AGENCY FINANCIAL REPORT

U.S. DEPARTMENT OF COMMERCE 

2016

FISCAL YEAR
This report can be found on the Internet at 

http://www.osec.doc.gov/ofm/OFM_Publications.html.

If you have questions or comments regarding this 

report, please call the Department’s Office of Financial 

Management at (202) 482-1207 or email Atisha Burks at 

ABurks@doc.gov or Gordon Alston at GAlston@doc.gov.

Office of Financial Management

U.S. Department of Commerce

1401 Constitution Avenue, NW

Washington, DC 20230

(202) 482-1207
2016

FISCAL YEAR

AGENCY FINANCIAL REPORT

U.S. DEPARTMENT OF COMMERCE 
HISTORY AND ENABLING LEGISLATION 

The Department of Commerce was originally established by 

Congressional Act on February 14, 1903 as the Department 

of Commerce and Labor (32 Stat. 826; 5 U.S.C. 591) and was 

subsequently renamed the U.S. Department of Commerce by 

President William H. Taft on March 4, 1913 (15 U.S.C. 1512). 

The defined role of the new Department was “to foster, promote, 

and develop the foreign and domestic commerce, the mining, 

manufacturing, and fishery industries of the United States.” 

MISSION

The Department of Commerce creates the conditions for 

economic growth and opportunity by promoting innovation, 

entrepreneurship, competitiveness, and stewardship.

The Department is composed of 12 bureaus, the Emergency Steel 

Loan Guarantee Program, and Departmental Management.

■ Bureau of Industry and Security (BIS) 

■ Economic Development Administration (EDA) 

■ Economics and Statistics Administration (ESA) 

● Bureau of Economic Analysis (BEA) 

● Census Bureau

■ International Trade Administration (ITA) 

■ Minority Business Development Agency (MBDA) 

■ National Institute of Standards and Technology (NIST)

● National Technical Information Service (NTIS) 

■ National Oceanic and Atmospheric Administration (NOAA)

■ National Telecommunications and Information 

Administration (NTIA) 

■ U.S. Patent and Trademark Office (USPTO) 

■ Emergency Steel Loan Guarantee Program (ELGP-Steel)

■ Departmental Management (DM)

STRATEGIC GOALS

Strategic Goal 1: Trade and Investment

Strategic Goal 2: Innovation

Strategic Goal 3: Data

Strategic Goal 4: Environment

Strategic Goal 5: Operational Excellence

LOCATION

The Department is headquartered in Washington, D.C., at the 

Herbert Clark Hoover Building, which is located on eight acres 

of land covering three city blocks. The Department also has field 

offices in all states and territories and maintains offices in more 

than 86 countries worldwide.

EMPLOYEES 

As of September 30, 2016, the Department had approximately 

46 thousand employees. 

BUDGET AUTHORITY

The Department’s FY 2016 net budget authority was approximately 

$10.35 billion.

INTERNET 

The Department’s Internet address is www.commerce.gov.

THE DEPARTMENT AT A GLANCE
TABLE OF CONTENTS

Message from Secretary Pritzker IV

How to Use this Report VI

Management’s Discussion and Analysis 1

Mission and Organization 2

The Department of Commerce Process for Strategic Planning and Performance Reporting 3

FY 2016 Performance Summary 6

Management Controls 10

Secretary’s Statement of Assurance 10

Federal Managers’ Financial Integrity Act (FMFIA) of 1982 11

Federal Financial Management Improvement Act (FFMIA) of 1996 11

Report on Audit Follow-up 12

Biennial Review of Fees 12

Financial Management and Analysis 13

Analysis of FY 2016 Financial Condition and Results 20

Summary of Stewardship Information 29

Financial Section 31

Message from the Chief Financial Officer 32

Independent Auditors’ Report 33

Principal Financial Statements 41

Consolidated Balance Sheets 42

Consolidated Statements of Net Cost 43

Consolidated Statements of Changes in Net Position 44

Combined Statements of Budgetary Resources 45

Notes to the Financial Statements 47

Required Supplementary Information (Unaudited) 103

Required Supplementary Stewardship Information (Unaudited) 109

Other Information 119

Schedule of Spending (Unaudited) 120

Office of Inspector General Summary on Top Management Challenges 121

Summary of Financial Statement Audit and Management Assurances 126

Improper Payments Information Act (IPIA) of 2002, as Amended, Reporting Details 127 

Freeze the Footprint 144

Civil Monetary Penalties’ Adjustments for Inflation 145

Undisbursed Balances in Expired Grant Accounts 150

Glossary of Acronyms 154

Acknowledgements 159

FY 2016 AGENCY FINANCIAL REPORT | III
MESSAGE FROM SECRETARY PRITZKER

I

am pleased to present the Department of Commerce’s 

Agency Financial Report (AFR) for fiscal year (FY) 2016. The 

AFR is an opportunity for us to highlight the Department’s 

accomplishments and challenges in FY 2016. This report 

also provides information on our financial management and 

performance. 

The primary mission of the Department of Commerce is to create 

the conditions for economic growth and opportunity. Since 

becoming Secretary, I have met with more than 2,000 CEOs and 

business leaders, entrepreneurs and other stakeholders across 

the country and around the world. Based on these conversations, 

we initiated the “America is Open for Business” strategic plan 

focused on five key priorities: expanding exports and foreign inward 

investment; supporting innovation and entrepreneurship; ensuring communities are prepared for and prosper in a 

changing environment; unleashing more access to government data; and operational excellence. 

In FY 2016, the Department continued to help American businesses and workers prosper, compete, and thrive. 

Exports set record highs. America was once again named the #1 place in the world for investment. More government 

data were made available. And the longest streak of private-sector job growth continued.

The Department’s 46,000 employees are committed to meeting the fast-changing needs of the private sector in 

today’s global economy and providing the best services possible to the American people.

This report provides an important window of transparency for our key stakeholders and the American public to 

assess our financial information and performance for this past year.

Our financial management systems have been found to be in substantial compliance with the Federal Financial 

Management Improvement Act (FFMIA) of 1996. In accordance with Office of Management and Budget (OMB) 

Circulars A-136 and A-11, the financial and performance data published in this report are substantially complete 

and reliable.

IV | FY 2016 AGENCY FINANCIAL REPORT

MESSAGE FROM SECRETARY PRITZKER
These data provide an accurate and transparent accounting of the Department’s financial situation and high-level 

performance results. For the 18th year in a row, the independent auditors tasked with reviewing our financial 

statements have provided an unmodified opinion. However, the Department received a Significant Deficiency relating 

to needed improvement in financial information system general controls as a result of findings within the bureaus.

The Federal Managers’ Financial Integrity Act of 1982 (FMFIA) and OMB Circular A-123 provide the framework within 

which Departmental and operating unit managers may determine whether adequate internal controls are in place 

and operating as they should. We rely on a wide range of studies conducted by programmatic and administrative 

managers, the Office of Inspector General, the Government Accountability Office, and others to assist in this effort. 

Based on activities undertaken during FY 2016, the Department is able to provide an unmodified statement of 

assurance that its internal controls and financial management systems meet the objectives of FMFIA.

More detailed performance information and results will be released in the Annual Performance Report in February 2017.

I am proud of the work we do and the progress we have made. I hope you find this report useful.

Penny Pritzker

U.S. Secretary of Commerce

November 14, 2016

FY 2016 AGENCY FINANCIAL REPORT | V

MESSAGE FROM SECRETARY PRITZKER
HOW TO USE THIS REPORT

T

his Agency Financial Report (AFR) for the fiscal year ended 

September 30 (FY) 2016 provides the Department of Commerce’s 

financial and summary performance information in accordance with 

OMB Circular A-136, Financial Reporting Requirements.

The Department has chosen to produce an AFR. The Department will 

provide performance results in the FY 2018 Congressional Budget in 

conjunction with performance plan information as the “FY 2018 Annual 

Performance Report” for each bureau and will post it on the Department’s 

website at http://www.osec.doc.gov/bmi/budget/.

The Department’s annual AFR is available on the Department’s website at 

http://www.osec.doc.gov/ofm/OFM_Publications.html. The Department 

welcomes feedback on the form and content of this report.

This report is organized into the following major components:

Statement from the Secretary of Commerce

The Secretary’s statement includes an assessment of the reliability and completeness of the financial and summary 

performance information presented in the report and a statement of assurance on the Department’s management 

controls as required by the Federal Managers’ Financial Integrity Act (FMFIA).

Management’s Discussion and Analysis (MD&A)

This section provides an overview of the financial and summary-level performance information contained in 

the Performance Summary, Financial Section, and Other Information. The MD&A includes an overview of the 

summary of the performance process and current status of systems, internal control weaknesses, information on 

the Department’s financial management, and analysis of FY 2016 financial condition and results.

Financial Section

This section contains details of the Department’s finances in FY 2016. A message from the Department’s Chief 

Financial Officer (CFO) is followed by the independent auditors’ report, audited financial statements and notes, 

and required supplementary information.

Other Information

This section provides an overview of spending, a summary of the top management challenges, improper payments 

information, a federal real property “Freeze the Footprint” report, a schedule of civil monetary penalties’ adjustments 

for inflation, and a glossary of acronyms. 
Management’s Discussion

and Analysis
MISSION AND ORGANIZATION

MISSION

To create the conditions for economic growth and opportunity. 

2 | FY 2016 AGENCY FINANCIAL REPORT

MANAGEMENT’S DISCUSSION AND ANALYSIS
THE DEPARTMENT OF COMMERCE PROCESS FOR STRATEGIC 

PLANNING AND PERFORMANCE REPORTING

BACKGROUND ON THE FY 2014 – FY 2018 STRATEGIC PLAN

The Department of Commerce FY 2014 – FY 2018 strategic planning process was re-engineered in the summer of FY 2013. 

Newly confirmed, Secretary Penny Pritzker began her tenure with a national listening tour of businesses, Departmental 

leadership, and staff. The tour produced the outline of a new vision for the Department. The vision is a major departure 

from the previous strategic plan and has five goal areas: Trade and Investment, Innovation, Environment, Data, and 

Operational Excellence.

The outline the Office of the Secretary produced was refined and expanded upon by multi-bureau executive teams. 

The final product, published in March of FY 2014, requires an unprecedented level of bureau collaboration. All but three of 

19 strategic objectives involve more than one bureau; 12 involve three or more.

The bureau leadership development/writing teams became multi-bureau implementation teams that wrote action plans 

for each objective. The action plans included initiatives, initiative owners, milestones, and due dates. In FY 2015, the 

Department Strategic Plan and related action plans were revised by the executive teams based on lessons learned in 

FY 2014. The Department now has a 1.1 version of the FY 2014 – FY 2018 Strategic Plan.

ROUTINE MONITORING OF THE STRATEGIC PLAN

The Department’s Strategic Plan Review and Implementation (SPRI) meetings are the principal forum for monitoring 

the strategic plan and refining strategies and tactics on an ongoing basis. SPRI meets every month and includes the 

administration-appointed bureau leaders, the Secretary, her chief of staff, the Deputy Secretary, and principals of the Office 

of the Secretary. The Secretary attends when she is not on one of her many trips that support execution of the Strategic 

Plan. The Deputy Secretary chairs the meeting. At every meeting, a goal area and related objectives and priorities are 

discussed. Progress, challenges, and risks are identified and benefit from the collective talents and resources of the group. 

Strategies and tactics may be revised or enhanced to accelerate progress or reduce risks. 

There are several other mechanisms that are used to report and review Strategic Plan implementation. The Deputy Secretary 

meets monthly with the Goal Area leads individually and as a group. This provides the opportunity for deeper dives into 

issues and challenges. Data on Agency Priority Goals (APG), initiatives singled out for emphasis, and Cross-Agency Priority 

Goals (CAP), multi-agency priorities, are posted to a public website www.performance.gov. Before the data and explanations 

are published to the site, the tracking information is reviewed by both bureau and Department leadership and the Office of 

Management and Budget (OMB). Bureaus have internal bureau centric metric review processes. Data on mission support 

initiatives (Human Resources, Acquisition, Information Technology, etc.) are tracked on an online dashboard and reviewed 

at quarterly meetings with the Chief Financial Officer/Assistant Secretary for Administration.

FY 2016 AGENCY FINANCIAL REPORT | 3

MANAGEMENT’S DISCUSSION AND ANALYSIS
ANNUAL STRATEGIC REVIEW PROCESS

Apart from the SPRI and Goal Lead reviews of strategic objectives, in FY 2016 the Department conducted an annual 

strategic review as required by OMB Circular A-11. FY 2015 was the first year federal agencies conducted these reviews 

to the letter of new guidance from OMB and the Federal Performance Improvement Council. The Department’s reviews 

were conducted in the following three steps:

● Each Strategic Objective team met to discuss evidence of progress and plans to undertake additional research to 

improve strategies.

● The groups developed draft assessments of progress for review by a larger staff group and leadership.

● The Commerce Performance Management Team synthesized the material into a final Annual Strategic Review report.

Action plans for the strategic objectives will continue to be refined using the analysis from the strategic reviews and input 

from the review meetings. The strategic reviews and budget process will also generate a list of research and evaluation 

subjects that will be used to develop a priority “evidence” agenda that will provide information needed to improve policy 

and operations.

On the following page is a summary of the strategic goals and objectives established in the FY 2014 – FY 2018 Strategic Plan. 

The complete plan can be viewed online at https://www.commerce.gov/sites/commerce.gov/files/media/files/2014/

doc_fy2014-2018_strategic_plan.pdf.

4 | FY 2016 AGENCY FINANCIAL REPORT

MANAGEMENT’S DISCUSSION AND ANALYSIS
Note: ESA includes the Bureau of Economic Analysis and the Census Bureau.

SUMMARY OF STRATEGIC GOALS AND OBJECTIVES

TRADE AND INVESTMENT

1.1. Increase opportunities for U.S. companies by opening markets globally 

(ITA, NOAA, NTIA, USPTO)

1.2. Increase U.S. exports (BIS, EDA, ESA, ITA, MBDA, NIST, OS)

1.3. Increase high-impact inward foreign direct investment into the United States 

(EDA, ESA, ITA)

1.4. Strengthen fair competition in international trade for U.S. firms and 

workers (ITA)

INNOVATION

2.1. Accelerate advanced manufacturing (EDA, NIST)

2.2. Strengthen the Nation’s digital economy (ITA, NIST, NTIA, USPTO)

2.3. Catalyze innovation ecosystems (EDA, ESA, ITA, MBDA, NIST, OS, USPTO)

ENVIRONMENT

3.1. Advance the understanding and prediction of changes in the environment 

(NIST, NOAA)

3.2. Build a Weather-Ready Nation (ESA, NOAA)

3.3. Strengthen the resiliency of communities and regions (EDA, ESA, NIST, NOAA)

3.4. Foster healthy and sustainable marine resources, habitats, and ecosystems 

(NOAA)

3.5. Enable U.S. businesses to adapt and prosper by developing environmental 

and climate informed solutions (ESA, ITA, NIST, NOAA)

DATA

4.1. Deliver increasing amounts of data to governments, businesses, and the 

public in formats that are easier to access and use (OS, All Bureaus)

4.2. Position the Department of Commerce to meet society’s future data needs (ESA)

4.3. Create a data-driven government (EDA, ESA, ITA, MBDA)

OPERATIONAL EXCELLENCE

5.1. Empower and engage Commerce employees (OS, All Bureaus)

5.2 Support a service-oriented culture that responds to the needs of external 

and internal customers (OS, All Bureaus)

5.3 Manage for results (OS, All Bureaus)

5.4 Improve facilities, support services, and IT products and services to drive 

mission success (OS, All Bureaus)

Expand the U.S. economy 

through increased 

exports and inward 

foreign investment that 

lead to more and better 

American jobs

Foster a more innovative 

U.S. economy—one that is 

better at inventing, improving, and commercializing 

products and technologies

Help communities 

and businesses prepare 

for and prosper in a 

changing environment

Maximize the positive 

impacts of Commerce 

data on society

Strengthen the Department’s 

capacity to achieve its 

objectives, maximize 

return on program 

investments, and deliver 

quality, timely service

1 

2 

3 

4 

5 

FY 2016 AGENCY FINANCIAL REPORT | 5

MANAGEMENT’S DISCUSSION AND ANALYSIS
FY 2016 PERFORMANCE SUMMARY

OVERVIEW

The performance indicators below are a representative sample of the 170 indicators that are tracked. The indicators that are 

presented were selected based on significance, the availability of FY 2016 data, and accessibility (easy to understand without 

a technical background). The Department’s full set of performance metrics, trends and results are in the Annual Performance 

Plan/Report that is part of the annual budget submission to Congress. Because the Department’s strategic plan is a significant 

departure from past plans; many supporting indicators were established in the last few years and have limited trend data. Further, 

because of the publication date of this report, full year data on FY 2016 are not available on all measures.

1. TRADE AND INVESTMENT 

The Agency Priority Goal (APG) in the Trade and Investment goal area is “Percentage of Global Markets’ clients that achieved 

their export objectives.” Global Markets is part of the International Trade Administration (ITA) and assists U.S. business to start 

exporting or increase exports. This measure reflects Global Markets’ emphasis on customer service. In FY 2016, the target of 

73 percent was exceeded; 78 percent achieved their objectives. The percentage of clients highly likely to recommend Global 

Markets assistance, 86 percent, compares favorably to the service ratings of well-regarded private sector companies.

In FY 2016, ITA increased emphasis on enforcement of trade agreements and conventions. They far exceeded their target of 

responding to 259 business petitions regarding unfair practices; they worked with 655 businesses. The “export impact of prevention, 

reduction or removal of trade barriers” depends largely on the issues and industries that are problematic in a given year.

Performance Measure

FY 2011

Actual

FY 2012

Actual

FY 2013

Actual

FY 2014

Actual

FY 2015

Actual

FY 2016

Target

FY 2016

Actual

Percentage of Global Markets clients that achieved 

their export objectives

67% 68% 67% 73% 73% 73% 78%

Percentage of clients highly likely to recommend 

Global Markets

79% 82% 78% 83% 84% 81% 86%

Number of clients assisted by Global Markets 20,143 18,945 18,126 17,593 25,029 23,000 26,852

Number of antidumping and countervailing duty petition 

counseling sessions

N/A N/A N/A N/A N/A 259 655

Export impact of prevention, reduction or removal of trade 

barriers – Dollars of business created or retained 

N/A N/A $1.8B $151M $3.6B $1.7B $26.2B

2. INNOVATION

The Department supports innovation with cutting-edge research by the scientists at the National Institute of Standards and 

Technology (NIST). The NIST indicator below shows that their publications are cutting-edge and highly cited. The National 

Telecommunications and Information Administration (NTIA) provides highly used research and information on broadband use and 

developments. The third measure in the matrix below refers to the Department work on industry driven skills training.

6 | FY 2016 AGENCY FINANCIAL REPORT

MANAGEMENT’S DISCUSSION AND ANALYSIS
Performance Measure

FY 2011

Actual

FY 2012

Actual

FY 2013

Actual

FY 2014

Actual

FY 2015

Actual

FY 2016

Target

FY 2016

Actual

Relative citation impact of NIST authorized publications 1.63 1.31 1.58 1.53 1.7 1.5 2.0

Number of times NTIA research publications are downloaded N/A N/A N/A 7,707 8,960 7,500 8,800

Number of NIST Manufacturing Extension Partnership 

centers partnering with skills training providers

N/A N/A N/A 54 54 53 53

The U.S. Patent and Trademark Office (USPTO) continues to reduce the patent backlog and the time required for a patent 

determination (another APG). Their efforts to improve cycle-time and patent quality help reduce the time from invention to 

commercialization of a product.

Performance Measure

FY 2011

Actual

FY 2012

Actual

FY 2013

Actual

FY 2014

Actual

FY 2015

Actual

FY 2016

Target

FY 2016

Actual

Patent first action pendency (months) 28.0 21.9 18.2 18.4 17.3 14.8 16.2

Patent total action pendency (months) 33.7 32.4 29.1 27.4 26.6 25.4 25.3

Patent backlog 669,625 608,283 584,998 605,646 553,221 N/A 537,655

3. ENVIRONMENT

The National Oceanic and Atmospheric Administration (NOAA) has an innovative APG aimed at accelerating the speed of science. 

They set a target for moving seven advances in research to advances in operations. They missed the target and moved four to 

applications but aiming high using an unprecedented measure has produced learning and new strategies. 

NOAA also advances U.S. resilience to extreme weather and works with individual communities toward that end. As shown 

in the metric below many hometowns are benefiting from increased resilience. Like NIST, NOAA has an admirable record for 

peer-reviewed research; NOAA research focuses on weather, climate, and the oceans. As indicated in the last measure in the 

matrix below they also have an admirable record of success supporting populations of endangered species. 

Performance Measure

FY 2011

Actual

FY 2012

Actual

FY 2013

Actual

FY 2014

Actual

FY 2015

Actual

FY 2016

Target

FY 2016

Actual

Number of research and development capabilities 

transitioning to applications (from TRL 8 to TRL 91) to 

improve efficiency, accuracy, or precision of forecasts

N/A N/A N/A N/A N/A 7 4

Percentage of U.S. coastal states and territories 

demonstrating annual improvement in resilience to 

weather and climate hazards

43% 46% 57% 54% 60% 60% 74%

Annual number of peer-reviewed publications related to 

environmental understanding and prediction 

1,210 1,800 1,676 1,759 1,860 1,500 1,697

Number of protected species designated as threatened, 

endangered or depleted with stable or increasing 

population levels

29 29 30 37 31 31 31

1 TRL = Technology Readiness Level

FY 2016 AGENCY FINANCIAL REPORT | 7

MANAGEMENT’S DISCUSSION AND ANALYSIS
NOAA skill and lead time for predicting weather can and does save lives. They have a multi-year APG to extend the reliable lead 

time for weather predictions to 9.5 days. They are using “super-computing” to perfect the models that will achieve the goal.

Performance Measure

FY 2011

Actual

FY 2012

Actual

FY 2013

Actual

FY 2014

Actual

FY 2015

Actual

FY 2016

Target

FY 2016

Actual

Length of forecast considered useful 9.05 9.46 9.34 9.29 9.25 9.5 N/A

U.S. temperature forecast skill 22 29 26 26 25 25 24

Winter storm warning – Lead time (hours) 20 18 22 22 21 20 21 

4. DATA

The Data goal area has a much different emphasis than in the past. The Department has viewed its statistical and environmental 

data as a product. The FY 2014 – FY 2018 Strategic Plan presents data as a national asset that can increase competitiveness and 

save lives (weather data). In FY 2014, the new Chief Data Officer joined the Department to create a vision and a plan to put the 

Department ahead of the breakneck speed of information technology (IT) advances. In FY 2015, his new team began working 

with several bureaus on new applications that make Department data more accessible and useful.

The Census Bureau has met its annual milestones toward its key goal. They are aiming for a 2020 Decennial Census that cost 

less per housing unit (when adjusted for inflation) than the 2010 Census, while maintaining high quality and timeliness for all its 

many survey and data products. Census and the Bureau of Economic Analysis (BEA) continued to meet their deadlines for data 

releases that are the basis of critical government and business decisions.

Performance Measure

FY 2011

Actual

FY 2012

Actual

FY 2013

Actual

FY 2014

Actual

FY 2015

Actual

FY 2016

Target

FY 2016

Actual

Percentage of key activities for cyclical census programs 

completed on time to support effective decision-making 

by policymakers, businesses, and the public

90% 90% 90% 90% 100% 90% 100%

Percentage of key data products for Census Bureau 

programs released on time to support effective decisionmaking of policymakers, businesses, and the public 

(Economic Indicators)

100% 100% 100% 100% 100% 100% 100%

Percentage of key data products for Census Bureau 

programs released on time to support effective decisionmaking of policymakers, businesses, and the public 

(Other Key Products: Econ, Geo, and Demo)

90% 90% 90% 86% 87% 90% 84%

BEA timely releases of economic statistics 62 62 62 65 65 65 741

1 Target was exceeded because additional datasets were released.

8 | FY 2016 AGENCY FINANCIAL REPORT

MANAGEMENT’S DISCUSSION AND ANALYSIS
5. OPERATIONAL EXCELLENCE 

There are many “granular” measures in the Operational Excellence goal area that establishes strategies for mission support, 

e.g., measures of customer satisfaction with individual processes and services, cycle-times, and cost effective new practices. 

The strategic measures are milestones for creating a new framework for organizational development, a common IT architecture, 

and enterprise-wide support services. Plans in these areas are on track and in line with government-wide initiatives. As these 

proceed, the Department monitors employee survey results (see below) to assess if the culture supports excellence. The survey 

data below is the percent of staff who responded positively on the questions in the index. Both index scores are above the 

federal average. Environmental responsibility is monitored through a sustainability index and enterprise acquisition practices 

are monitored through staff feedback and savings. Each measure shows notable progress.

Performance Measure

FY 2011

Actual

FY 2012

Actual

FY 2013

Actual

FY 2014

Actual

FY 2015

Actual

FY 2016

Target

FY 2016

Actual

Federal Employee Viewpoint Survey – Employee 

Engagement Index

70 70 70 70 68 N/A 69

Federal Employee Viewpoint Survey – Results Oriented 

Culture Index

61 61 61 61 60 N/A 60

Commerce Sustainability Scorecard rank among Chief 

Financial Officer agencies

N/A N/A 24/24 15/24 5/25 Top 10 N/A

Savings achieved through effective acquisition practices N/A N/A $29M $18.1M $17M N/A $26M

FY 2016 AGENCY FINANCIAL REPORT | 9

MANAGEMENT’S DISCUSSION AND ANALYSIS
T

he Department’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). During FY 2016, the Department assessed its internal control over the effectiveness and 

efficiency of operations and compliance with applicable laws and regulations in accordance with Office of 

Management and Budget (OMB) Circular A-123, Management’s Responsibility for Enterprise Risk Management 

and Internal Control. Based on the results of this evaluation, the Department 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, 2016 was operating effectively and no material weaknesses were found 

in the design or operation of the internal controls. 

In addition, the Department conducted its assessment of the effectiveness of internal control over financial 

reporting, which includes safeguarding of assets and compliance with applicable laws and regulations, 

in accordance with the requirements of Appendix A of OMB Circular A-123. Based on the results of this 

evaluation, the Department can provide reasonable assurance that its’ internal control over financial reporting 

as of June 30, 2016 was operating effectively and no material weaknesses were found in the design or 

operation of the internal control over financial reporting. Furthermore, no material weaknesses related to 

internal control over financial reporting were identified between July 1 and September 30. 

Based on reviews conducted by the Department, it has been able to determine that its financial systems are 

in conformance with government-wide requirements.

Ellen Herbst

Chief Financial Officer and

Assistant Secretary for Administration

Department of Commerce

November 14, 2016

Penny Pritz

Secretary of Commerce

November 14, 2016

MANAGEMENT CONTROLS

10 | FY 2016 AGENCY FINANCIAL REPORT

MANAGEMENT’S DISCUSSION AND ANALYSIS
FEDERAL MANAGERS’ FINANCIAL INTEGRITY ACT (FMFIA) OF 1982

The objective of the Department’s management control system is to provide reasonable assurance that: 

● Obligations and costs are in compliance with applicable laws;

● Assets are safeguarded against waste, loss, unauthorized use, or misappropriation; 

● Revenues and expenditures applicable to the Department’s operations are properly recorded and accounted 

for, permitting accurate accounts, reliable financial reports, and full accountability for assets; and 

● Programs are efficiently and effectively carried out in accordance with applicable laws and management policy. 

During FY 2016, the Department reviewed its management control system in accordance with the requirements of FMFIA, 

and OMB and Departmental guidelines. 

SECTION 2 OF FMFIA – INTERNAL MANAGEMENT CONTROLS

 Section 2 of FMFIA requires that federal agencies report, on the basis of annual assessments, any material weaknesses 

that have been identified in connection with their internal and administrative controls. The efficiency of the Department’s 

operations is continually evaluated using information obtained from reviews conducted by the Government Accountability 

Office (GAO) and the Office of Inspector General (OIG), evaluations conducted by other federal agencies such as the Office 

of Personnel Management, and other specifically requested studies. The diverse reviews that took place during FY 2016 

that were key to the organization provide assurance that Department systems and management controls comply with 

standards established under FMFIA.

Based on their FY 2016 evaluations, the Department’s 12 bureaus submitted, signed, and certified their Statements of 

Assurance and can provide reasonable assurance that its’ internal control over the effectiveness and efficiency of operations 

and compliance with applicable laws and regulations was operating effectively and no material weaknesses were found in 

the design or operation of the internal controls. 

SECTION 4 OF FMFIA – INTERNAL CONTROLS OVER FINANCIAL MANAGEMENT SYSTEMS 

The Department has reported no material weaknesses under FMFIA Section 4 in recent years. Based on reviews conducted 

by the Department and its bureaus for FY 2016, the financial systems in the Department are compliant with GAO principles 

and standards, the requirements of the Chief Financial Officers (CFO) Act, and OMB requirements. 

FEDERAL FINANCIAL MANAGEMENT IMPROVEMENT ACT (FFMIA) OF 1996

Under FFMIA, the Department is required to have financial management systems that comply with federal financial 

management system requirements, federal accounting standards, and the U.S. Government Standard General Ledger at 

the transaction level. In FY 2016, the Department remained in compliance with FFMIA. 

FY 2016 AGENCY FINANCIAL REPORT | 11

MANAGEMENT’S DISCUSSION AND ANALYSIS
REPORT ON AUDIT FOLLOW-UP

The Inspector General Act, as amended, requires that the Secretary report to Congress on the final action taken for Inspector 

General audits. This report covers Commerce Department audit follow-up activities for FY 2015.

SUMMARY OF ACTIVITY ON AUDIT REPORTS

OCTOBER 1, 2014 THROUGH SEPTEMBER 30, 2015

NUMBER OF OPEN REPORTS POTENTIAL MONETARY BENEFITS

Monetary1 Nonmonetary2 Total

Disallowed 

Costs3

Funds to Be Put to 

Better Use4

Beginning Balance 12 28 40 $ 19,277,332 $ 224,342,502

New Reports 0 14 14 – –

Total Reports Open During the Period 12 42 54 19,277,332 224,342,502

Reports Closed 7 8 15 3,805,139 221,564,007

Ending Balance 5 34 39 $ 15,472,193 $ 2,778,495

1 “Monetary reports” are those in which OIG has found that there are potential monetary benefits to be achieved through implementation of 

its recommendations.

2 “Nonmonetary reports” do not contain findings identifying potential monetary benefits.

3 “Disallowed costs” are questioned costs that management has sustained or agreed should not be charged to the government.

4 “Funds to be put to better use” are funds that could be used more efficiently if management took action to implement and complete the 

recommendation. Audits with “funds to be put to better use” may be non-federal audits of individual grant awards or performance audits 

of grant programs or other programs. Thus, the amount of “funds to be put to better use” among audits can vary widely.

Notes:

• Changes to the non-federal audit process were implemented in part as a result of OMB’s Uniform Administrative Requirements, Cost 

Principles and Audit Requirements for Federal Awards. Effective December 26, 2014, OIG discontinued review of 

non-federal audit reports.

• With the FY 2016 Agency Financial Report, the Department has changed the reporting period to the previous fiscal year.

• This report does not reflect implementation of individual recommendations, but only closure of complete reports 

(i.e., implementation of all recommendations).

BIENNIAL REVIEW OF FEES

OMB Circular A-25 Revised, User Charges, requires the biennial review of agency programs to determine whether fees 

should be charged for government goods or services, and to ascertain that existing user charges are adjusted to reflect 

unanticipated changes in costs or market values. 

The Department conducts a review of its programs at least biennially, with some bureaus conducting annual reviews. With 

the exception of the National Technical Information Service (NTIS), all bureaus in the Department are in compliance with 

the requirement to adjust its fees to meet the Circular A-25 Revised requirement of full-cost recovery for user charges.

Due to a change in services provided in FY 2017 in support of their new strategic direction, the NTIS will complete a review 

of all user charges in 2017. The last NTIS review was conducted in 2014. In June of 2015, Secretary Pritzker set a new 

focus for NTIS to expand access to the Department’s and the broader federal government’s data resources with a focus 

on data concerning the nation’s economy, population, and environment. In support of this new strategic direction, NTIS 

has been phasing out projects and products that are not aligned with the new mission. This had a significant impact on 

the type/number of products that NTIS charges a user fee for. 

12 | FY 2016 AGENCY FINANCIAL REPORT

MANAGEMENT’S DISCUSSION AND ANALYSIS
FINANCIAL MANAGEMENT AND ANALYSIS

INTRODUCTION

Under the Secretary’s leadership, the Department is continuing to give the highest priority to providing accurate financial 

data to its internal and external customers, and to its accountability for all assets. Ensuring that there are strong internal 

controls throughout the Department remains a priority. The Department has created a financial management environment that 

complies with federal laws and regulations and that provides its executives with timely, accurate financial and performance 

information. This is evidenced with the Department continuing to receive unmodified audit opinions, maintaining a single 

integrated financial system, and continuing its compliance with the Federal Financial Management Improvement Act (FFMIA).

Highlights of accomplishments for FY 2016 and future initiatives are discussed further below.

FINANCIAL MANAGEMENT SYSTEMS

The Department maintains an FFMIA-compliant financial management system, Commerce Business Systems (CBS), which 

provides reliable, timely information within a sophisticated security infrastructure. The system is capable of producing both 

financial and budget reports from information generated within the financial management system. CBS consists of a Core 

Financial System, including the Commerce Purchase Card System and the Budget and Execution Data Warehouse. CBS is 

interfaced with the Commerce Standard Acquisition and Reporting System, the U.S. Department of Agriculture’s National 

Finance Center Payroll System, and the U.S. Department of the Treasury’s (Treasury) Automated Standard Application 

for Payments. 

The financial information from CBS is integrated in the Corporate Database for consolidated financial reporting, resulting in 

a single integrated financial management system. The Corporate Database is a commercial, off-the-shelf software package 

for consolidating financial data and producing financial reports. The Corporate Database is an integrated solution that 

provides financial statements and Adjusted Trial Balances reported at the Department, bureau, and Treasury Appropriation/

Fund Group level. It also provides the ability to perform data analysis and produce the Department’s footnotes, financial 

analysis reports, and other additional information required for the government-wide financial statements. 

During FY 2016, the Department accomplished the following initiatives: 

● Began the requirements, design, development, testing, and deployment of interfaces between CBS and E2 in support 

of the Department-wide implementation of E2 (travel management system). These interfaces include authorizations, 

vouchers, centrally billed accounts, and audit functionality;

● Began planning and assessment for the Department’s approach to meet the Digital Accountability and Transparency 

Act (DATA Act) requirements;

● Participated in the Common Core effort, led by Treasury’s Office of Financial Innovation and Transformation, to optimize 

functional, technical, and operations components of each Federal Shared Service Provider financial management 

system solution. The Business Application Solutions (BAS) project remains on hold while the Department works 

with the Office of Management and Budget (OMB) and Treasury to determine a path forward;

FY 2016 AGENCY FINANCIAL REPORT | 13

MANAGEMENT’S DISCUSSION AND ANALYSIS
● Implemented system changes to address the government-wide Treasury Accounting Symbol modification to handle 

beginning balance attributes and Adjusting Entry modifications to CBS; 

● Deployed Visa and Passport system to facilitate issuance of visas and passports for Department officials’ foreign travel;

● Completed several technical CBS upgrades, including the upgrade of the CSC Portal to WebCenter; began the upgrade 

of the CBS Portal to WebCenter; began the Oracle 12c Database Upgrade;

● Deployed online dashboards, tools, processes, and standardized templates improving the efficiency, effectiveness, 

governance, management, and delivery of the Chief Financial Officer and Assistant Secretary for Administration 

(CFO/ASA) capabilities and services; and 

● Conducted operations and maintenance activities for the Department’s CFO/ASA Dashboard application. The CFO/

ASA Dashboard provides a Department-wide, executive-level overview of the Department’s highest priority and 

highest risk mission and administrative initiatives. 

In FY 2017 and beyond, the Department will continue its efforts to enhance its financial systems. The Department plans 

to accomplish the following: 

● Continue working with OMB and Treasury to determine the next steps for the BAS project; 

● Complete the design, development, and testing of the interfaces between the Department’s travel system and the 

Department’s financial management system (CBS), modifications to meet the DATA Act requirements;

● Implement a Department-wide relocation system and its interface with CBS; and

● Complete technical upgrades, including upgrading the database to Oracle 12c, and upgrading CBS Portal to WebCenter.

FINANCIAL REPORTING AND POLICY

The Department accomplished the following initiatives during FY 2016:

● Bureaus identified and reported improper payments data to the Department quarterly, including recaptures of 

improper payments data, identified reasons for improper payments, and continually implemented appropriate actions 

to minimize future improper payments; 

● Each of the Department’s bureaus/reporting entities updated or prepared their scheduled improper payment risk 

assessments covering all programs/activities as required by OMB Circular A-123, Management’s Responsibility for 

Internal Control, Appendix C, Requirements for Effective Measurement and Remediation of Improper Payments. 

These improper payment risk assessments of the entity’s programs/activities also include assessments of the 

control, procurement, and grants management environments, and are now in the continuous process stage of being 

updated every three years, unless significant changes occur, in which case an assessment will be updated quicker; 

● A contractor completed an annual payment recapture audit of Department-wide grants and other cooperative 

agreements, and completed annual payment recapture audits of contracts/obligations for the Bureau of Industry 

and Security and the National Technical Information Service (payment recapture audits of contracts/obligations are 

performed annually for the Department’s bureaus/reporting entities, on a rotational basis). The payment recapture 

audits identified improper payments (overpayments) of $122 thousand, for which appropriate action was subsequently 

taken by the Department to resolve the improper payments, and recapture was not applicable; 

14 | FY 2016 AGENCY FINANCIAL REPORT

MANAGEMENT’S DISCUSSION AND ANALYSIS
● A contractor prepared a Statistical Sampling and Estimation Plan for the National Oceanic and Atmospheric Administration 

(NOAA) Disaster Relief Appropriations Act FY 2015 disbursements in order to yield a statistically valid improper 

payments estimate, and performed the FY 2015 disbursements testing, which yielded a statistically valid improper 

payments estimate of $51 thousand for FY 2015 disbursements; and

● Adjusted the Department’s civil monetary penalties for inflation in 2016, under a revised methodology effective for 

2016 which provided for initial catch up adjustments for inflation in 2016, in accordance with the Federal Civil Penalties 

Inflation Adjustment Act of 1990, as amended by the Debt Collection Improvement Act of 1996 and the Federal Civil 

Penalties Inflation Adjustment Act Improvements Act of 2015. 

In FY 2017 and beyond, the Department plans to accomplish the following:

● Adjust the Department’s civil monetary penalties for inflation in 2017, in accordance with the Federal Civil Penalties 

Inflation Adjustment Act of 1990, as amended by the Debt Collection Improvement Act of 1996 and the Federal Civil 

Penalties Inflation Adjustment Act Improvements Act of 2015; 

● Implement, effective FY 2017, the Federal Accounting Standards Advisory Board’s (FASAB) Statement of Federal 

Financial Accounting Standards (SFFAS) 48, Opening Balances for Inventory, Operating Materials and Supplies, and 

Stockpile Materials, which permits reporting entities to apply an alternative valuation method in establishing opening 

balances for inventory, operating materials and supplies, and stockpile materials;

● Evaluate and implement as necessary, effective FY 2019, FASAB’s SFFAS 49, Public-Private Partnerships Disclosure 

Requirements, which establishes a Public-Private Partnership definition and identifying risk-based characteristics that 

need to exist before considering the Public-Private Partnership arrangement or transaction for disclosure. The standard 

exempts certain arrangements or transactions from the standard’s specific disclosure requirements, although such 

items are subject to other federal accounting standards, as appropriate; and

● Upgrade the Corporate Database as dictated by changes to financial reporting requirements and technology 

advancements.

GRANTS MANAGEMENT

Under the CFO/ASA, the Office of Acquisition Management (OAM) is responsible for the Department’s enterprise-wide 

grants management policy, projects, and oversight. The Department’s focus is to standardize policy and procedures for 

its grant and cooperative agreement programs in order to strengthen compliance. Additionally, OAM is overseeing the 

migration of all of its grant-making units to the NOAA’s fully automated grants management system, Grants Online. Targeted 

efforts by OAM continue to transform the decentralized Department grants management community into an effective and 

efficient partnership. 

OAM’s Grants Management Division (GMD) coordinates the Department’s implementation of all applicable statutes, 

regulations, Executive Orders, and OMB circulars, as well as the provisions of 2 CFR, Part 200 (Uniform Guidance), to 

establish more efficient and user friendly requirements for both Department awarding units and recipients. OAM/GMD 

collaborates with partners in the Department’s financial assistance community to review and update the Department’s 

Grants and Cooperative Agreements Manual (Manual) as well as develop updated Financial Assistance Standard Terms and 

Conditions (STC) consistent with the issued guidance—both the Manual and the STCs undergo annual reviews and updates.

FY 2016 AGENCY FINANCIAL REPORT | 15

MANAGEMENT’S DISCUSSION AND ANALYSIS
The International Trade Administration (ITA), Minority Business Development Administration, National Telecommunications 

and Information Administration (as well as the First Responder Network Authority), and the Census Bureau have successfully 

migrated to NOAA’s Grants Online to manage their respective grants throughout the award’s lifecycle. The Economic 

Development Administration and the National Institute of Standards and Technology (NIST) are in the process of migrating 

to Grants Online and they are expected to complete their migration in FY 2018.

OAM/GMD is participating in an intergovernmental work group lead by OMB to review policy governing the Catalog of 

Federal Domestic Assistance (CFDA). Specifically, the work group is studying the feasibility of linking CFDA entries to 

Treasury Account Symbols and program activity and to what extent CFDA listings can be associated with authorizing statutes.

OAM/GMD is actively engaged in assisting the grant making bureaus with implementing DATA Act, which was enacted in 

FY 2014 under Public Law 113-101. The DATA Act furthers the President’s effort already underway to provide transparent federal 

spending information and establish government-wide financial data standards for information posted on USASpending.gov.

In support of the Department’s focus in standardizing policies and procedures for its financial assistance programs and thus 

strengthen compliance, OAM/GMD tracks the number of expired grants which remain unclosed for more than 180 days. 

The Department has made significant progress in this area over the past three years, with the total number of unclosed 

grants in this category dropping from 703 at the start of calendar year 2013 to 108 by July of 2016. To ensure this issue 

remains a top priority, each operating unit provides OAM/GMD with a monthly report and also provides an update at the 

Department’s bi-monthly Grants Council meetings.

HUMAN CAPITAL

Both the President and Congress recognize that the federal workforce is central to the delivery of services to the U.S. public. 

Acknowledging that people are the key to mission accomplishment, Departmental leadership continues to implement and 

evaluate programs to ensure that there is succession planning in the area of financial management. Internships, leadership 

development programs, technical training opportunities, telework, and succession plans are used as vehicles for making 

progress in the recruitment, development, and retention of a highly-skilled and diverse workforce. 

In FY 2016, the Department continued its drive towards implementing the Enterprise Services (ES) Initiative, recognized by 

the Secretary, Deputy Secretary, and executive leadership to be a proven means of achieving the objective of Operational 

Excellence, one of the five priority areas of the Department’s Strategic Plan designed to help the Department meet its longterm goals and objectives. The ES Initiative will transform the way the Department delivers mission enabling services by 

implementing intra-departmental, multi-function enterprise service operations (in Human Resources, Information Technology, 

Acquisitions, and Financial Management) to the Office of the Secretary and the Department’s 12 bureaus. 

While full implementation of ES is pending reprogramming decisions, ES has been successful in delivering several critical 

services in Acquisitions and Information Technology, based on the authority and approvals that the Department does have, 

yielding enterprise-wide benefits and cost savings for the Department. In support of transforming the Department’s Human 

Resources program, the Department awarded a contract to a vendor to perform a full range of Human Resources transactional 

services, allowing HR professionals to focus on the high value, strategic services important to client bureaus in meeting 

their mission. Efforts will continue in FY 2017 and beyond to transition additional services and functions (e.g., Financial 

Management) to ES service delivery model. 

16 | FY 2016 AGENCY FINANCIAL REPORT

MANAGEMENT’S DISCUSSION AND ANALYSIS
Also in FY 2016, the Department hosted 31 Pathway Program interns (an increase from 14 interns in FY 2015) as accountants, 

budget analysts, and auditors including 24 new hires and four who were converted to permanent positions. Trainees were 

located within finance and accounting offices in the Bureau of Economic Analysis, Census Bureau, ITA, NIST, and the Office 

of Inspector General (OIG). To maintain a highly skilled financial management workforce, the Department’s retention and 

succession strategies include the increased use of telework. In FY 2016, approximately 61 percent of accounting and 

budgeting employees engaged in telework, an increase of seven percentage points from 54 percent in FY 2015. Telework is 

used by the Department to position itself as an “employer of choice” in attracting qualified employees, facilitating employee 

work/life balance, increasing employee satisfaction and engagement, and potentially increasing employee productivity.

RECEIVABLES WITH THE PUBLIC AND DEBT COLLECTION MANAGEMENT

The Department provides policies and procedures for the management and collection of non-tax debts owed to Departmental 

entities in its debt collection regulations, Commerce Debt Collection. These regulations adopt and incorporate all provisions 

of the Federal Claims Collections Standards (FCCS), which were jointly published by Treasury and the U.S. Department of 

Justice. The Department’s debt collection regulations supplement FCCS by prescribing procedures, consistent with FCCS, 

as necessary and appropriate for Departmental debt collection management operations. FCCS clarifies and simplifies federal 

debt collection procedures and reflects changes under the Debt Collection Improvement Act of 1996 and the General 

Accounting Office Act of 1996. The Department also provides guidance for debt collection management in its Credit and 

Debt Management Operating Standards and Procedures Handbook, to ensure that consistent debt collection management 

practices are established and followed throughout the Department, and to establish and enhance Departmental debt 

collection management practices.

Applicable bureaus prepared, in 2014, Credit Management and Debt Collection Plans, which set forth their plans for 

effectively managing credit extension, account servicing, and debt collection management. These plans are updated at 

least every five years.

The Digital Accountability and Transparency Act of 2014 (DATA Act) was enacted starting from first quarter FY 2016 to report to 

Congress any instance in which federal agencies fail to refer legally enforceable non-tax debts that are greater than 120 days 

delinquent to the Treasury Offset Program (TOP) for administrative offset. 

FY 2016 AGENCY FINANCIAL REPORT | 17

MANAGEMENT’S DISCUSSION AND ANALYSIS
The Department’s total gross receivables with the public decreased $10 million, or 2.0 percent, from $482 million as of 

September 30, 2015 to $472 million as of September 30, 2016, as reported on the Department’s Treasury Report on Receivables, 

which is the primary means for the Department to provide comprehensive information to Treasury on its receivables with the 

public. Total delinquencies with the public, as a percentage of total gross receivables with the public, increased from 1.2 percent

as of September 30, 2015 to 3.8 percent as of September 30, 2016. Receivables with the public over 180 days delinquent/120 days 

delinquent (FY 2016), as a percentage of total gross receivables with the public, remained the same from 0.3 percent as of 

September 30, 2015 to 0.3 percent as of September 30, 2016. 

Prescreening procedures, account-servicing standards, 

determined collection of delinquent debt, and extensive 

referrals of delinquent debt to Treasury for cross-servicing, 

which includes Treasury referrals to the Treasury Offset 

Program and credit bureau reporting when deemed 

appropriate by Treasury, have all contributed to effective 

Departmental debt collection management. The Debt 

Collection Improvement Act of 1996 established Treasury as 

the debt collection agency for eligible federal agency debts. 

PAYMENT PRACTICES

PROMPT PAYMENT

The Prompt Payment Act of 1982 generally requires 

agencies to pay their bills to vendors on a timely basis 

(within 30 days of receipt of relevant documents), and 

to pay interest penalties when payments are made late. 

The Department closely monitors its prompt payment 

performance, and the bureaus submit quarterly reports of 

prompt payment performance to the Deputy CFO. 

The Department’s prompt payment performance increased from 98.3 percent in FY 2015 to 98.8 percent in FY 2016. The 

number of invoices paid late decreased from 4,480 in FY 2015 to 3,064 in FY 2016. FY 2014 prompt payment performance 

was lower than all other fiscal years due to unusual processing delays caused by the October 2013 furlough of financial 

management staff. The Department continues to focus on improving its prompt payment percentage by working closely 

with its bureaus to identify opportunities for new or improved business processes. Per OMB Memorandum M-15-19, 

Improving Government Efficiency and Saving Taxpayer Dollars Through Electronic Invoicing (July 17, 2015) federal agencies are 

required to transition to electronic invoicing for appropriate federal procurements by the end of FY 2018. The Department is 

currently exploring options to transition off its primary financial management system used by most of the bureaus and adopt 

a commercial off-the-shelf (COTS) product for those bureaus. As such, the Department would in large part adopt the COTS 

product’s solution for an electronic invoice processing system, if available. The US Patent and Trademark Office is currently 

reviewing various electronic invoicing options and plans to have a solution in place by the end of FY 2018. 

FY 2014

1.0%

FY 2012 FY 2013 FY 2016

3.8%

TOTAL DELINQUENCIES WITH THE PUBLIC AS A 

PERCENTAGE OF TOTAL GROSS RECEIVABLES

AS OF SEPTEMBER 30

2.5%

FY 2015

2.8%

1.2%

18 | FY 2016 AGENCY FINANCIAL REPORT

MANAGEMENT’S DISCUSSION AND ANALYSIS
The Department implemented in July 2012 a temporary payment policy whereby agencies shall make payments to all 

prime contractors as soon as practicable, with a goal of paying all prime contractors within 15 days of receiving proper 

documentation. A July 2014 OMB memorandum, Extension of Policy to Provide Accelerated Payment to Small Business 

Subcontractors, extends this temporary policy to December 31, 2016. The Department monitors bureaus’ monthly 

accelerated payments performance.

BANKCARDS

The Department remains committed to the use of bankcards (purchase cards) as a means to improve mission support by 

streamlining the procurement and payment processes and by reducing administrative costs. Based on the results of FY 2013 

testing of purchase card processes under OMB Circular A-123, Appendix A, Internal Control Over Financial Reporting, the 

Department implemented a pilot data analytic program in FY 2015 that reviews Department-wide purchase and travel card 

transactions in an effort to identify patterns, trends, and anomalies for possible further investigation. The Department 

continued to work with the bureaus in implementing corrective actions, monitoring internal controls, performing data 

analytics, and conducting necessary reviews and testing to ensure proper internal controls are in place during FY 2016. 

The Department also continues to carry out initiatives which have been implemented in the last few fiscal years, including 

more effective training, oversight, and risk management reviews in order to enhance the purchase card program. These 

enhancements have led to, among other things, a steady decrease in the number of purchase cards issued and in use by 

the Department.

LIMITATIONS OF THE FINANCIAL STATEMENTS

The principle financial statements in the financial section have been prepared to report the overall financial position and 

results of operations of the Department, pursuant to the requirements of 31 U.S.C. 3515(b). While the statements have 

been prepared from the books and records of the Department in accordance with the generally accepted accounting 

principles (GAAP) for federal entities and the formats prescribed in OMB Circular A-136, Financial Reporting Requirements, 

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

from the same books and records. 

These financial statements should be read with the realization that they are for a component of the U.S. government, a 

sovereign entity. One implication of this is that liabilities cannot be liquidated without legislation that provides the resources 

to do so.

FY 2016 AGENCY FINANCIAL REPORT | 19

MANAGEMENT’S DISCUSSION AND ANALYSIS
ANALYSIS OF FY 2016 FINANCIAL CONDITION AND RESULTS

FINANCIAL HIGHLIGHTS

(Dollars in Thousands)

Percentage 

Change FY 2016 FY 2015

Condensed Balance Sheets:

As of September 30, 2016 and 2015

ASSETS:

Fund Balance with Treasury 1% $ 25,872,055 $ 25,511,071

General Property, Plant, and Equipment, Net 9% 14,134,191 12,948,649

Direct Loans and Loan Guarantees, Net -11% 453,956 512,463

Investment N/A 333,013 –

Other -8% 454,077 491,547

TOTAL ASSETS 5% $ 41,247,292 $ 39,463,730

LIABILITIES:

Unearned Revenue -2% $ 1,485,260 $ 1,510,571

Federal Employee Benefits -1% 876,111 881,546

Accounts Payable -7% 598,009 646,074

Accrued Payroll and Annual Leave 10% 557,966 505,168

Debt to Treasury -6% 475,207 504,704

Liability to General Fund of U.S. Government 

for Deficit Reduction N/A 334,054 –

Accrued Grants -13% 125,498 144,925

Other 6% 284,949 269,860

TOTAL LIABILITIES 6% $ 4,737,054 $ 4,462,848

NET POSITION:

Unexpended Appropriations 2% $ 5,840,085 $ 5,733,904

Cumulative Results of Operations 5% 30,670,153 29,266,978

TOTAL NET POSITION 4% $ 36,510,238 $ 35,000,882

TOTAL LIABILITIES AND NET POSITION 5% $ 41,247,292 $ 39,463,730

Condensed Financing Sources:

For the Years Ended September 30, 2016 and 2015

Appropriations Received, Net of Reductions 8% $ 9,234,371 $ 8,535,185

Transfer In of Auction Proceeds from Federal 

Communications Commission -55% 8,430,058 18,627,804 

Transfer Out to General Fund of U.S. Government 

for Deficit Reduction -38% (7,781,010) (12,618,990)

Financing Sources Used for Recognizing Liability to 

General Fund of U.S. Government for Deficit Reduction N/A (334,054) –

Imputed Financing Sources from Cost Absorbed by Others -4% 247,277 256,500

Other -138% (157,102) 413,685

TOTAL FINANCING SOURCES -37% $ 9,639,540 $ 15,214,184

(continued on next page)

20 | FY 2016 AGENCY FINANCIAL REPORT

MANAGEMENT’S DISCUSSION AND ANALYSIS
(continued from previous page)

(Dollars in Thousands)

Percentage 

Change FY 2016 FY 2015

Condensed Statements of Net Cost:

For the Years Ended September 30, 2016 and 2015

Condensed Statements of Net Cost:

Gross Departmental Costs 2% $ 12,164,110 $ 11,951,789

Less: Earned Revenue 0% (4,033,926) (4,020,707)

NET COST OF OPERATIONS 3% $ 8,130,184 $ 7,931,082

Selected Budgetary Information:

For the Years Ended September 30, 2016 and 2015

New Obligations and Upward Adjustments -26% $ 15,459,852 $ 20,805,228

Outlays, Gross -27% $ 14,853,358 $ 20,469,821

COMPOSITION OF ASSETS AND ASSETS BY RESPONSIBILITY SEGMENT

The composition (by percentage) and distribution (by responsibility segment) of the Department’s assets remained consistent 

from September 30, 2015 to September 30, 2016. 

Departmental assets amounted to $41.25 billion as of September 30, 2016. Fund Balance with the U.S. Department of the 

Treasury (Treasury) of $25.87 billion is the aggregate amount of funds available to make authorized expenditures and pay 

liabilities. General Property, Plant, and Equipment (PP&E), Net of Accumulated Depreciation, of $14.13 billion, includes 

$9.74 billion of Construction-in-progress, primarily of satellites and weather measuring and monitoring systems; $1.51 billion 

of Structures, Facilities, and Leasehold Improvements; $1.46 billion of Satellites/Weather Systems Personal Property; and 

$1.42 billion of other General PP&E. Direct Loans and Loan Guarantees, Net of Allowances for Subsidy Cost (Present Value) 

and Loan Losses, of $454.0 million, primarily relates to the National Oceanic and Atmospheric Administration’s (NOAA) 

direct loan programs. Investment of $333.0 million, a new asset category as of September 30, 2016, represents NTIA 

Public Safety Trust Fund’s investment in federal securities, consisting of an interest-bearing, market based Treasury note 

purchased from Treasury. Other Assets of $454.1 million primarily includes Advances and Prepayments of $172.4 million; 

Accounts Receivable, Net of Allowance for Uncollectible Accounts, of $153.5 million; and Inventory, Materials, and Supplies, 

Net of Allowance for Excess, Obsolete, and Unserviceable Items, of $114.1 million.

FY 2016 AGENCY FINANCIAL REPORT | 21

MANAGEMENT’S DISCUSSION AND ANALYSIS
TRENDS IN ASSETS

Departmental assets increased $1.85 billion, or 5 percent, from $39.46 billion as of September 30, 2015 to $41.25 billion as 

of September 30, 2016. Fund Balance with Treasury increased $361.0 million, or 1 percent, from $25.51 to $25.87 billion. 

General PP&E, Net increased $1.19 billion, or 9 percent, from $12.95 billion to 14.13 billion, primarily due to an increase in 

Construction-in-progress of $1.14 billion, in large part due to an increase in Construction-in-progress for NOAA’s Geostationary 

Operational Environmental Satellites – R (GOES – R) and Joint Polar Satellite System (JPSS) of approximately $805.8 million 

and $760.3 million, offset by a decrease of approximately $219.9 million and $141.0 million related to the capitalization of 

the Deep Space Climate Observatory (DSCOVR) satellite and the Jason-3 Altimetry Mission Satellite, respectively. Direct 

Loans and Loan Guarantees, Net decreased by $58.5 million, or 11 percent, from $512.5 million to $454.0 million, primarily 

due to NOAA’s $33.3 million decrease in allowance for subsidy resulting from net technical re-estimate accrual and lower 

subsidy rates on disbursed loans, as well as a decrease of $23.7 million in loan balance primarily due to a large number of 

loan prepayments received and fewer loan disbursements. Investment of $333.0 million is a new NTIA Public Safety Trust 

Fund asset as of September 30, 2016 as previously discussed. Other Assets decreased $37.5 million, or 8 percent, from 

$491.5 million to $454.1 million, in large part due to a decrease in advances to grantees for NTIA’s Broadband Technology 

Opportunities Program of $67.7 million.

22 | FY 2016 AGENCY FINANCIAL REPORT

MANAGEMENT’S DISCUSSION AND ANALYSIS
COMPOSITION OF LIABILITIES AND LIABILITIES BY RESPONSIBILITY SEGMENT

The composition (by percentage) and distribution (by responsibility segment) of the Department’s liabilities changed somewhat 

from September 30, 2015 to September 30, 2016. Liabilities as of September 30, 2016 include a new liability of $334.1 million 

for NTIA Public Safety Trust Fund’s Liability to General Fund of U.S. Government for Deficit Reduction. Priority 8 of Section 

6413 of the Middle Class Tax Relief and Job Creation Act of 2012 specifies that any remaining funds deposited in the NTIA 

Public Safety Trust Fund be deposited in the General Fund of U.S. Government for deficit reduction after the end of FY 2022. 

Liabilities of the Department amounted to $4.74 billion as of September 30, 2016. Unearned Revenue of $1.49 billion 

represents the portion of monies received from customers for which goods and services have not been provided or 

rendered by the Department, including customer deposits, and primarily relates to patent and trademark application and 

user fees that are pending action, and also includes monies collected in advance under reimbursable agreements. Federal 

Employee Benefits Liability of $876.1 million is comprised of the actuarial present value of projected benefits for the NOAA 

Corps Retirement System of $633.0 million and the NOAA Corps Post-retirement Health Benefits of $36.5 million, and 

the Department’s Actuarial Federal Employees Compensation Act (FECA) Liability of $206.6 million, which represents 

the actuarial liability for future workers’ compensation benefits. Accounts Payable of $598.0 million consists primarily of 

amounts owed for goods, services, or capitalized assets received, progress on contract performance by others, and other 

expenses due. Accrued Payroll and Annual Leave of $558.0 million includes salaries and wages earned by employees, 

but not disbursed as of September 30, 2016. Debt to Treasury of $475.2 million represents debt for NOAA’s direct loan 

programs. Accrued Grants of $125.5 million relate to a diverse array of financial assistance programs and projects, including 

the Economic Development Administration’s (EDA) accrued grants of $50.1 million for its grant investments that help 

communities generate jobs, retain existing jobs, and stimulate industrial and commercial growth; NOAA’s accrued grants 

of $43.5 million for grants awarded to state and local governments, non-profits research institutions, and colleges and 

universities for research and conservation initiatives; and National Institute of Standards and Technology’s (NIST) accrued 

grants of $27.6 million for its grant investments and cooperative agreements that fund programs in a variety of fields such as 

energy, food safety, and electronics research, strategic manufacturing technology, and the Hollings Manufacturing Extension 

Partnership. Other Liabilities of $284.9 million primarily include Environmental and Disposal Liabilities of $143.1 million, 

including $73.8 million for asbestos-related cleanup costs and $57.3 million for a nuclear reactor operated by NIST; Accrued 

Benefits of $53.1 million; Accrued FECA Liability of $28.6 million; Contingent Liabilities of $22.3 million for claims to be paid 

out of Treasury’s Judgement Fund; and ITA’s Foreign Service Nationals’ Voluntary Separation Pay Liability of $11.5 million.

LIABILITIES BY RESPONSIBILITY SEGMENT

AS OF SEPTEMBER 30, 2016

NOAA

39%

USPTO

31%

EDA

2%

NTIA

8%

Others3

2%

NIST

7%2

ESA

11%1

1 ESA includes ESA, BEA, and the Census Bureau.

2 NIST includes NIST and NTIS.

3 Others includes DM, BIS, ITA, and MBDA.

FY 2016 AGENCY FINANCIAL REPORT | 23

MANAGEMENT’S DISCUSSION AND ANALYSIS
TRENDS IN LIABILITIES

Liabilities of the Department increased $274.2 million, or 6 percent, from $4.46 billion as of September 30, 2015 to $4.74 billion 

as of September 30, 2016. A new liability of $334.1 million as of September 30, 2016 is for NTIA Public Safety Trust Fund’s 

Liability to General Fund of U.S. Government for Deficit Reduction as previously discussed. Accounts Payable decreased 

by $48.1 million, or 7 percent, from $646.1 million to $598.0 million, primarily due to NOAA’s decreased Accounts Payable 

of $51.3 million, primarily resulting from decreased intragovernmental payables of $26.7 million for GOES – R and JPSS 

projects. Accrued Payroll and Annual Leave increased by $52.8 million, or 10 percent, from $505.2 million to $558.0 million, 

primarily due to two additional days of accrued payroll as of September 30, 2016. Accrued Grants decreased by $19.4 million, 

or 13 percent, from $144.9 million to $125.5 million, primarily due to a decrease of $12.4 million in accrued grants related 

to NIST’s Manufacturing Extension Partnership program. 

COMPOSITION OF AND TRENDS IN FINANCING SOURCES

The composition by percentage of the Department’s financing 

sources, as reported in the Department’s Consolidated Statements of Changes in Net Position, changed significantly from 

FY 2015 to FY 2016. For FY 2016, the NTIA Public Safety Trust 

Fund transfers in of auction proceeds from FCC was $8.43 billion 

as compared to $18.63 billion in FY 2015. For FY 2016, the NTIA 

Public Safety Trust Fund transfer out to General Fund of U.S. 

Government for deficit reduction was $7.78 billion as compared to 

$12.62 billion in FY 2015. The FY 2016 Financing Sources included 

a new use of financing sources for NTIA Public Safety Trust Fund’s 

recognition of a $334.1 million liability to General Fund of U.S. 

Government for deficit reduction as of September 30, 2016 as 

previously discussed. 

Total financing sources of the Department decreased $5.57 billion, 

or 37 percent, from $15.21 billion in FY 2015 to $9.64 billion in 

FY 2016. Appropriations Received, Net of Reductions increased 

24 | FY 2016 AGENCY FINANCIAL REPORT

MANAGEMENT’S DISCUSSION AND ANALYSIS
$699.2 million, or 8 percent, from $8.54 billion in FY 2015 to $9.23 billion in FY 2016. The largest increases in the Department’s 

Appropriations Received were (a) Census Bureau’s Periodic Censuses and Programs budget account (increase of $260.0 million, 

or 31 percent—from $840.0 million to $1.10 billion), resulting from increased appropriations received for the 2020 Decennial 

Census; (b) NOAA’s Procurement, Acquisition, and Construction budget account (increase of $141.1 million, or 6 percent—from 

$2.18 billion to $2.32 billion), primarily due to an increase of $370.0 million in appropriations received to initiate the Polar 

Follow-on satellite program critical to ensuring the continuity of polar weather observations and to achieving robustness in 

the constellation as early as FY 2023, offset by decreases in appropriations received of $109.0 million and $107.3 million for 

GOES – R and JPSS satellite programs, respectively; (c) NOAA’s Operations, Research, and Facilities budget account (increase 

of $104.5 million, or 3 percent—from $3.23 billion to $3.34 billion); and (d) NIST’s Construction of Research Facilities budget 

account (increase of $68.7 million, or 137 percent—from $50.3 million to $119.0 million), to provide increased safety and 

capacity and to perform maintenance and major repairs to comply with scientific and engineering requirements and to keep 

pace with federal, state, and local health and safety regulations. The additional funding will increase the Safety Capacity, 

Maintenance and Major Repair program, and will contribute to funding the next phase of planned multi-year renovations.

Other Financing Sources decreased by $570.8 million, or 138 percent, from $413.7 million in FY 2015 to $(157.1) million in 

FY 2016, primarily due to (a) a decrease of appropriations transferred in from the Executive Office of the President totaling 

$263.7 million (from $263.7 million in FY 2015 to $0 in FY 2016) for NOAA’s Procurement, Acquisition, and Construction 

budget account and NOAA’s Operations, Research, and Facilities budget account. The FY 2015 appropriations transferred 

in were from auctions of eligible frequencies for which the funds are authorized to be used to pay for relocation or sharing 

costs of an eligible federal entity incurring such costs with respect from or sharing of those frequencies; (b) a reduction 

of $124.7 million in non-exchange revenue for NOAA’s Damage Assessment and Restoration Revolving Fund primarily as a 

result of a $75.0 million revenue refund in FY 2016 related to the Deepwater Horizon oil spill; and (c) a NOAA decrease of 

$78.9 million in transfers in/out without reimbursement, net with the National Aeronautics and Space Administration related 

to Solar Irradiance, Data, and Rescue/Total Solar Irradiance activities. 

COMPOSITION OF FY 2016 NET COST OF OPERATIONS AND 

NET COST OF OPERATIONS BY RESPONSIBILITY SEGMENT

In FY 2016, the Department’s Net Cost of Operations amounted 

to $8.13 billion, which consists of Gross Costs of $12.16 billion 

less Earned Revenue of $4.03 billion.

The distribution (by responsibility segment) of the Department’s Net 

Cost of Operations remained consistent from FY 2015 to FY 2016.

Note: The Gross Costs and Earned Revenue amounts presented in the 

following paragraphs include transactions with other Departmental 

entities (intra-Departmental transactions). As a result, the Gross Costs 

amounts discussed below may not agree with the Gross Costs presented 

on the Department’s FY 2016 Consolidated Statement of Net Cost, which 

excludes intra-Departmental transactions.

NOAA’s FY 2016 Net Cost of Operations was $4.56 billion (Gross 

Costs of $4.81 billion less Earned Revenue of $244.7 million). 

NOAA’s mission relates to science, service, and stewardship—to 

FY 2016 AGENCY FINANCIAL REPORT | 25

MANAGEMENT’S DISCUSSION AND ANALYSIS
understand and predict changes in climate, weather, oceans, and coasts; to share that knowledge and information with others; 

and to conserve and manage coastal and marine ecosystems and resources. NOAA’s Gross Costs include costs related to 

improving weather, water quality, and climate reporting and forecasting; and enabling informed decision-making through an 

expanded understanding of the U.S. economy, society, and environment by providing data, standards, and services. NOAA 

also develops and procures satellite systems, aircraft, and ships to provide information to determine weather patterns and 

predict weather forecasts. NOAA’s Gross Costs also support its efforts to promote economically-sound environmental 

stewardship and science, including developing sustainable and resilient fisheries, habitats, and species; supporting climate 

adaption and mitigation; and supporting coastal communities that are environmentally and economically sustainable.

USPTO’s FY 2016 Net Cost of Operations of $(13.8) million (Gross Costs of $3.12 billion less Earned Revenue of $3.13 billion) 

relates to its patents and trademark programs. USPTO is the federal agency for granting U.S. patents and registering 

trademarks. The strength and vitality of the U.S. economy depends directly on effective mechanisms that protect new 

ideas and investments in innovation and creativity. USPTO advises the President, the Secretary of Commerce, and federal 

agencies on intellectual property (IP) policy, protection, and enforcement; and promotes the stronger and more effective IP 

protection around the world. USPTO furthers effective IP protection for the Nation’s innovators and entrepreneurs worldwide 

by working with other federal agencies to secure strong IP provisions in free trade and other international agreements. 

It also provides training, education, and capacity building programs designed to foster respect for IP and encourage the 

development of strong IP enforcement regimes by the Nation’s trading partners.

The Economics and Statistics Administration’s (ESA) FY 2016 Net Cost of Operations was $1.40 billion (Gross Costs of 

$1.70 billion less Earned Revenue of $295.6 million), which includes ESA, the Bureau of Economic Analysis (BEA), and the 

Census Bureau. ESA plays three key roles within the Department. ESA provides timely economic analysis, disseminates 

national economic indicators, and oversees BEA and the Census Bureau. BEA promotes a better understanding of the 

Nation’s economy by providing timely, relevant, and accurate economic accounts data in an objective and cost-effective 

manner. The Census Bureau’s FY 2016 Net Cost of Operations was $1.29 billion (Gross Costs of $1.58 billion less Earned 

Revenue of $289.3 million). The Census Bureau serves as the leading source of quality data about the Nation’s people and 

economy. Data that the Census Bureau collects includes the Population and Housing Census (every 10 years), Economic 

Census (every 5 years), Census of Governments (every 5 years), American Community Survey (annually), demographic 

and economic surveys provided to survey sponsors, and economic indicators.

NIST’s FY 2016 Net Cost of Operations was $926.3 million (Gross Costs of $1.27 billion less Earned Revenue of $345.0 million), 

which includes NIST and the National Technical Information Service (NTIS). NIST’s FY 2016 Net Cost of Operations was 

$927.4 million (Gross Costs of $1.08 billion less Earned Revenue of $156.9 million). NIST promotes American innovation and 

industrial competitiveness by advancing measurement science, standards, and technology in ways that enhance economic 

security and improve the Nation’s quality of life. NIST’s Gross Costs include costs for its NIST Laboratories program. The 

NIST Laboratories conducts world-class research, often in close collaboration with industry, which advances the Nation’s 

technology infrastructure and helps American companies continually improve products and services. NTIS serves as the 

largest central resource for government-funded scientific, technical, engineering, and business related information available 

today. For more than 60 years, NTIS has assured businesses, universities, and the public timely access to approximately 

3 million publications covering over 350 subject areas. NTIS promotes the Nation’s economic growth by providing access 

to information that stimulates innovation and discovery.

26 | FY 2016 AGENCY FINANCIAL REPORT

MANAGEMENT’S DISCUSSION AND ANALYSIS
ITA’s FY 2016 Net Cost of Operations was $501.9 million (Gross Costs of $529.9 million less Earned Revenue of $28.0 million). 

ITA strengthens the competitiveness of American industry, promotes trade and investment, and ensures fair trade through 

the rigorous enforcement of the Nation’s trade laws and agreements. ITA works to improve the global business environment 

and helps American organizations compete at home and abroad. ITA supports the President’s recovery agenda and the 

National Export Initiative to sustain economic growth and support American jobs.

EDA’s FY 2016 Net Cost of Operations was $291.0 million (Gross Costs of $295.8 million less Earned Revenue of $4.8 million). 

EDA leads the federal economic development agenda by promoting innovation and competitiveness, preparing American 

regions for growth and success in the worldwide economy. EDA plays a critical role in fostering regional economic 

development efforts in communities across the United States. Through strategic investments that foster job creation and 

attract private investment, EDA supports development in economically distressed areas of the United States. EDA works 

directly with local economic development officials to make grant investments that are well-defined, timely, and linked to a 

long-term, sustainable economic development strategy.

NTIA’s FY 2016 Net Cost of Operations was $207.7 million (Gross Costs of $242.1 million less Earned Revenue of $34.4 million). 

NTIA is the federal agency that is principally responsible for advising the President on telecommunications and information 

policy issues. NTIA’s programs and policymaking focus largely on expanding broadband Internet access and adoption in 

America, expanding the use of spectrum by all users, and ensuring that the Internet remains an engine for continued 

innovation and economic growth. NTIA’s activities include managing the federal use of spectrum and identifying additional 

spectrum for commercial use, and administering grant programs that further the deployment and use of broadband and 

other technologies in America.

FY 2016 Net Cost of Operations for Departmental Management (DM) was $119.1 million (Gross Costs of $412.1 million 

less Earned Revenue of $293.0 million), which includes Gifts and Bequests, Franchise Fund, Herbert C. Hoover Building 

Renovation Project, Office of Inspector General, Salaries and Expenses, and Working Capital Fund. DM’s objective is to 

develop and provide policies and procedures for administrative planning, oversight, coordination, direction, and guidance 

to ensure implementation of the Department’s mission. 

FY 2016 Net Cost of Operations for the other Departmental bureaus was $136.1 million (Gross Costs of $137.4 million less 

Earned Revenue of $1.3 million), which is comprised of the Bureau of Industry and Security (BIS) and the Minority Business 

Development Agency (MBDA). BIS advances the Nation’s national security, foreign policy, and economic objectives by 

ensuring an effective export control and treaty compliance system and promoting continued strategic technology leadership 

by the United States. MBDA helps to create and sustain American jobs by promoting the growth and global competitiveness 

of businesses owned and operated by minority entrepreneurs.

TRENDS IN NET COST OF OPERATIONS

The Department’s Net Cost of Operations increased by $199.1 million, or 3 percent, from $7.93 billion in FY 2015 to 

$8.13 billion in FY 2016. Gross Costs increased slightly by $212.3 million, or 2 percent, from $11.95 billion in FY 2015 to 

12.16 billion in FY 2016. Earned Revenue increased slightly by $13.2 million, or 0.3 percent, from $4.02 billion in FY 2015 

to $4.03 billion in FY 2016.

FY 2016 AGENCY FINANCIAL REPORT | 27

MANAGEMENT’S DISCUSSION AND ANALYSIS
SELECTED BUDGETARY INFORMATION BY RESPONSIBILITY SEGMENT

The distribution (by responsibility segment) of the Department’s Obligations Incurred, and Outlays, Gross, as reported in 

the Department’s Combined Statements of Budgetary Resources, changed significantly from FY 2015 to FY 2016 primarily 

due to a large decrease of $6.03 billion in NTIA Public Safety Trust Fund’s transfers out to NTIA’s Network Construction 

Fund treated as Obligations Incurred and Outlays, Gross by the Public Safety Trust Fund (from $6.40 billion in FY 2015 

to $366.2 million in FY 2016). As a result, NTIA’s Obligations Incurred by responsibility segment percentage decreased 

from 33 percent in FY 2015 to 6 percent in FY 2016. Similarly, NTIA’s Outlay, Gross by responsibility segment percentage 

decreased from 34 percent in FY 2015 to 6 percent in FY 2016.

FY 2016 OBLIGATIONS INCURRED

BY RESPONSIBILITY SEGMENT

NOAA

41%

USPTO

20%

NIST2

9%

NTIA

6%

ESA1

15%

Others3

3%

ITA

3% Departmental 3% Management

1 ESA includes ESA, BEA, and the Census Bureau.

2 NIST includes NIST and NTIS.

3 Others includes BIS, EDA, and MBDA.

TRENDS IN SELECTED BUDGETARY INFORMATION

The Department’s New Obligations and Unpaid Adjustments decreased significantly by $5.35 billion, or 26 percent, from 

$20.81 billion in FY 2015 to $15.46 billion in FY 2016, and the Department’s Outlays, Gross also decreased significantly by 

$5.62 billion, or 27 percent, from $20.47 billion in FY 2015 to $14.85 billion in FY 2016. These significant decreases were 

primarily due to a large decrease of $6.03 billion in NTIA’s Public Safety Trust Fund Obligations Incurred, and Outlays, Gross 

as discussed above.

28 | FY 2016 AGENCY FINANCIAL REPORT

MANAGEMENT’S DISCUSSION AND ANALYSIS
SUMMARY OF STEWARDSHIP INFORMATION

STEWARDSHIP ASSETS

T

he Department has certain resources entrusted to it and certain stewardship responsibilities it assumes. The physical 

properties of Stewardship Assets resemble those of the General Property, Plant, and Equipment that is capitalized 

traditionally in the financial statements of federal entities. Given the nature of these assets, federal standard-setting 

bodies have determined that valuation is unduly burdensome and matching costs with specific periods is not meaningful. 

Therefore, federal accounting standards require the disclosure of the nature and quantity of these assets. The National 

Oceanic and Atmospheric Administration (NOAA) is the primary bureau within the Department that maintains Stewardship 

Assets, while the National Institute of Standards and Technology (NIST) and the Census Bureau also maintains Stewardship 

Assets.

NOAA maintains the following Stewardship Assets: Heritage Assets (Galveston Laboratory; National Marine Fisheries Service 

(NMFS) St. George Sealing Plant; NMFS Cottage M, St. George; NMFS St. Paul Old Clinic/Hospital; NMFS Woods Hole 

Science Aquarium; and Great Lakes Environmental Research Laboratory, Lake Michigan Field Station); 13 National Marine 

Sanctuaries; 5 Marine National Monuments (Marianas Trench, Pacific Remote Islands, Rose Atoll, Papahãnaumokuãkea, and 

the Northeast Canyons and Seamounts); Aleutian Islands Habitat Conservation Area; NOAA Habitat Blueprint (10 Habitat 

Focus Areas); and Collection-type Heritage Assets, primarily included in the NOAA Central Library (mainly books, journals, 

publications, photographs, and motion pictures) and Thunder Bay Sanctuary Research Collection (data cards, photograph 

negatives, document copies, photographs, books, and other items). 

NIST maintains Collection-type Heritage Assets under its Museum and History Program, which collects, preserves, and 

exhibits artifacts, such as scientific instruments, equipment, objects, and records of significance to NIST and predecessor 

agencies. The Census Bureau maintains Collection-type Heritage Assets that help illustrate the social, educational, and 

cultural heritage of the Census Bureau, including artifacts, artwork, books, films, instruments, records, publications, 

manuscripts, photographs, and maps. 

STEWARDSHIP INVESTMENTS

Stewardship investments are substantial investments made by the federal government for the benefit of the Nation, but 

are not physical assets owned by the federal government. Though treated as expenses when incurred to determine the 

Department’s Net Cost of Operations, these items merit special treatment, so that users of federal financial reports know 

the extent of investments that are made for the long-term benefit of the Nation.

Investments in Non-federal Physical Property: These investments are for the purchase, construction, or major renovation 

of physical property owned by state and local governments. The Economic Development Administration (EDA) and NOAA 

have significant investments in non-federal physical property. EDA’s investments in FY 2016 totaled $163.3 million and 

included its Public Works program ($113.8 million), Disaster Recovery ($15.6 million), Economic Adjustment Assistance 

program ($25.4 million), and Assistance to Coal Communities ($8.5 million). NOAA’s investments in FY 2016 totaled 

$2.1 million and included the National Estuarine Research Reserves ($1.6 million) and the Coastal and Estuarine Land 

Conservation Program ($0.5 million). 

FY 2016 AGENCY FINANCIAL REPORT | 29

MANAGEMENT’S DISCUSSION AND ANALYSIS
Investments in Human Capital: These investments are for education and training programs that are intended to 

increase or maintain national economic productive capacity and produce outputs and outcomes that provide evidence of 

the constant or increasing national productive capacity. These investments exclude education and training expenses for 

federal civilian and military personnel. The most significant investments in human capital are by NOAA, whose investments 

in FY 2016 totaled $22.7 million and included the Educational Partnership Program ($14.3 million), the Ernest F. Hollings 

Undergraduate Scholarship Program ($5.8 million), the National Sea Grant College Program ($0.9 million), the National 

Estuarine Research Reserve Program ($1.5 million), the Other Programs ($0.2 million).

Investments in Research and Development (R&D): These investments include investments in basic research, applied 

research, and development, which are made with the expectation of maintaining or increasing national economic productive 

capacity, or yielding other future economic or societal benefits. The only significant investments in R&D are by NIST and 

NOAA. NIST’s investments in FY 2016 totaled $770.4 million, and included $756.0 million for its NIST Laboratories Program 

and $14.4 million for its Manufacturing USA, Advanced Manufacturing Technology Consortia, and Technology Innovation 

Program. NOAA’s investments in FY 2016 totaled $577.9 million, which included Environmental and Climate ($405.5 million), 

Fisheries ($53.4 million), Marine Operations and Maintenance and Aircraft Services ($29.9 million), Weather Service 

($18.7 million), and Other ($70.4 million).

30 | FY 2016 AGENCY FINANCIAL REPORT

MANAGEMENT’S DISCUSSION AND ANALYSIS
Financial Section
MESSAGE FROM THE CHIEF FINANCIAL OFFICER

T

his FY 2016 Agency Financial Report provides financial and high-level program performance information to enable the 

Department’s stakeholders to understand and evaluate the Department’s achievements relative to its mission and 

resources. The Department is committed to operational excellence, with a focus on providing outstanding service to 

our customers. This includes providing the public with highlights of our performance, and detailed financial information. 

This report also fulfills several statutory requirements, including the Reports Consolidation Act of 2000, the Chief Financial 

Officers Act, the Federal Managers’ Financial Integrity Act (FMFIA), and the Government Management Reform Act. 

For FY 2016, the Department achieved an unmodified audit opinion for the eighteenth consecutive year. The Department 

was able to eliminate the significant deficiencies related to needed improvement in (1) accounting for NOAA Commissioned 

Officer Corps pension benefits, and (2) accounting for the Public Safety Trust Fund spectrum auction proceeds; however, 

the Department received a significant deficiency relating to Department-wide information technology (IT) general controls 

around access, security, and configuration management. We will continue to take corrective actions to strengthen controls 

in these areas in FY 2017. 

The Department will continue enhancing financial and non-financial controls under FMFIA and Office of Management and 

Budget (OMB) Circular A-123. The Department has provided an unmodified statement of assurance that its internal controls 

and financial management systems meet the objectives of FMFIA, and that internal controls operated effectively. 

The Department’s leadership continues its commitment to improving the capacity to deliver our mission with customer 

focused outcomes. This starts with our most important assets—our people. The Department’s employees are committed 

to the Commerce mission and public service, and leadership is committed to engaging and empowering them to maximize 

their talents through continuous learning, collaboration, and innovation. 

This includes providing an up-to-date work environment and IT services that support collaboration amongst our employees in 

order to unleash their potential and creativity to solve common challenges. The Department’s headquarters, the Herbert C. 

Hoover Building, is undergoing a critical renovation that will support this environment. Our Office of the Chief Information 

Officer is modernizing our tools to enable best-in-class service through enterprise solutions, while also safeguarding against 

cyber threats. 

The Department’s management is also committed to looking at more efficient and effective ways to manage our processes 

as an enterprise for our key services. This includes using data to better manage for results and exploring opportunities for 

increased collaboration. This will not only allow for improved service delivery, but also smarter and more efficient, effective 

use of taxpayer resources.

Ellen Herbst

Chief Financial Officer 

and Assistant Secretary for Administration

November 14, 2016

32 | FY 2016 AGENCY FINANCIAL REPORT

MESSAGE FROM THE CHIEF FINANCIAL OFFICER
FINANCIAL SECTION

Independent Auditors’ Report
November 15, 2016 

INFORMATION MEMORANDUM FOR THE SECRETARY

FROM: David Smith

Deputy Inspector General

SUBJECT: Department of Commerce FY 2016 Consolidated Financial Statements

Final Report No. OIG-17-003-A 

I am pleased to provide you with the attached audit report, which presents an 

unmodified opinion on the Department of Commerce’s fiscal year 2016 consolidated 

financial statements. 

KPMG LLP, an independent public accounting firm, performed the audit in accordance 

with U.S. generally accepted auditing standards, standards applicable to financial audits 

contained in Government Auditing Standards, and Office of Management and Budget 

Bulletin 15-02, Audit Requirements for Federal Financial Statements. 

In its audit of the Department, KPMG:

• determined that the financial statements were fairly presented in all material

respects and in conformity with U.S. generally accepted accounting principles;

• identified one significant deficiency in internal control over financial reporting

related to weaknesses surrounding information technology general controls in the

areas of access controls, configuration management, and security management;

• identified no instances of reportable noncompliance with applicable laws,

regulations, contracts, and grant agreements, as well as no instances in which the

Department’s financial management systems did not substantially comply with the

requirements of the Federal Financial Management Improvement Act of 1996; and

• disclosed six potential instances of noncompliance with the Antideficiency Act

currently under review at the Department.

My office oversaw the audit performance. We reviewed KPMG’s report and related 

documentation and made inquiries of its representatives. 

Our review disclosed no instances where KPMG did not comply, in all material respects, 

with U.S. generally accepted government auditing standards. 

34 | FY 2016 AGENCY FINANCIAL REPORT

INDEPENDENT AUDITORS’ REPORT
2

However, our review—as differentiated from an audit in accordance with these 

standards—was not intended to enable us to express, and we do not express, any 

opinion on the Department’s consolidated financial statements, conclusions about the 

effectiveness of internal control, or conclusions on compliance with laws, regulations, 

contracts, and grant agreements. KPMG is solely responsible for the attached audit 

report and the conclusions expressed in it.

We appreciate the cooperation and courtesies extended to KPMG during the audit.

Attachment

FY 2016 AGENCY FINANCIAL REPORT | 35

INDEPENDENT AUDITORS’ REPORT
KPMG LLP

Suite 12000

1801 K Street, NW

Washington, DC 20006

Independent Auditors’ Report

Deputy Inspector General, U.S. Department of Commerce and 

Secretary, U.S. Department of Commerce: 

Report on the Financial Statements

We have audited the accompanying consolidated financial statements of the U.S. Department of Commerce 

(Department), which comprise the consolidated balance sheets as of September 30, 2016 and 2015, and the 

related consolidated statements of net cost and changes in net position, and the combined statements of 

budgetary resources for the years then ended, and the related notes to the consolidated financial statements. 

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these consolidated financial statements 

in accordance with U.S. generally accepted accounting principles; this includes the design, implementation, and 

maintenance of internal control relevant to the preparation and fair presentation of consolidated financial 

statements that are free from material misstatement, whether due to fraud or error. 

Auditors’ Responsibility

Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We 

conducted our audits in accordance with auditing standards generally accepted in the United States of America,

in accordance with the standards applicable to financial audits contained in Government Auditing Standards

issued by the Comptroller General of the United States, and in accordance with Office of Management and 

Budget (OMB) Bulletin No. 15-02, Audit Requirements for Federal Financial Statements. Those standards and 

OMB Bulletin No. 15-02 require that we plan and perform the audit to obtain reasonable assurance about 

whether the consolidated financial statements are free from material misstatement. 

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the 

consolidated financial statements. The procedures selected depend on the auditors’ judgment, including the 

assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud 

or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s

preparation and fair presentation of the consolidated financial statements in order to design audit procedures 

that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness 

of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the 

appropriateness of accounting policies used and the reasonableness of significant accounting estimates made 

by management, as well as evaluating the overall presentation of the consolidated financial statements. 

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our 

audit opinion. 

KPMG LLP is a Delaware limited liability partnership and the U.S. member

firm of the KPMG network of independent member firms affiliated with

KPMG International Cooperative (“KPMG International”), a Swiss entity.

36 | FY 2016 AGENCY FINANCIAL REPORT

INDEPENDENT AUDITORS’ REPORT
U.S. Department of Commerce 

Independent Auditors’ Report

November 14, 2016 

Page 2 of 5 

Opinion on the Financial Statements

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

the financial position of the U.S. Department of Commerce as of September 30, 2016 and 2015, and its net 

costs, changes in net position, and budgetary resources for the years then ended in accordance with U.S. 

generally accepted accounting principles. 

Other Matters 

Interactive Data 

Management has elected to reference to information on websites or other forms of interactive data outside the 

Agency Financial Report to provide additional information for the users of its financial statements. Such 

information is not a required part of the basic consolidated financial statements or supplementary information 

required by the Federal Accounting Standards Advisory Board. The information on these websites or the other 

interactive data has not been subjected to any of our auditing procedures, and accordingly we do not express 

an opinion or provide any assurance on it. 

Required Supplementary Information 

U.S. generally accepted accounting principles require that the information in the Management’s Discussion and 

Analysis (including the Financial Management and Analysis section), Required Supplementary Information, and 

Required Supplementary Stewardship Information sections be presented to supplement the basic consolidated 

financial statements. Such information, although not a part of the basic consolidated financial statements, is 

required by the Federal Accounting Standards Advisory Board who considers it to be an essential part of 

financial reporting for placing the basic consolidated financial statements in an appropriate operational, 

economic, or historical context. We have applied certain limited procedures to the required supplementary 

information in accordance with auditing standards generally accepted in the United States of America, which 

consisted of inquiries of management about the methods of preparing the information and comparing the 

information for consistency with management’s responses to our inquiries, the basic consolidated financial 

statements, and other knowledge we obtained during our audits of the basic consolidated financial statements. 

We do not express an opinion or provide any assurance on the information because the limited procedures do 

not provide us with sufficient evidence to express an opinion or provide any assurance. 

Other Information 

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

as a whole. The information in the Message from Secretary Pritzker, the How to Use this Report section, the 

Message from the Chief Financial Officer, the Other Information section, and the Appendices are presented for 

purposes of additional analysis and are not a required part of the basic consolidated financial statements. Such 

information has not been subjected to the auditing procedures applied in the audits of the basic consolidated 

financial statements, and accordingly, we do not express an opinion or provide any assurance on it. 

Other Reporting Required by Government Auditing Standards

Internal Control Over Financial Reporting 

In planning and performing our audit of the consolidated financial statements as of and for the year ended 

September 30, 2016, we considered the Department’s internal control over financial reporting (internal control) 

to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our 

FY 2016 AGENCY FINANCIAL REPORT | 37

INDEPENDENT AUDITORS’ REPORT
U.S. Department of Commerce 

Independent Auditors’ Report

November 14, 2016 

Page 3 of 5 

opinion on the consolidated financial statements, but not for the purpose of expressing an opinion on the 

effectiveness of the Department’s internal control. Accordingly, we do not express an opinion on the 

effectiveness of the Department’s internal control. We did not test all internal controls relevant to operating 

objectives as broadly defined by the Federal Managers’ Financial Integrity Act of 1982. 

A deficiency in internal control exists when the design or operation of a control does not allow management or 

employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, 

misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in 

internal control, such that there is a reasonable possibility that a material misstatement of the entity’s financial 

statements will not be prevented, or detected and corrected, on a timely basis. A significant deficiency is a 

deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet 

important enough to merit attention by those charged with governance. 

Our consideration of internal control was for the limited purpose described in the first paragraph of this section 

and was not designed to identify all deficiencies in internal control that might be material weaknesses or 

significant deficiencies and therefore, material weaknesses or significant deficiencies may exist that have not 

been identified. Given these limitations, during our audit we did not identify any deficiencies in internal control 

that we consider to be material weaknesses. We did identify certain deficiencies in internal control, described in 

the accompanying Exhibit I, that we consider to be a significant deficiency. 

Compliance and Other Matters

As part of obtaining reasonable assurance about whether the Department’s consolidated financial statements 

are free from material misstatement, we performed tests of its compliance with certain provisions of laws, 

regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect 

on the determination of financial statement amounts. However, providing an opinion on compliance with those 

provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of 

our tests of compliance disclosed no instances of noncompliance or other matters that are required to be 

reported herein under Government Auditing Standards or OMB Bulletin No. 15-02. 

We also performed tests of its compliance with certain provisions referred to in Section 803(a) of the Federal 

Financial Management Improvement Act of 1996 (FFMIA). Providing an opinion on compliance with FFMIA was 

not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests of 

FFMIA disclosed no instances in which the Department’s financial management systems did not substantially 

comply with the (1) Federal financial management systems requirements, (2) applicable Federal accounting 

standards, and (3) the United States Government Standard General Ledger at the transaction level. 

Potential Instances of Noncompliance 

The Department informed us of potential instances of noncompliance with the Antideficiency Act, which are 

under review. Specifically, the Department’s Office of the Secretary and the Department’s Office of General 

Counsel are reviewing instance(s) of: (i) potential incorrect use of budgetary funding sources to support its 

programs; (ii) accepting terms of agreement on purchases made through the internet; (iii) work performed 

without compensation through appointment as an intermittent expert after retiring from employment with the 

bureau; (iv) unemployment claims filed by temporary employees; (v) potential obligations in excess of quarterly 

advance of apportionment from OMB; and (vi) expenditures for an employee’s office. Because these reviews 

are not complete, the ultimate outcomes of these potential matters are not presently known. 

38 | FY 2016 AGENCY FINANCIAL REPORT

INDEPENDENT AUDITORS’ REPORT
U.S. Department of Commerce 

Independent Auditors’ Report

November 14, 2016 

Page 4 of 5 

The Department’s Response to Finding

The Department’s response to the finding identified in our audit is described in Exhibit I. The Department’s 

response was not subjected to the auditing procedures applied in the audit of the consolidated financial 

statements and, accordingly, we express no opinion on the response. 

Purpose of the Other Reporting Required by Government Auditing Standards

The purpose of the communication described in the Other Reporting Required by Government Auditing 

Standards section is solely to describe the scope of our testing of internal control and compliance and the result 

of that testing, and not to provide an opinion on the effectiveness of the Department’s internal control or 

compliance. Accordingly, this communication is not suitable for any other purpose. 

November 14, 2016 

FY 2016 AGENCY FINANCIAL REPORT | 39

INDEPENDENT AUDITORS’ REPORT
U.S. Department of Commerce 

Independent Auditors’ Report

November 14, 2016 

Page 5 of 5 

Exhibit I – Significant Deficiency 

Some Information Technology General Controls Need Improvement 

During fiscal year (FY) 2016, we noted certain deficiencies surrounding information technology (IT) general 

controls associated with the Department’s financial management systems and supporting infrastructure that we 

considered collectively to be a significant deficiency under the standards issued by the American Institute of 

Certified Public Accountants. The U.S. Government Accountability Office’s (GAO’s) Standards for Internal 

Control in the Federal Government defines general controls as “the policies and procedures that apply to all or 

a large segment of an entity’s information systems” and which “include security management, logical and 

physical access, configuration management segregation of duties, and contingency planning.” Specifically, the 

Department needs to make improvements in its access controls, configuration management controls, and 

security management controls, described below, to support management’s ability to provide assurance that 

transactions are complete, accurate, and valid. 

Access controls. The objectives of limiting access are to ensure that users have only the access needed to 

perform their duties; that access to sensitive resources, such as security software programs, is limited to few 

individuals; and that employees are restricted from performing incompatible functions or duties beyond their 

responsibility. During FY 2016, we noted deficiencies in the areas of (1) database and operating system 

password controls, (2) access administration controls, (3) physical and logical access controls, (4) user account 

review controls, and (5) audit log review controls. 

Configuration management. The objectives of configuration management are to ensure that hardware, 

software and firmware programs, and program modifications are properly authorized, tested, and approved; 

that access to and distribution of programs is carefully controlled; and that integrity of the application controls is 

maintained. During FY 2016, we noted deficiencies in configuration and patch management. 

Security management. The objective of security management is to support data reliability. During FY 2016, 

we noted a deficiency in Department monitoring compliance with some internal policies. 

When performing our procedures, we considered Department -wide and bureau-level policies and various 

Federal standards and guidance such as (1) GAO’s Standards for Internal Control in the Federal Government,

dated September 2014, (2) GAO’s Federal Information System Controls Audit Manual, dated February 2009, 

(3) NIST SP 800-53 Rev. 4, Security and Privacy Controls for Federal Information Systems and Organizations,

and (4) NIST Special Publication 800-34 Rev. 1, Contingency Planning Guide for Federal Information Systems. 

Due to the sensitive nature of IT controls, certain information has been omitted from this report. We provided 

the Department management with a separate limited distribution IT report that includes specific information 

about our observations, the criteria used, our understanding of the cause of the deficiencies identified, and our 

recommendations. We recognize that the Department has certain compensating controls in place to help 

reduce the risk of the identified deficiencies, and we have considered such compensating controls as part of 

our Department consolidated financial statement audit. 

Management’s Response

The Department concurs. The Department will develop corrective action plans and ensure timely 

implementation to address KPMG’s recommendations.

40 | FY 2016 AGENCY FINANCIAL REPORT

INDEPENDENT AUDITORS’ REPORT
FINANCIAL SECTION

Principal Financial Statements
United States Department of Commerce Consolidated Balance Sheets

As of September 30, 2016 and 2015 (In Thousands)

FY 2016 FY 2015

ASSETS

Intragovernmental:

Fund Balance with Treasury (Notes 2 and 19) $ 25,872,055 $ 25,511,071

Investment (Note 3) 333,013 –

Accounts Receivable (Note 4) 107,394 119,395

Advances and Prepayments 103,657 104,385

Total Intragovernmental 26,416,119 25,734,851

Cash (Note 5) 5,986 4,406

Accounts Receivable, Net (Note 4) 46,079 32,718

Direct Loans and Loan Guarantees, Net (Note 6) 453,956 512,463

Inventory, Materials, and Supplies, Net (Note 7) 114,094 104,388

General Property, Plant, and Equipment, Net (Note 8) 14,134,191 12,948,649

Other (Note 9) 76,867 126,255

TOTAL ASSETS $ 41,247,292 $ 39,463,730

Stewardship Assets (Note 24)

LIABILITIES

Intragovernmental:

Accounts Payable $ 131,920 $ 165,233

Debt to Treasury (Note 11) 475,207 504,704

Other

Unearned Revenue 311,178 266,056

Liability to General Fund of U.S. Government for Deficit Reduction (Note 22) 334,054 – 

Other (Note 12) 102,851 92,983

Total Intragovernmental 1,355,210 1,028,976

Accounts Payable 466,089 480,841

Federal Employee Benefits (Note 13) 876,111 881,546

Environmental and Disposal Liabilities (Note 14) 143,100 144,893 

Other

Accrued Payroll and Annual Leave 557,966 505,168

Accrued Grants 125,498 144,925

Capital Lease Liabilities (Note 15) 1,600 3,109

Unearned Revenue 1,174,082 1,244,515

Other (Note 12) 37,398 28,875

TOTAL LIABILITIES $ 4,737,054 $ 4,462,848

Commitments and Contingencies (Note 17) 

NET POSITION 

Unexpended Appropriations

Unexpended Appropriations – Funds from Dedicated Collections (Note 22) $ – $ –

Unexpended Appropriations – All Other Funds 5,840,085 5,733,904

Cumulative Results of Operations

Cumulative Results of Operations – Funds from Dedicated Collections (Note 22) 17,724,210 17,640,086 

Cumulative Results of Operations – All Other Funds 12,945,943 11,626,892 

Total Net Position – Funds from Dedicated Collections 17,724,210 17,640,086 

Total Net Position – All Other Funds 18,786,028 17,360,796

TOTAL NET POSITION $ 36,510,238 $ 35,000,882

TOTAL LIABILITIES AND NET POSITION $ 41,247,292 $ 39,463,730

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

42 | FY 2016 AGENCY FINANCIAL REPORT

PRINCIPAL FINANCIAL STATEMENTS

PAGE NOT UPDATED 
United States Department of Commerce Consolidated Statements of Net Cost

For the Years Ended September 30, 2016 and 2015 (Note 18) (In Thousands) 

FY 2016 FY 2015

National Oceanic and Atmospheric Adminstration

Gross Costs $ 4,791,275 $ 5,174,270 

Less: Earned Revenue (230,840) (264,920)

Net Cost of Operations 4,560,435 4,909,350 

U.S. Patent and Trademark Office

Gross Costs 3,119,076 3,012,010 

Less: Earned Revenue (3,132,862) (3,073,178)

Net Cost of Operations (13,786) (61,168) 

Economics and Statistics Adminstration

Gross Costs 1,683,852 1,509,005 

Less: Earned Revenue (282,539) (309,241)

Net Cost of Operations 1,401,313 1,199,764 

National Institute of Standards and Technology

Gross Costs 1,246,044 1,204,798 

Less: Earned Revenue (319,753) (293,560)

Net Cost of Operations 926,291 911,238 

National Telecommunications and Information Adminstration

Gross Costs 237,816 298,848 

Less: Earned Revenue (30,085) (31,786)

Net Cost of Operations 207,731 267,062 

Departmental Management

Gross Costs 133,881 129,952 

Less: Earned Revenue (14,742) (17,259)

Net Cost of Operations 119,139 112,693 

Others

Gross Costs 952,166 622,906 

Less: Earned Revenue (23,105) (30,763)

Net Cost of Operations 929,061 592,143 

Total Gross Departmental Costs 12,164,110 11,951,789 

Less: Total Earned Revenue (4,033,926) (4,020,707)

NET COST OF OPERATIONS $ 8,130,184 $ 7,931,082 

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

FY 2016 AGENCY FINANCIAL REPORT | 43

PRINCIPAL FINANCIAL STATEMENTS

PAGE NOT UPDATED
United States Department of Commerce Consolidated Statements of Changes in Net Position 

For the Years Ended September 30, 2016 and 2015 (In Thousands)

FY 2016 FY 2015

Funds from 

Dedicated 

Collections

(Note 22) All Other Funds

Consolidated 

Total

Funds from 

Dedicated 

Collections

(Note 22) All Other Funds

Consolidated 

Total

Cumulative Results Of Operations:

Beginning Balance $ 17,640,086 $ 11,626,892 $ 29,266,978 $ 11,592,944 $ 10,861,395 $ 22,454,339

Budgetary Financing Sources:

Appropriations Used – 8,970,412 8,970,412 – 8,204,450 8,204,450

Non-exchange Revenue 11,204 9,231 20,435 118,419 12,001 130,420

Donations and Forfeitures of Cash and 

Cash Equivalents – 5,316 5,316 – 4,119 4,119

Transfers In of Auction Proceeds from Federal 

Communications Commission (Note 22) 8,430,058 – 8,430,058 18,627,804 – 18,627,804

Transfer Out to Receipt Account for Providing Funds to 

General Fund of U.S. Government (Note 22) (7,781,010) – (7,781,010) (12,618,990) – (12,618,990)

Transfers In/(Out) Without Reimbursement, Net (91,376) 147,669 56,293 1,674 143,870 145,544

Rescissions/Sequestrations (Note 19) – – – – (2,906) (2,906)

Other Budgetary Financing Sources/(Uses), Net – – – – 31 31

Other Financing Sources (Non-exchange):

Donations and Forfeitures of Property – 779 779 1,351 1,305 2,656

Transfer In Received by Receipt Account for Providing 

 Funds to General Fund of U.S. Government (Note 22) 7,781,010 – 7,781,010 12,618,990 – 12,618,990

Transfer Out to General Fund of U.S. Government for 

 Deficit Reduction (Note 22) (7,781,010) – (7,781,010) (12,618,990) – (12,618,990)

Transfers In/(Out) Without Reimbursement, Net – (78,549) (78,549) (1,251) 410 (841)

Imputed Financing Sources from Cost Absorbed 

 by Others 35,542 211,735 247,277 47,002 209,498 256,500

Financing Sources Used for Recognizing Liability 

to General Fund of U.S. Government for Deficit 

Reduction (Note 22) (334,054) – (334,054) – – –

Other Financing Sources/(Uses), Net – (3,598) (3,598) – (5,066) (5,066)

Total Financing Sources 270,364 9,262,995 9,533,359 6,176,009 8,567,712 14,743,721

Net Cost of Operations (186,240) (7,943,944) (8,130,184) (128,867) (7,802,215) (7,931,082)

Net Change 84,124 1,319,051 1,403,175 6,047,142 765,497 6,812,639

Cumulative Results of Operations – Ending Balance 17,724,210 12,945,943 30,670,153 17,640,086 11,626,892 29,266,978

Unexpended Appropriations:

Beginning Balance – 5,733,904 5,733,904 – 5,263,441 5,263,441

Budgetary Financing Sources:

Appropriations Received (Note 19) – 9,234,371 9,234,371 – 8,545,281 8,545,281

Appropriations Transferred In/(Out), Net – 24,250 24,250 – 283,364 283,364

Rescissions/Sequestrations of Appropriations (Note 19) – (34,360) (34,360) – (7,190) (7,190)

Cancellations and Other Adjustments – (147,668) (147,668) – (146,542) (146,542)

Appropriations Used – (8,970,412) (8,970,412) – (8,204,450) (8,204,450)

Total Budgetary Financing Sources – 106,181 106,181 – 470,463 470,463

Unexpended Appropriations – Ending Balance – 5,840,085 5,840,085 – 5,733,904 5,733,904

NET POSITION $ 17,724,210 $ 18,786,028 $ 36,510,238 $ 17,640,086 $ 17,360,796 $ 35,000,882

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

44 | FY 2016 AGENCY FINANCIAL REPORT

PRINCIPAL FINANCIAL STATEMENTS

PAGE NOT UPDATED 
United States Department of Commerce Combined Statements of Budgetary Resources 

For the Years Ended September 30, 2016 and 2015 (Note 19) (In Thousands)

FY 2016

Reclassified

FY 2015

Budgetary

Non-budgetary Credit 

Program Financing Accounts Budgetary

Non-budgetary Credit 

Program Financing Accounts

BUDGETARY RESOURCES:

Unobligated Balance, Brought Forward, October 1 $ 17,608,684 $ 2,127 $ 12,834,426 $ 10

Adjustments to Unobligated Balance, Brought Forward (596) – – –

Unobligated Balance, Brought Forward, October 1, as Adjusted 17,608,088 2,127 12,834,426 10

Actual Recoveries of Prior-years Unpaid Obligations 307,493 18,877 306,562 28,490

Actual Nonexpenditure Transfers of Unobligated Balance, Net 5,867 – 1,672 –

Borrowing Authority Withdrawn – (18,877) – (28,490)

Other Changes in Unobligated Balance, Net (8,933,414) – (132,129) –

Unobligated Balance From Prior-years Budget Authority, Net 8,988,034 2,127 13,010,531 10

Appropriations 10,416,411 – 13,981,745 –

Borrowing Authority – 22,532 – 65,860

Spending Authority From Offsetting Collections 5,519,171 28,410 11,326,763 31,130

TOTAL BUDGETARY RESOURCES $ 24,923,616 $ 53,069 $ 38,319,039 $ 97,000

STATUS OF BUDGETARY RESOURCES:

New Obligations and Upward Adjustments $ 15,412,271 $ 47,581 $ 20,710,355 $ 94,873

Unobligated Balance, End of Year

Apportioned, Unexpired Accounts 8,600,100 – 8,041,086 –

Exempt From Apportionment, Unexpired Accounts 2,257 – 2,486 –

Unapportioned, Unexpired Accounts 544,961 5,488 9,147,958 2,127 

Unobligated Balance, End of Year, Unexpired Accounts 9,147,318 5,488 17,191,530 2,127 

Unobligated Balance, End of Year, Expired Accounts 364,027 – 417,154 –

Total Unobligated Balance, End of Year 9,511,345 5,488 17,608,684 2,127

TOTAL STATUS OF BUDGETARY RESOURCES $ 24,923,616 $ 53,069 $ 38,319,039 $ 97,000

CHANGE IN UNPAID OBLIGATED BALANCE, NET:

Unpaid Obligations:

Unpaid Obligations, Brought Forward, October 1 $ 6,738,577 $ 122,051 $ 6,677,864 $ 182,409

New Obligations and Upward Adjustments 15,412,271 47,581 20,710,355 94,873

Outlays, Gross (14,768,244) (85,114) (20,343,080) (126,741)

Actual Recoveries of Prior-years Unpaid Obligations (307,493) (18,877) (306,562) (28,490)

UNPAID OBLIGATIONS, END OF YEAR $ 7,075,111 $ 65,641 $ 6,738,577 $ 122,051

Uncollected Customer Payments: 

Uncollected Customer Payments, Brought Forward, October 1 $ (564,491) $ (467) $ (448,663) $ (467)

Change in Uncollected Customer Payments 216 – (115,828) –

UNCOLLECTED CUSTOMER PAYMENTS, END OF YEAR $ (564,275) $ (467) $ (564,491) $ (467)

Unpaid Obligated Balance, Net, Brought Forward, October 1 $ 6,174,086 $ 121,584 $ 6,229,201 $ 181,942

Unpaid Obligated Balance, Net, End of Year $ 6,510,836 $ 65,174 $ 6,174,086 $ 121,584

BUDGET AUTHORITY, NET:

Budget Authority, Gross $ 15,935,582 $ 50,942 $ 25,308,508 $ 96,990

Actual Offsetting Collections (5,541,627) (117,971) (11,351,448) (135,026)

Change in Uncollected Customer Payments 216 – (115,828) –

Recoveries of Prior-years Paid Obligations 21,651 – 14,381 –

BUDGET AUTHORITY, NET $ 10,415,822 $ (67,029) $ 13,855,613 $ (38,036)

OUTLAYS, NET:

Outlays, Gross $ 14,768,244 $ 85,114 $ 20,343,080 $ 126,741

Actual Offsetting Collections (5,541,627) (117,971) (11,351,448) (135,026)

Outlays, Net 9,226,617 (32,857) 8,991,632 (8,285)

Distributed Offsetting (Receipts)/Outlays, Net (64,352) – (36,089) –

AGENCY OUTLAYS, NET $ 9,162,265 $ (32,857) $ 8,955,543 $ (8,285)

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

FY 2016 AGENCY FINANCIAL REPORT | 45

PRINCIPAL FINANCIAL STATEMENTS

PAGE NOT UPDATED
46 | FY 2016 AGENCY FINANCIAL REPORT

PRINCIPAL FINANCIAL STATEMENTS

PAGE NOT UPDATED 
FINANCIAL SECTION

Notes to the Financial Statements

PAGE NOT UPDATED
NOTES TO THE FINANCIAL STATEMENTS

(All Tables are Presented in Thousands Unless Otherwise Stated)

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A Reporting Entity 

T

he Department of Commerce (the Department) is a cabinet-level agency of the Executive Branch of the U.S. government. 

Established in 1903 to promote U.S. business and trade, the Department’s broad range of responsibilities includes predicting 

the weather, granting patents and registering trademarks, measuring economic growth, gathering and disseminating 

statistical data, expanding U.S. exports, developing innovative technologies, helping local communities improve their economic 

development capabilities, promoting minority entrepreneurial activities, and monitoring the stewardship of national assets. 

The Department is composed of 12 bureaus, the Emergency Steel Loan Guarantee Program, and Departmental Management.

For the Consolidated Statements of Net Cost, the Department’s entities have been grouped together as follows:

● National Oceanic and Atmospheric Administration (NOAA)

● U.S. Patent and Trademark Office (USPTO)

● Economics and Statistics Administration (ESA) — based on organizational structure

● Bureau of Economic Analysis (BEA)

● Census Bureau

● National Institute of Standards and Technology (NIST) — based on organizational structure

● National Technical Information Service (NTIS)

● National Telecommunications and Information Administration (NTIA)1

● Departmental Management (DM)

● Gifts and Bequests

● Herbert C. Hoover Building Renovation Project

● Office of Inspector General (OIG)

● Salaries and Expenses (S&E)

● Working Capital Fund (WCF)

● Others

● Bureau of Industry and Security (BIS) 

● Economic Development Administration (EDA)

● International Trade Administration (ITA)

● Minority Business Development Agency (MBDA)

1 The Middle Class Tax Relief and Job Creation Act of 2012 created the First Responder Network Authority (FirstNet), included in 

these financial statements, as an independent authority within NTIA, to provide emergency responders with the first high-speed, 

nationwide network dedicated to public safety.

48 | FY 2016 AGENCY FINANCIAL REPORT

NOTES TO THE FINANCIAL STATEMENTS
B Basis of Accounting and Presentation

The Department’s fiscal year ends September 30. These financial statements reflect both accrual and budgetary accounting 

transactions. Under the accrual method of accounting, revenues are recognized when earned and expenses are recognized when 

incurred, without regard to the receipt or payment of cash. Budgetary accounting is designed to recognize the obligation of funds 

according to legal requirements, which in many cases is made prior to the occurrence of an accrual-based transaction. Budgetary 

accounting is essential for compliance with legal constraints and controls over the use of federal funds. 

These financial statements have been prepared from the accounting records of the Department in conformance with U.S. 

generally accepted accounting principles (GAAP) and the form and content for entity financial statements specified by the Office 

of Management and Budget (OMB) in Circular A-136, Financial Reporting Requirements. GAAP for federal entities are the 

standards prescribed by the Federal Accounting Standards Advisory Board, which is the official body for setting the accounting 

standards of the U.S. government.

Throughout these financial statements, intragovernmental assets, liabilities, gross costs, earned revenue, transfers, and other 

activity represent activity or balances with other federal entities.

The Department has allocation transfer transactions with other federal agencies as both a transferring (parent) entity and as a 

receiving (child) entity. Allocation transfers are legal delegations by one department of its authority to obligate budget authority 

and outlay funds to another department. A separate fund account (allocation account) is created in the U.S. Department of the 

Treasury (Treasury) as a subset of the parent fund account for tracking and reporting purposes. All allocation transfers of balances 

are credited to this account, and subsequent obligations and outlays incurred by the child entity are charged to this allocation 

account as they execute the delegated activity on behalf of the parent entity. Generally, all financial activity related to these 

allocation transfers (e.g., budgetary resources, obligations incurred, gross costs, and outlays, gross) is reported in the financial 

statements of the parent entity, from which the underlying legislative authority, appropriations, and OMB apportionments are 

derived. EDA allocates funds, as the parent, to the U.S. Department of Agriculture’s Rural Development Administration; all 

financial activity related to these EDA funds is reported in the Department’s financial statements. EDA and BEA have received 

allocation transfers, as the child, from Delta Regional Authority, Appalachian Regional Commission, Northern Border Regional 

Commission and U.S. General Services Administration (GSA). Activity relating to these child allocation transfers is not reported 

in the Department’s financial statements, except that the Department has recognized Imputed Costs, and Imputed Financing 

Sources From Cost Absorbed by Others, for gross costs, as the child, under GSA’s Federal Buildings Fund.

C Funds from Dedicated Collections

Funds from Dedicated Collections are financed by specifically identified revenues, often supplemented by other financing sources 

that are originally provided to the federal government by a non-federal source, which remain available over time. These specifically 

identified revenues and other financing sources are required by statute to be used for designated activities, benefits, or purposes, 

and must be accounted for separately from the federal government’s general revenues.

Funds from Dedicated Collections include general funds, revolving funds (not including credit reform financing funds), special 

funds, and trust funds. (See Note 22, Funds from Dedicated Collections.)

D Elimination of Intra-entity and Intra-Departmental Transactions and Balances

Transactions and balances within a reporting entity (intra-entity), and transactions and balances among the Department’s entities 

(intra-Departmental), have been eliminated from the Consolidated Balance Sheets and Consolidated Statements of Net Cost, and 

are excluded from the consolidated total column of the Consolidated Statements of Changes in Net Position. The Statements of 

FY 2016 AGENCY FINANCIAL REPORT | 49

NOTES TO THE FINANCIAL STATEMENTS
Budgetary Resources are presented on a combined basis; therefore, intra-Departmental and intra-entity transactions and balances 

have not been eliminated from these statements.

E Fund Balance with Treasury

Fund Balance with Treasury is the aggregate amount of funds in the Department’s accounts with Treasury. Deposit Funds include 

amounts held in customer deposit accounts.

Treasury processes cash receipts and disbursements for the Department’s domestic operations. Cash receipts and disbursements 

for the Department’s overseas operations are primarily processed by the U.S. Department of State’s financial service centers.

F Investment

Investment in Federal Securities consists of an interest-bearing, market-based Treasury security (note), purchased by NTIA’s Public 

Safety Trust Fund from Treasury at a discount. This investment is presented on the Department’s Consolidated Balance Sheet at 

acquisition cost, net of amortization of the discount. The discount will be amortized over the life of the Treasury security using the 

interest method. Under the interest method, the effective interest rate (the actual interest yield on amounts invested) multiplied 

by the carrying amount of the Treasury security at the start of the accounting period equals the interest income recognized during 

the period (the carrying amount changes each period by the amount of the amortized discount). The amount of the amortization 

of the discount is the difference between the effective interest recognized for the period and the nominal interest for the Treasury 

security. The market value of the Treasury security is not recorded on the Balance Sheet because this investment is expected to 

be held to maturity. See Note 3, Investment for disclosure of the market value of the Treasury security, which was provided by 

Treasury. For purposes of determining market values, investments should be grouped by the type of security, such as marketbased or marketable Treasury securities. The market value of investments in a group is calculated by the market price of securities 

of that group at the financial reporting date multiplied by the number of notes or bonds held at the financial reporting date. 

G Accounts Receivable, Net

Accounts Receivable are recognized primarily when the Department performs reimbursable services or sells goods. Accounts 

Receivable are reduced to net realizable value by an Allowance for Uncollectible Accounts. This allowance is estimated periodically 

using methods such as the identification of specific delinquent receivables, and the analysis of aging schedules and historical 

trends adjusted for current market conditions.

H Advances and Prepayments

Advances are payments the Department has made to cover a part or all of a grant recipient’s anticipated expenses, or are advance 

payments for the cost of goods and services to be acquired. For grant awards, the recipient is required to periodically (for example, 

quarterly) report the amount of costs incurred. Prepayments are payments the Department has made to cover certain periodic 

expenses before those expenses are incurred, such as subscriptions and rent. Advances and Prepayments are included in 

Other Assets.

I Direct Loans and Loan Guarantees, Net

A direct loan is recorded as a receivable after the Department disburses funds to a borrower. The Department also makes loan 

guarantees with respect to the payment of all or part of the principal or interest on debt obligations of non-federal borrowers to 

non-federal lenders. A borrower-defaulted loan guaranteed by the Department is recorded as a receivable from the borrower after 

the Department disburses funds to the lender. 

50 | FY 2016 AGENCY FINANCIAL REPORT

NOTES TO THE FINANCIAL STATEMENTS
Interest Receivable generally represents uncollected interest income earned on loans. For past-due loans, only up to 180 days 

of interest income is generally recorded. 

Foreclosed Property is acquired primarily through foreclosure and voluntary conveyance, and is recorded at the fair market value 

at the time of acquisition. Foreclosed Property is adjusted to the current fair market value each fiscal year-end.

Direct Loans and Loan Guarantees Obligated before October 1, 1991 (pre-FY 1992): Loans Receivable are reduced by an Allowance for 

Loan Losses, which is based on an analysis of each loan’s outstanding balance. The value of each receivable, net of any Allowance 

for Loan Losses, is supported by the values of pledged collateral and other assets available for liquidation, and by the Department’s 

analysis of financial information of parties against whom the Department has recourse for the collection of these receivables. 

Direct Loans and Loan Guarantees Obligated after September 30, 1991 (post-FY 1991): Post-FY 1991 obligated direct loans and loan 

guarantees and the resulting receivables are governed by the Federal Credit Reform Act of 1990. 

For a direct or guaranteed loan disbursed during a fiscal year, a subsidy cost is initially recognized. Subsidy costs are intended to 

estimate the long-term cost to the U.S. government of its loan programs. The subsidy cost equals the present value of estimated 

cash outflows over the life of the loan, minus the present value of estimated cash inflows, discounted at the applicable Treasury 

interest rate. Administrative costs such as salaries are not included in the subsidy costs. Subsidy costs can arise from interest rate 

differentials, interest subsidies, delinquencies and defaults, loan origination and other fees, and other cash flows. The Department 

calculates its subsidy costs based on a model created and provided by OMB. 

A Loan Receivable is recorded at the present value of the estimated cash inflows less cash outflows. The difference between 

the outstanding principal of the loan and the present value of its net cash inflows is recorded as the Allowance for Subsidy Cost. 

A subsidy reestimate is normally performed annually, as of September 30. The subsidy reestimate takes into account all factors 

that may have affected the estimated cash flows. Any adjustment resulting from the reestimate is recognized as a subsidy 

expense (or a reduction in subsidy expense). The portion of the Allowance for Subsidy Cost related to subsidy modifications and 

reestimates is calculated annually, as of September 30.

The amounts of any downward subsidy reestimates as of September 30 must be disbursed to Treasury in the subsequent 

fiscal year. Appropriations are normally obtained in the following fiscal year for any upward subsidy reestimates.

J Inventory, Materials, and Supplies, Net

Inventory, Materials, and Supplies, Net are stated at the lower of cost or net realizable value primarily under the average, weightedaverage, and first-in, first-out methods, and are adjusted for the results of physical inventories. Inventory, Materials, and Supplies 

are expensed when consumed. There are no restrictions on their sale, use, or disposition.

K General Property, Plant, and Equipment, Net

General Property, Plant, and Equipment, Net (PP&E) is composed of capital assets used in providing goods or services. General 

PP&E is stated at full cost, including all costs related to acquisition, delivery, and installation, less Accumulated Depreciation. 

Acquisitions of General PP&E include assets purchased, or assets acquired through other means such as through transfer in 

from another federal entity, donation, devise (a will or clause of a will disposing of property), judicial process, exchange between 

a federal entity and a non-federal entity, and forfeiture. General PP&E also includes assets acquired through capital leases, which 

are initially recorded at the amount recognized as a liability for the capital lease at its inception. 

FY 2016 AGENCY FINANCIAL REPORT | 51

NOTES TO THE FINANCIAL STATEMENTS
Capitalization Thresholds:

Single-asset Acquisitions: The Department’s policy is to capitalize single-asset acquisitions of General PP&E if the useful life 

is two years or more and the dollar amount meets the entity’s single-asset acquisition capitalization threshold. Based on a 

Department-wide capitalization thresholds review, which reflects materiality and cost-benefit analyses, the Department’s single-asset 

acquisition capitalization thresholds for both FY 2016 and FY 2015 are as follows: NOAA—$200 thousand or more; NIST—$100 

thousand or more for FY 2016, and $50 thousand or more for FY 2015; USPTO—$50 thousand or more; and all other bureaus and 

Departmental Management—$25 thousand or more, except that NTIA’s First Responder Network Authority has a single-asset 

acquisition capitalization threshold of $5 thousand. 

Personal Property Bulk Acquisitions: For FY 2016 and FY 2015, NOAA has a personal property bulk acquisition capitalization threshold 

of $1 million or more where individual items cost $25 thousand or more but less than $200 thousand; NIST has a personal property 

bulk acquisition capitalization threshold of $500 thousand or more for FY 2016, and $250 thousand or more for FY 2015; and all other 

bureaus and Departmental Management have a personal property bulk acquisition capitalization threshold of $250 thousand or more, 

except that USPTO has a furniture bulk acquisition capitalization threshold of $50 thousand or more and NTIA’s First Responder 

Network Authority has a personal property bulk acquisition capitalization threshold of $50 thousand or more.

General PP&E not meeting the applicable capitalization threshold is expensed.

Depreciation: Depreciation is recognized on a straight-line basis over the estimated useful life of the asset with the exception of 

leasehold improvements, which are depreciated over the remaining life of the lease or over the useful life of the improvement, 

whichever is shorter. Land, Construction-in-progress, and Internal Use Software in Development are not depreciated.

Construction-in-progress: Costs for the construction, modification, or modernization of General PP&E are initially recorded as 

Construction-in-progress. The Department’s construction-in-progress consists primarily of satellites under development for NOAA, 

and major laboratory renovations and construction projects under development for NIST. Upon completion of the work, the costs 

are transferred to the appropriate General PP&E account.

Internal Use Software: Internal Use Software includes purchased commercial off-the-shelf (COTS) software and internally or contractordeveloped software solely to meet the Department’s internal or operational needs. Internally developed software includes the 

full cost (direct and indirect cost) incurred during the software development stage. For contractor-developed software, capitalized 

costs include the costs for the contractor to design, program, install, and implement the software.

Real Property: GSA provides most of the facilities in which the Department operates, and generally charges rent based on 

comparable commercial rental rates under operating leases. Accordingly, GSA-owned properties under operating leases are not 

included in the Department’s General PP&E. The Department’s real property primarily consists of facilities for NIST and NOAA. 

L Non-entity Assets 

Non-entity assets are assets held by the Department that are not available for use in its operations, and for which a liability has been 

recorded. Non-entity Fund Balance with Treasury includes customer deposits held by the Department until customer orders are 

received, and monies payable to the General Fund of U.S. Government for custodial and loan programs activity. 

52 | FY 2016 AGENCY FINANCIAL REPORT

NOTES TO THE FINANCIAL STATEMENTS
M Liabilities

A liability for federal accounting purposes is a probable and measurable future outflow or other sacrifice of resources as a result 

of past transactions or events. 

Accounts Payable: Accounts Payable are amounts primarily owed for goods, services, or capitalized assets received, progress on 

contract performance by others, and other expenses due. 

Debt to Treasury: The Department has borrowed funds from Treasury through the Fisheries Finance Financing Account for various 

NOAA direct loan programs, and State and Local Implementation Fund. To simplify interest calculations, the Fisheries Finance 

Financing Account borrowings are dated October 1. Interest rates are based on a weighted average of rates during the term of 

the borrowed funds. The weighted average rate for each cohort’s borrowing is recalculated at the end of each fiscal year during 

which disbursements are made. Annual interest payments on unpaid principal balances as of September 30 are required. Principal 

repayments are required only at maturity, but are permitted at any time during the term of the loan. The Department’s primary 

financing source for repayments of Debt to Treasury is the collection of principal on the associated Loans Receivable, and deposits 

from public safety communications and electromagnetic spectrum auction proceeds. Balances of any borrowed but undisbursed 

Fisheries Finance Financing Account will earn interest at the same rate used in calculating interest expense. The amounts reported 

for Debt to Treasury include accrued interest payable. See Note 11, Debt to Treasury, for information regarding maturity dates.

Unearned Revenue: Unearned Revenue is the portion of monies received for which goods and services have not yet been provided 

or rendered by the Department. Revenue is recognized as reimbursable costs are incurred, and the Unearned Revenue balance 

is reduced accordingly. Unearned Revenue also includes the balances of customer deposit accounts held by the Department. 

The intragovernmental Unearned Revenue primarily relates to monies collected in advance under reimbursable agreements. 

The majority of the Unearned Revenue with the public represents patent and trademark application and user fees that are 

pending action.

Liability to General Fund of U.S. Government for Deficit Reduction: The NTIA Public Safety Trust Fund was created as a result of 

Section 6413 of the Middle Class Tax Relief and Job Creation Act of 2012 (Act). The Act provides funding for specified programs 

and activities to be derived from the proceeds of FCC auctions of spectrum licenses, to be deposited into the Public Safety 

Trust Fund. The Act directs the use of auction proceeds in an order of priority after the repayment of borrowings from Treasury 

(priority 1), which was fully completed in September 2015. Priority 8 of the Act specifies that any remaining amounts deposited 

in the Public Safety Trust Fund shall be deposited in the General Fund of U.S. Government for deficit reduction. The Act further 

specifies that any amounts remaining in the Public Safety Trust Fund after the end of FY 2022 shall be deposited in the General 

Fund of U.S. Government for deficit reduction. The Department records a liability (not covered by budgetary resources) to the 

General Fund of U.S. Government for the monies owed for priority 8. A corresponding use of financing sources is recorded on 

the Consolidated Statement of Changes in Net Position, Other Financing Sources (Non-exchange) section.

Resources Payable to Treasury: Resources Payable to Treasury includes assets in excess of liabilities that are being held as working 

capital in the Department’s liquidating fund groups, which account for loan programs prior to October 1, 1991 (pre-FY 1992). 

Accrued FECA Liability: The Federal Employees Compensation Act (FECA) provides income and medical cost protection to 

covered federal civilian employees injured on the job, to employees who have incurred work-related occupational diseases, and 

to beneficiaries of employees whose deaths are attributable to job-related injuries or occupational diseases. The FECA program 

is administered by the U.S. Department of Labor (DOL), which pays valid claims against the Department and subsequently seeks 

reimbursement from the Department for these paid claims. Accrued FECA Liability, included in Intragovernmental Other Liabilities, 

represents amounts due to DOL for claims paid on behalf of the Department.

FY 2016 AGENCY FINANCIAL REPORT | 53

NOTES TO THE FINANCIAL STATEMENTS
Federal Employee Benefits:

Actuarial FECA Liability: Actuarial FECA Liability represents the liability for future workers’ compensation (FWC) benefits, which 

includes the expected liability for death, disability, medical, and miscellaneous costs for approved cases. The liability is determined 

by DOL annually, as of September 30, using a method that utilizes historical benefits payment patterns related to a specific 

incurred period to predict the ultimate payments related to that period. Projected annual payments were discounted to present 

value based on OMB’s interest rate assumptions which were interpolated to reflect the average duration in years for income 

payments and medical payments. 

To provide more specifically for the effects of inflation on the liability for FWC benefits, wage inflation factors (Cost of Living 

Adjustment) and medical inflation factors (Consumer Price Index - Medical) are applied to the calculation of projected future benefits. 

The actual rates for these factors are also used to adjust the historical payments to current-year constant dollars.

For FY 2016, to test the reliability of the model, DOL performed comparisons between projected payments in the last year to 

actual amounts, by agency. Changes in the liability from last year’s analysis to this year’s analysis were also examined by DOL, 

by agency, with any significant differences by agency inspected in greater detail. The model has been stable, and has projected 

the actual payments by agency well.

For FY 2015, the model’s resulting projections were analyzed by DOL to ensure that the amounts were reliable. The analysis 

was based on four tests: (1) a sensitivity analysis of the model to economic assumptions; (2) a comparison of the percentage 

change in the liability amount to the percentage change in the actual incremental payments; (3) a comparison of the incremental 

paid losses per case (a measure of case severity) in chargeback year to the average pattern observed during the most current 

three chargeback years; and (4) a comparison of the estimated liability per case in the projection to the average pattern for the 

projections of the most recent three years.

NOAA Corps Retirement System Liability and NOAA Corps Post-retirement Health Benefits Liability: These liabilities are recorded 

at the actuarial present value of projected benefits, calculated annually, as of September 30. The actuarial cost method used to 

determine these liabilities is the aggregate entry age normal method. Under this method, the actuarial present value of projected 

benefits is allocated on a level basis over the earnings or the service of the group between entry age and assumed exit ages. 

The portion of this actuarial present value allocated to the valuation year is called the normal cost. For purposes of calculating the 

normal cost, certain actuarial assumptions utilized for the actual valuation of U.S. Military Retirement System are used. Actuarial 

gains and losses, and prior and past service costs, if any, are recognized immediately in the fiscal year they occur, without 

amortization. The medical claim rates used for the NOAA Corps Post-retirement Health Benefits Liability actuarial calculations are 

based on the claim rates used for the U.S. Department of Defense Medicare-Eligible Retiree Health Care Fund actuarial valuations. 

Demographic assumptions appropriate to covered personnel are also used. For background information about these plans, see 

Note 1.Q, Employee Retirement Benefits.

Environmental and Disposal Liabilities: The Department has incurred asbestos-related cleanup costs related to the costs of removing, 

containing, and/or disposing of asbestos-containing materials from property, plant, and equipment; specifically, from facilities 

owned by NIST and NOAA, and from ships owned by NOAA. The Department has estimated its liabilities for asbestos-related 

cleanup costs for both friable and nonfriable asbestos-related cleanup costs. Estimates of asbestos-related cleanup costs are 

reviewed periodically, and updated as appropriate, to account for actual or estimated increases or decreases in asbestos-containing 

materials, material changes due to inflation or deflation, and changes in regulations, plans, and/or technology. 

NIST operates a nuclear reactor licensed by the U.S. Nuclear Regulatory Commission, in accordance with NIST’s mission of 

setting standards and examining new technologies. The Department currently estimates the cost of decommissioning this 

54 | FY 2016 AGENCY FINANCIAL REPORT

NOTES TO THE FINANCIAL STATEMENTS
facility to be $72.2 million. The NIST decommissioning estimate includes an assumption that an offsite waste disposal facility 

will become available, when needed, estimated in 2029. Currently, an offsite disposal location has not been identified, and the 

NIST environmental liability cost estimate includes an amount approved by the Nuclear Regulatory Commission for offsite waste 

disposal. The total estimated decommissioning cost is being accrued on a straight-line basis over the expected life of the facility. 

Under current legislation, funds to cover the expense of decommissioning the facility’s nuclear reactor should be requested in a 

separate appropriation when the decommissioning date becomes relatively certain.

The Department has incurred cleanup costs related to the costs of removing, containing, and/or disposing of hazardous waste 

from facilities used by NOAA. The Department has estimated its liabilities for environmental cleanup costs at all NOAA-used 

facilities, including the decommissioning of ships. The largest of NOAA’s environmental liabilities relates to the cleanup of the 

Pribilof Islands in Alaska, which contains waste from the U.S. Department of Defense’s use during World War II. Such cleanup 

activities are the responsibility of the Department because it became the successor agency of the waste generated from 

war-related programs. The Department does not recognize a liability for environmental cleanup costs for NOAA-used facilities 

that are less than $25 thousand per project. When an estimate of cleanup costs includes a range of possible costs, the most 

likely cost is reported. When no cost is more likely than another, the lowest estimated cost in the range is reported. The liability 

is reduced as progress payments are made.

The Department may have liabilities associated with lead-based paints at certain NOAA facilities. The Department has scheduled 

surveys to assess the potential for liabilities for lead-based paint contamination. All known issues, however, are contained, and 

NOAA facilities meet current environmental standards. No cost estimates are presently available for facilities that have not yet 

been assessed for lead-based paint issues.

Accrued Payroll and Annual Leave: These categories include salaries, wages, and other compensation earned by employees, but 

not disbursed as of September 30. Annually, as of September 30, the balances of Accrued Annual Leave are adjusted to reflect 

current pay rates. Sick leave and other types of non-vested leave are expensed as taken. 

Accrued Grants: The Department administers a diverse array of financial assistance programs and projects concerned with the 

entire spectrum of business and economic development efforts that promote activities such as expanding U.S. exports, creating 

jobs, contributing to economic growth, developing innovative technologies, promoting minority entrepreneurship, protecting 

coastal oceans, providing weather services, managing worldwide environmental data, and using telecommunications and 

information technologies to better provide public services. Disbursements of funds under the Department’s grant programs are 

generally made when requested by recipients. These drawdown requests may be received and fulfilled before recipients make 

the expenditures under the grant. When the Department has disbursed funds but the recipient has not yet reported expenditures, 

these disbursements are recorded as advances to the recipient. If a recipient, however, has expenditures under the grant as of 

September 30 that have not been advanced by the Department as of September 30, such amounts are recorded as grant expenses 

and Accrued Grants as of September 30. 

Capital Lease Liabilities: Capital leases are leases for property, plant, and equipment that transfer substantially all the benefits 

and risks of ownership to the Department.

Contingent Liabilities and Contingencies: A contingency is an existing condition, situation, or set of circumstances involving 

uncertainty as to possible gain or loss. The uncertainty will ultimately be resolved when one or more future events occur or fail 

to occur. A contingent liability (included in Other Liabilities) and an expense are recognized when a past event has occurred, and 

a future outflow or other sacrifice of resources is measurable and probable. A contingency is considered probable when the 

future confirming event or events are more likely than not to occur, with the exception of pending or threatened litigation and 

unasserted claims. For pending or threatened litigation and unasserted claims, the future confirming event or events are likely 

FY 2016 AGENCY FINANCIAL REPORT | 55

NOTES TO THE FINANCIAL STATEMENTS
to occur. A contingency is disclosed in the Notes to the Financial Statements if any of the conditions for liability recognition are 

not met and there is at least a reasonable possibility that a loss or an additional loss may have been incurred. A contingency is 

considered reasonably possible when the chance of the future confirming event or events occurring is more than remote but less 

than probable. A contingency is not recognized as a contingent liability and an expense nor disclosed in the Notes to the Financial 

Statements when the chance of the future event or events occurring is remote. A contingency is considered remote when the 

chance of the future event or events occurring is slight.

Liabilities Not Covered by Budgetary Resources: These are liabilities for which congressional actions are needed before budgetary 

resources can be provided. The Department anticipates that liabilities not covered by budgetary resources will be funded from 

future budgetary resources when required. These amounts are detailed in Note 16.

NTIA’s Public Safety Trust has assets on hand as of September 30 for its Liability to General Fund of U.S. Government for Deficit 

Reduction; however, budgetary resources will need to be apportioned by OMB in order for the Public Safety Trust Fund to transfer 

funds against this liability.

Under accrual accounting, the expense for annual leave is recognized when the leave is earned. However, for most of the 

Department’s fund groups, appropriations are provided to pay for the leave when it is taken. As a result, budgetary resources do 

not cover a large portion of the Department’s Accrued Annual Leave liability.

The Department generally receives budgetary resources for its Federal Employee Benefits liability when needed for disbursements.

Due to USPTO’s funding structure, budgetary resources do not cover a portion of its Unearned Revenue. The Unearned Revenue 

reported in Note 16 is the portion of USPTO’s Unearned Revenue that is considered not covered by budgetary resources. USPTO’s 

Unearned Revenue is a liability for revenue received before the patent or trademark work has been completed. Budgetary resources 

derived from the current reporting period’s revenue have been partially used to cover the current reporting period’s costs associated 

with unearned revenue from a prior reporting period. In addition, the current patent fee structure sets low initial application fees 

that are followed by income from maintenance fees as a supplement in later years to cover the full cost of the patent examination 

and issuance processes. The combination of these funding circumstances requires USPTO to obtain additional budgetary resources 

to cover its liability for unearned revenue.

N Commitments

Commitments are preliminary actions that will ultimately result in an obligation to the U.S. government if carried through, such 

as purchase requisitions, estimated travel orders, or unsigned contracts/grants. Major long-term commitments are disclosed in 

Note 16, Commitments and Contingencies. 

O Net Position

Net Position is the residual difference between assets and liabilities, and is composed of Unexpended Appropriations and 

Cumulative Results of Operations. 

Unexpended Appropriations represent the total amount of unexpended budget authority that is classified as appropriations, both 

obligated and unobligated. Unexpended Appropriations is increased for Appropriations Received, is reduced for Appropriations 

Used, and is adjusted for other changes in appropriations, such as transfers and rescissions. Cumulative Results of Operations 

is the net result of the Department’s operations since inception.

56 | FY 2016 AGENCY FINANCIAL REPORT

NOTES TO THE FINANCIAL STATEMENTS
P Revenues and Other Financing Sources

Appropriations Used: Most of the Department’s operating funds are provided by congressional appropriations of budget authority. 

The Department receives appropriations on annual, multiple-fiscal year, and no-year bases. Upon expiration of an annual or multiplefiscal year appropriation, the obligated and unobligated balances retain their fiscal year identity, and are maintained separately 

within an expired account. The unobligated balances can be used to make legitimate obligation adjustments, but are otherwise 

not available for expenditures. Annual and multiple-fiscal year appropriations are canceled at the end of the fifth fiscal year after 

expiration. No-year appropriations do not expire. Appropriations of budget authority are recognized as used when costs are 

incurred, for example, when goods and services are received or benefits and grants are provided. 

Exchange and Non-exchange Revenue: The Department classifies revenue as either exchange revenue or non-exchange revenue. 

Exchange revenue is derived from transactions in which both the federal government and the other party receive value, including 

processing patents and registering trademarks, the sale of weather data, nautical charts, and navigation information, reimbursable 

revenue, and other sales of goods and services. Exchange revenue is presented on the Department’s Consolidated Statements of 

Net Cost. Non-exchange revenue is derived from the federal government’s sovereign right to demand payment, and, for example, 

includes revenue of NOAA’s Damage Assessment and Restoration Revolving Fund as reported and described in Note 22, Funds 

from Dedicated Collections. Non-exchange revenue is recognized when a specifically identifiable, legally enforceable claim to 

resources arises, and to the extent that collection is probable and the amount is reasonably estimable. Non-exchange revenue is 

not considered to reduce the cost of the Department’s operations and is therefore reported on the Consolidated Statements of 

Changes in Net Position as a financing source.

In certain cases, law or regulation sets the prices charged by the Department, and, for program and other reasons, the Department 

may not receive full cost (e.g., the processing of patents and registering of trademarks, and the sale of weather data, nautical 

charts, and navigation information). Prices set for products and services offered through the Department’s working capital funds 

are intended to recover the full costs incurred by these activities. 

Imputed Financing Sources from Cost Absorbed by Others (and Related Imputed Costs): In certain cases, operating costs of the Department are paid for in full or in part by funds appropriated to other federal entities. For example, Civil Service Retirement System 

pension benefits for applicable Departmental employees are paid for in part by the U.S. Office of Personnel Management (OPM), 

and certain legal judgments against the Department are paid for in full from the Judgment Fund maintained by Treasury. 

The Department includes applicable imputed costs in the Consolidated Statements of Net Cost. In addition, Imputed Financing 

Sources from Cost Absorbed by Others is recognized on the Consolidated Statements of Changes in Net Position as an other 

financing source (non-exchange).

Transfers In/(Out): Intragovernmental transfers, for example, of budgetary resources, or of assets without reimbursement that 

are recorded at book value, are reported in the Consolidated Statements of Changes in Net Position.

Q Employee Retirement Benefits

Civil Service Retirement System (CSRS) and Federal Employees Retirement System (FERS): Most employees of the Department 

participate in either the CSRS or FERS defined-benefit pension plans. 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 could 

elect to either join FERS and Social Security, or remain in CSRS.

The Department is not responsible for and does not report CSRS or FERS assets, accumulated plan benefits, or liabilities applicable 

to its employees. OPM, which administers the plans, is responsible for and reports these amounts.

FY 2016 AGENCY FINANCIAL REPORT | 57

NOTES TO THE FINANCIAL STATEMENTS
For CSRS-covered regular employees, the Department was required to make contributions to the plan equal to 7 percent of an 

employee’s basic pay. Employees contributed 7 percent of basic pay. For each fiscal year, OPM calculates the U.S. government’s 

service cost for covered employees, which is an estimate of the amount of funds, that, if accumulated annually and invested over 

an employee’s career, would be enough to pay that employee’s future benefits. Since the U.S. government’s estimated service 

cost exceeds contributions made by employer agencies and covered employees, this plan is not fully funded by the Department and 

its employees. The Department has recognized an imputed cost, and an imputed financing source from cost absorbed by others, 

for the difference between the estimated service cost and the contributions made by the Department and its covered employees. 

Effective October 1, 2014, for FERS-covered regular employees hired prior to January 1, 2013, the Department was required to 

make contributions of 13.2 percent of basic pay. Employees contributed 0.8 percent of basic pay. For regular employees hired 

after December 31, 2012, as defined in Public Law 112-96, Section 5001, the Department was required to make contributions of 

11.1 percent of basic pay. Regular employees hired between December 31, 2012 and December 31, 2013 contributed 3.1percent 

of basic pay. Regular employees hired after December 31, 2013 contributed 4.4 percent of basic pay. For each fiscal year, OPM 

calculates the U.S. government’s service cost for covered employees. Since the U.S. government’s estimated service cost 

exceeds contributions made by employer agencies and covered employees, this plan was not fully funded by the Department and 

its employees. The Department has recognized an imputed cost, and an imputed financing source from cost absorbed by others, 

for the difference between the estimated service cost and the contributions made by the Department and its covered employees. 

Employees participating in FERS are covered under the Federal Insurance Contributions Act, for which the Department contributes 

a matching amount to the Social Security Administration. 

NOAA Corps Retirement System: Active-duty officers of the NOAA Corps are covered by the NOAA Corps Retirement System, 

an unfunded, pay-as-you-go, defined-benefit plan administered by the Department. Participants do not contribute to this plan. 

Plan benefits are based primarily on years of service and compensation. Participants, as of September 30, 2016, included 308 active

duty officers, 382 nondisability retiree annuitants, 15 disability retiree annuitants, and 55 surviving families. Key provisions include 

voluntary nondisability retirement after 20 years of active service, disability retirement, optional survivor benefits, Consumer Price 

Index (CPI) optional survivor benefits, and CPI adjustments for benefits. 

Foreign Service Retirement and Disability System, and the Foreign Service Pension System: Foreign Commercial Officers are covered 

by the Foreign Service Retirement and Disability System and the Foreign Service Pension System. ITA makes contributions 

to the systems based on a percentage of an employee’s pay. Both systems are multi-employer plans administered by the 

U.S. Department of State. The Department is not responsible for and does not report plan assets, accumulated plan benefits, or 

liabilities applicable to its employees. The U.S. Department of State, which administers the plan, is responsible for and reports 

these amounts. 

Thrift Savings Plan (TSP): Employees covered by CSRS and FERS are eligible to contribute to the U.S. government’s TSP, administered 

by the Federal Retirement Thrift Investment Board. A TSP account is automatically established for FERS-covered employees, and 

the Department makes a mandatory contribution of one percent of basic pay. The Department also makes matching contributions of 

up to four percent of basic pay for FERS-covered employees. FERS and CSRS-covered employees have no limit on the percentage 

of pay contributed to their TSP account. However, the total employee regular contribution for 2016 and 2015 may not exceed the 

IRS limit of $18 thousand. The Department makes no matching contributions for CSRS-covered employees. TSP participants age 

50 or older who are already contributing the maximum amount of contributions for which they are eligible may also make catch-up 

contributions, subject to the IRS dollar limit for catch-up contributions.

58 | FY 2016 AGENCY FINANCIAL REPORT

NOTES TO THE FINANCIAL STATEMENTS
Federal Employees Health Benefit (FEHB) Program: Most Departmental employees are enrolled in the FEHB Program, which provides 

post-retirement health benefits. OPM administers this program and is responsible for the reporting of liabilities. Employer agencies 

and covered employees are not required to make any contributions for post-retirement health benefits. OPM calculates the U.S. 

government’s service cost for covered employees each fiscal year. The Department has recognized the entire service cost of 

these post-retirement health benefits for covered employees as an imputed cost, and an imputed financing source from cost 

absorbed by others.

NOAA Corps Post-retirement Health Benefits: Active-duty officers of the NOAA Corps are covered by the health benefits program 

for the NOAA Corps, which provides post-retirement health benefits. This is a pay-as-you-go plan administered by the Department. 

Participants do not make any contributions to this plan. 

Federal Employees Group Life Insurance (FEGLI) Program: Most Department employees are entitled to participate in the FEGLI 

Program. Participating employees can obtain basic term life insurance, with the employee paying two-thirds of the cost and the 

Department paying one-third. Additional coverage is optional, to be paid fully by the employee. The basic life coverage may be 

continued into retirement if certain requirements are met. OPM administers this program and is responsible for the reporting 

of liabilities. For each fiscal year, OPM calculates the U.S. government’s service cost for the post-retirement portion of basic life 

coverage. Because the Department’s contributions to the basic life coverage are fully allocated by OPM to the pre-retirement 

portion of coverage, the Department has recognized the entire service cost of the post-retirement portion of basic life coverage 

as an imputed cost and an imputed financing source from cost absorbed by others.

R Use of Estimates

The preparation of financial statements requires the Department to make estimates and assumptions that affect these financial 

statements. Actual results may differ from those estimates. 

S Tax Status

The Department is not subject to federal, state, or local income taxes. Accordingly, no provision for income taxes is recorded.

T Fiduciary Activities

Fiduciary activities are the collection or receipt, and the management, protection, accounting, and disposition by the federal 

government of cash or other assets in which non-federal individuals or entities have an ownership interest that the federal 

government must uphold. Fiduciary cash and other assets are not assets of the federal government, and, accordingly, are not 

recognized in the Department’s financial statements.

The Department’s fiduciary activities consist of the following:

The Patent Cooperation Treaty authorizes USPTO to collect patent filing and search fees on behalf of the World Intellectual Property 

Organization (WIPO), European Patent Office, Korean Intellectual Property Office, Russian Intellectual Property Organization, Israeli 

Patent Office, Japanese Patent Office, Intellectual Property Office of Singapore, and Australian Patent Office from U.S. citizens 

requesting an international patent. The Madrid Protocol Implementation Act authorizes USPTO to collect trademark application 

fees on behalf of the International Bureau of WIPO from U.S. citizens requesting an international trademark. These fiduciary 

activities are reported in Note 21.

FY 2016 AGENCY FINANCIAL REPORT | 59

NOTES TO THE FINANCIAL STATEMENTS
NOTE 2. FUND BALANCE WITH TREASURY

Fund Balance with Treasury, by type, is as follows:

FY 2016 FY 2015

General Funds $ 8,816,535 $ 8,411,292

Revolving Funds

Network Construction Fund 6,642,633 6,356,712

Other Revolving Funds 883,590 856,404

Special Funds

Digital Television Transition and Public Safety Fund 8,822,531 8,815,921

Patent and Trademark Surcharge Fund 233,529 233,529

Other Special Funds 128,741 123,287

Deposit Funds 146,849 167,402

Trust Funds

Public Safety Trust Fund 176,870 541,696

Other Trust Funds 2,802 2,735

Other Fund Types 17,975 2,093

Total $ 25,872,055 $ 25,511,071

Status of Fund Balance with Treasury is as follows:

FY 2016 FY 2015

Reduction of Budgetary Resources

Not Available – Digital Television Transition and Public Safety Fund $ 8,807,394 $ –

Temporarily Precluded from Obligation 974,270 1,325,068

Unobligated Balance

Available 8,632,970 8,065,051

Unavailable

 Digital Television Transition and Public Safety Fund – 8,798,108

 Others 550,451 747,124

Obligated Balance Not Yet Disbursed 6,510,831 6,174,260

Non-budgetary 396,139 401,460

Total $ 25,872,055 $ 25,511,071

See Note 19, Combined Statements of Budgetary Resources, for legal arrangements affecting the Department’s use of Fund 

Balance with Treasury for FY 2016 and FY 2015.

See Note 22, Funds from Dedicated Collections, for more information regarding the Network Construction Fund, the Digital 

Television Transition and Public Safety Fund, the Patent and Trademark Surcharge Fund, and the Public Safety Trust Fund.

60 | FY 2016 AGENCY FINANCIAL REPORT

NOTES TO THE FINANCIAL STATEMENTS
NOTE 3. INVESTMENT 

FY 2016

Investment in 

Federal Securities Cost

Amortization 

Method

Amortized 

Discount

Interest 

Receivable

Investment, 

Net

Other 

Adjustments

Market Value 

Disclosure

Intragovernmental

Non-marketable

Market-based $ 333,013 Interest Method $ – $ – $ 333,013 $ – $ 332,961

NOTE 4. ACCOUNTS RECEIVABLE, NET 

FY 2016

Accounts 

Receivable, 

Gross

Allowance for 

Uncollectible 

Accounts

Accounts 

Receivable, 

Net

Intragovernmental $ 107,394 $ – $ 107,394

With the Public $ 56,490 $ (10,411) $ 46,079

FY 2015

Accounts 

Receivable, 

Gross

Allowance for 

Uncollectible 

Accounts

Accounts 

Receivable, 

Net

Intragovernmental $ 119,395 $ – $ 119,395

With the Public $ 43,461 $ (10,743) $ 32,718

NOTE 5. CASH 

FY 2016 FY 2015

Cash Not Yet Deposited with Treasury $ 5,580 $ 4,054

Imprest Funds 406 352

Total $ 5,986 $ 4,406

Cash Not Yet Deposited with Treasury primarily represents patent and trademark fees that were not processed as of September 30, 

due to the lag time between receipt and initial review. Certain bureaus maintain imprest funds for operational necessity, such as 

law enforcement activities and for environments that do not permit the use of electronic payments. 

FY 2016 AGENCY FINANCIAL REPORT | 61

NOTES TO THE FINANCIAL STATEMENTS
NOTE 6. DIRECT LOANS AND LOAN GUARANTEES, NET

The Department operates the following direct loan and loan guarantee programs:

Direct Loan Programs:

EDA Drought Loan Portfolio

EDA Economic Development Revolving Fund

NOAA Alaska Purse Seine Fishery Buyback Loans

NOAA Bering Sea and Aleutian Islands Non-Pollock Buyback Loans

NOAA Bering Sea Pollock Fishery Buyback

NOAA Coastal Energy Impact Program (CEIP)

NOAA Crab Buyback Loans

NOAA Federal Gulf of Mexico Reef Fish Buyback Loans1

NOAA Fisheries Finance Individual Fishing Quota (IFQ) Loans

NOAA Fisheries Finance Traditional Loans

NOAA Fisheries Loan Fund

NOAA New England Groundfish Buyback Loans1

NOAA New England Lobster Buyback Loans1

NOAA Pacific Groundfish Buyback Loans

Loan Guarantee Programs:

EDA Economic Development Revolving Fund

EDA Innovation in Manufacturing Loan Guarantees1

NOAA Fishing Vessel Obligation Guarantee (FVOG) Program

1 No loans have been issued under these programs as of September 30, 2016. 

NOAA’s Fisheries Finance Loan programs provide direct loans for certain fisheries costs, including vessels, shoreside facilities, 

aquaculture, and Individual Fishing Quota (IFQ). Vessel financing is available for the purchase of used vessels or the reconstruction 

of vessels. Refinancing is available for existing debt obligations. The purpose of these loan programs is to contribute to stable 

fisheries and fishing communities, and ensure that fisheries are sustainable economic resources. NOAA’s various buyback loan 

programs address excess fishing capacity which decreases fisheries earnings, complicates fisheries management, and imperils 

fisheries conservation. Buyback loans are issued to fisheries to permanently remove vessels and/or permits and thus lower 

fishing effort in overcapitalized fisheries. Loans are repaid from fees collected on the ex-vessel value of the catch in the fishery.

EDA currently has four loan programs: (1) public works loans, which the majority of these loans are to utility companies, mainly 

water companies, and a few loans to children’s centers; (2) grant and civil debt loans, which are being paid back either because 

grants were misused or because excess money was disbursed; (3) drought loans made to water districts; and (4) manufacturing 

innovation loan guarantees for obligations to small or medium-sized manufacturers for the use or production of innovative technologies.

62 | FY 2016 AGENCY FINANCIAL REPORT

NOTES TO THE FINANCIAL STATEMENTS
The net assets for the Department’s loan programs consist of:

FY 2016 FY 2015

Direct Loans Obligated Prior to FY 1992 $ 6,014 $ 7,698

Direct Loans Obligated After FY 1991 447,938 504,761

Defaulted Guaranteed Loans from Pre-FY 1992 Guarantees 4 4

Total $ 453,956 $ 512,463

Direct Loans Obligated Prior to FY 1992 consist of:

FY 2016

Direct 

Loan Program

Loans 

Receivable, 

Gross

Interest 

Receivable

Allowance for 

Loan Losses

Value of Assets 

Related to 

Direct Loans, 

Net

CEIP $ 18,435 $ 6,004 $ (20,343) $ 4,096

Drought Loan Portfolio 1,574 – – 1,574

Economic Development Revolving Fund 341 6 (3) 344

Fisheries Loan Fund 148 16 (164) –

Total $ 20,498 $ 6,026 $ (20,510) $ 6,014

FY 2015

Direct 

Loan Program

Loans 

Receivable, 

Gross

Interest 

Receivable

Allowance for 

Loan Losses

Value of Assets 

Related to 

Direct Loans, 

Net

CEIP $ 18,624 $ 5,743 $ (20,082) $ 4,285

Drought Loan Portfolio 2,917 – – 2,917

Economic Development Revolving Fund 501 – (5) 496

Fisheries Loan Fund 148 16 (164) –

Total $ 22,190 $ 5,759 $ (20,251) $ 7,698

FY 2016 AGENCY FINANCIAL REPORT | 63

NOTES TO THE FINANCIAL STATEMENTS
Direct Loans Obligated After FY 1991 consist of: 

FY 2016

Direct Loan Program

Loans 

Receivable, 

Gross

Interest 

Receivable

Foreclosed 

Property

Allowance for 

Subsidy Cost

(Present Value)

Value of Assets 

Related to 

Direct Loans, Net

Alaska Purse Seine Fishery Buyback Loans $ 9,279 $ 13 $ – $ 767 $ 10,059

Bering Sea and Aleutian Islands 

Non-Pollock Buyback Loans 30,981 63 – 4,950 35,994

Bering Sea Pollock Fishery Buyback 22,144 4 – 1,068 23,216

Crab Buyback Loans 71,501 1,242 – 10,403 83,146

Fisheries Finance IFQ Loans 19,928 180 – 1,077 21,185

Fisheries Finance Traditional Loans 230,817 1,312 3,071 8,960 244,160

Pacific Groundfish Buyback Loans 24,974 65 – 5,139 30,178

Total $ 409,624 $ 2,879 $ 3,071 $ 32,364 $ 447,938

FY 2015

Direct Loan Program

Loans 

Receivable, 

Gross

Interest 

Receivable

Allowance for 

Subsidy Cost

(Present Value)

Value of Assets 

Related to 

Direct Loans, Net

Alaska Purse Seine Fishery Buyback Loans $ 9,383 $ 6 $ 803 $ 10,192

Bering Sea and Aleutian Islands 

Non-Pollock Buyback Loans 32,106 80 4,858 37,044

Bering Sea Pollock Fishery Buyback 28,227 23 1,588 29,838

Crab Buyback Loans 78,565 1,123 19,310 98,998

Fisheries Finance IFQ Loans 21,892 192 3,266 25,350

Fisheries Finance Traditional Loans 240,425 1,541 30,065 272,031

Pacific Groundfish Buyback Loans 25,728 69 5,511 31,308

Total $ 436,326 $ 3,034 $ 65,401 $ 504,761

New Disbursements of Direct Loans (Post-FY 1991):

Direct Loan Program FY 2016 FY 2015

Fisheries Finance IFQ Loans $ 1,119 $ 1,658

Fisheries Finance Traditional Loans 46,497 84,308

Total $ 47,616 $ 85,966

64 | FY 2016 AGENCY FINANCIAL REPORT

NOTES TO THE FINANCIAL STATEMENTS
Subsidy Expense for Direct Loans by Program and Component:

Subsidy Expense for New Disbursements of Direct Loans:

FY 2016

Direct Loan Program

Interest Rate

Differential Defaults

Fees and 

Other

Collections Other Total

Fisheries Finance IFQ Loans $ (225) $ 1 $ (4) $ 199 $ (29)

Fisheries Finance Traditional Loans (6,756) 295 (229) 4,520 (2,170)

Total $ (6,981) $ 296 $ (233) $ 4,719 $ (2,199)

FY 2015

Direct Loan Program

Interest Rate

Differential Defaults

Fees and 

Other

Collections Other Total

Fisheries Finance IFQ Loans $ (325) $ 2 $ (7) $ 224 $ (106)

Fisheries Finance Traditional Loans (12,507) 477 (419) 6,668 (5,781)

Total $ (12,832) $ 479 $ (426) $ 6,892 $ (5,887)

Reestimates:

FY 2016

Direct Loan Program

Technical

Reestimates

Alaska Purse Seine Fishery Buyback Loans $ (22)

Bering Sea and Aleutian Islands Non-Pollock Buyback Loans (496)

Bering Sea Pollock Fishery Buyback 165

Crab Buyback Loans 2,556

Fisheries Finance IFQ Loans 1,867

Fisheries Finance Traditional Loans 17,884

Pacific Groundfish Buyback Loans 90

Total $ 22,044

FY 2015

Direct Loan Program

Technical

Reestimates

Alaska Purse Seine Fishery Buyback Loans $ (4)

Bering Sea and Aleutian Islands Non-Pollock Buyback Loans (225)

Bering Sea Pollock Fishery Buyback (175)

Crab Buyback Loans 1,104

Fisheries Finance IFQ Loans 619

Fisheries Finance Traditional Loans (3,886)

Fisheries Finance Traditional Loans 663

Total $ (1,904)

There were no interest rate reestimates for FY 2016 and FY 2015.

FY 2016 AGENCY FINANCIAL REPORT | 65

NOTES TO THE FINANCIAL STATEMENTS
Total Direct Loan Subsidy Expense:

Direct Loan Program FY 2016 FY 2015

Alaska Purse Seine Fishery Buyback Loans $ (22) $ (4)

Bering Sea and Aleutian Islands Non-Pollock 

Buyback Loans (496) (225)

Bering Sea Pollock Fishery Buyback 165 (175)

Crab Buyback Loans 2,556 1,104

Fisheries Finance IFQ Loans 1,838 513

Fisheries Finance Traditional Loans 15,714 (9,667)

Pacific Groundfish Buyback Loans 90 663

Total $ 19,845 $ (7,791)

Subsidy Rates for Direct Loans by Program and Component:

Budget Subsidy Rates for Direct Loans for the Current Fiscal-year’s Cohorts:

FY 2016

Direct Loan Program

Interest Rate

Differential Defaults

Fees and 

Other 

Collections Other Total

Fisheries Finance IFQ Loans (18.29) % 0.14 % (0.41) % 15.29 % (3.27) %

Fisheries Finance Traditional Loans (11.71) % 1.06 % (0.49) % 8.09 % (3.05) %

FY 2015

Direct Loan Program

Interest Rate

Differential Defaults

Fees and 

Other 

Collections Other Total

Fisheries Finance IFQ Loans (20.82) % 0.12 % (0.41) % 18.74 % (2.37) %

Fisheries Finance Traditional Loans (15.06) % 0.57 % (0.49) % 10.12 % (4.86) %

The budget subsidy rates disclosed pertain only to the reporting period’s cohorts. These rates cannot be applied to the new 

disbursements of direct loans during the reporting period to yield the subsidy expense. The subsidy expense for new disbursements 

of direct loans for the reporting period could result from disbursements of loans from both the reporting period’s cohorts and prior 

fiscal-year(s) cohorts. The subsidy expense for the reporting period may also include modifications and reestimates.

66 | FY 2016 AGENCY FINANCIAL REPORT

NOTES TO THE FINANCIAL STATEMENTS
Schedule for Reconciling Allowance for Subsidy Cost (Post-FY 1991 Direct Loans):

FY 2016 FY 2015

Beginning Balance of the Allowance for Subsidy Cost $ 65,401 $ 61,168

Add Subsidy Expense for Disbursements of Direct Loans 

During the Year by Component:

 Interest Rate Differential 6,981 12,832

 Defaults (296) (479)

 Fees and Other Collections 233 426

 Other (4,719) (6,892)

Total of the above Subsidy Expense Components 2,199 5,887

Adjustments:

 Fees Received (269) (529)

 Foreclosed Property Acquired (2,500) –

 Loans Written Off (62) 913

 Subsidy Allowance Amortization (10,367) (3,949)

 Other 6 7

Total of Adjustments (13,192) (3,558)

Ending Balance of the Allowance for Subsidy Cost Before Reestimates 54,408 63,497

Add or Subtract Subsidy Reestimates by Component:

 Technical Reestimates (22,044) 1,904

Ending Balance of the Allowance for Subsidy Cost $ 32,364 $ 65,401

Defaulted Guaranteed Loans from Pre-FY 1992 Guarantees:

FY 2016

Loan Guarantee

Program

Defaulted

Guaranteed Loans

Receivable, Gross

Interest

Receivable

Allowance for 

Loan Losses

Value of Assets 

Related to Defaulted

Guaranteed Loans

Receivable, Net

FVOG Program $ 7,318 $ 1 $ (7,315) $ 4

FY 2015

Loan Guarantee

Program

Defaulted

Guaranteed Loans

Receivable, Gross

Interest

Receivable

Allowance for 

Loan Losses

Value of Assets 

Related to Defaulted

Guaranteed Loans

Receivable, Net

FVOG Program $ 7,318 $ 1 $ (7,315) $ 4

FY 2016 AGENCY FINANCIAL REPORT | 67

NOTES TO THE FINANCIAL STATEMENTS
Loan Guarantees:

As of September 30, 2016 and 2015, there were no non-acquired guaranteed loans outstanding. There are no new guaranteed 

loans disbursed during FY 2016 and FY 2015. Since there were no new guaranteed loans disbursed FY 2016 and FY 2015, 

there were no related subsidy expenses. Also, there were no modifications or reestimates for loan guarantees during 

FY 2016 and FY 2015. In addition, there were no new cohorts of guaranteed loans during FY 2016 and FY 2015.

Schedule for Reconciling Loan Guarantee Liabilities (Post-FY 1991 Loan Guarantees):

FY 2016 FY 2015

Beginning Balance of Loan Guarantee Liabilities $ – $ 516

Adjustments:

Loans Written Off – (516)

Ending Balance of Loan Guarantee Liabilities $ – $ –

Administrative Expenses: 

Administrative expenses in support of the Department’s direct loan and loan guarantee programs consist of: 

Direct Loan Program FY 2016 FY 2015

Drought Loan Portfolio and 

Economic Development Revolving Fund $ 2,164 $ 2,555

NOAA Direct Loan Programs 3,435 3,382

Total $ 5,599 $ 5,937

Loan Guarantee Program FY 2016 FY 2015

FVOG Program $ 71 $ 66

68 | FY 2016 AGENCY FINANCIAL REPORT

NOTES TO THE FINANCIAL STATEMENTS
NOTE 7. INVENTORY, MATERIALS, AND SUPPLIES, NET

Category Cost Flow Assumption FY 2016 FY 2015

Inventory

Items Held for Current Sale

NIST Standard Reference Materials Average $ 23,780 $ 23,054

Other Various 146 160

Allowance for Excess, Obsolete, 

and Unserviceable Items (96) (86)

Total Inventory, Net 23,830 23,128

Materials and Supplies

Items Held for Use

NOAA’s National Logistics Support Center Weighted-average 59,234 53,980

Other Various 6,029 5,729

Items Held for Repair

NOAA’s National Reconditioning Center Weighted-average 30,774 30,384

Allowance for Excess, Obsolete, 

and Unserviceable Items (5,773) (8,833)

Total Materials and Supplies, Net 90,264 81,260

Total $ 114,094 $ 104,388

NIST’s Standard Reference Materials Program provides reference materials for quality assurance of measurements, while 

NOAA’s Materials and Supplies are primarily repair parts for weather forecasting equipment. 

FY 2016 AGENCY FINANCIAL REPORT | 69

NOTES TO THE FINANCIAL STATEMENTS
NOTE 8. GENERAL PROPERTY, PLANT, AND EQUIPMENT, NET

FY 2016

Category

Useful Life

(Years) Cost

Accumulated

Depreciation Net Book Value

Land N/A $ 16,632 $ – $ 16,632

Land Improvements 30-40 2,996 (1,839) 1,157

Structures, Facilities, and 

Leasehold Improvements 2-50 2,373,010 (860,191) 1,512,819

Satellites/Weather Systems 

Personal Property 3-25 6,657,547 (5,198,820) 1,458,727

Other Personal Property 2-30 2,076,916 (1,308,550) 768,366

Internal Use Software 3-15 1,344,872 (940,437) 404,435

Assets Under Capital Lease 3-40 18,905 (12,838) 6,067

Construction-in-progress N/A 9,739,906 – 9,739,906

Internal Use Software in 

Development N/A 226,082 – 226,082

Total $ 22,456,866 $ (8,322,675) $ 14,134,191

FY 2015

Category

Useful Life

(Years) Cost

Accumulated

Depreciation Net Book Value

Land N/A $ 16,656 $ – $ 16,656

Land Improvements 30-40 2,996 (1,747) 1,249

Structures, Facilities, and 

Leasehold Improvements 2-50 2,275,931 (781,791) 1,494,140

Satellites/Weather Systems 

Personal Property 3-20 6,258,702 (4,764,266) 1,494,436

Other Personal Property 2-30 2,127,814 (1,378,508) 749,306

Internal Use Software 3-15 1,183,627 (808,224) 375,403

Assets Under Capital Lease 3-40 18,987 (9,970) 9,017

Construction-in-progress N/A 8,602,567 – 8,602,567

Internal Use Software in 

Development N/A 205,875 – 205,875

Total $ 20,693,155 $ (7,744,506) $ 12,948,649

70 | FY 2016 AGENCY FINANCIAL REPORT

NOTES TO THE FINANCIAL STATEMENTS
NOTE 9. OTHER ASSETS

FY 2016 FY 2015

With the Public

Advances and Prepayments $ 68,737 $ 118,310

Note Receivable 1,349 1,408

Bibliographic Database, Net 5,166 5,324

General PP&E Permanently Removed 

but Not Yet Disposed

261 194

Other 1,354 1,019

Total $ 76,867 $ 126,255

As of September 30, 2016 and 2015, there is one Note Receivable with a maturity date of July 2024 and an interest rate 

of 7.0 percent. The balance includes accrued interest.

The Bibliographic Database relates to NTIS’s scientific and technical information used to prepare products and services 

for sale. The database is stated at capitalized costs of $77.1 million and $74.7 million, less accumulated amortization of 

$71.9 million and $69.4 million, as of September 30, 2016 and 2015, respectively.

NOTE 10. NON-ENTITY ASSETS

The assets that are not available for use in the Department’s operations are summarized below:

FY 2016 FY 2015

Intragovernmental

Fund Balance with Treasury $ 139,120 $ 148,933

Accounts Receivable 3,748 13,359

Other – 1,079

Total Intragovernmental 142,868 163,371

With the Public

Cash 1,770 691

Accounts Receivable, Net 12,652 349

Direct Loans and Loan 

Guarantees, Net 1,574 3,417

Other 1,353 1,408

Total $ 160,217 $ 169,236

FY 2016 AGENCY FINANCIAL REPORT | 71

NOTES TO THE FINANCIAL STATEMENTS
NOTE 11. DEBT TO TREASURY

FY 2016

Loan Program

Beginning

Balance

Net Borrowings

(Repayments)

Ending

Balance

Direct Loan Program

Fisheries Finance, Financing Account $ 504,704 $ (29,497) $ 475,207

Maturity dates range from September 2020 to September 2052, and interest rates range from 2.11 to 6.13 percent.

FY 2015

Loan Program

Beginning

Balance

Net Borrowings

(Repayments)

Ending

Balance

Direct Loan Program

Fisheries Finance, Financing Account $ 510,871 $ (6,167) $ 504,704

NTIA Public Safety Trust Fund 779,000 (779,000) –

NTIA State and Local Implementation Fund 21,800 (21,800) –

Total $ 1,311,671 $ (806,967) $ 504,704

72 | FY 2016 AGENCY FINANCIAL REPORT

NOTES TO THE FINANCIAL STATEMENTS
NOTE 12. OTHER LIABILITIES

FY 2016 FY 2015

Current Portion

Non-current 

Portion Total Total

Intragovernmental

Accrued FECA Liability $ 19,761 $ 8,792 $ 28,553 $ 31,700

Accrued Benefits 53,141 – 53,141 40,549

Custodial Activity 12,672 – 12,672 388

Downward Subsidy Reestimates 

Payable to Treasury 3,748 – 3,748 13,359

Resources Payable to Treasury 4,503 – 4,503 5,905

Other 234 – 234 1,082

Total $ 94,059 $ 8,792 $ 102,851 $ 92,983

With the Public

ITA Foreign Service Nationals’ 

Voluntary Separation Pay $ 2,618 $ 8,878 $ 11,496 $ 10,138

Contingent Liabilities (Note 17) 22,257 – 22,257 15,712

Employment-related 1,433 – 1,433 1,624

Other 2,212 – 2,212 1,401

Total $ 28,520 $ 8,878 $ 37,398 $ 28,875

The Current Portion represents liabilities expected to be paid by September 30, 2017, while the Non-current Portion represents 

liabilities expected to be paid after September 30, 2017.

FY 2016 AGENCY FINANCIAL REPORT | 73

NOTES TO THE FINANCIAL STATEMENTS
NOTE 13. FEDERAL EMPLOYEE BENEFITS

FY 2016 FY 2015

Actuarial FECA Liability $ 206,611 $ 209,346

NOAA Corps Retirement System Liability 633,000 634,900

NOAA Corps Post-retirement Health Benefits Liability 36,500 37,300

Total $ 876,111 $ 881,546

Actuarial FECA Liability: 

Actuarial FECA liability is calculated annually, as of September 30. For discounting projected annual future benefit payments 

to present value, the interest rate assumptions used by DOL were as follows:

FY 2016 FY 2015

Year 1 and Thereafter 2.78% 3.13%

The wage inflation factors (Cost of Living Adjustment) and medical inflation factors (Consumer Price Index - Medical) applied 

to the calculation of projected future benefits, and also used to adjust the methodology’s historical payments to currentyear constant dollars, were as follows:

FY 2016

Fiscal Year

Cost of Living 

Adjustment

Consumer Price 

Index - Medical

2017 1.31% 2.99%

2018 1.13% 3.09%

2019 1.23% 3.40%

2020 1.45% 3.68%

2021 1.85% 3.87%

FY 2015

Fiscal Year

Cost of Living 

Adjustment

Consumer Price 

Index - Medical

2016 1.64% 2.94%

2017 1.47% 2.98%

2018 1.33% 3.09%

2019 1.43% 3.39%

2020 1.65% 3.69%

74 | FY 2016 AGENCY FINANCIAL REPORT

NOTES TO THE FINANCIAL STATEMENTS
NOAA Corps Retirement System Liability: 

This liability represents the unfunded actuarial present value of projected plan benefits. The actuarial calculation is 

performed annually, as of September 30. The September 30, 2016 and 2015 actuarial calculations used the following 

economic assumptions:

FY 2016 FY 2015

Discount Rate 3.80% 3.99%

Annual Basic Pay Scale Increases 2.21% 2.59%

Annual Inflation 1.71% 2.09%

Schedule for Reconciling NOAA Corps Retirement System Liability:

A reconciliation of the NOAA Corps Retirement System Liability from the beginning balance to the ending balance, including 

the components of the related pension costs included in the Consolidated Statements of Net Costs, follows:

FY 2016 FY 2015

Beginning Balance – NOAA Corps Retirement System Liability $ 634,900 $ 632,800 

Add Pension Costs:

Normal Cost 12,500 12,700

Interest on the Unfunded Liability 23,600 24,700

Actuarial (Gains)/Losses, Net

From Experience (11,400) (10,200)

From Discount Rate Assumption Change 25,400 18,100

From Long-term Assumption Changes

Annual Inflation (32,500) (19,400)

Annual Basic Pay Scale Increases (1,800) (1,000)

Mortality 18,600 1,900

Withdrawal (1,100) –

Career Pay Increase (1,500) –

Retirement (8,700) –

Total Pension Costs 23,100 26,800 

Subtract Benefit Payments (25,000) (24,700)

Ending Balance – NOAA Corps Retirement System Liability $ 633,000 $ 634,900 

NOAA Corps Post-retirement Health Benefits Liability: 

This liability represents the unfunded actuarial present value of projected post-retirement plan benefits. The actuarial 

calculation is performed annually, as of September 30. The actuarial calculations used the following economic assumptions:

FY 2016 FY 2015

Discount Rate 3.77% 3.97%

Ultimate Medical Trend Rate 4.85% 5.15%

FY 2016 AGENCY FINANCIAL REPORT | 75

NOTES TO THE FINANCIAL STATEMENTS
Schedule for Reconciling NOAA Corps Post-retirement Health Benefits Liability:

A reconciliation of the NOAA Corps Post-retirement Health Benefits Liability from the beginning balance to the ending 

balance, including the components of the related post-retirement health benefits costs included in the Consolidated 

Statements of Net Costs, follows:

FY 2016 FY 2015

Beginning Balance – NOAA Corps Post-retirement Health 

Benefits Liability $ 37,300 $ 39,600

Add Health Benefits Costs:

Normal Cost 1,200 1,300

Interest on the Unfunded Liability 1,400 1,600

Actuarial (Gains)/Losses, Net

From Experience 700 400

From Discount Rate Assumption Change 600 300

From Long-term Assumption Changes

Medical Claims and Trend Rate (2,100) (3,500)

Mortality (300) –

Total Health Benefits Costs 1,500 100

Subtract Benefit Payments (2,300) (2,400)

Ending Balance – NOAA Corps Post-retirement Health 

Benefits Liability $ 36,500 $ 37,300

 NOTE 14. ENVIRONMENTAL AND DISPOSAL LIABILITIES

FY 2016 FY 2015

Asbestos-related Cleanup Costs $ 73,820 $ 77,343

Nuclear Reactor 57,342 55,881

Pribilof Islands 1,574 1,665

Non-reactor Radiological Facilities 8,619 8,280

Other 1,745 1,724

Total $ 143,100 $ 144,893

76 | FY 2016 AGENCY FINANCIAL REPORT

NOTES TO THE FINANCIAL STATEMENTS
NOTE 15. LEASES

Capital Leases:

Assets under capital leases are as follows:

FY 2016 FY 2015

Structures, Facilities, and Leasehold Improvements $ 6,206 $ 6,206

Equipment 12,699 12,781

Less: Accumulated Depreciation (12,838) (9,970)

Net Assets Under Capital Leases $ 6,067 $ 9,017

Capital Lease Liabilities are primarily related to NOAA and DM/WCF. NOAA has real property capital leases covering both 

land and buildings. The majority of these leases are for weather forecasting offices, but the leases are also for radar system 

sites, river forecasting centers, and National Weather Service enforcement centers. NOAA’s real property capital leases 

range from 5 to 40 years. DM/WCF has a capital lease for equipment with a lease term of 5 years. 

Capital Lease Liabilities:

Future payments due under capital leases are as follows:

FY 2016

General PP&E Category

 Fiscal Year Real Property Personal Property Total

2017 $ 314 $ 1,117 $ 1,431

2018 314 – 314

2019 26 – 26

Total Future Lease Payments 654 1,117 1,771

Less: Imputed Interest (39) (16) (55)

Less: Executory Costs (116) – (116)

Net Capital Lease Liabilities $ 499 $ 1,101 $ 1,600

FY 2016 AGENCY FINANCIAL REPORT | 77

NOTES TO THE FINANCIAL STATEMENTS
FY 2015

General PP&E Category

 Fiscal Year Real Property Personal Property Total

2016 $ 463 $ 1,162 $ 1,625

2017 314 1,161 1,475

2018 315 – 315

2019 26 – 26

Total Future Lease Payments 1,118 2,323 3,441

Less: Imputed Interest (98) (50) (148)

Less: Executory Costs (184) – (184)

Net Capital Lease Liabilities $ 836 $ 2,273 $ 3,109

Operating Leases:

Most of the Department’s facilities are rented from GSA, which generally charges rent that is intended to approximate 

commercial rental rates. For federally owned property rented from GSA, the Department generally does not execute 

an agreement with GSA; the Department, however, is normally required to give 120 to 180 days notice to vacate. For 

non-federally owned property rented from GSA, an occupancy agreement is generally executed, and the Department may 

normally cancel these agreements with 120 days notice.

The Department’s (1) estimated real property rent payments to GSA for FY 2017 through FY 2021; and (2) future payments 

due under noncancellable operating leases (non-GSA real property) are as follows:

FY 2016

General PP&E Category

 Fiscal Year

GSA

Real Property

Non-GSA

Real Property

2017 $ 282,495 $ 14,312

2018 299,073 12,262

2019 299,735 11,066

2020 302,571 11,118

2021 309,191 10,515

Thereafter 1 59,516

Total Future Lease Payments $ 118,789

1 Not estimated

78 | FY 2016 AGENCY FINANCIAL REPORT

NOTES TO THE FINANCIAL STATEMENTS
NOTE 16. LIABILITIES NOT COVERED BY BUDGETARY RESOURCES

FY 2016 FY 2015

Intragovernmental

Liability to General Fund of U.S. Government 

for Deficit Reduction $ 334,054 $ –

Accrued FECA Liability 28,462 31,610

Accounts Payable 5 –

Total Intragovernmental 362,521 31,610

Accrued Payroll 57,536 58,050

Accrued Annual Leave 301,462 291,019

Federal Employee Benefits 876,111 881,546

Environmental and Disposal Liabilities 143,100 144,893

Contingent Liabilities 22,257 15,712

Capital Lease Liabilities 444 882

Unearned Revenue 499,196 523,271

ITA Foreign Service Nationals’ Voluntary Separation Pay 11,496 10,138

Other 378 78

Total $ 2,274,501 $ 1,957,199

FY 2016 AGENCY FINANCIAL REPORT | 79

NOTES TO THE FINANCIAL STATEMENTS
NOTE 17. COMMITMENTS AND CONTINGENCIES

Commitments:

The Department has entered into long-term contracts for the purchase, construction, and modernization of environmental satellites 

and weather measuring and monitoring systems. A summary of major long-term commitments as of September 30, 2016 is 

shown below.

Major Long-term Commitments:

FY 2016

Description FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 Thereafter Total

Joint Polar Satellite Systems $ 787,246 $ 745,777 $ 572,240 $ 445,082 $ 376,061 $ 740,274 $ 3,666,680

Geostationary Operational 

Environmental Satellites 752,784 518,532 335,879 214,674 148,588 1,226,651 3,197,108

Polar Follow-on 393,000 594,000 581,000 579,000 469,000 – 2,616,000

Space Weather Follow-on 2,500 53,700 186,100 154,500 81,500 278,200 756,500

Comprehensive Large 

Array-data Stewardship 

System 59,025 58,025 57,325 57,357 57,357 – 289,089

Satellite Projects, Planning, 

and Analysis 33,488 33,488 33,488 33,488 33,488 – 167,440

Cooperative Data and

Rescue Services 500 48,950 32,800 18,550 2,400 9,600 112,800

Constellation Observing 

System for Meteorology, 

Ionosphere, and 

Climate - 2 16,200 16,200 16,400 8,800 8,800 35,200 101,600

Weather Service 23,374 3,376 3,423 3,471 3,521 2,850 40,015

Ocean Surface Topography 4,357 7,651 5,338 4,648 4,648 4,648 31,290

Satellite System 

Architecture and 

Advanced Planning 4,929 4,929 4,929 4,929 4,929 – 24,645

Deep Space Climate 

Observatory 3,745 3,860 3,838 3,838 3,838 3,838 22,957

Commercial Weather 

Data Pilot 5,000 – – – – – 5,000

Total $ 2,086,148 $ 2,088,488 $ 1,832,760 $ 1,528,337 $ 1,194,130 $ 2,301,261 $11,031,124

80 | FY 2016 AGENCY FINANCIAL REPORT

NOTES TO THE FINANCIAL STATEMENTS
Legal Contingencies: 

The Department is subject to potential liabilities in various administrative proceedings, legal actions, environmental suits, and 

claims brought against it. In the opinion of the Department’s management and legal counsel, the ultimate resolution of these 

proceedings, actions, suits, and claims will not materially affect the financial position or net costs of the Department.

Probable Likelihood of an Adverse Outcome: 

The Department is subject to potential liabilities where adverse outcomes are probable, and claims are approximately 

$22.3 million and $15.7 million as of September 30, 2016 and 2015, respectively. Accordingly, these contingent liabilities were 

included in Other Liabilities on the Consolidated Balance Sheets as of September 30, 2016 and 2015, respectively. For a majority 

of these claims, any amounts ultimately due will be paid out of Treasury’s Judgment Fund. For the claims to be paid by Treasury’s 

Judgment Fund, once the claims are settled or court judgments are assessed relative to the Department, the liability will be 

removed and an Imputed Financing Source From Cost Absorbed by Others will be recognized.

Reasonably Possible Likelihood of an Adverse Outcome: 

The Department and other federal agencies are subject to potential liabilities for a variety of environmental cleanup costs, 

many of which are associated with the Second World War, at various sites within the U.S. Since some of the potential 

liabilities represent claims with no stated amount, the exact amount of total potential liabilities is unknown, but may exceed 

$280.3 million as of September 30, 2016. For these potential liabilities, it is reasonably possible that an adverse outcome will 

result. It is not possible, however, to speculate as to a range of loss. In the absence of a settlement agreement, decree, or 

judgment, there is neither an allocation of response costs between the U.S. government and other potentially responsible 

parties, nor is there an attribution of such costs to or among the federal agencies implicated in the claims. Although the 

Department has been implicated as a responsible party, the U.S. Department of Justice was unable to provide an amount for 

these potential liabilities that is attributable to the Department. Of these potential liabilities, all will be funded by Treasury’s 

Judgment Fund, if any amounts are ultimately due. 

The Department and other federal agencies are subject to other potential liabilities. Since some of the potential liabilities 

represent claims with no stated amount, the exact amount of total potential liabilities is unknown, but may exceed $67.4 million

as of September 30, 2016. For these potential liabilities, it is reasonably possible that an adverse outcome will result. It is not 

possible, however, to speculate as to a range of loss. Of these potential liabilities, most will be funded by Treasury’s Judgment 

Fund, if any amounts are ultimately due.

FY 2016 AGENCY FINANCIAL REPORT | 81

NOTES TO THE FINANCIAL STATEMENTS
NOTE 18. CONSOLIDATED STATEMENTS OF NET COST

The following tables illustrate the major budgetary functions of the Department. 

United States Department of Commerce Consolidating Statement of Net Cost by Major Budgetary Function

For the Year Ended September 30, 2016

Natural 

Resources and 

Environment/

Other Natural 

Resources

Other 

Advancement 

of Commerce

Area and 

Regional 

Development Others 

Combined

Total

IntraDepartmental 

Eliminations

Consolidated 

Total

Intragovernmental

Gross Costs $ 767,663 $ 1,795,752 $ 16,567 $ 45,706 $ 2,625,688 $ (346,202) $ 2,279,486

Less: Earned Revenue (174,424) (916,446) (4,802) 746 (1,094,926) 346,202 (748,724)

Intragovernmental, Net Costs 593,239 879,306 11,765 46,452 1,530,762 – 1,530,762

With the Public

Gross Costs 3,950,729 5,585,372 279,234 69,289 9,884,624 – 9,884,624

Less: Earned Revenue (48,025) (3,235,243) (17) (1,917) (3,285,202) – (3,285,202)

With the Public, Net Costs 3,902,704 2,350,129 279,217 67,372 6,599,422 – 6,599,422

Total Program Costs

Gross Costs 4,718,392 7,381,124 295,801 114,995 12,510,312 (346,202) 12,164,110

Less: Earned Revenue (222,449) (4,151,689) (4,819) (1,171) (4,380,128) 346,202 (4,033,926)

NET COST OF OPERATIONS $ 4,495,943 $ 3,229,435 $ 290,982 $ 113,824 $ 8,130,184 $ – $ 8,130,184

United States Department of Commerce Consolidating Statement of Net Cost by Major Budgetary Function

For the Year Ended September 30, 2015

Natural 

Resources and 

Environment/

Other Natural 

Resources

Other 

Advancement 

of Commerce

Area and 

Regional 

Development Others 

Combined

Total

IntraDepartmental 

Eliminations

Consolidated 

Total

Intragovernmental

Gross Costs $ 747,484 $ 1,619,748 $ 16,550 $ 41,057 $ 2,424,839 $ (293,252) $ 2,131,587

Less: Earned Revenue (206,810) (868,874) (13,515) 457 (1,088,742) 293,252 (795,490)

Intragovernmental, Net Costs 540,674 750,874 3,035 41,514 1,336,097 – 1,336,097

With the Public

Gross Costs 4,366,680 5,376,238 11,302 65,982 9,820,202 – 9,820,202

Less: Earned Revenue (49,623) (3,170,769) (3,093) (1,732) (3,225,217) – (3,225,217)

With the Public, Net Costs 4,317,057 2,205,469 8,209 64,250 6,594,985 – 6,594,985

Total Program Costs

Gross Costs 5,114,164 6,995,986 27,852 107,039 12,245,041 (293,252) 11,951,789

Less: Earned Revenue (256,433) (4,039,643) (16,608) (1,275) (4,313,959) 293,252 (4,020,707)

NET COST OF OPERATIONS $ 4,857,731 $ 2,956,343 $ 11,244 $ 105,764 $ 7,931,082 $ – $ 7,931,082

82 | FY 2016 AGENCY FINANCIAL REPORT

NOTES TO THE FINANCIAL STATEMENTS
NOTE 19. COMBINED STATEMENTS OF BUDGETARY RESOURCES

Other Changes in Unobligated Balance, Net: On the FY 2016 Combined Statement of Budgetary Resources (SBR), Budgetary 

Resources, Budgetary column, the reduction of budgetary resources of $8.93 billion reported includes a reduction of $8.80 billion 

for NTIA’s Digital Television Transition and Public Safety Fund. For more financial information for the Digital Television Transition and 

Public Safety Fund, see Note 22, Funds from Dedicated Collections, the Combining Schedule of Budgetary Resources by Major 

Budget Account (unaudited) for FY 2016, included in Required Supplementary Information (Unaudited), and the Combining Schedule 

of Spending by Major Budget Account (unaudited) for FY 2016, included in Other Information.

Appropriations: 

There are reconciling items from the amounts of the Budgetary Resources, Appropriations on the SBR to the amounts of the 

Budgetary Financing Sources, Appropriations Received on the Consolidated Statement of Changes in Net Position (SCNP).

For FY 2016, the primary reconciling items are (a) a transfer in of auction proceeds from the Federal Communications Commission 

to NTIA’s Public Safety Trust Fund of $8.43 billion, which is included as Appropriations on SBR, and is included as a budgetary 

transfer in on SCNP (see Note 22, Funds from Dedicated Collections, for more information on the Public Safety Trust Fund); and 

(b) a transfer out from NTIA’s Public Safety Trust Fund to the General Fund of U.S. Government of $7.78 billion for deficit reduction, 

which is included as negative Appropriations on SBR and is in included as a transfer out on SCNP. 

For FY 2015, the primary reconciling items are (a) a transfer in of auction proceeds from the Federal Communications Commission to 

NTIA’s Public Safety Trust Fund of $18.63 billion, which is included as Appropriations on SBR, and is included as a budgetary transfer 

in on SCNP; and (b) a transfer out from NTIA’s Public Safety Trust Fund to the General Fund of U.S. Government of $12.62 billion for 

deficit reduction, which is included as negative Appropriations on SBR and is included as a transfer out on SCNP.

Borrowing Authority: Total borrowing authority available for NOAA’s loan programs amounted to $65.2 million and $121.6 million 

as of September 30, 2016 and 2015, respectively. The Borrowing Authority amounts reported in the SBR Budgetary Resources

section represent only borrowing authority realized during the fiscal year being reported. See Note 1M, Debt to Treasury, for debt 

repayment requirements, financing sources for repayments, and other terms of borrowing authority used. 

Permanent, Indefinite Appropriations: All of the Department’s reporting entities have one or more permanent, indefinite appropriations 

to finance operations. Permanent, indefinite appropriations are appropriations that are available until expended.

Permanent Reductions to Budgetary Resources: Permanent reductions to the Department’s budgetary resources under Public 

Laws 114-223 and 114-113 amounted to $34.4 million for FY 2016, while permanent reductions for FY 2015 under Public Law 

113-235 amounted to $10.1 million. These permanent reductions are included in the SBR Budgetary Resources section, and are 

also included on the SCNP.

Unobligated Balance, End of Year, Unapportioned, Unexpired Accounts: On the FY 2015 SBR, Status of Budgetary Resources, 

Budgetary column, the $9.15 billion reported includes $8.80 billion of unapportioned authority for NTIA’s Digital Television Transition 

and Public Safety Fund.

FY 2016 AGENCY FINANCIAL REPORT | 83

NOTES TO THE FINANCIAL STATEMENTS
Legal arrangements affecting the Department’s use of Unobligated Balances of Budget Authority and/or Fund Balance with 

Treasury during FY 2016 and FY 2015 include the following:

● The Department’s Deposit Funds, reported in Note 2, Fund Balance with Treasury, are not available to finance operating 

activities. These funds are also included in Note 2 on the line Non-budgetary (breakdown by status).

● The Department’s Fund Balance with Treasury as of September 30, 2016 and 2015 includes $790.1 million of USPTO offsetting 

collections exceeding the current fiscal year and prior fiscal years’ appropriations. USPTO may use these funds only as 

authorized by the U.S. Congress, and only as made available by the issuance of a Treasury warrant. These funds are included 

in Note 2 on the lines General Funds (breakdown by type) and Temporarily Precluded From Obligation (breakdown by status).

● The Omnibus Budget Reconciliation Act of 1990 established surcharges on certain statutory patent fees collected 

by USPTO. Subsequent legislation extended the surcharges through September 30, 1998. These surcharges were 

deposited into the Patent and Trademark Surcharge Fund, a Special Fund Receipt Account at Treasury. USPTO may use 

monies from this account only as authorized by Congress and made available by the issuance of a Treasury warrant. As 

of September 30, 2016 and 2015, $233.5 million is held in the Patent and Trademark Surcharge Fund. These funds are 

included in Note 2 on the lines Patent and Trademark Surcharge Fund - Special Funds section (breakdown by type), and 

Non-budgetary (breakdown by status). 

● The Department’s Fund Balance with Treasury as of September 30, 2016 and 2015 includes $147.7 million of USPTO 

sequestered funds temporarily not available. These funds are included in Note 2 on the lines General Funds (breakdown 

by type) and Temporarily Precluded from Obligation (breakdown by status).

● The Department’s Fund Balance with Treasury as of September 30, 2016 and 2015 includes $21.4 million and $372.3 million 

of sequestered funds temporarily not available for NTIA’s Public Safety Trust Fund, respectively. These funds are included 

in Note 2 on the lines Trust Funds, Public Safety Trust Fund (breakdown by type) and Temporarily Precluded from Obligation

(breakdown by status).

● The Department’s Fund Balance with Treasury as of September 30, 2016 and 2015 includes $9.9 million and $310.5 million of 

sequestered funds temporarily not available for NOAA’s Promote and Develop Fishery Products and Research Pertaining to 

American Fisheries fund, respectively. These funds are included in Note 2 on the lines Special Funds, Other Special Funds

(breakdown by type) and Temporarily Precluded from Obligation (breakdown by status).

● For loan programs prior to the Federal Credit Reform Act of 1990 (pre-FY 1992 loans), most or all liquidating fund unobligated 

balances in excess of working capital needs are required to be transferred to Treasury as soon as practicable during the 

following fiscal year. 

● For direct loan programs under the Federal Credit Reform Act of 1990 (post-FY 1991 loans) that have outstanding debt 

to Treasury, regulations require that most unobligated balances be returned to Treasury on September 30 or require that 

the borrowing authority be cancelled on September 30.

Comparison to Budget of the U.S. Government:

A comparison was performed, and there were no material differences between the amounts reported in the FY 2015 SBR

and the actual FY 2015 amounts reported in the FY 2016 budget of the U.S. Government for SBR lines Total Budgetary 

Resources; Obligations Incurred; Outlays, Net; and Distributed Offsetting (Receipts)/Outlays, Net. The President’s Budget that 

will report actual amounts for FY 2016 has not yet been published, and will be made available on OMB’s Budget Web page at 

https://www.whitehouse.gov/omb/budget/. 

84 | FY 2016 AGENCY FINANCIAL REPORT

NOTES TO THE FINANCIAL STATEMENTS
Apportionment Categories of New Obligations and Upward Adjustments:

Category A apportionments distribute budgetary resources by fiscal quarters, whereas Category B apportionments typically 

distribute budgetary resources by activities, projects, objects, or a combination of these categories.

The amounts of Direct (for example, derived from Appropriations) and Reimbursable (for example, derived from Spending Authority 

From Offsetting Collections) New Obligations and Upward Adjustments by apportionment category are as follows:

FY 2016

Direct Reimbursable Total

Category A $ 2,761,562 $ 3,648,368 $ 6,409,930

Category B 8,222,799 821,578 9,044,377

Exempt from Apportionment 5,545 – 5,545

Total New Obligations and Upward Adjustments $ 10,989,906 $ 4,469,946 $ 15,459,852

FY 2015

Direct Reimbursable Total

Category A $ 2,767,351 $ 3,735,586 $ 6,502,937

Category B 13,125,120 1,171,520 14,296,640

Exempt from Apportionment 5,651 – 5,651

Total New Obligations and Upward Adjustments $ 15,898,122 $ 4,907,106 $ 20,805,228

Undelivered Orders: Undelivered orders (unpaid and paid) were $6.48 billion and $6.14 billion as of September 30, 2016 and 

2015, respectively.

NOTE 20. CUSTODIAL NON-EXCHANGE ACTIVITY 

Custodial non-exchange activity represents revenue that was or will be collected on behalf of another entity, and the disposition 

of that revenue, for the General Fund of U.S. Government, a trust fund, or other recipient entities. The Department’s custodial 

non-exchange activity is not included in the Department’s financial statements.

The Department’s custodial non-exchange revenue in FY 2016 was $39.0 million, primarily received by EDA, BIS, and NOAA. 

EDA and BIS received custodial non-exchange revenue in FY 2016 primarily from miscellaneous collections and civil monetary 

penalties from private entities that violate the Export Administration Act, respectively, remitted or payable to the General Fund 

of U.S. Government. NOAA received custodial non-exchange revenue in FY 2016 primarily from the audit resolution of a grants 

receivable which is payable to the General Fund of U.S. Government. The Department’s payable to the General Fund of the 

U.S. Government for custodial non-exchange revenue was $12.7 million as of September 30, 2016.

The Department’s custodial non-exchange revenue in FY 2015 was $14.7 million, primarily for BIS’s civil monetary penalties 

from private entities that violate the Export Administration Act, remitted or payable to the General Fund of U.S. Government. 

The Department’s payable to the General Fund of U.S. Government for custodial non-exchange revenue was $388 thousand as 

of September 30, 2015. 

FY 2016 AGENCY FINANCIAL REPORT | 85

NOTES TO THE FINANCIAL STATEMENTS
NOTE 21. FIDUCIARY ACTIVITIES

Schedule of Fiduciary Activities for the Year Ended September 30, 2016:

FY 2016

Patent Cooperation 

Treaty

Madrid 

Protocol Total

Fiduciary Net Assets, Beginning Balance $ 16,168 $ 615 $ 16,783

Contributions 154,474 22,572 177,046

Disbursements to and on Behalf of Beneficiaries (156,183) (22,736) (178,919) 

Increase/(Decrease) in Fiduciary Net Assets (1,709) (164) (1,873)

Fiduciary Net Assets, Ending Balance $ 14,459 $ 451 $ 14,910

Fiduciary Net Assets as of September 30, 2016: 

FY 2016

Patent Cooperation 

Treaty

Madrid 

Protocol Total

Fund Balance with Treasury $ 14,459 $ 451 $ 14,910

Schedule of Fiduciary Activities for the Year Ended September 30, 2015:

FY 2015

Patent Cooperation 

Treaty

Madrid 

Protocol Total

Fiduciary Net Assets, Beginning Balance $ 15,795 $ 512 $ 16,307

Contributions 159,753 22,274 182,027

Disbursements to and on Behalf of Beneficiaries (159,380) (22,171) (181,551) 

Increase/(Decrease) in Fiduciary Net Assets 373 103 476

Fiduciary Net Assets, Ending Balance $ 16,168 $ 615 $ 16,783

Fiduciary Net Assets as of September 30, 2015:

FY 2015

Patent Cooperation 

Treaty

Madrid 

Protocol Total

Fund Balance with Treasury $ 16,168 $ 615 $ 16,783

86 | FY 2016 AGENCY FINANCIAL REPORT

NOTES TO THE FINANCIAL STATEMENTS
NOTE 22. FUNDS FROM DEDICATED COLLECTIONS

The following tables depict major funds from dedicated collections separately chosen based on their significant financial activity and 

importance to taxpayers. All other funds from dedicated collections not shown are aggregated as “Other Funds from Dedicated Collections.”

United States Department of Commerce Combining Balance Sheet – Funds from Dedicated Collections

As of September 30, 2016

 NIST 

Wireless 

Innovation 

Fund 

 NOAA 

Damage 

Assessment 

and 

Restoration 

Revolving 

Fund 

 NTIA Digital 

Television 

Transition 

and Public 

Safety Fund 

 NTIA 

Network 

Construction 

Fund 

 NTIA Public 

Safety Trust 

Fund 

 NTIA State 

and Local 

Implementation 

Fund 

 USPTO 

Funds from 

Dedicated 

Collections 

 Other 

Funds from 

Dedicated 

Collections 

 Combined 

Total 

Funds from 

Dedicated 

Collections 

ASSETS 

Fund Balance with Treasury $ 277,971 $ 199,491 $ 8,822,531 $ 6,642,633 $ 176,870 $ 79,118 $ 2,222,633 $ 54,902 $ 18,476,149

Cash – – – – – – 3,811 – 3,811

Investment – – – – 333,013 – – – 333,013

Accounts Receivable, Net – 60 – 7 253 2 473 6,832 7,627

General Property, Plant, and 

Equipment, Net – – – 4,364 2,082 – 504,025 – 510,471

Other – 105 2,925 22,701 1,439 23 25,177 105 52,475

TOTAL ASSETS $ 277,971 $ 199,656 $ 8,825,456 $ 6,669,705 $ 513,657 $ 79,143 $ 2,756,119 $ 61,839 $ 19,383,546

LIABILITIES 

Accounts Payable $ 122 $ 146 $ 278 $ 7,090 $ 1,236 $ 129 $ 93,463 $ 86 $ 102,550

Federal Employee Benefits – – – – – – 11,729 – 11,729

Other 

Accrued Payroll and 

Annual Leave 18 91 – 521 1,975 17 225,605 153 228,380

Accrued Grants – 433 229 – – 2,088 – 865 3,615

Capital Lease Liabilities – – – 524 133 – – – 657

Unearned Revenue – – – – – – 960,398 – 960,398

Liability to General Fund 

of U.S. Government 

for Deficit Reduction – – – – 334,054 – – – 334,054

Other Liabilities – 33 – 328 134 – 17,404 54 17,953

TOTAL LIABILITIES $ 140 $ 703 $ 507 $ 8,463 $ 337,532 $ 2,234 $ 1,308,599 $ 1,158 $ 1,659,336

 NET POSITION 

Unexpended Appropriations $ – $ – $ – $ – $ – $ – $ – $ – $ –

Cumulative Results of 

Operations 277,831 198,953 8,824,949 6,661,242 176,125 76,909 1,447,520 60,681 17,724,210

TOTAL NET POSITION $ 277,831 $ 198,953 $ 8,824,949 $ 6,661,242 $ 176,125 $ 76,909 $ 1,447,520 $ 60,681 $ 17,724,210

TOTAL LIABILITIES AND 

NET POSITION $ 277,971 $ 199,656 $ 8,825,456 $ 6,669,705 $ 513,657 $ 79,143 $ 2,756,119 $ 61,839 $ 19,383,546

FY 2016 AGENCY FINANCIAL REPORT | 87

NOTES TO THE FINANCIAL STATEMENTS
United States Department of Commerce Combining Balance Sheet – Funds from Dedicated Collections

As of September 30, 2015

 NIST 

Wireless 

Innovation 

Fund 

 NOAA 

Damage 

Assessment 

and 

Restoration 

Revolving 

Fund 

 NTIA Digital 

Television 

Transition 

and Public 

Safety Fund 

 NTIA 

Network 

Construction 

Fund 

 NTIA 

Public 

Safety 

Trust Fund 

 NTIA State 

and Local 

Implementation 

Fund 

 USPTO 

Funds from 

Dedicated 

Collections 

 Other 

Funds from 

Dedicated 

Collections 

 Combined 

Total 

Funds from 

Dedicated 

Collections 

ASSETS 

Fund Balance with Treasury $ 92,700 $ 261,170 $ 8,815,921 $ 6,356,712 $ 541,697 $ 100,195 $ 2,346,986 $ 51,989 $ 18,567,370

Accounts Receivable, Net – 32 – 60 2 298 6 398

General Property, Plant, and 

Equipment, Net – – – 3,626 2,823 – 405,740 – 412,189

Other – 129 10,855 14,106 717 – 22,973 109 48,889

TOTAL ASSETS $ 92,700 $ 261,331 $ 8,826,776 $ 6,374,444 $ 545,297 $ 100,197 $ 2,775,997 $ 52,104 $ 19,028,846

LIABILITIES 

Accounts Payable $ – $ 18 $ 68 $ 5,058 $ 3,163 $ 131 $ 116,211 $ 8 $ 124,657

Federal Employee Benefits – – – 156 – – 11,003 – 11,159

Other 

Accrued Payroll and 

Annual Leave – 196 – 258 1,049 13 206,031 106 207,653

Accrued Grants – 463 262 – 495 – 926 2,146

Unearned Revenue – – – 1,109 282 – 1,027,460 – 1,028,851

Other Liabilities – 63 – (1) 60 – 14,136 36 14,294

TOTAL LIABILITIES $ – $ 740 $ 330 $ 6,580 $ 4,554 $ 639 $ 1,374,841 $ 1,076 $ 1,388,760

 NET POSITION 

Unexpended Appropriations $ – $ – $ – $ – $ – $ – $ – $ – $ –

Cumulative Results of 

Operations 92,700 260,591 8,826,446 6,367,864 540,743 99,558 1,401,156 51,028 17,640,086

TOTAL NET POSITION $ 92,700 $ 260,591 $ 8,826,446 $ 6,367,864 $ 540,743 $ 99,558 $ 1,401,156 $ 51,028 $ 17,640,086

TOTAL LIABILITIES AND 

NET POSITION $ 92,700 $ 261,331 $ 8,826,776 $ 6,374,444 $ 545,297 $ 100,197 $ 2,775,997 $ 52,104 $ 19,028,846

88 | FY 2016 AGENCY FINANCIAL REPORT

NOTES TO THE FINANCIAL STATEMENTS
United States Department of Commerce Combining Statement of Net Cost – Funds from Dedicated Collections

For the Year Ended September 30, 2016

 NIST 

Wireless 

Innovation 

Fund 

 NOAA 

Damage 

Assessment 

and 

Restoration 

Revolving 

Fund 

 NTIA Digital 

Television 

Transition 

and Public 

Safety Fund 

 NTIA 

Network 

Construction 

Fund 

 NTIA 

Public 

Safety 

Trust Fund 

 NTIA State 

and Local 

Implementation 

Fund 

 USPTO 

Funds from 

Dedicated 

Collections 

 Other 

Funds from 

Dedicated 

Collections 

 Combined 

Total 

Funds from 

Dedicated 

Collections 

Intragovernmental

Gross Costs $ 4,456 $ 1,208 $ 145 $ 39,215 $ 6,130 $ 336 $ 635,435 $ 1,274 $ 688,199

Less: Earned Revenue – – – – (368) (30) (8,957) – (9,355)

Intragovernmental, Net Costs 4,456 1,208 145 39,215 5,762 306 626,478 1,274 678,844

With the Public

Gross Costs 4,113 57,911 1,352 33,676 10,320 22,343 2,484,149 17,944 2,631,808

Less: Earned Revenue – – – – – – (3,124,412) – (3,124,412)

With the Public, Net Costs 4,113 57,911 1,352 33,676 10,320 22,343 (640,263) 17,944 (492,604)

Total Program Costs

Gross Costs 8,569 59,119 1,497 72,891 16,450 22,679 3,119,584 19,218 3,320,007

Less: Earned Revenue – – – – (368) (30) (3,133,369) – (3,133,767)

NET COST OF OPERATIONS $ 8,569 $ 59,119 $ 1,497 $ 72,891 $16,082 $ 22,649 $ (13,785) $ 19,218 $ 186,240

United States Department of Commerce Combining Statement of Net Cost – Funds from Dedicated Collections

For the Year Ended September 30, 2015

 NIST 

Wireless 

Innovation 

Fund 

 NOAA 

Damage 

Assessment 

and 

Restoration 

Revolving 

Fund 

 NTIA Digital 

Television 

Transition 

and Public 

Safety Fund 

 NTIA 

Network 

Construction 

Fund 

 NTIA 

Public 

Safety 

Trust Fund 

 NTIA State 

and Local 

Implementation 

Fund 

 USPTO 

Funds from 

Dedicated 

Collections 

 Other 

Funds from 

Dedicated 

Collections 

 Combined 

Total 

Funds from 

Dedicated 

Collections 

Intragovernmental

Gross Costs $ – $ 3,786 $ 1,967 $ 10,482 $ 7,090 $ 328 $ 620,933 $ 1,242 $ 645,828

Less: Earned Revenue – – – – (234) (2) (9,225) – (9,461)

Intragovernmental, Net Costs – 3,786 1,967 10,482 6,856 326 611,708 1,242 636,367

With the Public

Gross Costs – 93,319 5,751 18,751 16,396 15,955 2,391,900 15,204 2,557,276

Less: Earned Revenue – – – – – – (3,064,776) – (3,064,776)

With the Public, Net Costs – 93,319 5,751 18,751 16,396 15,955 (672,876) 15,204 (507,500)

Total Program Costs

Gross Costs – 97,105 7,718 29,233 23,486 16,283 3,012,833 16,446 3,203,104

Less: Earned Revenue – – – – (234) (2) (3,074,001) – (3,074,237)

NET COST OF OPERATIONS $ – $ 97,105 $ 7,718 $ 29,233 $23,252 $ 16,281 $ (61,168) $ 16,446 $ 128,867

FY 2016 AGENCY FINANCIAL REPORT | 89

NOTES TO THE FINANCIAL STATEMENTS
United States Department of Commerce Combining Statement of Changes in Net Position – Funds from Dedicated Collections

For the Year Ended September 30, 2016

 NIST 

Wireless 

Innovation 

Fund 

 NOAA 

Damage 

Assessment 

and 

Restoration 

Revolving 

Fund 

 NTIA Digital 

Television 

Transition and 

Public Safety 

Fund 

 NTIA 

Network 

Construction 

Fund 

 NTIA Public 

Safety Trust 

Fund 

 NTIA State 

and Local 

Implementation 

Fund 

 USPTO 

Funds from 

Dedicated 

Collections 

 Other 

Funds from 

Dedicated 

Collections 

 Combined 

Total 

Funds from 

Dedicated 

Collections 

Cumulative Results of Operations: 

Beginning Balance $ 92,700 $ 260,591 $ 8,826,446 $ 6,367,864 $ 540,743 $ 99,558 $ 1,401,156 $ 51,028 $ 17,640,086

Budgetary Financing Sources: 

Non-exchange Revenue – (17,673) – – 6 – – 28,871 11,204

Transfers In of Auction Proceeds 

from Federal Communications 

Commission – – – – 8,430,058 – – – 8,430,058

Transfer Out to Receipt Account for 

Providing Funds to General Fund 

of U.S. Government – – – – (7,781,010) – – – (7,781,010)

Transfers from Public Safety Trust 

Fund to Dedicated Collections 

Funds 193,700 – – 366,269 (559,969) – – – –

Transfers In/(Out) Without

Reimbursement, Net – 15,154 – – (104,430) – (2,100) – (91,376)

Other Financing Sources 

(Non-exchange): 

Transfer In Received by Receipt 

Account for Providing Funds to 

General Fund of U.S. Government – – – – 7,781,010 – – – 7,781,010

Transfer Out to General Fund of U.S. 

Government for Deficit Reduction – – – – (7,781,010) – – – (7,781,010)

Imputed Financing Sources from 

Cost Absorbed by Others – – – – 863 – 34,679 – 35,542

Financing Sources Used for 

Recognizing Liability to General 

Fund of U.S. Government for 

Deficit Reduction – – – – (334,054) – – – (334,054)

Total Financing Sources 193,700 (2,519) – 366,269 (348,536) – 32,579 28,871 270,364

Net Cost of Operations (8,569) (59,119) (1,497) (72,891) (16,082) (22,649) 13,785 (19,218) (186,240)

Net Change 185,131 (61,638) (1,497) 293,378 (364,618) (22,649) 46,364 9,653 84,124

Cumulative Results of 

Operations – Ending Balance 277,831 198,953 8,824,949 6,661,242 176,125 76,909 1,447,520 60,681 17,724,210

NET POSITION $ 277,831 $ 198,953 $ 8,824,949 $ 6,661,242 $ 176,125 $ 76,909 $ 1,447,520 $ 60,681 $ 17,724,210

90 | FY 2016 AGENCY FINANCIAL REPORT

NOTES TO THE FINANCIAL STATEMENTS
United States Department of Commerce Combining Statement of Changes in Net Position – Funds from Dedicated Collections

For the Year Ended September 30, 2015

 NIST 

Wireless 

Innovation 

Fund 

 NOAA 

Damage 

Assessment 

and 

Restoration 

Revolving 

Fund 

 NTIA Digital 

Television 

Transition and 

Public Safety 

Fund 

 NTIA 

Network 

Construction 

Fund 

 NTIA Public 

Safety Trust 

Fund 

 NTIA State 

and Local 

Implementation 

Fund 

 USPTO 

Funds from 

Dedicated 

Collections 

 Other 

Funds from 

Dedicated 

Collections 

 Combined 

Total 

Funds from 

Dedicated 

Collections 

Cumulative Results 

of Operations: 

Beginning Balance $ – $ 246,977 $ 8,834,164 $ 384 $ 1,174,946 $ (15,035) $ 1,295,408 $ 56,100 $ 11,592,944

Budgetary Financing 

Sources: 

Non-exchange Revenue – 107,045 – – – – – 11,374 118,419

Transfer In of 

Auction Proceeds 

from Federal 

Communications 

Commission – – – – 18,627,804 – – – 18,627,804

Transfer Out to 

Receipt Account for 

Providing Funds to 

General Fund of 

U.S Government – – – – (12,618,990) – – – (12,618,990)

Transfers from Public 

Safety Trust Fund 

to Dedicated 

Collections Funds 92,700 – – 6,396,613 (6,620,187) 130,874 – – –

Transfers In/(Out) 

Without

Reimbursement, Net – 3,674 – – – – (2,000) – 1,674

Other Financing Sources 

(Non-exchange): 

Donations and 

Forfeitures of 

Property – – – 1,351 – – – – 1,351

Transfer In Received by 

Receipt Account for 

Providing Funds to 

General Fund of 

U.S Government – – – – 12,618,990 – – – 12,618,990

Transfer Out to General 

Fund of U.S 

Government for 

Deficit Reduction – – – – (12,618,990) – – – (12,618,990)

Transfers In/(Out) 

Without

Reimbursement, Net – – – (1,251) – – – – (1,251)

Imputed Financing 

Sources from Cost 

Absorbed by Others 422 46,580 47,002

Total Financing Sources 92,700 110,719 – 6,396,713 (610,951) 130,874 44,580 11,374 6,176,009

Net Cost of Operations – (97,105) (7,718) (29,233) (23,252) (16,281) 61,168 (16,446) (128,867)

Net Change 92,700 13,614 (7,718) 6,367,480 (634,203) 114,593 105,748 (5,072) 6,047,142

Cumulative Results of 

Operations – Ending 

Balance 92,700 260,591 8,826,446 6,367,864 540,743 99,558 1,401,156 51,028 17,640,086

NET POSITION $ 92,700 $ 260,591 $ 8,826,446 $ 6,367,864 $ 540,743 $ 99,558 $ 1,401,156 $ 51,028 $ 17,640,086

FY 2016 AGENCY FINANCIAL REPORT | 91

NOTES TO THE FINANCIAL STATEMENTS
Below is a description of major Funds from Dedicated Collections shown in the tables on the previous pages.

The NIST Wireless Innovation Fund was created in order for NIST, in consultation with the Federal Communications Commission 

(FCC), the Secretary of Homeland Security, and the National Institute of Justice of the Department of Justice, to conduct research 

and assist with the development of standards, technologies, and applications to advance wireless public safety communications. 

Section 6413 of the Middle Class Tax Relief and Job Creation Act of 2012 requires NTIA to make available $300.0 million to the 

Director of NIST as amounts are deposited into the Public Safety Trust Fund to carry out public safety research. The Wireless 

Innovation Fund in FY 2016 and FY 2015 received transfers in totaling $193.7 million and $92.7 million, respectively, from NTIA’s 

Public Safety Trust Fund (included in FY 2016 and FY 2015 SCNP, Budgetary Financing Sources section, respectively), and which are 

included as a Budgetary Resource on the FY 2016 and FY 2015 SBR (Spending Authority From Offsetting Collections), respectively. 

The law establishing this program can be found in Section 6303 of the Middle Class Tax Relief and Job Creation Act of 2012.

The NTIA Digital Television Transition and Public Safety Fund made digital television available to every home in America, improved 

communications between local, state, and federal agencies, allowed smaller television stations to broadcast digital television, 

and improved how warnings are received when disasters occur. NTIA received initial funding from borrowings from Treasury, 

and repaid Treasury from the proceeds of the auction of recovered analog spectrum which was completed in March 2008. 

The proceeds from the auction provide funding for several programs, and $7.36 billion was transferred in September 2009 to the 

General Fund of U.S. Government as required by the Deficit Reduction Act of 2005. The Fund has a Net Position, Cumulative 

Results of Operations – Funds from Dedicated Collections balance of $8.82 billion included in the Department’s Consolidated 

Balance Sheet as of September 30, 2016, and has a FY 2016 reduction of budgetary resources of $8.80 billion included in the 

Department’s FY 2016 SBR on the line Other Changes in Unobligated Balance, Net. The law establishing this program can be found 

in the Deficit Reduction Act of 2005, Sections 3001-3014. For FY 2016 budgetary financial information for the Digital Television 

Transition and Public Safety Fund, see the Combining Schedule of Budgetary Resources by Major Budget Account (unaudited) 

for FY 2016, included in Required Supplementary Information (Unaudited) and see the Combining Schedule of Spending by Major 

Budget Account (unaudited) for FY 2016, included in Other Information.

The NTIA Network Construction Fund primarily provides funding for build-out and operations, excluding administrative expenses 

which are paid by NTIA’s Public Safety Trust Fund, of the First Responder Network Authority (FirstNet), an independent authority 

within NTIA, and also provides funding for NTIA to make grants to states under the “Opt-Out” program. FirstNet shall ensure 

the establishment of a nationwide interoperable broadband network to help police, firefighters, emergency medical service 

professionals, and other public safety officials stay safe and do their jobs. The Network Construction Fund in FY 2016 and FY 2015 

received transfers in totaling $366.3 million and $6.40 billion, respectively, from NTIA’s Public Safety Trust Fund (included in FY 2016 

and FY 2015 SCNP, Budgetary Financing Sources section, respectively), and which are included as Budgetary Resources on the 

FY 2016 and FY 2015 SBR (Spending Authority From Offsetting Collections), respectively. FirstNet is also authorized to assess and 

collect network user fees and lease fees related to network capacity, and, eventually, shall be permanently self-funded. FirstNet 

has not yet collected any user fees as of September 30, 2016. The law establishing the Network Construction Fund can be found 

under Section 6206 of the Middle Class Tax Relief and Job Creation Act of 2012. For FY 2016 budgetary financial information for 

the Network Construction Fund, see the Combining Schedule of Budgetary Resources by Major Budget Account (unaudited) for 

FY 2016, included in Required Supplementary Information (Unaudited) and see the Combining Schedule of Spending by Major 

Budget Account (unaudited) for FY 2016, included in Other Information.

The NTIA Public Safety Trust Fund was created as a result of Section 6413 of the Middle Class Tax Relief and Job Creation Act of 

2012 (Act). The Act provides funding for specified programs and activities to be derived from the proceeds of FCC auctions of 

spectrum licenses, to be deposited into the Public Safety Trust Fund. 

92 | FY 2016 AGENCY FINANCIAL REPORT

NOTES TO THE FINANCIAL STATEMENTS
Prior to the receipt of auction proceeds from FCC, the Act provided authority to NTIA to borrow up to $2.00 billion from Treasury, 

interest-free, with the debt to be repaid from auction proceeds as the first priority. The Public Safety Trust Fund borrowed $2.00 billion 

from Treasury through FY 2014, and also repaid $1.22 billion in FY 2014, leaving a Debt to Treasury balance of $779.0 million as 

of September 30, 2014, which was repaid in full in September 2015. The September 2015 repayment of debt was included as a 

reduction of Budgetary Resources, Appropriations in the FY 2015 SBR.

FCC carries out auctions in accordance with the Act, of which certain earned net auction proceeds (earned auction proceeds 

less any FCC administrative fees) are transferred in from FCC to the Public Safety Trust Fund. A transfer in from FCC becomes a 

budgetary financing source on the SCNP and a budgetary resource on the SBR when the transfer in is received. Transfers in of 

auction proceeds from FCC totaling $8.43 billion and $18.63 billion were received in FY 2016 and FY 2015, respectively, and are 

included as a budgetary financing source on the FY 2016 and FY 2015 SCNP, respectively, and as a budgetary resource on the 

FY 2016 and FY 2015 SBR (Appropriations), respectively. 

The Act directs the use of auction proceeds in an order of priority after the repayment of borrowings from Treasury (priority 1). 

Priority 1 was fully completed in September 2015 as previously discussed. In FY 2015, the Public Safety Trust Fund transferred 

out $130.9 million to the NTIA State and Local Implementation Fund, fully completing priority 2. In FY 2016 and 2015, the Public 

Safety Trust Fund transferred out a total of $366.3 million and $6.40 billion, respectively, to the NTIA Network Construction 

Fund (towards priority 3 of up to $7.00 billion), and a total of $193.7 million and $92.7 million, respectively, to the NIST Wireless 

Innovation Fund (towards priority 4 and priority 7 totaling $300.0 million for transfers to NIST to carry out public safety research). 

These intra-Departmental FY 2016 and FY 2015 transfers out net to $0 for each respective fiscal year and are not reported on the 

FY 2016 and FY 2015 SCNP. These Public Safety Trust Fund transfers out are included on the FY 2016 and FY 2015 SBR as New 

Obligations and Upward Adjustments and Outlays, Gross. Priority 5 specifies that the Public Safety Trust Fund is to deposit a total 

of $20.40 billion in the General Fund of U.S. Government for deficit reduction. Fully completing this priority, the Public Safety Trust 

Fund transferred out a total of $7.78 billion and $12.62 billion in FY 2016 and FY 2015, respectively, to a receipt account utilized for 

transferring these funds to the General Fund of U.S. Government (these transfers out by Public Safety Trust Fund, and transfers 

in received by receipt account, are reported on the FY 2016 and FY 2015 SCNP), and the receipt account transferred a total of 

$7.78 billion and $12.62 billion in FY 2016 and FY 2015, respectively, to the General Fund of U.S. Government (these transfers 

out are reported on the FY 2016 and FY 2015 SCNP, Other Financing Sources (Non-exchange section)), respectively. The receipt 

account transfers in and out of $7.78 billion and $12.62 billion are also included in the Funds from Dedicated Collections column 

of the FY 2016 and FY 2015 SCNP, respectively, as the receipt account serves as the established transactional mechanism for the 

Public Safety Trust Fund to transfer out a total of $7.78 billion and $12.62 billion in FY 2016 and FY 2015, respectively, to the General 

Fund of U.S. Government. The Public Safety Trust Fund transfers out of a total of $7.78 billion and $12.62 billion in FY 2016 and 

FY 2015, respectively, to the receipt account, are included as reductions of Budgetary Resources, Appropriations in the FY 2016 and 

FY 2015 SBR, respectively. Priority 6 specified in the Act includes that the Public Safety Trust Fund make available $115.0 million 

to the Assistant Secretary (NTIA) and the Administrator of the National Highway Traffic Safety Administration to carry out the grant 

program of Next Generation 9-1-1. Towards this priority, the Public Safety Trust Fund transferred out $104.4 million in FY 2016 to the 

National Highway Traffic Safety Administration (NHTSA), and made available in FY 2016 $2.8 million within the Public Safety Trust 

Fund for the Assistant Secretary (NTIA). The FY 2016 Public Safety Trust Fund transfer out to NHTSA of $104.4 million is included 

on the FY 2016 SCNP, Budgetary Financing Sources section and included on the FY 2016 SBR as New Obligations and Upward 

Adjustments and Outlays, Gross. Priority 8 specifies that any remaining amounts deposited in the Public Safety Trust Fund shall 

be deposited in the General Fund of U.S. Government for deficit reduction. The Act further specifies that any amounts remaining 

in the Public Safety Trust Fund after the end of FY 2022 shall be deposited in the General Fund of U.S. Government for deficit 

reduction. Towards priority 8, the Public Safety Trust Fund has recorded a liability (not covered by budgetary resources) to the 

General Fund of U.S. Government of $334.1 million as of September 30, 2016. The corresponding FY 2016 financing sources used 

of $334.1 million for recognizing this liability is reported on the FY 2016 SCNP, Other Financing Sources (Non-exchange) section.

FY 2016 AGENCY FINANCIAL REPORT | 93

NOTES TO THE FINANCIAL STATEMENTS
The Act specifies that amounts in the Public Safety Trust Fund be invested in accordance with Section 9702 of Title 31, United States 

Code. The Public Safety Trust Fund has an investment in a market-based Treasury security of $333.0 million as of September 30, 

2016; see Note 3, Investment for more information. The federal government does not set aside assets to pay future expenditures 

associated with the Public Safety Trust Fund. The dedicated cash receipts collected from the public into the Public Safety Trust 

Fund are deposited with Treasury, which uses the cash for general government purposes. Treasury securities are issued to the 

Public Safety Trust Fund as evidence of its receipts. Treasury securities are an asset to the Public Safety Trust Fund, and Treasury 

securities are a liability of Treasury. Because the Public Safety Trust Fund and Treasury are both parts of the federal government, 

these assets and liabilities offset each other from the standpoint of the federal government as a whole. For this reason, they 

do not represent an asset or a liability in the U.S. government-wide financial statements. Treasury securities provide the Public 

Safety Trust Fund with authority to draw upon Treasury to make future expenditures. When the Public Safety Trust Fund requires 

redemption of these securities to make expenditures, the federal government finances those expenditures out of accumulated cash 

balances by raising taxes or other receipts, by borrowing from the public or repaying less debt, or by curtailing other expenditures. 

This is the same way that the federal government finances all other expenditures.

The Public Safety Trust Fund’s budgetary resources includes $335.7 million of budgetary resources that are unapportioned as of 

September 30, 2016. For FY 2016 budgetary financial information for the Public Safety Trust Fund, see the Combining Schedule of 

Budgetary Resources by Major Budget Account (unaudited) for FY 2016 included in Required Supplementary Information (Unaudited)

and see the Combining Schedule of Spending by Major Budget Account (unaudited) for FY 2016, included in Other Information.

The NTIA State and Local Implementation Fund includes a matching grants program to states, carried out by NTIA, in consultation 

with the First Responder Network Authority, to assist state, regional, tribal, and local jurisdictions to identify, plan, and implement 

the most efficient and effective way for such jurisdictions to utilize and integrate the infrastructure, equipment, and other architecture 

associated with the nationwide public safety broadband network to satisfy the wireless communications and data services needs 

of that jurisdiction, including with regards to coverage, siting, and other needs. The program was initially funded by borrowings 

from Treasury, without interest, which have been fully repaid in FY 2015. The State and Local Implementation Fund in FY 2015 

received transfers in totaling $130.9 million from NTIA’s Public Safety Trust Fund (included in FY 2015 SCNP, Budgetary Financing 

Sources section), which is included as a Budgetary Resource on the FY 2015 SBR (Spending Authority From Offsetting Collections). 

If there is a balance remaining in the Fund on September 30, 2022, the Fund shall transfer such balance to the General Fund of 

U.S. Government for deficit reduction. The law establishing this program can be found in Sections 6301 and 6302 of the Middle 

Class Tax Relief and Job Creation Act of 2012.

The NOAA Damage Assessment and Restoration Revolving Fund receives monies for the reimbursement of expenses related to oil 

or hazardous substance spill response activities, or natural resource damages assessment, restoration, rehabilitation, replacement, 

or acquisition activities conducted by NOAA. The recovered sums by a federal, state, Indian, or foreign trustee for natural resource 

damages is retained by the trustee and is only used to reimburse or pay costs incurred by the trustee for the damaged natural 

resources. The law establishing the Damage Assessment and Restoration Revolving Fund can be found in 33 USC Section 2706. 

The USPTO Funds from Dedicated Collections consist of its Salaries and Expenses Fund, Patent and Trademark Fee Reserve Fund, 

and Patent and Trademark Surcharge Fund.

The Salaries and Expenses Fund contains monies used for the administering of the laws relevant to patents and trademarks and 

advising the Secretary of Commerce, the President of the United States, and the Administration on patent, trademark, and copyright 

protection, and trade-related aspects of intellectual property. This fund is used for USPTO’s three core business activities—granting 

patents; registering trademarks; and intellectual property policy, protection, and enforcement—that promote the use of intellectual 

94 | FY 2016 AGENCY FINANCIAL REPORT

NOTES TO THE FINANCIAL STATEMENTS
property rights as a means of achieving economic prosperity. These activities give innovators, businesses, and entrepreneurs the 

protection and encouragement they need to turn their creative ideas into tangible products, and also provide protection for their 

inventions and trademarks. USPTO may use monies from this account only as authorized by Congress. For FY 2016 budgetary 

financial information for the Salaries and Expenses Fund, see the Combining Schedule of Budgetary Resources by Major Budget 

Account (unaudited) for FY 2016, included in Required Supplementary Information (Unaudited) and see the Combining Schedule 

of Spending by Major Budget Account (unaudited) for FY 2016, included in Other Information.

The Patent and Trademark Fee Reserve Fund results from a provision that requires USPTO to deposit all patent and trademark 

fees collected in excess of the annual appropriation amount into the fund. Funds made available may only be used for expenses 

of the office relating to the processing of patent applications and for other activities, services, and materials relating to patents 

and applicable administrative costs.

The Patent and Trademark Surcharge Fund, a Special Fund Receipt Account at Treasury, is discussed in Note 19, Combined Statements 

of Budgetary Resources. USPTO may use monies from this account only as authorized by Congress and made available by the 

issuance of a Treasury warrant. As of September 30, 2016 and 2015, $233.5 million is held in this fund.

NOTE 23. RECONCILIATION OF NET COST OF OPERATIONS TO BUDGET

The Reconciliation of Net Cost of Operations to Budget reconciles the Department’s Resources Used to Finance Activities

(first section), which consists of the budgetary basis of accounting Net Obligations Incurred (as reported on several lines in the 

Department’s SBR) plus the proprietary basis of accounting Other Resources (as reported in the Department’s SCNP), to the 

proprietary basis of accounting Net Cost of Operations as reported in the Department’s Consolidated Statement of Net Cost. 

The second section, Resources Used to Finance Items Not Part of Net Cost of Operations, reverses out items included in the 

first section that are not included in Net Cost of Operations. The third section, Components of Net Cost of Operations that Will 

Not Require or Generate Resources in the Current Period, adds items included in Net Cost of Operations that are not included 

in the first section. 

The third section’s subsection, Components Requiring or Generating Resources in Future Periods, includes costs reported in the 

current period that are included in the Liabilities Not Covered by Budgetary Resources reported in Note 16. This subsection does 

not include costs reported in prior fiscal years that are also included in Liabilities Not Covered by Budgetary Resources reported 

in Note 16.

The reconciliations of Net Cost of Operations to Budget for FY 2016 and 2015 are as follows:

FY 2016 FY 2015

Resources Used to Finance Activities:

Budgetary Resources Obligated:

New Obligations and Upward Adjustments $ 15,459,852 $ 20,805,228

Less: Spending Authority From Offsetting Collections and Actual Recoveries of Prior-years Unpaid Obligations (5,873,951) (11,692,945)

New Obligations and Upward Adjustments Net of Offsetting Collections and Actual Recoveries 9,585,901 9,112,283

Less: Distributed Offsetting (Receipts)/Outlays, Net (64,352) (36,089)

Net Obligations and Upward Adjustments 9,521,549 9,076,194

(continued on next page)

FY 2016 AGENCY FINANCIAL REPORT | 95

NOTES TO THE FINANCIAL STATEMENTS
(continued from previous page)

FY 2016 FY 2015

Other Resources: 

Donations and Forfeitures of Property 779 2,656

Transfer In Received by Receipt Account for Providing Funds to General Fund of U.S. Government 7,781,010 12,618,990

Transfer Out to General Fund of U.S. Government for Deficit Reduction (7,781,010) (12,618,990)

Transfers In/(Out) Without Reimbursement, Net (78,549) (841)

Imputed Financing Sources From Cost Absorbed by Others 247,277 256,500

Financing Sources Used for Recognizing Liability to General Fund of U.S. Government for Deficit Reduction (334,054) –

Other Financing Sources/(Uses), Net (3,598) (5,066)

Net Other Resources Used to Finance Activities (168,145) 253,249

Total Resources Used to Finance Activities 9,353,404 9,329,443

Resources Used to Finance Items Not Part of Net Cost of Operations:

Change in Budgetary Resources Obligated for Goods, Services, and Benefits Ordered but Not Yet Provided (267,019) (406,435)

Resources that Fund Expenses Recognized in Prior Periods (16,249) (43,375)

New Obligations for Downward Subsidy Reestimates Payable to Treasury (13,359) (11,614)

New Obligation for a Transfer Out to National Highway Traffic Safety Administration (104,430) –

Budgetary Offsetting Collections and Receipts that Do Not Affect Net Cost of Operations:

Distributed Offsetting (Receipts)/Outlays, Net (excludes Clearing Accounts’ Gross Costs) 64,352 36,089

Credit Program Collections which Increase Loan Guarantee Liabilities or Allowance for Subsidy Cost 86,768 112,188

Repayments of Debt that reduce Debt to Treasury Liability (89,561) (84,265)

Substitution of Borrowing Authority that is not related to Earned Revenue – (143,895)

Budgetary Financing Sources/(Uses), Net (17,833) 105,024

Resources that Finance the Acquisition of Assets (2,189,998) (2,189,847)

Other Resources or Adjustments to Net Obligated Resources that Do Not Affect Net Cost of Operations: 

Change in Unfilled Customer Orders 27,939 (47,199)

Donations and Forfeitures of Property (779) (2,656)

Transfer In Received by Receipt Account for Providing Funds to General Fund of U.S. Government (7,781,010) (12,618,990)

Transfer Out to General Fund of U.S. Government for Deficit Reduction 7,781,010 12,618,990

Transfers In/(Out) Without Reimbursement, Net 78,549 841

Financing Sources Used for Recognizing Liability to General Fund of U.S. Government for Deficit Reduction 334,054 –

Other Financing Sources/(Uses), Net 3,598 5,066

Other (7,729) –

Total Resources Used to Finance Items Not Part of Net Cost of Operations (2,111,697) (2,670,078)

Total Resources Used to Finance Net Cost of Operations 7,241,707 6,659,365

Components of Net Cost of Operations that Will Not Require or Generate Resources in the Current Period:

Components Requiring or Generating Resources in Future Periods:

Increase in Accrued Annual Leave Liability 10,443 10,059

Increase in Contingent Liabilities 6,545 15,303

Other 18,649 (3,605)

Total Components of Net Cost of Operations that Will Require or Generate Resources in Future Periods 35,637 21,757

Components Not Requiring or Generating Resources:

Depreciation and Amortization 816,874 741,034

NOAA Issuances of Materials and Supplies 23,320 17,912

Revaluation of Assets or Liabilities 28,204 502,485

Other 6,024 2,910

Total Components of Net Cost of Operations that Will Not Require or Generate Resources 874,422 1,264,341

Total Components of Net Cost of Operations that Will Not Require or Generate Resources in the Current Period 910,059 1,286,098

Negative Gross Costs for Recoveries of Prior-years Delivered Orders that are Excluded from 

Net Obligations and Upward Adjustments (21,582) (14,381)

NET COST OF OPERATIONS $ 8,130,184 $ 7,931,082

96 | FY 2016 AGENCY FINANCIAL REPORT

NOTES TO THE FINANCIAL STATEMENTS
NOTE 24. STEWARDSHIP ASSETS

Preservation of stewardship assets promotes the Department’s mission of providing effective management and monitoring of 

our Nation’s resources and assets to support both environmental and economic health. The physical properties of stewardship 

assets resemble those of General PP&E that is capitalized traditionally in the Balance Sheet of the financial statements of federal 

entities. Due to the nature of these assets, however, valuation would be difficult and matching costs with specific periods would 

not be meaningful. Therefore, federal accounting standards require the disclosure of the nature and quantity of these assets. 

NOAA, NIST, and the Census Bureau are the only entities within the Department that have stewardship assets. 

Heritage Assets 

Heritage assets are unique for their historical or natural significance, for their cultural, educational, or artistic importance, 

or for their significant architectural characteristics. The Department generally expects that these assets will be preserved 

indefinitely.

In cases where a heritage asset also has a practical and predominant use for general federal government operations, the 

asset is considered a multi-use heritage asset. The cost of a multi-use heritage asset is capitalized as General PP&E and 

is depreciated over the useful life of the asset.

NOAA has established policies for heritage assets to ensure the proper care and handling of these assets under its control 

or jurisdiction. The Deputy Under Secretary of NOAA established the Heritage Assets Working Committee to administer 

NOAA’s stewardship policies and procedures. In carrying out these policies and procedures, the Working Committee:

● Maintains a nationwide inventory of heritage assets, ensuring that they are identified and recorded in the Personal Property 

Heritage Asset Accountability System;

● Establishes nationwide NOAA policies, procedures, and standards for the preservation, security, handling, storage, and 

display of NOAA heritage assets;

● Tracks and updates each loan of NOAA heritage assets, including assigning current values and inventory numbers, and 

reporting the current conditions of heritage assets;

● Determines the feasibility of new asset loans, such as meters, standard tide gauges, portraits, and books for exhibit 

loans; and

● Collects heritage assets and properties of historic, cultural, artistic, or educational significance to NOAA. 

Heritage Assets maintained by NOAA include the Galveston Laboratory; National Marine Fisheries Service (NMFS) St. George 

Sealing Plant; NMFS Cottage M, St. George; NMFS St. Paul Old Clinic/Hospital; NMFS Woods Hole Science Aquarium; and Great 

Lakes Environmental Research Laboratory/Lake Michigan Field Station.

Information regarding deferred maintenance and repairs for heritage assets is included in the Required Supplementary 

Information section.

FY 2016 AGENCY FINANCIAL REPORT | 97

NOTES TO THE FINANCIAL STATEMENTS
Stewardship National Marine Sanctuaries, Marine National Monuments, Conservation Area, and Habitat Blueprint

Written policy statements or permit guidelines for the National Marine Sanctuaries and Marine National Monuments have been 

developed for the areas of acoustic impacts, artificial reefs, climate change, invasive species, and marine debris. The Office of 

Marine National Sanctuaries answers the most frequently asked questions related to alternative energy and oil and gas policy 

decisions for national marine sanctuaries.

NOAA maintains the following stewardship assets: 

National Marine Sanctuaries: In 1972, Congress passed the Marine Protection, Research, and Sanctuaries Act (Act) in response 

to a growing awareness of the intrinsic environmental and cultural value of coastal waters. The Act authorized the Secretary of 

Commerce to designate special nationally-significant areas of the marine environment as national marine sanctuaries.

These protected waters provide a secure habitat for species close to extinction, and also protect historically significant shipwrecks 

and prehistoric artifacts. National marine sanctuaries are also used for recreation (e.g., boating, diving, and sport fishing), and support 

valuable commercial industries such as fishing and kelp harvesting. As of September 30, 2016, 13 National Marine Sanctuaries, 

which include both coastal and offshore areas, have been designated, covering a total area of nearly 35 thousand square miles.

Marine National Monuments: The Marine National Monuments were created to protect the abundant and diverse coral, fish, 

and seabird populations; to facilitate exploration and scientific research; and to promote public education regarding the value 

of these national treasures. The establishment of the Monuments provides the opportunity to protect areas of outstanding 

scientific, cultural, conservation, and aesthetic value, and provide for the long-term preservation of these natural and cultural 

legacies. There are currently five Marine National Monuments: the Marianas Trench; the Rose Atoll; the Pacific Remote Islands; 

the Papahãnaumokuãkea; and the Northeast Canyons and Seamounts.

On Friday, August 26, 2016, President Obama signed a proclamation expanding the Papahãnaumokuãkea Marine National Monument. 

The expanded boundaries make it once again the biggest protected area on the planet at 582,578 square miles, nearly the size 

of the Gulf of Mexico.

The first national marine monument in the Atlantic Ocean was also created in FY 2016—the Northeast Canyons and Seamounts 

Marine National Monument. The Northeast Canyons and Seamounts Marine National Monument includes two areas with a 

combined area of approximately 4,913 square miles. 

Aleutian Islands Habitat Conservation Area: On July 28, 2006, NOAA formally established the Aleutian Islands Habitat Conservation 

Area in Alaska, which covers nearly 370 thousand square miles and may harbor among the highest diversity of deep-water corals in 

the world. The conservation area established a network of fishing closures in the Aleutian Islands and Gulf of Alaska, and protects 

habitat for deep-water corals and other sensitive features that are slow to recover once disturbed by fishing gear or other activities. 

Six small areas that include fragile coral gardens discovered by NOAA Fisheries Service scientists are closed to all bottom-contact 

fishing gear. This effort is part of a network of new marine protected areas in Alaskan waters designed to protect essential fish 

habitat and prevent any further damage of the area.

NOAA Habitat Blueprint: Protecting our natural infrastructure is vital to protecting our communities and their economies as well as 

fisheries and recreational opportunities along our coasts. With continued widespread loss and deterioration of coastal and marine 

habitats, we are in danger of losing this infrastructure. Congress has charged NOAA with protecting habitat for fish, threatened 

and endangered species, marine mammals, and other natural resources within the coastal zone. NOAA needs to increase the 

sustainability and productivity of our fisheries by focusing on the habitat that fish need to spawn and grow, as well as protecting 

the coastal resources on which our communities depend. Recognizing the need for more concerted efforts to conserve, protect, 

98 | FY 2016 AGENCY FINANCIAL REPORT

NOTES TO THE FINANCIAL STATEMENTS
and restore habitat, NOAA developed the NOAA Habitat Blueprint to build on existing programs, prioritize its activities, and guide its 

future actions. This is being accomplished by creating Habitat Focus Areas. There are currently 10 Habitat Focus Areas. A five-year 

Implementation Plan is being developed for each Focus Area. As of September 30, 2016, eight of these plans have been completed, 

and the remaining two will be finalized by September 30, 2017. The 10 Focus Areas are:

● Penobscot River Watershed, ME

● Choptank River Watershed, MD/DE

● Muskegon Lake, MI

● St. Louis River Estuary, MN/WI

● Russian River Watershed, CA

● Kachemak Bay, AK

● West Hawaii, HI 

● Manell-GeusWatershed, GU

● Biscayne Bay, FL

● Northeast Reserves and Culebra Island, PR

Collection-type Heritage Assets: 

NOAA:

NOAA’s historical artifacts are designated collection-type heritage assets if they help illustrate the social, educational, and cultural 

heritage of NOAA and its predecessor agencies (Coast and Geodetic Survey, U.S. Fish Commission, the Weather Bureau, the 

Institutes for Environmental Research, the Environmental Science Services Administration, etc.). These artifacts include, but 

are not limited to: books, journals, publications, photographs, motion pictures, manuscripts, records, nautical chart plates, bells, 

gyrocompasses, brass citations, flags, pennants, chronometers, ship seals, clocks, compasses, fittings, miscellaneous ship 

fragments, lithographic plates, barometers, rain gauges, and any items that represent the uniqueness of the mission of NOAA 

and its predecessor agencies.

NOAA’s Logistics Office continually conducts inventories of its collection-type heritage assets. Many items that were once 

classified as an individual collection are now included in existing collections. Other items are now deemed as not meeting the 

heritage asset criteria. 

NOAA’s collection-type heritage assets include items in the Thunder Bay Sanctuary Research Collection (Collection). In 2004, the 

Thunder Bay National Marine Sanctuary (jointly managed by NOAA and the state of Michigan to protect and interpret a nationally 

significant collection of shipwrecks and other maritime heritage resources) established an agreement with the Alpena County 

George N. Fletcher Public Library to jointly manage this Collection. Amassed over a period of more than 40 years by historian C. 

Patrick Labadie, the Collection includes information about such diverse subjects as Great Lakes ports and waterways, docks, 

cargoes, ships, shipbuilders, owners and fleets, machinery and rigging, notable maritime personalities, and shipwrecks. Special 

features of the Collection are extensive collections of (1) data cards listing most of the ships on the Great Lakes before year 

1900, a roster of some 15 thousand vessels complete with descriptive data and highlights of the ships’ careers and their ultimate 

losses; and (2) ship photograph negatives of 19th and 20th century Great Lakes ships. Heritage assets also include copies of 

vessel ownership documents, contemporary ship photographs, books, and other items documenting the Great Lakes history. 

NOAA’s collection-type heritage assets also include items in the National Climatic Data Center Library. Heritage assets include 

(1) books, manuals, and slides; (2) thermometers, gauges, and radiosondes; and (3) laboratory equipment. 

The Florida Keys National Marine Sanctuary (FKNMS) collection-type heritage assets include artifacts from shipwreck and wrecking 

events occurring in the Florida Keys over a 500-year period. The FKNMS 2,900 square nautical mile boundary is an abundant 

mixture of natural and cultural, historical resources that include prehistoric cultures, and maritime history.

FY 2016 AGENCY FINANCIAL REPORT | 99

NOTES TO THE FINANCIAL STATEMENTS
NIST: 

NIST currently maintains collection-type heritage assets under its Museum and History Program, which collects, preserves, 

and exhibits artifacts, such as scientific instruments, equipment, objects, and records of significance to NIST and predecessor 

agencies. This program provides institutional memory and demonstrates the contributions of NIST to the development of standards 

measurement, technology, and science. The Information Services Office (ISO) maintains the historical archives and rare book 

collection, and oversees the oral history program. The historical archives and rare book collection contain titles that are considered 

“classics” of historical scientific interest, books by prominent scientists, and books by NIST authors or about NIST work. Titles 

are recommended for inclusion by ISO staff and customers. Materials are not specifically purchased for the collection nor are 

funds specifically allocated for the collection. Photos and manuscripts include images of NIST staff, facilities, and artifacts that 

demonstrate NIST history and accomplishments. 

NIST’s Museum and History Program has policies in place for acquisitions and loans. Objects are either on display or in storage 

and are not used by visitors. Archives, including the historical book collection, are used according to established research library 

policies and procedures. When considering artifacts for accession, the following criteria are considered: 

● Direct connection to NIST program activity; 

● Direct connection to a NIST prominent person; 

● Physical size; and 

● Safety considerations. 

Archive material is not loaned. Artifacts are rarely loaned, but can be loaned within established policies and procedures for 

educational purposes, scholarly research, and limited public exhibition to qualified institutions. The loan policy packet for these 

artifacts includes an introduction to the NIST Loan Program, Borrower Checklist, Artifact Loan Request, NIST Loan Policy, Insurance 

Requirements, Facilities Report, Outgoing Loan Agreement, Condition Report Form, and Outgoing Loan Process. 

ISO promotes the history of NIST through a program that collects, organizes, and preserves records of enduring value and 

encourages and supports their use by researchers. The policies and procedures cover such topics as submitting reference inquiries, 

regulations for use of the archives collection, scope of archives collection, criteria for accepting archival material, providing physical 

and bibliographic access, preservation, and reviewing the collection.

Census Bureau: 

Collection-type heritage assets maintained by the Census Bureau are items considered unique for their historical, cultural, 

educational, technological, methodological, or artistic importance. They help illustrate the social, educational, and cultural heritage 

of the Census Bureau. Some items because of their age or obvious historical significance are inherently historical artifacts.

The Census Bureau has in place a Project Charter that outlines policies and procedures for the acquisition and removal of Census 

Bureau’s heritage assets. The Census Bureau Heritage Assets Committee decides if an item meets the criteria for a heritage 

asset based on the uniqueness, historical age, and/or if the item helps to illustrate the Census Bureau’s historic contributions to 

the Nation’s growth. If the item is deemed a heritage asset, the applicable property management office will ensure the heritage 

asset is catalogued and stored in a safe, secure environment, allowing for appropriate preservation and conservation. All necessary 

actions will be taken to reduce deterioration of heritage assets due to environmental conditions, and to limit damage, loss, and 

misuse of heritage assets. The Committee meets on a regular basis to determine if any heritage assets should be removed from 

the approved list, or if a newly arrived item should be classified as a heritage asset. Once a determination has been made to no 

longer classify an item as a heritage asset, the Census Bureau will follow any applicable established policies and procedures for 

surplus property.

100 | FY 2016 AGENCY FINANCIAL REPORT

NOTES TO THE FINANCIAL STATEMENTS
The following table summarizes the Department’s Collection-type Heritage Assets activity and balances.

Collection-type Heritage Assets:

(In Actual Quantities)

Category Description of Assets

Quantity of 

Items Held 

September 30, 

2015

FY 2016 

Additions

FY 2016 

Withdrawals

Quantity of 

Items Held

September 30, 

2016

NOAA Central Library: 

Circulating Collection Books, journals, and other 

publications 1 N/A1 N/A1 1

Rare Book Room 

Collection Books and publications 1 N/A1 N/A1 1

Collection of 

Photographs and 

Motion Pictures Photographs and motion pictures 1 N/A1 N/A1 1

Other Artifacts, documents, and other 

items 56 – – 56

NOAA National Ocean 

Service–Thunder Bay 

Sanctuary Research 

Collection

Data cards, photograph negatives, 

document copies, photographs, 

books, and other items

106,254 – – 106,254

NOAA National Climatic 

Data Center Library 

Artifacts, books, documents, and 

other items 225 – 159 66

NOAA Others Artifacts, artwork, books, films, 

instruments, maps, and records 3,427 1 44 3,384

NIST Artifacts and 

Scientific Measures 

National Bureau of Standards2/

NIST scientific instruments, 

equipment, and objects 1,216 250 146 1,320

NIST Historical Books 

and Manuscripts 

Books/manuscripts of historical 

scientific interest by prominent 

scientists 61 – – 61

Census Bureau Artwork 

and Gifts 

Artifacts, artwork, books, films, 

instruments, and records 159 – – 159

Census Bureau 

Collectable Assets 

Publications, books, manuscripts, 

photographs, and maps 33 – – 33

Total 111,434 251 349 111,336

1 N/A – Not applicable; this category is reported as one collection. 2 National Bureau of Standards is the former name of NIST.

FY 2016 AGENCY FINANCIAL REPORT | 101

NOTES TO THE FINANCIAL STATEMENTS
102 | FY 2016 AGENCY FINANCIAL REPORT

NOTES TO THE FINANCIAL STATEMENTS
FINANCIAL SECTION

Required Supplementary Information

(unaud i ted)
REQUIRED SUPPLEMENTARY INFORMATION (Unaudited)

A Deferred Maintenance and Repairs 

Deferred Maintenance and Repairs (DM&R) are maintenance and repairs that were not performed when they should have 

been, that were scheduled and not performed, or that were delayed for a future period. Maintenance and Repairs are activities 

directed towards keeping Property, Plant, and Equipment (PP&E) in acceptable operating condition. These activities include 

preventive maintenance, replacement of parts and structural components, and other activities needed to preserve the asset 

so that it can deliver acceptable performance and achieve its expected life. Maintenance and Repairs exclude activities 

aimed at expanding the capacity of an asset or otherwise upgrading it to serve needs different from, or significantly greater, 

than those originally intended. The significant portions of Departmental DM&R relate to PP&E of both the National Oceanic 

and Atmospheric Administration (NOAA) and the National Institute of Standards and Technology (NIST). These two entities 

comprise 95 percent of the Department’s General PP&E, Net balance as of September 30, 2016.

NOAA:

NOAA measures DM&R using Condition Assessment Surveys, which are periodic visual (i.e., physical) inspections of 

applicable PP&E to determine their current condition and estimated cost to correct any deficiencies, and by collecting 

information from its line offices. NOAA completed a condition survey of the entire applicable inventory of its real property 

in FY 2011. NOAA, effective FY 2012, schedules its surveys for real property on a cyclical basis, with each appropriate asset 

being surveyed every five years. Exceptions to the five-year cycle would be where factors indicate that a greater frequency 

of review is prudent for reasons such as age and/or poor condition. NOAA collects DM&R information for capitalized 

personal property on an annual basis. 

NOAA performs Condition Assessment Surveys as necessary to measure and report DM&R for, at a minimum, NOAA-owned 

buildings (including those fully depreciated), non-capitalized heritage assets, and capital leases that NOAA has executed and 

where NOAA has the financial responsibility for operations and maintenance of the asset. DM&R is reported for individual 

real property items with estimates greater than $50 thousand. DM&R on capitalized personal property is reported with 

an estimated project cost of $25 thousand or more. For financial reporting purposes, NOAA does not report on DM&R of 

structures, non-heritage non-capitalized buildings, non-capitalized personal property, or stewardship land as these categories 

represent less than 10 percent of the acquisition value of NOAA’s PP&E and are considered not significant to DM&R reporting.

NOAA prioritizes maintenance and repair projects to sustain its PP&E in good operating condition, including maintaining 

warranties. DM&R is impacted by funding shortfalls. As such, NOAA selects projects that will remedy life safety deficiencies 

and minimize risk of mission failure, as PP&E enables the accomplishment of the mission. DM&R projects will not be 

addressed without a funding initiative. NOAA generally does not perform investment analyses in selecting projects. 

Acceptable condition standards are established for real property by using building codes and/or industry standards for 

benchmarking and cost estimating. These standards are used to evaluate site and building conditions, which include 

the review of building systems such as civil, structure, architectural, life safety, mechanical, plumbing, elevators, electric, 

and others. 

NOAA has not significantly changed its policies or factors that are subject to DM&R reporting requirements. The increase 

in the Buildings asset category is the result of facility condition assessments performed in FY 2016.

104 | FY 2016 AGENCY FINANCIAL REPORT

REQUIRED SUPPLEMENTARY INFORMATION (UNAUDITED)
The following table shows NOAA’s DM&R as of September 30, 2016 and 2015:

(In Thousands)

Asset Category

Deferred Maintenance 

and Repairs as of 

September 30, 2016

Deferred Maintenance 

and Repairs as of 

September 30, 2015

Buildings $ 105,549 $ 76,000

Multi-use Heritage Assets 95 92

Ships 28,441 26,876

Total $ 134,085 $ 102,968

NIST:

NIST measures DM&R for real property using Condition Assessment Surveys, which are periodic visual (i.e., physical) 

inspections of applicable PP&E to determine their current condition and estimated cost to correct any deficiencies, and by 

collecting information from its line offices. NIST completed a condition survey of the entire applicable real property inventory 

in FY 2013. NIST schedules its surveys for real property on a cyclical basis, with each appropriate asset being surveyed every 

three years. Exceptions to the three-year cycle would be where factors indicate that a greater frequency of review is prudent 

such as age and/or poor condition. NIST does not make a distinction between active or inactive assets for reporting DM&R.

DM&R relates to capitalized, non-capitalized, and fully depreciated real property. DM&R for real property is reported for 

individual items with DM&R estimates greater than $5 thousand. Items estimated to cost less than $5 thousand are 

shared with the facility managers for correction as emergency/service calls or minor work orders. Examples of the types 

of items that fall below the $5 thousand threshold include minor repairs to interior finishes and doors, caulk replacement, 

minor pipe and valve leaks, and minor mechanical and electrical repairs.

NIST prioritizes real property maintenance and repair projects to sustain its PP&E in good operating condition, including 

maintaining warranties. DM&R is impacted by funding shortfalls. As such, NIST selects projects that will remedy life safety 

deficiencies and minimize risk of mission failure as PP&E enables the accomplishment of the mission. 

Individual real property maintenance and repair projects are prioritized using a risk matrix procedure which determines the 

severity of the risk-rank (i.e., minimal, low, medium, serious, or critical). Based on the type of project (maintenance and repair, 

code compliance and safety, or capacity) and the distress type, the appropriate risk matrix is used and a risk-rank assigned. 

Ranking can be adjusted to take into account current projects underway, prioritization of future candidate projects, and 

budgetary funding outlook.

Acceptable real property facility condition standards are established by using building codes and/or industry standards for 

benchmarking and cost estimating. These standards are used to evaluate site and interior conditions, life safety, mechanical 

and plumbing systems, elevator and conveying systems, electrical systems, structural systems, building envelope closure 

systems, etc.

Real property facility condition index (FCI) values are calculated for each NIST facility. The ratio of the cost of correcting all 

facility deficiencies in a building divided by the cost of replacing the building is expressed on a 100 percentage point scale. 

The FCI index is 100 minus this ratio of cost expressed. This is somewhat similar to a system described by the Building 

Research Board of the National Research Council. Generally, a facility with an index above 95 is considered excellent, 

between 95 and 90 is good, between 90 and 85 is fair, and below 85 is considered poor.

FY 2016 AGENCY FINANCIAL REPORT | 105

REQUIRED SUPPLEMENTARY INFORMATION (UNAUDITED)
Effective 2016, NIST measures DM&R for personal property by assessing the value/cost of a scheduled maintenance or repair 

event that has been delayed for any reason and the delay extends beyond the end of the current fiscal year. Assessments 

are performed on all capitalized personal property with costs that exceed $100 thousand. DM&R for personal property is 

reported for individual items with DM&R estimates greater than $5 thousand.

The following table shows NIST’s DM&R as of September 30, 2016 and 2015:

(In Thousands)

Assets Category

Deferred Maintenance 

and Repairs as of 

September 30, 2016

Deferred Maintenance 

and Repairs as of 

September 30, 2015

Buildings $ 319,426 $ 319,591

Site Utilities and Infrastructure 26,802 27,169

Total $ 346,228 $ 346,760

106 | FY 2016 AGENCY FINANCIAL REPORT

REQUIRED SUPPLEMENTARY INFORMATION (UNAUDITED)
United States Department of Commerce Combining Schedule of Budgetary Resources by Major Budget Account

For the Year Ended September 30, 2016 (In Thousands)

Combined 

Total

Census 

Bureau 

Periodic 

Censuses and 

Programs

NIST 

Scientific and 

Technical 

Research and 

Services

NOAA

Operations, 

Research, and

Facilities

NOAA

Procurement,

Acquisition, 

and 

Construction

NTIA Digital 

Television 

Transition and 

Public Safety 

Fund

NTIA

Network 

Construction 

Fund

NTIA

Public Safety 

Trust Fund

USPTO

 Salaries

 and

Expenses

Other 

Budget 

Accounts

BUDGETARY RESOURCES:

Unobligated Balance, Brought Forward, October 1 $ 17,610,811 $ 110,528 $ 23,019 $ 364,531 $ 258,717 $ 8,798,108 $ 6,321,995 $ 157,258 $ 504,354 $ 1,072,301

Adjustments to Unobligated Balance, Brought Forward (596) – – – – – – – – (596)

Unobligated Balance, Brought Forward, October 1, as Adjusted 17,610,215 110,528 23,019 364,531 258,717 8,798,108 6,321,995 157,258 504,354 1,071,705

Actual Recoveries of Prior-years Unpaid Obligations 326,370 21,620 6,881 61,617 19,575 1,568 2,103 1,636 36,266 175,104

Actual Nonexpenditure Transfers of Unobligated Balance, Net 5,867 – – – – – – – – 5,867

Borrowing Authority Withdrawn (18,877) – – – – – – – – (18,877)

Other Changes in Unobligated Balance, Net (8,933,414) (88,927) (76) (30,802) (11,359) (8,799,676) 3 3 331 (2,911)

Unobligated Balance From Prior-years Budget Authority, Net 8,990,161 43,221 29,824 395,346 266,933 – 6,324,101 158,897 540,951 1,230,888

Appropriations 10,416,411 1,111,374 696,000 3,456,074 2,315,407 – – 999,934 – 1,837,622

Borrowing Authority 22,532 – – – – – – – – 22,532

Spending Authority From Offsetting Collections 5,547,581 – – 264,993 – – 366,269 445 3,066,894 1,848,980

TOTAL BUDGETARY RESOURCES $ 24,976,685 $ 1,154,595 $ 725,824 $ 4,116,413 $ 2,582,340 $ – $ 6,690,370 $ 1,159,276 $ 3,607,845 $ 4,940,022

STATUS OF BUDGETARY RESOURCES:

New Obligations and Upward Adjustments $ 15,459,852 $ 1,121,353 $ 704,007 $ 3,736,456 $ 2,317,787 $ – $ 95,155 $ 677,414 $ 3,146,607 $ 3,661,073

Unobligated Balance, End of Year 

Apportioned, Unexpired Accounts 8,600,100 17,069 17,091 244,421 172,025 – 6,593,108 146,169 461,238 948,979

Exempt From Apportionment, Unexpired Accounts 2,257 – – – – – – – – 2,257

Unapportioned, Unexpired Accounts 550,449 30 4,644 42,698 73,981 – 2,107 335,693 – 91,296

Unobligated Balance, End of Year, Unexpired Accounts 9,152,806 17,099 21,735 287,119 246,006 – 6,595,215 481,862 461,238 1,042,532

Unobligated Balance, End of Year, Expired Accounts 364,027 16,143 82 92,838 18,547 – – – – 236,417

Total Unobligated Balance, End of Year 9,516,833 33,242 21,817 379,957 264,553 – 6,595,215 481,862 461,238 1,278,949

TOTAL STATUS OF BUDGETARY RESOURCES $ 24,976,685 $ 1,154,595 $ 725,824 $ 4,116,413 $ 2,582,340 $ – $ 6,690,370 $ 1,159,276 $ 3,607,845 $ 4,940,022

CHANGE IN UNPAID OBLIGATED BALANCE, NET:

Unpaid Obligations:

Unpaid Obligations, Brought Forward, October 1 $ 6,860,628 $ 193,721 $ 236,752 $ 1,966,422 $ 1,309,299 $ 17,812 $ 34,718 $ 12,196 $ 671,341 $ 2,418,367

New Obligations and Upward Adjustments 15,459,852 1,121,353 704,007 3,736,456 2,317,787 – 95,155 677,414 3,146,607 3,661,073

Outlays, Gross (14,853,358) (941,359) (718,883) (3,607,618) (2,093,646) (1,108) (80,352) (681,048) (3,191,583) (3,537,761)

Actual Recoveries of Prior-years Unpaid Obligations (326,370) (21,620) (6,881) (61,617) (19,575) (1,568) (2,103) (1,636) (36,266) (175,104)

UNPAID OBLIGATIONS, END OF YEAR $ 7,140,752 $ 352,095 $ 214,995 $ 2,033,643 $ 1,513,865 $ 15,136 $ 47,418 $ 6,926 $ 590,099 $ 2,366,575

Uncollected Customer Payments:

Uncollected Customer Payments, Brought Forward, October 1 $ (564,958) $ – $ – $ (340,460) $ – $ – $ – $ (58) $ (57) $ (224,383)

Change in Uncollected Customer Payments 216 – – (23,203) – – – (268) 4 23,683

UNCOLLECTED CUSTOMER PAYMENTS, END OF YEAR $ (564,742) $ – $ – $ (363,663) $ – $ – $ – $ (326) $ (53) $ (200,700)

Unpaid Obligated Balance, Net, Brought Forward, October 1 $ 6,295,670 $ 193,721 $ 236,752 $ 1,625,962 $ 1,309,299 $ 17,812 $ 34,718 $ 12,138 $ 671,284 $ 2,193,984

Unpaid Obligated Balance, Net, End of Year $ 6,576,010 $ 352,095 $ 214,995 $ 1,669,980 $ 1,513,865 $ 15,136 $ 47,418 $ 6,600 $ 590,046 $ 2,165,875

BUDGET AUTHORITY, NET:

Budget Authority, Gross $ 15,986,524 $ 1,111,374 $ 696,000 $ 3,721,067 $ 2,315,407 $ – $ 366,269 $ 1,000,379 $ 3,066,894 $ 3,709,134

Actual Offsetting Collections (5,659,598) (468) (23) (244,942) (54) (7,718) (366,273) (180) (3,069,330) (1,970,610)

Change in Uncollected Customer Payments 216 – – (23,203) – – – (268) 4 23,683

Recoveries of Prior-years Paid Obligations 21,651 468 23 3,152 54 7,718 3 3 332 9,898

BUDGET AUTHORITY, NET $ 10,348,793 $ 1,111,374 $ 696,000 $ 3,456,074 $ 2,315,407 $ – $ (1) $ 999,934 $ (2,100) $ 1,772,105

OUTLAYS, NET:

Outlays, Gross $ 14,853,358 $ 941,359 $ 718,883 $ 3,607,618 $ 2,093,646 $ 1,108 $ 80,352 $ 681,048 $ 3,191,583 $ 3,537,761

Actual Offsetting Collections (5,659,598) (468) (23) (244,942) (54) (7,718) (366,273) (180) (3,069,330) (1,970,610)

Outlays, Net 9,193,760 940,891 718,860 3,362,676 2,093,592 (6,610) (285,921) 680,868 122,253 1,567,151

Distributed Offsetting (Receipts)/Outlays, Net (64,352) – – – – – – – – (64,352)

AGENCY OUTLAYS, NET $ 9,129,408 $ 940,891 $ 718,860 $ 3,362,676 $ 2,093,592 $ (6,610) $ (285,921) $ 680,868 $ 122,253 $ 1,502,799 

B Combining Schedule of Budgetary Resources by Major Budget Account

The following table illustrates the Department’s FY 2016 budgetary resources by major budget account.

FY 2016 AGENCY FINANCIAL REPORT | 107

REQUIRED SUPPLEMENTARY INFORMATION (UNAUDITED)
108 | FY 2016 AGENCY FINANCIAL REPORT

REQUIRED SUPPLEMENTARY INFORMATION (UNAUDITED)
FINANCIAL SECTION

Required Supplementary

Stewardship Information

(unaud i ted)
REQUIRED SUPPLEMENTARY STEWARDSHIP INFORMATION 

(Unaudited)

Stewardship Investments

Stewardship investments are substantial investments made by the federal government for the benefit of the Nation, but are not 

physical assets owned by the federal government. Though treated as expenses when incurred to determine the Department’s Net 

Cost of Operations, these items merit special treatment so that users of federal financial reports know the extent of investments 

that are made for the long-term benefit of the Nation.

Investments in Non-federal Physical Property:

Non-federal physical property investments are expenses included in the Department’s Net Cost of Operations for the purchase, 

construction, or major renovation of physical property owned by state and local governments. Based on a review of the Department’s 

programs, the Economic Development Administration (EDA) and the National Oceanic and Atmospheric Administration (NOAA) 

have significant investments in non-federal physical property.

EDA’s and NOAA’s investments in non-federal physical property for FY 2012 through FY 2016 were as follows:

(In Millions)

Program FY 2016 FY 2015 FY 2014 FY 2013 FY 2012 Total

EDA:

Public Works $ 113.8 $ 101.0 $ 114.0 $ 120.5 $ 160.7 $ 610.0

Economic Adjustment Assistance 25.4 32.5 42.3 66.8 49.5 216.5

Global Climate Change Mitigation Incentive Fund – – 10.6 14.9 12.8 38.3

Assistance to Coal Communities 8.5 – – – – 8.5

Disaster Recovery 15.6 8.8 98.7 146.2 111.0 380.3

EDA Subtotal 163.3 142.3 265.6 348.4 334.0 1,253.6

NOAA:

National Estuarine Research Reserves 1.6 0.7 1.1 2.4 3.9 9.7

Coastal and Estuarine Land Conservation Program 0.5 0.2 0.5 5.7 8.8 15.7

NOAA Subtotal 2.1 0.9 1.6 8.1 12.7 25.4

Total $ 165.4 $ 143.2 $ 267.2 $ 356.5 $ 346.7 $ 1,279.0

EDA:

EDA’s investments in non-federal physical property, other than Disaster Recovery, require matching funds by state and local 

governments of 20 to 50 percent. Disaster Recovery grants do not require matching funds and can be up to 100 percent 

of the investment costs.

110 | FY 2016 AGENCY FINANCIAL REPORT

REQUIRED SUPPLEMENTARY STEWARDSHIP INFORMATION (UNAUDITED)
Public Works: The Public Works program promotes long-term economic development in distressed areas by providing 

investments for vital public infrastructure and development facilities. These critical investments enable communities to 

attract new, or support existing, businesses that will generate new jobs and income for unemployed and underemployed 

residents. Among the types of projects funded are water, sewer, fiber optics, access roads, and facilities such as industrial 

and business parks, business incubator and skill training facilities, and port improvements.

Economic Adjustment Assistance: The Economic Adjustment Assistance program provides flexible investments for communities 

facing sudden or severe economic distress to diversify and stabilize their economies. Factors that seriously threaten the 

economic survival of communities include plant closures, military base closures or realignments, defense laboratory or 

contractor downsizings, natural resource depletion, out-migration, under-employment, and the impacts of foreign trade. 

Global Climate Change Mitigation Incentive Fund (GCCMIF): The last fiscal year of funding for the GCCMIF program was 

FY 2011. The funding for this program is fully expensed. EDA is not anticipating future grants from this funding source. 

GCCMIF program financed projects that fostered economic development by advancing the green economy in distressed 

communities and developed and used products and services that contributed to economic growth and alleviated economic 

distress by respecting and revitalizing the environment. GCCMIF program supported projects that created jobs through, and 

increase private capital investment in, efforts to limit the Nation’s dependence on fossil fuels, enhance energy efficiency, 

curb greenhouse gas emissions, and protect natural systems.

Assistance to Coal Communities: This program competitively awards grants to coalitions of regionally-driven economic 

development and workforce development organizations anchored in impacted coal communities. These grants enable 

grantees to take deliberate and measured steps to build economic resilience, industry diversification, and promote new 

job creation opportunities. Competitive projects are tightly linked to existing economic and workforce development 

strategic plans. These activities should result in more competitive and resilient “pipelines” of skilled workers moving into 

new job opportunities.

Disaster Recovery: EDA supports the repair of infrastructure and economic development-related facilities damaged by floods 

and other natural disasters. Funding for Disaster Recovery is generally through supplemental appropriations from Congress 

for recovery efforts to save, sustain, and preserve private enterprise and job creation in economically distressed communities. 

NOAA:

National Estuarine Research Reserves (NERR): NERR system consists of 28 estuarine reserves protected by federal, state, 

and local partnerships that work to preserve and protect the Nation’s estuaries. NOAA has proposed the designation of 

a 29th estuarine reserve, i.e., He’eia Hawaii. NERR system helps to fulfill NOAA’s stewardship mission to sustain healthy 

coasts by improving the Nation’s understanding and stewardship of estuaries. Estuarine reserves are the areas where 

freshwater from rivers meet the ocean. These areas are known as bays, swamps, sloughs, and sounds. These important 

coastal habitats are used as spawning grounds and nurseries for the Nation’s commercial fish and shellfish. Estuaries filter 

much of the polluted runoff from rivers and streams that would otherwise contaminate oceans. The reserves were created 

with the passage of the Coastal Zone Management Act of 1972, and, as of September 30, 2016, encompassed approximately 

1.4 million acres of estuarine waters, wetlands, and uplands. The most recent reserve, Lake Superior, WI, was designated on 

October 26, 2010. NERRs are state-operated and managed in cooperation with NOAA. NOAA’s investments in non-federal 

physical property are for the acquisition of lands and development or construction of facilities, auxiliary structures, and public 

access routes for any NERR site.

FY 2016 AGENCY FINANCIAL REPORT | 111

REQUIRED SUPPLEMENTARY STEWARDSHIP INFORMATION (UNAUDITED)
Coastal and Estuarine Land Conservation Program: This program was established under the Commerce, Justice, and State 

Appropriations Act of 2002, “for the purpose of protecting important coastal and estuarine areas that have significant 

conservation, recreation, ecological, historical, or aesthetic values, or that are threatened by conversion from their natural 

or recreational state to other uses.” The investments in non-federal physical property include matching grants awarded to 

state and local governments for land acquisition in coastal and estuarine areas. Since FY 2002, matching grants have been 

directed to 203 such projects.

Coastal Zone Management Fund: The Coastal Zone Management Program is authorized by the Coastal Zone Management 

Act of 1972, and administered at the federal level by NOAA’s Office of Ocean and Coastal Resource Management. NOAA’s 

financing supports various coastal states in their redevelopment of deteriorating and urbanized waterfronts and ports, as 

well as providing for public access to beaches and coastal areas. The state and local governments receive funding for these 

investments through NOAA grant expenditures, for the purpose of preservation or restoration of coastal resources and 

habitats. There is currently not in place a mechanism for the state and local governments to determine and report to NOAA 

the amount of monies they expend for the investments in non-federal physical property. The Department, accordingly, cannot 

report the amount of investments in non-federal physical property for the Coastal Zone Management Fund.

Investments in Human Capital:

Human capital investments are expenses, included in the Department’s Net Cost of Operations, for education and training programs 

that are intended to increase or maintain national economic productive capacity and produce outputs and outcomes that provide 

evidence of the constant or increasing national productive capacity. These investments exclude education and training expenses 

for federal civilian and military personnel. Based on a review of the Department’s programs, the most significant investments in 

human capital are by NOAA.

The following table summarizes NOAA’s investments in human capital for FY 2012 through FY 2016:

(In Millions)

Program FY 2016 FY 2015 FY 2014 FY 2013 FY 2012 Total

National Sea Grant College Program $ 0.9 $ 0.7 $ 0.8 $ 0.7 $ 0.7 $ 3.8

National Estuarine Research Reserve Program 1.5 1.5 1.3 1.4 1.5 7.2

Educational Partnership Program 14.3 14.3 14.3 13.0 12.5 68.4

Ernest F. Hollings Undergraduate Scholarship Program 5.8 5.5 6.2 5.0 4.9 27.4

Other Programs 0.2 0.4 0.7 0.7 0.7 2.7

Total $ 22.7 $ 22.4 $ 23.3 $ 20.8 $ 20.3 $ 109.5

National Sea Grant College Program: Sea Grant is a nationwide network, administered through NOAA, of 34 university-based 

programs that work with coastal communities. With the adoption in 1966 of the National Sea Grant College Act, Congress 

established an academic/industry/government partnership that would enhance the Nation’s education, economy, and 

environment into the 21st century. The program supports activities designed to increase public awareness of coastal, ocean, 

and Great Lakes issues; to provide information to improve management decisions in coastal, ocean, and Great Lakes policy; 

and to train graduate students in marine and Great Lakes science. The Knauss Fellowship Program offers qualified masters 

and doctoral students the opportunity to spend a year working on marine and Great Lakes policy issues with the Executive 

and Legislative branches of the federal government. The program currently has 53 fellowships awarded: 14 fellowships 

funded by the National Sea Grant College Program, and 39 fellowships funded by other NOAA offices and other federal 

112 | FY 2016 AGENCY FINANCIAL REPORT

REQUIRED SUPPLEMENTARY STEWARDSHIP INFORMATION (UNAUDITED)
agencies. There is also a Graduate Fellowship Program for Ph.D. candidates in the specialized areas of population dynamics 

and marine resource economics. The Graduate Fellowship Program currently has 10 fellowships awarded. Participants in 

this program can receive up to three years of funding. 

National Estuarine Research Reserve Program: This program supports activities designed to increase public awareness of estuary 

issues, provide information to improve management decisions in estuarine areas, and train graduate students in estuarine 

science. The National Estuarine Research Reserve System’s Graduate Research Fellowship Program offered qualified masters 

and doctoral students the opportunity to address scientific questions of local, regional, and national significance. The result 

was high-quality research focused on improving coastal management issues. The Graduate Research Fellowship Program 

ended in FY 2014. 

Educational Partnership Program: The NOAA Educational Partnership Program (EPP) with Minority Serving Institutions (MSI) 

provides financial assistance through competitive processes to minority serving institutions that support research and training 

of students in NOAA-related sciences (EPP Cooperative Science Centers). The program’s goal is to increase the number of 

trained and graduated students, from underrepresented communities in science and technology, directly related to NOAA’s 

mission. EPP/MSI also seeks to increase collaborative research efforts between NOAA scientists and researchers at minority 

serving academic institutions through the EPP Cooperative Science Centers. In FY 2016, EPP Cooperative Science Center 

awarded a total of 70 degrees to students. 

Ernest F. Hollings Undergraduate Scholarship Program: This program was established in 2005 to (1) increase undergraduate 

training in oceanic and atmospheric science, research, technology, and education, and foster multidisciplinary training 

opportunities; (2) increase public understanding and support for stewardship of the ocean and atmosphere and improve 

environmental literacy; (3) recruit and prepare students for public service careers with NOAA and other agencies at the 

federal, state, and local levels of government; and (4) recruit and prepare students for careers as teachers and educators in 

oceanic and atmospheric science and to improve scientific and environmental education in the U.S. In FY 2016, the program 

added 127 students.

Other Programs:

Southeast Fisheries Science Center’s (SEFSC) Recruiting Training Research Program: This is a joint program between 

NOAA’s National Marine Fisheries Service (NMFS) and the University of Florida. The objectives of the program are the 

following: (1) to recruit top undergraduate and graduate students into the field of fisheries population dynamics and careers 

with NMFS; (2) to train graduate students; and (3) to conduct population dynamics and stock assessment research in support 

of the NMFS mission. The program also offers graduate courses and workshops in computer programming, simulation 

modeling, and fish population dynamics. In February 2016, the Recruiting Training Research Program hosted a weeklong 

undergraduate workshop in the Florida Keys designed to give high-caliber students from across the country exposure to 

fisheries population dynamics and careers with NMFS. The grant for this partnership concludes in the fall of 2016 and new 

approaches for engaging early career scientists at the undergraduate level are being explored.

Northeast Fisheries Science Center Partnership Education Program (PEP): This program of NOAA’s NMFS leads a consortium 

of six science institutions in Woods Hole, MA, offering a 10-week summer program that combines undergraduate course 

work with research in marine and environmental science. Launched in 2009, PEP is an ongoing diversity program designed 

to recruit talent from minority groups that are under-represented in marine and environmental sciences. PEP recruitment 

targets college students with priority given to entering juniors and seniors majoring in the natural sciences who have had 

some course work in marine and/or environmental science. The program includes a credit course taught in Woods Hole by 

research scientists from Woods Hole science institutions, student research projects, and presentation of research results in 

a one-day seminar. In FY 2016, 16 students participated in the 10-week summer program. 

FY 2016 AGENCY FINANCIAL REPORT | 113

REQUIRED SUPPLEMENTARY STEWARDSHIP INFORMATION (UNAUDITED)
Woods Hole Science Aquarium (WHSA) High School Intern Program: WHSA typically offers three summer programs for 

students who have completed grades 10, 11, or 12. Interns selected for the five-week program work in the aquarium, help 

lead public collecting walks, and participate in the Careers in Marine Science seminars. The one and two-week Careers in 

Marine Science seminars consist of short presentations by marine scientists, activities, and field trips that introduce students 

to marine-related careers. All students learn basic animal husbandry and aquarist skills, visit the local Woods Hole research 

institutions, meet with working scientists in a variety of fields, and visit area aquariums, zoos, and waterfronts. During 

FY 2016, the program consisted of a six-week internship and a two-week seminar program. Two students participated in the 

six-week program, and seven in the two-week program. The Aquarium also hosted three college undergraduate summer 

interns: two from the University of Chicago, and one from University of Southern California. 

Pacific Islands Fisheries Science Center (PIFSC) Young Scientist Opportunity (PYSO): PYSO offers qualified college students 

professional work experience and formal training opportunities tailored to meet their educational and professional goals and 

interests. PYSO is a paid, summer-long (8-12 weeks) internship program that combines on-the-job training, formal training, 

one-to-one mentoring, and developmental assignments at PIFSC. Internship opportunities are available in specific PIFSC 

research topics ranging from marine ecology to socioeconomics. During FY 2016, PIFSC hosted four undergraduate summer 

interns at the Inouye Regional Center in Honolulu, HI.

Investments in Research and Development (R&D):

Investments in R&D are expenses that are included in the Department’s Net Cost of Operations. The investments are divided 

into three categories: (1) basic research, the systematic study to gain knowledge or understanding of the fundamental aspects 

of phenomena and of observable facts without specific applications toward processes or products in mind; (2) applied research, 

the systematic study to gain knowledge or understanding necessary for determining the means by which a recognized and 

specific need may be met; and (3) development, the systematic use of the knowledge and understanding gained from research 

for the production of useful materials, devices, systems, or methods, including the design and development of prototypes 

and processes. The investments are made with the expectation of maintaining or increasing national economic productive 

capacity, or yielding other future economic or societal benefits. Based on a review of the Department’s programs, the only 

significant investments in R&D are by the National Institute of Standards and Technology (NIST) and NOAA.

NIST:

The following table summarizes NIST’s R&D investments for FY 2012 through FY 2016:

(In Millions)

Program

FY 2016 

Basic Applied Development Total FY 2015 FY 2014 FY 2013 FY 2012 Total

NIST Laboratories Program $ 276.8 $ 469.5 $ 9.7 $ 756.0 $ 717.2 $ 657.5 $ 603.6 $ 590.7 $ 3,325.0

Manufacturing USA, Advanced 

Manufacturing Technology 

Consortia, and Technology 

Innovation Program 7.2 5.1 2.1 14.4 5.2 7.2 21.2 39.4 87.4

Total $ 284.0 $ 474.6 $ 11.8 $ 770.4 $ 722.4 $ 664.7 $ 624.8 $ 630.1 $ 3,412.4

114 | FY 2016 AGENCY FINANCIAL REPORT

REQUIRED SUPPLEMENTARY STEWARDSHIP INFORMATION (UNAUDITED)
NIST Laboratories Program: 

For more than 100 years, NIST has maintained the national standards of measurement, a role that the U.S. Constitution 

assigns to the federal government. Today, NIST Laboratories address increasingly complex measurement challenges. NIST 

develops measurements focusing on the very small (e.g., nanotechnology devices), the very large (e.g., skyscrapers), the 

physical (e.g., methods for characterizing strands of DNA for forensic testing), and the virtual (e.g., methods for testing 

electronic health record systems). 

● NIST Laboratories work at the frontiers of measurement science to ensure that the Nation’s system of measurements 

is firmly grounded on a sound scientific and technical foundation. NIST also promotes the use of measurements based 

on the international system of units.

● NIST Laboratories work to assure that the Nation’s realization of the basic and derived measurement units is consistent 

with the realization in other nations. NIST Laboratories engage in a number of international activities to support trade and 

global science, and to promote the international acceptance of the Nation’s measurement standards. 

● NIST Laboratories provide industry and academia with unique user facilities that support innovation in materials science, 

nanotechnology, and other emerging technology areas through the NIST Center for Neutron Research, which provides 

world-class neutron measurement capabilities to the Nation’s research community, and through the NIST Center for 

Nanoscale Science and Technology, which supports nanotechnology development from discovery to production. 

● NIST Laboratories also support the development of standards and specifications that define technical and performance 

requirements for goods and services. These standards—also known as documentary standards—are often developed 

collaboratively with the private sector through an open, consensus-based process. NIST scientists and engineers lend 

their expertise to these efforts in order to promote standards that are based on sound science, and to ensure that the 

standards are supported by effective measurements and testing methods for conformity. In addition, NIST is designated 

under the National Technology Transfer Advancement Act as the coordinator for all federal agencies using documentary 

standards that are developed by private sector consensus bodies to carry out their policy objectives.

Manufacturing USA:

Manufacturing USA was renamed from the National Network for Manufacturing Innovation (NNMI) in September 2016.

This budget program was first appropriated funds in FY 2016, pursuant to the Revitalize American Manufacturing and 

Innovation Act of 2014 (RAMI). The FY 2016 enacted bill provided $25.0 million in discretionary funds. This program and 

funding is part of government-wide efforts to strengthen the U.S. advanced manufacturing sector.

As part of its efforts to revitalize U.S. manufacturing, NIST proposed and Congress authorized (RAMI) Manufacturing USA, 

which would consist of a network of manufacturing innovation institutes where researchers, companies, universities, 

community colleges, and entrepreneurs can come together to develop new manufacturing technologies with broad 

applications, as well as train the workforce needed to work in advanced manufacturing industries. The primary goal is to 

ensure that American innovations and inventions, currently going off-shore for production in competitor nations, would 

be scaled up from the lab-scale experiments to industrial scale by developing new manufacturing processes to be used 

by entire industry sectors.

Each institute in Manufacturing USA has a unique technology focus with the objective of creating self-sustaining regional 

manufacturing hubs that have national impact. The institutes help support an ecosystem of manufacturing activity in 

regions of the United States. The institutes support manufacturing technology commercialization by helping to bridge the 

gap from the laboratory to the market and address core gaps in scaling manufacturing process technologies. 

FY 2016 AGENCY FINANCIAL REPORT | 115

REQUIRED SUPPLEMENTARY STEWARDSHIP INFORMATION (UNAUDITED)
Advanced Manufacturing Technology Consortia (AMTech):

AMTech received Congressional appropriations of $14.5 million in FY 2013, $15.0 million in FY 2014, $8.1 million in FY 2015, 

and no appropriations in FY 2016. The FY 2016 enacted appropriations bill instructs that NIST’s AMTech activity is to be 

merged with Manufacturing USA program. To this end, NIST is using remaining AMTech funds to administer all AMTech 

awards to their conclusion, facilitate connections between AMTech-funded awards and outcomes and Manufacturing USA 

institutes and network, and operate the joint NIST-National Science Foundation MForesight Consortium.

Technology Innovation Program (TIP): 

The FY 2015 enacted appropriations provided no funding for TIP and the program is currently undergoing a closeout process 

through FY 2017. NIST uses unobligated balances (carryover funding), and funding from prior-years’ deobligations, to close 

out the program and to perform NIST’s closeout responsibilities.

NOAA:

NOAA’s R&D investments by program from FY 2012 through FY 2016 were as follows:

(In Millions)

Program

FY 2016 

Basic Applied Development Total FY 2015 FY 2014 FY 2013 FY 2012 Total

Environmental and Climate $ – $ 341.6 $ 63.9 $ 405.5 $ 298.4 $ 294.1 $ 326.3 $ 392.8 $ 1,717.1

Fisheries – 48.7 4.7 53.4 50.3 43.4 51.2 64.9 263.2

Marine Operations and 

Maintenance and Aircraft 

Services – 18.2 11.7 29.9 29.2 29.7 32.4 33.3 154.5

Weather Service – 3.7 15.0 18.7 42.7 29.3 28.6 36.4 155.7

Other – 69.0 1.4 70.4 30.0 63.5 74.8 90.6 329.3

Total $ – $ 481.2 $ 96.7 $ 577.9 $ 450.6 $ 460.0 $ 513.3 $ 618.0 $ 2,619.8

NOAA conducts a substantial program of environmental R&D in support of its mission, much of which is performed to 

improve the United States’ understanding of and ability to predict environmental phenomena, and is intended to provide a 

solid scientific basis for environmental policy-making in government. The scope of research includes:

● Improving predictions and warnings associated with the weather, on timescales ranging from minutes 

to weeks;

● Improving predictions of climate, on timescales ranging from months to centuries; and

● Improving understanding of natural relationships to better predict and manage renewable marine resources 

and coastal and ocean ecosystems.

116 | FY 2016 AGENCY FINANCIAL REPORT

REQUIRED SUPPLEMENTARY STEWARDSHIP INFORMATION (UNAUDITED)
Here is a brief description of the major R&D programs of NOAA:

Environmental and Climate: The Office of Oceanic and Atmospheric Research (OAR) is NOAA’s primary R&D office. This 

office conducts research in three major areas: climate research; weather and air quality research; and ocean, coastal, 

and Great Lakes research. NOAA’s research laboratories, Climate Program Office, and research partners conduct 

wide-ranging research into complex climate systems, including the exploration and investigation of ocean habitats 

and resources. NOAA’s research organizations conduct applied research on the atmosphere to predict severe weather 

events and hazardous conditions that threaten life, property, and economic well being. OAR research laboratories 

then develop high-resolution regional and global weather prediction models and software applications for forecasters 

that transfer into operations at the National Weather Service to significantly improve services to the public. These 

products are helping to evolve the National Weather Service into providing decision support to users in addition to 

weather forecasts.

Fisheries: NOAA’s NMFS is responsible for the conservation and management of living marine resources and their 

habitat within the Nation’s Exclusive Economic Zone. NMFS manages these resources through science-based 

conservation and management to ensure their continuation as functioning components of productive ecosystems, 

while also affording economic opportunities and enhancing the quality of life for the American public. Fishery stocks 

and protected species are surveyed; catch, by catch, incidental take, economic and social data are collected; and 

research is conducted to better understand the variables affecting the abundance and variety of marine fishes and 

protected species, their habitat, and the benefits they provide to society. Protection of endangered species, restoration 

of coastland estuarine fishery habitats, and enforcement of fishery regulations are primary NOAA activities. The 

research and management of living marine resources is conducted in partnership with states, tribes, universities, other 

countries, international organizations, and a broad range of stakeholders who benefit from the use and existence of 

living marine resources and their habitats. 

R&D at NMFS laboratories supports resource management in NOAA, fishery management councils, interstate fishery 

commissions, and other agencies to facilitate informed decision-making about marine resource management decisions 

for sustainable fisheries, protected resources, endangered species, and habitat. NMFS conducts applied research 

to gain knowledge or understanding necessary for determining the means by which a recognized and specific need 

may be met. It includes research that improves understanding of technologies, leading to development that supports 

the mission. Development activities include the production of useful tools, materials, devices, systems, or methods, 

including the design and development of prototypes and processes. Examples of NMFS R&D include process-oriented 

studies such as those that address mechanisms that control reproductive success, population genetics and stock 

structure, animal behavior, biophysical modeling, and the functional value of habitat.

Marine Operations and Maintenance and Aircraft Services: These efforts support NOAA’s programs requiring operating 

days and flight hours to collect data at sea and in the air. NOAA’s Marine and Aviation Operations manage a wide 

variety of specialized aircraft and ships to complete NOAA’s environmental and scientific missions. The aircraft collect 

the environmental and geographic data essential to NOAA hurricane and other weather and atmospheric research, 

conduct aerial surveys for hydrologic research to help predict flooding potential from snowmelt, and provide support 

to NOAA’s fishery research and marine mammal assessment programs. NOAA’s ship fleet provides oceanographic 

and atmospheric research and fisheries research vessels to support NOAA’s strategic plan elements and mission. 

Weather Service: NOAA’s National Weather Service conducts applied R&D, building upon research conducted by NOAA 

laboratories and the academic community. Applied meteorological and hydrological research is integral to providing 

more timely and accurate weather, water, and climate services to the public.

FY 2016 AGENCY FINANCIAL REPORT | 117

REQUIRED SUPPLEMENTARY STEWARDSHIP INFORMATION (UNAUDITED)
Other Programs: As a national lead for coastal stewardship, NOAA’s National Ocean Service promotes wide-ranging 

research activities to create the strong science foundation required to advance the sustainable use of precious coastal 

systems. Understanding of the coastal environment is enhanced through coastal ocean activities that support science 

and resource management programs. This research supports the NOAA National Ocean Service and NOAA Office of 

Coastal Management strategic priority of making communities more resilient. At the reserve level, the research is 

providing science-based information that addresses climate change, water quality, and habitat protection management 

decisions in our Nation’s estuaries. This funding supported 31 collaborative research and 14 science transfer projects. 

NOAA’s National Environmental Satellite, Data, and Information Service (NESDIS), Center for Satellite Applications 

and Research (STAR) supports internal development of the mathematical and physics-based techniques for assuring 

sustained monitoring of the calibration of the NOAA satellite sensors, detecting faults, and diagnosing and countering 

the inevitable effects of instrument and satellite orbit degradation on the utility of the atmospheric and ocean 

measurements required for authoritative NOAA environmental analyses and predictions. NESDIS STAR is developing 

an Integrated Calibration and Validation System (ICVS) to monitor performance of NOAA satellites, instruments, sensors, 

and observational products. STAR scientists are developing advanced methods inter-calibrating NOAA sensors with 

like sensors from other (NOAA, NASA, and international) satellites to achieve, over time, a consistently calibrated 

Satellite Global Observing System. Calibration and validation techniques include developing methods for low-light 

calibration and lunar calibration.

118 | FY 2016 AGENCY FINANCIAL REPORT

REQUIRED SUPPLEMENTARY STEWARDSHIP INFORMATION (UNAUDITED)
Other Information
SCHEDULE OF SPENDING (Unaudited)

T

he Combined Schedule of Spending by Major Budget Account (SOS) presents an overview of how and where the Department is spending 

(i.e., obligating) money for the fiscal year, on a budgetary basis, the same basis as the Combined Statement of Budgetary Resources

(SBR). The schedule includes amounts agreed to be spent during the fiscal year, how the money was spent, and who did the money go 

to. Total Resources reported on SOS agrees to Total Budgetary Resources reported on SBR; Less: Amounts Available but Not Agreed to be 

Spent reported on SOS agrees to the total of Unobligated Balance, End of Year, Apportioned, Expired Accounts and Unobligated Balance, End 

of Year, Exempt From Apportionment, Expired Accounts on SBR; Less: Amounts Not Available to be Spent reported on SOS agrees to the 

total of Unobligated Balance, End of Year, Unapportioned, Expired Accounts and Unobligated Balance, End of Year, Expired Accounts on SBR; 

and Total Amounts Agreed to be Spent reported on SOS agrees to New Obligations and Upward Adjustments reported on SBR.

The Combined Schedules of Spending by Major Budget Account for FY 2016 and FY 2015 are as follows:

United States Department of Commerce Combining Schedule of Spending by Major Budget Account

For the Year Ended September 30, 2016 (In Thousands)

Combined 

Total

Census 

Bureau 

Periodic 

Censuses and 

Programs

NIST 

Scientific and 

Technical 

Research and 

Services

NOAA

Operations, 

Research, and

Facilities

NOAA

Procurement,

Acquisition, 

and 

Construction

NTIA Digital 

Television 

Transition and 

Public Safety 

Fund

NTIA

Network 

Construction 

Fund

NTIA

Public Safety 

Trust Fund

USPTO

Salaries

and

Expenses

Other 

Budget 

Accounts

WHAT MONEY IS AVAILABLE TO SPEND?

Total Resources $ 24,976,685 $ 1,154,595 $ 725,824 $ 4,116,413 $ 2,582,340 $ – $ 6,690,370 $ 1,159,276 $ 3,607,845 $ 4,940,022

Less: Amounts Available but Not Agreed to be Spent (8,602,357) (17,069) (17,091) (244,421) (172,025) – (6,593,108) (146,169) (461,238) (951,236)

Less: Amounts Not Available to be Spent (914,476) (16,173) (4,726) (135,536) (92,528) – (2,107) (335,693) – (327,713)

TOTAL AMOUNTS AGREED TO BE SPENT $ 15,459,852 $ 1,121,353 $ 704,007 $ 3,736,456 $ 2,317,787 $ – $ 95,155 $ 677,414 $ 3,146,607 $ 3,661,073

HOW WAS THE MONEY SPENT?

Contracts $ 6,628,113 $ 442,255 $ 387,449 $ 1,306,660 $ 2,204,512 $ – $ 43,628 $ 3,637 $ 1,034,423 $ 1,205,549

Grants 1,474,777 – 78,208 750,519 47,000 – 26,812 – – 572,238

Loans and Guarantees 33,848 – – – – – – – – 33,848

Non-financial Assistance Direct Payments 5,951,024 296,444 238,336 1,675,950 65,194 – 24,714 9,377 2,108,759 1,532,250

Other 1,372,090 382,654 14 3,327 1,081 – 1 664,400 3,425 317,188

TOTAL AMOUNTS AGREED TO BE SPENT $ 15,459,852 $ 1,121,353 $ 704,007 $ 3,736,456 $ 2,317,787 $ – $ 95,155 $ 677,414 $ 3,146,607 $ 3,661,073

WHO DID THE MONEY GO TO?

Federal Government $ 5,986,238 $ 484,014 $ 291,061 $ 670,738 $ 1,825,360 $ – $ 43,182 $ 564,664 $ 679,307 $ 1,427,912

Non-federal 9,473,614 637,339 412,946 3,065,718 492,427 – 51,973 112,750 2,467,300 2,233,161

TOTAL AMOUNTS AGREED TO BE SPENT $ 15,459,852 $ 1,121,353 $ 704,007 $ 3,736,456 $ 2,317,787 $ – $ 95,155 $ 677,414 $ 3,146,607 $ 3,661,073

United States Department of Commerce Combining Schedule of Spending by Major Budget Account

For the Year Ended September 30, 2015 (In Thousands)

Combined 

Total

Census 

Bureau 

Periodic 

Censuses and 

Programs

NIST 

Scientific and 

Technical 

Research and 

Services

NOAA

Operations, 

Research, and

Facilities

NOAA

Procurement,

Acquisition, 

and 

Construction

NTIA Digital 

Television 

Transition and 

Public Safety 

Fund

NTIA

Network 

Construction 

Fund

NTIA

Public Safety 

Trust Fund

USPTO

Salaries

and

Expenses

Other 

Budget 

Accounts

WHAT MONEY IS AVAILABLE TO SPEND?

Total Resources $ 38,416,039 $ 938,901 $ 720,493 $ 3,967,503 $ 2,542,284 $ 8,798,108 $ 6,396,997 $ 6,789,763 $ 3,680,439 $ 4,581,551

Less: Amounts Available but Not Agreed to be Spent (8,043,572) (18,099) (19,308) (215,378) (37,889) – (6,321,995) (154,986) (504,285) (771,632)

Less: Amounts Not Available to be Spent (9,567,239) (92,429) (3,711) (149,153) (220,828) (8,798,108) – (2,272) (69) (300,669)

TOTAL AMOUNTS AGREED TO BE SPENT $ 20,805,228 $ 828,373 $ 697,474 $ 3,602,972 $ 2,283,567 $ – $ 75,002 $ 6,632,505 $ 3,176,085 $ 3,509,250

HOW WAS THE MONEY SPENT?

Contracts $ 6,480,053 $ 249,650 $ 378,126 $ 1,282,501 $ 2,189,799 $ – $ 62,767 $ 4,657 $ 1,151,420 $ 1,161,133

Grants 1,424,937 – 160,633 671,155 43,141 – – – – 550,008

Loans and Guarantees 84,207 – – – – – – – – 84,207

Non-financial Assistance Direct Payments 5,637,326 269,417 158,659 1,647,331 50,512 – 12,210 4,670 2,021,803 1,472,724

Other 7,178,705 309,306 56 1,985 115 – 25 6,623,178 2,862 241,178

TOTAL AMOUNTS AGREED TO BE SPENT $ 20,805,228 $ 828,373 $ 697,474 $ 3,602,972 $ 2,283,567 $ – $ 75,002 $ 6,632,505 $ 3,176,085 $ 3,509,250

WHO DID THE MONEY GO TO?

Federal Government $ 11,127,034 $ 404,992 $ 281,793 $ 642,036 $ 1,625,987 $ – $ 37,174 $ 6,507,661 $ 215,858 $ 1,411,533

Non-federal 9,678,194 423,381 415,681 2,960,936 657,580 – 37,828 124,844 2,960,227 2,097,717

TOTAL AMOUNTS AGREED TO BE SPENT $ 20,805,228 $ 828,373 $ 697,474 $ 3,602,972 $ 2,283,567 $ – $ 75,002 $ 6,632,505 $ 3,176,085 $ 3,509,250

120 | FY 2016 AGENCY FINANCIAL REPORT

SCHEDULE OF SPENDING (UNAUDITED)
1

OIG’s Top Management and Performance Challenges 

Facing the Department of Commerce in FY 2017

The Reports Consolidation Act of 2000 requires federal inspectors general to identify the top 

management challenges facing their departments. OIG’s Top Management Challenges Facing 

the Department of Commerce report for fiscal year (FY) 2017 is aligned with the Department’s 

FYs 2014–2018 Strategic Plan and identifies challenges that must be addressed to attain each of 

the plan’s strategic goals. Within each of the plan’s strategic goals, we discussed the challenges 

that we identified and briefly described the progress in addressing the challenges. The full report 

can be found at www.oig.doc.gov.

1. TRADE AND INVESTMENT: Expand the U.S. economy through increased exports 

and foreign direct investment that leads to more and better American jobs.

Departmental and bureau grants oversight. The Department and its bureaus with grant 

programs must consolidate the various Departmental grants management systems into 

one system. An additional challenge is identifying, hiring, and maintaining a qualified 

financial assistance workforce.

2. INNOVATION: Foster a more innovative U.S. economy—one that is better at 

inventing, improving, and commercializing products and technologies that lead to 

higher productivity and competitiveness.

• USPTO patent examinations. Despite the increase in both the number of patent 

examiners and spending on patent examination, USPTO still faces challenges in 

meeting its targets for patent processing time. In addition, USPTO continues to face 

challenges in enhancing patent quality and developing more effective quality metrics.

• USPTO information technology (IT) systems. For FY 2017, USPTO requested $595.6 

million from Congress for its IT portfolio. As stated in its 2014–2018 Strategic Plan, 

USPTO’s vision for the next 4 years includes plans to continue transforming its 

operations with next-generation technology and services. However, USPTO still 

needs to deploy a significant number of applications within the portfolios and, in the 

interim, must rely on more than 67 existing legacy systems to conduct day-to-day 

business.

• FirstNet network implementation. As FirstNet makes progress in acquisition 

activities, consultation, and internal control, challenges remain. FirstNet plans to 

award a contract for the development and management of a nationwide public safety 

broadband network (NPSBN) in November 2016. Also, NTIA issued $116.56 million 

in grant awards under the Middle Class Tax Relief and Job Creation Act of 2012’s 

State and Local Implementation Grant Program to promote—among each of the 56 

states and territories, as well as tribes and federal public safety entities—outreach, 

data collection, and planning for the NPSBN. In addition, various government and 

accounting reports have identified the need for FirstNet to strengthen its controls.

OIG SUMMARY ON TOP MANAGEMENT CHALLENGES

FY 2016 AGENCY FINANCIAL REPORT | 121

OIG SUMMARY ON TOP MANAGEMENT CHALLENGES
2

• Demand for radio frequency spectrum. Freeing up spectrum for high-speed 

broadband services remains a key challenge facing the Department. In June 2010, the 

President directed the Department, working through NTIA, to make 500 megahertz of 

federal and non-federal spectrum available by 2020 to support wireless broadband 

needs. As of June 2016, NTIA reported that it has made available almost half of the 

500 megahertz goal. NTIA continues to investigate opportunities to make additional 

spectrum available, while ensuring no loss of critical existing and planned federal, 

state, local, and tribal government capabilities.

3. ENVIRONMENT: Ensure communities and businesses have the necessary 

information, products, and services to prepare for and prosper in a changing 

environment.

• NOAA satellite acquisitions. The Department must manage risks associated with the 

acquisition and development of environmental satellite systems. Satellite integration 

and test problems caused NOAA to delay the Geostationary Operational 

Environmental Satellite-R Series (GOES-R) estimated launch date to November 

2016. If the launch date continues to be delayed, there will be increased risk of a 

potential gap in coverage. Also, in order for the Joint Polar Satellite System (JPSS) 

program to launch JPSS-1 by the end of the second quarter of FY 2017, it must 

investigate and correct a problem with a key instrument, as well as complete 

environmental and other final tests of the satellite and a major upgrade of the JPSS 

common ground system. 

• NOAA observational data processing. The ground system development problems that 

both GOES-R and JPSS-1 are addressing may necessitate the deferral of planned 

operational capabilities until after their launches. Management attention to postlaunch test activities is needed to ensure users’ needs are met—and inform a new 

Administration and Congress of data availability and its effect on forecasts. 

• NOAA National Marine Fisheries Service data. NOAA Fisheries must balance two 

competing interests: promoting commercial and recreational fishing while preserving 

populations of fish and other marine life. Developing conservation and management 

measures requires collecting, analyzing, and reporting demographic information 

about fish populations via stock assessments. NOAA continues to face challenges to 

ensuring timely and accurate stock assessments and providing what is often 

controversial consultation to its stakeholders.

4. DATA: Improve government, business, and community decisions and knowledge by 

transforming Department data capabilities and supporting a data-enabled economy.

• 2020 Census quality and cost. On October 1, 2015—after conducting FYs 2013, 

2014, and 2015 site tests—the Bureau released its 2020 Census Operational Plan, 

with a set of design decisions that drive how the 2020 Census will be conducted. The 

Bureau plans to conduct additional testing in order to refine the design. Its 2017 site 

test must be adequately planned and implemented to ensure critical information is 

obtained. In addition, audits continue to report deficiencies in the Bureau’s cost 

accounting practices, which will make it difficult for the bureau to demonstrate that 

cost savings were realized. Without complete cost information, it will be difficult for 

the Bureau to compute accurate estimates and actual costs for comparison with 

budget requests.

• Census enterprise data system. The Census Enterprise Data Collection and 

Processing System (CEDCaP) Program aims to integrate and standardize the 

Bureau’s systems in order to share data collection and processing across all censuses 

122 | FY 2016 AGENCY FINANCIAL REPORT

OIG SUMMARY ON TOP MANAGEMENT CHALLENGES
3

and surveys. Specifically, CEDCaP proposes to consolidate costs by retiring unique, 

survey-specific systems and redundant capabilities—a factor in the proposed redesign 

with a goal of realizing an estimated $5 billion in costs avoidance for the 2020 

decennial census. A challenge the Program faces is how to effectively integrate, test, 

and implement the architecture and systems to a level sufficient enough to support the 

2017 Census site test, the 2018 end-to-end decennial test, and the 2020 Census itself, 

all within a short timeframe.

• Departmental compliance with the Digital Accountability and Transparency Act of 

2014 (DATA Act). The DATA Act requires federal agencies to make available 

detailed information on their spending and use of federal funds and reporting it by 

specific categories, such as how much funding an agency receives from Congress and 

how much agencies spend on specific projects and awards. Due to the Department’s 

legacy information systems and need to use existing funding resources, providing 

reliable and consistent agency program information and meeting the goals of the 

DATA Act will be a significant challenge.

• Replacement for Commerce Business Systems (CBS). The lack of a centralized and 

integrated financial management system continues to create reporting and oversight 

challenges for the Department—including the ability to effectively report financial 

data and monitor financial activity across its operating units. The Department and 

most of its operating units’ continued reliance on CBS—with its limited functionality, 

high support costs, lack of system integration, and lack of centralized reporting 

capabilities—is an immediate high risk for the Department’s compliance with current 

and future reporting requirements such as the DATA Act.

5. OPERATIONAL EXCELLENCE: Strengthen the Department's capacity to achieve 

its objectives, maximize return on program investments, and deliver quality, timely 

service.

• Department-wide IT security issues. We continue to find deficiencies in the 

implementation of basic security measures, such as regularly identifying 

vulnerabilities, expeditiously remediating security flaws, and effectively managing 

access controls. As a result of these deficiencies, Department systems continued to 

face the significant risk of cyber attacks. Also, continuing the implementation of the 

enterprise security operations center and enterprise cybersecurity monitoring and 

operations is critical to providing timely cyber situational awareness across the 

Department. Accordingly, the Department needs to make the required management 

commitment and prioritize resources to fully implement these cybersecurity 

initiatives.

• The Department’s contracts and acquisitions. A government-wide initiative notes that 

excessive reliance on sole-source and cost-reimbursement contracts creates risk of 

waste, inefficiency, and misuse. Our work across the Department continues to 

identify that—without sound procurement practices and an effective acquisition 

structure in place—the risk of wasted government dollars increases. During FY 2015, 

the Department made significant gains in managing and strengthening the acquisition 

workforce but still faces related challenges.

• IT controls for financial data. The independent auditor of the Department’s annual 

financial statements reported general IT controls as a Department-wide significant 

deficiency in FYs 2012–2015. Specifically, the Department’s financial systems 

continue to have deficiencies in the areas of access controls, configuration 

management, and segregation of duties within their financial management system. In 

addition, a significant deficiency related to IT access and configuration management 

FY 2016 AGENCY FINANCIAL REPORT | 123

OIG SUMMARY ON TOP MANAGEMENT CHALLENGES
4

control weaknesses was identified in the USPTO’s annual financial statement audit in 

FY 2015. The Department and USPTO have ongoing efforts in place to implement 

corrective actions for the deficiencies identified.

• Department-wide culture of accountability. One major challenge is detecting and 

preventing time and attendance abuse, which OIG has investigated at several 

Departmental operating units. Another challenge involves the integrity of 

procurement processes: over the past 3 fiscal years, OIG conducted multiple 

investigations into allegations of abuse in contracting matters. In addition, in FY 

2016, OIG investigated alleged abuses related to official Department travel. These 

inquiries raised concerns about the Department’s compliance with governing laws 

and rules, particularly the Federal Travel Regulation and the Department’s travelrelated policies.

124 | FY 2016 AGENCY FINANCIAL REPORT

OIG SUMMARY ON TOP MANAGEMENT CHALLENGES
MEMORANDUM FOR: David Smith

Deputy Inspector General

FROM: Penny Pritzker

Secretary of Commerce

SUBJECT: OIG Report, Top Management and Performance Challenges Facing the 

Department of Commerce, OIG-16-049, September 30, 2016

Thank you for the Office of Inspector General’s analysis regarding the most serious

management and performance challenges facing the Department in Fiscal Year 2017.

We appreciate OIG’s efforts and value the insights and recommendations your office delivers each 

year about issues that have the potential to impact the effectiveness and efficiency of the 

Department’s programs and operations.

The Department remains committed to addressing continuing challenges, as well as new and 

emerging issues, as we work to achieve Commerce’s strategic objectives.

FY 2016 AGENCY FINANCIAL REPORT | 125

OIG SUMMARY ON TOP MANAGEMENT CHALLENGES
SUMMARY OF FINANCIAL STATEMENT AUDIT 

AND MANAGEMENT ASSURANCES

P

resented below is a summary of financial statement audit and management assurances for FY 2016. Table 1 relates 

to the Department’s FY 2016 financial statement audit, which resulted in an unmodified opinion with no material 

weakness. Table 2 presents the number of material weaknesses reported by the Department under Section 2 of 

the Federal Managers’ Financial Integrity Act (FMFIA)—either with regard to internal controls over operations or financial 

reporting, and Section 4, which relates to internal controls over financial management systems; as well as the Department’s 

compliance with the Federal Financial Management Improvement Act (FFMIA).

Table 1. Summary of Financial Statement Audit

● Audit Opinion: ● Unmodified

● Restatement: ● No

Material Weaknesses Beginning Balance New Resolved Consolidated Ending Balance

Total Material Weaknesses 0 0 0 0 0

Table 2. Summary of Management Assurances

EFFECTIVENESS OF INTERNAL CONTROL OVER FINANCIAL REPORTING (FMFIA § 2)

Statement of Assurance: Unmodified

Material Weaknesses Beginning Balance New Resolved Consolidated Reassessed Ending Balance

Total Material Weaknesses 0 0 0 0 0 0

EFFECTIVENESS OF INTERNAL CONTROL OVER OPERATIONS (FMFIA § 2)

Statement of Assurance: Unmodified

Material Weaknesses Beginning Balance New Resolved Consolidated Reassessed Ending Balance

Total Material Weaknesses 0 0 0 0 0 0

CONFORMANCE WITH FINANCIAL MANAGEMENT SYSTEM REQUIREMENTS (FMFIA § 4)

Statement of Assurance: Systems conform with financial management system requirements

Non-Conformances Beginning Balance New Resolved Consolidated Reassessed Ending Balance

Total Non-Conformances 0 0 0 0 0 0

COMPLIANCE WITH FFMIA

Agency Auditor

1. System Requirements No lack of substantial compliance noted No lack of substantial compliance noted

2. Accounting Standards No lack of substantial compliance noted No lack of substantial compliance noted

3. U.S. Standard General Ledger 

 at Transaction Level

 

 No lack of substantial compliance noted

 

 No lack of substantial compliance noted

126 | FY 2016 AGENCY FINANCIAL REPORT

SUMMARY OF FINANCIAL STATEMENT AUDIT AND MANAGEMENT ASSURANCES
IPIA of 2002, as amended by the Improper Payments Elimination and Recovery Act (IPERA) of 2010 and the Improper 

Payments Elimination and Recovery Improvement Act (IPERIA) of 2012, requires agencies to periodically review all programs 

and activities and identify those that may be susceptible to significant improper payments, take multiple actions when 

programs and activities are identified as susceptible to significant improper payments, and annually report information on 

their improper payments monitoring and minimization efforts. The Office of Management and Budget’s (OMB) Circular 

A-123, Management’s Responsibility for Internal Control, Appendix C, Requirements for Effective Measurement and 

Remediation of Improper Payments, defines an improper payment1 and provides guidance to agencies to comply with 

IPIA, as amended, and for agency improper payments efforts. The Department has not itself identified any programs or 

activities susceptible to significant improper payments.

On January 29, 2013, the President signed into law the Disaster Relief Appropriations Act (Act), which provides a total of 

$50.5 billion government-wide in aid for Hurricane Sandy disaster victims and their communities. The National Oceanic and 

Atmospheric Administration (NOAA) received $326 million of funds under the Act for Hurricane Sandy recovery and other 

disaster-related activities. Pursuant to OMB Memorandum M-13-07, Accountability for Funds Provided by the Disaster Relief 

Appropriations Act (March 12, 2013), the Department in March 2013 submitted its final plan for accountability, internal controls, 

and other requirements, for funds provided to NOAA that are deemed by OMB as susceptible to significant improper payments 

for the purposes of requirements under IPIA of 2002, as amended, and is required to calculate and report an annual improper 

payments estimate. The Department submitted to OMB in April 2016 a sampling methodology plan for FY 2015 disbursements 

made under the Act by NOAA. In May 2016, testing of FY 2015 disbursements was completed by an independent contractor. 

See section II., Statistical Sampling, for a brief discussion of the statistical sampling process performed, and see section III., 

Improper Payments Reporting for Funds Received by NOAA under Disaster Relief Appropriations Act, for the statistical 

sampling results of the FY 2015 disbursements testing.

The Department recognizes the importance of maintaining adequate internal controls to ensure proper payments, and the 

Department’s commitment to continuous improvement in the overall disbursement management process remains high. 

Each of the Department’s payment offices has implemented policies and procedures to detect and prevent improper 

payments. For FY 2017 and beyond, the Department will continue its efforts to ensure the integrity of its disbursements.

IMPROPER PAYMENTS INFORMATION ACT (IPIA) OF 2002,

AS AMENDED, REPORTING DETAILS

1 An improper payment is any payment that should not have been made or that was made in an incorrect amount under 

statutory, contractual, administrative, or other legally applicable requirements. Incorrect amounts are overpayments or 

underpayments that are made to eligible recipients (including inappropriate denials of payment or service, any payment that 

does not account for credit for applicable discounts, payments that are for an incorrect amount, and duplicate payments). An 

improper payment also includes any payment that was made to an ineligible recipient or for an ineligible good or service, or 

payments for goods or services not received (except for such payments authorized by law). In addition, when an agency’s 

review is unable to discern whether a payment was proper as a result of insufficient or lack of documentation, this payment 

must also be considered an improper payment. 

The term “payment” in this guidance means any disbursement or transfer of Federal funds (including a commitment for future 

payment, such as cash, securities, loans, loan guarantees, and insurance subsidies) to any non-Federal person, non-Federal 

entity, or Federal employee, that is made by a Federal agency, a Federal contractor, a Federal grantee, or a governmental or 

other organization administering a Federal program or activity. The term “payment” includes Federal awards subject to the 

Single Audit Act and the Uniform Guidance for Federal assistance (2 CFR 200 Subpart F) (Single Audits) that are expended by 

both recipients and sub-recipients. 

FY 2016 AGENCY FINANCIAL REPORT | 127

IMPROPER PAYMENTS INFORMATION ACT (IPIA) OF 2002, AS AMENDED, REPORTING DETAILS
I. Improper Payments Risk Assessments. All agencies must assess the improper payments risk level for each program 

that is not already reporting an improper payments estimate at least once every three years. (See OMB Circular 

A-123, Appendix C for additional guidance related to risk assessments). All programs that are assessed for risk in a 

given year should be listed in this section. In addition, clearly identify the risk-susceptible programs (i.e., programs 

that are susceptible to significant improper payments based on statutory thresholds listed in OMB Circular A-123, 

Appendix C, Part I.A.9., Step 2.) identified by the agency risk assessments performed in the fiscal year or required 

by OMB to be included (OMB may determine, on a case-by-case basis, that certain programs that do not meet 

the statutory threshold requirements may still be subject to the annual reporting requirements). For the newly 

identified risk-susceptible programs, indicate the fiscal year in which a rate and amount will be reported (per OMB 

Circular A-123, Appendix C, Part I.A.9., Step 2. footnote 8 this should be the fiscal year following the year in which 

the risk assessment was conducted). Agencies should briefly describe all of the risk assessment(s) performed in 

the fiscal year (the risk factors examined should be included in the description). Highlight any changes to the risk 

assessment methodology or results that occurred since the last Agency Financial Report (AFR) or Performance 

and Accountability Report (PAR).

The Department annually conducts an assessment of the effectiveness of internal control over financial reporting, in 

compliance with OMB Circular A-123. Furthermore, every three years, the assessment includes a review of internal controls 

over disbursement processes, including Department-wide sample testing of disbursements for improper payments and for 

appropriate internal control attributes. The most recent review performed indicated that internal controls over disbursement 

processes were sound.

Each of the Department’s bureaus/reporting entities periodically completes or updates, over a one to three-year period 

(depending on the size of the entity), improper payments risk assessments covering all of its programs/activities as required 

by OMB Circular A-123, Appendix C. These improper payments risk assessments of the entity’s programs/activities also 

incorporate improper payments risk assessments every three years of the control, procurement, and grants management 

environments. The program/activity improper payments risk assessments performed in 2016 and 2015 address the nine 

minimum improper payments risk factors set forth in OMB Circular A-123, Appendix C that should be addressed, which 

are: whether the program or activity reviewed is new to the agency; the complexity of the program or activity reviewed, 

particularly with respect to determining correct payment amounts; the volume of payments made annually; whether payments 

or payment eligibility decisions are made outside of the agency, for example, by a state or local government, or a regional 

federal office; recent major changes in program funding, authorities, practices, or procedures; the level, experience, and quality 

of training for personnel responsible for making program eligibility determinations or certifying that payments are accurate; 

the inherent risks of improper payments due to the nature of agency programs or operations; significant deficiencies in the 

audit reports of the agency including, but not limited to, the agency Inspector General or the U.S. General Accountability 

Office audit report findings, or other relevant management findings; and results from prior improper payment work.

An October 2014 update to OMB Circular A-123, Appendix C expanded the definition of improper payments to include payments 

to employees; and, accordingly, the programs/activities improper payments risk assessments performed in 2016 and 2015 

additionally addressed payments to employees to the extent they were not already addressed.

The following table presents a summary of the Department’s program/activity improper payments risk assessments performed 

in FY 2016; none of these improper payments risk assessments performed (or performed in prior fiscal years) revealed any 

programs or activities considered susceptible to significant improper payments. 

128 | FY 2016 AGENCY FINANCIAL REPORT

IMPROPER PAYMENTS INFORMATION ACT (IPIA) OF 2002, AS AMENDED, REPORTING DETAILS
SUMMARY OF PROGRAMS/ACTIVITIES FOR WHICH IMPROPER PAYMENTS RISK ASSESSMENTS WERE PERFORMED IN FY 2016

Program/Activity

FY 2016 

Improper 

Payments 

Below 

Statutory 

Thresholds?

Considered 

Susceptible 

to Significant 

Improper 

Payments?

Census Bureau

Census of Governments Yes No 

Current Demographic Statistics Yes No 

Current Economic Statistics Yes No 

Decennial Census Yes No 

Demographic Surveys Sample Redesign Yes No 

Economic Census Yes No 

Intercensal Demographic Estimates Yes No 

State Children’s Health Insurance Program Yes No 

Survey of Program Dynamics Yes No 

International Trade Administration

Global Markets Yes No 

National Institute of Standards and Technology

Guest Researcher Expenditures Yes No 

Purchase Orders Yes No 

National Oceanic and Atmospheric Administration

Purchase Orders and Contracts Yes No 

National Telecommunications and Information Administration

Broadband Technology Opportunities Program Yes No 

Telecommunications and Information Policy Development and Management, Spectrum Management Yes No 

National Technical Information Service

Collect and Disseminate Technical Information – Clearinghouse Program Yes No 

FY 2016 AGENCY FINANCIAL REPORT | 129

IMPROPER PAYMENTS INFORMATION ACT (IPIA) OF 2002, AS AMENDED, REPORTING DETAILS
II. Sampling and Estimation. Any agency that has programs or activities that are susceptible to significant improper 

payments based on statutory thresholds listed in OMB Circular A-123, Appendix C, Part I.A.9., Step 1. and are reporting 

an improper payments rate under section III. below shall briefly describe the statistical sampling process conducted 

to estimate the improper payments rate for each program identified as being susceptible to significant improper 

payments. Agencies that were granted OMB approval to use an alternative sampling and estimation methodology 

must also include the justification for using the alternative methodology (i.e., explain why the agency was not able 

to follow the requirements in OMB Circular A-123, Appendix C, Part I.A.9., Step 2.). In addition, briefly highlight any 

changes to any sampling and estimation plans that have occurred since the last Agency Financial Report or Performance 

and Accountability Report. If an agency would like to provide more detailed information about its risk assessment or 

statistical sampling process, please post this information on the agency website and provide a link to this website in 

the AFR or PAR (e.g., “Additional information about the Department of ABC’s statistical sampling process can be found 

at www.abc.gov/improperpayments/statisticalsampling”).

As previously discussed, an independent contractor performed statistical sampling of FY 2015 NOAA disbursements of funds 

received under the Disaster Relief Appropriations Act, in order to yield a statistically valid improper payments estimate, as 

required by OMB Circular A-123, Appendix C. The independent contractor obtained the population of FY 2015 disbursements, 

excluding disbursements within the federal government, and determined a pilot (that later could be expanded if necessary) 

single-stage stratified random sample using the absolute value of the disbursement amount to define the stratum dollar ranges. 

Stratified samples are highly efficient designs that allow confidence and precision levels to be reached with smaller samples 

when compared to simple random sampling. A single certainty or take-all stratum was defined for disbursement amounts that 

were large relative to the rest of the population, to help ensure that large amounts would be covered in the sample review, as 

well as to help improve the precision of the statistical estimates at the time of estimation. The remaining disbursements were 

stratified into similar groups, or strata, based upon absolute disbursement amounts. The non-certainty stratum dollar ranges 

were initially determined to approximately equalize the population size multiplied by the estimated standard error within each 

stratum and then were slightly modified to improve efficiency. The independent contractor tested each sample item selected 

for improper payments—see section III., Improper Payments Reporting for Funds Received by NOAA under Disaster Relief 

Appropriations Act, for a discussion of the statistical sampling results of the FY 2015 disbursements testing—and determined 

that the pilot sample did not need to be expanded.

III. Improper Payments Reporting for Funds Received by NOAA under Disaster Relief Appropriations Act. 

The table that follows is required for each agency that has programs and activities reporting under OMB Circular 

A-123 Appendix C, Part I.A.9., Step 2. or Part I.A.14., or for programs that OMB has automatically deemed susceptible 

to significant improper payments (please see footnote 8 under Part I.A.9., Step 2. for reporting timing expectations) 

regardless of whether the program or activity has improper payments exceeding the statutory thresholds listed in 

OMB Circular A-123 Appendix C Part I.A.9., Step 1. Where no measurement is provided, the agency should indicate the 

date by which a measurement is expected and add a note to explain why there was no measurement. If the current 

year is the baseline measurement year, and there is no previous year information to report, indicate by either note 

or by “N/A” in the Prior Year column. If any of the dollar amount(s) included in the estimate correspond to newly 

established measurement components in addition to previously established measurement components, separate the 

two amounts to the extent possible. Agencies are expected to report on current year activity, and if not feasible, then 

prior year activity is acceptable if approved by OMB. (Agencies should clearly indicate [such as with a note] when the 

current year is different from the fiscal year covered by the AFR/PAR. Agencies should include future year outlay and 

improper payments estimates for Current Year +1, Current Year +2, and Current Year +3. Future year outlay estimates 

should be derived from the most recent available source corresponding with Current Year +1, Current Year +2, and Current 

Year +3. For example, future year outlay estimates should match the outlay estimates for those years as reported 

in the most recent President’s Budget when the current year activity timeframe matches the fiscal year covered by 

130 | FY 2016 AGENCY FINANCIAL REPORT

IMPROPER PAYMENTS INFORMATION ACT (IPIA) OF 2002, AS AMENDED, REPORTING DETAILS
the AFR/PAR. If the Current Year +1, Current Year +2, and Current Year +3 outlay estimates do not match the President’s 

most recent budget then agencies should clearly indicate [such as a note] its source and methodology for determining 

future year outlay estimates. Activity for improper payments reporting in the table is defined as the time frame of the 

payments tested. Reduction targets for out years must be lower than current year improper payments percentages 

as is implied by the word ‘reduction,’ unless otherwise approved by OMB. If an agency establishes a reduction target 

that does not decrease (e.g., a target that is constant or increasing), the reason(s) for establishing such a target must 

be clearly explained in a footnote to the table (a constant reduction target at zero percent does not require a footnote). 

As previously discussed, an independent contractor performed statistical sampling of FY 2015 NOAA disbursements of funds 

received under the Disaster Relief Appropriations Act, in order to yield a statistically valid improper payments estimate as required 

by OMB Circular A-123, Appendix C. The independent contractor and NOAA determined that of the sample items tested for 

improper payments, which amounted to $35.0 million, there was a statistically valid estimate of improper payments (overpayments) 

of $51 thousand for NOAA FY 2015 disbursements of funds received under the Disaster Relief Appropriations Act, given a 

90 percent confidence level and 2.5 percent precision.

The following table is reported with regard to the funds received by NOAA under the Disaster Relief Appropriations Act. Statistical 

sampling of a fiscal year’s disbursements to arrive at a statistically valid estimate of improper payments for that fiscal year is 

performed by an independent contractor in the following calendar year. Statistical sampling of FY 2015 (referred to as Current 

Year in below table) NOAA disbursements of funds received under the Disaster Relief Appropriations was completed in May 2016 

as previously discussed.

IMPROPER PAYMENTS (IP) REDUCTION OUTLOOK FOR FUNDS RECEIVED BY NOAA UNDER THE DISASTER RELIEF APPROPRIATIONS ACT

(Dollars in Millions)

Activity

Prior

Year

(FY 2014)

Outlays,

Gross

Prior

Year

(FY 2014)

IP

Percent

Prior

Year

(FY 2014)

IP

Current 

Year

(FY 2015)

Outlays,

Gross

Current 

Year

(FY 2015)

IP

Percent

Current 

Year

(FY 2015)

IP

Current 

Year

(FY 2015)

Overpayments

Current 

Year

(FY 2015)

Underpayments

Funds Received by NOAA under Disaster 

Relief Appropriations Act $ 80.77 0.00% $ – $ 101.17 0.05% $ 0.0511 $ 0.0511 $ –1

(continued)

Activity

Estimated 

Current 

Year + 1

(FY 2016)

Outlays,

Gross

Estimated 

Current 

Year + 1

(FY 2016)

IP

Percent

Estimated 

Current 

Year + 1

(FY 2016)

IP

Estimated 

Current 

Year + 1

(FY 2016)

Overpayments

Estimated 

Current 

Year + 1

(FY 2016)

Underpayments

Estimated 

Current 

Year + 2

(FY 2017)

Outlays,

Gross

Estimated 

Current 

Year + 2

(FY 2017)

IP

Percent

Estimated 

Current 

Year + 2

(FY 2017)

IP

Estimated 

Current 

Year + 3

(FY 2018)

Outlays,

Gross

Estimated 

Current 

Year + 3

(FY 2018)

IP

Percent

Estimated 

Current 

Year + 3

(FY 2018)

IP

Funds Received 

by NOAA under 

Disaster Relief 

Appropriations Act $ 56.35 0.00% $ – $ – $ – $ 32.50 0.00% $ – $ 3.50 0.00% $ –

1 Statistically valid estimate of improper payments (overpayments) of $51 thousand for FY 2015 disbursements.

The source of the Outlays, Gross dollar amounts is NOAA, based on data gathering and estimation techniques, as the Outlays, 

Gross cannot be obtained from the President’s Budget. 

FY 2016 AGENCY FINANCIAL REPORT | 131

IMPROPER PAYMENTS INFORMATION ACT (IPIA) OF 2002, AS AMENDED, REPORTING DETAILS
High-Priority Programs: For high-priority programs, agencies shall provide a basic summary discussing the 

supplemental measures, the frequency of each supplemental measurement (i.e., how often will the area be measured 

and reported on PaymentAccuracy.gov), the measurement baseline, a discussion of how information from this 

measurement will help the program reduce improper payments, and the actual (or planned) targets, including any 

reasons for meeting, exceeding, or failing to meet the supplemental targets.

The Department does not have any programs/activities that OMB has determined to be a “high-priority” program with 

regard to improper payments under Executive Order 13520, Reducing Improper Payments and Eliminating Waste in Federal 

Programs (November 23, 2009).

IV. Improper Payment Root Cause Categories. The table that follows is required for each agency that has programs 

and activities reporting under OMB Circular A-123, Appendix C, Part I.A.9., Step 2. or Part I.A.14. regardless of whether 

the program or activity has improper payments exceeding the statutory thresholds listed in OMB Circular A-123, 

Appendix C, Part I.A.9., Step 1. The matrix cells shall be filled out with dollar amounts with a separate program 

column for each program that has been deemed susceptible to significant improper payments and is reporting an 

improper payments estimate. In the matrix, columns A and B include two categories based on the type of improper 

payments (i.e., overpayments and underpayments), and the rows include categories for the causes of the improper 

payments. Each program shall distribute its estimate of improper payments (which is based on dollars, as opposed 

to number of occurrences or percentages) across the cells in the matrix for each program—with the understanding, 

of course, that not every cell will apply to every program. Agencies may create sub-categories under the categories 

provided by OMB in the matrix template above if an agency is able to break any of the provided categories down 

into more detail. Please see OMB Circular A-123, Appendix C, Part I.C.1. for more detailed information related to 

completing the matrix.

IMPROPER PAYMENT ROOT CAUSE CATEGORY MATRIX FOR FUNDS RECEIVED BY NOAA UNDER THE DISASTER RELIEF 

APPROPRIATIONS ACT FOR CURRENT YEAR (FY 2015) IMPROPER PAYMENTS

(In Millions)

Reason for Improper Payments

Funds Received by NOAA under 

Disaster Relief Appropriations Act

Overpayments Underpayments Total Improper Payments 

Program Design or Structural Issue $ – $ – $ –

Inability to Authenticate Eligibility – – –

Failure to Verify: Death Data – – –

Financial Data – – –

Excluded Party Data – – –

Prisoner Data – – –

Other Eligibility Data (explain) – – –

Administrative 

or Process Error 

Made by:

Federal Agency 0.051 – 0.051

State or Local Agency – – –

Other Party (e.g., participating lender, health care 

provider, or any other organization administering 

federal dollars)

– – –

Medical Necessity – – –

Insufficient Documentation to Determine – –

Total $ 0.051 $ – $ 0.051

132 | FY 2016 AGENCY FINANCIAL REPORT

IMPROPER PAYMENTS INFORMATION ACT (IPIA) OF 2002, AS AMENDED, REPORTING DETAILS
V. Improper Payment Corrective Actions. For all programs and activities as determined under OMB Circular 

A-123, Appendix C, Part I.A.9., Step 2. with improper payments exceeding the statutory thresholds listed in OMB 

Circular A-123, Appendix C, Part I.A.9.,Step 1., agencies shall identify the reasons their programs and activities are 

susceptible to significant improper payments and put in place a corrective action plan to reduce them. The agency 

shall describe the corrective action plans for: 

a. Reducing the estimated improper payments rate and amount for each type of root cause identified in the table 

categories matrix reported in section IV. The corrective actions should be linked to the root cause(s) they are 

addressing from the matrix reported in this section. Each root cause must have at least one corrective action. 

If the agency does not have a corrective action for a particular root cause they must clearly describe why no 

corrective action exists. This discussion must include the corrective action(s), taken or planned, most likely 

to significantly reduce future improper payments due to each type of error an agency identifies, the planned 

or actual completion date of these actions, and the results of the actions taken to address these root causes. 

If efforts are ongoing, it is appropriate to include that information in this section, and to highlight current 

efforts, including key milestones.

b. High-priority Programs: IPERIA requires agencies to tailor their corrective actions for high-priority programs. 

Therefore, any agency that has any programs identified as high-priority shall explain how it has specifically 

tailored its corrective actions for high-priority programs to better reflect the unique processes, procedures, 

and risks involved in each specific high-priority program. IPERIA also requires each agency that has any 

programs identified as high-priority to report: any action the agency has taken—or plans to take—to recover 

improper payments; and any action the agency intends to take to prevent future improper payments. 

The Department does not have any programs/activities that have improper payments exceeding the statutory thresholds 

listed in OMB Circular A-123, Appendix C, Part I.A.9., Step 1., which are defined as gross annual improper payments 

(i.e., the total amount of overpayments and underpayments) in the program exceeding (1) both 1.5 percent of program outlays 

and $10 million of all program or activity payments made during the fiscal year reported; or (2) $100 million (regardless of 

the improper payments percentage of total program outlays).

While the Department does not have a current need for corrective actions plans for improper payments for risk-susceptible 

programs/activities, the Department has continuous processes in place and actively works with each of the Department’s 

payment offices to identify and implement additional procedures to prevent and detect improper payments. In FY 2016, 

the Department continued with the bureaus’ quarterly reporting of improper payments, and payment recaptures data, to 

the Department’s Deputy Chief Financial Officer (CFO) and Director for Financial Management, along with identifying the 

nature of larger improper payments and identifying any necessary control enhancements. The Department has additionally 

reviewed all financial statement audit findings/comments and results of any other payment reviews for indications of 

breaches of disbursement controls. None of these audit findings/comments or reviews have uncovered any significant 

problems with the internal controls that surround disbursements.

VI. Internal Control over Payments. The table that follows is required for each agency that has programs and activities 

as determined under OMB Circular A-123, Appendix C, Part I.A.9.,Step 2. with improper payments exceeding the 

statutory thresholds listed in OMB Circular A-123, Appendix C, Part I.A.9., Step 1. Agencies shall briefly summarize 

the status of internal control over payments using: (1) a single narrative explaining efforts undertaken to provide 

reasonable assurance that internal controls over payments are in place and operating effectively; and (2) a table 

illustrated below. The primary purpose of the summary is to provide a thoughtful analysis linking agency efforts 

in establishing internal controls and reducing improper payments rates. Agencies do not need to create a separate 

narrative for each program they are addressing in this section; rather, the agency may report using one narrative that 

encompasses the information for all of the programs reporting under the requirements of this section. Agencies 

FY 2016 AGENCY FINANCIAL REPORT | 133

IMPROPER PAYMENTS INFORMATION ACT (IPIA) OF 2002, AS AMENDED, REPORTING DETAILS
should leverage existing internal control plans and at a minimum should address the internal control standards 

provided in OMB Circular A-123, Appendix C, Part II.C.2. An illustrative example for the table is provided. The 

programs listed at the top of each column would be the programs susceptible to significant improper payments, 

under OMB Circular A-123, Appendix C, Part I.A.9., Step 1. that are currently reporting improper payments.

The Department does not have any programs/activities that have improper payments exceeding the statutory thresholds 

listed in OMB Circular A-123, Appendix C, Part I.A.9., Step 1., which are defined as gross annual improper payments (i.e., 

the total amount of overpayments and underpayments) in the program exceeding (1) both 1.5 percent of program outlays 

and $10 million of all program or activity payments made during the fiscal year reported; or (2) $100 million (regardless of 

the improper payments percentage of total program outlays).

The Department annually conducts an assessment of the effectiveness of internal control over financial reporting, in 

compliance with OMB Circular A-123. Furthermore, every three years, the assessment includes a review of internal controls 

over disbursement processes, including Department-wide sample testing of disbursements for improper payments and for 

appropriate internal control attributes. The most recent review performed indicated that internal controls over disbursement 

processes were sound.

As described in section I., Improper Payments Risk Assessments, none of the improper payments risk assessments performed 

from November 16, 2015 through November 15, 2016 or in prior years have revealed programs or activities considered 

susceptible to significant improper payments.

VII. Accountability. For all programs and activities as determined under OMB Circular A-123, Appendix C, Part I.A.9., 

Step 2. with improper payments exceeding the statutory thresholds listed in OMB Circular A-123, Appendix C, 

Part I.A.9., Step 1., agencies shall describe the steps the agency has taken and plans to take (including timeline) 

to ensure that agency managers, accountable officers (including the agency head), programs, and states and 

localities (where appropriate) are held accountable for reducing and recapturing improper payments. Specifically, 

they should be held accountable for meeting applicable improper payments reduction targets and establishing and 

maintaining sufficient internal controls (including an appropriate control environment) that effectively prevents 

improper payments from being made and promptly detects and recaptures any improper payments that are made.

The Department does not have any programs/activities that have improper payments exceeding the statutory thresholds 

listed in OMB Circular A-123, Appendix C, Part I.A.9., Step 1., which are defined as gross annual improper payments 

(i.e., the total amount of overpayments and underpayments) in the program exceeding (1) both 1.5 percent of program outlays 

and $10 million of all program or activity payments made during the fiscal year reported; or (2) $100 million (regardless of 

the improper payments percentage of total program outlays).

The Department recognizes the importance of maintaining adequate internal controls to ensure proper payments, and its 

commitment to continuous improvement in disbursement management processes remains very strong. The Department’s 

CFO and Assistant Secretary for Administration has responsibility for establishing policies and procedures for assessing 

Departmental and program risks of improper payments, taking actions to reduce improper payments, and reporting the 

results of the actions to Departmental Management (DM) for oversight and other actions as deemed appropriate. The CFO 

and Assistant Secretary for Administration has designated the Deputy CFO and Director for Financial Management to oversee 

initiatives related to reducing improper payments within the Department, and to work closely with the bureau CFOs in this area.

In FY 2016, the Department continued its reporting procedures that required quarterly reporting to the Department by its 

bureaus on any improper payments, identifying the nature and magnitude of any improper payments along with any necessary 

control enhancements to prevent further occurrences of the types of improper payments identified. The Department’s 

134 | FY 2016 AGENCY FINANCIAL REPORT

IMPROPER PAYMENTS INFORMATION ACT (IPIA) OF 2002, AS AMENDED, REPORTING DETAILS
analysis of the data collected from the bureaus shows that Department-wide improper payments were at or below two-tenths 

of one percent in FY 2016 and FY 2015. The bureau CFOs are accountable for internal controls over improper payments; 

and, for monitoring, minimizing, and recapturing improper payments, and implementing corrective actions as appropriate.

For FY 2017 and beyond, the Department will continue its efforts to ensure the integrity of its disbursements.

VIII. Agency Information Systems and Other Infrastructure.

a. For all programs and activities as determined under OMB Circular A-123, Appendix C, Part I.A.9., Step 2., with 

improper payments exceeding the statutory thresholds listed in OMB Circular A-123, Appendix C, Part I.A.9., 

Step 1., agencies shall describe whether the agency has the internal controls, human capital, and information 

systems and other infrastructure it needs to reduce improper payments to the levels the agency has targeted.

b. If the agency does not have such internal controls, human capital, and information systems and other 

infrastructure, describe the resources the agency requested in its most recent budget submission to Congress 

to establish and maintain the necessary internal controls, human capital, and information systems and other 

infrastructure.

The Department does not have any programs/activities that have improper payments exceeding the statutory thresholds 

listed in OMB Circular A-123, Appendix C, Part I.A.9., Step 1., which are defined as gross annual improper payments (i.e., 

the total amount of overpayments and underpayments) in the program exceeding (1) both 1.5 percent of program outlays 

and $10 million of all program or activity payments made during the fiscal year reported; or (2) $100 million (regardless of 

the improper payments percentage of total program outlays).

The Department has ensured that sound internal controls, manual, as well as financial systems, relating to payments are 

in place throughout the Department, and has reviewed all financial statement audit findings/comments and results of any 

other payment reviews for indications of breaches of disbursement controls. None of these audit findings/comments or 

reviews have uncovered any significant problems with the internal controls that surround disbursements.

IX. Barriers. For all programs and activities as determined under OMB Circular A-123, Appendix C, Part I.A.9., Step 2. 

with improper payments exceeding the statutory thresholds listed in OMB Circular A-123, Appendix C, Part I.A.9., 

Step 1., agencies shall describe any statutory or regulatory barriers, which may limit the agency’s corrective actions 

in reducing improper payments and actions taken by the agency to mitigate the barriers’ effects.

The Department does not have any programs/activities that have improper payments exceeding the statutory thresholds 

listed in OMB Circular A-123, Appendix C, Part I.A.9., Step 1., which are defined as gross annual improper payments 

(i.e., the total amount of overpayments and underpayments) in the program exceeding (1) both 1.5 percent of program outlays 

and $10 million of all program or activity payments made during the fiscal year reported; or (2) $100 million (regardless of 

the improper payments percentage of total program outlays).

The Department has not identified any significant barriers that limit actions to reduce improper payments.

X. Overpayments Identified in FY 2016 and FY 2016 Recaptures of Overpayments. 

a. Payment Recapture Audits Narrative. See OMB Circular A-123, Appendix C, Part I.D. for more information about 

payment recapture audits. All programs and activities that expend $1 million or more annually—including 

FY 2016 AGENCY FINANCIAL REPORT | 135

IMPROPER PAYMENTS INFORMATION ACT (IPIA) OF 2002, AS AMENDED, REPORTING DETAILS
grants, benefits, loans, and contracts programs—shall be considered for payment recapture audits. An agency 

shall discuss payment recapture audit efforts, if applicable. The discussion should describe: 

i. The agency’s payment recapture audit program; 

ii. The actions and methods used by the agency to recoup overpayments; 

iii. A justification of any overpayments that have been determined not to be collectable; 

iv. Any actions the agency has taken during the current fiscal year or intends to take in future fiscal years to 

recapture and/or prevent improper payments; 

v. A list of all agency recapture audit contract programs; and 

vi. Any conditions giving rise to improper payments and how those conditions are being resolved 

(e.g., the business process changes and internal controls instituted and/or strengthened to prevent 

further occurrences). 

b. Programs Excluded from the Payment Recapture Audit Program. If the agency has excluded any programs 

or activities from review under its payment recapture audit program (including any programs or activities 

where the agency has determined a payment recapture audit program is not cost-effective), the agency must:

● List all of the programs and activities where it has been determined conducting a payment recapture audit 

program would not be cost-effective (whether determination occurred in the current year or in a prior year); 

● Indicate when OMB was notified (month and year) that it was not cost effective to conduct a payment 

recapture audit and the program would be excluded from a payment recapture audit program; and 

● Provide the justification and a summary of the analysis that is used to determine that conducting a 

payment recapture audit program for the program or activity was not cost effective (i.e., a discussion of 

the analysis conducted to determine that a payment recapture audit program would not be cost-effective). 

In conformity with IPIA, as amended, the Department has been performing, since 2005, annual payment recapture audits of 

closed contracts/obligations for many of the Department’s bureaus/reporting entities on a rotational basis. In recent years, 

these payment recapture audits have been performed by an independent contractor; however, in the past, these payment 

recapture audits have also been conducted by the Department’s Office of Financial Management. Effective 2012, the scope 

of payment recapture audits of contracts/obligations was expanded to additionally include contracts/obligations for which the 

period of performance ended and last payment was made, however for which the closeout process has not yet been completed.

Annual payment recapture auditing is additionally performed by an independent contractor, effective 2011, for Department-wide 

grants and other cooperative agreements (i.e., financial assistance). Per OMB Circular A-123, Appendix C, intragovernmental 

transactions are not required to be reviewed.

In May 2011, the Department completed an evaluation of possible additional categories of disbursements for which payment 

recapture auditing could be performed, if cost-effective, as discussed below, held a meeting with OMB to discuss the 

Department’s evaluation, and provided the written summary of the evaluation to OMB. 

The Department’s evaluation of payroll disbursements in May 2011 determined that it would likely not be cost-effective to 

perform payment recapture auditing for payroll disbursements. Payroll-administration services are primarily provided to the 

Department by the U.S. Department of Agriculture’s National Finance Center (NFC). Based on the Department’s review of 

available risk assessments and audits/reviews, at that time, the Department’s payroll processes were rated at a low risk 

and only had a few minor audit and review findings. Further, no significant payroll improper payments had been identified 

136 | FY 2016 AGENCY FINANCIAL REPORT

IMPROPER PAYMENTS INFORMATION ACT (IPIA) OF 2002, AS AMENDED, REPORTING DETAILS
by the bureaus. The latest audit report at that time regarding the adequacy of the internal controls of NFC as a servicing 

organization revealed no significant issues. The Department will reevaluate, in 2017, whether payment recapture auditing 

should be performed, if considered cost-effective, for payroll and other payments to employees. 

With regard to loan disbursements, NOAA is currently the only bureau with loan disbursements. As part of NOAA’s 

internally-conducted reviews and testing processes, NOAA loan disbursements are significantly tested every three years 

for both internal controls and improper payments, and the disbursement testing for improper payments is considered to 

be essentially equivalent to a payment recapture audit. Regarding the NOAA Corps Retirement System and the NOAA 

Corps Health Benefits benefit programs, these programs are cross-serviced for disbursements by the U.S. Department of 

Defense; and, therefore, are not subject to payment recapture auditing by the Department.

For payment recapture audits, the independent contractor analyzes the reasons why any payment errors occurred, and 

develops, presents, and documents any recommendations for cost-effective controls to prevent improper payments in the 

future and/or to enhance the applicable bureau processes.

A primary type of improper payment that the Department’s applicable bureaus experience is the improper drawdown(s) 

(i.e., payment(s) to recipient) of funds by a recipient against a Departmental grant or cooperative agreement award in the 

Automated Standard Application for Payments (ASAP). ASAP is a secure, Web-based, all electronic payment and information 

application operated by the U.S. Department of the Treasury (Treasury) that allows recipients to drawdown funds from 

accounts preauthorized by federal agencies. A recipient can normally drawdown on its authorized funds with little or no 

oversight by the Department prior to drawdown if the drawdown is in accordance with the conditions of the grant/cooperative 

agreement. Since these drawdowns are at the discretion of the recipient, it is difficult for the Department to control an 

improper drawdown(s) by a recipient. The recipient, however, will often report the overpayment to the Department and 

promptly return the funds to the Department via ASAP. When a recipient establishes a history of improper drawdowns 

against its awards, or for several other valid reasons, bureau financial assistance personnel can place the recipient on 

“Agency Review” within ASAP to help prevent future improper payments.

A standard procedure is for bureau financial assistance personnel to review recipients’ periodic Standard Form (SF) 425, 

Federal Financial Report, submissions to the Department, and when an overpayment is discovered, the recipient is promptly 

notified and requested to return the overpayment to the Department via ASAP. These bureaus now require that project 

officers sign and date progress reports after review, and place the signed documents in the grant files. In-house training, 

furthermore, is being provided to bureau financial assistance personnel on performing comprehensive reviews of the SF 425 

submissions from recipients. To ensure that proper review and approval procedures are being followed, bureaus have 

established a peer-to-peer review process where financial assistance specialists review their partners’ financial assistance 

files. The results of these reviews are shared and discussed with other bureau financial assistance specialists. Bureaus’ 

supervisory staff are conducting desk audits of financial assistance specialists to ensure that procedures are followed in a 

timely manner. Bureaus also schedule periodic audits or reviews of financial assistance files to ensure that all procedures 

are being followed. Bureau financial assistance offices continue to make considerable investments in vendor-provided 

training certification programs for their financial assistance personnel on the full range of federal financial assistance policy, 

including technical requirements such as the preparation of SF 425s. 

Overpayments can also be recaptured from recipients via other methods if recapture via ASAP is not appropriate. Improper 

payments for grants/cooperative agreements are also detected during post-award closeout procedures and similar action 

is taken to recapture an overpayment from a recipient.

Two additional primary types of improper payments are (a) improper payments determined resulting from an audit, review, 

or investigation by the Department’s Office of Inspector General; and (b) improper payments determined resulting from an 

audit of a federal grant/cooperative agreement award under the Single Audit Act of 1984, as amended. It is often difficult 

FY 2016 AGENCY FINANCIAL REPORT | 137

IMPROPER PAYMENTS INFORMATION ACT (IPIA) OF 2002, AS AMENDED, REPORTING DETAILS
or not possible for the Department to identify, prior to payment, the types of improper payments that are identified in these 

audits, reviews, or investigations. One bureau financial assistance office’s efforts to help prevent incorrect overhead rates 

being billed by a grant/cooperative agreement recipient include (a) overhead rates are reviewed through the review of a 

recipient’s approved Negotiated Indirect Cost Rate Agreements and line item budget); and (b) overhead costs will not be 

allowable costs against an award unless permitted under the award, and specifically included as a line item in the award’s 

approved budget. Furthermore, at the time of award closeout, a final comprehensive SF 425 must be submitted by the 

recipient within 90 days after award expiration. If overhead costs were included as a line item in the award’s approved 

budget, the SF 425 must include the cumulative total of overhead costs charged to the award. This SF 425 requires the 

review and approval of the bureau’s financial assistance office. This bureau’s financial assistance office has also taken 

steps to help ensure recipients do not overdraw their awards. Award funds are monitored through the review of interim 

Federal Financial Cash Flow Reports to ensure that (a) recipients are expending funds at an appropriate rate; (b) federal 

disbursements are comparable with the period covered by requests for payment; (c) reports submitted by the recipient 

agree with the bureau’s accounting records for payments made; and (d) recipients are not maintaining excess cash on 

hand. The financial assistance office, monthly, furthermore obtains a cash flow tracking report, which serves as an internal 

control for monitoring recipients’ cash on-hand balances. 

One bureau finance office has indicated an additional identifiable reason for improper payments to vendors is a lack of 

resources that can sometimes lead to short staffing in the accounts payable processing operations, resulting in, due to 

heavy workload for individual technicians, data entry or other types of errors that result in improper payments. In response 

to this condition, the bureau is hiring additional accounts payable staff, and providing periodic training to staff to address 

errors that have been made.

For an identified overpayment that is not promptly recaptured, the Department’s policy is to establish a receivable for 

the overpayment and the Department then pursues the overpayment through the Department’s normal debt collection 

management process. See the Receivables With the Public and Debt Collection Management subsection of the Financial 

Management and Analysis subsection of Management’s Discussion and Analysis for more information on the Department’s 

debt collection management process for receivables from the public.

Payment recapture audits of contracts/obligations were completed in May 2016 by an independent contractor for the 

Bureau of Industry and Security (BIS), and the National Technical Information Service (NTIS). Contracts/obligations greater 

than $100 thousand which were closed out, or for which the period of performance ended and last payment was made 

but for which the closeout process had not yet been completed after April 1, 2014 and through March 31, 2015, were 

reviewed. Intragovernmental transactions and payments to employees were excluded from review as discussed above. 

Travel payments, bankcards/purchase cards, government bills of lading, and gifts and bequests were also excluded from 

review. The Department determined that, for these categories of transactions, the Department’s costs for the payment 

recapture audit activities would likely exceed the benefits of payment recapture audits. As part of the payment recapture 

audits, vendor inquiries were performed for a sample of vendors to determine if the reporting entities had any open credits 

or debts with those vendors. Of the $1.3 million reviewed for improper payments, overpayments of $122 thousand were 

identified, and no underpayments were identified. It was subsequently determined by the Department that recapture of the 

$122 thousand was not applicable, as appropriate action subsequently taken by the Department resolved the $122 thousand 

of improper payments.

A payment recapture audit of Department-wide grants and other cooperative agreements was completed in May 2016 by an 

independent contractor. The applicable bureaus/entities were: Economic Development Administration (EDA), International 

Trade Administration (ITA), Minority Business Development Agency (MBDA), National Institute of Standards and Technology 

(NIST), NOAA, and National Telecommunications and Information Administration (NTIA). The audit consisted of grants 

and other cooperative agreements for which the period of performance expired during the timeframe of January 1, 2014 

138 | FY 2016 AGENCY FINANCIAL REPORT

IMPROPER PAYMENTS INFORMATION ACT (IPIA) OF 2002, AS AMENDED, REPORTING DETAILS
through December 31, 2014, and greater than $100 thousand. Of the $729.3 million reviewed for improper payments, no 

improper payments were identified. 

The independent contractor also completed in May 2016 a review of the statuses of sustained disallowed costs of 

$10 thousand or more, issued between April 1, 2014 and through March 31, 2015. Sustained disallowed costs could 

result, for example, from Single Audit Act audit reports related to grants/cooperative agreements, OIG audits or reviews, 

post-payment reviews, closeout reviews, grant/cooperative agreement-specific audits or reviews, and contracts/obligationsspecific audits or reviews. The statuses of the sustained disallowed costs provided by the contractor are utilized by the 

Department for its comprehensive improper payments and recaptures efforts, including reporting, monitoring, recapturing, 

and corrective actions; the statuses are further followed up on by the Department as appropriate.

Of the cumulative overpayments of $285 thousand that was identified for recapture in payment recapture audits completed 

to date, $96 thousand has been recaptured to date, $63 thousand was subsequently determined by the Department to 

be proper payments, $122 thousand was subsequently resolved and recapture was not applicable, and $4 thousand has 

not yet been recaptured.

c. Payment Recapture Audit Reporting. Complete the table below and include each program or activity that 

expends $1 million or more annually and either conducts a payment recapture audit or recaptures payments 

outside of a payment recapture audit (if any of this information is not available indicate by either note or by 

“N/A” in the relevant column or cell). Agencies may include a footnote to list the programs or activities that 

do not have a recovery audit program in place. Programs or activities where the agency has determined a 

payment recapture audit program is not cost effective should still be listed in the table below if they have 

overpayments recaptured outside of a payment recapture audit (see the Overpayments Recaptured Outside 

of Payment Recapture Audits section below for more information). Note that these will be payments that 

were identified and/or recaptured in the current reporting year; however, the actual payment itself may have 

been made in a prior reporting year or in the current reporting year.

d. Overpayments Recaptured Outside of Payment Recapture Audits. As applicable, agencies should also report 

on improper payments identified and recaptured through sources other than payment recapture audits. For 

example, agencies could report on improper payments identified through: statistical samples conducted 

under IPIA of 2002; agency post-payment reviews or audits; OIG reviews; Single Audit reports; self-reported 

overpayments; or reports from the public. Agencies should use the Overpayments Recaptured Outside of 

Payment Recapture Audits section of the table to report this information. Note that these will be payments 

that were identified and/or recaptured in the current reporting year; however, the actual payment itself may 

have been made in a prior reporting year or in the current reporting year. 

Beyond the Department’s payment recapture audits program, the Department has extensive improper payments monitoring, 

minimization, recapturing, and corrective actions efforts in place, including the identification of improper payments through 

bureau post-payment reviews, OIG audits or reviews, Single Audit Act audits of grants/cooperative agreements, other 

grants/cooperative agreements audits, contract closeout reviews, grants/cooperative agreements closeout reviews, other 

audits or reviews, and Department-wide sample testing of disbursements under internal controls testing.

The following table summarizes (1) the results of payment recapture audits completed in 2016; and (2) the Department’s 

FY 2016 overpayments identified, and overpayments verified as recaptured, through sources other than payment recapture 

audits. For Overpayments Identified Outside of Payment Recapture Auditing reporting, the Overpayments Recaptured 

column includes both (a) recaptures of overpayments during FY 2016 of overpayments reported in FY 2016; and (b) recaptures 

of overpayments that were previously identified in prior fiscal years.

FY 2016 AGENCY FINANCIAL REPORT | 139

IMPROPER PAYMENTS INFORMATION ACT (IPIA) OF 2002, AS AMENDED, REPORTING DETAILS
OVERPAYMENTS IDENTIFIED IN FY 2016 AND FY 2016 RECAPTURES OF OVERPAYMENTS 

(In Millions)

Bureau/

Reporting 

Entity

Overpayments Identified in FY 2016 from Payment Recapture Audits Overpayments Identified 

in FY 2016 outside of 

Contracts Grants Total Payment Recapture Audits

Amounts 

Reviewed 

Overpayments 

Identified

Overpayments 

Recaptured 

Amounts 

Reviewed 

Overpayments 

Identified 

Overpayments 

Recaptured 

Amounts 

Reviewed 

Overpayments 

Identified 

Overpayments 

Recaptured 

Overpayments 

Identified

Overpayments 

Recaptured1

BIS $ 0.391 $ 0.122 N/A2 N/A N/A N/A $ 0.391 $ 0.122 N/A $ 0.612 $ 0.481

Census 

Bureau N/A N/A N/A N/A N/A N/A N/A N/A N/A 1.860 1.789

DM/S&E N/A N/A N/A N/A N/A N/A N/A N/A N/A 0.003 –

DM/WCF N/A N/A N/A N/A N/A N/A N/A N/A N/A 0.001 –

EDA N/A N/A N/A $ 2.500 $ – N/A 2.500 – N/A 0.540 0.670

ESA/BEA N/A N/A N/A N/A N/A N/A N/A N/A N/A 0.007 –

ITA N/A N/A N/A 0.700 – N/A 0.700 – N/A 0.080 –

MBDA N/A N/A N/A N/A N/A N/A N/A N/A N/A 0.031 0.030

NIST N/A N/A N/A 83.729 – N/A 83.729 – N/A 0.924 1.886

NOAA N/A N/A N/A 230.625 – N/A 230.625 – N/A 0.578 0.424

NTIA N/A N/A N/A 411.699 – N/A 411.699 – N/A 0.107 0.105

NTIS 0.926 – N/A N/A N/A N/A 0.926 – N/A 0.001 –

USPTO N/A N/A N/A N/A N/A N/A N/A N/A N/A 0.062 0.032

Total $ 1.317 $ 0.122 N/A $ 729.253 $ – N/A $ 730.570 $ 0.122 N/A $ 4.806 $ 5.417

N/A – Not applicable

1 Includes both (a) recaptures of overpayments during FY 2016 of overpayments that were reported in FY 2016; 

and (b) recaptures of overpayments that were previously reported in prior fiscal years.

2 The overpayments of $122 thousand were subsequently resolved and recapture was not applicable.

e. Payment Recapture Audit Program Targets. If an agency has a payment recapture audit program in place, then the 

agency is required to establish annual targets to drive their annual performance. The targets shall be based on the 

rate of recovery. Agencies are expected to report current year amounts and rates, as well as recapture rate targets 

for two years (Current Year +1 and Current Year +2). Agencies are encouraged to set targets that show an increase 

in recapture rate over time. (Agencies should clearly indicate [such as with a footnote] when the current year is 

different from the fiscal year covered by the Agency Financial Report/Performance and Accountability Report). 

The Department’s target payment recapture rate is 100 percent of overpayments identified for recapture in payment recapture 

audits. Since 2005, the Department has recaptured $96 thousand of the $285 thousand of overpayments identified for payment 

recapture; $63 thousand that was identified in previous payment recapture audits for recapture was subsequently determined 

by the Department to be proper payments, $122 thousand was subsequently resolved and recapture was not applicable, and 

$4 thousand has not yet been recaptured as described in subsection f.

f. In addition, agencies shall report the following information on their Overpayments Recaptured through Payment 

Recapture Audits in a table, if applicable: 

i. A summary of how amounts recaptured through payment recapture audits in the current year have been disposed 

of (if any of this information is not available indicate by either note or by “N/A” in the relevant column or cell). 

Agencies may also include a short narrative to accompany the table if desired.

140 | FY 2016 AGENCY FINANCIAL REPORT

IMPROPER PAYMENTS INFORMATION ACT (IPIA) OF 2002, AS AMENDED, REPORTING DETAILS
The Department has not yet recaptured the overpayments of $4 thousand identified for recapture in the payment recapture 

audit of contracts/obligations of EDA/S&E completed in February 2015.

ii. An aging schedule of the amount of overpayments identified through the payment recapture audit program 

that are outstanding (i.e., overpayments that have been identified but not recaptured) shall be displayed 

in a table. Typically, the aging of an overpayment begins at the time the overpayment is detected—please 

indicate with a note whenever that is not the case. 

AGING OF OUTSTANDING OVERPAYMENTS IDENTIFIED IN PAYMENT RECAPTURE AUDIT

(In Millions)

Bureau/

Reporting Entity Type of Payment

Amount Outstanding 

(0–6 Months)

Amount Outstanding 

(6 Months–1 Year)

Amount Outstanding 

(Over 1 Year)

Amount Determined to 

Not be Collectible

EDA Contract $ – $ – $ 0.004 $ –

XI. Additional Comments. Discuss any additional comments, if any, on overall agency efforts, specific programs, 

best practices, or common challenges identified, as a result of IPIA, IPERA, and/or IPERIA implementations.

The Department’s Disbursement Best Practices. The following are some examples of internal control procedures used 

by the Department’s payment offices:

● Limited/controlled access to vendor files—access to basic vendor information (e.g., name, address, and business 

size) is available to financial system users; access to banking information, however, is strictly limited by system 

security to certain Office of Finance staff.

● Periodic review of vendor file by finance office to remove inactive vendors.

● Utilizing Do Not Pay portal checking results to remove vendors as appropriate.

● Controlled access to financial system accounts payable screens—authority to create, edit, approve, process, and 

amend payment records is limited to certain Office of Finance financial system users. Also, authority to add or 

revise records in the vendor database is limited to separate Office of Finance financial system users.

● Segregation of duties for financial system data entry and review prior to transmitting disbursement files to 

Treasury—data entry duties are assigned to technicians in the Office of Finance who do not have authority to 

review and process payments. Authority to approve and process payments is assigned to accountants in the 

Office of Finance. Both data entry and approval/processing of payments are separate functions from transmitting 

disbursement files to Treasury.

● Financial system edit reports highlight potential items that may result in improper payments (e.g., invoice amount 

and accrual amount are not the same). There is a daily Invoice Workload Report that displays open amounts (not 

closed by a payment) on all invoices. This report is reviewed and action is taken to resolve partially open invoices. 

Furthermore, system settings prevent a payment in excess of the amount of the invoice.

● The finance office performs a preliminary review of an invoice prior to issuing to program office for review/approval.

● Daily pre-payment audit of invoices for accuracy, and corrective actions prior to disbursement, are in place, thereby 

helping to prevent improper payments from occurring.

● Financial system edit checks if the vendor’s name on the payment does not agree with that on the obligation, or 

if the payment amount is greater than the obligation or accrual amount.

FY 2016 AGENCY FINANCIAL REPORT | 141

IMPROPER PAYMENTS INFORMATION ACT (IPIA) OF 2002, AS AMENDED, REPORTING DETAILS
● The monthly vendor statement for purchase cards is interfaced into the financial system, thereby reducing data 

entry error.

● An accountant or supervisor reviews individual payments before releasing for payment to help ensure that the 

correct banking information or payment addresses are used, and that the correct amount will be paid.

● Multiple reviews of a payment prior to the payment being made.

● Monthly post-payment random sample audits are performed for detection purposes.

● Contracts include a clause requiring the contractor to notify the contracting officer if the government overpays 

when making an invoice payment or a contract financing payment.

● The circumstances of what caused an improper payment is reviewed by the finance office, and any corrective 

actions are taken as appropriate.

XII. Agency Reduction of Improper Payments with the Do Not Pay Initiative. IPERIA requires pre-payment and 

pre-award reviews by each agency to determine program or award eligibility and to prevent improper payments 

before the release of any federal funds. The procedures must ensure that a thorough review on eligibility occurs 

with relevant information of available databases. 

IPERIA also requires OMB to submit to the Congress an annual report, “which may be included as part of another 

report submitted to Congress by the Director, regarding the operation of the Do Not Pay Initiative, which shall: 

(A) include an evaluation of whether the Do Not Pay Initiative has reduced improper payments or improper awards; 

and (B) provide the frequency of corrections or identification of incorrect information.” To support this requirement, 

all agencies shall provide a brief narrative discussing the agency’s actions attributable to the Do Not Pay Initiative 

and respective databases on an annual basis, regardless of the agency’s susceptibility to improper payments. 

This narrative shall include an evaluation of whether the Do Not Pay Initiative has reduced improper payments 

or improper awards; identify the frequency of corrections or identification of incorrect information; and include 

completion of the table that follows. Include a table reflecting the dollar amounts and the number of payments 

reviewed for improper payments between October 1 through September 30, 20XX. Agencies should complete the 

table, in numbers and dollars, with payment reviews for all databases, and include a footnote listing the databases 

used for payment screening (whether included in IPERIA or not). Agencies may request the Do Not Pay Business 

Center to provide summary information for report preparation. 

Pursuant to OMB Memorandum M-12-11 dated April 12, 2012, Reducing Improper Payments through the “Do Not Pay 

List,” the Department in December 2012 submitted a final plan to OMB for its use of the Do Not Pay Portal for pre-payment 

eligibility reviews. Furthermore, the Department at that time completed evaluations of the use of the Do Not Pay solution 

for pre-award eligibility reviews for contracts and grants. The evaluations were to determine if the benefits from the portal 

checking of available databases and/or the Data Analytics Services merit the additional procedures. The Department 

determined existing pre-award eligibility review processes and databases checked are adequate for preventing improper 

contract and grant awards. The Department determined, however, that Treasury’s Debt Check database may be a beneficial 

tool for use in pre-award evaluations of grant applications. Currently, the Department is in the process of implementing the 

use of the Do Not Pay portal for pre-award checking to Treasury’s Debt Check database for grants applications.

The Department’s payment offices, between January and June 2013, implemented the Department’s OMB-approved 

plan to perform weekly, or daily (the Census Bureau), pre-payment eligibility reviews to the following Do Not Pay portal 

databases for the Department’s domestic, non-classified, non-employee-related, non-intragovernmental disbursements: 

(a) Social Security Administration’s Death Master File (DMF); (b) the U.S. General Services Administration’s System for 

Award Management (SAM) Exclusion Records; and (c) SAM Entity Registration Records (excluding the Census Bureau).

142 | FY 2016 AGENCY FINANCIAL REPORT

IMPROPER PAYMENTS INFORMATION ACT (IPIA) OF 2002, AS AMENDED, REPORTING DETAILS
The pre-payment checking performed by the Department excludes pre-payment eligibility reviews of grantees under ASAP, 

as Treasury performs continuous monitoring to the Do Not Pay portal of ASAP grantees. Bureau payment and acquisition 

offices, as appropriate, follow up on vendors initially matched to the Do Not Pay portal databases checked to, and perform 

further research as necessary to follow through and resolve the issues identified by the Do Not Pay portal matches. In 

most cases, the initial matches are subsequently determined by the Department to be false matches. Other Departmental 

offices are also consulted as appropriate.

Furthermore, the Department’s payment offices receive, from the Do Not Pay portal, monthly reports listing any match 

results of payments made to the following databases: (a) DMF; and (b) SAM Exclusion Records. Payment offices research 

and follow up on matches, as appropriate, and submit to the Do Not Pay portal monthly Adjudication Reports summarizing 

the results of their efforts.

Since the inception of the payment offices’ Do Not Pay portal pre-payment eligibility reviews and reviews of the Do Not Pay 

portal post-payment match reports, the Department has not had any significant true matches to DMF and SAM Exclusion 

Records. While the Department’s use of the Do Not Pay portal since inception has not yet identified or led to the prevention 

of any significant improper payments, the Department supports the use of the Do Not Pay portal as a sound financial 

management practice to prevent improper payments.

The following table shows the dollar amounts and the number of payments reviewed for improper payments in FY 2016, 

per the payment offices’ monthly Adjudication Reports submitted to the Do Not Pay portal.

RESULTS FOR FY 2016 OF THE DO NOT PAY INITIATIVE IN PREVENTING IMPROPER PAYMENTS 

(Numbers in Actual Amounts; Dollars in Millions)

Department-wide

Number of 

Payments 

Reviewed 

for Possible 

Improper 

Payments1

Dollars of 

Payments 

Reviewed 

for Possible 

Improper 

Payments1

Number of 

Payments 

Stopped2

Dollars of 

Payments 

Stopped2

Number of 

Potential 

Improper 

Payments 

Reviewed 

Further and 

Determined 

Proper3

Dollars of 

Potential 

Improper 

Payments 

Reviewed 

Further and 

Determined 

Proper3

Reviews with DMF 246,068 $ 3,938.25 – $ – 33 $ 0.07

Reviews with SAM 

Exclusion Records 246,068 $ 3,938.25 – $ – 33 $ 0.07

1 Payments reviewed for improper payments by Do Not Pay portal databases.

2 Payments that were intercepted or were not disbursed due to the Do Not Pay Initiative.

3 Payments requiring further reviewed as a result of matching against the Do Not Pay portal databases and subsequently identified as proper.

FY 2016 AGENCY FINANCIAL REPORT | 143

IMPROPER PAYMENTS INFORMATION ACT (IPIA) OF 2002, AS AMENDED, REPORTING DETAILS
FREEZE THE FOOTPRINT

C

hief Financial Officers (CFO) Act departments and agencies shall not increase the total square footage of their 

domestic office and warehouse inventory compared to the FY 2012 baseline, unless increased footage is offset 

through consolidation, co-location, or disposal of space from the inventory of that agency, per section 3 of the Office 

of Management and Budget (OMB) Memorandum 12-12, Promoting Efficient Spending to Support Agency Operations, 

and OMB Management Procedures Memorandum 2013-02, the Freeze the Footprint policy implementation guidance.

FREEZE THE FOOTPRINT BASELINE COMPARISONS

(In Millions)

FY 2012

Baseline FY 2015 +/- Change 

Square Footage 11.837 11.280 (0.556)

OPERATING COSTS OF OWNED AND DIRECT LEASE BUILDINGS SUBJECT TO FREEZE THE FOOTPRINT

(In Millions)

FY 2012

Baseline FY 2015 +/- Change 

Operation and Maintenance Costs $39.503 $35.039 ($4.464)

The Department of Commerce’s FY 2012 baseline is 11.84 million square feet of office and warehouse space. The FY 2015 

area was 11.28 million square feet. The nearly five percent reduction to the baseline of 11.84 million square feet is significant. 

Operating costs have seen an 11 percent reduction since the FY 2012 baseline. Operating costs savings are constrained 

by the slow progress in improving utilization rates in owned and direct lease office buildings by the National Oceanic and 

Atmospheric Administration and the National Institute of Standards and Technology.

144 | FY 2016 AGENCY FINANCIAL REPORT

FREEZE THE FOOTPRINT
CIVIL MONETARY PENALTIES’ ADJUSTMENTS 

FOR INFLATION

T

he Federal Civil Penalties Inflation Adjustment Act of 1990, as amended by the Debt Collection Improvement Act of 

1996, required agencies to adjust their civil monetary penalties (CMP) for inflation at least every four years to maintain 

their deterrent effect. A CMP is defined as any penalty, fine, or other sanction that is (1) for a specific monetary 

amount as provided by federal law, or has a maximum amount provided for by federal law; (2) assessed or enforced by an 

agency pursuant to federal law; and (3) assessed or enforced pursuant to an administrative proceeding or a civil action in 

the federal courts. The Department had been adjusting its CMPs every four years from 1996 through 2012 in accordance 

with the Federal Civil Penalties Inflation Adjustment Act of 1990.

On November 2, 2015, the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 further amended 

the Federal Civil Penalties Inflation Adjustment Act of 1990 to improve the effectiveness of CMPs and to maintain their 

deterrent effect. This amendment required agencies to adjust the CMP levels in effect as of November 2, 2015, with initial 

catch up adjustments for inflation through an interim final rulemaking published by July 1, 2016, and to take effect no later 

than August 1, 2016. The maximum amount for an initial catch up adjustment for inflation could not exceed 150 percent of 

the amount of that CMP on the date of enactment of the Federal Civil Penalties Inflation Adjustment Act Improvements Act 

of 2015 (November 2, 2015). The Department published its latest adjustments for inflation to CMPs (15 CFR Part 6, Civil 

Monetary Penalty Adjustments for Inflation), in accordance with this amendment, in the Federal Register on June 7, 2016 

(Vol. 81, No. 109, Rules and Regulations, pages 36454-36458), and which is also available at the Department’s website at 

http://www.osec.doc.gov/ofm/OFM_Publications.html. The latest adjusted CMP levels became effective on July 7, 2016. This 

amendment further requires agencies to make subsequent annual adjustments for inflation to CMPs, beginning in 2017, to 

take effect not later than January 15.

The following table provides detailed information on each of the Department’s CMPs as of July 7, 2016.

Statutory Authority CMP Name

Year CMP 

Originally

Enacted

Latest Year 

of CMP 

Non-inflation 

Adjustment 

(via Statute or 

Regulation)

Current

CMP Level

Department of Commerce

31 U.S.C. 3802(a)(1), Program Fraud Civil 

Remedies Act of 1986

Violation 1986 1986 Maximum $10,781

31 U.S.C. 3802(a)(2), Program Fraud Civil 

Remedies Act of 1986

Violation 1986 1986 Maximum $10,781

31 U.S.C. 3729(a)(1)(G), False Claims Act Violation 1863 1986 Minimum $10,781

Maximum $21,563

 All footnotes are listed at the end of this table. (continued on next page)

FY 2016 AGENCY FINANCIAL REPORT | 145

CIVIL MONETARY PENALTIES’ ADJUSTMENTS FOR INFLATION
Statutory Authority CMP Name

Year CMP 

Originally

Enacted

Latest Year 

of CMP 

Non-inflation 

Adjustment 

(via Statute or 

Regulation)

Current

CMP Level

Bureau of Industry and Security

15 U.S.C. 5408(b)(1), Fastener Quality Act Violation 1990 1990 Maximum $44,539

22 U.S.C. 6761(a)(1)(A), Chemical 

Weapons Convention Implementation Act

Violation 1998 1998 Maximum $36,256

22 U.S.C. 6761(a)(1)(B), Chemical 

Weapons Convention Implementation Act

Violation 1998 1998 Maximum $7,251

50 U.S.C. 1705(b), International 

Emergency Economic Powers Act

Violation 1977 2007 Maximum $284,582

22 U.S.C. 8142(a), United States 

Additional Protocol Implementation Act

Violation 2006 2006 Maximum $29,464

Census Bureau

13 U.S.C. 304, Collection 

of Foreign Trade Statistics

Each day's 

delinquency of 

a violation; total 

of not to exceed 

maximum 

violation

Maximum per 

violation

1962 2002 Each day’s delinquency 

of a violation: 

Maximum $1,312

Maximum per violation: 

$13,118

13 U.S.C. 305(b), Collection

of Foreign Trade Statistics

Violation 1962 2002 Maximum $13,118

Economics and Statistics Administration

22 U.S.C. 3105(a), International 

Investment and Trade in Services Act

Failure to furnish 

information

Minimum: 1990

Maximum: 1976

Minimum: 1990

Maximum: 1990

Minimum $4,454

Maximum $44,539

International Trade Administration

19 U.S.C. 81s, Foreign Trade Zone Violation 1934 1934 Maximum $2,750

19 U.S.C. 1677f(f)(4), U.S.-Canada 

FTA Protective Order

Violation 1988 1988 Maximum $197,869

National Oceanic and Atmospheric Administration

51 U.S.C. 60123(a), Land Remote 

Sensing Policy Act of 2010

Violation 2010 2010 Maximum $10,874

51 U.S.C. 60148(c), Land Remote 

Sensing Policy Act of 2010

Violation 2010 2010 Maximum $10,874

16 U.S.C. 773f(a), Northern Pacific 

Halibut Act of 1982

Violation 1982 2007 Maximum $227,666

16 U.S.C. 783, Sponge Act Violation 1914 1914 Maximum $1,625

 All footnotes are listed at the end of this table. (continued on next page)

(continued from previous page)

146 | FY 2016 AGENCY FINANCIAL REPORT

CIVIL MONETARY PENALTIES’ ADJUSTMENTS FOR INFLATION
Statutory Authority CMP Name

Year CMP 

Originally

Enacted

Latest Year 

of CMP 

Non-inflation 

Adjustment 

(via Statute or 

Regulation)

Current

CMP Level

National Oceanic and Atmospheric Administration (continued)

16 U.S.C. 957(d), (e), and (f), 

Tuna Conventions Act of 1950

Violations 1962 1962 (i) Violation of 

16 U.S.C. 957(a):

Maximum $81,250

(ii) Subsequent violation

of 16 U.S.C. 957(a):

Maximum $175,000

(iii) Violation of 

16 U.S.C. 957(b):

Maximum $2,750

(iv) Subsequent violation

of 16 U.S.C. 957 (b): 

Maximum $16,250

(v) Violation of 

16 U.S.C. 957(c):

Maximum $350,000

16 U.S.C. 957(i), Tuna Conventions

Act of 1950

Violation 2015 2015 Maximum $178,1561

16 U.S.C. 959, Tuna Conventions

Act of 1950

Violation 2015 2015 Maximum $178,1561

16 U.S.C. 971f(a), Atlantic Tunas 

Convention Act of 1975 

Violation 2015 2015 Maximum $178,1561

16 U.S.C. 973f(a), South Pacific Tuna 

Act of 1988

Violation 1988 1988 Maximum $494,672

16 U.S.C. 1174(b), Fur Seal Act 

Amendments of 1983

Violation 1983 1983 Maximum $23,548

16 U.S.C. 1375(a) (1), Marine Mammal 

Protection Act of 1972

Violation 1972 1972 Maximum $27,500

16 U.S.C. 1385(e), Dolphin Protection 

Consumer Information Act

Violation 1990 2015 Maximum $178,1561

16 U.S.C. 1437(d)(1), National Marine 

Sanctuaries Act

Violation 1984 1992 Maximum $167,728

16 U.S.C. 1540(a)(1), Endangered 

Species Act of 1973

Violations 1973 1988 (i) Violation as specified:

Maximum $49,467

(ii) Violation as specified:

Maximum $23,744

(iii) Otherwise violation:

Maximum $1,625

16 U.S.C. 1858(a), MagnusonStevens Fishery Conservation and 

Management Act

Violation 1976 1990 Maximum $178,156

 All footnotes are listed at the end of this table. (continued on next page)

(continued from previous page)

FY 2016 AGENCY FINANCIAL REPORT | 147

CIVIL MONETARY PENALTIES’ ADJUSTMENTS FOR INFLATION
Statutory Authority CMP Name

Year CMP 

Originally

Enacted

Latest Year 

of CMP 

Non-inflation 

Adjustment 

(via Statute or 

Regulation)

Current

CMP Level

National Oceanic and Atmospheric Administration (continued)

16 U.S.C. 2437(a)(1), Antarctic Marine 

Living Resources Convention Act of 1984

Violation 1984 2015 Maximum $178,1561

16 U.S.C. 2465(a), Antarctic Protection 

Act of 1990

Violation 1990 1990 Maximum $178,1561

16 U.S.C. 3373(a), Lacey Act 

Amendments of 1981

Violations 1981 1981 (i) 16 U.S.C. 3373(a)(1):

Maximum $25,464

(ii) 16 U.S.C. 3373(a)(2):

Maximum $637

16 U.S.C. 3606(b)(1), Atlantic Salmon 

Convention Act of 1982

Violation 1982 1982 Maximum $178,1561

16 U.S.C. 3637(b), Pacific Salmon Treaty 

Act of 1985

Violation 1985 1985 Maximum $178,1561

16 U.S.C. 4016(b)(1)(B), Fish and Seafood 

Promotion Act of 1986

Violation 1986 1986 Minimum $1,078

Maximum $10,781

16 U.S.C. 5010, North Pacific 

Anadromous Stocks Act of 1992

Violation 1992 2015 Maximum $178,1561

16 U.S.C. 5103(b)(2), Atlantic Coastal 

Fisheries Cooperative Management Act

Violation 1993 1993 Maximum $178,1561

16 U.S.C. 5154(c)(1), Atlantic Striped 

Bass Conservation Act

Violation 1984 1997 Maximum $178,1561

16 U.S.C. 5507(a), High Seas Fishing 

Compliance Act of 1995

Violation 1995 1995 Maximum $154,742

16 U.S.C. 5606(b), Northwest Atlantic 

Fisheries Convention Act of 1995

Violation 1995 1995 Maximum $178,1561

16 U.S.C. 6905(c), Western and 

Central Pacific Fisheries Convention 

Implementation Act 

Violation 1997 1997 Maximum $178,1561

16 U.S.C. 7009(c) and (d), Pacific 

Whiting Act of 2006

Violation 2007 2007 Maximum $178,1561

22 U.S.C. 1978(e), Fishermen’s 

Protective Act of 1967

Violations 1971 1971 Violation:

Maximum $27,500

Subsequent violation:

Maximum $81,250

30 U.S.C. 1462(a), Deep Seabed Hard 

Mineral Resources Act

Violation 1980 1980 Maximum $70,117

42 U.S.C. 9152(c), Ocean Thermal Energy 

Conversion Act of 1980

Violation 1980 1980 Maximum $70,117

16 U.S.C. 1827a, Billfish Conservation 

Act of 2012

Violation 2012 2012 Maximum $178,1561

 All footnotes are listed at the end of this table. (continued on next page)

(continued from previous page)

148 | FY 2016 AGENCY FINANCIAL REPORT

CIVIL MONETARY PENALTIES’ ADJUSTMENTS FOR INFLATION
Statutory Authority CMP Name

Year CMP 

Originally

Enacted

Latest Year 

of CMP 

Non-inflation 

Adjustment 

(via Statute or 

Regulation)

Current

CMP Level

National Oceanic and Atmospheric Administration (continued)

16 U.S.C. 7407(b)(1), Port States 

Measures Agreement Act of 2015

Violation 2015 2015 Maximum $178,1561

16 U.S.C. 1826g(f), High Seas Driftnet 

Fishing Moratorium Protection Act

Violation 2015 2015 Maximum $178,1561

1 This National Oceanic and Atmospheric Administration maximum CMP, as prescribed by law, is the maximum CMP per 16 U.S.C. 1858(a), 

Magnuson-Stevens Fishery Conservation and Management Act CMP.

(continued from previous page)

FY 2016 AGENCY FINANCIAL REPORT | 149

CIVIL MONETARY PENALTIES’ ADJUSTMENTS FOR INFLATION
UNDISBURSED BALANCES IN EXPIRED GRANT ACCOUNTS

Undisbursed balances in expired grant accounts include budget authority that is no longer available for new obligations 

but is still available for disbursement. The period of disbursement lasts for five years after the last unexpired year 

unless the expiration period has been lengthened by legislation. Specifically, one may not incur new obligations 

against expired budget authority, but one may liquidate existing obligations by making disbursements (section 20.4(c), 

Period of availability of budget authority, of the Office of Management and Budget’s (OMB) Circular A-11, Preparation, 

Submission and Execution of the Budget).

OMB Memorandum M-16-18, Financial and Performance Reporting on Undisbursed Balances in Expired Grant Accounts 

(July 15, 2016), requires the following information to be reported in the Department’s annual Agency Financial Report and 

annual performance plans/budgets for FY 2016 and subsequent fiscal years with regard to undisbursed balances in expired 

grant accounts:

(1) In the preceding three fiscal years, provide the total number of expired grant accounts with undisbursed balances 

for the Department and the total amount that has not been obligated to a specific grant or project remaining in 

the accounts;

(2) Details on future action the Department will take to resolve undisbursed balances in expired grant accounts;

(3) The method that the Department uses to track undisbursed balances in expired grant accounts; and

(4) Process for identification of undisbursed balances in expired grant accounts that may be returned to the 

U.S. Department of the Treasury (Treasury). 

Five bureaus report information under this guidance: International Trade Administration (ITA), Minority Business Development 

Agency (MBDA), National Institute of Standards and Technology (NIST), National Oceanic and Atmospheric Administration 

(NOAA), and National Telecommunications and Information Administration (NTIA). NIST’s Grants and Agreements Management 

Division (GAMD) manages all grants awarded by NIST as well as a portion of those grants funded by NTIA. NOAA’s Grants 

Management Division (GMD) manages all grants awarded by NOAA as well as those grants awarded by ITA and MBDA 

and the remainder of the NTIA awards. 

Both NIST GAMD and NOAA GMD have teams that are specifically responsible for reviewing, closing out, and deobligating 

undisbursed balances in expired awards. Monthly, these teams review reports that identify expired awards with undisbursed 

balances of funds as well as expired awards that may have existing audit findings or other unresolved matters which require 

further coordination prior to deobligating funds and closing out an award.

During its review of expired awards with undisbursed obligations, NIST GAMD reconciles the Standard Form (SF) 425, Federal 

Financial Report, of each award against the amount of funding remaining in the payment system and in NIST’s financial 

system. NIST GAMD also reviews the final SF 425s to ensure that recipients do not have any outstanding unliquidated 

obligations. In cases where the amount of funds does not reconcile appropriately, when the recipient indicates having 

unliquidated obligations, or when the applicable NIST program office indicates other concerns such as outstanding audit 

issues, NIST GAMD works with all relevant parties to resolve any discrepancies prior to the deobligation of funds. There are 

at times outstanding audit issues, legal matters, or cost-share related discrepancies that delay the closeout and deobligation 

processes. NIST GAMD and other applicable NIST offices begin the deobligation process once it is determined that the 

150 | FY 2016 AGENCY FINANCIAL REPORT

UNDISBURSED BALANCES IN EXPIRED GRANT ACCOUNTS
recipient is not owed any further federal funding and that all relevant issues are resolved. NIST currently has several 

employees and contractors assigned to work on deobligating and closing out expired awards. This group actively checks 

the grants system for awards eligible for closeout, assigns awards for deobligation and closeout regularly, and begins those 

processes. For awards with potential audit findings or other unresolved matters, this group coordinates with the appropriate 

team to identify funds to deobligate or to coordinate any remaining actions that need to be taken prior to deobligation and 

closeout. NIST has a Grants Management Officer assigned to oversee the entire closeout process. This individual obtains 

reports from the Grant Management Information System (GMIS), which is the database for all NIST financial assistance 

awards. This report is run at least twice monthly to identify any awards that have expired and are eligible to go through 

the closeout process. This report also identifies if any undisbursed obligations remain in the award account. All awards 

eligible for closeout are assigned to staff to begin the closeout process and any awards with undispersed obligations are 

to be given priority to ensure NIST is deobligating funds in a timely manner. The Grant Management Officer also collects 

regular status updates on all the awards in the closeout process, and advises NIST GAMD staff on appropriate next steps 

to resolve any outstanding issues that may be preventing a deobligation or the closeout of an award. The status reports are 

reconciled against reports run from GMIS to help ensure no awards are missed in the process. If there is an unobligated 

balance, NIST’s finance office uses the budget account to determine what unobligated funds, if any, may be returned to 

Treasury. Any funds that are returned to Treasury are typically returned to Treasury upon the budget account entering the 

cancelled phase. NIST has made significant progress in reducing the backlog of closeouts and deobligations in the past 

three fiscal years and is beginning to keep up with closeouts as they become available. Any aged closeouts are being 

tracked and reported to the Department’s GMD monthly to ensure progress is being made. 

NOAA GMD obtains and reviews monthly an Undisbursed Funds Chart which is used to track expired grant awards with 

undisbursed obligations. The monthly Undisbursed Funds Charts are also provided to the Department’s GMD. Upon review 

and acceptance of the recipient’s SF 425, NOAA GMD completes and submits to NOAA’s finance office a deobligation 

request. After deobligation is completed, NOAA’s finance office identifies the applicable budget account and determines 

what, if any, unobligated funds may be returned to Treasury. NOAA will continue to expedite deobligations and closeout of 

expired to the maximum extent within 90 days from NOAA receipt of a recipient’s final SF 425. Recipients have 90 days 

after award expiration to drawdown remaining funds for expenses incurred during the award period.

Each bureau submits a monthly report to the Department’s GMD detailing the current status of expired awards – number 

of expired awards not yet closed and undisbursed balances of funds in these awards. GMD consolidates these reports and 

presents the information during the Department’s bi-monthly Grants Council meeting for review and analysis. Over the past 

three fiscal years, numerous lessons learned and business process improvements have been identified and implemented 

across the Department’s grants offices. A direct impact of the Grants Council’s oversight has been the Department’s 

significant progress in reducing the backlog of closeouts and deobligations.

The table on the following page presents, for each budget account that had undisbursed obligations for expired grant awards 

as of October 1, 2015 (first day of FY 2016), October 1, 2014 (first day of FY 2015), or October 1, 2013 (first day of FY 2014), 

the dollar amount of undisbursed obligations for expired grant awards as of October 1, 2015, 2014, and 2013; the dollar 

amount of the total unobligated balance for the budget account as of October 1, 2015, 2014, and 2013; and, for each bureau 

reported, the total number of expired grant awards with undisbursed obligations as of October 1, 2015, 2014, and 2013.

FY 2016 AGENCY FINANCIAL REPORT | 151

UNDISBURSED BALANCES IN EXPIRED GRANT ACCOUNTS
(Numbers in Actual Amounts; Dollars in Thousands)

Bureau

Budget Account As of October 1, 2015 As of October 1, 2014 As of October 1, 2013

Number Title

Number 

of Expired 

Grant 

Awards with 

Undisbursed 

Obligations

Undisbursed 

Obligations 

for Expired 

Grant Awards

Total 

Unobligated 

Balance 

in Budget 

Account

Number 

of Expired 

Grant 

Awards with 

Undisbursed 

Obligations

Undisbursed 

Obligations 

for Expired 

Grant Awards

Total 

Unobligated 

Balance 

in Budget 

Account

Number 

of Expired 

Grant 

Awards with 

Undisbursed 

Obligations

Undisbursed 

Obligations 

for Expired 

Grant Awards

Total 

Unobligated 

Balance 

in Budget 

Account

ITA 1250 Operations and 

Administration, ITA, Commerce 3 $ 550 $ 41,633 1 $ 94 $ 46,809 12 $ 544 $ 25,708 

MBDA 0201 Minority Business 

Development, MBDA 1 88 4,920 3 94 4,351 5 165 3,524 

NIST 0500 Scientific and Technical 

Research and Services, NIST 3,161 23,018 1,627 33,748 1,304 29,710 

0514 Construction of Research 

Facilities, Recovery Act, NIST, Commerce – – – 114 2,882 86 

0515 Construction of Research 

Facilities, NIST – 25,746 281 12,908 398 18,898 

0525 Industrial Technology 

Services, NIST 12,065 21,400 5,065 33,496 5,725 18,956 

0549 Scientific and Technical 

Research and Services, Recovery Act, NIST, Commerce – 113 – 2,555 842 2,322 

4650 Working Capital Fund, NIST 1,268 105,119 1,123 88,058 213 95,574 

Total 182 16,494 175,396 187 8,096 170,879 219 11,364 165,546 

NOAA 1440 Operations, Research, and 

Facilities, Recovery Act, NOAA, Commerce – – – 886 584 660 

1450 Operations, Research, and 

Facilities, NOAA 10,247 364,532 27,149 308,151 10,085 346,046 

1451 Expenses, Pacific Coastal 

Salmon Recovery, NOAA 400 436 16 649 581 155 

1460 Procurement, Acquisition, 

and Construction, NOAA, Commerce 1,119 258,716 1,553 138,995 300 164,848 

(continued on next page)

152 | FY 2016 AGENCY FINANCIAL REPORT

UNDISBURSED BALANCES IN EXPIRED GRANT ACCOUNTS
(Numbers in Actual Amounts; Dollars in Thousands)

Bureau

Budget Account As of October 1, 2015 As of October 1, 2014 As of October 1, 2013

Number Title

Number 

of Expired 

Grant 

Awards with 

Undisbursed 

Obligations

Undisbursed 

Obligations 

for Expired 

Grant Awards

Total 

Unobligated 

Balance 

in Budget 

Account

Number 

of Expired 

Grant 

Awards with 

Undisbursed 

Obligations

Undisbursed 

Obligations 

for Expired 

Grant Awards

Total 

Unobligated 

Balance 

in Budget 

Account

Number 

of Expired 

Grant 

Awards with 

Undisbursed 

Obligations

Undisbursed 

Obligations 

for Expired 

Grant Awards

Total 

Unobligated 

Balance 

in Budget 

Account

NOAA (continued)

2055 Fisheries Disaster 

Assistance, NOAA, Commerce $ 1,136 $ 4,358 $ – $ 49,188 $ – $ –

4316 Damage Assessment and 

Restoration Revolving Fund, NOAA 25 166,460 – 110,939 – 74,835 

5139 Promote and Develop 

Fishery Products and Research Pertaining to American Fisheries, NOAA 7 1,083 – 6,817 124 11,277 

5284 Limited Access System 

Administration Fund, NOAA 552 12,055 – 12,899 56 11,355 

5439 Western Pacific 

Sustainable Fisheries Fund, NOAA – 90 1 – – 1,771 

Total 306 13,486 807,730 288 28,719 628,524 335 11,730 610,947 

NTIA 0550 Salaries and Expenses, 

NTIA, Commerce – 29,523 10 30,151 – 32,291 

0551 Public Telecommunication 

Facilities, Planning and Construction, NTIA, Commerce 4 935 4 1,023 4 9,276 

0554 Broadband Technology 

Opportunities Program, Recovery Act, NTIA, Commerce – 166,725 14,586 135,461 161,238 7,651 

Total 41 4 197,183 32 14,600 166,635 55 161,242 49,218 

Total 533 $ 30,622 $1,226,862 511 $ 51,603 $ 1,017,198 626 $ 185,045 $ 854,943 

(continued from previous page)

FY 2016 AGENCY FINANCIAL REPORT | 153

UNDISBURSED BALANCES IN EXPIRED GRANT ACCOUNTS
A AFR Agency Financial Report

AMTech Advanced Manufacturing Technical Consortia (NIST)

APG Agency Priority Goal

ASAP Automated Standard Application for Payments (Treasury)

B BAS Business Application Solutions

BEA Bureau of Economic Analysis

BIS Bureau of Industry and Security

C CAP Cross-Agency Priority Goal

CBS Commerce Business Systems

CEIP Coastal Energy Impact Program 

(a NOAA direct loan program)

CFDA Catalog of Federal Domestic Assistance

CFO Chief Financial Officer

CFO/ASA Chief Financial Officer and Assistant Secretary 

for Administration (DM)

CMP Civil Monetary Penalty

COLA Cost of Living Adjustment

COOP Continuity of Operations Programs

COTS Commercial off-the-shelf [software]

CPI Consumer Price Index

CSRS Civil Service Retirement System (OPM)

GLOSSARY OF ACRONYMS

Abbreviation Title

154 | FY 2016 AGENCY FINANCIAL REPORT

GLOSSARY OF ACRONYMS
D DATA Act Digital Accountability and Transparency Act

DM Departmental Management 

DMF Death Master File (data from the Social Security Administration)

DM&R Deferred Maintenance and Repairs

DOL U.S. Department of Labor

E EDA Economic Development Administration 

ELGP-Steel Emergency Steel Loan Guarantee Program

EPP Educational Partnership Program (NOAA)

ES Enterprise Services

ESA Economics and Statistics Administration

ESOC Enterprise Security Oversight Center

F FASAB Federal Accounting Standards Advisory Board

FCC Federal Communications Commission

FCI Facility Condition Index (DM&R)

FCCS Federal Claims Collection Standards

FECA Federal Employees Compensation Act

FEGLI Federal Employees Group Life Insurance Program (OPM)

FEHB Federal Employees Health Benefit Program (OPM)

FERS Federal Employees Retirement System (OPM)

FFMIA Federal Financial Management Improvement Act of 1996

FirstNet First Responder Network Authority (an independent 

authority within NTIA)

FKNMS Florida Keys National Marine Sanctuary (NOAA)

FMFIA Federal Managers’ Financial Integrity Act of 1982

FVOG Fishing Vessel Obligation Guarantee Program 

(a NOAA loan guarantee program)

FWC Future Workers’ Compensation

FY Fiscal Year ended September 30

Abbreviation Title

FY 2016 AGENCY FINANCIAL REPORT | 155

GLOSSARY OF ACRONYMS
Abbreviation Title

G GAAP Generally Accepted Accounting Principles

GAMD Grants and Agreements Management Division (NIST)

GAO U.S. Government Accountability Office

GCCMIF Global Climate Change Migration Incentive Fund (EDA)

GMD Grants Management Division (DM; and NOAA)

GMIS Grant Management Information System (NIST)

GOES – R Geostationary Operational Environmental Satellites – R (NOAA)

GSA U.S. General Services Administration

I ICVS Integrated Calibration and Validation System (NESDIS STAR)

IFQ Individual Fishing Quota Loans (a NOAA direct loan program)

IP Intellectual Property

IPERA Improper Payments Elimination and Recovery Act of 2010

IPERIA Improper Payments Elimination and Recovery Improvement 

Act of 2012

IPIA Improper Payments Information Act of 2002

ISO Information Services Office (NIST)

IT Information Technology

ITA International Trade Administration

IV&V Independent Verification and Validation

J JPSS Joint Polar Satellite System (NOAA)

M MBDA Minority Business Development Agency

MD&A Management’s Discussion and Analysis

MSI Minority Serving Institutions (EPP)

156 | FY 2016 AGENCY FINANCIAL REPORT

GLOSSARY OF ACRONYMS
N NERR National Estuarine Research Reserves (NOAA)

NESDIS National Environmental Satellite, Data, and Information 

Service (NOAA)

NFC National Finance Center (U.S. Department of Agriculture)

NHTSA National Highway Traffic Safety Administration 

(U.S. Department of Transportation)

NIST National Institute of Standards and Technology

NMFS National Marine Fisheries Service (NOAA)

NNMI National Network for Manufacturing Innovation, 

former name for Manufacturing USA (NIST)

NOAA National Oceanic and Atmospheric Administration

NTIA National Telecommunications and Information Administration

NTIS National Technical Information Service

O OAM Office of Acquisition Management (DM)

OAR Office of Oceanic and Atmospheric Research (NOAA)

OIG Office of Inspector General (DM)

OMB Office of Management and Budget

OPM U.S. Office of Personnel Management

P PAR Performance and Accountability Report

PEP Partnership Education Program (NOAA)

PIFSC Pacific Islands Fisheries Science Center (NOAA)

PP&E Property, Plant, and Equipment

PYSO PIFSC Young Scientist Opportunity (NOAA)

R RAMI Revitalize American Manufacturing and Innovation Act of 2014

R&D Research and Development

Abbreviation Title

FY 2016 AGENCY FINANCIAL REPORT | 157

GLOSSARY OF ACRONYMS
S SAM System for Award Management (GSA)

S&E Salaries and Expenses (DM)

SBR Combined Statement of Budgetary Resources

SCNP Consolidated Statement of Changes in Net Position

SEFSC Southeast Fisheries Science Center (NOAA)

SF 425 Standard Form 425, Federal Financial Report

SFFAS Statement of Federal Financial Accounting Standards (FASAB)

SOS Schedule of Spending by Major Budget Account (Unaudited)

SPRI Strategic Plan Review and Implementation

STAR Center for Satellite Applications and Research (NESDIS)

STC Standard Terms and Conditions

T TIP Technology Innovation Program (NIST)

Treasury U.S. Department of the Treasury

TRL Technology Readiness Level

TSP Thrift Savings Plan

U USPTO U.S. Patent and Trademark Office

W WCF Working Capital Fund (DM)

WHSA Woods Hole Science Aquarium (NOAA)

WIPO World Intellectual Property Organization

Abbreviation Title

158 | FY 2016 AGENCY FINANCIAL REPORT

GLOSSARY OF ACRONYMS
T

his Agency Financial Report was prepared with the energies and talents of many 

Department of Commerce employees. To these individuals, the Office of Financial 

Management would like to offer our sincerest appreciation and recognition.

In particular, we would like to recognize the following organizations for their 

contributions:

The bureau finance offices, Office of the Secretary, Office of the Chief Financial Officer 

and Assistant Secretary for Administration, Office of Inspector General, Office of 

Acquisition Management, Office of Budget, Office of Human Resources Management, 

Office of Performance, Evaluation, and Risk Management, Office of Public Affairs, 

and Office of Facilities and Environmental Quality/Office of Real Property Programs.

We also offer special gratitude and recognition to The DesignPond for their outstanding 

contributions in the design and production of this report.

ACKNOWLEDGEMENTS
U.S. DEPARTMENT OF COMMERCE

1401 Constitution Avenue, NW

Washington, DC 20230

(202) 482-2000

www.commerce.gov