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Agency Financial Report
Fiscal Year 2024
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ABOUT THIS REPORT
The U.S. Environmental Protection Agency is pleased to
present the Fiscal Year 2024 Agency Financial Report
(AFR). This report provides an overview of the financial
and performance results for the fiscal year spanning
October 1, 2023, through September 30, 2024.
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 2024 AFR encompasses the EPA Office of
Inspector General's FY 2024 Financial Statements
Audit Report and the agency's FY 2024 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-ll,
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 FY 2024 Annual
Performance Report, which will present the agency's
FY 2024 performance results as measured against
the targets established in its FY 2024 Annual
Performance Plan and Budget and the goals
established in the FY2022-2026 EPA Strategic Plan.
The EPA's FY 2024 APR will be included with the
agency's FY 2026 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-q u a I ity-records.
How the Report Is Organized
The EPA's FY 2024 AFR is organized into four 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
ABOUTTHIS REPORT 2
TABLE OF CONTENTS 3
MESSAGE FROM THE ADMINISTRATOR 4
SECTION I MANAGEMENT DISCUSSION AND ANALYSIS 6
ABOUT EPA 7
FY 2024 PROGRAM PERFORMANCE 10
FINANCIAL ANALYSIS AND STEWARDSHIP 11
IMPROVING MANAGEMENT AND RESULTS 17
ANALYSIS OF SYSTEMS, CONTROLS, AND LEGAL COMPLIANCE 19
FISCAL YEAR 2024 ANNUAL ASSURANCE STATEMENT 21
SECTION II FINANCIAL SECTION 22
EPA'S FISCAL YEAR 2024 AND 2023 CONSOLIDATED FINANCIAL STATEMENTS (WITH RESTATEMENT)....23
AUDIT OF THE EPA'S FISCAL YEARS 2024 AND 2023 (RESTATED) CONSOLIDATED FINANCIAL
STATEMENTS 86
SECTION III OTHER ACCOMPANYING INFORMATION 128
MANAGEMENT INTEGRITY AND CHALLENGES 129
FY 2024 and FY 2025 TOP MANAGEMENT CHALLENGES 130
PAYMENT INTEGRITY 134
CIVIL MONETARY PENALTY ADJUSTMENT FOR 145
BIENNIAL REVIEW OF USER FEES 149
GRANTS PROGRAM 150
CLIMATE-RELATED FINANCIAL RISK 151
SECTION IV APPENDICES 152
APPENDIX A PUBLIC ACCESS 153
APPENDIX B ACRONYMS AND ABBREVIATIONS 155
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MESSAGE FROM THE
ADMINISTRATOR
November 15, 2024
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 2024 Agency Financial Report. For the 25th consecutive year, the EPA has
earned a clean, unmodified financial audit opinion from the Office of Inspector
General. This quarter century of achievement is made possible because of the
dedication, professionalism and integrity of our agency's employees and the
financial management oversight provided by the EPA's Office of the Chief Financial Officer. The AFR outlines
how the EPA used its resources, maintaining the highest standards of accountability and financial integrity, to
benefit the American people and advance the Administration's environmental and public health priorities.
The agency is at the center of the Biden-Harris Administration's Investing in America agenda, and every day we
have been working to quickly and effectively mobilize more than $100 billion in supplemental appropriations
to protect public health and the environment, create good-paying jobs, grow our economy, advance private
investment in clean technologies and address environmental justice by confronting decades of
underinvestment in disadvantaged communities. We can already see that these investments are improving the
health and wellbeing of Americans and will have lasting benefits for future generations.
Through the historic Infrastructure Investment and Jobs Act, commonly called the Bipartisan Infrastructure
Law, and the Inflation Reduction Act, the EPA continues to fulfill the Administration's commitment to upgrade
critical public utility infrastructure and services, accelerate the cleanup of toxic waste sites and address the
current and anticipated impacts of climate change and extreme weather events. These investments are
designed to help communities throughout the country, many that are among the nation's most vulnerable
and underserved, who have been disproportionately burdened by pollution and environmental harm.
In continuing our nation's leadership in addressing climate change, the agency has utilized the IRA to provide
$27 billion in Greenhouse Gas Reduction Fund grants to accelerate clean energy and climate solutions across
the country. These grants are being used to provide affordable financing for clean- technology projects,
support community lenders to fund clean energy projects and deliver solar energy to more than 900,000 low-
income households nationwide.
in addition, we recently announced $300 million of the $5 billion provided under the IRA for Climate Pollution
Reduction implementation grants to assist 34 Tribes and territories for the first time, so they can apply
greenhouse-gas reduction measures in their own communities.
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More detailed information on our accomplishments will be provided in the FY 2026 Annual Performance Plan
and Budget. My assurance statement, as required under the Federal Managers' Financial Integrity Act,
appears in Section I, "Management's Discussion and Analysis," of this report. Section III of this report provides
details regarding corrective actions, including strengthened management controls, that have been
implemented, reflecting the agency's dedication to ensure proper resources management.
I am grateful for the supplemental appropriations that provide the EPA with expanded opportunities to ensure
that all Americans can access clean water and breathe clean air. We have a great responsibility to ensure that
we manage these resources transparently and with the utmost financial integrity. We are committed to
achieving these goals as we work with and support our Tribal, state and local partners 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 and enforces regulations
¦S Gives grants to states, local
communities, and tribes
¦/ Studies environmental issues
y Sponsors partnerships
¦/ 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
Offices
Office of the
Chief Financial
Officer
Office of Environ.
Justice arid Exremal
Civil Righis
Office of
Inspector
General
Office of Land
and Emergency
Management
Office of
Enforcement
and Compliance
Office of
General
Counsel
Office of
International and
Tribal Affairs
Office of
Mission Support
Office of Air
and Radiation
Office
of
Water
Regionl
Boston, MA
Region 3
Philadelphia, PA
Region A
Atlanta, GA
Region 6
Dallas, TX
Region 7
Kansas City, KS
Region 8
Denver, CO
Region 9
San Francisco,
CA
Region 1 0
Seattle, WA
Office of
Research and
Development
Office of
Chemical Safety
and Pollution
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 16,000 people.
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eadquarters and Regional Office Map
EPA Offices and Facilites
EPA National Headquarters EPA Regional Headquarters • EPA Regional and Program Laboratories and Facilities
Collaborating with Partners and Stakeholders
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 2024 PROGRAM PERFORMANCE
Detailed FY 2024 performance results will be presented in EPA's FY 2024 Annual Performance
Report. This report will be posted at http://www.epa.gov/planandbudget in January 2025.
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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 2024:
• Invoice Processing Platform. In FY 2024, the agency continues to experience prolific efficiencies since the
deployment of the Invoice Processing Platform (IPP), which fully launched in May 2023. IPP has significantly
streamlined and standardized the invoice approval process for the agency. It allowed the agency to
decommission multiple feeder systems, consolidating all commercial invoice payment processing into IPP.
During FY 2024 the agency has benefited by taking advantage of over $28k in discounts offered and
experienced a 73% reduction in the number of late invoices paid since FY 2023. Since implementation,
50,324 invoices have been processed via IPP totaling over $1.9B in payments to commercial vendors.
• G-lnvoicing. OCFO partnered with the Office of Acquisition Solutions to improve the Interagency
Agreement process for employee relocation services provided to external federal agencies via EPA's
Working Capital Fund. This eliminated duplicate processes and data entry and implemented role changes in
G-lnvoicing to make the review and approval of Interagency Agreements timelier and more efficient, thus
enabling improved customer service.
• Continuous Improvement Summit. In FY 2024, OCFO's Continuous Improvement Division (CID), previously
the Office of Continuous Improvement, hosted the EPA's 6th annual continuous improvement summit. This
year the event brought people together in Chicago Illinois at EPA's Region 5 Offices. Fifty-three participants
joined us in person, while the rest took advantage of the virtual participation option, allowing for maximum
participation. The summit in FY 2024 had 261 registrants and participation from 16 states and one other
country, in addition to over 300 EPA employees. A total of 38 speakers delivered 26 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.
• Tournament of Ideas. In FY 2024, OCFO's Continuous Improvement Division (CID), previously the Office of
Continuous Improvement, hosted the 2nd annual Tournament of Ideas. This year the march madness
inspired competition incorporated 2 new actions into gameplay (3 points for grants ideas and 5 points for
ideas stories) that resulted in the following innovations: 2,138 ideas received in a month (we usually
average about 80 ideas implemented a month), 588 grants related ideas implemented, and over 36 ideas
stories that were shared across the agency. This event spurs innovation across the EPA, engaging staff in
making beneficial operational improvements, and showcases OCFO's commitment to innovation, employee
engagement and sound fiscal management.
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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, 2024, and September
30, 2023. 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 2022.
$100
$80
$60
$40
$20
$-
Balance Sheet Trend
(dollars in billions)
II
Assets
Liabilities Net Position
M 2022 M 2023 M2024
Net Cost of
Operations
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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)
S98
S88
S78
S68
S58
$48
S38
S28
S18
S8
2020
2021
¦ Budgetary Resources
2022
-Obligations
2023
Total Outlays+Disbursernents
2024
Assets—What EPA Owns and Manages
The EPA's assets totaled $105 billion at the end of FY 2024, an increase of $13.3 billion from the FY 2023 level, in
FY 2024, approximately 91 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 2024 and FY 2023 assets by major categories.
FY 2023 COMPOSITION OF ASSETS FY 2024 COMPOSITION OF ASSETS
Property, Plant,
Investments ^ and Equipment
13% \ (Net)
Other Assets
0%
Fund
with Treasury
81%
Loans
Receivable
2%
Prepayments
2%
Property, Plant,
Investments ant' Equipment
12% ~A (Net) ,
Fund Balance
with Treasury
79%
Advances and
Prepayments
2%
Loans
Receivable
6%
Other Assets
0%
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Liabilities—What EPA Owes
The EPA's liabilities were $12.3 billion at the end of FY 2024, an increase of $4.1 million from the FY 2023 level.
In FY 2024, the EPA's largest liability (56 percent) was debt. Additional categories include accounts payable,
federal employee benefits, and advances from others/deferred revenue. The graphs compare FY 2024 and FY
2023 liabilities by major categories.
FY 2024 COMPOSITION OF LIABILITIES
Debt
37%
FY 2023 COMPOSITION OF LIABILITIES
Other Accounts
12% _ Payable
1%
Advances
from Others
and
Deferred
Revenue
47%
Debt
56%
Accounts
Payable
0%
Advances
from Others
and
Deferred
Revenue
30%
Federal
Employee
Benefits
Other
12%
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 2024 and
FY 2023.
FY 2023 NET COST BY PROGRAM FY 2024 NET COST BY PROGRAM
State and
Tribal
Assistance
Agreements
47%
Superfund
En vi ro nmental
Programs &
Management
27%
Leaking
Underground
Storage Tanks
1%
&
Technology
7%
Leaking
Underground
Storage Tanks
1%
Science &
Technology
6%
Environmental
Programs &
Management
24%
Tribal
Assistance
Agreements
50%
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The EPA serves as a steward on behalf of the American people. The chart below presents four categories of
stewardship: land, research and development, infrastructure, and human capital. In FY 2024, the EPA devoted a
total of $7.8 billion to its stewardship activities.
FY 2023 STEWARDSHIP
FY 2024 STEWARDSHIP
Research &
Df
Research &
Development
Land
_0%
Human
Capital
0%
Infrastructure
90%
Infrastructure
92%
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
$6.4 billion in FY 2024 appropriated funds, from both regular appropriations and the Infrastructure
Investment and Jobs Act, for the SRFs. 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 of people.
• Research and development activities enable the EPA to identify and assess important risks to human
health and the environment. This critical research investment provides 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 includes 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 taking place.
• The agency's investment in human capital through training, public awareness, 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 human health and the environment. 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.
The OMB had 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-lnvoicing for federal interagency
agreements 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-lnvoicing. The agency is actively working with trading partners to close out or transfer all the existing IA
agreements to G-invoicing, to meet the FY 2026 mandate. The EPA is currently in the process of migrating the
agency financial system to the Office of Mission Support's AWS Customer Managed Cloud environment and
expects this migration to be completed by Q3 FY 2025. In addition, the EPA expects to facilitate the migration to
the new Travel System as part of GSA's ETSNext. EPA will take the latest version of the agency's financial system
underlying software, Momentum, and ensure updated travel related fields are part of our integrated system.
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 EPA has 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 ensures that agency
resources are used as intended, develops recommendations for improvements and cost savings, and provides
oversight and advisory assistance in helping the EPA carry out its objectives.
The OIG detects and prevents fraud, waste, and abuse to 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. 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 2024, the OIG identified key management challenges and internal control weaknesses and the audits,
evaluations, and investigations resulted in:
• More than $169.21 million in potential savings and recoveries;
• 132 recommendations for improvement; and
• 77 criminal, civil, or administrative enforcement actions.
Risk Management
The EPA continues to integrate the strategic reviews, risk management and internal control processes to provide
reasonable assurance that the agency's programs are operating effectively and free of fraud, waste, and abuse.
Annually, the agency evaluates progress towards strategic objectives and identifies the significant enterprise-
level risks that may impede progress. In assessing the enterprise-level risks, the agency considers relevant and
available information from internal control reviews, audit findings and recommendations from the Office of
Inspector General and the Government Accountability Office, and other partnering external stakeholders.
Annually, the EPA issues agency Enterprise Risk Management and Program Integrity guidance to assist the
program and regional offices in their risk management and internal controls. The guidance clearly stresses the
importance of risk management and internal controls to help prevent actions of fraud. The guidance sets out
the expectations of the senior leaders on how risk management should be performed and the benefits that the
agency will see if the reviews are done well. It lays out the expectations for internal control testing to ensure
that program and regional controls are operating and correctly established. As the agency continues to mature
its enterprise risk management efforts, it will be looking to incorporate more best practices as proposed by GAO
that will allow for risk management to become second nature at the EPA.
In FY 2024, the agency worked to evolve and enhance its risk management functions to create more cohesive
analysis and tools to help promote effective enterprise risk management efforts. During this transition, all
program offices and regions were advised to continue performing risk management and internal control review
activities. Each NPM and regional office attested to the soundness of internal controls within the organization
and provided a personal statement of assurance of the Administrator. Collectively, these statements support the
Administrator's overall statement of assurance on the agency's internal control system.
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One of the critical establishments in the area of risk management was the identification and designation of an
interim Chief Risk Officer. This executive is accountable for developing and enabling the efficient and effective
governance of significant risks, mitigation strategies and related opportunities, allowing for a clear path for the
agency to achieve operational excellence and missional goals. At the early stages of this position, this individual
will be responsible for developing the risk management framework for the agency, establishing the mechanisms
to adequately collect and address risks, and working with senior leadership to establish the control environment
to enable a culture of risk awareness.
As part of the agency's annual strategic review process, program and regional office worked collaboratively to
identify the risks to achieving the strategic objectives in EPA's Strategic Plan and the results inform EPA's
Enterprise Risk Profile. Additionally, in FY 2024, the agency conducted strategic reviews and risks assessments
on the objectives in the FY 2022-2026 Strategic Plan.
Grants Management
The EPA has two major grants management metrics, one for grant competition and 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 funds that are competed according to the policy. For
FY 2024, EPA competed 99.6% of new grant funds subject to the competition policy, which amounts to
$29,167,198,222.
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 2024, EPA closed out 87% of the awards that expired in 2023 and 97% of those that expired in
earlier years (data as of 9/30/24).
Grants Management Performance Measures for EPA
Performance Measure
Target
Progress in FY 2023
Progress in FY 2024
Percentage of grants closed
out
90%
83% closure of grants
that expired in 2022
87% closure of grants that expired
in 2023
99%
99% closure of grants
that expired in 2021 and
earlier
97% closure of grants that expired
in 2022 and earlier
Percentage of new grant funds
subject to the competition
policy that were competed
90%
68%
99.6%
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ANALYSIS OF SYSTEMS, CONTROLS, AND LEGAL
COMPLIANCE
Federal Managers' Financial Integrity Act fFMFIA)
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 2024, 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 identified one new material weakness. Subsequent to the agency's review, The EPA's OIG identified two
new material weaknesses during the FY 2024 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 2024 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 Transparencv Act
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) documentation of all associated
warnings in its statement of assurance.
19
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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, 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 the law.
The DATA Act 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 DATA Act 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 FY 2025, 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. As of FY 2024, the EPA
has no known violations of the Antideficiency Act for FY 2024.
Federal Financial Management Improvement ActfFFMIA)
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 2024 ANNUAL ASSURANCE STATEMENT
The U.S. Environmental Protection Agency's management is responsible for managing risk and maintaining
effective internal controls to meet the objectives of the Federal Managers' Financial Integrity Act.
In accordance with Section 2 of the FMFIA and the Office of Management and Budget's Circular A-123,
"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-123, the agency evaluated whether financial
management systems substantially comply with the FFMIA requirements.
Based on the EPA's and the Office of Inspector General's reviews, the agency has three new material
weaknesses. The EPA identified a material weakness related to the inadequacy of accounting treatment of
internal controls for new programs. The OIG identified two material weaknesses related to the Superfund
State Contracts accrual methodology and the accrual methodology related to Clean School Bus rebates. The
agency has completed several corrective actions and anticipates completing remaining corrective actions
for these material weaknesses in FY 2025. More information on the identified material weaknesses is
provided in Section III, "Other Accompanying Information" of this report.
As a result of the EPA's assessments, I can provide reasonable assurance that, except for the material
weaknesses described above, the agency's internal controls over operations are effective, and the EPA's
financial management systems conform to governmentwide standards as of September 30, 2024. The
agency's internal controls over financial reporting are operating effectively as well.
November 15. 2024
Date
Michael S. Regan
Administrator
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Section II
Financial Section
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EPA's Fiscal Year 2024 and 2023
Consolidated Financial Statements (With Restatement)
Financial Section
23
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Table of Contents
Principal Financial Statements
Notes to the Financial Statements
Note 1. Summary of Significant Accounting Policies
Note 2. Fund Balance with Treasury (FBWT)
Note 3. Cash and Other Monetary Assets
Note 4. Investments, Net
Note 5. Accounts Receivable, Net
Note 6. Inventory and Related Property, Net
Note 7. Loans Receivable, Net
Note 8. Accounts Payable
Note 9. Property, Plant, and Equipment, Net
Note 10. Debt
Note 11. Stewardship Property, Plant, and Equipment
Note 12. Liability to the General Fund for Custodial Assets
Note 13. Other Liabilities
Note 14. Leases
Note 15. Advances from Others and Deferred Revenue
Note 16. Commitments and Contingencies
Note 17. Funds from Dedicated Collections
Note 18. Environmental and Disposal Liabilities
Note 19. State Credits
Note 20. Preauthorized Mixed Funding Agreements
Note 21. Custodial Revenues and Accounts Receivable
Note 22. Statement of Budgetary Resources
Note 23. Imputed Financing
Note 24. Federal Employee Benefits Payable
Note 25. Non-Exchange Revenue, Statement of Changes in Net Position
Note 26. Reconciliation of Net Cost of Operations to Net Outlays (Restated)
Note 27. Amounts Held by Treasury
Note 28. Reclassified Financial Statements for Government-wide Reporting.
Note 29. Restatements
Required Supplementary Information (Unaudited)
Deferred Maintenance
Supplemental Combining Statement of Budgetary Resources
24
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Principal Financial Statements
United States Environmental Protection Agency
Consolidated Balance Sheet (Restated)
As of September 30, 2024 and 2023
(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 (Note 29)
Total Other Than Intragovernmental Assets (Note 29)
Total Assets (Note 29)
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 Salary, Leave and Benefits Payable (Note 24)
Pension and Post-Employment 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)
Funds from Other than Dedicated Collections (Note 29)
Total Unexpended Appropriations (Consolidated) (Note 29)
Cumulative Results of Operations
Funds from Dedicated Collections (Note 17)
Funds from Other than Dedicated Collections
Total Cumulative Results of Operations (Consolidated)
Total Net Position (Note 29)
Total Liabilities and Net Position (Note 29)
2024
83,384,431
12,737,366
8,104
2,019,234
98,149,135
10
436,106
6,025,415
540
757,995
109,927
7,329,993
105.479.128
302
6,881,726
141,995
379,168
224,535
7,627,726
59,574
186,754
40,359
42,809
3,556,940
774,656
4,661,092
12.288.818
61
83,687,121
83,687,182
10,079,989
(576,861)
9,503,128
93,190,310
105.479.128
(Restated)
2023
74,589,768
12,159,283
7,686
1,569,525
88,326,262
10
520,692
2,401,922
626
743,207
381,324
4,047,781
92.374.043
2,921
2,953,225
173,381
105,995
208,187
3,443,709
116,234
185,399
44,349
37,357
3,676,206
623,349
4,682,894
8.126.603
281
74,972,206
74,972,487
9,309,893
(34,940)
9,274,953
84,247,440
92.374.043
The accompanying notes are an integral part of these financial statements.
25
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United States Environmental Protection Agency
Consolidated Statement of Net Cost (Restated)
For the Fiscal Years Ending September 30, 2024 and 2023
(Dollars in Thousands)
(Restated)
2024 2023
COSTS
Gross Costs (Note 29)
Less: Earned Revenue
NET COST OF OPERATIONS (Notes 26 and 29)
$ 15,099,758 $
12,117,563
797.871
520.394
S 14.301.887 S
11.597.169
The accompanying notes are an integral part of these financial statements.
26
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United States Environmental Protection Agency
Statement of Net Cost by Major Program
For the Fiscal Year Ending September 30, 2024
(Dollars in Thousands)
State &
Environmental
Programs &
Management
Leaking
Underground
Storage Tanks
Science &
Technology
Superfund
Tribal
Assistance
Agreements
Other
Totals
Costs:
Gross Costs
WCF Elimination
$ 3,564,990
$ 90,953
$ 829,175
$ 2,020,970
$ 7,220,806
$ 1,814,001
(441.137)
$ 15,540,895
(441.137)
Total Costs
3.564.990
90.953
829.175
2.020.970
7.220.806
1.372.864
15.099.758
Less:
Earned Revenue
WCF Elimination
99,592
-
5,902
330,373
-
803,141
(441.137)
1,239,008
(441.137)
Total Earned Revenue
99.592
_
5.902
330.373
_
362.004
797.871
NET COST OF
OPERATIONS
S 3.465.398
S 90.953
S 823.273
S 1.690.597
S 7.220.806
S 1.010.860
S 14.301.887
United States Environmental Protection Agency
Statement of Net Cost by Major Program (Restated)
For the Fiscal Year Ending September 30, 2023
(Dollars in Thousands)
Environmental
Programs &
Management
Leaking
Underground
Storage Tanks
Science &
Technology
Superfund
(Restated)
State &
Tribal
Assistance
Agreements
Other
(Restated)
Totals
Costs:
Gross Costs (Note 29)
WCF Elimination
$ 3,152,262
$ 91,478
$ 799,818
$ 1,690,188
$5,501,463
$ 1,238,522
(356.168)
$ 12,473,731
(356.168)
Total Costs
3.152.262
91.478
799.818
1.690.188
5.501.463
882.354
12.117.563
Less:
Earned Revenue
WCF Elimination
37,771
-
4,711
239,104
-
594,976
(356.168)
876,562
(356.168)
Total Earned Revenue
37.771
_
4.711
239.104
_
238.808
520.394
NET COST OF
OPERATIONS
(Note 29)
S 3.114.491
S 91.478
S 795.107
S 1.451.084
S 5.501.463
S 643.546
S 11.597.169
The accompanying notes are an integral part of these financial statements.
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United States Environmental Protection Agency
Consolidated Statement of Changes in Net Position
For the Fiscal Year Ending September 30, 2024
(Dollars in Thousands)
Funds from
Funds from
Other Than
Dedicated
Dedicated
Consolidated
Collections
Collections
Totals
UNEXPENDED APPROPRIATIONS:
(Note 17)
Beginning Balance
$ 281
$ 74,602,484
$ 74,602,765
Adjustments
Corrections of Errors
-
369.722
369.722
Beginning Balance, as Adjusted
$ 281
$ 74,972,206
$ 74,972,487
Appropriations Received
-
20,963,713
20,963,713
Appropriations Transferred In/(Out)
-
(9,433)
(9,433)
Other Adjustments
(144)
(21,789)
(21,933)
Appropriations Used
(76)
(12.217.576)
(12.217.652)
Net Change in Unexpended Appropriations
(220)
8,714,915
8,714,695
Total Unexpended Appropriations
S 61
S 83.687.121
S 83.687.182
CUMULATIVE RESULTS OF OPERATIONS:
Beginning Balance
$ 9,309,893
$ (34,940)
$ 9,274,953
Other Adjustments
-
(24,931)
(24,931)
Appropriations Used
76
12,217,576
12,217,652
Non-Exchange Revenue (Note 25)
2,252,044
-
2,252,044
Transfers-In/(Out) Without Reimbursements
259,174
(238,732)
20,442
Imputed Financing (Note 23)
48,681
244,985
293,666
Other
-
(228.811)
(228.811)
Net Cost of Operations
(1.789.879)
(12.512.008)
(14.301.887)
Net Change in Cumulative Results of Operations
770,096
(541,921)
228,175
Total Cumulative Results of Operations
10,079,989
(576,861)
9,503,128
Net Position
S 10.080.050
S 83.110.260
S 93.190.310
The accompanying notes are an integral part of these financial statements.
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United States Environmental Protection Agency
Consolidated Statement of Changes in Net Position (Restated)
For the Fiscal Year Ending September 30, 2023
(Dollars in Thousands)
Funds from
Funds from
Other Than
(Restated)
Dedicated
Dedicated
Consolidated
Collections
Collections
Totals
UNEXPENDED APPROPRIATIONS:
(Note 17)
Beginning Balance
$ 178
$ 62,618,529
$ 62,618,707
Corrections of Errors
-
-
-
Beginning Balance, as Adjusted
$ 178
$ 62,618,529
$ 62,618,707
Appropriations Received
-
23,138,776
23,138,776
Appropriations Transferred In/(Out)
-
(1,500)
(1,500)
Other Adjustments
-
(34,496)
(34,496)
Appropriations Used (Note 29)
103
(10.749.103)
(10.749.000)
Net Change in Unexpended Appropriations
103
12,353,677
12,353,780
Total Unexpended Appropriations (Note 29)
S 281
S 74.972.206
S 74.972.487
CUMULATIVE RESULTS OF OPERATIONS:
Beginning Balance
$ 7,744,123
$ 255,033
$ 7,999,156
Other Adjustments
-
(52,084)
(52,084)
Appropriations Used (Note 29)
(103)
10,749,103
10,749,000
Non-Exchange Revenue (Note 25)
1,880,795
-
1,880,795
Transfers-In/(Out) Without Reimbursements
1,195,958
(1,172,693)
23,265
Imputed Financing (Note 23)
38,002
203,655
241,657
Other
-
30.333
30.333
Net Cost of Operations (Note 29)
(1.548.882)
(10.048.287)
(11.597.169)
Net Change in Cumulative Results of Operations
1,565,770
(289,973)
1,275,797
Total Cumulative Results of Operations
9,309,893
(34,940)
9,274,953
Net Position (Note 29)
S 9.310.174
S 74.937.266
S 84.247.440
The accompanying notes are an integral part of these financial statements.
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United States Environmental Protection Agency
Combined Statement of Budgetary Resources
For the Fiscal Years Ending September 30, 2024 and 2023
(Dollars in Thousands)
2024
2023
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
Non-
Budgetary
Credit Reform
Financing
Account
Budgetary
Non-
Budgetary
Credit Reform
Financing
Account
$ 59,925,869 $
23,494,902
781.379
1,328,973
688.467
$ 57,282,366 $
25,003,271
639.195
2,884,452
374.140
S 84.202.150 S 2.017.440 S 82.924.832 S 3.258.592
$ 53,856,080 $ 2,017,440 $ 23,652,487 $ 3,258,592
30,229,126
601
116.343
30,346,070
59,166,962
600
104.783
59,272,345
S 84.202.150 S 2.017.440 S 82.924.832 S 3.258.592
$ 14,202,599
(701.232)
$ 13.501.367
$ 14,155,184
(1.568.936)
$ 12.586.248
$ 3.925.793
$ 1.379.374
The accompanying notes are an integral part of these financial statements.
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United States Environmental Protection Agency
Statement of Custodial Activity
For the Fiscal Years Ending September 30, 2024 and 2023
(Dollars in Thousands)
2024
2023
Total Custodial Revenue:
Sources of Cash Collections:
Fines and Penalties
$
102,961
$
85,601
Other
(2.721)
(25.935)
Total Cash Collections
100,240
59,666
Accrual Adjustments
43.716
29.999
Total Custodial Revenue (Note 21)
$
143.956
$
89.665
Disposition of Collections:
Transferred to Others (General Fund)
$
100,240
$
106,802
Increases/Decreases in Amounts to be Transferred
43.716
(17.137)
Total Disposition of Collections
$
143.956
$
89.665
Custodial Revenue Less Disposition of Collections
$
-
$
-
The accompanying notes are an integral part of these financial statements.
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United States Environmental Protection Agency
Notes to the Financial Statements
For the Fiscal Years Ending September 30, 2024 and 2023
(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 2024 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 30, 2024, 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 21 st
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 2024 and 2023 to finance the administrative portion of the program.
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United States Environmental Protection Agency
Notes to the Financial Statements
For the Fiscal Years Ending September 30, 2024 and 2023
(Dollars in Thousands)
EPA reestimates the risk on each individual loan annually. Proceeds issued by EPA generally cannot exceed 49% of
eligible project costs, but under certain circumstances small communities can receive up to 80%. 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.
II. 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.
III. 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).
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United States Environmental Protection Agency
Notes to the Financial Statements
For the Fiscal Years Ending September 30, 2024 and 2023
(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.
34
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United States Environmental Protection Agency
Notes to the Financial Statements
For the Fiscal Years Ending September 30, 2024 and 2023
(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 e-Manifest 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 TSCA Fund 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).
35
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United States Environmental Protection Agency
Notes to the Financial Statements
For the Fiscal Years Ending September 30, 2024 and 2023
(Dollars in Thousands)
F. Fund Balance with Treasury (See Note 2)
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 Note 4)
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.
36
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United States Environmental Protection Agency
Notes to the Financial Statements
For the Fiscal Years Ending September 30, 2024 and 2023
(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. 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 are tangible assets that have an estimated useful life of 2 or more years, are not intended for sale in
the ordinary course of business and are intended to be used or available for use by the entity.
The EPA accounts for leases in accordance with SFFAS 54. Federal lessees recognize a lease liability and a leased
asset at the commencement of the lease term, unless it meets any of the scope exclusions or the definition/criteria of
short-term leases, or contracts or agreements that transfer ownership, or intragovernmental leases. The lease liability
is measured at the present value of payments expected to be made during the lease term. The future lease payments are
discounted using the estimated rate that would be charged for borrowing the lease payment amounts for the lease term.
The amortization of the discount on the lease liability is calculated and recognized as interest expense for the period.
Payments are allocated first to the accrued interest liability and then to the lease liability.
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
37
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United States Environmental Protection Agency
Notes to the Financial Statements
For the Fiscal Years Ending September 30, 2024 and 2023
(Dollars in Thousands)
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.
Real property consists of land, buildings, capital and leasehold improvements, property owned by the reporting entity
in the hands of or leased to others, land rights that do not meet the definition of a lease and contracts or agreements that
transfer ownership. 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, modifications, and
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 (See Note 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 Salary, Leave and Benefits Payable". Sick leave earned but not taken is not
accrued as a liability; it is expensed as it is used.
38
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United States Environmental Protection Agency
Notes to the Financial Statements
For the Fiscal Years Ending September 30, 2024 and 2023
(Dollars in Thousands)
Q. Retirement Plan (See Note 23)
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.
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 advances from BP and 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.
39
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United States Environmental Protection Agency
Notes to the Financial Statements
For the Fiscal Years Ending September 30, 2024 and 2023
(Dollars in Thousands)
U. Reclassifications and Comparative Figures
Certain reclassifications have been made to the prior year's financial statements to enhance comparability with the
current year's financial statements and footnotes in accordance with Office of Management and Budget (OMB)
Circular No. A-13 6, Financial Reporting Requirements revised May 30, 2024. 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.
Note 2. Fund Balance With Treasury (FBWT)
Fund Balance with Treasury as of September 30, 2024 and 2023 consists of the following:
2024 2023
Entity
Assets
Non-Entity
Assets
Total
Entity
Assets
Non-Entity
Assets
Total
Trust Funds:
Superfund
$ 26,546
$
$ 26,546
$ (56,699)
$
-
$ (56,699)
LUST
23,778
-
23,778
20,603
-
20,603
Oil Spill & Misc.
17,565
-
17,565
20,556
-
20,556
Revolving Funds:
FIFRA/T olerance
34,713
-
34,713
30,826
-
30,826
Working Capital
158,800
-
158,800
116,764
-
116,764
E-Manifest
54,986
-
54,986
45,425
-
45,425
NRDA
2,826
-
2,826
2,544
-
2,544
WIFIA
13,153
-
13,153
17,441
-
17,441
Appropriated
82,393,381
-
82,393,381
73,765,838
-
73,765,838
Other Fund Types
653.009
5.674
658.683
622.876
3.594
626.470
Total
S 83.378.757
S 5.674
S 83.384.431
S 74.586.174
$
3.594
S 74.589.768
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: 2024 2023
Unobligated Amounts in Fund Balance:
Available for Obligation $ 30,239,849 $ 59,166,962
Unavailable for Obligation 122,602 114,325
Net Receivables from Invested Balances (9,226,625) (8,822,692)
Balances in Treasury Trust Fund (95,273) (182,653)
Obligated Balance not yet Disbursed 61,700,498 23,705,591
Non-Budgetary FBWT 643.380 608.235
Total S 83.384.431 S 74.589.768
40
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United States Environmental Protection Agency
Notes to the Financial Statements
For the Fiscal Years Ending September 30, 2024 and 2023
(Dollars in Thousands)
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, 2024 and 2023, 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.
Note 3. Cash and Other Monetary Assets
As of September 30, 2024 and 2023, the balance in the imprest fund was $10.
Note 4. Investments, Net
As of September 30, 2024 and 2023, investments consist of the following:
Amortized
Amortization (Premium) Interest Investments, Market
Cost Method Discount Receivable Net Value
Intragovernmental
Securities:
Non-
Marketable FY 2024 $ 13,166,439 Straight Line 431,532 2,459 12,737,366 $ 12,737,366
Non-
Marketable FY 2023 $ 12,438,324 Straight Line 289,586 10,545 12,159,283 $ 12,159,283
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.
41
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United States Environmental Protection Agency
Notes to the Financial Statements
For the Fiscal Years Ending September 30, 2024 and 2023
(Dollars in Thousands)
Note 5. Accounts Receivable, Net
Accounts Receivable as of September 30, 2024 and 2023, consist of the following:
2024 2023
Intragovernmental:
Accounts & Interest Receivable
$
9,006
$
8,938
Less: Allowance for Uncollectible Accounts
(902)
(1.252)
Total
$
8.104
$
7.686
Other Than Intragovernmental:
Unbilled Accounts Receivable
Accounts & Interest Receivable
Less: Allowance for Uncollectible Accounts
Total
2024
2023
$ 100,293 $ 110,567
2,536,158 2,647,893
(2.200.345) (2.237.768)
$ 436.106 $ 520.692
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, 2024 and 2023, consist of the following:
2024 2023
Inventory Purchased for Resale $ MQ $ 626
Total $ 540 $ 626
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 2024 and 2023, the Agency received borrowing
authority of $3 billion and $6 billion respectively for the non-subsidy portion of loan proceeds disbursed. For the fiscal
years ended September 30, 2024 and 2023, the Agency closed $3 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,
2024 and 2023, the WIFIA program has incurred $45 million and $16 million in administrative expenses, respectively.
42
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United States Environmental Protection Agency
Notes to the Financial Statements
For the Fiscal Years Ending September 30, 2024 and 2023
(Dollars in Thousands)
Obligated after FY 1991
Foreclosed
Property/
Value of Assets
2024 Loans
Interest and
Allowance
Allowance for Related to
Receivable,
Fees
for
Subsidy Direct
Direct Loan Program
Gross
Receivable
Loan Losses
Cost Loans, Net
WIFIA
$
7,639,399
5,028
-
(1,619,012) $ 6,025,415
Foreclosed
Property/
Value of Assets
2023 Loans
Interest and
Allowance
Allowance for Related to
Receivable,
Fees
for
Subsidy Direct
Direct Loan Program
Gross
Receivable
Loan Losses
Cost Loans, Net
WIFIA
$
3,261,931
1,398
-
(861,407) $ 2,401,922
Total Amount of Direct Loans Disbursed (Post-1991)
Direct Loan Program 2024 2023
WIFIA $ 4,390,071 $ 1,594,232
Subsidy Expense for Direct Loans by Program and Component
Subsidy Expense for New Direct Loans Disbursed
2024 Interest Fees and Other Other Subsidy
Direct Loan Program Differential Defaults Collections Costs Total
WIFIA $ - - - (36,887) $ (36,887)
2023 Interest Fees and Other Other Subsidy
Direct Loan Program Differential Defaults Collections Costs Total
WIFIA $ - - - (8,687) $ (8,687)
Modifications and Reestimates
2024 Interest
Total Rate Technical FAI Total
Direct Loan Program Modifications Reestimates Reestimates Reestimates Reestimates
WIFIA $ - 115,543 730,933 - $ 846,476
2023 Interest
Total Rate Technical FAI Total
Direct Loan Program Modifications Reestimates Reestimates Reestimates Reestimates
WIFIA $ - 76,295 461,383 - $ 537,678
43
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United States Environmental Protection Agency
Notes to the Financial Statements
For the Fiscal Years Ending September 30, 2024 and 2023
(Dollars in Thousands)
Total Direct Loans Subsidy Expense
Direct Loan Program 2024 2023
WIFIA $ 36,887 $ 8,687
Budget Subsidy Rates for Direct Loans for the Current Year Cohort
2024 Interest Fees and Other Other Subsidy
Direct Loan Program Differential Defaults Collections Costs Total
WIFIA 0% 07% 0% 0% 0.7%
2023 Interest Fees and Other Other Subsidy
Direct Loan Program Differential Defaults Collections Costs Total
WIFIA 0% 0.73% 0% 0% 0.73%
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
2024
2023
Beginning Balance of the Subsidy Allowance
$
(861,407) $
(392,448)
Add: Subsidy Expense for Direct Loans Disbursed During the Reporting Years
by Component
Other Subsidy Costs
Reversal of PY subsidy costs
(36,887)
(8,688)
3.815
Total of the Above Subsidy Expense Components
$
(36,887) $
(4,873)
Adjustments
Loan Modifications
Subsidy Allowance Amortization
Ending Balance of the Subsidy Cost Allowance Before Reestimates
6,996
118.762
(772,536)
73.592
(323,729)
Add or Subtract Subsidy Reestimates by Component
Interest Rate Reestimates
Technical/Default Reestimates
Total of the Above Reestimate Components
Ending Balance of the Subsidy Cost Allowance
$
$
(115,543)
(730.933)
(846.476) $
(1.619.012) S
(76,295)
(461.383)
(537.678)
(861.407)
44
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United States Environmental Protection Agency
Notes to the Financial Statements
For the Fiscal Years Ending September 30, 2024 and 2023
(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 2024 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.
20242023
Beginning balance of loans receivable, net
$ 2,401,922 $
1,291,508
Add loan disbursements
4,390,071
1,594,232
Less principal and interest payments received
(66,859)
(46,601)
Add interest accruals
57,861
32,125
Add fees accrued
25
(384)
Add upward reestimates
(1,397,500)
(687,880)
Less downward reestimates
1,224,876
514,526
Loan modifications
6,996
Subsidy allowance
(591.977)
(295.604)
Ending balance of loans receivable, net
X 6.025.415 X
2.401.922
Note 8. Accounts Payable
Accounts Payable are current liabilities and consist of the following amounts as of September 30, 2024 and 2023:
Covered by Budgetary
Resources
2024 2023
Intragovernmental:
Accounts Payable $ 302 $ 16
Disbursements in Transit - 2.905
Total S 302 S 2.921
2024 2023
Other Than Intragovernmental:
Accounts Payable $ 41,489 $ 53,978
Advances Payable 4 4
Interest Payable 15 24
Disbursements in Transit 18.066 62.228
Total X 59.574 X 116.234
45
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United States Environmental Protection Agency
Notes to the Financial Statements
For the Fiscal Years Ending September 30, 2024 and 2023
(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, 2024, PP&E Cost consisted of the following:
2024
EPA-
Contractor
Land
Held
Software
Software
Held
and
Capital
Equipment
(Production)
(Development)
Equipment
Buildings
Leases
Total
Balance,
Beginning of
Year
$ 332,249
$ 440,896
$ 120,546
$ 36,305
$ 882,114
$ 24,485
$ 1,836,595
Additions
17,943
-
16,954
1,587
370
-
36,854
Dispositions
(16,291)
-
-
(1,587)
-
-
(17,878)
Revaluations
164
-
18.370
(19.759)
16.457
181
15.413
Balance,
September
S 334.065
S 440.896
S 155.870
S 16.546
S 898.941
S 24.666
S 1.870.984
30,2024
As of September 30, 2024, PP&E Accumulated Depreciation consisted of the following:
2024
EPA-
Contractor
Land
Held
Software
Software
Held
and
Capital
Eauipment
(Production)
(Development)
Equipment
Buildings
Leases
Balance,
Beginning of
Year
$ 240,636
$ 439,714
$
$
14,759
$ 374,816
$ 23,463
Dispositions
(14,508)
-
-
20
-
-
Revaluations
4,088
-
-
(5,011)
(3,742)
(68)
Depreciation
Expense
17.297
7
-
221
20.480
817
Balance,
September
S 247.513
S 439.721
S
$
9.989
S 391.554
S 24.212
30,2024
Total
(14,488)
(4,733)
38,822
46
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United States Environmental Protection Agency
Notes to the Financial Statements
For the Fiscal Years Ending September 30, 2024 and 2023
(Dollars in Thousands)
As of September 30, 2024, PP&E, Net consisted of the following:
2024
EPA- Contractor Land
Held Software Software Held and Capital
Equipment (Production) (Development) Equipment Buildings Leases Total
Balance,
September X 86.552 X 1.175 X 155.870 X 6.557 X 507.387 X 454 X 757.995
30,2024
As of September 30, 2023, PP&E Cost consisted of the following:
2023
EPA-
Held
Software
Software
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 $ 440,896 $
13,543
(13,489)
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
X 332.249 X 440.896 X 120.546 X 36.305 X 882.114 X 24.485 X 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 X 240.636 X 439.714 X X 14.759 X 374.816 X 23.463 X 1.093.388
30,2023
47
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United States Environmental Protection Agency
Notes to the Financial Statements
For the Fiscal Years Ending September 30, 2024 and 2023
(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
EauiDment
(Production)
(Development)
EauiDment
Buildings
Leases
Total
Balance,
September
S 91.613
S 1.182
S 120.546
S 21.546
S 507.298
S 1.022
S 743.207
30,2023
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, 2024 and 2023, the EPA had debt due to Treasury consisting
entirely of funds borrowed to finance the non-subsidy portion of the WIFIA Direct Loan Program:
2023 2024
Beginning Net Ending Net Ending
Balance Borrowing Balance Borrowing Balance
Debt to the
Treasury $ 1.557.180 $ 1.396.045 X 2.953.225 $ 3.928.501 S 6.881.726
See Note 1 paragraph O for additional information.
48
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United States Environmental Protection Agency
Notes to the Financial Statements
For the Fiscal Years Ending September 30, 2024 and 2023
(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, 2024 and 2023, the Agency possessed the following land and land rights:
Superfund Sites with Easements:
Beginning Balance
Additions
Ending Balance
S iiperfund Sites with Land Acquired:
Beginning Balance
Additions
Withdrawals
Ending Balance
2024
2023
48
47
2
1
50
48
32
33
2
-
(1)
(1)
33
32
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,
2024 and 2023, custodial liability is approximately $379,168 and $105,995 respectively.
49
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United States Environmental Protection Agency
Notes to the Financial Statements
For the Fiscal Years Ending September 30, 2024 and 2023
(Dollars in Thousands)
Note 13. Other Liabilities
Other Liabilities consist of the following as of September 30, 2024:
Covered by
Budgetary
Resources
Other Liabilities - Intragovernmental:
Current
Employer Contributions & Payroll Taxes
Other Accrued Liabilities
Non-Current
Unfunded FECA Liability
Unfunded Unemployment Liability
Payable to Treasury Judgement Fund
Total Intragovernmental
Not Covered by
Budgetary
Resources
15,592 $
178,429
194.021 $_
8,442
72
22,000
30.514 $_
Total
15,592
178,429
8,442
72
22,000
224.535
Other Liabilities - Other Than Intragovernmental:
Current
Liability for Deposit Funds, Other Than
Intragovernmental
Other Accrued Liabilities
Grant Liabilities
Accrued Funded Payroll and Benefits
Capital Lease Liabilities
Direct Loans Subsidy Liability
Liability for Clearing Accounts
Total Other Than Intragovernmental
$ 907 $ 4,133 $ 5,040
144,687 - 144,687
572,391 - 572,391
49,821 - 49,821
310 310
1,169 1,169
- 1.238 1.238
S 767.806 S 6.850 S 774.656
50
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United States Environmental Protection Agency
Notes to the Financial Statements
For the Fiscal Years Ending September 30, 2024 and 2023
(Dollars in Thousands)
Other Liabilities consist of the following as of September 30, 2023:
Covered by
Budgetary
Resources
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
177.054
Not Covered by
Budgetary
Resources
9,653 $
167,401
769
8,292
72
22.000
31.133
Total
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
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, 2024 and 2023, are as follows:
Capital Leases:
2024 2023
Summary of Assets Under Capital Lease:
Real Property $ 24.666 $ 24.485
Total 24.666 24.485
Accumulated Amortization $ 24.212 $ 23.464
51
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United States Environmental Protection Agency
Notes to the Financial Statements
For the Fiscal Years Ending September 30, 2024 and 2023
(Dollars in Thousands)
The EPA has one capital lease for land and buildings housing scientific laboratories. This lease includes abase 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 Capital Leases
2025 $ 335
Total Future Minimum Lease Payments 335
Less: Imputed Interest (25)
Net Capital Lease Liability 310
Liabilities not Covered by Budgetary Resources S 310
Note 15. Advances from Others and Deferred Revenue
As of September 30,2024 Advances from Others and Deferred Revenue consist of the following:
Other Than Intragovernmental:
Cashout Advances, Superfund
Unearned Advances
Total
2024 2023
$
3,394,211
$
3,544,466
162.729
131.740
$
3.556.940
$
3.676.206
Cashout advances are funds received or receivable 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.
52
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United States Environmental Protection Agency
Notes to the Financial Statements
For the Fiscal Years Ending September 30, 2024 and 2023
(Dollars in Thousands)
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.
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, 2024, there were no accrued liabilities for commitments and potential loss contingencies. As of
September 30, 2023, there were no accrued liabilities for commitments and potential loss contingencies.
Estimated Estimated
Accrued Range of Loss- Range of Loss-
Liabilities Lower End Upper End
FY 2024
Legal Contingencies:
Reasonably Possible $ - $ 8,065 $ 8,065
FY 2023
Legal Contingencies:
Reasonably Possible $ - $ 7,522 $ 7,522
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, 2024, legal claims exist for a claim made by an Environmental Restoration contractor for
settlement costs of approximately $2.6 million 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 $2.7 million for the amount resolved through settlement with the state of New Mexico. The likelihood
of an unfavorable outcome for EPA in these two matters is reasonably possible, but not probable.
B. Flint, Michigan
The EPA has received claims from over 9,400 individuals under the Federal Tort Claims Act for alleged personal
injuries and property damage caused by the EPA's alleged negligence related to the water health crisis in Flint,
Michigan. There is currently no estimated loss amount related to the water health crisis; the chance of an unfavorable
outcome for EPA is only reasonably possible, not probable.
53
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United States Environmental Protection Agency
Notes to the Financial Statements
For the Fiscal Years Ending September 30, 2024 and 2023
(Dollars in Thousands)
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
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, 2024, there are two cases related to Superfund; both are considered to have
a reasonably possible likelihood of an unfavorable outcome for EPA. The first is August Mack Environmental, Inc.
v. EPA for $2.7 million. 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 then 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.
The second case related to Superfund is Prudent Technologies, Inc. v. The United States, a Contracts Dispute Act
case on a Superfund contract for remediation of residential yards. There is currently no estimated loss amount related
to this case; the chance of an unfavorable outcome for EPA is only reasonably possible, not probable.
D. Environmental Liabilities
As of September 30, 2024, there are no cases pending against the EPA that are reported under Environmental
Liabilities for which the likelihood of an unfavorable outcome for EPA has been determined to be either probable or
reasonably possible.
E. Other Pending Cases
As of September 30, 2024, several legal claims exist for which the potential loss could not be determined; all have a
reasonably possible likelihood of an unfavorable outcome for EPA.
° United Affiliates Corp., et al. v. United States - Claim involves an alleged taking of property for which
plaintiff is seeking just compensation under the 5th Amendment. It arises from EPA's withdrawal of
certification for certain disposal sites of mining waste.
° Alaska v. United States - Alaska is seeking damages regarding allegations that EPA's 2023 Final
Determination issued under the Clean Water Act Section 404(c) regarding the Pebble Deposit in Alaska
constitutes a breach of contract and breach of covenant of good faith.
° Northern Dynasty Minerals, Ltd., Pebble Limited Partnership, Pebble West Claims Corp., and Pebble
East Claims Corp. v. United States - Plaintiffs (collectively, "PLP") allege that EPA's 2023 Final
Determination issued under the Clean Water Act Section 404(c) regarding the Pebble Deposit constitutes a
categorical taking, or in the alternative, an ad hoc permanent taking, because it blocks any economically viable
use of PLP's mineral rights. The complaint also alleges that the action constitutes a temporary taking even if it
were to be withdrawn or vacated. The government plans to file a motion to dismiss.
54
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United States Environmental Protection Agency
Notes to the Financial Statements
For the Fiscal Years Ending September 30, 2024 and 2023
(Dollars in Thousands)
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. EPA has a $22 million liability
to the Treasury Judgment Fund for a payment made by the fund to settle a contract dispute claim.
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 2024, and $3 million in FY 2023 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 2024, and $8 million
in the FY 2023.
55
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United States Environmental Protection Agency
Notes to the Financial Statements
For the Fiscal Years Ending September 30, 2024 and 2023
(Dollars in Thousands)
Note 17. Funds from Dedicated Collections
Environmental
Balance Sheet as of September 30,2024
Services
LUST
SuDerfund
Intragovernmental Assets
Fund Balance with Treasury
$ 637,122 $
23,778 :
$ 293,386
Investments, Net
-
1,577,996
11,159,370
Accounts Receivable, Net
-
82,561
9,384,997
Advances and Prepayments
-
97
14.779
Total Intragovernmental Assets
637,122
1,684,432
20,852,532
Other Than Intragovernmental Assets
Accounts Receivable, Net
-
-
298,398
Loans Receivable, Net
-
-
-
General Property, Plant, and Equipment, Net
-
33
50,292
Advances and Prepayments
-
-
727
Total Other Than Intragovernmental Assets
-
33
349,417
Total Assets
$ 637.122 $
1.684.465 1
$ 21.201.949
Intragovernmental Liabilities
Accounts Payable
$ - $
82,563
$ 9,169,950
Debt
-
-
-
Advances from Others and Deferred Revenue
-
-
129,470
Liability to the General Fund for Custodial Assets
-
-
22,362
Other Liabilities
-
186
59,420
Total Intragovernmental Liabilities
-
82,749
9,381,202
Other Than Intragovernmental Liabilities
Accounts Payable
-
-
22,290
Federal Employee Salary, Leave and Benefits Payable
-
17
1,077
Pension and Post-Employment Benefits Payable
-
-
7,257
Advances from Others and Deferred Revenue
-
-
53,555
Deferred Revenue
-
-
3,394,211
Other Liabilities
-
6,414
86,783
Total Other Than Intragovernmental Liabilities
_
6,431
3,565,173
Total Liabilities
$ - S
89,180
$ 12,946,375
Unexpended Appropriations
$ - $
$
Cumulative Results of Operations
637.122
1.595.285
8.255.574
Total Liabilities and Net Position
$ 637.122 $
1.684.465 1
$ 21.201.949
Other Funds
from Dedicated
Collections
Total Funds
from Dedicated
Collections
Combined
Eliminations
between
Dedicated
Collections
Funds
Total Funds
from Dedicated
Collections
Consolidated
: 125,979 $
1,080,265
-
12,737,366
203
9,467,761
941
15.817
127,123
23,301,209
2,235
300,633
22,368
72,693
-
727
24,603
374,053
151.726 $
23.675.262
i - $
9,252,513
2,738
132,208
-
22,362
3,573
63,179
6,311
9,470,262
1,421
23,711
107
1,201
-
7,257
42,170
95,725
-
3,394,211
3,719
96,916
47,417
3,619,021
! 53,728 $
13,089,283
i 61 $
61
97.937
10.585.918
151.726 $
23.675.262
(266,839) $
813,426
-
12,737,366
(9,465,715)
2,046
-
15.817
(9,732,554)
13,568,655
-
300,633
_
72,693
-
727
-
374,053
(9.732.554) $
13.942.708
J (9,226,625) $
25,888
_
132,208
-
22,362
-
63,179
(9,226,625)
243,637
_
23,711
-
1,201
-
7,257
-
95,725
-
3,394,211
-
96,916
-
3,619,021
; (9,226,625) $
3,862,658
$ - $ 61
(505.929') 10.079.989
$ (9.732.554) $ 13.942.708
56
-------
United States Environmental Protection Agency
Notes to the Financial Statements
For the Fiscal Years Ending September 30, 2024 and 2023
(Dollars in Thousands)
Statement of Net Cost as of September 30,2024
Gross Program Costs
Less: Earned Revenues
Net Costs of Operations
Statement of Changes in Net Position as of
September 30,2024
Unexpended Appropriations
Beginning Balance
Other Adjustments
Appropriations Used
Total Unexpended Appropriations
Cumulative Results of Operations
Beginning Balance
Appropriations Used
Excise tax & customs
Misc. taxes & receipts
Total Other Than Intragovernmental Non-Exchange
Revenue
Transfers-In/(Out) Without Reimbursement
Imputed Financing
Net Cost of Operations
Net Change in Cumulative Results of Operations
Cumulative Results of Operations: Ending
Net Position, End of Period
Eliminations
Total Funds
between
Total Funds
Other Funds
from Dedicated
Dedicated
from Dedicated
Environmental
from Dedicated
Collections
Collections
Collections
Services
LUST
SuDerfund
Collections
Combined
Funds
Consolidated
$ - $
90,953 !
S 2,020,971
$ 109,168
$ 2,221,092 !
B
$ 2,221,092
(232)
-
596.641
101.072
697.481
(266.268)
431.213
S 232 $
90.953 !
15 1.424.330
S 8.096
S 1.523.611 <
S 266.268
S 1.789.879
$ - $
$
$ 281
$ 281 J
&
$ 281
-
-
-
(144)
(144)
-
(144)
-
-
-
(76)
(76)
-
(76)
S/5
I
S/5
j
6
$ 61
$ 61 J
5
$ 61
$ 604,057 $
1,399,561 !
S 7,458,740
$ 86,624
$ 9,548,982 !
£ (239,089)
$ 9,309,893
-
-
-
76
76
-
76
-
208,371
1,405,389
-
1,613,760
-
1,613,760
33.297
78.008
526.059
1.492
638.856
(572)
638.284
33,297
286,379
1,931,448
1,492
2,252,616
(572)
2,252,044
-
-
241,387
17,787
259,174
-
259,174
-
298
48,329
54
48,681
-
48,681
(232)
(90,953)
(1,424,330)
(8,096)
(1,523,611)
(266,268)
(1,789,879)
33.065
195.724
796.834
11.313
1.036.936
(266.840)
770.096
637,122
1,595,285
8,255,574
97,937
10,585,918
(505,929)
10,079,989
S 637.122 $
1.595.285 <
S 8.255.574
S 97.998
S 10.585.979 <
S (505.929*
S 10.080.050
57
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United States Environmental Protection Agency
Notes to the Financial Statements
For the Fiscal Years Ending September 30, 2024 and 2023
(Dollars in Thousands)
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
SuDerfund
Collections
Combined
Funds
Consolidated
Intragovernmental Assets
Fund Balance with Treasury
$ 604,057 $
20,603
$ 182,369
$ 118,170
$ 925,199 3
5 (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 Assets
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 Assets
-
47
463,370
23,416
486,833
-
486,833
Total Assets
$ 604.057 $
1.497.917 !
S 20.163.590
$ 142.711
$ 22.408.275 S
i (9.061.781)
$ 13.346.494
Intragovernmental Liabilities
Accounts Payable
$ - $
91,439 !
S 8,761,203
$
$ 8,852,642 $
: (8,822,692)
$ 29,950
Advances from Others and Deferred 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
1,642
51,578
-
51,578
Total Intragovernmental Liabilities
-
91,563
8,989,247
6,115
9,086,925
(8,822,692)
264,233
Other Than Intragovernmental Liabilities
Accounts Payable
-
66
31,758
1,491
33,315
-
33,315
Federal Employee Salary, Leave and Benefits
-
12
792
91
895
-
895
Payable
Pension and Post-Employment Benefits Payable
-
-
7,974
-
7,974
-
7,974
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
3,833
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
$ 12,704,850
$ 55,806
$ 12,859,012 !
S (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
(239.089s)
9.309.893
Total Liabilities and Net Position
$ 604.057 $
1.497.917 !
S 20.163.590
$ 142.711
$ 22.408.275 S
i (9.061.781)
$ 13.346.494
58
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United States Environmental Protection Agency
Notes to the Financial Statements
For the Fiscal Years Ending September 30, 2024 and 2023
(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
SuDerfund
Collections
Combined
Funds
Consolidated
Gross Program Costs
$- $
91,478 !
S 1,690,189
$ 104,605 $
1,886,272 J
& -$
1,886,272
Less: Earned Revenues
(247)
_
477.469
98.533
575.755
(238.365)
337.390
Net Costs of Operations
S 247 S
91.478 !
K 1.212.720 S
i 6.072
S 1.310.517 <
K 238.365
S 1.548.882
Statement of Changes in Net Position as of
September 30,2023
Unexpended Appropriations
Beginning Balance
$ - $
<
S (113)
$ 291
00
r-
&
$ 178
Appropriations Used
-
-
113
(10)
103
.
103
Total Unexpended Appropriations
$ - $
<
S
$ 281
$ 281 5
6
$ 281
Cumulative Results of Operations
Beginning Balance
$ 572,474 $
1,235,638 !
S 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
S 604.057 S
1.399.561 !
K 7.458.740
S 86.905
S 9.549.263 f
S (239.089)
S 9.310.174
-------
United States Environmental Protection Agency
Notes to the Financial Statements
For the Fiscal Years Ending September 30, 2024 and 2023
(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.
Hi. 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.
60
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United States Environmental Protection Agency
Notes to the Financial Statements
For the Fiscal Years Ending September 30, 2024 and 2023
(Dollars in Thousands)
Hi. 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 27 sites for which it is responsible for cleanup 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) Cleanup 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 cleanup 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 cleanup cost as a liability and record changes to the estimate in
subsequent years.
As of September 30, 2024, the EPA has no sites that require cleanup stemming from its activities.
The EPA has 27 sites for which it is required to fund the environmental cleanup. As of September 30, 2024, the
estimated costs for site cleanup were $43 million unfunded, and $292 thousand funded. For September 30, 2023 the
estimated cost for site cleanup was $37 million unfunded, with $100 thousand funded. Since the cleanup costs
associated with permanent closure were not primarily recovered through user fees, the EPA has elected to recognize
the estimated total cleanup cost as a liability and record changes to the estimate in subsequent years.
61
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United States Environmental Protection Agency
Notes to the Financial Statements
For the Fiscal Years Ending September 30, 2024 and 2023
(Dollars in Thousands)
In FY 2024, the estimate for unfunded cleanup cost increased by $6 million from the FY 2023 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 remedial actions in their states. The SSC defines the states'
role in the remedial action and obtains the states' assurance that they will share in the cost of the remedial actions.
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, 2024 and 2023, the total remaining state credits have been estimated at $22 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 claims against the Superfund Trust Fund for portions of the
costs they incurred while conducting a preauthorized response action agreed to under a mixed funding agreement. As
of September 30, 2024, the EPA had three outstanding preauthorized mixed funding agreements with obligations
totaling $12 million. As of September 30, 2023, the EPA had three outstanding preauthorized mixed funding
agreements with obligations totaling $13 million. A liability is not recognized for these amounts until all work has
been performed by the PRPs and has been approved by the EPA for payment. Further, the EPA will not disburse any
funds under these agreements until the PRPs' application, claim and claims adjustment processes have been reviewed
and approved by the EPA.
62
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United States Environmental Protection Agency
Notes to the Financial Statements
For the Fiscal Years Ending September 30, 2024 and 2023
(Dollars in Thousands)
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. EPA's
mission requires it to collect nonexchange revenue for Cellulose Biofuel Waiver Credits from the public. The custodial
collections do not affect EPA's net cost or net position. Instead, the collections are transferred to Treasury where the
impact on financial statements is shown.
For the Fiscal Years Ended September 30,2024 and 2023
Fines, Penalties and Other Miscellaneous Receipts
2024 2023
$ 143.956 $ 89.665
As of September 30,2024 and 2023
Accounts Receivable for Fines, Penalties and Other Miscellaneous
Receipts:
Accounts Receivable
Less: Allowance for Uncollectible Accounts
Total
2024
$ 109.778 $_
2023
$ 241,015 $ 200,312
(131.237) (134.259)
66.053
63
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United States Environmental Protection Agency
Notes to the Financial Statements
For the Fiscal Years Ending September 30, 2024 and 2023
(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 by law 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 2023 Statement of Budgetary
Resources, are reconciled to the amounts included in the FY 2023 Budget of the United States Government.
Differences between the FY 2023 Statement of Budgetary Resources and the FY 2023 Budget of the United States
Government are due to the reporting of expired funds in the Statement of Budgetary Resources. The Budget of the
United States Government with actual numbers for FY 2024 has not yet been published. We expect it will be published
by early 2025, 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, 2024 and 2023
(Dollars in Thousands)
The actual amounts published for the year ended September 30, 2023 are listed immediately below (dollars in
millions):
FY 2023 Budgetary Offsetting
_ Resources
Statement of Budgetary Resources
Reported in the Budget of the U.S. Government
$
86.183
$ 26.911
$
1.569
$ 15.535
$
86.068
S 26.878
$
1.569
S 15.533
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, 2024 and 2023:
2024
2023
Unobligated Balance Brought Forward, Oct 1.
S 59.272.345
$
56.975.250
Adjustments to Budgetary Resources Made During the Current Year
Downward Adjustments of Prior Year Undelivered Orders
858,827
331,528
Downward Adjustments of Prior Year Delivered Orders
14,081
13,047
Permanent Reduction Prior Year Balances
(1,500)
(13,300)
Upward Adjustments of Prior Year Delivered Orders
(197,861)
-
Other Adjustments
(20.023)
(24.159)
Total
653,524
307,116
Unobligated Balance from Prior Year Budget Authority, Net
(discretionary and mandatory)
S 59.925.869
S 57.282.366
Temporarily Not Available - Rescinded Authority
$ (16,382)
$
(8,942)
Permanently Not Available:
Rescinded Authority
$
$
-
Cancelled Authority
(20.369)
(21.196)
Total Permanently Not Available
S (20.369)
$
(21.196)
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, 2024 and 2023:
2024 2023
Unexpired Unobligated Balance $ 30,229,727 $ 59,167,562
Expired Unobligated Balance 116.343 104.783
Total S 30.346.070 X 59.272.345
65
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United States Environmental Protection Agency
Notes to the Financial Statements
For the Fiscal Years Ending September 30, 2024 and 2023
(Dollars in Thousands)
Budgetary resources obligated for undelivered orders as of September 30,2024 and 2023:
2024 2023
Intragovernmental:
Unpaid Undelivered Orders $ 2,323,555 $ 1,982,774
Paid Undelivered Orders 2,133,603 1,643,300
Other Than Intragovernmental:
Unpaid Undelivered Orders 71,719,199 36,792,410
Paid Undelivered Orders 99.155 8.275
Total $ 76.275.512 S 40.426.759
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, 2024 and 2023,
the following receipts were generated from these activities:
2024 2023
Trust Fund Recoveries $ 266,268 $ 238,365
Special Fund Services 56,023 55,443
Trust Fund Appropriation 282,699 1,218,809
Miscellaneous Receipt and Clearing Accounts 96.242 56.319
Total S 701.232 X 1.568.936
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 2024 are $252 million.
For FY 2023, the estimates were $196 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 2024 total imputed costs were $37 million.
66
-------
United States Environmental Protection Agency
Notes to the Financial Statements
For the Fiscal Years Ending September 30, 2024 and 2023
(Dollars in Thousands)
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 2024, entries for Judgment Fund payments totaled $4 million. For FY 2023, entries for Judgment
Fund payments totaled $9 million.
Note 24. Federal Employee Benefits Payable
Payroll and benefits payable to the EPA employees for the fiscal years ending September 30, 2024 and 2023, consist
of the following:
FY 2024 Federal Employee Salary, Leave and Benefits
Payable
Employer Contributions Payable - Thrift Savings Plan
Accrued Unfunded Annual Leave
Total Benefits Payable
FY 2024 Pension and Post-Employment Benefits Payable
Actuarial FECA Liability
Total Benefits Payable
Covered by
Budgetary
Resources
Not Covered
by Budgetary
Resources Total
$
1,373 $
$
1,373
-
185.381
185.381
1,373
185,381
186,754
40.359
40.359
$
S
40.359 S
40.359
FY 2023 Federal Employee Salary, Leave and Benefits
Payable
Employer Contributions Payable - Thrift Savings Plan
Accrued Unfunded Annual Leave
Total Benefits Payable
FY 2023 Pension and Post-Employment Benefits Payable
Actuarial FECA Liability
Total Benefits Payable
Covered by
Not Covered
Budgetary
by Budgetary
Resources
Resources
Total
$ 1,003
$
$
1,003
-
184.396
184.396
1,003
184,396
185,399
44.349
44.349
s
S 44.349
$
44.349
67
-------
United States Environmental Protection Agency
Notes to the Financial Statements
For the Fiscal Years Ending September 30, 2024 and 2023
(Dollars in Thousands)
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 2024
present value of these estimated outflows is calculated using a discount rate of 2.648 percent in the first year for wage
benefits and 2.399 percent in the first year for medical benefits, and 2.648 percent in the years thereafter for wage
benefits and 2.399 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.
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, 2024
and 2023:
2024
2023
Funds from
Funds from
Interest on Trust Fund
Tax Revenue, Net of Refunds
Fines and Penalties Revenue
Special Receipt Fund Revenue
Dedicated All Other
Collections Funds
$ 600,102 $
Dedicated All Other
Collections Funds
$ 437,679 $
1,613,759
4,886
33.297
1,410,243
1,043
31.830
Total Nonexchange Revenue
S 2.252.044 $.
S 1.880.795 $.
68
-------
United States Environmental Protection Agency
Notes to the Financial Statements
For the Fiscal Years Ending September 30, 2024 and 2023
(Dollars in Thousands)
Note 26. Reconciliation of Net Cost of Operations to Net
For the Fiscal Year Ended September 30, 2024:
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
Gains/Losses on All Other Investments
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
Federal Employee Salary, Leave and Benefits Payable
Post Employment 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:
Effect of Prior Year Agencies Credit Reform Subsidy
Reestimates
Acquisition of Inventory
Acquisition of Investments
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
Non-Entity Activity
Appropriated Receipts for Trust Fund/Special Funds
Other Temporary Timing Differences
NET OUTLAYS
Outlays (Restated)
Other Than
Intra- Intra-
governmental governmental
Total FY24
$ 2,785,977 $ 11,515,910 $ 14,301,887
418
3,629
(83,045)
449,708
(10,610)
(3,928,500)
23,833
115
(20,539)
(20.424)
(36,153)
(480)
(3,826)
63,796
(6,995)
(84,587)
3,619,863
(271,397)
59,567
(5,452)
(1,355)
3,990
(32,738)
(293,666)
(1.052.256) 14.820.143
(238,648)
27
661,128
422.507
(701,232)
24,931
18,789
(11,091)
S (1.730.192) S 15.231.559
(36,153)
(480)
(3,826)
63,796
(6,995)
(84,169)
3,623,492
(83,045)
178,311
48,957
(3,928,500)
(5,452)
(1,355)
3,990
(8,905)
(293,666)
13.767.887
(238,648)
142
661,128
(20,539)
402.083
(701,232)
24,931
18,789
(11,091)
S 13.501.367
69
-------
United States Environmental Protection Agency
Notes to the Financial Statements
For the Fiscal Years Ending September 30, 2024 and 2023
(Dollars in Thousands)
For the Fiscal Year Ended September 30, 2023:
NET COST (Restated)
Components of Net Cost That Are Not Part of Net Outlays:
Property, Plant and Equipment Depreciation
Inventory Depreciation Expense
Property, Plant and Equipment Disposal & Revaluation
Applied Overhead/Cost Capitalization Offset
Increase/(Decrease) in Assets:
Accounts Receivable
Loans Receivable
Investments
Other Assets (Restated)
(Increase)/Decrease in Liabilities:
Accounts Payable and Accrued Liabilities
Loans Guarantee Liability (Non-FCRA)/Loans Payable
Environmental and Disposal Liabilities
Federal Employee Salary, Leave 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
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
Other Temporary Timing Differences
NET OUTLAYS
Other Than
Intra- Intra-
governmental governmental Total FY23
$ 2,194,312 $ 9,402,857 $ 11,597,169
1,939
(600)
95,214
1,307,749
(100,205)
(1,396,046)
16,974
(241,657)
122
(20,033)
(1,568,936)
(181,970)
(44,010)
(260)
(1,244)
(57,677)
(27,803)
1,579,973
370,788
(53,320)
(5,201)
(5,962)
(35,834)
220
1,766,289
(452,123)
(44,010)
(260)
(1,244)
(57,677)
(25,864)
1,579,373
95,214
1,678,537
(153,525)
(1,396,046)
(5,201)
(5,962)
(18,860)
(241,657)
1.877.680 11.122.307 12.999.987
342
1,766,289
(452,123)
(20,033)
(19.911) 1.314.386 1.294.475
(1,568,936)
(135,448)
46,522
(3,830) (3,830)
106.863 S 12.479.385 S 12.586.248
70
-------
United States Environmental Protection Agency
Notes to the Financial Statements
For the Fiscal Years Ending September 30, 2024 and 2023
(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.
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, 2024 and 2023. 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 2024, the EPA received an appropriation of $283 million 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, 2024 and 2023, 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 2024 EPA Treasury Combined
Undistributed Balances
Uninvested Fund Balance
$
-
$
(97.325)
$
(97.325)
Total Undistributed Balance
-
(97,325)
(97,325)
Interest Receivable
-
2,145
2,145
Investments, Net
9.144.062
2.013.163
11.157.225
Total - Assets
$
9.144.062
$
1.917.983
$
11.062.045
Liabilities and Equity
Equity
$
9.144.062
$
1.917.983
$
11.062.045
Total Liabilities and Equity
$
9.144.062
$
1.917.983
$
11.062.045
71
-------
United States Environmental Protection Agency
Notes to the Financial Statements
For the Fiscal Years Ending September 30, 2024 and 2023
(Dollars in Thousands)
Receipts
Chemicals
_
550,555
550,555
Imported Petroleum Product- Superfund Tax
-
224,341
224,341
Petroleum- Domestic Superfund Tax
-
554,042
554,042
Imported Chemical Substances
-
76,450
76,450
Cost Recoveries
$
-
$
266,268
$
266,268
Fines and Penalties
-
572
572
Total Revenue
-
1,672,228
1,672,228
Appropriations Received
-
282,699
282,699
Interest Income
-
520.602
520,602
Total Receipts
$
-
$
2.475.529
$
2.475.529
Outlays
Transfers to/from EPA, Net
$
2.411.164
$
(2.411.164)
$
-
Total Outlays
$
2.411.164
$
(2.411.164)
$
-
Net Income
$
2.411.164
$
64.365
$
2.475.529
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
$
8.731.253
$
1.853.620
$
10.584.873
Liabilities and Equity
Equity
$
8.731.253
$
1.853.620
$
10.584.873
Total Liabilities and Equity
$
8.731.253
$
1.853.620
$
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
$
-
$
3.049.321
$
3.049.321
Outlays
$
Transfers to/from EPA, Net
$
1.723.271
$
(1.723.271)
-
Total Outlays
$
1.723.271
$
(1.723.271)
$
-
Net Income
$
1.723.271
$
1.326.050
$
3.049.321
-------
United States Environmental Protection Agency
Notes to the Financial Statements
For the Fiscal Years Ending September 30, 2024 and 2023
(Dollars in Thousands)
B. LUST
LUST is supported primarily by a sales tax on motor fuels to clean up LUST waste sites. In FY 2024 and 2023, 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 2024 EPA Treasury Combined
Undistributed Balances
Uninvested Fund Balance
$
.
$
2,052
$
2,052
Total Undistributed Balance
Interest Receivable
Investments, Net
Total - Assets
$
82,563
82.563
$
2,052
314
1,495,119
1.497.485
$
2,052
314
1,577,682
1.580.048
Liabilities and Equity
Equity
Total Liabilities and Equity
$
$
82,563
82.563
$
$
1,497,485
1.497.485
$
$
1,580,048
1.580.048
Receipts
Highway TF Tax
Airport TF Tax
Inland TF Tax
$
-
$
199,701
8,640
30
$
199,701
8,640
30
Total Revenue
Interest Income
-
208,371
78,008
208,371
78,008
Total Receipts
$
-
$
286.379
$
286.379
Outlays
Transfers to/from EPA, Net
$
89,214
$
(89,214)
$
Total Outlays
$
89.214
$
(89.214)
$
-
Net Income
$
89.214
$
197.165
$
286.379
73
-------
United States Environmental Protection Agency
Notes to the Financial Statements
For the Fiscal Years Ending September 30, 2024 and 2023
(Dollars in Thousands)
LUST FY 2023 EPA Treasury Combined
Undistributed Balances
Uninvested Fund Balance
$
.
$
6,010
$
6,010
Total Undistributed Balance
Interest Receivable
Investments, Net
Total - Assets
$
91,439
91.439
$
6,010
1,364
1,292,945
1.300.319
$
6,010
1,364
1,384,384
1.391.758
Liabilities and Equity
Equity
Total Liabilities and Equity
$
$
91,439
91.439
$
$
1,300,319
1.300.319
$
$
1,391,758
1.391.758
Receipts
Highway TF Tax
Airport TF Tax
Inland TF Tax
$
-
$
192,656
11,800
919
$
192,656
11,800
919
Total Revenue
Interest Income
-
205,375
48,792
205,375
48,792
Total Receipts
$
-
$
254.167
$
254.167
Outlays
Transfers to/from EPA, Net
$
94,205
$
(94,205)
$
Total Outlays
$
94.205
$
(94.205)
$
-
Net Income
$
94.205
$
159.962
$
254.167
Note 28. 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 2023 Financial Report can be found here: Bureau of the Fiscal Service - Reports. Statements
& Publications (treasurv.gov) and a copy of the 2024 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 intragovernmental" 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.
74
-------
United States Environmental Protection Agency
Notes to the Financial Statements
For the Fiscal Years Ending September 30, 2024 and 2023
(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 30,2024
FY 2024 EPASNC
Line Items Used to Prepare the FY 2024 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
$ 15,099,758
Other Than
Intragovernmental Costs
1,541,282
11,129,007
12,670,289
Other Than
Intragovernmental Gross
Costs
_
1,541,282
_
11,129,007
_
12,670,289
Total Other Than
Intragovernmental Costs
Intragovernmental Costs
-
108,744
-
431,210
-
539,954
Benefits Program Costs
-
3,529
-
252,950
-
256,479
Imputed Costs
-
567,537
-
791,354
-
1,358,891
Buy/Sell Costs
-
-
-
115
-
115
Purchase of Assets
_
_
_
235,692
_
235,692
Borrowing and Other
Interest Expense
_
_
_
986
_
986
Other Expenses (w/o
Reciprocals)
_
679,810
_
1,712,307
_
2,392,117
Total Intragovernmental
Costs
Total Gross Costs
$ 15,099,758
$ 2,221,092
$
$ 12,841,314
$
$ 15,062,406
Total Reclassified Gross
Costs
Earned Revenue
$ 797,871
$ (390,242)
$ 266,268
$ (396,895)
$
$ (520,869)
Other Than
Intragovernmental Earned
Revenue
Intragovernmental Revenue
-
(40,971)
-
(119,340)
-
(160,311)
Buy/Sell Revenue
-
-
-
(115)
-
(115)
Purchase of Assets Offset
.
(40,971)
.
(119,455)
.
(160,426)
Total Intragovernmental
Earned Revenue
Total Earned Revenue
$ 797,871
$ (431,213)
$ 266,268
$ (516,350)
$
$ (681,295)
Total Reclassified Earned
Revenue
NET COST
S 14,301,887
S 1,789,879
S 266,268
S 12,324,964
S
S 14,381,111
NET COST
75
-------
United States Environmental Protection Agency
Notes to the Financial Statements
For the Fiscal Years Ending September 30, 2024 and 2023
(Dollars in Thousands)
Reclassification of Statement on Changes in Net Position to Line Items Used for Government-wide Statement of Operations
and Changes in Net Position for the Year Ended September 30,2024
FY 2024 EPASCNP
Line Items Used to Prepare the FY 2024 Government-wide SCNP
Financial Statement Line
Amounts
Dedicated
Collections
Combined
Dedicated
Collections
Eliminations
All Other
Amounts
(with
Eliminations)
Eliminations
Between
Dedicated
and Other
Total
Reclassified Statement
Line
UNEXPENDED
APPROPRIATIONS
UNEXPENDED
APPROPRIATIONS
Unexpended appropriations,
Beginning Balance
281
9,310,040
_
74,578,772
_
83,888,812
Net Position, Beginning of
Period
Corrections of Errors
-
-
-
369,722
-
369,722
Corrections of Errors
Total Correction of Errors
-
-
-
369,722
-
369,722
Total Correction of Errors
Other Adjustments
(144)
144
20,941,634
20,941,778
Appropriations Received as
Adjusted (Rescissions and
Other Adjustments)
Appropriations Used
(76)
(76)
-
(12,217,576)
-
(12,217,652)
Appropriations Used
Total Unexpended
Appropriations
61
CUMUL. RESULTS OF
OPERATIONS
Cumulative Results,
Beginning Balance
9,309,893
_
_
_
_
_
Appropriations Used
76
(76)
_
12,217,728
_
12,217,652
Appropriations Expended
Nonexchange Revenue -
Securities Investment
_
_
_
_
_
_
Nonexchange Revenue -
Securities Investment
Nonexchange Revenue
Federal Non-Exchange
Revenues
_
1,613,759
_
(1,613,759)
_
_
Excise Taxes
.
638,285
(572)
(590,630)
.
47,083
Other Taxes and Receipts
_
2,252,044
(572)
(2,204,389)
_
47,083
Total Federal Non-
Exchange Revenues
Non-Federal Non-
Exchange Revenues
600,102
600,102
Federal Securities Interest
Revenue Including
Associated Gains and Losses
_
_
_
76,020
_
76,020
Borrowings and Other
Interest Revenue
_
_
_
1,613,759
_
1,613,759
Other Taxes and Receipts
_
_
_
1,737,722
_
1,737,722
Collection Transfers to TAS
Other Than General Fund
2,252,044
_
_
4,027,603
_
4,027,603
Total Non-Federal Non-
Exchange Revenues
Transfers In/Out w/o
Reimbursement-Budgetary
22,652
(22,652)
Appropriation of
Unavailable Special or Trust
Fund Receipts Transfers-in
(22,652)
22,652
Appropriation of
Unavailable Special or Trust
Fund Receipts Transfers-out
22,334
(2,500,378)
2,500,001
21,957
Non-Expenditure Transfers-
in of Unexpended
Appropriations and
Financing Sources
(4,169)
2,500,378
(2,502,925)
(6,716)
Non-Expenditure Transfers-
out of Unexpended
Appropriations and
Financing Sources
-
282,699
-
(282,699)
_
-
Expenditure Transfers-in of
Financing Sources
76
-------
United States Environmental Protection Agency
Notes to the Financial Statements
For the Fiscal Years Ending September 30, 2024 and 2023
(Dollars in Thousands)
_
55,671
_
(56,159)
_
(488)
Expenditure Transfers-out of
Financing Sources
Total Transfers In/Out w/o
Reimbursement-Budgetary
259,174
356,535
(341,782)
14,753
Total Reclassified Transfers
In/Out w/o Reimbursement-
Budgetary
Imputed Financing Sources
48,681
(48,681)
_
305,159
_
256,478
Imputed Financing Sources
(Federal)
Trust Fund Appropriations
(1,679,944)
(1,679,944)
Non-Entity Collections
Transferred to the General
Fund of the U.S. Gov.
(272,557)
(272,557)
Accrual of Collections Yet
to be Trans, to the Gen.
Fund
_
_
_
7
_
7
Other Non-Budgetary
Financing Sources
Total Financing Sources
307,855
307,846
-
18,952,669
-
19,260,515
Net Cost of Operations
(1,789,879)
1,789,879
266,268
12,324,964
-
14,381,111
Net Cost of Operations
Ending Balance -
Cumulative Results of
Operations
10,079,989
Total Net Position
10,080,050
10,080,051
(266,840)
83,399,413
-
93,212,624
Total Net Position
77
-------
United States Environmental Protection Agency
Notes to the Financial Statements
For the Fiscal Years Ending September 30, 2024 and 2023
(Dollars in Thousands)
Reclassification of Statement on Changes in Net Position to Line Items Used for Government-wide Statement of Operations
and Changes in Net Position for the Year Ended September 30,2023 (Restated)
FY 2023 EPASCNP
Line Items Used to Prepare the FY 2023 Government-wide SCNP
Financial Statement Line
Amounts
Dedicated
Collections
Combined
Dedicated
Collections
Eliminations
All Other
Amounts
(with
Eliminations)
Eliminations
Between
Dedicated
and Other
Total
Reclassified Statement
Line
UNEXPENDED
APPROPRIATIONS
UNEXPENDED
APPROPRIATIONS
Unexpended Appropriations,
Beginning Balance
178
7,744,231
65
62,854,497
_
70,598,793
Net Position, Beginning of
Period
Other Adjustments
23,125,476
23,125,476
Appropriations Received as
Adjusted (Rescissions and
Other Adjustments)
Appropriations Used
103
-
-
(11,118,620)
-
(11,118,620)
Appropriations Used
Total Unexpended
Appropriations
281
CUMUL. RESULTS OF
OPERATIONS
Cumulative Results,
Beginning Balance
7,744,123
_
_
_
_
_
Other Adjustments
_
_
_
_
_
_
Other Budgetary Financing
Sources
Appropriations Used
(103)
_
_
11,118,620
_
11,118,620
Appropriations Expended
Nonexchange Revenue -
Securities Investment
_
_
_
_
_
_
Nonexchange Revenue -
Securities Investment
Nonexchange Revenue
Federal Non-Exchange
Revenues
_
1,410,243
_
(1,410,243)
_
_
Excise Taxes
.
470,552
(703)
(481,880)
.
(12,031)
Other Taxes and Receipts
_
1,880,795
(703)
(1,892,123)
_
(12,031)
Total Federal Non-
Exchange Revenues
Non-Federal Non-
Exchange Revenues
437,680
437,680
Federal Securities Interest
Revenue Including
Associated Gains and Losses
_
_
_
31,241
_
31,241
Borrowings and Other
Interest Revenue
_
_
_
1,410,243
_
1,410,243
Other Taxes and Receipts
.
.
.
182,165
.
182,165
Collection Transfers to TAS
other Than General Fund
1,880,795
_
_
2,061,329
_
2,061,329
Total Non-Federal Non-
Exchange Revenues
Transfers In/Out w/o
Reimbursement-Budgetary
(23,413)
23,413
Appropriation of
Unavailable Special or Trust
Fund Receipts Transfers-in
23,413
(23,413)
Appropriation of
Unavailable Special or Trust
Fund Receipts Transfers-out
23,480
(1,817,476)
1,817,476
23,480
Non-Expenditure Transfers-
in of Unexpended
Appropriations and
Financing Sources
(3,551)
1,817,476
(1,815,444)
(1,519)
Non-Expenditure Transfers-
out of Unexpended
Appropriations and
Financing Sources
78
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United States Environmental Protection Agency
Notes to the Financial Statements
For the Fiscal Years Ending September 30, 2024 and 2023
(Dollars in Thousands)
_
1,218,809
_
(1,218,809)
_
_
Expenditure Transfers-in of
Financing Sources
_
33,225
_
(33,225)
_
_
Expenditure Transfers-out of
Financing Sources
_
_
_
(256)
_
(256)
Transfers-in Without
Reimbursement
Total Transfers In/Out w/o
Reimbursement-Budgetary
1,195,958
1,271,963
(1,250,258)
21,705
Total Reclassified Transfers
In/Out w/o Reimbursement-
Budgetary
Imputed Financing Sources
38,002
(38,002)
_
243,002
_
205,000
Imputed Financing Sources
(Federal)
Trust Fund Appropriations
(154,427)
(154,427)
Non-Entity Collections
Transferred to the General
Fund of the U.S. Gov.
390
390
Accrual of Collections Yet
to be Trans, to the Gen.
Fund
_
_
_
10,233
_
10,233
Other Non-Budgetary
Financing Sources
Total Financing Sources
1,233,960
1,233,961
-
21,974,416
-
23,208,377
Net Cost of Operations
(1,548,882)
1,548,882
238,365
10,181,097
-
11,968,344
Net Cost of Operations
Ending Balance -
Cumulative Results of
Operations
9,309,893
Total Net Position
9,310,174
9,310,105
(239,003)
74,817,022
-
83,888,124
Total Net Position
Note 29. Restatements
During an internal review, EPA identified $370 million in expenses that should have been reported on its
financial statements as advances. EPA is restating its FY 2023 consolidated financial statements to reclassify
these prior year prepaid assets. This change impacted the FY 2023 Balance Sheet, Statement of Net Cost,
Statement of Net Cost by Major Program, and Statement of Changes in Net Position.
Previously
Restated
For the Year Ended September 30,2023
Reported
Restatement
Amount
Balance Sheet:
Other than Intragovernmental Assets: Advances and Prepayments
$ 11,602
$
369,722
$
381,324
Total Other than Intragovernmental Assets
$ 3,678,059
$
369,722
$
4,047,781
Total Assets
$ 92,004,321
$
369,722
$
92,374,043
Unexpended Appropriations- Funds from Other than Dedicated
$ 74,602,484
$
369,722
$
74,972,206
Collections
Total Unexpended Appropriations (Consolidated)
$ 74,602,765
$
369,722
$
74,972,487
Total Net Position
$ 83,877,718
$
369,722
$
84,247,440
Total Liabilities and Net Position
$ 92,004,321
$
369,722
$
92,374,043
Statement of Net Cost:
Gross Costs
$ 12,487,285
$
(369,722)
$
12,117,563
Net Cost of Operations
$ 11,966,891
$
(369,722)
$
11,597,169
Statement of Net Cost by Major Program:
Gross Costs - State and Tribal Assistance Agreements
$ 5,871,185
$
(369,722)
$
5,501,463
Net Cost of Operations Totals
$ 11,966,891
$
(369,722)
$
11,597,169
79
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United States Environmental Protection Agency
Notes to the Financial Statements
For the Fiscal Years Ending September 30, 2024 and 2023
(Dollars in Thousands)
Statement of Changes in Net Position:
Unexpended Appropriations - Appropriations Used (Consolidated
Totals) $(11,118,722) $ 369,722 $(10,749,000)
Total Unexpended Appropriations (Consolidated Totals) $ 74,602,765 $ 369,722 $ 74,972,487
Cumulative Results of Operations-Appropriations Used $ 11,118,722 $ (369,722) $ 10,749,000
(Consolidated Totals)
Net Position (Consolidated Totals) $ 83,877,718 $ 369,722 $ 84,247,440
80
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Required Supplementary Information (Unaudited)
United States Environmental Protection Agency
For the Fiscal Years Ending September 30,2024 and 2023
(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, 2024 and 2023:
2024 2023
Asset Category
Buildings
$
228,486
$
128,180
EPA Held Equipment
2.556
1.700
Total Deferred Maintenance
$
231.042
$
129.880
81
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Required Supplementary Information (Unaudited) Cont.
In Fiscal Year 2024, 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.
82
-------
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.
83
-------
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.
Conservation
and Total Estimated
Commercial Preservation Operational Acreage
PP&E Land
End of FY 2023/Start of FY 2024 - - 576 576
End of FY 2024 - - 601 601
Held for Disposal or Exchange (also
included in the balances above)
End of FY 2024 - - 10 10
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.
84
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Supplemental Combining Statement of Budgetary Resources (Unaudited)
United States Environmental Protection Agency
For the Fiscal Years Ending September 30, 2024
(Dollars in Thousands)
Leaking
Environmental Underground State Tribal
Programs & Storage Science & Assistance
Management Tanks Technology Superfund Agreements Other Totals
BUDGETARY RESOURCES
Unobligated Balance From Prior Year Budget Authority, Net $ 3,670,762 $ 22,856 $ 19,710 $ 5,821,758 $48,656,676 $ 1,734,107 $ 59,925,869
Appropriations (discretionary and mandatory) 413,866 98,090 - 2,362,758 15,585,826 5,034,362 23,494,902
Borrowing Authority (discretionary and mandatory)
-
-
-
-
-
1,328,973
1,328,973
Spending Authority From Offsetting Collection
3.915
(8.875)
(1.220)
86.660
-
1.389.366
1.469.846
Total Budgetary Resources
$ 4.088.543
$
112.071 $
18.490
$
8.271.176
$64,242,502
$
9.486.808
$
86.219.590
STATUS OF BUDGETARY RESOURCES
New Obligations and Upward Adjustments (total)
$ 724,489
$
97,152 $
1,099
$
3,354,334
$43,866,696
$
7,829,750
$
55,873,520
Unobligated Balance, End of Year:
Apportioned, Unexpired Accounts
3,267,760
14,919
679
4,915,581
20,375,806
1,654,381
30,229,126
Unapportioned, Unexpired Accounts
-
-
-
601
-
-
601
Expired Unobligated Balance, End of Year
96.294
-
16.712
660
-
2.677
116.343
Unobligated Balance, End of Year (total):
3.364.054
14.919
17.391
4.916.842
20.375.806
1.657.058
30.346.070
Total Status of Budgetary Resources
$ 4.088.543
$
112.071 $
18.490
$
8.271.176
$64,242,502
$
9.486.808
$
86.219.590
OUTLAYS, NET
Outlays, Net (total) (discretionary and mandatory)
$ 616,106
$
90,957 $
67,718
$
1,966,412
$ 7,117,545
$
4,343,861
$
14,202,599
Distributed Offsetting Receipts (-)
-
-
-
(548.967)
-
(152.265)
(701.232)
Agency Outlays, Net (discretionary and mandatory)
$ 616.106
$
90.957 $
67.718
$
1.417.445
$ 7.117.545
$
4.191.596
$
13.501.367
Disbursements, Net (total) (mandatory)
$
3.925.793
$
3.925.793
85
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Independent Audit of the
EPA's Fiscal Years 2024
and 2023 (Restated]
Consolidated Financial
Statements
ovember 15, 2024 | Re port N ~. 25- F-OG10
-------
Report Contributors
Elizabeth Brinson
Shane Brown
Vincent Campbell
Nancy Dao
Edgar Dumeng
Amir Eskarous
Robert Evans
Robert Hairston
Tanishia Heilig
Jospeh Van Hook
Jennifer Hutkoff
Damon Jackson
Sheree James
Carol Kwok
Shannon Lackey
Ethel Lowery
Sheila May
Demetrios Papakonstantinou
Joshua Rodriguez
Gina Ross
Scott Sammons
Connie Song
Wendy Swan
Ryan Watren
Abbreviations
EPA
FFMIA
FY
OIG
OMB
SSC
U.S.C.
U.S. Environmental Protection Agency
Federal Financial Management Improvement Act of 1996
FiSscal Year
Office of Inspector General
Office of Management and Budget
Superfund State Contract
United States Code
Cover Image
EPA headquarters building. (EPA image)
Are you aware of fraud, waste, or abuse in an
EPA program?
EPA Inspector General Hotline
1200 Pennsylvania Avenue, NW (2431T)
Washington, D.C. 20460
(888) 546-8740
OIG.Hotline@epa.gov
Learn more about our OIG Hotline.
EPA Office of Inspector General
1200 Pennsylvania Avenue, NW (2410T)
Washington, D.C. 20460
(202) 566-2391
www.epaoiq.gov
Subscribe to our Email Updates.
Follow us on X (formerly Twitter) @EPAoig.
Send us your Project Suggestions.
87
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. ^sPEcr0
At a Gla
25-F-0010
November 15, 2024
Independent Audit of the EPA's Fiscal Years 2024 and 2023 (Restated)
Consolidated Financial Statements
Why We Did This Audit
To accomplish this objective:
We performed this audit in accordance
with the Chief Financial Officers Act of
1990, as codified at 31 U.S.C. §
3521(e), 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 2024 and
2023 (Restated)
We rendered an unmodified opinion on the EPA's consolidated financial statements for fiscal
years 2024 and 2023 (restated), meaning that they were fairly presented and free of material
misstatement.
Material Weaknesses and Significant Deficiency Noted
We noted the following material weaknesses:
• The EPA did not have adequate internal controls in place to record the 2022
Clean School Bus Rebates Program funds for fiscal years 2024 and 2023.
• The EPA did not develop an adequate process for the Clean School Bus Rebates
Program accrual calculation.
• The EPA significantly understated Superfund State Contract accrual revenue.
We noted the following significant deficiency: EPA property balances are not reliable.
The EPA used an existing rebate transaction type that was established to
record the Clean School Bus rebate payments. This resulted in $828 million of
rebate payments being recorded as expenses instead of advances. The EPA
will be developing guidance for new programs on financial management
considerations that need to be implemented.
Noncompliance with Applicable Laws, Regulations, Contracts, and
Grant Agreements Noted
We noted the following instances of noncompliance with laws and regulations:
• The EPA failed to comply with and implement provisions of Office of Management
and Budget Circular No. A-123, Management's Responsibility for Enterprise Risk
Management and Internal Control.
• The EPA improperly recorded advances as expenses for the Clean School Bus
Rebates Program.
Recommendations and Planned Agency Corrective Actions
The EPA agreed with all 13 recommendations and have either completed corrective actions
or provided an estimated time frame for completion.
List of OIG reports.
88
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U.S. ENVIRONMENTAL PROTECTION AGENCY
OFFICE OF INSPECTOR GENERAL
November 15, 2024
MEMORANDUM
SUBJECT: Independent Audit of the EPA's Fiscal Years 2024 and 2023 (Restated) Consolidated
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-FY24-0086. This report contains findings that
describe the problems the OIG has identified and corrective actions the OIG recommends. Final
determinations on matters in this report will be made by EPA managers in accordance with established
audit resolution procedures.
The Office of the Chief Financial Officer is responsible for the issues discussed in the report.
In accordance with EPA Manual 2750, your office completed corrective actions for Recommendations 3,
7, and 11. Your office also provided acceptable planned corrective actions and estimated milestone dates
in response to Recommendations 1, 2, 4, 5, 6, 8, 9,10,12, and 13. These recommendations are resolved,
and no final response to this final 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.
Financial Statements
Report No. 25-F-0010
FROM: Damon Jackson, Director
Financial Directorate
Office of Audit
TO:
Faisal Amin, Chief Financial Officer
To report potential fraud, waste, abuse, misconduct, or mismanagement, contact the OIG Hotline at (888) 546-8740 or OIG.Hotline@epa.gov.
89
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Table of Contents
Report on the Audit of the Financial Statements 1
Required Supplementary Information 4
Report on Internal Control over Financial Reporting 4
Report on Compliance with Laws, Regulations, Contracts, and Grant Agreements 8
Other Governmental Reporting Requirements 10
Prior Audit Coverage 10
Status of Recommendations and Potential Monetary Benefits 29
A Material Weaknesses 11
B Significant Deficiency 18
C Compliance with Laws and Regulations 22
D Status of Prior Audit Report Recommendations 28
1 The EPA's Fiscal Years 2024 and 2023 Consolidated Financial Statements
(with Restatement) 30
2 Agency Response to Draft Report 94
3 Distribution 99
90
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Independent Auditor's Report on the
EPA's Fiscal Years 2024 and 2023
(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, 2024 and 2023 (restated); 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, 2024 and 2023 (restated), in conformity with accounting
principles generally accepted in the United States of America.
Basis for Opinion
We conducted our audit in accordance with U.S. generally accepted auditing standards; the standards
applicable to financial audits contained in Government Auditing Standards issued by the comptroller
general of the United States, commonly referred to as generally accepted government auditing
standards; and Office of Management and Budget, or OMB, Bulletin No. 24-02, Audit Requirements for
Federal Financial Statements. 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.
1
91
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Emphasis of Matter
As described in note 29 to the financial statements, "Restatements," the EPA identified $370 million in
expenses that should have been reported on its financial statements as advances in FY 2023. The EPA
restated its fiscal year 2023 consolidated financial statements to reclassify these prior year prepaid
assets. The change impacted the FY 2023 balance sheet, statement of net cost, statement of net cost by
major program, and statement of changes in net position. However, we found that the EPA used
insufficient documentation to develop its process to calculate the Clean School Bus rebate accrual for
FYs 2024 and 2023.
The EPA used an existing rebate transaction type that was established in its financial system known as
Compass to record the Clean School Bus rebate payments. This resulted in a total of $828 million of the
Clean School Bus rebate payments as being recorded as expenses instead of advances in FYs 2023 and
2024. The EPA will be developing guidance for new programs on financial management considerations
that need to be implemented and discussed. This guidance should also be used during the design phase
of the program development.
The Infrastructure Investment and Jobs Act invested $3.5 billion in environmental remediation at
Superfund sites and reinstated the Superfund chemical taxes, making it one of the largest investments in
American history to address legacy pollution that harms public health in communities and
neighborhoods. This funding will allow the EPA to initiate work on all backlogged remedial construction
projects and accelerate cleanups at National Priority List sites across the country. The EPA estimated the
FY 2024 tax collections to be about $1.6 billion. In FY 2024, the EPA received an annual Superfund
appropriation of $538 million.
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 (1) the preparation and fair presentation of
the consolidated financial statements in accordance with U.S. generally accepted accounting principles;
(2) preparing measuring and presenting the Required Supplementary Information in accordance with
U.S. generally accepted accounting principles; (3) preparing and presenting other information included
in the Agency's Financial Report, and ensuring the consistency of that information with the audited
financial statements and the Required Supplemental Information; and (4) designing, implementing, and
maintaining effective internal control relevant to the preparation and fair presentation of financial
statements that are free of 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; therefore, it is not a guarantee that an audit conducted in accordance with generally
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accepted auditing standards, generally accepted government auditing standards, and OMB Bulletin
No. 24-02 will always detect a material misstatement or material matters 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, including omissions, 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, generally accepted
government auditing standards, and OMB Bulletin No. 24-02, 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 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.
• Evaluate the appropriateness of accounting policies used, the reasonableness of significant
accounting estimates made by management, and the overall presentation of the financial
statements.
• Perform other procedures we consider necessary in the circumstances.
We are also 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 identify 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.
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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 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, in order to report omissions or material departures
from Federal Accounting Standards Advisory Board guidelines, if any, identified by these limited
procedures. 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.
Other Information
EPA's Other Information contains a wide range of information, some of which is not directly related to
the financial statements. This information is presented for purposes of additional analysis and is not a
required part of the financial statements or the Required Supplementary Information. Management is
responsible for the Other Information included in EPA's Agency Financial Report. The Other Information
compromises the following sections: Message from the Chairperson, Message from the Chief Financial
Officer, Management Discussion and Analysis and Performance. Other Information does not include the
financial statements and our auditor's report thereon. Our opinion on the financial statements does not
cover the Other Information, and we do not express an opinion or any form of assurance thereon.
In connection with our audit of the financial statements, our responsibility is to read the Other
Information and consider whether a material inconsistency exist between the Other Information and the
financial statements, or Other Information otherwise appears to be materially misstated. If, based on
the work performed, we conclude that an uncorrected material misstatement of the Other Information
exists, we are required to describe it in our report.
Report on Internal Control over Financial Reporting
Results of Our Consideration of Internal Control over Financial Reporting
In connection with our audits of EPA's financial statements, we considered EPA's internal control over
financial reporting, consistent with the auditor's responsibilities discussed below.
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Our consideration of the internal control over financial reporting 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 or to express an opinion
on the effectiveness of EPA's internal control over financial reporting; therefore, such deficiencies in
internal control may exist that we did not identify during our audit. A deficiency in internal control over
financial reporting exists when the design or operation of 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 material weaknesses and significant deficiencies. These issues are summarized below and
detailed in Attachments A and B.
Material Weaknesses
The EPA Did Not Have Adequate Internal Controls in Place to Record the 2022 Clean
School Bus Rebates Program Funds for FYs 2024 and 2023
We found that the EPA failed to implement internal controls to make sure funding was properly
allocated for the 2022 Clean School Bus Rebates Program. The Agency recorded the full amount paid to
the Clean School Bus rebate recipients as an expense, instead of an advance, prior to the recipient
expending the funds. The EPA informed us that it paid $567.6 million in FY 2023 and $260.4 million in FY
2024 to the Clean School Bus Rebates Program recipients, totaling $828 million.
The EPA Did Not Develop an Adequate Process for the Clean School Bus Rebates
Accrual Calculation
We found that the EPA used insufficient documentation to develop its process to calculate the Clean
School Bus Rebates Program accrual for FYs 2024 and 2023. In order to support its determination on the
calculation of rebate accruals, the EPA sent the Clean School Bus rebate recipients survey questions
relating to the recipients' funding. Since the information the recipients provided to the EPA lacked
sufficient supporting documentation, the EPA's FYs 2024 and 2023 Clean School Bus Rebates Program
accrual could be misstated.
The EPA Significantly Understated Superfund State Contract Accrual Revenue
We found that the EPA's updated Superfund State Contract, or SSC, accrual methodology did not
recognize SSC state cost share revenue totaling $115,272,077.64 for the third quarter of FY 2024, or
April, May, and June 2024. Federal financial accounting standards require revenue to be recognized in
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proportion to the estimated total cost when goods and services are acquired to fulfill a contract. The
error occurred when the Agency did not consider accounting principles and standards when updating its
SSC accrual methodology. Significant errors misstate the financial statements and reduce reliance on
them as a fair representation of the Agency's financial condition and activities.
Significant Deficiency
EPA Property Balances Are Not Reliable
We found that the EPA's inventory management process did not adhere to procedures specified in EPA
Manual 4832, Personal Property Manual, dated June 2017. Based on the information that was provided
to us from the Agency, we identified the following: property was not received at a designated
centralized receiving point and property decals were not affixed to EPA property; property held by
contractors was not reconciled with EPA records; and $5,454,962.57 worth of personal property was
held as rejected in the EPA's accounting system. Due to a lag in invoicing, a discrepancy of
$40,610,646.43 was recorded in the construction in-progress general ledger account instead of property
recorded in the building account.
Attachment D contains the status of issues reported in prior years' reports on the EPA's consolidated
financial statements. The issues included in Attachment D should be considered among the EPA's
significant deficiencies for FY 2024. We reported more 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 generally accepted government auditing standards and OMB audit guidance.
Responsibilities of Management for Internal Control over Financial Reporting
The EPA's management is responsible for (1) 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; (2) evaluating the
effectiveness of internal control over financial reporting based on the criteria established under the
Federal Managers' Financial Integrity Act; and (3) providing an assurance statement on the overall
effectiveness of internal control over financial reporting included in management's discussion and
analysis.
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, 2024, in accordance with generally accepted government auditing standards, we
considered the EPA's internal control over financial reporting as a basis for designing audit procedures
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that are appropriate in the circumstances for the purpose of expressing an opinion on the financial
statements and to comply with the OMB's audit guidance, but not to express 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. We are required to report all
deficiencies that are considered to be significant deficiencies or material weaknesses. We did not
consider all internal controls relevant to operating objectives, such as those controls relevant to
preparing performance information and ensuring efficient operations.
Definition and Inherent Limitations of Internal Control over Financial Reporting
An entity's internal control over financial reporting is a process effected by those charged with
governance, management, and other personnel. The objectives of internal control over financial
reporting are to provide reasonable assurance that (1) transactions are properly recorded, processed,
and summarized to permit the preparation of financial statements in accordance with U.S. generally
accepted accounting principles, and assets are safeguarded against loss from unauthorized acquisition,
use, or disposition, and (2) transactions are executed in accordance with provisions of applicable laws,
including those governing the use of budget authority, regulations, contracts, and grant agreements,
noncompliance with which could have a material effect on the financial statements.
Intended Purpose of Report on Internal Control over Financial Reporting
Because of inherent limitations, internal controls over financial reporting may not prevent or detect and
correct misstatements and projections of any assessment of effectiveness to future periods are subject
to the risk that controls may become inadequate because of changes in conditions or the degree of
compliance with the policies or procedures may deteriorate.
Comparison of the EPA's Federal Managers' Financial Integrity Act Report with
Our Evaluation of Internal Control
OMB Bulletin No. 24-02 requires us to compare material weaknesses disclosed during the audit with
those material weaknesses identified in the Agency's Federal Managers' Financial Integrity Act report
that relate to the financial statements. We are also required to identify material weaknesses disclosed
by the audit that were not communicated in the Agency's report.
For financial statement audit and financial reporting purposes, OMB Bulletin No. 24-02 defines material
weaknesses in internal control as a deficiency or combination of deficiencies in internal control over
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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 in 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
Our tests for compliance with selected provisions of applicable laws, regulations, contracts, and grant
agreements disclosed two instances of noncompliance for FY 2024 that would be reportable under U.S.
generally accepted government auditing standards. 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 identified instances of noncompliance that could result in a
material misstatement to the audited financial statements.
We identified two significant matters involving compliance with laws and regulations that came to our
attention during the course of the audit. We found that the EPA failed to comply with and implement
provisions of OMB Circular No. A-123, Management's Responsibility for Enterprise Risk Management
and Internal Control, and that the EPA improperly recorded advances as expenses for the Clean School
Bus Rebates Program. Attachment C provides additional details, as well as our recommendations on
actions that should be taken on this matter. We will not issue a separate management letter.
The EPA Failed to Comply with and Implement OMB Circular No. A-123 Provisions
Based on the information the Agency provided to us, we found the EPA failed to implement and
integrate key elements of OMB Circular No. A-123 such as:
• Assessment process for internal controls.
• Governance structure for risk management and defining risk appetite.
• Completion of annual risk profiles.
These key inputs determine the level and effectiveness of internal controls testing and evaluation.
Internal controls are tools to help an agency and financial managers achieve results and protect the
integrity of its operations.
The EPA Improperly Recorded Advances as Expenses for the Clean School Bus
Rebates Program
During FYs 2024 and 2023, the EPA did not comply with federal financial accounting standards and
financial requirements by improperly recording advances as expenses for the Clean School Bus Rebates
Program disbursements. The federal financial accounting standards and financial reporting
requirements recognize that advances are cash outlays made by a federal entity to others to cover a
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part or all of the recipients' anticipated expenses or as advance payments for the cost of goods and
services acquired. As a result, the EPA did not comply with federal financial reporting requirements.
Basis of Results of Our Tests for Compliance with Laws, Regulations, Contracts,
and Grant Agreements
We performed our tests of compliance in accordance with U.S. generally accepted government auditing
standards.
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
Our responsibility is to test compliance with selected provisions of laws, regulations, contracts, and
grant agreements applicable to the EPA that have a direct effect on the determination of material
amounts and disclosures in EPA's financial statements, including whether EPA's financial management
system comply substantially with the Federal Financial Management Improvement Act of 1996, or
FFMIA, Section 803(a), requirements, and to perform certain limited procedures. Accordingly, we did
not test compliance with all provisions of laws and regulations, contracts, and grant agreements
applicable to the EPA. We caution that noncompliance may occur and not be detected by these tests.
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 Compliance
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 U.S. 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
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Financial Management Improvement Act, dated January 9, 2009, to determine whether there was any
substantial noncompliance with FFMIA.
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.
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 material weakness reported above also relates to Superfund.
Prior Audit Coverage
During previous financial statement audits, we reported significant deficiencies, as detailed in
Attachment D. These deficiencies include that:
• Originating offices did not forward accounts receivable source documents to the finance division
in a timely manner.
• The EPA did not provide accurate information for its revenue accrual.
This report is intended solely for the information and use of the management of the EPA, the OMB, and
Congress, and it is not intended to be and should not be used by anyone other than these specified
parties.
Damon Jackson
Certified Public Accountant
Director, Financial Directorate
Office of Audit
Office of Inspector General
U.S. Environmental Protection Agency
November 6, 2024
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Attachment A
Material Weaknesses
Table of Contents
1 The EPA Did Not Have Adequate Internal Controls in Place to Record the 2022 Clean
School Bus Rebates Program Funds for FYs 2024 and 2023 12
2 The EPA Did Not Develop an Adequate Process for the Clean School Bus Rebates Program
Accrual Calculation 14
3 The EPA Significantly Understated SSC Accrual Revenue 16
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1 - The EPA Did Not Have Adequate Internal Controls
in Place to Record the 2022 Clean School Bus Rebates
Program Funds for FYs 2024 and 2023
We found that the EPA failed to implement internal controls to make sure funding was properly
allocated in the 2022 Clean School Bus Rebates Program. The Agency recorded the full amount paid to
the rebate recipients as an expense, instead of an advance, prior to the recipient expending the funds.
The EPA informed us that it paid $567.6 million in FY 2023 and $260.4 million in FY 2024 to the Clean
School Bus Rebates Program recipients for a total of $828 million.
According to the monitoring component of the U.S. Government Accountability Office's Standards for
Internal Control in the Federal Government, management should establish and operate monitoring
activities to monitor the internal control system and evaluate the results.
According to OMB Circular No. A-123, federal leaders and managers are responsible for establishing and
achieving goals and objectives, seizing opportunities to improve effectiveness and efficiency of
operations, providing reliable reporting, and maintaining compliance with relevant laws and regulations.
They are also responsible for implementing management practices that effectively identify; assess;
respond; and report on risks, which can arise from a variety of external and internal environments.
Agency managers must continuously monitor, assess, and improve the effectiveness of internal control
associated with those internal control objectives identified as part of their risk profile. This continuous
monitoring and other periodic evaluations provide the basis for the Agency's annual assessment and
reports.
The Agency assumed that the 2022 Clean School Bus Rebates Program would function similarly as its
previous rebate programs and recorded the full amount paid to the recipients as an expense instead of
an advance. The Agency failed to have multiple controls in place, such as a program checklist and
updated guidance on how new programs will be handled once funds are ready to be disbursed.
We acknowledge that the chief financial officer informed us of the incorrect way that OCFO allocated
funding for the Clean School Bus Rebates Program, which allowed us to identify the lack of controls for
new programs. However, failure to properly exercise due diligence in the preparation of the Agency's
financial statements compromises the accuracy of the financial statements and the reliance on them to
be free of material misstatement.
Recommendation
We recommend that the chief financial officer:
1. Develop guidance, including an Office of the Chief Financial Officer checklist, to review,
evaluate, and determine the accounting treatment and financial management considerations for
new and modified programs.
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Agency Response and OIG Assessment
The EPA agreed with our recommendation. The Agency provided an estimated milestone date of
April 1, 2025. We consider this recommendation resolved with corrective action pending.
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2 - The EPA Did Not Develop an Adequate Process for
the Clean School Bus Rebates Program
Accrual Calculation
We found that the EPA used insufficient documentation to develop its process to calculate the Clean
School Bus Rebates Program accrual for FYs 2024 and 2023. In order to support its determination on the
calculation of rebate accruals, the EPA sent the Clean School Bus rebate recipients survey questions
relating to their funding. Since the information the recipients provided to the EPA lacked sufficient
supporting documentation, the EPA's FYs 2024 and 2023 Clean School Bus Rebates Program accrual
could be misstated.
During our review, we found that the EPA did not have sufficient documents or close-out forms to
calculate the rebate accrual accurately. According to the EPA's 2022 Clean School Bus (CSB) Rebates
Program Guide, close-out packages for the 2022 Clean School Bus Rebates Program were not due to the
Office of Air and Radiation for review and validation until October 31, 2024. A close-out package from
the recipient is required per the program's terms. According to the Program Guide, the package must
include the following:
For existing buses being scrapped, scrappage photos and letter for buses being replaced.
For existing buses eligible to be sold or donated, documentation of the vehicle sale or donation.
A scan of the invoices for the replacement buses and eligible infrastructure.
A scan of proof of delivery for the replacement buses and eligible infrastructure.
One photo of the exterior of each replacement bus, labeled with the last four digits of the bus
vehicle identification number.
One photo of each electric vehicle charger after installation is completed if the EPA funds were
used for charging infrastructure.
The Office of the Controller did not receive the close-out packages and the EPA determined that, since
the office did not have a process or procedure to calculate the accrual of the rebates, further analysis
and information was needed. As such, the Office of the Controller contacted the 2022 Clean School Bus
rebate recipients asking them to provide the following information:
• Date and amount of funding received from the EPA for the Clean School Bus Rebates Program in
2023 or 2024.
• Dates when funding was moved to a third party to purchase the buses and the associated
charging equipment.
• Amount of the rebate funding remaining with the recipient as of September 30, 2023.
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• Amount of the rebate funding remaining in the recipient account as of August 30, 2024.
• Amount of the funding that has not yet been spent on eligible program expenses or transferred
to a third party but is planned to be transferred or spent by September 30, 2024.
Eighty-five percent of the rebate recipients responded to the information request, representing
$705 million out of the $828 million rebate amount that the EPA paid. Out of the $705 million, $624
million classified as expenses and $81 million classified as advances. For the 15 percent of rebate
recipients that did not respond, representing $123 million out of $828 million, the EPA did not obtain
clear information and leveraged its statistical office to find noted trends in the survey responses to
allocate a portion of the remaining rebates as either expenses or advances.
When we reviewed the documents that the EPA received from the rebate recipients, we noticed that
the recipients provided varying levels of documentation. Recipients either provided emails, purchase
orders, invoices, or emails with the invoices. Also, when we originally received the files from the intranet
site that the EPA created for us, some of the files were empty. When we inquired as to why, it was
discovered that a technical issue occurred. The EPA resolved the issue and uploaded the information in
the files. Based upon the inadequate documentation in some of the rebate files, we believe the rebate
accrual calculations may not be fully supported. We further note that the lack of information resulted in
the EPA using statistical trends and not factual data to calculate the rebate accrual for certain rebates.
Therefore, the EPA's FYs 2024 and 2023 Clean School Bus Rebates Program accrual could be misstated.
Recommendation
We recommend that the chief financial officer:
2. Develop and implement a methodology for calculating Clean School Bus Rebates Program
accrual calculations.
Agency Response and OIG Assessment
The EPA agreed with our recommendation. The Agency provided an estimated milestone date of
August 1, 2025. We consider this recommendation resolved with corrective action pending.
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3 - The EPA Significantly Understated SSC Accrual
Revenue
We found that the EPA's updated SSC accrual methodology did not recognize SSC state cost share
revenue totaling $115,272,077.64 for the third quarter of FY 2024, or April, May, and June 2024. Federal
financial accounting standards require revenue to be recognized in proportion to the estimated total
cost when goods and services are acquired to fulfill a contract. The error occurred when the Agency did
not consider accounting principles and standards when updating its SSC accrual methodology.
Significant errors caused misstatements in the EPA's financial statements, reducing reliance on them as
a fair representation of the Agency's financial condition and activities.
Statement of Federal Financial Accounting Standards 7, Accounting for Revenue and Other Financing
Sources and Concepts for Reconciling Budgetary and Financial Accounting, is the standard for revenue
recognition in the federal government. The standard states that revenue should be recognized for goods
or services under contracts in proportion to the estimated total cost when goods and services are
acquired to fulfill the contract.
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, describes the EPA's process for managing the financial aspects of the Superfund program
remedial state cost share provisions in SSCs. The directive states that "CFC [Cincinnati Finance Center]
prepares an accrual each fiscal quarter to properly recognize remedial cost share revenue, liabilities, and
accounts receivables based on the cost share requirements, cumulative billings and remedial action
expenditures at each site."1
Pursuant to section 104 of the Comprehensive Environmental Response, Compensation, and Liability Act
of 1980, as amended, before the EPA can provide remedial action in a state, the state must agree to
provide 10 percent of the cost of remedial actions in that state. In addition, in the case of facilities
operated by or on behalf of a state at the time hazardous waste was disposed of, the state must have
agreed to provide 50 percent or more, as determined by the Agency, of the cost of remedial action.
These commitments are stated in the SSCs.
During the third quarter of FY 2024, the Agency updated its SSC accrual methodology to reduce accrued
revenue. Under the updated methodology, the SSC accrued revenue decreased by $115,272,077.64. The
EPA's previous SSC accrual methodology recognized earned revenue as costs were incurred based on
the SSC cost-share requirements, cumulative billings, credits, and remedial action expenses at each site.
The new methodology calculated a revenue accrual only when the Superfund appropriated fund
1 On August 11, 2024, the Office of the Chief Financial Officer reorganized and changed the name of Cincinnati
Finance Center to Cincinnati Finance Division. Resource Management Directive System 2550D-09-P1 is dated
March 31, 2017.
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expenses exceeded the EPA's share of the contract, which is typically 90 percent. As a result, some sites
may not recognize revenue on state cost share for many years.
Table 3-1 shows the SSC accrual differences between the two methodologies for the third quarter of
FY 2024.
Table 3-1: SSC accrual differences between the two methodologies
SSC accrual type
New ($)
Old ($)
Difference ($) I
Work in progress accrual
35,804,396.63
96,491,121.11
(60,686,724.49)
Unbilled receivables
15,935,509.82
70,520,0862.97
(54,585,353.15)
Total revenue
understatement
-
-
(115,272,077.64)
Source: OIG analysis of EPA data. (EPA OIG table)
The understatement occurred because the EPA did not consider accounting principles and standards
when updating the SSC accrual methodology. The Agency believes aligning total expenditures for a site
with the SSC percentage results in a much higher accrual than needed. However, generally accepted
accounting principles and federal financial accounting standards require revenue to be recognized when
earned, as expenses are incurred, and in proportion to the estimated total cost. As a result, the SSC
accrued revenue was significantly understated. Significant errors impact the credibility of the EPA's
financial statements, reducing reliance on them as a fair representation of the Agency's financial
condition and activity.
Recommendation
We recommend that the chief financial officer:
3. Return to the original methodology involving the calculation of the Superfund State Contract
accrual to recognize the revenue amount of $115,272,077.64.
Agency Response and OIG Assessment
After we refuted the EPA's new methodology per generally accepted accounting principles, the Agency
reevaluated the SSC accrual process. We verified that the Agency returned to the original methodology,
which recognizes earned revenue based on the cost-share requirements, cumulative billings, and
remedial action expenditures at each site in their year-end financial statements. The EPA agreed with
our recommendation. The Agency completed the recommendation on September 30, 2024.
17
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Attachment B
Significant Deficiency
Table of Contents
4 EPA Property Balances Are Not Reliable 19
18
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4 - EPA Property Balances Are Not Reliable
We found that the EPA's inventory management process did not adhere to procedures specified in EPA
Manual 4832, Personal Property Manual. Based on the information that was provided to us from the
Agency, we found that property was not received at a designated centralized receiving point and
property decals were not affixed to EPA property. We also found that property held by contractors was
not reconciled with EPA records and $5,454,962.57 worth of personal property was held as rejected in
the EPA's accounting system. Due to a lag in invoicing, a discrepancy of $40,610,646.43 was recorded in
the construction in-progress general ledger account instead of properly recorded in the building
account.
Section 5.3 of the Personal Property Manual provides that:
"As a standard practice, all personal property assets acquired by the EPA shall be
received by a designated PAO [Property Accountable Officer] at a designated
centralized receiving point. This will ensure that assets are properly inspected,
labeled, recorded and secured. Only under unique circumstances will property be
delivered directly (e.g., large outsized and heavy assets requiring special handling, or
large volume [over 100] of assets) to a using location and only when coordinated
through the Property Management Officer (PMO). All direct deliveries must be
coordinated through the PAO so the property can be received properly."
We were informed that occasionally, the acquired equipment is shipped directly to the requesting
offices instead of the Office of Mission Support centralized receiving warehouse for property. Not
receiving property properly as set forth in the Personal Property Manual can lead to improperly
documenting receipt of property.
The Personal Property Manual also provides protocol as to how materials are to be processed upon
receipt. Section 5.5 of the Personal Property Manual provides that standard receiving procedures shall
address, at a minimum, the following elements:
• Verifying. The correct items and quantities were delivered based on the associated purchase
order and shipping documents.
• Inspecting. The determination that items were received undamaged.
• Accepting. The acknowledgement and verification of inspected items are correct and if an
incorrect item or quantity was shipped or an item arrived damaged, it is returned.
• Decaling. The labeling and placement of an appropriate EPA property decal on accountable
personal property received.
• Recording. The accurate recording of decaled personal property in the Agency Asset
Management System
• Documenting. Maintaining documentation that evidences receipt, title, stewardship, delivery,
and other activities.
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In addition, section 3.9.5 and section 3.7.3 of the Personal Property Manual respectively provide:
"Conducting the Physical Inventory
PCOs [Property Custodial Officers] are responsible for conducting the physical
inventory of the property assigned to their Custodial Area (CA) by the date scheduled
bytheir PMO. PAOs should also develop procedures to guide their PCOs in conducting
the inventories and ensure such activities meet the [appropriate] criteria."
"Reconciliation of Property and Financial Records
EPA Financial Management relies on the agency's property management team to
maintain complete and accurate property records to report the investment and
depreciation of capitalized personal property owned by the agency. Capitalized
personal property accountability records must be reconciled quarterly with the
financial control accounts in accordance with procedures established by the EPA
CFO."
During our audit, we were informed by Agency personnel that property was being received directly at
the requesting offices, property was recorded incorrectly, property decals were not applied, and
property was not recorded as received. Moreover, Agency personnel stated that property held by
contractors was not reconciled with EPA records and capitalization of the property was not reconciled
on a quarterly basis. This resulted in $5,454,962.57 worth of personal property held as rejected in
Compass and a $40,610,646.43 discrepancy recorded in the EPA's accounting system.
As a result of failing to follow the Personal Property Manual, inventory controls were not in place,
personal property assets did not go through standard receiving procedures and personal property was
not accurately recorded in the Agency Asset Management System. In addition, not properly reconciling
capitalization accounts resulted in a misstatement of assets and expenses on the Agency's financial
statements.
Recommendations
We recommend that the assistant administrator for Mission Support, in conjunction with the chief
financial officer:
4. Develop and implement a standardized intake process for receipt of personal property, including
application of property decals, as provided in EPA Manual 4832, Personal Property Manual.
5. Develop and implement a process for capitalized personal property accountability records to
include control logs or other similar accounting mechanisms, to be properly reconciled quarterly
with the financial control accounts.
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6. Reconcile the $5,454,962.57 worth of personal property held as rejected in the EPA's accounting
system.
7. Reconcile the $40,610,646.43 that was recorded in the construction in-progress in the proper
account.
Agency Response and OIG Assessment
The EPA agreed with our recommendations. For Recommendation 4, the Agency provided an estimated
milestone date of October 15, 2025. For Recommendation 5, the Agency provided estimated milestone
dates of February 1, 2025; October 15, 2025; and June 1, 2025. The Agency partially completed
Recommendation 6 on October 18, 2024, and provided an estimated milestone date of July 1, 2025. The
Agency completed Recommendation 7 on November 6, 2024. We consider these recommendations
resolved with corrective actions pending.
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Attachment C
Compliance with Laws and Regulations
Table of Contents
5 The EPA Failed to Comply with and Implement OMB Circular No. A-123 Provisions 23
6 The EPA Improperly Recorded Advances as Expenses for the Clean School Bus
Rebates Program 25
22
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5 - The EPA Failed to Comply with and Implement
OMB Circular No. A-123 Provisions
Based on the information that was provided to us, we found that the EPA failed to implement and
integrate key elements of OMB Circular No. A-123, including:
• Assessment process for internal controls.
• Governance structure for risk management and defining risk appetite.
• Completion of annual risk profiles.
These key inputs determine the level and effectiveness of internal control testing and evaluation.
Internal controls are tools to help an agency and financial managers achieve results and protect the
integrity of operations.
According to OMB Circular No. A-123, federal leaders and managers are responsible for establishing and
achieving goals and objectives, seizing opportunities to improve effectiveness and efficiency of
operations, providing reliable reporting, and maintaining compliance with relevant laws and regulations.
They are also responsible for implementing management practices that effectively identify; assess;
respond; and report on risks, which can arise from a variety of external and internal environments.
OMB Circular No. A-123 directs that management must implement an assessment process "to properly
assess and improve internal controls over operations, reporting, and compliance." Similarly,
management is responsible for a governance structure in order to have a robust process of risk
management and internal control, including developing a process to define risk appetite. OMB Circular
No. A-123 also provides that agencies must annually complete risk profiles to "identify risks arising from
mission and mission-support operations and consider those risks as part of the annual strategic review
process." As further explained in the circular, "[t]he primary purpose of a risk profile is to provide a
thoughtful analysis of the risks an Agency faces toward achieving its strategic objectives arising from its
activities and operations, and to identify appropriate options for addressing significant risks."
Based on information provided to us by the Agency, we found that the EPA failed to implement and
integrate these key elements of OMB Circular No. A-123. More specifically, we identified that it does not
have an appropriate governance structure to guide its risk management or have an assessment process
to review and improve its internal controls. The Agency also does not implement the required annual
risk profile. All these key inputs determine the level and effectiveness of internal controls testing and
evaluation. According to the OMB circular, internal controls are tools to help an agency and financial
managers achieve results and protect the integrity of their programs and operations.
Additionally, OMB Circular No. A-123, Appendix D, Management of Financial Management Systems -
Risk and Compliance, applies a risk-based approach to determine whether an agency's financial
management systems comply substantially with federal financial management systems requirements,
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applicable federal accounting standards, and the U.S. Standard General Ledger at the transaction level.
Agencies have the latitude to apply risk management concepts defined in Appendix D to determine the
scope necessary to meet management assurance requirements. The goal of Appendix D is to define
agency requirements for determining compliance with the FFMIA.
Without the proper internal controls in place, an internal control assessment process, a governance
structure to implement risk management, and complete annual risk profiles, the Agency does not have
the ability to properly monitor, identify, and mitigate risk and correct internal control deficiencies. This
can cause inaccuracy on the annual assurance statement for the Agency, in addition to potential
misstatements in the financial statements and notes.
Recommendations
We recommend that the chief financial officer:
8. Develop and implement an assessment process to assess and improve internal controls over
operations, reporting, and compliance.
9. Develop a governance structure to implement risk management and internal processes,
including a process to define risk appetite.
10. Develop and implement a plan to complete annual risk profiles to identify risks arising from
Agency programs and operations.
Agency Response and OIG Assessment
The EPA agreed with our recommendations. The Agency provided an estimated milestone date of
October 1, 2025. We consider these recommendations resolved with corrective actions pending.
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6 - The EPA Improperly Recorded Advances as
Expenses for the Clean School Bus Rebates Program
During FYs 2024 and 2023, the EPA did not comply with federal financial accounting standards and
financial requirements by improperly recording advances as expenses for the Clean School Bus Rebates
Program disbursements. The federal financial accounting standards and financial reporting
requirements state that advances are cash outlays made by a federal entity to others to cover a part or
all of the recipients' anticipated expenses or as advance payments for the cost of goods and services
acquired. By not recording the disbursements from the Clean School Bus Rebates Program as advances,
the EPA did not comply with federal financial reporting requirements.
OMB Circular No. A-136 Section 11.3, Financial Reporting Requirements, requires that information in
financial statements be presented in accordance with generally accepted accounting principles, which
include the Federal Accounting Standards Advisory Board's Statement of Federal Financial Accounting
Standards. As stated in the OMB Circular:
"Advances are cash outlays made by a Federal entity to its employees, contractors,
grantees, or others to cover a part or all of the recipients' anticipated expenses or as
advance payments for the costs of goods and services the entity receives."
"Gross program costs should be reported and consist of: (a) direct and indirect costs
and (b) the costs of identifiable supporting services provided by other programs
within the entity and by other entities."
Statement of Federal Financial Accounting Standards 1, Accounting for Selected Assets and Liabilities,
states:
"Advances are cash outlays made by a federal entity to its employees, contractors,
grantees, or others to cover a part or all of the recipients' anticipated expenses or as
advance payments for the cost of goods and services the entity acquires."
"Advances and prepayments should be recorded as assets. Advances and
prepayments are reduced when goods or services are received, contract terms are
met, progress is made under a contract, or prepaid expenses expire."
"In financial reports of an entity, advances and prepayments the entity paid out
(assets) should not be netted against advances and prepayments that the entity
received (liabilities)."
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Resource Management Directive System Number 2540-04-P3, Accounts Payable Policies and Procedures
for Recognizing Year-End Accrued Liabilities for Grants, states the following:
"1. Accruals must be established for that portion of obligations where the grantee
incurred expense but has not yet billed. While the amounts recorded as grant accruals
are estimates, every effort should be made to develop a methodology that will closely
reflect the actual amount outstanding at the end of ... each quarterly and year end
reporting period."
"2. To the extent possible, estimates should be projected based on historical analysis
of unbilled costs incurred prior to year-end."
During our FY 2024 testing, we found that the EPA improperly recorded four Clean School Bus Rebates
Program payments totaling $19,838,292.17 as expenses instead of advances prior to the funds being
expended, as shown in Table 6-1.
Table 6-1: FY 2024 payments recorded as expenses
Date
Document Number
Dollar Amount ($)
12/13/23
24DRFZ2081
7,505,000.00
1/18/24
24DRFZ2007
7,615,164.17
1/18/24
24DRFS2101
1,580,000.00
1/24/24
24DRFS2112
3,138,128.00
Total payments
-
19,838,292.17
Source: OIG analysis of EPA data. (EPA OIG table)
We were also able to identify that in FY 2023, the EPA improperly recorded seven Clean School Bus
Rebates Program payments totaling $36,273,056.97 as expenses instead of advances prior to the funds
being expended, as shown in Table 6-2.
Table 6-2: FY 2023 Payments Recorded as Expenses
I Date
I Document Number
I Dollar Amount ($) 1
5/23/23
23DRFZ2109
1,104,000.00
5/25/23
23DRFZ2091
9,875,000.00
5/25/23
23DRFS2108
9,874,500.00
5/25/23
23DRFZ2027
1,177,181.97
6/23/23
23DRFS2133
3,972,375.00
6/23/23
23DRFZ2004
395,000.00
6/29/23
23DRFS2002
9,875,000.00
Total payments
-
36,273,056.97
Source: OIG analysis of EPA data. (EPA OIG table)
The EPA used an existing rebate accounting model that was established for the Diesel Emissions
Reduction Act to record the Clean School Bus Rebates Program payments in Compass. This resulted in
the payments being recorded as expenses instead of advances. In September 2024, the EPA identified
and corrected the posting model for the Clean School Bus Rebates Program and reclassified all payments
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as advances. Also, all future payments involving the program should be recorded as advances instead of
expenses. By not complying with the reporting requirements, the EPA could undermine the trust and
reliability of its financial statements.
Recommendations
We recommend that the chief financial officer:
11. Update the accounting model for the Clean School Bus Rebates Program to comply with federal
reporting requirements.
12. Develop guidance on recording the payments for the Clean School Bus Rebates Program in the
EPA's accounting system.
13. Reconcile the advances and expenses quarterly for the Clean School Bus Rebates Program.
Agency Response and OIG Assessment
The EPA agreed with our recommendations. The Agency completed Recommendation 11 on
September 2, 2024. The Agency provided an estimated milestone date of February 1, 2025, for
Recommendations 12 and 13. We consider these recommendations resolved with corrective actions
pending.
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Attachment D
Status of Prior Audit Report Recommendations
As noted in the table below, there are still recommendations from previous financial statement audits
that have not been fully implemented.
Table D-1: Significant deficiency issues not fully resolved
Originating Offices Did Not Forward Accounts Receivable Source Documents to the Finance Division 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 Division 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 Division 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 Division. When the Cincinnati Finance Division 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 2024. 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 Provide Accurate Information for Its Revenue Accruals
During FY 2023, 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. Based
on our findings, we recommended that the chief financial officer (1) instruct the regions to perform an analysis of
financially closed SSCs to reclassify appropriated and reimbursable disbursements and financially close lines on
the accrual and (2) instruct the regions to provide current SSC information quarterly to the Cincinnati Finance
Division. We recommended that the director for the Great Lakes Legacy National Program Office review the Great
Lakes Legacy Act accrual project information to the Cincinnati Finance Division to ensure its accuracy. During FY
2024, we found that the Agency reported the actions as complete; however, based on the results of SSCs and
Great Lakes Legacy Act accrual analyses and sample testing, we found instances of inaccurate information
reported on the revenue accruals. Therefore, the EPA's corrective actions are not yet effective.
Source: OIG analysis of prior-year recommendations and the Agency's corrective actions. (EPA OIG table)
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Attachment E
Status of Recommendations
and Potential Monetary Benefits
Potential
Planned
Monetary
Rec.
Page
Completion
Benefits
No.
No.
Recommendation
Status*
Action Official
Date
(in $000s)
1 12 Develop guidance, including an Office of the Chief Financial R
Officer checklist, to review, evaluate, and determine the
accounting treatment and financial management considerations
for new and modified programs.
2 15 Develop and implement a methodology for calculating Clean R
School Bus Rebates Program accrual calculations.
3 17 Return to the original methodology involving the calculation of C
the Superfund State Contract accrual to recognize the revenue
amount of $115,272,077.64.
4 20 In conjunction with the chief financial officer, develop and R
implement a standardized intake process for receipt of personal
property, including application of property decals, as provided in
EPA Manual 4832, Personal Property Manual.
5 20 In conjunction with the chief financial officer, develop and R
implement a process for capitalized personal property
accountability records to include control logs or other similar
accounting mechanisms, to be properly reconciled quarterly with
the financial control accounts.
6 21 In conjunction with the chief financial officer, reconcile the R
$5,454,962.57 worth of personal property held as rejected in
EPA's accounting system.
7 21 In conjunction with the chief financial officer, reconcile the C
$40,610,646.43 that was recorded in construction in-progress in
the proper account.
8 24 Develop and implement an assessment process to assess and R
improve internal controls over operations, reporting, and
compliance.
9 24 Develop a governance structure to implement risk management R
and internal processes, including a process to define risk
appetite.
10 24 Develop and implement a plan to complete annual risk profiles to p
identify risks arising from Agency programs and operations.
11 27 Update the accounting model for the Clean School Bus Rebates C
Program to comply with federal reporting requirements.
12 27 Develop guidance on recording the payments for the Clean R
School Bus Rebates Program in the EPA's accounting system.
13 27 Reconcile the advances and expenses quarterly for the Clean R
School Bus Rebates Program.
Chief Financial Officer 4/1/25
Chief Financial Officer 8/1/25
Chief Financial Officer 9/30/24
Assistant Administrator for 10/15/25
Mission Support
Assistant Administrator for 6/1/25
Mission Support
Assistant Administrator for 7/1125
Mission Support
Assistant Administrator for 11/6/24
Mission Support
Chief Financial Officer 10/1/24
Chief Financial Officer 10/1/25
Chief Financial Officer 10/1/25
Chief Financial Officer 9/1/24
Chief Financial Officer 2/1/25
Chief Financial Officer 2/1/25
$827,991
$115,272
$5,455
$40,611
*C = Corrective action completed.
R = Recommendation resolved with corrective action pending.
U = Recommendation unresolved with resolution efforts in progress.
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Appendix 1
The EPA's Fiscal Year 2024 and 2023 Consolidated Financial
Statements (with Restatement)
30
120
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Appendix 2
Agency Response to Draft Report
^0ST^,
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-------
While the CSB rebate program is not a grant program, but a hybrid between a rebate and a grant
program (advance), the EPA considered the guidance provided by the Federal Accounting Standards
Advisory Board's Federal Financial Accounting Technical Release 12, Accrual Estimates for Grant
Programs (August 4, 2010), when formulating the CSB rebate expense accrual. Technical Release 12
advises agencies with new grant programs in section 16 that "in the absence of sufficient relevant and
reliable historical data on which to base accrual estimates, agencies should prepare estimates based
upon the best available data at the time the estimates are made."
In the absence of historical data or closeout forms from the recipients (which were not due until the
end of October 2024), the agency coordinated with the Office of Air and Radiation on the process for
requesting information directly from the rebate recipients. To form a supportable expense accrual for
the CSB rebate program, the EPA collected data from recipients of the 2022 rebate program requesting
information on the status of the funds received by the recipients. The agency received an 85 percent
response rate to its information request, which provided adequate information to form the basis of its
expense accrual. For the remaining 15 percent ($123 million) of the recipients, the EPA leveraged the
expertise of its statistical office to allocate a portion of the remaining rebates as expenses and to
provide further support in the reliability and reasonable assurance of the assumptions for the accrual
calculation.
The agency believes that the process it used to calculate the expense accrual for the CSB rebate
program was reasonable, had sufficient support to justify reliability of the accrual for a program in its
second year of operation, and was applied consistently for the preparation and fair presentation of the
consolidated financial statements for fiscal years 2024 and 2023. However, the EPA will further
develop and implement an enhanced methodology as additional data is received from the recipients.
AGENCY RESPONSE TO DRAFT REPORT RECOMMENDATIONS
Recommendation
Office
High-Level Intended Corrective Action(s)
Planned
Date
1. Develop guidance, including
OCFO
Concur. The OCFO-OC's Policy and
4/1/25
an Office of the Chief Financial
Accountability Division will develop
Officer checklist to review,
guidance for new or modified programs to
evaluate, and determine the
utilize during program design, in order to
accounting treatment and
ensure proper accounting treatments and
financial management
financial management principles are
considerations for new and
implemented.
modified programs.
The OCFO-OC's PAD will develop a
checklist to assess risks and internal
controls for new or modified programs to
be included in the Enterprise Risk
Management and Program Integrity
Annual Guidance.
4/1/25
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Recommendation
Office
High-Level Intended Corrective Action(s)
Planned
Date
2. Develop and implement a
methodology for calculating
Clean School Bus Rebates
Program accrual calculations.
OCFO
Concur. The OCFO-OC's Finance and
Accounting Division will refine the
methodology for calculating CSB Program
rebate accruals.
8/1/25
3. Return to the original
methodology involving the
calculation of the SSC accrual
to recognize the revenue
amount of $115,272,077.64.
OCFO
Concur. The OCFO-OC's Cincinnati Finance
Division returned to the original
methodology.
Completed
9/30/24
4. In conjunction with the
Chief Financial Officer,
develop and implement a
standardized intake process
for receipt of personal
property, including application
of property decals, as
provided in EPA Manual 4832,
Personal Property Manual.
OMS
Concur. The OMS will implement a
standard intake process for receipt of
personal property governing a new,
varying process of receiving and decaling
assets when receipt outside of an OMS
warehouse is necessary.
10/15/25
5. In conjunction with the
Chief Financial Officer,
develop and implement a
process for capitalized
personal property
accountability records to be
properly reconciled quarterly
with the financial control
accounts and develop a
process that allows the
Agency to review and monitor
all contractor activities with
control logs.
OMS
Concur. The OMS will develop and
implement a process for capitalized
personal property accountability records
to be reconciled quarterly. Additionally,
OMS will develop a process to review and
monitor contractor control logs.
The OCFO-OC's Research Triangle Park
Finance Division will enhance
collaboration between the RTPFD and
OMS, increasing the frequency of
collaboration meetings from annually to
quarterly to discuss new acquisitions and
dispositions.
The OCFO-OC's PAD will create a test plan
and conduct an A-123 Review of
Contractor Held Property transactions for
FY2025.
10/15/25
2/1/25
6/1/25
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Recommendation
Office
High-Level Intended Corrective Action(s)
Planned
Date
6. In conjunction with the
OMS
Concur. As part of the normal OCFO-OC's
Completed
Chief Financial Officer,
RTPFD process, the two systems are
10/18/24
reconcile the $5,454,962.57
reconciled quarterly, and variances are
worth of personal property
documented and investigated for
held as rejected in EPA's
resolution.
accounting system.
The OCFO-OC's RTPFD and OMS will
develop a business case to enhance
Personal Property, Real Property, and
Contractor Held Property through system
integration between Compass and
Sunflower.
7/1/25
7. In conjunction with the
OMS
Concur. Fixed Asset Transfers in the
Completed
Chief Financial Officer,
amount of $40,610,646.43 were properly
11/6/24
reconcile the $40,610,646.43
reconciled and transferred in Period 15 of
that was recorded in
FY2024 by the OCFO-OC.
construction in-progress in the
proper account.
8. Develop and implement an
OCFO
Concur. The OCFO-OC's PAD will further
10/1/25
assessment process to assess
develop and implement strategies to
and improve internal controls
improve internal controls, including
over operations, reporting,
strengthening guidance, enhancing
and compliance.
training, and conducting an assessment to
validate effectiveness.
9. Develop a governance
OCFO
Concur. The OCFO is developing a process
10/1/25
structure to implement risk
to strengthen its risk management
management and internal
oversight, including implementing an
processes, including a process
enhanced governance structure and
to define risk appetite.
establishing the agency's risk appetite
process.
10. Develop and implement a
OCFO
Concur. The OCFO will develop and
10/1/25
plan to complete annual risk
implement the EPA's risk management
profiles to identify risks arising
plan to complete annual risk profiles for
from Agency programs and
agency programs and operations.
operations.
11. Update the accounting
OCFO
Concur. The OCFO-OC's FAD identified the
Completed
model for the Clean School
accounting issue and updated the
9/2/24
Bus Rebates Program to
accounting models for the CSB rebate
comply with federal reporting
payments to properly record them as
requirements.
advances when disbursed.
12. Develop guidance on
OCFO
Concur. The OCFO-OC will develop
2/1/25
recording the payments for
guidance on the lifecycle of recording CSB
the Clean School Bus Rebates
payments to include the reconciliation of
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Recommendation
Office
High-Level Intended Corrective Action(s)
Planned
Date
Program in the EPA's
accounting system.
the close-out packages for final expense
transaction recording.
13. Reconcile the advances
and expenses quarterly forthe
Clean School Bus Rebates
Program.
OCFO
Concur. The OCFO-OC's RTPFD will
reconcile the advance payments and
expenses for the CSB rebate program after
the end of each quarter.
2/1/25
CONTACT INFORMATION
If you have any questions regarding this response, please contact the OCFO's Audit Follow-up
Coordinator, Andrew LeBlanc, at leblanc.andrewPepa.gov or (202) 564-1761.
cc: Gregg Treml
Lek Kadeli
Meshell Jones-Peeler
Adil Gulamali
Kimberly Patrick
Dan Coogan
Andrew Battin
Angel Robinson
Stefan Martiyan
John M. Hall
Derek David
Wyatt Boyd
Noha Gaber
OCFO-OC-MANAGERS
Demetrios Papakonstantinou
Shannon Lackey
Sheila May
Andrew Sheeran
Gabrielle Hanson
Yvette Jackson
Marilyn Armstrong
Afreeka Wilson
Darryl Perez
Larisha McKnight
Alana Maye
Susan Perkins
Andrew LeBlanc
Shay Bracey
Jose Kercado
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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
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
Controller
Deputy Controller
Associate Deputy Controller
Director, Office of Continuous Improvement, Office of the Chief Financial Officer
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
99
126
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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.CongressionalAffairsffiepa.gov
Media Inquiries: OIG.PublicAffairs@epa.gov
'line EPA OIG Hotline: OIG.Hotline@epa.gov
¦w Web: epaoig.gov
Follow us:
X (formerly Twitter): (Sepaoig
Linkedln: linkedin.com/company/epa-oig
YouTube: voutube.com/epaoig
,01 Instagram: ;S?epa.ig.on,ig
-------
Section
Other Accompanying
Information
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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
2024 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 2024, the EPA identified one new material weakness. Two 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.
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FY 2024 and FY 2025 TOP MANAGEMENT CHALLENGES
Office of Inspector General - Identified Top Management Challenges
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 2024 Top Management Challenges, the OIG retained 7 management challenges and identified one new
top management challenge for FY 2025. 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 2024
FY 2025
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. It therefore needs to continue efforts to reduce greenhouse gas emissions,
promote resiliency and adaptation, address cumulative and disparate impacts, and engage
with international partnerships.
•
Integrating and implementing environmental justice. Achieving environmental justice
remains a whole-of-government focus and necessitates that the EPA harness agencywide
coordination and make cross-program decisions that weigh cumulative risks and impacts to
the communities that the Agency serves.
•
Safeguarding the use and disposal of chemicals. The public must be able to trust 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. To ensure public trust and
program integrity, the EPA's decision-making and program implementation must be grounded
in sound scientific principles and its employees, especially its senior officials, must adhere to
rigorous ethical standards.
•
Managing grants, contracts, and data systems. Effective management of grants, contracts,
and related data is critical to reducing the risk of fraud, waste, abuse, and noncompliance with
funding requirements, especially as the risks increase with the influx of approximately $100
billion in supplemental appropriations under the Infrastructure Investment and Jobs Act and
Inflation Reduction Act.
•
Maximizing compliance with environmental laws and regulations. The EPA's monitoring and
enforcement activities remain below ten-year averages, while the Agency's ability to maximize
compliance faces difficulties related to variations in permitting, management of delegated
state programs, incorporation of environmental justice concerns, and uncertainties that may
result from recent court decisions.
•
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 and drinking water.
•
Recruiting and retaining staff for new and existing programs. The EPA faces difficulties
recruiting and retaining the number and caliber of employees it needs to accomplish its
mission. The recent influx of supplemental appropriations underscores the Agency's need to
complete workforce planning and support human capital development to maintain and grow
its workforce so it can implement existing and new programs.
•
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At a Gl
The EPA's Fiscal Year 2025 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 to
briefly assess the agency's progress in
addressing those challenges.
To identify these tcp challenges for
fiscal year 2025, 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 2024
Top Management Challenges,
published November 2023, identified
seven top management challenges
facing the Agency. For fiscal
year 2025, we retained all seven of
these challenges and added a new
challenge related to the Agency's
recruiting and retention efforts. In total,
we identified eight top management
challenges.
Address inquiries to our public
affairs office at (202) 566-2391 or
Ol G.P ub I ic Affa i rs @e |jg, gov.
What We Found
We identified eight top management challenges for the EPA for fiscal year 2025:
1. Mitigating the causes and adapting to the impacts of climate change. Hie
EPA has prioritized addressing climate change as a core aspect of its mission to
protect human health and the environment. It therefore needs to continue efforts
to reduce greenhouse gas emissions, promote resiliency and adaptation, address
cumulative and disparate impacts, and engage with international partnerships.
2. Integrating and implementing environmental justice. Achieving environmental
justice remains a whole-of-govemment focus and necessitates that the EPA
harness agencywide coordination and make cross-program decisions that weigh
cumulative risks and impacts to the communities that the Agency serves.
3. Safeguarding the use and disposal of chemicals. The public must be able to
trust 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. To ensure
public trust and program integrity, the EPA's decision-making and program
implementation must be grounded in sound scientific principles and its employees,
especially its senior officials, must adhere to rigorous ethical standards.
5. Managing grants, contracts, and data systems. Effective management of
grants, contracts, and related data is critical to reducing the risk of fraud, waste,
abuse, and noncompliance with funding requirements, especially as the risks
increase with the influx of approximately $ 100 billion in supplemental
appropriations under the Infrastructure Investment and Jobs Act and Inflation
Reduction Act.
6. Maximizing compliance with environmental laws and regulations. The EPA's
monitoring and enforcement activities remain below ten-year averages, while the
Agency's ability to maximize compliance faces difficulties related to variations in
permitting, management of delegated state programs, incorporation of
environmental justice concerns, and uncertainties that may result from recent
court decisions.
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 and
drinking water.
8. Recruiting and retaining staff for new and existing programs. The EPA faces
difficulties recruiting and retaining the number and caliber of employees it needs to
accomplish its mission. The recent influx of supplemental appropriations
underscores the Agency's need to complete workforce planning and support
human capital development to maintain and grow its workforce so it can
implement existing and new programs.
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 barriers to the EPA accomplishing its mission.
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Agency Response to Office of Inspector General - Identified Top Management Challenges
The Office of the Inspector General did not transmit the final "EPA's FY2025 Top Management Challenges"
report by November 15, 2024. The agency plans to review the final report and prepare a response, if necessary,
to this report.
132
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Summary of Financial Statement Audit
Audit Opinion
Unmodified Opinion
Restatement
Yes
Material Weaknesses
Beginning
Balance
New
Resolved
Consolidated
Ending
Balance
Adequate Internal Controls for New
or Modified Programs
0
1
0
0
1
Clean School Bus Rebates Accrual
Calculation
0
1
0
0
1
Superfund State Contract Accrual
Revenue
0
1
1
0
0
Total Material Weaknesses
0
3
1
0
2
Summary of Management Assurances
Effectiveness of Internal Control Over Financial Reporting (FMFIA § 2)
Statement of Assurance
Modified
Material Weaknesses
Beginning
Balance
New
Resolved
Consolidated
Reassessed
Ending
Balance
Adequate Internal Controls for New
or Modified Programs
0
1
0
0
0
1
Clean School Bus Rebates Accrual
Calculation
0
1
0
0
0
1
Superfund State Contract Accrual
Revenue
0
1
1
0
0
0
Total Material Weaknesses
0
3
1
0
0
2
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
No lack of substantial compliance
compliance noted.
noted.
2. Accounting Standards
No lack of substantial
No lack of substantial compliance
compliance noted.
noted.
3. USSGLat Transaction Level
No lack of substantial
No lack of substantial compliance
compliance noted.
noted.
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PAYMENT INTEGRITY
Payment Integrity Information Act of 2019 Requirements
The Payment Integrity Information Act of 2019 (PIIA) 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 as well as post the results on PaymentAccuracy.gov. The PI IA
further requires each agency's Office of Inspector General (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 P11 A; the 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 3 years to identify those that are susceptible
to significant improper payments, defined as gross annual improper payments exceeding (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 amount of improper payments in programs
identified as susceptible to significant improper payments.
3. Implement a plan to reduce improper payments in these programs.
4. Report the 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 programs 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.
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Office of Inspector General's Compliance Determination for FY2024
On May 29, 2024, the EPA's Office of Inspector General released its annual report of the agency's prior fiscal
year PIIA compliance. In the report, the EPA's OIG stated that:
The EPA complied with the requirements of the Payment Integrity Information Act of 2019, or
PI IA, and the applicable Office of Management and Budget guidance for its fiscal year 2023
reporting. The EPA has made progress in resolving corrective action plans and efforts to prevent
and reduce improper payments from prior audit recommendations, but Agency corrective
actions are still in process. The Agency satisfied these requirements for PI IA compliance for FY
2023 but has an opportunity to improve internal controls to provide better oversight of its
payment integrity activities.
As a result of its review, the OIG recommended that:
1. The Chief Financial Officer develop guidance for generating and maintaining documentation to
support risk assessment determinations of whether EPA programs are susceptible to significant
improper payments.
2. The EPA should develop oversight guidance and mechanisms to monitor the resolution of unknown
payments, as well as develop processes and tools to periodically collect and analyze agencywide
payment integrity activities and related information for preventing and reducing improper and
unknown payments.
The agency agreed to implement these recommendations and took the following actions to satisfy requirements of
OIG's recommendations:
• In June of 2024, the EPA completed revisions to its Qualitative Risk Assessments Standard Operating
Procedures that includes processes for standardizing and scoring the review process.
• Also, in June of 2024, the Payment Integrity Team started a monthly data call to survey each payment
stream to report improper payments.
Summary of criteria to be compliant with PIIA
To be considered compliant with the Payment Integrity Information Act (PIIA), federal agencies must meet up to
six annual reporting requirements listed below.
1. Publish Payment Integrity Information: Agencies must include payment integrity information in
their annual financial statements and accompanying materials, which must also be posted on the
agency's website and on PaymentAccuracy.gov. (Applicable to ALL Federal Agencies)
2. Conduct Risk Assessments: Programs with annual outlays over $10 million must undergo
risk assessments at least once every three years to determine susceptibility to improper
payments. (Applicable to ALL Federal Agencies)
3. Estimate Improper Payments: Agencies must produce statistically valid estimates of improper
and unknown payments for susceptible programs and publish these estimates. (Applicable to
Programs Deemed Susceptible to Significant Improper Payments)
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4. Develop Corrective Action Plans: Agencies are required to publish corrective action plans for
programs with improper payment estimates above the statutory threshold. (Applicable to Programs
Deemed Susceptible to Significant Improper Payments)
5. Set and Achieve Reduction Targets: Agencies must publish reduction targets for improper payments
and demonstrate improvements in payment integrity or achieve a tolerable rate of improper
payments. (Applicable to Programs Deemed Susceptible to Significant Improper Payments)
6. Report on Payment Rates: Agencies need to report an improper and unknown payment rate of less
than 10% for each program. (Applicable to Federal Agencies with an Improper Payment or Unknown
Payment Rate Above 10%)
Summary of current risk/susceptibility levels in EPA programs
The Office of Management and Budget uses three levels to classify federal agency improper payments risk: Not
Susceptible to Significant Improper Payments, Susceptible to Significant Improper Payments, and High Priority.
None of the agency's programs were identified as high priority (defined as exceeding $100 million of annual
estimated improper payments under PIIA). The individual risk status of the agency's programs is summarized in
Table 1: Program Risk Level.
In FY 2023, the EPA conducted improper payment risk assessments using a systematic approach to determine
whether each program or payment stream is susceptible to significant improper payments. The risk assessments
required an evaluation of risk factors that could contribute to the potential for significant improper payments.
One new program, the Water Infrastructure Finance, and Innovation Act (WIFIA) program was included in the
risk assessment in the FY 2023 process. For their individual risk assessments, each office addressed risks known
at the time of completion. Results showed that 8 of the 9 payment streams reviewed were unlikely to be
susceptible to significant improper payments. The agency's Grants program was identified as likely to be
susceptible requiring a more rigorous review of its payments.
In FY 2024, the EPA identified four additional programs that were expected to surpass the $10 million of annual
outlays threshold that triggers the requirement to complete a Payment Integrity risk assessment. Ultimately,
two of the four programs (Clean School Bus- Rebates and Settlements) met the criteria, resulting in each
completing their own qualitative risk assessment. The other two programs, the Greenhouse Gas Reduction
Fund, and the Environmental Justice Grants program, are expected to complete their own risk assessments in FY
2025.
Table 1 summarizes the risk level for each of the agency's payment streams.
Table 1: Program Risk Level
Payment Stream
Not Susceptible to
Significant IPs
Susceptible to
Significant IPs
Year of Last Risk
Assessment
Commodities
X
2023
Contracts
X
2023
CWSRF
X
2023
DWSRF
X
2023
Grants
X
2023
Clean School Bus Rebates
X
2024
Clean School Bus Grants
2025
Settlements
X
2024
Payroll
X
2023
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Table 1: Program Risk Level
Payment Stream
Not Susceptible to
Significant IPs
Susceptible to
Significant IPs
Year of Last Risk
Assessment
Purchase Cards
X
2023
Travel
X
2023
GGRF*
2025
Environmental Justice
Grants*
2025
2018 Disaster Relief
Fundst
X
N/A
WIFIA
X
2023
*The Green House Gas Reduction Fund (GGRF) and the Environmental Justice Grants are scheduled to do the program's risk
assessments in FY 2025.
+The 2018 Disaster Relief Funds continue to spend well below the $10 million threshold for requiring a risk assessment.
I. EPA's Risk Assessments
Under the PIIA, federal agencies are required to conduct risk assessments of their programs or activities at least
once every three years to determine whether they are susceptible to significant improper payments1. These risk
assessments can be either qualitative or quantitative reviews. The EPA utilizes both methods to assess the risk of
improper payments in its payment streams. A qualitative risk assessment is an evaluation of risk factors that
could contribute to the occurrence of significant improper payments. A quantitative risk assessment may consist
of a true statistical sample of payments for review or through the use of a non-statistical assessment where a
subset of the population is sampled non-randomly. With each those results, the ratio of improper payments is
projected onto the annual outlays.
The agency's 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 following risk factors
are addressed in the agency's qualitative risk assessments:
1. How long the program has been at the agency and when did it make its first payment.
2. The complexity of the program reviewed.
3. The change in 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 authorities, practices, procedures, or funding,
6. The level, experience, documentation, and quality of training for personnel responsible for making
program eligibility determinations or certifying that payments are accurate.
7. Significant deficiencies or material weaknesses identified 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 IP2 and UP3 estimates or been deemed susceptible to significant IPs.
1 OMB guidance document A-123 Appendix C (M-21-19) also requires agencies conduct risk assessments of each new programs
after it has outlays greater than $10 million within a 12-month period.
2 IP = improper payment
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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 reliable information or data systems to confirm eligibility or provide for
other payment integrity needs.
11. The accuracy and reliability of the information or data systems used by the program.
12. The risk of fraud as assessed by the agency under the Standards for Internal Control in the Federal
Government (commonly known as the 'Green Book') published by the Government Accountability
Office.
13. Whether there are additional risks the payment stream faces not identified by the risk factors in the
questionnaire.
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. Directions for
completion of the questionnaire are provided to the program managers of each payment stream. Payment
streams justify their ratings with a brief narrative and supporting documentation. The payment stream self-
assessment ratings, supported by a brief narrative, and submission of supporting documentation, provide the
basis for the assigned risk scores. Upon completion, the Office of the Chief Financial Officer (OCFO) tabulates a
scorecard providing an overall risk rating for each payment stream on a scale of 1 to 5.
Directions for completion of the questionnaire are provided to the program managers of each payment
stream. Payment streams justify their ratings with a brief narrative and supporting documentation. The
payment stream self-assessment ratings, supported by a brief narrative, and submission of supporting
documentation, provide the basis for the assigned risk scores.
If the final score is between 1.0 - 2.5, the payment stream is not susceptible to significant improper payments;
if the score is between 2.6 - 3.6, the payment stream is considered likely to be susceptible to significant
improper payments; and if the score is 3.7 or above, the payment stream is at high risk of significant improper
payments.
If the results of a risk assessment show that an agency program is determined to be likely susceptible to
significant improper payments. Therefore, the program will need to undertake and complete a Sampling and
Estimation Methodology Plan (S&EMP) to be considered statistically valid if the programs produce point
estimates and confidence intervals around those estimates of its payments during the following fiscal year.
II. Improper Payments and Recoveries Reporting
a. Programs
Table 2 provides information on EPA's Grants program, and required to be gathered and finalized before the
final determination that the Grants program was no longer susceptible to significant improper payments. The
following results reinforce the Grants program is not susceptible determination. The website
https://pavmentaccuracv.gov/ contains more detailed information on improper payments as well as all of the
information reported in prior year AFRs.
3 UP = 'Unknown' Payment i.e., unknown payments as those that an agency cannot determine to be either proper or improper
because of insufficient or lacking documentation.
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Table 2: Improper Payment Rate
($ in millions)
$ Outlays
$1,720.30
$ Proper
$1,707.11
$ Improper
$13.19
IP°/o
0.77%
Proper %
99.23%
PM
$ Overpay
$13.19
O
IN
$ Underpay
$0.00
>-
u_
$ Insufficient Documentation
$0.00
% Sample Overpaid
0.77%
% Sample Underpaid
0.00%
% Sample Insufficient Documentation
0.00%
Sampling Timeframe Start
October 1, 2022
Sampling Timeframe End
September 30, 2023
Table 3 provides information on the estimated amount of improper payments made directly by the federal
government and the amount of improper payments made by recipients of federal money.
Table 3: Monetary Loss ($ in millions)
Program
Estimated Total
Monetary Loss to
the Government
Monetary Loss
within the
Agency's
Control
Monetary Loss
Outside the
Agency's
Control
Estimated Non-
Monetary Loss to
the
Government
Unknown
(Insufficient
Documentation
to Determine)
Grants
$13.19
$0.00
$13.19
$0.00
$0.00
Table 4 identifies the root causes of payment errors.
Table 4: Improper Payment Root Cause Category Matrix (Grants)
($ in millions)
Reason for Improper Payment
Type of Improper Payment
Overpayments
Underpayments
Unknown
Totals
Program Design or Structural Issue
—
—
—
—
Inability to
Authenticate
Eligibility:
Inability to Access Data
-
-
-
-
Data Needed Does Not
Exist
-
-
-
-
Failure to Verify:
Death Data
-
-
-
-
Financial Data
-
-
-
-
Excluded Party Data
-
-
-
-
Prisoner Data
-
-
-
-
Other Eligibility Data
-
-
-
-
139
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Administrative
or Process Error
Made by:
Federal Agency
-
-
-
-
State or Local Agency
$5.01
-
-
$5.01
Other Party
$8.18
-
-
$8.18
Medical Necessity
-
-
-
-
Insufficient Documentation to Determine
-
-
-
-
Other Reason
-
-
-
-
Totals
$13.19
-
-
$13.19
b. Recoveries of Improper Payments
PI IA requires agencies to conduct payment recapture audit reviews in any program expending more than $1
million annually. Past experience has demonstrated that the low dollar value of improper payments recovered
by an external payment recapture auditor resulted in an effort that was not cost-effective for the agency or the
contractor. Therefore, EPA no longer uses a payment recapture audit firm to conduct formal payment recapture
audits.
Nevertheless, the agency performs overpayment recovery activities internally, leveraging the work of agency
employees and agency resources. As part of this process, each payment stream is routinely monitored to assure
the effectiveness of internal controls and identify issues that could give rise to overpayments. The agency's
payment review and recovery activities are part of its overall program of internal control over disbursements,
which includes establishing and assessing internal controls to prevent improper payments, reviewing
disbursements, assessing root causes of error, developing corrective action plans where appropriate, and
tracking the recovery of overpayments.
The following table quantifies the results of the agency's efforts to identify and recapture overpayments across
all of its payment streams.
Table 5: Overpayments Recaptured Outside of Payment Recapture Audits (1)
($ in millions)
Program
Amount Identified
in FY 2024
Amount Recovered
in FY 2024
Commodities (2)
0.03
0.01
Contracts (2)
0.71
0.71
CWSRF
0.18
0.17
DWSRF
0.38
0.39
Grants
2.60
2.60
Payroll (3)
0.95
0.83
Purchase Cards
0.00
0.00
Travel
0.02
0.02
2018 Disaster Relief
0.00
0.00
Other (4)
2.00
0.03
Total
7.86
5.57
Recapture Rate - 71 %
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1. The amounts displayed in this table were identified and recovered using a variety of
means available to the agency.
2. The amounts for contracts and commodities do not include lost discounts, which
are uncollectible.
3. 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 behind
bi-weekly payroll payments).
4. "Other" consists of improper payments identified by audits plus confirmed fraud.
The information provided below summarizes the actions and methods used by the agency to 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.
A) Commodities and Contracts (Commercial 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. The following is a brief 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 agency's Research Triangle Park (RTP) Finance Division 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 Treasury processing. Additional
preventive reviews are performed by the RTP Finance Center on all credit and re-submitted invoices.
Furthermore, 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). 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
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rejected, and the invoice is paid as close to the payment due date as possible. For FY 2024 reporting, improper
payments stemming from lost discounts totaled $3,038 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 period specified 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
The SRFs are not susceptible to significant improper payments. For the SRFs, the agency both identifies and
recovers improper payments during the state review process. EPA Regions are required to conduct annual
reviews of state SRF programs using checklists developed by the agency's headquarters. 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 EPA's Program Evaluation Report, and the agency follows up with the state to
ensure compliance.
C) Grants
For the agency's grants payment stream, overpayments principally consist of unallowable costs or lack of
supporting documentation. When overpayments arise, 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.
EPA identifies overpayments in grants both through statistical sampling and through non-statistical means. As
part of its non-statistical activity, the agency conducts transaction testing of active grant recipients through
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 a minimum of three non-consecutive draws.
In addition, the agency responds to single audits and audits conducted by the Office of the Inspector General
and uses them as a means of identifying and recovering improper payments. The agency follows established
processes for evaluating questioned costs, validating, or disallowing costs where appropriate, and seeking the
recovery of any sustained overpayments. 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
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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. EPA also seeks to prevent improper
payments. Prior to the issuance of a grant award, OGD's Compliance Team conduct pre-award certification of
non-profit recipients that receive awards in excess of $200K 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 (GMOs) concur on all certifications. GMOs are also required to ensure that
recipients are not listed in the Excluded Parties List System within the System for Award Management. 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 deemed 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.
In FY 2024, the agency performed statistical sample transaction testing, since the payment stream was
identified as susceptible in FY 2023. Based on the transaction testing, the grants payment stream is not
susceptible to significant improper payments.
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 EPA following
separation. EPA establishes the debt and tracks recovery status. A small portion of EPA's out-of-service debt was
uncollectible as a result of 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 2024.
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.
III. Agency Improvement of Payment Accuracy with the Do Not Pay Initiative
PIIA requires federal agencies to implement the Do Not Pay (DNP) initiative, a government-wide solution
designed to prevent payment errors and detect waste, fraud, and abuse in programs administered by the
federal government. EPA's payments are screened by Treasury's DNP working system to detect improper
payments. Treasury analyzes each agency's payments and provides a monthly report itemizing any payments
that were made to potentially ineligible recipients. These 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 Treasury's
DNP working system.
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In FY 2024, Treasury screened 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. Through September 30, 2024, approximately $1.69 billion of EPA payments
were screened, and no improper payments were identified.
In addition, 58,781 EPA payments totaling $4.2 billion were made via the Automated Standard Application for
Payments (ASAP), and ASAP's grantee listing is monitored by Treasury. Finally, 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 December 27, 2023, which became effective the same day. For
details on this Rule, see 88 Fed. Reg. 89309-89313, codified in Table 1 of 40 CFR § 19.4. EPA will amend 40 CFR §
19.4 by January 15, 2025, to reflect changes in inflation since the last adjustment.
Current Statutory Maximum/Minimum Civil Penalties under
EPA's 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 monetary
penalties for violations
that occur or occurred
after November 2, 2015,
where penalties are
assessed on or after
December 27, 2023
7 U.S.C. 136/(a)(l)
FEDERAL INSECTICIDE, FUNGICIDE,
AND RODENTICIDE ACT (FIFRA)
1972
2023
$24,255
7 U.S.C. 136/(a)(2)
FIFRA
1972
2023
$3,558
7 U.S.C. 136/(a)(2)
FIFRA
1978
2023
$3,558/$2,293
15 U.S.C. 2615(a)(1)
TOXIC SUBSTANCES CONTROL ACT
(TSCA)
2016
2023
$48,512
15 U.S.C. 2647(a)
TSCA
1986
2023
$13,946
15 U.S.C. 2647(g)
TSCA
1990
2023
$11,524
31 U.S.C. 3802(a)(1)
PROGRAM FRAUD CIVIL REMEDIES
ACT(PFCRA)
1986
2023
$13,946
31 U.S.C. 3802(a)(2)
PFCRA
1986
2023
$13,946
33 U.S.C. 1319(d)
CLEAN WATER ACT (CWA)
1987
2023
$66,712
33 U.S.C.
1319(g)(2)(A)
CWA
1987
2023
$26,685/$66,712
33 U.S.C.
1319(g)(2)(B)
CWA
1987
2023
$26,685/$333,552
33 U.S.C.
1321(b)(6)(B)(i)
CWA
1990
2023
$23,048/$57,617
33 U.S.C.
1321(b)(6)(B)(ii)
CWA
1990
2023
$23,048/$288,080
33 U.S.C.
1321(b)(7)(A)
CWA
1990
2023
$57,617/$2,304
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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 monetary
penalties for violations
that occur or occurred
after November 2, 2015,
where penalties are
assessed on or after
December 27,2023
33 U.S.C.
1321(b)(7)(B)
CWA
1990
2023
$57,617
33 U.S.C.
1321(b)(7)(C)
CWA
1990
2023
$57,617
33 U.S.C.
1321(b)(7)(D)
CWA
1990
2023
$230,464/$6,913
33 U.S.C.
1414b(d)(l)(A)
MARINE PROTECTION, RESEARCH,
AND SANCTUARIES ACT (MPRSA)
1988
2023
$1,535
33 U.S.C. 1415(a)
MPRSA
1972
2023
$242,550/$319,953
33 U.S.C. 1901 note
(see 1409(a)(2)(A))
CERTAIN ALASKAN CRUISE SHIP
OPERATIONS (CACSO)
2000
2023
$17,683/$44,206
33 U.S.C. 1901 note
(see 1409(a)(2)(B))
CACSO
2000
2023
$17,683/$221,026
33 U.S.C. 1901 note
(see 1409(b)(1))
CACSO
2000
2023
$44,206
33 U.S.C.
1908(b)(1)
ACTTO PREVENT POLLUTION FROM
SHIPS (APPS)
1980
2023
$90,702
33 U.S.C.
1908(b)(2)
APPS
1980
2023
$18,139
42 U.S.C. 300g-3(b)
SAFE DRINKING WATER ACT (SDWA)
1986
2023
$69,733
42 U.S.C. 300g-
3(g)(3)(A)
SDWA
1986
2023
$69,733
42 U.S.C. 300g-
3(g)(3)(B)
SDWA
1986/1996
2023
$13,946/$48,586
42 U.S.C. 300g-
3(g)(3)(C)
SDWA
1996
2023
$48,586
42 U.S.C. 300h-
2(b)(1)
SDWA
1986
2023
$69,733
42 U.S.C. 300h-
2(c)(1)
SDWA
1986
2023
$27,894/$348,671
42 U.S.C. 300h-
2(c)(2)
SDWA
1986
2023
$13,946/$348,671
42 U.S.C. 300h-3(c)
SDWA
1974
2023
$24,255/$51,744
42 U.S.C. 300i(b)
SDWA
1996
2023
$29,154
42 U.S.C. 300i-l(c)
SDWA
2002
2023
$169,700/$1,697,012
42 U.S.C. 300j(e)(2)
SDWA
1974
2023
$12,127
42 U.S.C. 300j-4(c)
SDWA
1986
2023
$69,733
42 U.S.C. 300j-
6(b)(2)
SDWA
1996
2023
$48,586
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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 monetary
penalties for violations
that occur or occurred
after November 2, 2015,
where penalties are
assessed on or after
December 27, 2023
42 U.S.C. 300j-23(d)
SDWA
1988
2023
$12,799/$127,983
42 U.S.C.
4852d(b)(5)
RESIDENTIAL LEAD-BASED PAINT
HAZARD REDUCTION ACT OF 1992
1992
2023
$21,699
42 U.S.C. 4910(a)(2)
NOISE CONTROL ACT OF 1972
1978
2023
$45,850
42 U.S.C. 6928(a)(3)
RESOURCE CONSERVATION AND
RECOVERY ACT (RCRA)
1976
2023
$121,275
42 U.S.C. 6928(c)
RCRA
1984
2023
$73,045
42 U.S.C. 6928(g)
RCRA
1980
2023
$90,702
42 U.S.C.
6928(h)(2)
RCRA
1984
2023
$73,045
42 U.S.C. 6934(e)
RCRA
1980
2023
$18,139
42 U.S.C. 6973(b)
RCRA
1980
2023
$18,139
42 U.S.C.
6991e(a)(3)
RCRA
1984
2023
$73,045
42 U.S.C.
6991e(d)(l)
RCRA
1984
2023
$29,221
42 U.S.C.
6991e(d)(2)
RCRA
1984
2023
$29,221
42 U.S.C. 7413(b)
CLEAN AIR ACT (CAA)
1977
2023
$121,275
42 U.S.C.
7413(d)(1)
CAA
1990
2023
$57,617/$460,926
42 U.S.C.
7413(d)(3)
CAA
1990
2023
$11,524
42 U.S.C. 7524(a)
CAA
1990
2023
$57,617/$5,761
42 U.S.C. 7524(c)(1)
CAA
1990
2023
$460,926
42 U.S.C.
7545(d)(1)
CAA
1990
2023
$57,617
42 U.S.C.
9604(e)(5)(B)
COMPREHENSIVE ENVIRONMENTAL
RESPONSE, COMPENSATION, AND
LIABILITY ACT (CERCLA)
1986
2023
$69,733
42 U.S.C.
9606(b)(1)
CERCLA
1986
2023
$69,733
42 U.S.C. 9609(a)(1)
CERCLA
1986
2023
$69,733
42 U.S.C. 9609(b)
CERCLA
1986
2023
$69,733/$209,202
42 U.S.C. 9609(c)
CERCLA
1986
2023
$69,733/$209,202
42 U.S.C. 11045(a)
EMERGENCY PLANNING AND
COMMUNITY RIGHT-TO-KNOW ACT
(EPCRA)
1986
2023
$69,733
147
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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 monetary
penalties for violations
that occur or occurred
after November 2, 2015,
where penalties are
assessed on or after
December 27, 2023
42 U.S.C.
11045(b)(1)(A)
EPCRA
1986
2023
$69,733
42 U.S.C.
11045(b)(2)
EPCRA
1986
2023
$69,733/$209,202
42 U.S.C.
11045(b)(3)
EPCRA
1986
2023
$69,733/$209,202
42 U.S.C.
11045(c)(1)
EPCRA
1986
2023
$69,733
42 U.S.C.
11045(c)(2)
EPCRA
1986
2023
$27,894
42 U.S.C.
11045(d)(1)
EPCRA
1986
2023
$69,733
42 U.S.C.
14304(a)(1)
MERCURY-CONTAINING AND
RECHARGEABLE BATTERY
MAN AG E M E NT ACT (BATTE RY ACT)
1996
2023
$19,437
42 U.S.C. 14304(g)
BATTERY ACT
1996
2023
$19,437
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BIENNIAL REVIEW OF USER FEES
The Chief Financial Officer Act and OMB Circular No. A-25 Revised directs agencies to biennially review fees,
royalties, rents, and other charges assessed for services and goods they provide and to recommend updates to
those fee charges to reflect the cost of providing those services. OMB Circular, No. A-25 Revised further provides
guidance to review other agency programs and determine whether fees be initiated for government services or
goods for which fees are not currently charged.
EPA administers eight fee programs and conducts reviews at least biennially. The agency's fees are funded to
recover the full or partial cost of the program's authorized activities. The bold-highlighted programs are
required by statue or regulation to recover the full cost of the goods and services provided.
Agency 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 System Fees
Toxic Substance Control Act Administration Service Fees
Lead-Based Paint Fee Program
Clean Air Part 71 Permit Fees
Fees established under the Toxic Substance Control Act, section 26(b), requires EPA to review and, if necessary,
adjust the fees every three years, after consultation with parties potentially subject to fees.
The Agency reviewed the fees established in the 2018 TSCA Fee Rule and determined it necessary to adjust the
fees due to changes in the program cost. On January 11, 2021, EPA proposed revisions to the TSCA fees rule, and
on November 16, 2022, issued a supplemental notice to that proposal. The changes ensure the collected fees
provide the Agency with up to 25% of the costs of TSCA activities. The final fees rule was published in February
2024 and the new fees took effect on April 22, 2024.
Also, the Agency conducted a review to determine whether fees should be assessed for programs that review all
other programs to determine whether fees should be assessed for government services that provide special
benefits. The review looked at a subset of the total universe of potential fee programs identified as part of the
FY 2024 fee review process, we focused on the following programs: Compliance Assistance Services; Special,
Environmental, or Voluntary RCRA Assessments; IT Support to External Entities for FOIA and IT Support for
External Entities- Application / Service Fees.
As part of the FY 2024 user fee review, the EPA will be working with OMB 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 is exploring options and opportunities for programs where collecting fees may be appropriate, for
which the EPA is not recommending an exception to OMB. In the FY 2025 President's Budget, the Agency
highlighted the Pesticide Registration Improvement Act of 2022 ("PRIA-5") which reauthorizes fee collection
authorities through FY 2027 and expands the range of activities that the EPA can fund with existing pesticide
registration and maintenance fees.
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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
FY21-22
>3-5 Years
FY19-20
>5 Years
Before FY18
Number of Grants/Cooperative
Agreements with Zero Dollar
Balances
185
22
8
Number of Grants/Cooperative
Agreements with Undisbursed
Balances
18
12
11
Total Amount of Undisbursed
Balances
$ 9,456,632
$1,816,846
$3,050,486
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 2024, EPA released its 2024-2027 Climate Adaptation Plan Climate Adaptation Plans I US EPA (in response to
Executive Order (E.O.) 14008: Tackling the Climate Crisis at Home and Abroad, and draft "Instructions for the
2024-2027 Federal Climate Adaptation Plans" issued by the White House Council on Environmental Quality
issued in September 2023. EPA's Climate Adaptation 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 EPA programs, policies, rulemaking processes, and enforcement
activities.
2. Consult and partner with states, tribes, 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.
In 2022, the EPA Program and Regional Offices developed Climate Adaption Implementation Plans
(https://www.epa.gOv/climate-adaptation/climate-adaptation-plans#implementation). Addenda to the plans
were produced in Fiscal Year 2024. Additional information about EPA's work on climate adaptation is located on
the EPA Climate Adaptation Website: EPA.gov/Climate-Adaptation.
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Section IV
Appendices
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APPENDIX A
PUBLIC ACCESS
153
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The EPA invites the public to access its website at www.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: www.epa.gov/newsroom/browse-news-releases#region
Laws, regulations, guidance, and dockets: www.epa.gov/laws-regulations
• Major environmental laws: www.epa.gov/laws-regulations/laws-and-executive-orders
• EPA's Regulations website: www.epa.gov/laws-regulations/regulations
Where you live: www.epa.gov/children/where-you-live
• Community Information: www.epa.gov/nutrientpollution/what-vou-can-do-vour-community
• EPA regional offices: www.epa.gov/aboutepa/regional-and-geographic-offices
Information sources: www.epa.gov/qualitv/epa-information-quality-guidelines
• Hotlines and clearinghouses: 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 organization chart: www.epa.gov/aboutepa/epa-organization-chart
EPA programs with a geographic focus: www.epa.gov/environmental-topics/environmental-
information-location
EPA for business and nonprofits: www.epa.gov/grants/grants-management-guidance-non-profit-
organizations
• Small Business Gateway: www.epa.gov/resources-small-businesses
• Grants, fellowships, and environmental financing: www.epa.gov/grants
Budget and performance: www.epa.gov/planandbudget
Careers: www.epa.gov/careers
EPA en Espanol: www.espanol.epa.gov
EPAtieng Viet: 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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ADA
Antideficiency Act
FY
Fiscal Year
AFR
Agency Financial Report
GAAP
Generally Accepted Accounting Principles
AME
August Mack Environmental
GGRF
Greenhouse Gas Reduction Fund
AICPA
American Institute of Certified Public Accountants
GHG
Greenhouse Gas
APPS
Act to Prevent Pollution from Ships
GMO
Grants Management Officer
APR
Annual Performance Report
GSA
U.S. General Services Administration
ASAP
Automated Standard Application for Payments
GTAS
Governmentwide Treasury Accounting Symbol
B&F
Buildings and Facilities
HVAC
Heating, Ventilation, and Air Conditioning
BFS
Bureau of Fiscal Services
IA
Interagency Agreement
BP
British Petroleum
IBC
Interior Business Center
BIL
Bipartisan Infrastructure Law
IP
Improper Payment
CAA
Clean Air Act
IIJA
Infrastructure Investment & Jobs Act
CACSO
Certain Alaskan Cruise Ship Operations
IRA
Inflation Reduction Act
CFO
Chief Financial Officer
IPP
Invoice Processing Platform
CFR
Code of Federal Regulations
LUST
Leaking Underground Storage Tank
CID
Continuous Improvement Division
MPRSA
Marine, Protection, Research, and Sanctuaries Act
CO
Contracting Officer
NPL
National Priorities List
CPRG
Climate Pollution Reduction Grants
NRDA
Natural Resource Damages Assessment Assurance
CSRS
Civil Service Retirement System
OCFO
Office of the Chief Financial Officer
CWA
Clean Water Act
OGD
Office of Grants and Debarment
CWSRF
Clean Water State Revolving Fund
OIG
Office of Inspector General
DATA
Data Accountability and Transparency Act
OMB
Office of Management and Budget
DCAA
Defense Contract Audit Agency
OPA
Oil Pollution Act
DEAR
DATA Evaluation & Approval Repository
OPM
Office of Personnel Management
DM&R
Deferred Maintenance and Repairs
PFCRA
Program Fraud Civil Remedies Act
DNP
Do Not Pay
PP&E
Plant, Property and Equipment
DWH
Deepwater Horizon
PRIA
Pesticides Registration Improvement Act
DWSRF
Drinking Water State Revolving Fund
PIIA
Payment Integrity Information Act
EPA
U.S. Environmental Protection Agency
PFCRA
Program Fraud Civil Remedies Act
EPCRA
Emergency Planning and Community Right-to-know Act
PRFA
Pollution Removal Funding Agreements
EPM
Environmental Programs and Management
PRP
Potentially Responsible Parties
FAS
Fixed Assets Subsystem
UNEP
United Nations Environmental Program
FCRA
Fair Credit Reporting Act
UP
Unknown Payments
FASAB
Federal Accounting Standards Advisory Board
ULO
Unliquidated Obligations
FBWT
Fund Balance with Treasury
RCRA
Resource Conservation and Recovery Act
FECA
Federal Employees Compensation Act
R&l
Repair and Improvement
FERS
Federal Employees Retirement System
RP
Responsible Party
FFMIA
Federal Financial Management Improvement Act of 1996
R&l
Research Triangle Park
FIFRA
Federal Insecticide, Fungicide and Rodenticide Act
SARA
Superfund Amendments and Reauthorization Act
FMFIA
Federal Managers' Financial Integrity Act of 1982
SDWA
Safe Drinking Water Act
FRM
Fraud Risk Management
SFFAS
Statement of Federal Financial Accounting
Standards
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WE WELCOME YOUR COMMENTS!
Thank you for your interest in the U.S. Environmental Protection Agency's Fiscal Year 2024
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
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 at nscep@bps-lmit.com.
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