The Peace Corps

Performance and Accountability Report

F i sca l Ye ar 2007
A PDF version of this report is available at www.peacecorps.gov/docs. Send feedback to the Peace Corps at the mailing address, or at www.peacecorps.gov/contactus.

The Peace Corps

Performance and Accountability Report

F i sca l Ye ar 2007

Paul D. Coverdell Peace Corps Headquarters | 1111 20th Street NW | Washington, DC 20526
The Peace Corps’ mission is to promote world peace and friendship. While much has 

changed in the world since the Peace Corps’ founding in 1961, its mission has not. 

The Peace Corps’ goals are as relevant today as they were 46 years ago.
Contents

Message from the Director

Management’s Discussion and Analysis 1

Mission and Organizational Structure 2

Key Performance Measures 4

Analysis of Financial Statements 7

Analysis of Systems, Controls and Legal Compliance 9

Management Assurances

Core Issues 10

Actions to Address Agency-Identified Prior Year Challenges 13

Agency-Identified Future Challenges 14

President’s Management Agenda Summary 15

Performance Section 20

Annual Performance Report 21

Financial Section 38

Message from the Chief Financial Officer 39

Financial Statements 42

Notes to the Financial Statements 46

Inspector General’s Audit Transmittal Letter 58

Auditor’s Report 61

Other Accompanying Information 74

The Inspector General’s Statement on the Peace Corps’ 

Management and Performance Challenges 75

Agency Response to the Inspector General’s Statement

on the Peace Corps’ Management and Performance Challenges 78

Summary of Financial Statement Audit and 

Management Assurances Tables 83

Appendices 85

Appendix 1: Audit Follow-Up Actions 86

Appendix 2: Glossary of Acronyms 88
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On behalf of all Americans serving in the Peace Corps around the world, I am pleased to present the Peace 

Corps’ Performance and Accountability Report for fiscal year (FY) 2007. This report provides an account 

of the Peace Corps’ financial and performance results, enabling the President, Congress, and the American 

people to assess the agency’s operations during the past year. 

Since 1961, the Peace Corps has partnered with 139 countries, and more than 190,000 Americans have served 

around the world carrying out the agency’s mission of promoting world peace and friendship. The agency traces its roots and mission to the early 1960s, when then-Senator John F. Kennedy inspired Americans to serve 

their country in the cause of peace by living and working in developing countries.

Volunteers share their time and talents by serving as teachers, business advisors, youth counselors, agriculture 

and environmental specialists, and health and HIV/AIDS educators, carrying out the agency’s three goals: 

1) to help the people of interested countries in meeting their need for trained men and women; 

2) to help promote a better understanding of Americans on the part of the peoples served; and

3) to help promote a better understanding of other peoples on the part of Americans.

At the end of FY 2007, 8,079 Americans were serving as Peace Corps Volunteers at 68 posts in 74 countries 

encouraging sustainable development and cross-cultural understanding at the grassroots level.1

 The number 

of Volunteers currently serving is the highest level in 37 years. In April 2007, the agency broadened its international reach with the historic arrival of 20 Volunteers in a new country entry, the Kingdom of Cambodia. 

Additionally, the Peace Corps is preparing for Volunteers to return to Ethiopia in October 2007 and assessments are being performed for entry consideration in Indonesia, Liberia, Rwanda, and Sierra Leone.

Three new strategic initiatives were launched during FY 2007. They are Strategic Recruitment and Outreach 

(enhancing recruitment and outreach to the 50+ age population, national organizations, and returned Peace 

Corps Volunteers), Measuring our Success and Impact, and Promoting Volunteerism at Home and Abroad. To 

better measure our success and impact, we created the Office of Strategic Information, Research, and Planning which focuses on performance planning and reporting, measurement and evaluations, and data management functions for the agency. We also have an ongoing task force defining steps to better promote volunteerism through our staff and Volunteers at posts. 

Among our continuing initiatives, Volunteer safety and security remains the agency’s highest priority and the 

Peace Corps continues to contribute significantly to the global fight against HIV/AIDS. Our internal management assessments of posts were continued in FY 2007 to partner with regional and post senior leadership to 

strengthen and improve post management.

The crowning financial achievement of FY 2007 was attaining the first-ever unqualified opinion from the external auditors on the Peace Corps financial statements for the fiscal year ending September 30, 2007. All 

1 The on board count for all Peace Corps Volunteers and trainees, and Crisis Corps Volunteers, from all funding sources serving under the 

Peace Corps as of September 30, 2007, is 8,079. This number includes 195 Volunteers funded by the President’s Emergency Plan for AIDS 

Relief and nine Volunteers funded by USAID Tsunami funds. Some posts cover more than one country. The on board count includes posts in 

which the Peace Corps is active or suspended, but not closed. 

THE DIRECTOR OF THE PEACE CORPS

WASHINGTON, D.C.
existing material weaknesses were resolved this year and the financial system was successfully certified and 

accredited. This success can be attributed to our continuing internal control program coupled with intensive 

management efforts across the agency and implementation of financial management and information technology (IT) systems improvements throughout this fiscal year. Notable among the developing systems efforts is 

the creation of Magellan, a global IT network that will securely connect posts to the headquarters and regional 

recruiting offices, exploration of online collaboration tools, and continuing work to improve and enhance the 

Volunteer Delivery System.

Our FY 2007 performance measures were ambitious. I am pleased to report that the agency exceeded its performance targets in five of its eight performance goals and approximately 73 percent of 33 performance indicators. These results show continued improvement by staff and Volunteers as well as improved research 

and management of performance data. Overall, the Peace Corps has made great progress in documenting and 

streamlining its performance reporting process and can provide solid results on performance measures. 

The accompanying financial statements in this Performance and Accountability Report submission were prepared from the Peace Corps’ financial system and processes using the most reliable and complete data available. The agency’s total assets were $166 million as of September 30, 2007, and $173 million as of September 30, 

2006. Budgetary resources available from all years and all sources for use by the agency totaled $345 million 

in FY 2007 and $344 million in FY 2006, of which appropriated funds totaled $320 million and $322 million, 

respectively. 

Improvements and refinements can always be made in the financial management world and those are reflected 

in the Message from the Chief Financial Officer that appears later in this report. 

The agency’s financial and performance data for this fiscal year are reliable and complete which is a tribute to 

the hard work of Peace Corps employees. I am most pleased with the increase this year in the number of dedicated Volunteers proudly serving around the world and I look forward to increasing the number of Volunteers 

age 50 and above in the years ahead. Volunteers represent the very best of America in serving the needs of others at this time of great conflict throughout the world. Our Volunteers share their skills and experiences while 

living in distant communities around the globe and their ability to quietly foster peace and friendship around 

our world has never been more important.

Ron Tschetter, Director

November 15, 2007
mana g e m e nt ’ s d i sc u ss i o n and ana l ys i s
2 The Peace Corps :: performance and accountability report :: fiscal year 2007

Management’s Discussion and Analysis

Mission and Organizational Structure

0

Mission Statement

The Peace Corps’ mission is to promote world peace 

and friendship. While much has changed in the 

world since the Peace Corps’ founding in 1961, its 

mission has not. The Peace Corps’ three core goals 

are as relevant today as they were 46 years ago: 

1) to help the people of interested countries in 

meeting their need for trained men and women; 

2) to help promote a better understanding of Americans on the part of the peoples served; and

3) to help promote a better understanding of other 

peoples on the part of Americans.

The Peace Corps carries out its mission and goals 

by assisting interested countries with their development needs while providing an effective and satisfying Volunteer experience for a diverse group of 

Americans in a safe and secure environment; and 

by building an operational infrastructure that efficiently and effectively supports Peace Corps Volunteers in the 21st century.

Since the program’s inception, more than 190,000 

Americans have served as Peace Corps Volunteers, 

and the agency has partnered with 139 countries 

throughout the world. These Volunteers foster positive relationships with host country nationals, dispel myths about Americans, and promote sustainable development. Upon their return, Volunteers 

bring messages back to the American people about 

life overseas, the people they have served, and the 

cultures they have experienced.

The women and men who serve as Peace Corps 

Volunteers reflect the rich diversity of the United 

States and represent some of the finest characteristics of the American people: a generosity of spirit, 

a strong work ethic, a commitment to service, and 

an approach to problems that is both optimistic and 

pragmatic. Our Volunteers are afforded no special 

privileges and often live in remote, isolated communities where they speak local languages and 

learn the cultures and customs of the people they 

serve. In this process, Volunteers share and represent the culture and values of the American people 

and, in doing so, earn respect and admiration for 

the United States among people who may have never met an American. 

Offices throughout the agency deliver services ranging from recruitment and selection of Volunteers to 

providing training and support to Volunteers in the 

field to carrying out essential financial, information 

technology, and administrative support functions.

Development indicators suggest that nations face 

significant challenges in agriculture, education, 

business, information technology, health and HIV/

AIDS, the environment, and youth development. 

The Peace Corps, in partnership with interested 

countries, provides skilled Americans who work 

to transfer their knowledge about these areas and 

to build greater understanding between cultures. 

Thus, the Peace Corps provides practical assistance 

to developing countries by sharing America’s most 

precious resource—its people. The Peace Corps 

combines development with the strong people-topeople relationships that Volunteers forge with 

host country colleagues and communities, providing a crucial foundation for peace and friendship for 

years to come. Indeed, the core values of the Peace 

Corps since its establishment on March 1, 1961, remain relevant, vital, and strong.

The organization chart of the Peace Corps follows:
The Peace Corps :: performance and accountability report :: fiscal year 2007 3

Management’s Discussion and Analysis

Note: In their functions as Chief Financial Officer and Chief Information Officer, the incumbents report 

directly to the Director. The Office of Acquisitions and Contract Management reports to the Chief 

of Staff with a dotted line report to the Director.

Peace Corps Organization

Executive

Secretariat

Office of American 

Diversity/EEO

Office of the

General Counsel

Director

Deputy Director

Overseas Posts

Office of 

Safety and Security

Office of

Volunteer Recruitment

and Selection

Office of the Chief

Financial Officer

Office of 

Volunteer Support

The Center for 

Field Assistance &

Applied Research

Office of the Chief

Information Officer

Crisis Corps

Domestic 

Programs

Overseas Posts

Inter-America and 

the Pacific Region Africa Region

Overseas Posts

Europe,

Mediterranean, and 

Asia Region

Office of

Inspector General

Chief of Staff

Deputy Chief of Staff

Office of Acquisitions

and Contract

Management

Office of 

Management

Office of 

Private Sector

Initiatives

Office of Strategic 

Information, Research 

and Planning 

Office of

Congressional

Relations

Office of

AIDS Relief

Office of 

Communications

Office of 

Press Relations Chief Compliance

Officer

Director of 

Special Initiatives
4 The Peace Corps :: performance and accountability report :: fiscal year 2007

Management’s Discussion and Analysis

0

Key Performance Measures

Performance Goals and Results Summary

The agency is currently utilizing its 2003-2008 strategic plan which was revised for 2006-2008 to better align the plan with the Peace Corps’ three goals 

and internal processes, including new and modified 

strategic objectives with outcome-oriented targets 

and indicators. The FY 2008 Congressional Budget 

Justification (CBJ), which is submitted to Congress 

each year, includes the updated strategic plan. The 

CBJ is available to the public on the agency’s website 

www.peacecorps.gov. The key strategic goals outlined in the agency’s revised strategic plan focus on: 

•	 Delivering a trained and diverse group of Volunteers to interested countries to transfer tangible 

skills and promote cross-cultural understanding; 

•	 EnsuringVolunteers have a quality experience by

providing relevant health, safety, and programmatic support;

•	 Increasing the exposure of Americans to other cultures by sharing Volunteer experiences 

through a variety of avenues; and

•	 Meeting the needs of applicants and Volunteers

with efficient and effective support. 

Thus, FY 2007 is the second year for the agency 

to report out on its current set of ambitious but 

achievable performance goals and indicator targets 

outlined in the revised strategic plan. In FY 2007, 

the agency was above target for five of its eight performance goals and approximately 73 percent of its 

33 performance indicators.

Performance Goals and Status

At the end of FY 2007, 8,079 Americans were serving 

in 74 countries through 68 posts as Peace Corps Volunteers, encouraging sustainable development and 

cross-cultural understanding at the grassroots level. 

The number of Volunteers is noteworthy because it 

represents a 37-year high for Volunteers serving in 

the field during the period covered by the present 

strategic plan. The agency has also broadened its 

international reach with Volunteer placements in 

the Kingdom of Cambodia and the historic return of 

the Peace Corps program to Ethiopia. In addition, a 

number of assessments have been completed for potential new country entries in FY 2008.

The agency was slightly below target on the number of Peace Corps applicants representing diverse 

ethnicities and people 50+. While the agency has 

set ambitious goals in these categories, more efforts 

are planned to help meet targets. These include pilot recruitment efforts including 50+ recruitment 

liaisons at every regional recruitment office. These 

offices will also target specified associations and 

gatherings to help boost applications from older 

Americans and from Americans of diverse ethnicities. In FY 2007, the agency rolled out a new 50+ 

website and the Coverdell World Wise Schools did 

a major redesign of its website, which seems to have 

increased Web traffic. 

Media outreach efforts are strong, and the agency 

exceeded its goals in FY 2007 for press coverage of 

diverse Volunteers or in outlets covering diverse 

audiences. Likewise goals were exceeded for placement of public service announcements (PSAs) in 

minority- and diversity-geared media. 

The Peace Corps uses various survey instruments 

to capture Volunteer feedback on key indicators 

of the agency’s effectiveness in delivering different services. As the agency strives to continuously 

improve, these survey results can benefit currently 
The Peace Corps :: performance and accountability report :: fiscal year 2007 5

Management’s Discussion and Analysis

serving and future Volunteers. The biennial Peace 

Corps Volunteer survey provides an important 

snapshot of Volunteer satisfaction during the same 

period of time worldwide. The close-of-service survey, which is given when Volunteers complete their 

service overseas, provides the agency with ongoing 

feedback from the field. 

There are numerous steps in the application process to become a Peace Corps Volunteer. This enables the agency to recruit and thoroughly screen 

applicants for specific skills and medical and suitability issues prior to approving and inviting them 

to serve as Volunteers. The application process has 

been broken down into the various stages to allow 

the Peace Corps to best analyze its efficiencies. The 

agency is pleased to have exceeded its FY 2007 goal 

of response time to applicants and remains committed to streamlining the processes that enable 

Americans to obtain information, apply, join, and 

complete service as Volunteers.

High levels of returned Peace Corps Volunteer 

(RPCV) participation during Peace Corps Week 

and the work of our regional recruiters in tracking 

RPCV participation in activities that contribute directly to this goal historically were not sufficent to 

demonstrate achievement of our target in this area. 

The agency implemented changes to create a more 

objective and verifiable method of calculating these 

results moving forward. RPCV outreach activities 

help carry the message of understanding of other 

cultures as they share their stories and experiences 

with schools, community groups and other philanthropic organizations across the country.

Performance Reporting Procedures

In FY 2007, the Peace Corps built on significant 

improvements to its performance reporting process. Throughout FY 2007, the agency continued 

to institutionalize its internal controls and documentation of processes surrounding strategic performance reporting. The creation of the Office of 

Strategic Information, Research, and Planning 

(OSIRP) has helped institutionalize agency performance planning and reporting, allowing for greater 

continuity and reliability in reporting and helping 

mitigate the effect of staff changes on consistent 

performance reporting. 

Addressing mid-year performance results during FY 2007 mid-year budget reviews allowed the 

agency to take another positive step toward aligning performance with budgeting. The integrated 

mid-year review allows for the reallocation of funding and human resources to correct a course of action if there are challenges in meeting performance 

goals, or to validate positive actions taken to meet 

performance targets.

Performance Goals Under On Over

1.1.1 Number of Volunteers serving

1.2.1 Transfer skills and knowledge

1.3.1 Represent American diversity

2.1.1 Volunteer healthcare*

2.2.1 Volunteer safety*

3.1.1 Interactions with Americans to build cross-cultural understanding

4.1.1 Reduce response time to applicants

4.2.1 Cap Volunteer resignation rate

Total Performance Goals 3 5

Performance Goals Summary

Note * The agency does not have official FY 2007 targets and results for certain performance goals and indicators because the biennial Volunteer survey is not 

administered this year. Rather than indicating N/A for both the goals and results, the agency has interpolated goals and utilized close-of-service survey 

results in order to provide alternate information of agency performance in these areas.
6 The Peace Corps :: performance and accountability report :: fiscal year 2007

Management’s Discussion and Analysis

To continue emphasizing transparency and performance, the agency is using results from the close-ofservice survey in FY 2007 to provide alternate data 

for indicators that used the biennial survey information in FY 2006. This is due to the unavailability 

of biennial survey data in FY 2007. The Peace Corps 

plans to continue this practice in future years when 

the biennial survey is not conducted. 

The Peace Corps’ FY 2007 performance results are 

based on reliable, actual data that are complete as 

of the production of the results at the close of the 

fiscal year. While the data are largely a complete 

and accurate view of the full fiscal year results, they 

are limited by instances of unforeseen challenges 

with technology and data that flow in beyond the 

reporting dates. Overall, the Peace Corps has made 

great progress in institutionalizing its performance 

reporting procedures and is well-positioned to provide solid results on its performance measures.

Environment Volunteer, Cambodia
The Peace Corps :: performance and accountability report :: fiscal year 2007 7

Management’s Discussion and Analysis

0

Analysis of Financial Statements

Overview

The certification and accreditation of the financial 

system during fiscal year 2007 was a landmark 

achievement for the Peace Corps. This fiscal year, 

all required federal financial statements were generated directly from the financial system for the 

first time. Another major accomplishment—gaining 

better control of the property, plant, and equipment 

(PP&E) capital assets—was achieved by implementing an Oracle fixed asset module to streamline 

PP&E tracking and depreciation and initiation of a 

semiannual PP&E asset verification process with 

each post. 

Analysis of the Peace Corps’ 

Financial Statements

The Peace Corps’ financial statements were prepared from its financial system and processes using 

the most reliable and complete data available. The 

financial system was certified and accredited during this fiscal year and conforms fully to government-wide standards. During FY 2007, generation 

of the financial statements was enhanced by implementing formalized and comprehensive reconciliation and quality control processes and by further 

documenting and publishing the basis for each fund 

classification and its treatment in the financial 

statements. 

The agency had total assets of $166 million as of 

September 30, 2007, and $173 million as of September 30, 2006. As mentioned above, a major accomplishment—gaining better control of PP&E capital 

assets—was achieved by implementing an Oracle 

fixed asset module to streamline PP&E tracking 

and depreciation and initiation of a semi-annual 

PP&E asset verification process with each post. 

Operational improvements have resulted in a significant reduction in the outstanding accounts receivable and accounts payable with the public in the FY 

2007 closing balances as compared to the FY 2006 

balances. Improvements in system and accounting 

procedures resulted in more accurate reporting 

of prepayments and accruals. The substantial increase in net outlays from FY 2006 to FY 2007 is a 

result of 1) operational efficiencies in accounts payable, 2) expensing more than $5 million to partially 

fund the host country residents contractors separation liability fund established during FY 2007 and 

3) increases in the number of Volunteers and the 

associated infrastructure and support costs. 

Budgetary resources available for use by the agency 

totaled $345 million in FY 2007 and $344 million 

in FY 2006, of which appropriated funds totaled 

$320 million and $322 million, respectively. 

Improper Payments Information Act (IPIA)

The Peace Corps is not identified in Appendix C, 

OMB Circular A-123 (formerly Section 57, “Programs for which Erroneous Payments Information is 

Requested,” in OMB Circular A-11). Again this fiscal 

year, no improper payments were identified internally or by independent auditors that would reach 

the defined Improper Payments Information Act 

(IPIA) threshold of 2.5 percent and $10 million. 

A risk assessment, though, was performed in the 

global accounts payable area this year in recognition of the inherent risk associated with improper 

payments. Additionally, internal control sample 

testing conducted during this fiscal year on high 

dollar payments did not reveal any significant improper payments for the agency.
8 The Peace Corps :: performance and accountability report :: fiscal year 2007

Management’s Discussion and Analysis

Limitations of the Principal

Financial Statements

The principal financial statements have been prepared to report the financial position and results 

of operations of the Peace Corps, pursuant to the 

requirements of 31 U.S.C. 3515 (b). While the statements have been prepared from the books and records of the entity in accordance with generally 

acceptable accounting principles for Federal entities and the formats prescribed by OMB, the statements are in addition to the financial reports used 

to monitor and control budgetary resources which 

are prepared from the same books and records. 

The statements should be read with the realization 

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

Business Volunteer, Ukraine
The Peace Corps :: performance and accountability report :: fiscal year 2007 9

Management’s Discussion and Analysis

0

Analysis of Systems, Controls, and Legal Compliance

Management Assurances

Federal Managers’ Financial Integrity Act

The Federal Managers’ Financial Integrity Act 

(FMFIA) requires agencies to establish accounting 

and administrative controls to include program, 

operational, and administrative areas as well as accounting and financial management. The FMFIA 

establishes overall requirements for internal control and requires that the agency head evaluate and 

report annually on the control and financial systems that protect the integrity of Federal programs 

(Section 2 and Section 4 of FMFIA respectively). 

Internal Control Over Peace Corps Operations

Oversight of the Peace Corps’ internal control program is conducted by top agency management 

functioning as the senior assessment team that was 

established during FY 2006 and led by the Chief 

Financial Officer. Offices throughout the agency 

conducted risk assessments for their business areas 

during FY 2007 and identified no reportable material weaknesses. Additionally, Peace Corps managers prepared annual assurance statements attesting 

to the adequacy of internal controls, identifying no 

reportable material weaknesses in any area. Assurances were based on the managers’ personal knowledge of day-to-day operations, existing controls, 

and other related reviews and evaluations. Internal 

control testing was conducted during this fiscal year 

to strengthen the reliability of personal service contract payment processing for the overseas contractors and to further substantiate the financial statement balances. During FY 2008, internal control 

testing will be expanded. 

Summary

The Peace Corps is proud to have achieved an unqualified statement of assurance for FY 2007 and 

that the internal controls and financial management 

systems meet FMFIA objectives. Future agency efforts will remain focused to support this unqualified statement of assurance and an unqualified audit 

opinion on the agency’s financial statements. Changes made within the agency over the last few years that 

produced sound financial processes, a certified and 

accredited financial system, and strong operational 

management have supplied the pillars for a solid financial management foundation. 

FY 2007 Annual FMFIA Assurance Statement

The Peace Corps assessed the effectiveness of the 

internal controls to support effective and efficient 

operations, reliable financial reporting, and compliance with applicable laws and regulations in accordance with the Federal Managers’ Financial Integrity Act (FMFIA) Section 2 and OMB Circular A-123,

Management’s Responsibility for Internal Control. 

Based on this assessment, the Peace Corps can provide reasonable assurance for FY 2007 that its internal control over the effectiveness and efficiency of 

operations, financial reporting, and compliance with 

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

design or operation of the internal controls.

The Peace Corps conducted its assessment of whether the financial management systems conform to 

government-wide financial systems requirements in 

accordance with FMFIA Section 4 and OMB Circular A-123. Based on this assessment, the Peace Corps 

can provide reasonable assurance that its financial 

management systems are in compliance with the applicable provisions of the FMFIA for FY 2007. 

Ron Tschetter, Director

November 15, 2007

George A. Schutter III, CPA, CPCM

Chief Financial Officer

November 15, 2007
10 The Peace Corps :: performance and accountability report :: fiscal year 2007

Management’s Discussion and Analysis

0

Core Issues

The Peace Corps provides practical assistance to 

developing countries by sharing America’s most 

precious resource—its people. The close interaction 

between Peace Corps Volunteers and local communities has allowed the Peace Corps to establish 

a record of service that is admired and recognized 

around the world. 

At the end of FY 2007, 8,079 Americans were 

serving as Peace Corps Volunteers at 68 posts in 

74 countries (posts in the Eastern Caribbean and 

Micronesia provide support to eight island nations) and fostering sustainable development and 

cross-cultural understanding at the grassroots 

level. Currently, about 20 percent of the Volunteers are serving in nations with predominantly 

Muslim populations. Volunteers work in the areas 

of agriculture, business, education, the environment, health and HIV/AIDS, and youth development, incorporating cross-cutting themes such as 

information and communications technology into 

their work. In addition to transferring skills to host 

country nationals and promoting cross-cultural understanding between Americans and other peoples, 

the Peace Corps service also provides the American 

workforce with overseas experience. In fact, in September 2007, the Peace Corps was again recognized 

by Business Week as one of the top 50 best places to 

launch a career. Returned Peace Corps Volunteers 

also contribute to America’s legacy of service by 

offering their time and skills to community volunteer programs or organizations around the country 

and through Peace Corps programs such as Crisis 

Corps, Fellows/USA, and Peace Corps Week.

In FY 2007, the Peace Corps embarked on three 

strategic initiatives: Recruitment and Outreach; 

Measuring Success and Impact; and Volunteerism

at Home and Abroad.

Recruitment and Outreach

The 50+ population represents a tremendous opportunity for the Peace Corps. Individuals in this 

population already volunteer at high rates and have 

a desire to share their expertise and skills. The 

Peace Corps has a strong relationship with AARP, 

which is helping the agency recruit older Americans. Additionally, the agency has identified pilot 

posts in each of the three regions to review the 

needs of potential 50+ Volunteers and make recommendations.

The Peace Corps must continue to be strategic 

and creative in increasing recruitment efforts at 

small colleges and universities. Relationships with 

groups like the Historically Black Colleges and Universities (HBCU), and the American Association of 

Community Colleges are helping with these efforts, 

leading to initiatives such as the Baccalaureate and 

Peace Corps Prep programs. 

The Peace Corps will also work to ensure that its returned Peace Corps Volunteer (RPCV) community 

is engaged and ready to assist the agency in Volunteer recruitment as active alumni. The agency is 

pursuing opportunities for increased involvement, 

such as the mentoring program between RPCVs 

and recently returning Volunteers.

To increase public awareness for the Peace Corps, 

targeted websites were created such as the Teens 

website and the 50+ website, or significantly redesigned, such as the Coverdell World Wise Schools 

website. 

Measuring Our Success and Impact

While we feel that the Peace Corps brings great value to the world, the agency needs to better measure 

its success and impact to better document results 

and better articulate its success and impact internally and to others.
The Peace Corps :: performance and accountability report :: fiscal year 2007 11

Management’s Discussion and Analysis

The Peace Corps took concrete steps in FY 2007 to 

position itself for enhanced performance measurement in the future. The agency created the Office 

of Strategic Information, Research, and Planning 

to focus and integrate the efforts of the agency to 

improve the evaluation and measurement of performance, outcomes and impact; the management 

of data and information, and performance planning 

and reporting within the agency.

Volunteerism at Home and Abroad

We believe that the Peace Corps represents the 

gold standard for volunteerism, and we can assist 

our partners around the world in promoting volunteerism among their own people. Our Volunteers reached more than 1.4 million young people 

in 2006, and many posts are already working with 

youth in-service learning projects, teaching them 

the value of giving back to their own communities.

We surveyed our posts to see how our Volunteers 

promote volunteerism in their host communities 

and created a task force to look at the way that the 

Peace Corps can encourage the spirit of volunteerism in our countries of service and here at home. 

The agency will be placing additional emphasis in 

this area as we implement our worldwide organizational plans for FY 2008 activities. 

Other on-going significant core activities include:

Volunteer Safety and Security 

Volunteer safety and security remains the agency’s 

highest priority. In early FY 2007, the Office of 

Safety and Security determined that a program assessment would be useful to ensure that the office 

was appropriately staffed and fulfilling its programmatic responsibilities. This program assessment 

included interviews and a survey of the primary 

stakeholders of the safety and security program. 

The following enhancements were identified for 

implementation in FY 2008:

Continue to enhance the roles of key safety and security overseas staff in supporting the safety and security of Volunteers; continue to emphasize the importance of site selection and Volunteer safety and 

security training; spearhead improvements to the 

existing process for monitoring critical safety and 

security recommendations; and continue the agency focus on under-reporting of crimes committed 

against Volunteers and explore creative solutions 

for encouraging additional incident reporting. 

HIV/AIDS Initiative

The Peace Corps continues to contribute significantly to the global fight against HIV/AIDS. Peace 

Corps Volunteers, by living and working at the 

grassroots level in communities and speaking the 

local language, are uniquely suited to reach populations most in need of HIV/AIDS prevention and 

care services. The Office of AIDS Relief continues to 

provide agency-level policy guidance; overall leadership; and general supervision, direction, and coordination of Peace Corps’ HIV/AIDS activities, including the agency’s participation in the President’s 

Emergency Plan for AIDS Relief (PEPFAR). The 

Peace Corps continues to be a valuable participant 

in the PEPFAR program with 195 PEPFAR-funded 

Volunteers serving in 10 of PEPFAR’s 15 focus countries.2

 In addition to posts in the focus countries, 12 

other Peace Corps posts implemented PEPFARfunded activities in FY 2007.3

As a result of the Peace Corps’ increased involvement in HIV/AIDS efforts globally, the agency is 

evaluating how issues around death, dying, grief, 

and loss due to HIV/AIDS are affecting Volunteers’ 

emotional health to ensure the agency is providing 

adequate support to Volunteers. The results of this 

2 PEPFAR has identified 15 focus countries. The Peace Corps has posts in ten of these focus countries—Botswana, Ethiopia, Guyana, Kenya, Mozambique, 

Namibia, South Africa, Tanzania, Uganda, and Zambia. The other focus countries are Haiti, Ivory Coast, Nigeria, Rwanda, and Vietnam.

3 Other Peace Corps posts implementing PEPFAR-funded activities include: Dominican Republic, Eastern Caribbean, Georgia, Ghana, Honduras, Kazakhstan, 

Kyrgyz Republic, Lesotho, Malawi, Swaziland, Thailand, and Ukraine. 
12 The Peace Corps :: performance and accountability report :: fiscal year 2007

Management’s Discussion and Analysis

evaluation will define where the Peace Corps needs 

to strengthen support systems to ensure that those 

Volunteers performing these difficult tasks are 

well-prepared to cope with these issues. 

Continuous Improvement

In an effort to focus on the efficiency and effectiveness of Peace Corps operations, the agency continued its program of Internal Management Assessments (IMA) of posts in FY 2007. The goal of 

the IMA program is to partner with regional and 

posts’ senior leadership to strengthen and improve 

post management. Assessment teams have pursued 

meaningful solutions to improve posts’ operations 

and to enhance Volunteer service and programmatic impact. Nine post assessments were conducted in 

FY 2007, leading to specific recommendations with 

agency-wide implications. 

In addition, the Peace Corps’ Office of the Inspector 

General (OIG) regularly conducts audits and evaluations in the utilization of agency resources, and the 

efficiency and effectiveness of programs that support Peace Corps Volunteers. Audits focus on fiscal 

accountability and effectiveness of internal controls 

over Peace Corps wide resources. Evaluators analyze the program operations of the Peace Corps at 

both overseas posts and domestic offices. Audits and 

evaluation reports identify internal control weaknesses, best practices and recommend program improvements and means to comply with Peace Corps’ 

policies and procedures. During FY 2007, the OIG 

issued six program evaluation reports and 16 audit 

reports in 21 countries.

Overall

The Peace Corps’ mission and efforts around the 

globe are as important as ever. The agency will 

continue to strive to operate at its optimum level to 

ensure more Americans are given the opportunity 

to serve as Peace Corps Volunteers to carry out the 

agency’s mission of world peace and friendship.

Health Volunteer, Benin
The Peace Corps :: performance and accountability report :: fiscal year 2007 13

Management’s Discussion and Analysis

0

Actions to Address Agency-Identified Prior Year Challenges

Volunteer Delivery System

Early in FY 2007, the Director announced the formation of the Volunteer Delivery System (VDS) 

steering committee as a major initiative to come out 

of the strategic planning effort. The Volunteer Delivery System represents the entire pipeline of the 

system in which Volunteers are recruited, apply, are 

invited, trained and deployed to serve overseas.

The objective of the VDS steering committee is for 

the Peace Corps to optimize VDS by leveraging the 

full force of the agency’s organization, management, technology, and fiscal operations to improve 

and sustain VDS holistically. The steering committee ensures seamless continuity of operations 

between offices, focuses agency resources, and proposes strategic solutions to emerging challenges. 

To date, the VDS steering committee has been focusing on the issues of new recruiting strategies 

(including Americans over 50), better messaging of 

the meaning of service, expediting the process for 

clearing and inviting applicants, language training, 

and the development of good sites and projects for 

Volunteers. Process and system changes are under 

evaluation. Additionally, pilot posts have been identified to evaluate effectiveness of changes in field operations. The active and important work of the VDS 

steering committee will continue into FY 2008 and 

beyond as changes are expected to be implemented 

to start addressing identified challenges.

Strategic Research, Evaluation 

and Planning Functions

The agency identified the lack of strategic research, 

evaluation and planning functions as a major challenge for FY 2007. The agency must do a better job 

of measuring its performance and documenting results to enhance its ability to articulate its success 

and impact internally and to others. Propelled by 

internal strategic planning, the Office of Management and Budget (OMB) Program and Rating Tool 

(PART) assessment process, and the need for a cohesive process in preparing the FY 2009-2014 strategic plan, the agency took major steps in FY 2007 

to address this issue. 

The agency created the Office of Strategic Information, Research, and Planning (OSIRP) to focus and 

integrate the efforts to improve: the evaluation and 

measurement of our performance, outcomes and 

impact; the management of data and information, 

and performance planning and reporting within the 

agency. The new office began its work in May 2007 

and has already begun improving the governance of 

data and information, and the research associated 

with the formulation of critical evaluations that 

must be performed in order to support the development of the agency’s FY 2009-2014 strategic plan.

Financial Process Changes

Extensive system and process changes implemented in FY 2006 and in prior years were extremely 

effective in FY 2007. These prior year system and 

process changes allowed for the production of accurate and timely financial statements in FY 2007. 

Changes implemented in the past years were further tested and validated during this year’s successful certification and accreditation of the financial 

system, Odyssey, in accordance with the Federal 

Information Security Management Act (FISMA), 

Public Law 107-347. There were no requirements 

for additional system and process changes resulting from the formal FISMA review. Additionally, 

internal control testing as well as implementing 

standardized reconciliations allowed the Peace 

Corps to make necessary changes as a part of the 

regular day-to-day operations in the financial arena. This fiscal year no material weaknesses were 

identified in the risk assessments and existing material weaknesses from past year financial audits 

were mitigated.
14 The Peace Corps :: performance and accountability report :: fiscal year 2007

Management’s Discussion and Analysis

In looking ahead, future challenges for the agency 

include: 

•	 Continuing to enhance the Volunteer Delivery

System, with a special focus on the recruitment 

of 50+ and applicants of diverse ethnicities.

•	 Institutionalizing the functions of performance

planning and reporting, evaluation and measurement and strategic management of information through the efforts of OSIRP. This will 

ensure that these functions are implemented in 

a holistic, comprehensive and effective manner. 

•	 Evaluating and improving the capabilities of

staff to ensure the continuity of mission in supporting our Volunteers and ensuring effective 

performance at our posts overseas.

•	 Standardizing and formalizing training of Host

Country Staff in current financial management 

best practices.

While our challenges continue to evolve, the Peace 

Corps’ mission is as vital today as it was in 1961 and 

the agency is well positioned to meet these challenges head on as we continue to emphasize operational excellence in the years to come.

Education Volunteer, Nicaragua

0

Agency-Identified Future Challenges
The Peace Corps :: performance and accountability report :: fiscal year 2007 15

Management’s Discussion and Analysis

0

President’s Management Agenda Summary

The Peace Corps continually strives to improve 

its management and performance. Strategic and 

performance goals, indicators, and targets were recently assessed within the context of the President’s 

Management Agenda (PMA) and the agency’s own 

management initiatives. Highlighted here are the 

major improvements for each PMA initiative made 

during this fiscal year that reflect efficiency and effectiveness gains for the Peace Corps and all of its 

staff. The PMA helps the agency adopt new disciplines to ensure its focus on results is effective and 

enduring. For each initiative, the PMA establishes 

clear, government-wide goals or standards for success and the Peace Corps is committed to meeting 

or exceeding these goals and standards.

Strategic Management of Human Capital 

The Peace Corps operates under a unique termlimited hiring authority. Staff members are limited 

to five years of regular employment, with an additional 30 months available for up to 15 percent of 

the staff. Within this context, the agency continually strives to improve its human resource management (HRM) consistent with the goals of PMA and 

to meet or exceed the agency’s own goals and initiatives. 

A vital part of the agency’s HRM plan is the integration of the President’s expanded e-government 

initiative into all of our processes. The most important initiative to support strategic management of 

human capital is our ongoing implementation of 

an automated human capital management system 

introduced as a pilot program during FY 2006. By 

automating many of our HRM functions and other 

e-government initiatives, the agency is streamlining many of its processes, procedures and practices. 

Repetitive reporting tasks are being reduced and 

information is shared more quickly and efficiently 

between offices. Automating internal processes reduces operating costs.

Use of this system and its recruitment and staffing 

modules has reduced the time it takes to recruit and 

hire quality applicants by simultaneously sending 

vacancy announcements to over 1,400 recruitment sources. Potential candidate rosters are now 

available within one week, a significant improvement over the previous manual system. Additionally, this system provides the applicant intake tool 

for the Leadership Development Academy which 

was launched in FY 2006 and is now in its second 

year. The goal of this 12-month leadership program 

is to ensure that potential future leaders have the 

necessary skills to lead the Peace Corps. Other enhancements achieved through the ongoing system 

implementation include specialized orientation 

training, conducting of HRM formal efficiency surveys, distributing customized quarterly electronic 

newsletters, conducting three town hall events 

with increased participation, developing a management communication plan, and maintaining a personnel database of former Peace Corps employees 

to facilitate future re-employment.

Improvements are being continuously incorporated and the agency is fine-tuning the way in which 

HRM business is conducted to maximize performance and to ensure that the most efficient results 

are achieved to meet the needs of all Peace Corps’ 

customers. 

Competitive Sourcing 

Over the past few years, the Peace Corps has outsourced many functions to private firms and to 

other government agencies. These various outsourcing initiatives have resulted in a 2:1 ratio of 

outsourced positions to Peace Corps employees. 

The agency continues to operate effectively with a 

full-time staff of approximately 1,000 employees at 

Peace Corps headquarters, regional recruiting offices, and at posts in the 74 countries in which Volunteers serve. The agency augments its full-time 

staffing with about 2,000 contractors, who work 
16 The Peace Corps :: performance and accountability report :: fiscal year 2007

Management’s Discussion and Analysis

domestically and overseas. Most overseas staff 

functions under personal service contracts, which 

are renewed annually. While the agency is open to 

newly developing opportunities, no new competitive sourcing initiatives were implemented this fiscal year, and none are planned for FY 2008. 

Improved Financial Performance

The most significant improvements in financial 

performance in this fiscal year were completing 

the certification and accreditation process for the 

agency’s financial system and validating the agency’s contingency plan. This mitigated non-conformances to the government-wide financial management systems requirements previously impeding a 

clean financial audit opinion. The financial systems 

area can now focus more directly on future system 

improvements for Peace Corps customers. This fiscal year all required federal financial statements 

were generated directly from the financial system 

and processes for the first time.

External auditors issued a qualified opinion on the 

Peace Corps’ September 30, 2006, balance sheet. 

With the improved financial reporting and internal controls implemented by the Peace Corps, the 

auditors were able to perform extended procedures 

during FY 2007 and an unqualified opinion was extended to all financial statements for the fiscal year 

ended September 30, 2007. Aggressive monitoring 

and completion of the corrective actions necessary 

to satisfy the agency’s corrective action plans in response to other external financial audit findings 

have significantly reduced the overall number of 

outstanding audit findings and eliminated material 

weaknesses for the agency. Major milestones were 

achieved this fiscal year in gaining better control of 

the capital assets (property, plant, and equipment 

[PP&E]) through implementation of an Oracle Fixed 

Asset module to streamline tracking and deprecation 

of PP&E and initiating the ongoing process of semiannual verification of PP&E assets with each post. 

Account reconciliations were standardized during 

this year and further systematizing efforts will occur in the future. The Inspector General’s post and 

headquarters audits were closely monitored to ensure financial-related findings were resolved speedily, thereby reducing outstanding financial oversight 

audit findings from 23 to one for this fiscal year. The 

recent Office of the Chief Financial Officer reorganization has produced better communication and 

consistency among managers and helped stabilize 

contract consultants in their positions.

The agency-wide internal control program expanded to include internal control testing to strengthen 

the reliability of personal service contract payment 

processing for the overseas contractors and to further substantiate undelivered orders for the financial statement balances. Additionally, long-term 

personal service contract payments were fully automated during this fiscal year to further increase 

accuracy and speed and legislation was signed into 

law that allowed the agency to create a personal 

service contractors separation pay account at Treasury to better manage the funding of separation pay 

for host country nationals.

Financial management improvement efforts introduced this fiscal year that directly benefit the posts 

located around the world include enhancing financial management training for new country directors 

and administrative officers; replacing announced 

cash verifications with surprise audits by each post; 

reducing the required quarterly reports from five 

to two; changing the imprest fund replenishments 

from check to automated clearinghouse/electronic 

funds transfer; focusing on electronic funds transfer payments to reduce imprest fund cash requirements; implementing the paper check conversion 

over-the-counter program to fully automate and 

improve the collection, reconciliation, research 

and reporting associated with check collections; 

and canceling and crediting payments issued by the 

State Department’s financial service centers so the 

funding is immediately available to the posts.

Many other important financial performance accomplishments were instituted during this fiscal 
The Peace Corps :: performance and accountability report :: fiscal year 2007 17

Management’s Discussion and Analysis

year to include financial management performance 

metrics measuring critical activities that evaluate 

the agency’s financial health, eliminating the $1.2 

million debit card backlog spanning several fiscal 

years and changing to a new debit card platform 

that will automatically unload unused amounts 

on debit cards based on expiration date to prevent 

future problems as well as replacing the manual 

method of referring debts to Treasury for collection. Strong efforts to improve financial policy and 

to disseminate that policy rapidly throughout the 

agency continue through use of e-mails, bulletins, 

policies, and procedures and will be even further 

strengthened in the coming fiscal year. On-going 

efforts to maintain and update Peace Corps manuals and handbooks continue to be a priority for the 

future as well as strengthening the documentation 

for functions and processes.

Expanded E-Government 

Expanded e-government fosters a citizen-centered 

government with a greater volume of service at 

a lower cost. The Peace Corps’ challenge is to ensure that its investments in information technology (IT) are put to the best use while providing for 

system security and integrity. This is critical since 

the likelihood of obtaining resources for all identified IT initiatives can be difficult. To facilitate program and operation transparency, the Peace Corps’ 

e-government initiatives are geared toward overcoming agency bureaucratic divisions and increasing productivity and the ease of electronic access for 

citizens. The agency has witnessed annual progress 

in its systems maturation, from a low-tech operating environment to a the high-tech enabled agency 

of today.

Consistent with current government-wide management reforms, the Peace Corps will increase its use 

of IT and e-government services to strengthen the 

quality, efficiency, and timeliness of recruiting, assessing, and selecting prospective Volunteers. In 

2004, the Peace Corps began developing the infrastructure required to modernize the agency and 

enable greater e-government solutions. The agency 

has enhanced telecommunications, hardware, security, and solutions development capability worldwide since that time.

The Volunteer Delivery System (VDS) is a continuous cycle of Volunteer recruitment, screening, and 

placement that allows the Peace Corps to deliver the 

best suited Volunteers for a host country’s needs. 

The Peace Corps has strategically aligned its VDS 

with the agency’s mission, modernizing its processes to speed up the delivery process and to reach 

different diverse groups more effectively. Internal 

communication has been streamlined and overall 

response times to applicants have been reduced. 

The agency has deployed a Web-based conferencing tool, WebEx, which facilitates sharing realtime information between overseas and domestic 

staff. WebEx has significantly improved Volunteer 

placement because the post receiving the Volunteer 

can discuss host needs and requirements with the 

Placement Office that sends the Volunteer. Correspondingly, accurate and effective placement reduces early termination rates and increases Volunteer satisfaction because the right person is placed 

in the right job. WebEx also reduces travel costs by 

allowing staff to teleconference via the Web instead 

of meeting face-to-face. 

As the agency refreshed technology at Africa region 

posts, a number of country directors recommended 

enhancements to increase productivity and effectiveness. In response, English language and typing 

tutorials have been introduced at each post. These 

tools increase productivity of administrative staff, 

primarily host country nationals who may struggle 

with language or data entry. 

The Peace Corps continues to implement IT security solutions to secure data stored and processed 

on agency computers. This enables the agency to be 

compliant with the Continuity of Operations Plan 

(COOP) and the Federal Information Security In-
18 The Peace Corps :: performance and accountability report :: fiscal year 2007

Management’s Discussion and Analysis

formation Management Act. In FY 2007, the agency made significant strides in the certification and 

accreditation processes. 

Enhanced technology helped provide an automated 

property tracking system that is better controlling 

and managing assets owned and/or operated by the 

agency. PropMan II, the agency’s new PP&E system, not only improves property management, but 

it provides a standard system to capture, track, and 

report on Peace Corps property. 

A number of overseas posts have monthly telecommunications costs of more than $4,000, including 

long-distance and local phone service. The Peace 

Corps is piloting a voice-over-Internet protocol 

(VOIP) at two overseas posts, reducing this cost to 

approximately $400 per month. VOIP could potentially lower telecommunications costs for as many 

as 20 overseas posts.

E-mail is a critical component of the Peace Corps 

communication and collaboration environment. 

It is probably the most depended-upon technology in the agency. Approximately 85 percent of our 

incoming e-mail is spam. In FY 2007, the Peace 

Corps implemented a spam reduction solution that 

eliminates 99.5 percent of spam and prevents the 

loss of productivity associated with managing bogus e-mail.

The Peace Corps released a new version of the Volunteer information database application (VIDA) 

which allows posts to manage their Volunteers using a standard system, process, and reports. This 

work is ongoing and includes enhancements to mobility (VIDA will work on a laptop, tablet, or personal digital assistant) and data transmission (data 

will be available at Peace Corps headquarters). 

The agency continues to implement VSAT (very 

small aperture terminal, an earthbound station 

used in satellite communications of data, voice, 

and video signals) terminals in countries where 

the telecommunications infrastructure does not 

support stable telephone and Internet services. In 

FY 2007, this technology was implemented in Benin, Burkina Faso, Guyana, Kenya, Kyrgyz Republic, Lesotho, Malawi, Mali, Mauritania, Micronesia, Samoa, St. Lucia, Togo, Tonga, Turkmenistan, 

Uganda, and Vanuatu.

The Peace Corps upgraded the Crime Incident Reporting System introduced in FY 2006 to a Crime 

Incident Reporting Form (CIRF). CIRF is providing a secure, timely, standard electronic solution for 

posts to report specific crimes against Volunteers 

to the Office of Safety and Security, regions, medical staff, the inspector general, and general counsel. 

CIRF is saving time, enhancing safety and security, 

and providing accurate and consistent information 

to all parties involved. 

Peace Corps e-government plans for FY 2008-

2009 include:

•	 Deploying a search engine solution called Information Access 

•	 Developing the first iteration data warehouse

for information sharing

•	 Developing requirements and analysis for a content management system

•	 Analyzing a document management solution to

address the Health Insurance Portability and 

Accountability Act, the National Archives and 

Records Administration, and COOP needs

•	 Deploying an agency mobility solution, including wireless.
The Peace Corps :: performance and accountability report :: fiscal year 2007 19

Management’s Discussion and Analysis

•	 Deploying a pilot wiki (an online collaboration

tool) called Peace Wiki.

•	 Deploying sharepoint portal services to more

posts, reducing the need for Volunteers to travel 

to posts to exchange information.

•	 Deploying the VOIP solution for additional

posts.

The Peace Corps will continue to align IT systems 

with core business processes using its governance 

process to ensure agency priorities are achieved. 

Defining IT strategic planning around processes 

that make the best use of Web accessibility will be 

one way the agency accomplishes this.

Budget and Performance Integration

The primary tool the Peace Corps uses to integrate 

budget and performance is its Integrated Planning 

and Budget System (IPBS). The IPBS is consistent 

with the planning process defined by the Government Performance and Results Act and is tied to 

the PMA. The system aligns the Congressional 

planning and budget cycle with the major business 

life cycles of the Peace Corps (i.e., posts’ field project design and the agency’s Volunteer recruitment 

and delivery cycles). IPBS was reengineered during 

FY 2006 and the agency is experiencing the benefits of the enhanced planning features, the internal 

monthly budget execution reviews and the quarterly execution reviews. Realigning performance 

reviews with the mid-year budget review process, 

combined with formal presentations to the Director, has streamlined the reallocation process for 

funding and the management of human resources 

and increased the visibility of problem areas for 

quick resolution. 

The agency’s most recent step toward improving 

the budget and performance integration was creating the Office of Strategic Information, Research, 

and Planning during FY 2007. This office will lead 

the development of content for long-range planning 

efforts; facilitate implementation of Peace Corpslevel program evaluations; improve use of outcome-oriented performance measures; and serve 

as the agency’s authority for data governance and 

stewardship.

Managing within the framework of the President’s 

Management Agenda provides agency management 

with an opportunity to create systems that enhance 

performance. These improved capabilities allow 

the Peace Corps to focus on its vital mission and 

build a solid foundation for future excellence.

Volunteers in El Salvador
P e rf o rmanc e s e ct i o n
The Peace Corps :: performance and accountability report :: fiscal year 2007 21

Performance Section

Annual Performance Report

0

The Peace Corps’ mission of promoting world peace 

and friendship is accomplished through the work of 

Peace Corps Volunteers as they transfer skills and 

build cross-cultural understanding in partner countries throughout the world. The agency operates in 

host countries that have invited the Peace Corps to 

assist them in meeting their development needs. 

Through their work, Peace Corps Volunteers build 

bridges of understanding between Americans and 

host country nationals. 

The Peace Corps uses performance goals and measures that focus on providing skilled Volunteers to 

meet host country needs, supporting the health and 

safety of the Volunteers, and ensuring that Volunteers reflect the face of America to host countries. 

The measures also look at the efficiency and effectiveness of efforts to recruit, train, and support Volunteers as they carry out their work, as well as the 

exposure of Americans to other cultures because of 

the Peace Corps. These goals and measures provide 

a clear picture of the agency’s most important performance results.

In FY 2007, the Peace Corps made significant strides 

in institutionalizing its performance reporting process through the creation of the Office of Strategic 

Information, Research, and Planning (OSIRP). For 

FY 2006-2008, the Peace Corps adjusted its strategic plan to better align the plan to the Peace Corps’ 

three core goals and internal processes, including 

new and modified strategic objectives with outcomeoriented targets and indicators. The Peace Corps 

completed, and OMB approved, the revised version 

of the agency’s strategic plan, which was included in 

the FY 2007 Congressional Budget Justification.

Program Assessment Rating Tool 

The strategic plan adjustment was in response to the 

Peace Corps’ first-ever Program Assessment Rating 

Tool (PART) review, which occurred in FY 2005. 

The Peace Corps received an “effective” rating, which 

indicates that the agency has set ambitious goals, 

achieved results, is well-managed, and improves efficiency. The PART review process also included recommendations for improvement, called the PART 

improvement plan. The Peace Corps’ improvement 

plan outlined the need to identify new strategic objectives with outcome-oriented targets and indicators 

more closely aligned to the agency’s mission statement. In response, the Peace Corps produced the 

interim adjustment to the strategic plan described 

above under which the agency is currently operating. 

The PART improvement plan also refers to the agency’s need to better measure Volunteers’ effectiveness 

in carrying out the Peace Corps’ second core goal of 

promoting a better understanding of Americans on 

the part of the peoples served. OSIRP is developing 

sophisticated research methods to measure outcomes that will enable the Peace Corps to quantify 

its achievement of this second core goal and the rest 

of the agency’s performance measures in FY 2008.

In addition to institutionalizing the agency’s performance reporting, OSIRP is also charged with developing the FY 2009-2014 strategic plan.

Office of Inspector General Audits 

and Evaluations

The Peace Corps’ Office of the Inspector General 

(OIG) regularly conducts audits and evaluations of 

the effectiveness of programs that support Peace 

Corps Volunteers. Auditors focus on fiscal accountability and effectiveness of internal controls over 

Peace Corps resources. Evaluators analyze the program operations of the Peace Corps at both overseas posts and domestic offices. Audits and evaluation reports identify internal control weaknesses, 

best practices and recommend program improvements and means to comply with applicable federal 

regulatory guidance, and Peace Corps’ policies and 

procedures. During FY 2007, the OIG issued six program evaluation reports and 16 audit reports reporting on 21 countries. Audit management challenges 

cited in the reports include operational areas related 

to financial reporting, information technology, and 

internal controls over Peace Corps resources such as 

cash and capital assets. Challenges cited in the pro-
22 The Peace Corps :: performance and accountability report :: fiscal year 2007

Performance Section

gram evaluation reports relate to site development 

and selection, grant-making and other funding-related issues, technical and local language training, 

and the sufficiency and quality of medical services to 

Volunteers.

OIG issued 16 audit reports in FY 2007 related to 

administrative and financial operations at overseas 

posts. Other audits performed included the annual 

audits of the agency’s financial statements, privacy 

and vulnerability assessment of Peace Corps’ intranet and external website, and a Federal Information Security Management Act review of selected 

agency information systems.

The six program evaluations were conducted in 

Azerbaijan, Cameroon, Eastern Caribbean, Ecuador, Guinea, and South Africa. Reports from these 

evaluations are submitted to regional directors who 

then take appropriate action to address identified 

concerns.

In FY 2007, the OIG also initiated field research 

for two large-scale comprehensive evaluations to 

look at the safety and security of Volunteers and the 

agency’s medical screening process for potential 

Volunteers. Research for these two evaluations involved travel to 16 countries.

Internal Management Assessments

The goal of the Office of the Director’s internal management assessment (IMA) program is to partner 

with regional and post senior leadership to strengthen and improve the management of posts. Assessment teams have pursued meaningful solutions 

to improve the efficiency and effectiveness of post 

operations and to enhance Volunteer service and 

programmatic impact. These assessments are collaborative and build consensus. Additionally, the assessments are timely for posts and regions, relevant 

to senior staff at selected posts and the regions, and 

are responsive to post and region needs. 

In FY 2007 IMA assessments were conducted in: 

Belize, Costa Rica, Guyana, Kenya, Mexico, Niger, 

Peru, the Philippines, and Zambia. Assessments focused on: 

•	 Posts in transition (new leadership, program direction and internal challenges);

•	 Peace Corps training;

•	 Operational models in geographically large

countries;

•	 Review of Peace Corps operations in new entry

countries (three to five years after opening);

•	 Volunteer support concerns in countries with

high incidence of HIV/AIDS and the impact of 

the President’s Emergency Plan for AIDS Relief 

(PEPFAR) funds on operations; and

•	 Post growth (implications for staffing, budget,

Volunteer support, and site development).

Performance Reporting Process

Throughout FY 2007, the agency continued to use 

the enhanced internal controls and documentation 

of processes developed in FY 2006. The creation of 

OSIRP was a major step in providing an institutional home for performance reporting in the agency. 

The Peace Corps’ FY 2007 performance results are 

based on reliable, actual data that are complete as 

of the production of the results at the close of the 

fiscal year. Overall, the Peace Corps has made great 

progress in institutionalizing its performance reporting process and is well-positioned to provide 

solid results on performance measures.
The Peace Corps :: performance and accountability report :: fiscal year 2007 23

Performance Section

Performance Summary

FY 2007 is the second year for the agency to report 

out on its current set of ambitious but achievable 

performance goals and indicator targets as outlined in the strategic plan. In FY 2007, the agency 

was above target for five of the eight performance 

goals and approximately 73 percent of the 33 performance indicators. In some cases results were 

better than anticipated; in other areas results fell 

short of the goal. A case-by-case analysis is included in the section entitled “Annual Performance Results”. The agency will continue to work to achieve 

its strategic goals and to serve the Volunteer, host 

country nationals, and the American people.

Performance Goal and Brief Description

Performance Goal

Against Target

Performance Indicators Against Target

Under On Over

1.1.1 Volunteers serving Over 2 1 1

1.2.1 Skills and knowledge transfer Over 1 – 3

1.3.1 Representation of American diversity Under 2 – 3

2.1.1 Volunteer healthcare Over* – – 3

2.2.1 Volunteer safety Under* – – 3

3.1.1 Interactions with Americans to build

cross-cultural understanding Under 2 – 3

4.1.1 Reduction of response time to applicants Over – 1 4

4.2.1 Volunteer resignation rate Over 1 – 2

Total Performance Goals = 8 3 Under

5 Over

8 2 22

Notes: The three categories of performance measurement are under, on, or over target. A number that is under target is any number 

below the target; a number that is on target is any number that is exactly on target; and a number that is over target is any number 

that is more than the target. Data for one of the performance indicators for Performance Goal 4.2.1 are not available as the biennial Volunteer survey was not performed in FY 2007 and the close-of-service survey did not include the necessary question to 

inform this indicator.

* The agency does not have official FY 2007 targets and results for certain performance goals and indicators because the biennial 

Volunteer survey is not administered this year. Rather than indicating N/A for both the goals and results, the agency has interpolated 

goals and utilized close-of-service survey results in order to provide alternate information of agency performance in these areas.

Performance Indicators Summary

*
24 The Peace Corps :: performance and accountability report :: fiscal year 2007

Performance Section

Correlation of Peace Corps Core Goals and Strategic Goals

The Peace Corps has four strategic goals that align to the agency’s three core goals (as set forth in the Peace 

Corps Act). Although many of the agency’s activities cut across all of the three core goals, there are close 

relationships between specific core goals and certain strategic goals. The following table shows these relationships.

Goal 1) to help the people of interested countries in meeting their need for trained men and women; 

Goal 2) to help promote a better understanding of Americans on the part of the peoples served; and

Goal 3) to help promote a better understanding of other peoples on the part of Americans.

0

Core Goals

Strategic 

Goals

Performance 

Goals Correlation

Goal 1 1, 2, 4 1.1.1

1.2.1

More Volunteers in the field provide more opportunities to assist interested countries 

and broaden the impact of the agency.

2.1.1

2.2.1

The effectiveness of Volunteers to assist communities overseas is enhanced when they 

are safe and healthy.

4.1.1

4.2.1

Getting Volunteers to the field and having them serve their full term enhances the 

opportunities for positive impact.

Goal 2 1, 2, 4 1.1.1

1.3.1

By increasing the number of Volunteers overseas, and having a diverse representation of 

America, a better understanding of Americans by the people they serve is expanded.

2.1.1

2.2.1

The effectiveness of Volunteers to accomplish Goal 2 is enhanced when

they are safe and healthy.

4.1.1

4.2.1

Getting Volunteers to the field and having them serve their full term enhances the ability 

to fulfill Goal 2.

Goal 3 3 1.1.1

1.3.1

By increasing the number of Volunteers serving overseas, the base of persons who will 

promote a better understanding of other peoples to Americans is expanded.

3.1.1 Helping promote a better understanding of other peoples on the part of Americans is 

achieved by sharing Volunteer experiences and stories in a variety of venues.

Correlation of Peace Corps Core and Strategic Goals
The Peace Corps :: performance and accountability report :: fiscal year 2007 25

Performance Section

Annual Performance Results

Strategic Goal 1

Assist interested countries with their identified needs by gradually expanding the number of trained Volunteers serving overseas; broadening the impact on the lives of men and women in their host communities 

by transferring tangible skills; and helping to promote an understanding of Americans, including representing American diversity, at a rate consistent with annual funding. 

Outcome Goals:

1.1 Assist interested countries with their identified needs by gradually expanding the number of trained Volunteers serving overseas from 7,733 in FY 2004 to 8,000 in FY 2008, at a rate consistent with annual 

funding.

1.2 Broaden the impact of Volunteers on the lives of men and women in their host communities by transferring tangible skills, as measured by increasing Volunteers reporting in the Peace Corps’ close-of service 

survey that they were “adequately” to “exceptionally” effective in transferring knowledge and skills to 

members of their host community, from 80 percent in FY 2006 to 82 percent by FY 2008. 

1.3 Represent American diversity in Peace Corps host communities by increasing numbers of Peace Corps 

applicants representing diverse ethnicities and people 50+ by 4 percent, from the FY 2005 level of 24 

percent to 28 percent by FY 2008. 

Performance Goal 1.1.1. 

Increase the number of Peace Corps Volunteers to 

7,920 by FY 2007.

Results and Analysis:

At the end of FY 2007, 8,079 Americans were serving in 74 countries through 68 posts as Peace Corps Volunteers encouraging sustainable development and cross-cultural understanding at the grassroots level. This 

level of achievement is noteworthy because it represents a high for field-serving Volunteers during the period 

covered by the present strategic plan and for the agency during the last 37 years. In addition, the agency broadened its international reach with the arrival of Volunteers entering on duty in the Kingdom of Cambodia which 

opened in FY 2006 and the historic return of the Peace Corps to Ethiopia. 

Performance Indicators 1.1 FY 2007 Target FY 2007 Results

i. Number of new country entries 2 1

ii. Percentage of Peace Corps focus countries participating in

the President’s Emergency Plan for AIDS Relief (PEPFAR)

100% 100%

iii. Number of Crisis Corps Volunteers (all funding sources) 100 64

iv. Overall visits to website 8.6 million 10 million

0

FY 2007 Goal FY 2007 Actual

7,920 8,079

Results

FY 2003 FY 2004 FY 2005 FY 2006

7,533 7,733 7,810 7,749
26 The Peace Corps :: performance and accountability report :: fiscal year 2007

Performance Section

Results and Analysis:

In accomplishing the agency ’s goals for modest expansion, the Peace Corps continues to respond to the numerous countries requesting a Peace Corps presence by opening new programs that focus on meeting the unique 

needs of the host country. In April 2007, the Peace Corps placed Volunteers in the Kingdom of Cambodia for 

the first time. Volunteers will also again be working in Ethiopia with trainees arriving there in October 2007. 

The agency has also completed assessments for new country entries in three African countries and one Asian 

country for consideration in FY 2008.

The Peace Corps continues to be a valuable participant in the President’s Emergency Plan for AIDS Relief 

(PEPFAR). The Peace Corps has a presence in 10 of the 15 PEPFAR focus countries. Each of these posts actively 

participated in PEPFAR funded HIV/AIDS programs during FY 2007, expanding and enhancing their ongoing efforts in the fight against the pandemic. Twelve additional posts also participated in the PEPFAR funded 

program, and Volunteers throughout the world integrated HIV/AIDS awareness messages into their work. By 

living and working at the grassroots level in communities and speaking the local language, Peace Corps Volunteers are uniquely suited to share culturally appropriate messages in HIV/AIDS education and prevention. 

The Peace Corps’ Crisis Corps program sends returned Peace Corps Volunteers on short-term assignments to 

assist with critical country needs. This fiscal year, programs primarily supported the HIV/AIDS global pandemic and disaster preparedness and mitigation in countries prone to natural disasters. In FY 2007 Crisis 

Corps served in 10 new countries: Eastern Caribbean (which comprises Antigua/Barbados, Dominica, Grenada, St. Lucia, St. Kitts, and St. Vincent), Guyana, Madagascar, Panama, and the Philippines. Of the 64 Crisis 

Corps Volunteers who served, 41 supported HIV/AIDS programs in nine countries. Crisis Corps also sponsored 

a disaster preparedness workshop for the Central America/Caribbean sub-region, providing strategic response 

training to facilitate future participation in disaster preparedness and response.

A strategic realignment of priorities in Jamaica along with staff changes in Jamaica and Guatemala, led to a 

shortfall of anticipated assignments for the Crisis Corps in the Central America/Caribbean sub-region for

FY 2007. Establishing a new program in the Philippines, which required hiring a project coordinator and extensive relationship building and site development, also delayed placements and contributed to the program’s 

not meeting its FY 2007 targets. The process to request Crisis Corps Volunteers has been streamlined, and the 

program expects to receive more-than-sufficient requests to meet its FY 2008 targets.

The American public increasingly uses the internet as its primary source to obtain information. New initiatives 

for the Peace Corps website have increased traffic to the site by an additional 92,000 visitors. In FY 2007, these 

initiatives included RRS (really simple syndication) feeds to syndicate news, events, and content of Volunteers’ 

journals; and adding compelling new content to the website, such as an interactive world map, a Kenyan sign 

language project, the new Coverdell World Wise Schools site, and “Volunteer Voices” podcasts.

Performance Goal 1.2.1.

Incrementally increase the percentage of respondents 

to the Peace Corps close-of-service survey reporting 

the effectiveness of transferring knowledge and skills 

to members of their host community as “adequately” 

to “exceptionally” to 81 percent by FY 2007. 

FY 2007 Goal FY 2007 Actual

81% 86%

Results

FY 2003 FY 2004 FY 2005 FY 2006

N/A N/A N/A 83%

This is a new performance goal as of FY 2006. No data from past fiscal years is available.
The Peace Corps :: performance and accountability report :: fiscal year 2007 27

Performance Section

Results and Analysis:

One of the Peace Corps’ main objectives is for Volunteers to transfer skills to members of the communities in 

which they live and work in order to make a meaningful and sustainable difference in the lives of those they 

serve. Volunteers are instructed on methods to build the capacity of the host country nationals with whom 

they work and to help tech solutions that will be sustainable within the community. According to Volunteers 

surveyed upon completion of their service, via the close-of-service survey implemented in FY 2007, 86 percent said they effectively transferred knowledge and skills to members of their host community.

Performance Indicators 1.2 FY 2007 Target FY 2007 Results

i. Number of individuals assisted by Volunteers (e.g., students, farmers, community

members) as reported via the prior year’s project status report annual review 

2,176,000 2,403,458

ii. Number of service providers trained by Volunteers (e.g., teachers, health clinic 

workers, agriculture extension agents) as reported via the prior year’s project 

status report annual review

114,300 155,565

iii. Number of community-initiated, Volunteer-led, Partnership Program projects 465 429

iv. Increase the extent Volunteers report that they have helped host country nationals 

gain a better understanding of the United States and its people, as reported by the 

Peace Corps close-of-service survey

91% 95%

Results and Analysis:

The agency exceeded its targets for the numbers of individuals assisted and service providers trained by Volunteers. The Center for Field Assistance and Applied Research, through its annual project status review process, 

compiles annual data and reviews observations related to programming and training as submitted by the field. 

The Peace Corps accomplishes its goal of transferring skills to people of interested countries by building the 

capacity of men, women, girls, and boys to manage their own development in a sustainable manner. Volunteers 

help build capacity by increasing knowledge, improving skills, and promoting behavior change of individuals 

and families in the countries they serve. Capacity-building efforts are targeted toward individuals, service 

providers, and organizations, who can, in turn, teach fellow community members. 

One key goal of each Volunteer is to help promote a better understanding of Americans on the part of the host 

country community in which the Volunteer is serving. In FY 2007,the Peace Corps exceeded its target for this 

performance indicator. Sharing about themselves, their families, and their life in the United States, enables 

Volunteers to build a bridge of cross-cultural understanding. By living and working in local communities and 

speaking the local language, Volunteers forge relationships with their host country community members, and 

they model a spirit of friendship, understanding, and volunteerism on behalf of Americans.

The Peace Corps was slightly below its target for community-initiated, Volunteer-led Peace Corps Partnership Program projects. This was largely due to the use of cumbersome guidance documents and processes 

during the first part of the year. Steps were taken mid-year to streamline these documents and processes. Subsequently, project approvals increased threefold, but the number still fell short of FY 2007 targets by 36. It is 

important to note that the average project size increased by approximately 4 percent, while the average fundraising time decreased by approximately 30 percent, further validating the effectiveness of the new streamlined processes.
28 The Peace Corps :: performance and accountability report :: fiscal year 2007

Performance Section

Performance Goal 1.3.1.

Incrementally increase the number of Peace Corps 

applicants representing diverse ethnicities and people 50+ by 3 percent from a FY 2005 level of 24 percent to 27 percent by FY 2007.

Results and Analysis:

While working to gradually expand its number of Volunteers, the agency is also working to increase the number of individuals from underrepresented ethnic and age groups who apply for Peace Corps service. This effort 

ensures that the Peace Corps continues to do its best to reflect the diverse face of the United States. While the 

agency enhanced its performance in FY 2007, it still failed to meet its FY 2007 target of 27 percent. A new 

strategic emphasis on minority recruiting reflects the agency’s continued commitment to recruit applicants of 

diverse ethnicities and those age 50+.

Performance Indicators 1.3 FY 2007 Target FY 2007 Results

i. Percentage of applicants over the age of 50 7.9% 7.4% 

ii. Percentage of applicants of diverse ethnicities 20% 17.4%

iii. Total visitors to website who access minority recruitment pages 

and/or scarce skills and family pages

440,000 572,363

iv. Number of articles placed in newspapers and other media that 

focus on diverse Volunteers and/or target diverse audiences

180 260

v. Total number of public service announcements (PSA) placements 

in minority- and diversity-geared media

2,500 12,337

Results and Analysis:

Several initiatives have begun to further increase the diversity of the Peace Corps applicant pool. The following are continuing programs to further improve performance in this area: (1) Presentations at national conventions regarding Volunteer service either mid-career or post retirement; (2) Increased to more than 275 50+ 

general information meetings with a focus on opportunities for 50+ throughout the 11 regions; (3) Increased 

press coverage beginning with the Lillian Carter Awards and placement of national advertising in fraternal 

organization publications; (4) Addition of 50+ recruiters in the regional offices by hiring seasoned or 50+ temporary and full-time staff.

The Peace Corps has also worked diligently to increase the production of diverse applicants. Peace Corps currently enjoys a historic high number of diverse Volunteers in the field. Even though the agency did not meet the 

FY 2007 target for applicants of diverse ethnicities, Volunteer Recruitment and Selection has implemented 

the following for further improved performance in the future: (1) Regional diversity milestones; (2) Awareness 

and extended outreach at Hispanic-serving institutions and the Hispanic Association of Colleges and Universities (HACUs); (3) Workshops and presentations at various minority-serving institutional organizations; 

(4) Provision of diversity funds to regional recruitment offices for diversity recruitment pilot programs and 

participation in national diversity events.

FY 2007 Goal FY 2007 Actual

27% 24%

Results

FY 2003 FY 2004 FY 2005 FY 2006

25.9% 26.1% 24.5% 24%
The Peace Corps :: performance and accountability report :: fiscal year 2007 29

Performance Section

New web content and PSA marketing efforts have increased visitors to the Peace Corps’ website. Also in

FY 2007, the bandwidth of the agency’s Internet server was increased and multimedia assets were off-loaded 

to an external server. This enabled visitors to navigate through the website much more easily. More visitors are 

coming to the site and each visitor is staying longer to view more pages, sharply increasing the number of minority recruitment, scarce skills, and family pages viewed.

This year the Peace Corps reenergized its campaign to recruit more Volunteers ages 50 and over. The steering 

committee for the Volunteer Delivery System focused on new recruiting strategies (including those for Americans age 50 and over); communicating better what service really means; expediting the process to medically 

clear and invite applicants; strengthening language training; and creating good site placements and projects 

for Volunteers. Pilot posts are evaluating the effectiveness of changes in field operations. 

The agency also continued to highlight the diversity of its Volunteers throughout 2007, with concentrated 

effort during times such as African American History Month, Hispanic Heritage Month, and Asian Pacific 

Islander Heritage Month. All of these efforts allowed the agency to exceed its number of article placements in 

diverse and targeted diverse media. 

In FY 2007, there were 12,337 placements for Peace Corps PSAs in minority- and diversity-geared media—

more than five times the goal. Significant factors contributing to this success were the release of two new 

Spanish radio PSAs; continued placement of the Spanish television PSA, which launched in 2006; and the 

strategic placement of Web PSAs. New targeted print PSAs were released in July 2007, which will additionally 

strengthen the agency’s public service campaign.

800.424.8580 

www.peacecorps.gov Life is calling. How far will you go?

 e diff erence between a career and 

a purpose is about 8,000 miles.

2007_JobPostings_Purpose_fullpg.1 1 7/31/07 12:42:08 PM

800.424.8580 

www.peacecorps.gov Life is calling. How far will you go?

What happens in Botswana doesn’t stay in Botswana.

When you help make a better life for others abroad, you also develop skills 

and experience that will serve your community back home.

CornerOffice_half_horiz.

Bleed: 8.25x5.5

Trim: 7.875x5.25

Live: 7x5

Peace Corps PSA

PEA-GEN-P6-1061

Client:

Art Director:

Job No.:

Copywriter:

Size:

Production:

 Date:

Traffic:

PEACE CORPS PEA GEN P6 1061 7X5 LIVE 4/30/2007

DEBORAH

Studio

MGB

Proofreader Copywriter Art Director Production Creative Dir. Acct. Exec. Acct. Sup.

 e corner offi ce can wait. 

Some corners of the world can’t.

800.424.8580 

www.peacecorps.gov Life is calling. How far will you go?

FromHere_half_horiz.

Bleed: 8.25x5.5

Trim: 7.875x5.25

Live: 7x5

Peace Corps PSA

PEA-GEN-P6-1061

Client:

Art Director:

Job No.:

Copywriter:

Size:

Production:

 Date:

Traffic:

PEACE CORPS PEA GEN P6 1061 7X5 LIVE 4/30/2007

DEBORAH

Studio

MGB

Proofreader Copywriter Art Director Production Creative Dir. Acct. Exec. Acct. Sup.

800.424.8580 

www.peacecorps.gov Life is calling. How far will you go?

From here, you can see the future.

 e most rewarding thing you can do now

is to help create a better tomorrow.

Print ads from the Peace Corps Life is Calling campaign
30 The Peace Corps :: performance and accountability report :: fiscal year 2007

Performance Section

Strategic Goal 2

Ensure a quality Volunteer experience by increasing the quality of healthcare and managing the safety and 

security risk factors in each of the communities where the Volunteers live. 

Outcome Goals:

2.1 Increase the percentage of Volunteers indicating feeling “adequately” to “exceptionally” satisfied with 

their in-country healthcare from FY 2002 level of 75 percent to 82 percent by FY 2008.

2.2 Increase the percentage of Volunteer survey respondents indicating they feel safe most of the time (“usually safe” to “very safe”) where they live from FY 2002 level of 86 percent to 88 percent by FY 2008.

Performance Goal 2.1.1.

Incrementally increase the percentage of respondents 

to the biennial Peace Corps Volunteer survey indicating feeling “adequately” to “exceptionally” satisfied 

with their in-country healthcare from the FY 2002 

level of 75 percent to 82 percent by FY 2008.

Notes: The target level for this performance goal is interpolated between those previously established for FY 2006 at 80 percent and for

FY 2008 at 82 percent. The close-of service survey results for FY 2007 have been used to inform this performance goal since the next 

biennial Peace Corps Volunteer survey is targeted for implementation in FY 2008. 

Results and Analysis:

The health, safety, and security of every Volunteer is the Peace Corps’ highest priority and is reflected as such 

in the agency’s planning. The results of the FY 2007 close-of-service Volunteer survey demonstrate that the 

vast majority of Volunteers are satisfied with the healthcare they receive while they live and work in their communities around the world.

Performance Indicators 2.1 FY 2007 Target FY 2007 Results

i. Percentage of Volunteers medically evacuated to Washington, D.C., reporting they are 

satisfied with their medical evacuation care as measured by the medevac survey

90% 92% 

ii. Percentage of Volunteer respondents reporting feeling “adequately” to “exceptionally” 

prepared, both physically and mentally, to meet the challenges of Peace Corps service 

as measured by the Peace Corps close-of-service survey

90% 92%

iii. Incidence of falciparum malaria in Africa region 

(measure is in cases per 100 Volunteer/trainee years)

Less than 6.0 1.7

Results and Analysis:

Peace Corps Volunteers serve in challenging environments throughout the world, and the health of Volunteers 

is one of the agency’s top priorities. In extreme circumstances, Volunteers may need to be medically evacuated 

to Washington, D.C. Their satisfaction with the care received is important. During FY 2007, data from the 

survey given to medevaced Volunteers show that the agency exceeded its goal by achieving a 92 percent satisfaction rate. These high marks reflect how well the medical field support unit supports Volunteers on medevac 

status. Accommodations for these Volunteers during their stay in D.C. include a lounge with Internet access 

and telephone service for their use; and shuttle bus transportation to and from Peace Corps headquarters each 

week day, and to grocery stores and pharmacies throughout the week.

The Peace Corps focuses on equipping Volunteers with the tools they need to deal with the changes they will 

face in their communities. Training on physical and emotional health is a focus of pre-service training and is 

FY 2007 Goal FY 2007 Actual

81% 92%

Results

FY 2003 FY 2004 FY 2005 FY 2006

N/A 87% N/A 92%
The Peace Corps :: performance and accountability report :: fiscal year 2007 31

Performance Section

reinforced throughout a Volunteer’s term of service. Close-of-service survey results from FY 2007 indicate 

that the vast majority of Volunteers are satisfied with the preparation they receive during training to meet 

the mental and physical challenges of Peace Corps service. Furthermore, Volunteers in malaria-prone areas 

are thoroughly trained on proper protocols and the importance of malaria prophylaxis, resulting in a marked 

decrease in the incidence rate for falciparum malaria.

Performance Goal 2.2.1.

Incrementally increase the percentage of respondents to the biennial Peace Corps Volunteer survey 

indicating that Volunteers feel safe most of the time 

(“usually safe” to “very safe”) where they live by 2 

percent from FY 2002 level of 86 percent to 88 percent by FY 2008.

Notes: The target level for this performance goal is interpolated between those previously established for FY 2006 at 86 percent and for

FY 2008 at 88 percent. The close-of service survey results for FY 2007 have been used to inform this performance goal since the next 

biennial Peace Corps Volunteer survey is targeted for implementation in FY 2008. 

Results and Analysis:

The safety and security of the Volunteer is the agency’s highest priority. Safety and security information is 

incorporated into all aspects of Volunteer recruitment, training, and service. While we are concerned with the 

slight drop off in this performance indicator, we attribute this to the smaller Volunteer population sampled by 

the close-of-service surveys. We will continue to emphasize performance in this area and will be able to validate it during the implementation of the biennial Volunteer survey in FY 2008.

Performance Indicators 2.2 FY 2007 Target FY 2007 Results

i. Percentage of posts receiving safety and security report recommendations annually 85% 87% 

ii. Percentage of Volunteer respondents reporting the safety and security portion of their 

pre-service training as “adequate,” “effective,” or “very effective” as measured by the 

biennial Volunteer survey*

85% 96%

iii. Percentage of Volunteer respondents reporting they were “somewhat,” “considerably,” 

or “completely” satisfied with support provided by Peace Corps staff for safety and 

security, as measured by the biennial Volunteer survey*

85% 90%

Notes: * The target level for performance goals ii. and iii. are maintained at the level previously established for FY 2006 of 85 percent. 

The FY 2008 target is 85 percent. The close-of service survey results for FY 2007 have been used to inform these performance 

goal since the biennial Peace Corps Volunteer survey will be conducted again in FY 2008. 

Results and Analysis: 

To help measure the impact that the safety and security support staff has had on Volunteer safety, the agency’s 

Office of Safety and Security determined that 85 percent of posts would be visited by safety and security officers to assess and recommend improvements to their respective Volunteer safety support systems. By the 

end of FY 2007, this goal had been exceeded. Safety and security site visits assisted staff in training, crisis 

management, and collaboration with embassies on physical security recommendations or office relocations; to 

follow-up on previous recommendations; and to provide other safety and security programmatic support.

An important goal related to a Volunteer’s perception of safety and security was increasing the percentage of 

Volunteer respondents to 85 percent who felt that the safety and security information received during pre-service training was “adequate” to “very effective”. This percentage was also greatly surpassed with survey data 

indicating that 96 percent reported favorably. By including region-and post-specific safety and security information in all Welcome Books, invitees become aware of the overall security environment of prospective posts 

FY 2007 Goal FY 2007 Actual

87% 85%

Results

FY 2003 FY 2004 FY 2005 FY 2006

N/A 88% N/A 88%
32 The Peace Corps :: performance and accountability report :: fiscal year 2007

Performance Section

as well as the agency’s approach to safety and security. Receiving this information before leaving home enables 

invitees to better absorb the messages that are reiterated and emphasized in staging and pre-service training. 

Additionally, 90 percent of Volunteers reported that they were “somewhat” to “completely” satisfied with the 

support provided by Peace Corps staff regarding their safety and security, which is well above the 85 percent 

goal. The presence of regional Peace Corps safety and security officers in the field, safety and security coordinators at each post, and safety and security desk officers at headquarters has improved communication, coordination, and oversight of safety and security systems. The agency is encouraged by the positive perceptions 

Volunteer have of their security, training, and support and remains committed to focusing on this important 

issue, remaining vigilant to maximize Volunteer security overseas.

Education Volunteer, Kenya
The Peace Corps :: performance and accountability report :: fiscal year 2007 33

Performance Section

Strategic Goal 3

Increase the exposure of Americans to other cultures by sharing Volunteer experiences and stories in numerous venues, including the classroom, special events, community visits, and through electronic means, 

as well as engaging those who have completed their service in ongoing Peace Corps-supported volunteer 

opportunities.

Outcome Goal:

3.1 Increase the number of interactions with Americans to further the Peace Corps’ goals through Peace 

Corps-supported activities to 25,844 (aggregate of indicators i. through iv.) by FY 2007.

Performance Goal 3.1.1.

Increase the number of interactions with Americans to 

further the Peace Corps’ goals through Peace Corpssupported activities to 25,844 in FY 2007.

Results and Analysis:

The Peace Corps’ failure to achieve this goal is directly related to the methodology to calculate Performance 

Indicator 3.1 (i). In early FY 2007 the agency established that the previously used methodology was labor intensive and did not provide results that could be verified in an optimal manner. This was because it included an 

estimate of the number of unregistered returned Peace Corps Volunteers (RPCV) who participated in Peace 

Corps Week activities. While a number of these individuals definitely contribute to this goal, the Peace Corps 

has decided to exclude this estimate of unregistered participants in future calculations. 

Performance Indicators 3.1 FY 2007 Target FY 2007 Results

i. RPCV interactions with the American public in communities and on campuses 

nationwide during Peace Corps Week and throughout the year through activities 

supported by the Peace Corps

15,200 10,954

ii. Donors supporting Peace Corps Volunteer projects through private sector contributions 5,800 5,684

iii. U.S. educators connecting with Peace Corps Volunteers through the Peace Corps’ 

Coverdell World Wise Schools correspondence match program

4,500 4,689

iv. Fellows/USA participants serving in communities nationwide 344 421

v. Visits per year to the Peace Corps’ Coverdell World Wise School website that contains 

lesson plans, Volunteer stories, and other educational resources for use in the classroom 

and beyond

1.32 million 2.1 million

Results and Analysis:

RPCV participation in Peace Corps Week surpassed the FY 2006 level by 91 participants. However, the agency 

failed to meet its goal due to a change in calculating methodology. The previously used methodology did not 

provide results that could be verified in an optimal manner and was labor intensive. This was because it included an estimate of the number of RPCVs who participated in Peace Corps Week activities. While a number 

of these individuals definitely contribute to this goal, the Peace Corps has decided to exclude this estimate of 

unregistered participants in future calculations. 

FY 2007 Goal FY 2007 Actual

25,844 21,748

Results

FY 2003 FY 2004 FY 2005 FY 2006

N/A N/A N/A 21,377

This is a new performance goal as of FY 2006. No data from past fiscal years is available.
34 The Peace Corps :: performance and accountability report :: fiscal year 2007

Performance Section

Though the number of donors supporting Peace Corps Partnership Program projects did not meet the FY 2007 

target, it is still an achievement over levels reported in FY 2006. The 5,684 donors in FY 2007 represented an 

increase of 24 percent over FY 2006 levels, which is attributable to efforts to develop materials that support 

internal and external marketing goals. These materials are increasing Volunteer awareness of the Peace Corps 

Partnership Program and raising the visibility of the program to potential and existing donors.

The Peace Corps is proud to have exceeded the target for the Coverdell World Wise Schools Correspondence 

Match program. The agency will continue to examine the work processes in this area and deploy target strategies to encourage increased participation in FY 2008. These will include revising match procedure to encourage Volunteers to select their own teachers; revamping the marketing brochure to include a detachable, 

pre-paid mail-in form; adding the form to the applicant kit received prior to staging; regularly reporting status 

to in-country contacts; and efforts to redesign the Correspondence Match database as an automatic Web sign 

up application.

The agency successfully achieved its target for the Peace Corps Fellows/USA participant service in communities. This success was due in significant part to effective improvements in reminding RPCVs of this benefit of 

service. Our performance in increasing the visits to the Coverdell World Wise Schools website is due to several 

special events like the innovative Global Issues Conference, more Web-based program content, a major website redesign, and cross linking with non-governmental organizations.

Agriculture Volunteer, Jamaica
The Peace Corps :: performance and accountability report :: fiscal year 2007 35

Performance Section

Strategic Goal 4

Increase the retention level of Americans interested in the Peace Corps by better facilitating the process of 

obtaining information, applying, joining and completing their Volunteer service.

Outcome Goals:

4.1 Improve the responsiveness of the Volunteer application process by streamlining the application process 

and decreasing the Peace Corps’ response time to applicants by 7 percent from 156 days (aggregate of 

below indicators of timeliness) in FY 2005 to 146 days in FY 2008.

4.2 Maintain the overall 12-month Volunteer resignation rate (with resignation officially defined as a decision made by a Volunteer/trainee that he/she no longer wishes to continue in Peace Corps service) at 10 

percent or less.

Performance Goal 4.1.1.

Decrease the Peace Corps’ response time to applicants by 2 percent from 154 days in FY 2005 to 150 

days in FY 2007.

Results and Analysis:

There are numerous steps in the application process to become a Peace Corps Volunteer. This enables the 

agency to recruit and thoroughly screen applicants for skills and medical and suitability issues prior to approving and inviting them to serve as Volunteers. In FY 2007, this application process was broken down into 

the various stages for which the Peace Corps has processing responsibilities to best analyze its efficiencies. 

The agency is pleased to have exceeded its FY 2007 goal of response time to applicants by approximately 20 

days. The agency remains committed to streamlining the processes that enable Americans to obtain information, apply, join, and complete service as Peace Corps Volunteers.

Performance Indicators 4.1 FY 2007 Target FY 2007 Results

i. Number of days from receipt of application to nomination 65 58

ii. Number of days from nominee’s completed health status review to medical kit sent 8 6.6

iii. Number of days from receipt of completed medical kit to medical qualification 31 31

iv. Number of days from medical qualification to invitation 46 34

v. Percentage of applicants who submit their Volunteer applications over the Internet 85% 93%

Results and Analysis:

The agency created a steering committee to optimize the Volunteer Delivery and Support System by leveraging the full force of the agency’s organization, management, technology, and fiscal operations to improve and 

sustain the Volunteer delivery. As a result of the efforts of this steering committee, the agency is pleased to 

have exceeded the FY 2007 goal of response time to applicants. The agency remains committed to streamlining the processes that enable Americans to obtain information, apply, join, and complete service as Peace 

Corps Volunteers.

FY 2007 Goal FY 2007 Actual

150 days or less 129.6 days

Results

FY 2003 FY 2004 FY 2005 FY 2006

N/A N/A N/A 138 days

This is a new performance goal as of FY 2006. No data from past fiscal years is available.
36 The Peace Corps :: performance and accountability report :: fiscal year 2007

Performance Section

Upon receipt of notification that an applicant has been nominated, and based upon the completed health status 

review, medical kits containing documents pertinent to each applicant are created and sent. In FY 2007, the 

agency exceeded its target for the number of days from nomination until the medical kit is sent. Additionally, 

the Office of Volunteer Support is creating an online medical kit that will allow Volunteers to receive their 

medical kits even more quickly and return them to the Peace Corps for evaluation and review.

While the Peace Corps successfully met its FY 2007 target for Performance Indicator 4.1 (iii), the current 

methodology to calculate the number of days from receipt of completed medical kit to a decision on medical 

qualification does not adequately address extenuating circumstances that influence the time it takes to make 

a final decision. In FY 2008, the Office of Volunteer Support will test a new calculation method that will eliminate the days waiting for the return of information or test results from applicants or medical providers. This 

will more accurately represent the medical workload and timing until a medical decision is made.

The Peace Corps is pleased with its performance on Performance Indicator 4.1 (v), and attributes that success 

to the ease of applying online and submitting electronic references.

Performance Goal 4.2.1.

Maintain the overall 12-month Volunteer’s resignation rate at 10 percent or less in FY 2007.

Results and Analysis:

Retaining Volunteers is an area the Peace Corps has carefully examined, and its target to keep resignations 

for FY 2007 below 10 percent was achieved. Offices throughout the agency benefited from a more thorough 

analysis of early terminations in general, with a focus on resignations (officially defined as a decision made by 

a Volunteer/trainee that he/she no longer wishes to continue in Peace Corps service). The agency continues to 

monitor early terminations and to use both quantitative and qualitative data to improve recruiting, training, 

programming, and all other aspects of the Volunteer experience. 

Performance Indicators 4.2 FY 2007 Target* FY 2007 Results*

i. Percentage of sites described “very well,” “well,” or “adequately” prepared 

as measured by the the biennial Volunteer survey

80% N/A

ii. Percentage of Volunteer respondents reporting their pre-service training to manage 

cultural differences as “adequate,” “effective,” or “very effective” as measured by the 

biennial Volunteer survey

90% 93%

iii. Percentage of Peace Corps project and training programs reviewed annually to provide 

feedback for improvement to posts as reported via the prior year’s project status report/

training status report review process

96% 95%

iv. Percentage of Peace Volunteer respondents reporting their pre-service training as 

“adequate,” “effective,” or “very effective” in preparing them to maintain their mental/

emotional health, as measured by the biennial Volunteer survey

84% 91%

Notes: N/A No data available from either the biennial or the close-of-service Volunteer survey.

* The target level for performance indicators i, ii, and iv is interpolated between the target previously established for

FY 2006 and the target for FY 2008. The close-of service survey results for FY 2007 have been used to inform these 

performance indicators since the biennial Peace Corps Volunteer survey is targeted for implementation in FY 2008. 

FY 2007 Goal FY 2007 Actual

<10% 8.8%

Results

FY 2003 FY 2004 FY 2005 FY 2006

9.0% 8.0% 9.0% 8.9%
The Peace Corps :: performance and accountability report :: fiscal year 2007 37

Performance Section

Results and Analysis:

The Peace Corps strives to retain Volunteers throughout their term of service by managing a quality program. 

However, life circumstances, such as family emergencies, sometimes cause Volunteers to resign early. These 

performance indicators were chosen in light of the difficulties Volunteers face that can lead to resignation, including challenges in adapting to the local culture, dealing with emotional or mental health issues, and struggling with the work environment. 

The Peace Corps met its goal on training Volunteers to manage cultural differences. The most safe and secure 

Volunteers are those who are well-integrated into their communities. The Peace Corps provides extensive 

training on cross-cultural awareness, enabling Volunteers to function well in their new communities. Additionally, the agency provides Volunteers with extensive language training to help them adapt to their new environment and to communicate effectively with their host country community counterparts.

Cohesive projects enable Volunteers to have well-defined work at their sites, which fits into a larger project 

goal to address the identified needs of the host country. The Center for Field Assistance and Applied Research 

monitors the production and quality of programming and training (including the quality of materials provided to posts) through an annual project status report review. These evaluations provide feedback to posts 

on overall possible project improvements. The agency is proud to have completed review of 95 percent of the 

project plans in FY 2007 which is slightly below the target of 96 percent previously established. We expect this 

performance to improve in FY 2008. 

The agency met its goal on preparing Volunteers to meet their mental/emotional health needs during their 

service. In FY 2007, the agency continued training efforts of staff and Volunteers that are essential to maintaining and enhancing mental health and Volunteer resiliency.

50+ Education Volunteer, Guyana
f i nanc i a l s e ct i o n
The Peace Corps :: performance and accountability report :: fiscal year 2007 39

Financial Section

Message from the Chief Financial Officer

Fiscal year 2007 saw the results of the past years transition and maturation of the financial systems and our 

personnel culminating in an unqualified opinion on the agency’s financial statements. For the first time since 

the financial audits began, there were no new material weaknesses or federal system non-compliances identified during the financial audit. Great credit needs to be given to the staff throughout the Peace Corps as sound 

financial management has been embraced across the organization. I give special thanks to the finance and 

administrative staff who have completely redefined their business practices to move from a disclaimer of an 

opinion to an unqualified audit opinion in two years. The production of the financial statements has moved 

from a project to a process and our internal controls have significantly improved.

The enterprise-wide federal system non-compliance (i.e., information systems control environment) from 

prior years was resolved by the successful certification and accreditation of the financial system earlier this 

fiscal year and by successfully testing the agency’s disaster recovery strategy process and the contingency 

plan in February 2007. Certification and accreditation of the Odyssey financial system was in accordance with 

the Federal Information Security Management Act, Public Law 107-347. Other information technology issues 

at the overseas posts were resolved by completing the software refresh in all three regions and by rolling out 

monthly software patches. 

Existing material weaknesses from past year audits in the financial management structure, accounting business processes, and the beginning balances were mitigated by the following:

•	 Implementing formalized and comprehensive reconciliation and quality control processes for material account balances and further documenting the basis for each fund classification and its treatment in the financial statements. 

•	 Providing an obligation funds documentation matrix to the posts and reinforcing obligation and disbursement guidance in the Overseas Financial Management Handbook.

•	 Conducting internal control testing to strengthen the reliability of personal service contract payment processing for overseas contractors and to further substantiate financial statement balances.

•	 Implementing a standardized accrual matrix, accrualtemplates and procedures and changing how accounts

payable accruals are estimated.

•	 Gaining better control ofthe property, plant, and equipment(PP&E) capital assets by publishing PP&Eprocedures, implementing an Oracle fixed asset module, and implementing an ongoing semiannual PP&E asset verification process with each post. The asset module streamlines PP&E tracking and depreciation and 

facilitates reconciliation with the financial statements.

Close, aggressive monitoring and completing corrective actions necessary to satisfy the agency’s corrective 

action plan coupled with dedicated managerial and employee efforts throughout the fiscal year significantly 

reduced the number of outstanding audit findings and eliminated material weaknesses for the Peace Corps. 

Notable among the financial management improvements this year to benefit the worldwide posts were enhanced training for new country directors and administrative officers; initiatives to better use electronic funds 

transfer capabilities; and cash improvements that allow immediate canceling and crediting of payments and 

reuse of funding. Other financial management improvement efforts implemented this fiscal year included: 

0
40 The Peace Corps :: performance and accountability report :: fiscal year 2007

Financial Section

•	 Implementing financial management performance metrics that measure critical activities to evaluate the

agency’s financial health.

•	 Monitoring closely the Inspector General’s post and headquarters audits and reducing the outstanding financial oversight audit findings from 23 to one.

•	 Eliminating a $1.2 million debit card backlog that spanned several fiscal years.

•	 Changing to a new debit card platform that will automatically unload unused amounts on debit cards based

on expiration date preventing future debit card problems.

•	 Replacing the manual method of referring debts to Treasury for collection with the Treasury’s automated

method, the FedDebt System.

•	 Publishing updated financial policy and disseminating it rapidly throughout the agency.

•	 Clearing outstanding cashier accountability out-of-balance conditions with the State Department in January 2007, with that balance remaining at zero at year’s end.

•	 Issuing 10 Peace Corps Manual Sections, 11 CFO Bulletins, two CFO Policy Statements; updating 35 of 52 

Chapters in the Overseas Financial Management Handbook; and issuing Travel and Fiscal Coding Handbooks.

•	 Clearing 515 old travel advances from expired funds which totaled more than $200,000.

•	 Developing a process to monitor outstanding collections at posts using the FOR-Post accounting system.

The Auditor’s report identified no material weaknesses during this year’s financial audit but did identify significant deficiencies in our internal controls for the accounting business processes and the information system 

security controls. Those deficiencies are identified in Appendix 1 and will be addressed and corrected during 

the next fiscal year. Additionally, there are a few remaining outstanding audit findings from prior-year audits 

not yet fully resolved but progressing in accordance with the structured corrective action plan. The status of 

the outstanding audit findings is shown in Appendix 1. Generally, resolving the outstanding audit findings is 

tied to future agency-wide events, such as conducting post IT audits or requires interaction with other federal 

agencies.

Looking forward to next year, internal control testing will be further expanded to include all key processes 

that impact financial reporting, further strengthening of the documentation for financial functions and processes, focus on financial management training for domestic and overseas staff, continued emphasis on hiring 

and retaining qualified staff, and continuing ongoing efforts to maintain and update Peace Corps manuals and 

handbooks.
The Peace Corps :: performance and accountability report :: fiscal year 2007 41

Financial Section

We remain committed to excellence in financial management with a goal to refine the maturation level of 

Peace Corps financial systems and key agency-wide financial processes that maintain financial performance 

and to support all agency efforts to secure future unqualified opinions on the agency’s financial statements. 

The financial statements that follow were prepared in accordance with generally accepted accounting principles for federal government entities and by subjecting the statements to an independent audit. The Peace 

Corps’ financial statements were prepared from its financial systems and processes using the most reliable 

and complete data available.

George A. Schutter III, CPA, CPCM

Chief Financial Officer

November 15, 2007

CFO George Schutter, Niger
42 The Peace Corps :: performance and accountability report :: fiscal year 2007

Financial Section

Peace Corps

 Balance Sheet

As of September 30, 2007 and 2006 

(In Thousands)

2007 2006

Assets (Restated)

 Intragovernmental 

 Fund Balance With Treasury (Note 2 and 3) $ 125,652 $ 134,516

 Accounts Receivable (Note 5) 630 980

 Total Intragovernmental 126,282 135,496

 Cash and Other Monetary Assets (Note 4) 65 65

 Accounts Receivable, Net (Note 5) 183 58

 General Property, Plant, and Equipment, Net (Note 6) 32,657 32,980

 Other

 Prepaid Volunteer Living Allowances (Note 7) 3,984 3,813

 Other Assets (Note 8) 2,510 430

 Subtotal Other 6,494 4,243

Total Assets $ 165,556 $ 172,967

Liabilities

 Intragovernmental

 Accounts Payable $ 1,024 $ 442

 Other

 FECA Liability (Note 9) 24,236 24,157

 Other Liabilities (Note 10) 2 2

 Subtotal Other 24,238 24,159

 Total Intragovernmental 25,262 24,601

 Accounts Payable 11,767 8,313

 Federal Employee and Veteran Benefits (Note 9) 116,450 116,451

 Other

 Other Employment Related Liability (Note 9) 7,590 9,840

 Non-Entity Funds 32,597 27,379

 Accrued Funded Payroll and Leave 3,680 3,241

 Annual Leave (Note 9) 7,310 6,673

 Other Liability (Note 10) 750 500

 Subtotal Other 51,927 47,633

 Total Liabilities 201,952 200,452

Commitments and Contingencies (Note 12)

Net Position

 Unexpended Appropriations - Other Funds 81,586 92,863

 Cumulative Results of Operations - Other Funds (120,348) (117,982)

 Total Net Position $ (27,485) (36,396) $

Total Liabilities and Net Position $ 165,556 $ 172,967

The accompanying notes are an integral part of these statements
The Peace Corps :: performance and accountability report :: fiscal year 2007 43

Financial Section

Peace Corps

 Statement of Net Cost

For the Years Ended September 30, 2007 and 2006

(In Thousands)

2007 2006

 (Restated)

(Unaudited)

Program Costs:

 Gross Costs $ 335,688 $ 314,734

 Less: Earned Revenue (Note 14) 3,158 5,532

 Net Program Costs 332,530 309,202

 Costs Not Assigned to Programs - - 

 Less: Earned Revenues Not Attributed to Programs - - 

Net Cost of Operations $ 332,530 $ 309,202

The accompanying notes are an integral part of these statements
44 The Peace Corps :: performance and accountability report :: fiscal year 2007

Financial Section

Peace Corps

Statement of Changes in Net Position

For the Years Ended September 30, 2007 and 2006

(In Thousands)

 (Restated)

(Unaudited)

Cumulative Results of Operations

Beginning Balances $ (120,348) $ (120,425)

Adjustments

 Corrections of Errors (511) (6,492)

Beginning Balances, As Adjusted (120,859) (126,917)

Budgetary Financing Sources:

 Appropriations Used 330,685 310,377

Other Financing Sources (Non-Exchange):

 Transfers-In/Out Reimbursement (102) 702

 Imputed Financing (Note 13) 4,824 4,692

Total Financing Sources 335,407 315,771

Net Cost of Operations (332,530) (309,202)

Net Change 2,877 6,569

Cumulative Results of Operations (117,982) (120,348)

Unexpended Appropriations

Beginning Balances 92,863 84,896

Adjustments

 Corrections of Errors (135) (2)

Beginning Balances, As Adjusted 92,728 84,894

Budgetary Financing Sources:

 Appropriations Received 319,700 322,000

 Appropriations Transferred In/Out - 1,100

 Other Adjustments (157) (4,753)

 Appropriations Used (330,685) (310,377)

 Total Budgetary Financing Sources (11,142) 7,970

Total Unexpended Appropriations 81,586 92,863

Net Position $ (36,396) $ (27,485)

2007 2006

The accompanying notes are an integral part of these statements
The Peace Corps :: performance and accountability report :: fiscal year 2007 45

Financial Section

Peace Corps

 Statement of Budgetary Resources

For the Years Ended September 30, 2007 and 2006

(In Thousands)

2007 2006

Budetary Resources:

 (Restated)

(Unaudited)

Unobligated Balance, Brought Forward, October 1 $ 21,148 $ 20,356

Budgetary Authority

 Appropriations 319,700 322,000

 Spending Authority From Offsetting Collections (Gross)

 Earned

 Collected 4,789 6,802

 Change in Receivables from Federal Sources (334) 376

 Change in Unfilled Customer Orders

 Advance Received - -

 Without Advance from Federal Sources (150) (2,064)

 Subtotal 324,005 327,114

Nonexpenditure Transfers, Net, Anticipated and Actual 1,100 -

 Permanently Not Available 158 4,753

Total Budgetary Resources $ 344,995 $ 343,817

Status of Budgetary Resources:

Obligations Incurred

 Direct $ 320,848 $ 319,146

 Reimbursable 2,646 3,522

 Subtotal 323,494 322,668

Unobligated Balance

 Apportioned 10,648 7,828

Unobligated Balance Not Available 10,853 13,321

 Total Status of Budgetary Resources $ 344,995 $ 343,817

Change in Obligated Balance:

Obligated Balance, Net

 Unpaid Obligations, Brought Forward, October 1 $ 87,860 $ 82,624

 Uncollected Customer Payments from Federal Sources, Brought Forward, October 1 438 2,126

 Total Unpaid Obligated Balance, Net 87,422 80,498

Obligations Incurred, net 323,494 322,668

Gross Outlays 338,407 317,433

Obligated Balance Transferred, Net - -

Change in Uncollected Customer Payments from Federal Sources (484) (1,688)

Obligated Balance, Net, End of Period

 Unpaid Obligations 72,947 87,860

 Uncollected Customer Payments from Federal Sources (46) 438

 Total Unpaid Obligated Balance, Net, End of Period $ 72,993 $ 87,422

NET OUTLAYS

 Net Outlays

 Gross Outlays $ 338,407 $ 317,433

 Offsetting Collections 4,789 6,802

 Net Outlays $ 333,618 $ 310,631

The accompanying notes are an integral part of these statements
46 The Peace Corps :: performance and accountability report :: fiscal year 2007

Financial Section

Note 1 Significant Accounting Policies

a) Reporting Entity 

The Peace Corps was initially established by President John F. Kennedy pursuant to Executive Order 10924 on March 1, 1961, 

and was subsequently formalized by the Peace Corps Act of 1961. The Peace Corps is an independent agency within the executive 

branch of the United States government.

The core mission of the Peace Corps is to promote world peace and friendship by making available to interested, less developed 

countries men and women of the United States qualified for service abroad and willing to serve, even under conditions of hardship if necessary. The Peace Corps’ goals are to help the people of interested countries in meeting their need for trained men and 

women; to help promote a better understanding of Americans on the part of the peoples served; and to help promote a better understanding of other peoples on the part of Americans. 

b) Basis of Presentation 

The financial statements present the financial position, the net cost of operations, and changes in net position along with budgetary resources activities of the agency pursuant to the requirements of 31 U.S.C. 3515 (b). They have been prepared using Peace 

Corps’ books and records in accordance with agency accounting policies, the most significant of which are summarized in this 

note. The statements are in addition to the financial reports used to monitor and control budgetary resources, which are prepared 

from the same books and records. The statements are presented in accordance with the applicable form and content requirements 

of the OMB Circular A-136, “Financial Reporting Requirements,” issued June 2007. The statements should be read with the realization that they are for a component of the U.S. government, a sovereign entity. 

The Peace Corps’ accounting policies follow Federal Accounting Standards Advisory Board principles and other generally 

accepted accounting principles for the United States federal government. 

The financial statements are subdivided in two categories: intragovernmental and public. The intragovernmental balances, revenues, and costs reflect financial transactions between the Peace Corps and other federal agencies. Public activities are those with 

non-governmental customers, including Volunteers, contributors, employees, contractors, and vendors. 

Federal Financial Statements 

Statement Federal Objective 

Balance Sheet Reflects the agency’s financial position as of the statement date. The assets are the amount of future economic 

benefits owned or managed by the agency. The liabilities are amounts owed by the agency. The net position is 

the difference between the assets and liabilities. 

Statement of 

Net Cost 

Shows separately the components of the net cost of the agency’s operations for the period. Net cost is equal to 

the gross cost incurred by the agency less any exchange revenue earned from its activities. 

Statement of 

Changes in 

Net Position 

Explains how the net cost for the agency’s operations was funded, and reports other changes in equity that are 

not included in the Statement of Net Cost. It reflects the changes in both the proprietary and the budgetary activities through the respective components: Cumulative Results of Operations and Unexpended Appropriations. 

Statement of 

Budgetary 

Resources

Provides information about how budgetary resources were made available as well as their status at the end of 

the period. It is the only financial statement exclusively derived from the agency’s budgetary general ledger in 

accordance with budgetary accounting rules. 

c) Basis of Accounting 

Accounting principles encompass both accrual and budgetary transactions. Under the accrual method, revenues are recognized 

when earned and expenses are recognized when a liability is incurred, without regard to receipt or payment of cash. Under the 

budgetary basis, however, fund availability is recorded based upon legal considerations and constraints. The agency receives financing sources through direct appropriations from the general fund of the U.S. Treasury to support its operations. This financing 

source—appropriations used—is recognized to the extent that appropriation authority has been applied against received goods 

and services. 

d) Fund Accounting Structure 

The agency’s financial activities are accounted for by U. S. Treasury Appropriation Fund Symbol. They include accounts for appropriated funds and other fund groups described below for which the Peace Corps maintains financial records. 
The Peace Corps :: performance and accountability report :: fiscal year 2007 47

Financial Section

General Funds—These funds consist of the receipts and expenditures by the government that are not earmarked by law for a 

specific purpose and used to fund agency operations and capital expenditures. 

Special or Trust Funds—These funds consist of receipts and expenditures by the government for carrying out specific purposes 

and programs in accordance with terms of the statute that designates the fund as a special fund or trust fund. The balances in the 

agency’s trust funds are non-entity assets and are included in the financial statements. 

Deposit Funds—These funds consist of monies held temporarily by the Peace Corps as an agent for others. These include allowance and allotment accounts for employees and Volunteers. The balances in these funds are non-entity assets and are included

in the financial statements. 

General Fund Receipt Accounts—These funds consist of monies collected by the Peace Corps that are returned to the U.S. 

Treasury and not available for Peace Corps’ use. 

e) Budget Authority 

Congress annually passes multi-year appropriations that provide the agency with authority to obligate funds over a two-year period for necessary expenses to carry out operations. After the right to create new obligations has expired, this two-year budget 

authority is available for five additional years to complete the liquidation of open obligations, advances, and receivables. After

the five-year period, all open transactions for the respective fiscal year will be closed and funds will be returned to the U.S.

Treasury. Any valid claims associated with these funds after closure must be processed against current year funds.

In addition, Congress enacts no year appropriations that are available until expended. All appropriations are subject to OMB apportionment as well as Congressional restrictions. The agency places internal restrictions to ensure the efficient and proper use 

of all funds. 

f) Revenues and Other Financing Sources 

Peace Corps operations are financed through appropriations, proceeds from the sale of property, and interagency agreements.

For financial statement purposes, appropriations are recorded as a financing source and reported on the Statement of Changes in

Net Position at the time they are recognized as expenditures. 

g) Fund Balance with the U.S. Treasury 

The fund balance with the U. S. Treasury consists of appropriated funds that are available to pay current liabilities and finance 

authorized purchase commitments, and special funds that periodically are direct-financing reimbursements to the appropriated 

funds.

The agency does not maintain cash in commercial bank accounts for the funds reported in the balance sheet. All cash receipts and 

disbursements are processed by the U.S. Treasury or the U.S. Department of State (DOS). 

The funds that make up post cashiers’ imprest funds belong to the U.S. Treasury through DOS’s accountability. These funds are 

routinely used to pay for small-value purchases of goods and services and are also used to make an occasional emergency payment. Per agreement with the DOS, the Peace Corps is responsible to pay for any losses incurred by the cashiers that would normally fall on the account holder. All international payments made by DOS on behalf of the Peace Corps are charged to the Peace 

Corps and reduce the applicable Peace Corps appropriation unexpended balance in U.S. Treasury records. As of September 30, 

2007, cashier imprest funds represented by cash on hand, checks on hand, interim advances, and cashier checking account balances totaled approximately $1.8 million in U. S. dollar equivalents. 

At any point in time, the posts have U. S. dollar equivalents and local currency checks in their possession that are awaiting delivery to the payees. These checks were recorded as disbursements on Peace Corps and U.S. Treasury records in the month the 

checks were issued. As of September 30, 2007, these checks totaled approximately $4.9 million in U. S. dollar equivalents. 

Fund balance with Treasury is carried forward until such time as goods or services are received and payment is made, or until the

funds are returned to the U.S. Treasury. 

h) Foreign Currency 

Accounting records for the agency are maintained in U.S. dollars, while a significant amount of the overseas expenditures are in

foreign currencies. For accounting purposes, overseas obligations and disbursements are recorded in U.S. dollar equivalents 

based on the budgeted rate of exchange as of the date of the transaction. Foreign currency payments are made by the U.S. dis-
48 The Peace Corps :: performance and accountability report :: fiscal year 2007

Financial Section

bursing officers located at the U.S. Department of State Financial Service Centers in Charleston, South Carolina; and Bangkok, 

Thailand. 

i) Accounts Receivable 

Accounts receivable includes amounts due from other federal entities and from current and former employees and Volunteers. 

Annually, a determination of the amount of the Allowance for Doubtful Accounts will be established for material amounts exceeding $30,000. The agency recognizes an Allowance for Doubtful Accounts when it is determined that the amounts are more 

likely than not to be totally uncollected. An exception to this write-off policy will be for accounts with approved payment plans 

in place and for which the debtor is meeting the terms of the plan. 

j) Advances and Prepayments 

Payments in advance of the receipt of goods and services are recorded as advances and recognized as expenses when the related 

goods and services are received. Advances are made principally to agency employees for official travel and prepayments to Volunteers for living allowances. 

Pursuant to Section 5(b) of the Peace Corps Act, Peace Corps Volunteers are entitled to a living allowance in order that they may 

serve effectively and safely overseas. Living allowances are paid to Volunteers to provide support while in their country of assignment. Allowances, which are based on local living standards and costs, include food, clothing, household items, rent, utilities, and local transportation. 

k) Property, Plant, and Equipment (PP&E) 

The agency capitalizes all property, plant, and equipment, with the exception of general property, plant, and equipment, that has 

an acquisition cost of $10,000 or greater, a useful life of two years or more, are not intended for sale in the ordinary course of 

business, and are intended to be used or available for use by the entity. For general property, plant, and equipment, purchases are 

capitalized at $25,000 or greater for individual items and $500,000 or greater for aggregate purchases. Acquisitions that do not

meet these criteria are recorded as operating expenses. Assets are capitalized at historical cost and depreciated using the straightline method. The agency has established a policy that uses an estimated salvage value of 40 percent for the agency’s vehicles 

based on their resale value in recent years. 

The agency does not own any real property. Nonexpendable personal property is depreciated over 3 to 15 years. The agency operates land, buildings, and equipment that are provided by the General Services Administration. Rent for this property is expensed. Deferred maintenance amounts are immaterial with respect to the financial statements. Software purchased for $10,000 

or developed for internal use at a cost of $25,000 or greater is capitalized and amortized over its expected life (currently 3 to 9 

years). 

l) Capital Leases 

Leases are accounted for as a capital lease if they meet one of the following criteria: 1) the lease term is greater than 75 percent of 

the property’s estimated economic life; 2) the lease contains an option to purchase the property for less than the fair market value;

3) ownership of the property is transferred to the lessee at the end of the lease term; or 4) the present value of the lease payments 

exceeds 90 percent of the fair market value of the property. 

m) Accounts Payable and Other Liabilities 

Liabilities represent the amount of monies or other resources that are likely to be paid as the result of a transaction or event that 

has already occurred. Liabilities classified as not covered by budgetary resources are liabilities for which appropriations have not 

been enacted.

n) Employee Benefits 

I. Federal Employees Compensation Act (FECA) Accrued Claims—The agency records the direct dollar costs of compensation and medical benefits paid on its behalf by the U.S. Department of Labor for employees under the agency’s jurisdiction. 

II. Future Workers Compensation Benefits—FECA provides income and medical costs protection to federal employees injured on the job or who have incurred a work-related occupational disease, and to beneficiaries of employees whose death is 

attributable to job-related injury or occupational disease. The U.S. Department of Labor administers the FECA program and 

initially pays valid claims and bills the agency on an annual basis. 
The Peace Corps :: performance and accountability report :: fiscal year 2007 49

Financial Section

III. Accrued Leave—A liability for annual leave is accrued as leave is earned and paid when leave is taken or employment 

terminates. Accrued annual leave is paid from future funding sources and is reflected as a liability not covered by budgetary 

resources. Sick and other leave is expensed as taken. 

IV. Employee Health Benefits and Life Insurance—The agency’s employees are eligible to participate in the contributory 

Federal Employees Health Benefit Program (FEHBP) and the Federal Employees Group Life Insurance Program (FEGLIP). 

The agency contributes to each program to pay for current benefits. 

V. Post-Retirement Health Benefits and Life Insurance—Agency employees who may be eligible to participate in the Federal Employees Health Benefit Program and the Federal Employees Group Life Insurance Program could continue to do so 

during retirement. The Office of Personnel Management (OPM) has provided the agency with cost factors that estimate the 

true cost of providing the post-retirement benefit to current employees. The agency recognizes a current cost for these and 

other retirement benefits (ORBs) at the time of employment with the agency. The ORB expense is financed by OPM and 

offset by the agency through the recognition of an imputed financing source on the Statement of Changes in Net Position.

VI. Employee Retirement Benefits—Peace Corps direct hire employees participate in one of four retirement systems: Civil 

Service Retirement System (CSRS), Federal Employees’ Retirement System (FERS), or the Foreign Service Retirement and 

Disability System (FSRDS). Foreign Service National (FSN) employees at overseas posts who were hired prior to January 1, 

1984, are covered under CSRS. FSNs hired after that date are covered under a variety of local government plans in compliance with the host country’s local laws and regulations. 

The Peace Corps recognizes its share of the cost of providing future pension benefits to eligible employees throughout their 

period of employment. The pension expense not covered by budgetary resources is calculated using actuarial factors provided by OPM and is considered imputed cost to the agency. 

VII. Valuation of Host Country Resident Personal Service Contractor Severance and Retirement Liability—The Peace Corps 

is generally liable for separation or retirement payments to eligible host country resident personal service contractors (PSCs) in 

countries that require payments under local labor laws. Until systems are in place to track this liability in a timely manner, the estimate of the current and future costs of the severance and retirement liability is determined annually. 

o) Commitments and Contingencies 

The agency is involved in various administrative proceedings, legal actions, and claims arising in the ordinary course of business. 

Contingencies are recognized as a liability when a future outflow or other sacrifice of resources is probable and measurable. 

p) Use of Estimates 

The preparation of financial statements required management to make some estimates and assumptions that affect the reported 

amount of assets and liabilities, as well as the disclosure of contingent liabilities at the date of the financial statements and the 

amount of revenues and costs reported during the period. Actual results could differ from those estimates. 

q) Interest on Late Payments 

Occasionally, the agency incurs interest penalties on late payments. Such interest penalties are paid to the respective vendor in 

accordance with the guidelines mandated by the Prompt Payment Act, P.L. 97–177, as amended. 

r) Intragovernmental Net Costs 

The Statement of Net Cost is consolidated for the agency using a budget functional classification (BFC) code. BFC codes are 

used to classify budget resources presented in the budget of the United States government per OMB. The agency is categorized 

under BFC code number 150—International Affairs. Gross cost and earned revenues from other intragovernmental agencies (reimbursable agreements) fall under this code.

s) Adjustments to Maintain Inherent Account Relationship Integrity 

In order to correct the relationships between the proprietary and budgetary accounts, a high-level analysis was performed. Cash 

balances were adjusted to align with the U.S. Treasury fund balance to permit the agency to pass edit checks and submit FACTS 

II reports to Treasury. All of the adjustments for fiscal year 2007 were immaterial.
50 The Peace Corps :: performance and accountability report :: fiscal year 2007

Financial Section

t) Allocation Transfer

The Peace Corps (child) is a party to allocation transfers with the Department of State as a receiving entity. Allocation transfers 

are legal delegation by one agency of its authority to obligate budget authority and outlay funds to another agency. A separate

fund account (allocation account) is created In the U. S. Treasury as a subset of the parent fund account for tracking and reporting 

purposes. All allocation transfers of balances are credited to this account, and subsequent obligations and outlays incurred by the 

child entity are charged to this allocation account as they execute the delegated activity on behalf of the parent entity. All financial activity related to these allocation transfers (e.g., budget authority, obligations, outlays) is reported in the financial statements 

of the parent entity, from which the underlying legislative authority, appropriations, and budget apportionments are derived. 

Note 2 Non-Entity Assets 

Non-entity assets are composed of trust and deposit funds. These funds are not available for Peace Corps’ use and not part of 

Peace Corps resources. The Peace Corps has a fiduciary responsibility to monitor collections, status, and distribution. Below, as 

information, are the U.S. Treasury fund balances of non-entity, fiduciary assets. All the non-entity assets are non-governmental. 

Non-Entity Assets 

September 30, 2007 

(in thousands)

September 30, 2006 

(in thousands)

Trust Funds 

 Gifts and Contributions (Cash) $ 0 * $ 603 

 Advances from Foreign Governments 0 * 3 

 FSN Separation Liability Trust Fund 7,849 8,817 

Special Receipt Fund 

 Host Country Residents Contractors Separation 

 Liability Fund 5,157 0 

Deposit Funds 

 Volunteer Readjustment Allowance 17,978 16,849 

 Volunteer Payroll Allotment Account (Payroll Savings 

 Bond Account) 

 17 ( 7) 

Special Fund Accounts 1,596 1,114 

 Total Non-entity Assets 32,597 27,379 

 Total Entity Assets per Balance Sheet 132,959 145,588 

 Total Assets $ 165,556 $ 172,967 

Trust Fund Accounts— Consists of gifts and contributions, advances from foreign governments and the FSN Separation Liability Trust Fund. Gifts and contributions represent funds from public, non-governmental sources. Advances from foreign governments are U.S. dollar contributions supported by an agreement with the host country. The FSN Separation Liability Trust fund 

represents the estimated accrued liability for separation pay (based on local labor law) of FSN employees and personal service 

contractors. 

Special Receipt Fund— Host Country Residents Contractor Separation Liability fund represents the estimated accrued liability 

for separation pay (based on local labor law) of FSN employees and personal service contractors. 

Deposit Fund Accounts—The Volunteer readjustment allowance is an allowance earned by Volunteers for each month of satisfactory service and payable upon their return to the United States. The Volunteer payroll allotment account reflects the value of 

held U. S. government bonds purchased by the Volunteers through allotments from the readjustment allowance. The bonds allow 

the Volunteers to earn interest on their earnings while in service overseas. 

Special Fund Accounts—The proceeds of sales funds represent cash received from the sale of assets, primarily vehicles, and 

available to be reinvested in a like-kind replacement purchase (e.g., proceeds from vehicle sales used to purchase replacement 

vehicles). 

* These funds are no longer reported due to a change in OCFO reporting policy statement 07-01. 
The Peace Corps :: performance and accountability report :: fiscal year 2007 51

Financial Section

Note 3 Fund Balance with Treasury 

Fund Balances 

September 30, 2007 

(in thousands) 

September 30, 2006 

(in thousands) 

Appropriated Funds $ 93,055 $ 107,137 

Total Non-entity Assets (Note 2) 32,597 27,379 

 Total $ 125,652 $ 134,516 

Status of Fund Balance with Treasury 

September 30, 2007 

(in thousands) 

September 30, 2006 

(in thousands) 

-Restated-

(1) Unobligated Balance 

 (a) Available $ 10,648 $ 7,828 

 (b) Unavailable 10,853 13,321 

(2) Obligated Balance Not Yet Disbursed 104,151 113,367 

 Total $ 125,652 $ 134,516 

The Fund Balance with Treasury is equal to the unobligated balance of funds plus the obligated balance not yet disbursed. 

The Fund Balance with Treasury displayed above includes an adjustment of $128 thousand. 

Available Unobligated Balance—Composed of apportionments available for allotment plus allotments available for obligation or 

commitment. 

Unavailable Unobligated Balance—Composed of unapportioned authority plus unobligated appropriation authority from prior 

years that is no longer available for new obligations. This latter authority is only available for adjustments to existing obligations.

Note 4 Cash and Other Monetary Assets 

September 30, 2007 

(in thousands)

September 30, 2006 

(in thousands)

Total Cash and Other Monetary Assets $ 65 $ 65 

The cash balances represent imprest funds at headquarters and at the East Timor post, both held in U.S. currency. 

Note 5 Accounts Receivable, Net 

September 30, 2007 

(in thousands) 

September 30, 2006 

(in thousands) 

Accounts Receivable—Intragovernmental $ 630 $ 980 

 Other Accounts Receivable 58 183 

Total Accounts Receivable, Net $ 688 $ 1,163 

Intragovernmental receivables are due from other federal agencies for services provided per reimbursable agreements. 

Other accounts receivable are due from nonfederal entities, consisting primarily of receivables from employees. 

Annually, a determination of the amount of the Allowance for Doubtful Accounts will be established for material amounts exceeding $30,000. The agency recognizes an Allowance for Doubtful Accounts when it is determined that the amounts are more 

likely than not to be totally uncollected. An allowance was not established as of September 30, 2007. 
52 The Peace Corps :: performance and accountability report :: fiscal year 2007

Financial Section

Note 6 General Property, Plant, and Equipment (PP&E), Net 

Components of Fixed Assets as of 

September 30, 2007:

(in thousands)

Useful Life in Years Cost Accumulated

Depreciation 

Net Book Value 

General Property, Plant, and Equipment 5–10 $ 2,949 $ 2,404 $ 545 

Vehicles 5 15,625 5,715 9,910 

IT Hardware 3–15 9,580 3,871 5,709 

Leasehold Improvements 10 402 60 342 

Internal-Use Software 3–9 27,684 11,533 16,151 

Total $ 56,240 $ 23,583 $ 32,657 

Components of Fixed Assets as of 

September 30, 2006:

(in thousands)

Useful Life in Years Cost Accumulated

Depreciation Net Book Value 

General Property, Plant, and Equipment 5–10 $ 2,864 $ 2,103 $ 761 

Vehicles 5 15,519 5,578 9,941 

IT Hardware 3–15 8,266 4,336 3,930 

Leasehold Improvements 10 180 31 149 

Internal-Use Software 3–9 26,881 8,682 18,199 

Total $ 53,710 $ 20,730 $ 32,980 

For the year ending September 30, 2007, Peace Corps fixed assets include internally developed software and those assets that are reflected as active in the property management databases. These assets are located at headquarters in Washington, D.C., the eleven regional offices, and the overseas posts. 

Values for all assets other than internally developed software were obtained from data extracted from the databases. Values for internally developed software were derived from the most reliable available data for each system. There are no restrictions on the use or 

convertibility of General Property, Plant and Equipment owned by Peace Corps. 

Note 7 Prepaid Volunteer Living Allowances 

September 30, 2007 

(in thousands)

September 30, 2006 

(in thousands)

Prepaid Volunteer Living Allowances $ 3,984 $ 3,813 

Prepaid Volunteer Living Allowances—Payments of Volunteer living allowances are made prior to the entitlement month so the 

posts can ensure timely payments of the allowances. 
The Peace Corps :: performance and accountability report :: fiscal year 2007 53

Financial Section

Note 8 Other Assets

September 30, 2007 

(in thousands)

September 30, 2006 

(in thousands)

Travel Advances to Employees $ 97 $ 347 

Relocation Advances to Employees 40 78 

Prepayments to Foreign National Personal Service Contractors 

(FNPSCs) 0 5 

Prepaid Property, Plant and Equipment 555 0 

Prepaid Rent 1,818 0 

 Total Other Assets $ 2,510 $ 430 

Relocation Advances to Employees—Direct-hire employees are provided a relocation advance when appropriate. 

Prepayments to Foreign National Personal Service Contractors—Payments of the foreign national personal service contractors’ 

biweekly payrolls are made prior to the end of the pay period so that the direct deposits or checks are received by the last day of the pay 

period.

Travel Advances to Employees—Travel advances are provided to employees when appropriate. Advances remain in the financial records until they are offset against travel entitlements or collected.

Note 9 Liabilities Not Covered by Budgetary Resources 

September 30, 2007 

(in thousands)

September 30, 2006 

(in thousands)

Intragovernmental Liabilities 

Unfunded FECA Liability $ 24,236 $ 24,157 

Liabilities 

Unfunded Annual Leave 7,310 6,673 

Unfunded Employment-Related Liability 7,590 9,840 

Federal Employee and Veterans Benefits 116,450 116,451 

Total Liabilities Not Covered by Budgetary Resources $ 155,586 $ 157,121 

Unfunded FECA Liability—A liability for the direct dollar costs of compensation and medical benefits paid on the agency’s behalf by the U.S. Department of Labor. Since the agency is dependent on annual appropriation, it will include the amount billed 

for the direct costs in its budget request two years later. 

Unfunded Annual Leave (U.S. Employees)—A liability for annual leave is accrued as leave is earned and paid when leave is 

taken or when the individual terminates. The balance represents the estimated value of annual leave for U.S.-hired employees 

earned but not used on September 30, 2007. Payments are charged to the appropriation current at the time of payment. 

Unfunded Annual Leave—The valuation of the accrued annual leave for foreign service national employees and the foreign national PSCs has been estimated for this financial statement. There are approximately 200 foreign service nationals and a range of 

1,500 to 2,000 foreign national PSCs working for the Peace Corps at fiscal year end. Annual leave earned is based on local labor 

law requirements. Annual leave is paid out of current appropriations when taken. 

Unfunded Employment Related Liability—A liability for the FNPSC estimated severance. Lump-sum payments are generally 

made to eligible international long-term personal service contractors based on local labor law requirements for separation. These 

payments are made when the individual terminates and are paid for out of current appropriations. 

Federal Employee and Veterans Benefits—Liability for the actuarial value of future payments for FECA as estimated by the 

U.S. Department of Labor for the agency. 
54 The Peace Corps :: performance and accountability report :: fiscal year 2007

Financial Section

Note 10 Other Liabilities 

Advances from Others—The balance of amounts advanced by other federal entities for goods and services to be furnished (e.g., 

money advance for small project assistance grants). 

Contingent Liability—See Note 12. 

Note 11 Leases 

Peace Corps has reviewed all leases and determined that no future payments are due and that the agency does not have noncancellable leases with terms longer than one year. 

Note 12 Commitments and Contingencies 

In the opinion of the management and legal counsel, the agency is liable for contingent liabilities related to administrative proceedings, legal actions, or claims that are probable and measurable in the amount of $750,000 as of September 30, 2007.

Disclosure is required if there is a reasonable possibility that a loss may be incurred. The likelihood of a reasonable possibility of a 

loss related to administrative proceedings, legal actions, or claims is estimated to be $1,300,000 as of September 30, 2007. As of 

September 30, 2007 the likelihood of potential losses from overseas cashiers is estimated to be $33,000. 

Note 13 Imputed Financing 

September 30, 2007 

(in thousands)

September 30, 2006 

(in thousands)

Federal Employees Health Benefit Program (FEHBP) $ 3,811 $ 3,645 

Federal Employees Group Life Insurance Program (FEGLIP) 12 12 

Civil Service Retirement System (CSRS) 811 834 

Federal Employees Retirement System (FERS) (4) 0 

Foreign Service Retirement and Disability System (FSRDS) 194 201 

Total Imputed Costs $ 4,824 $ 4,692 

Imputed financing recognizes actual costs of future benefits which include the Federal Employees Health Benefit Program, Federal Employees Group Life Insurance Program, and pension benefits that are paid by other federal entities. The agency is not required to reimburse other entities for these costs. 

 September 30, 2007

(in thousands)

September 30, 2006

(in thousands)

 Intragovernmental 

 Advances from Others $ 2 $ 2 

Other Liabilities 

 Contingent Liability 750 500 

 Total Other Liabilities $ 752 $ 502 
The Peace Corps :: performance and accountability report :: fiscal year 2007 55

Financial Section

Note 14 Exchange Revenues 

September 30, 2007 

(in thousands)

September 30, 2006 

(in thousands) 

-UnauditedIntragovernmental Earned Revenues $ 2,784 $ 4,853 

Earned Revenues from the Public 374 679 

Total Exchange Revenues $ 3,158 $ 5,532 

Exchange revenues represent revenue from services provided. This includes reimbursable agreements from other government 

agencies such as U.S. Agency for International Development (USAID)-sponsored HIV/AIDS education, prevention, and mitigation activities; and umbrella programs covering environment, health, youth, microenterprise and Small Project Assistance technical assistance. 
56 The Peace Corps :: performance and accountability report :: fiscal year 2007

Financial Section

Note 15 Reconciliation of Net Cost of Operations to Budget 

September 30, 2007 

(in thousands)

September 30, 2006 

(in thousands) 

(Restated)

(Unaudited)

Resources Used to Finance Activities 

Budgetary Resources Obligated: 

 Obligations Incurred $ 323,494 $ 322,668 

 Less: Spending Authority from Offsetting Collections and Recoveries 4,305 5,114 

 Obligations Net of Offsetting Collections and Recoveries 319,189 317,554 

 Less: Offsetting Receipts - - 

 Net Obligations 319,189 317,554 

Other Resources 

 Transfers In/Out Without Reimbursement (102) 702 

 Imputed Financing from Costs Absorbed by Others 4,824 4,692 

 Net Other Resources Used to Finance Activities 4,722 5,394 

Total Resources Used to Finance Activities 323,911 322,948 

Resources Used to Finance Items Not Part of Cost of Operations 

 Change in Budgetary Resources Obligated for Goods, Services and Benefits but Not Yet 

Provided (9,681) 9,165 

 Resources that Fund Expenses Recognized in Prior Periods 2,156 10,650 

 Budgetary Offsetting Collections and Receipts that do not Affect Net Cost of Operations (1,660) 

 Resources that Finance the Acquisition of Assets 8,558 4,801 

Other Resources or adjustments to Net Obligated Resources that do not affect Net Costs of 

Operations (102) - 

Total Resources Used to Finance Items Not part of the Net Cost of Operations (729) 24,616

Total Resources Used to Finance the Net Cost of Operations 324,640 298,332 

Components Requiring or Generating Resources in Future Periods: 

Increase in Annual Leave Liability 637 139 

Other (+/-) 329 3,419 

Total Components of Net Cost of Operations That Will Require or Generate Resources in 

Future Periods 966 3,558 

Components Not Requiring or Generating Resources 

Depreciation and Amortization 7,027 6,658 

Revaluation of Assets or Liabilities (+/-) (104) 527 

Other (+/-) - 127 

Total Components Not Requiring or Generating Resources 6,923 7,312 

Total Components of the Net Cost of Operations that Will Not Require or Generate Resources 

in the Current Period 7,890 10,870 

Net Cost of Operations $ 332,530 $ 309,202 
The Peace Corps :: performance and accountability report :: fiscal year 2007 57

Financial Section

Note 16 Restatement 

In connection with efforts to correct the prior year control deficiency regarding obligated balances and the related accruals, 

certain prior year balances in the accompanying financial statements have been restated. The Accounts Payable balance as of 

September 30, 2006 increased by $2.2 million, Unexpended Appropriations decreased by $2.2 million and the unobligated 

portion of Unexpended Appropriations increased by $111 thousand. This adjustment also resulted in an increase in the FY 2006 

Net Cost of Operations of $2.2 million with a corresponding adjustment to the Appropriations Expended balance on the 

Statement of Changes in Net Position. On the Statement of Budgetary Resources, the Obligations Incurred balance decreased by 

$111 thousand and the Unobligated Balance - Apportioned increased by $111 thousand. 

Note 17 Disclosure on Contributions to the Peace Corps 

1. Media Contributions Received—The agency received $14.7 million in print, radio, and television media contributions 

through public service announcements in the first 11 months of FY 2007. 

2. Host Country Contributions—The agency received cash and in-kind contributions from host countries. In-kind contributions 

estimated at $4.9 million in fair market value were received at posts through the end of FY 2007 for services, supplies, equipment, and facilities. The end of FY 2007 host country cash balance is $1,333,000. 

Note 18 Apportionment Categories of Obligations Incurred: Direct vs.

Reimbursable Obligations 

September 30, 2007 

(in thousands)

September 30, 2006 

(in thousands) 

-UnauditedDirect Reimbursable Direct Reimbursable 

Category A $ 320,848 $ 2,646 $ 319,146 $ 3,522 

Category B 0 0 0 0 

Category C 0 0 0 0 

Total Obligations Incurred $ 320,848 $ 2,646 $ 319,146 $ 3,522 

All obligations incurred are Category A. US Peace Corps does not have any Category B or C apportionments. 

Note 19 Undelivered Orders at the End of the Period 

September 30, 2007 

(in thousands)

September 30, 2006 

(in thousands) 

-UnauditedUndelivered Orders – End of Period $ 66,462 $ 75,707 

The undelivered obligations with and without advances/prepayments at the end of each fiscal year. 
58 The Peace Corps :: performance and accountability report :: fiscal year 2007

Financial Section

Since 1961.

To: Ron Tschetter, Director

From: H. David Kotz, Inspector General 

Date: November 13, 2007

Subject: Audit of Peace Corps’ Fiscal Year 2007 Financial Statements

This letter transmits the reports of Urbach Kahn and Werlin LLP (UKW) on its financial statement audit of 

the Peace Corps’ Fiscal Year (FY) 2007 Financial Statements. As required by the Accountability of Tax Dollars Act of 2002, the Peace Corps prepared financial statements in accordance with Office of Management and 

Budget (OMB) Circular No. A-136, Financial Reporting Requirements, and subjected them to audit. 

Audit Reports on Financial Statements, Internal Control, and Compliance with Laws and Regulations

We contracted with UKW, an independent certified public accounting firm to audit the financial statements as 

of September 30, 2007 as well as of 2006, and for the years then ended. The contract required that the audit be 

done in accordance with generally accepted government auditing standards; the OMB’s Bulletin 07-04, Audit 

Requirements for Federal Financial Statements; and the Government Accountability Office/President’s Council on Integrity and Efficiency Financial Audit Manual. 

UKW’s audit report for FY 2007 includes: (1) an opinion on the financial statements, (2) a report on internal control, and (3) a report on compliance with laws and regulations. In the audit of the Peace Corps, UKW 

found:

•	 The financial statements were fairly presented, in all material respects, in conformity with generally accepted accounting principles for the year-ended September 30, 2007.

•	 There were no material weaknesses in the internal controls. OMB Bulletin 07-04 defines a material weakness as a significant deficiency, or combination of significant deficiencies, that results in a more than remote 

likelihood that a material misstatement of the financial statements will not be prevented or detected.

•	 However, UKW’s report on internal control did identify some significant deficiencies:

•	 Certain controls associated with property, plant, and equipment were inadequate and need to be 

improved.

•	 Internal controls over the business processes relating to undelivered orders and accounts payable 

need to be enhanced.

•	 Accounting for Host Country Contributions is not always consistent with generally accepted accounting principles related to preparation of financial statements, presentation, and disclosure.

•	 Certain weaknesses related to the Peace Corps’ information technology control environment require corrective actions.
The Peace Corps :: performance and accountability report :: fiscal year 2007 59

Financial Section

OMB Bulletin 07-04 defines a significant deficiency as a deficiency in internal control, or a combination of deficiencies, that adversely affects the entity’s ability to initiate, authorize, record, process, or report financial data reliably 

in accordance with generally accepted accounting principles such that there is more than a remote likelihood that 

a misstatement of the entity’s financial statements that is more than inconsequential will not be prevented or detected. 

•	 UKW found no reportable noncompliance with laws and regulations it tested. 

OIG Evaluation of UKW’s Audit Performance

In connection with the audit contract, the Office of Inspector General reviewed UKW’s report and related documentation and made inquiries of its representatives regarding the audit. To fulfill our responsibilities under the 

Chief Financial Officers Act for ensuring the quality of the audit work performed, we monitored UKW’s audit of 

the Peace Corps’ FY 2007 Financial Statements in accordance with generally accepted auditing standards. Specifically, we:

•	 reviewed UKW’s audit approach and planning;

•	 evaluated the qualifications and independence of its auditors;

•	 monitored the progress of the audit at key points;

•	 examined UKW’s working papers related to audit planning, testing, and assessing internal control over 

the financial reporting process;

•	 reviewed the audit reports to ensure compliance with generally accepted government auditing standards; 

•	 coordinated issuance of the audit reports; and

•	 performed other procedures we deemed necessary.

UKW is responsible for the attached auditor’s reports dated October 31, 2007, and the conclusions expressed in the 

report. The Office of Inspector General does not express opinions on Peace Corps’ financial statements, internal 

control, or compliance with laws and regulations.

We would like to extend our thanks to the Peace Corps staff involved in issuing the financial statements prior to the 

November 15 due date. Their professionalism, courtesy, and cooperation allowed us to overcome the many challenges associated with performance of the audit and our oversight of the audit process. If you or a member of the 

Peace Corps staff has any questions about UKW’s audit or our oversight, please contact me or Gerald Montoya, 

Assistant Inspector General for Audit, at 202-692-2907.

Attachments

cc: Jody Olsen, Deputy Director

David Liner, Chief of Staff

George Schutter, Chief Financial Officer
This page was intentionally left blank. 
The Peace Corps :: performance and accountability report :: fiscal year 2007 61

INDEPENDENT AUDITOR’S REPORT 

ON THE FINANCIAL STATEMENTS

 

 

Director and Inspector General 

Peace Corps 

We have audited the accompanying Balance Sheets of Peace Corps, an independent executive 

branch agency of the United States federal government, as of September 30, 2007 and 2006, 

and the related Statements of Net Cost, Changes in Net Position, and Budgetary Resources for 

the year ended September 30, 2007 and were engaged to audit the Statements of Net Cost, 

Changes in Net Position and Budgetary Resources for the year ended September 30, 2006. 

These financial statements are the responsibility of the management of Peace Corps. Our 

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

Except as discussed in the following paragraph relating to the fiscal year 2006 audit, we 

conducted our audits in accordance with auditing standards generally accepted in the United 

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

Auditing Standards issued by the Comptroller General of the United States, and Office of 

Management and Budget (OMB) Bulletin No. 07-04, Audit Requirements for Federal Financial 

Statements. Those standards and OMB Bulletin No. 07-04 require that we plan and perform the 

audit to obtain reasonable assurance about whether the financial statements are free of material 

misstatement. An audit includes consideration of internal control over financial reporting 

(internal control) as a basis for designing our audit procedures that are appropriate in the 

circumstances and to comply with OMB audit guidance, but not for the purpose of expressing an 

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

opinion on Peace Corps’ internal control. An audit also includes examining, on a test basis, 

evidence supporting the amounts and disclosures in the financial statements, assessing the 

accounting principles used and significant estimates made by management, as well as 

evaluating the overall financial statement presentation. We believe that our audits provide a 

reasonable basis for our opinion. 

Because Peace Corps had not maintained adequate accounting records and sufficient 

supporting documentation for material balances presented in the Balance Sheet as of 

September 30, 2005, we were unable to sufficiently extend our auditing procedures to 

determine the extent to which the Statements of Net Cost, Changes in Net Position, and 

Budgetary Resources for the year ended September 30, 2006 may have been affected by this 

condition. Accordingly, we do not express an opinion on the Statements of Net Cost, Changes 

in Net Position, and Budgetary Resources for the year ended September 30, 2006. 

In our report dated November 10, 2006, we expressed an opinion that the Balance Sheet as of 

September 30, 2006 did not fairly present the financial position of Peace Corps in accordance 

with generally accepted accounting principles because Peace Corps had not maintained 

adequate accounting records and sufficient supporting documentation to determine 
62 The Peace Corps :: performance and accountability report :: fiscal year 2007

INDEPENDENT AUDITOR’S REPORT 

ON THE FINANCIAL STATEMENTS, CONTINUED 

the proper classification of certain obligations recorded during the year ended September 30, 

2006. As described in Note 16, Peace Corps has restated its September 30, 2006 Balance 

Sheet and the Statements of Net Cost, Changes in Net Position and Budgetary Resources for 

the year then ended. Accordingly, our present opinion on the September 30, 2006 Balance 

Sheet, as presented herein, is different from that expressed in our previous report. 

In our opinion, the Balance Sheets as of September 30, 2007 and 2006 referred to above, 

present fairly, in all material respects, the financial position of Peace Corps as of September 30, 

2007 and 2006 in conformity with accounting principles generally accepted in the United States 

of America. Further, in our opinion, the Statements of Net Cost, Changes in Net Position, and 

Budgetary Resources for the year ended September 30, 2007 present fairly, in all material 

respects, the Peace Corps’ net cost, changes in net position, and budgetary resources for the 

year then ended in conformity with those same accounting principles. 

The information in Management’s Discussion and Analysis is not a required part of the financial 

statements, but is supplementary information required by the Federal Accounting Standards 

Advisory Board and OMB Circular No. A-136, Financial Reporting Requirements. We have 

applied certain limited procedures, which consisted principally of inquiries of management 

regarding the methods of measurement and presentation of the supplementary information. 

However, we did not audit this information and express no opinion on it. 

The Other Accompanying Information is presented for purposes of additional analysis and is not 

a required part of the financial statements. This information has been subjected to the auditing 

procedures applied in the audits of the financial statements, and, in our opinion, is presented 

fairly, in all material respects, in relation to the financial statements taken as a whole. 

In accordance with Government Auditing Standards, we have also issued reports dated October 

31, 2007 on our consideration of Peace Corps’ internal control, and on our tests of its 

compliance with certain provisions of applicable laws and regulations. Those reports are an 

integral part of an audit performed in accordance with Government Auditing Standards and, in 

considering the results of the audit, should be read in conjunction with this report. 

Arlington, Virginia 

October 31, 2007
The Peace Corps :: performance and accountability report :: fiscal year 2007 63

INDEPENDENT AUDITOR’S REPORT 

ON INTERNAL CONTROL 

Director and Inspector General 

Peace Corps 

We have audited the financial statements of Peace Corps, an independent executive branch 

agency of the United States federal government, as of and for the year ended September 30, 

2007, and have issued our report thereon dated October 31, 2007. We conducted our audit in 

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

standards applicable to financial audits contained in Government Auditing Standards issued by 

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

Bulletin No. 07-04, Audit Requirements for Federal Financial Statements. 

In planning and performing our audit, we considered Peace Corps’ internal control over financial 

reporting (internal control) by obtaining an understanding of Peace Corps’ internal control, 

determined whether internal controls had been placed in operation, assessed control risk, and 

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

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

those controls necessary to achieve the objectives described in OMB Bulletin No. 07-04 and 

Government Auditing Standards. We did not test all internal controls relevant to operating 

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

those controls relevant to ensuring efficient operations. The objective of our audit was not to 

express an opinion on the effectiveness of Peace Corps’ internal control. Consequently, we do 

not provide an opinion on the effectiveness of Peace Corps’ internal control. 

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

management or employees, in the normal course of performing their assigned functions, to 

prevent or detect misstatements on a timely basis. A significant deficiency is a control 

deficiency, or combination of control deficiencies, that adversely affects Peace Corps’ ability to 

initiate, authorize, record, process, or report financial data reliably in accordance with generally 

accepted accounting principles such that there is more than a remote likelihood that a 

misstatement of Peace Corps’ financial statements that is more than inconsequential will not be 

prevented or detected by Peace Corps’ internal control. 

A material weakness is a significant deficiency, or combination of significant deficiencies that 

results in a more than a remote likelihood that a material misstatement of the financial 

statements will not be prevented or detected by Peace Corps’ internal control. 

Our consideration of internal control was for the limited purpose described in the first paragraph 

and would not necessarily identify all deficiencies in internal control that might be significant 

deficiencies or material weaknesses. However, as discussed below, we identified certain 

deficiencies in Peace Corps’ internal control that we consider to be significant deficiencies. 
64 The Peace Corps :: performance and accountability report :: fiscal year 2007

INDEPENDENT AUDITOR’S REPORT 

ON INTERNAL CONTROL, CONTINUED 

These conditions, detailed on the following pages, are summarized as follows: 

1. Accounting business processes need enhancement. 

2. Information systems security controls need improvement. 

With respect to the internal control objective relating to the performance measures included in the 

Management’s Discussion and Analysis, we obtained an understanding of the design of internal 

controls relating to the existence and completeness assertions and determined whether they have 

been placed in operation, as required by OMB Bulletin No. 07-04. Our procedures were not 

designed to provide an opinion on the effectiveness of Peace Corps’ internal control over reported 

performance measures, and, accordingly, we do not provide an opinion on the effectiveness of 

Peace Corps’ internal control over these reported performance measures. 

We also noted other less significant matters involving Peace Corps’ internal control, which we 

have reported to the management of Peace Corps in a separate letter, dated October 31, 2007. 

This report is intended solely for the information and use of the management of Peace Corps, the 

Peace Corps’ Office of Inspector General, OMB, and Congress, and is not intended to be and 

should not be used by anyone other than these specified parties. 

Arlington, Virginia 

October 31, 2007 
The Peace Corps :: performance and accountability report :: fiscal year 2007 65

INDEPENDENT AUDITOR’S REPORT 

ON INTERNAL CONTROL, CONTINUED 

SIGNIFICANT DEFICIENCY 1 

ACCOUNTING BUSINESS PROCESSES NEED ENHANCEMENT 

Property, Plant and Equipment 

Peace Corps has made significant improvement during FY 2007 in accounting for its capitalized 

assets. Internal business policies were updated and issued in FY 2007. Fixed assets data was 

also converted from a manual environment into an integrated subsidiary module of its core 

financial management system. However, UKW identified the following issues through our FY 

2007 internal control and substantive testing: 

Additions: 

x There was no clear audit trail to verify software developers’ hours spent for software 

development. Records were not properly maintained because management was not able to 

demonstrate the original calculation of the capitalized labor cost related to the software. 

Immaterial adjustments were subsequently made to the recorded balance of capitalized 

software costs as a result of audit testing. 

x Certain capitalized asset additions were recorded in the system or asset listing incorrectly 

due to key stroke error and the use of incorrect invoice amounts. We noted that capitalized 

assets were recorded using budgeted costs rather than actual amounts. As a result, certain 

capitalized balances included travel or shipping costs that were not incurred, resulting in an 

immaterial overstatement of the asset cost. 

x Certain records at posts visited were inconsistent with those provided by headquarters. 

Some vehicles in-service-dates per the Vehicle Status Report did not match the dates 

recorded in the PP&E Verification Report used at HQ for preparing the asset listings. 

Disposals: 

x Incorrect asset in-service-dates were used to calculate accumulated depreciation and net 

book value which affected the related gain or loss computation when asset disposals were 

recorded. 

x Sufficient supporting documentation for initial capitalized balances could not be provided for 

certain assets disposed of in the current year. One of those items was due to the closing of 

a post site that resulted in supporting documentation not being retained by Peace Corps 

after it was closed in FY 2007. 

Adjustments: 

x We identified one instance where the Office of the Chief Financial Officer (OCFO) wrote off 

one capitalized IT hardware component when the Office of the Chief Information Officer 

(OCIO) was unable to provide supporting documentation for the asset cost. OCIO 

subsequently located and provided OCFO with the invoice applicable to the asset which met 

the capitalization threshold. Therefore, this item was not properly recorded in the Fixed 

Assets Module and financial statements as of 9/30/07. 
66 The Peace Corps :: performance and accountability report :: fiscal year 2007

INDEPENDENT AUDITOR’S REPORT 

ON INTERNAL CONTROL, CONTINUED 

SIGNIFICANT DEFICIENCY 1, CONTINUED 

Peace Corps, MS 711, Accounting for Property, Plant and Equipment, outlines specific roles 

and responsibilities for OCFO, the Peace Corps posts and the Office of Management for 

ensuring the propriety of the recorded fixed asset balances and the related supporting 

documentation. 

Recommendations 

We recommend the Peace Corps Director: 

1a. Establish more detailed criteria to ensure that a detail and clear audit trail for calculations of 

capitalized software developers’ labor costs are maintained and readily available. 

1b. Conduct expanded internal reviews to ensure that Property, Plant & Equipment records are 

being updated and reconciled to interim financial statements on a regular basis. Proper and 

timely reconciliation procedures should be coordinated between HQ and posts as well as 

between OCFO and OCIO offices. Formal training should be provided on a regular basis to 

Post General Services Officer (GSO) to ensure adequate controls over assets and record 

retention at posts. 

1c. Develop and implement detailed procedures for recording and documenting capitalized 

property additions and disposals on an on-going basis within the new Fixed Assets Module. 

Changes to capitalized amounts, in-service-dates or other relevant information should be 

communicated timely to OCFO to be updated to the system’s records. Peace Corps 

management should ensure that when an item is added to or deleted off of the assets 

listing, the date or accounting period (different from in-service-date) is being tracked and 

available in the system. 

1d. Ensure that roles and responsibilities outlined on Peace Corps Standard Operating 

Procedures (SOP) are carried out by posts and HQ for property accounting and financial 

reporting personnel that perform accuracy, verification, and completeness checks on the 

capitalized property listings. HQ should perform periodic reviews to ensure records retention 

policies and procedures are properly followed by the posts and HQ. 

Undelivered Orders / Accounts Payable

Peace Corps continues to make tremendous progress in improving its accounting controls over 

the recording of obligations, deobligations, accounts payable, and accruals. In FY 2006, Peace 

Corps implemented a process to review all obligation documents containing an obligating 

transaction greater than $250,000, all purchase card obligations, and all State Departmentprocessed Voucher Audit Detail Report transactions for potentially unrecorded liabilities 

(accruals). In FY 2007, Peace Corps made further improvements by reducing the obligation 

review threshold to $100,000. In addition, Peace Corps applied an estimated accrual rate to all 

open obligation documents less than $100,000 for financial reporting purposes. They also 

issued a twelve-page desktop procedure outlining the detail processes for determining and 

estimating various accrued liabilities. 
The Peace Corps :: performance and accountability report :: fiscal year 2007 67

INDEPENDENT AUDITOR’S REPORT 

ON INTERNAL CONTROL, CONTINUED 

SIGNIFICANT DEFICIENCY 1, CONTINUED 

However, we noted the following exceptions during our year-end testing procedures: 

x Two duplicate obligations for relocation allowances. 

x One estimated accrual not properly allocated to all available funds. 

x September services not properly accrued for certain obligations. 

x Gains or losses from foreign currency exchange rates were not considered when 

recording accruals for unapproved year end invoices. 

x Certain accruals were improperly reversed or correcting entries were not processed 

properly. 

Recommendations 

We recommend the Peace Corps Director: 

1e. Enhance the policies and procedures for accounting for relocation allowances and ensure 

management review procedures are conducted to identify duplicate obligations. Further, 

Peace Corps management should conduct internal review of posts’ procedures in following 

the Peace Corps Obligation SOP. Additionally, Peace Corps’ OCFO/Office of Budget and 

Analysis and Office of Acquisitions and Contract Management should have open and timely 

communication to update the status of open obligations for deobligation consideration. 

1f. Expand the level of testing conducted in connection with the OMB Circular A-123 

management assurance review to specifically examine the reliability of the controls over the 

accounts payable and accrual accounting processes. 

1g. Establish a management check list or review for final accruals to ensure completeness. 

Management should also consider high value open foreign currency obligations gains/losses 

impact from exchange rates when processing accruals at year-end. Further, Management 

should incorporate the accrual desktop procedures in formal OCFO policies.

1h. Provide effective formal training to ensure staff is sufficiently knowledgeable in performing 

correction and reversal entries.

Host Country Contributions 

Posts receive two types of Host Country Contributions (HCC): in-kind and cash. In-kind 

contributions are any non-cash items such as housing for volunteers, utilities, and donated 

supplies. Cash HCCs are used for payment to local contractors, allowances for volunteers and 

Peace Corps programs. Currently, about twenty-four posts had cash contributions balances in 

local currency or in USD totaling about $1.3 million as of September 30, 2007 for which the 

donor country may have earmarked the funds for specific purposes. Cash donations are 

recorded in FOR Post and recognized as an HCC receipt. Posts are required to deposit HCC 

receipts and submit a deposit slip to Headquarters. 
68 The Peace Corps :: performance and accountability report :: fiscal year 2007

INDEPENDENT AUDITOR’S REPORT 

ON INTERNAL CONTROL, CONTINUED 

SIGNIFICANT DEFICIENCY 1, CONTINUED 

The current Peace Corps CFO Policy Statement 07-01, Accounting for Funds and 

Miscellaneous Items, is inconsistent with generally accepted accounting principles used to 

prepare financial statements and for the appropriate presentation and disclosure of HCCs in the 

Peace Corps financial statements. In-kind and cash HCCs were not presented properly in the 

financial statements as assets, deferred revenue, other financing sources, and non-exchange 

revenues. Management included these amounts in a disclosure related to HCCs in the footnotes 

section of the financial statements. 

Management has expressed concern that certain HCCs contain restrictions on the use of the 

funds, and that recognizing revenue upon receipt would not be proper. Such donations could be 

recorded as cash and deferred revenue until the conditions for earning such donations are met. 

In FY 2007 Peace Corps began working with legal counsel to determine the nature of the cash 

contributions and whether the cash received from host countries meet the definition as gifts or 

donations and whether the balance should be reported by Peace Corps on its principal financial 

statements in addition to footnote disclosure. 

Statements of Federal Financial Accounting Standard No. 7, Accounting for Revenue and Other 

Financing Sources states: 

5. Nonexchange revenues include income taxes, excise taxes, duties, fines, penalties, 

and other inflows of resources arising from the Government's power to demand 

payments, as well as voluntary donations. 

36 d. When services are rendered continuously over time or the right to use an asset 

extends continuously over time, such as the use of borrowed money or the rental of 

space in a building, the revenue should be recognized in proportion to the passage of 

time or the use of the asset. 

Donations 

62. Donations are contributions to the government, i.e., voluntary gifts of resources to a 

government entity by a nonfederal entity. Donations may be financial resources, such as 

cash or securities, or nonfinancial resources such as land or buildings. Revenue arising 

from donations should be recognized for those inflows of resources which meet 

recognition criteria for assets and should be measured at the estimated fair value of the 

contribution. 

STATEMENT OF FINANCING 

97. Nonbudgetary resources represent the net amount of resources received by the 

entity that are not included in budgetary resources. These items could include donations 

of assets, transfers of assets from (to) other federal entities, and financing imputed for 

cost subsidies. This amount would also include decreases (increases) in receivables 

related to revenue accrued from the public because, while the cash collected for 

exchange revenue is a budgetary resource, the accrual amount is not. 

 
The Peace Corps :: performance and accountability report :: fiscal year 2007 69

INDEPENDENT AUDITOR’S REPORT 

ON INTERNAL CONTROL, CONTINUED 

SIGNIFICANT DEFICIENCY 1, CONTINUED 

The Budgetary Process and Its Linkage to Accounting 

222. Donations are not included as receipts in the budget, except for cash and nearcash items. However, some other kinds of donations are also recognized as revenue. 

Such revenues are permanent differences between the budget and the financial 

statements. Donation revenue will increase net results of operations under these 

standards. Under the standard, accounting for donations is consistent with current 

practice in the private sector where contributions are recognized as revenue. 

 

Recommendations 

We recommend the Peace Corps Director: 

1i. Reexamine its current CFO Policy 07-01 regarding HCCs to ensure that recognition, 

recording, monitoring and reporting its HCCs is consistent with generally accepted 

accounting principles for Federal entities, and modify the policy accordingly, which should 

include references to applicable standards. 

1j. Continue to work with legal counsel to determine the nature of these assets and any 

restrictions that may impact their reporting or classification. Peace Corps management 

should ensure the policy is updated to reflect the legal counsel and Peace Corps’ 

determination on how to report these assets. Further, they should implement the updated 

policy in FY 2008 to address the proper reporting of HCC in the financial statements in 

accordance with the generally accepted accounting principles. 
70 The Peace Corps :: performance and accountability report :: fiscal year 2007

INDEPENDENT AUDITOR’S REPORT 

ON INTERNAL CONTROL, CONTINUED 

SIGNIFICANT DEFICIENCY 2 

INFORMATION SYSTEM SECURITY CONTROLS NEED IMPROVEMENT 

Peace Corps significantly improved its information systems control environment during FY 2007, 

most notably with the certification and accreditation of its core financial management system, 

Odyssey. However, we found that certain internal control weaknesses related to the Odyssey 

system and Peace Corps’ overall Information Technology (IT) environment continued to exist at 

September 30, 2007. 

Control Weaknesses 

x Peace Corps is sharing and exchanging information maintained in Odyssey with external 

entities without a Memorandum of Understanding (MOU) which states the terms and 

conditions as to how the data may be used by each entity. Without written 

memorandums of understanding or authorization agreements, there is no formal 

acceptance and agreement on roles, responsibilities, and expectations with respect to 

the exchange of data. This may result in a lack of accountability in the event that the 

interface fails to meet the expectations and requirements of the parties involved. System 

owners may have a reduced level of assurance regarding the integrity, completeness, 

and authorization of data and transactions that are transmitted among their respective 

systems. 

x Peace Corps had not developed adequate test plan standards and expectations for test 

results for all levels of testing proposed Odyssey system changes. Peace Corps 

currently has three separate documents governing the change and configuration 

management procedures. The proper development of standardized test plans for each 

level of testing (i.e., unit test, module test, integration test, alpha test, and regression 

test) helps ensure all the general controls and necessary application processing 

requirements of the system have been successfully tested. Management can not ensure 

the reliability of its system processes without adequately documented change and 

configuration test plans.

x Developers for the FOR HQ application had access to the production environment of the 

FOR HQ application. In addition, multiple accounts for the same individuals were present 

on all three servers. Furthermore, one individual maintained an administrator account on 

all three servers, yet no longer required access. 

Inadequate segregation between development and production environments increases 

the risk of inadvertent or intentional unauthorized software modifications being placed in 

the production environment. Unauthorized software modifications, or modifications that 

have not been independently reviewed, may go undetected. As a result, the ability to 

investigate and address any identified issues in a timely manner is diminished. Multiple 

unnecessary accounts for the same individuals also increase the risk that an account 

may be used improperly. 
The Peace Corps :: performance and accountability report :: fiscal year 2007 71

INDEPENDENT AUDITOR’S REPORT 

ON INTERNAL CONTROL, CONTINUED 

SIGNIFICANT DEFICIENCY 2, CONTINUED 

x We noted multiple weaknesses relating to the Odyssey UNIX environment. System 

accounts existed on the Odyssey UNIX production environment servers that were not 

required in the production environment. In addition, management-approved access 

request forms were not on file for all individuals with access to the production 

environment servers. Without proper control and reconciliation of user accounts, Peace 

Corps cannot ensure that unauthorized users are unable to access the system and 

perform unauthorized actions. 

x We noted multiple weaknesses relating to the posts’ logical and physical access 

controls, backup procedures and environmental controls during the site visits to a 

sample of Posts. Critical procedures were not being performed at the posts which 

increases the risk and vulnerabilities to Peace Corps’ overseas information technology 

systems and the data they contain. 

The Peace Corps MS 542, Peace Corps IT Security Policies and Procedures, states that “No 

Peace Corps computer or network shall be connected to, or have the capacity to be directly 

connected to, any non-Peace Corps organization, unless the organization has the following 

security measures in place: a memorandum of understanding (MOU) that sets out the terms, 

configurations, and dates when the connections and the security safeguards will be in place.” 

The Peace Corps MS 542, states: “System designers/developers shall provide test procedures 

for the installations of new software or configurations.” 

NIST SP 800-53, Recommended Security Controls for Federal Information Systems, 

Configuration Management – 1 states: “The organization develops, disseminates, and 

periodically reviews/updates: (i) a formal, documented, configuration management policy that 

addresses purpose, scope, roles, responsibilities, management commitment, coordination 

among organizational entities, and compliance; and (ii) formal, documented procedures to 

facilitate the implementation of the configuration management policy and associated 

configuration management controls.” 

NIST SP 800-53, states, “The organization establishes appropriate divisions of responsibility 

and separates duties as needed to eliminate conflicts of interest in the responsibilities and 

duties of individuals. There is access control software on the information system that prevents 

users from having all of the necessary authority or information access to perform fraudulent 

activity without collusion.” 

The Peace Corps MS 542, states: “overseas posts are subject to the policies and requirements 

of this manual section to the extent they have been provided with the appropriate equipment 

and have the technical capacity to do so. Posts that are still transitioning to a new electronic 

system shall confer with regional directors and the IT security program manager for guidance on 

methods for securing their systems.” 
72 The Peace Corps :: performance and accountability report :: fiscal year 2007

INDEPENDENT AUDITOR’S REPORT 

ON INTERNAL CONTROL, CONTINUED 

SIGNIFICANT DEFICIENCY 2, CONTINUED 

Recommendations

We recommend the Peace Corps Director ensure that: 

2a. Memorandums of understandings/written authorizations are established and maintained for 

each entity/agency system that shares information with Odyssey. The MOU should be 

signed and authorized by appropriate management officials and document the roles, 

responsibilities, requirements, and terms agreed to by all parties involved in the exchange of 

data. 

2b. A comprehensive configuration management plan is developed and implemented for the 

Odyssey system that describes the entire process for making changes to the system, 

including roles and responsibilities associated with initiating, authorizing, developing, testing, 

and implementing system changes. 

2c. Logical access controls are implemented to restrict a developer from having access to the 

production environment of the FOR HQ application. If resources prohibit complete 

segregation of access, then compensating controls should be implemented to reduce the 

risk associated with access that is not segregated among conflicting environments. 

Compensating controls such as updating the FOR HQ change control procedures to include 

reviews of privileged user activity and management approvals of all changes prior to 

migration should be implemented. 

2d. System administrator access to the FOR HQ SQL Server is reviewed periodically and 

unused and unnecessary accounts are removed. 

2e. Procedures are developed and implemented for periodically reviewing the Odyssey UNIX 

user accounts. In addition, ensure that user access request forms are completed and kept 

updated according to individual system access rights for each individual with system access. 

2f. Posts are provided with a copy of the overseas information technology systems (1) risk 

assessment; (2) system security plan; and (3) an explanation of how to use and apply these 

documents to ensure Posts are adhering to the security plan. 

2g. Posts are reviewed on yearly basis for compliance with policies and procedures established 

for information technology at the Posts in accordance with the agency's internal control 

program. In addition, the Post self assessment should be developed and implemented for 

testing of all Post specific security controls. 
The Peace Corps :: performance and accountability report :: fiscal year 2007 73

INDEPENDENT AUDITOR’S REPORT ON 

COMPLIANCE WITH LAWS AND REGULATIONS 

Director and Inspector General 

Peace Corps 

We have audited the financial statements of Peace Corps, an independent executive branch 

agency of the United States federal government, as of and for the year ended September 30, 

2007, and have issued our report thereon dated October 31, 2007. We conducted our audit in 

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

standards applicable to financial audits contained in Government Auditing Standards issued by 

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

Bulletin No. 07-04, Audit Requirements for Federal Financial Statements. 

The management of Peace Corps is responsible for complying with laws and regulations 

applicable to Peace Corps. As part of obtaining reasonable assurance about whether Peace 

Corps’ financial statements as of September 30, 2007 are free of material misstatement, we 

performed tests of Peace Corps’ compliance with certain provisions of laws and regulations 

which could have a direct and material effect on the determination of financial statement 

amounts, and certain other laws and regulations specified in OMB Bulletin No. 07-04. We 

limited our tests of compliance to these provisions and we did not test compliance with all laws 

and regulations applicable to Peace Corps. 

The results of our tests of compliance with the laws and regulations described in the preceding 

paragraph disclosed no instances of noncompliance that are required to be reported under

Government Auditing Standards or OMB Bulletin No. 07-04. 

Providing an opinion on compliance with certain provisions of laws and regulations was not an 

objective of our audit and, accordingly, we do not express such an opinion. 

This report is intended solely for the information and use of the management of Peace Corps, the 

Peace Corps’ Office of Inspector General, OMB, and Congress, and is not intended to be and 

should not be used by anyone other than these specified parties. 

Arlington, Virginia 

October 31, 2007 
o th e r acc o mpany i n g i nf o rmat i o n
The Peace Corps :: performance and accountability report :: fiscal year 2007 75

Other Accompanying Information

The Inspector General’s Statement on the Peace Corps’ Management and Performance Challenges

As required by the Reports Consolidation Act of 2000 and Office of Management and Budget guidance, I am 

pleased to submit the following summarizing what I consider to be the most serious management challenges facing 

the Peace Corps. This statement has been compiled based on Office of Inspector General (OIG) audits, investigations, evaluations, and the general knowledge of the agency’s operations.

Sincerely,

H. David Kotz, Inspector General

September 28, 2007

Challenge Safety and Security of Peace Corps Volunteers

Violent crime against Volunteers continues to be a management challenge. We are preparing a comprehensive 

report on our evaluation of the major components of Peace Corps’ safety and security strategy. The report will 

discuss the agency’s progress in ensuring that the Volunteers are working and living in a safe and secure environment and make recommendations for improving safety and security. Our work in this area has disclosed 

that the agency’s crime statistics have an unacceptably high error rate and that the agency’s safety and security 

training for Volunteers is based upon these inaccurate figures. In addition, all Country Welcome Books that 

are sent to prospective Volunteers reviewed by the OIG included outdated and incorrect data and information. 

Finally, we have some concerns about the efficacy of the posts’ Emergency Action Plan tests.

Challenge Peace Corps’ Medical Clearance System 

Several aspects of the agency’s Medical Clearance System (MCS), including the length of the process, the lack 

of transparency and communication, and insufficient reimbursement costs present significant management 

challenges to the Peace Corps. Furthermore, the Director’s initiative to recruit a greater number of Volunteers 

in the 50+ age range will place an increased burden on the capacity of the Volunteer Delivery System (VDS) in 

general and the MCS in particular. 

The OIG is currently conducting an evaluation of the Medical Clearance System. The MCS evaluation will 

make recommendations on the following specific areas: screening review systems and procedures; the screening review timeframe and costs; medical screening guidelines, communicated guidance, system transparency, 

interoffice communication and customer service; staff training; and the reimbursement fee schedule. In the 

next fiscal year it will be critical for the agency to allocate the financial and technical resources that enable its 

Office of Medical Services to implement recommendations for needed improvements that are key to ensuring 

the success of the 50+ initiative and the overall VDS program.

Challenge Information Technology Management

Management has made improvements in strengthening the Peace Corps’ information technology architecture 

and security management. However, several issues related to information security and risk management of 

system architecture remain a management challenge. The most significant issues follow:

0
76 The Peace Corps :: performance and accountability report :: fiscal year 2007

Other Accompanying Information

•	 Eleven of 12 of the agency’s information systems have not received final certifications and accreditations

indicating that they are acceptable to use.

•	 Processes for systems development life cycle and change management have not been fully or consistently

implemented.

•	 Although significant progress has been made, some systems’ contingency plans need to be further tested and

refined to ensure full recovery following a major disruption of service.

In addition, the agency is planning to deploy two on-line collaboration tools without the appropriate and necessary internal controls in place to limit the agency’s vulnerabilities.

Challenge Performance Management and Disciplinary Actions 

A broad management challenge that exists within the agency involves the reluctance of management to undertake the necessary disciplinary actions against employees where there is evidence of unsatisfactory performance and/or inappropriate conduct. 

In the past fiscal year, the OIG investigative unit brought five cases of criminal conflict-of-interest on the 

part of Peace Corps staff members, including country directors, and additional cases involving allegations 

of improper transfer of Government property, falsification of official Government forms and violations of 

Peace Corps rules and regulations on the part of both staff members and Volunteers to management’s attention. Notwithstanding these findings, agency management has been often unwilling to impose disciplinary actions, deciding in these cases to take either no action or engage in a settlement with the offending 

party in which the agency agrees to expunge any adverse documentation from the employee’s personnel file. 

In addition, failures on the part of Peace Corps posts to follow-up appropriately with employees who had significant performance deficiencies has led to significant losses and mismanagement of agency resources. 

The Office of Inspector General has engaged in discussions with senior-level officials at the Peace Corps, including the Director and Chief of Staff about the above, and Peace Corps management has stated that it is committed to taking the appropriate steps to rectify this challenge in the future. 

Challenge Financial Management

Financial management and compilation of accurate and complete financial statements in accordance with 

generally accepted accounting principles continues to be a management challenge. A qualified opinion was received on the balance sheet for FY 2006 and further improvements in financial reporting have been achieved 

this year.

Challenge Post Imprest Fund Management and Other Cashier Operations

Peace Corps manages cash accounts maintained as imprest funds in 68 posts in the countries served by the 

Peace Corps. The value of funds flowing through the imprest fund was approximately $21 million during FY 

2007. The fund’s purpose is to manage the numerous day-to-day business activities carried on at Peace Corps 

posts. Incidents of imprest fund-related embezzlement and theft leading to cash losses continue to be a man-
The Peace Corps :: performance and accountability report :: fiscal year 2007 77

Other Accompanying Information

agement challenge. Significant losses have resulted from ineffective oversight and internal control over the imprest fund and other cashier operations. We are currently investigating two cases involving an armed robbery 

and embezzlement of money associated with the imprest fund and other cashier operations. Resulting estimated losses were over $85,000. Our auditors have also noted problems involving management of the imprest 

fund in nearly every audit of a Peace Corps post that they have conducted within the past fiscal year. This area 

requires increased management focus in improving policies, procedures, supervisory oversight, and internal 

control at the overseas posts.

Challenge Managing Resources from Other Agencies: 

 The President’s Emergency Plan for AIDS Relief

Accountability for Federal funds provided to the Peace Corps through the President’s Emergency Plan for 

AIDS Relief (PEPFAR) is a significant management challenge. This funding is managed by the State Department Global Aids Coordinator and is specifically limited to support AIDS-related programs. Greater emphasis on program guidance is critical to effectively managing the funds and ensuring the funds are delivered as 

legislatively intended.

The OIG intends to conduct a comprehensive combined audit and evaluation of the agency’s PEPFAR program 

in the coming fiscal year to assess how the agency is dealing with this challenge. 

Challenge Support for Volunteers Working in HIV/AIDS Projects 

While the agency has begun to take steps to increase the amount and quality of support to Volunteers working in 

HIV-prevalent countries, the challenge to management remains to mobilize resources sufficient to the task. To 

date, the burden of responding to Volunteers’ mental health needs has fallen largely on the Peace Corps Medical 

Officers at post and the staff in the Office of Special Services, who provide mental health counseling to Volunteers. The Office of Special Services, in conjunction with the Center for Field Assistance and Applied Research, 

has also provided training to staff and Volunteers on special issues. However, the effort to support Volunteers’ 

mental health needs should be multi-faceted and agency-wide. According to the 2006 Peace Corps Volunteer 

survey, when asked to rate factors that create stress or emotional health issues, 24 percent of the Volunteers rated 

their primary work assignments as considerably to exceptionally problematic and 30 percent rated their work 

assignments as moderately stressful.
78 The Peace Corps :: performance and accountability report :: fiscal year 2007

Other Accompanying Information

Agency Response to the Inspector General’s Statement

on the Peace Corps’ Management and Performance Challenges

To: H. David Kotz, Inspector General

From: Ron Tschetter, Director

Date: October 29, 2007

Subject: Agency Response to the Inspector General’s Statement on Management and Performance Challenges

Thank you for your statement of September 28, addressing the management and performance challenges faced 

by the Peace Corps, as required by the Reports Consolidation Act of 2000 and OMB guidance.

As the Office of the Inspector General (OIG) carries out its work through audits, investigations, and evaluations in order to prevent and detect fraud, waste, abuse, and mismanagement, and promote economy, effectiveness, and efficiency in government, the agency is pleased to support that work.

I would like to address the areas of challenge identified in your statement. The agency continues to strive for 

constant improvement as it carries out its worldwide mission. 

Safety and Security of Peace Corps Volunteers

The safety and security of Peace Corps Volunteers is always the agency’s highest priority. The agency has dedicated safety and security personnel at post and headquarters who are a part of an extensive safety and security 

support network that works fulltime to ensure the safety and security of our Volunteers. In support of this, the 

Office of Safety and Security completed a top to bottom review in FY 2007 and is working on identified issues.

The agency appreciates the OIG review this year of specific aspects of the safety and security support network. Of concerns identified in the OIG’s letter, the OIG specifically cited challenges with the agency’s crime 

statistics. The errors identified by the OIG have been noted and, where appropriate, corrected. The Office of 

Safety and Security transitioned from a paper based manual reporting system to a state-of-the-art, internetaccessible crime incident reporting system to capture statistical data from the field. The OIG submitted a list 

of errors encountered in reviewing all crime incident reporting form (CIRF) reports from 10 out of 68 posts. 

Each report had over 40 data points required to be filled out by the preparer. The OIG found inconsistencies 

between information provided in some data points and the narrative report of incident. Few of these errors 

were substantive and some of the errors are not agreed to by the Office of Safety and Security. Based on the 

OIG input, the office ceased normal operations and reviewed over 1,300 cases completed in 2006. Minor errors were identified and immediately corrected. Since the implementation of the CIRF, the Office of Safety 

and Security instituted an annual reconciliation process and an ad-hoc review and correction of 19 posts 

due to unusually low reporting of incidents. These reviews were instituted before the OIG review. The Office 

of Safety and Security has submitted corrected data to the OIG, and instituted a stricter quality assurance 

process. The identified effort does not affect the validity of the data provided in other venues, including Welcome Books or training. Volunteer training is based primarily on identified trends and those primary risks 

that Volunteers face at a specific post. Strategies to manage these risks are infused with culturally-specific 

training. In general, the crime trends and risk factors do not fluctuate significantly from one year to the next; 

therefore, minor errors in incident reporting are not likely to negatively impact the overall safety and security training at any given post. 

0
The Peace Corps :: performance and accountability report :: fiscal year 2007 79

Other Accompanying Information

The agency requires that posts test their emergency action plans (EAP) annually, so that posts can analyze 

their EAP tests and make adjustments to their EAP tests in response to identified shortcomings. In many 

instances, the safety and security officers assist in the design and execution of emergency action plan tests 

and provide observations and feedback once tests have been completed. Additionally, the safety and security 

officers provide EAP training to the staff and wardens upon request from the country directors during their 

post visits. The Office of Safety and Security has been working with the regions since March 2007 to develop 

additional EAP testing guidance. 

Peace Corps’ Medical Clearance System

The medical clearance process is a key checkpoint in the application process as it helps ensure the agency fields 

Volunteers who, from a health and well-being standpoint, are able to meet the rigors of two years of overseas 

service. The Office of Medical Services looks forward to the final OIG report on the medical clearance process. 

In relation to the items raised by the IG in the management challenges letter regarding improvements in the 

agency’s medical clearance system (MCS), the medical pre-service team is taking the following steps:

•	 Review of systems and procedures (in progress);

•	 Review of all forms and written communication sent to applicants (completed);

•	 Establish and transmit forms and written communications online to shorten processing time 

(continuing project); 

•	 Staff education regarding customer service (completed);

•	 Review of medical screening guidelines (continuing project);

•	 Reimbursement fee schedule constrained by FY 2008 budget (continuing project);

•	 50+ Initiative—established a clinical and support staff team to medically evaluate applicants (completed).

The team is working closely with other offices within the Peace Corps to accomplish its work and to meet the 

time lines established to bring about improvements. 

Information Technology Management

Certifications and Accreditations 

In FY 2007 the Office of the Chief Information Officer (OCIO) created up-to-date information technology (IT) 

security requirements, published a certification and accreditation (C&A) process guide, provided C&A and 

tool training to multiple agency staff, and began the process of preparing several systems for accreditation. 

Consistent with the plan to conduct at least three certification and accreditation efforts each year beginning 

in FY 2007, Odyssey; IGCMS, the Inspector General Case Management System; and .Net Aquifer completed 

the initiation, certification, and accreditation phases of the agency’s National Institute of Standards and Technology-based C&A process in FY 2007. The authorizing official issued an authorization to operate for Odyssey 
80 The Peace Corps :: performance and accountability report :: fiscal year 2007

Other Accompanying Information

and the authorizing officials for the IGCMS and .Net Aquifer issued an interim authorization to operate. Two 

systems and one application will complete the initiation, certification, and accreditation phases of the C&A 

process in FY 2008. Additionally, two other systems and one application started the initiation phase of C&A 

in FY 2007. 

Systems Development Life Cycle and Change Management 

In FY 2007, the agency took an important step when the Peace Corps’ Systems Development Life Cycle Handbook 

(SDLC) was approved by the OCIO Enterprise Architecture Advisory Board in December 2006. The SDLC 

Handbook is the definitive statement of the policies, standards, and life cycle that govern information technology (IT) systems—including infrastructure—that are built by or for the Peace Corps. This SDLC is based on 

the standard SDLC used throughout industry, and has been tailored, where necessary, to meet the needs of the 

Peace Corps. The SDLC represents the agency-wide guideline. Senior staff will be educated on the value of the 

SDLC to all stakeholders and the SDLC will be presented for approval at the agency level during FY 2008. 

The change management plan was not formally approved but has been followed by most of the agency since 

October 2005. Change management provides a process for managing and controlling the way changes are initiated, assessed, planned for, scheduled, and implemented. The change management plan will be presented for 

approval at the agency level during FY 2008.

Contingency Planning 

The purpose of disaster recovery is to resume Peace Corps operations in the event of a significant service interruption or a continuity of operations plan (COOP) is declared. The OCIO and the Office of Safety and Security 

have determined that the OCIO disaster recovery planning is part of the agency’s overall COOP effort.

As part of that program, the OCIO conducts a disaster recovery exercise to test significant subsets of the overall COOP. In FY 2007, the exercise focused on the recovery of the agency’s most critical services—account 

management, messaging (including e-mail messages), and the basic database functions.

In FY 2008 the office intends to expand testing to address fundamental changes that have occurred in the 

agency’s financial systems and address existing and new major applications, broad-based upgrades to the 

hardware platforms, software systems, and configurations.

Online Collaboration Tools 

The agency is currently exploring several online collaboration tools in order to determine which ones will best 

meet the agency’s knowledge management objectives. After the results of the exploration process have been 

analyzed and documented, a review board will oversee online collaboration efforts prior to full deployment of 

the tools.

Performance Management and Disciplinary Actions

The agency takes unsatisfactory performance and inappropriate conduct issues very seriously and has processes in place to ensure that such challenges are promptly addressed. When management receives cases from 

the Inspector General, they are thoroughly reviewed and acted upon.
The Peace Corps :: performance and accountability report :: fiscal year 2007 81

Other Accompanying Information

Management believes that there is no instance in which the Inspector General has provided complete and 

irrefutable evidence that the agency has not taken action that serves justice and is in the best interests of the 

agency, the taxpayer, and the efficiency of the federal service. 

The Inspector General also disagrees in some instances with the level of discipline taken. The authority and 

discretion to set that level is entrusted solely to management. While the Inspector General may have an opinion, management has many factors—in addition to the OIG report—which it must weigh in applying appropriate discipline. Almost without exception, the problem staff members identified in OIG investigations are no 

longer employed at the Peace Corps. The severing of the employer-employee relationship is a significant action 

in the employment context and will always be part of the individual’s employment history and required to be 

reported in future applications for federal employment.

The agency endeavors to have a work environment that is marked by excellence and full performance of all 

employees and looks forward to working with the Inspector General to address any concerns raised.

Financial Management

Financial management is our fiduciary responsibility and is of paramount importance throughout the Peace 

Corps. Over the past few years we have made monumental improvements in systems, process, personnel, and 

governance over financial transactions. The era of 2006 and 2007 has been a time of maturation of financial 

management for the Peace Corps. Existing material weaknesses from past year financial audits were mitigated during this fiscal year and no material weaknesses were identified in the risk assessments nor in the current 

financial audit. System and process changes implemented in FY 2007 and in prior years were tested and validated during this year’s successful certification and accreditation of the financial system in accordance with 

the Federal Information Security Management Act, Public Law 107-347. Further, internal control testing and 

standardized reconciliations were implemented this fiscal year and will be expanded and institutionalized in 

the coming years. We have hired and retained financial professionals with current staff, including the Chief 

Financial Officer, holding Certified Professional Accountant certifications. These actions over the past few 

years have led to the production of accurate and timely financial statements for FY 2007. While we do and will 

continue to take financial management very seriously in the Peace Corps, it is no longer considered a management weakness for the Peace Corps.

Post Imprest Fund Management and Other Cashier Operations

The post imprest fund cash for the year, spread among the 68 Peace Corps posts, totaled $21.4 million used 

to manage numerous day-to-day business activities in cash based economies of the developing countries we 

serve. The Peace Corps’ internal risk review of 2006 found that post imprest fund cash was an inherently high 

financial risk. The Office of the Chief Financial Officer in conjunction with region staff methodically took significant actions to tighten internal controls by reducing cash, internal reviews, automating post reconciliation 

of cash, surprise cash counts, and training. Cash on hand was proactively reduced in 2006. By FY 2007, cash 

had been reduced by 25 percent. We continue to pursue further reductions in the imprest fund cash accountability. To further improve post cash management controls, additional sub-regional cashier training has taken 

place to further improve the post-level understanding of cashiering procedures. Every cashier will have taken 

the new interactive, internet based training by the end of calendar year 2007. The Overseas Financial Management Handbook was updated this fiscal year and the applicable Peace Corps Manual section is currently under 

review, both of which will continue to assist posts in better management of the imprest fund. Peace Corps 
82 The Peace Corps :: performance and accountability report :: fiscal year 2007

Other Accompanying Information

management is aware of $40,977 in losses at one post due to embezzlement of imprest funds. The loss was 

discovered by Peace Corps post staff following regular internal control protocol. Peace Corps management 

is also aware of an armed robbery of $44,660 due to staff not following Peace Corps procedures; however, the 

funds were not stolen from the imprest fund but from post staff after cashing a check at the bank. These two 

losses resulted from ineffective oversight at the post level and failure to follow established internal control 

procedures. In FY 2008 after the cashier training is complete, an interactive training session will be provided 

to cashier supervisors as well. The Peace Corps will continue strengthening controls and oversight to manage 

the inherent risk of providing cash through imprest funds to the posts.

Managing Resources from Other Agencies: The President’s Emergency Plan for AIDS Relief

The agency recognizes its responsibility to effectively manage the PEPFAR program and the PEPFAR funds. 

PEPFAR funds are provided to the State Department and are properly managed by the Peace Corps as nonentity resources not reflected on the face of the financial statements. PEPFAR funding is managed by the State 

Department Global Aids Coordinator. Odyssey, the Peace Corps financial system, now tracks PEPFAR funds 

by program in the areas of prevention, care and treatment. The Peace Corps continues to meet State Department reporting requirements, providing obligation and outlays reports on a quarterly basis. 

During FY 2007, the Peace Corps’ Office of AIDS Relief (OAR) hired an administrative officer to support overseas and headquarters offices with PEPFAR funds. This enables OAR to be more responsive to financial inquiries and to provide financial management tools to the posts, while also strengthening guidance. OAR also has 

a program and training advisor on staff who assists posts with PEPFAR programming and training issues. All 

posts started including their PEPFAR plans in their strategic and post operating plans last year, and submit 

their implementation plans to OAR for a multi-office review that includes programming and training specialists from the Center for Field Assistance and Applied Research and the regions. The agency looks forward to 

the upcoming OIG audit of Peace Corps’ involvement in PEPFAR to determine ways to continue to strengthen 

necessary support.

Support for Volunteers Working in Projects Dedicated to Assisting HIV/AIDS Victims

The agency agrees that Volunteers need support as they cope with emotional health issues related to their 

work in HIV/AIDS. At the request of the Peace Corps Director in FY 2007, the Office of AIDS Relief (OAR) 

established a cross-office task force to review these issues and make recommendations. From this effort, the 

Peace Corps Director approved a set of recommendations and OAR is working with the task force to prepare 

an action plan to improve this support, which will also identify any need for additional resources. Further, 

the Center for Field Assistance and Applied Research and OAR joined forces to finalize a HIV/AIDS resource 

toolkit that includes eight training modules—one of which focuses on resiliency. During these efforts, it has 

become increasingly evident that Volunteers are indeed coping with emotional health issues relating to HIV/

AIDS; however, it is also evident that these issues are part of a larger spectrum of Volunteer resiliency issues. 

The work being completed on the HIV/AIDS issues has increased awareness for the importance of broader 

support as well.
The Peace Corps :: performance and accountability report :: fiscal year 2007 83

Other Accompanying Information

Summary of Financial Statement Audit and Management Assurances Tables 

Table 1: Summary of Financial Statement Audit 

Audit Opinion Unqualified 

Restatement Yes 

Material Weaknesses Beginning 

Balance 

New Resolved Consolidated Ending Balance 

Financial Mgt. Structure 1 0 

Accounting Business 

Processes

1 0 

Beginning Balances 1 0 

Information Systems 

Control Environment 

1 0 

Total Material 

Weaknesses 

4 4 0 

Summary of Financial Statement Audit and Management Asssurances Tables

0
84 The Peace Corps :: performance and accountability report :: fiscal year 2007

Other Accompanying Information

Table 2: Summary of Management Assurances 

Effectiveness of Internal Control over Financial Reporting (FMFIA § 2) 

Statement of Assurance Unqualified 

Material Weaknesses Beginning 

Balance 

New Resolved Consolidated Reassessed Ending 

Balance 

Financial Management. 

Structure 

1 0 

Accounting Business 

Processes

1 0 

Beginning Balances 1 0 

 

 

Total Material Weaknesses 3 3 0 

Effectiveness of Internal Control over Operations (FMFIA § 2) 

Statement of Assurance Unqualified 

Material Weaknesses Beginning 

Balance 

New Resolved Consolidated Reassessed Ending 

Balance 

 

 

 

 

 

Total Material Weaknesses 

Conformance with Financial Management System Requirements (FMFIA § 4) 

Statement of Assurance Systems Conform to Financial Management System Requirements 

Non-conformances Beginning 

Balance 

New Resolved Consolidated Reassessed Ending 

Balance 

Information Systems 

Control Environment 

1 0 

 

 

Total Non-conformances 1 1 0 

Compliance with Federal Financial Management Improvement Act (FFMIA) 

Agency Auditor 

Overall Substantial Compliance 

1. System Requirements 

2. Accounting Standards 

3. USSGL at Transaction Level 
app e nd i c e s
86 The Peace Corps :: performance and accountability report :: fiscal year 2007

Appendices

Appendices 

Appendix 1: Audit Follow-Up Actions

Status of Financial Notice of Findings – All Fiscal Years Audits 

Description Number/Severity Status__________

FSN Payroll Reconciliation 02-FIN-MED-2006 Closed 

Property, Plant and Equipment (PP&E) 02-FIN-MED-2007 Issued 

Overseas Accounting & Reporting Functions 03-FIN-MED-2006 Closed 

Undelivered Orders/Accounts Payable 03-FIN-MED-2007 Issued 

Procedures 04-FIN-MED-2006 Closed 

Advances/Receivables 07-FIN-MED-2004 Closed 

Medical Services 11-FIN-MED-2004 Closed 

Host Country Contributions 14-FIN-MED-2004 In Progress 

Medical Supply 01-FIN-LOW-2007 Issued 

Purchase Cards 05-FIN-LOW-2006 Closed 

Status of Non-Financial Notice of Findings – All Fiscal Years Audits 

Description Number/Severity Status__________

Odyssey UNIX Access 04-IT-MED-2007 Issued 

Odyssey Memorandum of Understanding 07-IT-MED-2005 In Progress 

FOR Post/HQ Segregation of Duties 12-IT-MED-2003 Closed 

FOR HQ Segregation of Duties 12-IT-MED-2003 Issued 

Odyssey Audit Logs 16-IT-MED-2003 Closed 

Odyssey Test Plans 16-IT-MED-2005 Closed 

Odyssey Test Results/Plans and 16/17-IT-MED-2005 Issued 

 Change Management 

Odyssey Account Review 24-IT-MED-2004 Closed 

Odyssey Segregation of Duties 26-IT-MED-2004 Closed 

Post IT Issues 29-IT-MED-2004 In Progress 

Overseas Posts–Overseas Architecture Changes 30-IT-MED-2004 Closed 

Odyssey Security Plan System Owner 01-IT-LOW-2005 Closed 

Odyssey User Access 01-IT-LOW-2006 Closed 

Odyssey Account Reviews 01-IT-LOW-2007 Issued 

User Access 02-IT-LOW-2006 In Progress 

Odyssey Segregation of Duties 02-IT-LOW-2007 Issued 

Professional Development Training 03-IT-LOW-2005 Closed 

Odyssey Data Retention Policy 03-IT-LOW-2006 Closed 

Lack of Audit Log Review Evidence 03-IT-LOW-2007 Issued 

Data and Resource Classification Rankings 04-IT-LOW-2005 Closed 

Odyssey Approval Limits 04-IT-LOW-2006 Closed 

No Formal Policy and Procedures for Odyssey 05-IT-LOW-2005 Closed 

 Access 

No Individual Accountability for System 05-IT-LOW-2006 Closed 

 Administrators or DBAs 

Data Center Physical Access 05-IT-LOW-2007 Issued 

Odyssey Archiving and Deleting 06-IT-LOW-2005 In Progress 

FOR Post Change Control 06-IT-LOW-2007 Issued 

Appendix 1

Audit Follow-Up Actions 

0
The Peace Corps :: performance and accountability report :: fiscal year 2007 87

Appendices

FOR Post Access 07-IT-LOW-2003 Closed 

Odyssey-UNIX Audit Logs 07-IT-LOW-2007 Issued 

Network and Data Center Diagram 08-IT-LOW-2007 Issued 

Inventory of System/Application Documentation 10-IT-LOW-2005 Closed 

Testing of Environmental Controls 11-IT-LOW-2005 Closed 

Data Center Emergency Procedures 12-IT-LOW-2005 Closed 

Odyssey System Change Test Results 17-IT-LOW-2005 Closed 

Status Key 

Closed: Completed by Peace Corps and closed by the auditors 

In Progress: Completed portions of the corrective action plan while other portions remain to 

be completed 

Issued: Issued during FY 2007 audit 

 

FOR Post Access 07-IT-LOW-2003 Closed 

Odyssey-UNIX Audit Logs 07-IT-LOW-2007 Issued 

Network and Data Center Diagram 08-IT-LOW-2007 Issued 

Inventory of System/Application Documentation 10-IT-LOW-2005 Closed 

Testing of Environmental Controls 11-IT-LOW-2005 Closed 

Data Center Emergency Procedures 12-IT-LOW-2005 Closed 

Odyssey System Change Test Results 17-IT-LOW-2005 Closed 

Status Key 

Closed: Completed by Peace Corps and closed by the auditors 

In Progress: Completed portions of the corrective action plan while other portions remain to 

be completed 

Issued: Issued during FY 2007 audit 

 

Audit Follow-Up Actions, Continued
88 The Peace Corps :: performance and accountability report :: fiscal year 2007

Appendices

Appendix 2

Glossary of Acronyms 

BFC Budget Functional Classification

C&A Certification and Accreditation

CBJ Congressional Budget Justification

CIRF Crime Incident Reporting Form

COOP Continuity of Operations Plan

CSRS Civil Service Retirement System

DOS Department of State

EAP Emergency Action Plan

FECA Federal Employees’ 

Compensation Act

FEGLIP Federal Employees’ Group

Life Insurance Program

FEHBP Federal Employees’ 

Health Benefit Program

FERS Federal Employees’ 

Retirement System

FISMA Federal Information Security 

Management Act

FMFIA Federal Managers’ Financial

Integrity Act

FNPSC Foreign National Personal 

Service Contractor

FSN Foreign Service National

FSRDS Foreign Service Retirement 

and Disability System

FY Fiscal Year

GSO General Services Officer

HACU Hispanic Association of Colleges 

and Universities

HBCU Historically Black Colleges 

and Universities

HCC Host Country Contributions

HQ Headquarters

HRM Human Resource Management

IG Inspector General

IGCMS Inspector General

Case Management System

IMA Internal Management Assessment 

IPBS Integrated Planning 

and Budget System

IT Information Technology

MCS Medical Clearance System

MOU Memorandum of Understanding

MS Manual Section

NIST National Institute of Standards 

and Technology

OAR Office of AIDS Relief

OCFO Office of the Chief Financial Officer

OCIO Office of the Chief 

Information Officer 

OIG Office of Inspector General

OMB Office of Management and Budget

OPM Office of Personnel 

and Management

ORB Other Retirement Benefits

OSIRP Office of Strategic Information, 

Research, and Planning

PART Program Assessment Rating Tool 

PEPFAR President’s Emergency 

Plan for AIDS Relief

PMA President’s Management Agenda

PP&E Property, Plant, and Equipment

PSA Public Service Announcement

PSC Personal Service Contractor

RPCV Returned Peace Corps Volunteer

SDLC Systems Development Life Cycle

SOP Standard Operating Procedures

SQL Structured Query Language

UKW Urbach Kahn and Werlin LLP

VDS Volunteer Delivery System

VIDA Volunteer Information 

Database Application

VOIP Voice-Over-Internet Protocol
Produced by the Peace Corps

Paul D. Coverdell Peace Corps Headquarters

1111 20th Street NW | Washington, DC 20526

A PDF version of this report is available at www.peacecorps.gov/docs. 

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