ANNUAL MANAGEMENT REPORT

FISCAL YEAR 2017
Contents 

How to Serve 

How this Report Is Organized 

Section I: Agency Mission and Overview

Message from the Chief Executive Officer 

Agency Mission and Overview 

Assessment of Internal Controls

Trust Certification

Analysis of Financial Statements and Stewardship Information

Section II: Financial Section

Message from the Chief Financial Officer 

Financial Statements and Footnotes 

Independent Auditor’s Report 

Management’s Response 

Section III: Other Information 

Donations and Contributions 

National Service Trust Fund Status Report 

Civil Monetary Penalty for Inflation 

Improper Payments
How to Serve

If you are interested in joining or learning more about the Corporation for National 

and Community Service (CNCS) programs, go to www.nationalservice.gov. Click 

“Serve Your Community” to discover which opportunity is right for you.

About this Report

In lieu of a Performance and Accountability Report, CNCS will instead produce 

two reports that provide financial management and program performance 

information. Each report will be available on CNCS’s website as it is completed.

 This report, the Annual Management Report (AMR), focuses on CNCS’s

financial management and the results of the agency’s annual financial

audit. It includes management’s assurance statement regarding internal

controls and compliance, CNCS’s improper payments report, and a

response to the financial audit from management. This report can be

found at:

www.nationalservice.gov/about/budget-and-performance/performanceandaccountability-reports

 The Annual Performance Report (APR) provides an overall assessment of

agency performance. The APR will be included in CNCS’s fiscal year 2019

(FY 2019) Congressional Budget Justification, which will be transmitted to

Congress in February 2018. Congressional Budget Justification reports can

be found at www.nationalservice.gov/about/budget.

These reports meet requirements under the Government Performance and 

Results Act, the Federal Financial Management Improvement Act, the Federal 

Managers’ Financial Integrity Act, the Government Corporation Control Act, and 

the Federal Information Security Modernization Act, among others. These

reports also follow applicable guidance from the Office of Management and 

Budget 

(OMB). 

This report is in the public domain. Authorization to reproduce it in whole or in 

part is granted. The citation should be: Corporation for National and Community 

Service FY 2017 Annual Management Report, Washington, DC, 20525.

To request a printed copy of this report, obtain it in a format that is accessible to 

individuals with disabilities, or provide any related feedback, please contact the 

Office of the Chief Financial Officer at 202-606-5000 or at the mailing address 

noted below. 

CNCS

250 E St., SW 

Washington, D.C. 20525

1
How this Report is Organized

Section I – Agency Mission and Overview 

Section I provides an overview of agency performance and financial information. 

It includes a brief history of CNCS, introduces its mission, and contains major 

agency and program performance accomplishments. This section also provides 

summary financial highlights and internal control assurances. 

Section II – Financial Section

Section II provides the agency’s financial details, including audited financial 

statements and footnotes. 

Section III – Other Information 

Section III provides supplementary reporting of Donations and Contributions, the 

National Service Trust Fund (Trust), and Improper Payments. Donations and 

Contributions reporting identifies the nature and amount of donations, as well as 

how they were used in support of CNCS’s programs and activities.

1
Section I: Agency Mission and Overview

2
Message from the Acting Chief Executive Officer

3
Message  from  the  Acting  Chief  Executive  Officer

For  nearly  a  quarter  century,  the  Corporation  for  National  and  Community  Service  has  

leveraged  our  nation’s  greatest  resource—the  American  people—to  get  things  done.  

Working  hand  in  hand  with  thousands  of  local  partners,  CNCS  programs  improve  lives,  

expand  opportunity,  encourage  personal  responsibility,  and  strengthen  civil  society.    

Our  fiscal  year  2017  (FY  2017)  Annual  Management  Report  summarizes  agency  

accomplishments  and  financial  information  in  accordance  with  relevant  federal  guidance  

and  laws.  Our  efforts  this  past  year  demonstrate  continued  commitment  to  effective  

programs,  targeted  investments,  community  impact,  evidence-­based  approaches,  and  

operational  efficiency  and  accountability.  

Based  on  principles  of  local  control,  competition,  and  public-­private  partnership,  CNCS  

supports  local  community  solutions.  Through  AmeriCorps  and  Senior  Corps,  more  than  

300,000  trained,  dedicated  citizens  provide  intensive  service  at  50,000  sites  across  the  

country.  They  take  on  complex  assignments,  assume  leadership  roles,  and  deliver  

powerful  results  –  including  recruiting  millions  of  additional  volunteers  to  increase  their  

impact.        

Over  the  past  year,  our  programs  have  helped  millions  of  Americans  improve  academic  

success,  prepare  for  21st  century  jobs,  increase  self-­sufficiency,  and  rebuild  their  lives  

after  addiction  or  disasters.  CNCS  advances  priorities  of  President  Trump’s  Administration  

to  promote  economic  mobility,  develop  workforce  skills,  revitalize  cities,  combat  the  opioid  

crisis,  support  veterans  and  military  families,  and  grow  the  economy.    

As  they  serve  others,  national  service  members  expand  their  own  economic  and  

educational  opportunity.  Like  apprenticeships,  AmeriCorps  members  earn  while  they  learn,  

gaining  valuable  career  skills  and  experience  to  prepare  them  for  work.  The  skills  are  both  

specific  to  their  service  (construction,  teaching,  STEM,  firefighting)  and  general  skills  of  

leadership  and  problem-­solving  that  all  employers  look  for.  At  a  time  of  record  job  

openings,  national  service  is  a  pathway  to  employment  that  helps  close  the  skills  gap  -­  

especially  for  low-­income  young  adults  facing  the  toughest  prospects  for  employment.  In  

addition,  preliminary  CNCS  research  released  this  year  shows  that  service  in  Senior  Corps  

helps  improve  health  and  well-­being  and  decrease  isolation  and  depression.    

Over  the  past  year,  CNCS  continued  its  close  partnership  with  the  nation’s  governors,  

mayors,  and  county  leaders.  Three-­quarters  of  AmeriCorps  grant  funds  were  administered  

by  Governor-­appointed  State  Service  Commissions,  and  4,520  local  elected  officials  

representing  194  million  Americans  recognized  the  impact  of  Senior  Corps  and  

AmeriCorps  members.  CNCS  also  continued  to  leverage  substantial  resources  from  

businesses,  foundations,  and  other  sources  –  more  than  $1.25  billion  in  FY  2016  alone.  

250 E Street, SW

Washington, D.C. 20525

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This  local  investment  –  which  exceeds  the  federal  appropriation  -­  strengthens  community  

impact,  increases  the  return  on  taxpayer  dollars,  and  shows  strong  confidence  in  our  work.    

In  addition  to  administering  programs,  building  partnerships,  awarding  and  monitoring  

grants,  and  making  a  transition  to  a  new  Administration,  CNCS  continued  to  make  strong  

progress  on  operational,  financial,  human  capital,  and  internal  controls  priorities.  We  made  

workforce  changes  to  increase  efficiency,  enhanced  grants  monitoring  and  oversight,  

strengthened  our  Enterprise  Risk  Management  program,  and  received  a  10  percent  

increase  in  employee  satisfaction  ratings  on  the  Federal  Employee  Viewpoint  Survey.  

CNCS  is  committed  to  continuously  improving  its  internal  controls  system  and  takes  our  

responsibility  to  safeguard  taxpayer  dollars  very  seriously.  We  have  devoted  significant  

time  and  resources  over  the  past  year  to  assessing  the  effectiveness  of  internal  controls.  

While  we  disagree  with  the  auditor’s  findings  regarding  financial  reporting  of  National  

Service  Trust  obligations,  we  will  work  with  the  Office  of  Inspector  General  and  the  

auditors  to  appropriately  address  items  that  need  to  be  addressed.  CNCS  will  also  

continue  to  strengthen  our  Enterprise  Risk  Management  program,  building  on  the  

significant  progress  made  in  FY  2017  by  the  Office  of  the  Chief  Risk  Officer.    

Service  has  always  been  a  vital  part  of  the  American  character.  For  five  decades,  

Administrations  of  both  parties  have  invested  in  national  service  to  tap  the  ingenuity  and  

can-­do  spirit  of  the  American  people.    With  high-­impact  programs,  an  experienced  field,  

strong  appointed  leaders,  and  hardworking  staff,  we  look  forward  to  achieving  greater  

levels  of  efficiency,  cost  effectiveness,  and  community  impact  moving  forward.  

Kim  Mansaray  

Acting  Chief  Executive  Officer  

NationalService.gov
Agency Mission and Overview

As the federal agency for service and volunteering, the Corporation for National 

and Community Service (CNCS) improves lives, strengthens communities, and 

fosters civic engagement through service and volunteering. Through AmeriCorps, 

Senior Corps, and other programs, CNCS engages millions of Americans in 

results-driven service to solve local problems at 50,000 sites across the country. 

Our work is based on smart, common-sense principles: 

 Tapping the ingenuity and talents of the American people to solve problems

 Encouraging personal responsibility and self-sufficiency – a hand-up, not a

hand-out

 Partnering with local leaders to support local community solutions

 Bolstering existing nonprofit, faith-based, and voluntary organizations

 Leveraging private sector resources to increase impact and stretch the

taxpayer dollar

 Driving impact with business-like focus on competition, data, evidence, and

results

 Uniting Americans from different backgrounds to achieve common goals for

America.

Each year, CNCS and its partners engage hundreds of thousands of trained, 

skilled Senior Corps and AmeriCorps members in sustained service at thousands 

of schools, food banks, homeless shelters, veteran’s homes, and youth centers. 

CNCS strengthens America’s nonprofit and voluntary sector through human 

capital, grants, capacity-building support, research and evaluation to inform best 

practices, and public-private partnerships. CNCS helps create more engaged 

citizens, greater economic opportunity, safer neighborhoods, and stronger 

communities. 

How Are We Organized? 

CNCS is led by a bipartisan Board of Directors and Chief Executive Officer 

(CEO) with independent oversight provided by an Inspector General – all of 

whom are appointed by the President. 

The CEO provides overall organizational leadership for the agency’s programs 

and operations, including approximately 600 employees who work throughout the

United States and its territories. The Board of Directors works with the CEO to 

set the direction for CNCS, advises the President and Congress concerning 

developments in national and community service, and conducts an evaluation of 

the CEO. 

CNCS programs are operated through the combined efforts of the CNCS 

headquarter staff, CNCS State Office staff, and Governor-appointed State 

Service Commissions. The AmeriCorps program is a joint state-federal 

6
undertaking, providing Governors with a key role in deciding where resources go. 

Three-quarters of AmeriCorps State and National grant funding is managed by 

State Service Commissions. The 52 State Service Commissions identify local 

needs, develop programs, monitor grantees, carry out Governor’s service 

priorities, and lead citizen service efforts in their states. 

Organizational Chart 

7

Legislation 

Congress created CNCS in 1993, merging the work and staff of two separate 

agencies that provided opportunities for Americans of all ages and backgrounds 

to serve their communities. 

This authority was expanded in 2009 with the passage of the 

bipartisan Edward M. Kennedy Serve America Act, which amended 

the original National and Community Service Act (1990) and the 
Domestic Volunteer Service Act (1973). Under this current authority 

CNCS manages the following major programs.1 

 AmeriCorps –including AmeriCorps State and National, AmeriCorps

VISTA, and AmeriCorps National Civilian Community Corps (NCCC)

 State Service Commission Support Grants

 Senior Corps – RSVP, Foster Grandparents Program, and Senior

Companion Program

 Volunteer Generation Fund

 Days of Service – Martin Luther King Jr. National Day of Service and

September 11th National Day of Service and Remembrance

 Research and Evaluation.

Fiscal Year 2017 Accomplishments 2

In Fiscal Year (FY) 2017, CNCS continued to provide targeted, 

critical support through its national network of State Service 

Commissions, grantees, partners, and members to deliver vital 

services to individuals and communities throughout the country. 

CNCS’s investment led to significant accomplishments in the 

agency’s priority focus areas. A partial sample of these 

accomplishments is listed below, grouped by the agency’s major 

goals. 

Goal: Increase the impact of national service on community needs in 

communities served by CNCS-supported programs. 

 Supported an estimated 72,000 AmeriCorps members and 232,000

Senior Corps positions to carry out results-driven service in the agency’s

statutory focus areas of disaster services, economic opportunity,

education, environmental stewardship, healthy futures, and veterans and

military families.

 Supported millions of youth through teaching, tutoring, mentoring, and

after-school programs, helping more than 540,000 students demonstrate

improved academic achievement in literacy and math. More than 88,000

Senior Corps and AmeriCorps members serve in nearly 12,000 schools,

including 1 of 4 low-performing schools and more than 720 charter

schools. Rigorous independent evaluations have demonstrated the

positive impact of national service on early childhood education, third1

 CNCS also continues to manage funds previously awarded through the Social 

Innovation Fund, which did not receive an appropriation in FY17. 

2

 All AmeriCorps and Senior Corps data is estimated. Final information will be available 

in the second quarter of FY 2018. Service and result estimates are approximately equal 

to prior year levels. 

8
grade literacy, college access, and other key measures of educational 

success.3

 Provided independent living assistance to more than 350,000 adults –

primarily frail seniors – helping them to live with dignity in their homes

instead of more costly institutional care.

 Deployed more than 2,000 AmeriCorps and Senior Corps members who

provided vital support to Americans affected by hurricanes Harvey, Irma,

and Maria. Working with FEMA and local partners, members provided a

range of services including blue roof tarping, debris removal, muck and

gut operations, damage assessments, volunteer and donation

management, and disaster survivor assistance. Over the last five years,

CNCS programs have responded to more than 200 disasters including

floods, fires, hurricanes, and tornadoes affecting millions of Americans.

 Significantly increased agency investment in opioid abuse prevention,

education, and recovery programs by allocating $10.5 million to support

96 opioids projects in more than 160 communities in 45 states. This

investment supports 1,200 new Senior Corps and AmeriCorps members

serving with nonprofits, police departments, and local agencies to prevent

and reduce opioid abuse.

 Continued to support health, education, and other initiatives for military

service members, veterans, and their families. AmeriCorps and Senior

Corps members provided our service heroes and their families with

employment services, benefits counseling, transportation to medical

appointments, and more. More than 23,000 veterans serve in CNCS

programs, applying the skills they gained in the military to address

problems on the homefront.

 Partnered with mayors, police departments, and local nonprofits to reduce

crime, rebuild housing, remove blight, and expand economic opportunity

for individuals and families living in urban areas. For example, the

AmeriCorps Urban Safety Corps worked with the Detroit Police

Department (DPD) and residents in high-crime areas to board up vacant

homes, create safe routes to schools, conduct home safety audits, and

carry out neighborhood watch patrols. According to the DPD, in

neighborhoods where AmeriCorps members served, crime declined by 26

percent and saved an estimated $302 million in law enforcement costs.4

3 https://www.nationalservice.gov/sites/default/files/documents/Impact_Evaluation_MRC.pdf

4 https://www.nationalservice.gov/urban-safety-program 

9
 Continued national Call to Service initiatives which engaged hundreds of

thousands of Americans in projects on the Dr. Martin Luther King Jr. Day

of Service and the September 11th National Day of Service and

Remembrance, with many focused on supporting veterans, soldiers, and

military families.

Goal: Strengthen national service so that participants engaged in CNCSsupported programs consistently find opportunity, satisfaction, and 

meaning. 

 Continued to strengthen AmeriCorps as a pathway to employment and

closing the skills gap. While there are six million job openings in the United

States today -- the highest number in history - many of these jobs go

unfilled because of a mismatch between available positions and

prospective employees’ job skills.

 National service is a proven pathway to employment that helps close the

skills gap in high demand sectors including teaching, health services, IT,

construction, and nonprofit. Similar to an apprenticeship, AmeriCorps

members earn while they learn, gaining valuable career skills and

experience to prepare them for work. The skills they gain are both specific

to their service (construction, teaching, STEM, firefighting) and general

skills of leadership, creativity, and problem-solving that all employers look

for. This pathway is especially critical for low-income young adults facing

the toughest prospects for employment. Eighty percent of alumni say

AmeriCorps benefited their career path, and 42 percent of alumni

employed within six months of service found a job through AmeriCorps.5

New research shows that national service helps create new jobs.

Preliminary findings from an Arizona State University study found that 82.7

percent of AmeriCorps host organizations hired at least one AmeriCorps

member.6 The positions are typically full-time, and more than half the jobs

are newly created.

 Expanded the number of Employers of National Service, an initiative to

recognize the valuable skills and experience gained by AmeriCorps and

Peace Corps alumni and provide opportunities for them to apply their skills

in the workplace. Employers of National Service connects national service

alumni with leading employers to create recruitment, hiring, and

advancement opportunities. More than 500 companies, nonprofits, and

public agencies representing 2.4 million jobs have signed on as

Employers of National Service, including Disney, Comcast, CSX, Sodexo,

Accenture, Delta Airlines, New York City, and the states of Montana and

Virginia.

5 https://www.nationalservice.gov/sites/default/files/evidenceexchange/FR_AmeriCorpsAlumniOutcomesFinalTechReport.pdf

6 https://www.nationalservice.gov/sites/default/files/evidenceexchange/FR_2017%20State%20of%20the%20Evidence%

20Report_0.pdf

10
 Demonstrated the physical and mental health benefits of Senior Corps.

Contributing to the belief that volunteering has health benefits, CNCS

released preliminary results of two longitudinal studies to assess the

impact of service on Foster Grandparent and Senior Companion

volunteers and the caregivers of Senior Companion clients.7 The Senior

Corps volunteer study showed that just after one year of service:

o Nearly half of Senior Corps volunteers (46 percent) reported

improved health and well-being, and more than one-third who

initially reported they were in good health reported improved health

at the end of the one-year period

o Almost two-thirds of Senior Corps volunteers (63 percent) reported

a decrease in feelings of isolation and 67 percent of those who first

reported they “often” lack companionship reported improved social

connections.

o Seventy percent of Senior Corps volunteers who initially reported

five or more symptoms of depression reported fewer symptoms at

the end of the first year of service, and 63 percent of volunteers

who initially reported three or four symptoms of depression also

report fewer symptoms.

Goal: Maximize the value we add to grantees, partners, and participants. 

 Through the funding of AmeriCorps programs across the nation, CNCS

established an infrastructure that recruited and managed millions of

community volunteers to multiply the impact of national service

participants and strengthened nonprofit and faith-based organizations

across the country. AmeriCorps VISTA members raised an estimated

$178 million in cash and in-kind resources in support of anti-poverty

programs, nearly doubling every federal dollar invested. In addition, initial

findings from twelve in-depth case analyses show that VISTA members

build the capacity of organizations to serve communities, even within their

first year of service. For example, VISTA members developed systems for

increasing organizational efficiency, engaged in outreach and partnership

development to expand the organization’s reach, and generated resources

such as funding, volunteers, and in-kind donations.

 In addition to strengthening the capacity of organizations, there is

compelling new evidence that national service contributes to the nation’s

civic health.8 A team of researchers at the University of Texas at Austin

developed two new county-level measures; one for civic engagement and

one for subjective well-being. Statistical models were used to analyze

7 https://www.nationalservice.gov/programs/senior-corps/senior-corps-and-health-benefits

8 https://www.nationalservice.gov/impact-our-nation/evidence-exchange/2017SOE

11
these datasets to test whether or not national service programs strengthen 

the overall health of communities across the United States. This team of 

researchers found that the presence of AmeriCorps programs from 2005–

2010 is significantly associated with levels of subjective well-being. More 

specifically, the AmeriCorps programming within a community buffers 

those communities so that citizens report fewer negative aspects of 

subjective well-being such as disengagement or negative relationships. 

The study also found that the presence of a VISTA member predicts 

increased civic engagement at the county level. 

 Provided State Service Commissions with Commission Investment Funds

to expand their capacity to improve service delivery by forging new

partnerships, offering training and technical assistance to grantees,

strengthening compliance, building evaluation capacity, and developing

new skills and knowledge to increase community impact.

 Awarded Program Development grants to 22 State Commissions to

support the development of AmeriCorps programs addressing the opioid

and prescription drug abuse crisis and public safety in local communities.

 Strengthened the volunteer management practices of more than 600

organizations and supported recruitment of more than 250,000 volunteers

through Volunteer Generation Fund grants to State Service Commissions.

In FY 2017, CNCS awarded 15 new Volunteer Generation Fund grants to

State Service Commissions, supporting effective approaches that expand

the capacity of volunteer connector organizations to recruit, manage,

support and retain individuals to serve in high quality volunteer

assignments.

 Continued to develop a knowledge and evidence base to support the

agency’s mission, programs, and strategic goals through rigorous program

evaluation and research initiatives. CNCS’s emphasis on evaluation is

aligned with federal guidance on the importance of using evidence and

rigorous evaluation in budget, management, and policy decisions.

Implementing a robust research and evaluation agenda is critical to the

agency’s ability to achieve and communicate the value that national

service brings to communities across the country. All CNCS programs

incorporated evidence and evaluation into their grant making practices

and operational procedures.

 Strengthened relationships with governors, mayors, county, and tribal

elected officials across the country. These officials are important partners

in identifying local needs and ensuring national service resources are

effectively meeting those needs. More than 4,520 mayors and county

leaders representing 194 million Americans participated in the 2017

Mayor, County, and Tribal Recognition Day for National Service.

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Goal: Fortify management operations and sustain a capable, responsive, 

and accountable organization. 

 Continued to develop and strengthen the agency’s Enterprise Risk

Management framework.

 Continued to strengthen the agency’s Internal Controls with a specific

focus on grant monitoring and Information Technology assessment.

 Completed important project milestones for CNCS’s new grants and

member management system which will provide enhanced usability to

the CNCS service community.

More agency and program impacts can be found at 

https://www.nationalservice.gov/impact-our-nation. The remainder of this 

report will highlight CNCS's payment integrity, financial management 

activities, and related information. 

13
Assessment of Internal Controls, Management Assurances Under FMFIA, 

and Management Certification of Compliance Regarding National Service 

Trust 

14
Assessment  of  Internal  Controls  

Section  306  of  the  Chief  Financial  Officers  Act  (CFO  Act)  established  a  reporting  

requirement  related  to  the  internal  controls  for  corporations  covered  by  the  

Government  Corporation  Control  Act  (GCCA),  including  CNCS.    These  corporations  

must  submit  an  annual  management  report  to  the  Congress  that  includes  a  statement  

by  the  CEO  consistent  with  the  requirement  of  the  Federal  Managers'  Financial  

Integrity  Act  (FMFIA).  The  FMFIA  requires  federal  agencies  to  annually  evaluate  and  

assert  on  the  effectiveness  and  efficiency  of  their  internal  control  and  financial  

management  systems.  Agency  heads  must  annually  provide  a  statement  on  whether  

there  is  reasonable  assurance  that  the  agency’s  internal  controls  are  achieving  their  

intended  objectives  and  the  agency's  financial  management  systems  conform  to  

government-­wide  requirements.  Section  2  of  FMFIA  outlines  compliance  with  internal  

control  requirements,  while  Section  4  dictates  conformance  with  systems  requirements.  

Additionally,  agencies  must  report  on  any  identified  material  weaknesses  and  provide  a  

plan  and  schedule  for  correcting  the  weaknesses.  

In  September  2014,  the  U.S.  Government  Accountability  Office  (GAO)  released  an  

updated  edition  of  its  Standards  of  Internal  Control  in  the  Federal  Government,  

effective  FY  2016.  The  document  includes  several  new  principles  and  priorities,  

including  a  focus  on  a  framework  for  Enterprise  Risk  Management  (ERM).  In  July  

2016,  OMB  release  an  updated  version  of  Circular  A-­123,  titled  Management's  

Responsibility  for  Enterprise  Risk  Management  and  Internal  Control.  The  new  Circular  

complements  GAO’s  Standards,  implements  requirements  of  the  FMFIA  with  the  intent  

to  improve  accountability  in  federal  programs  and  increase  federal  agencies’  

consideration  of  ERM.  CNCS  made  improvements  in  its  Internal  Controls  program  

consistent  with  GAO’s  Standards  of  Internal  Control  and  OMB  Circular  A-­123.  

CNCS  is  in  the  process  of  continually  assessing  the  effectiveness  of  its  internal  control  

system.  In  assessing  the  design,  implementation  and  operating  effectiveness  of  its  

internal  controls,  CNCS  has  identified  a  total  of  18  key  business  processes.  During  FY  

2016,  CNCS  completed  an  assessment  of  the  most  pervasive  of  those  cycles  (Entity  

Level  Controls)  and  concluded  that  CNCS’s  controls  were  effective,  with  no  significant  

deficiencies  or  material  weakness  being  identified.1

  Of  the  17  remaining  cycles,  the  two  

that  encompass  the  greatest  part  of  CNCS’s  obligations  are  the  Grants  Life  Cycle  and  

the  Procurement  Processes,  totaling  approximately  79%  of  CNCS’s  total  Operating  

Expense  and  Salaries  and  Expenses  FY  2017  appropriations.  For  FY  2017  testing  

CNCS  identified  these  as  high-­risk  cycles,  performed  full  evaluations  of  those  two  

                                                                                                                        

1 CNCS  has  identified  Entity  Level  Controls  as  a  medium  risk  cycle  and  therefore  conducts  its  control  assessments  on  a  

rotating  two-­‐‐year  cycle.  

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business  cycles  and  concluded  that  CNCS’s  controls  were  effective,  with  no  significant  

deficiencies  or  material  weakness  being  identified.  In  FY  2018  and  beyond,  CNCS  will  

continue  its  process  of  implementing  a  robust,  risk-­based  internal  controls  assessment  

program  of  all  of  its  business  processes.    

Consistent  with  Section  IV.B  of  OMB  Circular  A-­123,  and  for  many  years,  CNCS  has  

been  able  to  rely  upon  the  work  of  its  independent  auditors  as  key  evidence  that  its  

internal  controls  were  operating  effectively.  This  year,  CNCS’s  new  auditor  identified  

four  conditions  as  material  weaknesses:  Financial  Reporting,  Unpaid  Obligations  within  

the  National  Service  Trust,  the  National  Service  Trust  Award  Liability,  and  Grant  

Accrual  and  Advances.  In  general,  CNCS  does  not  concur  with  all  of  the  auditor’s  

findings  in  these  areas.  In  particular,  CNCS  believes  that  its  auditors  have  an  

erroneous  view  of  CNCS’s  statutory  authorities  regarding  the  National  Service  Trust  

(which  leads  directly  to  the  auditors’  conclusions  regarding  the  reporting  of  unpaid  

obligations  and  the  overall  liability  of  the  Trust).  Moreover,  the  auditor’s  findings  

regarding  the  Trust  do  not  call  into  question  CNCS’s  safeguarding  of  taxpayer  funds.  In  

fact,  the  auditor’s  views  are  that  CNCS  has  been  too  aggressive  in  ensuring  that  the  

National  Service  Trust  has  sufficient  resources  to  meet  its  future  outlays.  Further,  the  

findings  in  regard  to  financial  reporting  and  grant  accrual  are  almost  exclusively  

concerns  about  how  CNCS  summarizes  and  reports  the  financial  results  of  its  

operations.  Those  findings  do  not  call  into  question  how  CNCS  conducts  its  core  

business  operations.  Therefore,  CNCS  is  not  able  to  rely  upon  the  results  of  its  FY  

2017  audit  in  providing  assurances  in  regard  to  its  internal  controls.      

Management  Assurances  Under  FMFIA  

CNCS  management  is  responsible  for  managing  risks  and  maintaining  effective  

internal  control  to  meet  the  objectives  of  Sections  2  and  4  of  the  Federal  Managers’  

Financial  Integrity  Act.  CNCS  conducted  its  assessment  of  risk  and  internal  control  in  

accordance  with  OMB  Circular  No.  A-­123,  Management’s  Responsibility  for  Enterprise  

Risk  Management  and  Internal  Control.  Based  on  the  results  of  its  assessments,  

CNCS  can  provide  reasonable  assurance  that  internal  control  over  operations,  

reporting,  and  compliance  in  the  areas  of  entity  level  controls,  grants  operations,  

procurement  were  operating  effectively  as  of  September  30,  2017.  Because  of  the  

limitations  discussed  above,  CNCS  is  unable  to  provide  assurance  that  the  balance  of  

its  internal  control  over  operations,  reporting,  and  compliance  were  operating  

effectively.    CNCS  remains  committed  to  improving  its  operations,  reporting  and  

compliance.  CNCS  also  maintains  its  strong  commitment  to  improving  its  Internal  

Controls  Program,  building  on  the  significant  progress  made  in  FY  2017  under  the  

leadership  of  the  Chief  Risk  Officer.  Together,  these  actions  will  enable  CNCS  to  

resume  providing  unmodified  assurances  on  the  effectiveness  of  its  internal  controls.      

Management  Certification  of  Compliance  Regarding  National  Service  Trust  

Section  149(a)(3)  of  the  National  and  Community  Service  Act  of  1990  (NCSA),  as  

amended  by  the  Edward  M.  Kennedy  Serve  America  Act  (PL  111-­13),  establishes  the  

specific  criteria  for  timing  and  recording  obligations  in  the  National  Service  Trust.  

Section  149(a)(3)  of  the  NCSA  requires  the  Chief  Executive  Officer  of  CNCS  to  

NationalService.gov
annually  certify  that  CNCS  is  in  compliance  with  the  requirements  of  the  NCSA  with  

regard  to  the  timing  and  recording  of  obligations  within  the  Trust.  

Based  on  CNCS’  analysis  and  review  of  its  National  Service  Trust  activities,  CNCS  

certifies  that  for  FY  2017  it  complied  with  the  requirements  for  recording  National  

Service  Trust  Obligations  as  described  in  section  149(a)(1)  of  the  NCSA.  

_________________________  

Acting  Chief  Executive  Officer  

NationalService.gov
Understanding the Financial Statements

The Corporation for National and Community Service’s (CNCS) consolidated financial

statements outline its financial position, results of operations, cash flows, and budgetary

resources, as required by the Government Corporation Control Act (GCCA) and

Executive Order 13331, National and Community Service Programs. The Act requires

government corporations to submit an annual report including the corporation’s financial

statements to Congress. As specified in the Act, the principal financial statements of

CNCS are the:

• Statement of Financial Position (balance sheet), which reports the status of

CNCS assets, liabilities, and net position

• Statement of Operations and Changes in Net Position (income statement),

which reports CNCS’s revenues and expenses for the year and the changes in

net position that occurred during the year

• Statement of Cash Flows, which shows how changes in CNCS’s financial

position and results affected its cash (Fund Balance with Treasury), and

presents analysis of operating, investing, and financing activities.

In addition, under the requirements of Executive Order 13331, CNCS prepares a

Statement of Budgetary Resources (SBR) as a principal financial statement. The SBR

provides information about the budgetary resources made available to CNCS and the

status of those resources at the end of the fiscal year. CNCS’s financial statements

provide comparative information for Fiscal Year (FY) 2017 and 2016.

18
Composition of CNCS’s Assets and Liabilities

Figure I CNCS’s Assets as of September 30, 2017

43.1% 52.1%

3.1%

0.5%

1.2% Fund Balance With Treasury 52.1%

Trust Investments and Related Receivables

43.1%

Advances to Others 3.1%

Accounts Receivable 0.5%

Property, and Equipment 1.2%

19

The Statement of Financial Position provides an overview of CNCS’s financial position

at the certain point in time. The fiscal year end statement displays the current and the

future economic benefits owed or available for use (assets) and amounts owed

(liabilities) and the residual amount (net position) at September 30th. In Figure I, the pie

chart displays the FY 2017 assets by the asset classes aligned with the percentages of

the total assets.

CNCS reported on its Statement of Financial Position total assets of $2.0 billion at the

end of FY 2017. The amount aforementioned above represents an increase of $61.1

million (3.1 percent) over the FY 2016 total assets of $ 1.9 million. The change is

primarily due to $44.2 million increase in Investments and Related Receivables and

10.7 million increase in Property and Equipment.

Fund Balance with Treasury (FBWT) is the largest asset class, representing 52.1% of

the total asset. The FBWT equaled to $1.0 billion for FY2017 and FY 2017, $3.0 million

change from FY 2016. The FBWT is increased through appropriations, transfers,

recoveries, receipts and collections and decreased by expenditures and/or rescissions.

CNCS is authorized to use FBWT to make expenditures for authorized expenses

resulting from operational activity.
Investments and Related Receivables is second largest asset class, representing

43.1% percent of the total assets. Funding for the Trust investments comes from

appropriations, interest earned, sponsorships, and proceeds from the sale or

redemption of investments. Investments and Related Receivables are used to pay

Education Awards for eligible participants who complete AmeriCorps service.

Figure II CNCS’s Liabilities as of September 30, 2017

72.4%

17.8%

0.8%

1.4%

3.5%

0.8%

3.3%

Trust Service Award Liability   72.4%

Grant Payable 17.8%

Acccount Payable 0.8%

Actuarial FECA 1.4%

Advances from Others  3.5%

Accrued Annual Leave 0.8%

Other Liabilities 3.3%

20

As of September 30, 2017, CNCS total liabilities amounted to $535.5 million, $ 21.2

million decrease from the FY 2016. In Figure II, the chart displays the FY 2017 liabilities

classes and percentages of the total liabilities. The major change in liabilities composed

of a significant decrease in Trust Service Award Liability of $ 8.2 million due to a revised

statistical methods. In FY 2017, the Trust Service Award Liability amounted to 72.4 % of

the Total Liabilities. The Trust Service Award Liability consisted of estimates of unpaid

earned and expected to earned education award and interest forbearance costs that are

likely to be paid.

In addition, Grants Payable represents funds due to grantees in payment of their

performance under a grant. Grants Payable amounted to $95.2 million, 17.8% of the FY

17 total liabilities. This liability decreased by 5.4% compared to the FY 2016 balance of

$ 100.7 million.
Figure III CNCS’s Expenses for the Period Ended September 30, 2017

74.0%

20.2%

5.1%

0.2%

0.5%

AmeriCorps  74.0%

SeniorCorps  20.2%

Innovation, Demonstration and

Assistance Activities 5.1%

J Special Authority 0.2%

Office of the Inspector General

0.5%

21

Results of Operations

The Statement of Operations and Changes in Net Position presents revenue earned by

CNCS (primarily appropriations) and the annual cost of operating CNCS programs.

CNCS recognizes its use of appropriated capital as revenue at the time it is expended

or accrued to pay program or administrative expenses. Appropriations received for the

Trust are recognized as revenue when received. In FY 2016, CNCS used a revised cost

accounting methodology to allocate the expenses allocated among its major programs,

at the sub-program level. Costs for each major CNCS program are reported separately.

Program costs include grant expenses and direct and allocated personnel and

administrative costs, including AmeriCorps recruitment and Trust operations. In Figure

III, the pie chart displays the FY 2017 expenses by the major programs aligned with the

percentages of the total program expenses.

For FY 2017, CNCS’s Total revenue totaled $1.1 billion, an increase of $ 38.0 million, or

3.5%, from FY 2016. Total expenses reported for FY 2017 totaled $ 986.9 million, which

represents a decrease of $ 28.7 million, or 3.0 %, from FY 2016. CNCS’s net revenue
over expenses for FY 2017 was $ 68.1 million, which is a decrease of 66.7 million

compared to FY 2016.

Budgetary Resources

The Statement of Budgetary Resources provides information on how budgetary

resources were made available to CNCS for the year and the status of those budgetary

resources at year-end.

Limitations of the Financial Statements

The principal financial statements have been prepared in compliance with the reporting

requirements described above. CNCS’s financial statements published herein are in

addition to the financial reports it uses to monitor and control budgetary resources which

are prepared from the same books and records. The statements should be read with the

realization that they are for a component of the U.S. Government, a sovereign entity. An

implication of this is that liabilities cannot be liquidated without legislation that provides

the resources to do so.

22
Section II: Financial Section

23
Message from the Chief Financial Officer 

24
Message  from  the  Chief  Financial  Officer

The  Corporation  for  National  and  Community  Service  improves  lives,  strengthens  communities,  and  

fosters  civic  engagement  through  service  and  volunteering.  To  accomplish  this  mission  we  rely  on  

millions  of  dedicated  Americans  who  serve  across  the  nation.  Agency-­supported  volunteers  help  our  

neighbors  prepare  for  new  economic  opportunities,  live  with  dignity  in  their  own  homes  as  they  age,  

and  recover  from  natural  disasters.  

We  are  proud  to  help  lead  this  service.  And  we  remain  committed  to  working  with  our  partners  to  

ensure  taxpayer  resources  are  used  appropriately.  To  this  end,  we  partner  closely  with  our  OIG  to  

resolve  any  concerns,  such  as  those  raised  in  this  year’s  Independent  Auditor’s  Report.  For  FY  2017  

this  report  identified  four  material  weaknesses,  with  which  we  do  not  wholly  agree.  Additional  related  

details  can  be  found  later  in  our  Management  Response  section.    

During  FY  2017,  in  addition  to  providing  sound  financial  management,  we  continued  to  make  

significant  progress  on  our  operational  priorities.  For  example,  we  completed  key  project  milestones,  

including  preliminary  testing,  necessary  to  launch  our  new  grants  and  member  management  system.  

When  implemented,  it  will  significantly  improve  user  experience  by  modernizing  the  previous  system’s  

interface  and  introducing  new  grant  lifecycle  management  functionality  such  as  a  streamlined  

application  process.  .    

This  past  fiscal  year  we  also  completed  milestones  that  will  allow  us  to  prioritize  and  manage  the  

uncertainty  associated  with  achieving  our  agency  objectives.  Progress  included  the  implementation  of  

an  agency-­wide  risk  register,  which  identified  six  priority  risks  related  to  CNCS’s  reputation,  

organizational  structure,  enterprise  view,  grant  making  requirements,  strategic  alignment,  and  general  

decision  making.  These  risks  will  inform  agency  resource  alignment  in  upcoming  years.  And,  they  will  

help  inform  our  ongoing  efforts  to  develop  a  grants  monitoring  approach  based  primarily  on  the  most

relevant  factors  that  influence  success.  

In  closing,  I  would  like  to  recognize  all  of  the  staff  who  made  our  success  possible.  You  ensure  we  

deliver  the  right  resources  to  the  right  people  at  the  right  time.  Our  teams  monitor  funds,  purchase  

critical  services,  and  yes,  keep  the  lights  on.  Without  your  dedication  and  hard  work,  we  would  not  be  

able  to  get  things  done  for  America.  Thank  you.  

                         -­-­-­-­-­-­-­-­-­-­-­-­-­-­-­-­-­-­-­-­-­-­-­-­  

                         Robert  McCarty  

250 E Street, SW

Washington, D.C. 20525

202-606-5000 | 800-942-2677 | TTY 800-833-3722
Financial Statements and Footnotes

26
Consolidated Financial Statements 

27
Corporation for National and Community Service

Consolidated Statements of Financial Position 

As of September 30, 2017 and 2016

(Dollars in Thousands)

2017

Unaudited

2016

Assets

Fund Balance with Treasury (Note 2) $ 1,047,393 $ 1,044,413

Cash and Other Monetary Assets 118 - 

Investments and Related Receivables (Note 3) 866,834 822,652

Advances to Others 62,559 59,488

Accounts Receivable, Net (Note 4) 9,577 9,559

Property and Equipment, Net (Note 5) 24,356 13,638

Total Assets $ 2,010,837 $ 1,949,750

Liabilities

Trust Service Award Liability (Note 6) $ 388,134 $ 396,344

Grants Payable 95,228 100,664

Accounts Payable 4,113 8,250

Actuarial FECA Liability (Note 8) 7,328 7,573

Advances from Others (Note 9) 18,752 23,507

Accrued Annual Leave 4,112 4,130

Other Liabilities (Note 10) 17,822 16,200

Total Liabilities $ 535,489 $ 556,668

Contingencies (Note 16)

Net Position

Unexpended Appropriation $ 970,315 956,173

Cumulative Results of Operations 505,033 436,909

Total Net Position (Note 11) $ 1,475,348 $ 1,393,082

Total Liabilities and Net Position $ 2,010,837 $ 1,949,750

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

28
Corporation for National and Community Service

Consolidated Statements of Operations and Changes in Net Position 

For the Periods Ended September 30, 2017 and 2016

(Dollars in Thousands)

2017

Unaudited

2016

Revenue 

Appropriated Capital Used $ 777,731 $ 794,222

Appropriations Received by the National Service Trust (Note 12) 215,985 241,352

29

Interest 6,726 3,964

Revenue from Services Provided 41,176 39,605

Other 13,441 13,893

 Total Revenue $ 1,055,059 $ 1,093,036

Expenses 

AmeriCorps $ 729,967 $ 682,390

SeniorCorps 199,581 211,217

Innovation, Demonstration and Assistance Activities 50,517 59,620

J Special Authority 1,803 - 

Office of the Inspector General 5,067 4,964

 Total Expenses (Note 13) 986,935 958,191

Net of Revenue Over Expenses $ 68,124 $ 134,845

Net Position

Net of Revenue Over Expenses $ 68,124 $ 134,845

Increase/(Decrease) in Unexpended Appropriations, Net (Note 15) 14,142 40,741

Increase/Decrease in Net Position, Net 82,266 175,586

Cummulative Beginning Balance 436,909 302,063

Net Position, Beginning Balance 1,393,082 1,217,496

Net Position, Ending Balance (Note 11) $ 1,475,348 $ 1,393,082

The accompanying footnotes are an integral part of these financial statements.
Corporation for National and Community Service

National Service Trust Fund Statements of Cash Flows

For the Periods Ended September 30

(Dollars in Thousands)

2017

Unaudited

2016

CASH FLOWS FROM OPERATING ACTIVITIES

Net of Revenue Over Expenses $ 58,239 $ 125,280

Adjustments Affecting Cash Flow:

 Amortization of Premium/Discount on Investments (719) (197)

 Appropriations Received in Trust (215,985) (241,352)

 Decrease/(Increase) in Accounts Receivable 47 61

 Decrease/(Increase) in Interest Receivable (769) (305)

 Increase/(Decrease) in Trust Liability (8,209) (58,546)

 Total Adjustments (225,635) (300,339)

Net Cash Provided/(Used) by Operating Activities (167,396) (175,059)

CASH FLOWS FROM INVESTING ACTIVITIES

Sale of Securities 1,286,762 1,129,620

Purchase of Securities (1,329,457) (1,200,306)

Net Cash Provided/(Used) in Investing Activities (42,695) (70,686)

CASH FLOWS FROM FINANCING ACTIVITIES

Appropriations Received, Net of Trust 215,985 241,352

Net Cash Provided by Financing Activities 215,985 241,352

Net Increase/(Decrease) in Fund Balance with Treasury 5,894 (4,393) 

Fund Balance with Treasury, Beginning 4,027 8,420

Fund Balance with Treasury, Ending (Note 2) $ 9,921 $ 4,027

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

30
Corporation for National and Community Service

Combined Statements of Budgetary Resources 

For the Periods Ended September 30, 2017 and 2016

(Dollars in Thousands)

2017

Unaudited

2016

Budgetary Resources

Unobligated, balance brought forward, October 1 $ 291,787 $ 230,979

Recoveries of unpaid prior year obligations 37,663 36,354

Other changes in unobligated balance (22,496) (19,032)

Unobligated balance from prior year budget authority, net 306,954 248,301

Appropriation Discretionary 1,030,358 1,095,916

Appropriation (special or trust funds) 216,204 241,369

Appropriation Discretionary (total) 1,246,562 1,337,285

Appropriation Mandatory (special or trust funds) 5,211 3,461

Appropriations (discretionary and mandatory) 1,251,773 1,340,746

Spending authority from offsetting collections (discretionary and mandatory) 39,619 42,725

Total Budgetary Resources $ 1,598,346 $ 1,631,772

Status of Budgetary Resources

New obligations and upward adjustments ( Note 19) $ 1,297,144 $ 1,339,985

Unobligated balance, end of year:

 Apportioned, unexpired accounts (Note 2) 214,427 221,756

 Unapportioned, unexpired accounts (Note 2) 2,091 4

 Unexpired unobligated balance, end of year 216,518 221,760

 Expired unobligated balance,end of the year (Note 2) 84,684 70,027

Total unobligated balance, end of year 301,202 291,787

Total Budgetary Resources $ 1,598,346 $ 1,631,772

Change in obligated balance

 Unpaid obligations:

Unpaid obligations, brought forward, October 1 $ 1,577,151 $ 1,523,813

New obligations and upward adjustments 1,297,144 1,339,985

Outlays (gross) (1,223,121) (1,250,293)

Recoveries of prior year unpaid obligations, actual (37,663) (36,354)

Unpaid Obligations, end of year 1,613,511 1,577,151

 Uncollected payments:

Uncollected payments, Federal sources, brought forward, October 1 (5,608) (2,042)

Change in uncollected payments, Federal sources (354) (3,566)

Uncollected payments, Federal sources, end of year (5,962) (5,608)

 Memorandum (non-add) entries:

Obligated balance, start of year $ 1,571,543 $ 1,521,771

Obligated balance, end of year (Note 2) $ 1,607,549 $ 1,571,543

 Budget Authority and Outlays, net

Budgetary authority, gross (discretionary and mandatory) $ 1,291,392 $ 1,383,471

Actual offsetting collections (discretionary and mandatory) (39,271) (39,728)

Change in uncollected payments, Federal sources (354) (3,566)

Recoveries of paid prior year obligations 6 569

Budget authority, net (discretionary and mandatory) $ 1,251,773 $ 1,340,746

Outlays, gross (discretionary and mandatory) $ 1,223,121 $ 1,250,293

Actual offsetting collections (discretionary and mandatory) (39,271) (39,728)

Outlays, net (discretionary and mandatory) 1,183,850 1,210,565

Distributed offsetting receipts (218,202) (242,772)

Agency Outlays, net (discretionary and mandatory) $ 965,648 $ 967,793

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

31
Footnotes for Consolidated Financial Statements 

32
 NOTE 1—Summary of Significant Accounting Policies 

A. REPORTING ENTITY 

Corporation for National and Community Service (CNCS) was created by the National 

and Community Service Trust Act of 1993 (Public Law 103-82). CNCS’s mission is to 

improve lives, strengthen communities, and foster civic engagement through service 

and volunteering. To meet its mission, CNCS provides grants and other assistance to 

states, local municipalities, and nonprofit organizations to help communities meet critical 

challenges in the areas of education, healthy futures, environmental stewardship, 

economic opportunity, disaster services, and assisting veterans and military families 

through volunteer service. CNCS’s major programs are: 

Senior Corps. Senior Corps offers a network of programs that tap into the rich 

experience, skills and talents of older citizens to meet community challenges. Senior 

Corps comprises the RSVP, the Foster Grandparent Program, and the Senior 

Companion Program. 

AmeriCorps. AmeriCorps provides opportunities for Americans to make an ongoing, 

intensive commitment to service through the following programs: 

• AmeriCorps State, National, Tribes, and Territories (State and National) offers

grants supporting a broad range of local service programs that engage thousands of 

Americans in intensive service to meet critical community needs. 

• AmeriCorps Volunteers in Service to America (VISTA) helps community

organizations and public agencies create and expand programs that build capacity 

and ultimately bring low-income individuals and communities out of poverty. 

• AmeriCorps National Civilian Community Corps (NCCC) strengthens communities

while developing leaders through direct, team-based national and community 

service. 

CNCS, for the most part, administered its programs in FY 2017 from the following funds: 

Trust and Gift Funds: 

• National Service Trust (Trust), from which CNCS provided education awards and

interest forbearance for volunteers under the AmeriCorps members. 

• Gifts and Contributions, into which CNCS deposited qualified gifts and contributions

from individuals and organizations from which approved expenditures are made 

furthering CNCS’s goals. 

Appropriated Funds: 

• Operating Expenses, from which CNCS funded Senior Corps, AmeriCorps, and other

program activities 

• Salaries and Expenses, from which CNCS funded its general administrative expenses.

• Office of Inspector General (OIG), from which CNCS funded the expenses of the

Office of Inspector General. 

• AmeriCorps VISTA Advance Payment Revolving Fund, from which sponsor paid the

living allowances for AmeriCorps VISTA members enrolled under cost share 

33
agreements with sponsoring organizations. CNCS is reimbursed for these costs by the 

sponsoring organization. Despite the account title, the AmeriCorps VISTA Advance 

Payment Revolving Fund is not a revolving fund, but rather a general fund expenditure 

account. 

On February 17, 2009, the President signed into law the American Recovery and 

Reinvestment Act of 2009 (Recovery Act). The Recovery Act included funding for the 

use of CNCS to support an expansion of the AmeriCorps State and National and VISTA 

programs. As a result of the passage of the Recovery Act, three additional appropriated 

funds were established. The only remaining fund from the Recovery Act in Fiscal Year 

2017 is the “OIG, Recovery Act,” from which CNCS funded the expenses of the OIG’s 

Recovery Act oversight responsibilities. 

B. BASIS OF ACCOUNTING

The accompanying financial statements include all funds administered by CNCS, as 

delineated in Note 1A—Reporting Entity. They include CNCS’s activities related to 

providing grants and other assistance to eligible states, local governments, and 

nonprofit organizations as well as education awards to eligible national service 

participants. All significant intra-entity transactions and balances are eliminated in 

consolidation. 

C. FINANCIAL STATEMENT PRESENTATION AND CONSOLIDATION POLICY 

The accompanying financial statements report CNCS’s financial position, results of 

operations, and cash flows, as required by the Government Corporation Control Act 

(GCCA). As required by GCCA, the principal financial statements of CNCS are the: 

• Statement of Financial Position, which reports the status of CNCS’s assets,

liabilities, and net position; 

• Statement of Operations and Changes in Net Position, which reports CNCS’s

revenues and expenses for the year and the changes in net position that occurred 

during the year; and 

• Statement of Cash Flows, which shows how changes in CNCS’s financial position

and results affected its cash (Fund Balance with Treasury), and present the analysis 

of operating, investing, and financing activities. 

The financial statements are presented in accordance with the accounting principles 

generally accepted in the United States of America (GAAP), as applicable to federal 

government corporations. The Federal Accounting Standards Advisory Board (FASAB) 

is the standard setting body for the federal government. Statement of Federal Financial 

Accounting Standards Number 34 (SFFAS 34) provides that financial statements 

prepared by certain government corporations in conformity with the accounting 

standards issued by the Financial Accounting Standards Board (FASB) are regarded as 

being in conformity with GAAP. As provided by SFFAS 34, where there is no standard 

issued by FASB applicable to the federal corporation the financial statements are 

presented in accordance with the accounting standards issued by FASAB. 

34
In addition, under Executive Order 13331, National and Community Service Programs, 

CNCS must prepare a Combined Statement of Budgetary Resources as a principal 

statement. The accompanying Combined Statements of Budgetary Resources have 

been prepared in accordance with GAAP, as prescribed by FASAB. The Combined 

Statement of Budgetary Resources presents additional details to include activity that is 

significant to CNCS. 

CNCS’s consolidation policy requires the consolidation of all funds administered by 

CNCS, as delineated in Note 1A—Reporting Entity. 

D. BUDGETS AND BUDGETARY ACCOUNTING 

The activities of CNCS are primarily funded through the annual Departments of Labor 

(DOL), Health and Human Services (HHS), Education and Related Agencies 

Appropriation Act. CNCS’s accounting structure reflects 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 actual collection or payment of cash. Federal budgetary accounting recognizes the 

obligation of appropriations and other funds upon the establishment of a properly 

documented legal liability, which, in many cases, is different from the recording of an 

accrual-based transaction. The recognition of budgetary accounting transactions is 

essential for compliance with legal controls over the use of federal funds. 

E. ASSET AND LIABILITY VALUATION 

CNCS values its investments at carrying value and discloses fair value. As of 

September 30, 2017, the carrying amounts of Fund Balance with Treasury, Cash and 

Other Monetary Assets, Accounts Receivable, Advances to Others, Accrued Interest 

Receivable, Accounts Payable and Other Liabilities approximate their fair value. 

F. FUND BALANCE WITH TREASURY 

CNCS considers Fund Balance with Treasury (FBWT) to represent cash and cash 

equivalents. It is CNCS’s cash accounts with the Department of the Treasury 

(Treasury). Treasury processes cash receipts and disbursements on behalf of CNCS 

and CNCS’s accounting records are reconciled with those of Treasury on a regular 

basis. CNCS’s FBWT includes all of its appropriated, gift, and trust funds. 

The FBWT maintained in the National Service Trust is restricted to specific purposes, 

such as paying service awards earned by eligible participants, and is not available for 

use in the current operations of CNCS. In addition, the majority of the funds received 

from individuals and organizations for deposit in the Gifts and Contributions fund are 

restricted for particular uses, such as service projects. 

G. CASH AND OTHER MONETARY ASSETS 

Cash consists of coins, paper currency and readily negotiable instruments, such as 

money orders, checks, and bank drafts on hand or in transit for deposit. 

35
H. INVESTMENTS AND RELATED RECEIVABLES 

By law, CNCS may invest the funds of the National Service Trust in interest-bearing 

Treasury securities guaranteed by the United States as to principal and interest. These 

Treasury securities are referred to as “market-based,” since they mirror actual Treasury 

securities sold on the open market. They consist of Treasury notes, bonds and bills. 

Since they are expected to be held-to-maturity, CNCS’s investments are valued at cost 

and adjusted for the amortization of premiums and discounts. The premiums and 

discounts are recognized as adjustments to interest income, and are amortized using 

the level yield/effective interest method for the Notes and straight line method for the 

Bills. Interest receivable represents amounts earned, but not received on investments 

held at year-end. Prepaid interest is the amount of interest earned on a security since 

the date of its last interest payment, up to the date the security is purchased by CNCS. 

Such interest, if any, at year-end is included in the interest receivable balance. For 

additional information, see Note 3 

I. CASH EQUIVALENTS 

For purposes of the statement of cash flows, CNCS considers all interest-bearing 

Treasury securities guaranteed by the United States to be cash equivalents. 

J. ADVANCES TO OTHERS

CNCS advances funds to non-federal entities, primarily in response to grantee 

drawdown requests, to facilitate their authorized service activities. The cash payments 

to grantees, in excess of amounts appropriately expended under the terms of the grant 

agreements, are accounted for as advances. At the end of the fiscal year, the total 

amount advanced to grantees is compared with the total CNCS-funded amount of grant 

expenses properly incurred by the grantees. Grantee expenses are determined from 

reports submitted by the grantees. For those grantees with advances exceeding 

expenses, the aggregate difference is reported as the advance account balance. 

K. ACCOUNTS RECEIVABLE

Accounts receivable represents amounts due to CNCS primarily under federal and nonfederal reimbursable agreements, grantee audit resolution determinations, outstanding 

travel advances due from employees and Criminal History Check requirements. An 

allowance for doubtful accounts is established for reporting purposes based on past 

experience. 

L. GENERAL PROPERTY AND EQUIPMENT

Property and Equipment is stated at full cost, including all costs related to acquisition, 

delivery, and installation, less accumulated depreciation/amortization. Normal 

maintenance and repair costs on capitalized property and equipment are expensed 

when incurred. CNCS capitalizes properties and equipment with an estimated useful life 

of two years or more based on the thresholds. Capitalized properties are depreciated or 

amortized on a straight line over their estimated useful lives ranging from 2 to 10 years. 

36
The CNCS’s capitalization policy, Accounting for Capital Property, was updated with an

effective date May of Fiscal Year 2016. Property and Equipment acquired before this 

policy was implemented that does not meet the new capitalization criteria will be fully 

depreciated. 

The primary change relates to the capitalization thresholds for each asset type. Prior to 

May 2016 threshold change, CNCS capitalized items with a cost of $50 thousand or 

greater for all asset types. 

Effective May 2016, CNCS capitalizes single items of property and equipment with a 

cost of $50 thousand or more. Also, CNCS capitalizes bulk purchases of property and 

equipment with an aggregate cost of $250 thousand or more. A bulk purchase is 

defined as the purchase of like items related to a specific project, or the purchase of like 

items occurring within the same fiscal year that have an estimated useful life of at least 

two years. 

In addition, CNCS capitalizes Internal Use Software with an aggregate cost of $250 

thousand or more. Internal Use Software is either purchased off the shelf, internally 

developed, or contractor developed solely to meet the CNCS’s internal or operational 

needs. Internal-use software developed to meet CNCS’s internal or operational needs 

will be recognized as capitalized internal-use software in development if the estimated 

developmental cost obligated on the contract meets the capitalization criteria. Internaluse software in development will be recorded at cost in the fiscal year when they are 

incurred and paid. The realization of internal-use software will be recognized in CNCS’s 

financial records upon completion of the software development and when the title is 

passed to CNCS. 

Refer to Note 5, General Property and Equipment, Net for additional information. 

M. TRUST SERVICE AWARD LIABILITY 

The Trust Service Award Liability represents unpaid earned, and expected to be 

earned, education awards and eligible student loan interest forbearance costs expected 

to be used. These amounts relate to participants who have completed service or are 

currently enrolled in the program and are expected to earn an award, based on CNCS’s 

historical experience. 

N. GRANTS PAYABLE 

CNCS awards grants to nonprofit organizations, educational institutions, states, 

municipalities, and other external organizations. Grants become budgetary obligations, 

but not liabilities, at the time they are awarded. 

Although most grantees request funds prior to incurring expenses, some incur 

expenditures prior to initiating a request for disbursement, based on the nature of the 

expenditures. At the end of the fiscal year, CNCS computes and reports an estimate of 

the amount of unreimbursed grantee expenses as grants payable. This accrual is based 

on an analysis of the amounts actually disbursed to grantees in the third quarter. 

37
O. ACCOUNTS PAYABLE 

CNCS records as liabilities all amounts that are likely to be paid as a direct result of a 

transaction or event that has already occurred. Accounts payable represents amounts 

due to external entities for goods and services received by CNCS, but not paid for at the 

end of the fiscal year. 

P. ACTUARIAL FECA LIABILITY 

The Federal Employees’ Compensation Act (FECA) provides income and medical cost 

protection to covered federal civilian employees, AmeriCorps NCCC and VISTA 

members injured on the job, employees who have incurred a work-related occupational 

disease, and beneficiaries of employees whose death is attributable to a job-related 

injury or occupational disease. Claims incurred for benefits for CNCS’s employees and 

members under FECA are determined and paid by the Department of Labor DOL and 

later billed to CNCS. CNCS’s actuarial liability for workers’ compensation includes costs 

incurred, but unbilled as of year-end, as calculated by DOL. CNCS reimburses DOL for 

FECA claims out of current appropriations upon receipt of a bill from DOL. 

Q. OTHER LIABILITIES 

Other liabilities include amounts owed but not paid at the end of the fiscal year for payroll 

and benefits, AmeriCorps VISTA stipends, the amount of claims for benefits for CNCS 

employees under FECA that have been paid by DOL and billed to CNCS but have not yet 

been reimbursed to DOL, other unfunded employment related liability, liability for nonfiduciary deposit funds and undeposited collections, and accounts payable canceled 

appropriations. 

R. ACCRUED ANNUAL LEAVE 

Annual leave is accrued as a liability based on amounts earned but not used as of the 

fiscal year-end. Each year, the balance in the accrued annual leave account is adjusted 

to reflect current year pay rates and leave balances. Annual leave is funded from 

current appropriations when used. As unused annual leave is used in the future, 

financing will be obtained from appropriations current at that time. Sick leave and other 

types of non-vested leave are also expensed when used. 

S. ADVANCES FROM OTHERS 

Advances from others consist of advances from other federal agencies and the public 

related to interagency and cost share agreements into which CNCS entered to provide 

services. 

T. NET POSITION 

Net Position represents Net Assets. It is comprised of CNCS’s unexpended 

appropriations and its cumulative results of operations. Unexpended appropriations 

reflect the balance of appropriated authority granted to CNCS against which no 

expenditures have been made. Cumulative results of operations represent the net 

differences between revenues and expenses from the inception of CNCS. 

38
U. REVENUE RECOGNITION

Appropriation Used. CNCS recognizes its use of appropriated capital as revenue at 

the time it is expended or accrued to pay program or administrative expenses. 

Appropriations expended for property and equipment are recognized as used when the 

property is purchased. Appropriated capital not expended within five fiscal years after it 

became available for obligation is cancelled. Unpaid obligations recorded against 

cancelled appropriated capital are paid from currently available appropriated funds as 

payments become due. Appropriations received for the CNCS Trust are recognized as 

revenue when received in the Trust Fund. Trust appropriations do not expire with the 

passage of time and are retained by CNCS in the Trust until used for eligible education 

service award purposes. 

Interest on Investments. Interest income is recognized when earned. Treasury notes 

and bonds pay interest semi-annually, based on the stated rate of interest. Interest on 

Treasury bills is paid at maturity. Interest income is adjusted by amortization of 

premiums and discounts using the effective interest method. 

Revenue from Services Provided. CNCS also receives income from reimbursable 

service agreements that is recorded as revenue from services provided. Revenue from 

services provided is recognized when earned, i.e., goods have been delivered or 

services rendered. 

Gifts and Donations. Revenue is recognized at the time gifts and donations are 

received and deposited in Treasury to the credit of the Gifts and Contributions Fund. 

V. RETIREMENT BENEFITS 

CNCS’s employees participate in either the Civil Service Retirement System (CSRS) or 

the Federal Employees Retirement System (FERS). FERS was established by the 

enactment of Public Law 99-335. Pursuant to this law, FERS and Social Security 

automatically cover most employees hired after December 31, 1983. Employees hired 

prior to January 1, 1984 elected to join FERS and Social Security or remained in the 

CSRS. 

For employees covered by CSRS, CNCS contributes 7.0 percent of their basic pay. For 

those employees covered by FERS, CNCS contributes 11.2 percent of their gross pay 

towards retirement. Employees are allowed to participate in the Federal Thrift Savings 

Plan (TSP). For employees under FERS, CNCS contributes an automatic one percent 

of basic pay to TSP and matches employee contributions up to an additional 4 percent 

of pay, for a maximum CNCS contribution amounting to 5 percent of pay. Employees 

under CSRS may participate in the TSP, but will not receive either CNCS’s automatic or 

matching contributions. 

W. INCOME TAXES 

As a federal entity, CNCS is exempt from all income taxes imposed by any governing 

body, Federal, State, commonwealth, local, or foreign government. 

39
X. USE OF ESTIMATES 

The preparation of financial statements in accordance with GAAP requires CNCS to 

make estimates and assumptions about future events. These estimates and 

assumptions affect the amounts reported in CNCS’s financial statements and 

accompanying notes. CNCS evaluates its estimates and assumptions on an ongoing 

basis using historical experience and other factors that it believes to be reasonable 

under the circumstances. Adjustments to estimates and assumptions are made when 

facts and circumstances warrant. As future events and their effects cannot be 

determined with certainty, actual results could differ from the estimates used in 

preparing the accompanying financial statements. Significant estimates and 

assumptions are required as part of determining the liability for service awards, grants 

payable, and grant advances. See Note 6 “Trust Service Award Liability” for more 

information about CNCS’s use of estimates to record obligations in the Trust. 

Y. CONCENTRATION OF RISKS 

Congress annually considers whether to fund CNCS’s program and operational 

activities. Should Congress opt not to enact appropriations to fund them, CNCS would 

be unable to continue operations. The President’s Fiscal Year 2018 Budget proposes 

to eliminate CNCS, as part of the Administration's plans to move the Nation towards 

fiscal responsibility and to redefine the proper role of the Federal Government. 

40
NOTE 2 – Fund Balance with Treasury 

U.S. Government cash is accounted for on an overall consolidated basis by Treasury. 

The Fund Balance with Treasury line on the Statement of Financial Position consists of 

the following: 

 Appropriated Funds – Appropriated funds are received through congressional

appropriations to provide financing sources for the CNCS’s programs on an annual,

multi-year, and no-year basis.

 Trust Funds – Trust funds are accounts designated by law for receipts earmarked

for specific purposes and for the expenditure of these receipts. Funds from the

National Service Trust may be expended for the purpose of providing an education

award or student loan interest forbearance payment and are made directly to a

qualified institution (college, university, or other approved educational institution, or a

lending institution holding an existing student loan) as designated by the participant.

 Gift Funds – Gift Funds are funds received from individuals and organizations as

donations in furtherance of the purposes of national service laws.

Fund Balance with Treasury as of September 30, 2017 

(dollars in thousands) (unaudited)

Unrestricted Restricted 

41

Type Appropriated 

Funds

Trust 

Funds

Gift 

Funds Total 

Obligated Not Yet $ 938,414 $ 669,082 $ 53 $ 1,607,549 Disbursed 

Unobligated Available 9,728 204,198 501 214,427 

Unobligated Unavailable 86,322 453 - 86,775 

Non Budgetary FBWT 2,454 - - 2,454 

Investments * - (863,812) - (863,812) 

Total $ 1,036,918 $ 9.921 $ 554 $ 1,047,393 
NOTE 2 – Fund Balance with Treasury---Continued 

Fund Balance with Treasury as of September 30, 2016 

(dollars in thousands)

Unrestricted Restricted 

Type Appropriated 

Funds

Trust 

Funds

Gift 

Funds Total 

Obligated Not Yet $ 945,000 $ 626,512 $ 31 $ 1,571,543 Disbursed 

Unobligated Available 22,764 198,628 364 221,756 

Unobligated Unavailable 70,027 - 4 70,031 

Non Budgetary FBWT 2,200 - - 2,200 

Investments * - (821,117) - (821,117) 

42

Total $ 1,039,991 $ 4,027 $ 395 $ 1,044,413 

* Investments include purchases, sales, premiums and discounts
43

NOTE 3 – Investments and Related Receivables 

Investments and Related Receivables as of September 30 

(dollars in thousands) (unaudited)

2017 2016 

 Investments, Carrying Value $ 865,272 $ 821,860 

 Interest Receivable 1,562 792 

 Total $ 866,834 $ 822,652 

Amortized Cost and Fair Value of Investment 

Securities as of September 30, 2017 (unaudited)

(dollars in thousands)

Unrealized 

Securities Amortized Cost Gains/(Losses) Fair Value 

Notes $ 677,257 $ (1,403) $ 675,855 

Bills 188,015 (7) 180,009 

Total $ 865,272 $ (1,410) $ 863,864 

Amortized Cost and Fair Value of Investment Securities

as of September 30, 2016

(dollars in thousands)

Unrealized 

Securities Amortized Cost Gains/(Losses) Fair Value 

Notes $ 541,519 $ 463 $ 541,982 

Bills 280,341 47 280,388 

Total $821,860 $ 510 $ 822,370 
NOTE 3 – Investments and Related Receivables--Continued

As of September 30, 2017 (unaudited), the notes held at year-end had an interest

rate range of 0.625% to 0.875% and an outstanding maturity period of 

approximately 1 day to 2.5 years. The bills held at year-end had an interest rate of 

0.00% and were all due to mature within 364 days. The par values of notes range 

from $.2 million to $100.5 million. The fair value of the bills and notes is based on 

bid and ask prices quoted by Treasury as of September 30, 2017 and 2016. 

Since FY 2003, CNCS has set aside in reserve a portion of the funds in the National 

Service Trust for use in the event that its estimates used to calculate obligational 

amounts for education awards prove to be too low. This reserve was originally required 

by the Strengthen AmeriCorps Program Act, and is now required by section 149(b) of 

the National and Community Service Act (42 U.S.C. 12606(b)). As of September 30, 

2017 (unaudited), $50.2 million of CNCS’s investment account has been set aside for

this reserve.

Maturation of Securities Held as of September 30 

(dollars in thousands)

2017 (unaudited) 2016 

Held- toMaturity 

Securities 

Amortized 

Costs Fair Value 

Amortized 

Costs 

44

 Fair 

Value 

Due in 1 year 

or less $ 615,196 $ 615,957 $ 721,874 $ 722,133 

Due after 1 

year up to 5 

years 250,076 248,907 99,986 100,237 

Total $ 865,272 $ 863,864 $ 821,860 $ 822,370 
NOTE 4 – Accounts Receivable, Net 

Type Appropriated 

Funds

Gift 

Funds

Trust 

Funds Total 

2017 (unaudited)

45

 Accounts receivable $ 11,362 $ 6 $ 271 $ 11,639

 Less: allowance for doubtful 

 (118) (2,062) accounts (1,944) - 

 Accounts Receivable, Net $ 9,418 $ 6 $ 153 $ 9,577 

2016

 Accounts receivable $ 10,774 $ - $ 305 $ 11,079 

 Less: allowance for doubtful 

 - (105) (1,520) accounts (1,415) 

 Accounts Receivable, Net $ 9,359 $ - $ 200 $ 9,559 
NOTE 5 – Property and Equipment, Net

General Property and Equipment as of September 30, 2017 

(dollars in thousands) (unaudited)

Major Class Cost 

Service 

Life 

(Years) 

Accumulated 

Depreciation Net Book Value 

Equipment 3 – 10 $ 2,167 $ (1,377) $ 790 

ADP software in development N/A 23,566 - 23,566 

ADP software 2 13,847 (13,847) - 

 Total $ 39,580 $ (15,224) $ 24,356 

General Property and Equipment as of September 30, 2016 

 (dollars in thousands) 

Major Class Cost 

Service 

Life 

(Years) 

Accumulated 

Depreciation Net Book Value 

46

Equipment 3 – 10 $ 4,010 $ (3,009) $ 1,001 

ADP software in development N/A 11,907 - 11,907 

ADP software 2 13,847 (13,117) 730

 Total $ 29,764 $ (16,126) $ 13,638 
NOTE 6 – Trust Service Award Liability 

Individuals who successfully complete terms of service in AmeriCorps programs earn 

education awards, which can be used to make payments on qualified student loans or 

for educational expenses at qualified educational institutions. The education award 

generally must be used within seven years of completion date of an approved term of 

national service. If the education award is transferred to an eligible individual or is a 

Summer of Service award (which was available to youth enrolled in grades 6 through 9), 

the use period is ten years. These awards, as well as interest forbearance payments on 

qualified student loans during the period members perform their service, are paid from 

the National Service Trust Fund. 

GAAP requires the recording of a liability, which is at a point in time estimate, for the 

unpaid earned and expected-to-be-earned education award and interest forbearance 

costs that are likely to be paid. GAAP estimates are for members who have already 

completed at least 15 percent of the minimum service requirement and who therefore, 

have served enough hours to qualify for at least a partial education awards. Actual 

qualification for awards, however, still depends upon additional contingencies. The 

award liability components related to education awards and interest forbearance have 

been adjusted, based on historical experience, to reflect two such contingencies: (1) 

some members who enroll and reach the initial 15 percent threshold later do not 

actually qualify for an education award, and (2) other members who qualify for 

education awards do not use their education awards. CNCS estimates that up to 86 

percent of members earning an education award will eventually use it. 

Because of unique requirements related to recording of obligations in the National 

Service Trust, the Service Award Liability is not directly related to the required levels of 

obligations in the Trust. Since 2003, CNCS has been required to record obligations 

based on the total amount of national service positions that have the potential to result 

in a legal liability of the Trust, rather than actual legal liabilities. Those obligations are 

recorded in advance of becoming genuine liabilities because the contingent events that 

determine whether an individual in an authorized national service position is or is not 

entitled to payments from the National Service Trust are beyond the control of CNCS. 

The amount reported as the Service Award Liability is a subset of the amounts required 

to be obligated under the National and Community Service Act of 1993, as amended. 

That subset is based on the satisfaction of enough of the contingencies related to 

becoming an actual liability to allow CNCS to reasonably estimate it’s total liability 

under GAAP. In this sense, the Service Award Liability is a reasonable estimate of what 

CNCS would have to disburse out of the National Service Trust if all current grant 

operations were to cease as of September 30, 2017, but (1) without allowing currently 

authorized but unfilled national service positions to be filled, and (2) without allowing 

individuals currently serving in national service positions who have not yet qualified for 

education awards to meet the minimum requirements to qualify for an award. 

47
The Service Award was composed of the following as of September 30 

Service Award Liability as of September 30 

(dollars in thousands) 

(unaudited)

48

 2017 2016 

 Education awards 2,948,138 $ 2,948,138 

 Interest forbearance 115,179 112,005 

 Total estimated Service Award Liability 3,063,317 2,870,595 

 Less: cumulative awards paid (2,675,183) (2,474,251) 

Total $ 388,134 $ 396,344 

The Net Service Award Liability as of September 30, 2017 decreased by approximately 

$ 8.21 million (unaudited) from the Net Service Award Liability as of September 30, 

2016. 
NOTE 7 – Operating Leases

CNCS leases office space through the General Services Administration (GSA). GSA 

charges CNCS a Standard Level Users Charge that approximates commercial rental 

rates for similar properties. The NCCC also leases housing facilities for its campuses. 

Additionally, CNCS leases motor vehicles on an annual basis through GSA under an 

Interagency Fleet Management Service agreement for the NCCC. The leases are 

renewable with no purchase or escalation clause. The following schedule presents 

future minimum rental commitments under operating leases as of September 30. 

Estimated Operating Lease Commitments as of September 30 

(dollars in thousands)

2017 (unaudited) 2016 

Fiscal 

Year 

Facilities 

Space Vehicles Other Total 

Facilities 

Space Vehicles Other Total 

49

2017 7,916 818 482 9,216 

2018 8,808 659 372 9,839 8,141 836 485 9,462 

2019 9,052 666 373 10,091 8,372 855 498 9,725 

2020 9,304 672 364 10,340 8,611 874 506 9,991 

2021 9,565 679 365 10,609 8,856 895 521 10,272 

2022 9,834 686 365 10,885 

Total $ 46,563 $ 3,362 $ 1,839 $51,764 $ 41,896 $ 4,278 $2,492 $48,666 
NOTE 8 – Actuarial FECA Liability 

CNCS’s actuarial liability for future workers’ compensation benefits under FECA was 

$7.3 million (unaudited) and $ 7.6 million as of September 30, 2017 and 2016,

respectively. The amount includes the expected liability for death, disability, medical, 

and miscellaneous costs for approved compensation cases. As with all Federal 

agencies CNCS’s FECA liability is determined by DOL. The actuarial liability is 

determined using a method that utilizes historical benefit payment patterns related to a 

specific incurred period to predict the ultimate payments related to that period. 

Consistent with past practice, these projected annual benefit payments have been 

discounted to present value using the Office of Management and Budget’s (OMB’s) 

economic assumptions for 10-year Treasury notes and bonds

50
NOTE 9 – Advances from Others

Advances from Others consists of advances from other federal government entities and 

nonfederal entities related to the interagency and cost share agreements into which 

CNCS entered to provide services. Advances from others primarily consist of Federal 

Emergency Management Agency (FEMA), Environmental Protection Agency (EPA), 

Department of Justice (DOJ), Department of Housing and Urban Development (HUD), 

and Department of Agriculture (USDA) related reimbursable activities. 

51

Advances from Others as of September 30 

 (dollars in thousands) 

(unaudited)

2017 2016 

Advances from Others-Federal $ 18,740 $ 23,481

Advances from Others-Non-Federal 12 26

Total Advances from Others $ 18,752 $ 23,507 
NOTE 10 – Other Liabilities 

Other liabilities include amounts owed but not paid at the end of the fiscal year for payroll 

and benefits, AmeriCorps VISTA stipends, the amount of claims for benefits for CNCS’s

employees under FECA that have been paid by DOL and billed to CNCS but have not yet 

been reimbursed to DOL, other unfunded employment related liability, liability for nonfiduciary deposit funds and un-deposited collections, and accounts payable canceled 

appropriations. 

Other Liabilities as of September 30 

 (dollars in thousands) 

(unaudited)

52

2017 2016 

Accrued Funded Payroll and Benefits $ 2,622 $ 2,669

Unfunded FECA Liability 1,819 1,977 

Member Payroll Related Liabilities 4,867 4,341 

Liability for Non-Entity Assets 4,006 3,991 

Other 4,508 3,222 

Total Other Liabilities $ 17,822 $ 16,200 
NOTE 11 – Net Position 

Net position consists of unexpended appropriations and cumulative results of 

operations. Component balances are separately maintained for the Gift Funds, Trust 

Funds and Appropriated Funds. 

Net Position by Fund Balance Component as of September 30, 2017

 (dollars in thousands) (unaudited)

Appropriated 

Funds

 Trust 

 Funds

 Gift 

Funds Total 

 Unexpended appropriations $ 970,315 $ - $ - $ 970,315 

 Cumulative results of 

operations 15,725 488,774 534 505,033 

 Total Net Position $ 986,040 $ 488,774 $ 534 $ 1,475,348 

 Net Position by Fund Balance Component as of September 30, 2016 

 (dollars in thousands) 

 Appropriated 

Funds 

 Trust 

Funds

Gift 

Funds Total 

 Unexpended appropriations $ 956,173 $ - $ - $ 956,173 

 Cumulative results of 

operations 5,983 430,535 391 436,909 

 Total Net Position $ 962,156 $ 430,535 $ 391 $ 1,393,082 

CNCS is required to report information regarding its financial position according to three 

classes of net assets (net position): unrestricted, temporarily restricted and permanently 

restricted. 

53
NOTE 11 – Net Position ---Continued 

CNCS has no permanently restricted assets. The following table presents the 

Corporation's unrestricted and temporarily restricted net assets. 

Restrictions on Net Position as of September 30, 2017

(dollars in thousands) (unaudited)

 Unrestricted 

 Temporarily 

Restricted Total 

 Appropriated Funds $ 986,040 $ - $ 986,040

 Trust Funds - 488,774 488,774 

 Gift Funds - 534 534 

Total Net Position $ 986,040 $ 489,308 $ 1,475,348 

Restrictions on Net Position as of September 30, 2016

(dollars in thousands)

 Unrestricted 

 Temporarily 

Restricted Total 

54

 Appropriated Funds $ 962,156 $ - $ 962,156 

 Trust Funds - 430,535 430,535 

 Gift Funds - 391 391

Total Net Position $ 962,156 $ 430,926 $ 1,393,082 
NOTE 12 – Appropriations Received by the National Service Trust 

As of September 30, 2017 and 2016, the National Service Trust received $206.8 million

(unaudited) and $220 million, respectively. CNCS is also authorized to transfer additional

amounts from subtitle C program funds to the National Service Trust to support the activities of 

national service participants. Under the provisions of the law, CNCS transferred $9.1 million

(unaudited) and $ 21.4 million to the Trust in FY 2017 and FY 2016, respectively. Accordingly,

the National Service Trust received a total funding of $ 215.9 million (unaudited) in FY 2017,

and $241.4 million in FY 2016, respectively. 

55
NOTE 13 – Expenses 

Costs for each sub-program are reported on separately: 

AmeriCorps engages members in intense, impact-oriented service to address local 

community needs in areas of education, healthy futures, environmental stewardship, 

economic opportunity, disaster services, and assisting veterans and military families. 

AmeriCorps includes the State, National, Tribes, and 

Territories (State/National); National Civilian Community Corps (NCCC); and Volunteers 

In Service To America (VISTA) programs. The State/National sub-program includes 

grant expenses, as well as direct and allocated personnel and administrative costs 

including AmeriCorps recruitment and National Service Trust operations. The NCCC 

sub-program includes member stipend and benefits, and direct and allocated personnel 

and administrative costs including AmeriCorps recruitment and National Service Trust 

operations. The VISTA sub-program includes grant expenses, member stipend and 

benefits, as well as direct and allocated personnel and administrative costs including 

AmeriCorps recruitment and National Service Trust operations. 

The Senior Corps programs provide opportunities for members 55 and older to address 

local community needs in the areas of education, assisting veterans and military 

families, disaster response, and healthy futures. Senior Corps includes the Foster 

Grandparent Program (FGP); Senior Companion Program (SCP); and RSVP. 

The Senior Corps programs include grant expenses, as well as direct and allocated 

personnel and administrative costs for RSVP, FGP, and SCP. CNCS also has 

reimbursable agreements with several state agencies whereby CNCS awards and 

administers grants to a list of grantees selected and funded by the State (pass-through 

grants). The activity related to pass-through grants has been reclassified to be 

associated with the related Senior Corps program. 

The National Service Award Expense component consists of the CNCS’s estimated 

expense for education awards based on the increase in its service award liability during 

the year and interest forbearance costs on qualified student loans during the period 

members perform community service. No indirect costs have been allocated to the 

National Service Award expense component. 

Innovation, Demonstration, & Assistance Activities (ID&A Activities) include grants to 

support and encourage new forms of service and volunteering. The most significant 

program is the Social Innovation Fund (SIF). The primary objective of the SIF is to 

improve the lives of people in low-income communities by mobilizing public and private 

resources to grow innovative nonprofit organizations that have evidence of compelling 

impact in the areas of economic opportunity, youth development, and healthy futures. 

No indirect costs have been allocated to the Innovation, Demonstration, & Assistance 

Activities component. SIF did not receive funding in FY2017. 

The “J Special Authority” is referred to Section 179(j) of the National and Community 

Service Act, as amended (NCSA). This section allows CNCS to reserve not more than 

1 percent of the total funds appropriated for a fiscal year under section 501 of the NCSA 

to support program accountability activities. 

56
The Office of Inspector General (OIG) receives a separate appropriation. No indirect 

costs have been allocated to OIG. 

 Expenses by Major Responsibility Segment for the Period Ended September 30 

(dollars in thousands)

 2017 (unaudited) 2016 

 AmeriCorps 

 State/National $ 510,145 $ 480,375 

 72,261 65,315 NCCC

VISTA 147,561 136,700 

 Subtotal $ 729,967 $ 682,390 

 Senior Corps 

 49,196 50,998 

 RSVP 

104,730 111,721 

 Foster Grandparent Program 

 Senior Companion Program 45,655 48,498 

 Subtotal 199,581 211,217 

Innovation, Demonstration, & 

Assistance Activities 50,517 59,620 

J Special Authority 1,803 - 

Office of Inspector General (OIG) 5,067 4,964 

57

 Total Expenses $ 986,935 $ 958,191 
NOTE 14 – National Service Award Expense 

Members serving in approved national service positions are eligible to earn a service 

award to pay for qualified education expenses. 

The National Service Trust also pays interest forbearance costs on qualified student 

loans during the period members perform community service. 

CNCS estimates the expense for national service awards based on the increase in its 

cumulative service award liability during the year (see Note 6). The total service 

award liability as of September 30, 2017 (unaudited) and 2016, respectively, has been 

adjusted to reflect the fact that earned awards are not always used. 

58

 National Service Award Expense for the Period Ended September 30 

 (dollars in thousands) (unaudited)

2017 2016 

 Estimated education awards $ 159,331 $ 113,828 

 Estimated interest forbearance 7,918 9,331 

 National Service Award Expense $ 167,249 $ 123,159 
NOTE 15 – Change in Unexpended Appropriations, Net 

59

 Unexpended Appropriations, Net as of September 30 

(dollars in thousands) 	VOBVEJUFE


2017 2016 

 Unexpended appropriations, beginning balance $ 956,173 $ 915,432 

 Increases: 

 Appropriations received 1,030,358 1,094,916 

 Decreases: 

 Appropriated capital used (777,731) (794,222)

 Appropriations transferred to Trust Fund (206,841) (220,000)

 Program funds transferred to Trust Fund (9,143) (21,352) 

 Appropriations transferred to other federal - 1,000 

 Rescissions and cancellations (22,501) (19,601)

 Total decreases (1,016,216) (1,054,175)

Change in Unexpended Appropriations 14,142 40,741 

Unexpended Appropriations, Ending Balance $ 970,315 $ 956,173 
NOTE 16 – Contingencies 

CNCS is a party to various routine administrative proceedings, legal actions, and claims 

brought by or against it, including threatened or pending litigation involving labor 

relations claims, some of which may ultimately result in settlements or decisions against 

CNCS. In the opinion of CNCS’s management and legal counsel, there are no 

proceedings, actions, or claims outstanding or threatened that would materially impact 

the financial statements of CNCS. 

Certain legal matters to which CNCS is a party may be administered and, in some 

instances, litigated and paid by other federal agencies. Generally, amounts paid in 

excess of $2.5 thousand for Federal Tort Claims Act settlements or awards pertaining to 

these litigations are funded from the Treasury Judgment Fund (TJF). Although the 

ultimate disposition of any potential TJF proceedings cannot be determined, 

management does not expect that any liability or expense that might ensue would be 

material to CNCS’s financial statements. 

60
NOTE 17 – Subsequent Events 

CNCS has evaluated subsequent events through November 8, 2017, which is the date 

these financial statements were available to be issued. As a consequence of its 

evaluation, CNCS has determined that no subsequent events need to be recognized or 

disclosed. 

61
NOTE 18 – Undelivered Orders at the End of the Period 

CNCS’s undelivered orders as of September 30, 2017 and 2016 were$1.2 billion

(unaudited) and $1.1 billion, respectively.

62
NOTE 19 – Apportionment Categories of New Obligations and 

Upward Adjustments: Direct vs. Reimbursable Obligations 

An apportionment is a distribution by OMB of amounts available for obligation. OMB 

apportions CNCS’s funds on both a quarterly and annual basis. New Obligations 

and Upward Adjustments as of September 30, 2017 (unaudited) and 2016 were:

Consolidated New Obligations and Upward Adjustments through September 30 

 (dollars in thousands) 

Fiscal Year 2017 (unaudited) 2016 

Direct 

Category A $ 92,542 $ 110,722

Category B $1,165,015 1,186,362

Reimbursable 

Category A ($817) -

Category B $40,404 42,901

Total $ 1,297,144 $ 1,339,985

63
NOTE 20 – Contributed Capital (Donations) 

Under CNCS's authorizing legislation, donated funds may be accepted and used in 

furtherance of the purposes of the national service laws (42 U.S.C. 12651g (a) (2) 

(A)). Donated funds received by the CNCS as of September 30, 2017 and 2016 

were $218.5 thousand (unaudited) and $17.1 thousand, respectively.

64
Note 21 Explanation of Differences between the SBR and the Budget of the US 

Government 

The FY 2019 Budget of the United States Government (President’s Budget), which 

presents the actual amounts for the year ended September 30, 2017, has not been 

published as of the issue date of these financial statements. The FY 2019 President’s 

Budget is scheduled for release in February 2018 and can be found on the OMB 

website: http://www.whitehouse.gov/omb at that time.

A reconciliation of the FY 2016 SBR to the FY 2018 President’s Budget (FY 2016 actual 

amounts) for budgetary resources, new obligations and upward adjustments, distributed 

offsetting receipts, and net outlays is presented below: 

Amounts in millions 

Budgetary 

Resources 

New 

Obligations 

and Upward 

Adjustment 

total 

Distributed 

Receipts 

Net 

Outlays 

Combined SBR 1,631 1,340 243 1,211

Budget of the US 

Government 1,530 1,309 - 1,210

Difference 101 31 243 1 

*The differences between the SBR and the President Budget represents expired funds,

distributed offsetting receipts and rounding issues reported on the SBR but not in the 

President Budget. 

65
Independent Auditor’s Report

66
CORPORATION FOR NATIONAL 

& COMMUNITY SERVICE

OFFICE OF INSPECTOR GENERAL

AUDIT OF THE CORPORATION FOR 

NATIONAL AND COMMUNITY SERVICE'S 

FISCAL YEAR 2017

CONSOLIDATED FINANCIAL STATEMENTS

OIG Report 18-01

Prepared by:

CliftonLarsonAllen LLP

901 North Glebe Road, Suite 200

Arlington, VA 22203

This report was issued to Corporation management on November 15, 2017. Under the laws and regulations

governing audit follow up, the Corporation is to make final management decisions on

the report’s findings and recommendations no later than May 15, 2018, and complete its

corrective actions by November 15, 2018. Consequently, the reported findings do not necessarily

represent the final resolution of the issues presented.
250 E Street, SW  Suite 4100  Washington, DC 20525 

202-606-9390  Hotline: 800-452-8210  www.cncsoig.gov 

November 15, 2017

TO: Kim Mansaray

Acting Chief Executive Officer

FROM: Stuart Axenfeld /s/

Assistant Inspector General for Audit

SUBJECT: Audit of the Corporation for National and Community Service’s

Fiscal Year 2017 Consolidated Financial Statements, OIG Report 18-01

We contracted with the independent certified public accounting firm of CliftonLarsonAllen LLP (CLA) to

audit the consolidated financial statements of the Corporation for National and Community Service

(CNCS) as of September 30, 2017 and for the year then ended. The contract required that the audit be

performed in accordance with the Government Auditing Standards and applicable Office of Management

and Budget guidance. In its audit, CLA found:

 CNCS was unable to provide adequate evidential matter to support a significant number of

transactions and account balances due to inadequate processes and controls to support transactions

and estimates, and incomplete records to support accounting for transactions in accordance with

generally accepted accounting principles. CLA has not been able to obtain sufficient appropriate

audit evidence to provide a basis for an audit opinion (disclaimer);

 Four material weaknesses (Financial Reporting; Trust Fund Unpaid Obligations; Trust Service Award

Liability Model; and Grant Advances and Accrual) and one significant deficiency (Information

Technology Security Controls) in CNCS’s internal control over financial reporting; and

 No instances of noncompliance with applicable provisions of laws, regulations, contracts, and grant

agreements.

Had the scope of CLA's work been sufficient to enable CLA to express an opinion on the CNCS

consolidated financial statements, other material weaknesses or significant deficiencies, or

noncompliance or other matters may have been identified and reported.

In connection with the contract, we reviewed CLA’s report and related documentation and inquired of its

representatives. Our review, as differentiated from an audit in accordance with United States generally

accepted government auditing standards, was not intended to enable us to express, and we do not

express, an opinion on CNCS’s financial statements or conclusions about the effectiveness of internal

control; or conclusions on compliance with applicable provisions of laws, regulations, contracts, and grant

agreements.

CLA is responsible for the attached independent auditors’ report, dated November 8, 2017, and the

conclusions expressed therein. However, our review disclosed no instances where CLA did not comply,

in all material respects, with United States generally accepted government auditing standards.

Attachment

cc: Jeffrey Page, Chief Operating Officer

Robert McCarty, Chief Financial Officer

Tom Hanley, Chief Information Officer

Lori Giblin, Chief Risk Officer

Mia Leswing, Principal-in-charge, CliftonLarsonAllen LLP

68
901 North Glebe Road, Suite 200 

Arlington, VA 22203 

571-227-9500 | fax 571-227-9552 

CLAconnect.com 

INDEPENDENT AUDITORS’ REPORT

To the Board of Directors and Inspector General of the

Corporation for National and Community Service

Report on the Financial Statements

We were engaged to audit the accompanying consolidated financial statements of the Corporation

for National and Community Service (CNCS), which comprise the consolidated statements of

financial position as of September 30, 2017 and 2016, and the related consolidated statements

of operations and changes in net position, the consolidated statements of cash flows and the

combined statements of budgetary resources, for the years then ended, and the related notes to

the consolidated financial statements (referred to herein as financial statements).

Management’s Responsibility for the Financial Statements 

CNCS management is responsible for the preparation and fair presentation of these financial

statements in accordance with accounting principles generally accepted in the United States of

America (U.S.); this includes the design, implementation, and maintenance of internal control

relevant to the preparation and fair presentation of 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 financial statements based on conducting the

audit in accordance with auditing standards generally accepted in the U.S.; 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. 17-03, Audit Requirements for Federal Financial Statements (OMB Bulletin 17-03). Because

of the matters described in the Basis for Disclaimer of Opinion paragraph; however, we were not

able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion.

Basis for Disclaimer of Opinion 

CNCS was unable to provide adequate evidential matter to support a significant number of

transactions and account balances, as presented in the accompanying financial statements as of

and for the year ended September 30, 2017, due to inadequate processes and controls to support

transactions and estimates, and incomplete records to support accounting for transactions in

accordance with generally accepted accounting principles. The financial statement line items

impacted by the lack of evidential matter include but are not limited to Trust Service Award

Liability, Grant Accrual and Advances, Other Liabilities, Prior Year Recoveries and Unpaid

Obligations.

69
INDEPENDENT AUDITORS’ REPORT (Continued)

Disclaimer of Opinion 

Because of the significance of the matters described in the Basis for Disclaimer of Opinion

paragraph, we have not been able to obtain sufficient appropriate audit evidence to provide a

basis for an audit opinion. Accordingly, we do not express an opinion on the financial statements

referred to in the first paragraph.

Other Matters 

Fiscal Year 2016 Financial Statements 

The accompanying financial statements of CNCS as of September 30, 2016 and for the year then

ended were audited by other auditors whose report thereon dated November 14, 2016, expressed

an unmodified opinion on those consolidated financial statements.

Required Supplementary Information 

Accounting principles generally accepted in the U.S. require that the information in the

Management Discussion and Analysis (MD&A), and Required Supplementary Information (RSI)

be presented to supplement the financial statements. Such information, although not a part of the

financial statements, is required by the Federal Accounting Standards Advisory Board (FASAB),

which considers it to be an essential part of financial reporting for placing the financial statements

in an appropriate operational, economic, or historical context. We were unable to apply certain

limited procedures to the MD&A and the RSI in accordance with the auditing standards generally

accepted in the United States of America because of the significance of the matters described in

the Basis for Disclaimer of Opinion paragraph. We do not express an opinion or provide any

assurance on the information.

Other Information 

Our engagement was conducted for the purpose of forming an opinion on the financial statements

as a whole. All other information exclusive of the financial statements, MD&A and RSI as listed in

the Table of Contents of the Annual Management Report (AMR) are presented for purposes of

additional analysis and are not a required part of the financial statements. In addition,

management has included references to information on websites or other data outside of the

AMR. This information has not been subjected to any procedures, and accordingly, we do not

express an opinion or provide any assurance on it.

Report on Internal Control over Financial Reporting and on Compliance Based on an Audit

of Financial Statements Performed in Accordance with Government Auditing Standards

Internal Control over Financial Reporting 

In connection with our engagement to audit the financial statements, we considered CNCS’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 financial

statements, but not for the purpose of expressing an opinion on the effectiveness of CNCS’s

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

Our consideration of internal control was for the limited purpose described in the preceding

paragraph and was not designed to identify all deficiencies in internal control that might be

material weaknesses or significant deficiencies; therefore, material weaknesses or significant

70
INDEPENDENT AUDITORS’ REPORT (Continued)

deficiencies may exist that have not been identified. However, as described in Exhibit A, we

identified certain deficiencies in internal control that we consider to be material weaknesses.

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 financial statements will not be prevented, or

detected and corrected on a timely basis. We consider the deficiencies in the areas below, and

described in Exhibit A to be material weaknesses.

1. Financial Reporting

2. Trust Fund Unpaid Obligations

3. Trust Service Award Liability Model

4. Grants Accrual Payable and Advances

CNCS management did not report the material weaknesses noted above in its Fiscal Year 2017 

Statement of Assurance Under FMFIA, included in the Management’s Discussion and Analysis

section of the accompanying AMR.

A significant deficiency is a deficiency, or 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. We consider the deficiencies in the area below, and described in Exhibit B to

be a significant deficiency.

5. Information Technology Security Controls

Had the scope of our work been sufficient to enable us to express an opinion on the financial

statements, other material weaknesses or significant deficiencies may have been identified and

reported herein.

Compliance with Laws, Regulations, Contracts, and Grant Agreements and Other Matters 

In connection with our engagement to audit the financial statements, 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 engagement, 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 herein under Government Auditing Standards or OMB Bulletin 17-03.

Had the scope of our work been sufficient to enable us to express an opinion on the financial

statements, other instances of noncompliance or other matters may have been identified and

reported herein.

Management’s Responsibility for Internal Control and Compliance 

CNCS management is responsible for (1) evaluating the effectiveness of internal control over

financial reporting based on criteria established under the Federal Managers’ Financial Integrity 

Act (FMFIA) and GAO’s Standards for Internal Control in the Federal Government, (2) providing

71
INDEPENDENT AUDITORS’ REPORT (Continued)

4 

a statement of assurance on the overall effectiveness on internal control over financial reporting,

and (3) complying with other applicable laws, regulations, contracts, and grant agreements.

Auditors’ Responsibilities 

We are responsible for (1) obtaining a sufficient understanding of internal control over financial

reporting to plan the audit, and (2) testing compliance with certain provisions of laws, regulations,

contracts, and grant agreements.

We did not test compliance with all laws, regulations, contracts, and grant agreements applicable

to CNCS. We limited our tests to certain provisions of laws, regulations, contracts, and grant

agreements noncompliance with which could have a direct effect on the determination of material

financial statement amounts and disclosures. 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. We caution that noncompliance may occur and not be detected by these tests and that

such testing may not be sufficient for other purposes.

CNCS’s Response to Findings 

CNCS’s response to the audit findings in our report is included in Exhibit C. In its response, CNCS

management concurred with some but not all of the conditions and recommendations contained

in the report. Specifically, CNCS management discussed its non-concurrence with the material

weakness related to the Trust Fund unpaid obligations. CLA stands by our conclusion in reporting

the material weaknesses and significant deficiency. We did not audit CNCS’s response and,

accordingly, we express no opinion on the response.

Status of Prior Year’s Control Deficiencies 

We have reviewed the status of CNCS’s corrective actions with respect to the findings included

in the prior year’s Independent Auditors’ Report, dated November 14, 2016. The status of prior

year findings is included in Exhibit D.

Purpose of the Report on Internal Control over Financial Reporting and on Compliance 

The purpose of the Report on Internal Control over Financial Reporting and on Compliance 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 CNCS’s internal control or on

compliance. These reports are an integral part of an audit performed in accordance with

Government Auditing Standards in considering CNCS’s internal control and compliance.

Accordingly, these reports are not suitable for any other purpose.

CLIFTONLARSONALLEN LLP

Arlington, Virginia

November 8, 2017

72
EXHIBIT A

Material Weaknesses

1. Financial Reporting: As part of our testing of the Corporation for National and Community

Service’s (CNCS or the Corporation) financial reporting process, we noted the following three

conditions:

A. The financial statements were not prepared and presented in accordance with Federal

standards;

B. Internal control deficiencies in the financial accounting and reporting process

C. Non-compliance with OMB Circular A-11, Preparation, Submission, and Execution of

Budget, on the use of object classification (object class) to record transactions.

OMB Circular A-123, Management’s Responsibility for Internal Control in Federal Agencies,

makes management responsible for establishing and maintaining internal control to achieve the

objectives of effective and efficient operations, reliable financial reporting, and compliance with

applicable laws and regulations.

A. The financial statements were not prepared and presented in accordance with Federal 

standards. 

A1. Incomplete financial statements at June 30, 2017 increase inherent and control risks 

and the overall risk of misstatement. 

The interim (June 30) financial statements developed by CNCS Accounting and Financial

Management Services (AFMS) group are incomplete. Certain line items, statements, and notes

are either not prepared or updated until the year-end. For example:

 The Property and Equipment and Accounts Payable (accrual portion) on the Statement of

Financial Position are not updated until year end.

 Program expenses reported on the Statement of Operations are not updated with the most

accurate data at June 30, 2017. The allocation of indirect costs is based on employee

head count for each program and is only updated at year-end.

 The Consolidated Statement of Cash Flows and the notes for the consolidated financial

statements were not prepared at June 30, 2017.

 The Trust Fund financial statements were not prepared at June 30, 2017.

Preparing complete and accurate financial statements and supporting notes at the interim periods

provides management with an opportunity to assess the effectiveness of its controls over financial

reporting process and to detect and correct errors timely. The risk of material misstatement

increases when basic financial statements are only prepared at the end of the year with time

constraints.

5 

A2. Financial statements were not in compliance with Federal reporting requirements. 

CNCS’s financial reporting process states that CNCS opted to apply the form and content of OMB

Circular A-136 to the Statement of Budgetary Resources (SBR). However, during our review of

the prior year (FY 2016) financial statements footnotes, we noted multiple instances of noncompliance with OMB Circular A-136, Financial Reporting Requirements – Revised, as it relates

to the SBR. Furthermore, we identified various inconsistencies in the financial statements and

notes that raise concern about management’s review of OMB and Treasury guidance for the

financial statements and footnotes’ form and content.

73
EXHIBIT A (Continued)

Material Weaknesses

6 

A3. Management was not able to properly delineate whether Financial Accounting 

Standards Board (FASB) or Federal Accounting Standards Advisory Board (FASAB) 

standards were used in the financial reporting process. 

Note 1 C to the CNCS financial statement states that CNCS applies Generally Accepted

Accounting Principles (GAAP) in accordance with the FASB standards. When FASB has no

applicable standard, CNCS uses the accounting standards issued by the FASAB. When CNCS’s

management elected to use FASB standards, the FASAB standards were less developed than

they now are. Since then, FASAB has emerged as the promulgating body for Federal financial

reporting standards, and there have been significant changes in Federal reporting requirements.

CNCS Management has not reconsidered its reliance on FASB standards, nor was it able to

explain clearly where its financial reporting process uses FASB versus FASAB standards.

We recommend that: 

1. The AFMS team prepares complete sets of financial statements and related notes for

CNCS and the National Service Trust Fund at the interim periods.

2. CNCS evaluate and decide on the accounting standards to be followed in preparing the

CNCS financial statements. Management should reassess the initial basis for using FASB

and document its decision to continue to use FASB or transition to full FASAB reporting.

3. Notwithstanding the standards management elects to apply, the information presented in

the Statement of Budgetary Resources (SBR) and notes should be in accordance with

OMB Circular A-136 guidance. For instance, the attribute for Federal or Non Federal

transactions should be recorded to support the “Uncollected Payments, Federal Sources.”

B. Internal control deficiencies in CNCS’s financial accounting and reporting process. 

B1. Internal control deficiencies in the preparation of the financial statements and review 

of the trial balance. 

 CNCS’s financial statements were prepared in Excel spreadsheets with embedded

formulas. The Excel spreadsheets were inherently susceptible to manipulation and human

error as the cells in those spreadsheets were not protected.

 Although AFMS performs an analysis of the trial balance, it does not document any

explanation for known and recurring differences in the analysis, such as reversal of

standard voucher (SV) transactions, leading to unexplained and abnormal balances.

Moreover, some differences marked for research by management were either not

performed or their resolution was not documented. Nevertheless, the trial balance analysis

was approved by the AFMS supervisor. These exceptions were evidence of ineffective

implementation of controls to prevent and detect financial statements errors.

B2. Review of discontinued document types with balances were not performed. 

CNCS did not perform the necessary research to determine the validity of the legacy balances in

the “TJ” (used to report Trust Fund commitments and obligations) and “JV” (journal voucher)

document types to determine if they represent valid undelivered orders as of June 30, 2017. TJ

74
EXHIBIT A (Continued)

Material Weaknesses

7 

and JV document types have not been used since FY 2007 and FY 2011, respectively. Our review

of the June 30, 2017 unliquidated order report identified the following:

 A TJ document type for $8.6 million dating back to when obligation was initially recorded

in FY 2007

 A JV document type with a net balance of $6 million dating back to FY 2004

B3. Fluctuation analysis was not robust and the process was not properly documented. 

CNCS does not have complete, accurate, and updated policies and procedures that describes

how the fluctuation analysis is actually performed and the key controls that protect it. We noted

the following deficiencies when reviewing management’s fluctuation analysis at June 30, 2017:

 The CNCS Financial Statement Preparation Guide described fluctuation analysis

procedures at a high-level only and does not include the specific procedures performed

or controls in place.

 There were no documented fluctuation expectations based on the Corporation’s

operations nor was there any standard or comparison by which to assess the

reasonableness of particular fluctuations.

 The supporting documentation to validate the research and analysis performed by

management to substantiate the significant changes in financial statements line items are

not maintained and made readily available.

 The explanations provided for significant fluctuations in the interim fluctuation analysis

were generic.

B4. The cost allocation process was not documented and properly supported. 

The Financial Reporting Cost Allocation process memorandum did not address the process to

allocate the indirect costs among CNCS’s programs or any of the associated controls. Also, CNCS

was unable to provide CLA with a walkthrough of how the indirect costs were allocated to the

programs or the bases or studies performed supporting the indirect cost allocation percentages.

B5. The controls around the use of Standard Vouchers (SVs) need to be strengthened. 

As of June 30, 2017, CNCS recorded $4.4 billion in SVs (absolute value). CNCS explained that

SVs are necessary because of system limitations and staff processing inaccurate and incorrect

document type and transaction activity. As part of our SV population review, we noted generic

descriptions for significant SVs processed. The explanations for the SVs were inadequate. In

many cases, SVs were being used to correct other SVs. Considering the magnitude of the SVs

and the minimal descriptions of these transactions, this process increases the risks of recording

errors. Also, CNCS appears to use the SV process to address significant recurring financial

reporting issues across multiple funds, instead of addressing the root causes of the issues and

avoiding the need for future SVs.

B6. Lack of segregations of duties in the SV preparation and approval process. 

The Director of AFMS and the Lead Accountant of the Accounting and Reports division are the

only two CNCS staff with authority to approve SVs in Momentum. CLA noted that the Lead

Accountant can both prepare and approve the same SV, precluding any effective supervisory

review or control. Effective segregation of duties is required to prevent overrides of financial

reporting controls. In addition, the Momentum user log only shows the approvers of the SVs. As

a result, management cannot readily assess if proper segregation of duties was exercised during

75
EXHIBIT A (Continued)

Material Weaknesses

8 

processing of the SV transactions. Management’s review process to ensure proper segregation

of duties was not documented nor performed consistently over all SVs.

We recommend that:

4. The financial statement preparation process be automated to the greatest extent possible

to reduce the potential for human error in the financial statement template. The

Corporation should review and protect the formulas used in the Excel spreadsheet to

ensure accuracy and prevent inadvertent or intentional manipulations. Access to the Excel

spreadsheets should be limited to key personnel in AFMS.

5. AFMS develop detailed policies and procedures to reflect the financial statement

preparation process. The policies and procedures developed should address the key

processes and controls such as preparation of a quarterly fluctuation analysis, preparing

and approving SVs; preparation and approval of the quarterly financial statements; and

review of the trial balance. The procedures should clearly delineate responsibilities for the

various AFMS groups and team leads.

6. Management review and research discontinued document types such as TJs and JVs to

determine whether unliquidated order balances are still valid. Furthermore, management

should work with the system support team to remove any document types that are no

longer used.

7. Management update the Financial Reporting Cost Allocation process memorandum to

explain the methodology by which it allocates indirect costs among the various CNCS

programs.

8. Management work with Momentum’s developer to identify and remediate the causes that

give rise to the recurring needs for SV’s and user functionality issues that may be causing

errors that can be addressed through training.

C. Non-compliance with OMB Circular A-11 regarding the use of object class to record 

transactions 

Management explained that object classes associated with obligation transactions may not

accurately reflect the proper classification for the accounting event taking place. Older

transactions in Momentum were erroneously set up using the “250 Other Contractual Services”

object class. These transactions require further research by management at the transaction level

in order to update and correct the object classes for reporting. CNCS is currently using general

ledger accounts and sub-accounts as well as document type and transaction type codes to

classify transactions for reporting. There were transactions processed without associated object

class. This process is not consistent with OMB Circular A-11 guidance that object class codes

should be associated with US Standard General Ledger (USSGL) transactions.

We recommend that:

9. CNCS continue its efforts to be fully compliant with OMB Circular A-11 as CNCS is in the

process of becoming fully compliant with the object class reporting requirements.

76
EXHIBIT A (Continued)

Material Weaknesses

9 

2. Trust Fund Unpaid Obligations

Our review of the Trust Fund’s SF 133, Report on Budget Execution and Budgetary Resources, 

as of June 30, 2017, noted that CNCS did not report downward adjustments to unpaid obligations.

We inquired further and learned from management that CNCS has not reported downward

adjustments since the Trust Fund’s inception. Also, CNCS does not separately track and record

transactions for upward adjustment to prior year unpaid obligations. In our review of the

relationship between unpaid obligations of the trust fund and the service award liability on the

Statement of Financial Position (SFP), we noted significant variances, as shown in the table

below, and management could not provide adequate transaction detail to support the entire

amount of these differences.

9/30/2017 6/30/2017 9/30/2016

Financial Statement Line Item $’000 $’000 $’000

Unpaid Obligations, End of Period (per SBR) $669,082 $616,853 $626,512

Less: Service Award Liability (per SFP) $397,631 $391,499 $396,344

Difference $271,451 $225,354 $230,168

CNCS also recorded an obligation when it received interest on the Trust Fund’s Investment

balance, rather than recording the interest revenue as an unobligated budgetary resource.

Amounts reported in the SBR may not be properly supported as required by OMB Circular A-11

guidance. Given the lack of reconciliations and quality control reviews, material misstatements

can occur and not be detected and corrected timely.

Timely de-obligation, procurement and payment of invoices; timely recording of transactions

based on adequate source documents; and periodic and timely reconciliation of the subsidiary

system to the general ledger are key control activities within an entity’s internal control

environment that help achieve management’s responsibility required by OMB Circular A-123.

We recommend that CNCS management: 

10. Document the authority that allows for the automatic obligation of interest and its

compliance with the budget execution guidance in OMB Circular A-11, or modify its

practices with respect to the treatment of interest revenue.

11. Implement policies and procedures to address the following:

a) review obligation amounts to ensure amounts accurately reflect the status of the

obligation;

b) review the time frame for the obligation recorded in Momentum to be considered

as valid (i.e., grant dates are correctly reflected in the obligation);

c) ensure obligations are sufficiently supported (i.e., by documentary evidence) to

ensure proper accounting;

d) reconcile obligations to source documents (such as grant agreements);

e) ensure aged obligations are valid and accurately recorded; and

f) perform complete reconciliations of all outstanding obligations monthly, and

ensure any discrepancies identified are promptly researched and resolved.

77
EXHIBIT A (Continued)

Material Weaknesses

10 

12. Perform a documented assessment to validate the transactions currently included in the

unpaid obligations balance. Ensure those obligations are related to valid claims and

supported by documentary evidence.

13. Coordinate with the Office of Grants Management to implement a process to correctly

account for the unpaid obligations balance at the grant transaction level. Unused

education slots past the grant’s performance period should be promptly removed from the

unpaid obligations balance. The process should ensure that prior year recoveries are

recorded as the transaction occurs (e.g., expiration of grants by program by year

compared to actual enrollments/outlays by year, etc.). Prior year recoveries should be

recorded in the USSGL accounts for upward and downward adjustments to prior year

unpaid obligations, in order to account for differences in the amounts initially obligated.

3. Trust Service Award Liability (TSAL)

A. Lack of quality controls resulting in input and calculation errors in TSAL liability and 

TSAL model deficiencies 

The TSAL is the largest liability balance on CNCS’s financial statements as of September 30,

2017 ($397 million). CNCS developed a TSAL model to estimate quarterly the anticipated

service awards to be paid by the Trust Fund. The model was updated in FY 2011 by a

consulting firm and reviewed in by another consulting firm in FY 2016 to assess the

appropriateness, validity, and use of the statistics for determining benefits usage, earning

statistics, usage patterns, interest forbearance, and any other factor affecting the calculation

of the liability.

CLA identified the following errors in the June 30, 2017 TSAL model that significantly impacted

the accuracy of the liability calculated:

 Management’s quality review process did not identify an error in the TSAL calculation prior

to completing the Governmentwide Treasury Account Symbol Adjusted Trial Balance

System (GTAS) reporting for the third quarter. The “number of months of actual data in

the current year” (which was nine months) was not updated in the TSAL model at June

30, 2017. As a result, the liability was overstated by $9.2 million.

 CNCS’s consultant recommended in FY 2016 that CNCS correct erroneous codes in the

TSAL model from Part Time (PT) to Half Time (HT). We noted that CNCS did not

implement the recommendation. When the PT codes are replaced with HT codes, the

liability is reduced by approximately $17 million. Management subsequently

acknowledged this error and corrected it in the September 30, 2017 version of the TSAL

model.

 CNCS did not follow the consultant’s recommendation to update the assumptions used in

the TSAL and Calculator for the Education Award Earning Percentage to be used for

estimating future awards to be earned for open program years (i.e., program years for

which there are no reported members “earning” education awards) We noted that

management did not conduct a study to determine the historical data of education awards

earned by members, based on each program and program year, to support the TSAL

calculation.

78
EXHIBIT A (Continued)

Material Weaknesses

11 

We also noted the following deficiencies related to the TSAL model:

 The TSAL Model liability is estimated using an Excel-based spreadsheet, which could be

prone to human errors. Management had to manually copy and paste data from eSPAN

reports into the Excel-based model each quarter. Further, management has the ability to

override some assumptions significant to the model.

 Several Excel worksheets/tabs and some input data were included in the TSAL Model, but

were not used to calculate the TSAL. Management was unable to clearly explain the

relevancy of the data.

 The TSAL Model business process narrative was not adequately documented. It included

a list of key controls, but the narrative did not clearly describe the control activities; identify

any process risks; describe how the key controls were used to mitigate risk; nor include

procedures or controls to ensure that key assumptions used in the TSAL model were

validated.

 The TSAL Standard Operating Procedures (SOP) or desk procedures did not clearly

describe or identify the raw data inputs, nor did it identify the source of the raw data; it did

not include documentation of how the raw data was validated.

B. CNCS did not use discount rates in its TSAL calculation.

CNCS did not use discount rates in the TSAL calculation and management did not document its

rationale for not discounting the TSAL. CNCS stated that the cash flows for the obligations are

discounted but no discount rate is applied to the liability, since management considers the timing

of future payments to be uncertain and therefore it intentionally did not discount the liability. The

liability not being discounted may not be recorded in accordance with GAAP.

C. CNCS staff was not knowledgeable regarding certain key assumptions and inputs 

The only individual with sufficient knowledge to perform the actuarial model calculations is a

single retired annuitant working on a part-time basis, leaving this key process vulnerable and

subject to minimal supervision. CNCS staff members have not been cross-trained in how to use

the model to calculate the TSAL nor had knowledge of the actuarial model calculations and inputs.

In addition, the CNCS staff responsible for the actuarial modelling was not knowledgeable of

certain key assumptions, as well as several aspects of the inputs and calculations. Estimation of

TSAL is at risk due to the lack of a permanent and knowledgeable staff to manage the TSAL

modelling and calculation.

We recommend that CNCS Management:

14. Implement the consulting firm’s recommendation to correct the erroneous member record

types in the Raw Data Section 2, from PT to HT.

15. Develop or update the TSAL model documentation, document modelling assumptions,

SOPs, and business process narratives relevant to the Trust Fund’s accounting and

financial reporting of education awards.

16. Protect cells within the TSAL model (Excel spreadsheet).

79
EXHIBIT A (Continued)

Material Weaknesses

12 

17. Conduct a detailed study to determine the historical awards granted to members by

duration and by program year, and use the results of that study to adjust the calculation

of the Education Awards Earning Percentage.

18. Assess the need and document management’s position regarding the discounting factors

for the TSAL in accordance with applicable FASAB standards.

19. Cross-train staff and develop a succession plan to ensure the required expertise is

available in the event of employee turnover.

4. Grants Accrual Payable and Advances

The written “CNCS Grant Accrual Methodology,” dated 6/9/17, does not reflect the grant accrual

process actually followed by CNCS. The “FY 2017 Grants Payable and Expense Business

Process Narrative” (i.e. audit cycle memorandum), dated 5/17/17, validated by Corporation

management, reflects the same information in the “CNCS Grant Accrual Methodology.”

Moreover, CNCS’s grant accrual methodology does not include the estimate of costs Incurred But

Not Yet Reported (IBNR) by the grantees provided to the Corporation by its service provider

(Department of Health and Human Service, HHS). For example, a grantee may have incurred

costs during a quarter that were not yet reported in the Federal Financial Report (FFR) until the

subsequent quarter. CNCS management’s justification for not accounting for IBNR costs is that

the inclusion of IBNR could result in significantly overstating the grant accrual. However, CNCS’s

justification was based on the management’s comparison of its accrual between the HHS

calculated IBNR and the actual quarterly disbursements reported in the following quarter. CNCS’s

methodology did not consider an actual projection of the IBNR costs (through validation with the

grantees) and compare such projection directly with the IBNR estimated costs.

In addition, CNCS does not perform any lookback analysis or validation of its grant accrual at the

individual grant level. A grant accrual validation should be used as the basis for its analysis of the

grantees’ spending pattern by accrual components (i.e. FFR reporting and IBNR). The lookback

analysis and validation should be conducted separately to determine the accuracy of its grant

accrual estimate. When management’s key assumptions are not validated and properly

documented based on historical data analysis and grantee spending pattern, it increases the risk

of errors and ultimately may lead to misstatements in CNCS’s grant accrual and related expenses

reported in its financial statements.

Lastly, CNCS grant advances was not supported by historical analysis of grantee drawdown and

spending patterns.

Federal Accounting Standards Advisory Board (FASAB), Accrual Estimates for Grant Programs, 

Federal Financial Accounting Technical Release 12 (August 4, 2010), Preparing Accrual

Estimates for Grant Programs, Paragraph 12, states:

Agencies should document and maintain support for the data and assumptions used

to develop grant accrual estimates. The documentation will facilitate the agency’s

review of the assumptions, a key internal control, and will also facilitate the auditor’s

testing of the estimates. Documentation should be complete and stand on its own,

i.e., a knowledgeable independent person could perform the same steps and replicate

the same results. If the documentation were from a source that would normally be

80
EXHIBIT A (Continued)

Material Weaknesses

13 

destroyed, then copies should be maintained in the file for the purpose of

reconstructing the estimates.

We recommend that CNCS management: 

20. Revise the grant accrual methodology so that:

 It is based on historically reported expenses;

 All sources of information and calculations are clearly identified and the source

disclosed;

 The method for calculating the IBNR costs for the accrual is separately calculated and

identified;

 A validation process is established to verify the accuracy of the grant accrual, so that

management can make any necessary adjustments to improve the precision of the

grant accrual; and

 It addresses how the calculations are used to arrive at the Grants Payable and

Advances to Other line items in the Consolidated Statements of Financial Position.

21. Develop a process to validate grant advances, IBNR and payable estimates. Such

validation should be performed for all program elements included in the estimation process

and over a few years to show a trend of the estimates. Unusual fluctuations, if any, should

be investigated and the research conclusions documented by management.

22. Coordinate with the program and grant officers to gather and analyze its key grant

programs’ (AmeriCorps State and National and Senior Corps) historical data and the

grantees’ spending patterns to develop the following key factors:

 Percentage of CNCS grantees who draw down funds in advance versus those on

a reimbursable basis, and the relationship of those grant amounts to its grant

spending as a whole. If different key programs have different spending patterns,

perform this analysis at the program level;

 An inventory of relevant and reliable grant data to be used for the grant accrual

assumptions and documentation to support what data is to be considered relevant

and reliable.

 Grantees’ IBNR reporting pattern from when the expenses have been incurred to

the time those expenses are included the grantees’ FFRs. Grantee surveys may

be conducted to confirm the IBNR methodology (i.e. validation that two weeks of

IBNR is a well-based assumption). When alternative procedures are used,

management should provide its data-based analysis to validate its assertion

 Post-accrual analysis to compare the accrual (without the IBNR) and the

expenditures reported in the FFRs for the same quarter. When grantees’ reported

spending patterns deviates from its methodology, an analysis should be performed

to determine whether any deviation is acceptable or the methodology should be

further refined to reflect the actual grantees’ reported expenditure pattern. This is

a cyclical exercise that should be performed when there are legislation, regulation

or program changes that could impact the characteristics of the grant population

(i.e., new grant program, ending a grant program, significant changes in funding,

etc.).

81
EXHIBIT B

Significant Deficiency

14 

1. CNCS Needs to Mitigate Information Technology Control Deficiencies.

CNCS relies on information technology (IT) systems to initiate, authorize, record, process,

summarize, and report financial transactions in the preparation of its financial statements. Internal

controls over these operations are essential to ensure the integrity, confidentiality, and reliability

of critical data while reducing the risk of errors, fraud, and other illegal acts.

To balance high levels of service and reduce costs, CNCS’s Office of Information Technology

(OIT) has outsourced the operation, maintenance and support of most of the Corporation’s IT

systems. While outsourcing is not inherently detrimental to the security posture of an

organization, it introduces different considerations and new risks regarding the protection of

information and information systems. Despite this outsourcing, CNCS by law retains

responsibility for complying with the requirements of the Federal Information Security

Modernization Act (FISMA) and security control implementation.

Our review of IT controls covered general and selected business process application controls

both at the enterprise and at the facility levels, National Civilian Community Corps (NCCC)

campuses and State Offices. Our current year audit identified security weaknesses that were

corrected for certain control activities. Examples of CNCS improvements in its IT control

environment include: establishment of security assessment standards to ensure consistency and

quality, development of business impact assessments for each critical system, implementation of

the United States Government Configuration Baseline (USGCB) for desktops and monitoring for

compliance with those approved settings.

While the Corporation is taking a number of steps to remediate previously identified information

security weaknesses, we identified new and continued control weaknesses in the information

security program that need to be addressed, most importantly pertaining to configuration

management, access controls, security management and contingency planning. Specifically, we

identified enterprise and facility level findings for each of the following domains:

Configuration Management 

 Vulnerabilities related to patch management, configuration management, and unsupported

software exposed CNCS field offices networks to critical and high severity vulnerabilities. CNCS’s

vulnerability management program needs to improve to effectively identify, monitor and

remediate known vulnerabilities to reduce the risk of security breaches.

 Standard baseline configurations for all platforms in the CNCS information technology

environment were not fully implemented. For example, standard baseline configurations have

not been implemented for CNCS operating systems, databases, servers, network devices,

VMware, and Web browsers.

 Change management policies and procedures for testing and evaluating risk for network

changes were not consistently implemented.

 The CNCS inventory tracking system did not reflect accurately the inventory of OIT devices and

locations at Headquarters (HQ) and field offices. The HQ and field office inventories were

maintained independently by the respective parties and the FasseTrack system was not

integrated with the Headquarters inventory. As a result, a manual reconciliation is required to

update the respective inventories.

82
EXHIBIT B (Continued)

Significant Deficiency

15 

Access Control 

 The account access review process was not effective at identifying inactive accounts or accounts

belonging to separated employees or contractors. In addition, user access reviews and

recertification of user accounts was not consistently performed for all systems.

 CNCS had not implemented Personal Identification Verification multifactor authentication for

local and network access for privileged users and for network access for non-privileged users.

 Mobile devices provided to two CNCS field office’s personnel such as Team Lead laptops were

not securely configured and managed.

 CNCS did not capture the Momentum Oracle security logs into its event1 correlation tool used

for audit log review, analysis and reporting. The event and trend analysis to investigate security

events is required by National Institute of Standards and Technology (NIST) for information

systems categorized as moderate.2

 Although one field office has implemented two instances of continuous monitoring for its public

wireless network and campus Computer Lab computers, the events detected were not being

acted upon, as no one was monitoring the logs.

 Management at one field office did not ensure adequate protective controls were in place to

protect personally identifiable information in a storage room to validate who was accessing the

room.

Segregation of Duties 

 Momentum application controls for managing user profiles do not prevent a user from both

preparing and approving the same SV.

 The Momentum transaction log only records the approvers of the SV. As a result, management

can not readily assess if proper segregation of duties was exercised during processing of the

SVs.

Security Management 

 CNCS did not maintain current system authorizations to operate for all its information systems.

Specifically, the Electronic‐Systems for Program Agreements and National Service Participants

(eSPAN)/My AmeriCorps Portal’s Authorization to Operate (ATO) expired on July 31, 2017 and

management was not planning on issuing a new ATO until December 2017.

 CNCS did not ensure two external interconnections to the General Support System (GSS) were

listed in the GSS System Security Plan (SSP). In addition, four external interconnections listed

in the GSS SSP did not have properly signed agreements.

 CNCS did not complete the development, documentation and communication of an entity-wide

program for managing risk associated with the operation and use of the Corporation’s information

systems in accordance with NIST standards. During FY 2017, a risk register was developed and

submitted to the Risk Management Council for review and concurrence. In order to complete the

entity-wide risk management program in accordance with NIST, CNCS needs to perform the

following:

1 A security event is a change from what is expected in how an information system functions, signifying that

a security policy may have been breached or security measures may have failed.

2 Federal Information Processing Standards 199, Standards for Security Categorization of Federal 

Information and Information Systems, provides guidance determining the security category (i.e., low,

moderate, high) of federal information systems based on confidentiality, integrity and availability.

83
EXHIBIT B (Continued)

Significant Deficiency

16 

o Finalize the risk register

o Establish the risk tolerance for the Corporation and communicate the risk tolerance

throughout the organization

o Develop, document and implement acceptable risk assessment methodologies, risk

mitigation strategies, and a process for consistently evaluating risk across the

organization with respect to the organization’s risk tolerance

o Develop, document and implement approaches for monitoring risk over time

Once CNCS completes and communicates an organization-wide risk tolerance, OIT will need to

align its strategic goals and requirements for protecting its information and information systems

with the risk tolerance that supports the Corporation’s mission. This will assist CNCS in managing

risk associated with the operation and use of the Corporation’s information systems.

 CNCS did not adequately assess information system risks. For example:

o The Security Assessment Report (risk assessment) for the GSS did not take into account

assessed risk for entire system environment.

o The Security Assessment Report (risk assessment) for Momentum conducted did not

address all of the risk assessment elements such as threat/vulnerability identification,

likelihood, impact analysis, risk determination and control recommendation.

o Information security risks to the Corporation from the use of external systems were not

assessed. For example, management did not review the Service Organization Control

Reports or risk assessments performed for these systems to gain an understanding of

the information security risks identified, and assess and document the risks and impact

to CNCS from the use of external systems.

 The Plan of Action and Milestones (POA&Ms) for the GSS, Momentum and eSPAN did not

include all known control weaknesses.

 CNCS did not ensure employees had the proper background investigations. Specifically,

privileged users had background investigations at a lower level than the risk associated with their

assigned positions.

Contingency Planning 

 CNCS did not complete an after action report that specified whether Recovery Time Objectives

were met, and any lessons learned for the GSS/eSPAN disaster recovery test conducted in June

2017.

 The CNCS Continuity of Operations Plan was not up-to-date. Specifically it did not reflect the

Business Impact Analysis or updates to the Disaster Recovery Plan that were completed since

last year.

 CNCS did not document and implement a Service Level Agreement or performance metrics to

ensure that GSS backups are performed in accordance with contractual requirements.

 CNCS did not ensure adequate environmental controls were implemented. For example, a

malfunctioning Uninterruptable Power Supply at two CNCS facilities was not noticed by

management and reported for error resolution. In addition, a fire extinguisher or smoke detector

was not in place at another CNCS facility due to management oversight.

Many of these weaknesses can be attributed to an inconsistent enforcement of the agency-wide

information security program across the enterprise. These deficiencies can increase the risk of

unauthorized access to CNCS systems used to capture, process, and report financial transactions

and balances. Effective system security begins with strong governance, including agency level

oversight and controls monitoring of CNCS field offices. Designing and implementing effective

corporation level policies is the responsibility of the Chief Information Officer. In addition, managing

84
EXHIBIT B (Continued)

Significant Deficiency

17 

the information and system security program across the Corporation is primarily the responsibility

of the Chief Information Security Officer.

Although CNCS had policies for the operation of its information security program, its

implementation of those policies across the enterprise and managing information security risk need

strengthening to preserve the confidentiality, integrity, and availability of the CNCS’s information

and information systems. CNCS should increase its efforts to mature its risk management program

and monitor compliance with CNCS information security policies and procedures.

By not effectively implementing and enforcing IT policies and procedures, there is an increased

risk that financial and personally identifiable information may be inadvertently or deliberately

misused and may result in improper disclosure or theft without detection. Without remediating all

significant security vulnerabilities, systems could be compromised resulting in potential harm to

confidentiality, integrity, and availability of CNCS financial and sensitive data.

The information system security officer is an individual responsible for ensuring that the

appropriate operational security posture is maintained for an information system and as such,

works in close collaboration with the information system owner. The information system security

officer also serves as a principal advisor on all matters, technical and otherwise, involving the

security of an information system. The information system security officer has the detailed

knowledge and expertise required to manage the security aspects of an information system and,

in many organizations, is assigned responsibility for the day-to-day security operations of a

system.

We recommend CNCS:

1. Enforce the agency-wide information security program across the enterprise and improve

performance monitoring to ensure controls are operating as intended at all facilities.

2. Strengthen and refine the process for communicating CNCS facility specific control

deficiencies to CNCS facility personnel, and coordinate remediation of the control

deficiencies.

3. Strengthen and refine the process for holding system owners and information system security

officers accountable for remediation of control deficiencies and ensuring that the appropriate

security posture is maintained for CNCS information systems.

4. Strengthen and refine the process for holding contractors accountable for remediation of

control deficiencies in CNCS information systems.

5. Implement all detailed recommendations in the FY 2017 Federal Information Security

Modernization Act (FISMA) Evaluation report.

85
EXHIBIT C

Management’s Response

Memorandum

Date:  November  13,  2017

To:  Deborah  Jeffrey,  Inspector  General

From:  Robert  McCarty,  Chief  Financial  Officer

Subject:  Independent  Auditor’s  Report

Thank  you  for  the  opportunity  to  respond  to  the  results  of  your  audit  of  the  Corporation  for  National  and  

Community  Service’s  (CNCS)  financial  statements,  and  the  financial  statements  of  the  National  Service  Trust.  

This  is  a  consolidated  response  to  both  of  the  reports.  CNCS  does  not  concur  with  all  of  the  conditions  and  

recommendations  contained  in  the  two  reports.

Although  the  report  on  CNCS’s  financial  statements  concludes  that  CNCS  has  four  material  weaknesses,  by  far  

the  most  significant  relates  to  CliftonLarsonAllen’s (CLA’s)  findings  regarding  the  levels  of  unobligated  balances  

in  the  National  Service  Trust.  Throughout  the  course  of  this  audit,  CNCS  has  diligently  worked  with  CLA  to  

ensure  that  the  audit  consider the  unique  nature  of  the  National  Service  Trust,  its  authorities  and  operations.  

Despite  these  efforts,  CLA  has  cited  general  requirements  for  recording  obligations  of  the  National  Service  Trust  

that  conflict  with  specific  statutory  provisions  regarding  the  Trust.  Additionally,  by  applying  incorrect  criteria,  

CLA  reached  incorrect  conclusions  regarding  periodic  adjustments  to  obligations  of  the  National  Service  Trust.  

Those  conclusions  conflict  with  two  GAO  decisions.  Specifically,  CLA’s  continued  expectation  that  CNCS  must  

adjust  obligations  based  on  past  due  (and  never  capable  of  being  claimed)  education  awards  raises  significant  

concern  about  CLA’s  lack  of  understanding  regarding  CNCS’s  statutory  requirements.  If  CNCS  followed  CLA’s  

obligation  adjustment  recommendations,  it  would  actually  increase  the  risk  of insufficient  obligations  within  the  

National  Service  Trust  to  pay  future  education  awards.  

The issue  regarding  the  National  Service  Trust  is  illustrative  of  the  critical  need  for  continued worked with  CLA  

so  they  sufficiently  understand  CNCS,  its  operating  environment  (including  its  governing  laws),  and  its  policies  

and  procedures.  CNCS  has  a  long  history  of  being  able  to  work  with  auditors  to  provide  public  assurance  that  its  

core  financial  operations  are  meeting  their  objectives  and  that  CNCS’s  public  financial  information  is  appropriate  

and  reliable.  It  is  unfortunate,  in  this  case,  that  a  change  in  auditing  firms  has  placed  an  unnecessary  and  

unwarranted  cloud  over  CNCS’s  stewardship  of  federal  funds.  

CNCS  remains  committed  to  improving  its  operations,  financial  management  and  reporting.  CNCS  will  work  

with  CLA  to  appropriately  address  those  findings  that  have  merit.  CNCS  also  maintains  its  strong  commitment  to  

improving  its  Enterprise  Risk  Management  program,  building  on  the  significant  progress  made  in  Fiscal  Year  

2017  within  the  Office  of  the  Chief  Risk  Officer.  The  Office  of  Management  and  Budget  has  also  been  supportive  

of  increased  resources  for  that  office.  

250 E Street, SW

Washington, D.C. 20525

202-606-5000 | 800-942-2677 | TTY 800-833-3722
EXHIBIT D

Status of Prior Year Findings

19 

Our assessment of the current status of the recommendations from the prior year audit is

presented below.

Type of Finding 

Significant Deficiency

FY 2016 Finding 

Internal Controls Program (FMFIA/A-123)

Fiscal Year 2017 

Status 

Potential Repeat

Finding – Status

verification not

completed in 2017

87
CORPORATION FOR NATIONAL 

& COMMUNITY SERVICE

OFFICE OF INSPECTOR GENERAL

AUDIT OF THE CORPORATION FOR 

NATIONAL AND COMMUNITY SERVICE'S 

FISCAL YEAR 2017 

NATIONAL SERVICE TRUST FUND 

FINANCIAL STATEMENTS

OIG Report 18-02

Prepared by:

CliftonLarsonAllen LLP

901 North Glebe Road, Suite 200

Arlington, VA 22203

This report was issued to Corporation management on November 15, 2017. Under the laws and regulations

governing audit follow up, the Corporation is to make final management decisions on the

report’s findings and recommendations no later than May 15, 2018, and complete its corrective

actions by November 15, 2018. Consequently, the reported findings do not necessarily represent the final

resolution of the issues presented.
November 15, 2017

TO: Kim Mansaray

Acting Chief Executive Officer

FROM: Stuart Axenfeld /s/

Assistant Inspector General for Audit

SUBJECT: Audit of the Corporation for National and Community Service’s

Fiscal Year 2017 National Service Trust Fund Financial Statements,

OIG Report 18-02

We contracted with the independent certified public accounting firm of CliftonLarsonAllen LLP

(CLA) to audit the Corporation for National and Community Service’s (CNCS’s) National Service

Trust Fund financial statements (Trust financial statements) as of September 30, 2017 and for

the year then ended. The contract required that the audit be performed in accordance with the

Government Auditing Standards and applicable Office of Management and Budget guidance.

In its audit of the fiscal year 2017 Trust financial statements, CLA found that CNCS was unable

to provide adequate evidential matter to support a significant number of transactions and

account balances due to inadequate processes and controls to support transactions and

estimates, and incomplete records to support accounting for transactions in accordance with

generally accepted accounting principles. CLA has not been able to obtain sufficient

appropriate audit evidence to provide a basis for an audit opinion (disclaimer).

In connection with the contract, we reviewed CLA’s report and related documentation and

inquired of its representatives. Our review, as differentiated from an audit in accordance with

United States generally accepted government auditing standards, was not intended to enable us

to express, and we do not express, an opinion on the Trust financial statements.

CLA is responsible for the attached independent auditors’ report, dated November 8, 2017, and

the conclusions expressed therein. However, our review disclosed no instances where CLA did

not comply, in all material respects, with United States generally accepted government auditing

standards.

Attachment

cc: Jeffrey Page, Chief Operating Officer

Robert McCarty, Chief Financial Officer

Tom Hanley, Chief Information Officer

Lori Giblin, Chief Risk Officer

Mia Leswing, Principal-in-charge, CliftonLarsonAllen LLP

89

250 E Street, SW  Suite 4100  Washington, DC 20525 

202-606-9390  Hotline: 800-452-8210  www.cncsoig.gov 
CliftonLarsonAllen LLP 

901 North Glebe Road, Suite 200 

Arlington, VA 22203 

571-227-9500 | fax 571-227-9552 

CLAconnect.com 

INDEPENDENT AUDITORS’ REPORT

To the Board of Directors and Inspector General of the

Corporation for National and Community Service

Report on the Trust Financial Statements

We were engaged to audit the accompanying financial statements of the Corporation for National

and Community Service (CNCS), National Service Trust Fund (Trust), which comprise the

statements of financial position as of September 30, 2017 and 2016, and the related statements

of operations and changes in net position, the statements of cash flows and the combined

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

statements (referred to herein as Trust financial statements).

Management’s Responsibility for the Trust Financial Statements 

CNCS management is responsible for the preparation and fair presentation of these financial

statements in accordance with accounting principles generally accepted in the United States of

America (U.S.); this includes the design, implementation, and maintenance of internal control

relevant to the preparation and fair presentation of the Trust financial statements that are free

from material misstatement, whether due to fraud or error.

Auditors’ Responsibility 

Our responsibility is to express an opinion on the Trust financial statements based on conducting

the audit in accordance with auditing standards generally accepted in the U.S.; 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. 17-03, Audit Requirements for Federal Financial Statements (OMB Bulletin 17-03). Because

of the matters described in the Basis for Disclaimer of Opinion paragraph; however, we were not

able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion.

Basis for Disclaimer of Opinion 

CNCS was unable to provide adequate evidential matter to support significant transactions and

account balances, as presented in the accompanying Trust financial statements as of and for the

year ended September 30, 2017, due to inadequate processes and controls to support accounting

for transactions and estimates, and incomplete records to support accounting for transactions in

accordance with generally accepted accounting principles. The financial statement line items

impacted by the lack of evidential matter include but are not limited to Service Award Liability and

Unpaid Obligations.

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INDEPENDENT AUDITORS’ REPORT

2 

Disclaimer of Opinion 

Because of the significance of the matters described in the Basis for Disclaimer of Opinion

paragraph, we have not been able to obtain sufficient appropriate audit evidence to provide a

basis for an audit opinion. Accordingly, we do not express an opinion on the Trust financial

statements referred to in the first paragraph.

Other Matters 

Fiscal Year 2016 Trust Financial Statements 

The accompanying Trust financial statements as of September 30, 2016 and for the year then

ended were audited by other auditors whose report thereon dated November 14, 2016, expressed

an unmodified opinion on those Trust financial statements.

Required Supplementary Information 

Accounting principles generally accepted in the U.S. require that the information in the

Management’s Discussion and Analysis (MD&A), and Required Supplementary Information (RSI)

be presented to supplement the financial statements. Such information, although not a part of the

financial statements, is required by the Federal Accounting Standards Advisory Board (FASAB),

which considers it to be an essential part of financial reporting for placing the financial statements

in an appropriate operational, economic, or historical context. We were unable to apply certain

limited procedures to the MD&A and the RSI in accordance with the auditing standards generally

accepted in the United States of America because of the significance of the matters described in

the Basis for Disclaimer of Opinion paragraph. We do not express an opinion or provide any

assurance on the information.

Other Information 

Our engagement was conducted for the purpose of forming an opinion on the Trust financial

statements taken as a whole. The information contained in the section - National Service Trust

Fund Status Report – September 30, 2017 - of the fiscal year 2017 Annual Management Report

is presented for purposes of additional analysis and is not a required part of the Trust financial

statements. Such information has not been subjected to any procedures, and accordingly, we do

not express an opinion or provide any assurance on it.

Report on Internal Control over Financial Reporting and on Compliance Based on an Audit

of Financial Statements Performed in Accordance with Government Auditing Standards

Internal Control over Financial Reporting 

In connection with our engagement to audit the CNCS consolidated financial statements, we have

issued reports, dated November 8, 2017, on our consideration of CNCS’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 Trust financial statements, but

not for the purpose of expressing an opinion on the effectiveness of CNCS’s internal control.

Accordingly, we do not express an opinion on the effectiveness of CNCS’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.

Our consideration of internal control was for the limited purpose described in the preceding

paragraph and was not designed to identify all deficiencies in internal control that might be

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INDEPENDENT AUDITORS’ REPORT

3 

material weaknesses or significant deficiencies; therefore, material weaknesses or significant

deficiencies may exist that have not been identified.

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 financial statements will not be prevented, or

detected and corrected on a timely basis. We consider the deficiencies in the areas below,

described in Exhibit A of the Independent Auditors’ Report for the CNCS consolidated financial

statements, to be material weaknesses.

1. Financial Reporting

2. Trust Fund Unpaid Obligations

3. Trust Service Award Liability Model

CNCS management did not report the material weaknesses noted above in its Fiscal Year 2017 

Statement of Assurance under FMFIA included in the Management’s Discussion and Analysis

section of the accompanying AMR.

A significant deficiency is a deficiency, or 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. We consider the deficiency in the area below, and described in Exhibit B of the

Independent Auditors’ Report for the CNCS consolidated financial statements, to be a significant

deficiency.

4. Information Technology Security Controls

Compliance with Laws, Regulations, Contracts, and Grant Agreements and Other Matters 

In connection with our engagement to audit the CNCS’s consolidated financial statements, 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 engagement, 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 herein under Government Auditing Standards or OMB Bulletin

17-03.

Had the scope of our work been sufficient to enable us to express opinions on the Trust and the

CNCS consolidated financial statements, other material weaknesses or significant deficiencies,

or other instances of noncompliance or other matters may have been identified and reported in

the Independent Auditors’ Report for the CNCS consolidated financial statements dated

November 8, 2017.

Management’s Responsibility for Internal Control and Compliance 

CNCS management is responsible for (1) evaluating the effectiveness of internal control over

financial reporting based on criteria established under the Federal Managers’ Financial Integrity 

Act (FMFIA) and GAO’s Standards for Internal Control in the Federal Government, (2) providing

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INDEPENDENT AUDITORS’ REPORT

4 

a statement of assurance on the overall effectiveness on internal control over financial reporting,

and (3) complying with other applicable laws, regulations, contracts, and grant agreements.

Auditors’ Responsibilities 

We are responsible for (1) obtaining a sufficient understanding of internal control over financial

reporting to plan the audit, and (2) testing compliance with certain provisions of laws, regulations,

contracts, and grant agreements.

We did not test compliance with all laws, regulations, contracts, and grant agreements applicable

to Trust. We limited our tests to certain provisions of laws, regulations, contracts, and grant

agreements noncompliance with which could have a direct effect on the determination of material

financial statement amounts and disclosures. 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. We caution that noncompliance may occur and not be detected by these tests and that

such testing may not be sufficient for other purposes.

CNCS’s Response to Findings 

CNCS’s response to the audit findings in our report is included in Exhibit C of the Independent

Auditors’ Report for the CNCS consolidated financial statements dated November 8, 2017. In its

response, CNCS management concurred with some but not all of the conditions and

recommendations contained in the report. Specifically, CNCS management discussed its nonconcurrence with the material weakness related to the Trust Fund unpaid obligations. CLA stands

by our conclusion in reporting the material weaknesses and significant deficiency. We did not

audit CNCS’s response and, accordingly, we express no opinion on the response.

Status of Prior Year’s Control Deficiencies 

We have reviewed the status of CNCS’s corrective actions with respect to the findings included

in the prior year’s Independent Auditors’ Report, dated November 14, 2016. The status of prior

year findings is included in Exhibit D of the Independent Auditors’ Report for the CNCS

consolidated financial statements dated November 8, 2017.

Purpose of the Report on Internal Control over Financial Reporting and on Compliance 

The purpose of the Report on Internal Control over Financial Reporting and on Compliance 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 CNCS’s internal control or on

compliance. These reports are an integral part of an audit performed in accordance with

Government Auditing Standards in considering CNCS’s internal control and compliance.

Accordingly, these reports are not suitable for any other purpose.

CLIFTONLARSONALLEN LLP

Arlington, Virginia

November 8, 2017

93
National Service Trust Financial Statements

94
Corporation for National and Community Service

National Service Trust Statement of Financial Position 

As of September 30, 2017 and 2016

(Dollars in Thousands)

2017 2016

Unaudited

Assets

Fund Balance with Treasury (Note 2) $ 9,921 $ 4,027

Investments and Related Receivables (Note 3) 866,834 822,652

Accounts Receivable, Net (Note 4) 153 200

Total Assets $ 876,908 $ 826,879

Liabilities

Service Award Liability (Note 5) $ 388,134 $ 396,344

Net Position

Cumulative Results of Operations (Note 6) 488,774 430,535

Total Liabilities and Net Position $ 876,908 $ 826,879

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

95
Corporation for National and Community Service

National Service Trust Statements of Operations and Changes in Net Position 

For the Periods Ended September 30, 2017 and 2016

(Dollars in Thousands)

2017 2016

Unaudited

Revenue

Appropriations Received by the National Service Trust (Note 7) $ 206,842 $ 220,000

Transfer in Program Funds 9,143 21,352

Interest 6,726 3,964

Other Revenue 2,851 3,185

 Total Revenue $ 225,562 $ 248,501

Expenses

Service Award Expense (Note 8) $ 167,249 $ 123,159

Write off/Recovery of Receivables 47 62

Other Expenses 27 -

 Total Expenses 167,323 123,221

Net of Revenue Over Expenses $ 58,239 $ 125,280

Net Position 

Net of Revenue Over Expenses 58,239 125,280

Net Position, Beginning Balance 430,535 305,255

Net Position, Ending Balance (Note 6) $ 488,774 $ 430,535

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

96
Corporation for National and Community Service

National Service Trust Fund Statements of Cash Flows

For the Periods Ended September 30

(Dollars in Thousands)

2017 2016

Unaudited

CASH FLOWS FROM OPERATING ACTIVITIES

Net of Revenue Over Expenses $ 5 8,239 $ 1 25,280

Adjustments Affecting Cash Flow:

 Amortization of Premium/Discount on Investments ( 719) ( 197)

 Appropriations Received in Trust ( 215,985) ( 241,352)

 Decrease/(Increase) in Accounts Receivable 47 61

 Decrease/(Increase) in Interest Receivable ( 769) ( 305)

 Increase/(Decrease) in Trust Liability (8,209) ( 58,546)

 Total Adjustments ( 225,635) ( 300,339)

Net Cash Provided/(Used) by Operating Activities ( 167,396) ( 175,059)

CASH FLOWS FROM INVESTING ACTIVITIES

Sale of Securities 1 ,286,762 1,129,620

Purchase of Securities ( 1,329,457) ( 1,200,306)

Net Cash Provided/(Used) in Investing Activities ( 42,695) ( 70,686)

CASH FLOWS FROM FINANCING ACTIVITIES

Appropriations Received, Net of Trust 2 15,985 241,352

Net Cash Provided by Financing Activities 215,985 2 41,352

Net Increase/(Decrease) in Fund Balance with Treasury 5 ,894 ( 4,393)

Fund Balance with Treasury, Beginning 4 ,027 8 ,420

Fund Balance with Treasury, Ending (Note 2) $ 9 ,921 $ 4 ,027

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

97
Corporation for National and Community Service

National Service Trust Statements of Budgetary Resources

For the Periods Ended September 30, 2017 and 2016

(Dollars in Thousands)

2017 2016

Unaudited

Budgetary Resources

Unobligated, balance brought forward, October 1 $ 198,632 $ 123,532

Appropriation Discretionary (trust funds) 215,985 241,352

Appropriation Mandatory (trust funds) 5,211 3,461

Appropriations (discretionary and mandatory) 221,196 244,813

Spending authority from offsetting collections 2,851 3,185

Total Budgetary Resources $ 422,679 $ 371,530

Status of budgetary resources

New obligations and upward adjustments $ 218,028 $ 172,898

Unobligated balance, end of year

 Apportioned, unexpired accounts (Note 2) 204,198 198,628

 Unapportioned, unexpired accounts (Note 2) 453 4

Total unobligated balance, end of year 204,651 198,632

Total Budgetary Resources $ 422,679 $ 371,530

Change in Obligated Balance

 Unpaid obligations

Unpaid obligations, brought forward, October 1 $ 626,512 $ 635,320

New obligations and upward adjustments 218,028 172,898

Outlays (gross) (175,458) (181,706)

Unpaid Obligations, end of year $ 669,082 $ 626,512

 Memorandum (non-add) entries:

Obligated balance, start of year $ 626,512 $ 635,320

Obligated balance, end of year (Note 2) $ 669,082 $ 626,512

 Budget Authority and Outlays, net

Budgetary authority, gross (discretionary and mandatory) $ 224,047 $ 247,998

Actual offsetting collections (2,851) (3,185)

Budget authority, net (discretionary and mandatory) $ 221,196 $ 244,813

Outlays, gross (discretionary and mandatory) 175,458 181,706

Actual offsetting collections (2,851) (3,185)

Outlays, net (discretionary and mandatory) $ 172,607 $ 178,521

Distributed offsetting receipts (215,985) (241,352)

Agency outlays, net (discretionary and mandatory) $ (43,378) $ (62,831)

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

98
Footnotes for National Service Trust Financial Statements 

99
NOTE 1—Summary of Significant Accounting Policies 

A. REPORTING ENTITY 

The National Service Trust Fund (the Trust) was established by the National and 

Community Service Trust Act of 1993 (The Act), 42 USC 12601, et seq. to provide 

funds for Segal AmeriCorps Education Awards (education awards) to eligible 

participants who complete AmeriCorps service. The activities of the Trust are funded 

primarily through the annual Departments of Labor, Health and Human Services, 

Education and Related Agencies Appropriations Act, which funds National and 

Community Service Act programs. Appropriations are provided on a no-year basis for 

the Trust, a fund within the Corporation for National and Community Service (CNCS) 

used to provide education awards and student loan interest forbearance to eligible 

participants. Trust appropriations do not expire with the passage of time and are 

retained by CNCS in the Trust until used for eligible purposes. 

The Trust provides education awards for AmeriCorps members serving in approved 

national service positions in AmeriCorps State and National (ASN), AmeriCorps NCCC, 

and AmeriCorps VISTA programs. ASN is a grant program where CNCS provides an 

education award and, depending on the grant award, varying amounts of additional 

program costs. ASN programs have up to two years after receiving a grant award to 

enroll members in positions for which the members earn an education award upon 

successful completion of their term of service. One component of the AmeriCorps 

VISTA program is a cost-share program where sponsoring organizations are 

responsible for providing member subsistence and other costs. 

Funds from the Trust may be expended for the purpose of providing an education award 

or student loan interest forbearance payment on behalf of a successful member and 

must always be paid directly to a qualified institution (college, university, or other 

approved educational institution, or a lending institution holding an existing student loan) 

as designated by the participant. 

B. BASIS OF ACCOUNTING 

The Statements of Financial Position; Operations and Changes in Net Position, Cash 

Flows and Budgetary Resources have been prepared in accordance with Generally 

Accepted Accounting Principles (GAAP) as required by the Government Corporation 

Control Act (Act) and Executive Order 13331, National and Community Service 

Programs. 

C. FINANCIAL STATEMENT PRESENTATION 

The accompanying financial statements report the Trust’s financial position, results of 

operations, and cash flows, as required by the Government Corporation Control Act 

(GCCA). As required by GCCA, the principal financial statements of the Trust are the: 

• Statement of Financial Position, which reports the status of Trust assets, liabilities, 

and net position; 

100
• Statement of Operations and Changes in Net Position, which reports the Trust’s

revenues and expenses for the year and the changes in net position that occurred 

during the year; and 

• Statement of Cash Flows, which shows how changes in the Trust’s financial

position and results affected its cash (Fund Balance with Treasury), and breaks the 

analysis down according to operating, investing, and financing activities. 

The financial statements are presented in accordance with the Generally Accepted 

Accounting Principles in the United States of America (GAAP), as applicable to federal 

government corporations. The Federal Accounting Standards Advisory Board (FASAB) 

is the standard setting body for the federal government. Statement of Federal Financial 

Accounting Standards Number 34 (SFFAS 34) provides that financial statements 

prepared by certain government corporations in conformity with the accounting standard 

issued by the Financial Accounting Standards Board (FASB) are regarded as being in 

conformity with GAAP. As provided by SFFAS 34, where there is no standard issued by 

FASB applicable to the federal corporation the financial statements are presented in 

accordance with the accounting standards issued by FASAB. 

In addition, under Executive Order 13331, National and Community Service Programs, 

CNCS must prepare a Combined Statement of Budgetary Resources as a principal 

statement. The accompanying Combined Statements of Budgetary Resources have 

been prepared in accordance with GAAP, as prescribed by FASAB. The Combined 

Statement of Budgetary Resources presents additional details to include activity that is 

significant to the CNCS. 

CNCS’s consolidation policy requires the consolidation of all funds administered by 

CNCS, as delineated in Note 1A – Reporting Entity. 

D. BUDGETS AND BUDGETARY ACCOUNTING 

The activities of the National Service Trust Fund are primarily funded through the 

annual Departments of Labor, Health and Human Services, Education and Related 

Agencies Appropriation Act. CNCS’s accounting structure reflects 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 actual collection or 

payment of cash. Federal budgetary accounting recognizes the obligation of 

appropriations and other funds upon the establishment of a properly documented legal 

liability, which, in many cases, is different from the recording of an accrual-based 

transaction. The recognition of budgetary accounting transactions is essential for 

compliance with legal controls over the use of federal funds. 

E. ASSET AND LIABILITY VALUATION 

CNCS values its investments at carrying value and discloses fair value. As of 

September 30, 2017, the carrying amounts of Fund Balance with Treasury, Accounts 

Receivable, Accrued Interest Receivable, and Liabilities approximate their fair value. 

101
F. FUND BALANCE WITH TREASURY 

CNCS considers Fund Balance with Treasury (FBWT) to represent cash and cash 

equivalents. The Treasury processes cash receipts and disbursements on behalf of 

CNCS and CNCS’s accounting records are reconciled with those of the Treasury on a 

regular basis. The FBWT maintained in the National Service Trust is restricted to 

specific purposes, such as paying service awards earned by eligible participants, and is 

not available for use in the current operations of CNCS. 

G. INVESTMENTS AND RELATED RECEIVABLES 

By law, CNCS may invest the funds of the National Service Trust in interest-bearing 

Treasury securities guaranteed by the United States as to principal and interest. These 

Treasury securities are referred to as “market-based,” since they mirror actual Treasury 

securities sold on the open market. They consist of Treasury notes, bonds, bills and 

one-day certificates. 

Since they are expected to be held-to-maturity, CNCS’s investments are valued at cost 

and adjusted for the amortization of premiums and discounts. The premiums and 

discounts are recognized as adjustments to interest income, using the effective interest 

method. Interest receivable represents amounts earned, but not received on 

investments held at year-end. Prepaid interest is the amount of interest earned on a 

security since the date of its last interest payment, up to the date the security is 

purchased by CNCS. Such interest, if any, is included in the interest receivable balance 

at year-end. 

H. CASH EQUIVALENTS 

For purposes of the statement of cash flows, CNCS considers all interest-bearing 

Treasury securities guaranteed by the United States to be cash equivalents. 

I. ACCOUNTS RECEIVABLE 

Accounts receivable represents amounts due to CNCS primarily related to grantee audit 

resolution determinations. An allowance for doubtful accounts is established for 

reporting purposes based on past experience. 

J. TRUST SERVICE AWARD LIABILITY

The Trust Service Award Liability represents unpaid earned, and expected to be 

earned, education awards and eligible student loan interest forbearance costs expected 

to be used. These amounts relate to participants who have completed service or are 

currently enrolled in a national service program and are expected to earn an education 

award, based on CNCS’s historical experience. 

K. ACCOUNTS PAYABLE 

CNCS records as liabilities all amounts that are likely to be paid as a direct result of a 

transaction or event that has already occurred. Accounts payable represents an 

estimate of amounts due to external entities for goods and services received by CNCS, 

but not paid for at the end of the fiscal year. 

102
L. NET POSITION 

Net Position represents Net Assets and is comprised of cumulative results of 

operations. Cumulative results of operations represent the net differences between 

revenues and expenses from the inception of the Trust Fund. 

M. REVENUE RECOGNITION 

Appropriations received for CNCS’s Trust are recognized as revenue when received in 

the Trust Fund. Trust appropriations do not expire with the passage of time and are 

retained by CNCS in the Trust until used for eligible education service award purposes. 

Transfer in of Program Funds. Transfers in of program funds are recognized as 

revenue when funds are transferred from subtitle C pursuant to 42 USC 1260. 

Interest on Investments. Interest income is recognized when earned. Treasury notes 

and bonds pay interest semi-annually, based on the stated rate of interest. Interest on 

Treasury bills is paid at maturity. Interest income is adjusted by amortization of 

premiums and discounts using the effective interest method. 

Other Revenue. CNCS’s engagements in federal partnerships allow the Trust Fund to 

be reimbursed for Segal AmeriCorps Education Awards earned by members supporting 

activities of the partnership. The revenue from these partnerships is recognized as other 

revenue when earned. 

N. INCOME TAXES 

As a federal entity, CNCS is exempt from all income taxes imposed by any governing 

body, Federal, State, commonwealth, local, or foreign government. 

O. USE OF ESTIMATES 

The preparation of financial statements in accordance with GAAP requires the Trust 

Fund to make estimates and assumptions about future events. These estimates and 

assumptions affect the amounts reported in the Trust Funds’ financial statements and 

accompanying notes. CNCS evaluates its estimates and assumptions on an ongoing 

basis using historical experience, and other factors that it believes to be reasonable 

under the circumstances. Adjustments to estimates and assumptions are made when 

facts and circumstances warrant. As future events and their effects cannot be 

determined with certainty, actual results could differ from the estimates used in 

preparing the accompanying financial statements. See Notes 5 and 11 for more 

information about CNCS’s use of estimates to record obligations in the Trust. 

P. CONCENTRATION OF RISKS 

Congress annually considers whether to fund CNCS’s program and operational 

activities. Should Congress opt not to enact appropriations to fund them, CNCS would 

be unable to continue operations. The President’s Fiscal Year 2018 Budget proposes 

to eliminate CNCS, as part of the Administration's plans to move the Nation towards 

fiscal responsibility and to redefine the proper role of the Federal Government. 

103
NOTE 2 – Fund Balance with Treasury 

U.S. Government cash is accounted for on an overall consolidated basis by the U.S. 

Department of Treasury. The Fund Balance with Treasury line on the Statement of 

Financial Position consists of Trust Funds of $9.9 million (unaudited) in FY 2017 and

$4.0 million in FY 2017 that are considered restricted. 

Trust funds are accounts designated by law for receipts earmarked for specific 

purposes and for the expenditure of these receipts. Funds from the National Service 

Trust may be expended for the purpose of providing an education award or student loan 

interest forbearance payment and are made directly to a qualified institution (college, 

university, or other approved educational institution, or a lending institution holding an 

existing student loan) as designated by the participant. The National Service Trust also 

pays awards under the Summer of Service programs. 

Fund Balance with Treasury as of September 30 

 (dollars in thousands) (unaudited)

 Type 2017 2016 

Obligated Not Yet Disbursed $ 669,082 $ 626,512 

Unobligated Available 204,198 198,628 

Unobligated Unavailable 453 4 

Investment* (863,812) (821,117) 

 Total $ 9,921 $ 4,027 

* Investments include purchases, sales, premiums, and discounts

104
NOTE 3 – Investments and Related Receivables 

 Investments and Related Receivables as of September 30 

 (dollars in thousands) (unaudited)

2017 2016 

 Investments, Carrying Value $ 865,272 $ 821,860 

 Interest Receivable 1,562 792 

 Total $ 866,834 $ 822,652 

Amortized Cost and Fair Value of Investment Securities

as of September 30, 2017 (unaudited)

(dollars in thousands)

Securities Amortized Cost 

Unrealized 

Gains/(Losses) Fair Value 

821,860

Notes $ 677,257 $ (1,403) $ 675,855 

Bills 188,015 (7) 180,009 

Total $ 865,272 $ (1,410) $ 863,864 

Amortized Cost and Fair Value of Investment Securities

as of September 30, 2016

(dollars in thousands)

Securities Amortized Cost 

Unrealized 

Gains/(Losses) Fair Value 

821,860

105

Notes $ 541,519 $ 463 $ 541,982 

Bills 280,341 47 280,388 

Total $821,860 $ 510 $ 822,370 
NOTE 3 – Investments and Related Receivables--Continued

As of September 30, 2017 (unaudited), the notes held at year-end had an interest 

rate range of 0.625% to 0.875% and an outstanding maturity period of approximately 

1 days to 2.5 years. The bills held at year-end had an interest rate of 0.00% and 

were all due to mature within 364 days. The par values of notes range from $.2 

million to $100.5 million. The fair value of the bills and notes is based on bid and ask 

prices quoted by Treasury as of September 30, 2017 and 2016. 

Since FY 2003, CNCS has set aside in reserve a portion of the funds in the National 

Service Trust for use in the event that its estimates used to calculate obligational 

amounts for education awards prove to be too low. This reserve was originally required 

by the Strengthen AmeriCorps Program Act, and is now required by section 149(b) of 

the National and Community Service Act (42 U.S.C. 12606(b)). As of September 30, 

2017 (unaudited), $50.2 million of CNCS’s investment account has been set aside for 

this reserve.

Maturation of Securities Held as of September 30 

(dollars in thousands)

2017 (unaudited) 2016 

Held- toMaturity 

Securities 

Amortized 

Costs Fair Value 

Amortized 

Costs 

 Fair 

Value 

106

Due in 1 year 

or less $ 615,196 $ 615,957 $ 721,874 $ 722,133 

Due after 1 

year up to 5 

years 250,076 248,907 99,986 100,237 

Total $ 865,272 $ 863,864 $ 821,860 $ 822,370 
NOTE 4 –Accounts Receivables, Net 

107

Trust Fund

2017 (unaudited)

 Accounts receivable $ 271

 Less: allowance for doubtful accounts (119) 

 Accounts Receivable, Net $ 153 

2016 

 Accounts receivable $ 305

 Less: allowance for doubtful accounts (105) 

 Accounts Receivable, Net $ 200 
NOTE 5 – Trust Service Award Liability 

Individuals who successfully complete terms of service in AmeriCorps programs earn 

education awards, which can be used to make payments on qualified student loans or 

for educational expenses at qualified educational institutions. The education award 

generally must be used within seven years of completion date of an approved term of 

national service. If the education award is transferred to an eligible individual or is a 

Summer of Service award (which was available to youth enrolled in grades 6 through 9), 

the use period is ten years. These awards, as well as interest forbearance payments on 

qualified student loans during the period members perform their service, are paid from 

the National Service Trust Fund. 

GAAP requires the recording of a liability, which is at a point in time estimate, for the 

unpaid earned and expected-to-be-earned education award and interest forbearance 

costs that are likely to be paid. GAAP estimates are for members who have already 

completed at least 15 percent of the minimum service requirement and who therefore, 

have served enough hours to qualify for at least a partial education awards. Actual 

qualification for awards, however, still depends upon additional contingencies. The 

award liability components related to education awards and interest forbearance have 

been adjusted, based on historical experience, to reflect two such contingencies: (1) 

some members who enroll and reach the initial 15 percent threshold later do not 

actually qualify for an education award, and (2) other members who qualify for 

education awards do not use their education awards. CNCS estimates that up to 86 

percent of members earning an education award will eventually use it. 

Because of unique requirements related to recording of obligations in the National 

Service Trust (see Note 11), the Service Award Liability is not directly related to the 

required levels of obligations in the Trust. Since 2003, CNCS has been required to 

record obligations based on the total amount of national service positions that have the 

potential to result in a legal liability of the Trust, rather than actual legal liabilities. Those 

obligations are recorded in advance of becoming genuine liabilities because the 

contingent events that determine whether an individual in an authorized national service 

position is or is not entitled to payments from the National Service Trust are beyond the 

control of CNCS. The amount reported as the Service Award Liability is a subset of the 

amounts required to be obligated under the National and Community Service Act of 

1993, as amended. That subset is based on the satisfaction of enough of the 

contingencies related to becoming an actual liability to allow CNCS to reasonably 

estimate it’s total liability under GAAP. In this sense, the Service Award Liability is a 

reasonable estimate of what CNCS would have to disburse out of the National Service 

Trust if all current grant operations were to cease as of September 30, 2017, but (1) 

without allowing currently authorized but unfilled national service positions to be filled, 

and (2) without allowing individuals currently serving in national service positions who 

have not yet qualified for education awards to meet the minimum requirements to 

qualify for an award. 

108
The Service Award was composed of the following as of September 30 

Service Award Liability as of September 30 

(dollars in thousands) 

(unaudited)

 2017 2016 

 Education awards 2,948,138 $ 2,948,138 

 Interest forbearance 115,179 112,005 

 Total estimated Service Award Liability 3,063,317 2,870,595 

 Less: cumulative awards paid (2,675,183) (2,474,251) 

Total $ 388,134 $ 396,344 

The Net Service Award Liability as of September 30, 2017 decreased by approximately 

$ 8.21 million (unaudited) from the Net Service Award Liability as of September 30,

2016. 

109
NOTE 6 – Net Position

Net position consists of cumulative results of operations. The cumulative result of 

operations for the Trust Fund was $488.8 million (unaudited) in FY 2017 and $430.5

million in FY 2016, respectively. 

CNCS is required to report information regarding its financial position according to three 

classes of net assets (net position): unrestricted, temporarily restricted and permanently 

restricted. CNCS has no permanently restricted assets. The financial position of the 

Trust Fund in the amounts of $488.8 million (unaudited) in FY 2017 and $430.5 million

in FY 2016 is temporarily restricted.

110
NOTE 7 – Appropriations Received by the National Service Trust 

For FY 2017, the National Service Trust received $206.8 million (unaudited) under the 

Consolidated Appropriations Act, 2017 (Public Law 114-113). For FY 2016, the 

National Service Trust received $220.0 million under the Consolidated Appropriations 

Act, 2016 (Public Law 113-235). The acts also authorized CNCS to transfer additional 

amounts from subtitle C program funds to the National Service Trust to support the 

activities of national service participants. CNCS transferred $9.1 million (unaudited) and 

$21.4 million to the Trust under this provision in FY 2017 and FY 2016, respectively. 

Accordingly, the National Service Trust received a total funding of $215.9 million 

(unaudited) in FY 2017, and $241.4 million in FY 2016, respectively. 

111
NOTE 8 – Expenses 

The National Service Award Expense component consists of CNCS’s estimated

expense for education awards based on the increase in its service award liability during 

the year and interest forbearance costs on qualified student loans during the period 

members perform community service. No indirect costs have been allocated to the 

National Service Award Expense component. 

112

Expenses by Sub-Program for the Period Ended September 30, 2017 

 (dollars in thousands) (unaudited)

 AmeriCorps 

Type State/National NCCC VISTA Total 

Service Award Expense $ 112,559 $ 20,237 $ 34,453 $ 167,249

Total Expenses $ 112,559 $ 20,237 $ 34,453 $ 167,249 

 Expenses by Sub-Program for the Period Ended September 30, 2016 

 (dollars in thousands) 

 AmeriCorps 

Type State/National NCCC VISTA Total 

Service Award Expense $ 82,886 $ 14,902 $25,371 $ 123,159 

Total Expenses $ 82,886 $ 14,902 $ 25,371 $ 123,159 
NOTE 9 – Subsequent Events 

CNCS has evaluated subsequent events through November 8, 2017 which is the date 

these financial statements were available to be issued. As a consequence of its 

evaluation, CNCS has determined that no subsequent events need to be recognized or 

disclosed. 

113
NOTE 10—Undelivered Orders at Fiscal Year-End 

Trust Fund undelivered orders at September 30, 2017 and 2016 were $280.9 million

(unaudited) and $230.2 million, respectively. 

114
NOTE 11 – Trust Obligation Balances 

Section 149 of the National and Community Service Act of 1993, as amended, (NCSA) 

controls the obligations of the National Service Trust by CNCS. Under section 149, 

CNCS is required to record obligations at specific times and in specific amounts. This 

requirement differs from the general practices of obligating federal appropriations in two 

specific respects. First, CNCS must record obligations in the Trust in advance of any 

actual legal liability for the Trust to pay an eligible education award or to pay allowable 

deferred student loan interest. In CNCS’s various AmeriCorps programs, individuals 

enroll in national service positions that are authorized by CNCS. However, the vast 

majority of those individuals are selected, enrolled, supervised by, and perform their 

service for, third-party grantee organizations. Thus, the events and contingencies which 

control whether a national service position authorized by CNCS will result in a legal 

liability of the National Service Trust (Trust) are not within CNCS’s control. In order to 

ensure that there are sufficient obligated balances with the National Service Trust to 

deal with the potential legal liabilities created by authorizing national service positions, 

Congress has required CNCS to record obligations based upon the number of national 

service positions that have been authorized (even though not all of those authorized 

positions will become actual legal liabilities). 

Second, Congress does not require CNCS to record as its obligation the full amount of 

the possible legal liability for education awards or student loan forbearance payment 

that could potentially be paid for each position. Rather, historical trends which show 

that: (1) not all authorized positions are filled; (2) not all positions filled are completed 

resulting in an entitlement to education awards; and, (3) not all individuals entitled to 

education awards redeem those awards; are each taken into account in determining 

CNCS’s obligation. In addition, the structure of CNCS’s AmeriCorps programs, including 

the extended time during which individuals may qualify and claim their education 

awards, means that there are often significant delays from the time that CNCS 

authorizes national service positions until the disbursement of those awards. Both 

because of the historical trends which result in lower actual disbursements from the 

Trust, and the significant delay between CNCS’s authorization of future Trust payments 

and the actual disbursement of those payments, Congress has directed CNCS to record 

its obligations for each national service position based on a net present value basis, as 

specified in section 149(a)(1)(B) of the NCSA. CNCS records the net present value of 

its obligations monthly, based on the numbers of individuals who are enrolled in 

AmeriCorps VISTA and NCCC positions, and the numbers of national service positions 

authorized to be filled by grants awarded in the AmeriCorps State and National 

program. Because the net present value amount used to record the obligations 

assumes historical rates of non-enrollment, non-completion of terms of service, and 

non-redemption of qualified education awards, CNCS records the initial net present 

value obligations in gross, rather than position-by-position. In addition, CNCS adjusts its 

obligation upward as it recognizes interest earned on the Trust’s U.S. Treasury 

investments (as authorized under section 145(b) of the NCSA). By recording its 

115
obligations on the authorized net present value basis, and obligating interest revenue 

when recognized, CNCS ensures that it has sufficient obligated balances to meet the 

Trust’s future needs for disbursements. 

Upon completion of a term of service, section 146A of the NCSA, individuals who 

successfully complete a term of service are certified as eligible to receive a national 

service education award (and associated payment of interest forbearance). Those 

certifications are made by the entity that selected the individual for and supervised the 

individual in the approved national service position. Under section 148(b)(2) of the 

NCSA, eligible individuals (those who have been certified as having successfully 

completed a term of service) may apply for disbursement of their education award. 

After review of an application for disbursement, CNCS pays education awards to 

educational institutions or the holders of qualified student loans. Because of the nature 

of the certification and application for payment processes, CNCS records its 

disbursements from the Trust on a payment-by-payment basis. However, because of 

the distinct bases on which obligations of and disbursements from the Trust are based, 

individual disbursements are not accounted for as liquidations of specific prior 

obligations. Accordingly, the amounts shown as unpaid obligations of the Trust are 

differences between the Trust’s obligations (recorded en gross, as discussed above) 

and the Trust’s disbursements (recorded for each individual authorized payment, as 

discussed above). The unpaid obligation balances do not represent the sum of 

unliquidated individual obligations for each originally authorized national service 

position. 

The unpaid obligated balances include both those amounts that are actual current legal 

liabilities of the Trust (which is reported by CNCS as the Service Trust Liability), and 

those potential future legal liabilities of the Trust which may result from national service 

positions that CNCS has authorized, but which have not yet matured into legal liabilities 

of the Trust. As discussed in Note 5, the Service Trust Liability is a reasonable estimate 

of what CNCS would have to disburse out of the National Service Trust if all current 

grant operations were to cease as of September 30, 2017, but (1) without allowing 

currently authorized but unfilled national service positions to be filled, and (2) without 

allowing individuals currently serving in national service positions who have not yet 

qualified for education awards to meet the minimum requirements to qualify. In contrast, 

the unpaid obligated balance represents a reasonable estimate of what CNCS would 

have to disburse out of the National Service Trust based on (1) the Service Trust 

Liability, (2) all currently authorized national service positions being allowed to be filled 

and (3) the associated terms of service being completed and the education awards 

being claimed - at historical rates. 

116
Management's Response

117
Memorandum

Date:  November  13,  2017

To:  Deborah  Jeffrey,  Inspector  General

From:  Robert  McCarty,  Chief  Financial  Officer

Subject:  Independent  Auditor’s  Report

Thank  you  for  the  opportunity  to  respond  to  the  results  of  your  audit  of  the  Corporation  for  National  and  

Community  Service’s  (CNCS)  financial  statements,  and  the  financial  statements  of  the  National  Service  Trust.  

This  is  a  consolidated  response  to  both  of  the  reports.  CNCS  does  not  concur  with  all  of  the  conditions  and  

recommendations  contained  in  the  two  reports.

Although  the  report  on  CNCS’s  financial  statements  concludes  that  CNCS  has  four  material  weaknesses,  by  far  

the  most  significant  relates  to  CliftonLarsonAllen’s (CLA’s)  findings  regarding  the  levels  of  unobligated  balances  

in  the  National  Service  Trust.  Throughout  the  course  of  this  audit,  CNCS  has  diligently  worked  with  CLA  to  

ensure  that  the  audit  consider the  unique  nature  of  the  National  Service  Trust,  its  authorities  and  operations.  

Despite  these  efforts,  CLA  has  cited  general  requirements  for  recording  obligations  of  the  National  Service  Trust  

that  conflict  with  specific  statutory  provisions  regarding  the  Trust.  Additionally,  by  applying  incorrect  criteria,  

CLA  reached  incorrect  conclusions  regarding  periodic  adjustments  to  obligations  of  the  National  Service  Trust.  

Those  conclusions  conflict  with  two  GAO  decisions.  Specifically,  CLA’s  continued  expectation  that  CNCS  must  

adjust  obligations  based  on  past  due  (and  never  capable  of  being  claimed)  education  awards  raises  significant  

concern  about  CLA’s  lack  of  understanding  regarding  CNCS’s  statutory  requirements.  If  CNCS  followed  CLA’s  

obligation  adjustment  recommendations,  it  would  actually  increase  the  risk  of insufficient  obligations  within  the  

National  Service  Trust  to  pay  future  education  awards.  

The issue  regarding  the  National  Service  Trust  is  illustrative  of  the  critical  need  for  continued worked with  CLA  

so  they  sufficiently  understand  CNCS,  its  operating  environment  (including  its  governing  laws),  and  its  policies  

and  procedures.  CNCS  has  a  long  history  of  being  able  to  work  with  auditors  to  provide  public  assurance  that  its  

core  financial  operations  are  meeting  their  objectives  and  that  CNCS’s  public  financial  information  is  appropriate  

and  reliable.  It  is  unfortunate,  in  this  case,  that  a  change  in  auditing  firms  has  placed  an  unnecessary  and  

unwarranted  cloud  over  CNCS’s  stewardship  of  federal  funds.  

CNCS  remains  committed  to  improving  its  operations,  financial  management  and  reporting.  CNCS  will  work  

with  CLA  to  appropriately  address  those  findings  that  have  merit.  CNCS  also  maintains  its  strong  commitment  to  

improving  its  Enterprise  Risk  Management  program,  building  on  the  significant  progress  made  in  Fiscal  Year  

2017  within  the  Office  of  the  Chief  Risk  Officer.  The  Office  of  Management  and  Budget  has  also  been  supportive  

of  increased  resources  for  that  office.  

250 E Street, SW

Washington, D.C. 20525

202-606-5000 | 800-942-2677 | TTY 800-833-3722
Section III: Other Information

118
Donations and Contributions

Under CNCS’s authorizing legislation, donated funds may be accepted and used in

furtherance of the purposes of the national service laws (42 USC 12651g (a)(2)(A)). The

law allows CNCS to “solicit, accept, hold, administer, use, and dispose of, in furtherance

of the purpose of the national service laws, donations of any money or property, real,

personal, or mixed, tangible or intangible, received by gift, devise, bequest, or

otherwise.” The legislation also requires that CNCS report to Congress on the nature

and amount of donations, as well as on how they were used and disposed of (in the

case of donated property) in support of its programs and activities. This report fulfills

these requirements for FY 2016. CNCS also utilizes Pay.gov, a Treasury program that

allows federal agencies to conduct transactions online. Under the Pay.gov program,

CNCS collects donations by credit card or direct debit from donors. Pay.gov facilitates

the process of collecting gift funds from donors online through a secure website with

real-time identification verification and provides the reporting necessary for processing

transactions.

Status of Gift Fund Balance as of September 30, 2016 

 (dollars in thousands) 

Fund Balance with Treasury (FBWT) $ 554 

Obligation & Commitments (65)

 Funds Available $ 490 

The total FBWT of $ 554 thousand included $196 thousand of current year receipts and

$36 thousand of current year expenses during FY 2017. The donations were from

various sources from the public. The single largest donation was $98 thousand from

Walmart. Below is the summary of the spending activities: 

2%

97%

1%

CNCS projects in support

of USA Freedom Corps

VISTA support

FY 17 Use of Donations and Contributions

119
National Service Trust Fund Status Report 

Part 1: General Discussion 

Part 2: Trust Fund Financial Statements and Footnotes 

120
National Service Trust Fund Status Report 

Part 1: General Discussion 

121
Table 1a

AmeriCorps Member Position Award Activity

Program Year 2017

Awarded Cerified Not Planned Not

Program Enrolled Not Enrolled Awarded Certified Total

State & National 26,530 38,027 4,999 - 69,556 

VISTA 7,050 - 1,236 - 8,286

NCCC 1,192 - 8 - 1,200

Total 34,772 38,027 6,243 0 79,042

CORPORATION FOR NATIONAL AND COMMUNITY SERVICE

National Service Trust Fund Status Report

September 30, 2017

The National Service Trust Fund (the Trust) was established by the National and Community Service 

Trust Act of 1993 (the Act), 42 USC 12601, et seq. to provide funds for Segal AmeriCorps Education 

Awards for eligible participants who complete AmeriCorps service. Funding comes from 

appropriations, interest earned, transfer of program dollars, proceeds from the sale or redemption of 

Trust investments, partnerships with other agencies, and funds collected from disallowed or improperly 

awarded Education Awards. The Trust is also authorized to accept gifts or bequests, Sponsorships, 

and funds from federal partners. Under the Act, funds are available to repay qualified student loans, 

pay educational expenses at qualified educational institutions, and repay eligible interest expense on 

student loans.

The value of an education award depends on the term of service performed by an AmeriCorps 

member. For Program Year 2017, completion of a full-time term of service, requiring a minimum of 

1,700 hours of service, entitles an AmeriCorps member to an education award of $5,815. Completion 

of a part-time term, requiring a minimum of 900 hours of service, entitles an AmeriCorps member to an 

education award of $2,907. Reduced part-time terms, which provide awards of $500 to $2,215, are 

also offered. The education award is indexed to the maximum federal Pell grant; therefore these 

amounts may change each year. 

Education awards earned by AmeriCorps members are generally available to be used for seven years 

from the completion of the service. Payments are made directly to the educational institutions and the 

loan holders as directed by the members and by the institutions. Trust funds are not used to pay 

member stipends or other grant costs. Beginning in Program Year 2010, AmeriCorps State and 

National and Silver Scholar members who are age 55 or older when they begin service may also 

transfer the education award to a qualified child, grandchild, or foster child.

Table 1a shows the planned activity for the current Program Year and actual enrollments to date 

against the plan. Table 1b includes similar data on the prior Program Year for comparative purposes. 

Member positions (slots) classified as “Certified Not Awarded” have been approved by CNCS’s Chief 

Executive Officer (CEO) for award to grantees, but for which the final grant award has not been 

executed. For budgetary purposes these positions are considered commitments in the Trust Fund. 

Positions classified as Planned not Certified have not yet been approved by the CEO.

122
Table 1b

AmeriCorps Member Position Award Activity

Program Year 2016

Awarded Certified Not Planned Not

Program Enrolled Not Enrolled Awarded Certified Total

State & National 60,789 4,715 3,541 - 69,045

VISTA 7,054 - - - 7,054

NCCC 1,240 - - - 1,240

Total 69,083 4,715 3,541 - 77,339

The 79,042 Trust positions planned for Program Year 2017 do not include an estimated 1,500 

AmeriCorps VISTA members (1300 full time and 200 Summer Associates) who elected an end-ofservice stipend instead of an education award. Total estimated member positions for Program Year 

2017, including VISTA members electing a stipend, is 9,786. Member enrollment and slot data are 

periodically adjusted to reflect corrections and slot reconfigurations by grantees; therefore they may 

change slightly from month to month.

The 77,339 Trust positions for Program Year 2016 do not include an estimated 1,650 AmeriCorps 

VISTA members (1,329 full time and 321 Summer Associates) who elected an end-of-service stipend 

instead of an education award. Total estimated member positions for Program Year 2016, including 

VISTA members electing a stipend, is 8,704. Of the 7,054 VISTA member positions in the Trust for 

2016, 1,835 positions are for Summer Associates who receive a Trust award of $1,175.

Trust Awards

Since CNCS's inception in 1993, AmeriCorps members have earned over $3.54 billion in Segal 

AmeriCorps Education Awards and used over $2.54 billion of that amount to fund their education and 

repay student loans. In addition, CNCS has made $14.31 million in interest forbearance payments. 

Approximately $404.83 million in education awards earned have expired without being used. The 

Trust obligation formula has been adjusted to reflect these expired awards.

123
Refilled Positions

CNCS policy allows grantees limited flexibility to refill positions vacated by a member who has served 

less than 30 percent of his or her service term, provided that the departing member had not earned a 

pro-rated education award. To prevent over-enrollment, the policy includes “fail safe” triggers that 

restrict the overall number of refills to no more than 5 percent of awarded positions and suspends 

refilling altogether if total AmeriCorps enrollment reaches 97 percent of awarded positions. Table 3 

provides information on the number of positions refilled. Positions in Program Years 2010 and earlier 

can no longer be refilled.

Table 3

Number of Refilled Positions

Program Years

Fail-safe 2012 2013 2014 2015 2016 2017 Trigger

Number of Refilled Positions 1,381 1,200 1,131 1,158 25 0 N/A

Refills as a Percent of Awarded 2.05% 1.88% 1.81% 1.87% 0.04% 0.00% 5% State & National Positions

State & National Enrollment as a 98.8% 98.5% 99.3% 98.1% 92.8% 92.8% 97% Percentage of Awarded Positions

Table 4

Factors Affecting the National Service Trust Fund

Program Year

2013 2014 2015 2016 2017

Member enrollments in the Trust 71,144 70,653 68,963 69,667 35,289

Percent of members who earned an education award 83.85% 83.47% 83.33% 83.02% 72.12%

Percent of earned education awards used 68.75% 60.63% 47.61% 25.05% 16.92%

Breakout of enrollment by term type:

 Full-time 52% 54% 54% 51% 77%

 Part-time 12% 12% 13% 13% 7%

 Reduced Part-time 36% 34% 33% 36% 15%

Table 4 shows the most significant factors used to calculate Trust obligations on a historical basis. It is 

important to note that Program Year refers to positions awarded with a particular fiscal year’s grant 

funds. Positions are often filled in time periods after the year in which they are awarded. For example, 

a grantee may receive a grant in fiscal year 2016 but not fill all positions until fiscal 2017. All positions 

related to this grant would be considered Program Year 2016 positions, irrespective of the fiscal year in 

which they are filled.

124
The Program Year data used throughout these tables reflect all enrollments recorded through the 

reporting period. Prior year enrollment numbers may change slightly from time to time due to 

corrections or late reporting by grantees. The percentage of members who earned an award in Table 

4 is calculated by taking the number of members who earned an award divided by the total number of 

members who have ended service. For example, for 2016 :

Enrolled: 69,083

Still Earning: 4,715

Completed: 64,368 (Enrolled less Still Earning)

Awards Earned: 57,116

% Earned: 88.73% (Awards Earned divided by Completed)

Tables 5 and 6 present information on the budgetary resources and obligations of the Trust, including 

the Trust Reserve. The schedules present information on a budgetary basis, which represents the 

accounting used to determine compliance with the Anti-Deficiency Act. CNCS records Trust 

obligations at the time it awards AmeriCorps State & National grants or at the time it enters into an 

enforceable agreement with AmeriCorps VISTA and NCCC members.

The amounts obligated in the Trust are based on the estimated value of the education benefit 

discounted for the estimated enrollment, earning and usage rate and the time value of money. For 

fiscal 2017 , these factors are the full value of the Segal AmeriCorps Education Award, a 100 percent 

enrollment rate (which allows for refills), an average earning rate of 84 percent (which ranges from 77 

to 86 percent depending on term type), and an average usage rate of 87 percent. Under the National 

and Community Service Act, as amended, awards earned by members over age 55 can be transferred 

to an eligible beneficiary.For budgetary purposes we project that all transferable awards will eventually 

be used. Obligations are periodically adjusted to reflect current earning and usage projections."

FEMA Corps is a unit of AmeriCorps' National Civilian Community Corps (NCCC) whose members are 

devoted solely to FEMA disaster response, and recovery efforts. The five-year agreement provides for 

a service corps which compliments and supports FEMA's current disaster workforce. While FEMA 

provides funding for the Education Awards for the FEMA Corps members, they are shown in tables 5 

and 6 as part of our budgetary and obligation activity.

125
Table 5

Corporation for National and Community Service

National Service Trust

Schedule of Budgetary Activity for the Period Ended September 30, 2017

(Dollars in Thousands)

Recovery Act Other FEMA Corps General Fund Consolidated

Funds Available at October 1 1,882 4 506 146,043 1 48,435

Budgetary Resources

Fiscal Year Appropriation 46 - 55 221,095 221,196

Other Collections - Federal - - 2 ,641 2 ,641

Apportioned-Subsequent (Reserve) 3 ,500 - - 46,697 5 0,197

Collection of Audit Receivables - - - 211 211

Total Budgetary Resources 5 ,428 4 3 ,202 414,046 4 22,680

Obligations

Education Awards (44) - (2,493) (206,089) (208,626)

Interest Forbearance (2) - (104) (9,296) (9 ,402)

Total Obligations (46) - (2,597) (215,385) (2 18,028)

Apportioned-Subsequent (Reserve) (3,500) - - (46,697) (5 0,197)

Unapportioned - - - (453) (4 53)

Funds Available for Obligation $ 1 ,882 $ 4 $ 605 $ 151,511 $ 1 54,002

Table 6

Corporation for National and Community Service

National Service Trust

Schedule of Trust Obligations as of September 30, 2017

(Dollars in Thousands)

Resources Recovery Act Other FEMA Corps General Fund Consolidated

Fund Balance with Treasury 80 56 140 9,646 9 ,922

Investments, Net 8 ,560 - 1 1,287 845,425 8 65,272

Interest Receivable 4 - 1 1,557 1 ,562

Accounts Receivable - - - 152 152

Subtotal 8 ,644 56 1 1,428 856,780 8 76,908

Less:

Cumulative Trust Reserve (3,500) - - (46,697) (50,197)

Receivables Not Available for Obligation (21) - (28) (3,126) (3,175)

Unapportioned - - - (453) (453)

Total Resources 5 ,123 56 1 1,400 806,504 8 23,083

Unliquidated Obligations

Education Awards (3,141) (50) (10,770) (639,373) (653,334)

Interest Forbearance (100) (2) (25) (15,620) (15,747)

Total Unliquidated Obligations (3,241) (52) (10,795) (654,993) (669,081)

Funds Available for Obligation $ 1 ,882 $ 4 $ 605 $ 151,511 $ 1 54,002

126
Enrollment Activity

Table 7 presents cumulative data to date on Trust enrollments, education awards earned and used for 

Program Years 1994 through 2017 as well as Recovery Act positions.

Table 7

Trust Enrollment Activity – Program Years 1994 through September 30, 2017

Members 

Earning or Not 

Exited

Members 

Enrolled

Earned an 

Award Program Year Type Did Not Earn Amount Earned Amount Used

1994 Full Time 374,937 2 297,527 77,408 1,371,049,800 1,105,469,660

through Part-time 155,672 1 103,155 52,516 235,230,824 168,344,207

2008 Reduced Part-time 200,931 1 157,846 43,084 175,482,734 134,228,183

 Total 731,540 4 558,528 173,008 1,781,763,358 1,408,042,050

2009 Full Time 31,039 3 27,326 3,710 127,710,848 107,218,152

2009 Part-time 9,877 0 7,590 2,287 17,636,065 12,950,476

2009 Reduced Part-time 28,868 2 23,306 5,560 26,491,125 19,965,254

 Total 69,784 5 58,222 11,557 171,838,039 140,133,882

Rec_Act Full Time 7,908 0 6,654 1,254 31,022,831 25,100,827

Rec_Act Part-time 1,662 0 1,221 441 2,818,344 1,927,434

Rec_Act Reduced Part-time 4,297 0 3,592 705 4,186,393 3,037,375

 Total 13,867 0 11,467 2,400 38,027,568 30,065,636

2010 Full Time 37,719 5 33,284 4,430 175,553,359 143,185,665

2010 Part-time 11,428 4 8,782 2,642 22,955,807 15,830,211

2010 Reduced Part-time 39,214 4 31,762 7,448 38,794,858 27,735,441

 Total 88,361 13 73,828 14,520 237,304,024 186,751,317

2011 Full Time 35,764 2 31,465 4,297 170,191,819 133,229,674

2011 Part-time 10,351 2 8,377 1,972 22,515,239 14,504,055

2011 Reduced Part-time 33,085 2 27,116 5,967 35,393,399 25,053,026

 Total 79,200 6 66,958 12,236 228,100,456 172,786,755

2012 Full Time 36,273 4 31,895 4,374 171,050,902 129,150,369

2012 Part-time 9,576 2 7,770 1,804 21,023,448 13,028,156

2012 Reduced Part-time 29,147 7 23,842 5,298 31,585,610 21,440,237

 Total 74,996 13 63,507 11,476 223,659,960 163,618,763

2013 Full Time 37,045 13 32,234 4,798 173,353,710 122,915,698

2013 Part-time 8,782 0 6,888 1,894 18,664,779 10,389,856

2013 Reduced Part-time 25,317 2 20,520 4,795 27,600,677 17,686,276

 Total 71,144 15 59,642 11,487 219,619,166 150,991,830

2014 Full Time 37,966 33 32,770 5,163 179,071,497 112,009,625

2014 Part-time 8,661 4 6,744 1,913 18,549,519 8,693,737

2014 Reduced Part-time 24,026 62 19,376 4,588 26,440,315 15,134,052

 Total 70,653 99 58,890 11,664 224,061,331 135,837,414

2015 Full Time 37,196 131 31,530 5,535 174,424,291 85,215,117

2015 Part-time 9,155 32 7,113 2,010 19,783,043 7,058,186

2015 Reduced Part-time 22,612 261 18,473 3,878 25,618,418 12,388,412

 Total 68,963 424 57,116 11,423 219,825,751 104,661,715

2016 Full Time 35,452 2,946 27,083 5,423 150,942,522 38,709,539

2016 Part-time 9,395 2,282 5,290 1,823 14,741,377 2,515,618

2016 Reduced Part-time 24,241 4,496 16,843 2,902 23,005,733 6,077,821

2016 Affiliate 579 0 548 31 178,100 14,404

 Total 69,667 9,724 49,764 10,179 188,867,732 47,317,381

2017 Full Time 27,200 25,594 626 980 3,431,507 475,013

2017 Part-time 2,644 2,612 0 32 0 0

2017 Reduced Part-time 5,050 2,941 1,997 112 2,461,393 540,110

2017 Affiliate 395 38 337 20 110,283 655

 Total 35,289 31,185 2,960 1,144 6,003,184 1,015,777

Cumulative to Date 1,373,464 41,488 1,060,882 271,094 3,539,070,568 2,541,222,520

127
National Service Trust Fund Status Report 

Part 2: Financial Statements and Footnotes 

National Service Trust Statement of Financial Position 

National Service Trust Statement of Operations and Changes in Net Position 

National Service Trust Statement of Cash Flow 

National Service Trust Statement of Budgetary Resources 

Footnotes 

* Please also see the “Independent Auditor's Report on the National Service Trust Fund Financial

Statements” (OIG Report 18-02) in Section II Part 3 “Independent Auditor’s Report”

128
End of Trust Status Report 

129
Civil Monetary Penalty Adjustment for Inflation 

Statutory Authority Penalty Year 

Enacted 

Latest Year 

of 

adjustment 

Current Penalty

Level 

SubAgency/Bureau 

Unit 

Location of Penalty 

Update Details 

Pub. L. 101-121, 

Sec. 319, (31 

U.S.C. 1352); Pub. 

L. 93-113; 42 

U.S.C. 4951, et 

seq.; 42 U.S.C. 

5060

The penalty 

associated 

with 

Restrictions 

on Lobbying 

(45 CFR 

1230.400) 

1990 2017 The current 

range of civil 

monetary 

penalties related 

to Restrictions 

on Lobbying is 

from $19,246 to 

$192,459. 

Corporation for 

National and 

Community 

Service 

82 Fed. Reg. 1606 

(Jan. 6, 2017) 

Pub. L. 99-509, 

Secs. 6101-6104, 

100 Stat. 1874 (31 

U.S.C. 3801-3812); 

42 U.S.C. 12651c12651d 

The penalty 

associated 

with the 

Program 

Fraud Civil 

Remedies 

Act (45 CFR 

2554.1) 

2006 2017 The upper limit 

for civil 

monetary 

penalties for the 

Program Fraud 

Civil Remedies 

Act of 1986 is 

$10,781 

Corporation for 

National and 

Community 

Service 

82 Fed. Reg. 1606 

(Jan. 6, 2017) 

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Improper Payments 

Background 

The Improper Payments Information Act of 2002 (IPIA), as amended by the 

Improper Payments Elimination and Recovery Act of 2010 (IPERA), and the 

Improper Payments Elimination and Recovery Improvement Act of 2012 

(IPERIA), requires agencies to report information on improper payments (IP) to 

the President and Congress through agency financial reports. 

Risk Assessment 

Under IPERA, all agencies must assess the IP risk level for each program that is 

not already reporting an IP estimate at least once every three years. CNCS 

performed its risk assessments for its programs and activities not reporting IP 

estimates in FY 2015, and these programs and activities will undergo a new risk 

assessment in FY 2018. The results of the risk assessments will be provided in 

CNCS’s FY 2018 Annual Management Report (AMR).

CNCS currently has four grant programs that are susceptible to significant 

improper payments including: AmeriCorps State and National (AmeriCorps), the 

Foster Grandparent Program (FGP), the Retired and Senior Volunteer Program 

(RSVP), and the Senior Companion Program (SCP). The information on payment 

integrity found in this report is high level. More detailed information on CNCS’s 

and government-wide improper payments for FY 2017 and prior years can be 

found at https://paymentaccuracy.gov/. 

Improper Payment Information 

Improper Payment Testing Results 

Program 

Name 

FY 

2017 

Outlays 

($M) 

FY 2017 

IP 

Amount 

($M) 

FY 

2017 IP 

Rate 

FY 2017 

Overpayments 

($M) 

FY 2017 

Proper 

Payments 

Amount 

($M) 

FY 2017 

Proper 

Payments 

Percentage 

AmeriCorps $247.19 $26.78 10.8% $26.78 $220.41 89.2% 

FGP $82.48 $14.07 17.1% $14.07 $68.4 82.9% 

RSVP $41.05 $3.02 7.4% $3.02 $38.03 92.6% 

SCP $33.81 $5.68 16.8% $5.68 $28.13 83.2% 

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Source of Improper Payments 

Program IP Made Directly by 

CNCS ($M) 

IP made by recipients of federal money 

($M) 

AmeriCorps $0 $26.78 

FGP $0 $14.07 

RSVP $0 $3.02 

SCP $0 $5.68 

Root Cause Information

A majority of CNCS’s improper payments fall into the category “Insufficient 

Documentation to Determine,” which occurs when there is insufficient supporting 

documentation necessary to verify the accuracy of the payment. The payments in 

this section include those that have missing or inadequate administrative 

documents, such as timesheets, age eligibility forms, etc. This category also 

contains cases where grantees did not perform all of the required National 

Service Criminal History Check (NSCHC) components on national service 

participants prior to the date of the tested transaction or did not provide all 

supporting documentation for the required NSCHC components. The payments 

that fall into “Program Design or Structural Issues” are payments that were made 

to national service participants whose NSCHCs were properly initiated prior to 

start of service, but the date of the transaction occurred before results had been 

received. 

Program Program Design or Structural 

Issues ($M) 

Insufficient Documentation to 

Determine ($M) 

AmeriCorps $0.35 $26.43 

FGP $0 $14.07 

RSVP $0.23 $2.78 

SCP $0 $5.68 

Corrective Action Plans

Program Design or Structural Issues

The payments included in this category represent files that have criminal history 

checks that were properly initiated prior to start of service, but results were 

pending at the time of payment, so eligibility cannot be definitively established. 

Even though the NSCHC was conducted correctly, the missing paperwork 

needed to determine eligibility at time of payment requires CNCS to deem these 

payments improper. National service participants are allowed to begin service 

while checks are pending if they are accompanied by a cleared individual during 

that time period. This is allowable in order to ensure the waiting period for checks 

does not hinder CNCS’s mission and national service as a whole. 

If the checks show the individual is eligible, CNCS would consider the file 

compliant and no financial loss to the government would result. All funds 

associated with the individual would be recovered if the individual was ineligible. 

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Given this is allowable by both CNCS policy and regulation, CNCS does not have 

a corrective action for the payments that fall into this category. However, the 

corrective actions in the next section could potentially affect these payments. 

Insufficient Documentation to Determine 

National Service Criminal History Check Related Findings 

The majority of the IP payments in this category are related to non-compliant 

NSCHC. By law, NSCHCs are required for all national service participants and 

staff in covered positions. A national service participant is required to have a 

National Public Sex Offender Website (NSOPW) check, a state check, and/or an 

FBI fingerprint based check. If any part of the required check is not completed or 

is completed incorrectly by the time the payment is made, it is considered 

improper. Typically most improper payment files have completed some portion of 

the required checks, but not all. In the past, CNCS has focused on more training 

and technical assistance to combat the non-compliance identified in grantee 

NSCHC files. CNCS is now considering additional measures as outlined below.

Actions Taken in FY 2017:

 CNCS finalized the National Service Criminal History Check Enforcement

Guide, which provides guidance to grant recipients and CNCS staff on

when and how to establish debts for grant recipient non-compliance with

NSCHC requirements (including sub-grant recipients).

 CNCS issued a new State-by-State guide to better assist grantees’ in

understanding their state’s criminal history check requirement. This

includes information on how to obtain name-based and fingerprint-based

state checks, whether the state repository submits fingerprint checks to

the FBI, and information on approved alternative state check sources in

states where they are available.

 CNCS hired additional staff in the Office of the Chief Risk Officer to

address NSCHC issues.

 CNCS updated its NSCHC trainings and has given 31 trainings since

March 2017 and trained more than 1,200 CNCS grant recipients and

CNCS staff.

Planned Corrective Actions:

 CNCS is contracting with a vendor to perform the National Sex Offender

Public Website (NSOPW) check and state of residence and state of

services checks for grantees.

 CNCS is reviewing its regulation to determine whether changes could

streamline the implementation and documentation process for grantees.

 CNCS is considering increasing the disallowance costs associated with

non-compliant NSCHC files. This will be completed in FY 2018.

 CNCS will continue to regularly offer trainings to grantee staff.

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Non-Criminal History Check Related Findings 

CNCS continues to see a minimal amount of non-criminal history check related 

findings during its IP testing. These findings, on average, are seen in 

approximately 5% of files. These types of findings typically stem from either noncompliant documentation or CNCS not receiving the correct documentation to 

determine the completeness of the file. 

Actions Taken in FY 2017: 

 CNCS offered grantees bi-weekly calls to have any questions addressed

during the improper payments data collection process.

 CNCS added two staff resources in the Office of the Chief Risk Officer to

the IP testing efforts.

 CNCS added language in all grant awards that grantees are required to

respond to IPERIA requests – this language was added in FY 2016 and

will remain.

 CNCS set up a separate email box for grantees to ask any IPERIA related

questions. Staff increased communication with grantees to ensure proper

follow up for requested documentation and established specific due dates

and clear deadlines for submission.

 CNCS offered at least 13 different training opportunities (both webinars

and in-person trainings at regional conferences) to continue to educate

grantees on the importance of IPERIA compliance and related

requirements.

Planned Corrective Actions:

 As part of its commitment to continuous improvement, CNCS will again

review and revise all IP testing communications to ensure information is

conveyed in a clear, concise manner. This will be completed by the end of

the first quarter of FY 2018.

 CNCS is augmenting the FY 2018 IPERIA planning process with contract

support to ensure all IP testing is completed timely to allow additional time

for follow up and resolution.

 CNCS plans to create an outward facing internet page related to IPERIA

efforts that will include best practices for record maintenance, reference

documentation and checklists for how to support transactions, and training

materials. This will be completed prior to the end of FY 2019.

 CNCS will continue to offer regular trainings to grantees and host calls for

immediate responses to any questions grantees may have.

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 Reduction Target Information 

Program FY 2018 Est. 

Outlays ($M) 

FY 2018 Est. IP 

Rate (%) 

FY 2018 Est. IP $ 

($M) 

AmeriCorps $247.19 10.3% $25.46 

FGP $82.48 16.6% $13.69 

RSVP $33.81 6.9% $2.83 

SCP $41.05 16.2% $ 5.48 

Recapture of Improper Payments 

OMB A-123, Appendix C requires agencies to conduct payment recapture audits 

for each program and activity that expends over $1M annually, if cost effective. 

CNCS will perform cost effectiveness analysis for all programs and activities in 

FY 2018.

Barriers 

As reported in prior years, CNCS continues to face one significant barrier to 

reducing its improper payments. CNCS’s NSCHC law requires multiple 

components for a compliant check that are only available from selected sources. 

CNCS is currently working on a strategy to remediate this issue by continuing to 

make training available, implementing consistent enforcement of noncompliance, 

and identifying opportunities to streamline the process. Please see the corrective 

action plan section for more information. 

Accountability 

CNCS continues its commitment to reduce IP rates. In the past year, CNCS 

designated its Chief Risk Officer as the agency’s accountable official over its IP 

program. The Chief Risk Officer has begun presenting the results of IP testing to 

the agency’s risk governance bodies comprising the Risk Management Council 

(which includes all senior leadership) and the Risk Assessment Committee, 

(which includes program directors). Beginning in FY 2018, the Chief Risk Officer 

will issue a findings report for improper payments in the programs where 

improper payments were identified and require a follow up corrective action plan 

(CAP). The agency will recapture any applicable funds and report results as part 

of CAP resolution. The findings report will be completed and issued prior to the 

end of the first quarter of FY 2018. The Office of the Chief Risk Officer will 

assess the effectiveness of this strategy for the reduction of IP during the FY 

2018 IP testing cycle and will make adjustments as necessary. 

Agency Information Systems and Other Infrastructure 

CNCS is required to address whether it has the necessary internal control 

systems, human capital, and information systems it needs to reduce IP levels to 

the reduction targets it sets. CNCS continues to have an on-going assessment of 

the systems needed to reduce its improper payment rates. If CNCS determines 

additional funding for agency infrastructure is needed in order to reduce IP, it will 

be reflected in CNCS’s budget submissions to Congress.

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Internal Control 

The four programs CNCS deemed susceptible to significant improper payments 

are outward facing grant programs. CNCS does not have direct control over the 

individual payments made or the internal control systems needed to prevent IP 

on the grantee level. CNCS continues to work toward improving the detection of 

improper payments and strengthening grantee’s internal control systems to 

ensure they’re in place to reduce CNCS’s IP rates. Actions that are ongoing 

include: 

 Improving CNCS’s annual grantee risk assessment to ensure risks

associated with the grant are identified and addressed timely

 Continuing financial and programmatic training for both CNCS staff and

grantee staff

 Conducting monitoring and site visits which serve as training and technical

assistance opportunities for grantees.

Human Capital 

In the past, CNCS struggled to complete its IP testing due to insufficient human 

capital. However, in FY 2017 CNCS added two additional staff to ensure testing 

levels are achieved as planned. The additional staff also assisted in assuring 

reduction targets are met by more aggressive follow up with grantees to ensure 

all available, relevant documentation is collected and no proper payments are 

erroneously reported as improper due to failure to collect all information.

Information Systems 

CNCS is currently undergoing an IT Modernization effort that will provide a more 

comprehensive workflow and serve as a system of record for all pre and post 

award information. This will allow the agency more visibility on the challenges 

facing the grant portfolio, which could, in turn, assist in understanding how to 

better address root causes of improper payments made at the grantee level.

Sampling and Estimation 

CNCS uses the same sampling methodology for all four susceptible grant 

programs. CNCS’s grantees report the amount of their payments charged to 

grant funds every six months (with period ending dates of either March 31 and 

September 30 or June 30 and December 31) by completing Federal Financial 

Report (FFR) information in CNCS’s online grants management system. 

However, due to the timing of the FFR submissions by grantees, the improper 

payment estimates produced by this approach will not be based on payments 

made within any given federal fiscal year. Instead, CNCS must utilize data 

reported during the second half of the previous fiscal year and the first half of 

each current fiscal year in order to provide a complete improper payment 

estimate. 

In FY 2017 CNCS engaged KPMG who estimated the required sample sizes for 

four of the grantee programs assuming a precision target of 12.0 percent at the 

two-sided confidence level of 90.0 percent. CNCS’s plan to use this precision level 

136
was approved by OMB. At the request of the CNCS management, we selected 

80.0 percent of the samples from the first half-year population data that is available 

as of February 2017. For FY 2017, a higher portion of samples were selected from 

the first half-year population in consideration of the significant time and levels of 

effort required for CNCS personnel to request and obtain sporting documentations 

from the selected grantees through multiple stages. 

Program N 

(Universe)8

Total FFR 

Amount9 Sample Size (+/-12.0% Precision) 

AmeriCorps 378 $223,313,909.44 63

FGP 544 $86,906,934.70 83

RSVP 1,132 $43,510,245.86 54

SCP 298 $32,952,464.54 72

Total 2,352 $386,683,554.54 272

For the FY 2017 improper payments assessment, KPMG adopted a multi-stage 

sampling method for each grantee program that CNCS management determined 

to be susceptible to significant improper payments. In the first stage, KPMG 

selected a random sample of FFRs from each program. In particular, KPMG 

selected the first stage sample using a probability proportional to size (PPS) 

sampling methodology, specifically PPS with replacement. For each selected 

FFR, CNCS requested the grantee to provide general ledger entries (GLs) or 

other accounting system records which support the information submitted on the 

FFR. CNCS then selected a second stage sample of GL entries using a simple 

random sampling method. If the randomly selected GL entry was a payment to 

an individual or a vendor (excluding a vendor acting as a payment agent or 

service provider making payments on the behalf of the grantee), then no further 

sampling was required and this payment was evaluated. If the GL entry was an 

aggregate of multiple payments, then CNCS requested the supporting data for 

that entry and performed additional simple random sampling on the supporting 

data until an assessable payment was identified. 

The PPS estimator will be used to extrapolate the 1st stage Non-Response Errors 

and Unmatched Reporting Errors (if all Unmatched Reporting Errors only occur at 

the 1st stage). The PPS estimate of the total error amount is as follows: 

For Unmatched Reporting Errors (if there are Unmatched Reporting Errors 

discovered in the 2nd or later stages) and Improper Payments (including Improper 

Payment due to non-responses in the 2nd and later stages), as there are multiple 

stages involved, the Unmatched Reporting Errors and Improper Payment will first 

be extrapolated to all transactions within each sampled FFR using ratio estimators. 

8

 The population sizes for FY 2017 are estimated by multiplying the population sizes based 

on the first 6-month data by 2. In addition, grantees in the FY 2017 universe with zero 

fund outlay are excluded from the population. 

9

 The total FFR amounts for FY 2017 are estimated by multiplying the total FFR amount 

based on the first 6-month data by 2. 

137
Then the projected errors in the sampled FFR will be extrapolated to all FFRs in 

the first stage population using the PPS estimator. KPMG will perform these 

extrapolations for each program separately. 

In order to determine the point estimate, the lower and upper bounds, and relative 

precision of the Improper Payment for each program, KPMG will first extrapolate 

the Unmatched Reporting Errors to determine the corrected population total10 for 

each program. Then the corrected population total will be used for the Improper 

Payment projections as it will reflect the total program outlay that is corrected for 

Unmatched Reporting Errors, which presumably are related to the grantees' ability 

to properly aggregate and report costs to CNCS, rather than the grantees’ ability 

or inability to properly make or allocate payments as charges to federal grant 

funds. 

Fraud Reduction Report 

On June 30, 2016 the President signed into law the Fraud Reduction and Data 

Analytics Act of 2015 (Public Law No.114-186). This legislation emphasizes the 

importance for federal agencies to identify, assess, and address fraud risks. 

Since the enactment of the law, CNCS has reinforced its anti-fraud efforts 

through the following activities. 

Implementation of an Agency-wide Mandatory Fraud Awareness Training 

(FY2016 Q4) 

The office of the General Counsel (OGC) has expanded its annual ethics training 

to include Fraud awareness. The new training was based on a curriculum jointly 

developed with the office of the inspector general (OIG) Investigations Unit. Prior 

to FY2016 Q4, the ethics training was required only for public and confidential 

filers. However, in Q4 of FY2016 the Office of the Chief Risk Officer (OCRO), as 

a result of its assessment of CNCS’s entity level control, recommended that this 

training be made mandatory for all CNCS personnel and be combined with the 

fraud awareness training that was previously reserved to OIG personnel. This 

recommendation was implemented in Q4 of FY2016 and the first trainings were 

offered in FY2016 Q4 and FY2017 Q1. 

Implementation of the GAO’s Framework for Managing Fraud Risks In 

Federal Programs (FY2017) 

To build upon the fraud reduction initiatives started in FY2016, in FY2017 OCRO 

initiated the implementation of the GAO’s Framework for Managing Fraud Risk in 

the Federal Government. 

Creation of a Fraud Risk Management Governance Body 

In order to demonstrate its commitment to combating fraud, CNCS created a 

Fraud Risk Subcommittee composed of senior-level managers. The members of 

this body, a subset of the agency’s Risk Assessment Committee, were selected 

10 The corrected population total will be calculated by adjusting the population book value 

by the projected Unmatched Reporting Error. 

138
to break down the silos that can inhibit the identification and assessment of fraud 

risk. The members of this fraud risk governance body include the Chief Financial 

Officer (CFO); Director of Procurement Services; Chief Human Capital Officer; 

Chief Information Officer; Deputy General Counsel; Chief Grants Management 

Officer; Chief Program Officer; and the Chief Risk Officer. The roles of this body 

include identifying and analyzing fraud risk, providing effective oversight for 

identifying and evaluating existing internal controls over fraud risks and 

recommending corrective actions. The Fraud Risk Subcommittee convenes 

quarterly. 

Creation of the CNCS Fraud Risk Profile 

Under the oversight of the Fraud Risk Subcommittee, OCRO has 

created CNCS’s first fraud risk profile. In FY17, the members of the 

subcommittee have identified thirty five (35) inherent fraud risks that 

were assessed on a two-dimensional criteria: likelihood and impact. 

Those risks were both mission and mission-support related. The 

internal control program (ICP) has identified the counter measures 

(existing fraud prevention and detection controls) that were designed 

and implemented to address those risks and is currently assessing 

the operating effectiveness of those fraud risk responses in order to 

determine their residual risks.

139