U.S. Environmental Protection Agency's
Fiscal Year 2023 flM
Agency Financial Report
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ABOUT THIS REPORT
The U.S. Environmental Protection Agency is pleased
to present the Fiscal Year 2023 Agency Financial
Report (AFR). This report provides an overview of
the financial and performance results for the fiscal
year spanning October 1, 2022, through September
30,2023.
The information, data, and analyses presented in this
AFR are intended to aid the President, Congress, and
the American people in evaluating the agency's
annual activities and accomplishments towards its
mission of protecting human health and the
environment.
The FY 2023 AFR encompasses the EPA Office of
Inspector General's FY 2023 Financial Statements
Audit Report and the agency's FY 2023 Federal
Managers' Financial Integrity Act Report, including
the Administrator's statement assuring the
soundness of the agency's internal controls.
The AFR reports information in accordance with
the Chief Financial Officers Act and Office of
Management and Budget Circular A-136, Financial
Reporting Requirements, and fulfills the
requirements set forth in OMB Circular A-11,
Preparation, Submission and Execution
of the Budget, and the Government Performance
and Results Act Modernization Act of 2010.
The AFR is one of two annual reports
publishing information on EPA's programmatic
and financial activities. The financial
information within the AFR will be
supplemented by the EPA's FY2023 Annual
Performance Report, which will present the
agency's FY 2023 performance results as
measured against the targets established in its
FY 2023 Annual Performance Plan and Budget
and the goals established in the FY2022-2026
EPA Strategic Plan. The EPA's FY 2023 APR will
be included with the agency's FY2025
Congressional Budget Justification and will be
posted on the agency's website.
Collectively, the AFR and APR present a
complete summary of the agency's activities,
accomplishments, progress, and financial
information for each fiscal year. Both prior year
reports are available at:
https://www.epa.gov/planandbudget/fy-2022-
2026- data-qualitv-records.
How the Report Is Organized
The EPA's FY 2023 AFR is organized into three sections
to provide clear insight into the agency's financial
results.
Section I—Management's
Discussion and Analysis
Provides an overview on the EPA's
mission and organizational
structure; a summary of
performance results; an analysis of
the financial statements and stewardship data;
information on systems, legal compliance, and
controls; and other management initiatives.
Section II—Financial Section
Includes the agency's independently
audited financial statements, which
comply with the Chief Financial
Officers Act, the related Independent
Auditors' Report and other
information on the agency's financial management.
Section III—Other Accompanying
Information
Provides additional material as
specified under OMB Circular A-
136, Financial Reporting
Requirements, and the Reports
Consolidation Act of 2000. The subsection titled
"Management Integrity and Challenges"
describes the EPA's progress toward
strengthening management practices to achieve
program results and presents the OIG's list of top
management challenges.
Section IV Appendices
Provides links to relevant
information on the agency website
and a glossary of acronyms and
abbreviations.
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Table of Contents
ABOUT THIS REPORT 1
Table of Contents 2
Message from the Administrator 4
SECTION 1 - Management's Discussion and Analysis
About EPA 7
History and Purpose 7
Mission 7
Organization 8
Headquarter and Regional Office Map 9
Collaborating with Partners and Stakeholders 9
FY 2023 PROGRAM PERFORMANCE 10
FINANCIAL ANALYSIS AND STEWARDSHIP INFORMATION 11
Sound Financial Management: Good for the Environment, Good for the Nation 11
Financial Condition and Results 13
Financial Management for the Future 17
Limitations of the Principal Financial Statements 17
IMPROVING MANAGEMENT AND RESULTS 18
Office of Inspector General Audits, Evaluations,and Investigations 18
Grants Management 18
ACCOUNTABILITY: SYSTEMS, CONTROLS, AND LEGAL COMPLIANCE 19
Federal Managers' Financial Integrity Act 19
The Digital Accountability and Transparency Act 19
AntideficiencyAct (ADA) 20
Federal Financial Management Improvement Act (FFMIA) 20
Fiscal Year 2023 Annual Assurance Statement 21
SECTION II - Financial Section
Message from the Chief Financial Officer 23
EPA's Fiscal Year 2023 and 2022 Consolidated Financial Statements (with restatement) 25
Audit of EPA's Fiscal Years 2023 and 2022 Consolidated Financial Statements 84
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SECTION III - Other Accompanying Information
Management Integrity and Challenges 119
Overview of EPA's Efforts 119
2024 Key Management Challenges 120
Office of Inspector General-Identified Key Management Challenges 121
FY 2024 TOP MANAGEMENT CHALLENGES (OIG Report) 122
Agency Response to Office of Inspector General-Identified Management Challenges 123
PROGRESS IN ADDRESSING FY 2 02 3 WEAKNESSES 123
Material Weakness 123
Summary of Financial Statement Audit 123
Summary of Management Assurances 123
PAYMENT INTEGRITY 124
L Payment Reporting 124
1L Risk Assessment 125
III. Recoveries of Improper Payments 127
Programs Susceptible to Improper Payments 128
IV. Agency Improvement of Payment Accuracy with the Do NotPay Initiative 130
CIVIL MONETARY PENALTY ADJUSTMENT FOR INFLATION 131
BIENNIAL REVIEW OF USER FEES 135
GRANTS PROGRAM 136
CLIMATE-RELATED FINANCIAL RISK 137
SECTION IV - Appendices
APPENDIX A PUBLIC ACCESS 139
APPENDIX B ACRONYMS AND ABBREVIATIONS 141
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Message from the Administrator
November 15, 2023
The President
The White House
Washington, D.C. 20500
Dear Mr. President:
It is my privilege to present the U.S. Environmental Protection Agency's
Fiscal Year 2023 Agency Financial Report. For the 24th consecutive year,
the EPA has earned a clean, unmodified financial audit opinion from its
independent auditors. This is an impressive achievement that speaks to
the dedication, professionalism and integrity of the agency's team. The
Agency Financial Report outlines how the EPA used its resources to advance the Administration's
public health and environmental priorities benefiting the American people, while ensuring
accountability and sustaining the highest standards of financial integrity.
We have made great strides advancing the Administration's historic Investing in America agenda.
Through the Infrastructure Investment and Jobs Act, commonly called the Bipartisan Infrastructure
Law, and the Inflation Reduction Act, the EPA is reversing years of neglect with upgrades to basic
public utility infrastructure and services. We also are cleaning up toxic waste sites across the country
and helping communities increase resilience to the impacts of climate change and extreme weather.
Many of these investments focus on our nation's most vulnerable and underserved communities who
have disproportionately borne the burden of pollution and environmental degradation. The breadth
and impact of the work we are doing today is impressive, having a profound impact on the health and
wellbeing of Americans now and for generations to come.
This Administration has made it clear since its first day that the United States is back as the global
leader on climate change. Earlier this year, the agency took a major step to address the climate crisis
while also investing in communities across America. The IRA authorized the EPA to create and
implement the Greenhouse Gas Reduction Fund, a historic $27 billion investment to combat the
climate crisis by mobilizing financing and private capital for greenhouse-gas and air-pollution-
reducing projects in communities across the country. Additionally, the GGRF's National Clean
Investment Fund, the Clean Communities Investment Accelerator, and the Solar for All programs will
finance clean-technology deployment nationally and in low-income and disadvantaged communities.
Simultaneously, these resources will enhance the capacity of community lenders that serve those
communities and spur adoption of clean-distributed solar energy that lowers energy bills for millions
of Americans in low-income and disadvantaged communities. Each of these programs will help the
United States address the climate crisis while expanding good-paying job opportunities in domestic
industries and advancing the Administration's environmental justice goals.
As laid out in the agency's new FY2022-26 Strategic Plan, the EPA is employing the full array of
policy and legal tools at our disposal to incorporate environmental and climate justice considerations
in all our activities and actions. We will do so while maintaining a steadfast commitment to scientific
integrity as the underpinning of all the agency's decisions and rulemakings. We are dramatically
stepping up the pace on efforts to modernize the country's drinking and wastewater systems;
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safeguard communities and ecological systems from perfluoroalkyl and polyfluoroalkyl substances
contamination; clean up and revitalize contaminated sites; and strengthen energy security while
confronting the climate crisis. At the same time, these investments provide economic opportunities
and create good jobs across the country.
This is a very exciting time in the EPA's history. As we take advantage of these transformational
opportunities to protect human health and the environment more fully for all Americans, I continue
to be inspired by the talented and committed public servants at the agency who conduct the EPA's
business transparently and with the utmost financial integrity. I am proud to work alongside the
agency's dedicated career staff and with our tribal, state and local partners who help us advance our
mission to protect human health and the environment.
Respectfully,
Michael S. Regan
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Section I
Management's ^
Discussion and
Analysis
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Mission
ABOUT EPA
What EPA Does
¦S Develops an d enforces reg ulations
¦S Gives grants to states, local
communities, and tribes
¦S Studies environmental issues
¦S Sponsors partnerships
¦S Teaches people about the
environment
¦S Publishes environmental health
information
The mission of the EPA is to protect human health and the
environment
To accomplish this mission, the EPA works to ensure that
Americans have clean air, land, and water for present and future
generations. This includes the EPA's commitment to take steps
and align its actions to respond to the climate crisis and continue
engaging the global community. Also, the EPA will take critical
actions to advance environmental justice and enforce civil rights
laws that impact underserved and overburdened communities.
The EPA relies on accurate scientific information to identify
human health and environmental matters that affect policy
decisions and enforcement actions.
The EPA works to ensure all communities, individuals, businesses, and state, local and tribal governments
have access to accurate and sufficient information to effectively participate in delivering a cleaner, safer,
and healthier environment. The Agency ensures contaminated lands and toxic sites are cleaned up by
potentially responsible parties and revitalized, and chemicals in the marketplace are reviewed for safety.
Environmental stewardship is integral to U.S. policies concerning natural resources, human health,
economic growth, energy, transportation, agriculture, industry, and international trade, and these factors
are similarly considered in establishing environmental policy. The EPA is committed to effectively and
efficiently serving the American people and conducting business with transparency in a manner worthy of
the public's trust and confidence.
History and Purpose
The EPA was established in 1970 and has worked over five decades to identify, evaluate, and execute
sustainable solutions to existing and emerging environmental and public health concerns. The negative
impact and hazards of environmental pollution underscore the value and importance of EPA's mission. The
American people deserve a clean, healthy, and safe environment where they live, work, and play.
The EPA incorporates environmental research, monitoring, standard-setting, and enforcement functions
under the guidance of a single, independent agency. As a result, the agency ensures environmental
protection remains an integral part of all U.S. policies, whether related to economic growth, climate change,
environmental justice, natural resource use, energy, transportation, agriculture, or human health.
The EPA has made and continues to make great strides in providing a cleaner, safer, and healthier
environment for all Americans and future generations. Focused cleanup efforts have helped remedy the
practices of the past, and the EPA continuously works to monitor and regulate pollutants, evaluate new
chemicals and pesticides, and inspire better decision-making to safeguard our environmental future.
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Organization
The EPA's headquarters offices, 10 regional offices, and more than a dozen laboratories and field offices
across the country employ a diverse, highly educated, and technically trained workforce of roughly 15,000
people.
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Headquarter and Regional Office Map
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EPA Offices and Facilites
EPA National Headquarters ^ EPA Regional Headquarters
Collaborating with Partners and Stakeholders
EPA Regional and Program Laboratories and Facilities
The EPA's partnerships with states, tribes, local governments, and the global community are central to the
success of protecting human health and the environment. For five decades, this collaboration has
strengthened federal environmental protection laws that are implemented within state, tribal, and local
jurisdictions. Through continued partnerships communities, individuals, businesses, and state, local and
tribal governments have access to accurate information sufficient to effectively participate in managing
human health and environmental risks.
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FY 2023 PROGRAM PERFORMANCE
Detailed FY 2023 performance results will be presented in the EPA's FY 2023 Annual Performance Report
The EPA will include its FY 2023 APR with its FY 2025 Annual Performance Plan and Budget. These
reports, along with FY 2023 performance results will be posted at http: //www.epa.gov/planandbudget
concurrent with the publication of the FY 2025 President's Budget.
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FINANCIAL ANALYSIS AND STEWARDSHIP
INFORMATION
Sound Financial Management: Good for the Environment. Good for the Nation
The financial management overview below highlights some of the EPA's most significant financial
achievements carried out during the agency's efforts to execute its mission to protect human health and the
environment during FY 2023:
• Agency Financial Statements. For the 24th consecutive year, the EPA's OIG issued a "clean",
unmodified, audit opinion for the Agency's financial statements. This accomplishment underlines EPA's
consistency in providing timely, reliable, and accurate financial information that is reported in all material
aspects.
• Infrastructure Investment & Jobs Act (IIJA) & Inflation Reduction Act Funding (IRA). Through the
passing of the IIJA and IRA, the EPA received over $100 billion in supplemental funding, which has created
an unprecedented opportunity to advance agency efforts to protect human health and the environment
and help the nation address challenges such as climate change, environmental justice and strengthening
our nation's infrastructure. To ensure proper tracking and reporting of IIJA and IRA resources, OCFO
developed new coding structures to precisely track dozens of new IIJA and IRA budgetary line items and
enhanced dashboards so managers and staff could efficiently access budget and financial data in real time.
These enhancements assist the agency in ensuring proper stewardship of IIJA and IRA funding.
• CARES Act. In FY 2023, the agency continued to use funds received under the Coronavirus Aid, Relief, and
Economic Security Act, to support Environmental Program Management, Science and Technology, Building
and Facilities and Superfund program efforts in response to the COVID-19 pandemic.
• Program Integrity - Fraud Risk Management (FRM) Program. In FY2023, the EPA enhanced its Fraud
Risk Management (FRM) program to increase fraud risk awareness throughout the agency. OCFO led the
FRM program by holding agency-wide trainings, discussions and fraud risk assessments, to help expand
the dialogue and expertise surrounding fraud awareness across the agency. The agency successfully
established a Fraud Risk Management Workgroup, who offered broad perspectives of potential fraud
vulnerabilities in agency operations and identified various type of schemes to consider when assessing
fraud. The Office of the Inspector General also extensively provided trainings to the agency to help
employees identify and mitigate fraud vulnerabilities in daily operations. Currently, the OCFO is in the
process of developing an extensive Fraud Risk Management Guidance document to publish and distribute
agency-wide in FY 2024 to ensure effective program integrity.
• Invoice Processing Platform. In May 2023, the EPA fully launched the Invoice Processing Platform (IPP).
IPP is an electronic invoicing system for all invoices that are currently processed through legacy agency
systems. IPP has significantly streamlined and standardized the invoice approval process. It combines
efforts from multiple systems, replacing the agency's Contract Payment System and Small Purchase
Information Tracking System with a single system. IPP also interfaces directly with EPA's acquisition
system and financial system, which eliminates data reconciliation issues when processing invoices. Since
its release in May, vendor payments have been made on over 14,700 invoices in IPP totaling over $588
million.
• Robotics Process Automation (RPA). OCFO developed a Robotics Process Automation (RPA) program
to pilot and implement the usage of automation to allow for improved efficiency in financial management
practices. One example of an implemented RPA involved automating the retrieval of grant-related
earmark financial data from the Agency's Compass Data Warehouse in order to streamline reporting and
tracking. This RPA eliminated manual processes the agency formerly used for data validation, reduced the
potential for human error and minimized volume processing time. As the agency continues to develop its
RPA program, the goal is to continually find new processes related to financial management that can be
better controlled and run through automation.
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• Continuous Improvement Summit. In FY 2023, OCFO's Office of Continuous Improvement (OCI) hosted
the EPA's 5th annual continuous improvement summit, which brought people back together in person
while maintaining a virtual component, making it the first hybrid summit The summit in FY 2023 had 450
registrants and participation from 35 states, 10 tribes and 1 other country, in addition to over 300 EPA
employees. A total of 51 speakers delivered 30 different sessions focused on providing summit attendees
training tools, and techniques to help them innovate and continuously improve processes in their
programs and organizations. This summit speaks to the OCFO's commitment to collaboration, innovation,
and continuous improvement as we continue our efforts to ensure sound financial management of
appropriated resources.
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Financial Condition and Results
Financial statements are formal financial records that document the EPA's activities at the transaction
level, where a "financial event" occurs. A financial event is any occurrence having financial consequences to
the federal government related to the receipt of appropriations or other financial resources; acquisition of
goods or services; payments or collections; recognition of guarantees, benefits to be provided, and other
potential liabilities; or other reportable financial activities.
The EPA prepares four consolidated
statements (a balance sheet, a statement of net
cost, a statement of changes in net position,
and a statement of custodial activity) and one
combined statement, the Statement of
Budgetary Resources. Together, these
statements with their accompanying notes
provide the complete picture of the EPA's
financial situation. The complete statements
with accompanying notes, as well as the
auditors' opinion, are available in Section II of
this report.
Key Terms
Assets: What the EPA owns and manages.
Liabilities: Amounts the EPA owes because
of past transactions or events.
Net position: The difference between the
EPA's assets and liabilities.
Net cost of operations: The difference between
the costs incurred by the EPA's programs and
revenues.
The balance sheet displays assets, liabilities,
and net position as of September 30, 2023, and
September 30, 2022. The statement of net cost
shows the EPA's gross cost to operate, minus
exchange revenue earned from its activities.
Together, these two statements provide
information about key components of the
EPA's financial condition—assets, liabilities,
net position, and net cost of operations. The
balance sheet trend chart depicts the agency's
financial activity levels since FY 2021.
Balance Sheet Trend
(dollars in billions)
$100
$80
= nil ... Il ...
Assets Liabilities Net Position NetCostof
Operations
~ 2021 ¦ 2022 C 2023
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The figure below depicts the EPA's aggregate budgetary resources (congressional appropriations and some
agency collections], obligations (authorized commitment of funds), and total outlays (cash payments) for
each of the last five fiscal years. The Statement of Budgetary Resources in Section II provides more
information on the makeup of the agency's resources.
EPA Financial Trends
(dollars in billions)
$98
$88
$78
$68
$58
$48
$38
$28
$18
$8
2019
2020
2021
2022
2023
Budgetary Resources
• Obligations
-Total Ou tlays+Disbursements
Assets—What EPA Owns and Manages
The EPA's assets totaled $92 billion at the end of FY 2023, an increase of $14.75 billion from the FY 2022
level. In FY 2023, approximately 93 percent of the EPA's assets fall into two categories: fund balance with
the Department of the Treasury and investments. All of the EPA's investments are backed by U.S.
government securities. The graph below compares the agency's FY 2023 and FY 2022 assets by major
categories.
FY 2022 COMPOSITION OF ASSETS
Accounts Receivable prepayment^- L°a"S ^eivable
(NetJ 1 /o Other Assets
Property, Plant, and
Equipment (Net] T%~
Investments
13%
FY 2023 COMPOSITION OF ASSETS
— Fund Balance
with Treasury
83%
Fund Balance
with Treasury
80%
Property, Plant,
Equipment (Net) 1%
Investments
13%
Accounts Receivabl
(Net) 1%
Advances and
Loans Receivable
Other Assets
0%
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Liabilities—What EPA Owes
The EPA's liabilities were $8.13 billion at the end of FY 2023, an increase of $1.5 billion from the FY 2022
level. In FY 2023, the EPA's largest liability (48 percent) was advances from others and deferred revenue.
Additional categories include accounts payable, federal employee benefits, and debt. The graphs compare
FY 2023 and FY 2022 liabilities by major categories.
FY 2022 COMPOSITION OF LIABILITIES FY 2023 COMPOSITION OF LIABILITIES
Federal Employee
Benefits
23%
Advances from Others
and Deferred Revenue
59%
Other
14%
Accounts
Payable, 1%
Advances from
Others and
Deferred Revenue,
48%
Other, l™-
Federal Employee
Benefits, 3%
.Accounts
Payable, 1%
Net Cost of Operations—How EPA Used Its Funds
The graph that follows show how the EPA's funds are expended among five expenditure accounts in FY
2023 and FY 2022.
FY 2022 NET COST BY PROGRAM
State and Tribal
Assistance Agreements
45%
Environmental
Programs &
Management
33%
State and Tribal
Assistance Agreements
49%
FY 2023 NET COST BY PROGRAM
Other
5o/0 Environmental
Programs &
Management
26%
Leaking
Underground
Storage Tanks
1%
Underground
Storage Tanks
& Technology
Superfund
12%
Science &
Technology
9%
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The EPA serves as a steward on behalf of the American people. The chart below presents four categories of
stewardship: Superfund land easement, research and development, infrastructure, and human capital. In
FY 2023, the EPA devoted a total of $6.12 billion to its stewardship activities.
FY 2022 STEWARDSHIP
FY 2023 STEWARDSHIP
Human Capital
0%
Researcl
Developn
13%
Infrastructure
90%
Per the Federal Accounting Standards Advisory Board, stewardship investments consist of expenditures
made by the agency for the long-term benefit of the nation that do not result in the federal government
acquiring tangible assets.
- Some of the largest infrastructure programs within the agency are the Clean Water State
Revolving Fund and Drinking Water State Revolving Fund (SRF) programs that provide
grant funds to states for water infrastructure projects, such as the construction of
wastewater and drinking water treatment facilities. States lend the majority of these funds
to localities or utilities to fund the construction and or upgrade of facilities (some may also
be used for loan forgiveness or given as grants). Loan repayments then revolve at the state
level to fund future water infrastructure projects. The EPA's budget included nearly $11.24
billion in FY 2023 appropriated funds for the SRFs for states' use. In addition, states lent
billions of dollars from funds they received as repayments from previous State Revolving
Fund loans. These funds provide assistance to public drinking water and wastewater
systems for the enhancement of water infrastructure, allowing for cleaner water bodies and
crucial access to safer drinking water for millions ofpeople.
- Research and development activities enable the EPA to identify and assess important risks
to human health and the environment These critical research investments provide the basis
for the EPA's regulatory work, including regulations to protect children's health and at-risk
communities, drinking water, and the nation's ecosystems.
- Land activities include contaminated sites to which the EPA acquires title under the
Superfund authority. This land needs remediation and cleanup because its quality is well
below any usable and manageable standards. To gain access to contaminated sites, the EPA
may acquire easements that are in good and usable condition. These easements may also
serve to isolate the site and restrict usage while the cleanup is takingplace.
- The agency's investment in human capital through training which includes a focus on
diversity, equity, and inclusion awareness, public forums, and research fellowships are
components of many of the agency's programs and effective in achieving the agency's
mission of protecting public health and the environment.
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Financial Management for the Future
During times of environmental challenges, sound stewardship of the EPA's financial resources continues to
be critical to the agency's ability to protect the environment and human health. Reliable, accurate, and
timely financial information is essential to ensure prudent and cost-effective decisions for addressing land,
water, air and broader ecosystem issues. The strength of EPA's financial stewardship capabilities reflects
the fundamental elements of financial management: people and systems.
People: The EPA actively leverages available tools to recruit the highly qualified individuals with the
necessary skills to meet tomorrow's financial challenges. Relevant staff members are trained in financial
analysis and forecasting to understand financial data and what it means.
Systems: The EPA is integrating financial information into decision-making so that it effectively maximizes
the prudent use of its resources. The EPA's core financial system, Compass, is based on a commercial-off-
the-shelf software solution. Compass has improved the EPA's financial stewardship by strengthening
accountability, data integrity and internal controls within the following business areas:
General ledger
Accounts payable
Accounts receivable
Property
Project cost
Intra-governmental transactions
Budget execution
Compass provides core budget execution and accounting functions while facilitating more efficient
transaction processing. The system posts updates to ledgers and tables as transactions are processed and
generates source data for the preparation of financial statements and budgetary reports. During the next
year, the agency plans to look at opportunities to review all remaining payment tracking systems and seek
to move them into the financial system, where applicable.
The OMB has outlined several planned solutions to assist agencies with modernizing and maximizing
information technology while retiring aging administrative systems. The implementation of shared
solutions will allow the EPA to continue efforts already begun to streamline and enhance the delivery of
financial management information and services. The EPA has implemented G-Invoicing (for federal
interagency agreements) and the Invoice Payment Platform (for contracts and simplified acquisitions).
These two initiatives were guided by the Treasury. The agency has fully implemented G-Invoicing for all
new interagency agreements. The second stage of the implementation involves the coordinated effort
between the agency and trading partners to establish all existing interagency agreements in G-Invoicing.
The agency is actively working with trading partners to close out or transfer all of the existing IA
agreements to G-invoicing in order to meet the FY 2026 mandate. The conversion of existing interagency
agreements will be limited based on the trading partner's overall implementation status of G-invoicing.
Limitations of the Principal Financial Statements
The EPA prepared the principal financial statements to report the financial position and results of its
operations, pursuant to the requirements of 31 U.S.C. 3515 (b). The EPAhas prepared the statements from
the books and records of the entity in accordance with federal generally accepted accounting principles
and the formats prescribed by OMB. Reports used to monitor and control budgetary resources are
prepared from the same books and records. The financial statements should be read with the realization
that they are for a component of the final U.S. Government financial statements.
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IMPROVING MANAGEMENT AND RESULTS
Office of Inspector General Audits. Evaluations, and Investigations
The OIG contributes to the EPA's mission to protect human health and the environment by assessing the
efficiency and effectiveness of the agency's program management and results. The OIG provides oversight
to help EPA carry out its mission through audits, evaluations, inspections, and investigations to determine
if agency resources are used as intended, identify cost savings, and help the agency protect human health
and the environment more efficiently and cost effectively. The OIG performs its mission through
independent oversight of the programs and operations of the EPA and the development of
recommendations for improvements. The OIG also contributes to the oversight, integrity of, and public
confidence in the agency's programs and to the security of its resources by preventing and detecting
possible fraud, waste, and abuse and pursuing judicial and administrative remedies.
In FY 2023, the OIG identified key management challenges and internal control weaknesses and the audits,
evaluations, and investigations resulted in:
• $182,964,548 million in potential savings and recoveries1;
• 77 Recommendations for improvement; and,
• 48 Criminal, Civil, or Administrative Enforcement Actions2.
Grants Management
The EPA has two major grants management metrics, one for grant competition, the other for grants
closeout The EPA's Policy for Competition of Assistance Agreements establishes requirements for the
competition of assistance agreements (grants, cooperative agreements, and fellowships) to the maximum
extent practicable. The Agency tracks the percentage of new grant awards that are competed according to
the policy. For FY 2023, EPA competed $639,153,514 (168% of the value competed in FY22), which far
surpassed all other prior years through 2009 in total dollars competed, which is 68% of the funds covered
by the Policy. While EPA did not meet the 90% performance metric target, it is largely due to an exception
from competition provided to the Climate Pollution Reduction Grants (CPRG) Planning Grants program,
which issued $243,365,544 via 210 noncompetitive grants. Factoring out CPRG, EPA competed 92% of
funds covered by the Policy in FY23.
EPA tracks the closeout of grants through two measures, one for grants for which the project period
expired within the previous fiscal year and one for older grants for which the project period expired prior
to the last fiscal year. For FY 2023, EPA closed out 83% of the awards that expired that expired in 2022
and 99% of those that expired in earlier years (data as of 9/30/23).
Grants Management Performance Measures for EPA
Performance Measure
Target
Progress in FY 2022
Progress in FY 2023
Percentage of grants closed out
90%
92% closure of grants that
expired in 2021
83% closure of grants
that expired in 2022
99%
99% closure of grants that
expired in 2020 and
earlier
99% closure of grants
that expired in 2021 and
earlier
Percentage of new grant funds
subject to the competition policy
that were competed
90%
96%
68%
1 This figure includes questioned costs, potential monetary benefits, fines penalties and settlements, and costs the agency avoided
after implementing recommendations based on investigative results.
2This figure includes indictments, convictions, civil actions, administrative actions taken, and suspension or debarment actions.
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ACCOUNTABILITY: SYSTEMS, CONTROLS, AND
LEGAL COMPLIANCE
Federal Managers' Financial Integrity Act (FMFIA)
The FMFIA requires federal agencies to conduct ongoing evaluations of their internal controls over
program operations and financial activities and report the results to the President and Congress.
Additionally, agencies are required to assess and report on whether financial management systems comply
with federal standards.
The EPA evaluated its internal controls in accordance with OMB Circular A-123, Management's
Responsibility for Enterprise Risk Management and Internal Control. The agency operates a comprehensive
internal control program, which ensures compliance with the requirements of FMFIA and other laws and
regulations. The EPA's national programs and regional offices conduct risk and internal control
assessments and submit annual assurance letters attesting to the soundness of the internal controls within
their organizations. These assurance letters provide the basis for the Administrator's statement of
assurance on the overall effectiveness of the EPA's internal controls designed for operations and financial
management systems.
In FY 2023, the EPA did not identify any new material weaknesses related to effectiveness and efficiency of
operations. The EPA continues to emphasize the importance of maintaining effective internal controls in
order to comply with FMFIA and other applicable laws and regulations.
Internal Controls Over Financial Reporting
The agency has evaluated the key internal controls spanning its financial processes. Based on this
evaluation, the EPA did not identify any new material weaknesses. Subsequent to the agency's review, The
EPA's OIG did not identify any new material weaknesses during the FY 2023 financial statement audit.
Internal Controls Over Financial Management Systems
The FMFIA requires agencies to ensure that financial management systems consistently provide reliable
data that comply with government-wide principles, standards, and requirements. Based on the agency's
evaluation of its financial management systems, no material weaknesses were identified. The assessment
included a review of the agency's core financial system, Compass, as well as those considered as financially
related or mixed systems that support or interface with the core financial system. The EPA has determined
that its financial management systems substantially comply with FMFIA requirements and federal
standards.
Based on the results of the agency and the OIG's FY 2023 evaluations, the Administrator provides
reasonable assurance on the adequacy and effectiveness of the EPA's internal controls over financial
management systems.
The Digital Accountability and TransparencvAct
The DATA Act of 2014 was designed to increase the standardization and transparency of federal spending.
It requires agencies to report data, consistent with data standards established by OMB and the Department
of the Treasury, for publication on USASpending.gov.
During the implementation of the DATA Act requirements, the EPA certified compliance with OMB
guidance and provided reasonable assurance that internal controls support the reliability and validity of
account-level and award-level data reported on USASpending.gov. This level of assurance in the internal
controls enables through three elements of the EPA DATA Act submission process: 1) establishment of the
DATA Act Evaluation and Approval Repository Tool (DEAR); 2) multi-level approval process; and 3)
19
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documentation of all associated warnings in its statement of assurance.
The DEAR Tool was designed to transform data to meet the data standards, pre-validate all warnings and
edits that would be triggered when submitting the information to the DATA Act broker, and to standardize
and fully document the multi-level approval process, culminating in the Senior Accountable Official
approval.
The multi-level approval process within the DATA Act submission process allows all parties of the approval
process to be informed of the issues present and documented within the files. The approval process
consists of three independent reviews of the DATA Act files: appropriations and program activities/BOC
(Files A and B), contract awards (File C and Dl), and grant awards (File C and D2). The case manager for
each review ensures that all warnings are within normal limits and edits have been removed and the files
are ready for certification. Next, the Office Director provides a memorandum, which includes an
explanation as to why particular warnings could not be fully resolved. By signing the memorandum, the
Office Directors are confirming that the information submitted is valid and can be certified for publishing to
USA Spending. A final briefing is held to give the appropriate assurance to the Senior Accountable Official
and to address questions or concerns prior to official certification that the files fully comply with thelaw.
The Statement of Assurance is the central piece of information for the agency to document its data issues
that triggered the DATA Act warnings but remain unresolved. The EPA's approach is to address all data
issues that can easily be resolved with changes to the host financial system or the DEAR. For those issues
that what cannot be addressed in a timely fashion, the agency fully documents the cause of the warnings
within the Statement of Assurance. Therefore, the EPA uses the Statement of Assurance as the document to
illustrate that even though our data has flaws, the agency understood and considered the issues in the
larger context of the DATA Act submission.
The agency continually works to improve data quality and completeness, in line with the requirements of
the DATA Act. Moving into FY2024, the agency aims to continue to focus on improving data quality and
streamlining the review processes to ensure that it continues to maintain exemplary transparency to the
public on spending.
Antideficiencv Act (ADA)
Per the Antideficiency Act (ADA), federal employees are prohibited from obligating funds in excess of an
appropriation, or before those funds are available, and from accepting voluntary services. In FY 2022, the EPA's
Office of General Counsel determined that in FY 2018 EPA violated section 710 of the Financial Services and
General Government Appropriations Act, 2017 when it failed to notify the Committees on Appropriations of the
House of Representatives and Senate prior to obligating in excess of $5,000 to install a soundproof privacy booth
for the office of the Administrator during his period of appointment. EPA reported its Antideficiency Act
violation as required by law.
Federal Financial Management Improvement Act (FFMIA)
FFMIA requires that agencies implement and maintain financial management systems that comply with the
following:
Federal financial management system requirements;
Applicable federal accounting standards; and
U.S. Standard General Ledger at the transaction level.
The agency evaluated its financial management systems and has determined they complied with FFMIA
requirements. Additionally, FFMIA requires independent auditors to report on agency compliance with the
three requirements as part of financial statement audit reports.
20
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Fiscal Year 2023 Annual Assurance Statement
The U.S. Environmental Protection Agency's management is responsible for managing risk and
maintaining effective internal control to meet the objectives of the Federal Managers' Financial Integrity
Act.
In accordance with Section 2 of FMFIA and the Office of Management and Budget's Circular A-12 3,
"Management's Responsibility for Enterprise Risk Management and Internal Control", the EPA identified
and evaluated risks and assessed the effectiveness of its internal controls to support the effectiveness and
efficiency of operations, reliable financial reporting, and compliance with applicable laws and regulations.
Section 4 of the FMFIA and the Federal Financial Management Improvement Act of 1996 require
management to ensure financial management systems provide reliable, consistent disclosure of financial
data. In accordance with Appendix D of the OMB's Circular A-12 3, the agency evaluated whether financial
management systems substantially comply with the FFMIA's requirements.
The EPA did not identify any new material weaknesses during FY 2023. The one previously identified
weakness related to the financial statement preparation process was downgraded to a significant
deficiency after the completion of the FY 2020 financial statement audit and all remaining corrective
actions have been completed.
Although no new material weaknesses were identified, the EPA will continue to monitor its programmatic,
financial, and administrative controls to ensure compliance with laws and regulations.
Based on the results of the agency's assessments and recent program improvements, I can provide
reasonable assurance that the EPA's internal control over operations is effective and the agency's financial
management systems conform to governmentwide standards as of September 30, 2023. The EPA's
internal controls over financial reporting are operating effectively as well.
Michael S. Regan
Administrator
November 15, 2023
Date
21
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Section II
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Message from the Chief Financial Officer
November 15, 2023
I am pleased to join Administrator Regan in presenting the U.S.
Environmental Protection Agency's Fiscal Year 2023 Agency Financial
Report. This AFR presents our accountability in reporting and stewardship
over taxpayer dollars for FY 2023 and highlights our most notable
accomplishments as we continue to carry out the EPA's mission to protect
human health and the environment.
For the 24th consecutive year, the agency achieved a clean, unqualified
opinion on its financial statements from the EPA's Office of Inspector
General. This impressive accomplishment exemplifies our unwavering
commitment to sound financial management and to ensure effective
management of the financial resources entrusted to us by the American
people.
During FY 2023, the agency continued to make remarkable strides towards combatting the
environmental challenges faced by our nation as the EPA advances the Biden Administration's ambitious
environmental agenda. The Infrastructure Investment and Jobs Act, commonly referred to as the
Bipartisan Infrastructure Law, and Inflation Reduction Act appropriated over $100 billion to invest in the
national infrastructure, climate, and energy needs to benefit all people. With this unprecedented funding,
the OCFO has implemented additional oversight responsibilities to ensure the safeguarding of these
resources against waste, fraud, and abuse.
The OCFO developed agencywide guidance on the importance of program integrity, internal controls, and
risk management. Through enhanced tracking and transparent reporting, the agency ensures proper
stewardship of the $100 billion in IIJA and IRA funds. To meet program goals and objectives successfully,
the EPA completed risk assessments and tested payment integrity to ensure that appropriate controls
were in place to prevent and detect improper payments. This increased oversight is essential to ensure
funds are used properly to continue enhancing the EPA's longstanding work that includes providing
environmental justice to disadvantaged communities, developing local solutions necessary to drastically
reduce emissions, and creating jobs in local communities.
Now moving into its third year of implementation, the EPA's FY 2022 to FY 2026 Strategic Plan continues
to serve as the agency's beacon to tackle the climate crisis; advance environmental justice and civil rights;
ensure workforce equity; strengthen Tribal, state, and local partnerships; and enhance community
engagement. I am proud of the OCFO's effort to lead the EPA's development of the agency's strategic plan
and the National Program Guidances that operationalize that plan. To advance financial resource
stewardship in collaboration with the Department of the Treasury, the EPA's Office of Mission Support,
and our stakeholders, the OCFO was instrumental in implementing the Invoice Processing Platform, a
shared federal service, at the agency in May 2023. The IPP is a secure, web-based, centralized program
through which federal agencies better manage the invoicing process for goods and services from
purchase to payment, automating the process to improve timeliness and accuracy ultimately saving
vendors time.
These efforts ensure that proper oversight is in place and that EPA's programs working to advance the
agency's organizational excellence and workforce equity speak to the highly impactful work that OCFO
does to support the EPA's mission. I am incredibly grateful to OCFO's employees' relentless commitment
23
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to serving our internal and external stakeholders. The over $110 billion in supplemental and annual
appropriations entrusted to the agency stands as an important reminder of our responsibility and duty to
fulfill the EPA's mission. The OCFO remains diligent in our efforts to provide oversight and guidance to
the agency on sound financial management practices and ensuring our resources are protected against
waste, fraud, and abuse.
Sincerely,
Faisal Amin
24
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EPA'S FISCAL YEARS 2023 AND 2022
CONSOLIDATED FINANCIAL
STATEMENTS (WITH RESTATEMENT)
25
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Table of Contents
Principal Financial Statements 27
Notes to the Financial Statements 34
Note 1. Summary of Significant Accounting Policies 34
Note 2. Fund Balance with Treasury (FBWT) 43
Note 3. Cash and Other Monetary Assets 43
Note 4. Investments, Net 43
Note 5. Accounts Receivable, Net 44
Note 6. Inventory and Rel ated Property 44
Note 7. Loans Receivable, Net 44
Note 8. Accounts Payable 47
Note 9. Property, Plant andEquipment, Net 48
Note 10. Debt 50
Note 11. Stewardship Property, Plant and Equipment 51
Note 12. Liability to the General Fund for Custodial Assets 51
Note 13. Other Liabilities 52
Note 14. Leases 53
Note 15. Advances from Others and Deferred Revenue 54
Note 16. Commitments and Contingencies 54
Note 17. Funds from Dedicated Collections (Restated) 57
Note 18. Environmental and Disposal Liabilities 62
Note 19. State Credits 63
Note 20. Preauthorized Mixed Funding Agreements 63
Note 21. Custodial Revenues and Accounts Receivable 63
Note 22. Statement of Budgetary Resources 64
Note 23. Imputed Financing 66
Note 24. Federal Employee and Veteran Benefits Payable 67
Note 25. Non-Exchange Revenue, Statement of Changes inNet Position 68
Note 26. Reconciliation of Net Cost of Operations to Net Outlays 69
Note 27. Amounts Held by Treasury 72
Note 28. COVID-19 Activity 76
Note 29. Reclassified Financial Statements for Government-wide Reporting 76
Note 30. Restatement 78
Required Supplementary Information (Unaudited) 79
Deferred Maintenance 79
Supplemental Combining Statement of Budgetary Resources 83
26.
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Principal Financial Statements
United States Environmental Protection Agency
Consolidated Balance Sheet (Restated)
As of September 30, 2023 and 2022
(Dollars in Thousands)
ASSETS:
Intragovernmental Assets:
Fund Balance With Treasury (Note 2)
Investments, Net (Note 4)
Accounts Receivable, Net (Note 5)
Advances and Prepayments
Total Intragovernmental Assets
Other Than Intragovernmental Assets:
Cash and Other Monetary Assets (Note 3)
Accounts Receivable, Net (Note 5)
Loans Receivable, Net (Note 7)
Inventory and Related Property, Net (Note 6)
Property, Plant and Equipment, Net (Note 9)
Advances and Prepayments
Total Other Than Intragovernmental Assets
Total Assets
Stewardship Property Plant and Equipment (Note 11)
LIABILITIES:
Intragovernmental Liabilities:
Accounts Payable (Note 8)
Debt (Note 10)
Advances from Others and Deferred Revenue
Other Liabilities
Liability to the General Fund for Custodial Assets (Note 12)
Other (Note 13)
Total Intragovernmental Liabilities
Other Than Intragovernmental Liabilities:
Accounts Payable (Note 8)
Federal Employee and Veteran Benefits Payable (Note 24)
Environmental and Disposal Liabilities (Note 18)
Advances from Others and Deferred Revenue (Note 15)
Other Liabilities (Note 13)
Total Other Than Intragovernmental Liabilities
Total Liabilities
Commitments and Contingencies (Note 16)
NET POSITION:
Unexpended Appropriations - Funds from Dedicated Collections (Note 17)
Unexpended Appropriations - Funds from Other than Dedicated Collections
Total Unexpended Appropriations (Consolidated)
Cumulative Results of Operations - Funds from Dedicated Collections (Note 17, 30)
Cumulative Results of Operations - Funds from Other than Dedicated Collections
(Note 30)
Total Cumulative Results of Operations (Consolidated)
Total Net Position
Total Liabilities and Net Position
2023
74,589,768
12,159,283
7,686
1.569.525
88.326.262
10
520,692
2,401,922
626
743,207
11.602
3.678.059
92.004.321
2,921
2,953,225
173,381
105,995
208.187
3.443.709
116,234
229,748
37,357
3,676,206
623,349
4.682.894
8.126.603
281
74.602.484
74,602,765
9,309,893
(34.940)
(Restated)
2022
9.274.953
83.877.718
92.004.321
64,103,829
10,297,779
5,717
261.776
74.669.101
10
548,525
1,291,508
531
730,992
10.536
2.582.102
77.251.203
3,067
1,557,180
183,791
106,560
199.697
2.050.295
62,913
223,785
32,156
3,666,198
597.993
4.583.045
6.633.340
178
62.618.529
62,618,707
7,744,123
255.033
7.999.156
70.617.863
77.251.203
The accompanying notes are an integral part of these financial statements.
27.
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United States Environmental Protection Agency
Consolidated Statement of Net Cost
For the Fiscal Years Ending September 30, 2023 and 2022
(Dollars in Thousands)
2023 2022
COSTS
Gross Costs $ 12,487,285 $ 10,142,639
Less: Earned Revenue 520.394 400.059
NET COST OF OPERATIONS (Note 26) S 11.966.891 S 9.742.580
The accompanying notes are an integral part of these financial statements.
28.
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United States Environmental Protection Agency
Statement of Net Cost by Major Program
For the Fiscal Years Ending September 30,2023
(Dollars in Thousands)
State &
Environmental
Programs &
Management
Leaking
Underground
Storage Tanks
Science &
Technology
Superfund
Tribal
Assistance
Agreements
Other
Totals
Costs:
Gross Costs
WCF Elimination
$ 3,152,262
$ 91,478
$799,818
$ 1,690,188
$ 5,871,185
$ 1,238,522
056.168^
$ 12,843,453
056.168^
Total Costs
3.152.262
91.478
799.818
1.690.188
5.871.185
882.354
12.487.285
Less:
Earned Revenue
WCF Elimination
37,771
-
4,711
239,104
-
594,976
056.168^
876,562
056.168^
Total Earned Revenue
37.771
_
4.711
239.104
_
238.808
520.394
NET COST OF
OPERATIONS
S 3.114.491
S 91.478
S 795.107
$ 1.451.084
$ 5,871,185
S 643.546
S 11.966.891
United States Environmental Protection Agency
Statement of Net Cost by Major Program
For the Fiscal Years Ending September 30, 2022
(Dollars in Thousands)
Environmental
Programs &
Management
Leaking
Underground
Storage Tanks
Science &
Technology
Superfund
State &
Tribal
Assistance
Agreements
Other
Totals
Costs:
Gross Costs
WCF Elimination
$ 3,161,870
$ 92,373
$784,144
$ 1,350,585
$ 4,254,533
$821,116 3
(321.982)
5 10,464,621
(321.982)
Total Costs
3.161.870
92.373
784.144
1.350.585
4.254.533
499.134
10.142.639
Less:
Earned Revenue
WCF Elimination
35,036
-
6,328
202,969
-
477,708
(321.982)
722,041
(321.982)
Total Earned Revenue
35.036
_
6.328
202.969
_
155.726
400.059
NET COST OF
OPERATIONS
S 3.126.834
S 92.373
S 777.816
$ 1.147.616
$ 4.254.533
S 343.408 fl
? 9.742.580
The accompanying notes are an integral part of these financial statements.
29.
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United States Environmental Protection Agency
Consolidated Statement of Changes in Net Position
For the Fiscal Years Ending September 30, 2023
(Dollars
in Thousands)
Funds from
Dedicated
Collections
Funds from
Other Than
Dedicated
Collections
Consolidated
Totals
UNEXPENDED APPROPRIATIONS:
Beginning Balance
(Note 17)
$ 178
$62,618,529
$62,618,707
Appropriations Received
Appropriations Transferred In/(Out)
Other Adjustments
Appropriations Used
Net Change in Unexpended Appropriations
103
103
23,138,776
(1,500)
(34,496)
(11.118.825)
11,983,955
23,138,776
(1,500)
(34,496)
(11.118.722)
11,984,058
Total Unexpended Appropriations
S 281
S 74.602.484
S 74.602.765
CUMULATIVE RESULTS OF OPERATIONS:
Beginning Balance
$ 7,744,123
$ 255,033
$ 7,999,156
Other Adjustments
Appropriations Used
Non-Exchange Revenue (Note 25)
Transfers-In/(Out) Without Reimbursements
Imputed Financing (Note 23)
Other
(103)
1,880,795
1,195,958
38,002
(52,084)
11,118,825
(1,172,693)
203,655
30.333
(52,084)
11,118,722
1,880,795
23,265
241,657
30.333
Net Cost of Operations
Net Change in Cumulative Results of Operations
(1.548.882)
1,565,770
(10.418.009)
(289,973)
(11.966.891)
1,275,797
Total Cumulative Results of Operations
9,309,893
(34,940)
9,274,953
Net Position
S 9.310.174
S 74.567.544
S 83.877.718
The accompanying notes are an integral part of these financial statements.
30.
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United States Environmental Protection Agency
Consolidated Statement of Changes in Net Position
For the Fiscal Years Ending September 30, 2022
(Dollars in Thousands)
(Restated)
(Restated)
Funds from
Funds from
Other Than
(Restated)
Dedicated
Dedicated
Consolidated
Collections
Collections
Totals
UNEXPENDED APPROPRIATIONS:
(Note 17)
Beginning Balance
$ 187
$ 10,400,345
$ 10,400,532
Appropriations Received
-
65,051,983
65,051,983
Other Adjustments
-
(20,398)
(20,398)
Appropriations Used
(9)
(12.813.401)
(12.813.410)
Change in Unexpended Appropriations
(9)
52,218,184
52,218,175
Total Unexpended Appropriations
S 178
S 62.618.529
S 62.618.707
CUMULATIVE RESULTS OF OPERATIONS:
Beginning Balance
$ 3,559,846
$ 372,822
$ 3,932,668
Other Adjustments (Note 30)
-
(769)
(769)
Appropriations Used
9
12,813,401
12,813,410
Non-Exchange Revenue (Note 25)
752,635
-
752,635
Transfers-In/(Out) Without Reimbursements (Note 30)
4,633,057
(4,610,710)
22,347
Imputed Financing (Note 23)
26,687
242,257
268,944
Other (Note 30)
-
(47.499)
(47.499)
Net Cost of Operations (Note 30)
(1.228.111)
(8.514.469)
(9.742.580)
Net Change in Cumulative Results of Operations
4,184,277
(117,789)
4,066,488
Total Cumulative Results of Operations
7,744,123
255,033
7,999,156
Net Position
S 7.744.301
S 62.873.562
S 70.617.863
The accompanying notes are an integral part of these financial statements.
31.
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United States Environmental Protection Agency
Combined Statement of Budgetary Resources
For the Fiscal Years Ending September 30, 2023 and 2022
(Dollars in Thousands)
2023
2022
BUDGETARY RESOURCES
Unobligated Balance From Prior Year Budget
Authority, Net (discretionary and mandatory)
(Note 22)
Appropriations (discretionary and mandatory)
Borrowing Authority (discretionary and mandatory)
Spending Authority from offsetting collections
(discretionary and mandatory)
Total Budgetary Resources
STATUS OF BUDGETARY RESOURCES
New Obligations and Upward adjustments (total)
Unobligated Balance, End of Year:
Apportioned, Unexpired Accounts
Unapportioned, Unexpired accounts
Expired Unobligated Balance, End of Year
Unobligated Balance, End of Year (total): (Note 22)
Total Budgetary Resources
OUTLAYS, NET AND DISBURSEMENTS, NET
Outlays, Net (total) (discretionary and mandatory)
Distributed Offsetting Receipts (-) (Note 22)
Agency Outlays, Net (discretionary and mandatory)
Disbursements, Net (total) (mandatory)
Budgetary
$ 57,282,366
25,003,271
639,195
Non-
Budgetary
Credit Reform
Financing
Account Budgetary
Non-
Budgetary
Credit Reform
Financing
Account
2,884,452
374,140
$ 5,674,107 $
70,271,764
542,709
3,693,794
181,898
S 82.924.832 X 3.258.592 X 76.488.580 X 3.875.692
$23,652,487 $ 3,258,592 $ 19,513,330 $ 3,875,692
59,166,962
600
104.783
59,272,345
56,844,168
24,464
106.618
56,975,250
X 82.924.832 $ 3.258.592 $ 76.488.580 $ 3.875.692
$ 14,155,184
(1.568.936)
$ 12.586.248
$ 14,318,219
(5.038.8201
$9.279.399
$ 1.379.374
$_
840.409
The accompanying notes are an integral part of these financial statements.
32.
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United States Environmental Protection Agency
Statement of Custodial Activity
For the Fiscal Years Ending September 30, 2023 and 2022
(Dollars in Thousands)
2023
2022
Total Custodial Revenue:
Sources of Cash Collections:
Fines and Penalties
$
85,601 $
56,390
Other
(25.935)
(3.810)
Total Cash Collections
59,666
52,580
Accrual Adjustments
29.999
5.935
Total Custodial Revenue (Note 21)
$
89.665 S
58.515
Disposition of Collections:
Transferred to Others (General Fund)
$
106,802 $
52,761
Increases/Decreases in Amounts to be Transferred
(17.137)
5.754
Total Disposition of Collections
$
89.665 S
58.515
Custodial Revenue Less Disposition of Collections
$
S
-
The accompanying notes are an integral part of these financial statements.
33.
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United States Environmental Protection Agency
Notes to the Financial Statements
For the Fiscal Years Ending September 30, 2023 and 2022
(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, water, waste, pesticides, and toxic substances.
The FY 2023 financial statements are presented on a consolidated basis for the Balance Sheet, Statement of Net Cost,
Statement of Net Costs by Major Program, and Statement of Changes in Net Position. The Statement of Custodial
Activity and the Statement of Budgetary Resources are presented on a combined basis. The financial statements
include the accounts of all funds described in this note by their respective Treasury fund group.
B. Basis of Presentation
The accompanying financial statements have been prepared to report the financial position and results of operations of
the U.S. Environmental Protection Agency (the EPA or Agency) as required by the Chief Financial Officers Act of
1990 and the Government Management Reform Act of 1994. The reports have been prepared from the financial
system and records of the Agency in accordance with Office of Management and Budget (OMB) Circular No. A-13 6,
Financial Reporting Requirements revised May 19, 2023, and the EPA accounting policies, which are summarized in
this note.
C. Budgets and Budgetary Accounting
I. General Funds
Congress enacts an annual appropriation for State and Tribal Assistance Grants (STAG), Buildings and Facilities
(B&F), and for payments to the Hazardous Substance Superfund to be available until expended. Annual
appropriations for the Science and Technology (S&T), Environmental Programs and Management (EPM) and for the
Office of Inspector General (OIG) are available for two fiscal years. When the appropriations for the General Funds
are enacted, Treasury issues a warrant for the respective appropriations. As the Agency disburses obligated amounts,
the balance of funds available in the appropriation is reduced at the U.S. Treasury (Treasury).
The EPA has three-year appropriation accounts and a no-year revolving fund account to provide funds to carry out
section 3024 of the Solid Waste Disposal Act, including the development, operation, maintenance, and upgrading of
the hazardous waste electronic manifest system. The Agency is authorized to establish and collect user fees for the
Hazardous Waste Electronic Manifest System Fund (e-Manifest) to recover the full cost of providing the hazardous
waste electronic manifest fund system related services.
The EPA receives two-year appropriated funds to carry out the Frank R. Lautenberg Chemical Safety for the 21st
Century Act. Under the Act, the Agency is authorized to collect user fees (up to $25 million annually) from chemical
manufacturers and processors. Fees collected will defray costs for new chemical reviews and a range of Toxic
Substances Control Act Service Fee Fund (TSCA) implementation activities for existing chemicals.
The Water Infrastructure Finance and Innovation Act of 2014 (WIFIA) established a federal credit program
administered by the EPA for eligible water and wastewater infrastructure projects. The program is financed from
appropriations to cover the estimated long-term cost of the loans. The long-term cost of the loans is defined as the net
present value of the estimated cash flows associated with the loans. A permanent indefinite appropriation is available
to finance the costs of reestimated loans that occur in subsequent years after the loans are disbursed. The Agency
received two-year appropriations in fiscal years 2023 and 2022 to finance the administrative portion of the program.
34.
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United States Environmental Protection Agency
Notes to the Financial Statements
For the Fiscal Years Ending September 30, 2023 and 2022
(Dollars in Thousands)
EPA reestimates the risk on each individual loan annually. Proceeds issued by EPA cannot exceed forty-nine percent
of eligible project costs. Project costs must exceed a minimum of $20 million for large communities and $5 million for
communities with populations of 25,000 or less. After substantial completion of a project, the borrower may defer up
to five years to start loan repayment and cannot exceed thirty-five years for the final loan maturity date.
Funds transferred from other federal agencies are processed as non-expenditure transfers. Clearing accounts and
receipt accounts receive no appropriated funds. Amounts are recorded to the clearing accounts pending further
disposition. Amounts recorded to the receipt accounts capture amounts collected for or payable to the Treasury
General Fund.
On November 15, 2021, the Infrastructure Investment and Jobs Act (Public Law 117-58) was signed into law,
appropriating approximately $60 billion to the Agency over fiscal years 2022 through 2026; some funds have five-
year availability but most are available until expended. The Inflation Reduction Act (IRA), signed in August 2022,
appropriated the Agency an additional $42 billion, available for a minimum of two and a maximum of ten fiscal
years.
IE. Revolving Funds
Funding of the Pesticides Reregistration and Expedited Processing Fund (FIFRA) and Hazardous Waste Electronic
Manifest System Fund (e-Manifest) is provided by fees collected from industry to offset costs incurred by the Agency
in carrying out these programs. Each year, the Agency submits an apportionment request to OMB based on the
anticipated collections of industry fees.
Funding of the Working Capital Fund (WCF) is provided by fees collected from other Agency appropriations and
other federal agencies to offset costs incurred for providing the Agency administrative support for computer and
telecommunication services, financial system services, employee relocation services, background investigations,
continuity of operations, and postage.
The EPA Damage Assessment and Restoration Revolving Fund was established through the U.S. Department of the
Treasury and OMB for funds received for critical damage assessments and restoration of natural resources injured as a
result of the Deepwater Horizon oil spill.
HI. Special Funds
The Environmental Services Receipts Account Fund obtains fees associated with environmental programs. The
Pesticide Registration Improvement Act Fund (PRIA) collects pesticide registration service fees for specified
registration and amended registration and associated tolerance actions which set maximum residue levels for food and
feed. The Toxic Substances Control Act Fund (TSCA) collects user fees to defray costs for new chemical reviews and
range of implementation activities for existing chemicals.
IV. Deposit Funds
Deposit accounts receive no appropriated funds. Amounts are recorded to the deposit accounts pending further
disposition. Until a determination is made, these are not the EPA's funds. The amounts are reported to the U.S.
Treasury through the Government-Wide Treasury Account Symbol Adjusted Trial Balance System (GTAS).
35.
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United States Environmental Protection Agency
Notes to the Financial Statements
For the Fiscal Years Ending September 30, 2023 and 2022
(Dollars in Thousands)
V. Trust Funds
Congress enacts an annual appropriation for the Hazardous Substance Superfund, Leaking Underground Storage Tank
(LUST) and the Inland Oil Spill Programs accounts to remain available until expended. Transfer accounts for the
Superfund and LUST Trust Funds have been established to record appropriations moving from the Trust Fund to
allocation accounts for purposes of carrying out the program activities. As the Agency disburses obligated amounts
from the expenditure account, the Agency draws down monies from the Superfund and LUST Trust Funds held at
Treasury to cover the amounts being disbursed. The Agency draws down all the appropriated monies from the
Principal Fund of the Oil Spill Liability Trust Fund when Congress enacts the Inland Oil Spill Programs appropriation
amount to the EPA's Inland Oil Spill Programs account.
In 2015, the EPA established a receipt account for Superfund special account collections. Special accounts are
comprised of settlements from other federal agencies and proceeds from Potentially Responsible Parties (PRPs) under
the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) Section 122(b)(3). This
allows the Agency to invest the funds until drawdowns are needed for special accounts disbursements.
VI. Classified Activities
Accounting standards require all reporting entities to disclose that accounting standards allow certain presentations
and disclosures to be modified, if needed, to prevent the disclosure of classified information.
VII. Allocation Transfers
The EPA is a party to allocation transfers with other Federal agencies as both a transferring (parent) entity and a
receiving (child) entity. Allocation transfers are legal delegations from one entity of its authority to obligate budget
authority and outlay funds to another entity. A separate fund account (allocation account) is created in the U.S.
Treasury as a subset of the parent fund account for tracking and reporting purposes. All allocation transfers of
balances are credited to this account, and subsequent obligations and outlays incurred by the child entity are charged
to this allocation account as they execute the delegated activity on behalf of the parent entity. Generally, all financial
activity related to allocation transfers (e.g., budget authority, obligations, and outlays) is reported in the financial
statements of the parent entity from which the underlying legislative authority, appropriations and budget
apportionments are derived. The EPA allocates funds, as the parent, to the Center for Disease Control. The
EPA receives allocation transfers, as the child, from the Bureau of Land Management.
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.
EPA uses a modified matching principle since federal entities recognize unfunded liabilities (without budgetary
resources) in accordance with FASAB Statement of Federal Financial Accounting Standards (SFFAS) No. 5
Accounting for Liabilities of the Federal Government.
36.
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United States Environmental Protection Agency
Notes to the Financial Statements
For the Fiscal Years Ending September 30, 2023 and 2022
(Dollars in Thousands)
E. Revenue and Other Financing Sources
As a component of the Government-wide reporting entity, the entity is subject to the Federal budget process, which
involves appropriations that are provided annually and appropriations that are provided on a permanent basis. The
financial transactions that are supported by budgetary resources, which include appropriations, are generally the same
transactions reflected in entity and Government-wide financial reports.
The reporting entity's budgetary resources reflect past congressional action and enable the entity to incur budgetary
obligations, but they do not reflect assets to the Government as a whole. Budgetary obligations are legal obligations
for goods, services, or amounts to be paid based on statutory provisions (e.g., Social Security benefits). After
budgetary obligations are incurred, Treasury will make disbursements to liquidate the budgetary obligations and
finance those disbursements in the same way it finances all disbursements, using some combination of receipts, other
inflows, and borrowing from the public (if there is a budget deficit).
The following EPA policies and procedures to account for the inflow of revenue and other financing sources are in
accordance with SFFAS No. 7, Accounting for Revenues and Other Financing Sources.
I. Superfund
The Superfund program receives most of its funding through appropriations that may be used within specific statutory
limits for operations and capital expenditures (primarily equipment). Additional financing for the Superfund program
is obtained through settlements from other federal agencies and proceeds from PRPs under CERCLA Section
122(b)(3), which are placed into special accounts. Special accounts and corresponding interest are classified as
mandatory appropriations due to the 'retain and use' authority under CERCLA 122(b) (3). Cost recovery settlements
that are not placed in special accounts are deposited in the Superfund Trust Fund.
II. Other Funds
Funds under the Federal Credit Reform Act of 1990 receive program guidance and funding needed to support loan
programs through appropriations which may be used within statutory limits for operations and capital expenditures.
The WIFIA program receives additional funding to support awarding, servicing and collecting loans through
application fees collected in the program fund. WIFIA authorizes the EPA to charge fees to recover all or a portion of
the Agency's cost of providing credit assistance and the costs of retaining expert firms, including financial,
engineering, and legal services, to assist in the underwriting and servicing of federal credit instruments. The fees are
to cover costs to the extent not covered by congressional appropriations.
The FIFRA and PRIA funds receive funding through fees collected for services provided and interest on invested
funds and can obligate collections up to the amount of anticipated collections within the fiscal year on the approved
letter of apportionment. The Hazardous Waste Electronic Manifest System Fund receives funding through fees
collected for use of the Hazardous Waste Electronic Manifest System and can obligate collections up to the amount of
anticipated collections on the approved letter of apportionment. The Toxic Substances Control Act Fund (TSCA)
collects user fees to defray costs for new chemical reviews and a range of implementation activities for existing
chemicals and can obligate collections up to the amount of anticipated collections on the approved letter of
apportionment. The WCF receives revenue through fees collected from the Agency program offices for services
provided. Such revenue is eliminated with related Agency program expenses upon consolidation of the Agency's
financial statements.
Appropriated funds are recognized as other financing sources expended when goods and services have been rendered
without regard to payment of cash. Other revenues are recognized when earned (i.e., when services have been
rendered).
37.
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United States Environmental Protection Agency
Notes to the Financial Statements
For the Fiscal Years Ending September 30, 2023 and 2022
(Dollars in Thousands)
F. Fund Balance with Treasury (See Note2)
FBWT is an asset of a reporting entity and a liability of the General Fund. Similarly, investments in Federal
Government securities that are held by Dedicated Collections accounts are assets of the reporting entity responsible
for the Dedicated Collections and liabilities of the General Fund. In both cases, the amounts represent commitments
by the Government to provide resources for particular programs, but they do not represent assets to the Government as
a whole.
When the reporting entity seeks to use FBWT or investments in Government securities to liquidate budgetary
obligations, Treasury will finance the disbursements in the same way it finances all other disbursements, using some
combination of receipts, other inflows, and borrowing from the public (if there is a budget deficit).
The Agency does not maintain cash in commercial bank accounts; cash receipts and disbursements are handled by
Treasury. The major funds maintained with Treasury are General Funds, Revolving Funds, Trust Funds, Special
Funds, Deposit Funds, and Clearing Accounts. These funds have balances available to pay current liabilities and
finance authorized obligations, as applicable.
G. Investments in U.S. Government Securities (See Note 4)
Investments in U.S. Government securities are maintained by Treasury and are reported at amortized cost net of
unamortized discounts or premiums. Discounts or premiums are amortized over the term of the investments and
reported as interest income. No provision is made for unrealized gains or losses on these securities because they
generally are held to maturity.
H. Marketable Securities (See Note4)
The Agency records marketable securities at cost as of the date of receipt. Marketable securities are held by Treasury
and reported at their cost value in the financial statements until sold.
I. Accounts Receivable and Interest Receivable (See Note 5)
Superfund accounts receivable represent recovery of costs from PRPs as provided under CERCLA as amended by the
Superfund Amendments and Reauthorization Act of 1986 (SARA). Since there is no assurance that these funds will be
recovered, cost recovery expenditures are expensed when incurred. The Agency also records allocations receivable
from the Superfund Trust Fund, which are eliminated in the consolidated totals.
The Agency records accounts receivable from PRPs for Superfund site response costs when a consent decree,
judgment, administrative order, or settlement is entered. These agreements are generally negotiated after at least some,
but not necessarily all, of the site response costs have been incurred. It is the Agency's position that until a consent
decree or other form of settlement is obtained, the amount recoverable should not be recorded.
The Agency also records accounts receivable from states for a percentage of Superfund site remedial action costs
incurred by the Agency within those states. As agreed to under SSCs, cost sharing arrangements may vary according
to whether a site was privately or publicly operated at the time of hazardous substance disposal and whether the
Agency response action was removal or remedial. SSC agreements are usually for 10 percent or 50 percent of site
remedial action costs, depending on who has the primary responsibility for the site (i.e., publicly or privately owned).
States may pay the full amount of their share in advance or incrementally throughout the remedial action process.
Most remaining receivables for non-Superfund funds represent penalties and interest receivable for general fund
receipt accounts, unbilled intragovernmental reimbursements receivable, and refunds receivable for the STAG
appropriation.
38.
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United States Environmental Protection Agency
Notes to the Financial Statements
For the Fiscal Years Ending September 30, 2023 and 2022
(Dollars in Thousands)
J. Advances and Prepayments
Advances and prepayments represent funds paid to other entities both internal and external to the Agency for which a
budgetary expenditure has not yet occurred.
K. Loans Receivable (See Note 7)
Loans are accounted for as receivables after funds have been disbursed. Loans receivable resulting from loans
obligated on or after October 1, 1991, are reduced by an allowance equal to the present value of the subsidy costs
associated with these loans. The subsidy cost is calculated based on the interest rate differential between the loans and
Treasury borrowing, the estimated delinquencies and defaults net of recoveries offset by fees collected, and other
estimated cash flows associated with these loans. Loan proceeds are disbursed pursuant to the terms of the loan
agreement. Interest is calculated semi-annually on a per loan basis. Repayments are made pursuant to the terms of the
loan agreement with the option to repay loan amounts early.
L. Appropriated Amounts Held by Treasury (See Note 27)
Cash available to the Agency that is not needed immediately for current disbursements of the Superfund and LUST
Trust Funds, and amounts appropriated from the Superfund Trust Fund to the OIG and Science and Technology
appropriations, remains in the respective Trust Funds managed by Treasury.
M. Property, Plant, and Equipment (See Note 9)
The EPA accounts for its personal and real property accounting records in accordance with SFFAS No. 6, Accounting
for Property, Plant and Equipment as amended. For EPA-held property, the Fixed Assets Subsystem (FAS) maintains
the official records and automatically generates depreciation entries monthly based on in-service dates.
A purchase of EPA-held or contractor-held personal property is capitalized if it is valued at $25 thousand or more and
has an estimated useful life of at least two years. For contractor-held property, depreciation is taken on a modified
straight-line basis over a period of six years depreciating 10 percent the first and sixth year, and 20 percent in years
two through five. For contractor-held property, detailed records are maintained and accounted for in contractor
systems, not in EPA's FAS. Acquisitions of EPA-held personal property are depreciated using the straight-line method
over the specific asset's useful life, ranging from two to fifteen years.
Personal property includes capital leases. To be defined as a capital lease, a lease, at its inception, must have a lease
term of two or more years and the lower of the fair value or present value of the projected minimum lease payments
must be $75 thousand or more. Capital leases containing real property (therefore considered in the real property
category as well), have a $150 thousand capitalization threshold. In addition, the lease must meet one of the following
criteria: transfers ownership at the end of the lease to the EPA; contains a bargain purchase option; the lease term is
equal to 75 percent or more of the estimated economic service life; or the present value of the projected cash flows of
the lease and other minimum lease payments is equal to or exceeds 90 percent of the fair value.
Superfund contract property used as part of the remedy for a site-specific response action is capitalized in accordance
with the Agency's capitalization threshold. This property is part of the remedy at the site and eventually becomes part
of the site itself. Once the response action has been completed and the remedy implemented, the EPA retains control
of the property (i.e., pump and treat facility) for 10 years or less and transfers its interest in the facility to the
respective state for mandatory operation and maintenance - usually 20 years or more. Consistent with the EPA's 10-
year retention period, depreciation for this property is based on a 10-year useful life. However, if any property is
transferred to a state in a year or less, this property is charged to expense. If any property is sold prior to the EPA
relinquishing interest, the proceeds from the sale of that property shall be applied against contract payments or
refunded as required by the Federal Acquisition Regulations. An exception to the accounting of contract property
includes equipment purchased by the WCF. This property is retained in EPA's FAS and depreciated utilizing the
straight-line method based upon the asset's in-service date and useful life.
39.
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United States Environmental Protection Agency
Notes to the Financial Statements
For the Fiscal Years Ending September 30, 2023 and 2022
(Dollars in Thousands)
Real property consists of land, buildings, capital and leasehold improvements and capital leases. In FY 2017, the EPA
increased the capitalization threshold for real property, other than land, to $150 thousand from $85 thousand for
buildings and improvements and $25 thousand for plumbing, heating, and sanitation projects. The new threshold was
applied prospectively. Land is capitalized regardless of cost. Buildings are valued at an estimated original cost basis,
and land is valued at fair market value, if purchased prior to FY 1997. Real property purchased after FY 1996 is
valued at actual cost. Depreciation for real property is calculated using the straight-line method over the specific
asset's useful life, ranging from 10 to 50 years. Leasehold improvements are amortized over the lesser of their useful
life or the unexpired lease term. Additions to property and improvements not meeting the capitalization criteria,
expenditures for minor alterations, and repairs and maintenance are expensed when incurred.
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, reviewed capitalization
of other federal entities, and evaluated the materiality of software account balances. Based on the review, the Agency
increased the capitalization threshold from $250 thousand to $5 million to better align with major software acquisition
investments. The $5 million threshold was 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.
Internal use software purchased or developed for the working capital fund is capitalized at $250 thousand and is
amortized using the straight-line method over its useful life, not exceeding five years.
N. Liabilities (See Notes 8 & 13)
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 authorized for retention. 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. Liabilities of the Agency arising from other than contracts can be abrogated by the
Government acting in its sovereign capacity.
O. Debt (See Note 10)
Debt payable to Treasury results from loans from Treasury to fund the non-subsidy portion of the WIFIA direct loans.
The Agency borrows the funds from Treasury when the loan disbursements agreed upon in the loan agreement are
made. Principal payments are made to Treasury periodically based on the collection of loan receivables.
P. Accrued Unfunded Annual Leave (SeeNote 24)
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 "Federal Employee and Veteran Benefits Payable". Sick leave earned but not taken is not accrued
as a liability; it is expensed as it is used.
Q. Retirement Plan (See Note24)
There are two primary retirement systems for federal employees. Employees hired prior to January 1, 1987, may
participate in the Civil Service Retirement System (CSRS). On January 1, 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 to 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.
40.
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United States Environmental Protection Agency
Notes to the Financial Statements
For the Fiscal Years Ending September 30, 2023 and 2022
(Dollars in Thousands)
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.
R. Prior Period Adjustments and Restatements
Prior period adjustments, if any, are made in accordance with SFFAS No. 21, Reporting Corrections of Errors and
Changes in Accounting Principles. Specifically, prior period adjustments will only be made for material prior period
errors to: (1) the current period financial statements, and (2) the prior period financial statements presented for
comparison. Adjustments related to changes in accounting principles will only be made to the current period financial
statements, but not to prior period financial statements presented for comparison.
S. Deepwater Horizon Oil Spill
The April 20, 2010 Deepwater Horizon (DWH) Oil Spill was the largest oil spill in U.S. history. In the wake of the
spill, the National Contingency Plan regulation was revised to reflect the EPA's designation as a DWH Natural
Resource Trustee. The DWH Natural Resources Damage Assessment is a legal process pursuant to the Oil Pollution
Act and the April 4, 2016 Consent Decree between the U.S., the five Gulf states, and British Petroleum (BP) entered
by a federal court in New Orleans. Under the Consent Decree, a payment schedule was set forth for BP to pay $7.1
billion in natural resource damages. The Natural Resource Damage Assessments (NRDA) trustees are then jointly
responsible to use those funds in the manner set forth in Appendix 2 of the Consent Decree to restore natural
resources injured by the DWH Oil Spill. In FY 2016, the EPA received an advance of $184 thousand from BP and $2
million from the U.S. Coast Guard, to participate in addressing injured natural resources and service resulting from the
Deepwater Horizon Oil Spill. As additional projects are identified, the EPA may continue to receive funding through
the 2016 Consent Decree to implement its DWH NRDA Trustee responsibilities in the Agency's Damage Assessment
and Restoration Revolving Trust Fund.
T. 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, including environmental and grant liabilities, and the reported amounts of
revenue and expenses during the reporting period. Actual results could differ from those estimates.
U. Reclassifications and ComparativeFigures
Certain reclassifications have been made to the prior year's financial statements to enhance comparability with the
current year's financial statements and footnotes in accordance with Office of Management and Budget (OMB)
Circular No. A-13 6, Financial Reporting Requirements revised May 19, 2023. As a result, the form and content of the
Balance Sheet, Statement of Changes in Net Position and footnotes have been changed to conform with OMB Circular
No. A-136.
41.
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United States Environmental Protection Agency
Notes to the Financial Statements
For the Fiscal Years Ending September 30, 2023 and 2022
(Dollars in Thousands)
Note 2. Fund Balance With Treasury (FBWT)
Fund Balance with Treasury as of September 30, 2023 and 2022 consists of the following:
2023 2022
Entity
Non-Entity
Entity
Non-Entity
Assets
Assets
Total
Assets
Assets
Total
Trust Funds:
Superfund
$ (56,699)
$
$ (56,699)
$ 244,972
$
-
$ 244,972
LUST
20,603
-
20,603
24,166
-
24,166
Oil Spill & Misc.
20,556
-
20,556
18,919
-
18,919
Revolving Funds:
FIFRA/T olerance
30,826
-
30,826
31,338
-
31,338
Working Capital
116,764
-
116,764
112,992
-
112,992
E-Manifest
45,425
-
45,425
32,240
-
32,240
NRDA
2,544
-
2,544
2,123
-
2,123
WIFIA
17,441
-
17,441
769
-
769
Appropriated
73,765,838
-
73,765,838
63,039,162
-
63,039,162
Other Fund Types
622.876
3.594
626.470
592.723
4.425
597.148
Total
S 74.586.174
S 3.594
S 74.589.768
S 64.099.404
$
4.425
S 64.103.829
Entity fund balances, except for special fund receipt accounts, are available to pay current liabilities and to finance
authorized purchase commitments (see Status of Fund Balances below). Entity Assets for Other Fund Types consist of
special purpose funds and special fund receipt accounts, such as the Pesticide Registration funds and the
Environmental Services receipt account. The Non-Entity Assets for Other Fund Types consist of clearing accounts
and deposit funds, which are either awaiting documentation for the determination of proper disposition or being held
by the EPA for other entities.
Status of Fund Balances:
Unobligated Amounts in Fund Balance:
Available for Obligation
Unavailable for Obligation
Net Receivables from Invested Balances
Balances in Treasury Trust Fund (Note 27)
Obligated Balance not yet Disbursed
Non-Budgetary FBWT
Total
2023
2022
$59,166,962 $56,789,464
114,325
(8,822,692)
(182,653)
23,705,591
608.235
188,011
(8,748,354)
117,500
15,179,725
577.483
$ 74.589.768 S 64.103.829
The funds available for obligation may be apportioned by OMB for new obligations at the beginning of the following
fiscal year. Funds unavailable for obligation are generally balances in expired funds, which are available only for
adjustments of existing obligations. For September 30, 2023 and 2022, no differences existed between Treasury's
accounts and the EPA's statements for fund balances with Treasury. See Note 1 paragraph F for additional
information.
42.
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United States Environmental Protection Agency
Notes to the Financial Statements
For the Fiscal Years Ending September 30, 2023 and 2022
(Dollars in Thousands)
Note 3. Cash and Other Monetary Assets
As of September 30, 2023 and 2022, the balance in the imprest fund was $10.
Note 4. Investments, Net
As of September 30, 2023 and 2022, investments consist of the following:
Amortized
Amortization (Premium) Interest Investments, Market
Cost Method Discount Receivable Net Value
Intragovernmental
Securities:
Non-
Marketable FY 2023 $ 12,438,324 Straight Line 289,586 10,545 12,159,283 $ 12,159,283
Non-
Marketable FY 2022 $ 10,610,897 Straight Line 317,928 4,810 10,297,779 $ 10,297,779
CERCLA, as amended by SARA, authorizes the EPA to recover monies to clean up Superfund sites from responsible
parties (RPs). Some RPs file for bankruptcy under Title 11 of the U.S. Code. In bankruptcy settlements, the EPA is an
unsecured creditor and is entitled to receive a percentage of the assets remaining after secured creditors have been
satisfied. Some RPs satisfy their debts by issuing securities of the reorganized company. The Agency does not intend
to exercise ownership rights to these securities and instead will convert them to cash as soon as practicable. All
investments in Treasury securities are funds from dedicated collections (see Note 17).
The Federal Government does not set aside assets to pay future benefits or other expenditures associated with funds
from dedicated collections. The cash receipts collected from sources other than intragovernmental for dedicated
collection funds are deposited in the U.S. Treasury, which uses the cash for general Government purposes. Treasury
securities are issued to the EPA as evidence of its receipts. Treasury securities are an asset to the EPA and a liability
to the U.S. Treasury. Because the EPA and the U.S. Treasury are both parts of the Government, these assets and
liabilities offset each other from the standpoint of the Government as a whole. For this reason, they do not represent
an asset or liability in the U.S. Government-wide financial statements.
Treasury securities provide the EPA with authority to draw upon the U.S. Treasury to make future benefit payments or
other expenditures. When the EPA requires redemption of these securities to make expenditures, the Government
finances those expenditures out of accumulated cash balances, by raising taxes or other receipts, by borrowing from
the public or repaying less debt, or by curtailing other expenditures. This is the same way that the Government
finances all other expenditures. See Note 1 paragraphs G and H for additional information.
43.
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United States Environmental Protection Agency
Notes to the Financial Statements
For the Fiscal Years Ending September 30, 2023 and 2022
(Dollars in Thousands)
Note 5. Accounts Receivable, Net
Accounts Receivable as of September 30, 2023 and 2022, consist of the following:
2023 2022
Intragovernmental:
Accounts & Interest Receivable
$
8,938
$
6,579
Less: Allowance for Uncollectible Accounts
(1.252)
(862)
Total
$
7.686
$
5.717
Other Than Intragovernmental:
Unbilled Accounts Receivable
Accounts & Interest Receivable
Less: Allowance for Uncollectible Accounts
Total
2023
2022
$ 110,567
2,647,893
(2.237.768)
$ 520.692
$ 130,572
2,625,563
(2.207.610)
$ 548.525
The Allowance for Uncollectible Accounts is determined both on a specific identification basis, as a result of a case-
by-case review of receivables, and on a percentage basis for receivables not specifically identified. See Note 1
paragraph I for additional information.
Note 6. Inventory and Related Property
Inventory and related property as of September 30, 2023 and 2022, consist of the following:
2023 2022
Inventory Purchased for Resale
Total
$
626
$
531
$
626
$
531
Note 7. Loans Receivable, Net
Direct loans receivable disbursed from obligations made after FY 1991 are governed by the Federal Credit Reform
Act, which mandates that the present value of the subsidy costs (i.e., interest rate differentials, interest subsidies,
anticipated delinquencies, and defaults) associated with direct loans be recognized as a cost in the year the loan is
disbursed. The net loan present value is the gross loan receivable less the subsidy present value. The EPA does not
have any loans obligated prior to 1992.
The EPA administers the WIFIA Direct Loans program. In fiscal years 2023 and 2022, the Agency received
borrowing authority of $6 billion and $6 billion respectively for the non-subsidy portion of loan proceeds disbursed.
For the fiscal years ended September 30, 2023 and 2022, the Agency closed $6 billion and $6 billion in WIFIA loans,
respectively.
Interest on the loans is accrued based on the terms of the loan agreement. For the fiscal years ended September 30,
2023 and 2022, the WIFIA program has incurred $550 million and $256 million in administrative expenses,
respectively.
44.
-------
United States Environmental Protection Agency
Notes to the Financial Statements
For the Fiscal Years Ending September 30, 2023 and 2022
(Dollars in Thousands)
Obligated after FY 1991
Direct Loan Program
2023 Loans
Receivable,
Gross
Interest and
Fees
Receivable
Foreclosed
Property/
Allowance
for
Loan Losses
Value of Assets
Allowance for Related to
Subsidy Direct
Cost Loans, Net
WIFIA
$ 3,261,931
1,398
-
(861,407) $
2,401,922
Direct Loan Program
2022 Loans
Receivable,
Gross
Interest and
Fees
Receivable
Foreclosed
Property/
Allowance
for
Loan Losses
Value of Assets
Allowance for Related to
Subsidy Direct
Cost Loans, Net
WIFIA
$ 1,681,958
1,998
"
(392,448) $
1,291,508
Total Amount of Direct Loans Disbursed (Post-1991)
Direct Loan Program 2023 2022
WIFIA
$ 1,594,232 $
955,452
Subsidy Expense for Direct Loans by Program and Component
Subsidy Expense for New Direct Loans Disbursed
Direct Loan Program
2023 Interest
Differential
Defaults
Fees and Other
Collections
Other Subsidy
Costs
Total
WIFIA
$
"
"
(8,687) $
(8,687)
Direct Loan Program
2022 Interest
Differential
Defaults
Fees and Other
Collections
Other Subsidy
Costs
Total
WIFIA
$
-
-
(5,015) $
(5,015)
Modifications and Reestimates
2023
Total
Direct Loan Program Modifications
Interest
Rate
Reestimates
Technical
Reestimates
FAI
Reestimates
Total
Reestimates
WIFIA
$
76,295
461,383
$
537,678
Direct Loan Program
2022
Total
Modifications
Interest
Rate
Reestimates
Technical
Reestimates
FAI
Reestimates
Total
Reestimates
WIFIA
$
22,769
208,342
7,536 $
238,647
45.
-------
United States Environmental Protection Agency
Notes to the Financial Statements
For the Fiscal Years Ending September 30, 2023 and 2022
(Dollars in Thousands)
Total Direct Loans Subsidy Expense
Direct Loan Program 2023 2022
WIFIA $ 8,687 $ 5^oTT"
Budget Subsidy Rates for Direct Loans for the Current Year Cohort
2023 Interest Fees and Other Other Subsidy
Direct Loan Program Differential Defaults Collections Costs Total
WIFIA 00% 073% 0% 0% 073%
2022 Interest Fees and Other Other Subsidy
Direct Loan Program Differential Defaults Collections Costs Total
WIFIA 002% 047% 0% 0% 049%
The subsidy rates disclosed pertain to the current year's cohort. The rates cannot be applied to the direct loans
disbursed during the current reporting year to yield the subsidy expense. The subsidy expense for new loans reported
in the current year could result from disbursement of loans from both current year cohorts and prior year cohorts. The
subsidy expense reported in the current year also includes modifications and reestimates.
Schedule for Reconciling Subsidy Cost Allowance Balances
Beginning Balance, Changes and Ending Balance 2023 2022
Beginning Balance of the Subsidy Allowance $ (392,448)$ (148,785)
Add: Subsidy Expense for Direct Loans Disbursed During the Reporting Years
by Component
Other Subsidy Costs (8,688) (5,015)
Reversal of PY subsidy costs 3.815
Total of the Above Subsidy Expense Components $ (4,873)$ (5,015)
Adjustments
Subsidy Allowance Amortization
Ending Balance of the Subsidy Cost Allowance Before Reestimates (323,729) (153,800)
Add or Subtract Subsidy Reestimates by Component
Interest Rate Reestimates (76,295) (22,769)
Technical/Default Reestimates (461,383) (208,343)
FAI Adjustment : (7.536)
Total of the Above Reestimate Components $ (537.678) $ (238.648)
Ending Balance of the Subsidy Cost Allowance $ (861.407) $ (392.448)
$
(4,873)
73.592
(323,729)
(76,295)
(461,383)
$
(537.678)
$
(861.407)
46.
-------
United States Environmental Protection Agency
Notes to the Financial Statements
For the Fiscal Years Ending September 30, 2023 and 2022
(Dollars in Thousands)
The economic assumptions of the WIFIA upward and downward adjustments were a reassessment of risk levels as
well as estimated changes in future cash flows on loans. Actual interest rates used for FY 2023 loan disbursements
were higher than the interest rate assumptions used during the budget formulation process at loan origination. See
Note 1 paragraph K for additional information.
20232022
Beginning balance of loans receivable, net
$ 1,291,508 $
586,138
Add loan disbursements
1,594,232
955,452
Less principal and interest payments received
(46,601)
(28,498)
Add interest accruals
32,125
21,745
Add fees accrued
(384)
334
Add upward reestimates
(687,880)
(164,438)
Less downward reestimates
514,526
48,268
Allowance for loan and interest loss adjustments
-
(127,493)
Subsidy allowance
(295.604)
-
Ending balance of loans receivable, net
S 2.401.922 S
1.291.508
Note 8. Accounts Payable
Accounts Payable are current liabilities and consist of the following amounts as of September 30, 2023 and 2022:
Covered by Budgetary
Resources
2023 2022
Intragovernmental:
Accounts Payable $ 16 $ 159
Disbursements in Transit 2.905 2.908
Total S 2.921 S 3.067
2023 2022
Other Than Intragovernmental:
Accounts Payable $ 53,978 $ 39,579
Advances Payable 4 4
Interest Payable 24 15
Disbursements in Transit 62.228 23.315
Total S 116.234 S 62.913
47.
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United States Environmental Protection Agency
Notes to the Financial Statements
For the Fiscal Years Ending September 30, 2023 and 2022
(Dollars in Thousands)
Note 9. Property, Plant and Equipment, Net
Property, plant, and equipment (PP&E) consist of software, real property, EPA-held and contractor-held personal
property, and capital leases. See Note 1 paragraph M for additional information.
As of September 30, 2023, PP&E Cost consisted of the following:
EPA-
Held
Software
Software
2023
Contractor
Held
Land
and
Equipment (Production) (Development) Equipment Buildings
Capital
Leases
Total
Balance,
Beginning of
Year
Additions
Dispositions
Revaluations
Balance,
September
30,2023
$ 332,195 $
13,543
(13,489)
440,896 $
S 332.249 S 440.896 $_
96,640 $ 39,526 $ 862,775 $ 24,485 $ 1,796,517
15,122
8,784
693
(3,914)
1,105
18,234
30,463
(17,403)
27,018
120.546 S 36.305 S 882.114 S 24.485 S 1.836.595
As of September 30, 2023, PP&E Accumulated Depreciation consisted of the following:
2023
EPA- Contractor Land
Held Software Software Held and Capital
Equipment (Production) (Development) Equipment Buildings Leases Total
Balance,
Beginning of
Year $ 235,630 $ 438,507 $ - $ 11,184 $ 357,624 $ 22,580 $ 1,065,525
Dispositions (12,237) - - (3,914) - - (16,151)
Revaluations - - - - 4 68 72
Depreciation
Expense 17.243 1.207 - 7.489 17.188 815 43.942
Balance,
September S 240.636 S 439.714 S S 14.759 S 374.816 S 23.463 S 1.093.388
30,2023
48.
-------
United States Environmental Protection Agency
Notes to the Financial Statements
For the Fiscal Years Ending September 30, 2023 and 2022
(Dollars in Thousands)
As of September 30, 2023, PP&E, Net consisted of the following:
2023
EPA- Contractor Land
Held Software Software Held and Capital
Equipment (Production) (Development) Equipment Buildings Leases Total
Balance,
September X 91.613 X 1.182 X 120.546 X 21.546 X 507.298 X 1.022 X 743.207
30,2023
As of September 30, 2022, PP&E Cost consisted of the following:
2022
EPA-
Held
Equipment
Software
(Production)
Software
(Development)
Contractor
Held
Equipment
Land
and
Buildings
Capital
Leases
Total
Balance,
Beginning of
Year
$ 330,579
$ 440,896
$
55,537
$
31,618
$ 828,716
$ 24,485
$ 1,711,831
Additions
12,239
-
38,844
-
52,018
-
103,101
Dispositions
(10,623)
-
-
-
(6,986)
-
(17,609)
Revaluations
-
-
2.259
7.908
(10.973)
-
(806)
Balance,
September
30,2022
X 332.195
X 440.896
$
96.640
$
39.526
X 862.775
X 24.485
X 1.796.517
As of September 30, 2022, PP&E Accumulated Depreciation consisted of the following:
2022
EPA-
Held
Software
Software
Contractor
Held
Land
and
Capital
Balance,
Equipment
(Production)
(Development)
Equipment
Buildings
Leases
Beginning of
Year
$ 225,982
$ 433,822
$
$ 19,851
$ 339,775
$ 21,764
Dispositions
Revaluations
(9,799)
(301)
-
-
(8,667)
-
1
Depreciation
Expense
19.748
4.685
17.849
815
Balance,
September
30,2022
X 235.630
X 438.507
S
X 11.184
X 357.624
X 22.580
Total
(9,799)
(8,967)
43,097
49.
-------
United States Environmental Protection Agency
Notes to the Financial Statements
For the Fiscal Years Ending September 30, 2023 and 2022
(Dollars in Thousands)
As of September 30, 2022, PP&E, Net consisted of the following:
2022
EPA- Contractor Land
Held Software Software Held and Capital
Equipment (Production) (Development) Equipment Buildings Leases Total
Balance,
September S 96.565 S 2.389 S 96.640 S 28.342 S 505.151 S 1.905 S 730.992
30,2022
Note 10. Debt
All debt is classified as not covered by budgetary resources, except for direct loan and guaranteed loan financing
account debt to Treasury and that portion of other debt covered by budgetary resources at the Balance Sheet date.
The EPA borrows funds from the Bureau of Public Debt right before funds are disbursed to the borrower for the non-
subsidy portion of WIFIA loans. As of September 30, 2023 and 2022, the EPA had debt due to Treasury consisting
entirely of funds borrowed to finance the non-subsidy portion of the WIFIA Direct Loan Program:
2022 2023
Beginning Net Ending Net Ending
Balance Borrowing Balance Borrowing Balance
Debt to the
Treasury $ 746.839 $ 810.341 X 1.557.180 $ 1.396.045 X 2.953.225
See Note 1 paragraph O for additional information.
50.
-------
United States Environmental Protection Agency
Notes to the Financial Statements
For the Fiscal Years Ending September 30, 2023 and 2022
(Dollars in Thousands)
Note 11. Stewardship Property, Plant and Equipment
The Agency acquires title to certain property and property rights under the authorities provided in Section 104(j)
CERCLA related to remedial clean-up sites. The property rights are in the form of fee interests (ownership) and
easements to allow access to clean-up sites or to restrict usage of remediated sites. The Agency takes title to the land
during remediation and transfers it to state or local governments upon the completion of clean-up. A site with "land
acquired" may have more than one acquisition property. Sites are not counted as a withdrawal until all acquired
properties have been transferred under the terms of 104(j).
As of September 30, 2023 and 2022, the Agency possessed the following land and land rights:
2023 2022
Superfund Sites with Easements:
Beginning Balance
47
45
Additions
1
2
Ending Balance
48
12
Superfund Sites with Land Acquired:
Beginning Balance
33
32
Additions
-
1
Withdrawals
(1)
-
Ending Balance
32
22
Note 12. Liability to the General Fund for Custodial Assets
Liability to the General Fund for Custodial Assets represents the amount of net accounts receivable that, when
collected, will be deposited to the Treasury General Fund. Included in the custodial liability are amounts for fines and
penalties, interest assessments, repayments of loans, and miscellaneous other accounts receivable. As of September
30, 2023 and 2022, custodial liability is approximately $105,995 and $106,560 respectively.
51.
-------
United States Environmental Protection Agency
Notes to the Financial Statements
For the Fiscal Years Ending September 30, 2023 and 2022
(Dollars in Thousands)
Note 13. Other Liabilities
Other Liabilities consist of the following as of September 30, 2023:
Other Liabilities - Intragovernmental:
Current
Employer Contributions & Payroll Taxes
Other Accrued Liabilities
Loan Reestimates
Non-Current
Unfunded FECA Liability
Unfunded Unemployment Liability
Payable to Treasury Judgement Fund
Total Intragovernmental
Covered by
Budgetary
Resources
9,653
167,401
Not Covered by
Budgetary
Resources
769
8,292
72
22,000
Total
177.054 $_
31.133 $_
9,653
167,401
769
8,292
72
22.000
208.187
Other Liabilities - Other Than Intragovernmental:
Current
Liability for Deposit Funds, Other Than
$ 510 $
4,313 $
4,823
Intragovernmental
Other Accrued Liabilities
132,683
-
132,683
Grant Liabilities
446,873
-
446,873
Accrued Funded Payroll and Benefits
38,217
-
38,217
Capital Lease Liabilities
-
1,007
1,007
Liability for Clearing Accounts
-
(254)
(254)
Total Other Than Intragovernmental
S 618.283 S
5.066 S
623.349
52.
-------
United States Environmental Protection Agency
Notes to the Financial Statements
For the Fiscal Years Ending September 30, 2023 and 2022
(Dollars in Thousands)
Other Liabilities consist of the following as of September 30, 2022:
Covered by
Budgetary
Resources
Current
Employer Contributions & Payroll Taxes
Other Accrued Liabilities
Loan Reestimates
Liability for Deposit Funds
Non-Current
Unfunded FECA Liability
Unfunded Unemployment Liability
Payable to Treasury Judgement Fund
Total Intragovernmental
Not Covered by
Budgetary
Resources
16,126 $
152,350
168.476 $_
769
(2)
8,447
7
22.000
31.221 $_
Total
16,126
152,350
769
(2)
8,447
7
22.000
199.697
Other Liabilities - Other Than Intragovernmental
Current
Liability for Deposit Funds, Other Than
$ 5,128 $
$
5,128
Intragovernmental
Other Accrued Liabilities
126,411
-
126,411
Grant Liabilities
360,811
-
360,811
Accrued Funded Payroll and Benefits
103,166
-
103,166
Capital Lease Liabilities
1,476
-
1,476
Commitment and Contingencies
-
1,770
1,770
Direct Loans Subsidy Liability
-
(769)
(769)
Total Other Than Intragovernmental:
S 596.992 S
1.001 s
597.993
Liabilities not covered by budgetary resources require future congressional action whereas liabilities covered by
budgetary resources reflect prior congressional action. Regardless of when the congressional action occurs, when the
liabilities are liquidated, Treasury will finance the liquidation in the same way that it finances all other disbursements,
using some combination of receipts, other inflows, and borrowing from the public (if there is a budget deficit).
Other Accrued Liabilities are mostly comprised of contractor accruals.
See Note 1 paragraph N for additional information.
Note 14. Leases
The value of assets held under Capital Leases as of September 30, 2023 and 2022, are as follows:
Capital Leases:
2023 2022
Summary of Assets Under Capital Lease:
Real Property $ 24.485 $ 24.485
Total 24,485 24,485
Accumulated Amortization $ 23.464 $ 22.581
53.
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United States Environmental Protection Agency
Notes to the Financial Statements
For the Fiscal Years Ending September 30, 2023 and 2022
(Dollars in Thousands)
The EPA has one capital lease for land and buildings housing scientific laboratories. This lease includes a base rental
charge and escalation clauses based upon either rising operating costs and/or real estate taxes. The base operating
costs are adjusted annually according to escalators in the Consumer Price Indices published by the Bureau of Labor
Statistics, U.S. Department of Labor. The EPA's lease will terminate in FY 2025.
Future Payments Due
Fiscal Year Canital Leases
2024 $ 970
2025 323
Total Future Minimum Lease Payments 1,293
Less: Imputed Interest (286)
Net Capital Lease Liability 1.007
Liabilities not Covered by Budgetary Resources S 1.007
Note 15. Advances from Others and Deferred Revenue
As of September 30, 2023 Advances from Others and Deferred Revenue consist of the following:
2023 2022
Other Than Intragovernmental:
Cashout Advances, Superfund $ 3,544,466 $ 3,541,093
Unearned Advances 131.740 125.105
Total S 3.676.206 S 3.666.198
Cashout advances are funds received by the EPA, a state, or another responsible party under the terms of a settlement
agreement (e.g., consent decree) to finance response action costs at a specified Superfund site. Under CERCLA
Section 122(b)(3), cashout funds received by the EPA are placed in site-specific, interest-bearing accounts known as
special accounts and are used for potential future work at such sites in accordance with the terms of the settlement
agreement. Funds placed in special accounts may be disbursed to PRPs, to states that take responsibility for the site, or
to other Federal agencies to conduct or finance response actions in lieu of the EPA without further appropriation by
Congress.
Note 16. Commitments and Contingencies
The EPA may be a party in various administrative proceedings, actions and claims brought by or against it. These
include:
a) Various personnel actions, suits, or claims brought against the Agency by employees, and others.
b) Various contract and assistance program claims brought against the Agency by vendors, grantees, and others.
c) The legal recovery of Superfund costs incurred for pollution cleanup of specific sites, to include the collection
of fines and penalties from responsible parties.
54.
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United States Environmental Protection Agency
Notes to the Financial Statements
For the Fiscal Years Ending September 30, 2023 and 2022
(Dollars in Thousands)
d) Claims against recipients for improperly spent assistance funds which may be settled by a reduction of future
EPA funding to the grantee or the provision of additional grantee matching funds.
As of September 30, 2023, there were no accrued liabilities for commitments and potential loss contingencies. As of
September 30, 2022, there were $2M of accrued liabilities for commitments and potential loss contingencies.
FY 2023
Legal Contingencies:
Reasonably Possible
FY 2022
Legal Contingencies:
Reasonably Possible
Estimated Estimated
Accrued Range of Loss- Range of Loss-
Liabilities Lower End Upper End
7,522 $
2,700 $
7,522
2,700
Environmental Contingencies:
Probable
Reasonably Possible
1,770 $
1,770 $
1,770
A. Gold King Mine
On August 5, 2015, the EPA and its contractors were investigating under the Comprehensive Environmental
Response, Compensation, and Liability Act (CERCLA) the Gold King Mine, an inactive mine in Colorado, when a
release of acid mine drainage occurred. While the EPA team was excavating above the mine adit, water began leaking
from the mine adit. The small leak quickly turned into a significant breach, releasing approximately three million
gallons of mine water into the North Fork of Cement Creek, a tributary of the Animas River. The plume of acid mine
water traveled from Colorado's Animas River into New Mexico's San Juan River, passed through the Navajo Nation,
and deposited into Utah's Lake Powell. As of September 30, 2023, legal claims exist for which the potential loss
could not be determined related to Hennis v. United States. In this case, EPA built and operates an interim water
treatment plant to treat ongoing discharge of mine-impacted water from the Gold King Mine on plaintiffs property.
Plaintiff alleges that the Government's ongoing access to, occupation, and use of his property constitutes a physical
taking without just compensation.
In addition, as of September 30, 2023, legal claims exist for a claim made by an Environmental Restoration contractor
for settlement costs of approximately $3M for the amount resolved through settlement with the Navajo Nation, and an
additional claim made by an Environmental Restoration contractor for settlement costs in the amount of
approximately $2M for the amount resolved through settlement with the state of New Mexico.
B. Flint, Michigan
The EPA has received claims from over 9,400 individuals under the Federal Tort Claims Act for alleged injuries and
property damages caused by the EPA's alleged negligence related to the water health crisis in Flint, Michigan. There
is no estimated loss amount related to the water health crisis; they are only reasonably possible, and the final outcomes
are not probable.
C. Superfund
Under CERCLA Section 106(a), the EPA issues administrative orders that require parties to clean up contaminated
sites. CERCLA Section 106(b) allows a party that has complied with such an order to petition the EPA for
55.
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United States Environmental Protection Agency
Notes to the Financial Statements
For the Fiscal Years Ending September 30, 2023 and 2022
(Dollars in Thousands)
reimbursement of its reasonable costs of responding to the order plus interest. To be eligible for reimbursement, the
party must demonstrate either that it was not a liable party under CERCLA Section 107(a) for the response action
ordered or that the Agency's selection of the response action was arbitrary and capricious or otherwise not in
accordance with law. As of September 30, 2023, there is one case related to Superfund. This case is August Mack
Environmental, Inc. v. EPA for $3 million; it is only reasonably possible, and the outcome is not probable. August
Mack Environmental (AME) was a contractor for Vertellus, one of three PRPs (Potentially Responsible Parties) at the
Big John Salvage Site in Fairmont, WV. The site was being cleaned up pursuant to a consent decree which named
Vertellus the performing defendant; there is a Special Account at the site funded by the PRPs. Vertellus filed for
bankruptcy and AME did not recover in bankruptcy the moneys it claimed it was owed by Vertellus. AME made a
claim against the Superfund and/or the Special Account. EPA Region 3 denied the claim and AME appealed to the
Administrative Law Judge (ALJ) who also denied it. AME then filed suit in district court. The court ruled in favor of
EPA on a Motion to Dismiss and AME appealed to the 4th Circuit. The 4th Circuit ruled in AME's favor and the case
was remanded back to the ALJ.
D. Environmental Liabilities
As of September 30, 2023, there are no cases pending against the EPA that are reported under Environmental
Liabilities that the outcome is listed as either Probable or Reasonably Possible.
E. Other Pending Cases
As of September 30, 2023, legal claims exist for which the potential loss could not be determined. The case is for
United Affiliates Corp., et al. v. United States, involving alleged taking of property for which plaintiff is seeking just
compensation under the 5th Amendment. An additional case exists for Alaska v. US (S. Ct.), involving a bill of
complaint for EPA's action under the Clean Water Act regarding the Pebble Mine, alleging breach of contract and
takings.
F. Judgement Fund
In cases that are paid by the U.S. Treasury Judgment Fund, the EPA must recognize the full cost of a claim regardless
of which entity is actually paying the claim. Until these claims are settled or a court judgment is assessed where the
Judgment Fund is determined to be the appropriate source for the payment, claims that are probable and estimable
must be recognized as an expense and liability of the Agency. For these cases, at the time of settlement or judgment,
the liability will be reduced and an imputed financing source recognized. See Interpretation of Federal Financial
Accounting Standards No. 2, Accounting for Treasury Judgment Fund Transactions. The EPA has a $22 million
liability to the Treasury Judgment Fund for a payment made by the Fund to settle a contract dispute claim. As of
September 30, 2023, there is no other case pending in the court.
G. Other Commitments
EPA has a commitment to fund the U.S. Government's payment to the Commission of the North American Agreement
on Environmental Cooperation between the Government of Canada, the Government of the United Mexican States,
and the Government of the United States of America (commonly referred to as CEC). According to the terms of the
agreement, each government pays an equal share to cover the operating costs of the CEC. EPA paid $3 million in FY
2023, and $4 million in FY 2022 to the CEC.
EPA has a legal commitment under a noncancelable agreement, subject to the availability of funds, with the United
Nations Environmental Program (UNEP). This agreement enables EPA to provide funding to the Multilateral Fund for
the Implementation of the Montreal Protocol. EPA made payments totaling $8 million in FY 2023, and $8 million in
the FY 2022.
56.
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United States Environmental Protection Agency
Notes to the Financial Statements
For the Fiscal Years Ending September 30,2023 and 2022
(Dollars in Thousands)
Note 17. Funds from Dedicated Collections (Restated)
Eliminations
Total Funds
between
Total Funds
Other Funds
from Dedicated
Dedicated
from Dedicated
Environmental
from Dedicated
Collections
Collections
Collections
Balance Sheet as of September 30,2023
Services
LUST
Superfund
Collections
Combined
Funds
Consolidated
Intragovernmental
Fund Balance with Treasury
$ 604,057 $
; 20,603
$ 182,369
$ 118,170
$ 925,199
$ (239,068)
$ 686,131
Investments, Net
-
1,385,748
10,773,535
-
12,159,283
-
12,159,283
Accounts Receivable, Net
-
91,438
8,732,394
240
8,824,072
(8,822,713)
1,359
Advances and Prepayments
-
81
11.922
885
12.888
-
12.888
Total Intragovernmental Assets
604,057
1,497,870
19,700,220
119,295
21,921,442
(9,061,781)
12,859,661
Other Than Intragovernmental
Accounts Receivable, Net
-
1
422,288
2,695
424,984
-
424,984
Loans Receivable, Net
-
-
-
-
-
-
-
General Property, Plant, and Equipment, Net
-
46
40,360
20,721
61,127
-
61,127
Advances and Prepayments
-
-
722
-
722
-
722
Total Other Than Intragovernmental
-
47
463,370
23.416
486.833
-
486,833
Total Assets
S 604.057 S
1 1.497.917
S 20.163.590
S 142.711
S 22.408.275
S C9.061.781~*
S 13_346.494
tntragovernmental
Accounts Payable
$ - $
91,439 !
S 8,761,203
$
$ 8,852,642
$ (8,822,692)
$ 29,950
Advances from Others andDeferred Revenue
_
_
155,870
4,473
160,343
_
160,343
Liability to the General Fund for Custodial Assets
-
-
22,362
-
22,362
-
22,362
Other Liabilities
-
124
49.812
] 642
51.578
-
51.578
Total Intragovernmental Liabilities
-
91,563
8,989,247
( 115
9,086,925
(8,822,692)
264,233
Other Than Intragovernmental
Accounts Payable
-
66
31,758
] 491
33,315
-
33,315
Federal Employee Benefits Payable
-
12
8,766
91
8,869
-
8,869
Advances from Others and Deferred Revenue
-
-
52,393
44,276
96,669
-
96,669
Deferred Revenue
-
-
3,544,465
-
3,544,465
-
3,544,465
Other Liabilities
-
6.715
78.221
: 833
88.769
-
88.769
Total Other Than Intragovernmental Liabilities
_
6.793
3.715.603
49.691
3.772.087
_
3.772.087
Total Liabilities
$ - $
98.356
S 12.704.850
$ 55.806
$ 12.859.012 1
$ (8.822.692)
$ 4.036.320
Unexpended Appropriations
$ - $
$
$ 281
$ 281
$
$ 281
Cumulative Results of Operations
604.057
1.399.561
7.458.740
86.624
9.548.982
(239.089)
9.309.893
Total Liabilities and Net Position
S 604.057 $
1.497.917
S 20.163.590
S 142.711
S 22.408.275
S C9.061.781~*
S 13.346.494
57.
-------
United States Environmental Protection Agency
Notes to the Financial Statements
For the Fiscal Years Ending September 30,2023 and 2022
(Dollars in Thousands)
Eliminations
Total Funds
between
Total Funds
Other Funds
from Dedicated
Dedicated
from Dedicated
Environmental
from Dedicated
Collections
Collections
Collections
Statement of Net Cost as of September 30,2023
Services
LUST
Superfund
Collections
Combined
Funds
Consolidated
Gross Program Costs
$ - $
91,478
$ 1,690,189
$ 104,605
$ 1,886,272
$
$ 1,886,272
Less: Earned Revenues
(247)
-
477.469
98.533
575.755
(238.365)
337.390
Net Costs of Operations
S 247 $
91.478
S 1.212.720
S 6.072
S 1.310.517
S 238.365
S 1.548.882
Statement of Changes in Net Position as of
September 30,2023
Unexpended Appropriations
Beginning Balance
$ - $
$ (113)
$ 291
$ 178
$
$ 178
Appropriations Used
-
-
113
(10)
103
-
103
Total Unexpended Appropriations
$ - $
S
$ 281
$ 281
$
$ 281
Cumulative Results of Operations
Beginning Balance
$ 572,474 $
1,235,638
$ 5,865,045
$ 70,987
$ 7,744,144
$ (21)
$ 7,744,123
Appropriations Used
-
-
(112)
10
(102)
-
(102)
Excise tax & customs
-
205,374
1,204,868
-
1,410,242
-
1,410,242
Misc. taxes & receipts
31,830
48,791
389,277
1,357
471,255
(703)
470,552
Total Other Than Intragovernmental Non-Exchange
Revenue
31,830
254,165
1,594,145
1,357
1,881,497
(703)
1,880,794
Transfers-In/(Out) Without Reimbursement
-
1,000
1,175,029
19,929
1,195,958
-
1,195,958
Imputed Financing
-
236
37,353
413
38,002
-
38,002
Net Cost of Operations
(247)
(91,478)
(1,212,720)
(6,072)
(1,310,517)
(238,365)
(1,548,882)
Net Change in Cumulative Results of Operations
31.583
163.923
1.593.695
15.637
1.804.838
(239.068)
1.565.770
Cumulative Results of Operations: Ending
604,057
1,399,561
7,458,740
86,624
9,548,982
(239,089)
9,309,893
Net Position, End of Period
$ 6Q4.057 $_
1.399.561
S 7.458.740
S 86.905
S 9.549.263
S (239.089*1
S 9.310.174
58.
-------
United States Environmental Protection Agency
Notes to the Financial Statements
For the Fiscal Years Ending September 30,2023 and 2022
jifuiiars in niuusaiiusj
(Restated)
Eliminations
(Restated)
Total Funds
between
Total Funds
Other Funds
from Dedicated
Dedicated
from Dedicated
Environmental
from Dedicated
Collections
Collections
Collections
Balance Sheet as of September 30,2022
Services
LUST
Superfund
Collections
Combined
Funds
Consolidated
Intragovernmental
Fund Balance with Treasury
$ 572,474 $
; 24,166
$ 551,926 !
S 104,870
$ 1,253,436 !
S (306,954)
$ 946,482
Investments, Net
-
1,218,255
9,079,524
-
10,297,779
-
10,297,779
Accounts Receivable, Net
-
92,713
8,657,245
261
8,750,219
(8,748,509)
1,710
Advances and Prepayments
-
88
20.272
1.007
21.367
-
21.367
Total Intragovernmental Assets
572,474
1,335,222
18,308,967
106,138
20,322,801
(9,055,463)
11,267,338
Other Than Intragovernmental
Accounts Receivable, Net
-
-
460,932
4,540
465,472
-
465,472
Loans Receivable, Net
-
-
-
-
-
-
-
GeneralProperty, Plant, and Equipment, Net
-
59
32,357
20,593
53,009
-
53,009
Advances and Prepayments
-
-
772
-
772
-
772
Total Other Than Intragovernmental
-
59
494.061
25.133
519.253
-
519.253
Total Assets
S 572.474 S
i 1.335.281
S 18.803.028 !
S 131.271
S 20.842.054 :
S C9.055.463~>
S 11.786.591
Intragovernmental
Accounts Payable
$ - $
92,715 !
S 8,688,339 J
&
$ 8,781,054 !
S (8,748,489)
$ 8,781,054
Debt
-
-
-
-
-
-
-
Advances from Others and Deferred Revenue
-
-
164,486
4,789
169,275
-
169,275
Liability to the General Fund for Custodial Assets
-
-
22,362
-
22,362
-
22,362
Other Liabilities
-
485
41.337
2.583
44.405
-
44.405
Total Intragovernmental Liabilities
_
93.200
8.916.524
1312
9.017.096
(8.748.489)
9.017.096
Other Than Intragovernmental
Accounts Payable
-
49
33,685
984
34,718
-
34,718
Federal Employee Benefits Payable
-
36
10,135
261
10,432
-
10,432
Advances from Others and Deferred Revenue
-
-
44,970
45,988
90,958
-
90,958
Deferred Revenue
-
-
3,541,093
-
3,541,093
-
3,541,093
Other Liabilities
-
6.358
84.736
5.388
96.482
-
96.482
Total Other Than Intragovernmental Liabilities
_
6.443
3.714.619
52.621
3.773.683
_
3.773.683
Total Liabilities
$ - $
99.643
$ 12.631.143 !
$ 59.993
$ 12.790.779 J
5 (8.748.489)
$ 4.042.290
Unexpended Appropriations
$ - $
s
i (113) J
291
$ 178 !
&
$ 178
Cumulative Results of Operations
572.474
1.235.638
6.171.998
70.987
8.051.097
(306.974)
7.744.123
Total Liabilities and Net Position
S 572.474 $
1.335.281 !
15 18.803.028 *
S 131.271
S 20.842.054 <
S C9.055.463~*
S 11.786.591
59.
-------
United States Environmental Protection Agency
Notes to the Financial Statements
For the Fiscal Years Ending September 30,2023 and 2022
(Dollars in Thousands)
(Restated)
Eliminations
(Restated)
Total Funds
between
Total Funds
Other Funds
from Dedicated
Dedicated
from Dedicated
Environmental
from Dedicated
Collections
Collections
Collections
Statement of Net Cost as of September 30,2022
Services
LUST
Superfund
Collections
Combined
Funds
Consolidated
Gross Program Costs
$ - $
92,373 :
$ 1,350,585
$ 84,622
$ 1,527,580 !
S
$ 1,527,580
Less: Earned Revenues
(513)
-
506.923
97.013
603.423
(303.954)
299.469
Net Costs of Operations
S 513 $
92.373 !
-------
United States Environmental Protection Agency
Notes to the Financial Statements
For the Fiscal Years Ending September 30, 2023 and 2022
(Dollars in Thousands)
A. Funds from Dedicated Collections
i. Environmental Services Receipt Account:
The Environmental Services Receipt Account, authorized by a 1990 act, "To amend the Clean Air Act (P.L. 101-
549)," was established for the deposit of fee receipts associated with environmental programs, including radon
measurement proficiency ratings and training, motor vehicle engine certifications, and water pollution permits.
Receipts in this special fund can only be appropriated to the S&T and EPM appropriations to meet the expenses of the
programs that generate the receipts if authorized by Congress in the Agency's appropriations bill.
ii. Leaking Underground Storage Tank (LUST) Trust Fund:
The LUST Trust Fund was authorized by the SARA as amended by the Omnibus Budget Reconciliation Act of 1990.
The LUST appropriation provides funding to prevent and respond to releases from leaking underground petroleum
tanks. The Agency oversees cleanup and enforcement programs which are implemented by the states. Funds are
allocated to the states through cooperative agreements and prevention grants to inspect and clean up those sites posing
the greatest threat to human health and the environment. Funds are used for grants to non-state entities including
Indian tribes under Section 8001 of the Resource Conservation and Recovery Act.
iii. Superfund Trust Fund:
In 1980, the Superfund Trust Fund was established by CERCLA to provide resources to respond to and clean up
hazardous substance emergencies and abandoned, uncontrolled hazardous waste sites. The Superfund Trust Fund
financing is shared by federal and state governments as well as industry. The EPA allocates funds from its
appropriation to the Department of Justice to carry out CERCLA. Risks to public health and the environment at
uncontrolled hazardous waste sites qualifying for the Agency's National Priorities List (NPL) are reduced and
addressed through a process involving site assessment and analysis and the design and implementation of cleanup
remedies. NPL cleanups and removals are conducted and financed by the EPA, private parties, or other Federal
agencies. The Superfund Trust Fund includes Treasury's collections, special account receipts from settlement
agreements, and investment activity.
B. Other Funds from Dedicated Collections
i. Inland Oil Spill Programs Account:
The Inland Oil Spill Programs Account was authorized by the Oil Pollution Act of 1990 (OPA). Monies are
appropriated from the Oil Spill Liability Trust Fund to the EPA's Inland Oil Spill Programs Account each year. The
Agency is responsible for directing, monitoring and providing technical assistance for major inland oil spill response
activities. This involves setting oil prevention and response standards, initiating enforcement actions for compliance
with OPA and Spill Prevention Control and Countermeasure requirements, and directing response actions when
appropriate. The Agency carries out research to improve response actions to oil spills including research on the use of
remediation techniques such as dispersants and bioremediation. Funding for specific oil spill cleanup actions is
provided through the U.S. Coast Guard from the Oil Spill Liability Trust Fund through reimbursable Pollution
Removal Funding Agreements (PRFAs) and other inter-agency agreements.
ii. Pesticide Registration Fund:
The Pesticide Registration Fund was authorized by a 2004 Act, "Consolidated Appropriations Act (P.L. 108-199),"
and reauthorized until September 30, 2027, for the expedited processing of certain registration petitions and the
associated establishment of tolerances for pesticides to be used in or on food and animal feed. Fees covering these
activities, as authorized under the FIFRA Amendments of 1988, are to be paid by industry and deposited into this fund
group.
61.
-------
United States Environmental Protection Agency
Notes to the Financial Statements
For the Fiscal Years Ending September 30, 2023 and 2022
(Dollars in Thousands)
iii. Reregistration and Expedited Processing Fund:
The Revolving Fund was authorized by the FIFRA of 1972, as amended by the FIFRA Amendments of 1988 and as
amended by the Food Quality Protection Act of 1996. Pesticide maintenance fees are paid by industry to offset the
costs of pesticide re-registration and the reassessment of tolerances for pesticides used in or on food and animal feed,
as required by law.
iv. Tolerance Revolving Fund:
The Tolerance Revolving Fund was authorized in 1963 for the deposit of tolerance fees. Fees were paid by industry
for Federal services to set pesticide chemical residue limits in or on food and animal feed. Fees collected prior to
January 2, 1997 were accounted for under this fund. Presently, collection of these fees is prohibited by statute enacted
in the Consolidated Appropriations Act, 2004 (P.L. 108-199).
v. Hazardous Waste Electronic Manifest System:
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" authorized the EPA
to implement a national electronic manifest system and required that the costs of developing and operating the new e-
Manifest system be recovered from user fees charged to those who use hazardous waste manifests to track off-site
shipments of their wastes. To that end, the EPA charges and collects fees from facilities for each manifest they
submit.
Note 18. Environmental and Disposal Liabilities
Annually, the EPA is required to disclose its audited estimated future costs associated with:
a) Cleanup of hazardous waste and restoration of the facility when it is closed, and
b) Costs to remediate known environmental contamination resulting from the Agency's operations.
The EPA has 24 sites for which it is responsible for clean-up costs incurred under federal, state, and/or local
regulations to remove, contain, or dispose of hazardous material found at these facilities.
The EPA is also required to report the estimated costs related to:
a) Clean-up from federal operations resulting in hazardous waste
b) Accidental damage to nonfederal property caused by federal operations, and
c) Other damage to federal property caused by federal operations or natural forces.
The key to distinguishing between future clean-up costs versus an environmental liability is to determine whether the
event (accident, damage, etc.) has already occurred and whether we can reasonably estimate the cost to remediate the
site.
The EPA has elected to recognize the estimated total clean-up cost as a liability and record changes to the estimate in
subsequent years.
As of September 30, 2023, the EPA has no sites that require clean up stemming from its activities.
The EPA has 82 sites for which it is required to fund the environmental cleanup. As of September 30, 2023, the
estimated costs for site clean-up were $37 million unfunded, and $100 thousand funded. For September 30, 2022 the
estimated cost for site clean-up was $32 million unfunded, with nothing funded. Since the clean-up costs associated
with permanent closure were not primarily recovered through user fees, the EPA has elected to recognize the
estimated total clean-up cost as a liability and record changes to the estimate in subsequent years.
62.
-------
United States Environmental Protection Agency
Notes to the Financial Statements
For the Fiscal Years Ending September 30, 2023 and 2022
(Dollars in Thousands)
In FY 2023, the estimate for unfunded clean-up cost increased by $5 million from the FY 2022 estimate. This is
primarily due to increased estimates of future lab cleanup actions.
Note 19. State Credits
Authorizing statutory language for Superfund and related Federal regulations requires states to enter into Superfund
State Contracts (SSC) when the EPA assumes the lead for a remedial action in their state. The SSC defines the state's
role in the remedial action and obtains the state's assurance that it will share in the cost of the remedial action. Under
Superfund's authorizing statutory language, states will provide the EPA with a 10 percent cost share for remedial
action costs incurred at privately owned or operated sites, and at least 50 percent of all response activities (i.e.,
removal, remedial planning, remedial action, and enforcement) at publicly operated sites. In some cases, states may
use EPA-approved credits to reduce all or part of their cost share requirement that would otherwise be borne by the
states. The credit is limited to state site-specific expenses the EPA has determined to be reasonable, documented,
direct out-of-pocket expenditures with the public funds for remedial action.
Once the EPA has reviewed and approved a state's claim for credit, the state must first apply the credit at the site
where it was earned. The state may apply any excess/remaining credit to another site when approved by the EPA. As
of September 30, 2023 and 2022, the total remaining state credits have been estimated at $18 million, and $18 million,
respectively.
Note 20. Preauthorized Mixed Funding Agreements
Under Superfund preauthorized mixed funding agreements, PRPs agree to perform response actions at their sites with
the understanding that the EPA will reimburse them a certain percentage of their total response action costs. The
EPA's authority to enter into mixed funding agreements is provided under CERCLA Section 111(a) (2). Under
CERCLA Section 122(b)(1), as amended by SARA, PRPs may assert a claim against the Superfund Trust Fund for a
portion of the costs they incurred while conducting a preauthorized response action agreed to under a mixed funding
agreement. As of September 30, 2023, the EPA had three outstanding preauthorized mixed funding agreements with
obligations totaling $7 million. As of September 30, 2022, the EPA had three outstanding preauthorized mixed
funding agreements with obligations totaling $7 million. A liability is not recognized for these amounts until all work
has been performed by the PRP and has been approved by the EPA for payment. Further, the EPA will not disburse
any funds under these agreements until the PRP's application, claim and claims adjustment processes have been
reviewed and approved by the EPA.
Note 21. Custodial Revenues and Accounts Receivable
The EPA uses the accrual basis of accounting for the collection of fines, penalties and miscellaneous receipts.
Collectability by the EPA of the fines and penalties is based on the respondents' willingness and ability to pay. As of
September 30, 2023 and 2022 Custodial Revenues and Accounts Receivable are:
2023
2022
Fines, Penalties and Other Miscellaneous Receipts
$
89.665 S
58.515
Accounts Receivable for Fines, Penalties and Other Miscellaneous
Receipts:
Accounts Receivable
$
200,312 $
236,617
Less: Allowance for Uncollectible Accounts
(134.259)
(152.300)
Total
$
66.053 S
84.317
63.
-------
United States Environmental Protection Agency
Notes to the Financial Statements
For the Fiscal Years Ending September 30, 2023 and 2022
(Dollars in Thousands)
Note 22. Statement of Budgetary Resources
The purpose of Federal budgetary accounting is to control, monitor, and report on funds made available to Federal
agencies bylaw and help ensure compliance with law.
The following budget terms from OMB Circular A-l 1, Section 20.3 are commonly used:
• Appropriation: A provision of law (not necessarily in an appropriations act) authorizing the expenditure of funds
for a given purpose. Usually, but not always, an appropriation provides budget authority.
• Budgetary resources: Amounts available to incur obligations in a given year. Budgetary resources consist of new
budget authority and unobligated balances of budget authority provided in previous years.
• Distributed offsetting receipts: Amounts that an agency collects from the public or from other U.S. Government
agencies that are used to offset or reduce an agency's budget outlays. Agency outlays are measured on both a gross
and net basis, with net outlays being reduced by offsetting receipts (and other amounts).
• Offsetting collections: Payments to the Government that, by law, are credited directly to expenditure accounts and
deducted from gross budget authority and outlays of the expenditure account, rather than added to receipts. Usually,
offsetting collections are authorized to be spent for the purposes of the account without further action by Congress.
They usually result from business-like transactions with the public, including payments from the public in exchange
for goods and services, reimbursements for damages, and gifts or donations of money to the Government and from
intragovernmental transactions with other Government accounts. The authority to spend offsetting collections is a
form of budget authority.
• Offsetting receipts: Payments to the Government that are credited to offsetting receipt accounts and deducted from
gross budget authority and outlays, rather than added to receipts. Usually, they are deducted at the level of the agency
and subfunction, but in some cases they are deducted at the level of the Government as a whole. They are not
authorized to be credited to expenditure accounts. The legislation that authorizes the offsetting receipts may earmark
them for a specific purpose and either appropriate them for expenditure for that purpose or require them to be
appropriated in annual appropriations acts before they can be spent. Like offsetting collections, they usually result
from business-like transactions with the public, including payments from the public in exchange for goods and
services, reimbursements for damages, and gifts or donations of money to the Government, and from
intragovernmental transactions with other Government accounts.
• Obligation: A binding agreement that will result in outlays, immediately or in the future. Budgetary resources must
be available before obligations can be incurred legally.
• Outlay: A payment to liquidate an obligation. Outlays generally are equal to cash disbursements and are the measure
of Government spending.
Budgetary resources, obligations incurred and outlays, as presented in the audited FY 2022 Statement of Budgetary
Resources, will be reconciled to the amounts included in the FY 2022 Budget of the United States Government when
they become available. The Budget of the United States Government with actual numbers for FY 2023 has not yet
been published. We expect it will be published by early 2024, and it will be available on the Office of Management
and Budget website at https://www.whitehouse. gov/
64.
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United States Environmental Protection Agency
Notes to the Financial Statements
For the Fiscal Years Ending September 30, 2023 and 2022
(Dollars in Thousands)
The actual amounts published for the year ended September 30, 2022 are listed immediately below (dollars in
millions):
FY 2022 Budgetary
Offsetting
Resources Obligations
Receipts
Net Outlavs
Statement of Budgetary Resources $ 80.365 $ 23.389
$ 5.039
$ 15.159
Renorted in the Budget of the U.S. Government $ 80.257 $ 23.357
S 5.039
S 15.160
Recoveries of Prior Year Obligations, Temporarily Not Available, and Permanently Not Available on the Statement of
Budgetary Resources consist of the following amounts as of September 30, 2023 and 2022:
2023
2022
Unobligated Balance Brought Forward, Oct 1.
S 56.975.250
S 5.372.585
Adjustments to Budgetary Resources Made During the Current Year
Downward Adjustments of Prior Year Undelivered Orders
331,528
310,599
Downward Adjustments of Prior Year Delivered Orders
13,047
11,898
Permanent Reduction Prior Year Balances
(13,300)
-
Other Adjustments
(24.159)
(20.975)
Total
307,116
301,522
Unobligated Balance from Prior Year Budget Authority, Net
(discretionary and mandatory)
S 57.282.366
S 5.674.107
Temporarily Not Available - Rescinded Authority
$ (8,942)
$ (6.563)
Permanently Not Available:
Rescinded Authority
$
$
Cancelled Authority
(21.196)
21.065
Total Permanently Not Available
S (21.196)
S 21.065
Unobligated balances are a combination of two lines on the Statement of Budgetary Resources: Apportioned,
Unobligated Balances and Unobligated Balances Not Available. Unexpired unobligated balances are available to be
apportioned by the OMB for new obligations at the beginning of the following fiscal year. The expired unobligated
balances are only available for upward adjustments of existing obligations.
The unobligated balances available consist of the following as of September 30, 2023 and 2022:
2023
2022
Unexpired Unobligated Balance
$ 59,167,562
$ 56,868,632
Expired Unobligated Balance
104.783
106.618
Total
S 59.272.345
S 56.975.250
65.
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United States Environmental Protection Agency
Notes to the Financial Statements
For the Fiscal Years Ending September 30, 2023 and 2022
(Dollars in Thousands)
Budgetary resources obligated for undelivered orders as of September 30, 2023 and 2022:
2023
2022
Intragovernmental:
Unpaid Undelivered Orders
Paid Undelivered Orders
$ 1,982,774 $ 1,309,147
1,643,300 330,617
Other Than Intragovernmental:
Unpaid Undelivered Orders
Paid Undelivered Orders
Total
36,792,410 27,441,476
8.275 3.736
S 40.426.759 S 29.084.976
Distributed offsetting receipts are amounts that an agency collects from the public or from other Government agencies
that are used to offset or reduce an agency's budget outlays. Agency outlays are measured on both a gross and net
basis, with net outlays being reduced by offsetting receipts (and other amounts). As of September 30, 2023 and 2022,
the following receipts were generated from these activities:
Note 23. Imputed Financing
In accordance with SFFAS No. 5, Accounting for Liabilities of the Federal Government, Federal agencies must
recognize the portion of employees' pensions and other retirement benefits to be paid by the OPM trust funds. These
amounts are recorded as imputed costs and imputed financing for each Agency. Each year the OPM provides Federal
agencies with cost factors to calculate these imputed costs and financing that apply to the current year. These cost
factors are multiplied by the current year's salaries or number of employees, as applicable, to provide an estimate of
the imputed financing that the OPM trust funds will provide for each Agency. In FY 2023, the Agency began
recording OPM amounts quarterly; previously it was recorded annually. The estimates for FY 2023 are $196 million.
For FY 2022, the estimates were $132 million.
SFFAS No. 4, Managerial Cost Accounting Standards and Concepts and SFFAS No. 30, Inter-Entity
Cost Implementation, requires Federal agencies to recognize the costs of goods and services received from other
Federal entities that are not fully reimbursed, if material. The EPA estimates imputed costs for inter-entity
transactions that are not at full cost and records imputed costs and financing for these unreimbursed costs subject to
materiality. The EPA applies its Headquarters General and Administrative indirect cost rate to expenses incurred for
inter-entity transactions for which other Federal agencies did not include indirect costs to estimate the amount of
unreimbursed (i.e., imputed) costs. For FY 2023 total imputed costs were $37 million.
In addition to the pension and retirement benefits described above, the EPA also records imputed costs and financing
for Treasury Judgment Fund payments made on behalf of the Agency. Entries are made in accordance with the
Interpretation of Federal Financial Accounting Standards No. 2, Accounting for Treasury Judgment Fund
Transactions. For FY 2023, entries for Judgment Fund payments totaled $9 million. For FY 2022, entries for
2023 2022
Trust Fund Recoveries
Special Fund Services
Trust Fund Appropriation
Miscellaneous Receipt and Clearing Accounts
Total
$ 238,365 $ 303,954
55,443 29,368
1,218,809 4,675,799
56.319 29.699
$ 1.568.936 $ 5.038.820
66.
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United States Environmental Protection Agency
Notes to the Financial Statements
For the Fiscal Years Ending September 30, 2023 and 2022
(Dollars in Thousands)
Judgment Fund payments totaled $98 million.
Note 24. Federal Employee and Veteran Benefits Payable
Payroll and benefits payable to the EPA employees for the fiscal years ending September 30, 2023 and 2022, consist
of the following:
Covered by
Not Covered
Budgetary
by Budgetary
Resources
Resources
Total
FY 2023 Payroll and Benefits Payable
Employer Contributions Payable - Thrift Savings Plan
$ 1,003
$
$
1,003
Actuarial FECA Liability
-
44,349
44,349
Accrued Unfunded Annual Leave
-
184.396
184.396
Total - Current
S 1.003
S 228.745
$
229.748
Covered by
Not Covered
Budgetary
by Budgetary
Resources
Resources
Total
FY 2022 Payroll and Benefits Payable
Employer Contributions Payable - Thrift Savings Plan
$ 2,813
$
$
2,813
Actuarial FECA Liability
-
45,758
45,758
Accrued Unfunded Annual Leave
-
175.214
175.214
Total - Current
S 2.813
S 220.972
$
223.785
FECA (Federal Employees' Compensation Act) provides income and medical cost protection to covered Federal
civilian employees injured on the job, employees who have incurred a work-related occupational disease, and
beneficiaries of employees whose death is attributable to a job-related injury or occupational disease. Annually, the
EPA allocates the portion of the long-term FECA actuarial liability attributable to the entity. The liability is calculated
to estimate the expected liability for death, disability, medical and miscellaneous costs for approved compensation
cases. The liability amounts and the calculation methodologies are provided by the Department of Labor. The FY
2023 present value of these estimated outflows is calculated using a discount rate of 2.326 percent in the first year for
wage benefits and 2.112 percent in the first year for medical benefits, and 2.326 percent in the years thereafter for
wage benefits and 2.112 percent in the years thereafter for medical benefits. The estimated future costs are recorded as
an unfunded liability.
See Note 1 paragraph P for additional information.
67.
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United States Environmental Protection Agency
Notes to the Financial Statements
For the Fiscal Years Ending September 30, 2023 and 2022
(Dollars in Thousands)
Note 25. Non-Exchange Revenue, Statement of Changes in Net Position
Non-Exchange Revenue on the Statement of Changes in Net Position for the fiscal years ended September 30, 2023
and 2022:
Interest on Trust Fund
Tax Revenue, Net of Refunds
Fines and Penalties Revenue
Special Receipt Fund Revenue
Total Nonexchange Revenue
2023
Funds from
Dedicated All Other
Collections Funds
$ 437,679 $
1,410,243
1,043
31.830 -
S 1.880.795 S
2022
Funds from
Dedicated All Other
Collections Funds
$ 66,012 $
658,050
1,587
26.986 -
X 752.635 S
68.
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United States Environmental Protection Agency
Notes to the Financial Statements
For the Fiscal Years Ending September 30, 2023 and 2022
(Dollars in Thousands)
Note 26. Reconciliation of Net Cost of Operations to Net Outlays
For the Fiscal Year Ended September 30,2023:
Intra-
governmental
NET COST
Components of Net Cost That Are Not Part of Net Outlays:
Property, Plant and Equipment Depreciation
Inventory Depletion Expense
Property, Plant and Equipment Disposal & Revaluation
Applied Overhead/Cost Capitalization Offset
Other Than
Intra-
governmental
Total 2023
Increase/(Decrease) in Assets:
Accounts Receivable
Loans Receivable
Investments
Other Assets
(Increase)/Decrease in Liabilities:
Accounts Payable and Accrued Liabilities
Loans Guarantee Liability (Non-FCRA)/Loans Payable
Environmental and Disposal 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
Components of Net Outlays That Are Not Part of Net Cost:
Acquisition of Inventory
Acquisition of Investments
Other
Other Financing Sources:
Transfer Out (In) Without Reimbursement
Total Components of Budget Outlays That Are Not Part of
Net Operating Cost
Miscellaneous Items
Distributed Offsetting Receipts
Custodial/Non-Exchange Revenue
Appropriated Receipts for Trust Fund/Special Funds
Other Temporary Timing Differences
NET OUTLAYS
$ 2,194,312 $ 9,772,579 $11,966,891
1,939
(600)
95,214
1,307,749
(100,205)
(1,396,046)
16,974
(241,657)
1,877,680
122
(20,033)
(19,911)
(1,568,936)
(181,970)
S 106.863
(44,010)
(260)
(1,244)
(57,677)
(27,803)
1,579,973
1,066
(53,320)
(5,201)
(5,962)
(35,834)
11,122,307
220
1,766,289
(452,123)
1,314,386
46,522
(3,830)
S 12.479.385
(44,010)
(260)
(1,244)
(57,677)
(25,864)
1,579,373
95,214
1,308,815
(153,525)
(1,396,046)
(5,201)
(5,962)
(18,860)
(241,657)
12,999,987
342
1,766,289
(452,123)
(20,033)
1,294,475
(1,568,936)
(135,448)
(3,830)
S 12.586.248
69.
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United States Environmental Protection Agency
Notes to the Financial Statements
For the Fiscal Years Ending September 30, 2023 and 2022
(Dollars in Thousands)
For the Fiscal Year Ended September 30, 2022:
NET COST
Components of Net Cost That Are Not Part of Net Outlays:
Property, Plant and Equipment Depreciation
Property, Plant and Equipment Disposal & Revaluation
Applied Overhead/Cost Capitalization Offset
Other
Other Than
Intra- Intra-
governmental governmental Total 2022
$ 1,840,316 $ 7,902,264 $ 9,742,580
(43,097)
(952)
109,348
32
(43,097)
(952)
109,348
32
Increase/(Decrease) in Assets:
Accounts Receivable
Loans Receivable
Investments
Other Assets
(1,941)
1,432
(44,891)
15,839
(32,154)
947,601
3,238
(34,095)
949,033
(44,891)
19,077
(Increase)/Decrease in Liabilities:
Accounts Payable and Accrued Liabilities
Loans Guarantee Liability (Non-FCRA)/Loans Payable
Environmental and Disposal 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
Components of Net Outlays That Are Not Part of Net Cost:
Acquisition of Inventory
Acquisition of Other Assets
Other Financing Sources:
Transfer Out (In) Without Reimbursement
Total Components of Budget Outlays That Are Not Part of
Net Operating Cost
Miscellaneous Items
Distributed Offsetting Receipts
Custodial/Non-Exchange Revenue
Appropriated Receipts for Trust Fund/Special Funds
Other Temporary Timing Differences
NET OUTLAYS
39,769
(810,341)
(29,058)
(268,943)
742,182
(17,397)
(5,038,820)
45
(9,498)
(6,433)
11,359
(73,967)
8,807,741
309
4,186,832
306,387
23.554
30,271
(810,341)
(6,433)
11,359
(103,025)
(268,943)
9,549,923
309
4,186,832
(17,397)
(17,397) 4,187,141 4,169,744
(5,038,820)
306,432
23.554
268,566 268,566
X (4.313.9901 S 13.593.389 S 9.279.399
70.
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United States Environmental Protection Agency
Notes to the Financial Statements
For the Fiscal Years Ending September 30, 2023 and 2022
(Dollars in Thousands)
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 above illustrates this reconciliation by listing the
key differences between net cost and net outlays.
71.
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United States Environmental Protection Agency
Notes to the Financial Statements
For the Fiscal Years Ending September 30, 2023 and 2022
(Dollars in Thousands)
Note 27. Amounts Held by Treasury
Amounts held by Treasury for future appropriations consist of amounts held in trusteeship by Treasury in the
Superfund and LUST Trust Funds.
A. Superfund
Superfund is supported by general revenues, cost recoveries of funds spent to clean up hazardous waste sites, interest
income, and fines and penalties.
The following reflects the Superfund Trust Fund maintained by Treasury as of September 30, 2023 and 2022. The
amounts contained in these notes have been provided by Treasury. As indicated, a portion of the outlays represent
amounts received by the EPA's Superfund Trust Fund; such funds are eliminated on consolidation with the Superfund
Trust Fund maintained by Treasury.
In FY 2023, the EPA received an appropriation of $1 billion for Superfund. Treasury's Bureau of the Fiscal Service
(BFS), the manager of the Superfund Trust Fund assets, records a liability to the EPA for the amount of the
appropriation. BFS does this to indicate those trust fund assets that have been assigned for use and therefore are not
available for appropriation. As of September 30, 2023 and 2022, the Treasury Trust Fund has a liability to the EPA for
previously appropriated funds and special accounts of $9 billion and $9 billion, respectively.
SUPERFUND FY 2023
EPA
Treasury
Combined
Undistributed Balances
Uninvested Fund Balance
$
$
(188.663)
$ (188.663)
Total Undistributed Balance
-
(188,663)
(188,663)
Interest Receivable
-
9,182
9,182
Investments, Net
8.731.253
2.033.101
10.764.354
Total - Assets
S 8.731.253
$
1.853.620
S 10.584.873
Liabilities and Equity
Equity
$ 8.731.253
$
1.853.620
$ 10.584.873
Total Liabilities and Equity
S 8.731.253
$
1.853.620
S 10.584.873
Receipts
Corporate Environmental
$
$
1,204,868
$ 1,204,868
Cost Recoveries
-
238,365
238,365
Fines and Penalties
-
703
703
Total Revenue
-
1,443,936
1,443,936
Appropriations Received
-
1,217,809
1,217,809
Interest Income
-
387.576
387.576
Total Receipts
S
$
3.049.321
S 3.049.321
Outlays
Transfers to/from EPA, Net $ 1.723.271 $(1.723.271) $
Total Outlays S 1.723.271 S (1.723.271) S
Net Income S 1.723.271 S 1.326.050 S 3.049.321
72.
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United States Environmental Protection Agency
Notes to the Financial Statements
For the Fiscal Years Ending September 30, 2023 and 2022
(Dollars in Thousands)
SUPERFUND FY 2022 EPA Treasury Combined
Undistributed Balances
Uninvested Fund Balance
$
$
103.683
$ 103.683
Total Undistributed Balance
-
103,683
103,683
Interest Receivable
-
4,694
4,694
Investments, Net
8.655.640
419.190
9.074.830
Total - Assets
S 8.655.640
$
527.567
S 9.183.207
Liabilities and Equity
Equity
$ 8.655.640
$
527.567
$ 9.183.207
Total Liabilities and Equity
S 8.655.640
$
527.567
S 9.183.207
Receipts
Corporate Environmental
$
$
413,002
$ 413,002
Cost Recoveries
-
303,954
303,954
Fines and Penalties
-
3.000
3.000
Total Revenue
-
719,956
719,956
Appropriations Received
-
4,675,799
4,675,799
Interest Income
-
56.135
56.135
Total Receipts
S
S 5.451.890
S 5.451.890
Outlays
Transfers to/from EPA, Net
$ 5.076.897
$ (5.076.897)
$
Total Outlays
S 5.076.897
S (5.076.897)
S
Net Income
S 5.076.897
$
374.993
S 5.451.890
73.
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United States Environmental Protection Agency
Notes to the Financial Statements
For the Fiscal Years Ending September 30, 2023 and 2022
(Dollars in Thousands)
B. LUST
LUST is supported primarily by a sales tax on motor fuels to clean up LUST waste sites. In FY 2023 and 2022, there
were no fund receipts from cost recoveries. The amounts contained in these notes are provided by Treasury. Outlays
represent appropriations received by the EPA's LUST Trust Fund; such funds are eliminated on consolidation with
the LUST Trust Fund maintained by Treasury.
LUST FY 2023 EPA Treasury Combined
Undistributed Balances
Uninvested Fund Balance
$
-
$
6.010
$ 6.010
Total Undistributed Balance
-
6,010
6,010
Interest Receivable
-
1,364
1,364
Investments, Net
91.439
1.292.945
1.384.384
Total - Assets
$
91.439
S 1.300.319
S 1.391.758
Liabilities and Equity
Equity
$
91.439
$ 1.300.319
$ 1.391.758
Total Liabilities and Equity
$
91.439
S 1.300.319
S 1.391.758
Receipts
Highway TF Tax
$
-
$
192,656
$ 192,656
Airport TF Tax
-
11,800
11,800
Inland TF Tax
-
919
919
Total Revenue
-
205,375
205,375
Interest Income
-
48.792
48.792
Total Receipts
$
-
$
254.167
S 254.167
Outlays
Transfers to/from EPA, Net
$
94.205
$
(94.205)
$
Total Outlays
$
94.205
$
(94.205)
S
Net Income
$
94.205
$
159.962
S 254.167
74.
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United States Environmental Protection Agency
Notes to the Financial Statements
For the Fiscal Years Ending September 30, 2023 and 2022
(Dollars in Thousands)
LUST FY 2022
EPA
Treasury
Combined
Undistributed Balances
Uninvested Fund Balance
$
$ 13.817
$ 13.817
Total Undistributed Balance
Interest Receivable
Investments, Net
Total - Assets
$
92.714
92.714
13,817
116
1.125.426
S 1.139.359
13,817
116
1.218.140
S 1.232.073
Liabilities and Equity
Equity
Total Liabilities and Equity
$
$
92.714
92.714
$ 1.139.359
S 1.139.359
$ 1.232.073
S 1.232.073
Receipts
Highway TF Tax
Airport TF Tax
Inland TF Tax
$
-
$ 234,170
7,607
3.270
$ 234,170
7,607
3.270
Total Revenue
Interest Income
-
245,047
9.716
245,047
9.716
Total Receipts
$
_
S 254.763
S 254.763
Outlays
Transfers to/from EPA, Net
$
92.293
$ (92.293)
$
Total Outlays
$
92.293
S (92.293^
S
Net Income
$
92.293
S 162.470
S 254.763
75.
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United States Environmental Protection Agency
Notes to the Financial Statements
For the Fiscal Years Ending September 30, 2023 and 2022
(Dollars in Thousands)
Note 28. COVID-19 Activity
On March 27, 2020, President Donald Trump signed into law The Coronavirus Aid, Relief, and Economic Security
Act (CARES Act) in response to the economic fallout of the COVID-19 pandemic in the United States. The EPA
received a supplemental appropriation of $7 million to support Environmental Program Management, Science and
Technology, Building and Facilities, and Superfund program efforts related to the virus. As of September 30, 2023,
there have been no new obligations.
On March 11, 2021, President Joe Biden signed into law the American Rescue Plan Act (American Rescue Plan) also
called the COVID-19 Stimulus Package, to speed up the United States' recovery from the economic and health effects
of the COVID-19 pandemic and the ongoing recession. The EPA received a supplemental appropriation of $100
million to support Environmental Program Management and State and Tribal Assistance Grants program efforts
related to recovery from the virus.
Additional COVID-19 activities are discussed in Section I, Management's Discussion and Analysis, Financial
Analysis and Stewardship Information.
COVID-19 Activity
Budgetary Resources: Unobligated (and unexpired) Balance Carried Forward from
PY
Budgetary Resources Obligated (-)
Budgetary Resources: Ending Unobligated (and unexpired) Balance to be Carried
Forward
Outlays, Net (Total)
2023
2022
$ 33,129 $
86,206
(26.653)
(67.019)
6.476
19.187
S (85.199) S
(69.706)
Note 29. Reclassified Financial Statement for Government-wide Reporting
To prepare the Financial Report of the U.S. Government (Financial Report), the Department of the Treasury requires
agencies to submit an adjusted trial balance, which is a listing of amounts by U.S. Standard General Ledger account
that appear in the financial statements. Treasury uses the trial balance information reported in the Government-wide
Treasury Account Symbol Adjusted Trial Balance System (GTAS) to develop a Reclassified Statement of Net Cost.
Treasury eliminates intragovernmental balances from the reclassified statements and aggregates lines with the same
title to develop the Financial Report statements. This note shows the agency's financial statements and reclassified
statements prior to elimination of intragovernmental balances and prior to aggregation of repeated Financial Report
line items. A copy of the 2022 Financial Report can be found here: Bureau of the Fiscal Service - Reports. Statements
& Publications (treasurv.gov) and a copy of the 2023 Financial Report will be posted to this site as soon as it is
released.
The term "intragovernmental" is used in this note to refer to amounts that result from other components of the Federal
Government.
The term "other than tntragovernmental" is used in this note to refer to Federal Government amounts that result from
transactions with non-Federal entities. These include transactions with individuals, businesses, non-profit entities, and
State, local, and foreign governments.
76.
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United States Environmental Protection Agency
Notes to the Financial Statements
For the Fiscal Years Ending September 30, 2023 and 2022
(Dollars in Thousands)
Reclassification of Statement of Net Cost to Line Items Used for the Government-wide Statement of Net Cost
For the Year Ended September 30, 2023
FY 2023 EPA SNC
Line Items Used to Prepare the FY 2023 Government-wide SNC
Financial Statement Line
Amounts
Dedicated
Collections
Combined
Dedicated
Collections
Eliminations
Other than
Dedicated
Collections
(with
Eliminations)
Eliminations
Between
Dedicated &
Other than
Dedicated
Total
Reclassified Statement
Line
Gross Costs
$ 12,487,285
Other Than
Intragovernmental Costs
1,404,475
9,091,122
10,495,597
Other Than
Intragovernmental Gross
Costs
_
1,404,475
_
9,091,122
_
10,495,597
Total Other Than
Intragovernmental Costs
Intragovernmental Costs
-
99,612
-
395,410
-
495,022
Benefits Program Costs
-
2,835
-
202,164
-
204,999
Imputed Costs
-
379,347
-
759,585
-
1,138,932
Buy/Sell Costs
-
-
-
122
-
122
Purchase of Assets
_
_
_
92,344
_
92,344
Borrowing and Other
Interest Expense
_
_
_
9,181
_
9,181
Other Expenses (w/o
Reciprocals)
_
481,794
_
1,458,806
_
1,940,600
Total Intragovernmental
Costs
Total Gross Costs
$ 12,487,285
$ 1,886,269
$
$ 10,549,928
$
$ 12,436,197
Total Reclassified Gross
Costs
Earned Revenue
$ 520,394
$ (317,119)
$ 238,365
$ 458,170
$
$ 379,416
Other Than
Intragovernmental Earned
Revenue
Intragovernmental
Revenue
-
(20,270)
-
114,948
-
94,678
Buy/Sell Revenue
-
-
-
122
-
122
Purchase of Assets Offset
_
(20,270)
_
115,070
_
94,800
Total Intragovernmental
Earned Revenue
Total Earned Revenue
$ 520,394
$ (337,389)
$ 238,365
$ 573,240
$
$ 474,216
Total Reclassified Earned
Revenue
NET COST
$ 11,966,891
$ 2,223,658
$ (238,365)
$ 9,976,688
$
$ 11,961,981
NET COST
77.
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United States Environmental Protection Agency
Notes to the Financial Statements
For the Fiscal Years Ending September 30, 2023 and 2022
(Dollars in Thousands)
Note 30. Restatements
FY 2022 has been restated. The WIFIA Loan Financing Account was previously reported as a dedicated collections
fund but is specifically excluded from such per Statement of Federal Financial Accounting Standards (SFFAS) 27,
Identifying and Reporting Funds from Dedicated Collections, and SFFAS 43, Dedicated Collections: Amending
SFFAS 27, Identifying and Reporting Earmarked Funds.
The restatement resulted in a $8,206 increase to the Funds from Dedicated Collections net position and a $8,206
decrease to the Funds Other than those from Dedicated Collections net position. There was no impact to total net
position.
The change impacts the FY 2022 Balance Sheet and Statements of Changes in Net Position - Cumulative Results of
Operations between Funds from Dedicated Collections and Funds from Other Than Dedicated Collections. The
Consolidated Totals on the Statement of Changes in Net Position remains unchanged. Footnote 17 Funds from
Dedicated Collections was updated for this change.
For the Year Ended September 30, 2022
Balance Sheet:
Cumulative Results of Operations - Funds from Dedicated
Collections
Cumulative Results of Operations - Funds from Other than
Dedicated Collections
Total Cumulative Results of Operations (Consolidated)
Total Net Position
Previously
Reported Restatement
Restated
Amount
$ 7,717,484 $ 26,639 $ 7,744,123
281,672
7,999,156
$ 70,617,863 $
(26,639) 255,033
7,999,156
$70,617,863
Statement of Changes in Net Position:
Funds from Dedicated Collections:
Cumulative Results of Operations Beginning Balance
Transfers-In/(Out)
Other
Net Cost of Operations
Total Cumulative Results of Operations
$ 3,551,640 $ 8,206 $ 3,559,846
4,584,789 48,268 4,633,057
48,268 (47,268) 1,000
(1,246,544) 18,433 (1,228,111)
$ 7,717,484 $ 26,639 $ 7,744,123
Funds from Other Than Dedicated Collections:
Cumulative Results of Operations Beginning Balance
Other Adjustments
Other
Net Cost of Operations
Total Cumulative Results of Operations
$ 381,028 $ (8,206) $ 372,822
(769) (769)
(48,268) 769 (47,499)
(8,496,036) (18,433) (8,514,469)
$ 281,672 $ (26,639) $ 255,033
Consolidated Totals:
Cumulative Results of Operations Beginning Balance
Other Adjustments
Transfers-In/(Out)
Other
Net Cost of Operations
Total Cumulative Results of Operations
$ 3,932,668 $
(9,742,580)
$ 7,999,156 $
(25,921)
$ 3,932,668
(769) (769)
48,268 22,347
(47,499) (47,499)
(9,742,580)
$ 7,999,156
78.
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Required Supplementary Information (Unaudited)
United States Environmental Protection Agency
For the Fiscal Years Ending September 30, 2023 and 2022
(Dollars in Thousands)
Deferred Maintenance
Deferred maintenance is maintenance that was not performed when it should have been, that was scheduled and not
performed, or that was delayed for a future period. Maintenance is the act of keeping property, plant, and equipment
(PP&E) in acceptable operating condition and includes preventive maintenance, normal repairs, replacement of parts
and structural components, and other activities needed to preserve the asset so that it can deliver acceptable
performance and achieve its expected life. Maintenance excludes activities aimed at expanding the capacity of an
asset or otherwise upgrading it to serve needs different from or significantly greater than those originally intended.
Deferred Maintenance is described as the act of keeping fixed assets in acceptable condition.
Such activities include preventive maintenance, replacement of parts, systems, or components, and other activities
needed to preserve or maintain the asset.
The deferred maintenance as of September 30, 2023 and 2022:
2023 2022
Asset Category
Buildings
$
128,180
$
142,324
EPA Held Equipment
1.700
-
Total Deferred Maintenance
$
129.880
$
142.324
79.
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Required Supplementary Information (Unaudited) Cont.
In Fiscal Year 2023, in accordance with SFFAS No. 42, Deferred Maintenance and Repairs: Amending Statements of
Federal Financial Accounting Standards 6, 14, 29 and 32, the EPA presents Deferred Maintenance and Repairs
(DM&R) information by asset category as follows:
Buildings:
Policy
Explanation
Maintenance and repairs policies and how they are
applied.
The maintenance and repair policies are to maintain facilities
and real property installed equipment to fully meet mission
needs at each site. Systems are maintained to function
efficiently at full capacity and to meet or exceed life
expectancy of buildings and building systems.
How we rank and prioritize maintenance and repair
activities among other activities.
Building and facility program projects are scored and ranked
individually based on seven weighted factors to determine
priority needs. High scoring projects are prioritized above
lower scoring projects. The seven factors considered are:
health and safety, energy conservation, environmental
compliance, program requirements, repair and upkeep, space
alteration, and operational urgency. Repair and Improvement
(R&I) projects are identified and prioritized on a local basis.
Factors considered in determining acceptable
condition standards.
The nine building systems must function at a level that fully
meet mission needs. The nine building systems are: structure,
roof, exterior components and finish, interior finish, HVAC,
electrical, plumbing, conveyance, and specialized program
support equipment. Each system is rated from 0 to 5 during
facility assessments. Ratings are used to determine facility
condition index and estimated deferred maintenance.
State whether DM&R relate solely to capitalized
general PP&E and stewardship PP&E or also to
non-capitalized or fully depreciated general PP&E.
Facilities assessments and the resulting DM&R estimates are
applied to capitalize PP&E only. Full facility assessments
using the NASA parametric model are used to determine
facilities and systems indices and deferred maintenance
estimates.
PP&E for which management does not measure
and/or report DM&R and the rationale for the
exclusion of other than non-capitalized or fully
depreciated general PP&E.
Buildings are not excluded from DM&R estimates.
Explain significant changes from the prior year.
No significant changes.
80.
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Required Supplementary Information (Unaudited) Cont.
EPA Held Equipment:
Policy
Explanation
Maintenance and repairs policies and how they are
applied.
Managers of the equipment consider manufacturers
recommendations in determining maintenance requirements.
How we rank and prioritize maintenance and repair
activities among other activities.
Equipment is maintained based on manufacture's
recommendations.
Factors considered in determining acceptable
condition standards.
Manufacturer recommendations.
State whether DM&R relate solely to capitalized
general PP&E and stewardship PP&E or also to
non-capitalized or fully depreciated general PP&E.
DM&R relates to all EPA Held Equipment as determined by
individual site managers.
PP&E for which management does not measure
and/or report DM&R and the rationale for the
exclusion of other than non-capitalized or fully
depreciated general PP&E.
Individual site managers determine the need to measure and/or
report DM&R based on mission needs.
Explain significant changes from the prior year.
Individual site equipment managers decide on a case-by-case
basis the need to maintain equipment.
Vehicles:
Policy
Explanation
Maintenance and repairs policies and how they are
applied.
Vehicle managers maintain vehicles owned by the EPA in
accordance with the recommendations of the manufacturer.
How we rank and prioritize maintenance and repair
activities among other activities.
The goal is to maintain the vehicle as built and as
recommended by the manufacturer. Repairs and maintenance
are also described as system critical or minor. System critical
repairs and maintenance are high priority and are immediately
taken care of. Minor repairs are lower priority and may be
taken care of at a later date (time/scheduling permitting).
These are not critical to in-field functionality, but the repairs
are needed to maintain the vehicle as built.
Factors considered in determining acceptable
condition standards.
The vehicle is inspected to ensure that it (the vehicle) and
related specialized equipment are in good working order. The
criteria being that the vehicle is being maintained as built and
as recommended by the manufacturer.
State whether DM&R relate solely to capitalized
general PP&E and stewardship PP&E or also to
non-capitalized or fully depreciated general PP&E.
All vehicles are capitalized.
PP&E for which management does not measure
and/or report DM&R and the rationale for the
exclusion of other than non-capitalized or fully
depreciated general PP&E.
None.
Explain significant changes from the prior year.
No significant changes.
Beginning in FY 2015, requirements for recognizing and reporting significant and expected-to-be-permanent
impairment of general PP&E (except Internal Use Software) remaining in use are in SFFAS No. 44, Accounting for
Impairment of General Property, Plant, and Equipment (G-PP&E) Remaining in Use.
This statement establishes accounting and financial reporting standards for impairment of general property, plant, and
equipment remaining in use, except for internal use software. G-PP&E is considered impaired when there is a
significant and permanent decline in the service utility of G-PP&E or expected service utility for construction work in
progress. A decline is permanent when management has no reasonable expectation that the lost service utility will be
replaced or restored.
81.
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Required Supplementary Information (Unaudited) Cont.
This statement does not anticipate that entities will have to establish additional or separate procedures beyond those
that may already exist, such as those related to deferred maintenance and repairs, to search for impairments.
Impairments can be identified and brought to management's attention in a variety of ways. Although a presumption
exists that there are existing processes and internal controls in place to reasonably assure identification and
communication of potential material impairments, this statement does not require entities to conduct an annual or
other periodic survey solely for the purpose of applying these standards.
Management may determine that existing processes and internal controls are not sufficient to reasonably assure
identification of potential material impairments and impairments and implement appropriate additional processes and
internal controls.
Land:
Estimated Acreage by Predominant Use
Below details the predominant use of Land in Property, Plant and Equipment on the balance sheet by acreage.
Commercial
Conservation
and
Preservation Operational
Total Estimated
Acreage
End of FY 2022/Start of FY 2023
End of FY 2023
576
576
576
576
All of EPA's land is for the Agency's operational facilities. The rights to this land are permanent and fully devoted to
support the operational facilities contained therein.
82.
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Supplemental Combining Statement of Budgetary Resources (Unaudited)
United States Environmental Protection Agency
For the Fiscal Years Ending September 30,2023
(Dollars in Thousands)
Environmental
Programs &
Management
Leaking
Underground
Storage Science &
Tanks Technology
Superfund
State Tribal
Assistance
Agreements
Other
Totals
BUDGETARY RESOURCES
Unobligated Balance From Prior Year Budget Authority, Net $ 3,867,261 $ 20,819 $ 177,825 $ 6,372,484 $ 8,088,109 $ 38,755,868 $ 57,282,366
Appropriations (discretionary and mandatory)
Borrowing Authority (discretionary and mandatory)
Spending Authority From Offsetting Collection
Total Budgetary Resources
STATUS OF BUDGETARY RESOURCES
New Obligations and Upward Adjustments (total)
Unobligated Balance, End of Year:
Apportioned, Unexpired Accounts
Unapportioned, Unexpired Accounts
Expired Unobligated Balance, End of Year
Unobligated Balance, End of Year (total):
Total Status of Budgetary Resources
413,866
95,480
1,678,568 16,933,949
5,881,408
2,884,452
25,003,271
2,884,452
^M2iL27Si^)J^948JL947J^lM13i336
$ 4.334.169 $ 11 5.024 $ 177.263 $ 8.066.000
$25.022.058 $48.468.911 $86.183.425
704,843 $
3,542,300
87.026
3.629.326
$ 4.334.169
96,290
18,734
18.734
$ 160,444 $ 2,799,778
2,346
14.473
16.819
5,264,962
600
660
$12,563,307 $ 10,586,418 $26,911,080
12,458,751 37,879,869
- 2.624
59,166,962
600
104.783
5.266.222 12.458.751 37.882.493 59.272.345
$ 115.024 $ 177.263 $ 8.066.000 $25.022.058 $48.468.911 $86.183.425
OUTLAYS, NET
Outlays, Net (total) (discretionary and mandatory)
Distributed Offsetting Receipts (-)
Agency Outlays, Net (discretionary and mandatory)
Disbursements, Net (total) (mandatory)
952,590 $
91,236
(1.0001
$ 249,827
952.590 $ 90.236 $249.827
$ 1,632,740 $ 5,755,567 $5,473,224 $14,155,184
(1.456.1741 - (111.7621 (1.568.9361
$ 176.566 $ 5.755.567 $5.361.462 $ 12.586.248
$1.379.374 $1.379.374
83.
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AUDIT OF EPA'S FISCAL YEARS
2023 AND 2022
CONSOLIDATED FINANCIAL
STATEMENTS
84
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*¦
Audit of the EPA's Fiscal
Years 2023 and 2022
(Restated) Consolidated
Financial Statements
November 15, 2023 [ Report No. 24-F-0009
^spec7-0
7"al PR0'
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Report Contributors
Wanda Arrington
Lasharn Barnes
Elizabeth Brinson
Vincent Campbell
Safiya Chambers
Nancy Dao
Edgar Dumeng
Amir Eskarous
Robert Evans
Robert Hairston
Tanishia Heilig
Jennifer Hutkoff
Damon Jackson
Eric Jackson
Sheree James
Alyssa Jolly
Carol Kwok
Shannon Lackey
Mairim Lopez
Ethel Lowery
Sheila May
Demetrios Papakonstantinou
Shaheryar Qureshi
Maria Ramirez-Grigortsuk
Joshua Rodriguez
Gina Ross
Kevin Ross
Scott Sammons
Connie Song
Wendy Swan
Ryan Watren
Philip Weihrouch
Abbreviations
C.F.R. Code of Federal Regulations
CIO Chief Information Officer
EPA U.S. Environmental Protection Agency
FFMIA Federal Financial Management Improvement Act of 1996
FY Fiscal Year
ISA and MOA Interconnection Security Agreement and Memorandum of Agreement
OCFO Office of the Chief Financial Officer
OIG Office of Inspector General
OMB Office of Management and Budget
SSC Superfund State Contract
U.S.C. United States Code
Cover Image
EPA headquarters building. (EPA image)
Are you aware of fraud, waste, or abuse in an
EPA program?
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Washington, D.C. 20460
(888) 546-8740
(202) 566-2599 (fax)
OIG.Hotline@epa.qov
Learn more about our OIG Hotline.
EPA Office of Inspector General
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(202) 566-2391
www.epaoiq.gov
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At a Gla
24-F-0009
November 15, 2023
Audit of the EPA's Fiscal Years 2023 and 2022 (Restated) Consolidated
Financial Statements
Why We Did This Audit
To accomplish this objective:
We performed this audit in accordance
with the Government Management
Reform Act of 1994, which requires the
U.S. Environmental Protection Agency
Office of Inspector General to audit the
financial statements prepared by the
Agency each year. Our primary
objectives were to determine whether
the EPA's:
• Financial statements were fairly
stated in all material respects in
accordance with generally
accepted accounting principles.
• Internal control over financial
reporting was in place.
• Management complied with
applicable laws, regulations,
contracts, and grant agreements.
This requirement for audited financial
statements was enacted to help
improve agencies' financial
management practices, systems, and
control so that timely, reliable
information is available for managing
federal programs.
To support this EPA mission-related
effort:
• Operating efficiently and
effectively.
Address inquiries to our public
affairs office at (202) 566-2391 or
OIG.PublicAffairs@epa.gov.
The EPA Receives an Unmodified Opinion for Fiscal Years 2023 and
2022 (Restated)
We rendered an unmodified opinion on the EPA's consolidated financial statements for fiscal
years 2023 and 2022 (restated), meaning that they were fairly presented and free of material
misstatement.
We found the EPA's financial statements to be fairly presented and
free of material misstatement.
Significant Deficiencies Noted
We noted the following significant deficiencies:
• The EPA did not provide accurate information for its revenue accruals.
• The EPA did not deobligate unneeded funds in a timely manner.
• The EPA operated under an expired Interconnection Security Agreement and
Memorandum of Agreement, which could hamper invoice processing.
• The EPA did not review user accounts for EPA contracting personnel every
60 days, as required by its information security procedure.
Compliance with Applicable Laws, Regulations, Contracts, and
Grant Agreements
We did not note any significant noncompliance with laws, regulations, contracts, and grant
agreements.
Recommendations and Planned Agency Corrective Actions
We make seven recommendations to the EPA, including that the chief financial officer
instruct the regions to take action to correct the accrual and to provide information on a
quarterly basis, develop and implement plans to deobligate unneeded funds in a timely
manner and to ensure that future Interconnection Security Agreement and Memorandum of
Agreement documents are reauthorized before the current agreements expire, and
determine how to review user accounts in compliance with the EPA's information security
procedure. We also recommend that the Great Lakes National Program Office review
accrual information to ensure its accuracy. The EPA agreed with all seven
recommendations, completed corrective actions in response to one, and provided
acceptable planned corrective actions and estimated milestone dates for the others.
List of OIG reports.
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OFFICE OF INSPECTOR GENERAL
U.S. ENVIRONMENTAL PROTECTION AGENCY
November 15, 2023
MEMORANDUM
SUBJECT: Audit of the EPA's Fiscal Years 2023 and 2022 (Restated) Consolidated
Financial Statements
Report No. 24-F-0009
FROM: Damon Jackson, Director Qomm Qxickd&n-
Financial Directorate
Office of Audit
TO: Faisal Amin, Chief Financial Officer
Teresa Siedel, Director
Great Lakes National Program Office
This is our report on the subject audit conducted by the U.S. Environmental Protection Agency Office of
Inspector General. The project number for this audit was QA-FY23-0078. This report contains findings
that describe the problems the OIG has identified and the corrective actions the OIG recommends. Final
determination on matters in this report will be made by EPA management in accordance with established
audit resolution procedures.
The Office of the Chief Financial Officer and the Great Lakes National Program Office are responsible
for the issues discussed in the report.
In accordance with EPA Manual 2750, your offices completed corrective actions for Recommendation 3.
Your offices also provided acceptable planned corrective actions and estimated milestone dates in
response to Recommendations 1, 2, 4, 5, 6, and 7. These recommendations are resolved, and no final
response to this draft is required. If you submit a response, however, 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 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.epaoig.gov.
To report potential fraud, waste, abuse, misconduct, or mismanagement, contact the OIG Hotline at (888) 546-8740 or OIG.Hotline@epa.gov.
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Table of Contents
1 Report on the Audit of the Financial Statements 1
2 Required Supplementary Information 3
3 Report on Internal Control over Financial Reporting 4
4 Report on Compliance with Laws, Regulations, Contracts, and Grant Agreements 6
5 Other Governmental Reporting Requirements 8
6 Prior Audit Coverage 8
A Significant Deficiencies 9
B Status of Prior Audit Report Recommendations 19
C Status of Recommendations and Potential Monetary Benefits 21
1 The EPA's Fiscal Years 2023 and 2022 Consolidated Financial Statements
(with Restatement) 22
2 Agency Response to Draft Report 23
3 Distribution 27
24-F-0009 i
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Inspector General's Report on the EPA's
Fiscal Years 2023 and 2022 (Restated)
Consolidated Financial Statements
The Administrator
U.S. Environmental Protection Agency
Report on the Audit of the Financial Statements
Opinion
We have audited the consolidated financial statements of the U.S. Environmental Protection Agency,
which comprise the consolidated balance sheets, as of September 30, 2023 and 2022 (restated); and the
related consolidated statement of net cost, net cost by major program, changes in net position, and
custodial activity; the combined statement of budgetary resources for the years then ended; and the
related notes to the financial statements.
In our opinion, the consolidated financial statements, including the accompanying notes, present fairly,
in all material respects, the consolidated assets, liabilities, net position, net cost, net cost by major
program, changes in net position, custodial activity, and combined budgetary resources of the EPA as of
and for the years ended September 30, 2023 and 2022 (restated), in conformity with accounting
principles generally accepted in the United States of America.
Basis for Opinion
We conducted our audit in accordance with auditing standards generally accepted in the United States
of America, known as generally accepted auditing standards. Our responsibilities under those standards
are further described in the "Auditor's Responsibilities for the Audit of the Financial Statements" section
of our report. We are required to be independent of the EPA and to meet our ethical responsibilities in
accordance with the relevant ethical requirements relating to our audits. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Emphasis of Matter Restatements of Fiscal Year 2022
As described in note 30, "Restatements," to the financial statements, the EPA restated its fiscal
year 2022 financial statements. The Water Infrastructure Finance and Innovation Act of 2014 loan
financing account was previously reported as a dedicated collections fund, but it is specifically excluded
from such per Statement of Federal Financial Accounting Standards 27, Identifying and Reporting Funds
from Dedicated Collections, and Statement of Federal Financial Accounting Standards 43, Dedicated
Collections: Amending SFFAS 27, Identifying and Reporting Earmarked Funds.
24-F-0009
1
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The restatement resulted in an $8,206,000 increase to the funds from dedicated collections net position
and an $8,206,000 decrease to the funds other than those from dedicated collections net position.
There was no impact to the total net position.
The change impacts the FY 2022 balance sheet and statement of changes in net position—cumulative results
of operations between funds from dedicated collections and funds from other than dedicated collections.
Our opinion is not modified with respect to these corrections.
Responsibilities of Management for the Financial Statements
The EPA's management is responsible for the preparation and fair presentation of the consolidated
financial statements in accordance with accounting principles generally accepted in the United States of
America and for 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 Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements, as a whole,
are free from material misstatement, whether due to fraud or error, and to issue an auditor's report
that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute
assurance and, therefore, is not a guarantee that an audit conducted in accordance with generally
accepted auditing standards will always detect a material misstatement when it exists. The risk of not
detecting a material misstatement resulting from fraud is higher than for one resulting from error, as
fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of
internal control. Misstatements are considered material if there is a substantial likelihood that,
individually or in the aggregate, they would influence the judgment made by a reasonable user based on
the financial statements.
In performing an audit in accordance with generally accepted auditing standards, we:
• Exercise professional judgment and maintain professional skepticism throughout the audit.
• Identify and assess the risks of material misstatement of the financial statements, whether due
to fraud or error, and design and perform audit procedures responsive to those risks. Such
procedures include examining, on a test basis, evidence regarding the amounts and disclosures
in the financial statements.
• Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the EPA's internal control. Accordingly, we express no such opinion.
24-F-0009
2
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• Evaluate the appropriateness of accounting policies used and the reasonableness of significant
accounting estimates made by management, as well as evaluate the overall presentation of the
financial statements.
We are required to communicate with those charged with governance regarding, among other matters,
the planned scope and timing of the audit, significant audit findings, and certain internal control-related
matters that we identified during the audit.
The financial statements include expenses of grantees, contractors, and other federal agencies. Our
audit work pertaining to these expenses included testing only within the EPA. The U.S. Department of
the Treasury collects and accounts for excise taxes that are deposited into the Leaking Underground
Storage Tank Trust Fund. Treasury is also responsible for investing amounts not needed for current
disbursements and transferring funds to the EPA as authorized in legislation. Since Treasury, and not the
EPA, is responsible for these activities, our audit work did not cover these activities.
The Office of Inspector General is not independent with respect to amounts pertaining to OIG
operations that are presented in the financial statements. The amounts included for the OIG are not
material to the EPA's financial statements. The OIG is organizationally independent with respect to all
other aspects of the Agency's activities.
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the information in
the Required Supplementary Information, Supplemental Information, and Management's Discussion and
Analysis sections be presented to supplement the EPA's financial statements. Such information is the
responsibility of management and, although not a part of the basic consolidated financial statements, is
required by the Office of Management and Budget, or OMB, and the Federal Accounting Standards
Advisory Board, which consider it to be an essential part of the financial reporting that places the basic
consolidated financial statements in an appropriate operational, economic, or historical context.
We have applied certain limited procedures to the Required Supplementary Information, Supplemental
Information, and Management's Discussion and Analysis, in accordance with auditing standards
generally accepted in the United States of America, which consisted of inquiring management about the
methods of preparing and comparing the information for consistency with management's responses to
our inquiries, the basic consolidated financial statements, and other knowledge we obtained during the
audit of the basic consolidated financial statements. We do not express an opinion or provide any
assurance on the information because the limited procedures do not provide us with sufficient evidence
to express an opinion or provide any assurance.
24-F-0009
3
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Report on Internal Control over Financial Reporting
Results of Our Consideration of Internal Control over Financial Reporting
Our consideration of internal control was for the limited purpose of expressing an opinion on the EPA's
financial statements and was not designed to identify all deficiencies in internal control that might be
material weaknesses or significant deficiencies; therefore, deficiencies in internal control may exist that
were not identified during the course of our audit. 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.
We noted certain matters, which we discuss below, involving internal control and its operation that we
consider to be significant deficiencies. These issues are summarized below and detailed in Attachment A.
Significant Deficiencies
The EPA Did Not Provide Accurate Information for Its Revenue Accruals
We found multiple instances in which the Agency did not provide accurate information for its revenue
accruals resulting from cost-share agreements for Superfund State Contracts, or SSCs, and Great Lakes
Legacy Act project agreements. Revenue is an inflow of resources that the government earns. An accrual
is an estimate of the percentage of completion based on the work performed under cost-share
agreements. Agency directives describe the processes for managing the financial aspects of the revenue
accruals; however, not all Agency personnel followed these processes, which resulted in the Cincinnati
Finance Center not having all the information that it needed to properly calculate the revenue accruals.
In addition, over $1.5 million of Superfund appropriated funds were not available for other site cleanup
projects that would help to protect human health. Furthermore, without accurate information, revenue
accruals and the financial statements may be misstated.
The EPA Did Not Deobligate Unneeded Funds in a Timely Manner
The EPA did not deobligate in a timely manner $10 million of unneeded funds that it identified during its
annual review of unliquidated obligations. We also identified this deficiency during the FY 2022
consolidated financial statement audit. Furthermore, while we made no determination as to whether
the funds were needed, we recently reported that from FY 2018 through 2023, the EPA had over
$1.55 billion in unliquidated obligations with inactivity of 180 days or more. This includes approximately
$429 million in Infrastructure Investment and Jobs Act appropriations in FY 2022 and 2023. Agency
directives require that responsible offices annually review unliquidated obligations, including inactive
unliquidated obligations, and take appropriate action to deobligate unneeded funds. While the EPA met
24-F-0009
4
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the requirement to review unliquidated obligations at least annually, it did not take timely actions to
deobligate the unneeded funds. As a result, almost $10 million in unobligated funds were not
deobligated and made available for other uses. Further, without the timely deobligation of unneeded
funds, the EPA does not have reasonable assurance that unliquidated obligations are accurate and
represent valid obligations.
The EPA Operated Under an Expired Interconnection Security Agreement and
Memorandum of Agreement, Which Could Hamper Invoice Processing
The Office of the Chief Financial Officer and Treasury operated under an expired Interconnection Security
Agreement and Memorandum of Agreement, a combined single document referred to as the ISA and MOA,
for more than six months, from March to September 2023. The ISA and MOA document each entity's
responsibility to design and implement security controls for the connection between the EPA's Compass
Financials system and Treasury's Invoice Processing Platform. This connection, which implements the
OMB's requirement for electronic invoicing, must be secure to protect the confidentiality, integrity, and
availability of the invoice processing function. Furthermore, security controls are needed to protect the
data being transmitted over this connection, which contain not only federal financial information but also
data subject to the Privacy Act, 5 U.S.C. § 552a. A lack of an approved ISA and MOA could cause the EPA
and Treasury to be unaware of changes made either to the connection or to the design configurations of
the systems, which could disrupt operations and potentially prevent vendors from submitting invoices and
EPA personnel from approving invoices in a timely manner.
The EPA Did Not Review User Accounts for EPA Contracting Personnel Every 60 Days
As Required By Its Information Security Procedure
The OCFO's management of EPA employee user accounts that can access Treasury's Invoice Processing
Platform is not compliant with the Agency's information technology account management
requirements. The Invoice Processing Platform was fully implemented within the EPA on May 23, 2023,
for EPA contracting personnel to manage and approve vendor invoices. Despite EPA requirements to
conduct user account reviews every 60 days, the OCFO had not conducted the required review as of
September 30, 2023. These user account reviews help confirm whether all of the EPA's approximately
2,300 active Invoice Processing Platform user accounts are still necessary. Removing unnecessary user
accounts could help reduce the risk of unauthorized access, which could potentially lead to the
disclosure, modification, or destruction of financial information and the disruption of system operations.
Attachment B contains the status of issues reported in prior year reports on the EPA's consolidated
financial statements. The issues included in Attachment B should be considered among the EPA's
significant deficiencies for FY 2023. We reported less significant internal control matters to the Agency
during the course of the audit. We will not issue a separate management letter.
Basis for Results of Our Consideration of Internal Control Over Financial Reporting
We performed our procedures related to the EPA's internal control over financial reporting in
accordance with government auditing standards generally accepted in the United States of America.
24-F-0009
5
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Responsibilities of Management for Internal Control over Financial Reporting
The EPA's management is responsible for designing, implementing, and maintaining effective internal
control over financial reporting relevant to the preparation and fair presentation of financial statements
that are free from material misstatement, whether due to fraud or error.
Auditor's Responsibilities for Internal Control over Financial Reporting
In planning and performing our audit of the consolidated financial statements as of and for the year
ended September 30, 2023, in accordance with generally accepted auditing standards, we considered
the EPA's internal control over financial reporting as a basis for designing audit procedures, which are
appropriate in the circumstances for the purpose of expressing our opinion on the financial statements
and of complying with OMB Bulletin 24-01, Audit Requirements for Federal Financial Statements, but not
for the purpose of expressing an opinion on the effectiveness of the EPA's internal control. Accordingly,
we do not express an opinion on the effectiveness of the EPA's internal control over financial reporting.
Intended Purpose of Report on Internal Control over Financial Reporting
Because of inherent limitations in internal control, misstatements, losses, or noncompliance may
nevertheless occur and not be detected.
Comparison of the EPA's Federal Managers' Financial Integrity Act Report with
Our Evaluation of Internal Control
OMB Bulletin 24-01 requires the OIG 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. The OIG is also required to identify material weaknesses disclosed by
the audit that were not reported in the Agency's Federal Managers' Financial Integrity Act report.
For financial statement audit and financial reporting purposes, OMB Bulletin 24-01 defines material
weaknesses in internal control as a deficiency or 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.
Report on Compliance with Laws, Regulations, Contracts, and Grant
Agreements
Results of Our Tests for Compliance with Laws, Regulations, Contracts, and
Grant Agreements
Providing an opinion on compliance with 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.
24-F-0009
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Basis of Results of Our Tests for Compliance with Laws, Regulations, Contracts,
and Grant Agreements
As part of obtaining reasonable assurance about whether the Agency'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 financial statements.
Responsibilities of Management for Compliance with Laws, Regulations,
Contracts, and Grant Agreements
The EPA's management is responsible for complying with laws, regulations, contracts, and grant
agreements applicable to the Agency.
Auditor's Responsibilities for Tests of Compliance with Laws, Regulations,
Contracts, and Grant Agreements
We also performed certain other limited procedures as described in the American Institute of Certified
Public Accountants' Codification of Statements on Auditing Standards, AU-C 250.14-16, "Consideration of
Laws and Regulations in an Audit of Financial Statements." OMB Bulletin 24-01 mandates that we evaluate
compliance with federal financial statement system requirements, including those referred to in the
Federal Financial Management Improvement Act of 1996, or FFMIA. We limited our tests of compliance to
these provisions and did not test compliance with all laws and regulations applicable to the EPA.
Intended Purpose of Report on Compliance with Laws, Regulations, Contracts,
and Grant Agreements
The purpose of this report is solely to describe the scope and results of our testing of compliance with
selected provisions of applicable laws, regulations, contracts, and grant agreements, and not to provide an
opinion on compliance. This report is an integral part of an audit performed in accordance with government
auditing standards generally accepted in the United States of America. Accordingly, this report on
compliance with laws, regulations, contracts, and grant agreements is not suitable for any other purpose.
FFMIA Noncompliance
Under FFMIA, we are required to report whether the Agency's financial management systems
substantially comply with the federal financial management systems requirements, applicable federal
accounting standards, and the United States Government Standard General Ledger at the transaction
level. To meet the FFMIA requirement, we performed tests of compliance with FFMIA section 803(a)
requirements and used OMB Memorandum M-09-06, Implementation Guidance for the Federal
Financial Management Improvement Act, dated January 9, 2009, to determine whether there was any
substantial noncompliance with FFMIA.
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The results of our tests did not disclose any instances of noncompliance with FFMIA requirements,
including where the Agency's financial management systems did not substantially comply with the
applicable federal accounting standard.
We did not identify any significant matters involving compliance with laws, regulations, contracts, or
grant agreements related to the Agency's financial management systems during the course of the audit.
Other Governmental Reporting Requirements
Audit Work Required Under the Hazardous Substance Superfund Trust Fund
We also performed audit work to comply with 42 U.S.C. § 9611(k), including the requirement to conduct
an annual audit of payments, obligations, reimbursements, or other uses of the Hazardous Substance
Superfund Trust Fund. The significant deficiencies reported above also relate to Superfund.
Prior Audit Coverage
During previous financial statement audits, we reported significant deficiencies, as detailed in
Attachment B. These deficiencies include that:
• Originating offices did not forward accounts receivable source documents to the finance center
in a timely manner.
• The EPA did not deobligate unneeded funds in a timely manner.
This report is intended solely for the information and
Congress, and it is not intended to be and should not
parties.
use of the management of the EPA, the OMB, and
be used by anyone other than these specified
Qamoit Qxtckd&w,
Damon Jackson
Certified Public Accountant
Director, Financial Directorate
Office of Audit
Office of Inspector General
U.S. Environmental Protection Agency
November 9, 2023
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Attachment A
Significant Deficiencies
Table of Contents
1 The EPA Did Not Provide Accurate Information for Its Revenue Accruals 10
2 The EPA Did Not Deobligate Unneeded Funds in a Timely Manner 13
3 The EPA Operated Under an Expired Interconnection Security Agreement and
Memorandum of Agreement, Which Could Hamper Invoice Processing 15
4 The EPA Did Not Review User Accounts for EPA Contracting Personnel Every 60 Days
As Required by Its Information Security Procedure 17
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1 - The EPA Did Not Provide Accurate Information
for Its Revenue Accruals
We found multiple instances in which the Agency did not provide accurate information for revenue
accruals resulting from cost-share agreements for SSCs and Great Lakes Legacy Act project agreements.
Agency directives describe the processes for managing the financial aspects of the revenue accruals;
however, not all Agency personnel followed these processes, which resulted in the Cincinnati Finance
Center not having all the information that it needed to properly calculate the revenue accruals. In
addition, over $1.5 million of Superfund appropriated funds were not available for other site cleanup
projects that would help to protect human health. Furthermore, without accurate information, revenue
accruals and the financial statements may be misstated.
Regulations and Agency Directives Require Accurate Information Be Provided
EPA regulations at 40 C.F.R. § 35.6805 state that an SSC "remains in effect until the financial settlement
of project costs and final reconciliation of response costs (including all change orders, claims, overmatch
of cost share, reimbursements, etc.) ensures that both [the] EPA and the State have satisfied the cost
share requirement" in section 104 of the Comprehensive Environmental Response, Compensation, and
Liability Act, as amended. This Act is informally known as Superfund.
Also pertaining to SSCs, the EPA's Resource Management Directive System 2550D-09-P1, Financial
Management of Superfund Program - State Cost Share Provisions for Superfund State Contracts and
Remedial Cooperative Agreements, directs regional offices to conduct the SSC financial closeout process,
which includes the reconciliation of the state's final cost share and reclassification of disbursements
when applicable. When the EPA has not used reimbursable (TR1) resources concurrently with Superfund
appropriated (T) obligations, a TR1 resource reclassification may be appropriate. The directive further
states that the SSC accrual calculation for a financially closed SSC should be reviewed and adjusted, if
needed, to reflect a zero-accrual balance. In addition, the directive describes the EPA's process for
managing the financial aspects of Superfund program remedial state cost-share provisions in state
contracts and cooperative agreements. Regional program offices are responsible for the overall
management of SSCs. The directive requires regions, on a quarterly basis, to respond to the Cincinnati
Finance Center's request for information with respect to new and amended SSCs.
Pertaining to the Great Lakes Legacy Act project agreements, the EPA's Resource Management Directive
System 2540-09-P6, Accounts Receivable - Non-Federal Sponsor Cost Share Provisions for Great Lakes
Legacy Act Project Agreements, contains the procedures for financial management of Great Lakes
Legacy Act cost-share provisions. The Great Lakes Legacy Act of 2002 requires a minimum of a
35 percent nonfederal cost share for all projects carried out under the Act.
The EPA Did Not Always Follow Processes to Provide Accurate Information
We found multiple instances in which the Agency did not provide accurate information for its revenue
accruals. Specifically, during FY 2023, we identified the following issues:
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• The EPA did not properly analyze its revenue accruals for financially closed SSCs with available
reimbursable funds. During our analysis of the SSC accrual, we found eight financially closed
SSCs with available reimbursable funds that resulted in corresponding accruals totaling over
$1.5 million. These SSCs should have been closed and their accrual should have been zero.
Table 1-1 lists the financially closed SSCs with available reimbursable funds.
Table 1-1: Financially closed SSCs with available reimbursable funds
Site identification I
I Available reimbursable funds ($)
019L
38,179.39
02GP
41,612.74
0277
47,751.00
A301
73,541.64
0417
512,348.87
047U
46,291.76
047U
200,693.96
0441
625,360.23
Total
1,585,779.59
Source: OIG analysis of EPA data. (EPA OIG table)
• SSC credits were not included in the accrual. Approved SSC credits totaling $3,048,485 for one
Region 10 Superfund site, 102Q, were not included in the accrual. The total of $3,048,485 had
been previously approved by Region 10 as meeting the definition of Superfund SSC credits and
applied toward the state's 10 percent cost-share obligation. Of this amount, $2,497,029 was
approved as SSC creditable costs earned from FY 2003 through 2008, and the remaining
$551,456 was approved for costs earned from FY 2008 through 2015.
• The Great Lakes Legacy Act accruals contained inaccurate project amounts and site numbers.
Four Great Lakes Legacy Act accruals did not contain either the correct project amount or site
numbers, which are used to track the appropriated and reimbursable disbursements and
collections for the accrual. Table 1-2 lists the exceptions that we identified.
Table 1-2: Great Lakes Legacy Act accruals with project amount and site number errors
Project number
Project amount
recorded in accrual
($)
Correct project
amount ($)
Site numbers
recorded in
accrual
Correct site
numbers
GLLA2004-007A-C
45,000,000.00
44,200,000.00
—
—
GLLA2013-005
35,112,354.00
70,892,940.00
—
—
GLLA2018-002
—
—
551222
551222
551224
GLLA2011-005
251201T1
251201T2
551224
251201T1,
251201T2
Source: OIG analysis of EPA data. (EPA OIG table)
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These reclassification errors occurred because the regions did not follow the Agency SSC closeout
process and did not review SSCs on the accrual to financially close the lines and reclassify the Superfund
appropriated T fund disbursements to reimbursable TR1 fund disbursements. Therefore, SSC final
financial reconciliations were not complete on the accrual, resulting in regions assessing accruals for
closed SSCs. In addition, over $1.5 million of Superfund appropriated funds were not available for other
site cleanup projects that would help to protect human health. Without accurate information, revenue
accruals and the financial statements may be misstated.
The other errors occurred because Region 10 and the Great Lakes National Program Office did not
follow Agency directives and did not provide the Cincinnati Finance Center with accurate information. In
response to our inquiries, Region 10 and the Great Lakes National Program Office subsequently provided
the Cincinnati Finance Center with the SSC credit and Great Lakes Legacy Act project information
required to properly calculate the SSC and Great Lakes Legacy Act accruals.
Recommendations
We recommend that the chief financial officer:
1. Instruct the regions to perform an analysis of financially closed Superfund State Contracts to
reclassify appropriated and reimbursable disbursements and financially close lines on the
accrual.
2. Instruct the regions to provide current Superfund State Contract information quarterly to the
Cincinnati Finance Center.
We recommend that the director for the Great Lakes National Program Office:
3. Review the Great Lakes Legacy Act accrual project information prior to its submission to the
Cincinnati Finance Center to ensure its accuracy.
Agency Response and OIG Assessment
The EPA agreed with our recommendations. The Agency provided an acceptable planned corrective
actions for Recommendations 1 and 2, as well as an estimated milestone date of June 30, 2024, for
Recommendation 1 and January 15, 2024, for Recommendation 2. We consider these recommendations
resolved with corrective action pending. The Agency completed Recommendation 3 on October 18,
2023.
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2 - The EPA Did Not Deobligate Unneeded Funds in a
Timely Manner
The EPA did not deobligate in a timely manner $10 million of unneeded funds that it identified during its
annual review of unliquidated obligations. We also identified this deficiency during our FY 2022
consolidated financial statement audit. Furthermore, while we made no determination as to whether
the funds were needed, we recently reported that from FY 2018 through 2023, the EPA had over
$1.55 billion in unliquidated obligations with inactivity of 180 days or more. This includes approximately
$429 million in Infrastructure Investment and Jobs Act appropriations in FY 2022 and 2023.1 Agency
directives require that responsible offices annually review unliquidated obligations and inactive
unliquidated obligations and take appropriate action to deobligate unneeded funds. While the EPA met
the requirement to review unliquidated obligations at least annually, it did not take timely actions to
deobligate the unneeded funds. As a result, almost $10 million in unobligated funds were not
deobligated and made available for other uses. Further, without timely deobligation of unneeded funds,
the EPA has does not have reasonable assurance that unliquidated obligations are accurate and
represent valid obligations.
Resource Management Directive System 2520-03-P1, Responsibilities for Reviewing Unliquidated
Obligations, requires all responsible parties to review at least annually all current and prior year
unliquidated obligations to ensure that all recorded obligations are still valid and properly documented.
According to the directive, an inactive obligation is one in which there has been no activity for six
months (180 days) or more, and a valid obligation is one "for which appropriated funds are still available
for the purpose and time period specified, and for which an actual need still exists within the life of the
appropriation." Resource Management Directive System 2520-03-P1 requires that all unneeded funds
be deobligated by the end of each fiscal year. The directive requires that all responsible officials certify
that their office or region took the necessary actions to deobligate the funds as provided in the Office of
the Controller's year-end requirement for the fiscal year.
We found that the EPA did not deobligate unneeded funds in FY 2023 in a timely manner. During its
annual review of unliquidated obligations, the Agency identified $10.5 million of unliquidated
obligations that remained opened as of September 30, 2023. The EPA determined that $471,143 of
these unliquidated obligations were valid and should remain open. As shown in Table 2-1, the Agency
determined that approximately $10 million of unliquidated obligations were unneeded, but these funds
were not deobligated by the end of fiscal year, as required.
Table 2-1: Unneeded funds identified for deobligation
Offices and regions
Funds ($)
Office of the Administrator
4,889.65
Office of Chemical Safety and Pollution Prevention
498,527.83
OCFO
455,920.35
1 OIG Report No. 23-N-0036, Status of Unliquidated Obligations for Programs Receiving Funding from the
Infrastructure Investment and Jobs Act, issued September 28, 2023.
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I Offices and regions
| Funds ($) 1
Office of International and Tribal Affairs
777,898.62
Office of Land and Emergency Management's Office of Emergency Management
360,659.99
Office of Land and Emergency Management's Office of Superfund Remediation and
Technology Innovation
270,564.22
Office of Research and Development
5,759.45
Region 3
2,980,930.07
Region 5
70,339.76
Region 6
175,785.59
Region 8
1,292,038.52
Region 9
*3,102,619.85
Total
9,995,933.90
Source: OIG analysis of EPA data. (EPA OIG table)
* This amount includes $2,518,007.12 for Region 8 for a mixed-funded contract with Regions 8 and 9 funds.
Program offices and regions noted several reasons why unliquidated obligations were not deobligated by
the end of the fiscal year. Some said that they experienced technical issues related to the EPA's adoption
of the Treasury's Invoice Processing Platform in May 2023, while some said that they were awaiting final
invoices before deobligating funds. In addition, others noted either that the deobligation of funds should
occur, was in process, or would occur in FY 2024 or that the funds would be expended in FY 2024.
By not taking timely and appropriate action to deobligate unneeded funds, the EPA does not have
reasonable assurance that the unliquidated obligations are accurate and represent valid obligations
reported in the financial statements. Further, obligated funds are overstated if unneeded funds are not
deobligated. By deobligating funds no longer needed for their original purpose by the required deadline,
the EPA can make these funds available for other purposes.
Recommendation
We recommend that the chief financial officer:
4. Develop a plan to improve the Office of the Chief Financial Officer processes for headquarters
program offices and regional offices to deobligate unneeded funds in a timely manner by the
end of the fiscal year, as required.
Agency Response and OIG Assessment
The EPA agreed with our recommendation and provided an acceptable planned corrective action and
estimated milestone date of July 1, 2024. We consider this recommendation resolved with corrective
action pending.
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3 - The EPA Operated Under an Expired ISA and MOA,
Which Could Hamper Invoice Processing
The OCFO and the Treasury were operating under an expired ISA and MOA for more than six months,
from March to September 2023. The ISA and MOA documents each entity's responsibility to design and
implement security controls for the connection between the EPA's Compass Financials system and the
Treasury's Invoice Processing Platform. This connection, which implements the OMB's requirement for
electronic invoicing, must be secure to protect the confidentiality, integrity, and availability of the
invoice processing function. Furthermore, security controls are needed to protect the data being
transmitted over this connection, which contain not only federal financial information but also data
subject to the Privacy Act, 5 U.S.C. § 552a. A lack of an approved agreement could cause the EPA and the
Treasury to be unaware of changes made either to the connection or to the design configurations of the
systems, which could disrupt operations and potentially prevent vendors from submitting invoices and
EPA personnel from approving invoices in a timely manner.
OMB Memorandum M-15-19, Improving Government Efficiency and Saving Taxpayer Dollars Through
Electronic Invoicing, dated July 17, 2015, mandates that federal agencies implement electronic invoicing.
The EPA implements the electronic invoicing requirement via a connection between its financial system,
Compass Financials, and the Treasury's Invoice Processing Platform. Section CA-3, "Information
Exchange," of the EPA Chief Information Officer Directive No. CIO 2150-P-04.3, Information Security-
Assessment, Authorization and Monitoring Procedure, signed June 8, 2023, requires the approval and
management of the exchange of information between systems using an ISA or MOA. The directive also
requires that the ISA and MOA be reviewed and updated "as agreed upon by the participating
signatories but not to exceed three (3) years or whenever there is a significant change to any of the
systems covered by the agreements."
In accordance with CIO 2150-P-04.3, the OCFO and the Treasury signed the ISA and MOA on March 14,
2020, for a new connection between the Compass Financials system and the Invoice Processing Platform
to implement the OMB's electronic invoicing requirement. The ISA and MOA documents each entity's
responsibility to implement security controls to protect the confidentiality, integrity, and availability of
invoice processing between the Compass Financials system and the Invoice Processing Platform. The
data being transmitted over this connection contain federal financial information, as well as data subject
to the Privacy Act, 5 U.S.C. § 552a. Consistent with CIO 2150-P-04.3, this original agreement was in
effect for a three-year period, expiring on March 14, 2023. Section 5, "Timeline," of the expired ISA and
MOA states:
This agreement will remain in effect for three (3) years after the last date on either
signature in the signature block below. After three (3) years, this agreement will
expire without further action. If the parties wish to extend this agreement, they may
do so by reviewing, updating, and reauthorizing this agreement.
However, a new ISA and MOA was not reauthorized before the original agreement expired. As such, the
OCFO and the Treasury were operating without an approved agreement for approximately six months,
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from March to September 2023. Furthermore, the OCFO did not start the ISA and MOA renewal process
until February 2023, one month before the expiration of the original agreement. The OCFO did not
explain why the ISA and MOA was not renewed prior to the original agreement expiring; it only provided
us with a timeline of its progress in updating and renewing the agreement. According to that timeline,
the renewal process was in process for more than seven months, from February to September 2023.
A new ISA and MOA was signed and became effective on September 25, 2023.
Based on the timeline provided to us, we concluded that the OCFO did not have a plan with milestone
dates to ensure that the ISA and MOA would be reauthorized prior to its expiration. Without a current
ISA and MOA in place that accounts for any system updates that would affect the connection and
related security controls for the Compass Financials system and the Invoice Processing Platform, the EPA
and the Treasury had no enforceable agreement to govern the development, management, operation,
and security of the systems' connection. This leaves both federal entities with limited assurance that
they are fully aware of any significant changes or updates that could impact the connection between the
two systems. As a result, they cannot ensure that the security controls are properly designed to protect
the transmission of financial and privacy information across the connection.
Recommendation
We recommend that the chief financial officer:
5. Develop and implement a plan with milestones to ensure that future Interconnection Security
Agreement and Memorandum of Agreement documents for each external connection with
Office of the Chief Financial Officer systems are reauthorized before the current agreements
expire.
Agency Response and OIG Assessment
The EPA agreed with our recommendation and provided an acceptable planned corrective action and
estimated milestone date of June 30, 2024. We consider this recommendation resolved with corrective
action pending.
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4 - The EPA Did Not Review User Accounts for EPA
Contracting Personnel Every 60 Days As Required By
Its Information Security Procedure
The OCFO's management of EPA employee user accounts that can access the Treasury's Invoice
Processing Platform are not compliant with the Agency's information technology account management
requirements. The Invoice Processing Platform was fully implemented within the EPA on May 23, 2023,
for EPA contracting personnel to manage and approve vendor invoices. Despite the EPA requirements to
conduct user account reviews every 60 days starting June 8, the OCFO had not conducted the required
review as of September 30, 2023. The user account reviews help confirm whether all of the EPA's
approximately 2,300 active Invoice Processing Platform user accounts are still necessary. Removing
unnecessary user accounts could help reduce the risk of unauthorized access, which could lead to the
disclosure, modification, or destruction of financial information and the disruption of system operations.
Section AC-2, "Account Management," of Chief Information Officer Directive No. CIO 2150-P-01.3,
Information Security - Access Control Procedure, signed June 8, 2023, requires service managers for
systems operated by or on behalf of the EPA to take security measures including:
1. Review accounts for compliance with account management every 60 (sixty) days
and align account management processes with personnel termination and
transfer processes.
2. Create, enable, modify, disable, and remove accounts in accordance with EPA
information security requirements.
3. Notify account managers, Information Security Officer, and Information System
Security Officers within:
a) Three (3) days when accounts are no longer required.
b) Four (4) hours of departure for involuntary terminations and same day of
departure for voluntary terminations when users are terminated or transferred.
c) Three (3) days when system usage or need-to-know changes for an individual.
In addition to the EPA's 60-day user account reviews, the Treasury requires an annual user account
recertification.
The OCFO conducted only the annual user account recertification in June 2023, despite CIO 2150-P-01.3
requirements to conduct user account reviews every 60 days. The OCFO advised us that it did not
adhere to CIO 2150-P-01.3 because it is developing standard operating procedures that will not include
the 60-day requirement but will instead leverage the Treasury's annual user account recertification
process. However, the OCFO's plans to incorporate account management practices for the Invoice
Processing Platform user accounts as part of an annual user account recertification process do not
comply with CIO 2150-P-01.3 requirements that accounts be reviewed every 60 days. Additionally, the
OCFO stated that it intends to rely on Invoice Processing Platform system controls that disable a user
account when there is a period of inactivity as part of its account management practices. According to
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Treasury personnel, the Invoice Processing Platform will disable a user account after 120 days of
inactivity. However, this period is twice the duration of the EPA's required 60-day user account reviews.
The Invoice Processing Platform provides contracting personnel with the ability to approve vendor
invoices ranging from hundreds to millions of dollars of federal funds. By not following the Agency's
account management requirements, the OCFO risks exposing the EPA's systems and the Treasury's
Invoice Processing Platform to unauthorized access, which could potentially lead to the disclosure,
modification, or destruction of financial information and the disruption of system operations. The
60-day user account reviews required by EPA information technology directive serve as a preventive
control to limit unauthorized access.
Recommendations
We recommend that the chief financial officer:
6. In consultation with the Office of Mission Support's chief information officer, determine how
the Office of the Chief Financial Officer will conduct reviews of active Invoice Processing
Platform user accounts to comply with Chief Information Officer Directive No. CIO 2150-P-01.3,
Information Security - Access Control Procedure.
7. Develop and implement a strategy to ensure that future reviews of active Invoice Processing
Platform user accounts comply with Chief Information Officer Directive No. CIO 2150-P-01.3,
Information Security - Access Control Procedure.
Agency Response and OIG Assessment
The EPA agreed with these recommendations and provided acceptable planned corrective actions. For
both recommendations, the EPA provided an estimated milestone date of June 30, 2024. We consider
these recommendations resolved with corrective actions pending.
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Attachment B
Status of Prior Audit Report Recommendations
The EPA continues to strengthen its audit management practices and procedures to address audit
findings in a timely manner and to complete corrective actions expeditiously and effectively. In FY 2023,
the EPA's chief financial officer, as the agency follow-up official, continued to encourage managers to
evaluate the OIG's recommendations thoroughly, develop suitable and attainable corrective actions,
and implement the corrective actions in the agreed-upon time frame. The OCFO implemented the
following actions to strengthen its audit management procedures:
• Worked closely with the Agency's audit follow-up coordinators to ensure adherence to
corrective action dates and submission of the required certification memorandums. The OCFO
efforts were critical and significantly helped with the EPA's responses to the OIG's Semiannual
Report to Congress published in May 2023.
• Conducted a comprehensive review of open OIG and U.S. Government Accountability Office
recommendations and corrective actions to identify common themes and challenges. The
review included data calls and interviews with individual offices and a brief to OCFO and Agency
leadership.
• Provided monthly reporting for the agencywide metric on the number of past-due audit
corrective actions. The metric measures the completion of Agency-identified corrective actions
that were not completed by the proposed completion date. The intended purpose of the
monthly reporting is to facilitate the implementation of Agency corrective actions in response to
OIG audit recommendations and to decrease the number of late audit corrective actions.
• Enhanced the utility of the Enterprise Audit Management System, the Agency's audit tracking
tool, for improved tracking of OIG and Government Accountability Office audits and evaluations.
The Enterprise Audit Management System facilitates the Agency's activities and corrective
actions in response to the OIG and Government Accountability Office audits and evaluations.
• Prepared regular reports on OIG and Government Accountability Office audits and evaluations
for broad agency distribution. The report includes the most recent audit and evaluation updates,
open recommendations, and metric status.
• Maintained the audit community intranet site, which serves as a resource for the Agency's audit
follow-up coordinators and audit liaisons. The collaborative site includes resources and
reference materials, such as standard operating procedures, response templates, frequently
asked questions, reporting links, deadlines, and other useful information.
• Continued regular use of the audit community's internet site for the Agency's audit follow-up
coordinators and audit liaisons to work collaboratively, share best practices, and contribute to
community projects.
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• Provided training during the OCFO technical training series for Agency subject matter experts
participating in OIG or Government Accountability Office projects. The training provided best
practices for audit preparedness.
• Established biweekly meetings with audit follow-up coordinators and audit liaisons agencywide
to provide regular updates, offer training, and discuss audit-related issues and concerns.
These and other efforts are a testament to the OCFO's continued commitment to improving the
Agency's audit and evaluation management practices. In addition, the EPA maintained its commitment
to engage early with the OIG on audit and evaluation findings and to develop effective corrective actions
that address OIG recommendations.
As noted in the table below, however, there are still recommendations from previous financial
statement audits that have not been fully implemented.
Table B-1: Significant deficiency issues not fully resolved
Originating Offices Did Not Forward Accounts Receivable Source Documents to the Finance Center in a
Timely Manner
During our FY 2021 audit, we found that EPA regions did not submit supporting source documents to the EPA's
Cincinnati Finance Center for accounts receivable in a timely manner, which then delayed recording and
processing of those receivables. The EPA's Resource Management Directives state that the responsible offices
must forward to the Cincinnati Finance Center source documents supporting an accounts receivable for
settlements or orders demonstrating a debt owed to the Agency within five business days. The regional program
office, the Office of Regional Counsel, and the regional legal enforcement office staff are responsible for providing
these documents to the Cincinnati Finance Center. When the Cincinnati Finance Center is unable to create
receivables timely, the debtor may not be billed appropriately, interest may not accrue, and the EPA may not
collect all that it is owed. Furthermore, the EPA's delayed recording of accounts receivable could result in a
material misstatement of the financial statements. While we have noted some improvements in the timely receipt
of legal documents, we still identified instances of untimely receipt from FY 2015 through FY 2023. Therefore, the
Agency's corrective actions are not completely effective, and we will continue to evaluate whether the Agency
receives legal source documents in a timely manner going forward.
The EPA Did Not Deobligate Unneeded Funds in a Timely Manner
During the FY 2022 audit, we found the EPA did not deobligate in a timely manner the $5.8 million of unliquidated
obligations that it identified in its FY 2022 unliquidated obligations annual review. Agency directives require that
unliquidated obligations be reviewed annually and that responsible offices review inactive unliquidated obligations
at least annually. As a result, the EPA has no assurance that unliquidated obligations are accurate and represent
valid and viable obligations. We recommended that the chief financial officer reiterate to headquarters program
offices and regional offices the importance of deobligating by the end of the fiscal year the unneeded funds that
they identified during their annual unliquidated obligations review. The EPA concurred with our recommendation
and completed corrective action on May 8, 2023. However, during our 2023 audit, we continued to find that
unneeded funds were not deobligated by the required deadline. Therefore, the Agency's corrective action is not
completely effective, and we will continue to evaluate whether the Agency deobligates unneeded funds by the
required deadline in FY 2024.
Source: OIG analysis of prior-year recommendations and the Agency's corrective actions. (EPA OIG table)
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Attachment C
Status of Recommendations
and Potential Monetary Benefits
Rec.
No.
Page
No.
Recommendation
Status*
Action Official
Potential
Planned Monetary
Completion Benefits
Date (in $000s)
12 Instruct the regions to perform an analysis of financially closed
Superfund State Contracts to reclassify appropriated and
reimbursable disbursements and financially close lines on the
accrual.
12 Instruct the regions to provide current Superfund State Contract
information quarterly to the Cincinnati Finance Center.
12 Review the Great Lakes Legacy Act accrual project information
prior to its submission to the Cincinnati Finance Center to ensure
its accuracy.
14 Develop a plan to improve the Office of the Chief Financial
Officer processes for headquarters program offices and regional
offices to deobligate unneeded funds in a timely manner by the
end of the fiscal year, as required.
16 Develop and implement a plan with milestones to ensure that
future Interconnection Security Agreement and Memorandum of
Agreement documents for each external connection with Office
of the Chief Financial Officer systems are reauthorized before
the current agreements expire.
18 In consultation with the Office of Mission Support's chief
information officer, determine how the Office of the Chief
Financial Officer will conduct reviews of active Invoice
Processing Platform user accounts to comply with Chief
Information Officer Directive No. CIO 2150-P-01.3, Information
Security - Access Control Procedure.
18 Develop and implement a strategy to ensure that future reviews
of active Invoice Processing Platform user accounts comply with
Chief Information Officer Directive No. CIO 2150-P-01.3,
Information Security - Access Control Procedure.
Chief Financial Officer
Chief Financial Officer
6/30/24
1/15/24
$1,586
Director for the Great Lakes 10/18/23
National Program Office
Chief Financial Officer
Chief Financial Officer
7/1/24
6/30/24
$9,995
Chief Financial Officer
6/30/24
Chief Financial Officer
6/30/24
* C = Corrective action completed.
R = Recommendation resolved with corrective action pending.
U = Recommendation unresolved with resolution efforts in progress.
24-F-0009
21
-------
Appendix 1
The EPA's Fiscal Year 2023 and 2022 Consolidated
Financial Statements (with Restatement)
24-F-0009 22
-------
Appendix 2
Agency Response to Draft Report
THE CHIEF FINANCIAL OFFICER
WASHINGTON, D.C. 20460
November 14, 2023
MEMORANDUM
SUBJECT: Response to the Office of Inspector General Draft Report, Project No. OA-FY23-0078,
"Audit of the EPA's Fiscal Years 2023 and 2022 (Restated) Consolidated Financial
Statements," dated November 13, 2023
FROM: Faisal Amin, Chief Financial Officer
Office of the Chief Financial Officer
Oignally sgred tiy Amn.
Amin, Faisal ^2lS5„ „
TO:
Damon Jackson, Director
Financial Directorate
Office of Audit
Thank you for the opportunity to respond to the issues and recommendations in the
subject draft report. The following is a summary of the U.S. Environmental Protection
Agency's overall position, along with its position on the report's recommendations. This
response has been coordinated with Region 5.
AGENCY*S OVERALL POSITION
The draft report contains six recommendations for the Office of the Chief Financial Officer
and one recommendation for the Director of the Great Lakes National Program Office, located
in Region 5. The EPA agrees with the Office of Inspector General's recommendations.
24-F-0009
23
-------
AGENCY RESPONSE TO DRAFT REPORT RECOMMENDATIONS
Recommendation
Office
High-Level Intended Corrective Action(s)
Planned
Date
1. Instruct the regions to
perform an analysis of
financially closed Superfund
State Contracts to reclassify
appropriated and
reimbursable disbursements
and financially close lines on
the accrual.
OCFO
Concur. In addition to the Corrective
Action listed for Recommendation 2, the
OCFO's Cincinnati Finance Center will
instruct the Regions to perform a
thorough review of their respective
financially closed sites for accuracy. We will
request a written response once completed.
06/30/24
2. Instruct the regions to
provide current Superfund
State Contract information
quarterly to the Cincinnati
Finance Center.
OCFO
Concur. Starting with the first fiscal
quarter of 2024, the OCFO's Cincinnati
Finance Center will begin including not
only the Program Contacts but also their
management, Regional Comptrollers, and
Mission Support Division Directors in
guidance communications. OCFO's CFC
will reinforce the importance of fully
reviewing and updating regional data
provided for the accuracy of the accrual
and impact on the financial statements.
01/15/24
3. Review the Great Lakes
Legacy Act accrual project
information prior to its
submission to the Cincinnati
Finance Center to ensure its
accuracy.
R5/
GLNPO
Concur. The Great Lakes National
Program Office has already reviewed the
Great Lakes Legacy Act accrual project
information and fixed the errors
identified in the OIG Point Sheet No. 6^
Completed
10/18/23
4. Develop a plan to improve
the Office of the Chief
Financial Officer processes for
headquarters program offices
and regional offices to
deobligate unneeded funds in
a timely manner by the end of
the fiscal year, as required.
OCFO
Concur. The Office of the Controller's
Policy, Training and Accountability
Division will develop a plan to strengthen
the unliquidated obligation reviews for
the deobligations processes. This plan will
enhance the current policies associated
with the unliquidated obligation review
and the subsequent deobligations of any
unneeded funding.
7/1/24
24-F-0009
24
-------
Recommendation
Office
High-Level Intended Corrective Action(s)
Planned
Date
5. Develop and implement a
plan with milestones to ensure
that future Interconnection
Security Agreement and
Memorandum of Agreement
documents for each external
connection with Office of the
Chief Financial Officer systems
are reauthorized before the
current
agreements expire.
OCFO
Concur. The OCFO's Office of Technology
Solutions will develop and implement a
strategy with milestones to ensure that
future Interconnection Security Agreement
and Memorandum of Agreement
documents for each external connection
with OCFO systems are reauthorized before
the current agreements expire.
6/30/24
6. In consultation with the
Office of Mission Support's
chief information officer,
determine how the Office of
the Chief Financial Officer will
conduct reviews of active
Invoice Processing Platform
user accounts to comply with
Chief Information Officer
Directive No. CIO 2150-P-
01.3, Information Security -
Access Control Procedure.
OCFO
Concur. The OCFO's Office of Technology
Solutions will, in consultation with the
Office of Mission Support's Chief
Information Officer, determine how it will
conduct reviews of active Invoice
Processing Platform user accounts to
comply with the Chief Information Officer
Directive No: CIO 2150-P-01.3, Information
Security - Access Control Procedure.
6/30/24
7. Develop and implement a
strategy to ensure that future
reviews of active Invoice
Processing Platform user
accounts comply with Chief
Information Officer Directive
No. CIO 2150-P-01.3,
Information Security - Access
Control Procedure.
OCFO
Concur. The OCFO's Office of Technology
Solutions will develop and implement a
strategy to ensure that future reviews of
active Invoice Processing Platform user
accounts comply with the Chief
Information Officer Directive No: CIO 2150-
P-01.3, Information Security - Access
Control Procedure.
6/30/24
CONTACT INFORMATION
If you have any questions regarding this response, please contact the OCFO's Audit Follow-up
Coordinator, Andrew LeBlanc, at leblanc.andrewffiepa.gov or (202) 564-1761.
cc: Debra Shore
Cheryl Newton
24-F-0009
25
-------
Gregg Treml
Lek Kadeli
Meshell Jones-Peeler
Michael Clanton
Angel Robinson
Adil Gulamali
Derek David
Wyatt Boyd
Teresa Seidel
OCFO-OC-MANAGERS
Wanda Arrington
Demetrios Papakonstantinou
Shannon Lackey
Mairim Lopez
Sheila May
Andrew Sheeran
Gabrielle Hanson
Mara Notbusch
Nina Johnson
Bob Shields
Alana Maye
Susan Perkins
Andrew LeBlanc
Jose Kercado
24-F-0009
26
-------
Appendix 3
Distribution
The Administrator
Deputy Administrator
Chief of Staff, Office of the Administrator
Deputy Chief of Staff for Management, Office of the Administrator
Chief Financial Officer
Regional Administrator for Region 5
Agency Follow-Up Coordinator
General Counsel
Associate Administrator for Congressional and Intergovernmental Relations
Associate Administrator for Public Affairs
Deputy Chief Financial Officer
Associate Chief Financial Officer
Deputy Regional Administrator for Region 5
Controller
Deputy Controller
Associate Deputy Controller
Director, Office of Continuous Improvement, Office of the Chief Financial Officer
Director, Great Lakes National Program Office, Region 5
Director, Office of Regional Operations
Director, Office of Budget, Office of the Chief Financial Officer
Director, Office of Planning, Analysis and Accountability, Office of the Chief Financial Officer
Director, Office of Resource and Information Management, Office of the Chief Financial Officer
Director, Office of Technology Solutions, Office of the Chief Financial Officer
Director, Accounting and Cost Analysis Division, Office of the Controller
Director, Policy, Training, and Accountability Division, Office of the Controller
Chief, Management, Integrity, and Accountability Branch; Policy, Training, and Accountability Division,
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
Office of Policy OIG Liaison
Office of Policy GAO Liaison
Audit Follow-Up Coordinator, Office of the Administrator
Audit Follow-Up Coordinator, Office of the Chief Financial Officer
Audit Liaison, Office of Budget, Office of the Chief Financial Officer
Audit Liaison, Office of Technology Solutions, Office of the Chief Financial Officer
Audit Follow-Up Coordinator, Region 5
24-F-0009
27
-------
Whistleblower Protection
U.S. Environmental Protection Agency
The whistleblower protection coordinator's role
is to educate Agency employees about
prohibitions against retaliation for protected
disclosures and the rights and remedies against
retaliation. For more information, please visit
the OIG's whistleblower protection webpage.
Contact us:
Congressional Inquiries: OIG.CoiwessionalAffairs(53epa.gov
Media Inquiries: OIG,PublicAffairs@epa.gov
line EPA OIG Hotline: OIG.Hotline@epa.gov
-§rg- Web: epaoig.gov
Follow us:
X (formerly Twitter): (5)epaoig
Linkedln: linkedin.com/company/epa-oig
you I uDe: youtupe.com/epaoig
[0] Instagram: {5)epa.ig.on.ig
-------
Section III
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MANAGEMENT INTEGRITY AND
CHALLENGES
Overview of EPA's Efforts
Management challenges and internal control weaknesses represent vulnerabilities in program operations
that may impair the EPA's ability to achieve its mission and threaten the agency's safeguards against fraud,
waste, abuse, and mismanagement. These areas are identified through internal agency reviews and
independent reviews by the EPA's external evaluators, such as the OMB, the Government Accountability
Office and EPA's OIG. This section of the AFR discusses in detail two components: 1) key management
challenges identified by EPA's OIG, followed by the agency's response and 2) a brief discussion of EPA's
progress in addressing its FY 2023 material weaknesses.
Under the FMFIA, all federal agencies must provide reasonable assurance that internal controls are
adequate to support the achievement of their intended mission, goals, and objectives. (See Section I,
"Management Discussion and Analysis," for the Administrator's Statement of Assurance.) Additionally,
agencies must report any material weaknesses identified through internal and/or external reviews and
their strategies to remedy the problems. Material weaknesses are vulnerabilities that could significantly
impair or threaten fulfillment of the agency's programs or mission. In FY 2023, the EPA did not identify any
new material weaknesses. No new material weaknesses were identified by OIG. (See following subsection
for a discussion of the EPA's progress in addressing any material weaknesses.)
The agency's senior managers are committed to maintaining effective and efficient internal controls to
ensure that program activities are carried out in accordance with agency policy and applicable laws and
regulations. The agency will continue to address its remaining weaknesses and report on its progress, as
appropriate.
119
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FY 2023 and FY 2024 TOP MANAGEMENT
CHALLENGES
Office of Inspector General - Identified Top ManagementChallenges
The Reports Consolidation Act of 2000 requires the OIG to report on the agency's most serious
management and performance challenges, known as the key management challenges. Management
challenges represent vulnerabilities in program operations and their susceptibility to fraud, waste, abuse
or mismanagement. From the FY 2023 Top Management Challenges the OIG retained five management
challenges and identified two new top management challenge for FY 2024. The table below includes issues
the OIG identified as top management challenges facing the EPA and the years in which the OIG identified
the challenge.
OIG-identified key management challenges for the EPA
FY
2023
FY
2024
Mitigating the causes and adapting to the impacts of climate change. The EPA has
prioritized addressing climate change as a core aspect of its mission to protect human
health and the environment. To do this, the EPA should understand and address the
threats posed by climate change.
•
•
Integrating and implementing environmental justice. Achieving environmental justice,
which remains a whole-of-government focus, will require the EPA to harness agencywide
coordination and change its culture to make cross-program decisions that weigh
cumulative risks and impacts to the communities that the EPA serves.
•
•
Safeguarding the use and disposal of chemicals. The public must be able to depend on
the EPA's ability to identify the risks of using chemicals, including pesticides, and to
provide safeguards for and verification of proper disposal, management, or remediation of
toxic substances.
•
•
Promoting ethical conduct and protecting scientific integrity. The public entrusts the
EPA to implement its programs in a fair and impartial manner and to base its decision-
making on sound science that is free of inappropriate influence. Failure to adhere to ethical
and scientific integrity principles jeopardizes program integrity and could undermine
public trust in the EPA.
•
•
Managing grants, contracts, and data systems. The influx of $100 billion in
supplemental appropriations to fund EPA programs under the Infrastructure Investment
and Jobs Act and Inflation Reduction Act increases the risk of fraud, waste, abuse, and
noncompliance with funding requirements. Effective management of grants, contracts, and
related data is critical to reducing these risks.
•
Maximizing compliance with environmental laws and regulations. The EPA's
enforcement resources have declined 23 percent from fiscal year 2006 through 2023. This,
along with variability in permitting, management of delegated state programs, and
incorporation of environmental justice concerns, presents challenges to maximizing
compliance and enforcement actions.
•
•
Overseeing, protecting, and investing in water and wastewater systems. The EPA has
oversight responsibility for strengthening and securing the cyber and physical
infrastructure at tens of thousands of public drinking water systems and publicly owned
wastewater treatment systems. This critical infrastructure faces various threats from
cyberattack, theft, vandalism, and other risks that can affect public health and leave
communities vulnerable to the loss of clean water.
•
120
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24-N-0008
November 15, 2023
The EPA's Fiscal Year 2024 Top Management Challenges
What Are Management
Challenges?
The Reports Consolidation Act of 2000
requires each inspector general to
prepare an annual statement
summarizing what the inspector
general considers to be "the most
serious management and performance
challenges facing the agency" and
briefly assessing the agency's
progress in addressing those
challenges.
To identify these top challenges for
fiscal year 2024, the
U.S. Environmental Protection Agency
Office of Inspector General considered
the body of our work, as well as our
objective and professional
observations, work conducted by the
U.S. Government Accountability
Office, Congress's interests, and
Agency documentation and
statements.
Our report EPA's Fiscal Year 2023
Top Management Challenges,
published October 2022, identified
eight top management challenges
facing the Agency. For fiscal
year 2024, we retained five of these
challenges, with some modifications,
and we substantially revised the
others, combining them into two
challenges. In total, we identified
seven top management challenges.
What We Found
We identified seven top management challenges for the EPA for fiscal year 2024:
1. Mitigating the causes and adapting to the impacts of climate change. The
EPA has prioritized addressing climate change as a core aspect of its missionto
protect human health and the environment. To do this, the EPA should understand
and address the threats posed by climate change.
2. Integrating and implementing environmental justice. Achieving environmental
justice, which remains a whole-of-government focus, will require the EPA to
harness agencywide coordination and change its culture to make cross-program
decisions that weigh cumulative risks and impacts to the communities that the
EPA serves.
3. Safeguarding the use and disposal of chemicals. The public must be ableto
depend on the EPA's ability to identify the risks of using chemicals, including
pesticides, and to provide safeguards for and verification of proper disposal,
management, or remediation of toxic substances.
4. Promoting ethical conduct and protecting scientific integrity. The public
entrusts the EPA to implement its programs in a fair and impartial manner and to
base its decision-making on sound science that is free of inappropriate influence.
Failure to adhere to ethical and scientific integrity principles jeopardizes program
integrity and could undermine public trust in the EPA.
5. Managing grants, contracts, and data systems. The influx of $100 billion in
supplemental appropriations to fund EPA programs under the Infrastructure
Investment and Jobs Act and Inflation Reduction Act increases the risk of fraud,
waste, abuse, and noncompliance with funding requirements. Effective
management of grants, contracts, and related data is critical to reducing these
risks.
6. Maximizing compliance with environmental laws and regulations. The
EPA's enforcement resources have declined 23 percent from fiscal year 2006
through 2023. This, along with variability in permitting, management of delegated
state programs, and incorporation of environmental justice concerns, present
challenges to maximizing compliance and enforcement actions.
7. Overseeing, protecting, and investing in water and wastewater systems. The
EPA has oversight responsibility for strengthening and securing the cyber and
physical infrastructure at tens of thousands of public drinking water systems and
publicly owned wastewater treatment systems. This critical infrastructure faces
various threats from cyberattack, theft, vandalism, and other risks that can affect
public health and leave communities vulnerable to the loss of clean water.
We have identified these as the most serious management and performance challenges
facing the EPA. They represent vulnerabilities to waste, fraud, abuse, and mismanagement,
or the most significant challenges to the EPA accomplishing its mission.
Address inquiries to our public
affairs office at (202) 566-2391 or
OIG.PublicAffairs@epa.gov.
List of OIG reports.
121
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Agency Response to Office of Inspector General - Identified Top Management Challenges
The Office of the Inspector General transmitted the final "EPA's FY2024 Top Management Challenges"
report on November 15, 2023. The agency plans to review the revised final and prepare a response,
which will be separately transmitted no later than 30 days from the issuance of this report.
122
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Summary of Financial Statement Audit
Audit Opinion
Unmodified
Restatement
Yes
Material Weaknesses
Beginning
Balance
New
Resolved
Consolidated
Ending
Balance
0
0
0
0
0
Total Material Weaknesses
0
0
0
0
0
Summary of ManagementAssurances
Effectiveness of Internal Control Over Financial Reporting (FMFIA § 2)
Statement of Assurance
Unmodified
Material Weaknesses
Beginning
Balance
New
Resolved
Consolidated
Reassessed
Ending
Balance
0
0
0
0
0
0
Total Material Weaknesses
0
0
0
0
0
0
Effectiveness of Internal Control Over Operations (FMFIA § 2)
Statement of Assurance
Unmodified
Material Weaknesses
Beginning
Balance
New
Resolved
Consolidated
Reassessed
Ending
Balance
Total Material Weaknesses
0
0
0
0
0
0
Conformance With Financial Management System Requirements (FMFIA § 4)
Statement of Assurance
Systems Conform to Financial Management Systems Requirement
Non-Conformances
Beginning
Balance
New
Resolved
Consolidated
Reassessed
Ending
Balance
Total Non-Conformances
0
0
0
0
0
0
Compliance With FFMIA
Agency
Auditor
1. System Requirement
No lack of substantial
compliance noted.
No lack of substantial compliance
noted.
2. Accounting Standards
No lack of substantial
compliance noted.
No lack of substantial compliance
noted.
3. USSGL at Transaction Level
No lack of substantial
compliance noted.
No lack of substantial compliance
noted.
123
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PAYMENT INTEGRITY
I. Payment Reporting
The Payment Integrity Information Act of 2019 requires executive branch agencies to review all programs
and activities annually identify those that may be susceptible to significant improper payments and report
the results of their improper payment activities to the President and Congress through their annual Agency
Financial Report or Performance and Accountability Report PIIA further requires each agency's OIG to
determine if their agencies programs or activities are compliant with the statute.
The EPA is dedicated to reducing fraud, waste, and abuse and presents the following improper payment
information in accordance with PIIA; OMB guidance found in Circular A-123, Appendix C, Requirements for
Payment Integrity Improvement; and the reporting requirements contained in OMB Circular A-136,
Financial Reporting Requirements. The OMB implementing guidance directs federal agencies to take the
following steps:
1) Review all programs and activities at least once every three years to identify those that are
susceptible to significant improper payments, defined as gross annual improper payments
exceeding the "statutory threshold" of either (a) both 1.5 percent of program outlays and $10
million of estimated improper payments or (b) $100 million of estimated improper payments
(regardless of the rate).
2) Obtain a statistically valid estimate of the annual amounts of improper payments in programs
identified as susceptible to significant improper payments.
3) Implement a plan to reduce improper payments in these programs.
4) Reportthe annual amount of each program's overpayments and recoveries.
An improper payment is defined as any payment that should not have been made or that was made in an
incorrect amount, including an overpayment or underpayment, under a statutory, contractual,
administrative, or other legally applicable requirements. It includes any payment to an ineligible recipient;
any payment for an ineligible good or service; any duplicate payment; any payment for a good or service
not received, except for those payments where authorized by law; and any payment that does not account
for credit for applicable discounts. Further, the term "payment for an ineligible good or service" includes a
payment for any good or service that is rejected under any provision of any contract, grant, lease,
cooperative agreement, or other funding mechanism.
The term "payment" means any transfer or commitment for future transfer of federal funds such as cash,
securities, loans, loan guarantees, and insurance subsidies to any non-federal person or entity or a federal
employee, that is made by a federal agency, a federal contractor, a federal grantee, or a governmental or
other organization administering a federal program or activity.
As described in Appendix C of OMB Circular A-123 all programs3 with annual outlays over $10,000,000 will
fall into one of two possible classifications: Phase 1 Programs that are not likely to have an annual amount
of improper payments (IPs) above the statutory threshold. If a program in Phase 1 determines that it is
likely to annually make IPs above the statutory threshold, then the program will move into Phase 2 the
following year. Once in Phase 2 a program will need to develop and implement a corrective action plan and
obtain a statistically valid estimate of the annual amounts of improper payments in that program. Programs
in Phase 2 that exceed $100 million of estimated improper payments are also designated as High-Priority
Programs. High-Priority Programs will have additional quarterly reporting requirements.
3 A-123 Appendix C defines Program to include activities or sets of activities administered by the head of the
agency. The term "program" in this guidance implies "program or activity." The agency is authorized to determine
the most appropriate grouping of activities to create a "program" for purposes of this guidance. The EPA refers to
its sets of activities as "Payment Streams".
124
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OIG Determination of the EPA's Compliance with the Payment Integrity Information Act
In its most recent report4 the Office of Inspector General determined the EPA was compliant with the PIIA
and related OMB guidance for its FY 2022 reporting. In addition, the report did not contain any findings or
recommendations for the agency. However, the OIG reiterated that the EPA still must complete corrective
actions to meet the intent of two prior-year recommendations5. Those recommendations asked that the
agency update its SOP for conducting risk assessments and to conduct an off-cycle risk assessment of its
payment streams. The OIG report noted EPA had provided an updated Risk Assessment SOP and that the
agency would be completing its off-cycle risk assessments by November 2023 which they would review
during their next compliance audit
Summary of Current Risk Levels in EPA programs
In FY 2023, the EPA completed qualitative risk assessments on the nine programs that have annual outlays
exceeding $10 million. Those programs are Commodities, Contracts, Clean Water State Revolving Fund
(CWSRF), Drinking Water State Revolving Fund (DWSRF), Payroll, Purchase cards, Travel, Water
Infrastructure Finance and Innovation Act (WIFIA) payment streams. The risk assessments determined
that 8 of the 9 payment streams assessed are not likely to be susceptible to significant improper payments.
Based upon the results of the agency's qualitative risk assessments, the Grants program is considered likely
to be susceptible to significant improper payments. None of the EPA's payment streams are deemed a High-
Priority program. The table below shows a summary of EPA payment streams and their susceptibility to
significant improper payments.
Table 1: Risk Level
Payment Stream
Not likely to be Susceptible
to Significant IPs
Likely to be Susceptible
to Significant IPs
Commodities
X
Contracts
X
CWSRF
X
DWSRF
X
Grants
X
Payroll
X
Purchase Cards
X
T ravel
X
WIFIA
X
II. Risk Assessments
Federal agencies are required to conduct risk assessments of their programs or activities to determine
whether they are susceptible to significant improper payments. PIIA requires risk assessments to be
conducted at least once every three years for programs that are not deemed susceptible to significant
improper payments, unless otherwise recommended by their respective Office of Inspector General.
A quantitative risk assessment may consist of a true statistical sample or a non-statistical assessment
where a subset of the population is sampled non-randomly, for which the ratio of improper payments is
projected to the annual outlays. A qualitative risk assessment is an evaluation of risk factors that could
contribute to the occurrence of significant improper payments EPA utilizes both qualitative and
4 The EPA Complied with the Payment Integrity Information Act for Fiscal Year 2022 Report No. 23-P-0017; May 16, 2023.
5 See the EPA Inspector General Memorandum, Response to Planned Corrective Actions for Office of Inspector General Report
No. 22-P-0050, The EPA Was Not Compliant with the Payment Integrity Information Act for Fiscal Year 2021, issued June 27,
2022, issued.
125
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quantitative methods to assess the risk of improper payments in its payment streams.
The qualitative risk assessments consist of a questionnaire designed to provide the payment streams with
a tool for self-evaluation of these risk factors in consideration of their existing internal controls. The risk
factors based upon OMB Circular A-123, Appendix C guidance and assess:
1) Whether the program reviewed is new to the agency;
2) The complexity of the program reviewed;
3) The volume of payments made through the program reviewed;
4) Whether payments or payment eligibility decisions are made outside of the agency, such as by
a State or local government;
5) Recent major changes in program funding, authorities, practices, or procedures;
6) The level, experience, and quality of training for personnel responsible for making program
eligibility determinations or certifying that payments are accurate;
7) Significant deficiencies in the audit report or other relevant management findings of the agency
that might hinder accurate payment certification;
8) Similarities (a combination of outlays, mission, payment process, etc.) to other programs that
have reported IP and Unknown Payment (UP) estimates or been deemed susceptible to
significant IPs;
9) The accuracy and reliability of IP and UP estimates previously reported for the program, or
other indicator of potential susceptibility to IPs and UPs identified by the OIG of the executive
agency, the Government Accountability Office, other audits performed by or on behalf of the
Federal, State, or local government, disclosures by the executive agency, or any other means;
10) Whether the program lacks information or data systems to confirm eligibility or provide for
other payment integrity needs; and
11) The risk of fraud as assessed by the agency under the Standards for Internal Control in the
Federal Government published by the Government Accountability Office (commonly known as
the 'Green Book').
Directions for completion of the qualitative risk assessment are provided to the program managers of each
payment stream, and responses are supported with a brief narrative and supporting documentation. Upon
completion, the OCFO tabulates a scorecard providing an overall risk rating for each payment stream on a
scale of 1 to 5. A score of 1 indicates a very low susceptibility to significant improper payments, and a score
of 5 indicates a very high susceptibility to significant improper payments.
Payment streams considered susceptible to significant improper payments must undergo a statistical
sampling transaction review during the next fiscal year. As a result of the Grants payment stream being
considered susceptible to significant improper payments, the EPA will conduct a grants transaction review
in FY 2024. The results of this review will be discussed in the EPA's FY 2024 AFR.
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III. Recoveries of Improper Payments
PIIA requires agencies to conduct payment recapture audit reviews in any program expending more than $1
million annually. The low dollar value of improper payments recovered by an external payment recapture
auditor resulted in an effort that was not cost-effective for the agency or the contractor. As a result, the EPA
no longer uses a payment recapture audit firm to conduct formal payment recapture audits.
Nevertheless, the agency performs overpayment recovery activities internally, leveraging the work of
agency employees and agency resources. As part of this process, each payment stream is routinely
monitored to assure the effectiveness of internal controls and identify issues that could give rise to
overpayments. The agency's payment review and recovery activities are part of its overall program of
internal control over disbursements, which includes establishing and assessing internal controls to prevent
improper payments, reviewing disbursements, assessing root causes of error, developing corrective action
plans where appropriate, and tracking the recovery of overpayments.
Table 3 quantifies the results of the agency's efforts to identify and recapture overpayments across all
payment streams.
Table 3: Overpayment Recovered Outside of Payment Recapture Audits 13
($ in millions)
Program
Amount Identified in
FY 202323
Amount Recovered in
FY 2023=)
Commodities[3)
0.300
0.300
Contracts (3)
0.146
0.146
CWSRF
0.338
0.334
DWSRF
0.006
0.000
Grants
2.060
1.982
Payroll m
0.889
0.773
Purchase Cards-
0.000
0.000
T ravel
0.023
0.021
WIFIA
0.000
0.000
Other
0.002
0.000
Total
3.764
3.556
Agencywide Recapture Rate -
94.5%
L) The amounts displayed in this table were identified and recovered using a variety of means available to the
Agency.
t) The Amount Recovered can include overpayments identified in prior fiscal years (as well as from the
current fiscal year) but residual repayments were only received in FY 2023. This can lead to payment stream
fiscal year recapture rates of greater than 100%.
3) The amounts for contracts and commodities do not include lost discounts, which are considered improper
payments but uncollectible.
i) Payroll consists of salary, benefits, and awards. The amount of improper payments can be overstated if this
figure also includes adjustments to pay (factors impacting changes include: changes to employee grade/step
and health plans may lag bi-weekly payroll payments).
5) Purchase cards and WIFIA programs did not identify any improper payments during FY 2023. However,
EPA is required to list all payment streams in Table 3: Overpayment Recovered Outside of Payment
Recapture Audits.
5) "Other" consists of improper payments identified either by audits, or by criminal, civil, and administrative
case investigations, closed out during FY 2023. Repayments can, and often do, take several years to
complete.
The following information summarizes the actions and methods used by the agency to prevent and recoup
overpayments, a justification of any overpayments determined not to be collectible, and any conditions
giving rise to improper payments and how those conditions are being resolved.
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A) Commodities and Contracts
Neither payment stream is susceptible to significant improper payments. Given the historically low
percentage of improper payments in commodities and contracts, the agency relies on its internal review
process to detect and recover overpayments. The agency produces monthly reports for each payment
stream and uses these reports as its primary tool for tracking and resolving improper payments. These
reports identify the number and dollar amount of improper payments, the source and reason for the
improper payment, the number of preventive reviews conducted, and the value of recoveries.
The commercial payments are subject to financial review, invoice approval, and payment certification.
Since all commercial payments are subject to rigorous internal controls, the agency relies upon its system of
internal controls to minimize errors. Below is a summary of the internal controls in place over the agency's
commercial invoice payment process.
The payment processing cycle requires that all invoices be subjected to rigorous review and approval by
separate entities. Steps taken to ensure payment accuracy and validity, which serve to prevent improper
payments, include 1) the Research Triangle Park Finance Center's review for adequate funding and proper
invoice acceptance; 2) comprehensive system edits to guard against duplicate payments, exceeding ceiling
cost and fees, billing against incorrect period of performance dates, and payment to wrong vendor; 3)
electronic submission of the invoice to Project Officers and Approving Officials for validation of proper
receipt of goods and services, period of performance dates, labor rates, and appropriateness of payment,
citing disallowances or disapprovals of costs if appropriate; and 4) review by the RTP Finance Center of
suspensions and disallowances, if taken, prior to the final payment certification for the Treasury
processing. Additional preventive reviews are performed by the RTP Finance Center on all credit and re-
submitted invoices. Furthermore, the EPA Contracting Officers perform annual reviews of invoices on each
contract they administer, and DCAA audits are performed on cost-reimbursable contracts at the request of
the agency.
Vendors doing business with federal agencies occasionally offer discounts when invoices are paid in full
and within the specified discount period (e.g., within 10 days of billing). The EPA makes its best effort to
take all discounts, as they represent a form of savings to the agency. However, there are valid reasons for
which it is not feasible to take every discount that is offered, including: 1) an insufficient discount period to
process a discount offer, such as a discount offer in which the required processing time for payment
exceeds the number of days of the offer; and 2) a situation in which it is not economically advantageous to
take the discount Specifically, if the discount rate exceeds the Treasury's current value of funds rate,
taking the discount saves the government money, so the discount is accepted by paying the invoice early.
However, if the discount rate is less than the current value of funds rate, taking the discount is not cost-
effective for the government, so the discount is rejected, and the invoice is paid as close to the payment due
date as possible. For FY 2023 reporting, improper payments stemming from lost discounts totaled just
under $8,000 for commodities and contracts combined.
Improper payments can result from typographical errors, payments to incorrect vendors, duplicate
payments, or lost discounts. Numerous training sessions have been conducted, and standard operating
procedures have been updated to ensure the most current processes are properly documented. Any
significant changes in policy or procedures are communicated in a timely manner. Despite the agency's
best efforts to collect all overpayments, some overpayments are not recoverable. For example, lost
discounts can result when the agency is unable to pay an invoice within the specified time by the vendor.
While reported as improper payments, lost discounts are not recoverable and are excluded from the
recovery percentage for both contracts and commodities.
B) Clean and Drinking Water State Revolving Funds
Neither of the State Revolving Funds (SRFs) are susceptible to significant improper payments. Quarterly,
the agency holds compliance training sessions in various areas of the country that are attended by local,
state, and EPA regional officials as well operators of the water treatment facilities. Further, EPA Regional
offices supported by headquarters staff conduct mandatory annual reviews of all state SRF programs to
identify and recover improper payments. This process is aided by using checklists developed by
128
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headquarters staff. Included in the checklist are questions about potential improper payments which the
regions discuss with the state SRF staff during the reviews. Errors in the SRFs most often arise from
duplicate payments, funds drawn from the wrong account, incorrect proportionality used for drawing
federal funds, ineligible expenses, transcription errors, or inadequate cost documentation. Many of the
payment errors are immediately corrected by the state or are resolved by adjusting a subsequent cash
draw. For issues requiring more detailed analysis, the state provides the agency with a plan for resolving
the improper payments and reaches an agreement on the planned course of action. The agreement is
described in the EPA's Program Evaluation Report, and the agency follows up with the state to ensure
compliance.
C) Grants
In FY2023, Grants were determined likely to be susceptible to significant improper payments. Therefore,
the EPA will undertake a statistical sampling in FY 2024 as required by OMB Guidance6. For the agency's
Grants payment stream, overpayments principally consist of unallowable costs or lack of supporting
documentation. When overpayments arise, the EPA seeks to recover them either by establishing a
receivable and collecting money from the recipient or by offsetting future payment requests. The agency
follows established debt collection procedures to recapture overpayments.
The EPA identifies overpayments in Grants both through statistical sampling and through non-statistical
means. Included in the agency's non-statistical activity, transaction testing of active grant recipients is
conducted as a part of Advanced Administrative Monitoring reviews. Recipients selected for non-statistical
reviews are chosen based on the results of risk assessments performed by Grants Management Officers.
Using a standard protocol, an onsite or desk review is performed, and each recipient's administrative and
financial management controls are examined. The reviews include an analysis of the recipient's
administrative policies and procedures and the testing of a judgmental sample of three non-consecutive
draws.
The agency follows established processes for evaluating questioned costs, validating, or disallowing costs
where appropriate, and seeking the recovery of any sustained overpayments. The EPA also identifies
improper payments originating from enforcement actions, grant adjustments, and recipient overdraws.
Grant adjustments arise when a recipient must return any unexpended drawn amounts prior to close out of
the grant Recipient overdraws occur when funds are erroneously drawn in advance of immediate cash
needs, and the recipient is directed to repay the funds while also being reminded of the immediate cash
needs rule. Depending on the type of error, improper payment information is tracked by the Office of the
Controller and the Office of Grants and Debarment, and the records of each are reconciled to ensure
complete and accurate reporting.
The EPA also seeks to prevent improper payments. Prior to the issuance of a grant award, the OGD's
Compliance Tearn conduct pre-award certification of non-profit recipients that receive awards more than
$200,000 to ensure their written policies and procedures specify acceptable internal controls for
safeguarding federal funds. Re-certifications are conducted every four years. Grants Management Officers
concur on all certifications. The GMOs are also required to ensure that recipients are not listed in the
Excluded Parties List System within the System for Award Management The EPA conducts annual baseline
monitoring reviews of all recipients to ensure overall compliance with assistance agreement terms and
conditions, as well as all applicable federal regulations. If determined to be necessary, recipients can be
placed on a reimbursement payment plan which requires submission of cost documentation (receipts,
invoices, etc.) for review and approval prior to receiving reimbursement.
6 See Circular A-123, Appendix C, Requirements for Payment Integrity Improvement
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D) Payroll
The agency's payroll is not susceptible to significant improper payments. Payroll is a largely automated
process driven by the submission of employee time and attendance records and personnel actions. In-
service debt can arise for a variety of reasons during the period of employment When in-service debt
arises, the employee is notified of the debt, given the right to dispute the debt, provided payment options,
and an account receivable is recorded by the agency's shared service payroll provider, the Interior
Business Center. Debts are typically recovered through payroll deductions in subsequent pay periods.
Out-of-service debt can arise when an employee leaves the agency and owes funds back to the EPA
following separation. The EPA establishes the debt and tracks recovery status. A small portion of the EPA's
out-of-service debt was uncollectible due to the separating employee retiring on disability. For both in-
service and out-of-service debt, recoveries are actively pursued by following established debt collection
procedures.
E) Purchase Cards
The purchase card program is not susceptible to significant improper payments, and no improper payments
were identified in FY 2023. Approving Officials and Cardholders are required to complete the GSA Purchase
Card Training as well as complete the EPA Supplemental Purchase Card and Convenience Check Training.
To prevent potential problems, Approving Officials and Cardholders ensure that all items have been
received and services rendered prior to allocating funds. Reports are generated from the bank vendor
system for review to identify instances of misuse and potential fraud.
F) Travel
Travel is not susceptible to significant improper payments. For travel, improper payments can include
ineligible expenses and insufficient or missing supporting documentation. When an overpayment is
identified for travel, the Agency establishes a receivable, and existing procedures are followed to ensure
prompt recovery.
IV. Agency Improvement of Payment Accuracy with the Do Not Paylnitiative
PIIA requires federal agencies to implement the Do Not Pay initiative, a government-wide solution
designed to prevent payment errors and detect waste, fraud, and abuse in programs administered by the
federal government. The EPA's payments are screened by the US Treasury's DNP working system to detect
improper payments. The Treasury analyzes each agency's payments and provides a monthly report
itemizing any payments that were made to potentially ineligible recipients. Potential matches are identified
when the name of an agency's payee matches the name of an individual or entity listed in federal data
sources contained in the Treasury's DNP working system.
In FY 2023, the Treasury screened the EPA payments through the following DNP data sources on a post-
payment basis: the Social Security Administration's Death Master File and the General Services
Administration's System for Award Management Exclusion List In FY 2023, a total of 226,737 EPA
payments worth $3.76 billion were screened, with no improper payments identified.
The EPA's Payment Integrity Program is supported by two other US Treasury screening tools, the
Automated Standard Application for Payments and the Offset Program, to support its Payment Integrity
work. Under this process 55,363 EPA payments totaling $ 5.5 billion were made using ASAP, including
having ASAP's grantee listing is monitored by the Treasury.
In addition, the agency payments are routinely monitored by the Treasury Offset Program, which offsets
federal payments to recipients with delinquent federal nontax debt. These different tools provide a
valuable external check of the agency's payment integrity.
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CIVIL MONETARY PENALTY ADJUSTMENT FOR
INFLATION
Report on Inflationary Adjustments to Civil Monetary Penalties
Pursuant to the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015. EPA and other
federal agencies are required to adjust their maximum and minimum statutory civil penalty amounts by
January 15 each year to account for inflation. In accordance with this requirement, EPA promulgated the
Civil Monetary Penalty Inflation Adjustment Rule (Rule) on January 6, 2023, which became effective the
same day. For details on this Rule, see 88 Fed. Reg. 986-990, codified in Table 1 of 40 CFR § 19.4. EPA
will amend 40 CFR § 19.4 by January 15, 2024, to reflect changes in inflation since the last adjustment.
Current Statutory Maximum/Minimum Civil Penalties under
EPA's 2023 Civil Monetary Penalty Inflation Adjustment Rule
U.S. Code Citation
Environmental statute
Year statutory
penalty
authority was
enacted
Latest year of
adjustment
(via statute or
regulation)
Statutory civil
penalties for
violations that
occurred after
November 2,2015,
where penalties are
assessed on or after
January 6,2023
7 U.S.C. 136/.(a)(l)
FEDERAL INSECTICIDE,
FUNGICIDE, AND
RODENTICIDE ACT (FIFRA)
1972
2023
$23,494
7 U.S.C. 136/.(a)(2)
FIFRA
1972
2023
$3,446
7 U.S.C. 136/.(a)(2)
FIFRA
1978
2023
$3,446/$2,221
15 U.S.C.
2615(a)(1)
TOXIC SUBSTANCES
CONTROL ACT (TSCA)
2016
2023
$46,989
15 U.S.C. 2647(a)
TSCA
1986
2023
$13,508
15 U.S.C. 2647(g)
TSCA
1990
2023
$11,162
31 U.S.C.
3802(a)(1)
PROGRAM FRAUD CIVIL
REMEDIES ACT (PFCRA)
1986
2023
$13,508
31 U.S.C.
3802(a)(2)
PFCRA
1986
2023
$13,508
33 U.S.C. 1319(d)
CLEAN WATER ACT (CWA)
1987
2023
$64,618
33 U.S.C.
1319(g)(2)(A)
CWA
1987
2023
$25,847/$64,618
33 U.S.C.
1319(g)(2)(B)
CWA
1987
2023
$25,847/$323,081
33 U.S.C.
1321(b)(6)(B)(i)
CWA
1990
2023
$22,324/$55,808
33 TT S C
1321(b)(6)(B)(ii)
CWA
1990
2023
$22,324/$279,036
33 U.S.C.
1321(b)(7)(A)
CWA
1990
2023
$55,808/$2,232
33 U.S.C.
1321(b)(7)(B)
CWA
1990
2023
$55,808
33 U.S.C.
1321(b)(7)(C)
CWA
1990
2023
$55,808
131
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U.S. Code Citation
Environmental statute
Year statutory
penalty
authority was
enacted
Latest year of
adjustment
(via statute or
regulation)
Statutory civil
penalties for
violations that
occurred after
November 2,2015,
where penalties are
assessed on or after
January 6,2023
33 U.S.C.
1321(b)(7)(D)
CWA
1990
2023
$223,229/$6,696
33 U.S.C.
1414b(d)(l)
MARINE PROTECTION,
RESEARCH, AND
SANCTUARIES ACT (MPRSA)
1988
2023
$1,487
33 U.S.C. 1415(a)
MPRSA
1972
2023
$234,936/$309,909
33 U.S.C. 1901
note (see
1409(a)(2)(A))
CERTAIN ALASKAN CRUISE
SHIP OPERATIONS (CACSO)
2000
2023
$17,128/$42,818
33 U.S.C. 1901
note (see
1409(a)(2)(B))
CACSO
2000
2023
$17,128/$214,087
33 U.S.C. 1901
note (see
1409(b)(1))
CACSO
2000
2023
$42,818
33 U.S.C.
1908(b)(1)
ACT TO PREVENT POLLUTION
FROM SHIPS (APPS)
1980
2023
$87,855
33 U.S.C.
1908(b)(2)
APPS
1980
2023
$17,570
42 U.S.C. 300g-
3(b)
SAFE DRINKING WATER ACT
(SDWA)
1986
2023
$67,544
42 U.S.C. 300g-
3(g)(3)(A)
SDWA
1986
2023
$67,544
42 U.S.C. 300g-
3(g)(3)(B)
SDWA
1986/1996
2023
$13,508/$47,061
42 U.S.C. 300g-
3(g)(3)(C)
SDWA
1996
2023
$47,061
42 U.S.C. 300h-
2(b)(1)
SDWA
1986
2023
$67,544
42 U.S.C. 300h-
2(c)(1)
SDWA
1986
2023
$27,018/$337,725
42 U.S.C. 300h-
2(c)(2)
SDWA
1986
2023
$13,508/$337,725
42 U.S.C. 300h-
3(c)
SDWA
1974
2023
$23,494/$50,120
42 U.S.C. 300i(b)
SDWA
1996
2023
$28,239
42 U.S.C. 300i-l(c)
SDWA
2002
2023
$164,373/$ 1,643,738
42 U.S.C.
300j(e)(2)
SDWA
1974
2023
$11,746
42 U.S.C. 300j-4(c)
SDWA
1986
2023
$67,544
42 U.S.C. 300j-
6(b)(2)
SDWA
1996
2023
$47,061
42 U.S.C. 300j-
23(d)
SDWA
1988
2023
$ 12.397/$ 123.965
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U.S. Code Citation
Environmental statute
Year statutory
penalty
authority was
enacted
Latest year of
adjustment
(via statute or
regulation)
Statutory civil
penalties for
violations that
occurred after
November 2,2015,
where penalties are
assessed on or after
January 6,2023
42 U.S.C.
4852d(b)(5)
RESIDENTIAL LEAD-BASED
PAINT HAZARD REDUCTION
ACT OF 1992
1992
2023
$21,018
42 U.S.C.
4910(a)(2)
NOISE CONTROL ACT OF 1972
1978
2023
$44,411
42 U.S.C.
6928(a)(3)
RESOURCE CONSERVATION
AND RECOVERY ACT (RCRA)
1976
2023
$117,468
42 U.S.C. 6928(c)
RCRA
1984
2023
$70,752
42 U.S.C. 6928(g)
RCRA
1980
2023
$87,855
42 U.S.C.
6928(h)(2)
RCRA
1984
2023
$70,752
42 U.S.C. 6934(e)
RCRA
1980
2023
$17,570
42 U.S.C. 6973(b)
RCRA
1980
2023
$17,570
42 U.S.C.
6991e(a)(3)
RCRA
1984
2023
$70,752
42 U.S.C.
6991e(d)(l)
RCRA
1984
2023
$28,304
42 U.S.C.
6991e(d)(2)
RCRA
1984
2023
$28,304
42 U.S.C. 7413(b)
CLEAN AIR ACT (CAA)
1977
2023
$117,468
42 U.S.C.
7413(d)(1)
CAA
1990
2023
$55,808/$446,456
42 U.S.C.
7413(d)(3)
CAA
1990
2023
$11,162
42 U.S.C. 7524(a)
CAA
1990
2023
$55,808/$5,580
42 U.S.C.
7524(c)(1)
CAA
1990
2023
$446,456
42 U.S.C.
7545(d)(1)
CAA
1990
2023
$55,808
42 U.S.C.
9604(e)(5)(B)
COMPREHENSIVE
ENVIRONMENTAL RESPONSE,
COMPENSATION, AND
LIABILITY ACT (CERCLA)
1986
2023
$67,544
42 U.S.C.
9606(b)(1)
CERCLA
1986
2023
$67,544
42 U.S.C.
9609(a)(1)
CERCLA
1986
2023
$67,544
42 U.S.C. 9609(b)
CERCLA
1986
2023
$67,544/$202,635
42 U.S.C. 9609(c)
CERCLA
1986
2023
$67,544/$202,635
42 U.S.C. 11045(a)
EMERGENCY PLANNING AND
COMMUNITY RIGHT-TO-
KNOW ACT (EPCRA)
1986
2023
$67,544
42 U.S.C.
11045(b)(1)(A)
EPCRA
1986
2023
$67,544
42 U.S.C.
11045(b)(2)
EPCRA
1986
2023
$67,544/$202,635
133
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U.S. Code Citation
Environmental statute
Year statutory
Latest year of
Statutory civil
penalty
adjustment
penalties for
authority was
(via statute or
violations that
enacted
regulation)
occurred after
November 2,2015,
where penalties are
assessed on or after
January 6,2023
42 U.S.C.
EPCRA
1986
2023
$67,544/$202,635
11045(b)(3)
42 U.S.C.
EPCRA
1986
2023
$67,544
11045(c)(1)
42 U.S.C.
EPCRA
1986
2023
$27,018
11045(c)(2)
42 U.S.C.
EPCRA
1986
2023
$67,544
11045(d)(1)
42 U.S.C.
MERCURY-CONTAINING AND
1996
2023
$18,827
14304(a)(1)
RECHARGEABLE BATTERY
MANAGEMENT ACT
(BATTERY ACT)
42 U.S.C. 14304(g)
BATTERY ACT
1996
2023
$18,827
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BIENNIAL REVIEW OF USER FEES
The EPA, biennially, conducts a review of its fees and other charges. This fiscal year, the agency did not
review its user fees and charges. This section reiterates work that was discussed in the FY 2022 Agency
Financial Report. The CFO Act of 1990 and OMB Circular No. A-25 Revised, User Charges, directs agencies
to biennially review their fees, royalties, rents, and other charges and recommend adjustments, as
appropriate, to reflect unanticipated changes in costs or market values. OMB Circular No. A-25 Revised also
directs agencies to review other agency programs and determine whether fees should be initiated for
government services or goods for which fees are not charged.
The EPA administers eight user fee programs. The bold-highlighted programs are statutorily required to
recover the full cost of the goods and services provided.
EPA's User Fee Programs
Pesticide Registration Service Fees
Pesticide Maintenance Fees
Motor Vehicle and Engine
Compliance Fee Program
Water Infrastructure Finance and
Innovation Act Fees
e-Manifest Fees
Toxic Substance Control Act Fees
Lead-Based Paint Fee Program
Clean Air Part 71 Permit Fees
During FY 2022, EPA reviewed the Clean Air Part 71 Permit Fees, Pesticide Maintenance Fees, Pesticide
Registration Fees, and the e-Manifest Fees. The agency review concluded the fee program to be compliant
with the statutory requirements and regulations to recover the cost share of the fees' activities. No
recommendations were made to adjust the fee levels.
The agency also conducted a review to determine whether fees should be assessed for programs that
provide special benefits to recipients beyond the public. The review looked at a subset of the total universe
of potential fee programs identified as part of the FY 2022 user fee process.
The EPA will continue working with OMB in FY 2024 to determine if exceptions are justified for each
program that was reviewed. For some programs, the cost of collecting fees can often represent an unduly
large part of the activity or other conditions may exist that would cause the implementation of a fee to be
inappropriate. The agency will also continue exploring options and opportunities for programs where
collecting fees may be appropriate, for which the EPA is not recommending an exception to OMB.
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GRANTS PROGRAM
The EPA has tracked assistance agreement closeout performance since its first five-year Grants
Management Plan was issued in 2002. The EPA reports in its Annual Financial Report on two grants
closeout performance measures: 90% closure of recently expired grants and 99% closure of grants that
expired in earlier years. The agency has consistently exceeded or met these targets or, in limited instances,
missed them by a few percentage points. Below is a summary table showing the total number of federal
grant and cooperative agreement awards and balances for which closeout has not yet occurred, but for
which the period of performance has elapsed by more than two years.
CATEGORY
2-3 Years
FY20-21
>3-5 Years
FY17-19
>5 Years
Before FY17
Number of
Grants/Cooperative
Agreements with
Zero Dollar
Balances
76
13
6
Number of
Grants/Cooperative
Agreements with
Undisbursed
Balances
18
16
3
Total Amount of
Undisbursed
Balances
$2,599,484
$2,649,859
$1,231,629
The EPA has made great progress in reducing the amount of undisbursed balances on expired grants as
well as reducing the number of older grants that have expired but have not been closed out The timely
closeout of grants can be delayed for a variety of reasons, but generally these include open audits with
unresolved findings and where recipient appeal rights have not yet been exhausted, or lack of required
documentation from the recipient. The EPA monitors unliquidated obligations (ULOs) on expired
assistance agreements as well, requiring an annual review of ULOs to determine if funds are no longer
needed and can be deobligated and the assistance agreement closed out
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CLIMATE-RELATED FINANCIAL RISK
Climate Adaptation Plan
In 2021, EPA released its new US EPA's Climate Adaptation Plan: October 2021 in response to Executive
Order (E.O.) 14008: Tackling the Climate Crisis at Home and Abroad. EPA's Climate Adaptation Action Plan
accelerates and focuses attention on five priority actions the Agency will take over the next four years to
increase human and ecosystem resilience as the climate changes and disruptive impacts increase:
1. Integrate climate adaptation into the EPA programs, policies, rulemaking processes, and
enforcement activities.
2. Consult and partner with tribes, states, territories, local governments, environmental justice
organizations, community groups, businesses, and other federal agencies to strengthen adaptive
capacity and increase the resilience of the nation, with a particular focus on advancing
environmental justice.
3. Implement measures to protect the agency's workforce, facilities, critical infrastructure, supply
chains, and procurement processes from the risks posed by climate change.
4. Measure and evaluate performance.
5. Identify and address climate adaptation science needs.
The EPA Program and Regional Offices developed Climate Adaption Implementation Plans. Final plans are
located at: https://www.epa.gov/climate-adaptation/climate-adaptation-plan. Additional information on
the Plan is located on the EPA Climate Adaptation Website: EPA.gov/Climate-Adaptation
EPA Sustainability Plans
Strategic plans help the EPA meet federal sustainability requirements and its own internal goals to reduce
greenhouse gas emissions, resource use and other environmental impacts.
EPA's Sustainability Report and Implementation Plan identifies targets for reducing agencywide GHG
emissions and outlines steps to reduce energy, water, waste, and other resource use. It also addresses ways
the agency will incorporate sustainability across its facilities, purchases, and operations. Goal areas
include:
• Facility energy efficiency
• Efficiency measures, investment and performance contracting
• Renewable energy
• Water efficiency
• High performance sustainable buildings
• Waste management and diversion
• T ransportation/fleetmanagement
• Sustainable acquisition
• Electronics stewardship
• GHG emissions reductions
Read EPA's latest Sustainability Report and Implementation Plan.
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Section
IV
Appendices
P
i *
r sm
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APPENDIX A
PUBLIC ACCESS
139
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The EPA invites the public to access its website atwww.epa.gov to obtain the latest environmental news,
browse agency topics, learn about environmental conditions in their communities, obtain information on
interest groups, research laws and regulations, search specific program areas, or access the EPA's historical
database.
EPA newsroom: www.epa.gov/newsroom
News releases: www.epa.gov/newsroom/news-releases
Regional newsrooms: https://www.epa.g0v/newsroom/browse-news-releases#region
Laws, regulations, guidance and dockets:
https: //www.epa.gov/laws-regulations Major environmental
laws: https://www.epa.gov/laws-
regulations/laws-and-executive-orders
EPA's Regulations website: https: //www.epa.gov/laws-regulations/regulations
Where you live: https: //www.epa.gov/children/where-you-live
Community Information:
https://www.epa.gov/nutrientpollution/what-you-can-do- vour-
community
EPA regional offices: https: //www.epa.gov/aboutepa/regional-and-geographic-offices
Information sources:
https://www.epa.gov/quality/epa-information-
quality- guidelines
Hotlines and clearinghouses:
https: //www.epa.gov/home/epa- hotlines
Publications: https://nepis.epa.gov/EPA/html/pubindex.html
Education resources: www.epa.gov/students /
Office of Environmental Education: www.epa.gov/education
About EPA: www.epa.gov/aboutepa
EPA organizational structure: www.epa.gov/aboutepa/epa-organizational-structure
EPA programs with a geographic focus:
https://www.epa.gov/environmental-
topics/environmental-information-location
EPA for business and nonprofits:
http s://www, epa. gov / grants / gr ants-
management- guidance- non-profit-
organizations
Small Business Gateway: www.epa.gov/osbp/
Grants, fellowships, and environmental financing: https: //www.epa.gov/grants
Budget and performance: www.epa.gov/planandbudget
Careers: www.epa.gov/careers/
EPA en Espanol: https: //espanol.epa.gov/
EPA tieng Viet: https://www.epa.gov/lep/vietnamese
EPA https://www.epa.gov/lep/korean
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APPENDIX B
ACRONYMS AND
ABBREVIATIONS
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ACE Affordable Clean Energy GAAP
ADA Anti-deficiency Act GGRF
ADP Action Development Process GHG
ALJ Administrative Law Judge GMO
AFR Agency Financial Report GSA
AME August Mack Environmental GTAS
AICPA American Institute of Certified Public
Accountants HVAC
APPS Act to Prevent Pollution from Ships IA
APR Annual Performance Report IBC
ASAP Automated Standard Application for IP
Payments IIJA
B&F Building and Facilities IRA
BPS Bureau of Fiscal Services Iff
BP British Petroleum LUST
BIL Bipartisan Infrastructure Law MPRSA
CAA Clean Air Act
CACSO Certain Alaskan Cruise Ship Operations NPL
CARES Coronavirus Aid, Relief and Economic NRDA
Security Act
CEC Commission of the North American OCFO
Agreement on Environmental Cooperation 0^1
OGD
CERCLA Comprehensive Environmental Response OIG
Compensation and Liability Act OMB
CDPHE Colorado Department of Public Health and OPA
Environment OPM
CFO Chief Financial Officer PFCRA
CFR Code of Federal Regulations PP&E
CO Contracting Officer PRIA
CPRG Climate Pollution Reduction Grants PIIA
CSRS Civil Service Retirement System PFCRA
CWA Clean Water Act PRFA
CWSRF Clean Water State Revolving Fund PRP
DATA Data Accountability and Transparency Act UNEP
DCAA Defense Contract Audit Agency UP
DEAR DATA Evaluation & Approval Repository ULO
Generally Accepted Accounting Principles
Greenhouse Gas Reduction Fund
Greenhouse Gas
Grants Management Officer
U.S. General Services Administration
Governmentwide Treasury Accounting
Symbol
Heating, Ventilation, and Air Conditioning
Interagency Agreement
Interior Business Center
Improper Payment
Infrastructure Investment & Jobs Act
Inflation Reduction Act
Invoice Processing Platform
Leaking Underground Storage Tank
Marine, Protection, Research, and
Sanctuaries Act
National Priorities List
Natural Resource Damages Assessment
Assurance
Office of the Chief Financial Officer
Office of Continuous Improvement
Office of Grants and Debarment
Office of Inspector General
Office of Management and Budget
Oil Pollution Act
Office of Personnel Management
Program Fraud Civil Remedies Act
Plant, Property and Equipment
Pesticides Registration Improvement Act
Payment Integrity Information Act
Program Fraud Civil Remedies Act
Pollution Removal Funding Agreements
Potentially Responsible Parties
United Nations Environmental Program
Unknown Payments
Unliquidated Obligations
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DM&R Deferred Maintenance and Repairs Do
DNP N0t pay
DWH Deepwater Horizon
DWSRF Drinking Water State Revolving
Fund
EPA U.S. Environmental Protection Agency
EPCRA Emergency Planning and Community Right-
to-know Act
EPM Environmental Programs and Management
FAS Fixed Assets Subsystem
FCRA pajr Credit Reporting Act
FASAB Federal Accounting Standards
Advisory Board
FBWT Fund Balance with Treasury
FECA Federal Employees Compensation Act
FERA Federal Employees Retirement System
FFMIA Federal Financial Management
Improvement Act of 1996
FIFRA Federal Insecticide, Fungicide and
Rodenticide Act
FMFIA Federal Managers' Financial Integrity Act of
1982
FRM Fraud Risk Management
FY Fiscal Year
RCRA Resource Conservation and Recovery Act
R&I Repair and Improvement
RP Responsible Party
RPA Robotics Process Automation
RTP Research Triangle Park
SARA Superfund Amendments and
Reauthorization Act
SDWA Safe Drinking Water Act
SFFAS Statement of Federal Financial Accounting
Standards
SOP Standard Operating Procedures
SRF State Revolving Fund
SSC Superfund State Contracts
S&T Science & Technology
STAG State and Tribal Assistance Grants
Talent Enterprise Diagnostic
TP Trust Fund
TSCA Toxic Substance Control Act
USSGL U.S. Standard General Ledger
WCF Working Capital Fund
WIFIA Water Infrastructure Finance and Innovation Act
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WE WELCOME YOUR COMMENTS!
Thank you for your interest in the U.S. Environmental Protection Agency's Fiscal Year 2023 Agency
Financial Report. We welcome your comments on how we can make this report a more informative
document for our readers. Please send your comments to:
Office of the Chief Financial Officer
Office of Financial Management
Environmental Protection Agency
1200 Pennsylvania Ave., NW
Washington, D.C. 20460
ocfoinfo@epa.gov
This report is available at
http://www.epa.gov/planandbudget
Printed copies of this report are available from EPA's National Service Center for Environmental
Publications at 1-800-490-9198 or by email atnscep@bps-lmit.com.
# U r>
w I
%PR0^0
U.S. Environmental Protection Agency
Fiscal Year 2023 Agency Financial Report
EPA-190-R-23-003
November 15,2023
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