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U.S. ENVIRONMENTAL PROTECTION AGENCY
OFFICE OF INSPECTOR GENERAL
Catalyst for Improving the Environment
Quick Reaction Report
Agreed-Upon Procedures
on EPA's Fiscal Year 2009
Third Quarter
Financial Statements
Report No. 09-2-0247
September 24, 2009

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Report Contributors:	Paul Curtis
Meg Hiatt
Javier Negron
Demetrios Papakonstantinou
Lynda Taylor
Abbreviations
EPA
U.S. Environmental Protection Agency
FY
Fiscal Year
GL
General Ledger
OCFO
Office of the Chief Financial Officer
OIG
Office of Inspector General
OMB
Office of Management and Budget
RGLTS
Report of General Ledger Balance by Treasury Symbol
SFFAS
Statement of Federal Financial Accounting Standards
USSGL
United States Standard General Ledger

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U.S. Environmental Protection Agency
Office of Inspector General
At a Glance
09-2-0247
September 24, 2009
Catalyst for Improving the Environment
Why We Performed These
Agreed-Upon Procedures
We performed agreed-upon
procedures on the U.S.
Environmental Protection
Agency (EPA) Fiscal Year (FY)
2009 Third Quarter Financial
Statements. We did so to assist
EPA in evaluating whether its
quarterly Financial Statements
were compiled consistent with
the Treasury United States
Standard General Ledger
Crosswalk, and to identify
significant fluctuations in
financial line item balances from
the previous year.
Background
Agencies submit unaudited
interim Financial Statements to
the Office of Management and
Budget 21 days after the end of
each of the first three quarters of
the fiscal year. Agencies should
include management's
explanation of significant
variances in types or amounts of
assets, liabilities, costs, revenues,
obligations, and outlays, along
with the submitted statements.
Agreed-Upon Procedures on EPA's Fiscal Year 2009
Third Quarter Financial Statements
What We Found
We performed certain agreed-upon procedures on the Agency's FY 2009
Third Quarter Financial Statements. We compared the statements with EPA's
Crosswalk, recomputed them for mathematical accuracy, and compared them
with balances separately generated by us, and concluded that the amounts
agreed.
During the first and second quarters of the Agreed-Upon Procedures, we
identified a difference between the FY 2009 Report of General Ledger Balance
by Treasury Symbol beginning balances and FY 2008 ending balances in
general ledger account 4201, Total Actual Resources. The net difference of
$43,627 was the result of account 4165, Allocation of Authority - Anticipated,
incorrectly closing to account 4201 instead of to account 4450, Authority
Available for Apportionment. The Agency made an adjustment in the third
quarter to correct the error.
The agreed-upon procedures do not constitute an audit of the quarterly
Financial Statements or any part thereof, the objective of which would be the
expression of an opinion on the quarterly Financial Statements or any part
thereof.
For further information, contact
our Office of Congressional,
Public Affairs and Management at
(202) 566-2391.
To view the full report, click on the
following link:
www.epa.aov/oia/reports/2009/
20090924-09-2-0247.pdf

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OFFICE OF
INSPECTOR GENERAL
September 24, 2009
MEMORANDUM
SUBJECT: Agreed-Upon Procedures on EPA's Fiscal Year 2009
Third Quarter Financial Statements
Report No. 09-2-0247
FROM: Paul C. Curtis
Director, Financial Statement Audits
TO:	Maryann Froehlich
Acting Chief Financial Officer
The Office of Inspector General (OIG) of the U.S. Environmental Protection Agency (EPA)
conducted these Agreed-Upon Procedures on EPA's Fiscal Year 2009 Third Quarter Financial
Statements. This report is provided to you solely to assist you in evaluating whether the Fiscal
Year 2009 Third Quarter Financial Statements were compiled consistent with the Treasury
United States Standard General Ledger Crosswalk, and to identify significant fluctuations in
financial line balances from the previous year.
Our report is intended solely for your information and use and should not be used by those who
have not agreed to the procedures or taken responsibility for the sufficiency of the procedures for
their purposes. No written response to this report is required.
If you have any questions, please do not hesitate to contact me at 202-566-2523 or
curtis.paul@epa.gov. or Meg Hiatt at 513-487-2366 or hiatt.mar garet@epa.gov.
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, D.C. 20460

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Agreed-Upon Procedures on EPA's Fiscal Year 2009
Third Quarter Financial Statements
09-2-0247
Table of C
Purpose		1
Background		1
Scope and Methodology		1
Results of Agreed-Upon Procedures		2
Status of Recommendations and Potential Monetary Benefits		7
Appendices
A OIG-ldentified Significant Fluctuations between 06/30/09 and 06/30/08	 8
B Distribution	 11

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09-2-0247
Purpose
We performed these agreed-upon procedures at the request of the Office of the Chief Financial
Officer (OCFO). We did so to assist the U.S. Environmental Protection Agency (EPA) in
evaluating whether its Fiscal Year (FY) 2009 Third Quarter Financial Statements were compiled
consistently with the Treasury United States Standard General Ledger (USSGL) Crosswalk, and
to identify significant fluctuations in financial line item balances from the previous year.
Background
According to Office of Management and Budget (OMB) Circular A-13 6, interim unaudited
Financial Statements, without notes, are required on a quarterly basis. Agencies submit
unaudited interim Financial Statements to OMB 21 days after the end of each of the first three
quarters of the fiscal year. Agencies should include management's explanation of significant
variances in types or amounts of assets, liabilities, costs, revenues, obligations, and outlays,
along with the submitted statements.
Scope and Methodology
We performed certain agreed-upon procedures, enumerated below, on EPA's unaudited
consolidated FY 2009 Third Quarter Financial Statements, to assist the OCFO in evaluating
whether the quarterly Financial Statements were compiled consistently with Treasury's USSGL
Crosswalk and to identify significant fluctuations in financial line item balances from the
previous year.
The adequacy of these procedures is the OCFO's responsibility. Consequently, we make no
representation regarding the sufficiency of the procedures. The agreed-upon procedures do not
constitute an audit of the quarterly Financial Statements or any part thereof, the objective of
which would be the expression of an opinion on the quarterly Financial Statements or any part
thereof. Accordingly, we do not express such an opinion. Were we to perform additional
procedures, other matters might come to our attention that we would report to assist the OCFO.
This agreed-upon procedures engagement was conducted using applicable generally accepted
government auditing standards, which incorporate attestation standards issued by the American
Institute of Certified Public Accountants. These standards provide guidance for performing and
reporting the results of agreed-upon procedures.
We performed the agreed-upon procedures from July 21, 2009 to September 15, 2009. We based
our procedures on EPA's FY 2009 Third Quarter Financial Statements and supporting schedules,
general ledger (GL) balances, and manual on-top adjustments.
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09-2-0247
Results of Agreed-Upon Procedures
Procedure 1
Obtain EPA's FY 2009 Third Quarter Financial Statements, adjusted trial balance, on-top
entries, and support for the statements (including Earmarked Funds). Import the Report of
General Ledger Balance by Treasury Symbol (RGLTS) and enter the Agency's on-top entries
into ProSystem and generate an adjusted trial balance, Consolidated Balance Sheet, Statement of
Net Cost, and Statement of Changes in Net Position.
Results of Procedure 1
We obtained the Agency's FY 2009 Third Quarter Financial Statements, adjusted trial
balance, on-top entries, and support for the statements (including Earmarked Funds and
Child Agency Trial Balances). We imported the RGLTS for the accounting period 0909,
and entered the Agency's on-top adjusting entries to beginning balances into ProSystem
to generate an adjusted trial balance, Consolidated Balance Sheet, Statement of Net Cost,
and Statement of Changes in Net Position.
Procedure 1.a
Compare the ProSystem-generated adjusted trial balance based on the Agency's support to the
Agency's adjusted trial balance in order to verify the Agency's Financial Statement Crosswalk
and note any differences.
Results of Procedure 1.a
We compared the ProSystem adjusted trial balance to the Agency's adjusted trial balance
and the amounts agreed. We verified that the statements complied with and are in
accordance with EPA's Crosswalk.
Procedure 1.b
Compare the ProSystem-generated Financial Statements to EPA's Financial Statements and note
any differences.
Results of Procedure 1.b
We compared the ProSystem-generated financial statements to EPA's Financial
Statements (Consolidated Balance Sheet, and Consolidated Statements of Net Cost and
Changes in Net Position). We found that the amounts agreed.
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09-2-0247
Procedure 1.c
Enter the FY 2009 and FY 2008 GL balances and on-top entries into Excel spreadsheets.
Prepare the Combined Statement of Budgetary Resources and Statement of Custodial Activity
and compare to the Agency's statements and note any differences.
Results of Procedure 1.c
We entered the FY 2009 and FY 2008 GL balances and on-top adjustment entries into
Excel spreadsheets and compared the OIG-prepared Combined Statement of Budgetary
Resources and Statement of Custodial Activity to the Agency's statements.
Statement of Custodial Activity:
The Agency's balances for the FY 2009 third quarter agreed with our amounts for this
statement.
Combined Statement of Budgetary Resources:
The Agency's balances for the FY 2009 third quarter agreed with our amounts for this
statement.
Procedure 1.d
Extract GL ending balances for Earmarked Funds from the RGLTS using Interactive Data
Extraction Analysis and enter into ProSystem. Enter on-top entries and generate a Consolidated
Statement of Changes in Net Position for Earmarked Funds and compare to EPA's Consolidated
Statement of Changes in Net Position for Earmarked Funds.
Results of Procedure 1.d
We extracted the GL ending balances for Earmarked Funds from the RGLTS, generated a
Consolidated Statement of Changes in Net Position for Earmarked Funds, and compared
it to EPA's Statement of Changes in Net Position for Earmarked Funds. The balances
agreed.
Procedure 1.e
Compare the Agency's Third Quarter Consolidated Statement of Net Cost by Goal to the
consolidated totals from the Consolidated Statement of Net Cost.
Results of Procedure 1.e
We compared the Agency's Third Quarter Consolidated Statement of Net Cost by Goal
to the consolidated totals (total costs, total earned revenue, and net cost of operations)
from the Consolidated Statement of Net Cost. The amounts agreed.
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09-2-0247
Procedure 1.f
Mathematically verify accuracy of the Consolidated All Other column on the Consolidating
Statement of Changes in Net Position in the Agency's Financial Statements.
Results of Procedure 1.1
We mathematically verified the accuracy of the All Other column in the Agency's
Financial Statements on the Consolidating Statement of Changes in Net Position.
Procedure 1.g
Identify significant fluctuations in balances by comparing current year balances to prior year
balances. (Criteria - Percentage change of 10 percent or more and dollar change exceeding
$50 million).
Results of Procedure 1.g
We identified significant fluctuations in the Balance Sheet, Statement of Net Cost,
Statement of Changes in Net Position, and Statement of Budgetary Resources. OIG
identified the same fluctuations as the Agency, as well as other fluctuations, which are
detailed in Appendix A.
OMB Circular A-136 states, "The analysis should be only on the significant variances
between the current quarter and the same quarter from the prior year. Management has
discretion on what constitutes a significant variance. Management is to provide variances
for only the top three items with significant fluctuations." The Agency elected to identify
seven fluctuations and submit them to OMB as follows:
Balance Sheet
(1)	The Agency reported to OMB that the $5.8 billion increase in Fund Balance With
Treasury is primarily due to the State and Tribal Assistance Grant program
contained in the American Recovery and Reinvestment Act of 2009 (Recovery
Act).
(2)	The Agency reported to OMB that the $6.1 billion increase in Unexpended
Appropriations is primarily due to the State and Tribal Assistance Grant program
contained in the Recovery Act.
(3)	The Agency reported to OMB that the $206 million decrease in Non-Federal
Accounts Payable and Accrued Liabilities is primarily due to a decrease in
Grantee Liability Accruals as a result of a lower statistical sample rate used in the
FY 2008 fourth quarter compared to the rate used in the FY 2007 fourth quarter.
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09-2-0247
Statement of Budgetary Resources
(1)	The Agency reported to OMB that the $8 billion increase in Appropriations is
primarily due to the $6.4 billion State and Tribal Assistance Grant program
contained in the Recovery Act.
(2)	The Agency reported to OMB that the $4.8 billion increase in Obligations is
primarily due to the $4 billion State and Tribal Assistance Grant program as well
as the $600 million Superfund program contained in the Recovery Act.
(3)	The Agency reported to OMB that the $2.7 billion increase in Apportioned
Unobligated Balance is primarily due to the State and Tribal Assistance Grant
program as well as the Superfund program contained in Recovery Act.
Statement of Net Cost
(1) The Agency reported to OMB that the decrease of $100 million in current year
Gross Costs is primarily due to a reduction in Grant expenses in FY 2009.
Procedure 2
Obtain and compare EPA's identified Earmarked Treasury Symbols to Federal Accounting
Standards Advisory Board Statement of Federal Financial Accounting Standards (SFFAS) 27,
Identifying and Reporting Earmarked Funds, for compliance.
Results of Procedure 2
We obtained and compared EPA's identified Earmarked Treasury Symbols to SFFAS 27.
We found EPA's [Identified Earmarked] Treasury Symbols to be in compliance with
SFFAS 27. Earmarked Treasury Symbols consist of the following trust funds:
Hazardous Substance Superfund; Federal Insecticide, Fungicide, and Rodenticide Act
Fund; Revolving Fund for Certification and Other Services; Licenses and Other Services;
Environmental Services; Exxon Valdez Settlement Fund; Pesticide Registration
Improvement Act Fund; Oil Spill Response Fund; and Contributed Funds; as well as
Treasury Symbols established for the Recovery Act (Superfund and Leaking
Underground Storage Tank).
Procedure 3
Obtain and compare FY 2009 and FY 2008 Child Trial Balances to the Child on-top entry.
Results of Procedure 3
We obtained and compared EPA's FY 2009 and FY 2008 Child Trial Balances to the
Child on-top entry. We found that the on-top entry to record child agency balances
agreed with the support.
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09-2-0247
Procedure 4
Compare the FY 2009 reversals to the FY 2008 on-top adjustments and EPA's Closing
Instructions to assess if EPA followed its guidance.
Results of Procedure 4
We compared the FY 2009 reversals to the FY 2008 on-top adjustments and to EPA's
closing instructions to assess if EPA followed its guidance. We found that the Agency
reversed the FY 2008 on-tops properly in FY 2009.
Procedure 5
Compare the RGLTS FY 2009 beginning balances to the FY 2008 ending balances and note any
differences.
Results of Procedure 5
During the first and second quarter of the Agreed-Upon Procedures, we identified a
difference in GL account 4201, Total Actual Resources. The difference between the
FY 2008 ending and FY 2009 beginning balance of $43,627 was a result of errors in the
year-end closing process. GL account 4165, Allocation of Authority - Anticipated,
incorrectly closed to GL account 4201 instead of to GL account 4450, Authority
Available for Apportionment, according to the Year End Account Table. The Agency
forced the closure to GL account 4201 to ensure that beginning balances on line 1 of the
FY 2009 Statement of Budgetary Resources matched the ending balances of the year end
FY 2008 Statement of Budgetary Resources lines 9 and 10. The Agency made an
adjustment in the third quarter to correct the error.
Procedure 6
Review elimination and consolidation entries prepared by the Reporting and Analysis Staff for
reasonableness and completeness.
Results of Procedure 6
We reviewed the FY 2009 third quarter elimination and consolidation entries prepared by
the Reporting and Analysis Staff for reasonable and completeness. The elimination and
consolidation entries appeared reasonable and complete.
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09-2-0247
Status of Recommendations and
Potential Monetary Benefits
RECOMMENDATIONS
POTENTIAL MONETARY
BENEFITS (In $000s)
Rec.
No.
Page
No.
Subject
Status1
Action Official
Planned
Completion
Date
No recommendations
Claimed
Amount
Agreed To
Amount
1 0 = recommendation is open with agreed-to corrective actions pending
C = recommendation is closed with all agreed-to actions completed
U = recommendation is undecided with resolution efforts in progress
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09-2-0247
Appendix A
OIG-ldentified Significant Fluctuations
between 06/30/09 and 06/30/08
(Dollars in Thousands)
Consolidated Balance Sheet:

FY 2009
FY 2008
Difference
%
ASSETS
Intragovernmental:




Fund Balance With Treasury
$17,242,174
$11,429,580
$5,812,594
50.86%
Investments
$7,226,402
$6,301,983
$924,419
14.67%
Other
$205,207
$85,245
$119,962
140.73%
Accounts Receivable, Net
$312,472
$441,680
($129,208)
-29.25%





LIABILITIES
Accounts Payable & Accrued
Liabilities
$661,007
$867,056
($206,049)
-23.76%

NET POSITION
Unexpended Appropriations -
Other Funds
$16,431,068
$10,272,712
$6,158,356
59.95%
Cumulative Results of
Operations - Earmarked Funds
$7,239,852
$6,432,884
$806,968
12.54%
Source: FY 2009 Financial Statements provided by EPA
Consolidated Statement of Net Cost:

FY 2009
Consolidated
FY 2008
Consolidated
Difference
%
COSTS
Earned Revenue
$390,560
$490,400
($99,840)
-20.36%
Source: FY 2009 Financial Statements provided by EPA
Consolidated Statement of Changes in Net Position:

FY 2009
Consolidated
FY 2008
Consolidated
Difference
%
BUDGETARY FINANCING SOURCES
Appropriations
Received
$14,406,297
$7,197,712
$7,208,585
100.15%
Other Adjustments
($10,000)
($117,285)
$107,285
-91.47%
Source: FY 2009 Financial Statements provided by EPA
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09-2-0247
Consolidated Statement of Changes in Net Position - All Other Funds:

FY 2009
Consolidated
All Other
Funds
FY 2008
Consolidated
All Other
Funds
Difference
%
CUMULATIVE RESULTS OF OPERATIONS
Budgetary Financing Sources:
Trust Fund
Appropriations
($1,747,911)
($984,974)
($762,937)
77.46%

BUDGETARY FINANCING SOURCES
Appropriations
Received
$14,406,297
$7,197,712
$7,208,585
100.15%
Other Adjustments
($10,000)
($117,285)
$107,285
-91.47%
Source: FY 2009 Financial Statements provided by EPA
Consolidated Statement of Changes in Net Position - Earmarked Funds:

FY 2009
Consolidated
Earmarked
Funds
FY 2008
Consolidated
Earmarked
Funds
Difference
%
CUMULATIVE RESULTS OF OPERATIONS
Budgetary Financing Sources:
Trust Fund
Appropriations
$1,747,911
$984,974
$762,937
77.46%
Source: FY 2009 Financial Statements provided by EPA
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09-2-0247
Combined Statement of Budgetary Resources:

FY 2009
FY 2008
Difference
%
BUDGETARY RESOURCES
Appropriation
$15,277,062
$7,263,159
$8,013,903
110.34%
Advance Received
$80,475
$143,536
($63,061)
-43.93%
Without Advance from
Federal Sources
($78,090)
$11,248
($89,338)
-794.26%
Anticipated for Rest of
Year, Without
Advances
$361,654
$119,309
$242,345
203.12%
Permanently Not
Available
($11,000)
($118,284)
$107,284
-90.70%

STATUS OF BUDGETARY SOURCES
Direct
$10,561,137
$5,724,936
$4,836,201
84.48%
Apportioned
$9,144,656
$6,462,859
$2,681,797
41.50%
Unobligated Balances
Not Available
$1,086,308
$373,594
$712,714
190.77%

CHANGE IN OBLIGATED BALANCE
Obligations Incurred,
Net
$10,968,569
$6,111,701
$4,856,868
79.47%
Change in
Uncollected Customer
Payments from
Federal Sources
$54,888
($12,460)
$67,348
-540.51%
Unpaid Obligations
$11,874,254
$8,212,341
$3,661,913
44.59%

NET OUTLAYS
Less: Distributed
Offsetting Receipts
($1,714,124)
($1,045,003)
($669,121)
64.03%
Source: FY 2009 Financial Statements provided by EPA
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09-2-0247
Appendix B
Distribution
Acting Chief Financial Officer
Acting Deputy Chief Financial Officer
Acting Director, Office of Financial Management, Office of the Chief Financial Officer
Director, Reporting and Analysis Staff, Office of the Chief Financial Officer
Acting Director, Office of Financial Services, Office of the Chief Financial Officer
Acting Inspector General
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