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OFFICE OF THE INSPECTOR GENERAL
Catalyst for Improving the Environment
Audit Report
Fiscal 2004 Financial Statements
for the Pesticide Registration
Fund
Report No. 2005-1-00082
May 4, 2005

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Abbreviations
EPA	Environmental Protection Agency
FIFRA	Federal Insecticide, Fungicide, and Rodenticide Act
FMFIA	Federal Managers' Financial Integrity Act
FQPA	Food Quality Protection Act
PRIA	Pesticide Registration Improvement Act
OMB	Office of Management and Budget

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U.S. Environmental Protection Agency
Office of Inspector General
At a Glance
2005-1 -00082
May 4, 2005
Catalyst for Improving the Environment
Why We Did This Review
The Pesticide Registration
Improvement Act requires that
we perform an annual audit of
the Pesticide Registration
Fund (known as PRIA)
financial statements and report
findings and recommendations
resulting from the audit.
Background
To expedite the registration of
certain pesticides, Congress
authorized EPA to assess and
collect pesticide registration
fees. The fees collected are
deposited into the Pesticide
Registration Fund. The
Agency is required to prepare
financial statements that
present financial information
about the Fund.
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/2005/
20050504-2005-1 -00082.pdf
Fiscal 2004 Financial Statements for the
Pesticide Registration Fund
Opinion
We rendered an unqualified, or clean, opinion on EPA's Pesticides Registration
Fund Financial Statements for fiscal 2004, meaning that they were fairly presented
and free of material misstatement.
Internal Control Reportable Conditions Noted
We identified the following reportable conditions:
•	We could not assess the adequacy of the automated controls.
•	EPA needs to improve financial statement preparation.
Compliance with Laws and Regulations
We tested compliance with those laws and regulations that could either materially
affect the PRIA Fund financial statements, or that we considered significant to the
audit. The objective of our audit, including our tests of compliance with
applicable laws and regulations, was not to provide an opinion on overall
compliance with such provisions. Accordingly, we do not express such an
opinion.
What We Recommend
We recommend that the Director, Reporting and Analysis Staff: (a) ensure that
products issued from the office, especially Financial Statements, footnotes,
supplemental information, and overviews, are properly reviewed prior to release or
submittal for audit; and (b) establish milestone due dates for the PRIA 2005
financial statement audit.

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UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
I	WASHINGTON, D.C. 20460
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OFFICE OF
INSPECTOR GENERAL
May 4, 2005
MEMORANDUM
SUBJECT:	Fiscal 2004 Financial Statements for the Pesticide Registration Fund
Report No. 2005-1-00082
FROM:	Paul C. Curtis
Director, Financial Statement Audits
TO:	Susan B.Hazen
Acting Assistant Administrator for Prevention,
Pesticides and Toxic Substances (7101M)
Charles E. Johnson
Chief Financial Officer (271 OA)
Attached is our audit report on the fiscal 2004 financial statements for the Pesticide Registration
Fund (PRIA). We discussed our findings with your staff and issued a draft report. We
appreciate your staffs assistance and cooperation during the conduct of this audit.
In accordance with EPA Order 2750, we are requesting the Acting Assistant Administrator for
Prevention, Pesticides and Toxic Substances, as the primary action official, provide this office
with a written response to this report within 90 days of the final audit report date. For corrective
actions planned but not yet completed by the response date, refer to specific milestone dates that
will assist us in deciding whether to close this report in our audit tracking system.
This audit report contains findings that the Office of Inspector general (OIG) identified and
corrective actions the OIG recommends. This audit represents the opinion of the OIG and the
findings in this report do not necessarily represent the final Environmental Protection Agency
(EPA) position. Final determinations on matters in this audit report will be made by EPA
managers in accordance with established EPA audit resolution procedures. We have no
objection to the release of this report to the public.
If you or your staff have any questions regarding this report, please contact me at
(202) 566-2523, or Meg Bastin of my staff at (513) 487-2366.
Attachment

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Table of C
At a Glance
Inspector General's Report on the Fiscal 2004 Financial Statements
for the Pesticide Registration Fund
Opinion on the PRIA Fund Financial Statements		1
Evaluation of Internal Controls		2
Tests of Compliance with Laws and Regulations		3
Overview Section of the Financial Statements		4
Recommendations		4
Agency Comments		4
Appendices
A Fiscal 2004 PRIA Financial Statements
B Distribution

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Inspector General's Report on the
Fiscal 2004 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, 2004, and the related statements of net cost, changes in net position, budgetary
resources, and financing for the period from inception (March 23, 2004) to September 30, 2004.
These financial statements are the responsibility of 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 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. 01-02, Audit Requirements for Federal Financial Statements. These standards require that we
plan and perform the audit to obtain reasonable assurance about whether the financial statements are
free of material misstatements. An audit 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 present fairly the assets, liabilities, net position, budgetary
resources, financing activities, and reconciliation of net costs to budgetary obligations of the PRIA
fund, as of September 30, 2004, and for the period from inception (March 23, 2004) to September
30, 2004, in accordance with accounting principles generally accepted in the United States of
America.
1

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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, 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 timely and reliable preparation of the financial statements in
accordance with generally accepted accounting principles; and assets are safeguarded against
loss from unauthorized acquisition, use, or disposition.
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.
Compliance with applicable laws and regulations - Transactions are executed in
accordance with laws governing the use of budget authority and other laws and regulations
that could have a direct and material effect on the financial statements; and any other laws,
regulations, and Government-wide policies identified by OMB.
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. The objective of our audit was not to provide assurance on internal
controls and, accordingly, we do not express an opinion on internal controls. Our consideration of
the internal controls over financial reporting would not necessarily disclose all matters in the internal
controls that might be reportable conditions or material weaknesses. Because of inherent limitations
in any internal control structure, losses, noncompliance, or misstatements could occur and not be
detected. Also, projecting our evaluation of internal controls to future periods is subject to the risk
that controls may become inadequate because of changes in conditions, or the degree of compliance
with such controls may deteriorate.
With respect to internal control related to performance measures presented in the Overview and
Analysis (which addresses requirements for a Management 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. 01-02. 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.
Material Weaknesses
Material weaknesses as defined by OMB Bulletin No. 01-02 are situations where internal controls do
not reduce, to a relatively low level, the risk that errors, fraud, or noncompliance in amounts material
to the financial statements, including the performance measures reported for the Fund, may occur
and not be detected in a timely manner by employees in the normal course of performing their
assigned functions. We noted certain matters discussed below involving internal controls and
operations that we consider to be reportable conditions, although none are believed to be material
weaknesses.
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Reportable Conditions
OMB Bulletin No. 01-02 defines reportable conditions as matters that come to the auditor's attention
that, in the auditor's judgment, should be communicated because they represent significant
deficiencies in the design or operation of internal control that could adversely affect the
organization's ability to meet the objectives defined above. For fiscal 2004, we identified two
reportable conditions, as follows:
We could not assess the adequacy of the automated controls. As we have previously reported in
the Agency-wide Financial Statement and FIFRA Financial Statement audits, we could not
assess the adequacy of the automated internal control structure as it relates to automated input,
processing, and output controls for the Integrated Financial Management System. During past
financial statement audits, we attempted to evaluate controls without systems documentation, but
these alternatives proved to be inefficient and impractical We could not evaluate the reliability
of these controls because existing documentation is not detailed enough to develop a sufficient
test plan.
We identified a weakness in the Agency's preparation and quality control of the Financial
Statements and footnotes. The Agency did not have established milestones and did not provide for
proper quality control over the financial statement preparation process. The draft statements we
received included incomplete line items, amounts that were misclassified, inconsistencies among and
within the Financial Statements and footnotes, inaccurate calculations, and material misstatements.
Additionally, the Agency double booked the payroll unfunded leave liability, which would have
materially misstated the financial statements if not caught by OIG auditors.
Comparison of EPA's FMFIA Report with Our Evaluation of Internal Controls
OMB Bulletin No. 01-02 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 audit that were not reported in the agency's FMFIA
report.
For reporting under FMFIA, material weaknesses are defined differently than they are defined 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.
Our audit did not disclose any material weaknesses, nor were any reported by the Agency as part of the
Integrity Act process.
Tests of Compliance with Laws and Regulations
In accordance with the Pesticide Registration Improvement Act, the Administrator is required to
publish a schedule of decision 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. The Act also requires the OIG to perform an
3

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analysis of the Agency's compliance with decision time review periods. Our analysis of the
Agency's compliance with decision time review periods did not identify any non-compliances.
As part of obtaining reasonable assurance about whether the financial statements are free from
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. However, we did not identify any non-compliances that would result in a
material misstatement to the audited financial statements.
Overview Section of the Financial Statements
Our audit work related to the information presented in Management's Overview and Analysis of the
Pesticides Program included comparing the overview information with information in EPA's
principal financial statements to ensure that it was consistent. In comparing the overview
information with information presented in EPA's principal financial statements, 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.
Recommendations
We recommend the Director, Reporting and Analysis Staff, Office of the Chief Financial Officer:
1.	Ensure that products issued from the office, especially products that would go outside the
Agency, such as the Financial Statements (including the footnotes, supplemental information,
and overview), are properly reviewed prior to release or submittal for audit.
2.	Establish milestone due dates for the PRIA 2005 financial statement audit.
Agency Comments
The Agency agreed with our comments and recommendations.
Paul C. Curtis
Director, Financial Statement Audits
Office of Inspector General
U.S. Environmental Protection Agency
February 25, 2005
4

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Appendix A
FY 2004 PESTICIDE REGISTRATION FUND (PRIA)
FINANCIAL
STATEMENTS
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Produced by the U.S. Environmental Protection Agency
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Office of Financial Management

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TABLE OF CONTENTS
Overview and Analysis of the Pesticide Program		1
Principal Financial Statements		6
Page i
EPA's FY 2004 Annual PRIA Financial Statements

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OVERVIEW AND ANALYSIS
OF THE PESTICIDE PROGRAM
Page 1
EPA's FY 2004 Annual PRIA Financial Statements

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OVERVIEW AND ANALYSIS OF THE PESTICIDE PROGRAM
The Agency's Office of Pesticide Programs 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.
With passage of the Pesticide Registration Improvement Act (PRIA) of 2003, the
pesticide program now administers the newly established Registration Fund. PRIA authorizes
the collection of new fees for pesticide registrations. Registration service fees are deposited to
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 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 the
Pesticide Registration Improvement Act (PRIA) of 2003, with deadlines for completion of certain
registration actions. As part of the registration program, EPA expedites the registration of
reduced risk pesticides, which are generally presumed to pose lower risks to consumers, workers,
groundwater, and wildlife. 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 Section 18 program provides emergency exemption to
any part of FIFRA. This authority is typically used by States on an emergency basis. We have
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 Antimicrobials, Biopesticides and
conventional pesticides registration actions. The category of action, the amount of the
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. The
Page 2
EPA's FY 2004 Annual PRIA Financial Statements

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legislation became effective on March 23, 2004, and the collection of registration fees are
authorized through FY 2008. In order to help ensure a smooth transition (if PRIA is not re-
authorized), PRIA reduces the registration service fees by 40 percent in FY 2009 and then by 70
percent in FY 2010. For any application received after September 30, 2008, but before
September 30, 2010, the reduced registration service fee applies, while the decision review
periods do not.
In order for a pending or a new application 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 fees. For most applications, the decision review period starts 21 days after submission of the
application - provided it includes the applicable fee and all the necessary forms, labeling and
documents certifying payment of the fee. The legislation provides fee waivers for certain
categories of small businesses, minor uses, IR-4 petitions, and for applications from federal and
state agencies, and, in very limited cases, the reduction of fees when the application is withdrawn
with little work completed. If the registrant requests a waiver or reduction of the fee, the decision
review period will begin when the Agency grants such request or 60 days after receipt of the
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.
Research Program Description
Pesticide research continues to focus on providing scientifically-valid, cost-effective
methods for evaluating risks associated with pesticide use, manufacture, and release into the
environment. Research efforts in FY 2004 focused on developing new and revised human health
effects test methods to improve EPA's understanding of the effects of pesticides on infants and
children (age-related differences and activity patterns) and other highly-exposed groups. EPA
also continued efforts to develop a systematic approach for determining the cumulative risk for a
given set of exposure conditions. This approach, starting with less complex paradigms (e.g., risk
from aggregate exposure to a single chemical or a class of pesticides with a common mode of
action) builds towards the more complex, including consideration of different temporal
dimensions of exposure.
Additionally, research addressed agricultural and residential exposure and effects, with
particular emphasis on children's health, including the special susceptibilities of infants and
children exposed to pesticides and other toxins. Results from this work will support human and
environmental risk assessments.
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, 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.
Page 3
EPA's FY 2004 Annual PRIA Financial Statements

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EPA's grant support to states' and tribes' pesticide programs emphasizes pesticide worker
protection standards, high risk pesticide activities including antimicrobials, pesticide misuse in
urban areas, and the misapplication of structural pesticides. In FY 2004, 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 2004 and FY 2005 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: 1) special action chemicals identified by the Office of
Enforcement and Compliance Assurance, 2) unregistered sources of pesticidal active ingredients,
and 3) illegal distribution, sale, and advertisement of pesticides and pesticidal services via the
Internet.
Highlights and Accomplishments
Registration Financial Perspective
During FY 2004, the Agency's obligations charged against the Pesticide Registration
Fund for the cost of registration were $5.0 million and 23.0 workyears (all obligated by the
Office of Pesticide Programs).
Appropriated funds are used in addition to Registration funds. In FY 2004,
approximately $39.6 million in appropriated funds were obligated for registration activities. The
unobligated balance in the Fund at the end of FY 2004 was $9.6 million.
The Fund has two types of receipts: fee collections and interest earned on investments.
Of the $14.6 million in FY 2004 receipts, 100% 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 2004 President's budget.
Measure 1: Number of new active ingredients registered.
Results: In FY 2004, EPA registered 26 new active ingredients, of which 14 are
biopesticides, 2 are antimicrobials, and 10 are conventional pesticides with domestic uses.
Measure 2: Progress in Registering Reduced-risk Pesticides.
Results: In FY 2004, EPA registered 19 reduced risk pesticides and 1 methyl bromide
alternative. Biological pesticides are certain types ofpesticides derivedfrom such natural
materials as animals, plants, bacteria, and certain minerals. They are usually less toxic and are
typically considered safer pesticides than the traditional conventional chemicals; therefore, the
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EPA's FY 2004 Annual PRIA Financial Statements

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14 biopesticides new active ingredients are counted as reduced risk pesticides. For conventional
chemicals, there were 5 reduced risk new active ingredients registered this year. One of these
actions was also an organophosphate alternative. Conventional pesticides reduced risk
determination is granted when compared to the registered alternatives the new product poses
less risk. In addition, we registered 1 methyl bromide alternative new active ingredient that has
10 new uses associated with this registration.
Measure 3: Number of New Food Uses Registered.
Results: EPA registered 231 new food uses for previously registered active ingredients.
Measure 4: Progress in Registering Reduced-risk New Uses.
Results: Included in the new uses registered are 40 reduced-risk, 20 organophosphate
alternatives, and 10 methyl bromide alternatives.
Reducing Exposure through Human Health Protection Research
In FY 2004, EPA's research program developed models to estimate exposure and dose.
In addition, the Agency refined methods for measuring children's exposures to pesticides and
other environmental contaminants to improve exposure and risk assessments. These research
results will be used by the Office of Prevention, Pesticides, and Toxic Substances (OPPTS) in the
2006 reassessment of current use pesticides. The research program also provided tools to OPPTS
for identifying and assessing key factors influencing farm applicator exposure to agricultural
pesticides as well as approaches for evaluating the population-level effects of pesticides on
wildlife and aquatic species.
The data and improved understanding(s) gained through this research program will reduce
uncertainties associated with risk assessments. In addition, these results will be used by the
Office of Research and Development and OPPTS to prioritize future research activities.
Page 5
EPA's FY 2004 Annual PRIA Financial Statements

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PRINCIPAL
FINANCIAL STATEMENTS
Page 6
EPA's FY 2004 Annual PRIA Financial Statements

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CONTENTS
Financial Statements
Balance Sheet
Statement of Net Cost
Statement of Changes in Net Position
Statement of Budgetary Resources
Statement of Financing
Notes to Financial Statements
Note 1.	Summary of Significant Accounting Policies
Note 2.	Fund Balances with Treasury
Note 3.	Other Liabilities
Note 4.	Payroll and Benefits Payable
Note 5.	Income and Expenses from Other Appropriations
Note 6.	Exchange Revenues, Statement of Net Cost
Page 7
EPA's FY 2004 Annual PRIA Financial Statements

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Environmental Protection Agency
PRIA
Balance Sheet
As of September 30, 2004
(Dollars in Thousands)
	FY 2004
ASSETS
Intragovernmental
Fund Balance With Treasury (Note 2)	$ 	11,367
Total Intragovernmental	$ 11,367
Property, Plant & Equipment, Net		238
Total Assets	$ 	11,605
LIABILITIES
Intragovernmental
Other (Note 3)		32
Total Intragovernmental	$ 32
Accounts Payable & Accrued Liabilities	171
Payroll & Benefits Payable (Note 4)		596
Total Liabilities	$ 799
NET POSITION
Cumulative Results of Operations		10,806
Total Net Position		10,806
Total Liabilities and Net Position	$	11,605
Page 8
The accompanying notes are an integral part of these
EPA's FY 2004 Annual PRIA Financial
statements.
Statements

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Environmental Protection Agency
PRIA
Statement of Net Cost
From Inception (March 23, 2004) to September 30, 2004
(Dollars in Thousands)


FY 2004
COSTS


Intragovernmental
$
434
With the Public

3,211
Expenses from Other Appropriations (Note 5)

4,163
Total Costs
$
7,808
Less:


Earned Revenues, Federal (Note 6)
$

Earned Revenues, Non-Federal (Note 6)

14,634
Total Earned Revenues
$
14,634
NET COST OF OPERATIONS
$
(6,826)
Page 9
The accompanying notes are an integral
EPA's FY 2004 Annual
part of these statements.
PRIA Financial Statements

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Environmental Protection Agency
PRIA
Statement of Changes in Net Position
From Inception (March 23, 2004) to September 30, 2004
(Dollars in Thousands)
FY 2004
Net Position - Beginning of Period	$ 0
Budgetary Financing Sources:
Nonexchange Revenue	(19)
Income from Other Appropriations (Note 5)	4,163
Total Budgetary Financing Sources	$ 4,144
Other Financing Sources:
Imputed Financing Sources	39
Other- Unfunded Annual Leave Transfer (Note 4)	(203)
Total Other Financing Sources	$ (164)
Net Cost of Operations	6,826
Net Position - End of Period	$ 10,806
Page 10
The accompanying notes are an integral part of these statements.
EPA's FY 2004 Annual PRIA Financial Statements

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Environmental Protection Agency
PRIA
Statement of Budgetary Resources
From Inception (March 23, 2004) to September 30, 2004
(Dollars in Thousands)
FY 2004
BUDGETARY RESOURCES
Budgetary Authority:
Appropriations Received	$ 	14,615
Total Budgetary Resources	$ 	14,615
STATUS OF BUDGETARY RESOURCES
Obligations Incurred:
Direct
Unobligated Balances:
Apportioned
Total Status of Budgetary Resources
RELATIONSHIP OF OBLIGATIONS TO
OUTLAYS
Obligations Incurred, Net	$ 4,994
Obligated Balances, Net - Beginning of Period	0
Undelivered Orders, Unpaid	(1,380)
Accounts Payable		(366)
Total Outlays	$ 	3,248
Disbursements	$ 	3,248
Net Outlays	$	3,248
$	4,994
	9,621
$	14,615
Page 11
The accompanying notes are an integral part of these statements.
EPA's FY 2004 Annual PRIA Financial Statements

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Environmental Protection Agency
Statement of Financing
PRIA
From Inception (March 23, 2004) to September 30, 2004
(Dollars in Thousands)
FY 2004
RESOURCES USED TO FINANCE ACTIVITIES:
Budgetary Resources Obligated
Obligations Incurred	$ 4,994
Other Resources
Imputed Financing Sources	39
Income from Other Appropriations (Note 5)	4,163
Net Other Resources Used to Finance Activities	$ 4,202
Total Resources Used To Finance Activities	$ 9,196
RESOURCES USED TO FINANCE ITEMS
NOT PART OF NET COST OF OPERATIONS
Change in Budgetary Resources Obligated
Resources that Finance Asset Acquisition
Total Resources Used to Finance Items Not
Part of the Net Cost of Operations
Total Resources Used to Finance the Net
Cost of Operations
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 (Note 4)
Increase in Public Exchange Revenue Receivable
Total Components of Net Cost of Operations that
Requires or Generates Resources in the Future
Net Cost of Operations
$ (1,380)
(238)
$ (1,618)
$ 7,578
$	230
(14,634)
$ (14,404)
$ (6,826)
Page 12
The accompanying notes are an integral part of these statements.
EPA's FY 2004 Annual PRIA Financial Statements

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Environmental Protection Agency
PRIA
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 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. For FY 2004, we prepared the PRIA financial statements separate
from FIFRA financial statements. The reports have been prepared from the books and records of
EPA in accordance with "Form and Content for Agency Financial Statements," specified by the
Office of Management and Budget (OMB) in Bulletin 01-09 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 PRIA fund is authorized under the Pesticide Registration Improvement Act of 2003, and
became effective on March 23, 2004. This Act authorizes 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 PRIA Fund is accounted for
under Treasury symbol number 68X5374.
Pesticide 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 FY 2004 were $4,163 thousand. This amount was included as Income from
Other Appropriations on the Statements of Changes in Net Position and Financing and as
Expenses from Other Appropriations on the Statement of Net Cost for FY 2004.
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EPA's FY 2004 Annual PRIA Financial Statements

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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 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
For FY 2004, PRIA received funding from fees collected for monitoring of pesticides. For FY
2004, revenues were recognized from fee collections to the extent that expenses are incurred
during the fiscal year.
F.	Funds with the Treasury
PRIA deposits receipts and processes disbursements through its operating account maintained at
the U.S. Department of the Treasury. Cash funds in excess of immediate needs, are invested in
U.S. Government securities.
G.	Property, Plant and Equipment
Purchases of EPA-held and contractor-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 modified straight-line basis over a period of six years depreciating
10% the first and sixth years, and 20% in years two through five. EPA shows property, plant and
equipment at net of depreciation on its audited financial statements.
H.	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 PRIA, liabilities are liquidated from fee
receipts and interest earnings, since PRIA receives no appropriation. Liabilities of EPA, arising
from other than contracts, can be abrogated by the Government acting in its sovereign capacity.
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EPA's FY 2004 Annual PRIA Financial Statements

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I. Annual, Sick and Other Leave
Annual, sick and other leave is expensed as taken during the fiscal year. Annual and other leave
earned but not taken as of the end of the fiscal year is accrued as an unfunded liability.
J. Retirement Plan
EPA's employees participate in either the Civil Service Retirement System (CSRS) or the
Federal Employees Retirement System (FERS). The Agency makes contributions to the
retirement plans equal to 8.51% and 10.7% of base pay to CSRS and FERS, respectively.
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, were allowed
to either join FERS and Social Security or remain in CSRS. A primary feature of FERS is that it
offers a savings plan to EPA employees which automatically contributes 1 percent of pay and
matches any employee contribution up to an additional 4 percent of pay. For most employees
hired after December 31, 1983, EPA also contributes the employer's matching share for Social
Security.
With the issuance of "Accounting for Liabilities of the Federal Government" (SFFAS-5),
accounting and reporting standards were established for liabilities relating to the Federal
employee benefit programs (Retirement, Health Benefits and Life Insurance). SFFAS-5 requires
employing agencies to recognize the cost of pensions and other retirement benefits during their
employees' active years of service. SFFAS-5 requires that the Office of Personnel Management,
as administrator of the CSRS, the FERS, the Federal Employees Health Benefits Program, and
the Federal Employees Group Life Insurance Program, provide EPA with the 'cost factors' to
compute EPA's liability for each program.
Note 2. Fund Balances with Treasury:
FY 2004
Revolving Funds:	Entity Assets	$ 11.367
Non-Entity Assets $ 0
Page 15	EPA's FY 2004 Annual PRIA Financial Statements

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Note 3. Other Liabilities:
For FY 2004, the Payroll and Benefits Payable, non-Federal, are now presented on a separate
line of the Balance Sheet and in a separate footnote (see Note 4 below).
FY 2004
Other Intragovernmental Liabilities - Covered by Budgetary Resources
Employer Contributions - Payroll	$ 32
Other Intragovernmental Liabilities - Covered by Budgetary Resources
Advances to non-federal entities	$	0
Note 4. Payroll and Benefits Payable, non-Federal:
FY 2004
Covered by Budgetary Resources
Accrued Payroll Payable to Employees $	90
Withholdings Payable	68
Thrift Savings Plan Benefits Payable		5
Total	$	163
Not Covered by Budgetary Resources
Unfunded Annual Leave Liability -	$ 203
Transferred-In (a)
Unfunded Annual Leave Expense (b)		230
Unfunded Annual Leave Liability - End
of the Year	$	433
(a)	In FY 2004, certain employees were transferred from FIFRA to PRIA, the unfunded
leave liability associated with those employees was approximately $203 thousand which
is reported on the Statement of Net Position under "Other Financing Sources".
(b)	The unfunded annual leave expense for FY 2004 was $230 thousand.
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EPA's FY 2004 Annual PRIA Financial Statements

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At various periods throughout FY 2004, employees with their associated payroll costs were
transferred from the fund to the Environmental Programs and Management (EPM) appropriation.
(See graph in Note 5 below showing trend of hours charged per month to the PRIA Fund for
FY 2004.) These employees were transferred in order to keep PRIA's obligations and
disbursements within budgetary and cash limits. When resources became available, the
employees charging to PRIA increased in order to utilize resources as much as possible. The
Agency expects that the practice of transferring employees when PRIA's resources are low, and
restoring employees when funds become available, will continue throughout FY 2004, and
probably beyond that period.
This process has led to variations between the year-end liabilities of FY 2004. The liabilities
covered by budgetary resources (both intragovernmental and non-Federal) represent unpaid
payroll and benefits at year-end. At the end of FY 2004, about 23 employees were charging to
PRIA. As of September 30, 2004, these liabilities were $32 thousand and $163 thousand for
employer contributions and accrued funded payroll and benefits.
In contrast, the unfunded annual leave liability is a longer term liability than the funded
liabilities. At various periods throughout FY 2004, approximately 23 employees in total have
been under PRIA's accountability. Therefore the September 30, 2004 balances for unfunded
annual leave were accrued to cover these 23 employees for a total of $433 thousand.
Note 5. Income and Expenses from Other Appropriations:
The Statement of Net Cost reports program costs that include the full costs of the program
outputs and consist of the direct costs and all other costs that can be directly traced, assigned on a
cause and effect basis, or reasonably allocated to program outputs.
During FY 2004, 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 PRIA to EPM at various times during FY 2004
(see Note 4 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 FY 2004 are shown below. Note that a decrease in hours charged to PRIA normally
signifies an increase in EPM's payroll costs, and vice versa.
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EPA's FY 2004 Annual PRIA Financial Statements

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PRIA Payroll Hours per Month of FY 2004
O
H
*4-
o
-
ZJ
-O
20,000
-o 15,000
*5 10,000
6 5,000
0
¦FY 2004


V
&
Months
All of the expenses from EPM were distributed among EPA's two Reporting Entities: Superfund
and All Other (includes PRIA). 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 PRIA's Net Position.
From Inception
(3/23/2004) to
9/30/2004
Income from Other
Appropriations
$ 4,163
Expenses from	Net
Other	Effect
Appropriations
$ 4,163	$0
Note 6. Exchange Revenues, Statement of Net Cost
For FY 2004, the exchange revenues reported on the Statement of Net Cost are separated into
Federal and non-Federal portions.
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EPA's FY 2004 Annual PRIA Financial Statements

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Appendix B
Distribution
Office of the Administrator
Acting Assistant Administrator for Prevention, Pesticides and Toxic Substances
Associate Assistant Administrator for Prevention, Pesticides and Toxic Substances
Agency Followup Official (the CFO)
Deputy Chief Financial Officer
Agency Followup Coordinator
General Counsel
Director, Office of Pesticides Programs
Deputy Director, Office of Pesticides Programs
Director, Biopesticides and Pollution Prevention Division
Director, Special Review and Reregi strati on Division
Director, Registration Division
Director, Antimicrobials Division
Director, Office of Financial Management
Director, Information Resources and Services Division
Director, Office of Financial Services
Director, Reporting and Analysis Staff
Director, Financial Policy and Planning Staff
Audit Followup Coordinator, Office of Prevention, Pesticides and Toxic Substances
Audit Followup Coordinator, Office of the Chief Financial Officer
Associate Administrator for Congressional and Intergovernmental Relations
Associate Administrator for Public Affairs
Inspector General

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