U.S. ENVIRONMENTAL PROTECTION AGENCY 

OFFICE OF INSPECTOR GENERAL 

Catalyst for Improving the Environment 

Quick Reaction Report 

Agreed-Upon Procedures 

on EPA’s Fiscal Year 2009 

Third Quarter 

Financial Statements 

 Report No. 09-2-0247 

 September 24, 2009 
Report Contributors:	 Paul Curtis 

Meg Hiatt 

 Javier Negron 

Demetrios Papakonstantinou 

 Lynda Taylor 

Abbreviations 

EPA U.S. Environmental Protection Agency 

FY Fiscal Year 

GL General Ledger 

OCFO Office of the Chief Financial Officer 

OIG Office of Inspector General 

OMB Office of Management and Budget 

RGLTS Report of General Ledger Balance by Treasury Symbol 

SFFAS Statement of Federal Financial Accounting Standards 

USSGL United States Standard General Ledger 
U.S. Environmental Protection Agency 09-2-0247 

September 24, 2009 Office of Inspector General 

At a Glance 

Catalyst for Improving the Environment 

Why We Performed These 

Agreed-Upon Procedures 

We performed agreed-upon 

procedures on the U.S. 

Environmental Protection 

Agency (EPA) Fiscal Year (FY) 

2009 Third Quarter Financial 

Statements. We did so to assist 

EPA in evaluating whether its 

quarterly Financial Statements 

were compiled consistent with 

the Treasury United States 

Standard General Ledger 

Crosswalk, and to identify 

significant fluctuations in 

financial line item balances from 

the previous year. 

Background 

Agencies submit unaudited 

interim Financial Statements to 

the Office of Management and 

Budget 21 days after the end of 

each of the first three quarters of 

the fiscal year. Agencies should 

include management’s 

explanation of significant 

variances in types or amounts of 

assets, liabilities, costs, revenues, 

obligations, and outlays, along 

with the submitted statements. 

For further information, contact 

our Office of Congressional, 

Public Affairs and Management at 

(202) 566-2391. 

To view the full report, click on the 

following link: 

www.epa.gov/oig/reports/2009/ 

20090924-09-2-0247.pdf 

Agreed-Upon Procedures on EPA’s Fiscal Year 2009 

Third Quarter Financial Statements

 What We Found 

We performed certain agreed-upon procedures on the Agency’s FY 2009 

Third Quarter Financial Statements. We compared the statements with EPA’s 

Crosswalk, recomputed them for mathematical accuracy, and compared them 

with balances separately generated by us, and concluded that the amounts 

agreed. 

During the first and second quarters of the Agreed-Upon Procedures, we 

identified a difference between the FY 2009 Report of General Ledger Balance 

by Treasury Symbol beginning balances and FY 2008 ending balances in 

general ledger account 4201, Total Actual Resources. The net difference of 

$43,627 was the result of account 4165, Allocation of Authority – Anticipated, 

incorrectly closing to account 4201 instead of to account 4450, Authority 

Available for Apportionment. The Agency made an adjustment in the third 

quarter to correct the error. 

The agreed-upon procedures do not constitute an audit of the quarterly 

Financial Statements or any part thereof, the objective of which would be the 

expression of an opinion on the quarterly Financial Statements or any part 

thereof. 
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY 

WASHINGTON, D.C. 20460 

OFFICE OF 

INSPECTOR GENERAL 

September 24, 2009 

MEMORANDUM 

SUBJECT: Agreed-Upon Procedures on EPA’s Fiscal Year 2009 

Third Quarter Financial Statements 

Report No. 09-2-0247 

FROM: Paul C. Curtis 

Director, Financial Statement Audits 

TO:	 Maryann Froehlich 

Acting Chief Financial Officer 

The Office of Inspector General (OIG) of the U.S. Environmental Protection Agency (EPA) 

conducted these Agreed-Upon Procedures on EPA’s Fiscal Year 2009 Third Quarter Financial 

Statements. This report is provided to you solely to assist you in evaluating whether the Fiscal 

Year 2009 Third Quarter Financial Statements were compiled consistent with the Treasury 

United States Standard General Ledger Crosswalk, and to identify significant fluctuations in 

financial line balances from the previous year. 

Our report is intended solely for your information and use and should not be used by those who 

have not agreed to the procedures or taken responsibility for the sufficiency of the procedures for 

their purposes. No written response to this report is required. 

If you have any questions, please do not hesitate to contact me at 202-566-2523 or 

curtis.paul@epa.gov, or Meg Hiatt at 513-487-2366 or hiatt.margaret@epa.gov. 
Agreed-Upon Procedures on EPA’s Fiscal Year 2009 09-2-0247 

Third Quarter Financial Statements 

Table of Contents 

Purpose........................................................................................................................... 1 

Background .................................................................................................................... 1 

Scope and Methodology ............................................................................................... 1 

Results of Agreed-Upon Procedures ........................................................................... 2 

Status of Recommendations and Potential Monetary Benefits................................. 7 

Appendices 

A OIG-Identified Significant Fluctuations between 06/30/09 and 06/30/08 ....... 8 

B Distribution ......................................................................................................... 11 
09-2-0247 

Purpose 

We performed these agreed-upon procedures at the request of the Office of the Chief Financial 

Officer (OCFO). We did so to assist the U.S. Environmental Protection Agency (EPA) in 

evaluating whether its Fiscal Year (FY) 2009 Third Quarter Financial Statements were compiled 

consistently with the Treasury United States Standard General Ledger (USSGL) Crosswalk, and 

to identify significant fluctuations in financial line item balances from the previous year. 

Background 

According to Office of Management and Budget (OMB) Circular A-136, interim unaudited 

Financial Statements, without notes, are required on a quarterly basis. Agencies submit 

unaudited interim Financial Statements to OMB 21 days after the end of each of the first three 

quarters of the fiscal year. Agencies should include management’s explanation of significant 

variances in types or amounts of assets, liabilities, costs, revenues, obligations, and outlays, 

along with the submitted statements. 

Scope and Methodology 

We performed certain agreed-upon procedures, enumerated below, on EPA’s unaudited 

consolidated FY 2009 Third Quarter Financial Statements, to assist the OCFO in evaluating 

whether the quarterly Financial Statements were compiled consistently with Treasury’s USSGL 

Crosswalk and to identify significant fluctuations in financial line item balances from the 

previous year. 

The adequacy of these procedures is the OCFO’s responsibility. Consequently, we make no 

representation regarding the sufficiency of the procedures. The agreed-upon procedures do not 

constitute an audit of the quarterly Financial Statements or any part thereof, the objective of 

which would be the expression of an opinion on the quarterly Financial Statements or any part 

thereof. Accordingly, we do not express such an opinion. Were we to perform additional 

procedures, other matters might come to our attention that we would report to assist the OCFO. 

This agreed-upon procedures engagement was conducted using applicable generally accepted 

government auditing standards, which incorporate attestation standards issued by the American 

Institute of Certified Public Accountants. These standards provide guidance for performing and 

reporting the results of agreed-upon procedures. 

We performed the agreed-upon procedures from July 21, 2009 to September 15, 2009. We based 

our procedures on EPA’s FY 2009 Third Quarter Financial Statements and supporting schedules, 

general ledger (GL) balances, and manual on-top adjustments. 

1 
09-2-0247 

Results of Agreed-Upon Procedures 

Procedure 1 

Obtain EPA’s FY 2009 Third Quarter Financial Statements, adjusted trial balance, on-top 

entries, and support for the statements (including Earmarked Funds). Import the Report of 

General Ledger Balance by Treasury Symbol (RGLTS) and enter the Agency’s on-top entries 

into ProSystem and generate an adjusted trial balance, Consolidated Balance Sheet, Statement of 

Net Cost, and Statement of Changes in Net Position. 

Results of Procedure 1 

We obtained the Agency’s FY 2009 Third Quarter Financial Statements, adjusted trial 

balance, on-top entries, and support for the statements (including Earmarked Funds and 

Child Agency Trial Balances). We imported the RGLTS for the accounting period 0909, 

and entered the Agency’s on-top adjusting entries to beginning balances into ProSystem 

to generate an adjusted trial balance, Consolidated Balance Sheet, Statement of Net Cost, 

and Statement of Changes in Net Position. 

Procedure 1.a 

Compare the ProSystem-generated adjusted trial balance based on the Agency’s support to the 

Agency’s adjusted trial balance in order to verify the Agency’s Financial Statement Crosswalk 

and note any differences. 

Results of Procedure 1.a 

We compared the ProSystem adjusted trial balance to the Agency’s adjusted trial balance 

and the amounts agreed. We verified that the statements complied with and are in 

accordance with EPA’s Crosswalk. 

Procedure 1.b 

Compare the ProSystem-generated Financial Statements to EPA’s Financial Statements and note 

any differences. 

Results of Procedure 1.b 

We compared the ProSystem-generated financial statements to EPA’s Financial 

Statements (Consolidated Balance Sheet, and Consolidated Statements of Net Cost and 

Changes in Net Position). We found that the amounts agreed. 

2 
09-2-0247 

Procedure 1.c 

Enter the FY 2009 and FY 2008 GL balances and on-top entries into Excel spreadsheets. 

Prepare the Combined Statement of Budgetary Resources and Statement of Custodial Activity 

and compare to the Agency’s statements and note any differences. 

Results of Procedure 1.c 

We entered the FY 2009 and FY 2008 GL balances and on-top adjustment entries into 

Excel spreadsheets and compared the OIG-prepared Combined Statement of Budgetary 

Resources and Statement of Custodial Activity to the Agency’s statements. 

Statement of Custodial Activity: 

The Agency’s balances for the FY 2009 third quarter agreed with our amounts for this 

statement. 

Combined Statement of Budgetary Resources: 

The Agency’s balances for the FY 2009 third quarter agreed with our amounts for this 

statement. 

Procedure 1.d 

Extract GL ending balances for Earmarked Funds from the RGLTS using Interactive Data 

Extraction Analysis and enter into ProSystem. Enter on-top entries and generate a Consolidated 

Statement of Changes in Net Position for Earmarked Funds and compare to EPA’s Consolidated 

Statement of Changes in Net Position for Earmarked Funds. 

Results of Procedure 1.d 

We extracted the GL ending balances for Earmarked Funds from the RGLTS, generated a 

Consolidated Statement of Changes in Net Position for Earmarked Funds, and compared 

it to EPA’s Statement of Changes in Net Position for Earmarked Funds. The balances 

agreed. 

Procedure 1.e 

Compare the Agency’s Third Quarter Consolidated Statement of Net Cost by Goal to the 

consolidated totals from the Consolidated Statement of Net Cost. 

Results of Procedure 1.e 

We compared the Agency’s Third Quarter Consolidated Statement of Net Cost by Goal 

to the consolidated totals (total costs, total earned revenue, and net cost of operations) 

from the Consolidated Statement of Net Cost. The amounts agreed. 

3 
09-2-0247 

Procedure 1.f 

Mathematically verify accuracy of the Consolidated All Other column on the Consolidating 

Statement of Changes in Net Position in the Agency’s Financial Statements. 

Results of Procedure 1.f 

We mathematically verified the accuracy of the All Other column in the Agency’s 

Financial Statements on the Consolidating Statement of Changes in Net Position. 

Procedure 1.g 

Identify significant fluctuations in balances by comparing current year balances to prior year 

balances. (Criteria – Percentage change of 10 percent or more and dollar change exceeding 

$50 million). 

Results of Procedure 1.g 

We identified significant fluctuations in the Balance Sheet, Statement of Net Cost, 

Statement of Changes in Net Position, and Statement of Budgetary Resources. OIG 

identified the same fluctuations as the Agency, as well as other fluctuations, which are 

detailed in Appendix A. 

OMB Circular A-136 states, “The analysis should be only on the significant variances 

between the current quarter and the same quarter from the prior year. Management has 

discretion on what constitutes a significant variance. Management is to provide variances 

for only the top three items with significant fluctuations.” The Agency elected to identify 

seven fluctuations and submit them to OMB as follows: 

Balance Sheet 

(1)	 The Agency reported to OMB that the $5.8 billion increase in Fund Balance With 

Treasury is primarily due to the State and Tribal Assistance Grant program 

contained in the American Recovery and Reinvestment Act of 2009 (Recovery 

Act). 

(2)	 The Agency reported to OMB that the $6.1 billion increase in Unexpended 

Appropriations is primarily due to the State and Tribal Assistance Grant program 

contained in the Recovery Act. 

(3) The Agency reported to OMB that the $206 million decrease in Non-Federal 

Accounts Payable and Accrued Liabilities is primarily due to a decrease in 

Grantee Liability Accruals as a result of a lower statistical sample rate used in the 

FY 2008 fourth quarter compared to the rate used in the FY 2007 fourth quarter. 

4 
09-2-0247 

Statement of Budgetary Resources 

(1) The Agency reported to OMB that the $8 billion increase in Appropriations is 

primarily due to the $6.4 billion State and Tribal Assistance Grant program 

contained in the Recovery Act. 

(2) The Agency reported to OMB that the $4.8 billion increase in Obligations is 

primarily due to the $4 billion State and Tribal Assistance Grant program as well 

as the $600 million Superfund program contained in the Recovery Act. 

(3) The Agency reported to OMB that the $2.7 billion increase in Apportioned 

Unobligated Balance is primarily due to the State and Tribal Assistance Grant 

program as well as the Superfund program contained in Recovery Act. 

Statement of Net Cost 

(1) The Agency reported to OMB that the decrease of $100 million in current year 

Gross Costs is primarily due to a reduction in Grant expenses in FY 2009. 

Procedure 2 

Obtain and compare EPA’s identified Earmarked Treasury Symbols to Federal Accounting 

Standards Advisory Board Statement of Federal Financial Accounting Standards (SFFAS) 27, 

Identifying and Reporting Earmarked Funds, for compliance. 

Results of Procedure 2 

We obtained and compared EPA’s identified Earmarked Treasury Symbols to SFFAS 27. 

We found EPA’s [Identified Earmarked] Treasury Symbols to be in compliance with 

SFFAS 27. Earmarked Treasury Symbols consist of the following trust funds: 

Hazardous Substance Superfund; Federal Insecticide, Fungicide, and Rodenticide Act 

Fund; Revolving Fund for Certification and Other Services; Licenses and Other Services; 

Environmental Services; Exxon Valdez Settlement Fund; Pesticide Registration 

Improvement Act Fund; Oil Spill Response Fund; and Contributed Funds; as well as 

Treasury Symbols established for the Recovery Act (Superfund and Leaking 

Underground Storage Tank). 

Procedure 3 

Obtain and compare FY 2009 and FY 2008 Child Trial Balances to the Child on-top entry. 

Results of Procedure 3 

We obtained and compared EPA’s FY 2009 and FY 2008 Child Trial Balances to the 

Child on-top entry. We found that the on-top entry to record child agency balances 

agreed with the support. 

5 
09-2-0247 

Procedure 4 

Compare the FY 2009 reversals to the FY 2008 on-top adjustments and EPA’s Closing 

Instructions to assess if EPA followed its guidance. 

Results of Procedure 4 

We compared the FY 2009 reversals to the FY 2008 on-top adjustments and to EPA’s 

closing instructions to assess if EPA followed its guidance. We found that the Agency 

reversed the FY 2008 on-tops properly in FY 2009. 

Procedure 5 

Compare the RGLTS FY 2009 beginning balances to the FY 2008 ending balances and note any 

differences. 

Results of Procedure 5 

During the first and second quarter of the Agreed-Upon Procedures, we identified a 

difference in GL account 4201, Total Actual Resources. The difference between the 

FY 2008 ending and FY 2009 beginning balance of $43,627 was a result of errors in the 

year-end closing process. GL account 4165, Allocation of Authority – Anticipated, 

incorrectly closed to GL account 4201 instead of to GL account 4450, Authority 

Available for Apportionment, according to the Year End Account Table. The Agency 

forced the closure to GL account 4201 to ensure that beginning balances on line 1 of the 

FY 2009 Statement of Budgetary Resources matched the ending balances of the year end 

FY 2008 Statement of Budgetary Resources lines 9 and 10. The Agency made an 

adjustment in the third quarter to correct the error. 

Procedure 6 

Review elimination and consolidation entries prepared by the Reporting and Analysis Staff for 

reasonableness and completeness. 

Results of Procedure 6 

We reviewed the FY 2009 third quarter elimination and consolidation entries prepared by 

the Reporting and Analysis Staff for reasonable and completeness. The elimination and 

consolidation entries appeared reasonable and complete. 

6 
09-2-0247 

Status of Recommendations and 

Potential Monetary Benefits
 

RECOMMENDATIONS 

POTENTIAL MONETARY 

BENEFITS (in $000s) 

Rec. 

No. 

Page 

No. Subject Status1 Action Official 

Planned 

Completion 

Date 

Claimed 

Amount 

Agreed To 

Amount 

No recommendations 

O = recommendation is open with agreed-to corrective actions pending 

C = recommendation is closed with all agreed-to actions completed 

U = recommendation is undecided with resolution efforts in progress 

7 

1 
09-2-0247 

Appendix A 

OIG-Identified Significant Fluctuations 

between 06/30/09 and 06/30/08

(Dollars in Thousands) 

Consolidated Balance Sheet: 

FY 2009 FY 2008 Difference % 

ASSETS 

Intragovernmental: 

Fund Balance With Treasury $17,242,174 $11,429,580 $5,812,594 50.86% 

Investments $7,226,402 $6,301,983 $924,419 14.67% 

Other $205,207 $85,245 $119,962 140.73% 

Accounts Receivable, Net $312,472 $441,680 ($129,208) -29.25% 

LIABILITIES 

Accounts Payable & Accrued 

Liabilities 

$661,007 $867,056 ($206,049) -23.76% 

NET POSITION 

Unexpended Appropriations – 

Other Funds 

$16,431,068 $10,272,712 $6,158,356 59.95% 

Cumulative Results of 

Operations – Earmarked Funds 

$7,239,852 $6,432,884 $806,968 12.54% 

Source: FY 2009 Financial Statements provided by EPA 

Consolidated Statement of Net Cost: 

FY 2009 

Consolidated 

FY 2008 

Consolidated Difference % 

COSTS 

Earned Revenue $390,560 $490,400 ($99,840) -20.36% 

Source: FY 2009 Financial Statements provided by EPA 

Consolidated Statement of Changes in Net Position: 

FY 2009 

Consolidated 

FY 2008 

Consolidated Difference % 

BUDGETARY FINANCING SOURCES 

Appropriations 

Received 

$14,406,297 $7,197,712 $7,208,585 100.15% 

Other Adjustments ($10,000) ($117,285) $107,285 -91.47% 

Source: FY 2009 Financial Statements provided by EPA 

8 
09-2-0247 

Consolidated Statement of Changes in Net Position - All Other Funds: 

FY 2009 

Consolidated 

All Other 

Funds 

FY 2008 

Consolidated 

All Other 

Funds Difference % 

CUMULATIVE RESULTS OF OPERATIONS 

Budgetary Financing Sources: 

Trust Fund 

Appropriations 

($1,747,911) ($984,974) ($762,937) 77.46% 

BUDGETARY FINANCING SOURCES 

Appropriations 

Received 

$14,406,297 $7,197,712 $7,208,585 100.15% 

Other Adjustments ($10,000) ($117,285) $107,285 -91.47% 

Source: FY 2009 Financial Statements provided by EPA 

Consolidated Statement of Changes in Net Position - Earmarked Funds: 

FY 2009 

Consolidated 

Earmarked 

Funds 

FY 2008 

Consolidated 

Earmarked 

Funds 

Difference % 

CUMULATIVE RESULTS OF OPERATIONS 

Budgetary Financing Sources: 

Trust Fund 

Appropriations 

$1,747,911 $984,974 $762,937 77.46% 

Source: FY 2009 Financial Statements provided by EPA 

9 
09-2-0247 

Combined Statement of Budgetary Resources: 

FY 2009 FY 2008 Difference % 

BUDGETARY RESOURCES 

Appropriation $15,277,062 $7,263,159 $8,013,903 110.34% 

Advance Received $80,475 $143,536 ($63,061) -43.93% 

Without Advance from 

Federal Sources 

($78,090) $11,248 ($89,338) -794.26% 

Anticipated for Rest of 

Year, Without 

Advances 

$361,654 $119,309 $242,345 203.12% 

Permanently Not 

Available 

($11,000) ($118,284) $107,284 -90.70% 

STATUS OF BUDGETARY SOURCES 

Direct $10,561,137 $5,724,936 $4,836,201 84.48% 

Apportioned $9,144,656 $6,462,859 $2,681,797 41.50% 

Unobligated Balances 

Not Available 

$1,086,308 $373,594 $712,714 190.77% 

CHANGE IN OBLIGATED BALANCE 

Obligations Incurred, 

Net 

$10,968,569 $6,111,701 $4,856,868 79.47% 

Change in 

Uncollected Customer 

Payments from 

Federal Sources 

$54,888 ($12,460) $67,348 -540.51% 

Unpaid Obligations $11,874,254 $8,212,341 $3,661,913 44.59% 

NET OUTLAYS 

Less: Distributed 

Offsetting Receipts 

($1,714,124) ($1,045,003) ($669,121) 64.03% 

Source: FY 2009 Financial Statements provided by EPA 

10 
09-2-0247 

Appendix B 

Distribution 

Acting Chief Financial Officer 

Acting Deputy Chief Financial Officer 

Acting Director, Office of Financial Management, Office of the Chief Financial Officer 

Director, Reporting and Analysis Staff, Office of the Chief Financial Officer 

Acting Director, Office of Financial Services, Office of the Chief Financial Officer 

Acting Inspector General 

11