U.S. Merit Systems Protection Board 

 

Agency

Financial 

Report

 FY 2014

November 2014
ii

a

United States

Merit Systems Protection Board

AGENCY FINANCIAL REPORT

For Fiscal Year 2014

NOVEMBER 2014
iii

Table of Contents

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

About MSPB.....................................................................................................................................................2

The MSPB Mission...........................................................................................................................................2

Board Organization .........................................................................................................................................2

Organization Chart ..........................................................................................................................................4

Management Discussion and Analysis .....................................................................................5

External Trends Affecting MSPB’s Mission and Performance ................................................................5

External Trends ..............................................................................................................................................5

Interim Summary of MPSB’s FY 2014 Program Performance .................................................................6

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

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

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

Independent Auditor’s Report on the Financial Statements

Financial Statements......................................................................................................................A-1 to A-14
1

U.S. Merit Systems Protection Board

Fiscal Year 2014

Agency Financial Report

Message from the Chairman

It is my honor to submit the Fiscal Year 2014 Agency Financial Report for the U.S. Merit Systems Protection 

Board (MSPB). I am pleased to report that as of September 30, 2014, MSPB has received an unqualified 

opinion on its financial statements. 

In accordance with our legal requirements and Office of Management and Budget (OMB) guidance, I have 

determined that the financial data included in this report are complete and reliable. There are no material 

inadequacies or non-conformances in either the completeness or reliability of the financial data. MSPB has 

existing systems to guarantee the completeness and reliability of the financial data used in this report and is 

using OMB guidance to review and continually improve these systems. In addition, following an assessment 

of MSPB’s comprehensive management control program, I certify, with reasonable assurance, that MSPB’s 

systems of accounting and internal control comply with the provisions of the Federal Managers’ Financial 

Integrity Act.

Respectfully,

Susan Tsui Grundmann

Chairman

November 17, 2014
2

U.S. Merit Systems Protection Board

FY 2014 Agency Financial Report

About MSPB

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

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

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

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

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

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

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

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

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

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

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

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

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

2

The MSPB Mission

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

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

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

regulations and significant actions of the Office of Personnel Management to assess the degree to which 

those actions support adherence to the merit principles and do not lead to the commission of PPP’s.

Board Organization

The agency is organized into offices designed to conduct and support its statutory functions. The agency has 

three appointed Board members and is authorized 226 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 over-lapping, 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.

 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.
3

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 United States Coast Guard, the Federal Trade Commission,

and the 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, 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 for payroll services, U.S. Department of the Treasury, Bureau of the 

Public Debt for accounting services, and U.S. Department of Agriculture, Animal and Plant Health 

Inspection Service 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 petition for review 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 
4

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

Government Performance and Results Modernization Act.

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

 

U.S. Merit Systems Protection Board

 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,

San Francisco, and

Washington, DC 

Field Offices 

Denver and

New York

Financial and

Administrative

Management

Information 

Resources 

Management

Executive 

Director

Human Resources Management services are provided by 

USDA's Animal and Plant Health Inspection Service (APHIS) Business Services. 

Payroll services are provided by USDA's 

National Finance Center.

Accounting services are provided by the Department of the Treasury’s 

Bureau of the Public Debt.

VICE CHAIRMAN
5

Management Discussion and Analysis

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

MSPB will submit its FY 2014 APR with its Congressional Budget Justification and post it on the MSPB web 

site at www.mspb.gov at the time the President’s 2016 budget is submitted to Congress in February 2015.

External Trends Affecting MSPB’s Mission and Performance

A number of significant external trends and issues are likely to affect MSPB’s mission to protect the Federal 

merit systems through FY 2015 and FY 2016. 

External Trends 

A number of significant external events have impacted MSPB and are likely to continue to affect MSPB’s 

mission to protect the Federal merit systems through FY 2016 and should be considered as funding levels are 

determined for the MSPB in FY 2016. At MSPB, we recognize the financial challenges facing our nation with 

increasing pressure to cut fiscal spending and to reduce the size of the Federal Government. However, we 

feel that our agency has been impacted in a unique way. On March 1, 2013, Government-wide 

“sequestration” was implemented and MSPB sustained a decrease of over $2 million from its FY 2013 

appropriation. As a result of sequestration, a number of Federal agencies furloughed staff, including the 

Department of Defense. Hundreds of thousands of Federal employees were furloughed, and as expected, 

tens of thousands exercised their statutory right 3 to appeal their furloughs to the MSPB, resulting in historical

increases in the number of furlough appeals filed. In fact, more than 32,400 furlough appeals were filed with 

MSPB. 4 

In FY 2014, MSPB processed over 16,000 initial appeals and had over 23,600 initial appeals pending. 

Throughout FY 2014, we received new initial appeals that are added to our existing caseload that must be 

processed. Simply docketing these appeals and preparing to adjudicate them has been an overwhelming 

endeavor and has affected all offices of the agency. Congress recognized the need for additional resources to 

address the historical number of furlough appeals, thereby increasing our FY 2014 funding by $2.6 million 

more than the amount requested in the President’s budget. 

While we expect to make significant progress in processing the backlog of cases in FY 2015, it is likely we will 

begin FY 2016 with a significant backlog of cases including appeals and petitions for review (PFR) filed in FY 

2015. As we noted in our FY 2015 budget justification to Congress, the only historical comparator for this 

volume of work at the Board are the Air Traffic Controller terminations that occurred in 1981. At that time, 

approximately 11,000 appeals were filed at the Board by terminated controllers. We would note, however, 

that at that time, MSPB had about twice the number of FTE than our current staffing level. Additionally, 

unlike the current furlough appeals, which are spread across various agencies Government-wide, all 11,000 

appeals came from the Federal Aviation Administration.

An increase of furlough (and potentially reduction-in-force) appeals may persist for the foreseeable future if 

agencies continue to be faced with implementing adverse personnel actions to address ongoing budget 

 3 Under 5 U.S.C. § 7512, a “furlough of 30 days or less” is an adverse action for which a covered employee is entitled to appeal to 

MSPB. 

4 Under the law, each appellant has a statutory right to a hearing, meaning that every case filed must be processed and adjudicated. 5 

U.S.C. § 7701(a)(1)
6

reductions due to the resumption of sequestration in FY 2016. Based on the number of furlough appeals 

currently in the regions, our PFR receipts at the Board will likely be at historic levels in FY 2015 and beyond. 

In addition, if agencies continue to furlough their employees during FY 2016 and beyond due to additional 

budget cuts, or begin to reduce staffing levels through reductions in force (RIFs), PFR receipts could remain 

at historic levels for years to come. 

Furthermore, significant changes in the law have had and will continue to have a direct impact on case 

processing. We anticipate that the recently passed Department of Veterans Affairs Management 

Accountability Act of 2014 will increase our workload, although we do not yet know how much of an 

increase we will see. The most significant aspect of that legislation; however, is that it will require MSPB to 

prioritize and devote resources for these cases to the detriment of all other appeals, since they must be 

completed within 21 days of being filed at MSPB. This is less than 20% of the 120-day time goal the Board 

has been operating under for many years. Thus, resources will need to be diverted from other categories of 

ongoing cases that will lead to delays in processing. 

The Whistleblower Protection Enhancement Act (WPEA) will likely increase the number of whistleblower 

cases that will proceed to a hearing. It also provides additional rights to whistleblowers and those who 

engage in other protected activity in the Federal Government by expanding the scope of protected disclosures 

as well as MSPB’s whistleblower jurisdiction and options for granting corrective action, all of which make

adjudication of WPEA cases far more complex and time-consuming. The additional corrective action 

possibilities will also likely lead to more addendum appeals being filed as appellants seek compensatory 

damages and attorney fees. The law also permits review of MSPB decisions by multiple Federal Courts of 

Appeals, thereby leading to the likelihood of inconsistent precedent that could further complicate 

adjudication. Finally, the WPEA also requires MSPB to track and report more detailed information about 

whistleblowing cases in its performance reports, which requires more resources.

Additionally, the Hatch Act Modernization Act of 2012 may increase the number of Hatch Act cases MSPB

handles. Further, revisions to management flexibilities, such as the Pathways Program, are anticipated to 

continue. In the recent past, such management flexibilities have generated numerous complex cases 

challenging various aspects of the revisions, such as the Outstanding Scholar Program, Federal career Intern 

Program, and the National Security Personnel System. 

Interim Summary of MSPB’s FY 2014 Program Performance

This performance summary contains interim FY 2014 performance results compared to the Annual

Performance Plan for FY 2014, which was developed under MSPB’s Strategic Plan for FY 2012-2016. MSPB 

is continuing to verify and validate its performance results for FY 2014. Final results will be published in the 

FY 2014 Annual Performance Report (APR) in February 2015.

Strategic Objective 1A: Provide high-quality resolution of appeals through adjudication and 

alternative dispute resolution. 

Interim FY 2014 results indicate that this objective was SUBSTANTIALLY MET. MSPB exceeded its 

adjudication performance goal targets related to decision quality for initial appeals and cases left unchanged by 

the U.S. Court of Appeals for the Federal Circuit. Due to the arrival of 32,400 furlough cases in FY 2013, 

MSPB set no target for average processing time for initial appeals for FY 2014. Even without a target, MSPB 

regional and field offices issued decisions in over 16,000 decisions, including approximately one third of the 
7

furlough cases, and about 70% of its non-furlough initial appeals. The average processing time for petitions 

for review (PFRs) was longer than the target. However, MPSB reduced significantly the number of pending 

PFRs at HQ. Adequate progress was made in FY 2014 to obtain a survey platform to support obtaining 

customer feedback from adjudication and ADR customers. In accordance with the Whistleblower Protection

Enhancement Act of 2012, FY 2014 whistleblowing information will be reported in February 2015 in the FY 

2014 APR.

Strategic Objective 1B: Enforce timely compliance with MSPB decisions. 

Interim results indicate that this objective was NOT MET. The weighted average processing time of 

compliance/ enforcement cases closed at HQ and in the regional and field offices was longer than the target 

level. HQ closed a larger number of enforcement cases than normal, including several older cases, which 

increased the weighted average processing time.

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

and human capital management issues. 

Interim results indicate this objective was MET. MSPB exceeded the performance targets for publication of 

Issues of Merit newsletter editions and flash content articles, which contained articles covering all the Merit 

System Principles and several Prohibited Personnel Practices. Four new merit system study reports were 

approved and published in FY 2014 including reports on Perceptions of Favoritism, The role of Training and 

Experience in Hiring, Sexual Orientation and the Federal Workplace, and Practices and Perceptions on 

Veteran Hiring in the Civil Service. MSPB also published a catalog of research highlights from several studies 

published between 2008 and 2014. In addition, MSPB began the process of updating its merit systems studies 

research agenda, including holding a public meeting for the Board members to hear from and ask questions 

of representatives from several stakeholder groups with an interest in MSPB’s studies function.

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

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

MET. The Board issued decisions on requests for MSPB review of OPM regulations, but did not initiate of 

review of an OPM regulation on its own motion. MSPB published its Annual Report for FY 2013, which

contained review of OPM significant actions covering a broad range of merit system principles and updates 

of significant actions initiated in earlier years.

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

appropriate, that strengthen Federal merit systems laws and regulations.

Interim data indicate this objective was EXCEEDED. MSPB studies, cases, and issues regarding furlough 

appeals were cited hundreds of times in the print and electronic media, trade publications (on Federal

management and legal issues), wire services, major city daily newspapers, Congressional sources, and a variety 

of websites and blogs. MSPB sent a letter to the President expressing concerns about legal issues related to 

the Veterans Access, Choice, and Accountability Act of 2014, and met with Congress about the proposed 

SES Accountability Act. MSPB’s Chairman testified at a House Hearing examining the Administration’s 

policy toward whistleblowers. References to MSPB were included in House and Senate proposed legislation 

to allow employees who occupy sensitive positions to appeal to MSPB. MSPB posted merit system study 

report highlights for all reports published in 2014 and for several previously published reports on the website 

including information focused on policy issues and policy-makers.
8

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

prevention of PPPs in the workplace through outreach. 

Interim results indicate this objective was EXCEEDED. MSPB conducted significantly more outreach 

presentations related to adjudication, studies, and general merit issues than the number targeted (not including 

outreach related to furlough appeals or telephonic interviews). In addition, MPSB conducted nine radio 

interviews on legal and merit systems studies topics.

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

the use of educations standards, materials, and guidance established by MSPB.

Interim results indicate this objective was MET. The number of visits to pages on the MSPB website related 

to improving the understanding and practice of merit of merit were greater than anticipated. However, the 

number of accesses to documents on the website were lower than in FY 2013. MSPB posted merit systems 

educational materials including a report and regulations on how MSPB will implement the SES appeal 

provisions of the Veterans Access, Choice, and Accountability Act. MSPB posted research highlights for all 

study reports published in FY 2014, four highlights on reports published previously, and a catalog of research 

highlights from several studies published between 2008 and 2014. MSPB also posted educational materials 

related to development of a new merit systems studies research agenda, a Special Panel Oral Argument on a 

mixed case, and guidance for attorneys interested in providing pro bono representation.

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

competencies to perform the mission.

Interim results indicate this objective is likely to be MET. Results for employee competency, diversity, and 

engagement were within 10% of the target. Interim results for inclusion are not yet available. 

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

ensure current and future resources. Interim results indicate this objective was MET. MSPB selected the 

proportion of funded positions left vacant for 6 months or more as the measure for budget justification and 

resource accountability. Significant progress was made in pilot testing the electronic processing of furlough 

appeals and in moving forward with MSPB’s e-Adjudication efforts. Approximately 55 percent of initial 

appeals and 83 percent of pleadings were filed electronically in FY 2014.

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

support our mission. 

Interim results indicate this objective was MET. Adequate progress was made in the procurement of a 

survey platform to support obtaining customer feedback from current web users. The downtime for critical 

IT systems was below the target value. The target for percent of IT help desk tickets (internal and external) 

closed within service level agreement was achieved. 

Management Objective M4: Ensure individual and workplace safety and security. 

Interim results for this measure are not yet available. 
9

Management Assurances

Federal Managers’ Financial Integrity Act (FMFIA)

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)

The purpose of the Federal Financial Management Improvement Act of 1996 (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 the 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. This is 

particularly important, as budgets have become increasingly tight.
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 Chief Financial Officer 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 2014. 
11

Message from the Chief Financial Officer

I am pleased to present the U.S. Merit Systems Protection Board (MSPB) financial statements for FY 2014

and to report that MSPB has earned an unqualified opinion on its FY 2014 consolidated financial statements. 

I am also particularly pleased to report that, once again, under the leadership of our Chairman, Susan Tsui 

Grundmann, no material weaknesses were identified in the auditor’s report on internal controls. As in 

previous years, we are proud of our accomplishments in receiving this unqualified opinion as it validates our 

efforts in preserving the integrity of our financial reporting.

MSPB has partnered with the Department of the Treasury Bureau of Public Debt (BPD) in Parkersburg, 

West Virginia, since 1992. BPD, designated by the Office of Management and Budget as a Center of 

Excellence, is responsible for handling our administrative payments and preparing our financial statements. 

Through its franchise operation, BPD has provided us with timely and complete reports to satisfy our day-today operating needs as well as the reporting requirements for Congress, our auditors, and other external 

reviewing organizations.

This working relationship between MSPB and BPD has facilitated the Agency’s compliance with all external 

reporting requirements. The timeliness and completeness of the reports allow us to operate more efficiently 

and to identify and correct any potential problems quickly. Reports and communications between MSPB and 

BPD are virtually all electronic in compliance with efforts to increase the use of e-Government applications.

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

While we are proud of our accomplishment of receiving unqualified opinions for the past ten years, 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.

 Kevin J. Nash

Chief Financial Officer

November 17, 2014
12

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 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 the 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 2013 and FY 2014. 
1101 MERCANTILE LANE, SUITE 122 ● LARGO, MD 20774

PHONE: (240) 770-4900 ● FAX: (301) 773-2090 ● mail@brownco-cpas.com ● www.brownco-cpas.com

INDEPENDENT AUDITOR'S REPORT 

U.S. Merit Systems Protection Board

Washington, D.C.

Report on the Financial Statements

We have audited the accompanying balance sheets of the U.S. Merit Systems Protection Board (MSPB)

as of September 30, 2014 and 2013, and the related statements of net cost, changes in net position, and 

budgetary resources, for the years then ended (collectively referred to as the financial statements), and 

the related notes to the financial statements.

Management’s Responsibility for the Financial Statements

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

accordance with accounting principles generally accepted in the United States of America; this includes 

the design, implementation, and maintenance of internal control relevant to the preparation and fair 

presentation of financial statements that are free from material misstatement, whether due to fraud or 

error.

Auditor’s Responsibility

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

conducted our audit in accordance with auditing standards generally accepted in the United States of 

America and the standards applicable to financial audits contained in Government Auditing Standards, 

issued by the Comptroller General of the United States; and the Office of Management and Budget 

(OMB) Bulletin No. 14-2, Audit Requirements for Federal Financial Statements. Those standards and 

OMB Bulletin No. 14-2, require that we plan and perform the audit to obtain reasonable assurance about 

whether the financial statements are free from material misstatements.

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

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

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

In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation 

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

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

internal control. Accordingly, we express no such opinion. An audit also includes evaluating the 

appropriateness of accounting policies used and the reasonableness of significant accounting estimates 

made by management, as well as evaluating the overall presentation of the financial statements.

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

our audit opinion.
Opinion on the Financial Statements

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

financial position of MSPB as of September 30, 2014 and 2013, and its net costs, changes in net position, 

and budgetary resources for the years then ended, in accordance with accounting principles generally 

accepted in the United States of America. 

Other Matters

Accounting principles generally accepted in the United States of America require that the information in 

the Management’s Discussion and Analysis (MD&A) and Required Supplementary Information (RSI)

sections be presented to supplement the basic financial statements. Such information, although not a part 

of the basic financial statements, is required by the Federal Accounting Standards Advisory Board, who

considers it to be an essential part of financial reporting for placing the basic financial statements in an 

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

the required supplementary information in accordance with auditing standards generally accepted in the 

United States of America, which consisted of inquiries of management about the methods of preparing the 

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

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

financial statements. We do not express an opinion or provide any assurance on the information because 

the limited procedures do not provide us with sufficient evidence to express an opinion or provide any 

assurance.

Report on Internal Control Over Financial Reporting

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

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

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

purpose of expressing an opinion on the effectiveness of MSPB’s internal control. Accordingly, we do 

not express an opinion on the effectiveness of MSPB’s internal control.

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

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

detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or combination 

of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement 

of the entity’s financial statements will not be prevented, or detected and corrected on a timely basis. A 

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

severe than a material weakness, yet important enough to merit attention by those charged with 

governance.

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

this section and was not designed to identify all deficiencies in internal control that might be deficiencies,

significant deficiencies or material weaknesses. Given these limitations, during our audit we did not 

identify any deficiencies in internal control that we consider to be a material weakness. However, 

material weaknesses may exist that have not been identified.

Report on Compliance and Other Matters

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

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

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

determination of financial statement amounts. However, providing an opinion on compliance with those 
provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The 

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

reported under Government Auditing Standards or OMB Bulletin No. 14-02.

Management’s Responsibility for Internal Control and Compliance

MSPB’s management is responsible for (1) evaluating effectiveness of internal control based on criteria 

established under the Federal Managers Financial Integrity Act (FMFIA), (2) providing a statement of 

assurance on the overall effectiveness of internal control over financial reporting, (3) ensuring MSPB’s 

financial management systems are in substantial compliance with FFMIA requirements, and (4) ensuring 

compliance with other applicable laws and regulations.

Auditor’s Responsibilities

We are responsible for: (1) obtaining a sufficient understanding of internal controls to plan the audit, (2) 

testing compliance with certain provisions of laws and regulations that have a direct and material effect 

on the financial statements and applicable laws for which OMB Bulletin No. 14-02 requires testing, and 

(3) applying certain limited procedures with respect to the MD&A and other RSI.

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

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

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

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

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

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

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

not be sufficient for other purposes.

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

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

financial statements and those required by OMB Bulletin No. 14-02 that we deemed applicable to 

MSPB’s financial statements for the fiscal year ended September 30, 2014. We caution that 

noncompliance with laws and regulations may occur and not be detected by these tests and that such 

testing may not be sufficient for other purposes. 

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

and Other Matters

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

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

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

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

accordance with Government Auditing Standards in considering MSBP’s internal control and compliance. 

Accordingly, these reports are not suitable for any other purpose.

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

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

Largo, Maryland

November 12, 2014
A-1

2014 2013

Assets:

Intragovernmental

Fund Balance With Treasury (Note 2) $ 12,429,481 $ 8,663,049

Accounts Receivable (Note 3) 3,954 3,954

Other (Note 5) 74,109 67,469

Total Intragovernmental 12,507,544 8,734,472

Accounts Receivable, Net (Note 3) 4,170 4,480

Property, Equipment, and Software, Net (Note 4) 470,428 216,514

Total Assets $ 12,982,142 $ 8,955,466

Liabilities:

Intragovernmental

Accounts Payable $ 7,016 $ 4,071

Other (Note 8) 263,614 232,392

Total Intragovernmental 270,630 236,463

Accounts Payable 108,197 98,943

Federal Employee and Veterans' Benefits (Note 7) 517,337 527,962

Other (Note 8) 3,415,628 3,079,347

Total Liabilities (Note 6) $ 4,311,792 $ 3,942,715

Net Position:

Unexpended Appropriations - Other Funds $ 11,494,417 $ 7,923,608

Cumulative Results of Operations - Other Funds (2,824,067) (2,910,857)

Total Net Position $ 8,670,350 $ 5,012,751

Total Liabilities and Net Position $ 12,982,142 $ 8,955,466

BALANCE SHEET

AS OF SEPTEMBER 30, 2014 AND 2013

(In Dollars)

MERIT SYSTEMS PROTECTION BOARD
A-2

2014 2013

Program Costs: (Note 11)

Adjudication

Gross Costs $ 36,264,767 $ 34,924,134

Less: Earned Revenue - (3,192)

Net Program Costs $ 36,264,767 $ 34,920,942

Management Support

Gross Costs $ 4,746,497 $ 4,914,293

Net Program Costs $ 4,746,497 $ 4,914,293

Merit System Studies

Gross Costs $ 1,753,531 $ 1,751,854

Net Program Costs $ 1,753,531 $ 1,751,854

Net Cost of Operations $ 42,764,795 $ 41,587,089

MERIT SYSTEMS PROTECTION BOARD

STATEMENT OF NET COST

FOR THE YEARS ENDED SEPTEMBER 30, 2014 AND 2013

(In Dollars)
A-3

2014 2013

Cumulative Results of Operations:

Beginning Balances $ (2,910,857) $ (3,013,646)

Budgetary Financing Sources:

Appropriations Used 38,321,181 37,165,096

Transfers In/Out Without Reimbursement 2,345,000 2,340,310

Other Financing Sources (Non-Exchange):

Imputed Financing Sources (Note 10) 2,185,404 2,184,472

Total Financing Sources 42,851,585 41,689,878

Net Cost of Operations (42,764,795) (41,587,089)

Net Change 86,790 102,789

Cumulative Results of Operations $ (2,824,067) $ (2,910,857)

Unexpended Appropriations:

Beginning Balances $ 7,923,608 $ 7,889,792

Budgetary Financing Sources:

Appropriations Received 42,740,000 40,258,000

Other Adjustments (848,010) (3,059,088)

Appropriations Used (38,321,181) (37,165,096)

Total Budgetary Financing Sources 3,570,809 33,816

Total Unexpended Appropriations $ 11,494,417 $ 7,923,608

Net Position $ 8,670,350 $ 5,012,751

MERIT SYSTEMS PROTECTION BOARD

STATEMENT OF CHANGES IN NET POSITION

FOR THE YEARS ENDED SEPTEMBER 30, 2014 AND 2013

(In Dollars)
A-4

2014 2013

Budgetary Resources:

Unobligated Balance Brought Forward, October 1 $ 5,484,692 $ 4,856,845

Recoveries of Prior Year Unpaid Obligations 60,249 782,888

Other changes in unobligated balance (848,010) (953,353)

Unobligated balance from prior year budget authority, net 4,696,931 4,686,380

Appropriations 42,740,000 38,152,265

Spending authority from offsetting collections 2,345,431 2,345,829

Total Budgetary Resources $ 49,782,362 $ 45,184,474

Status of Budgetary Resources:

Obligations Incurred (Note 13) $ 41,646,414 $ 39,699,782

Unobligated balance, end of year:

 Apportioned (Note 2) 6,382,325 2,965,352

 Unapportioned (Note 2) 1,753,623 2,519,340

Total unobligated balance, end of year 8,135,948 5,484,692

Total Budgetary Resources $ 49,782,362 $ 45,184,474

Change in Obligated Balance

 Unpaid Obligations:

Unpaid Obligations, Brought Forward, October 1 $ 3,182,311 $ 4,925,885

Obligations Incurred (Note 13) 41,646,414 39,699,782

Outlays (gross) (40,470,989) (40,660,468)

Recoveries of Prior Year Unpaid Obligations (60,249) (782,888)

Unpaid Obligations, End of Year (Gross) 4,297,487 3,182,311

Uncollected payments:

Uncollected Customer Payments, Federal Sources, Brought Forward, October 1 (3,954) -

Change in Uncollected Payments, Federal Sources - (3,954)

Uncollected Customer Payments, Federal Sources, End of Year (3,954) (3,954)

Obligated Balance, End of Year $ 4,293,533 $ 3,178,357

Budget Authority and Outlays, Net:

Budget authority, gross $ 45,085,431 $ 40,498,094

Actual offsetting collections (2,345,431) (2,341,875)

Change in Uncollected Payments, Federal Sources - (3,954)

Budget Authority, net, (total) $ 42,740,000 $ 38,152,265

Outlays, gross $ 40,470,989 $ 40,660,468

Actual offsetting collections (2,345,431) (2,341,875)

Agency outlays, net $ 38,125,558 $ 38,318,593

MERIT SYSTEMS PROTECTION BOARD

STATEMENT OF BUDGETARY RESOURCES

FOR THE YEARS ENDED SEPTEMBER 30, 2014 AND 2013

(In Dollars)
U. S. MERIT SYSTEMS PROTECTION BOARD

NOTES TO THE FINANCIAL STATEMENTS

A-5

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, the Government 

Management Reform Act of 1994 and the 

Accountability of Tax Dollars Act of 2002. 

They have been prepared from, and are fully 

supported by, the books and records of 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.

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 
A-6

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 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. 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)

Office Equipment 10

Leasehold Improvements 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 
A-7

costs earned by employees during the fiscal year 

which are not paid until the next fiscal year.

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, 

Federal Employees’ Compensation Act 

(FECA), and the amounts due to Treasury for 

collection and accounts receivable of civil 

penalties and Freedom of Information Act 

(FOIA) request fees. Liabilities not covered by 

budgetary resources on the Balance Sheet are 

equivalent to amounts reported as components 

requiring or generating resources on the 

Reconciliation of Net Cost to Budget. 

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 effective at 50% beginning FY 2012

and 100% in 2014.

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 the MSPB matches 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 
A-8

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. 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 2014 and 2013 to the extent 

directed by accounting standards.

O. Contingencies

Liabilities are deemed contingent when the 

existence or amount of the liability cannot be 

determined with certainty pending the outcome 

of future events. The MSPB recognizes 

contingent liabilities in the accompanying 

balance sheet and statement of net cost, when it 

is both probable and can be reasonably 

estimated. The MSPB discloses contingent 

liabilities in the notes to the financial statements 

when the conditions for liability recognition are 

not met or when a loss from the outcome of 

future events is more than remote. 

P. Reclassification

Certain fiscal year 2013 balances have been 

reclassified, retitled, or combined with other 

financial statement line items for consistency 

with the current year presentation.
A-9

NOTE 2. FUND BALANCE WITH TREASURY

Fund balance with Treasury account balances as of September 30, 2014 and 2013, 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, 2014 and 2013, were as follows:

2014 2013

Fund Balances:

Appropriated Funds $ 12,429,481 $ 8,663,049 

Total $ 12,429,481 $ 8,663,049 

Status of Fund Balance with Treasury:

Unobligated Balance

 Available $ 6,382,325 $ 2,965,352 

 Unavailable 1,753,623 2,519,340 

Obligated Balance Not Yet Disbursed 4,293,533 3,178,357 

Total $ 12,429,481 $ 8,663,049 

2014 2013

Intragovernmental

Accounts Receivable $ 3,954 $ 3,954

Total Intragovernmental Accounts Receivable $ 3,954 $ 3,954

With the Public

Accounts Receivable $ 4,170 $ 4,480

Total Public Accounts Receivable $ 4,170 $ 4,480

Total Accounts Receivable $ 8,124 $ 8,434
A-10

The accounts receivable is primarily made up of Federal and Non-Federal Travel reimbursements 

and employee receivables.

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

no material uncollectible accounts as of September 30, 2014 and 2013

NOTE 4. PROPERTY, EQUIPMENT, AND SOFTWARE

Schedule of Property, Equipment, and Software as of September 30, 2014

Schedule of Property, Equipment, and Software as of September 30, 2013

NOTE 5. OTHER ASSETS

Other assets account balances as of September 30, 2014 and 2013, were as follows:

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

Office

Major Class

Acquisition 

Cost

Accumulated 

Amortization/

Depreciation

Net Book 

Value

Leasehold Improvements $ 1,785,765 $ 1,694,979 $ 90,786

Furniture & Equipment 483,027 103,385 379,642

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

Total $ 11,684,368 $ 11,213,940 $ 470,428

Major Class

Acquisition 

Cost

Accumulated 

Amortization/

Depreciation

Net Book 

Value

Leasehold Improvements $ 1,785,765 $ 1,672,844 $ 112,921

Furniture & Equipment 177,797 74,204 103,593

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

Total $ 11,379,138 $ 11,162,624 $ 216,514

2014 2013

Intragovernmental

Advances and Prepayments $ 74,109 $ 67,469

Total Other Assets $ 74,109 $ 67,469
A-11

NOTE 6. LIABILITIES NOT COVERED BY BUDGETARY RESOURCES

The liabilities for the MSPB as of September 30, 2014 and 2013, 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 the 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 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, 2014 and 2013, was $517,337 and $527,962, 

respectively.

2014 2013

Intragovernmental – FECA $ 98,790 $ 101,991

Unfunded Leave 2,682,539 2,501,899

Federal Employee and Veterans' Benefits 517,337 527,962

Total Liabilities Not Covered by Budgetary Resources $ 3,298,666 $ 3,131,852

Total Liabilities Covered by Budgetary Resources 1,013,126 810,863

Total Liabilities $ 4,311,792 $ 3,942,715
A-12

NOTE 8. OTHER LIABILITIES

Other liabilities account balances as of September 30, 2014 were as follows:

Other liabilities account balances as of September 30, 2013 were as follows:

NOTE 9. LEASES

Operating Leases

At September 30, 2014, the MSPB leased office space at 9 locations under operating lease 

agreements that expire between 2016 and 2023. The total operating lease expenses as of September 

30, 2014 and 2013 were $3,614,319 and $3,220,786 respectively. Below is a schedule of future 

payments for the terms of the leases.

Current Non Current Total

Intragovernmental

FECA Liability $ 11,269 $ 87,521 $ 98,790

Payroll Taxes Payable 164,824 - 164,824

Total Intragovernmental Other Liabilities$ 176,093 $ 87,521 $ 263,614

With the Public

 Payroll Taxes Payable $ 27,145 $ - $ 27,145

 Accrued Funded Payroll and Leave 705,944 - 705,944

 Unfunded Leave 2,682,539 - 2,682,539

Total Public Other Liabilities $ 3,415,628 $ - $ 3,415,628

Current Non Current Total

Intragovernmental

FECA Liability $ 40,660 $ 61,331 $ 101,991

Payroll Taxes Payable 130,401 - 130,401

Total Intragovernmental Other Liabilities$ 171,061 $ 61,331 $ 232,392

With the Public

 Payroll Taxes Payable $ 20,861 $ - $ 20,861

 Accrued Funded Payroll and Leave 556,587 - 556,587

 Unfunded Leave 2,501,899 - 2,501,899

Total Public Other Liabilities $ 3,079,347 $ - $ 3,079,347
A-13

The MSPB also occupies a warehouse space at one location with a lease agreement accounted for 

as an operating lease. The (Washington, DC warehouse) lease began on April 1, 2003 and expired 

on March 31, 2013. The MSPB continues to lease the space on a month to month basis until a new 

lease can be negotiated. The agency currently estimates annual rent at $34,000. 

NOTE 10. 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 administering agency, OPM. For the years ended September 30, 2014 and 

2013, imputed financing was $2,185,404 and 2,184,472 respectively. 

NOTE 11. INTRAGOVERNMENTAL COSTS AND EXCHANGE REVENUE

Intragovernmental costs and revenue represent exchange transactions between the MSPB and other 

federal government entities, and are in contrast to those with non-federal entities (the public). Such 

costs and revenue are summarized as follows:

Fiscal Year Office Space

2015 $ 3,498,861 

2016 3,603,657 

2017 3,780,242 

2018 3,889,020 

2019 3,951,930 

Thereafter 13,831,720 

Total Future Payments $ 32,555,430 

2014 2013

Adjudication

 Intragovernmental Costs $ 11,738,448 $ 11,094,598

 Public Costs 24,526,319 23,829,536

 Total Program Costs 36,264,767 34,924,134

 Public Earned Revenue - (3,192)

 Net Program Costs 36,264,767 34,920,942

Management Support

 Intragovernmental Costs $ 1,297,425 $ 1,317,694

 Public Costs 3,449,072 3,596,599

 Net Program Costs 4,746,497 4,914,293

Merit Systems Studies

 Intragovernmental Costs 313,656 307,497

 Public Costs 1,439,875 1,444,357

 Net Program Costs 1,753,531 1,751,854

Total Intragovernmental costs 13,349,529 12,719,789

Total Public costs 29,415,266 28,870,492

 Total Costs 42,764,795 41,590,281

 Total Public Earned Revenue - (3,192)

Total Net Cost $ 42,764,795 $ 41,587,089
A-14

NOTE 12. BUDGETARY RESOURCE COMPARISONS TO THE BUDGET OF THE 

UNITED STATES GOVERNMENT

The President’s Budget that will include fiscal year 2014 actual budgetary execution information 

has not yet been published. The President’s Budget is scheduled for publication in February 2015

and can be found at the OMB Web site: http://www.whitehouse.gov/omb/. The 2015 Budget of 

the United States Government, with the "Actual" column completed for 2013, has been reconciled 

to the Statement of Budgetary Resources and there were no material differences. 

NOTE 13. APPORTIONMENT CATEGORIES OF OBLIGATIONS INCURRED

Obligations incurred and reported in the Statement of Budgetary Resources in 2014 and 2013

consisted of the following:

Category A apportionments distribute budgetary resources by fiscal quarters.

NOTE 14. UNDELIVERED ORDERS AT THE END OF THE PERIOD

For the fiscal years ended September 30, 2014 and 2013, budgetary resources obligated for 

undelivered orders amounted to $3,358,469 and $2,438,917 respectively.

NOTE 15. 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.

2014 2013

Direct Obligations, Category A $ 39,300,983 $ 37,355,519

Reimbursable Obligations, Category A 2,345,431 2,344,263

Total Obligations Incurred $ 41,646,414 $ 39,699,782

2014 2013

Resources Used to Finance Activities:

Budgetary Resources Obligated

Obligations Incurred $ 41,646,414 $39,699,782

Spending Authority From Offsetting Collections and Recoveries (2,405,680) (3,128,717)

Net Obligations 39,240,734 36,571,065

Other Resources

Imputed Financing From Costs Absorbed By Others 2,185,404 2,184,472

Net Other Resources Used to Finance Activities 2,185,404 2,184,472

Total Resources Used to Finance Activities 41,426,138 38,755,537

Resources Used to Finance Items Not Part of the Net Cost of Operations 1,106,391 2,773,754

Total Resources Used to Finance the Net Cost of Operations 42,532,529 41,529,291

Components of the Net Cost of Operations That Will Not Require or

Generate Resources in the Current Period: 232,266 57,798

Net Cost of Operations $ 42,764,795 $41,587,089