI A)
requires that we perform an
annual audit of the Pesticide
Registration Fund (known as
the PRIA Fund) financial
statements.
Background
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.
For further information, contact
our Office of Congressional and
Public Affairs at (202) 566-2391.
The full report is at:
www.epa.gov/oiq/reports/2012/
20120606-12-1 -0522. pdf
Fiscal Years 2011 and 2010 Financial
Statements for the Pesticide Registration Fund
Opinion
We rendered an unqualified, or clean, opinion on EPA's Pesticide Registration
Fund financial statements for fiscal years 2011 and 2010, meaning that they were
fairly presented and free of material misstatement.
Internal Control Material Weakness Noted
We noted one material weakness in internal controls. EPA materially understated
the PRIA payroll and benefits payable and related payroll expenses included in
fiscal year 2011 gross costs. The 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. The transfer
removed the base upon which the leave accrual and benefits payable amounts are
calculated. The fiscal year 2010 accruals for PRIA were $239,000 while the fiscal
year 2011 accruals were $8,000. Understatements could impact the opinion on
the financial statements and reliance on reported PRIA financial information.
Internal Control Significant Deficiency Noted
We noted one significant deficiency in internal controls. EPA did not record
accounts receivable for a PRIA fee until the payments were 18 months overdue.
During our fiscal year 2011 allowance for doubtful accounts review, we found a
PRIA receivable for which the finance center was unable to record an allowance
because there was no accounting model for a PRIA allowance for doubtful
accounts.
Compliance with Decision Time Review Periods
The Agency was in compliance with the statutory decision time frames.
Planned Agency Corrective Actions
The Agency agreed with our findings and recommendations. The Agency
corrected the payroll and benefit payable amounts and indicated it will monitor
the PRIA benefit accrual at year-end. The Agency will develop policies and
procedures for PRIA accounts receivables and has established general ledger
posting models for PRIA allowances. The Agency's complete response is in
appendix B to this report. We agree with the Agency's corrective actions.

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# a \
ISI
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, D.C. 20460
THE INSPECTOR GENERAL
June 6, 2012
MEMORANDUM
SUBJECT: Fiscal Years 2011 and 2010 Financial Statements for the
Pesticide Registration Fund
Report No. 12-1-0522
FROM: Arthur A. Elkins, Jr.
TO:	Jim Jones
Acting Assistant Administrator for Chemical Safety and Pollution Prevention
Barbara Bennett
Chief Financial Officer
Attached is our report on the U.S. Environmental Protection Agency's (EPA's) fiscal years 2011
and 2010 financial statements for the Pesticides Registration Fund, conducted by the Office of
Inspector General (OIG) of the U.S. Environmental Protection Agency (EPA). This audit report
represents the opinion of the OIG, and the findings in this report do not necessarily represent the
final EPA position. EPA managers, in accordance with established EPA audit resolution
procedures, will make final determinations on the findings in this audit report. Accordingly, the
findings described in this audit report are not binding upon EPA in any enforcement proceeding
brought by EPA or the Department of Justice. We have no objections to the further release of this
report to the public. This report will be available at http://www.epa. gov/oig.
In accordance with EPA Manual 2750, we are closing this report on issuance in our tracking
system. You should track progress of your corrective actions in the Management Audit Tracking
System.
If you or your staff have any questions regarding this report, please contact Melissa Heist
at (202) 566-0899 or Heist.Melissa@epa.gov. or Paul Curtis at (202) 566-2523 or
Curtis. Paul@,epa. gov.

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Fiscal Year 2011 and 2010 Financial Statements
for the Pesticide Registration Fund
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	Table of Contents	
Inspector General's Report on the Fiscal Years 2011 and 2010
Financial Statements for the Pesticide Registration Fund
Opinion on the PRIA Fund Financial Statements		1
Evaluation of Internal Controls		1
Tests of Compliance With Laws and Regulations		3
Management's Discussion and Analysis Section of the Financial Statements		4
Prior Audit Coverage		4
Agency Comments and OIG Evaluation		4
Attachments
1	Material Weakness		6
PRIA Payroll and Benefits Payable Are Understated		7
2	Significant Deficiency		9
EPA Should Identify When Pesticide Registration Improvement
Renewal Act Fees Should Be Recorded as Accounts Receivables		10
3	Status of Recommendations and Potential Monetary Benefits		12
Appendices
A Fiscal Years 2011 and 2010 PRIA Financial Statements
B Agency's Response to Draft Report
C Distribution

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Inspector General's Report on the
Fiscal Years 2011 and 2010 Financial Statements for the
Pesticide Registration Fund
The Administrator
U.S. Environmental Protection Agency
We have audited the Pesticide Registration Fund (known as the PRIA Fund)
balance sheet as of September 30, 2011 and 2010, and the related statements of
net cost, changes in net position, and budgetary resources for the years then
ended. These financial statements are the responsibility of the U.S. Environmental
Protection Agency (EPA) management. Our responsibility is to express an
opinion on these financial statements based upon our audit.
We conducted our audit in accordance with the generally accepted 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 No. 07-04, Audit
Requirements for Federal Financial Statements, as Amended. These standards
require that we plan and perform the audit to obtain reasonable assurance as to
whether the financial statements are free of material misstatements. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that
our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements, including the accompanying notes,
present fairly, in all material respects, the assets, liabilities, net position, net costs,
changes in net position, and budgetary resources of the PRIA Fund, as of and for
the years ended September 30, 2011, and 2010, in conformity with accounting
principles generally accepted in the United States of America.
Evaluation of Internal Controls
As defined by OMB, internal control, as it relates to the financial statements, is a
process, affected 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.
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Compliance with applicable laws, regulations, and government-wide
policies - Transactions are executed in accordance with laws governing
the use of budget authority, government-wide policies, laws identified by
OMB, and other laws and regulations that could have a direct and material
effect on the financial statements.
In planning and performing our audit, we considered EPA's internal control over
Pesticide Registration Improvement Act (PRIA) 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 or on
management's assertions 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. 07-04, Audit
Requirements for Federal Financial Statements, as Amended. 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.
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, in internal controls 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,
in internal controls, 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 basis. Because of inherent limitations in internal
controls, misstatements, losses, or noncompliance may nevertheless occur and not
be detected. We noted a matter involving the internal controls and their operations
that we considered to be a material weakness and another matter involving the
internal control and their operations that we consider to be a significant
deficiency.
Material Weakness: PRIA Payroll and Benefits Payable Are
Understated
EPA materially understated the PRIA Fund's payroll and benefits payable, and
related payroll expense included in fiscal year gross costs. The Agency's practice
of transferring employees and related expenses and liabilities from PRIA to the
Environmental Programs and Management (EPM) Fund for cash flow reasons led
to the understatement. Just prior to year-end, the Office of Pesticide Programs, in
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the Office of Chemical Safety and Pollution Prevention, transferred all employees
from PRIA to EPM. On average, 59 employees were assigned to PRIA throughout
fiscal year 2011. The transfer removed the base upon which the leave accrual and
the benefits payable amounts are calculated. As a result, payroll and benefits
payable were materially understated. The fiscal year 2010 accruals for PRIA were
$239,000 while the fiscal year 2011 accruals were $8,000.
Significant Deficiency: EPA Should Identify When Pesticide
Registration Improvement Renewal Act Fees Should Be Recorded as
Accounts Receivables
EPA did not record accounts receivable for a PRIA fee until the payments were
18 months overdue. The program office sent the request to the Cincinnati Finance
Center after the collection was overdue. By not tracking or recording the request
for payment of a government debt in the financial system, EPA may be
understating its accounts receivable in its annual financial statements. During our
fiscal year 2011 allowance review, we found a PRIA receivable totaling $1,090
for which the finance center was unable to record an allowance because there was
no accounting model for a PRIA allowance for doubtful accounts.
Comparison of EPA's FMFIA Report with Our Evaluation of Internal
Controls
OMB Bulletin No. 07-04, Audit Requirements for Federal Financial Statements,
as Amended, 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 fiscal year 2011 impacting the PRIA Fund; however, we identified a material
weakness with the Agency's reporting of payroll and benefits payable. Details
concerning this material weakness are in attachment 1.
Tests of Compliance With Laws and Regulations
In accordance with PRIA, the Administrator is required to publish a schedule of
decision time review periods for pesticide registration actions and corresponding
registration fees in the Federal Register. Decision time review periods are
specified time limits for the Agency to grant or deny pesticide registrations. PRIA
also requires the Office of Inspector General (OIG) to perform an analysis of the
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Agency's compliance with decision time review periods. The Agency was in
compliance with the statutory decision time frames.
As part of obtaining a reasonable assurance about 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 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
noncompliances 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 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:
•	We reported in the March 2011 PRIA report that EPA misapplied federal
retirement benefit cost factors in calculating fiscal year 2010 imputed
costs related to the Civil Service Retirement System and the Federal
Employees Retirement System. Imputed costs are costs that are not fully
reimbursed.
•	We could not assess the adequacy of the Integrated Financial
Management System automated controls.
The Agency has taken action to correct both of these deficiencies by correcting
the fiscal year 2010 imputed costs in the PRIA Fund Financial Statements and by
implementing a new accounting system to replace the Integrated Financial
Management System in October 2011
Agency Comments and OIG Evaluation
In a memorandum dated May 11, 2012, the Agency responded to our draft report.
The Office of the Chief Financial Officer and Office of Chemical Safety mid
Pollution Prevention concurred with our recommendations and provided
corrective actions for each specific recommendation. We agree with the Agency's
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proposed corrective actions and believe that they adequately address the issues
raised. The Agency's complete response is included as appendix B to this report.
Paul C. Curtis
Director, Financial Statement Audits
Office of Inspector General
U.S. Environmental Protection Agency
June 6, 2012
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Attachment 1
Material Weakness
Table of Contents
1 - PRIA Payroll and Benefits Payable are Understated	7
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1 - PRIA Payroll and Benefits Payable Are Understated
EPA materially understated the PRIA Fund's payroll and benefits payable, and related payroll
expense included in gross costs, in the draft fiscal year 2011 financial. OMB Circular A-136,
Financial Reporting Requirements, states, "Liabilities shall be recognized when they are
incurred regardless of whether they are covered by available budgetary resources." The
Agency's practice of transferring employees and related expenses and liabilities from PRIA to
the EPM Fund for cash flow reasons led to the understatement. The fiscal year 2010 accruals for
PRIA were $239,000 while the fiscal year 2011 accruals were $8,000. Such understatements
could impact the opinion on the financial statements and reliance on reported PRIA financial
information.
The annual leave accrual amount is calculated at year-end using the total number of PRIA
employees multiplied by their hourly rates and accrued leave balances. Just prior to year-end, the
Office of Pesticide Programs transferred all employees from PRIA to EPM. On average,
59 employees were assigned to PRIA throughout fiscal year 2011. The transfer removed the base
upon which the leave accrual and the benefits payable amounts are calculated. As a result,
payroll and benefits payable were materially understated.
EPA uses the EPM appropriation for a broad range of abatement, prevention, and compliance
activities, and personnel compensation, benefits, travel, and expenses for all programs of the
Agency. Statement of Federal Financial Accounting Standards No. 5 states that liabilities should
be recognized when they are incurred and directs that liabilities arising from transactions should
be recognized for the unpaid amounts due as of the reporting date. OMB Circular No. 136,
Financial Reporting Requirements, further classifies liabilities of federal agencies as liabilities
covered or not covered by budgetary resources (e.g., unfunded).
EPA began the practice of moving payroll expenses from PRIA to EPM in fiscal year 2000.
When PRIA resources are low, the Agency transfers employees from PRIA to EPM to keep
PRIA obligations and disbursements within budgetary and cash limits. As PRIA fees are
collected, employees are moved back to the PRIA appropriation. EPA has regularly disclosed
this ongoing practice in prior PRIA financial statement reports, and this practice is expected to
continue throughout fiscal year 2012. Temporarily moving employees for cash flow reasons
should not impact accruals as long as those employees are continuing the same work. If the
transfers become permanent, PRIA should recognize a benefit as another appropriation would be
covering the accrued payroll debt.
The process of moving employees and the related payroll expenses and liabilities between PRIA
and EPM near year-end contributed to the understatement of the PRIA payroll and benefits
payable and related payroll expense included in gross costs, in the draft fiscal year 2011 financial
statements. However, the Office of the Chief Financial Officer should have realized that the
transfer of employees from PRIA to EMP was only temporary and computed the annual leave
accrual and payroll benefits payable amounts accordingly.
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Recommendations
We recommend that Office of the Chief Financial Officer:
1.	Correct the PRIA financial statements to reflect the proper payroll and benefits payable
amounts.
2.	Closely monitor the payroll and benefit accruals for PRIA at year-end.
Agency Response and OIG Evaluation
The Agency agreed with our findings and recommendations, and has completed corrective
actions on recommendation 1. The Office of the Chief Financial Officer corrected the PRIA
financial statements to reflect the proper payroll and benefits payable amounts.
Agency actions on recommendation 2 are pending. The Office of the Chief Financial Officer
indicated it will closely monitor the payroll and benefit accruals for PRIA at year-end. The
estimated completion date for this corrective action is September 30, 2012.
The Agency's response is included in appendix B to this report. We agree with the Agency's
proposed corrective actions and believe they adequately address the issues raised.
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Significant Deficiency
Table of Contents
2 - EPA Should Identify When Pesticide Registration Improvement
Renewal Act Fees Should Be Recorded as Accounts Receivables
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2 - EPA Should Identify When Pesticide Registration Improvement
Renewal Act Fees Should Be Recorded as Accounts Receivables
EPA did not record accounts receivable for a Pesticide Registration Improvement Renewal Act
(PRIA 2) fee until the payments were 18 months overdue. The program office sent the request to
the Cincinnati Finance Center after the collection was overdue. The Federal Insecticide,
Fungicide, and Rodenticide Act (FIFRA), as amended by PRIA, requires that when EPA does
not receive payment of a registration service fee by 30 days after the fee is due, the fee shall be
treated as a claim of the government. By not tracking or recording the request for payment of a
government debt in the financial system, EPA may be understating its accounts receivable in its
annual financial statements.
During our fiscal year 2011 allowance review, we found a PRIA receivable totaling $1,090 for
which the finance center did not record an allowance for doubtful account because there was no
accounting model for a PRIA allowance for doubtful account. We reviewed the receivable and
found supporting documentation showing that EPA's program office sent a billing letter to a
vendor for nonpayment of fees in July 2008, requesting payment by August 2008. The program
office requested the Accounting and Reporting Section (ARS) to record the receivable. ARS
requested that the finance center record the receivable in January 2010, over 1 year after the
nonpayment of fees letter was sent. We reviewed the allowance files at year-end and found that
this receivable remained uncollected, and no recorded allowance appears in the financial system.
FIFRA, as amended by PRIA, Section 33(b)(2)(D), states that the registration service fee
required under this subsection shall be due upon submission of the application. Section
33(b)(2)(F-H) states that the Administrator shall reject any application submitted without the
required registration service fee and retain 25 percent of the applicable registration service fee.
In any case in which the Administrator does not receive payment of a registration service fee
(or applicable portion of the registration service fee) by the date that is 30 days after the fee is
due, the fee shall be treated as a claim of the U.S. government subject to 31 U.S. Code,
Chapter 37, Subchapter II.
ARS did not explain why the request for recording the receivable did not reach the finance center
until January 2010. We believe the request to record a receivable should be sent directly to the
finance center at the same time a billing letter is sent to the vendor requesting payment. EPA
does not have any policies or procedures relating to the recording of account receivables for
nonpayment of PRIA fees.
Clear policies and procedures that outline when or how billings for PRIA fees from rejected
applications should be handled in the financial system would improve EPA's internal controls.
If EPA considers nonpayment of rejected applications to be receivables after the 30-day period,
EPA should ensure that the nonpayment is recorded in the financial system at the time the billing
letter is sent to the vendor and not 1 year later. Because the finance center reviews delinquent
debt quarterly to estimate the uncollectible amount, these receivables should have been recorded
in the allowance for doubtful accounts much sooner. EPA should ensure that the financial system
has an allowance accounting model to timely record PRIA receivables.
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Recommendations
We recommend that the Office of the Chief Financial Officer:
3.	Work with the Office of Chemical Safety and Pollution Prevention to develop policies
and procedures that identify when accounts receivable should be recorded for
nonpayment of PRIA fees.
4.	Create an accounting model in the financial system for PRIA allowances and possible
write-offs.
We recommend that the Office of Chemical Safety and Pollution Prevention:
5.	Develop a routine process to ensure that its staff is trained on accounting policies and
procedures relating to sending documents to the finance centers for recording accounts
receivable.
Agency Response and OIG Evaluation
The Agency agreed with our findings and recommendations, and it has completed corrective
actions on recommendation 4. The Office of the Chief Financial Officer established general
ledger posting models in Compass for PRIA allowances and possible write-offs.
Agency actions on recommendations 3 and 5 are pending. . The Office of the Chief Financial
Officer will work with the Office of Chemical Safety and Pollution Prevention to develop
policies and procedures that identify when accounts receivables should be recorded for
nonpayment of PRIA fees. The estimated completion date for this corrective action is December
31, 2012. The Office of Chemical Safety and Pollution Prevention is changing its procedures
with respect to establishing accounts receivables for PRIA actions that are rejected for non-
payment of the required PRIA fee. The estimated completion date for this corrective action is
July 31, 2012.
The Agency's response is included in appendix B to this report. We agree with the Agency's
proposed corrective actions and believe they adequately address the issues raised.
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Attachment 3
Status of Recommendations and
Potential Monetary Benefits
POTENTIAL MONETARY
RECOMMENDATIONS	BENEFITS (in $000s)
Rec.
No.
Page
No.
Subject
Status1
Action Official
Planned
Completion
Date
Claimed Agreed-To
Amount Amount
1
8
Correct the PRIA financial statements to reflect the
proper payroll and benefits payable amounts.
C
Office of the
Chief Financial Officer
03/05/2012

2
8
Closely monitor the payroll and benefit accruals for
PRIA at year-end.
0
Office of the
Chief Financial Officer
09/30/2012

3
11
Work with the Office of Chemical Safety and
Pollution Prevention to develop policies and
procedures that identify when accounts receivable
should be recorded for nonpayment of PRIA fees.
0
Office of the
Chief Financial Officer
12/31/2012

4
11
Create an accounting model in the financial system
for PRIA allowances and possible write-offs.
c
Office of the
Chief Financial Officer
01/11/2012

5
11
Develop a routine process to ensure that its staff is
trained on accounting policies and procedures
relating to sending documents to the finance
centers for recording accounts receivable.
0
Office of Chemical Safety
and Pollution Prevention
07/31/2012

1 0 = recommendation is open with agreed-to corrective actions pending
C = recommendation is closed with all agreed-to actions completed
U = recommendation is unresolved with resolution efforts in progress
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Appendix A
FYs 2011 and 2010 PESTICIDE REGISTRATION FUND
(PRIA)
FINANCIAL STATEMENTS
f	5
x •• * 		" * Q
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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	1
Principal Financial Statements	7
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EPA's FY 2011 Annual PRIA Financial Statements

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Management's Discussion and Analysis
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EPA's FY 2011 Annual PRIA Financial Statements
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MANAGEMENT'S DISCUSSION AND ANALYSIS
The EPA's Office of Pesticide Programs (OPP) was established to administer the Federal
Insecticide, Fungicide and Rodenticide Act (FIFRA) to protect public health and the
environment. The law requires the Agency to balance public health and environmental concerns
with the expected economic benefits derived from pesticides. The guiding principles of the
pesticide program are to reduce risks from pesticides in food, the workplace, and other exposure
pathways and to prevent pollution by encouraging the use of new and safer pesticides.
With passage of the Pesticide Registration Improvement Act (PRIA) of 2003, the
pesticide program now administers the Pesticide Registration Fund. PRIA authorizes the
collection of new fees for pesticide registrations. Registration service fees 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 the authority of FIFRA and the Federal Food, Drug, and Cosmetic Act (FFDCA)
as amended by the Food Quality Protection Act (FQPA), no person or State can distribute or sell
any pesticide that is not registered with the Agency. The pesticide registration program works to
decrease the risk to the public from pesticide use through the regulatory review of new
pesticides. In 2004, Congress passed PRIA, with deadlines for completion of certain registration
actions. As part of the registration program, EPA expedites the registration of reduced-risk
pesticide uses, which are generally presumed to pose lower risks to people and the environment.
These accelerated pesticide reviews provide an incentive for industry to develop, register, and
use lower risk pesticides. Additionally, the availability of these reduced-risk pesticides provides
alternatives to older, potentially more harmful products currently on the market.
Biological agents are potential weapons that could be exploited by terrorists against the
United States. EPA's pesticides antimicrobial program is working to help address this threat.
Antimicrobials play an important role in public health and safety. EPA is conducting
comprehensive scientific assessments and developing test protocols to determine the safety and
efficacy of products used against chemical and biological weapons of mass destruction, and
registering products as necessary. EPA is also developing a timeline for prioritizing and
implementing the tests. In addition, the FIFRA Section 18 program provides emergency
exemption to any part of FIFRA. This authority is typically used by States on an emergency
basis. EPA has recently used this authority to help with homeland security. Section 18
exemptions have been authorized to help with anthrax and soybean rust.
PRIA established registration service fees for certain antimicrobials, biopesticides and
conventional pesticides registration actions. The category of action, the amount of the
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EPA's FY 2011 Annual PRIA Financial Statements
2

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registration service fee, and the corresponding decision review periods by year are prescribed in
the statute. The goal is to create a more predictable evaluation process for affected pesticide
decisions, and couple the collection of individual fees with specific decision review periods. The
legislation also promotes shorter decision review periods for reduced-risk applications. PRIA
became effective on March 23, 2004, and the collection of registration fees were authorized
through FY 2008. PRIA was reauthorized with passage of the Pesticide Registration
Improvement Renewal Act (commonly referred to as PRIA 2) on October 9, 2007. PRIA 2
became effective retroactive to October 1, 2007, and the collection of registration fees are now
authorized through FY 2012. In order to help ensure a smooth transition (if PRIA 2 is not re-
authorized), PRIA 2 reduces the registration service fees by 40 percent in FY 2013 and then by
70 percent in FY 2014. For any application received after September 30, 2012, but before
September 30, 2014, the reduced registration service fee applies, while the decision review
periods do not.
In order 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 fees1. 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 2, the fee has been paid and waiver granted. The
legislation provides fee waivers for certain categories of small businesses, and minor uses .
Exemptions from the requirement to pay a registration service fee is provided under PRIA 2 for
applications solely associated with IR-4 petitions3. 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 it
is determined that a fee is required and thus the waiver is not granted, the decision review period
starts after the fee is collected.
Applications received prior to October 1, 2007 are covered by PRIA 1. Applications
received in FY08 are covered by PRIA 2 and PRIA 2 contains the same audit provision as PRIA
1. PRIA 2 imposed minimum payment requirements, requires the EPA to reject an application
for an unpaid fee, allows the Agency to reject an application and retain a portion of the fee if the
application fails an initial content screen; increased the fee categories or types of applications
1	Out of approximately 11,650 completed PRIA actions since the start of PRIA, more than 99% were completed on
or before the PRIA/PRIA 2 due date.
2	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.
3	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.
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covered by PRIA from 90 to 140; allows the use of investment income; eliminated the 100% fee
waiver for small businesses; and increased the amount to support worker protection activities.
Research Program Description
Chemical safety is a major priority of research and decision making at EPA. EPA's new
integrated Chemical Safety for Sustainability research program is charged with examining the
risks resulting from exposure to pesticides and toxic chemicals. In previous years, this research
was performed under EPA's pesticides and toxics research program which will be consolidated
in FY 2012 into the Chemical Safety for Sustainability research program. Chemical safety
research is improving the protection of human health and the environment by providing scientific
approaches and information on chemical exposure, hazard and risk. The research program's
major goals are: (1) to evaluate pesticide and toxic chemicals for potential risks to human health
and the environment; (2) to research ways to produce, use and dispose of new and existing
chemicals using more sustainable methods, (3) emphasizes research efforts targeting
nanomaterials and endocrine disrupting chemicals and (4) uses innovative chemical screening
technologies such as computational toxicology to generate chemical data on the biological
effects of large numbers of chemicals.
The Chemical Safety research program:
•	Examines chemical properties (inherency): Chemical inherency is the physico-chemical
characteristics of a pesticide or toxic that influences exposure and toxicity potential.
Inherency research works to understand the relationships between chemical inherency,
toxicity potential and specific disease outcomes.
•	Develops systems models to assess the potential toxicity of chemicals: Systems models
are developed to research the entire process of how a pesticide or toxic interacts with the
biological processes of humans and wildlife. The investigation starts with research on
chemical exposures. It then follows the subsequent interactions between chemical
exposures and resulting adverse effects to improve the understanding of environmentally
caused diseases.
•	Evaluates biomarkers: Biomarkers are biological responses that indicate exposure to a
pesticide or toxic, an effect from exposure or susceptibility to adverse effects from a
chemical. Biomarkers research uses linkages to develop biomarker-based predictive tools
to understand chemical exposure events and predict potential outcomes.
•	Assesses cumulative risk: Real world chemical exposures are rarely due to a single
pesticide or toxic. The research assesses the potential human health and environmental
outcomes that may occur due to multiple and continuous exposures to toxics and
mixtures, especially those found in consumer products.
•	Evaluates Chemical Life Cycle: Life cycle considerations research includes studying the
design, manufacture, and use of a pesticide or toxic. By examining the environmental
exposures and human and ecological health impacts of a chemical, Life Cycle research
provides data to inform the design of more sustainable chemicals.
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•	Provides methods for extrapolating chemical data: This research uses available pesticide
and toxics data to develop approaches that extrapolate possible effects between test
organisms and human or ecological responses, test and real-world exposure durations,
and from laboratory to field conditions.
•	Provides decision makers access to developed databases, tools and models: Using EPA's
web-based interactive tools, decision-makers and others interested in pesticide and toxics
research data can access information from chemical exposure, hazard data, decision-rules
and predictive models. CSS is working to provide more integrative, holistic information
for use in pesticide and toxic risk assessment and risk management decisions.
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 states' and tribes' pesticide programs emphasizes its commitment
to maintaining a strong compliance and enforcement presence. Agency Cooperative Agreement
priorities for FY 2011 - FY 2013 include reducing chemical risks and protecting the underserved
and vulnerable populations. Core program activities include inspections of producing
establishments; dealers/distributors/retailers; e-commerce; imports and exports, and pesticide
misuse. Additionally, through the Cooperative Agreement resources we support inspector
training and training for state/tribal senior managers, scientists, and supervisors.
Highlights and Accomplishments
Resistration Financial Perspective
During FY 2011, the Agency's obligations charged against the Pesticide Registration
Fund for the cost of registration were $14.9 million and 54.3 workyears (all obligated by OPP).
Appropriated funds are used in addition to Registration funds. In FY 2011, the enacted
operating plan included approximately $38.2 million in appropriated funds for registration
activities. The unobligated balance in the Fund at the end of FY 2011 was $4.2 million.
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The Fund has two types of receipts: fee collections and interest earned on investments.
Of the $11.7 million in FY 2011 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 2011 President's budget.
Measure 1: Number of new active ingredients registered.
Results: In FY 2011 EPA registered 18 new active ingredients, of which 11 are
biopesticides, and 4 are conventional pesticides (1 with domestic uses and 3 import tolerance
only new active ingredients). This measure includes both reduced-risk and non-reduced-risk
pesticides.
Measure 2: Progress in Registering Reduced-risk Pesticides.
Results: In FY 2011, EPA registered 11 reduced-risk new active ingredients, all of
whichwere biological pesticides. Biological pesticides are certain types of pesticides derived
from 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 11 biopesticides 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 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 194 new food uses for previously registered active ingredients.
Of these new uses, 184 were for conventional pesticides, 2 were for antimicrobial pesticides, and
8 were for biopesticides.
Measure 4: Progress in Registering Reduced-risk New Uses.
Results: Included in the new uses registered are 23 reduced-risk.
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PRINCIPAL
FINANCIAL STATEMENTS
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TABLE OF CONTENTS
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	16
Note 3. Other Assets	16
Note 4. General Property, Plant and Equipment	17
Note 5. Other Liabilities	17
Note 6. Payroll and Benefits Payable	18
Note 7. Income and Expenses from Other Appropriations	18
Note 8. Exchange Revenues, Statement of Net Cost	20
Note 9. Intragovernmental Costs and Exchange Revenue	20
Note 10. Reconciliation of Net Cost of Operations to Budget (formerly the
Statement of Financing)	21
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Environmental Protection Agency
PRIA
Balance Sheet
For the Years Ended September 30, 2011 and 2010
(Dollars in Thousands)
FY2011	FY2010
ASSETS


Intragovernmental:


Fund Balance With Treasury (Note 2)
$ 11,241 $
15,094
Other (Note 3)
40
100
Total Intragovernmental
$ 11,281 $
15,194
Accounts Receivable, Net
2
2
Property, Plant & Equipment, Net (Note 4)
3,188
4,445
Total Assets	$	14,471 $	19,641
LIABILITIES
Intragovernmental:
Accounts Payable and Accrued Liabilities	133	141
Other (Note 5)		95_ 	21_
Total Intragovernmental	$	228	$	162
Accounts Payable & Accrued Liabilities	$	816	$	1,088
Payroll & Benefits Payable (Note 6)	962	239
Other (Note 5)		10,064 	14,088
Total Liabilities	$	12,070	$	15,577
NET POSITION
Cumulative Results of Operations
Total Net Position
Total Liabilities andNet Position
2.401
2.401
14,471 $
19,641
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The accompanying notes are an integral part of these statements.
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Environmental Protection Agency
PRIA
Statement of Net Cost
For the Years Ended September 30, 2011 and 2010
(Dollars in Thousands)

FY2011
FY2010
COSTS


Gross Costs (Note 9) $
17,672 $
16,990
Expenses from Other Appropriations (Note 7)
36,710
37,256
Total Costs $
54,382 $
54,246
Less:


Earned Revenue (Notes 8 and 9)
15,809
17,885
NET COST OF OPERATIONS (Note 9) $
38,573 S
36,361
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The accompanying notes are an integral part of these statements.
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Environmental Protection Agency
PRIA
Statement of Changes in Net Position
For the Years Ended September 30, 2011 and 2010
(Dollars in Thousands)
Cumulative Results of Operations:
FY 2011
FY 2010
Net Position - Beginning of Period
Beginning Balances, as Adjusted
4,064
$ 4,064 $
2,806
2,806
Budgetary Financing Sources:
Nonexchange Revenue - Securities Investment
Nonexchange Revenue - Other
Income from Other Appropriations (Note 7)
T otal Budgetary Financing Sources
5
0
36,710
$ 36,715 $
6
2
37,256
37,264
Other Financing Sources (Non-Exchange)
Imputed Financing Sources
T otal Other Financing Sources
195
$ 195 $
355
355
Net Cost of Operations
(38,573)
(36,361)
Net Change
(1,663)
1,258
Cumulative Results of Operations
$ 2,401 $
4,064
The accompanying notes are an integral part of these statements.
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Environmental Protection Agency
PRIA
Statement of Budgetary Resources
For the Years Ended September 30, 2011 and 2010
(Dollars in Thousands)
FY 2011
FY2010
BUDGETARY RES OURGES
Unobligated Balance, Brought Forward, October 1:
Adjusted Subtotal
Budgetary Authority:
Appropriation
Spending Authority fromOffsetting Collections
Earned:
Collected
Total Spending Authority from Offsetting Collections
Temporarily Not Available Pursuant to Public Law
Total Budgetary Resources
7,393 £
7,393
11,790
(40)
6,980
6,980
18,557
19,143 £
25,540
STATUS OF BUDGETARYRESOURCES
Obligations Incurred:
Direct
Total Obligations Incurred
Unobligated Balances:
Apportioned
Total Unobligated Balances
Unobligated Balances Not Available
Total Status of Budgetary Resources
14,896 £
14,896
4,247
4,247
19,143
18,147
18,147
7,368
7,368
25
25,540
CHANGE IN OBLIGATED BALANCE
Obligated Balance, Net:
Unpaid Obligations, Brought Forward, October 1
Total Unpaid Obligated Balance, Net
Obligations Incurred, Net
Less: Gross Outlays
Total, Change in Obligated Balance
7,701
7,701
14,896
(15,642)
6,955
8,161
8,161
18,147
(18,607)
7,701
Obligated Balance, Net, End of Period:
Unpaid Obligations
Total, Unpaid Obligated Balance, Net, End of Period
6,955
6,955
7,701
7,701
NET OUTLAYS
Net Outlays:
Gross Outlays
Less: Offsetting Collections
Less: Distributed Offsetting Receipts (Note 1 Section L)
Total, Net Outlays
15,642 £
(11,790)
3,852 £
18,607
(3)
(18,557)
47
The accompanying notes are an integral part of these statements.
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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. 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 2011 and 2010 were $36,710 thousand and $37,256 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 2011 and 2010.
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
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
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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 2011
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 2011 and 2010, PRIA received funding from fees collected from registrants requesting
pesticide registrations. For FYs 2011 and 2010, 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
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.
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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 10 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
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
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15

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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-136, 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.
Note 2. Fund Balance with Treasury
FY 2011	FY 2010
Revolving Funds: Entity Assets	$	11,241	$	15,094
Note 3. Other Assets
Other Assets consist of advances for Interagency Agreements. As of September 30, 2011 and
2010, funds advanced that will be applied to future costs as incurred were $40 thousand and
$100 thousand respectively.
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Note 4. 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, 2011 and 2010, General Property, Plant and Equipment consist of the
following:


FY 2011


FY 2010


Acquisition
Accumulated
Net Book
Acquisition
Accumulated
Net Book

Value
Depreciation
Value
Value
Depreciation
Value
EPA-Held Equipment 5
B 410 :
S (271) 3
> 139
S 446 J
B (239) :
5 207
Software
4,198
(1,149)
3,049
4,238
-
4,238
Total 3
> 4,608 :
$ (1,420) 3
; 3,188
$ 4,684 Ğ
8 (239) !
$ 4,445
Note 5. Other Liabilities
For FYs 2011 and 2010, 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 2011	FY 2010
Other Intragovernmental Liabilities - Covered
by Budgetary Resources
Employer Contributions - Payroll	$	95	$ 	21_
Total	$	95"	$	21
Other Non-Federal Liabilities - Covered by
Budgetary Resources
Advances from Non-Federal Entities	$ 10,064 $	14,088
Total	$ 10,064 $ 	14,088
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Note 6. Payroll and Benefits Payable, Non-Federal:
FY 2011	FY 2010
Covered by Budgetary Resources
Accrued Payroll Payable to Employees	$ 327	$ 61
Withholdings Payable	61	29
Thrift Savings Plan Benefits Payable	17	3
Total	$	405	$	93
Not Covered by Budgetary Resources
Unfunded Annual Leave	$	557	$	146
Total	$	557	$	146
At various periods throughout FYs 2011 and 2010 employees with their associated payroll costs
were transferred from PRIA to the Environmental Programs and Management (EPM)
appropriation. (See graph in Note 7 below showing trend of hours charged per month to the
PRIA fund for FYs 2011 and 2010.) 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 2011 and 2010. The
liabilities covered by budgetary resources (both intragovernmental and non-Federal) represent
unpaid payroll and benefits at year-end. For FY 2011 Pay Period 26; no employees charged any
part of their salary and benefits to PRIA. As of September 30, 2011, the liabilities were $95
thousand and $405 thousand for employer contributions and accrued funded payroll and benefits
as compared to FY 2010's balances of $21 thousand and $93 thousand, respectively.
In contrast, the unfunded annual leave liability is a longer term liability than the funded
liabilities. At various periods throughout FYs 2011 and FY 2010, approximately 130 and 144
employees, respectively, in total have been under PRIA's accountability. As of September 30,
2011 and 2010 liability balances for unfunded annual leave were accrued to cover these
employees for a total of $557 thousand and $146 thousand, respectively.
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.
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During FYs 2011 and 2010, the EPA had two appropriations which funded a variety of
programmatic and non-programmatic activities across the Agency, subject to statutory
requirements. The EPM appropriation was created to fund personnel compensation and benefits,
travel, procurement, and contract activities. Transfers of employees from PRIAto EPM at
various times during FYs 2011 and 2010 (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 2011 and 2010 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 - Total Employee Hours by Month
16,000
14,000
12,000
10,000
S 8,000
.o
a
,1 6,000
4,000
2,000
^	*	C#
•FY 2011 Total Hours
•FY 2010 Total Hours
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.
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Income From Other	Expenses From Other	Net
Appropriations	Appropriations	Effect
FY 2011 $ 	36,710 $	36,710 $	0
FY 2010 $ 37,256	$ 37,256	$ 0
Note 8. Exchange Revenues, Statement of Net Cost
For FYs 2011 and 2010, the exchange revenues reported on the Statement of Net Cost consists of
non-Federal amounts.
Note 9. Intragovernmental Costs and Exchange Revenue
FY 2011	FY 2010
COSTS:
Intragovernmental	$ 2,661	$	2,730
With the Public	15,011	14,260
Expenses from Other Appropriations	36,710	37,256
Total Costs	$ 54,382	$	54.246
REVENUE:
With the Public	15,809	17,885
Total Revenue	$ 15,809	$ 17,885
NET COST OF OPERATIONS	$ 38,573	$ 36,361
Intragovernmental costs relate to the source of the goods or services not the classification of the
related revenue.
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Note 10. Reconciliation of Net Cost of Operations to Budget (formerly the Statement of
Financing)
RESOURCES USED TO FINANCE ACTIVITIES:
Budgetary Resources Obligated
Obligations Incurred
Less: Spending Authority from Offsetting Collections and Recoveries
Obligations, Net of Offsetting Collections
Less: Offsetting Receipts (Note 1 Section L)
Net Obligations
Other Resources
Imputed Financing Sources
Income from Other Appropriations (Note 7)
Net Other Resources Used to Finance Activities
Total Resources Used To Finance Activities
RESOURCES USED TO FINANCE ITEMS
NOT PART OF NET COST OF OPERATIONS
Change in Budgetary Resources Obligated
Resources that Fund Prior Periods Expenses
Offsetting Receipts Not Affecting Net Cost (Note 1 Section L)
Resources that Finance Asset Acquistion
Total Resources Used to Finance Items Not
Part of the Net Cost of Operations
Total Resources Used to Finance the Net
Cost of Operations
COMPONENTS OF 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 Receivable
Total Components of Net Cost of Operations that
Requires or Generates Resources in the Future
Components Not Requiring/Generating Resources:
Depreciation and Amortization
Expenses Not Requiring Budgetary Resources
Total components of Net cost of Operations that Will Not Require or Generate Resources
Total components of Net cost of Operations that Will Not Require
or Generate Resources in the Current Period
FY 2011
$ 14,896
FY 2010
18,147
(3)
14,896 $
18,144
(11,790)
(18,557)
3,106
(413)
195 $
355
36,710
37,256
36,905 $
37,611
40,011 $
37,198
913 $
(261)
-
(446)
11,790
18,557
(3,966)
(803)
8,737 $
17,047
48,748 $
54,245
411 $

(15,810)
(17,885)
(15,399) $
(17,885)
1,182
1
4,042
-
5,224
1
(10,175)
(17,884)
Net Cost of Operations
38,573
36,361
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EPA's FY 2011 Annual PRIA Financial Statements
21

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Appendix B
Agency's Response to Draft Report
May 11,2012
MEMORANDUM
SUBJECT: Response to Office of Inspector General Draft Report: "Fiscal Year 2011 and
2010 Financial Statements for the Pesticides Registration Fund, " Report No.
2012-P-XXXX, dated April 30, 2012
FROM: Barbara J. Bennett /s/Original Signed By:
Chief Financial Officer
Jim Jones, Acting Assistant Administrator
Office of Chemical Safety and Pollution Prevention
TO:	Arthur A. Elkins, Jr.
Inspector General
Thank you for the opportunity to respond to the issues and recommendations in the subject audit
report. Attention to the issues identified in the report should help further strengthen the agency's
fiscal integrity. Attached is our corrective action plan in response to the specific
recommendations made in the report.
If you have any questions regarding this response, please contact Sandy Dickens of the Office of
Financial Management on (202) 564-0606.
Attachment
cc: Maryann Froehlich
Joshua Baylson
Steven Bradbury
Marty Monell
Stefan Silzer
Jeanne Conklin
Chris Osborne
Sherri Anthony
Sandy Dickens
12-1-0522

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Sheldonna Proctor
Raffael Stein
Melvin Visnick
Richard Gray
Janice Kern
Janet Weiner
Peter Caulkins
Vickie Robinson
Maria Sorrell
John Street
Michael Hardy
Janet Weiner
Melissa Heist
Meg Hiatt
Robert L. Smith
Art Budelier
Sheila May
Bill Samuel
12-1-0522

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Attachment
Response to Office of Inspector General Draft Report No. 12-P-XXXX
"Fiscal Year 2011 and 2010 Financial Statements for the Pesticide Registration Fund, "
dated April 30, 2012
Rec.
No.
OIG Recommendation
Proposed Corrective Action
Action
Official
Estimated
Completion Date
1.
Correct the PRIA financial
statements to reflect the proper
payroll and benefits payable
amounts.
1.1 OCFO/OFM will correct
the PRIA financial
statements to reflect the
proper payroll and benefits
payable amounts.
OCFO/OFM
03/05/2012
(COMPLETED)
2.
Closely monitor the payroll and
benefit accruals for PRIA at
year-end.
2.1 OCFO/OFS will closely
monitor the payroll and
benefit accruals for PRIA at
year-end.
OCFO/OFS
09/30/2012
3.
Work with the Office of
Chemical Safety and Pollution
Prevention to develop policies
and procedures that identify
when accounts receivable
should be recorded for
nonpayment of PRIA fees.
3.1 OCFO/OFM will work
with OCSPP's Office of
Pesticide Programs to
develop policies and
procedures that identify when
accounts receivable should
be recorded for nonpayment
of PRIA fees.
OCFO/
OFM/FPPS
12/31/2012
4.
Create an accounting model in
the financial system for PRIA
allowances and possible write-
offs.
4.1 OCFO/OFM will
establish General Ledger
posting models in Compass
for PRIA allowances (SV41)
and possible write-offs
(CWR13).
OCFO/OFM/
RAS
01/11/2012
(COMPLETED)
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Rec.
No.
OIG Recommendation
Proposed Corrective Action
Action
Official
Estimated
Completion Date
5.
Develop a routine process to
ensure that its staff is trained on
accounting policies and
procedures relating to sending
documents to the finance
centers for recording accounts
receivable.
5.1 OCSPP/OPP has changed
its procedures with respect to
establishing accounts
receivable for PRIA actions
that are rejected for non-
payment of the required
PRIA fee.
OCSPP/OPP
07/31/2012
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Distribution
Appendix C
Office of the Administrator
Chief Financial Officer
Acting Assistant Administrator for Chemical Safety and Pollution Prevention
Assistant Administrator for Administration and Resources Management
Deputy Chief Financial Officer
Agency Follow-Up Coordinator
General Counsel
Associate Administrator for Congressional and Intragovernmental Relations
Associate Administrator for External Affairs and Environmental Information
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
Director, Office of Human Resources, Office of Administration and Resources Management
Director, Office of Financial Management, Office of the Chief Financial Officer
Director, Office of Financial Services, Office of the Chief Financial Officer
Director, Reporting and Analysis Staff, Office of the Chief Financial Officer
Acting Director, Financial Policy and Planning Staff, Office of the Chief Financial Officer
Director, Research Triangle Park Finance Center, Office of the Chief Financial Officer
Director, Cincinnati Finance Center, Office of the Chief Financial Officer
Director, Las Vegas Finance Center, Office of the Chief Financial Officer
Director, Payroll Management and Outreach Staff, Office of Financial Services, Office of the
Chief Financial Officer
Staff Director, Accountability and Control Staff, Office of Financial Services, 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
Audit Follow-Up Coordinator, Office of Administration and Resources Management
PRIA Audit Coordinator, Office of Pesticide Programs, Office of Chemical Safety and
Pollution Prevention
12-1-0522

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