OFFICE OF INSPECTOR GENERAL 

Catalyst for Improving the Environment 

Audit Report 

Fiscal Year 2006 and 2005 

Financial Statements for the 

Pesticide Registration Fund 

Report No. 2007-1-00071 

May 30, 2007 
Report Contributors: Paul Curtis Ethel Lowery 

 Wanda Whitfield

 Bill Samuel 

 Sheree Brice 

 Diane Forrest 

 Carol Kwok 

Abbreviations 

CFC Cincinnati Finance Center 

EPA U.S. Environmental Protection Agency 

FMFIA Federal Managers’ Financial Integrity Act 

 Sheila May 

 Javier Negron 

 Demetrios Papakonstantinou 

 Cynthia Poteat 

 Phil Weihrouch 

FMSD Facilities Management and Services Division 

GAD Grants Administration Division 

GAO Government Accountability Office 

IAG Interagency Agreement 

IFMS Integrated Financial Management System 

OARM Office of Administration and Resources Management 

OIG Office of Inspector General 

OMB Office of Management and Budget 

OPP Office of Pesticide Programs 

PRIA Pesticide Registration Improvement Act 

WFC Washington Finance Center 
U.S. Environmental Protection Agency 2007-1-00071 

Office of Inspector General May 30, 2007

At a Glance 


Catalyst for Improving the Environment 

Why We Did This Audit 

The Pesticide Registration 

Improvement Act (PRIA) 

requires that we perform an 

annual audit of the Pesticide 

Registration Fund (known as 

the PRIA Fund) financial 

statements, and report findings 

and recommendations 

resulting from the audit. 

Background 

To expedite the registration of 

certain pesticides, Congress 

authorized the U.S. 

Environmental Protection 

Agency (EPA) to assess and 

collect pesticide registration 

fees. The fees collected are 

deposited into the PRIA Fund. 

The Agency is required to 

prepare financial statements 

that present financial 

information about the PRIA 

Fund. 

For further information, 

contact our Office of 

Congressional and Public 

Liaison at (202) 566-2391. 

To view the full report, 

click on the following link: 

www.epa.gov/oig/reports/2007/ 

20070530-2007-1-00071.pdf 

Fiscal Year 2006 and 2005 Financial Statements 

for the Pesticide Registration Fund 

 EPA Receives Unqualified Opinion 

We rendered an unqualified, or clean, opinion on EPA’s Pesticide Registration 

Fund financial statements for fiscal years 2006 and 2005, meaning that they were 

fairly presented and free of material misstatement. 

 Internal Control Reportable Condition Noted 

EPA did not timely obligate PRIA funds, totaling $100,000, for worker protection 

activities. 

Noncompliance With Laws and Regulations Noted 

We tested compliance with those laws and regulations that could either materially 

affect the PRIA Fund financial statements, or that we considered significant to the 

audit. The objective of our audit, including our tests of compliance with applicable 

laws and regulations, was not to provide an opinion on overall compliance with 

such provisions. Accordingly, we do not express such an opinion. We did not 

identify any noncompliances that would result in a material misstatement to the 

audited financial statements. However, EPA’s not recording $100,000 in 

obligations for services performed during fiscal year 2006 was contrary to Title 31, 

U.S. Code, Section 1501. 

 Agency Comments and Office of Inspector General Evaluation 

In a memorandum dated April 19, 2007, the Assistant Administrator for 

Administration and Resources Management responded to our draft report. 
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY 

WASHINGTON, D.C. 20460 

OFFICE OF 

INSPECTOR GENERAL 

May 30, 2007 

MEMORANDUM 

SUBJECT: Fiscal Year 2006 and 2005 Financial Statements for the 

Pesticide Registration Fund 

Report No. 2007-1-00071 

FROM: Melissa M. Heist 

Assistant Inspector General for Audit 

TO: James B. Gulliford 

Assistant Administrator for Prevention, 

Pesticides, and Toxic Substances 

Luis A. Luna 

Assistant Administrator for Administration 

and Resources Management 

 Lyons Gray 

Chief Financial Officer 

 Martha Cuppy 

Assistant Regional Administrator, Region 7 

This is our report on the audit of the U.S. Environmental Protection Agency’s (EPA’s) fiscal 

year 2006 and 2005 financial statements for the Pesticide Registration Fund, conducted by the 

EPA Office of Inspector General (OIG). This report contains findings that describe the problems 

the OIG has identified and corrective actions the OIG recommends. The report represents the 

opinion of the OIG and does not necessarily represent the final EPA position. Final 

determinations on matters in this report will be made by EPA managers in accordance with 

established audit resolution procedures. 

The estimated cost of this report – calculated by multiplying the project’s staff days by the 

applicable daily full cost billing rates in effect at the time – is $249,000. 
Action Required 

In accordance with EPA Manual 2750, you are required to provide a written response to this 

report within 90 calendar days of the date of this report. You should include a corrective action 

plan for each recommendation that includes milestone dates. 

If you or your staff have any questions regarding this report, please contact me at (202) 566-0899 

or Heist.Melissa@epa.gov, or Paul Curtis at (202) 566-2523 or Curtis.Paul@epa.gov. 
Fiscal Year 2006 and 2005 Financial Statements for the 

Pesticide Registration Fund 

Table of Contents

Inspector General's Report on the Fiscal Year 2006 and 2005 

Financial Statements for the Pesticide Registration Fund 

Opinion on the PRIA Fund Financial Statements............................................................... 1 

Evaluation of Internal Controls........................................................................................... 2 

Tests of Compliance with Laws and Regulations............................................................... 4 

Overview Section of the Financial Statements................................................................... 4 

Prior Audit Coverage.......................................................................................................... 5 

Agency Comments and OIG Evaluation ........................................................................... 5 

Attachments 

1 Reportable Condition................................................................................................. 6

Worker Protection Funds Not Obligated Timely.......................................................... 7 

2 Compliance with Laws and Regulations.................................................................. 9

EPA Did Not Comply with U.S. Code for Recording Obligations ............................... 10 

3 Status of Recommendations and Potential Monetary Benefits............................. 12 

Appendices 

A Fiscal Year 2006 and 2005 PRIA Financial Statements 

B Full Text of Agency Response 

C Distribution 
Inspector General’s Report on the 

Fiscal Year 2006 and 2005 Financial Statements 

for the Pesticide Registration Fund 

The Administrator 

U.S. Environmental Protection Agency 

We have audited the Pesticide Registration Fund (known as the PRIA Fund) balance sheet as of 

September 30, 2006 and 2005, and the related statements of net cost, changes in net position, 

budgetary resources, and financing for the years then ended. These financial statements are the 

responsibility of the U.S. Environmental Protection Agency’s (EPA’s) management. Our 

responsibility is to express an opinion on these financial statements based upon our audit. 

We conducted our audit in accordance with generally accepted auditing standards; the standards 

applicable to financial statements contained in Government Auditing Standards, issued by the 

Comptroller General of the United States; and Office of Management and Budget (OMB) 

Bulletin No. 06-03, Audit Requirements for Federal Financial Statements. These standards 

require that we plan and perform the audit to obtain reasonable assurance about whether the 

financial statements are free of material misstatements. An audit includes examining, on a test 

basis, evidence supporting the amounts and disclosures in the financial statements. An audit also 

includes assessing the accounting principles used and significant estimates made by 

management, as well as evaluating the overall financial statement presentation. We believe that 

our audit provides a reasonable basis for our opinion. 

As discussed in Note 1.K., the Agency changed the manner in which it classified and reported 

amounts for offsetting receipts in fiscal year 2006 to comply with OMB Circular No. A-136, 

Financial Reporting Requirements. OMB Circular No. A-136 also does not require the 

restatement of prior year (fiscal year 2005) financial statements. Accordingly, the 2006 financial 

statements are not comparative with 2005 as they pertain to reporting offsetting receipts. 

In our opinion, the financial statements present fairly the assets, liabilities, net position, 

budgetary resources, financing activities, and reconciliation of net costs to budgetary obligations 

of the PRIA fund, as of and for the years ended September 30, 2006 and 2005, in accordance 

with accounting principles generally accepted in the United States of America. 

1 
Evaluation of Internal Controls 

As defined by OMB Bulletin No. 06-03, internal control, as it relates to the financial statements, 

is a process, affected by the Agency’s management and other personnel, designed to provide 

reasonable assurance that the following objectives are met: 

Reliability of financial reporting - Transactions are properly recorded, processed, and 

summarized to permit the preparation of the financial statements in accordance with 

generally accepted accounting principles; and assets are safeguarded against loss from 

unauthorized acquisition, use, or disposition. 

Reliability of performance reporting - Transactions and other data that support 

reported performance measures are properly recorded, processed, and summarized to 

permit the preparation of performance information in accordance with criteria stated by 

management. 

Compliance with applicable laws and regulations - Transactions are executed in 

accordance with laws governing the use of budget authority and other laws and 

regulations that could have a direct and material effect on the financial statements; and 

any other laws, regulations, and Government-wide policies identified by OMB. 

In planning and performing our audit, we considered EPA’s internal control over PRIA financial 

reporting by obtaining an understanding of the Agency’s internal controls. We determined 

whether internal controls have been placed in operation, assessing control risk, and performing 

tests of controls in order to determine our auditing procedures for the purpose of expressing an 

opinion on the financial statements. We limited our internal control testing to those controls 

necessary to achieve the objectives described in OMB Bulleting No. 06-03. We did not test all 

internal controls relevant to operating objectives as broadly defined by the Federal Managers’ 

Financial Integrity Act (FMFIA) of 1982, such as those controls relevant to ensuring efficient 

operations. The objective of our audit was not to provide assurance on internal controls and, 

accordingly, we do not express an opinion on internal controls. 

Our consideration of the internal controls over financial reporting would not necessarily disclose 

all matters in the internal controls that might be reportable conditions or material weaknesses. 

Because of inherent limitations in any internal control structure, losses, noncompliance, or 

misstatements could occur and not be detected. Also, projecting our evaluation of internal 

controls to future periods is subject to the risk that controls may become inadequate because of 

changes in conditions, or the degree of compliance with such controls may deteriorate. 

With respect to internal controls related to performance measures presented in the Management’s 

Discussion and Analysis, we obtained an understanding of the design of significant internal 

controls relating to the existence and completeness assertions, as required by OMB Bulletin No. 

06-03. Our procedures were not designed to provide assurance on internal controls over reported 

performance measures and, accordingly, we do not express an opinion on internal controls. 

2 
Material Weaknesses 

Material weaknesses, as defined by OMB Bulletin No. 06-03, are reportable conditions in which 

the design or operation of the internal control does not reduce to a relatively low level the risk 

that errors, fraud, or noncompliance in amounts that would be material in relation to the financial 

statements being audited, or material to a performance measure or aggregation of related 

performance measures, may occur and not be detected within a timely period by employees in 

the normal course of performing their assigned functions. We noted certain matters discussed 

below involving operations that we consider a reportable condition and noncompliance issue, 

although we do not believe they are material weaknesses. 

Reportable Conditions 

OMB Bulletin No. 06-03 defines reportable conditions as matters that come to the auditor’s 

attention that, in the auditor’s judgment, should be communicated because they represent 

significant deficiencies in the design or operation of internal controls that could adversely affect 

the organization’s ability to meet the objectives defined on the previous page. For fiscal year 

2006, we identified one reportable condition. 

During fiscal year 2006, EPA did not timely obligate $100,000 in PRIA funds for worker 

protection activities. In two instances, EPA received goods ordered prior to obligating and 

expending the funds. The Government Accountability Office’s (GAO’s) Standards for Internal 

Controls in the Federal Government require accurate and timely recording of transactions and 

events. The Office of Pesticide Programs (OPP) committed the funds for these transactions. 

However, the funds were not recorded as obligations timely due to a delay by Region 7 and the 

Grants Administration Division (GAD) in providing documentation to the Cincinnati Finance 

Center (CFC). When obligations are not recorded timely, it increases the risk for inaccurate or 

incomplete information in the Agency’s accounting system, the Integrated Financial 

Management System (IFMS). Accordingly, it impacts the quality and reliability of financial data 

available to manage EPA’s resources. 

Comparison of EPA’s FMFIA Report with Our Evaluation of Internal Controls 

OMB Bulletin No. 06-03 requires us to compare material weaknesses disclosed during the audit 

with those material weaknesses reported in the Agency’s FMFIA report that relate to the 

financial statements and identify material weaknesses disclosed by audit that were not reported 

in the Agency’s FMFIA report. 

For reporting under FMFIA, material weaknesses are defined differently than they are for 

financial statement audit purposes. OMB Circular A-123, Management Accountability and 

Control, defines a material weakness as a deficiency that the Agency head determines to be 

significant enough to be reported outside the Agency. 

Our audit did not disclose any material weaknesses, nor were any reported by the Agency as part 

of the Integrity Act process. 

3 
Tests of Compliance with Laws and Regulations 

In accordance with PRIA, the Administrator is required to publish a schedule of decision review 

periods for pesticide registration actions and corresponding registration fees in the Federal 

Register. Decision time review periods are specified time limits for the Agency to grant or deny 

pesticide registrations. The Act also requires the OIG to perform an analysis of the Agency’s 

compliance with decision time review periods. The Agency was in substantial compliance with 

the statutory decision time frames. 

As part of obtaining reasonable assurance about whether the Agency’s financial statements are 

free of material misstatement, we tested compliance with those laws and regulations that could 

either materially affect the PRIA financial statements, or that we considered significant to the 

audit. The objective of our audit, including our tests of compliance with applicable laws and 

regulations, was not to provide an opinion on overall compliance with such provisions. 

Accordingly, we do not express such an opinion. We did not identify any noncompliances that 

would result in a material misstatement to the audited financial statements. However, our tests 

of laws and regulations disclosed the following noncompliance issue that we considered to be 

significant to the audit. 

EPA Did Not Comply with U.S. Code for Recording Obligations 

During fiscal year 2006, EPA did not record $100,000 in obligations for services performed 

during the year. Title 31, U.S. Code, Section 1501 requires that the obligation be recorded when 

there is documentary evidence of a binding agreement or order between an agency and another 

party. OPP committed the funds for these transactions. However, the funds were not obligated 

timely due to a delay by Region 7 and GAD in providing documentation to CFC. Because the 

funds were not recorded as obligations until fiscal year 2007, obligations were understated in the 

fiscal year 2006 PRIA financial statements. Failure to promptly record obligations could result 

in a violation of the Anti-Deficiency Act. 

Overview Section of the Financial Statements 

Our audit work related to the information presented in Management’s Overview and Analysis of 

the Pesticide Program included comparing the overview information with information in EPA’s 

principal financial statements for consistency. We did not identify material inconsistencies 

between the information presented in the two documents. 

Our audit work also included obtaining an understanding of the design of significant internal 

controls relating to the existence and completeness assertions of the performance measures in the 

Overview. Our procedures were not designed to provide assurance on internal control over 

reported performance measures and, accordingly, we do not express an opinion on such controls. 

4 
Prior Audit Coverage 

During previous financial or financial-related audits, we reported the following reportable 

conditions: 

 We identified a weakness in the Agency’s documentation of adjustments to IFMS entries. 

 We could not assess the adequacy of IFMS automated controls. 

 We identified a weakness in the Agency’s preparation and quality control of the financial 

statements and footnotes. 

The Agency began corrective action to improve documentation of adjusting and correcting 

entries in IFMS. EPA’s Washington Finance Center (WFC) updated its procedures to include 

maintaining adequate source documentation when adjusting and correcting entries are made to 

transactions already entered in IFMS. WFC staff will include an adjustment control sheet to 

document the reason for the adjustments and corrections. In addition, a separate staff person will 

be assigned to review and approve the transactions (Fiscal 2005 and 2004 (restated) Financial 

Statements for the Pesticide Registration Fund, Audit Report 2007-1-00002). 

EPA has made progress toward replacing IFMS. However, until EPA implements the planned 

replacement automated accounting system that addresses past issues, we will continue to disclose 

a reportable condition concerning documentation of the current accounting system and its 

automated application processing controls (Audit of EPA’s Fiscal 2006 and 2005 Consolidated 

Financial Statements, Audit Report 2007-1-00019). In addition, EPA recognizes the importance 

of properly reviewing the financial statements, including the footnotes, supplemental 

information, and overview, prior to release or submittal for audit. EPA strengthened its quality 

control and review procedures for the financial statement documents. 

Agency Comments and OIG Evaluation 

In a memorandum dated April 19, 2007, the Assistant Administrator for Administration and 

Resources Management responded to our draft report. The rationale for our conclusions and a 

summary of the Agency comments are included in the appropriate sections of this report, and the 

Agency’s complete response is included in Appendix B to this report. 

This report is intended solely for the information and use of the management of EPA, OMB, and 

Congress, and is not intended to be and should not be used by anyone other than these specified 

parties. 

Paul C. Curtis 

Director, Financial Statement Audits 

Office of Inspector General 

U.S. Environmental Protection Agency 

May 16, 2007 

5 
 Attachment 1 

Reportable Condition 

Table of Contents 

1 - Worker Protection Funds Not Obligated Timely ................................................ 7

6 
1 - Worker Protection Funds Not Obligated Timely 

During fiscal year 2006, EPA did not timely obligate $100,000 in PRIA funds for worker 

protection activities. In two instances, EPA received goods ordered prior to obligating and 

expending the funds. The GAO Standards for Internal Controls in the Federal Government 

require accurate and timely recording of transactions and events. OPP committed the funds for 

these transactions. However, the funds were not recorded as obligations timely due to a delay by 

Region 7 and GAD in providing documentation to CFC. When obligations are not recorded 

timely, it increases the risk for inaccurate or incomplete information in IFMS. Accordingly, it 

impacts the quality and reliability of financial data available to manage EPA’s resources. 

The GAO Standards for Internal Controls in the Federal Government state that “transactions 

should be promptly recorded to maintain their relevance and value to management in controlling 

operations and making decisions. This applies to the entire process or life cycle of a transaction 

or event from the initiation and authorization through its final classification in summary 

records.” 

EPA Comptroller Policy Announcement No. 86-09, Requirements for Timely Posting of Agency 

Obligations, establishes policies and procedures that the Agency must comply with to ensure 

prompt recording of obligations. It states that “each program and administrative office is 

responsible for establishing supplementary procedures to ensure prompt processing of documents 

under its control from initiation to the point of obligation.” Individuals with obligational 

authority are responsible for ensuring that the valid obligating document or, alternatively, written 

evidence is received by the servicing finance office. In addition, the policy requires that data be 

recorded in IFMS as promptly as possible after authorized officials take action in order to report 

accurately and timely on funds status and other financial results of Agency activities. 

Funds to support worker protection activities for three transactions, totaling $100,000, were not 

obligated timely. EPA issued two print requests for the reproduction of worker safety training 

materials, totaling $50,000, to the U.S. Government Printing Office. The products from the print 

requests were received in fiscal year 2006. However, we learned that the funds for these two 

transactions were not obligated until February 8, 2007. The obligation occurred 10 months after 

the funds were committed and at least 3 months after the products were received. In addition, 

EPA increased funding for an Interagency Agreement (IAG No. DW-75-92221801-1) with the 

Department of Health and Human Services, National Cancer Institute, totaling $50,000. Under 

this IAG, the National Cancer Institute is to provide a pesticide health effects data analysis to 

EPA. The IAG was signed in fiscal year 2006, but funds were not obligated until February 13, 

2007. As of the end of our field work, these transactions had not been paid. 

The funds were not recorded as obligations timely due to a delay by Region 7 and GAD in 

providing documentation to CFC. Failure to promptly record the obligations increases the risk 

for inaccurate or incomplete information in IFMS. Accordingly, it impacts the quality and 

reliability of financial data available to manage EPA’s resources. 

7 
Recommendations 

We recommend that the Assistant Regional Administrator, Region 7 Office of Policy and 

Management: 

1-1 Have the Chief, Facilities, Security and Safety Branch, ensure that print orders 

placed with the Government Printing Office are promptly forwarded to CFC to 

ensure that the obligations are recorded timely in IFMS. 

We recommend that the Assistant Administrator for Administration and Resources Management: 

1-2 Have the Director, GAD, ensure that IAGs signed by all responsible parties are 

promptly forwarded to CFC to ensure that the obligations are recorded timely in 

IFMS. 

Agency Response and OIG Evaluation 

The Office of Administration and Resources Management (OARM) identified Region 7 as the 

appropriate organization to respond to Recommendation 1-1 because both printing requisitions 

originated in Region 7. Region 7 recognized its responsibility in an informal response and 

agreed with our finding and recommendation. OARM agreed with Recommendation 1-2, and 

indicated it will review its internal procedures and make any necessary changes to ensure that 

funds are obligated timely. 

We acknowledge OARM’s and Region 7’s responses and appreciate their cooperation. We also 

note that the ultimate responsibility to monitor and ensure funds are obligated timely rest with 

OPP as the organization responsible for oversight of PRIA funds. 

8 
 Attachment 2 

Compliance with Laws and Regulations 

Table of Contents 

2 - EPA Did Not Comply with U.S. Code for Recording Obligations ................. 10

9 
2 - EPA Did Not Comply with U.S. Code 

for Recording Obligations 

During fiscal year 2006, EPA did not record $100,000 in obligations for services performed 

during the year. Title 31, U.S. Code, Section 1501 requires that the obligation be recorded when 

there is documentary evidence of a binding agreement or order between an agency and another 

party. OPP committed the funds for these transactions. However, the funds were not recorded 

as obligations timely due to a delay by Region 7 and GAD in providing documentation to CFC. 

Because the funds were not recorded as obligations until fiscal year 2007, obligations were 

understated in the fiscal year 2006 PRIA financial statements. Failure to promptly record 

obligations could result in a violation of the Anti-Deficiency Act. 

Title 31, U.S. Code, Section 1501(a) states: 

an amount shall be recorded as an obligation of the United States Government 

only when supported by documentary evidence of -

(1) a binding agreement between an agency and another person (including 

an agency) that is (A) in writing, in a way and form, and for a purpose 

authorized by law; and (B) executed before the end of period of 

availability for obligation of the appropriation or fund used for ... 

work or service to be provided; or ... 

(3) an order required by law to be placed with an agency... 

The GAO Principles of Federal Appropriations Law describe an example of “orders required by 

law” as printing and binding to be done by the Government Printing Office (Title 44, U.S. Code, 

Section 501). The rule is that a requisition for printing services may be recorded as an obligation 

when placed if (1) there is a present need for the printing, and (2) the requisition is accompanied 

by copy or specifications sufficient for the Government Printing Office to proceed with the job. 

Pursuant to Title 31, U.S. Code, Section 1501, a voluntary interagency order for goods is 

recordable as an obligation when the order is placed. 

Further, the EPA Resources Management Directives System 2520, Administrative Control of 

Appropriated Funds, Chapter 2, requires that accurate and complete documentation be forwarded 

immediately to the appropriate Financial Management Officer to record the obligation in IFMS. 

EPA did not timely obligate funds to support worker protection activities for three transactions 

with documentary evidence, totaling $100,000. The transactions consisted of two print requests 

totaling $50,000 and an IAG totaling $50,000. During fiscal year 2006, EPA issued the two print 

requests to the Government Printing Office and received the goods in fiscal year 2006. In 

addition, EPA increased funding for an IAG with the Department of Health and Human Services, 

totaling $50,000, which was signed by all responsible parties in fiscal year 2006. However, the 

funds for these transactions were not recorded as obligations in IFMS until February 2007. OPP 

committed the funds for these transactions. The breakdown in recording these obligations 

occurred in Region 7’s and GAD’s delay in providing documentation to CFC. After our inquiry, 

the transactions were obligated. 

10 
Because the funds were not recorded as obligations until fiscal year 2007, obligations were 

understated in the fiscal year 2006 PRIA financial statements. Failure to promptly record 

obligations could result in a violation of the Anti-Deficiency Act. 

We are not making further recommendations as implementation of the two preceding 

recommendations would address our findings above and ensure adherence to Title 31, U.S. 

Code, Section 1501, by providing closer monitoring and oversight of recording obligations. 

11 
 Attachment 3 

Status of Recommendations and 

Potential Monetary Benefits 

POTENTIAL MONETARY 

RECOMMENDATIONS BENEFITS (in $000s) 

Rec. 

No. 

Page 

No. Subject Status1 Action Official 

Planned 

Completion 

Date 

Claimed 

Amount 

Agreed To 

Amount 

1-1 

1-2 

8 

8 

Have the Chief, Facilities, Security and Safety 

Branch, ensure that print orders placed with the 

Government Printing Office are promptly forwarded 

to CFC to ensure that the obligations are recorded 

timely in IFMS. 

Have the Director, GAD, ensure that IAGs signed 

by all responsible parties are promptly forwarded to 

CFC to ensure that the obligations are recorded 

timely in IFMS. 

O 

O 

Assistant Regional 

Administrator, Region 7 

Office of Policy 

and Management 

Assistant Administrator for 

Administration and 

Resources Management 

1 O = recommendation is open with agreed-to corrective actions pending 

C = recommendation is closed with all agreed-to actions completed 

U = recommendation is undecided with resolution efforts in progress 

12 
 Appendix A 

FYs 2006 and 2005 PESTICIDE REGISTRATION FUND 

(PRIA) 

FINANCIAL 

STATEMENTS 

Produced by the U.S. Environmental Protection Agency 

Office of the Chief Financial Officer 

Office of Financial Management
TABLE OF CONTENTS 

Management’s Discussion and Analysis ................................................................ 1

Principal Financial Statements .............................................................................. 6 

i EPA’s FY 2006 Annual PRIA Financial Statements 
Management’s Discussion and Analysis

1 EPA’s FY 2006 Annual PRIA Financial Statements 
MANAGEMENT’S DISCUSSION AND ANALYSIS

The Agency’s Office of Pesticide Programs (OPP) was established pursuant to the 

Federal Insecticide, Fungicide and Rodenticide Act (FIFRA) to protect public health and the 

environment. The law requires the Agency to balance public health and environmental concerns 

with the expected economic benefits derived from pesticides. The guiding principles of the 

pesticide program are to reduce risks from pesticides in food, the workplace, and other exposure 

pathways and to prevent pollution by encouraging the use of new and safer pesticides. 

 With passage of the Pesticide Registration Improvement Act (PRIA) of 2003, the 

pesticide program now administers the newly established Registration Fund. PRIA authorizes 

the collection of new fees for pesticide registrations. Registration service fees are deposited into 

the Registration Fund and made available for obligation to the extent provided in appropriation 

Acts, and are available without fiscal year limitation. 

Pesticide Registration 

Under the authority of FIFRA and the Federal Food, Drug, and Cosmetic Act (FFDCA) 

as amended by the Food Quality Protection Act (FQPA), no person or State can distribute or sell 

any pesticide that is not registered with the Agency. The pesticide registration program works to 

decrease the risk to the public from pesticide use through the regulatory review of new 

pesticides. In 2004, Congress passed PRIA, with deadlines for completion of certain registration 

actions. As part of the registration program, EPA expedites the registration of reduced-risk 

pesticide uses, which are generally presumed to pose lower risks to consumers, workers, 

groundwater, and/or wildlife. These accelerated pesticide reviews provide an incentive for 

industry to develop, register, and use lower risk pesticides. Additionally, the availability of these 

reduced-risk pesticides provides alternatives to older, potentially more harmful products 

currently on the market. 

Biological agents are potential weapons that could be exploited by terrorists against the 

United States. EPA’s pesticides antimicrobial program is working to help address this threat. 

Antimicrobials play an important role in public health and safety. EPA is conducting 

comprehensive scientific assessments and developing test protocols to determine the safety and 

efficacy of products used against chemical and biological weapons of mass destruction, and 

registering products as necessary. EPA is also developing a timeline for prioritizing and 

implementing the tests. In addition, the Section 18 program provides emergency exemption to 

any part of FIFRA. This authority is typically used by States on an emergency basis. EPA has 

recently used this authority to help with homeland security. Section 18 exemptions have been 

authorized to help with anthrax and soybean rust. 

2 EPA’s FY 2006 Annual PRIA Financial Statements 
PRIA established registration service fees for certain antimicrobials, biopesticides and 

conventional pesticides registration actions. The category of action, the amount of the 

registration service fee, and the corresponding decision review periods by year are prescribed in 

the statute. The goal is to create a more predictable evaluation process for affected pesticide 

decisions, and couple the collection of individual fees with specific decision review periods. The 

legislation also promotes shorter decision review periods for reduced-risk applications. The 

legislation became effective on March 23, 2004, and the collection of registration fees are 

authorized through FY 2008. In order to help ensure a smooth transition (if PRIA is not reauthorized), PRIA reduces the registration service fees by 40 percent in FY 2009 and then by 70 

percent in FY 2010. For any application received after September 30, 2008, but before 

September 30, 2010, the reduced registration service fee applies, while the decision review 

periods do not. 

In order for a pending or a new application covered by PRIA to be deemed complete and 

subject to the decision review periods, a registrant is required to pay the applicable fee or receive 

a waiver from the fees1. For most applications, the decision review period starts 21 days after 

submission of the application - provided it includes the applicable fee and all the necessary 

forms, labeling, data requirements, and documents certifying payment of the fee. The legislation 

provides fee waivers for certain categories of small businesses, minor uses

2

, IR-4 petitions3, and 

for applications from federal and state agencies. If the registrant requests a waiver or reduction 

of the fee, the decision review period will begin when the Agency grants such request or 60 days 

after receipt of the application. If it is determined that a fee is required and thus the waiver is not 

granted, the decision review period starts after the fee is collected. 

Research Program Description 

EPA’s pesticides and toxics research continues to focus on providing scientifically-valid, 

cost-effective, and low-burden methods for evaluating risks associated with pesticide 

manufacture, use, and release into the environment. 

EPA’s FY 2006 research addressed aggregate and cumulative risks that would result from 

both agricultural and residential exposures. Special emphasis was placed on addressing exposure 

and effects science issues regarding children’s health, including the special susceptibilities of 

1

 Out of approximately 1350 completed PRIA actions in FY06, 99.8% were completed on or before its due date. 

2

 Minor use pesticides are those that produce relatively little revenue for their manufacturers, for a variety of 

reasons. They may be registered for a seldom seen pest, or for a crop that is not grown by a large number of 

producers. However, minor crops include some high revenue fruit, vegetable, and ornamental crops. 3

 The IR-4 (Interregional Research Project No.4) program is involved in making sure that pesticides are registered 

for use on minor crops. IR-4 helps by conducting research on minor use pesticides, pesticides that would not 

otherwise be profitable to manufacture. 

3 EPA’s FY 2006 Annual PRIA Financial Statements 
infants and children exposed to pesticides and other toxins. Results from this work support 

human and environmental risk assessments. 

Specifically, in FY 2006, EPA research results directly influenced regulatory actions and 

risk assessment decisions for pesticides to which the young are uniquely sensitive. To decrease 

the potential for exposure in the young, OPP cancelled or reduced household and agricultural 

uses of selected cholinesterase-inhibiting pesticides. Additionally, OPP issued a Data Call-In 

(DCI) for all registered organophosphates (~30) to collect data on comparative sensitivity of the 

young. This DCI provided important information for Agency consideration in evaluating the risk 

to infants and children. 

Enforcement and Compliance Assurance Program Description

 The Pesticide Enforcement and Compliance Assurance Program focuses on pesticide 

product and user compliance, including problems relating to pesticide worker safety protection, 

ineffective antimicrobial products, food safety, adverse effects, risks of pesticides to endangered 

species, ineffective pesticide containers and containment facilities, and e-commerce. The 

enforcement and compliance assurance program provides compliance assistance to the regulated 

community through its National Agriculture Compliance Assistance Center, seminars, guidance 

documents, brochures, and other forms of communication to ensure knowledge of and 

compliance with environmental laws. 

EPA’s grant support to states’ and tribes’ pesticide programs emphasizes enforcement of 

the pesticide worker protection standards. In FY 2006, states continued to conduct compliance 

monitoring inspections on core pesticide requirements. 

EPA will continue its commitment to maintaining a strong compliance and enforcement 

presence. Agency priorities for FY 2007 and FY 2008 include enforcement for products making 

illegal public health claims, including unregistered and ineffective products, such as 

inefficacious hospital disinfectants; enforcement of worker protection standards; compliance 

monitoring and enforcement activities related to newly promulgated pesticide container and 

containment rules, protection of endangered species from pesticides, and special action 

chemicals identified by the Office of Pesticide Programs as well as illegal distribution, sale, and 

advertisement of pesticides and pesticidal services via the Internet. 

Highlights and Accomplishments 

Registration Financial Perspective 

During FY 2006, the Agency's obligations charged against the Pesticide Registration 

Fund for the cost of registration were $10.7 million and 51.5 workyears (all obligated by OPP). 

4 EPA’s FY 2006 Annual PRIA Financial Statements 
Appropriated funds are used in addition to Registration funds. In FY 2006, 

approximately $39.8 million in appropriated funds were obligated for registration activities. The 

unobligated balance in the Fund at the end of FY 2006 was $12.3 million. 

The Fund has two types of receipts: fee collections and interest earned on investments. 

Of the $13.8 million in FY 2006 receipts, 100% were fee collections. 

Registration Program Performance Measures 

The following measures support the program's strategic goals of Healthy Communities and 

Ecosystems as contained in the FY 2006 President’s budget. 

Measure 1: Number of new active ingredients registered. 

Results: In FY 2006, EPA registered 24 new active ingredients, of which 15 are 

biopesticides, 6 are antimicrobials, and 3 are conventional pesticides with domestic uses. 

OPP also established import tolerances for 8 conventional new active ingredients that 

are not registered in the U.S. but found on imported food products. This is in addition to the 24 

total. 

Measure 2: Progress in Registering Reduced-risk Pesticides. 

Results: In FY 2006, EPA registered 15 reduced-risk new active ingredients, all of 

which were biological pesticides. Biological pesticides are certain types of pesticides derived 

from such natural materials as animals, plants, bacteria, and certain minerals. They are usually 

less toxic and are typically considered safer pesticides than the traditional conventional 

chemicals; therefore, the 15 biopesticides new active ingredients are counted as reduced-risk 

pesticides. There were no conventional chemicals with reduced-risk uses registered in FY 2006. 

Measure 3: Number of New Food Uses Registered. 

Results: EPA registered 186 new food uses for previously registered active ingredients. 

Measure 4: Progress in Registering Reduced-risk New Uses. 

Results: Included in the new uses registered are 40 reduced-risk, 4 organophosphate 

alternatives, and no methyl bromide alternative uses. 

5 EPA’s FY 2006 Annual PRIA Financial Statements 
PRINCIPAL 

FINANCIAL STATEMENTS

6 EPA’s FY 2006 Annual PRIA Financial Statements 
TABLE OF CONTENTS 

Financial Statements 

Balance Sheet ................................................................................. 8 

Statement of Net Cost ....................................................................... 9 

Statement of Changes in Net Position ................................................... 10 

Statement of Budgetary Resources ....................................................... 11 

Statement of Financing ..................................................................... 12 

Notes to Financial Statements 

Note 1. Summary of Significant Accounting Policies ............................... 13 

Note 2. Fund Balances with Treasury .................................................. 16 

Note 3. Other Liabilities .................................................................. 16 

Note 4. Property, Plant and Equipment ................................................ 16 

Note 5. Payroll and Benefits Payable ................................................... 17 

Note 6. Income and Expenses from Other Appropriations ........................... 18 

Note 7. Exchange Revenues, Statement of Net Cost .................................. 19 

Note 8. Intragovernmental Costs and Exchange Revenue............................ 19 

7 EPA’s FY 2006 Annual PRIA Financial Statements 
Environmental Protection Agency 

PRIA 

Balance Sheet 

For the Years Ended September 30, 2006 and 2005 

(Dollars in Thousands) 

FY 2006 FY 2005 

ASSETS 

Intragovernmental

 Fund Balance With Treasury (Note 2) $ 16,243 $ 11,877 

Total Intragovernmental $ 16,243 $ 11,877 

Property, Plant & Equipment, Net (Note 4) 131 179

 Total Assets $ 16,374 $ 12,056 

LIABILITIES 

Intragovernmental

 Accounts Payable & Accrued Liabilities 86 119

 Other (Note 3) 45 39 

Total Intragovernmental $ 131 $ 158 

Accounts Payable & Accrued Liabilities 402 275 

Payroll & Benefits Payable (Note 5) 633 560 

Other (Note 3) 15,763 11,517

 Total Liabilities $ 16,929 $ 12,510 

NET POSITION

 Cumulative Results of Operations (555) (454)

 Total Net Position (555) (454)

 Total Liabilities and Net Position $ 16,374 $ 12,056

 The accompanying notes are an integral part of these statements. 

8 EPA’s FY 2006 Annual PRIA Financial Statements 
Environmental Protection Agency 

PRIA 

Statement of Net Cost 

For the Years Ended September 30, 2006 and 2005 

(Dollars in Thousands) 

FY 2006 FY 2005 

COSTS 

Gross Cost (Note 8) $ 9,908 $ 10,739 

Expenses from Other Appropriations (Note 6) 39,595 36,019 

Total Costs $ 49,503 $ 46,758

 Less:

 Earned Revenues, (Notes 7 and 8) 9,530 10,522 

NET COST OF OPERATIONS (Note 8) $ 39,973 $ 36,236 

The accompanying notes are an integral part of these statements. 

9 EPA’s FY 2006 Annual PRIA Financial Statements 
Environmental Protection Agency 

PRIA 

Statement of Changes in Net Position 

For the Years Ended September 30, 2006 and 2005 

(Dollars in Thousands)

FY 2006 FY 2005 

Net Position - Beginning of Period $ (454) $ (453) 

Budgetary Financing Sources:

 Income from Other Appropriations (Note 6) 39,595 36,019

Total Budgetary Financing Sources $ 39,595 $ 36,019

Other Financing Sources:

 Imputed Financing Sources 277 216

 Total Other Financing Sources $ 277 $ 216 

Net Cost of Operations (39,973) (36,236) 

Net Change (101) (1) 

Net Position - End of Period $ (555) $ (454) 

The accompanying notes are an integral part of these statements. 

10 EPA’s FY 2006 Annual PRIA Financial Statements 
Environmental Protection Agency 

PRIA 

Statement of Budgetary Resources 

For the Years Ended September 30, 2006 and 2005 

(Dollars in Thousands) 

FY 2006 FY 2005 

BUDGETARY RESOURCES 

Unobligated Balance, Brought Forward, October 1: $ 9,229 $ 9,621 

Recoveries of Prior Year Unpaid Obligations 29 -

Budgetary Authority:

 Appropriations 13,777 10,780 

Total Budgetary Resources $ 23,035 $ 20,401 

STATUS OF BUDGETARY RESOURCES 

Obligations Incurred: 

Direct $ 10,695 $ 11,172 

Total Obligations Incurred 10,695 11,172

 Unobligated Balances: 

Apportioned 12,340 9,229 

Total Status of Budgetary Resources $ 23,035 $ 20,401 

CHANGE IN OBLIGATED BALANCE 

Obligated Balance, Net: 

Unpaid Obligations, Brought Forward, October 1 $ 2,647 $ 1,746

 Total Unpaid Obligated Balance, Net 2,647 1,746 

Obligations Incurred, Net 10,695 11,172 

Less: Gross Outlays (9,411) (10,271) 

Less Recoveries of Prior Year Unpaid Obligations, Actual (29) -

 Total, Change in Obligated Balance 3,902 2,647 

Obligated Balance, Net, End of Period: 

Unpaid Obligations 3,902 2,647

 Total, Unpaid Obligated Balance, Net, End of Period $ 3,902 $ 2,647 

NET OUTLAYS 

Net Outlays: 

Gross Outlays $ 9,411 $ 10,271 

Less Distributed Offsetting Receipts (Note 1.K) (13,777) -

Total, Net Outlays $ (4,366) $ 10,271 

The accompanying notes are an integral part of these statements. 

11 EPA’s FY 2006 Annual PRIA Financial Statements 
Environmental Protection Agency 

Statement of Financing 

PRIA 

For the Years Ended September 30, 2006 and 2005 

(Dollars in Thousands) 

FY 2006 FY 2005 

RESOURCES USED TO FINANCE ACTIVITIES: 

Budgetary Resources Obligated

 Obligations Incurred 

 Less: Spending Authority from Offsetting Collections and Recoveries 

 Obligations, Net of Offsetting Collections 

 Less: Offseting Receipts (Note 1.K) 

 Net Obligations 

Other Resources 

$ 10,695 

(29) 

$ 10,666 

(13,777) 

(3,111) 

$ 11,172

-

$ 11,172

-

11,172 

Imputed Financing Sources 

 Income from Other Appropriations (Note 6) 

 Net Other Resources Used to Finance Activities 

$ 277 

39,595 

$ 39,872 

$ 216

36,019

$ 36,235

 Total Resources Used To Finance Activities $ 36,761 $ 47,407 

RESOURCES USED TO FINANCE ITEMS 

NOT PART OF NET COST OF OPERATIONS

 Change in Budgetary Resources Obligated 

 Resources that Fund Prior Period Expenses 

 Offsetting Receipts Not Affecting Net Cost (Note 1.K) 

 Total Resources Used to Finance Items Not

$ (1,136) 

-

13,777 

$ (649)

(59)

-

 Part of the Net Cost of Operations $ 12,641 $ (708)

 Total Resources Used to Finance the Net

 Cost of Operations $ 49,402 $ 46,699 

COMPONENTS OF NET COST OF OPERATIONS

 THAT WILL NOT REQUIRE OR GENERATE

 RESOURCES IN THE CURRENT PERIOD

 Components Requiring or Generating Resources in Future Periods:

 Increase in Annual Leave Liability (Note 5) 

 Increase in Public Exchange Revenue Receivable 

 Total Components of Net Cost of Operations that

 Requires or Generates Resources in the Future 

Components Not Requiring/Generating Resources:

 Depreciation and Amortization 

Total components of Net cost of Operations that Will Not 

Require or General Resources 

Total components of Net cost of Operations that Will Not Require

 or Generate Resources in the Current Period 

$ 

$ 

53 

(9,530) 

(9,477) 

48 

48 

(9,429) 

$ 

$ 

-

(10,522)

(10,522) 

59 

59 

(10,463)

 Net Cost of Operations $ 39,973 $ 36,236 

The accompanying notes are an integral part of these statements. 

12 EPA’s FY 2006 Annual PRIA Financial Statements 
Environmental Protection Agency 

PRIA 

Notes to Financial Statements 

(Dollars in Thousands) 

Note 1. Summary of Significant Accounting Policies: 

A. Basis of Presentation 

These financial statements have been prepared to report the financial position and results of 

operations of the Environmental Protection Agency (EPA) for the Pesticide Registration Fund 

(PRIA) as required by the Chief Financial Officers Act of 1990 and the Pesticide Registration 

Improvement Act (PRIA) of 2003. In the prior years, pesticide registration was included in the 

FIFRA financial statements. The reports have been prepared from the books and records of EPA 

in accordance with Financial Reporting Requirements, Office of Management and Budget 

(OMB) Circular A-136 and EPA's accounting policies which are summarized in this note. These 

statements are therefore different from the financial reports also prepared by EPA pursuant to 

OMB directives that are used to monitor and control EPA's use of budgetary resources. 

B. Reporting Entity 

EPA was created in 1970 by executive reorganization from various components of other Federal 

agencies in order to better marshal and coordinate Federal pollution control efforts. The Agency 

is generally organized around the media and substances it regulates -- air, water, land, hazardous 

waste, pesticides and toxic substances. 

The PRIA fund is authorized under the Pesticide Registration Improvement Act of 2003, and 

became effective on March 23, 2004. This Act authorizes EPA to assess and collect pesticide 

registration service fees on applications submitted to register pesticides covered by this Act, as 

well as, assess and collect fees to register new active ingredients not listed in the Registration 

Division 2003 Work Plan of the Office of Pesticide Programs. The PRIA Fund is accounted for 

under Treasury symbol number 68X5374. 

Pesticide may charge some administrative costs directly to the fund and charge the remainder of 

the administrative costs to Agency-wide appropriations. Costs funded by Agency-wide 

appropriations for FYs 2006 and 2005 were $39,595 thousand and $36,019 thousand, 

respectively. This amount was included as Income from Other Appropriations on the Statements 

of Changes in Net Position and Financing and as Expenses from Other Appropriations on the 

Statement of Net Cost for FYs 2006 and 2005. 

13 EPA’s FY 2006 Annual PRIA Financial Statements 
C. Budgets and Budgetary Accounting 

Funding for PRIA is provided by fees collected from industry to offset costs incurred by EPA in 

carrying out these programs. Each year EPA submits an apportionment request to OMB based 

on the anticipated collections of industry fees. 

D. Basis of Accounting 

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 a 

liability is incurred, without regard to receipt or payment of cash. Budgetary accounting 

facilitates compliance with legal constraints and controls over the use of Federal funds. All 

interfund balances and transactions have been eliminated. 

E. Revenues and Other Financing Sources 

For FYs 2006 and 2005, PRIA received funding from fees collected for monitoring of pesticides. 

For FYs 2006 and 2005, revenues were recognized from fee collections to the extent that 

expenses are incurred during the fiscal year. 

F. Funds with the Treasury 

PRIA deposits receipts and processes disbursements through its operating account maintained at 

the U.S. Department of the Treasury. Cash funds in excess of immediate needs, are invested in 

U.S. Government securities. 

G. Property, Plant and Equipment 

Purchases of EPA-held personal equipment are capitalized if the equipment is valued at $25 

thousand or more and has an estimated useful life of at least two years. Depreciation is taken on 

a basic straight-line method over the specific asset’s useful life, ranging from two to 15 years. 

EPA shows property, plant and equipment at net of depreciation on its audited financial 

statements. 

H. Liabilities 

Liabilities represent the amount of monies or other resources that are likely to be paid by EPA as 

the result of a transaction or event that has already occurred. However, no liability can be paid 

by EPA without an appropriation or other collection of revenue for services provided. Liabilities 

for which an appropriation has not been enacted are classified as unfunded liabilities and there is 

no certainty that the appropriations will be enacted. For PRIA, liabilities are liquidated from fee 

receipts and interest earnings, since PRIA receives no appropriation. Liabilities of EPA, arising 

from other than contracts, can be abrogated by the Government acting in its sovereign capacity. 

14 EPA’s FY 2006 Annual PRIA Financial Statements 
I. Annual, Sick and Other Leave 

Annual, sick and other leave is expensed as taken during the fiscal year. Sick leave earned but 

not taken is not accrued as a liability. Annual leave earned but not taken as of the end of the 

fiscal year is accrued as an unfunded liability. Accrued unfunded annual leave is included in the 

Balance Sheet as a component of “Payroll and Benefits Payable.” 

J. Retirement Plan 

There are two primary retirement systems for federal employees. Employees hired prior to 

January 1, 1984, 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, 1983, are automatically covered by FERS and 

Social Security. Employees hired prior to January 1, 1984, elected to either join FERS and Social 

Security or remain in CSRS. A primary feature of FERS is that it offers a savings plan to which 

the Agency automatically contributes one percent of pay and matches any employee 

contributions up to an additional four percent of pay. The Agency also contributes the 

employer’s matching share for Social Security. 

With the issuance of “Accounting for Liabilities of the Federal Government” (SFFAS No.5), 

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 employing agencies to 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, as administrator of the CSRS, the FERS, the Federal Employees Health 

Benefits Program, and the Federal Employees Group Life Insurance Program, provide EPA with 

the ‘cost factors’ to compute EPA’s liability for each program. 

K. Offsetting Receipts 

OMB Circular No. A-136, Financial Reporting Requirements, states that the amount of 

distributed offsetting receipts reported in the Statement of Budgetary Resources (SBR) and the 

Statement of Financing (SOF) should equal the amount recorded as offsetting receipts by the 

Department of the Treasury (Treasury). Pesticide Registration Fees collected under PRIA are 

considered to be offsetting receipts by Treasury. Prior to FY 2006, EPA did not include PRIA 

receipts on the distributed offsetting receipts line on the SBR and SOF. OMB Circular A-136 

does not require that prior periods be restated. PRIA offsetting receipts in FY 2005 were 

$10,781 (in thousands). 

15 EPA’s FY 2006 Annual PRIA Financial Statements 
Note 2. Fund Balances with Treasury: 

FY 2006 FY 2005 

Revolving Funds: Entity Assets $16,243 $ 11,877 

Note 3. Other Liabilities: 

For FYs 2006 and 2005, the Payroll and Benefits Payable, non-Federal, are now presented on a 

separate line of the Balance Sheet and in a separate footnote (see Note 5 below). 

FY 2006 FY 2005 

Other Intragovernmental Liabilities - Covered by Budgetary Resources 

Employer Contributions - Payroll $ 45 $ 39 

Total $ 45 $ 39 

Other Non-Federal Liabilities - Covered by Budgetary Resources 

Advances from Non-Federal Entities $ 15,763 $ 11,517 

Total $ 15,763 $ 11,517 

Note 4. General Plant, Property and Equipment: 

Plant, property and equipment consists of EPA-Held personal property. 

As of September 30, 2006 and 2005, Plant, Property and Equipment consist of the following: 

FY 2006 FY 2005 

Acquisition Accumulated Net Book Acquisition Accumulated Net Book

Value Depreciation Value Value Depreciation Value

EPA-Held Equipment $ 238 $ (107) $ 131 $ 238 $ $ (59) $ 179 

16 EPA’s FY 2006 Annual PRIA Financial Statements 
Note 5. Payroll and Benefits Payable, non-Federal: 

FY 2006 FY 2005 

Covered by Budgetary Resources 

Accrued Payroll Payable to Employees $ 105 $ 95 

Withholdings Payable 94 84 

Thrift Savings Plan Benefits Payable 7 6

 Total $ 206 $ 185 

Not Covered by Budgetary Resources 

Unfunded Annual Leave $ 427 $ 375

 Total $ 427 $ 375 

At various periods throughout FYs 2006 and 2005, employees with their associated payroll costs 

were transferred from the fund to the Environmental Programs and Management (EPM) 

appropriation. (See graph in Note 6 below showing trend of hours charged per month to the 

PRIA Fund for FYs 2006 and 2005.) These employees were transferred in order to keep PRIA’s 

obligations and disbursements within budgetary limits. 

This process has led to variations between the year-end liabilities of FYs 2006 and 2005. The 

liabilities covered by budgetary resources (both intragovernmental and non-Federal) represent 

unpaid payroll and benefits at year-end. At the end of FY 2006, about 136 employees were 

charging all or part of their salary and benefits to PRIA. As of September 30, 2006, these 

liabilities were $45 thousand and $206 thousand for employer contributions and accrued funded 

payroll and benefits as compared to FY 2005’s balances of $39 thousand and $185 thousand, 

respectively. 

In contrast, the unfunded annual leave liability is a longer term liability than the funded 

liabilities. At various periods throughout FYs 2006 and 2005, approximately 52 employees in 

total have been under PRIA’s accountability. Therefore the September 30, 2006 and 2005 

liability balances for unfunded annual leave were accrued to cover these 52 employees for a total 

of $427 thousand and $375 thousand, respectively. 

17 EPA’s FY 2006 Annual PRIA Financial Statements 
Note 6. Income and Expenses from Other Appropriations: 

The Statement of Net Cost reports program costs that include the full costs of the program 

outputs and consist of the direct costs and all other costs that can be directly traced, assigned on a 

cause and effect basis, or reasonably allocated to program outputs. 

During FYs 2006 and 2005, EPA had two appropriations which funded a variety of 

programmatic and non-programmatic activities across the Agency, subject to statutory 

requirements. The EPM appropriation was created to fund personnel compensation and benefits, 

travel, procurement, and contract activities. Transfers of employees from PRIA to EPM at 

various times during FYs 2006 and 2005 (see Note 5 above) resulted in an increase in payroll 

expenses in EPM, and these costs financed by EPM are reflected as an increase in the Expenses 

from Other Appropriations on the Statement of Net Cost. The increased financing from EPM is 

reported on the Statement of Changes in Net Position as Income from Other Appropriations. 

In terms of hours charged to PRIA each month, the transfers of employees and their associated 

costs during FYs 2006 and 2005 are shown below. Note that a decrease in hours charged to 

PRIA normally signifies an increase in EPM’s payroll costs, and vice versa. 

PRIA Payroll Hours Per Month 

0 

2,000 

4,000 

6,000 

8,000 

10,000 

12,000 

14,000 

16,000 

18,000 

20,000 

October 

November

December 

Ja

ar

F

Ma

ay 

Ju

epte

nu

y 

ebuary

rch 

April 

M

ne 

July 

August 

S

mber 

Months 

Number of Hours Charged

FY06 Hours 

FY05 Hours 

All of the expenses from EPM were distributed among EPA’s two Reporting Entities: Superfund 

and All Other (includes PRIA). This distribution is calculated using a combination of specific 

identification of expenses to Reporting Entities, and a weighted average that distributes expenses 

18 EPA’s FY 2006 Annual PRIA Financial Statements 
proportionately to total programmatic expenses. As illustrated below, this estimate does not 

impact the PRIA’s Net Position. 

FY 2006 

Income from Other 

Appropriations 

$39,595 

Expenses from Other 

Appropriations 

$39,595 

Net Effect 

$0 

FY 2005 $36,019 $36,019 $0 

Note 7. Exchange Revenues, Statement of Net Cost 

For FYs 2006 and 2005, the exchange revenues reported on the Statement of Net Cost consists of 

non-Federal amounts. 

Note 8. Intragovernmental Costs and Exchange Revenue 

FY 2006 FY 2005 

COSTS:

 Intragovernmental $ 2,101 $ 2,495

 With the Public 7,807 8,244

 Expenses from Other Approprations 39,595 36,019

 Total Costs $ 49,503 $ 46,758 

REVENUE:

 With the Public 9,530 10,522

 Total Revenue $ 9,530 $ 10,522 

NET COST OF OPERATIONS $ 39,973 $ 36,236 

Intragovernmental costs relate to the source of the goods or services not the classification of the 

related revenue. 

19 EPA’s FY 2006 Annual PRIA Financial Statements 
 Appendix B 

Full Text of Agency Response 

April 19, 2007 

MEMORANDUM 

SUBJECT: Draft Audit Report 

Fiscal Year 2006 and 2005 Financial Statements for the 

Pesticide Registration Fund 

FROM: Luis A. Luna /s/ Sherry A. Kaschak 

 Assistant Administrator 

TO: Paul C. Curtis 

Director, Financial Statement Audits 

Thank you for the opportunity to provide our comments and perspectives on the Draft 

Audit Report. 

The Report identifies a reportable condition, as defined in Office of Management Budget 

Bulletin No. 06-03, for Fiscal Year (FY) 2006. The condition involves the untimely obligation 

of $100,000 in Pesticide Registration Fund dollars for worker protection activities. Specifically, 

the Report notes that the Agency: 1) obligated $50,000 for two print requests to reproduce 

worker safety training materials ten months after the funds were committed and at least three 

months after the products were received; and 2) signed a $50,000 amendment to an Interagency 

Agreement (IAG) with the Department of Health and Human Services, National Cancer Institute 

in FY 2006 but did obligated the funds until February 2007. 

The Report presents a number of recommendations to address these findings. OARM’s response 

to these recommendations is presented below. 

Recommendation #1-1: Have the Director, Facilities Management and Security Division, 

ensure that print orders placed with the Government Printing Office are promptly forwarded to 

the Cincinnati Finance Center (CFC) to ensure that the obligations are recorded timely in the 

Integrated Financial Management System (IFMS). 

OARM Response: OARM is not the appropriate organization to respond to this 

recommendation because both printing requisitions originated in Region 7 and did not at any 

time involve the Facilities Management and Services Division or any other part of OARM. The 

Agency’s printing manual specifies that regional offices are responsible for their own printing 

activities. We have forwarded your draft report to Region 7 and we understand they are already 

in touch with you and are developing a response which will be sent directly by them. 
Recommendation #1-2: Have the Director, Grants and Interagency Agreement Management 

Division (GIAMD), ensure that IAGs signed by all responsible parties are promptly forwarded to 

CFC to ensure that obligations are recorded timely in IFMS. 

OARM Response: OARM agrees with this recommendation. After an IAG is awarded, 

GIAMD’s standard practice is to send the other Federal agency the IAG for acceptance. The 

agency has three weeks to accept the agreement and return a fully executed copy to EPA. After 

the accepted copy is received, the GIAMD sends a copy to CFC for the funds to be obligated. 

CFC obligates the funds within five working days. 

To ensure that this process results in the timely obligation of funds, GIAMD periodically 

conducts follow-up with the other agency and CFC. Typically, follow-up is done on a quarterly 

basis, except for the large number of end-of-fiscal year IAGs, where follow-up is done on a 

weekly basis. During the rush to process the National Cancer Center IAG toward the end of FY 

2006, GIAMD inadvertently failed to conduct the necessary follow-up. While we believe this 

was an isolated occurrence, we will examine our follow-up procedures and make any necessary 

adjustments. 

Recommendation #2-1: Implementation of the two preceding recommendations would address 

our findings above and ensure adherence to Title 31, U.S. Code, Section 1501 by providing 

closer monitoring and oversight of recording obligations. 

OARM Response: As explained above, OARM agrees with the two preceding 

recommendations and will review its internal procedures and make any necessary changes to 

ensure that the funds are timely obligated. 

Thank you for the opportunity to comment on the Report. If you have any questions 

about the comments, please contact Sherry Kaschak, Director, Office of Policy and Resources 

Management at (202) 564-4600. 

cc: Lyons Gray 

 James Gulliford 

 Susan Hazen 

 Richard Lemley 

 Howard Corcoran 

 David Bushta 

 Richard Kuhlman 

 Milton Brown 

 Jim Wood 
Appendix C 

Distribution 

Office of the Administrator 

Agency Followup Official (the CFO) 

Deputy Chief Financial Officer 

Agency Followup Coordinator 

General Counsel 

Assistant Administrator, Office of Prevention, Pesticides, and Toxic Substances 

Assistant Administrator, Office of Administration and Resources Management 

Assistant Regional Administrator, Region 7 Office of Policy and Management 

Associate Administrator for Congressional and Intergovernmental Relations 

Associate Administrator for Public Affairs 

Director, Office of Pesticide Programs 

Deputy Director, Office of Pesticide Programs 

Director, Biopesticides and Pollution Prevention Division 

Director, Special Review and Reregistration Division 

Director, Registration Division 

Director, Antimicrobials Division 

Director, Information Technology and Resources Management Division 

Director, Field and External Affairs Division 

Director, Office of Grants and Debarment 

Director, Grants Administration Division 

Director, Office of Financial Management 

Director, Office of Financial Services 

Director, Cincinnati Finance Center 

Director, Washington Finance Center 

Director, Reporting and Analysis Staff 

Director, Financial Policy and Planning Staff 

Director, Office of Regional Operations 

Region 7 Comptroller 

Chief, Facilities, Security and Safety Branch, Region 7 

Audit Followup Coordinator, Office of Prevention, Pesticides, and Toxic Substances 

Audit Followup Coordinator, Office of Administration and Resources Management 

Audit Followup Coordinator, Office of Grants and Debarment 

Audit Followup Coordinator, Office of the Chief Financial Officer 

Audit Followup Coordinator, Region 7 

Audit Liaison, Washington Finance Center 

Acting Inspector General