Agreed-Upon Procedures on EPA's Fiscal year 2010 First Quarter Financial Statements


$
<
3J
I
&hi
c
pRQl^
A-0
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 2010
First Quarter Financial
Statements
Report No. 10-2-0131
May 19, 2010

-------
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
YACT
Year-End Account Closing Table

-------
<
^tDsr%
.sfiz.
\^lU-i
V j?
PRO^^
U.S. Environmental Protection Agency
Office of Inspector General
At a Glance
10-2-0131
May 19, 2010
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) 2010 First Quarter
Financial Statements. We did
so to assist EPA in evaluating
whether its quarterly Financial
Statements were compiled in a
manner 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 (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.
For further information,
contact our Office of
Congressional, Public Affairs
and Management at
(202) 566-2391.
Agreed-Upon Procedures on EPA's Fiscal Year
2010 First Quarter Financial Statements
What We Found
We performed certain agreed-upon procedures on the Agency's First Quarter
FY 2010 Financial Statements. We compared the statements with EPA's
crosswalk, recomputed them for mathematical accuracy, and compared them with
balances separately generated by us. We identified differences between our
computed general ledger account adjusted trial balance and the Agency's
adjusted trial balance.
Below are the results of our performance of the agreed-upon procedures:
•	The FY 10 Cumulative Results of Operations Beginning of Period does not
agree with the FY09 Cumulative Results of Operations Ending Balance.
•	The Agency's Combined Statement of Budgetary Resources and Statement
of Custodial Activity agreed with the amounts on the Agency's support.
•	The Agency identified 14 fluctuations in its financial statements and
submitted them to OMB.
•	Two items should be updated based on our comparison of EPA's Financial
Statement Preparation Guide for the 2010 Financial Statements to OMB
Circular A-136.
•	We identified discrepancies in the Statement of Custodial Activity,
Statement of Net Position, and Statement of Budgetary Resources in our
review of Treasury's financial statement crosswalk to the Agency's financial
statement crosswalk.
•	We identified four differences in our comparison of Treasury's Closing
Instructions to EPA's Closing Instructions.
•	We found that EPA's Treasury Symbols were in compliance with Statement
of Federal Financial Accounting Standards No. 27.
•	We found that the on-top entry to record child agency balances agreed with
the support.
•	We found three items were not reversed based on the Agency's designation
of the type of adjustment. There were differences between the FY 2010
Report of General Ledger Balance by Treasury Symbol beginning balances
and FY 2009 ending balances.
•	The elimination and consolidation entries appear reasonable and complete.
To view the full report,
click on the following link:
www.epa.aov/oia/reports/2010/
20100519-10-2-0131.pdf
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.

-------
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, D.C. 20460
OFFICE OF
INSPECTOR GENERAL
May 19, 2010
MEMORANDUM
SUBJECT: Agreed-Upon Procedures on EPA's Fiscal Year 2010
First Quarter Financial Statements
Report No. 10-2-0131
FROM: Paul C. Curtis
Director, Financial Statement Audits
TO:
Barbara Bennett
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 2010 First Quarter Financial
Statements. This report is provided to you solely to assist you in evaluating whether the Fiscal
Year 2010 First Quarter Financial Statements were compiled in a manner 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.margaret@epa.gov.

-------
Agreed-Upon Procedures on EPA's Fiscal Year 2010
First Quarter Financial Statements
10-2-0131
Table of C
Purpose		1
Background		1
Scope and Methodology		1
Results of Agreed-Upon Procedures		2
Agency Comments and OIG Analysis		11
Status of Recommendations and Potential Monetary Benefits		12
Appendices
A OIG-ldentified Significant Fluctuations between 12/31/09 and 12/31/08	 13
B Distribution	 16

-------
10-2-0131
Purpose
The Office of Inspector General (OIG) 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) 2010 First Quarter
Financial Statements were compiled in a manner consistent 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, Financial Reporting
Requirements, 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 2010 First 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 March 3 to May 19, 2010. We based our
procedures on EPA's First Quarter Financial Statements and supporting schedules, general
ledger (GL) balances, and manual on-top adjustments.
1

-------
10-2-0131
Results of Agreed-Upon Procedures
Procedure 1
Obtain EPA's First 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), 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 First 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 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 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 noted the following differences:
Table 1: Comparison of OIG's Adjusted Trial Balance and EPA's Adjusted Trial Balance
G/L
Agency
Ending Balance

OIG
Ending Balance
Difference
1011
$26,049,119,160.07

$26,047,291,438.27
$1,827,721.80
13P1
$389,213,628.50

$238,361,248.50
$150,852,380.00
2327
($112,383,188.66)

($5,030,701.02)
($107,352,487.64)
3100
($14,536,346,617.65)

($14,535,201,568.73)
($1,145,048.92)
3310
($6,869,289,256.31)

($6,825,106,691.07)
($44,182,565.24)
4201
$14,972,175,707.85

$14,961,143,155.99
$11,032,551.86
4450
($381,837,862.86)

($381,794,235.78)
($43,627.08)
4801
($13,917,298,608.77)

($13,906,269,303.87)
($11,029,304.90)
4802
($307,660,534.63)

($307,684,899.73)
$24,365.10
4803
$768,404,745.36

$768,389,576.48
$15,168.88
Source: OIG analysis of EPA data.
2

-------
10-2-0131
The Agency stated that the differences for GL accounts 1011, 13P1, 2327, 3100, 3310,
4201, 4450, 4801, 4802, and 4803 are due to: (1) FY 2009 on-top adjustments that should
have been reversed in FY 2010, and (2) an FY 2009 restatement adjustment that the
Agency incorrectly reversed in FY 2010. The Agency will correct GL accounts 1011,
13P1, 2327, 3100, 3310, 4201, 4450, 4801, 4802, and 4803 in the Second Quarter
Financial Statements.
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, and identified differences in the:
(1) Balance Sheet due to the differences noted in step l.a; and
(2) Statement of Changes in Net Position because the FY 2010 Net Position
Beginning of Period does not agree with the FY 2009 Fourth Quarter Balance
Sheet Cumulative Results of Operations.
The Agency will correct GL accounts noted in step la, and the Statement of Changes in
Net Position in the Second Quarter Financial Statements.
Procedure 1.c
Enter the FY 2010 and 2009 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 2010 GL balances, Agency support, and on-top adjustment entries
into an Excel spreadsheet. We prepared and compared the OIG 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 2010 First Quarter agreed with our amounts for this
statement except for immaterial rounding differences.
3

-------
10-2-0131
Combined Statement of Budgetary Resources:
The Agency's balances for the FY 2010 First Quarter agreed with our amounts for this
statement except for immaterial rounding differences.
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 from the RGLTS for Earmarked Funds, 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. We identified
one difference in the FY 2010 Net Position Beginning of Period balance that does not
agree with the FY 2009 Fourth Quarter Balance Sheet Cumulative Results of Operations.
The Agency will correct the FY 2010 Net Position Beginning of Period balance to agree
with the FY 2009 Fourth Quarter Balance Sheet Cumulative Results of Operations.
Procedure 1.e
Compare the Agency's First Quarter Consolidated Statement of Net Cost by Goal to the
consolidated totals from the Consolidated Statement of Net Cost by Goal.
Results of Procedure 1.e
We compared the Agency's First 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.
Procedure 1.f
Mathematically verify the accuracy of the Consolidated All Other column on the Consolidated
Statement of Changes in Net Position in the Agency's Financial Statements.
Results of Procedure 1.f
We mathematically verified the accuracy of the All Other column in the Agency's
Financial Statements on the Consolidated Statement of Changes in Net Position.
4

-------
10-2-0131
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 fluctuations are detailed in Appendix A.
OMB A-136 states: Agencies are required to submit an analysis of significant variances
along with the quarter's three financial statements. 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.
We did not audit the Agency's analysis of significant variances provided to OMB and
place no assurance on them. We did compare variances identified by the Agency to
significant fluctuations identified by us and noted where they agreed or disagreed. The
Agency identified 14 fluctuations and submitted them to OMB as follows:
Balance Sheet
(1)	The Agency reported to OMB that the increase of $12 billion in Fund Balance
With Treasury is primarily due to the cash that carried forward to the FY 2010
Beginning Balance from the State & Tribal Assistance Grant program contained
in the American Recovery and Reinvestment Act of 2009 (Recovery Act).1
(2)	The Agency reported to OMB that the increase of $12 billion in Unexpended
Appropriations is primarily due to the brought-forward balance of the State &
Tribal Assistance Grant program contained in the Recovery Act.1
(3)	The Agency reported to OMB that the increase of $110 million in Non-Federal
Accounts Payable and Accrued Liabilities is primarily due to an increase in
Grantee Liability Accruals as a result of a higher statistical sample rate used to
generate the FY 2009 Fourth Quarter compared to the rate used in the FY 2008
Fourth Quarter. The calculated rate period is from the Prior Year Fourth Quarter
to the Current Year Third Quarter.1
(4)	The Agency reported to OMB that the increase of $115 million in
Intragovernmental Other is primarily due to the FY 2009 Fourth Quarter Advance
of $90 million to the Indian Health Service that carried forward to the beginning
balance in FY 2010.1
1 Change identified by the OIG in Appendix A.
5

-------
10-2-0131
(5)	The Agency reported to OMB that the increase of $135 million in Non-Federal
Accounts Receivable, Net is primarily due to the FY 2009 Second Quarter write-
offs of two receivables for Raytech Industries that carried forward to the
beginning balance in FY 2010.1&2
(6)	The Agency reported to OMB that the increase of $496 million in Cashout
Advances, Superfund, is primarily due to the ASARCO Bankruptcy Settlement
for the Superfund program that occurred in the FY 2010 First Quarter.1&3
Statement of Net Cost:
(1)	The Agency reported to OMB that the increase of $407 million Gross Costs is
primarily due to expenses incurred in the FY 2010 First Quarter in the State &
Tribal Assistance Grant program contained in the Recovery Act.1
(2)	The Agency reported to OMB that the increase of $110 million in Earned
Revenue is primarily due to $82 million in interest collected from the U.S.
Department of Justice related to ASARCO Bankruptcy Settlement for the
Superfund program that occurred in the FY 2010 First Quarter.1
Statement of Budgetary Resources
(1)	The Agency reported to OMB that the $7 billion increase in Appropriations is
primarily due to the longer Continuing Resolution period in FY 2009 versus FY
2010. The Continuing Resolution period was 157 days in FY 2009 compared to
31 days in FY 2010. In the FY 2010 First Quarter, EPA received its full enacted
budget.1
(2)	The Agency reported to OMB that the $619 million increase in Total Obligations
is primarily due to increases in the (a) payment to the Superfund Trust Fund, and
(b) obligations in the State & Tribal Assistant Grant program as a result of the
longer term Continuing Resolution period in FY 2009 versus FY 2010. The
Continuing Resolution period was 157 days in FY 2009 compared to 31 days in
FY 2010. In the FY 2010 First Quarter, EPA received its full enacted budget.1
(3)	The Agency reported to OMB that the $7 billion increase in Appropriations
Unobligated Balance is primarily due to the longer Continuing Resolution period
in FY 2009 versus FY 2010. The Continuing Resolution period was 157 days in
FY 2009 compared to 31 days in FY 2010. In the FY 2010 First Quarter, EPA
received its full enacted budget.1
2	OIG Comment: The Agency stated the increase in the Non-Federal Accounts Receivable was based on the write-
off of Raytech Industries receivables. Based on our analysis of significant fluctuations, the increase is the result of
EPA incorrectly reversing a 2009 on-top entry. The Agency will correct the reversing entry in the FY 2010 Second
Quarter.
3	The actual fluctuation is approximately $401 million.
6

-------
10-2-0131
(4)	The Agency reported to OMB that the $224 million increase in Collected
Spending Authority from Offsetting Collections is primarily due to the ASARCO
Bankruptcy Settlement for the Superfund program that occurred in the FY 2010
First Quarter.1
(5)	The Agency reported to OMB that the $319 million decrease in Change in
Unfilled Customer Orders-Advances Received is primarily due to the ASARCO
Bankruptcy Settlement for the Superfund program that occurred in the FY 2010
First Quarter.1
(6)	The Agency reported to OMB that the $404 million decrease in Anticipated for
Rest of Year, Without Advances is primarily due to the ASARCO Bankruptcy
Settlement for the Superfund program that occurred in the FY 2010 First Quarter.1
Procedure 2
Obtain and compare EPA's Financial Statement Preparation Guide for the FY 2010 Financial
Statements to OMB Circular A-136 for compliance and note any differences.
Results of Procedure 2
We obtained and compared EPA's Financial Statement Preparation Guide to OMB
Circular A-136. We found that the Agency's Financial Statement Preparation Guide
should be updated for the following items (these items have no impact on compliance
with A-136). The Agency stated it would update the Financial Statement Preparation
Guide.
Table 2: Issues Identified Upon Review of Financial Statement Preparation Guide
Page
No.
Section
Item
Comment
2
Attachment H
IFMS FY 2009 Year-
End Account Closing
Table (YACT)
The table of contents refers to the FY
2009 YACT table; however, the guide
only includes an "Example" of the YACT
table consisting of only one page.
27-58
Attachments A-E
Financial Statement
Crosswalk
The Crosswalks in the Financial
Statement Preparation Guide refer to FY
2009 and not 2010.
Source: OIG analysis of EPA data and OMB requirements.
Procedure 3
Obtain and compare EPA's Financial Statement Crosswalk to Treasury's USSGL Crosswalk and
note any differences.
Results of Procedure 3
We obtained and compared EPA's Financial Statement Crosswalk to Treasury's USSGL
Crosswalk and identified the following discrepancies:
7

-------
10-2-0131
Statement of Custodial Activity:
• Account 1359 is listed on line 2 of EPA's Crosswalk; however, Treasury does not
list the account. The Agency stated it would make the change in the FY 2010
Second Quarter reporting.
Statement of Net Position:
• Account 5325 is listed on line 8 of EPA's Crosswalk; however, Treasury does not
list the account. The Agency stated it would make the change in the FY 2010
Second Quarter reporting.
Statement of Budgetary Resources:
• Account 4396 is listed on line 5 of Treasury's Crosswalk; however, EPA does not
have it listed on its crosswalk. The account is used in the Financial Data
Warehouse and the Financial Statements. The Agency stated it would make the
change in the FY 2010 Second Quarter reporting.
Procedure 4
Obtain and compare EPA's FY 2009 post-closing instructions to EPA's Year-End Account
Closing Table (YACT) and Treasury's Closing Instructions and note any differences.
Results of Procedure 4
We obtained and compared EPA's FY 2009 post-closing instructions to EPA's YACT
and Treasury's Closing Instructions. We identified four differences between the criteria
Treasury lists for closing accounts and what the Agency listed in the YACT table. The
table below compares EPA's post-closing instructions to EPA's YACT table and
Treasury's Closing Instructions.
Table 3: Comparison of EPA's Post-Closing Instructions to EPA's YACT Table and Treasury's Closing
Instructions

Per EPA's YACT

Table EPA's GL

Per Treasury EPA's

Account Should

Per Treasury EPA's

GL Account Should

EPA GL

Close to

GL Account Should

Close to

Account

(Expired)

(Unexpired)

Close to (Expired)

(Unexpired)

4042
4650
4450
4450
4450
4047
4650
4450
4450
4450
4070
4650
4450
4450
4450
4310
4650
4450
4690, 4450
4650, 4450
Source: YACT table and Year-End Closing Instructions provided by Reporting and Analysis Staff.
The Agency stated: "For accounts 4042, 4047, 4070, and 4310, the close on the YACT
table for EXPIRED Treasury Symbols is account 4650 since this is the appropriate
closing account for expired treasury symbols. Perhaps, Treasury listed account 4450
8

-------
10-2-0131
because these are anticipated accounts which are associated with current year authority.
In reality, this matter is of no consequence because the YACT table cannot be invoked
since these anticipated accounts cannot roll over to the new fiscal year as they must have
a zero balance by the end of the Fourth Quarter.
Procedure 5
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 5
We obtained and compared EPA's identified Earmarked Treasury Symbols to SFFAS 27.
We found that EPA's Treasury Symbols are 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; Contributed Funds; and Leaking Underground Storage Tank Trust Fund.
Procedure 6
Obtain and compare FY 2010 and 2009 Child Trial Balances to the Child on-top entry.
Results of Procedure 6
We obtained and compared EPA's FY 2010 and 2009 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.
Procedure 7
Compare the FY 2010 reversals to the FY 2009 on-top adjustments and EPA's Closing
Instructions to assess whether EPA followed its guidance.
Results of Procedure 7
We compared the FY 2010 reversals to the FY 2009 on-top adjustments and to EPA's
closing instructions to assess whether EPA followed the Financial Statement Preparation
Guide for entering the reversals of last year's on-top adjustments. We identified three
items that were not reversed but should have been reversed based on the Agency's
designation of the adjustments. In FY 2009, entry numbers 109, 110, and 111 were
identified as "B. Normal Statement Adj." types and therefore should have been reversed.
The Agency's FY 2010 OCFO Financial Statement Preparation Guide states:
9

-------
10-2-0131
b. Review the remaining On-top adjustments to determine if they should be reversed.
Normally the following entry types are reversed:
A.	Corrections
B.	Normal Statement Adjustments
C.	Statement only Adj.
The Agency did not comply with the FY 2010 OCFO Financial Statement Preparation
Guide. We brought the entries to the Agency's attention to inquire why entries 109, 110,
and 111 were not reversed. The Agency stated, "These entries offset each other on
cancelled treasury symbols and were not entered in IFMS in the FY 2009 Fourth Quarter.
The Office of Technology Solutions will need to work with OCFO to clear them out in
IFMS. Once they are corrected in IFMS, OCFO will reverse them as On-top adjustments
in FY 2010."
Table 4: Comparison of the FY 2010 Reversals to the FY 2009 On-Top Adjustments to
EPA's Closing Instructions
Entry No.
Type
Fund
Description
109
B. Normal Statement Adj.
107
Cancellation of 681/20107
110
B. Normal Statement Adj.
108
Cancellation of 681/20108
111
B. Normal Statement Adj.
112
Cancellation of 681/20112
Source: FY 2009 On-Top Adjustments provided by Reporting and Analysis Staff.
Procedure 8
Compare the RGLTS FY 2010 beginning balances to the FY 2009 ending balances and note any
differences.
Results of Procedure 8
We compared the RGLTS FY 2010 beginning balances to FY 2009 ending balances and
found that the following balances did not agree:
10

-------
10-2-0131
Table 5: Comparison of EPA's FY 2009 Post-Closing Instructions to EPA's YACT Table and
Treasury's Closing Instructions

General Ledger
Account


EPA OIG Balance
2009 Post Closing
Balance


2010 Adjusted
Agency Beginning
Balance


Difference

1340
$0.00

$7,572,295.09
($7,572,295.09)

1341
$0.00
$0.08
($0.08)

1342
$7,572,295.17
$0.00
$7,572,295.17
1343
$54,162,365.75
$0.00
$54,162,365.75
1347
$0.00
($53,114,876.86)
$53,114,876.86
1349
($53,114,876.86)
$0.00
($53,114,876.86)
134S
$0.00
$54,162,365.75
($54,162,365.75)
1360
$0.00
$11,280,692.83
($11,280,692.83)
1361
$111,942.25
$0.26
$111,941.99
1362
$11,280,693.09
$0.00
$11,280,693.09
1367
$0.00
($10,175,193.39)
$10,175,193.39
1369
($10,175,193.39)
$0.00
($10,175,193.39
1370
$0.00
$111,912.25
($111,912.25)
1371
$0.00
$30.00
($30.00)
Source: OIG analysis of EPA data.
The Agency stated: "To accommodate the above USSGL changes, there are new
accounts and new posting models as well as changes to account descriptions. In addition,
accounts and posting models were deleted. The differences between the 2009 ending and
2010 beginning balances were the result of changes to the YACT. The year-end balances
in EPA's FY 2009 'old' accounts will be transferred to the FY 2010 'new' accounts at
FY 2009 year-end close."
Procedure 9
Review elimination and consolidation entries prepared by the Reporting and Analysis Staff for
reasonableness and completeness.
Results of Procedure 9
We reviewed elimination and consolidation entries prepared by the Reporting and
Analysis Staff for reasonableness and completeness. The elimination and consolidation
entries appeared reasonable and complete.
Agency Comments and OIG Analysis
We held a discussion with the Agency on May 10, 2010, to discuss the findings in our report,
obtain comments or concerns, and finalize our report. We addressed the Agency's concerns and
it concurred with our findings. We did not report any recommendations.
11

-------
10-2-0131
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
12

-------
10-2-0131
Appendix A
OIG-ldentified Significant Fluctuations
between 12/31/09 and 12/31/08
(Dollars in Thousands)
Consolidated Balance Sheet:
ASSETS




FY 2010
FY 2009

Difference
%
Fund Balance With Treasury4


$22,755,923
$10,570,668

$12,185,255
115.27%
Investments5



$7,935,049
$6,445,659

$1,489,390
23.11%
Other4




$216,014
$101,465

$114,549
112.90%










Accounts
Receivable, Net4


$452,312
$317,560

$134,752
42.43%




















LIABILITIES








Accounts Payable & Accrued Liabilities4

$807,008
$696,505

$110,503
15.87%
Cashout Advances, Superfund4


$667,245
$266,220

$401,025
150.64%




















NET POSITION








Unexpended Appropriations - Other
Funds4

$21,424,167
$9,688,917

$11,735,250
121.12%
Cumulative Results of Operations - Earmarked
Funds5
$8,087,251
$6,492,674

$1,594,577
24.56%
Cumulative Results of Operations - Other Funds5
$669,375
$557,030

$112,345
20.17%
Source: FY 2010 Financial Statements provided by EPA.
Consolidated Statement of Net Cost:
COSTS




FY 2010
FY 2009

Difference
%
Gross Costs4


$2,527,518
$2,122,627

$404,891
19.07%
Earned Revenue4



$229,231
$119,110

$110,121
92.45%
Source: FY 2010 Financial Statements provided by EPA.
4	OIG-identified significant fluctuations also identified by the Agency.
5	OIG-identified significant fluctuations not identified by EPA in the 1st Quarter Analysis reported to OMB.
13

-------
10-2-0131
Consolidated Statement of Changes in Net Position:






FY 2010
FY 2009









Consolidated
Consolidated









Total
Total

Difference
%
CUMULATIVE RESULTS OF OPERATIONS:





Budgetary Financing Sources:






Appropriations Used5


$3,252,593
$2,148,943

$1,103,650
51.36%
Transfers In/Out5


$818,379
$8,399

$809,980
9643.77%








BUDGETARY FINANCING SOURCES:






Appropriations Received5


$10,180,413
$3,163,149

$7,017,264
221.84%
Appropriations Used5


($3,252,593)
($2,148,943)

($1,103,650)
51.36%
Source: FY 2010 Financial Statements provided by EPA.
Consolidated Statement of Changes in Net Position - All Other Funds:







FY 2010
FY 2009










Consolidated
Consolidated










All Other
All Other










Funds
Funds

Difference
%
CUMULATIVE RESULTS OF OPERATIONS:





Budgetary Financing Sources:






Appropriations Used5


$3,252,593
$2,148,943

$1,103,650
51.36%
Trust Fund Appropriations5


($1,280,570)
($539,345)

($741,225)
137.43%
Other Financing Sources (Non-Exchange)





Net Cost of Operations5

($1,952,628)
($1,652,273)

($300,355)
18.18%







BUDGETARY FINANCING SOURCES:






Appropriations Received5


$10,180,413
$3,163,149

$7,017,264
221.84%
Appropriations Used5


($3,252,593)
($2,148,943)

($1,103,650)
51.36%
Source: FY 2010 Financial Statements provided by EPA.
Consolidated Statement of Changes in Net Position - Earmarked Funds:






FY 2010
Consolidated
Earmarked
Funds

FY 2009
Consolidated
Earmarked
Funds


Difference
%
CUMULATIVE RESULTS OF OPERATIONS:





Budgetary Financing Sources:






Transfers In/Out5


$781,570
($7,603)

$789,173
-10379.76%
Trust Fund Appropriations5


$1,280,570
$539,345

$741,225
137.43%
Source: FY 2010 Financial Statements provided by EPA.
14

-------
10-2-0131
Combined Statement of Budgetary Resources:
BUDGETARY RESOURCES:


FY 2010
FY 2009

Difference
%
Appropriation4


$10,255,076
$3,203,173

$7,051,903
220.15%
Collected4



$447,668
$128,317

$319,351
248.88%
Advance Received4



$288,161
$64,181

$223,980
348.98%
Anticipated for Rest of Year, Without Advances4
$267,267
$671,669

($404,402)
-60.21%
Nonexpenditure Transfers, Net, Anticipated and
Actual
$1,494,789
$571,918

$922,871
161.36%









STATUS OF BUDGETARY RESOURCES:





Obligations Incurred:







Direct5

$2,582,016
$1,895,215

$686,801
36.24%
Reimbursable5


$66,844
$135,051

($68,207)
-50.50%
Apportioned4


$11,328,280
$4,517,012

$6,811,268
150.79%
Unobligated Balances Not Available5

$2,521,111
$1,671,262

$849,849
50.85%









CHANGE IN OBLIGATED BALANCE:






Unpaid Obligations, Brought Forward, October 15
$15,788,390
$9,368,094

$6,420,296
68.53%
Less: Uncollected Customer Payments from
Federal Sources, Brought Forward, October 15
($573,824)
($666,246)

$92,422
-13.87%
Obligations Incurred, Net4

$2,648,860
$2,030,266

$618,594
30.47%
Less: Gross Outlays

($4,032,861)
($2,783,520)

($1,249,341)
44.88%
Change in Uncollected Customer Payments from
Federal Sources5
($25,049)
$17,632

($42,681)
-242.07%






Unpaid Obligations5
$14,356,684
$8,579,713

$5,776,971
67.33%






NET OUTLAYS:





Net Outlays:





Gross Outlays5
$4,032,861
$2,783,520

$1,249,341
44.88%
Less: Offsetting Collections5
($745,340)
($203,277)

($542,063)
266.66%
Less: Distributed Offsetting Receipts5
($1,273,041)
($540,820)

($732,221)
135.39%
Source: FY 2010 Financial Statements provided by EPA.
15

-------
10-2-0131
Appendix B
Distribution
Chief Financial Officer
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
16

-------