U.S. Merit Systems Protection Board

 

 

Agency

Financial 

Report

FY 2013

December 2013
ii

a

United States

Merit Systems Protection Board

AGENCY FINANCIAL REPORT

For Fiscal Year 2013

DECEMBER

2013
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 MSPB’s FY 2013 Program Performance..................................................................6

Management Assurances.................................................................................................................................7

Message from the Chief Financial Officer..................................................................................................10

Notes on the Financial Statements..............................................................................................................11

Financial Statements and Independent Auditor Reports..........................................................................12
1

U.S. Merit Systems Protection Board

Fiscal Year 2013

Agency Financial Report

Message from the Chairman

It is my honor to submit the Fiscal Year 2013 Agency Financial Report for the U.S. Merit Systems Protection 

Board (MSPB). I am pleased to report that as of September 30, 2013, MSPB has received an unqualified 

opinion on its financial statements. 

The MSPB’s role as the independent, bipartisan protector of the merit systems under which Federal 

employees work is essential to assuring the American people that their Federal civil servants are well qualified 

to perform their duties and effectively serve the public. The MSPB carries out its mission to protect the 

Federal merit systems and the rights of individuals within those systems by: providing for independent 

adjudication of employee appeals of personnel actions for over two million Federal employees; enforcing 

compliance with Board orders and decisions; conducting studies of the merit systems and other Federal 

management issues to ensure employees are managed in accordance with the merit principles and free from 

Prohibited Personnel Practices; and reviewing the significant actions of the Office of Personnel Management.

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

 December 16, 2013
2

U.S. Merit Systems Protection Board

FY 2013 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;1the Office of Personnel 

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

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

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

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

2

The MSPB Mission

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

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

appeals, enforcing its 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 2013 APR with its Congressional Budget Justification and post it on the MSPB web 

site at www.mspb.gov at the time the President’s 2015 budget is submitted to Congress in February 2014.

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 2014 and FY 2015. 

External Trends 

External Trends: The most significant external issues currently affecting MSPB’s ability to carry out its 

mission are sequestration and other reductions in the Federal budget and the consequences resulting from 

these actions. Governmentwide “sequestration,” which took effect in March 2013, has resulted in hundreds 

of thousands of furloughs, which subsequently led to over 32,000 furlough appeals filed with MSPB since 

May 2013. Most of the furlough appeals have been filed by Department of Defense (DoD) employees. This is 

almost five times the average number of initial appeals MSPB typically receives in one year. This increase in 

appeals is having an extraordinary impact on MSPB’s Regional and Field offices all of which process initial 

appeals. At the height of this filing wave, the MSPB e-Appeal Online system received over 1,600 appeals in a 

single day – over 80 times the average number of appeals the online system typically receives per day. The 

volume of new appeals is also straining our IT infrastructure requiring constant monitoring and intervention 

to ensure necessary processing capacity. The tens of thousands of furlough appeals from DoD are being 

docketed, reviewed, and grouped based on several factors, in order to adjudicate them effectively and 

efficiently. As these initial appeals are processed and initial decisions issued, we expect a comparable increase 

in the number of Petitions for Review (PFRs) filed at the Board. If sequestration continues, as expected in 

future years, furloughs and more permanent actions, such as Reduction in Force (RIF) that may occur in lieu 

of yearly furloughs, will likely result in an increase in appeals filed with MSPB. Depending on a number of 

factors, it could take years for MSPB to completely adjudicate furlough appeals and other cases related to 

sequestration and other budget reductions. At the same time, MSPB is also impacted by sequestration as a 

result of the increased workload from furlough appeals.

In addition to sequestration and furlough appeals, enactment of the Whistleblower Protection Enhancement 

Act of 2012 (WPEA) affects how MSPB processes cases. The WPEA, which provides additional rights to 

whistleblowers and those who engage in other protected activity in the Federal government, has led to 

increase the number of whistleblower appeals filed with MSPB. In addition, expanding the scope of protected 

disclosures, expanded jurisdiction, expanded options for granting corrective action, and review of MSPB 

decisions by multiple Federal courts of Appeals increases the complexity of MSPB’s processing of 

whistleblower cases. The WPEA will also likely lead to more hearings on whistleblowing cases and more 

addendum appeals such as claims for compensatory and other damages or attorney’s fees related to 

whistleblowing appeals. 

This extraordinary increase in our adjudication workload does not change MSPB’s responsibility to continue 

to process other appeals and to perform its other statutory functions to conduct merit systems studies and 

review OPM rules, regulations, and significant actions. MSPB is committed to performing its functions to the 

best of its ability and to justifying and requesting the resources necessary to carry out its responsibilities.
6

Interim summary of MSPB’s FY 2013 Program Performance

The MSPB Performance Plan for FY 2013 was based on the MSPB Strategic Plan for FY 2012 - 2016. An 

interim summary of MSPB’s program performance is provided below. 

Strategic Goal 1: Serve the public interest by protecting the Merit System Principles and safeguarding the civil 

service from Prohibited Personnel Practices. 

Strategic Plan Goal 2: Advance the public interest through education and promotion of stronger merit 

systems, adherence to Merit System Principles, and prevention of Prohibited Personnel Practices.

This performance summary contains interim FY 2013 performance results compared to the Annual 

Performance Plan for FY 2013, which was developed under the MSPB Strategic Plan for FY 2012-2016. 

MSPB is continuing to verify and validate its performance results for FY 2013 and final results will be 

published in the FY 2013 Annual Performance Report (APR) in February 2014. 

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

alternative dispute resolution. Interim FY 2013 results indicate that this objective was 

SUBSTANTIALLY MET. MSPB achieved or exceeded its adjudication performance goal targets related to: 

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

processing time for initial appeals, electronic filing of initial appeals, and electronic filing of pleadings. The 

average processing time for petitions for review (PFRs) was longer than the target. To improve PFR 

processing time, MSPB has hired some new PFR writing attorneys who are undergoing the 2-3 year 

development process to reach journey level work. MSPB is also conducting a program evaluation of the PFR 

process to identify how timeliness can be improved while maintaining the quality of PFR decisions. MSPB 

published the first comprehensive update of its adjudication regulations, which took effect on November 12, 

2012. MSPB also made changes to its case processing systems in order to meet the reporting requirements in 

the Whistleblower Protection Enhancement Act (WPEA) of 2012. These whistleblowing data will be reported 

in the final FY 2013 APR.

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

this objective was NOT MET. Average processing time of compliance/enforcement cases at HQ was longer 

than the target level. The relatively small number of enforcement cases processed at HQ means that a few 

cases can have a significant impact on the average processing time. The weighted average of all compliance 

appeals processed in the field and at HQ is a more comprehensive measure of enforcement processing 

timeliness and was significantly shorter. MSPB’s new regulations, which were effective in November 2012, 

changed the way enforcement cases are processed. MSPB is tracking the impact of these changes on the 

enforcement process.

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

and human capital management issues. This objective was PARTIALLY MET. MSPB achieved the 

performance targets for publication of Issues of Merit newsletter editions. One merit system study report was 

approved for publication. The number of approved reports varies from year to year and several study reports 

are in the review process. Merit system studies resources are competing with resources needed to conduct 

MSPB agency-wide activities such as meeting Government Performance Results Act Modernization Act 

(GPRAMA) requirements, supporting key leadership initiatives, and conducting program evaluation. 
7

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

Office of Personnel Management (OPM), as appropriate. This objective was MET. MSPB has not 

changed its regulations that delineate the processes MSPB uses to review OPM regulations that on their face, 

or in their implementation, cause the commission of a PPP. The Board issued decisions on requests by 

interested parties that MSPB review OPM regulations, and did not initiate of review of an OPM regulation on 

its own motion. MSPB conducted a review of its internal processes for reviewing and reporting on OPM 

significant actions. In addition, MSPB’s Annual Report for FY 2012 contained review of OPM significant 

actions covering a broad range of merit system principles, updates of significant actions initiated in earlier 

years, and additional context information. 

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 MET. Key contacts with policy-makers included several meetings with Congressional members 

and staff about furlough appeals. Although efforts to identify a more automated way to track references and 

citations to MSPB’s work have not been successful, MSPB studies, cases, and issues regarding furlough 

appeals were cited in the print and electronic media, trade publications and books, OPM guidance, legal 

sources, and a variety of websites and blogs. Merit system study report highlights were posted on the website 

included information focused on policy issues. 

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 MET. 

The number of visits to pages on the MSPB website and accesses to web-based documents related to 

improving the practice of merit were greater than anticipated. In addition, MSPB conducted slightly more 

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

outreach related to furlough appeals or telephonic interviews). 

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 EXCEEDED. The number of visits to pages on the MSPB website and 

accesses to web-based documents related to improving the understanding of merit were greater than 

anticipated. MSPB posted merit systems educational materials including summaries of PPPs of the month, 

MSPB’s new adjudication regulations, changes in law and regulation related to the WPEA, training videos, 

case reports, live radio interviews, merit systems study highlights, and oral argument materials. 

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 
8

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.

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 
9

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 2013. 
10

Message from the Chief Financial Officer

Under the leadership of Chairman Susan Tsui Grundmann, I am pleased to present the financial statements 

for FY 2013 of the U.S. Merit Systems Protection Board (MSPB) and to report that MSPB has earned an 

unqualified opinion on its FY 2013 consolidated financial statements. I am particularly pleased to report that

The Auditor identified in internal controls. As in previous years, we have adhered to generally accepted 

accounting principles and are proud to receive an unqualified opinion validating our efforts to preserve the 

integrity of our financial reporting.

Since 1992, MSPB has partnered with the Department of the Treasury Bureau of Public Debt (BPD) in 

Parkersburg, West Virginia. BPD is responsible for handling our administrative payments and preparing our 

financial statements. Through its franchise operation, BPD provides us with timely and complete reports to 

satisfy our day-to-day operating needs as well as the reporting requirements for Congress, our auditors, and 

other external reviewing organizations.

The working relationship between MSPB and BPD has facilitated MSPB’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 complying 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 to receive unqualified opinions for the past eleven years, we are committed to continue to 

improve our financial management performance and to accomplish the mission of MSPB – to protect the 

Federal merit systems and the rights of individuals within those systems.

 

 Kevin J. Nash

Chief Financial Officer

December 16, 2013
11

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 2012 and FY 2013. 
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, 2013 and 2012, 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. 
13

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, 2013 and 2012, 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 over financial reporting 

that might be deficiencies, significant deficiencies or material weaknesses. In our fiscal year 2013 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. 
14

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 the 

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 over financial 

reporting 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 over financial 

reporting 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 

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 14-02 that we deemed applicable to MSPB’s 

financial statements for the fiscal year ended September 30, 2013. 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. 
15

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 

December 9, 2013 
Assets: 

Intragovernmental 

MERIT SYSTEMS PROTECTION BOARD 

BALANCE SHEET 

AS OF SEPTEMBER 30, 2013 AND 2012 

(In Dollars) 

Fund Balance With Treasury (Note 2) 

Accounts Receivable (Note 3) 

$ 

Other (Note 5) 

Total Intragovernmental 

8,663,049 

3,954 

67,469 

8,734,472 

$ 9,782,730 

81,998 

9,864,728 

Accounts Receivable, Net (Note 3) 4,480 335 

Property, Equipment, and Software, Net (Note 4) 216,514 169,029 

Liabilities: 

Intragovernmental 

Accounts Payable 

Other (Note 8) 

Total Intragovemmental 

Accounts Payable 

Federal Employee and Veterans' Benefits (Note 7) 

Other (Note 8) 

Total Liabilities (Note 6) 

Net Position: 

$ 

$ 

4,071 

232,392 

236,463 

98,943 

527,962 

3,079,347 

3,942,715 

$ 

$ 

39,011 

424,639 

463,650 

111,655 

559,268 

4,023,373 

5,157,946 

Unexpended Appropriations - Other Funds $ 7,923,608 $ 7,889, 792 

Cumulative Results of Operations- Other Funds (2,910,857) (3,013,646) 

Total Net Position $ 5,012,751 $ 4,876,146 

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

1 
MERIT SYSTEMS PROTECTION BOARD 

STATEMENT OF NET COST 

FOR THE FISCAL YEARS ENDING SEPTEMBER 30, 2013 AND 2012 

(In Dollars) 

Pr<>eram Costs: (Note 12) 

Adjudication 

Gross Costs 

Management Support 

Merit System Studies 

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

2 

$ 34,924,134 $ 36,340,285 
MERIT SYSTEMS PROTECTION BOARD 

STATEMENT OF CHANGES IN NET POSITION 

FOR THE FISCAL YEARS ENDING SEPTEMBER 30, 2013 AND 2012 

(In Dollars) 

Cumulative Results of Operations: 

Beginning Balances 

Budgetary Financing Sources: 

Appropriations Used 

Transfers In/Out Without Reimbursement 

Other Financing Sources (Non-Exchange): 

$ (3,013,646) $ 

37,165,096 

2,340,310 

(3,076,429) 

38,761,460 

2,345,000 

Imputed Financing Sources (Note II) 2,184,472 2,248,208 

Total Financing Sources 41,689,878 43,354,668 

Net Cost of Operations (41,587,089) (43,291,885) 

Net Change 102,789 62,783 

~Jat!f~~~~l!lli!!!~~<:!!l!ltatm!l1>1~5ti'¥~11:~~t'\1li~E',;~;,;;:m!fiH:&;,f;:&'~'1ffi'iiilmmi~<r1i$,~1:~~~[~%f2~!,~!~~w~ffiJJ!illimUY,i;1:4f;1~!!:11~i~~~!ll'!~~ 

Unexpended Appropriations: 

Beginning Balances 

Budgetary Financing Sources: 

Appropriations Received 

Other Adjustments 

Appropriations Used 

Total Budgetary Financing Sources 

$ 7,889,792 

40,258,000 

(3,059,088) 

(37,165,096) 

33,816 

accompanying notes are an integral part of these financial statements. 

3 

$ 6,892,918 

40,258,000 

(499,666) 

(38,761,460) 

996,874 
Budgetary Resources: 

MERIT SYSTEMS PROTECTION BOARD 

STATEMENT OF BUDGETARY RESOURCES 

FOR THE FISCAL YEARS ENDING SEPTEMBER 30, 2013 AND 2012 

(In Dollars) 

Unobligated Balance Brought Forward, October 1 $ 4,856,845 $ 3,399,615 

Recoveries of Prior Year Unpaid Obligations 782,888 669,914 

Other changes in unobligated balance (953,353) (499,666) 

Unobligated balance from prior year budget authority, net 4,686,380 3,569,863 

Appropriations 38,152,265 40,258,000 

Spending authority from offsetting collections 2,345,829 2,472,194 

Status of Budgetary Resources: 

Obligations Incurred (Note 14) 

Unobligated balance, end of year: 

Apportioned 

Change in Obligated Balance 

Unpaid Obligations: 

Unpaid Obligations, Brought Forward, October 1 

Obligations Incurred (Note 14) 

Outlays (gross) 

Recoveries of Prior Year Unpaid Obligations 

Unpaid Obligations, End of Year (Gross) 

Uncollected payments: 

Uncollected Customer Payments, Federal Sources, Brought Forward, October 1 

Change in Uncollected Customer Payments, Federal Sources 

Uncollected Customer Payments, Federal Sources, End of Year 

Budget Authority and Outlays, Net: 

$ 39,699,782 $ 

2,965,352 

$ 4,925,885 $ 

39,699,782 

(40,660,468) 

(782,888) 

3,182,311 

(3,954) 

(3,954) 

41,443,212 

1,896,210 

5,673,859 

41,443,212 

(41,521,272) 

(669,914) 

4,925,885 

(2,877) 

2,877 

Budget authority, gross $ 40,498,094 $ 42,730,194 

Actual offsetting collections (2,341,875) (2,475,069) 

Change in uncollected customer payments from Federal sources (3,954) 2,877 

Outlays, gross 

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

4 

$ 40,660,468 $ 41,521,272 
U. S. MERIT SYSTEMS PROTECTION BOARD 

NOTES TO THE FINANCIAL STATEMENTS 

NOTE 1. SUMMARY OF SIGNIFICANT 

ACCOUNTING POLICIES 

A. ReportiiJg EIJtity 

The U.S. Merit Systems ProtectioiJ 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. 

5 

B. Basis of Presentation 

The fmancial 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 Govermnent. 

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 fmancial 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 recogoized 

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 fmance 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 

6 

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 

Office Equipment 

Software 

Useful Life (years) 

10 

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 

recogoized as expenses when the related goods 

and services are received. 

H. Liabilities 

Liabilities represent the amount of funds likely 

to be paid by the MSPB as a result of 

transactions or events that have already 

occurred. 

The MSPB reports its liabilities under two 

categories, Intragovernmental and With the 

Public. Intragovernmental liabilities represent 

funds owed to another government agency. 

Liabilities with the Public represent funds 

owed to any entity or person that is not a 

federal agency, including private sector firms 

and federal employees. Each of these 

categories may include liabilities that are 

covered by budgetary resources and liabilities 

not covered by budgetary resources. · 
Liabilities covered by budgetary resources are 

liabilities funded by a current appropriation or 

other funding source. These consist of 

accounts payable and accrued payroll and 

benefits. Accounts payable represent amounts 

owed to another entity for goods ordered and 

received and for services rendered except for 

employees. Accrued payroll and benefits 

represent payroll costs earned by employees 

during the fiscal year which are not paid until 

the next fiscal year. 

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 armual 

leave, FECA, and the amounts due to Treasury 

for collection and accounts receivable of civil 

penalties and 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 armual 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 armuities upon the retirement 

of Federal Employees Retirement System 

(FERS)-covered employees effective at 50% 

beginning FY 2012 and 100% in 2014. 

7 

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 armually 

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 (I) 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 armuity account in 

the Civil Service Retirement and Disability 

Fund. 

Prior to December 31, 1983, all employees 

were covered under the CSRS program. From 

January I, 1984 through December 31, 1986, 

employees had the option of remaining under 

CSRS or joining FERS and Social Security. 

Employees hired as of January I, 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 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 fmancial 

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 fmanced by OPM, and offset by the 

MSPB through the recognition of an imputed 

fmancing source. 

8 

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 2013 and 2012 to the 

extent directed by accounting standards. 

0. 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 2012 balances have been 

reclassified, retitled, or combined with other 

fmancial statement line items for consistency 

with the current year presentation. 
NOTE2. FUNDBALANCE~THTREASURY 

Fund balance with Treasury account balances as of September 30, 2013 and 2012, were as 

follows: 

Fund Balances: 

Funds 

Status of Fund Balance with Treasury: 

Unobligated Balance 

Available 

Unavailable 

$ 2,965,352 

2,519,340 

$ 1,896,210 

2,960,635 

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 15) 

9 
NOTE3. ACCOUNTSRECEIVABLE 

Accounts receivable balances as of September 30,2013 and 2012, were as follows: 

Intragovernmental 

With the Public 

The accounts receivable is primarily made up of Federal an 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, 2013 and 2012. 

NOTE 4. PROPERTY, EQUIPMENT, AND SOFTWARE 

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

', , _ , , ~ - _ - ~ ~-~ ~- ~ ~ ':',"- ~i;,_~' "~ccunJuJateil 

· · .~· · · . . · .. ·.~ · ~:·~cl:{nisifio,n.;"K :. ~····.wmortization{ · Net BooR 

iMaJ"orni!E!Iass · · · · .•.~ .. •·=···· l<illast :,;;•:::,.:'!..·.· Denreciation · ~ · NCalue · • ~ - 1 '1 i' " ~- 1 ~\C- 2!C10rA1\':WSO J:"' -

Leasehold Improvements 

Furniture & Equipment 

$ 1,785,765 

177,797 

$ 1,672,844 

74,204 

Schedule of Property, Equipment, and Software as of September 30, 2012 

$ 112,921 

103,593 

. . ~ ~ ·. · ~· ··. . .~ • .·" :c:.:=~r.:·• ~.~JAtceumulatcd 

_ :: ~~-£-_ :- _-~ : == - -, - ,,-~cq~lsltio~::,~~d;~:'~ Wlllortb·atjonl - Net Book 

Maiox €Jitss:: -= -' ~, -- -\,~ , - ~osf}~~~~£3Jtfl?~~,~~ ;:]j)e:nreciafion NITalue :J ' " ~'"''""'"'~ -- 1r" 

Leasehold Improvements 

Furniture & Equipment 

$ 1,785,765 

73,776 

10 

$ 1,616,736 

73,776 

$ 169,029 
NOTE 5. OTHER ASSETS 

Other assets account balances as of September 30,2013 and 2012, were as follows: 

Intragovernmental 

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

Printing Office 

NOTE 6. LIABILITIES NOT COVERED BY BUDGETARY RESOURCES 

The liabilities for the MSPB as of September 30, 2013 and 2012, 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. 

Intragovernmental- FECA 

Unfunded Leave 

Actuarial FECA 

$ 

Total Liabilities Not Covered by Budgetary Resources $ 

101,991 

2,501,899 

527,962 

3,131,852 

$ 

$ 

96,584 

2,527,158 

559,268 

3,183,010 

FECA liability represents 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 

11 
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, 2013 and 2012, was $527,962 

and $559,268, respectively. 

NOTE 8. OTHER LIABILITIES 

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

Intragovemmental 

FECA Liability 

Payroll Taxes Payable 

With the Public 

Payroll Taxes Payable 

Accrued Funded Payroll and Leave 

$ 

$ 

40,660 

130,401 

20,861 

556,587 

$ 61,331 

$ 

Other liabilities account balances as of September 30, 2012 were as follows: 

Intragovernmental 

FECA Liability 

With the Public 

Payroll Taxes Payable 

Accrued Funded Payroll and Leave 

$ 

$ 

63,471 

50,920 

1,445,295 

12 

$ 33,113 

$ 

$ 

$ 

$ 

$ 

101,991 

130,401 

20,861 

556,587 

96,584 

50,920 

1,445,295 
NOTE 9. LEASES 

Operating Leases 

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 April!, 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 pays annual rent of$31,203. 

The office space at Washington Regional Office (WRO) began on September 15, 2000 and 

expired on September 14, 2010. The lease was extended by executing a Supplemental Lease 

Agreement (SLA) for three years. The SLA for WRO expires on September 8, 2013. The WRO 

will be relocating to office space leased by GSA in late July 2013. The MSPB pays its pro-rata 

share of any property tax increases. 

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

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

options. 

NOTE 10. CONTINGENT LlABlLITlES 

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

September 30, 2013 and 2012. 

NOTE 11. 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 year ended September 30, 2013 

and 2012, imputed financing was $2,184,472 and $2,248,208 respectively 

13 
NOTE 12. lNTRAGOVERNMENTAL 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 swnmarized as follows: 

Adjudication 

Intragovernmental Costs 

Public Costs 

Total Program Costs 

Intragovernmental Earned Revenue 

Management Support 

Intragovernmental Costs 

Public Costs 

Merit Systems Studies 

Intragovernmental Costs 

Total Intragovernmental costs 

Total Public costs 

Total Costs 

Total Intragovernmental Earned Revenue 

$ ll,094,598 

23,829,536 

34,924,134 

$ 

$ 1,317,695 

3,J7•J,J:'" 

$ 307,497 

$ 12,719,790 

28,870,491 

41,590,281 

$ 10,849,997 

25,490,288 

36,340,285 

$ (127,192) 

$ 1,288,601 

$ 

$ 12,467,212 

30,951,865 

43,419,077 

(127,192) 

NOTE 13. BUDGETARY RESOURCE COMPARISONS TO THE BUDGET OF THE 

UNITED STATES GOVERNMENT 

The President's Budget that will include fiscal year 2013 actual budgetary execution information 

has not yet been published. The President's Budget is scheduled for publication in February 2014 

and can be found at the OMB Web site: http://www.whitehouse.gov/ombl. The 2014 Budget of 

the United States Government, with the "Actual" column completed for 2012, has been 

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

14 
NOTE 14. APPORTIONMENT CATEGORIES OF OBLIGATIONS INCURRED 

Obligations incurred and reported in the Statement of Budgetary Resources in 2013 and 2012 

consisted of the following: 

Direct Obligations, Category A $ 37,355,519 $ 38,971,020 

Category A apportionments distribute budgetary resources by fiscal quarters. 

NOTE 15. UNDELIVERED ORDERS AT THE END OF THE PERIOD 

For the fiscal years ended September 30, 2013 and 2012, budgetary resources obligated for 

undelivered orders amounted to $2,438,917 and $3,032,947 respectively. 

NOTE 16. CUSTODIAL ACTIVITY 

The MSPB's custodial collection primarily consists of Freedom of Information Act requests. 

While these collections are considered custodial, they are neither primary to the mission of the 

MSPB nor material to the overall fmancial statements. The MSPB's total custodial collections 

are $0 and $1,402 for the years ended September 30, 2013, and 2012, respectively. 

NOTE 17. 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. 

Resources Used to Finance Acthities: 

Budgetary Resources Obligated 

Obligations Incurred 

Spending Authority From Offsetting Collections and Recoveries 

Net Obligations 

Other Resources 

Imputed Financing From Costs Absorbed By Others 

Net Other Resources Used to Finance Activities 

Total Resources Used to Finance Activities 

Resources Used to Finance Items Not Part of the Net Cost of Operations 

Total Resources Used to Finance the Net Cost of Operations 

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

15 

$ 39,699,782 $41,443,212 

(3,128, 717) (3,142,108) 

36,571,065 38,301,104 

2,184,472 2,248,208 

2,184,472 2,248,208 

38,755,537 40,549,312 

2,773,754 2,631,771 

41,529,291 43,181,083