# Presentation: 684408

## User Fee Reporting Needs Improvement 

- Presented by**JANE A. BANNON**

## CRITERIA

**OMB Circular No. A-25, “User Charges**,” requires, in part, that user charges be assessed to each identifiable recipient for special benefits derived from Federal activities beyond those received by the general public and ...that user charges be sufficient to recover the full cost of providing the special benefits incurred by the Federal Government.
**The CFO Act of 1990 (Public Law 101-576, Section 205)** requires, in part, that the Chief Financial Officer “review, on a biennial basis, the fees, royalties, rents and other charges imposed by the agency for services and things of value it provides, and make recommendations on revising those charges to reflect costs incurred by it in providing those services and things of value.”
**Department Regulation (DR) 2100-3** requires that the agencies analyze their financial activity and perform reviews to include, in part, an analysis of current charges for things of value. The DR also states that “OCFO will review and consolidate the responses from the agency CFOs...,” and “OCFO may conduct examinations of the agencies’ reviews on a sample basis.”

- Office of the Chief Financial Officer

## CRITERIA

**OMB Circular No. A-129, “Managing Federal Credit Programs,”** requires that reviews of credit program fees be performed annually.
**Statement of Federal Financial Accounting Standards No. 2** states, “the present value of fees and other collections is recognized as a deduction from subsidy costs.”
**The Federal Credit Reform Act of 1990** defines cost as “the estimated long-term cost to the Government of a direct loan or loan guarantee, calculated on a net present value basis, excluding administrative costs.”

- Office of the Chief Financial Officer

## CONDITION

- The methodology to be employed in OCFO’s reviews was not documented.
- We could not independently assess the adequacy of the control measures intended.
- Our review of the agencies’ submissions identified issues which questioned the utility of the reports and the level of assurance that could be garnered that the requirements of OMB Circular A-25 had been met.
- Credit reform fees charged were insufficient to cover the subsidy costs of the programs (unrecouped subsidies).

- Office of the Chief Financial Officer

## Condition

| Various user fees | program revenues | program expenses | variance |
| --- | --- | --- | --- |
| International Air Passenger  | $172,401,487  | $172,401,487 | 0 |
| Commercial Vessel | $23,840,488  | $23,840,488 | 0 |
| Aircraft Clearance | $27,226,568 | $27,226,568 | 0 |
|  |  |  |  |
| Laboratory Accreditation Program  | $193,585 | $697,124. | ($503,539) |
|  |  |  |  |

- Office of the Chief Financial Officer

## EFFECT

- No assurance that full costs had been recouped, as required.
- Users in prior years were overcharged and current years’ users have been provided an unwarranted subsidy.

- Office of the Chief Financial Officer

## CAUSE

- No assurance that full costs had been recouped, as required be**cause **the obligation data had been estimated to agree with actual revenues (i.e., controls were not in place to assure the accuracy of the financial data reported).
- Users in prior years were overcharged and current years’ users have been provided an unwarranted subsidy be**cause** of the inadequate rate–setting processes.
- Frequently the fees charged were insufficient to cover the subsidy costs of the programs be**cause** agency officials did not have documentation or analysis to support the justifications for not covering the full cost of the direct and guaranteed loan programs.
- OCFO’s biennial review process needed strengthening.

- Office of the Chief Financial Officer

## Recommendations(to OCFO)

**Recommendations****(to OCFO)**

- Prescribe a documented methodology for reviewing the reasonableness of agency fee submissions and formalize a review schedule.

- Office of the Chief Financial Officer

## Recommendations

**Recommendations**

- Require Rural Development and FSA to document their justifications for not recouping the full costs of their programs.

- Office of the Chief Financial Officer

##             Management Decision

- OCFO will develop a review methodology to detect report deficiencies and review the support for the agencies’ submissions on a sample basis.

- Office of the Chief Financial Officer

##             Management Decision

- OCFO has met with credit agencies to develop a review methodology and issued more prescriptive guidance on how credit programs should document their justifications for not recouping (if applicable) the full costs of their programs.

- Office of the Chief Financial Officer

##             THANK YOU

- REPORT INFORMATION
- USDA CONSOLIDATED FINANCIAL STATEMENT AUDIT
- Fiscal Years 2004 and 2003
- 50401-53-FM

- Office of the Chief Financial Officer