FY2010 Performance and Accountability Report 

U.S. OFFICE OF SPECIAL COUNSEL

1730 M Street, N.W., Suite 300 

Washington, D.C. 20036-4505 

(www.osc.gov) 
U.S. Office of Special Counsel 

FY 2010 Performance and Accountability Report 

2

TABLE OF CONTENTS 

 

Page

 

Message from the Associate Special Counsel 3 

Part 1: Management Discussion and Analysis 4 

I. Agency at a Glance 4 

II. Statutory Background 4 

III. The Mission of the U.S. Office of Special Counsel 6 

IV. Organizational Structure of OSC 7 

V. Performance Highlights 10 

VI. OSC’s Systems, Controls, and Legal Compliance 17 

VII. Management Assurances 19 

VIII. Future Effects of Known Demands, Risks, Uncertainties, 

 Events, Conditions and Trends 20 

IX. Comments on Final FY 2010 Financial Statements 22 

X. Endnotes 23 

Part 2: Performance Section 24

Goals: Prohibited Personnel Practices ..................................................................................................... 25 

Goals: Hatch Act ...................................................................................................................................... 28 

Goals: USERRA ...................................................................................................................................... 31 

Goals: Whistleblower Disclosures ........................................................................................................... 34 

Part 3: Financial Section 36

CFO Letter .............................................................................................................................................. 37 

Independent Auditor’s Report ................................................................................................................. 38 

FY 2010 Financial Statements.................................................................................... 41 

Notes to Principal Financial Statements......................................................................... . 45 
U.S. Office of Special Counsel 

FY 2010 Performance and Accountability Report 

3

 

A Message from the Associate Special Counsel 

It is my pleasure to present the Office of Special Counsel’s Performance and Accountability 

Report for Fiscal Year 2010. This agency has a proud history of serving the federal workforce and 

the public through its tenacious defense of the merit system principles that continue to safeguard 

the integrity of the executive branch agencies of the United States. Fiscal Year 2010 marks the 

seventh year the U.S. Office of Special Counsel was required to have a financial audit. I am 

pleased to report once again the agency’s strong results, which include no reportable conditions 

and no material weaknesses. I am reasonably assured that the financial and performance data 

presented in this report are complete, reliable and accurate. 

To all of those who rely on our counsel, our service, and our protection, be assured that we will 

continue striving for excellence. Thank you for your continued trust and confidence. 

 Sincerely, 

 

 William E. Reukauf 

 Associate Special Counsel 
U.S. Office of Special Counsel 

FY 2010 Performance and Accountability Report 

4

Part 1: Management Discussion and Analysis 

I. Agency at a Glance 

The U.S. Office of Special Counsel (OSC) is an independent federal investigative and 

prosecutorial agency. Its primary mission is to safeguard the merit system in federal employment, 

by protecting employees and applicants from prohibited personnel practices (PPPs), especially 

reprisal for whistleblowing. In addition, the agency operates a secure channel for federal 

whistleblower disclosures of violations of law, rule or regulation; gross mismanagement; gross 

waste of funds; abuse of authority; and substantial and specific danger to public health and safety. 

OSC also has jurisdiction under the Hatch Act to enforce restrictions on political activity by 

government employees. Finally, OSC enforces federal employment rights secured by the 

Uniformed Services Employment and Reemployment Rights Act (USERRA). 

II. Statutory Background 

Statutory Background

OSC was established on January 1, 1979. From then until 1989, the office operated as the 

independent investigative and prosecutorial arm of the Merit Systems Protection Board (MSPB, or 

“the Board”). By law, OSC: a). received and investigated complaints from current and former 

federal employees, and applicants for federal employment, alleging prohibited personnel practices 

by federal agencies; b). enforced the Hatch Act, including by giving advice on restrictions 

imposed by the act on political activity by covered federal, state, and local government employees; 

and c). received disclosures from federal whistleblowers (current and former employees, and 

applicants for federal employment) about wrongdoing in government agencies. The office 

enforced restrictions against prohibited personnel practices and political activity by filing, where 

appropriate, petitions for corrective and/or disciplinary action with the Board. 

In 1989, Congress enacted the Whistleblower Protection Act (WPA). The statute made OSC an 

independent agency within the executive branch of the federal government, with continued 

responsibility for the functions described above. It also strengthened protections against reprisal 

for employees who disclose wrongdoing in the government, and enhanced OSC’s ability to 

enforce those protections. 

Congress enacted legislation in 1993 that significantly amended Hatch Act provisions applicable 

to federal and District of Columbia (D.C.) government employees, and enforced by OSC.1

(Provisions of the act enforced by OSC with respect to certain state and local government 

employees were unaffected by the 1993 amendments.) 

In 1994, the Uniformed Services Employment and Reemployment Rights Act (USERRA) became 

law. It defined employment-related rights of persons in connection with military service, 
U.S. Office of Special Counsel 

FY 2010 Performance and Accountability Report 

5

prohibited discrimination against them because of that service, and gave OSC new authority to 

pursue remedies for violations by federal agencies.2

Also in 1994, OSC’s reauthorization act expanded protections for federal employees, and defined 

new responsibilities for OSC and other federal agencies. It provided, for example, that within 240 

days after receiving a prohibited personnel practice complaint, OSC should determine whether 

there are reasonable grounds to believe that such a violation occurred, exists, or is to be taken. The 

act extended the protections of certain legal provisions enforced by OSC to approximately 60,000 

employees of what is now the Department of Veterans Affairs (DVA), and to employees of certain 

government corporations. It also broadened the scope of personnel actions covered under those 

provisions. Finally, the act made federal agencies responsible for informing their employees of 

available rights and remedies under the WPA, and directed agencies to consult with OSC in that 

process.3

In November of 2001, Congress enacted the Aviation and Transportation Security Act,4creating 

the Transportation Security Administration (TSA). Under the act, non-security screener employees 

of TSA can file allegations of reprisal for whistleblowing with OSC and the MSPB. 

Approximately 45,000 security screeners in TSA, however, could not pursue such complaints at 

OSC or the Board. OSC efforts led to the signing of a memorandum of understanding (MOU) with 

TSA in May 2002, under which OSC would review whistleblower retaliation complaints from 

security screeners, and recommend corrective or disciplinary action to TSA, when warranted. 
U.S. Office of Special Counsel 

FY 2010 Performance and Accountability Report 

6

III. The Mission of the U.S. Office of Special Counsel 

The U.S. Office of Special Counsel’s primary mission is to safeguard the merit system in federal 

employment by protecting employees and applicants from prohibited personnel practices (PPPs), 

especially reprisal for whistleblowing. In addition, the agency operates a secure channel for 

federal whistleblower disclosures of violations of law, rule or regulation; gross mismanagement; 

gross waste of funds; abuse of authority; and substantial and specific danger to public health and 

safety. OSC also has jurisdiction under the Hatch Act to enforce restrictions on political activity 

by government employees. Finally, OSC enforces the civilian employment and reemployment 

rights of military service members under the USERRA. 
U.S. Office of Special Counsel 

FY 2010 Performance and Accountability Report 

7

IV. Organizational Structure of OSC 

OSC maintains its headquarters office in Washington, D.C. Four field offices are located 

in Dallas, Oakland, Detroit, and Washington, D.C. 

Agency components during FY2010 include the Immediate Office of the Special Counsel 

(IOSC), five operating units/divisions and several supporting offices explained in detail below. 

Immediate Office of the Special Counsel (IOSC). The Special Counsel and the IOSC staff are 

responsible for policy-making and overall management of OSC. This encompasses management 

of the agency’s congressional liaison and public affairs activities, and coordination of its outreach 

program. The latter includes promotion of compliance by other federal agencies with the 

employee information requirement at 5 U.S.C. § 2302(c). The IOSC is currently vacant while we 

await appointment of a Special Counsel. In the interim the responsibilities are performed by the 

agency’s career employees. 

Program Units 

Complaints Examining Unit (CEU). This unit is the intake point for all complaints alleging 

prohibited personnel practices and other violations of civil service law, rule, or regulation within 

OSC’s jurisdiction. CEU screens approximately 2,400 such complaints each year. Attorneys and 

personnel management specialists conduct an initial review of complaints to determine if they are 

within OSC’s jurisdiction, and if so, whether further investigation is warranted. The unit refers all 

matters stating a potentially valid claim to the Investigation and Prosecution Division for further 

investigation or possible mediation.

Investigation and Prosecution Division (IPD). IPD is comprised of the four field offices, and is 

generally responsible for conducting field investigations of matters referred after preliminary 

inquiry by CEU. In selected cases referred by CEU for further investigation, IPD coordinates 

mediation of complaints in which the complainant and the agency involved have agreed to 

participate in OSC’s voluntary Alternative Dispute Resolution (ADR) Program. In other cases, 

after field investigation of matters referred by CEU, legal analyses are done by IPD attorneys to 

determine whether the evidence is sufficient to establish that a prohibited personnel practice (or 

other violation within OSC’s jurisdiction) has occurred. IPD investigators work with the attorneys 

in deciding whether a matter warrants corrective action, disciplinary action, or both. If 

meritorious cases cannot be resolved through negotiation with the agency involved, the attorneys 

represent the Special Counsel in litigation before the MSPB. They also represent the Special 

Counsel when OSC intervenes, or otherwise participates, in other proceedings before the Board. 

Finally, IPD investigators and attorneys assist the Hatch Act Unit and the USERRA Unit, as 

needed, with cases handled by those components. 

Disclosure Unit (DU). This component receives and reviews disclosures from federal 

whistleblowers. DU recommends the appropriate disposition of disclosures, which may include 

referral to the head of the agency involved for investigation and a report to the Special Counsel; 
U.S. Office of Special Counsel 

FY 2010 Performance and Accountability Report 

8

informal referral to the Inspector General (IG) of the agency involved; or closure without further 

action. Unit attorneys review each agency report of investigation to determine its sufficiency and 

reasonableness before the Special Counsel sends the report to the President and responsible 

congressional oversight committees, along with any comments by the whistleblower and the 

Special Counsel. 

Hatch Act Unit (HAU). This unit enforces and investigates complaints of Hatch Act violations, 

and represents OSC in litigation before the MSPB seeking disciplinary action. In addition, the 

HAU is responsible for providing legal advice on the Hatch Act to federal, D.C., state and local 

employees, as well as the public at large. 

USERRA Unit. This component reviews USERRA cases referred by the Department of Labor 

(DOL) to OSC for legal representation of the claimant before the MSPB, if warranted. 

Support Units 

Legal Counsel and Policy Division. This division serves as OSC’s office of general counsel, and 

provides policy advice and support to the agency. The division’s responsibilities include 

provision of legal advice and support in connection with management and administrative matters; 

defense of OSC interests in litigation filed against the agency; management of the agency’s 

Freedom of Information Act, Privacy Act, and ethics programs; and policy planning and 

development. 

Administrative Services. This office manages OSC’s budget and financial operations, and 

accomplishes the technical, analytical and administrative needs of the agency. Component units 

are the Budget, Finance and Procurement Branch, Human Resources and Document Control 

Branch, and the Information Technology Branch. 
U.S. Office of Special Counsel 

FY 2010 Performance and Accountability Report 

9

Map showing locations of OSC Field Offices 
U.S. Office of Special Counsel 

FY 2010 Performance and Accountability Report 

10

V. Performance Highlights 

 

 In FY 2010 OSC overall caseloads continued to rise, increasing to 3,950 new matters, a 

6% increase over the already record levels of cases that FY 2009 had brought. Significant growth 

areas were Whistleblower Disclosures, which increased 33% in the year, and the Hatch Act 

program, where cases increased by 6%, (along with a 65% jump in the number of Hatch Act 

Formal Advisory requests received). Through much hard work and dedication caseload backlogs 

have not increased significantly and remain at manageable levels. 

 Of paramount importance are the positive outcomes OSC has achieved in its Programs. 

Favorable actions negotiated with agencies for PPP’s increased 55%; Disciplinary Actions 

negotiated with agencies for PPP’s more than doubled; stays negotiated with agencies increased 

67%; and both Hatch Act corrective actions and disciplinary actions obtained doubled in FY 

2010. OSC met 73% of its performance Goals in FY 2010, as described in the Performance 

Section. Overall, in the face of this growing caseload, the agency fulfilled its role as an 

independent prosecutorial and investigative agency charged with bringing greater integrity and 

efficiency to the merit system. 

OSC’S SUCCESSES IN FY 2010

1) Enforcing veterans’ job rights under USERRA. OSC achieved an important precedent 

when the MSPB accepted its argument that a federal agency can be held liable for violating the 

USERRA rights of a federal contractor (not just an employee) in Silva v. DHS. OSC also filed 

another case of first impression before the MSPB involving initial hiring discrimination under 

USERRA that should help define agencies’ obligations to service members who are selected 

for employment but unable to report on the agency’s preferred start date, due to military duty. 

2) Federal Aviation Administration (FAA) Oversight and Aviation Safety. OSC continues its 

work on a number of whistleblower disclosures involving allegations of dangers to aviation 

safety. Investigations conducted as a result of OSC referrals substantiated allegations that in 

some instances, that air traffic was managed in an unsafe manner, that FAA oversight was 

inadequate and that FAA officials misused the Voluntary Disclosure Reporting Program 

(VDRP). The Department of Transportation (DOT) found that Detroit Metropolitan Airport 

operated an approach and departure configuration, known as the "Southwest Flow," which was 

unsafe and violated FAA Order 7110.65, and that an Operations Manager knowingly allowed 

the non-compliant operation for two months. DOT also concluded that airport managers 

provided Senator Carl Levin a disingenuous response to his inquiry into the matter. The 

airport ceased operation of the Southwest Flow, counseled airport managers, and FAA sent a 

letter to Senator Levin in April 2008 clarifying its response. In another case, DOT 

substantiated whistleblower allegations that two supervisory inspectors failed in their oversight 

responsibilities by violating FAA’s VDRP and improperly permitting United Airlines to selfdisclose noncompliance with an Airworthiness Directive (AD) after the noncompliance had 
U.S. Office of Special Counsel 

FY 2010 Performance and Accountability Report 

11

been discovered by the whistleblower. In a third case, DOT substantiated allegations that FAA 

officials knowingly allowed Southwest Airlines to self-disclose a violation of an AD, and to 

operate aircraft in passenger revenue service in an unsafe or un-airworthy situation and in 

violation of Title 14 of the Code of Federal Regulations and the VDRP. FAA proposed 

suspensions for the managers in these cases. 

3) Protecting the Health of Federal Employees. OSC completed a referral involving 

allegations that air traffic controllers at Detroit Metropolitan Airport were suffering severe 

health problems from mold in the control tower. The DOT investigation found that previous 

attempts to resolve the mold and moisture problems in the control tower were unsuccessful. 

Following OSC’s referral, DOT reinstituted the inspection and remediation process and 

planned to conduct an employee health survey of current and former air traffic control tower 

employees. 

4) Improving Safety at Construction Sites and Heavy Machinery. The Department of the 

Navy substantiated an OSC referral that employees at the Naval Surface Warfare Center in 

Bayview, Idaho violated Naval regulations and local facility instructions when they failed to 

report damage to a crane and kept the damaged crane in operation without testing or 

recertification. The Navy inspected the crane and related equipment, completed the required 

accident report, changed the procedures used to deploy equipment, counseled all employees 

involved in the January 2009 accident and required all those involved to attend training on the 

use of cranes. 

5) DoD Confirms Misuse of Agency Funds. OSC completed a disclosure case referred to the 

Secretary of Defense regarding allegations that Department of Defense (DoD) employees were 

improperly using the fees collected for Information Analysis Center (IAC) programs for 

unrelated DoD functions and activities. The whistleblower also disclosed that employees 

failed to report the IAC monies and implemented faulty policies to justify their misuse of the 

funds. The DoD investigation found that employees violated the Economy Act, 31 U.S.C. § 

1535, and inappropriately augmented DoD’s budget. The investigation also partially 

substantiated the allegation that DoD failed to report the IAC monies and determined that the 

then-Administrator of the IAC program engaged in gross mismanagement. As a result, the 

Administrator was removed from his position. DoD also established an IAC Reimbursable 

Review Board, will update its Financial Management Regulations and conduct a study in FY 

2011 to ensure that compliance with its reporting requirements. 

6) Exposing Deficiencies in FAA’s Drug Testing Regulations. OSC completed a disclosure 

case referred to the Secretary of Transportation regarding allegations that the Federal Aviation 

Administration (FAA), Drug Abatement Division`s (Drug Abatement) procedures for 

investigating violations of FAA`s drug testing program regulations were deficient and resulted 

in a substantial and specific danger to public safety. The whistleblower disclosed an incident 

where a mechanic continued to perform safety-sensitive maintenance for a certificate holder 

after he tested positive for cocaine in a pre-employment drug test conducted by another 

certificate holder, and the positive drug test result was reported to, and investigated by, Drug 

Abatement. After an accident involving an aircraft operated by the certificate holder 
U.S. Office of Special Counsel 

FY 2010 Performance and Accountability Report 

12

employing this mechanic, FAA discovered the mechanic was working in violation of the 

regulations and had performed maintenance on the aircraft that crashed. 

7) Protecting Employees from Retaliation. OSC continues to obtain corrective actions for 

employees who have suffered retaliation for whistleblowing and for engaging in other 

protected activity. In one such case, the whistleblower, a supervisory financial analyst with 

the U.S. Forest Service, disclosed that the Chief Financial Officer had misused his government 

travel card. The whistleblower alleged that he was not selected for a promotion because of his 

protected whistleblowing. After OSC’s investigation into the matter, the agency agreed to 

settle the case by paying the whistleblower a lump sum of $30,000. In another case, the 

whistleblower, a National Park Service (NPS) employee, disclosed to a Park Superintendent 

that his supervisor had illegally used government fuel for his personal vehicle. The 

whistleblower alleged that he was denied an appointment as Park Ranger because of his 

protected whistleblowing. OSC informed NPS of its findings and successfully negotiated 

corrective action on the whistleblower’s behalf. NPS agreed to pay the whistleblower $50,000 

in back-pay. 

8) Increased Rates of Investigation. Of the new PPP complaints received in FY2010, a record 

level 10% have been referred as cases for Investigation, up from 8%. The review and referral 

of these cases has been completed on average in less than 90 days. Altogether, we have been 

able to achieve a new level of timeliness and thoroughness of review of new complaints. 

9) Prohibited Personnel Practice Prosecutions-Formal Disciplinary Action. A significant 

investigation by OSC resulted in 45-day and 10-day suspensions for two Department of 

Homeland Security Coast Guard Human Resources (HR) specialists. OSC filed two 

disciplinary action complaints before the Merit Systems Protection Board (MSPB). The 

MSPB found that both HR specialists violated one provision of the Civil Service Reform Act; 

the prohibition against granting an unauthorized preference or improper advantage during the 

hiring process for the purpose of giving advantage to a candidate for a GS-11-1801-11 

Supervisory Merchant Marine Specialist position in Long Beach, California. The HR 

specialists had three separate vacancy announcements issued before they were able to qualify 

their preferred GS-8 level candidate. The final vacancy announcement redefined the manner 

or scope of competition by changing the grade of the position to GS-9 with promotion 

potential, and included a requirement that applicants have licensing experience, the preferred 

candidate’s specialty. The MSPB concluded that the two HR specialists intentionally assisted 

the selecting official, a Coast Guard uniformed servicewoman, in granting an illegal preference 

to the preferred candidate, and ordered the suspension without pay of the two HR specialists. 

10) Two Prohibited Personnel Practice Matters that Resulted in both Corrective and 

Disciplinary Actions. One OSC investigation resulted in two supervisors from the U.S. 

Department of Transportation (DOT), Federal Aviation Administration, receiving letters of 

counseling. OSC found that the supervisors improperly suspended a subordinate (the 
U.S. Office of Special Counsel 

FY 2010 Performance and Accountability Report 

13

complainant) for three days, in part, for his threat to report the supervisors to the DOT 

Inspector General for having given a decertified air traffic controller an undeserved 

“satisfactory” performance rating. OSC successfully negotiated the cancellation of the 

complainant’s three-day suspension and pay reimbursement, a one-year detail to the Air 

Traffic Control Academy, and payment of attorney`s fees. Another OSC investigation resulted 

in a former acting medical center director receiving a letter of counseling. OSC found that the 

former director had improperly implemented a rule that employees who had worked at the 

facility for less than one year could not earn an overall summary performance rating higher 

than “Fully Successful.” OSC obtained corrective action for five employees at the facility, 

including upgraded summary performance ratings, increased annual performance awards, and 

a letter of apology from the medical center director. Finally, the region issued a directive to all 

regional medical centers to cease using this rule and it conducted a training session at this 

medical center for supervisors concerning performance management. 

11) Obtaining Relief for an Employee Discriminated Against Based on Political Affiliation. 

Another significant investigation by OSC resulted in corrective action for the complainant, an 

applicant for a position with the U.S. Election Assistance Commission (EAC). OSC’s 

investigation uncovered evidence indicating that two EAC Commissioners illegally blocked 

the approval of the complainant’s appointment to the agency’s general counsel position 

because of the complainant’s political affiliation. In lieu of taking the general counsel 

position, the complainant accepted a substantial lump sum payment. 

12) Clarification of OSC’s responsibilities. The Complaints Examining Unit (CEU) developed 

a Matrix which outlined OSC’s jurisdiction over various Government agencies/entities. This 

Matrix addresses the following: 1) whether Title 5 is applicable to a particular agency, 

employees of a particular agency, or positions within a particular agency; 2) the personnel 

actions over which OSC has jurisdiction to investigate; and 3) the legal citation and/or case 

law that establishes, restricts, or prohibits our investigative jurisdiction. CEU also updated all 

of its standard language paragraphs based on the completed Matrix. 

13)Increased Hatch Act Litigation & Investigation. As a result of the considerable increase in 

both the number and seriousness of Hatch Act violations by federal employees during the 2008 

Presidential election, and the current midterm elections, the Hatch Act Unit continues to 

generate increased investigative and litigation activity at OSC. A number of these violations 

involve federal supervisors coercing subordinates to engage in political activity and federal 

employees soliciting political contributions or advocating the success or failure of candidates 

via e-mail while at work. 

Due to an increased awareness of the Hatch Act at the state and local level, the Hatch Act Unit 

also continues to see a rise in complaints involving state and local employees; an 

overwhelming number of recent complaints involve the abuse of official authority, which will 

require onsite investigations. For example, the Hatch Act Unit recently conducted an onsite 

investigation of a North Carolina Sheriff who invited subordinate employees to a meeting for 
U.S. Office of Special Counsel 

FY 2010 Performance and Accountability Report 

14

his reelection campaign by placing fliers in their mailboxes; the purpose of the meeting was to 

distribute yard signs, collect contributions, and discuss ways to assist his campaign. 

Another example at the federal level includes a lengthy investigation into a Supervisory 

Special Agent of the FBI who asked subordinate employees to volunteer for a family 

member’s political campaign by handing out fliers on weekends, and at polling locations. As 

further restricted employees under the Hatch Act, the subordinates who agreed engaged in 

activity prohibited by the Hatch Act. The Hatch Act Unit also investigated an Assistant United 

States Attorney who solicited and accepted political contributions from subordinate 

employees; this activity occurred during their performance evaluation period. A number of the 

investigations completed by the Hatch Act Unit have resulted in litigation. 

14) Hatch Act Disciplinary Actions brought before the Merit Systems Protection Board. 

During this fiscal year, the Hatch Act Unit has filed ten complaints for disciplinary action with 

the MSPB, with more to be filed soon. For example, one case was filed against a high level 

federal employee who, while on duty and in the federal workplace, prepared speeches, website 

content, and other written material for the Obama campaign. OSC also filed a complaint 

against a VA doctor who, while on duty and in her federal workplace, disseminated political emails to subordinate employees and patients urging them to vote for a particular candidate. 

Subsequent to filing the complaint, the case was settled for a 90-day suspension without pay. 

In addition, OSC filed a complaint against a Contracting Officer Technical Representative with 

the Bureau of Engraving and Printing who solicited political contributions from co-workers 

and contract employees, while on duty and in her federal workplace; the COTR disseminated 

two e-mails, one of which was an invitation to a campaign fundraiser for then-Presidential 

candidate Barack Obama, the other encouraged donations to Obama’s campaign through a 

slide presentation. Although the contract employees were not direct subordinates, the COTR’s 

duties included the monitoring, documenting, and evaluation of contractors’ overall 

performance both during the contract and at the contract’s end. The MSPB ordered the 

employee removed for her violations. 

In another case, OSC filed a complaint against an IRS employee who disseminated a 

fundraising e-mail to approximately 44 recipients, requesting campaign contributions for thenPresidential candidate Barack Obama. The MSPB ordered that the employee receive a 120-

day suspension without pay for his violation. 

OSC also filed a complaint against a 30-year federal employee who composed and 

disseminated e-mails, while on duty and in her federal workplace, urging readers to make 

political contributions and attend a campaign fundraiser at her home. Despite warnings from 

her ethics coordinator to cancel the fundraiser, the employee held the event; one year later she 

again violated the Hatch Act by making a financial contribution to then-Presidential candidate 

Barack Obama’s campaign while on duty and in her federal workplace. In an initial decision, 

the administrative law judge found that the employee should be removed for her violations. 

Another VA employee resigned after a complaint was filed with the Board identifying over 

thirty political e-mails sent while the employee was on duty and in her federal workplace. 

Even though she resigned, the Board retained its jurisdiction, found that removal was the 

appropriate penalty, and ordered that a copy of the finding be placed in the employee’s official 

personnel file. 

OSC also filed a complaint against a VA doctor who sent an e-mail invitation while on duty 

and in his federal workplace to several individuals (including subordinates) for a political 

event for Presidential candidate John McCain. This same VA doctor, after receiving 
U.S. Office of Special Counsel 

FY 2010 Performance and Accountability Report 

15

notification of his violation, and while OSC was conducting an onsite investigation, sent 

another e-mail soliciting contributions for a candidate running for state office. An 

administrative law judge found him in violation and ordered his removal from employment. 

The employee appealed the decision, which is pending before the MSPB. 

In another case, after extensive litigation, an administrative law judge recommended the 

removal of a police chief who, despite receiving OSC guidance that he was covered by the 

Hatch Act, pursued a candidacy for public office in a partisan election. This case is also on 

appeal before the MSPB. 

OSC also filed a complaint against a Postal Service employee for running as a candidate in a 

partisan election. Subsequent to filing the complaint, the case settled and the employee 

received a thirty-day suspension without pay. 

In addition, OSC filed a case against a GSA employee who sent several e-mails advocating 

support for then-Presidential candidate Barack Obama and soliciting contributions for his 

campaign. The parties subsequently agreed to settle the matter, and the employee received a 

sixty-day suspension with pay. 

15) Hatch Act Disciplinary Action Obtained Through Informal Settlement. Several 

significant Hatch Act investigations resulted in disciplinary action through informal settlement. 

For example, the executive director of a state agency was suspended for sixty days without pay 

for inviting her staff to a fundraiser and a federal employee was suspended for thirty days 

without pay for forwarding several political e-mails while on duty and in his federal 

workplace. Another case involving a federal employee who sent a partisan political e-mail 

while at work settled for a 45-day suspension. In addition, a federal regulatory division chief 

with the U.S. Army Corps of Engineers resigned from his employment as a result of settlement 

negotiations. 

16) Other Hatch Act Enforcement Activity. The Hatch Act Unit is responsible for a nation-wide 

program that provides federal, state, and local (including D.C.) government employees, as well 

as the public at large, with legal advice on the Hatch Act, enabling individuals to determine 

whether they are covered by the Act, and whether their contemplated activities are permitted 

under the Act. Specifically, the Hatch Act Unit has the unique responsibility of providing 

Hatch Act information and legal advice to White House and congressional offices; cabinet 

members and other senior management officials throughout the federal government; state and 

local government officials; and the media. As the only unit authorized by law to issue legal 

advice to persons outside the agency, the Hatch Act Unit issues all OSC advisory opinions. 

This year, the Hatch Act Unit has seen a tremendous increase in the volume and complexity of 

these requests, including the analysis of new political movements like the Tea Party and The 

American Revolution of 2010, and the application of the Hatch Act to social media outlets like 

Twitter and Facebook. The Hatch Act Unit also worked closely with the White House to 

provide Hatch Act guidance and provided numerous outreach programs for both federal and 

state/local employees subject to the Act. In total, the Hatch Act Unit has issued 4,320 advisory 

opinions (written, oral, and e-mail) this year. 
U.S. Office of Special Counsel 

FY 2010 Performance and Accountability Report 

16

DOT confirmed that this incident highlighted critical deficiencies in Drug Abatement`s 

procedures for investigating violations of FAA`s drug testing program regulations. According 

to the report, Drug Abatement staff was not familiar with a change in policy permitting FAA 

to report positive drug test results to multiple employers. The report also found that disparities 

between the requirements for pilots and mechanics concerning certificate verification and 

reporting of drug and alcohol violations pose a "potential threat to safety." FAA reiterated its 

new policy concerning the sharing of drug and alcohol violations with employers, and pledged 

to give full consideration to the disparities between pilot and mechanic requirements during 

Drug Abatement`s Rulemaking Project. 
U.S. Office of Special Counsel 

FY 2010 Performance and Accountability Report 

17

 

VI. OSC's Systems, Controls, and Legal Compliance 

Management control activities carried out by OSC include periodic reviews of agency 

administrative and program elements to assure that obligations and costs comply with applicable 

laws; funds, property and other assets are safeguarded; revenues and expenditures are properly 

recorded and accounted for; and programs are efficiently and effectively carried out in accordance 

with law and management policy. During FY 2010, reviews were completed on the following 

agency administrative operations: 

1. Information Security Program. OSC’s Chief Information Officer conducts an annual 

security review. The results of this review were summarized in the agency’s Federal 

Information Security Management Act (FISMA) Report, submitted to OMB in 

November, 2010. The review found no material weaknesses in the agency’s 

information technology policies, procedures, or practices. Further, there were no 

security incidents affecting critical agency information systems. 

2. Financial Audit. OSC is undergoing its seventh financial audit. The agency’s first 

audit was in FY 2004. The auditors reported no material weaknesses in FY 2004, FY 

2005, FY 2006, FY 2007, FY 2008 or FY 2009. The FY 2010 audit addresses the 

financial statements and accounting processes, almost all of which were accomplished 

by the National Business Center (NBC) at the Department of Interior under an 

interagency outsourcing agreement. In the event that any material control weaknesses 

are identified during this year’s audit, they will be discussed in the next FMFIA/IG Act 

report. 

3. OSC Review of Capital Assets. OSC has a capitalization policy for assets with a 

purchase price over $50,000. OSC’s reviews its purchases quarterly, to determine if 

there are additional assets to capitalize. 

4. HSPD-12. To comply with the security requirements of directive HSPD-12, OSC has 

an agreement for HSPD-12 services with the General Services Administration. OSC 

has met all deadlines so far for the accomplishment of HSPD-12 milestones, has issued 

PIV cards to all OSC employees, and is now working on expanding its program to 

include two-factor HSPD-12 authentication for securing each employee’s computer. 

In FY2010 OSC conducted an analysis and “Best Interest Determination” of its contracting 

operations and as a result outsourced this operation to the National Business Center. This 

increases our use of Governmental Shared Services providers. In FY 2009, OSC outsourced 

several financial management and administrative activities to the National Business Center (NBC), 

including budget accounting, financial accounting, reporting accounting, procurement systems 

software, and travel services. OSC personnel and payroll data entry transactions were processed 

by the Department of Agriculture’s National Finance Center (NFC). All these operations are 

administered under cross-servicing agreements. For information on any significant management 

control issues related to services provided under these agreements, OSC relies on information 

received from NBC and NFC, and any audits or reviews issued by the Inspectors General and 
U.S. Office of Special Counsel 

FY 2010 Performance and Accountability Report 

18

Chief Financial Officers of the Departments of Treasury and Agriculture, and the Government 

Accountability Office (GAO). 

In September of 2009, NBC certified its Oracle Federal Financials Major Application, in 

accordance with OMB Circular A-130, Appendix III, approving the system for continued 

operation, and this authorization is valid until September 2012. Also, an annual SAS 70 Type 2 

evaluation was also conducted this year on the Oracle Federal Financials Major Application. 
U.S. Office of Special Counsel 

FY 2010 Performance and Accountability Report 

19

VII. Management Assurances 

Annual Assurance Statement on Internal Controls and Internal Control over Financial 

Reporting

OSC's management is responsible for establishing and maintaining effective internal 

control and financial management systems that meet the objectives of the Federal Managers' 

Financial Integrity Act (FMFIA). OSC conducted its assessment of internal control over the 

effectiveness and efficiency of operations and compliance with applicable laws and regulations in 

accordance with OMB Circular A-123, Management's Responsibility for Internal Control. Based 

on the results of this evaluation, OSC can provide reasonable assurance that its internal control 

over the effectiveness and efficiency of operations and compliance with applicable laws and 

regulations as of September 30, 2010 was operating effectively and no material weaknesses were 

found in the design or operation of the internal controls. 

OSC works with the National Business Center (NBC) for its financial reporting needs. 

OSC obtains the SAS 70 report from NBC, and reviews it to assist in assessing internal control 

over financial reporting. OSC has not discovered any significant issues or deviations in its 

financial reporting during FY 2010 and therefore concludes that the agency’s internal controls 

over financial reporting are sufficiently strong. 

OSC has no in-house financial system. OSC has chosen to use Oracle Federal Financials 

on an instance hosted by NBC, a shared service provider. Because of the rigorous testing that 

NBC undergoes, OSC considers its financial system to be reliable and effective. 

 

William E. Reukauf 

Associate Special Counsel 

November 8, 2010 
U.S. Office of Special Counsel 

FY 2010 Performance and Accountability Report 

20

VIII.Future Effects of Known Demands, Risks, Uncertainties, 

Events, Conditions, and Trends 

In the past several years, the agency has experienced significant year-after-year increases 

in caseload levels. For example, in FY 2008, OSC’s overall caseload increased 8.0%, in FY 

2009 the overall caseload jumped 19.5%, and now in FY2010 the caseloads have increased 6% 

further. The most pronounced increases are in the Whistleblower Disclosure and Hatch Act 

Program areas. Several factors which have contributed to these rising levels of complaint filings 

with OSC include: 

 Press coverage of OSC has continued to increase in recent years. Also, OSC’s outreach 

program has continued to build awareness within the Federal community. During FY 2009, 

OSC received 724 Whistleblower disclosures, which was a 37% increase, and FY 2010 

brought 961 Disclosures, a further 33% increase. (see chart below) 

 Awareness of the Hatch Act along with OSC’s role has continued to build among Federal 

employees, primarily due to media coverage. The number of Hatch Act complaints received in 

FY 2010 was a 6% increase over the prior year which had already brought record levels of 

Hatch Act cases. Hatch Act complaints in the 2010 mid-term elections are expected to 

continue to increase and elevated levels continuing through the Presidential Election Cycle. 

Further, the Advisory opinions OSC issued in FY2010 increased to 4,320, a 16% jump from 

the prior year, with a notable 42% increase in Formal Advisory opinions that were issued. 

 During FY 2010, OSC continued to conduct a certification program 2302(c) for Federal 

Agencies, in addition to conducting its outreach program on the twelve Prohibited Personnel 

Practices. As agencies implement the certification process and partake in the OSC outreach 

session, agency employees who might previously have been unaware of their rights and 

remedies through OSC are becoming informed. 

A significant development this year was the signing of legislation on October 13, 2010, for a 

renewed USERRA Demonstration Project commencing in approximately April 2011. OSC had 

conducted a USERRA Demonstration Project from 2004 through 2007. OSC will have a similar 

role and will receive half of the Federal USERRA cases that would typically have been 

investigated by the Department of Labor, thereby increasing OSC’s USERRA caseload 

considerably. OSC is confident that it has the expertise and infrastructure to successfully conduct 

this pilot program and improve results for members of our military who were being denied rights 

under USERRA. During the prior three year program OSC achieved 120 corrective actions in 

USERRA cases, which represented 27% of all USERRA cases handled by OSC under the 

Demonstration Project. 

Also of note, FY 2010 marks the second year for OSC without an appointed Special Counsel. As 

noted previously, the career management, namely the Associate Special Counsel, fulfills these 

responsibilities in the interim. 
U.S. Office of Special Counsel 

FY 2010 Performance and Accountability Report 

21
U.S. Office of Special Counsel 

FY 2010 Performance and Accountability Report 

22

IX. Comments on Final FY 2010 Financial Statements 

 OSC’s Asset Capitalization Policy has been in place for four years. It pertains to assets 

with an initial purchase price over $50,000. This year computer servers were added to the 

list of capitalized assets, in addition to the agency’s phone system, videoconferencing 

equipment and certain leasehold improvements from prior years. 

 Total Assets decreased from $4,775,000 in FY 2009 to $4,422,000 in FY 2010. Fund 

Balance with Treasury comprises 89% of Total Assets. Fund Balance with Treasury was 

down from 93% in FY 2009 due to the cancellation of large balances of funds from FY 

2005 Appropriations. The other major component of Assets was Property, Plant and 

Equipment, which increased from $326,000 in FY 2009 to $440,000 in FY 2010 due to the 

added computer servers. 

 Net cost of Operations rose from $17,795,000 in FY 2009 to $18,840,000 in FY 2010. The 

primary factor for this is our annual appropriation increasing by $1,027,000 in FY10. 

85% of those costs go towards salaries, benefits, rents and utilities. Other contributing 

factors were a rise in imputed costs, and an increased amortization amount from our 

capitalized assets. Imputed costs increased from $805,000 in FY 2009 to $1,008,000 in FY 

2010 due to the higher cost factors provided by OPM for Pension and other Retirement 

Benefits Accruals. (Pension costs, FERS, FEGLI and FEHB). Imputed Costs are 

expected to continue to rise. Amortized costs went up $34,000 due to the added computer 

servers now being capitalized. 

 Limitations of the Financial Statements: The principal financial statements have been 

prepared to report the financial position and results of operations of OSC, pursuant to the 

requirements of 31 U.S.C. 3515 (b). 

The statements have been prepared from the books and records of the Review Commission 

in accordance with generally accepted accounting principles (GAAP) for Federal entities 

and formats prescribed by the Office of Management and Budget (OMB). The statements 

are in addition to the financial reports used to monitor and control budgetary resources 

which are prepared from the same books and records. These statements should be read 

with the realization that they are for a component of the United States Government, a 

sovereign entity. 
U.S. Office of Special Counsel 

FY 2010 Performance and Accountability Report 

23

Endnotes 

 

1

 Public Law No. 103-94 (1993), codified in scattered sections of 5 U.S.C. and 12 U.S.C. 

2

 Public Law No. 103-353 (1994), codified at 38 U.S.C. § 4301, et seq. The Veterans’ Employment Opportunities Act 

of 1998 (Public Law No. 103-424) also expanded OSC’s role in protecting veterans. The act made it a prohibited 

personnel practice to knowingly take, recommend, or approve (or fail to take, recommend, or approve) any personnel 

action, if taking (or failing to take) such action would violate a veterans’ preference requirement. See 5 U.S.C. § 

2302(b)(11). (The former § 2302(b)(11) was re-designated as § 2302(b)(12).). 

3

 Public Law No. 103-424 (1994), codified in various sections of title 5 of the U.S. Code. The provision making 

federal agencies responsible, in consultation with OSC, for informing their employees of rights and remedies under 

the Whistleblower Protection Act appears at 5 U.S.C. § 2302(c). 

4

 Public Law 107-71 (2001). 
U.S. Office of Special Counsel 

FY 2010 Performance and Accountability Report 24

_____________________________________________________________________________________________________________________

Part 2: Performance Section
U.S. Office of Special Counsel 

FY 2010 Performance and Accountability Report 25

Goal 1: TO PROTECT THE MERIT SYSTEM THROUGH TIMELY 

 CASE PROCESSING

PPP Enforcement Mission PROHIBITED PERSONNEL

PRACTICES CASES

PERFORMANCE INDICATOR Indicator A: Percentage of cases 

processed in less than 240 days.

FY 2006 TARGET 85%

FY 2006 RESULTS 89%

FY 2007 TARGET 92%

FY 2007 RESULTS 94%

FY 2008 TARGET 92%

FY 2008 RESULTS 95%

FY 2009 TARGET 92%

FY 2009 RESULTS 94%

FY 2010 TARGET 94%

FY 2010 RESULTS 93%

FY 2011 TARGET 94%

FY 2011 RESULTS

FY 2012 TARGET 94%

FY 2012 RESULTS

OSC missed its timeliness target by a percentage point for PPP case processing in FY 2010. This 

is due to the 30% increase in cases referred by CEU to IPD for investigation. Full field 

investigations often take longer than 240 days due to factors outside of OSC’s control, such as 

extensions of time requested by the agency under investigation, and the timeframes associated 

with litigation. This resulted in those cases taking longer, as well as in resources being directed 

to perform the additional investigatory work. We are maintaining 94% as the target in FY 2011, 

raising the target above 94% would not be realistic. 
U.S. Office of Special Counsel 

FY 2010 Performance and Accountability Report 26

Goal 2: TO PROMOTE JUSTICE THROUGH THE QUALITY OF 

 INVESTIGATIONS AND ENFORCEMENT ACTIONS

PPP Enforcement Mission Prohibited Personnel 

Practices Cases 

PERFORMANCE INDICATOR

Indicator A: % favorable 

outcomes in cases determined by 

OSC to be meritorious = (# of 

settlements achieved + # of 

successful litigations) / (# 

meritorious cases)

FY 2006 TARGET 99%

FY 2006 RESULTS 100%

FY 2007 TARGET 99%

FY 2007 RESULTS 100%

FY 2008 TARGET 100%

FY 2008 RESULTS 100%

FY 2009 TARGET 100%

FY 2009 RESULTS 100%

FY 2010 TARGET 100%

FY 2010 RESULTS 100%

FY 2011 TARGET 100%

FY 2011 RESULTS

FY 2012 TARGET

FY 2012 RESULTS 100%

OSC did not lose any cases in FY 2010 in PPP litigation before the board. Normally, agencies 

will settle the matter when OSC outlines the nature of the prohibited personnel practices that 

have been committed. We are maintaining the target of 100% for FY 2012. 
U.S. Office of Special Counsel 

FY 2010 Performance and Accountability Report 27

Goal 3: TO PROMOTE COMPLIANCE WITH THE STATUTES THAT 

 OSC ENFORCES THROUGH ENHANCED OUTREACH TO 

 FEDERAL AGENCIES

PPP Enforcement Mission PROHIBITED PERSONNEL

PRACTICES CASES

PERFORMANCE INDICATOR

Indicator A: # of new Federal 

agencies certified in the 2302 (c) 

Program by OSC.

FY 2006 TARGET 5

FY 2006 RESULTS 6

FY 2007 TARGET 5

FY 2007 RESULTS 3

FY 2008 TARGET 5

FY 2008 RESULTS 5

FY 2009 TARGET 5

FY 2009 RESULTS 11

FY 2010 TARGET 5

FY 2010 RESULTS 5

FY 2011 TARGET 5

FY 2011 RESULTS

FY 2012 TARGET 5

FY 2012 RESULTS

During FY 2010, five agencies were certified or re-certified under OSC’s 2302(c) program. We 

are not increasing the FY 2012 target for certifying agencies because of decreased interest from 

agencies involved in the program. We note that the statutory provision upon which OSC’s 

certification program is based - 5 USC § 2302(c) - does not provide an enforcement tool to 

require agencies to become certified. 
U.S. Office of Special Counsel 

FY 2010 Performance and Accountability Report 28

Indicator A: During FY 2010, OSC issued formal written advisory opinions 90% of the time 

within 120 days. This was a significant performance achievement given the 42% increase in the 

number of these formal advisory opinions. 

Goal 1: TO DEFEND THE MERIT SYSTEM BY ENFORCING THE 

 HATCH ACT – THROUGH TIMELY CASE PROCESSING

HATCH ACT 

MISSION 

HATCH ACT 

WRITTEN 

ADVISORY 

OPINIONS 

HATCH ACT 

ORAL & EMAIL 

ADVISORY 

OPINIONS 

HATCH ACT 

COMPLAINTS

PERFORMANCE 

INDICATORS

Indicator A:

Percentage of 

formal written 

advisory opinions 

issued in less than 

120 days.

Indicator B: 

Percentage of 

oral and e-mail 

advisory opinions 

issued in less than 

five business days

Indicator C: 

Percentage of 

matters 

resolved in less 

than 365 days.

FY 2007 TARGET 80% 99% 70%

FY 2007 

RESULTS

91% 99% 92%

FY 2008 TARGET 85% 99% 80%

FY 2008 

RESULTS

60% 100% oral 88%

95% email

FY 2009 TARGET 90% 99% oral 85%

95% email

FY 2009 

RESULTS

82% 99% oral 84%

98% email

FY 2010 TARGET 90% 99% oral 85%

95% email

FY 2010 

RESULTS

90% 99% oral 71%

99% email

FY 2011 TARGET 85% 99% oral 85%

95% email

FY 2011 

RESULTS

FY 2012 TARGET 90% 99% oral 85%

98% email

FY 2012 

RESULTS
U.S. Office of Special Counsel 

FY 2010 Performance and Accountability Report 29

Indicator B: During FY 2010 OSC achieved its target of 99% oral advisory opinions and 

exceeded its target of 95% email advisory opinions issued within 5 business days. The FY12 

target for oral advisory opinions has been maintained, since a higher target would be unrealistic.

The target for email advisory opinions has been increased to 98%. 

Indicator C: During FY 2010, OSC did not meet its target of resolving 85% of matters within 

365 days, due to the following reasons: a continued and record level rise in both caseload and 

advisory opinions; required prioritization towards handling important cases; an increase in the 

complexity of cases; more litigation (which results in redirected resources and longer case 

processing time). For these reasons, many cases stayed open longer on average. Despite not 

meeting the goal, it is important to note that overall productivity as defined by the number of 

complaints processed and closed increased by 72%. These trends are likely to continue into FY 

11 and FY 12. However, we are keeping the target goal at 85%; additional Hatch Act staff is 

being added in FY 11 and efforts are being redoubled towards meeting this important goal. 

Goal 2: TO PROMOTE JUSTICE THROUGH THE QUALITY OF 

 INVESTIGATIONS AND ENFORCEMENT ACTIONS

HATCH ACT 

MISSION 

HATCH ACT CASES

See comment 1. 

PERFORMANCE 

INDICATOR

Indicator A: % favorable outcomes in meritorious 

cases

FY 2006 TARGET 90%

FY 2006 RESULTS 97%

FY 2007 TARGET 90%

FY 2007 RESULTS 97%

FY 2008 TARGET 97%

FY 2008 RESULTS 96%

FY 2009 TARGET 97%

FY 2009 RESULTS 100%

FY 2010 TARGET 97%

FY 2010 RESULTS 100%

FY 2011 TARGET 97%

FY 2011 RESULTS

FY 2012 TARGET 100%

FY 2012 RESULTS

During FY 2010, OSC achieved 100% favorable outcomes in meritorious Hatch Act cases, 

exceeding the target of 97%. We are increasing the FY 2012 target to 100%. 
U.S. Office of Special Counsel 

FY 2010 Performance and Accountability Report 30

Goal 3: TO PROMOTE COMPLIANCE WITH THE STATUTES THAT 

 OSC ENFORCES THROUGH ENHANCED OUTREACH TO 

 FEDERAL AGENCIES

HATCH ACT 

MISSION 

HATCH ACT 

OUTREACH VISITS 

HATCH ACT SECTION 

OF OSC WEBSITE 

PERFORMANCE 

INDICATORS

Indicator A: (# of HA 

trainings and 

outreaches given) / (# 

of invitations to 

provide HA training 

or outreach, where the 

inviter sponsors OSC)

Indicator B: Number of new 

advisory complex opinions

added every month to the 

website. (complex opinions 

are also posted in the form 

of Q&A)

FY 2006 TARGET 90% One

FY 2006 RESULTS 96% One

FY 2007 TARGET 90% One

FY 2007 RESULTS 100% One

FY 2008 TARGET 95% One

FY 2008 RESULTS 98% One 

FY 2009 TARGET 95% One

FY 2009 RESULTS 99% One

FY 2010 TARGET 95% One

FY 2010 RESULTS 93% One

FY 2011 TARGET 97% One

FY 2011 RESULTS

FY 2012 TARGET 97% One

FY 2012 RESULTS

Indicator A: During FY 2010, OSC’s Hatch Act Unit provided training to federal, state, and 

local agencies 93% of the time when invited by sponsoring organizations, missing the 95% 

target. Two trainings had to be declined this year, due to scheduling and critical Hatch Act 

program requirements. OSC recognizes the importance of outreach and is maintaining a target 

of 97% for FY 2012, despite an expected increase in numbers of cases and advisory opinions (on 

top of already elevated workload levels) in the Hatch Act program. 

Indicator B: OSC met its goal of posting one complex advisory opinion to the OSC website 

on a monthly basis. We are maintaining this goal in FY 2012, posting more opinions would 

detract from the importance of the cases selected for posting. 
U.S. Office of Special Counsel 

FY 2010 Performance and Accountability Report 31

Indicator A: OSC did not meet its FY 2010 target by one percentage point, due to a number of 

cases received late in the Fiscal Year that required additional investigation by OSC or in which 

OSC was attempting to negotiate corrective action on behalf of the service member. 

Goal 1: TO ENFORCE THE UNIFORMED SERVICES EMPLOYMENT AND 

 REEMPLOYMENT RIGHTS ACT THROUGH TIMELY CASE 

 PROCESSING 

USERRA 

MISSION 

USERRA Referral (RE) Cases 

PERFORMANCE 

INDICATORS

Indicator A: Average number of days in which the case 

is settled, closed or a decision to litigate is made. 

FY 2007 TARGET 75 days

FY 2007 RESULTS 33 days

FY 2008 TARGET 75 days

FY 2008 RESULTS 110 days

FY 2009 TARGET 80% in 60 days

FY 2009 RESULTS 75% in 60 days

FY 2010 TARGET 80% in 60 days

FY 2010 RESULTS 79% in 60 days

FY 2011 TARGET 80% in 60 days

FY 2011 RESULTS

FY 2012 TARGET 80% in 60 days

FY 2012 RESULTS
U.S. Office of Special Counsel 

FY 2010 Performance and Accountability Report 32

Goal 2: TO PROMOTE JUSTICE THROUGH THE QUALITY OF 

 INVESTIGATIONS AND ENFORCEMENT ACTIONS

USERRA 

MISSION 

USERRA CASES

PERFORMANCE 

INDICATORS

Indicator A: % favorable 

outcomes in cases 

determined by OSC to be 

meritorious = (# 

successful meditations + # 

of settlements achieved + 

# of successful litigations) 

/ (# meritorious cases)

Indicator B: # of “test cases” 

filed

FY 2006 TARGET 90% Inappropriate to set

a specific target

FY 2006 RESULTS 100% 0

FY 2007 TARGET 90% Inappropriate to set 

a specific target

FY 2007 RESULTS 100% 1

FY 2008 TARGET 95% Inappropriate to set 

a specific target

FY 2008 RESULTS 97% 1

FY 2009 TARGET 99% Inappropriate to set 

a specific target

FY 2009 RESULTS 100% 0

FY 2010 TARGET 90% Inappropriate to set 

a specific target

FY 2010 RESULTS 100% 1

FY 2011 TARGET 90% Inappropriate to set 

a specific target

FY 2011 RESULTS

FY 2012 TARGET 90% Inappropriate to set 

a specific target

FY 2012 RESULTS

Indicator A: OSC was successful in 2 out of 2 meritorious cases during FY 2010.

Indicator B: There was 1 test case filed in FY 2010 that falls in this category. 
U.S. Office of Special Counsel 

FY 2010 Performance and Accountability Report 33

Goal 3: TO PROMOTE COMPLIANCE WITH THE STATUTES THAT 

OSC ENFORCES THROUGH ENHANCED OUTREACH TO 

FEDERAL AGENCIES

USERRA 

MISSION 

USERRA CASES

PERFORMANCE 

INDICATORS

Indicator A: (# of 

USERRA trainings and 

outreaches given) / (# of 

invitations to provide 

USERRA training or 

outreach visits {where 

inviting agency sponsors 

OSC})

Indicator B: (# of USERRA 

trainings and outreaches 

given) / (# of invitations to 

provide USERRA training 

or outreach visits {where 

OSC pays expenses})

FY 2006 TARGET 90% 50%

FY 2006 RESULTS NA 100%

FY 2007 TARGET 90% 50% 

FY 2007 RESULTS 100% 100%

FY 2008 TARGET 90% 75%

FY 2008 RESULTS 100% NA

FY 2009 TARGET 90% 75%

FY 2009 RESULTS 100% NA

FY 2010 TARGET 100% 75%

FY 2010 RESULTS 100% 100%

FY 2011 TARGET 100% 75%

FY 2011 RESULTS

FY 2012 TARGET 100% 100%

FY 2012 RESULTS

Two outreaches were requested in FY 2010; one paid by the requesting agency and one by OSC. 

Both were accomplished by the USERRA Unit. 
U.S. Office of Special Counsel 

FY 2010 Performance and Accountability Report 34

Goal 1: TO RECEIVE AND RESOLVE WHISTLEBLOWER DISCLOSURES 

 WITH TIMELY PROCESSING 

WHISTLEBLOWER 

DISCLOSURE 

MISSION 

DISCLOSURES

PERFORMANCE 

INDICATORS

Indicator A: Percentage of disclosures resolved within 

the statutory 15 day time frame

FY 2006 TARGET 50%

FY 2006 RESULTS 42%

FY 2007 TARGET 50%

FY 2007 RESULTS 61%

FY 2008 TARGET 50%

FY 2008 RESULTS 52%

FY 2009 TARGET 50%

FY 2009 RESULTS 54%

FY 2010 TARGET 50%

FY 2010 RESULTS 55%

FY 2011 TARGET 50%

FY 2011 RESULTS

FY 2012 TARGET 54%

FY 2012 RESULTS

In FY 2010, OSC’s Disclosure Unit resolved 55% of its cases within the statutory time 

frame, exceeding its target of 50% despite a 33% increase in the unit’s caseload. The 

target for FY 2012 has been increased to 54%. 

 
U.S. Office of Special Counsel 

FY 2010 Performance and Accountability Report 35

Goal 2: TO PROMOTE JUSTICE AND PROTECT THE MERIT SYSTEM 

 THROUGH THE QUALITY OF DETERMINATIONS AND 

 REFERRALS

WHISTLEBLOWER 

DISCLOSURE 

MISSION 

DISCLOSURES

PERFORMANCE 

INDICATORS

Indicator A: % Percentage of disclosures referred to 

agency head, pursuant to 5 U.S.C. § 1213, or under the 

informal IG referral process.

FY 2006 TARGET 7%

FY 2006 RESULTS 8%

FY 2007 TARGET 7%

FY 2007 RESULTS 10%

FY 2008 TARGET 7%

FY 2008 RESULTS 6%

FY 2009 TARGET 7%

FY 2009 RESULTS 7%

FY 2010 TARGET 7%

FY 2010 RESULTS 2%

FY 2011 TARGET 7%

FY 2011 RESULTS

FY 2012 TARGET 5%

FY 2012 RESULTS

For FY 2010, the rate of referrals to the head of the agency was 2%, a decrease from 7% in FY 

2009 and from the 7% target rate set for FY 2010. The rate of referrals is dependent upon the 

information received from whistleblowers and whether that information meets the “substantial 

likelihood” standard required by the statute. In FY 2009 OSC received a significant increase in 

disclosures from employees of the Federal Aviation Administration (FAA), which were referred 

for investigation. The number of FAA cases received in FY 2010 has decreased and accounts, in 

part, for the lower referral rate. The target for referrals in FY 2012 has been set at 5%, which we 

expect to be a more realistic estimate. 
U.S. Office of Special Counsel 

FY 2010 Performance and Accountability Report 36

Part 3: Financial Section 
U.S. Office of Special Counsel 

FY 2010 Performance and Accountability Report 37

 

 CFO Letter 

November 9, 2010 

This letter usually addresses any recommendations for improvement made by the auditor 

concerning deficiencies in internal controls which may have an effect on the auditor’s ability to 

express an opinion on the financial statements. I am pleased to report that there were no such 

matters noted by the FY 2010 auditor that were considered significant. 

The auditor also did not note any noncompliance with laws or regulations which would have an 

effect on the financial statements. 

We believe the minor recommendations for improvement pointed out during the FY 2009 audit 

have been fully addressed. 

 Sincerely, 

 

 Karl Kammann 

 Director of Finance 

 U.S. Office of Special Counsel 

U.S. OFFICE OF SPECIAL COUNSEL

1730 M Street, N.W., Suite 218

Washington, D.C. 20036-4505

202-254-3600
U.S. Office of Special Counsel 

FY 2010 Performance and Accountability Report 38

Report of Independent Auditors 

Associate Special Counsel 

Office of Special Counsel: 

Opinion on the Financial Statements 

We have audited the accompanying consolidated balance sheets of the U.S. Office of Special 

Counsel (OSC), as of September 30, 2010 and 2009, and the related consolidated statements of 

net cost of operations and changes in net position, and combined statements of budgetary 

resources, for the years then ended. These financial statements are the responsibility of OSC’s 

management. Our responsibility is to express an opinion on these financial statements based on 

our audit. 

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

States of America, the standards applicable to financial audits contained in Government Auditing 

Standards, issued by the Comptroller General of the United States, and OMB Bulletin No. 07-04, 

Audit Requirements for Federal Financial Statements, as amended. Those standards require that 

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

statements are free of material misstatement. 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 audits provide a reasonable basis for our opinion. 

In our opinion, the financial statements referred to above, present fairly, in all material respects, 

the financial position of OSC as of September 30, 2010 and 2009, and its net cost of operations, 

changes in net position, and budgetary resources for the years then ended, in conformity with 

accounting principles generally accepted in the United States of America. 
U.S. Office of Special Counsel 

FY 2010 Performance and Accountability Report 39

Report on Internal Control over Financial Reporting 

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

reporting and compliance. We did this in order to determine our audit procedures for the purpose 

of expressing our opinion on the financial statements and not to provide an opinion on internal 

control. We limited our internal control testing to those controls necessary to achieve the 

objectives described in OMB Bulletin No. 07-04, as amended. We did not test all internal 

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

Financial Integrity Act of 1982. Providing an opinion on internal control was not the objective of 

our audit. Accordingly, we do not express an opinion on OSC’s internal control over financial 

reporting and compliance or on management’s assertion on internal control included in 

Managements’ Discussion and Analysis. However, for the controls we tested, we found no 

material weaknesses in internal control over financial reporting (including safeguarding assets) 

and compliance. 

A control deficiency 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 

misstatements on a timely basis. Our consideration of the internal control over financial reporting 

would not necessarily disclose all deficiencies that might be a significant deficiency. A 

significant deficiency is a deficiency in internal control, or a combination of deficiencies, that 

adversely affects the entity's ability to initiate, authorize, record, process, or report financial data 

reliably in accordance with generally accepted accounting principles such that there is more than 

a remote likelihood that a misstatement of the entity's financial statements that is more than 

inconsequential will not be prevented or detected. Our consideration of the internal control over 

financial reporting would not necessarily disclose all significant deficiencies that might be a 

material weakness. A material weakness is a significant deficiency, or combination of significant 

deficiencies, that result in a more than remote likelihood that a material misstatement of the 

financial statements will not be prevented or detected. Because of inherent limitations in internal 

controls, misstatements, losses, or non-compliance may nevertheless occur and not be detected. 

Report on Compliance with Applicable Laws and Regulations 

The management of OSC is responsible for complying with laws and regulations applicable to 

OSC. As part of obtaining reasonable assurance about whether OSC’s financial statements are 

free of material misstatement, we performed tests of its compliance with selected provisions of 

laws and regulations including laws governing the use of budgetary authority and governmentwide policies identified in OMB Bulletin No. 07-04, as amended, non-compliance with which 

could have a direct and material effect on the determination of consolidated and combined 

financial statements. Our tests disclosed no instances of noncompliance with laws and 

regulations which would be reportable under U.S. generally accepted government auditing 

standards or OMB audit guidance. 

We limited our tests of compliance to the provisions of laws and regulations referred to in the 

preceding paragraph. Providing an opinion on compliance with those provisions was not an 

objective of our audit. Accordingly, we do not express such an opinion. 
U.S. Office of Special Counsel 

FY 2010 Performance and Accountability Report 40

Other Information 

Management’s Discussion and Analysis (MD&A) is not a required part of the financial 

statements but is supplementary information required by the Federal Accounting Standards 

Advisory Board and OMB Circular A-136, Financial Reporting Requirements. We have applied 

certain limited procedures, which consisted principally of inquiries of management regarding the 

methods of measurement and presentation of the MD&A. However, we did not audit the 

information and accordingly, we express no opinion on it. 

Our audits were conducted for the purpose of forming an opinion on the financial statements of 

OSC taken as a whole. The other accompanying information included in this performance and 

accountability report is presented for purposes of additional analysis and is not a required part of 

the financial statements. Such information has not been subjected to the auditing procedures 

applied in the audit of the financial statements and, accordingly, we express no opinion on them. 

This report is intended solely for the information and use of the management of the U.S Office of 

Special Counsel, the U.S. Office of Management and Budget, the U.S. Government 

Accountability Office, and the U.S. Congress and is not intended to be and should not be used by 

anyone other than these specified parties. 

November 10, 2010 
U.S. Office of Special Counsel 

FY 2010 Performance and Accountability Report 41

2010 2009

Assets

Intragovernmental

Fund Balance With Treasury (Note 2) $ 3,957 $ 4,423

Total Intragovernmental 3,957 4,423

Assets With the Public

Accounts Receivable, Net (Note 3) 25 26

General Property, Plant, and Equipment, Net (Note 4) 440 326

Total Assets $ 4,422 $ 4,775

Liabilities

Intragovernmental

Other 

Employer Contributions and Payroll Taxes Payable (Note 5) $ 144 $ 138

Unfunded FECA Liability (Note 5) 57 49

Total Intragovernmental 201 187

Liabilities With the Public

Accounts Payable 50 117

Federal Employee and Veteran Benefits (Note 5) 258 275

Other

Accrued Funded Payroll and Leave 574 532

Employer Contributions and Payroll Taxes Payable (Note 5) 5 -

Unfunded Leave (Note 5) 865 900

Custodial Liability 1 0

Total Liabilities $ 1,954 $ 2,011

Net Position

Unexpended Appropriations-Other Funds 3,183 3,636

Cumulative Results of Operations-Other Funds (715) (872)

Total Net Position $ 2,468 $ 2,764

Total Liabilities And Net Position $ 4,422 $ 4,775

The accompanying notes are an integral part of these statements.

Office of Special Counsel

Consolidated Balance Sheets

as of September 30, 2010 and September 30, 2009

(dollars in thousands)
U.S. Office of Special Counsel 

FY 2010 Performance and Accountability Report 42

2010 2009

Gross costs (Note 9) $ 18,841 $ 17,795

Less: Total Earned Revenue 1 0

Net Cost of Operations $ 18,840 $ 17,795

The accompanying notes are an integral part of these statements.

Consolidated Statements of Net Cost of Operations

for the Fiscal Years Ended September 30, 2010 and September 30, 2009

(dollars in thousands)

Office of Special Counsel
U.S. Office of Special Counsel 

FY 2010 Performance and Accountability Report 43

2010 2009

Cumulative Results of Operations:

Beginning Balances $ (872) $ (643)

Beginning Balances, as Adjusted (872) (643)

Budgetary Financing Sources:

Appropriations Used 17,990 16,761

Nonexchange Revenue (1) (0)

Imputed Financing 1,008 805

Total Financing Sources 18,997 17,566

Net Cost of Operations (18,840) (17,795)

Net Change 157 (229)

Cumulative Results of Operations $ (715) $ (872)

Unexpended Appropriations:

Beginning Balances $ 3,636 $ 3,057

Beginning Balances, as Adjusted 3,636 3,057

Budgetary Financing Sources:

Appropriations Received 18,495 17,468

Appropriations Used (17,990) (16,761)

Other Adjustments (958) (128)

Total Budgetary Financing Resources (453) 579

Total Unexpended Appropriations $ 3,183 $ 3,636

Net Position $ 2,468 $ 2,764

The accompanying notes are an integral part of these statements.

Consolidated Statements of Changes in Net Position

for the Fiscal Years Ended September 30, 2010 and September 30, 2009

(dollars in thousands)

Office of Special Counsel
U.S. Office of Special Counsel 

FY 2010 Performance and Accountability Report 44

2010 2009

BUDGETARY RESOURCES

Unobligated balance; start of year $ 1,567 $ 1,463

Recoveries of prior year unpaid obligations: 406 34

Budget authority:

Appropriation: 18,495 17,468

Total Budget authority 18,495 17,468

Permanently not available: (958) (128)

Total budgetary resources $ 19,510 $ 18,837

STATUS OF BUDGETARY RESOURCES

Obligations incurred:

Direct: 18,127 17,270

Total Obligations incurred 18,127 17,270

Unobligated balance:

Apportioned: 368 160

Total Unobligated balance 368 160

Unobligated balance not available: 1,015 1,407

Total status of budgetary resources $ 19,510 $ 18,837

CHANGE IN OBLIGATED BALANCES

Obligated balance, net; start of year:

Unpaid obligations, brought forward, October 1 2,856 2,739

Total, unpaid obligated balance, brought forward, net 2,856 2,739

Obligations incurred 18,127 17,270

Less: Gross outlays (18,004) (17,119)

Less: Recoveries of prior-year unpaid obligations, actual (406) (34)

Total, unpaid obligated balance, net, end of period $ 2,573 $ 2,856

Obligated balance, net, end of period:

Unpaid obligations 2,573 2,856

Total, unpaid obligated balance, net end of period $ 2,573 $ 2,856

NET OUTLAYS

Net Outlays:

Gross outlays 18,004 17,119

Net outlays $ 18,004 $ 17,119

The accompanying notes are an integral part of these statements.

Office of Special Counsel

Combined Statements of Budgetary Resources

for the Fiscal Years Ended September 30, 2010 and September 30, 2009

(dollars in thousands)
U.S. Office of Special Counsel 

FY 2010 Performance and Accountability Report 45

_____________________________________________________________________________________________________________________

OFFICE OF SPECIAL COUNSEL 

Washington, D.C 

Notes to Principal Financial Statements 

As of September 30, 2010 and 2009 
Notes to Principal Financial Statements 

U.S. Office of Special Counsel 

FY 2010 Performance and Accountability Report 46

_____________________________________________________________________________________________________________________

Office of Special Counsel 

Notes to Principal Financial Statements 

As of September 30, 2010 and 2009 

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A. Reporting Entity 

The Office of Special Counsel (OSC) is an independent federal investigative and prosecutorial agency. 

OSC’s authority comes from four federal statutes, the Civil Service Reform Act, the Whistleblower 

Protection Act, the Hatch Act, and the Uniform Services Employment and Reemployment Rights Act. 

OSC’s primary mission is to safeguard the merit system by protecting federal employees and applicants 

from prohibited personnel practices. OSC receives, investigates, and prosecutes allegations of prohibited 

personnel practices, with an emphasis on protecting federal government whistleblowers. 

OSC is headed by the Special Counsel, who is appointed by the President, and confirmed by the Senate. 

At full strength, the agency employs approximately 111 employees to carry out its government-wide 

responsibilities in the headquarters office in Washington, D.C., and in the Dallas, San Francisco, and 

Detroit field offices. 

OSC has rights and ownership of all assets reported in these financial statements. There are no non-entity 

assets. 

B. Basis of Presentation 

The financial statements have been prepared to report the financial position, net cost of operations, 

changes in net position, status and availability of budgetary resources, and the reconciliation between 

proprietary and budgetary accounts of the OSC. The statements are a requirement of the Chief Financial 

Officers Act of 1990, the Government Management Reform Act of 1994, the Accountability of Tax 

Dollars Act of 2002 and the Office of Management and Budget (OMB) Circular A-136, Financial 

Reporting Requirements. They have been prepared from, and are fully supported by, the books and 

records of OSC in accordance with the hierarchy of accounting principles generally accepted in the 

United States of America, standards approved by the principals of the Federal Accounting Standards 

Advisory Board (FASAB), OMB Circular A-136, and OSC Accounting policies which are summarized in 

this note. These statements, with the exception of the Statement of Budgetary Resources, are different 

from financial management reports, which are also prepared pursuant to OMB directives that are used to 

monitor and control OSC’s use of budgetary resources. 

The statements consist of the Balance Sheet, Statement of Net Cost, Statement of Changes in Net 

Position, and the Statement of Budgetary Resources. In accordance with OMB Circular A-136, the 

financial statements and associated notes are presented on a comparative basis. 

C. Basis of Accounting 

Transactions are recorded on both 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. These financial statements were prepared following accrual 
Notes to Principal Financial Statements 

U.S. Office of Special Counsel 

FY 2010 Performance and Accountability Report 47

_____________________________________________________________________________________________________________________

accounting. Budgetary accounting facilitates compliance with legal requirements on the use of federal 

funds. Balances on these statements may therefore differ from those on financial reports prepared 

pursuant to other OMB directives that are primarily used to monitor and control OSC’s use of budgetary 

resources. 

D. Taxes 

OSC, as a Federal entity, is not subject to Federal, State, or local income taxes, and, accordingly, no 

provision for income taxes has been recorded in the accompanying financial statements. 

E. Fund Balance with Treasury 

The U. S. Treasury processes cash receipts and disbursements. Funds held at the Treasury are available to 

pay agency liabilities. OSC does not maintain cash in commercial bank accounts or foreign currency 

balances. 

F. Accounts Receivable 

Accounts receivable consists of amounts owed to OSC by other Federal agencies and the public. Amounts 

due from Federal agencies are considered fully collectible. Accounts receivable from the public include 

reimbursements from employees. An allowance for uncollectible accounts receivable from the public is 

established when either (1) based upon a review of outstanding accounts and the failure of all collection 

efforts, management determines that collection is unlikely to occur considering the debtor’s ability to pay, 

or (2) an account for which no allowance has been established is submitted to the Department of the 

Treasury for collection, which takes place when it becomes 180 days delinquent. 

G. General Property, Plant and Equipment, Net 

OSC’s property and equipment is recorded at original acquisition cost and is depreciated using the 

straight-line method over the estimated useful life of the asset. Major alterations and renovations are 

capitalized, while maintenance and repair costs are charged to expense as incurred. OSC’s capitalization 

threshold is $50,000 for individual purchases. Applicable standard governmental guidelines regulate the 

disposal and convertibility of agency property, plant and equipment. The useful life classifications for 

capitalized assets are as follows: 

Description Useful Life (years) 

Leasehold Improvements 10

Office Equipment 5 

Hardware 5 

Software 2 

H. Advances and Prepaid Charges 

Advance payments are generally prohibited by law. There are some exceptions, such as reimbursable 

agreements, subscriptions and payments to contractors and employees. Payments made in advance of the 

receipt of goods and services are recorded as advances or prepaid charges at the time of prepayment and 

recognized as expenses when the related goods and services are received. 
Notes to Principal Financial Statements 

U.S. Office of Special Counsel 

FY 2010 Performance and Accountability Report 48

_____________________________________________________________________________________________________________________

I. Liabilities 

Liabilities covered by budgetary or other resources are those liabilities for which Congress has 

appropriated funds or funding is otherwise available to pay amounts due. 

Liabilities not covered by budgetary or other resources represent amounts owed in excess of available 

congressionally appropriated funds or other amounts. The liquidation of liabilities not covered by 

budgetary or other resources is dependent on future Congressional appropriations or other funding. 

Intragovernmental liabilities are claims against OSC by other Federal agencies. Liabilities not covered by 

budgetary resources on the Balance Sheet are equivalent to amounts reported as components requiring or 

generating resources on the Statement of Financing. Additionally, the government, acting in its sovereign 

capacity, can abrogate liabilities. 

Accrued liabilities for OSC are comprised of program expense accruals, payroll accruals, and annual 

leave (funded and unfunded) earned by employees. Program expense accruals represent expenses that 

were incurred prior to year-end but were not paid. Similarly, payroll accruals represent payroll expenses 

that were incurred prior to year-end but were not paid. 

J. Accounts Payable 

Accounts payable consists of amounts owed to other Federal agencies and the public. 

K. Annual, Sick, and Other Leave 

Annual leave is accrued as it is earned, and the accrual is reduced as leave is taken. The balance in the 

accrued leave account is adjusted to reflect current pay rates. Liabilities associated with other types of 

vested leave, including compensatory, restored leave, and sick leave in certain circumstances, are accrued 

at year-end, based on latest pay rates and unused hours of leave. Sick leave is generally non-vested. 

Funding will be obtained from future financing sources to the extent that current or prior year 

appropriations are not available to fund annual and other types of vested leave earned but not taken. Nonvested leave is expensed when used. 

L. Accrued Workers’ Compensation

A liability is recorded for actual and estimated future payments to be made for workers’ compensation 

pursuant to the Federal Employees’ Compensation Act (FECA). The actual costs incurred are reflected as 

a liability because OSC will reimburse the Department of Labor (DOL) two years after the actual 

payment of expenses. Future appropriations will be used for the reimbursement to DOL. The liability 

consists of (1) the net present value of estimated future payments calculated by the DOL, and (2) the 

unreimbursed cost paid by DOL for compensation to recipients under the FECA. 

M. Retirement Plans 

OSC employees participate in either the Civil Service Retirement System (CSRS) or the Federal 

Employees’ Retirement System (FERS). The employees who participate in CSRS are beneficiaries of 

OSC’s matching contribution, equal to seven percent of pay, distributed to their annuity account in the 

Civil Service Retirement and Disability Fund. 

FERS went into effect on January 1, 1987. FERS and Social Security automatically cover most 

employees hired after December 31, 1983. Employees hired prior to January 1, 1984 elected to join either 

FERS, Social Security, or remain in CSRS. FERS offers a savings plan to which OSC automatically 
Notes to Principal Financial Statements 

U.S. Office of Special Counsel 

FY 2010 Performance and Accountability Report 49

_____________________________________________________________________________________________________________________

contributes one percent of pay and matches any employee contribution up to an additional four percent of 

pay. For FERS participants, OSC also contributes the employer’s matching share of Social Security. 

FERS employees and certain CSRS reinstatement employees are eligible to participate in the Social 

Security program after retirement. In these instances, OSC remits the employer’s share of the required 

contribution. 

OSC recognizes the imputed cost of pension and other retirement benefits during the employees’ active 

years of service. Office of Personnel Management (OPM) actuaries determine pension cost factors by 

calculating the value of pension benefits expected to be paid in the future and communicate these factors 

to OSC for current period expense reporting. OPM also provides information regarding the full cost of 

health and life insurance benefits. OSC recognized the offsetting revenue as imputed financing sources to 

the extent these expenses will be paid by OPM. 

OSC does not report on its financial statements information pertaining to the retirement plans covering its 

employees. Reporting amounts such as plan assets, accumulated plan benefits, and related unfunded 

liabilities, if any, is the responsibility of the OPM. 

N. Net Position 

Net position is the residual difference between assets and liabilities and is comprised of unexpended 

appropriations and cumulative results of operations. Unexpended appropriations represent the amount of 

unobligated and unexpended budget authority. Unobligated balances are the amount of appropriations or 

other authority remaining after deducting the cumulative obligations from the amount available for 

obligation. The cumulative result of operations is the net result of OSC’s operations since inception. 

O. Imputed Costs/Financing Sources 

Federal government entities often receive goods and services from other Federal government entities 

without reimbursing the providing entity for all the related costs. In addition, Federal government entities 

also incur costs that are paid in total or in part by other entities. An imputed financing source is 

recognized by the receiving entity for costs that are paid by other entities. OSC recognized imputed costs 

and financing sources in fiscal years 2010 and 2009 to the extent directed by OMB. 

P. Revenues & Other Financing Resources 

Congress enacts annual and multi-year appropriations to be used, within statutory limits, for operating 

and capital expenditures. Additional amounts are obtained from service fees and reimbursements from 

other government entities and the public. 

Appropriations are recognized as a financing source when expended. Revenues from service fees 

associated with reimbursable agreements are recognized concurrently with the recognition of accrued 

expenditures for performing the services. 

OSC recognizes as an imputed financing source the amount of accrued pension and post-retirement 

benefit expenses for current employees paid on our behalf by (OPM). 

Q. Contingencies 

Liabilities are deemed contingent when the existence or amount of the liability cannot be determined with 

certainty pending the outcome of future events. OSC recognizes contingent liabilities, in the 

accompanying Balance Sheet and Statement of Net Cost, when it is both probable and can be reasonably 

estimated. OSC discloses contingent liabilities in the notes to the financial statements when the conditions 
Notes to Principal Financial Statements 

U.S. Office of Special Counsel 

FY 2010 Performance and Accountability Report 50

_____________________________________________________________________________________________________________________

for liability recognition are not met or when a loss from the outcome of future events is more than remote. 

In some cases, once losses are certain, payments may be made from the Judgment Fund maintained by the 

U.S. Treasury rather than from the amounts appropriated to OSC for agency operations. Payments from 

the Judgment Fund are recorded as an “Other Financing Source” when made. 

R. Expired Accounts and Cancelled Authority 

Unless otherwise specified by law, annual authority expires for incurring new obligations at the beginning 

of the subsequent fiscal year. The account in which the annual authority is placed is called the expired 

account. For five fiscal years, the expired account is available for expenditure to liquidate valid 

obligations incurred during the unexpired period. Adjustments are allowed to increase or decrease valid 

obligations incurred during the unexpired period but not previously reported. At the end of the fifth 

expired year, the expired account is cancelled. 

S. Use of Estimates 

The preparation of financial statements in conformity with Generally Accepted Accounting Principles 

(GAAP) requires management to make estimates and assumptions that affect the reported amounts of 

assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial 

statements and the reported amounts of revenues and expenses during the reporting period. Actual results 

could differ from those estimates. 

T. Comparative Data 

The financial statements and footnotes present comparative data for the prior fiscal year, in order to 

provide an understanding of changes in OSC’s financial position and operations. Certain FY 2009 

amounts have been reclassified to conform to the FY 2010 financial statement and footnote presentations. 
Notes to Principal Financial Statements 

U.S. Office of Special Counsel 

FY 2010 Performance and Accountability Report 51

_____________________________________________________________________________________________________________________

NOTE 2. FUND BALANCE WITH TREASURY 

Fund Balance with Treasury account balances as of September 30, 2010 and 2009 were: 

(dollars in thousands)

Fund Balances: 2010 2009

 Appropriated Funds (general) $ 3,957 $ 4,423

Total Fund Balance with Treasury $ 3,957 $ 4,423

Status of Fund Balance with Treasury

 Unobligated Balance:

 Available $ 368 $ 160

 Unavailable 1,015 1,407

 Obligated Balance Not Yet Disbursed 2,573 2,856

 Non-Budgetary 1 -

Total Status of Fund Balance with Treasury $ 3,957 $ 4,423

Restricted unobligated fund balance represents the amount of appropriations for which the period of 

availability for obligation has expired. These balances are available for upward adjustments of 

obligations incurred only during the period for which the appropriation was available for obligation or 

paying claims attributable to the appropriations. 

NOTE 3. ACCOUNTS RECEIVABLE 

A summary of accounts receivable from the public as of September 30, 2010 and 2009 were as follows: 

(dollars in thousands) 2010 2009

Accounts Receivable from the Public:

Billed:

 Current $ 25 $ 26

Total Accounts Receivable 25 26

Accounts Receivable from the Public, Net $ 25 $ 26

NOTE 4. GENERAL PROPERTY, PLANT AND EQUIPMENT 

Property, Plant and Equipment account balances as of September 30, 2010 and 2009 were as follows: 

(dollars in thousands) Service Life

Acquisition 

Value

Accumulated 

Depreciation

2010 Net Book 

Value

2009 Net Book 

Value

Office Equipment 5 yrs $ 556 $ (282) $ 274 $ 135

Leashold Improvements 10 yrs 273 (107) 166 191

Total $ 829 $ (389) $ 440 $ 326
Notes to Principal Financial Statements 

U.S. Office of Special Counsel 

FY 2010 Performance and Accountability Report 52

_____________________________________________________________________________________________________________________

NOTE 5. LIABILITIES NOT COVERED BY BUDGETARY RESOURCES 

The liabilities on OSC’s Balance Sheet as of September 30, 2010 and 2009 include liabilities not covered 

by budgetary resources, which are liabilities for which congressional action is needed before budgetary 

resources can be provided. Although future appropriations to fund these liabilities are likely and 

anticipated, it is not certain that appropriations will be enacted to fund these liabilities. 

A. Intragovernmental and Public Liabilities

(dollars in thousands) 2010 2009

Intragovernmental:

 Accounts Payable $ - $ -

 Employer Contributions & Payroll Taxes Payable 144 138

 Unfunded FECA Liability 57 49

Total Intragovernmental 201 187

Public Liabilities:

 Employer Contributions & Payroll Taxes Payable 5 -

 Federal Employee and Veteran Benefits 258 275

 Unfunded Annual Leave 865 900

Total Liabilities Not Covered by Budgetary Resources $ 1,329 $ 1,362

Total Liabilities Covered by Budgetary Resources 625 649

B. Other Information 

Unfunded Payroll Liabilities consists of workers’ compensation claims payable to the Department of 

Labor, which will be funded in a future period, and an unfunded estimated liability for future workers’ 

compensation claims based on data provided from the DOL. Unfunded FECA liabilities for 2010 and 

2009 were $57 and $49, respectively. Unfunded Employment liabilities for 2010 were $0 and $0 for 

2009. The actuarial calculation is based on benefit payments made over 12 quarters, and calculates the 

annual average of payments. The Actuarial FECA liabilities for 2010 and 2009 were $258 and $275, 

respectively. For medical expenses and compensation this average is then multiplied by the liability-tobenefit paid ratio for the whole FECA program. 

Unfunded Leave represents a liability for earned leave and is reduced when leave is taken. At year end, 

the balance in the accrued leave account is adjusted to reflect the liability at current pay rates and leave 

balances. Accrued leave is paid from future funding sources and, accordingly, is reflected as a liability 

not covered by budgetary resources. Sick and other leave is expensed as taken. 

All other liabilities are considered to be covered by budgetary resources. 

NOTE 6. OPERATING LEASES 

OSC occupies office space under lease agreements in Washington DC, Dallas, Oakland, and Detroit that 

are accounted for as operating leases. The DC lease term began on October 26, 2009 and expires on 

October 25, 2019. The original Dallas lease term began on December 9, 2002 and after the new lease was 

entered now expires on December 8, 2017. The Oakland 60-month lease was entered into on February 1, 

2006 and expires in BFY 2011. This lease was modified in FY06 with the period commencing 
Notes to Principal Financial Statements 

U.S. Office of Special Counsel 

FY 2010 Performance and Accountability Report 53

_____________________________________________________________________________________________________________________

on July 1, 2006 and expiring BFY 2011. The Detroit lease will begin on October 16, 2010 and will expire 

on October 15, 2020. 

Lease payments are increased annually based on the adjustments for operating cost and real estate tax 

escalations. The operating lease amount does not include estimated payments for leases with annual 

renewal options. 

Below is a schedule of future payments for the terms of all the leases. 

 

(dollars in thousands)

Fiscal Year Total

2011 $ 1,738

2012 1,795

2013 1,830

2014 1,851

2015 1,873

Total Future Lease Payments $ 9,087

NOTE 7. CONTINGENCIES 

A contingency is an existing condition, situation or set of circumstances involving uncertainty as to 

possible payment by OSC. The uncertainty will ultimately be resolved when one of more future events 

occur or fail to occur. For pending, threatened or unasserted litigation, a liability/cost is recognized when 

a past transaction or event has occurred, a future outflow or other sacrifice of resources is probable, and 

the related future outflow or sacrifice of resources can be reasonably estimated. 

There are numerous legal actions pending against the United States in Federal courts in which claims 

have been asserted that may be based on action taken by OSC. Management intends to vigorously contest 

all such claims. Management believes, based on information provided by legal counsel, that losses, if 

any, for the majority of these cases would not have a material impact on the financial statements. 

NOTE 8. IMPUTED FINANCING SOURCES 

OSC recognizes as imputed financing the amount of accrued pension and post-retirement benefit 

expenses for current employees. The assets and liabilities associated with such benefits are the 

responsibility of the administering agency, the Office of Personnel Management. For the fiscal month 

ended September 30, 2010 and 2009, respectively, imputed financing from OPM were $1,008 and $805. 

NOTE 9. INTRAGOVERNMENTAL COSTS AND EXCHANGE REVENUE 

Intragovernmental costs represent goods and services exchange transactions made between two reporting 

entities within the Federal government, and are in contrast to those with non-federal entities (the public). 

Such costs are summarized as follows: 
Notes to Principal Financial Statements 

U.S. Office of Special Counsel 

FY 2010 Performance and Accountability Report 54

_____________________________________________________________________________________________________________________

(dollars in thousands)

2010 2009

Investigations and Enforcements

 Intragovernmental Costs $ 3,646 $ 2,458

 Public Costs 15,195 15,337

Total Investigations and Enforcements $ 18,841 $ 17,795

 Intragovernmental Earned Revenue $ 1 $ -

Total Intragovernmental Earned Revenue $ 1 $ -

NOTE 10. APPORTIONMENT CATEGORIES OF OBLIGATIONS INCURRED 

Obligations incurred reported on the Statement of Budgetary Resources in 2010 and 2009 consisted of the 

following: 

(dollars in thousands) 2010 2009

Direct Obligations:

 Category A $ 18,127 $ 17,270

Reimbursable Obligations:

 Category A - -

Total Obligations Incurred $ 18,127 $ 17,270

NOTE 11. EXPLANATION OF DIFFERENCES BETWEEN THE SBR AND THE BUDGET OF 

THE U.S. GOVERNMENT 

Statement of Federal Financial Accounting Standards No. 7, Accounting for Revenue and Other 

Financing Sources and Concepts for Reconciling Budgetary and Financial Accounting, calls for 

explanations of material differences between amounts reported in the Statement of Budgetary Resources 

(SBR) and the actual balances published in the Budget of the United States Government (President’s 

Budget). However, the President’s Budget that will include FY10 actual budgetary execution information 

has not yet been published. The President’s Budget is scheduled for publication in February 2011 and 

can be found at the OMB website: http://www.whitehouse.gov/omb. The 2009 Budget of the United 

States Government, with the Actual column completed for 2009, has been reconciled to the Statement of 

Budgetary Resources and there were no material differences. 

NOTE 12. UNDELIVERED ORDERS AT THE END OF THE PERIOD 

Beginning with FY06, the format of the Statement of Budgetary Resources has changed and the amount 

of undelivered orders at the end of period is no longer required to be reported on the face of the statement. 

Statement of Federal Financial Accounting Standards No. 7, Accounting for Revenue and Other 

Financing Sources and Concepts for Reconciling Budgetary and Financial Accounting, states that the 

amount of budgetary resources obligated for undelivered orders at the end of the period should be 

disclosed. For the years ended September 30, 2010 and 2009, undelivered orders amounted to $1,801 and 

$2,069. 
Notes to Principal Financial Statements 

U.S. Office of Special Counsel 

FY 2010 Performance and Accountability Report 55

_____________________________________________________________________________________________________________________

NOTE 13. RECONCILIATION OF NET COST OF OPERATIONS (PROPRIETARY) TO 

BUDGET (FORMERLY THE STATEMENT OF FINANCING) 

In fiscal year 2006 this reconciliation was presented as a fifth statement, the Statement of Financing. In 

accordance with OMB Circular A-136, revised June 2007, presentation requirement for this information 

is now a footnote disclosure. Details of the relationship between budgetary resources obligated and the 

net costs of operations for the fiscal years ending September 30 are as follows: 
Notes to Principal Financial Statements 

U.S. Office of Special Counsel 

FY 2010 Performance and Accountability Report 56

_____________________________________________________________________________________________________________________

2010 2009

Resources Used to Finance Activities

Current Year Gross Obligations 18,127$ 17,270$ 

Budgetary Resources from Offsetting Collections

Spending Authority from Offsetting Collections

 Earned

 Collected

Recoveries of Prior Year Unpaid Obligations (406) (34)

Other Financing Resources

Imputed Financing Sources 1,008 805

Total Resources Used to Finance Activity 18,729 18,041

Resources Used to Finance Items Not Part of the Net Cost of Operations

Budgetary Obligations and Resources Not in the Net Cost of Operations

Change in Undelivered Orders 268 (166)

Current Year Capitalized Purchases (226) (133)

Components of Net Cost which do not Generate or Use Resources in the Reporting Period

Revenues without Current Year Budgetary Effect

Change in Non-Federal Receivables 1 -

Other Financing Sources Not in the Budget (1,008) (805)

Costs without Current Year Budgetary Effect

Depreciation and Amortization 111 72

Future Funded Expenses (25) 44

Imputed Costs 1,008 805

Other Expenses Not Requiring Budgetary Resources (18) (63)

Net Cost of Operations 18,840$ 17,795$ 

Reconciliation of Net Cost of Operations (Proprietary) to Budget

As of September 30, 2010 and 2009