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OFFICE OF INSPECTOR GENERAL
Catalyst for Improving the Environment
Audit Report
Fiscal 2003 and 2002
Financial Statements for the
Pesticides Reregistration and
Expedited Processing Fund
Report No. 2004-1-00071
June 3, 2004

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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
OMB	Office of Management and Budget

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|	%	UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
1	|	WASHINGTON, D.C. 20460
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OFFICE OF
INSPECTOR GENERAL
June 03, 2004
MEMORANDUM
SUBJECT: Fiscal 2003 and 2002 Financial Statements for the
Pesticides Reregi strati on and Expedited Processing Fund

FROM: Paul C. Curtis
Director, Financial statement Audits
TO:	Stephen L. Johnson
Assistant Administrator for Prevention,
Pesticides and Toxic Substances (7101)
Mike Ryan
Acting Chief Financial Officer (271 OA)
Attached is our audit report on the fiscal 2003 and 2002 financial statements for the Pesticides
Reregi strati on and Expedited Processing Fund (FIFRA Fund). We discussed our findings with
your staff and issued a draft report. The comments we received on the draft report are
summarized in this final report. We also included the complete response as Appendix B of the
report. We appreciate your staffs assistance and cooperation during the conduct of this audit.
In accordance with EPA Order 2750, we are requesting the 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 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 further release of this report to the
public.

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Should you or your staff have any questions about the report, please contact me at
(202) 566-2523, or Robert Smith of my staff at (202) 566-2531.
Attachment

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Executive Summary
The Environmental Protection Agency (EPA) is responsible for reassessing the safety of older
pesticide registrations against modern health and environmental testing standards. To expedite
this reregi strati on process, Congress authorized EPA to collect fees from pesticide
manufacturers. The fees are deposited into the Pesticides Reregi strati on and Expedited
Processing Fund (known as 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. The Food Quality Protection Act requires that we
perform an annual audit of the FIFRA Fund financial statements.
Objectives
Our primary objectives were to determine whether:
the FIFRA Fund's financial statements were fairly presented in all material respects in
conformity with generally accepted accounting principles;
EPA's internal control over financial reporting related to the FIFRA financial statements
were in place; and
EPA management complied with applicable laws and regulations that, if not followed, could
have a direct and material effect on the FIFRA financial statements.
Results in Brief
Opinion on Financial Statements. In our opinion, the fiscal 2003 and 2002 FIFRA Fund
financial statements are fairly presented.
Evaluation of Internal Controls. Material weaknesses as defined by Office of Management
and Budget (OMB) Bulletin 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 are reporting no material weaknesses. However, we identified three
reportable conditions, as follows:
We could not assess the adequacy of the automated controls. As we have previously
reported, 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. We could not evaluate the reliability of these controls because existing
documentation is not detailed enough to develop a sufficient test plan.
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We cannot attest to the accuracy of the performance measure outcomes disclosed in the
report. We have been unable to satisfy ourselves that the fiscal 2003 accomplishments
reported under Reregi strati on Program performance measures one and two are final and
complete. The number of completed pesticides decisions and the number of pesticide
products cancelled could change, subsequent to the issuance of this report.
The timing of the issuing performance measure reports and the fiscal year do not coincide.
The information presented in performance measure three is based upon a report that was
generated on November 24, 2003; therefore, some of the reregi strati on studies received and
reviewed by the Agency may have taken place in fiscal 2004. Additionally, as a result of
EPA's transition to a new pesticides information system, the total number of reregi strati on
studies received through November 24, 2003, is less than the reregi strati on studies reported
received by the Agency through October 1, 2002.
Tests of Compliance with Laws and Regulations. 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.
Recommendations
We recommend that the Director, Office of Pesticides Programs: disclose that the information in
performance measure three is based upon data as of November 24, 2003, in the fiscal 2003
FIFRA financial statements; and disclose the reasons for the decrease in the total number of
reregi strati on studies received by EPA between October 1, 2002, and November 24, 2003, in the
fiscal 2003 FIFRA financial statements.
Agency Comment and OIG Evaluation
In a memorandum dated April 12, 2004, the Office of Pesticide Programs agreed to disclose the
that the information in performance measure three is based upon data as of November 24, 2003,
and also agreed to disclose the decrease in number of studies received. On April 29, 2004, the
Agency revised the FIFRA financial statements and adequately disclosed accurate performance
measure data and reasons for the decrease in reregi strati on studies. Therefore, no further action
is required.
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Table of C
Executive Summary		i
Inspector General's Report on the Fiscal 2003 and 2002
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
Overview Section of the Financial Statements		4
Prior Audit Coverage 		5
Recommendations 		5
Agency Comments and OIG Evaluation		5
Appendices
A Fiscal 2003 and 2002 FIFRA Financial Statements
B Agency's Response to the Draft Report
C Distribution

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Inspector General's Report on the
Fiscal 2003 and 2002 Financial Statements for the
Pesticides Re registration and Expedited Processing Fund
The Administrator
U.S. Environmental Protection Agency:
We have audited the Pesticides Reregi strati on and Expedited Processing Fund (known as the
FIFRA Fund) balance sheet as of September 30, 2003 and 2002, and the related statements of net
cost, changes in net position, budgetary resources, and financing for the years then ended. 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
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
FIFRA fund, as of and for the years ended September 30, 2003 and 2002, in accordance with
accounting principles generally accepted in the United States of America.
Throughout fiscal 2003, employees and their associated payroll costs were transferred from the
FIFRA fund to the Environmental Programs and Management appropriation. These employees
were transferred in order to keep FIFRA's obligations and disbursements within budgetary and
cash limits. As funds are available, employees will charge their time directly to FIFRA. As funds
become limited, those employees are transferred to the Environmental Programs and Management
appropriation. At the end of fiscal 2003 and 2002, about 350 and 290 employees, respectively
charged their time directly to the FIFRA fixed account number. In addition, due to the year-end
unfunded payroll liabilities associated with those employees charging FIFRA, the FIFRA Fund
assets are not sufficient to cover the unfunded liabilities of the fund. As a result, the FIFRA Fund
will either have to obtain additional funding or such unfunded liabilities would have to be paid
from other EPA appropriations.
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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 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
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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.
Reportable Conditions
OMB Bulletin 01-02 defines a 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 2003 we identified three
reportable conditions, as follows:
We could not assess the adequacy of the automated controls. As we have previously
reported, 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 cannot attest to the accuracy of the performance measure outcomes disclosed in the
report. We have been unable to satisfy ourselves that the fiscal 2003 accomplishments
reported under Reregi strati on Program performance measures one and two are final and
complete. The number of completed pesticides decisions and the number of pesticide
products cancelled could change, subsequent to the issuance of this report.
The timing of the issuing performance measure reports and the fiscal year do not coincide.
Also, as a result of EPA's transition to a new pesticides information system the information
presented in performance measure three is based upon activity through November 24, 2003,
and the total number of reregistration studies received decreased from the 28,707 as of
October 1, 2002, to 27,260 as of November 24, 2003.
Comparison of EPA's FMFIA Report with Our Evaluation of Internal Controls
OMB Bulletin 01-02, Audit Requirements for Federal Financial Statements, requires us to
compare material weaknesses disclosed during the audit with those material weaknesses reported
in the agency's FMFIA report that relate to the financial statements and identify material
weaknesses disclosed by 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.
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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
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 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. However, we did not identify any noncompliances 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.
We reviewed supporting documentation for each of the six performance measures listed in
Management's Overview and Analysis of the Pesticides Program, but we have been unable to
satisfy ourselves that the fiscal 2003 accomplishments reported under Reregi strati on Program
performance measures one and two are final and complete. The number of completed pesticides
decisions and the number of pesticide products cancelled could change, subsequent to the issuance
of this report.
Performance measure three explains the progress EPA is making in reducing the number of
required reregi strati on studies. The information presented in performance measure three is not as
of the end of fiscal 2003, but is based upon a report that was generated on November 24, 2003;
therefore, some of the reregi strati on studies received and reviewed by the Agency may have taken
place in fiscal 2004. Additionally, as a result of EPA's transition to a new pesticides information
system, the 27,260 studies reported received by the Agency through the reregi strati on program as
of November 24, 2003, is less than the 28,707 studies reported received by the Agency through
the reregi strati on program as of October 1, 2002. Office of Pesticide Programs staff has explained
that in converting to the new information system, duplicate or erroneous records were removed
from the data base resulting in a lower total number of studies received. We believe this
information should be disclosed in the fiscal 2003 FIFRA financial statements
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Prior Audit Coverage
During the fiscal 2002 audit, we reported a material noncompliance with those laws and
regulations that could affect the FIFRA Fund financial statements. The Agency was not in
compliance with the Food Quality Protection Act of 1996 (FQPA) because the Agency exceeded
the limitation on the usage of maintenance fees.
During the fiscal 2001 audit, we reported one material noncompliance with those laws and
regulations that could affect the FIFRA Fund financial statements, or that we consider significant
to the audit. The FQPA requires that the EPA Administrator establish and publish annually in the
Federal Register FQPA performance measures and goals. As of the 2001 audit, EPA did not
publish the Federal Register Notice for the fiscal 2000 FQPA performance measures and goals.
On September 13, 2002, EPA issued a Federal Register Notice that included both the fiscal 2000
and 2001 measures and goals. EPA published the Federal Register Notice for the fiscal 2002
FQPA performance measures and goals on July 30, 2003.
Recommendations
We recommend that the Director, Office of Pesticides Programs:
1.	Disclose that the information in performance measure three is based upon data as of
November 24, 2003, in the fiscal 2003 FIFRA financial statements.
2.	Disclose the reasons for the decrease in the total number of reregi strati on studies received
by EPA between October 1, 2002, and November 24, 2003, in the fiscal 2003 FIFRA
financial statements.
Agency Comments and OIG Evaluation
In a memorandum dated April 12, 2004, the Office of Pesticide Programs agreed to disclose that
the information in performance measure three is based upon data as of November 24, 2003. The
Office of Pesticide Programs also agreed to disclose the reasons for a decrease in the total number
of reregi strati on studies received. On April 29, 2004, the Agency revised the FIFRA financial
statements and adequately disclosed accurate performance measure data and reasons for the
decrease in reregi strati on studies. Therefore, no further action is required.
Paul C. Curtis
Director, Financial Statement Audits
Office of Inspector General
U.S. Environmental Protection Agency
April 30, 2004
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FY2003FIFRA
FINANCIALSTA TEMENTS
Appendix A
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Produced by the U.S. Environmental Protection Agency
Office of the Chief Financial Officer
Office of Financial Management

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TABLE OF CONTENTS
Overview of the Pesticide Program	1
Principal Financial Statements	 13
EPA's FY 2003 Annual FIFRA Financial Statements	Page i

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OVERVIEW AND ANALYSIS
OF THE PESTICIDE PROGRAM
EPA's FY 2003 Annual FIFRA 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.
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 registration 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 for tolerances for raw agricultural commodities were deposited to the U.S. Treasury
General Fund until 1963 when Congress established the Tolerance Fund. Specific fees are
contained in 40 CFR 180.33 and range from $4,600 to $80,950 depending on the type of tolerance
action requested. Waivers and/or refunds are granted for minor use pesticides submitted under the
Inter-Regional Research Project Number 4 (IR-4 Program), public interest, such as reduced-risk
pesticides, and economic hardship. The fee schedule is changed annually by the same percentage
as the percent change in the federal General Schedule (GS) pay scale.
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
EPA's FY 2003 Annual FIFRA Financial Statements
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tolerances to be reassessed as part of the reregi strati on program. Effective January 1997, all fees
related to tolerance activities are deposited in the FIFRA Fund.
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 by 1997. The legislation allows for various time
extensions which can extend the deadline by three years or more. The current goal for the
completion of reregistration is 2006, in conjunction with the new tolerance reassessment
program.
Congress authorized the collection of two kinds of fees to supplement appropriated
funds for the 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 2003 appropriations bill extended
authority to collect maintenance fees by one year for the amount of $21.5 million.
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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~	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
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 2003 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
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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 pesticide
worker protection standards, high risk pesticide activities including antimicrobials, pesticide
misuse in urban areas, and the misapplication of structural pesticides. In FY 2003, 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 2003 and FY 2004 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
Tolerance Performance Measures
Tolerance fees collected in FY 2003 were approximately $1.5 million and obligations
were $2.0 million.
Measure: Tolerance re-evaluations.
Results: In FY 2003, EPA reassessed 119 tolerances and exemptions from tolerance.
Of these, 79 reassessments occurred through reregistration/REDs, 14 were obtained through
Tolerance Reassessment Decisions (TREDs), and 26 were from other sources. At the end of FY
2003, EPA had completed 6,626 tolerance reassessment decisions, addressing over 68% of the
9,721 tolerances that require reassessment.
Reregistration (FIFRA) Financial Perspective
During FY 2003, the Agency's obligations charged against the FIFRA Fund for the cost
of the reregistration and expedited processing programs were $20.7 million and 169 workyears.
Of these amounts, the Office of Pesticide Programs obligated almost $18.4 million of this cost
and funded the 169 workyears.
Appropriated funds are used in addition to FIFRA revolving funds. In FY 2003,
approximately $25.8 million in appropriated funds were obligated for reregistration and
EPA's FY 2003 Annual FIFRA Financial Statements
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expedited processing program activities. The unobligated balance in the Fund at the end of FY
2003 was $0.9 million.
The Fund has two types of receipts: fee collections and interest earned on investments.
Of the $21.6 million in FY 2003 receipts, approximately 99.8% were fee collections.
Reregistration Program (FIFRA) Performance Measures
The following measures support the program's strategic goals of Food Safety and Safer
Pesticides as contained in the FY 2003 President's budget.
Measure 1: Number of Reregistration Eligibility Documents (REDs) completed.
Results: OPP completed decisions for 42 pesticides in FY 2003. The number of
Reregistration Eligibility Decisions (REDs) completed was 13. Of the 612 chemical cases
(representing 3,822 chemical active ingredients), that initially were subject to reregistration, 227
have completed REDs. An additional 231 reregistration cases were voluntarily canceled before
EPA invested significant resources in developing REDs. A total of458 reregistration cases
(75%), therefore, had completed the reregistration eligibility decision making process by the end
of FY 2003, leaving 154 cases (25%) awaiting such decisions. In addition to the 13 FY 2003
REDs, the Agency completed interim reregistration eligibility decisions and interim tolerance
reassessment/risk management decisions for 3 organophosphate (OP), carbamate, and triazine
pesticides. These individual chemical decisions are considered "interim "pending EPA's
cumulative decisions for the OPs, carbamates, and triazines, which share common mechanisms
of toxicity.
Measure 2: Number of products reregistered, canceled, or amended.
Approximately 19,000 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 2003, 53 product reregistration actions1, 40product amendment
actions, 5 product suspension actions and 213 product cancellation actions were completed.
Currently a universe of appoximately 9,656 products are undergoing or have completed product
reregistration. The status of those products at the end of FY 2003 was as follows: 385 product
1 Product reregistrations include federally registered products and special local needs
registrations issued by states pursuant to Section 24(c) of FIFRA.
EPA's FY 2003 Annual FIFRA Financial Statements
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registrations had been amended; 4,019 products were cancelled2; 17 products were sent for
suspension; 3,545 products had actions/decisions pending; and 1,690 products were
reregistered. The Agency's goal in FY 2004 is to complete 450 product 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. 27,260 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. (In 2003, OPP moved to a new
information system, OPPIN. The studies reporting function for this measure was not available
until November 24, 2003. The move to OPPIN allowed for the cleanup of duplicate bad and/or
erroneous data, resulting in a lower total number of studies received than in prior reporting).
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
2 A product cancellation is reported as a reregistration decision when a voluntary cancellation
request is received, when the annual maintenance fee is not paid, or when a notice of intent to cancel due
to unreasonable adverse effects is issued. In the case of a voluntary cancellation request, the process of
finalizing the cancellation required by Section 6(f) of FIFRA may take about six months after receipt of
the request to complete.
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ingredients included in FY2003 REDs are shown in Table 1. Table 1. Data Call-Ins Issued to
Support Product Reregistration for FY 2003 REDs
Case
No.
Case Name
Number of
Products
Covered
by the
RED3
Number of
Product
Chemistry
Studies
Required4
Number of Acute Toxicology Studies
Required5
Number
of
Efficacy
Studies
Required
2200
Dinocap (Voluntary Cancellation)
0
N/A
N/A
N/A
0046
Diuron
101
31
Acute toxicity batching has not been
finalized.
0
0290
Fenthion (Voluntary Cancellation)
6
N/A
N/A
N/A
2280
Fenvalerate (Voluntary Cancellation)
54
N/A
N/A
N/A
2325
Imazalil
16
31
72 (1 batch/11 products not batched)
0
2215
MGK-326 (Dipropyl
isocinchomeronate)
92
31
Acute toxicity batching has not been
finalized.
0
2435
Molinate (Voluntary Cancellation)
13
N/A
N/A
N/A
2485
Oxadiazon
53
31
216 (5 batches/31 products not batched)
0
0226
Propanil
42
31
162 (9 batches/18 products not batched)
0
2605
Sodium Acifluorfen
10
31
54 (1 batch/8 products not batched)
0
2680
Thiophanate-Methyl
67
31
162 (6 batches/21 products not batched)
0
3146
Triethylene Glycol
18
34
72 (4 batches/8 products not batched)
0
2180
Ziram
21
31
48 (4 batches/4 products not batched)
0
3	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.
4	This column shows the number of product chemistry studies that are required for each product
covered by the RED.
5	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 batchings because they are supported by a valid parent product (Section 3)
registration.)
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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 2003 IREDs are shown in Table 2.
Table 2. Data Call-Ins Issued to Support Product Reregistration for FY 2003 IREDs
Case
No.
Case Name
Number of
Products
Covered by the
IRED6
Number of
Product
Chemistry Studies
Required7
Number of Acute Toxicology
Studies Required8
Number of
Efficacy Studies
Required
0062
Atrazine
174
22
294 (14 batches/35 products not
batched)
0
0080
Carbaryl
314
31
852 (37 batches/105 products
not batched)
5
0153
Methyl Parathion
28
31
36 (3 batches/3 products not
batched)
0
Measure 5: Future Schedule for Reregistrations.
Results: EPA is now conducting reregistration in conjunction with tolerance
reassessment under FQPA. That law requires the Agency to reassess all existing tolerances over
a ten year period to ensure consistency with the new safety standard, and to consider pesticides
6	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.
7	This column shows the number of product chemistry studies that are required for each product
covered by the RED.
8	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 batchings because they are supported by a valid parent product (Section 3)
registration.)
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that appear to pose the greatest risk first. The organophosphate (OP) pesticides thus have been
the focal point of EPA 's reregistration and tolerance reassessment programs for several years
(see List 1).
List 1. The Organophosphate Pesticides

Organophosphate Pesticides with Decisions Pending

Dichlorvos (DDVP)
Dimethoate
Malathion
Organophosphate Pesticides with Individual Decisions Completed
Acephate
Dicrotophos
Methidathion
Pirimiphos methyl
Azinphos-methyl
Disulfoton
Methyl parathion
Profenofos
Bensulide
Ethion
Mevinphos
Propetamphos
Cadusafos
Ethoprop
Naled
Sulfotepp
Chlorethoxyfos
Ethyl Parathion
Oxydemeton-methyl
Temephos
Chlorpyrifos
Fenamiphos
Phorate
Terbufos
Chlorpyrifos methyl
Fenitrothion
Phosalone
Tetrachlorvinphos
Coumaphos
Fenthion
Phosmet
Tribufos (DEF)
Diazinon
Methamidophos
Phostebupirim
Trichlorfon
EPA currently is reviewing each of the OP pesticides with individual decisions pending,
and expects to complete risk assessments and interim risk management decisions for these three
pesticides in FY 2005.
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List 2. Fiscal Year 2004 Candidates for Decisions - subject to change
FY 2004 RED, IRED, and TRED Candidate Pesticides

RED Candidates

Benfluralin
MCPA
Pine Oils
Benzisothiazolin-3-one (BIT)
Naphthalene Acetic Acid
Propylene/Dipropylene glycol
Carboxin
Omadine Salts
Sabadilla alkaloids
Cycloate
Phenol and Salts
Sulfonated oleic acid
Dihalodialkyldantoins
PHMB
Thiram
Ethoxyquin



IRED Candidates

Atrazine Revised IRED (due
Formetanate HC1

and completed 10-31-03)



TRED Candidates

Amitraz
Desmedipham
Oil of Orange
Bacillus thuringiensis var. San
Dimethenamid
Oryzalin
Diego (completed)
Flumetsulam
Putrescent Whole Egg Solids
Boric Acid Group
Fluridone
Thifensulfuron
Carbon Dioxide (completed)
Limonene
Tribenuron methyl
Chlorimuron ethyl
Nitrogen(completed)
Trifluralin
DCPA or Dacthal
Oil of Lemon

Reducing Exposure through Human Health Protection Research
In FY 2003, EPA's research program delivered state-of-the-science tools (methods,
models, approaches) and quality exposure data for characterizing aggregate risks from exposure
to pesticides to the Office of Prevention, Pesticides, and Toxic Substances (OPPTS) in order to
reduce uncertainty in risk assessments under FQPA. Major products resulting from this research
include: 1) completion of a large scale exposure study conducted in North Carolina and Ohio
assessing aggregate exposures for 260 pre-school children to pesticides, EDCs and other
persistent pollutants; 2) a report outlining the key factors influencing young children's exposures
to pesticides; 3) a peer-reviewed design for a longitudinal study characterizing aggregate
pesticide exposures for very young children; 4) a peer-reviewed manuscript characterizing the
health effects resulting from exposures to mixtures of selected anticholinesterase insecticides; 5)
a report summarizing the results of four case studies of neurodevelopmental toxicants and
recommendations for improving future physiologically-based pharmacokinetic (PBPK) models;
and 6) results from a workshop defining the current and future research needs regarding temporal
variability in pesticide exposure modeling and assessment.
These research results will be used by OPPTS in the 2006 reassessment of current use
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pesticides. The data and improved understanding(s) gained through this research program will
reduce some of the uncertainties associated with and improve the default assumptions used in
risk assessments. In addition, These results will be used by the Office of Research and
Development and OPPTS to prioritize future research activities.
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PRINCIPAL
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
Note 7. Change in Annual Leave Liability, Statement of Financing
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Environmental Protection Agency
FIFRA
Balance Sheet
As of September 30, 2003 and 2002
(Dollars in Thousands)


FY 2003
FY 2002
ASSETS
Intragovernmental
Fund Balance With Treasury (Note 2)
Investments, Unamortized Discount
Advances to Working Capital Fund
$
1,797 $
(3)
0
2,999
0
67
Total Intragovernmental Assets
$
1,794 $
3,066
LIABILITIES
Intragovernmental
Accounts Payable and Accrued Liabilities
Other (Note 3)
$
229 $
153
15
274
Total Intragovernmental
$
382 $
289
Accounts Payable and Accrued Liabilities
Payroll and Benefits Payable (Note 4)
Other (Note 3)

15
3,292
219
178
3,436
4
Total Liabilities
$
3,908 $
3,907
NET POSITION
Cumulative Results of Operations
$
(2,114) $
(841)
Total Net Position

(2,114)
(841)
Total Liabilities and Net Position
$
1,794 $
3,066
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, 2003 and 2002
(Dollars in Thousands)
COSTS
FY 2003

FY 2002
Intragovernmental
$ 7,491
$
5,251
With the Public
17,835

16,170
Expenses from Other Appropriations (Note 5)
41,578

34,641
Total Costs
$ 66,904
$
56,062
Less:



Earned Revenues, Federal (Note 6)
46

109
Earned Revenues, Non Federal (Note 6)
22,792

17,690
Total Earned Revenues (Note 6)
$ 22,838
$
17,799
NET COST OF OPERATIONS
JK 44 066
$
38 7.63
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, 2003 and 2002
(Dollars in Thousands)
Cumulative
Results of
Operations
FY 2003
Cumulative
Results of
Operations
FY 2002
Budgetary Financing Sources:
Net Position, Beginning of the year	$ (841)	$ 1,689
Income from Other Appropriations (Note 5) 	41,578 	34,641
Total Budgetary Financing Sources	$ 41,578	$ 34,641
Other Financing Sources:
Imputed Financing Sources 1,215	1,092
Total Other Financing Sources	$ 1,215	$ 1,092
Net Cost of Operations (44,066)	(38,263)
Net Position - End of Period	$ 	(2,114) $ 	(841)
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, 2003 and 2002
(Dollars in Thousands)
FY 2003	FY 2002
BUDGETARY RESOURCES:
Unobligated Balances, Beginning of Period	$ 376	1,917
Beginning of Period
Spending Authority from Offsetting Collections:
Earned and Collected	22,838	17,802
Receivable from Federal Sources	0	0
Advance Received 	216		(1)
Total Spending Authority from Offsetting Collections	$ 23,054 $	17,801
Recoveries of Prior Year Obligations 	168		0_
Total Budgetary Resources	$ 	23,598 	19,718
STATUS OF BUDGETARY RESOURCES
Obligations Incurred:
Reimbursable	$ 22,708 $ 19,342
Unobligated Balances:
Apportioned		890 	376
Total Status of Budgetary Resources	$ 	23,598 $	19,718
RELATIONSHIP OF OBLIGATIONS TO OUTLAYS
Obligations Incurred, Net
$
(514)$
1,541
Obligated Balances, Net - Beginning of Period

2,621
1,547
Undelivered Orders

149
(839)
Accounts Payable

(1,053)
(1,782)
Total Outlays
$
1,203 $
467
Disbursements
$
24,258 $
18,267
Collections

(23,055)
(17,800)
Net Outlays
$
1,203 $
467
The accompanying notes are an integral part of these statements.
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Environmental Protection Agency
Statement of Financing
FIFRA
For the Years Ended September 30, 2003 and 2002
(Dollars in Thousands)
RESOURCES USED TO FINANCE ACTIVITIES:
FY2003
FY 2002
Budgetary Resources Obligated


Obligations Incurred $
22,708 $
19,342
Less: Spending authority from offsetting collections


and recoveries
(23,222)
(17,801)
Obligations net of offsetting collections and recoveries
(514)
1,541
Other Resources


Imputed financing sources
1,215
1,092
Income from Other Appropriations (Note 5)
41,578
34,641
Net other resources used to finance activities
42,793
35,733
Total Resources Used To Finance Activities $
42,279 $
37,274
RESOURCES USED TO FINANCE ITEMS NOT PART


OF NET COST OF OPERATIONS


Change in budgetary resources obligated for goods $
1,343 $
1,033
Resources that fund expenses recognized in prior periods
0
(44)
(Notes 4 and 7)


Total Resources Used to Finance Items Not


Part of the Net Cost of Operations
1,343
989
Total Resources Used to Finance the Net


Cost of Operations $
43,622 $
38,263
COMPONENTS OF THE NET COST OF


OPERATIONS THAT WILL NOT REQUIRE OR


GENERATE RESOURCES IN CURRENT PERIOD


Component Requiring Resources in Future Periods:


Increase in Annual Leave Liability (Notes 4 and 7) $
444 $
0
Component not Requiring Resources:


Expenses not Requiring Budgetary Resources
0
0
Total Components of Net Cost of Operations That Will Not


Require or Generate Resources in the Current Period j
444 $
0
Net Cost of Operations $
44 066 S
38 263
The accompanying notes are an integral part of these statements.
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Environmental Protection Agency
FIFRA Revolving Fund
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 "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.
FIFRA was authorized in 1988 by amendments to the Federal Insecticide, Fungicide and
Rodenticide Act. The 1988 amendments mandated the accelerated reregi strati on of all products
registered prior to November 1, 1984. Congress authorized the collection of fees to supplement
appropriations to fund re-registration and to fund expedited processing of pesticides. FIFRA also
includes provisions for the registration of new pesticides, 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, however, pay for these activities. The FIFRA Revolving Fund is accounted for under
Treasury symbol number 4310.
FIFRA may charge some administrative costs directly to the fund and charge the remainder of the
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administrative costs to Agencywide appropriations. The costs funded by Agencywide
appropriations for FY 2003 and FY 2002 were $41,578 thousand and $34,641 thousand,
respectively. These amounts were included as Income from Other Appropriations on the
Statements of Changes in Net Position and Financing and as Expenses from Other
Appropriations on the Statements of Net Cost for FY 2003 and 2002.
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
For FY 2003 and 2002, FIFRA received funding from fees collected for registration, re-
registration, and monitoring of pesticides and from interest collected on investments in U.S.
Government securities. However, at this time the Agency's authority to collect Reregi strati on
Maintenance Fees has not been extended past September 30, 2003. For FY 2003 and 2002
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.
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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.
H.	Accounts Receivable and Interest Receivable
FIFRA receivables are mainly for interest receivable on investments.
I.	Advances and Prepayments
Advances and prepayments represent funds advanced or prepaid to other entities both internal
and external to the Agency for which an appropriation expenditure has not yet occurred.
J. 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. FIFRA property, plant and equipment is fully depreciated thus the net of
depreciation value is zero. Since EPA shows its property, plant and equipment at net value and
the net value for FIFRA property, plant and equipment is zero, EPA does not show an amount for
FIFRA property, plant and equipment on its balance sheet.
K. 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
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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.
L. Annual, Sick and Other Leave
Annual, sick and other leave is expensed as taken during the fiscal year. Sick and other 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 "Other Liabilities,
non-Federal." As of September 30, 2003 and 2002, the unfunded annual leave liability for
FIFRA was $2,479 thousand and $2,035 thousand, respectively. The difference in the year-end
accruals for unfunded annual leave is reported as part of "Costs-With the Public" in the
Statement of Net Cost.
M. 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.
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Note 2. Fund Balances with Treasury:
FY 2003	FY 2002
Revolving Funds:	Entity Assets	^^797	^^999
Non-Entity Assets $ 0	$ 0
Status of Funds:
Unobligated - Available
Unobligated - Unavailable
Obligated but not yet Disbursed
Totals
FY 2003	FY 2002
$ 890	$ 376
3	0
904	2,623
$ 1,797	$ 2,999
The funds available for obligation may be apportioned by the OMB for new obligations at the
beginning of the following FY. Funds unavailable for obligation offset unamortized discount on
investments.
For FY 2003 and 2002, no differences existed between Treasury's accounts and EPA's general
ledger for FIFRA's fund balances with Treasury.
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Note 3. Other Liabilities:
FY 2003	FY 2002
Other Intragovernmental Liabilities - Covered by Budgetary Resources
Employer Contributions - Payroll	$	153 $	274
Total	$	m $	224
Other Non-Federal Liabilities - Covered by Budgetary Resources
Advances to non-Federal Entities	$	7.19 $	4
Note 4. Payroll and Benefits Payable, non-Federal:
FY 2003	FY 2002
Covered by Budgetary Resources
Accrued Payroll Payable to Employees	$	458	$	767
Withholdings Payable	333	596
Thrift Savings Plan Benefits Payable		22	$	38
Total	$	m	$	1 401
Not Covered by Budgetary Resources
Unfunded Annual Leave Liability	$	2,479 $	2,035
At various periods throughout FY 2002 and 2003, employees with their associated payroll costs
were transferred from the FIFRA fund to the Environmental Programs and Management (EPM)
appropriation. (See graph in Note 5 below showing trend of hours charged per month to the
FIFRA fund for FY 2002 and 2003.) 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 fiscal year 2004 and probably beyond that period.
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This process has led to some variation between year-end liabilities. The liabilities covered by
budgetary resources (both intragovernmental and non-Federal) represent unpaid payroll and
benefits at year-end. As of September 30, 2003 and 2002, about 350 and 290 employees,
respectively, were charged to FIFRA. As of September 30, 2003 and 2002, these liabilities were
$153 thousand and $813 thousand for employer contributions and accrued funded payroll and
benefits, as compared to FY 2002's balances of $274 thousand and $1,401 thousand respectively.
While the number of days unpaid as of the end of FY 2003 were less than half than FY 2002's
yearend, the liabilities did not decrease proportionally because of the increase in the number of
employees.
In contrast, the unfunded annual leave liability is a longer term liability than the funded
liabilities. At various periods throughout FY 2002 and 2003, approximately 350 employees in
total have been under FIFRA's accountability. Therefore both the September 30, 2003 and 2002
liability balances for unfunded annual leave were accrued to cover these 350 employees for a
total of $2,479 thousand and $2,035 thousand, respectively. The increase in the total liability is
due to overall increases in both average salary and outstanding annual leave hours for FIFRA
employees.
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 2003 and 2002, 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 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 FIFRA each month, the transfers of employees and their associated
costs during FY 2002 and 2003 are shown below. Note that a decrease in hours charged to
FIFRA normally signifies an increase in EPM's payroll costs, and vice versa.
EPA's FY 2003 Annual FIFRA Financial Statements
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FIFRA Payroll Hours per Month of FY 2002 and 2003
Number of
Hours
Charged
70000
60000
50000
40000
30000
20000
10000
0
FY02 hours
FY03 hours
Months
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	Net
Appropriations Other	Effect
Appropriations
FY 2003 $41.578 $41.578	£0
FY 2002 $34.641 $34.641	$0
EPA's FY 2003 Annual FIFRA Financial Statements
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Note 6. Exchange Revenues, Statement of Net Cost
For FY 2003, the exchange revenues reported on the Statement of Net Cost are separated into
Federal and non-Federal portions.
Note 7. Change in Annual Leave Liability, Statement of Financing
The annual leave liability increased by $444 thousand in FY 2003, but decreased by $44
thousand in FY 2002. The FY 2003 increase was reported under the section entitled
"Components Requiring Resources in Future Periods." In accordance with instructions on
OMB's Form and Content Bulletin No. 01-09, the decrease was reported on the FY 2002
Statement of Financing as "Resources that fund expenses recognized in prior periods." Also see
Note 4 (Payroll and Benefits Payable) for detail on the unfunded annual leave liability.
EPA's FY 2003 Annual FIFRA Financial Statements
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Appendix B
Agency's Response to the Draft Report
4#% ' T
.33B2 ;
"^X. K. * i 'X 1 . "*w *'* » ' Hj ' i 5 i f r fjt f1
Fiscal .2003 and 2002 htrtmt<&k%t Statements for Pesticides
1	ir< C. p i •; „ > . „ .	^ ^n\\
8 HOV	,,< T -, • i >. ..or-	'	" " ('
Oi fV-* »* de	5 r * k! i 4»
TO:?
.i, i. a ti,H „ » > \ ^
1 " ' "u" ' 1 ' •••'i •-* ', i , V v ' c.' . " il,< fi arj. AJ	, m n, , i. , r
concur with the MeonmoadRiioti* developed for pewtoa.aas.es measure number three - Progre
is Reducing th& Nu*tsb*3r c>f LJiirevifew&ct. Rctjuirci! Rjeragistratiott Studies - as follows;
1 ir t 3,n s)t rp rj sit 1 t „ t P}' itm\ , i* " i m h t>i v c: ,u j t	rj\ »^ v
automated reporting functions for The status of studies report was not available until November
"4. 2003, OPP agrees to disclose that the information in performsuae* naeiisffpe thrrc is based
ujsoii data as of November 24, 2003,
&MmmmMmimL*SL - III 2CS03 OPP mewed to a new information system, OPPIN. In
converting to OPPIN, the Agency cleaned tip records uses to prepare tie mwm states of studi.
report. Duplicates as well as bad and / or erroneous data were removed from the data base.
>¦	* ri ,1 ' AM l,> n , TV f ; , t}„ ,	¦ J. 1 . ,	J , v; r>t ,rp_	>	u	(M ^
mm Op**IN	wb-'ch will be used from now on to generate the annua] status of studies
reports, O.PP agrees to disclose this information.
If the
emmg this mfoiroatkjn oostact E4 Setxe
cc:
EPA's FY 2003 Annual FIFRA Financial Statements
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Appendix C
Distribution
Associate Assistant Administrator (7101M)
Comptroller (2731 A)
Agency Followup Official (the CFO) (271 OA)
Deputy Chief Financial Officer (271 OA)
Agency Audit Followup Coordinator (2724A)
Director, Office of Pesticide Programs (7501C)
Director, Biopesticides and Pollution Prevention Division (7511C)
Director, Special Review and Reregi strati on Division (7508C)
Director, Registration Division (7505C)
Director, Antimicrobials Division (75IOC)
EPA's FY 2003 Annual FIFRA Financial Statements
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