£
<
3)
O
%
o
ssz
^4 PRO^
O
z
UJ
CD
p*
U.S. ENVIRONMENTAL PROTECTION AGENCY
OFFICE OF INSPECTOR GENERAL
Operating efficiently and effectively
Fiscal Years 2018 and 2017
Financial Statements for the
Pesticide Registration Fund
Report No. 20-F-0135
April 14, 2020
TOST*
•W-"
¦r irnrw
-

-------
Report Contributors:	Paul Curtis
Demetrios Papakonstantinou
Safiya Chambers
Edgar Dumeng
Carol Kwok
Sheila May
Guillermo Mejia
Wendy Swan
Phillip Weihrouch
Abbreviations
EPA	U.S. Environmental Protection Agency
FY	Fiscal Year
OIG	Office of Inspector General
PRIA	Pesticide Registration Improvement Act
Cover Photo: Pesticides being applied. (EPA photo)
Are you aware of fraud, waste, or abuse in an
EPA program?
EPA Inspector General Hotline
1200 Pennsylvania Avenue, NW (2431T)
Washington, D.C. 20460
(888) 546-8740
(202) 566-2599 (fax)
OIG Hotline@epa.gov
Learn more about our OIG Hotline.
EPA Office of Inspector General
1200 Pennsylvania Avenue, NW (2410T)
Washington, D.C. 20460
(202) 566-2391
www.epa.gov/oiq
Subscribe to our Email Updates
Follow us on Twitter @EPAoig
Send us your Project Suggestions

-------
tfto sr^
U.S. Environmental Protection Agency	20-F-0135
J1	\ Office of Inspector General	Apnl 14 2020
issszi
At a Glance
Why We Did This Project
The Pesticide Registration
Improvement Act requires that
the U.S. Environmental
Protection Agency's Office of
Inspector General 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 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 OIG perform an analysis of
the Agency's compliance with
those review periods.
This report addresses the
following:
• Operating efficiently and
effectively.
Fiscal Years 2018 and 2017 Financial
Statements for the Pesticide Registration Fund
EPA Receives an Unmodified Opinion for FY 2018
We rendered an unmodified opinion on the PRIA
Fund financial statements for fiscal year 2018,
meaning they were fairly presented and free of
material misstatement.
We rendered an
unmodified opinion on
the EPA's FY 2018 PRIA
Fund financial
statements and a
qualified opinion on the
FY 2017 PRIA Fund
financial statements.
We rendered a qualified opinion on the PRIA Fund
financial statements for FY 2017, meaning that
except for the possible effects of the Agency's
inability to support PRIA's payroll accruals and related expenses, the FY 2017
financial statements were fairly presented.
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 review periods.
There are no recommendations in this report.
Address inquiries to our public
affairs office at (202) 566-2391 or
OIG WEBCOMMENTS@epa.gov.
List of OIG reports.

-------
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, D.C. 20460
OFFICE OF
INSPECTOR GENERAL
April 14, 2020
MEMORANDUM
SUBJECT: Fiscal Years 2018 and 2017 Financial Statements for the Pesticide
Registration Fund
Report No. 20-F-0135
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
David Bloom, Deputy Chief Financial Officer
This is our report on the subject audit conducted by the Office of Inspector General of the U.S.
Environmental Protection Agency. The project number for this audit was OA&E-FY19-0121.
This report contains no recommendations, and you are not required to respond to this report. 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.
We will post this report to our website at www.epa.gov/oig.

-------
Fiscal Years 2018 and 2017 Financial
Statements for the Pesticide
Registration Fund
20-F-0135
Table of C
Inspector General's Report on the Fiscal Years 2018
and 2017 Financial Statements for the Pesticide
Registration Fund
Report on the Financial Statements		1
Report on Internal Control over Financial Reporting		2
Tests of Compliance with Laws, Regulations, Contracts, and Grant
Agreements		3
Management's Discussion and Analysis Section
of the Financial Statements		4
Prior Audit Coverage		4
Agency Comments		4
Appendices
A Fiscal Years 2018 and 2017 Pesticide Registration Fund Financial Statements
B Distribution

-------
Inspector General's Report on the
Fiscal Years 2018 and 2017 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
Fund. These statements comprise the balance sheets as of September 30, 2018,
and September 30, 2017; 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 auditing standards generally accepted in
the United States; 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 Bulletin 19-03, 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
20-F-0135
1

-------
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 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 PRIA'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.
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.
Unmodified Opinion in 2018
In our opinion, the PRIA Fund financial statements, including the accompanying
notes, present fairly, in all material respects, the PRIA assets, liabilities, net
position, net cost, changes in net position, and budgetary resources of the EPA as
of and for the year ended September 30, 2018, in accordance with accounting
principles generally accepted in the United States of America.
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 for designing our auditing procedures for the
purpose of expressing an opinion on the financial statements and to comply with
the Office of Management and Budget audit guidance, not to express an opinion
on internal control. Accordingly, we do not express an opinion on internal control
over financial reporting nor on management's assertion on internal controls
included in 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 the Office of Management and Budget
Bulletin 19-03. We did not test all internal controls relevant to operating
20-F-0135
2

-------
objectives as broadly defined by the Federal Managers' Financial Integrity Act of
1982.
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 control, misstatements, losses, or
noncompliance may occur and not be detected.
Comparison of EPA's Federal Managers' Financial Integrity Act
Report with Our Evaluation of Internal Control
Office of Management and Budget Bulletin No. 19-03 requires the Office of
Inspector General to compare material weaknesses disclosed during the audit with
those material weaknesses reported in the Agency's Federal Managers' Financial
Integrity Act report that relate to the financial statements and identify material
weaknesses disclosed by the audit that were not reported in the Agency's report.
The Agency's report is prepared and submitted at the consolidated level, of which
the PRIA Fund is a component.
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
review periods.
20-F-0135
3

-------
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, 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.
During a previous audit of the PRIA Fund's financial statements—Fiscal Years
2017 and 2016 (Restated) Financial Statements for the Pesticide Registration
Fund (Report No. 19-F-02151 issued June 28, 2019—we reported a material
weakness regarding software transactions. As a result of the material weakness
finding for software on the EPA's consolidated financial statements, the EPA
conducted an analysis and recognized that it had improperly accounted for some
prior year Pesticide Registration Information System 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 that were used to justify the restatement amounts, we found that
supporting documentation for some Pesticide Registration Information System
software transactions were missing.
We recommended that the Agency analyze 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 on
August 30, 2018.
There are no recommendations in this report, and the Agency had no comments.
Paul C. Curtis
Certified Public Accountant
Director, Financial Directorate
Office of Audit and Evaluation
Office of Inspector General
U.S. Environmental Protection Agency
March 23, 2020
20-F-0135	4
Prior Audit Coverage
Agency Comments

-------
Appendix A
Fiscal Years 2018 and 2017
Pesticide Registration Fund Financial Statements

mm
<3
T"
PROT®^"''
Produced by the U.S. En virontnental Protection Agency
Office of the Chief Financial Officer
Office of Controller
20-F-0135
5

-------
TABLE OF CONTENTS
Management's Discussion and Analysis
Principal Financial Statements
EPA's FY 2018 Annual PRIA Financial Statements
1
20-F-0135

-------
Management's Discussion and Analysis
EPA's FY 2018 Annual PRIA Financial Statements
2
20-F-0135
7

-------
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. The
PRIA3 statutory expiration date of September 30, 2017, was extended through fiscal year 2018
by legislative language contained in continuing resolutions and the 2018 omnibus spending bill.
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
EPA's FY 2018 Annual PRIA Financial Statements
3
20-F-0135
8

-------
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 peri od 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, including through fiscal year 2018, 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.
EP A's grant support to state and tribal pesticide programs emphasizes its commitment to
maintaining a strong compliance and enforcement presence. Agency FIFR A Cooperative
Agreement priorities for FY 2017 & FY 2018 include the enforcement of worker protection
standards and pesticide applicator certification; compliance monitoring and enforcement
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 ResearchProjectNo.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.
EPA's FY 2018 Annual PRIA Financial Statements
4
20-F-0135
9

-------
activities related to the pesticide container and containment rales; the revised soil fumigant
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 2018, the Agency's obligations charged against the PRIA Fund for the cost of
registration were $21.8 million and 56.9 work-years. Of this amount, OPP obligated $8.5 million
in Personnel Compensation and Benefits (PC&B).
Appropriated funds are used in addition to Registration funds. In FY 2018, the Enacted
Operating Plan included approximately $11.6 million in appropriated funds for registration
activities.
The Fund has two types of receipts: fee collections and interest earned on investments. Of the
$16.8 million in FY 2018 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: Average number of days to complete PRIA decisions for new active ingredients
Results: The average decision review timeframe for new active ingredient decisions completed
in FY 2018 was 603 days, bettering the FY 2018 target of643 days.
Measure 2: Average number of days exceeding PRIA decision timeframes for new active
ingredient decisions
Results: In FY 2018, the average number of days by which the decision timeframe for
completed new active ingredient actions exceeded the statutory timeframes was 117 days,
bettering the FY 2018 target of303 days.
EPA's FY 2018 Annual PRIA Financial Statements
5
20-F-0135

-------
Measure 3: Percentage of decisions (registration actions) completed on time (on or before
PRIA or negotiated due date)
Results: In FY 2018, EPA completed 99. 7% of PRIA actions "on-time", exceeding the FY 2018
target of 99% on-time completion. Of the 2,199 PRIA decisions completed in the fiscal year,
only six were completed after the original or negotiated due date.
EPA's FY 2018 Annual PRIA Financial Statements
6
20-F-0135
11

-------
PRINCIPAL
FINANCIAL STATEMENTS
EPA's FY 2018 Annual PRIA Financial Statements
7
20-F-0135
12

-------
Principal Financial Statements
Financial Statements
Balance Sheet	9
Statemen t of Net Cost	10
Statement of Changes in Net Position	11
Statement of Budgetary Resources	12
Notes to Financial Statements
Note 1. Summary of Significant Accounting Policies	13
Note 2. Fund Balance with Treasury	16
Note 3. Other Assets-Advances to Working Capital Fund	17
Note 4. General Property, Plant and Equipment	17
NoteS. 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
EPA's FY 2018 Annual PRIA Financial Statements
S
20-F-0135
13

-------
United States Environmental Protection Agency
PRIA
Balance Sheet
As of September 30, 2018 and 2017
(Dollars in Thousands)
FY 2018 FY 2017
Assets:
Intragovernmental:
Fund Balance With Treasury (Note 2)	$ 19,899 $ 22A05
Other (Note 3)		132 	15.
T otal Intragovernmental
20,031
22,420
Property, Plant & Equipment, Net (Notes 4)
209
292
Total Assets
S 20,240 $
22,712
Liabilities:


Intragovernmental:


Accounts Payable and Accrued Liabilities
49
40
Other (Note 5)
22
278
Total Intragovernmental
71
318
Accounts Payable & Accrued Liabilities
821
929
Payroll & Benefits Payable (Note 6)
2,517
4,080
Other (Note 5)
18,929
19,803
Total Liabilities
$ 22,338 $
25,130
Net Position:


Cumulative Results of Operations


Funds from Dedicated Collections
(2,098)
(2,418)
Total Net Position
(2,098)
(2,418)
Total Liabilities and Net Position
$ 20,240 $
22,712
The accompanying notes are an integral part of these financial statements.
EPA1 s FY 2018 Annual PRIA Financial Statements
9
20-F-0135
14

-------
United States Environmental Protection Agency
PRIX
Statement of Net Cost
For the Fiscal Years Ending September 30, 2018 and 2017
(Dollars in Thousands)
FY 2018	FY 2017
Costs:
Gross Costs (Note 9)	$ 19,378	$ 21,957
Expenses from Otter Appropriations (Note 7)	36,638	35,399
Total Costs	56,016	57,356
Less:
Earned Revenue (Note 8 and 9)	18,337	20,773
Net Cost of Operations (Notes 10)	$ 37,679	$ 36,583
The accompanying notes are an integral part of these financial statements.
EPA1 s FY 2018 Annual PRIA Financial Statements
10
20-F-0135
15

-------
United States Environmental Protection Agency
PR1A
Statement of Changes in Net Position
For the Fiscal Years Ending September 30, 2018 and 2017
(Dollars in Thousands)
FY 2018	FY 2017
Cumulative Results of Operations:
Net Position-Beginning of Period $	(2,418) $	(188)
Budgetary Financing Sources:
Nonexchange Revenue - Securities Investment	169	82
Nonexchange- Revenue - Other	893	(1,435)
Income from Other Appropriations (Note 7)	36,638	35,399
Total Budgetary Financing Sources	37,700	34,046
Other Financing Sources (Non-Exchange):
Imputed Financing Sources		299 	307
Total Other Financing Sources	299	307
Net Cost of Operations (Notes 9)	(37,679)	(36,583)
Net Change	320	(2,230)
Cumulative Results of Operations	$ (2,098) $ (2,418)
The accompanying notes are an integral part of these financial statements.
EPA1 s FY 2018 Annual PRIA Financial Statements
11
20-F-0135
16

-------
United States Environmental Protection Agency
PRIA
Statement of Budgetary Resources
For the Fiscal Years Ending September 30,2018 and 2017
(Dollars in Thousands)
FY 2018	FY 2017
Budgetary Resources



Unobligated Balance from Prior Year Budget Authority, Net
$
11,310 $
12,921
Appropriations (Discretionary and Mandatory)

17,046
18,992
Total Budgetary Resources
$
28,356 $
31,913
Memorandum (non add) Entries



Net Adjustments To Unobligated Balance Brought Forward, Oct. 1
$
(33) $
32
Status of Budgetary Resources



New Obligations and Upward Adjustment (T otal)

21,517
20,636
Unobligated Balance, End of Year:



Apportioned, Unexpired Accounts

6,839
9,285
Umpportioned, Unexpired Accounts

-
1,992
Unobligated Balance, End of Year (Total)

6,839
11,277
Total Status of Budgetary Resources
$
28,356 $
31,913
Outlays, net



Outlays, Net (Discretionary and Mandatory)

19,421
19,141
Distributed Offsetting Receipts

(17,046)
(18,992)
Agency Outlays, 'Net (Discretionary and Mandatory)
$
2,375 $
149
The accompanying notes are an integral part of these financial statements.
EPA1 s FY 2018 Annual PRIA Financial Statements
12
20-F-0135
17

-------
Environmental Protection Agency
PRIA
Notes to Financial Statements
For the Fiscal Years Ending September 30, 2018 and 2017
(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 2) extended the
authority to collect pesticide registration service fees through FY 2012. PRIA 2 became
effective October 1, 2007. PRIA 2 was reauthorized with the passage of the Pesticide
Registration Improvement Extension Act (referred to as PRIA 3) on September 28, 2012. PRIA 3
became effective October 1, 2012, and authorized collection of registration fees through FY
2018. 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. See Note 7 Income and
Expenses from Other Appropriations for amounts included in Income from Other Appropriations
on the Statement of Changes in Net Position and as Expenses from Other Appropriations on the
Statement of Net Cost.
B.	Basis of Presentation
These financial statements have been prepared to report the financial position and results of
operations of the EPA for the Pesticide Registration Fund (PRIA) as required by the Chief
Financial Officers Act of 1990 and the Pesticide Registration Improvement Act (PRIA) of 2003,
In the prior years, pesticide registration was included in the FIFRA financial statements. The
reports have been prepared from the books and records of the EPA in accordance with Office of
Management and Budget (OMB) Circular A-136 Financial Reporting Requirements, and the
EPA's accounting policies which are summarized in this note. These statements are therefore
EPA's FY 2018 Annual PRIA Financial Statements
13
20-F-0135

-------
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 2018
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 PR1A 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 2018 and 2017, PRIA received funding from fees collected from registrants requesting
pesticide registrations. For FYs 2018 and 2017, revenues were recognized from fee collections
to the extent that expenses are incurred during the fiscal year.
F.	Funds with the Treasury
The PRIA fund deposits receipts and processes disbursements through its operating account
maintained at the U.S. Department of the Treasury.
G.	Investments in U. S. Government Securities
Investments in U. S. government securities are maintained by Treasury and are reported at
amortized cost net of unamortized discounts. Discounts are amortized over the term of the
investments and reported as interest income. PRIA holds the investments to maturity, unless
needed to finance operations of the fund. No provision is made for unrealized gains or losses on
these securities because, in the majority of cases, they are held to maturity.
EPA's FY 2018 Annual PRIA Financial Statements
14
20-F-0135

-------
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 increased 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 priorto 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 priorto January 1, 1984, elected to either join FERS and
Social Security or remain in CSRS. A primary feature of FERS is that it offers a savings plan to
which the Agency automatically contributes one percent of pay and matches any employee
EPA's FY 2018 Annual PRIA Financial Statements
15
20-F-0135

-------
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 ben efits
during their employees' active years of service. SFFAS No. 5 requires that the Office of
Personnel Management (OPM), as administrator of the CSRS and FERS, the Federal Employees
Health Benefits Program, and the Federal Employees Group Life Insurance Program, provide
federal agencies with the actuarial cost factors to compute the liability for each program.
L. Offsetting Receipts
Beginning in FY 2007 OMB Circular A-136, Financial Reporting Requirements, requires that
the amount of distributed offsetting receipts reported in the Statement of Budgetary Resources
(SBR) should equal the amount recorded as offsetting receipts by the Department of the Treasury
(Treasury). Pesticide Registration Fees collected under PRIA are considered to be offsetting
receipts by Treasury.
M. Use of Estimates
The preparation of financial statements requires management to make certain estimates and
assumptions that affect the reported amounts of assets and liabilities and the reported amounts of
revenue and expenses during the reporting period. Actual results could differ from those
estimates.
N. Reclassifications and Comparative Figures
Certain reclassifications have been made to the prior year's financial statements to enhance
comparability with the current year's financial statements in accordance with Office of
Management and Budget (OMB) Circular No. A-126, Financial Reporting Requirements revised
July 30, 2018. As a result, certain line items have been amended in the Statement of Budgetary
Resources.
Note 2. Fund Balance with Treasury
FY 2018 FY 2017
Revolving Funds: Entity Assets	S 19,899 S 22,405
EPA's FY 2018 Annual PRIA Financial Statements
16
20-F-0135

-------
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, 2018 and 2017, funds advanced that
will be applied to future costs as incurred were $132 thousand and SI5 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 resolved this material
weakness in FY 2018.
As of September 30, 2018, and 2017, General Property, Plant and Equipment consist of the
following:
FY 2018	FY 2017


Net


Net
Acquisition
Accumulated
Book
Acquisition
Accumulated
Book
Value
Depreciation
Value
Value
Depreciation
Value
EPA-Held Equipment $ 35
(35)
-
S 35
(35)
-
Software 5,050
(4,841)
209
5,050
(4,758)
292
Total $ 5,085
(4,876)
209
$ 5,085
(4,793)
292
EPA's FY 2018 Annual PRIA Financial Statements
17
20-F-0135

-------
Note 5. Other Liabilities
For FYs 2018 and 2017, Payroll and Benefits Payable, non-federal, are presented
line of the Balance Sheet and in a separate footnote (see Note 6).
on a separate

FY 2018
FY 2017
Other Intragovernmental Liabilities -
Covered by Budgetary Resources
Employer Contributions - Payroll
$ 22
$ 278
Total
$ 22
$ 278
Other Non-Federal Liabilities - Covered
by Budgetary Resources
Unearned Advances from Fee Collections*
S 18,929
$ 19,803
Total
$ 18,929
$ 19,803
*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 2018
FY 2017
Covered by Budgetaiy Resources


Accrued Payroll Payable to Employees
$ 116 S
1,372
Withholdings Payable
1
67
Thrift Savings Plan Benefits Payable
12
60
Total
$ 129 S
1,499
Not Covered by Budgetaiy Resources


Unfunded Annual Leave
2,388
2,581
Total
$ 2,388 $
2,581
At various periods throughout FY 2018 and FY 2017 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.
This process has led to variations between the year-end liabilities of FYs 2018 and 2017. The
liabilities covered by budgetary resources (both intragovernmental and non-Federal) represent
unpaid payroll and benefits at year-end. As of September 30, 2018, the liabilities were $22
EPA's FY 2018 Annual PRIA Financial Statements
18
20-F-0135

-------
thousand and $129 thousand for employer contributions and accrued funded payroll and benefits
as compared to FY 2017's balances of $278 thousand and $1,499 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 2018 and 2017 was $2,388 and $2,581 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 2018 and 2017, the EPA had two appropriations which funded a variety of
programmatic and non-programmatic activities across the Agency, subject to statutory
requirements. The I .I'M 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.
Expenses from
Income from Other	Other
Appropriations	Appropriations	Net Effect
FY 2018	$	36,638	36,638
FY 2017	$	35,399	35,399
Note 8. Exchange Revenues, Statement of Net Cost
For FYs 2018 and 2017, the exchange revenues reported on the Statement of Net Cost consists of
non-Federal amounts.
EPA's FY 2018 Annual PRIA Financial Statements
19
20-F-0135

-------
Note 9. Intragovernmental Costs and Exchange Revenue
Costs:	FY 2018 FY 2017
Intragovernmental	$ 3,183	$ 3,071
With the Public	16,195	18,886
Expenses from Other Appropriations	36,638	35,399
Total Costs	56,016	57,356
Revenue:
With the Public	18,337	20,773
Total Revenue	18,337	20,773
Net Cost of Operations:	$ 37,679 $ 36,583
Intragovernmental costs relate to the source of the goods or services not the classification of the
related revenue.
EPA's FY 2018 Annual PRIA Financial Statements
20
20-F-0135

-------
Note 10. Reconciliation of Net Cost of Operations to Budget
FY 2018	FY 2017
Resources Used to Finance Activities:
Budgetary Resources Obligated
Obligations Incurred
$
21,517
$
20,636
Less: Spending Authority from Offsetting Collections and Recoveries

(33)

(32)
Obligations, Net of Offsetting Collections

21,484

20,604
Less: Offsetting Receipts

(17,046)

(18,992)
Net Obligations

4,438

1,612
Other Resources




Imputed Financing Sources

299

307
Income from Other Appropriations

36.638

35,399
Net Other Resources Used to Finance Activities

36,937

35,706
Total Resources Used To Finance Activities
$
41,375
$
37,318
Resources Used to Finance Items




Not Part of the Net Cost of Operations:




Change in Budgetaiy Resources Obligated

378

1,303
Resources that Finance Asset Acquistion

(3,716)

-
Offsetting Receipts Not Affecting Net Cost

17,046

18,992
Total Resources Used to Finance Items Not Part of the Net Cost of Operations

13,708

20,295
Total Resources Used to Finance the Net Cost of Operations
$
55,083
$
57,613
Components of the Net Cost of Operations that Will




Not Require or Generate Resources in the Current Period:




Components Requiring or Generating Resources in Future Periods:




Increase m Annual Leave Liability

(193)

(341)
Increase in Public Exchange Revenue Receivables

(18,337)

(20,773)
Total Components of Net Cost of Operations that Require or




Generate Resources in Future Periods

(18,530)

(21,114)
Components Not Requiring/Generating Resources:




Depreciation and Amortization

84

84
Expenses Not Requiring Budgetary Resources

1,042

-
Total Components of Net Cost that Will Not Require or Generate Resources

1,126

84
Total Components of Net Cost of Operations That Will Not Require or




Generate Resources in the Current Period

(17,404)

(21,030)
Net Cost of Operations
$
37,679
$
36,583
EPA's FY 2018 Annual PRIA Financial Statements
21
20-F-0135
26

-------
Appendix B
Distribution
The Administrator
Assistant Deputy Administrator
Associate Deputy Administrator
Chief of Staff
Deputy Chief of Staff/Operations
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
Associate Deputy 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
Director, Offices of Resources and Business Operations, Office of Mission Support
Deputy Chief Financial Officer
Associate Chief Financial Officer
Associate Chief Financial Officer for Policy
Deputy Assistant Administrator for Chemical Safety and Pollution Prevention
Principal Deputy Assistant Administrator for Chemical Safety and Pollution Prevention
Associate Deputy Assistant Administrator for New Chemicals, 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, 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
20-F-0135
27

-------
Director, Information Technology and Resources Management Division, Office of Pesticide
Programs, Office of Chemical Safety and Pollution Prevention
Controller
Deputy Controller
Director, Office of Technology Solutions, Office of the Chief Financial Officer
Deputy Director, Office of Technology Solutions, Office of the Chief Financial Officer
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
Branch Chief, Fees and Collections Branch, Accounting and Costs 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, Policy, Training and Accountability Division, Office of the Controller, Office of the
Chief Financial Officer
Director, Office of Human Resources, Office of Mission Support
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
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
20-F-0135
28

-------