U.S. DEPARTMENT OF COMMERCE 

AGENCY FINANCIAL REPORT

2015

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
U.S. DEPARTMENT OF COMMERCE 

AGENCY FINANCIAL REPORT

2015

FISCAL YEAR
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, 2015, the Department had approximately 

46 thousand employees. 

BUDGET AUTHORITY

The Department’s FY 2015 net budget authority was approximately 

$13.86 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 2015 Performance Summary 6

Management Controls 9

Secretary’s Statement of Assurance 9

Federal Managers’ Financial Integrity Act (FMFIA) of 1982 10

Federal Financial Management Improvement Act (FFMIA) of 1996 15

Report on Audit Follow-up 15

Biennial Review of Fees 15

Financial Management and Analysis 16

Analysis of FY 2015 Financial Condition and Results 23

Summary of Stewardship Information 32

Financial Section 35

Message from the Chief Financial Officer 36

Independent Auditors’ Report 37

Principal Financial Statements 49

Consolidated Balance Sheets 50

Consolidated Statements of Net Cost 51

Consolidated Statements of Changes in Net Position 52

Combined Statements of Budgetary Resources 53

Notes to the Financial Statements 55

Required Supplementary Information (Unaudited) 111

Required Supplementary Stewardship Information (Unaudited) 117

Other Information 125

Schedule of Spending (Unaudited) 126

OIG Summary on Top Management Challenges 127

Summary of Financial Statement Audit and Management Assurances 132

Improper Payments Information Act (IPIA) of 2002, as Amended, Reporting Details 133 

Freeze the Footprint 149

Civil Monetary Penalties’ Adjustments for Inflation 150

Glossary of Acronyms 154

Acknowledgements 159

FY 2015 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) 2015. The 

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

accomplishments and challenges in FY 2015. 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 2015, the Department continued to help American businesses and workers prosper, compete, and thrive. 

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 2015 AGENCY FINANCIAL REPORT
These data provide an accurate and transparent accounting of the Department’s financial situation and highlevel performance results. For the 17th 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 three areas: (1) accounting for National Oceanic and Atmospheric 

Administration Commissioned Officer Corps pension benefits, (2) Department-wide information technology 

general controls around access and configuration management, and (3) accounting for Public Safety Trust Fund 

spectrum auction proceeds.

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 the Inspector General, the Government Accountability Office, and 

others to assist in this effort. Based on activities undertaken during FY 2015, the Department is able to provide 

an unqualified 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 2016.

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 13, 2015 

FY 2015 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) 2015 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 2017 Congressional Budget in 

conjunction with performance plan information as the “FY 2017 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 2015 financial condition and results.

Financial Section

This section contains details of the Department’s finances in FY 2015. 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, 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 2015 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 CrossAgency 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 2015 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 2015 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 2015 AGENCY FINANCIAL REPORT

MANAGEMENT’S DISCUSSION AND ANALYSIS
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 

Note: ESA includes the Bureau of Economic Analysis and the Census Bureau.

SUMMARY OF STRATEGIC GOALS AND OBJECTIVES

FY 2015 AGENCY FINANCIAL REPORT | 5

MANAGEMENT’S DISCUSSION AND ANALYSIS
FY 2015 PERFORMANCE SUMMARY

OVERVIEW OF PERFORMANCE

Because the Department’s new strategic plan is a significant departure from past plans; many of the supporting performance 

indicators are also new. Therefore, trends are not always available. However, when they are, they are included in the tables on 

the following pages, which serve as a compilation of data on the current Agency Priority Goals (APG) and other priority indicators. 

These tables do not include all the measures used to track progress at the Department. Additional measures are included in 

budget documents. Department budget submissions can be found at http://www.osec.doc.gov/bmi/budget/.

1. TRADE AND INVESTMENT 

The APG in the Trade and Investment goal area is “Percentage of Global Markets’ clients that achieved their export objectives.” 

This measure reflects Global Markets’ emphasis on customer service. In FY 2015, the target of 71 percent was exceeded. 

Accomplishments will be pushed further as new service delivery process are implemented in FY 2015 and when a new Customer 

Relations Management System is implement in FY 2016. The percentage of clients highly likely to recommend Global Markets 

assistance compares favorably to the private sector and other federal agencies. 

AGENCY PRIORITY GOAL: COMPANIES ASSISTED BY GLOBAL MARKETS THAT ACHIEVE EXPORT OBJECTIVES

PERFORMANCE MEASURE FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015

Percentage of Global Markets clients that achieved 

their export objectives

N/A 67% 68% 67% 73% 73%1

Percentage of clients highly likely to recommend 

Global Markets

77% 79% 82% 78% 83% 84%2

Number of clients assisted by Global Markets 18,784 20,143 18,945 18,126 17,593 25,029

1 This data point reflects FY 2015 annual performance and is an average of all four quarters.

2 This data point reflects fourth quarter FY 2015 performance and is not an average of all data points for FY 2015.

2. INNOVATION

An APG for the Innovation goal area is “increased miles of broadband to unserved or underserved areas.” The number of 

community anchor institutions connected is also measured. The targets for the measures were exceeded, thereby helping to 

bridge the “digital divide.”

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

a patent determination. During FY 2016–FY 2017, USPTO will produce major reductions as examiners gain experience with new 

processes and enabling technology. 

6 | FY 2015 AGENCY FINANCIAL REPORT

MANAGEMENT’S DISCUSSION AND ANALYSIS
AGENCY PRIORITY GOAL: EXPAND U.S. BROADBAND INFRASTRUCTURE

PERFORMANCE MEASURE FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015

Miles of broadband networks deployed (infrastructure projects) 4,824 29,191 78,699 111,361 113,555 114,6971

Number of community anchor institutions connected 

(infrastructure projects)

N/A 4,163 11,246 20,325 25,391 25,6841

1 This data point reflects third quarter FY 2015 performance as fourth quarter FY 2015 data was not available at the time of this report.

AGENCY PRIORITY GOAL: IMPROVE PATENT PROCESSING TIME AND QUALITY

PERFORMANCE MEASURE FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015

Patent first action pendency (months) 25.7 28.0 21.9 18.2 18.4 17.3

Patent total action pendency (months) 35.3 33.7 32.4 29.1 27.4 26.6

Patent backlog 708,535 669,625 608,283 584,998 605,646 553,221

3. ENVIRONMENT

One APG in the Environment goal area has delayed results. The National Oceanic and Atmospheric Administration (NOAA) 

National Weather Service aims to produce reliable weather forecast nine days in advance. Problems procuring the server power 

needed for the new improved forecasting model set the schedule back. The problem has been solved and nine-day forecasts 

with good “skill” scores will be achieved in FY 2016. 

The APG for enforcing monitoring fishing catch limits is right on target and the number of threatened species with improving 

population levels has a positive trend. 

AGENCY PRIORITY GOAL: CONFIRM ELIMINATION OF OVERFISHING

PERFORMANCE MEASURE FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015

Number of domestic stocks, as of June 30, 2013, listed as 

subject to overfishing for which the annual catch does not 

exceed the overfishing limit

N/A N/A N/A N/A 11 19

AGENCY PRIORITY GOAL: IMPROVE FORECASTING ACCURACY AND LEAD TIMES FOR SEVERE WEATHER

PERFORMANCE MEASURE FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015

GFS 500 hPa anomaly correlation of forecast 

considered accurate

8.02 8.00 8.00 8.1 8.1 8.21

Hurricane forecasts track – 48 hour error 88 71 69 103 652 N/A3

1 This data point is an estimate of performance. This is a calendar year measure and the data will not be available until calendar year 2016.

2 This data point was adjusted from what was reported in FY 2014.

3 This data point will not be available until second quarter FY 2016.

FY 2015 AGENCY FINANCIAL REPORT | 7

MANAGEMENT’S DISCUSSION AND ANALYSIS
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 new 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 the goal of a 2020 Census that will cost less per housing unit than 

the 2010 Census (when adjusted for inflation), while continuing to maintain high quality. The Bureau of Economic Analysis and 

Census continued to meet their critical deadlines for data releases.

PERFORMANCE MEASURE FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015

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% 90% 100%

Percentage of key data products for Census Bureau 

programs released on time to support effective 

decision-making of policymakers, businesses, 

and the (Economic Indicators)

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% 90% 86% 87%

5. OPERATIONAL EXCELLENCE 

There are many “granular” measures in the Operational Excellence goal area that sets strategies for mission support, e.g., 

measures of customer satisfaction with processes and services, cycle-times, error rates. The strategic measures are milestones 

for creating new frameworks for organizational development, a common IT architecture, shared services, and results focus. 

Plans in these areas are on track and in line with government-wide initiatives. There are significant positive trends in the quality 

and quantity of service provided by www.Business.USA.gov. This is the one-stop shop website to access all federal services 

available to help American business.

PERFORMANCE MEASURE FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015

Business USA (Business.USA.gov) ability to find information:

Content subscribers N/A N/A 35,000 70,388 103,903 120,278

Website visits N/A N/A 628,000 1,370,000 2,362,313 3,838,740

8 | FY 2015 AGENCY FINANCIAL REPORT

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 2015, 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 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, 2015 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, 2015 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.

Penny Pritzker

U.S. Secretary of Commerce

November 13, 2015

MANAGEMENT CONTROLS

FY 2015 AGENCY FINANCIAL REPORT | 9

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 2015, 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 U.S. Government Accountability 

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

Office of Personnel Management (OPM), and other specifically requested studies. The diverse reviews that took place 

during FY 2015 relative to non-financial controls provide assurance that Department systems and management controls 

comply with standards established under FMFIA.

Key Administrative and Management Internal Control Activities

In compliance with FMFIA, the following information regarding the adequacy of the design and operation of management 

and internal control systems in FY 2015 is detailed below. 

HUMAN RESOURCE MANAGEMENT

Human Capital Accountability System. In accordance with Title 5, U.S. Code § 1104(a)(2) and Executive Order 13197, 

Government-wide Accountability for Merit Systems Principles; Workforce Information, dated January 18, 2001, and 

the Interagency Delegated Examining Agreement Number DOC-1, between OPM and the Department, and Human 

Resources Bulletin #036, FY 2006, Human Resources Management Accountability System, the Office of Human Resources 

Accountability coordinated, trained, and led the Department Human Capital (HC) Audit Team successfully through eight 

Delegated Examining on-site audits at the servicing human resources office. In addition, the audit team conducted two 

Human Capital Framework (HCF) assessments: one at the National Oceanic and Atmospheric Administration (NOAA) 

Headquarters Workforce Management Office, Silver Spring, MD (follow-up evaluation) and the other at U.S. Census Bureau 

Headquarters, Suitland, MD. The Department HC Audit Team contributes to the effectiveness of the Department’s human 

capital accountability system by monitoring and auditing/evaluating the results of its human capital management policies, 

programs, and activities; by analyzing compliance with merit system principles, federal regulations, OPM standards, and 

Departmental policy; by identifying and monitoring required improvements; and by recognizing notable and best practices. 

During FY 2016, eight Delegated Examining and two HCF audits will be conducted.

10 | FY 2015 AGENCY FINANCIAL REPORT

MANAGEMENT’S DISCUSSION AND ANALYSIS
Protecting Personally Identifiable Information. A quarterly analysis is conducted by an independent third-party vendor 

of all Department employee identities to ensure no organized misuse by fraudsters is occurring. In relation to specific 

breach or potential breach incidents, reports of “Harm” or “No Harm” are provided by the vendor to indicate if misuse of 

any employee identities is occurring as a result of the specific incident(s).

ACQUISITION MANAGEMENT 

The Office of Acquisition Management’s (OAM) internal control process is based on OMB-prescribed guidance on acquisition 

assessment with the following cornerstones:

● Policies and Processes; 

● Human Capital; and 

● Information Management and Leadership. 

OAM’s structure directly addresses major initiatives such as implementation of the scalable framework for acquisition 

management, strategic sourcing initiatives and acquisition/administrative savings, risk management, and cost analysis 

and oversight. 

Acquisition Improvement Project Scalable Acquisition Framework. In 2015, OAM successfully completed Departmentwide policy for acquisition project management and cost estimation and independent cost estimates with the publication of 

DAO 208-16 issued in May. This policy establishes a Department-wide acquisition framework, processes for Department 

oversight of major programs via a Milestone Review Board (MRB) chaired by the Deputy Secretary, establishment of 

decision points and necessary artifacts to move programs from one framework phase to the next, and a clear requirement 

and standard procedures for cost estimating work products and their review and approval (and responding to GAO findings 

in 2012). There were two MRBs in FY 2015. The scalable framework has proven very versatile, useful for non-milestone 

program oversight, and adaptable, being used by NOAA and the Census Bureau for internal acquisition decision-making.

USASpending.gov. USASpending.gov, a single searchable website that is accessible to the public, receives and displays 

data pertaining to amounts awarded for federally sponsored projects during a given budget period. One of the main 

source systems that provides information to the USASpending.gov website is the Federal Procurement Data System 

(FPDS). OAM annually reviews and certifies its procurement data captured in FPDS in accordance with Office of Federal 

Procurement Policy (OFPP) guidance. This activity certifies the completeness, quality, accuracy, and timeliness of the 

Department’s data in FPDS. Accuracy is measured by reviewing a random sample of records for data elements prescribed 

by OFPP. The Department has consistently maintained an accuracy rating of 96 percent or above. In addition, OAM 

conducts quarterly FPDS independent verification and validation process (IV&V) reviews. The quarterly reviews are used to 

evaluate the accuracy of the agency data in FPDS throughout the year. Data elements with accuracy rates that fall below 

95 percent are identified and targeted for improvement. The quarterly review process has helped to improve the accuracy 

of procurement data in FPDS. In FY 2015, the OMB MAX Portal was used to enter and record IV&V results. Capturing 

data electronically improved data validations, and enhanced and standardized collection methods across the bureaus.

Purchase Card program. OAM continuously monitors and updates internal control measures and processes to manage 

the Department’s Purchase Card Program; certifies that the appropriate policies and controls are in place; and corrective 

actions have been taken to mitigate the risk of fraud and inappropriate charge card practices. In FY 2015, the Department 

continued its implementation efforts to enhance policy requirements and implement structured procedures. Enhancements 

FY 2015 AGENCY FINANCIAL REPORT | 11

MANAGEMENT’S DISCUSSION AND ANALYSIS
to the purchase card program included: improvements to the customized virtual online training course to highlight changes 

to federal and Department-specific policies and procedures of the program and improve user training by providing realistic 

scenario-based examples; updated the Commerce Acquisition Management Chapter to enhance management review 

and internal control processes; issued a Procurement Memorandum to revise the record retention requirements in order 

to conform with new National Archives and Records Administration’s regulations; and executed cardholder community 

newsletters, APC Digest, to improve communication with the cardholder community.

American Recovery and Reinvestment Act (ARRA) and Hurricane Sandy Funds Management. Supplemental funding 

received under ARRA and the Disaster Relief Appropriations Act (Hurricane Sandy) received comprehensive programmatic 

and administrative attention throughout the Department in order to achieve the legislative goals attributable to it. ARRA and 

Hurricane Sandy funds received by Department bureaus were awarded or otherwise expended for authorized purposes, 

in as prompt and efficient a manner as possible while safeguarding against fraud, waste, and abuse. Reporting associated 

with this funding is being performed clearly, transparently, and comprehensively. Monitoring has been and will continue 

to be conducted to ensure the recipient is meeting goals as stated in its application and as incorporated into award 

documents, and will also focus on the effects ARRA and Hurricane Sandy funding has had and will prospectively have on 

economic indicators.

Security Management. Major security-related programs within the Department worked together to mitigate the threat 

to the Department by addressing the terrorism and espionage risks and increasing emergency management effectiveness. 

The Department’s Office of Security has instituted initiatives and documented accomplishments including:

● Coordinating the Department’s efforts in various senior level and principal level continuity exercises while providing 

operational support to significant emergencies (including an active shooter at the Suitland Federal Center) to natural 

disasters such as floods, tornados, earthquakes, hurricanes, and fires;

● Managing the Department’s overall Continuity of Government and Continuity of Operations Programs (COOP) program 

to include major deployed exercises (Eagle Horizon 15) and senior official exercises as well as operational reviews 

of Bureau COOP plans and capabilities;

● Developing a Department Active Shooter Training Program to teach the government best practice individual response 

of: RUN-HIDE-FIGHT and align with new Interagency Security Committee active shooter guidance; and

● Engaging various offices, including the Office of the Chief Information Officer, OAM, and NOAA to better respond to 

Supply Chain Risk Management requirements while also adding additional resources to specifically focus on insider 

threat concerns.

FACILITIES MANAGEMENT

Beginning in 2003, GAO has deemed federal real property management to be a high risk due to long standing challenges 

that include unreliable data reported in the Federal Real Property Profile (FRPP). In July 2014, GAO issued a report that 

concluded that data problems related to federal real property management continue to be an issue. While neither OMB 

nor the U.S. General Services Administration (GSA) has issued specific guidance regarding data quality improvements in 

2014, the Federal Real Property Guidance, released in July 2014, addresses data accuracy as follows:

In accordance with OMB guidance in the July 2014 FRPP Guidance, the Department instituted an annual process to obtain 

formal certification from operating unit Chief Financial Officers (CFO) of federal property assigned to their control and 

custody as reported to GSA in December 2014.

12 | FY 2015 AGENCY FINANCIAL REPORT

MANAGEMENT’S DISCUSSION AND ANALYSIS
Prior to the December 15, 2014 data submittal, the Department received certifications from the applicable operating units 

that their FRPP data was complete and accurate and forwarded the Department CFO’s certification to GSA. The Department 

also performed its annual IV&V review of its current real property inventory system data, modeled after the process used 

by the U.S. Department of Energy.

Under the Department’s IV&V review, a random sample of 20 buildings was taken, and operating units were directed to 

provide copies of source documentation for key data fields; eight data fields in owned properties and seven in direct lease 

properties. If the data value(s) in all fields for all records were properly supported with documentation, the Department 

could claim to have a confidence level of 90 percent for all FRPP building data. In the sample tested, we found that 

corrections were needed or source documentation was not found for nearly half of the owned buildings and several of 

the leased buildings. Operating units will be asked to certify their data again and another IV&V test will be conducted for 

data reported in December 2015.

INFORMATION TECHNOLOGY SECURITY RECEIVES CONTINUED FOCUS

The Office of the Chief Information Officer (OCIO) conducts reviews of its information technology (IT) investments to ensure 

their efficiency and effectiveness in support of the Department’s missions. The Department, following OMB policies and 

guidelines and complying with Federal Information Security Modernization Act of 2014 (FISMA) requirements, oversees 

and manages IT resources by establishing and implementing policies and controls to mitigate IT risks. In FY 2015, the 

Department made improvements to elevate the IT security program and address deficiencies in policies and procedures, 

incident response management and reporting, management of privileged users, and enterprise cybersecurity initiatives. 

Accomplishments resulting from the Department’s efforts to address the deficiencies include significant enhancements 

and additions to toolsets and services. The Department has made progress in deployment of the Department Enterprise 

Security Oversight Center (ESOC) focusing on 24x7 coverage and establishment of a Secure Enclave; centralized tracking and 

reporting of incident response for the Department through the Department’s Computer Incident Response Team (DOC-CIRT); 

a review of the Department’s top high value assets; and policies and guidance on management of privileged user accounts, 

new remediation timelines for critical vulnerabilities, and an update to the Department IT Security Policy Program, which 

includes transition to the National Institute of Standards and Technology (NIST) SP 800-53 rev.4. The Department continued 

to implement Enterprise Cybersecurity Monitoring and Operations tool to monitor and track continuous monitoring of IT 

security-related events throughout the Department. The Department has developed policy and is continuing to implement a 

Supply Chain Risk Management program. The Department also reduced the number of outstanding IT security remediation 

activities over 120 days past due.

While these enhancements will allow the Department to elevate its IT security posture, more work remains to be 

accomplished. Despite these improvements, the OIG reported that IT security deficiencies still persist including issues 

with the Department’s incident response management and tracking, and implementation of cloud environments regarding 

GSA FedRAMP compliance. The OIG also continued to find security deficiencies in bureaus’ implementation of security 

controls, continuous monitoring, and vulnerability management in FY 2015 FISMA Audits. The OIG acknowledges the 

progress the Department has made with continued deployment of the ESOC and centralized incident response reporting 

and tracking through the DOC-CIRT. However, the OIG encourages the Department to continue to make a concerted effort 

to expedite the Shared Services initiatives and strengthen the Department’s continuous monitoring program.

FY 2015 AGENCY FINANCIAL REPORT | 13

MANAGEMENT’S DISCUSSION AND ANALYSIS
IT ACCOMPLISHMENTS TOWARD FMFIA

To ensure that the Department effectively manages the ongoing IT security concerns, the OCIO continues to engage an IT 

Leadership Team and an IT Management team with regularly weekly meetings and status updates. Additionally, the OCIO 

cybersecurity office continues to conduct rigorous IT security compliance reviews based on FISMA requirements, OMB 

policy, NIST standards and guidelines, and previous OIG recommendations. 

Financial Management 

During FY 2015, the Department’s OMB Circular A-123 Appendix A reviews and assessment included the following:

● Provided training to the Senior Assessment Team on implementation of the requirements of the new GAO’s Standards 

for Internal Controls in the Federal Government (Green Book) and a refresher on the five phases of the Department’s 

OMB Circular A-123 Appendix A assessment process;

● Completed a preliminary impact assessment by each of the bureaus and Departmental Management to assess its 

current level of controls as they relate to those required by GAO’s Green Book and to determine the level of efforts 

and resources required to maintain compliance with the Green Book in FY 2016;

● Utilized the Senior Management Council to implement, direct, and oversee the assessment process, and the Senior 

Assessment Team to develop OMB Circular A-123 Appendix A planning documentation, administer internal control 

test plans, and monitor and review the test work;

● Updated Departmental sampling plan and Department-wide testing templates for selected key processes;

● Analyzed the results of the overall effort to assess and document the adequacy of the Department’s internal 

controls in order to develop the annual statement of assurance issued by the Secretary and published in the Agency 

Financial Report;

● Consolidated and analyzed the OMB Circular A -123 Appendix A review findings for each of the applicable 

Departmental bureaus;

● Performed a review of working papers for select processes/cycles at the Census Bureau for completeness, accuracy, 

reliability, adequacy, and adherence to the Department’s Implementation Plan, Sampling Plan, and Work Paper Guide; and

● Furthered the initiative on data analytics function. Through contractor support, the Department piloted the review 

on purchase card, travel card, and payroll related datasets.

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 2015, the financial systems in the Department are compliant with GAO principles 

and standards, the requirements of the CFO Act, and OMB requirements.

14 | FY 2015 AGENCY FINANCIAL REPORT

MANAGEMENT’S DISCUSSION AND ANALYSIS
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 2015, the Department remained in compliance with FFMIA. 

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 the period June 1, 2014, 

through May 31, 2015.

SUMMARY OF ACTIVITY ON AUDIT REPORTS

JUNE 1, 2014 THROUGH MAY 31, 2015

DISALLOWED COSTS1

FUNDS TO BE PUT TO 

BETTER USE2

NONMONETARY 

REPORTS3 TOTAL

NUMBER OF 

REPORTS DOLLARS

NUMBER OF 

REPORTS DOLLARS

NUMBER OF 

REPORTS REPORTS

Beginning Balance 31 $ 40,702,191 8 $ 223,624,627 20 59

New Reports 8 2,276,186 2 309,000 21 31

Total Reports 39 42,978,377 10 223,933,627 41 90

Reports Closed (20) (25,307,814) (4) (220,783,962) (16) (40)

Ending Balance 19 $ 17,670,563 6 $ 43,149,665 25 50

1. This column includes reports on contract, grant, and loan audits that contain disallowed costs. Disallowed costs are questioned 

costs that management has sustained or agreed should not be charged to the government. 

2. This column includes reports on contract, grant, and loan audits that contain funds to be put to better use. “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.

3. This column Includes management (performance), contract, grant, loan, and financial statement audits with nonmonetary 

recommendations.

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

Cost Principles and Audit Requirements for Federal Awards. Effective December 26, 2014, Department OIG discontinued review of nonfederal audit reports.

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. 

The Department is in compliance with the requirement to adjust its fees to meet the Circular A-25 Revised requirement 

of full-cost recovery for user charges.

FY 2015 AGENCY FINANCIAL REPORT | 15

MANAGEMENT’S DISCUSSION AND ANALYSIS
FINANCIAL MANAGEMENT AND ANALYSIS

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 2015 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 2015, the Department accomplished the following initiatives: 

● Continued the Planning phase for the Business Application Solutions (BAS) project that will modernize the 

Department’s financial and business systems. However, the project is currently on hold while the Department 

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

● Completed the design, development, and testing of the government-wide Treasury Accounting Symbol modification 

to handle beginning balance attributes and Adjusting Entry modifications to CBS; 

● Completed several technical CBS upgrades, including Fusion Middleware/WebLogic to Oracle Access Manager 

upgrade; completed the Oracle Database upgrade and began the Oracle portal upgrade to Webcenter;

● 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 

16 | FY 2015 AGENCY FINANCIAL REPORT

MANAGEMENT’S DISCUSSION AND ANALYSIS
● Conducted design and development 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 2016 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; and 

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

Department’s financial management system (CBS), modifications to meet the Federal Funding Accountability and 

Transparency Act requirements, and modifications to CBS to associate the correct business event type code to the 

transaction.

FINANCIAL REPORTING AND POLICY

The Department accomplished the following initiatives during FY 2015: 

● Completed the Department’s implementation, effective FY 2015, of financial reporting to Treasury’s Governmentwide 

Treasury Account Symbol Adjusted Trial Balance System;

● Quarterly financial metrics were compiled, analyzed, and reported to individual bureaus, which also included a status 

report comparing bureau results with Departmental performance goals. The results of bureaus’ metrics and any 

corrective actions needed were discussed at bureau CFO individual monthly meetings;

● 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 Departmental Management 

(DM)/Salaries and Expenses (S&E), DM/Working Capital Fund, the Economic Development Administration (EDA)/

S&E, the Economics and Statistics Administration/Bureau of Economic Analysis (BEA), and the International Trade 

Administration (ITA) (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 $4 thousand of improper 

payments;

● A contractor prepared a Statistical Sampling and Estimation Plan for the National Oceanic and Atmospheric 

Administration (NOAA) Disaster Relief Appropriations Act FY 2014 disbursements in order to yield a statistically 

valid improper payments estimate, and performed the FY 2014 disbursements testing, which did not identify any 

improper payments in accordance with the plan;

FY 2015 AGENCY FINANCIAL REPORT | 17

MANAGEMENT’S DISCUSSION AND ANALYSIS
● A contractor performed a review of the Departments’ capitalization thresholds for accounting for real and personal 

property. Revised capitalization thresholds for the National Institute of Standards and Technology (NIST) were 

implemented as a result, effective October 1, 2015;

● NOAA prepared a Program Review (to be prepared biennially) of its active Fisheries Finance direct loan program 

which evaluates the loan program’s effectiveness in achieving program goals in accordance with guidance set 

forth in OMB Circular A-129, Policies for Federal Credit Programs and Non-tax Receivables, and OMB Circular 

A-11, Preparation, Submission, and Execution of the Budget, Part 6, Strategic Plans, Annual Performance Plans, 

Performance Reviews, and Annual Program Performance Reports;

● Completed bureaus’ implementations of reporting Treasury Appropriation Symbols and Business Event Type Codes 

for each individual transaction for Intragovernmental payments, collections, and disbursements; and

● Pursuant to a Digital Accountability and Transparency Act of 2014 amendment to 31 U.S.C. 3716(c)(6), Administrative 

Offset, bureaus completed their implementations of referring delinquent debts to Treasury for cross-servicing no 

later than 120 days delinquent (expedited from no later than 180 days delinquent).

In FY 2016 and beyond, the Department plans to accomplish the following:

● Adjust the Department’s civil monetary penalties 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

● Evaluate and implement as necessary, effective FY 2018, Federal Accounting Standard Advisory Board’s Statement 

of Federal Financial Accounting Standards 47, Reporting Entity, which establishes principles to guide preparers of 

general purpose federal financial reports in determining what organizations to report upon and what information 

should be presented.

GRANT 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, work toward a single automated 

grants management system, and enhance/formalize workforce education. Targeted efforts continue to transform the 

decentralized Department grants management community into an effective and efficient partnership.

In FY 2014, the Department started migrating EDA to NOAA’s grants management system, Grants Online. In FY 2015, 

NIST began the migration. This activity is expected to continue into FY 2017. ITA, Minority Business Development 

Administration (MBDA), and National Telecommunications and Information Administration (NTIA) have already migrated 

to Grants Online.

OAM’s Grants Management Division (GMD) continues to coordinate the Department’s implementation of 2 CFR, Part 

200, the Uniform Guidance for Grants and Cooperative Agreements issued by OMB on December 26, 2013. The Uniform 

Guidance requires federal agencies to modify grant business processes to achieve the President’s goals of streamlining 

federal programs to establish more efficient and user friendly requirements for both federal awarding agencies and 

recipients. Pursuant to the requirements of the Uniform Guidance, OAM/GMD has collaborated with partners in the 

Department’s financial assistance community to develop updated Financial Assistance Standard Terms and Conditions 

18 | FY 2015 AGENCY FINANCIAL REPORT

MANAGEMENT’S DISCUSSION AND ANALYSIS
(STC) consistent with the Uniform Guidance. These revised STC’s were issued on December 26, 2014 and govern all 

financial assistance awards issued on or subsequent to that date.

The Department’s Office of Inspector General (OIG) has withdrawn from its traditional role in the audit resolution process 

and consequently, the grants offices have expanded their role. The OIG remains available for consultation but otherwise 

does not play an authoritative role in final audit resolution decisions. This responsibility now resides with the award making 

bureau. OAM/GMD interacts with the respective bureaus to track and report on the progress of audit resolution activities.

OAM/GMD is actively engaged in assisting the grant making bureaus with implementing the Digital Accountability 

and Transparency Act (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.

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 2015, the Department hosted 14 Pathway Program interns as accountants, budget analysts, and auditors including 

eight new hires and two who were converted to permanent positions. Trainees were located within finance and accounting 

offices in the BEA, Census Bureau, ITA, NIST, and OIG.

To maintain a highly-skilled financial management workforce, the Department’s retention and succession strategies 

include the increased use of telework and development of succession plans. In FY 2015, approximately 54 percent 

of accounting and budgeting employees engaged in telework, an increase of eight percentage points from 46 percent 

in FY 2014. 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.

FY 2015 AGENCY FINANCIAL REPORT | 19

MANAGEMENT’S DISCUSSION AND ANALYSIS
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 Department’s total gross receivables with the public decreased $27 million or 5.3 percent, from $509 million as of 

September 30, 2014 to $482 million as of September 30, 2015, 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, 

decreased from 2.8 percent as of September 30, 2014 to 1.2 percent as of September 30, 2015. Receivables with the public 

over 180 days delinquent, as a percentage of total gross receivables with the public, decreased from 1.6 percent as of 

September 30, 2014 to 0.3 percent as of September 30, 2015. 

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 that are more than 180 days delinquent. 

20 | FY 2015 AGENCY FINANCIAL REPORT

MANAGEMENT’S DISCUSSION AND ANALYSIS
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 97.4 percent in FY 2014 to 98.3 percent in FY 2015. The 

number of invoices with late-payment interest penalties decreased from 4,865 in FY 2014 to 4,480 in FY 2015. The FY 2014 

prompt payment performance fell below the 98 percent target primarily due to delays in invoice processing caused by 

the October 2013 furlough of financial management staff. The Department’s prompt payment result improved in FY 2015 

as a result. 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. 

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 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 

will continue 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.

FY 2015 AGENCY FINANCIAL REPORT | 21

MANAGEMENT’S DISCUSSION AND ANALYSIS
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.

22 | FY 2015 AGENCY FINANCIAL REPORT

MANAGEMENT’S DISCUSSION AND ANALYSIS
ANALYSIS OF FY 2015 FINANCIAL CONDITION AND RESULTS

FINANCIAL HIGHLIGHTS

(Dollars In Thousands)

Percentage 

Change FY 2015 FY 2014

Condensed Balance Sheets:

As of September 30, 2015 and 2014

ASSETS:

Fund Balance with Treasury 25% $ 25,511,071 $ 20,440,730

General Property, Plant, and Equipment, Net 7% 12,948,649 12,107,752

Direct Loans and Loan Guarantees, Net 0% 512,463 512,588

Other 38% 491,547 356,634

TOTAL ASSETS 18% $ 39,463,730 $ 33,417,704

LIABILITIES:

Unearned Revenue -8% $ 1,510,571 $ 1,641,577

Federal Employee Benefits -2% 881,546 898,771

Accounts Payable 9% 646,074 592,999

Accrued Payroll and Annual Leave 1% 505,168 500,082

Debt to Treasury -62% 504,704 1,311,671

Accrued Grants -70% 144,925 475,714

Other -3% 269,860 279,110

TOTAL LIABILITIES -22% $ 4,462,848 $ 5,699,924

NET POSITION:

Unexpended Appropriations 9% $ 5,733,904 $ 5,263,441

Cumulative Results of Operations 30% 29,266,978 22,454,339

TOTAL NET POSITION 27% $ 35,000,882 $ 27,717,780

TOTAL LIABILITIES AND NET POSITION 18% $ 39,463,730 $ 33,417,704

Condensed Financing Sources:

For the Years Ended September 30, 2015 and 2014

Appropriations Received, Net of Reductions 3% $ 8,535,185 $ 8,250,441

Transfer In of Auction Proceeds from Federal 

Communications Commission 1,426% 18,627,804 1,221,000 

Transfer Out to General Fund of U.S. Government 

for Deficit Reduction N/A (12,618,990) –

Imputed Financing Sources from Cost Absorbed by Others -28% 256,500 357,022

Other 43% 413,685 289,260

TOTAL FINANCING SOURCES 50% $ 15,214,184 $ 10,117,723

(continued on next page)

FY 2015 AGENCY FINANCIAL REPORT | 23

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

(Dollars In Thousands)

Percentage 

Change FY 2015 FY 2014

Condensed Statements of Net Cost:

For the Years Ended September 30, 2015 and 2014

Condensed Statements of Net Cost:

Gross Departmental Costs 4% $ 11,951,789 $ 11,468,898

Less: Earned Revenue 6% (4,020,707) (3,796,874)

NET COST OF OPERATIONS 3% $ 7,931,082 $ 7,672,024

Selected Budgetary Information:

For the Years Ended September 30, 2015 and 2014

Obligations Incurred 56% $ 20,805,228 $ 13,363,956

Outlays, Gross 59% $ 20,469,821 $ 12,914,541

COMPOSITION OF ASSETS AND ASSETS BY RESPONSIBILITY SEGMENT

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

somewhat from September 30, 2014 to September 30, 2015. 

Departmental assets amounted to $39.46 billion as of September 30, 2015. Fund Balance with the U.S. Department of the 

Treasury (Treasury) of $25.51 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 $12.95 billion, includes 

$8.81 billion of Construction-in-progress, primarily of satellites and weather measuring and monitoring systems; $1.54 billion 

of Satellites/Weather Systems Personal Property; $1.49 billion of Structures, Facilities, and Leasehold Improvements; and 

$1.11 billion of other General PP&E. Direct Loans and Loan Guarantees, Net of Allowances for Subsidy Cost (Present 

Value) and Loan Losses, of $512.5 million, primarily relates to the National Oceanic and Atmospheric Administration’s 

(NOAA) direct loan programs. Other Assets of $491.5 million primarily includes Accounts Receivable, Net of Allowance 

for Uncollectible Accounts, of $152.1 million; Advances and Prepayments of $222.7 million; and Inventory, Materials, and 

Supplies, Net of Allowance for Excess, Obsolete, and Unserviceable Items, of $104.4 million.

24 | FY 2015 AGENCY FINANCIAL REPORT

MANAGEMENT’S DISCUSSION AND ANALYSIS
TRENDS IN ASSETS

Departmental assets increased $6.05 billion, or 18 percent, from $33.42 billion as of September 30, 2014 to $39.46 billion 

as of September 30, 2015. Fund Balance with Treasury increased $5.07 billion, or 25 percent, from $20.44 to $25.51billion, 

primarily due to a Fund Balance with Treasury increase of $6.36 billion in the National Telecommunications and Information 

Administration’s (NTIA) Network Construction Fund, from $392 thousand to $6.36 billion, resulting from a September 2015 

transfer in of $6.40 billion from NTIA’s Public Safety Trust Fund, which will be used for funding of the First Responder Network 

Authority, an independent authority within NTIA, and for other NTIA program(s). There was an offsetting Fund Balance with 

Treasury decrease of $1.42 billion in NTIA’s Public Safety Trust Fund, from $1.96 billion to $541.7 million. The Public Safety 

Trust Fund in FY 2015 received a transfer in of auction proceeds from the Federal Communications Commission (FCC) of 

$18.63 billion, and, in September 2015, transferred out a total of $19.24 billion pursuant to provisions of the Middle Class 

Tax Relief and Job Creation Act of 2012, including a transfer out of $12.62 billion to the General Fund of U.S. Government 

for deficit reduction, and a transfer out of $6.40 billion to NTIA’s Network Construction Fund, and also in September 2015 

repaid its debt to Treasury balance of $779.0 million. General PP&E, Net increased $840.9 million, or 7 percent, from 

$12.11 billion to 12.95 billion, primarily due to an increase in Construction-in-progress of $1.13 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 $713 million and $538 million, respectively. Other Assets increased 

FY 2015 AGENCY FINANCIAL REPORT | 25

MANAGEMENT’S DISCUSSION AND ANALYSIS
$134.9 million, or 38 percent, from $356.6 million to $491.5 million, in large part due to an increase in advances to grantees 

for NITA’s Broadband Technology Opportunities Program of $67.7 million as a result of periods of performance carrying 

into FY 2016 for several grants, also due to an increase in NOAA’s intragovernmental accounts receivable of $28.0 million 

related to agreements with the U.S. Air Force for construction, habitat conservation, and restoration of Grand Liard and 

Bayou DuPont, and also as a result of $19.4 million of increased intragovernmental advances and prepayments from the 

International Trade Administration (ITA) to the U.S. Department of the Interior for information technology-related services.

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, 2014 to September 30, 2015. Debt to Treasury decreased $807.0 million, or 62 percent, 

from $1.31 billion as of September 30, 2014 to $504.7 million as of September 30, 2015, primarily due to a FY 2015 debt 

repayment of $779.0 million by NTIA’s Public Safety Trust Fund, for its outstanding debt balance, as the result of additional 

FCC auction proceeds being received in FY 2015. As a result, NTIA’s liabilities notably decreased from 15 percent of 

total liabilities as of September 30, 2014 to 1 percent of total liabilities as of September 30, 2015, and NOAA’s liabilities 

notably increased from 34 percent of total liabilities as of September 30, 2014 to 43 percent of total liabilities as of 

September 30, 2015.

Liabilities of the Department amounted to $4.46 billion as of September 30, 2015. Unearned Revenue of $1.51 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 $881.5 million is comprised of the actuarial present value of projected benefits for the NOAA 

Corps Retirement System of $634.9 million and the NOAA Corps Post-retirement Health Benefits of $37.3 million, and 

the Department’s Actuarial Federal Employees Compensation Act (FECA) Liability of $209.3 million, which represents 

the actuarial liability for future workers’ compensation benefits. Accounts Payable of $646.1 million consists primarily of 

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

26 | FY 2015 AGENCY FINANCIAL REPORT

MANAGEMENT’S DISCUSSION AND ANALYSIS
expenses due. Accrued Payroll and Annual Leave of $505.2 million includes salaries and wages earned by employees, 

but not disbursed as of September 30, 2015. Debt to Treasury of $504.7 million represents debt for NOAA’s direct loan 

programs. Accrued Grants of $144.9 million relate to a diverse array of financial assistance programs and projects, 

including the Economic Development Administration’s (EDA) accrued grants of $51.8 million for its grant investments that 

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

grants of $46.9 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 $44.2 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 $269.9 million primarily include Environmental and Disposal 

Liabilities of $144.9 million, including $77.3 million for asbestos-related cleanup costs and $55.9 million for a nuclear 

reactor operated by NIST; Accrued Benefits of $40.5 million; Accrued FECA Liability of $31.7 million; Downward Subsidy 

Reestimates Payable to Treasury of $13.4 million for NOAA’s loan programs; ITA’s Foreign Service Nationals’ Voluntary 

Separation Pay Liability of $10.1 million; and Resources Payable to Treasury of $5.9 million for the Department’s loan 

programs which have pre-credit reform liquidating fund groups.

TRENDS IN LIABILITIES

Liabilities of the Department decreased $1.24 billion, or 22 percent, from $5.70 billion as of September 30, 2014 to 

$4.46 billion as of September 30, 2015. Debt to Treasury decreased $807.0 million, or 62 percent, from $1.31 billion to 

$504.7 million, primarily due to a $779.0 million repayment of debt in September 2015 by NTIA’s Public Safety Fund, as 

previously discussed. Accrued Grants decreased $330.8 million, from $475.7 million to $144.9 million, or 70 percent, 

primarily due to a change in EDA’s grant accrual methodology, aimed at better illustrating the spending patterns in each 

major grant program over the average life of the grant. Unearned Revenue decreased $131.0 million, or 8 percent, from 

$1.64 billion to $1.51 billion, primarily due to the Census Bureau’s decrease of $77.5 million in advances received from the 

U.S. Department of Justice, the U.S. Department of Housing and Urban Development, and the U.S. Department of Health 

and Human Services, that resulted from a combination of prior-year carryover advances and a lack of new work requests. 

Accounts Payable increased $53.1 million, or 9 percent, from $593.0 million to $646.1 million, in part due to NOAA’s 

increase in payables of $19.2 million related to GOES – R and JPSS satellite projects, and also due to the Census Bureau’s 

increase in payables of $13.5 million related to 2015 Census Tests across the United States aimed to improve the Census 

Bureau’s operations for the 2020 Decennial Census. 

FY 2015 AGENCY FINANCIAL REPORT | 27

MANAGEMENT’S DISCUSSION AND ANALYSIS
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 2014 to FY 2015, primarily due to a FY 2015 transfer in of 

auction proceeds from FCC of $18.63 billion received by NTIA’s 

Public Safety Trust Fund, and a subsequent FY 2015 transfer out 

of $12.62 billion by the Public Safety Trust Fund to the General 

Fund of U.S. Government for deficit reduction. As a result, Appropriations Received, Net of Reductions notably decreased from 

82 percent of the Department’s financing sources in FY 2014 to 

56 percent of the Department’s financing sources in FY 2015, with 

a similar notable percentage increase from FY 2014 to FY 2015 for 

the significant FY 2015 transfers discussed above.

Financing sources of the Department increased $5.10 billion, 

or 50 percent, from $10.12 billion in FY 2014 to $15.21 billion in 

FY 2015. Appropriations Received, Net of Reductions increased 

$284.7 million, or 3 percent, from $8.25 billion in FY 2014 to $8.54 

billion in FY 2015. Imputed Financing Sources from Cost Absorbed by Others decreased $100.5 million, or 28 percent, from 

$357.0 million to $256.5 million, primarily due to NOAA’s decrease of $46.9 million in imputed costs related to a Judgment 

Fund payment; NOAA’s and the U.S. Patent and Trademark Office’s (USPTO) decreased imputed costs related to pensions 

of $19.9 million and $16.0 million, respectively, due to a decrease in the Federal Employees Retirement System (FERS) 

cost factor; and a $9.2 million decrease in imputed costs related to the U.S. General Service Administration’s (GSA) Federal 

Buildings Fund. 

COMPOSITION OF FY 2015 NET COST OF OPERATIONS AND 

NET COST OF OPERATIONS BY RESPONSIBILITY SEGMENT

In FY 2015, the Department’s Net Cost of Operations amounted 

to $7.93 billion, which consists of Gross Costs of $11.95 billion 

less Earned Revenue of $4.02 billion.

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

Net Cost of Operations remained consistent from FY 2014 to 

FY 2015.

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 2015 Consolidated Statement of Net 

Cost, which excludes intra-Departmental transactions.

28 | FY 2015 AGENCY FINANCIAL REPORT

MANAGEMENT’S DISCUSSION AND ANALYSIS
NOAA’s FY 2015 Net Cost of Operations was $4.91 billion (Gross Costs of $5.19 billion less Earned Revenue of $280.9 million). 

NOAA’s mission relates to science, service, and stewardship—to 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 2015 Net Cost of Operations of $(61.2) million (Gross Costs of $3.01 billion less Earned Revenue of $3.07 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 2015 Net Cost of Operations was $1.20 billion (Gross Costs of 

$1.52 billion less Earned Revenue of $317.6 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 2015 Net Cost of Operations was $1.10 billion (Gross Costs of $1.41 billion less Earned 

Revenue of $311.9 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 2015 Net Cost of Operations was $911.2 million (Gross Costs of $1.23 billion less Earned Revenue of $322.6 million), 

which includes NIST and the National Technical Information Service (NTIS). NIST’s FY 2015 Net Cost of Operations was 

$912.3 million (Gross Costs of $1.07 billion less Earned Revenue of $157.0 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.

FY 2015 AGENCY FINANCIAL REPORT | 29

MANAGEMENT’S DISCUSSION AND ANALYSIS
ITA’s FY 2015 Net Cost of Operations was $456.6 million (Gross Costs of $479.5 million less Earned Revenue of 

$22.9 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.

NTIA’s FY 2015 Net Cost of Operations was $267.1 million (Gross Costs of $300.7 million less Earned Revenue of 

$33.6 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.

EDA’s FY 2015 Net Cost of Operations was $11.3 million (Gross Costs of $27.9 million less Earned Revenue of $16.6 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.

FY 2015 Net Cost of Operations for Departmental Management (DM) was $112.7 million (Gross Costs of $357.2 million 

less Earned Revenue of $244.5 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 2015 Net Cost of Operations for the other Departmental bureaus was $124.3 million (Gross Costs of $125.6 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 entrepeneurs.

TRENDS IN NET COST OF OPERATIONS

The Department’s Net Cost of Operations increased by $259.1 million, or 3 percent, from $7.67 billion in FY 2014 to 

$7.93 billion in FY 2015. Gross Costs increased by $482.9 million, or 4 percent, from $11.47 billion in FY 2014 to $11.95 billion 

in FY 2015. Earned Revenue increased by $223.8 million, or 6 percent, from $3.80 billion in FY 2014 to $4.02 billion in 

FY 2015, primarily due to NTIS’s increased earned revenue of $51.1 million in reimbursable work related to E-Learning 

management services; NOAA’s increase of $49.5 million with the U.S. Army Corps of Engineers for habitat conservation 

and restoration; and the Census Bureau’s increase of $37.9 million in earned revenue resulting from increased reimbursable 

activities with the U.S. Department of Housing and Urban Development.

30 | FY 2015 AGENCY FINANCIAL REPORT

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 2014 to FY 2015 

primarily due to NTIA’s Public Safety Trust Fund’s $6.40 billion transfer out in FY 2015 to NTIA’s Network Construction Fund, 

as previously discussed, treated as Obligations Incurred and Outlays, Gross by the Public Safety Trust Fund. As a result, 

NTIA’s Obligations Incurred, and Outlays, Gross, notably increased from 1 percent and 3 percent of the Departmental 

total in FY 2014, respectively, to 33 percent and 34 percent of the Departmental total in FY 2015, respectively. This 

caused notable decreases in NOAA’s Obligations Incurred, and Outlays, Gross, from 45 percent and 44 percent of the 

Departmental total in FY 2014, respectively, to 30 percent of the Departmental total, for both Obligations Incurred, and 

Outlays, Gross, in FY 2015.

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 Obligations Incurred increased by $7.44 billion, or 56 percent, from $13.36 billion in FY 2014 to 

$20.81 billion in FY 2015, and the Department’s Outlays, Gross increased by $7.56 billion, or 59 percent, from $12.91 billion 

in FY 2014 to $20.47 billion in FY 2015. The increases in Obligations Incurred, and Outlays, Gross were primarily due to a 

$6.40 billion increase in NTIA’s Public Safety Trust Fund Obligations Incurred, and Outlays, Gross as discussed above.

FY 2015 AGENCY FINANCIAL REPORT | 31

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; 4 Marine National Monuments (Marianas Trench, Pacific Remote Islands, Rose Atoll, 

and Papahãnaumokuãkea); 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 2015 totaled $142.3 million and 

included its Public Works program ($101.0 million), Disaster Recovery ($8.8 million), and Economic Adjustment Assistance 

program ($32.5 million). NOAA’s investments in FY 2015 totaled $0.9 million and included the National Estuarine Research 

Reserves ($0.7 million) and the Coastal and Estuarine Land Conservation Program ($0.2 million). 

32 | FY 2015 AGENCY FINANCIAL REPORT

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 2015 totaled $22.4 million and included the Educational Partnership Program ($14.3 million), the Ernest 

F. Hollings Undergraduate Scholarship Program ($5.5 million), the National Sea Grant College Program ($0.7 million), 

the National Estuarine Research Reserve Program ($1.5 million), the Southeast Fisheries Science Center’s Recruiting 

Training Research Program ($0.3 million), and the Northeast Fisheries Science Center Partnership Education Program 

($0.1 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 2015 totaled $722.4 million, and included $717.2 million for its NIST Laboratories Program 

and $5.2 million for its Technology Innovation Program, Advanced Technology Program, and Advanced Manufacturing 

Technology Consortia. NOAA’s investments in FY 2015 totaled $450.6 million, which included Environmental and Climate 

($298.4 million), Fisheries ($50.3 million), Marine Operations and Maintenance and Aircraft Services ($29.2 million), 

Weather Service ($42.7 million), and Other ($30.0 million).

FY 2015 AGENCY FINANCIAL REPORT | 33

MANAGEMENT’S DISCUSSION AND ANALYSIS
34 | FY 2015 AGENCY FINANCIAL REPORT

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

T

his FY 2015 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 2015, the Department achieved an unmodified audit opinion for the seventeenth consecutive year. The Department 

was able to eliminate the significant deficiency related to the accounting for the Economic Development Administration’s 

accrued grants; however, the Department received a significant deficiency relating to needed improvement in (1) accounting 

for the National Oceanic and Atmospheric Administration’s Commissioned Officer Corps pension benefits, (2) Departmentwide information technology general controls around access and configuration management, and (3) accounting for the 

Public Safety Trust Fund spectrum auction proceeds. We will continue to take corrective actions to strengthen controls in 

these areas in FY 2016. 

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 unqualified 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 information technology 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 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 13, 2015

36 | FY 2015 AGENCY FINANCIAL REPORT
FINANCIAL SECTION

Independent

Auditors’ Report
November 13, 2015 

INFORMATION MEMORANDUM FOR THE SECRETARY

FROM: David Smith, Acting

SUBJECT: Department of Commerce FY 2015 Consolidated Financial 

Statements—Final Report No. OIG-16-007-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 2015 

consolidated financial statements. KPMG LLP, an independent public accounting 

firm, performed the audit in accordance with U.S. generally accepted 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 three significant deficiencies in internal control over financial

reporting related to weaknesses in information technology general controls,

accounting for Public Safety Trust Fund spectrum auction proceeds, and

accounting for NOAA Corps pension benefits;

• identified no instance of reportable noncompliance with applicable

provisions of laws, regulations, contracts, and grant agreements;

• identified 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 five potential Antideficiency Act compliance matters currently

under review at the Department.

38 | FY 2015 AGENCY FINANCIAL REPORT

INDEPENDENT AUDITORS’ REPORT
2

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. 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 2015 AGENCY FINANCIAL REPORT | 39

INDEPENDENT AUDITORS’ REPORT
Independent Auditors’ Report

Acting 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, 2015 and 2014, and the 

related consolidated statements of net cost and changes in net position, and 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; the standards applicable to financial audits contained in Government Auditing Standards issued 

by the Comptroller General of the United States; and 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

Suite 12000

1801 K Street, NW

Washington, DC 20006

KPMG LLP is a Delaware limited liability partnership, 

the U.S. member firm of KPMG International Cooperative 

(“KPMG International”), a Swiss entity.

40 | FY 2015 AGENCY FINANCIAL REPORT

INDEPENDENT AUDITORS’ REPORT
U.S. Department of Commerce 

Independent Auditors’ Report 

November 13, 2015 

Page 2 of 9 

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, 2015 and 2014,

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

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 

audit of the basic consolidated financial statements, and accordingly, we do not express an opinion or 

provide any assurance on it. 

FY 2015 AGENCY FINANCIAL REPORT | 41

INDEPENDENT AUDITORS’ REPORT
U.S. Department of Commerce 

Independent Auditors’ Report 

November 13, 2015 

Page 3 of 9 

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, 2015, 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 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 were not 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 below and in more detail in Exhibit I that we consider to be significant 

deficiencies. 

• Information technology (IT) general controls need improvement. During fiscal year (FY) 2015, we

noted control deficiencies relating to access controls and configuration management. Specifically, the

Department needs to make improvements in its IT general controls to fully ensure that financial data

processed on the Department’s systems has integrity, is securely maintained, and is available only to

authorized users.

• Accounting for Public Safety Trust Fund spectrum auction proceeds needs improvement. During

FY 2015, we noted that the Department needs to improve controls and its accounting policies relating

to accounting for the Public Safety Trust Fund spectrum auction proceeds. Specifically, the Department

needs to ensure that the portion of these proceeds that are due to external parties as of an interim date

are recognized as a liability regardless of the Department’s plans to distribute the funds prior to the end

of the period.

• Accounting for NOAA Corps pension benefits needs improvement. During FY 2015, we noted that

the National Oceanic and Atmospheric Administration (NOAA) did not review the census data that was

provided to an external actuary and did not obtain and review a service organization report or perform

sufficient alternative procedures to identify and address key controls supporting the NOAA Corps

retirement system and health benefits liabilities.

42 | FY 2015 AGENCY FINANCIAL REPORT

INDEPENDENT AUDITORS’ REPORT
U.S. Department of Commerce 

Independent Auditors’ Report 

November 13, 2015 

Page 4 of 9 

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 disclosed no instances of noncompliance or other matters 

that are required to be reported 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.

Other Matters: The Department informed us of potential Antideficiency Act compliance matters that are 

being reviewed by the Department’s Office of the Secretary and the Department’s Office of General 

Counsel as follows: (i) potential incorrect use of budgetary funding sources to support its programs; 

(ii) accepting terms of agreement on purchases made through the internet; (iii) relating to work performed 

without compensation through appointment as an intermittent expert after retiring from employment with 

the bureau; (iv) unemployment claims filed by temporary employees; and, (v) potential obligations in 

excess of quarterly advance of apportionment from OMB. Because these reviews are not complete, the

ultimate outcomes of these potential matters are not presently known.

The Department’s Responses to Findings

The Department’s responses to the findings identified in our audit are described in Exhibit I. The 

Department’s responses were not subjected to the auditing procedures applied in the audit of the 

consolidated financial statements and, accordingly, we express no opinion on the responses. 

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. 

Washington, D.C. 

November 13, 2015 

FY 2015 AGENCY FINANCIAL REPORT | 43

INDEPENDENT AUDITORS’ REPORT
U.S. Department of Commerce 

Independent Auditors’ Report 

November 13, 2015 

Page 5 of 9 

Exhibit I – Significant Deficiencies

A. Information Technology General Controls Need Improvement

For several years, information security is recognized as a top management challenge for the Department.

While the Department has implemented corrective actions, it continues to be an area of focus. Using the 

U.S. Government Accountability Office’s Federal Information System Controls Audit Manual

(FISCAM), we considered the Department’s IT general controls supporting its financial reporting because 

IT systems significantly facilitate an entity’s financial processing activities and retain important financial 

data. Effective IT general controls assists management with ensuring that data used to prepare and report 

financial statements and related information is complete, reliable, and has integrity.

Access controls. In close concert with an organization’s entity-wide information security program, access 

controls for general support systems should provide reasonable assurance that computer resources such as 

data files, application programs, and computer-related facilities and equipment are protected against 

unauthorized modification, disclosure, loss or impairment. Access controls are facilitated by an 

organization’s entity-wide security program. Such controls include physical controls, such as keeping 

computers in locked rooms to limit physical access, and logical controls, such as security software 

programs designed to prevent or detect unauthorized access to data. Similar to security management, 

inadequate access controls diminish the reliability and integrity of computerized data and increase the risk 

of destruction or inappropriate disclosure of information.

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. This is reiterated by Federal guidelines. For example, the OMB Circular A-130 and 

supporting National Institute of Standards and Technology publications provide guidance related to the 

maintenance of technical access controls. In addition, the Department’s IT Security Program Policy 

contains requirements for operating Department IT devices in a secure manner.

During FY 2015, we noted that access controls should be improved, primarily in the areas of: (1) 

improving application, database and operating system password controls; (2) strengthening access 

administration controls to financial and feeder systems’ applications and supporting infrastructure (e.g. 

databases and network); (3) restricting logical access to financially significant source code; (4) reviewing 

user accounts to appropriately disable and recertify access to financial and feeder systems’ applications 

and supporting infrastructure; (5) strengthening software encryption controls; and (6) improving 

monitoring of audit logs. We recognize that the Department has certain compensating controls in place to

help reduce the risk of the identified weaknesses, and we considered such compensating controls as part 

of our audit of the Department’s consolidated financial statements. 

Configuration management. Configuration management involves the identification and management of 

security features for all hardware, software, and firmware components of an information system at a given 

point and systematically controls configuration changes throughout the life cycle of the system. 

Configuration settings and the related configuration management is a key component of many IT systems 

44 | FY 2015 AGENCY FINANCIAL REPORT

INDEPENDENT AUDITORS’ REPORT
U.S. Department of Commerce 

Independent Auditors’ Report 

November 13, 2015 

Page 6 of 9 

Exhibit I – Significant Deficiencies, continued

to ensure that hardware, software and firmware programs, and program modifications are properly 

authorized, tested, and approved, and that access to, and distribution of, programs is carefully controlled. 

Configuration settings may affect the design, implementation and/or operating effectiveness of 

application controls and may be subject to change control procedures to maintain the integrity of the 

application controls. Without proper controls, there is a risk that security features could be inadvertently 

or deliberately omitted or turned off, or that processing irregularities or malicious code could be 

introduced into the IT environment. 

During FY 2015, we noted that configuration management controls should be improved to address

configuration and patch management weaknesses identified. We recognize that the Department has 

certain compensating controls in place to help reduce the risk of the identified weaknesses, and we 

considered such compensating controls as part of our audit of the Department’s consolidated financial 

statements. 

Recommendations

We provided the Department specific recommendations to improve its IT general controls related to 

financial systems in a separate limited distribution IT report, issued as part of the FY 2015 consolidated 

financial statement audit. The Department should monitor operating units’ actions to ensure effective 

implementation of our recommendations and to ensure continued compliance with the Federal Financial 

Management Improvement Act of 1996. 

Management’s Response

The Department concurs. We will develop corrective action plans and ensure timely implementation to 

address KPMG’s recommendations.

B. Accounting for Public Safety Trust Fund Spectrum Auction Proceeds Needs Improvement

On June 9, 2015, the National Telecommunications and Information Administration (NTIA) Public 

Safety Trust Fund received a transfer-in of $18.6 billion from the Federal Communications Commission 

for spectrum auction proceeds in accordance with the Middle Class Tax Relief and Job Creation Act of 

2012 (the Act). In accordance with the Act, NTIA planned to use $6.3 billion for the Network 

Construction Fund, $131 million for the NTIA State and Local Implementation Fund, $779 million for 

NTIA’s loan repayment to the U.S. Department of Treasury (Treasury), $93 million for certain National 

Institute of Standards and Technology (NIST) programs, and $12.6 billion to be disbursed to the Treasury 

General Fund. 

On June 25, 2015, NIST, the accounting service provider for NTIA, recorded an accounting entry to 

recognize this transaction. However, NIST, in coordination with NTIA and the Department’s Office of 

Financial Management (OFM), did not accrue a liability for the portion of the proceeds that were owed to 

FY 2015 AGENCY FINANCIAL REPORT | 45

INDEPENDENT AUDITORS’ REPORT
U.S. Department of Commerce 

Independent Auditors’ Report 

November 13, 2015 

Page 7 of 9 

Exhibit I – Significant Deficiencies, continued

the Treasury General Fund even though the conditions outlined in Statement of Federal Financial 

Accounting Standards Number 5, Accounting for Liabilities, were met. As a result, the Department’s FY 

2015 third quarter financial statements were misstated because they did not include this liability.

NIST stated that a liability was not recorded because of uncertainties associated with the timing of OMB 

approving the apportionment of the proceeds received and that NIST intended to record the liability when 

the apportionment was received. In addition, OFM’s management review control of third quarter 

submissions from bureaus for financial statement reporting purposes did not identify the need for a 

liability. Further, although the Department’s Accounting Principles and Standards Handbook recognizes 

the need for quarterly accruals for goods and services received, it does not address the type of non-entity 

activity described above (that is, receipts received that are due to an external party upon receipt). 

As a result of our inquiry about this matter, the Department recorded a liability in the general ledger on

September 22, 2015. The liability was subsequently liquidated on September 29, 2015 when the proceeds 

were disbursed to the Treasury General Fund as a result of receipt of the apportionment on September 11, 

2015. 

Recommendations

We recommend that: 

1. NIST improve its processes to identify and determine the financial statement impact of all significant

events and/or transactions to ensure that accounting positions are based on U.S. generally accepted

accounting principles (GAAP).

2. OFM update the Department’s Accounting Principles and Standards Handbook to address the

appropriate accounting for such transactions.

3. OFM ensure that significant transactions and events that are identified when reviewing the analysis of

significant variances received from the bureaus for the quarterly financial statements that are required

to be submitted to OMB are resolved on a timely basis.

Management’s Response

The Department concurs. We will develop corrective action plans and ensure timely implementation to 

address KPMG’s recommendations.

C. Accounting for NOAA Corps Pension Benefits Needs Improvement

The NOAA Corps payroll, retirement system, and health benefits payments are processed and maintained 

by an external accounting service provider and the related actuarial liabilities as of fiscal year end are 

determined by an external actuary. 

46 | FY 2015 AGENCY FINANCIAL REPORT

INDEPENDENT AUDITORS’ REPORT
U.S. Department of Commerce 

Independent Auditors’ Report 

November 13, 2015 

Page 8 of 9 

Exhibit I – Significant Deficiencies, continued

In prior years, we recommended that the NOAA either: 1) obtain a Statement on Standards for Attestation 

Engagements No. 16 (SSAE 16) report relating to the service provider’s processing of payments due to 

NOAA Corps active and retired officers, and, as applicable, their beneficiaries or 2) develop a 

documented system of internal controls to ensure that the related payroll and pension benefits data 

processed and maintained by the service provider is complete and accurate.

During FY 2015, we noted that NOAA made some progress in addressing our prior year recommendation 

as they requested a service organization control (SOC) report from the service provider and drafted a

standard operating procedures (SOP) document outlining a system of internal controls to ensure that 

NOAA pay and benefit data processed and maintained by the service provider is complete and accurate.

However, we noted the following weaknesses relating to the SOC report and the draft SOP. 

SOC report. The service provider provided NOAA with a Service Organization Control 2 (SOC 

2), Type 2 report, Report on Controls at the Service Organization Relevant to Security, 

Availability, Processing Integrity, and Confidentiality that covered the period from April 1, 2015 

to September 30, 2015. NOAA received this report on October 30, 2015 (that is, after the period 

end). 

While the SOC 2 report may be useful to NOAA Corps for operational purposes, it does not 

directly address internal controls over financial reporting. A SOC 1 Type 2 report, Report on 

Controls at a Service Organization Relevant to User Entities’ Internal Control over Financial 

Reporting should be used by user entities’ management for its consideration of financial reporting 

controls that are relevant to the Department’s consolidated financial statements. As described by 

the American Institute of Certified Public Accountants (AICPA), a SOC 1 Type 2 report (also 

referred to as a SSAE 16 report as a result of the relevant AICPA attestation standards) is a report 

on the fairness of the presentation of management’s description of the service organization’s 

system and the suitability of the design and operating effectiveness of the controls to achieve the 

related control objectives included in the description throughout a specified period (e.g. the entire 

fiscal year).

Draft SOP. NOAA did not finalize its draft SOP during fiscal year 2015. Therefore, control 

procedures were not implemented as of and for the year ended September 30, 2015 to ensure that 

the NOAA Corps data processed and maintained by the service provider is complete and 

accurate. 

Moreover, the NOAA Corps census data that contains personally identifiable information (e.g. 

officers’ and surviving beneficiaries’ date of birth and date of initial entry into military service, 

pay, as applicable) was sent directly from the service provider to the external actuary. Therefore, 

NOAA Corps did not review the data prior to submission to the external actuary and does not 

have a policy to review that data for completeness and accuracy prior to such submission. 

FY 2015 AGENCY FINANCIAL REPORT | 47

INDEPENDENT AUDITORS’ REPORT
U.S. Department of Commerce 

Independent Auditors’ Report 

November 13, 2015 

Page 9 of 9 

Exhibit I – Significant Deficiencies, continued

The lack of a SOC 1 Type 2 report or sufficient alternative procedures and sufficient complementary end 

user controls relating to the NOAA Corps census data provides an increased risk for misstatements in the 

NOAA Corps actuarial liabilities to occur and not be detected and corrected in a timely manner. We

considered that NOAA has compensating controls over the input of personnel information and 

reconciliations relating to the payroll expense that reduce the risk of the identified weaknesses.

Recommendations

We recommend that NOAA:

4. Coordinate with the service provider to obtain a SOC 1 Type 2 report or perform sufficient alternative

procedures to identify and address key internal controls over financial reporting over the

completeness and accuracy of the NOAA Corps retirement system and health benefits liabilities.

5. Continue to develop and implement complementary end user controls and other financial reporting

controls, to address control deficiencies identified in a SOC 1 Type 2 report or in the results of any

alternative procedures as well as finalize and implement policies to ensure completeness and accuracy

of the NOAA Corps census data.

Management’s Response

The Department concurs. We will develop corrective action plans and ensure timely implementation to 

address KPMG’s recommendations.

48 | FY 2015 AGENCY FINANCIAL REPORT

INDEPENDENT AUDITORS’ REPORT
FINANCIAL SECTION

Principal Financial

Statements
United States Department of Commerce Consolidated Balance Sheets

As of September 30, 2015 and 2014 (In Thousands)

FY 2015 FY 2014

ASSETS

Intragovernmental:

Fund Balance with Treasury (Notes 2 and 18) $ 25,511,071 $ 20,440,730

Accounts Receivable (Note 3) 119,395 79,756

Advances and Prepayments 104,385 75,948

Total Intragovernmental 25,734,851 20,596,434

Cash (Note 4) 4,406 5,444

Accounts Receivable, Net (Note 3) 32,718 48,201

Direct Loans and Loan Guarantees, Net (Note 5) 512,463 512,588

Inventory, Materials, and Supplies, Net (Note 6) 104,388 100,038

General Property, Plant, and Equipment, Net (Note 7) 12,948,649 12,107,752

Other (Note 8) 126,255 47,247

TOTAL ASSETS $ 39,463,730 $ 33,417,704

Stewardship Assets (Note 23)

LIABILITIES

Intragovernmental:

Accounts Payable $ 165,233 $ 141,659

Debt to Treasury (Note 10) 504,704 1,311,671

Other

Resources Payable to Treasury 5,905 8,674 

Unearned Revenue 266,056 348,361

Other (Note 11) 87,078 85,953

Total Intragovernmental 1,028,976 1,896,318

Accounts Payable 480,841 451,340

Loan Guarantee Liabilities (Notes 5 and 16) – 516 

Federal Employee Benefits (Note 12) 881,546 898,771

Environmental and Disposal Liabilities (Note 13) 144,893 157,503 

Other

Accrued Payroll and Annual Leave 505,168 500,082

Accrued Grants 144,925 475,714

Capital Lease Liabilities (Note 14) 3,109 6,345

Unearned Revenue 1,244,515 1,293,216

Other (Note 11) 28,875 20,119

TOTAL LIABILITIES $ 4,462,848 $ 5,699,924

Commitments and Contingencies (Note 16) 

NET POSITION 

Unexpended Appropriations

Unexpended Appropriations – Funds from Dedicated Collections (Note 21) $ – $ – 

Unexpended Appropriations – All Other Funds 5,733,904 5,263,441

Cumulative Results of Operations

Cumulative Results of Operations – Funds from Dedicated Collections (Note 21) 17,640,086 11,592,944 

Cumulative Results of Operations – All Other Funds 11,626,892 10,861,395 

Total Net Position – Funds from Dedicated Collections 17,640,086 11,592,944 

Total Net Position – All Other Funds 17,360,796 16,124,836

TOTAL NET POSITION $ 35,000,882 $ 27,717,780

TOTAL LIABILITIES AND NET POSITION $ 39,463,730 $ 33,417,704

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

50 | FY 2015 AGENCY FINANCIAL REPORT

PRINCIPAL FINANCIAL STATEMENTS
United States Department of Commerce Consolidated Statements of Net Cost

For the Years Ended September 30, 2015 and 2014 (Note 17) (In Thousands) 

FY 2015 FY 2014

Gross Departmental Costs

National Oceanic and Atmospheric Adminstration (NOAA) (Note 7) $ 5,174,270 $ 4,891,391

U.S. Patent and Trademark Office (USPTO) 3,012,010 2,731,675

Economics and Statistics Adminstration (ESA) 1,509,005 1,402,443

National Institute of Standards and Technology (NIST) 1,204,798 1,017,709

National Telecommunications and Information Adminstration (NTIA) (Note 7) 298,848 406,530

Departmental Management 129,952 115,770

Others 622,906 903,380

Total Gross Departmental Costs 11,951,789 11,468,898

Less: Earned Revenue (4,020,707) (3,796,874)

NET COST OF OPERATIONS $ 7,931,082 $ 7,672,024

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

FY 2015 AGENCY FINANCIAL REPORT | 51

PRINCIPAL FINANCIAL STATEMENTS
United States Department of Commerce Consolidated Statements of Changes in Net Position 

For the Years Ended September 30, 2015 and 2014 (In Thousands)

FY 2015 FY 2014

Funds from 

Dedicated 

Collections

(Note 21) All Other Funds

Consolidated 

Total

Funds from 

Dedicated 

Collections

(Note 21) All Other Funds

Consolidated 

Total

Cumulative Results Of Operations:

Beginning Balance $ 11,592,944 $ 10,861,395 $ 22,454,339 $ 10,033,602 $ 9,897,600 $ 19,931,202

Budgetary Financing Sources:

Appropriations Used – 8,204,450 8,204,450 – 8,299,985 8,299,985

Non-exchange Revenue 118,419 12,001 130,420 176,145 6,630 182,775

Donations and Forfeitures of Cash and 

 Cash Equivalents – 4,119 4,119 – 4,749 4,749

Transfer In of Auction Proceeds from Federal 

 Communications Commission (Note 21) 18,627,804 – 18,627,804 1,221,000 – 1,221,000

Transfer Out to Receipt Account for Providing 

 Funds to General Fund of U.S. Government (Note 21) (12,618,990) – (12,618,990) – – –

Transfers In/(Out) Without Reimbursement, Net 1,674 143,870 145,544 3,768 129,540 133,308

Rescissions/Sequestrations (Note 18) – (2,906) (2,906) – – –

Other Budgetary Financing Sources/(Uses), Net – 31 31 – – – 

Other Financing Sources (Non-exchange):

Donations and Forfeitures of Property 1,351 1,305 2,656 – 1,296 1,296

Transfer In Received by Receipt Account for Providing 

 Funds to General Fund of U.S. Government (Note 21) 12,618,990 – 12,618,990 – – – 

Transfer Out to General Fund of U.S. Government for 

 Deficit Reduction (Note 21) (12,618,990) – (12,618,990) – – – 

Transfers In/(Out) Without Reimbursement, Net (1,251) 410 (841) – 6,742 6,742

Imputed Financing Sources from Cost Absorbed 

 by Others 47,002 209,498 256,500 62,780 294,242 357,022

Other Financing Sources/(Uses), Net – (5,066) (5,066) – (11,716) (11,716)

Total Financing Sources 6,176,009 8,567,712 14,743,721 1,463,693 8,731,468 10,195,161

Net Cost of Operations (128,867) (7,802,215) (7,931,082) 95,649 (7,767,673) (7,672,024)

Net Change 6,047,142 765,497 6,812,639 1,559,342 963,795 2,523,137

Cumulative Results of Operations – Ending Balance 17,640,086 11,626,892 29,266,978 11,592,944 10,861,395 22,454,339

Unexpended Appropriations:

Beginning Balance – 5,263,441 5,263,441 – 5,340,879 5,340,879

Budgetary Financing Sources:

Appropriations Received (Note 18) – 8,545,281 8,545,281 – 8,261,101 8,261,101

Appropriations Transferred In/(Out), Net – 283,364 283,364 – 17,688 17,688

Rescissions/Sequestrations of Appropriations (Note 18) – (7,190) (7,190) – (10,660) (10,660)

Cancellations and Other Adjustments – (146,542) (146,542) – (45,582) (45,582)

Appropriations Used – (8,204,450) (8,204,450) – (8,299,985) (8,299,985)

Total Budgetary Financing Sources – 470,463 470,463 – (77,438) (77,438)

Unexpended Appropriations – Ending Balance – 5,733,904 5,733,904 – 5,263,441 5,263,441

NET POSITION $ 17,640,086 $ 17,360,796 $ 35,000,882 $ 11,592,944 $ 16,124,836 $ 27,717,780

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

52 | FY 2015 AGENCY FINANCIAL REPORT

PRINCIPAL FINANCIAL STATEMENTS
United States Department of Commerce Combined Statements of Budgetary Resources 

For the Years Ended September 30, 2015 and 2014 (Note 18) (In Thousands)

FY 2015 FY 2014

Budgetary

Non-budgetary Credit 

Program Financing Accounts Budgetary

Non-budgetary Credit 

Program Financing Accounts

BUDGETARY RESOURCES:

Unobligated Balance, Brought Forward, October 1 $ 12,834,426 $ 10 $ 10,701,770 $ 7

Adjustments to Unobligated Balance, Brought Forward – – (2,721) –

Unobligated Balance, Brought Forward, October 1, as Adjusted 12,834,426 10 10,699,049 7

Actual Recoveries of Prior-years Unpaid Obligations 306,562 28,490 378,062 6,696

Actual Nonexpenditure Transfers of Unobligated Balance, Net 1,672 – 3,826 –

Borrowing Authority Withdrawn – (28,490) – (6,696)

Other Changes in Unobligated Balance, Net (146,510) – (46,094) –

Unobligated Balance From Prior-years Budget Authority, Net 12,996,150 10 11,034,843 7

Appropriations 13,981,745 – 8,429,193 –

Borrowing Authority – 65,860 1,738,475 98,218

Spending Authority From Offsetting Collections 11,341,144 31,130 4,867,504 30,152

TOTAL BUDGETARY RESOURCES $ 38,319,039 $ 97,000 $ 26,070,015 $ 128,377

STATUS OF BUDGETARY RESOURCES:

Obligations Incurred $ 20,710,355 $ 94,873 $ 13,235,589 $ 128,367

Unobligated Balance, End of Year

Apportioned 8,041,086 – 3,449,315 –

Exempt From Apportionment 2,486 – 4,016 –

Unapportioned 9,565,112 2,127 9,381,095 10

Total Unobligated Balance, End of Year 17,608,684 2,127 12,834,426 10

TOTAL STATUS OF BUDGETARY RESOURCES $ 38,319,039 $ 97,000 $ 26,070,015 $ 128,377

CHANGE IN UNPAID OBLIGATED BALANCE, NET:

Unpaid Obligations:

Unpaid Obligations, Brought Forward, October 1 $ 6,677,864 $ 182,409 $ 6,656,223 $ 139,393

Obligations Incurred 20,710,355 94,873 13,235,589 128,367

Outlays, Gross (20,343,080) (126,741) (12,835,886) (78,655)

Actual Recoveries of Prior-years Unpaid Obligations (306,562) (28,490) (378,062) (6,696)

UNPAID OBLIGATIONS, END OF YEAR $ 6,738,577 $ 122,051 $ 6,677,864 $ 182,409

Uncollected Customer Payments: 

Uncollected Customer Payments, Brought Forward, October 1 $ (448,663) $ (467) $ (468,789) $ (467)

Adjustments to Uncollected Customer Payments, Brought Forward – – 4,025 –

Change in Uncollected Customer Payments (115,828) – 16,101 –

UNCOLLECTED CUSTOMER PAYMENTS, END OF YEAR $ (564,491) $ (467) $ (448,663) $ (467)

Unpaid Obligated Balance, Net, Brought Forward, October 1, 

as Adjusted $ 6,229,201 $ 181,942 $ 6,191,459 $ 138,926

Unpaid Obligated Balance, Net, End of Year $ 6,174,086 $ 121,584 $ 6,229,201 $ 181,942

BUDGET AUTHORITY, NET:

Budget Authority, Gross $ 25,322,889 $ 96,990 $ 15,035,172 $ 128,370

Actual Offsetting Collections (11,351,448) (135,026) (4,886,210) (92,352)

Change in Uncollected Customer Payments (115,828) – 16,101 –

BUDGET AUTHORITY, NET $ 13,855,613 $ (38,036) $ 10,165,063 $ 36,018

OUTLAYS, NET:

Outlays, Gross $ 20,343,080 $ 126,741 $ 12,835,886 $ 78,655

Actual Offsetting Collections (11,351,448) (135,026) (4,886,210) (92,352)

Outlays, Net 8,991,632 (8,285) 7,949,676 (13,697)

Distributed Offsetting (Receipts)/Outlays, Net (36,089) – (56,006) –

AGENCY OUTLAYS, NET $ 8,955,543 $ (8,285) $ 7,893,670 $ (13,697)

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

FY 2015 AGENCY FINANCIAL REPORT | 53

PRINCIPAL FINANCIAL STATEMENTS
54 | FY 2015 AGENCY FINANCIAL REPORT

PRINCIPAL FINANCIAL STATEMENTS
FINANCIAL SECTION

Notes to the Financial

Statements
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)

● Franchise Fund

● Gifts and Bequests (G&B)

● Herbert C. Hoover Building (HCHB) 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)

● Emergency Steel Loan Guarantee Program (ELGP-Steel)

● 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) as an independent 

authority within NTIA, to provide emergency responders with the first high-speed, nationwide network dedicated to public safety.

56 | FY 2015 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. NOAA, 

EDA, the Census Bureau, and BEA have received allocation transfers, as the child, from the U.S. General Services Administration 

(GSA), U.S. Environmental Protection Agency, Delta Regional Authority, Appalachian Regional Commission, and the Northern 

Border Regional Commission. 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 21, Funds from Dedicated Collections.)

FY 2015 AGENCY FINANCIAL REPORT | 57

NOTES TO THE FINANCIAL STATEMENTS
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, Consolidated Statements of Net Cost, and are 

excluded from the consolidated total column of the Consolidated Statements of Changes in Net Position; however, to improve 

the transparency of an intra-entity (NTIA) transfer preceding a September 2015 transfer out of $12.62 billion to the General Fund 

of U.S. Government, a transfer out of $12.62 billion from NTIA’s Public Safety Trust Fund to a receipt account for transferring funds 

to the General Fund of U.S. Government is not eliminated on the FY 2015 Consolidated Statement of Changes in Net Position. 

See Note 21, Funds from Dedicated Collections, Public Safety Trust Fund, for a full description of these transfers. The Statements 

of 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 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.

G 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.

H 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. 

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. 

58 | FY 2015 AGENCY FINANCIAL REPORT

NOTES TO THE FINANCIAL STATEMENTS
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.

I 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, 

weighted-average, 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.

J 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 2015 AGENCY FINANCIAL REPORT | 59

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 singleasset acquisition capitalization thresholds for both FY 2015 and FY 2014 are as follows: NOAA—$200 thousand or more; NIST 

and 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: As of September 30, 2015, NOAA has a personal property bulk acquisition capitalization 

threshold of $1 million, where individual items cost $25 thousand or more but less than $200 thousand, and all other bureaus 

and Departmental Management have a personal property bulk acquisition capitalization threshold of $250 thousand, except that 

USPTO has a furniture bulk acquisition capitalization threshold of $50 thousand and NTIA’s First Responder Network Authority 

has a personal property bulk acquisition capitalization threshold of $50 thousand.

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 and Construction-in-progress are not depreciated.

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. 

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.

K 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. 

L 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 through NTIA’s Public Safety Trust Fund, and State and Local Implementation Fund. To simplify 

60 | FY 2015 AGENCY FINANCIAL REPORT

NOTES TO THE FINANCIAL STATEMENTS
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 borrowed by NTIA are interest-free. The amounts reported for Debt to 

Treasury include accrued interest payable. See Note 10, Debt to Treasury, for information regarding maturity dates.

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). 

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.

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.

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 

Allowance) 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.

The model’s resulting projections are analyzed by DOL to ensure that the amounts are reliable. The analysis is 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.

FY 2015 AGENCY FINANCIAL REPORT | 61

NOTES TO THE FINANCIAL STATEMENTS
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.P, 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 asbestosrelated 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 asbestoscontaining 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 

facility to be $71.8 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. 

62 | FY 2015 AGENCY FINANCIAL REPORT

NOTES TO THE FINANCIAL STATEMENTS
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 grantees. These drawdown requests may be received and fulfilled before grantees 

make the program expenditures. When the Department has disbursed funds but the grant recipient has not yet reported 

expenditures, these disbursements are recorded as advances. If a recipient, however, reports program expenditures that have 

not been advanced by the Department by September 30, such amounts are recorded as grant expenses and grants payable 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 

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 15.

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 15 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.

FY 2015 AGENCY FINANCIAL REPORT | 63

NOTES TO THE FINANCIAL STATEMENTS
M 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. 

N 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.

O 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 

multiple-fiscal 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 21, 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. Nonexchange 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. 

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 

64 | FY 2015 AGENCY FINANCIAL REPORT

NOTES TO THE FINANCIAL STATEMENTS
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.

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.

P 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.

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, 2015, included 

327 active duty officers, 376 nondisability retiree annuitants, 14 disability retiree annuitants, and 53 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. 

FY 2015 AGENCY FINANCIAL REPORT | 65

NOTES TO THE FINANCIAL STATEMENTS
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 2015 and 2014 may not 

exceed the IRS limit of $18 thousand for 2015 and $17.5 thousand for 2014. 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.

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.

Q 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. 

66 | FY 2015 AGENCY FINANCIAL REPORT

NOTES TO THE FINANCIAL STATEMENTS
R Tax Status

The Department is not subject to federal, state, or local income taxes. Accordingly, no provision for income taxes is recorded.

S 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, 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 20.

FY 2015 AGENCY FINANCIAL REPORT | 67

NOTES TO THE FINANCIAL STATEMENTS
NOTE 2. FUND BALANCE WITH TREASURY

Fund Balance with Treasury, by type, is as follows:

FY 2015 FY 2014

General Funds $ 8,411,292 $ 8,247,076

Revolving Funds

Network Construction Fund 6,356,712 392

Others 856,404 906,561

Special Funds

Digital Television Transition and Public Safety Fund 8,815,921 8,822,152

Patent and Trademark Surcharge Fund 233,529 233,529

Others 123,287 110,312

Deposit Funds 167,402 154,037

Trust Funds

Public Safety Trust Fund 541,696 1,957,934

Other 2,735 4,674

Other Fund Types 2,093 4,063

Total $ 25,511,071 $ 20,440,730

Status of Fund Balance with Treasury is as follows:

FY 2015 FY 2014

Temporarily Precluded From Obligation $ 1,325,068 $ 1,089,248

Unobligated Balance

Available 8,065,051 3,452,709

Unavailable 9,545,232 9,381,382

Obligated Balance Not Yet Disbursed 6,174,260 6,126,726

Non-budgetary 401,460 390,665

Total $ 25,511,071 $ 20,440,730

See Note 18, Combined Statements of Budgetary Resources, for legal arrangements affecting the Department’s use of Fund 

Balance with Treasury for FY 2015 and FY 2014.

See Note 21, 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.

68 | FY 2015 AGENCY FINANCIAL REPORT

NOTES TO THE FINANCIAL STATEMENTS
NOTE 3. ACCOUNTS RECEIVABLE, NET 

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

FY 2014

Accounts 

Receivable, 

Gross

Allowance for 

Uncollectible 

Accounts

Accounts 

Receivable, 

Net

Intragovernmental $ 79,756 $ – $ 79,756

With the Public $ 59,868 $ (11,667) $ 48,201

NOTE 4. CASH 

FY 2015 FY 2014

Cash Not Yet Deposited with Treasury $ 4,054 $ 5,091

Imprest Funds 352 353

Total $ 4,406 $ 5,444

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 2015 AGENCY FINANCIAL REPORT | 69

NOTES TO THE FINANCIAL STATEMENTS
NOTE 5. 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

1 No loans have been issued under these programs as of September 30, 2015. 

Loan Guarantee Programs:

EDA Economic Development Revolving Fund

ELGP-Steel Emergency Steel Loan Guarantee Program

NOAA Fishing Vessel Obligation Guarantee (FVOG) Program

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.

70 | FY 2015 AGENCY FINANCIAL REPORT

NOTES TO THE FINANCIAL STATEMENTS
The net assets for the Department’s loan programs consist of:

FY 2015 FY 2014

Direct Loans Obligated Prior to FY 1992 $ 7,698 $ 11,771

Direct Loans Obligated After FY 1991 504,761 500,298

Defaulted Guaranteed Loans from Pre-FY 1992 Guarantees 4 3

Defaulted Guaranteed Loans from Post-FY 1991 Guarantees – 516

Total $ 512,463 $ 512,588

Direct Loans Obligated Prior to FY 1992 consist of:

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

Fisheries Loan Fund 148 16 (164) –

Economic Development Revolving Fund 501 – (5) 496

Total $ 22,190 $ 5,759 $ (20,251) $ 7,698

FY 2014

Direct 

Loan Program

Loans 

Receivable, 

Gross

Interest 

Receivable

Allowance for 

Loan Losses

Value of Assets 

Related to 

Direct Loans, 

Net

CEIP $ 18,842 $ 5,474 $ (19,813) $ 4,503

Drought Loan Portfolio 4,257 – – 4,257

Fisheries Loan Fund 148 16 (164) –

Economic Development Revolving Fund 3,040 1 (30) 3,011

Total $ 26,287 $ 5,491 $ (20,007) $ 11,771

FY 2015 AGENCY FINANCIAL REPORT | 71

NOTES TO THE FINANCIAL STATEMENTS
Direct Loans Obligated After FY 1991 consist of: 

FY 2015

Direct Loan Program

Loans 

Receivable, 

Gross

Interest 

Receivable

Allowance for 

Subsidy Cost

(Present Value)

Value of Assets 

Related to 

Direct Loans, Net

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

Alaska Purse Seine Fishery Buyback Loans 9,383 6 803 10,192

Total $ 436,326 $ 3,034 $ 65,401 $ 504,761

FY 2014

Direct Loan Program

Loans 

Receivable, 

Gross

Interest 

Receivable

Allowance for 

Subsidy Cost

(Present Value)

Value of Assets 

Related to 

Direct Loans, Net

Bering Sea and Aleutian Islands NonPollock Buyback Loans $ 32,956 $ 85 $ 5,040 $ 38,081

Bering Sea Pollock Fishery Buyback 33,226 52 1,830 35,108

Crab Buyback Loans 83,006 1,481 19,945 104,432

Fisheries Finance IFQ Loans 23,237 233 4,102 27,572

Fisheries Finance Traditional Loans 225,699 2,015 22,979 250,693

Pacific Groundfish Buyback Loans 27,486 66 6,421 33,973

Alaska Purse Seine Fishery Buyback Loans 9,572 16 851 10,439

Total $ 435,182 $ 3,948 $ 61,168 $ 500,298

New Disbursements of Direct Loans (Post-FY 1991):

Direct Loan Program FY 2015 FY 2014

Fisheries Finance IFQ Loans $ 1,658 $ 1,411

Fisheries Finance Traditional Loans 84,308 42,563

Total $ 85,966 $ 43,974

72 | FY 2015 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 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)

FY 2014

Direct Loan Program

Interest Rate

Differential Defaults

Fees and 

Other

Collections Other Total

Fisheries Finance IFQ Loans $ (5,366) $ 28 $ (217) $ 1,836 $ (3,719)

Fisheries Finance Traditional Loans (233) 2 (6) 85 (152)

Total $ (5,599) $ 30 $ (223) $ 1,921 $ (3,871)

Reestimates:

FY 2015

Direct Loan Program

Technical

Reestimates

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)

Pacific Groundfish Buyback Loans 663

Alaska Purse Seine Fishery Buyback Loans (4)

Total $ (1,904)

FY 2014

Direct Loan Program

Technical

Reestimates

Bering Sea and Aleutian Islands Non-Pollock Buyback Loans $ (594)

Bering Sea Pollock Fishery Buyback (3)

Crab Buyback Loans 2,883

Fisheries Finance IFQ Loans (328)

Fisheries Finance Traditional Loans 9,125

Fisheries Finance Traditional Loans 1,200

Alaska Purse Seine Fishery Buyback Loans (399)

Total $ 11,884

There were no interest rate reestimates and all reestimates were technical for both FY 2015 and FY 2014.

FY 2015 AGENCY FINANCIAL REPORT | 73

NOTES TO THE FINANCIAL STATEMENTS
Total Direct Loan Subsidy Expense:

Direct Loan Program FY 2015 FY 2014

Bering Sea and Aleutian Islands Non-Pollock 

Buyback Loans $ (225) $ (594)

Bering Sea Pollock Fishery Buyback (175) (3)

Crab Buyback Loans 1,104 2,883

Fisheries Finance IFQ Loans 513 (481)

Fisheries Finance Traditional Loans (9,667) 5,407

Pacific Groundfish Buyback Loans 663 1,200

Alaska Purse Seine Fishery Buyback Loans (4) (399)

Total $ (7,791) $ 8,013

Subsidy Rates for Direct Loans by Program and Component:

Budget Subsidy Rates for Direct Loans for the Current Fiscal-year’s Cohorts:

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) %

FY 2014

Direct Loan Program

Interest Rate

Differential Defaults

Fees and 

Other 

Collections Other Total

Fisheries Finance IFQ Loans (21.48) % 0.14 % (0.40) % 13.68 % (8.06) %

Fisheries Finance Traditional Loans (14.94) % 0.58 % (0.50) % 7.50 % (7.36) %

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.

74 | FY 2015 AGENCY FINANCIAL REPORT

NOTES TO THE FINANCIAL STATEMENTS
Schedule for Reconciling Allowance for Subsidy Cost (Post-FY 1991 Direct Loans):

FY 2015 FY 2014

Beginning Balance of the Allowance for Subsidy Cost $ 61,168 $ 73,396

Add Subsidy Expense for Disbursements of Direct Loans 

During the Year by Component:

 Interest Rate Differential 12,832 5,599

 Defaults (479) (30)

 Fees and Other Collections 426 223

 Other (6,892) (1,921)

Total of the above Subsidy Expense Components 5,887 3,871

Adjustments:

 Fees Received (529) (238)

 Loans Written Off 913 –

 Subsidy Allowance Amortization (3,949) (3,980)

 Other 7 3

Total of Adjustments (3,558) (4,215)

Ending Balance of the Allowance for Subsidy Cost Before Reestimates 63,497 73,052

Add or Subtract Subsidy Reestimates by Component:

 Technical Reestimates 1,904 (11,884)

Ending Balance of the Allowance for Subsidy Cost $ 65,401 $ 61,168

Defaulted Guaranteed Loans from Pre-FY 1992 Guarantees:

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 2014

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 $ – $ (7,315) $ 3

FY 2015 AGENCY FINANCIAL REPORT | 75

NOTES TO THE FINANCIAL STATEMENTS
Defaulted Guaranteed Loans from Post-FY 1991 Guarantees:

FY 2014

Loan Guarantee

Program

Defaulted

Guaranteed Loans

Receivable, Gross

Interest

Receivable

Allowance for 

Subsidy Cost

(Present Value)

Value of Assets 

Related to Defaulted 

Guaranteed Loans

Receivable, Net

FVOG Program $ 14,128 $ 1,254 $ (14,866) $ 516

Loan Guarantees:

Guaranteed Loans Outstanding:

Outstanding non-acquired guaranteed loans as of September 30, 2014, which are not reflected in the financial 

statements, are as follows: 

FY 2014

Loan Guarantee

Program

Outstanding Principal of 

Guaranteed Loans, Face Value

Amount of Outstanding

Principal Guaranteed

FVOG Program $ 157 $ 157

New Guaranteed Loans Disbursed:

There were no new guaranteed loans disbursed during FY 2015 and FY 2014.

Loan Guarantee Liabilities: 

FY 2014

Loan Guarantee

Program

Loan Guarantee Liabilities for PostFY 1991 Guarantees, Present Value

FVOG Program $ 516

Subsidy Expense for Loan Guarantees by Program and Component:

Subsidy Expense for New Loan Guarantees Disbursed:

As there were no new guaranteed loans disbursed during FY 2015 and FY 2014, there is not any related subsidy expense.

76 | FY 2015 AGENCY FINANCIAL REPORT

NOTES TO THE FINANCIAL STATEMENTS
Modifications and Reestimates:

There were no modifications and reestimates for loan guarantees for FY 2015 and FY 2014.

Subsidy Rates for Loan Guarantees by Program and Component: 

Budget Subsidy Rates for Loan Guarantees for the Current Fiscal-year’s Cohorts:

There were no new cohorts of guaranteed loans during FY 2015 and FY 2014.

Schedule for Reconciling Loan Guarantee Liabilities (Post-FY 1991 Loan Guarantees):

FY 2015 FY 2014

Beginning Balance of Loan Guarantee Liabilities $ 516 $ 516

Adjustments:

Loans Written Off (516) –

Ending Balance of Loan Guarantee Liabilities $ – $ 516

Administrative Expenses: 

Administrative expenses in support of the Department’s direct loan and loan guarantee programs consist of: 

Direct Loan Program FY 2015 FY 2014

Drought Loan Portfolio and 

Economic Development Revolving Fund $ 2,555 $ 165

NOAA Direct Loan Programs 3,382 3,374

Total $ 5,937 $ 3,539

Loan Guarantee Program FY 2015 FY 2014

FVOG Program $ 66 $ 176

FY 2015 AGENCY FINANCIAL REPORT | 77

NOTES TO THE FINANCIAL STATEMENTS
NOTE 6. INVENTORY, MATERIALS, AND SUPPLIES, NET

Category Cost Flow Assumption FY 2015 FY 2014

Inventory

Items Held for Current Sale

NIST Standard Reference Materials Average $ 23,054 $ 22,379

Other Various 160 325

Allowance for Excess, Obsolete, 

and Unserviceable Items (86) (73)

Total Inventory, Net 23,128 22,631

Materials and Supplies

Items Held for Use

NOAA’s National Logistics Support Center Weighted-average 53,980 51,020

Other Various 5,729 5,100

Items Held for Repair

NOAA’s National Reconditioning Center Weighted-average 30,384 36,332

Allowance for Excess, Obsolete, 

and Unserviceable Items (8,833) (15,045)

Total Materials and Supplies, Net 81,260 77,407

Total $ 104,388 $ 100,038

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.

78 | FY 2015 AGENCY FINANCIAL REPORT

NOTES TO THE FINANCIAL STATEMENTS
NOTE 7. GENERAL PROPERTY, PLANT, AND EQUIPMENT, NET

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 6,372,079 (4,836,992) 1,535,087

Other Personal Property 1-30 3,198,064 (2,114,006) 1,084,058

Assets Under Capital Lease 3-40 18,987 (9,970) 9,017

Construction-in-progress N/A 8,808,442 – 8,808,442

Total $ 20,693,155 $ (7,744,506) $ 12,948,649

In August 2015, a $430.0 million impairment, or reduction, to Construction-in-progress was recorded for a significant and 

permanent decline to expected service utility for NOAA’s Joint Polar Satellite System C1-Bus, which resulted because 

intellectual property provided by the original contractor could no longer be used subsequent to the contract award to a 

new contractor. The impairment is included in the Department’s FY 2015 Consolidated Statement of Net Cost as Gross 

Cost for NOAA.

NTIA’s Federal Spectrum Management System re-engineering, automation, and modernization effort was suspended, 

resulting in a $18.0 million impairment, or reduction, to Internal-Use Software in Development. Because of escalating 

costs and concerns with the strategy of developing the software, the decision was made to terminate this investment. 

The impairment is included in the Department’s FY 2015 Consolidated Statement of Net Cost as Gross Cost for NTIA.

FY 2014

Category

Useful Life

(Years) Cost

Accumulated

Depreciation Net Book Value

Land N/A $ 16,633 $ – $ 16,633

Land Improvements 30-40 2,996 (1,655) 1,341

Structures, Facilities, and 

Leasehold Improvements 2-50 2,203,366 (739,337) 1,464,029

Satellites/Weather Systems 

Personal Property 3-20 6,381,184 (4,415,831) 1,965,353

Other Personal Property 2-30 2,945,075 (1,974,690) 970,385

Assets Under Capital Lease 3-40 30,408 (18,557) 11,851

Construction-in-progress N/A 7,678,160 – 7,678,160

Total $ 19,257,822 $ (7,150,070) $ 12,107,752

FY 2015 AGENCY FINANCIAL REPORT | 79

NOTES TO THE FINANCIAL STATEMENTS
NOTE 8. OTHER ASSETS

FY 2015 FY 2014

With the Public

Advances and Prepayments $ 118,310 $ 37,024

Note Receivable 1,408 1,464

Bibliographic Database, Net 5,324 5,533

General PP&E Permanently Removed 

but Not Yet Disposed

194 2,679

Other 1,019 547

Total $ 126,255 $ 47,247

As of September 30, 2015 and 2014, 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 $74.7 million and $72.4 million, less accumulated amortization of 

$69.4 million and $66.9 million, as of September 30, 2015 and 2014, respectively.

NOTE 9. NON-ENTITY ASSETS

The assets that are not available for use in the Department’s operations are summarized below:

FY 2015 FY 2014

Intragovernmental

Fund Balance with Treasury $ 148,933 $ 136,209

Accounts Receivable 13,359 11,614

Other 1,079 –

Total Intragovernmental 163,371 147,823

With the Public

Cash 691 769

Accounts Receivable, Net 349 471

Direct Loans and Loan 

Guarantees, Net 3,417 7,210

Advances and Prepayments – 2,437

Other 1,408 1,464

Total $ 169,236 $ 160,174

80 | FY 2015 AGENCY FINANCIAL REPORT

NOTES TO THE FINANCIAL STATEMENTS
NOTE 10. DEBT TO TREASURY

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

For the direct loan program Debt to Treasury, maturity dates range from September 2017 to September 2052, and interest 

rates range from 2.11 to 6.13 percent.

FY 2014

Loan Program

Beginning

Balance

Net Borrowings

(Repayments)

Ending

Balance

Direct Loan Program

Fisheries Finance, Financing Account $ 524,565 $ (13,694) $ 510,871

NTIA Public Safety Trust Fund 39,238 739,762 779,000

NTIA State and Local Implementation Fund 11,800 10,000 21,800

Total $ 575,603 $ 736,068 $ 1,311,671

FY 2015 AGENCY FINANCIAL REPORT | 81

NOTES TO THE FINANCIAL STATEMENTS
NOTE 11. OTHER LIABILITIES

FY 2015 FY 2014

Current Portion

Non-current 

Portion Total Total

Intragovernmental

Accrued FECA Liability $ 22,535 $ 9,165 $ 31,700 $ 33,508

Accrued Benefits 40,549 – 40,549 39,718

Custodial Activity 388 – 388 361

Downward Subsidy Reestimates 

Payable to Treasury 13,359 – 13,359 11,614

Other 1,082 – 1,082 752

Total $ 77,913 $ 9,165 $ 87,078 $ 85,953

With the Public

ITA Foreign Service Nationals’ 

Voluntary Separation Pay $ 2,308 $ 7,830 $ 10,138 $ 11,236

Contingent Liabilities (Note 16) 15,712 – 15,712 409

Employment-related 1,624 – 1,624 1,416

Other 1,401 – 1,401 7,058

Total $ 21,045 $ 7,830 $ 28,875 $ 20,119

The Current Portion represents liabilities expected to be paid by September 30, 2016, while the Non-current Portion 

represents liabilities expected to be paid after September 30, 2016.

82 | FY 2015 AGENCY FINANCIAL REPORT

NOTES TO THE FINANCIAL STATEMENTS
NOTE 12. FEDERAL EMPLOYEE BENEFITS

FY 2015 FY 2014

Actuarial FECA Liability $ 209,346 $ 226,371

NOAA Corps Retirement System Liability 634,900 632,800

NOAA Corps Post-retirement Health Benefits Liability 37,300 39,600

Total $ 881,546 $ 898,771

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 2015 FY 2014

Year 1 3.13% 3.46%

Year 2 and Thereafter 3.13% 3.46%

The wage inflation factors (Cost of Living Allowance) 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 2015

Fiscal Year

Cost of Living 

Allowance

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%

FY 2014

Fiscal Year

Cost of Living 

Allowance

Consumer Price 

Index - Medical

2015 1.73% 2.93%

2016 2.17% 3.76%

2017 2.13% 3.86%

2018 2.23% 3.90%

2019 2.30% 3.90%

FY 2015 AGENCY FINANCIAL REPORT | 83

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, 2015 and 2014 actuarial calculations used the following 

economic assumptions:

FY 2015 FY 2014

Discount Rate 3.99% 4.19%

Annual Basic Pay Scale Increases 2.59% 2.81%

Annual Inflation 2.09% 2.31%

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 2015 FY 2014

Beginning Balance - NOAA Corps Retirement System Liability $ 632,800 $ 612,200 

Add Pension Costs:

Normal Cost 12,700 12,600 

Interest on the Unfunded Liability 24,700 25,200

Actuarial (Gains)/Losses, Net

From Experience (10,200) (4,200)

From Discount Rate Assumption Change 18,100 6,000

From Long-term Assumption Changes

Annual Inflation (19,400) (10,800)

Annual Basic Pay Scale Increases (1,000) (600)

Demographic 1,900 16,600

Total Pension Costs 26,800 44,800 

Subtract Benefit Payments (24,700) (24,200)

Ending Balance - NOAA Corps Retirement System Liability $ 634,900 $ 632,800 

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 2015 FY 2014

Discount Rate 3.97% 4.17%

Ultimate Medical Trend Rate 5.15% 5.15%

84 | FY 2015 AGENCY FINANCIAL REPORT

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 2015 FY 2014

Beginning Balance - NOAA Corps Post-retirement Health 

Benefits Liability $ 39,600 $ 42,300

Add Health Benefits Costs:

Normal Cost 1,300 1,300

Interest on the Unfunded Liability 1,600 1,800

Actuarial (Gains)/Losses, Net

From Experience 400 800

From Discount Rate Assumption Change 300 200

From Long-term Assumption Changes

Medical Claims Costs (3,500) (4,500)

Other – 300

Total Health Benefits Costs 100 (100)

Subtract Benefit Payments (2,400) (2,600)

Ending Balance - NOAA Corps Post-retirement Health 

Benefits Liability $ 37,300 $ 39,600

 NOTE 13. ENVIRONMENTAL AND DISPOSAL LIABILITIES

FY 2015 FY 2014

Asbestos-related Cleanup Costs $ 77,343 $ 85,907

Nuclear Reactor 55,881 60,122

Pribilof Islands 1,665 1,950

Non-reactor Radiological Facilities 8,280 7,320

Other 1,724 2,204

Total $ 144,893 $ 157,503

FY 2015 AGENCY FINANCIAL REPORT | 85

NOTES TO THE FINANCIAL STATEMENTS
NOTE 14. LEASES

Capital Leases:

Assets under capital leases are as follows:

FY 2015 FY 2014

Structures, Facilities, and Leasehold Improvements $ 6,206 $ 18,527

Equipment 12,781 11,881

Less: Accumulated Depreciation (9,970) (18,557)

Net Assets Under Capital Leases $ 9,017 $ 11,851

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 10 to 40 years. The 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 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

By year 2020, GSA will take over all NOAA’s capital leases, therefore, NOAA will no longer have any executed real property 

capital leases after year 2019.

86 | FY 2015 AGENCY FINANCIAL REPORT

NOTES TO THE FINANCIAL STATEMENTS
FY 2014

General PP&E Category

 Fiscal Year Real Property Personal Property Total

2015 $ 1,956 $ 1,280 $ 3,236

2016 904 449 1,353

2017 839 449 1,288

2018 839 – 839

2019 551 – 551

Thereafter 7,940 – 7,940

Total Future Lease Payments 13,029 2,178 15,207

Less: Imputed Interest (6,741) (39) (6,780)

Less: Executory Costs (2,082) – (2,082)

Net Capital Lease Liabilities $ 4,206 $ 2,139 $ 6,345

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 nonfederally 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 2016 through FY 2020; and (2) future payments 

due under noncancellable operating leases (non-GSA real property) are as follows:

FY 2015

General PP&E Category

 Fiscal Year

GSA

Real Property

Non-GSA

Real Property

2016 $ 276,177 $ 17,075

2017 280,478 11,789

2018 281,452 11,541

2019 278,524 10,573

2020 276,297 10,680

Thereafter 1 68,114

Total Future Lease Payments $ 129,772

1 Not estimated.

FY 2015 AGENCY FINANCIAL REPORT | 87

NOTES TO THE FINANCIAL STATEMENTS
NOTE 15. LIABILITIES NOT COVERED BY BUDGETARY RESOURCES

FY 2015 FY 2014

Intragovernmental

Accrued FECA Liability $ 31,610 $ 33,413

Total Intragovernmental 31,610 33,413

Accrued Payroll 58,050 55,470

Accrued Annual Leave 291,019 280,960

Federal Employee Benefits 881,546 898,771

Environmental and Disposal Liabilities 144,893 157,503

Contingent Liabilities 15,712 409

Capital Lease Liability 882 1,316

Unearned Revenue 523,271 439,031

ITA Foreign Service Nationals’ Voluntary Separation Pay 10,138 11,236

Other 78 2,437

Total $ 1,957,199 $ 1,880,546

88 | FY 2015 AGENCY FINANCIAL REPORT

NOTES TO THE FINANCIAL STATEMENTS
NOTE 16. 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, 

2015 is shown below.

Major Long-term Commitments:

FY 2015

Description FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 Thereafter Total

Geostationary Operational 

Environmental Satellites $ 871,791 $ 786,684 $ 523,049 $ 364,032 $ 266,865 $ 1,928,554 $ 4,740,975

Joint Polar Satellite Systems 808,966 797,246 735,777 558,803 439,506 1,129,825 4,470,123

Polar Follow-on 370,000 430,000 589,000 579,000 577,000 – 2,545,000

Comprehensive Large 

Array-data Stewardship 

System 58,525 58,525 58,525 58,525 58,525 – 292,625

NOAA Weather Service 36,353 36,042 36,111 35,526 35,594 34,390 214,016

Satellite Projects, Planning, 

and Analysis 30,488 33,488 33,488 33,488 33,488 – 164,440

Constellation Observing 

System for Meteorology, 

Ionosphere, and 

Climate - 2 20,000 16,200 8,800 8,800 8,800 25,400 88,000

Ocean Surface Topography 7,458 7,288 7,265 7,196 – – 29,207

Satellite System 

Architecture and 

Advanced Planning 4,929 4,929 4,929 4,929 4,929 – 24,645

Deep Space Climate 

Observatory 3,200 2,400 2,069 – – – 7,669

Space Weather Follow-on 2,500 – – – – – 2,500

Solar Irradiance, Data, 

and Rescue 500 – – – – – 500

Total $ 2,214,710 $ 2,172,802 $ 1,999,013 $ 1,650,299 $ 1,424,707 $ 3,118,169 $12,579,700

FY 2015 AGENCY FINANCIAL REPORT | 89

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 

$15.7 million and $409 thousand as of September 30, 2015 and 2014, respectively. Accordingly, these contingent liabilities were 

included in Other Liabilities on the Consolidated Balance Sheets as of September 30, 2015 and 2014, 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 $267.2 million as of September 30, 2015. 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 $373.8 million

as of September 30, 2015. 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.

Guaranteed Loan Contingencies:

Fishing Vessels Obligation Guarantee Program: This loan guarantee program had outstanding non-acquired guaranteed loans 

(fully guaranteed by the Department) as of September 30, 2014, with outstanding principal balances totaling $157 thousand. 

A loan guarantee liability of $516 thousand was recorded for the outstanding guarantees as of September 30, 2014.

90 | FY 2015 AGENCY FINANCIAL REPORT

NOTES TO THE FINANCIAL STATEMENTS
NOTE 17. 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, 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

United States Department of Commerce Consolidating Statement of Net Cost by Major Budgetary Function

For the Year Ended September 30, 2014

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 $ 764,915 $ 1,564,233 $ 14,884 $ 48,338 $ 2,392,370 $ (286,047) $ 2,106,323

Less: Earned Revenue (160,330) (760,524) (3,216) 743 (923,327) 286,047 (637,280)

Intragovernmental, Net Costs 604,585 803,709 11,668 49,081 1,469,043 – 1,469,043

With the Public

Gross Costs 4,071,006 4,934,261 283,550 73,758 9,362,575 – 9,362,575

Less: Earned Revenue (49,009) (3,108,481) 446 (2,550) (3,159,594) – (3,159,594)

With the Public, Net Costs 4,021,997 1,825,780 283,996 71,208 6,202,981 – 6,202,981

Total Program Costs

Gross Costs 4,835,921 6,498,494 298,434 122,096 11,754,945 (286,047) 11,468,898

Less: Earned Revenue (209,339) (3,869,005) (2,770) (1,807) (4,082,921) 286,047 (3,796,874)

NET COST OF OPERATIONS $ 4,626,582 $ 2,629,489 $ 295,664 $ 120,289 $ 7,672,024 $ – $ 7,672,024

FY 2015 AGENCY FINANCIAL REPORT | 91

NOTES TO THE FINANCIAL STATEMENTS
NOTE 18. COMBINED STATEMENTS OF BUDGETARY RESOURCES

Appropriations: 

There are reconciling items from the amounts of the Budgetary Resources, Appropriations on the Combined Statements of 

Budgetary Resources (SBR) to the amounts of the Budgetary Financing Sources, Appropriations Received on the Consolidated 

Statements of Changes in Net Position (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 (see Note 21, 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 $12.62 billion for deficit 

reduction, which is included as negative Appropriations on SBR, and is included as a transfer out on SCNP. 

For FY 2014, the primary reconciling item is budgetary transfers in/out, net of $149.8 million included in SBR Appropriations, 

which is $0 on SCNP as classified as transfers in/(out) on SCNP or excluded from SCNP for intra-Departmental transfers. 

Borrowing Authority: Total borrowing authority available for NTIA’s State and Local Implementation Fund amounted to 

$0 million and $102.7 million as of September 30, 2015 and 2014, respectively. Total borrowing authority available for 

NOAA’s loan programs amounted to $121.6 million and $181.9 million as of September 30, 2015 and 2014, 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 1L, 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 

Law 113-235 amounted to $10.1 million for FY 2015, while permanent reductions for FY 2014 under Public Laws 113-76 and 

112-96 amounted to $10.9 million. These permanent reductions are included in the SBR Budgetary Resources section, and are 

also included on the SCNP when applicable.

Legal arrangements affecting the Department’s use of Unobligated Balances of Budget Authority and/or Fund Balance with 

Treasury during FY 2015 and FY 2014 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, 2015 and 2014 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. 

92 | FY 2015 AGENCY FINANCIAL REPORT

NOTES TO THE FINANCIAL STATEMENTS
As of September 30, 2015 and 2014, $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, 2015 and 2014 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).

● 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 2014 SBR and the actual FY 2014 amounts reported in the FY 2014 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 2015 has not yet been published, and will be available on OMB’s 

Budget Web page at https://www.whitehouse.gov/omb/budget/. 

Apportionment Categories of Obligations Incurred:

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) Obligations Incurred by apportionment category are as follows:

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 Obligations Incurred $ 15,898,122 $ 4,907,106 $ 20,805,228

FY 2014

Direct Reimbursable Total

Category A $ 2,905,239 $ 3,488,090 $ 6,393,329

Category B 5,910,848 1,219,303 7,130,151

Exempt from Apportionment (159,524) – (159,524)

Total Obligations Incurred $ 8,656,563 $ 4,707,393 $ 13,363,956

Undelivered Orders: Undelivered orders (unpaid and paid) were $6.14 billion and $5.81 billion as of September 30, 2015 and 

2014, respectively.

FY 2015 AGENCY FINANCIAL REPORT | 93

NOTES TO THE FINANCIAL STATEMENTS
NOTE 19. 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 2015 was $14.7 million, primarily received by EDA and BIS. EDA received 

custodial non-exchange revenue in FY 2015 primarily for miscellaneous collections remitted to the General Fund of U.S. Government, 

while BIS’s FY 2015 custodial non-exchange revenue included 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.

The Department’s custodial non-exchange revenue in FY 2014 was $63.2 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 $361 thousand as 

of September 30, 2014. 

NOTE 20. FIDUCIARY ACTIVITIES

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

94 | FY 2015 AGENCY FINANCIAL REPORT

NOTES TO THE FINANCIAL STATEMENTS
Schedule of Fiduciary Activities for the Year Ended September 30, 2014:

FY 2014

Patent Cooperation 

Treaty

Madrid 

Protocol Total

Fiduciary Net Assets, Beginning Balance $ 14,364 $ 484 $ 14,848

Contributions 186,630 21,818 208,448

Disbursements to and on Behalf of Beneficiaries (185,199) (21,790) (206,989) 

Increase/(Decrease) in Fiduciary Net Assets 1,431 28 1,459

Fiduciary Net Assets, Ending Balance $ 15,795 $ 512 $ 16,307

Fiduciary Net Assets as of September 30, 2014:

FY 2014

Patent Cooperation 

Treaty

Madrid 

Protocol Total

Fund Balance with Treasury $ 15,795 $ 512 $ 16,307

FY 2015 AGENCY FINANCIAL REPORT | 95

NOTES TO THE FINANCIAL STATEMENTS
NOTE 21. 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, 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

96 | FY 2015 AGENCY FINANCIAL REPORT

NOTES TO THE FINANCIAL STATEMENTS
United States Department of Commerce Combining Balance Sheet – Funds from Dedicated Collections

As of September 30, 2014

NOAA 

Damage 

Assessment 

and 

Restoration 

Revolving 

Fund

NOAA 

Environmental 

Improvement 

and 

Restoration 

Fund

NTIA Digital 

Television 

Transition and 

Public Safety 

Fund

NTIA Public 

Safety Trust 

Fund

USPTO Funds 

from Dedicated 

Collections

Other Funds 

from Dedicated 

Collections 

Combined 

Total Funds 

from Dedicated 

Collections

ASSETS 

Fund Balance with Treasury $ 246,360 $ 37,843 $ 8,822,152 $ 1,957,934 $ 2,372,126 $ 29,994 $ 13,466,409

Cash – – – – 4,322 – 4,322

Accounts Receivable, Net 1,336 – – 277 255 3 1,871

General Property, Plant, and 

Equipment, Net – – – 206 328,290 – 328,496

Other 26 26 14,357 1,702 8,695 53 24,859

TOTAL ASSETS $ 247,722 $ 37,869 $ 8,836,509 $ 1,960,119 $ 2,713,688 $ 30,050 $ 13,825,957

LIABILITIES 

Accounts Payable $ 14 $ – $ – $ 5,330 $ 112,810 $ 143 $ 118,297

Debt To Treasury – – – 779,000 – 21,800 800,800

Federal Employee Benefits – – – – 11,030 – 11,030

Other 

 Accrued Payroll and Annual Leave 166 – – 843 192,942 115 194,066

 Accrued Grants 512 1,024 2,345 – – 3,354 7,235

 Unearned Revenue – – – – 1,089,812 – 1,089,812

Other Liabilities 53 – – – 11,686 34 11,773

TOTAL LIABILITIES $ 745 $ 1,024 $ 2,345 $ 785,173 $ 1,418,280 $ 25,446 $ 2,233,013

 NET POSITION 

Unexpended Appropriations $ – $ – $ – $ – $ – $ – $ –

Cumulative Results of Operations 246,977 36,845 8,834,164 1,174,946 1,295,408 4,604 11,592,944

TOTAL NET POSITION $ 246,977 $ 36,845 $ 8,834,164 $ 1,174,946 $ 1,295,408 $ 4,604 $ 11,592,944

TOTAL LIABILITIES AND 

NET POSITION $ 247,722 $ 37,869 $ 8,836,509 $ 1,960,119 $ 2,713,688 $ 30,050 $ 13,825,957

FY 2015 AGENCY FINANCIAL REPORT | 97

NOTES TO THE FINANCIAL STATEMENTS
United States Department of Commerce Combining Statement of Net Cost – 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 

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

United States Department of Commerce Combining Statement of Net Cost – Funds from Dedicated Collections

For the Year Ended September 30, 2014

NOAA

 Damage 

Assessment 

and 

Restoration 

Revolving Fund

NOAA 

Environmental 

Improvement 

and 

Restoration 

Fund

NTIA Digital 

Television 

Transition and 

Public Safety 

Fund

 NTIA Public 

Safety Trust 

Fund

USPTO Funds 

from Dedicated 

Collections

Other 

Funds from 

Dedicated 

Collections 

Combined 

Total 

Funds from 

Dedicated 

Collections

Intragovernmental

Gross Costs $ 1,859 $ – $ 14,732 $ 8,649 $ 584,745 $ 1,464 $ 611,449

Less: Earned Revenue – – – (277) (9,102) – (9,379)

Intragovernmental, Net Costs 1,859 – 14,732 8,372 575,643 1,464 602,070

With the Public

Gross Costs 105,194 9,159 9,483 19,663 2,147,634 20,091 2,311,224

Less: Earned Revenue – – – – (3,008,943) – (3,008,943)

With the Public, Net Costs 105,194 9,159 9,483 19,663 (861,309) 20,091 (697,719)

Total Program Costs

Gross Costs 107,053 9,159 24,215 28,312 2,732,379 21,555 2,922,673

Less: Earned Revenue – – – (277) (3,018,045) – (3,018,322)

NET COST OF OPERATIONS $ 107,053 $ 9,159 $ 24,215 $ 28,035 $ (285,666) $ 21,555 $ (95,649)

98 | FY 2015 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 2015 AGENCY FINANCIAL REPORT | 99

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, 2014

NOAA 

Damage 

Assessment 

and 

Restoration 

Revolving 

Fund

NOAA 

Environmental 

Improvement 

and 

Restoration 

Fund

NTIA Digital 

Television 

Transition 

and Public 

Safety Fund

NTIA Public 

Safety Trust 

Fund

USPTO 

Funds from 

Dedicated 

Collections

Other 

Funds from 

Dedicated 

Collections 

Combined 

Total 

Funds from 

Dedicated 

Collections

Cumulative Results of Operations: 

Beginning Balance $ 199,985 $ 27,611 $ 8,858,379 $ (17,894) $ 949,237 $ 16,284 $ 10,033,602

Budgetary Financing Sources: 

Non-exchange Revenue 148,277 18,393 – – – 9,475 176,145

Transfer In of Auction Proceeds from 

 Federal Communications 

 Commission – – – 1,221,000 – – 1,221,000

Transfers In/(Out) Without

Reimbursement, Net 5,768 – – (400) (2,000) 400 3,768

Other Financing Sources (Non-exchange): 

Imputed Financing Sources from Cost 

Absorbed by Others – – – 275 62,505 – 62,780

 Total Financing Sources 154,045 18,393 – 1,220,875 60,505 9,875 1,463,693

 Net Cost of Operations (107,053) (9,159) (24,215) (28,035) 285,666 (21,555) 95,649

 Net Change 46,992 9,234 (24,215) 1,192,840 346,171 (11,680) 1,559,342

 Cumulative Results of 

 Operations – Ending Balance 246,977 36,845 8,834,164 1,174,946 1,295,408 4,604 11,592,944

 NET POSITION $ 246,977 $ 36,845 $ 8,834,164 $ 1,174,946 $ 1,295,408 $ 4,604 $ 11,592,944

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, 

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 $100.0 million to the 

Director of NIST as amounts are deposited into the Public Safety Trust Fund to carry out the requirements of this program. The 

Wireless Innovation Fund in September 2015 received a transfer in of $92.7 million, net of sequestration, from NTIA’s Public 

Safety Trust Fund (included in FY 2015 SCNP), and which is included as a Budgetary Resource on the FY 2015 SBR (Spending 

Authority From Offsetting Collections). The law establishing this program can be found in Section 6303 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.

100 | FY 2015 AGENCY FINANCIAL REPORT

NOTES TO THE FINANCIAL STATEMENTS
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 balance of $8.83 billion included in the Department’s 

Consolidated Balance Sheet as of September 30, 2015, and has an Unobligated Balance, End of Year, Unapportioned balance 

of $8.80 billion as of September 30, 2015 included in the Department’s FY 2015 SBR. The law establishing this program 

can be found in the Deficit Reduction Act of 2005, Sections 3001-3014. For FY 2015 budgetary financial information for the 

Digital Television Transition and Public Safety Fund, see the Combining Schedule of Budgetary Resources by Major Budget 

Account for FY 2015, included in Required Supplementary 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 2015 received 

transfers in totaling $6.40 billion from NTIA’s Public Safety Trust Fund (included in FY 2015 SCNP), which are included as Budgetary 

Resources on the FY 2015 SBR (Spending Authority From Offsetting Collections). 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, 2015. 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 2015 budgetary financial information for 

the Network Construction Fund, see the Combining Schedule of Budgetary Resources by Major Budget Account for FY 2015, 

included in Required Supplementary 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 Federal 

Communications Commission (FCC) auctions of spectrum licenses, to be deposited into the Public Safety Trust Fund. 

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. These repayments of debt 

were included as a reduction of Budgetary Resources, Appropriations in the FY 2014 and 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 of $18.63 billion and $1.22 billion were received in FY 2015 and FY 2014, 

respectively, and are included as a Budgetary Financing Source on the FY 2015 and FY 2014 SCNP and as a Budgetary 

Resource in the FY 2015 and FY 2014 SBR (Appropriations). 

The Act directs the use of auction proceeds in an order of priority after the repayment of borrowings from Treasury (priority 

1). In FY 2015, the Public Safety Trust Fund transferred out $130.9 million to the NTIA State and Local Implementation Fund 

(priority 2), $6.40 billion to the NTIA Network Construction Fund (towards priority 3 of $7.00 billion), and $92.7 million, net 

of sequestration, to the NIST Wireless Innovation Fund (priority 4). These intra-Departmental FY 2015 budgetary transfers 

FY 2015 AGENCY FINANCIAL REPORT | 101

NOTES TO THE FINANCIAL STATEMENTS
out and in net to $0 and are not reported on the FY 2015 SCNP. These Public Safety Trust Fund transfers out are included on 

the FY 2015 SBR as Obligations Incurred, and Outlays, Gross. Priority 5 specifies that the Public Safety Trust Fund deposit 

$20.40 billion in the General Fund of U.S. Government for deficit reduction. Towards this priority, the Public Safety Trust Fund 

in September 2015 transferred out $12.62 billion to a receipt account utilized for transferring the $12.62 billion to the General 

Fund of U.S. Government (transfer out by Public Safety Trust Fund, and transfer in received by receipt account, are reported 

on the FY 2015 SCNP), and the receipt account in September 2015 transferred the $12.62 billion to the General Fund of U.S. 

Government (transfer out reported on the FY 2015 SCNP, Other Financing Sources (Non-exchange section). The receipt 

account transfers in and out of $12.62 billion are also included in the Public Safety Trust Fund column of the FY 2015 SCNP, 

as the receipt account serves as the established transactional mechanism for the Public Safety Trust Fund to transfer out 

the $12.62 billion to the General Fund of U.S. Government. The Public Safety Trust Fund transfer out of $12.62 billion to the 

receipt account is included as a reduction of Budgetary Resources, Appropriations in the FY 2015 SBR. 

For FY 2015 budgetary financial information for the Public Safety Trust Fund, see the Combining Schedule of Budgetary 

Resources by Major Budget Account for FY 2015, included in Required Supplementary Information.

Further priorities specified in the Act include that the Public Safety Trust Fund transfer out $115.0 million to the National 

Highway Traffic Safety Administration to fund 9-1-1, E9-1-1, and Next Generation 9-1-1 implementation grants (priority 6), that 

the Public Safety Trust Fund transfer out an additional $200.0 million to NIST to carry out additional public safety research 

(priority 7), and that any additional amounts deposited in the Public Safety Trust Fund be deposited in the General Fund 

of U.S. Government for deficit reduction. 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 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 September 2015 received a transfer in of $130.9 million from NTIA’s Public Safety Trust Fund (included in FY 2015 SCNP), which 

is included as a Budgetary Resource on the FY 2015 SBR (Spending Authority From Offsetting Collection). 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, 

where such balance shall be dedicated for the sole purpose of 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 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 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 2015 budgetary financial information for the Salaries and Expenses Fund, see the Combining Schedule of Budgetary 

Resources by Major Budget Account for FY 2015, included in Required Supplementary Information.

102 | FY 2015 AGENCY FINANCIAL REPORT

NOTES TO THE FINANCIAL STATEMENTS
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 18, 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, 2015 and 2014, $233.5 million is held in this fund.

NOTE 22. 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 15. 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 15.

The reconciliations of Net Cost of Operations to Budget for FY 2015 and 2014 are as follows:

FY 2015 FY 2014

Resources Used to Finance Activities:

Budgetary Resources Obligated:

Obligations Incurred $ 20,805,228 $ 13,363,956

Less: Spending Authority From Offsetting Collections and Actual Recoveries of Prior-years Unpaid Obligations (11,707,326) (5,282,414)

Obligations Incurred Net of Offsetting Collections and Actual Recoveries 9,097,902 8,081,542

Less: Distributed Offsetting (Receipts)/Outlays, Net (36,089) (56,006)

Net Obligations Incurred 9,061,813 8,025,536

Other Resources: 

Donations and Forfeitures of Property 2,656 1,296

Transfers In Received by Receipt Account for Returning Funds to General Fund of U.S. Government 12,618,990 –

Transfers Out to General Fund of U.S. Government for Deficit Reduction (12,618,990) –

Transfers In/(Out) Without Reimbursement, Net (841) 6,742

Imputed Financing Sources From Cost Absorbed by Others 256,500 357,022

Other Financing Sources/(Uses), Net (5,066) (11,716)

Net Other Resources Used to Finance Activities 253,249 353,344

Total Resources Used to Finance Activities 9,315,062 8,378,880

(continued on next page)

FY 2015 AGENCY FINANCIAL REPORT | 103

NOTES TO THE FINANCIAL STATEMENTS
(continued from previous page)

FY 2015 FY 2014

Resources Used to Finance Items Not Part of Net Cost of Operations:

Obligations Incurred:

Change in Obligations Incurred for Goods, Services, and Benefits Ordered but Not Yet Provided (406,434) (75,928)

Obligations Incurred that Fund Expenses Recognized in Prior Periods (43,375) (1,995)

Obligations Incurred for Downward Subsidy Reestimates Payable to Treasury (11,614) (7,361)

Obligations Incurred that Finance the Acquisition of Assets (2,189,846) (2,115,341)

Other (5,887) – 

Spending Authority From Offsetting Collections and Actual Recoveries of Prior-years Unpaid Obligations:

Non-exchange Revenue 111,092 145,641 

Credit Program Collections which relate to Direct Loans and Loan Guarantees, Net (Asset) 112,188 66,792 

Change in Unfilled Customer Orders (47,199) 210,548 

Repayments of Debt that reduce Debt to Treasury Liability (84,265) (62,201)

Substitution of Borrowing Authority that is not related to Earned Revenue (143,895) – 

Other (6,068) (3,115)

Distributed Offsetting (Receipts)/Outlays, Net 36,089 56,006 

Other Resources:

Donations and Forfeitures of Property (2,656) (1,296) 

Transfer In Received by Receipt Account for Returning Funds to General Fund of U.S. Government (12,618,990) – 

Transfer Out to General Fund of U.S. Government for Deficit Reduction 12,618,990 – 

Transfers In/Out Without Reimbursement, Net 841 (6,742) 

Other Financing Sources/(Uses), Net 5,066 11,716

Total Resources Used to Finance Items Not Part of Net Cost of Operations (2,675,963) (1,783,276)

Total Resources Used to Finance Net Cost of Operations 6,639,099 6,595,604

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 10,059 8,610

Increase in Federal Employee Benefits – 1,580

Increase in Environmental and Disposal Liabilities – 830

Increase/(Decrease) in Contingent Liabilities 15,303 (216)

Other 2,282 11,071

Total Components of Net Cost of Operations that Will Require or Generate Resources in Future Periods 27,644 21,875

Components Not Requiring or Generating Resources:

Depreciation and Amortization 741,034 1,017,300

NOAA Issuances of Materials and Supplies 17,912 19,135

Revaluation of Assets or Liabilities 502,485 20,239

Other 2,908 (2,129)

Total Components of Net Cost of Operations that Will Not Require or Generate Resources 1,264,339 1,054,545

Total Components of Net Cost of Operations that Will Not Require or Generate Resources in the Current Period 1,291,983 1,076,420

NET COST OF OPERATIONS $ 7,931,082 $ 7,672,024

104 | FY 2015 AGENCY FINANCIAL REPORT

NOTES TO THE FINANCIAL STATEMENTS
NOTE 23. 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.

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.

FY 2015 AGENCY FINANCIAL REPORT | 105

NOTES TO THE FINANCIAL STATEMENTS
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, 2015, 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: NOAA’s Marine National Monument Program implements the January 2009 Presidential 

Proclamations that established three Pacific Marine National Monuments—the Marianas Trench, Pacific Remote Islands, and 

Rose Atoll, and also co-manages the Papahãnaumokuãkea Marine National Monument, created in 2006. 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.

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, 

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, 2015, four of these plans have been 

completed, and the remaining six will be finalized by March 2016. 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

106 | FY 2015 AGENCY FINANCIAL REPORT

NOTES TO THE FINANCIAL STATEMENTS
Collection-type Heritage Assets: 

NOAA:

NOAA’s collection-type heritage assets are comprised primarily of books, journals, publications, photographs and motion pictures, 

manuscripts, records, nautical chart plates, and artifacts. Many of these heritage assets are maintained by the NOAA Central 

Library (Library). As evidenced by a search of international catalogs, 35 to 50 percent of the Library’s collection is unique. 

Historically, 40 percent of the items catalogued are not found anywhere else. Many older books cannot be replaced. The works 

include 17th century works of Francis Bacon and Robert Boyle, 18th century works of Daniel Bernouilli, Daniel Defoe, and Pierre 

Bougher, and 19th and 20th century works of Benjamin Franklin and George Washington Carver. The Library has an extensive 

collection of historical Coast and Geodetic Survey materials (from 1807) and Weather Bureau materials (from the 1830s), including 

foreign and historical meteorological data, information on instruments, and metadata. 

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. 

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 include, but are not limited to, 

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.

The Florida Keys National Marine Sanctuary (FKNMS) collection-type heritage assets include 252 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 resources—coral reefs, sea grasses, and hundreds of species of marine life, as well 

as historical resources that include prehistoric cultures, maritime history covering European Colonial, American, and modern to 

WWII shipping, and historic navigational aids. The unique characteristics of the islands, latitude, and proximity to the Gulf of 

Mexico, Bahama Channel, and subsequent currents such as the Straits of Florida, create qualities of flora and fauna that are 

unique to the Nation. FKNMS contains some of the Nation’s most unique resources. Ship disasters resulting from hurricanes 

for which eight vessels in 1622 and 13 vessels in 1733 were wrecked on the seafloor in the Florida Keys. There are 58 National 

Register listings in Monroe County, Florida that distinguish 14 shipwrecks and five lighthouses.

FY 2015 AGENCY FINANCIAL REPORT | 107

NOTES TO THE FINANCIAL STATEMENTS
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.

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 developed 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. 

108 | FY 2015 AGENCY FINANCIAL REPORT

NOTES TO THE FINANCIAL STATEMENTS
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.

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, 

2014

FY 2015 

Additions

FY 2015 

Withdrawals

Quantity of 

Items Held

September 30, 

2015

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 – – 225

NOAA Others Artifacts, artwork, books, films, 

instruments, maps, and records 3,421 53 47 3,427

NIST Artifacts and 

Scientific Measures 

National Bureau of Standards2/

NIST scientific instruments, 

equipment, and objects 1,123 123 30 1,216

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 111,335 176 77 111,434

1 N/A - Not applicable; this category is reported as one collection. 

2 National Bureau of Standards is the former name of NIST.

FY 2015 AGENCY FINANCIAL REPORT | 109

NOTES TO THE FINANCIAL STATEMENTS
110 | FY 2015 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 represent 95 percent of the Department’s General PP&E, Net balance as of September 30, 2015.

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 

will only be 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. 

112 | FY 2015 AGENCY FINANCIAL REPORT

REQUIRED SUPPLEMENTARY INFORMATION (UNAUDITED)
NOAA has not significantly changed its policies or factors that are subject to DM&R reporting requirements. During 

FY 2015, however, NOAA reevaluated its heritage assets items related to DM&R, resulting in a significant decrease in the 

amounts of DM&R for heritage assets, as most items did not meet the criteria for DM&R reporting.

The following table shows NOAA’s DM&R as of September 30, 2015 and 2014:

(In Thousands)

Asset Category

Deferred Maintenance 

and Repairs as of 

September 30, 2015

Deferred Maintenance 

and Repairs as of 

September 30, 2014

Buildings $ 76,000 $ 74,518

Heritage Assets:

Documentary Artifacts – 11,900

Pictures – 1,000

Multi-use Heritage 92 90

Other – 162

Ships 26,876 22,996

Total $ 102,968 $ 110,666

NIST:

NIST performs facility Condition Assessment Surveys for capitalized NIST-owned buildings and facilities (including those 

fully depreciated). 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 is reported for individual items 

with 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 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 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 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.

FY 2015 AGENCY FINANCIAL REPORT | 113

REQUIRED SUPPLEMENTARY INFORMATION (UNAUDITED)
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.

NIST DM&R increased from $297.0 million as of September 30, 2014 to $346.8 million as of September 30, 2015, an 

increase of $49.8 million. The increase is in large part due to an increase in DM&R of $32.0 million as a result of 

enhanced facility condition assessments performed for Building 1, a nearly 60-year-old, 23 thousand square foot building, 

and Building 3, a nearly 25 thousand square foot building. The enhancements included taking a more in-depth look at 

the deficiencies identified in the base-year assessment. Adding to the increase was approximately $25.0 million in new 

mechanical and electrical deficiencies due to the system age.

The following table shows NIST’s DM&R as of September 30, 2015 and 2014:

(In Thousands)

Assets Category

Deferred Maintenance 

and Repairs as of 

September 30, 2015

Deferred Maintenance 

and Repairs as of 

September 30, 2014

Buildings $ 319,591 $ 267,867

Site Utilities and Infrastructure 27,169 29,107

Total $ 346,760 $ 296,974

114 | FY 2015 AGENCY FINANCIAL REPORT

REQUIRED SUPPLEMENTARY INFORMATION (UNAUDITED)
B Combining Schedule of Budgetary Resources by Major Budget Account

The following table illustrates the Department’s FY 2015 budgetary resources by major budget account.

United States Department of Commerce Combining Schedule of Budgetary Resources 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

BUDGETARY RESOURCES:

Unobligated Balance, Brought Forward, October 1 $ 12,834,436 $ 157,935 $ 33,749 $ 308,151 $ 138,994 8,796,569 $ 384 $ 1,792,419 $ 502,721 $ 1,103,514

Actual Recoveries of Prior-years Unpaid Obligations 335,052 20,234 5,388 58,364 12,789 3 – 1,515 15,469 221,290

Actual Nonexpenditure Transfers of Unobligated Balance, Net 1,672 – – (5) – – – – 148,236 (146,559)

Borrowing Authority Withdrawn (28,490) – – – – – – – – (28,490)

Other Changes in Unobligated Balance, Net (146,510) (75,504) (147) (25,376) (6,715) – – – – (38,768)

Unobligated Balance From Prior-years Budget Authority, Net 12,996,160 102,665 38,990 341,134 145,068 8,796,572 384 1,793,934 666,426 1,110,987

Appropriations 13,981,745 835,849 681,450 3,394,460 2,393,850 – – 4,994,889 – 1,681,247

Borrowing Authority 65,860 – – – – – – – – 65,860

Spending Authority From Offsetting Collections 11,372,274 387 53 231,909 3,366 1,536 6,396,613 940 3,014,013 1,723,457

TOTAL BUDGETARY 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

STATUS OF BUDGETARY RESOURCES:

Obligations Incurred $ 20,805,228 $ 828,373 $ 697,474 $ 3,602,972 $ 2,283,567 – $ 75,002 $ 6,632,505 $ 3,176,085 $ 3,509,250

Unobligated Balance, End of Year 

Apportioned 8,041,086 18,099 19,308 215,378 37,889 – 6,321,995 154,986 504,285 769,146

Exempt From Apportionment 2,486 – – – – – – – – 2,486

Unapportioned 9,567,239 92,429 3,711 149,153 220,828 8,798,108 – 2,272 69 300,669

Total Unobligated Balance, End of Year 17,610,811 110,528 23,019 364,531 258,717 8,798,108 6,321,995 157,258 504,354 1,072,301

TOTAL STATUS OF BUDGETARY 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

CHANGE IN UNPAID OBLIGATED BALANCE, NET:

Unpaid Obligations:

Unpaid Obligations, Brought Forward, October 1 $ 6,860,273 $ 142,317 $ 220,210 $ 1,994,971 $ 1,084,685 25,583 $ 9 $ 28,467 $ 549,941 $ 2,814,090

Obligations Incurred 20,805,228 828,373 697,474 3,602,972 2,283,567 – 75,002 6,632,505 3,176,085 3,509,250

Outlays, Gross (20,469,821) (756,735) (675,544) (3,573,157) (2,046,164) (7,768) (40,293) (6,647,261) (3,039,216) (3,683,683)

Actual Recoveries of Prior-years Unpaid Obligations (335,052) (20,234) (5,388) (58,364) (12,789) (3) – (1,515) (15,469) (221,290)

UNPAID OBLIGATIONS, END OF YEAR $ 6,860,628 $ 193,721 $ 236,752 $ 1,966,422 $ 1,309,299 17,812 $ 34,718 $ 12,196 $ 671,341 $ 2,418,367

Uncollected Customer Payments:

Uncollected Customer Payments, Brought Forward, October 1 $ (449,130) $ – $ – $ (339,781) $ – – $ – $ (328) $ (120) $ (108,901)

Change in Uncollected Customer Payments (115,828) – – (679) – – – 270 63 (115,482)

UNCOLLECTED CUSTOMER PAYMENTS, END OF YEAR $ (564,958) $ – $ – $ (340,460) $ – – $ – $ (58) $ (57) $ (224,383)

Unpaid Obligated Balance, Net, Brought Forward, October 1 $ 6,411,143 $ 142,317 $ 220,210 $ 1,655,190 $ 1,084,685 25,583 $ 9 $ 28,139 $ 549,821 $ 2,705,189

Unpaid Obligated Balance, Net, End of Year $ 6,295,670 $ 193,721 $ 236,752 $ 1,625,962 $ 1,309,299 17,812 $ 34,718 $ 12,138 $ 671,284 $ 2,193,984

BUDGET AUTHORITY, NET:

Budget Authority, Gross $ 25,419,879 $ 836,236 $ 681,503 $ 3,626,369 $ 2,397,216 1,536 $ 6,396,613 $ 4,995,829 $ 3,014,013 $ 3,470,564

Actual Offsetting Collections (11,486,474) (387) (53) (231,230) (3,366) (1,536) (6,396,613) (1,210) (3,016,076) (1,836,003)

Change in Uncollected Customer Payments (115,828) – – (679) – – – 270 63 (115,482)

BUDGET AUTHORITY, NET $ 13,817,577 $ 835,849 $ 681,450 $ 3,394,460 $ 2,393,850 – $ – $ 4,994,889 $ (2,000) $ 1,519,079

OUTLAYS, NET:

Outlays, Gross $ 20,469,821 $ 756,735 $ 675,544 $ 3,573,157 $ 2,046,164 7,768 $ 40,293 $ 6,647,261 $ 3,039,216 $ 3,683,683

Actual Offsetting Collections (11,486,474) (387) (53) (231,230) (3,366) (1,536) (6,396,613) (1,210) (3,016,076) (1,836,003)

Outlays, Net 8,983,347 756,348 675,491 3,341,927 2,042,798 6,232 (6,356,320) 6,646,051 23,140 1,847,680

Distributed Offsetting (Receipts)/Outlays, Net (36,089) – – – – – – – – (36,089)

AGENCY OUTLAYS, NET $ 8,947,258 $ 756,348 $ 675,491 $ 3,341,927 $ 2,042,798 6,232 $ (6,356,320) $ 6,646,051 $ 23,140 $ 1,811,591

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REQUIRED SUPPLEMENTARY INFORMATION (UNAUDITED)
116 | FY 2015 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 2011 through FY 2015 were as follows:

(In Millions)

Program FY 2015 FY 2014 FY 2013 FY 2012 FY 2011 Total

EDA:

Public Works $ 101.0 $ 114.0 $ 120.5 $ 160.7 $ 224.4 $ 720.6

Economic Adjustment Assistance 32.5 42.3 66.8 49.5 47.6 238.7

Global Climate Change Mitigation Incentive Fund – 10.6 14.9 12.8 6.8 45.1

Disaster Recovery 8.8 98.7 146.2 111.0 85.1 449.8

EDA Subtotal 142.3 265.6 348.4 334.0 363.9 1,454.2

NOAA:

National Estuarine Research Reserves 0.7 1.1 2.4 3.9 5.5 13.6

Coastal and Estuarine Land Conservation Program 0.2 0.5 5.7 8.8 6.9 22.1

NOAA Subtotal 0.9 1.6 8.1 12.7 12.4 35.7

Total $ 143.2 $ 267.2 $ 356.5 $ 346.7 $ 376.3 $ 1,489.9

EDA:

EDA’s investments in non-federal physical property 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.

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.

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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.

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. 

FY 2012 was the last year EDA received funding for Disaster Recovery. The program is nearly fully expensed. EDA expensed 

$8.8 million in construction-related grants for disaster recovery in the fourth quarter of FY 2015.

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. 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, 2015, 

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.

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 200 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 

FY 2015 AGENCY FINANCIAL REPORT | 119

REQUIRED SUPPLEMENTARY STEWARDSHIP INFORMATION (UNAUDITED)
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 2011 through FY 2015:

(In Millions)

Program FY 2015 FY 2014 FY 2013 FY 2012 FY 2011 Total

National Sea Grant College Program $ 0.7 $ 0.8 $ 0.7 $ 0.7 $ 0.8 $ 3.7

National Estuarine Research Reserve Program 1.5 1.3 1.4 1.5 1.5 7.2

Educational Partnership Program 14.3 14.3 13.0 12.5 14.3 68.4

Ernest F. Hollings Undergraduate Scholarship Program 5.5 6.2 5.0 4.9 4.5 26.1

Southeast Fisheries Science Center’s Recruiting Training 

Research Program 0.3 0.5 0.5 0.5 0.5 2.3

Northeast Fisheries Science Center 

Partnership Education Program (PEP) 0.1 0.2 0.2 0.2 0.2 0.9

Total $ 22.4 $ 23.3 $ 20.8 $ 20.3 $ 21.8 $ 108.6

National Sea Grant College Program: Sea Grant is a nationwide network, administered through NOAA, of 32 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 51 fellowships awarded: 12 fellowships 

funded by the National Sea Grant College Program, and 39 fellowships funded by other NOAA offices and other federal 

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 17 fellowships awarded. An additional call 

for proposals has been issued, and the number of fellows will change slightly throughout the year as some fellowships end 

and others begin. 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 offers 

qualified masters and doctoral students the opportunity to address scientific questions of local, regional, and national 

significance. The result is high-quality research focused on improving coastal management issues. The Graduate Research 

Fellowship Program ended in FY 2014. As a result, there were no fellowships awarded in FY 2015. 

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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 2015, 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 2015, the program 

added 150 students.

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 FY 2015, 15 outstanding undergraduate students from across the country participated in 

a week-long undergraduate workshop. In addition, 5 graduate students conducted SEFSC-related research as part of the 

program.

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 2015, 16 students participated in the 10-week summer program.

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.

FY 2015 AGENCY FINANCIAL REPORT | 121

REQUIRED SUPPLEMENTARY STEWARDSHIP INFORMATION (UNAUDITED)
NIST:

The following table summarizes NIST’s R&D investments for FY 2011 through FY 2015:

(In Millions)

Program

FY 2015 

Basic Applied Development Total FY 2014 FY 2013 FY 2012 FY 2011 Total

NIST Laboratories Program $ 256.0 $ 449.1 $ 12.1 $ 717.2 $ 657.5 $ 603.6 $ 590.7 $ 582.5 $ 3,151.5

Technology Innovation Program,

Advanced Technology Program, 

and Advanced Manufacturing 

Technology Consortia 3.5 1.6 0.1 5.2 7.2 21.2 39.4 44.2 117.2

Total $ 259.5 $ 450.7 $ 12.2 $ 722.4 $ 664.7 $ 624.8 $ 630.1 $ 626.7 $ 3,268.7

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 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.

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 2016. NIST uses unobligated balances (carryover funding), and funding from prior-year deobligations, 

to close out the program and to perform NIST’s responsibilities. 

122 | FY 2015 AGENCY FINANCIAL REPORT

REQUIRED SUPPLEMENTARY STEWARDSHIP INFORMATION (UNAUDITED)
Advanced Manufacturing Technology Consortia (AMTech):

In FY 2015, AMTech received $8.1 million from enacted appropriations. Industry consortia are known to be extremely 

effective in identifying technology needs and roadblocks, yet often need a catalyst to enable consortium formation. 

The AMTech grants program enables industry-led consortia to identify and prioritize directed late basic to early applied 

research projects supporting long-term industrial research needs. AMTech creates the incentive for multiple industry 

stakeholders to share financial and scientific resources, together with state and local government interests, as well as 

technical innovators at universities and government laboratories. The program provides funding to industry-led consortia 

for the development of detailed roadmaps of long-term research challenges. Further, the program aims to seed industryled consortia establishment by awarding project grants to support the research needed to help them achieve future 

desired technology developments. The AMTech program supports the Administration’s priorities to invest in advanced 

manufacturing to foster innovation, create high-quality jobs, and enhance global competitiveness. By supporting consortia, 

the AMTech program will address multiple components of the innovation cycle, from discovery and pre-competitive 

technology development, to accelerate the pace of innovation through various industry sectors.

NOAA:

NOAA’s R&D investments by program from FY 2011 through FY 2015 were as follows:

(In Millions)

Program

FY 2015 

Basic Applied Development Total FY 2014 FY 2013 FY 2012 FY 2011 Total

Environmental and Climate $ – $ 251.5 $ 46.9 $ 298.4 $ 294.1 $ 326.3 $ 392.8 $ 395.3 $ 1,706.9

Fisheries – 48.0 2.3 50.3 43.4 51.2 64.9 65.7 $ 275.5

Marine Operations and 

Maintenance and Aircraft 

Services – 17.8 11.4 29.2 29.7 32.4 33.3 34.3 $ 158.9

Weather Service – 15.7 27.0 42.7 29.3 28.6 36.4 54.7 $ 191.7

Other – 24.5 5.5 30.0 63.5 74.8 90.6 98.0 356.9

Total $ – $ 357.5 $ 93.1 $ 450.6 $ 460.0 $ 513.3 $ 618.0 $ 648.0 $ 2,689.9

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.

FY 2015 AGENCY FINANCIAL REPORT | 123

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 is NOAA’s primary research and development 

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 upper and lower atmosphere, as well as the 

space environment.

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. 

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 research and development, 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.

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. NOAA’s National Environmental Satellite Data and Information Service, through its Office of 

Research and Applications, conducts atmospheric, climatological, and oceanic research into the use of satellite data for 

monitoring environmental characteristics and their changes. It also provides guidance for the development and evolution of 

spacecraft and sensors to meet future needs.

124 | FY 2015 AGENCY FINANCIAL REPORT

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Other Information
SCHEDULE OF SPENDING (Unaudited)

T

he Combining 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 and Unobligated Balance, End 

of Year, Exempt from Apportionment reported on SBR; Less: Amounts Not Available to be Spent reported on SOS agrees to Unobligated 

Balance, End of Year, Unapportioned reported on SBR; and Total Amounts Agreed to be Spent reported on SOS agrees to Obligations 

Incurred reported on SBR.

The Combining Schedules of Spending by Major Budget Account for FY 2015 and FY 2014 are as follows:

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

United States Department of Commerce Combining Schedule of Spending by Major Budget Account (Reclassified)

For the Year Ended September 30, 2014 (In Thousands)

Combined 

Total

Census 

Bureau 

Periodic 

Censuses and 

Programs

ITA

Operations

and

Administration

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

Public Safety 

Trust Fund

USPTO

Salaries

and

Expenses

Other 

Budget 

Accounts

WHAT MONEY IS AVAILABLE TO SPEND?

Total Resources $ 26,198,392 $ 846,192 $ 529,220 $ 685,331 $ 3,884,195 $ 2,189,275 $ 8,799,069 $ 1,839,311 $ 3,500,178 $ 3,925,621

Less: Amounts Available but Not Agreed to be Spent (3,453,331) (8,851) (32,833) (30,862) (216,203) (123,205) – (1,792,415) (502,721) (746,241)

Less: Amounts Not Available to be Spent (9,381,105) (149,084) (13,978) (2,886) (91,948) (15,789) (8,796,569) (4) – (310,847)

TOTAL AMOUNTS AGREED TO BE SPENT $ 13,363,956 $ 688,257 $ 482,409 $ 651,583 $ 3,576,044 $ 2,050,281 $ 2,500 $ 46,892 $ 2,997,457 $ 2,868,533

HOW WAS THE MONEY SPENT?

Contracts $ 5,989,613 $ 153,063 $ 110,117 $ 361,396 $ 1,263,005 $ 1,967,577 $ 2,500 $ 34,977 $ 1,115,497 $ 981,481

Grants 1,314,878 – 2,574 101,684 686,664 35,188 – – – 488,768

Loans and Guarantees 114,484 – – – – – – – – 114,484

Non-financial Assistance Direct Payments 5,424,341 241,332 286,380 188,452 1,625,653 46,322 – 8,400 1,880,188 1,147,614

Other 520,640 293,862 83,338 51 722 1,194 – 3,515 1,772 136,186

TOTAL AMOUNTS AGREED TO BE SPENT $ 13,363,956 $ 688,257 $ 482,409 $ 651,583 $ 3,576,044 $ 2,050,281 $ 2,500 $ 46,892 $ 2,997,457 $ 2,868,533

WHO DID THE MONEY GO TO?

Federal Government $ 3,863,582 $ 375,936 $ 53,217 $ 270,320 $ 596,754 $ 1,494,161 $ 2,500 $ 19,310 $ 226,502 $ 824,882

Non-federal 9,500,374 312,321 429,192 381,263 2,979,290 556,120 – 27,582 2,770,955 2,043,651

TOTAL AMOUNTS AGREED TO BE SPENT $ 13,363,956 $ 688,257 $ 482,409 $ 651,583 $ 3,576,044 $ 2,050,281 $ 2,500 $ 46,892 $ 2,997,457 $ 2,868,533

126 | FY 2015 AGENCY FINANCIAL REPORT

SCHEDULE OF SPENDING (UNAUDITED)
Summary of the Top Management Challenges Facing 

the Department of Commerce 

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) 2016 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. The full report can be found at www.oig.doc.gov.

1. TRADE AND INVESTMENT: Expand the U.S. economy through increased

exports and inward foreign investment that lead to more and better American

jobs.

International Trade Administration (ITA) consolidation. ITA must resolve challenges such as 

developing revised performance plans and providing appropriate training for affected 

employees, developing an employee engagement plan, and assessing the level of 

resources throughout ITA headquarters.

Bureau of Industry and Security (BIS) export licensing functions. BIS had originally planned to 

decommission its legacy export licensing system, Export Control Automated Support 

System (ECASS), and by 2012 migrate to the Defense Technology Security Agency’s 

(DTSA’s) USXPORTS. Migration to USXPORTS was required under the president’s 

export control reform initiative. However, after project delays, in 2014 BIS determined 

that USXPORTS, in its current state of development, will not meet its operational 

needs. As a result, BIS implemented license processing capabilities in its existing systems, 

and thus was able to decommission ECASS. BIS and DTSA have entered into an 

agreement to enhance USXPORTS to allow other export control agencies to access BIS 

data in USXPORTS. BIS now needs to assess the costs versus the benefits of this 

approach, as opposed to its original plan to fully migrate to USXPORTS.

Departmental and bureau grants oversight. The Department and its bureaus with grant 

programs must incorporate the Office of Management and Budget’s (OMB’s) Uniform 

Administrative Requirements, Cost Principles, and Audit Requirements for Federal 

Awards—which went into effect during the first quarter of FY 2015—mandating how 

grants are awarded, administered, and audited.

OIG SUMMARY ON TOP MANAGEMENT CHALLENGES

FY 2015 AGENCY FINANCIAL REPORT | 127

OIG SUMMARY ON TOP MANAGEMENT CHALLENGES
U.S. Department of Commerce Office of Inspector General

Summary of the Top Management Challenges Facing the Department of Commerce

2

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.

U.S. Patent and Trademark Office (USPTO) patent examinations. Last year, USPTO 

temporarily redirected its resources to reduce its backlog of requests for continued 

examination (RCEs). While USPTO has made progress in reducing the RCE backlog and 

pendency of unexamined patent applications, it still faces challenges in reducing the 

patent application backlog and improving patent examination quality.

Patent Trial and Appeal Board (PTAB) timeliness and quality. Since September 2012, PTAB 

has been increasing the size of its staff to address both the appeals inventory and new 

proceedings under the America Invents Act. Despite the high rates of increase in PTAB 

personnel and spending on patent trials and appeals, USPTO is still facing challenges in 

reducing the ex parte appeal backlog and pendency.

First Responder Network Authority (FirstNet) network implementation. FirstNet— tasked with 

implementing a nationwide interoperable public safety broadband network—is making 

progress in establishing an organizational structure and performing consultation and 

outreach. However, challenges remain concerning the adequacy of funding; statutory 

requirements for consulting; internal control; and staffing and other organizational 

issues.

3. ENVIRONMENT: Ensure communities and businesses have the necessary 

information, products, and services to prepare for and prosper in a changing 

environment.

National Oceanic and Atmospheric Administration (NOAA) satellite acquisitions. Acquisition 

and development delays could lead to gaps in NOAA’s satellite coverage, potentially 

degrading its ability to produce actionable environmental information. The Joint Polar 

Satellite System (JPSS) program’s challenge is to keep the JPSS-1 satellite development 

on track to meet its launch commitment—while taking steps to implement a newlyproposed Polar Follow-On program. The Department must also ensure that the 

Geostationary Operational Environmental Satellite-R Series (GOES-R) program 

continues to meet requirements and manage development challenges. The launch of the 

first GOES-R satellite has been delayed to October 2016, increasing the potential for 

the GOES fleet to be without ensured coverage should an operational satellite fail.

NOAA observational data processing. NOAA may need to defer or even eliminate planned 

operational capabilities as it completes complex integration testing for the GOES-R and 

JPSS-1 missions in order to launch both satellites as soon as possible and mitigate 

potential data gaps. Post-launch test activities, as well as validation of data flows and 

products, will need to be closely monitored to ensure timely processing for user 

availability.

128 | FY 2015 AGENCY FINANCIAL REPORT

OIG SUMMARY ON TOP MANAGEMENT CHALLENGES
U.S. Department of Commerce Office of Inspector General

Summary of the Top Management Challenges Facing the Department of Commerce

3

NOAA National Marine Fisheries Service (Fisheries) data. To increase efficiency and 

oversight, NOAA Fisheries has considered using emerging electronic technologies, such 

as video monitoring, to increase coverage and reduce human observer costs, as well as 

contribute to a more cost-effective and sustainable collection of fishing data. However, 

NOAA Fisheries has not yet developed a nationwide strategic plan and continues to 

have each region developing its own plan, with current objectives detailed across 

multiple policy documents.

4. DATA: Improve government, business, and community decisions and 

knowledge by transforming Department data capabilities and supporting a dataenabled economy.

2020 Census quality and cost. The Bureau continues to face challenges in achieving cost 

savings goals while fully utilizing resources needed to achieve design decision and 

research and testing goals. Moreover, the Bureau still needs to develop a defined 

schedule for achieving key milestones in order to complete the operational 

development and systems testing phase and begin readiness testing and execution by FY 

2019.

Other Census Bureau challenges. One of the Bureau’s key challenges in preparation for the 

2020 Census has been to effectively record, collect, and use financial data to guide 

programmatic decisions. Another decennial challenge has been developing, testing, and 

implementing a cost-effective, secure 2020 Census IT infrastructure.

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, 

providing reliable and consistent agency program information and meeting the goals of 

the DATA Act will be a significant challenge.

5. OPERATIONAL EXCELLENCE: Deliver better services, solutions, and 

outcomes that benefit the American people.

The Department’s financial systems. For each of the past 3 years, the independent auditor 

of the Department’s annual financial statements reported general IT controls as a 

Department-wide significant deficiency. Despite the Department’s ongoing efforts to 

implement corrective actions, the independent auditor found that weaknesses still exist 

and require management’s attention. In addition, the lack of centralized and integrated 

financial management systems to replace Commerce Business Solutions creates 

challenges for the Department—including the ability to effectively report financial data 

and monitor financial activity across its operating units.

FY 2015 AGENCY FINANCIAL REPORT | 129

OIG SUMMARY ON TOP MANAGEMENT CHALLENGES
U.S. Department of Commerce Office of Inspector General

Summary of the Top Management Challenges Facing the Department of Commerce

4

Department-wide IT security issues. Addressing persistent IT security issues poses 

challenges for the Department. These include implementing basic security measures 

required by National Institute of Standards and Technology’s (NIST’s) risk management 

framework; remediating critical and high-risk vulnerabilities as it implements its 

enterprise cybersecurity monitoring and operations initiative; improving the quality and 

thoroughness of system security control assessments; and continuing to strengthen its 

incident detection and response capabilities through its Enterprise Security Oversight 

Center initiative.

Departmental contracts, acquisition workforce, and procurement data. A government-wide 

initiative calls for federal agencies to reduce spending on high-risk contract types, such 

as time-and-materials and labor-hour, cost reimbursement, and noncompetitive 

contracts. The Department still faces challenges in contract oversight and administration 

of these contracts. Also, during FY 2014, the Department enhanced its acquisition 

workforce recruitment efforts by attending college and job fairs, exploring recruitment 

incentives, and using special hiring authorities. Despite this aggressive recruitment effort, 

the Department still fell short of its staffing goal due to attritions and retirements. 

Finally, the Department needs to improve its process for entering accurate and reliable 

data into the Federal Procurement Data System-Next Generation. This will help provide 

a comprehensive view into the details of contract spending and increasing the 

transparency and accountability of the Department for how it spends taxpayer dollars.

Department-wide culture of accountability. One major challenge arises from OIG hotline 

complaints: detecting and preventing time and attendance abuse, which OIG has 

investigated at several Departmental operating units. Another challenge involves 

ensuring that OIG independence and access is more strongly supported. To achieve this, 

the Department’s senior leadership must create a culture that supports OIG’s oversight 

function by encouraging all employees to cooperate with OIG audits, inspections, and 

investigations.

130 | FY 2015 AGENCY FINANCIAL REPORT

OIG SUMMARY ON TOP MANAGEMENT CHALLENGES
MEMORANDUM FOR: David Smith

Acting Inspector General

FROM: Penny Pritzker

Secretary of Commerce

SUBJECT: OIG Report “Top Management Challenges Facing the Department of 

Commerce in Fiscal Year 2016’

Thank you for the Office of Inspector General’s work in assessing the top management and 

performance challenges facing the Department in the coming fiscal year. We appreciate OIG’s work 

on this effort and value the insights and recommendations your office has delivered.

The Department continues to make solid progress on the five key priorities in our strategic plan. 

OIG’s work will help the Department to be responsive and agile in adapting to the fast-changing 

needs of the U.S private sector in the 21st century.

We remain committed to focusing resources on overcoming challenges as we work to achieve the 

vision laid out in our strategic framework.

FY 2015 AGENCY FINANCIAL REPORT | 131

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 2015. Table 1 relates 

to the Department’s FY 2015 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: Unqualified

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: Unqualified

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

132 | FY 2015 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, 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 June 2015 a sampling methodology plan for FY 2014 disbursements 

made under the Act by NOAA. In June 2015, testing of FY 2014 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 2014 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 2016 and beyond, the Department will continue its efforts to ensure the integrity of its disbursements.

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 

IMPROPER PAYMENTS INFORMATION ACT (IPIA) OF 2002,

AS AMENDED, REPORTING DETAILS

FY 2015 AGENCY FINANCIAL REPORT | 133

IMPROPER PAYMENTS INFORMATION ACT (IPIA) OF 2002, AS AMENDED, REPORTING DETAILS
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 or Performance 

and Accountability Report.

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 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, in FY 2015, the programs/activities improper payments risk assessments performed 

in FY 2015 additionally addressed payments to employees to the extent they were not already addressed.

134 | FY 2015 AGENCY FINANCIAL REPORT

IMPROPER PAYMENTS INFORMATION ACT (IPIA) OF 2002, AS AMENDED, REPORTING DETAILS
The following table presents a summary of the Department’s program/activity improper payments risk assessments performed 

in 2015; none of these improper payments risk assessments performed in 2015 (or in prior years) revealed any programs or 

activities considered susceptible to significant improper payments. 

SUMMARY OF PROGRAMS/ACTIVITIES FOR WHICH IMPROPER PAYMENTS RISK ASSESSMENTS WERE PERFORMED IN 2015

Program/Activity

FY 2015 

Improper 

Payments 

Below 

Statutory 

Thresholds?

Considered 

Susceptible 

to Significant 

Improper 

Payments?

Economic Development Administration

Global Climate Change Mitigation Fund Yes No 

Research and Evaluation Yes No 

Technical Assistance Yes No 

Trade Adjustment Yes No 

International Trade Administration

Executive Direction and Administration Yes No 

Enforcement and Compliance Yes No 

National Institute of Standards and Technology

Grants and Other Cooperative Agreements Payments Yes No 

Payments to Employees Yes No 

Non-federal Memorandums of Understanding Payments Yes No 

Customer Refund Payments Yes No 

Miscellaneous Payments Yes No 

National Oceanic and Atmospheric Administration

Grants and Other Cooperative Agreements Payments Yes No 

Payroll Yes No 

National Telecommunications and Information Administration

Selected Programs/Activities included in the Digital Television Transition and Public Safety Fund Yes No 

Telecommunications and Information Policy Development and Management, Spectrum Management Yes No 

Public Telecommunications Facilities Program Yes No 

Information Infrastructure Grants Program (also known as Technology Opportunities Program) Yes No 

First Responder Network Authority (FirstNet) Yes No 

Non-FirstNet Activities included in Public Safety Trust Fund and in Network Construction Fund Yes No 

FY 2015 AGENCY FINANCIAL REPORT | 135

IMPROPER PAYMENTS INFORMATION ACT (IPIA) OF 2002, AS AMENDED, REPORTING DETAILS
II. Statistical Sampling. 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 report (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 2014 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 2014 

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 2014 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 Agency Financial Report/Performance 

and Accountability Report. Agencies should include future year outlay and improper payments estimates for Current 

136 | FY 2015 AGENCY FINANCIAL REPORT

IMPROPER PAYMENTS INFORMATION ACT (IPIA) OF 2002, AS AMENDED, REPORTING DETAILS
Year +1, +2 and +3 (future year outlay estimates should match the outlay estimates for those years as reported in the 

most recent President’s Budget). 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 2014 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 determined that all sample items tested for improper payments, 

which amounted to $21.2 million, were found to be properly disbursed; and, as a result, determined that the estimated amount 

improperly disbursed is zero. As no improper payments were found, the resulting precision of the estimate is zero percent (less 

than the required 2.5 percent), with 90 percent confidence.

The following table is reported with regard to the funds received by NOAA under the Act. 

IMPROPER PAYMENTS (IP) REDUCTION OUTLOOK FOR FUNDS RECEIVED BY NOAA UNDER THE DISASTER RELIEF APPROPRIATIONS ACT

(Dollars in Millions)

Activity

FY 2014

Outlays,

Gross

FY 2014

IP

Percent

FY 2014

IP

FY 2014

Overpayments

FY 2014

Underpayments

FY 2015

Outlays,

Gross

Estimated 

FY 2015

IP

Percent

Estimated

FY 2015

IP

FY 2015

Overpayments

FY 2015

Underpayments

Funds Received 

by NOAA under 

Disaster Relief 

Appropriations Act $80.77 0.00% $ – $ – $ – $113.12 0.00% $ – $ – $ –

(continued)

Activity

Estimated

FY 2016

Outlays,

Gross

Estimated

FY 2016

IP

Percent

Estimated

FY 2016

IP

Estimated

FY 2017

Outlays,

Gross

Estimated

FY 2017

IP

Percent

Estimated

FY 2017

IP

Estimated

FY 2018

Outlays,

Gross

Estimated

FY 2018

IP

Percent

Estimated

FY 2018

IP

Funds Received by NOAA under 

Disaster Relief Appropriations Act $52.26 0.00% $ – $29.96 0.00% $ – $4.23 0.00% $ –

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).

FY 2015 AGENCY FINANCIAL REPORT | 137

IMPROPER PAYMENTS INFORMATION ACT (IPIA) OF 2002, AS AMENDED, REPORTING DETAILS
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 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 rows 1 through 13 include 13 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 columns A and B 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 above.

There were no improper payments reported for FY 2014 for NOAA disbursements of funds received under the Disaster 

Relief Appropriations Act, as displayed in the table in section III. above.

V. 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. 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 2015, 

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 

138 | FY 2015 AGENCY FINANCIAL REPORT

IMPROPER PAYMENTS INFORMATION ACT (IPIA) OF 2002, AS AMENDED, REPORTING DETAILS
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 

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 below. 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 II., Improper Payments Risk Assessments, none of the improper payments risk assessments performed 

in 2015 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).

FY 2015 AGENCY FINANCIAL REPORT | 139

IMPROPER PAYMENTS INFORMATION ACT (IPIA) OF 2002, AS AMENDED, REPORTING DETAILS
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 2015, 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 

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 2015 and FY 2014. 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 2016 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 

140 | FY 2015 AGENCY FINANCIAL REPORT

IMPROPER PAYMENTS INFORMATION ACT (IPIA) OF 2002, AS AMENDED, REPORTING DETAILS
(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 2015 and FY 2015 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 

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.

FY 2015 AGENCY FINANCIAL REPORT | 141

IMPROPER PAYMENTS INFORMATION ACT (IPIA) OF 2002, AS AMENDED, REPORTING DETAILS
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 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 2016, whether payment recapture 

auditing should be performed, if considered cost-effective, for payroll and other payments to employees. The results of the 

upcoming 2016 internal control review of the Department’s disbursement processes, which includes transaction sample 

testing, will assist in this evaluation. 

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 auditor 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.

Payment recapture audits of contracts/obligations were completed in February 2015 by an independent contractor for 

DM/Salaries and Expenses (S&E), DM/Working Capital Fund, the Economic Development Administration (EDA/S&E), the 

Economics and Statistics Administration/Bureau of Economic Analysis (ESA/BEA), and the International Trade Administration 

(ITA). 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, 2013 and 

through March 31, 2014, 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 $7.5 million reviewed for improper payments, $4 thousand of 

overpayments were identified for payment recapture, and no underpayments were identified.

A payment recapture audit of Department-wide grants and other cooperative agreements was completed in February 2015 

by an independent contractor. The applicable bureaus/entities were: EDA, ITA, Minority Business Development Agency 

(MBDA), National Institute of Standards and Technology (NIST), NOAA, and National Telecommunications and Information 

142 | FY 2015 AGENCY FINANCIAL REPORT

IMPROPER PAYMENTS INFORMATION ACT (IPIA) OF 2002, AS AMENDED, REPORTING DETAILS
Administration (NTIA). The audit consisted of two different populations: (a) sustained disallowed costs of $10 thousand or 

more for grants and other cooperative agreements per Single Audit Act audit reports, grant/cooperative agreement-specific 

audits, and Office of Inspector General (OIG) audits or reviews, issued between April 1, 2013 and through March 31, 2014; 

and (b) grants and other cooperative agreements for which the period of performance expired during the timeframe of 

January 1, 2013 through December 31, 2013, and greater than $100 thousand, and which were not subjected to any of 

the types of audits or reviews indicated in item (a) above. Of the $1.93 billion million reviewed for improper payments, no 

overpayments or underpayments were identified.

The contractor also completed in February 2015 a review of the statuses of sustained disallowed costs of $10 thousand or 

more, issued between April 1, 2013 and through March 31, 2014. 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/obligations-specific 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 $163 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, 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.

FY 2015 AGENCY FINANCIAL REPORT | 143

IMPROPER PAYMENTS INFORMATION ACT (IPIA) OF 2002, AS AMENDED, REPORTING DETAILS
The following table summarizes (1) the results of payment recapture audits completed in 2015; and (2) the Department’s FY 2015 

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 2015 of overpayments reported in FY 2015; and (b) recaptures of overpayments 

that were previously identified in prior fiscal years.

OVERPAYMENTS IDENTIFIED IN FY 2015 AND FY 2015 RECAPTURES OF OVERPAYMENTS 

(In Millions)

Bureau/

Reporting 

Entity

Overpayments Identified in FY 2015 from Payment Recapture Audits Overpayments Identified 

in FY 2015 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 N/A N/A N/A N/A N/A N/A N/A N/A N/A $ 0.074 $ 0.071

Census 

Bureau N/A N/A N/A N/A N/A N/A N/A N/A N/A 1.358 0.169

Census 

Bureau – 

Unsupported 

Costs Finding 

by OIG N/A N/A N/A N/A N/A N/A N/A N/A N/A 6.384 –

DM/S&E $ 2.056 $ – N/A N/A N/A N/A $ 2.056 $ – N/A 0.012 0.007

DM/WCF 1.586 – N/A N/A N/A N/A 1.586 – N/A – 0.004

EDA 0.724 0.004 $ – $ 57.928 $ – N/A 58.652 0.004 $ – 1.059 1.016

ESA/BEA 0.721 – N/A N/A N/A N/A 0.721 – N/A – –

ITA 2.452 – N/A 1.684 – N/A 4.136 – N/A 0.019 –

MBDA N/A N/A N/A 0.300 – N/A 0.300 – N/A – –

NIST N/A N/A N/A 146.538 – N/A 146.538 – N/A 2.663 3.622

NIST – 

Unsupported 

Costs Finding 

by OIG N/A N/A N/A N/A N/A N/A N/A N/A N/A 3.536 –

NOAA N/A N/A N/A 565.100 – N/A 565.100 – N/A 1.748 1.782

NOAA – 

Unsupported 

Costs Finding 

by OIG N/A N/A N/A N/A N/A N/A N/A N/A N/A 14.880 –

NTIA N/A N/A N/A 1,161.828 – N/A 1,161.828 – N/A 0.173 0.135

NTIS N/A N/A N/A N/A N/A N/A N/A N/A N/A 0.009 –

OIG N/A N/A N/A N/A N/A N/A N/A N/A N/A 0.020 0.018

USPTO N/A N/A N/A N/A N/A N/A N/A N/A N/A 0.333 0.066

Total $ 7.539 $ 0.004 $ – $ 1,933.378 $ – $ – $ 1,940.917 $ 0.004 $ – $ 32.268 $ 6.890

N/A – Not applicable

1 Includes both (a) recaptures of overpayments during FY 2015 of overpayments that were reported in FY 2015; 

and (b) recaptures of overpayments that were previously reported in prior fiscal years.

144 | FY 2015 AGENCY FINANCIAL REPORT

IMPROPER PAYMENTS INFORMATION ACT (IPIA) OF 2002, AS AMENDED, REPORTING DETAILS
The Department’s OIG issued on December 3, 2014 the following report, which includes a finding of unsupported costs 

for the U.S. Patent and Trademark Office (USPTO), for which the Department’s Office of Financial Management has not 

yet concluded its process of determining if the OIG finding of unsupported costs should be included in the Department’s 

improper payments reporting, in full or in part: U.S. Patent and Trademark Office, The U.S. Patent and Trademark Office’s 

Awarding and Administering of Time-and-Materials and Labor-Hour Contracts Needs Improvement (OIG-15-012-A). The 

Department’s Office of Financial Management and USPTO have held discussions with regard to the above noted OIG 

finding and will continue these discussions along with conducting any other necessary procedures, with the objective 

of arriving at a determination in 2016 as to whether the OIG finding of unsupported costs should be included in the 

Department’s next improper payments reporting for FY 2016, in full or in part.

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 improper payments identified for recapture in payment 

recapture audits. Since 2005, the Department has recaptured $96 thousand of the $163 thousand of improper payments 

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, 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.

The Department has not yet recaptured the $4 thousand of overpayments 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 $ – $ –

FY 2015 AGENCY FINANCIAL REPORT | 145

IMPROPER PAYMENTS INFORMATION ACT (IPIA) OF 2002, AS AMENDED, REPORTING DETAILS
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.

● 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 the U.S. 

Department of the Treasury (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.

● Daily pre-payment audit of invoices for accuracy, and corrective actions prior to disbursement, are in place, thereby 

preventing 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.

● 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.

● 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.

146 | FY 2015 AGENCY FINANCIAL REPORT

IMPROPER PAYMENTS INFORMATION ACT (IPIA) OF 2002, AS AMENDED, REPORTING DETAILS
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). The Do Not Pay Business Center will provide 

summary information to OMB on behalf of their customer agencies. 

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).

The pre-payment checking performed by the Department excludes pre-payment eligibility reviews of grantees under 

Treasury’s Automated Standard Application for Payments (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.

FY 2015 AGENCY FINANCIAL REPORT | 147

IMPROPER PAYMENTS INFORMATION ACT (IPIA) OF 2002, AS AMENDED, REPORTING DETAILS
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 2015, 

per the payment offices’ monthly Adjudication Reports submitted to the Do Not Pay portal.

RESULTS FOR FY 2015 OF THE DO NOT PAY INITIATIVE IN PREVENTING IMPROPER PAYMENTS 

(Dollars in Millions; Numbers in Actual Amounts)

Department-wide

Number of 

Payments 

Reviewed 

for Possible 

Improper 

Payments

Dollars of 

Payments 

Reviewed 

for Possible 

Improper 

Payments

Number of 

Payments 

Stopped 

Dollars of 

Payments 

Stopped

Number of 

Payments 

Reviewed and 

Determined 

Proper

Dollars of 

Payments 

Reviewed and 

Determined 

Accurate

Reviews with DMF 248,499 $ 3,749.62 – $ – 248,499 $ 3,749.62

Reviews with SAM 

Exclusion Records 248,499 $ 3,749.62 – $ – 248,499 $ 3,749.62

148 | FY 2015 AGENCY FINANCIAL REPORT

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 2014 +/- Change 

Square Footage 11.837 11.554 (0.283)

OPERATING COSTS OF OWNED AND DIRECT LEASE BUILDINGS SUBJECT TO FREEZE THE FOOTPRINT

(In Millions)

FY 2012

Reported Cost FY 2014 +/- Change 

Operation and Maintenance Costs $39.503 $39.526 ($3.088)

The Department of Commerce’s FY 2012 baseline is 11.84 million square feet of office and warehouse space. The FY 2014 

area was 11.55 million square feet. The two percent reduction to the baseline is a slight rise from the FY 2013 area of 11.84 

million square feet reflecting growth exceeding offset area. Through FY 2020, the Department is predicting that the offset 

area will increase in level below the baseline to as much as six percent.

Operating costs have maintained a slight increase since the FY 2012 baseline. Operating costs savings are constrained by 

the slow progress in reducing the amount of underutilized owned and direct lease office buildings by the National Oceanic 

and Atmospheric Administration and the National Institute of Standards and Technology. 

FY 2015 AGENCY FINANCIAL REPORT | 149

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, requires agencies to adjust their civil monetary penalties for inflation at least every four years to maintain 

their deterrent effect. A civil monetary penalty is defined as any penalty, fine, or other sanction that is for a specific 

monetary amount as provided by federal law, or has a maximum amount provided for by federal law; and is assessed or 

enforced by an agency pursuant to federal law; and is assessed or enforced pursuant to an administrative proceeding or 

a civil action in the federal courts. Any resulting increases in a Departmental civil monetary penalty due to an inflation 

adjustment only applies to the violations that occur subsequent to the date of the publication in the Federal Register of 

the increased amount of the civil monetary penalty. The first inflation adjustment of any civil monetary penalty shall not 

exceed 10 percent of such penalty. The Department published its last adjustments for inflation in the Federal Register on 

December 7, 2012.

Civil Monetary 

Penalty Name Authority

Date of Previous 

Adjustment

Date of Current 

Adjustment

Current Penalty 

Amount

Department of Commerce

Violation 31U.S.C. 3802(a)(1)(D), 

Program Fraud Civil Remedies 

Act of 1986

N/A December 7, 2012 Minimum $5,000 

Maximum $5,500

Violation 31 U.S.C. 3729(a)(1)(G), 

False Claims Act

N/A December 7, 2012 Minimum $5,000 

Maximum $11,000

Bureau of Industry and Security

Violation 15 U.S.C. 5408(b)(1), 

Fastener Quality Act

December 11, 2008 December 7, 2012 $32,500

Inspection Violation 22 U.S.C. 6761(a)(1)(A), 

Chemical Weapons Convention 

Implementation Act

December 11, 2008 December 7, 2012 $25,000

Record Keeping 

Violation

22 U.S.C. 6761(a)(l)(B), 

Chemical Weapons Convention 

Implementation Act

December 11, 2008 December 7, 2012 $5,000

Violation 50 U.S.C. 1705(a), 

International Emergency 

Economic Powers Act (2007)

December 11, 2008 December 7, 2012 $250,000

Violation 22 U.S.C. 8142(a), United 

States Additional Protocol 

Implementation Act (2006)

December 11, 2008 December 7, 2012 Minimum $25,000 

Maximum $27,500

(continued on next page)

150 | FY 2015 AGENCY FINANCIAL REPORT

CIVIL MONETARY PENALTIES’ ADJUSTMENTS FOR INFLATION
Civil Monetary 

Penalty Name Authority

Date of Previous 

Adjustment

Date of Current 

Adjustment

Current Penalty 

Amount

Census Bureau

Delinquency on 

Delayed Filing of 

Export Documentation

13 U.S.C. 304, Collection 

of Foreign Trade Statistics

December 11, 2008 December 7, 2012 Per Day $1,000

Per Violation $10,000 

Violation 13 U.S.C. 305(b), Collection 

of Foreign Trade Statistics

December 11, 2008 December 7, 2012 $10,000

Economics and Statistics Administration

Failure to Furnish 

Information

22 U.S.C. 3105(a), 

International Investment 

and Trade in Services Act

December 11, 2008 December 7, 2012 Minimum $2,500 

Maximum $32,500

International Trade Administration

Violation 19 U.S.C. 81s, 

Foreign Trade Zone

December 11, 2008 December 7, 2012 $1,100 

Violation 19 U.S.C. 1677f(f)(4), U.S.-

Canada FTA Protective Order

December 11, 2008 December 7, 2012 $130,000

National Oceanic and Atmospheric Administration

Violation 51 U.S.C. 60123(a)(3), 

Land Remote Sensing 

Policy Act of 2010

N/A December 7, 2012 $10,000

Violation 51 U.S.C. 60148(c), 

Land Remote Sensing 

Policy Act of 2010

N/A December 7, 2012 $10,000

Violation 16 U.S.C. 773f(a), 

Northern Pacific Halibut 

Act of 1982 (2007)

December 11, 2008 December 7, 2012 $200,000

Violation 16 U.S.C. 783, 

Sponge Act (1914)

December 11, 2008 December 7, 2012 $650

Violations 16 U.S.C. 957, 

Tuna Conventions 

Act of 1950 (1962)

December 11, 2008 December 7, 2012 Violation/Subsection (a) 

$32,500

Subsequent Violation/

Subsection (a) $70,000 

Violation/Subsection (b) 

$1,100

Subsequent Violation/

Subsection (b) $6,500 

Violation/Subsection (c) 

$140,000 

Violation 16 U.S.C. 971e(e), 

Atlantic Tunas Convention 

Act of 1975 (1995)

December 11, 2008 December 7, 2012 $140,000

(continued on next page)

N/A – Not applicable

FY 2015 AGENCY FINANCIAL REPORT | 151

CIVIL MONETARY PENALTIES’ ADJUSTMENTS FOR INFLATION
Civil Monetary 

Penalty Name Authority

Date of Previous 

Adjustment

Date of Current 

Adjustment

Current Penalty 

Amount

National Oceanic and Atmospheric Administration (continued)

Violations 16 U.S.C. 972f(b), Eastern 

Pacific Tuna Licensing Act 

of 1984

December 11, 2008 December 7, 2012 Violation/Subsections (a) 

(1)–(3) $32,500 

Subsequent Violation/Subsections (a)(1)–(3) $65,000 

Violation/Subsections (a) 

(4)–(5) $6,500 

Subsequent Violation/

Subsections (a)(4)–(5) 

$6,500 

Violation/Subsection (a)(6) 

$140,000

Violation 16 U.S.C. 973f(a), South 

Pacific Tuna Act of 1988

December 11, 2008 December 7, 2012 $350,000

Violation 16 U.S.C. 1174(b), Fur Seal 

Act Amendments of 1983

December 11, 2008 December 7, 2012 $11,000

Violation 16 U.S.C. 1375(a) (1), Marine 

Mammal Protection Act of 

1972 (1981)

December 11, 2008 December 7, 2012 $11,000

Violation 16 U.S.C. 1385(e), Dolphin 

Protection Consumer 

Information Act (1990)

December 11, 2008 December 7, 2012 $130,000

Violation 16 U.S.C. 1437(d)(1), National 

Marine Sanctuaries Act (1992)

December 11, 2008 December 7, 2012 $140,000

Violations 16 U.S.C. 1540(a)(1), 

Endangered Species 

Act of 1973

December 11, 2008 December 7, 2012 Knowing Violation of 

Section 1538 (1988) 

$32,500

Other Knowing Violation (1988) 

$13,200 

Otherwise Violation (1978)

$650 

Violation 16 U.S.C. 1858(a), MagnusonStevens Fishery Conservation 

and Management Act (1990)

December 11, 2008 December 7, 2012 $140,000

Violations 16 U.S.C. 2437(a)(1), Antarctic 

Marine Living Resources 

Convention Act of 1984

December 11, 2008 December 7, 2012 Violation $6,500

Knowing Violation $11,000 

Violations 16 U.S.C. 2465(a), Antarctic 

Protection Act of 1990

December 11, 2008 December 7, 2012 Violation $6,500

Knowing Violation $11,000

Violations 16 U.S.C. 3373(a), Lacey Act 

Amendments of 1981

December 11, 2008 December 7, 2012 Sale and Purchase 

Violation $11,000 

Marking Violation $275 

False Labeling Violation 

$11,000 

Other than Marking 

Violation $11,000 

(continued on next page)

152 | FY 2015 AGENCY FINANCIAL REPORT

CIVIL MONETARY PENALTIES’ ADJUSTMENTS FOR INFLATION
Civil Monetary 

Penalty Name Authority

Date of Previous 

Adjustment

Date of Current 

Adjustment

Current Penalty 

Amount

National Oceanic and Atmospheric Administration (continued)

Violation 16 U.S.C. 3606(b)(1), 

Atlantic Salmon Convention 

Act of 1982 (1990)

December 11, 2008 December 7, 2012 $140,000

Violation 16 U.S.C. 3637(b), 

Pacific Salmon Treaty 

Act of 1985 (1990)

December 11, 2008 December 7, 2012 $140,000

Violation 16 U.S.C. 4016(b)(1)(B), 

Fish and Seafood Promotion 

Act of 1986

December 11, 2008 December 7, 2012 Minimum $500 

Maximum $6,500 

Violation 16 U.S.C. 5010(a)(1), 

North Pacific Anadromous 

Stocks Act of 1992

December 11, 2008 December 7, 2012 $130,000

Violation 16 U.S.C. 5103(b)(2), Atlantic 

Coastal Fisheries Cooperative 

Management Act (1993)

December 11, 2008 December 7, 2012 $140,000

Violation 16 U.S.C. 5154(c)(1), Atlantic 

Striped Bass Conservation 

Act (1990)

December 11, 2008 December 7, 2012 $140,000

Violation 16 U.S.C. 5507(a)(1), 

High Seas Fishing Compliance 

Act of 1995

December 11, 2008 December 7, 2012 $130,000

Violation 16 U.S.C. 5606(b), Northwest 

Atlantic Fisheries Convention 

Act of 1995

December 11, 2008 December 7, 2012 $140,000

Violation 16 U.S.C. 6905(c), Western 

and Central Pacific Fisheries 

Convention Implementation 

Act (2007)

December 11, 2008 December 7, 2012 $140,000

Violation 16 U.S.C. 7009(c), Pacific 

Whiting Act of 2006 (2007)

December 11, 2008 December 7, 2012 $140,000

Violations 22 U.S.C. 1978(e), Fishermen’s 

Protective Act of 1967 (1971)

December 11, 2008 December 7, 2012 Violation $11,000 

Subsequent Violation 

$32,500

Violation 30 U.S.C. 1462(a), Deep 

Seabed Hard Mineral 

Resources Act (1980)

December 11, 2008 December 7, 2012 $32,500

Violation 42 U.S.C. 9152(c)(1), Ocean 

Thermal Energy Conversion 

Act of 1980

December 11, 2008 December 7, 2012 $32,500

FY 2015 AGENCY FINANCIAL REPORT | 153

CIVIL MONETARY PENALTIES’ ADJUSTMENTS FOR INFLATION
A AFR Agency Financial Report

AmTech Advanced Manufacturing Technical Consortia (NIST)

APG Agency Priority Goal

ARRA American Recovery and Reinvestment Act of 2009

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)

CFO Chief Financial Officer

CFO/ASA Chief Financial Officer and Assistant Secretary 

for Administration (DM)

CIRT Computer Incident Response Team

COOP Continuity of Operations Programs

COTS Commercial off-the-shelf [software]

CSRS Civil Service Retirement System (OPM)

D DATA Act Digital Accountability and Transparency Act

DM Departmental Management 

DMF Death Master File (Social Security Administration)

GLOSSARY OF ACRONYMS

Abbreviation Title

154 | FY 2015 AGENCY FINANCIAL REPORT

GLOSSARY OF ACRONYMS
DM&R Deferred Maintenance and Repairs

DOC U.S. Department of Commerce

DOL U.S. Department of Labor

E EDA Economic Development Administration

ELGP-Steel Emergency Steel Loan Guarantee Program

EMT Executive Management Team

EPP Educational Partnership Program (NOAA)

ESA Economics and Statistics Administration

ESOC Enterprise Security Oversight Center

F FCC Federal Communications Commission

FCI Facility Condition Index

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)

FISMA Federal Information Security Management Act

FKNMS Florida Keys National Marine Sanctuary

FMFIA Federal Managers’ Financial Integrity Act of 1982

FPDS Federal Procurement Data System

FRPMS Federal Real Property Management System

FRPP Federal Real Property Profile

Abbreviation Title

FY 2015 AGENCY FINANCIAL REPORT | 155

GLOSSARY OF ACRONYMS
Abbreviation Title

FVOG Fishing Vessel Obligation Guarantee Program 

(a NOAA loan guarantee program)

FWC Future Workers’ Compensation

FY Fiscal Year ended September 30

G G&B Gifts and Bequests (a fund that is part of DM)

GAAP Generally Accepted Accounting Principles

GAO U.S. Government Accountability Office

GCCMIF Global Climate Change Migration Incentive Fund

GMD Grants Management Division of OAM (DM)

GOES – R Geostationary Operational Environmental 

Satellites – R (NOAA)

GSA U.S. General Services Administration

H HC Human Capital

HCF Human Capital Framework

HCHB Herbert C. Hoover Building

I IFQ Individual Fishing Quota Direct 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

IT Information Technology

ITA International Trade Administration

IV&V Independent Verification and Validation

156 | FY 2015 AGENCY FINANCIAL REPORT

GLOSSARY OF ACRONYMS
J JPSS Joint Polar Satellite System (NOAA)

M MBDA Minority Business Development Agency

MD&A Management’s Discussion and Analysis

MRB Milestone Review Board

MSI Minority Serving Institutions

N NERR National Estuarine Research Reserves

NFC National Finance Center (U.S. Department 

of Agriculture)

NIST National Institute of Standards and Technology

NMFS National Marine Fisheries Service (NOAA)

NOAA National Oceanic and Atmospheric Administration

NTIA National Telecommunications and Information 

Administration

NTIS National Technical Information Service

O OAM Office of Acquisition Management (DM)

OCIO Office of the Chief Information Officer (DM)

OFFP Office of Federal Procurement Policy (OMB)

OIG Office of Inspector General (DM)

OMB Office of Management and Budget

OPM U.S. Office of Personnel Management

OS Office of the Secretary

P PEP Partnership Education Program (NOAA)

PP&E Property, Plant, and Equipment

R R&D Research and Development

Abbreviation Title

FY 2015 AGENCY FINANCIAL REPORT | 157

GLOSSARY OF ACRONYMS
S SAM System for Award Management (GSA)

S&E Salaries and Expenses

SBR Combined Statements of Budgetary Resources

SCNP Consolidated Statements of Changes in Net Position

SEFSC Southeast Fisheries Science Center (NOAA)

SPRI Strategic Plan Review and Implementation

STC Standard Terms and Conditions

T TIP Technology Innovation Program (NIST)

Treasury U.S. Department of the Treasury

TSP Thrift Savings Plan

U USPTO U.S. Patent and Trademark Office

W WCF Working Capital Fund 

(a fund that is part of DM)

WIPO World Intellectual Property Organization

Abbreviation Title

158 | FY 2015 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.

ACKNOWLEDGEMENTS

CERTIFICATE OF EXCELLENCE

IN ACCOUNTABILITY REPORTING

I

n May 2015, the U.S. Department of 

Commerce received the Certificate 

of Excellence in Accountability 

Reporting (CEAR) from the Association 

of Government Accountants (AGA) for 

its Fiscal Year 2014 Agency Financial 

Report. The CEAR Program was 

established by the AGA, in conjunction 

with the Chief Financial Officers Council 

and the U.S. Office of Management and 

Budget, to improve the effectiveness 

of financial and program accountability 

reporting. 

 CERTIFICATE OF 

 EXCELLENCE IN 

ACCOUNTABILITY

 REPORTING®

Presented to the

In recognition of your outstanding

efforts in preparing the Agency Financial

Report and for the fiscal year 

ended September 30, 2014.

A Certificate of Excellence in Accountability Reporting is presented 

by AGA to federal government agencies whose Agency 

Financial Reports achieve the highest standards demonstrating 

accountability and communicating results.

U.S. Department

of Commerce

Ann Ebberts, MS, PMP

Chief Executive Officer, AGA

Robert F. Dacey, CGFM, CPA

Chair, Certificate of Excellence 

in Accountability Reporting Board

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.

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, 
U.S. DEPARTMENT OF COMMERCE

1401 Constitution Avenue, NW

Washington, DC 20230

(202) 482-2000

www.commerce.gov