F I S C A L Y E A R 2 0 0 4

The Peace Corps 

PERFORMANCE AND ACCOUNTABILITY REPORT

F I S C A L Y E A R 2 0 0 4

THE PEACE CORPS 

PERFORMANCE AND ACCOUNTABILITY REPORT

PRODUCED BY THE PEACE CORPS

PAUL D. COVERDELL PEACE CORPS HEADQUARTERS

1111 20TH STREET NW | WASHINGTON DC 20526
The vision of the Peace Corps—to 

assist interested countries around the 

world while providing an effective 

and satisfying Volunteer experience 

for a diverse group of Americans in a 

safe and secure environment, and to 

build an operational infrastructure to 

efficiently and effectively support the 

Volunteer in the 21st century.
CONTENTS

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MANAGEMENT’S DISCUSSION AND ANALYSIS 5

MESSAGE FROM THE DIRECTOR 5

OVERVIEW 8

CORE ISSUES 8

MISSION 9

PEACE CORPS ORGANIZATION 10

MOST IMPORTANT PERFORMANCE

GOALS AND RESULTS 11

ACTIONS TO ADDRESS CHALLENGES

AND FUTURE CHALLENGES 12

FINANCIAL STATEMENTS 13

SYSTEMS, CONTROLS AND 

LEGAL COMPLIANCE 14

INTEGRITY ACT CHALLENGES 16

PRESIDENT’S MANAGEMENT AGENDA 18

PERFORMANCE REPORT 25

STRATEGIC GOALS 26

PERFORMANCE RESULTS 27

FINANCIAL REPORT 38

MESSAGE FROM THE

CHIEF FINANCIAL OFFICER 39

MANAGEMENT CONTROLS 41

RESULTS OF THE GAP ANALYSIS AND

PROGRESS ON CORRECTIVE ACTIONS 48

FEDERAL MANAGERS’ FINANCIAL

INTEGRITY ACT REPORT 49

FINANCIAL STATEMENT AND

AUDITOR’S REPORT 52

INSPECTOR GENERAL’S SUMMARY 98

OTHER REPORTS 108

APPENDICES 109

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MANAGEMENT’S DISCUSSION AND ANALYSIS

On behalf of the Americans currently serving in 72 countries around the world as Peace Corps Volunteers, 

I am pleased to present the Peace Corps’ Performance and Accountability Report for Fiscal Year 2004 

(PAR). This report summarizes the agency’s achievements, measures its performance against pre-established objectives, and includes the financial results of our operations during the past year.

Since its inception in 1961, the Peace Corps has sent more than 171,000 Volunteers to serve in 137 countries around the globe—from Azerbaijan to Zambia—promoting the Peace Corps’ mission of world peace 

and friendship. Volunteers share their time and talents by serving as teachers, business advisors, information technology consultants, 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.

As of the end fiscal year (FY) 2004, 7,733 Volunteers were serving in the Peace Corps1

—the largest number of Volunteers since 1974. The Volunteers serving in FY 2004 provided 6,494 years of effort, which 

reflects their commitment to live in and integrate with the communities at their sites of assignment.2

 A 

historic program opened in Mexico after reaching an agreement on ways to better exchange technology 

between the U.S. and Mexico, allowing Americans to share their skills in information technology, small 

business development, science, and water and environmental technology with Mexican citizens. The program will also allow Mexicans to share their business skills, ideas, and culture with Volunteers. The Peace 

Corps also worked with six countries to participate in the President’s Emergency Plan for AIDS Relief. 

The interest among Americans to serve in the Peace Corps continued to grow with applications up by 48 

percent since October 2001.

Safety and security remains the agency’s highest priority. Safety and security issues are fully integrated 

into all aspects of Volunteer recruitment, training and service, which all emphasize the importance of 

Volunteers taking personal responsibility for their safety at all times and for assimilating into their communities. The Peace Corps uses four key elements in establishing and maintaining its safety and security 

framework for Volunteers and staff: research, planning, training, and compliance. Safety and security 

information is tracked and analyzed on an ongoing basis. The data analysis is used to enhance existing 

policies or to develop new policies and procedures, as needed. Compliance is essential to ensure that safety 

Safety and security remains

the agency’s highest priority. 

THE DIRECTOR OF THE PEACE CORPS

WASHINGTON, D.C.
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and security measures are implemented and remain a top priority over the course of time. In addition to 

the associate director for safety and security and the chief compliance officer, a safety and security data 

analyst, four additional sub-regional safety and security officers and three safety and security desk officers 

have been added. Furthermore, safety and security coordinators have been hired at every post. 

The Peace Corps sought and received a waiver of the Accountability of Tax Dollars Act of 2002 for the 

fiscal year ending September 2003. The waiver request contained a provision for a gap analysis to be 

performed in conjunction with the agency’s inspector general and an independent audit firm in lieu of a 

formal financial statement audit. Much of the discussion of management controls that follows focuses on 

the results of this gap analysis. While the agency could not prepare financial statements in FY 2003, the 

auditors focused primarily on internal controls. They cited four financial management and six financial 

system weaknesses that severely impeded auditability.3

 Three of the four financial and five of the six systems findings have either been addressed or have actions in progress to alleviate the finding. The agency is 

developing plans for improving several management controls and systems (e.g., inventory and equipment, 

the accounting system Odyssey/FOR Post, and IT security requirements) in late FY 2005 and FY 2006.4

In FY 2004, the Peace Corps formulated financial statements for the fiscal year that are based, to the extent possible, upon the laws and regulations that govern the U.S. government federal financial statements. 

While the agency’s new financial management and accounting system, Odyssey/FOR Post, monitors the 

use and expenditure of funds, the system remains to be fully reconciled. The agency plans to focus on 

technical improvements to the system during FY 2005. The conversion to Odyssey/FOR Post from a system that was not U.S. standard general ledger-compliant has made it difficult for the agency to confirm 

the beginning balances in the new system. The complexities of the integration of the system led to starting and finishing the fiscal year with un-reconciled balances. In combination, these factors prevent management from attesting to the accuracy and completeness of the FY 2004 financial statements. The Peace 

Corps will continue efforts to correct these problems in FY 2005 and FY 2006.

The agency also recognizes that our business processes need to be reassessed and further defined to better 

align them to the system’s capabilities. We also plan to increase staff training to alleviate user error and to 

realize the system’s full potential. 

The Peace Corps revised its six-year strategic plan for the period FY 2003–2008 and received Office 

of Management and Budget (OMB) approval for the plan in May 2004. The previous strategic plan 

contained seven general goals; the new plan consolidated these into four key strategic goals. The new 

strategic plan reflects the Peace Corps’ long-standing commitment to the unique role that its Volunteers 

perform to further the three goals set forth in the Peace Corps Act. The new plan also institutionalizes a 

comprehensive safety and security plan. 

Once the strategic plan was approved, the Peace Corps developed its performance plan that establishes 

performance indicators for FY 2004–2006. These indicators were established to help ensure attainment 

of our strategic goals, but were based on past experience with the previous strategic plan. Thus, during 

fiscal year 2005, the Peace Corps will evaluate the indicators for upcoming years and make appropriate 

revisions so the agency meets its strategic goals. 
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On the whole, the agency’s FY 2004 performance plan results are based on reliable, actual data and/or a 

combination of actual data through most of the year with an estimate of results that covers the last quarter of the fiscal year. Additionally, since we are in a transition year—and this is the Peace Corps’ first ever 

Performance and Accountability Report—we have identified changes and improvements we will undertake during FY 2005 to improve the quality, completeness and accuracy of future PAR submissions. For 

example, the final results of the 2004 biennial Volunteer survey are scheduled to be tabulated and published in January 2005—the timing of this survey needs to be realigned to provide data for our PAR. 

The Peace Corps looks forward to continuing its mission by sending men and women who are young 

and old, married and single, and from an array of ethnic backgrounds to promote peace and friendship 

around the world. These dedicated Americans will serve in distant communities, sharing their skills, and 

then bring their experiences back home to educate others about the people and cultures in which they 

have served.

Gaddi H. Vasquez

Director

November 2004

1 This number is an “on-board” count of all Peace Corps Volunteers and trainees, Crisis Corps Volunteers, and

 UN Volunteers serving under Peace Corps.

2 This measure displays the fact that Volunteers are engaged in their assignment 24 hours a day, seven days a week.

3

 One sub-finding within the medium-risk findings for procurement was cited as high-risk—it is counted as medium 

risk along with the other sub-findings in procurement.

4

 All plans mentioned in this report are subject to the availability of funds. 

Director Gaddi Vasquez of the Peace Corps and Director Jaime Parada of CONACYT (National Council on Science 

and Technology) sign a historic agreement that opens the way for Peace Corps to work with the people of Mexico for 

the first time.
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It has been an exciting time as the agency continues 

to carry out President Bush’s call to public service 

and his goal to increase the number of Peace Corps 

Volunteers serving in the field. As of the end fiscal 

year 2004, 7,733 Volunteers are serving in the Peace 

Corps— the largest number of Volunteers since 

19745

—in the areas of agriculture, business development, education, the environment, health and 

HIV/AIDS education and prevention, and youth development. In addition to these major sectors, Peace 

Corps Volunteers worked to introduce information 

technology into their work. The safety and security 

of Peace Corps Volunteers is the agency’s top priority. 

As the number of Volunteers in the field increases, 

the Peace Corps remains committed to providing the 

optimum conditions for Volunteers, including a safe 

and secure environment and quality programming.

Currently, almost 20 percent of our Volunteers are 

serving in nations with predominantly Muslim populations in West and North Africa, the Middle East, 

Europe, and Central Asia. The Peace Corps’ mission 

in these regions matches our efforts worldwide and 

continues to be important. Host communities experience positive and personal images of Americans, 

and returning Volunteers share their new understanding of these different cultures with friends and 

family in the United States.

Furthermore, more than 2,400 Peace Corps 

Volunteers were actively engaged in activities 

addressing HIV/AIDS at the grass-roots level. 

By knowing local cultures and communicating 

in local languages, Peace Corps Volunteers are 

uniquely positioned to focus on this presidential 

priority. Fighting the ravages of this disease is 

paramount to the survival of people across the 

globe, and important to this agency. All Volunteers who serve in our 26 African nations—regardless of their program sector—are trained to 

provide HIV/AIDS prevention and education. 

The work of past, present and future Peace Corps 

Volunteers is more critical than ever. The Peace 

Corps is well positioned to safely achieve expansion 

and build upon the successes of the past 43 years.

OVERVIEW | CORE ISSUES

“A spirit of sacrifice and 

service gave birth to the 

Peace Corps more than 40 

years ago. We needed the 

Peace Corps then, and we 

need the Peace Corps today”

President George W. Bush, 2002

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 See Note 1.
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The Peace Corps’ mission is to promote world peace 

and friendship by assisting interested countries 

while providing an effective and satisfying Volunteer 

experience for a diverse group of Americans in a safe 

and secure environment, and building an operational infrastructure that efficiently and effectively supports the Peace Corps Volunteer in the 21st century.

Development indicators suggest that nations on all 

continents face even greater challenges as they work 

on demands for improved development, information 

technology, agriculture, education, sanitation and 

environment, health management, and business.

The Peace Corps combines development with 

people-to-people relationships that Volunteers forge 

with host country colleagues and communities. This 

serves as a crucial foundation for peace and friendship for generations to come.

President Bush’s frequent references to the Peace 

Corps and the agency’s new drive to reacquaint 

the American people with the mission of the Peace 

Corps has caused a significant increase in Americans 

seeking to serve. At the end of 2003, inquiries were 

up by 9 percent over the previous year, new applications rose 10 percent, and the Peace Corps website 

had a 32 percent increase, for a total of 5.7 million 

visitor sessions. Since January 2002, 27 countries 

have requested Peace Corps programs, 24 country 

assessments have been conducted, and the Peace 

Corps has entered or re-entered 14 countries.

The core values of the Peace Corps since it was established on March 1, 1961, remain relevant, vital, 

and strong. During the last 43 years, more than 

171,000 Americans have served as Peace Corps Volunteers and promoted the agency’s mission of world 

peace and friendship. The Volunteers have helped 

dispel misconceptions about Americans; assisted in 

fostering positive relationships with host country 

nationals; promoted sustainable development; and 

returned back home with messages about life overseas, the people they have served, and the cultures 

they have experienced. 

OVERVIEW | MISSION

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Health Volunteer, Benin
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Executive

Secretariat

Deputy Chief of Staff/

Deputy Chief 

of Operations

Office of American 

Diversity/EEO

Office of the

General Counsel

Director

Deputy Director

Overseas Posts

Office of 

Safety and Security

Compliance

Office of

Volunteer Recruitment

and Selection

Office of Planning,

Budget, and Finance

(CFO)

Office of 

Private Sector

Initiatives

Office of Planning,

Policy, and Analysis

Office of

Congressional

Relations

Office of 

Press Relations

Office of 

Volunteer Support

Office of 

Management

The Center for 

Field Support and 

Technical Assistance

Office of the Chief

Information Officer

(CIO)

Crisis Corps

Office of 

Communications

Overseas Posts

Inter-America and 

the Pacific Region Africa Region

Overseas Posts

Europe,

Mediterranean, and 

Asia Region

Office of the

Inspector General

Chief of Staff/

Operations

Office of Acquisitions

and

Contract

Management

This chart reflects 

the current status, 

but is pending 

formal inclusion in 

the Policy Manual

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. The Chief Compliance Officer reports to the Chief of Staff.

OVERVIEW | PEACE CORPS ORGANIZATION

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THE PEACE CORPS | PERFORMANCE AND ACCOUNTABILITY REPORT | FISCAL YEAR 2004 

MANAGEMENT’S DISCUSSION AND ANALYSIS

The current Peace Corps strategic plan was developed in 2003 for FY 2003–2008. The plan continues to reflect the agency’s long-standing commitment to the unique role that its Volunteers perform 

to further the three goals set forth in the Peace Corps 

Act. In response to the President’s challenge to double the size of the Peace Corps, we are focusing on 

growth while providing a positive experience for all 

Volunteers in a safe and secure environment. 

The most important goals are from the strategic 

plan. Each strategic outcome goal is a key measure of 

the agency’s overall performance. During FY 2004, 

the Peace Corps successfully met most of these goals. 

The most important goal—increasing the number of 

Volunteers in the field—was nearly realized and positioned the Peace Corps to grow at a rate consistent 

with the strategic plan. This increase in Volunteer 

strength is also validated by evidence of increased 

demand for Volunteers by foreign countries. We recorded more requests than anticipated by countries 

for Peace Corps programs, so the increase in Volunteer strength is warranted.

At the same time, the number of Volunteers on board 

at the end of FY 2004 fell short of strategic goal 1. 

One reason for this shortfall is an unexpected evacuation of the Peace Corps post in Nepal. Eighty-two 

Volunteers left Peace Corps after being evacuated 

from Nepal for safety concerns in September; additionally, 24 trainees who were scheduled to arrive 

in Nepal after the evacuation had their assignments 

deferred to FY 2005. These numbers are not included 

in FY 2004 totals. Despite great efforts in recruitment 

and retention, current congressional appropriation 

levels do not provide enough resources for the agency 

to meet this strategic goal. Therefore, the agency plans 

to review and revise this goal during FY 2005.

Other key results are the tremendous success with 

the redesigned Internet site and the marketing 

campaign. Both were re-launched in FY 2004, and 

showed great results. Visitor traffic to the website 

has increased 24.5 percent. More people are going 

online and visiting the website’s resources than ever 

before. The new marketing campaign has been very 

successful, and recruitment has utilized more than 

double the marketing materials it expected to use.

OVERVIEW | MOST IMPORTANT PERFORMANCE GOALS AND RESULTS

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Business/IT Volunteer, Tonga
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With safety and security as a priority, the biennial 

Peace Corps Volunteer survey is a major tool to collect data on that subject. As data are being collected 

and analyzed, it appears that Volunteer opinion reflects this priority.

Returned Peace Corps Volunteer (RPCV) visits to 

schools and organizations in FY 2004 were the highest in the program’s history. The Peace Corps has 

continued to witness a modest but steady growth in 

participation in Peace Corps Week (the main project 

where RPCVs visit schools), although the agency 

did not reach its FY 2004 target. The Peace Corps 

believes that much information about the number 

of RPCVs interacting with communities is not being captured. The Peace Corps is identifying steps 

to better capture this data and better understand 

the impact RPCVs have on improving the American 

people’s understanding of other peoples.

Another key indicator is the early termination (ET) 

rate, a factor in maintaining Volunteer strength and 

as a measure of overall satisfaction of safety and 

security. There has been a steady decline in the ET 

rate, and FY 2004 data indicate that this trend is 

continuing.6

The Peace Corps is undertaking its new performance 

plan for the first time. This logically requires a 

critical look at the results in relation to the original 

targets. Were the targets set too high? Are the data 

from FY 2004 providing an “apples-to-apples” comparison with previous data? In any event, the Peace 

Corps will give special care to these areas, as there 

are clearly concerns among Volunteers. Volunteers’ 

opinions will continue to be addressed in future performance plans and reports.

During the preparation of this performance report, 

the Peace Corps discovered that the timing of several data-producing efforts, including the biennial 

Volunteer survey, the project status report, and the 

year-end Volunteer and trainee count, are out of 

sync with the timing of the PAR. The agency will 

adjust the timing of future surveys and reports so 

results may be available on a timelier basis relative to 

its PAR.

In the next fiscal year, the Peace Corps plans to:

• Continue ongoing efforts to update its policy 

manual; 

• Balance increased security needs against resources 

and growth commitments;

• Continue action to correct gap analysis findings;

• Stabilize, upgrade, and enhance the Odyssey/

FOR Post financial system;

• Refine its performance plan and adjust the 

timing and nature of systems so the agency

has the data necessary for its performance

report and the PAR;

• Undertake a reconciliation project to resolve 

imbalances with inherent accounts and external 

sources and create procedures and disciplines to 

regularly reconcile accounts;

• Reassess the financial management business 

processes and realign organizational structure to 

accommodate the new paradigm; and

• Train staff in the skills and disciplines of 

financial management. 

OVERVIEW | ACTIONS TO ADDRESS CHALLENGES AND FUTURE CHALLENGES

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 ET means early termination of service. This can include resignation, administrative separation, medical separation and/or interrupted service. 

The 12-month ET rate is found by dividing the number of trainees and Volunteers who separated from the Peace Corps during the previous 12 

months by the total number of trainees and Volunteers who served at any time during the same previous 12 months. This report has been produced 

at the end of each quarter starting in FY 2004.
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For the first time in its history, the Peace Corps has 

prepared a financial statement in a timely manner 

that complies, to the extent possible, with OMB 

guidelines and the Accountability of Tax Dollars Act 

of 2002.

Where possible, the accompanying financial statement conforms to the hierarchy of accounting 

principles approved by the Federal Accounting 

Standards Advisory Board (FASAB); OMB Bulletin 

01-09, Form and Content of Agency Financial Statements; and the Department of the Treasury’s Treasury Financial Manual (TFM) and related bulletins.

The agency is committed to the principles and objectives of the Chief Financial Officers (CFOs) Act of 

1990, the Federal Financial Management Improvement Act of 1996, and the Accountability of Tax 

Dollars Act of 2002. 

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Comparative data for the prior fiscal year are not 

presented in this debut financial statement. The 

statements should be read with the realization that 

they are a component of the U.S. government.

The accompanying statements summarize the 

agency’s financial position; disclose the net cost of 

operations and changes in net position; and provide 

information on budgetary resources and financing 

for fiscal year ended September 30, 2004. These 

statements reflect activity of appropriated funds, 

even though the agency has a gift authority and 

stewardship over trust fund and special fund

receipt accounts.

The agency had total assets of $126.4 million, primarily composed of a $95.5 million fund balance 

with Treasury as of September 30, 2004. Revenue 

and financing sources available totaled $319.5 million, of which $310 million was received in appropriations in FY 2004.

OVERVIEW | FINANCIAL STATEMENTS

Agriculture Volunteer, Guatemala
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Enterprise Architecture

The Peace Corps Director established the enterprise 

architecture (EA) program in November, 2002, 

within the Office of the CIO, with the objective of 

modernizing the systems and infrastructure to support the agency’s mission in the 21st century. The 

EA program establishes the analysis and governance 

framework support to implement the Clinger-Cohen 

Act of 1996, OMB Circulars A-11 and A-130, the 

Federal Information Security Management Act, and 

various other legislative and regulatory requirements. 

The Peace Corps EA is based on the federal enterprise 

architecture framework (FEAF). This approach, in 

connection with the emerging cross-agency reference 

models OMB is developing, provides the framework 

for implementing the EA program at the agency level 

and ensuring its alignment with the FEAF. 7

The Office of IT Architecture Standards and Practices, reporting to the CIO, was established as the 

Program Management Office for EA program 

activities as well as to guide agency-wide IT data 

administration, governance, standards, and investment management programs. In FY 2003, the Peace 

Corps reconstituted its investment review board 

to function as the EA executive steering committee, chartered the EA advisory board to serve as the 

architecture review and configuration management 

board, and organized and staffed the EA core team 

to address EA operational activities. Integration 

between the EA and IT investment management 

(ITIM) began. The agency’s IT governance program 

was implemented through the investment review 

board (IRB). The IRB reviews all new project proposals over $10,000 for alignment with the mission 

of the agency, prioritizes investment decisions, and 

develops sound business practices. 

Continuing into 2004, the Peace Corps has populated high- to mid-level as-is and to-be business, data, 

application and technical infrastructure component 

architectures for six major activity areas. These areas 

are: Volunteer delivery, human resources, safety and 

security, overseas posts, financial systems, and IT 

security. Starting in FY 2004 and continuing in FY 

2005, components of these six architectures have 

merged into a complete end-to-end view of the main 

business line of the agency, the Volunteer delivery 

system (VDS). Initial mapping of agency business 

functions to the OMB business and performance 

reference models (BRM/PRM) was also completed. 

Additionally, an agency solution for automating 

human resource management (HRM) processing 

of staff position descriptions, classification, posting 

and recruiting was identified with the assistance of 

the EA program, and a business case was developed 

by a cross-organizational team. This proposal was 

presented to the IRB and ultimately recommended 

for funding. The first phase of the HRM modernization project has started and is in progress. 

Concurrently, development and implementation of 

a comprehensive policy, standards, and guidance 

framework are planned for continuation in connection with an enterprise-wide IT investment management program. Within this context, the agency 

plans a systematic identification of opportunities 

to leverage common IT solutions across the enterprise. Through its EA program, the Peace Corps is 

pursuing cross-program and enterprise-wide initiatives strategically and methodically to better meet 

the agency’s mission and goals. 

Financial Systems

Phase I of the Peace Corps’ new financial management system, Odyssey/FOR Post, went live on October 1, 2003. It is a highly integrated, enterprise-wide 

financial management and contracting system. The 

plan allows a phased-in implementation of core 

functionalities and future phase-in of additional 

functionalities and integration into FY 2005 and 

2006. The core modules implemented were: genOVERVIEW | SYSTEMS, CONTROLS AND LEGAL COMPLIANCE

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 The underlying theories and methodologies for the program include the Zachman Framework, published by John Zachman, 

and Enterprise Architecture Planning Methodologies published by Steven Spewak. General procedural guidance for program 

implementation is based on A Practical Guide to Federal Enterprise Architecture, published by the federal CIO council.
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eral ledger, accounts payable, purchasing, accounts 

receivable, project accounting, FOR Post overseas 

front end, HRM (non-employee payments) and 

budget tracking through Oracle Financial Analyzer. 

The project began in FY 2001. The requirements 

of the joint financial management improvement 

program (JFMIP) were incorporated into product 

specifications with Oracle Federal Financials 11.5.7, 

which was sourced to develop and implement Odyssey/FOR Post. During development, it was determined that the commercial off-the-shelf (COTS) 

product could not provide the foreign currency management functionality in the core offering. Therefore, the Peace Corps, in collaboration with Oracle 

Consulting, customized the product to meet these 

requirements. JFMIP further enhanced its requirements, and Oracle Federal Financials 11.5.7 was no 

longer compliant with federal accounting processing 

and the U.S. standard general ledger. The agency will 

further assess enhancements once it has upgraded to 

the most recent version of Oracle Federal Financials.

Compliance

During FY 2004, the Peace Corps undertook efforts 

to monitor its compliance with congressional mandates, regulations and law, as well as its own policies. 

These efforts include the items in the following:

• Created and implemented an original compliance 

system for the agency focusing on establishing 

management controls and criteria for verification, including clarity of expectations, materials 

needed, deadlines, and tracking. Established 

proper tools for reporting and tracking, including 

revising existing material and creating new tools 

using the latest technology. Tracked manual section adherence and management compliance to 

directives from the Director.

• Established a comprehensive system of compliance with IG reports and recommendations, 

semi-annual review by region, active participation in IG visits before and during debriefing, and verifying closure and compliance to 

responses. Coordinated agency response to all 

IG reports and transmittal of the semi-annual 

report to Congress.

• Created a standard emergency action plan 

(EAP) template with accompanying Standard 

Operating Procedures. This included standardizing all major forms as well as providing clear 

guidance on uses, distribution, and dates due.

At the same time, the agency is committed to improving its monitoring efforts and the implementation of all such items.

The Peace Corps Director established 

the enterprise architecture program 

to modernize the systems and 

infrastructure to support the

agency’s mission in the 21st century. 
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MANAGEMENT’S DISCUSSION AND ANALYSIS

The Peace Corps sought and received a waiver of 

the Accountability of Tax Dollars Act of 2002 for 

the fiscal year ending September 2003. The waiver 

request contained a provision for a gap analysis 

to be performed in conjunction with the agency’s 

inspector general and an independent audit firm in 

lieu of a formal financial statement audit. While the 

Agency was not able to prepare financial statements, 

the auditors focused primarily on internal controls. 

In that the gap analysis did not provide an auditor’s 

opinion, the findings were categorized by type—

financial management and accounting or systems 

and applications—and high, medium or low risk.

The most critical findings centered around basic 

finance, accounting, and systems issues, such as policies and procedures; U.S. standard general ledger 

(USSGL) compliance; management and accounting 

of property, plant and equipment; internal controls 

and routine reconciliation; systems development life 

cycle; systems security, recovery, and contingency 

planning and execution; and data confidentiality, 

integrity and availability. The auditors cited four 

financial management and six financial system 

weaknesses that presented a severe impediment to 

auditability.

Corrective action plans were developed or areas of 

findings were planned for assessment and development in March 2004. As of September 30, 2004, 

three of the four financial and five of the six systems 

findings have either been addressed or have actions 

in progress which will alleviate the finding. The 

agency is developing plans for the management and 

recording of property, plant and equipment and will 

be re-engineering the overseas front end, FOR Post, 

to accommodate IT security requirements which are 

the findings not yet acted upon. These plans are to 

be implemented in late FY 2005 and FY 2006 presuming the availability of funding.

The appendix contains a complete list of the findings 

with management’s response and status of corrective 

action plans at September 30, 2004. As a note, the 

overseas Posts that participated in the Gap Analysis 

were Philippines and Senegal. Therefore, wherever 

the term “Posts” is used in this discussion, it refers to 

these two offices. In addition, the implementation of 

plans is contingent on the funding available for the 

timeline established.

OVERVIEW | INTEGRITY ACT CHALLENGES

U

Financial 

Management

and Accounting Status

Systems and 

 SEVERITY OF FINDING Applications (IT) Status

High—presents a severe 

impediment to auditability 4

Complete

6

Complete

On-target On-target

In-progress 3 In-progress 5

Future plan 1 Future plan 1

Medium—presents 

significant internal control 

weaknesses

4

Complete

 14

Complete 8

On-target 1 On-target

In-progress 3 In-progress 3

Future plan Future plan 3

Low—requires management 

attention 5

Complete 1

1

Complete

On-target 1 On-target

In-progress 3 In-progress 1

Future plan Future plan

Table: Summary of Gap Analysis Findings

AREA OF FINDING

Status Key

Complete—Completed during FY 2004

On-target—Corrective action plan timeline crosses fiscal years and progress is on target to complete according to plan

In-progress—Some portions of plan have been completed; others have been delayed or items are being affected without a timeline

Future plan—Causes of finding are being analyzed to develop corrective action plan
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Summary of Gap Analysis Findings

Of the five most severe financial management and 

accounting findings, the one that presented the 

most challenge for the Peace Corps related to the 

management and recording of property, plant and 

equipment. While there has been progress in updating the property manual, the implementation of the 

fixed assets module of the new financial management system, Odyssey/FOR Post, was not a part of 

the initial system implementation. Current plans 

recommended by the agency’s investment review 

board and approved by the agency’s Director, have 

this activity slated for assessment in late FY 2005 

with planned implementation in FY 2006. The advent and implementation of this module will help 

the agency complete the appropriate processes and 

systems for audit.

One finding from the systems and applications area 

is the insufficient security available in the agency’s 

FTP (file transfer protocol) site for uploading financial data. The FOR Post front-end for overseas posts 

uses the FTP to load data into the official accounting 

system. Two initiatives must be completed before this 

Geometry instruction, Tonga

risk is mitigated: the reconfiguration of the FTP site 

and the re-engineering and redeployment of the front 

end. Both are planned for design and development in 

late FY 2005 and implementation in FY 2006.

Findings that continue to require completion in the 

high-risk area:

Financial Management and Accounting

• Policies and procedures

• Asset management

• Reconciliation and reporting

IT Systems and Applications

• Finalize IT recovery plans

• Finalize system delivery life cycle (SDLC) 

for Odyssey/FOR Post/headquarters

• Create or complete contingency plans 

for Odyssey/FOR Post

• Secure overseas small business-servers (SBS) 

and workstation vulnerabilities
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MANAGEMENT’S DISCUSSION AND ANALYSIS

The Peace Corps has examined its stated performance goals, indicators, and targets within the context of the President’s management agenda and the 

five government-wide management initiatives. The 

management initiatives are intended to foster reform 

and provide a common accountability standard 

among all federal agencies. These initiatives include:

• strategic management of human capital;

• competitive sourcing;

• improved financial performance; 

• expanded e-government; and

• budget and performance integration.

The Peace Corps—using established performance 

goals and strategies from its integrated planning and 

budget system as a springboard—will link existing 

performance indicators to measure achievement of 

strategic goals and the core criteria used to measure 

progress under the President’s management agenda. 

For example, one core element of success under 

“strategic management of human capital” is that 

there should be no skill gaps or deficiencies in mission-critical occupations. This is measured, in part, 

by the first objective in the Office of Management’s 

performance indicators, which tracks personnel recruitment and placement. Another example under 

“improved financial performance” is for financial 

systems to produce accurate and timely financial 

information to support operating, budget, and policy 

decisions. This area is measured by the Office of 

Planning, Budget and Finance’s objective that tracks 

timely and accurate acquisition, budget, and financial reports to management and external entities.

Strategic Management of Human Capital

The Peace Corps is committed to implementing 

a sound, responsible workforce strategy to reduce 

management layers; organize functions more efficiently; and support a diverse, dynamic workforce 

committed to a citizen-centered government and 

quality service.

To implement this strategy, the agency will implement an automated human capital management 

system in compliance with the agency’s enterprise 

architecture. This system will modernize the classification and recruitment processes that were previously labor-intensive to applicants and Peace Corps 

managers. This will enhance the agency’s competitive position in the marketplace, allow the Peace 

Corps to recruit quality staff, and greatly assist existing staff when staffing demands are high. This system will help make the Peace Corps a more attractive 

workplace for prospective and incumbent managers. 

Future module enhancements within the system 

have been identified as performance management/

training, employee/labor relations, and diversity.

This strategic human capital enhancement will be 

one of the landmark changes in the Peace Corps’ 

management processes. 

The mission of the Peace Corps—to promote world 

peace and friendship—has remained constant during the past 40-plus years and it is the linchpin of 

the agency’s three goals. Peace Corps Volunteers 

remain the heart and soul of the Peace Corps, and its 

domestic and overseas staff exists to support them 

and their efforts in the field. As stated earlier: The 

Peace Corps is committed to workforce re-engineering, and that process has been an agency priority for 

a considerable time.

Every department and agency of the federal government faces significant challenges with employment 

issues, be they an aging workforce or the recruitment and retention of qualified individuals in skilled 

disciplines. The situation for the Peace Corps is 

compounded by its “five-year rule,” which generally 

imposes a five-year term of employment for all U.S. 

citizen direct-hire employees. However, the average 

length of employment is two years. This has significantly impacted the culture, organization, and operations of the agency. 

OVERVIEW | PRESIDENT’S MANAGEMENT AGENDA

U
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On one hand, time-limited appointments can foster 

a non-bureaucratic, energized, can-do atmosphere 

where employees are committed to making the most 

of their limited tenure. Changes in needs for specific 

workforce skills also can be more readily addressed 

because of built-in turnover. The problem of less 

effective employees is minimized, as are long-term 

employee-relations problems, since supervisors and 

employees are more likely to forge a satisfactory 

working relationship, given the short-term nature of 

their employment cycle. 

On the other hand, there are challenges created by 

the five-year rule, critical among them the need for 

strong internal controls, standard policies, and operating procedures. 

During FY 2001, the Peace Corps completed a comprehensive workforce analysis that identified areas of 

need and potential strategies to address those needs. 

As a result, the Peace Corps is continuing to initiate 

improvements in how it recruits, selects, and places 

Volunteers and it is exploring alternative staffing 

patterns, both domestically and abroad, for Volunteer support functions. The agency will strengthen 

internal communication and staff training opportunities through its Intranet and Internet applications.

The Peace Corps is committed to institutionalizing 

the standards of accountability for all staff, increasing its efforts in the e-government arena, and fully 

implementing a competitive sourcing strategy. All 

of these will contribute to a more effective and responsive human resource management system that 

ensures mission-critical occupations are adequately 

staffed.

Competitive Sourcing 

During FY 2004 the Peace Corps focused strongly 

on competitive sourcing by establishing a chief acquisition officer raising the visibility of competitive 

sourcing throughout the agency who now coordinates all potential opportunities to obtain efficiencies 

through the open market. The chief acquisition officer has direct access to the agency’s Director on all 

acquisition issues to include competitive sourcing. 

The Peace Corps continues to improve the efficiency 

of its commercial activity functions by determining 

which functions can be performed more effectively 

through contractual vehicles. The agency is supporting its current performance-based contracts and 

converting additional commercial activities to performance-based contracts, when feasible and where 

they would prove to be effective. Part of the strategy 

to affect these performance goals includes continually reviewing and refining performance-based 

contracts (e.g., information technology management, voucher processing, and accounting services); 

performing a comprehensive analysis of the agency’s 

commercial activity inventory and the potential for 

converting additional activities to performancebased contracts; and compiling the best practices of 

contractors and performance-based contracting.

To convert additional activities to a performancebased contract platform, the Peace Corps will explore 

effective approaches to identify and publicize opportunities for contract sourcing. Using the tools 

provided by the Federal Activities Inventory Reform 

Act, the agency will explore conversion competitions 

(i.e., assess the appropriateness and cost-effectiveness of competing federally performed functions 

for private sector performance contracts) and cost 

competitions across a broad range of functions. To 

be successful, the Peace Corps will also review the 

need to increase the level of knowledge of various 

OMB A-76 methodologies among its managers and 

support staff. The agency is committed to increasing 

competitive sourcing where and when it is beneficial 

to do so.

Identifying and accessing sources to productively 

enhance the agency’s mission is an on-going process. 

Adjustments to operations because of budgetary 

resources have caused each office to examine how 

services are delivered. Of Peace Corps’ FY 2004 apThe mission of the Peace Corps—to promote 

world peace and friendship—has remained 

constant during the past 40-plus years. 
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propriation of $310 million, approximately $130 

million was contracted out to procure goods and a 

wide range of non-inherently governmental services 

that ranged from professional medical care to software development.8

Improved Financial Performance

The Peace Corps converted to Oracle Federal Financials in October 2003 and has prepared its first set 

of audited financial statements. Quarterly financial 

statements for the first three quarters of FY 2004 

have been submitted to OMB per Bulletin 01-09 

as amended. In addition, the agency’s Investment 

Review Board was reconstituted to facilitate the 

decision-making on enterprise-wide information 

technology improvements. For FYs 2005–2006, the 

agency is planning additional improvements in the 

following areas:

• Restructure OPBF to better align with functions 

and processes.

• Complete the documentation of revised/new 

business processes.

• Upgrade to JFMIP-compliant version of Oracle 

Federal Financials.

• Implement additional functionality of Human 

Resources Management (HRM) system module 

to accommodate Volunteer payments.

• Assess, design, and implement next generation 

FOR Post front-end for Oracle Federal 

Financials.

• Plan and design integration with future 

enterprise-wide systems such as human capital 

management.

Expanded E-Government 

As the President’s management agenda suggests, 

expanded e-government is a keystone to fostering a 

citizen-centered government with a greater volume 

of service at lower costs. The agency’s challenge is to 

ensure that its investments in information technology are put to the best use, providing for the security 

and integrity of its systems. The Peace Corps’

e-government initiatives are also geared to overcome 

agency bureaucratic divisions and increase productivity and the ease of electronic access for citizens. 

This will increase transparency of programs and

operations.

Consistent with current government-wide management reforms, the Peace Corps plans to increase the 

use of information technology and e-government 

services to strengthen the quality, efficiency, and 

timeliness of recruiting, assessing, and selecting 

prospective Volunteers. The agency is planning a 

business process re-engineering of the Volunteer 

delivery system to deliver services and information 

in a citizen-centric manner that promotes transparent customer service, security, and privacy. A fully 

citizen-centered Web presence has been completed. 

This includes Web-based outreach to attract new 

applicants; an extensive electronic information site 

for prospective Volunteers and their families and 

friends; an online application, medical history form, 

and reference submission; and an online tracking 

system so applicants can check their status at each 

step of the application process.

The Peace Corps annually collects and analyzes 

overseas project and training data from posts and 

produces a global summary report on trends, challenges, and promising practices. It is currently developing an Intranet-based system to collect these data 

and is using Web-based technology to disseminate 

the information back to the field and other parties 

in its diverse audience. By improving information 

technology and information flow, the Peace Corps 

can provide timely reports to the public at a reduced 

operational cost.

Another aspect of the Peace Corps mandate is to 

increase the understanding of other peoples on 

the part of the American people. The Peace Corps 

will continue expanding—to the fullest extent possible—the number of Paul D. Coverdell World Wise 

Schools (WWS) classrooms in the United States. It 

will do this by increasing videoconferencing capa8 This figure excludes personnel salaries and benefits and travel expenses.
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bilities, increasing satellite downlinks between WWS 

classrooms and current Volunteers, and promoting 

the use of the Peace Corps online library.

The enterprise-wide information architecture approach will identify and document all agency computer systems and guide the management of the 

agency’s IT portfolio. The Peace Corps continues to 

implement IT Security Policy and Disaster Recovery 

Plans to secure the wealth of information stored and 

processed on agency computers. The agency continues to move its legacy systems away from older 

mainframe technologies to Web-enabled ones, providing vast potential for e-government solutions and 

service delivery.

In FY 2004, the Peace Corps also implemented 

tools such as Web Inspector and SMS to ensure 

the secure utilization of our web-based assets. The 

agency deployed the Volunteer information database 

application globally to standardize the systems and 

database that manage Volunteer information. It also 

implemented an electronic medical records process 

that allows the encryption and secure transfer of Volunteer medical information overseas, and reached 

an agreement with OPM to use and implement 

an online personnel security application (E-QIP, 

electronic questionnaires for investigations processing). Other e-government investments included an 

electronic capital property inventory tool (in review 

and testing for a future planned integration) and 

“Prospect Manager,” a software application to assist 

recruiters in tracking information from prospective 

Volunteers.

In summary, the Peace Corps plans to continue to 

align its information technology systems with core 

business processes to ensure that agency priorities 

are achieved. One means of accomplishing this objective is to define the strategic planning of information technology around processes that best use Web 

accessibility. Planned activities for FY 2005–2006 

include:

• Assessing requirements of the Health Insurance 

Portability and Accountability Act (HIPAA) and 

recommending systems for compliance.

• Standardizing processes in the Volunteer 

delivery system to enable an automated, online 

administration and tracking system.

• Identifying areas to develop new and underutilized recruitment markets, reduce application 

processing time, and increase applicant-totrainee retention rates via the Intranet.

Volunteer training class, Malawi
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• Streamlining the crime-reporting process for 

Volunteers through an electronic system with 

real-time incident reporting capabilities.

• Redesigning the Peace Corps Intranet site.

• Upgrading key Microsoft-based information 

to set the foundation for more innovative esolutions.

Budget and Performance Integration

The integrated planning and budget system (IPBS) 

is the framework the Peace Corps uses to carry out 

its planning and budget functions. Its underlying 

principles are:

• Plan drives budget. The Peace Corps strives 

to make its resource allocation decisions based 

on the goals and priorities of the agency; 

however, budget constraints may not allow the 

funding of every proposed plan.

• Reasonable planning horizons. The strategic planning timeframe is three years—long 

enough to avoid the truncated nature of one-year 

planning, but not too long for the fast-changing 

world in which the Peace Corps operates.

• Right level of detail at the right time. 

The system is iterative, with macro-planning 

and budgeting occurring in the process and 

micro-planning and budgeting occurring later, 

near the start of the fiscal year.

• Institutionalized vertical and horizontal 

communication. The system prescribes agency 

integration, since each part of the organization 

uses the same basic system.

• Current operations costing. Pricing out 

current operations provides managers with 

valuable information on the resources needed to 

continue at current levels before they begin to 

consider increases or decreases in those levels. 

Current operations’ costing is a management 

and budget tool and does not require the 

continuation of all current activities.

There are three major processes within the annual 

IPBS cycle. They are:

• Strategic plan and budget process. This is 

the stage where Peace Corps posts and offices, 

working with guidance from the Director, 

develop and/or update a three-year strategic 

plan. The strategic plans include a strategy 

statement; a strategic analysis; and goal 

statements, objectives, performance indicators 

and timeframes. The budget document includes 

explanations of current operations, proposed 

enhancements, and reductions to current 

operations, including changes in staffing levels, 

major new initiatives, major capital investments, 

and projections of Volunteer levels for three 

years forward. Posts then submit the plan and 

related requests for budget enhancements 

and/or reductions over the next two years to 

their regional and associate directors for review. 

Regional and associate directors then present 

summary strategic plans and requests for budget 

enhancements/reductions to the Director. 

Based on these presentations, and with input 

from agency senior staff, the Director makes 

internal planning and budget decisions for the 

upcoming fiscal year and provides guidance 

for preparation of the OMB submission for 

the following year. The OMB submission is 

presented in the Government Performance and 

Results Act (GPRA) performance plan format 

with goals and objectives linked to budget and 

full-time equivalents (FTEs). Regional and 

associate directors then inform the posts and 

offices of decisions.

• Operating plan and budget formulation. 

Based on the feedback and decisions from their 

regional and associate directors, each post and 

office prepares an operating plan and budget 

for the upcoming fiscal year. The plan takes the 

goals and objectives of the strategic plan and 

focuses on the next 12 months. This detailed 

plan is not forwarded, but remains at post or 

in individual offices for execution. The detailed 

budget is forwarded for associate and regional 
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MANAGEMENT’S DISCUSSION AND ANALYSIS

director review, and regional and major office 

budgets are summarized for agency review. The 

Director, with senior staff input, makes any new 

resource allocation decisions required. The fiscal 

year financial and reporting processes begin.

• Plan and budget review. Two planning and 

budget reviews occur during each fiscal year. 

These provide a brief update on progress in 

accomplishing goals and allow the opportunity 

to propose midcourse corrections, if needed. 

The budget review focuses on budget execution 

and proposed reprogramming. Review occurs 

at the regional and associate director level and 

at the agency Director level. In addition, a 

formal budget closeout review is conducted each 

November.

In concert with IPBS, the Peace Corps also requires 

overseas posts to develop plans for their Volunteer 

projects that describe the goals, objectives, and lifespan of each project. The status of each project is reviewed each December. Each project’s strengths and 

weaknesses are assessed, and the plan is reaffirmed 

or altered based on lessons learned in the planning 

process.

This year’s three-year (FY 2005–2007) planning 

process began in the spring with the issuance of 

Director Vasquez’s guidance. In addition to reaffirming the agency’s mission and goals, the directive addressed the impact of—and planned for the heightened focus on—safety and security of Volunteers and 

staff. The offices then aligned their individual plans 

to the agency’s overall direction and each IPBS submission was presented to the Director and reviewed. 

Upon concluding these review activities, each overseas post, sub-office, and major office assembled its 

respective performance plan for the coming strategic 

plan period (FY 2003 through FY 2008) with emphasis on defining the outcome and performance 

goals with accompanying performance indicators.

In this capacity-building approach to development, 

the agency helps individuals, service providers, 

organizations, and communities identify and address their needs. This is a major thrust of the Peace 

Corps’ work at the grass-roots level. These monitoring and evaluation efforts should capture how 

many and in what ways these entities are involved 

in activities sponsored by the Peace Corps. All core 

criteria under this management agenda standard are 

being addressed. They will be strengthened by the 

full implementation of the agency’s newly developed 

financial budget and financial management systems.

The Director has also established the interoffice 

quality statements and indicators project (QSIP) to 

measure strategic outcomes through the Peace Corps 

Volunteer survey. QSIP complements the agency’s 

strategic plan under GPRA by helping to determine 

if performance goals and plans produce improved 

quality operations and service. For example, each 

office’s strategies under GPRA are designed to support, complement, or enhance the agency’s strategic 

goals. These goals drive how the Peace Corps operates and performs. Offices determine that they need 

Cross-cultural exchange in action, Benin
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to conduct certain training, provide certain services, 

etc. to meet the GPRA goals. QSIP allows the Peace 

Corps to measure whether these plans work by asking for feedback from Volunteers about the quality 

of their experience. Additionally, QSIP developed 

quality statements and performance indicators for 

recruitment and placement, programming and 

training, Volunteer support, third-goal and domestic 

activities, and management and administration. The 

main vehicle to evaluate progress in these areas is 

the biennial Peace Corps Volunteer survey. As this 

survey is completed by most serving Volunteers, so it 

is a useful source of feedback for the agency to track 

its progress.

The overall integrated process ensures that management can provide the right people with the right information, in the right format, at the right time. The 

inclusion of all the stakeholders of the Peace Corps’ 

mission (the right people) in data collection, analysis, 

and sharing of results increases the likelihood that 

those results will be applied and used in current 

operations and in the future. The right information 

is the result of continually assessing what data is 

meaningful, useful, and appropriate, and ensuring 

that both the data and any follow-up analysis are 

communicated in a language and the right format 

that allows stakeholders to do something with them. 

Finally, the right time for the exchange is critical to 

moving ahead and converting past performance—

and the measurements of that performance—into 

higher levels of achievement.

The Peace Corps’ management revised the agency’s 

six-year strategic plan for FY 2003–2008 and finalized approval with OMB in May of 2004. The FY 

2004 transition plan projects FY 2004–2006 indicator targets. Budget dollars and FTE will be aligned 

in the FY 2004 financial statements and provided 

in subsequent submissions. The plan for FY 2006 

includes assessing the capabilities of the financial 

system to track performance by project and provide 

more timely performance budget information.
PERFORMANCE RESULTS

o
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THE PEACE CORPS | PERFORMANCE AND ACCOUNTABILITY REPORT | FISCAL YEAR 2004

PERFORMANCE RESULTS

In response to President Bush’s challenge to increase the size of the Peace Corps, the agency is 

focusing on growth while providing a positive experience for all Volunteers in a safe and secure 

environment. This section discusses the four strategic outcome goals the Peace Corps seeks to 

achieve from FY 2003 through FY 2008. Each strategic outcome goal has a set of measurable 

performance goals with accompanying means and strategies. Also discussed are their relationship 

to the agency’s annual performance goals in the performance budget; key factors potentially 

affecting their achievement; and the methods used to assess that achievement. 

STRATEGIC GOALS

U

STRATEGIC OUTCOME GOAL 1

Assist interested countries with their identified needs 

by increasing Volunteers in the field from 7,533 in FY 

2003 to 11,250 by FY 2008, at a rate consistent with 

funding levels and infrastructure support.

STRATEGIC OUTCOME GOAL 2 

Improve the health and safety of Volunteers by improving the Volunteer health-care satisfaction rate by 7 percent, from 75 percent in FY 2002 to 82 percent in FY 

2008; and increasing Volunteers’ perceptions of their 

personal safety where they live by 3 percent, from 86 

percent in FY 2002 to 89 percent by FY 2008. 

STRATEGIC OUTCOME GOAL 3 

Improve Americans’ understanding of other peoples 

by increasing returned Peace Corps Volunteers’ visits to 

schools and community organizations by 28 percent, 

from 7,000 in FY 2003 to 9,000 by FY 2008.

STRATEGIC OUTCOME GOAL 4 

Reduce the Peace Corps’ overall response time for those 

applying to the Peace Corps by 5 percent, from 222 days 

in FY 2003 to 212 days by FY 2008.
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PERFORMANCE RESULTS

PERFORMANCE RESULTS

U

As indicated earlier, the agency’s FY 2004 performance plan results are based on reliable, actual data 

and/or a combination of actual data through most 

of the year with an estimate of results that covers 

the last quarter of the fiscal year. For example, as of 

October 12, 2004, the agency had received approximately 1,350 survey responses to the Peace Corps 

Volunteer survey via the Internet. The data from the 

online responses are instantly accessible, and have 

been used to create the responses in the performance 

report for questions pertaining to the Volunteer 

survey. However, these results are incomplete, as approximately 1,200 paper surveys have been received 

but not analyzed. Another 800 to 1,000 more responses are expected over the next couple of weeks. 

Thus, the results used to generate these findings represent only about 30 percent of the expected survey 

responses. Until the agency has a complete collection 

and analysis of all survey data, results are preliminary and incomplete, and they could change.

Since we are in a transition year, and this document is 

Peace Corps’ first ever Performance and Accountability Report, the agency has changes and improvements 

that it plans to undertake during FY 2005 to improve 

the quality, completeness and accuracy of future PAR 

submissions. For example, the 2004 biennial Volunteer survey is scheduled to be tabulated and published 

in January 2005; the timing of this survey should be 

realigned to provide data for the PAR. 

STRATEGIC GOAL 1:

Assist interested countries with their identified 

needs by increasing Volunteers in the field from 

the FY 2003 level of 7,533 to 11,250 by September 2008, at a rate consistent with funding 

levels and infrastructure support.

Outcome Goals:

1.1 Increase Volunteers in the field from the FY 

2003 level of 7,533 to 11,250 (49 percent) 

by FY 2008, assuming full funding for FY 

2005 and future requests. 

1.2 Increase the combined number of 

applications to Peace Corps from underrepresented ethnic and age groups from 

19 percent to 25 percent by FY 2008 to 

provide Volunteers to interested countries 

that better reflect American diversity. 

1.3 Reduce overall Volunteers’ 12-month earlytermination (ET) rate by 2.5 percent from 

FY 2003 level of 11.6 percent to 9.1 percent 

by September 2008 through improved 

matching of Volunteers’ skills and primary 

assignment, and improved satisfaction rate 

of Volunteer health and safety.
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PERFORMANCE RESULTS

Performance Goal 1.1.1.

Incrementally increase in subsequent 

performance years Volunteers/trainees on 

board from the FY 2003 level of 7,533 to 

9,300 (23 percent) by FY 2006.

 FY 2004 Goal FY 2004 Actual

 7,840 7,7339

0

3

6

9

12

15

18

1961 1966 1971 1976 1981 1986 1991 1996 2001 2004

124

15,556

8,044 7,733

Performance Indicators 1.1.1. FY 2004 Target FY 2004 Actual

i. New country entries 0 2

ii. New country assessments 2 3

iii. Countries requesting programs 10 19

iv. Overall traffic to website 6 million 7 million

v. Online applications completed 8,000 10,062

vi. Inquiries originating from website 125,000 147,872

vii. Rate of applications started vs. submitted 22% 22%

viii. Value of earned/donated media $8 million $7.9 million

(based on $250K cost to produce) 

Resources Needed: 

 Dollars in thousands 229,033 226,147

 Full-time equivalents 922 875

Results and Analysis

The Peace Corps strives to recruit and place the most 

qualified and diverse Volunteers effectively and efficiently. In FY 2004, the agency came very close to 

achieving this goal—7,733 is the highest number of 

Volunteers in 29 years. However, the current appropriations levels and trends require a revision of the 

agency’s strategic plan for growth. 

Note: All data in Performance Indicators 1.1.1 as of September 2004

Figure: Number of Volunteers on board at the end of the fiscal year, 1961–2004

Fiscal Year

Volunteers

(thousands)

9 See Note 1.
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PERFORMANCE RESULTS

Results and Analysis

The Peace Corps received more requests from countries than expected, including preliminary inquiries 

on programming options and possible locations. 

Follow-up assessments are being planned for FY 

2005, but these will depend on FY 2005 appropriations. However, the rising demand for Peace Corps 

and its programs throughout the developing world 

supports the agency’s goal of increasing Volunteers. 

One recent request came from Indonesia, reflecting 

an appreciation of Peace Corps by predominately 

Muslim countries. 

There was an increase in traffic to the Peace Corps’ 

Internet site during FY 2004. Several factors contributed to the agency exceeding its target by nearly 

25 percent. A redesign of the Peace Corps website 

and additional content placed on the Web has attracted many new and repeat visitors. A successful 

new marketing campaign also funneled additional 

visitors to the website. In addition, the current international climate has increased Americans’ awareness 

of global issues. The Peace Corps provides an ideal 

way for Americans to exercise their sense of service 

and ambassadorship, and the successful reception 

of the marketing campaign, Internet resources, and 

related materials are key indicators of that success. 

Along with visits to the website, nearly every aspect 

of the interactive site saw similar increases. Online 

applications were higher then expected. Inquiries 

about the Peace Corps made through the website 

were 33 percent higher than expected. The Peace 

Corps will review its goals and targets for subsequent 

fiscal year performance plans in light of these unexpected, positive results. U

Results and Analysis

While working to increase its numbers to meet the 

President’s desire for growth, the agency is also attempting to increase under-represented, racial, 

ethnic, and age groups applying to Peace Corps. 

This effort is essential to ensure that Peace Corps 

truly reflects the diversity of America. 

2004 was the third year in a row in which we increased the number of diverse applicants to the 

Peace Corps. Although FY 2004 results fell a bit 

short of the goal, the agency still saw an overall 

increase in the number of diverse applicants from 

2,195 at the end of FY 2003 to 2,596 at the end of 

FY 2004. In comparison, at the end of FY 2002, 

1,931 of all applicants were of diverse backgrounds.

At the end of FY 2002, the agency formed a working group on overcoming barriers to Volunteer 

service and establishing priorities to increase recruitment. An important priority of this working group 

is to significantly increase the number of diverse 

applicants. For example, the working group has 

focused on increasing diversity outreach through 

targeted local recruiting venues, conferences, publications, and website materials, on having web 

based materials during the application phase that 

increases awareness, on giving credit for service 

by colleges and universities, on having non-credit 

certificate programs for service that facilitates employment post service, on targeting community 

college students and expanding country programs 

for them, and on reviewing readjustment allowance 

levels following their service. 

Performance Goal 1.2.1.

Increase the combined number of underrepresented ethnic and age groups applying 

to the Peace Corps from 19 percent to 22 

percent by FY 2006.

 FY 2004 Goal FY 2004 Actual

 20% 19.6%10

10 7.2% of all applicants did not specify their ethnicity.
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PERFORMANCE RESULTS

 Performance Indicators 1.2.1. FY 2004 Target FY 2004 Actual

Results and Analysis

It is critically important to the Peace Corps to attract 

under-represented racial, ethnic and age group applicants. The redesigned website, with additional content targeted to under-represented audiences, and 

the agency’s overall marketing campaigns have attracted many new and repeat visitors to the website. 

This traffic is part of the significant growth in overall 

traffic to the website. The synergy of a new marketing campaign, international climate, improved Internet technology, and wide-reaching content again has 

caused results to exceed expectations. Based on this 

experience, the Peace Corps will review its goals for 

subsequent fiscal year performance plans.

The Peace Corps has targeted diverse audiences in 

all of its marketing materials, which were created 

for a variety of audiences. As this was the first year 

of a marketing campaign with all new materials, it 

was difficult to predict what number of pieces would 

be used during the year. Predictions based on previous recruitment materials generated these fiscal year 

goals; subsequent plans will allow the Peace Corps to 

review and revise targets with better information. U

i. Percentage of minority trainees. Measured on actual data only. 

No targets established. 16.5%

ii.

Recruitment and support efforts focusing on 

applicants over age 50, diverse ethnicities, 

backgrounds, and level of education.

Expand recruitment and support

for a diverse range of applicants 

and Volunteers, including seniors.

10 diverse 

conferences, 

5 panel 

presentations

iii. Percentage of Volunteers over age 50. Measured on actual data only. 

No targets established. 5.8%

iv.

Visitors to website who access minority 

recruitment pages and/or scarce skills, 

family pages.

200,000 304,336 a

v.

Collateral pieces used (i.e., all marketing 

material printed by Peace Corps) that

target diverse audiences.

1 million 2 million b

vi. Articles placed in newspapers and other 

media that target diverse audiences 6 138 c

Resources Needed:

Dollars in thousands 447 464

Full-time equivalents 4 4

 Note: a,b,c Data as of August 31, 2004
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PERFORMANCE RESULTS

Performance Goal 1.3.1.

Reduce the overall 12-month Volunteer 

early termination (ET) rate by 1.5 percent, 

from FY 2003 level of 11.6 percent to

10.1 percent by September 2006.

 FY 2004 Goal FY 2004 Actual

 11.1% 11.0%

Results and Analysis

The ET rate is declining, which is an improvement 

sought in the strategic plan. The Peace Corps developed 

a new survey instrument to collect data not previously 

captured from Volunteers and trainees who ET. This 

looks at reasons why an individual terminates early and 

will provide feedback to posts and headquarters to better understand and analyze this issue.

Early termination and the reasons for it can be complex. The additional focus on the subject, and the additional data being collected, will allow the agency to 

adjust recruitment information, pre-service training, 

in-service training, site and program development, 

and other factors that may contribute to ET rates.

FY 2004 

FY 2004 Actual/

 Performance Indicators 1.3.1. Target Estimate

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

“adequately” prepared in the biennial Volunteer survey 75% N/A*

ii. Percentage of skill requests that align with available applicants 85% 85%

iii. Percentage of Peace Corps project plans complete and current 50% 50%

iv. Percentage of Peace Corps projects and training programs

reviewed annually 95% 100%

v. Field-based project reviews and evaluations 30 29

vi. Project and training technical assistance events for posts 105 105

Resources Needed:

 Dollars in thousands 6,937 6,699

 Full Time Equivalents 78 79

Results and Analysis

FY 2004 results of the work to reduce the ET rate 

were positive, as Peace Corps focused on training, 

matching skills with projects, and reviewing programs implemented in the field. Early Termination 

is a complex issue, involving almost every aspect of 

the recruitment, application, training, and Volunteer 

experience. Significant attention was placed on this 

area in FY 2004, and the Peace Corps plans to continue to review and modify indicators to reflect the 

data we receive.

The agency will review and analyze the results of “i” 

above once the biennial Volunteer survey results are 

available—any lack of performance will be analyzed 

and addressed. U

Note: * Final tabulation of the results of the 2004 biennial Peace Corps Volunteer survey is scheduled for January 2005. Thus, it is not 

possible to report on any of the indicators that rely on survey results. The agency plans to adjust the timing of future surveys 

to align with the timing of the PAR. At the time of producing this PAR, the agency had received approximately 30 percent of 

expected responses. This note applies to all indicators that rely on the biennial Peace Corps Volunteer survey for data.
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PERFORMANCE RESULTS

STRATEGIC GOAL 2:

Improve the health/safety of Volunteers by

improving the Volunteer health-care satisfaction 

rate by 7 percent and increasing Volunteers’ 

perceptions of their personal safety where they 

live by 3 percent by September 2008.

Outcome Goals:

1.1 Increase the percentage of Peace Corps 

Volunteers indicating feeling “well” or 

“completely” satisfied with their in-country 

health care from FY 2002 level of 75 percent 

to 82 percent by September 2008. 

1.2 Increase the percentage of Peace Corps 

Volunteer survey responses indicating 

Volunteers feel safe “most of the time” where 

they live from FY 2002 level of 86 percent to 

89 percent by September 2008.

Performance Goal 2.1.1.

Increase the percentage of respondents to 

the biennial Peace Corps Volunteer survey 

indicating feeling “well” or “completely” 

satisfied with their in-country health care

by 5 percent, from FY 2003 level of 75 

percent to 80 percent by September 2006.

 FY 2004 Goal FY 2004 Actual

 78% N/A11

Performance Indicators 2.1.1. FY 2004

Target

FY 2004

Actual/Estimate

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

95% 93%

ii. Percentage of Volunteer respondents reporting health training 

as effective or very effective as measured by the biennial 

Volunteer survey

85% N/A*

iii. Incidence of vaccine-preventable diseases (e.g., hepatitis

A & B). Measure is in cases per 100 Volunteer/trainee years Target <0.05 .0496

iv. Incidence of falciparum malaria in Africa region. Measure is in 

cases per 100 Volunteer/trainee years Target <6.0 1.2397

Resources Needed:

Dollars in thousands 57,602 57,604

Full-time equivalents 103 90

Results and Analysis

The health, safety and security of every Volunteer is 

the Peace Corps’ highest priority and this is reflected 

in the agency’s strategic plan. Greater emphasis on 

this priority in FY 2004 has placed increased attention on training, both before and after Volunteers 

travel overseas to their posts.

Actual results for FY 2004 will only be available by 

January 2005 because the biennial Volunteer survey is still in the process of tabulation and analysis. 

When the results become available to the agency, 

attention to this area will be made to ensure any 

lack of performance is analyzed, and addressed. 

Note: See note for Performance Indicators 1.3.1. p.27. Additionally, the 2002 Volunteer survey questioned overall physical health. In an 

effort to further understand how the Volunteers feel about their care, the 2004 survey makes a distinction between mental and 

physical health. Thus, the results will not be totally comparative—the agency will review this performance goal in FY 2005.

11 See note for Performance Indicators 1.3.1., p. 27. 
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PERFORMANCE RESULTS

Results and Analysis

The results of FY 2004 medevac surveys were two 

percent lower than the FY 2004 goal; this small 

difference can be attributed to the overall circumstances of each situation. A medical evacuation is a 

stressful time, and Peace Corps does everything it 

can to ensure the safety and health of its Volunteers. 

Reviews will be made of the survey results to identity any trends and address any needs for additional 

training. The agency will also review the survey instrument to ensure it is appropriately designed and 

executed. Currently, five out of twenty-one questions 

ask the medevac Volunteer about the quality of their 

medevac care. 

The incidence of falciparum malaria exceeds the FY 

2004 goal for several reasons. First, the medication is 

effective. Also, Peace Corps medical officers provide 

comprehensive malaria education to Volunteers, and 

those Volunteers are complying with that training. U

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 at home by

2 percent, from FY 2003 level of 86

percent to 88 percent by September 2006.

 FY 2004 Goal FY 2004 Actual

 87% N/A12

Results and Analysis

The safety and security of every Volunteer is the 

Peace Corps’ highest priority and is reflected as 

such in the agency’s strategic plan. As shown in this 

measurement, this emphasis is paying off with Volunteers feeling safe and confidant in their overseas 

homes. In light of the current global climate, this 

achievement is especially notable. 

In FY 2004, all posts received a standardized 

template for an emergency action plan (EAP) and 

standard operating procedures that accompany that 

plan. The agency wants them to be fully operational 

by March 2005. This will help ensure continuous 

testing, monitoring, and operations of all emergency 

plans in the agency. Also in 2004, EAPs were placed 

in an electronic format allowing for easier transmittal and tracking. During emergencies, headquarters 

can received and transmit the latest information 

electronically, including consolidation points and 

maps for all Volunteers. This is the first time the 

agency has achieved this interactive emergency operations system.

12 See note for Performance Indicators 1.3.1., p. 27. 
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PERFORMANCE RESULTS

Performance Indicators 2.2.1.

FY 2004

Target

FY 2004

Actual/Estimate

i. Percentage of Volunteer pre-service training programs 

including safety training 90% 100%a

ii. Percentage of Volunteers demonstrating 10 safety and 

security competencies at end of pre-service training 75% 80%

iii. Posts undergoing safety and security assessments 75% 92%

iv. Posts receiving emergency action plan training 85% 85%

v. Percentage of posts testing emergency action plans at 

least once a year 95% 100%

vi. Percentage of posts complying with all sections of 

MS 270, beginning July 2003 95% 95%

vii. 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% N/Ab

viii. 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% N/Ac

Resources Needed:

Dollars in thousands 9,668 9,598

Full-time equivalents 12 11

Results and Analysis

The Office of Safety and Security is responsible for 

several training and review programs. Each region also 

continually reiterates the agency’s emphasis on safety 

and security. FY 2004 reports indicate that this vigilance has been both meaningful and successful. U

Notes: a Estimated based on FY 2003 Training Status Reports (TSR) results; FY 2004 TSR results 

will be available in the first quarter of 2005. 

b See note for Performance Indicators 1.3.1., p. 27. 

c Ibid. 
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PERFORMANCE RESULTS

STRATEGIC GOAL 3:

Improve Americans’ understanding of other peoples by increasing returned Peace Corps Volunteers’ (RPCVs) visits to schools and community 

organizations by 28 percent by September 2008.

Outcome Goal:

1.1 Increase RPCV visits to schools and 

organizations by 28 percent, from FY 2003 

level 7,000 to 9,000 by September 2008.

Performance Goal 3.1.1.

Increase RPCV visits to schools and 

organizations by 17 percent, from FY 2003 

level of 7,000 to 8,200 by September 2006.

 FY 2004 Goal FY 2004 Actual

 7,400 7,031

Results and Analysis

RPCV visits to schools and organizations in FY 2004 

were at the highest level in the program’s history. 

Though the agency fell slightly short of its projected 

goal, it has continued to witness a modest but steady 

growth in participation in Peace Corps Week (the 

anniversary devoted to RPCV outreach to schools, 

community centers, libraries, etc.). Peace Corps Week 

participation is driven by RPCV participation. 

One factor that impacts the performance in this measure is the number of RPCVs that give talks to schools 

and organizations, but do not report these interactions 

to the Peace Corps. The Peace Corps is taking steps to 

better capture this information and to gain a clearer 

picture of the impact RPCVs are having on improving 

Americans’ understanding of other peoples.

Improvements in gathering and maintaining contact 

information will allow the Peace Corps to organize 

activities for, and collect information from, Peace 

Corps Volunteers. Technology should make it easier to 

facilitate this, so improvements in meeting this goal 

are expected.

Performance Indicators 3.1.1. FY 2004

Target

FY 2004

*Actual*

i. RPCVs participating in Peace Corps Week activities 8,000 7,031

ii. RPCVs participating in career events 800 915

iii. RPCVs e-mailed the RPCV newsletter 7,000 7,702

iv. Percentage of active Volunteers (not trainees) during the year 

participating in the Coverdell World Wise Schools one-to-one 

correspondence match program

53% 47%

v. Average visitors per month to the Coverdell World Wise 

Schools (CWWS) section of the Peace Corps website 350,000 474,574

Resources Needed:

Dollars in thousands 1,451 1,671

Full-time Equivalents 18 16

Notes: * Data as of early September, 2004. 
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PERFORMANCE RESULTS

Results and Analysis

Though the number of RPCV visits to schools and 

organizations in FY 2004 is the highest level ever 

recorded, much information is not being captured. 

Improvements in communication and database 

techniques will continue to make that task easier. In 

addition, more RPCVs than anticipated participated 

in a variety of career events, indicating a commitment to the agency’s third goal. Although the Peace 

Corps exceeded its goal regarding the RPCV newsletter by about 10 percent, attaining next year’s goal 

will require a concerted effort to build the database 

of e-mail addresses.

Forty-seven percent of active Volunteers participate 

in the CWWS match program. The absolute number 

of Volunteers participating in this program has not 

fallen. Transferring the application form for the correspondence match program to the online Volunteer 

toolkit should increase the number of Volunteers. 

The percentage in FY 2004 may have fallen due to 

the number of program closings, suspensions, and 

interruptions or to an anomaly with the new system 

reporting overall number of Volunteers. 

The average number of visitors to the website as 

measured by page-view figures between October 

2003 and August 2004 was 474,574, thus far exceeding the goal. This is attributed to user-friendly 

cosmetic and organizational changes to the website 

and the introduction of enhanced curriculum materials and programs. Plans are in place to continue 

adding new content and marketing it widely in FY 

2005, which should increase visitors to the site. U

STRATEGIC GOAL 4:

Reduce the Peace Corps overall response time for 

those applying to the Peace Corps by 5 percent, 

from FY 2003 level of 222 days to 212 days by 

September 2008.

Outcome Goal:

1.1 Reduce overall Peace Corps applicant 

response time by 5 percent by September 

2008 through evaluation and integration 

of new technology and recruitment and 

placement of staff structures.

Performance Goal 4.1.1.

Reduce overall response time to applicants 

by 3 percent, from FY 2003 level of 222 

days to 216 days by September 2006.

 FY 2004 Goal FY 2004 Estimated

 220 N/A13

Results and Analysis

The FY 2004 overall response time is an estimate 

based on the best available data. Changes in the online application and status check systems occurred 

in September 2004, with a launch of the online application system hosted by a new vendor. The new 

system will improve the timeliness and accuracy of 

data, and it will be a key tool in tracking this performance goal. It will be used to integrate the measurement of the various stages that compose overall 

response time.

In 2002, a task force was convened to look at ways 

to decrease the number of days that prospective Volunteer candidates spent in the application process. 

This task force documented the number in each of 

the following stages of the Application process from 

application through invitation (to a Volunteer assignment).

13 The Peace Corps does not currently have a system to track this performance goal, other than ad hoc, partially anecdotal data. 

The Peace Corps plans to develop a tracking system in FY 2005. 
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PERFORMANCE RESULTS

In 2004, the agency initiated the process standardization and integration project (PSIP) and conducted a business practices survey. The results of this 

survey led to the creation of a test site in Rosslyn, 

Virginia to determine which recruitment practices 

in the application to nomination process should be 

standardized and streamlined. The agency expects 

results from this test in FY 2005. Additionally, the 

PSIP is expected to help the agency develop a better 

system to ensure accurate measurement of the average time applicants are spending in the process.

Performance Indicators 4.1.1. FY 2004

Target

FY 2004

*Actuala

i. Percentage of applicants who complete their Volunteer 

applications over the Internet 75% 75%

ii. Percentage of applicants who complete their health status 

review for medical screening over the Internet 73% 86%

iii. Average months between application and departure for 

overseas assignment 9.5 N/Ab

Resources Needed:

Dollars in thousands 1,822 1,493

Full-time Equivalents 4 4

Results and Analysis

The September 2004 launch of the new online application system should further improve the overall 

application process and timeliness. Already, the 

health status review (HSR) is ahead of schedule, due 

to the solid technology and process behind it. HSRs 

completed online have dramatically surpassed the 

2004 goal. Persons of all ages have adapted to using 

the Web for interactive purposes, and the HSR is 

well-formatted and easy to fill out.

Similar gains are expected in other aspects of the application process. As the data are collected in the following fiscal years, the targets will be reviewed and 

modified to coincide with the new performance. U

Notes: a See note for Performance Indicators 1.3.1., p. 27. 

b Data as of early September, 2004. 
FINANCIAL REPORT

Y
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THE PEACE CORPS | PERFORMANCE AND ACCOUNTABILITY REPORT | FISCAL YEAR 2004

FINANCIAL REPORT

On behalf of the Peace Corps, I am pleased to report on the agency’s FY 2004 performance and 

accountability with our first audited financial statements as planned and on time to meet the 

expedited submission requirement. 

The Accountability of Tax Dollars Act (ATDA) of 2002, requiring auditable internal processes 

and procedures, has given the Peace Corps the opportunity to initiate a significant three year 

modernization plan changing systems and technologies that were in place for over 20 years. 

When completed, Peace Corps will have the tools needed to generate auditable financial statements that can receive an unqualified opinion and fulfill the new financial reporting requirements. This modernization plan completely transforms systems, processes, and controls 

throughout the agency. 

The plan includes: 

Phase I (FY 2003, FY 2004) now completed: 

• Bringing into production Odyssey/FOR Post, the new integrated, agencywide financial 

management system which provides the core accounting and financial management 

modules to the agency’s 72 posts worldwide, 13 recruiting offices nationwide, and 

headquarters. 

Phases II and III (FY 2005, FY 2006):

• Completing documentation and implementation of U.S. standard general ledger compliant 

business processes and practices; 

• Building systems and processes that support management and accounting of property, 

plant, and equipment; 

• Implementing the remaining modules, functionalities, and enhancements to the Odyssey/

FOR Post system; 

• Completing the reconciliation of account balances; and,

• Training staff throughout the agency 

This modernizes the agency’s financial management system to achieve accuracy, completeness, 

and the auditability of financial reporting. 

We are pleased that we can draw on Phase I of our work to complete the FY 2004 financial 

statements. The FY 2004 financial statements were prepared using OMB Bulletin 01-09, 

FASAB Concepts and Standards, and other generally accepted accounting principles, and drew 

on data available through Phase I of our modernization program. The two additional phases are 

not yet completed, preventing me from assuring Peace Corps management that the information

presented is either complete or accurate. 

MESSAGE FROM THE CHIEF FINANCIAL OFFICER

U
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THE PEACE CORPS | PERFORMANCE AND ACCOUNTABILITY REPORT | FISCAL YEAR 2004

FINANCIAL REPORT

Since the agency’s legacy systems were designed for funds control management and not for financial 

reporting, the FY 2004 beginning balances cannot be fully supported from the conversion. Enormous 

data from earlier decades had to be converted from the legacy systems, many of which did not meet 

today’s accounting and reporting requirements. Therefore, assumptions were made while bringing 

forward account balances into the new system for FY 2004 reporting. Manual records of the assumptions and the related transactions have been retained for audit purposes. These items are on

record with the agency's cancelled-years files. 

The agency’s business requirements to track finances in multiple currencies and to be compliant with 

the Joint Financial Management Improvement Program (JFMIP) called for significant workarounds 

and customizations to the new commercial off-the-shelf (COTS) system. The increased data flow complexities led to account imbalances that could not be resolved prior to the end of the fiscal year. The 

new requirements for levels of reconciliation in FY 2004 made it difficult to bring all account balances 

in line. Adjusting entries was required in order to bring inherent account relationships in balance. The 

agency plans to determine the cause and resolve these issues in FY 2005. 

We are committed to our plan for building the systems, processes, and controls needed to support the 

Peace Corps’ mission in the 21st century, and to delivering financial statements in the years to come that 

can and will receive unqualified opinions. These efforts will help ensure full compliance with the laws 

and regulations and further the President’s initiative toward improved financial management.

Gopal K. Khanna

Chief Financial Officer

November 2004
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FINANCIAL REPORT

Authorities and Separation of Duties

Checks and balances were created to enable the distributed financial management approach for Peace 

Corps’ execution of mission and mandate. The authorities from the Peace Corps Act and other applicable legislation have been codified within the Peace 

Corps Manual, sections 101 through 129. Briefly 

summarized, the manual sections establish that:

• Director and deputy director appointments are 

Senate-confirmed;

• Appropriate delegations ensure separation of 

duties;

• Delegations provide authorities and approvals at 

proper organizational levels; and

• Functional descriptions define roles of each 

organizational unit.

For other than those authorities reserved for the 

Director, the Director has written delegations that 

are included in the Peace Corps Manual, section 

114. The “Authorities Reserved by the Director” 

reflect the current status within the agency, which 

includes some updates that are awaiting inclusion in 

the Peace Corps Manual. These authorities are frequently revised to reflect changes in personnel and 

in the organization. As these changes occur, relevant 

revisions and updates are scheduled for the manual. 

For example, inclusion of the “Chief Compliance Officer” has been approved, but is not yet reflected in 

the manual itself.19

MESSAGE | MANAGEMENT CONTROLS

U

Business Volunteer, Guatemala

14 During the past three years, the Peace Corps has been updating and revising its policy manual to ensure it reflects the most recent 

policy of the agency. This process is ongoing and is expected to continue throughout FY 2005.
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FINANCIAL REPORT

Authorities Reserved by the Director

Personnel 

• Authority to approve initial selection, appointment, promotion, transfer, termination, or disciplinary action relating to 

the following positions and incumbents: Chief of Staff/Chief 

of Operations; Associate Directors; Regional Directors; Director of the Crisis Corps; Chief Financial Officer; Chief Information Officer; Inspector General; Country Directors; Deputy 

Country Directors; Regional Recruiting Office Managers; and 

the Director’s Office staff heads, which consist of the General 

Counsel, the Director of Communications, the Press Director, 

the Marketing Director, the Director of Congressional Relations, the Manager of the American Diversity Program, Chief 

Compliance Officer, Director of Planning, Policy and Analysis, 

the Director of the Office of Private Sector Cooperation and 

International Volunteerism.

• Authority to approve all personnel actions relating to the Deputy Director.

• Authority to approve and authorize all time-limited appointments extended beyond five years under 22 U.S.C. 2506(a)(5) 

and (a)(6). (Appointments under 22 U.S.C. 2506(a)(6) are nontransferable by law.

• Authority to approve and authorize performance evaluations 

for the Chief of Staff/Chief of Operations; Associate Directors; 

Chief Financial Officer; Chief Information Officer; Inspector 

General; Regional Directors; Director of the Crisis Corps; Director of the Center for Field Assistance and Applied Research; 

General Counsel; Director of Communications; Press Director; Marketing Director; Director of Congressional Relations; 

Chief Compliance Officer, Director of Planning, Policy, and 

Analysis; and Director of the Office of Private Sector Cooperation and International Volunteerism.

• Authority to approve all agreements entered into with a labor 

organization as the exclusive representative of employees. 

• Authority to approve all cash awards over $5,000 for agency 

employees and Meritorious Step Increases for Country Directors, Deputy Country Directors, and any other employees reporting directly to the Director of the Peace Corps. 

• Authority to approve and authorize restoration of forfeited annual leave.

• Authority to review grievances at the third level of the grievance process. This authority includes authority to appoint an 

outside examiner if the grievance is not resolved at the third 

level; and 

• Authority to decide appeals from General Counsel determinations of ineligibility for employment or Volunteer service under 

the Peace Corps Intelligence Policy.

Procurement, Budget, and Accounting

• Authority to approve the annual budget, including supplements, amendments, policies, and assumptions used in developing budget estimates; approve reprogrammings to be submitted to Congress.

• Authority to approve operating plans and budgets and employment ceilings and revisions thereto.

• Authority to reallocate funds within budget activities in excess 

of $25,000.

• Authority to approve and authorize allotments within the 

Peace Corps.

• Authority to accept on behalf of Peace Corps unconditional gifts of money or tangible personal property in excess of 

$10,000, and accept all conditional gifts where the condition is 

other than a restriction to a particular country or area

• Authority to approve all procurement requests over $800,000

• Authority to approve domestic and international travel for the 

Deputy Director.

Country Agreements

Authority to approve requests to the State Department for the 

initiation, modification, or termination of Peace Corps country 

agreements.

General Administration

• Authority to authorize telegrams during “minimize” conditions.

• Authority to approve and authorize changes to the agency’s organizational structure at or above the following levels: 

- Major sub-divisions under the direction of the Associate 

Directors, Chief Information Officer, Chief Financial Officer, Regional Officers, Director of the Crisis Corps, and the 

Director of the Center for Field Assistance and Applied Research, and any program unit where the head of the unit 

reports directly to the Director; 

- Overseas posts; and 

- Regional Recruiting and Administrative offices. 

• Authority to approve the production of newly designed print 

and audio-visual materials pertaining to the Peace Corps to be 

used externally, such as, new pamphlets, brochures, booklets, 

or films. 

Record Dissemination, Privacy, and Management

• Authority to decide appeals from denials of requests for records under the Freedom of Information Act, other than OIG 

records, and refusals to waive overdue fees. 

• Authority to decide appeals from denials of access to records 

and for requests for the amendment of records, other than OIG 

records, under the Privacy Act. 

Equal Employment Opportunity Authority

• Settle and adjust any complaint of prohibited discrimination or 

reprisal. 

• With the concurrence of the General Counsel, approve and 

authorize attorneys’ fees permitted under the law in cases of 

prohibited discrimination or reprisal. 

• With the concurrence of the General Counsel, concur with Justice Department proposals to settle any complaint in litigation 

that is related to EEO, prohibited discrimination, or reprisal 

matters.

• Take final action in all matters related to EEO, or prohibited 

discrimination or reprisal. 

Volunteer and Trainee Claims

• Authority to make the final agency decision in Volunteer appeals from administrative separations.

• Authority to decide Volunteer appeals from determinations of 

ineligibility for benefits under Executive Order 11103, relating 

to non-competitive eligibility for federal employment. 
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PRINCIPLES OF IPBS

Plan drives budget

s

Performance

substantiates

requirements

s

Reasonable 

planning horizon

s

Right level of detail 

at the right time

s

Institutionalized vertical and 

horizontal communications 

s

Current operations costing

Budget Controls: Integrated Planning 

and Budget System

The Office of Planning, Policy and Analysis develops 

the agency’s strategic plan, which provides the basis 

for guidance to all parts of the agency in the annual 

preparation of its integrated planning and budget 

system (IPBS). The IPBS is the framework used by 

Peace Corps to carry out its planning and budget 

functions. In turn, the IPBS links back to the strategic plan through the agency’s performance plan. The 

underlying principles of the IPBS are as follows. 

• Plan drives budget. The Peace Corps strives 

to make its resource allocation decisions based 

on the goals and priorities of the agency. 

However, because of budget constraints, not 

every plan proposed is funded. 

• Performance substantiates requirements. 

How well the office performs against the plan 

informs decision-making on funding allocation.

• Reasonable planning horizon. The strategic 

planning timeframe is three years. This is long 

enough to avoid the truncated nature of oneyear planning but not too long for the fastchanging world in which Peace Corps operates. 

Looking ahead three years also evens the ups 

and downs of the government budget cycle, 

allowing plans to be accelerated in times of 

higher-than-expected budgets and decelerated 

in times of lower-than-expected budgets. 

• Right level of detail at the right time. The 

system is iterative, with macro-planning and 

budgeting occurring first in the process and 

micro-planning and budgeting occurring later, 

near the start of the fiscal year.

• Institutionalized vertical and horizontal 

communications. The system prescribes 

both vertical and horizontal communication 

in its basic architecture. It serves as an agency 

integrator, since each part of the organization 

uses the same basic system.

• Current operations costing. The system 

formally recognizes that to repeat this year’s 

operations in the next three years, costs will 

be different. Operations may cost or less, but 

will not cost the same. Pricing out current 

operations provides managers with valuable 

information on the resources needed to 

continue at current levels before they begin to 

consider increases or decreases to those levels. 

Current operations’ costing is a management 

and budgeting tool only. It does not require the 

continuation of all current activities.
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Major Processes 

There are three major processes in the IPBS cycle. 

They are described below and displayed in the accompanying diagram.

• Strategic Plan and Budget Process. 

Peace Corps posts and offices, working with 

guidance from the Director, develop and/or 

update a three-year strategic plan that includes 

operational performance indicators. They 

submit the plan, performance indicators, and 

related requests for budget enhancements 

or reductions over the next two years to 

their regional and associate directors for 

review. These regional and associate directors 

subsequently present summary strategic plans, 

along with requests for budget enhancements 

or reductions, to the Director. Based on these 

presentations, and with senior staff input, the 

Director makes internal planning and budget 

decisions for the upcoming fiscal year and 

provides guidance for preparation of the OMB 

submission for the following year. The OMB 

submission is in the GPRA format. Regional 

and associate directors then pass back decisions 

to their posts and offices. This process takes 

place each spring, with Director’s decisions 

occurring during the summer. 

• Operating Plan and Budget Process. 

Based on the feedback and decisions from their 

regional and associate directors, each post and 

office prepares an operating plan and budget 

for the coming fiscal year. The plan takes the 

goals and objectives of the strategic plan and 

focuses on the next 12 months. (The strategic 

plan is resubmitted at this stage only if major 

changes are necessary.) The detailed budget 

is forwarded for associate or regional director 

review, and regional and major office budgets 

are summarized for agency review. The Director, 

with senior staff input, makes any new resource 

allocation decisions required, and the fiscal 

year begins. This process occurs during the 

summer, with the Director’s decisions occurring 

at the end of September. Detailed requests for 

assistance from the Center for Field Assistance 

and Applied Research accompany this 

submission.

• Periodic Planning and Budget Reviews.

Two planning and budget reviews are conducted 

during the fiscal year. The plan portion provides 

a brief update on progress in accomplishing 

goals and describes proposed mid-course 

corrections if any are needed. The budget review 

focuses on budget execution and proposed 

reprogramming. Again there are two levels of 

review, one at the regional and associate director 

level and one at the agency level. In addition, 

a formal budget closeout review is conducted 

each November. A plan update is not required in 

this review because the second periodic review 

provides sufficient information.

Early Spring Director’s Guidance

Early Spring

Late Spring

Early Summer

Late Summer

Late Summer

Strategic Planning and Budget Formulation

Strategic Plan (for subsequent 3 fiscal years)

Budget (for subsequent 2 fiscal years)

Current Operations/Enhancements/Reductions

Request to OMB

for second of

planned years

Request to OMB

for second of

planned years

Periodic

Planning and

Budget Reviews

Director’s Decisions
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Acquisition and Contract Management

Chief Acquisition Officer

In August 2004, the , Director established the chief 

acquisition officer (CAO) to champion better business acquisition practices at the Peace Corps and to 

effect implementation of acquisition policies, regulations, and standards providing sound acquisition 

decisions consistent with applicable laws.

The CAO has authority to:

• Authorize, execute, amend, terminate, or administer all contracts, leases, agreements, or 

other procurements; and make decisions, determinations, or findings relating thereto, unless 

otherwise specifically delegated to another employee for any amount.

• To delegate contracting authority to appropriate 

employees through Federal Contracting Officer 

warrants, Ordering Officer appointments, purchase card holder appointments and one time 

delegations to Country Directors for requirements above $50,000.

• When using other than full and open competition (sole source procurement), authority to 

approve and authorize the contracting officer's 

justification for each sole source procurement 

award and other determinations and findings 

related to such contract awards, in accordance 

with the Federal Acquisition Regulation for any 

amount.

• To maintain the Peace Corps Acquisition System 

as the Senior Procurement Executive/ Head of 

the Contracting Activity for the Peace Corps 

pursuant to E.O. 12931 (August 21, 1994).

• To implement EO 13170 (October 6, 2000), 

Increasing Opportunities and Access for Disadvantaged Businesses.

• To have direct communication with the Director's Office regarding contentious procurement 

matters when necessary to avoid legal or ethical 

ramifications.

• To act on all contracting authorities that are not 

reserved to the Director or specifically delegated 

to another employee.

• To authorize all interagency program agreements.

• To approve all interagency program agreements 

up to $50,000.

• To approve and authorize all personnel detail 

and fee-for-service interagency agreements.

Office of Acquisitions and Contract Management

• The Office of Acquisitions and Contract 

Management (OACM) was established in 

August of 2004 to provide support for Peace 

Corps supplies and services requirements 

through the Peace Corps acquisition system. 

This system defines outsourcing policy and 

processes for either contracts with the private 

sector or interagency agreements with other 

federal agencies. OACM is responsible for 

the policy and operational management of 

the agency’s acquisitions domestically and 

overseas. Contracts, interagency agreements, 

memorandums of understanding transferring 

resources or funds, cooperative agreements, 

personal service contracts, and the government 

wide commercial purchase card fall under 

the purview of OACM. OACM awards all 

Peace Corps contracts above $50,000 and all 

interagency agreements. Country Directors at 

overseas posts maintain $50,000 contracting 

officer authority.

Financial Management

Chief Financial Officer

In 1991, the Peace Corps Director established the role 

and assigned the responsibilities for the agency’s chief 

financial officer (CFO). The CFO has authority to:

• Establish effective financial management 

policies and internal controls. 

• Ensure adequate systems to produce useful, 

reliable, and timely financial and related 

programmatic information. 

• Develop useful financial analysis and 

performance reports. 

• Integrate planning, budget formulation, 

budget execution and accounting functions. 
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• Ensure high-quality in financial management 

personnel. 

The CFO reports directly to the Director regarding 

financial management matters, and provides the following functions to agency management:

• Oversees all financial management activities 

relating to the programs and operations of the 

agency; 

• Develops and maintains an integrated agency 

budget accounting and financial management 

system, including financial reporting and 

internal controls; 

• Directs, manages, and provides policy guidance 

and oversight to agency financial management 

personnel, activities and operations; and 

• Monitors the financial formulation of the agency 

budget, the financial execution of the budget 

in relation to actual expenditures, and prepares 

and submits timely reports to the Director. 

The CFO is both chief financial management policy 

officer and chief financial management advisor to 

the Director. The CFO has authority: 

• To establish financial management policies for 

the agency and its component parts. 

• To ensure compliance throughout the agency 

with applicable accounting standards and 

principles and financial information and 

systems functions standards (including 

the standard general ledger and the core 

requirements for financial systems). 

• To establish, review and enforce internal 

control policies, standards and compliance 

guidelines throughout the agency involving 

financial management (including authority to 

require and ensure timely corrective actions 

regarding material weaknesses disclosed 

through audit findings and reports under the 

Federal Managers' Financial Integrity Act 

[FMFIA]); to establish, in coordination with 

senior managers, agency-wide internal control 

processes; to advise the Director on the accuracy 

and completeness of the annual FMFIA 

report; and to participate in monitoring and 

requiring corrective actions on reported material 

weaknesses (especially high-risk areas listed in 

the President's budget). 

• To direct, manage, and provide policy guidance 

and oversight of, agency financial management 

personnel, activities, and operations, including 

preparation and annual revision of agency fiveyear financial management budgets. 

• To ensure adequate controls over cash 

management operations; credit management 

and debt collection operations. 

As the CFO’s authority and responsibility for financial management systems covers the breadth of 

agency activity and the CFO's mandate is to integrate budget, financial, and programmatic data, the 

CFO is a voting member in the investment review 

board and may appeal decisions affecting financial 

management of which he/she disapproves to the 

CIO. 

Within the CFO’s responsibility to produce financial 

analysis and performance reports, the CFO has authority to:

• Mandate agency-wide, and for agency program 

and financial components, data and reporting 

formats (consistent with OMB guidance). 

• Prepare all Peace Corps financial reports and 

statements for transmittal to the Director, OMB, 

the President, Congress, or external groups. 

• Prepare consolidated and/or combined agency 

financial statements and work with the 

inspector general and other auditors to improve 

auditability. 

• Develop, in coordination with senior managers, 

financial and programmatic performance 

indicators to include in financial systems and 

financial reports and statements. 

Office of Planning, Budget & Finance and 

Other Financial Support Functions

The Peace Corps’ Office of Planning, Budget and 

Finance (OPBF) carefully monitors the automated 

accounting reports and the monthly obligations of 

all budget holders. Also, Peace Corps regional directors and chief administrative officers monitor reports 
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for Peace Corps countries to detect any apparent 

obligations in excess of approved country budgets. 

They promptly notify the CFO if an over-obligation 

is detected.

 In the case of an over-obligation at the office or 

country level, the budget officer will verify the facts 

and determine the impact on the agency’s administrative control of funds as well as what corrective action 

needs to be taken. This information is included in a 

report submitted by the budget officer to the CFO. In 

turn, the CFO may recommend appropriate administrative discipline up to and including suspension or 

removal of individuals responsible for serious or repeated over-obligation of administrative budgets. 

The funds control system is fully integrated with the 

Peace Corps’ financial management system. Reports 

against the operating plan can be generated at least 

monthly or as often as the budget holder wishes to 

review the status of funds. The accounting system 

also records and reports data on a cost basis against 

budget categories to aid funds control. Obligations 

and disbursements are entered into the agency accounting system through a combination of automated interfaces and user data entry (see “Financial 

Systems” below). Recording is based on proper 

documentation in accordance with 31 U.S.C. §1501, 

“Documentary Evidence Requirement for Government Obligations.”

Overseas Financial Management

Budgets are issued to each country by the appropriate regional director (Africa; Inter-America and the 

Pacific; or Europe, the Mediterranean, and Asia). 

The issuance of country budgets represents a re-delegation of the obligation authority (delegated to the 

regional director by the CFO through the operating 

budget advice) to each country director. Country 

budgets are also reflected in the operating plan.

Regional directors are responsible for ensuring that 

country budgets within their region and their own 

headquarters budget does not exceed the amounts 

available to the region for obligation in any budgetary category. The Overseas Financial Management 

Handbook (OFMH) is issued to ensure that overseas posts have a reference guide that contains clear, 

concise, standardized financial management policies 

and procedures and to supplement the general policy guidance in the Peace Corps Manual. This handbook is continuously updated and revised to ensure 

posts have the most current information.

Business/Information Technology Volunteer in Moldova
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MESSAGE | RESULTS OF THE GAP ANALYSIS AND PROGRESS ON CORRECTIVE ACTIONS

U

The Peace Corps sought and received a waiver of 

the Accountability of Tax Dollars Act of 2002 for 

the fiscal year ending September 2003. The waiver 

request contained a provision for a Gap Analysis to 

be performed in conjunction with the agency’s Inspector General and an independent audit firm in 

lieu of a formal financial statement audit. While the 

agency was not able to prepare financial statements, 

the auditors focused primarily on internal controls. 

In that the Gap Analysis did not provide an auditor’s 

opinion, the findings were categorized by type—

financial management and accounting or systems 

and applications—and high, medium or low risk.

The most critical findings centered around basic 

finance, accounting, and systems issues, such as 

policies and procedures; US standard general ledger 

(USSGL) compliance; management and accounting 

of property, plant and equipment; internal controls 

and routine reconciliation; systems development life 

cycle; systems security, recovery, and contingency 

planning and execution; and data confidentiality, 

integrity and availability. The auditors cited five 

financial management and seven financial system 

weaknesses that presented a severe impediment to 

auditability.

Corrective actions plans were developed or areas of 

findings were planned for assessment and development in March 2004. As of September 30, 2004, 

four of the five financial and six of the seven systems 

findings have either been addressed or have actions 

in progress which will alleviate the finding. The 

agency is developing plans for the management and 

recording of property, plant and equipment and will 

be re-engineering the overseas front end, FOR Post, 

to accommodate IT security requirements which 

are the findings not yet acted upon. These plans are 

to be implemented in late FY 2005 and FY 2006 

presuming the availability of funding. The Appendix 

contains a complete list of the findings with management’s response and status of corrective action 

plans at September 30, 2004. 

 Volunteer in Ghana
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This fiscal year, the Peace Corps faced and addressed 

challenges in overarching transitions in staffing, 

technology, business processes, training and tools. 

During this past year, significant work toward 

strengthening the integrity of the data in the financial system has occurred. The conversion reconciliation efforts helped correct most errant beginning 

balances. However, much more needs to be done 

before the agency can provide reliable management 

information to support its decision-making and to 

provide sound, financial statements for audit.

The Peace Corps is restructuring financial management functions within the organization using a zerobased staffing model to create the optimal structure. While the approach has been deliberate and 

thoughtful, other workload priorities have hindered 

the agency’s ability to bring forward a final plan as 

quickly as planned. At this point, the targeted implementation is December 2004.

Odyssey/FOR Post systems continue to present 

technical challenges. The complexity of the integration and the partial development of some of the 

functions led to maintaining technical expertise at 

higher levels of effort than originally planned. The 

changes in budget planning in FY 2004 required the 

agency to significantly scale back its technical support team and consequently its service-level delivery.

While some resources were identified in FY 2004 

for training in federal accounting, the results of the 

training study performed in FY 2003 showed a 74 

percent gap in staff knowledge of key areas. A reassessment of the training needs is planned for FY 

2005 along with development of additional training 

curricula, if funding is available.

While the Peace Corps has trained more than 300 

staff (200 overseas and 100 at headquarters) involved in its financial management function over 

the past year, at least 20 percent of the headquarters 

staff have turned over due to the agency’s five-year 

rule. The Peace Corps is seeking innovative partnerships with other federal agencies to create the staff 

development opportunities needed to reduce this 

barrier to obtaining the appropriate skill base for 

financial management.

MESSAGE | FEDERAL MANAGERS’ FINANCIAL INTEGRITY ACT REPORT

U

BUDGET, FINANCE, AND ACCOUNTING

SEMINAR SERIES

Seminar 1: 

Closing and Canceling Entries Using the SGL

Covered the quarterly and annual requirements to make 

adjusting and accrual entries in preparation for reporting. 

The reason and structure of the entries were discussed 

along with the sequencing. The year-end closing entries 

and ultimate canceling entries for appropriated funds were 

described in detail.

Seminar 2: 

Federal Government Obligations—

Concepts and Controls

Discussed the definition and concept of federal obligations 

as compared to cash based budgeting. The basic requirement for and types of documentation to support obligations will be discussed. The session will also discuss some 

of the basic legal controls and limitations of the obligation 

process. The process of creating, adjusting and reusing 

obligated authority will be explained.

Seminar 3: 

The Federal Programming, Planning 

and Execution Concept

Explained the process of programming resources for the 

out-years, planning for the budget process and executing 

controls and reports of the current year. This overview included the discussion of the budgeting and distribution of 

resources and the need for establishing and tracking a 

financial plan.

Seminar 4:

Overview of the Federal 

Agency Reports and Reporting Process

Discussed the timeline and requirements for Federal reporting as required by the Office of Management and 

Budget. The discussion included a review of the form and 

content of the General Purpose Federal Financial Reports 

with all the requisite parts and supporting data to include 

the six basic federal reports.

Seminar 5: 

Development and Relationships 

of Financial and Management Reporting

Discussed the requirements and structure of reporting in 

an organization. An explanation of how reports should be 

designed to meet the financial and managerial needs without creating additional workload was provided. Discussion 

included how to identify the key elements of information in 

designing internal reports while satisfying external report 

requirements.
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Financial Systems

Odyssey/FOR Post replaced an antiquated and inefficient mainframe technology and systems that could 

not satisfy current federal regulations or external 

financial requirements mandated by the OMB and 

the Department of Treasury on October 1, 2003. 

Prior to that date, the agency maintained a large 

number of stand-alone systems to satisfy financial 

management requirements beyond basic accounting. 

Most of the interfaces among these systems were 

manual and data was re-keyed multiple times. These 

systems included: IPBS (the detailed operating 

budget review system), procurement, international 

financial operations (IFO) software for administrative and financial operations performed in more 

than 70 posts, disbursing systems, domestic cuffs 

(the previous accounting system) maintained by the 

budget implementation teams, a Volunteer database 

for readjustment and other allowances, private-sector funds tracking, and many others. Maintaining 

interfaces among these systems was very time consuming, and keeping them in-sync required detailed 

reconciliation. The new financial management system is based on COTS software that integrates and 

streamlines the financial management and reporting 

process. Odyssey/FOR Post improves auditability 

and reduces duplicative and error-prone data entry. 

Data is entered only once. A transaction starts with 

a requester and passes through the entire financial 

process without data re-entry.

The Peace Corps investment review board, as configured at the time of investment, approved funding 

for the Odyssey/FOR Post project beginning in FY 

1999, and again during the FY 2001, FY 2002, FY 

2003 and FY 2004 IPBS approval processes. The 

Odyssey/FOR Post project is progressing toward full 

implementation and completion by FY 2007. The 

October 1, 2003, implementation date for domestic 

operations occurred as scheduled. Production operations and plans for project activities going forward 

are reviewed and monitored during the quarterly 

programming and budget review process, and 

through periodic reporting to the Director through 

the investment review board. As each phase of the 

Odyssey project completes, a post-implementation 

review will be conducted to ensure the investment 

continues to provide expected benefits. 

The Odyssey project has been planned and is being 

implemented in three major phases to meet organizational capacity restrictions. A schedule of the 

planned release dates follows.

U.S. Standard

General Ledger

Asset Purchasing Management*

ORACLE

Financial Analyzer ProjectAccounting

PRISM

SATO

Citibank

eTravel*

Travel Manager*

GSA

Treasury

State

USDA/NFC

HR

Payables*

Accounts

Payable

Federal 

Administrator

FOR Post

Accounts

Receivable

PRISM

Figure: Odyssey/FOR post at Full Implementation

* Implementation scheduled for fiscal years 2005–2007
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• Phase I: Odyssey/FOR Post phase I replaced 

the current financial systems with a COTS 

enterprise resource planning (ERP) package for 

better compliance, integration, and efficiency. 

Phase I includes the Oracle Federal Financial 

applications and which at that time was a 

JFMIP-certified ERP solution. General ledger 

management, core financial management, funds 

management and budget execution, accounts 

payable (including 1099/W2 tax processing), 

accounts receivable, financial reporting, project 

accounting, and human resources management 

system (HRMS) payroll. Implementation 

began October 1, 2003, with operations and 

maintenance thereafter.

 During FY 2004, the Odyssey team 

stabilized the production environment and 

planned, scoped and analyzed the next 

phase of implementation. JFMIP enhanced 

the certification requirements just prior 

to Peace Corps’ implementation of Oracle 

Federal Financials, 11.5.7. Analysis, testing, 

documentation, and preparation for upgrading 

to the latest JFMIP-certified version of 

Oracle Federal Financial is now underway. 

An upgrade of the procurement management 

COTS software was completed in June 2004. 

This supports compliance with GSA reporting 

requirements for agency acquisitions and 

contracts management under FPDS.

• Phase II: The next phase of implementation 

planned for FY 2005, includes a full 

implementation of the JFMIP upgrade to 

Oracle Federal Financials; process and system 

changes to the U.S. Department of State 

financial system interface; foreign currency 

gains and losses enhancements; migration 

of the Volunteer readjustment allowance 

accounting and administration system to 

Oracle’s HRMS, and COTS application system 

patches. Preparation for the implementation of 

a fixed assets and property management system, 

Volunteer in-country allowance, and budget 

formulation are planned for FY 2005.

• Phase III: Plans for Odyssey/FOR Post 

Phase III include implementation rollout to 

overseas installations as well as full-blown 

cost accounting across the agency. Agency IT 

infrastructure, communications and security 

capacities and resources are an integral 

part of Phase III planning and decisionmaking. Planning for travel management 

implementation and integration with Odyssey 

is scheduled for implementation in FY 2005, FY 

2006 and FY 2007.

ODYSSEY MODULES

IN PRODUCTION

• Purchasing (PO)—reserves and obligates funds

• PRISM—contract management tool by 

CompuSearch

• Accounts payable (AP)—records items for 

payment

• Accounts receivable (AR)—reimbursable 

agreements, donors, travel advances, etc.

• Human resources (HRMS)—partial 

implementation—personal services contractor 

payments—Future: Volunteer readjustment and 

living allowances

• Project accounting (PA)—tracks Volunteer 

projects

• General ledger (GL)—basis for financial 

statements

• Oracle financial analyzer (OFA)—budget allocation 

and management

• Federal administrator (FD)—management 

reporting—information retrieval from all modules

FOR POST ADMINISTRATIVE AND

FINANCIAL MANAGEMENT SYSTEM 

IN PRODUCTION

• Commit and obligate funds under budget authority

• Request check and EFT payments

• Transact cashiering activities

• Real-time financial management reports

• Single point of data entry—forms are generated

from data entered into system

• Electronic interface to Odyssey

• Automatically reconciles to Odyssey records
Peace Corps

Consolidated Balance Sheet

As of September 30, 2004

(In Thousands)

FY2004 FY2003*

Assets

Intragovernmental Assets

 Fund Balance With Treasury (Note 3) $ 95,488

 Non Entity Funds (Note 2) 25,287

 Accounts Receivable (Note 5) 1,127

Total Intragovernmental Assets 121,902

Assets With the Public

 Cash, Foreign Currency, and Other Monetary Assets (Note 4) 134

 Accounts Receivable (Note 5) 31

 General Property, Plant, and Equipment -

 Other

 Prepaid Volunteer Living Allowances (Note 7) 3,665

 Other Assets (Note 8) 632

Total Assets With the Public 4,462

Total Assets $ 126,364

Liabilities

Intragovernmental Liabilities 

 Other (Note 10) $ 46

 Unfunded FECA Liability (Note 9) 24,553

Total Intragovernmental Liabilities 24,599

Liabilities With the Public

 Accounts Payable 6,161

 Federal Employee and Veterans Benefits (Note 9) 125,709

 Other Liabilities With the Public

 Other Liability - Non-Entity Funds 25,287

 Other Unfunded Employment Related Liability (Note 9) 13,973

 Accrued Funded Payroll and Leave 2,880

 Unfunded Annual Leave (Note 9) 3,216

Total Liabilities With the Public 177,226

Total Liabilities (Note 10) 201,825

Net Position

 Unexpended Appropriations 95,451

 Less: Cumulative Results of Operations 170,912

Total Net Position (Note 14) $ (75,461)

Total Liabilities/Net Position $ 126,364

*There were no reports submitted for End of Year FY2003

The Accompanying Notes Are An Integral Part Of The Statements
Peace Corps

Consolidated Statement of Net Cost

For the Fiscal Year Ended September 30, 2004

(In Thousands)

FY2004 FY2003*

Program Costs:

 Intragovernmental Gross Costs $ 55,347

 Less: Intragovernmental Earned Revenues (Note 15) 4,279

 Intragovernmental Net Costs 51,068

 Gross Costs With the Public 439,562

 Less: Earned Revenues From the Public -

 Net Costs With the Public 439,562

 Total Net Costs 490,630

Costs Not Assigned to Program -

Less: Earned Revenues Not Attributed to Program -

Net Cost of Operations $ 490,630

*There were no reports submitted for End of Year FY2003

The Accompanying Footnotes Are An Integral Part Of The Statements
Peace Corps

Consolidated Statement of Changes in Net Position

For the Fiscal Year Ended September 30, 2004

(In Thousands)

FY2004 FY2004 FY2003* FY2003*

Cumulative Results of 

Operations

Unexpended 

Appropriations

Cumulative Results of 

Operations

Unexpended 

Appropriations

Beginning Balances $ (3,655) $ 99,358

Prior-Period Adjustments (+/-) - -

Beginning Balances, As Adjusted (3,655) 99,358

Budgetary Financing Sources:

 Appropriations Received - 310,000

 Other Adjustments (Rescissions, etc.) (+/-) (8) (2,543)

 Appropriations Used 311,364 (311,364)

 Transfers-In/Out Without Reimbursement (1,153) -

Other Financing Sources - -

 Donations and Forfeitures of Property 7,885 -

 Transfers-In/Out Without Reimbursement 853 -

 Imputed Financing From Costs Absorbed by Others 4,448 -

 Other (16) -

Total Financing Sources 323,373 (3,907)

Net Cost of Operations (+/-) (490,630) -

Ending Balances $ (170,912) $ 95,451

*There were no reports submitted for End of Year FY2003

The Accompanying Footnotes Are An Integral Part Of The Statements
Peace Corps

Combined Statement of Budgetary Resources

For the Fiscal Year Ended September 30, 2004

(In Thousands)

FY2004 FY2003*

BUDGETARY RESOURCES

 Budgetary Authority:

 Appropriations Received $ 310,000

 Unobligated Balance

 Brought Forward, Oct 1 17,501

 Net Transfers, Balances, Actual

 Spending Authority from Offsetting Collections (Gross)

 Earned

 Collected 4,069

 Receivable from Federal Sources 1,127

 Change in Unfilled Customer Orders

 Advance Received 29

 Without Advance from Federal Sources (203)

 Recoveries of Prior-Year Obligations: -

 Temporarily Not Available Pursuant to Public Law -

 Less: Permanently Not Available

 Cancellations of Expired and No-Year Accounts 998

 Enacted Reductions 1,829

 Total Budgetary Resources $ 329,696

STATUS OF BUDGETARY RESOURCES

 Obligations Incurred (Note 15)

 Direct

 Category A $ 302,510

 Reimbursable

 Category A 4,105

 Unobligated Balances

 Apportioned:

 Balance Currently Available 9,673

 Unobligated Balances Not Available

 Other 13,408

 Total Status of Budgetary Resources $ 329,696

RELATIONSHIP OF OBLIGATIONS TO OUTLAYS

 Obligated Balance, Net as of October 1 $ 76,892

 Obligated Balance, Net, End of Period

 Accounts Receivable 1,127

 Unfilled Customer Orders from Federal Sources 618

 Undelivered Orders 65,246

 Accounts Payable 9,041

 Outlays:

 Disbursements 310,042

 Collections 4,098

 Net Outlays 305,944

 Less: Distributed Offsetting Receipts -

 Net Outlays $ 305,944

*There were no reports submitted for End of Year FY2003

The Accompanying Footnotes Are An Integral Part Of The Statements
Peace Corps

Consolidated Statement of Financing

For the Fiscal Year Ended September 30, 2004

(In Thousands)

FY2004 FY2003*

Resources Used to Finance Activities

Budgetary Resources Obligated:

 Obligations Incurred $ 306,616

 Less: Spending Authority from Offsetting Collections and Recoveries 5,022

 Obligations Net of Offsetting Collections and Recoveries 301,594

 Less: Offsetting Receipts - 

 Net Obligations 301,594

Other Resources

 Donations and Forfeitures of Property 7,885

 Transfers In/Out Without Reimbursement 853

 Imputed Financing from Costs Absorbed by Others 4,448

 Other Resources (17)

 Net Other Resources Used to Finance Activities 13,169

Total Resources Used to Finance Activities 314,763

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

 8,711

 Resources that Fund Expenses Recognized in Prior Periods - 

 Credit Program Collections That Increase Liabilities for Loan Guarantees - 

 Resources that Finance the Acquisition of Assets - 

Other Resources or adjustments to Net Obligated Resources that do not affect 

Net Costs of Operations

 (300)

Total Resources Used to Finance Items Not part of the Net Cost of Operations 8,411

Total Resources Used to Finance the Net Cost of Operations 323,174

Components of the Net Cost of Operations that Will Not Require or Generate 

Resources in the Current Period

Components Requiring or Generating Resources in Future Periods:

Increase in Annual Leave Liability 3,216

Increase in Environmental and Disposal Liability - 

Upward/Downward Reestimates of Credit Subsidy Expense (+/-) - 

Increase in Exchange Revenue Receivable from the Public -

Other (+/-) 164,235

Total Components of Net Cost of Operations That Will Require or Generate 

Resources in Future Periods (Note 9) 167,451 

Components Not Requiring or Generating Resources

Depreciation and Amortization - 

Revaluation of Assets or Liabilities (+/-) (16)

Other (+/-) 21

Total Components Not Requiring or Generating Resources 5 

Total Components of the Net Cost of Operations that Will Not Require or Generate 

Resources in the Current Period 167,456 

Net Cost of Operations $ 490,630

*There were no reports submitted for End of Year FY2003

The Accompanying Footnotes Are An Integral Part Of The Statements
NOTES TO THE FINANCIAL STATEMENTS 

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 meet their need for trained men 

and women; promote a better understanding of the American people abroad; and, develop a 

better understanding of other peoples on the part of the American people. 

The agency is presenting its first financial statements prepared in conformity with federal 

accounting standards, reflecting the results of operations to support the Volunteers in 73 

countries. 

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 and financing activities of the agency in

accordance with generally accepted accounting principles (GAAP) in the United States. The 

American Institute of Certified Public Accountants (AICPA) Council designated the Federal 

Accounting Standards Advisory Board (FASAB) as the body that established accounting 

principles for federal entities. These statements have also been prepared in accordance with the 

Office of Management and Budget (OMB) Bulletin 01-09, Form and Content of Agency 

Financial Statements, as amended, and the agency accounting principles which are 

summarized in these notes. 

Since this is the first year to prepare statements in conformity with federal accounting 

standards, only the current year statements will be reflected. 

The 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 contributors, employees, contractors and vendors. 

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THE PEACE CORPS |
NOTES TO THE FINANCIAL STATEMENTS 

FEDERAL F INANCIAL STATEMENTS 

Statement Federal Objective 

Balance Sheet The 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 Changes in 

Net Position

The 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 Net Cost The Statement of Net Cost is intended to show 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 Budgetary

Resources 

The 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. 

Statement of Financing The Statement of Financing demonstrates the relationship between 

budgetary amounts reported on the Statement of Budgetary Resources to 

the proprietary amounts reported on the Statement of Net Cost. The focus 

of this presentation is to reconcile net obligations to the net cost of 

operations. 

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, 

funds availability is recorded based upon legal considerations and constraints. As a result, 

certain line items on the proprietary financial statements may not equal similar line items on 

the budgetary financial statements. 

The agency receives financing sources through direct appropriations from the general fund of 

the Treasury to support its operations. This financing source, appropriations used, is 

recognized to the extent these funds have been consumed. 

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THE PEACE CORPS |
NOTES TO THE FINANCIAL STATEMENTS 

d) Fund Accounting Structure 

The agency’s financial activities are accounted for by federal account symbol. They include 

the accounts for appropriated funds and other fund groups described below for which the Peace 

Corps maintains financial records. 

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 a statute that designates the fund as a special or trust fund.

Deposit Funds – These funds consist of monies held temporarily by Peace Corps 

as an agent for others. These include allowance and allotment accounts for 

employees and volunteers. 

General Fund Receipt Accounts – These funds consist of monies collected by Peace Corps that 

are returned to the U.S. Treasury and not available for Peace Corps use. 

e) Budget Authority 

Congress annually passes appropriations that provide the agency with authority to obligate 

funds for necessary expenses to carry out operations. The annual budget authority funds are 

available for one year beyond the close of that fiscal year for obligations and five years for 

those portions of unliquidated obligations. After the five year period, all unliquidated 

obligations for the respective fiscal year will be closed and funds 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 multi-year appropriations and 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. 

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THE PEACE CORPS |
NOTES TO THE FINANCIAL STATEMENTS 

f) Revenues and Other Financing Sources 

Peace Corps operations are financed through appropriations, proceeds from the sale of 

property, host country contributions, private sector funds, interagency agreements and nonexpenditure transfers. 

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. 

Generally, donations received in the form of cash or financial instruments are recognized as 

revenue as their fair value in the period received. 

g) Fund Balance with the U.S. Treasury 

The Fund Balance with Treasury consists of appropriated funds that are available to pay

current liabilities and finance authorized purchase commitments, and restricted funds which 

include deposit and suspense accounts. 

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. 

Financial support is provided by the Department of State for operations overseas. For the 

overseas operations, monies provided through the Department’s Financial Service Centers are 

held in an imprest fund by a Peace Corps cashier who is personally responsible for that fund. 

At each of the two Financial Service Centers, a U.S. Disbursing Officer has the delegated 

authority to disburse funds on behalf of the Treasury. 

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. dollars based on the rate of exchange as of 

the date of the transaction. Foreign currency payments are made by the U.S. Disbursing 

Officers located at the Department of State’s Financial Service Centers in Charleston, South 

Carolina and Bangkok, Thailand. 

i) Accounts Receivable 

Accounts receivable include amounts due from other federal entities and from current and 

former employees and volunteers. 

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THE PEACE CORPS |
NOTES TO THE FINANCIAL STATEMENTS 

j) Advances and Prepayments 

Payments in advance of the receipt of goods and services are recorded as advances and 

recognized as expense when the related goods and services are received. Advances are made 

principally to agency employees for official travel and 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 include food, clothing, household items, rent, utilities and local transportation that

are based on local living standards and costs. 

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

The agency will review and revise the policies and procedures for capitalized property and 

equipment and related depreciation to be in accordance with Generally Accepted Accounting 

Principles (GAAP). 

l) 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 and 

liabilities resulting from the agency’s custodial activities. Also, the Government acting in its 

sovereign capacity can abrogate Peace Corps’ liabilities (other than contracts). 

m) 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 

Department of Labor (DOL) for employees under the agency’s jurisdiction. 

II. Future Workers’ Compensation Benefits – FECA provided income and medical costs 

protection to cover Federal employees injured on the job or who have incurred a workrelated occupational disease, and beneficiaries of employees whose death is attributable to 

job-related injury or occupational disease. The U.S. Department of Labor (DOL) 

administers the FECA program. DOL initially pays valid claims and bills the agency on an 

annual basis. 

III. Accrued leave – A liability for annual leave is accrued as leave is earned and paid when 

leave is taken. Accrued annual leave is paid from future funding sources and is a liability

that 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 matches the 

employee contributions to each program to pay for current benefits. 

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THE PEACE CORPS |
NOTES TO THE FINANCIAL STATEMENTS 

V. Post-Retirement Health Benefits and Life Insurance – Agency employees eligible to 

participate in the FEHEP and the FEGLIP may continue to participate in these programs 

during retirement. 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 

(ORB) at the time the employee’s services are rendered. The ORB expense is financed by

OPM and offset by the agency through the recognition of an imputed financing source on 

the Statement of Financing. During fiscal year 2004 the cost factor related to FEHEP and 

FEGLI was $3 million and to FEGLIP was 0.02 percent of basic pay per employee 

enrolled. 

VI. Employee Retirement Benefits – Peace Corps direct hire employees participate in one of 

three retirement systems: Civil Service Retirement System (CSRS), Federal Employees’

Retirement System (FERS), or the Foreign Service Retirement and Disability System

(FSRDS). Approximately 6 percent of Peace Corps employees participate in CSRS, 92 

percent in FERS, and 2 percent in FSRDS. 

Employees covered under CSRS contribute 7% of their salary; the agency contributes 7%. 

Employees covered under CSRS also contribute 1.45% of their salary to Medicare 

insurance; the agency makes a matching contribution. On January 1, 1987, FERS went into 

effect pursuant to Public Law 99-335. Most employees hired after December 31, 1983, are 

automatically covered by FERS and Social Security. Employees hired prior to January 1, 

1984, were allowed to join FERS or remain in CSRS. Employees participating in FERS 

contribute 0.80% of their salary, with the agency making contributions of 10.70%. FERS 

employees also contribute 6.20% to Social Security and 1.45% to Medicare insurance. The 

agency makes matching contributions to both. A primary feature of FERS is that it offers a 

Thrift Savings Plan (TSP) into which the agency automatically contributes 1% of pay and 

matches employee contributions up to an additional 4%. 

Foreign Service employees hired prior to January 1, 1984 participate in the FSRDS with 

certain exceptions. FSRDS employees contribute 7.25% of their salary; the agency

contributes 7.25%. FSRDS employees contribute 1.45% of their salary to Medicare; the 

agency matches their contributions. 

Foreign Service Nationals (FSN) 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 agency does not report CSRS, FERS, FEHBP or FEGLIP assets, accumulated plan 

benefits, or unfunded liabilities applicable to its employees; OPM reports this information. 

As required by SFFAS No. 5, Accounting for Liabilities of the Federal Government, the 

agency reports the full cost of employee benefits for the programs that OPM administers. 

The agency recognizes an expense and imputed financing source for the annualized 

unfunded portion of CSRS, post-retirement health benefits, and life insurance for 

employees covered by these programs. The agency recognized $1.4 million in 2004 for 

unfunded pension and post-retirement benefits. The additional costs are not actually owed 

or paid to OPM, and thus are not reported on the Balance Sheet as a liability, but instead 

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THE PEACE CORPS |
NOTES TO THE FINANCIAL STATEMENTS 

are reported as an imputed financing source from costs absorbed from others on the 

Statement of Changes in Net Position. 

VII. Valuation of Foreign Service National (FSN) and Foreign National Personal Service

Contractor (PSC) Separation Liability – Separation payments are made to eligible FSN 

employees and foreign national personal service contractors at posts in countries that 

require a separation payment. The amount required to estimate the current and future costs 

of the separation pay is determined annually. 

The estimates for the FSN and Foreign National PSC Severance liability are based upon 

the same methodology. Until systems are in place to track the liability by individual and 

local labor law requirements, the estimate is based on an average of two months salary for 

every year of service. 

n) 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.

o) Use of Estimates 

The preparation of financial statements required management to make 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. 

p) Interest on Late Payments 

The agency on occasion 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. 

q) Intragovernmental Net Costs 

The Statement of Net Costs 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. 

r) Beginning Balances 

The agency implemented a new financial management system on October 1, 2003, replacing a 

legacy system that was not U.S. Standard General Ledger (USSGL) compliant. 

Opening balances brought forward to the new system reflected the final balances for the 

Treasury Account Fund Symbol (TAFS). The obligations, receivables and payables detail from 

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THE PEACE CORPS |
NOTES TO THE FINANCIAL STATEMENTS 

the legacy system were transferred. Data was modified based on proper documentation. All 

non-standard accounts were eliminated and balances moved to the appropriate USSGL 

accounts. Applicable accounts and budgetary authorities were adjusted to the U.S. Treasury

fund balances. Due to this approach there may be items that could create a future liability that 

have not been captured in the beginning balances. 

s) Adjustments to Maintain Inherent Account Relationship Integrity 

At the end of the 2004 fiscal year, the working trial balance was reviewed and a determination 

was made that the reports were out of balance due to missing relationships between funds and

authority and authority and appropriated funds. For instance, an expense was incurred in the 

proprietary accounts, but the associated entries had not been taken to all of the related 

budgetary accounts. The problem was not with the data but with the posting logic that 

maintains the USSGL relationships between the proprietary and the budgetary activities. 

Criteria were established to govern changes to the trial balance. Since the Treasury funds 

represent budget authority in the government system, the fund balances in the financial system

were confirmed to match the Treasury balances. Budgetary and proprietary accounts are 

related in several dimensions. There is a direct correlation between the unused authority and 

the unused appropriation value. With the correct fund balances and the related authority in line, 

the unexpended appropriation would also be correct. 

Once the analysis was complete, the adjusting entries were made to the accounting system at 

the highest levels of accounting. All adjustments were made based on standard posting logic of 

the U.S. Treasury’s approved USSGL transaction codes. 

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THE PEACE CORPS |
NOTES TO THE FINANCIAL STATEMENTS 

NOTE 2 Non-Entity Assets | Balance Sheet 

Non-entity assets are comprised of deposit and suspense funds temporarily held on behalf of 

the U.S. Government. Below are the Treasury Fund balances as of September 30, 2004: 

Trust Fund Accounts 

September 30, 2004

In Thousands 

Gifts and Contributions (Cash) $ 849 

Advances from Foreign Governments 52

Foreign Service National (FSN) Separation Liability Trust Fund 6,561 

 

Special Fund Accounts 

Proceeds of Sales 1,490 

Clearing Account (91) 

 

Deposit Fund Accounts 

Volunteer Readjustment Allowance 16,455 

Volunteer Payroll Allotment Account (Payroll Savings Bond Account) (29)

Total Non-Entity Assets $ 25,287 

Trust Fund Accounts – Gifts and Contributions represents funds from public, nongovernmental 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 cost of Foreign Service National employees for separation pay based 

on local labor law. 

Special Fund Accounts – The Proceeds of Sales funds represent cash received from the sale of 

a vehicle or non-vehicle asset and available to be reinvested in a like-kind replacement 

purchase; i.e., proceeds from vehicle used to purchase a replacement vehicle. The Clearing 

Account is a temporary holding account for unidentified intragovernmental fund activity to be 

analyzed and placed into proper fund account. 

Deposit Fund Accounts – The Volunteer Readjustment Allowance is an allowance earned by 

volunteers for each month of satisfactory service and payable upon his or her 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. 

Disclosure: Receivables for the Volunteer Readjustment Allowance Fund – On 

September 30, 2004, this Deposit Fund had a receivable in the amount of $274K. 

This amount consists of receivables from volunteers for $18K and from the Internal 

Revenue Service for $256K related to a Form 941 quarterly payment for withheld income 

and FICA taxes for volunteers. 

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THE PEACE CORPS |
NOTES TO THE FINANCIAL STATEMENTS 

 PERFORMANCE AND ACCOUNTABILITY REPORT | FISCAL YEAR 2004

Page 66

NOTE 3 Fund Balance with Treasury | Balance Sheet 

General Fund Balance 

September 30, 2004

In Thousands 

Status of Fund Balance with Treasury 

(1) Unobligated Balance 

 (a) Available $ 9,673 

 (b) Unavailable 13,408 

(2) Obligated Balance not yet Disbursed 72,407 

Fund Balance with Treasury $ 95,488 

The Fund Balance with Treasury is equal to the unobligated balance of funds 

plus the obligated balance not yet disbursed. 

Available Unobligated Balance – Comprised of apportionments available for allotment 

plus allotments available for obligation or commitment. 

Unavailable Unobligated Balance – Comprised 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 adjustment to existing 

obligations. 

Statement of Differences – As of September 30, 2004, the Statement of Differences 

(SF6652) from the U.S. Treasury reflected a net difference of $783K for deposits and 

disbursements. The process and tools necessary to reconcile the details with the U.S. 

Treasury will be developed in Fiscal Year 2005. 

NOTE 4 Cash and Other Monetary Assets | Balance Sheet 

Cash and Other Monetary Assets 

September 30, 2004

In Thousands 

Cash $ 134 

Foreign currency -0-

Other Monetary Assets -0- 

Total Cash and Other Monetary Assets $ 134 

The cash balance represents imprest funds at Headquarters ($100K) and at the 

East Timor post ($34K), both held in U.S. currency. 

THE PEACE CORPS |
NOTES TO THE FINANCIAL STATEMENTS 

NOTE 5 Net Accounts Receivable | Balance Sheet 

 

September 30, 2004

In Thousands 

Accounts Receivable - Intragovernmental $ 1,127 

Accounts Receivable from the Public 31 

Total Accounts Receivable $ 1,158 

Intragovernmental receivables are due from other federal agencies for reimbursable 

agreements. All intragovernmental receivables are considered collectable. 

Accounts receivable from the public are from non-federal entities consisting 

primarily of receivables from employees. 

There will be no allowance for doubtful accounts as of September 30, 2004 due to the 

relatively small number and dollar amount of non-federal receivables, and to the lack 

of a standard procedure for estimating uncollectible accounts. 

NOTE 6 General Property, Plant, and Equipment | Balance Sheet 

The Fixed Assets module was not part of the implementation of the new financial management 

system, Odyssey/FOR Post. Current plans are to inventory and establish property values in the 

next year and bring the Fixed Assets module on line in the Fiscal Year 2006. 

General PP&E has been recorded in the financial system as an expense for fiscal year ending 

September 30, 2004 reporting purposes. PP&E balances were not brought forward from the 

non-USSGL compliant legacy system. 

NOTE 7 Prepaid Volunteer Living Allowances | Balance Sheet 

 

September 30, 2004

In Thousands 

Prepaid Volunteer Living Allowances $ 3,665 

Prepaid Volunteer Living Allowances – Volunteer allowances are sent to the posts prior 

to the due date so the posts can assure timely payments of the allowances. Payments received 

prior to the due date are held at the post until the payments are due. Volunteers are entitled to 

these allowances so they may serve effectively and safely overseas. Once paid, these allowances will cover from one to three months of future rent, utilities and local transportation. 

 PERFORMANCE AND ACCOUNTABILITY REPORT | FISCAL YEAR 2004

Page 67

THE PEACE CORPS |
NOTES TO THE FINANCIAL STATEMENTS 

 PERFORMANCE AND ACCOUNTABILITY REPORT | FISCAL YEAR 2004

Page 68

NOTE 8 Other Assets | Balance Sheet 

 

September 30, 2004

In Thousands 

Relocation Advances to Employees $ 66 

Advances to FN-PSCs 101 

Travel Advances to Employees 465 

Total Other Assets $ 632 

Relocation Advances to Employees – Direct-hire employees are provided a relocation 

advance when appropriate.

Advances to Foreign National Personal Service Contractors (FN-PSC) – The posts 

were forwarded the Foreign National Personal Service Contractors’ bi-weekly payment 

prior to the pay period ending October 2, 2004. This amount represents one day of 

advanced pay processed for Friday, October 1, 2004. 

Travel Advances to Employees – Travel advances are provided to employees when 

appropriate. Advances remain in the financial record until the obligation is cleared or 

cancelled. 

The Peace Corps currently does not have any amounts for other assets on its books 

except for Advances. There is a current project underway to identify, value, and report 

all the property at its headquarters and 70 world-wide locations. 

THE PEACE CORPS |
NOTES TO THE FINANCIAL STATEMENTS 

NOTE 9 Liabilities Not Covered by Budgetary Resources

Future Funding Requirements 

Intragovernmental Liabilities 

September 30, 2004

In Thousands 

Unfunded FECA Liability $ 24,553 

 

Liabilities with the Public 

Unfunded Annual Leave 3,216 

Other Unfunded Employment-Related Liability 13,973 

Federal Employee and Veterans Benefits 125,709 

Total Liabilities Not Covered by Budgetary Resources $ 167,451 

Unfunded FECA Liability – A liability for the direct dollar costs of compensation and medical 

benefits paid on the agency’s behalf by DOL. 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; i.e., costs for the DOL 2004 billing period will be included in the agency’s budget 

request for Fiscal Year 2006. 

Unfunded Annual Leave – A liability for annual leave is accrued as leave is earned and paid 

when leave is taken. The balance represents the estimated value of annual leave for U.S. hired

employees earned as of September 30, 2004. These payments are made when the individual 

terminates and paid for out of current appropriations. 

Other Unfunded Employment Related Liability - A liability for the Foreign National Personal 

Service Contractor (PSC) estimated severance. Lump-sum payments are made to eligible 

international long-term personal service contractors (PSC) based on local labor law 

requirements for separation. These payments are made when the individual terminates and paid 

for out of current appropriations. 

Unfunded Liabilities Disclosure – The valuation of the accrued annual leave for Foreign 

Service National (FSN) employees and the Foreign National PSCs has not 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 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. 

Federal Employee and Veterans Benefits – Liability for the actuarial value of future payments 

for FECA as estimated by the Department of Labor for the agency. 

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THE PEACE CORPS |
NOTES TO THE FINANCIAL STATEMENTS 

 PERFORMANCE AND ACCOUNTABILITY REPORT | FISCAL YEAR 2004

Page 70

NOTE 10 Other Liabilities | Balance Sheet 

Intragovernmental Liabilities 

September 30, 2004 

In Thousands 

Liability for Deposit Funds, Clearing Accounts and Undeposited Collections $ 17 

Advances from Others 29 

Total Other Intragovernmental Liabilities 46 

Unfunded FECA Liability (Note 9) 24,553 

Liabilities with the Public 

Accrued Funded Payroll and Leave 2,880 

Unfunded Annual Leave (Note 9) 3,216 

Accounts Payable 6,161 

Other Unfunded Employment-Related Liability (Note 9) 13,973 

Non-Entity Assets (Note 2) 25,287 

Federal Employee and Veterans Benefits 125,709 

Total Liabilities $ 201,825 

Liability for Deposit Funds, Clearing Accounts and Undeposited Collections – Amounts 

offsetting undeposited collections and collections deposited in deposit funds and clearing 

accounts, including suspense accounts, awaiting disposition or reclassification. 

Advances from Others – The balance of amounts advanced by other federal entities for goods 

and services to be furnished; i.e., money advance for SPA grants. 

Unfunded FECA Liability – A liability for the direct dollar costs of compensation and medical 

benefits paid on the agency’s behalf by DOL. 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; i.e., costs for the DOL 2004 billing period will be included in the agency’s budget 

request for Fiscal Year 2006. 

Accrued Funded Payroll and Leave – The estimated liability for salaries, wages and funded 

annual and sick leave that have been earned but are unpaid. 

Unfunded Annual Leave – A liability for annual leave is accrued as leave is earned and paid 

when leave is taken. The balance represents the estimated value of annual leave for U.S. hired

employees earned as of September 30, 2004. These payments are made when the individual 

terminates and paid for out of current appropriations. 

Other Unfunded Employment Related Liability - A liability for the Foreign National Personal 

Service Contractor (PSC) estimated severance. Lump-sum payments are made to eligible 

international long-term personal service contractors (PSC) based on local labor law 

requirements for voluntary separation. These payments are made when the individual 

terminates and paid for out of current appropriations 

Non-Entity Funds – Fund balances comprised of deposit and suspense funds temporarily held 

on behalf of the U.S. Government. For details of the fund balances, see Note 2. 

Federal Employee and Veterans Benefits – Liability for the actuarial value of future payments 

for FECA as estimated by the Department of Labor for the agency. 

THE PEACE CORPS |
NOTES TO THE FINANCIAL STATEMENTS 

 PERFORMANCE AND ACCOUNTABILITY REPORT | FISCAL YEAR 2004

Page 71

NOTE 11 Commitments and Contingencies | Disclosure 

The agency is committed under obligations for goods and services which have been 

ordered but not yet received (undelivered orders) at fiscal year end. Undelivered orders 

were $69,543K as of September 30, 2004. 

In the opinion of the management and legal counsel, the likelihood that the agency is liable 

for contingent liabilities related to administrative proceedings, legal actions or claims is 

neither probable nor measurable as of this statement date. The ultimate resolution of these 

proceedings, actions and claims will not materially affect the financial position or results of 

operations of the agency. 

Disclosure is required if there is a reasonable possibility that a loss may incur. The 

likelihood of a reasonable possibility of a loss related to administrative proceedings, legal 

actions or claims is estimated to be $1,050K as of this date. 

Obligations related to canceled appropriations for which the agency has contractual 

commitments for payout are estimated to be $180K as of September 30, 2004. 

THE PEACE CORPS |
NOTES TO THE FINANCIAL STATEMENTS 

NOTE 12 Leases | Disclosure 

CAPITAL LEASES: 

Inventory and valuation of capital leases will be included in the plans to complete the 

recording of the agency’s inventory of property, plant and equipment (PP&E). 

OPERATING LEASES: 

The agency rents 246,306 square feet of space in both commercial and government-owned 

properties for use as offices, storage and parking within the United States. All leases, whether 

commercial or government-owned properties, are managed by the General Services 

Administration (GSA) as GSA is the sole federal government manager of domestic leases. 

Some leases provide for tenant improvement allowances and provide that these costs be 

amortized over the length of the leases. Under the terms of the lease, the agency agrees to 

reimburse the landlord for the principal balance of the unamortized portion of the tenant 

improvement allowance in the event the agency vacates the space before lease expiration. 

The lease expiration dates range from 2004 and 2012.

Domestic rent expenditures for the year ended September 30, 2004 were $9,112K. 

The operating lease information represents the future cost of current contracts with GSA. 

Future minimum lease payments due as of September 30, 2004 are as follows: 

Fiscal Year In Thousands 

2005 $ 7,945 

2006 7,709 

2007 7,497 

2008 5,397 

2009 1,293 

Thereafter 3,499 

Total future minimum lease payments $ 33,340 

International leases are local contracts authorized by the country director of the host country. 

The agency is committed to approximately 500 international leases, which cover office and 

functional properties, and residential units at overseas posts. The majority of these leases are

short-term, operating leases. In most cases, management expects that the leases will be renewed 

or replaced by other leases. 

 PERFORMANCE AND ACCOUNTABILITY REPORT | FISCAL YEAR 2004

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THE PEACE CORPS |
NOTES TO THE FINANCIAL STATEMENTS 

NOTE 13 Imputed Financing | Disclosure 

 

2004 

In Thousands 

Federal Employees Health Benefit Program (FEHBP) $ 3,008 

Federal Employees Group Life Insurance Program (FEGLIP) 11 

Civil Service Retirement System (CSRS) 875 

Federal Employee’s Retirement System (FERS) 263 

Foreign Service Retirement and Disability System (FSRDS) 291 

 Total Imputed Costs $ 4,448 

Imputed financing recognizes actual costs of future benefits which include the FEHBP, 

FEGLIP and pensions benefits that are paid by other federal entities. The agency is not 

required to reimburse other entities for these costs. 

NOTE 14 Net Position | Balance Sheet 

Net position consisted of the following:

Unexpended Appropriations 

September 30, 2004 

In Thousands 

 Unobligated – Available $ 25,908 

 Undelivered Orders 69,543 

Total Unexpended Appropriations 95,451 

Less: Cumulative Results of Operations 170,912 

Total Net Position (75,461) 

Unexpended Appropriations – This amount reflects that portion of the entity’s appropriations 

represented by undelivered orders and unobligated balances. 

Cumulative Results of Operations – Net results of operations since inception plus the 

cumulative amount of prior period adjustments. This balance primarily includes liabilities 

requiring future funding. See Note 9, Liabilities Not Covered by Budgetary Resources, for 

details of liabilities requiring future funding.

 PERFORMANCE AND ACCOUNTABILITY REPORT | FISCAL YEAR 2004

Page 73

THE PEACE CORPS |
NOTES TO THE FINANCIAL STATEMENTS 

NOTE 15 Exchange Revenues | Statement of Net Cost 

 

2004 

In Thousands 

Intragovernmental Earned Revenues $ 4,279 

Earned Revenues from the Public -0- 

Total Exchange revenues $ 4,279 

Exchange revenues represent revenue from services provided. This includes reimbursable 

agreements from other government agencies such as the USAID sponsored HIV/AIDS 

education, prevention and mitigation activities and umbrella programs covering 

environment, health, youth, micro-enterprise, SPA technical assistance and economic

growth in fiscal year 2004.

There are no goods or serviced provided to the public that earn revenues for the agency. 

NOTE 16 Gross Cost and Earned Revenue by Budget Functional Classification 

Statement of Net Cost 

Intragovernmental Gross Costs – Gross costs paid to other intergovernmental agencies for 

services provided to the agency; i.e., property rental paid to the General Services 

Administration, payroll services from the National Finance Center and overseas services 

provided by the Department of State.

Intragovernmental Earned Revenue – Earned revenue received from other 

intragovernmental agencies for services provided. 

Gross Cost and Earned Revenue with the Public – Gross cost with the public are those 

incurred with non-governmental customers, including contributors, employees, contractors 

and vendors. The agency does not earn revenues from the public. 

NOTE 17 Apportionment Categories of Obligations Incurred 

Statement of Budgetary Resources

In fiscal year 2004, the agency’s apportionments received from the Office of Management 

and Budget (OMB) were all Category A, apportionments distributed by fiscal quarters. 

NOTE 18 Incidental Custodial Collections | Disclosure

The agency collected immaterial custodial revenues that were incidental to the primary

missions. Less than $200 was received to offset the cost of a Freedom of Information 

request (FOIA). 

 PERFORMANCE AND ACCOUNTABILITY REPORT | FISCAL YEAR 2004

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THE PEACE CORPS |
NOTES TO THE FINANCIAL STATEMENTS 

 PERFORMANCE AND ACCOUNTABILITY REPORT | FISCAL YEAR 2004

Page 75

Supplementary Information

Disclosure on Contributions in 2004 – 

1. Media Contributions received – The agency received $7,855K in print, radio and 

television media contributions through public service announcements. 

 

2. Host Country Contributions – The agency received cash and in-kind contributions 

from host countries. 

The estimated value of the cash contributions received in 2004 ranges from $800K to 

$900K in U.S. Dollar equivalents. These contributions are received in local currency

and maintained at post to support the volunteers. As the agency changed its financial 

management system, so did the Department of State (DOS). Reconciliation of these 

cash contributions will be possible once the DOS is able to capture the agency’s local 

currency amount and an identifier for the transaction agreed upon. The agency

anticipates the issues will be resolved and the cash contributions reconciled in fiscal 

year 2005. 

Policies and procedures will be reviewed and revised to capture the valuation of the 

in-kind host country contributions. 

THE PEACE CORPS |






















Office of Inspector General 

To: Gaddi Vasquez, Director 

From: Allan R. Gall, Acting Inspector General 

Date: October 29, 2004 

Subject: Management Challenges for the Peace Corps in FY 2005 

As required by the Reports Consolidation Act of 2000 and OMB guidance, I am pleased 

to submit our statement summarizing what the Office of Inspector General (OIG) 

considers to be the most serious management and performance challenges facing the 

Peace Corps. We have compiled this statement based on our audit and evaluation work 

and general knowledge of the agency’s operations. 

Managing Resources 

In his first State of the Union address, President Bush called for a doubling of the number 

of Peace Corps Volunteers in the field. The agency accepted this challenge and submitted 

budgets that would support annual, incremental increases in the number of Volunteers. 

The agency reports actual growth from 5925 to 7733 Volunteers in the field from the end 

of FY 2002 to the end of FY 2004. 

Management, rightly, takes pride in the agency’s increased total applications (80% of

them on-line), its increased number of diverse Americans serving as Volunteers, the 

highest appropriation in the history of the Peace Corps, and the highest number of 

Volunteers in the field in 29 years. The Peace Corps has entered or reentered 16 new 

countries in the past three years and has requests from another 30 to open programs. 

Unfortunately, the agency’s appropriations for FY 2002, 2003, and 2004, while up 

modestly, did not match the requests in the President’s budget and have not supported the 

growth in Volunteer numbers proposed in the President’s budgets. The proposed levels of 

growth were trimmed each year, but the agency maintained its commitment to growth 

and succeeded in that as noted above.

Growth occurred despite the fact that during this same period the agency incurred several 

new financial obligations. Management responded—at considerable cost—to a GAO 

report, which concluded that the agency did not have adequate systems in place to assure 

the safety and security of Volunteers. The agency created new positions throughout the 

agency, including a new Associate Director’s office for safety and security, a safety and 

security coordinator in every post overseas (70+), and regional safety and security 

coordinators at headquarters and in nine geographic areas overseas. In addition, the 

emphasis on e-government in all Federal agencies over the past half decade has presented 

significant new costs for systems and security. New legislative requirements for 

information technology security and fiscal accounting discussed later in this document 
are also new draws on agency resources. Finally, costs for operations in many of the 

agency’s 70+ programs overseas have been affected by a weak dollar. 

The agency’s commitment to growth in this environment of only moderate increases in 

appropriations and new outlays has created a taut budget environment. There are signs in 

the 70+ programs overseas that belts have been too severely tightened. In our assessments 

of overseas posts, we find even routine operating expenditures being delayed or cut, and 

requests to headquarters for unanticipated costs—or even costs associated with increased 

numbers of Volunteers in the field—being rejected. One of the more questionable costsaving decisions by some country programs has been to shorten the training period for 

Volunteers at the beginning of their service.1

 

The challenge in FY 2005 and beyond—absent significant increases in appropriations—

will be to make hard choices. At what appropriation level does the agency abandon 

growth? Should the agency ignore requests for programs in new countries, some of which 

have a compelling need, or should it accommodate this opportunity by closing some

current programs? What does the Peace Corps need to do to make a case based on the 

effectiveness of its programs overseas to justify increases in budget that do not show 

increases in numbers of Volunteers in the field? 

Budget Development and Budget Execution 

A tight budget increases the challenge to develop an accurate budget, to distribute 

resources effectively, to monitor expenditures carefully, to make adjustments as needed, 

and, in particular, to do these things through transparent and user-friendly processes. The 

analysis of needs also requires the scrutiny that transparency fosters. The assessment of 

across-the-board cuts as a tool for managing tight resources disproportionately hurts 

some operations, particularly small overseas posts and posts with a history of submitting 

trim budgets. There is every reason to expect that the FY 2005 appropriation will fall 

short of the President’s request, increasing the urgency to make the budget development 

and execution processes transparent and user-friendly. A concomitant challenge exists to 

institute improved procedures for monitoring expenditures. The existing controls often do 

not flag obvious questionable payments by overseas posts. Overseas, we regularly find 

cashiers and alternate cashiers who have not taken or not passed the cashier exam, and 

administrative officers responsible to oversee cashier operations who have not taken the 

cashier supervisor exam. In addition, the agency’s big dollar expenditures require 

analysis for savings. 

Information Technology 

The Peace Corps has made progress in recent years on the improvement of its 

information technology architecture and security management. The agency has 

reconstituted an investment review board to review major information technology 

projects, worked to develop an enterprise-wide architecture, and shown incremental 

 1

 Some posts have cut Pre-Service Training as a strategy to spend more for in-service training. This is not 

what is meant here. This is a reference to cuts made solely in order to meet budget. 

99
improvements in its information technology security management program. With these 

improvements in place, management is in a position to address a number of challenges it 

still faces with regard to information technology, some of which are listed below: 

• Many of the agency’s information systems have not received their final 

accreditations and certifications for use. 

• System life cycle development and change management practices have not yet 

been fully institutionalized. 

• Business continuity contingency planning and testing, while ongoing, has not 

reached the level where all the agency’s critical activities could be recovered 

during a major disruption. 

• Components of the information technology architecture of the agency’s 70+ 

overseas posts will no longer be supported by the manufacturers after December 

2004. Funding for and implementation of replacements for these critical 

components needs to be accelerated.

• Management controls and funding need to be in place to provide annual 

information technology security awareness training to all agency personnel, 

especially those employees with significant security responsibilities. 

Financial Management 

This has been a watershed year for the Peace Corps in its efforts to improve financial 

management. At the beginning of FY 2004, the agency completed the implementation of 

its core financial accounting systems at headquarters and its 70+ posts worldwide. This 

was the culmination of several years of effort to design and implement a modern financial 

accounting system for the Peace Corps. Much of the financial management team’s effort 

in FY 2004 has been dedicated to the post-implementation challenges associated with this 

effort. These challenges included ensuring that transactions were processed properly and 

timely as agency financial personnel learned the capabilities of the new financial 

accounting system. 

Looking forward, the next challenge for the agency is for the financial management team

to move from a transactional processing focus to a financial management focus. This 

includes: (1) setting policies and procedures in place that enable the staff to 

systematically manage the financial system; (2) strengthening internal controls, such as

financial reconciliations, to ensure the integrity of the data processed and reported; and 

(3) developing reporting tools that facilitate management of the agency’s day to day and 

month to month activities. 

During FY 2004, the agency also made some interim changes in the financial 

management team’s structure in response to the requirements of the new financial 

accounting system. The agency needs to follow through on the restructuring initiative to 

align staff resources with the new financial processes and internal control environment. 

In addition, the agency needs to hire and retain personnel with the appropriate skills and 

experience needed to maintain and improve upon the considerable progress that has been 

made in FY 2004. The implementation of a sophisticated and integrated financial system

100
increases the need to develop a comprehensive strategy to reduce staff turnover and 

mitigate the effects of turnover that occurs. A high staff turnover rate will continue to 

negatively affect the agency’s ability to implement sound financial management. 

Volunteer Safety and Security 

In our overseas post evaluations, we find concrete evidence of the agency’s efforts to 

strengthen the systems that support Volunteer safety and security. This is most clearly 

manifest in the agency’s commitment of staff resources, e.g., the new position of safety 

and security coordinator (SSC) at each post to assist in implementing the safety and 

security procedures prescribed in the Peace Corps manual. We find that most posts have 

extended considerable effort on the requirements of this section of the manual. We also 

find, however, that some aspects of it are incompletely implemented and that the 

emergency action plans are almost always tested under optimum conditions. The 

qualifications of SSCs and their position descriptions vary greatly. Some are highly 

qualified and have a professional leadership position at the post on safety and security. 

Others have no professional background and perform a clerical function in the 

compliance aspects of the manual’s requirements. 

 

The challenges for the agency with regard to Volunteer safety include: 

• Documenting that the considerable resources devoted to safety and security 

positively affect Volunteers’ safety. 

• Reducing the occasional risky behavior of some Volunteers.2

 

• Managing the impact of increasing numbers of young females as a percentage of 

the Volunteers in the field. 

• Reducing the hazards for Volunteers during in-country travel. 

• Improving the safety of Volunteers in capital cities when visiting the Peace Corps 

office or if assigned to work in a capital city. 

Programming

The most important challenge for the agency is to meet the first of the three purposes 

articulated in the Peace Corps Act “...to help the peoples of such countries and areas in 

meeting their needs for trained manpower, particularly in meeting the basic needs of 

those living in the poorest areas of such countries...” The agency’s challenge is to design 

programs that constructively engage Volunteers in meeting needs. Volunteers must be 

engaged in activities they are qualified or trained to perform in a structure in which their 

purpose in the community is clear to them and to the local people. This is the most 

important element in a Peace Corps Volunteer’s experience that contributes to their safety 

and security and makes their two years of service satisfying. 

 2

 The most common problems reported by Volunteers of their peers are alcohol abuse, promiscuous sexual

behavior, and some drug use. The comfort level that Volunteers come to feel in the local language and

culture can lead them to disregard precautions they have been trained to take. Many of the incidents of

harm to Volunteers are associated with risky behavior. 

101
The agency’s historic and continued emphasis on numbers of Volunteers in the field 

exerts pressure on country staff to develop programs that can utilize generalist skills. We 

do find some countries where the Peace Corps is demonstrating that generalist Volunteers 

with sufficient training, site development, and program structure can contribute 

effectively to the needs of local communities. But, they succeed with intensive staff work 

up-front and on-going. 

Projects utilizing Volunteers without technical skills must have concrete activities and 

roles for Volunteers, must have rigorous site selection, must nurture sponsoring agencies 

and counterparts, and must have exemplary technical training and support for Volunteers. 

This is challenging, staff-intensive work. Examples of programs in which Volunteers 

serve without technical skills include health and environmental education, youth 

development, rural and community development, and municipal and business 

development. In these programs, Volunteers often report that their host country sponsors 

are unclear, uninterested, or inadequately prepared to work with them. Meeting the needs 

of local people requires a partnership with interested and supportive host country 

colleagues. There is no partnership when Volunteers’ assignments are not obvious to the 

members of their community and workplace from the time they arrive at their site until 

they leave. 

Unfortunately, some posts place Volunteers in the field under a broad program umbrella 

with little structure and with the directive to find something to do. A few Volunteers even 

in that situation thrive and become the “super Volunteers” whose success is used to 

justify their program, but this is unfair to the majority of Volunteers who do not have 

much success in unstructured settings or, if they succeed, may do so only after many 

months of frustration. Volunteers’ own estimate of productivity show that many work

only a few hours per week on their primary assignment.3

 This self-reporting is likely 

high. But even taking the reporting at face value, we find underutilization of Volunteers a 

significant weakness for the Peace Corps. 

We find that lack of meaningful work is closely linked to travel out of site, feelings of 

isolation, and risky behavior. Volunteers with meaningful work are more likely to stay in 

their communities where they are safe and are less likely to engage in risky behavior, 

which most often occurs off-site.4

 Staffs overseas expend considerable effort to enforce 

policies designed to keep Volunteers at their sites. But the most important influence is not 

the policy and how well it is enforced. It is the self-motivation of Volunteers who feel 

they are making a contribution to meeting needs and are engaged with local partners in 

that endeavor. 

 3

 The agency’s most recently available data on this is from 2002. 38% of the Volunteers reported working 

20 or fewer hours per week on their assignment— 30% reported 30 or more hours. Some Volunteers find

engagement with secondary projects, and these are encouraged by all posts. But this, again, puts the onus 

on the Volunteer to find something productive to do, and 55% of the Volunteers in the same survey 

reported working 10 or fewer hours per week on a secondary project. 4

 In our surveys and interviews Volunteers report their site as the place where they feel safest. 

102
Volunteers’ motivation for joining the Peace Corps is to help the people of other 

countries meet their needs. The challenge for the agency is to make goal one a reality for 

more of its Volunteers. Some programs demonstrate that this is possible.

A further challenge related to programs is the early termination rate. Approximately a

third of all Volunteers terminate service before the end of their two years of service.5

 We 

find that this is clearly affected by the quality of the programs. We find the early 

termination rates in effective programs to be low, sometimes less than 10%. But we find 

the early termination rate for some programs—often those with little structure—to be 

unacceptably high. In recent evaluations, we found early termination rates of 100% in 

several small, ill-conceived programs, and 50% is not uncommon in programs for which 

the Volunteers and their communities are not prepared and not clear about the 

Volunteer’s purpose. This is inefficient and counterproductive to the goal to increase 

Volunteers in the field. The challenge to the agency is to use early termination data—real 

data based on the difference between the number who entered training and the number 

who completed service—as a management tool to hold program managers accountable to 

develop programs in which Volunteers are feeling too rewarded to leave early except for 

reasons unrelated to their experience as a Volunteer. 

Training 

The challenge for management in Volunteer training is better technical preparation. The 

majority of Volunteers report that their technical training fails to provide them the skills 

they need for credibility in the work they are asked to do. This is critical in unstructured 

programs utilizing Volunteers recruited without technical skills. As noted earlier, we 

believe it is not cost effective to achieve savings by cutting Volunteer training. 

The most favorable reports about technical training and technical support come from

Volunteers in countries where the program staff are principals in providing the preservice technical training. This model assures an early bond between the program support 

staff and the Volunteers and a sense of accountability in the staff for how well the 

Volunteers have been prepared for their assignments. This model is the exception, not the 

rule. 

The agency, rightly, prides itself on its language training, and Volunteers most often rate 

their language training high. But in a number of countries, the lingua franca spoken and 

taught to Volunteers in pre-service training is not the language used by the people the 

Volunteers must work with, especially in some of the programs like health education 

where communication is the task, but the audience is uneducated. The challenge is to do a 

better job of identifying sites early so that Volunteers can receive training in the local 

language of their prospective sites. 

 5 We use this term here to mean the percentage difference between the number of Volunteers in a specific 

group when it begins training until the group’s end of service date 27 months later. We recognize that 

some Volunteers leave for medical or other reasons not related to the quality of their assignment. 

Nevertheless, for comparative purposes the rate presents an accurate picture. 

103
Technical support 

A significant challenge for the agency is to improve technical support. Volunteers report 

few site visits by the program managers with insufficient content. This situation is 

exacerbated by the pressure to increase the numbers of Volunteers. Country directors 

who accept additional Volunteers routinely do not receive authority and money to 

increase program staff. We find the program support staff stretched thin in many 

countries and frustrated with the time spent responding to the administrative requirements 

of the agency. 

Money as a Program Challenge 

An increasing challenge is for programs to plan for the fact that non-Peace Corps money 

is progressively more available to Volunteers for projects, and Volunteers are taking 

advantage of this. Some of the money is available through other donor agencies in the 

countries where Volunteers work, and some is available through the Peace Corps as 

Special Project Assistance (SPA) funds from USAID, the Ambassador’s fund, funds 

raised by Volunteers’ friends and family, and funds raised from private corporations. This 

phenomenon leads in some countries and in some projects to an expectation that 

Volunteers will be a source of funds. This is particularly a problem for Volunteers 

assigned to assist local non-government organizations that depend exclusively on foreign 

sources for funding. Volunteers feel pressured to be fund-raisers generally—which may 

be fine if that is understood by everyone up front—but is a problem when the Volunteers 

find this out only after arriving at site, sometimes after being assured that they will not be 

expected to raise money. The programming challenge to Peace Corps staff is to confront 

the phenomenon of donor money as it develops programs and designs training. It needs to 

be part of the plan, not a revelation to the Volunteer once at site. 

Leadership and Management 

The agency staffing configuration has inadequate capacity to oversee the 70+ programs 

overseas and hold country directors accountable. Country directors do not have adequate 

program staff to develop and support programs that place the number of Volunteers the 

agency is fielding in assignments that have them engaged for 30 or more hours per week 

in meaningful and satisfying work. 

Our program reviews suggest that the biggest challenge for country directors is program

leadership—serious time spent on program development, on assuring that Volunteers are 

arriving to assignments that are real and will challenge them to use their talents for 

significant hours per week. This is hard work. No one receives training in this. No one 

has a degree in this. Few people have relevant experience. Even country directors who 

were once Volunteers may not have had a Volunteer experience that is applicable to the 

situation today in the country to which they are posted. In some cases their Volunteer 

experience may be a hindrance if they perceive their experience to be transferable to 

others. A new country director will not likely hear from the staff that a program is weak. 

What has always been done is what the local staff know how to do and feel is expected of 

104
them. The challenge for all country directors is to concentrate on what the Volunteers are 

doing, how they are prepared to do it, and how they are supported in doing it. The 

challenge for headquarters management is to get this message out there as the top 

priority, support country directors in doing it,6

 and hold country directors accountable. 

This administration began with two challenges, one from the President to increase the

number of Volunteers in the field, and one from GAO to focus on Volunteer safety and 

security. The agency has met the first challenge and put significant resources into 

demonstrating its commitment to meeting the second. The new challenges are more 

difficult. On the safety and security front, procedures and manual sections are in place, 

safety and security staff are in place, and the message that safety and security is the 

agency’s top priority is in place. The challenge now is to implement programs that keep 

Volunteers safe by engaging them in their work. This will require more staff devoted to 

program development, site development, Volunteer technical training, and Volunteer 

field support. This will require a message from headquarters to country directors that this 

is the top priority, not because it is more important than safety and security but because it 

is fundamental to safety and security. This challenge will be difficult to meet with the 

number of program support staff currently on board overseas. Absent a significant 

increase in appropriations, hiring more local program staff will require at least a moderate 

realignment of resources. But this is not impossible. Resources follow crises. 

The challenge for management is to make programming the Peace Corps’ top priority and 

set targets for numbers of Volunteers in the field7

 commensurate with its ability to assure

them a quality experience. 

 

 6 Country directors we interview report feeling pressured to increase their number of Volunteers without 

adequate staff and budget support. 7

 It is not intended by this statement to imply that this is a challenge precipitated by actions unique to

current management. The emphasis on numbers is a problem that dates back to the Peace Corps’

beginnings. This happens to be one of the times in the agency’s history when numbers appear to be 

outstripping appropriations. 

105
MEMORANDUM 

From: Gaddi H. Vasquez, Director 

To: Allan R. Gall, Acting Inspector General 

Date: November 9, 2004 

Subject: Response to October 29, 2004 Memorandum on 

‘Management Challenges for the Peace Corps in FY 2005’ 

Thank you for your memorandum of October 29, 2004 on the management and performance 

challenges faced by the Peace Corps, as required by the Reports Consolidation Act of 2000 and 

OMB guidance. 

The work of the Inspector General continues to be well integrated with agency activities, and to 

provide important insights. It is through this partnership that the agency has been able to address, 

and in most instances resolve, outstanding issues and recommendations from the Inspector 

General’s Office. 

The Inspector General’s memo accurately acknowledges that the Peace Corps has responded to 

the President’s goals for growth, but has faced challenges along the way. Namely, the funding 

provided in the appropriations process has fallen significantly short of the amounts necessary to 

reach the goal of doubling the number of Volunteers in the field. Thus, the Peace Corps has 

pursued the strongest growth possible within the constraints of our resources while staying 

focused on safety and security and preserving the quality of the Volunteer experience. 

The Peace Corps strives to overcome challenges with strategically targeted efforts. 

The Inspector General’s memo noted particular challenges for the agency, and the below items

reflect agency responses to a few key issues. 

Pre-Service Training – The Peace Corps is proud of its exemplary training program that equips 

Volunteers to become effective in their host communities. Management does not support cuts in 

essential training as a cost-saving measure and is reviewing the matter across the agency. While 

it is not an agency-wide trend, a handful of posts currently have plans to shorten the length of 

their Pre-Service Training (PST). Although the Peace Corps must always evaluate the 

effectiveness of its training and make decisions accordingly, shortening PST across the board for 

budget reasons will not be permitted.

Underutilized Volunteers – A Volunteer’s primary assignment is of great importance, but should 

be considered in relation to all three of Peace Corps’ goals in mind. Thus, a Volunteer who has a 

robust secondary project, is connecting with local host country nationals, and is sharing his or 

her cross-cultural experiences with Americans, is well-rounded in accomplishing the Peace 

Corps’ goals, even if the Volunteer is not spending forty hours a week at his or her primary 

assignment. In fact, the same survey data used to note that 30% of Volunteers reported spending 
30 or more hours a week on their primary assignments also shows that 43% of Volunteers 

reported spending 10 to 40+ hours of their average work week on a secondary assignment. While 

a handful of Volunteers may not reach their full potential, the majority of Volunteers work hard 

to fulfill all three of Peace Corps’ important goals. 

Programming – The agency acknowledges programming as an essential component of a positive 

Volunteer experience, and that good site development, a Volunteer’s self-motivation, and 

involvement in the community are key factors that contribute to a Volunteer staying safely at his 

or her site. 

As new programs are established or host country needs require additional Volunteers, the Peace 

Corps uses the annual Integrated Planning and Budget System (IPBS) process to outline the 

appropriate staff levels necessary to provide a quality experience for an increase in the number of 

Volunteers. Each post’s IPBS plan is generated in the field, receives careful review at 

headquarters, and takes growth and staffing needs into account. 

In concert with the IPBS, the Peace Corps requires overseas posts to develop plans for their 

Volunteer projects that describe the goals, objectives, and life span of the project. The Peace 

Corps also has an annual Project Status Review (PSR) process, which provides a comprehensive 

review of current programming to help ensure maximum effectiveness. The plan is reaffirmed or 

altered based on lessons learned in the iterative planning process. This review helps the Peace 

Corps to assess whether Volunteers have useful assignments that feed into the development goals 

of the host country. 

Through the PSR process, budget reviews, project evaluations, and staff training, the agency will 

continue to strengthen its efforts to provide quality programming for all Volunteers. 

Overall, the agency will continue to address the challenges of operating the Peace Corps in the 

21st century within the world climate and budget realities. The Peace Corps is pleased to be on a 

pathway for growth and will continue efforts to provide an excellent Volunteer experience, while 

positively contributing to the development of host countries around the world 
108

THE PEACE CORPS | PERFORMANCE AND ACCOUNTABILITY REPORT | FISCAL YEAR 2004

MANAGEMENT’S DISCUSSION AND ANALYSIS

108

THE PEACE CORPS | PERFORMANCE AND ACCOUNTABILITY REPORT | FISCAL YEAR 2004

Reports under the Peace Corps Act

Peace Corps provides the President with a report 

on operations under the Peace Corps Act, which is 

transmitted to Congress, at least once in each fiscal 

year. Each report contains information describing 

efforts undertaken to improve the coordination of 

activities of the agency with activities of international voluntary service organizations, such as the United Nations volunteer program, and of host country 

voluntary service organizations, including:

• a description of the purpose and scope of any 

development project that the Peace Corps 

undertook during the preceding fiscal year as a 

joint venture with any such international or host 

country voluntary service organization; and

• recommendations to improve coordination of 

development projects between the Peace Corps 

and any such international or host country 

voluntary service organization.

OTHER REPORTS

U

The President shall also include in this report a description of any plans to carry out the policy set forth 

in section 2(b) of this act [22 USCS § 2501(b)]. 

Semi-Annual Reports

The Peace Corps also provides a semi-annual report 

to Congress (IG Report). These cover the periods 

October 1 to March 31 and April 1 to September 30; 

and they are due to Congress by May 31 and November 30 of each year, respectively.

Congressional Budget Justification

The Peace Corps also submits a Congressional budget justification (CBJ) to Congress each year that is 

due by March 1.
I APPENDICES I
The Peace Corps Strategic Plan: 

Answering the Call to Service Around the Globe 

Opportunity in the Twenty-First Century

The Peace Corps is pleased to present the agency’s strategic plan for fiscal years 2003 to 2008. 

Not only does the strategic plan reflect the agency’s long-standing commitment to the unique

role that its Volunteers perform to further the three goals set forth in the Peace Corps Act, but it

institutionalizes a comprehensive safety and security approach and furthers the modernization

of the agency’s support infrastructure to help achieve the vision to meet the growing needs of 

the world in this century. 

The mission of promoting world peace and friendship, as well as the three goals of the Peace

Corps, have remained the same since its inception. Development indicators suggest that there

will be even greater challenges for nations on all continents as they deal with the demands for 

improved development, information technology, agriculture, education, sanitation and

environment, health management, and small business. 

Recognizing the strategic relevance of the Peace Corps in the 21st century, President Bush

declared in numerous speeches over the past two years, that “...the United States remains 

committed to ensuring a future of peace, hope, and promise for all people, and the Peace Corps 

is playing a critical role in these efforts.” 

President Bush’s frequent references to the Peace Corps and the agency’s new drive to 

reacquaint the American people with the mission of the Peace Corps has resulted in a

significant increase in the number of Americans seeking to serve. At the end of 2003, inquiries 

were up by 9 percent, new applications rose 10 percent, and the Peace Corps website had a 32

percent increase, for a total of 5.7 million visitor sessions. Since January 2002, over 30 

countries have requested Peace Corps programs, 24 country assessments have been

conducted, and the Peace Corps has entered or reentered 14 countries.

In September 2003, the Peace Corps achieved a 28-year high of 7,533 Volunteers serving in 73 

countries. Peace Corps is pleased to be on a pathway for growth; however, the amounts 

provided in the appropriations process for the past two years have fallen significantly short of

that needed to meet the goal of doubling the number of Volunteers over five years. Thus, we are 

pursuing the strongest growth possible within the constraints of our resources, while preserving 

the quality of the Peace Corps Volunteer experience and focusing on safety and security. 

Vision 

The Peace Corps’ vision is to assist interested countries around the world while providing an

effective and satisfying Volunteer experience for a diverse group of Americans in a safe and 

secure environment, and to build an operational infrastructure to efficiently and effectively 

support the Volunteer in the 21st century. 

Mission 

The mission and three goals of the Peace Corps are as relevant today as they were 43 years 

ago when they were first defined in the Peace Corps Act of 1961. The Peace Corps combines 

development with people-to-people relationships that Volunteers forge with host country 

colleagues and communities. This serves as a crucial foundation for peace and friendship for 

generations to come. 

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Strategic Planning Process 

The integrated planning and budget system (IPBS) is the Peace Corps’ primary strategic 

planning mechanism. IPBS is consistent with the planning process defined by the Government

Performance and Results Act (GPRA). It features a multilevel strategic planning process that

requires each Peace Corps office and sub-office to set goals and establish measurable 

objectives and specific tasks—in essence, a performance plan—with related timelines. IPBS is 

based on a three-year planning cycle, and every Peace Corps office and overseas post is

required to define its goals and objectives and develop a strategic plan and budget that will

enable the office to meet them. These plans are based on projected levels of funding; however, 

they are adjusted accordingly if these levels are not realized through actual appropriations. This 

is possible through the annual update of the three-year plan. IPBS begins with an assessment

and evaluation of the previous year’s plans and projects. It then identifies lessons learned,

potential improvements, and plans for the future. 

In concert with IPBS, the Peace Corps also requires overseas posts to develop plans for their

Volunteer projects that describe the goals, objectives, and life span of the project. The status of 

each project is reviewed annually in December. Each project’s strengths and weaknesses are

assessed, and the plan is reaffirmed or altered based on lessons learned in the planning 

process. 

This year’s agency planning process began in the spring with the issuance of Director

Vasquez’s guidance. In addition to reaffirming the agency’s mission and goals, the offices 

specifically addressed the impact of, and planned for the heightened focus on, safety and

security of Volunteers and staff. The offices then aligned their individual plans to the agency’s 

overall direction and each IPBS submission was presented to the director and reviewed. Upon 

concluding these review activities, each overseas post, sub-office, and major office assembled 

its respective performance plan for the coming strategic plan period FY 2003 through FY 2008 

with emphasis on defining the outcome and performance goals together with accompanying 

performance indicators. 

The director has also established the inter-office quality statements and indicators project 

(QSIP) to measure strategic outcomes through the Peace Corps Volunteer survey. QSIP 

complements the agency’s strategic plan under GPRA by helping to determine if performance

goals and plans actually result in higher quality operations and service. 

For example, each office’s individual strategies under GPRA are designed to support, 

complement, or enhance the agency’s strategic goals. These goals drive how the Peace Corps 

operates and performs. Offices determine that to meet the GPRA goals, they need to conduct 

certain training, provide certain services, etc. QSIP provides a means by which the Peace Corps 

can measure if these plans actually work by asking for feedback from Volunteers about the

quality of their experience. QSIP developed quality statements and performance indicators for 

recruitment and placement, programming, and training, Volunteer support, third goal and

domestic activities, and management and administration. The main vehicle for evaluating

progress in these areas is the biennial Peace Corps Volunteer survey because this survey is 

completed by approximately 70 percent of serving Volunteers. It is, therefore, a useful source of

feedback by which Peace Corps can track its progress. 

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The Peace Corps’ Goals for Fiscal Years 2003–2008 

In response to President Bush’s challenge to increase the size of the Peace Corps, the agency 

is focusing on growth while providing a positive experience for all Volunteers in a safe and 

secure environment. This document presents the four strategic goals the Peace Corps seeks to

achieve from FY 2003 through FY 2008. Each strategic outcome goal is followed by a set of 

measurable performance goals with accompanying means and strategies; a discussion of the 

relationship to the agency’s annual performance goals in the performance budget; key factors 

potentially affecting achievement of goals; and the methods used to assess achievement. 

Strategic Goal 1 

 PERFORMANCE AND ACCOUNTABILITY REPORT 

Strategic Goal 2 

Assist interested countries with their identified needs by increasing the number of Volunteers in

the field from 7,533 in FY 2003 to 11,250 by FY 2008, at a rate consistent with funding levels 

and infrastructure support. 

Improve the health and safety of Volunteers by improving the Volunteer health care satisfaction 

rate by 7 percent, from 75 percent in FY 2002 to 82 percent in FY 2008; and increasing 

Volunteers’ perceptions of their personal safety where they live by 3 percent, from 86 percent in 

FY 2002 to 89 percent by FY 2008. 

Strategic Goal 3 

Improve Americans’ understanding of other peoples by increasing returned Peace Corps 

Volunteers’ visits to schools and community organizations by 28 percent, from 7,000 in FY 2003

to 9,000 by FY 2008. 

Strategic Goal 4 

Reduce the Peace Corps’ overall response time for those applying to the Peace Corps by 5

percent, from 222 days in FY 2003 to 212 days by FY 2008. 

Strategic Goal 1 

Assist interested countries with their identified needs by increasing the number of Volunteers in

the field from 7,533 in FY 2003 to 11,250 by FY 2008, at a rate consistent with funding levels 

and infrastructure support. 

Strategy

The Peace Corps is committed to growing the number of Volunteers in the field. This growth,

which is strategically and incrementally implemented, is balanced with the need to preserve the

core values of the Peace Corps and provide the infrastructure necessary to support the work of

the Volunteers and the business of the agency. To meet the challenges for growth in the 21st

century, the Peace Corps is focusing action items in the following areas.

Infrastructure Support 

Under the direction of the Offices of the Chief Information Officer and Chief Financial Officer, the 

Peace Corps is developing the necessary technical infrastructure to streamline current 

operational processes that will support the Volunteers in the field. In addition, management is 

reviewing personnel practices to identify and analyze trends and future needs among

Volunteers and staff that will be used to inform workforce processes and resource allocations.

These analyses will also inform policy decisions and maximize resource efficiency and quality of

service. 

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Recruitment 

While four-year institutions have been the main source for Volunteers over the years, the Peace 

Corps is now working with the American Association of Community Colleges to expand

recruiting activities at community colleges. Assignment areas, such as health and information 

technology, can often be filled by community college graduates who are trained in these

qualifying skills. 

Efforts to expand the applicant pool also include reaching out to those of diverse age groups 

and ethnic backgrounds who have previously been under-represented in the Peace Corps. The 

Peace Corps is currently identifying venues, such as national conferences or publications, and 

developing partnerships with key agencies and organizations to assist with recruitment. Efforts 

to increase the number of older Americans serving in the Peace Corps involve identifying senior 

Peace Corps officials and returned Peace Corps Volunteers (RPCVs) who can be 

spokespersons at national conferences and other speaker forums. The Office of Medical 

Services (OMS) is developing materials for use in informing older Volunteers about issues of 

interest to them, such as the impact on retirement benefits, insurance, and medical benefits. 

Communications 

The Peace Corps launched the new awareness and recruitment campaign “Life is calling. How 

far will you go?” in September 2003. This campaign included the placement of a significant

number of public service ads in strategic venues. To date, this campaign has earned over 2

million dollars in free media and has garnered over 251 million audience impressions. 

Retaining Applicants and Volunteers 

Significant effort has been made to retain applicants, trainees, and Volunteers from the time that 

they apply until the time they close their service. The training framework project provides a

means by which applicants can start preparing for their service using online educational tools. 

During the application process, the training modules can help them get a head start in learning 

about culture, languages, and the personal responsibility requirements, which increase their 

chances for success. The Peace Corps also completed an applicant dropout study and a newly 

expanded early termination study to help identify reasons that applicants and Volunteers drop

out of the system. This helps enhance the agency’s systems and addresses issues that

negatively impact retention rates. 

In addition, both the programming and training and the recruitment and placement QSIP 

committees have developed performance goals to ensure that Volunteers are satisfied and

effective. To achieve this, Volunteers are trained to live and work successfully in the context of 

their assignments and cultural environment. Their satisfaction will be measured by questions in 

the next Peace Corps Volunteer survey and the newly designed completion-of-service study. 

Outcome goals related to the satisfaction levels of Volunteers in this area will be established

next year. 

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Outcome Goal 1.1 

Increase the number of Volunteers in the field from the FY 2003 level of 7,533 to 11,250 (49 

percent) by FY 2008, assuming full funding for FY 2005 and future requests. 

Performance Goal 

1.1.1 Incrementally increase in subsequent performance years Volunteers/trainees 

on board from the FY 2003 level of 7,533 to 11,250 (49 percent) by FY 2008. 

1.1.1.1 Increase Peace Corps Volunteers to 7,840 (4 percent) over FY 2003 level by 

FY 2004. 

1.1.1.2 Increase Peace Corps Volunteers to 8,704 (16 percent) over FY 2003 level by 

FY 2005. 

1.1.1.3 Increase Peace Corps Volunteers to 9,300 (23 percent) over FY 2003 level by 

FY 2006. 

1.1.1.4 Increase Peace Corps Volunteers to 10,200 (35 percent) over FY 2003 level 

by FY 2007. 

1.1.1.5 Increase Peace Corps Volunteers to 11,250 (49 percent) over FY 2003 level 

by FY 2008. 

Outcome Goal 1.2

Increase the combined number of applications to the Peace Corps from under-represented

ethnic and age groups from 19 percent to 25 percent by FY 2008 to provide Volunteers to

interested countries that better reflect American diversity. 

Performance Goal 

1.2.1. Increase the combined number of underrepresented ethnic and age groups applying

to the Peace Corps from 19 percent to 25 percent by FY 2008. 

1.2.1.1 20 percent of applicants will be from under-represented groups by FY 2004. 

1.2.1.2 21 percent of applicants will be from under-represented groups by FY 2005. 

1.2.1.3 22 percent of applicants will be from under-represented groups by FY 2006. 

1.2.1.4 23 percent of applicants will be from under-represented groups by FY 2007. 

1.2.1.5 25 percent of applicants will be from under-represented groups by FY 2008. 

Outcome Goal 1.3

Reduce overall Volunteers’ 12-month early termination (ET) rate by 2.5 percent, from the FY

2003 level of 11.6 percent to 9.1 percent by FY 2008 through improved matching of Volunteers’ 

skills and primary assignment, and improved satisfaction rate of Volunteer health and safety. 

Performance Goal 

1.3.1. Reduce the overall Volunteers’ 12-month ET rate by 2.5 percent from FY 2003 level

of 11.6 percent to 9.1 percent by FY 2008. 

1.3.1.1 Reduce the overall 12-month ET rate to 11.1 percent by FY 2004. 

1.3.1.2 Reduce the overall 12-month ET rate to 10.6 percent by FY 2005. 

1.3.1.3 Reduce the overall 12-month ET rate to 10.1 percent by FY 2006. 

1.3.1.4 Reduce the overall 12-month ET rate to 9.6 percent by FY 2007. 

1.3.1.5 Reduce the overall 12-month ET rate to 9.1 percent by FY 2008. 

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Strategic Goal 2 

Improve the health and safety of Volunteers by improving the Volunteer health-care satisfaction

rate by 7 percent, from 75 percent in FY 2002 to 82 percent in FY 2008; and increasing 

Volunteers’ perceptions of their personal safety where they live by 3 percent, from 86 percent in 

FY 2002 to 89 percent in FY 2008. 

Strategy

Because the Peace Corps Volunteer survey in 2002 captured these data, the baselines have 

been set. The Peace Corps will continue to measure performance against the results of the 

survey to determine if target outcomes are met. If they are not met, however, the following areas 

can be used to evaluate and reassess processes and practices and implement changes to 

ensure that these targets are achieved. 

Office of Medical Services Technical Guidelines 

OMS recognizes that technical guidelines are established to provide comprehensive health

services and preventative education to Volunteers. These guidelines provide for rigorous 

training requirements, licensing and certification, and performance standards for medical staff. 

They also establish critical guidelines for training and medical care for Volunteers. Finally, these

policies ensure that screening guidelines are based on current research, best practices, and

knowledge of the field that is reviewed every two years. 

Emergency Care 

OMS provides medical evacuation and support to Volunteers who require medical and/or

psychological care beyond what is available in-country. To achieve this, the medical staff 

conducts prompt field consults (within 48 hours) and responds to the immediate medical and

emotional needs of the Volunteer or trainee in-country. Medevac Volunteers also receive timely 

and quality Medevac care, and, if appropriate, may return to country. 

Special Services for Volunteers 

The Office of Special Services provides comprehensive services and training to Volunteers that

advocate for and promote healthy emotional adaptation to their Peace Corps service. This is 

critical to ensuring that Volunteers have a positive and productive experience in-country and the

support necessary to handle crises and challenging situations. 

Safety and Security Personnel 

The new Office of Safety and Security, in coordination with post-level and regional safety and

security personnel, provides for a safety and security framework for Volunteers. This involves 

training in how to maintain one’s safety while serving in a foreign country as well as assistance 

in addressing any safety related issues. When Volunteers feel adequately prepared and have 

access to guidance and assistance from safety and security staff, they are more likely to feel

safe at home and at work. 

Safety Policies 

The safest and most secure Volunteer is one that is at site, well-known, accepted, and

integrated into the community. This comes by learning the local language, the culture, working

in a well designed project, and staying close to host families. The safe Volunteer takes 

responsibility for his or her own behavior and knows how to minimize personal risks. The recent 

Volunteer survey indicates that these policies are being followed, and that most of the time, 

Volunteers feel safe where they live and work. The Peace Corps will, however, always continue

to review and enhance its safety and security policies. 

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Outcome Goal 2.1 

Increase the percentage of Volunteers indicating feeling “well” or “completely” satisfied with their 

in-country health care from the FY 2002 level of 75 percent to 82 percent by FY 2008. 

Performance Goal 

2.1.1 Incrementally increase the percentage of respondents to the biennial Peace Corps 

Volunteer survey indicating feeling “well” or “completely” satisfied with their in-country health

care. 

2.1.1.1 75 percent Volunteers’ satisfaction rate on their health care by FY 2002

2.1.1.2 78 percent Volunteers’ satisfaction rate on their health care by FY 2004

2.1.1.3 80 percent Volunteers’ satisfaction rate on their health care by FY 2006

2.1.1.4 82 percent Volunteers’ satisfaction rate on their health care by FY 2008

Outcome Goal 2.2 

Increase the percentage of Peace Corps Volunteer survey responses indicating that Volunteers

feel safe most of the time where they live from the FY 2002 level of 86 percent to 89 percent by

FY 2008. 

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 at home. 

2.2.1.1 86 percent of the Volunteers feel safe most of the time where they live by FY 2002. 

2.2.1.2 87 percent of the Volunteers feel safe most of the time where they live by FY 2004. 

2.2.1.3 88 percent of the Volunteers feel safe most of the time where they live by FY 2006. 

2.2.1.4 89 percent of the Volunteers feel safe most of the time where they live by FY 2008. 

Strategic Goal 3 

Improve Americans’ understanding of other peoples by increasing returned Peace Corps 

Volunteers’ visits to schools and community organizations by 28 percent, from 7,000 in FY 2003

to 9,000 by FY 2008. 

Strategy

The Peace Corps achieves its third goal of improving Americans’ understanding of other 

peoples by providing opportunities and resources to RPCVs and educators to promote a better 

understanding among Americans about other cultures and other people around the world. The 

Peace Corps seeks to increase the number of these opportunities by increasing the number of 

colleges and universities participating in the USA/Fellows programs. This goal is also achieved

by ensuring that RPCVs have the information about and support they need to engage in third

goal activities. 

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Outcome Goal 3.1 

Increase the number of RPCV visits to schools and organizations by 28 percent from the FY

2003 level of 7,000 to 9,000 by FY 2008. 

Performance Goal 

3.1.1 Increase RPCV visits to schools and organizations by 28 percent from the FY 2003

level of 7,000 to 9,000 by FY 2008. 

3.1.1.1 Increase RPCV visits to schools and organizations by 400 from the FY 2003 level of

7,000 to 7,400 in FY 2004. 

3.1.1.2 Increase RPCV visits to schools and organizations by 800 from the FY 2003 level of

7,000 to 7.800 in FY 2005. 

3.1.1.3 Increase RPCV visits to schools and organizations by 1,200 from the FY 2003 level 

of 7,000 to 8,200 in FY 2006. 

3.1.1.4 Increase RPCV visits to schools and organizations by 1,600 from the FY 2003 level 

of 7,000 to 8,600 in FY 2007. 

3.1.1.5 Increase RPCV visits to schools and organizations by 2,000 from the FY 2003 level 

of 7,000 to 9,000 in FY 2008. 

Strategic Goal 4 

Reduce the Peace Corps’ overall response time for those applying to the Peace Corps by 5

percent, from 222 days in FY 2003 to 212 days by FY 2008. 

Strategy

The application process to become a Volunteer can be lengthy and efforts are being made to 

reduce the application time. However, because the Peace Corps must determine if a potential

Volunteer would be suited for two years of service overseas, it must assess each applicant 

thoroughly. These assessments include medical and psychological screenings as well as 

comprehensive skills assessments. In order to streamline this process and reduce the

application time, the following areas are being targeted for enhancement. 

Application Redesign and Use of Online Application Forms 

Online applications have increased dramatically and currently comprise an average of 70

percent of all applications. The agency is continually reviewing opportunities for more 

efficiencies and greater user compatibility. 

Medical Screening 

OMS and Volunteer Recruitment and Selection (VRS) have established regionally based

medical screening and placement teams to better identify matches between future Volunteers 

and potential countries. They have reviewed the mental health screening process to reduce

screening time; clarified mental health guidelines so screening nurses can make most decisions 

without mental health care professionals; reduced the number of mental health reviews per 

applicant; and, moved alcohol and drug suitability determinations to VRS. In addition, the 

redesign of the health status review form and its availability online have significantly reduced the

processing time. 

Enterprise Architecture 

The CIO has worked closely with VRS to prioritize new software and hardware requirements for 

the Volunteer delivery system. This review has included: updated activity models; data models; 

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Page 117
organizational interfaces; and information exchanges that make the application process more

efficient and less labor intensive. 

Outcome Goal 4.1 

Reduce overall Peace Corps applicant response time by 5 percent by September 2008 through 

evaluation and integration of new technology and recruitment and placement of staff structures. 

Performance Goal 

4.1.1 Reduce overall response time to applicants by 5 percent from FY 2003 level 222 

days to 212 days by FY 2008. 

4.1.1.1 Reduce overall response time to applicants by 1 percent (to 220 days) by FY 2004. 

4.1.1.2 Reduce overall response time to applicants by 2 percent (to 218 days) by FY 2005. 

4.1.1.3 Reduce overall response time to applicants by 3 percent (to 216 days) by FY 2006. 

4.1.1.4 Reduce overall response time to applicants by 4 percent (to 214 days) by FY 2007. 

4.1.1.5 Reduce overall response time to applicants by 5 percent (to 212 days) by FY 2008. 

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Summary of the FY 2003 Gap Analysis 

The Peace Corps’ FY 2003 Financial Management Gap Analysis resulted in a series of findings 

much like those from a financial statement audit, but focused primarily on systems and controls.

Management’s response and status of corrective action plans at September 30, 2004 against each 

of the findings follows. The findings were categorized by type—financial management and

accounting or systems and applications—and level of risk. Three risk levels were identified as: 

• High—presents a severe impediment to auditability 

• Medium—presents significant internal control weaknesses 

• Low—requires management attention. 

The status of corrective action plan maps to the summary table in Section I.B.8. accordingly:

• Complete—Completed during FY 2004 

• On-target—Corrective action plan timeline crosses fiscal years and progress is on target 

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Page 119

• een completed, others have been delayed or 

• Future plan—Causes of finding are being analyzed to develop corrective action plan.

implementation of plans is contingent on the funding available for the timeline

stablished.

igh Risk Findings

ccounting

ummary of Finding: FY 04 beginning balances are considered unsupportable to date.

Sum

reconciliation procedures and controls, as OPBF grows in its proficiency in the new system. 

Sum

conversion methodology. The FY 2004 financial statements 

contain footnotes accordingly. 

to complete according to plan 

In-progress—Some portions of plan have b

items are being effected without a timeline 

As a note, the overseas Posts that participated in the Gap Analysis were Philippines and Senegal. 

Therefore, wherever the term “Posts” is used in this discussion, it refers to these two offices. In

addition, the

e

H

Type of Finding: Financial Management and A

Area of Finding: FY 04 Beginning Balances 

S

mary of Management’s Response: While management concurred with the finding, the 

methodology provided to the auditors prior to and during accounting systems conversion

allowed for the beginning balances to be adjusted during the fiscal year. The balances are to

be validated at end of 2nd quarter, 2004. The agency plans to develop additional

mary of Status at September 30, 2004: Complete—Complete for those account balances that 

could be confirmed under the

THE PEACE CORPS |
    

Type of Finding: Financial Management and Accounting 

Area of Finding: Overall Policy and Procedures 

Summary of Finding: 

A. The Peace Corps does not have Management approved, detailed authoritative guidance in the 

Peace Corps Manual for the following processes: 

- Budget Process (Formulation by HQ & Posts) 

- Strategic Plan/Operating Plan (HQ & Posts) 

- Periodic Budget Review Procedure (HQ) 

- Payroll Procedures 

- Medical Services 

- PRISM 

- RADBMS 

- Procurement Request 

- Purchase Card 

- Disbursements (BIT & IFO) 

- Oracle Instructions 

- FOR Post 

B. The Peace Corps-approved authoritative guidance needs to be updated and/or revised. Roles 

and responsibilities of personnel need to be more clearly defined and key functions need to 

be assigned to personnel and described in detail for the following processes: 

- Periodic Budget Review process (Posts only) 

- Readjustment Allowance 

- Procurement/Obligations/Disbursements into FOR Post 

- Payroll 

- Reconciliation (Posts only) 

- IFO System 

- Vouchering (Posts only) 

- Travel Advance/Authorization 

- Volunteer allowance 

Summary of Management’s Response: 

A. OPBF will initiate the process of updating, recording, and formalizing procedures through a

business process reengineering (BPR) activity in FY 2004 – 2005. A plan and timeline will 

be developed to facilitate this process. 

B. The BPR will provide the necessary information to analyze and update the Peace Corps

guidance on roles, responsibilities, and procedure. The timeline developed in the BPR will 

include updating guidance and position descriptions as well as desk manuals. 

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Summary of Status at September 30, 2004: In-progress—OPBF has prepared a list of processes

and procedures to be documented, established priorities and a plan, and assigned staff to 

monitor progress. As of September 30, 80 of 151 procedures have been documented and 

published. Roles and responsibilities are being identified within the appropriate 

documentation. 

    

Type of Finding: Financial Management and Accounting 

Area of Finding: Property, Plant, & Equipment 

Summary of Finding: 

A. The Peace Corps was not adhering to documented procedures for recording in accounting

system or maintaining property data. In addition, existing procedures are not detailed at the 

working level identifying roles and responsibilities for key functions. 

B. The Peace Corps has not appointed an Asset Management Director to provide leadership and 

general supervision in implementation and maintenance of property management. 

Headquarters and Posts do not have a property management database that is linked directly to 

the Financial Management System. 

C. All property purchased, contributed or otherwise acquired and retained by the Peace Corps, 

including Host Country Contributions, were not consistently recorded by Peace Corps HQ or

Posts and also was not recorded in the Peace Corps Financial Management System (PCFMS). 

D. In gathering property data, no distinction is made between non-capitalized and capitalized 

property. 

E. Accounting personnel were not utilizing the appropriate useful life when calculating

depreciation and the resulting depreciation expense was not recorded in PCFMS 

 PERFORMANCE AND ACCOUNTABILITY REPORT | FISCAL YEAR 2004

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F. adequate controls of acquisition, management and disposal of property at Peace 

Corps Posts.

G. ant & equipment were not recorded on the 

inventory/vehicle report sent to headquarters. 

ummary of Management’s Response: 

A. 

be documented in a procedures manual. An organizational restructure is also 

being planned. 

There were in

Host Country Contributions of property, pl

S

The Head of Building Operations and Asset Management will develop a process and the

associated mapping for the Asset Management Process. Once developed the asset 

management process will be codified into a Peace Corps Manual Section. The related

procedures will

THE PEACE CORPS |
B. Approval of the Asset Management organization and the manager position are pending.

Position development is in the proposal stage. COTS systems are being evaluated for 

implementation to track assets on a worldwide basis. The capability and market assessment

are complete and the agency is prepared to select a vendor from a short-list of finalists. It has 

been made a requirement that this asset management program have the capability of 

interfacing with the accounting system. However, integration work is un-funded. The 

purchase price of the software is small in comparison to implementation costs. Funding for

integration beyond HQ is not likely to be available in FY 2004. 

C. Peace Corps Management will ensure that adequate internal controls are implemented and 

maintained with the management of Property, Plant, & Equipment. Management will also 

provide consistent, thorough and effective training at Headquarters and Posts as it pertains to 

Property, Plant, and Equipment. 

D. Peace Corps Management will develop and revise the policy and procedures for fixed assets. 

E. With the implementation of the fixed assets module in Oracle Federal Financials, and 

inventorying all the existing assets with their remaining useful life, we plan to calculate 

depreciation accurately by the end of FY 2005 and in accordance with Generally Accepted 

Accounting Principles. 

F. The newly established policy will require an annual reconciliation of property. This 

reconciliation will include a verification of property disposed of and acquired. 

G. Peace Corps Management will update the Peace Corps Manual to include policy on recording

of host country contributions and property, plant, and equipment. These elements will be

included in the property accounting policy when developed. M/AS will issue policy 

guidelines that will require the Posts to provide to headquarters host country contributions in 

the form of property, plant, and equipment on the annual inventory and vehicles listings. 

Summary of Status at September 30, 2004:

A. Future plan—The organizational realignment that formally establishes the position as 

Management/Chief of Asset Management (M/CAM) is currently under executive review and

is pending approval. The position’s function is currently being handled within 

Management/Administrative Services. This position is responsible for documenting

procedures as well as the oversight and monitoring of their execution. 

B. Complete—The Chief of the RRDD is the designated Agency Property Officer for the 

AGENCY. M/AS maintains the Peace Corps Property Management System Database as a 

single point of control to track each Peace Corps office property, including capital assets,

provide a uniform process for data-entry of all property, track assets, generate property 

management reports, and create a web-based interface to the Fixed Assets database. Each

Peace Corps office/organizational entity is set up as a separate site to allow the M/AS to

determine what data each office can access online. Upon executive approval of the Capital 

Asset management organization real property accounting and development, and the oversight 

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of the procurement and life cycle management of investment equipment (over $10K) will be 

transferred to this unit. 

C. Complete—M/AS issued a new Peace Corps Property Management Handbook emphasizing 

that all property purchased, contributed or otherwise acquired and retained by Peace Corps, 

including Host Country Contributions, be consistently recorded by Peace Corps HQ or Posts, 

in cooperation with the OBPF staff responsible for the Financial Management System on an

annual basis and upon request by M/AS. During the next quarter, the agency is planning to 

conduct property management training for Property Account Holders, Property Officers, and 

Property Custodians in both the new property management procedures and the Property 

Management Database Automated system. 

D. Complete—A new Property Management Handbook has been issued that changed the 

definition of "capitalized property" from $500 US to $10,000 US or more. 

E. In-Progress—While a new Property Management Handbook has been issued that defines 

"depreciation" under two distinct categories so that accounting personnel will be able to

identify the appropriate category of depreciation for recording in PCFMS, the Fixed Asset 

Module of Odyssey/FOR Post is not due for assessment and implementation until late FY 

2005 and into FY 2006. 

F. In-Progress—The new Property Management Handbook requires an annual reconciliation of 

property or upon request by the M/AS, including verification of property disposed of and

acquired. Under that handbook, property holders will be trained and the reconciliation

performed during FY 2005. 

G. In-Progress—Chapter 4.0 Acquisition and Recording Property Value of the new Property 

Management Handbook provides that all property purchased, contributed or otherwise 

acquired and retained by the Peace Corps, including Host Country Contributions, shall be 

recorded by the Property Officers at Peace Corps HQ or Posts in the Property Database, and

in the Financial Management System by a designee(s) in OPBF. Training is planned during 

FY 2005 for those identified as responsible in this process. The updated inventory is planned 

to be recorded during FY 2005. 

    

Type of Finding: Financial Management and Accounting 

Area of Finding: Overall Financial Reconciliation and Reporting 

Summary of Finding: 

A. The organizational structure of the Peace Corps Headquarters needs to be reviewed and 

revised to properly establish lines of authority and internal controls in some areas. In 

particular, the accounting and management groups need to be properly staffed and organized

to manage the year-end financial reporting process. 

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B. Policies and Procedures to perform monthly reconciliations and periodic reporting functions

are not formally documented in the Peace Corps Manual. There are draft BP-080s that 

address these functions, however they need to be updated and formally approved by 

management. 

C. The periodic reconciliation process needs improvement. Although some reconciliations are 

performed by accounting, they are attempting to reconcile to unreliable data in the PCFMS 

system, which also includes very old items. Other important reconciliations do not appear to 

be tasked: 

-

Accounts Receivable 

Property, Plant, & Equipment 

-

- Accounts Payable 

- Contributions

- Obligations

- Unliquidated Obligations

D. The accounting system should be closed each month and a trial balance report run and 

reconciled. These reconciled balances are then used for, among other things, governmental

reporting. Although the Peace Corps is reporting, they do not have confidence in the balances

reported. 

E. General Ledger accounts are not supported by detailed subsidiary ledgers of supporting 

documentation or transactions. 

 PERFORMANCE AND ACCOUNTABILITY REPORT | FISCAL YEAR 2004

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ummary of Management’s Response: 

. OPBF will undertake reorganization in FY 2004. 

. Reconciliation processes have begun in FY 2004. 

. Sub-ledger reconciliation has begun with the installation of Oracle in October 2003. 

.

E.

ubject to the availability of 

funding and Fixed Assets in FY 2006 under the same condition. 

S

A

B

C

D The system is closed at the end of each month beginning in October 2003.

All but two sub-ledgers are now integrated to the core financials and readily available. The 

two remaining are Fixed Assets and Volunteer Readjustment Allowance. Volunteer

Readjustment Allowance is to be implemented in FY 2005, s

THE PEACE CORPS |
Summary of Status at September 30, 2004: 

A. In-progress—Operational demands and funding restrictions have slowed the Reorganization 

Development for OPBF. The functional structure has been developed and plans are in place 

to implement an organizational change December 1, 2004. Interim organizations have been

established to mitigate the internal control conflicts and streamline payment processes. 

B. In-progress—Varying levels of reconciliation are occurring. Gaps in staffing and additional 

modular implementation have slowed formalization of the process. During the first two

quarters of FY 2005, a dedicated reconciliation project is planned to reconcile general ledger 

account imbalances (i.e., budget authority to cash), imbalances with external entities (i.e.,

cash with US Treasury and statement of accounts with the Department of State), as well as 

sub-ledger accounts to the general ledger. This project includes documenting the procedures 

and revising any policy necessary to support FASAB and GAAP requirements. 

C. In-progress—Varying levels of reconciliation are occurring. Gaps in staffing and additional 

modular implementation have slowed the process. The Peace Corps has negotiated with the

Department of Transportation to re-engineer their automated reconciliation programs for 

Oracle Federal Financials. The reconciliation project incorporates the reverse engineering,

testing, and documentation of these reconciliation programs. 

D. Complete—Each month in FY 2004 has been closed and financial statements prepared for 

each quarter. 

E. On-target—The migration of the Volunteer Readjustment Allowance process and assessment

and implementation of the Fixed Assets module are still planned for FY 2005-2006. 

 PERFORMANCE AND ACCOUNTABILITY REPORT | FISCAL YEAR 2004

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Type of Finding: Information Technology

Area of Finding: Recovery Plans

Summary of Finding: 

The Peace Corps Information Technology Recovery Plans have not been finalized. 

Summary of Management’s Response: 

The Peace Corps IT is currently developing IT Recovery / Contingency Plans under the 

guidance of the Agency’s COOP initiative. These plan will be tested prior to the upcoming 

Presidential Challenge Forward and periodically (quarterly or semi-annually) after this effort 

(on a regular, planned basis). 

Summary of Status at September 30, 2004: 

In-progress—Critical systems have been identified and the recovery of their operating

systems was successfully tested in July 2004. The financial systems will be further assessed

to determine any additional critical components. An exercised is planned in FY 2005 to test 

the recovery of the operating systems and data files. A test on user data is planned for FY 

2006. 

THE PEACE CORPS |
    

Type of Finding: Information Technology 

Area of Finding: Systems Development Life Cycle 

Summary of Finding: 

The auditors noted that the Systems Development Life Cycle (SDLC) methodology for FOR 

Post/HQ is currently in draft form and has not been finalized. Changes to the application are

occurring without a formalized change control process. 

Summary of Management’s Response: The Office of the CIO does have a documented SDLC 

methodology that complies with OMB Circular A-127 and A-130. We are in the process of 

implementing this methodology in concert with our Agency IT governance and project 

management initiatives. 

Summary of Status at September 30, 2004: In-progress—The process is being implemented. 

    

Type of Finding: Information Technology

Area of Finding: Contingency Plans 

Summary of Finding: 

The Peace Corps FOR Post/HQ applications do not have a contingency plan in place. 

Summary of Management’s Response: The FOR Post database at each post can be recreated from 

FOR HQ up to the point of the last successful data synchronization. There is not a formal

disaster recovery and contingency plan for FOR HQ. Odyssey and FOR HQ data is being 

backed up each night and the tapes are being shipped off-site the following morning. In the 

event of a disaster these systems would have to be restored from the previous nights backup 

tapes. Both systems will be included in the Odyssey disaster recovery and contingency plans. 

Summary of Status at September 30, 2004: 

In-progress—The COOP team is evaluating the incorporation of FOR HQ server into the 

disaster recovery plan with SunGuard. 

    

Type of Finding: Information Technology 

Area of Finding: Contingency Plans 

Summary of Finding: 

The Peace Corps Odyssey system does not have a contingency plan in place. 

Summary of Management’s Response: 

As part of the Agency’s COOP initiative, the Office of the CIO has created disaster recovery

procedures for all major systems including Odyssey. In partnership with SunGard, the Peace 

Corps’ major systems will be restored within 72 hours which is our service level agreement

(SLA) with our disaster recovery vendor. In response to the President’s Challenge Forward in 

May 2004, we will be testing notification and communications components of our COOP 

function. Ongoing testing will be conducted on a periodic basis. 

Summary of Status at September 30, 2004: 

In-progress—COOP successfully conducted the recovery of Odyssey UNIX servers twice 

during May 12-14th challenge. 

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Type of Finding: Information Technology

Area of Finding: Access Control 

Summary of Finding: 

The auditors found severe access control issues within the Peace Corps Oracle Financials 

server, FRIENDS, and its database, which compromise the controls ensuring Confidentiality 

and Integrity of the financial data residing in the system. 

Summary of Management’s Response: 

The Peace Corps has addressed the password, unnecessary users, and unnecessary services 

issues. The Peace Corps will analyze 777 file system privileges and reduce access where 

possible. The recommended change to upgrade to Trusted HP-UX will be submitted to OPBF 

for analysis and funding consideration. Upon review, approval, and funding, the Office of the

CIO’s Change Control Board will review these items and assist the Odyssey project team 

with implementation support. Due to current budget constraints, these changes will have to 

be reviewed by the Investment Review Board. 

Summary of Status at September 30, 2004: 

Future plan—Will implement upon approval of the IRB and funding. 

    

Type of Finding: Information Technology

Area of Finding: Data Confidentiality, Integrity, and Availability 

Summary of Finding: 

The auditors noted several conditions with the Posts Small Business Server (SBS) and 

workstations that present risk to the Peace Corps data confidentiality, integrity, and 

availability.

Summary of Management’s Response: The O/CIO at headquarters will work with local IT

Specialist to continue their practice of storing backup tapes off-site and to place the server 

above the floor. If funded, O/CIO will deploy a new method for distributing patch updates in

a timely manner with its proposed technology lifecycle refresh. 

Summary of Status at September 30, 2004: 

In progress—All server and workstation configuration issues and a new method for patch 

deployment will be resolved with the deployment of overseas software refresh (pending

funding) that includes a new overseas architecture redesign. 

Complete—CIO staff conduct periodic check with post IT Specialist to ensure IT Support 

and security procedures are followed.

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Medium Risk Findings

Type of Finding: Financial Management and Accounting 

Area of Finding: Contributions, Accounts Receivable, and Cash Receipts 

Summary of Finding: 

A. Accounts Receivable through Interagency Agreements was not recorded in the general ledger 

account. 

B. The Peace Corps Host Country Contributions were not captured in the financial management

system and not disclosed to Treasury within the SF 224. 

Summary of Management’s Response: 

A. The financial system in production for 2003, PCFMS, did not have the capability to record 

Accounts Receivable through Interagency Agreements. This function is available in Oracle 

Federal Financials. Opening balances and detailed transactions have been stated according to 

the procedures used with the prior manual system. The new financial management system

corrected this problem. 

B. OPBF will update existing policy and procedures and work with the Regions to distribute and

re-educate overseas staff to ensure compliance of capturing Host Country Contributions 

where we are able. Processes and procedures will be documented with responsibilities for 

recording assigned by 1st quarter FY 2005. 

Summary of Status at September 30, 2004: 

A. Complete - Odyssey and the system records the opening balances (in PA) and the

receivables(in AR) information for Interagency Agreements. 

B. In-progress—We are continuing to work to correct this reporting problem. Since the last 

update we discovered that the Department of State changed their financial system which is 

causing the underlying problem for us. State has advised us that they will correct their

problem in January 2005, which should enable the Peace Corps to fully correct our reporting 

problem by the second quarter’s financial statement. 

    

Type of Finding: Financial Management and Accounting 

Area of Finding: Procurement/Obligation/Disbursement 

Summary of Finding: 

A. Policies and detailed procedures on the Procurement/Obligation/Disbursement Cycle need to 

be compiled, updated, revised and/or strengthened in the following areas: 

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- Generating a Procurement Request 

- Entering information into PRISM/sending to GSA 

- Purchase card policies and procedures 

- Entering obligations into the new systems 

- Headquarters disbursement process 

- Entering disbursements into the Financial Management System 

- Description of data entered into the Department of State provided System (SPFMS) 

- Operations of the Office of Medical Services 

B. Currently, the Office of Contracts reports directly to the Chief Financial Officer. [Note: This 

sub-finding was classified as HIGH RISK. However, because the primary portions of the

finding were considered MEDIUM RISK, the Peace Corps reports this sub-finding with the 

medium risk findings.] 

C. US dollar invoices received at Headquarters for payment are not certified by a U.S. Treasury 

Certifying Officer within the same division that they are processed in (BIT & IFO). This

certification is as to the legality, existence, and accuracy of the computation, voucher 

information, and supporting records.

D. A Claims Officer has been given the Certifying Officer function for all US dollar 

disbursements. The Claims Officer transmits payments through ECS, but does not verify the 

legality and accuracy of the proposed vouchers and applicable support. 

E. During testing at Peace Corps/Senegal, the auditors determined the Country Director was not 

set up in FOR Post as the alternate approver. 

F. At Peace Corps/Senegal, the Cashier is calculating the Volunteer Living Allowance and

depositing the checks at the bank. 

 PERFORMANCE AND ACCOUNTABILITY REPORT | FISCAL YEAR 2004

Page 129

ices are sometimes paid after the 30 days due date with no interest 

payment included. 

ummary of Management’s Response: 

A.

vity in FY 2004 – 2005. A plan and timeline will be

developed to facilitate this process.

. The Office of Contracts will be reassigned during FY 2004. 

. OPBF will be reorganizing during FY 2004. 

G. The Peace Corps is not in compliance with the Prompt Pay Act. The auditors noted that not 

all offices (HQ and Posts) time/date stamp the invoices when received from vendors, or 

otherwise begin tracking the 30-day time period in which they need to pay the invoice.

Subsequently, invo

S

OPBF will initiate the process of updating, recording, and formalizing procedures through a

business process reengineering acti

B

C

THE PEACE CORPS |
 PERFORMANCE AND ACCOUNTABILITY REPORT | FISCAL YEAR 2004

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D. rocedure to ensure and demonstrate proper internal controls are

established and followed. 

sure there is an alternative approver on file. 

G.

al procedures will be implemented to further enhance the system’s

A.

. Complete—As of October 1, 2004, the Office of Contracts has been reorganized to report to 

C. ctions have slowed the Reorganization

Development for OPBF. The functional structure has been developed and plans are in place 

. In-progress—Within the reorganization plan, a certifying officer position has been identified 

. Complete—Posts have been notified to provide for an alternate approver and the guidance 

. reminded to date stamp all invoices received. These dates are

now entered into Odyssey to ensure that any interest due will be paid. The is standard

functionality in the system. 

OPBF will document a p

E. OPBF will send a notice to Post to en

F. OPBF will send guidance to Posts. 

Oracle Federal Financials has been configured to support prompt pay. During FY 2004 – 

2005 addition

functionality. 

Summary of Status at September 30, 2004: 

In-progress—OPBF has completed documentation of 50% of identified processes and 

procedures. As the update and revision process had already been initiated prior to conversion 

to the new system, a timeline was not developed. The OPBF Training Managers were

assigned to monitor progress to completion. Funding is also being sought for consulting

assistance to speed the documentation. At fiscal year end, OPBF had completed 50% of the 

documentation online. Work will continue on publication in FY 2005. 

B

the Office of the Director. 

In-progress—Operational needs and funding restri

to implement an organizational change in FY 2005. 

D

within the Budget Implementation Team structure. 

E

has been incorporated into the Overseas Financial Management Handbook. 

F. Complete—Posts have been notified of proper segregation of duties and the guidance has 

been incorporated into the Overseas Financial Management Handbook. 

G Complete—Staff have been

THE PEACE CORPS |
    

Type of Finding: Financial Management and Accounting 

Area of Finding: Laws and Regulations 

Summary of Finding: 

A. For FY 03, the Peace Corps did not submit a FMFIA Assurance Report to the President and

Congress as required by Financial Managers Federal Integrity Act. 

B. In FY 03 and prior years, the Peace Corps did not charge debtors interest on delinquent debts

as required by the Debt Collection Improvement Act of 1996. 

C. The Peace Corps does not consistently refer receivables over 180 days to Treasury as 

required in the Debt Collection Improvement Act of 1996. 

Summary of Management’s Response: 

A. The Peace Corps has noted this oversight and will submit a FMFIA Assurance Report in the 

future. 

B. The Peace Corps has not had a financial system capable of handling the calculation of 

interest. With the installation of Oracle Federal Financials, future upgrades will be able to 

handle the calculation of interest charges. The Peace Corps will develop appropriate policies 

and procedures to be effective 4th quarter FY 2004. 

 PERFORMANCE AND ACCOUNTABILITY REPORT | FISCAL YEAR 2004

Page 131

quarterly reporting

requirement on receivables required by the Department of the Treasury. 

A.

or FY 2004 is contained in this Performance and Accountability Report in Section 

III.A.3. 

B.

ding exclusion of Volunteer debt from interest charges should 

be made in FY 2005 as well. 

C. 80 days old have been referred to 

Treasury as required by the Debt Collection Act of 1996. 

C. The Peace Corps did refer nine debts to Treasury on September 3, 2003. Currently the Peace 

Corps is referring debts to Treasury over 180 days once due process is complete and eligible 

for referral. The responsible person for referring these debts is the Claims Officer. 

Additionally, quarterly reviews will be incorporated with the new

Summary of Status at September 30, 2004: 

In-progress—FMFIA reporting for FY 2003 was submitted to OMB with the FY 2005 

Budget Submission. Unfortunately, the official copy could not be provided. The FMFIA 

Report f

Complete—The new financial system provides the capability to charge interest to debtors—a

functionality that the old system did not have. The Odyssey/FOR Post team is currently 

reviewing and testing this functionality. Implementation of this feature is planned in FY 

2005. A policy decision regar

Complete—As of September 2003 all receivables over 1

THE PEACE CORPS |
    

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ype of Finding: Financial Management and Accounting 

. The Peace Corps Manual does not document detailed budget formulation procedures 

. The Peace Corps compiled Headquarters’ and Posts’ Fiscal Years 2003 and 2004 budgets 

s or monitor budget resources. 

he Peace Corps

loped to integrate budget formulation to Oracle G/L.

d with the installation of Odyssey in October 2003. 

The Peace Corps’ new financial management system provides for the automated 

process of budget formulation integrated to the general ledger. 

Are

m. 

been completed. 

Summary of Status at September 30, 2004: Complete—Copy provided to the auditors with FY

2004 FISMA Audit. 

T

Area of Finding: Budget Cycle 

Summary of Finding: 

A

performed by Headquarters’ budget employees. 

B

manually. The Peace Corps is unable to track execution, statu

Summary of Management’s Response: 

A. OPBF will update the current documentation, incorporate reference for it in t

Manual, and distribute the updated guidance. This will be done according to the timeline 

established in the business process reengineering activity in FY 2004 – 2005. 

B. Oracle Financial Analyzer has been deve

This automated process was implemente

Summary of Status at September 30, 2004: 

A. On-target—All but one process has been updated at September 30. Final process is planned 

to be released in FY 2005. 

B. Complete—

    

Type of Finding: Information Technology 

a of Finding: Systems Security 

Summary of Finding: The auditors noted that the Overseas Microsoft NT General Support

System Security Plan exists in draft for

Summary of Management’s Response: Overseas Microsoft NT General Support System Security 

Plan HQ systems has

THE PEACE CORPS |
    

Type of Finding: Information Technology 

Area of Finding: Systems Access 

Summary of Finding: The auditors noted that the Peace Corps has termination procedures in 

place; however, the Personnel Tracking System (PTS) does not automatically update when

an employee is terminated; it has to be manually entered into the system by the supervisor or

system administrators. In addition, PTS does not interface with the Odyssey system. 

Therefore, any change in payroll status would not be automatically detected by PTS. 

Summary of Management’s Response: The Peace Corps has processes for managing the 

termination of employees and contractors but these processes need to be documented. A task

force, sponsored by the CIO and the AD/M, has begun the process of documenting these 

processes, identifying owners of these processes, and making recommendations to both the 

process and the PTS application. The Human Capital Modernization working group, under

the Agency’s Enterprise Architecture initiative, will be engaged to make sure the

recommendations are in line with the desired new human capital management system

(approved by the Agency’s IT Investment Review Board and business case is in

development). 

Summary of Status at September 30, 2004: In progress—The Taskforce is continuing the process

of mapping the automated personnel tracking system. We are beginning the phase of 

interviewing the system stakeholders to identify data entry triggers. 

    

Type of Finding: Information Technology

Area of Finding: Systems Security 

Summary of Finding: The auditors noted that there is no security plan in place for the FOR 

Post/HQ applications. 

Summary of Management’s Response: The Office of the CIO and OPBF are working to complete 

the security plans for the For Post and HQ applications. These plans are currently in 

development and in final draft stage due to be completed by 3/31/04.

Summary of Status at September 30, 2004: Complete—Final plans in place at September 30, 

2004. 

    

Type of Finding: Information Technology 

Area of Finding: Systems Risk Assessment 

Summary of Finding: There is no risk assessment in place for the FOR Post/HQ applications.

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Summary of Management’s Response: The risk assessment for FOR Post / HQ systems was 

completed in February 2004.. 

Summary of Status at September 30, 2004: Complete 

    

Type of Finding: Information Technology 

Area of Finding: Systems Security 

Summary of Finding: 

The auditors noted the following conditions in regards to application security for FOR Post/HQ: 

- No complexity constraints on passwords for the FOR Post/HQ applications; 

- No set login attempts threshold has been defined (one super account exists); and 

- User account is not automatically disabled after specified period of inactivity.

Summary of Management’s Response: The ability to implement stronger password controls for

FOR Post will require the acquisition of additional software and the modification of the FOR 

Post application. Due to current budget constraints, these changes will have to be reviewed 

and approved by the IRB process. 

Summary of Status at September 30, 2004: Complete—Completed with the release of FOR Post 

Version 2.4.19 in August 2004. 

    

Type of Finding: Information Technology 

Area of Finding: Application Monitoring 

Summary of Finding: The auditors noted that are no audit logs that are automatically generated 

by the FOR Post/HQ applications. 

Summary of Management’s Response: The FOR Post application currently does not create audit 

logs that can be audited or reviewed. The development of this functionality will have to be

reviewed by the OPBF project team, prioritized, funded, developed, and implemented by the 

OPBF Odyssey/FOR Post project team. 

Summary of Status at September 30, 2004: Future plan—Project plan will be developed in FY 

2005 and presented to the Investment Review Board. 

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Type of Finding: Information Technology 

Area of Finding: Systems Data Integrity 

Summary of Finding: 

The auditors noted that that FOR Post/HQ application data validation may not be adequate since 

data integrity is conducted through referential checks only. 

Currently, financial data files traveling between the Peace Corps Overseas Posts and the Peace 

Corps headquarters is only restricted as to the manner of data which may be placed in a 

particular data entry field. For example, a cashier may not be able to put a monetary sum into a

date field. After, passing this test the data becomes “trusted”. 

Should data become corrupted in transit from Post to Headquarters or vice-versa, verification of 

the validity of the data must come from manual intervention. This risk could be mitigated by

using a digital checksum on data prior to transmission and checksum verification on receipt

assuring its integrity.

Summary of Management’s Response: 

The FOR Post application needs to be enhanced to provide the necessary data integrity controls. 

The development of this functionality will have to be reviewed by the OPBF project team, 

prioritized, funded, developed, and implemented by the OPBF For Post / Odyssey project team. 

Summary of Status at September 30, 2004: Future plan—Project plan will be developed in FY 

2005 and presented to the Investment Review Board. 

    

Type of Finding: Information Technology 

Area of Finding: Systems Access 

Summary of Finding: The auditors noted that FOR Post/HQ developers have access to the 

production environment of FOR Post/HQ. 

Summary of Management’s Response: The Peace Corps Office of the CIO has implemented 

logical access controls that restrict developers from having access to the production

environment of FOR Post/HQ. 

Summary of Status at September 30, 2004: In-progress—FOR HQ developers have access to

production. No developers have access to FOR Post data at posts. 

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Type of Finding: Information Technology 

Area of Finding: Systems Security 

Summary of Finding: The auditors noted that there is no security plan in place for the Odyssey 

application. 

Summary of Management’s Response: The Office of the CIO is in the process of developing 

security plans for the Odyssey system, and all other systems managed by the Peace Corps. 

The Office of the CIO’s Security Chief is leading this effort. This plan will be final by March

31, 2004. 

Summary of Status at September 30, 2004: Complete. 

    

Type of Finding: Information Technology 

Area of Finding: Systems Risk Assessment 

Summary of Finding: There is no risk assessment in place for the Peace Corps Odyssey system. 

Summary of Management’s Response A comprehensive risk assessment of the Peace Corps

Odyssey system has been conducted by SRA, and completed as of February 27, 2004. 

Summary of Status at September 30, 2004: Complete. 

    

Type of Finding: Information Technology 

Area of Finding: Systems Security 

Summary of Finding: 

The auditors noted the following conditions in regards to application security for Odyssey: 

- No complexity constraints on passwords; 

- No set login attempts threshold has been defined; 

- There is no limit set on when a password should expire; and 

- The application allows for unlimited failed login attempts with no account lockout.

Summary of Management’s Response: 

The Odyssey/FOR Post project team in collaboration with the operations offices within the

Office of Planning, Budget, and Finance are working to review the password and security needs

of the Odyssey application. The recommendations from this report will be analyzed, prioritized,

and the resulting cost will be estimated. Upon completion of this activity, the proper response 

will be determined. 

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n t third quarter FY 2004 but the user account 

asswords were not part of these improvements. 

Sum

password expiration and account lockout were all effected in the fourth quarter 

FY 2004. 

   

chnology 

Sum

Sum

Sum n included in

the list of policies and procedures described in the High Risk Findings section. 

   

Sum ent that 

to the Peace Corps data confidentiality, integrity, and availability. 

Sum

the required direction, leadership,

Sum ic checks with post

IT Specialist to review standard operating procedures and server health. 

   

Sum

ent that present risk to the Peace Corps data confidentiality, integrity, and 

availability.

ummary of Management’s Response: 

t existing Agency standard form, “Temporary 

ccess and Permanent Transfer Request Form”. 

Improvements in account passwords were made i he

p

mary of Status at September 30, 2004: Complete—Complexity restraints, login attempt 

thresholds,



Type of Finding: Information Te

Area of Finding: System Audit 

mary of Finding: The auditors noted that Odyssey generates audit trails; however, there are

no documented Standard Operating Procedures (SOPs) for the review of Odyssey audit logs. 

mary of Management’s Response: OPBF and the Odyssey project team are working to

develop policies and procedures to address the monitoring and review of Odyssey audit logs. 

mary of Status at September 30, 2004: In-progress—This requirement has bee



Type of Finding: Information Technology 

Area of Finding: Data Confidentiality, Integrity and Availability 

mary of Finding: The auditors noted several conditions with Posts’ IT environm

present risk

 

mary of Management’s Response: The Country IT Binder will be completed and organized 

as required, at the direction of the Chief, International Technical Support. In addition, the 

Chief ITS, will work with the Country Directors to provide

and funds needed to address the issues at off-site facilities. 

mary of Status at September 30, 2004: Complete-CIO conducts period



Type of Finding: Information Technology 

Area of Finding: Data Confidentiality, Integrity and Availability 

mary of Finding: The auditors noted several conditions with the PEACE CORPS/Manila 

Post IT environm

S

CIO/OI/ITS will work with Posts to implemen

A

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nvestigated. No locally hired staff receives a specific security clearance.

e Peace Corps will continue to conduct a National Agency Check with Inquiries for all US

omplete—O/CIO staff conduct periodic reviews with post IT Specialist to ensure proper 

/CIO will review security clearance of IT Specialist staff.

   

The Peace Corps will work with the State Department Regional Security Officer to ensure all 

local hires overseas are i

Th

Direct Hires and PSCs. 

Summary of Status at September 30, 2004: 

C

support procedures are followed. 

Future plan—O



Low Risk Findings

Type of Finding: Financial Management and Accounting

Are

Sum

process to ensure consistent delegation of the Billing Officer 

esponsibilities to the Administrative Assistant as set forth in the Overseas Financial 

lity not 

eing verified before disbursements were processed at Post; obligations and disbursements 

planation and sources of

components to support the calculations and fiscal data on the form was not completed in 

Sum

f a policy and/or procedure, the actions are planned for FY 2005. 

For those items requiring retraining of current procedures, notices will be distributed 

Sum

with FOR Post Update 5.13.04 to reinforce current policies and procedures. The new position

s and updated roles and responsibilities will be issued once the BPR is complete. 

a of Finding: Imprest Fund Cycle 

mary of Finding: 

The Peace Corps Manual and the Overseas Financial Management Handbook need to be 

revised and strengthened with regard to detailed procedures of the responsibilities and

procedures of the Cashier at Headquarters, entering disbursements into FOR Post; and

description of fiscal data and field data entered into FOR Post to create the Bill of Collection.

Posts do not utilize a

r

Management Handbook. 

Difficulties in the implementation of FOR Post at Posts resulted in funds availabi

b

were not being entered into FOR Post timely; and data was not available to Odyssey.

Bill of Collection at Posts does not contain an adequate ex

accordance with the Overseas Financial Management Handbook. 

mary of Management’s Response: As a part of the BPR, new position descriptions 

containing updated roles and responsibilities will be created for Post staff. Thereafter,

headquarters management will request annual updates. For those items requiring

development or updating o

advising of proper action. 

mary of Status at September 30, 2004: In-progress—A training memorandum was issued

description

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ent and Accounting

rea of Finding: Volunteer Readjustment Allowance 

A. does not have procedures for entering or maintaining Volunteer 

data in RADBMS (Readjustment Allowance Database Management System) regarding 

re sending inaccurate close of service (COS) data. In some cases, outstanding 

one Post does not consistently use the check register to 

adjustment allowance check at Posts.

A.

tirety. Once HRMS is implemented the procedures will be

B. ining communications and regular feedback to ensure 

that systems are in place and that responsibilities are delegated to the appropriate personnel 

. VFO will inform posts of the required information that is needed to complete COS cables

D.

 appropriate to require Posts to do so for

better internal control of One-Third RA checks in-country. Effective immediately, 

management will institute the procedural change by notifying all Posts of said change and 

updating MS-223.9.2.1 accordingly.

Type of Finding: Financial Managem

A

Summary of Finding: 

The Peace Corps Manual

readjustment allowance. 

B. Posts are not consistently sending Volunteer information to Headquarters in a timely manner. 

C. Posts a

Volunteer bills or other withdrawals are not indicated on the close of service cable from 

Posts. 

D. The auditors’ testing indicated that

record Volunteers’ receipt of their re

Summary of Management’s Response: 

Volunteer Financial Operations (VFO) is scheduled to convert to Odyssey’s Human

Resources Management System (HRMS) from the Readjustment Allowance Database 

Management System (RADBMS) during FY 2004, which will change data processing and 

disbursing procedures in their en

clearly defined by management and Manual Section 223 will be updated to reflect all

appropriate systems processes. 

VFO will work with posts through tra

to ensure that all posts submit documents containing Volunteer information within the time

frame outlined in the Manual Section.

C

accurately. Further, we will work with posts to have Volunteer bills paid prior to their 

departure from post or, when within our control, report outstanding bills in the COS cable. 

Although MS-223.9.2.1 does not require Posts to send completed check registers to VFO, as

indicated in the auditors’ Notice of Finding, it is

THE PEACE CORPS |
Summary of Status at September 30, 2004: 

A. On-target—The planned date for the implementation of the HRMS is December 1, 2004.

MS-223 will be updated after implementation. 

B. Complete—Ongoing, regular communication between VFO and Posts to reinforce deadlines 

has been effected in FY 2004. 

C. Complete—Ongoing, regular communication between VFO and Posts to reinforce deadlines 

has been effected in FY 2004. 

D. On-target—The planned date for the implementation of the HRMS is December 1, 2004.

MS-223 will be updated after implementation. Posts were notified of changes in advance of 

the Manual Section update. 

    

Type of Finding: Financial Management and Accounting 

Area of Finding: Payroll 

Summary of Finding: 

A. The Peace Corps Manual does not have adequate procedures for the following: 

- Reconciliation of the transmission to National Finance Center (NFC) and/or the payroll 

data received from NFC 

- Budget Analyst’s review of applicable Posts or departments payroll report of payroll 

expenses 

- Correction of payroll data errors by the Accountant 

B. The Peace Corps Manual Section 742 does not have updated procedures for using Time

Peace as the time and attendance recorder for the Peace Corps. 

C. The Overseas Financial Management Handbook does not have adequate procedures for 

recording time and attendance for overseas staff paid through Headquarters. 

D. At Peace Corps/Senegal and Philippines Posts, the guard logbooks were not always 

consistent with the timesheets submitted by staff. Additionally, in some cases leave slips

were not submitted for leave taken. 

E. The policies and procedures in the Overseas Financial Management Handbook Section 27 

need to be revised to document the current process for the fiscal coding for Personal Service 

Contractors (PSC) and should include all of the Posts' responsibilities regarding vouchering 

and all payments for PSCs. 

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Summary of Management’s Response: 

A. The Operating Procedures for transmitting and reconciling data to NFC is located in the 

Human Resource Office. HRM submits the bi-weekly data to NFC though the agency 

mainframe. The staff receives reports from NFC verifying the number of time and attendance 

(T & A) data transmitted and received by NFC. Corrections of data errors are resolved

through a review and analysis of the original T & A and the personnel database. HRM also

submits a report that identifies employees that were paid and unpaid. HRM is working on a

formal Standard Operating Procedure Manual. OPBF will document the remaining 

procedures in a procedures manual.

B. We concur that the Peace Corps Manual Section 742 does not have updated procedures for 

using Time Peace as the time and attendance recorder for the Peace Corps. We will update 

the Peace Corps Manual to reference the handbook as the authority for the procedure.

The Peace Corps website has a copy of the Time and Attendance Handbook – Time Peace. 

HRM is working on the update of this procedures manual. 

C. The Agency will examine their policies and procedures as they refer to documentation of

overseas staff paid through Headquarters. 

D. The Regional offices acknowledge this was an issue at the time of the audit. They have 

responded to and resolved it by clarifying that the guard report comings and goings for 

security purposes not for time and attendance, which is now monitored separately. 

E. OPBF is currently working to revise the Overseas Financial Management Handbook and

review at Section 25 for update and/or modification. 

Summary of Status at September 30, 2004: 

A. In-progress—An SOP has been drafted in HRM. The manual will be updated to reflect that 

the SOP resides in HRM. The procedures and training for budget analyst payroll 

reconciliation and accountant adjustments are incorporated in the list of policies and 

procedures to be documented in the BPR exercise. 

B. In-progress—The Time Peace Handbook is being refined to reflect changes in Time Peace, in 

addition, we are reviewing the feasibility of placing the handbook in CD-ROM format for 

distribution to the overseas posts. HRM is in the process of reviewing all personnel related 

manual sections for update and will incorporate the appropriate reference with the proposed 

changes. 

C. In-progress—In the Guide for Overseas Staff and Their Families, revised in April, 2004,

there is a section titled "Hours of Work/Time and Attendance. This section speaks to the 

biweekly reporting of post personnel to the Peace Corps/HQ payroll office. The information

is maintained on an attendance record (PC-57). This is the official record of time worked and

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leave taken. This information may be incorporated into the Overseas Financial Mgmt

Handbook. 

D. In-progress—The guard logbooks are not authorized for use in reconciling employee time 

and attendance sheets, this information is maintained on an attendance record (PC-57). This 

is the official record of time worked and leave taken. HRM has communicated this guidance 

to the regions for dissemination to the posts. 

E. In-progress—OPBF is currently working to revise the Overseas Financial Management 

Handbook and review at Section 25 for update and/or modification of the PSC payment and

recording processes. 

    

Type of Finding: Financial Management and Accounting 

Area of Finding: Medical Services 

Summary of Finding: 

A. The Peace Corps does not have a management approved policies and procedures guide which 

addresses the need to account for Medical Services. Medical Services uses an intra-office 

handbook for guidance. 

B. Post inventory procedures for medicines is inadequate. 

C. Internal controls surrounding country inventory, located at Peace Corps/Senegal need to be

strengthened. 

▪ Controls surrounding the transfer and inventory of medicine to Training Centers need to 

be strengthened. 

▪ No review by Headquarters or Posts’ Medical Officers’ supervisor to monitor purchase, 

usage or disposal of medical supplies for reasonableness. 

Summary of Management’s Response: 

A. The Office of Medical Services agrees with the recommendation that the medical services 

section in the Peace Corps Manual needs to be reviewed and updated to reflect current policy

especially in MS 264 Medical Evacuations. In addition, the manual section needs to state that 

OMS has the authority to establish clinical/practice guidelines for use by the Peace Corps 

Medical Officers at post and staff at headquarters. The manual section should define the 

policy and the authority of OMS to implement clinical practice standards and guidelines to 

manage the quality of care provided to the Volunteers. The clinical practice standards and 

guidelines implementing these policies and should be separate from the Peace Corps manual

as they reflect current clinical practice and standards. 

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B. Whether medical inventory records are done manually or electronically, the Peace Corps 

Medical Officer and the Country Director are responsible for the procurement and handling 

of medicine as noted in MS 734, Section 2.1.6. 

C. Effective inventory controls are already identified in MS 734, Section 2.1.6. PCMOs 

maintain and inventory control system and a general inventory of supplies must be taken at 

least every month by the Country Director or designee. Current Peace Corps policy (2.1.6.1) 

establishes the requirement for headquarters to perform semi-monthly reconciliation of

controlled medical substance requisitions received from posts. Position development and 

approval for a Property and Supply Chief is in the proposal stage. Inventory and 

reconciliation systems are being reviewed and updated to meet the criteria established in

OMB circular A-123 and GAO-01-1008G. 

Summary of Status at September 30, 2004: 

A. In-progress—The update to the Peace Corps Manual is in the revision and approval process. 

B. Complete—Overseas Services Division (M/AS/OSD) has updated the inventory system to

assist the PCMOs in recording the proper inventory amount. This system tracks all medicine 

ordered, received, dispensed and disposed of for each Post. The inventory is routinely

reviewed by staff at Headquarters to track the purchasing and dispensing of medicine. New 

ordering procedures have been issued by M/AS/OSD to posts. A new Property Management

Handbook (M/AS Property Management Office Procedures) has been issued to assist 

Country Directors and their designees with the inventory and accountability process. 

C. Complete—M/OSD has been working with the posts to ensure that a general inventory of 

supplies is taken at least every month by the Country Director or designee. The Chiefs of

M/OSD and M/RRDD or their designees perform semi-monthly reconciliation of controlled 

medical substance requisitions received from posts. The duties and responsibilities of 

programs and the Agency Property Officer (Chief of M/RRDD) has been re-emphasized in 

the M/AS Property Management Handbook (PMH). The PMH is being provided to each 

Property Account Holder and Property Custodian to provide property management guidance 

and associated deadlines. Inventory and reconciliation systems continue to be reviewed and

updated to meet the criteria established in OMB circular A-123 and GAO-01-1008G. 

    

Type of Finding: Financial Management and Accounting 

Area of Finding: Reconciliation & Financial Reporting – SF 224 

Summary of Finding: The monthly Statement of Transactions SF 224 submitted to Treasury is 

not properly reviewed and approved by the supervisor. 

Summary of Management’s Response: Due to oversight, some SF 224s are not physically signed 

by the Director, Accounting Operations. We will ensure that in the future, these are reviewed 

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and signed by the Director before submission to the Treasury. Necessary changes will also be 

made in SF 224 procedures manual to reflect this change. 

Summary of Status at September 30, 2004: Complete—The finding was resolved with the

submission of the July 2004 SF 224 report. The report was signed by the Accounting Operations 

Supervisor prior to the submission of the report to Treasury and this procedure has been followed

by the subsequent reporting months. All future reports will comply with this process. 

    

Type of Finding: Information Technology 

Area of Finding: Systems Access 

Summary of Finding: The auditors noted that the Peace Corps has not implemented a formal 

process for granting user access to the FOR Post/HQ applications. No written formal policies

and procedures exist for granting user access. Also there is no management approved access

request form that is used for granting access to the application.

Summary of Management’s Response: The Peace Corps will establish a formal process for FOR 

Post/HQ user administration, including the use of user access forms. 

Summary of Status at September 30, 2004: In-progress—Draft of the FOR HQ user access

form has been completed. The request process and a request form are planned to be finalized 

by the end of December 2004. 

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Peace Corps Acronyms 

AF Africa Region

BFO Budget and Fiscal Office(r) 

BFY Budget Fiscal Year

BIT Budget Implementation Team

CC Crisis Corps 

CCV Crisis Corps Volunteer 

CD Country Director 

CDA Country Desk Assistant

CDO Country Desk Officer 

CDU Country Desk Unit

CFO Chief Financial Officer 

CHOPS Chief of Operations

CMA Centrally Managed Account

CME Continuing Medical Education 

COLA Cost of Living Adjustment 

COS Close of Service 

COTR Contracting Officer's Technical Representative 

COTS Commercial Off-the-Shelf

CPU Central Processing Units 

CR Continuing Resolution

DOL U.S. Department of Labor 

DOS U.S. Department of State 

EAC Emergency Action Committee 

EAP Emergency Action Plan

ECS Electronic Certification System

EFT Electronic Funds Transfer

EL Emergency Leave

EMA Europe, Mediterranean and Asia Region 

EOD Enter on Duty

EOT End of Tour 

ER Exchange Rate

ET Early Termination

FAM Foreign Affairs Manual 

FCH Fiscal Coding Handbook

FECA Federal Employee Compensation Act

FEGLI Federal Employee Government Life Insurance 

FEHB Federal Employees Health Benefits Program 

FEHBA Federal Employee Health Benefits Act Program

FERS Federal Employees’ Retirement System

FICA Federal Insurance Compensation Act

FMO Financial Management Officer 

FOR Financial Operations Room (e.g., FOR Post, FOR Budget)

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FSC Financial Service Center 

FSN Foreign Service National 

FTE Full-Time Equivalent (Employee) 

FY Fiscal Year

GAO General Accounting Office

GC General Counsel

HQ Headquarters 

HRM Human Resource Management (Office of) 

IAP Inter-America and Pacific Region 

ICASS International Cooperative Administrative Support Services 

IFO International Financial Operations

IG Inspector General

IPBS Integrated Planning And Budget System

IST In Service Training 

IT Information Technology

MOA Memorandum of Agreement

OFMH Overseas Financial Management Handbook

OIG Office of the Inspector General 

OMB Office of Management And Budget

OMS Office of Medical Services 

OPBF Office of Planning, Budget and Finance 

OPSI Office of Private Sector Initiatives 

OSS Office of Special Services 

OST Overseas Staff Training

OVS Office of Volunteer Services 

PASA Participating Agency Service Agreement 

PBR Plan and Budget Review

PCMO Peace Corps Medical Officer 

PCSSO Peace Corps Safety and Security Officer 

PCT Peace Corps Trainee 

PCV Peace Corps Volunteer

PPA Planning and Policy Analysis

PSA Public Service Announcement 

PSC Personal Services Contractor 

PST Pre-Service Training 

PVO Private Volunteer Organization 

RA Readjustment Allowance

RD Regional Director

RPCV Returned Peace Corps Volunteer 

RSO Regional Security Officer (U.S. State Department) 

UNV United Nations Volunteer 

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