AGENCY

FINANCIAL

REPORT

FISCAL YEAR 2017

FEDERAL TRADE COMMISSION
FEDERAL TRADE COMMISSION
FISCAL YEAR 2017

INTRODUCTION
FEDERAL TRADE COMMISSION
INTRODUCTION

www.ftc.gov FEDERAL TRADE COMMISSION 1

FISCAL YEAR 2017 AGENCY FINANCIAL REPORT

ABOUT THIS REPORT

The Federal Trade Commission’s (FTC) fiscal year (FY) 2017 Agency Financial Report (AFR) provides financial and 

high-level performance results and demonstrates to the Congress, the President, and the public, the FTC’s commitment 

to its mission and accountability over the resources entrusted to it. 

This report, available at the FTC’s website, satisfies the reporting requirements contained in the following legislation: 

•	 Federal Managers’ Financial Integrity Act of 1982

•	 Prompt Payment Act of 1982

•	 Government Performance and Results Act of 1993

•	 Government Management Reform Act of 1994

•	 Federal Financial Management Improvement Act of 1996

•	 Reports Consolidation Act of 2000 

•	 Accountability of Tax Dollars Act of 2002

•	 Government Performance and Results Modernization Act of 2010

•	 Improper Payments Elimination and Recovery Improvement Act (IPERIA) of 2012

•	 Digital Accountability and Transparency Act of 2014

•	 Federal Information Security Modernization Act of 2014

•	 Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015

This is the fourth year the FTC is producing an AFR and an Annual Performance Report (APR) in lieu of a combined 

Performance and Accountability Report. The FY 2017 APR will be combined with the FY 2019 Annual Performance Plan 

(APP) and included in the FY 2019 Congressional Budget Justification in February 2018. The combined APP and APR will 

be available at the FTC’s website at https://www.ftc.gov/about-ftc/performance, along with other performance documents.

Certificate of Excellence

The FTC received the Association of Government Accountants’ Certificate of Excellence in Accountability 

Reporting for its FY 2016 AFR
INTRODUCTION

FISCAL YEAR 2017 AGENCY FINANCIAL REPORT

2 FEDERAL TRADE COMMISSION www.ftc.gov

HOW THIS REPORT IS ORGANIZED

The FTC Agency Financial Report is organized into the following three major sections, plus appendices.

1. MANAGEMENT’S DISCUSSION AND ANALYSIS

This section provides an overview of the FTC’s mission and organization, an overview 

of key performance goals and efficiency measures, mission challenges, financial 

highlights, and management assurances on internal controls, financial systems, and 

compliance with laws and regulations.

2. FINANCIAL SECTION

This section provides financial details, including the independent auditor’s report and 

audited financial statements with accompanying notes.

3. OTHER INFORMATION

This section provides management and performance challenges identified by the 

Inspector General along with the Chairman’s response and a summary of financial 

statement audit and management assurances.

4. APPENDICES

Appendix A provides the data quality information for the FTC’s key performance goals 

and efficiency measures; Appendix B lists the acronyms cited throughout this report; 

Appendix C provides contact information and acknowledgements.

FISCAL YEAR 2017

MANAGEMENTS’ 

DISCUSSION 

AND ANALYSIS

FISCAL YEAR 2017

FINANCIAL

SECTION

OTHER

INFORMATION

FISCAL YEAR 2017

APPENDICES

FISCAL YEAR 2017
INTRODUCTION

3

FISCAL YEAR 2017 AGENCY FINANCIAL REPORT

www.ftc.gov FEDERAL TRADE COMMISSION

THE FTC AT-A-GLANCE

HISTORY

The Federal Trade Commission was created on September 26, 1914, when President Woodrow Wilson signed 

the Federal Trade Commission Act into law. The original purpose of the FTC was to prevent unfair methods 

of competition in commerce as part of the battle to “bust the trust.” Over the years, Congress passed additional 

laws giving the agency greater authority to police anticompetitive practices, and in 1938, Congress passed a broad 

prohibition against “unfair and deceptive acts or practices.” Since then the FTC also has been directed to enforce a 

wide variety of other consumer protection laws and regulations.

LAWS ENFORCED

The FTC is an independent law enforcement agency with both consumer protection and competition jurisdiction in 

broad sectors of the economy. The agency administers a wide variety of laws and regulations. Examples include the 

Federal Trade Commission Act, Clayton Act, Telemarketing Sales Rule, Fair Credit Reporting Act, Identity Theft Act 

and Equal Credit Opportunity Act. In total, the commission has enforcement or administrative responsibilities under 

more than 70 other laws.

PROFILE

•	 The agency is headquartered in Washington, D.C. and operates with seven regions across the United States. 

•	 The agency had 1,141 staff on board at the end of FY 2017.

•	 Total new budget authority for FY 2017 was $313 million.
FISCAL YEAR 2017 AGENCY FINANCIAL REPORT

4 FEDERAL TRADE COMMISSION www.ftc.gov

MESSAGE FROM THE ACTING CHAIRMAN

The FTC is the only federal agency with both consumer protection and 

competition jurisdiction in broad sectors of the economy. In FY 2017, the FTC 

continued to exemplify good government by advancing consumer interests and 

encouraging innovation and competition in our economy while making more 

efficient use of limited resources to better serve the public. This Agency Financial 

Report highlights the FTC’s major accomplishments, illustrates how the agency 

manages its resources, and outlines its plans to address the challenges ahead.

Maureen K. Ohlhausen

Acting Chairman

FY 2017 PERFORMANCE 

HIGHLIGHTS

CONSUMER PROTECTION

The FTC’s consumer protection enforcement initiatives 

are primarily focused on addressing trends we see in 

the marketplace: stopping fraud targeting specific 

populations, protecting consumers in the financial 

marketplace, safeguarding consumers’ privacy and data 

security, and prosecuting deceptive marketing and 

advertising claims. The FTC also engages in significant 

policy work and research through, for example, our 

Office of Technology Research and Investigation, and the 

numerous workshops and seminars we hold each year on 

consumer issues.

Stopping fraud is one of the FTC’s top consumer 

protection priorities, and for good reason: fraud causes 

enormous harm to consumers. In January, the Western 

Union Company (Western Union), a global money 

services business, agreed to pay $586 million to settle 

FTC and Department of Justice charges that the 

company allowed scammers to use its money transfer 

system to collect money from their victims. The FTC 

alleged that the company’s failures, including not taking 

effective action against its own complicit agents, resulted 

in hundreds of millions in fraudulent transfers since 

2004. As part of this global settlement, the FTC required 

Western Union to implement an effective anti-fraud 

program. The $586 million settlement will provide 

redress to injured consumers. 

DeVry University agreed to pay $100 million to settle 

FTC charges that it misled prospective students with ads 

that touted high employment success rates and income 

levels upon graduation. The FTC mailed 173,000 refund 

checks totaling more than $49 million to students in 

compensation for DeVry’s allegedly misleading ads, 

and will provide $51 million in debt relief. The debt 

being forgiven includes the full balance owed—$30.35 

million—on all private unpaid student loans that DeVry 

issued to undergraduates between September 2008 and 

September 2015, and $20.25 million in student debts 

for items such as tuition, books, and lab fees.

In a case brought by the Department of Justice on 

behalf of the FTC and four states, an Illinois federal 

court ordered Dish Network to pay $280 million in 

civil penalties and to stop alleged violations of the 

FTC’s Telemarketing Sales Rule and other federal and 

state laws. The satellite TV provider allegedly made 

millions of illegal calls, including to numbers on the 

Do Not Call Registry, and used unscrupulous tactics 

to generate programming sales. The court also ordered 

Dish to ensure its marketing practices comply with the 
5

FISCAL YEAR 2017 AGENCY FINANCIAL REPORT

www.ftc.gov FEDERAL TRADE COMMISSION

MESSAGE FROM THE ACTING CHAIRMAN

law. The civil penalty award included a record-setting 

$168 million to the U.S. Treasury, with the remainder 

going to the states. 

Volkswagen Group of America agreed to fully 

compensate consumers who purchased 3.0-liter TDI 

diesel vehicles through a combination of repairs, 

additional monetary compensation, and buybacks for 

certain models. Consumers will receive up to $1.2 billion 

in compensation for Volkswagen’s allegedly misleading 

“clean diesel” claims, in addition to the more than 

$10 billion redress fund already created for 2.0 liter 

consumers. In all, consumers who bought affected “clean 

diesel” vehicles will receive up to $11.5 billion, and the 

court may hold Volkswagen in contempt if it makes 

deceptive environmental claims in the future.

The FTC, along with federal, state, and international 

law enforcement partners, announced “Operation 

Tech Trap,” a nationwide and international crackdown 

on tech support scams that trick consumers into 

believing their computers are infected with viruses and 

malware, and then charge them hundreds of dollars for 

unnecessary repairs. As part of this effort, the FTC and 

its partners announced 16 actions, including complaints, 

settlements, indictments, and guilty pleas, against 

deceptive tech support operations. 

The FTC is the lead government agency protecting 

consumer privacy through enforcement, policy, and 

business education initiatives. In September, the FTC, 

along with privacy law enforcement agencies in Australia 

and Canada, received a global data protection award 

from the International Conference of Data Protection 

and Privacy Commissioners, a global forum representing 

119 data protection entities. The award recognized the 

cross-border investigation of the AshleyMadison.com

data breach in 2015, which affected consumers in nearly 

50 countries. The FTC alleged that the dating website 

deceived consumers and failed to protect customer 

information in 36 million users’ accounts. The court 

settlement required the defendants to pay $1.6 million 

and implement a comprehensive data security program.

The FTC and 32 state attorneys general alleged that 

Lenovo, one of the world’s largest computer makers, 

harmed consumers by pre-loading software on some 

laptops that compromised security protections in order 

to deliver ads. In its complaint, the FTC alleged that 

beginning in 2014, Lenovo began selling consumer 

laptops with a pre-installed software program, 

VisualDiscovery, that allowed access to consumers’ 

sensitive personal information transmitted over the 

Internet, including login credentials, Social Security 

numbers, and medical information. As part of the 

settlement, Lenovo is prohibited from misrepresenting 

any features of software preloaded on laptops that will 

inject advertising into consumers’ Internet browsing 

sessions or transmit sensitive consumer information to 

third parties. The company must also get consumers’ 

affirmative consent before pre-installing this type of 

software.

In another privacy case, Uber Technologies agreed 

to implement a comprehensive privacy program and 

obtain regular, independent audits to settle FTC charges 

that the ride-sharing company deceived consumers by 

failing to monitor employee access to consumer personal 

information and by failing to reasonably secure sensitive 

consumer data stored in the cloud. In its complaint, the 

FTC alleged that the San Francisco-based firm failed to 

live up to its claims that it closely monitored employee 

access to consumer and driver data and that it deployed 

reasonable measures to secure personal information it 

stored on a third-party cloud provider’s servers. The 

FTC’s complaint alleges that Uber’s failure to provide 

reasonable data security enabled a hacker to get personal 

information about Uber drivers, including more than 

100,000 drivers’ names and license numbers. 

The FTC also announced the winner of an Internet 

of Things (IoT) Home Inspector Challenge where 

contestants competed for a top prize of $25,000 to 

develop a tool to help consumers protect the security of 

their IoT devices. The winning product, a mobile app, 

will help users with limited technical expertise to identify 

devices with out of date software and other common 

security vulnerabilities and provide instructions on 
FISCAL YEAR 2017 AGENCY FINANCIAL REPORT

6 FEDERAL TRADE COMMISSION www.ftc.gov

MESSAGE FROM THE ACTING CHAIRMAN

how to update the software and fix the vulnerabilities. 

The FTC also granted a $3,000 honorable mention 

award to a team that proposed an alternative method of 

securing home networks from vulnerable IoT devices. 

Awards were provided under the America COMPETES 

(Creating Opportunities to Meaningfully Promote 

Excellence in Technology, Education, and Science) Act. 

PROMOTING COMPETITION

For more than 100 years, the Commission has actively 

enforced the antitrust laws in a range of industries of 

critical importance to American consumers, including 

health care, technology, energy, consumer goods and 

services, and manufacturing. The agency also conducts 

workshops, publishes studies, and pursues advocacy 

opportunities to promote competition and educate 

policymakers about its benefits.

As a major policy initiative, the FTC launched 

the Economic Liberty Task Force to focus on the 

proliferation of occupational licensing. Nearly 30 

percent of American jobs now require a license. While 

certain licensing requirements are necessary to protect 

the public, unnecessary and excessive occupational 

licensing destroys jobs, increases costs for consumers, 

and threatens economic liberty. These harms often affect 

those least able to bear them – low and middle income 

Americans, veterans, and military families. Building 

on the FTC’s long history of advocacy to reduce or 

eliminate unnecessary state-based occupational licensing 

requirements, the Task Force seeks bring even greater 

attention to this important issue.

The Commission has long prioritized promoting 

competition in healthcare markets because of its 

critical impact on American consumers. In 2017, the 

FTC prevailed in two high-profile cases, ultimately 

blocking hospital mergers in Harrisburg, Pennsylvania 

and the North Shore area of Chicago, Illinois. In both 

cases, the FTC alleged that the mergers would reduce 

competition for general acute care inpatient services 

sold to commercial health care plans and lead to higher 

costs and lower quality of care for patients. In both cases, 

the district courts initially rejected the FTC’s proffered 

geographic markets. On appeal, two different circuit 

courts overturned the district courts’ decisions and 

validated the FTC’s geographic market analysis. The 

appellate decisions protected hospital competition by 

acknowledging that employers require, and commercial 

health care plans must offer, access to healthcare close to 

where plan participants live. 

The Commission also continued to challenge 

anticompetitive practices in the pharmaceutical industry. 

In January, FTC filed a stipulated injunction in federal 

court settling charges that Mallinckrodt ARD Inc., 

formerly known as Questcor Pharmaceuticals, Inc., had 

acquired the rights to develop a drug that would have 

threatened the firm’s existing monopoly of drugs used to 

treat a rare seizure disorder. In addition to a $100 million 

monetary payment, the stipulated court order requires 

that Questcor grant a license to develop that drug to a 

licensee approved by the Commission. 

The FTC has also successfully challenged several mergers 

and negotiated merger settlement agreements in a 

variety of industries including agricultural chemicals, 

animal vaccines, and fantasy sports. For example, Draft 

Kings and Fan Duel, the two largest daily fantasy sports 

sites, abandoned their planned transaction, after the 

Commission sought a preliminary injunction in federal 

district court. The combination would have controlled 

more than ninety percent of the U.S. market for paid 

daily fantasy sports contests, according to the complaint.

The FTC is also committed to evaluating the 

effectiveness of its work, whether through enforcement, 

education, or advocacy. For example, in February the 

agency issued: The FTC’s Merger Remedies 2006-2012. 

The Merger Remedy Study analyzed 89 merger orders 

issued between 2006 and 2012 to determine whether the 

remedies utilized had maintained or restored competition 

in the subject markets. The study found that the agency’s 

process for maintaining competition when companies 

merge is generally effective, as is the process by which 

the Commission designs and implements remedies. The 

study also resulted in the development of agency best 

practices for divestiture. 
7

FISCAL YEAR 2017 AGENCY FINANCIAL REPORT

www.ftc.gov FEDERAL TRADE COMMISSION

MESSAGE FROM THE ACTING CHAIRMAN

OUTREACH AND PARTNERSHIPS

Consumers, industry, and law enforcement partners 

help keep the FTC informed about real-world trends 

and challenges in the market place. Consumers can 

contact the agency online or via toll free phone numbers. 

FTC outreach also includes online resources, such as 

www.ftc.gov, much of which is also available in Spanish. 

The agency also provides updates on Facebook and 

Twitter, and hosts educational videos on its YouTube 

channel. The FTC’s online Business Center offers 

extensive guidance to businesses.

This fiscal year, the FTC launched two new education 

websites, one aimed at military consumers – Military.

Consumer.gov, and one for small businesses – 

FTC.gov/SmallBusiness. The Military Consumer site 

provides advice about financial readiness, including 

car buying and managing finances during deployment, 

as well as a guide for financial counselors advising the 

military community. The small business site includes 

information on how small business owners can avoid 

scams and protect their computers and networks from 

cyberattacks and other threats. The site, which includes 

a new Small Business Computer Security Basics guide, 

also has information on other cyber threats, such as 

ransomware and phishing schemes that target small 

businesses.

FINANCIAL MANAGEMENT

Being responsible stewards of the public resources that 

the American taxpayers and Congress entrusted to us 

is one of our most important jobs. For the FY 2017 

independent financial audit, we received our 21st 

consecutive unmodified opinion, the highest audit 

opinion available. The independent auditors did not 

identify any material weaknesses, significant deficiencies, 

or instances of non-compliance with internal controls, 

financial systems, or laws and regulations. In FY 2016, 

the FTC identified a material weakness in the design 

of our internal controls regarding accounts receivable 

balances held by receivers appointed by federal court 

judges in some of our law enforcement cases. The FTC 

corrected the material weakness, and the independent 

auditors confirmed that the material weakness has been 

remediated. I am pleased to report that management’s 

assessment of risks and review of controls and financial 

systems disclosed no material weaknesses, and that the 

financial and performance data presented here is reliable 

and complete. (see Statement of Assurance, p. 35). 

FUTURE CHALLENGES

In pursuing its strategic goals and objectives, many of 

the FTC’s challenges are defined by the conditions of 

the marketplace, and thus are ever changing. The agency 

works to stay informed about new technologies that 

can bring tremendous benefits to consumers, but also 

pose challenges on both the competition and consumer 

protection fronts. For a more detailed description of 

the mission challenges identified by agency senior 

management, see p. 26.

In addition, the Office of the Inspector General (OIG) 

identified three key management challenges this year: 

(1) securing the agency’s information systems and 

networks from destruction, data loss or compromise; 

(2) accelerating maturity of the agency’s information 

technology governance process; and (3) improving 

acquisition planning and contract management. Agency 

management agrees that these are important challenges 

and concurs with the IG’s assessment of our progress in 

addressing these challenges (see the “Other Information” 

section).

Working with FTC’s partners and colleagues in 

Congress, industry, and domestic and international law 

enforcement, the agency will continue to strive to protect 

American consumers and promote competition.

Maureen K. Ohlhausen

November 13, 2017
FEDERAL TRADE COMMISSION
INTRODUCTION

9

FISCAL YEAR 2017 AGENCY FINANCIAL REPORT

www.ftc.gov FEDERAL TRADE COMMISSION

TABLE OF CONTENTS

INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

About This Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

How This Report Is Organized . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

The FTC At-A-Glance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Message from the Acting Chairman . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

MANAGEMENT’S DISCUSSION AND ANALYSIS. .

Agency and Mission Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  1

Performance Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

Agency Mission Challenges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  2

Management Assurances...

Financial Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38

FINANCIAL SECTION  .

Message from the Chief Financial Officer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50

Report of Independent Auditors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52

Principal Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59

Notes to the Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65

OTHER INFORMATION. .

Inspector General Identified Management and Performance Challenges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85

Chairman’s Response to IG Identified Challenges....

Summary of Financial Statement Audit and Management Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101

The Improper Payments Elimination and Recovery Improvement Act Reporting Details . . . . . . . . . . . . . . . . .  10

“Reduce the Footprint” Implementation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103

Fraud Reduction Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  10

Civil Monetary Penalty Adjustment for Inflation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105

Grants Oversight & New Efficiency (GONE) Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  10

APPENDICES. . 

Appendix A: Data Quality Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109

Appendix B: Acronyms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  11

Appendix C: Contact Information and Acknowledgements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117
FEDERAL TRADE COMMISSION
FISCAL YEAR 2017

MANAGEMENT’S

DISCUSSION 

AND ANALYSIS
FEDERAL TRADE COMMISSION
MANAGEMENT’S DISCUSSION AND ANALYSIS

13

FISCAL YEAR 2017 AGENCY FINANCIAL REPORT

www.ftc.gov FEDERAL TRADE COMMISSION

AGENCY AND MISSION 

INFORMATION 

The work of the Federal Trade Commission (FTC) is 

critical to protecting and strengthening free and open 

markets and promoting informed consumer choice, both 

in the United States (U.S.) and around the world. The 

FTC performs its mission through the use of a variety of 

tools, including law enforcement, rulemaking, research, 

studies on marketplace trends and legal developments, 

and consumer and business education. 

VISION 

A vibrant economy characterized by vigorous competition 

and consumer access to accurate information. 

MISSION 

Working to protect consumers by preventing 

anticompetitive, deceptive, and unfair business 

practices, enhancing informed consumer choice and 

public understanding of the competitive process, and 

accomplishing this without unduly burdening legitimate 

business activity. 

OUR PURPOSE AND HISTORY 

Consumers and businesses are likely to be more familiar 

with the work of the FTC than they think. In the 

consumer protection area, the product warranties, care 

labels in clothes, and labels on home appliances showing 

their energy cost provide information that is required 

by the FTC. Likewise, businesses must be familiar with 

the laws requiring truthful advertising and protecting 

consumers’ personally identifiable information. These laws 

are enforced by the FTC. 

Competition among independent businesses is good for 

consumers, the businesses themselves, and the economy. 

Competitive markets yield lower prices and better quality 

goods and services, and a vigorous marketplace provides 

the incentive and opportunity for the development of new 

ideas and innovative products and services. Many of the 

laws governing competition also are enforced by the FTC. 

The FTC has a long tradition of maintaining a 

competitive marketplace for both consumers and 

businesses. In 1903, Congress created the predecessor to 

the FTC, the Bureau of Corporations, as an investigatory 

agency within the Department of Commerce and 

Labor. The Bureau investigated and published reports 

on the operation of interstate corporations, looking for 

monopolistic practices. In one case of note, the Justice 

Department used the Bureau’s 1906 report on petroleum 

transportation when it successfully prosecuted and broke 

up Standard Oil in 1911. In 1914, President Woodrow 

Wilson signed the Federal Trade Commission Act into 

law, creating the FTC, which then absorbed the Bureau of 

Corporations in 1915. 

When the FTC was created in 1914, its purpose was to 

prevent unfair methods of competition in commerce as 

part of the battle to “bust the trusts.” Over the years, the 

Congress passed additional laws giving the agency greater 

authority over anticompetitive practices. Recognizing that 

unfair and deceptive practices can distort a competitive 

marketplace as much as unfair methods of competition, in 

1938 Congress passed a broad prohibition against “unfair 

or deceptive acts or practices in or affecting commerce.” 

Since then, the FTC also has been directed to enforce 

a wide variety of other consumer protection laws and 

regulations.

OUR ORGANIZATION 

The FTC is an independent Federal law enforcement 

agency that reports to the President and to Congress on its 

actions, with both consumer protection and competition 

jurisdiction in broad sectors of the economy. The agency 

administers a wide variety of laws, such as the Federal 

Trade Commission Act (FTC Act), Fair Credit Reporting 

Act, and Clayton Act. In total, the Commission has 

enforcement or administrative responsibilities under 

more than 70 laws. The FTC also enforces rules issued 

pursuant to the Federal Trade Commission Act or other 

laws, including the Business Opportunity Rule and the 

Telemarketing Sales Rule. FTC actions include pursuing 

vigorous and effective law enforcement; advancing 

consumers’ interests by sharing its expertise with 

Congress and state legislatures and U.S. and international 
MANAGEMENT’S DISCUSSION AND ANALYSIS

FISCAL YEAR 2017 AGENCY FINANCIAL REPORT

14 FEDERAL TRADE COMMISSION www.ftc.gov

 The FTC Commission as of September 30, 2017: (left to right) Maureen K. Ohlhausen, Acting Chairman; Terrell McSweeny, Commissioner. 

government agencies; developing policy and research 

tools through hearings, workshops, and conferences; 

and creating practical and plain-language educational 

programs for consumers and businesses in a global 

marketplace with constantly changing technologies. 

The FTC is headed by a Commission composed of 

five commissioners, nominated by the President and 

confirmed by the Senate, each serving a staggered sevenyear term. No more than three commissioners may be 

from the same political party. The President designates 

one commissioner to act as Chair. Maureen K. Ohlhausen 

was designated Acting Chairman on January 25, 2017, 

and Terrell McSweeny has been a Commissioner 

since April 28, 2014. There are currently three open 

Commissioner positions.

The FTC’s workforce is its greatest asset. The agency’s 

workforce consists of 1,141 civil service employees 

dedicated to carrying out the agency’s mission.

The FTC’s mission is carried out by three bureaus: 

The Bureau of Competition enforces the nation’s 

antitrust laws, which form the foundation of our free 

market economy. The antitrust laws promote the interests 

of consumers; they support unfettered markets and 

result in lower prices and more choices. By enforcing 

the antitrust laws, the Bureau promotes competition and 

protects consumers’ freedom to choose goods and services 

in an open marketplace at a price and quality that fit 

their needs. The Bureau seeks to prevent anticompetitive 

mergers and other anticompetitive business practices in 

the marketplace.

The Bureau of Consumer Protection’s mandate 

is to protect consumers against unfair, deceptive or 

fraudulent practices. The Bureau enforces a variety of 

consumer protection laws enacted by Congress, as well 

as trade regulation rules issued by the Commission. Its 

actions include individual company and industry-wide 

investigations, administrative and federal court litigation, 

rulemaking proceedings, and consumer and business 

education. In addition, the Bureau contributes to the 

Commission’s on-going efforts to inform Congress and 

other government entities of the impact that proposed 

actions could have on consumers.

The Bureau of Economics helps the FTC evaluate the 

economic impact of its actions. To do so, the Bureau 

provides economic analysis and support to antitrust and 

consumer protection investigations and rulemakings. It 

also analyzes the impact of government regulation on 
MANAGEMENT’S DISCUSSION AND ANALYSIS

15

FISCAL YEAR 2017 AGENCY FINANCIAL REPORT

www.ftc.gov FEDERAL TRADE COMMISSION

competition and consumers and provides Congress, the 

Executive Branch and the public with economic analysis 

of market processes as they relate to antitrust, consumer 

protection, and regulation.

The work of the bureaus is aided by:

The Office of Congressional Relations works closely 

with members of Congress and their staffs. The Office 

informs Commissioners and FTC staff of Capitol Hill 

issues and policies, and helps provide information 

on legislation of interest to the Commission. It also 

coordinates the preparation of both Congressional 

testimony and responses to Congressional inquiries 

concerning FTC policies and programs.

The Office of Public Affairs is responsible for informing 

the public about the FTC’s diverse law enforcement 

actions and policy work. The office is the agency’s main 

point of contact with the news media.

The Privacy Office is responsible for ensuring that the 

agency’s practices and policies comply with applicable 

federal information privacy and security requirements.

The Office of Policy Planning assists the Commission 

to develop and implement long-range competition and 

consumer protection policy initiatives and advises staff on 

cases raising new or complex policy and legal issues.

The Office of International Affairs leads and coordinates 

the FTC’s work in international antitrust, consumer 

protection, and technical assistance projects. The FTC 

works with competition and consumer protection 

agencies around the world to promote cooperation and 

convergence toward best practices. 

The Office of the Secretary oversees swift and prompt 

processing of all matters presented to the Commission and 

supports the Commission decision-making process and 

ensures it operates efficiently. The Office also responds 

to most Congressional and White House correspondence 

raising constituent issues.

The Office of the General Counsel is the Commission’s 

chief legal officer and adviser. The office’s major functions 

are representing the Commission in court and providing 

legal counsel to the Commission, the three bureaus, and 

other offices.

The Regional Offices work with the Bureaus of 

Competition and Consumer Protection to conduct 

investigations and litigation, provide advice to state and 

local officials on the competitive implications of proposed 

actions, recommend cases, provide local outreach services 

to consumers and businesspersons, and coordinate 

activities with local, state, and regional authorities. 

The Office of the Executive Director is responsible for 

the administration and management of the Commission 

through four organizations, which manage the 

Commission’s human capital, information technology, 

financial management and administrative/records 

management services.

The Office of Administrative Law Judges performs 

the initial adjudicative fact-finding in Commission 

administrative complaint proceedings, guided by the 

FTC Act, the Administrative Procedure Act, relevant 

case law interpreting these statutes, and the FTC’s Rules 

of Practice. Administrative Law Judges are independent 

decision makers, appointed under the authority of the 

Office of Personnel Management.

The Office of Inspector General is an independent and 

objective organization within the FTC, established in 

compliance with the Inspector General Act Amendments 

of 1988. Under the Inspector General Act, the office 

is responsible for conducting audits and investigations 

relating to the programs and operations of the FTC. 

The Office of Equal Employment Opportunity and 

Workplace Inclusion advises and assists the FTC in 

carrying out its responsibilities and duties relative to Title 

VII of the Civil Rights Act of 1964, as amended, other 

laws, executive orders, and regulatory guidelines affecting 

affirmative employment and the processing of EEO 

complaints.

For more information about the agency’s components, 

visit the FTC’s Bureaus and Offices webpage.
MANAGEMENT’S DISCUSSION AND ANALYSIS

FISCAL YEAR 2017 AGENCY FINANCIAL REPORT

16 FEDERAL TRADE COMMISSION www.ftc.gov

FEDERAL TRADE COMMISSION ORGANIZATIONAL CHART

Chairman

Maureen Ohlhausen

(Acting)

Chief of Staff

Svetlana Gans

Chief Technologist

Neil Chilson (Acting)

Commissioner

Vacant

Commissioner

Terrell McSweeny

Commissioner

Vacant

Office of

Congressional Relations

Jean Bumpus

Commissioner

Vacant

Office of 

Public Affairs

Peter Kaplan (Acting)

Office of

International Affairs

Randolph W. Tritell

Office of

Policy Planning

Tara Isa Koslov (Acting)

Office of Equal

Employment Opportunity 

and Workplace Inclusion* 

Kevin D. Williams

Office of

the Secretary

Donald S. Clark

Office of

Administrative Law Judges*

D. Michael Chappell

Office of

Inspector General*

Roslyn Mazer

Office of the

General Counsel

David Shonka

(Acting)

Bureau of

Consumer 

Protection

Tom Pahl (Acting)

Office of the

Executive Director

David B Robbins

Bureau of

Competition

Bruce Hoffman

(Acting)

Bureau of

Economics

Michael G. Vita

(Acting)

Regions

Privacy Office

Katherine Race Brin

*An independent organization within the FTC
MANAGEMENT’S DISCUSSION AND ANALYSIS

17

FISCAL YEAR 2017 AGENCY FINANCIAL REPORT

www.ftc.gov FEDERAL TRADE COMMISSION

The agency is headquartered in Washington, DC, and operates with seven regions across the U.S. The graphic below 

illustrates the locations of the FTC regions.

NORTHWEST

(includes Alaska)

EAST 

CENTRAL

Washington, DC

(Headquarters)

NORTHEAST

(includes Puerto Rico

and U.S. Virgin Islands)

SOUTHWEST

MIDWEST

SOUTHEAST

WESTERN

(includes Hawaii)

Seattle, WA

 Dallas, TX

Chicago, IL Cleveland, OH

Atlanta, GA

New York, NY

Los Angeles, CA

San Francisco, CA

OUR BUILDING

The FTC established its headquarters at 600 Pennsylvania 

Avenue, N.W., with President Franklin D. Roosevelt 

laying the cornerstone himself.

Roosevelt remarked, “May this permanent home of the 

Federal Trade Commission stand for all time as a symbol 

of the purpose of the government to insist on a greater 

application of the golden rule to conduct the corporation 

and business enterprises in their relationship to the 

body politic.” 

The building which is particularly known for its two art deco style statues, called “Man Controlling 

Trade,” is located at the apex of the Federal Triangle, and was the culmination of the massive Depressionera government building project. Commissioners and staff officially moved in on April 21, 1938, and the 

building continues to function as the FTC’s headquarters, serving the agency’s adjudicative, executive, 

policy, and administrative functions.
MANAGEMENT’S DISCUSSION AND ANALYSIS

FISCAL YEAR 2017 AGENCY FINANCIAL REPORT

18 FEDERAL TRADE COMMISSION www.ftc.gov

PERFORMANCE HIGHLIGHTS

As stated in the introduction to this report, this is the 

fourth year the FTC has chosen to produce an AFR 

and an APR in lieu of a combined Performance and 

Accountability Report. The FY 2017 APR will be 

combined with the FY 2019 APP and included in the FY 

2019 Congressional Budget Justification to be published 

in 2018. The AFR and combined APP and APR, will be 

published at the FTC’s website.

This section explains the FTC’s strategic and 

performance planning framework and summarizes 

the key performance goals. The performance results 

described in this report enable the FTC to administer 

its programs, gauge their success, and make adjustments 

necessary to improve program quality for the public. 

STRATEGIC AND PERFORMANCE 

PLANNING FRAMEWORK

The performance planning framework originates from 

the FTC’s Strategic Plan for Fiscal Years 2014 to 2018

and is supported by the FTC’s Performance Plan. The 

FTC’s work is structured around three strategic goals and 

eight objectives. The following table shows the FTC’s net 

costs for its strategic goals.

STRATEGIC GOALS

(Dollars in millions) OBJECTIVES

GOAL 1: PROTECT CONSUMERS

*Net Costs: $167

1.1 Identify and take actions to address deceptive or 

unfair practices that harm consumers.

1.2 Provide the public with knowledge and tools to 

prevent harm to consumers.

1.3 Collaborate with domestic and international 

partners to enhance consumer protection.

GOAL 2: MAINTAIN COMPETITION

*Net Costs: $19

2.1 Identify and take actions to address 

anticompetitive mergers and practices that harm 

consumers.

2.2 Engage in effective research and stakeholder 

outreach to promote competition, advance its 

understanding, and create awareness of its benefits 

to consumers.

2.3 Collaborate with domestic and international 

partners to preserve and promote competition.

GOAL 3: ADVANCE 

ORGANIZATIONAL PERFORMANCE

Goal 3’s costs are distributed to Goal 1 and Goal 

2 predominately by Goal 1 and Goal 2’s Full-Time 

Equivalent (FTE) usage, except for those non-pay 

costs that are clearly attributable to a specific goal.

3.1 Optimize resource management and 

infrastructure.

3.2 Cultivate a high-performing, diverse, and 

engaged workforce.

*Note: Net Costs represent the resources used to achieve strategic goals and signify the relative efficiency and cost-effectiveness 

of agency program/operations. The FTC does not divide net costs by objective.
MANAGEMENT’S DISCUSSION AND ANALYSIS

19

FISCAL YEAR 2017 AGENCY FINANCIAL REPORT

www.ftc.gov FEDERAL TRADE COMMISSION

PERFORMANCE MEASUREMENT 

REPORTING PROCESS

Bureau and Office representatives serve as the 

Performance Measure Reporting Officials (PMROs), 

who act as data stewards for each of the agency’s 

publicly-reported performance goals. The PMROs 

report to the Deputy Performance Improvement Officer 

(PIO) on a quarterly or annual basis via an internal 

data reporting tool. The Financial Management Office 

(FMO) also leads periodic performance goal reviews in 

coordination with budget execution reviews. The CFO/

PIO, the Executive Director, the Chief of Staff, and the 

Chairman are briefed on the results and any significant 

variances in planned versus actual results. The PIO 

and Deputy PIO then coordinate with the PMROs on 

any adjustments to strategies and tactics based on the 

performance results.

VERIFICATION AND VALIDATION OF 

PERFORMANCE DATA

Appendix A: Data Quality Information contains 

definitions, calculation/formula information, data 

sources and limitations, and additional details on 

verification and validation for the performance goals 

included in this report. Additionally, the following 

steps outline how the agency ensures the performance 

information it reports is complete, reliable and accurate:

•	 The FTC has adopted a central internal 

repository for performance data entry, reporting 

and review. The electronic data tool reduces 

human error, increases transparency, and 

facilitates senior management review of the 

agency’s performance information.

•	 The agency maintains written procedures 

used to ensure timely reporting of complete, 

accurate, and reliable actual results relative to 

the key performance goals.

•	 The agency holds program managers 

accountable to set meaningful and realistic 

targets that also challenge the agency to leverage 

its resources. This includes ensuring ongoing 

monitoring and updating of performance 

targets. Further, when appropriate, program 

managers are required to explain how they will 

improve performance when targets are not met.

•	 The agency conducts quarterly performance 

measurement reviews with management as well 

as periodic reviews throughout the fiscal year 

with FTC Executives. This process includes 

substantiating that actual results reported are 

indeed correct whenever those results reveal 

significant discrepancies or variances from the 

target.

Agency program managers also monitor and maintain 

automated systems and databases that collect, track, 

and store performance data, with support provided by 

the FTC’s Office of the Chief Information Officer. In 

addition to the general controls the FTC has in place, 

which ensure only authorized staff can access key 

systems, each application (system) incorporates internal 

validation edits to ensure the accuracy of data contained 

therein. These application edits include checks for 

reasonableness, consistency, and accuracy. Crosschecks 

between other internal automated systems also provide 

assurances of data accuracy and consistency. In addition 

to internal monitoring of each system, experts outside 

of the business units (e.g., the Bureaus of Consumer 

Protection and Competition) routinely monitor the data 

collection. For example, senior economists from the 

Bureau of Economics review statistical data used by the 

Bureau of Competition to calculate performance results.

The FMO is responsible for providing direction and 

support on data collection methodology and analysis, 

ensuring that data quality checks are in place, and 

accurately reporting performance data.

PERFORMANCE GOALS OVERVIEW 

The FTC has established 29 performance goals for 

assessing program performance against strategic goals 

and objectives. Of the 29 total performance goals, 22 

met or exceeded target, three did not meet target, and 

data was not available at the time of publication for 

four. The following table displays historical high-level 

performance trends for all of the FTC’s performance 

goals for the past three years.
MANAGEMENT’S DISCUSSION AND ANALYSIS

FISCAL YEAR 2017 AGENCY FINANCIAL REPORT

20 FEDERAL TRADE COMMISSION www.ftc.gov

Count of Per

FY 

2017

FY 

2016

FY 

2015*

GOAL 1: PROTECT 

CONSUMERS

Target Met/Exceeded 10 10 10

Target Not Met 1 1 1

Data Not Available at Time of 

Publication 1 1 0

Data Not Available 0 0 1

GOAL 2: MAINTAIN 

COMPETITION

Target Met/Exceeded 7 8 10

Target Not Met 2 1 0

Data Not Available at Time of 

Publication 1 1 0

GOAL 3: ADVANCE 

ORGANIZATIONAL 

PERFORMANCE

Target Met/Exceeded 5 6 7

Target Not Met 0 0 0

Data Not Available at Time of 

Publication 2 1 0

TOTAL Target Met/Exceeded 22 24 27

Target Not Met 3 2 1

Data Not Available at Time of 

Publication 4 3 0

Data Not Available 0 0 1

TOTAL MEASURES 29 29 29

*The FY 2015 count was updated after the publication of the FY 2015 AFR to account for one performance goal for 

which the result became available after publication and one performance goal for which the result was incorrectly 

reported as Not Met in the FY 2015 AFR. 

Of the 29 performance goals, nine are considered “key” 

performance goals because they best indicate whether 

agency activities are achieving the desired outcome 

associated with the related objective. Additionally, four 

performance goals are considered efficiency performance 

goals because either they are ratios of outcomes to 

inputs or they capture administrative timeliness. For 

each performance goal, the FTC has established a 

performance target.

The following tables summarize actual performance 

during FY 2017 against established targets for the FTC’s 

key and efficiency performance goals. The tables also 

include actual results from the prior two fiscal years. The 

FTC met or exceeded eight of the nine key performance 

goals and three of the four efficiency performance goals.

LEGEND FOR UPCOMING TABLES

✔ Signifies that the target is met or exceeded

✖ Signifies that the target is not met
MANAGEMENT’S DISCUSSION AND ANALYSIS

21

FISCAL YEAR 2017 AGENCY FINANCIAL REPORT

www.ftc.gov FEDERAL TRADE COMMISSION

Opens Doors

Economic

LIBERTY

STRATEGIC GOAL 1: PROTECT CONSUMERS

Objective 1.1: Identify and take actions to address deceptive or unfair practices that harm consumers.

Key/Efficiency Performance Goal 1.1

Total consumer savings compared to the amount of FTC resources allocated to consumer protection law 

enforcement. (Efficiency measure)

2017 2016 2015

Target Actual Target Actual Target Actual

650.0% 1,278.3% 650.0% 1,083.8% 650.0% 723.4%

✔ ✔ ✔

Key Performance Goal 1.1

Amount of money the FTC returned to consumers and forwarded to the U.S. Treasury. (Outcome measure)

2017 2016 2015

Target Actual Target Actual Target Actual

$60.0 million $366.0 million $60.0 million $57.6 million $60.0 million $76.2 million

✔ ✖ ✔

Note: The agency missed its target in FY 2016 because a major redress order for the AT&T case was not fulfilled in FY 

2016 due to the complex nature of the refund process. 

FTC Launches Economic Liberty Task Force

In March 2017, as Acting Chairman Maureen Ohlhausen’s 

first major policy initiative, the FTC launched a new 

Economic Liberty Task Force and a related website to focus 

on the proliferation of occupational licensing. Nearly thirty 

percent of American jobs require a license today, up from 

less than five percent in the 1950s. For some professions, 

occupational licensing is necessary to protect the public 

against legitimate health and safety concerns. But in many situations, the expansion of occupational licensing 

threatens economic liberty. Unnecessary or overbroad restrictions erect significant barriers and impose costs 

that harm American workers, employers, consumers, and our economy as a whole, with no measurable 

benefits to consumers or society. Building on the FTC’s long history of advocacy to reduce or eliminate 

unnecessary state-based occupational licensing requirements, the Task Force is amplifying the FTC’s voice 

and bringing greater attention to these important issues. The Task Force encourages greater reliance on 

competition to protect the public against unqualified service providers, and collaborates with state partners 

and other interested stakeholders to highlight the benefits of occupational licensing reform. In July 2017, the 

Task Force held its first public roundtable, which convened a panel of experts to discuss license portability 

across state lines. In September 2017, the Task Force announced a second public roundtable (scheduled for 

November 2017) that will focus on empirical evidence regarding the effects of occupational licensing.
MANAGEMENT’S DISCUSSION AND ANALYSIS

FISCAL YEAR 2017 AGENCY FINANCIAL REPORT

22 FEDERAL TRADE COMMISSION www.ftc.gov

Objective 1.2: Provide the public with knowledge and tools to prevent harm to consumers.

Key Performance Goal 1.2

Number of federal, state, local, international, and private partnerships to maximize the reach of consumer and 

business education campaigns. (Output measure)

2017 2016 2015

Target Actual Target Actual Target Actual

12,500 12,944

✔

11,500 14,509

✔

11,500 16,321

✔

Note: The FY 2016 result was incorrectly reported in the FY 2016 AFR due to a data entry error.

Objective 1.3: Collaborate with domestic and international partners to enhance consumer protection.

Key Performance Goal 1.3

Number of investigations or cases in which the FTC obtained foreign-based evidence or information or 

engaged in other mutual assistance that contributed to FTC law enforcement actions or in which the FTC 

cooperated with foreign agencies and/or multilateral organizations on enforcement matters. (Output measure)

2017 2016 2015

Target Actual Target Actual Target Actual

40 50

✔

40 53

✔

40 58

✔

FTC Hosts Workshop on Hearing Health Care 

In April 2017, the FTC hosted a public workshop to 

examine how enhanced competition and innovation 

might increase the availability and adoption of hearing 

aids by consumers who need them. Health and science 

authorities have observed that many consumers who 

could benefit from hearing aids do not use them, 

often citing price as a significant factor. The workshop brought together researchers, health care providers, 

industry representatives, consumer representatives, and policymakers to consider potential barriers to hearing aid 

availability and adoption, as well as ways that competition and innovation might lower those barriers. Workshop 

participants also discussed the benefits and risks of a policy proposal, which has since been enacted, to create a 

new federal regulatory category for over-the-counter (OTC) hearing aids, which could foster the development 

of lower-cost and more widely accessible hearing aids. FTC staff are reviewing public comments submitted in 

conjunction with the workshop, and will continue to contribute their competition and consumer protection 

expertise as implementing OTC regulations are developed.
MANAGEMENT’S DISCUSSION AND ANALYSIS

23

FISCAL YEAR 2017 AGENCY FINANCIAL REPORT

www.ftc.gov FEDERAL TRADE COMMISSION

STRATEGIC GOAL 2: MAINTAIN COMPETITION

Objective 2.1: Identify and take actions to address anticompetitive mergers and practices that harm consumers.

Key Performance Goal 2.1

Percentage of actions** taken to maintain competition in substantial merger and nonmerger investigations. 

(Outcome measure)

2017 2016 2015

Target Actual Target Actual Target Actual

40.0-60.0% 49.1%

✔

40.0-60.0% 54.6%

✔

40.0-60.0% 57.7%

✔

**“Actions” includes litigated victories, consent orders, abandoned transactions, and restructured transactions. See 

Appendix A for more information.

Note: The FY 2015 results for performance goals 2.1.1 and 2.1.3 were updated after the publication of the FY 2015 

AFR and Performance Report, because a merger action was unintentionally excluded from the original calculation. 

Key/Efficiency Performance Goal 2.1

Total consumer savings compared to the amount of FTC resources allocated to the merger program. (Efficiency 

measure)

2017 2016 2015

Target Actual Target Actual Target Actual

4,200.0% 5,563.0%

✔

2,600.0% 4,640.3%

✔

2,600.0% 5,131.6%

✔

Court Orders Dish to Pay $280M and Stop Violations

In a historic decision, an Illinois Federal court ordered Dish Network 

to pay $280 million in civil penalties and to stop alleged violations of 

the FTC’s Telemarketing Sales Rule and other federal and state laws. 

The Department of Justice filed charges on behalf of the FTC and four 

states against the satellite TV provider. Dish allegedly made millions 

of illegal calls, including to numbers on the Do Not Call Registry, and 

used unscrupulous tactics to generate programming sales. The court also 

ordered Dish to ensure its marketing practices comply with the law. The 

civil penalties include a record-setting $168 million payment to the U.S. 

Treasury General Fund, with the remainder going to the states. 
MANAGEMENT’S DISCUSSION AND ANALYSIS

FISCAL YEAR 2017 AGENCY FINANCIAL REPORT

24 FEDERAL TRADE COMMISSION www.ftc.gov

FTC and DOJ Update Two Sets of Antitrust Guidelines 

In January 2017, the FTC and the Department of Justice Antitrust 

Division jointly issued revised Antitrust Guidelines on two 

subjects: the Licensing of Intellectual Property and International 

Enforcement and Cooperation. The updated IP licensing 

guidelines maintain the Agencies’ economically-grounded approach 

to IP licensing issues, and include focused revisions based on 

legal changes over the past 20 years. The revised international 

guidelines reflect developments in the law and the Agencies’ 

practices since the guidance was last updated in 1995, including 

on the application of U.S. antitrust law to conduct involving 

foreign commerce. These updated guidelines provide practical guidance on the Agencies’ international 

antitrust enforcement policies and related investigative tools, and include a new chapter dedicated to 

international cooperation and related concerns, such as confidentiality safeguards and the Agencies’ approach 

to extraterritorial remedies.

Key/Efficiency Performance Goal 2.1

Total consumer savings compared to the amount of FTC resources allocated to the nonmerger program. 

(Efficiency measure)

2017 2016 2015

Target Actual Target Actual Target Actual

4000.0% 3,959.0%

✖

400.0% 5,228.6%

✔

400% 4,863.3%

✔

Note: The agency raised its target from 400% to 4000% in FY 2017, because the significant consumer savings from 

the Cephalon investigation will continue to impact the rolling average reported for this goal through FY 2019. The 

agency missed this new higher target in FY 2017, in part because of significant litigation in conduct matters, which 

drove an increase in costs for the program and resulting in a lowering of the savings/costs ratio. 

Objective 2.3: Collaborate with domestic and international partners to preserve and promote competition.

Key Performance Goal 2.3

Percentage of FTC cases involving at least one substantive contact with a foreign antitrust authority in which 

the agencies’ followed consistent analytical approaches and reached compatible outcomes. (Output measure)

2017 2016 2015

Target Actual Target Actual Target Actual

95.0% 96.0%

✔

95.0% 100.0%

✔

95.0% 100.0%

✔
MANAGEMENT’S DISCUSSION AND ANALYSIS

25

FISCAL YEAR 2017 AGENCY FINANCIAL REPORT

www.ftc.gov FEDERAL TRADE COMMISSION

STRATEGIC GOAL 3: ADVANCE ORGANIZATIONAL PERFORMANCE

Objective 3.1: Optimize resource management and infrastructure.

Efficiency Performance Goal 3.1

Average number of days for the FTC to release information in response to a simple Freedom of Information 

Act (FOIA) request. (Efficiency measure)

2017 2016 2015

Target Actual Target Actual Target Actual

6.0 days 5.4 days

✔

6.0 days 5.9 days

✔

6.0 days 5.5 days

✔

Note: Performance Goal 3.1.4 is one of four efficiency performance goals, and the only one that is not also a key 

performance goal. It is included here, because this report contains the agency’s key and efficiency performance goals.

Objective 3.2: Cultivate a high-performing, diverse, and engaged workforce.

Key Performance Goal 3.2

The extent employees believe the FTC has the talent necessary to achieve organizational goals. (Outcome 

measure)

2017 2016 2015

Target Actual Target Actual Target Actual

59.0% 77.0%

✔

58.0% 74.0%

✔

57.0% 72.0%

✔

Note: The FTC set its organizational target to exceed the government-wide results on the Federal Employee Viewpoint 

Survey’s Talent Management Index. In 2017 the government-wide score was 59.0%.
MANAGEMENT’S DISCUSSION AND ANALYSIS

FISCAL YEAR 2017 AGENCY FINANCIAL REPORT

26 FEDERAL TRADE COMMISSION www.ftc.gov

AGENCY MISSION CHALLENGES

The FTC stands prepared to face the challenges of 

today’s marketplace as a champion for competition and 

consumers. For example, as consumers and businesses 

encounter difficulties with financial scams, deceptive 

or fraudulent advertising, online privacy and data 

security, and anticompetitive business practices in the 

technology, health care and other industries, the FTC 

steps forward to promote competition and protect 

consumers. Agency mission challenges are presented as 

they relate to the agency’s strategic goals: Strategic Goal 1 

(Protect Consumers) and Strategic Goal 2 (Maintain 

Competition). A reference to the most applicable 

strategic objectives is also provided, so readers may refer 

to descriptions of related performance targets and actual 

results.

Management’s assessment was performed separately from 

the Inspector General’s (IG) identified management and 

performance challenges (see Other Information Section). 

Management concurs with the IG identified challenges 

and assessment of agency progress in addressing the 

challenges.

STRATEGIC GOAL 1: PROTECT 

CONSUMERS

Under the goal of protecting consumers, the FTC will 

continue to give priority to addressing the following 

challenges: protecting Americans from fraud including in 

the financial services marketplace; protecting consumers 

as technology evolves; protecting consumer privacy and 

improving data security including combating identity 

theft; and addressing emerging advertising issues and 

targeting deceptive advertising.

PROTECTING AMERICANS FROM FRAUD:

Fraud affects all consumers, and the FTC will continue 

its enforcement efforts to stop fraud, focusing on 

those that cause or are likely to cause the greatest 

consumer harm. The FTC continues to receive 

consumer complaints about imposter scams in which 

the perpetrators pose as government agencies, legitimate 

technical support companies, family members, or others. 

Certain scams, such as those involving business and 

income opportunities, affect all consumers, but can 

pose even a greater risk to those from lower income or 

underserved communities. 

The FTC also will focus on frauds targeting specific 

populations, including military consumers, seniors, 

non-English speaking consumers, and small businesses. 

Con artists continue to target consumers in financial 

distress. Therefore, the FTC will continue to take law 

enforcement actions to stop deceptive or other unlawful 

conduct in mortgage, student loan assistance relief and 

debt relief services, payday lending, and debt collection. 

This unlawful conduct can have severe consequences for 

consumers who can least afford it. 

Western Union Settles Consumer Fraud Charges 

The Western Union Company, a global money services business 

headquartered in Englewood, Colorado, agreed to pay $586 million 

to settle FTC and Department of Justice charges that the company 

allowed scammers to use its money transfer system to collect money 

from their victims. The FTC says that the company’s failures, including 

not taking effective action against complicit agents, resulted in hundreds 

of millions of dollars in fraudulent transfers since 2004. As part of this 

global settlement, the FTC also requires Western Union to implement 

an effective anti-fraud program. The Department of Justice will use the 

$586 million payment to provide remission to the victims.
MANAGEMENT’S DISCUSSION AND ANALYSIS

27

FISCAL YEAR 2017 AGENCY FINANCIAL REPORT

www.ftc.gov FEDERAL TRADE COMMISSION

The FTC is committed to protecting military consumers 

from scams. The FTC’s website MilitaryConsumer.gov

is a tool to help service members and their families avoid 

fraud and make wise purchases. With deployments and 

frequent relocations, military families regularly need to 

rent or buy a new place to live, manage money while on 

the move, and be vigilant about dealing with businesses 

in new locales. The FTC will devote more resources on 

outreach to military consumers.

The FTC will continue to closely coordinate with other 

federal agency partners to ensure that consumers are 

protected in the financial marketplace and to avoid 

any duplicative efforts between the agencies. The FTC 

will continue to offer materials to help businesses avoid 

becoming victims of fraud in the FTC’s Business Center 

at business.ftc.gov. The FTC is prioritizing outreach 

and education for small businesses. The FTC recently 

launched a web page with resources to help small 

businesses stay ahead of the latest scams, reduce the risk 

of cyber threats, and respond in case of a data breach. 

The FTC also will combat frauds targeting seniors and 

non-English-speaking consumers, and evaluate the best 

education messages and outreach methods for these 

groups. (Objectives 1.1, 1.2, and 1.3)

PROTECTING CONSUMERS AS TECHNOLOGY 

EVOLVES:

Technology provides countless benefits to consumers, 

including choice, convenience, and increased access 

to goods, services, and information. It also enables, 

however, new vehicles for fraudulent, deceptive, and 

unfair practices in the marketplace. The FTC will 

continue its focus on the consumer protection issues 

associated with the use of new technology, including 

a careful consideration of the costs and benefits of 

practices and the importance of fostering innovation. 

The FTC will take enforcement actions against deceptive 

advertisements that appear in new formats and new 

media (e.g., apps, games, streaming videos, and social 

networks). 

Consumers and law enforcers face challenges as a 

result of technological advances that facilitate the use 

of illegal robocalls and make it easier for fraudsters 

perpetrating telemarketing scams to hide their location. 

The FTC will continue to work with consumer 

groups, telecommunications industry representatives, 

technologists, policymakers, and other stakeholders 

to develop solutions to halt illegal robocalls and other 

telemarketing practices that violate the Telemarketing 

Sales Rule. The FTC will continue to conduct research 

on emerging technologies to assist with enforcement 

actions, inform policy, and educate consumers.

(Objectives 1.1, 1.2, and 1.3)

Protecting Military Consumers 

The FTC hosted a workshop in San Antonio, Texas to 

examine financial issues and scams that can affect military 

consumers, including active duty servicemembers in all 

branches and veterans. The workshop also discussed FTC 

resources available to military consumer advocates and 

representatives on financial readiness and fraud prevention, including the FTC’s Military Consumer Toolkit, 

available at MilitaryConsumer.gov. The FTC, state, and local authorities convened a second conference in 

Los Angeles, California to help educate military consumers and train military attorneys, law enforcement 

personnel, and consumer protection officials to address consumer fraud and other issues that affect 

servicemembers and their families. 
MANAGEMENT’S DISCUSSION AND ANALYSIS

FISCAL YEAR 2017 AGENCY FINANCIAL REPORT

28 FEDERAL TRADE COMMISSION www.ftc.gov

Internet of Things Challenge 

The FTC announced the winner of an Internet of Things (IoT) Home 

Inspector Challenge where contestants competed for a top prize of 

$25,000 to develop a tool that would help consumers protect the 

security of their IoT devices. The winning product, a mobile app, 

would enable users with limited technical expertise to identify devices 

with out of date software and other common security vulnerabilities 

and provide instructions on how to update each device’s software and 

fix other vulnerabilities. The FTC also awarded a $3,000 honorable 

mention to a team that proposed an alternative method of securing 

home networks from vulnerable IoT devices. 

PROTECTING CONSUMER PRIVACY AND 

IMPROVING DATA SECURITY:

The FTC will continue to take a leading role in efforts 

to protect consumers from unfair or deceptive practices 

related to the security and privacy of their personal 

information, while preserving the many benefits that 

technological advances offer. The agency will stop 

unfair and deceptive consumer privacy and data security 

practices through law enforcement focusing on matters 

that cause or are likely to cause concrete harm to 

consumers. It will promote strong and balanced privacy 

and security protections through policy initiatives on 

a range of topics. The FTC will continue to emphasize 

data security educational tools with the Start with 

Security and Stick With Security campaigns. For these 

campaigns, the agency will continue to host events 

around the country on security topics and best practices. 

The FTC recently launched a web page with resources 

to help small businesses stay ahead of the latest scams, 

reduce the risk of cyber threats, and respond in case 

of a data breach. The agency will bring enforcement 

actions as appropriate against entities that violate the 

Children’s Online Privacy Protection Act (COPPA) Rule. 

The agency also will participate in interagency groups, 

promote self-regulatory efforts, and provide technical 

assistance to Congress on draft legislation, as well as 

participate in international privacy initiatives and execute 

with diligence its enforcement role in the Privacy Shield 

framework. 

In addition, identity theft exacts a heavy financial 

and emotional toll from its victims, and the FTC will 

continue to assist the millions of Americans who are 

victimized each year through data security breaches and 

other means. The FTC will continue to be the repository 

for identity theft complaints and make them available 

to federal criminal law enforcement agencies. Our 

trained counselors will continue to advise identity theft 

victims who call our toll free number about rights and 

remedies available to them under federal law. The FTC’s 

website IdentityTheft.gov is the federal government’s 

one-stop resource to help consumers report and recover 

from identity theft. IdentityTheft.gov highlights useful 

resources and connects identity theft victims to federal 

agencies and other organizations that are critical to 

the recovery process. IdentityTheft.gov allows visitors 

to create a customized plan based on their specific 

experiences. In addition, the Office of Technology 

Research and Investigation is conducting research on 

emerging technologies to assist with enforcement actions, 

educate consumers, and inform policy on consumer 
MANAGEMENT’S DISCUSSION AND ANALYSIS

29

FISCAL YEAR 2017 AGENCY FINANCIAL REPORT

www.ftc.gov FEDERAL TRADE COMMISSION

New FTC Website Helps Small Businesses Avoid Scams 

and Cyber Attacks

The FTC launched ftc.gov/SmallBusiness, a new website with articles, 

videos, and other information aimed at helping small business 

owners avoid scams and protect their computers and networks from 

cyberattacks and other threats. 

It also includes a Small Business 

Computer Security Basics guide, 

which helps employees of very 

small companies be mindful about 

sharing account information, using 

strong passwords and keeping their 

wireless networks protected. 

protection matters involving emerging technologies. The 

agency also will train local law enforcement to spot and 

prosecute identity theft, and it will update educational 

materials. (Objectives 1.1, 1.2, and 1.3)

ADDRESSING EMERGING ADVERTISING 

ISSUES AND TARGETING DECEPTIVE 

ADVERTISING:

Digital media has opened new avenues for companies 

to communicate with consumers, and the format of 

advertisements continues to evolve. Like all advertising, 

digital marketing must comply with the law. The 

FTC will take enforcement action against deceptive 

advertisements that appear in new formats and new 

media (e.g., apps, games, videos, and social networks). 

The FTC also will evaluate the use of online reviews of 

products or services, including the use of false reviews, 

undisclosed material connections with reviewers, 

prohibitions on negative reviews, or unsubstantiated 

testimonials, and take action as appropriate. Companies 

are increasingly blending advertising with news, 

entertainment, or editorial content in digital media. 

If consumers do not recognize and understand the 

difference between the advertising and other content, 

they may be deceived. The FTC, therefore, will 

continue to examine consumer protection issues 

raised by sponsored content, “native” advertising that 

looks like surrounding non-commercial content, and 

endorsements.

The FTC will continue to address deceptive advertising 

of health products, such as homeopathic products and 

dietary supplements. The agency will focus on disease 

prevention and treatment claims; claims aimed at 

baby boomers, seniors, military members, and rural 

consumers; and claims exploiting emerging health 

threats. The FTC also will continue to focus its law 

enforcement efforts on misleading environmental 

marketing claims and will educate businesses about the 

FTC’s Guides for the Use of Environmental Marketing 

Claims (“Green Guides”). (Objectives 1.1, 1.2, and 1.3)

STRATEGIC GOAL 2: MAINTAIN 

COMPETITION

Under the Maintain Competition goal, the FTC will 

continue to prioritize promoting competition and 

preventing anticompetitive conduct in the health care 

and pharmaceutical sectors, technology and retail 

markets, and the energy industry. The agency will 

also work to promote sound competition policy at the 
MANAGEMENT’S DISCUSSION AND ANALYSIS

FISCAL YEAR 2017 AGENCY FINANCIAL REPORT

30 FEDERAL TRADE COMMISSION www.ftc.gov

international level and will continue advocating for 

competition before federal courts, state legislatures, and 

other governmental agencies. For example, the FTC has 

formed an Economic Liberty Task Force to consider 

how occupational licensing reform could reduce barriers 

to entry, enhance competition, and promote economic 

opportunity for all Americans. As a part of this effort, 

in July 2017, the FTC held a roundtable to highlight 

approaches that make it easier for workers in statelicensed occupations to offer their services across state 

lines or move between states.

PROMOTING COMPETITION IN HEALTH CARE 

AND PHARMACEUTICAL MARKETS:

The high cost of health care, which continues to account 

for a significant share of the gross domestic product, 

is a matter of concern for consumers, businesses, and 

taxpayers. To ensure that consumers receive the benefits 

of competitive health care markets, antitrust enforcement 

and advocacy in this sector is a top priority for the 

Commission.

The FTC will continue to focus resources on illegal 

reverse payment patent settlement agreements through 

which brand and generic drug manufacturers agree 

to delay generic competition. As the Supreme Court 

explained in FTC v. Actavis, “there is reason for 

concern that settlements taking this form tend to have 

significant adverse effects on competition.” Similarly, 

the Commission will continue to investigate other 

anticompetitive conduct, such as sham litigation or 

the abuse of government regulatory processes used to 

delay generic entry into pharmaceutical markets. Such 

practices deny consumers access to lower priced generic 

drugs. The FTC reviews, investigates, and challenges 

these harmful practices where appropriate. 

The FTC also prioritizes stopping anticompetitive health 

care mergers that could lead to higher costs or reduced 

quality, including those involving health care providers 

and pharmaceutical and medical device companies. In 

recent years, the FTC has required significant divestitures 

in a large number of pharmaceutical transactions. 

Recently, the FTC successfully challenged two large 

hospital mergers, ultimately winning circuit court 

endorsement for its analytical approach in two separate 

circuits. Stopping anticompetitive mergers of health care 

providers remains an area of considerable focus for the 

agency. 

In health care markets in particular, the FTC is 

increasingly facing a challenging landscape in attempting 

to maintain competition as state and local communities 

adjust to recent Supreme Court rulings in FTC v. Phoebe 

Putney Health System, Inc., and in North Carolina State 

Board of Dental Examiners v. FTC. These rulings clarified 

the reach of the state action doctrine and require states

to actively supervise state boards controlled by market 

Merger Remedy Study 

In February 2017, the Commission issued a study by the FTC’s Competition 

and Economics Bureaus that looks back at Commission merger orders issued 

between 2006 and 2012. The study confirmed that the agency’s processes for 

designing and enforcing merger remedies are generally effective and in most 

cases resulted in remedies that preserved or restored competition that would 

have been lost due to the merger. Where the study provided valuable insight 

on how to improve the FTC’s divestiture process, the agency has begun to 

make those improvements.
MANAGEMENT’S DISCUSSION AND ANALYSIS

31

FISCAL YEAR 2017 AGENCY FINANCIAL REPORT

www.ftc.gov FEDERAL TRADE COMMISSION

Twin Appellate Hospital Merger Victories 

The FTC prevailed in two high-profile hospital merger cases during 

FY 2017, ultimately blocking mergers in Harrisburg, Pennsylvania[i]

and the North Shore area of Chicago, Illinois.[ii] In each case, the 

FTC alleged that the proposed merger would substantially reduce 

competition for general acute care inpatient hospital services sold 

to commercial health plans, leading to higher healthcare costs 

and lower quality service in local communities. In both cases, the 

district court initially rejected the FTC’s proffered geographic 

market. On appeal, two different circuit courts each overturned the 

district court’s decision and validated the FTC’s geographic market 

analysis. The decisions acknowledged the commercial reality of 

U.S. hospital competition: that because patients prefer to receive 

hospital services close to home, employers require—and commercial health plans must offer—access to 

in-network hospitals close to where their employees live. The FTC’s cases protected this type of hospital 

competition.

participants when they act to suppress competition in 

violation of the federal antitrust laws.

Beyond enforcement, the FTC utilizes its full range of 

policy and advocacy tools to promote competition in 

health care markets. For example, the FTC has advocated 

against state legislation that attempts to immunize 

competing hospitals and other health care providers 

from federal antitrust laws when they merge or engage 

in certain forms of collaboration. In the FTC’s view, 

state efforts to immunize such conduct are unnecessary. 

The antitrust laws already permit procompetitive 

collaboration that would benefit consumers; therefore, 

the main effect of these statutes would be to immunize 

conduct that likely would restrain competition and 

result in higher health care prices for consumers, without 

generating offsetting benefits.

The FTC also attempts to better understand the markets 

it monitors and to anticipate future antitrust law and 

policy developments through research and scholarship. 

In April 2017, the Commission held a workshop entitled 

“Now Hear This” to examine competition, innovation, 

and consumer protection issues raised by hearing health 

and technology, for example.(Objectives 2.1 and 2.2)

CONTINUING EMPHASIS ON TECHNOLOGY: 

The continuing importance of technology and the 

fast pace at which it evolves is a crucial marketplace 

challenge. FTC antitrust investigations involve 

increasingly complicated high-technology sectors of 

the economy, such as devices used in manufacturing, 

electronic components, and computer hardware and 

software. In enforcing the antitrust laws, the FTC 

analyzes mergers and acquisitions filed under the HartScott-Rodino (HSR) Act, and monitors the marketplace 

for non-reportable transactions that might raise 

anticompetitive concerns. The FTC takes action against 

those mergers that are likely to reduce or eliminate 

competition. The FTC is vigilant where a firm may 

be illegally using a dominant market position to stifle 

_____________________________________

[i] FTC v. Penn State Hershey Med. Ctr., 838 F.3d 327 (3d Cir. 2016). 

[ii] FTC v. Advocate Health Care Network, 841 F.3d 460 (7th Cir. 2016).
MANAGEMENT’S DISCUSSION AND ANALYSIS

FISCAL YEAR 2017 AGENCY FINANCIAL REPORT

32 FEDERAL TRADE COMMISSION www.ftc.gov

competition in order to raise prices, reduce the quality 

or choice of goods and services, or reduce innovation; or 

where groups of competitors take collective action that 

threatens to increase prices or stifle innovation. Earlier 

this year, in the face of an FTC challenge, the two largest 

providers of daily fantasy sports abandoned their planned 

merger. The two companies operated the largest on-line 

platforms for daily fantasy sports.

Antitrust and competition policy matters in the 

technology marketplace increasingly intersect with 

complex intellectual property (IP) concerns. IP concerns 

remain a Commission priority due to their widespread 

impact on competition and consumer protection. For 

example, the FTC conducted a study of approximately 

twenty-five patent assertion entities (PAEs)—businesses 

that purchase patents and generate revenues by 

asserting them against alleged infringers—and fifteen 

other entities to better understand the PAE market. In 

October 2016, the FTC issued a report on the study 

that provides an empirical foundation for ongoing policy 

discussions and makes recommendations for patent 

litigation reforms designed to balance the needs of patent 

holders with the goal of reducing nuisance litigation. 

(Objectives 2.1 and 2.2)

PREVENTING ANTICOMPETITIVE ACTIVITY IN 

THE ENERGY INDUSTRY: 

The agency continues to closely monitor energy markets 

to identify and challenge anticompetitive mergers and 

conduct. FTC merger enforcement actions have resulted 

in multiple divestitures in the energy market during 

recent years, including Cumberland Gulf/ArcLight 

Capital Partners (involving light petroleum product 

terminals) and Energy Transfer Equity, L.P./The Williams 

Companies, Inc. and Enbridge Inc./Spectra Energy 

Corp. (both cases involving the pipeline transportation 

of natural gas). The FTC also continuously examines 

price movements and other activity through its Gasoline 

and Diesel Price Monitoring Project in an effort 

to identify anticompetitive conduct such as illegal 

agreements among competitors, agreements between 

manufacturers and product dealers, and monopolization 

that may undermine the benefits of competition. 

To prepare and support agency staff in meeting these 

challenges, the FTC continues to study energy markets. 

In FY 2016, the FTC sponsored a workshop entitled 

“Something New Under the Sun” which examined 

competition and consumer protection issues in the 

Mallinckrodt Pays $100 Million to Settle Charges It 

Illegally Maintained its Monopoly

In January 2017, the Commission filed a stipulated injunction in federal 

court in which Malinckrodt ARD Inc., formerly Questcor Pharmaceuticals, 

Inc., agreed to settle Commission charges that it monopolized the market 

for adrenocorticotropic hormone (ACTH) drugs. These drugs are 

typically the last of defense in treating infantile spasms, a rare and serious 

seizure disorder. According to the Commission’s complaint, the company 

purchased the rights to develop Synacthen Depot, a drug that threatened 

the firm’s existing monopoly in the U.S. market. The Commission charged 

that the company undertook this acquisition to prevent any other company 

from using the Synacthen assets to develop a synthetic ACTH drug in the 

United States, thereby preserving Questcor’s monopoly and allowing it to 

raise and maintain extremely high prices. Questcor raised its prices from 

$40 a vial to more than $34,000 a vial between 2001 and 2017, when it faced no competition for this critical 

infant medicine. To resolve this matter, Malinckrodt ARD Inc. agreed to grant a license to Synacthen Depot to 

a Commission-approved licensee and to pay $100 million in disgorgement.
MANAGEMENT’S DISCUSSION AND ANALYSIS

33

FISCAL YEAR 2017 AGENCY FINANCIAL REPORT

www.ftc.gov FEDERAL TRADE COMMISSION

solar energy industry. The knowledge gained from the 

workshop will likely influence future advocacy efforts.

The FTC also issues reports on the factors that influence 

the prices that American consumers pay for gas. In 

compliance with the Energy Policy Act of 2005, the FTC 

issued its twelfth annual Ethanol Market report in 2016, 

which concluded that the market is less concentrated 

than it was eleven years ago. (Objectives 2.1 and 2.2)

MAINTAINING ROBUST COMPETITION IN 

RETAIL MARKETS:

Competition in retail markets impact the wallet of 

every American consumer. The FTC focuses significant 

resources on identifying and challenging mergers and 

conduct likely to harm competition in the retail sector. 

These actions preserve competition for the benefit of 

consumers by keeping prices down, improving quality 

and service, and expanding innovation and consumer 

choices. In recent years, the Commission has successfully 

challenged several large retail mergers including Staples/

Office Depot, along with several proposed supermarket 

acquisitions, which would likely have reduced 

competition in many geographic markets absent the 

Commission’s challenges.

As in other sectors, the FTC also continues to study 

evolving competitive dynamics that affect how 

consumers shop for products they want to buy. In 

January of 2016, the Commission held a public 

workshop examining the current state and future trends 

in automotive distribution including direct sales to 

consumers, warranty reimbursement, the future of 

autonomous vehicles and connected cars. The workshop 

built upon advocacy efforts from previous years 

regarding the potentially anticompetitive effects of laws 

prohibiting direct-to-consumer auto sales. (Objectives 

2.1 and 2.2)

DraftKings and FanDuel Abandon Merger 

In June 2017, the FTC authorized staff to seek a preliminary injunction to 

block the merger of the two largest daily fantasy sports sites, DraftKings 

and FanDuel. The FTC alleged that the combined firm would control 

more than 90 percent of the U.S. market for paid daily fantasy sports 

contests and that post-merger consumers would likely have to pay higher 

commission rates and receive lower promotional offers. According to the 

complaint, the two firms compete head-to-head to offer the best prices and 

product quality, including the largest prize pools and greatest variety of 

contests--competition. Post-merger, this competition would have been lost. 

Approximately one month after the Commission authorized legal action, 

the parties abandoned their proposed transaction, and the Commission 

subsequently withdrew its complaint.
MANAGEMENT’S DISCUSSION AND ANALYSIS

FISCAL YEAR 2017 AGENCY FINANCIAL REPORT

34 FEDERAL TRADE COMMISSION www.ftc.gov

MANAGEMENT ASSURANCES

IMPLEMENTATION OF THE FEDERAL 

MANAGERS’ FINANCIAL INTEGRITY ACT 

(FMFIA)

The FTC’s Enterprise Risk Management (ERM) and 

internal controls are integral to daily management of 

operations and to carrying out activities that achieve 

strategic goals and objectives. Internal controls are 

part of all agency systems and processes. Managers are 

held accountable for assessing and improving these 

controls and relevant performance risks in order to 

provide efficient and effective program operations as 

well as program compliance with applicable laws and 

regulations.

The FTC’s Senior Management Council (SMC) 

provides oversight to the Senior Assessment Team 

(SAT) activities and is instrumental in the strategic 

direction and mitigation strategies for the agencies 

most significant risks. The SAT executes the agency’s 

enterprise risk and internal control program activities. 

This includes assessing and improving compliance with 

applicable guidance (e.g., Office of Management and 

Budget Circular A-123, Management Responsibilities 

for Enterprise Risk Management and Internal 

Controls), monitoring and remediation of identified 

risk, and communicating the results of reviews to senior 

management and the head of the agency. 

During FY 2017, the SAT activities included planning 

the annual internal controls assessments, identifying key 

processes and related control activities, documenting 

the scope, design, and methodology of risk and internal 

control assessments, and monitoring corrective action 

plans and the remediation progress.

This year, the FTC continued with the implementation 

of an ERM program plan and strategy. Activities 

for FY 2017 included implementing the third year 

of the multi-year internal control assessment plan, 

identification and analysis of risk, entity level control 

assessment, and corrective action monitoring. These 

results and other information from independent 

audits or reviews performed by the Office of Inspector 

General (OIG) and the Government Accountability 

Office (GAO) (e.g., Federal Information Security 

Management Act review), independent audits of service 

providers’ operations and financial systems (e.g., reviews 

conducted in accordance with Statement on Standards 

for Attestation Engagements (SSAE) No. 18), and 

other relevant evaluations and control assessments 

were considered by the SAT and the agency head in 

determining if there were any management control 

deficiencies or nonconformances that must be disclosed 

in the annual assurance statement.

The Chairman’s assurance statement below is supported 

by the processes and reviews described above, which were 

carried out in FY 2017. Management assurances tables 

appear in the Other Information section.
MANAGEMENT’S DISCUSSION AND ANALYSIS

35

FISCAL YEAR 2017 AGENCY FINANCIAL REPORT

www.ftc.gov FEDERAL TRADE COMMISSION
MANAGEMENT’S DISCUSSION AND ANALYSIS

FISCAL YEAR 2017 AGENCY FINANCIAL REPORT

36 FEDERAL TRADE COMMISSION www.ftc.gov

SUMMARY OF MATERIAL WEAKNESS 

AND NONCONFORMANCES

As noted in the Chairman’s FMFIA Statement of 

Assurance, the FTC’s management has no material 

weaknesses or nonconformances to report for FY 2017. 

During the third quarter of FY 2016, the FTC’s 

management detected a material weakness in the design 

of the internal controls regarding accounts receivable 

balances held by receivers appointed by Federal 

court judges in some of our law enforcement cases. 

Management took remedial action in the fourth quarter 

to record accounts receivable balances held by receivers 

as of September 30, 2016. In FY 2017, steps were taken 

to improve the controls over receivership receivables such 

as; implementation of an updated policy, established an 

alert process to be notified of judgements issued by the 

court, and established a receiver asset survey to report the 

estimated cash value of assets. All actions were completed 

as of June 30, 2017 resulting in the remediation of the 

material weakness. 

FEDERAL INFORMATION SECURITY 

MANAGEMENT ACT (FISMA)

As mandated by FISMA, the agency continues 

to maintain an information security program to 

manage information technology in accordance with 

OMB Circular A-130 requirements and National 

Institute of Standards and Technology (NIST) guidance. 

During FY 2017, the FTC performed five assessment 

and authorization efforts and currently has thirteen 

systems authorized to operate. The FTC leverages four 

Federal Risk and Authorization Management Program 

(FedRAMP) Joint Authorization Board provisional 

authorizations – one for the cloud hosting of our public 

web sites, two for the Sentinel Network Services systems, 

and one for Acutrak.

DIGITAL ACCOUNTABILITY AND 

TRANSPARENCY ACT OF 2014 

(DATA ACT)

The DATA Act expands the Federal Funding 

Accountability and Transparency Act of 2006 to increase 

accountability and transparency in Federal spending, 

making Federal expenditure information more accessible 

to the public; improve the quality of the information 

on USASpending.gov, as verified through regular audits 

of the posted data; and to streamline and simplify 

reporting requirements through clear data standards. The 

FTC completed its implementation plan, successfully 

transmitted the data files, and certified the fiscal year 

end submission as required by the government-wide 

requirements set by OMB and U.S. Department of 

Treasury. 

DEBT COLLECTION IMPROVEMENT ACT

The Debt Collection Improvement Act of 1996

prescribes standards for the administrative collection, 

compromise, suspension, and termination of Federal 

agency collection actions and referrals to the proper 

agency for litigation. The FTC monitors, administers, 

and collects on debts less than 120 days delinquent. The 

FTC also monitors, administers and collects on debts 

more than 120 days delinquent. Eligible, nonexempt 

debts more than 120 days old are transferred to the 

U.S. Department of the Treasury for cross-servicing. 

In addition, recurring payments were processed 

by Electronic Funds Transfer (EFT) in accordance 

with the EFT provisions of the Debt Collection 

Improvement Act.
MANAGEMENT’S DISCUSSION AND ANALYSIS

37

FISCAL YEAR 2017 AGENCY FINANCIAL REPORT

www.ftc.gov FEDERAL TRADE COMMISSION

PROMPT PAYMENT ACT

The Prompt Payment Act requires Federal agencies to 

make timely payments to vendors, including any interest 

penalties for late invoice payments. In FY 2017, the 

FTC processed 3,452 invoices totaling $80 million that 

were subject to prompt payment. Of these invoices, 

99.08 percent were paid on time. During FY 2017, 

the FTC paid a total of $3,292 in interest penalties, or 

.0041 percent of the total dollar amount invoiced.

AGENCY FINANCIAL MANAGEMENT 

SYSTEMS STRATEGY 

The FTC’s overall strategy for its financial management 

systems framework is driven by the objectives of 

operational effectiveness and efficiency, reliability and 

timeliness of data, and support of requirements for the 

agency’s strategic goals. The FTC obtains hosting and 

application management services from the Department 

of the Interior Business Center (IBC), a Federal 

Shared Service Provider, and has been in the shared 

services environment, using Oracle Federal Financials 

(OFF), since FY 2008. The FTC currently has its core 

financial, personnel and payroll, travel management, and 

acquisition lifecycle systems hosted and supported by 

the IBC.

The core financial management system is based on OFF 

Release 12, and used for general ledger, accounts payable, 

accounts receivable, budget execution, requisition, 

contract writing, and reporting capabilities. The FTC 

also has been obtaining support from the IBC for its 

Federal Personnel/Payroll System (FPPS) since 1998, and 

financial data from FPPS is interfaced into OFF. 

The FTC, with the IBC’s support, continues to 

modernize and integrate our portfolio of financial 

management systems. In FY 2018, the IBC and the 

FTC will make several improvements to the financial 

systems. The IBC will upgrade OFF from version 

12.1 to 12.2. Once complete, this will provide the 

FTC with additional functionality. The FTC will be 

furthering its capability of using business analytics 

by participating in the IBC’s effort to migrate from 

the Oracle Discoverer reporting system to the Oracle 

Business Intelligence Enterprise Edition (OBIEE)/

Oracle Business Intelligence Application (OBIA). This is 

a prebuilt business intelligence solution that will deliver 

information across the organization, from the front line 

users to senior management. In addition, the FTC, in 

conjunction with the IBC, will implement the Invoice 

Processing Platform (IPP), a secure web-based service 

that more efficiently manages government invoicing 

from purchase order through payment notifications. 

The IPP capability will automate vendor invoicing 

and payments which should reduce transactional costs, 

improve accuracy of payments, and help the FTC 

comply with OMB Memorandum M-15-19, which 

directs federal agencies to implement electronic invoicing 

by the end of FY 2018.

FEDERAL CIVIL PENALTIES INFLATION 

ADJUSTMENT ACT OF 1990

As established by statutory civil penalty provisions, 

the FTC has jurisdiction to charge civil penalties for 

violations specified in the FTC Act and other laws 

the Commission is responsible for administering and 

enforcing. The FTC adjusts these civil penalty amounts 

for cost of living, as required by Federal Civil Penalties 

Inflation Adjustment Act Improvements Act of 2015.

Details about the FTC’s types of civil penalties, the 

authority for the penalty, adjustment dates, and current 

penalty amount can be found in the Other Information 

section of this report.
MANAGEMENT’S DISCUSSION AND ANALYSIS

FISCAL YEAR 2017 AGENCY FINANCIAL REPORT

38 FEDERAL TRADE COMMISSION www.ftc.gov

FINANCIAL HIGHLIGHTS

INTRODUCTION

These financial highlights provide an overview of the 

FTC’s FY 2017 financial statements. An independent 

audit was conducted on the FTC’s financial statements 

for the fiscal years ending September 30, 2017 and 2016. 

For the 21st straight year, the FTC received a ”clean” 

unmodified opinion on its audited financial statements. 

An unmodified opinion is when the auditor concludes 

that an entity’s financial statements are presented fairly, 

in all material aspects, in accordance with Generally 

Accepted Accounting Principles (GAAP). A summary 

of the information contained in the financial statements 

is presented in the tables below. The complete audited 

financial statements with accompanying notes including, 

the independent auditor’s report, are presented in the 

Financial Section of this report.

RESTATEMENT OF NON-ENTITY FUNDS

The FTC has engaged in a multiyear effort to re-evaluate 

the accounting treatment of its non-entity funds, and 

as a result, several improvements have been made to 

the agency’s accounting practices. Non-entity funds are 

those that the FTC holds on behalf of third parties and 

are not available for the agency’s use. In FY 2016, the 

FTC updated its policy for the recording of accounts 

receivable (and offsetting liability) related to the agency’s 

non-entity consumer redress program. The FTC was 

not recording the estimated accounts receivable and 

the offsetting liability for judgments requiring assets to 

be liquidated by a court appointed receiver. The FTC 

updated its accounting process prior to September 30, 

2016, which resulted in a restatement of the FY 2015 

balance sheet. 

In FY 2017, the FTC continued with the improvement 

initiative that began in FY 2016. During FY 2017, the 

agency updated its practice of accounting for non-entity 

funds held by the redress third party administrators to 

be consistent with the Federal Accounting Standards 

Advisory Board (FASAB) Statement of Federal Financial 

Accounting Standards 1 (SFFAS 1). These funds are not 

available to, or held by, the FTC and, therefore, are no 

longer reported on the FTC’s balance sheet. This change 

required the FTC to restate the FY 2016 balance sheet in 

FY 2017, resulting in a reduction of $55 million in both 

non-entity assets and corresponding liabilities. The net 

effect of the restatement on the balance sheet is zero, and 

no other statements are impacted.

The FTC’s internal review of its accounting practice for 

non-entity funds demonstrates the agency’s commitment 

to sound financial management practices. As a result 

of its efforts, the FTC has improved the accuracy and 

transparency of its non-entity reporting.
MANAGEMENT’S DISCUSSION AND ANALYSIS

39

FISCAL YEAR 2017 AGENCY FINANCIAL REPORT

www.ftc.gov FEDERAL TRADE COMMISSION

BALANCE SHEET

The FTC’s Balance Sheet includes both entity and 

non-entity assets and liabilities. Entity assets, by law, 

are authorized for the FTC to use in its operations, 

i.e., Property, Plant, and Equipment (PP&E). Entity 

liabilities consist of probable and measurable future 

outflows of FTC entity resources. 

Non-entity assets (which are not available for the 

FTC’s use) are those assets held on behalf of others, 

i.e., collections and accounts receivable that arise from 

civil monetary penalties and court-ordered judgments 

for monetary relief in the consumer redress program. 

Non-entity assets are equal to, and offset by, non-entity 

liabilities. 

CONDENSED BALANCE SHEET 

AS OF SEPTEMBER 30, 2017 AND 2016 (Restated)

(Dollars in Millions) FY 2017 Restated

FY 2016 % Change

Entity Assets

Fund Balance with Treasury $ 133 $ 133 0%

General property, plant, and equipment 51 57 -12%

Total Entity Assets 184 190 -3%

Non-Entity Assets

Fund Balance with Treasury 432 797 -46%

Accounts receivable 70 99 -30%

Total Non-Entity Assets 502 896 -44%

Total Assets $ 686 $ 1,086 -37%

Entity Liabilities

Employee related liabilities 21 21 0%

Accounts payable and other 11 13 -17%

Total Entity Liabilities 32 34 -5%

Non-Entity Liabilities

Redress collections not yet disbursed 432 797 -46%

Liability for amounts to be collected 70 99 -30%

Total Non-Entity Liabilities 502 896 -44%

Total Liabilities $ 534 $ 930 -43%

Cumulative results of operations 152 156 -2%

Total Net Position $ 152 $ 156 -2%

Total Liabilities and Net Position $ 686 $ 1,086 -37%
MANAGEMENT’S DISCUSSION AND ANALYSIS

FISCAL YEAR 2017 AGENCY FINANCIAL REPORT

40 FEDERAL TRADE COMMISSION www.ftc.gov

BALANCE SHEET

ENTITY

Entity assets totaled $184 million, or 26 percent of 

all FTC assets as of September 30, 2017, a decrease 

of $6 million or 3 percent from the FY 2016 total of 

$190 million. 

The Fund Balance with Treasury of $133 million is 

the aggregate amount available to the FTC to make 

expenditures and pay liabilities. There was no change 

in the Fund Balance with Treasury from FY 2016 to 

FY 2017.

PP&E, net of accumulated depreciation/amortization, 

is $51 million, which is comprised of $32 million in 

leasehold improvements, $12 million in equipment, and 

$7 million in software. Of the total PP&E, $27 million 

is associated with the FY 2014 relocation of staff to office 

space at Constitution Center. The $6 million decrease in 

PP&E is primarily due to the continued depreciation/

amortization of assets related to the FY 2014 staff 

relocation.

Entity liabilities totaled $32 million, or 6 percent of 

all FTC liabilities as of September 30, 2017, a decrease 

of $2 million or 5 percent from the FY 2016 total of 

$34 million.

Employee related liabilities of $21 million consist of 

accrued payroll, accrued annual leave wages earned by 

employees but not yet paid, and the Federal Employees 

Compensation Act (FECA) liability. Accounts payable 

and other totaling $11 million consists of the amounts 

owed but not yet paid for goods or services the FTC 

has received.

57

BALANCE SHEET - ENTITY - FY17 AND FY16 COMPARISON

0 20 40 60 80 100 120 140 160

Millions

Assets Liabilities

Fund Balance 

with Treasury

General PP&E

Accounts payable 

and other

Employee related

liabilities

FY16

51

133

13

11

21

21

FY17

133
MANAGEMENT’S DISCUSSION AND ANALYSIS

41

FISCAL YEAR 2017 AGENCY FINANCIAL REPORT

www.ftc.gov FEDERAL TRADE COMMISSION

BALANCE SHEET

NON-ENTITY

Non-entity assets total $502 million, or 74 percent of all 

FTC assets as of September 30, 2017. This represents a 

decrease of $394 million or 44 percent from the FY 2016 

total of $896 million.

Non-entity assets are equal to, and offset by, non-entity 

liabilities. The accounts receivable is offset by the liability 

for amounts to be collected, while the Fund Balance with 

Treasury is offset by the liability for redress collections 

not yet disbursed.

Net accounts receivable of $70 million reflects amounts 

to be paid to the FTC from court ordered judgments 

in the consumer redress program. This represents a 

$29 million decrease in net accounts receivable from 

the FY 2016 total of $99 million. The majority of the 

decrease is the result of a $22 million collection related 

to a 2016 judgment with AMG Services Inc., a payday 

lender that illegally charged consumers undisclosed and 

inflated fees.

99

BALANCE SHEET - NON-ENTITY - FY17 AND FY16 COMPARISON

0 100 200 300 400 500 600 700 800 900

Millions

Assets Liabilities

Fund Balance 

with Treasury

Accounts receivable

Liability for amounts 

to be collected

Redress collections 

not yet disbursed

FY16

70

797

432

99

70

797

432

FY17

The Fund Balance with Treasury for consumer redress 

of $432 million is held temporarily by the FTC until 

distributed to consumers, other harmed parties, redress 

third party administrators (for distribution to consumers 

on behalf of the FTC), or disgorged to Treasury (if 

consumer redress is not practicable). 

The decrease of $365 million in Fund Balance 

with Treasury (46% less than FY 2016) consists of 

$273 million in collections, offset by $638 million in 

disbursements. Five large judgments account for over 

77% of the FY 2017 ending Fund Balance with Treasury 

of $432 million. The figure below shows the major 

collections and disbursements that occurred throughout 

the fiscal year and the five large judgments that the FTC 

held at fiscal year-end.

Non-entity assets are comprised of receivables due to the 

FTC and collections received by the FTC. Occasionally, 

the FTC will be a plaintiff in a case but the funds will 

not be collected by the FTC, therefore they are not 

recognized in the Balance Sheet. Examples include the 

Western Union (pg. 26), and Dish Network (pg. 23), 

cases where the FTC was a plaintiff but the funds were 

payable either to the Department of Justice or the 

U.S. Treasury General Fund. 
MANAGEMENT’S DISCUSSION AND ANALYSIS

FISCAL YEAR 2017 AGENCY FINANCIAL REPORT

42 FEDERAL TRADE COMMISSION www.ftc.gov

DEC-16 MAR-17 JUN-17 Ending

Balance:

$432M

Beginning

Balance:

$797M

77% consists of

5 judgments

$1,000,000,000

$800,000,000

$600,000,000

$400,000,000

$200,000,000

K M

G

A

C

D

E

L

N

J

F

B

I H

NON-ENTITY ASSETS - FUND BALANCE WITH TREASURY

FY 2017 Activity

FY 2017 NON-ENTITY FUND BALANCE WITH TREASURY TIMELINE OF ACTIVITY 

$797M Beginning Balance – FY 2017 Non-Entity Fund Balance with Treasury

A ($88M) AT&T

Disbursed $88M in refunds to more than 2.7 million AT&T consumers who had thirdparty charges added to their mobile bills without their consent, a tactic known as mobile 

cramming. The refunds relate to FTC settlements in 2014 with AT&T and two other 

companies involved in the cramming schemes, Tatto and Acquinity.

B $22M AMG 

Services, Inc.

Collected $22M as part of a 2016 judgment for a payday lending scheme that deceived 

consumers across the country and illegally charged them undisclosed and inflated fees. 

C ($125M) Cephalon, 

Inc.

Disbursed $125M to harmed parties as part of a $1.2 billion settlement in 2015 that 

resolved the FTC’s antitrust suit charging Cephalon, Inc. with illegally blocking generic 

competition (pay for delay) to its sleep-disorder drug Provigil. The FTC collected $458M 

from the settlement, with the remaining $752M paid directly to harmed parties. Of the 

$458M the FTC collected, a total of $245M has been disbursed in FY 2016 and FY 2017. 

D ($18M) The Tax Club

Disbursed $18M in refunds to more than 20,000 people who lost money to The Tax Club, 

a scheme that targeted individuals who were trying to start home based businesses. The 

refunds are the result of a 2014 settlement with The Tax Club. 

E ($200M) Herbalife

Disbursed $200M in refunds to nearly 350,000 consumers who lost money running 

Herbalife businesses. The refunds are the result of a 2016 settlement that required Herbalife 

to pay $200M and fundamentally restructure its business.

F $49M DeVry 

University

Collected $49M as a result of a $100M 2016 settlement with DeVry University for deceiving 

students about the likelihood of finding jobs in their field of study and the income level 

they could achieve upon graduation. The remaining $51M consists of debt forgiveness from 

DeVry University to qualifying students on unpaid student loans and other debts

G ($20M) T-Mobile

Disbursed $20M in refunds to more than 617,000 T-Mobile consumers who had third-party 

charges added to their mobile bills. These refunds are the result of a 2014 settlement with 

T-Mobile.

H $20M Uber

Collected $20M from a 2017 settlement with Uber Technologies to resolve the FTC’s 

charges that Uber misled prospective drivers with exaggerated earnings claims and claims 

about financing through its Vehicle Solutions Program. The $20M will be used to provide 

refunds to affected drivers across the country.
MANAGEMENT’S DISCUSSION AND ANALYSIS

43

FISCAL YEAR 2017 AGENCY FINANCIAL REPORT

www.ftc.gov FEDERAL TRADE COMMISSION

FY 2017 NON-ENTITY FUND BALANCE WITH TREASURY TIMELINE OF ACTIVITY (CONTINUED)

I $90M Mallinckrodt 

ARD Inc

Collected $90M from a $100M January 2017 settlement with Mallinckrodt ARD Inc., 

formerly known as Questcor Pharmaceuticals, Inc. to settle the FTC’s charge that it violated 

the antitrust laws when it acquired the rights to a drug that threatened its monopoly in the 

U.S. market for adrenocorticotropic hormone (ACTH) drugs. These drugs are typically the 

last defense in treating infantile spasms, a rare and serious seizure disorder. The remaining 

$10M will be paid to the five state co-plaintiffs in this matter.

J $9M Health 

Formulas, LLC

Collected $9M from a 2016 settlement with Health Formulas LLC, who the FTC alleged 

advertised using fake “free trials” that tricked people into disclosing credit card information, 

and enrolled them without their permission in a costly negative-option membership 

program.

K ($49M) DeVry 

University

Disbursed $49M received from the 2016 settlement described above (F), to 173,000 

students in compensation for DeVry University allegedly deceiving them about the likelihood 

of finding jobs in their field of study and the income level they could achieve upon 

graduation.

L $33M Lifelock

Collected $33M from a 2015 settlement to resolve the FTC’s contempt charges that Lifelock 

violated the terms of a 2010 Federal court order that requires it to secure consumers’ 

personal information and prohibits Lifelock from deceptive advertising. Lifelock will pay an 

additional $67M directly to consumers.

M ($90M) Mallinckrodt 

ARD Inc

Disbursed $90M received from the settlement described above (H) to the U.S. Treasury 

General Fund. 

N ($10M) Health 

Formulas, LLC

Disbursed $10M to 227,000 consumers who bought “fat burning,” “weight loss,” and 

other dietary supplements, DVDs, or skin creams. The FTC received the funds as part of 

the settlement described above (J). In addition to the $9M collected in FY 2017, $1M was 

collected in FY 2016.

$12M Net of other collections $50M and disbursing ($38M) activities, related to over 200 additional matters

$432M Ending Balance – FY 2017 Non-Entity Fund Balance with Treasury

SIGNIFICANT CONTRIBUTORS TO THE ENDING NON-ENTITY FUND BALANCE WITH TREASURY dollar amt company description

$213M Cephalon, 

Inc.

$213M (49% of the ending balance) is held by the FTC from a 2015 settlement resolving 

antitrust charges that Cephalon, Inc. illegally blocked generic competition (pay for delay) to its 

drug Provigil. The settlement made available $1.2 billion to harmed parties. The FTC collected 

$458M from the settlement, with the remaining $742M paid directly paid to harmed parties. 

Of the $458M the FTC collected, a total of $245M was disbursed in FY 2016 and FY 2017. 

The remaining funds will be used to pay future claims. At the end of the settlement term, any 

remaining funds will be disgorged to the U.S. Treasury General Fund.

$47M AMG 

Services, Inc.

$47M is held by the FTC from a 2016 judgment (and earlier settlements) for a payday lending 

scheme that deceived consumers across the country and illegally charged them undisclosed and 

inflated fees.

$33M Lifelock

$33M is held by the FTC from a 2015 settlement to resolve the FTC’s contempt charges that 

Lifelock violated the terms of a 2010 Federal court order that requires it to secure consumers’ 

personal information and prohibits Lifelock from deceptive advertising. 

$21M Lights of 

America

$21M is held by the FTC from a 2014 judgment against Lights of America Inc. for overstating 

the light output and life expectancy of its LED bulbs on packages and in brochures, and falsely 

comparing the brightness of its LED bulbs with that of other light bulbs.

$20M Uber

$20M is held by the FTC from a 2017 settlement with Uber Technologies to resolve the FTC’s 

charges that Uber misled prospective drivers with exaggerated earnings claims and claims about 

financing through its Vehicle Solutions Program. 

$98M The remaining balance consists of 106 additional matters

$432M Ending Balance – FY 2017 Non-Entity Fund Balance with Treasury
MANAGEMENT’S DISCUSSION AND ANALYSIS

FISCAL YEAR 2017 AGENCY FINANCIAL REPORT

44 FEDERAL TRADE COMMISSION www.ftc.gov

STATEMENT OF NET COST

STATEMENT OF NET COST SUMMARY

FOR THE YEARS ENDED SEPTEMBER 30, 2017 AND 2016

(Dollars in Millions) FY 2017 FY 2016 % Change

Protecting Consumers:

Gross costs $ 182 $ 185 -2%

Less: earned revenue (15) (14) 4%

Protecting Consumers 167 171 -2%

Maintaining Competition:

Gross costs $ 145 $ 144 0%

Less: earned revenue (126) (115) 10%

Maintaining Competition 19 29 -33%

Net Cost of Operations $ 186 $ 200 -7%

The Statement of Net Cost presents the FTC’s gross 

costs less earned revenue for both of the FTC’s strategic 

goals, Protect Consumers and Maintain Competition. 

The third goal, Advance Organizational Performance, 

has its costs distributed to the two strategic goals based 

on FTE usage (unless a cost is clearly attributable to 

a specific goal). The FTC net cost of operations was 

$186 million in FY 2017, which consists of $327 million 

in gross costs offset by $141 million in earned revenue.

The net cost of operations for the Protect Consumers 

strategic goal is $167 million, which consists of 

$182 million in gross costs offset by $15 million in 

earned revenue. Of the total earned revenue, $13 million 

is from fees collected for the National Do Not Call 

Registry. The FTC receives fees from telemarketers who 

pay an annual subscription fee to download telephone 

numbers of consumers who do not wish to receive calls. 

Fees are based on the number of area codes downloaded. 

The remaining $2 million in earned revenue is from a 

reimbursable agreement with the Department of Justice 

(DOJ) for services provided from the Consumer Sentinel 

Network. The Consumer Sentinel Network is a unique 

database of consumer complaints filed with the FTC that 

provides law enforcement officials within the U.S. and 

abroad with access to millions of consumer complaints 

including identity theft, telemarketing scams, and 

immigration services. 

The net cost of operations for the Maintain Competition 

strategic goal is $19 million, which consists of 

$145 million in gross costs offset by $126 million 

in earned revenue. Of the total earned revenue, 

$125 million comes from fees collected for premerger 

notification filings. The remaining $1 million is from 

multiple reimbursable agreements with other Federal 

agencies. Premerger notification filings are under the 

Hart-Scott-Rodino (HSR) Antitrust Improvement 

Act of 1976, which gives the Federal government the 

opportunity to investigate and challenge mergers that are 

likely to harm consumers before injury occurs. The HSR 

Act requires the filing of premerger notifications with the 

FTC and the DOJ Antitrust Division. The filing fees are 

determined by the value and size of the merging parties. 

By law, the FTC retains one-half of all premerger filing 

fees collected and remits one-half to the DOJ Antitrust 

Division. 

The gross costs for the Maintain Competition strategic 

goal increased to $145 million in FY 2017 from 

$144 million in FY 2016, an increase of only $1 million. 

Premerger revenue increased $11 million as a result of 

an increase in the number of premerger transactions 

from FY 2016 to FY 2017. The FTC used its resources 

wisely, at the same cost level as FY 2016, to effectively 

analyze and process an increased number of premerger 
MANAGEMENT’S DISCUSSION AND ANALYSIS

45

FISCAL YEAR 2017 AGENCY FINANCIAL REPORT

www.ftc.gov FEDERAL TRADE COMMISSION

transactions, demonstrating the FTC’s commitment 

to a sound return on investment for consumers. The 

FTC continues to work to streamline its investigatory 

processes and minimize the burden imposed on 

legitimate business practices. 

FTC NET COST OF OPERATIONS VS

BENEFIT TO CONSUMERS 

The FTC had gross costs of $327 million offset by 

$141 million in earned revenue resulting in a total net 

cost of operations of $186 million. Additionally, a large 

portion of the FTC’s operations result in activity whose 

benefits are not seen on the Statement of Net Cost. These 

benefits to the public are important in determining the 

overall impact of the agency’s strategic goals. 

The Statement of Net Cost only includes entity activity. 

During FY 2017, the FTC returned $638 million 

in non-entity collections to consumers and the U.S. 

Treasury General Fund. Additionally, the FTC saved 

consumers an estimated $3.6 billion* through its merger 

and nonmerger actions and an estimated $900 million* 

through its consumer protection law enforcement actions. 

The FTC’s cost to protect consumers and maintain 

competition is a small fraction of the amount the FTC 

has saved consumers. For FY 2017, the FTC provided an 

estimated total of $5.1 billion in benefits to consumers. 

When this benefit is compared to the $186 million in net 

costs, it equates to every $1 of the FTC’s cost returning 

an estimated $27 in benefits provided by the FTC to 

consumers.

Other benefits to consumers*

$4.5 Billion

Non-entity funds 

disbursed to 

consumers and 

Treasury

$638 Million

COST vs BENEFIT 

FTC Net Cost of Operations

$186 Million

FTC’S IMPACT 

ON 

THE CONSUMER

For every $1 of the FTC’s cost there is an estimated $27 in benefits provided to the consumer

*These estimates were calculated for performance measures 1.1.3 (consumers savings from consumer protection law enforcement), 2.1.3 (consumer savings 

from merger enforcement), and 2.1.5 (consumer savings from non-merger enforcement). See Appendix A – Data Quality Information for more information 

on these measures and how these estimates were calculated.
MANAGEMENT’S DISCUSSION AND ANALYSIS

FISCAL YEAR 2017 AGENCY FINANCIAL REPORT

46 FEDERAL TRADE COMMISSION www.ftc.gov

BUDGET AUTHORITY

The FTC receives an annual appropriation that is 

available until expended, subject to the Office of 

Management Budget (OMB) apportionment and 

Congressional restrictions on the expenditure of funds 

(see FTC’s FY 2018 Congressional Budget Justification, 

page 3, “Appropriations Language Provisions”). 

The FTC’s budget authority is derived from a direct 

appropriation and offsetting collections. 

The FTC’s new budget authority in FY 2017 was 

$313 million, an increase of $2 million from the 

FY 2016 total of $311 million. The FY 2017 authority 

of $313 million is comprised of $175 million in general 

fund appropriations and $138 million in spending 

authority from offsetting collections, consisting 

of $125 million from fees collected for premerger 

notification filings under the Hart-Scott-Rodino 

Antitrust Improvements Act of 1976, and $13 million 

from fees collected for the National Do Not Call 

Registry.

The $138 million in offsetting collections reduced 

the burden the FTC placed on the Federal budget for 

FY 2017, from the $313 million to $175 million.

General Fund

Appropriation

$180 Million

Offsetting

Collection

$131 Million

General Fund

Appropriation

$175 Million

Offsetting

Collection

$138 Million

NEW BUDGET AUTHORITY

(Dollars in millions)

FY 2017 - $313M

FY 2016 - $311M
MANAGEMENT’S DISCUSSION AND ANALYSIS

47

FISCAL YEAR 2017 AGENCY FINANCIAL REPORT

www.ftc.gov FEDERAL TRADE COMMISSION

LIMITATIONS OF FINANCIAL STATEMENTS

The FY 2017 financial statements have been prepared from the books and records of the agency in accordance with 

OMB Circular A-136, financial reporting requirements, as amended. The financial statements represent the financial 

position and results of operations of the agency pursuant to the requirements of Chapter 31 of the U.S. Code Section 

3515(b). While these statements have been prepared from the agency’s books in accordance with GAAP for federal 

entities and the formats prescribed by the OMB, the statements are in addition to the financial reports used to 

monitor and control budgetary resources, which are prepared from the same books and records. These statements 

should be read with the understanding that they are for a component of the U.S. government, a sovereign entity. 

FINANCIAL MANAGEMENT INDICATORS

The following table shows standard indicators developed by the Chief Financial Officers Council and used by the 

OMB to monitor agencies’ financial management practices.

FINANCIAL MANAGEMENT INDICATORS FOR FY 2017

DEBT MANAGEMENT

Eligible debt transferred to Treasury 100%

FUNDS MANAGEMENT

Fund balance with Treasury (identifies the difference between the fund balance 

reported in Treasury reports and the agency fund balance with Treasury recorded in 

its general ledger)

100% reconciled

PAYMENT MANAGEMENT

Percentage invoices paid on time (per Prompt Payment Act) 99.08%

Percentage interest penalties paid to total dollars invoiced .0041%

Percentage of total dollars outstanding in current status (good standing) for individually 

billed travel account holders 100%

Percentage of total dollars outstanding in current status (good standing) for centrally 

billed travel accounts 100%

Percentage of total dollars outstanding in current status (good standing) for 

purchase cards 100%
FEDERAL TRADE COMMISSION
FISCAL YEAR 2017

FINANCIAL

SECTION
FINANCIAL SECTION

FISCAL YEAR 2017 AGENCY FINANCIAL REPORT

50 FEDERAL TRADE COMMISSION www.ftc.gov

MESSAGE FROM THE CHIEF FINANCIAL OFFICER

David Rebich

Chief Financial Officer

I am pleased to present FTC’s Agency Financial Report 

(AFR) for Fiscal Year 2017. The AFR provides us the 

opportunity to provide the results of our commitment 

to the efficient and effective stewardship of resources 

entrusted to the FTC to carry out our mission. Our goal 

is to present the Agency’s use of resources, operational 

effectiveness, financial stewardship, and internal controls 

in a manner that demonstrates the incredible value that 

the FTC provides to the American public. The financial 

statements and corresponding financial analysis, coupled 

with the Agency’s Performance Highlights, demonstrate 

how the FTC optimizes the use of its financial 

resources to protect American consumers and maintain 

competition in the marketplace.

For over 100 years, the FTC has championed the 

interests of American consumers. The FTC is dedicated 

to advancing consumer interests while ensuring 

innovative and fair competition in our dynamic 

economy. Our greatest assets are the people that work 

tirelessly at the FTC to achieve our mission. The people 

at the FTC have an incredible dedication and focus 

on accomplishing the mission, which is evident in the 

FTC’s Employee Engagement Score (83%) on the 2017 

Federal Employee Viewpoint Survey. The FTC is the top 

performer among medium sized agencies. The level of 

employee engagement is evident throughout the FTC, 

and especially with our financial management team, who 

are dedicated to ensuring that we are good stewards of 

taxpayer dollars through accountability and transparency.

For the 21st consecutive year, an independent auditor 

rendered an unmodified opinion on FTC’s Financial 

Statements. The auditor found no material weaknesses 

or significant deficiencies during their audit. Our 

unmodified audit opinion confirms that our statements 

present fairly the financial position of our Agency 

and are free of material misstatements. Our goal is 

continuous improvement, and during FY 2017, we 

demonstrated our commitment to that goal with the 

following accomplishments:

•	 No material weaknesses or significant deficiencies in

Internal Controls Over Financial Reporting;

•	 No instances of noncompliance with laws and

regulations that are required to be reported under 

Government Auditing Standards;

•	 Resolved the material weakness identified in

FY 2016 regarding receivership reporting;

•	 Effectively implemented the Digital Accountability

and Transparency Act of 2014 (DATA Act) and 

used the Government-wide financial data standards 

established by OMB and Treasury; 

•	 Developed and implemented the FTC Risk Register;

and

•	 Focused resources and encouraged collaboration

on Corrective Action Plans, closing 48 

recommendations from previous internal and 

external audits and reviews.
FINANCIAL SECTION

www.ftc.gov FEDERAL TRADE COMMISSION 51

FISCAL YEAR 2017 AGENCY FINANCIAL REPORT

The FTC has engaged in a multiyear effort to re-evaluate 

the accounting treatment of its non-entity funds, and 

as a result, several improvements have been made to 

the Agency’s accounting practices. In FY 2016, the 

FTC updated its policy for the recording of accounts 

receivable related to the Agency’s non-entity consumer 

redress program. The FTC was not recording the 

estimated accounts receivable and the offsetting liability 

for judgments requiring assets to be liquidated by a court 

appointed receiver. The FTC updated its accounting 

process, which resulted in a restatement of the FY 2015 

Balance Sheet. In FY 2017, the Agency updated its 

practice of accounting for non-entity funds held by the 

redress third party administrators. These funds are not 

available to, or held by, the FTC and, therefore, are no 

longer reported on the FTC’s Balance Sheet. This change 

required the FTC to restate the FY 2016 Balance Sheet 

in FY 2017, resulting in a reduction of $55 million in 

both non-entity assets and corresponding liabilities. 

In 2017, we initiated an entity-wide effort to identify 

an organizational Risk Register as required by OMB 

Circular A-123. We leveraged our Enterprise Risk 

Management (ERM) Implementation Plan and our 

ERM Guide in developing our Risk Register. We also 

convened a Senior Management Council to manage 

the highest organizational risks and to ensure that 

remediation plans are identified and implemented, if 

necessary. 

We also convened a Strategic Plan Working Group and 

Executive Steering Committee to take a fresh look at our 

Strategic Plan. During FY 2017, we developed a new 

Strategic Plan (2018-2022) and submitted the draft plan 

to OMB for review. 

Looking ahead to FY 2018, we will be implementing the 

Invoice Processing Platform through our Shared Service 

Provider (SSP). We will also be working with our SSP to 

upgrade to a more recent version of the Oracle Federal 

Financial software, providing additional functionality 

and stronger integration with the Contract Lifecycle 

Management module.

The accomplishments outlined in this report are the 

result of the FTC’s employees’ hard work and dedication 

to the mission. The unmodified audit opinion and 

financial accomplishments reflect the organizational 

commitment to sound financial management. We will 

continue to support the Agency’s mission, while being 

exemplary stewards of the funds entrusted to us by 

the American people. I would like to thank all of the 

employees at the FTC and especially the employees 

within the Financial Management Office. 

David Rebich

Chief Financial Officer

November 13, 2017
FINANCIAL SECTION

FISCAL YEAR 2017 AGENCY FINANCIAL REPORT

52 FEDERAL TRADE COMMISSION www.ftc.gov

 November 13, 2017 

MEMORANDUM

TO: Maureen K. Ohlhausen, Acting Chairman 

 Terrell McSweeny, Commissioner 

FROM: Roslyn A. Mazer 

 Inspector General 

I am pleased to provide you with the attached audit report required by the Accountability of Tax Dollars 

Act of 2002, which presents an unmodified opinion on the Federal Trade Commission’s (FTC) fiscal 

years 2017 and 2016 financial statements. We commend the FTC for the noteworthy accomplishment of 

attaining an unmodified (clean) opinion for the 21st consecutive year. 

We contracted with the independent certified public accounting firm of Brown & Company CPAs and 

Management Consultants, PLLC (Brown & Company) to audit the financial statements of the FTC as of 

September 30, 2017 and 2016, and for the years then ended, provide a report on internal control over 

financial reporting (including safeguarding assets) and compliance with laws and regulations, and report 

any reportable noncompliance with laws and regulations they tested. The contract required that the audit 

be done in accordance with U.S. generally accepted government auditing standards and Office of 

Management and Budget audit guidance and the GAO/PCIE Financial Audit Manual. 

In its audit, Brown & Company found 

 the fiscal years 2017 and 2016 financial statements were fairly presented, in all material 

respects, in accordance with U.S. generally accepted accounting principles; 

 there were no material weaknesses in internal control over financial reporting and compliance 

with laws and regulations; and

 no reportable noncompliance with laws and regulations tested. 

Brown & Company is responsible for the attached auditor’s report dated November 13, 2017, and the 

conclusions expressed in the report. We do not express opinions on FTC’s financial statements or 

conclusions about the effectiveness of internal control or conclusions on compliance with laws and 

regulations. 

UNITED STATES OF AMERICA

FEDERAL TRADE COMMISSION 

WASHINGTON, D.C. 20580

 Office of Inspector General
FINANCIAL SECTION

53

FISCAL YEAR 2017 AGENCY FINANCIAL REPORT

www.ftc.gov FEDERAL TRADE COMMISSION

We appreciate the cooperation afforded by management to Brown & Company and my office during the 

audit. Should you have any questions or would like to discuss the report, please contact me or OIG Audit 

Manager Mary Harmison at (202) 326-3527. 

 

Enclosure 
FISCAL YEAR 2017 AGENCY FINANCIAL REPORT

54 FEDERAL TRADE COMMISSION www.ftc.gov

FINANCIAL SECTION

INDEPENDENT AUDITOR’S REPORT 

Inspector General 

Federal Trade Commission

Washington, D.C. 

Report on the Financial Statements 

We have audited the accompanying balance sheets of the Federal Trade Commission (FTC) as of September 

30, 2017 and 2016 (Restated), and the related statements of net cost, changes in net position, budgetary 

resources, and custodial activity for the years then ended (collectively referred to as the financial 

statements), and the related notes to the financial statements. 

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in 

accordance with U.S. generally accepted accounting principles; this includes the design, implementation, 

and maintenance of internal control relevant to the preparation and fair presentation of financial statements 

that are free from material misstatement, whether due to fraud or error. 

Auditor’s Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted 

our audit in accordance with U.S. generally accepted government auditing standards and the standards 

applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller 

General of the United States; and the Office of Management and Budget (OMB) Bulletin No. 17-03, Audit 

Requirements for Federal Financial Statements. Those standards and OMB Bulletin No. 17-03 require that 

we plan and perform the audit to obtain reasonable assurance about whether the financial statements are 

free from material misstatements. 

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the 

financial statements. The procedures selected depend on the auditor’s judgment, including the assessment 

of the risks of material misstatement of the financial statements, whether due to fraud or error. In making 

those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair 

presentation of the financial statements in order to design audit procedures that are appropriate in the 

circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal 

control. Accordingly, we express no such opinion. An audit includes test of compliance with provisions 

of applicable laws, regulations, and contracts that have a direct effect on the determination of material 

amounts and disclosure in the financial statements. The purpose was not to provide an opinion on 

compliance with provisions of applicable laws, regulations, contracts and grant agreements and, therefore, 

we do not express such opinion. An audit also includes evaluating the appropriateness of accounting 

policies used and the reasonableness of significant accounting estimates made by management, as well as 

evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for 

our audit opinion. 
FINANCIAL SECTION

55

FISCAL YEAR 2017 AGENCY FINANCIAL REPORT

www.ftc.gov FEDERAL TRADE COMMISSION

Opinion on the Financial Statements 

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial 

position of the FTC as of September 30, 2017 and 2016 (Restated), and its net costs, changes in net position, 

budgetary resources, and custodial activity for the years then ended, in accordance with U.S. generally 

accepted accounting principles. 

Emphasis of Matters

Restated Financial Statements. As discussed in Note 17 Restatement the agency has restated the financial 

statements for FY 2016 due to updating its accounting policy for non-entity funds held by redress third 

party administrators consistent with SFFAS 1, as these funds are not available or held by the FTC and 

should not be reported on the FTC financial statements. This policy update is the result of management’s 

multiyear effort to re-evaluate the accounting treatment of their non-entity funds to follow U.S. generally 

accepted accounting principles (GAAP). As a result, the FTC FY 2016 balance sheet has a reduction of 

$55 million in both non-entity assets and liabilities, with a net effect of zero. Due to this material correction 

in the reporting of cash and monetary assets held outside of Treasury, FTC’s Consolidated Financial 

Statements, dated November 14, 2016, should not be relied on. Instead, users should rely on this report and 

refer to Note 17 Restatement. 

Other Matters

Required Supplementary Information

U.S. generally accepted accounting principles require that the information in the Management’s Discussion 

and Analysis (MD&A), also regarded as Required Supplementary Information (RSI), be presented to 

supplement the basic financial statements. Such information, although not a part of the basic financial 

statements, is required by the Federal Accounting Standards Advisory Board, who considers it to be an 

essential part of financial reporting for placing the basic financial statements in an appropriate operational, 

economic, or historical context. We have applied certain limited procedures to the required supplementary 

information in accordance with U.S. generally accepted government auditing standards, which consisted of 

inquiries of management about the methods of preparing the information and comparing the information 

for consistency with management’s responses to our inquiries, the basic financial statements, and other 

knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or 

provide any assurance on the information because the limited procedures do not provide us with sufficient 

evidence to express an opinion or provide any assurance. 

Other Information 

Our audits were conducted for the purpose of forming an opinion on the financial statements as a whole. 

The Message from the Chairwoman, Message from the Chief Financial Officer, Introduction, Other 

Information, and the Appendices sections are presented for purposes of additional analysis and are not 

required part of the financial statements. Such information has not been subjected to the auditing 

procedures applied in the audits of the financial statements, and accordingly, we do not express an opinion 

or provide any assurance on it. 
FINANCIAL SECTION

FISCAL YEAR 2017 AGENCY FINANCIAL REPORT

56 FEDERAL TRADE COMMISSION www.ftc.gov

Report on Internal Control Over Financial Reporting 

In planning and performing our audit of the financial statements, we considered the FTC’s internal control 

over financial reporting (internal control) to design audit procedures that are appropriate in the 

circumstances for the purpose of expressing an opinion on the financial statements, but not for the purpose 

of providing an opinion on internal control. Accordingly, we do not express such an opinion. 

A deficiency in internal control exists when the design or operation of a control does not allow management 

or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, 

misstatements on a timely basis. A material weakness is a deficiency or combination of deficiencies in 

internal control, such that there is a reasonable possibility that a material misstatement of the entity’s 

financial statements will not be prevented, or detected and corrected on a timely basis. A significant 

deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a 

material weakness, yet important enough to merit attention by those charged with governance. 

Our consideration of the internal control was for the limited purpose described in the first paragraph of this 

section and was not designed to identify all deficiencies in internal control over financial reporting that 

might be deficiencies, significant deficiencies or material weaknesses. During the audit of the financial 

statements no deficiencies in internal control were identified that were considered to be a material weakness. 

However, material weaknesses may exist that have not been identified. 

We also identified other deficiencies in FTC’s internal control over financial reporting that we do not consider 

to be material weaknesses or significant deficiencies. Nonetheless, these deficiencies warrant FTC 

management’s attention. We have communicated these matters to FTC management and, will report on them

separately in a management letter.

Report on Compliance and Other Matters 

As part of obtaining reasonable assurance about whether FTC’s financial statements are free from material 

misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts 

and grant agreements, noncompliance with which could have a direct and material effect on the 

determination of financial statement amounts. We limited our tests of compliance to the provisions 

described in the preceding sentence, and we did not test compliance with all laws, regulations and contracts 

applicable to FTC. The objective was not to provide an opinion on compliance with those provisions of 

laws, regulations, contracts and grant agreements, and we do not express such an opinion. 

The results of our tests disclosed no instances of noncompliance or other matters required to be reported 

under Government Auditing Standards or OMB Bulletin No. 17-03. 

Management’s Responsibility for Internal Control and Compliance

FTC’s management is responsible for (1) evaluating effectiveness of internal control over financial 

reporting based on criteria established under the Federal Managers’ Financial Integrity Act (FMFIA), (2) 

providing a statement of assurance on the overall effectiveness of internal control over financial reporting, 

and (3) ensuring compliance with other applicable laws and regulations. 
FINANCIAL SECTION

57

FISCAL YEAR 2017 AGENCY FINANCIAL REPORT

www.ftc.gov FEDERAL TRADE COMMISSION

Auditor’s Responsibilities

We are responsible for (1) obtaining a sufficient understanding of internal control over financial reporting 

to plan the audit, (2) testing compliance with certain provisions of laws and regulations that have a direct 

and material effect on the financial statements and applicable laws for which OMB Bulletin No. 17-03 

requires testing, and (3) applying certain limited procedures with respect to the MD&A. 

We did not evaluate all internal controls relevant to operating objectives as broadly established by the

FMFIA, such as those controls relevant to preparing statistical reports and ensuring efficient operations. 

We limited our internal control testing to testing internal control over financial reporting. Because of 

inherent limitations in internal control, misstatements due to error or fraud, losses, or noncompliance may 

nevertheless occur and not be detected. We also caution that projecting our audit results to future periods 

is subject to risk that controls may become inadequate because of changes in conditions or that the degree 

of compliance with controls may deteriorate. In addition, we caution that our internal control testing may 

not be sufficient for other purposes. 

We did not test compliance with all laws and regulations applicable to FTC. We limited our tests of 

compliance to certain provisions of laws and regulations that have a direct and material effect on the 

financial statements and those required by OMB Bulletin No. 17-03 that we deemed applicable to FTC’s 

financial statements for the fiscal year ended September 30, 2017. We caution that noncompliance with 

laws and regulations may occur and not be detected by these tests and that such testing may not be sufficient 

for other purposes. 

Status of Prior Year’s Control Deficiencies and Noncompliance Issues 

We have reviewed the status of FTC’s corrective actions with respect to the findings included in the prior 

year’s Independent Auditor’s Report, dated November 14, 2016. The status of prior year findings is 

presented in Exhibit A. 

Purpose of the Report on Internal Control over Financial Reporting and the Report on Compliance 

and Other Matters

The purpose of the Report on Internal Control over Financial Reporting and the Report on Compliance and 

Other Matters sections of this report is solely to describe the scope of our testing of internal control and 

compliance and the result of that testing, and not to provide an opinion on the effectiveness of FTC’s 

internal control or on compliance. These reports are an integral part of an audit performed in accordance 

with Government Auditing Standards in considering FTC’s internal control and compliance. Accordingly, 

these reports are not suitable for any other purpose. 

This report is intended solely for the information and use of the management of FTC, OMB, and the U.S. 

Congress, and is not intended to be, and should not be, used by anyone other than these specified parties. 

Largo, Maryland 

November 13, 2017 
FINANCIAL SECTION

FISCAL YEAR 2017 AGENCY FINANCIAL REPORT

58 FEDERAL TRADE COMMISSION www.ftc.gov

EXHIBIT A – STATUS OF PRIOR YEAR FINDING

Finding 

No. Type of Finding FY 2016 Finding FY 2017 Status

2016-02 Material Weakness Improved Accounting and Controls 

are Needed Over Receivership 

Receivables. 

Closed. 
FINANCIAL SECTION

59

FISCAL YEAR 2017 AGENCY FINANCIAL REPORT

www.ftc.gov FEDERAL TRADE COMMISSION

PRINCIPAL FINANCIAL STATEMENTS

FINANCIAL STATEMENT DESCRIPTIONS

A brief description of the five principal financial statements presented on the following pages is provided: 

Balance Sheet – Presents the combined amounts the agency had to use or distribute (assets) versus the amounts the 

agency owed (liabilities), and the difference between the two (net position). 

Statement of Net Cost – Presents the annual cost of agency operations. The gross cost less offsetting revenue is used to 

determine the net cost. 

Statement of Changes in Net Position – Reports the accounting activities that caused the change in net position 

during the reporting period. 

Statement of Budgetary Resources – Reports how budgetary resources were made available and the status of those 

resources at fiscal year-end. 

Statement of Custodial Activity – Reports collections and their disposition by the agency on behalf of the Treasury 

General Fund and one other Federal agency. The FTC acts as custodian and does not have use of these funds. 

The accompanying Notes to the Financial Statements describe significant accounting policies as well as detailed 

information on select statement lines.
FINANCIAL SECTION

FISCAL YEAR 2017 AGENCY FINANCIAL REPORT

60 FEDERAL TRADE COMMISSION www.ftc.gov

BALANCE SHEET

AS OF SEPTEMBER 30, 2017 AND 2016 (Restated)

(Dollars in thousands)

2017

Restated

2016

Assets (Notes 2 and 17):

Intragovernmental:

Fund balance with Treasury (Note 3) $ 565,055 $ 929,693

Accounts receivable, net (Note 4) 52 75

Advances and prepayments 253 -

Total intragovernmental 565,360 929,768

Accounts receivable, net (Note 4) 69,972 98,996

Property, plant, and equipment, net (Note 5) 50,714 57,368

Total Assets $ 686,046 $ 1,086,132

Liabilities (Notes 6 and 17):

Intragovernmental:

Accounts payable $ 1,181 $ 621

Other liabilities (Note 7) 1,847 4,973

Total intragovernmental 3,028 5,594

Accounts payable 9,533 10,353

Accrued redress due to claimants 69,887 98,182

Undisbursed redress collections (Note 17) 431,573 796,395

Other (Note 7) 19,857 19,275

Total Liabilities 533,878 929,799

Net Position (Notes 1(p) and 17):

Unexpended appropriations - -

Cumulative results of operations 152,168 156,333

Total Net Position (Note 17) 152,168 156,333

Total Liabilities and Net Position (Note 17) $ 686,046 $ 1,086,132

The accompanying notes are an integral part of these statements.
FINANCIAL SECTION

61

FISCAL YEAR 2017 AGENCY FINANCIAL REPORT

www.ftc.gov FEDERAL TRADE COMMISSION

STATEMENT OF NET COST

FOR THE YEARS ENDED SEPTEMBER 30, 2017 AND 2016

(Dollars in thousands)

2017 2016

Costs by Strategic Goal (Note 10):

Strategic Goal 1: Protect Consumers:

Gross costs $ 181,505 $ 184,670 

Less: earned revenue (14,565) (13,867)

Net cost 166,940 170,803

Strategic Goal 2: Maintain Competition:

Gross costs 145,532 143,924 

Less: earned revenue (126,037) (114,673)

Net cost 19,495 29,251

Net Cost of Operations $ 186,435 $ 200,054

The accompanying notes are an integral part of these statements.
FINANCIAL SECTION

FISCAL YEAR 2017 AGENCY FINANCIAL REPORT

62 FEDERAL TRADE COMMISSION www.ftc.gov

STATEMENT OF CHANGES IN NET POSITION

FOR THE YEARS ENDED SEPTEMBER 30, 2017 AND 2016

(Dollars in thousands)

2017 2016

Cumulative Results of Operations:

Beginning balance $ 156,333 $ 169,498

Budgetary Financing Sources:

Appropriations used 175,374 179,804

Other Financing Sources (Non-Exchange):

Imputed financing 6,896 7,085

Total financing sources 182,270 186,889

Net cost of operations (Note 10) (186,435) (200,054)

Net change (4,165) (13,165)

Cumulative Results of Operations 152,168 156,333

Unexpended Appropriations:

Beginning balance - - 

Budgetary Financing Sources:

Appropriations received 175,374 179,804 

Appropriations used (175,374) (179,804)

Total budgetary financing sources - - 

Total Unexpended Appropriations - - 

Net Position (Note 1(p)) $ 152,168 $ 156,333

The accompanying notes are an integral part of these statements.
FINANCIAL SECTION

63

FISCAL YEAR 2017 AGENCY FINANCIAL REPORT

www.ftc.gov FEDERAL TRADE COMMISSION

STATEMENT OF BUDGETARY RESOURCES

FOR THE YEARS ENDED SEPTEMBER 30, 2017 AND 2016

(Dollars in thousands)

2017 2016

Budgetary Resources: 

Unobligated balance, brought forward, October 1 $ 25,950 $ 22,118 

 Recoveries of unpaid prior year obligations 8,947 20,317

Other changes in unobligated balance 18 28

Unobligated balance from prior year budget authority, net 34,915 42,463 

Appropriations 175,374 179,804 

Spending authority from offsetting collections 137,625 131,425 

Total Budgetary Resources $ 347,914 $ 353,692

Status of Budgetary Resources: 

New obligations and upward adjustments (total) (Note 11) $ 314,747 $ 327,742 

Unobligated balance, end of year: 

 Apportioned, unexpired accounts 27,241 10,346 

 Unapportioned, unexpired accounts 5,926 15,604

 Unexpired unobligated balance, end of year 33,167 25,950

Unobligated balance, end of year (total) 33,167 25,950

Total Status of Budgetary Resources $ 347,914 $ 353,692

Change in Obligated Balance: 

Unpaid Obligations: 

 Unpaid obligations, brought forward, October 1 $ 83,351 $ 91,647 

 New obligations and upward adjustments (Note 11) 314,747 327,742 

 Outlays, gross (313,468) (315,721)

 Recoveries of prior year unpaid obligations (8,947) (20,317)

 Unpaid obligations, end of year 75,683 83,351 

Uncollected Payments: 

 Uncollected payments from Federal sources, brought forward, October 1 (1,515) (577)

 Change in uncollected payments from Federal sources, brought forward , October 1 617 (938) 

 Uncollected payments from Federal sources, end of year (898) (1,515)

Memorandum (non-add) Entries: 

 Obligated balance, start of year 81,836 91,070 

 Obligated balance, end of year 74,785 81,836

Budget Authority and Outlays, Net: 

 Budget authority, gross 312,999 311,229 

 Actual offsetting collections (138,700) (130,515)

 Change in uncollected customer payments from Federal sources 617 (938)

 Recoveries of prior year paid obligations 18 28

 Budget authority, net $ 174,934 $ 179,804 

 Outlays, gross $ 313,468 $ 315,721 

 Actual offsetting collections (138,700) (130,515)

 Outlays, net 174,768 185,206 

 Distributed offsetting receipts (94,654) (6,825)

 Agency outlays, net $ 80,114 $ 178,381

The accompanying notes are an integral part of these statements.
FINANCIAL SECTION

FISCAL YEAR 2017 AGENCY FINANCIAL REPORT

64 FEDERAL TRADE COMMISSION www.ftc.gov

STATEMENT OF CUSTODIAL ACTIVITY

FOR THE YEARS ENDED SEPTEMBER 30, 2017 AND 2016

(Dollars in thousands)

Protect 

Consumers

Maintain 

Competition 2017 2016

Revenue Activity (Note 14):

Sources of collections:

Premerger filing fees (net of refunds) $ - $ 125,440 $ 125,440 $ 114,173 

Civil penalties and fines 2,517 - 2,517 6,291

Consumer redress 94,463 - 94,463 6,680 

Other miscellaneous receipts 191 - 191 145

Total cash collections 97,171 125,440 222,611 127,289

Accrual adjustments (731) - (731) (554)

Total Custodial Revenue $ 96,440 $ 125,440 $ 221,880 $ 126,735 

Disposition of Collections (Note 14):

Transferred to others:

Treasury general fund $ 97,171 $ - $ 97,171 $ 13,116

Department of Justice - 125,520 125,520 114,093 

Amounts yet to be transferred (731) (80) (811) (474) 

Total Disposition of Collections $ 96,440 $ 125,440 $ 211,880 $ 126,735 

Net Custodial Activity $ - $ - $ - $ -

The accompanying notes are an integral part of these statements.
FINANCIAL SECTION

65

FISCAL YEAR 2017 AGENCY FINANCIAL REPORT

www.ftc.gov FEDERAL TRADE COMMISSION

NOTES TO THE FINANCIAL 

STATEMENTS 

NOTE 1—SIGNIFICANT ACCOUNTING 

POLICIES

(a) REPORTING ENTITY 

The FTC is an independent agency of the U.S. 

Government, established by the Federal Trade 

Commission Act of 1914. The FTC enforces a variety of 

Federal antitrust and consumer protection laws. Its mission 

is to protect consumers by preventing anticompetitive, 

deceptive, and unfair business practices, enhancing 

informed consumer choice and public understanding of 

the competitive process, and accomplishing this without 

unduly burdening legitimate business activity. The FTC 

is headed by five Commissioners, nominated by the 

President and confirmed by the Senate, each serving a 

seven-year term. The President chooses one Commissioner 

to act as Chair. 

The FTC carries out its mission of protecting consumers 

and maintaining competition through three bureaus: The 

Bureau of Consumer Protection (BCP), the Bureau of 

Competition (BC), and the Bureau of Economics (BE), 

which supports both BCP and BC. Additionally, various 

offices within the FTC provide critical mission support 

to the bureaus. The FTC’s staff is located in Washington, 

D.C. and seven other geographic areas. 

The financial statements and notes include the financial 

activity recorded in all of the funds under the FTC’s 

control. As further described in Note 1(b), Fund 

Accounting Structure, the FTC maintains these funds 

including appropriations received for salaries and necessary 

expenses, as well as non-entity funds that are primarily 

collections derived from court ordered judgments and 

settlements held for subsequent distribution to approved 

claimants. 

(b) FUND ACCOUNTING STRUCTURE 

The FTC, like other Federal agencies, uses Treasury 

Account Symbols (TAS) to record and track financial 

activity. These TAS are described as: 

GENERAL FUND 

Salaries and Expenses (TAS 29X0100): Each year, this 

account receives budget authority from an appropriation 

and offsetting collections, up to a limit set by Congress, 

to fund the necessary expenses of the agency. Offsetting 

collections include fees collected for premerger notification 

filings under the Hart-Scott-Rodino (HSR) Antitrust 

Improvement Act of 1976, and collections for the National 

Do Not Call Registry, which operates under Section 5 

of the FTC Act. Collections in excess of Congressional 

limits are unavailable by law and included in the FTC’s 

unavailable – temporary reduction balance. (See Note 3, 

Fund Balance with Treasury) 

DEPOSIT FUND 

Consumer Redress Escrow (TAS 29X6013): This 

account consists of amounts collected under the consumer 

redress program and held temporarily by the FTC until 

money is distributed to consumers or harmed entities (or 

to a third party agent that distributes money to consumers 

on the FTC’s behalf), or transferred to the general fund 

of the Treasury. These funds, which are considered nonentity funds, do not affect the FTC’s Net Position and are 

not reported on the Statement of Changes in Net Position. 

(See Note 3, Fund Balance with Treasury and Note 15, 

Consumer Redress Activities) 

CLEARING/SUSPENSE FUND 

Budget Clearing and Suspense (TAS 29F3875): Fees 

collected for premerger notification filings under the HSR 

Act are deposited, initially, into the Budget Clearing and 

Suspense account, then distributed equally to the FTC 

(as an offsetting collection in the general fund) and the 

Department of Justice (DOJ). (See Note 1(q), Revenues 

and Other Financing Sources) 

RECEIPT ACCOUNTS 

Fines, Penalties, and Forfeitures, Customs, Commerce, 

and Antitrust Laws (TAS 29 1040): Collections of 

civil penalties imposed in court actions for violations 

of antitrust acts and FTC orders are deposited into 

this account. Penalties imposed, but not yet collected, 

are accrued as accounts receivable and recorded in this 

account. The cash balance in the fund at the end of the 

fiscal year is transferred to the general fund of the Treasury. 
FINANCIAL SECTION

FISCAL YEAR 2017 AGENCY FINANCIAL REPORT

66 FEDERAL TRADE COMMISSION www.ftc.gov

General Fund Proprietary Receipts (TAS 29 3220):

Miscellaneous receipts that by law are not available for 

the FTC’s use, and collections in connection with the 

consumer redress program for which redress to consumers 

is not practicable, are held in this account until the end 

of the fiscal year when they are transferred to the general 

fund of the Treasury.

(c) BASIS OF PRESENTATION AND ACCOUNTING

The accompanying financial statements present the 

financial position, net cost of operations, changes in net 

position, budgetary resources, and custodial activities of 

the FTC, and have been prepared from the accounting 

records of the FTC. These financial statements may differ 

from other financial reports submitted pursuant to the 

Office of Management and Budget (OMB) directives for 

the purpose of monitoring and controlling the use of the 

FTC’s budgetary resources. 

The FTC’s financial statements are prepared in conformity 

with Generally Accepted Accounting Principles 

(GAAP) for Federal entities and with OMB Circular 

A-136, Financial Reporting Requirements (as revised 

August 2017). Accordingly, revenues are recognized 

when earned and expenses are recognized when incurred, 

without regard to the receipt or payment of cash. These 

principles differ from budgetary reporting principles. 

The differences relate primarily to the capitalization and 

depreciation of property and equipment, as well as the 

recognition of other long-term assets and liabilities.

As described in Note 1(b), Fund Accounting Structure, the 

FTC maintains a single fund to account for salaries and all 

necessary expenses. Further, there are limited intra-entity 

transactions with any other fund (e.g., deposit fund) that 

would require eliminating entries to present consolidated 

statements. Accordingly, the statements are not labeled 

consolidated nor is the Statement of Budgetary Resources 

(SBR) presented as combined. 

Assets, liabilities, revenues, and costs are classified 

in these financial statements according to the type 

of entity associated with the transactions. Balances 

classified as intragovernmental arise from transactions 

with other Federal entities. Balances not classified as 

intragovernmental arise from transactions with individuals 

or organizations outside of the Federal Government 

(i.e., with the Public). 

The FTC presents net cost of operations by its two 

major strategic goals: Protect Consumers and Maintain 

Competition. These goals are described in the agency’s 

strategic and performance plan and align with the agency’s 

major programs. 

(d) USE OF ESTIMATES 

The preparation of financial statements in conformity 

with GAAP requires management to make estimates and 

assumptions that affect the reported amounts of assets 

and liabilities at the date of the financial statements and 

the reported amounts of revenues and expenses during 

the reporting period. For example, estimates are used in 

computing accounts payable for vendor service contracts, 

the allowance for uncollectible accounts, and the allocation 

of costs to strategic goals in the Statement of Net Cost. 

Actual results could differ from the estimated amounts. 

(e) BUDGET AUTHORITY 

The Congress passes appropriations annually that provide 

the FTC with authority to obligate funds for necessary 

expenses to carry out mandated program activities. These 

funds are available until expended, subject to the OMB 

apportionment and to Congressional restrictions on the 

expenditure of funds. In addition, the FTC places internal 

restrictions on fund expenditures to ensure the efficient 

and proper use of all funds. The FTC’s budget authority 

is derived from a direct appropriation and offsetting 

collections. The FTC accounts for budget authority in its 

general fund (29X0100), as reflected in the Statement of 

Budgetary Resources. 

(f) ENTITY AND NON-ENTITY ASSETS

The FTC accounts for and reports on both entity and 

non-entity assets in the financial statements. Assets that 

the agency is authorized to use in its operations are entity 

assets. Assets that the agency holds on behalf of another 

Federal agency or a third party and are not available for 
FINANCIAL SECTION

67

FISCAL YEAR 2017 AGENCY FINANCIAL REPORT

www.ftc.gov FEDERAL TRADE COMMISSION

the agency’s use are non-entity assets. Non-entity assets 

include collections and accounts receivable that arise from 

court order judgments for monetary relief, civil monetary 

penalties, and the portion of fees collected for premerger 

notification filings that are distributed to the DOJ in a 

subsequent period. These non-entity assets are included 

in the financial statements along with an offsetting nonentity liability of equal amount. (See Note 2, Entity and 

Non-Entity Assets)

(g) FUND BALANCE WITH TREASURY 

The Fund Balance with Treasury is the aggregate amount 

of undisbursed funds in the FTC’s general fund, deposit 

fund, and clearing/suspense fund. General funds include a 

portion that is available to the FTC to make expenditures 

and pay liabilities, and a portion that is unavailable. 

Deposit fund and clearing/suspense fund balances are nonentity funds that are temporarily held by the FTC until 

transferred to another Federal agency (Treasury or DOJ), 

or distributed to a third party. Fund balances are carried 

forward into subsequent fiscal years until disbursements 

are made. (See Note 3, Fund Balance with Treasury) 

(h) CASH AND OTHER MONETARY ASSETS 

In FY 2017, the FTC updated its practice of accounting 

for non-entity funds held by redress third party 

administrators to be consistent with Federal Accounting 

Standards Advisory Board (FASAB) Statement of Federal 

Financial Accounting Standard (SFFAS) 1: Accounting for 

Selected Assets and Liabilities. These funds are not available 

or held by the FTC and therefore should not be on the 

FTC’s financial statements. As a result of this correction 

to remove all remaining balances for funds held by redress 

third party administrators, the FTC restated the FY 2016 

financial statements. (See Note 17, Restatement)

(i) ACCOUNTS RECEIVABLE, NET AND 

ADVANCES AND PREPAYMENTS

Accounts receivable, net of allowances, reflect the FASAB 

standard for the recognition of losses using the collection 

criterion of “more likely than not.” This criterion results 

in receivable balances that are more conservatively stated 

than those valued by the private sector under GAAP. 

FASAB states that it is appropriate to recognize the nature 

of Federal receivables, which, unlike trade accounts of 

private firms or loans made by banks, are not created 

through credit screening procedures. Rather, these 

receivables arise because of the assessment of fines from 

regulatory violations. In these circumstances, historical 

experience and economic realities indicate that these types 

of claims are frequently not fully collectible. Accounts 

receivable includes estimates of the net cash value from 

court appointed receivers for which the FTC anticipates 

the proceeds will be deposited in the Consumer Redress 

Escrow account.

The method used to estimate the allowance for 

uncollectible accounts consists of individual case analysis 

by a case manager who assesses the debtor’s ability and 

willingness to pay, the defendant’s payment record, and the 

probable recovery amount including the value of assets. 

Based on the litigation and collection status, cases are 

referred to the Treasury for collection action. (See Note 4, 

Accounts Receivable, Net)

Advances and prepayments consist of payments by the 

FTC to other Federal agencies for services that will be 

provided in a future period.

(j) PROPERTY, PLANT, AND EQUIPMENT, NET 

The FTC’s property, plant, and equipment (PP&E) 

consists of general purpose equipment used by the agency 

and capital improvements made to buildings leased from 

the General Services Administration (GSA) by the FTC 

for office space, as well as software leased and purchased 

from vendors. The FTC’s capitalization policy, Accounting 

for Property, Plant, and Equipment, was updated with an 

effective date on or after October 1, 2014. PP&E placed 

in service prior to October 1, 2014, will continue to be 

accounted for based on the capitalization policy in effect at 

the time acquired, until fully depreciated or removed from 

service. 
FINANCIAL SECTION

FISCAL YEAR 2017 AGENCY FINANCIAL REPORT

68 FEDERAL TRADE COMMISSION www.ftc.gov

Effective October 1, 2014, capitalization thresholds are as 

follows:

Asset Type Capitalization 

Threshold

Furniture $ 50,000

General Equipment $ 50,000

IT Equipment $ 150,000

Leasehold Improvements $ 150,000

Internal Use Software $ 200,000

The FTC reports property and equipment at historical 

cost and capitalizes items based on the above thresholds 

and a useful life of two or more years. Property and 

equipment that meet these criteria are depreciated 

or amortized using the straight-line method over the 

estimated useful life of the asset. Additionally, assets 

under development, such as internal use software and 

leasehold improvements, with an estimated aggregate 

cost meeting the threshold criteria are capitalized and 

then amortized once completed and placed into service. 

Normal repairs and maintenance, and PP&E that do 

not meet the capitalization criteria, are recognized as an 

expense in the current period. (See Note 5, Property, 

Plant, and Equipment, Net)

(k) ACCRUED LIABILITIES AND ACCOUNTS 

PAYABLE

Accrued liabilities and accounts payable represent a 

probable future outflow or other sacrifice of resources 

from past transactions or events. Liabilities are recognized 

when they are incurred, regardless of whether they are 

covered by budgetary resources. The FTC has liabilities 

that are entity and non-entity. Entity liabilities cannot 

be liquidated without legislation that provides the 

resources to do so. In addition, the government, acting in 

its sovereign capacity, can abrogate the FTC’s liabilities 

(other than contracts). (See Note 6, Liabilities Covered 

and Not Covered by Budgetary Resources) 

(l) EMPLOYEE HEALTH BENEFITS AND LIFE 

INSURANCE 

FTC employees are eligible to participate in the 

contributory Federal Employees’ Health Benefit Program 

(FEHBP) and the Federal Employees’ Group Life 

Insurance Program (FEGLIP) administered by the Office 

of Personnel Management (OPM). The FTC contributes 

a percentage to each program to pay for current benefits. 

(m) EMPLOYEE RETIREMENT BENEFITS 

FTC employees participate in either the Civil Service 

Retirement System (CSRS) or the Federal Employees’ 

Retirement System (FERS) administered by the OPM. 

Employees hired after December 31, 1983 are covered by 

FERS and Social Security, while employees hired prior to 

January 1, 1984 were allowed to elect joining FERS or 

remaining in CSRS. For employees participating in CSRS, 

the FTC contributes 7 percent of the employee’s basic pay 

to the Civil Service Retirement and Disability Fund. For 

employees participating in FERS, the FTC contributes 

13.2 percent to the Federal Employees’ Retirement 

Fund. New employees hired between January 1 and 

December 31, 2013 participate in FERS-RAE (Revised 

Annuity Employees). New employees hired on or after 

January 1, 2014 are covered by FERS-FRAE (Further 

Revised Annuity Employees). The FTC contribution is 

11.1 percent for both FERS-RAE and FERS-FRAE. In 

addition, the FTC contributes the employer’s matching 

share to the Social Security Administration under the 

Federal Insurance Contributions Act, which fully covers 

FERS participating employees. FTC contributions are 

recognized as current operating expenses. 

The Thrift Savings Plan (TSP) is a defined contribution 

retirement savings and investment plan for employees 

covered by either CSRS or FERS. Participating employees 

may contribute any dollar amount or percentage of basic 

salary to the TSP, not to exceed an annual dollar limit 

set by law. For those employees participating in FERS, 

the FTC makes a mandatory 1 percent contribution 

to this plan and, in addition, matches 100 percent of 

the first 3 percent contributed and 50 percent of the 

next 2 percent. CSRS participating employees do not 

receive a matching contribution from the FTC. The 

FTC contributions to the TSP are recognized as current 

operating expenses. 

The FTC does not report CSRS and FERS assets, 

accumulated plan benefits, or unfunded liabilities, if 

any, applicable to its employees. The OPM reports this 
FINANCIAL SECTION

69

FISCAL YEAR 2017 AGENCY FINANCIAL REPORT

www.ftc.gov FEDERAL TRADE COMMISSION

information. However, the FTC recognizes the full cost 

of providing future pension benefits to covered employees 

at the time the employees’ services are rendered using 

cost factors provided by the OPM that estimate the 

true service cost of providing the pension benefits. The 

FTC recognizes the excess of the true service cost over 

amounts contributed as an imputed cost. This additional 

cost is financed by the OPM, and recognized as an 

imputed financing source by the FTC. (See Note 16, 

Reconciliation of Net Cost of Operations to Budget) 

(n) FECA AND OTHER POST-EMPLOYMENT 

BENEFITS 

The Federal Employees’ Compensation Act (FECA) 

administered by the U.S. Department of Labor (DOL) 

provides income and medical cost protection to covered 

Federal civilian employees injured on the job, and 

employees who have incurred a work-related injury or 

occupational disease. The DOL bills the FTC annually 

for the claims paid and the FTC recognizes the FECA 

liability for future payment. Payment is deferred for two 

years to allow for funding through the budget. The FTC 

also recognizes a FECA actuarial liability, which is an 

estimate for the future workers compensation as a result 

of past events using procedures developed by the DOL to 

estimate the liability. FECA liabilities are reported as not 

covered by budgetary resources. (See Note 6, Liabilities 

Covered and Not Covered by Budgetary Resources)

FTC employees eligible to participate in the FEHBP 

and the FEGLIP may continue to participate in these 

programs after their retirement. The FTC recognizes a 

current cost of providing post-retirement benefits using 

cost factors provided by the OPM that estimate the true 

cost of providing these benefits to current employees. The 

cost of providing post-retirement benefits for the FEHBP 

and FEGLIP is financed by the OPM, and recognized as 

an imputed financing source by the FTC. (See Note 16, 

Reconciliation of Net Cost of Operations to Budget)

(o) ANNUAL AND SICK LEAVE

The FTC accrues an annual leave liability when employees 

earn leave and reduces the liability when employees take 

leave. The balance in this account reflects the current 

leave balances and pay rates of the FTC employees. 

Budget execution rules do not allow this liability to be 

funded as earned. It is funded when leave is taken or when 

paid out as a lump sum at the end of employment. As a 

result, accrued annual leave is reported as not covered by 

budgetary resources. Sick leave is non-vested and expensed 

as used. (See Note 6, Liabilities Covered and Not Covered 

by Budgetary Resources)

(p) NET POSITION 

Cumulative results of operations represent the net results 

of operations since inception, the cumulative amount of 

prior period adjustments, the remaining book value of 

capitalized assets, and future funding requirements. 

The portion of the FTC’s budget authority funded by a 

direct appropriation is fully expended during the year. 

Therefore, there is no unexpended appropriation balance 

in net position at the end of the year. (See Statement of 

Changes in Net Position) 

(q) REVENUES AND OTHER FINANCING 

SOURCES

The FTC’s activities are financed through exchange 

revenue it receives from others and through an 

appropriation provided by the Congress. Exchange 

revenues consist of fees collected for premerger 

notification filings under the HSR Act and collections for 

the National Do Not Call Registry. Additionally, exchange 

revenues include a small amount of reimbursements for 

services performed under inter-agency agreements. 

(r) METHODOLOGY FOR ASSIGNING COSTS 

AND EXCHANGE REVENUES 

The FTC allocates costs and exchange revenues on the 

Statement of Net Cost to its two major strategic goals: 

Protect Consumers and Maintain Competition. Costs 

and exchange revenues that are identified specifically with 

each of these two strategic goals are charged or credited 

directly. Costs not directly attributable to these two goals, 

including costs related to the FTC’s third goal, Advance 

Organizational Performance, are allocated based on the 

percentage of direct full-time equivalents used by each of 

these two goals. 
FINANCIAL SECTION

FISCAL YEAR 2017 AGENCY FINANCIAL REPORT

70 FEDERAL TRADE COMMISSION www.ftc.gov

NOTE 2—ENTITY AND NON-ENTITY 

ASSETS

The FTC’s entity assets are comprised of undisbursed 

general funds, accounts receivable, and property, plant 

and equipment. Accounts receivable, net, represents 

amounts due from other Federal agencies, current and 

former employees, and vendors. 

The FTC’s non-entity assets are comprised of fund 

balances with Treasury and accounts receivable. The 

fund balances with Treasury consist of amounts held 

temporarily in deposit funds for the consumer redress 

program and collections of premerger filing fees held in 

clearing/suspense funds that will be transferred to the 

DOJ in a subsequent period. Accounts receivable, net, 

is the estimated amount collectible on consumer redress 

judgments and civil penalties.

Entity and non-entity assets consisted of the following as of September 30, 2017: 

(Dollars in thousands) 2017

Entity

2017 

Non-Entity

2017

Total

Intragovernmental:

Fund balance with Treasury:

General funds $ 133,482 $ - $ 133,482 

Deposit funds - consumer redress - 431,573 431,573

Clearing/Suspense funds - premerger filing fees - - - 

Accounts receivable, net 52 - 52

Advances and Prepayments 253 - 253

Subtotal intragovernmental assets 133,787 431,573 565,360 

Accounts receivable, net 81 69,891 69,972

Property, plant, and equipment, net 50,714 - 50,714

Total Assets $ 184,582 $ 501,464 $ 686,046 

Entity and non-entity assets consisted of the following as of September 30, 2016 (Restated):

(Dollars in thousands) 2016

Entity

Restated 

2016

Non-Entity

Restated

2016

Total

Intragovernmental:

Fund balance with Treasury:

General funds $ 132,875 $ - $ 132,875 

Deposit funds - consumer redress - 796,395 796,395

Clearing/Suspense funds - premerger filing fees - 423 423 

Accounts receivable, net 75 - 75

Advances and Prepayments - - - 

Subtotal intragovernmental assets 132,950 796,818 929,768 

Accounts receivable, net 79 98,917 98,996

Property, plant, and equipment, net 57,368 - 57,368

Total Assets $ 190,397 $ 895,735 $ 1,086,132 
FINANCIAL SECTION

71

FISCAL YEAR 2017 AGENCY FINANCIAL REPORT

www.ftc.gov FEDERAL TRADE COMMISSION

NOTE 3—FUND BALANCE WITH 

TREASURY

The FTC’s Fund Balance with Treasury consists of 

undisbursed appropriated funds, which are either 

unobligated or obligated, as well as deposit funds arising 

from amounts collected for consumer redress and not yet 

disbursed to claimants. The fund balance also includes 

clearing/suspense funds for collections of premerger 

filing fees that will be distributed to the DOJ in a 

subsequent period. The unobligated balance includes 

available and unavailable balances. The unavailable 

balance is the result of recoveries that exceeded 

anticipated and apportioned amounts, the collection of 

fees above the authorized amount to spend in the current 

year and prior year, and $6,450 thousand of sequestered 

funds from FY 2013. 

Fund balance with Treasury consisted of the following as of September 30, 2017 and 2016:

(Dollars in thousands) 2017 2016

Fund Balance with Treasury:

General funds $ 133,482 $ 132,875 

Deposit funds - consumer redress 431,573 796,395 

Clearing/Suspense funds - premerger filing fees - 423 

Total Fund Balance with Treasury $ 565,055 $ 929,693

Status of Fund Balance with Treasury:

Unobligated balance:

 Available - apportioned $ 27,241 $ 10,346

 Unavailable - unapportioned 5,926 15,604

 Unavailable - temporary reduction 25,530 25,089

Obligated balance not yet disbursed 74,785 81,836

Non-budgetary fund balance with Treasury:

 Deposit funds - consumer redress 431,573 796,395

 Clearing/Suspense funds - premerger filing fees - 423

Total Status of Fund Balance with Treasury $ 565,055 $ 929,693

The FTC’s Fund Balance with Treasury, as reflected in the entity’s general ledger and the Treasury account balances, 

has no material discrepancy.
FINANCIAL SECTION

FISCAL YEAR 2017 AGENCY FINANCIAL REPORT

72 FEDERAL TRADE COMMISSION www.ftc.gov

NOTE 4—ACCOUNTS RECEIVABLE, NET 

The bulk of the FTC’s accounts receivable are nonentity accounts receivable arising from the settlement 

or litigation of administrative and Federal court cases 

in connection with the consumer redress program, and 

from civil monetary penalties imposed for violation of 

an FTC order and antitrust acts. Because of the nature of 

these receivables, they are frequently not fully collectible 

and are offset with a significant allowance. The allowance 

for uncollectible accounts is based on an analysis by 

a case manager who assesses the debtor’s ability and 

willingness to pay, the defendant’s payment record, and 

the probable recovery amount including the value of 

assets. These non-entity accounts receivable are included 

in the financial statements along with an offsetting nonentity liability. 

Non-entity redress gross accounts receivable is the 

court ordered judgment amount, usually a calculated 

amount of ill-gotten gains. The related allowance for 

uncollectible accounts is the estimate the FTC will not 

collect from the defendant(s), which many times is a 

large percentage of the judgment.

Accounts receivable, net consisted of the following as of September 30, 2017:

(Dollars in thousands) Gross

Receivables 

Allowance for

Uncollectible

Accounts 

 2017 Net

 Entity Accounts Receivable: 

 Intragovernmental $ 52 $ - $ 52

 With the public 81 - 81 

 Total entity accounts receivable 133 - 133

 Non-Entity Accounts Receivable: 

 Consumer redress 2,585,646 2,515,759 69,887

 Civil penalties 39,081 39,077 4 

 Total non-entity accounts receivable 2,624,727 2,554,836 69,891

Total Accounts Receivable $ 2,624,860 $ 2,554,836 $ 70,024 

Accounts receivable, net consisted of the following as of September 30, 2016:

(Dollars in thousands) Gross

Receivables 

Allowance for

Uncollectible

Accounts 

2016 Net

 Entity Accounts Receivable: 

 Intragovernmental $ 75 $ - $ 75

 With the public 79 - 79 

 Total entity accounts receivable 154 - 154

 Non-Entity Accounts Receivable: 

 Consumer redress 2,600,317 2,502,135 98,182 

 Civil penalties 35,075 34,340 735 

 Total non-entity accounts receivable 2,635,392 2,536,475 98,917 

Total Accounts Receivable $ 2,635,546 $ 2,536,475 $ 99,071 
FINANCIAL SECTION

73

FISCAL YEAR 2017 AGENCY FINANCIAL REPORT

www.ftc.gov FEDERAL TRADE COMMISSION

NOTE 5—PROPERTY PLANT, AND EQUIPMENT, NET

The following represents the FTC’s capital assets and accumulated depreciation/amortization as of September 30, 2017 

and 2016. No impairment was recognized in either year. 

Property, plant, and equipment, net consisted of the following as of September 30, 2017:

Asset Class

(Dollars in thousands)

Service 

Life

Acquisition

Value

Accumulated 

Depreciation/

Amortization

Net 

Book Value

Equipment 5-20 years $ 26,992 $ 15,138 $ 11,854

Leasehold improvements 15 years 46,566 14,718 31,848 

Software 5 years 28,000 20,988 7,012

Total Property, Plant, and Equipment $ 101,558 $ 50,844 $ 50,714 

Property, plant, and equipment, net consisted of the following as of September 30, 2016:

Asset Class

(Dollars in thousands)

Service 

Life

Acquisition

Value

Accumulated 

Depreciation/

Amortization

Net 

Book Value

Equipment 5-20 years $ 24,425 $ 10,586 $ 13,839

Leasehold improvements 15 years 45,894 11,697 34,197 

Software 5 years 27,359 18,027 9,332

Total Property, Plant, and Equipment $ 97,678 $ 40,310 $ 57,368 
FINANCIAL SECTION

FISCAL YEAR 2017 AGENCY FINANCIAL REPORT

74 FEDERAL TRADE COMMISSION www.ftc.gov

NOTE 6—LIABILITIES COVERED AND NOT 

COVERED BY BUDGETARY RESOURCES

The FTC recognizes three categories of liabilities 

described below:

LIABILITIES COVERED BY BUDGETARY 

RESOURCES

Liabilities incurred that are covered by available 

budgetary resources as of the Balance Sheet date. These 

include accounts payable for goods and services received, 

and accrued employee payroll and benefits payable.

LIABILITIES NOT COVERED BY BUDGETARY 

RESOURCES

Liabilities incurred for which revenues or other sources 

of funds necessary to pay the liabilities have not been 

made available through Congressional appropriations 

or current earnings. These include unfunded FECA 

liabilities and accrued annual leave. 

LIABILITIES NOT REQUIRING BUDGETARY 

RESOURCES

Non-entity liabilities that are covered by non-entity assets 

and do not require budgetary resources. These include:

Undisbursed Premerger Filing Fees - the offsetting 

liability to the non-entity clearing/suspense fund balance 

for premerger fees that are payable to the DOJ in a 

subsequent period.

Accrued Civil Penalties due to Treasury - the offsetting 

liability to non-entity accounts receivable for civil 

penalties, net, that upon collection will be payable to the 

general fund of the Treasury.

Undisbursed Redress Collections - the offsetting liability 

to the non-entity deposit fund balance for consumer 

redress that is payable to approved claimants. 

Accrued Redress due to Claimants - the offsetting 

liability to the non-entity accounts receivable for 

consumer redress that upon collection will be payable to 

approved claimants.

Liabilities consisted of the following as of September 30, 2017 and 2016 (Restated):

(Dollars in thousands)

2017 

Covered by 

Budgetary 

Resources

2017

Not 

Covered by 

Budgetary 

Resources

2017

Not 

Requiring 

Budgetary 

Resources

2017

Total 

Liabilities

2016 

Covered by 

Budgetary 

Resources

2016

Not 

Covered by 

Budgetary 

Resources

Restated 

2016 Not 

Requiring 

Budgetary 

Resources

Restated 

2016

Total 

Liabilities

Intragovernmental:

Accounts payable $ 1,181 $ - $ - $ 1,181 $ 621 $ - $ - $ 621 

Accrued employee benefits 1,477 - - 1,477 1,413 - - 1,413 

Other employment related 

liability - - - - - 13 - 13 

FECA liability - 353 - 353 - 354 - 354

Reimbursable advances 13 - - 13 1,956 - - 1,956

Undisbursed premerger filing 

fees - - - - - - 502 502 

Accrued civil penalties due to 

Treasury - - 4 4 - - 735 735

Subtotal intragovernmental 

liabilities 2,671 353 4 3,028 3,990 367 1,237 5,594 

Accounts payable 9,533 - - 9,533 10,353 - - 10,353

Accrued payroll and benefits 6,081 - - 6,081 5,784 - - 5,784 

Accrued leave - 11,681 - 11,681 - 11,431 - 11,431 

Actuarial FECA - 2,095 - 2,095 - 2,060 - 2,060 

Undisbursed redress collections - - 431,573 431,573 - - 796,395 796,395

Accrued redress due to 

claimants - - 69,887 69,887 - - 98,182 98,182 

Total Liabilities $ 18,285 $ 14,129 $ 501,464 $ 533,878 $ 20,127 $ 13,858 $ 895,814 $ 929,799 
FINANCIAL SECTION

75

FISCAL YEAR 2017 AGENCY FINANCIAL REPORT

www.ftc.gov FEDERAL TRADE COMMISSION

NOTE 7 – OTHER LIABILITIES

Other liabilities consisted of the following as of September 30, 2017:

(Dollars in thousands) 2017

Non-Current

2017

Current

2017

Total

Other intragovernmental:

Accrued employee benefits $ - $ 1,477 $ 1,477 

FECA liability 353 - 353 

Reimbursable advances - 13 13

Undisbursed premerger filing fees - - -

Accrued civil penalties due to Treasury - 4 4

Subtotal other intragovernmental 353 1,494 1,847 

Accrued payroll and benefits - 6,081 6,081

Accrued leave 11,681 - 11,681 

Actuarial FECA 2,095 - 2,095

Subtotal other 13,776 6,081 19,857

Total Other Liabilities $ 14,129 $ 7,575 $ 21,704 

Other liabilities consisted of the following as of September 30, 2016:

(Dollars in thousands) 2016

Non-Current

2016

Current

2016

Total

Other intragovernmental:

Accrued employee benefits $ - $ 1,426 $ 1,426 

FECA liability 354 - 354 

Reimbursable advances - 1,956 1,956

Undisbursed premerger filing fees - 502 502

Accrued civil penalties due to Treasury - 735 735 

Subtotal other intragovernmental 354 4,619 4,973 

Accrued payroll and benefits - 5,784 5,784

Accrued leave 11,431 - 11,431 

Actuarial FECA 2,060 - 2,060

Subtotal other 13,491 5,784 19,275 

Total Other Liabilities $ 13,845 $ 10,403 $ 24,248 
FINANCIAL SECTION

FISCAL YEAR 2017 AGENCY FINANCIAL REPORT

76 FEDERAL TRADE COMMISSION www.ftc.gov

NOTE 8—OPERATING LEASES 

Future minimum lease payments due under leases of government-owned 

property for the fiscal year ended September 30, 2017:

Fiscal Year

(Dollars in thousands)

2018 $ 7,088 

2019 6,710 

2020 363

2021 366 

2022 314 

Thereafter 762

Total Future Minimum Lease Payments $ 15,603 

Future minimum lease payments due under leases of commercial-owned 

property for the fiscal year ended September 30, 2017:

Fiscal Year

(Dollars in thousands)

2018 $ 13,972 

2019 14,579

2020 14,901 

2021 14,910 

2022 14,662

Thereafter 23,376

Total Future Minimum Lease Payments $ 96,400

Leases of government and commercial property are 

made through and managed by the GSA. While the 

leases with the GSA are cancellable, the FTC’s intention 

is to stay in the GSA leased space and disclose the 

amounts that will be paid in the future to the GSA under 

signed lease agreements. The FTC has leases on four 

government-owned properties and seven commercial 

properties totaling approximately 612 thousand square 

feet for use as offices, storage and parking. The FTC’s 

government and commercial leases expire at various dates 

through 2027. 

NOTE 9—COMMITMENTS AND 

CONTINGENCIES

As of September 30, 2017, the FTC has no pending 

single or aggregate administrative proceedings, legal 

actions, and claims brought by or against it, including 

pending litigation where adverse decisions are considered 

by management and legal counsel as “reasonably 

possible.”
FINANCIAL SECTION

77

FISCAL YEAR 2017 AGENCY FINANCIAL REPORT

www.ftc.gov FEDERAL TRADE COMMISSION

NOTE 10—INTRAGOVERNMENTAL COSTS 

AND EXCHANGE REVENUES

The Statement of Net Cost presents the FTC’s costs 

and exchange revenues for its two major strategic 

goals. The costs and exchange revenues reported can 

be further classified as either “intragovernmental” or 

“public.” Intragovernmental costs and exchange revenues 

arise from transactions with another Federal entity, 

whereas, public costs and exchange revenues arise from 

transactions with non-Federal entities. 

The FTC’s intergovernmental costs are services provided 

by other Federal agencies under reimbursable agreements 

to carry out its programs. The Federal agency providing 

the service bills the FTC based on full cost recovery. The 

FTC recognizes the costs based on the services being 

performed by the other agency.

A small portion of the FTC’s overall exchange revenue 

is intragovernmental arising from services provided to 

other Federal agencies under interagency agreements. 

The FTC bills the buying agency to recover the full cost 

of services, primarily salaries, and recognizes the revenue 

at the time expenditures are incurred. 

The bulk of the FTC’s exchange revenue is “public” and 

derived from two primary sources:

Fees collected for premerger notification filings 

under the HSR Act - The HSR Act requires the filing of 

premerger notifications with the FTC and the Antitrust 

Division of the DOJ and establishes a waiting period 

before certain acquisitions may be consummated. The 

filing fees are determined by the value and size of the 

parties. By law, the FTC retains one-half of all premerger 

filing fees collected, and remits one-half to the DOJ’s 

Antitrust Division. 

Subscription fees collected for the National Do Not 

Call Registry - The Do Not Call (DNC) Registry Fee 

Extension Act of 2007, which amended the Do Not 

Call Implementation Act, established a permanent 

fee structure for the DNC registry and provided that 

fees be reviewed annually and adjusted for inflation, 

as appropriate. Telemarketers must pay an annual 

subscription fee and download a list of telephone 

numbers of consumers who do not wish to receive calls. 

Fees are based on the number of area codes downloaded. 

The FTC recognizes the revenue when collected and the 

telemarketer is given access to the requested data. 

Costs and revenues categorized as intragovernmental and public consisted of the following for 

the fiscal years ended September 30, 2017 and 2016:

(Dollars in thousands) 2017 2016

Strategic Goal 1: Protect Consumers

Intragovernmental gross costs $ 44,611 $ 45,417 

Public costs 136,894 139,253 

Gross costs, Protect Consumers 181,505 184,670 

Intragovernmental earned revenue - reimbursements (1,939) (945)

Public earned revenue - Do Not Call registry fees (12,626) (12,922)

Earned revenue, Protect Consumers (14,565) (13,867)

Net Cost, Protect Consumers 166,940 170,803

Strategic Goal 2: Maintain Competition

Intragovernmental gross costs 35,770 35,396 

Public costs 109,762 108,528 

Gross costs, Maintain Competition 145,532 143,924 

Intragovernmental earned revenue - reimbursements (597) (500)

Public earned revenue - premerger filing fees (125,440) (114,173)

Earned revenue, Maintain Competition (126,037) (114,673)

Net Cost, Maintain Competition 19,495 29,251 

Net Cost of Operations $ 186,435 $ 200,054 
FINANCIAL SECTION

FISCAL YEAR 2017 AGENCY FINANCIAL REPORT

78 FEDERAL TRADE COMMISSION www.ftc.gov

NOTE 11—APPORTIONMENT CATEGORIES OF OBLIGATIONS INCURRED: DIRECT VS. 

REIMBURSABLE OBLIGATIONS 

Obligations incurred consisted of the following for the fiscal years ended September 30, 2017 

and 2016:

(Dollars in thousands) 2017 2016

Obligations Incurred:

Category A - direct obligations $ 314,003 $ 324,221

Category B - reimbursable obligations 744 3,521

Total Obligations Incurred $ 314,747 $ 327,742

Category A – direct obligations represent amounts obligated in carrying out the FTC’s normal on-going operations. 

The source of funding for these obligations is an annual appropriation, offsetting collections, and unobligated funds 

brought forward from previous years. These funds are made available by the OMB through quarterly (Category A) 

apportionments.

Category B – reimbursable obligations represent amounts obligated in fulfilling interagency agreements when the 

FTC is the provider of services. The source of funding for these obligations is reimbursements collected from other 

Federal agencies to cover the FTC’s costs in fulfilling the agreement.

NOTE 12—EXPLANATION OF 

DIFFERENCES BETWEEN THE STATEMENT 

OF BUDGETARY RESOURCES AND THE 

BUDGET OF THE UNITED STATES

GOVERNMENT

There are no material differences between amounts 

reported in the FY 2016 Statement of Budgetary 

Resources and the FY 2016 actual amounts as 

reported in the FY 2018 Budget of the United States 

Government. The FY 2019 Budget of the United States 

is not available to compare FY 2017 actual amounts to 

the FY 2017 Statement of Budgetary Resources. 

NOTE 13—UNDELIVERED ORDERS AT THE 

END OF THE PERIOD

The amount of budgetary resources obligated for 

undelivered orders as of September 30, 2017 and 2016, 

is $57,664 and $65,100 thousand, respectively. 
FINANCIAL SECTION

79

FISCAL YEAR 2017 AGENCY FINANCIAL REPORT

www.ftc.gov FEDERAL TRADE COMMISSION

NOTE 14—CUSTODIAL ACTIVITIES

The primary custodial activities of the FTC are: 

PREMERGER FILING FEES 

Fees collected for premerger notification filings under 

the HSR Act are divided evenly between the FTC and 

the DOJ. The portion of collections designated for the 

DOJ is reported as a custodial activity. As of September 

30, 2017 and 2016, the FTC collected $250,880 and 

$228,346 thousand respectively, in HSR premerger filing 

fees. One-half of the amounts collected in each year was 

distributed to the DOJ, as shown on the Statement of 

Custodial Activity. 

CIVIL PENALTIES 

Civil monetary penalties and antitrust violations 

collected in connection with the settlement or litigation 

of the FTC’s administrative or Federal court cases are 

collected by either the FTC or the DOJ as provided 

by law. In those situations where the FTC collects the 

penalties, the funds are deposited in a receipt account 

with the Treasury. All civil penalties collected are 

transferred to the general fund of the Treasury at the end 

of the year. 

CONSUMER REDRESS 

Collections for consumer redress reported on the 

Statement of Custodial Activity are limited to those 

collections that have been disgorged to the Treasury. Net 

disgorgements to the Treasury were $94,463 thousand 

as of September 30, 2017 and $267 thousand as of 

September 30, 2016. 

Other line items on the Statement of Custodial Activity 

include: 

ACCRUAL ADJUSTMENTS 

Accrual adjustments represent the change in accounts 

receivable, net of allowances for uncollectible accounts, 

for civil penalties assessed in court actions.

AMOUNTS YET TO BE TRANSFERRED 

Amounts yet to be transferred represents the change in 

the offsetting liability for civil penalties due to Treasury 

that is established at the time an accounts receivable for 

civil penalties is recorded. 
FINANCIAL SECTION

FISCAL YEAR 2017 AGENCY FINANCIAL REPORT

80 FEDERAL TRADE COMMISSION www.ftc.gov

NOTE 15—CONSUMER REDRESS ACTIVITIES 

The FTC obtains consumer redress in connection with the settlement or litigation of both administrative proceedings 

and Federal court cases. The FTC holds redress funds in a deposit fund at Treasury until a determination is made on 

the practicability of redress. The FTC attempts to distribute funds to injured parties whenever possible. If redress is 

determined to be practicable, funds are either directly disbursed by the FTC to claimants, or, funds needed to cover 

immediate disbursements to injured parties are transferred to accounts at financial institutions from which redress 

third party administrators process claims and disburse proceeds to claimants. The FY 2017 disbursement to claimants 

and third party administrators of $543,432 thousand includes several large payments of funds collected in prior 

years; i.e., the $125,169 thousand disbursed to claimants in accordance with a FY 2015 settlement resolving antitrust 

charges against Cephalon Inc. The FTC also has $212,827 thousand in Fund Balance with Treasury to pay for future 

settlements against Cepahlon Inc.

In those cases where consumer redress is not practicable, the funds are transferred (disgorged) to the Treasury, or on 

occasion, used for consumer education or another purpose as directed by the final order issued by the court. Major 

components of the redress program include eligibility determination, claimant notification, and administration of 

redress to claimants. 

Redress fund activities consisted of the following for the fiscal years ended September 30, 2017 

and 2016 (Restated):

(Dollars in thousands) 2017 Restated 

2016

Consumer Redress:

Fund Balance with Treasury

Beginning balance $ 796,395 $ 729,804

Collections 273,073 286,265

Disbursements to claimants and third party 

administrators for redress, net (543,432) (219,407)

Disgorgements to Treasury, net (94,463) (267)

Total Fund Balance with Treasury, Ending $ 431,573 $ 796,395 

Accounts Receivable, Net

Beginning balance $ 98,182 $ 41,741 

Net activity (28,295) 56,441

Total Accounts Receivable, Ending $ 69,887 $ 98,182
FINANCIAL SECTION

81

FISCAL YEAR 2017 AGENCY FINANCIAL REPORT

www.ftc.gov FEDERAL TRADE COMMISSION

NOTE 16 — RECONCILIATION OF NET COST OF OPERATIONS TO BUDGET

For the fiscal years ended September 30, 2017 and 2016:

(Dollars in thousands) 2017 2016

Resources Used to Finance Activities:

Budgetary resources obligated:

 Obligations incurred $ 314,747 $ 327,742 

 Less: spending authority from offsetting collections and recoveries (147,030) (151,770)

Total budgetary resources obligated 167,717 175,972

Other resources:

 Imputed financing from costs absorbed by others 6,896 7,085

Total other resources 6,896 7,085 

Total Resources Used to Finance Activities 174,613 183,057

Resources Used to Finance Items not Part of the Net Cost of 

Operations:

 Change in budgetary resources obligated, but not yet provided 4,898 10,806

 Resources that finance the acquisition of assets (3,879) (4,328)

Total resources used to finance items not part of the net cost of operations 1,019 6,478

Total Resources Used to Finance the Net Cost of Operations 175,632 189,535 

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 250 201

 Other 19 47

Total components requiring or generating resources in future period 269 248

Components not requiring or generating resources:

 Depreciation and amortization 10,534 10,271

Total components not requiring or generating resources 10,534 10,271 

Total Components of the Net Cost of Operations that will not Require 

or Generate Resources in the Current Period: 10,803 10,519

Net Cost of Operations $ 186,435 $ 200,054
FINANCIAL SECTION

82 FEDERAL TRADE COMMISSION www.ftc.gov

FISCAL YEAR 2017 AGENCY FINANCIAL REPORT

NOTE 17 — RESTATEMENT

In accordance with OMB Circular A-123, the FTC 

performed a review of its court ordered collection process 

as a follow-up to the review work performed in FY 2016. 

The review in FY 2017 identified an inconsistency 

with the Statement of Federal Financial Accounting 

Standard (SFFAS) 1, Accounting for Selected Assets and 

Liabilities. The SFFAS 1 defines the recognition of nonentity assets as follows: 

“Assets available to an entity to use in its operations are 

entity assets while those assets not available to an entity 

but held by the entity are non-entity assets. While both 

entity and non-entity assets are to be reported in entity 

statements, the standards require the segregation of 

entity and non-entity assets.” 

In FY 2017, the FTC updated its practice of 

accounting for non-entity funds held by redress third 

party administrators consistent with SFFAS 1, as 

these funds are not available or held by the FTC and 

therefore should not be reported on the FTC’s financial 

statements. All remaining balances for funds held by 

redress third party administrators were removed from 

FY 2017 and 2016, respectively.

As a result of the correction, the FTC restated the FY 

2016 financial statements. The restatement is presented 

in the FY 2017 and FY 2016 comparative financial 

statements. The FTC Redress program is non-entity 

in nature, and all assets are offset by an equal liability. 

There is no net effect to the restatement beyond the lines 

presented below on the Balance Sheet, and as reflected 

on the following notes: Note 1 - Significant Accounting 

Policies, Note 2 - Entity and Non-Entity Assets, Note 

6 - Liabilities Covered and Not Covered by Budgetary 

Resources, and Note 15 - Consumer Redress Activities. 

SUMMARY OF CHANGES TO THE BALANCE SHEET

Balance as of September 30, 2016 (Restated):

(Dollars in thousands) FY 2016

as Stated Adjustment FY 2016Restated

Assets (Notes 2 and 17):

Cash and other monetary assets $ 54,495 $ (54,495) $ -

Total Assets $ 1,140,627 $ (54,495) $ 1,086,132 

Liabilities (Notes 6 and 17):

Undisbursed redress collections $ 850,890 $ (54,495) $ 796,395 

Total Liabilities 984,294 (54,495) 929,799 

Net Position (Notes 1(p) and 17):

Total Net Position 156,333 - 156,333

Total Liabilities and Net Position $ 1,140,627 $ (54,495) $ 1,086,132 
OTHER

INFORMATION

FISCAL YEAR 2017
FEDERAL TRADE COMMISSION
OTHER INFORMATION

85

FISCAL YEAR 2017 AGENCY FINANCIAL REPORT

www.ftc.gov FEDERAL TRADE COMMISSION

INSPECTOR GENERAL-IDENTIFIED MANAGEMENT AND 

PERFORMANCE CHALLENGES

1 

 October 17, 2017 

MEMORANDUM 

TO: Maureen Ohlhausen 

Acting Chairman, Federal Trade Commission 

FROM: Roslyn A. Mazer 

Inspector General 

SUBJECT: FY 2017 FTC Management Challenges 

The Reports Consolidation Act of 2000 requires that the Inspector General provide a summary of 

our perspective on the most serious management and performance challenges facing the agency 

and a brief assessment of the agency’s progress in addressing those challenges. The management 

challenges in this document are based on work conducted by the Office of Inspector General 

(OIG) and discussions with senior leaders at the Federal Trade Commission (FTC). 

We identify the following as the most significant management challenges facing the FTC: 

1. Securing the Agency’s Information Systems and Networks from Destruction, Data Loss, 

 or Compromise 

2. Accelerating the Maturity of the Agency’s Information Technology Governance Process 

3. Improving Acquisition Planning and Contract Management 

Some of these are enduring challenges requiring leadership’s continued attention. Others are a 

priority at this time in the agency’s development, but may become a less pressing priority in the 

future. The FTC’s progress in addressing management challenges one and two slowed in FY 

2017. We will address these and related issues in the OIG’s upcoming CyberScope reporting and 

our FY 2017 FISMA evaluation. 

The attached document provides the justification for our assessment. We provided a draft of our 

assessment to management, and its comments are incorporated into the section headings, “Agency 

Progress in Addressing the Challenge.” 

UNITED STATES OF AMERICA

FEDERAL TRADE COMMISSION 

WASHINGTON, D.C. 20580

 Office of Inspector General
OTHER INFORMATION

FISCAL YEAR 2017 AGENCY FINANCIAL REPORT

86 FEDERAL TRADE COMMISSION www.ftc.gov

2 

We appreciate leadership’s ongoing support for the OIG’s independent mission, and we will 

continue to work with you in addressing these and other challenges the FTC faces in achieving its 

vital mission. As the FTC continues to focus energy and resources on addressing these challenges, 

it will significantly enhance its performance and success. 

Attachment 1 
OTHER INFORMATION

87

FISCAL YEAR 2017 AGENCY FINANCIAL REPORT

www.ftc.gov FEDERAL TRADE COMMISSION

Office of Inspector General

Top Management Challenges at the Federal Trade Commission

October 16, 2017

1. Securing the Agency’s Information Systems and Networks from Destruction, Data Loss, or 

Compromise

The information security and privacy environment is fluid and ever-changing, which means that protecting 

information assets remains an ongoing and complex challenge for the FTC. The volume and scope of 

information the FTC routinely acquires and must protect is increasing, and threats are becoming more 

numerous and pervasive. The FTC cannot effectively accomplish its mission if industry and the public lack 

confidence that the FTC can protect proprietary information, personally-identifiable information, and other 

sensitive non-public information entrusted to its care.

The FTC OIG assists by assessing FTC information control procedures, including its annual Federal 

Information Security Modernization Act of 2014 (FISMA) evaluation of FTC information security and 

privacy programs.These assessments provide management with an independent, high-level determination 

of the FTC’s ability to protect its information assets; securely and cost-effectively acquire, implement, and 

manage modern technologies; and maintain a skilled workforce versed in technology and the need to protect 

information assets.

In its FY 2015 and FY 2016 FISMA evaluations, the OIG recognized the FTC improvements taking place 

and continued to advocate for continuous monitoring and management improvements. The recommended 

improvements are intended to improve management’s security and privacy planning and oversight while 

reducing costs through an evolving Continuous Monitoring Management and process improvement system.

In FY 2016, the Office of Management and Budget (OMB), the National Institute of Standards 

and Technology (NIST), the Department of Homeland Security (DHS), and the OIG community, 

working through the Council of the Inspectors General on Integrity and Efficiency (CIGIE), continued 

implementation of an information security “maturity model.” The maturity model is intended to provide 

an assessment of the status of an agency’s information security program as well as the agency’s capability to 

enhance the resilience and capability of its information security program. The FTC OIG tailored its FISMA 

evaluation to align with the maturity model approach and to the FTC’s mission, organizational culture, size, 

and technology architecture.

The results of the FY 2016 FISMA evaluation showed that, while the FTC is improving its capabilities 

to protect its information assets and modernizing its technology, the maturity of its information security 

program was not advancing. As the OIG’s prior assessments concluded, while the FTC responds quickly to 

mitigate identified specific vulnerabilities and threats and FTC staff recognize and value information security 

and privacy, its documentation of policies and procedures and monitoring of the information security 
OTHER INFORMATION

FISCAL YEAR 2017 AGENCY FINANCIAL REPORT

88 FEDERAL TRADE COMMISSION www.ftc.gov

environment is deficient. Use of the OMB/DHS FISMA criteria highlights these deficiencies because the 

maturity model emphasizes the need for a formalized program that is consistently monitored and improved.

We also determined in FY 2016 that the FTC Information Technology (IT) and modernization planning 

and acquisition documents as of September 30, 2016, did not demonstrate the disciplined planning 

necessary for compliance with Federal Acquisition Regulation principles, or with Office of Management and 

Budget (OMB) and FTC requirements and guidance for such a complex activity; nor did the documents 

demonstrate a risk-based approach where information security, privacy, and performance risks were identified 

or considered, or where appropriate mitigations were planned. These deficiencies did not adversely affect 

the FTC’s current ability to protect FTC information assets, but are indicative of a security environment 

with decreasing effectiveness. For example, the OIG’s concerns with management’s decision to proceed 

with a multi-year IT modernization plan without having policies and procedures in place for configuration 

management were realized in August 2017, when the agency experienced an email outage that affected all 

FTC staff, contractors, and customers using email and mobile email.

The FTC’s practice of correcting information security weaknesses after a problem occurs, characteristic of 

a Level 2 – Defined program, needs to be advanced to higher maturity levels where programed/automated 

processes and management oversight anticipate issues and take preventive action before FTC operations and 

missions experience disruption.

The FTC is working to improve its information security processes and planning. Concurrently, the 

agency must maintain the integrity and availability of its information assets as it continues to modernize 

its information systems, reorganize its information technology support staff, respond to new security 

requirements, and continue to provide reliable mission support. Successfully addressing competing 

requirements for staff and technology resources will require the continued attention of FTC senior and 

executive management and a focus on building an information security program on defined, repeatable 

processes. Information security processes must be repeatable, continually monitored and improved if the 

FTC is to continue to perform its missions while protecting its information assets and controlling costs.

Agency Progress in Addressing the Challenge

As a result of the evolving changes to the cybersecurity landscape, FTC determined to devote additional 

resources to address its information security program gaps. In 2017, OCIO hired a seasoned federal Chief 

Information Security Officer to lead the agency’s cybersecurity efforts. Recently, OCIO also received 

approval to recruit additional FTEs, which recruitment effort is currently ongoing. The new FTEs will, 

among other things, revise policies and procedures to align with the plan to take advantage of federal 

programs such as Fed RAMP approved cloud services, interagency-shared services, and other initiatives 

such as the Department of Homeland Security’s Continuous Diagnostics and Mitigation program; efforts 

that will not only allow the agency to provide improved services to agency users but improve the agency’s 

IT security posture as well. In addition, the FTC will focus its initial continuous monitoring efforts on 

implementing CAP goals and managing IT assets in the following technical areas: hardware and software 

management, vulnerability management, configuration management, and privileged user management. 
OTHER INFORMATION

89

FISCAL YEAR 2017 AGENCY FINANCIAL REPORT

www.ftc.gov FEDERAL TRADE COMMISSION

These are multiyear projects and will be implemented and managed consistent with anticipated, but not yet 

issued, guidance from OMB.

Finally, while the FTC agrees that revising its configuration management policies and procedures is a 

priority and integral to the success of its IT modernization efforts, completion of this work would not 

have prevented the email outage the agency experienced in August, as the OIG suggests. The root cause for 

the outage as identified in the Exchange Email After Action Report was a defective antivirus update. This 

sort of change is one that would never be subjected to the configuration management process as the time 

required for, and likely benefit obtained from, such a review would be outweighed by the risk of failing to 

immediately implement any antivirus update.

2. Accelerating the Maturity of the Agency’s Information Technology Governance Process

The FTC depends on IT to perform its missions and associated business objectives. In accordance with 

federal law, the Chief Information Officer (CIO), in coordination with FTC Bureaus and Offices and 

appropriate governance boards, defines processes and policies to address information resources appropriately.

At the end of FY 2011, the FTC chartered an IT Governance Program with three governance boards to 

improve the planning, monitoring, and risk mitigation associated with its information systems. Over the 

past several years, the FTC improved its IT governance procedures to address increasing threats, changes 

in government-wide policy and guidelines, and constrained budgets. As reported in the OIG independent 

Federal Information Security Modernization Act of 2014 (FISMA) evaluations for FYs 2012, 2014, and 

2015, the FTC improved its governance policies, procedures, and technical guidance and expanded its use of 

Capital Planning and Investment Control (CPIC) and investment analysis techniques. In FY 2013, the FTC 

governance maturation slowed because of needed focus on office consolidations and accommodating policy 

and priority changes resulting from senior and executive management turnover.

Maturation of the FTC governance process improved planning consistency, oversight, and risk-based 

decision-making. Similarly, the expansion of Governance Board roles increased Board Member participation 

in linking investments to business needs and analyzing risks and developing mitigation approaches. For 

example, recognizing the potential enterprise-level impact of minor FTC IT projects, the Governance Board 

added “risk” as a requirement for Board review, in addition to the Federal Acquisition Regulation (FAR) 

cost criteria. Thus, under FTC governance procedures, an investment or project with a high security or 

performance risk that might affect the FTC’s reputation is subject to Governance Board oversight, regardless 

of investment cost.

In FY 2016, the FTC initiated an effort to improve Office of the Chief Information Officer (OCIO) 

support operations and accelerate the maturation of its IT Governance program. Key elements of this effort 

were the reorganization of the OCIO to align support components with business needs and the development 

of a Strategy and Transition Plan Security and Technology Services (IT Strategy). The OCIO completed its 

reorganization in FY 2016 and issued the IT Strategy on September 30, 2016. While the OCIO conducted 

activities related to the reorganization and IT Strategy in FY 2016 (e.g., revision of policies, procedures, 
OTHER INFORMATION

FISCAL YEAR 2017 AGENCY FINANCIAL REPORT

90 FEDERAL TRADE COMMISSION www.ftc.gov

and support systems), management does not anticipate the impact of FTC improvement efforts from the 

IT Strategy until FY 2017 or later. This determination affected the FY 2016 FISMA evaluation in that 

the FISMA Maturity levels focus on the current state (in place policies and practices) for Maturity Levels 

1 through 3, and the future or target state for Maturity Levels 4 and 5. Consequently, the OIG FY 2016 

FISMA evaluation presented a description of the FTC current state information security environment as 

strong and robust relative to its ability to protect its information assets, with no concerns specific to the FTC 

privacy program.

In its FY 2016 evaluation, the OIG assessed the FTC IT Strategy and its planned implementation. The 

evaluation identified weaknesses in the IT Strategy, its proposed implementation, and associated policies and 

procedures. The OIG concluded that –

While the FTC made significant efforts to improve its governance practices, modernization planning 

and acquisition documents provided as of September 30, 2016, did not demonstrate the disciplined 

planning necessary for compliance with Federal Acquisition Regulation (FAR) principles, Office of 

Management and Budget (OMB), and FTC requirements and guidance for such a complex activity; 

nor did the documents demonstrate a risk-based approach where information security, privacy, and 

performance risks were considered and appropriate mitigations were evaluated and planned.

The OIG identified the FTC IT Strategy (initiated in FY 2016) as a high-risk project, given its mission 

impact and estimated cost, warranting increased oversight. Accordingly, early in its FY 2017 FISMA 

evaluation, the OIG collected information allowing assessment of the agency’s progress in securely executing 

its IT Strategy. The OIG’s objective was to identify potential concerns or weaknesses and raise them to 

FTC management for resolution before there is an adverse impact on FTC information assets, mission, or 

reputation. The OIG determined that the IT Strategy implementation was not proceeding in a manner 

that reduced performance risks. Further, the FTC’s failure to recognize the relevance of legacy policies and 

procedures to maintaining effective security increases the adverse impact to FTC information assets.

In FY 2016, the OCIO initiated actions to address the challenge of Accelerating the Maturation of the FTC 

IT Governance process. Unfortunately, while these actions contributed to mitigating some specific areas of 

concern, they did not advance the IT Governance process. Part of the problem is timing: the OCIO issued 

the IT Strategy on September 30, 2016 -- the very end of FY 2016. The IT Strategy schedule proposed 

performance through the entire FY 2016 to FY 2019 timeframe. While FTC performed some IT Strategyrelated activities in FY 2016, it delayed some critical activities (e.g., issuance of the supporting contract 

vehicle). Further, as shown by the OIG evaluation of IT Strategy efforts conducted in FY 2017, the lack of 

progress appears to be the result of inadequate planning and the solution approaches pursued. For example, 

the FISMA Maturity Model stresses the use of formalized processes and procedures and documented, riskbased decisions. The IT Strategy assumes that planning artifacts such as an enterprise architecture that 

describes the baseline architecture, target architecture, and a transition plan to get to the target architecture 

will be developed as the modernization project progresses. Thus, the FTC is seeking to acquire components 

for an enterprise architecture that has not been defined.

The following are the OIG assessments of the challenges associated with the FTC’s Governance maturation 

activities identified for FY 2016 performance and their status as of August 31, 2017:
OTHER INFORMATION

91

FISCAL YEAR 2017 AGENCY FINANCIAL REPORT

www.ftc.gov FEDERAL TRADE COMMISSION

•	 Updated Governance Charter

The current Information Technology Governance Program Charter is dated August 20, 2014. 

The 2014 Charter focused on the processes and Boards specific to the evaluation and assessment 

of the FTC information technology environment. The FTC has drafted a policy, identified as the 

replacement for the 2014 Charter, titled Information Technology Governance Administration Policy 

(IT Governance Administration Policy or Policy), that is scheduled for completion in September 

2017. Our review of the OCIO draft Policy shows that OCIO wrote it from a responsibility 

and authority perspective, as opposed to the procedural focus of the 2014 Charter. Further, the 

IT Governance Administration Policy identifies a number of policy management authorities and 

advisory councils without describing their relationship to the existing Governance Board structure. 

Thus, the draft policy does not provide for continuity of in-process Governance Board activities, 

increasing the performance risk to IT investments.

•	 TechStats

As defined in OMB Circular A-130, a “TechStat” is a face-to-face, evidence-based accountability 

review of an IT investment that enables the Federal Government to intervene to turn around, 

halt, or terminate IT projects that are failing or are not producing results for the American 

people.” The FTC is now successfully using TechStats to evaluate problem areas, but its efforts 

have largely focused on specific system-level problems (e.g., mobile phones or issues with legal 

discovery products) as opposed to the Governance Process. Thus, while the FTC’s use of the 

TechStat process is a valuable tool, it has not had a significant impact on maturing the Governance 

Process. The FTC could use the TechStat process to analyze the governance process itself and 

the investments monitored by the Governance Boards. For example, the IT Strategy, the FTC 

Enterprise Architecture, and the FTC contingency planning program are all appropriate candidates 

for TechStat reviews because they could provide the analysis necessary to ensure that the FTC is 

maximizing the use of its IT investments.

•	 IT Strategy and Transition Plan (IT Strategy)

The OCIO characterizes the FTC IT Strategy and Transition Plan as a significant contributor 

to the maturation of FTC IT Governance. The Risk and Policy Management Team described 

in the IT Strategy conducts continuous review and analysis of business practices, with the goal 

of improving decision making. The Risk and Policy Management Team is also responsible for 

governance processes and procedures and for ensuring that IT decisions are made in partnership 

with business stakeholders. The anticipated results are “increased transparency agency-wide of 

performance gains, challenges, and actions underway to correct deficiencies,” and assurance that 

policies and procedures are assessed for effectiveness and impact on the budget, performance, and 

operations services.

The OCIO planned for the multi-year IT Strategy to result in significant improvements in FTC IT 

Governance. However, in FY 2017, the IT Strategy had little positive impact on the maturation of 
OTHER INFORMATION

FISCAL YEAR 2017 AGENCY FINANCIAL REPORT

92 FEDERAL TRADE COMMISSION www.ftc.gov

IT Governance. A cornerstone of the IT Strategy is the use of blanket purchase agreements (BPA), 

under which the FTC will acquire cloud resources and related services. The IT Strategy called for 

award of the BPAs for the fourth quarter of FY 2016; however, the BPA award will not effectively 

occur before the first quarter of FY 2018, making it already significantly behind schedule. Further, 

the FTC deferred development of an Enterprise Architecture (EA) until after the BPA award. 

Thus, the FTC does not have a primary information tool that could be used to help identify IT 

Strategy components that could be separately acquired or developed. Further, as described in 

OMB Circular A-130, the EA should align business and technology resources to achieve strategic 

outcomes. The process of describing the current and future state of the agency and laying out a 

plan for transitioning from the current state to the desired future state helps agencies eliminate 

waste and duplication; increase shared services; close performance gaps; and promote engagement 

among Government, industry, and citizens. The lack of an EA “that describes the baseline 

architecture, target architecture, and a transition plan to get to the target architecture” presents a 

substantial performance risk to successful completion of the FTC IT Strategy. This remains a major 

management challenge for the FTC.

In FY 2017, the FTC identified risks associated with its legacy IT. The FTC complicated its 

governance maturity efforts by stating that it accepts the risk with its aging legacy IT in order to 

focus on migration to cloud services. Implicit in this statement is also the acceptance that FTC 

may increasingly experience disruptions that compromise the capability to perform its missions 

and protect its information assets. A general acceptance of risk, while allowable, shows that FTC 

has changed its focus from maintaining a reliable, secure environment to introducing modernized 

services with a currently unknown structure, risk, and implementation timeframe. The FTC must 

recognize that it needs concurrently to manage risk to its legacy systems and their information assets 

while modernizing its IT. This recognition must be reflected in a mature governance structure 

that fully supports both requirements – stable, secure in place Operations and Maintenance and 

successful planning and implementation of stable, secure modernized systems.

Agency Progress in Addressing the Challenge

The FTC took several steps toward maturing the agency’s IT governance, acquisitions and strategic planning 

processes during fiscal year 2017.

IT Governance

OCIO took numerous steps to mature and broaden its IT governance structure and operations – all to 

ensure that the Federal Trade Commission’s IT risk management activities support a management framework 

of organization, mission processes, and information systems consistent with guidance in NIST Special 

Publication 800-39, Managing Information Security Risk, Specifically, the revised structure was created 

to better ensure: 1) organization-wide risk awareness and management; 2) continuous improvement via 

stakeholder feedback; and 3) traceability and transparency of risk-based decisions.
OTHER INFORMATION

93

FISCAL YEAR 2017 AGENCY FINANCIAL REPORT

www.ftc.gov FEDERAL TRADE COMMISSION

The first major step in this process was the Chairman’s designation of the CIO as the senior risk official for 

Information Technology. Next, the CIO designated four OCIO managers as Policy Management Authorities 

(PMA) to manage day to day risk and implement the requirements of OMB Circular A-130, Managing 

Information as a Strategic Resource, including managing risks, artifacts, policies, and procedures in assigned 

areas of policy authority. OCIO also solicited agency-wide participation on various Advisory Councils, 

whose members act as subject matter experts (SME) to advise the PMAs, the CIO, and Senior Agency 

Officials in the program areas outlined in OMB Circular A-130.

The PMAs and the Advisory Councils constitute Tier 2 of a three-tiered, escalating IT risk management 

structure that provides oversight required to identify, analyze, prioritize, mitigate, and manage risks and 

issues regarding information systems, mission processes, and the organization at each respective decision 

making tier – all with the overall objective of continuous improvement. For example, when system 

owners and authorizing officials (Tier 3) are unable to resolve information systems risks and issues, or 

issues are determined to affect business processes, the risk or issue is escalated to the PMAs (Tier 2) and 

the appropriate IT Advisory Council to apply resources and decision-making strategies. Similarly, if the 

risk or issue cannot be prioritized or mitigated by the Tier 2 PMA governance bodies, or the criticality of 

risk is such that it affects the organization and requires decision-making or resources not available to the 

PMAs, the risk or issue is escalated to Tier 1 and the Senior Agency Officials who sit on the Enterprise Risk 

Management governing body, the Senior Management Council (SMC) for analysis and decision-making. 

The SMC may choose to accept, mitigate, or transfer the risk or modify the IRM Strategic Plan to manage 

the risk.

Finally, an IT risk register was established to ensure that the PMAs and the IT Advisory Councils have 

insight into project risk and issues. The PMAs conduct weekly risk reviews and make decisions regarding risk 

mitigation. Risks are escalated to the agency’s SMC senior risk management officials based on the severity, 

likelihood and impact. These escalated risks are presented as part of the SMC meetings, which focus on, 

not only IT risks, but also overall agency risks. Depending upon changes in the risk landscape, the IRM, 

the agency risk profile, or strategic initiatives may require adjustment. The SMC, the CIO, and PMAs will 

communicate changes in the IRM and agency risk profile to stakeholders, Advisory Council members, and 

system owners to guide their IT risk management activities.

The new governance structure is intended to streamline decision making, and broadened the IT governance 

scope beyond development, modernization and enhancement (DME) investments. It is also intended to 

ensure that IT, which is integral to the work of the agency, and the risks it poses to organization or mission 

are properly considered as part of Enterprise Risk Management for the agency. The new structure provides 

transparency throughout the agency regarding IT operations, maintenance, security, staffing, and budgeting, 

which directly influences the success of DME projects.

Because the voting members of the SMC, the agency’s senior risk review board, is made up of those who 

served as members of the prior IT Governance Board (i.e., the CIO, Deputy Directors of the Bureau of 

Economics (BE), the Bureau of Competition (BC) and the Bureau of Consumer Protection (BCP); the 

Chief Privacy Officer, the Chief of Staff, the Executive Director) there were no specific transition efforts that 
OTHER INFORMATION

FISCAL YEAR 2017 AGENCY FINANCIAL REPORT

94 FEDERAL TRADE COMMISSION www.ftc.gov

had to be undertaken to move the Governance Board’s functions/responsibilities and on-going projects to 

the broader SMC board that has responsibility for Enterprise Risk Management for the agency. Although 

these IT governance process improvements were not formally presented as a “TechStat,” (although OCIO 

has no objection to conducting such sessions for non-investment changes or issues going forward) these 

changes were presented to, and/or vetted extensively before implementation with, stakeholders throughout 

the agency. The CIO met with and discussed these proposed changes with the Chairman, the IT Governance 

Board members, the SAT, appointed representatives to the newly formed IT Advisory Councils, members 

of the FTC community who attended in In the Know With CIO forums, and others who provide input 

regarding the business risk associated with IT policy revisions and operational and functional changes. 

Finally, OCIO drafted a policy revision to the Administrative Manual reflecting these changes in IT 

governance, which is undergoing final review before publication.

Strategic Planning/Enterprise Architecture

The IRM Strategic Plan, which is targeted for completion in in Q1 FY2018, will supersede the current 

IT Strategy and Transition Plan. The finalization of the agency’s IRM Strategy is a continuation of the 

current IT Strategy, building on progress already made, and will support further improvement in the areas 

of IT governance and planning. The plan will establish a five-year strategy for modernizing the agency’s 

information technology portfolio, proposing a target architecture with a focus on high availability cloud 

environments, increased mobility, and greater emphasis on mission IT needs. In order to capture a cohesive 

agency view, in development of the plan, OCIO has met with Offices and Bureaus across the agency to 

document their needs. Again, while a TechStat was not held on the IRM, the draft IRM Strategic Plan was 

briefed to the responsible PMA/Advisory Council, which recommended it approval by the SMC, which 

approval is pending.

The FTC approach to strategic planning is to focus on the performance outcomes. As a result, FTC is using 

the IRM to drive the decision making on the target Enterprise Architecture and vehicles for IT acquisitions. 

This approach resulted in progress against the current IT Strategy as demonstrated by the completion 

of multi-factor authentication through use of Personal Identity Verification (PIV) for access to the FTC 

network. Progress in this area will continue with multi-factor authentication for regional office staff in 

FY 2018.

Implementation of the IT Strategy requires improvements to the FTC communications infrastructure. To 

begin the process, FTC completed a Network Modernization Business Case Analysis (BCA) in FY 2017. 

The Network Modernization BCA anticipated the user demands of a cloud-based solution set as discussed in 

the IT Strategy, and resulted in a recommendation for upcoming FTC network modernization. In FY 2017, 

the FTC began the development of an Enterprise Architecture (EA) program that aligns with the Federal 

Enterprise Architecture framework. Artifacts for the EA program are currently under development and 

will align IT systems and applications with agency strategic and performance goals, define the current and 

target state for the agency’s IT footprint, and provide a roadmap for future development and modernization. 

These documents will establish the baseline as-is architecture. Efforts so far have focused on areas of greatest 

mission risk and thus have concerned documenting litigation processes through meetings with senior 
OTHER INFORMATION

95

FISCAL YEAR 2017 AGENCY FINANCIAL REPORT

www.ftc.gov FEDERAL TRADE COMMISSION

leadership in BC, BCP, BE, and the Office of the General Counsel. In FY 2018, the FTC plans to complete 

the first round of EA artifacts, further define EA governance processes, integrating security and privacy into 

the overall EA program.

Acquisitions

The planning for, drafting, and issuance of the BPA was the result of intensive, collaborative work by OCIO 

and the Acquisitions Division, with the support of an outside contractor. It involved, among other things, 

significant requirements gathering and market research. The award of the BPA has been delayed, in part, 

due to the large number of proposals received. This is a good problem to have, as this means industry is 

interested in partnering in the FTC modernization effort. Moreover, this should translate into competitive 

pricing and a variety of viable approaches for modernization. The IG’s assertions notwithstanding, the 

agency has not failed to take action to manage risk, while it has accepted the risk pending implementation of 

its modernization plan. In parallel with its work on issuing and awarding the BPA, OCIO, and more broadly 

the agency as a whole, has been reviewing, documenting, and mitigating risks including those IT risks that 

have the potential for impact on mission services. In addition to the weekly review of risk registers described 

above, OCIO is actively cataloging end of life hardware and software, and has established Integrated Project 

Teams (IPTs) to conduct risk assessments on the current state. The IPTs will review and assess the upgrade of 

end of life software and hardware and, based on mission impact and criticality, and will develop project plans 

to mitigate risk that will be integrated in the IRM Strategic Plan monitoring effort.

3. Improving Acquisition Planning and Contract Management

The FTC depends on contractor support to meet its mission needs. In FY 2015, the FTC obligated about 

20 percent of its budget (approximately $60 million) for contracts for goods and services. In FY 2016, the 

FTC obligated about 23 percent of its budget (approximately $70 million) for contracts for goods and 

services, and of which 16 percent of its budget (approximately $50 million) was for non-FTE related IT 

resources. The FTC’s dependence on contractor support will continue to grow, as will the percentage of IT 

resources, as FTC mission requirements expand with an anticipated increase in economic activity.

Given the current economic and budgetary environment, the FTC cannot expect substantial increases in 

funding. It must, therefore, ensure the effective acquisition of quality goods and services that meet its needs. 

Implicit in accomplishing this objective is having consistent, flexible acquisition practices that ensure that 

goods and services are available when needed.

As recognized by the FAR, effective acquisition and management of goods and services requires a team 

approach between the customer with the acquisition requirements – e.g., the FTC’s Bureaus and Offices 

-- and the organizational component responsible for conducting acquisitions and managing contracts -- 

the Financial Management Office (FMO). In addition, within the Federal Government, the agency CIO is 

responsible for ensuring the effective specification and management of information resources.

For more than five years, the OIG has identified deficiencies in IT acquisition planning, project 

management, and contract management. The acquisition planning weaknesses resulted in: 
OTHER INFORMATION

FISCAL YEAR 2017 AGENCY FINANCIAL REPORT

96 FEDERAL TRADE COMMISSION www.ftc.gov

1) poorly-defined contract functional requirements, the lack of enterprise level planning that resulted in 

acquisition of products not appropriately integrating with existing IT capabilities, and the lack of metrics 

with a user or functional focus that could demonstrate whether delivered IT resources met contract 

requirements and user needs; 2) contracts that did not include the requirements and metrics necessary to 

identify poor performance or the tools needed to correct performance issues; and 3) Contracting Officer’s 

Representatives (COR) without the training and resources necessary to identify and properly document and 

resolve poor performance issues.

In FY 2016, the FTC initiated actions to improve the FMO acquisition and contract management processes 

and the OCIO IT Acquisition Planning, Project Management, and Contract Management processes. Many 

of these planned actions have not been in place for a long enough period to allow the OIG to fully assess their 

impact. The summaries below provide the OIG’s assessment of the challenges associated with these initiatives 

as of August 31, 2017.

FMO Acquisition and Contract Management

COR Education

In FY 2016, the FMO agreed to host quarterly COR training. However, the FMO Acquisitions Division 

subsequently determined that quarterly training was not adequate and thereafter instituted bi-monthly COR 

training in February 2016 and expanded training to include maturation of the FTC COR knowledge base, 

as well as to address current, specific needs. The Acquisitions Division also posted a variety of COR resources 

online, including sample documents and Procurement Action Lead Time (PALT) requirements for common 

acquisitions.1

 The use of PALT guidelines should result in more realistic planned acquisition schedules for 

customers to follow and lower schedule risks.

This FMO initiative should have a positive impact on FTC acquisition processing and contract management. 

The FTC’s Blanket Purchase Agreement (BPA) acquisition for Information Technology Services and Support 

(ITSS) is a critical element in the OCIO IT modernization initiative, approved in September 2016. The IT 

Strategy issued at that time assumed that ITSS Task Order awards would commence in the fourth quarter of 

2016, and the ITSS Acquisition Plan issued in February of 2017 stated that any “potential delay will impact 

the FTC’s ability to award task orders which are planned to be competed and awarded under the BPA in 

FY2017.” However, the FTC does not expect to award the ITSS BPA until FY 2018 – a full year beyond 

the initial estimate. Had those involved in planning the ITSS acquisition used the PALT and other COR 

resources, the risk of schedule delay could have been reduced.

Improved Customer Communications

The FMO Acquisitions Division proposed to improve agency acquisitions by improving customer 

communications. For example, the Division is scheduling targeted customer meetings and providing 

liaison support for select customers among the Bureaus and Offices. The FAR recognizes the importance 

1

 PALT is the approximate number of calendar days from the time the contracting officer accepts a complete acquisition package 

to the time of award. Agencies establish PALT guideless, based on acquisition size and complexity that define the categories of acquisitions to which the guidelines apply. PALT guidance also generally specifies what constitutes a complete acquisition package.
OTHER INFORMATION

97

FISCAL YEAR 2017 AGENCY FINANCIAL REPORT

www.ftc.gov FEDERAL TRADE COMMISSION

of participants in the acquisition process working together as a team.2 “The Acquisition Team consists of 

all participants in Government acquisition including not only representatives of the technical, supply, and 

procurement communities but also the customers they serve, and the contractors who provide the products 

and services.” 3

The OIG could not fully assess the impact of the proposed Acquisitions Division changes in FY 2017 

because these changes will not generate measurable results until FY 2018 and beyond.

Revised Policies and Procedures

The OIG welcomes the Acquisitions Division’s continuous review of all FTC policies and procedures to 

ensure consistency with federal regulations and strive for improved acquisitions and contractor management.

IT Acquisition Planning, Project Management, and Contract Management

The OCIO reported taking significant steps to improve its IT acquisition processes. The OIG has not 

had sufficient time to assess the full impact of those actions because most are long-term activities that 

management only began to implement during FY 2016. For example, the CIO established a new Vendor 

and Program Management (VPM) division in March 2016, and significant VPM initiatives were not 

scheduled to start until FY 2017. Thus, VPM has not yet had the opportunity to work with the OCIO 

customer base and the FMO to establish the working relationships, policies, strategies, and practices 

necessary to improve the FTC acquisition planning, project management, and governance.

Continued Progress

In the last year, the FTC has demonstrated its commitment to improve acquisition planning and contract 

management by making changes in many contract acquisition and management areas. Yet, acquisition 

planning and contract management remains a continuing challenge, particularly in regard to improving the 

management of information technology acquisitions and operations, which the Government Accountability 

Office (GAO) includes as a high risk area in its 2017 high-risk report.4

 We will continue monitoring the 

agency’s progress to determine the extent to which the FTC has established an effective framework of 

controls to guide its acquisitions, its COR cadre, and its contract management process.

Agency Progress in Addressing the Challenge

COR Education

COR education continues to be a priority for FMO management and the Senior Procurement Executive 

(SPE). In FY 2017, FMO’s Acquisitions has continued to hold bi-monthly COR training sessions as begun in 

2

 FAR § 1.102(a)(a) The vision for the Federal Acquisition System is to deliver on a timely basis the best value product or service 

to the customer, while maintaining the public’s trust and fulfilling public policy objectives. Participants in the acquisition process 

should work together as a team and should be empowered to make decisions within their area of responsibility.

3

 FAR § 1.102(c). 

4

 GAO 17-317, High-Risk Series: Progress on Many High-Risk Areas, While Substantial Efforts Needed on Others, February 

2017, Improving the Management of IT Acquisitions and Operations.
OTHER INFORMATION

FISCAL YEAR 2017 AGENCY FINANCIAL REPORT

98 FEDERAL TRADE COMMISSION www.ftc.gov

FY 2016. Topics in FY 2017 have included overall COR roles and responsibilities, expert witness contracts, 

the Privacy Office’s Privacy Threshold Analysis, unauthorized commitments and the ratification process, 

COR invoice process training, and an end-of-fiscal-year COR review session. To complement its in person 

training, the Acquisitions Division offers a wide variety of COR resources online for easy access, including 

templates, sample documents, and PALT requirements for the most common acquisitions, including new task 

orders, open market contracts, sole source contracts, and supplies/services contracts through GSA.

Improved Customer Communications

The Acquisitions Division is working to improve the quality of agency acquisitions by continuing to 

improve customer communications via targeted customer meetings and by obtaining new staff to serve as 

acquisition support liaisons for the customers. The SPE customer meetings, initiated in FY 2015, ensure 

standard topics are discussed, and new requirements are being addressed in an agreed-upon priority 

order. The Acquisitions Division also helped ensure timely completion of actions by sending reminders in 

advance of key dates. These improvements strengthened the acquisitions process overall and ensured that all 

acquisitions were completed timely at year-end. 

Additionally, in FY 2017, the Acquisitions Division contracted for three acquisition liaisons, to assist 

program offices by providing hands on guidance about the acquisition process; assisting customers with 

initiating contract actions; ensuring the adequacy of acquisition packages; and ensuring that both the 

Acquisitions Division and the customer maintain transparency and confidence throughout the entire process. 

In this first year, the liaisons have assisted with over 75 contracting actions for the offices within the Office 

of the Executive Director, as well as BC and BCP. As a result of their work, the Acquisitions Division has 

begun to see improvement in the quality in acquisition packages, most notably in requirements definition. 

Customer feedback for the liaisons has been universally positive, and the Acquisitions Division will continue 

offering liaison services into FY 2018.

Revised Policies and Procedures

The SPE will continue reviewing all existing policies and procedures to ensure consistency with the latest 

federal regulations. Additionally, the SPE will continue to identify new policies and procedures that need to be 

issued. In FY 2017, the Acquisitions Division has published substantial revisions to the FTC’s Administrative 

Manual chapter pertaining to Acquisitions. The updated chapter includes detailed descriptions of FTC’s 

elements of an acquisition package, updated roles and responsibilities, a discussion of governmentwide Contracting Officer Representative (COR) training requirements, and a definitions section. The 

Acquisitions Division has also focused on developing policies specifically for acquisitions staff. In FY 2017, 

the Acquisitions Division published over 17 such policies, with additional policies planned for FY 2018. 

Topics of completed policies include market research, documenting small business strategies and awards, 

closeouts, deobligating unliquidated obligations, and formal acquisition plans, among others. Through 

this continuous assessment process, the Acquisitions Division will have standardized policies and procedures 

that will govern contracting actions and provide consistency and efficiency in operation and output of 

the Acquisitions Division, as well as clear guidance for the program offices. Establishment of policies and 
OTHER INFORMATION

99

FISCAL YEAR 2017 AGENCY FINANCIAL REPORT

www.ftc.gov FEDERAL TRADE COMMISSION

procedures is an ongoing effort of continuous review, revision, and tested compliance, as the FAR and 

industry standards are constantly changing.

IT Acquisition Planning, Project Management, and Contract Management

In FY 2017, OCIO’s Strategy and Planning Division (SP) established an approach for managing 

modernization initiatives in an integrated manner. In FY 2018, OCIO plans to extend project management 

practices to non-standard change efforts associated with IT Operations and Maintenance to enable 

integrated visibility, resource allocation, and priority setting across divisions and support vendors to improve 

IT capability, customer service, and vendor performance accountability.

Also, OCIO’s Vendor and Program Management Division (VPM) continues to work with the FMO 

Acquisition Division to award the IT Support Services BPA, the strategic contracting vehicle for 

modernization and sustainment of IT services. The two offices will continue to work closely together to plan 

and execute the transition of legacy services contracts into task orders under the BPA. The planning and 

execution for task order transition will follow PALT guidelines and leverage other COR resources developed 

to reduce schedule delays in the acquisition cycle. The BPA will streamline the IT procurement process and 

enable the FTC to work with vendor partners to acquire and modernize IT services efficiently and effectively.

In FY 2017, the VPM has taken a few important initial steps to improve the efficiency of the requisition and 

procurement process by collaborating closely with other OCIO Offices and the Acquisition Office. VPM 

has taken the central acquisition oversight role by reviewing and approving OCIO acquisitions. VPM has 

developed a single information source that tracks the acquisition status of all OCIO acquisition and works 

with Acquisition Office to share and validate information between the two offices. VPM also serves as liaison 

and the focal point to enhance the efficiency of communication between the two offices. The VPM also 

developed an IT Acquisition Management Guide in September 2017. The guide includes procedures for 

acquisition planning and contract administration for IT contracts. The guide defines process and methods 

for enterprise level IT acquisition planning to ensure alignment with IT strategies and impact to existing IT 

capabilities are considered in an integrated manner. The guide also defines various methods for improving 

contractual requirements, including performance-based requirements, performance standards and metrics, 

end-user oriented outcomes and agile incremental system and service delivery. The guide also established 

management and oversight processes to ensure performance issues are identified, analyzed, and remediated 

timely and effectively. VPM plans to extend its oversight role to include IT acquisitions from all Bureaus 

and Offices. OCIO will continue to evolve and mature its project management approach, particularly as it 

applies to acquisitions.
OTHER INFORMATION

FISCAL YEAR 2017 AGENCY FINANCIAL REPORT

100 FEDERAL TRADE COMMISSION www.ftc.gov

CHAIRMAN’S RESPONSE TO IG-IDENTIFIED CHALLENGES
OTHER INFORMATION

101

FISCAL YEAR 2017 AGENCY FINANCIAL REPORT

www.ftc.gov FEDERAL TRADE COMMISSION

SUMMARY OF FINANCIAL STATEMENT AUDIT AND 

MANAGEMENT ASSURANCES

TABLE 1: SUMMARY OF FINANCIAL STATEMENT AUDIT

Audit Opinion Unmodified

Restatement Yes

Material Weaknesses Beginning 

Balance New Resolved Consolidated Ending Balance

The FTC did not record interim 

receivership accounts receivable 1 0 1 0 0

Total Material Weaknesses 1 0 1 0 0

TABLE 2: SUMMARY OF MANAGEMENT ASSURANCES

Effectiveness of Internal Control Over Financial Reporting 

(Federal Managers’ Financial Integrity Act (FMFIA) Para. 2

Statement of Assurance Unmodified

Material Weaknesses Beginning 

Balance New Resolved Consolidated Reassessed Ending Balance

0 0 0 0 0 0

Total Material Weaknesses 0 0 0 0 0 0

Effectiveness of Internal Control Over Operations (FMFIA Para. 2

Statement of Assurance Unmodified

Material Weaknesses Beginning 

Balance New Resolved Consolidated Reassessed Ending Balance

0 0 0 0 0 0

Total Material Weaknesses 0 0 0 0 0 0

Conformance with Financial Management System Requirements (FMFIA Para. 4

Statement of Assurance Systems conform to financial management system requirements

Non-Conformances Beginning 

Balance New Resolved Consolidated Reassessed Ending 

Balance

0 0 0 0 0 0

Total Non-Conformances 0 0 0 0 0 0
OTHER INFORMATION

FISCAL YEAR 2017 AGENCY FINANCIAL REPORT

102 FEDERAL TRADE COMMISSION www.ftc.gov

THE IMPROPER PAYMENTS ELIMINATION AND RECOVERY 

IMPROVEMENT ACT REPORTING DETAILS

•	 The program or activity was recently initiated 

at the agency

•	 The volume of payments made annually

•	 Results from prior improper payment work

The Improper Payments Elimination and Recovery 

Improvement Act (IPERIA) of 2012 requires agencies to 

annually report on all programs and activities, identify 

those that may be susceptible to significant improper 

payments, estimate annual improper payments in the 

susceptible programs and activities, and report the results 

of their improper payment activities. In accordance 

with the OMB A-123 Appendix C guidance, the FTC 

performed a FY 2015 risk assessment for nine payment 

processes including payroll, procurement, redress 

payments to consumers, travel, purchase card, premerger 

filing fee refunds, training, and two miscellaneous 

payment processes. Each payment program was defined 

by its own internal control framework. The FTC 

evaluated each payment program over $1 million using 

the following qualitative risk factors identified in OMB 

Circular A-123 Appendix C:

•	 The relative complexity of the program or 

activity operation

•	 The extent and significance of recent changes 

in the program that may be reason for improper 

payment in funding, authorities, practices and 

procedure

•	 The level, experience, and quality of training 

for personnel responsible for program eligibility 

determination or certifying that payments are 

accurate

•	 The inherent risks of improper payments due to 

the nature of programs or operation

•	 Known control deficiencies (i.e., reported by 

OIG, or GAO) that might hinder accurate 

payment certification

The FTC also performed a quantitative risk assessment 

and assessed risks related to the amounts of payments 

processed relative to the OMB specified threshold 

amounts that define payment programs susceptible to 

improper payments.

As a result of the risk assessment, the FTC determined 

that the agency’s programs and activities presented 

low risk of improper payments and that none of the 

agency’s programs or activities were determined to 

be susceptible to significant improper payments and 

a payment recapture audit is not cost effective. In 

addition to the risk assessment of all payment processes, 

the Interior Business Center (IBC), the FTC’s shared 

service provider, compares the FTC’s payee records in 

the financial system with payee records in the Do Not 

Pay databases. To prevent improper payments, the FTC 

reviews potential matches on an on-going basis and 

incorporates a pre-award check on potential contractors 

against the Do Not Pay databases. In 2015, the FTC 

performed and documented testing of statistical samples 

from larger payment processes to verify that the FTC 

payment programs are not susceptible to significant 

improper payments. Per OMB guidance and the result 

of FY 2015 IPERIA risk assessments, no assessment was 

conducted during FY 2017 and the next is scheduled for 

FY 2018.
OTHER INFORMATION

103

FISCAL YEAR 2017 AGENCY FINANCIAL REPORT

www.ftc.gov FEDERAL TRADE COMMISSION

THE IMPROPER PAYMENTS ELIMINATION AND RECOVERY 

IMPROVEMENT ACT REPORTING DETAILS (CONTINUED)

Number (#) 

of Payments 

Reviewed 

for Possible 

Improper 

Payments

Dollars ($) 

of Payments 

Reviewed 

for Possible 

Improper 

Payments

Number 

(#) of 

Payments 

Stopped

Dollars ($) 

of Payments 

Stopped

Number (#) of 

Potential Improper 

Payments 

Reviewed and 

Determined 

Accurate

Dollars ($)

of Potential 

Improper 

Payments 

Determined 

Accurate

Reviews with 

the IPERIA 

specified 

databases

8,594 $ 754.1M 0 $ 0.00 0 $ 0.00

Reviews with 

databases not 

listed in IPERIA

0 $ 0.00 0 $ 0.00 0 $ 0.00

All payments are screened by the Do Not Pay databases including the Death Master File, the System for Award 

Management, the Debt Check Database of the Department of the Treasury (Debt Check), the Credit Alert System 

or Credit Alert Interactive Voice Response System of the Department of Housing and Urban Development, the List 

of Excluded Individuals/Entities of the Office of the Inspector General of the Department of Health and Human 

Services, and the Prisoner Update Processing System of the Social Security Administration. 

More information on Improper Payments can be found at https://paymentaccuracy.gov/.

“REDUCE THE FOOTPRINT” IMPLEMENTATION

The Federal Trade Commission is committed to reducing the total square footage of its office and warehouse inventory 

relative to the established FY 2015 baseline in accordance with Section 3 of the Office of Management and Budget 

(OMB) Memorandum 12-12, Promoting Efficient Spending to Support Agency Operations: Reduce the Footprint.

Reduce the Footprint 

Baseline Comparison

FY 2015

Baseline FY 2017 Change 

(FY 2015 Baseline - FY 2017)

Rentable Square Footage 611,407 612,231 824 

Total square footage increased less than 1% in FY 2017 

from the FY 2015 baseline year due to a move from 

commercially owned to Federally owned space in 

Chicago, providing increased safety and better utilization 

of space. In FY 2018, the FTC will complete a move to 

new smaller space for the Los Angeles regional office. 

The FTC is also exploring relocation or downsizing of its 

warehouse location in FY 2018. The new warehouse and 

Los Angeles space is expected to reduce the agency’s total 

footprint compared to the FY 2015 baseline year, which 

is consistent with Section 3, OMB M-12-12. 

FTC renovations aim to utilize space and energy in 

the most efficient manner possible in all buildings it 

occupies. The FTC continues to identify opportunities 

to reduce total square footage for consideration in future 

budget years while carrying out its mission. 

The FTC has no buildings that meet the requirements to 

report operations and maintenance costs. 
OTHER INFORMATION

FISCAL YEAR 2017 AGENCY FINANCIAL REPORT

104 FEDERAL TRADE COMMISSION www.ftc.gov

FRAUD REDUCTION REPORT

The Fraud Reduction and Data Analytics Act of 2015 

requires Federal agencies to report on their effort to 

establish financial and administrative controls and 

implement the fraud risk principle in the Standards 

for Internal Control in the Government, and Office of 

Management and Budget (OMB) Circular A-123 with 

respect to leading practices for managing fraud risk. In 

addition, agencies are required to report identified fraud 

risks and vulnerabilities.

The financial and administrative controls require 

agencies to conduct an evaluation of fraud risks using 

a risk-based approach to design and implement control 

activities that prevent, detect, and respond to fraud.

It also requires the analytics of detected fraud and 

the results of monitoring, evaluating, auditing, and 

investigating fraud to monitor trends and improve fraud 

prevention controls.

During 2017, the FTC performed various activities to 

identify, assess, evaluate and respond to fraud risks. The 

FTC’s management has developed and implemented 

a three-year cycle internal control assessment plan in 

accordance with the OMB Circular A-123, Management 

Responsibilities for Enterprise Risk Management and 

Internal Controls.

Each year, based on a set of qualitative and quantitative 

criteria, the plan considers fraud risks using a risk-based 

approach when determining the review of assessable 

units deemed material to the agency.

The GAO’s Standards for Internal Control requires 

management to consider potential for fraud when 

identifying, analyzing, and responding to risks. The 

GAO framework outlines concepts for management 

to commit to combating fraud, assessing fraud risks, 

designing and implementing control activities to 

mitigate assessed fraud risks, and evaluating results 

and adapting control activities to improve fraud risk 

management.

The FTC implemented an agency-wide Enterprise Risk 

Management (ERM) process that considered the GAO 

Standards for Internal Controls for developing a risk 

based approach to identify, assess, evaluate and mitigate 

internal and external risks to the agency, including risk of 

fraud. In addition to the reviews performed at the level 

of the assessable units, the FTC conducted two agency 

level initiatives to address fraud risk, reinforcing its 

commitment to prevent, detect and respond to fraud risk 

during an annual assessment of entity level controls. 

During FY 2017, as part of the internal control program, 

fraud risk was assessed and tested for the Premerger 

Revenue Process, Purchase Card Management, Do Not 

Call Registry Fees Process, and cash management as 

well as those risks associated with financial reporting, 

compliance with laws and regulations, and operational 

effectiveness. Each included the review of GAO and IG 

audits and reports.

In addition, management ensured the following to create 

an organizational culture and structure conducive to 

fraud risk management.

•	 All new employees received an ethics 

orientation that included Standards of Conduct

•	 Annual training for FTC leadership

•	 Establishment of an agency senior ethics official

•	 Filing and review of annual financial disclosure 

•	 Disciplinary guidance for employee wrongdoing 

to include committing fraud

When fraud vulnerabilities and control weaknesses 

are identified, the FTC’s management develops and 

implements corrective actions plans to monitor and 

verify that controls are achieving intended results. 

Management monitors the successful completion of 

the corrective actions and reports progress to the Senior 

Assessment Team on a monthly basis to both mitigate 

fraud risks and strengthen management’s knowledge and 

accountability to reduce the FTC’s fraud risk.

During FY 2017, the FTC’s management did not have 

knowledge of fraud or suspected fraud.
OTHER INFORMATION

105

FISCAL YEAR 2017 AGENCY FINANCIAL REPORT

www.ftc.gov FEDERAL TRADE COMMISSION

CIVIL MONETARY PENALTY ADJUSTMENT FOR INFLATION

The Federal Civil Penalties Inflation Adjustment Act of 1990, as amended by the Federal Civil Penalties Inflation 

Adjustment Act Improvements Act of 2015, requires agencies to make regular and consistent inflationary adjustments 

of civil monetary penalties to maintain their deterrent effect. 

Statutory 

Authority 

Penalty 

(Name or 

Description)

Year 

Enacted

Latest year of 

adjustment 

(via statute or 

regulation)

Current 

Penalty Level 

($ Amount or 

Range)

SubAgency/ 

Bureau/

Unit

Location 

for Penalty 

Update 

Details

The Clayton Act Section 

7A(g)(1) 

15 U.S.C. 18a(g)(1)

Premerger filing 

notification 

violations

1976 January 24, 2017 $ 40,654 BC Federal Register 

Vol. 82, January 

24, 2017, Pages 

8135-8137

The Clayton Act Section 

11(l)

15 U.S.C. 21(l)

Violations of cease 

and desist orders

1959 January 24, 2017 $ 21,958 BC Federal Register 

Vol. 82, January 

24, 2017, Pages 

8135-8137

The FTC Act Section 5(l)

15 U.S.C. 45(l)

Unfair or deceptive 

acts or practices

1973 January 24, 2017 $ 40,654 BC and 

BCP

Federal Register 

Vol. 82, January 

24, 2017, Pages 

8135-8137

The FTC Act Section 5(m)

(1)(A)

15 U.S.C. 45(m)(1)(A)

Unfair or deceptive 

acts or practices

1975 January 24, 2017 $ 40,654 BC and 

BCP

Federal Register 

Vol. 82, January 

24, 2017, Pages 

8135-8137

The FTC Act Section 5(m)

(1)(B)

15 U.S.C. 45(m)(1)(B)

Unfair or deceptive 

acts or practices

1975 January 24, 2017 $ 40,654 BC and 

BCP

Federal Register 

Vol. 82, January 

24, 2017, Pages 

8135-8137

The FTC Act Section 10

15 U.S.C. 50

Failure to file 

required reports

1914 January 24, 2017 $ 534 BC and 

BCP

Federal Register 

Vol. 82, January 

24, 2017, Pages 

8135-8137

The Webb-Pomerene 

(Export Trade) Act

Section 5 

15 U.S.C. 65

Failure to 

file required 

statements

1918 January 24, 2017 $ 534 BC Federal Register 

Vol. 82, January 

24, 2017, Pages 

8135-8137

The Wool Products 

Labeling Act Section 6(b)

15 U.S.C. 68d(b)

Failure to maintain 

required records 

1940 January 24, 2017 $ 534 BCP Federal Register 

Vol. 82, January 

24, 2017, Pages 

8135-8137

The Fur Products Labeling 

Act Section 3(e)

15 U.S.C. 69a(e)

Failure to maintain 

required records 

1951 January 24, 2017 $ 534 BCP Federal Register 

Vol. 82, January 

24, 2017, Pages 

8135-8137

The Fur Products Labeling 

Act Section 8(d)(2)

15 U.S.C. 69f(d)(2)

Failure to maintain 

required records

1951 January 24, 2017 $ 534 BCP Federal Register 

Vol. 82, January 

24, 2017, Pages 

8135-8137
OTHER INFORMATION

FISCAL YEAR 2017 AGENCY FINANCIAL REPORT

106 FEDERAL TRADE COMMISSION www.ftc.gov

CIVIL MONETARY PENALTY ADJUSTMENT FOR INFLATION 

(CONTINUED)

Statutory 

Authority 

Penalty 

(Name or 

Description)

Year 

Enacted

Latest year of 

adjustment 

(via statute or 

regulation)

Current 

Penalty Level 

($ Amount or 

Range)

SubAgency/ 

Bureau/

Unit

Location 

for Penalty 

Update 

Details

The Energy Policy and 

Conservation Act

Section 333(a) 

42 U.S.C. 6303(a)

Knowing violations 1975 January 24, 2017 $ 440 BCP Federal Register 

Vol. 82, January 

24, 2017, Pages 

8135-8137

The Energy Policy and 

Conservation Act

Section 525(a) 

42 U.S.C. 6395(a)

Recycled oil 

labeling violations

1975 January 24, 2017 $ 21,598 BCP Federal Register 

Vol. 82, January 

24, 2017, Pages 

8135-8137

The Energy Policy and 

Conservation Act

Section 525(b) 

42 U.S.C. 6395(b)

Willful violations 1975 January 24, 2017 $ 40,654 BCP Federal Register 

Vol. 82, January 

24, 2017, Pages 

8135-8137

The Fair Credit Reporting 

Act Section 621(a)(2)

15 U.S.C. 1681s(a)(2)

Knowing violations 1996 January 24, 2017 $ 3,817 BCP Federal Register 

Vol. 82, January 

24, 2017, Pages 

8135-8137

The Medicare Prescription 

Drug, Improvement, and 

Modernization Act of 

2003 Public Law 108-173 

Section 1115(a) 

21 U.S.C. 355 note

Non-compliance 

with filing 

requirements

2003 January 24, 2017 $ 14,373 BC Federal Register 

Vol. 82, January 

24, 2017, Pages 

8135-8137

The Energy Independence 

and Security Act of 2007 

Section 814(a) 

42 U.S.C. 17304

Market 

manipulation or 

provision of false 

information to 

federal agencies

2007 January 24, 2017 $ 1,156,953 BC Federal Register 

Vol. 82, January 

24, 2017, Pages 

8135-8137

GRANTS OVERSIGHT & NEW EFFICIENCY (GONE) ACT

Per OMB Management Procedures Memorandum 2016-04, the GONE Act reporting requirements apply to agencies 

that award grants or cooperative agreements. As the FTC does not award grants or cooperative agreements, the 

reporting requirements do not apply.
FISCAL YEAR 2017

APPENDICES
FEDERAL TRADE COMMISSION
APPENDICES

109

FISCAL YEAR 2017 AGENCY FINANCIAL REPORT

www.ftc.gov FEDERAL TRADE COMMISSION

APPENDIX A: 

DATA QUALITY INFORMATION

STRATEGIC GOAL 1: PROTECT 

CONSUMERS

OBJECTIVE 1.1 IDENTIFY AND TAKE 

ACTIONS TO ADDRESS DECEPTIVE 

OR UNFAIR PRACTICES THAT HARM 

CONSUMERS.

Performance Goal 1.1.3: Total consumer savings 

compared to the amount of FTC resources allocated to 

consumer protection law enforcement.

Definition and background: This measure tracks how 

much money the FTC’s law enforcement efforts save 

consumers each year. The FTC has found that typically 

when it files a complaint in federal district court and 

obtains a court order, the defendants stop their practices. 

If they fail to comply with an order, they are subject to 

contempt proceedings. By stopping these practices, the 

agency directly prevents further consumer losses caused 

by these defendants.

Calculation/Formula: The sum of the estimated 

consumer savings generated and the amount of money 

the FTC returned to consumers, divided by the 

amount of resources spent on consumer protection 

law enforcement for the current fiscal year. Resources 

spent on the Consumer and Business Education and 

Economics and Consumer Policy functions are excluded 

from the base.

Data sources: To make dollar value assessments, 

staff uses company sales and other records, as well as 

information from employees and customers, where 

applicable. BCP case managers derive the amount 

of economic injury to consumers by estimating the 

consumer loss due to fraudulent, deceptive, or unfair 

practices in the 12 months prior to the FTC’s first 

contact with the defendants or by dividing the estimated 

total economic injury by the amount of time the 

defendants’ business operated to derive an annualized 

estimate of consumer savings. The measure also includes 

instances wherein, as a result of FTC staff action directed 

specifically at a business, that business stops its allegedly 

unfair or deceptive practices. After the completion of a 

case, staff reports the estimated dollar value of consumer 

loss in the Debrief in the Redress and Enforcement 

Database. If staff has not completed the Debrief or 

provided the required information, staff is surveyed by 

email. See goal 1.1.4 for more information about the 

total amount of money returned to consumers.

Verification and validation: The consumer savings by 

case are maintained in a spreadsheet by BCP staff. The 

spreadsheet is reviewed quarterly by headquarters and 

regional office management to verify the accuracy of the 

report and to ensure that all applicable cases are included 

in the report.

Data limitations: The calculation does not perfectly 

estimate the agency’s impact because it assumes that the 

challenged business practices would have continued for 

only one more year and it ignores the deterrent effect of 

FTC enforcement.

Performance Goal 1.1.4: Amount of money the FTC 

returned to consumers and forwarded to the U.S. 

Treasury.

Definition and background: The amount of money 

includes the sum of redress checks cashed by consumers, 

and all other amounts of money collected from 

defendants and forwarded to the U.S. Treasury.

Calculation/Formula: Sum of redress checks cashed 

by consumers, the amount of residual redress money or 

defendants’ disgorged profits that are forwarded to the 

U.S. Treasury, and the amount of civil penalties collected 

that are also forwarded to the U.S. Treasury.
APPENDICES

FISCAL YEAR 2017 AGENCY FINANCIAL REPORT

110 FEDERAL TRADE COMMISSION www.ftc.gov

Data sources: The redress data is based on sub-ledger 

reports from the agency’s Financial Management Office 

(FMO), redress contractor reports, and matter bank 

statements. The civil penalty data is summarized in a 

spreadsheet maintained by BCP staff in the Division of 

Consumer Response and Operations (DCRO).

Verification and Validation: 

•	 The Redress Administration Office (RAO) 

in DCRO reconciles monthly activity reports 

submitted by the redress contractors and FMO 

with matter bank statements.

•	 RAO reconciles the monthly FMO sub-ledger 

with the redress status of each individual 

matter.

•	 BCP budget staff reconciles the civil penalty 

spreadsheet with a separately maintained 

spreadsheet that includes a list of all civil 

penalty orders in the current fiscal year. BCP 

budget staff also reconciles the civil penalty 

spreadsheet with data maintained by FMO 

and with memos received by the Department 

of Justice, which contain copies of the checks 

and electronic fund transfers for civil penalty 

disgorgements.

Data Limitations: The amount of money is not a 

perfect measure of the effectiveness of the agency’s 

work protecting consumers. If the FTC steps in and 

stops scams in their incipiency, there is less injury and 

therefore less redress provided in those situations but 

consumers are undoubtedly better off. Also, the amount 

of money returned/forwarded to the U.S. Treasury may 

depend on the amount of money the defendants have to 

satisfy the judgment.

OBJECTIVE 1.2 PROVIDE THE PUBLIC 

WITH KNOWLEDGE AND TOOLS TO 

PREVENT HARM TO CONSUMERS.

Performance Goal 1.2.2: Number of federal, state, local, 

international, and private partnerships to maximize the 

reach of consumer and business education campaigns.

Definition and background: This measure helps 

determine the extent to which the FTC’s education tools 

reach consumers through partnerships with federal, 

state, local, international, and private organizations. 

These organizations work as partners with the FTC 

by distributing these materials to their clients and 

customers. BCP maximizes its reach to consumers and 

businesses by providing free bulk quantities of education 

materials via an online order system.

Data sources: The data is compiled from the number 

of organizations ordering consumer and/or business 

education materials for distribution. This data comes 

from the database of customer orders.

Verification and validation: The data for organizations 

disseminating materials is obtained from the data 

file generated by the FTC’s online order site for bulk 

quantities of publications. That information is filtered 

to include only orders by organizations – not individuals 

– and duplicates are excluded. The result is a list of 

unique organizations that ordered the FTC’s education 

publications for dissemination to consumers and 

businesses.

Data limitations: The data is compiled from customer 

input via the online order website. If customers fail to 

enter an organization name, they are not included in this 

measure, which could result in under reporting. There is 

no feasible workaround to mitigate this limitation.

OBJECTIVE 1.3 – COLLABORATE WITH 

DOMESTIC AND INTERNATIONAL 

PARTNERS TO ENHANCE CONSUMER 

PROTECTION.

Performance Goal 1.3.2: Number of investigations or 

cases in which the FTC obtained foreign-based evidence 

or information or engaged in other mutual assistance 

that contributed to FTC law enforcement actions, or in 

which the FTC cooperated with foreign agencies and/or 

multilateral organizations on enforcement matters.
APPENDICES

111

FISCAL YEAR 2017 AGENCY FINANCIAL REPORT

www.ftc.gov FEDERAL TRADE COMMISSION

Definition and background: This measure tracks 

investigations or cases in which the FTC obtains 

foreign-based evidence; engages in mutual assistance 

that contributed to FTC law enforcement actions; or in 

which the FTC cooperates with foreign agencies and/or 

multilateral organizations on enforcement matters.

Data sources: Office of International Affairs (OIA) 

weekly reports and internal tracking sheets.

Verification and validation: Consumer protection 

team members report matters they worked on in which 

information was shared. Staff reviews and compiles the 

matters reported. Managers review these matters to 

ensure that they qualify as part of the measure and have 

not been previously counted.

Data limitations: Review is necessary to avoid double 

counting of particular matters.

STRATEGIC GOAL 2: MAINTAIN 

COMPETITION

OBJECTIVE 2.1 – IDENTIFY AND 

TAKE ACTIONS TO ADDRESS 

ANTICOMPETITIVE MERGERS AND 

PRACTICES THAT HARM CONSUMERS.

Performance Goal 2.1.1: Percentage of actions taken 

to maintain competition in substantial merger and 

nonmerger investigations.

Definition and background: This measure ensures 

that FTC actions promote vigorous competition by 

preventing anticompetitive mergers and stopping 

business practices that diminish competition. This 

measure reflects actions to promote competition, 

including litigated victories, consent orders, abandoned 

transactions, or restructured transactions (either 

through a fix-it-first approach or through restructuring) 

in a significant percentage of substantial merger and 

nonmerger investigations.

Calculation/Formula: The measure is calculated 

by taking the number of substantial investigations 

concluded with an action (as described in the definition 

above) divided by the total number of substantial 

investigations closed.

Data sources: To ensure consistent reporting within the 

Bureau of Competition (BC), the FTC’s press releases 

are the primary source of information for public actions, 

such as consent orders and judicial review outcomes. 

Internal communications from staff attorneys are used 

to identify those investigations that were closed because 

parties abandoned a transaction or because staff did not 

find the transaction likely to harm competition. This 

information is then used to populate BC’s enforcement 

database. It is cross-referenced with both the list of 

known second request and compulsory process merger 

investigations as recorded in the agency’s matter tracking 

database and the list of nonmerger investigations with 

more than 150 hours, as identified using the agency’s 

staff time reporting system.

Verification and validation: The data is entered into a 

BC database by staff and reviewed monthly by analysts, 

attorneys, economists, and senior management.

Data limitations: This measure does not include actions 

that are still in litigation or on appeal.

Performance Goal 2.1.3: Total consumer savings 

compared to the amount of FTC resources allocated to 

the merger program.

Definition and background: This measure ensures that 

the FTC’s actions are in part guided by the requirement 

that estimated consumer savings exceed how much is 

spent on the merger program.

Calculation/Formula: Estimated consumer savings 

generated under goal 2.1.2 are divided by the amount of 

resources spent on the merger program for the current 

fiscal year. When available, case-specific data is used to 

generate the estimate of consumer savings. Otherwise, 

staff uses a formula of three percent of the volume of 

commerce of the relevant product market(s) for two 

years.
APPENDICES

FISCAL YEAR 2017 AGENCY FINANCIAL REPORT

112 FEDERAL TRADE COMMISSION www.ftc.gov

Data sources: The lead attorney estimates consumer 

savings for a particular case using the applicable 

estimation formula and submits it to BE for 

concurrence. The FTC’s financial system provides the 

amount of resources expended on the merger program.

Verification and validation: The data is entered into a 

BC database by staff and reviewed monthly by analysts, 

attorneys, economists, and senior management.

Data limitations: The data is dependent on the 

estimates of consumer savings made by staff in 

accordance with the applicable estimation formulas. 

Additionally, a five-year average is used because an 

individual year may be heavily influenced by significant 

cases in that year. 

Performance Goal 2.1.5: Total consumer savings 

compared to the amount of FTC resources allocated to 

the nonmerger program.

Definition and background: This measure ensures that 

the FTC’s actions are in part guided by the requirement 

that estimated consumer savings exceed how much is 

spent on the nonmerger program.

Calculation/Formula: This measure is calculated by 

taking the estimated consumer savings generated under 

goal 2.1.4 divided by the amount of resources spent on 

the nonmerger program. When available, case-specific 

data is used to generate the estimate of consumer savings. 

Otherwise, staff uses a formula of one percent of the 

volume of commerce of the relevant product market(s) 

for one year.

Data sources: The lead attorney estimates consumer 

savings for a case using the applicable estimation 

formula and submits it to BE for concurrence. The 

FTC’s financial system provides the amount of resources 

expended on the nonmerger program.

Verification and validation: The data is entered into a 

BC database by staff and reviewed monthly by analysts, 

attorneys, economists, and senior management.

Data limitations: The data is dependent on the 

estimates of consumer savings made by staff in 

accordance with the applicable estimation formulas. 

Additionally, a five-year average is used because an 

individual year may be heavily influenced by significant 

cases in that year. 

OBJECTIVE 2.3 – COLLABORATE WITH 

DOMESTIC AND INTERNATIONAL 

PARTNERS TO PRESERVE AND PROMOTE 

COMPETITION.

Performance Goal 2.3.1: Percentage of FTC cases 

involving at least one substantive contact with a foreign 

antitrust authority in which the agencies followed 

consistent analytical approaches and reached compatible 

outcomes.

Definition and background: This measure tracks 

the number of cases in which at least one substantive 

contact has taken place and where, in the judgment 

of OIA management, consistent analytical approaches 

were observed, compared with the total number of 

cases. The phrase “reached compatible outcomes” 

means that the reviewing agencies’ remedial measures 

are not inconsistent; professional judgment from OIA 

senior management is used to make a final decision on 

compatibility for FTC measurement purposes.

Calculation/Formula: Number of cases where a foreign 

antitrust authority or agency followed consistent 

analytical approaches and reached compatible outcomes 

as a percentage of the total number of cases the FTC has 

at least one substantive contact.

Data sources: OIA weekly reports and internal logs.

Verification and validation: International antitrust 

team members report matters they worked on in which 

substantial contact took place. Staff reviews and compiles 

the matters reported, as overseen by an international 

antitrust attorney. Managers review and ensure that the 

matters reported qualify for the measure.

Data limitations: Review is necessary to ensure that the 

matters reported included substantive contact with a 

foreign antitrust authority.
APPENDICES

113

FISCAL YEAR 2017 AGENCY FINANCIAL REPORT

www.ftc.gov FEDERAL TRADE COMMISSION

STRATEGIC GOAL 3: ADVANCE 

ORGANIZATIONAL PERFORMANCE

OBJECTIVE 3.1 – OPTIMIZE RESOURCE 

MANAGEMENT AND INFRASTRUCTURE

Performance Goal 3.1.4: Average number of days for 

the FTC to release information in response to a simple 

FOIA request.

Definition and background: The FTC receives a 

number of requests that upon initial review appear to 

be requests the agency can fulfill quickly. For example, 

a number of consumers file identity theft complaints or 

a complaint against a company they believe has engaged 

in bad acts and then request copies of the complaint 

submitted to the FTC. Responding to these requests 

is fairly simple and straightforward, and the requests 

represent a strong percentage of the types of requests 

the agency fills. The performance goal metric presented 

tracks the agency’s response time to process a simple 

perfected FOIA request for access to agency records. The 

agency also keeps track of a number of other metrics on 

an annual basis, including: the FTC’s response time for 

complex and expedited requests; steps that the FTC has 

taken to make its response system effective; steps taken 

to increase proactive disclosures; steps taken to decrease 

the FTC’s backlog and improve timeliness in responding 

to requests, and other measures. 

Calculation/Formula: Sum of the number of business 

days to process each perfected simple request divided by 

the total number of perfected simple requests processed.

Data sources: All of the FOIA requests that the FTC 

receives are logged into and processed through a software 

application called FOIAXpress. FOIAXpress is one of the 

electronic systems that various agencies use to track their 

FOIA requests and responses.

Verification and validation: Generally, under the 

Freedom of Information Act, an agency has 20 business 

days to respond to each request. When the FOIA Unit 

receives a request for records under the FOIA, the 

request is logged into FOIAXpress and automatically 

assigned a unique tracking number. If the request 

reasonably describes the records sought and complies 

with the agency’s regulations for making requests, the 

request is considered “perfected.” Additionally, based on 

the nature, volume and urgency to inform the public of 

the records sought, the request is categorized as “simple”, 

“complex” or “expedited.” Once these standards are met 

and the request is properly categorized, the 20-business 

day clock begins to run for processing the request. 

FOIAXpress automatically counts the number of days it 

takes for the agency to process all FOIA requests.

Data limitations: Occasionally, when the agency 

upgrades FOIAXpress, the upgrade does not proceed 

smoothly and the agency has to repeat processing steps 

that have already occurred. This may add days to process 

simple perfected requests.

OBJECTIVE 3.2 – CULTIVATE A HIGHPERFORMING, DIVERSE, AND ENGAGED 

WORKFORCE.

Performance Goal 3.2.2: The extent employees 

believe the FTC has the talent necessary to achieve 

organizational goals.

Definition and background: This measure gauges the 

extent employees think the organization has the talent 

necessary to achieve organizational goals so that the FTC 

has a strong foundation of organizational, individual, 

and management excellence driving mission success.

Data sources: The Federal Employee Viewpoint Survey 

(FEVS) Talent Management Index is the data source. 

The FEVS is administered annually by the U.S. Office of 

Personnel Management (OPM). It is a tool that measures 

employees’ perceptions of whether, and to what extent, 

conditions that characterize successful organizations are 

present. The survey was conducted for the first time in 

2002 as the Federal Human Capital Survey. Originally, 

OPM administered the survey in even years and agencies 

administered their own equivalent survey in odd 

years. In 2010 it was renamed the “Federal Employee 

Viewpoint Survey,” which is now administered each year. 

The FEVS is a tool that measures employees’ perceptions 
APPENDICES

FISCAL YEAR 2017 AGENCY FINANCIAL REPORT

114 FEDERAL TRADE COMMISSION www.ftc.gov

of whether, and to what extent, conditions characterizing 

successful organizations are present in their agencies. 

Survey results provide valuable insight into the challenges 

agency leaders face in ensuring the Federal Government 

has an effective civilian workforce. The most recent 

survey was conducted in 2017 and OPM transmits the 

agency results to the FTC’s Human Capital Management 

Office.

Calculation/Formula: N/A

Verification and validation: Data collected is weighted 

by statisticians to produce survey estimates that 

accurately represent the survey population and adjust 

for differences between the characteristics of the survey 

respondents and the population of federal employees 

surveyed. The weights developed take into account the 

variable probabilities of selection across sample domains, 

nonresponse, and known demographic characteristics of 

the survey population.

Data limitations: The survey results represent a 

snapshot in time of the perceptions of the workforce. 

The government-wide results have a plus or minus 1 

percent margin of error.
APPENDICES

115

FISCAL YEAR 2017 AGENCY FINANCIAL REPORT

www.ftc.gov FEDERAL TRADE COMMISSION

APPENDIX B: 

ACRONYMS

Acronym Definition

ACTH Adrenocorticotropic Hormone 

AFR Agency Financial Report 

APP Annual Performance Plan 

APR Annual Performance Report 

BC Bureau of Competition 

BCA Business Case Analysis

BCP Bureau of Consumer Protection 

BE Bureau of Economics 

BPA Blanket Purchase Agreement

CAP Cross-Agency Priority 

CIGIE Counsel of the Inspectors General on Integrity and Efficiency 

CIO Chief Information Officer

COPPA Children’s Online Privacy Protection Act 

COR Contracting Officer’s Representative 

CPIC Capital Planning and Investment Control

CSRS Civil Service Retirement System 

DCRO Division of Consumer Response and Operations 

DHS Department of Homeland Security 

DNC Do Not Call 

DOJ Department of Justice 

DOL Department of Labor 

EFT Electronic Funds Transfer 

ERM Enterprise Risk Management 

FAR Federal Acquisition Regulations 

FASAB Federal Accounting Standards Advisory Board 

FBwT Fund Balance with Treasury 

FECA Federal Employees’ Compensation Act 

FEVS Federal Employee Viewpoint Survey

FedRAMP Federal Risk and Authorization Management Program 

FEGLIP Federal Employees’ Group Life Insurance Program 

FEHBP Federal Employees’ Health Benefit Program 

FERS Federal Employees’ Retirement System 

FERS-FRAE Federal Employees’ Retirement System – Further Revised Annuity Employees

FERS-RAE Federal Employees’ Retirement System – Revised Annuity Employees

FISMA Federal Information Security Management Act 

FMFIA Federal Managers’ Financial Integrity Act 

FMO Financial Management Office 

FOIA Freedom of Information Act 
APPENDICES

FISCAL YEAR 2017 AGENCY FINANCIAL REPORT

116 FEDERAL TRADE COMMISSION www.ftc.gov

Acronym Definition

FPPS Federal Personnel/Payroll System 

FTC Federal Trade Commission 

FTE Full-Time Equivalent 

FY Fiscal Year 

GAAP Generally Accepted Accounting Principles 

GAO Government Accountability Office 

GSA General Services Administration 

HSR Hart-Scott-Rodino Act 

IBC Department of the Interior Business Center

IG Inspector General 

IP Intellectual Property 

IPERIA Improper Payments Elimination and Recovery Improvement Act 

IPP Invoice Processing Platform

IT Information Technology 

N/A Not Applicable or Not Available 

NIST National Institute of Standards and Technology 

OBIA Oracle Business Intelligence Application 

OBIEE Oracle Business Intelligence Enterprise Edition 

OCIO Office of the Chief Information Officer 

OFF Oracle Federal Financials 

OIA Office of International Affairs 

OIG Office of Inspector General 

OMB Office of Management and Budget 

OPM Office of Personnel Management 

OTC Over-the-counter

PAE Patent Assertion Entity 

PALT Procurement Administrative Lead Time

PIO Performance Improvement Officer 

PIV Personal Identity Verification

PMRO Performance Measure Reporting Official 

PP&E Property, Plant, and Equipment 

RAO Redress Administration Office 

SAT Senior Assessment Team 

SBR Statement of Budgetary Resources 

SFFAS Statement of Federal Financial Accounting Standard

SMC Senior Management Council

SSAE Statement on Standards for Attestation Engagements 

TAS Treasury Account Symbol 

TSP Thrift Savings Plan

VPM Vendor and Program Management 
APPENDICES

117

FISCAL YEAR 2017 AGENCY FINANCIAL REPORT

www.ftc.gov FEDERAL TRADE COMMISSION

APPENDIX C:

CONTACT INFORMATION AND ACKNOWLEDGEMENTS

FEDERAL TRADE COMMISSION 600 Pennsylvania Avenue, NW

Washington, D.C. 20580

General Information Number 202-326-2222

Internet Home Page www.ftc.gov

FTC Spanish Home Page www.ftc.gov/espanol

Strategic Plan Internet Site www.ftc.gov/about-ftc/performance

FTC Press Releases www.ftc.gov/news-events/press-releases

AGENCY FINANCIAL REPORT (AFR) SPECIFIC

The FTC welcomes comments or suggestions for improvement of its AFR. Please contact the agency to provide feedback or to request additional copies.

AFR Internet Site www.ftc.gov/about-ftc/performance

AFR Contact Joseph O’Leska

AFR Telephone 202-326-2716

AFR Email Address gpra@ftc.gov

AFR Fax Number 202-326-3529

AFR Mailing Address Federal Trade Commission

attn: AFR, M/D H-774

600 Pennsylvania Avenue, NW

Washington, D.C. 20580

CONSUMER RESPONSE CENTER

General Complaints 877-FTC-HELP (877-382-4357)

Identity Theft Complaints 877-ID-THEFT (877-438-4338)

TTY (Teletype Consumer Response Center) 866-653-4261

FTC Complaint Assistant www.ftc.gov/complaint

Identity Theft Education, Complaints, and Recovery Plan https://www.identitytheft.gov/

National Do Not Call Registry www.donotcall.gov

ACKNOWLEDGEMENTS

The FTC offers our sincerest thanks and acknowledges the following individuals who made significant contribution 

in producing this report: Bridget Borrelli and Svetlana Gans of the Office of the Chairman; George Adam, Patricia 

Bak, Chris Bryan, Tony Carter, Samantha Dennison, Kathryn Gillis, Valerie Green, James Hale, Tonia Hill, Jacalyn 

Johnson, William Merkle, Nancy Moreno, Joseph O’Leska, Mark Oemler, Karen Overmier, Neil Packard, David Rebich, 

David Robbins, Randall Salzer, Jamie Vargas, Lori Walsh-Van Wey, Linda Wilson and Juanhui Xie of the Office of the 

Executive Director; Jeanine Balbach, Nathan Hawthorne, and Kelly Signs of the Bureau of Competition; Kathleen 

Benway and Jenny Kellogg of the Bureau of Consumer Protection; Jeanne Bumpus and Philip Runco of the Office of 

Congressional Relations; Sarah Mackey and David Shonka of the Office of the General Counsel; Mary Harmison of 

the Office of the Inspector General; Russell Damtoft of the Office of International Affairs; Tara Isa Koslov and Suzanne 

Munck of the Office of Policy Planning; and Rich Custer, Frank Dorman, Mitchell Katz and Christine Noonan Sturm of 

the Office of Public Affairs. Finally, we offer thanks to AOC Solutions, Heartland Consulting, and Graphic Visions for 

their contributions in the design and production of this report.
The Work of the Federal Trade Commission

is Critical to Protecting and Strengthening Free 

and Open Markets and Promoting Informed 

Consumer Choice, Both in the United States 

and Around the World.

http://www.ftc.gov

https://www.facebook.com/federaltradecommission/

https://twitter.com/FTC

https://www.ftc.gov/stay-connected/rss

https://www.youtube.com/user/FTCvideos

WWW.FTC.GOV

/federaltradecommission

@FTC

ftc.gov

/FTCvideos