U.S. Merit Systems Protection Board

Agency

Financial 

Report

Fiscal Year 2019

November 2019
ii

Table of Contents

Message from the Chief Executive and Administrative Officer ...............................................1

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

Management Discussion and Analysis .....................................................................................3

About the Merit Systems Protection Board (MSPB) ..................................................................................3

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

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

MSPB Program Offices and Their Functions..............................................................................................4

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

Interim Summary of MPSB’s FY 2019 Program Performance..................................................................6

Systems, Controls, and Legal Compliances..................................................................................................9

Financial Section ......................................................................................................................11

Message from the Chief Financial Officer..................................................................................................11

Notes on the Financial Statements..............................................................................................................12

Other Information ................................................................................................................... 13

Summary of Financial Statement Audit and Management Assurances..................................................13

Civil Monetary Penalties’ Adjustments for Inflation.................................................................................14

Independent Auditor’s Report on the Financial Statements 

Financial Statements
1

Message from the Acting Chief Executive and

Administrative Officer

U.S. MERIT SYSTEMS PROTECTION BOARD 

Washington D.C. 20036

Office of the General Counsel

As Acting Chief Executive and Administrative Officer, I am pleased to present the U.S. Merit Systems Protection 

Board’s (MSPB) fiscal year (FY) 2019 Agency Financial Report (AFR). This report illustrates how we manage our 

resources, highlights our major accomplishments, and addresses our challenges. Additionally, this report provides a 

summary and analysis of the Agency’s financial operations and performance management for the fiscal year that ended 

on September 30, 2019.

MSPB’s mission is to “Protect the Merit System Principles (MSPs) and promote an effective Federal workforce free of 

Prohibited Personnel Practices (PPPs).” At MSPB, we are committed to promoting accountability, transparency, good 

stewardship, and financial integrity of taxpayers’ dollars to meet the mission of the organization. For FY 2019, MSPB 

has attained an unmodified (clean) opinion on its consolidated financial statements, providing reasonable assurance that 

the financial statements are reported fairly and accurately, in all material respects, in accordance with the U.S. Generally 

Accepted Accounting Principles (GAAP), the Federal Managers’ Financial Integrity Act (FMFIA) of 1982, and Office 

of Management and Budget (OMB) Circulars A-136 and A-11. As Acting Chief Executive and Administrative Officer, 

I certify with reasonable assurance that our financial management systems have been found to be in compliance with 

the Federal Financial Management Improvement Act (FFMIA) of 1996.

The agency’s accomplishments provided in this report are the results of our collective commitment, diligence, and 

dedication to maintaining the highest standards of performance and integrity. It is a privilege to work with the talented 

men and women of MSPB who devote their careers to upholding the merit system principles that govern our

federal workforce.

Respectfully, 

Tristan Leavitt 

General Counsel

Acting Chief Executive and Administrative Officer 

November 19, 2019

 Because there are currently no Presidentially-appointed, Senate-confirmed Board members, pursuant to the MSPB’s November 16, 2018 

Continuity of Operations Plan, the functions of the MSPB’s chief executive and administrative officer are vested in the General Counsel.
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, 2018 through September 30, 2019.

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

FY 2019 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 2021 Budget is submitted to Congress in 2020.

This report is organized into the following major components:

Management Discussion and Analysis (MD&A)

This section provides an overview of the MSPB (the agency’s mission, board organization, program offices 

and their functions and organization chart). This section also provides an overview of the performance 

information contained in the Interim FY 2019 Performance results compared to the Annual Performance Plan 

for FY 2019, which was developed under MSPB’s Strategic Plan for FY 2019-2023. It also includes relevant 

performance information related to the MSPB’s strategic and management objectives.

Systems, Controls, and Legal Compliances

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 2019 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.

Other Information Section

This section contains details of MSPB’s financial statement audit and management assurances 

including material weaknesses, compliances, and civil monetary penalties adjustments.
3

Management Discussion and Analysis (MD&A)

About MSPB

MSPB has its origin in the Pendleton Civil Service Reform Act of 1883 (Pendleton Act), which establishedthe 

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 labormanagement 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 Board Members are the Chairman, Vice Chairman, and Board Member. Board Members are nominated 

by the President, confirmed by the Senate, and serve overlapping, non-renewable 7-year terms. No more 

than two of the three Board Members can be from the same political party. The Board Members adjudicate 

the cases brought to the Board. 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 agency has its 

Headquarters in Washington, D.C. with six regional and two field offices located throughout the United 

States in which AJs adjudicate cases at the first level, akin to a trial court.

For FY 2019 the agency was funded at 235 Full-time Equivalents (FTEs) to conduct and support its statutory 

duties.

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

MSPB Program Offices and Their Functions

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 

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
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

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.

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

Interim Summary of MSPB’s FY 2019 Program Performance

This performance summary contains interim FY 2019 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 2019. MSPB is continuing to verify and validate its performance results for 

FY 2019. Final performance results and final judgements on the achievement of objectives will be published 

in the FY 2019 Annual Performance Report (APR) released in February 2020.

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 achieved its targets for cases left unchanged by the court and for conducting surveys of 

adjudication and ADR customers. Because MSPB began FY 2019 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 2019. Even though MSPB 

did not have a quorum for the entirety of FY 2019, it continued to process cases at headquarters (HQ) and 

prepare draft decisions in PFR and original jurisdiction cases for review by new Board members when they 

arrive. As of the end of FY 2019, over 2,375 PFR cases were pending at HQ.

Strategic Objective 1B: Enforce timely compliance with MSPB decisions. This objective was Not 

Rated (No Quorum). No target was set for this performance goal because we began the year without a 

quorum of Board members. While MSPB continued to process compliance cases at HQ and in the regional 

and field offices, the lack of quorum meant that the agency was unable to release decisions in 

compliance/enforcement cases at HQ. Thus, MSPB did 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 eight of nine merit system principles (MSPs) and four of fourteen prohibited personnel practices 

(PPPs). Newsletter articles include topics such as performance management, hiring, applicant assessment, 

pay, and emotional labor. MSPB published four additional briefs or articles on: probationary periods for 

supervisors and managers; perceived incidence of prohibited personnel practices (PPPs), remedying 

unacceptable performance, and managing employees who perform emotionally laborious work. Due to the 

lack of a quorum, MSPB 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, MSPB made significant progress 

in drafting a new research agenda to guide merit systems studies work for the next few years. The draft 

agenda, containing both new topics and topics building on previous research, is being prepared for approval 

when the new Chairman arrives. MSPB’s survey target was to develop requirements for a new survey 

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

MSPB’s studies function. MSPB exceeded this target by completing procurement of a new web-based, 

FedRAMP certified survey application.

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. Due to the lack of quorum, MSPB did not set targets for, nor rate the performance goal 

involving review of OPM regulations. MSPB published the Annual Report for FY 2018 which included
7

information for policymakers about OPM’s history and capacity, thus achieving the target for review of 

OPM’s significant actions.

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. MSPB cases, 

studies, reports, newsletter articles, and other products were cited hundreds of times in nearly 130 different 

sources. Sources include trade publications on Federal management and legal issues, wire services, major 

city daily newspapers, Congressional sources, and a variety of websites and blogs. Notable citations include 

a letter from the House Committee on Veterans’ Affairs to the Secretary of the Department of Veterans 

Affairs; a CRS Report entitled Merit Systems Protection Board (MSPB): A Legal Overview; and from the MITRE 

Corporation, Report: The Symposium on the Federal Workforce for the 21st Century. MSPB exceeded its target for 

articles or documents published or posted with policymakers as a primary audience. These documents 

included: updated FAQs on MSPB functions given the lack of Board members; FY 2018 Annual Report

including information for policymakers about OPM’s history and capacity; Acting Chairman’s February 28, 

2019 record testimony at a hearing on the effects of Board member vacancies before the House 

Subcommittee on Government Operations Committee on Oversight and Reform; a data webpage as 

required by Evidence Act; Personal Assistance Services Policy and Procedures; and other annual agency 

reports, plans, and budget documents.

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 13 percent 

more than the number of events held in FY 2018. Outreach event topics included MSPB adjudication 

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

systems issues. Audiences were varied and included 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 officials from 

Japan, Armenia and Brazil, among others. MSPB staff presented at the Federal Dispute Resolution conference, 

the American Society for Public Administration annual conference, Federal Circuit Bar Association MSPB 

Summit, International Personnel Assessment Council annual conference, and EEOC’s Examining Conflicts in 

Employment Law (EXCEL) conference.

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

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

results indicate this objective was Met. The number of visits to pages on the MSPB website was within 5 

percent of the number of visits in FY 2018. MSPB exceeded in the number of educational and informational 

materials made available on the website, with over six new or updated categories of documents posted to the 

website. These documents included: Three IoM newsletter editions and four research briefs; three Federal 

Register notice and five press releases; FY 2018 Annual Report; other agency annual reports, plans, and 

budget documents; 2018 FEVS results; updated FAQs on MSPB functions given the lack of Board members; 

update on history of Board member service; and changes to the AJ Handbook.

Management Objective M1: Lead, manage and develop employees to ensure a diverse, inclusive, 

and engaged workforce with the competencies to perform MSPB’s mission and support functions 

successfully. Interim results indicate this objective was Met. The number of visits to pages on the MSPB 

website was within 5 percent of the number of visits in FY 2018. MSPB exceeded in the number of 

educational and informational materials made available on the website, with over six new or updated
8

categories of documents posted to the website. These documents included: Three IoM newsletter editions 

and four research briefs; three Federal Register notice and five press releases; FY 2018 Annual Report; other 

agency annual reports, plans, and budget documents; 2018 FEVS results; updated FAQs on MSPB functions 

given the lack of Board members; update on history of Board member service; and changes to the AJ 

Handbook.

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 Partially Met. The target for average vacancy rate was not achieved.

Monthly results averaged over the year were greater than 10 percent above the target value. The average of 

the percent positive responses from the 2019 IS questions on workforce and workplace safety and security 

exceeded the target.

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 Partially Met. Results from the 2019 IS indicated that the average positive responses 

on employee ratings of availability and reliability of the IT infrastructure and for employee satisfaction with 

IT support exceeded their respective targets. The performance goal related to implementation of the 

iSupport ticket system was terminated in FY 2019 in favor of ticketing options available in the new core 

business applications. The performance goal related to customer surveys of e-Appeal users was terminated in 

FY 2019 in light of the pending implementation of new e-Appeal system. We will reconsider performance 

goals, measures, and targets for these two issues when all new core business applications are implemented.

Management Objective M4: Modernize core business applications to achieve electronic 

adjudication and provide a web-based survey platform. Interim results for this measure indicate this 

objective was Met. MSPB achieved the target for progress on modernizing its core business applications by 

awarding the contract for new core business application and beginning the configuration of the components 

for e-filing and initial appeals processing. MSPB exceeded its target for obtaining a new survey capability by 

going beyond requirements development to completing the procurement of a new web-based, FedRAMP 

certified survey application, with options years.
9

Systems, Controls, and Legal Compliances 

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 are 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 Information Act of 2010 (IPIA) 

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. In 2006, OMB 

provided guidance for Federal agencies to identify and reduce improper payments made to the wrong recipient, 

in the wrong amount, or used in an improper manner by the recipient for selected programs. 
10

The Improper Payments Information Act of 2002 (IPIA) broadened the original erroneous payment 

reporting requirements to programs and activities. 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. 

Improper Payments Elimination and Recovery Act of 2010 (IPERA) 

In June 2010, Congress passed the Improper Payments Elimination and Recovery Act of 2010 (IPERA), 

amending the IPIA to expand requirements for identifying programs and activities susceptible to improper 

payments by requiring the head of each federal agency, during the year after the enactment of this Act and 

at least once every three fiscal years thereafter, to review and identify agency programs and activities that 

may be susceptible to significant improper payments. 

The IPERA also expanded agency reporting requirements on actions to reduce improper payments to 

require a statement of whether the agency has sufficient resources with respect to internal controls, human 

capital, and information systems and other infrastructure to prevent improper payments. The law requires 

reports on actions to recover improper payments. 

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

In 2012, Congress passed the Improper Payments Elimination and Recovery Improvement Act of 2012 

(IPERIA) tointensify efforts toidentify, prevent, and recover payment error, waste, fraud, and abuse within 

Federal spending by requiring federal agencies to report annually to their Inspectors General on any 

high-dollar improper payments identified. Additionally, this act requires federal agencies to review 

prepayment and preaward procedures and available databases to determine program or award 

eligibility and prevent improper payments before releasing any federal funds.

To coordinate and facilitate MSPB’s efforts under the IPERA and IPERIA, the CFO works with the 

Agency Head and 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 2019 and MSPB programs and activities were NOT Susceptible to significant improper 

payments. 
11

Financial Section

Message from the Chief Financial Officer

It is my privilege to join Tristan Leavitt, General Counsel and Acting Chief Executive and Administrative 

Officer, in presenting the U.S. Merit Systems Protection Board’s (MSPB) financial statements for Fiscal Year 

(FY) 2019, which is an integral part of our Agency Financial Report (AFR). The AFR is our Agency’s primary 

statement of accountability to the President of the United States, the United States Congress and the 

American people of our stewardship of taxpayer’s dollars.

For FY 2019, MSPB has attained an unmodified (clean) opinion on its consolidated financial statements. As 

in previous years, 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. To achieve this opinion, an agency 

requires a dedicated workforce, and effective financial systems and processes.

Since 1992, the Department of the Treasury, Bureau of the Fiscal Service (BFS) in Parkersburg, West Virginia, 

a shared-service partner of MSPB, has been contributing to the Agency’s compliance strategy to meet all 

external reporting requirements. Through its financial operations, BFS has provided us with timely and wideranging reports, and has maintained effective security of our financial data.

While we are proud of our accomplishment of receiving an unmodified opinion for FY 2019, MSPB 

continually strives to strengthen our internal controls and financial management performance to identify and 

mitigate potential financial, operational, and compliance risks quickly. The achievements illustrated in this 

report are a direct reflection of the efforts and meticulousness of agency employees and partners who 

collaborate to accomplish the mission of MSPB – to protect the Federal merit systems and the rights of 

individuals within those systems.

I sincerely thank the dedicated, talented, and exceptional MSPB and BFS professionals who plan, manage, 

and account for the agency’s resources. Their commitment to excellence year after year provides the 

foundation for accountability, transparency, and good stewardship of public funds.

Respectfully,

Kevin J. Nash

Chief Financial Officer 

November 19, 2019
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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 2018 and FY 2019.

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 provide 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.
13

Other Information

Summary of Financial Statement Audit and Management Assurances

Presented below is a summary of financial statement audit and management assurances for FY 2019. Table 1 

relates to the Agency’s FY 2019 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
14

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 (84 FR 5583, Civil Monetary Penalty 

Adjustments for Inflation) in the Federal Register on February 22, 2019, pages 5583-5584), 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 February 22, 2019.

Statutory Authority

Penalty

(Name or Description)

Year 

Enacted

Latest Year 

of 

Adjustment 

(via Statute 

or

Regulation)

Current 

Penalty 

Level

Location for Penalty 

Update Details

Federal Register 84

5 U.S.C § 1215(a)(3),

Civil Service Reform

Act of 1978 (CSRA) Disciplinary Action 1989 2019 $1,093

(February 2019):

5583-5584

www.mspb.gov

Federal Register 84

5 U.S.C § 7326, Hatch

Act Modernization Act

of 2012 Penalties 2012 2019 $1,093

(February 2019):

5583-5584

www.mspb.gov
15

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MERIT SYSTEMS PROTECTION BOARD

INDEPENDENT AUDITOR’S REPORT 

AND

FINANCIAL STATEMENTS

FOR THE YEARS ENDED 

SEPTEMBER 30, 2019 AND 2018

Prepared By

Brown & Company CPAs and Management Consultants, PLLC 

November 12, 2019
MERIT SYSTEMS PROTECTION BOARD

INDEPENDENT AUDITOR’S REPORT 

AND

FINANCIAL STATEMENTS 

FOR THE YEARS ENDED 

SEPTEMBER 30, 2019 AND 2018

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
INDEPENDENT AUDITOR’S REPORT

U.S. Merit Systems Protection Board 

Washington, D.C.

In our audits of the fiscal years 2019 and 2018 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, 2019, and 

2018, 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 2019 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 

required supplementary information (RSI) and other information included with the financial

statements;

(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, 2019, and 2018; the related statements of net cost, changes in net 

position, and budgetary resources for the fiscal years then ended; and the related notes to the financial 

statements.

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

provisions of OMB Bulletin No.19-03, Audit Requirements for Federal Financial Statements. We believe 

that the audit evidence we obtained issufficient and appropriate to provide a basisfor our audit opinions.

Management’s Responsibility

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

statements in accordance 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.

1
Auditor’s Responsibility

Our responsibility is to 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 included with 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 of the risks of material misstatement of the financial statements, whether 

due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to 

the entity’s preparation and fair presentation of the financial statements in order to design audit procedures 

that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the 

effectiveness of the entity’sinternal control. Accordingly, we express no such opinion. An audit of financial 

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

reasonableness of significant 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, 2019, and 2018, 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

Required Supplementary 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.

2
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, 2019, 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 deficiencies or 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 its inherent limitations, internal control over financial reporting may not prevent, or detect 

and correct, misstatements due to fraud or error.

3
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 not suitable 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 Tests for 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 2019 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.

4
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 not suitable 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.

Greenbelt, Maryland 

November 12, 2019

5
The accompanying notes are an integral part of these financial statements.

6

2019 2018

MERIT SYSTEMS PROTECTION BOARD 

BALANCESHEET

AS OF SEPTEMBER 30, 2019 AND 2018

(In Dollars)

Assets:

Intragovernmental

Fund Balance With Treasury (Note 2) $ 14,528,054 $ 14,249,666

Other (Note 5) 5,186 36,032

Total Intragovernmental 14,533,240 14,285,698

Accounts Receivable, Net (Note 3) 13,075 133

Property, Equipment, and Software, Net (Note 4) 1,500,810 702,046

Total Assets $ 16,047,125 $ 14,987,877

Liabilities:

Intragovernmental

Accounts Payable $ 806,636 $ 518,754

Other (Note 8) 404,257 416,376

Total Intragovernmental 1,210,893 935,130

Accounts Payable 472,217 162,376

Federal Employee and Veterans' Benefits (Note 7) 561,959 506,922

Other (Note 8) 4,262,583 4,224,502

Total Liabilities (Note 6) $ 6,507,652 $ 5,828,930

Net Position:

Unexpended Appropriations - Other Funds $ 11,759,629 $ 12,104,558

Cumulative Results of Operations - Other Funds (2,220,156) (2,945,611)

Total Net Position $ 9,539,473 $ 9,158,947

Total Liabilities and Net Position $ 16,047,125 $ 14,987,877
The accompanying notes are an integral part of these financial statements.

7

2019 2018

Net Cost of Operations $ 48,361,439 $ 47,940,505

MERIT SYSTEMS PROTECTION BOARD 

STATEMENT OF NET COST

FOR THE YEARS ENDED SEPTEMBER 30, 2019 AND 2018

(In Dollars)

Gross Program Costs:

Adjudication

Gross Costs $ 40,825,986 $ 40,226,350

Less: Earned Revenue (158,712) -

Net Program Costs $ 40,667,274 $ 40,226,350

Management Support 

Gross Costs $ 5,253,564 $ 5,352,998

Net Program Costs $ 5,253,564 $ 5,352,998

Merit Systems Studies 

Gross Costs $ 2,440,601 $ 2,361,157

Net Program Costs $ 2,440,601 $ 2,361,157
The accompanying notes are an integral part of these financial statements.

8

MERIT SYSTEMS PROTECTION BOARD 

STATEMENT OF CHANGES IN NETPOSITION

FOR THE YEARS ENDED SEPTEMBER 30, 2019 AND 2018

(In Dollars)

2019 2018

Unexpended Appropriations:

Beginning Balances $ 12,104,558 $ 10,856,375

Budgetary Financing Sources:

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

Other Adjustments (656,051) (196,181)

Appropriations Used (44,178,878) (43,045,636)

Total Budgetary Financing Sources (344,929) 1,248,183

Total Unexpended Appropriations $ 11,759,629 $ 12,104,558

Cumulative Results of Operations:

Beginning Balances $ (2,945,611) $ (2,799,229)

Budgetary Financing Sources:

Appropriations Used 44,178,878 43,045,636

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

Other Financing Sources (Non-Exchange):

Imputed Financing Sources (Note 11) 2,563,016 2,403,487

Total Financing Sources 49,086,894 47,794,123

Net Cost of Operations (48,361,439) (47,940,505)

Net Change 725,455 (146,382)

Cumulative Results of Operations $ (2,220,156) $ (2,945,611)

Net Position $ 9,539,473 $ 9,158,947
The accompanying notes are an integral part of these financial statements.

9

MERIT SYSTEMS PROTECTION BOARD 

STATEMENTOFBUDGETARYRESOURCES

FOR THE YEARS ENDED SEPTEMBER 30, 2019 AND 2018

(In Dollars)

2019 2018

Budgetary Resources:

Unobligated balance from prior year budget authority, net $ 7,846,909 $ 7,476,127

Appropriations 44,490,000 44,490,000

Spending authority from offsetting collections 2,503,930 2,345,000

Total Budgetary Resources $ 54,840,839 $ 54,311,127

Status of Budgetary Resources:

New obligations and upward adjustments (total) $ 47,982,559 $ 46,320,572

Unobligated balance, end of year:

Apportioned, unexpired account 5,448,783 6,693,643

Expired unobligated balance, end of year 1,409,497 1,296,912

Unobligated balance, end of year (total) 6,858,280 7,990,555

Total Budgetary Resources $ 54,840,839 $ 54,311,127

Outlays, net:

Agency outlays, net $ 43,555,561 $ 43,316,183
10

MERIT SYSTEMS PROTECTION BOARD 

NOTES TO THE FINANCIAL STATEMENTS

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 non-recurring 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 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.
11

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 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 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. The 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.
12

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.

Liabilities not covered by budgetary resources are liabilitiesthat 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. Non-vested 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 the 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 the MSPB matches
13

any employee contribution up to an additional four percent of pay. For FERS participants, the 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, the 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.

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. Classified Activities

Accounting standards require all reporting entities to disclose that accounting standards allow 

certain presentation and disclosure to be modified, if needed, to prevent the disclosure of classified 

information.
14

NOTE 2. FUND BALANCE WITH TREASURY

Fund balance with Treasury account balances as of September 30, 2019 and 2018, were as follows:

2019 2018

Status of Fund Balance with Treasury:

Unobligated Balance

Available $ 5,448,783 $ 6,693,643

Unavailable 1,409,497 1,296,912

Obligated Balance Not Yet Disbursed 7,669,774 6,259,111

Total $ 14,528,054 $ 14,249,666

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 12).

NOTE 3. ACCOUNTS RECEIVABLE

Accounts receivable balances as of September 30, 2019 and 2018, were as follows:

2019 2018

With the Public

Accounts Receivable $ 13,075 $ 133

Total Accounts Receivable $ 13,075 $ 133

The accounts receivable is primarily made up of Employee Receivables.

Historical experience hasindicated that the majority of the receivables are collectible. There are no material 

uncollectible accounts as of September 30, 2019 and 2018.
15

NOTE 4. PROPERTY, EQUIPMENT, AND SOFTWARE

Schedule of Property, Equipment, and Software as of September 30, 2019:

Major Class

Acquisition 

Cost

Accumulated 

Amortization/ 

Depreciation Net Book Value

Leasehold Improvements $ 2,083,761 $ 1,945,947 $ 137,814

Furniture & Equipment 960,763 514,959 445,804

Software 9,415,576 9,415,576 -

Software-in-Development 917,192 - 917,192

Total $ 13,377,292 $ 11,876,482 $ 1,500,810

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

Major Class

Acquisition 

Cost

Accumulated 

Amortization/

Depreciation Net Book Value

Leasehold Improvements $ 2,082,859 $ 1,915,316 $ 167,543

Furniture & Equipment 960,763 426,260 534,503

Software 9,415,576 9,415,576 -

Total $ 12,459,198 $ 11,757,152 $ 702,046

NOTE 5. OTHER ASSETS

Other assets account balances as of September 30, 2019 and 2018, were as follows:

2019 2018

Intragovernmental

Advances and Prepayments $ 5,186 $ 36,032

Total Other Assets $ 5,186 $ 36,032

Advance balance consists entirely of an advance printing account with the US Government Printing Office.
16

NOTE 6. LIABILITIES NOT COVERED BY BUDGETARY RESOURCES

The liabilities for MSPB as of September 30, 2019 and 2018, 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.

2019 2018

Intragovernmental – FECA $ 104,961 $ 99,752

Intragovernmental – Unemployment Insurance - 29,479

Unfunded Leave 3,067,099 3,011,622

Actuarial FECA 561,959 506,922

Total Liabilities Not Covered by Budgetary Resources $ 3,734,019 $ 3,647,775

Total Liabilities Covered by Budgetary Resources 2,773,612 2,181,142

Total Liabilities Not Requiring Budgetary Resources 21 13

Total Liabilities $ 6,507,652 $ 5,828,930

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.

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 

the 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, the MSPB’s liability 

as of September 30, 2019 and 2018, was $561,959 and $506,922, respectively.
17

NOTE 8. OTHER LIABILITIES

Other liabilities account balances as of September 30, 2019 were asfollows:

Current Non Current Total

Intragovernmental

FECA Liability $ 91,650 $ 13,311 $ 104,961

Payroll Taxes Payable 299,275 - 299,275

Custodial Liability 21 - 21

Total Intragovernmental Other Liabilities $ 390,946 $ 13,311 $ 404,257

With the Public

Payroll Taxes Payable $ 54,477 $ - $ 54,477

Accrued Funded Payroll and Leave 1,135,496 - 1,135,496

Unfunded Leave 3,067,099 - 3,067,099

Other Liability 5,511 - 5,511

Total Public Other Liabilities $ 4,262,583 $ - $ 4,262,583

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

Current Non Current Total

Intragovernmental

FECA Liability $ 14,164 $ 85,588 $ 99,752

Unemployment Insurance Liability 29,479 - 29,479

Payroll Taxes Payable 287,132 - 287,132

Custodial Liability 13 - 13

Total Intragovernmental Other Liabilities $ 330,788 $ 85,588 $ 416,376

With the Public

Payroll Taxes Payable $ 44,706 $ - $ 44,706

Accrued Funded Payroll and Leave 1,162,668 - 1,162,668

Unfunded Leave 3,011,622 - 3,011,622

Other Liability 5,506 - 5,506

Total Public Other Liabilities $ 4,224,502 $ - $ 4,224,502

NOTE 9. LEASES

Operating Leases

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

York, Philadelphia, San Francisco, 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 2019 and 2018 were $3,734,324 and $3,663,601 

respectively. Below is a schedule of future payments for the term of the lease.
18

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.

Asset Category

Fiscal Year Office Space

2020 $ 2,836,040

2021 1,141,704

2022 1,010,321

2023 987,185

2024 785,881

Thereafter 2,642,914

Total Future Payments $ 9,404,045

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, 2019 and 2018.

NOTE 11. INTER-ENTITY COSTS

The MSPB recognizes certain inter-entity costs for goods and services that are received from other federal 

entities at no cost or at a cost less than the full cost. Certain costs of the providing entity that are not fully 

reimbursed are recognized as imputed cost and are offset by imputed revenue. Such imputed costs relate 

to employee benefits. The MSPB recognizes as inter-entity costs the amount of accrued pension and postretirement benefit expenses for current employees. The assets and liabilities associated with such benefits 

are the responsibility of the administering agency, OPM. For the periods ended September 30, 2019 and 

2018, respectively, inter-entity costs were as follows:

2019 2018

Office of Personnel Management $ 2,563,016 $ 2,403,487

Total Imputed Financing Sources $ 2,563,016 $ 2,403,487
19

NOTE 12. UNDELIVERED ORDERS AT THE END OF THE PERIOD

As of September 30, 2019, budgetary resources obligated for undelivered orders were asfollows:

Federal Non-Federal Total

Paid Undelivered Orders $ 5,186 $ - $ 5,186

Unpaid Undelivered Orders 2,043,919 2,852,463 4,896,382

Total Undelivered Orders $ 2,049,105 $ 2,852,463 $ 4,901,568

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

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

NOTE 13. EXPLANATION OF DIFFERENCES BETWEEN THE SBR AND THE BUDGET OF 

THE U.S. GOVERNMENT

The President’s Budget that will include fiscal year 2019 actual budgetary execution information has not 

yet been published. The President’s Budget is scheduled for publication in February 2020 and can be found 

at the OMB Web site: http://www.whitehouse.gov/omb/. The 2020 Budget of the United States 

Government, with the "Actual" column completed for 2018, has been reconciled to the Statement of 

Budgetary Resources and there were no material differences.

Note Presentation, rounded to millions

Budgetary Obligations Net

FY2018 Resources Incurred Outlays

Statement of Budgetary Resources 

Spending Authority from Offsetting

$ 54 $ 46 $ 43

Collections - - 2

Unobligated Balance Not Available (1) - -

Difference - Due to Rounding (1) - -

Budget of the U.S. Government $ 52 $ 46 $ 45
20

NOTE 14. RECONCILIATION OF NET COST TO NET OUTLAYS

The reconciliation of net outlays, presented on a budgetary basis, and the net cost, presented on an accrual 

basis, provides an explanation of the relationship between budgetary and financial accounting information.

BUDGET AND ACCRUAL RECONCILIATION 

FOR THE YEAR ENDED SEPTEMBER 30, 2019

(In Dollars)

Intragovernmental With the Public Total

Net Operating Cost (SNC) $ 15,759,202 $ 32,602,237 $ 48,361,439

Components of Net Operating Cost Not Part of the

Budgetary Outlays

Property, plant, andequipment depreciation - (119,330) (119,330)

(Increase)/Decrease in assets not affecting Budget Outlays:

Accounts receivable - 12,942 12,942

Other assets (30,846) - (30,846)

(Increase)/Decrease in liabilities not affecting Budget

Outlays:

Accounts payable (287,882) (309,841) (597,723)

Salaries and benefits (12,143) 17,400 5,257

Other liabilities 24,262 (110,518) (86,256)

Other financing sources:

Imputed federal employee retirement benefit costs (2,563,016) - (2,563,016)

Transfers out (in) without reimbursement (2,345,000) - (2,345,000)

Total Components of Net Operating Cost Not Part of the

Budget Outlays $ (5,214,625) $ (509,347) $ (5,723,972)

Components of the Budget Outlays That Are Not Part of

Net Operating Cost

Acquisition of capital assets 902 917,192 918,094

Other 9 (9) -

Total Components of the Budget Outlays That Are Not Part of

Net Operating Cost $ 911 $ 917,183 $ 918,094

Net Outlays (Calculated Total) $ 10,545,488 $ 33,010,073 $ 43,555,561

Related Amounts on the Statement of Budgetary Resources

Outlays, net, (total) (SBR 4190) 43,555,561

Outlays, Net (SBR 4210) $ 43,555,561