f O
U.S. ENVIRONMENTAL PROTECTION AGENCY
OFFICE OF INSPECTOR GENERAL
Operating efficiently and effectively
Fiscal Years 2017 and 2016
(Restated) Financial
Statements for the
Pesticide Registration Fund
Report No. 19-F-0215
June 28, 2019
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Report Contributors: Paul Curtis
Robert Smith
Demetrios Papakonstantinou
Safiya Chambers
Amir Eskarous
Tanisha Heilig
Jennifer Hutkoff
Sabrina Jones
Carol Kwok
Ethel Lowery
Sheila May
Guillermo Mejia
Lynda Taylor
Tyler Van Surksum
Phillip Weihrouch
Abbreviations
EPA U.S. Environmental Protection Agency
FMFIA Federal Managers' Financial Integrity Act of 1982
FY Fiscal Year
OIG Office of Inspector General
OMB Office of Management and Budget
PRIA Pesticide Registration Improvement Act
PRISM Pesticide Registration Information System
Cover Photo: Pesticides being applied. (EPA photo)
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* *. U.S. Environmental Protection Agency 19-F-0215
J" ftS \ Office of Inspector General June 28,2019
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At a Glance
Why We Did This Project
The Pesticide Registration
Improvement Act (PRIA)
requires that we perform an
annual audit of the Pesticide
Registration Fund (also known
as the PRIA Fund) financial
statements.
To expedite the registration
of certain pesticides,
Congress authorized the
U.S. Environmental Protection
Agency (EPA) to assess and
collect pesticide registration
fees. The fees collected are
deposited into the PRIA Fund.
The agency is required to
prepare financial statements
that present financial
information about the fund.
PRIA also requires that
decision-time review periods
be established for pesticide
registration actions and that
the Office of Inspector General
(OIG) perform an analysis of
the agency's compliance with
those review periods.
This report addresses the
following:
• Operating efficiently and
effectively.
Fiscal Years 2017 and 2016 (Restated) Financial
Statements for the Pesticide Registration Fund
EPA Receives a Modified Opinion
We rendered a modified opinion on the PRIA
Fund financial statements for fiscal year
(FY) 2017, meaning that except for the possible
effects of the agency's inability to support
PRIA's payroll accruals and related expenses in
FY 2016, the FY 2017 financial statements
were fairly presented.
We rendered a modified
opinion on the EPA's
FY 2017 PRIA Fund financial
statements and a disclaimer
of opinion on the FY 2016
(restated) PRIA Fund
financial statements.
We rendered a disclaimer of opinion on the PRIA Fund financial statements for
FY 2016, meaning we could not obtain sufficient, appropriate audit evidence to
provide a basis for an audit opinion. This disclaimer of opinion was rendered
because the agency could not support PRIA's payroll accruals and related
expenses in FY 2016.
Internal Control Material Weakness - Property
In FY 2017, the EPA corrected accounting errors in—and subsequently
restated—its FY 2016 PRIA Fund financial statements. When we examined the
transactions used to justify the restatement amounts, we found that the EPA did
not retain supporting documentation for $369,779.88 of the transactions. Federal
internal control standards require that all transactions be properly documented.
These standards also require that this documentation be retained for an
appropriate time period and be readily available for examination. Failure to retain
supporting documentation for PRIA transactions for an appropriate time period
casts doubt on management assertions regarding the recognition, measurement,
presentation and disclosure of PRIA property accounts; depreciation; operating
expenses; and the PRIA Fund's financial statements as a whole.
Compliance with Applicable Laws and Regulations
We did not identify any noncompliances that would result in a material
misstatement to the audited financial statements. In addition, the agency was in
substantial compliance with the statutory decision time frames.
Recommendation and Agency Corrective Action
Address inquiries to our public
affairs office at (202) 566-2391 or
OIG WEBCOMMENTS@epa.oia.
List of OIG reports.
We recommended that the Chief Financial Officer analyze agency records
management schedules for financial management and determine how long
records should be maintained after the disposal of software and financial records
related to software assets. The agency agreed with our recommendation and
completed the corrective action.
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UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, D.C. 20460
OFFICE OF
INSPECTOR GENERAL
June 28, 2019
MEMORANDUM
SUBJECT: Fiscal Years 2017 and 2016 (Restated) Financial Statements for the
Pesticide Registration Fund
Report No. 19-F-0215
FROM: Paul C. Curtis, Director
Financial Directorate
Office of Audit and Evaluation
TO: Alexandra Dapolito Dunn, Assistant Administrator
Office of Chemical Safety and Pollution Prevention
Holly Greaves, Chief Financial Officer
This is our report on the subject audit conducted by the Office of Inspector General (OIG) of the
U.S. Environmental Protection Agency (EPA). The project number for this audit was OA-FY18-0087.
This report contains a finding that describes the problem the OIG identified and the corrective action the
OIG recommended. This report represents the opinion of the OIG and does not necessarily represent the
final EPA position. Final determination on matters in this report will be made by EPA managers in
accordance with established audit resolution procedures.
The office responsible for the recommendation presented in this report is the Office of the Chief
Financial Officer.
In accordance with EPA Manual 2750, the Office of the Chief Financial Officer completed acceptable
corrective actions in response to the OIG recommendation. The recommendation is resolved, and no
final response to this report is required. However, if you submit a response, it will be posted on the
OIG's website, along with our memorandum commenting on your response. Your response should be
provided as an Adobe PDF file that complies with the accessibility requirements of Section 508 of the
Rehabilitation Act of 1973, as amended. The final response should not contain data that you do not want
to be released to the public; if your response contains such data, you should identify the data for
redaction or removal along with corresponding justification.
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We will post this report to our website at www.epa.gov/oig.
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Fiscal Years 2017 and 2016 (Restated)
Financial Statements for the
Pesticide Registration Fund
19-F-0215
Table of C
Inspector General's Report on the Fiscal Years 2017 and 2016
(Restated) Financial Statements for the Pesticide Registration Fund
Report on the Financial Statements 1
Report on Internal Control over Financial Reporting 3
Tests of Compliance with Laws, Regulations, Contracts and
Grant Agreements 5
Management's Discussion and Analysis Section of the
Financial Statements 5
Prior Audit Coverage 6
Agency Comments and OIG Evaluation 6
Attachments
1 Material Weakness 7
EPA Did Not Retain Supporting Documentation for Capitalized
Software Transactions 8
2 Status of Recommendations and Potential Monetary Benefits 10
Appendices
A Fiscal Years 2017 and 2016 (with Restatements)
Pesticide Registration Fund Financial Statements
B Agency Response to Draft Report
C Distribution
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Inspector General's Report on the
Fiscal Years 2017 and 2016 (Restated) Financial
Statements for the Pesticide Registration Fund
The Administrator
U.S. Environmental Protection Agency
Report on the Financial Statements
We have audited the accompanying financial statements of the Pesticide
Registration Fund, also known as the Pesticide Registration Improvement Act
(PRIA) Fund. These statements comprise the balance sheets as of September 30,
2017, and September 30, 2016 (restated); related statements of net cost and
changes in net position; statement of budgetary resources for the years then
ended; and related notes to the financial statements.
Management's Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these
financial statements in accordance with accounting principles generally accepted
in the United States of America. This includes the design, implementation and
maintenance of internal controls relevant to the preparation and fair presentation
of financial statements that are free from material misstatement, whether due to
fraud or error.
Auditor's Responsibility
Our responsibility is to express an opinion on these financial statements based on
conducting the audit in accordance with generally accepted government auditing
standards; the standards applicable to financial statements contained in
Government Auditing Standards issued by the Comptroller General of the United
States; and Office of Management and Budget (OMB) Bulletin 19-01, Audit
Requirements for Federal Financial Statements. These standards require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatements.
An audit involves performing procedures to obtain audit evidence about the
amounts and disclosures in the financial statements. The procedures selected
depend on the auditor's judgement, including the assessment of the risks of
material misstatements of the financial statements, whether due to fraud or error.
In making those risk assessments, the auditor considers internal control relevant to
the entity's preparation and fair presentation of the financial statements to design
audit procedures that are appropriate in the circumstances. An audit also includes
evaluating the appropriateness of accounting policies used and the reasonableness
19-F-0215
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of significant accounting estimates made by management, as well as evaluating
the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate
to provide a basis for our audit opinion.
Basis for Disclaimer of Opinion in 2016
The U.S. Environmental Protection Agency (EPA) could not adequately support
payroll liabilities on the PRIA Fund's balance sheet as of September 30, 2016, as
well as income/expense from other appropriations on the statements of the PRIA
Fund's net cost and changes in net position for the year ended September 30, 2016
In fiscal year (FY) 2016, the EPA allocated its pesticides appropriated funding to
pay for payroll costs. By paying significant payroll amounts from appropriations
versus fees collected by the PRIA Fund, the EPA lost the audit trail to properly
support how much of the PRIA payroll expenses were paid for by appropriations.
We were unable to satisfy ourselves by other audit procedures concerning the
adequacy of the amounts allocated, consistency of application, or reasonableness
of the payroll expenses between the PRIA Fund and the EPA's other pesticide
programs, including payroll accruals, as of and for the year ended September 30,
2016. As a result, we were unable to determine whether any adjustments were
necessary relating to payroll and related accounts, income/expense from other
appropriations, and payroll liabilities.
Disclaimer of Opinion in 2016
Because of the significance of the matter described in the "Basis for Disclaimer of
Opinion in 2016" section above, we have not been able to obtain sufficient,
appropriate audit evidence to provide a basis for an audit opinion. Accordingly,
we do not express an opinion on the PRIA Fund's financial statements and the
related accompanying notes as of and for the year ended September 30, 2016.
Basis for Qualified Opinion in 2017
The EPA could not support payroll accruals for the PRIA Fund, as of and for the
year ended September 30, 2016. The EPA's inability to support the PRIA Fund's
payroll accruals and related expenses in FY 2016 had a direct impact on the
agency's ability to determine the proper balance of PRIA payroll expenses for
FY 2017. As a result, we were unable to obtain sufficient, appropriate audit
evidence about the proper amount of PRIA payroll expenses incurred for the year
ended September 30, 2017, and we were unable to determine whether any
adjustments to these amounts were necessary.
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Qualified Opinion in 2017
In our opinion, except for the possible effects of the matter described in the "Basis
for Qualified Opinion in 2017" paragraph, the PRIA Fund's financial statements
referred to above present fairly, in all material respects, the assets, liabilities, net
position, net cost, changes in net position and budgetary resources, as of and for
the year ended September 30, 2017, in accordance with accounting principles
generally accepted in the United States of America.
Emphasis of Matters
Restated Financial Statements. In our FY 2017 audit of the agency's
consolidated financial statements (Report No. 18-F-0039. issued November 15,
2017), we identified a material weakness related to the EPA's documentation of
capitalized software transactions. As a result, as discussed in Note 11 of the PRIA
Fund's financial statements (Appendix A), the EPA revised its capitalized
software procedures, leading the agency to correct the value of the software assets
and account for all software projects. The EPA performed corrections to fix the
value of the software assets, which the agency determined were understated. As a
result of the agency's corrections, the EPA restated the FY 2016 PRIA Fund's
financial statements.
Our report on the EPA's FY 2016 PRIA Fund's financial statements—
Report No. 17-F-0365. dated August 14, 2017—contained a disclaimer of opinion
as mentioned above. The EPA's restatement of the PRIA Fund financial
statements did not resolve the issues that resulted in the disclaimer; accordingly,
our disclaimer of opinion on the FY 2016 financial statements has not changed.
Report on Internal Control over Financial Reporting
Opinion on Internal Control. In planning and performing our audit, we
considered the EPA's internal controls over financial reporting by obtaining an
understanding of the agency's internal controls, determining whether internal
controls had been placed in operation, assessing control risk and performing tests
of controls. We did this as a basis of designing our auditing procedures for the
purpose of expressing an opinion on the financial statements and to comply with
OMB audit guidance, not to express an opinion on internal control. Accordingly,
we do not express an opinion on internal control over financial reporting or on
management's assertion on internal controls included in the "Management's
Discussion and Analysis" section of the financial statements. We limited our
internal control testing to those controls necessary to achieve the objectives
described in OMB Bulletin 19-01. We did not test all internal controls relevant to
operating objectives, as broadly defined by the Federal Managers' Financial
Integrity Act of 1982 (FMFIA).
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Material Weakness and Significant Deficiencies. Our consideration of the
internal controls over financial reporting would not necessarily disclose all
matters in this area that might be significant deficiencies. A deficiency in internal
control exists when the design or operation of a control does not allow
management or employees, in the normal course of performing their assigned
functions, to prevent or detect and correct misstatements on a timely basis. A
material weakness is a deficiency or a combination of deficiencies in internal
control, such that there is a reasonable possibility that a material misstatement of
the entity's financial statements will not be prevented or detected and corrected on
a timely basis. A significant deficiency is a deficiency or a combination of
deficiencies in internal control that is less severe than a material weakness, yet it
is important enough to merit attention by those charged with governance.
Because of inherent limitations in internal controls, misstatements, losses or
noncompliance may occur and not be detected. In Attachment 1 and the "Prior
Audit Coverage" section of this report below, we discuss a matter involving
internal control and its operation, which we consider to be a material weakness.
Material Weakness
PROPERTY
EPA Did Not Retain Supporting Documentation for
Capitalized Software Transactions
We found that the EPA did not retain supporting documentation for $369,779.88
of its Pesticide Registration Information System (PRISM) capitalized software
transactions. Federal internal control standards require that all transactions be
properly documented and that the documentation be readily available for
examination and retained for an appropriate time period.
As a result of our material weakness finding that the EPA did not adequately
document capitalized software transactions on its consolidated financial
statements, the EPA conducted an analysis and recognized that it had improperly
accounted for some prior-year PRISM software transactions. In FY 2017, the
EPA corrected these accounting errors, resulting in the restatements of its
FY 2016 PRIA Fund's financial statements.
When we examined the software transactions used to justify the restatement
amounts, we found that some PRISM software transactions were missing
supporting documentation. Failure to retain supporting documentation for PRIA
capitalized software transactions for an appropriate time period casts doubt on
management assertions regarding the recognition, measurement, presentation and
disclosure of PRIA property accounts; depreciation; operating expenses; and the
PRIA Fund's financial statements as a whole.
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Comparison of EPA's FMFIA Report with Our Evaluation of
Internal Control
OMB Bulletin No. 19-01 requires the OIGto compare material weaknesses disclosed
during the audit with those material weaknesses reported in the agency's FMFIA
report that relate to the financial statements, and identify material weaknesses
disclosed by the audit that were not reported in the agency's FMFIA report. The
agency's FMFIA report is prepared and submitted at the consolidated level, of
which the PRIA Fund is a component.
In the EPA's FY 2017 agency financial statement audit report, dated
November 15, 2017, the agency continued to address a material weakness related
to undercapitalized software. The agency had also addressed this weakness in its
FYs 2014, 2015 and 2016 FMFIA assurance letters.
Tests of Compliance with Laws, Regulations, Contracts and
Grant Agreements
EPA management is responsible for complying with laws, regulations, contracts
and grant agreements applicable to the agency. As part of obtaining a reasonable
assurance as to whether the agency's financial statements are free of material
misstatement, we performed tests of its compliance with certain provisions of
laws, including those governing the use of budgetary authority, regulations,
contracts and grant agreements that have a direct effect on the determination of
material amounts and disclosures in the PRIA Fund's financial statements. The
objective of our audit, including our tests of compliance with applicable laws,
regulations, contracts and grant agreements, was not to provide an opinion on
compliance with such provisions. Accordingly, we do not express such an
opinion. We did not identify any instances of noncompliance that would result in
a material misstatement to the audited financial statements.
In addition, the agency was in substantial compliance with the statutory decision
time frames.
Management's Discussion and Analysis Section of the
Financial Statements
For our audit work related to the pesticide program information presented in the
"Management's Discussion and Analysis" section of the financial statements in
Appendix A, we compared the overview with information in the EPA's principal
financial statements for consistency. We did not identify any material
inconsistencies between the information presented in the two documents.
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Prior Audit Coverage
During a previous audit of the PRIA Fund's financial statements—Fiscal
Years 2015 and 2014 Financial Statements for the Pesticide Registration Fund
(Report No. 17-F-0315). issued July 10, 2017—we reported a material weakness
regarding inadequate support of costs. We reported the same issue in the next
audit report about the PRIA Fund's Financial Statements—Fiscal Years 2016
and 2015 Financial Statements for the Pesticide Registration Fund (Report
No. 17-F-0365). issued August 14, 2017. Specifically, the EPA's Office of
Pesticide Programs receives its funding from fees paid by pesticide manufacturers
and amounts appropriated by Congress. In both FYs 2015 and 2016, the EPA
allocated its pesticide funding to use appropriated amounts, which would expire,
and retained funding received from fees. Therefore, significant payroll amounts
paid from appropriations were not charged directly to the PRIA Fund or other
pesticide programs. This approach resulted in the loss of the audit trail for
reporting separate costs and liabilities for the PRIA Fund and other pesticide
programs.
The agency agreed with our findings in the prior reports and has corrected this
weakness. In October 2016, the agency improved its methodology for capturing
new PRIA costs by establishing codes to distinguish the costs charged to the
PRIA Fund versus the costs charged against other appropriations that support
PRIA-related activities.
The agency agreed with our recommendation and completed the corrective action.
Paul C. Curtis
Certified Public Accountant
Director, Financial Directorate
Office of Audit and Evaluation
Office of Inspector General
U.S. Environmental Protection Agency
June 25,2019
19-F-0215 6
Agency Comments and OIG Evaluation
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Attachment 1
Material Weakness
Table of Contents
1 - EPA Did Not Retain Supporting Documentation for
Capitalized Software Transactions 8
19-F-0215 7
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1 - EPA Did Not Retain Supporting Documentation for
Capitalized Software Transactions
We found that the EPA did not retain supporting documentation for $369,779.88 of its PRISM
capitalized software transactions. Federal internal control standards require that all transactions
be properly documented and that the documentation be retained for an appropriate time period
and readily available for examination. As a result of our material weakness finding that the EPA
did not adequately document capitalized software transactions on its consolidated financial
statements, which we reported in OIG Report No. 18-F-0039 (issued November 15, 2017), the
agency conducted an analysis and recognized that it had improperly accounted for some prior-
year PRISM software transactions. In FY 2017, the EPA corrected these accounting errors,
resulting in the restatement of its FY 2016 PRIA Fund financial statements. When we examined
the software transactions used to justify the restatement amounts, we found that some PRISM
software transactions were missing supporting documentation. Failure to retain supporting
documentation for PRIA capitalized software transactions for an appropriate time period casts
doubt on management assertions regarding the recognition, measurement, presentation and
disclosure of PRIA property accounts; depreciation; operating expenses; and the PRIA Fund's
financial statements as a whole.
As a result of our material weakness finding related to software transaction documentation on the
EPA's consolidated financial statements, the agency took steps to improve its internal accounting
and controls over software costs. During FY 2017, the EPA determined that some PRISM
software costs that should have been capitalized had been expensed and that accounting data for
some capitalized PRISM software were incorrect. Correcting these errors resulted in a
restatement of the FY 2016 PRIA Fund financial statements. As stated in Note 11,
"Restatements," of the restated financial statements, the changes impacted the EPA's FY 2016
Balance Sheet and Statement of Changes to Net Position.
During the FY 2017 PRIA Fund financial statement audit, we examined some of the software
transactions that were used to justify the restatements; however, the agency was unable to
provide support for some of our sampled software transactions. The agency explained that the
missing software records were unavailable due to the expiration of the capitalized software
record-retention period. However, the records schedule that the agency used, EPA Records
Schedule 0329, did not cover financial records related to property transactions.
The U.S. Government Accountability's Office's Standards for Internal Control in the Federal
Government emphasizes the importance of appropriate documentation of transactions and
internal control (GAO-14-7Q4G. Item No. 10.03, page 48):
Management clearly documents internal control and all transactions and other
significant events in a manner that allows the documentation to be readily
available for examination. The documentation may appear in management
directives, administrative policies, or operating manuals, in either paper or
electronic form. Documentation and records are properly managed and
maintained.
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In this PRIA report, we are re-reporting the material weakness that we previously reported on the
EPA's consolidated financial statements due to the allocation of PRISM costs to PRIA in its
restatement for FY 2016 and related lack of supporting documentation.
Recommendation
We recommend that the Chief Financial Officer:
1. Analyze agency records management schedules for financial management and determine
how long records should be maintained after the disposal of software and financial
records related to software assets.
Agency Comments and OIG Evaluation
The Office of the Chief Financial Officer agreed with our recommendation and completed the
corrective action. Appendix B contains the agency's response to our draft report.
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Attachment 2
Status of Recommendations and
Potential Monetary Benefits
RECOMMENDATIONS
Potential
Planned Monetary
Rec. Page Completion Benefits
No. No. Subject Status1 Action Official Date (In $000s)
1 9 Analyze agency records management schedules for financial C Chief Financial Officer 8/30/18
management and determine how long records should be
maintained after the disposal of software and financial records
related to software assets.
C = Corrective action completed.
R = Recommendation resolved with corrective action pending.
U = Recommendation unresolved with resolution efforts in progress.
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Appendix A
Fiscal Years 2017 and 2016 (with Restatements)
Pesticide Registration Fund Financial Statements
Produced by the U.S. Environmental Protection Agency
Office of the Chief Financial Officer
Office of Controller
19-F-0215
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TABLE OF CONTENTS
Management's Discussion and Analysis
Principal Financial Statements
19-F-0215
EPA's FY 2017 Annual PRIA Financial Statements
1
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Management's Discussion and Analysis
EPA's FY 2017 Annual PRIA Financial Statements
2
19-F-0215
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Under the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA) and the Federal Food,
Drug, and Cosmetic Act (FFDCA), as amended by the Food Quality Protection Act (FQPA) of
1996, the EPA's Pesticide Program registers new pesticides and re-evaluates existing pesticides
to ensure that they can be used safely and that levels of residue in food and animal feed are safe
(there is a reasonable certainty of no harm). The agency must also conclude that, when used in
accordance with labeling and common practices, the product will not generally cause
unreasonable adverse effects on the environment.
The Pesticide Registration Improvement Act (PRIA) of 2003 established the Pesticide
Registration Fund. PRIA authorizes the collection of Registration service fees, which are
deposited into the Registration Fund and made available for obligation to the extent provided in
appropriation acts, and are available without fiscal year limitation.
Pesticide Registration
Under FIFRA and FFDCA pesticides must be registered by the EPA. The passage of PRIA
introduced deadlines for the agency to complete certain registration actions. EPA expedites the
registration of reduced-risk pesticide uses, which generally pose lower risks to people and the
environment. Accelerated pesticide reviews provide an incentive for industry to develop and
register lower risk pesticides, and the availability of these reduced-risk pesticides provides
alternatives to older, potentially more harmful products currently on the market.
PRIA prescribed the amount of the registration service fee and the corresponding decision
review time for various categories of registration action. The goal is to create a more predictable
evaluation process for affected pesticide registrants and couple the collection of individual fees
with specific decision-making periods. The legislation also promotes shorter decision review
periods for reduced-risk pesticide applications. PRIA 1, effective on March 23, 2004, authorized
collection of registration fees through FY 2008. The Pesticide Registration Improvement
Renewal Act (PRIA 2), effective on October 1, 2007, authorized collection of registration fees
through FY 2012. The Pesticide Registration Improvement Extension Act (PRIA 3) was
effective on October 1, 2012, authorized collection of registration fees through FY 2017.
For a pending or a new application covered by PRIA to be deemed complete and subject to the
decision review periods, a registrant is required to pay the applicable fee or receive a waiver
from the fee. For most applications, the decision review period starts 21 days after submission of
the application, provided that the fee has been paid, fee waiver granted or in the case of a 75% or
50% fee waiver under PRIA 3, the waiver has been granted and the remaining fee has been paid.
PRIA 3 legislation provides fee waivers for certain categories of small businesses and minor
19-F-0215
EPA's FY 2017 Annual PRIA Financial Statements
3
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uses1. Exemption from the requirement to pay a registration service fee is continued under PRIA
3 for applications solely associated with IR-4 petitions2. Applications from federal and state
agencies are also exempt from registration service fees. If the registrant requests a waiver or
reduction of the fee, the decision review period will begin when the agency grants such request
or in the case of small business fee waivers, no more than 60 days after receipt of the waiver
application. If the agency determines that a fee is required and the waiver is not granted, the
decision review period starts after the fee is collected.
Applications received prior to October 1, 2007, were covered by PRIA 1. Applications received
between October 1, 2007 and September 30, 2012, were covered by PRIA 23 and applications
received on or after October 1, 2012, are covered by PRIA 3. PRIA 3 contains the same audit
provision as PRIA 2. PRIA 3 includes new authority to reject an application if it fails a
preliminary technical screen. PRIA 3 also increases the fee categories or types of applications
covered by PRIA from 140 to 189 and maintains set-asides to support worker protection and
applicator training activities as well as IPM grants at levels comparable to PRIA 2.
Enforcement and Compliance Assurance Program Description
The Pesticide Enforcement and Compliance Assurance Program focuses on pesticide product
and user compliance. These include problems relating to pesticide worker safety, certification
and training of applicators, ineffective antimicrobial products, food safety, adverse effects, risks
of pesticides to endangered species, pesticide containers and containment facilities, and e-
commerce and misuse. The Enforcement and Compliance Assurance Program provides
compliance assistance to the regulated community through its National Agriculture Compliance
Assistance Center, seminars, guidance documents, brochures, and other forms of communication
to ensure knowledge of and compliance with environmental laws.
EPA's grant support to state and tribal pesticide programs emphasizes its commitment to
maintaining a strong compliance and enforcement presence. Agency FIFRA Cooperative
Agreement priorities for FY 2015 - FY 2017 include the enforcement of worker protection
standards and pesticide applicator certification; compliance monitoring and enforcement
activities related to the pesticide container and containment rules; the revised soil fumigant
1 Minor use pesticides are those that produce relatively little revenue for their manufacturers, for a variety of
reasons. They may be registered for a seldom seen pest, or for a crop that is not grown by a large number of
producers. However, minor crops include some high revenue fruit, vegetable, and ornamental crops.
2 The IR-4 (Interregional Research Project No.4) program is involved in making sure that pesticides are registered
for use on minor crops. IR-4 helps by conducting research on minor use pesticides, pesticides that would not
otherwise be profitable to manufacture.
3Out of approximately 7,889 actions completed under PRIA 2, more than 99.0% were completed on or before the
PRIA 2 due date.
19-F-0215
EPA's FY 2017 Annual PRIA Financial Statements
4
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labels; compliance of supplemental distributor products; and program performance
reporting. Core program activities include inspections of producing establishments;
dealers/distributors/retailers; e-commerce; imports and exports, and pesticide misuse.
Additionally, through the Cooperative Agreements we support inspector training and training for
state/tribal senior managers, scientists, and supervisors.
Highlights and Accomplishments
Registration Financial Perspective
During FY 2017, the Agency's obligations charged against the PRIA Fund for the cost of
registration were $20.6 million and 59.8 work-years. Of this amount, OPP obligated $8.84
million in Personnel Compensation and Benefits (PC&B).
Appropriated funds are used in addition to Registration funds. In FY 2017, the Enacted
Operating Plan included approximately $10.0 million in appropriated funds for registration
activities.
The Fund has two types of receipts: fee collections and interest earned on investments. Of the
$18.2 million in FY 2017 net receipts, more than 99.9% were fee collections.
Registration Program Performance Measures
The following measure supports the program's strategic goals Ensuring the Safety of Chemicals
and Pollution Prevention.
Measure 1: Number of new active ingredients registered
Results: In FY 2017, EPA registered 16 new active ingredients, including 9 biopesticides, 1
antimicrobials, and 6 conventional pesticides. This measure includes both reduced-risk and
non-reduced-risk pesticides.
Measure 2: Progress in Registering Reduced-risk Pesticides
Results: In FY 2017, EPA registered 10 reduced-risk new active ingredients, all of which were
biopesticides and one of which was a conventional pesticide. Biological pesticides are derived
from such natural materials as animals, plants, bacteria, and certain minerals. They are usually
less toxic and are typically considered safer pesticides than the traditional conventional
chemicals; therefore, the 9 biopesticide new active ingredients are counted as reduced-risk
pesticides. Conventional "reduced risk" pesticides have one or more of the following
advantages over currently registered pesticides: low impact on human health, low toxicity to
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EPA's FY 2017 Annual PRIA Financial Statements
5
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non-target organisms, low potential for groundwater contamination, lower use rates, low pest
resistance potential, and compatibility with integrated pest management strategies.
Measure 3: Number of New Food Uses Registered
Results: EPA registered 148 new food uses for previously registered active ingredients. Of
these new uses, 139 food uses were for conventional pesticides, 1 was for an antimicrobial
pesticide, and 8 were for biopesticides.
Measure 4: Progress in Registering Reduced-risk New Uses
Results: Included in the new food uses registered are 35 reduced-risk use associated with 5
conventional pesticides, as well as the 8 biopesticide new uses, for a total of 43 reduced-risk new
uses.
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PRINCIPAL
FINANCIAL STATEMENTS
EPA's FY 2017 Annual PRIA Financial Statements
7
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Principal Financial Statements
Financial Statements
Balance Sheet 9
Statement of Net Cost 10
Statement of Changes in Net Position 11
Statement of Budgetary Resources 12
Notes to Financial Statements
Note 1. Summary of Significant Accounting Policies 13
Note 2. Fund Balance with Treasury 17
Note 3. Other Assets-Advances to Working Capital Fund 17
Note 4. General Property, Plant and Equipment 17
Note 5. Other Liabilities 18
Note 6. Payroll and Benefits Payable, Non-Federal 18
Note 7. Income and Expenses from Other Appropriations 19
Note 8. Exchange Revenues, Statement of Net Cost 19
Note 9. Intragovernmental Costs and Exchange Revenue 20
Note 10. Reconciliation of Net Cost of Operations to Budget 21
Note 11. Restatements 22
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8
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United States Environmental Protection Agency
PRIA
Balance Sheet
As of September 30, 2017 and 2016 (Restated)
(Dollars in Thousands)
Restated
FY 2017
FY 2016
Assets:
Intragovernmental:
Fund Balance With Treasury (Note 2)
$ 22,405 $
22,471
Other (Note 3)
15
8
Total Intragovernmental
22,420
22,479
Property, Plant & Equipment, Net (Notes 4 and 11)
292
376
Total Assets (Note 11)
$ 22,712 $
22,855
Liabilities:
Intragovernmental:
Accounts Payable and Accrued Liabilities
40
59
Other (Note 5)
278
248
Total Intragovernmental
318
307
Accounts Payable & Accrued Liabilities
929
602
Payroll & Benefits Payable (Note 6)
4,080
1,640
Other (Note 5)
19,803
20,494
Total Liabilities
$ 25,130 $
23,043
Net Position:
Cumulative Results of Operations
Funds from Dedicated Collections (Note 11)
(2,418)
(188)
Total Net Position (Note 11)
(2,418)
(188)
Total Liabilities and Net Position (Note 11)
$ 22,712 $
22,855
The accompanying footnotes are an integral part of these financial statements
EPA's FY 2017 Annual PRIA Financial Statements
9
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United States Environmental Protection Agency
PRIA
Statement of Net Cost
For the Fiscal Years Ending September 30, 2017 and 2016 (Restated)
(Dollars in Thousands)
Restated
FY 2017 FY 2016
Costs:
Gross Costs (Note 9 and 11) $
21,957 $
17,676
Expenses from Other Appropriations (Note 7)
35,399
31,134
Total Costs
57,356
48,810
Less:
Earned Revenue (Note 8 and 9)
20,773
20,677
Net Cost of Operations (Notes 10 and 11) $
36,583 $
28,133
The accompanying footnotes are an integral part of these financial statements
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EPA's FY 2017 Annual PRIA Financial Statements
10
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United States Environmental Protection Agency
PRIA
Statement of Changes in Net Position
For the Fiscal Years Ending September 30, 2017 and 2016 (Restated)
(Dollars in Thousands)
FY 2017
Restated
FY 2016
Cumulative Results of Ope rations:
Net Position - Beginning of Period $
Adjustment:
Correction of Errors (Notes 4 and 11)
(188) $
1,018
(1,238)
Beginning Balances
(188)
(220)
Budgetary Financing Sources:
Nonexchange Revenue - Securities Investment
Nonexchange Revenue - Other
Income from Other Appropriations (Note 7)
82
(1,435)
35,399
15
(3,435)
31,134
Total Budgetary Financing Sources
34,046
27,714
Other Financing Sources (Non-Exchange):
Imputed Financing Sources
307
451
Total Other Financing Sources
307
451
Net Cost of Operations (Notes 9 and 11)
(36,583)
(28,133)
Net Change (Note 11)
(2,230)
32
Cumulative Results of Operations (Note 11) $ (2,418) $ (188)
The accompanying footnotes are an integral part of these financial statements
EPA's FY 2017 Annual PRIA Financial Statements
11
19-F-0215
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United States Environmental Protection Agency
PRIA
Statement of Budgetary Resources
For the Fiscal Years Ending September 30, 2017 and 2016
(Dollars in Thousands)
FY 2017 FY 2016
Budgetary Resources
Unobligated balance, brought forward, October 1:
$ 12,889 $
13,540
Unobligated Balance Brought Forward, October 1, as adjusted
12,889
13,540
Recoveries of prior year unpaid obligations
32
366
Unobligated balance from prior year budget authority, net
12,921
13,906
Appropriations (discretionary and mandatory)
18,992
18,609
Total Budgetary Resources
VO
&
32,515
Status of Budgetary Resources
Obligations Incurred
20,636
19,626
Unobligated Balance, end of year:
Apportioned
9,285
9,355
Unapportioned
1,992
3,533
Total Unobligated balance, end of period
11,277
12,889
Total Status of Budgetary Resources
$ 31,913 $
32,515
Change in Obligated Balance
Unpaid Obligations:
Unpaid obligations, brought forward, October 1 (gross)
9,054
6,285
Obligated balance, start of year (net), before adjustments
9,054
6,285
Obligated balance, start of year (net), as adjusted
9,054
6,285
Obligations incurred, net
20,636
19,626
Outlays (gross)
(19,141)
(16,491)
Recoveries of prior year unpaid obligations
(32)
(366)
Obligated balance, end of period
Unpaid obligations, end of year (gross)
10,517
9,054
Obligated balance, end of year (net)
$ 10,517 $
9,054
Budget authority and outlays, net
Budget authority, gross (discretionary and mandatory)
18,992
18,609
Budget Authority, net (discretionary and mandatory)
$ 18,992 $
18,609
Outlays, gross (discretionary and mandatory)
19,141
16,491
Outlays, net (discretionary and mandatory)
19,141
16,491
Distributed offsetting receipts
(18,992)
(18,304)
Agency outlays, net (discretionary and mandatory)
S 149 S
(1,813)
The accompanying footnotes are an integral part of these financial statements
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EPA's FY 2017 Annual PRIA Financial Statements
12
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Environmental Protection Agency
PRIA
Notes to Financial Statements
For the Fiscal Years Ending September 30, 2017 and 2016 (Restated)
(Dollars in Thousands)
Note 1. Summary of Significant Accounting Policies
A. Reporting Entity
The U.S. Environmental Protection Agency (EPA or Agency) was created in 1970 by executive
reorganization from various components of other Federal agencies in order to better marshal and
coordinate federal pollution control efforts. The Agency is generally organized around the media
and substances it regulates — air, water, land, hazardous waste, pesticides and toxic substances.
The Pesticide Registration Fund (PRIA) is authorized under the Pesticide Registration
Improvement Act of 2003 (which amended the Federal Insecticide, Fungicide, and Rodenticide
Act (FIFRA), and became effective on March 23, 2004. This Act authorizes the EPA to assess
and collect pesticide registration service fees on applications submitted to register pesticides
covered by this Act, as well as assess and collect fees to register new active ingredients not listed
in the Registration Division 2003 Work Plan of the Office of Pesticide Programs. The Pesticide
Registration Improvement Renewal Act (commonly referred to as PRIA II) extended the
authority to collect pesticide registration service fees through FY 2012. PRIA II became
effective October 1, 2007. PRIA II was reauthorized with the passage of the Pesticide
Registration Improvement Extension Act (referred to as PRIA III) on September 28, 2012. PRIA
III became effective October 1, 2012, and authorized collection of registration fees through FY
2017. The PRIA Fund is accounted for under Treasury symbol number 68X5374.
The PRIA fund may charge some administrative costs directly to the fund and charge the
remainder of the administrative costs to Agency-wide appropriations. Costs funded by Agency-
wide appropriations for fiscal years 2017 and 2016 were $35,399 thousand and $31,134
thousand, respectively. This amount was included as Income from Other Appropriations on the
Statement of Changes in Net Position and as Expenses from Other Appropriations on the
Statement of Net Cost for FYs 2017 and 2016.
B. Basis of Presentation
These financial statements have been prepared to report the financial position and results of
operations of the EPA for the Pesticide Registration Fund (PRIA) as required by the Chief
Financial Officers Act of 1990 and the Pesticide Registration Improvement Act (PRIA) of 2003.
In the prior years, pesticide registration was included in the FIFRA financial statements. The
reports have been prepared from the books and records of the EPA in accordance with Office of
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13
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Management and Budget (OMB) Circular A-136 Financial Reporting Requirements, and the
EPA's accounting policies which are summarized in this note. These statements are therefore
different from the financial reports also prepared by the EPA pursuant to OMB directives that are
used to monitor and control the EPA's use of budgetary resources. The balances in these reports
have been updated from the EPA consolidated financial statements to reflect the use of FY 2017
cost factors for calculating imputed costs for Federal civilian benefits programs. These updates
impact the Balance Sheet, Statement of Net Cost, and Statement of Changes in Net Position.
C. Budgets and Budgetary Accounting
Funding for PRIA is provided by fees collected from industry to offset costs incurred by EPA in
carrying out these programs. Each year, the EPA submits an apportionment request to OMB
based on the anticipated collections of industry fees.
D. Basis of Accounting
Generally Accepted Accounting Principles (GAAP) for Federal entities is the standard
prescribed by the Federal Accounting Standards Advisory Board (FASAB), which is the official
standard setting body for the federal government. The financial statements are prepared in
accordance with GAAP for federal entities.
Transactions are recorded on an accrual accounting basis and a budgetary basis. Under the
accrual method, revenues are recognized when earned and expenses are recognized when a
liability is incurred, without regard to receipt or payment of cash. Budgetary accounting
facilitates compliance with legal constraints and controls over the use of Federal funds. All
interfund balances and transactions have been eliminated.
E. Revenues and Other Financing Sources
For FYs 2017 and 2016, PRIA received funding from fees collected from registrants requesting
pesticide registrations. For FYs 2017 and 2016, revenues were recognized from fee collections
to the extent that expenses are incurred during the fiscal year.
F. Funds with the Treasury
The PRIA fund deposits receipts and processes disbursements through its operating account
maintained at the U.S. Department of the Treasury.
G. Investments in U. S. Government Securities
Investments in U. S. government securities are maintained by Treasury and are reported at
amortized cost net of unamortized discounts. Discounts are amortized over the term of the
investments and reported as interest income. PRIA holds the investments to maturity, unless
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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. General Property, Plant and Equipment
General property, plant and equipment for PRIA consists of software in production. Internal use
software includes purchased commercial off-the-shelf software, contractor developed software
and software that was internally developed by Agency employees. In FY 2017, the EPA
reviewed its capitalization threshold levels for PP&E. The Agency performed an analysis of the
values of software assets and increases the capitalization threshold from $250 thousand to $5
million to better align with major software acquisition investments. The $5 million threshold will
be applied prospectively to software acquisitions and modifications/enhancements placed into
service after September 30, 2016. Software assets placed into service prior to October 1, 2016
were capitalized at the $250 thousand threshold. Internal use software is capitalized at full cost
(direct and indirect) and amortized using the straight-line method over its useful life, not
exceeding five years.
I. Liabilities
Liabilities represent the amount of monies or other resources that are likely to be paid by the
Agency as the result of an Agency transaction or event that has already occurred and can be
reasonably estimated. However, no liability can be paid by the Agency without an appropriation
or other collections. Liabilities for which an appropriation has not been enacted are classified as
unfunded liabilities and there is no certainty that the appropriations will be enacted. For PRIA,
liabilities are liquidated from fee receipts, since PRIA receives no appropriation. Fees collected
by the Agency are classified as unearned revenue until expended (see Note 5). Liabilities of the
Agency arising from anything other than contracts can be abrogated by the Government acting in
its sovereign capacity.
J. Accrued Unfunded Annual Leave
Annual, sick and other leave is expensed as taken during the fiscal year. Sick leave earned but
not taken is not accrued as a liability. Annual leave earned but not taken as of the end of the
fiscal year is accrued as an unfunded liability. Accrued unfunded annual leave is included in the
Balance Sheet as a component of "Payroll and Benefits Payable."
K. Retirement Plan
There are two primary retirement systems for Federal employees. Employees hired prior to
January 1, 1987, may participate in the Civil Service Retirement System (CSRS). On January 1,
1984, the Federal Employees Retirement System (FERS) went into effect pursuant to Public Law
99-335. Most employees hired after December 31, 1983, are automatically covered by FERS
and Social Security. Employees hired prior to January 1, 1984, elected to either join FERS and
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15
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Social Security or remain in CSRS. A primary feature of FERS is that it offers a savings plan to
which the Agency automatically contributes one percent of pay and matches any employee
contributions up to an additional four percent of pay. The Agency also contributes the
employer's matching share for Social Security.
With the issuance of SFFAS No. 5, "Accounting for Liabilities of the Federal Government,"
accounting and reporting standards were established for liabilities relating to the federal
employee benefit programs (Retirement, Health Benefits, and Life Insurance). SFFAS No. 5
requires that the employing agencies recognize the cost of pensions and other retirement benefits
during their employees' active years of service. SFFAS No. 5 requires that the Office of
Personnel Management (OPM), as administrator of the CSRS and FERS, the Federal Employees
Health Benefits Program, and the Federal Employees Group Life Insurance Program, provide
federal agencies with the actuarial cost factors to compute the liability for each program.
L. Offsetting Receipts
Beginning in FY 2007 OMB Circular A-13 6, Financial Reporting Requirements, requires that
the amount of distributed offsetting receipts reported in the Statement of Budgetary Resources
(SBR) should equal the amount recorded as offsetting receipts by the Department of the Treasury
(Treasury). Pesticide Registration Fees collected under PRIA are considered to be offsetting
receipts by Treasury.
M. Use of Estimates
The preparation of financial statements requires management to make certain estimates and
assumptions that affect the reported amounts of assets and liabilities and the reported amounts of
revenue and expenses during the reporting period. Actual results could differ from those
estimates.
N. Prior Period Adjustments and Restatements
Prior period adjustments, if any, are made in accordance with SFFAS No. 21, "Reporting
Corrections of Errors and Changes in Accounting Principles." Specifically, prior period
adjustments will only be made for material prior period errors to: (1) the current period financial
statements, and (2) the prior period financial statements presented for comparison. Adjustments
related to changes in accounting principles will only be made to the current period financial
statements, but not to prior period financial statements presented for comparison.
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16
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Note 2. Fund Balance with Treasury
FY 2017
FY 2016
Revolving Funds: Entity Assets
$
22,405 $
22,471
Note 3. Other Assets-Advances to Working Capital Fund
PRIA advances funds to the EPA's Working Capital Fund to pay for computer, postage, and
other administrative support services. As of September 30, 2017 and 2016, funds advanced that
will be applied to future costs as incurred were $15 thousand and $8 thousand, respectively.
Note 4. General Property, Plant and Equipment, Net
General property, plant and equipment includes the EPA-Held personal property, software, and
software in development.
In FY 2015, the Agency initiated an intensive remediation effort to address the material
weakness of accounting for software. The Agency disclosed a material weakness through its
internal control review of software capitalization processes in FY 2014. The material weakness
was cited in the "Audit of the EPA's Fiscal Year's 2014 and 2013 (Restated) Consolidated
Financial Statements" report, dated November 17, 2014. The agency expects to resolve this
material weakness in FY 2018. Please see Note 11, Restatements, for further information on the
impact of the material weakness remediation on software.
As of September 30, 2017, and 2016 (Restated), General Property, Plant and Equipment consist
of the following:
FY 2017
FY 2016 (Restated)
Acquisition
Value
Accumulated Net Book
Depreciation Value
(35)
(4,758) 292
Acquisition
Value
$ 35
Accumulated Net Book
Depreciation Value
EPA-Held Equipment $ 35
Software 5,050
Total $ 5,085
(4,793) 292
$ 5,085
5,050
(4,674) 376
(4,709) 376
(35)
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EPA's FY 2017 Annual PRIA Financial Statements
17
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Note 5. Other Liabilities
For FYs 2017 and 2016, Payroll and Benefits Payable, non-federal, are presented on a separate
line of the Balance Sheet and in a separate footnote (see Note 6).
Other Intragovcrnmcntal Liabilities -
Covered by Budgetary Resources
Employer Contributions - Payroll
Total
FY 2017 FY 2016
$ 278_ _$ 248
$ 278 $ 248
Other Non-Federal Liabilities - Covered
by Budgetary Resources
Unearned Advances from Fee Collections*
Total
$ 19,803 _$ 20,494
$ 19,803 $ 20,494
*Fees collected by the PRIA program that have not yet been expended are considered unearned
revenue. Unearned revenue will fluctuate in conjunction with expenses paid from other
appropriations and program expenses (see Note 7).
Note 6. Payroll and Benefits Payable, Non-Federal:
FY 2017
FY 2016
Covered by Budgetary Resources
Accrued Payroll Payable to Employees
$ 1,372
$ 1,192
Withholdings Payable
67
54
Thrift Savings Plan Benefits Payable
60
52
Total
$ 1,499
$ 1,298
Not Covered by Budgetary Resources
Unfunded Annual Leave
2,581
342
Total $ 2,581 $ 342
At various periods throughout FY 2017 and FY 2016 employees with their associated payroll
costs were transferred from PRIA to the Environmental Programs and Management (EPM)
appropriation. These employees were transferred to keep PRIA's obligations and disbursements
within budgetary limits.
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EPA's FY 2017 Annual PRIA Financial Statements
18
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This process has led to variations between the year-end liabilities of FYs 2017 and 2016. The
liabilities covered by budgetary resources (both intragovernmental and non-Federal) represent
unpaid payroll and benefits at year-end. As of September 30, 2017, the liabilities were $278
thousand and $1,499 thousand for employer contributions and accrued funded payroll and
benefits as compared to FY 2016's balances of $248 thousand and $1,298 thousand, respectively.
In contrast, the unfunded annual leave liability is a longer term liability than the funded
liabilities. The liability balance for unfunded annual leave accrued to cover the employees
charged to PRIA at the end of FY 2017 and 2016 was $2,581 and $342 thousand, respectively.
Note 7. Income and Expenses from Other Appropriations:
The Statement of Net Cost reports program costs that include the full costs of the program
outputs and consist of the direct costs and all other costs that can be directly traced, assigned on a
cause and effect basis, or reasonably allocated to program outputs.
During FYs 2017 and 2016, the EPA had two appropriations which funded a variety of
programmatic and non-programmatic activities across the Agency, subject to statutory
requirements. The EPM appropriation was created to fund personnel compensation and benefits,
travel, procurement, and contract activities.
In FY 2017, EPA implemented a new methodology to capture direct and indirect costs for PRIA.
Improvements to the costing methodology include a project schema that designates expenses
paid by other appropriations as PRIA related activities. As illustrated below, there is no impact
on PRIA's Statement of Changes in Net Position.
Income from Other Expenses from Other Net
Appropriations Appropriations Effect
FY2017 _$ 35,399 35,399
FY2016 _$ 31,134 31,134
Note 8. Exchange Revenues, Statement of Net Cost
For FYs 2017 and 2016, the exchange revenues reported on the Statement of Net Cost consists of
non-Federal amounts.
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EPA's FY 2017 Annual PRIA Financial Statements
19
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Note 9. Intragovernmental Costs and Exchange Revenue
Costs: FY2017 FY2016 (Restated)
Intragovernmental $
3,071 $
3,192
With the Public
18,886
14,484
Expenses from Other Appropriations
35,399
31,134
Total Costs
57,356
48,810
Revenue:
With the Public
20,773
20,677
Total Revenue
20,773
20,677
Net Cost of Ope rations: $
36,583 $
28,133
Intragovernmental costs relate to the source of the goods or services not the classification of the
related revenue.
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EPA's FY 2017 Annual PRIA Financial Statements
20
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Note 10. Reconciliation of Net Cost of Operations to Budget
Restated
FY 2017 FY 2016
Resources Used to Finance Activities:
Budgetary Resources Obligated
Obligations Incurred !
$ 20,636 $
19,626
Less: Spending Authority from Offsetting Collections and Recoveries
(32)
(366)
Obligations, Net of Offsetting Collections
20,604
19,260
Less: Offsetting Receipts
(18,992)
(18,304)
Net Obligations
1,612
956
Other Resources
Imputed Financing Sources
307
451
Income from Other Appropriations
35,399
31,134
Net Other Resources Used to Finance Activities
35,706
31,585
Total Resources Used To Finance Activities !
$ 37,318 $
32,541
Resources Used to Finance Items
Not Part ofthe Net Cost of Operations:
Change in Budgetary Resources Obligated
1,303
(3,294)
Resources that Finance Asset Acquistion
-
820
Offsetting Receipts Not Affecting Net Cost
18,992
18,304
Total Resources Used to Finance Items Not Part of the Net Cost of Operations
20,295
15,830
Total Resources Used to Finance the Net Cost of Operations $
57,613 $
48,371
Components ofthe Net Cost of Ope rations that Will
Not Require or Generate Resources in the Current Period:
Components Requiring or Generating Resources in Future Periods:
Increase in Annual Leave Liability
(341)
(280)
Increase in Public Exchange Revenue Receivables
(20,773)
(20,677)
Total Components of Net Cost of Operations that Require or
Generate Resources in Future Periods
(21,114)
(20,957)
Components Not Requiring/Generating Resources:
Depreciation and Amortization
84
704
Expenses Not Requiring Budgetary Resources
-
15
Total Components of Net Cost that Will Not Re quire or Generate Re source s
84
719
Total Components of Net Cost of Operations That Will Not Require or
Generate Resources in the Current Period
(21,030)
(20,238)
Net Cost of Operations $
36,583 $
28,133
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EPA's FY 2017 Annual PRIA Financial Statements
21
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Note 11. Restatements
In accordance with OMB Circular A-123, the EPA performed a review of its capital software
commencing in FY 2014. The review identified the following issues:
1. Entries under $250,000 were not capitalized.
2. Some entries had incorrect accounting strings.
3. Credit/debit lines were combined to correct transaction amounts.
To address these findings, the EPA revised its capitalized software procedures, resulting in the
Agency correcting values and accounting for all software projects. The EPA performed
corrections to fix the value of the software assets that were determined to be understated.
As a result of the agency corrections, the EPA restated the FY 2016 PRIA financial statements,
which are presented in the FY 2017 and FY 2016 comparative financial statements. The changes
impacted the beginning balances for the FY 2016 Balance Sheet and Statement of Changes in
Net Position and the FY 2016 Statement of Net Cost.
FY 2016,
as
Previously
Reported
Adjustment
FY 2016,
as
Restated
Balance Sheet
Property, Plant & Equipment, Net $ 1,536
TotalAssets 24,015
Cumulative Results of Operations - Funds from Dedicated Collections 972
Total Net Position 972
Total Liabilities and Net Position $ 24,015
1,160)
1,160)
1,160)
1,160)
1,160)
$ 376
22,855
(188)
(188)
$ 22,855
Statement ofNet Cost
Gross Costs $ 17,754 $ (78) $ 17,676
Net Cost of Operations $ 28,211 $ (78) $ 28,133
Statement of Changes in Net Position
Net Position Beginning of Period
Net Cost of Operations
Net Change
Cumulative Results of Operations
1,018
(28,211)
(46)
972
(1,238)
78
78
(1,160)
(220)
(28,133)
32
(188)
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EPA's FY 2017 Annual PRIA Financial Statements
22
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Appendix B
Agency Response to Draft Report
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
V3S.
y
•'{ mm'
MM 2 -i m
OFFICE OF THE
CHIEI ' N -.'fin.
MEMORANDUM
SUBJECT: Response to the Office of inspector General's; Draft Report No. OA-FY18-0087,
" 1:PA s 1' iscu! } ears 20} and 2016 (Re,staled) Financial Statements for the Pesticide
Registration Fund, " dated May 8, 201 ^
TO; Paul C. funis, Director
Financial I Jireetorate
Office of Inspector General
I hank you for the opportunity to respond to the issues and reeommendalion in the draft report. The
following is a summary ot the U.S. Fnvironmental Protection Agency's overall position on the report,
for the report recommendation with which the agency agrees, we have provided a high-level corrective
action and completion date.
AGENCY'S OVERALL POSITION
Ihe hPA follows the National Archives and Records Administration records management guidance and
corresponding l-.PA records management schedules that provide guidance for the retention, destruction,
and maintenance ot lederat records. In the case of the Pesticide Registration Information System records
referenced in the subject audit report, the hPA followed applicable records management schedules for
Ihe disposition ol the PRISM software files. Nevertheless, the agency concurs with the report
recommendation.
PROM: Molly W. Cireaves. Chief Financial Officer
Office of the Chief Financial Officer
19-F-0215
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AC«KMf!V>S RESPONSE TO AUDIT RECOMMENDATIONS
No. Recommendation Assigned to;
High-l.c\il Intended Fstimatcd
€orrecthc Action(s) Completion in
Chiaiter and FY
1 [Analyze agency records OCPO-OC
^management schedules for
financial management and
determine how long records
fciisposal of software and
-.should be maintained after the
'financial reeords related to
[software assets.
'Concur. The PPA updated Completed
{its Internal I ;.u- Software j8 '30/2018
I Capitalization Polity.
Resources Management
iPireetive System Number
[2540-11 -Tl. to include
[language that reeords related]
to capitalized software
jasscts must be maintained
[three years post
Sdeeommibsion date of the
software.
CONTACT-IMEQEMAUflM
[f you have any questions regarding this response, please contact the OCFO's Audit Follow-up
Coordinator. Benita Dcanc. at.ky\ :*•<> - ;v. ••>. or (202) 564-2079.
ce; Da.vid Bloom
Carol Terris
Kevin Christenson
Alexandra Dupolito Dunn
Charlotte Bertraml
Jeanne Conklin
Richard Gray
Sherri" L. Anthony
Lorna Washington
Demetrious Papukonstantinou
Sheila May
Janet Weiner
Bob Trent
Benita Dearie
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Appendix C
Distribution
The Administrator
Associate Deputy Administrator and Chief of Operations
Chief of Staff
Deputy Chief of Staff
Chief Financial Officer
Agency Follow-Up Coordinator
General Counsel
Associate Administrator for Congressional and Intergovernmental Relations
Associate Administrator for Public Affairs
Director, Office of Continuous Improvement, Office of the Administrator
Assistant Administrator for Mission Support
Principal Deputy Assistant Administrator for Mission Support
Deputy Assistant Administrator for Administration and Resources Management, Office of
Mission Support
Deputy Assistant Administrator for Environmental Information and Chief Information Officer,
Office of Mission Support
Deputy Chief Financial Officer
Associate Chief Financial Officer
Assistant Administrator for Chemical Safety and Pollution Prevention
Principal Deputy Assistant Administrator for Chemical Safety and Pollution Prevention
Deputy Assistant Administrator for Programs, Office of Chemical Safety and Pollution Prevention
Deputy Assistant Administrator for Management, Office of Chemical Safety and Pollution
Prevention
Director, Office of Pesticide Programs, Office of Chemical Safety and Pollution Prevention
Deputy Director, Office of Pesticide Programs, Office of Chemical Safety and Pollution
Prevention
Senior Advisor, PRIA Implementation, Office of Pesticide Programs, Office of Chemical Safety
and Pollution Prevention
Director, Biopesticides and Pollution Prevention Division, Office of Pesticide Programs, Office
of Chemical Safety and Pollution Prevention
Director, Pesticide Re-Evaluation Division, Office of Pesticide Programs, Office of Chemical
Safety and Pollution Prevention
Director, Registration Division, Office of Pesticide Programs, Office of Chemical Safety and
Pollution Prevention
Director, Antimicrobials Division, Office of Pesticide Programs, Office of Chemical Safety and
Pollution Prevention
Director, Information Technology and Resources Management Division, Office of Pesticide
Programs, Office of Chemical Safety and Pollution Prevention
Controller, Office of the Chief Financial Officer
Deputy Controller, Office of the Chief Financial Officer
Director, Office of Technology Solutions, Office of the Chief Financial Officer
Deputy Director, Office of Technology Solutions, Office of the Chief Financial Officer
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Director, Office of Budget, Office of the Chief Financial Officer
Deputy Director, Office of Budget, Office of the Chief Financial Officer
Director, Business Planning and Operations Division, Office of the Controller, Office of the
Chief Financial Officer
Director, Accounting and Cost Analysis Division, Office of the Controller, Office of the Chief
Financial Officer
Deputy Director, Accounting and Cost Analysis Division, Office of the Controller, Office of the
Chief Financial Officer
Director, Research Triangle Park Finance Center, Office of the Chief Financial Officer
Director, Cincinnati Finance Center, Office of the Chief Financial Officer
Director, Las Vegas Finance Center, Office of the Chief Financial Officer
Director, Policy, Training and Accountability Division, Office of the Controller, Office of the
Chief Financial Officer
Chief, General Ledger and Reporting Branch, Office of the Controller, Office of the Chief
Financial Officer
Director, Office of Human Resources, Office of Mission Support
Special Assistant, Office of Pesticide Programs, Office of Chemical Safety and Pollution
Prevention
Special Assistant, Office of the Controller, Office of the Chief Financial Officer
Audit Follow-Up Coordinator, Office of the Administrator
Audit Follow-Up Coordinator, Office of the Chief Financial Officer
Audit Follow-Up Coordinator, Office of the Controller, Office of the Chief Financial Officer
Audit Follow-Up Coordinator, Office of Technology Solutions, Office of the Chief Financial
Officer
Audit Follow-Up Coordinator, Office of Budget, Office of the Chief Financial Officer
Audit Follow-Up Coordinator, Office of Mission Support
Audit Follow-Up Coordinator, Office of Chemical Safety and Pollution Prevention
Audit Follow-Up Coordinator, Office of Pesticide Programs, Office of Chemical Safety and
Pollution Prevention
Audit Follow-Up Coordinators, Regions 1-10
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