U.S. ENVIRONMENTAL PROTECTION AGENCY
OFFICE OF INSPECTOR GENERAL
Operating efficiently and effectively
Fiscal Years 2019 and 2018
Financial Statements for the
Pesticide Registration Fund
Report No. 20-F-0328
September 23, 2020
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Report Contributors: Paul Curtis
Demetrios Papakonstantinou
Amir Eskarous
Kevin Haas
Tanishia Heilig
Sheree James
Sabrina Jones
Ethel Lowery
Guillermo Mejia
Kevin Ross
Lynda Taylor
Philip Weihrouch
Abbreviations
EPA U.S. Environmental Protection Agency
OIG Office of Inspector General
PRIA Pesticide Registration Improvement Act
Cover Photo: Pesticides being applied. (EPA photo)
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U.S. Environmental Protection Agency
Office of Inspector General
At a Glance
20-F-0328
September 23, 2020
Why We Did This Project
The Pesticide Registration
Improvement Act requires that
the U.S. Environmental
Protection Agency's Office of
Inspector General perform an
annual audit of the financial
statements for the Pesticide
Registration Fund, which is
also known as the PRIA Fund.
To expedite the registration of
certain pesticides, Congress
authorized the EPA to assess
and collect pesticide
registration fees. The fees
collected are deposited into the
PRIA Fund. The Agency is
required to prepare financial
statements that present
financial information about the
fund.
PRIA also requires that
decision-time review periods be
established for pesticide
registration actions and that the
OIG perform an analysis of the
Agency's compliance with
those review periods.
This report addresses the
following:
• Operating efficiently and
effectively.
This report relates to a top EPA
management challenge:
• Fulfilling mandated reporting
requirements.
Address inquiries to our public
affairs office at (202) 566-2391 or
OIG WEBCOMMENTS@epa.gov.
List of OIG reports.
Fiscal Years 2019 and 2018 Financial
Statements for the Pesticide Registration Fund
EPA Receives an Unmodified Opinion
We rendered an unmodified opinion on the
Pesticide Registration Fund financial statements
for fiscal years 2019 and 2018, meaning they
were fairly presented and free of material
misstatement.
We found the EPA's PRIA
Fund financial statements to
be fairly presented and free
of material misstatements.
Internal Controls Material Weakness—Financial Statement
Preparation
We noted a material weakness in internal control regarding the preparation
process for the financial statements, which we initially reported in OIG Report
No. 20-F-0033, EPA's Fiscal Years 2019 and 2018 (Restated) Consolidated
Financial Statements, issued November 19, 2019. We are rereporting this
material weakness for the PRIA Fund financial statements.
We found multiple instances where the Agency had misstatements of its
adjustments and financial statements. The Office of Management and Budget
requires that information in the financial statements be presented in accordance
with generally accepted accounting principles. Agency personnel initially failed to
make the appropriate adjustments to the financial statements, believing their
accounting was accurate. Failure to properly record accounting adjustments and
exercise due diligence in the preparation of the Agency's financial statements
compromises the accuracy of the financial statements and the reliance on them
to be free of material misstatements. These errors were corrected when we
brought them to the attention of management.
Compliance with Applicable Laws and Regulations, Contracts, and
Grant Agreements
We did not identify any instances of noncompliance that would result in a material
misstatement to the audited financial statements. In addition, the Agency was in
substantial compliance with the statutory decision-time review periods.
Recommendations and Planned Agency Corrective Action
We recommend that the chief financial officer improve the management review of
financial statements prior to providing them to OIG auditors, so that we receive
timely and accurate financial statements, as well as accurate and reliable
supporting documentation for adjustments and corrections to the financial
statements. The Agency agreed with our recommendations and has provided an
estimated time frame for completion.
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*1 PRO"*4- OFFICE OF
INSPECTOR GENERAL
September 23, 2020
MEMORANDUM
SUBJECT: Fiscal Years 2019 and 2018 Financial Statements for the Pesticide Registration Fund
Report No. 20-F-0328
FROM: Paul C. Curtis, Director
Financial Directorate
Office of Audit
TO: Alexandra Dapolito Dunn, Assistant Administrator
Office of Chemical Safety and Pollution Prevention
David Bloom, Deputy Chief Financial Officer
This is our report on the subject audit conducted by the Office of Inspector General of the
U.S. Environmental Protection Agency. The project number for this audit was OA&E-FY20-0113. 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 is responsible for the recommendations presented in this report.
In accordance with EPA Manual 2750, the Office of the Chief Financial Officer completed acceptable
corrective actions in response to OIG recommendations. All recommendations are resolved, and no final
response to this report is required. However, if you submit a response, it will be posted on the OIG's
website, along with our memorandum commenting on your response. Your response should be provided
as an Adobe PDF file that complies with the accessibility requirements of Section 508 of the Rehabilitation
Act of 1973, as amended. The final response should not contain data that you do not want to be released
to the public; if your response contains such data, you should identify the data for redaction or removal
along with corresponding justification.
We will post this report to our website at www.epa.gov/oig.
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Fiscal Years 2019 and 2018
Financial Statements for the
Pesticide Registration Fund
20-F-0328
Table of C
Inspector General's Report on the
Fiscal Years 2019 and 2018 Financial Statements
for the Pesticide Registration Fund
Report on the Financial Statements 1
Report on Internal Control over Financial Reporting 2
Tests of Compliance with Laws, Regulations, Contracts,
and Grant Agreements 3
Management's Discussion and Analysis 4
Prior Audit Coverage 4
Agency Response and OIG Assessment 4
Attachments
1 Material Weakness 5
EPA Needs to Improve Its Financial Statement Preparation Process 6
2 Status of Recommendations and Potential Monetary Benefits 8
Appendices
A Fiscal Years 2019 and 2018 Pesticide Registration Fund
Financial Statements 9
B Agency Response to Draft Report 29
C Distribution 32
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Inspector General's Report on the
Fiscal Years 2019 and 2018 Financial Statements
for the Pesticide Registration Fund
The Administrator
U.S. Environmental Protection Agency
Report on the Financial Statements
We have audited the accompanying financial statements of the Pesticide
Registration Fund, also known as the Pesticide Registration Improvement Act, or
PRIA, Fund. These statements comprise the balance sheets as of September 30,
2019, and September 30, 2018; related statements of net cost and changes in net
position; statement of budgetary resources for the years then ended; and related
notes to the financial statements.
Management's Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these
financial statements in accordance with accounting principles generally accepted
in the United States. 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
reasonableness of significant accounting estimates made by management, as well
as evaluating the overall presentation of the financial statements.
20-F-0328
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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, 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 Pesticide Registration
Fund as of and for the years ended September 30, 2019 and 2018, in accordance
with accounting principles generally accepted in the United States.
Report on Internal Control over Financial Reporting
Opinion on Internal Control. In planning and performing our audit, we
considered the EPA'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 auditing procedures for the
purpose of expressing an opinion on the financial statements and to comply with
the Office of Management and Budget audit guidance, not to express an opinion
on internal control. Accordingly, we do not express an opinion on internal control
over financial reporting. 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
objectives as broadly defined by the Federal Managers' Financial Integrity Act of
1982.
Material Weakness 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 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 that is less severe than a material weakness, yet it is important
enough to merit attention by those charged with governance.
Because of inherent limitations in internal control, misstatements, losses, or
noncompliance may occur and not be detected.
20-F-0328
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Material Weakness
FINANCIAL STATEMENTS
EPA Needs to Improve Its Financial Statement Preparation Process
We found multiple instances where the Agency had misstatements of its
adjustments and financial statements. The Office of Management and Budget
requires that information in the financial statements be presented in accordance
with generally accepted accounting principles. Agency personnel initially failed to
make the appropriate adjustments to the financial statements, believing their
accounting was accurate. Failure to properly record accounting adjustments and
exercise due diligence in the preparation of the Agency's financial statements
compromises the accuracy of the financial statements and the reliance on them to
be free of material misstatement. These errors were corrected when we brought
them to the attention of management.
Comparison of EPA's Federal Managers' Financial Integrity Act
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 Federal Managers' Financial
Integrity Act report that relate to the financial statements and identify material
weaknesses disclosed by the audit that were not reported in the Agency's report.
The Agency's report is prepared and submitted at the consolidated level, of which
the PRIA Fund is a component. Accordingly, there are no findings to report at the
PRIA level.
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
a reasonable assurance as to whether the PRIA 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 PRIA Fund's
financial statements.
Opinion on Compliance with Laws, Regulations, Contracts, and
Grant Agreements
The objective of our audit, including our tests of compliance with applicable laws,
regulations, contracts, and grant agreements, was not to provide an opinion on
compliance with such provisions. Accordingly, we do not express such an
20-F-0328
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opinion. We did not identify any instances of noncompliance that would result in
a material misstatement to the audited financial statements.
In addition, the PRIA Fund was in substantial compliance with the statutory
decision-review periods.
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 PRIA 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 PRIA 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 PRIA Fund's Management's Discussion and Analysis.
During a previous audit of the PRIA Fund's financial statements—Fiscal Years
2018 and 2017 Financial Statements for the Pesticide Registration Fund
(Report No. 20-F-01351 issued April 14, 2020—we did not identify any instances
of noncompliance that would result in a material misstatement to the audited
financial statements. We did not have any recommendations in that report.
The Agency agreed with our recommendations, as discussed in Attachment 1. The
estimated completion date for the corrective actions is December 31, 2020.
Paul C. Curtis
Certified Public Accountant
Director, Financial Directorate
Office of Audit
Office of Inspector General
U.S. Environmental Protection Agency
July 21, 2020
20-F-0328 4
Management's Discussion and Analysis
Prior Audit Coverage
Agency Response and OIG Assessment
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Attachment 1
Material Weakness
1 - EPA Needs to Improve Its Financial Statement Preparation Process 6
20-F-0328 5
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1 - EPA Needs to Improve Its Financial Statement Preparation Process
We found multiple instances where the Agency had misstatements of its adjustments and
financial statements. The Office of Management and Budget requires that information in the
financial statements be presented in accordance with generally accepted accounting principles.
Agency personnel initially failed to make the appropriate adjustments to the financial statements,
believing their accounting was accurate. Failure to properly record accounting adjustments and
exercise due diligence in the preparation of the Agency's financial statements compromises the
accuracy of the financial statements and the reliance on them to be free of material misstatement.
These errors were corrected when we brought them to the attention of management.
Office of Management and Budget Circular A-13 6, Financial Reporting Requirements,
Section II.3.1, requires that information in financial statements be presented in accordance with
generally accepted accounting principles, which include the Federal Accounting Standards
Advisory Board's Statement of Federal Financial Accounting Standards. The U.S. Government
Accountability Office's Standards for Internal Control in the Federal Government defines the
five components of internal control in government. Management should design control activities
to achieve objectives and respond to risks. The standards for control activities require appropriate
documentation of transactions and internal controls. Management is to clearly document internal
control, all transactions, and other significant events in a manner that allows the documentation
to be readily available for examination. The standards for control activities additionally require
accurate and timely recording of transactions and events.
We found multiple instances where the Agency had misstatements of its adjustments and
financial statements. Specifically, we found that the Agency misreported payroll accrual,
contract expenses, and statement of budgetary resources:
• Payroll Accrual. During our analysis of the payroll accrual adjustment, we noticed that
the accrual was incorrectly calculated. The Agency based its calculation for the accrual
using amounts from the Federal Insecticide, Fungicide, and Rodenticide Act Fund instead
of the PRIA Fund. We also noticed that the adjustment was reviewed and approved with
the incorrect information. We brought this to the Agency's attention and received an
updated adjustment with the correct amounts.
• Contract Expenses. The Agency did not prepare an adjustment for the final financial
statements in an amount of $156,311 to accrue for the PRIA portion of the contract
expenses. We brought this to the Agency's attention, and the Agency created an
adjustment for this amount and provided us with updated financial statements.
• Statement of Budgetary Resources. We found that general ledger account 48020024
(undelivered orders—obligated, prepaid/advanced accrued, nonfederal), with an ending
balance of $48,210, was not included in the net outlays line item. Based on the United
States Standard General Ledger crosswalk, this account should be included in the line
item. We brought this to the Agency's attention during our analysis of the PRIA Fund
draft financial statements; however, the Agency failed to correct the issue on the final
financial statements dated June 1, 2020. On June 19, 2020, the Agency provided
20-F-0328
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updated financial statements, which included this general ledger account in the net
outlays line item.
Agency personnel initially failed to make the appropriate adjustments to the financial statements,
believing their accounting was accurate. It was only after we conducted our analysis of the
financial statements and questioned the Agency's actions that staff made adjustments to correct
the errors. Had the errors not been detected and corrected, material errors would have impacted
the financial statements. These issues highlight the need for the Agency to strengthen its
processes so that data are accurate, comply with federal accounting standards, and are readily
available on a timely basis to prepare the financial statements. Failure to properly exercise due
diligence in the preparation of the Agency's financial statements compromises the accuracy of
the financial statements and the reliance on them to be free of material misstatement.
Recommendations
We recommend that the chief financial officer:
1. Improve the management review of financial statements prior to providing them to OIG
auditors, so that timely and accurate financial statements are provided.
2. Provide accurate and reliable supporting documentation for adjustments and corrections
to the financial statements.
Agency Comments and OIG Assessment
The Agency agreed with our recommendations and has provided an acceptable estimated
completion date for corrective actions. Appendix B contains the Agency's response to our
draft report.
20-F-0328
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Attachment 2
Status of Recommendations and
Potential Monetary Benefits
RECOMMENDATIONS
Potential
Planned Monetary
Rec. Page Completion Benefits
No. No. Subject Status1 Action Official Date (In $000s)
1 7 Improve the management review of financial statements prior to R Chief Financial Officer 12/31/20
providing them to OIG auditors, so that timely and accurate
financial statements are provided.
2 7 Provide accurate and reliable supporting documentation for R Chief Financial Officer 12/31/20
adjustments and corrections to the financial statements.
1 C = Corrective action completed.
R = Recommendation resolved with corrective action pending.
U = Recommendation unresolved with resolution efforts in progress.
20-F-0328
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Appendix A
Fiscal Years 2019 and 2018
Pesticide Registration Fund Financial Statements
Produced by the U.S. Environmental Protection Agency
Office of the Chief Financial Officer
Office of the Controller
20-F-0328
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Table of Contents
Management's Discussion and Analysis............................. 2 - 5
Principal Financial Statements................... 6
Balance Sheet 6
Statement of Net Cost 7
Statement of Changes in Net Position 8
Statement of Budgetary Resources 9
Notes to Financial Statements..... ..... .....10
Note 1. Summary of Significant Accounting Policies 10 - 13
Note 2. Fund Balance with Treasury (FBWT). 13
Note 3, Other Assets 13
Note 4. Accounts Payable and Accrued liabilities 14
Note 5. General Property Plant and Equipment 14
Note 6. Other Liabilities 15
Note 7. Unobligated Balances Available 16
Note 8. Undelivered Orders at the End of the Period 16
Note 9, Payroll and Benefits Payable 16
Note 10. Income and Expenses from Other Appropriations 17
Note 11. Intragovernmental Costs and Exchange Revenue 18
Note 12. Reconciliation of Net Cost of Operations to Budget 19
EPA's FY 2019 Annual PRIA Financial Statements
1.
20-F-0328
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Management's Discussion and Analysis
EPA's FY 2019 Annual PRIA Financial Statements
2,
20-F-0328 11
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Under the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA) and the Federal Food, Drug, and
Cosmetic Act (HFDCA). as amended by the Food Quality Protection Act (FQPA) of 1996, the EPA's
Pesticide Program registers new pesticides and re-evaluates existing pesticides to ensure that they can be
used safely and that levels of residue in food and animal feed are safe (there is a reasonable certainty of no
harm), The Agency must also conclude that, when used in accordance with labeling and common practices,
the product will not generally cause unreasonable adverse effects on the environment.
The Pesticide Registration Improvement Act (PRIA) of 2003 established the Pesticide Registration Fund,
PRIA authorizes the collection of Registration service fees, which are deposited into the Pesticide
Registration Fund and made available for obligation to the extent provided in appropriation acts, and are
available without fiscal year limitation.
Pesticide Registration
Under FIFRA and FFDCA pesticides must be registered by the EPA, The passage of PRIA introduced
deadlines for the Agency to complete certain registration actions. EPA expedites the registration of reduced-
risk pesticide uses, which generally pose lower risks to people and the environment. Accelerated pesticide
reviews provide an incentive for industry to develop and register lower risk pesticides, and the availability of
these reduced-risk pesticides provides alternatives to older, potentially more harmful products currently on
the market.
PRIA prescribed the amount of the registration service fee and the corresponding decision review time for
various categories of registration action. The goal is to create a more predictable evaluation process for
affected pesticide registrants and couple the collection of individual fees with specific decision-making
periods. The legislation also promotes shorter decision review periods for reduced-risk pesticide
applications. PRIA 1. effective on March 23, 2004, authorized collection of registration fees through FY
2008. The Pesticide Registration Improvement Renewal Act (PRIA 2), effective on October 1, 2007.
authorized collection of registration fees through FY 2012. The Pesticide Registration Improvement
Extension Act of 2012 (PRIA 3) was effective on October 1. 2012, authorized collection of registration fees
through FY 2017. The PRIA 3 statutoiy expiration date of September 30, 2017. was extended through fiscal
year 2018 and part of fiscal year 2019 by legislative language contained in 2018 and 2019 continuing
resolutions as well as the 2018 omnibus spending bill. Effective March 8, 2019. the Pesticide Registration
Improvement Extension Act of 2018 (PRIA 4) reauthorized PRIA for five years, through fiscal year 2023.
For a pending or a new application covered by PRIA to be deemed complete and subject to the decision
review periods, a registrant is required to pay the applicable lee or receive a waiver from the fee. For most
applications, the decision review period starts 21 days after submission of the application, provided that the
fee has been paid, fee waiver granted or in the case of a 75% or 50% fee waiver under PRIA 4. the waiver has
been granted and the remaining fee has been paid, PRIA 4 legislation provides fee waivers for certain
categories of small businesses and minor uses1. Exemption from the requirement to pay a registration service
fee is continued under PRIA 4 for applications solely associated with IR-4 petitions2.
1 Minor use pesticides are those that produce relatively little revenue for their manufacturers, for a variety of reasons. They may be
registered for a seldom seen pest, or for a crop that is not grown by a large number of producers. However, minor crops include
some high revenue fruit, vegetable, and ornamental crops.
2The IR-4 (Interregional Research Project No.4) program is involved in making sure that pesticides are registered for use on minor
crops. IR-4 helps by conducting research on minor use pesticides, pesticides that would not otherwise be profitable to manufacture.
EPA's FY 2019 Annual PRIA Financial Statements
3.
20-F-0328
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Applications from federal and state agencies are also exempt from registration service fees. If the registrant
requests a waiver or reduction of the fee, the decision review period will begin when the Agency giants such
request or in the case of small business fee waivers, no more than 60 days after receipt of the waiver
application. If the Agency determines that a fee is required and the waiver is not granted, the decision review
period starts after the fee is collected.
Applications received prior to October 1, 2007, were covered by PRIA 1. Applications received between
October 1, 2007 and September 30, 2012, were covered bv PRIA 2 applications received on or after October
1, 2012 through March 7, 2019 are covered by PRIA 3. Effective March 8, 2019. the Pesticide Registration
Improvement Extension Act of 2018 (PRIA 4) reauthorized PRIA for five years, through fiscal year 2023.
PRIA 4 contains the same audit provision as PRIA 3. PRIA 4 continues authority established under PRIA 3
to reject an application if it fails a preliminary technical screen. PRIA 4 also increases the fee categories or
types of applications covered by PRIA from 189 to 212 and continues PRIA 3 set-asides for farm worker
protection activities, partnership grants and pesticide safety education programs.
During fiscal year 2019. EPA operated under three different scenarios under PRIA. As mentioned above, up
through February 15. 2019. EPA operated under authority provided by the Pesticide Registration
Improvement Extension Act of 2012 (PRIA 3), extended by continuing resolution. This authority lapsed
while the government was shut down due to a lapse in appropriations that ended on January 28, 2019.
Because the government was not open during this time period, all applications submitted during that time
period were considered received on or after January 28, 20] 9, when PRIA authority was reinstated by the
continuing resolution.
Starting February 16, 2019, and for the duration of time up until March 8, 2019, EPA operated under the
phase out provisions under FIFRA section 33(m)(2)(B) and (D)(ii). in which pesticide registration service
fees for applications received during that time frame were reduced by 70% and those applications did not
receive a statutory decision review time period. On March 8, 2019. the Pesticide Registration Improvement
Extension Act of 2018 or PRIA 4, was signed into law and became effective. Additionally, PRIA 4 modified
fees for existing categories, created new fee categories, and in a few cases, amended the category definitions.
Enforcement and Compliance Assurance Program Description
The Pesticide Enforcement and Compliance Assurance Program focuses on pesticide product and user
compliance. These include problems relating to pesticide worker safety, certification and training of
applicators, ineffective antimicrobial products, food safety, adverse effects, risks of pesticides to endangered
species, pesticide containers and containment facilities, and e-commerce and misuse. The Enforcement and
Compliance Assurance Program provides compliance assistance to the regulated community through its
National Agriculture Compliance Assistance Center, seminars, guidance documents, brochures, and other
forms of communication to ensure knowledge of and compliance with environmental laws.
EPA's grant support to state and tribal pesticide programs emphasizes its commitment to maintaining a
strong compliance and enforcement presence. Agency FIFRA cooperative agreement priorities for FY 2018
& FY 2019 included the enforcement of worker protection standards and pesticide applicator certification;
compliance monitoring and enforcement activities related to the pesticide container and containment rules;
the revised soil fumigant labels; compliance of supplemental distributor products; and program performance
reporting. Core program activities include inspections of producing establishments;
dealers/distributors/retailers; e-commerce; imports and exports, and pesticide misuse. Additionally, through
the cooperative agreements we support inspector training and training for state/tribal senior managers,
scientists, and supervisors.
EPA's FY 2019 Annual PRIA Financial Statements
4.
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Highlights and Accomplishments
Registration Financial Perspective
During FY 2019, the Agency's obligations charged against the PRIA Fund for the cost of registration were
$18.8 million and 69.8 work-years. Of this amount, OPP obligated SI 0.4 million in Personnel Compensation
and Benefits (PC&B).
Appropriated funds are used in addition to registration fee funds. In FY 2019, approximately $11.1 million
in appropriated funds were used for pesticide registration activities.
The Pesticide Registration Fund has two types of receipts: fee collections and interest earned on
investments. Of the $16.6 million in FY 2019 net receipts, more than 99,9% were fee collections.
Registration Program Performance Measures
The following measure supports the program's strategic goals Ensuring the Safety of Chemicals and Pollution
Prevention.
Measure 1: Average number of days to complete PRIA decisions for new active ingredients
Results: The average decision review time frame for new active ingredient decisions completed in FY 2019
was 686 days, and the FY 2019 target was 631 days.
Measure 2: Average number of days exceeding PRIA decision timeframes for new active ingredient
decisions
Results: In FY 2019, the average number of days by which the decision timeframe for completed new active
ingredient actions exceeded the statutory timeframes was 182 days, bettering the FY 2019 target of284 days.
Meas uri * IV runt u,e of decisions (registration actions) completed on time (on or before PRIA or
negoii )Ud dui d ilij
Results: In FY 2018, EFA completed 97.6% of PRIA actions "on-time": the FY 2019 target was a 99% on-
time completion. Of the 2,085 PRIA decisions completed in the fiscal year, fifty-one were completed after the
original or negotiated due date.
EPA's FY 2019 Annual PRIA Financial Statements
5.
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Principal Financial Statements
U.S. Environmental Protection Agency
PRIA
Balance Sheet
As of September 30. 2019 and 2018
(Dollars in Thousands)
2019
2018
assets
Intragovenrmental:
Fund Balance With Treasury (Note 2)
Other (Note 3)
Total Tntragovemmental
Property, Plant and Equipment, Net (Note 5)
Total Assets
15,246
17
15,263
114
15.377
19.899
132
20.031
209
20.240
LIABILITIES
Intragovemn lental.
Accounts Payable and Accrued Liabilites (Note 4)
Other (Note 6)
Total Intragovemmental
87
114
201
49
22
71
Accounts Payable and Accrued Liabilities (Note 4)
Payroll and Benefits Payable (Note 9)
Other (Note 6)
Total Liabilites
NET POSITION
Cumulative Results of Operations - Funds from Dedicated Collections
Total Net Position
Total Liabilities and Net Position
844
3,088
13.342
17.475
821
2.517
18.929
22.338
(2.098)
(2.098)
(2.098)
15.377
(2.098)
20.240
The accompanying notes are an integral part of these financial statements.
EPA's FY 2019 Annual PRIA Financial Statements
6.
20-F-0328
15
-------
U.S. Environmental Protection Agency
PRIA
Statement of Net Cost
For the Fiscal Years Ended September 30,2019 and 2018
(Dollars in Thousands)
2019
COSTS
Gross Costs (Note 11) $ 22,605
Expenses from Oilier Appropriations (Note 10) 39.271
Total Costs 61,876
Less:
Earned Revenue (Note 11) 18.474
NET COST OF OPERATIONS (Note 12) $ 43.402
The accompanying notes are an integral part of these financial statements.
EPA's FY 2019 Annual PRIA Financial Statements
2018
$ 19.378
36.638
*56.016
18.337
$ 37.679
20-F-0328
16
-------
U.S. Environmental Protection Agency
PRIA
Statement id' Changes in Net Position
For the Fiscal Years Fnded September 30,2019 and 2018
(Dollars in Thousands)
Cumulative Results of Operations:
Net Position - Beginning of Period
Budgetary Financing Sources:
Nonexchange Revenue - Securities Investment
Nonexchange Revenue - Other
Income from Other Appropriations (Note 10)
Total Budgetary Financing Sources
Other Financing Sources iNon-Fxchange)
Imputed Financing Sources
Total Other Financing Sources
Net Cost of Operations (Note 12)
Net Change
Cumulative Results of Operations
TOTAL NET POSITION
2019
2018
; (2,098) $
(2,418)
229
169
3,471
893
39.271
36.638
42.971
37.700
431
2.99
431
299
(43,402) $
(37,679)
320
1 (2.098) $
(2.098i
; (2.098) $
(2.0981
The accompanying notes are an integral part of these financial statements.
EPA's FY 2019 Annual PRIA Financial Statements
20-F-0328
17
-------
U.S. Environmental Protection Agency
PRIA
Statement of Budgetary Resources
For the l'iscal Years Knded September 30,2019 and 2018
(Dollars in Thousands)
2019
2018
Hl'IMJKTARY RESOl "RUES
Unobligated Balance From Prior Year Budget Authority, Net (discretionary) $
8.944
$
11.310
Appropriations (discretionary)
16.623
17.046
Total Budgetary Resources $
25.567
$
28.356
STATl SOI' IH lKJETARY RESOl RCKS
New Obligations and Upward adjustments (total) $
19,351
$
21,517
Unobligated Balance. End of Year;
Apportioned. Unexpired Accounts (Note 7)
6.216
6.839
Unobligated Balance. End of Year (total):
6.216
6.839
Total Status ol'Budgetary Resources $
25.567
$
28.356
OUTLAYS. NET
Outlays, Net (total) (discretionary) $
21.325
$
19,421
Distributed Offsetting Receipts (-)
(16.623)
(17.046)
Agency Outlays. Net (discretionary) $
4.702
$
2.375
The accompanying notes are an integral part of these financial statements.
EPA's FY 2019 Annual PRIA Financial Statements
20-F-0328
18
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U.S. Environmental Protection Agency
PRIA
Moles to ihi' riminciiil Statements
For the fiscal Years ICntled September JO. 2019 aiul 2018
(Dollars in Thousands)
Note 1. Summary of Significant Accounting Policies
A. Reporting Entities
The EPA was created in 1970 by executive reorganization from various components of other federal agencies
to better marshal and coordinate federal pollution control efforts. The Agency is generally organized around
the media and substances it regulates - air, land, water, waste, pesticides, and toxic substances.
The Pesticide Registration Fund (PRIA) is authorized under the Pesticide Registration Improvement Act of
2003 (which amended the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA), and became
effective on March 23, 2004. This Act authorizes the EPA to assess and collect pesticide registration service
fees on applications submitted to register pesticides covered by this Act. as well as assess and collect fees to
register new active ingredients not listed in the Registration Division 2003 Work Plan of the Office of
Pesticide Programs. The Pesticide Registration Improvement Renewal Act (commonly referred to as PRIA
2) extended the authority to collect pesticide registration service fees through FY 2012. PRIA 2 became
effective October 1, 2007. PRIA 2 was reauthorized with the passage of the Pesticide Registration
Improvement Extension Act (referred to as PRIA 3) on September 28. 2012. PRIA 3 became effective
October 1, 2012, and authorized collection of legislation fees through FY 2018. PRIA 4 became effective
March 8. 2019 and authorized collection of registration fees through FY 2023.The PRIA Fund is accounted
for under Treasury symbol number 68X5374.
The PRIA fund may charge some administrative costs directly to the fund and charge the remainder of the
administrative costs to Agency-wide appropriations. See Note 10 Income and Expenses from Other
Appropriations for amounts included in Income from Other Appropriations on the Statement of Changes in
Net Position and as Expenses from Other Appropriations on the Statement of Net Cost.
B. Basis of Presentation
These financial statements have been prepared to report the financial position and results of operations of the
EPA for the Pesticide Registration Fund (PRIA) as required by the Chief Financial Officers Act of 1990 and
the Pesticide Registration Improvement Act (PRIA) of 2003. In the prior years, pesticide registration was
included in the FIFRA financial statements. The reports have been prepared from the books and records of
the EPA in accordance with Office of Management and Budget (OMB) Circular A-136 Financial Reporting
Requirements, and the EPA's accounting policies which are summarized in this note. These statements are
therefore different from the financial reports also prepared by the EPA pursuant to OMB directives that are
used to monitor and control the EPA's use of budgetary resources. The balances in these reports have been
updated from the EPA consolidated financial statements to reflect the use of FY 2018 cost factors for
calculating imputed costs for Federal civilian benefits programs. These updates impact the Balance Sheet.
Statement of Net Cost, and Statement of Changes in Net Position.
C. Budgets and Budgetary Accounting
Funding for PRIA is provided by fees collected from industry to offset costs incurred by EPA in carrying out
these programs. Each year, the EPA submits an apportionment request to OMB based on the anticipated
collections of industry fees.
EPA's FY 2019 Annual PRIA Financial Statements
10.
20-F-0328
19
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U.S. Environmental Protection Agency
PRIA
Moles to ihi' Financial Statements
For the Fiscal Years ICntled September JO. 2019 aiul 2018
(Dollars in Thousands)
D. Basis of Accounting
Generally Accepted Accounting Principles (GAAP) for federal entities is the standard prescribed by the
Federal Accounting Standards Advisory Board (FASAB), which is the official standard-setting body for the
Federal Government and the American Institute of Certified Public Accountants (AICPA). 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 liabilities are incurred, without
regard to receipt or payment of cash. Budgetary accounting facilitates compliance with legal constraints and
controls over the use of federal funds posted in accordance with OMB directives and the U.S. Treasury
regulations. All interfund balances and transactions have been eliminated.
EPA uses a modified matching principle since federal entities recognize unfunded liabilities (without
budgetary resources) in accordance FASAB Statement of Federal Financial Accounting Standards (SFFAS)
No. 5 Accounting for Liabilities of the Federal Government.
E. Revenues and Other Financing Sources
For FYs 2019 and 2018, PRIA received funding from fees collected from registrants requesting pesticide
registrations. For FYs 2019 and 2018, revenues were recognized from fee collections to the extent that
expenses are incurred during the fiscal year.
F. Funds with the Treasun
The PRIA fund deposits receipts and processes disbursements through its operating account maintained at the
U.S. Department of the Treasury.
G. Investments in U, S. Government Securities
Investments in U. S. government securities are maintained by Treasury and are reported at amortized cost net
of unamortized discounts. Discounts are amortized over the term of the investments and reported as interest
income. PRIA holds the investments to maturity, unless needed to finance operations of the fund. No
provision is made for unrealized gains or losses on these securities because, in the majority of cases, they are
held to maturity.
II. Property. Plant, and Equipment
General property, plant and equipment for PRIA consists of software in production. Internal use software includes
purchased commercial off-the-shelf software, contractor developed software and software that was internally
developed by Agency employees. In FY 2017. the EPA reviewed its capitalization threshold levels for PP&E.
The Agency performed an analysis of the values of software assets and increased the capitalization threshold
from S250 thousand to $5 million to better align with major software acquisition investments. The $5 million
threshold will be applied prospectively to software acquisitions and modifications/enhancements placed into
service after September 30, 2016. Software assets placed into service prior to October 1,2016 were
capitalized at the $250 thousand threshold. Internal use software is capitalized at full cost (direct and
indirect) and amortized using the straight-line method over its useful life, not exceeding five years.
EPA's FY 2019 Annual PRIA Financial Statements
11.
20-F-0328
20
-------
U.S. Environmental Protection Agency
PRIA
Moles to ihi' riminciiil Statements
For the I 'iscsil Years ICntled September JO. 2019 aiul 2018
(Dollars in Thousands)
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. For PRIA, liabilities are liquidated from fee receipts,
since PRIA receives no appropriation. Fees collected by the Agency are classified as unearned revenue until
expended (see Note 6). liabilities of the Agency arising from anything other than contracts can be abrogated
by the Government acting in its sovereign capacity.
J. Accrued I nliindi'd 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 1,1987,
may participate in the Civil Service Retirement System (CSRS). On January L 1987. the Federal Employees
Retirement System (FERS) went into effect pursuant to Public Law 99-335. Most employees hired after
December 31. 1986, are automatically covered by FERS and Social Security. Employees hired prior to
January 1,1987. 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 other retirement benefits during their employees" active years of service.
SFFAS No. 5 requires that the Office of Personnel Management (OPM), as administrator of the CSRS and
FERS. the Federal Employees Health Benefits Program, and the Federal Employees Group Life Insurance
Program, provide federal agencies with the actuarial cost factors to compute the liability for each program.
L. Offsetting Receipts
Beginning in FY 2007 OMB Circular A-136. Financial Reporting Requirements, requires that the amount of
distributed offsetting receipts reported in the Statement of Budgetary Resources (SBR) should equal the
amount recorded as offsetting receipts by the Department of the Treasury (Treasury). Pesticide Registration
Fees collected under PRIA are considered to be offsetting receipts by Treasury.
M. Use of Estimates
The preparation of financial statements requires management to make certain estimates and assumptions that
affect reporting amounts of assets, liabilities and the reported amounts of the revenue and expenses during
the period. Actual results could differ from those estimates.
FPA.'s FY 20)9 Annual PRIA Financial Statements
12.
20-F-0328
21
-------
U.S. Environmental Protection Agency
PRIA
Moles to ihi' Financial Statements
For the Fiscal Years lOntled September JO. 2019 aiul 2018
(Dollars in Thousands)
N. Reclassifications and Comparative Figures
Certain reclassifications have been made to the prior year's financial statements to enhance comparability
with the current year's financial statements in accordance with Office of Management and Budget (OMB)
Circular No. A-136. Financial Reporting Requirements revised June 28, 2019. As a result. Net Adjustments
to Unobligated Balance Brought Forward. Oct. 1 has been omitted in the Statement of Budgetary Resources.
Note 2. Fund Balance With Treasury (FBWT)
Fund Balance with Treasury as of Septemb -SU Ul9 and 2018 consists of the following
2019 2018
Other Fund Types:
PRIA
Total
Entity
Non-Entity
F u t>
Non-Entity
Assets
Assets
Total
A t
Assets
Total
$ 15.246
$ $
15.246
$ 19.899
$
$ 19.899
$ 15.246
$ - $
15.246
$ 19.899
$
$ 19.899
Status of Fund Balances: 2019 2018
I nobligaled Amounts in Fund Balance;
Available for Obligation
$ 6,216 $
6.839
Obligated Balance not yet Disbursed
9.030
13.060
Total
$ 15.246 $
19.899
Note 3. Other Assets
Other Assets as of September 30, 2019 and 2018 consist of the following:
lilt rngorernniental:
Advances to Federal Agencies
Total
2019
2018
$ 17 S
132
$ 17 $
132
PRIA advances funds to the EPA's Working Capital Fund to pay for computer, postage, and other
administrative support services.
EPA's FY 2019 Annual PRIA Financial Statements
13.
20-F-0328
22
-------
U.S. Environmental Protection Agency
PRIA
Moles to ihi' Financial Statements
For the Fiscal Years lOntled September JO. 2019 aiul 2018
(Dollars in Thousands)
Nolo 4. Accounts Payable and Accrued Liabilities
The Accounts Payable and Accrued Liabilities are current liabilities and consist of the following amounts as
of September 30, 2019 and 2018:
2019 2018
Intragcn ernmental:
Accounts Payable
$ 8 $
1
Accrued Liabilities
79
48
Total
$ 87 $
49
2019
2018
Non-Federal:
Accounts Payable
$ 8 $
168
Advances Payable
(8)
-
Other Accrued Liabilities
844
653
Total
$ 844 $
821
Note 5. General Property, Plant and Equipment, Net
General property, plant, and equipment (PP&E) consist of software, real property, EPA-held and contractor-
held personal property, and capital leases.
The Agency disclosed a material weakness through its internal control review of software capitalization
processes in FY 2014. The material weakness was cited in the "Audit of the EPA's Fiscal Year's 2014 and
2013 (Restated) Consolidated Financial Statements" report, dated November 17, 2014. The Agency resolved
this material weakness in FY 2018.
As of September 30, 2019 and 2018, General PP&E consisted of the following:
2019 2018
N l
Net
A (ji i iti n
Accumulated
I? k
Acquisition
Accumulated
Book
\ ill
Depreciation
V 1
Value
Depreciation
Value
EPA-Held Equipment
$
$ - $
-
$ 35
$ (35)S
-
Software (production)
5.050
(4.936)
114
5.050
(4.841 i
209
Total
$ 5.050
$ . 4.9361 *
114
$ 5.085
$ (4.876) t
209
EPA's FY 2019 Annual PRIA Financial Statements
14.
20-F-0328
23
-------
U.S. Environmental Protection Agency
PRIA
Moles to ihi' Financial Statements
For the Fiscal Years Fndcd September JO. 2019 aiul 2018
(Dollars in Thousands)
Note 6. Other Liabilities
Other Liabilities consist of the following as of September 30, 2019:
Covered by
Not Cowred
Budgetary
by Budgetary
Resources
Resources
Total
Current
Employer Contributions & Payroll Taxes
$ 114
$ - $
114
Total Intragovernmental
$ 114
$ - $
114
Other Liabilities - Non-Federal
Current
Unearned Advances, Non-Federal
$ MM
$ - $
13.342
Total Non-Federal
$ MM
$ - $
13.342
Other Liabilities consist of the following as of September 30,2018:
Current
Employer Contributions & Payroll Taxes
Total Intragovernmental
Other Liabilities - Non-Federal
Current
Unearned Advances from Fee Collections*, Non-Federal
Total Non-Federal
Com-red by
Budgetary
Resources
S t ( i red
hv
R i r es
Total
$
$
$
22
$
$
$
22
$
18.929 $
$
1S.929
$
18.929 S
$
18.929
*Fees collected by the PRIA program that have not yet been expended are considered unearned revenue.
Unearned revenue will fluctuate in conjunction with expenses paid from other appropriations and program
expenses (see Note 10).
EPA's FY 2019 Annual PRIA Financial Statements
15.
20-F-0328
24
-------
U.S. Environmental Protection Agency
PRIA
Moles to ihi' Financial Statements
For the Fiscal Years Fniled September JO. 2019 aiul 2018
(Dollars in Thousands)
Note 7. Unobligated Balances Available
Unexpired unobligated balances are available to be apportioned by the C)MB for new obligations at the
beginning of the following fiscal year. The expired unobligated balances are only available for upward
adjustments of existing obligations.
Hie unobligated balances available consist of the following as of September 30, 2019 and 2018:
2019 2018
Unexpired Unobligated Balance $ 6,216 $ 6,839
Expired Unobligated Balance - -
Total $ 6.216 $ 6.839
Note 8. Undelivered Orders at the End of the Period
Budgetary resources obligated for undeli vered orders at September 30, 2019 and 2018, was $9,017 and
$12,555.
Note 9. Payroll and Benefits Payable
Payroll and benefits payable to the EPA employees for the years September 30, 2019 and 2018 consist of the
following:
Covered by Not ('overed
Budgetary l)y Budgetary
Resources Resources
l'Y 2019 Payroll and Benefits Payable
Accrued Funded Payroll and Benefits
Withholdings Payable
Employer Contributions Payable - Thrift Savings Plan
Total - Current
Accrued Unfunded Annual Leave
Total - NonCurrent
Total
Total
$ 554 $
$
554
4
-
4
62
_
62
620
-
620
2.468
2.468
-
2.468
2,468
$ 620 $
2.468 $
3,088
EPA's FY 2019 Annual PRIA Financial Statements
16.
20-F-0328
25
-------
U.S. Environmental Protection Agency
PRIA
Moles to ihi' Financial Statements
For the Fiscal Years ICnded September JO. 2019 aiul 2018
(Dollars in Thousands)
Covered by
Not Covered
Budgetary
by Budgetary
Resources
Resources
Total
FY 2018 Payroll and Benefits Payable
Accrued Funded Payroll and Benefits
$ 116
$
$
116
Withholdings Payable
1
-
1
Employer Contributions Payable - Thrift Savings Plan
12
-
12
Total - Current
129
-
129
Accrued Unfunded Annual Leave
_
2.388
2.388
Total - Non-Current
"
2,388
2,388
Total
$ 129
$ 2.388
$
2.517
At various periods throughout FY 2019 and FY 2018 employees with their associated payroll costs were
transferred from PRIA to the Environmental Programs and Management (EPM) appropriation. These
employees were transferred to keep PRIA's obligations and disbursements within budgetary limits.
This process has led to variations between the year-end liabilities of FYs 2019 and 2018. The liabilities
covered by budgetary resources (both intragovernmental and non-Federal) represent unpaid payroll and
benefits at year-end. As of September 30, 2019. the liabilities were $114 thousand and $620 thousand for
employer contributions and accrued funded payroll and benefits as compared to FY 2018" s balances of $22
thousand and $129 thousand, respectively.
In contrast, the unfunded annual leave liability is a longer term liability than the funded liabilities.
Note 10. Income and Expenses from Other Appropriations
The Statement of Net Cost reports the program costs that include the full cost of the program outputs and
consist of the direct costs and all other costs that can be directly traced, assigned on a cause and effect basis,
or reasonably allocated to program outputs.
During FYs 2019 and 2018, the EPA had two appropriations which funded a variety of programmatic and
non-programmatic activities across the Agency, subject to statutory requirements. The EPM appropriation
was created to fund personnel compensation and benefits, travel, procurement, and contract activities.
As illustrated below there is no impact on EPA's Statement of Changes in Net Position.
2019 2018
Income from Other Appropriations $ 39.271 $ 36,638
Expenses from Other Appropriations 39.271 36.638
Net Effect $ - $ -
EPA's FY 2019 Annual PRIA Financial Statements
17.
20-F-0328
26
-------
U.S. Environmental Protection Agency
PRIA
Notes to the Financial Statements
For the Fiscal Years Ended September 30,2019 and 2018
(Dollars in Thousands)
Note 11, Exchange Revenues, Statement of Net Cost
2019 2018
Costs:
Intragovernmental
$ 3,906 $
3,183
With the Public
18,699
16,195
Expenses from Other Appropriations
39.271
36.638
Total Costs
61,876
56,016
Revenue:
With the Public
18.474
18.337
Total Re venue
18,474
18,337
Net Cost of Operations:
$ 43.402 $
37.679
Intragovernmental costs relate to the source of the goods or services not the classification of the related
revenue.
EPA's FY 2019 Annual PRIA Financial Statements
18,
20-F-0328
27
-------
U.S. Environmental Protection Agency
PRIA
Moles to ihi' Financial Statements
For the Fiscal Years Ended September JO. 2019 aiul 2018
(Dollars in Thousands)
Note 12, Reconciliation of Net Cost of Operations to Net Outlays
Budgetary and financial accounting information differ. Budgetary accounting is used for planning and control
purposes and relates to both the receipt and use of cash, as well as reporting the federal deficit. Financial accounting is
intended to provide a picture of the government's financial operations and financial position, so it presents
information on an accrual basis. The accrual basis includes information about costs arising from the consumption of
assets and the incurrence of liabilities. The reconciliation of net outlays, presented on a budgetary basis, and the net
cost, presented on an accrual basis, provides an explanation of the relationship between budgetary and financial
accounting information.
The reconciliation serves not only to identify costs paid for in the past and those that will be paid in the future, but
also to assure integrity between budgetary and financial accounting. The reconciliation explains the relationship
between the net cost of operations and net outlays by presenting components of net cost that are not part of net outlays
(e.g. depreciation and amortization expenses of assets previously capitalized, change in asset/liabilities), components
of net outlays that are not part of net cost (e.g. acquisition of capital assets), other temporary timing difference (e.g.
prior period adjustments due to correction of errors). The analysis below illustrates this reconciliation by listing the
key differences between net cost and net outlays.
Intra- With the
governmental Public Total 2019
NET COST
Componi'iits of Net Cost That Are Not Part of Net Outlays:
Property. Plant and Equipment Depreciation
Other
Increase/(Decrease) in Assets:
Other Assets
(Increased/Decrease in liabilities:
Accounts Payable and Accrued Liabilities
Payroll and Benefits Payable
Other Liabilities
Other Financing Sources:
Other Imputed Financing
Total Components of Net Cost That Are Not Part of Net
Outlays
Other Temporary Timing Differences
NET OUTLAYS
$ 3,906 $
39,496 $
43,402
(95)
(95)
-
(39.271)
(39,271)
(115)
-
(115)
(37)
(24)
(61)
-
(570)
(570)
(91)
5.587
5,496
431
431
4,094
5,123
9,217
-
(4,515)
(4,515)
$ 4.094 $
608 $
4.702
EPA's FY 2019 Annual PRIA Financial Statements
19.
20-F-0328
28
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Appendix B
Agency Response to Draft Report
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, D C. 20460
September 9, 2020
OFFICE OF THE
CHIEF FINANCIAL OFFICER
MEMORANDUM
SUBJECT: Response to the Office of Inspector General Draft Report, Project No. OA&E-FY20-
0113 "Fiscal Years 2019 and 2018 Financial Statements for the Pesticide Registration
Fund," dated August 12, 2020
nA\/in Digitally signed by
FROM: David A. Bloom, Deputy Chief Financial Officer david bloom
Office of the Chief Financial Officer BLOOM mk^-moo'9
TO: Paul C. Curtis
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 subject draft audit
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's recommendations. The draft report contained two
recommendations for the Office of the Chief Financial Officer and no recommendations for the Office
of Chemical Safety and Pollution Prevention.
AGENCY'S OVERALL POSITION
The OCFO concurs with the Office of Inspector General's recommendations and has provided high-
level intended corrective actions and estimated completion dates. The corrective actions have been
reviewed by the OCSPP.
RESPONSE TO RECOMMENDATIONS
The OIG noted a material weakness with the internal control regarding the preparation process for
financial statements, which was initially reported in OIG Report No. 20-F-0033. EPA's Fiscal Years
2019 and 2018 (Restated) Consolidated Financial Statements, issued November 19, 2019. Since the
initial reporting, the OCFO has taken numerous corrective actions in FY 2020 to address the
finding. These actions include:
• Development of a project plan for the financial statement preparation process. This plan will
be updated annually, at a minimum.
• Development of a reviewer checklist and Standard Operating Procedures for financial
statement preparation. This will be updated annually, at a minimum.
• Full implementation of CaseWare financial statement preparation software, which increases
efficiency and provides additional format controls and footnote cross checks that were not
available previously.
20-F-0328
29
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• Established a group email to ensure deliverables to the C)I(i are reviewed and approved by
leadership in the Office ol'the Controller to allow earlier clarification as needed and reduce
potentially confusing multiple version draft exchanges between the OKI and the ()C staff cm
deliverables.
• Kstablished a senior level call bi-w eekly between the Deputy Chief financial Officer.
Controller and the OKI's senior management to address concerns early in the audit process.
• Provided stall'additional training on CaseWare: this will become an annual requirement.
• Conducting regular financial statements team meetings to cross train, resolve potential issues,
and identify improvements.
• Conducted variance analysis training for staff to assist in general ledger account analysis.
• Reviewed w ith staff the need to include more ol'the supporting analysis and rationale behind
the adjustments made and the accounting basis for them.
• Regular reviews of journal vouchers by management to ensure they are clearly and
sul 1 ici ent Iv supported.
AGENCY'S RESPONSE TO DRAFT AUDIT RECOMMENDATIONS
Agreements
No.
Recommendation
Assigned
to:
High-l evel Intended
Corrective Action(s)
Estimated
Completion Date
1
Improve the management
review- of financial statements
prior to providing them to OKJ
auditors, so that timely and
accurate financial statements
are provided.
OCTO
As noted above, the agency has
implemented numerous actions
in KY 2020 which will improve
the preparation and review of
financial statements. The agency
will continue to review its
processes for preparing financial
statements and identify
additional improvements to
further strengthen the
p re pa ra l i on p roc ess.
12 3K2020
2
Provide accurate and reliable
supporting documentation for
adjustments and corrections to
the financial statements.
OCFO
The agency makes every effort
to provide accurate and reliable
supporting documentation for
adjustments and corrections-,
however, we will continue to
review with stall'the need to
include more ol'the supporting
analysis and rationale behind the
adjustments made and the
accounting basis for them.
Management reviews of journal
vouchers w ill continue, and
additional training provided as
needed.
12/31/2020
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CONTACT INFORMATION
If >on have any questions regarding tliis response, plea.se eontael the OCl-O Audit Follow-up
Coordinator, Andrew LeBlane. at or (202) 5o4-1761. or the OCSPP Audit
Follow -up Coordinator, Janet \\ einer. at - or (202) 504-2309.
cc: Carol Terris
C. Paige Hanson
Richard Keigwin
Carol Ann Siciliano
Fdward Messina
I,ek Kadeli
Charlie Dankert
Jeanne Conklin
Istanbul Yusuf
Richard Gray
OC FO-OC- \ I AN A( i FR S
Demetrios Papakonstairtinou
. \ndrew LeBlane
Jose kereado-Deleon
Janet Weiner
Cameo Smool
Dolores Barber
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Appendix C
Distribution
The Administrator
Assistant Deputy Administrator
Associate Deputy Administrator
Chief of Staff
Deputy Chief of Staff/Operations
Agency Follow-Up Coordinator
General Counsel
Associate Administrator for Congressional and Intergovernmental Relations
Associate Administrator for Public Affairs
Director, Office of Continuous Improvement, Office of the Administrator
Assistant Administrator for Mission Support
Principal Deputy Assistant Administrator for Mission Support
Associate Deputy Administrator for Mission Support
Deputy Assistant Administrator for Administration and Resources Management, Office of
Mission Support
Deputy Assistant Administrator for Environmental Information and Chief Information Officer,
Office of Mission Support
Director, Office of Resources and Business Operations, Office of Mission Support
Director, Office of Human Resources, Office of Mission Support
Assistant Administrator for Chemical Safety and Pollution Prevention
Principal Deputy Assistant Administrator for Chemical Safety and Pollution Prevention
Deputy Assistant Administrator for Chemical Safety and Pollution Prevention
Associate Deputy Assistant Administrator for New Chemicals, Office of Chemical Safety and
Pollution Prevention
Deputy Assistant Administrator for Management, Office of Chemical Safety and Pollution
Prevention
Senior Advisor, Office of Chemical Safety and Pollution Prevention
Director, Office of Pesticide Programs, Office of Chemical Safety and Pollution Prevention
Deputy Director, Office of Pesticide Programs, Office of Chemical Safety and Pollution
Prevention
Director, Biopesticides and Pollution Prevention Division, Office of Pesticide Programs, Office
of Chemical Safety and Pollution Prevention
Director, Pesticide Re-Evaluation Division, Office of Pesticide Programs, Office of Chemical
Safety and Pollution Prevention
Director, Registration Division, Office of Pesticide Programs, Office of Chemical Safety and
Pollution Prevention
Director, Antimicrobials Division, Office of Pesticide Programs, Office of Chemical Safety and
Pollution Prevention
Director, Information Technology and Resources Management Division, Office of Pesticide
Programs, Office of Chemical Safety and Pollution Prevention
Chief Financial Officer
Deputy Chief Financial Officer
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Associate Chief Financial Officer
Associate Chief Financial Officer for Policy
Controller
Deputy Controller
Director, Office of Technology Solutions, Office of the Chief Financial Officer
Deputy Director, Office of Technology Solutions, Office of the Chief Financial Officer
Director, Office of Budget, Office of the Chief Financial Officer
Deputy Director, Office of Budget, Office of the Chief Financial Officer
Director, Business Planning and Operations Division, Office of the Controller
Director, Accounting and Cost Analysis Division, Office of the Controller
Branch Chief, Fees and Collections Branch, Accounting and Costs Analysis Division, Office of
the Controller
Special Assistant, Office of the Controller
Director, Research Triangle Park Finance Center, Office of the Chief Financial Officer
Director, Cincinnati Finance Center, Office of the Chief Financial Officer
Director, Policy, Training and Accountability Division, Office of the Controller
Branch Chief, Management, Integrity, and Accountability Branch, Policy, Training, and
Accountability Division, Office of the Controller
Audit Follow-Up Coordinator, Office of the Administrator
Audit Follow-Up Coordinator, Office of the Chief Financial Officer
Audit Follow-Up Coordinator, Office of the Controller
Audit Follow-Up Coordinator, Office of Technology Solutions, Office of the Chief
Financial Officer
Audit Follow-Up Coordinator, Office of Budget, Office of the Chief Financial Officer
Audit Follow-Up Coordinator, Office of Mission Support
Audit Follow-Up Coordinator, Office of Chemical Safety and Pollution Prevention
Audit Follow-Up Coordinator, Office of Pesticide Programs, Office of Chemical Safety and
Pollution Prevention
Audit Follow-Up Coordinators, Regions 1-10
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