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U.S. ENVIRONMENTAL PROTECTION AGENCY
OFFICE OF INSPECTOR GENERAL
Catalyst for Improving the Environment
Audit Report
Fiscal Year 2007 and 2006
Financial Statements for the
Pesticides Reregistration and
Expedited Processing Fund
Report No. 08-1-0194
July 8, 2008

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Sheree James
Ethel Lowery
Sheila May
Javier Negron
Demetrios Papakonstantinou
Abbreviations
EPA
FIFRA
FMFIA
IFMS
OIG
OMB
OPP
OPPIN
Report Contributors:	Paul Curtis
Wanda Whitfield
Bill Samuel
Sabrina Berry
Diane Forrest
Robert Hairston
U.S. Environmental Protection Agency
Federal Insecticide, Fungicide, and Rodenticide Act
Federal Managers' Financial Integrity Act
Integrated Financial Management System
Office of Inspector General
Office of Management and Budget
Office of Pesticide Programs
Office of Pesticide Programs Information Network

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U.S. Environmental Protection Agency
Office of Inspector General
At a Glance
08-1-0194
July 8, 2008
Why We Did This Audit
The Food Quality Protection
Act requires that we perform
an annual audit of the
Pesticides Reregistration and
Expedited Processing Fund
(known as the FIFRA Fund)
financial statements.
Background
The U.S. Environmental
Protection Agency (EPA) is
responsible for reassessing the
safety of older pesticide
registrations against modern
health and environmental
testing standards. To expedite
this reregistration process,
Congress authorized EPA to
collect fees from pesticide
manufacturers. The fees are
deposited into the FIFRA
Fund. Each year, the Agency
prepares financial statements
that present financial
information about the Fund,
along with information about
EPA's progress in
reregistering pesticides.
For further information,
contact our Office of
Congressional and Public
Liaison at (202) 566-2391.
To view the full report,
click on the following link:
www.epa.qov/oiq/reports/2008/
20080708-08-1-0194.pdf
Catalyst for Improving the Environment
Fiscal Year 2007 and 2006 Financial Statements
for the Pesticides Reregistration and Expedited
Processing Fund
Opinion
We rendered an unqualified, or clean, opinion on EPA's Pesticides Reregistration
and Expedited Processing Fund Financial Statements for Fiscal Years 2007 and
2006, meaning that they were fairly presented and free of material misstatement.
Internal Control Significant Deficiency Noted
We noted one significant deficiency in internal controls. The Office of Pesticide
Programs was unable to provide reliable information on accomplishments for
reregistration and amendment actions under FIFRA Performance Measure Two
because it did not have effective controls to ensure data accuracy. EPA is required
to annually report on its pesticide performance measures and goals.
Noncompliance With Laws and Regulations Noted
We tested compliance with those laws and regulations that could either materially
affect the FIFRA Fund financial statements, or that we considered significant to the
audit. The objective of our audit, including our tests of compliance with applicable
laws and regulations, was not to provide an opinion on overall compliance with
such provisions. Accordingly, we do not express such an opinion. We did not
identify any noncompliances that would result in a material misstatement to the
audited financial statements.
Agency Response and Office of Inspector General Evaluation
In a memorandum received on June 13, 2008, from the Assistant Administrator for
Prevention, Pesticides, and Toxic Substances and the Chief Financial Officer, the
Agency agreed with our findings and recommendations, and has begun corrective
actions. We concur with the Agency's corrective actions, and believe they
adequately address the issues raised.

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|	g	UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
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OFFICE OF
INSPECTOR GENERAL
July 8, 2008
MEMORANDUM
SUBJECT: Fiscal Year 2007 and 2006 Financial Statements for the
Pesticides Reregi strati on and Expedited Processing Fund
Report No. 08-1-0194
FROM: Paul C. Curtis
Director, Financial Statement Audits
TO:	James B. Gulliford
Assistant Administrator for Prevention,
Pesticides, and Toxic Substances
Lyons Gray
Chief Financial Officer
This is our report on the audit of the U.S. Environmental Protection Agency's (EPA's) Fiscal
Year 2007 and 2006 Financial Statements for the Pesticides Reregi strati on and Expedited
Processing Fund, conducted by the EPA Office of Inspector General (OIG). This report contains
findings that describe the problems the OIG has identified and corrective actions the OIG
recommends. This report represents the opinion of the OIG and does not necessarily represent
the final EPA position. Final determinations on matters in this report will be made by EPA
managers in accordance with established audit resolution procedures.
The estimated cost of this report - calculated by multiplying the project's staff days by the
applicable daily full cost billing rates in effect at the time - is $225,239.
Action Required
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.

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If you or your staff have any questions regarding this report, please contact me at
(202) 566-2523 or Curtis.Paul@epa.gov. or Wanda Whitfield at (202) 566-2533 or
Whitfield.Wanda@epa.gov.
Attachments

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Fiscal Year 2007 and 2006 Financial Statements for the
Pesticides Reregistration and Expedited Processing Fund
08-1-0194
Table of C
Inspector General's Report on the Fiscal Year 2007 and 2006
Financial Statements for the Pesticides Reregistration
and Expedited Processing Fund
Opinion on the FIFRA Fund Financial Statements		1
Evaluation of Internal Controls		2
Tests of Compliance with Laws and Regulations		4
Management's Discussion and Analysis Section of the Financial Statements		4
Prior Audit Coverage		4
Agency Response and OIG Evaluation		5
Attachments
1	Significant Deficiency		6
Misclassification of Reregistration and Amendment Actions		7
2	Status of Recommendations and Potential Monetary Benefits		9
Appendices
A Fiscal Year 2007 and 2006 FIFRA Financial Statements
B Agency's Response to Draft Report
C Distribution

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08-1-0194
Inspector General's Report on the
Fiscal Year 2007 and 2006 Financial Statements for the
Pesticides Reregistration and Expedited Processing Fund
The Administrator
U.S. Environmental Protection Agency
We have audited the Pesticides Reregistration and Expedited Processing Fund (known as the
FIFRA Fund) balance sheet as of September 30, 2007 and 2006, and the related statements of net
cost, changes in net position, and budgetary resources for the year then ended. These financial
statements are the responsibility of the U.S. Environmental Protection Agency's (EPA's)
management. Our responsibility is to express an opinion on these financial statements based
upon our audit.
We conducted our audit in accordance with U.S. 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. 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 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 accompanying notes, present fairly, in all
material respects, the assets, liabilities, net position, net costs, changes in net position, and
budgetary resources of the FIFRA Fund, as of and for the years ended September 30, 2007 and
2006, in conformity with accounting principles generally accepted in the United States of
America.
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08-1-0194
Evaluation of Internal Controls
As defined by OMB Bulletin No. 07-04, internal control, as it relates to the financial statements,
is a process, affected by the Agency's management and other personnel, designed to provide
reasonable assurance that the following objectives are met:
Reliability of financial reporting - Transactions are properly recorded, processed, and
summarized to permit the preparation of the financial statements in accordance with
generally accepted accounting principles; and assets are safeguarded against loss from
unauthorized acquisition, use, or disposition.
Compliance with applicable laws, regulations, and 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.
Reliability of performance reporting - Transactions and other data that support
reported performance measures are properly recorded, processed, and summarized to
permit the preparation of performance information in accordance with criteria stated by
management.
In planning and performing our audit, we considered EPA's internal control over FIFRA
financial reporting by obtaining an understanding of the Agency's internal controls, determining
whether internal controls have been placed in operation, assessing control risk, and performing
tests of controls. We did this as a basis for designing our auditing procedures for the purpose of
expressing an opinion on the financial statements and to comply with OMB audit guidance, not
to express an opinion on internal control. Accordingly, we do not express an opinion on internal
control over financial reporting nor on management's assertion on internal controls included in
Management's Discussion and Analysis. We limited our internal control testing to those controls
necessary to achieve the objectives described in OMB Bulletin No. 07-04. We did not test all
internal controls relevant to operating objectives as broadly defined by the Federal Managers'
Financial Integrity Act (FMFIA) of 1982, 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 control deficiency, or combination of control deficiencies, that adversely affects
the Agency's ability to initiate, authorize, record, process, or report financial data reliably in
accordance with generally accepted accounting principles such that there is more than a remote
likelihood that a misstatement of the entity's financial statements that is more than
inconsequential will not be prevented or detected. A material weakness is a significant
deficiency, or combination of significant deficiencies, that results in more than a remote
likelihood that a material misstatement of the financial statements will not be prevented or
detected. Because of inherent limitations in any internal controls, misstatements, losses, or
noncompliance may nevertheless occur and not be detected. We noted a matter discussed below
involving the internal control and its operation that we consider to be a significant deficiency. In
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08-1-0194
addition, as mentioned in the Prior Audit Coverage section of this report, we will continue to
disclose a significant deficiency concerning documentation of the current accounting system and
its automated application controls until EPA implements the planned replacement automated
accounting system.
With respect to internal controls related to performance measures presented in the Management's
Discussion and Analysis, we obtained an understanding of the design of significant internal
controls relating to the existence and completeness assertions, as required by OMB Bulletin No.
07-04. Our procedures were not designed to provide assurance on internal controls over reported
performance measures and, accordingly, we do not express an opinion on internal controls.
Significant Deficiency: Misclassification of Reregistration and
Amendment Actions
The Office of Pesticide Programs (OPP) was unable to provide reliable information on reporting
accomplishments for reregistration and amendment actions under the Pesticide Reregistration
Program Performance Measure Two. FIFRA, as amended by the Food Quality Protection Act,
requires EPA to annually report on its pesticide reregistration performance measures and goals.
Incorrect and inconsistent coding in the OPP Information Network (OPPIN), OPP's information
system, and ineffective controls to correct these errors, resulted in the inaccurate reporting of
performance results. As a result, the Agency could not be sure of its program accomplishments
for this performance measure for Fiscal Year 2007.
Comparison of EPA's FMFIA Report with Our Evaluation of Internal Controls
OMB Bulletin No. 07-04 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 reporting under FMFIA, material weaknesses are defined differently than they are for
financial statement audit purposes. OMB Circular A-123, Management Accountability and
Control, defines a material weakness as a deficiency that the Agency head determines to be
significant enough to be reported outside the Agency.
For financial statement audit purposes, OMB defines material weaknesses in internal control as a
significant deficiency, or combination of significant deficiencies, that result in a more than
remote likelihood that a material misstatement of the financial statements will not be prevented
or detected.
During our audit, we did not identify any material weaknesses, and the Agency did not report
any material weaknesses related to the FIFRA financial statements as a part of its FMFIA
reporting.
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08-1-0194
Tests of Compliance with Laws and Regulations
As part of obtaining 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 FIFRA 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 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 material
inconsistencies between the information presented in the two documents.
Our audit work also included obtaining an understanding of the design of significant internal
controls relating to the existence and completeness assertions of the performance measures in the
Overview. Our procedures were not designed to provide assurance on internal control over
reported performance measures and, accordingly, we do not express an opinion on such controls.
We reviewed supporting documentation for the tolerance performance measure and the five
reregi strati on performance measures listed in the Management's Discussion and Analysis of the
Pesticides Program. We did not note any significant discrepancies in these measures, with the
exception of FIFRA Program Performance Measure Two. As discussed earlier, OPP was unable
to provide reliable information for this measure.
Prior Audit Coverage
During previous financial or financial-related audits, we reported the following reportable
conditions:
	We found that EPA materially understated the FIFRA payroll unfunded leave accrual and
related expenses reported in the draft financial statements for Fiscal Year 2006.
	We identified a weakness in the Agency's documentation of adjustments to Integrated
Financial Management System (IFMS) entries.
	We could not assess the adequacy of IFMS automated controls.
	We identified a weakness in the Agency's preparation and quality control of the Financial
Statements and footnotes.
The Agency recorded the adjustment to the unfunded leave accrual and related expenses to
accurately report those accounts in the FIFRA financial statements. The Office of the Chief
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08-1-0194
Financial Officer also developed procedures to monitor payroll and perform account analyses to
detect errors.
The Agency began corrective action to improve documentation of adjusting and correcting
entries in IFMS. EPA's Washington Finance Center updated its procedures to include
maintaining adequate source documentation when adjusting and correcting entries are made to
transactions already entered in IFMS. Washington Finance Center staff will include an
adjustment control sheet to document the reason for the adjustments and corrections. In addition,
a separate staff person will be assigned to review and approve the transactions. (.Fiscal 2005 and
2004 (restated) Financial Statements for the Pesticide Registration Fund, Audit Report
2007-1-00002, issued January 9, 2007.)
EPA has made progress toward replacing IFMS, and expects to begin implementation in Fiscal
Year 2008. However, until EPA implements the planned replacement automated accounting
system that addresses past issues, we will continue to disclose a significant deficiency
concerning documentation of the current accounting system and its automated application
processing controls. {Audit of EPA's Fiscal 2007 and 2006 (Restated) Consolidated Financial
Statements, Audit Report 08-1-0032, issued November 15, 2007.) In addition, EPA recognizes
the importance of properly reviewing the financial statements, including the footnotes,
supplemental information, and overview, prior to release or submittal for audit. EPA
strengthened its quality control and review procedures for the financial statement documents
(.Fiscal 2004 and 2003 Financial Statements for the Pesticides Reregistration and Expedited
Processing Fund, Audit Report 2005-1-00081; and Fiscal 2004 Financial Statements for the
Pesticide Registration Fund, Audit Report 2005-1-00082, both issued May 4, 2005).
Agency Response and OIG Evaluation
In a memorandum received on June 13, 2008, the Assistant Administrator for Prevention,
Pesticides and Toxic Substances and the Chief Financial Officer responded to our draft report.
The rationale for our conclusions and a summary of the Agency comments are included in the
appropriate sections of this report. The Agency's complete response is included in Appendix B
to this report.
Paul C. Curtis
Director, Financial Statement Audits
Office of Inspector General
U.S. Environmental Protection Agency
July 2, 2008
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08-1-0194
Attachment 1
Significant Deficiency
Table of Contents
1 - Misclassification of Reregistration and Amendment Actions	7
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08-1-0194
1 - Misclassification of Reregistration and Amendment Actions
OPP was unable to provide reliable information on accomplishments for reregistration and
amendment actions under the FIFRA Program Performance Measure Two. FIFRA, as amended
by the Food Quality Protection Act, requires EPA to annually report on its pesticide
reregistration performance measures and goals. Incorrect and inconsistent coding in OPPIN,
OPP's information system, combined with ineffective controls to identify and correct these
errors, resulted in the inaccurate reporting of performance results. As a result, the Agency could
not be sure of its program accomplishments for this performance measure for Fiscal Year 2007.
We tested 91 reregistration and amendment actions, and found that 9 were misclassified.
Specifically, we found that 2 out of 55 claimed reregistration actions were actually amendment
actions, and 6 out of 36 claimed amendment actions were reregistration actions. Also, 1 of the
36 amendment actions noted above was completed in Fiscal Year 2006. OPP's Registration
Division confirmed that the reregistration and amendment actions we identified were
misclassified.
FIFRA, as amended by the Food Quality Protection Act, requires EPA to annually report in the
Federal Register on its pesticide reregistration performance measures and goals. Specifically,
Section 4(1) states:
... Such measures and goals shall include the number ofproducts reregistered,
canceled, or amended, the status of reregistration ...
FIFRA Performance Measure Two states:
Number of products reregistered, canceled, or amended. Over 20,000products
are or eventually will be subject to product reregistration. Many products,
however, contain more than one active ingredient. Since products are reassessed
separately for each active ingredient, EPA will conduct approximately 38,000
product reviews.
According to EPA's Strategic Plan, "measuring our performance is key to improving it." The
Government Accountability Office Standards for Internal Control in the Federal Government
provide that".. .control activities help to ensure that all transactions are completely and
accurately recorded." The standards also state "qualified and continuous supervision is to be
provided to ensure that internal control objectives are achieved."
OPP officials were unsure why the misclassification of several product reregistration actions
occurred. They explained that these discrepancies could have occurred for several reasons:
(1) initial coding errors not being corrected in OPPIN, (2) inability to change certain dates in
OPPIN, (3) inconsistent use of response codes, and (4) OPP staff may not have recorded entries
timely or accurately in OPPIN. OPP officials further indicated that some registrant submittals
may be coded in OPPIN as one kind of action when submitted, but be found to be a different
kind of action when the Product Manager reviews them. However, these corrections may not
have always been made in OPPIN.
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08-1-0194
OPP's Registration Division said they are correcting the errors in OPPIN. They also stated that a
training program is being developed to ensure staff is entering the response codes for
reregi strati on and amendment actions in OPPIN accurately.
Because OPP provided unreliable information, we were unable to assess the Agency's program
accomplishments of reregi strati on and amendment actions for FIFRA Program Performance
Measure Two. We cannot be sure of the extent of errors in the universe of reregi strati on and
amendment actions; as a result, we have no assurance that the claimed reregi strati on and
amendment actions for Fiscal Year 2007 and the cumulative status of product reregi strati on
actions in the financial statements are accurate. Further, the Agency could not be sure of its
accomplishments for this performance measure for Fiscal Year 2007. Unless controls are
improved so that OPPIN data is reliable, OPP will not have accurate information to assess its
performance and make program plans.
Recommendations
We recommend that the Director, Office of Pesticide Programs:
1-1 Review the entire universe of reregi strati on and amendment actions claimed in
Fiscal Year 2007 and correct any errors found in the OPPIN system.
1-2 Strengthen internal controls over the entry, review, and correction of information
into the OPPIN system to reduce the risk of data entry errors. Specifically, review
processes for coding and correcting actions in the OPPIN system; and develop
procedures to ensure that these actions are entered consistently and accurately,
and errors corrected timely.
1-3 Provide training to OPP staff responsible for entering information in the OPPIN
system to ensure reregi strati on and amendment actions are classified accurately.
1-4 Direct the Product Managers to ensure that any errors in the classification of
reregi strati on and amendment actions are modified promptly, and documented in
the OPPIN system.
1-5 Disclose in the Annual Report on Reregi strati on Performance Measures and Goals
published in the Federal Register that the Fiscal Year 2007 accomplishments for
FIFRA Program Performance Measure Two are inaccurate, if they have not been
corrected before publishing.
Agency Response and OIG Evaluation
The Agency agreed with our findings and recommendations, and has begun corrective actions.
The Agency's complete 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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08-1-0194
Attachment 2
Status of Recommendations and
Potential Monetary Benefits
RECOMMENDATIONS
POTENTIAL MONETARY
BENEFITS (In $000s)
Rec.
No.
Page
No.
Subject
Status1
Action Official
Planned
Completion
Date
Claimed
Amount
Agreed To
Amount
1-1
1-2
1-3
1-4
1-5
Review the entire universe of reregistration and
amendment actions claimed in Fiscal Year 2007
and correct any errors found in the OPPIN system.
Strengthen internal controls over the entry, review,
and correction of information into the OPPIN
system to reduce the risk of data entry errors.
Specifically, review processes for coding and
correcting actions in the OPPIN system; and
develop procedures to ensure that these actions
are entered consistently and accurately, and errors
corrected timely.
Provide training to OPP staff responsible for
entering information in the OPPIN system to
ensure reregistration and amendment actions are
classified accurately.
Direct the Product Managers to ensure that any
errors in the classification of reregistration and
amendment actions are modified promptly, and
documented in the OPPIN system.
Disclose in the Annual Report on Reregistration
Performance Measures and Goals published in the
Federal Register that the Fiscal Year 2007
accomplishments for FIFRA Program Performance
Measure Two are inaccurate, if they have not been
corrected before publishing.
Director, Office of
Pesticide Programs
Director, Office of
Pesticide Programs
Director, Office of
Pesticide Programs
Director, Office of
Pesticide Programs
Director, Office of
Pesticide Programs
12/31/08
January
2008
9/30/08
January
2008
8/31/08
1 O = recommendation is open with agreed-to corrective actions pending
C = recommendation is closed with all agreed-to actions completed
U = recommendation is undecided with resolution efforts in progress
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08-1-0194
Appendix A
FYs 2007 and 2006 PESTICIDES REREGISTRA TION
and EXPEDITED PROCESSING FUND (FIFRA)
FINANCIAL STATEMENTS

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TABLE OF CONTENTS
Management's Discussion and Analysis
Principal Financial Statements 	
i
EPA's FY 2007 Annual FIFRA Financial Statements

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08-1-0194
Management's Discussion and Analysis
i
EPA's FY 2007 Annual FIFRA Financial Statements

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08-1-0194
MANAGEMENT'S DISCUSSION AND ANALYSIS
The Agency's Office of Pesticide Programs (OPP) was established pursuant to 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.
In accordance with FIFRA and the Federal Food, Drug, and Cosmetic Act (FFDCA), the
pesticide program administers the Revolving Fund for Certification and Other Services
(Tolerance Fund) and the Pesticides Reregi strati on and Expedited Processing Fund (FIFRA
Fund). As of 1996, fees for both tolerance and reregi strati on are deposited to the FIFRA
account, which is available to the EPA without further appropriation.
Tolerance Program Description
As part of its authority to regulate pesticides, EPA is responsible for setting "tolerances."
If the pesticide is being considered for use on a food or feed crop or as a food or feed additive,
the applicant must petition EPA for establishment of a tolerance (or exemption from a tolerance)
under authority of the FFDCA. A tolerance is the maximum legal limit of a pesticide residue on
food commodities and animal feed. Tolerances are set at levels that ensure that the public is
protected from health risks posed by eating foods that have been treated with pesticides in
accordance with label directions.
In 1954, Congress authorized the collection of fees for the establishment of tolerances for
raw agricultural commodities (Section 408 of FFDCA). Congress, however, did not authorize
the collection of fees for food additive tolerances (Section 409 of FFDCA). EPA, therefore, does
not collect fees for food additive tolerances. The Agency also does not collect fees for Agency-
initiated actions such as the revocation of tolerances for previously canceled pesticides. Fees
collected from tolerances for raw agricultural commodities were deposited to the U.S. Treasury
General Fund until 1963 when Congress established the Tolerance Fund.
In 1996, pesticide reform legislation included provisions for additional fees to support
reregi strati on activities. Passage of the Food Quality Protection Act (FQPA) of 1996 requires
tolerances to be reassessed as part of the reregi strati on program. Effective January 1997, all fees
related to tolerance activities were deposited in the FIFRA Fund. With passage of the Pesticide
Registration Improvement Act (PRIA) of 2003 and the Pesticide Registration Improvement
Renewal Act in 2007, no additional tolerance petition fees will be deposited to the FIFRA Fund
through FY 2012.
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EPA's FY 2007 Annual FIFRA Financial Statements

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08-1-0194
Pesticide Reregistration Program Description
As part of its authority to regulate pesticides, EPA is responsible for re-registering
existing pesticides. The FIFRA legislation, requiring the registration of pesticide products, was
originally passed in 1947. Since then, health and environmental standards have become more
stringent and scientific analysis techniques much more precise and sophisticated. In the 1988
amendments to FIFRA (FIFRA '88), Congress mandated the accelerated reregistration of all
products registered prior to November 1, 1984. The amendments established a statutory goal of
completing reregistration eligibility decisions (REDs) by 1997. The legislation allows for
various time extensions which can extend the deadline by three years or more. The statutory
requirement for the completion of reregistration food-use (REDs) is 2006, in conjunction with
the new tolerance reassessment program. For the non-food-use active ingredient REDs, the
current legal deadline under PRIA for completion of reregistration is October 3, 2008.
Congress authorized the collection of two kinds of fees to supplement appropriated funds
to support reregistration program: an annual maintenance fee and a one-time reregistration fee.
Maintenance fees are assessed on registrants of pesticide products and were structured to collect
approximately $14 million per year. Reregistration fees are assessed on the manufacturers of the
active ingredients in pesticide products and are based on the manufacturer's share of the market
for the active ingredient. In fiscal years 1992 through 1999, approximately 14% of the
maintenance fees collected, up to $2 million each year, were used for the expedited processing of
old chemical and amended registration applications. Fees are deposited into the FIFRA
Revolving Fund. By statute, excess monies in the FIFRA Fund may be invested. Waivers
and/or refunds are granted for minor use pesticides, antimicrobial pesticides, and small
businesses.
In 1996, pesticide reform legislation included provisions for additional fees to support
reregistration activities. Passage of the FQPA of 1996 implemented the following changes in the
Pesticide Reregistration Program: reauthorized collection of maintenance fees through 2001 to
complete the review of older pesticides to ensure they meet current standards (increased annual
fees from $14 million to $16 million per year for 1998, 1999, and 2000 only) and required all
tolerances (over 9,700) to be reassessed by 2006. EPA's 2002 appropriations bill extended
authority to collect maintenance fees by one year for the amount of $17 million; and the FY 2003
appropriations extended the authority to collect fees again by one year in the amount of $21.5
million. Passage of PRIA in FY 2004 extended the authority to collect maintenance fees through
FY 2008 (with annual fee amounts at $26 million in FY 2004; $27 million in FY 2005-2006; $21
million in FY 2007; and $15 million in FY 2008). Passage of the Pesticide Registration
Improvement Renewal Act (commonly known as PRIA II) on October 9, 2007 extended the
authority to collect maintenance fees through FY 2012 (with annual fee amounts at $22 million
each FY). PRIA II includes the provision for use of maintenance fees to offset the costs of
registration review beginning in FY 2008.
The reregistration process is being conducted through reviews of groupings of similar
active ingredients called cases. There are five major phases of reregistration:
~ Phase 1 - Listing of Active Ingredients. EPA publishes lists of active ingredients and
asks registrants whether they intend to seek reregistration. (Completed in FY 1989)
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EPA's FY 2007 Annual FIFRA Financial Statements

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08-1-0194
~	Phase 2 - Declaration of Intent and Identification of Studies. Registrants notify EPA if
they intend to reregister and identify missing studies. (Completed in FY 1990)
~	Phase 3 - Summarization of Studies. Registrants submit required existing studies.
(Completed in FY 1991)
~	Phase 4 - EPA Review and Data Call-Ins (DCIs). EPA reviews the studies, identifies and
"calls-in" missing studies by issuing a DCI. A "DCI" is a request to a pesticide registrant
for scientific data to assist the Agency in determining the pesticide's eligibility for
reregi strati on. (Completed in FY 1994)
~	Phase 5 - Reregi strati on Decisions. EPA reviews all studies and issues a Reregi strati on
Eligibility Decision (RED) for the active ingredient(s). A "RED" is a decision by the
Agency defining whether uses of a pesticide active ingredient are eligible or ineligible for
reregi strati on. The registrant complies with the RED by submitting product specific data
and new labels. EPA reregisters or cancels the product. Pesticide products are re-
registered, based on a RED, when it meets all label requirements. This normally takes 14
to 20 months after issuance of the RED.
Research Program Description
EPA's pesticides and toxics research continues to focus on providing scientifically-valid,
cost-effective, and low-burden methods for evaluating risks associated with pesticide
manufacture, use, and release into the environment.
EPA's FY 2007 research addressed aggregate and cumulative risks that would result from
both agricultural and residential exposures. Special emphasis was placed on addressing exposure
and effects science issues regarding children's health, including the special susceptibilities of
infants and children exposed to pesticides and other toxins. Results from this work support
human and environmental risk assessments.
Specifically, in FY 2007, EPA research results directly influenced regulatory actions and
risk assessment decisions for pesticides to which the young and others are uniquely sensitive. To
decrease the potential for exposure in the young and others, research provided a suite of
biomarkers in saliva that can be used to determine pesticide exposures in children; determined
the impact on human health of reducing exposure to water borne pathogens in drinking water and
cumulative impact of air pollution reduction programs for children and older individuals; and
developed, evaluated, and applied a DNA-based molecular indicator method for characterizing
exposure to endocrine disrupting chemicals.
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Enforcement and Compliance Assurance Program Description
The Pesticide Enforcement and Compliance Assurance Program focuses on pesticide
product and user compliance, including problems relating to pesticide worker safety protection,
ineffective antimicrobial products, food safety, adverse effects, risks of pesticides to endangered
species, ineffective pesticide containers and containment facilities, and e-commerce. 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 enforcement of
the pesticide worker protection standards. In FY 2006, states continued to conduct compliance
monitoring inspections on core pesticide requirements.
EPA will continue its commitment to maintaining a strong compliance and enforcement
presence. Agency priorities for FY 2007 and FY 2008 include enforcement for products making
illegal public health claims, including unregistered and ineffective products, such as
inefficacious hospital disinfectants; enforcement of worker protection standards; compliance
monitoring and enforcement activities related to newly promulgated pesticide container and
containment rules, protection of endangered species from pesticides, and special action
chemicals identified by the Office of Pesticide Programs as well as illegal distribution, sale, and
advertisement of pesticides and pesticidal services via the Internet.
Highlights and Accomplishments
Tolerance Performance Measures
As mandated by PRIA, no Tolerance fees were collected and deposited to the FIFRA
Fund in FY 2007.
Measure: Tolerance re-evaluations.
Results: In FY 2007, EPA completed 84 tolerance reassessment decisions. All 84
reassessments occurred through reregistration/REDs. At the end of FY 2007, EPA had
completed 9,721 tolerance reassessment decisions, addressing 100% of the 9,721 tolerances that
required reassessment.
Reresistration (FIFRA) Financial Perspective
During FY 2007, the Agency's obligations charged against the FIFRA Fund for the cost
of the reregi strati on programs and other authorized pesticide programs were $21.5 million and
144.2 workyears. Of these amounts, OPP obligated $18.9 million of this cost and funded the
144.2 workyears.
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Appropriated funds are used in addition to FIFRA revolving funds. In FY 2007,
approximately $51.0 million in appropriated funds were obligated for reregi strati on program
activities. The unobligated balance in the Fund at the end of FY 2007 was $7.0 million.
The Fund has two types of receipts: fee collections and interest earned on investments.
Of the $22.0 million in FY 2007 receipts, approximately 97% were fee collections.
Reregistration Program (FIFRA) Performance Measures
The following measures support the program's strategic goals of Healthy Communities
and Ecosystems as contained in the FY 2007 President's budget.
Measure 1: Number of Reregistration Eligibility Documents (REDs) completed.
Results: In FY 2007, OPP completed 27 Reregistration Eligibility Decisions (REDs). Of the 613
chemical cases (representing approximately 1,150 pesticide active ingredients), that initially
were subject to reregistration, 357 cases have completed REDs. An additional 229
reregistration cases were voluntarily canceled before EPA invested significant resources in
developing REDs. A total of586 reregistration cases ( 96%), therefore, had completed the
reregistration eligibility decision making process by the end of FY 2007, leaving 27 cases (4%)
awaiting such decisions.
Measure 2: Number of products reregistered, canceled, or amended. Over 20,000
products are or eventually will be subject to product reregistration. Many products,
however, contain more than one active ingredient. Since products are reassessed
separately for each active ingredient, EPA will conduct approximately 38,000 product
reviews.
Results: In FY 2007, 529product reregistration actions, 80product amendment actions,
370product cancellation actions, and 0product suspension actions were completed. Currently,
a universe of over 21,350 products is undergoing or has completed product reregistration. The
status of those products at the end of FY 2007 was as follows: 2,593 products had been
reregistered; 641 product registrations had been amended; 5,046products were cancelled; 6
products were suspended; and 13,065 products had actions/decisions pending. The Agency's
goal in FY 2008 is to complete 1,000product reregistration actions.
Measure 3: Progress in Reducing the Number of Unreviewed, Required
Reregistration Studies.
Results: EPA is making good progress in reviewing scientific studies submitted by
registrants in support of pesticides undergoing reregistration. 2 7,645 studies have been received
by the Agency through the reregistration program. Nearly 85% of these studies have been
reviewed or have been found to be extraneous. Approximately 15% of all studies are awaiting
review for future REDs to complete the reregistration program.
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Measure 4: Number and Type of DCIs Issued to Support Product Reregistration by
Active Ingredient.
Results: The number and type of data requests or Data Call-In notices (DCIs) issued by
EPA under FIFRA section 3(c)(2)(B) to support product reregistration for pesticide active
ingredients included in FY 2007 REDs are shown in Table 1.
Table 1. Data Call-Ins Issued to Support Product Reregistration for FY 2007 REDs:
Case Name
Case No.
Number of
Products
Covered by
the RED1
Number of
Product
Chemistry
Studies
Required2
Number of Acute Toxicology Studies
Required3
Number of
Efficacy
Studies
Required
Aldicarb
0140
39
31
12 (2 batches)
0
Aliphatic Alcohols, C6-C16
4004
22
31
54 (5 batches/4 products not batched)
0
Aliphatic Esters
4005
1
31
6(1 product not batched)
0
Alkyl Trimethylenediames
3014
13
34
Antimicrobial RED - Acute toxicity
batching has not been completed yet.
PDCI has
not been
completed
yet
Allethrin Stereoisomers
0437
251
31
Acute toxicity batching has not been
completed yet.
0
4-Aminopyridine
0015
10
31
PDCI and Acute toxicity batching
have not been completed yet.
PDCI has
not been
completed
yet.
Antimycin-A
4121
1
31
6(1 product not batched)
0
Benzoic Acid
4013
11
31
Acute toxicity batching has not been
completed yet.
0
Bioban-p-1487
3028
5
34
Antimicrobial RED - Acute toxicity
batching has not been completed yet.
PDCI has
not been
completed
yet
Bromonitro sty rene
(Voluntary Cancellation)
2065
6
NA
NA
NA
Carbaryl*
0080
101
NA
NA
NA
Carbofuran*
0101
88
NA
NA
NA
Chlorflurenol
2095
5
31
30 (5 products not batched)
0
Chlormequat Chloride
3003
4
31
24 (4 products not batched)
0
Copper-8-Quinolate
4026
28
34
Antimicrobial RED - Acute toxicity
batching has not been completed yet.
PDCI has
not been
completed
yet
2,4-DP-p
(dichorprop-p)
0294
63
31
Acute toxicity batching has not been
completed yet.
0
Dikegulac Sodium
3061
2
31
Acute toxicity batching has not been
completed yet.
0
Flumetralin
4119
6
31
Acute toxicity batching has not been
completed yet.
PDCI has
not been
completed
yet
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Case Name
Case No.
Number of
Products
Covered by
the RED1
Number of
Product
Chemistry
Studies
Required2
Number of Acute Toxicology Studies
Required3
Number of
Efficacy
Studies
Required
Formetanate HC1*
0091
6
NA
NA
NA
Glutaraldehyde
2315
59
34
Antimicrobial RED - Acute toxicity
batching has not been completed yet.
PDCI has
not been
completed
yet
Mecoprop-p (MCPP-p)
0377
314
31
Acute toxicity batching has not been
completed yet.
0
Mefluidide
2370
12
31
48(2 batches/6 products not batched)
0
Naphthenate Salts
3099
49
34
Antimicrobial RED - Acute toxicity
batching has not been completed yet.
PDCI has
not been
completed
yet
Octhilinone
2475
37
34
Antimicrobial RED - Acute toxicity
batching has not been completed yet.
PDCI has
not been
completed
yet
Oxamyl*
0253
12
NA
NA
NA
Para-Dichlorbenzene
3058
28
31
Acute toxicity batching has not been
completed yet.
0
Polypropylene Glycol
(Butoxypolypropylene
Glycol)
3123
53
31
PDCI and Acute toxicity batching
have not been completed yet.
PDCI has
not been
completed
yet
Rotenone
0255
50
31
Acute toxicity batching has not been
completed yet.
PDCI has
not been
completed
yet
Trimethoxysilyl Quats
3148**
30
34
Antimicrobial RED - Acute toxicity
batching has not been completed yet.
PDCI has
not been
completed
yet
Total
1306



*These 4 chemicals were issued as IREDs in previous fiscal years. At that time, PDCIs were approved and/or issued
for Carbaryl, Formetanate Hcl, and Oxamyl. A PDCI was not issued for Carbofuran because its products were
declared ineligible for reregistration. These IREDs became REDs in September 2007 when the N-Methyl
Carbamate cumulative risk assessment was completed. Additional PDCIs will not be issued for these REDs.
**2 additional active ingredients were significantly similar to Trimethoxysiyl Quats (Case 3148) and were included
in the Trimethoxysiyl Quats RED.
Special Local Need (SLN) or Section 24(c) products are not included in the acute toxicity batching. These products
have a parent product; therefore, acute toxicity data do not need to be generated for these SLN or Section 24(c)
products.
1 The number of registered products containing a pesticide active ingredient can change over time. The product total
that appears in the RED document (counted when the RED is signed) may be different than the number of products
that EPA is tracking for product reregistration (counted later, when the RED is issued). This table reflects the final
number of products associated with each RED, as they are being tracked for product reregistration.
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2	This column shows the number of product chemistry studies that are required for each product covered by the
RED.
3	In an effort to reduce the time, resources, and number of animals needed to fulfill acute toxicity data requirements,
EPA "batches" products that can be considered similar from an acute toxicity standpoint. For example, one batch
could contain five products. In this instance, if six acute toxicology studies usually were required per product, only
six studies (rather than 30 studies) would be required for the entire batch. Factors considered in the sorting process
include each product's active and inert ingredients (e.g., identity, percent composition, and biological activity), type
of formulation (e.g., emulsifiable concentrate, aerosol, wettable powder, granular, etc.), and labeling (e.g., signal
word, use classification, precautionary labeling, etc.). The Agency does not describe batched products as
"substantially similar," because all products within a batch may not be considered chemically similar or have
identical use patterns. (Note: FIFRA Section 24(c) or Special Local Need (SLN) registrations are not included in
acute toxicity hatchings because they are supported by a valid parent product (Section 3) registration.)
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Measure 5: Future Schedule for Reregistrations.
List 1. Fiscal Year 2008 Candidates for Decisions
FY 2008 RED Candidate Pesticides
Acrolein
Amical 48
Busan 77
Chloropicrin
Chromated arsenicals (CCA)
Coal tar/creosote
Dazomet
[Denatonium benzoate or Bitrex - part of ADBAC case 0350 completed FY 2006]
Ethylene oxide (ETO) [TRED completed FY 2006]
Formaldehyde
Grotan
Inorganic thiosulfates (ammonium and calcium thiosulfate)
Methyl bromide [soil fumigant uses; commodity uses TRED & RED completed FY 2006]
Methyldithiocarbamate salts (metam sodium/metam potassium)
MITC
Naphthalene
Nicotine
Organic esters of phosphoric acid
Pentachlorophenol
Prometon
Siduron
Sodium fluoride
Sulfometuron methyl
Sumithrin
TBT-containing compounds
Tetramethrin
Triclosan (Irgasan)
Triforine
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PRINCIPAL
FINANCIAL STATEMENTS
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TABLE OF CONTENTS
Financial Statements
Balance Sheet 	13
Statement of Net Cost 	14
Statement of Changes in Net Position 	15
Statement of Budgetary Resources 	16
Notes to Financial Statements
Note 1.	Summary of Significant Accounting Policies	17
Note 2.	Fund Balances with Treasury 	20
Note 3.	Other Assets - Advances to Working Capital Fund	20
Note 4.	Other Liabilities 	20
Note 5.	Payroll and Benefits Payable, non-Federal 	21
Note 6.	Income and Expenses from Other Appropriations	22
Note 7.	Exchange Revenues, Statement of Net Cost	23
Note 8.	Intragovernmental Costs and Revenue	23
Note 9.	Reconciliation of Net Cost of Operations to Budget (formerly the
Statement of Financing)	24
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Environmental Protection Agency
FIFRA
Balance Sheet
As of September 30, 2007 and 2006
(Dollars in Thousands)
ASSETS
Intragovernmental
Fund Balance With Trcasuiy (Note 2)
Other (Note 3)
Total Intragovernmental
Total Assets
FY 2007
9,284
100
9,384
9,384
FY 2006
8,045
558
8,603
8,603
LIABILITIES
Intragovernmental
Accounts Payable & Accrued Liabilities
Other (Note 4)
Total Intragovernmental
250
199
449
254
84
338
Accounts Payable & Accrued Liabilities
Payroll & Benefits Payable (Note 5)
Other (Note 4)
Total Liabilities
212
3,121
8,708
12,490
470
3,105
8,071
11,984
NET POSITION
Cumulative Results of Operations
Total Net Position
Total Liabilities and Net Position
(3,106)
(3,106)
9,384
(3,381)
(3,381)
8,603
The accompanying notes are an integral part of these statements.
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Environmental Protection Agency
FIFRA
Statement of Net Cost
For the Years Ended September 30, 2007 and 2006
(Dollars in Thousands)

FY 2007
FY 2006
COSTS


Gross Cost (Note 8)
$ 22,641
$ 27,746
Expenses from Other Appropriations (Note 6)
52,042
49,999
Total Costs
$ 74,683
$ 77,745
Less:


Earned Revenues, (Notes 7 and 8)
$ 21,376
$ 26,857
NET COST OF OPERATIONS (Note 8)
$ 53,307
$ 50,888
The accompanying notes are an integral part of these statements.
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Environmental Protection Agency
FIFRA
Statement of Changes in Net Position
For the Years Ended September 30, 2007 and 2006
(Dollars in Thousands)
FY 2007	FY 2006
Net Position-Beginning of Period	$ (3,381)	$ (3,004)
Budgetary Financing Sources:
Income from Other Appropriations (Note 6)	52,042	49,999
Total Budgetary Financing Sources	$ 52,042	$ 49,999
Other Financing Sources:
Imputed Financing Sources	1,540 	512
Total Other Financing Sources	$ 1,540	$ 512
Net Cost of Operations	(53,307)	(50,888)
Net Change	275	(377)
Net Position-End of Period	$ (3,106) $ (3,381)
The accompanying notes are an integral part of these statements.
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Environmental Protection Agency
FIFRA
Statement of Budgetary Resources
For the Years Ended September 30, 2007 and 2006
(Dollars in Thousands)
BUDGETARY RESOURCES
Unobligated Balance, Brought Forward, October 1:
Recoveries of Prior Year Unpaid Obligations
Spending Authority from Offsetting Collections:
Earned:
Collected
Change in Unfilled Customer Orders:
Advance Received
Total Budgetary Resources
FY 2007
5,616
828
21,389
631
28,464
FY 2006
4,986
894
26,867
(437)
32,310
STATUS OF BUDGETARY RESOURCES
Obligations Incurred:
Reimbursable	$	21,478	$ 26,694
Total Obligations Incurred	21,478 26,694
Unobligated Balances:
Apportioned		6,986	5,616
Total Status of Budgetary Resources	$ 28,464 $ 32,310
CHANGE IN OBLIGATED BALANCE
Obligated Balance, Net:
Unpaid Obligations, Brought Forward, October 1 $	2,427	$ 2,952
Total Unpaid Obligated Balance, Net	2,427	2,952
Obligations Incurred, Net	21,478	26,694
Less: Gross Outlays	(20,781)	(26,325)
Less: Recoveries of Prior Year Unpaid Obligations		(828)		(894)
Total, Change in Obligated Balance	2,296	2,427
Obligated Balance, Net, End of Period:
Unpaid Obligations 	2,296	2,427
Total, Unpaid Obligated Balance, Net, End of Period $	2,296	$ 2,427
NET OUTLAYS
Net Outlays:
Gross Outlays	$ 20,781	$ 26,325
Less: Offsetting Collections	(22,020)	(26,429)
Total, Net Outlays	$ (1,239)	$ (104)
The accompanying notes are an integral part of these statements.
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Environmental Protection Agency
FIFRA
Notes to Financial Statements
(Dollars in Thousands)
Note 1. Summary of Significant Accounting Policies:
A.	Basis of Presentation
These financial statements have been prepared to report the financial position and results of
operations of the Environmental Protection Agency (EPA) for the Reregi strati on and Expedited
Processing (FIFRA) Revolving Fund as required by the Chief Financial Officers Act of 1990.
The reports have been prepared from the books and records of EPA in accordance with Financial
Reporting Requirements, Office of Management and Budget (OMB) Circular A-136 and EPA's
accounting policies which are summarized in this note. These statements are therefore different
from the financial reports also prepared by EPA pursuant to OMB directives that are used to
monitor and control EPA's use of budgetary resources.
B.	Reporting Entity
EPA 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 FIFRA Revolving Fund was authorized in 1988 by amendments to the Federal Insecticide,
Fungicide and Rodenticide Act (FIFRA). The 1988 amendments mandated the accelerated re-
registration of all products registered prior to November 1, 1984. Congress authorized the
collection of maintenance fees to supplement appropriations to fund re-registration and to fund
expedited processing of pesticides. Maintenance fees are assessed on registrants of pesticide
products. FIFRA also includes provisions for the registration of new pesticides (funded in part
from the PRIA or Pesticide Registration Fund), monitoring the distribution and use of pesticides,
issuing civil or criminal penalties for violations, establishing cooperative agreements with the
states, and certifying training programs for users of restricted chemicals. Appropriated funds,
with the exception of partial funding of registration from Pesticide Registration Service Fees in
the Pesticide Registration Fund, pay for these activities. The FIFRA Revolving Fund is
accounted for under Treasury symbol number 68X4310.
FIFRA 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 2007 and 2006 were $52,042 thousand and $49,999 thousand,
respectively. These amounts are included as Income from Other Appropriations on the
Statements of Changes in Net Position and as Expenses from Other Appropriations on the
Statement of Net Cost.
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C.	Budgets and Budgetary Accounting
Funding of the FIFRA Revolving Fund is provided by fees collected from industry to offset costs
incurred by EPA in carrying out these programs. Each year EPA submits an apportionment
request to OMB based on the anticipated collections of industry fees.
D.	Basis of Accounting
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
EPA's 2002 appropriations bill extended authority to collect maintenance fees by one year in the
amount of $17 million and the FY 2003 appropriations extended the authority to collect fees
again by one year in the amount of $21.5 million. Passage of the Pesticide Registration
Improvement Act (PRIA) in 2004 extended the authority to collect maintenance fees through FY
2008 (with annual fee amounts at $26 million in FY 2004; $27 million in FY 2005-2006; $21
million in FY 2007; and $15 million in FY 2008). Passage of the Pesticide Registration
Improvement Renewal Act (commonly referred to as PRIA II) extended the authority to collect
maintenance fees through FY 2012 (with annual fee amounts set at $22 million each year from
2008-2012). For FYs 2007 and 2006, the FIFRA Revolving Fund received funding from
maintenance fees collected for re-registration and from interest collected on investments in U.S.
Government securities. For FYs 2007 and 2006 revenues were recognized from fee collections
to the extent that expenses are incurred during the fiscal year.
F.	Funds with the Treasury
FIFRA deposits receipts and processes disbursements through its operating account maintained
at the U.S. Department of Treasury. Cash funds in excess of immediate needs, are invested in
U.S. Government securities.
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. FIFRA 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.	Accounts Receivable and Interest Receivable
FIFRA receivables are mainly for interest receivable on investments.
I.	Liabilities
Liabilities represent the amount of monies or other resources that are likely to be paid by EPA as
the result of a transaction or event that has already occurred. However, no liability can be paid
by EPA without an appropriation or other collection of revenue for services provided. 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 FIFRA, liabilities are liquidated from
fee receipts and interest earnings, since FIFRA receives no appropriation. Liabilities of EPA,
arising from other than contracts, can be abrogated by the Government acting in its sovereign
capacity.
J. Annual, Sick and Other 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, 1984, may participate in the Civil Service Retirement System (CSRS). On January 1,
1987, 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.
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Note 2. Fund Balance with Treasury:
FY 2007	FY 2006
Revolving Funds: Entity Assets	$	9,284 $	8,045
Note 3. Other Assets - Advances to Working Capital Fund
FIFRA advances funds to the EPA's Working Capital Fund to pay for computer, postage, and
other administrative support services. As of September 30, 2007 and 2006, funds advanced that
will be applied to future costs as incurred were $100 thousand and $558 thousand, respectively.
Note 4. Other Liabilities:
For FYs 2007 and 2006, the Payroll and Benefits Payable, non-Federal, are presented on a
separate line of the Balance Sheet and in a separate footnote (see Note 5 below).
FY 2007	FY 2006
Other Intragovernmental Liabilities - Covered by
Budgetary Resources
Employer Contributions - Payroll	$	199 $	84
Total	$	199" $	84"
Other Non-Federal Liabilities - Covered by
Budgetary Resources
Advances from Non-Federal Entities	$ 8,708		8,071
Total	$ 8,708	8,071
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Note 5. Payroll and Benefits Payable, non-Federal:
FY 2007	FY 2006
Covered by Budgetary Resources
Accrued Payroll Payable to Employees $ 359	$ 197
Withholdings Payable 427	176
Thrift Savings Plan Benefits Payable		31		1_3
Total $ 817	$ 386
Not Covered by Budgetary Resources
Unfunded Annual Leave Liability	$ 2,304	$	2,719
At various periods throughout FYs 2007 and 2006, employees with their associated payroll costs
were transferred from the FIFRA fund to the Environmental Programs and Management (EPM)
appropriation. (See graph in Note 6 below showing trend of hours charged per month to the
FIFRA fund for FYs 2007 and 2006.) These employees were transferred in order to keep
FIFRA's obligations and disbursements within budgetary and cash limits. When resources
became available, the employees charging to FIFRA increased in order to utilize resources as
much as possible. The Agency expects that the practice of transferring employees when
FIFRA's resources are low, and restoring employees when funds become available, will continue
throughout FY 2007 and probably beyond that period.
This process has led to variations between the year-end liabilities for FYs 2007 and 2006. The
liabilities covered by budgetary resources (both intragovernmental and non-Federal) represent
unpaid payroll and benefits at year-end. At the end of FY 2007, 54 employees were charging all
or part of their salary and benefits to FIFRA compared to 109 employees for the end of FY 2006.
As of September 30, 2007 these liabilities were $199 thousand and $817 thousand for employer
contributions and accrued funded payroll and benefits, as compared to FY 2006's balances of $84
thousand and $386 thousand, respectively.
In contrast, the unfunded annual leave liability is a longer term liability than the funded
liabilities. At various periods throughout FYs 2007 and 2006, approximately 319 and 353
employees, respectively, in total have been under FIFRA's accountability. During the last pay
period of FY 2007, many FIFRA employees had been transferred to EPM so the liability was
computed based on 256 employees charged to FIFRA during the pay period before the last pay
period. Therefore, both the September 30, 2007 and 2006 liability balances for unfunded annual
leave were accrued to cover the employees charged to FIFRA close to the end of the fiscal year
for a total of $2,304 thousand and $2,719 thousand, respectively.
21
EPA's FY 2007 Annual FIFRA Financial Statements

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08-1-0194
Note 6. Income and Expenses front Other Appropriations:
The Statement of Net Cost reports program costs that include the full costs of the program
outputs and consist of the direct costs and all other costs that can be directly traced, assigned on a
cause and effect basis, or reasonably allocated to program outputs.
During FYs 2007 and 2006, 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 FIFRA to EPM at
various times during these years (see Note 5 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 FIFRA each month, the transfers of employees and their associated
costs during FYs 2007 and 2006 are shown below. Note that a decrease in hours charged to
FIFRA normally signifies an increase in EPM's payroll costs, and vice versa. In addition,
Pesticide was separated from FIFRA starting with FY 2004 and Pesticide has its own set of
financial statements.
FIFRA Payroll Hours Per Month

70,000
"O
(1)
60,000
p

.c
50,000
O

40,000
o

J.
30,000
o

d)
-Q
20,000
E

s
Z
10,000

V
Months
-FY07 Hours
-FY06 Hours
22
EPA's FY 2007 Annual FIFRA Financial Statements

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08-1-0194
All of the expenses from EPM were distributed among EPA's two Reporting Entities: Superfund
and All Other (includes FIFRA). This distribution is calculated using a combination of specific
identification of expenses to Reporting Entities, and a weighted average that distributes expenses
proportionately to total programmatic expenses. As illustrated below, this estimate does not
impact the FIFRA's Net Position.
Income From Other Expenses From Other	Net
Appropriations	Appropriations	Effect
FY 2007 $	52,042 $	52,042 $	0
FY 2006 $ 	49,999 $	49,999 $
Note 7. Exchange Revenues, Statement of Net Cost
For FYs 2007 and 2006, the exchange revenues reported on the Statement of Net Cost include
both Federal and non-Federal amounts.
Note 8. Intragovernmental Costs and Exchange Revenue
FY 2007	FY 2006
COSTS:
Intragovernmental $ 7,028	$ 6,788
With the Public 15,613	20,958
Expenses from Other Appropriations 52,042		49,999
Total Costs $ 74,683	$ 77,745
REVENUE:
Intragovernmental	$	602 $	558
With the Public	20,774	26,299
Total Revenue	$ 21,376 $	26,857
NET COST OF OPERATIONS	$ 53,307 $	50,888
Intragovernmental costs relate to the source of the goods or services not the classification of the
related revenue.
23	EPA's FY 2007 Annual FIFRA Financial Statements

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08-1-0194
Note 9. Reconciliation of Net Cost of Operations to Budget (formerly the Statement of
Financing)
FY 2007	FY 2006
RESOURCES USED TO FINANCE ACTIVITIES:
Budgetary Resources Obligated
Obligations Incurred	$ 21,478	$ 26,694
Less: Spending Authority from Offsetting
Collections and Recoveries	(22,848) (27,323)
Obligations, Net of Offsetting Collections	$ (1,370)	$	(629)
Other Resources
Imputed Financing Sources	$ 1,540	$	512
Income from Other Appropriations (Note 6)	52,042 49,999
Net Other Resources Used to Finance Activities	$ 53,582	$ 50,511
Total Resources Used To Finance Activities	$ 52,212	$ 49,882
RESOURCES USED TO FINANCE ITEMS
NOT PART OF NET COST OF OPERATIONS
Change in Budgetary Resources Obligated for Goods	$ 1,510	$	521
Resources that Fund Prior Period Expenses		(415)		-
Total Resources Used to Finance Items Not Part of the Net Cost of Operations	$ 1,095	$	521
Total Resources Used to Finance the Net
Cost of Operations	$ 53,307	$ 50,403
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			485
Total components of Net Cost of Operations that Require or Generate
Resources in Future Periods	-	485
Net Cost of Operations	$ 53,307	$ 50,888
24
EPA's FY 2007 Annual FIFRA Financial Statements

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08-1-0194
Appendix B
Agency's Response to Draft Report
June 6, 2008
MEMORANDUM
SUBJECT: OPP Response to Draft Audit Report: Fiscal Year 2007 and 2006 Financial
Statements for the Pesticides Reregistration and Expedited Processing Fund
FROM: James B. Gulliford/s/
Assistant Administrator for Prevention,
Pesticides and Toxic Substances
Lyons Gray /s/
Chief Financial Officer
TO:
Paul C. Curtis, Director
Financial Statement Audits (2422T)
Thank you for the opportunity to respond to the May 15, 2008, Draft Audit Report: Fiscal
Year 2007 and 2006 Financial Statements for the Pesticides Reregistration and Expedited
Processing Fund. The Office of Pesticide Programs (OPP) appreciates the Office of Inspector
General's (OIG) efforts to understand OPP's legal and regulatory framework and OPP's
procedures for processing pesticide product reregistration and amendment actions under the
Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA).
We agree with your general conclusions provided in the report and believe they reflect
how we have been consistently performing. We appreciate the OIG's help evaluating our
program, and your suggestions for improving our tracking of the effectiveness of our program.
Protection of human health and the environment from unreasonable adverse effects of pesticides
is a responsibility we take very seriously and we welcome OIG's input on our work.
The draft audit report presents a number of recommendations to address issues with
reporting accomplishments for product reregistration and amendments under Pesticide
Reregistration Program Performance Measure Two, "Number of products reregistered, canceled,
or amended." OPP's response to those recommendations is presented below.
Recommendation 1-1: Review the entire universe of reregistration and amendment actions
claimed in fiscal year 2007; and correct any errors found in the OPPIN system.
OPP's Response: OPP will review all the product reregistration and amendment actions that
were reported during fiscal year 2007 and will correct any errors found. We expect to complete
this task by December 31, 2008.

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08-1-0194
Recommendation 1-2: Strengthen internal controls over the entry, review, and correction of
information into the OPPIN system to reduce the risk of data entry errors. Specifically, review
processes for coding and correcting actions in the OPPIN system; and develop procedures to
ensure that these actions are entered consistently and accurately, and errors are corrected timely.
OPP's Response: In order to ensure that product reregi strati on and amendment actions are
correctly recorded in OPPIN, OPP has established a product reregi strati on quarterly audit
program. An audit team, comprised of staff from the product registering divisions (RD, BPPD,
and AD) will compile a list of completed product reregi strati on and amendment actions on a
quarterly basis and randomly select a 10% cross-section sample of actions completed in that
quarter for review. The team will review the actions according to the following procedure: (1)
review the product jackets for documentation of product reregistrations and amendments; and (2)
review OPPIN to ensure the actions were coded and accurate information entered The team will
be staffed on a rotating basis from the branches that handle product reregi strati on, with the added
benefit of training more employees on the quarterly audit program. As an additional measure to
ensure that OPP is accurately reporting the actions completed in FY 2008, OPP will maintain
both paper and electronic copies of the documentation for product reregi strati on and amendments
- one in a reference notebook, and the other in a shared database.
Recommendation 1-3: Provide training to OPP staff responsible for entering information in the
OPPIN system, to ensure reregi strati on and amendment actions are classified accurately.
OPP's Response: RD has developed a training document for staff to use to correctly enter
product reregi strati on and amendment actions in OPPIN. One training session has already been
completed for staff regarding codes for product reregi strati on, with additional training to be
scheduled. RD is working with the Information Technology and Resource Management Division
to establish response codes for product reregistration and amendment actions that accurately
address the type of action taken. These codes will remove the ambiguity between a product
being reregistered and a product being amended. Initial training will be complete by
September 30, 2008. Thereafter, staff newly assigned to product reregistration and amendment
data entry responsibilities will be provided with the training documentation and coaching.
Recommendation 1-4: Direct the Product Managers to ensure that any errors in the
classification of reregistration and amendment actions are modified promptly and documented in
the OPPIN system.
OPP's Response: As an interim step until all staff have been trained, Product Managers are
required to personally close out product reregistrations and amendments in OPPIN. Product
Managers and their branch chiefs also receive the results of the internal quarterly audit
mentioned above and ensure that any necessary corrections are made. Finally, the staffer who
maintains a copy of all product reregistrations and amendments will also spot-check OPPIN to
make sure that the system has been correctly updated.
Recommendation 1-5: Disclose in the Annual Report on Reregistration Performance Measures
and Goals published in the Federal Register that the Fiscal Year 2007 accomplishments for
FIFRA Program Performance Measure Two are inaccurate, if they have not been corrected
before publishing.

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OPP's Response: The 2007 Pesticide Reregi strati on Performance Measures and Goals Report
will not include the usual section on product reregi strati on actions completed. Instead it will
explain that OPP is reviewing and strengthening its internal processes and controls for handling
and electronically managing information concerning product reregi strati on actions and
accomplishments. OPP plans to complete this review by December 31, 2008, and will capture in
next year's Reregi strati on Performance Measures and Goals FR notice the actions completed in
FY 2007 and in FY 2008. This review will correct discrepancies in the claimed reregi strati on
and amendment actions identified during the FY 2007 annual audit.
Again, we appreciate the OIG's working with OPP to ensure that our accounting systems,
financial statements and internal controls are in compliance with applicable laws and regulations.
If you have any questions concerning our responses, you may contact Marty Monell, Deputy
Director, Office of Pesticide Programs on 703 305-7090, or Maryann Petrole, Chief, Financial
Management and Planning Branch, OPP on 703 308-8685.

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Status of Recommendations and
Potential Monetary Benefits
Rec.
No.
1-1
1-2
Page
No.
1-3
1-4
1-5
RECOMMENDATIONS
Subject	Status1
Review the entire universe of reregistration and	Ongoing
amendment actions claimed in Fiscal Year 2007
and correct any errors found in the OPPIN system.
Strengthen internal controls over the entry, review,	Done
and correction of information into the OPPIN
system to reduce the risk of data entry errors.
Specifically, review processes for coding and
correcting actions in the OPPIN system; and
develop procedures to ensure that these actions
are entered consistently and accurately, and errors
corrected timely.
Provide training to OPP staff responsible for
entering information in the OPPIN system to
ensure reregistration and amendment actions are
classified accurately.
Established product
reregistration
quarterly audit
program - Jan 08
Ongoing
Direct the Product Managers to ensure that any
errors in the classification of reregistration and
amendment actions are modified promptly, and
documented in the OPPIN system.
Action Official
Director, Office of
Pesticide Programs
Director, Office of
Pesticide Programs
POTENTIAL MONETARY
BENEFITS (in $000s)
Planned
Completion Claimed Agreed To
Date Amount Amount
Done
Jan 08(see response
to recommendation
1-2)
Disclose in the Annual Report on Reregistration	Ongoing
Performance Measures and Goals published in the
Federal Register that the Fiscal Year 2007
accomplishments for FIFRA Program Performance
Measure Two are inaccurate, if they have not been
corrected before publishing.
12/31/08
Done
Jan 08
Director, Office of 09/30/08
Pesticide Programs
Director, Office of
Pesticide Programs
Director, Office of
Pesticide Programs
Done
Jan 08
08/31/08
O = recommendation is open with agreed-to corrective actions pending
C = recommendation is closed with all agreed-to actions completed
U = recommendation is undecided with resolution efforts in progress

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08-1-0194
Appendix C
Distribution
Office of the Administrator
Chief Financial Officer
Agency Follow-up Official (the CFO)
Deputy Chief Financial Officer
Agency Followup Coordinator
Office of General Counsel
Assistant Administrator for Prevention, Pesticides, and Toxic Substances
Assistant Administrator for Administration and Resources Management
Associate Administrator for Congressional and Intergovernmental Relations
Associate Administrator for Public Affairs
Director, Office of Pesticide Programs, Office of Prevention, Pesticides, and Toxic Substances
Deputy Director, Office of Pesticide Programs, Office of Prevention, Pesticides, and Toxic
Substances
Director, Biopesticides and Pollution Prevention Division, Office of Prevention, Pesticides, and
Toxic Substances
Director, Special Review and Reregi strati on Division, Office of Prevention, Pesticides, and
Toxic Substances
Director, Registration Division, Office of Prevention, Pesticides, and Toxic Substances
Director, Antimicrobials Division, Office of Prevention, Pesticides, and Toxic Substances
Director, Information Technology and Resources Management Division, Office of Prevention,
Pesticides, and Toxic Substances
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
Director, Financial Policy and Planning Staff, Office of the Chief Financial Officer
Director, Research Triangle Park Finance Center
Director, Cincinnati Finance Center
Director, Las Vegas Finance Center
Director, Washington Finance Center
Audit Follow-up Coordinator, Office of the Chief Financial Officer
Audit Follow-up Coordinator, Office of Prevention, Pesticides, and Toxic Substances
Audit Follow-up Coordinator, Office of Administration and Resources Management
Audit Liaison, Washington Finance Center
Deputy Inspector General

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