U.S. Merit Systems Protection Board

Agency

Financial 

Report

 Fiscal Year 2018

November 2018
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 2018 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
Message from the Vice Chairman 

U.S. MERIT SYSTEMS PROTECTION 

BOARD Washington D.C. 20036 

Office of the Vice Chairman 

I am pleased to present the U.S. Merit Systems Protection Board's (MSPB) Agency Financial Report (AFR) 

for fiscal year (FY) 2018 and to report that as of September 30, 2018, MSPB has received an unmodified 

(clean) opinion on its financial statements. This is the final AFR that will be published and released under my 

direction and leadership, as we remain committed to protecting the civil service merit systems. The AFR is an 

opportunity for us to highlight the Agency's accomplishments and challenges in FY 2018. This report 

provides an assessment of the Agency's financial status along with information on our financial management 

and performance; it also provides a window of transparency for our key stakeholders and the American public 

to assess our financial information and performance. 

Following an assessment of MSPB's comprehensive management control program, I certify, with reasonable 

assurance that our financial management systems have been found to be in substantial compliance with the 

Federal Financial Management Improvement Act (FFMIA) of 1996. In accordance with Office of 

Management and Budget (0MB) Circulars A-136 and A-11, the financial and performance data published in 

this report are substantially complete and reliable. 

In summary, MSPB remains committed to the important work of ensuring that we meet the mission of the 

organization - "Protect the Merit System Principles and promote an effective Federal workforce free of 

Prohibited Personnel Practices." We will continue to dedicate our resources to primarily processing appeals 

for Federal employees involving, among others, adverse actions, whistleblower claims and veterans issues; in 

addition to ensuring that we are effective stewards of taxpayers' dollars. 

Respectfully, ��t� 

Mark A. Robbins* 

Vice Chairman 

November 15, 2018 

• Because the office of Chairman currently is vacant, the functions of the chief executive and administrative officer of the

Merit Systems Protection Board are vested in the Vice Chairman pursuant to 5 U.S.C. § 1203(b).

1
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, 2017 through September 30, 2018. 

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

FY 2018 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 2020 Budget is submitted to Congress in 2019. 

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 2018 

Performance results compared to the Annual Performance Plan for FY 2018, which was developed under 

MSPB’s Strategic Plan for FY 2018-2022. 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 2018 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 Civil Service Reform Act of 1883 (Pendleton Act), 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 rulemaker 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;1the 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 PPPs. 

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 the 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 of 2010. 
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, 

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 2018 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 2020 Budget is submitted to Congress in 2019. 

Interim Summary of MSPB’s FY 2018 Program Performance

This performance summary contains interim FY 2018 performance results and initial judgements related to 

the achievement of our strategic and management objectives. This information is organized to align with the 

Annual Performance Plan for FY 2018. MSPB is continuing to verify and validate its performance results for 

FY 2018. Final performance results and final judgements on the achievement of objectives will be published 

in the FY 2018 Annual Performance Report (APR) released in February 2019. 

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 target for average processing time for initial 

appeals, and met its targets for cases left unchanged by the U.S. Court of Appeals for the Federal Circuit, and 

for conducting surveys of adjudication and ADR customers. Because we began FY 2018 without a quorum 

of Board members, we did not set targets for quality of initial appeals (which is based on Petition for Review 

(PFR) decisions), and for average PFR processing time. These performance goals were not rated in FY 2018. 

Even though we did not have a quorum for the entirety of FY 2018, we continued to process cases at 

headquarters (HQ) and prepare draft decision for Board review, and the Vice Chairman voted on hundreds of 

PFR cases. As of the end of FY 2018, approximately 1,800 PFR cases were pending at HQ, and over 1,500 

PFR decisions had been drafted and are awaiting consideration by new Board members when they arrive. 

Additionally, our HQ offices prepared several draft decisions in original jurisdiction cases for consideration 

by new Board members when they arrive.

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

this objective was Not Rated (No Quorum). No target was set for this performance goals because we 

began the year without a quorum of Board members. While we continued to process compliance cases at 

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

release decisions in compliance/enforcement cases at HQ. Thus, we could not rate this objective and 

performance goal.

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 

exceeded its target for newsletters and other articles by publishing three Issues of Merit newsletter editions 

covering all nine of the merit system principles (MSPs) and four additional articles. Newsletter articles 

include topics such as barriers to using the supervisory probationary period, aligning employee engagement 

with results, a shared understanding of sexual harassment, temporary and term appointments, and an entire 

edition on the 40th anniversary of the Civil Service Reform Act of 1978 (CSRA). We published additional 

articles on: The roles of feedback, autonomy, and meaningfulness in employee performance behaviors; an 
7

update on sexual harassment; improving hiring through better assessment; and building blocks for effective 

performance management. Due to the lack of a quorum, we did not set a target for publication of merit 

system study reports. Therefore, the performance goal on publication of study reports was not rated. 

However, we have at least two merit system study reports awaiting review by new Board members. Our

survey target was met by negotiating a Memorandum of Understanding (MOU) with the Office of Personnel 

Management (OPM) for our use of OPM’s personnel data, and to begin to develop requirements for a new 

survey capability to ensure secure, effective, and efficient surveys of Federal employees and others to support 

our studies function. 

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 2017, which contained the review of OPM’s 2017 

significant actions. There were three regulation cases pending at HQ at the end of FY 2018. However, due 

to the lack of quorum, we could not issue decisions in the cases. Thus, we did 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 Met. MSPB’s performance goal for scope of citations was achieved. Our cases, studies, 

reports, newsletter articles, and other products were cited hundreds of times in over 135 different print and 

electronic sources. 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. Citation 

sources of particular import include two Government Accountability Office (GAO) reports; OPM’s 

unlocktalent.gov website; posts and letters by selected Senators and Representatives; the National Academies 

of Sciences, Engineering, and Medicine; the National Academy of Public Administration; and a book on 

Health Care Management. We exceeded our target for articles published with policymakers as a primary 

audience including an update on sexual harassment; improving hiring through better assessment; and building 

blocks for effective performance management.

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 Met. The number of MSPB outreach events was within 5 percent 

or the number of outreach events in 2017. 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 and equal employment opportunity 

professionals, academic and Federal researchers, legal organizations, Federal executive branch departments 

and agencies, employee and affinity groups, academic institutions, and television and radio audiences, among 

others. MSPB staff presented at the Federal Dispute Resolution conference, the American Society for Public 

Administration annual conference, Federal Circuit Bar Association Bench and Bar conference, and the 

Society for Industrial and Organizational Psychology annual conference.

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 
8

from FY 2017 by 16 percent. Over five new or updated educational and informational materials or 

documents were made available on the website. These documents included the information about: The All 

Circuit Review Act; MSPB’s new procedure to Dismiss PFRs with Prejudice through order of the Clerk of the 

Board; information about the President’s nominees for MSPB Chairman and Board members; updates on the 

Frequently Asked Questions (FAQs) on the impact of the lack of quorum on Board operations and appeals; 

monthly information on the number of PFRs pending at headquarters and PFRs pending before the Board;

new prohibited personnel practice (PPP) number 14; and a radio and a television interview. 

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 2018 Federal 

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

engagement, and the 2018 Internal Survey (IS) results for inclusion, were within plus or minus 5 percent from 

the previous year.

Management Objective M2: Develop budgets and manage financial resources to ensure necessary 

resources now and in the future, and ensure individual and workplace safety and security. Interim 

results indicate this objective was Met. Monthly results averaged over the year indicated that 8.0 percent of

funded positions were left vacant, which is at the target value. The average of the percent positive responses

from the 2018 Internal Survey questions on workforce and workplace safety and security was also within the

targeted range.

Management Objective M3: Improve and maintain information technology (IT) and information 

services programs to support agency mission and administrative functions. Interim results indicate

that this objective was Met. Results from the 2018 IS indicated that the average positive responses on 

employee ratings of availability and reliability of the IT infrastructure exceeded the target of plus or minus 5 

percent from the average in FY 2017. The IS ratings for employee satisfaction with IT support also exceeded

the target of plus or minus 5 percent from the average in 2017. We continued to use cSupport help-desk

ticket system emphasizing that tickets not be closed unless the customer agrees, and made significant progress

in planning for the implementation of iSupport, the successor ticket system. We also identified several MSPB

employees who had used e-Appeal in previous positions. These employees provided input to requirements 

for a successor e-Appeal application as part of the modernization of MSPB’s core business applications. 

Therefore, a survey of e-Appeal users was not necessary in FY 2018.

Management Objective M4: Modernize core business applications to achieve electronic 

adjudication, migrate the data center to the cloud, and provide a web-based survey platform. Interim

results for this measure indicate this objective was Met. MSPB completed requirements development for its 

new core business applications and issued a Request for Proposal (RFP) in FY 2018. This effort was and 

organized effort supported by external consultants, a core team of MSPB advisors, which included 

representatives from offices beyond those that conduct adjudication functions, and several internal surveys to 

clarify requirements. As work on IT modernization efforts accelerated, it was clear that separately migrating

our data center would not be cost effective since the new core business applications would be cloud-based. 

Therefore, we are devoting the migration resources to improving disaster recovery for the existing data center

and supporting collateral projects necessary for comprehensive IT modernization to achieve 100 

percent e-Adjudication. 
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 2018. 
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Other Information

Summary of Financial Statement Audit and Management Assurances

Presented below is a summary of financial statement audit and management assurances for FY 2018. Table 1 

relates to the Agency’s FY 2018 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 Penalty 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 (83 FR 1173, Civil Monetary Penalty

Adjustments for Inflation) in the Federal Register on January 10, 2018, pages 1173-1174), and which is also 

available on the agency website at www.mspb.gov. 

The following table provides detailed information on each of the Agency’s CMPs as of January 10, 2018. 

Statutory Authority

Penalty 

(Name or Description)

Year 

Enacted

Latest Year 

of 

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 2018 $1,066

Federal Register 83 

(January 2018): 1173-1174

www.mspb.gov

5 U.S.C § 7326, Hatch 

Act Modernization Act 

of 2012 Penalties 2012 2018 $1,066

Federal Register 83 

(January 2018): 1173-1174

www.mspb.gov
Financial Section 

Message from the Chief Financial Officer 

It is with pleasure that I present to you the U.S. Merit Systems Protection Board's (MSPB) financial 

statements for fiscal year (FY) 2018. In presenting the Annual Financial Report (AFR) I am particularly 

pleased to report that under the leadership of Vice Chairman Mark A. Robbins, MSPB has earned an 

unmodified ( clean) opinion on its FY 2018 consolidated financial statements. 

The AFR is our Agency's primary statement of accountability to the President of the United States, the 

United States Congress and to the American people. In achieving this opinion, many important aspects to 

financial operations had to be met. This would not have occurred without the dedication of many individuals 

within our Agency. As a result of the work of many professionals within our organization, it is also rewarding 

to report that as in previous years that no material weaknesses were identified in the auditor's report on 

internal controls; nor were there any material instances of noncompliance with laws and regulations. 

Since 1992, MSPB has partnered with the Department of the Treasury, Bureau of the Fiscal Service (BPS) in 

Parkersburg, West Virginia to facilitate the Agency's compliance with all external reporting requirements. 

Through its financial operations, BPS has provided us with timely and complete reports allowing us to 

operate more efficiently and to identify and resolve potential concerns quickly. I sincerely thank all MSPB 

and BPS financial personnel for their dedication, diligence and excellent work throughout the fiscal year as we 

continue to act as good stewards of public funds. 

We take our financial accountability seriously and are committed to strengthening our financial performance. 

While we are proud of our accomplishment of receiving an unmodified opinion for this year, we are 

committed to continue our work on improving our financial management performance during the coming 

years while efficiently accomplishing the mission of MSPB - to protect the Federal merit systems and the 

rights of individuals within those systems. 

13 

Respectfully, 

- l,,Lr,.. 

)

vmJ. Nash

Chief Financial Officer 

November 15, 2018 
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 2017 and FY 2018. 

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.
15

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MERIT SYSTEMS PROTECTION BOARD

INDEPENDENT AUDITOR’S REPORT

AND

FINANCIAL STATEMENTS

FOR THE YEARS ENDED

SEPTEMBER 30, 2018 AND 2017

Prepared By

Brown & Company CPAs and Management Consultants, PLLC

November 13, 2018
MERIT SYSTEMS PROTECTION BOARD

INDEPENDENT AUDITOR’S REPORT

AND

FINANCIAL STATEMENTS

FOR THE YEARS ENDED

SEPTEMBER 30, 2018 AND 2017

TABLE OF CONTENTS

INDEPENDENT AUDITOR'S REPORT ON THE FINANCIAL STATEMENTS ............. 1

BALANCE SHEET ................................................................................................................ 6

STATEMENT OF NET COST .............................................................................................. 7

STATEMENT OF CHANGES IN NET POSITION.............................................................. 8

STATEMENT OF BUDGETARY RESOURCES................................................................. 9

NOTES TO THE FINANCIAL STATEMENTS................................................................... 10
1

INDEPENDENT AUDITOR’S REPORT 

U.S. Merit Systems Protection Board 

Washington, D.C.

In our audits of the fiscal years 2018 and 2017 financial statements of the U.S. Merit Systems Protection 

Board (MSPB), we found

 MSPB’s financial statements as of and for the fiscal years ended September 30, 2018, and

2017, are presented fairly, in all material respects, in accordance with U.S. generally accepted

accounting principles;

 no material weaknesses in internal control over financial reporting based on the limited

procedures we performed; and

 no reportable noncompliance for fiscal year 2018 with provisions of applicable laws,

regulations, contracts, and grant agreements we tested.

The following sections discuss in more detail (1) our report on the financial statements, which includes 

requiredsupplementary information(RSI) andotherinformation included withthefinancialstatements;

(2) our report on internal control over financial reporting; and (3) our report on compliance with laws,

regulations, contracts, and grant agreements.

Report on the Financial Statements

In accordance with the provisions of Accountability of Tax Dollars Act of 2002 (ATDA) (Pub. L. No. 

107-289), we have audited MSPB’s financial statements. MSPB’s financial statements comprise the

balance sheets as of September 30, 2018, and 2017; the related statements of net cost, changes in net

position, and budgetary resourcesforthe fiscal yearsthen ended; and the related notes to the financial

statements.

We conducted our audits in accordance with U.S. generally accepted government auditing standards. We

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

opinions.

Management’sResponsibility

MSPB’s management is responsible for (1) the preparation and fair presentation of these financial

statements inaccordance with U.S. generally accepted accounting principles; (2) preparing, measuring, and

presenting the RSI in accordance with U.S. generally accepted accounting principles; (3) preparing and

presenting other information included in documents containing the audited financial statements and

auditor’s report, and ensuring the consistency of that information with the audited financial statements and

the RSI; and (4) maintaining effective internal control over financial reporting, including 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.
2

Auditor’s Responsibility

Our responsibility isto express an opinion on these financial statements based on our audits. U.S. generally

accepted government auditing standards require that we plan and perform the audit to obtain reasonable

assurance about whether the financial statements are free from material misstatement. We are also

responsible for applying certain limited procedures to RSI and other information includedwith the financial

statements.

An audit offinancial statements involves performing proceduresto obtain audit evidence about the amounts

and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment,

including the auditor’s assessment ofthe risks of material misstatement ofthe 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 offinancial

statements also involves evaluating the appropriateness of the accounting policies used and the

reasonableness ofsignificant accounting estimates made by management, as well as evaluating the overall 

presentation of the financial statements. Our audits also included performing such other procedures as we

considered necessary in the circumstances.

Opinion on Financial Statements

In our opinion, MSPB’s financial statements present fairly, in all material respects, MSPB’s financial

position as of September 30, 2018, and 2017, and its net cost of operations, changes in net position, and

budgetary resources for the fiscal years then ended in accordance with U.S. generally accepted accounting

principles.

Other Matters

RequiredSupplementary Information

U.S. generally accepted accounting principles issued by the Federal Accounting Standards

Advisory Board (FASAB) require that the RSI be presented to supplement the financial

statements. Although the RSI is not a part of the financial statements, FASAB considers this

information to be an essential part of financial reporting for placing the financial statements in

appropriate operational, economic, or historical context. We have applied certain limited

procedures to the RSI in accordance with U.S. generally accepted government auditing

standards, which consisted of inquiries of management about the methods of preparing the RSI

and comparing the information for consistency with management’s responses to the auditor's

inquiries, the financial statements, and other knowledge we obtained during the audit of the

financial statements, in order to report omissions or material departures from FASAB

guidelines, if any, identified by these limited procedures. We did not audit and we do not

express an opinion or provide any assurance on the RSI because the limited procedures we

applied do not provide sufficient evidence to express an opinion or provide any assurance.
3

Other Information

MSPB’s other information contains a wide range of information, some of which is not directly

related to the financial statements. This information is presented for purposes of additional

analysis and is not a required part of the financial statements or the RSI. We read the other 

information included with the financial statements in order to identify material inconsistencies,

if any, with the audited financial statements. Our audit was conducted for the purpose of

forming an opinion on MSPB’s financial statements. We did not audit and do not express an

opinion or provide any assurance on the other information.

Report on Internal Control over Financial Reporting

In connection with our audits of MSPB’s financial statements, we considered MSPB’s internal control

over financial reporting, consistent with our auditor's responsibility discussed below. We performed

our procedures related to MSPB’s internal control over financial reporting in accordance with U.S.

generally accepted government auditing standards.

Management’s Responsibility

MSPB’s management isresponsible for maintaining effective internal control over financial reporting,

including 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

In planning and performing our audit of MSPB’s financial statements as of and for the year ended

September 30, 2018, in accordance with U.S. generally accepted government auditing standards, we

considered the MSPB’s internal control over financial reporting as a basis for designing audit

procedures that are appropriate in the circumstances for the purpose of expressing our opinion on the

financial statements, but not for the purpose of expressing an opinion on the effectiveness of MSPB’s

internal control over financial reporting. Accordingly, we do not express an opinion on MSPB’s

internal control over financial reporting. We are required to report all deficiencies that are considered

to be significant deficienciesor material weaknesses. We did not consider all internal controls relevant

to operating objectives, such as those controls relevant to preparing performance information and

ensuring efficient operations.

Definition and Inherent Limitations of Internal Control over Financial Reporting

An entity’s internal control over financial reporting is a process effected by those charged with

governance, management, and other personnel, the objectives of which are to provide reasonable

assurance that (1) transactions are properly recorded, processed, and summarized to permit the

preparation of financial statements in accordance with U.S. generally accepted accounting principles,

and assets are safeguarded against loss from unauthorized acquisition, use, or disposition, and (2)

transactions are executed in accordance with provisions of applicable laws, including those governing

the use of budget authority, regulations, contracts, and grant agreements, noncompliance with which

could have a material effect on the financial statements.

Because of itsinherent limitations, internal control over financial reporting may not prevent, or detect

and correct, misstatements due to fraud or error.
4

Results of Our Consideration of Internal Control over Financial Reporting

Our consideration of internal control was for the limited purpose described above, and was not

designed to identify all deficiencies in internal control that might be material weaknesses and

significant deficiencies or to express an opinion on the effectiveness of MSPB’s internal control over

financial reporting. Given these limitations, during our audit, we did not identify any deficiencies in

internal control over financial reporting that we consider to be material weaknesses. However,

material weaknesses may exist that have not been identified.

Intended Purpose of Report on Internal Control over Financial Reporting

The purpose of this report is solely to describe the scope of our consideration of MSPB’s internal

control over financial reporting and the results of our procedures, and not to provide an opinion on the

effectiveness of the MSPB’s internal control over financial reporting. This report is an integral part of

an audit performed in accordance with U.S. generally accepted government auditing standards in

considering internal control over financial reporting. Accordingly, this report on internal control over

financial reporting is notsuitable for any other purpose.

Report on Compliance with Laws, Regulations, Contracts, and Grant Agreements

In connection with our audits of MSPB’s financial statements, we tested compliance with selected

provisions of applicable laws, regulations, contracts, and grant agreements consistent with our

auditor’s responsibility discussed below. We caution that noncompliance may occur and not be

detected by these tests. We performed our tests of compliance in accordance with U.S. generally

accepted government auditing standards.

Management’s Responsibility

MSPB’s management is responsible for complying with laws, regulations, contracts, and grant 

agreements applicable to MSPB.

Auditor’s Responsibility

Our responsibility is to test compliance with selected provisions of applicable laws, regulations,

contracts, and grant agreements applicable to MSPB that have a direct effect on the determination of

material amounts and disclosures in MSPB’s financial statements, and perform certain other limited

procedures. Accordingly, we did not test compliance with all laws, regulations, contracts, and grant

agreements applicable to MSPB.

Results of Our Testsfor Compliance with Laws, Regulations, Contracts, and Grant Agreements

Our tests for compliance with selected provisions of applicable laws, regulations, contracts, and grant

agreements disclosed no instances of noncompliance for fiscal year 2018 that would be reportable

under U.S. generally accepted government auditing standards. However, the objective of our tests was

not to provide an opinion on compliance with laws, regulations, contracts, and grant agreements 

applicable to MSPB. Accordingly, we do not express such an opinion.
5

Intended Purpose of Report on Compliance with Laws, Regulations, Contracts, and Grant Agreements

The purpose of this report is solely to describe the scope of our testing of compliance with selected

provisions of applicable laws, regulations, contracts, and grant agreements, and the results of that

testing, and not to provide an opinion on compliance. This report is an integral part of an audit

performed in accordance with U.S. generally accepted government auditing standards in considering

compliance. Accordingly, this report on compliance with laws, regulations, contracts, and grant

agreements is notsuitable for any other purpose.

This report is intended solely for the information and use of the management of the MSPB, OMB, and the 

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

Largo, Maryland

November 13, 2018
The accompanying notes are an integral part of these financial statements.

6

2018 2017

Assets:

Intragovernmental

Fund Balance With Treasury (Note 2) $ 14,249,666 $ 13,272,030

Other (Note 5) 36,032 25,682

Total Intragovernmental 14,285,698 13,297,712

Accounts Receivable, Net (Note 3) 133 1,513

Property, Equipment, and Software, Net (Note 4) 702,046 701,086

Total Assets $ 14,987,877 $ 14,000,311

Liabilities:

Intragovernmental

Accounts Payable $ 518,754 $ 909,749

Other (Note 8) 416,376 367,789

Total Intragovernmental 935,130 1,277,538

Accounts Payable 162,376 146,050

Federal Employee and Veterans' Benefits (Note 7) 506,922 493,723

Other (Note 8) 4,224,502 4,025,854

Total Liabilities (Note 6) $ 5,828,930 $ 5,943,165

Net Position:

Unexpended Appropriations - Other Funds $ 12,104,558 $ 10,856,375

Cumulative Results of Operations - Other Funds (2,945,611) (2,799,229)

Total Net Position $ 9,158,947 $ 8,057,146

Total Liabilities and Net Position $ 14,987,877 $ 14,000,311

MERIT SYSTEMS PROTECTION BOARD

BALANCE SHEET

AS OF SEPTEMBER 30, 2018 AND 2017

(In Dollars)
The accompanying notes are an integral part of these financial statements.

7

2018 2017

Program Costs:

Adjudication

Gross Costs $ 40,226,350 $ 41,654,789

Less: Earned Revenue - 2,348

Net Program Costs $ 40,226,350 $ 41,657,137

Management Support

Gross Costs $ 5,352,998 $ 5,266,888

Net Program Costs $ 5,352,998 $ 5,266,888

Merit Systems Studies

Gross Costs $ 2,361,157 $ 2,267,534

Net Program Costs $ 2,361,157 $ 2,267,534

Net Cost of Operations $ 47,940,505 $ 49,191,559

MERIT SYSTEMS PROTECTION BOARD

STATEMENT OF NET COST

FOR THE YEARS ENDED SEPTEMBER 30, 2018 AND 2017

(In Dollars)
The accompanying notes are an integral part of these financial statements.

8

2018 2017

Unexpended Appropriations:

Beginning Balances $ 10,856,375 $ 11,096,891

Budgetary Financing Sources:

Appropriations Received 44,490,000 44,786,000

Other Adjustments (196,181) (160,692)

Appropriations Used (43,045,636) (44,865,824)

Total Budgetary Financing Sources 1,248,183 (240,516)

Total Unexpended Appropriations $ 12,104,558 $ 10,856,375

Cumulative Results of Operations:

Beginning Balances $ (2,799,229) $ (2,522,629)

Budgetary Financing Sources:

Appropriations Used 43,045,636 44,865,824

Transfers In/Out Without Reimbursement 2,345,000 2,345,000

Other Financing Sources (Non-Exchange):

Imputed Financing Sources (Note 12) 2,403,487 1,704,135

Total Financing Sources 47,794,123 48,914,959

Net Cost of Operations (47,940,505) (49,191,559)

Net Change (146,382) (276,600)

Cumulative Results of Operations $ (2,945,611) $ (2,799,229)

Net Position $ 9,158,947 $ 8,057,146

MERIT SYSTEMS PROTECTION BOARD

STATEMENT OF CHANGES IN NET POSITION

FOR THE YEARS ENDED SEPTEMBER 30, 2018 AND 2017

(In Dollars)
The accompanying notes are an integral part of these financial statements.

9
MERIT SYSTEMS PROTECTION BOARD

NOTES TO THE FINANCIAL STATEMENTS

10

NOTE 1. SUMMARY OF SIGNIFICANT 

ACCOUNTING POLICIES

A. Reporting Entity

The U.S. Merit Systems Protection Board 

(MSPB) is an independent quasi-judicial 

agency in the Executive branch that serves as 

the guardian of federal merit systems. The 

Board was established by the Civil Service 

Reform Act of 1978 (CSRA) with a mission of 

ensuring that employees are protected against 

abuses by agency management, that Executive 

branch agencies make employment decisions in 

accordance with the merit systems principles, 

and that federal merit systems are kept free of 

prohibited personnel practices. The MSPB 

reporting entity is comprised of General Funds 

and General Miscellaneous Receipts.

General Funds are accounts used to record 

financial transactions arising under 

congressional appropriations or other 

authorizations to spend general revenues. 

MSPB manages Operations and Facilities, 

Engineering and Development General Fund 

accounts.

General Fund Miscellaneous Receipts are 

accounts established for receipts of nonrecurring activity, such as fines, penalties, fees, 

and other miscellaneous receipts for services 

and benefits.

The MSPB has rights and ownership of all 

assets reported in these financial statements. 

The MSPB does not possess any non-entity 

assets.

B. Basis of Presentation

The financial statements have been prepared to 

report the financial position and results of 

operations of the MSPB. The Balance Sheet 

presents the financial position of the agency. 

The Statement of Net Cost presents the 

agency’s operating results; the Statement of 

Changes in Net Position displays the changes in 

the agency’s equity accounts. The Statement of 

Budgetary Resources presents the sources, 

status, and uses of the agency’s resources and 

follows the rules for the Budget of the United 

States Government.

The statements are a requirement of the Chief 

Financial Officers Act of 1990 and the 

Government Management Reform Act of 1994.

They have been prepared from, and are fully 

supported by, the books and records of the 

MSPB in accordance with the hierarchy of 

accounting principles generally accepted in the 

United States of America, standards issued by 

the Federal Accounting Standards Advisory 

Board (FASAB), Office of Management and 

Budget (OMB) Circular A-136, Financial 

Reporting Requirements, as amended, and the 

MSPB’s accounting policies which are 

summarized in this note. These statements, 

with the exception of the Statement of 

Budgetary Resources, are different from 

financial management reports, which are also 

prepared pursuant to OMB directives that are 

used to monitor and control the MSPB’s use of 

budgetary resources. The financial statements 

and associated notes are presented on a 

comparative basis. Unless specified otherwise, 

all amounts are presented in dollars.

C. Basis of Accounting

Transactions are recorded on both an accrual 

accounting basis and a budgetary basis. Under 

the accrual method, revenues are recognized 

when earned, and expenses are recognized 

when a liability is incurred, without regard to 

receipt or payment of cash. Budgetary 
11

accounting facilitates compliance with legal 

requirements on the use of federal funds.

D. Fund Balance with Treasury

Fund Balance with Treasury is the aggregate 

amount of the MSPB’s funds with Treasury in 

expenditure, receipt, and revolving fund 

accounts. Appropriated funds recorded in 

expenditure accounts are available to pay 

current liabilities and finance authorized 

purchases. 

The MSPB does not maintain bank accounts of 

its own, has no disbursing authority, and does 

not maintain cash held outside of Treasury. 

Treasury disburses funds for the agency on 

demand. 

E. Accounts Receivable

Accounts receivable consists of amounts owed 

to the MSPB by other Federal agencies and the 

general public. Amounts due from Federal 

agencies are considered fully collectible. 

Accounts receivable from the public include 

reimbursements from employees. An 

allowance for uncollectible accounts receivable 

from the public is established when, based upon 

a review of outstanding accounts and the failure 

of all collection efforts, management 

determines that collection is unlikely to occur 

considering the debtor’s ability to pay.

F. Property, Equipment, and Software

Property, equipment, and software represent 

furniture, fixtures, equipment, and information 

technology hardware and software which are 

recorded at original acquisition cost and are 

depreciated or amortized using the straight-line 

method over their estimated useful lives. Major 

alterations and renovations are capitalized, 

while maintenance and repair costs are 

expensed as incurred. MSPB’s capitalization 

threshold is $50,000 for individual purchases 

and $500,000 for bulk purchases. Property, 

equipment, and software acquisitions that do 

not meet the capitalization criteria are expensed 

upon receipt. Applicable standard 

governmental guidelines regulate the disposal 

and convertibility of agency property, 

equipment, and software. The useful life 

classifications for capitalized assets are as 

follows:

Description Useful Life (years)

Leasehold Improvements 10

Office Equipment 10

Software 5

G. Advances and Prepaid Charges

Advance payments are generally prohibited by 

law. There are some exceptions, such as 

reimbursable agreements, subscriptions and 

payments to contractors and employees. 

Payments made in advance of the receipt of 

goods and services are recorded as advances or 

prepaid charges at the time of prepayment and 

recognized as expenses when the related goods 

and services are received.

H. Liabilities

Liabilities represent the amount of funds likely 

to be paid by the MSPB as a result of 

transactions or events that have already 

occurred.

The MSPB reports its liabilities under two 

categories, Intragovernmental and With the 

Public. Intragovernmental liabilities represent 

funds owed to another government agency. 

Liabilities with the Public represent funds owed 

to any entity or person that is not a federal 

agency, including private sector firms and 

federal employees. Each of these categories 

may include liabilities that are covered by 

budgetary resources and liabilities not covered 

by budgetary resources.

Liabilities covered by budgetary resources are 

liabilities funded by a current appropriation or 

other funding source. These consist of accounts 

payable and accrued payroll and benefits. 

Accounts payable represent amounts owed to 

another entity for goods ordered and received 

and for services rendered except for employees. 

Accrued payroll and benefits represent payroll 

costs earned by employees during the fiscal year 

which are not paid until the next fiscal year.
12

Liabilities not covered by budgetary resources 

are liabilities that are not funded by any current 

appropriation or other funding source. These 

liabilities consist of accrued annual leave, 

actuarial FECA, and the amounts due to 

Treasury for collection and accounts receivable 

of civil penalties and FOIA request fees. 

I. Annual, Sick, and Other Leave

Annual leave is accrued as it is earned, and the 

accrual is reduced as leave is taken. The 

balance in the accrued leave account is adjusted 

to reflect current pay rates. Liabilities 

associated with other types of vested leave, 

including compensatory, restored leave, and 

sick leave in certain circumstances, are accrued 

at year-end, based on latest pay rates and unused 

hours of leave. Funding will be obtained from 

future financing sources to the extent that 

current or prior year appropriations are not 

available to fund annual and other types of

vested leave earned but not taken. Nonvested 

leave is expensed when used. Any liability for 

sick leave that is accrued but not taken by a 

Civil Service Retirement System (CSRS)-

covered employee is transferred to the Office of 

Personnel Management (OPM) upon the 

retirement of that individual. Credit is given for 

sick leave balances in the computation of 

annuities upon the retirement of Federal 

Employees Retirement System (FERS)-covered 

employees.

J. Accrued and Actuarial Workers’ 

Compensation

The Federal Employees' Compensation Act 

(FECA) administered by the U.S. Department 

of Labor (DOL) addresses all claims brought by 

the MSPB employees for on-the-job injuries. 

The DOL bills each agency annually as its 

claims are paid, but payment of these bills is 

deferred for two years to allow for funding 

through the budget process. Similarly, 

employees that the MSPB terminates without 

cause may receive unemployment 

compensation benefits under the unemployment 

insurance program also administered by the 

DOL, which bills each agency quarterly for paid 

claims. Future appropriations will be used for 

the reimbursement to DOL. The liability 

consists of (1) the net present value of estimated 

future payments calculated by the DOL, and (2) 

the unreimbursed cost paid by DOL for 

compensation to recipients under the FECA.

K. Retirement Plans

The MSPB employees participate in either the 

CSRS or the FERS. The employees who 

participate in CSRS are beneficiaries of MSPB 

matching contribution, equal to seven percent of 

pay, distributed to their annuity account in the 

Civil Service Retirement and Disability Fund.

Prior to December 31, 1983, all employees were 

covered under the CSRS program. From 

January 1, 1984 through December 31, 1986, 

employees had the option of remaining under 

CSRS or joining FERS and Social Security. 

Employees hired as of January 1, 1987 are 

automatically covered by the FERS program. 

Both CSRS and FERS employees may 

participate in the federal Thrift Savings Plan 

(TSP). FERS employees receive an automatic 

agency contribution equal to one percent of pay 

and MSPB matches any employee contribution 

up to an additional four percent of pay. For 

FERS participants, MSPB also contributes the 

employer’s matching share of Social Security.

FERS employees and certain CSRS 

reinstatement employees are eligible to 

participate in the Social Security program after 

retirement. In these instances, MSPB remits the 

employer’s share of the required contribution.

The MSPB recognizes the imputed cost of 

pension and other retirement benefits during the 

employees’ active years of service. OPM 

actuaries determine pension cost factors by 

calculating the value of pension benefits 

expected to be paid in the future and 

communicate these factors to the MSPB for 

current period expense reporting. OPM also 

provides information regarding the full cost of 

health and life insurance benefits. The MSPB 

recognized the offsetting revenue as imputed 

financing sources to the extent these expenses 

will be paid by OPM.
13

The MSPB does not report on its financial 

statements information pertaining to the 

retirement plans covering its employees. 

Reporting amounts such as plan assets, 

accumulated plan benefits, and related 

unfunded liabilities, if any, is the responsibility 

of the OPM, as the administrator.

L. Other Post-Employment Benefits

The MSPB employees eligible to participate in 

the Federal Employees' Health Benefits Plan 

(FEHBP) and the Federal Employees' Group 

Life Insurance Program (FEGLIP) may 

continue to participate in these programs after 

their retirement. The OPM has provided the 

MSPB with certain cost factors that estimate the 

true cost of providing the post-retirement 

benefit to current employees. The MSPB 

recognizes a current cost for these and Other 

Retirement Benefits (ORB) at the time the 

employee's services are rendered. The ORB 

expense is financed by OPM, and offset by the

MSPB through the recognition of an imputed 

financing source. 

M. Use of Estimates

The preparation of the accompanying financial 

statements in accordance with generally 

accepted accounting principles requires 

management to make certain estimates and 

assumptions that affect the reported amounts of 

assets, liabilities, revenues, and expenses. 

Actual results could differ from those estimates. 

N. Imputed Costs/Financing Sources

Federal Government entities often receive 

goods and services from other Federal 

Government entities without reimbursing the 

providing entity for all the related costs. In 

addition, Federal Government entities also 

incur costs that are paid in total or in part by 

other entities. An imputed financing source is 

recognized by the receiving entity for costs that 

are paid by other entities. The MSPB 

recognized imputed costs and financing sources 

in fiscal years 2018 and 2017 to the extent 

directed by accounting standards.

O. Reclassification

Certain fiscal year 2017 balances have been 

reclassified, retitled, or combined with other 

financial statement line items for consistency 

with the current year presentation. 
14

NOTE 2. FUND BALANCE WITH TREASURY

Fund balance with Treasury account balances as of September 30, 2018 and 2017, were as follows:

No discrepancies exist between the Fund Balance reflected on the Balance Sheet and the balances 

in the Treasury accounts.

The available unobligated fund balances represent the current-period amount available for 

obligation or commitment. At the start of the next fiscal year, this amount will become part of the 

unavailable balance as described in the following paragraph.

The unavailable unobligated fund balances represent the amount of appropriations for which the 

period of availability for obligation has expired. These balances are available for upward 

adjustments of obligations incurred only during the period for which the appropriation was 

available for obligation or for paying claims attributable to the appropriations.

The obligated balance not yet disbursed includes accounts payable, accrued expenses, and 

undelivered orders that have reduced unexpended appropriations but have not yet decreased the 

fund balance on hand (see also Note 14).

NOTE 3. ACCOUNTS RECEIVABLE

Accounts receivable balances as of September 30, 2018 and 2017, were as follows:

The accounts receivable is primarily made up of employee receivables. 

Historical experience has indicated that the majority of the receivables are collectible. There are 

no material uncollectible accounts as of September 30, 2018 and 2017.
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NOTE 4. PROPERTY, EQUIPMENT, AND SOFTWARE

Schedule of Property, Equipment, and Software as of September 30, 2018

Schedule of Property, Equipment, and Software as of September 30, 2017

NOTE 5. OTHER ASSETS

Other assets account balances as of September 30, 2018 and 2017, were as follows:

Advance Balance consists entirely of an advance printing account with the US Government Printing 

Office.
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NOTE 6. LIABILITIES NOT COVERED BY BUDGETARY RESOURCES

The liabilities for the MSPB as of September 30, 2018 and 2017, include liabilities not covered by 

budgetary resources. Congressional action is needed before budgetary resources can be provided. 

Although future appropriations to fund these liabilities are likely and anticipated, it is not certain 

that appropriations will be enacted to fund these liabilities. 

FECA and the Unemployment Insurance liabilities represent the unfunded liability for actual 

workers compensation claims and unemployment benefits paid on MSPB’s behalf and payable to 

the DOL. The MSPB also records an actuarial liability for future workers compensation claims 

based on the liability to benefits paid (LBP) ratio provided by DOL and multiplied by the average 

of benefits paid over three years

Unfunded leave represents a liability for earned leave and is reduced when leave is taken. The 

balance in the accrued annual leave account is reviewed quarterly and adjusted as needed to 

accurately reflect the liability at current pay rates and leave balances. Accrued annual leave is paid 

from future funding sources and, accordingly, is reflected as a liability not covered by budgetary 

resources. Sick and other leave is expensed as taken. 

NOTE 7. ACTUARIAL FECA LIABILITY

FECA provides income and medical cost protection to covered federal civilian employees harmed 

on the job or who have contracted an occupational disease, and beneficiaries of employees whose 

death is attributable to a job-related injury or occupational disease. Claims incurred for benefits 

under FECA for MSPB’s employees are administered by the DOL and ultimately paid by the MSPB

when funding becomes available.

The MSPB bases its estimate for FECA actuarial liability on the DOL's FECA model. The DOL 

method of determining the liability uses historical benefits payment patterns for a specific incurred 

period to predict the ultimate payments for the period. Based on the information provided by the

DOL, MSPB’s liability as of September 30, 2018 and 2017, was $506,922 and $493,723, 

respectively.
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NOTE 8. OTHER LIABILITIES

Other liabilities account balances as of September 30, 2018 were as follows:

Other liabilities account balances as of September 30, 2017 were as follows:

NOTE 9. LEASES

Operating Leases

The MSPB occupies office space at various locations nationwide (Atlanta, Chicago, Dallas, 

Denver, New York, Philadelphia, Oakland, and in Washington DC at two locations.) The lease 

agreement is with the General Service Administration (GSA) and is accounted for as an operating 

lease. This lease agreement covers all locations that the MSPB occupies. The lease term began on 

May 1, 2013 and expires on January 13, 2028. The total operating lease expense for fiscal years 

2018 and 2017 were $3,663,601 and $3,595,097, respectively. Below is a schedule of future 

payments for the term of the lease.
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The MSPB occupies a warehouse space at one location with a lease agreement accounted for as an 

operating lease. The (Washington, DC warehouse) lease began on October 1, 2014 and will expire 

on September 30, 2019. The agency currently pays annual rent of $37,956.

The operating lease amount does not include estimated payments for leases with annual renewal 

options.

NOTE 10. COMMITMENTS AND CONTINGENCIES

The MSPB did not have any material contingent liabilities that met disclosure requirements as of 

September 30, 2018 and 2017. 

NOTE 11. BUDGETARY RESOURCE COMPARISONS TO THE BUDGET OF THE 

UNITED STATES GOVERNMENT

The President’s Budget that will include fiscal year 2018 actual budgetary execution information 

has not yet been published. The President’s Budget is scheduled for publication in February 2019

and can be found at the OMB Web site: http://www.whitehouse.gov/omb/. The 2019 Budget of 

the United States Government, with the "Actual" column completed for 2017, has been reconciled 

to the Statement of Budgetary Resources and there were no material differences.
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NOTE 12. IMPUTED FINANCING SOURCES

The MSPB recognizes as imputed financing the amount of accrued pension and post-retirement 

benefit expenses for current employees. The assets and liabilities associated with such benefits are 

the responsibility of the administrating agency, OPM. For years ended September 30, 2018 and 

2017, imputed financing was as follows:

NOTE 13. APPORTIONMENT CATEGORIES OF OBLIGATIONS INCURRED

Obligations incurred and reported in the Statement of Budgetary Resources in 2018 and 2017

consisted of the following:

Category A apportionments distribute budgetary resources by fiscal quarters.

NOTE 14. UNDELIVERED ORDERS AT THE END OF THE PERIOD

As of September 30, 2018, budgetary resources obligated for undelivered orders were as follows:

As of September 30, 2017, budgetary resources obligated for undelivered orders were as follows:

NOTE 15. CUSTODIAL ACTIVITY

The MSPB’s custodial collection primarily consists of late fees and penalties. While these 

collections are considered custodial, they are neither primary to the mission of MSPB nor material 

to the overall financial statements. The MSPB’s total custodial collections are $0 and $248 for the 

years ended September 30, 2018, and 2017, respectively. 

Federal Non-Federal Total

Paid Undelivered Orders $ 36,032 $ - $ 36,032

Unpaid Undelivered Orders 1,791,936 2,286,036 4,077,972

Total Undelivered Orders $ 1,827,968 $ 2,286,036 $ 4,114,004
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NOTE 16. RECONCILIATION OF NET COST OF OPERATIONS TO BUDGET

The MSPB has reconciled its budgetary obligations and non-budgetary resources available to its 

net cost of operations.