MANAGEMENT CONSULTANTS &

CERTIFIED PUBLIC ACCOUNTANTS

REPORT ON

FINANCIAL STATEMENTS AUDIT

OF NATIONAL COUNCIL ON DISABILITY

FOR THE FISCAL YEARS ENDED

SEPTEMBER 30, 2012 and 2011
TABLE OF CONTENTS

Independent Auditors' Report .......................................................................................... 1-4

Balance Sheet.......................................................................................................................5

Statement of Net Cost ..........................................................................................................6

Statement of Changes in Net Position ............................................................................. 7-8

Statement of Budgetary Resources ......................................................................................9

Notes to Financial Statements...................................................................................... 10-24

Agency Comments on Draft Audit Report /Appendix A............................................. 25-26
MANAGEMENT CONSULTANTS &

CERTIFIED PUBLIC ACCOUNTANTS

1400 Eye Street, NW, Suite 425, Washington, DC 20005 Tel 202-296-7101 Fax 202-296-7284

INDEPENDENT AUDITORS' REPORT

To the Chairman and Executive Director

National Council on Disability

Washington, DC

In accordance with the Accountability of Tax Dollars Act of 2002, we are responsible for

conducting the audit of the National Council on Disability’s financial statements for the year

ended September 30, 2012. In our audit of the National Council on Disability’s financial

statements for fiscal year ended September 30, 2012, we found:

 the financial statements are presented fairly, in all material respects, in conformity

with U.S. Generally Accepted Accounting Principles;

 no material weaknesses in internal control over financial reporting (including

safeguarding assets), and compliance with laws and regulations; and

 no reportable noncompliance with the laws and regulations we tested.

The following sections discuss in more detail (1) these conclusions; (2) our audit objectives,

scope, and methodology; and (3) our evaluation and agency comments.

Opinion on Financial Statements

In our opinion, the financial statements, including the accompanying notes, present fairly, in

all material respects, the assets, liabilities, and net position of the National Council on

Disability as of September 30, 2012; and the related net cost, changes in statements of net

position, and budgetary resources for the year then ended, in conformity with accounting

principles generally accepted in the United States of America.

Consideration of Internal Control

In planning and performing our audit, we considered the National Council on Disability’s

internal control over financial reporting and compliance. We did this to determine our

procedures for auditing the financial statements, and to comply with OMB audit guidance,

not to express an opinion on internal control. Accordingly, we do not express an opinion on

internal control over financial reporting and compliance, or on management’s assertions on

internal control. However, for the controls we tested, we found no material weakness in

internal control over financial reporting (including safeguarding assets) and compliance.

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

management or employees, in the normal course of performing their assigned functions, to

prevent or detect misstatements on a timely basis.
2

A significant deficiency is a control deficiency, or combination of control deficiencies, that

adversely affects the National Council on Disability’s ability to initiate, authorize, record,

process, or report financial data reliably in accordance with Generally Accepted Accounting

Principles, such that there is more than a remote likelihood that a misstatement of the

National Council on Disability’s financial statements that is more than inconsequential will

not be prevented or detected by the National Council on Disability’s internal control.

A material weakness is a significant deficiency, or combination of significant deficiencies,

that results in more than a remote likelihood that a material misstatement of the financial

statements will not be prevented or detected by the National Council on Disability’s internal

control.

Our consideration of internal control over financial reporting and compliance 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. Our internal control work would not

necessarily disclose all deficiencies in internal control that might be material weaknesses or

other significant deficiencies.

Compliance with Laws and Regulations

Our tests of the National Council on Disability’s compliance with selected provisions of laws

and regulations for fiscal year 2012 disclosed no instances of noncompliance that would be

reportable under U.S. Generally Accepted Government Auditing Standards, or OMB audit

guidance. However, providing an opinion on compliance with those provisions was not an

objective of our audit, and accordingly, we do not express such an opinion. The results of our

tests disclosed no instances of noncompliance or other matters that are required to be

reported under U.S. Generally Accepted Government Auditing Standards, or OMB audit

guidance.

Objectives, Scope, and Methodology

The National Council on Disability’s management is responsible for (1) preparing the

financial statements in conformity with U.S. Generally Accepted Accounting Principles: (2)

establishing, maintaining, and assessing internal control to provide reasonable assurance that

the broad control objectives of the Federal Managers’ Financial Integrity Act are met; and (3)

complying with applicable laws and regulations.

We are responsible for obtaining reasonable assurance about whether the financial statements

are presented fairly, in all material respects, in conformity with U.S. Generally Accepted

Accounting Principles. We are also responsible for (1) obtaining a sufficient understanding

of internal control over financial reporting and compliance to plan the audit, (2) testing

compliance with selected provisions of laws and regulations that have a direct and material

effect on the financial statements and laws for which OMB audit guidance requires testing,

(3) performing limited procedures with respect to certain other information appearing in the
3

Annual Financial Statements, and (4) expressing an opinion on these financial statements

based on our audit.

In order to fulfill the above responsibilities, we:

 examined, on a test basis, evidence supporting the amounts and disclosures in the

financial statements;

 assessed the accounting principles used, and significant estimates made by

management;

 evaluated the overall financial statement presentation;

 obtained an understanding of the entity and its operations, including its internal

control related to financial reporting (including safeguarding assets), and compliance

with laws and regulations (including execution of transactions in accordance with

budget authority);

 tested relevant internal controls over financial reporting and compliance, and

evaluated the design and operating effectiveness of internal control;

 considered the design of the process for evaluating and reporting on internal control

and financial management systems under the Federal Managers’ Financial Integrity

Act; and

 tested compliance with selected provisions of laws and regulations.

We did not evaluate all internal controls relevant to operating objectives, as broadly defined

by the Federal Managers’ Financial Integrity Act, such as those controls relevant to preparing

statistical reports and ensuring efficient operations. We limited our internal control testing to

controls over financial reporting and compliance. Because of inherent limitations in internal

control, misstatements due to error or fraud, losses, or noncompliance may nevertheless

occur and not be detected. We caution that our internal control testing may not be sufficient

for other purposes. In addition, we also caution that projecting our evaluation to future

periods is subject to the risk that controls may become inadequate because of changes in

conditions, or that the degree of compliance with controls may deteriorate.

We did not test compliance with all laws and regulations applicable to the National Council

on Disability. We limited our tests of compliance to selected provisions of laws and

regulations that have a direct and material effect on the financial statements, and those

required by OMB audit guidance that we deemed applicable to the National Council on

Disability’s financial statements for the fiscal year ended September 30, 2012. We caution

that noncompliance may occur and not be detected by these tests, and that such testing may

not be sufficient for other purposes.
4

We performed our audit in accordance with U.S. Generally Accepted Government Auditing

Standards and OMB audit guidance.

Agency Comments and Our Evaluation

The National Council on Disability concurred with the facts and conclusions in our report.

See Appendix A.

Regis & Associates, PC

Washington, DC

November 9, 2012
5

NATIONAL COUNCIL ON DISABILIY

BALANCE SHEET

As of September 30, 2012 and 2011

2012 2011

Assets:

Intragovernmental:

Fund Balance With Treasury (Note 2) $ 942,523 $ 1,086,477

Total Intragovernmental $ 942,523 $ 1,086,477

Assets With the Public:

Accounts Receivable, net (Note 3) 201 236

Loans Receivable (Note 4) 1,883 2,962

Other (Other) 0 28,285

Total Assets $ 944,607 $ 1,117,960

Liabilities: (Note 6)

Intragovernmental:

Accounts Payable $ 9,549 $ 28,548

Other (Note 7) 5,692 5,644

Total Intragovernmental $ 15,241 $ 34,192

Liabilities With the Public:

Accounts Payable $ 556,710 $ 211,393

Other (Note 7) 127,967 127,985

Total Liabilities With the Public 684,677 339,378

Total Liabilities $ 699,918 $ 373,570

Net Position:

Unexpended Appropriations - Earmarked Funds

(Note 9) $ 5,960 $ 70,267

Unexpended Appropriations - Other Funds 337,106 744,356

Cumulative Results of Operations (98,377) (70,233)

Total Net Position $ 244,689 $ 44,390

Total Liabilities and Net Position $ 944,607 $ 1,117,960

The accompanying notes are an integral part of these financial statements.
6

NATIONAL COUNCIL ON DISABILITY

STATEMENT OF NET COST

For The Years Ended September 30, 2012 and 2011

2012 2011

Program Costs:

Program A:

Gross Costs (Note 10) $ 3,768,519 $ 3,673,458

Less: Earned Revenue 0 0

Net Program Costs $ 3,768,519 $ 3,673,458

Net Cost of Operations $ 3,768,519 $ 3,673,458

The accompanying notes are an integral part of these financial statements.
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NATIONAL COUNCIL ON DISABILITY

STATEMENT OF CHANGES IN NET POSITION

For The Years Ended September 30, 2012 and 2011

2012

Earmarked

Funds

All Other

Funds

Consolidated

Total

Cumulative Results of Operations:

Beginning Balances $ $ (70,233) $ (70,233)

Adjustments:

(A) Corrections of Errors (+/-) (Note 11) (27,785) (27,785)

Beginning Balances, as Adjusted $ $ (98,018) $ (98,018)

Budgetary Financing Sources:

Appropriations Used 64,308 3,630,076 3,694,384

Imputed Financing 73,776 73,776

Total Financing Sources $ 64,308 $ 3,703,852 $ 3,768,159

Net Cost of Operations (+/-) 64,308 3,704,211 3,768,519

Net Change (359) (359)

Cumulative Results of Operations $ $ (98,377) $ (98,377)

All Other Funds:

Beginning Balances $ 70,267 $ 744,355 $ 814,623

Adjustments:

Corrections of Errors (+/-) (Note 11) 27,785 27,785

Beginning Balances, as Adjusted $ 70,267 $ 772,140 $ 842,408

Budgetary Financing Sources:

Appropriations Received 3,264,000 3,264,000

Other Adjustments (68,958) (68,958)

Appropriations Used (64,308) (3,630,076) (3,694,384)

Total Budgetary Financing Sources (64,308) (435,035) (499,342)

Total Unexpended Appropriations 5,960 337,106 343,066

Net Position $ 5,960 $ 238,729 $ 244,689

The accompanying notes are an integral part of these financial statements.
8

NATIONAL COUNCIL ON DISABILITY

STATEMENT OF CHANGES IN NET POSITION

For The Years Ended September 30, 2012 and 2011

2011

Earmarked

Funds

All Other

Funds

Consolidated

Total

Cumulative Results of Operations:

Beginning Balances $ $ (93,626) $ (93,626)

Beginning Balances, as Adjusted $ $ (93,626) $ (93,626)

Budgetary Financing Sources:

Other Adjustments

Appropriations Used $ 522 $ 3,621,227 $ 3,621,749

Other Financing Resources (Non-Exchange):

Imputed Financing 75,102 75,102

Total Financing Sources $ 522 $ 3,696,329 $ 3,696,851

Net Cost of Operations (+/-) $ 522 $ 3,672,936 $ 3,673,458

Net Change 23,393 23,393

Cumulative Results of Operations $ $ (70,233) $ (70,233)

Unexpended Appropriations:

Beginning Balances $ 70,789 $ 1,300,189 $ 1,370,978

Budgetary Financing Sources:

Appropriations Received $ 3,271,000 $ 3,271,000

Other Adjustments (205,606) (205,606)

Appropriations Used $ (522) (3,621,227) (3,621,749)

Total Budgetary Financing Sources (522) (555,833) (556,355)

Total Unexpended Appropriations 70,267 744,356 814,623

Net Position $ 70,267 $ 674,123 $ 744,390

The accompanying notes are an integral part of these financial statements.
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NATIONAL COUNCIL ON DISABILIY

STATEMENT OF BUDGETARY RESOURCES

For The Year Ended September 30, 2012

2012 2011

Budgetary Budgetary

BUDGETARY RESOURCES

Unobligated Balance brought forward, October 1: $ 241,909 $ 587,382

Recoveries of Prior Year unpaid Obligations (unobligated bal) 148,560 192,468

Other charges in unobligated balance (62,789) (205,606)

Unobligated balance from prior year budget authority, net $ 327,680 $ 574,244

Appropriations (discretionary and mandatory) 3,257,831 3,271,000

Spending authority from offsetting collections 8,291 51,758

Total Budgetary Resources $ 3,593,802 $ 3,897,002

STATUS OF BUDGETARY RESOURCES

Obligations Incurred (Note 12) $ 3,346,600 $ 3,655,093

Apportioned $ 15,873 $ 82,543

Unapportioned 231,329 159,366

Unobligated Balance brought forward, end of year $ 247,202 $ 241,909

Total Budgetary Resources: $ 3,593,802 $ 3,897,002

CHANGE IN OBLIGATED BALANCE

Unpaid Obligations, Brought Forward, October 1 $ 844,568 $ 1,123,831

Obligations Incurred 3,346,600 3,655,093

Gross Outlays (-) (3,347,287) (3,741,888)

Recoveries of Prior-Year Unpaid Obligations, Actual (-) (148,560) (192,468)

Unpaid Obligations, end of year (gross) (note 13) $ 695,321 $ 844,568

BUDGET AUTHORITY AND OUTLAYS, NET

Budget Authority, gross (discretionary and mandatory) $ 3,266,122 $ 3,322,759

Actual offsetting collections (discretionary and mandatory) (8,291) (51,759)

Budget Authority, net (discretionary and mandatory) $ 3,257,831 $ 3,271,000

Outlays, gross (discretionary and mandatory) $ 3,347,287 3,741,888

Actual offsetting collections (discretionary and mandatory) (8,291) (51,759)

Outlays, net (discretionary and mandatory) $ 3,338,996 $ 3,690,129

The accompanying notes are an integral part of these financial statements.
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NATIONAL COUNCIL ON DISABILITY

NOTES TO FINANCIAL STATEMENTS

SEPTEMBER 30, 2012

NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES

Reporting Entity

The National Council on Disability (NCD) is an independent agency of the Executive Branch

of the United States Government that makes recommendations to the President and Congress

on issues affecting Americans with disabilities.

NCD was initially established in 1978 as an advisory board within the Department of

Education (Public Law 95-602). The Rehabilitation Act Amendments of 1984 (Public Law

98-221) transformed NCD into an independent agency and required NCD to provide expert

advice to Congress and the Administration. The Rehabilitation Act Amendments of 1992

and 1998 and the Education of the Deaf Act Technical Amendments of 1993 updated NCD’s

statutory mandate.

NCD is composed of fifteen members appointed by the President and confirmed by the U.S.

Senate (as of October 10, 2012, NCD members are no longer confirmed by Senate per the

Presidential Appointment Efficiency and Streamlining Act of 2011). In consultation with the

Executive Director, the Council members set the agency budget and establish the parameters

for what it will support. The NCD executive director has full responsibility for carrying out

the agency’s operations as necessary to accomplish the goals and mission of the agency as

established by the Council members.

NCD’s overall purpose is to promote policies, programs, practices, and procedures that

guarantee equal opportunity for all individuals with disabilities, regardless of the nature or

severity of the disability; and to empower individuals with disabilities to achieve economic

self-sufficiency, independent living, and inclusion and integration into all aspects of society.

This mission is accomplished by serving as a policy agency that publishes reports and works

with other federal agencies on policy development and implementing best practices.

Basis of Presentation

These financial statements have been prepared from the accounting records of NCD in

accordance with generally accepted accounting principles (GAAP) as promulgated by the

Federal Accounting Standards Advisory Board (FASAB), and the form and content for entity

financial statements specified by the Office of Management and Budget (OMB) in OMB

Circular No. A-136, “Financial Reporting Requirements.” GAAP for Federal entities is the

hierarchy of accounting principles prescribed in Statement of Federal Financial Accounting

Standards (SFFAS) 34, “The Hierarchy of Generally Accepted Accounting Principles,

Including the Application of Standards issued by the Financial Accounting Standards Board.”
11

NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES - (CONTINUED)

Basis of Presentation – (Continued)

OMB Circular No. A-136 requires agencies to prepare principal statements, include a

Balance Sheet, Statement of Net Cost, Statement of Changes in Net Position, Statement of

Budgetary Resources. The balance sheet presents, as of September 30, 2012, amounts of

future economic benefits owned or managed by NCD (assets), amounts owed by NCD

(liabilities), and amounts which comprise the difference (net position). The Statement of Net

Cost reports the full cost of the program, both direct and indirect costs of the output, and the

costs of identifiable supporting services provided by other segments within NCD and other

reporting entities. The Statement of Budgetary Resources reports an agency’s budgetary

activity.

Basis of Accounting

Transactions are recorded on the accrual accounting basis in accordance with OMB Circular

No. A-136. Under the accrual basis of accounting, revenues are recognized when earned,

and expenses are recognized when a liability is incurred, without regard to receipt or

payment of cash.

Use of Estimates

The preparation of financial statements requires management to make estimates and

assumptions that affect the reported amounts of assets and liabilities, the disclosure of

contingent assets and liabilities at the date of the financial statements, and the reported

amounts of revenues and expenses during the reporting period. Actual results may differ

from those estimates.

Budgets and Budgetary Accounting

NCD follows standard federal budgetary accounting policies and practices in accordance

with OMB Circular A-11, “Preparation, Submission, and Execution of the Budget,” dated

June 2008. Budgetary accounting facilitates compliance with legal constraints and controls

over the use of federal funds. Each year, Congress provides NCD appropriations to incur

obligations in support of agency programs. For Fiscal Years (FY) 2012 and 2011, NCD is

accountable for general fund appropriations and no-year fund carryover. NCD recognizes

budgetary resources as assets when cash (funds held by Treasury) is made available through

warrants and when spending authority from the offsetting collections is incurred.

Revenues and Other Financing Sources

NCD receives substantially all of the funding needed to support its programs through

appropriations. NCD receives annual and no-year appropriations that may be used, within

statutory limits, for operating and capital expenditures. Appropriations are recognized as

revenues as the related programs or administrative expenses are incurred.
12

NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES - (CONTINUED)

Revenues and Other Financing Sources – (Continued)

Other financing sources for NCD consist of imputed financing sources which are costs

financed by other federal entities on behalf of NCD, as required by SFFAS No. 5,

“Accounting for Liabilities of the Federal Government.” In certain instances, operating costs

of NCD are paid out of funds appropriated to other federal agencies. In accordance with

SFFAS 5, all expenses of a federal entity should be reported by that agency regardless of

whether the agency will ultimately pay those expenses. Amounts for certain expenses of

NCD, which will be paid by other federal agencies, are recorded in the Statement of Net

Cost. A related amount is recognized in the Statement of Changes in Net Position as an

imputed financing source. NCD records imputed expenses and financing sources for

employee retirement plan contributions, group term life insurance, and health benefit costs,

which are paid by the Office of Personnel Management (OPM).

Personnel Compensation and Benefits

Salaries and wages of employees are recognized as accrued payroll expenses and related

liabilities as earned. These expenses are recognized as a funded liability when accrued.

Annual leave is accrued as it is earned by employees and is included in personnel

compensation and benefit costs. An unfunded liability is recognized for earned but unused

annual leave, since from a budgetary standpoint, this annual leave will be paid from future

appropriations when employees use the leave. The amount accrued is based upon current

pay rates for employees. Sick leave and other types of leave that are not vested are expensed

when used and no future liability is recognized for these amounts.

NCD’s employees participate in one of two retirement programs, either the Civil Service

Retirement System (CSRS) or the Federal Employees Retirement System (FERS), which

became effective on January 1, 1987. NCD and its employees both contribute to these

systems. Although NCD funds a portion of the benefits under CSRS and FERS and makes

the necessary payroll withholdings, it does not report assets associated with these benefit

plans in accordance with SFFAS 5.

For CSRS employees, NCD contributes an amount equal to 11.2% of the employees’ basic

pay to the plan. For FERS employees, NCD contributes an amount equal to 7% of the

employees’ basic pay to the plan.

Both CSRS employees and FERS employees are eligible to participate in the Thrift Savings

Plan (TSP). The TSP is a defined contribution retirement plan intended to supplement the

benefits provided under CSRS and FERS. For FERS employees, NCD contributes an

amount equal to 1% of the employee’s basic pay to the TSP and matches employee

contributions up to an additional 4%. CSRS employees receive no matching contribution

from NCD.
13

NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES - (CONTINUED)

Personnel Compensation and Benefits – (Continued)

OPM is responsible for reporting assets, accumulated plan benefits, and unfunded liabilities,

if any, applicable to CSRS participants and FERS employees government-wide, including

NCD’s employees. NCD has recognized an Imputed Cost and Imputed Financing Source for

the difference between the estimated service cost and the contributions made by NCD and its

covered employees. The estimated cost of pension benefits is based on rates issued by OPM.

Employees are entitled to participate in the Federal Employees Group Life Insurance

(FEGLI) Program. Participating employees can obtain “basic life” term life insurance, with

the employee paying two-thirds of the cost and NCD paying one-third. Additional coverage

is optional, to be paid fully by the employee. The basic life coverage may be continued into

retirement if certain requirements are met. OPM administers the FEGLI program and is

responsible for the reporting of related liabilities. Each fiscal year, OPM calculates the U.S.

Government’s service cost for the post-retirement portion of basic life coverage. Because

NCD’s contributions to the basic life coverage are fully allocated by OPM to the preretirement portion of coverage, the Board has recognized the entire service cost of the postretirement portion of basic life coverage as an Imputed Cost and Imputed Financing Source.

Assets and Liabilities

Intra-governmental assets and liabilities arise from transactions between NCD and other

Federal entities. Funds with the U.S. Treasury comprise the majority of assets on NCD’s

balance sheet. All other assets result from activity with non-federal sources.

Liabilities represent amounts that are likely to be paid by NCD as a result of transactions that

have already occurred. The accounts payable portion of liabilities consists of amounts owed

to federal agencies and commercial vendors for goods, services, and other expenses received

but not yet paid.

Liabilities covered by budgetary or other resources are those liabilities of NCD for which

Congress has appropriated funds, or funding is otherwise available to pay amounts due.

Fund Balance with Treasury

The U.S. Department of the Treasury (Treasury) processes NCD’s receipts and

disbursements. Fund Balance with Treasury is the aggregate amount of the agency’s

accounts with Treasury for which the agency is authorized to liquidate obligations, pay

funded liabilities, and make expenditures. The fund balance is increased through the receipt

of non-expenditure Treasury warrants for appropriations, positive non-expenditure transfers,

and other expenditure inflows of funds. The Fund Balance with Treasury is reduced through

non-expenditure Treasury Warrants for recissions, negative non-expenditure transfers,

disbursements, and other expenditure cash outflows of funds.
14

NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES - (CONTINUED)

Fund Balance with Treasury – (Continued)

NCD’s funds with the U.S. Treasury are cash balances from appropriations as of the fiscal

year-end from which NCD is authorized to make expenditures and pay liabilities resulting

from operational activity.

General Property, Plant, and Equipment, Net

Property, plant, and equipment (PP&E) have been defined in the Federal Government as

tangible items owned by the Federal Government and having an expected useful life of

greater than two years. NCD has established the following policies for PP&E:

PP&E is reported at acquisition cost.

The capitalization threshold is $5,000 for assets with a useful life of two or more years.

For bulk purchases, items will be capitalized when the individual useful lives are at least two

years and the property has an aggregate value of $100,000 or more.

Acquisitions of PP&E that do not meet the capitalization criteria outlined above are recorded

as operating expenses. General PP&E consists of items that are used by NCD to support its

mission.

Depreciation on assets is calculated using the straight-line method. Depreciation begins the

month after the asset is placed in service.

Useful lives are as follows:

Equipment - 4 years

Furniture - 4 years

Maintenance, repairs and minor renovations are expensed as incurred. Expenditures that

materially increase values, change capacities, or extend useful lives are capitalized.

The costs of any leasehold improvements financed with NCD appropriated funds is

capitalized if the total cost exceeds $25,000. Construction costs are accumulated as

“construction in-progress” until completion, at which time they are transferred to “leasehold

improvements” and depreciated over 7 years or the remainder of the lease, whichever is less.

Internal use software development and acquisition costs of $25,000 are capitalized as

“software development-in-progress” until the development stage is completed and the

software is successfully tested. At acceptance, “software development-in-progress” costs are

reclassified as “internal use software” and amortized using the straight-line method over an

estimated useful life of 4 years. Purchased commercial software that does not meet the

capitalization criteria is expensed. Enhancements that do not add significant new capability

or functionality are expensed.
15

NOTE 1 – SIGNIFICANT ACCOUNTING POLICIES - (CONTINUED)

Prepaid and Deferred Charges

Payments in advance of the receipt of goods and services are recorded as prepaid charges at

the time of prepayment and recognized as expenses when the related goods and services are

received.

Liabilities

Liabilities represent amounts expected to be paid as the result of a transaction or event that

has already occurred. Liabilities covered by budgetary resources are liabilities incurred

which are covered by realized budgetary resources as of the balance sheet date. Available

budgetary resources include new budget authority, spending authority from the offsetting

collections, recoveries of unexpired budget authority through downward adjustments of prior

year obligations, and unobligated balances of budgetary resources at the beginning of the

year. Unfunded liabilities are not considered to be covered by such budgetary resources.

Examples of unfunded liabilities are actuarial liabilities for future Federal Employees’

Compensation Act (FECA) payments and annual leave. The Government, acting in its

sovereign capacity, can abrogate liabilities arising from other than contracts.

Contingencies

The criteria for recognizing contingencies for claims are (1) a past event or exchange

transaction has occurred as of the date of the statements; (2) a future outflow or other

sacrifice of resources is probable; and (3) the future outflow or sacrifice of resources is

measurable (reasonably estimated). NCD recognizes material contingent liabilities in the

form of claims, legal action, administrative proceedings and environmental suits that have

been brought to the attention of legal counsel, some of which will be paid by the Treasury

Judgment Fund. It is the opinion of management and legal counsel that the ultimate

resolution of these proceedings, actions, and claims, will not materially affect the financial

position of results of operations.

Net Position

Net position consists of unexpended appropriations and cumulative results of operations.

Unexpended appropriations represent amounts of budgetary authority to include expenses,

unobligated or obligated balances not rescinded or withdrawn. Cumulative results of

operations are comprised of the following: (1) the difference between revenues and (2) the

net amount of transfers of assets in and out without reimbursement, and (3) donations, all

since inception of the fund(s).
16

NOTE 2 – FUND BALANCE WITH TREASURY

All of NCD’s fund balance with treasury is coming from appropriations. No trust, revolving

or other fund type are used to fund NCD’s activities. NCD operates as an annual fund, where

each year is a new appropriation. This fund balance with treasury is a consolidated balance

of one no-year fund and five annual funds (FY 2008, FY 2009, FY 2010, FY 2011, and FY

2012). The annual fund for FY 2007 is cancelled and the remaining fund balance of $62,789

is given back to US Treasury during fiscal year 2012.

A. Fund Balance with Treasury 2012 2011

Appropriated Fund $942,523 $1,086,477

B. Status of Fund Balance with Treasury

1) Unobligated Balance

a) Available 15,873 82,543

b) Unavailable 231,328 159,366

2) Obligated Balance not yet Disbursed 695,321 844,568

Total $942,523 $1,086,477

NOTE 3 – ACCOUNTS RECEIVABLE, NET

Accounts Receivable, Net from the Public represents the Accounts Receivable from current

employees.

2012 2011

$201 $236Accounts Receivable - With the Public

NOTE 4 – LOANS RECEIVABLE, NET

Loans Receivable, Net from the Public represents a Loan Receivable from a current

employee.

2012 2011

Loans Receivable - With the Public $1,883 $2,962

NOTE 5 – OTHER ASSETS WITH THE PUBLIC

NCD has an obligation that involves the advancement of funds for a current employee and

with other non-federal entities.

2012 2011

Assets with the Public - Other Assets -$ 28,285$
17

NOTE 6 – LIABILITIES NOT COVERED BY BUDGETARY RESOURCES

Liabilities of NCD are classified as liabilities covered or not covered by budgetary resources.

As of September 30, 2012, NCD showed liabilities covered by budgetary resources of

$599,457 and liabilities not covered by budgetary resources of $100,461. As of September

30, 2011, NCD showed liabilities covered by budgetary resources of $272,354 and liabilities

not covered by budgetary resources of $101,216.

As of September 30, 2012, liabilities covered by budgetary resources are composed of

Accounts Payable of $566,259, Accrued Funded Payroll and Leave of $26,571, and

Employer Contributions and Payroll Taxes Payable of $6,627. As of September 30, 2011,

liabilities covered by budgetary resources are composed of Accounts Payable of $239,941,

Accrued Funded Payroll and Leave of $25,915, and Employer Contributions and Payroll

Taxes Payable of $6,498.

2012 2011

With the Public

Other (Unfunded leave liability) $100,461 $101,216

Total liabilities not covered by budgetary resources 100,461 101,216

Total liabilities covered by budgetary resources 599,457 272,354

Total Liabilities $699,918 $373,570

NOTE 7 – OTHER LIABILITIES

As of September 30, 2012, other liabilities with the public consist of Accrued Funded Payroll

and Leave of $26,571, unfunded leave in the amount of $100,461, and employer

contributions and payroll taxes payable – TSP of $935. Other Intragovernmental liabilities

consist of employer contributions and payroll taxes payable of $5,692. As of September 30,

2011, other liabilities with the public consist of Accrued Funded Payroll and Leave of

$25,915, unfunded leave in the amount of $101,216, and employer contributions and payroll

taxes payable – TSP of $855. Other Intragovernmental liabilities consist of employer

contributions and payroll taxes payable of $5,644.

With the Public Non-Current Current Total

2012 Other Liabilities $100,461 $27,506 $127,967

2011 Other Liabilities $101,216 $26,770 $127,985

Intragovernmental Non-Current Current Total

2012 Other Liabilities $0 $5,692 $5,692

2011 Other Liabilities $0 $5,644 $5,644
18

NOTE 8 - LEASES

Entity as Lessee:

Operating Leases

NCD leases office space at 1331 F Street, NW, Washington, DC. The lease was entered into

on August 29, 2012 for a period of 10-years retroactive August 22, 2011 continuing through

August 21, 2021. The lease and space may be vacated at any time upon four (4) months

written notice.

The following is a schedule of future minimum lease payments required by the lease:

Fiscal Year Ended Minimum Lease Payments

September 30, 2012 252,132

September 30, 2013 254,665

September 30, 2014 257,238

September 30, 2015 259,961

September 30, 2016 263,859

September 30, 2017 279,139

September 30, 2018 282,076

September 30, 2019 285,100

September 30, 2020 288,215

September 30, 2021 257,804

2,680,189

NOTE 9 – EARMARKED FUNDS

In 2007, $300,000 was appropriated to remain available until expended, for necessary

expenses related to the requirements of the Post-Katrina Emergency Management Reform

Act of 2006, as enacted by the Department of Homeland Security Appropriations Act, 2007

(Public Law 109-295. It was determined during the FY09 audit that these funds should be

considered earmarked, therefore, it was at this time that we began to reflect the funds as

earmarked.
19

NOTE 9 – EARMARKED FUNDS, CONTINUED

2012

NCD Earmarked

Funds NCD Other Funds Total Funds

Balance Sheet as of Sept. 30

ASSETS

Fund Balance with Treasury 35,960$ 906,563$ 942,523$

Assets with the Public:

Accounts Receivable 201 201

Loans Receivable 1,883 1,883

Total Assets 35,960$ 908,647$ 944,607$

Intragovernmental Liabilities:

Accounts Payable $ 9,549$ 9,549$

Other Liabilities 5,692 5,692

Total Intragovenmental Liabilities $ 15,241$ 15,241$

Liabilities with the Public:

Accounts Payable 30,000$ 526,710$ 556,710$

Other Liabilities 127,967 127,967

Total Liabilities with the Public 30,000$ 654,677$ 684,677$

Total Liabilites 30,000$ 669,918$ 699,918$

Unexpended Appropriations 5,960$ 337,106$ 343,066$

Cumulative Results of Operations (98,377) (98,377)

Total Liabilities and Net Position 35,960$ 908,647$ 944,607$

Statement of Net Cost For the

Period Ended Sept. 30

Gross Program Costs 64,308$ 3,704,211$ 3,768,519$

Net Program Costs 64,308$ 3,704,211$ 3,768,519$

Net Cost of Operations 64,308$ 3,704,211$ 3,768,519$

Statement of Changes in Net Position

For the Period Ended Sept. 30

Cumulative Results of Operations:

Beginning Balances $ (70,233)$ (70,233)$

Adjustments, Corrections of Errors (27,785) (27,785)

Beginning Balances, As Adjusted $ (98,018)$ (98,018)$

Budgetary Financing Sources:

Appropriations Used 64,308$ 3,630,076$ 3,694,384$

Other Financing Sources

Imputed Financing 73,776 73,776

Total Financing Sources 64,308$ 3,703,852$ 3,768,159$

Net Cost of Operations 64,308$ 3,704,211$ 3,768,519$

Change in Net Position $ (359)$ (359)$

Cumulative Results of Operations $ (98,377)$ (98,377)$

Unexpended Appropriations:

Beginning Balances 70,267$ 744,355$ 814,623$

Adjustments, Corrections of Errors 27,785 27,785

Beginning Balances, As Adjusted 70,267$ 772,140$ 842,408$

Budgetary Financing Sources:

Appropriations Received 3,264,000 3,264,000

Other Adjustments (68,958) (68,958)

Appropriations Used (64,308) (3,630,076) (3,694,384)

Total Budgetary Financing Sources (64,308)$ (435,035)$ (499,342)$

Total Unexpended Appropriations 5,960$ 337,106$ 343,066$

Net Position End of Period 5,960$ 238,729$ 244,689$
20

NOTE 9 – EARMARKED FUNDS, CONTINUED

FY 2011

NCD Earmarked

Funds NCD Other Funds Total Funds

Balance Sheet as of Sept. 30

ASSETS

Fund Balance with Treasury 78,110$ 1,008,367$ 1,086,477$

Assets with the Public:

Accounts Receivable 236 236

Loans Receivable 2,962 2,962

Other Assets 28,285 28,285

Total Assets 78,110$ 1,039,850$ 1,117,960$

Intragovernmental Liabilities:

Accounts Payable 28,548$ 28,548$

Other Liabilities 5,644 5,644

Total Intragovenmental Liabilities 34,192$ 34,192$

Liabilities with the Public:

Accounts Payable 35,000$ 176,393$ 211,393$

Other Liabilities 127,985$ 127,985$

Total Liabilities with the Public 35,000$ 304,378$ 339,378$

Total Liabilites 35,000$ 338,570$ 373,570$

Unexpended Appropriations 70,267$ 744,355$ 814,623$

Cumulative Results of Operations (70,233)$ (70,233)$

Total Liabilities and Net Position 105,267$ 1,012,693$ 1,117,960$

Statement of Net Cost For the

Period Ended Sept. 30

Gross Program Costs 522$ 3,672,936$ 3,673,458$

Net Program Costs 522$ 3,672,936$ 3,673,458$

Net Cost of Operations 522$ 3,672,936$ 3,673,458$

Statement of Changes in Net Position

For the Period Ended Sept. 30

Cumulative Results of Operations:

Beginning Balances (93,626)$ (93,626)$

Budgetary Financing Sources:

Appropriations Used 522$ 3,621,227$ 3,621,749$

Other Financing Sources

Imputed Financing 75,102$ 75,102$

Total Financing Sources 522$ 3,696,329$ 3,696,851$

Net Cost of Operations 522$ 3,672,936$ 3,673,458$

Change in Net Position 23,393$ 23,393$

Cumulative Results of Operations (70,233)$ (70,233)$

Unexpended Appropriations:

Beginning Balances 70,789$ 1,300,189$ 1,370,978$

Budgetary Financing Sources:

Appropriations Received 3,271,000 3,271,000

Other Adjustments (205,606) (205,606)

Appropriations Used (522) (3,621,227) (3,621,749)

Total Budgetary Financing Sources (522)$ (555,833)$ (556,356)$

Total Unexpended Appropriations 70,267$ 744,355$ 814,623$

Net Position End of Period 70,267$ 674,123$ 744,390$
21

NOTE 10 – INTRAGOVERNMENTAL COSTS AND EXCHANCE REVENUE

Intragovernmental costs are those of goods/services purchased from a federal entity.

Total Total

2012 2011

Program A

Intragovernmental costs 834,655$ 843,738$

Public costs 2,933,863 2,829,721

Total Program A costs 3,768,519$ 3,673,458$

Total Program A 3,768,519$ 3,673,458$

NOTE 11 – CORRECTION TO BEGINNING BALANCES IN STATEMENTS OF

CHANGES IN NET POSITION

There is a misstatement within Cumulative Results of Operations and Unexpended

Appropriations related to the recognition of advances made as a requested worksheet

adjustment at the end of fiscal year 2011. The correction was made during this fiscal year.

There is no impact on the NCD’s overall Net Position in current or prior years.

NOTE 12 – APPORTIONMENT CATEGORIES OF OBLIGATIONS INCURRED

Obligations for NCD are split between category A and category B, which is the amount of

direct obligations incurred against amounts apportioned under category A and category B on

the latest SF 132.

FY 2012 FY 2011

Direct $ 0 $ 1,782

Category A 3,346,600 3,655,093

Category A $ 3,346,600 $ 3,655,093
22

NOTE 13 – UNDELIVERED ORDERS AT THE END OF THE PERIOD

The amount of Unpaid Obligated Balance, Net, End of Period includes obligations relating to

Undelivered Orders (good and services contracted for but not yet received at the end of the

year) and Accounts Payable (amounts owed at the end of the year for goods and services

received).

Year

Undelivered

Orders

Accounts

Payable

Unpaid Obligated

Balance Net

2012 95,864$ 599,457$ 695,321$

2011 572,214$ 272,354$ 844,568$

NOTE 14 – EXPLANATION OF THE RELATIONSHIP BETWEEN LIABILITIES

NOT COVERED BY BUDGETARY RESOURCES ON THE BALANCE SHEET AND

THE CHANGE IN COMPONENTS REQUIRING OR GENERATING RESOURCES

IN FUTURE PERIODS

The Change in Components Requiring or Generating Resources in Future Periods equals the

difference between the opening and ending balances of Liabilities Not Covered by Budgetary

Resources (as shown on the Balance Sheet, reference Note 6), shown as follows:

FY 2012

FY 2012 FY 2011 Change

Unfunded Annual Leave $100,461 $101,216 ($755)

FY 2011

FY 2011 FY 2010 Change

Unfunded Annual Leave $101,216 $93,626 $7,590

Note accrued funded payroll liability is covered by budgetary resources and is included in the

net cost of operations, whereas unfunded annual leave liability includes the expense related

to the increase in annual leave liability for which the budgetary resources will be provided in

a subsequent period.
23

NOTE 15 – RECONCILIATION OF NET COST OF OPERATIONS

(PROPRIETARY) TO BUDGET

Budgetary resources obligated are obligations for personnel, goods, services, benefits, etc.

made by the NCD in order to conduct operations or acquire assets. Other (i.e., nonbudgetary) financing resources are also utilized by the NCD in its program (proprietary)

operations. For example, spending authority from offsetting collections and recoveries are

financial resources from the recoveries of prior year obligations (e.g., the completion of a

contract where not all the funds were used) and refunds or other collections (i.e., funds used

to conduct operations that were previously budgeted). An imputed financing source is

recognized for future federal employee benefits costs incurred for the NCD employees that

will be funded by OPM. Changes in budgetary resources obligated for goods, services, and

benefits ordered by not yet provided represents the difference between the beginning and

ending balances of undelivered orders (i.e., good and services received during the year based

on obligations incurred the prior year represent a cost of operations not funded from

budgetary resources). Resources that finance the acquisition of assets are budgetary

resources used to finance assets and not cost of operations (e.g., increases in accounts

receivables or capitalized assets). Financing sources yet to be provided represents financing

that will be provided in future periods for future costs that are recognized in determining the

net cost of operations for the present period. Finally, components not requiring or generating

resources are costs included in the net cost of operations that do not require resources (e.g.,

depreciation and amortized expenses of assets previously capitalized).

A reconciliation between budgetary resources obligated and net cost of operations (i.e.,

providing an explanation between budgetary and financial (proprietary) accounting) is as

follows (note: in prior years this information was presented as a separate financial statement

(the Statement of Financing)):

FY 2012 FY 2011

Budgetary Resources Obligated $3,346,600 $3,655,093

Spending Authority from Recoveries and Offsetting Collections (156,851) (244,226)

Imputed Financing from Costs Absorbed by Others 73,776 75,102

Changes in Budgetary Resources Obligated for Goods, Services,

and Benefits Ordered but Not Yet Provided

504,635 183,098

Resources that Finance the Acquisition of Assets 1,114 (3,198)

Financing Sources Yet to be Provided (see Note 14) (755) 7,590

Net Cost of Operations $3,768,519 $3,673,458
24

NOTE 16 – SUBSEQUENT EVENTS

In preparing these financial statements for Fiscal Year 2012, management has evaluated

events and transactions for potential recognition or disclosure through November 9, 2012,

which is the date the financial statements were available to be issued.
25

APPENDIX A -

NATIONAL COUNCIL ON DISABILITY

COMMENTS ON DRAFT AUDIT REPORT
National Council on Disability

An independent federal agency making recommendations to the President and Congress to

enhance the quality of life for all Americans with disabilities and their families.

1331 F Street, NW ■ Suite 850 ■ Washington, DC 20004

202-272-2004 Voice ■ 202-272-2074 TTY ■ 202-272-2022 Fax ■ www.ncd.gov

November 15, 2012

Regis & Associates, PC

Mr. Lateef Abassi

1400 Eye Street, NW

Suite 425

Washington, DC 20005

Dear Mr. Abassi:

We have reviewed the draft audit report provided to us relating to your audit of the

National Council on Disability for the fiscal years ended September 30, 2012, and

2011. We concur with the facts and conclusions in the draft report.

Sincerely,

__________________________

Aaron Bishop, M.S.S.W.

Executive Director