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U.S. ENVIRONMENTAL PROTECTION AGENCY
OFFICE OF INSPECTOR GENERAL
Operating efficiently and effectively
EPA's Fiscal Years 2018 and
2017 Hazardous Waste
Electronic Manifest System
Fund Financial Statements
August 10, 2020
Report No. 20-F-0244
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Report Contributors:
Paul Curtis
Mairim Lopez
Robert Hairston
Abbreviations
e-Manifest Act Hazardous Waste Electronic Manifest Establishment Act
EPA
FMFIA
FY
OIG
SFFAS
U.S. Environmental Protection Agency
Federal Managers Financial Integrity Act of 1982
Fiscal Year
Office of Inspector General
Statement of Federal Financial Accounting Standards
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U.S. Environmental Protection Agency
Office of Inspector General
At a Glance
20-F-0244
August 10, 2020
Why We Did This Project
We performed this audit pursuant to
the Hazardous Waste Electronic
Manifest Establishment Act. The Act
requires the U.S. Environmental
Protection Agency to prepare and
the Office of Inspector General to
audit each year the accompanying
financial statements of the EPA's
Hazardous Waste Electronic
Manifest System fund, known as the
e-Manifest fund. Our primary
objectives were to determine
whether:
The financial statements were
fairly stated in all material
respects.
The EPA's internal controls over
financial reporting were in place.
EPA management complied with
applicable laws and regulations.
The e-Manifest system has been
designed to track off-site shipments
of hazardous waste from a
generator's site to the site of the
receipt, and disposition of the
hazardous waste. The system was
launched on June 30, 2018.
This report addresses the following:
Operating efficiently and effectively.
This report relates to a key EPA
management challenge:
Fulfilling mandated reporting
requirements.
Address inquiries to our public affairs
office at (202) 566-2391 or
OIG WEBCOMMENTS@epa.gov.
EPA's Fiscal Years 2018 and 2017 Hazardous
Waste Electronic Manifest System Fund
Financial Statements
EPA Receives an Unmodified Opinion
We rendered an unmodified opinion on the
EPA's fiscal years 2018 and 2017 e-Manifest
fund financial statements, meaning that the
statements were fairly presented and free of
material misstatement.
Significant Deficiencies Noted
We noted the following significant deficiencies:
The EPA improperly recorded e-Manifest receivables and earned
revenue.
The EPA misclassified e-Manifest user fee revenue.
The EPA agreed to update the accounting posting models for receivables
and earned revenue. The estimated completion date for the improper
recordings corrective actions is September 30, 2021. The EPA corrected the
misclassified fees during the audit. We originally reported on these findings
in OIG Report No. 20-F-0033. EPA's Fiscal Years 2019 and 2018
(Restated) Consolidated Financial Statements, issued November 19, 2019.
Compliance with Applicable Laws and Regulations
We did not identify any instances of noncompliance that would result in a
material misstatement to the audited financial statements.
OIG Analysis of e-Manifest Fees
We found that the EPA did not properly calculate e-Manifest fees and
underbilled users by approximately $260,128.
We recommended that the EPA correct the current fee model to properly
calculate e-Manifest fees. We also recommended that the EPA determine
the effect of underbilling on the fund's ability to recover full cost. The EPA
agreed with our recommendations related to e-Manifest fees and completed
corrective actions.
We found the fund's
financial statements to be
fairly presented and free of
material misstatement.
List of OIG reports.
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*1 PRO"*4- OFFICE OF
INSPECTOR GENERAL
August 10, 2020
MEMORANDUM
SUBJECT: EPA's Fiscal Years 2018 and 2017 Hazardous Waste Electronic Manifest System Fund
Financial Statements
Report No. 20-F-0244
FROM: Paul C. Curtis, Director
Financial Directorate
Office of Audit and Evaluation
TO: David Bloom, Deputy Chief Financial Officer
Peter Wright, Assistant Administrator
Office of Land and Emergency Management
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 of this audit was OA&E-FY19-0120. This
report contains findings that describes the problems the OIG identified and the corrective actions the OIG
recommended. Final determination on matters in this report will be made by EPA managers in accordance
with established audit resolution procedures.
The Office of the Chief Financial Officer and the Office of Land and Emergency Management are
responsible for the recommendations presented in this report.
In accordance with EPA Manual 2750, the Office of the Chief Financial Officer provided acceptable
corrective actions and milestones in response to OIG recommendations. Those recommendations are
resolved. The Office of Land and Emergency Management completed acceptable corrective actions in
response to the OIG recommendations. No final response to this report is required. However, if you submit
a response, it will be posted on the OIG's website, along with our memorandum commenting on your
response. Your response should be provided as an Adobe PDF file that complies with the accessibility
requirements of Section 508 of the Rehabilitation Act of 1973, as amended. The final response should not
contain data that you do not want to be released to the public; if your response contains such data, you
should identify the data for redaction or removal along with corresponding justification.
We will post this report to our website at www.epa.gov/oig.
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EPA's Fiscal Years 2018 and 2017
Hazardous Waste Electronic Manifest
System Fund Financial Statements
20-F-0244
Table of C
Inspector General's Report on EPA's
Fiscal Years 2018 and 2017 Hazardous Waste Electronic
Manifest System Fund Financial Statements
Report on the Financial Statements 1
Management's Discussion and Analysis 2
Report on Internal Control over Financial Reporting 2
Tests of Compliance with Laws, Regulations, Contracts, and Grant
Agreements 4
Prior Audit Coverage 6
Agency Comments and OIG Assessment 6
Attachments
1. Significant Deficiencies 8
EPA Improperly Recorded e-Manifest Receivables and Earned Revenue 9
EPA Misclassified e-Manifest User Fee Revenue 11
2. Compliance with Laws and Regulations 12
EPA Did Not Properly Calculate e-Manifest Fees 13
3. Status of Recommendations and Potential Monetary Benefits 15
Appendices
A For the Fiscal Years Ending September 30, 2018 and 2017
Hazardous Waste Electronic Manifest System (e-Manifest) Fund
Financial Statements
B Agency Response to Draft Report
C Distribution
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Inspector General's Report on EPA's Fiscal Years
2018 and 2017 Hazardous Waste Electronic
Manifest System Fund Financial Statements
The Administrator
U.S. Environmental Protection Agency
Report on the Financial Statements
We have audited the accompanying financial statements of the U.S. Environmental
Protection Agency's Hazardous Waste Electronic Manifest System fund, known as
the e-Manifest 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; the statement of budgetary resources for the years then
ended; and related notes to the financial statements.
Management's Responsibilities 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 control 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
our audit. We conducted our 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 misstatement.
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 judgment, including the assessment of the risks of
material misstatement 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 in order to
design audit procedures that are appropriate in the circumstances. An audit also
includes evaluating the appropriateness of accounting policies used and the
20-F-0244
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reasonableness 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.
Opinion
In our opinion, the financial statements referred to above, including the
accompanying notes, present fairly, in all material respects, the assets, liabilities,
net position, net cost, changes in net position, and budgetary resources of the
Hazardous Waste Electronic Manifest System fund as of and for the years ended
September 30, 2018 and 2017, in conformity with accounting principles generally
accepted in the United States of America.
Management's Discussion and Analysis
Our audit was conducted for the purpose of forming an opinion on the financial
statements as a whole. The Management's Discussion and Analysis are presented
for the purposes of additional analysis and are not a required part of the basic
financial statements. Such information is the responsibility of management.
We obtained information from the fund's management about its methods for
preparing the Management's Discussion and Analysis, and we reviewed this
information for consistency with the financial statements.
We did not identify any material inconsistencies between the information
presented in the fund's financial statements and the information presented in the
Management's Discussion and Analysis.
Our audit was not designed to express an opinion and, accordingly, we do not
express an opinion on the fund's Management's Discussion and Analysis.
Report on Internal Control over Financial Reporting
Opinion on Internal Control. In planning and performing our audit, we
considered the fund's internal control 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 audit procedures for the
purpose of expressing an opinion on the financial statements and to comply with
the Office of Management and Budget's audit guidance not to express an opinion
on internal control. Accordingly, we do not express an opinion on internal control
over financial reporting. We limited our internal control testing to those controls
necessary to achieve the objectives described in Office of Management and
Budget Bulletin 19-03. We did not test all internal controls relevant to operating
20-F-0244
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objectives as broadly defined by the Federal Managers Financial Integrity Act of
1982, known as FMFIA.
Material Weaknesses and Significant Deficiencies. Our consideration of the
internal control over financial reporting would not necessarily disclose all matters
in the internal control over financial reporting that might be significant
deficiencies. A deficiency in internal control over financial reporting 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 over financial reporting, 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 over financial reporting that is less severe than a material
weakness yet important enough to merit attention by those charged with
governance.
Because of inherent limitations in internal control, misstatements, losses, or
noncompliance may nevertheless occur and not be detected.
We did not note any matters that we consider to be material weaknesses.
However, we noted two significant deficiencies impacting the e-Manifest fund.
These issues are summarized below and detailed in Attachment 1.
Significant Deficiencies
EPA Improperly Recorded e-Manifest Receivables and
Earned Revenue
We found that the EPA did not properly record $2.1 million of e-Manifest
receivables during fiscal year 2018. Federal accounting standards require
federal entities to recognize accounts receivable when a legal claim exists, as
well as to recognize exchange revenue when goods or services are provided to
the public or another government entity at a price. The EPA did not establish
proper accounting models to record account receivables for e-Manifest fees,
interest, and penalties, or to recognize earned revenue from federal versus
nonfederal sources at the transaction level. As a result, the EPA is
noncompliant with accounting standards because account receivables and
earned revenue are understated during the year. Consequently, interest,
penalties, and federal revenue could be misstated in the financial statements.
EPA Misclassified e-Manifest User Fee Revenue
We found that the EPA misclassified $2.1 million of user fees for services
provided in FY 2018 as nonexchange revenue instead of exchange revenue.
Federal accounting standards require the recognition of exchange revenue
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when a government entity provides goods or services to the public or another
government entity and when each party sacrifices value and receives value in
return. However, the Agency recognized $2.1 million as nonexchange revenue
because it had not updated its accounting posting model. As a result, there was
a high risk that the EPA would continue to misclassify user fee revenues and
potentially overstate its net cost of operations. Further, such overstatement
inaccurately presented the EPA's ability to sustain program operation costs
through user fee revenues.
Comparison of EPA's FMFIA Report with Our Evaluation of
Internal Control
Office of Management and Budget Bulletin 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 FMFIA report that
relate to the financial statements, and identify material weaknesses disclosed by
the audit that were not reported in the Agency's FMFIA report. The Agency's
FMFIA report is prepared and submitted at the consolidated level, of which the
e-Manifest 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 and the fund. As part of obtaining
reasonable assurance about whether the fund's financial statements are free of
material misstatement, we performed tests of the Agency's 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 fund's financial
statements.
Opinion on Compliance with Laws, Regulations, Contracts, and
Grant Agreements
Providing an opinion on compliance with certain provisions of laws, regulations,
contracts, and grant agreements was not an objective of our audit and,
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.
Specific Audit Requirements of the Hazardous Waste Electronic
Manifest Establishment Act
The Hazardous Waste Electronic Manifest Establishment Act, known as the
e-Manifest Act, 42 U.S.C. ง 6939g, requires the OIGto include an analysis,
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which is included below, of (1) the fees collected and disbursed, (2) the
reasonableness of the fee structure in place as of the date of the audit to meet
current and projected costs of the system, (3) the level of use of the system by
users, and (4) the success to date of the system in operating on a self-sustaining
basis and improving the efficiency of tracking waste shipments and transmitting
waste shipment data.
Fees Collected and Disbursed. The EPA began collecting e-Manifest user fees in
August 2018. As required by the e-Manifest Act, the EPA deposited fee
collections into the e-Manifest fund. The total collections ($436,703) received in
FY 2018 did not exceed the amount appropriated to the e-Manifest fund in the
Consolidated Appropriations Act, 2018. The EPA is required under the
Consolidated Appropriations Act to reduce the appropriation from the general
fund by the amount of offsetting collections. The Agency reimbursed the
U.S. Department of the Treasury for e-Manifest fee collections totaling $436,703
in FY 2018.
Reasonableness of the Fee Structure to Meet Current and Projected Costs.
The EPA established fees for each manifest type (fully electronic, hybrid, data
plus image upload, scanned image upload, and mailed paper) based on a fee
model that focuses on the marginal labor cost of processing each manifest type.
Additionally, the EPA made a management decision to adjust the raw output of
this formula to distribute the costs across manifest types. Table 1 lists the fees per
manifest effective during FY 2018.
Table 1: FY 2018 fees by manifest type
Manifest type
Fee per manifest
Fully electronic and hybrid
$5.00
Data plus image upload
6.50
Scanned image upload
10.00
Mailed paper
15.00
Source: FY 2018 fee rates published on EPA's website.
We found that the EPA did not properly calculate e-Manifest fees and underbilled
users by approximately $260,128 in FY 2018. The e-Manifest Act requires the
EPA to establish a fee structure that allows the Agency to recover the full cost of
providing system-related services. Due to a mathematical error in the fee
structure, the EPA underestimated the fee for data plus image upload manifests.
By not establishing appropriate fees, the EPA risks its ability to recover the full
cost as required by the e-Manifest Act. Further details on this finding are in
Attachment 2.
Level of Use of the System. The EPA launched the e-Manifest system on
June 30, 2018. The system had 9,117 registered users as of September 30, 2018.
Of these registered users, 423 submitted a total of 280,762 manifests through the
e-Manifest system in FY 2018 (Table 2). In FY 2018, the EPA received funding
adequate to establish a paper processing center for mailed paper manifests but not
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adequate to process such manifests. The EPA received 26,448 mailed paper
manifests in FY 2018. These were processed during the third quarter of FY 2019,
following the EPA's receipt of additional e-Manifest funds appropriated in the
Consolidated Appropriations Act, 2019.
Table 2: Total manifests submitted through the e-Manifest system in FY 2018
Manifest type
Total manifests
Percentage
Fully electronic and hybrid
910
0.33%
Data plus image upload
203,225
72.38
Scanned image upload
76,627
27.29
Total
280,762
100.00%
Source: OIG analysis.
The EPA estimated that it would receive approximately three million manifests
annually.
Success to Date of the System in Operating on a Self-Sustaining Basis. The
system had not been in place for enough time to determine whether it is operating
on a self-sustaining basis as of FY 2018. However, we found that the EPA
underestimated the fee for data plus image upload manifests. This could impact
the EPA's ability to operate the e-Manifest system on a self-sustaining basis.
Additional details on this finding are in Attachment 2.
Prior Audit Coverage
In our prior year e-Manifest financial statement audit reportEPA's Fiscal Years
2017 and 2016 Hazardous Waste Electronic Manifest System Fund Financial
Statements (Report No. 19-F-0086I issued March 29, 2019we reported two
significant deficiencies:
1. The EPA overstated the e-Manifest fund's accrued liabilities.
2. The EPA did not provide adequate support for an e-Manifest contract
payment.
The Agency agreed with our audit findings and recommendations and completed
all corrective actions related to prior year deficiencies.
Agency Comments and OIG Assessment
The Agency agreed with our recommendations, as discussed below. The
estimated completion date for the corrective actions related to the improper
recording of receivables and earned revenues is September 30, 2021. The EPA
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corrected the misclassified fees during the audit and completed all corrective
actions related to the e-Manifest fee calculation error.
Paul C. Curtis
Certified Public Accountant
Director, Financial Audits
Office of Inspector General
U.S. Environmental Protection Agency
July 24, 2020
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Attachment 1
Significant Deficiencies
Table of Contents
1 EPA Improperly Recorded e-Manifest Receivables and Earned Revenue 9
2 EPA Misclassified e-Manifest User Fee Revenue 11
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1 - EPA Improperly Recorded e-Manifest Receivables
and Earned Revenue
We found that the EPA did not properly record $2.1 million of e-Manifest receivables during
FY 2018. Federal accounting standards require federal entities to recognize accounts receivable
when a legal claim exists, as well as to recognize exchange revenue when goods or services are
provided to the public or another government entity at a price. The EPA did not establish proper
accounting models to record account receivables for e-Manifest fees, interest, and penalties or to
recognize earned revenue from federal versus nonfederal sources at the transaction level. As a
result, the EPA is noncompliant with accounting standards because account receivables and
earned revenue are understated during the year. Consequently, interest, penalties, and federal
revenue could be misstated in the financial statements.
Statement of Federal Financial Accounting Standards 1, known as SFFAS 1, Accounting for
Selected Assets and Liabilities, states:
A receivable should be recognized when a federal entity establishes a claim to
cash or other assets against other entities, either based on legal provisions, such as
a payment due date, ... or goods or services provided. ... [Further,] [Receivables
from federal entities are intragovernmental receivables, and should be reported
separately from receivables from nonfederal entities.
In addition:
Interest [receivable] also should be recognized on outstanding accounts receivable
and other U.S. government claims against persons and entities in accordance with
provisions in 31 U.S.C. 3717, Interest and Penalty Claims. ... Interest receivable
from federal entities should be accounted for and reported separately from interest
receivable from the public.
SFFAS 7, Accounting for Revenue and Other Financing Sources and Concepts for Reconciling
Budgetary and Financial Accounting, states:
Exchange revenue and gains are inflows of resources to a Government entity that
the entity has earned. They arise from exchange transactions, which occur when
each party to the transaction sacrifices value and receives value in return. That is,
exchange revenue arises when a Government entity provides something of value
to the public or another Government entity at a price.
The EPA did not create appropriate accounting models to record $2.1 million e-Manifest
accounts receivable or to recognize revenue when earned. Collection transactions reduced
accounts receivable in general ledger account 13100044, "Billed Emanifest [sic] Receipts
Public." However, no prior receivable had been recorded for these transactions. In addition, the
EPA recorded accounts receivable corresponding to FY 2018 bills for the months of July,
August, and September 2018 by posting one overall standard voucher in October 2018.
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The Office of Land and Emergency Management compiles invoice data based on the electronic
manifest documents received from waste handlers and transmits invoices from the e-Manifest
system to individual facilities. However, the e-Manifest system is not integrated with Compass
Financials; therefore, no financial data for the invoiced amounts or earned revenue for services
provided are recorded in Compass at the transaction level. Facilities receive the invoices and
remit payments, which are recorded in Compass. The EPA recorded a standard voucher in
October 2018 to record receivables and recognize revenue, but this standard voucher was
recorded solely for financial reporting purposes, not to record individual receivable and earned
revenue transactions. Although the standard voucher, combined with the collection entries,
offsets the receivables and recognizes earned revenue, the receivables and earned revenue are
still not recorded at the transaction level. The EPA is, therefore, not compliant with federal
accounting standards during the year, and accounts are misstated until the standard voucher is
posted.
We also found that the EPA did not have a posting model in place to properly record e-Manifest
penalties, interest, and federal revenue. According to the Office of Land and Emergency
Management, interest and penalties are assessed automatically within the e-Manifest system and
are combined with the amount of fees due in invoices. The EPA does not differentiate between
federal and nonfederal sources in its reporting of earned revenue. According to information
provided by Office of Land and Emergency Management, e-Manifest collections are from both
federal and nonfederal vendors. However, this activity was not accounted for separately in the
Agency's accounting system, which misstates earned revenue.
By not creating proper accounting models for e-Manifest transactions to record accounts
receivable and earned revenue at the transaction level, accounts receivable and earned revenue
were understated during the year, and interest, penalties, and federal revenue could be misstated
in the financial statements. Furthermore, the EPA is not in compliance with either SFFAS 1,
which requires the recognition of a receivable when a legal claim exists, or SFFAS 7, which
requires revenue recognition when the goods or services were provided.
We reported on these findings in OIG Report No. 20-F-0033, EPA's Fiscal Years 2019 and 2018
(Restated) Consolidated Financial Statements, dated November 19, 2019. We recommended that
the chief financial officer:
Update the accounting models to properly record collections and not reduce an account
receivable account.
Establish accounting models to properly record e-Manifest account receivables and
recognize earned revenue at the transaction level.
Establish accounting models to properly classify and record interest, fines, penalties, and
fees.
Establish accounting models to properly record receivables, collections, and earned
revenue from federal versus nonfederal vendors.
These recommendations address our FY 2018 e-Manifest financial statements audit findings. The
EPA agreed with our recommendations and provided acceptable corrective actions. The
completion date for corrective actions is September 30, 2021.
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2 - EPA Misclassified e-Manifest User Fee Revenue
We found that the EPA misclassified $2.1 million of user fees for services provided in FY 2018
as nonexchange revenue instead of exchange revenue. Federal accounting standards require the
recognition of exchange revenue when a government entity provides goods or services to the
public or another government entity and when each party sacrifices value and receives value in
return. However, the Agency recognized $2.1 million as nonexchange revenue because it had not
updated its accounting posting model. As a result, there was a high risk that the EPA would
continue to misclassify user fee revenues and would potentially overstate its net cost of
operations. Further, such overstatement inaccurately presented the EPA's ability to sustain
program operation costs through user fee revenues.
SFFAS 7, Accounting for Revenue and Other Financing Sources and Concepts for Reconciling
Budgetary and Financial Accounting, states:
Exchange revenue and gains are inflows of resources to a Government entity that
the entity has earned. They arise from exchange transactions, which occur when
each party to the transaction sacrifices value and receives value in return. That is,
exchange revenue arises when a Government entity provides something of value
to the public or another Government entity at a price.
This standard also states that "[ejxchange revenue includes most user charges other than taxes."
In addition, according to the e-Manifest Act, the EPA is required to recover the full cost of
providing system-related services through established user fees.
In FY 2018, the EPA misclassified a voucher with a total of $2.1 million of e-Manifest user fees
for services provided as nonexchange revenue instead of exchange revenue. According to EPA
staff, they initially believed that the revenue from the e-Manifest user fees was not equal in value
to the services the Agency provided to the public. Upon further discussions with EPA staff, they
agreed that the fees should have been recorded as exchange revenue. In response to our finding,
the staff said that they will change their accounting posting model to correctly record the
e-Manifest user fees as exchange revenue.
If the Agency did not change the accounting posting model, the EPA could have continued to
misclassify user fee revenues and potentially overstate its net cost of operations. Further, such
overstatement would inaccurately present the EPA's ability to sustain the program's operations
and recover its full cost through user fee revenues, as required by the e-Manifest Act.
Based on our finding, the EPA updated the voucher posting model to record e-Manifest user fees
as exchange revenue. In addition, the EPA reclassified the $2.1 million as exchange revenue.
Since the Agency has already acted on our finding, we make no recommendations.
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Attachment 2
Compliance with Laws and Regulations
Table of Contents
1 EPA Did Not Properly Calculate e-Manifest Fees 13
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1 - EPA Did Not Properly Calculate e-Manifest Fees
We found that the EPA did not properly calculate e-Manifest fees and underbilled users by
approximately $260,128 in FY 2018. The e-Manifest Act requires the EPA to establish a fee
structure that allows the Agency to recover the full cost of providing system-related services.
Due to a mathematical error in the fee structure, the EPA underestimated the fee for data plus
image upload manifests. By not establishing appropriate fees, the EPA risks its ability to recover
the full cost, as required by the e-Manifest Act.
The e-Manifest Act states that the EPA may impose reasonable service fees as necessary to pay
costs incurred in developing, operating, and maintaining the system. It also requires the EPA to
determine the fee structure that is necessary to recover the full cost of providing system-related
services.
The EPA established fees for each manifest type: electronic, hybrid, data plus image upload,
scanned image upload, and mailed paper. The EPA calculated the fees using a marginal cost
differentiated fee model. This model focuses on the marginal labor cost of processing each
manifest type. The EPA also adjusts the raw output of this formula to distribute the costs across
manifest types.
We analyzed the fee structure in place during FY 2018 and found one exception. Our analysis
resulted in a lower fee, by $1.28 per manifest, for the data plus image upload manifest type,
which indicates that the EPA underbilled users by approximately $260,128. See Table 2-A for
further details.
Table 2-A: OIG's analysis of current fees based on FY 2018 total manifests
Manifest type
Current
fee
Total
manifests
Estimated
revenue using
current fee
OIG-
calculated
fee
Estimated
revenue using
OIG-calculated
fee
Difference
Data plus image
upload
$6.50
203,225
$1,320,962.50
$7.78
$1,581,090.50
($260,128.00)
Source: OIG analysis.
Due to an error in the fee calculation, the EPA underestimated the fee for data plus image upload
manifests. The established fee model is the following:
/System Setup Cost\ / 0&.M Cost\
Manifestt ^ J + ^Marginal Costi H J x (1 + Indirect Cost Factor)
In which, i = manifest type
Nt = total annual manifests
O&M Cost = Operations and Maintenance Cost
However, the EPA calculated the FY 2018 fees by applying the indirect cost factor only to the
operations and maintenance cost as illustrated below:
20-F-0244
13
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/System Setup Cost\ (0&.M Cost( 1 + Indirect Cost Factor)\
Manifest,ฆ = + Marginal Cost; +
' 1 \ Years x Nt ) 1 \ Nt J
By not establishing appropriate fees, the EPA puts its ability to recover full cost at risk and could
delay the system's likelihood to operate on a self-sustaining basis, as required by the e-Manifest
Act.
Recommendations
We recommend that the assistant administrator for Land and Emergency Management:
1. Correct the current fee model to properly calculate Hazardous Waste Electronic Manifest
fees.
2. Determine the effect of underfilling for data plus image manifests on the fund's ability to
recover full cost.
Agency Comments and OIG Assessment
The EPA agreed with our recommendations and completed all corrective actions. Appendix B
contains the Agency's response to our draft report.
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Attachment 3
Status of Recommendations and
Potential Monetary Benefits
RECOMMENDATIONS
Potential
Planned
Monetary
Rec.
Page
Completion
Benefits
No.
No.
Subject
Status1
Action Official
Date
(in $000s)
14 Correct the current fee model to properly calculate Hazardous
Waste Electronic Manifest fees.
14 Determine the effect of underbilling for data plus image
manifests on the fund's ability to recover full cost.
Assistant Administrator for 6/4/2020
Land and Emergency
Management
Assistant Administrator for 2/13/2020
Land and Emergency
Management
1 C = Corrective action completed.
R = Recommendation resolved with corrective action pending.
U = Recommendation unresolved with resolution efforts in progress.
20-F-0244
15
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Appendix A
For the Fiscal Years Ending September 30, 2018 and
2017 Hazardous Waste Electronic Manifest System
(e-Manifest) Fund Financial Statements
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For the Fiscal Years Ending September 30,2018 and 2017
Hazardous Waste Electronic Manifest System (e-Manifest) Fund
Financial Statements
C
A
W
%
\ K
Produced by the U.S. Environmental Protection Agency
Office of the Chief Financial Officer
Office of the Controller
20-F-0244
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Table of Contents
Management's Discussion and Analysis 1
Principal Financial Statements: 7
BALANCE SHEET 7
STATEMENT OF NET (:OST 8
STATEMENT OF CHANCES IN NET POSITION 9
STATEMENT OF BUM!KTARY RESOURCES 10
Notes to Financial Statements... 11
Note 1. Summary of Significant Accounting Policies 11
A. Reporting Entity 11
B. Basis of Presentation 11
C. Budgets and Budgetary Accounting 12
D. Basis of Accounting 12
E. Revenues and Other Financing Sources 12
/. Funds with the Treasury 12
II. General Property, Plant and Equipment 12
I. Liabilities 13
./. Accrued Unfunded Annual Leave 13
K. Retirement Plan 13
L. Use of Estimates 13
Note 2. Fund Balance with Treasury 14
Note 3. Other Assets 14
Note 4. Accounts Receivable, Net 14
Note 5. General Property, Plant and Equipment 15
Note 6. Other Liabilities 15
Note 7. Payroll and Benefits Payable, non-Federal 15
Note 8. Income and Expenses from Other Appropriations 16
Note 9. Reconciliation of Net Cost of Operations to Budget 17
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Management's Discussion and Analysis
Introduction
The Hazardous Waste Electronic Manifest System fund (e-Manifest) was established as a result
of the Hazardous Waste Manifest Establishment Act (Public Law 112-195, October 5, 2012).
The e-Manifest Act requires the United States Environmental Protection Agency ('EPA' or 'the
Agency'} to establish and own a hazardous waste electronic manifest program information
technology ('IT') system that will enable electronic manifesting as a means to augment or
replace the use of paper manifests for tracking hazardous waste shipments. The e-Manifest Act
requires that the e-Manifest system;
1. Meets the needs of the user community.
2. Attracts sufficient user participation and service revenues to ensure, the viability of the
system (the e-Manifest Act authorizes EPA to collect reasonable user fees).
3. Decreases the administrative burden on the user community.
Current EPA RCRA Manifest Program
The EPA Office of Land and Emergency Management (OLEM) provides policy, guidance and
direction for the Agency's emergency response and waste programs. The Office of Resource
Conservation and Recovery (ORCR) within OLEM works to protect human health and the
environment by ensuring responsible national management of hazardous and nonhazardous
waste. Working with delegated state waste programs, ORCR implements the 1976 Resource
Conservation and Recovery Act (RCRA), and ensures that the resource conservation, recovery
and waste management goals of RCRA are met. All states with the exception of Iowa and Alaska
have been delegated RCRA authority, meaning that states implement many if not all aspects of
RCRA policy.
The manifest program as implemented by EPA and the states ensures that hazardous waste
shipments are consistently tracked, and that hazardous wastes in fact arrive at permitted waste
management facilities. The manifest program is based on both RCRA and Department of
Transportation (DOT) hazardous materials law (The Hazardous Materials Transportation Act
(HMTA)). These laws together require uniformity in the content and use of the hazardous waste
manifest form.
Launched at the end of June of 2018, e-Manifest now receives about 5,000 hazardous waste
manifests a day and generates more than $ 1 million in fees each month to support the system.
EPA estimates that e-Manifest will save state and industry users, on average, $90 million
annually, once electronic manifests are widely adopted.
EPA's FY 2018 e-Manifest Financial Statements
1
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e-Manifest System Planning Activities
Discussion of the e-Manifest system itself has taken place over many years; beginning back in
the 1990's when the concept of an electronic manifest system was first taking shape. Further
activities continued over the years to envision the e-Manifest system through various stakeholder
discussions and pilots. For more information EPA's efforts prior to the passage of the e-Manifest
Act in 2012, please visit hnp://www.epa.gov/osw/hazard/transportation/manifest/e-man-
past meetings.htm.
In early calendar year (CY) 2013, EPA conducted various stakeholder requirements meetings to
reengage with the user community. The purpose of these meetings was to build on past e-
Manifest work to determine high level system functional requirements. Following this, a system
alternatives analysis was conducted to look at various system implementation approaches, all
assuming (among other things) a full electronic mobile workflow. The alternatives analysis
recommended that EPA leverage cloud hosting for initial system development and system
launch, and for long term operations and maintenance (O&M). consider re-negotiating the cloud
contract model or potentially migrate to an on premise hosting model to keep costs down.
Also as a part of the planning work, a system Concept of Operations (CONOPS) was completed
that, at a high level, outlines both what the current manifest process entails for highway and rail
transporters as well as what the future system may look like. The CONOPS document provides a
process and conceptual model for how data will flow from stakeholder to stakeholder and
through the system during the manifest workflow.
The technical architecture for e-Manifest was completed in FY 2015. This architecture includes
the specific components and data flows as currently defined to illustrate a technical solution for
the e-Manifest system. In doing so, it defines the specific boundaries of the e-Manifest system
and how the different parts of the system work together to provide the required services based on
current requirements. For example, areas such as system Cross-Media Electronic Reporting
Regulation (CROMERRj integration, paper manifest processing and manifest data quality
assurance (QA) were analyzed as a part of this effort.
As a part of this technical architecture planning work, EPA conducted targeted meetings with
states and industry separately in order to further flesh out current processes as well as
expectations for the above areas. The meetings were more detailed than previous discussions,
and provided critical information to inform system requirements.
The technical architecture work completed in FY 2015 serves as baseline for the current manifest
program and provides very strong foundation for future system buildout. It meets user needs and
provides flexibility for future iterations of the system.
Building on FY 2015, in FY 2016 the e-Manifest program realized significant progress while
leveraging existing ORCR software applications. EPA initially conceived e-Manifest as a
standalone system and allowed the system architects to consider a broad range of approaches
EPA's FY 2018 e-Manifest Financial Statements
2
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without inherent constraints from an existing system design. However, as designs matured, it
was recognized that the e-Manifest technical solution aligned closely with RCRAInfo in terms of
end user functionality, data integration, and required technical infrastructure. These factors led to
the decision to implement e-Manifest as a unique module of RCRAInfo.
Many of the new capabilities of e-Manifest can be implemented in RCRAInfo using the existing
modular architecture present in RCRAInfo. In addition, some of the more innovative design
aspects of e-Manifest could also be incorporated into RCRAInfo, improving both systems
Furthermore, by leveraging e-Manifest and RCRAInfo modules, opportunities for reuse of
existing technology investments were present, reducing the burden of e-Manifest implementation
These factors led to the decision to develop e-Manifest and RCRAInfo modules as distinct, but
interrelated entities which will meet the current and future needs of Industry. Government and
Public
Acquisition Strategy Change
The EPA's system development work is focused on ensuring user needs are met from day one of
national system deployment. To accomplish this, the agency is conducting user-centered design
and development, and is utilizing agile software development methodologies. This approach
embodies continuous improvement through pilots and testing, using iterative processes, and
continued regular engagement with users and stakeholders throughout the process to provide on-
going opportunities for input.
Instead of locking in on one source, the new e-Manifest Program services contract (multi-vendor
indefinite delivery/indefinite quantity (IDIQ)) will utilize a variety of vehicles for the following
segments of the system:
Project management including integration services.
Paper manifest processing.
User help desk and User training.
Quality assurance for manifest data amongst industry, states, and the EPA.
Services to calculate, collect, and support reporting of user fees for paper and electronic
manifest processing.
Support for stakeholder communication, including outreach and meeting support.
Research has shown that using this type of lean start-up methodology, with agile techniques,
lowers the cost of system development by addressing uncertainties pomptly, and by ensuring
that the work being completed brings real value to users.
EPA's FY 2018 e-Manifest Financial Statements
3
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The agency will continue to work closely with users, adding more functionality in an incremental
manner and providing continuous improvement for the lifetime of the system. By taking this
iterative approach the EPA will refine remaining uncertainties from our architecture planning
work in the most cost effective manner.
e-Manifest System Development
As a follow-on to the completed technical and conceptual architecture, e-Manifest embarked on a
pilot to create initial system functionality with the General Service Administrations (GSA) 18F
consulting shop. 18F provided the IT expertise to create the foundation of e-Manifest and also
provided agile project management support. Specifically, 18F:
Introduced user-centered design/development, which engages industry/state users in the
early phases of development.
Created the development platform and hosting environment for e-Manifest.
Level aged open source technologies (Trello, GitHub, biweekly online meetings
showcasing recent system updates) to allow users and other stakeholders to follow and
participate in system development.
As part of the agile development focus, in September 2015, EPA, in partnership with 18F,
completed an initial system demonstration. This focused on a key aspect of the system: the
transaction at the end of the chain-of-custody when the hazardous waste arrives at the designated
waste management facility, and that facility signs the electronic manifest to verify that all the
hazardous waste types and quantilies were received. Getting the system to properly electronically
execute this all-important manifest transaction was a critical first step. EPA worked with several
industry users to complete this initial system functionality.
Although not as straightforward as standard government IT development projects, this course
correction from traditional lifecycle system development ("waterfall") methodology to agile will
ultimately deliver a better system in a quicker, more value-added method going forward.
Starting with this initial system, EPA has been adding more functionality in an incremental
manner. Research has shown that using this type of lean start-up methodology with agile
techniques lowers the cost of current and future system development by addressing uncertainties
sooner rather than later. Therefore, EPA has been conducting user-centered design and
development, starting with the small scale demonstration phase. Open source code and project
engages industry and state users in the early phases of de velopment, creation of development
platform, and hosting environment. EPA will expand engagement efforts to all users over time
(e.g., states with no systems, large and small generators, etc.).
The agile software development methodology embodies continuous improvement through
iterative development and delivers software in sprints. Agile embraces change, continuous and
regular feedback and improvement, value-driven delivery, full-team collaboration, and learning
EPA's FY 2018 e-Manifest Financial Statements
4
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through discovery. Agile techniques cannot eliminate the challenges intrinsic to high-discovery
software development but by focusing on continuous delivery of incremental value and shorter
feedback cycles, they expose challenges as early as possible to allow for immediate correction.
EPA has adopted the lean start-up product development strategies with agile, user-centered
software design/development methodologies and as implemented the following:
Two-week sprint intervals.
Using modular development practices, relying heavily on available off-the-shelf software
modules, by building individual working pieces of the system and integrating them into
the whole.
Addressing uncertainties that arose during the initial architecture planning work, and
engaging early with users and stakeholders.
Bringing down the cost of current and future development by addressing risk upfront and
ensuring that the work being completed brings actual value to stakeholders and users.
Continuously improving, using iterative processes, and engaging regularly with users and
stakeholders throughout the life of the program.
EPA has made every effort to involve industry users in the development process to build the
strongest possible system. During the system development phase, the e-Manifest team is
working alongside industry, states, and other stakeholders, by focusing on issues raised and
addressing the issues, including the following:
How the national e-Manifest system will connect with state and industry systems.
ป User testing of the web application.
Addressing state data access needs.
The e-Manifest team communicates regularly with states, industry, and related stakeholders
about ongoing developments (i.e., continued release and testing of system iterations), updates on
e-Manifest related rules (i.e., user fees for the e-Manifest system and amendments to manifest
regulations), and the national launch of the e-Manifest system.
EPA's FY 2018 e-Manifest Financial Statements
5
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Our primary methods of communication include the following:
The e-Manifest website
User testing
Conferences
Site visits
Regional implementation working groups
Listserv (general interest and development-focused)
Public webinars
Blog posts
GitHub - code repository and project management
FACA Meetings
Meetings with stakeholders.
e-Manifest will follow this path of milestones to system launch and beyond in 2018
Winter 2018 - finalize user fee rale
June 30, 2018 System Launch
Continued development, enhancements and user outreach
Summer 2019 - update user fees
EPA's FY 2018 e-Manifest Financial Statements
6
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Principal Financial Statements:
Environmental Protection Agency
e-Miiiiilest
BALANCE SHEET
As of September 30, 2018 and 2017
(Dollars in Thousands)
Assets:
Intragovernmental:
Fund Balance with Treasury (Note 2)
Other (Note 3)
Total Intragovernmental
Accounts Receivable, Net (Note 4)
Property, Plant & Equipment, Net (Note 5)
Total Assets
Liabilities:
Intragovernmental:
Accounts Payable and Accrued Liabilities
Other (Note 6)
Total Intragovernmental
Accounts Payable & Accrued Liabilities
Payroll & Benefits Payable (Note 7)
Total Liabilities
Net Position:
Unexpended Appropriations
Cumulative Results of Operations
Total Net Position
Total Liabilities and Net Position
FY 2018 FY 2017
$ 4,294 $ 5,430
39_ 5
4.333 5,435
1,781
6,389 3,088
$ 12,503 $ 8,523
$ 72 $ 6
10_ 20
82 26
393 187
117 142
$ 592 $ 355
3 851 5 14-S
8 060 U)^
11,911 8,168
$ 12,503 $ 8,523
The accompanying footnotes are an integral part of these financial statements.
EPA's FY 2018 e-Manifest Financial Statements
7
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Environmental Protection Agency
e-Manifest
STATEMENT OF NET COST
For the Fiscal Years Ended September 30,2018 and 2017
(Dollars in Thousands)
FY 2018 FY 2017
Costs:
Gross costs $ 1,799 $ 1,030
Expenses from Other Appropriations (Note 8) 281 214
Less:
Earned revenue 2,192
Net cost of operations $ (112) $ 1,244
The accompanying footnotes are an integral part of these financial statements.
EPA's FY 2018 e-Manifest Financial Statements
8
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Environmental Protection Agency
e-Manifest
STATEMENT OF CHANGES IN NET POSITION
For the Fiscal Years Ended September 30,2018 and 2017
(Dollars in Thousands)
FY 2018 FY 2017
Cumulative Results of Operations:
Net Position - Beginning of Period
$ 3,025 S
876
Budgetary Financing Sources:
Appropriations Used
4,529
3,121
Income from Other Appropriations (Note 8)
281
214
Total Budgetary Financing Sources
4,810
3,335
Other Financing Sources (Non-Exchange):
Imputed Financing Sources
113
58
Total Other Financing Sources
113
58
Net Cost of Operations
112
(1,244)
Net Change
5,035
2,149
Cumulative Results of Operations
$ 8,060 $
3,025
Unexpended Appropriations:
Net Position - Beginning of Period
$ 5,143 $
5,086
Budgetary Financing Sources:
Appropriations Received
3,237
3,178
Appropriations Used
(4,529)
(3,121)
Total Budgetary Financing Sources
(1,292)
57
Total Unexpended Appropriations
3 8M
m
Net Position
$ 11 )\\ $
8 1C8
The accompanying footnotes are an integral part of these financial statements.
EPA's FY 2018 e-Manifest Financial Statements
9
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Environmental Protection Agency
e-Manifest
STATEMENT OF BUDGETARY RESOURCES
For the Fiscal Years Ended September 30,2018 and 2017
(Dollars In Thousands)
FY 2018 FY 2017
BUDGETARY RESOURCES
Unobligated Balance From Prior Yeai Budget Authority, Net (discretionary and mandatory)
Appropriations t'discretioaarv and mandator/1
Spending Authority From Offsetting C ollection '.discretionary and mandatory)
s
2.53?
3.23T
43"
s
4,562
irs
Total Budgetary Resources
$
6.213
s
7,740
MEMORANDUM (noii-add) entries
Net Adjustments to Unobligated Balance Brought Forward, Oct. 1
264
597
STATUS OF BUDGETARY RESOURCES
New Obligations and Upward adjusmtents (total)
Unobligated Balance. End of Year:
Apportioned- Unexpired Accounts
Unapportioned. Unexpired accounts
Expired Unobligated Balance. End of Year
s
5,379
b59
)4>
l~9
i
5,465
2,250
25
Unobligated Balance. End of Year itotall
834
2.275
Total Status of Budgetary Resource?
$
6 J13
$
7,740
OUTLAY^. NET
Outlavs Net (totals ^discretionaiv and mandator}')
Distributed Offsetting Receipts
$
4,785
$
2,978
Agencv Outlavs Net t disci etionary and mandatory)
$
CO
"it
$
2,978
The accompanying footnotes are an integral part of these financial statements.
EPA's FY 2018 e-Manifest Financial Statements
10
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Environmental Protection Agency
e-Manifest
Notes to Financial Statements
For the Fiscal Years Ended 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 Hazardous Waste Electronic Manifest System Fund (e-Manifest) was authorized by the
establishment of the Hazardous Waste Electronic Manifest System Act. The act mandates that
the Agency, within three years, establish a hazardous waste electronic manifest system that can
be accessed by any user. The act authorized the administrator to impose users' fees to pay the
costs incurred in developing, operating, maintaining, and upgrading the system, including any
costs incurred in collecting and processing data from paper manifests submitted to the system
after the date on which the system enters operations.
The e-Manifest fund charges some administrative costs directly to the fund, and charges the
remainder of the indirect administrative costs to Agency-wide appropriations. These amounts are
included as "Income from Other Appropriations" on the Statement of Changes in Net Position
and as "Expenses from Other Appropriations" on the Statement of Net Cost.
B. Basis of Presentation
These financial statements have been prepared to report the financial position and results of
operations of the EPA for the e-Manifest Fund in accordance with the Chief Financial Officers
Act of 1990 and the Government Management Reform Act of 1994. 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 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 fiscal year 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.
EPA's FY 2018 e-Manifest Financial Statements
11
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C. Budgets and Budgetary Accounting
Funding of the e-Manifest fund will be provided by fees collected from users to offset costs
incurred by the EPA in carrying out these programs. Since inception on October 5, 2012 through
fiscal year 2017, e-Manifest was funded from appropriated funds. EPA did not collect fees from
inception of the fund through fiscal year 2017. For fiscal year 2018 the e-Manifest fund was
funded through appropriations and offsetting collections.
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 issues
standards 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.
E. Revenues and Other Financing Sources
In fiscal year 2017, EPA did not collect any user fees for the e-Manifest fund, as the Hazardous
Waste Electronic Manifest System was still in development. For fiscal year 2018 EPA received
funding from fees collected and recognized revenues from collections to the extent that expenses
were incurred during the fiscal year.
F. Funds with the Treasury
The e-Manifest fund deposits receipts and processes disbursements through its operating account
maintained at the U.S. Department of Treasury.
//. General Property, Plant and Equipment
General property, plant and equipment for e-Manifest consists of software in development. Internal
use software includes purchased commercial off-the-shelf software, contractor developed
software and software that was internally developed by Agency employees. In fiscal year 2017,
EPA reviewed its capitalization threshold levels for PP&E. The Agency performed an analysis of
the values of software assets and increased capitalization threshold from $250 thousand to $5
million to better align with major software acquisition investments. The $5 million threshold will
be applied prospectively to software acquisitions and modifications/enhancements placed into
service after September 30, 2016. Software assets placed into service prior to October 1, 2016
were capitalized at the $250 thousand threshold. Internal use software is capitalized at full cost
(direct and indirect) and amortized using the straight-line method over its useful life, not
EPA's FY 2018 e-Manifest Financial Statements
12
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exceeding five years. The Hazardous Waste Electronic Manifest System was placed into
production August 23, 2018.
I. Liabilities
Liabilities represent the amount of monies or other resources that are more likely than not 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.
/. Accrued Unfunded Annual Leave
Annual, sick and other leave is expensed as taken during the fiscal year. Annual leave earned but
not taken at 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."
Sick leave earned but not taken is not accrued as a liability. It is expensed as it is used.
K. Retirement Plan
There are two primary retirement systems for Federal employees. Employees hired prior to
January I, 1987, may participate in the Civil Service Retirement System (CSRS). On January 1,
1984, the Federal Employees Retirement System (FERS) went into effect, pursuant to Public
Law 99-335. Most employees hired after December 31,1983, are automatically covered by
FERS and Social Security. Employees hired prior to January 1. 1984, elected to either join FERS
and Social Security or remain in CSRS. A primary feature of FERS is that it offers a savings plan
to which the Agency automatically contributes one percent of pay and matches any employee
contributions up to an additional four percent of pay. The Agency also contributes the
employer's matching share for Social Security.
With the issuance of SFFAS No. 5, "Accounting for Liabilities of the Federal Government,"
accounting and reporting standards were established for liabilities relating to the federal
employee benefit programs (Retirement. Health Benefits, and Life Insurance). SFFAS No. 5
requires that the employing agencies recognize the cost of pensions and othei retirement benefits
during their employees' active years of service. SFFAS No. 5 requires that the Office of
Personnel Management (OPM), as administrator of the CSRS and FERS, the Federal Employees
Health Benefits Program, and the Federal Employees Group Life Insurance Program, provide
federal agencies with the actuarial cost factors to compute the liability for each program.
L. 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
EPA's FY 2018 e-Manifest Financial Statements
13
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revenue and expenses during the reporting period. Actual results may differ from those
estimates.
FY 2018 FY 2017
Note 2. Fund Balance with Treasury
Entity Assets
Note 3, Other Assets
Other Intragovernmental Assets:
Advance to Working Capital Fund
Note 4. Accounts Receivable, Net
The Accounts Receivable as of September 30, 2018, and September 30, 2017, consist of the
followine:
4,294 $
5,430
FY 2018
FY 2017
39 i
t 5
FY 2018 FY 2017
Intragovernmental:
Accounts & Interest Receivable
Less: Allowance for Uncollectables
Total $ - $
Non-Federal:
Unbilled Accounts Receivable $
Accounts & Interest Receivable 1,781
Less: Allowance for Uncollectables
Total $ 1,781
EPA's FY 2018 e-Manifest Financial Statements
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Note 5. General Property, Plant and Equipment
The e-Manifest system was moved into production August 23, 2018 with a total capitalized cost
of $6,907,
FY 2018
Accumulated Net Book
Value
Acquisition
Value
Software
(production.)
Software
(development)
Total
6,907
6,907
Depreciation
(518)
(518) $
6,389
6,389
Acquisition
Value
FY 2017
Accumulated
Depreciation
Net Book
Value
3,088
3,088
3,088
3,088
Note 6. Other Liabilities
The Payroll and Benefits Payable, non-Federal, are presented on a separate line of the Balance
Sheet and in a separate footnote (see Note 7).
FY 2018 FY 2017
Other Intragovernmental liabilities;
Covered by But etar} Resources Employer
Contribution- P iyn.ll $ 10 $ 20
Note 7. Payroll and Benefits Payable, non-Federal
FY 2018 FY 2017
Covered by Budgetary Resources;
Accrued Payroll Payable
$ 34 $
77
Thrift Savings Plan Benefits payable
-
2
Total
34
79
Not Covered by Budgetary Resources;
Unfunded Annual Leave Liability
$ 83 $
63
Total $ 117 $ 142
EPA's FY 2018 e-Manifest Financial Statements
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Note 8. 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.
For fiscal years 2018 and 2017 the indirect rate was 15.60% and 20.79% respectively. As
illustrated below, there is no impact on e-Manifest's Statement of Changes in Net Position.
FY 2018 FY 2017
Income from Other Appropriations
$
281 $
214
Expenses from Other Appropriations
(281)
(214)
Net Effect
$
- $
-
EPA's FY 2018 e-Manifest Financial Statements
16
20-F-0244
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Note 9. Reconciliation of Net C ost of Operations to Budget
FY 2018
FY 2017
.3-
; 2SI'
!5S
281
RESOURCES USED TO FRANCE ACIIVITIES:
Budgetary Resources Obligated
Obligations Incurred S
Less: Spending Authority from Offsetting Collections and Recoveries
Obligations. Net of Offsetting Colecttons
Other Resources
ImputedFinsmtina Sources
Income from Other Appropriations
Net Other Resources Used to Finance Activities
Total Resources Used To Finance Activities %
RESOURCES USED TO FINANCE ITEMS
HOT PART OF THE XET COST OF OPERATIONS:
Change in Budgetary Resources ObUg at e d %
Resources that fund Pnor Periods Expenses
Resources that Finance Asset Acquistion O i>52
Total Re sources Used to Finance Items Not Part of the Net Cost of Operations I3J>12,
Total Resources Used to Finance the Net Cost of'Operations S_
+39
20
1,625
5
iSeS
Jo
21-
5,1ซ
(871)
(3,088)
(3,95f)
1181
FY 2018
COMPONENTS OF THE NET COST OF OPERATIONS THAT mi
NOT REQUIRE OR GENERATE RESOURCES IN THE CURRENT PERIOD:
Components Requiring or Generating Resources in Future Penods.
Increase in Annual L save Liability
Increase in Public Exchange Revenue Receivables
Total Components of Net Cost of Operations that Require or
Generate Resources in Future Periods
,'63,
a
FY 2017
63
63
Components Not Requiring Generating Resources:
Depreciation .and Amortization
Total Components of Net Cost that AViH Not Require or Generate Resources
Total Components of Net Cost of Operations That Will Not Require or
Generate Resources in the Current Period
318
518
(1,737)
63
Set Con of Operations
(112)
1244
E PA1' s FY 2018 e-M anifest Finarci al Statements
17
20-F-0244
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Appendix B
PHCrt1
Agency Response to Draft Report
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, D.C. 20460
]L -2020
OFFICE OF
LAND AND EMERGENCY
MANAGEMENT
MEMORANDUM
SUBJECT: Response to Office of Inspector General Draft Report No. OA&E-FY 19-0120
"EPA's Fiscal Years 2018 and 2017 Hazardous Waste Electronic Manifest System
Fund Financial Statements," dated April 22, 2020
Digitally signed by PETER
FROM: Peter C. Wright WRIGHT
Assistant Administrator
WRIGHT
Date: 2020.05.21
17:40:41 -04'00'
TO: Paul C. Curtis, Director
Financial Directorate
Office of Audit and Evaluation
Office of Inspector General
Thank you for the opportunity to respond to the issues and recommendations in the draft report.
The following is a summary of the U.S. Environmental Protection Agency's overall position
along with its position on each of the report recommendations.
AGENCY'S OVERALL POSITION
The Office of Land and Emergency Management (OLEM) agrees with the recommended actions
in the draft report and has completed corrective actions to address the findings. These corrective
actions have been reviewed and agreed upon by the Office of the Chief Financial Officer
(OCFO).
AGENCY'S RESPONSE TO REPORT RECOMMENDATIONS
Agreements
No.
Recommendation
High-Level Intended
Corrective Action(s)
Completion Dates
1
Correct the current fee
model to properly calculate
e-Manifest fees.
1.1 Corrected e-Manifest
master user fee workbook
February 13, 2020
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2
Determine the effect of
underbilling for data plus
image manifests on the
fund's ability to recover
full cost.
2.1 Performed review of fee
implications of the published
fee formula compared to the
version used to develop the
fees
February 13, 2020
CONTACT INFORMATION
If you have any questions regarding this response, please contact Kecia Thornton, OLEM's
Audit Follow-Up Coordinator at thornton.kecia@epa.gov or (202) 566-1913 or Andrew
LeBlanc, the Agency Audit Follow-Up Coordinator at LeBlanc.Andrew@epa.gov or (202) 564-
1761.
Attachments
Fiscal Year 2018 e-ManifestFee Calculation
User Fees for the Electronic Hazardous Waste Manifest (e-Manifest) System
cc: David Bloom, OCFO
Carol Terris, OCFO
Paige Hanson, OCFO
Charlie Dankert, OCFO
Jeanne Conklin, OCFO
Barry Breen, OLEM
Steven Cook, OLEM
Nigel Simon, OLEM
Kathleen Salyer, OLEM
Dany Lavergne, OCFO
Annette Morant, OCFO
Greg Sullivan, OLEM
Sonya Sasseville, OLEM
Mimi Guernica, OLEM
David Charbonneau, OLEM
Stephen Donnelly, OLEM
Jennifer Wilbur, OLEM
David Nicholas, OLEM
Kecia Thornton, OLEM
Andrew LeBlanc, OCFO
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Appendix C
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 Land and Emergency Management
Principal Deputy Assistant Administrator for Land and Emergency Management
Deputy Assistant Administrator for Land and Emergency Management
Deputy Chief Financial Officer
Associate Chief Financial Officer
Associate Chief Financial Officer for Policy
Controller
Deputy Controller
Associate Deputy Controller
Director, Accounting and Cost Analysis Division, Office of the Chief Financial Officer
Director, Policy, Training, and Accountability Division, Office of the Controller
Branch Chief, Management, Integrity and Accountability Branch, Policy, Training, and
Accountability Division, Office of the Controller
Director, Office of Program Management, Office of Land and Emergency Management
Director, Office of Resource Conservation and Recovery, Office of Land and
Emergency Management
Associate Director, Program Implementation and Information Division, Office of Resource
Conservation and Recovery, Office of Land and Emergency Management
Branch Chief, Permits Branch, Office of Resource Conservation and Recovery, Office of Land
and Emergency Management
Branch Chief, Information Collection and Analysis Branch, Office of Resource Conservation
and Recovery, Office of Land and Emergency Management
Associate Branch Chief, Information Collection and Analysis Branch, Office of Resource
Conservation and Recovery, Office of Land and Emergency Management
Audit Follow-Up Coordinator, Office of the Administrator
Audit Follow-Up Coordinator, Office of the Chief Financial Officer
Audit Follow-Up Coordinator, Office of Land and Emergency Management
Audit Follow-Up Coordinator, Office of the Controller
Audit Follow-Up Coordinator, Office of Resource Conservation and Recovery, Office of Land
and Emergency Management
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