*¦

Audit of the EPA's Fiscal
Years 2023 and 2022
(Restated) Consolidated
Financial Statements

November 15, 2023 [ Report No. 24-F-0009



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Report Contributors

Wanda Arrington
Lasharn Barnes
Elizabeth Brinson
Vincent Campbell
Safiya Chambers
Nancy Dao
Edgar Dumeng
Amir Eskarous
Robert Evans
Robert Hairston
Tanishia Heilig
Jennifer Hutkoff
Damon Jackson
Eric Jackson
Sheree James
Alyssa Jolly
Carol Kwok

Shannon Lackey
Mairim Lopez
Ethel Lowery
Sheila May

Demetrios Papakonstantinou

Shaheryar Qureshi

Maria Ramirez-Grigortsuk

Joshua Rodriguez

Gina Ross

Kevin Ross

Scott Sammons

Connie Song

Wendy Swan

Ryan Watren

Philip Weihrouch

Abbreviations

C.F.R.	Code of Federal Regulations

CIO	Chief Information Officer

EPA	U.S. Environmental Protection Agency

FFMIA	Federal Financial Management Improvement Act of 1996

FY	Fiscal Year

ISA and MOA	Interconnection Security Agreement and Memorandum of Agreement

OCFO	Office of the Chief Financial Officer

OIG	Office of Inspector General

OMB	Office of Management and Budget

SSC	Superfund State Contract

U.S.C.	United States Code

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At a Gla

24-F-0009
November 15, 2023

Audit of the EPA's Fiscal Years 2023 and 2022 (Restated) Consolidated
Financial Statements

Why We Did This Audit

To accomplish this objective:

We performed this audit in accordance
with the Government Management
Reform Act of 1994, which requires the
U.S. Environmental Protection Agency
Office of Inspector General to audit the
financial statements prepared by the
Agency each year. Our primary
objectives were to determine whether
the EPA's:

•	Financial statements were fairly
stated in all material respects in
accordance with generally
accepted accounting principles.

•	Internal control over financial
reporting was in place.

•	Management complied with
applicable laws, regulations,
contracts, and grant agreements.

This requirement for audited financial
statements was enacted to help
improve agencies' financial
management practices, systems, and
control so that timely, reliable
information is available for managing
federal programs.

To support this EPA mission-related
effort:

• Operating efficiently and
effectively.

Address inquiries to our public
affairs office at (202) 566-2391 or
OIG.PublicAffairs@epa.gov.

The EPA Receives an Unmodified Opinion for Fiscal Years 2023 and
2022 (Restated)

We rendered an unmodified opinion on the EPA's consolidated financial statements for fiscal
years 2023 and 2022 (restated), meaning that they were fairly presented and free of material
misstatement.

We found the EPA's financial statements to be fairly presented and
free of material misstatement.

Significant Deficiencies Noted

We noted the following significant deficiencies:

•	The EPA did not provide accurate information for its revenue accruals.

•	The EPA did not deobligate unneeded funds in a timely manner.

•	The EPA operated under an expired Interconnection Security Agreement and
Memorandum of Agreement, which could hamper invoice processing.

•	The EPA did not review user accounts for EPA contracting personnel every
60 days, as required by its information security procedure.

Compliance with Applicable Laws, Regulations, Contracts, and
Grant Agreements

We did not note any significant noncompliance with laws, regulations, contracts, and grant
agreements.

Recommendations and Planned Agency Corrective Actions

We make seven recommendations to the EPA, including that the chief financial officer
instruct the regions to take action to correct the accrual and to provide information on a
quarterly basis, develop and implement plans to deobligate unneeded funds in a timely
manner and to ensure that future Interconnection Security Agreement and Memorandum of
Agreement documents are reauthorized before the current agreements expire, and
determine how to review user accounts in compliance with the EPA's information security
procedure. We also recommend that the Great Lakes National Program Office review
accrual information to ensure its accuracy. The EPA agreed with all seven
recommendations, completed corrective actions in response to one, and provided
acceptable planned corrective actions and estimated milestone dates for the others.

List of OIG reports.


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OFFICE OF INSPECTOR GENERAL

U.S. ENVIRONMENTAL PROTECTION AGENCY

November 15, 2023
MEMORANDUM

SUBJECT: Audit of the EPA's Fiscal Years 2023 and 2022 (Restated) Consolidated
Financial Statements
Report No. 24-F-0009

FROM: Damon Jackson, Director Qomm Qxickd&n-
Financial Directorate
Office of Audit

TO:	Faisal Amin, Chief Financial Officer

Teresa Siedel, Director

Great Lakes National Program Office

This is our report on the subject audit conducted by the U.S. Environmental Protection Agency Office of
Inspector General. The project number for this audit was QA-FY23-0078. This report contains findings
that describe the problems the OIG has identified and the corrective actions the OIG recommends. Final
determination on matters in this report will be made by EPA management in accordance with established
audit resolution procedures.

The Office of the Chief Financial Officer and the Great Lakes National Program Office are responsible
for the issues discussed in the report.

In accordance with EPA Manual 2750, your offices completed corrective actions for Recommendation 3.
Your offices also provided acceptable planned corrective actions and estimated milestone dates in
response to Recommendations 1, 2, 4, 5, 6, and 7. These recommendations are resolved, and no final
response to this draft is required. If you submit a response, however, it will be posted on the OIG's website,
along with our memorandum commenting on your response. Your response should be provided as an
Adobe PDF file that complies with accessibility requirements of section 508 of the Rehabilitation Act of
1973, as amended. The final response should not contain data that you do not want to be released to the
public; if your response contains such data, you should identify the data for redaction or removal along
with corresponding justification.

We will post this report to our website at www.epaoig.gov.

To report potential fraud, waste, abuse, misconduct, or mismanagement, contact the OIG Hotline at (888) 546-8740 or OIG.Hotline@epa.gov.


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Table of Contents

1	Report on the Audit of the Financial Statements	1

2	Required Supplementary Information	3

3	Report on Internal Control over Financial Reporting	4

4	Report on Compliance with Laws, Regulations, Contracts, and Grant Agreements	6

5	Other Governmental Reporting Requirements	8

6	Prior Audit Coverage	8

A Significant Deficiencies	9

B Status of Prior Audit Report Recommendations	19

C Status of Recommendations and Potential Monetary Benefits	21

1	The EPA's Fiscal Years 2023 and 2022 Consolidated Financial Statements

(with Restatement)	22

2	Agency Response to Draft Report	82

3	Distribution	86

24-F-0009	i


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Inspector General's Report on the EPA's
Fiscal Years 2023 and 2022 (Restated)
Consolidated Financial Statements

The Administrator

U.S. Environmental Protection Agency

Report on the Audit of the Financial Statements

Opinion

We have audited the consolidated financial statements of the U.S. Environmental Protection Agency,
which comprise the consolidated balance sheets, as of September 30, 2023 and 2022 (restated); and the
related consolidated statement of net cost, net cost by major program, changes in net position, and
custodial activity; the combined statement of budgetary resources for the years then ended; and the
related notes to the financial statements.

In our opinion, the consolidated financial statements, including the accompanying notes, present fairly,
in all material respects, the consolidated assets, liabilities, net position, net cost, net cost by major
program, changes in net position, custodial activity, and combined budgetary resources of the EPA as of
and for the years ended September 30, 2023 and 2022 (restated), in conformity with accounting
principles generally accepted in the United States of America.

Basis for Opinion

We conducted our audit in accordance with auditing standards generally accepted in the United States
of America, known as generally accepted auditing standards. Our responsibilities under those standards
are further described in the "Auditor's Responsibilities for the Audit of the Financial Statements" section
of our report. We are required to be independent of the EPA and to meet our ethical responsibilities in
accordance with the relevant ethical requirements relating to our audits. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Emphasis of Matter Restatements of Fiscal Year 2022

As described in note 30, "Restatements," to the financial statements, the EPA restated its fiscal
year 2022 financial statements. The Water Infrastructure Finance and Innovation Act of 2014 loan
financing account was previously reported as a dedicated collections fund, but it is specifically excluded
from such per Statement of Federal Financial Accounting Standards 27, Identifying and Reporting Funds
from Dedicated Collections, and Statement of Federal Financial Accounting Standards 43, Dedicated
Collections: Amending SFFAS 27, Identifying and Reporting Earmarked Funds.

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The restatement resulted in an $8,206,000 increase to the funds from dedicated collections net position
and an $8,206,000 decrease to the funds other than those from dedicated collections net position.

There was no impact to the total net position.

The change impacts the FY 2022 balance sheet and statement of changes in net position—cumulative results
of operations between funds from dedicated collections and funds from other than dedicated collections.

Our opinion is not modified with respect to these corrections.

Responsibilities of Management for the Financial Statements

The EPA's management is responsible for the preparation and fair presentation of the consolidated
financial statements in accordance with accounting principles generally accepted in the United States of
America and for the design, implementation, and maintenance of internal control relevant to the
preparation and fair presentation of financial statements that are free from material misstatement,
whether due to fraud or error.

Auditor's Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements, as a whole,
are free from material misstatement, whether due to fraud or error, and to issue an auditor's report
that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute
assurance and, therefore, is not a guarantee that an audit conducted in accordance with generally
accepted auditing standards will always detect a material misstatement when it exists. The risk of not
detecting a material misstatement resulting from fraud is higher than for one resulting from error, as
fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of
internal control. Misstatements are considered material if there is a substantial likelihood that,
individually or in the aggregate, they would influence the judgment made by a reasonable user based on
the financial statements.

In performing an audit in accordance with generally accepted auditing standards, we:

•	Exercise professional judgment and maintain professional skepticism throughout the audit.

•	Identify and assess the risks of material misstatement of the financial statements, whether due
to fraud or error, and design and perform audit procedures responsive to those risks. Such
procedures include examining, on a test basis, evidence regarding the amounts and disclosures
in the financial statements.

•	Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the EPA's internal control. Accordingly, we express no such opinion.

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• Evaluate the appropriateness of accounting policies used and the reasonableness of significant
accounting estimates made by management, as well as evaluate the overall presentation of the
financial statements.

We are required to communicate with those charged with governance regarding, among other matters,
the planned scope and timing of the audit, significant audit findings, and certain internal control-related
matters that we identified during the audit.

The financial statements include expenses of grantees, contractors, and other federal agencies. Our
audit work pertaining to these expenses included testing only within the EPA. The U.S. Department of
the Treasury collects and accounts for excise taxes that are deposited into the Leaking Underground
Storage Tank Trust Fund. Treasury is also responsible for investing amounts not needed for current
disbursements and transferring funds to the EPA as authorized in legislation. Since Treasury, and not the
EPA, is responsible for these activities, our audit work did not cover these activities.

The Office of Inspector General is not independent with respect to amounts pertaining to OIG
operations that are presented in the financial statements. The amounts included for the OIG are not
material to the EPA's financial statements. The OIG is organizationally independent with respect to all
other aspects of the Agency's activities.

Required Supplementary Information

Accounting principles generally accepted in the United States of America require that the information in
the Required Supplementary Information, Supplemental Information, and Management's Discussion and
Analysis sections be presented to supplement the EPA's financial statements. Such information is the
responsibility of management and, although not a part of the basic consolidated financial statements, is
required by the Office of Management and Budget, or OMB, and the Federal Accounting Standards
Advisory Board, which consider it to be an essential part of the financial reporting that places the basic
consolidated financial statements in an appropriate operational, economic, or historical context.

We have applied certain limited procedures to the Required Supplementary Information, Supplemental
Information, and Management's Discussion and Analysis, in accordance with auditing standards
generally accepted in the United States of America, which consisted of inquiring management about the
methods of preparing and comparing the information for consistency with management's responses to
our inquiries, the basic consolidated financial statements, and other knowledge we obtained during the
audit of the basic consolidated financial statements. We do not express an opinion or provide any
assurance on the information because the limited procedures do not provide us with sufficient evidence
to express an opinion or provide any assurance.

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Report on Internal Control over Financial Reporting

Results of Our Consideration of Internal Control over Financial Reporting

Our consideration of internal control was for the limited purpose of expressing an opinion on the EPA's
financial statements and was not designed to identify all deficiencies in internal control that might be
material weaknesses or significant deficiencies; therefore, deficiencies in internal control may exist that
were not identified during the course of our audit. A deficiency in internal control over financial
reporting exists when the design or operation of a control does not allow management or employees, in
the normal course of performing their assigned functions, to prevent or detect and correct
misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies in
internal control over financial reporting, such that there is a reasonable possibility that a material
misstatement of the entity's financial statements will not be prevented or detected and corrected on a
timely basis. A significant deficiency is a deficiency or a combination of deficiencies in internal control
over financial reporting that is less severe than a material weakness yet important enough to merit
attention by those charged with governance.

We noted certain matters, which we discuss below, involving internal control and its operation that we
consider to be significant deficiencies. These issues are summarized below and detailed in Attachment A.

Significant Deficiencies

The EPA Did Not Provide Accurate Information for Its Revenue Accruals

We found multiple instances in which the Agency did not provide accurate information for its revenue
accruals resulting from cost-share agreements for Superfund State Contracts, or SSCs, and Great Lakes
Legacy Act project agreements. Revenue is an inflow of resources that the government earns. An accrual
is an estimate of the percentage of completion based on the work performed under cost-share
agreements. Agency directives describe the processes for managing the financial aspects of the revenue
accruals; however, not all Agency personnel followed these processes, which resulted in the Cincinnati
Finance Center not having all the information that it needed to properly calculate the revenue accruals.
In addition, over $1.5 million of Superfund appropriated funds were not available for other site cleanup
projects that would help to protect human health. Furthermore, without accurate information, revenue
accruals and the financial statements may be misstated.

The EPA Did Not Deobligate Unneeded Funds in a Timely Manner

The EPA did not deobligate in a timely manner $10 million of unneeded funds that it identified during its
annual review of unliquidated obligations. We also identified this deficiency during the FY 2022
consolidated financial statement audit. Furthermore, while we made no determination as to whether
the funds were needed, we recently reported that from FY 2018 through 2023, the EPA had over
$1.55 billion in unliquidated obligations with inactivity of 180 days or more. This includes approximately
$429 million in Infrastructure Investment and Jobs Act appropriations in FY 2022 and 2023. Agency
directives require that responsible offices annually review unliquidated obligations, including inactive
unliquidated obligations, and take appropriate action to deobligate unneeded funds. While the EPA met

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the requirement to review unliquidated obligations at least annually, it did not take timely actions to
deobligate the unneeded funds. As a result, almost $10 million in unobligated funds were not
deobligated and made available for other uses. Further, without the timely deobligation of unneeded
funds, the EPA does not have reasonable assurance that unliquidated obligations are accurate and
represent valid obligations.

The EPA Operated Under an Expired Interconnection Security Agreement and
Memorandum of Agreement, Which Could Hamper Invoice Processing

The Office of the Chief Financial Officer and Treasury operated under an expired Interconnection Security
Agreement and Memorandum of Agreement, a combined single document referred to as the ISA and MOA,
for more than six months, from March to September 2023. The ISA and MOA document each entity's
responsibility to design and implement security controls for the connection between the EPA's Compass
Financials system and Treasury's Invoice Processing Platform. This connection, which implements the
OMB's requirement for electronic invoicing, must be secure to protect the confidentiality, integrity, and
availability of the invoice processing function. Furthermore, security controls are needed to protect the
data being transmitted over this connection, which contain not only federal financial information but also
data subject to the Privacy Act, 5 U.S.C. § 552a. A lack of an approved ISA and MOA could cause the EPA
and Treasury to be unaware of changes made either to the connection or to the design configurations of
the systems, which could disrupt operations and potentially prevent vendors from submitting invoices and
EPA personnel from approving invoices in a timely manner.

The EPA Did Not Review User Accounts for EPA Contracting Personnel Every 60 Days
As Required By Its Information Security Procedure

The OCFO's management of EPA employee user accounts that can access Treasury's Invoice Processing
Platform is not compliant with the Agency's information technology account management
requirements. The Invoice Processing Platform was fully implemented within the EPA on May 23, 2023,
for EPA contracting personnel to manage and approve vendor invoices. Despite EPA requirements to
conduct user account reviews every 60 days, the OCFO had not conducted the required review as of
September 30, 2023. These user account reviews help confirm whether all of the EPA's approximately
2,300 active Invoice Processing Platform user accounts are still necessary. Removing unnecessary user
accounts could help reduce the risk of unauthorized access, which could potentially lead to the
disclosure, modification, or destruction of financial information and the disruption of system operations.

Attachment B contains the status of issues reported in prior year reports on the EPA's consolidated
financial statements. The issues included in Attachment B should be considered among the EPA's
significant deficiencies for FY 2023. We reported less significant internal control matters to the Agency
during the course of the audit. We will not issue a separate management letter.

Basis for Results of Our Consideration of Internal Control Over Financial Reporting

We performed our procedures related to the EPA's internal control over financial reporting in
accordance with government auditing standards generally accepted in the United States of America.

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Responsibilities of Management for Internal Control over Financial Reporting

The EPA's management is responsible for designing, implementing, and maintaining effective internal
control over financial reporting relevant to the preparation and fair presentation of financial statements
that are free from material misstatement, whether due to fraud or error.

Auditor's Responsibilities for Internal Control over Financial Reporting

In planning and performing our audit of the consolidated financial statements as of and for the year
ended September 30, 2023, in accordance with generally accepted auditing standards, we considered
the EPA's internal control over financial reporting as a basis for designing audit procedures, which are
appropriate in the circumstances for the purpose of expressing our opinion on the financial statements
and of complying with OMB Bulletin 24-01, Audit Requirements for Federal Financial Statements, but not
for the purpose of expressing an opinion on the effectiveness of the EPA's internal control. Accordingly,
we do not express an opinion on the effectiveness of the EPA's internal control over financial reporting.

Intended Purpose of Report on Internal Control over Financial Reporting

Because of inherent limitations in internal control, misstatements, losses, or noncompliance may
nevertheless occur and not be detected.

Comparison of the EPA's Federal Managers' Financial Integrity Act Report with
Our Evaluation of Internal Control

OMB Bulletin 24-01 requires the OIG to compare material weaknesses disclosed during the audit with
those material weaknesses reported in the Agency's Federal Managers' Financial Integrity Act report that
relate to the financial statements. The OIG is also required to identify material weaknesses disclosed by
the audit that were not reported in the Agency's Federal Managers' Financial Integrity Act report.

For financial statement audit and financial reporting purposes, OMB Bulletin 24-01 defines material
weaknesses in internal control as a deficiency or combination of deficiencies in internal control over
financial reporting, such that there is a reasonable possibility that a material misstatement of the
entity's financial statements will not be prevented or detected and corrected on a timely basis.

Report on Compliance with Laws, Regulations, Contracts, and Grant
Agreements

Results of Our Tests for Compliance with Laws, Regulations, Contracts, and
Grant Agreements

Providing an opinion on compliance with provisions of laws, regulations, contracts, and grant
agreements was not an objective of our audit and, accordingly, we do not express such an opinion. We
did not identify any instances of noncompliance that would result in a material misstatement to the
audited financial statements.

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Basis of Results of Our Tests for Compliance with Laws, Regulations, Contracts,
and Grant Agreements

As part of obtaining reasonable assurance about whether the Agency's financial statements are free of
material misstatement, we performed tests of the Agency's compliance with certain provisions of laws,
including those governing the use of budgetary authority, regulations, contracts, and grant agreements that
have a direct effect on the determination of material amounts and disclosures in the financial statements.

Responsibilities of Management for Compliance with Laws, Regulations,

Contracts, and Grant Agreements

The EPA's management is responsible for complying with laws, regulations, contracts, and grant
agreements applicable to the Agency.

Auditor's Responsibilities for Tests of Compliance with Laws, Regulations,
Contracts, and Grant Agreements

We also performed certain other limited procedures as described in the American Institute of Certified
Public Accountants' Codification of Statements on Auditing Standards, AU-C 250.14-16, "Consideration of
Laws and Regulations in an Audit of Financial Statements." OMB Bulletin 24-01 mandates that we evaluate
compliance with federal financial statement system requirements, including those referred to in the
Federal Financial Management Improvement Act of 1996, or FFMIA. We limited our tests of compliance to
these provisions and did not test compliance with all laws and regulations applicable to the EPA.

Intended Purpose of Report on Compliance with Laws, Regulations, Contracts,
and Grant Agreements

The purpose of this report is solely to describe the scope and results of our testing of compliance with
selected provisions of applicable laws, regulations, contracts, and grant agreements, and not to provide an
opinion on compliance. This report is an integral part of an audit performed in accordance with government
auditing standards generally accepted in the United States of America. Accordingly, this report on
compliance with laws, regulations, contracts, and grant agreements is not suitable for any other purpose.

FFMIA Noncompliance

Under FFMIA, we are required to report whether the Agency's financial management systems
substantially comply with the federal financial management systems requirements, applicable federal
accounting standards, and the United States Government Standard General Ledger at the transaction
level. To meet the FFMIA requirement, we performed tests of compliance with FFMIA section 803(a)
requirements and used OMB Memorandum M-09-06, Implementation Guidance for the Federal
Financial Management Improvement Act, dated January 9, 2009, to determine whether there was any
substantial noncompliance with FFMIA.

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The results of our tests did not disclose any instances of noncompliance with FFMIA requirements,
including where the Agency's financial management systems did not substantially comply with the
applicable federal accounting standard.

We did not identify any significant matters involving compliance with laws, regulations, contracts, or
grant agreements related to the Agency's financial management systems during the course of the audit.

Other Governmental Reporting Requirements

Audit Work Required Under the Hazardous Substance Superfund Trust Fund

We also performed audit work to comply with 42 U.S.C. § 9611(k), including the requirement to conduct
an annual audit of payments, obligations, reimbursements, or other uses of the Hazardous Substance
Superfund Trust Fund. The significant deficiencies reported above also relate to Superfund.

Prior Audit Coverage

During previous financial statement audits, we reported significant deficiencies, as detailed in
Attachment B. These deficiencies include that:

•	Originating offices did not forward accounts receivable source documents to the finance center
in a timely manner.

•	The EPA did not deobligate unneeded funds in a timely manner.

This report is intended solely for the information and
Congress, and it is not intended to be and should not
parties.

use of the management of the EPA, the OMB, and
be used by anyone other than these specified

Qamoit Qxtckd&w,

Damon Jackson

Certified Public Accountant

Director, Financial Directorate

Office of Audit

Office of Inspector General

U.S. Environmental Protection Agency

November 9, 2023

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Attachment A

Significant Deficiencies

Table of Contents

1	The EPA Did Not Provide Accurate Information for Its Revenue Accruals	10

2	The EPA Did Not Deobligate Unneeded Funds in a Timely Manner	13

3	The EPA Operated Under an Expired Interconnection Security Agreement and
Memorandum of Agreement, Which Could Hamper Invoice Processing	15

4	The EPA Did Not Review User Accounts for EPA Contracting Personnel Every 60 Days

As Required by Its Information Security Procedure	17

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1 - The EPA Did Not Provide Accurate Information

for Its Revenue Accruals

We found multiple instances in which the Agency did not provide accurate information for revenue
accruals resulting from cost-share agreements for SSCs and Great Lakes Legacy Act project agreements.
Agency directives describe the processes for managing the financial aspects of the revenue accruals;
however, not all Agency personnel followed these processes, which resulted in the Cincinnati Finance
Center not having all the information that it needed to properly calculate the revenue accruals. In
addition, over $1.5 million of Superfund appropriated funds were not available for other site cleanup
projects that would help to protect human health. Furthermore, without accurate information, revenue
accruals and the financial statements may be misstated.

Regulations and Agency Directives Require Accurate Information Be Provided

EPA regulations at 40 C.F.R. § 35.6805 state that an SSC "remains in effect until the financial settlement
of project costs and final reconciliation of response costs (including all change orders, claims, overmatch
of cost share, reimbursements, etc.) ensures that both [the] EPA and the State have satisfied the cost
share requirement" in section 104 of the Comprehensive Environmental Response, Compensation, and
Liability Act, as amended. This Act is informally known as Superfund.

Also pertaining to SSCs, the EPA's Resource Management Directive System 2550D-09-P1, Financial
Management of Superfund Program - State Cost Share Provisions for Superfund State Contracts and
Remedial Cooperative Agreements, directs regional offices to conduct the SSC financial closeout process,
which includes the reconciliation of the state's final cost share and reclassification of disbursements
when applicable. When the EPA has not used reimbursable (TR1) resources concurrently with Superfund
appropriated (T) obligations, a TR1 resource reclassification may be appropriate. The directive further
states that the SSC accrual calculation for a financially closed SSC should be reviewed and adjusted, if
needed, to reflect a zero-accrual balance. In addition, the directive describes the EPA's process for
managing the financial aspects of Superfund program remedial state cost-share provisions in state
contracts and cooperative agreements. Regional program offices are responsible for the overall
management of SSCs. The directive requires regions, on a quarterly basis, to respond to the Cincinnati
Finance Center's request for information with respect to new and amended SSCs.

Pertaining to the Great Lakes Legacy Act project agreements, the EPA's Resource Management Directive
System 2540-09-P6, Accounts Receivable - Non-Federal Sponsor Cost Share Provisions for Great Lakes
Legacy Act Project Agreements, contains the procedures for financial management of Great Lakes
Legacy Act cost-share provisions. The Great Lakes Legacy Act of 2002 requires a minimum of a
35 percent nonfederal cost share for all projects carried out under the Act.

The EPA Did Not Always Follow Processes to Provide Accurate Information

We found multiple instances in which the Agency did not provide accurate information for its revenue
accruals. Specifically, during FY 2023, we identified the following issues:

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• The EPA did not properly analyze its revenue accruals for financially closed SSCs with available
reimbursable funds. During our analysis of the SSC accrual, we found eight financially closed
SSCs with available reimbursable funds that resulted in corresponding accruals totaling over
$1.5 million. These SSCs should have been closed and their accrual should have been zero.

Table 1-1 lists the financially closed SSCs with available reimbursable funds.

Table 1-1: Financially closed SSCs with available reimbursable funds

Site identification I

I Available reimbursable funds ($)

019L

38,179.39

02GP

41,612.74

0277

47,751.00

A301

73,541.64

0417

512,348.87

047U

46,291.76

047U

200,693.96

0441

625,360.23

Total

1,585,779.59

Source: OIG analysis of EPA data. (EPA OIG table)

•	SSC credits were not included in the accrual. Approved SSC credits totaling $3,048,485 for one
Region 10 Superfund site, 102Q, were not included in the accrual. The total of $3,048,485 had
been previously approved by Region 10 as meeting the definition of Superfund SSC credits and
applied toward the state's 10 percent cost-share obligation. Of this amount, $2,497,029 was
approved as SSC creditable costs earned from FY 2003 through 2008, and the remaining
$551,456 was approved for costs earned from FY 2008 through 2015.

•	The Great Lakes Legacy Act accruals contained inaccurate project amounts and site numbers.

Four Great Lakes Legacy Act accruals did not contain either the correct project amount or site
numbers, which are used to track the appropriated and reimbursable disbursements and
collections for the accrual. Table 1-2 lists the exceptions that we identified.

Table 1-2: Great Lakes Legacy Act accruals with project amount and site number errors

Project number

Project amount
recorded in accrual
($)

Correct project
amount ($)

Site numbers
recorded in
accrual

Correct site
numbers

GLLA2004-007A-C

45,000,000.00

44,200,000.00

—

—

GLLA2013-005

35,112,354.00

70,892,940.00

—

—

GLLA2018-002

—

—

551222

551222
551224

GLLA2011-005





251201T1
251201T2
551224

251201T1,
251201T2

Source: OIG analysis of EPA data. (EPA OIG table)

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These reclassification errors occurred because the regions did not follow the Agency SSC closeout
process and did not review SSCs on the accrual to financially close the lines and reclassify the Superfund
appropriated T fund disbursements to reimbursable TR1 fund disbursements. Therefore, SSC final
financial reconciliations were not complete on the accrual, resulting in regions assessing accruals for
closed SSCs. In addition, over $1.5 million of Superfund appropriated funds were not available for other
site cleanup projects that would help to protect human health. Without accurate information, revenue
accruals and the financial statements may be misstated.

The other errors occurred because Region 10 and the Great Lakes National Program Office did not
follow Agency directives and did not provide the Cincinnati Finance Center with accurate information. In
response to our inquiries, Region 10 and the Great Lakes National Program Office subsequently provided
the Cincinnati Finance Center with the SSC credit and Great Lakes Legacy Act project information
required to properly calculate the SSC and Great Lakes Legacy Act accruals.

Recommendations

We recommend that the chief financial officer:

1.	Instruct the regions to perform an analysis of financially closed Superfund State Contracts to
reclassify appropriated and reimbursable disbursements and financially close lines on the
accrual.

2.	Instruct the regions to provide current Superfund State Contract information quarterly to the
Cincinnati Finance Center.

We recommend that the director for the Great Lakes National Program Office:

3.	Review the Great Lakes Legacy Act accrual project information prior to its submission to the
Cincinnati Finance Center to ensure its accuracy.

Agency Response and OIG Assessment

The EPA agreed with our recommendations. The Agency provided an acceptable planned corrective
actions for Recommendations 1 and 2, as well as an estimated milestone date of June 30, 2024, for
Recommendation 1 and January 15, 2024, for Recommendation 2. We consider these recommendations
resolved with corrective action pending. The Agency completed Recommendation 3 on October 18,

2023.

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2 - The EPA Did Not Deobligate Unneeded Funds in a

Timely Manner

The EPA did not deobligate in a timely manner $10 million of unneeded funds that it identified during its
annual review of unliquidated obligations. We also identified this deficiency during our FY 2022
consolidated financial statement audit. Furthermore, while we made no determination as to whether
the funds were needed, we recently reported that from FY 2018 through 2023, the EPA had over
$1.55 billion in unliquidated obligations with inactivity of 180 days or more. This includes approximately
$429 million in Infrastructure Investment and Jobs Act appropriations in FY 2022 and 2023.1 Agency
directives require that responsible offices annually review unliquidated obligations and inactive
unliquidated obligations and take appropriate action to deobligate unneeded funds. While the EPA met
the requirement to review unliquidated obligations at least annually, it did not take timely actions to
deobligate the unneeded funds. As a result, almost $10 million in unobligated funds were not
deobligated and made available for other uses. Further, without timely deobligation of unneeded funds,
the EPA has does not have reasonable assurance that unliquidated obligations are accurate and
represent valid obligations.

Resource Management Directive System 2520-03-P1, Responsibilities for Reviewing Unliquidated
Obligations, requires all responsible parties to review at least annually all current and prior year
unliquidated obligations to ensure that all recorded obligations are still valid and properly documented.
According to the directive, an inactive obligation is one in which there has been no activity for six
months (180 days) or more, and a valid obligation is one "for which appropriated funds are still available
for the purpose and time period specified, and for which an actual need still exists within the life of the
appropriation." Resource Management Directive System 2520-03-P1 requires that all unneeded funds
be deobligated by the end of each fiscal year. The directive requires that all responsible officials certify
that their office or region took the necessary actions to deobligate the funds as provided in the Office of
the Controller's year-end requirement for the fiscal year.

We found that the EPA did not deobligate unneeded funds in FY 2023 in a timely manner. During its
annual review of unliquidated obligations, the Agency identified $10.5 million of unliquidated
obligations that remained opened as of September 30, 2023. The EPA determined that $471,143 of
these unliquidated obligations were valid and should remain open. As shown in Table 2-1, the Agency
determined that approximately $10 million of unliquidated obligations were unneeded, but these funds
were not deobligated by the end of fiscal year, as required.

Table 2-1: Unneeded funds identified for deobligation

Offices and regions

Funds ($)

Office of the Administrator

4,889.65

Office of Chemical Safety and Pollution Prevention

498,527.83

OCFO

455,920.35

1 OIG Report No. 23-N-0036, Status of Unliquidated Obligations for Programs Receiving Funding from the
Infrastructure Investment and Jobs Act, issued September 28, 2023.

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I Offices and regions

| Funds ($) 1

Office of International and Tribal Affairs

777,898.62

Office of Land and Emergency Management's Office of Emergency Management

360,659.99

Office of Land and Emergency Management's Office of Superfund Remediation and
Technology Innovation

270,564.22

Office of Research and Development

5,759.45

Region 3

2,980,930.07

Region 5

70,339.76

Region 6

175,785.59

Region 8

1,292,038.52

Region 9

*3,102,619.85

Total

9,995,933.90

Source: OIG analysis of EPA data. (EPA OIG table)

* This amount includes $2,518,007.12 for Region 8 for a mixed-funded contract with Regions 8 and 9 funds.

Program offices and regions noted several reasons why unliquidated obligations were not deobligated by
the end of the fiscal year. Some said that they experienced technical issues related to the EPA's adoption
of the Treasury's Invoice Processing Platform in May 2023, while some said that they were awaiting final
invoices before deobligating funds. In addition, others noted either that the deobligation of funds should
occur, was in process, or would occur in FY 2024 or that the funds would be expended in FY 2024.

By not taking timely and appropriate action to deobligate unneeded funds, the EPA does not have
reasonable assurance that the unliquidated obligations are accurate and represent valid obligations
reported in the financial statements. Further, obligated funds are overstated if unneeded funds are not
deobligated. By deobligating funds no longer needed for their original purpose by the required deadline,
the EPA can make these funds available for other purposes.

Recommendation

We recommend that the chief financial officer:

4. Develop a plan to improve the Office of the Chief Financial Officer processes for headquarters
program offices and regional offices to deobligate unneeded funds in a timely manner by the
end of the fiscal year, as required.

Agency Response and OIG Assessment

The EPA agreed with our recommendation and provided an acceptable planned corrective action and
estimated milestone date of July 1, 2024. We consider this recommendation resolved with corrective
action pending.

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3 - The EPA Operated Under an Expired ISA and MOA,
Which Could Hamper Invoice Processing

The OCFO and the Treasury were operating under an expired ISA and MOA for more than six months,
from March to September 2023. The ISA and MOA documents each entity's responsibility to design and
implement security controls for the connection between the EPA's Compass Financials system and the
Treasury's Invoice Processing Platform. This connection, which implements the OMB's requirement for
electronic invoicing, must be secure to protect the confidentiality, integrity, and availability of the
invoice processing function. Furthermore, security controls are needed to protect the data being
transmitted over this connection, which contain not only federal financial information but also data
subject to the Privacy Act, 5 U.S.C. § 552a. A lack of an approved agreement could cause the EPA and the
Treasury to be unaware of changes made either to the connection or to the design configurations of the
systems, which could disrupt operations and potentially prevent vendors from submitting invoices and
EPA personnel from approving invoices in a timely manner.

OMB Memorandum M-15-19, Improving Government Efficiency and Saving Taxpayer Dollars Through
Electronic Invoicing, dated July 17, 2015, mandates that federal agencies implement electronic invoicing.
The EPA implements the electronic invoicing requirement via a connection between its financial system,
Compass Financials, and the Treasury's Invoice Processing Platform. Section CA-3, "Information
Exchange," of the EPA Chief Information Officer Directive No. CIO 2150-P-04.3, Information Security-
Assessment, Authorization and Monitoring Procedure, signed June 8, 2023, requires the approval and
management of the exchange of information between systems using an ISA or MOA. The directive also
requires that the ISA and MOA be reviewed and updated "as agreed upon by the participating
signatories but not to exceed three (3) years or whenever there is a significant change to any of the
systems covered by the agreements."

In accordance with CIO 2150-P-04.3, the OCFO and the Treasury signed the ISA and MOA on March 14,
2020, for a new connection between the Compass Financials system and the Invoice Processing Platform
to implement the OMB's electronic invoicing requirement. The ISA and MOA documents each entity's
responsibility to implement security controls to protect the confidentiality, integrity, and availability of
invoice processing between the Compass Financials system and the Invoice Processing Platform. The
data being transmitted over this connection contain federal financial information, as well as data subject
to the Privacy Act, 5 U.S.C. § 552a. Consistent with CIO 2150-P-04.3, this original agreement was in
effect for a three-year period, expiring on March 14, 2023. Section 5, "Timeline," of the expired ISA and
MOA states:

This agreement will remain in effect for three (3) years after the last date on either
signature in the signature block below. After three (3) years, this agreement will
expire without further action. If the parties wish to extend this agreement, they may
do so by reviewing, updating, and reauthorizing this agreement.

However, a new ISA and MOA was not reauthorized before the original agreement expired. As such, the
OCFO and the Treasury were operating without an approved agreement for approximately six months,

24-F-0009

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from March to September 2023. Furthermore, the OCFO did not start the ISA and MOA renewal process
until February 2023, one month before the expiration of the original agreement. The OCFO did not
explain why the ISA and MOA was not renewed prior to the original agreement expiring; it only provided
us with a timeline of its progress in updating and renewing the agreement. According to that timeline,
the renewal process was in process for more than seven months, from February to September 2023.
A new ISA and MOA was signed and became effective on September 25, 2023.

Based on the timeline provided to us, we concluded that the OCFO did not have a plan with milestone
dates to ensure that the ISA and MOA would be reauthorized prior to its expiration. Without a current
ISA and MOA in place that accounts for any system updates that would affect the connection and
related security controls for the Compass Financials system and the Invoice Processing Platform, the EPA
and the Treasury had no enforceable agreement to govern the development, management, operation,
and security of the systems' connection. This leaves both federal entities with limited assurance that
they are fully aware of any significant changes or updates that could impact the connection between the
two systems. As a result, they cannot ensure that the security controls are properly designed to protect
the transmission of financial and privacy information across the connection.

Recommendation

We recommend that the chief financial officer:

5. Develop and implement a plan with milestones to ensure that future Interconnection Security
Agreement and Memorandum of Agreement documents for each external connection with
Office of the Chief Financial Officer systems are reauthorized before the current agreements
expire.

Agency Response and OIG Assessment

The EPA agreed with our recommendation and provided an acceptable planned corrective action and
estimated milestone date of June 30, 2024. We consider this recommendation resolved with corrective
action pending.

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4 - The EPA Did Not Review User Accounts for EPA
Contracting Personnel Every 60 Days As Required By
Its Information Security Procedure

The OCFO's management of EPA employee user accounts that can access the Treasury's Invoice
Processing Platform are not compliant with the Agency's information technology account management
requirements. The Invoice Processing Platform was fully implemented within the EPA on May 23, 2023,
for EPA contracting personnel to manage and approve vendor invoices. Despite the EPA requirements to
conduct user account reviews every 60 days starting June 8, the OCFO had not conducted the required
review as of September 30, 2023. The user account reviews help confirm whether all of the EPA's
approximately 2,300 active Invoice Processing Platform user accounts are still necessary. Removing
unnecessary user accounts could help reduce the risk of unauthorized access, which could lead to the
disclosure, modification, or destruction of financial information and the disruption of system operations.

Section AC-2, "Account Management," of Chief Information Officer Directive No. CIO 2150-P-01.3,
Information Security - Access Control Procedure, signed June 8, 2023, requires service managers for
systems operated by or on behalf of the EPA to take security measures including:

1.	Review accounts for compliance with account management every 60 (sixty) days
and align account management processes with personnel termination and
transfer processes.

2.	Create, enable, modify, disable, and remove accounts in accordance with EPA
information security requirements.

3.	Notify account managers, Information Security Officer, and Information System
Security Officers within:

a)	Three (3) days when accounts are no longer required.

b)	Four (4) hours of departure for involuntary terminations and same day of
departure for voluntary terminations when users are terminated or transferred.

c)	Three (3) days when system usage or need-to-know changes for an individual.

In addition to the EPA's 60-day user account reviews, the Treasury requires an annual user account
recertification.

The OCFO conducted only the annual user account recertification in June 2023, despite CIO 2150-P-01.3
requirements to conduct user account reviews every 60 days. The OCFO advised us that it did not
adhere to CIO 2150-P-01.3 because it is developing standard operating procedures that will not include
the 60-day requirement but will instead leverage the Treasury's annual user account recertification
process. However, the OCFO's plans to incorporate account management practices for the Invoice
Processing Platform user accounts as part of an annual user account recertification process do not
comply with CIO 2150-P-01.3 requirements that accounts be reviewed every 60 days. Additionally, the
OCFO stated that it intends to rely on Invoice Processing Platform system controls that disable a user
account when there is a period of inactivity as part of its account management practices. According to

24-F-0009

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Treasury personnel, the Invoice Processing Platform will disable a user account after 120 days of
inactivity. However, this period is twice the duration of the EPA's required 60-day user account reviews.

The Invoice Processing Platform provides contracting personnel with the ability to approve vendor
invoices ranging from hundreds to millions of dollars of federal funds. By not following the Agency's
account management requirements, the OCFO risks exposing the EPA's systems and the Treasury's
Invoice Processing Platform to unauthorized access, which could potentially lead to the disclosure,
modification, or destruction of financial information and the disruption of system operations. The
60-day user account reviews required by EPA information technology directive serve as a preventive
control to limit unauthorized access.

Recommendations

We recommend that the chief financial officer:

6.	In consultation with the Office of Mission Support's chief information officer, determine how
the Office of the Chief Financial Officer will conduct reviews of active Invoice Processing
Platform user accounts to comply with Chief Information Officer Directive No. CIO 2150-P-01.3,
Information Security - Access Control Procedure.

7.	Develop and implement a strategy to ensure that future reviews of active Invoice Processing
Platform user accounts comply with Chief Information Officer Directive No. CIO 2150-P-01.3,
Information Security - Access Control Procedure.

Agency Response and OIG Assessment

The EPA agreed with these recommendations and provided acceptable planned corrective actions. For
both recommendations, the EPA provided an estimated milestone date of June 30, 2024. We consider
these recommendations resolved with corrective actions pending.

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Attachment B

Status of Prior Audit Report Recommendations

The EPA continues to strengthen its audit management practices and procedures to address audit
findings in a timely manner and to complete corrective actions expeditiously and effectively. In FY 2023,
the EPA's chief financial officer, as the agency follow-up official, continued to encourage managers to
evaluate the OIG's recommendations thoroughly, develop suitable and attainable corrective actions,
and implement the corrective actions in the agreed-upon time frame. The OCFO implemented the
following actions to strengthen its audit management procedures:

•	Worked closely with the Agency's audit follow-up coordinators to ensure adherence to
corrective action dates and submission of the required certification memorandums. The OCFO
efforts were critical and significantly helped with the EPA's responses to the OIG's Semiannual
Report to Congress published in May 2023.

•	Conducted a comprehensive review of open OIG and U.S. Government Accountability Office
recommendations and corrective actions to identify common themes and challenges. The
review included data calls and interviews with individual offices and a brief to OCFO and Agency
leadership.

•	Provided monthly reporting for the agencywide metric on the number of past-due audit
corrective actions. The metric measures the completion of Agency-identified corrective actions
that were not completed by the proposed completion date. The intended purpose of the
monthly reporting is to facilitate the implementation of Agency corrective actions in response to
OIG audit recommendations and to decrease the number of late audit corrective actions.

•	Enhanced the utility of the Enterprise Audit Management System, the Agency's audit tracking
tool, for improved tracking of OIG and Government Accountability Office audits and evaluations.
The Enterprise Audit Management System facilitates the Agency's activities and corrective
actions in response to the OIG and Government Accountability Office audits and evaluations.

•	Prepared regular reports on OIG and Government Accountability Office audits and evaluations
for broad agency distribution. The report includes the most recent audit and evaluation updates,
open recommendations, and metric status.

•	Maintained the audit community intranet site, which serves as a resource for the Agency's audit
follow-up coordinators and audit liaisons. The collaborative site includes resources and
reference materials, such as standard operating procedures, response templates, frequently
asked questions, reporting links, deadlines, and other useful information.

•	Continued regular use of the audit community's internet site for the Agency's audit follow-up
coordinators and audit liaisons to work collaboratively, share best practices, and contribute to
community projects.

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•	Provided training during the OCFO technical training series for Agency subject matter experts
participating in OIG or Government Accountability Office projects. The training provided best
practices for audit preparedness.

•	Established biweekly meetings with audit follow-up coordinators and audit liaisons agencywide
to provide regular updates, offer training, and discuss audit-related issues and concerns.

These and other efforts are a testament to the OCFO's continued commitment to improving the
Agency's audit and evaluation management practices. In addition, the EPA maintained its commitment
to engage early with the OIG on audit and evaluation findings and to develop effective corrective actions
that address OIG recommendations.

As noted in the table below, however, there are still recommendations from previous financial
statement audits that have not been fully implemented.

Table B-1: Significant deficiency issues not fully resolved

Originating Offices Did Not Forward Accounts Receivable Source Documents to the Finance Center in a
Timely Manner

During our FY 2021 audit, we found that EPA regions did not submit supporting source documents to the EPA's
Cincinnati Finance Center for accounts receivable in a timely manner, which then delayed recording and
processing of those receivables. The EPA's Resource Management Directives state that the responsible offices
must forward to the Cincinnati Finance Center source documents supporting an accounts receivable for
settlements or orders demonstrating a debt owed to the Agency within five business days. The regional program
office, the Office of Regional Counsel, and the regional legal enforcement office staff are responsible for providing
these documents to the Cincinnati Finance Center. When the Cincinnati Finance Center is unable to create
receivables timely, the debtor may not be billed appropriately, interest may not accrue, and the EPA may not
collect all that it is owed. Furthermore, the EPA's delayed recording of accounts receivable could result in a
material misstatement of the financial statements. While we have noted some improvements in the timely receipt
of legal documents, we still identified instances of untimely receipt from FY 2015 through FY 2023. Therefore, the
Agency's corrective actions are not completely effective, and we will continue to evaluate whether the Agency
receives legal source documents in a timely manner going forward.

The EPA Did Not Deobligate Unneeded Funds in a Timely Manner

During the FY 2022 audit, we found the EPA did not deobligate in a timely manner the $5.8 million of unliquidated
obligations that it identified in its FY 2022 unliquidated obligations annual review. Agency directives require that
unliquidated obligations be reviewed annually and that responsible offices review inactive unliquidated obligations
at least annually. As a result, the EPA has no assurance that unliquidated obligations are accurate and represent
valid and viable obligations. We recommended that the chief financial officer reiterate to headquarters program
offices and regional offices the importance of deobligating by the end of the fiscal year the unneeded funds that
they identified during their annual unliquidated obligations review. The EPA concurred with our recommendation
and completed corrective action on May 8, 2023. However, during our 2023 audit, we continued to find that
unneeded funds were not deobligated by the required deadline. Therefore, the Agency's corrective action is not
completely effective, and we will continue to evaluate whether the Agency deobligates unneeded funds by the
required deadline in FY 2024.

Source: OIG analysis of prior-year recommendations and the Agency's corrective actions. (EPA OIG table)

24-F-0009

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Attachment C

Status of Recommendations
and Potential Monetary Benefits

Rec.
No.

Page
No.

Recommendation

Status*

Action Official

Potential
Planned Monetary
Completion Benefits
Date	(in $000s)

12 Instruct the regions to perform an analysis of financially closed
Superfund State Contracts to reclassify appropriated and
reimbursable disbursements and financially close lines on the
accrual.

12 Instruct the regions to provide current Superfund State Contract
information quarterly to the Cincinnati Finance Center.

12 Review the Great Lakes Legacy Act accrual project information
prior to its submission to the Cincinnati Finance Center to ensure
its accuracy.

14 Develop a plan to improve the Office of the Chief Financial

Officer processes for headquarters program offices and regional
offices to deobligate unneeded funds in a timely manner by the
end of the fiscal year, as required.

16 Develop and implement a plan with milestones to ensure that
future Interconnection Security Agreement and Memorandum of
Agreement documents for each external connection with Office
of the Chief Financial Officer systems are reauthorized before
the current agreements expire.

18 In consultation with the Office of Mission Support's chief
information officer, determine how the Office of the Chief
Financial Officer will conduct reviews of active Invoice
Processing Platform user accounts to comply with Chief
Information Officer Directive No. CIO 2150-P-01.3, Information
Security - Access Control Procedure.

18 Develop and implement a strategy to ensure that future reviews
of active Invoice Processing Platform user accounts comply with
Chief Information Officer Directive No. CIO 2150-P-01.3,
Information Security - Access Control Procedure.

Chief Financial Officer

Chief Financial Officer

6/30/24

1/15/24

$1,586

Director for the Great Lakes 10/18/23
National Program Office

Chief Financial Officer

Chief Financial Officer

7/1/24

6/30/24

$9,995

Chief Financial Officer

6/30/24

Chief Financial Officer

6/30/24

* C = Corrective action completed.

R = Recommendation resolved with corrective action pending.
U = Recommendation unresolved with resolution efforts in progress.

24-F-0009

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Appendix 1

The EPA's Fiscal Year 2023 and 2022 Consolidated
Financial Statements (with Restatement)

24-F-0009	22


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EPA's Fiscal Year 2023 and 2022
Consolidated Financial Statements (With Restatement)

Financial Section


-------
Table of Contents

Principal Financial Statements	1

Notes to the Financial Statements.	8

Note 1. Summary of Significant Accounting Policies		8

Note 2. Fund Balance with Treasury (FBWT)	16

Note 3, Cash and Other Monetary Assets							17

Note 4. Investments, Net	17

Note 5. Accounts Receivable, Net	18

Note 6. Inventory and Related Property	18

Note 7. Loans Receivable, Net	18

Note 8. Accounts Payable							21

Note 9. Property, Plant and Equipment, Net	22

Note 10. Debt	24

Note 11. Stewardship Property, Plant and Equipment	25

Note 12. Liability to the General Fund for Custodial Assets	25

Note 13. Other Liabilities							26

Note 14. Leases							27

Note 15. Advances from Others and Deferred Revenue	28

Note 16. Commitments and Contingencies	28

Note 17. Funds from Dedicated Collections (Restated)	31

Note 18. Environmental and Disposal Liabilities		36

Note 19. State Credits							37

Note 20. Preauthorized Mixed Funding Agreements	37

Note 21. Custodial Revenues and Accounts Receivable	37

Note 22. Statement of Budgetary Resources	38

Note 23. Imputed Financing		40

Note 24. Federal Employee and Veteran Benefits Payable						41

Note 25. Non-Exchange Revenue, Statement of Changes in Net Position	42

Note 26. Reconciliation of Net Cost of Operations to Net Outlays	43

Note 27. Amounts Held by Treasury	46

Note 28. COVED-19 Activity.	50

Note 29. Reclassified Financial Statements for Govemment-wide Reporting	50

Note 30. Restatement							52

Required Supplementary Information (Unaudited)	53

Deferred Maintenance	53

Supplemental Combining Statement of Budgetary Resources			57


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Principal Financial Statements

United States Environmental Protection Agency
Consolidated Balance Sheet (Restated)
As of September 30, 2023 and 2022
(Dollars in Thousands)

ASSETS:

Intragovernmental Assets:

Fund Balance With Treasury (Note 2)

Investments, Net (Note 4)

Accounts Receivable, Net (Note 5)

Advances and Prepayments
Total Intragovernmental Assets
Other Than Intragovernmental Assets:

Cash and Other Monetary Assets (Note 3)

Accounts Receivable, Net (Note 5)

Loans Receivable, Net (Note 7)

Inventory and Related Property, Net (Note 6)

Property, Plant and Equipment, Net (Note 9)

Advances and Prepayments
Total Other Than Intragovernmental Assets
Total Assets

Stewardship Property Plant and Equipment (Note 1 I)

LIABILITIES:

Intra go v ernmental Liabilities:

Accounts Payable (Note 8)

Debt (Note 10)

Advances from Others and Deferred Revenue
Other Liabilities

Liability to the General Fund for Custodial Assets (Note 12)

Other (Note 13)

Total Intragovernmental Liabilities
Other Than Intragovernmental Liabilities:

Accounts Payable (Note 8)

Federal Employee and Veteran Benefits Payable (Note 24)

Environmental and Disposal Liabilities (Note 18)

Advances from Others and Deferred Revenue (Note 15)

Other Liabilities (Note 13)

Total Other Than Intragovernmental Liabilities
Total Liabilities

Commitments and Contingencies (Note 16)

NET POSITION:

Unexpended Appropriations - Funds from Dedicated Collections (Note 17)
Unexpended Appropriations - Funds from Other than Dedicated Collections
Total Unexpended Appropriations (Consolidated)

Cumulative Results of Operations - Funds from Dedicated Collections (Note 17, 30)
Cumulative Results of Operations - Funds from Other than Dedicated Collections
(Note 30)

Total Cumulative Results of Operations (Consolidated)

Total Net Position
Total Liabilities and Net Position

2023

74,589,768
12,159,283
7,686
1.569.525
88.326.262

10

520,692
2,401,922
626
743,207
1 1.602
3,678,059

2,921
2,953,225
173,381

105,995
208.187

3.443.709

116,234
229,748
37,357
3,676,206
623.349

4.682.894

281

74.602.484
74,602,765
9,309,893

9,274,953

83.877.718
92,004.321

(Restated)
2022

(34.940)

64,103,829
10,297,779
5,717
261.776
74.669.101

10

548,525
1,291,508
531
730,992
10.536
2.582.102

92,004,321 $ 77.251.203

3,067
1,557,180
183,791

106,560
199.697

2.050.295

62,913
223,785
32,156
3,666,198
597.993

4.583.045

8.126.603 $ 6.633.340

178

62.618.529
62,618,707
7,744,123

255.033
7.999.156
70.617.863
77.251.203

The accompanying notes are an integral part of these financial statements.

1.


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United States Environmental Protection Agency
Consolidated Statement of Net Cost
For the Fiscal Years Ending September 30, 2023 and 2022
(Dollars in Thousands)

2023	2022

COSTS









Gross Costs

$

12,487,285

$

10,142,639

Less: Earned Revenue



520.394



400.059

NET COST OF OPERATIONS (Note 26)

$

11.966.891

$

9.742.580

The accompanying notes are an integral part of these financial statements.

2.


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United States Environmental Protection Agency

Statement of Net Cost by Major Program
For the Fiscal Years Ending September 30, 2023
(Dollars in Thousands)

Environmental
Programs &
Management

Costs:

Gross Costs	S 3,152,262

WCF Elimination

Total Costs	3.152.262

Less:

Earned Revenue	37,771
WCF Elimination

Total Earned Revenue 	37.771

NET COST OF

OPERATIONS	$ 3,114.491

Leaking
Underground
Storage Tanks

S 91,478

Science &
Technology

S 799,818

Superfund
S 1,690,188

91.478

799.818

1.690.188

-

4,711

239,104

_

4.711

239.104

$ 91.478

$ 795.107

$1,451,084

State &

Tribal
Assistance

Agreements Other	T otals

5 5,871,185 S 1,238,522 S 12,843,453
-	(356.168) (356.168)

5.871.185 882.354 12.487.285

594,976	876,562

(356.1681 (356.168)
238.808	520.394

$5.871.185 $ 643.546 $ 11.966.891

United States Environmental Protection Agency

Statement of Net Cost by Major Program
For the Fiscal Years Ending September 30, 2022





(Dollars in Thousands)







Environmental
Programs &
Management

Leaking
Underground
Storage Tanks

Science &
T echnology

Superfund

State &

Tribal
Assistance

Agreements Other

Totals

Costs:

Gross Costs
WCF Elimination

S 3,161,870

S 92,373

S 784,144

S 1,350,585

5 4,254,533 S 821,116
(321,982)

S 10,464,621
(321,982)

Total Costs

3,161,870

92,373

784,144

1,350,585

4,254,533 499,134

10,142,639

Less:

Earned Revenue
WCF Elimination

35,036

-

6,328

202,969

477,708
(321,982)

722,041
(321,982)

Total Earned Revenue

35,036

-

6,328

202,969

155,726

400,059

NET COST OF
OPERATIONS

$ 3.126.834

$ 92.373

$ 777.816

$1,147,616

$4,254,533 $ 343.408

$ 9.742.580

The accompanying notes are an integral part of these financial statements.

3.


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United States Environmental Protection Agency
Consolidated Statement of Changes in Net Position
For the Fiscal Years Ending September 30, 2023

(Dollars in Thousands)









Funds from





Funds from

Other Than





Dedicated

Dedicated

Consolidated



Collections

Collections

Totals

UNEXPENDED APPROPRIATIONS:

(Note 17)





Beginning Balance

$ 178

$ 62,618,529

$ 62,618,707

Appropriations Received



23,138,776

23,138,776

Appropriations Transferred In/(Oul)

-

(1,500)

(1,500)

Other Adjustments

-

(34,496)

(34,496)

Appropriations Used

103

H 1.118.825)

(1 1.118.722)

Net Change in Unexpended Appropriations

103

1 1,983,955

11,984,058

Total Unexpended Appropriations

$ 281

$ 74,602,484

$ 74.602.765

CUMULATIVE RESULTS OF OPERATIONS:







Beginning Balanee

$ 7,744,123

$ 255,033

$ 7,999,156

Other Adj ustments

-

(52,084)

(52,084)

Appropriations Used

(103)

11,118,825

11,118,722

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

(1.548.882)

(10.418.009)

(11.966.891)

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

S 9.310.174

$ 74.567.544

$ 83.877.718

The accompanying notes are an integral part of these finaneial statements.

4.


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United States Environmental Protection Agency
Consolidated Statement of Changes in Net Position
For the Fiscal Years Ending September 30, 2022
(Dollars in Thousands)





(Restated)





(Restated)

Funds from





Funds from

Other Than

(Restated)



Dedicated

Dedicated

Consolidated



Collections

Collections

Totals

UNEXPENDED APPROPRIATIONS:

(Note 17)





Beginning Balance

$ 187

$ 10,400,345

$ 10,400,532

Appropriations Received

-

65,051,983

65,051,983

Other Adjustments

-

(20,398)

(20,398)

Appropriations Used

(9)

M 2.813.40 1*

M 2.813.410*

Change in Unexpended Appropriations

(9)

52,218,184

52,218,175

Total Unexpended Appropriations

$ 178

$ 62.618.529

$ 62.618.707

CUMULATIVE RESULTS OF OPERATIONS:







Beginning Balance

$ 3,559,846

$ 372,822

$ 3,932,668

Other Adjustments (Note 30)

-

(769)

(769)

Appropriations Used

9

12,813,401

12,813,410

Non-Exchange Revenue (Note 25)

752,635

-

752,635

Transfers-In/(Out) Without Reimbursements (Note 30)









4,633,057

(4,610,710)

22,347

Imputed Financing (Note 23)

26,687

242,257

268,944

Other (Note 30)

-

(47.499)

(47.499*

Net Cost of Operations (Note 30)

M.228.1 in

(8.514.469*

(9.742.580*

Net Change in Cumulative Results of Operations

4,184,277

(117,789)

4,066,488

Total Cumulative Results of Operations

7,744,123

255,033

7,999,156

Net Position

S 7.744.301

$ 62.873.562

S 70.617.863

The accompanying notes are an integral part of these finaneial statements.

5.


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United States Environmental Protection Agency
Combined Statement of Budgetary Resources
For the Fiscal Years Ending September 30, 2023 and 2022
(Dollars in Thousands)

2023

2022

BUDGETARY RESOURCES

Unobligated Balance From Prior Year Budget

Authority, Net (discretionary and mandatory)
(Note 22)

Appropriations (discretionary and mandatory)
Borrowing Authority (discretionary and mandatory)
Spending Authority from offsetting collections
(discretionary and mandatory)

Total Budgetary Resources



Non-



Non-



Budgetary



Budgetary



Credit Reform



Credit Reform



Financing



Financing

Budgetary

Account

Budgetary

Account

$ 57,282,366

$

$ 5,674,107

$

25,003,271

-

70,271,764

-

-

2,884,452

-

3,693,794

639.195

374.140

542.709

181,898

S 82.924.832 S 3.258.592 $ 76.488.580 S 3.875.692

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

$ 23,652,487 $ 3,258,592 $ 19,513,330 $ 3,875,692

59,166,962
600
104.783
59.272.345

56,844,168
24,464
106.618
56.975.250

S 82.924.832 S 3.258.592 S 76.488.580 S 3.875.692

OUTLAYS, NET AND DISBURSEMENTS, NET

Outlays, Net (total) (discretionary and mandatory) $ 14,155,184	$ 14,318,219

Distributed Offsetting Receipts (-) (Note 22)	(1.568.936)	f5.038.8201

Agency Outlays, Net (discretionary and mandatory) $ 12.586.248	$ 9.279.399

Disbursements, Net (total) (mandatory)	$ 1.379.374	$ 840.409

The accompanying notes are an integral part of these finaneial statements.

6.


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United States Environmental Protection Agency
Statement of Custodial Activity
For the Fiscal Years Ending September 30, 2023 and 2022
(Dollars in Thousands)



2023

2022

Total Custodial Revenue:





Sources of Cash Collections:





Fines and Penalties

$ 85,601 $

56.390

Other

(25.935)

(3.810*

Total Cash Collections

59,666

52,580

Accrual Adjustments

29.999

5.935

Total Custodial Revenue (Note 21)

$ 89.665 $

58.515

Disposition of Collections:





Transferred to Others (General Fund)

$ 106,802 $

52,761

Increases/Decreases in Amounts to be Transferred

(17.137*

5.754

Total Disposition of Collections

$ 89.665 X

58.515

Custodial Revenue Less Disposition of Collections

$ - $

-

The accompanying notes are an integral part of these finaneial statements.

7.


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United States Environmental Protection Agency
Notes to the Financial Statements
For the Fiscal Years Ending September 30, 2023 and 2022
(Dollars in Thousands)

Note 1. Summary of Significant Accounting Policies

A.	Reporting Entities

The EPA was created in 1970 by executive reorganization from various components of other federal agencies to better
marshal and coordinate federal pollution control efforts. The Agency is generally organized around the media and
substances it regulates: air, water, waste, pesticides, and toxic substances.

The FY 2023 financial statements are presented on a consolidated basis for the Balance Sheet, Statement of Net Cost,
Statement of Net Costs by Major Program, and Statement of Changes in Net Position. The Statement of Custodial
Activity and the Statement of Budgetary Resources are presented on a combined basis. The financial statements
include the accounts of all funds described in this note by their respective Treasury fund group.

B.	Basis of Presentation

The accompanying financial statements have been prepared to report the financial position and results of operations of
the U.S. Environmental Protection Agency (the EPA or Agency) as required by the Chief Financial Officers Act of
1990 and the Government Management Reform Act of 1994. The reports have been prepared from the financial
system and records of the Agency in accordance with Office of Management and Budget (OMB) Circular No. A-136,
Financial Reporting Requirements revised May 19, 2023, and the EPA accounting policies, which are summarized in
this note.

C.	Budgets and Budgetary Accounting
I. General Funds

Congress enacts an annual appropriation for State and Tribal Assistance Grants (STAG), Buildings and Facilities
(B&F), and for payments to the Hazardous Substance Superfund to be available until expended. Annual
appropriations for the Science and Technology (S&T), Environmental Programs and Management (EPM) and for the
Office of Inspector General (OIG) are available for two fiscal years. When the appropriations for the General Funds
are enacted. Treasury issues a warrant for the respective appropriations. As the Agency disburses obligated amounts,
the balance of funds available in the appropriation is reduced at the U.S. Treasury (Treasury).

The EPA has three-year appropriation accounts and a no-year revolving fund account to provide funds to carry out
section 3024 of the Solid Waste Disposal Act, including the development, operation, maintenance, and upgrading of
the hazardous waste electronic manifest system. The Agency is authorized to establish and collect user fees for the
Hazardous Waste Electronic Manifest System Fund (e-Manifest) to recover the full cost of providing the hazardous
waste electronic manifest fund system related services.

The EPA receives two-year appropriated funds to carry out the Frank R. Lautenberg Chemical Safety for the 21st
Century Act. Under the Act, the Agency is authorized to collect user fees (up to $25 million annually) from chemical
manufacturers and processors. Fees collected will defray costs for new chemical reviews and a range of Toxic
Substances Control Act Service Fee Fund (TSCA) implementation activities for existing chemicals.

The Water Infrastructure Finance and Innovation Act of 2014 (W1FIA) established a federal credit program
administered by the EPA for eligible water and wastewater infrastructure projects. The program is financed from
appropriations to cover the estimated long-term cost of the loans. The long-term cost of the loans is defined as the net
present value of the estimated cash flows associated with the loans. A permanent indefinite appropriation is available
to finance the costs of reestimated loans that occur in subsequent years after the loans are disbursed. The Agency
received two-year appropriations in fiscal years 2023 and 2022 to finance the administrative portion of the program.

8.


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United States Environmental Protection Agency
Notes to the Financial Statements
For the Fiscal Years Ending September 30, 2023 and 2022
(Dollars in Thousands)

EPA reestimates the risk on each individual loan annually. Proceeds issued by EPA cannot exceed forty-nine percent
of eligible project costs. Project costs must exceed a minimum of $20 million for large communities and $5 million for
communities with populations of 25,000 or less. After substantial completion of a project, the borrower may defer up
to five years to start loan repayment and cannot exceed thirty-five years for the final loan maturity date.

Funds transferred from other federal agencies are processed as non-expenditure transfers. Clearing accounts and
receipt accounts receive no appropriated funds. Amounts arc 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 (PR1A) 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).

9.


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United States Environmental Protection Agency
Notes to the Financial Statements
For the Fiscal Years Ending September 30, 2023 and 2022
(Dollars in Thousands)

V.	Trust Funds

Congress enacts an annual appropriation for the Hazardous Substance Superfund, Leaking Underground Storage Tank
(LUST) and the Inland Oil Spill Programs accounts to remain available until expended. Transfer accounts for the
Superfund and LUST Trust Funds have been established to record appropriations moving from the Trust Fund to
allocation accounts for purposes of carrying out the program activities. As the Agency disburses obligated amounts
from the expenditure account, the Agency draws down monies from the Superfund and LUST Trust Funds held at
Treasury to cover the amounts being disbursed. The Agency draws down all the appropriated monies from the
Principal Fund of the Oil Spill Liability Trust Fund when Congress enacts the Inland Oil Spill Programs appropriation
amount to the EPA's Inland Oil Spill Programs account.

In 2015, the EPA established a receipt account for Superfund special account collections. Special accounts are
comprised of settlements from other federal agencies and proceeds from Potentially Responsible Parties (PRPs) under
the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) Section 122(b)(3). This
allows the Agency to invest the funds until drawdowns are needed for special accounts disbursements.

VI.	Classified Activities

Accounting standards require all reporting entities to disclose that accounting standards allow certain presentations
and disclosures to be modified, if needed, to prevent the disclosure of classified information.

VII.	Allocation Transfers

The EPA is a party to allocation transfers with other Federal agencies as both a transferring (parent) entity and a
receiving (child) entity. Allocation transfers are legal delegations from one entity of its authority to obligate budget
authority and outlay funds to another entity. A separate fund account (allocation account) is created in the U.S.
Treasury as a subset of the parent fund account for tracking and reporting purposes. All allocation transfers of
balances are credited to this account, and subsequent obligations and outlays incurred by the child entity are charged
to this allocation account as they execute the delegated activity on behalf of the parent entity. Generally, all financial
activity related to allocation transfers (e.g., budget authority, obligations, and outlays) is reported in the financial
statements of the parent entity from which the underlying legislative authority, appropriations and budget
apportionments are derived. The EPA allocates funds, as the parent, to the Center for Disease Control. The
EPA receives allocation transfers, as the child, from the Bureau of Land Management.

D. Basis of Accounting

Generally Accepted Accounting Principles (GAAP) for federal entities is the standard prescribed by the Federal
Accounting Standards Advisory Board (FASAB), which is the official standard-setting body for the Federal
Government, and the American Institute of Certified Public Accountants (AICPA). The financial statements are
prepared in accordance with GAAP for federal entities.

Transactions are recorded on an accrual accounting basis and a budgetary basis. Under the accrual method, revenues
are recognized when earned and expenses are recognized when liabilities are incurred, without regard to receipt or
payment of cash. Budgetary accounting facilitates compliance with legal constraints and controls over the use of
federal funds posted in accordance with OMB directives and the U.S. Treasury regulations.

EPA uses a modified matching principle since federal entities recognize unfunded liabilities (without budgetary
resources) in accordance with FASAB Statement of Federal Financial Accounting Standards (SFFAS) No. 5
Accounting for Liabilities of the Federal Government.

10.


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United States Environmental Protection Agency
Notes to the Financial Statements
For the Fiscal Years Ending September 30, 2023 and 2022
(Dollars in Thousands)

E. Revenue and Other Financing Sources

As a component of the Government-wide reporting entity, the entity is subjeet to the Federal budget proeess, whieh
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 W1FIA 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 F1FRA and PRIA funds receive funding through fees collected for services provided and interest on invested
funds and can obligate collections up to the amount of anticipated collections within the fiscal year on the approved
letter of apportionment. The Hazardous Waste Electronic Manifest System Fund receives funding through fees
collected for use of the Hazardous Waste Electronic Manifest System and can obligate collections up to the amount of
anticipated collections on the approved letter of apportionment. The Toxic Substances Control Act Fund (TSCA)
collects user fees to defray costs for new chemical reviews and a range of implementation activities for existing
chemicals and can obligate collections up to the amount of anticipated collections on the approved letter of
apportionment. The WCF receives revenue through fees collected from the Agency program offices for services
provided. Such revenue is eliminated with related Agency program expenses upon consolidation of the Agency's
financial statements.

Appropriated funds are recognized as other financing sources expended when goods and services have been rendered
without regard to payment of cash. Other revenues are recognized when earned (i.e., when services have been
rendered).

11.


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United States Environmental Protection Agency
Notes to the Financial Statements
For the Fiscal Years Ending September 30, 2023 and 2022
(Dollars in Thousands)

F.	Fund Balance with Treasury (See Note 2)

FBWT is an asset of a reporting entity and a liability of the General Fund, Similarly, investments in Federal
Government seeurities that are held by Dedieated 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)

Super fund 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 intra governmental reimbursements receivable, and refunds receivable for the STAG
appropriation.

12.


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United States Environmental Protection Agency
Notes to the Financial Statements
For the Fiscal Years Ending September 30, 2023 and 2022
(Dollars in Thousands)

J. Advances and Prepayments

Advances and prepayments represent funds paid to other entities both internal and external to the Agency for which a
budgetary expenditure has not yet occurred.

K. Loans Receivable (See Note 7)

Loans are accounted for as receivables after funds have been disbursed. Loans receivable resulting from loans
obligated on or after October 1, 1991, are reduced by an allowance equal to the present value of the subsidy costs
associated with these loans. The subsidy cost is calculated based on the interest rate differential between the loans and
Treasury borrowing, the estimated delinquencies and defaults net of recoveries offset by fees collected, and other
estimated cash flows associated with these loans. Loan proceeds are disbursed pursuant to the terms of the loan
agreement. Interest is calculated semi-annually on a per loan basis. Repayments arc made pursuant to the terms of the
loan agreement with the option to repay loan amounts early.

L. Appropriated Amounts Held by Treasury (See Note 27)

Cash available to the Agency that is not needed immediately for current disbursements of the Super fund 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 LPA 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-hcld personal property are depreciated using the straight-line method
over the specific asset's useful life, ranging from two to fifteen years.

Personal property includes capital leases. To be defined as a capital lease, a lease, at its inception, must have a lease
term of two or more years and the lower of the fair value or present value of the projected minimum lease payments
must be $75 thousand or more. Capital leases containing real property (therefore considered in the real property
category as well), have a $150 thousand capitalization threshold. In addition, the lease must meet one of the following
criteria: transfers ownership at the end of the lease to the EPA; contains a bargain purchase option; the lease term is
equal to 75 percent or more of the estimated economic service life; or the present value of the projected cash flows of
the lease and other minimum lease payments is equal to or exceeds 90 percent of the fair value.

Superfund contract property used as part of the remedy for a site-specific response action is capitalized in accordance
with the Agency's capitalization threshold. This property is part of the remedy at the site and eventually becomes part
of the site itself. Once the response action has been completed and the remedy implemented, the EPA retains control
of the property (i.e., pump and treat facility) for 10 years or less and transfers its interest in the facility to the
respective state for mandatory operation and maintenance - usually 20 years or more. Consistent with the EPA's 10-
year retention period, depreciation for this property is based on a 10-year useful life. However, if any property is
transferred to a state in a year or less, this property is charged to expense. If any property is sold prior to the EPA
relinquishing interest, the proceeds from the sale of that property shall be applied against contract payments or
refunded as required by the Federal Acquisition Regulations. An exception to the accounting of contract property
includes equipment purchased by the WCF. This property is retained in EPA's FAS and depreciated utilizing the
straight-line method based upon the asset's in-service date and useful life.

13.


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United States Environmental Protection Agency
Notes to the Financial Statements
For the Fiscal Years Ending September 30, 2023 and 2022
(Dollars in Thousands)

Real property consists of land, buildings, capital and leasehold improvements and capital leases. In FY 2017, the EPA
increased the capitalization threshold for real property, other than land, to $150 thousand from $85 thousand for
buildings and improvements and $25 thousand for plumbing, heating, and sanitation projects. The new threshold was
applied prospectively. Land is capitalized regardless of cost. Buildings are valued at an estimated original cost basis,
and land is valued at fair market value, if purchased prior to FY 1997. Real property purchased after FY 1996 is
valued at actual cost. Depreciation for real property is calculated using the straight-line method over the specific
asset's useful life, ranging from 10 to 50 years. Leasehold improvements are amortized over the lesser of their useful
life or the unexpired lease term. Additions to property and improvements not meeting the capitalization criteria,
expenditures for minor alterations, and repairs and maintenance are expensed when incurred.

Internal use software includes purchased commercial off-the-shelf software, contractor-developed software, and
software that was internally developed by Agency employees. In FY 2017, the EPA reviewed its capitalization
threshold levels for PP&E. The Agency performed an analysis of the values of software assets, reviewed capitalization
of other federal entities, and evaluated the materiality of software account balances. Based on the review, the Agency
increased the capitalization threshold from $250 thousand to $5 million to better align with major software acquisition
investments. The $5 million threshold was applied prospectively to software acquisitions and

modifications/enhancements placed into service after September 30, 2016. Software assets placed into service prior to
October 1, 2016 were capitalized at the $250 thousand threshold. Internal use software is capitalized at full cost
(direct and indirect) and amortized using the straight-line method over its useful life, not exceeding five years.

Internal use software purchased or developed for the working capital fund is capitalized at $250 thousand and is
amortized using the straight-line method over its useful life, not exceeding five years.

N. Liabilities (See Notes 8 & 13)

Liabilities represent the amount of monies or other resources that are more likely than not to be paid by the Agency as
the result of an Agency transaction or event that has already occurred and can be reasonably estimated. However, no
liability can be paid by the Agency without an appropriation or other collections authorized for retention. Liabilities
for which an appropriation has not been enacted arc 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 and Veteran Benefits Payable". Sick leave earned but not taken is not accrued
as a liability; it is expensed as it is used.

Q. Retirement Plan (See Note 24)

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 contribu tes 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.

14


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United States Environmental Protection Agency
Notes to the Financial Statements
For the Fiscal Years Ending September 30, 2023 and 2022
(Dollars in Thousands)

With the issuance of SFFAS No. 5, Accounting for Liabilities of the Federal Government, accounting and reporting
standards were established for liabilities relating to the federal employee benefit programs (Retirement, Health
Benefits, and Life Insurance). SFFAS No. 5 requires that the employing agencies recognize the cost of pensions and
other retirement benefits during their employees' active years of service. SFFAS No. 5 requires that the Office of
Personnel Management (OPM), as administrator of the CSRS and FERS, the Federal Employees Health Benefits
Program, and the Federal Employees Group Life Insurance Program, provide federal agencies with the actuarial cost
factors to compute the liability for each program.

R. Prior Period Adjustments and Restatements

Prior period adjustments, if any, are made in accordance with SFFAS No. 21, Reporting Corrections of Errors and
Changes in Accounting Principles. Specifically, prior period adjustments will only be made for material prior period
errors to: (1) the current period financial statements, and (2) the prior period financial statements presented for
comparison. Adjustments related to changes in accounting principles will only be made to the current period financial
statements, but not to prior period financial statements presented for comparison.

S, Deepwater Horizon Oil Spill

The April 20, 2010 Deepwater Horizon (DWH) Oil Spill was the largest oil spill in U.S. history. In the wake of the
spill, the National Contingency Plan regulation was revised to reflect the EPA's designation as a DWH Natural
Resource Trustee. The DWH Natural Resources Damage Assessment is a legal process pursuant to the Oil Pollution
Act and the April 4, 2016 Consent Decree between the U.S., the five Gulf states, and British Petroleum (BP) entered
by a federal court in New Orleans. Under the Consent Decree, a payment schedule was set forth for BP to pay $7.1
billion in natural resource damages. The Natural Resource Damage Assessments (NRDA) trustees are then jointly
responsible to use those funds in the manner set forth in Appendix 2 of the Consent Decree to restore natural
resources injured by the DWH Oil Spill. In FY 2016, the EPA received an advance of $ 184 thousand from BP and $2
million from the U.S. Coast Guard, to participate in addressing injured natural resources and service resulting from the
Deepwater Horizon Oil Spill. As additional projects are identified, the EPA may continue to receive funding through
the 2016 Consent Decree to implement its DWH NRDA Trustee responsibilities in the Agency's Damage Assessment
and Restoration Revolving Trust Fund.

T. Use of Estimates

The preparation of financial statements requires management to make certain estimates and assumptions that affect the
reported amounts of assets and liabilities, including environmental and grant liabilities, and the reported amounts of
revenue and expenses during the reporting period. Actual results could differ from those estimates.

U. Reclassifications and 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-136, Financial Reporting Requirements revised May 19, 2023. As a result, the form and content of the
Balance Sheet, Statement of Changes in Net Position and footnotes have been changed to conform with OMB Circular
No. A-136.

15.


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United States Environmental Protection Agency
Notes to the Financial Statements
For the Fiscal Years Ending September 30, 2023 and 2022
(Dollars in Thousands)

Note 2. Fund Balance With Treasury (FBW'T)

Fund Balance with Treasury as of September 30, 2023 and 2022 consists of the following:

2023	2022





Entity
Assets

Non-Entity
Assets

Total

Entity
Assets

Non-Entity
Assets

Total

Trust Funds:















Supcrfund

$

(56,699)

$

$ (56,699)

$ 244,972 1

£

$ 244,972

LUST



20.603

-

20,603

24,166

-

24.166

Oil Spill & Misc.



20.556

-

20,556

18,919

-

18,919

Revolving Funds:















FIFRA/T olerance



30.826

-

30,826

31,338

-

31,338

Working Capital



116,764

-

116,764

112,992

-

112,992

E-Manifest



45.425

-

45,425

32,240

-

32,240

NRDA



2,544

-

2,544

2,123

-

2,123

W1F1A



17.441

-

17,441

769

-

769

Appropriated



73,765,838

-

73,765,838

63,039,162

-

63,039,162

Other Fund Types



622.876

3.594

626.470

592.723

4.425

597.148

Total

$

74.586.174

$ 3.594

$ 74.589.768

S 64.099.404 1

S 4.425

S 64.103.829

Entity fund balances, except for special fund receipt accounts, arc 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:	2023	2022

Unobligated Amounts in Fund Balance:

Available for Obligation	$ 59,166,962	$ 56,789,464

Unavailable for Obligation	114,325	188,011

Net Receivables from Invested Balances	(8,822,692)	(8,748,354)

Balances in Treasury Trust Fund (Note 27)	(182,653)	117,500

Obligated Balance not yet Disbursed	23,705,591	15,179,725

Non-Budgetary FBWT	608.235	577.483

Total	$, 74,589.768	S 64.103.829

The funds available for obligation may be apportioned by OMB for new obligations at the beginning of the following
fiscal year. Funds unavailable for obligation are generally balances in expired funds, which are available only for
adjustments of existing obligations. For September 30, 2023 and 2022, no differences existed between Treasury's
accounts and the EPA's statements for fund balances with Treasury. See Note 1 paragraph F for additional
information.

16.


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United States Environmental Protection Agency
Notes to the Financial Statements
For the Fiscal Years Ending September 30, 2023 and 2022
(Dollars in Thousands)

Note 3. Cash and Other Monetary Assets

As of September 30, 2023 and 2022, the balance in the imprest fund was $ 10.

Note 4. Investments, Net

As of September 30, 2023 and 2022, investments consist of the following:

Amortized

Amortization (Premium) Interest Investments, Market
Cost	Method Discount Receivable	.Net	Value

Intra governmental
Securities:

Non-

Marketable FY 2023 $ 12,438,324 Straight Line 289,586 10,545 12,159,283 $ 12,159,283
Non-

Marketable FY 2022 $10,610,897 Straight Line 317,928	4,810 10,297,779 $ 10,297,779

CLRCLA, as amended by SARA, authorizes the LPA to recover monies to clean up Supcrfund 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 intragovemmental 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.

17.


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United States Environmental Protection Agency
Notes to the Financial Statements
For the Fiscal Years Ending September 30, 2023 and 2022
(Dollars in Thousands)

Note 5. Accounts Receivable, Net

Accounts Receivable as of September 30, 2023 and 2022,

Intragovernmental:

Accounts & Interest Receivable
Less: Allowance for Uncollectible Accounts
Total

Other Than Intragovernmental:

Unbilled Accounts Receivable
Accounts & Interest Receivable
Less: Allowance for Uncollectible Accounts
Total

sist of the following:

2023	2022

$

8,938

$

6,579



(1.252)



(862)

$

7.686

$

5.717



2023



2022

$

110,567

$

130,572



2,647,893



2,625,563



(2.237.768)



(2.207.610)

s

520.692

$

548.525

The Allowance for Uncollectible Accounts is determined both on a specific identification basis, as a result of a case-
by-case review of receivables, and on a percentage basis for receivables not specifically identified. See Note 1
paragraph I for additional information.

Note 6. Inventory and Related Property

Inventory and related property as of September 30, 2023 and 2022, consist of the following:

2023	2022

Inventory Purchased for Resale	$	626 $	531

Total	S	626 $	531

Note 7. Loans Receivable, Net

Direct loans receivable disbursed from obligations made after FY 1991 are governed by the Federal Credit Reform
Act, which mandates that the present value of the subsidy costs (i.e., interest rate differentials, interest subsidies,
anticipated delinquencies, and defaults) associated with direct loans be recognized as a cost in the year the loan is
disbursed. The net loan present value is the gross loan receivable less the subsidy present value. The EPA does not
have any loans obligated prior to 1992.

The HPA administers the WIFIA Direct Loans program. In fiscal years 2023 and 2022, the Agency received
borrowing authority of $6 billion and $6 billion respectively for the non-subsidy portion of loan proceeds disbursed.
For the fiscal years ended September 30, 2023 and 2022, the Agency closed $6 billion and $6 billion in WIFIA loans,
respectively.

Interest on the loans is accrued based on the terms of the loan agreement. For the fiscal years ended September 30,
2023 and 2022, the WIFIA program has incurred $550 million and $256 million in administrative expenses,
respectively.

18.


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United States Environmental Protection Agency
Notes to the Financial Statements
For the Fiscal Years Ending September 30, 2023 and 2022
(Dollars in Thousands)

Obligated after FY 1991

Direct Loan Program

WIFIA

2023 Loans
Receivable,
Gross

$ 3,261,931

Interest and

Fees
Receivable

1,398

Foreclosed
Property/
Allowance
for

Loao Losses

Value of Assets
Allowance for Related to
Subsidy	Direct

Cost	Loans, Net

(861,407)$ 2,401,922

Direct Loan Program

WIFIA

2022 Loans
Receivable,
Gross

$ 1,681,958

Interest and

Fees
Receivable

1,998

Foreclosed
Property/
Allowance
for

Loan Losses

Value of Assets
Related to

Direct
Loans, Net

(392,448) $ 1,291,508

Allowance for
Subsidy
Cost

Total Amount of Direct Loans Disbursed (Post-1991)
Direct Loan Program	2023	2022

WIFIA	$ 1,594,232 $ 955,452

Subsidy Expense for Direct Loans by Program and Component
Subsidy Expense for New Direct Loans Disbursed

2023 Interest	Fees and Other Other Subsidy

Direct Loan Program	Differential Defaults	Collections	Costs	Total

WIFIA	$ -	-	-	(8,687) $	(8,687)

Direct Loan Program

2022 Interest
Differential

WIFIA	$

Modifications and Reestimates

Direct Loan Program

WIFIA

2023
Total
Modifications

$

Defaults

76,295

Fees and Other Other Subsidy
Collections	Costs

Interest
Rate
Reestimates

Technical
Reestimates

461,383

Total

(5,015) $

(5,015)

FAI
Reestimates

Total
Reestimates

537,678

2022	Interest

Total	Rate	Technical	FAI	Total

Direct Loan Program Modifications	Reestimates	Reestimates	Reestimates	Reestimates

WIFIA $ -	22,769	208,342	7,536	$ 238,647

19.


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United States Environmental Protection Agency
Notes to the Financial Statements
For the Fiscal Years Ending September 30, 2023 and 2022
(Dollars in Thousands)

Total Direct Loans Subsidy Expense

Direct Loan Program	2023	2022

WIFIA	$	8,687 $	5,015

Budget Subsidy Rates for Direct Loans for the Current Year Cohort

2023 Interest	Fees and Other Other Subsidy

Direct Loan Program	Differential Defaults	Collections	Costs	Total

WIFIA	0.0%	0.73%	0%	0%	0.73%

2022 Interest	Fees and Other Other Subsidy

Direct Loan Program	Differential Defaults	Collections	Costs	Total

WIFIA	0.02%	0.47%	0%	0%	0.49%

The subsidy rates disclosed pertain to the eurrent year's cohort. The rates cannot be applied to the direet loans
disbursed during the eurrent reporting year to yield the subsidy expense. The subsidy expense for new loans reported
in the current year could result from disbursement of loans from both current year cohorts and prior year cohorts. The
subsidy expense reported in the current year also includes modifications and reestimates.

Schedule for Reconciling Subsidy Cost Allowance Balances







Beginning Balance, Changes and Ending Balance



2023

2022

Beginning Balance of the Subsidy Allowance

$

(392,448) $

(148,785)

Add: Subsidy Expense for Direct Loans Disbursed During the Reporting Years







by Component







Other Subsidy Costs



(8,688)

(5,015)

Reversal of PY subsidy costs



3.815



Total of the Above Subsidy Expense Components

$

(4,873) S

(5,015)

Adjustments







Subsidy Allowance Amortization



73.592

-

Ending Balance of the Subsidy Cost Allowance Before Reestimates



(323,729)

(153,800)

Add or Subtract Subsidy Reestimates by Component







Interest Rate Reestimates



(76,295)

(22,769)

Techniea 1/Defau 11 Reestimates



(461,383)

(208,343)

FAI Adjustment



-

(7.536)

Total of the Above Reestimate Components

$

(537.678 * S

(238.648*

Ending Balance of the Subsidy Cost Allowance

$

(861.407) $

(392.448)

20.


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United States Environmental Protection Agency
Notes to the Financial Statements
For the Fiscal Years Ending September 30, 2023 and 2022
(Dollars in Thousands)

The economic assumptions of the WIFIA upward and downward adjustments were a reassessment of risk levels as
well as estimated changes in future cash flows on loans. Actual interest rates used for FY 2023 loan disbursements
were higher than the interest rate assumptions used during the budget formulation process at loan origination. See
Note 1 paragraph K for additional information.



2023

2022

Beginning balance of loans receivable, net

$ 1,291,508 $

586,138

Add loan disbursements

1,594,232

955,452

Less principal and interest payments received

(46,601)

(28,498)

Add interest accruals

32,125

21,745

Add fees accrued

(384)

334

Add upward reesti mates

(687,880)

(164,438)

Less downward reestimates

514,526

48,268

Allowance for loan and interest loss adjustments

-

(127,493)

Subsidy allowance

(295.604"!

-

Ending balance of loans receivable, net

$ 2,401,922 $

1,291.508

Note 8. Accounts Payable

Accounts Payable are current liabilities and consist of the following amounts as of September 30, 2023 and 2022:

Covered by Budgetary
	Resources	

2023	2022

Intragovernmental:

Accounts Payable	$ 16	$ 159

Disbursements in Transit		2.905 	2.908

Total	$ 2.921	$ 3.067

2023	2022

Other Than Intragovernmental:

Accounts Payable	$ 53,978	$ 39,579

Advances Payable	4	4

Interest Payable	24	15

Disbursements in Transit		62.228 	23.315

Total	$ 116.234	$ 62.913

21.


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United States Environmental Protection Agency
Notes to the Financial Statements
For the Fiscal Years Ending September 30, 2023 and 2022
(Dollars in Thousands)

Note 9. Property, Plant and Equipment, Net

Property, plant, and equipment (PP&E) eons is t of software, real property, EPA-held and con trae tor-held personal
property, and eapital leases. See Note 1 paragraph M for additional information.

As of September 30, 2023, PP&E Cost 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

S 332,195

$ 440,896

$

96,640

S

39,526

S 862,775

$ 24,485

$ 1,796,517

Additions

13,543

-



15.122



693

1.105

-

30,463

Dispositions

(13,489)

-



-



(3,914)

-

-

(17,403)

Revaluations

-

-



8.784



-

18.234

-

27.018

Balance,



















September

$ 332.249

S 440.896

$

120.546

$

36.305

$ 882.114

S 24.485

$ 1.836.595

30, 2023

As of September 30, 2023, PP&E Accumulated Depreciation consisted of the following:

	2U23	

EPA-	Contractor Land

Held	Software Software	Held	and Capital

Equipment (Production) (Development) Equipment Buildings Leases	Total

Balance,

Beginning of

Year	$ 235,630 $ 438,507 $ -	S 11,184 $ 357,624 S 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 $ 240.636 S 439.714 S	S 14.759 S 374.816 $ 23.463 S 1.093.388

30, 2023

22.


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United States Environmental Protection Agency
Notes to the Financial Statements
For the Fiscal Years Ending September 30, 2023 and 2022
(Dollars in Thousands)

As of September 30, 2023, PP&E, Net consisted of the following:

2023

EPA-	Contractor	Land

Held	Software Software Held	and Capital

Equipment	(Production) (Development) Equipment	Buildings Leases	Total

Balance,

September $ 91.613	S 1.182 S 120.546 S 21.546	S 507.298 S 1.022 S 743,207

30, 2023

As of September 30, 2022, PP&E Cost consisted of the following:

2022



EPA-







Contractor

Land







Held

Software



Software



Held

and

Capital





Equipment

(Production)

(Development)

Equipment

Buildings

Leases

Total

Balance,



















Beginning of



















Year

$ 330,579

S 440,896

$

55,537

S

31,618

$ 828,716

$ 24,485

$ 1,711,831

Additions

12,239

-



38.844



-

52.018

-

103,101

Dispositions

(10,623)

-



-



-

(6,986)

-

(17,609)

Revaluations

-

-



2.259



7.908

(10.973)

-

(806)

Balance,



















September

$ 332.195

$ 440.896

S

96.640

S

39.526

$ 862.775

$ 24.485

$ 1.796,517

30, 2022

As of September 30, 2022, PP&E Accumulated Depreciation consisted of the following:
	2022	

Balance,



Beginning of



Year $

225,982

Dispositions

(9,799)

Revaluations

(301)

Depreciation



Expense

19.748

Balance,



September $

235,630

30, 2022



EPA-	Contractor Land

Held	Software Software	Held	and Capital

Equipment (Production) (Development) Equipment Buildings Leases	Total

433,822 $ -	S 19,851 $ 339,775 S 21,764 $ 1,041,194

(9,799)

(8,667) -	1	(8,967)

4.685	-	-	17.849	815 43.097

438,507 $	S 11,184 $ 357.624 $ 22.580 $ 1,065,525

23.


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United States Environmental Protection Agency
Notes to the Financial Statements
For the Fiscal Years Ending September 30, 2023 and 2022
(Dollars in Thousands)

As of September 30, 2022, PP&E, Net consisted of the following:

	2022	

EPA-	Contractor	Land

Held	Software Software Held	and Capital

Equipment	(Production) (Development) Equipment	Buildings Leases	Total

Balance,

September $ 96.565	% 2.389 % 96.640 $ 28.342	$ 505.151 S 1.905 S 730.992
30, 2022

Note 10. Debt

All debt is classified as not covered by budgetary resources, except for direct loan and guaranteed loan financing
account debt to Treasury and that portion of other debt covered by budgetary resources at the Balance Sheet date.

The EPA borrows funds from the Bureau of Public Debt right before funds are disbursed to the borrower for the non-
subsidy portion of WIFIA loans. As of September 30, 2023 and 2022, the EPA had debt due to Treasury consisting
entirely of funds borrowed to finance the non-subsidy portion of the WIFIA Direct Loan Program:

	2022	2023	

Beginning	Net	Ending	Net	Ending

Balance	Borrowing	Balance	Borrowing	Balance

Debt to the

Treasury	$ 746.839 $ 810.341 S 1.557.180 $ 1.396.045 S 2.953.225

See Note 1 paragraph O for additional information.

24.


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United States Environmental Protection Agency
Notes to the Financial Statements
For the Fiscal Years Ending September 30, 2023 and 2022
(Dollars in Thousands)

Note 11. Stewardship Property, Plant and Equipment

The Agency acquires title to certain property and property rights under the authorities provided in Section 104(j)
CER.CLA related to remedial clean-up sites. The property rights are in the form of fee interests (ownership) and
easements to allow access to clean-up sites or to restrict usage of remediated sites. The Agency takes title to the land
during remediation and transfers it to state or local governments upon the completion of clean-up. A site with "land
acquired" may have more than one acquisition property. Sites are not counted as a withdrawal until all acquired
properties have been transferred under the terms of 104(j).

As of September 30, 2023 and 2022. the Agency possessed the following land and land rights:

2023	2022

Superfund Sites with Easements:





Beginning Balance

47

45

Additions

1

2

Ending Balance

48

47

Superfund Sites with Land Acquired:





Beginning Balance

33

32

Additions

-

1

Withdrawals

(1)

-

Ending Balance

32

33

Note 12. Liability to the General Fund for Custodial Assets

Liability to the General Fund for Custodial Assets represents the amount of net accounts receivable that, when
collected, will be deposited to the Treasury General Fund. Included in the custodial liability are amounts for fines and
penalties, interest assessments, repayments of loans, and miscellaneous other accounts receivable. As of September
30, 2023 and 2022, custodial liability is approximately $ 105,995 and $106,560 respectively.

25.


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United States Environmental Protection Agency
Notes to the Financial Statements
For the Fiscal Years Ending September 30, 2023 and 2022
(Dollars in Thousands)

Note 13. Other Liabilities

Other Liabilities consist of the following as of September 30, 2023:



Covered by

Not Covered by





Budgetary



Budgetary





Resources



Resources

Total

Other Liabilities - Intragovernmental:









Current









Employer Contributions & Payroll Taxes

$ 9,653

$

$

9,653

Other Aeerued Liabilities

167,401



-

167,401

Loan Reestimates

-



769

769

Non-Current









Unfunded FECA Liability

-



8,292

8,292

Unfunded Unemployment Liability

-



72

72

Payable to Treasury Judgement Fund

-



22.000

22.000

Total Intragovernmental

S 177.054

$

31.133 $

208,187

Other Liabilities - Other Than Intragovernmental:









Current









Liability for Deposit Funds, Other Than

$ 510

$

4,313 $

4,823

Intragovernmental









Other Aeerued 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

$ 618.283

$

5.066 $

623.349

26.


-------
United States Environmental Protection Agency
Notes to the Financial Statements
For the Fiscal Years Ending September 30, 2023 and 2022
(Dollars in Thousands)

Other Liabilities consist of the following as of September 30, 2022:



Covered by

Not Covered by





Budgetary-



Budgetary





Resources



Resources

Total

Current









Employer Contributions & Payroll Taxes

$ 16,126

$

$

16,126

Other Accrued Liabilities

152,350



-

152,350

Loan Reesti mates

-



769

769

Liability for Deposit Funds

-



(2)

(2)

Non-Current









Unfunded FECA Liability

-



8,447

8,447

Unfunded Unemployment Liability

-



7

7

Payable to Treasury Judgement Fund

-



22.000

22,000

Total Intragovernmental

S 168,476

S

31,221 $

199,697

Other Liabilities - Other Than Intragovernmental









Current









Liability for Deposit Funds, Other Than

$ 5,128

$

$

5,128

Intragovernmental









Other Accrued Liabilities

126,411



-

126,411

Grant Liabilities

360,811



-

360,811

Accrued Funded Payroll and Benefits

103,166



-

103,166

Capital Lease Liabilities

1,476



-

1,476

Commitment and Contingencies

-



1,770

1,770

Direct Loans Subsidy Liability

-



(769)

(769)

Total Other Than Intragovernmental:

S 596.992

S

1.001 $

597.993

Liabilities not eovered by budgetary resources require future congressional action whereas liabilities covered by
budgetary resources reflect prior congressional action. Regardless of when the congressional action occurs, when the
liabilities are liquidated, Treasury will finance the liquidation in the same way that it finances all other disbursements,
using some combination of receipts, other inflows, and borrowing from the public (if there is a budget deficit).

Other Accrued Liabilities are mostly comprised of contractor accruals.

See Note 1 paragraph N for additional information.

Note 14. Leases

The value of assets held under Capital Leases as of September 30, 2023 and 2022, are as follows:
Capital Leases:

2023	2022

Summary of Assets Under Capital Lease:







Real Property

$

24.485 $

24.485

Total



24.485

24.485

Accumulated Amortization

$

23.464 $

22.581

27.


-------
United States Environmental Protection Agency
Notes to the Financial Statements
For the Fiscal Years Ending September 30, 2023 and 2022
(Dollars in Thousands)

The EPA has one capital lease for land and buildings housing scientific laboratories. This lease includes a base rental
charge and escalation clauses based upon either rising operating costs and/or real estate taxes. The base operating
costs are adjusted annually according to escalators in the Consumer Price Indices published by the Bureau of Labor
Statistics, U.S. Department of Labor. The EPA's lease will terminate in FY 2025.

Future Payments Due

Fiscal Year	Capital Leases

2024	$	970

2025		323

Total Future Minimum Lease Payments	1,293

Less: Imputed Interest		(286)

Net Capital Lease Liability		1.007

Liabilities not Covered by Budgetary Resources	$ 1.007

Note 15. Advances from Others and Deferred Revenue

As of September 30, 2023 Advances from Others and Deferred Revenue consist of the following:

2023	2022

Other Than Intragovernmental:









Cashout Advances, Superfund

$

3,544,466

$

3,541,093

Unearned Advances



131.740



125.105

Total

S

3.676.206

S

3.666.198

Cashout advances are funds received by the EPA, a state, or another responsible party under the terms of a settlement
agreement (e.g., consent decree) to finance response action costs at a specified Superfund site. Under CERCLA
Section 122(b)(3), cashout funds received by the EPA are placed in site-specific, interest-bearing accounts known as
special accounts and are used for potential future work at such sites in accordance with the terms of the settlement
agreement. Funds placed in special accounts may be disbursed to PRPs, to states that take responsibility for the site, or
to other Federal agencies to conduct or finance response actions in lieu of the EPA without further appropriation by
Congress.

Note 16. Commitments and Contingencies

The EPA may be a party in various administrative proceedings, actions and claims brought by or against it. These
include:

a)	Various personnel actions, suits, or claims brought against the Agency by employees, and others.

b)	Various contract and assistance program claims brought against the Agency by vendors, grantees, and others.

c)	The legal recovery of Superfund costs incurred for pollution cleanup of specific sites, to include the collection
of fines and penalties from responsible parties.

28.


-------
United States Environmental Protection Agency
Notes to the Financial Statements
For the Fiscal Years Ending September 30, 2023 and 2022
(Dollars in Thousands)

d) Claims against recipients for improperly spent assistance funds which may be settled by a reduction of future
EPA funding to the grantee or the provision of additional grantee matching funds.

As of September 30, 2023, there were no accrued liabilities for commitments and potential loss contingencies. As of
September 30, 2022, there were $2M of accrued liabilities for commitments and potential loss contingencies.

FY 2023

Legal Contingencies:

Reasonably Possible
FY 2022 '

Legal Contingencies:

Reasonably Possible

Estimated Estimated
Accrued Range of Loss- Range of Loss-
Liabilities Lower End Upper End

7,522 $

2,700 $

7,522

2,700

Environmental Contingencies:

Probable

Reasonably Possible

1,770 $

1,770 $

1,770

A.	Gold King Mine

On August 5, 2015, the EPA and its contractors were investigating under the Comprehensive Environmental
Response, Compensation, and Liability Act (CERCLA) the Gold King Mine, an inactive mine in Colorado, when a
release of acid mine drainage occurred. While the EPA team was excavating above the mine adit, water began leaking
from the mine adit. The small leak quickly turned into a significant breach, releasing approximately three million
gallons of mine water into the North Fork of Cement Creek, a tributary of the Animas River. The plume of acid mine
water traveled from Colorado's Animas River into New Mexico's San Juan River, passed through the Navajo Nation,
and deposited into Utah's Lake Powell. As of September 30, 2023, legal claims exist for which the potential loss
could not be determined related to HenniS v. United States. In this case, EPA built and operates an interim water
treatment plant to treat ongoing discharge of mine-impacted water from the Gold King Mine on plaintiffs property.
Plaintiff alleges that the Government's ongoing access to, occupation, and use of his property constitutes a physical
taking without just compensation.

In addition, as of September 30, 2023, legal claims exist for a claim made by an Environmental Restoration contractor
for settlement costs of approximately $3M for the amount resolved through settlement with the Navajo Nation, and an
additional claim made by an Environmental Restoration contractor for settlement costs in the amount of
approximately $2M for the amount resolved through settlement with the state of New Mexico.

B.	Flint, Michigan

The EPA has received claims from over 9,400 individuals under the Federal Tort Claims Act for alleged injuries and
property damages caused by the EPA's alleged negligence related to the water health crisis in Flint, Michigan. There
is no estimated loss amount related to the water health crisis; they are only reasonably possible, and the final outcomes
are not probable.

C.	Superfund

Under CERCLA Section 106(a), the EPA issues administrative orders that require parties to clean up contaminated
sites. CERCLA Section 106(b) allows a party that has complied with such an order to petition the EPA for

29.


-------
United States Environmental Protection Agency
Notes to the Financial Statements
For the Fiscal Years Ending September 30, 2023 and 2022
(Dollars in Thousands)

reimbursement of its reasonable eosts 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 Seetion 107(a) for the response aetion
ordered or that the Agency's seleetion of the response aetion was arbitrary and eaprieious or otherwise not in
accordance with law. As of September 30, 2023, there is one ease related to Supcrfund. This case is August Mack
Environmental, Inc. v. EPA for $3 million; it is only reasonably possible, and the outcome is not probable. August
Mack Environmental (AME) was a contractor for Vertellus, one of three PRPs (Potentially Responsible Parties) at the
Big John Salvage Site in Fairmont, WV. The site was being cleaned up pursuant to a consent decree which named
Vertellus the performing defendant; there is a Special Account at the site funded by the PRPs. Vertellus filed for
bankruptcy and AME did not recover in bankruptcy the moneys it claimed it was owed by Vertellus. AME made a
claim against the Superfund and/or the Special Account. EPA Region 3 denied the claim and AME appealed to the
Administrative Law Judge (ALJ) who also denied it. AME then filed suit in district court. The court ruled in favor of
EPA on a Motion to Dismiss and AME appealed to the 4th Circuit. The 4th Circuit ruled in AME's favor and the case
was remanded back to the ALJ.

D.	Environmental Liabilities

As of September 30, 2023, there are no cases pending against the EPA that are reported under Environmental
Liabilities that the outcome is listed as either Probable or Reasonably Possible.

E.	Other Pending Cases

As of September 30, 2023, legal claims exist for which the potential loss could not be determined. The case is for
United Affiliates Corp., etal. v. United States, involving alleged taking of property for which plaintiff is seeking just
compensation under the 5th Amendment. An additional case exists for Alaska v. US (S. Ct.), involving a bill of
complaint for EPA's action under the Clean Water Act regarding the Pebble Mine, alleging breach of contract and
takings.

F.	Judgement Fund

In cases that are paid by the U.S. Treasury Judgment Fund, the EPA must recognize the full cost of a claim regardless
of which entity is actually paying the claim. Until these claims are settled or a court judgment is assessed where the
Judgment Fund is determined to be the appropriate source for the payment, claims that are probable and estimable
must be recognized as an expense and liability of the Agency. For these cases, at the time of settlement or judgment,
the liability will be reduced and an imputed financing source recognized. See Interpretation of Federal Financial
Accounting Standards No. 2, Accounting for Treasury Judgment Fund Transactions. The EPA has a $22 million
liability to the Treasury Judgment Fund for a payment made by the Fund to settle a contract dispute claim. As of
September 30, 2023, there is no other case pending in the court.

G.	Other Commitments

EPA has a commitment to fund the U.S. Government's payment to the Commission of the North American Agreement
on Environmental Cooperation between the Government of Canada, the Government of the United Mexican States,
and the Government of the United States of America (commonly referred to as CEC). According to the terms of the
agreement, each government pays an equal share to cover the operating costs of the CEC. EPA paid $3 million in FY
2023, and $4 million in FY 2022 to the CEC.

EPA has a legal commitment under a noncancelable agreement, subject to the availability of funds, with the United
Nations Environmental Program (UNEP). This agreement enables EPA to provide funding to the Multilateral Fund for
the Implementation of the Montreal Protocol. EPA made payments totaling $8 million in FY 2023, and $8 million in
the FY 2022.

30.


-------
United States Environmental Protection Agency
Notes to the Financial Statements
For the Fiscal Years Ending September 30, 2023 and 2022
(Dollars in Thousands)

Note 17. Funds from Dedicated Collections (Restated)

Environmental

Other Funds
from Dedicated

Total Funds
from Dedicated
Collections

Eliminations
between
Dedicated
Collections

Total Funds
from Dedicated
Collections

Balance Sheet as of September 30, 2023



Services

LUST

Suoerfund



Collections



Combined



Funds

Consolidated

I ntrago veminent a 1
Fund Balance with Treasury

S

604,057 S

20,603

S 182,369

S

118,170

S

925,199

$

(239,068) S

686,131

Investments, Net



-

1,385,748

10,773,535



-



12,159,283



-

12,159,283

Accounts Receivable, Net



-

91,438

8,732,394



240



8,824,072



(8,822,713)

1,359

Advances and Prepayments



-

81

11.922



885



12.888



-

12,888

Total Intragovernmental Assets



604,057

1,497,870

19,700,220



119,295



21,921,442



(9,061,781)

12,859,661

Other Than Intragovernmental
Accounts Receivable, Net





1

422,288



2,695



424,984





424,984

Loans Receivable, Net



-

.

-



-



-



-

-

General Property, Plant, and Equipment, Net
Advances and Prepayments



-

46

40,360
722



20,721



61,127
722



-

61,127
722

Total Other Than Intragovernmental



_

47

463.370



23.416



486.833



_

486.833

Total Assets

$

604.057 $

1.497.917

$ 20.163.590

$

142.711

$

22.408.275

$

(9.061.781) $

13.346.494

I ntrago vernmenta 1
Accounts Payable

s

S

91,439

S 8,761,203

S



s

8,852,642

S

(8,822,692) S

29,950

Debt



-

-

-



-



.



-

-

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

Other Than Intragovernmental
Accounts Payable
Federal Employee Benefits Payable
Advances from Others and Deferred Revenue
Deferred Revenue
Other Liabilities

91.563 8.989.247

66	31,758

12	8,766

52,393
3,544,465
6.715	78.221

6.115

1,491
91

44,276
3.833

9.086.925

33,315
8,869
96,669
3,544,465
88.769

(8.822.692)

264.233

33,315
8,869
96,669
3,544,465
88.769

Total Other Than Intragovernmental Liabilities
Total Liabilities







6.793

3.715.603



49.691



3.772.087





3.772.087

$

_

$

98.356 $

12.704.850

$

55.806

$

12.859.012

$

(8.822.6921 $

4.036.320

Unexpended Appropriations

S

-

S

S

-

S

281

S

281

S

S

281

Cumulative Results of Operations



604.057



1.399.561

7.458.740



86.624



9.548.982



(239.089)

9.309.893

Total Liabilities and Net Position

$

604.057

$

1,497,917 $

20.163.590

$

142J11

$

22*408,275

$

(9.061,781) $

13.346.494

31.


-------
United States Environmental Protection Agency
Notes to the Financial Statements
For the Fiscal Years Ending September 30, 2023 and 2022
(Dollars in Thousands)

Eliminations
Total Funds between Total Funds













Other Funds

from Dedicated



Dedicated

from Dedicated



Environmental







from Dedicated



Collections



Collections

Collections

Statement of Net Cost as of September 30,2023

Services

LUST



SuDerfund



Collections



Combined



Funds

Consolidated

Gross Program Costs

S - S

91,478

S

1,690,189

S

104,605

S

1,886,272

S



S 1,886,272

Less: Earned Revenues

(247)

-



477,469



98,533



575.755



(238,365)

337,390

Net Costs of Operations

$ 247 $

91.478

$

1.212.720

$

6.072

$

1.310.517

$

238.365

$ 1.548.882

Statement of Changes in Net Position as of























September 30, 2023























Unexpended Appropriations























Beginning Balance

S - S

-

s

(113)

s

291

s

178

s

-

S 178

Appropriations Used

-

-



113



(10)



103



-

103

Total Unexpended Appropriations

$ - $

-

$

-

$

281

$

281

$

-

$ 281

Cumulative Results of Operations























Beginning Balance

S 572,474 S

1,235,638

s

5,865,045

s

70,987

s

7,744,144

s

(21)

S 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

T otal 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



f239.0681

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

$ 604.057 $

U 99.561

$

7.458,740

s

86.905

s

9,549.263

$

(239.089)

$ 9.310.174


-------
United States Environmental Protection Agency
Notes to the Financial Statements
For the Fiscal Years Ending September 30, 2023 and 2022
(Dollars in Thousands)



Environmental









Balance Sheet as of September 30, 2022

Services



LUST



SuDerfund

I nt rago v ernmenta 1











Fund Balance with Treasury

S 572,474

S

24,166

S

551,926

Investments, Net

-



1,218,255



9,079,524

Accounts Receivable, Net

-



92,713



8,657,245

Advances and Prepayments

-



88



20.272

Total Intragovernmental Assets

572,474



1,335,222



18,308,967

Other Than Intragovernmental











Accounts Receivable, Net

-



-



460,932

Loans Receivable, Net

-



-



-

General Property, Plant, and Equipment, Net

-



59



32,357

Advances and Prepayments

-



-



772

Total Other Than Intragovernmental

-



59



494.061

Total Assets

$ 572.474

$

1.335.281

$

18.803.028

Intragovernmental











Accounts Payable

S

s

92,715

s

8,688,339

Debt

-



-



-

Advances from Others and Deferred Revenue

-



-



164,486

Liability to the General Fund for Custodial Assets

-



-



22,362

Other Liabilities

-



485



41.337

Total Intragovernmental Liabilities

-



93.200



8.916.524

Other Than Intragovernmental











Accounts Payable

-



49



33,685

Federal Employee Benefits Payable

-



36



10,135

Advances from Others and Deferred Revenue

-



-



44,970

Deferred Revenue

-



-



3,541,093

Other Liabilities

-



6.358



84.736

Total Other Than Intragovernmental Liabilities

-



6.443



3.714.619

Total Liabilities

s

$

99.643

$

12.631.143

Unexpended Appropriations

s

s

-

s

(113)

Cumulative Results of Operations

572.474



1.235.638



6.171.998

Total Liabilities and Net Position

$ 572.474

$

1.335.281

$

18,803.028





(Restated)



Eliminations



(Restated)



Total Funds



between

Total Funds

Other Funds

from Dedicated



Dedicated from Dedicated

rom Dedicated



Collections



Collections

Collections

Collections



Combined



Funds '

Consolidated

; 104,870

S

1,253,436

S

(306,954) S

946,482

-



10,297,779



-

10,297,779

261



8,750,219



(8,748,509)

1,710

1.007



21.367



-

21.367

106,138



20,322,801



(9,055,463)

11,267,338

4,540



465,472



-

465,472

20,593



53,009



_

53,009

-



772



-

772

25.133



519.253



_

519.253

; 131.271

$

20.842.054

$

(9.055.463) $

11.786.591



s

8,781,054

s

(8,748,489) S

8,781,054

4,789



169,275



_

169,275

-



22,362



-

22,362

2.583



44.405



-

44.405

7.372



9.017.096



(8.748.489)

9.017.096

984



34,718



_

34,718

261



10,432



-

10,432

45,988



90,958



-

90,958

-



3,541,093



-

3,541,093

5.388



96.482



.

96.482

52.621



3.773.683



_

3.773.683

; 59.993

$

12.790.779

$

(8.748.489) S

4.042.290

; 291

s

178

$

S

178

70.987



8.051.097



(306.974)

7.744.123

; 131.271

$

20.842.054

$

(9.055.463) S

11.786.591

33.


-------
United States Environmental Protection Agency
Notes to the Financial Statements
For the Fiscal Years Ending September 30, 2023 and 2022
(Dollars in Thousands)

















(Restated)



Eliminations















(Restated)



Total Funds



between

Total Funds













Other Eunds

from Dedicated



Dedicated from Dedicated



Environmental







from Dedicated



Collections



Collections

Collections

Statement of Net Cost as of September 30,2022

Services

LUST



SuDerfund



Collections



Combined



Funds '

Consolidated

Gross Program Costs

S - S

92,373

S

1,350,585

S

84,622

S

1,527,580

S

S

1,527,580

Less: Earned Revenues

(5131

-



506.923



97.013



603.423



(303.954)

299.469

Net Costs of Operations

$ 513 $

92.373

$

843.662

$

(12.391)

$

924.157

$

303.954 $

1.228.111

Statement of Changes in Net Position as of























September 30, 2022























Unexpended Appropriations























Beginning Balance

s - s

-

s

(104)

s

291

s

187

s

S

187

Appropriations Used

-

-



(91



-



(91



.

(91

Total Unexpended Appropriations

$ - $

-

$

(113)

$

291

$

178

$

$

178

Cumulative Results of Operations























Beginning Balance

S 546,001 S

1,072,946

s

1,899,380

s

41,539

s

3,559,866

s

(20) S

3,559,846

Appropriations Used

-

-



9



-



9



-

9

Excise tax & customs

-

245,048



413,002



-



658,050



-

658,050

Misc. taxes & receipts

26.986

9.716



60,652



230



97,584



(3.000)

94.584

T otal Other Than Intergovernmental Non-Exchange























Revenue

26,986

254,764



473,654



230



755,634



(3,000)

752,634

Transfers-In/'(Out) Without Reimbursement

-

-



4,616,482



16,575



4,633,057



-

4,633,057

Imputed Financing

-

301



26,135



251



26,687



-

26,687

Other Financing Sources

-

-



-



1



1



-

1

Net Cost of Operations

(513)

(92,373)



(843,662)



12,391



(924,157)



(303,954)

(1,228,1 1 1)

Net Change in Cumulative Results of Operations

26.473

162.692



4.272.618



29.448



4.491.231



(306.9541

4.184.277

Cumulative Results of Operations: Ending

572,474

1,235,638



6,171,998



70,987



8,051,097



(306,974)

7,744,123

Net Position, End of Period

$ 572.474 $

1.235.638

$

6.171.885

s

71.278

s

8.051.275

I

(306.974) S

7.744.301

34.


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United States Environmental Protection Agency
Notes to the Financial Statements
For the Fiscal Years Ending September 30, 2023 and 2022
(Dollars in Thousands)

A.	Funds from Dedicated Collections

/. En vironmen tal Services Receipt A ccount:

The Environmental Services Reeeipl 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.

it. Leaking Underground Storage Tank (LUST) Trust Fund:

The LUST Trust Fund was authorized by the SARA as amended by the Omnibus Budget Reconciliation Act of 1990.
The LUST appropriation provides funding to prevent and respond to releases from leaking underground petroleum
tanks. The Agency oversees cleanup and enforcement programs which are implemented by the states. Funds are
allocated to the states through cooperative agreements and prevention grants to inspect and clean up those sites posing
the greatest threat to human health and the environment. Funds are used for grants to non-state entities including
Indian tribes under Section 8001 of the Resource Conservation and Recovery Act.

iii. Superfund Trust Fund:

In 1980, the Superfund Trust Fund was established by CERCLA to provide resources to respond to and clean up
hazardous substance emergencies and abandoned, uncontrolled hazardous waste sites. The Superfund Trust Fund
financing is shared by federal and state governments as well as industry. The EPA allocates funds from its
appropriation to the Department of Justice to carry out CERCLA. Risks to public health and the environment at
uncontrolled hazardous waste sites qualifying for the Agency's National Priorities List (NPL) are reduced and
addressed through a process involving site assessment and analysis and the design and implementation of cleanup
remedies. NPL cleanups and removals are conducted and financed by the EPA, private parties, or other Federal
agencies. The Superfund Trust Fund includes Treasury's collections, special account receipts from settlement
agreements, and investment activity.

B.	Other Funds from Dedicated Collections

i. Inland Oil Spill Programs Account:

The Inland Oil Spill Programs Account was authorized by the Oil Pollution Act of 1990 (OPA). Monies are
appropriated from the Oil Spill Liability Trust Fund to the EPA's Inland Oil Spill Programs Account each year. The
Agency is responsible for directing, monitoring and providing technical assistance for major inland oil spill response
activities. This involves setting oil prevention and response standards, initiating enforcement actions for compliance
with OPA and Spill Prevention Control and Countcrmeasurc 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.

it. 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 F1FRA Amendments of 1988, are to be paid by industry and deposited into this fund
group.

35.


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United States Environmental Protection Agency
Notes to the Financial Statements
For the Fiscal Years Ending September 30, 2023 and 2022
(Dollars in Thousands)

iii. Reregistration and Expedited Processing Fund:

The Revolving Fund was authorized by the F1FRA of 1972, as amended by the FIFRA Amendments of 1988 and as
amended by the Food Quality Protection Aet 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.

f'v. 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 Electron ic Man if est System:

The Hazardous Waste Electronic Manifest System Fund (e-Manifest) was established as a result of the Hazardous
Waste Manifest Establishment Act (Public Law 1 12-195, October 5, 2012). The "e-Manifest Aet" authorized the EPA
to implement a national electronic manifest system and required that the costs of developing and operating the new e-
Manifest system be recovered from user fees charged to those who use hazardous waste manifests to track off-site
shipments of their wastes. To that end, the EPA charges and collects fees from facilities for each manifest they
submit.

Note 18. Environmental and Disposal Liabilities

Annually, the EPA is required to disclose its audited estimated future costs associated with:

a)	Cleanup of hazardous waste and restoration of the facility when it is closed, and

b)	Costs to remediate known environmental contamination resulting from the Agency's operations.

The EPA has 24 sites for which it is responsible for clean-up costs incurred under federal, state, and/or local
regulations to remove, contain, or dispose of hazardous material found at these facilities.

The EPA is also required to report the estimated costs related to:

a)	Clean-up from federal operations resulting in hazardous waste

b)	Accidental damage to nonfederal property caused by federal operations, and

c)	Other damage to federal property caused by federal operations or natural forces.

The key to distinguishing between future clean-up costs versus an environmental liability is to determine whether the
event (accident, damage, etc.) has already occurred and whether we can reasonably estimate the cost to remediate the
site.

The EPA has elected to recognize the estimated total clean-up cost as a liability and record changes to the estimate in
subsequent years.

As of September 30, 2023, the EPA has no sites that require clean up stemming from its activities.

The EPA has 82 sites for which it is required to fund the environmental cleanup. As of September 30, 2023, the
estimated costs for site clean-up were $37 million unfunded, and $100 thousand funded. For September 30, 2022 the
estimated cost for site clean-up was $32 million unfunded, with nothing funded. Since the clean-up costs associated
with permanent closure were not primarily recovered through user fees, the EPA has elected to recognize the
estimated total clean-up cost as a liability and record changes to the estimate in subsequent years.

36.


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United States Environmental Protection Agency
Notes to the Financial Statements
For the Fiscal Years Ending September 30, 2023 and 2022
(Dollars in Thousands)

In FY 2023, the estimate for unfunded clean-up eosl increased by $5 million from the FY 2022 estimate. This is
primarily due to increased estimates of future lab cleanup actions.

Note 19. State Credits

Authorizing statutory language for Superfund and related Federal regulations requires states to enter into Superfund
State Contracts (SSC) when the EPA assumes the lead for a remedial action in their state. The SSC defines the state's
role in the remedial action and obtains the state's assurance that it will share in the cost of the remedial action. Under
Supcrfund's authorizing statutory language, states will provide the EPA with a 10 percent cost share for remedial
action costs incurred at privately owned or operated sites, and at least 50 percent of all response activities (i.e.,
removal, remedial planning, remedial action, and enforcement) at publicly operated sites. In some cases, states may
use EPA-approved credits to reduce all or part of their cost share requirement that would otherwise be borne by the
states. The credit is limited to state site-specific expenses the EPA has determined to be reasonable, documented,
direct out-of-pocket expenditures with the public funds for remedial action.

Once the EPA has reviewed and approved a state's claim for credit, the state must first apply the credit at the site
where it was earned. The state may apply any excess/remaining credit to another site when approved by the EPA. As
of September 30, 2023 and 2022, the total remaining state credits have been estimated at $18 million, and $ 18 million,
respectively.

Note 20. Preauthorized Mixed Funding Agreements

Under Superfund preauthorized mixed funding agreements, PRPs agree to perform response actions at their sites with
the understanding that the EPA will reimburse them a certain percentage of their total response action costs. The
EPA's authority to enter into mixed funding agreements is provided under CERCLA Section 111(a) (2). Under
CERCLA Section 122(b)(1), as amended by SARA, PRPs may assert a claim against the Superfund Trust Fund for a
portion of the costs they incurred while conducting a preauthorized response action agreed to under a mixed funding
agreement. As of September 30, 2023, the EPA had three outstanding preauthorized mixed funding agreements with
obligations totaling $7 million. As of September 30, 2022, the EPA had three outstanding preauthorized mixed
funding agreements with obligations totaling $7 million. A liability is not recognized for these amounts until all work
has been performed by the PRP and has been approved by the EPA for payment. Further, the EPA will not disburse
any funds under these agreements until the PRP's application, claim and claims adjustment processes have been
reviewed and approved by the EPA.

Note 21. Custodial Revenues and Accounts Receivable

The EPA uses the accrual basis of accounting for the collection of fines, penalties and miscellaneous receipts.
Collectability by the EPA of the fines and penalties is based on the respondents' willingness and ability to pay. As of
September 30, 2023 and 2022 Custodial Revenues and Accounts Receivable are:

2023	2022

Fines, Penalties and Other Miscellaneous Receipts

S

89.665

$

58.515

Accounts Receivable for Fines, Penalties and Other Miscellaneous









Receipts:









Accounts Receivable

$

200.312

$

236,617

Less: Allowance for Uncollectible Accounts



(134.259}



n 52.300)

Total

s

66,053

s

84,317

37.


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United States Environmental Protection Agency
Notes to the Financial Statements
For the Fiscal Years Ending September 30, 2023 and 2022
(Dollars in Thousands)

Note 22. Statement of Budgetary Resources

The purpose of Federal budgetary accounting is to control, monitor, and report on funds made available to Federal
ageneies bylaw and help ensure compliance with law.

The following budget terms from OMB Circular A-l 1, Section 20.3 are commonly used:

•	Appropriation: A provision of law (not necessarily in an appropriations act) authorizing the expenditure of funds
for a given purpose. Usually, but not always, an appropriation provides budget authority.

•	Budgetary resources: Amounts available to incur obligations in a given year. Budgetary resources consist of new
budget authority and unobligated balances of budget authority provided in previous years.

•	Distributed offsetting receipts: Amounts that an agency collects from the public or from other U.S. Government
agencies that are used to offset or reduce an agency's budget outlays. Agency outlays are measured on both a gross
and net basis, with net outlays being reduced by offsetting receipts (and other amounts).

•	Offsetting collections: Payments to the Government that, by law, are credited directly to expenditure accounts and
deducted from gross budget authority and outlays of the expenditure account, rather than added to receipts. Usually,
offsetting collections arc 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
intragovernmcntal 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
intragovernmcntal transactions with other Government accounts.

•	Obligation: A binding agreement that will result in outlays, immediately or in the future. Budgetary resources must
be available before obligations can be incurred legally.

•	Outlay: A payment to liquidate an obligation. Outlays generally are equal to cash disbursements and are the measure
of Government spending.

Budgetary resources, obligations incurred and outlays, as presented in the audited FY 2022 Statement of Budgetary
Resources, will be reconciled to the amounts included in the FY 2022 Budget of the United States Government when
they become available. The Budget of the United States Government with actual numbers for FY 2023 has not yet
been published. We expect it will be published by early 2024, and it will be available on the Office of Management
and Budget website at https://www.whitehouse.gov/

38.


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United States Environmental Protection Agency
Notes to the Financial Statements
For the Fiscal Years Ending September 30, 2023 and 2022
(Dollars in Thousands)

The actual amounts published for the year ended September 30, 2022 are listed immediately below (dollars in
millions):

FY 2022	Budgetary	Offsetting

_ Resources

Statement of Budgetary Resources
Reported in the Budget of the U.S. Government

$

80.365

$

23.389

$

5.039

$ 15.159

$

80.257

$

23.357

$

5.039

$ 15.160

Recoveries of Prior Year Obligations, Temporarily Not Available, and Permanently Not Available on the Statement of
Budgetary Resources consist of the following amounts as of September 30, 2023 and 2022:

2023	2022

Unobligated Balance Brought Forward, Oct 1.

$ 56,975,250

S

5.372,585

Adjustments to Budgetary Resources Made l>uring the Current Year







Downward Adjustments of Prior Year Undelivered Orders

331.528



310,599

Downward Adjustments of Prior Year Delivered Orders

13,047



11,898

Permanent Reduction Prior Year Balances

(13,300)



-

Other Adjustments

(24.159)



(20.975)

Total

307,116



301,522

Unobligated Balance from Prior Year Budget Authority, Net







(discretionary and mandatory)

$ 57.282.366

$

5.674.107

Temporarily Not Available - Rescinded Authority

$ (8.942)

s

(6.563)

Permanently Not Available:







Rescinded Authority

$

$

-

Cancelled Authority

(21.196)



21.065

Total Permanently Not Available

$ (21.196)

$

21.065

Unobligated balances are a combination of two lines on the Statement of Budgetary Resources: Apportioned,
Unobligated Balances and Unobligated Balances Not Available. Unexpired unobligated balances are available to be
apportioned by the OMB for new obligations at the beginning of the following fiscal year. The expired unobligated
balances arc only available for upward adjustments of existing obligations.

The unobligated balances available consist of the following as of September 30, 2023 and 2022:

	 2023	2022

Unexpired Unobligated Balance
Expired Unobligated Balance
Total

$

59,167,562

$

56,868,632



104.783



106.618

$

59.272.345

$

56.975.250

39.


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United States Environmental Protection Agency
Notes to the Financial Statements
For the Fiscal Years Ending September 30, 2023 and 2022
(Dollars in Thousands)

Budgetary resources obligated for undelivered orders as of September 30, 2023 and 2022:

2023	2022

Intr ago v ernment al:

Unpaid Undelivered Orders $ 1,982,774	$ 1,309,147

Paid Undelivered Orders 1,643,300	330,617
Other Than Intragovernmental:

Unpaid Undelivered Orders	36,792,410 27,441,476

Paid Undelivered Orders		8.275 	3.736

Total	S 40,426.759 S 29.084.976

Distributed offsetting reeeipts are amounts that an ageney eolleets from the public or from other Government agencies
that are used to offset or reduce an agency's budget outlays. Ageney outlays are measured on both a gross and net
basis, with net outlays being reduced by offsetting receipts (and other amounts). As of September 30, 2023 and 2022,
the following receipts were generated from these activities:

Trust Fund Recoveries
Special Fund Services
Trust Fund Appropriation
Miscellaneous Receipt and Clearing Accounts
Total

2023

$ 238,365
55,443
1,218,809
56.319
S 1.568.936

2022

$

303,954
29,368
4,675,799
29.699
$ 5.038.820

Note 23. Imputed Financing

In accordance with SFFAS No. 5, Accounting for Liabilities of the Federal Government, Federal agencies must
recognize the portion of employees' pensions and other retirement benefits to be paid by the OPM trust funds. These
amounts are recorded as imputed costs and imputed financing for each Agency. Each year the OPM provides Federal
agencies with cost factors to calculate these imputed costs and financing that apply to the current year. These cost
factors are multiplied by the current year's salaries or number of employees, as applicable, to provide an estimate of
the imputed financing that the OPM trust funds will provide for each Agency. In FY 2023, the Agency began
recording OPM amounts quarterly; previously it was recorded annually. The estimates for FY 2023 are $196 million.
For FY 2022, the estimates were $132 million.

SFFAS No. 4, Managerial Cost Accounting Standards and Concepts and SFFAS No. 30, Inter-Entity
Cost Implementation, requires Federal agencies to recognize the costs of goods and services received from other
Federal entities that are not fully reimbursed, if material. The EPA estimates imputed costs for inter-entity
transactions that are not at full cost and records imputed costs and financing for these unreimbursed costs subject to
materiality. The EPA applies its Headquarters General and Administrative indirect cost rate to expenses incurred for
intcr-cntity transactions for which other Federal agencies did not include indirect costs to estimate the amount of
unreimbursed (i.e., imputed) costs. For FY 2023 total imputed costs were $37 million.

In addition to the pension and retirement benefits described above, the EPA also records imputed costs and financing
for Treasury Judgment Fund payments made on behalf of the Agency. Entries are made in accordance with the
Interpretation of Federal Financial Accounting Standards No. 2, Accounting for Treasury Judgment Fund
Transactions. For FY 2023, entries for Judgment Fund payments totaled $9 million. For FY 2022, entries for

40.


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United States Environmental Protection Agency
Notes to the Financial Statements
For the Fiscal Years Ending September 30, 2023 and 2022
(Dollars in Thousands)

Judgment Fund payments totaled $98 million.

Note 24. Federal Employee and Veteran Benefits Payable

Payroll and benefits payable to the EPA employees for the fiscal years ending September 30, 2023 and 2022, consist
of the following:



Covered by

Not Covered







Budgetary

by Budgetary







Resources

Resources



Total

FY 2023 Payroll and Benefits Payable









Employer Contributions Payable - Thrift Savings Plan

$ 1,003

$

$

1,003

Actuarial FECA Liability

-

44,349



44,349

Accrued Unfunded Annual Leave

-

184.396



184.396

Total - Current

$ 1.003

$ 228.745

$

229.748



Covered by

Not Covered







Budgetary

by Budgetary







Resources

Resources



Total

FY 2022 Payroll and Benefits Payable









Employer Contributions Payable - Thrift Savings Plan

$ 2,813

$

$

2,813

Actuarial FECA Liability

-

45,758



45,758

Accrued Unfunded Annual Leave

-

175.214



175.214

Total - Current

$ 2.813

S 220.972

$

223.785

FECA (Federal Employees' Compensation Act) provides income and medical cost protection to covered Federal
civilian employees injured on the job, employees who have incurred a work-related occupational disease, and
beneficiaries of employees whose death is attributable to a job-related injury or occupational disease. Annually, the
EPA allocates the portion of the long-term FECA actuarial liability attributable to the entity. The liability is calculated
to estimate the expected liability for death, disability, medical and miscellaneous costs for approved compensation
cases. The liability amounts and the calculation methodologies are provided by the Department of Labor. The FY
2023 present value of these estimated outflows is calculated using a discount rate of 2.326 percent in the first year for
wage benefits and 2.112 percent in the first year for medical benefits, and 2.326 percent in the years thereafter for
wage benefits and 2.112 percent in the years thereafter for medical benefits. The estimated future costs are recorded as
an unfunded liability.

See Note 1 paragraph P for additional information.

41.


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United States Environmental Protection Agency
Notes to the Financial Statements
For the Fiscal Years Ending September 30, 2023 and 2022
(Dollars in Thousands)

Note 25. Non-Exchange Revenue, Statement of Changes in Net Position

Non-Exchange Revenue on the Statement of Changes in Net Position for the fiscal years ended September 30, 2023
and 2022:

2023

2022

Interest on Trust Fund
Tax Revenue, Net of Refunds
Fines and Penalties Revenue
Special Receipt Fund Revenue
Total Nonexchange Revenue

Funds from
Dedicated
Collections

$ 437,679
1,410,243
1,043
31.830
S 1.880.795

All Other
Funds

Funds from
Dedicated
Collections

$ 66,012
658,050
1,587
26.986
$ 752.635

All Other
Funds

42.


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United States Environmental Protection Agency
Notes to the Financial Statements
For the Fiscal Years Ending September 30, 2023 and 2022
(Dollars in Thousands)

Note 26. Reconciliation of Net Cost of Operations to Net Outlays





For the Fiscal Year Ended September 30, 2023:



Other Than



Intra-

Intra-





governmental

governmental

Total 2023

NET COST

$ 2,194,312

$ 9,772,579

$ 11,966,891

Components of Net Cost That Are Not Part of Net Outlays:







Property, Plant and Equipment Depreeiation

-

(44,010)

(44.010)

Inventory Depletion Expense

-

(260)

(260)

Property, Plant and Equipment Disposal & Revaluation

-

(1,244)

(1,244)

Applied Overhead/Cost Capitalization Offset

-

(57,677)

(57,677)

Increase^Decrease) in Assets:







Aeeounts Receivable

1,939

(27,803)

(25,864)

Eoans Reeeivable

(600)

1,579,973

1,579,373

Investments

95,214

-

95,214

Other Assets

1,307,749

1,066

1,308,815

(Increase)/Decrease in Liabilities:







Aeeounts Payable and Aeerucd Liabilities

(100,205)

(53,320)

(153,525)

Loans Guarantee Liability (Non-FCRA)/Loans Payable

(1,396,046)

-

(1,396,046)

Environmental and Disposal Liabilities

-

(5,201)

(5,201)

Payroll and Benefits Payable

-

(5,962)

(5,962)

Other Liabilities

16,974

(35,834)

(18,860)

Other Financing Sources:







Other Imputed Finaneing

(241,657)

-

(241,657)

Total Components of Net Cost That Are Not Part of Net







Outlays

1.877.680

11.122.307

12.999.987

Components of Net Outlays That Are Not Part of Net Cost:







Acquisition of Inventory

122

220

342

Acquisition of Investments

-

1,766,289

1,766,289

Other

-

(452,123)

(452,123)

Other Financing Sources:







Transfer Out (In) Without Reimbursement

(20,033)

-

(20,033)

Total Components of Budget Outlays That Are Not Part of







Net Operating Cost

(19.911)

1.314.386

1.294.475

Miscellaneous Items







Distributed Offsetting Receipts

(1,568,936)

-

(1,568,936)

Custodial/Non-Exchange Revenue

(181,970)

46,522

(135,448)

Appropriated Receipts for Trust Fund/Special Funds

-

-

-

Other Temporary Timing Differences

-

(3,830)

(3,830)

NET OUTLAYS	$ 106.863 $ 12.479.385 S 12.586.248

43.


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United States Environmental Protection Agency
Notes to the Financial Statements
For the Fiscal Years Ending September 30, 2023 and 2022
(Dollars in Thousands)

For the Fiscal Year Ended September 30, 2022:



Other Than



Intra-

lntra-





governmental

governmental

Total 2022

NET COST

$ 1,840,316

$ 7,902,264

$ 9,742,580

Components of Net Cost That Are Not Part of Net Outlays:







Property, Plant and Equipment Depreeiation

-

(43,097)

(43,097)

Property, Plant and Equipment Disposal & Revaluation

-

(952)

(952)

Applied Overhead/Cost Capitalization Offset

-

109,348

109,348

Other

-

32

32

Increase^Decrease) in Assets:







Aeeounts Reeeivablc

(1,941)

(32,154)

(34,095)

Loans Receivable

1,432

947,601

949,033

Investments

(44,891)

-

(44,891)

Other Assets

15,839

3,238

19,077

(Increase)/Decrease in Liabilities:







Aeeounts Payable and Accrued Liabilities

39,769

(9,498)

30,271

Loans Guarantee Liability (Non-FCRA)ZLoans Payable

(810,341)

-

(810,341)

Environmental and Disposal Liabilities

-

(6,433)

(6,433)

Payroll and Benefits Payable

-

11,359

11,359

Other Liabilities

(29,058)

(73,967)

(103,025)

Other Financing Sources:







Other Imputed Financing

(268,943)

-

(268,943)

Total Components of Net Cost That Are Not Part of Net







Outlays

742.182

8.807.741

9.549.923

Components of Net Outlays That Are Not Part of Net Cost:







Acquisition of Inventory

-

309

309

Acquisition of Other Assets

-

4,186,832

4,186,832

Other Financing Sources:







Transfer Out (In) Without Reimbursement

(17,397)

-

(17,397)

Total Components of Budget Outlays That Are Not Part of







Net Operating Cost

(17.397^

4.187.141

4.169.744

Miscellaneous Items







Distributed Offsetting Receipts

(5,038,820)

-

(5,038,820)

Custodial/Non-Exchange Revenue

45

306,387

306,432

Appropriated Receipts for Trust Fund/Special Funds

-

23,554

23.554

Other Temporary Timing Differences

-

268,566

268,566

NET OUTLAYS

$ (4.313.990)

S 13.593.389

S 9.279.399

44.


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United States Environmental Protection Agency
Notes to the Financial Statements
For the Fiscal Years Ending September 30, 2023 and 2022
(Dollars in Thousands)

Budgetary and financial accounting information differ. Budgetary accounting is used for planning and control
purposes and relates to both the receipt and use of cash, as well as reporting the federal deficit. Financial accounting is
intended to provide a picture of the government's financial operations and financial position, so it presents
information on an accrual basis. The accrual basis includes information about costs arising from the consumption of
assets and the incurrence of liabilities. The reconciliation of net outlays, presented on a budgetary basis, and the net
cost, presented on an accrual basis, provides an explanation of the relationship between budgetary and financial
accounting information.

The reconciliation serves not only to identify costs paid for in the past and those that will be paid in the future, but
also to assure integrity between budgetary and financial accounting. The reconciliation explains the relationship
between the net cost of operations and net outlays by presenting components of net cost that are not part of net outlays
(e.g., depreciation and amortization expenses of assets previously capitalized, change in asset/liabilities), components
of net outlays that are not part of net cost (e.g., acquisition of capital assets), other temporary timing difference (e.g.,
prior period adjustments due to correction of errors). The analysis above illustrates this reconciliation by listing the
key differences between net cost and net outlays.

45.


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United States Environmental Protection Agency
Notes to the Financial Statements
For the Fiscal Years Ending September 30, 2023 and 2022
(Dollars in Thousands)

Note 27. Amounts Held by Treasury

Amounts held by Treasury for future appropriations eonsist of amounts held in trusteeship by Treasury in the
Superfund and LUST Trust Funds.

A. Superfund

Superfund is supported by general revenues, eost recoveries of funds spent to elean up hazardous waste sites, interest
ineome, and fines and penalties.

The following reflects the Superfund Trust Fund maintained by Treasury as of September 30, 2023 and 2022. The
amounts contained in these notes have been provided by Treasury. As indicated, a portion of the outlays represent
amounts received by the EPA's Superfund Trust Fund; such funds are eliminated on consolidation with the Superfund
Trust Fund maintained by Treasury.

In FY 2023, the EPA received an appropriation of $1 billion for Superfund. Treasury's Bureau of the Fiscal Service
(BFS), the manager of the Superfund Trust Fund assets, records a liability to the EPA for the amount of the
appropriation. BFS does this to indicate those trust fund assets that have been assigned for use and therefore are not
available for appropriation. As of September 30,2023 and 2022, the Treasury Trust Fund has a liability to the EPA for
previously appropriated funds and special accounts of $9 billion and $9 billion, respectively.

SUPERFUND FY 2023	EPA	Treasury Combined

Undistributed Balances













Uninvested Fund Balance

$

-

$

fl88.663)

$

(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

S

1.853.620

S

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

$

-

s

3.049.321

s

3.049.321

Outlays













Transfers to/from EPA, Net

$

1.723.271

$

C1.723.27n

$

-

Total Outlays

$

1.723.271

$

f 1.723.271)

s

-

Net Income

S

1,723,271

s

1,326,050

$

3.049.321

46.


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United States Environmental Protection Agency
Notes to the Financial Statements
For the Fiscal Years Ending September 30, 2023 and 2022
(Dollars in Thousands)

SUPERFUND FY 2022



EPA



Treasury



Combined

Undistributed Balances













Uninvested Fund Balance

$

-

$

103.683

$

103.683

Total Undistributed Balanee



-



103,683



103,683

Interest Reeeivable



-



4,694



4.694

Investments, Net



8.655.640



419.190



9.074.830

Total - Assets

S

8,655,640

$

527j567

$

9.183,207

Liabilities and Equity













Equity

$

8.655.640

$

527.567

$

9.183.207

Total Liabilities and Equity

s

8.655.640

$

527.567

S

9.183.207

Receipts













Corporate Environmental

$

-

$

413,002

$

413,002

Cost Recoveries



-



303,954



303,954

Fines and Penalties



-



3.000



3.000

Total Revenue



-



719,956



719,956

Appropriations Received



-



4,675,799



4,675,799

Interest Income



-



56.135



56.135

Total Receipts

s

-

$

5.451.890

$

5.451.890

Outlays













Transfers to/from EPA. Net

$

5.076.897

$

(5.076.8971

$

-

Total Outlays

$

5.076.897

$

(5.076.897)

$

-

Net Income

s

5.076.897

$

374.993

$

5.451.890

47.


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United States Environmental Protection Agency
Notes to the Financial Statements
For the Fiscal Years Ending September 30, 2023 and 2022
(Dollars in Thousands)

B. LUST

LUST is supported primarily by a sales tax on motor fuels to elean up LUST waste sites. In FY 2023 and 2022, there
were no fund reeeipts from eost reeoveries. The amounts eontained in these notes are provided by Treasury. Outlays
represent appropriations received by the LPA's LUST Trust Fund; such funds are eliminated on consolidation with

the LUST Trust Fund maintained by Treasury.













LUST FY 2023



EPA



Treasury



Combined

Undistributed Balances













Uninvested Fund Balance

$

-

$

6.010

$

6.010

Total Undistributed Balance



-



6,010



6.010

Interest Receivable



-



1,364



1,364

Investments, Net



91.439



1.292,945



1.384.384

Total - Assets

S

91.439

S

1.300.319

$

1.391.758

Liabilities and Equity













Equity

$

91.439

$

1.300.319

$

1.391.758

Total Liabilities and Equity

$

91.439

$

1.300.319

S

1.391.758

Receipts













Highway TF Tax

$

-

$

192,656

$

192,656

Airport TF Tax



-



11,800



11,800

Inland TF Tax



-



919



919

Total Revenue



-



205,375



205,375

Interest Income



-



48.792



48.792

Total Receipts

$

-

s

254.167

s

254.167

Outlays













Transfers to/from EPA, Net

$

94.205

$

(94.205}

$

-

Total Outlays

$

94.205

$

(94.205)

s

-

Net Income

$

94.205

s

159.962

s

254.167

48.


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United States Environmental Protection Agency
Notes to the Financial Statements
For the Fiscal Years Ending September 30, 2023 and 2022



(Dollars in Thousands)











LUST FY 2022



EPA



Treasury



Combined

Undistributed Balances













Uninvested Fund Balance

$

-

$

13.817

$

13.817

Total Undistributed Balanee



-



13,817



13,817

Interest Receivable



-



116



116

Investments, Net



92.714



1.125.426



1.218.140

Total - Assets

S

92.714

$

1.139.359

$

1.232.073

Liabilities and Equity













Equity

$

92.714

$

1.139.359

$

1.232.073

Total Liabilities and Equity

$

92.714

$

1.139.359

$

1.232.073

Receipts













Highway TF Tax

$

-

$

234.170

$

234,170

Airport TF Tax



-



7,607



7,607

Inland TF Tax



-



3.270



3.270

Total Revenue



-



245,047



245.047

Interest Ineome



-



9.716



9.716

Total Receipts

$

-

$

254.763

$

254.763

Outlays













Transfers to/from EPA. Net

$

92.293

$

(92.293)

$

-

Total Outlays

$

92.293

$

(92.293)

s

-

Net Income

s

92.293

$

162.470

$

254.763

49.


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United States Environmental Protection Agency
Notes to the Financial Statements
For the Fiscal Years Ending September 30, 2023 and 2022
(Dollars in Thousands)

Note 28. COVID-19 Activity

On March 27, 2020, President Donald Trump signed into law The Coronavirus Aid, Relief, and Economic Security
Act (CARES Act) in response to the economic fallout of the COVID-19 pandemic in the United States. The EPA
received a supplemental appropriation of $7 million to support Environmental Program Management, Science and
Technology, Building and Facilities, and Superfund program efforts related to the virus. As of September 30, 2023,
there have been no new obligations.

On March 11, 2021, President Joe Bidcn signed into law the American Rescue Plan Act (American Rescue Plan) also
called the COVID-19 Stimulus Package, to speed up the United States' recovery from the economic and health effects
of the COVID-19 pandemic and the ongoing recession. The EPA received a supplemental appropriation of $100
million to support Environmental Program Management and State and Tribal Assistance Grants program efforts
related to recovery from the virus.

Additional COVID-19 activities are discussed in Section I, Management's Discussion and Analysis, Financial
Analysis and Stewardship Information.

COVID-19 Activity	2023	2022

Budgetary Resources: Unobligated (and unexpired) Balance Carried Forward from
PY

Budgetary Resources Obligated (-)

Budgetary Resources: Ending Unobligated (and unexpired) Balance to be Carried
Forward

Outlays, Net (Total)

S 33,129 $

86,206

(26.653)

(67.019)

6.476

19.187

$ (85.199) S

(69.706)

Note 29. Reclassified Financial Statement for Government-wide Reporting

To prepare the Financial Report of the U.S. Government (Financial Report), the Department of the Treasury requires
agencies to submit an adjusted trial balance, which is a listing of amounts by U.S. Standard General Ledger account
that appear in the financial statements. Treasury uses the trial balance information reported in the Government-wide
Treasury Account Symbol Adjusted Trial Balance System (GTAS) to develop a Reclassified Statement of Net Cost.
Treasury eliminates intra govern mental balances from the reclassified statements and aggregates lines with the same
title to develop the Financial Report statements. This note shows the agency's financial statements and reclassified
statements prior to elimination of intragovernmental balances and prior to aggregation of repeated Financial Report
line items. A copy of the 2022 Financial Report can be found here: Bureau of the Fiscal Service - Reports, Statements
& Publications (treasury.gov) and a copy of the 2023 Financial Report will be posted to this site as soon as it is
released.

The term "intragovernmental" is used in this note to refer to amounts that result from other components of the Federal
Government.

The term "other than Inlragovernmcntal" 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.

50.


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United States Environmental Protection Agency
Notes to the Financial Statements
For the Fiscal Years Ending September 30, 2023 and 2022
(Dollars in Thousands)

Reclassification of Statement of Net Cost to Line Items Used for the Government-wide Statement of Net Cost

For the Year Ended September 30, 21123

FY 2023 EPA SNC

Line Items lised to Prepare the FY 2(123 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

S 12,487,285











Other Than

Intragovernmental Costs





1,404.475



9,091.122



10.495,597

Other Than

Intragovernmental Gross
Costs





1,404,475



9,091,122



10,495,597

Total Other Than
Intragovernmental Costs















Intraeo vernmental Costs



-

99.612

-

395,4 1 0

-

495,022

Benefits Program Cos(s



-

2,835

-

202,164

-

204.999

Imputed Costs



-

379,347

-

759,5 8 5

-

1,138,932

Buy/Sell Costs



.

-

-

122

-

122

Purchase of Assets









92,344



92,344

Borrowing and Other
ln(erest Expense









9,181



9,181

Other Expenses (w/o
Reciprocals)





481,794



1,458,806



1,940,600

Total Intragovernmental
Costs

Total Gross Costs

S 12.487.285

S 1.886.269

$

S 10.549.928

S

S 12.436.197

Total Reclassified Gross
Costs

Earned Revenue

S 520,394

S (317,119)

S 238,365

S 458,170

s

S 379,416

Other Than

Intragovernmental Earned
Revenue















Intragovernmental
Revenue



-

(20,270)

-

114,948

-

94,678

Buy/Sell Revenue



-

-

-

122

-

122

Purchase of Assets Offset





(20,270)



115,070



94,800

Total Intragovernmental
Earned Revenue

Total Earned Revenue

S 520,394

S (337,389)

S 238,365

S 573,240

s

S 474,216

Total Reclassified Earned
Revenue

NET COST

S 11.966,891

$ 2.223.658

$ (238.365)

S 9,976.688

$

$ 11,961.981

NET COST

51.


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United States Environmental Protection Agency
Notes to the Financial Statements
For the Fiscal Years Ending September 30, 2023 and 2022
(Dollars in Thousands)

Note 30. Restatements

FY 2022 has been restated. The WIFIA Loan Financing Account was previously reported as a dedicated collections
fund but is specifically excluded from such per Statement of Federal Financial Accounting Standards (SFFAS) 27,
Identifying and Reporting Funds from Dedicated Collections, and SFFAS 43, Dedicated Collections: Amending
SFFAS 27, Identifying and Reporting Earmarked Funds.

The restatement resulted in a $8,206 increase to the Funds from Dedicated Collections net position and a $8,206
decrease to the Funds Other than those from Dedicated Collections net position. There was no impact to total net
position.

The change impacts the FY 2022 Balance Sheet and Statements of Changes in Net Position - Cumulative Results of
Operations between Funds from Dedicated Collections and Funds from Other Than Dedicated Collections. The
Consolidated Totals on the Statement of Changes in Net Position remains unchanged. Footnote 17 Funds from
Dedicated Collections was updated for this change.

For the Year Ended September 30, 2022
Balance Sheet:

Cumulative Results of Operations - Funds from Dedicated
Collections

Cumulative Results of Operations - Funds from Other than
Dedicated Collections

Total Cumulative Results of Operations (Consolidated)
Total Net Position

Previously	Restated

Reported Restatement Amount

$ 7,717,484 $

281,672
7,999,156
$ 70,617,863 $

26,639 $ 7,744,123

(26,639) 255,033
7,999,156
$ 70,617,863

Statement of Changes in Net Position:

Funds from Dedicated Collections:

Cumulative Results of Operations Beginning Balance

T ransfers-ln/(Out)

Other

Net Cost of Operations

Total Cumulative Results of Operations

$ 3,551,640 $
4,584,789
48,268
(1,246,544)
$ 7,717,484 $

8,206
48,268
(47,268)
18,433
26,639

3,559,846
4,633,057
1.000
(1,228,1 11)
7,744,123

Funds from Other Than Dedicated Collections:
Cumulative Results of Operations Beginning Balance
Other Adj ustments
Other

Net Cost of Operations

Total Cumulative Results of Operations

$ 381,028 $

(48,268)
(8,496,036)
$ 281,672 $

(8,206)
(769)
769
(18,433)
(26,639)

372,822
(769)
(47,499)
(8,514,469)
255,033

Consolidated Totals:

Cumulative Results of Operations Beginning Balance
Other Adj ustments
T ransfcrs-In/(Out)

Other

Net Cost of Operations

Total Cumulative Results of Operations

$ 3,932,668 $

(25,921)

(9,742,580)
$ 7,999,156 S

(769)
48,268
(47,499)

3,932,668
(769)
22,347
(47,499)
(9,742,580)
7,999,156

52.


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Required Supplementary Information (Unaudited)

United States Environmental Protection Agency
For the Fiscal Years Ending September 30, 2023 and 2022
(Dollars in Thousands)

Deferred Maintenance

Deferred maintenance is maintenanee that was not performed when it should have been, that was seheduled and not
performed, or that was delayed for a future period. Maintenanee is the aet of keeping property, plant, and equipment
(PP&E) in aeeeptable operating condition and includes preventive maintenanee, normal repairs, replacement of parts
and structural components, and other activities needed to preserve the asset so that it can deliver acceptable
performance and achieve its expected life. Maintenance excludes activities aimed at expanding the capacity of an
asset or otherwise upgrading it to serve needs different from or significantly greater than those originally intended.

Deferred Maintenance is described as the act of keeping fixed assets in acceptable condition.

Such activities include preventive maintenance, replacement of parts, systems, or components, and other activities
needed to preserve or maintain the asset.

The deferred maintenance as of September 30, 2023 and 2022:

2023	2022

Asset Category









Buildings

$

128,180

$

142,324

EPA Held Equipment



1.700



-

Total Deferred Maintenance

$

129.880

$

142.324

53.


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Required Supplementary Information (Unaudited) Cont.

In Fiscal Year 2023, in accordance with SFFAS No. 42, Deferred Maintenance and Repairs'. Amending Statements of
Federal Financial Accounting Standards 6, 14, 29 and 32, the EPA presents Deferred Maintenance and Repairs
(DM&R) information by asset category as follows:

Buildings:

Policy

Explanation

Maintenance and repairs policies and how they are
applied.

The maintenance and repair policies are to maintain facilities
and real property installed equipment to fully meet mission
needs at each site. Systems are maintained to function
efficiently at full capacity and to meet or exceed life
expectancy of buildings and building systems.

How we rank and prioritize maintenance and repair
activities among other activities.

Building and facility program projects are scored and ranked
individually based on seven weighted factors to determine
priority needs. High scoring projects are prioritized above
lower scoring projects. The seven factors considered are;
health and safety, energy conservation, environmental
compliance, program requirements, repair and upkeep, space
alteration, and operational urgency. Repair and Improvement
(R&I) projects are identified and prioritized on a local basis.

Factors considered in determining acceptable
condition standards.

The nine building systems must function at a level that fully
meet mission needs. The nine building systems are: structure,
roof, exterior components and finish, interior finish, HVAC,
electrical, plumbing, conveyance, and specialized program
support equipment. Each system is rated from 0 to 5 during
facility assessments. Ratings are used to determine facility
condition index and estimated deferred maintenance.

State whether DM&R relate solely to capitalized
general PP&E and stewardship PP&E or also to
non-capitalized or fully depreciated general PP&E.

Facilities assessments and the resulting DM&R estimates are
applied to capitalize PP&E only. Full facility assessments
using the NASA parametric model are used to determine
facilities and systems indices and deferred maintenance
estimates.

PP&E for which management does not measure
and/or report DM&R and the rationale for the
exclusion of other than non-capitalized or fully
depreciated general PP&E.

Buildings are not excluded from DM&R estimates.

Explain significant changes from the prior year.

No significant changes.

54.


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Required Supplementary Information (Unaudited) Cont.
EPA Held Equipment:		

Policy

Explanation

Maintenance and repairs policies and how they are
applied.

Managers of the equipment consider manufacturers
recommendations in determining maintenance requirements.

How we rank and prioritize maintenance and repair
activities among other activities.

Equipment is maintained based on manufacture's
recommendations.

Factors considered in determining acceptable
condition standards.

Manufacturer recommendations.

State whether DM&R relate solely to capitalized
general PP&E and stewardship PP&E or also to
non-capitalized or fully depreciated general PP&E.

DM&R relates to all EPA Held Equipment as determined by
individual site managers.

PP&E for which management does not measure
and/or report DM&R and the rationale for the
exclusion of other than non-capitalized or fully
depreciated general PP&E.

Individual site managers determine the need to measure and/or
report DM&R based on mission needs.

Explain significant changes from the prior year.

Individual site equipment managers decide on a case-by-case
basis the need to maintain equipment.

Vehicles:

Policy

Explanation

Maintenance and repairs policies and how they are
applied.

Vehicle managers maintain vehicles owned by the EPA in
accordance with the recommendations of the manufacturer.

How we rank and prioritize maintenance and repair
activities among other activities.

The goal is to maintain the vehicle as built and as
recommended by the manufacturer. Repairs and maintenance
are also described as system critical or minor. System critical
repairs and maintenance are high priority and are immediately
taken care of. Minor repairs are lower priority and may be
taken care of at a later date (time/scheduling permitting).
These are not critical to in-field functionality, but the repairs
are needed to maintain the vehicle as built.

Factors considered in determining acceptable
condition standards.

The vehicle is inspected to ensure that it (the vehicle) and
related specialized equipment are in good working order. The
criteria being that the vehicle is being maintained as built and
as recommended by the manufacturer.

State whether DM&R relate solely to capitalized
general PP&E and stewardship PP&E or also to
non-capitalized or fully depreciated general PP&E.

All vehicles are capitalized.

PP&E for which management does not measure
and/or report DM&R and the rationale for the
exclusion of other than non-capitalized or fully
depreciated general PP&E.

None.

Explain significant changes from the prior year.

No significant changes.

Beginning in FY 2015, requirements for recognizing and reporting significant and expected-to-be-permanent
impairment of general PP&E (except Internal Use Software) remaining in use are in SFFAS No. 44, Accounting for
Impairment of General Property, Plant, and Equipment (G-PP&E) Remaining in Use.

This statement establishes accounting and financial reporting standards for impairment of general property, plant, and
equipment remaining in use, except for internal use software. G-PP&E is considered impaired when there is a
significant and permanent decline in the service utility of G-PP&E or expected service utility for construction work in
progress, A decline is permanent when management has no reasonable expectation that the lost service utility will be
replaced or restored.

55.


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Required Supplementary Information (Unaudited) Cont.

This statement does not anticipate that entities will have to establish additional or separate procedures beyond those
that may already exist, such as those related to deferred maintenance and repairs, to search lor impairments.
Impairments can be identified and brought to management's attention in a variety of ways. Although a presumption
exists that there are existing processes and internal controls in place to reasonably assure identification and
communication of potential material impairments, this statement does not require entities to conduct an annual or
other periodic survey solely for the purpose of applying these standards.

Management may determine that existing processes and internal controls are not sufficient to reasonably assure
identification of potential material impairments and impairments and implement appropriate additional processes and
internal controls.

Land:

Estimated Acreage by Predominant Use

Below details the predominant use of Land in Property, Plant and Equipment on the balance sheet by acreage.

Commercial

Conservation

and
Preservation

End of FY 2022/Start of FY 2023
End of FY 2023

Operational

576
576

Total Estimated
Acreage

576
576

All of EPA's land is for the Agency's operational facilities. The rights to this land are permanent and fully devoted to
support the operational facilities contained therein.

56.


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Supplemental Combining Statement of Budgetary Resources (Unaudited)

United States Environmental Protection Agency
For the Fiscal Years Ending September 30, 2023
(Dollars in Thousands)

Leaking
Environmental Underground
Programs &

Management

Storage
Tanks

Seienee &

State Tribal
Assistance

BUDGETARY RESOURCES

Unobligated Balance From Prior Year Budget Authority, Net
Appropriations (discretionary and mandatory)

Borrowing Authority (discretionary and mandatory)
Spending Authority From Offsetting Collection
Total Budgetary Resources

STATUS OF BUDGETARY RESOURCES

New Obligations and Upward Adjustments (total)
Unobligated Balance, End of Year
Apportioned, Unexpired Accounts
Unapponioned, Unexpired Accounts
Expired Unobligated Balance, End of Year
Unobligated Balance, End of Year (total):

Total Status of Budgetary Resources

OUTLAYS, NET

Outlays, Net (total) (discretionary and mandatory)

Distributed Offsetting Receipts (-)

Agency Outlays, Net (discretionary and mandatory)
Disbursements, Net (total) (mandatory)

Other

Totals

s

3,867,261

S

20,819

S

177,825

S

6,372,484

S 8,088,109

$38,755,868

S 57,282,3 66



413,866



95,480



-



1,678,568

16,933,949

5,881,408

25,003,271



-



-



-



-

-

2,884,452

2.884,452



53,042



(1.275)



(562)



14,948

-

947.183

1.013.336

s

4,334,169

S

115,024

s

177,263

S

8,066.000

S25.022.05 8

S48.468.911

S 86.183,425

s

704,843

s

96,290

s

160,444

S

2,799,778

S12,563,307

S 10,586,418

S 26,911,080



3,542,300



18,734



2,346



5,264,962

12,458,751

37,879,869

59,166,962



-



-



-



600

-

-

600



87.026



.



14.473



660

.

2.624

104.783



3.629.326



18.734



16.819



5.266.222

12.458.751

37.882.493

59.272.345

s

4,334,169

s

115,024

s

177.263

S

8,066.000

525,022,058

S48.468.911

S 86,183.425

s

952,590

s

91,236

s

249,827

s

1,632,740

S 5,755,567

S 5,473,224

S 14,155,184



.



(1.000)



.



(1.456.174)

.

(111.762)

(1.568.936)

s

952,590

s

90,236

s

249.827

s

176.566

S 5,755.567

S 5,361,462

S 12.586.248

S 1.379.374 S 1.379.374

57.


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Appendix 2

Agency Response to Draft Report

THE CHIEF FINANCIAL OFFICER

WASHINGTON, D.C. 20460

November 14, 2023

MEMORANDUM

SUBJECT: Response to the Office of Inspector General Draft Report, Project No. OA-FY23-0078,
"Audit of the EPA's Fiscal Years 2023 and 2022 (Restated) Consolidated Financial
Statements," dated November 13, 2023

FROM:	Faisal Amin, Chief Financial Officer

Office of the Chief Financial Officer

Oignally sgred tiy Amn.

Amin, Faisal ^2lS5„ „

TO:

Damon Jackson, Director
Financial Directorate
Office of Audit

Thank you for the opportunity to respond to the issues and recommendations in the
subject draft report. The following is a summary of the U.S. Environmental Protection
Agency's overall position, along with its position on the report's recommendations. This
response has been coordinated with Region 5.

AGENCY*S OVERALL POSITION

The draft report contains six recommendations for the Office of the Chief Financial Officer
and one recommendation for the Director of the Great Lakes National Program Office, located
in Region 5. The EPA agrees with the Office of Inspector General's recommendations.

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AGENCY RESPONSE TO DRAFT REPORT RECOMMENDATIONS

Recommendation

Office

High-Level Intended Corrective Action(s)

Planned
Date

1. Instruct the regions to
perform an analysis of
financially closed Superfund
State Contracts to reclassify
appropriated and
reimbursable disbursements
and financially close lines on
the accrual.

OCFO

Concur. In addition to the Corrective
Action listed for Recommendation 2, the
OCFO's Cincinnati Finance Center will
instruct the Regions to perform a
thorough review of their respective
financially closed sites for accuracy. We will
request a written response once completed.

06/30/24

2. Instruct the regions to
provide current Superfund
State Contract information
quarterly to the Cincinnati
Finance Center.

OCFO

Concur. Starting with the first fiscal
quarter of 2024, the OCFO's Cincinnati
Finance Center will begin including not
only the Program Contacts but also their
management, Regional Comptrollers, and
Mission Support Division Directors in
guidance communications. OCFO's CFC
will reinforce the importance of fully
reviewing and updating regional data
provided for the accuracy of the accrual
and impact on the financial statements.

01/15/24

3. Review the Great Lakes
Legacy Act accrual project
information prior to its
submission to the Cincinnati
Finance Center to ensure its
accuracy.

R5/

GLNPO

Concur. The Great Lakes National
Program Office has already reviewed the
Great Lakes Legacy Act accrual project
information and fixed the errors
identified in the OIG Point Sheet No. 6^

Completed
10/18/23

4. Develop a plan to improve
the Office of the Chief
Financial Officer processes for
headquarters program offices
and regional offices to
deobligate unneeded funds in
a timely manner by the end of
the fiscal year, as required.

OCFO

Concur. The Office of the Controller's
Policy, Training and Accountability
Division will develop a plan to strengthen
the unliquidated obligation reviews for
the deobligations processes. This plan will
enhance the current policies associated
with the unliquidated obligation review
and the subsequent deobligations of any
unneeded funding.

7/1/24

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Recommendation

Office

High-Level Intended Corrective Action(s)

Planned
Date

5. Develop and implement a
plan with milestones to ensure
that future Interconnection
Security Agreement and
Memorandum of Agreement
documents for each external
connection with Office of the
Chief Financial Officer systems
are reauthorized before the
current

agreements expire.

OCFO

Concur. The OCFO's Office of Technology
Solutions will develop and implement a
strategy with milestones to ensure that
future Interconnection Security Agreement
and Memorandum of Agreement
documents for each external connection
with OCFO systems are reauthorized before
the current agreements expire.

6/30/24

6. In consultation with the
Office of Mission Support's
chief information officer,
determine how the Office of
the Chief Financial Officer will
conduct reviews of active
Invoice Processing Platform
user accounts to comply with
Chief Information Officer
Directive No. CIO 2150-P-
01.3, Information Security -
Access Control Procedure.

OCFO

Concur. The OCFO's Office of Technology
Solutions will, in consultation with the
Office of Mission Support's Chief
Information Officer, determine how it will
conduct reviews of active Invoice
Processing Platform user accounts to
comply with the Chief Information Officer
Directive No: CIO 2150-P-01.3, Information
Security - Access Control Procedure.

6/30/24

7. Develop and implement a
strategy to ensure that future
reviews of active Invoice
Processing Platform user
accounts comply with Chief
Information Officer Directive
No. CIO 2150-P-01.3,
Information Security - Access
Control Procedure.

OCFO

Concur. The OCFO's Office of Technology
Solutions will develop and implement a
strategy to ensure that future reviews of
active Invoice Processing Platform user
accounts comply with the Chief
Information Officer Directive No: CIO 2150-
P-01.3, Information Security - Access
Control Procedure.

6/30/24

CONTACT INFORMATION

If you have any questions regarding this response, please contact the OCFO's Audit Follow-up
Coordinator, Andrew LeBlanc, at leblanc.andrewffiepa.gov or (202) 564-1761.

cc: Debra Shore
Cheryl Newton

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Gregg Treml
Lek Kadeli

Meshell Jones-Peeler

Michael Clanton

Angel Robinson

Adil Gulamali

Derek David

Wyatt Boyd

Teresa Seidel

OCFO-OC-MANAGERS

Wanda Arrington

Demetrios Papakonstantinou

Shannon Lackey

Mairim Lopez

Sheila May

Andrew Sheeran

Gabrielle Hanson

Mara Notbusch

Nina Johnson

Bob Shields

Alana Maye

Susan Perkins

Andrew LeBlanc

Jose Kercado

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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

Regional Administrator for Region 5

Agency Follow-Up Coordinator

General Counsel

Associate Administrator for Congressional and Intergovernmental Relations

Associate Administrator for Public Affairs

Deputy Chief Financial Officer

Associate Chief Financial Officer

Deputy Regional Administrator for Region 5

Controller

Deputy Controller

Associate Deputy Controller

Director, Office of Continuous Improvement, Office of the Chief Financial Officer
Director, Great Lakes National Program Office, Region 5
Director, Office of Regional Operations

Director, Office of Budget, Office of the Chief Financial Officer

Director, Office of Planning, Analysis and Accountability, Office of the Chief Financial Officer
Director, Office of Resource and Information Management, Office of the Chief Financial Officer
Director, Office of Technology Solutions, Office of the Chief Financial Officer
Director, Accounting and Cost Analysis Division, Office of the Controller
Director, Policy, Training, and Accountability Division, Office of the Controller

Chief, Management, Integrity, and Accountability Branch; Policy, Training, and Accountability Division,

Office of the Controller
Director, Research Triangle Park Finance Center, Office of the Chief Financial Officer
Director, Cincinnati Finance Center, Office of the Chief Financial Officer
Office of Policy OIG Liaison
Office of Policy GAO Liaison

Audit Follow-Up Coordinator, Office of the Administrator

Audit Follow-Up Coordinator, Office of the Chief Financial Officer

Audit Liaison, Office of Budget, Office of the Chief Financial Officer

Audit Liaison, Office of Technology Solutions, Office of the Chief Financial Officer

Audit Follow-Up Coordinator, Region 5

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Whistleblower Protection

U.S. Environmental Protection Agency
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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.

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