U.S. Merit Systems Protection Board

Agency

Financial 

Report

 Fiscal Year 2017

November 2017
ii

Table of Contents 

Message from the Vice Chairman .............................................................................................1

How to Use This Report ...........................................................................................................2

The Merit Systems Protection Board ........................................................................................3

About MSPB.....................................................................................................................................................3

The MSPB Mission...........................................................................................................................................3

Board Organization .........................................................................................................................................3

MSPB Program Offices and Their Functions .............................................................................................3

Organization Chart ..........................................................................................................................................5

Management Discussion and Analysis .....................................................................................6

Interim Summary of MPSB’s FY 2017 Program Performance .................................................................6

Management Assurances.................................................................................................................................9

Other Information ....................................................................................................................11

Summary of Financial Statement Audit and Management Assurances..................................................11

Civil Monetary Penalties’ Adjustments for Inflation.................................................................................12

Financial Section ..................................................................................................................... 13

Message from the Chief Financial Officer..................................................................................................13

Notes on the Financial Statements..............................................................................................................14

Independent Auditor’s Report on the Financial Statements

Financial Statements

2

How to Use This Report

The Agency Financial Report (AFR) presents financial information, as well as relevant performance 

information, on the U.S. Merit Systems Protection Board’s operations. The report was prepared in 

accordance with the Office of Management and Budget (OMB) Circular A-136, Financial Reporting Requirements, 

and covers activities from October 1, 2016 through September 30, 2017.

MSPB has chosen to produce an AFR and an Annual Performance Report (APR). MSPB will submit its 

FY 2017 APR with its Congressional Budget Justification and post it on the agency’s website at 

http://www.mspb.gov at the time the President’s FY 2019 Budget is submitted to Congress in 2018.

This report is organized into the following major components:

The Merit Systems Protection Board

This section provides an overview of the MSPB. It discusses the agency’s mission, board organization, 

program offices and their functions, and organization chart.

Management Discussion and Analysis (MD&A)

This section provides an overview of the performance information contained in the Interim FY 2017 

Performance results compared to the Annual Performance Plan for FY 2017, which was developed under 

MSPB’s Strategic Plan for FY 2017-2019. It also includes relevant performance information related to the 

MSPB’s strategic and management objectives.

Management Assurances

This section provides an overview of MSPB’s management commitment to excellence and the importance of 

strong financial systems and internal controls to ensure accountability, integrity, and reliability. Management, 

administrative, and financial system controls have been developed to ensure the following:

• Obligations and costs are in compliance with applicable laws;

• Funds, property, and other assets are safeguarded against waste, loss, unauthorized use, or 

misappropriation;

• Revenues and expenditures applicable to operations are properly recorded and accounted for to permit 

the preparation of reliable accounting, financial, and statistical reports; and,

• Accountability over assets is maintained.

Financial Section

This section contains details of MSPB’s financial position in FY 2017 including a message from the Chief 

Financial Officer (CFO) followed by the notes on the financial statements, independent auditor’s report on 

the financial statements, financial statements, and notes to the financial statements.
3

The Merit Systems Protection Board

About MSPB

MSPB has its origin in the Pendleton Act of 1883, which established the Civil Service Commission (CSC) and 

a merit-based employment system for the Federal Government. The Pendleton Act was passed after the 

assassination of President Garfield by a disgruntled Federal job seeker and grew out of the 19th century 

reform movement to curtail the excesses of political patronage in government and ensure a stable highly 

qualified workforce to serve the public. Over time, it became clear that the CSC could not properly, 

adequately, and simultaneously set managerial policy, protect the merit systems, and adjudicate appeals. 

Concern over the inherent conflict of interest in the CSC’s role as both rule-maker and judge was a principal 

motivating factor behind the passage of the Civil Service Reform Act of 1978 (CSRA). The CSRA replaced 

the CSC with three new agencies: MSPB as the successor to the Commission;1 the Office of Personnel 

Management (OPM) to serve as the President’s agent for Federal workforce management policy and 

procedure; and the Federal Labor Relations Authority (FLRA) to oversee Federal labor-management 

relations. The CSRA also codified for the first time the values of the merit systems as the MSPs (Merit System 

Principles) and defined the PPPs (Prohibited Personnel Practices).

2

The MSPB Mission

The mission of the MSPB is to protect the Federal merit systems and the rights of individuals within those systems. 

MSPB carries out its statutory responsibilities and authorities primarily by adjudicating individual employee 

appeals, enforcing its decisions, conducting objective, merit systems studies, and reviewing the rules, 

regulations and significant actions of OPM to assess the degree to which those actions support adherence to 

the merit principles and do not lead to the commission of PPP’s.

Board Organization

The agency has three appointed Board members and was authorized 235 Full-time Equivalents (FTE) with 

offices in Washington, D.C. (headquarters) and six regional and two field offices that are located throughout 

the United States. 

MSPB Program Offices and Their Functions

The three Board Members adjudicate the cases brought to MSPB. The bipartisan Board consists of the 

Chairman, Vice Chairman, and Member, with no more than two of its three members from the same political 

party. Board members are nominated by the President, confirmed by the Senate, and serve overlapping, nonrenewable 7-year terms. The Chairman, by statute, is the chief executive and administrative officer of MSPB. 

The Office Directors report to the Chairman through the Executive Director.

The Office of the Administrative Law Judge (ALJ) adjudicates and issues initial decisions in corrective and 

disciplinary action complaints (including Hatch Act complaints) brought by the Special Counsel, proposed 

agency actions against ALJs, MSPB employee appeals, and other cases assigned by MSPB. The functions of 

 1 Bogdanow, M., and Lanphear, T., History of the Merit Systems Protection Board, Journal of the Federal Circuit Historical Society, Volume 4, 2010.

2 Title 5 U.S.C. § 2301 and Title 5 U.S.C. § 2302, respectively.
4

this office are currently performed by ALJs at the U. S. Coast Guard, Federal Trade Commission, and 

Environmental Protection Agency under reimbursable interagency agreements.

The Office of Appeals Counsel conducts legal research and prepares proposed decisions for the Board in 

cases where a party petitions for review (PFR) of an administrative judge’s (AJ) initial decision and in most 

other cases decided by the Board. The office prepares proposed decisions on interlocutory appeals of rulings 

made by judges, makes recommendations on reopening cases on the Board’s own motion, and provides 

research, policy memoranda, and advice to the Board on legal issues.

The Office of the Clerk of the Board receives and processes cases filed at MSPB headquarters (HQ), rules 

on certain procedural matters, and issues MSPB decisions and orders. The office serves as MSPB’s public 

information center, coordinates media relations, produces public information publications, operates MSPB’s 

library and on-line information services, and administers the Freedom of Information Act and Privacy Act 

programs. The office also certifies official records to the courts and Federal administrative agencies and 

manages MSPB’s records systems, legal research systems, and the Government in the Sunshine Act program.

The Office of Equal Employment Opportunity plans, implements, and evaluates MSPB’s equal 

employment opportunity programs. It processes complaints of alleged discrimination brought by agency 

employees and provides advice and assistance on affirmative employment initiatives to MSPB’s managers and 

supervisors.

The Office of Financial and Administrative Management administers the budget, accounting, travel, time 

and attendance, human resources, procurement, property management, physical security, and general services 

functions of MSPB. It develops and coordinates internal management programs, including review of agency 

internal controls. It also administers the agency’s cross-servicing agreements with the U.S. Department of 

Agriculture, National Finance Center (NFC) for payroll services, U.S. Department of the Treasury, Bureau of 

Fiscal Service (BFS) for accounting services, and U.S. Department of Agriculture, Animal and Plant Health 

Inspection Service (APHIS) for human resources management services.

The Office of the General Counsel, as legal counsel to MSPB, advises the Board and MSPB offices on a 

wide range of legal matters arising from day-to-day operations. The office represents MSPB in litigation;

prepares proposed decisions for the Board to enforce a final MSPB decision or order, in response to requests 

to review OPM regulations, and for other assigned cases; conducts the agency’s PFR settlement program; and 

coordinates the agency’s legislative policy and congressional relations functions. The office drafts regulations, 

conducts MSPB’s ethics program, and plans and directs audits and investigations.

The Office of Information Resources Management develops, implements, and maintains MSPB’s 

automated information systems to help the agency manage its caseload efficiently and carry out its 

administrative and research responsibilities.

The Office of Policy and Evaluation carries out MSPB’s statutory responsibility to conduct special studies 

of the civil service and other Federal merit systems. Reports of these studies are sent to the President and the 

Congress and are distributed to a national audience. The office provides information and advice to Federal 

agencies on issues that have been the subject of MSPB studies. The office reviews and reports on the 

significant actions of OPM. The office also conducts program evaluations for the agency and has 

responsibility for preparing MSPB’s strategic and performance plans and performance reports required by the 

Government Performance and Results Modernization Act.
5

CHAIRMAN MEMBER

General Counsel

Equal

Employment

Opportunity

Clerk of the 

Board

Administrative 

Law Judge Regional 

Operations

Appeals Counsel Policy and 

Evaluation

Regional Offices 

Atlanta, Chicago,

Dallas,

Philadelphia,

Oakland, and

Washington, DC 

VICE CHAIRMAN

Field Offices 

Denver and

New York

Financial and

Administrative 

Management

Information

Resources 

Management

Executive 

Director

Human Resources Management services are provided by the U.S. Department of Agriculture’s (USDA), Animal and 

Plant Health Inspection Service (APHIS) Business Services.

Payroll services are provided by USDA’s National Finance Center.

Accounting services are provided by the Department of the Treasury, Bureau of the Fiscal Service (BFS).

The functions of the Administrative Law Judge (ALJ) are performed by ALJs employed by the Federal Trade 

Commission (FTC), the U.S. Coast Guard, and the Environmental Protection Agency (EPA) under reimbursable 

interagency agreements.

U.S. Merit Systems Protection Board

Performance

Improvement

Officer

The Office of Regional Operations oversees the agency’s six regional and two field offices, which receive 

and process appeals and related cases. It also manages MSPB’s Mediation Appeals Program (MAP). AJs in 

the regional and field offices are responsible for adjudicating assigned cases and for issuing fair, well-reasoned, 

and timely initial decisions.

Organization Chart
6

Management Discussion and Analysis

MSPB has chosen to produce an Agency Financial Report (AFR) and an Annual Performance Report (APR). 

MSPB will submit its final FY 2017 APR with its Congressional Budget Justification and post it on the MSPB 

web site at www.mspb.gov at the time the President’s FY 2019 Budget is submitted to Congress in 2018.

Interim Summary of MSPB’s FY 2017 Program Performance

This performance summary contains interim FY 2017 performance results and initial judgments related to the 

achievement of our objectives. This information is organized to align with the Annual Performance Plan for 

FY 2017, which was developed under MSPB’s Strategic Plan for FY 2016 – 2018. MSPB is continuing to 

verify and validate its performance results for FY 2017. Final performance results and final judgments on the 

achievement of objectives will be published in the FY 2017 Annual Performance Report (APR) scheduled for 

release in February 2018.

Strategic Objective 1A: Provide understandable, high-quality resolution of appeals, supported by fair 

and efficient adjudication and alternative dispute resolution (ADR) processes. Interim results indicate 

that this objective was Partially Met. MSPB exceeded its adjudication performance measure targets related 

to decision quality for initial appeals and cases left unchanged by the U.S. Court of Appeals for the Federal 

Circuit. We did not set a goal for average processing time for initial appeals but achieved the target for the 

interim indicator, closing 98 percent of cases on hand as of October 1, 2016. We also implemented an 

automated electronic process to collect customer service feedback on the adjudication process in the regional 

and field offices and on the MAP. The target for average processing time for PFRs was defined under the 

assumption of normal operations at HQ and the continued release of PFR decisions over the entire year. 

However, the departure of former Chairman Susan T. Grundmann in early January 2017meant that there was 

not a quorum of Board members to vote on and release PFR decisions from early January to the end of 

September 2017. We did continue to process cases at HQ and the Vice Chairman voted on hundreds of PFR 

cases, which await consideration by additional members when nominated and confirmed. However, we were 

unable to rate the target for average processing time for PFRs due to the lack of quorum. 

 

Strategic Objective 1B: Enforce timely compliance with MSPB decisions. Interim results indicate that 

this objective was Not Rated (No Quorum). The target was set with the assumption that we would release 

decisions in enforcement cases at HQ for the entire year. While we continued to process compliance cases 

at HQ and in the regional and field offices, the lack of a quorum of Board members meant that we were 

unable to release decisions in enforcement cases at HQ from early January to the end of September 2017. 

Thus, we could not rate the target for this objective. 

Strategic Objective 1C: Conduct objective, timely studies of the Federal merit systems and Federal 

human capital management issues. Interim results indicate this objective was Partially Met. MSPB 

published three Issues of Merit newsletter editions on topics such as misconduct and penalties, making a 

difference at work, stewardship and the MSPs, effective hiring, engagement, emotional exhaustion, sexual 

harassment trends, and Federal human resource (HR) offices. We published two “Noteworthy” articles, one 

on addressing misconduct in the Federal civil service and another on managing the workforce under the merit 

system principles (MSPs). MSPB published one study report, which was a compilation of articles on 
7

conducting adverse actions. Two other study reports are awaiting review and approval but cannot proceed 

because we do not have a quorum of Board members. Therefore, the performance goal on publication of 

study reports could not be rated. We continued to process 2016 MPS data and began work to ensure we have 

a secure location to electronically process workforce data.

Strategic Objective 1D: Review and act upon the rules, regulations, and significant actions of the 

Office of Personnel Management (OPM), as appropriate. Interim results indicate that this objective was 

Partially Met. MSPB published the Annual Report for FY 2016, which contained the review of OPM’s 2016 

significant actions and updates of selected significant actions from prior reports. However, due to the lack of 

quorum, MSPB could not release decisions involving requests for regulation review from early January to the 

end of September 2017. Thus, we could not rate the performance goal involving review of OPM regulations.

Strategic Objective 2A: Inform, promote, and /or encourage actions by policy-makers, as 

appropriate, that strengthen Federal merit systems laws and regulations. Interim results indicate that 

this objective was Exceeded. MSPB cases, studies, reports, newsletter articles, and other products were cited 

hundreds of times in 150 different print and electronic sources, 11 percent more unique sources than the 

previous year. Sources included trade publications on Federal management and legal issues, wire services, 

major city daily newspapers, Congressional sources, and a variety of websites and blogs. In accord with the 

Senate Report published in 2016, the National Defense Authorization Act for FY 2017 (signed in December 

2016) used an MSPB report on Veterans’ hiring to reinstate the 180-day waiting period for departing military 

personnel before they can be hired into Federal civilian positions. Several MSPB merit system study reports, 

including the compilation of articles about processing adverse action, were cited by the President of the 

Senior Executive Association in testimony during a hearing entitled, “Empowering Managers: Ideas for a 

More Effective Federal Workforce” conducted on February 9, 2017 by the Senate Subcommittee on 

Regulatory Affairs and Federal Management. An MSPB study on due process was also cited by the President 

of the Federal Management Association (FMA) during the same Senate Subcommittee hearing. Several 

MSPB merit system study reports were also cited in the Appendix to OMB memorandum M-17-22 entitled,

“Comprehensive Plan for Reforming the Federal Government and Reducing the Federal Civilian Workforce.” 

Although the study report on adverse actions did not have policy recommendations, we posted several 

documents for policy-makers including management perspectives on addressing misconduct in the Federal 

civil service, an annotated flow-chart on the Federal process for adverse actions, and managing Federal 

employees under the MSPs.

Strategic Objective 2B: Support and improve the practice of merit, adherence to MSPs, and 

prevention of Prohibited Personnel Practices (PPPs) in the workplace through successful outreach. 

Interim results indicate this objective was Exceeded. The number of MSPB outreach events was 

approximately 20 percent higher than the previous year. Outreach event topics included MSPB adjudication 

processes and legal precedent, Federal employment law, merit systems studies research, and general merit 

systems issues. Audiences varied from Federal labor law attorneys, human resource professionals, researchers, 

the Federal Bar Association, Executive branch departments and agencies, and Federally Employed Women 

(FEW), among others. MSPB also presented at the Federal Dispute Resolution conference and the OPM 

research summit. Finally, MSPB’s Director of the Office of Policy and Evaluation participated in a series of 

meetings between OMB and Federal agencies to clarify OMB expectations for agency responses to OMB 

memo M-17-22.
8

Strategic Objective 2C: Advance the understanding of the concepts of merit, MSPs, and PPPs 

through the use of educational standards, materials, and guidance established by MSPB. Interim

results indicate this objective was Exceeded. The number of visits to pages on the MSPB website increased 

from FY 2016 by 48 percent. Over five new or updated educational and informational materials or 

documents were made available on the website. These documents included the designation of the new Vice 

Chairman and FAQs on the impact of the lack of quorum on Board operations and appeals, an interactive 

report on adverse actions, two external reviews of the agency’s IT infrastructure, a diagram illustrating current 

avenues of review or appeal for an adverse action, and data from the 2016 MPS. We also reorganized our 

FOIA web page that included additional FOIA guidance and created a new page dedicated to the Privacy Act.

Management Objective M1: Lead and manage employees to ensure an engaged workforce with 

competencies to perform the mission. Interim results indicate this objective was Met. The 2017 Federal 

Employee Viewpoint Survey (FEVS) results for employee perceptions of competencies, diversity, and 

engagement, and the 2017 Internal Survey (IS) results for inclusion, were within plus or minus 5 percent from 

last year.

Management Objective M2: Manage budget and financial resources and improve efficiency to 

ensure current and future resources. Interim results indicate this objective was Met. Monthly results 

averaged over the year indicated that 3.4 percent of funded positions were left vacant, which was considerably 

lower than the target of 8% or lower. The performance work statement (PWS) for developing requirements 

for our new core adjudication business applications was approved by the Acting CIO and submitted to the 

MSPB contracting officer. The PWS for moving our data center to the cloud is pending approval by the 

Acting CIO. MSPB initiated weekly calls or meetings with staff from OMB’s Office of the Federal Chief 

Information Officer regarding our IT modernization efforts. We released e-Appeal version 9.7 and a new 

version of Quick Case, modified the Media Application and Media Server, completed a DMS upload 

application for litigation cases, and essentially completed an e-Case File application to automate compilation 

of electronic cases files sent to the Courts, Department of Justice, or other agencies. We distributed new 

laptops to all employees at HQ and in the regional and field offices. We also began work on obtaining a 

cloud-based secured location for analyzing Enterprise Human Resources Integration (EHRI) data. 

Management Objective M3: Manage information technology and information services programs to 

support our mission. Interim results indicate that this objective was Met. Results from the MSPB IS 

indicated a 14 percent increase in the average positive responses on employee ratings of the availability and 

reliability of the IT infrastructure. The IS ratings for employee satisfaction with IT support increased

5 percent, which was within the targeted range. Within this goal area, the percent positive responses to the 

question about effective communication about IT systems and services increased by 30 percent from 2016. 

We continued to use cSupport help-desk ticket system emphasizing that tickets not be closed unless the 

customer agrees, and have begun planning for the implementation of iSupport, the successor ticket system. 

We also began planning for an automated survey of e-Appeal users.

Management Objective M4: Ensure individual and workplace safety and security. Interim results for

this measure indicate this objective was Met. The average of the percent positive responses from the 

questions on workforce and workplace safety and security was within the targeted range. 
9

Management Assurances

Federal Managers’ Financial Integrity Act (FMFIA) of 1982

In accordance with the FMFIA, MSPB has established an internal management control system to ensure 

that: (1) obligations and costs comply with applicable law; (2) assets are safeguarded against waste, loss, 

unauthorized use, or misappropriation; (3) revenues and expenditures are properly recorded and accounted 

for; and (4) expenditures are being made in accordance with the agency’s mission and they are achieving their 

intended results.

Federal Financial Management Improvement Act (FFMIA) of 1996

The purpose of the FFMIA is to advance Federal financial management by ensuring that Federal financial 

management systems provide accurate, reliable, and timely financial management information to the 

government’s managers. The intent and the requirements of this Act go well beyond the directives of the 

CFO Act and the Government Management Reform Act of 1994 (GMRA) to publish audited financial 

reports. 

MSPB’s management review of the system of internal accounting and administrative control was evaluated in 

accordance with the applicable Federal guidance. The objectives of the system are to provide reasonable 

assurance that:

• Obligations and costs are in compliance with applicable laws;

• Funds, property, and other assets are safeguarded against waste, loss, unauthorized use, or 

misappropriation;

• Revenues and expenditures applicable to operations are properly recorded and accounted for to permit 

the preparation of reliable accounting, financial, and statistical reports; and,

• Accountability over assets is maintained.

The evaluation of management controls extends to every MSPB responsibility and activity and is applicable to 

financial, administrative, and operational controls. Furthermore, the concept of reasonable assurance 

recognizes that: (1) the cost of management controls should not exceed the projected derived benefits; and 

(2) the benefits consist of reductions in the risks of failing to achieve the stated objectives. The expected 

benefits and related costs of control procedures should be addressed using estimates and managerial 

judgment. Moreover, errors and irregularities may occur and not be detected because of inherent limitations 

in any system of internal accounting and administrative control, including those limitations resulting from 

resource constraints, restrictions, and other factors. Finally, projection of any evaluation of the system to 

future periods is subject to risk that the procedures may be inadequate because of changes in conditions or 

that the degree of compliance with the procedures may deteriorate.

Improper Payments Act

Improved financial performance through the reduction of improper payments continues to be a key financial 

management focus of the Federal government. At MSPB, developing strategies and the means to reduce 

improper payments is a matter of good stewardship. Accurate payments lower program costs.
10

OMB originally provided Section 57 of Circular A-11 as guidance for Federal agencies to identify and reduce 

improper payments for selected programs. The Improper Payments Information Act of 2002 (IPIA) 

broadened the original erroneous payment reporting requirements to programs and activities beyond those 

originally listed in Circular A-11. In August 2006, OMB issued Circular A-123, Appendix C - Requirements 

for Effective Measurement and Remediation of Improper Payments.

The IPIA defines improper payments as those payments made to the wrong recipient, in the wrong amount, 

or used in an improper manner by the recipient. The IPIA requires a Federal agency to identify its programs 

that are of high risk for improper payments. It also requires the agency to implement a corrective action plan 

that includes improper payment reduction and recovery targets and to report annually on the extent of its 

improper payments for high-risk programs and the actions taken to increase the accuracy of payments.

To coordinate and facilitate MSPB’s efforts under the IPIA, the CFO works with Office Directors to develop 

a coordinated strategy to perform annual reviews for all programs and activities susceptible to improper 

payments. This cooperative effort includes developing actions to reduce improper payments, identifying and 

conducting ongoing monitoring techniques, and establishing appropriate corrective action initiatives. MSPB 

has determined that there is no significant risk of improper payments based on the review of its programs in 

FY 2017. 
11

Other Information

Summary of Financial Statement Audit and Management Assurances

Presented below is a summary of financial statement audit and management assurances for FY 2017. Table 1 

relates to the Agency’s FY 2017 financial statement audit, which resulted in an unmodified opinion with no 

material weakness. Table 2 presents the number of material weaknesses reported by the Agency under 

Section 2 of the FMFIA—either with regard to internal controls over operations or financial reporting, and 

Section 4, which relates to internal controls over financial management systems; as well as the Agency’s 

compliance with the FFMIA.

Table 1. Summary of Financial Statement Audit

• Audit Opinion • Unmodified 

• Restatement • No

Material Weakness Beginning Balance New Resolved Consolidated Ending Balance

Total Material Weaknesses 0 0 0 0 0

Table 2. Summary of Management Assurances

Effectiveness of Internal Control over Financial Reporting (FMFIA § 2)

Statement of Assurance: Unmodified

Material Weakness Beginning Balance New Resolved Consolidated Reassessed Ending Balance

Total Material Weaknesses 0 0 0 0 0 0

Effectiveness of Internal Control over Operations (FMFIA § 2)

Statement of Assurance: Unmodified

Material Weakness Beginning Balance New Resolved Consolidated Reassessed Ending Balance

Total Material Weaknesses 0 0 0 0 0 0

Compliance with Federal Financial Management System Requirements (FMFIA § 4)

Statement of Assurance: Systems conform with financial management system requirements

Material Weakness Beginning Balance New Resolved Consolidated Reassessed Ending Balance

Total Material Weaknesses 0 0 0 0 0 0

Compliance with Section 803(a) of the Federal Financial Management Improvement Act (FFMIA)

Agency Auditor

1. System Requirements No lack of compliance noted No lack of compliance noted

2. Accounting Standards No lack of compliance noted No lack of compliance noted

3. USSGL at Transaction Level No lack of compliance noted No lack of compliance noted
12

CIVIL MONETARY PENALTIES’ ADJUSTMENTS FOR INFLATION

The Federal Civil Penalties Inflation Adjustment Act of 1990, as amended by the Debt Collection 

Improvement Act of 1996, required agencies to adjust their civil monetary penalties (CMP) for inflation at 

least every four years to maintain their deterrent effect. A CMP is defined as ‘‘any penalty, fine, or other 

sanction’’ that:: (1) ‘‘is for a specific amount’’ or ‘‘has a maximum amount’’ under Federal law; and (2) that a 

Federal agency assesses or enforces ‘‘pursuant to an administrative proceeding or a civil action in the Federal 

courts.’’ MSPB had no CMP in accordance with the Federal Civil Penalties Inflation Adjustment Act of 1990. 

On November 2, 2015, the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 

further amended the Federal Civil Penalties Inflation Adjustment Act of 1990 to improve the effectiveness of 

CMPs and to maintain their deterrent effect. This amendment required agencies to adjust the CMP levels in 

effect as of November 2, 2015, with initial catch-up adjustments for inflation through an interim final 

rulemaking published by July 1, 2016, and to take effect no later than August 1, 2016. The maximum amount 

for an initial catch-up adjustment for inflation could not exceed 150 percent of the amount of that CMP on 

the date of enactment of the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 

(November 2, 2015). 

The 2015 Amendments also provide for agencies to adjust for inflation to their CPM amounts by January 15, 

2017, and not later than January 15 of each year thereafter. Accordingly, MSPB had adjusted for inflation to 

CMP. MSPB published its latest adjustments for inflation to CMPs (82 FR 25715, Civil Monetary Penalty 

Adjustments for Inflation) in the Federal Register on June 5, 2017, pages 25715-25716), and which is also 

available at the agency’s website at www.mspb.gov.

The following table provides detailed information on each of the Agency’s CMPs as of June 5, 2017.

Statutory Authority

Penalty 

(Name or Description)

Year 

Enacted

Latest Year 

Adjustment (via 

Statute or 

Regulation)

Current 

Penalty 

Level

Location for Penalty 

Update Details

5 U.S.C § 1215(a)(3), 

Civil Service Reform 

Act of 1978 (CSRA) Disciplinary Action 1989 2017 $1,045

Federal Register 82 (5)

June 2017): 25715-25716 

www.mspb.gov

5 U.S.C § 7326, Hatch 

Act Modernization Act 

of 2012 Penalties 2012 2017 $1,045

Federal Register 82 (5)

June 2017): 25715-25716 

www.mspb.gov

14

Notes on the Financial Statements

Improving financial management continues to be a high priority of MSPB. It is an essential element in 

demonstrating accountability and enhancing services provided to the public. Financial improvements 

initiated by MSPB have been driven by recent legislation and external initiatives, as well as by a strict 

organizational belief that adherence to sound financial policies and procedures will directly enhance the 

efficiency and effectiveness of the agency. This is of particular importance in an era of financial uncertainty 

and tightening budgets. Pivotal to driving better performance results through enhanced financial 

management practices has been MSPB’s ongoing efforts to provide day-to-day decision-makers with reliable 

budgetary and cost information.

Limitations of the Principal Financial Statements

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

operations of this entity, pursuant to the requirements of 31 U.S.C. 3515 (b). While the statements have been 

prepared from the books and records of the entity in accordance with generally accepted accounting 

principles (GAAP) for Federal entities and the formats prescribed by OMB, the statements are in addition to 

the financial reports used to monitor and control budgetary resources, which are prepared from the same 

books and records. The statements should be read with the realization that MSPB is a component of the U.S. 

Government, a sovereign entity. 

The principal financial statements summarize MSPB’s financial position, net cost of operations, and changes 

in net position, provide information on budgetary resources and financing, and present the sources and 

disposition of custodial revenues for FY 2016 and FY 2017. 

The Balance Sheet summarizes the assets, liabilities, and net position by category as of the reporting date. 

Intragovernmental assets and liabilities resulting from transactions between federal agencies are presented 

separately from assets and liabilities from transactions with the public. 

The Statement of Net Cost shows, by programs, the net cost of operations for the reporting period. Net cost 

of operations consists of full program costs incurred by the agency less exchange revenues earned by those 

programs.

The Statement of Changes in Net Position presents the agency’s beginning and ending net position by two 

components—Cumulative Results of Operations and Unexpended Appropriations. It summarizes the 

change in net position by major transaction category. The ending balances of both components of the net 

position are also reported on the Consolidated Balance Sheet.

The Statement of Budgetary Resources presents the budgetary resources available to the agency, the status of 

these resources, and the outlays of budgetary resources.

The Notes to the Financial Statements provides information to explain the basis of the accounting and 

presentation used to prepare the statements and to explain specific items in the statements. They also provide 

information to support how particular accounts have been valued and computed.