FEDERAL MEDIATION AND CONCILIATION SERVICE 

 AUDIT REPORT 

 SEPTEMBER 30, 2015 

 ALLMOND & COMPANY, LLC 

 Certified Public Accountants 

 8181 Professional Place, Suite 250 

 Landover, Maryland 20785 

 (301) 918-8200 
FEDERAL MEDIATION AND CONCILIATION SERVICE 

 AUDIT REPORT 

 SEPTEMBER 30, 2015 

 CONTENTS

INDEPENDENT AUDITORS’ REPORT 

FINANCIAL STATEMENTS: 

Balance Sheet 

Statement of Net Cost 

Statement of Changes in Net Position 

Statement of Budgetary Resources 

NOTES TO FINANCIAL STATEMENTS 

SUPPLEMENTAL INFORMATION 

 Intragovernmental Balances by Trading Partner 

.
1 

Independent Auditors’ Report 

The Director 

Federal Mediation and Conciliation Service 

We have audited the accompanying consolidated balance sheet of the Federal Mediation and 

Conciliation Service (FMCS) as of September 30, 2015 and 2014, and the related consolidated 

statements of net cost, changes in net position, and combined statement of budgetary resources 

for the year then ended (hereinafter referred to as “consolidated financial statements”). The 

objective of our audits was to express an opinion on the fair presentation of these consolidated 

financial statements. In connection with our fiscal year 2015 audit, we also considered FMCS’s 

internal controls over financial reporting and tested FMCS’s compliance with certain provisions 

of applicable laws and regulations that could have a direct and material effect on these 

consolidated financial statements. 

Summary 

As stated in our opinion of the consolidated financial statements, we concluded that FMCS 

consolidated financial statements as of and for the years ended September 30, 2015 and 2014, are 

presented fairly, in all material respects, in conformity with U.S. generally accepted accounting 

principles. 

We did not identify any deficiencies in internal control over financial reporting we considered to 

be a material weakness or significant deficiency as defined in the Consideration of Internal 

Control section of this report. 

Our test of compliance with certain provisions of laws and regulations did not disclose any 

instances of non compliance. 

The following sections discuss our opinion on FMCS consolidated financial statements; our 

considerations of FMCS internal control over financial reporting; our tests of FMCS compliance 

with certain provisions of applicable laws and regulations; and management’s and our 

responsibilities. 
Independent Auditors’ Report 

2 

Opinion on the Financial Statements 

We have audited the accompanying consolidated balance sheets of FMCS as of September 30, 

2015 and 2014, and related consolidated statements of net costs and changes in net position, and 

combined statements of budgetary resources for the years then ended. 

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

material respects, the financial position of FMCS as of September 30, 2015 and 2014, and its net 

costs, changes in net position, and budgetary resources for the year then ended in conformity 

with U.S. general accepted accounting principles. 

The information in the Supplemental Information section of this report is not a required part of 

the basic financial statements, but is supplementary information required by U.S. generally 

accepted accounting principles. We have applied certain limited procedures, which consisted 

principally of inquiries of management regarding the methods of measurement and presentation 

of this information. However we did not audit this information and, accordingly, we express no 

opinion on it. 

Consideration of Internal Control 

A control 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 misstatement on a timely basis. A significant deficiency is a 

control deficiency or a combination of control deficiencies, that adversely affects FMCS’s ability 

to initiate, authorize, record, process, or report financial data reliably in accordance with 

generally accepted accounting principles such that there is more than a remote likelihood that a 

misstatement of the FMCS’s financial statements that is more than inconsequential will not be 

prevented or detected. A material weakness is a significant deficiency, or combination of 

significant deficiencies, that results in more than a remote likelihood that a material misstatement 

of the financial statements will not be prevented or detected. 

Our consideration of internal control over financial reporting was for the limited purpose 

described in the Responsibilities section of this report and was not designed to identify all 

deficiencies in internal control over financial reporting that might be a control deficiency, 

significant deficiency, or material weakness. In our fiscal year 2015 audit, we did not identify 

any deficiencies in internal control over financial reporting that we considered to be a material 

weakness or significant deficiency, as defined above. 

Exhibit I presents the status of prior year significant deficiencies. 

We noted certain additional matters that we have reported to FMCS management in a separate 

letter dated November 16, 2015. 
Independent Auditors’ Report 

3 

Compliance with Applicable Laws and Regulations 

The results of our tests of compliance as described in the Responsibilities section of this report, 

disclosed no instances of noncompliance or other matters that are required to be reported herein 

under Government Auditing Standards or OMB Bulletin No. 15-02. 

 

Responsibilities 

Management Responsibilities: Management is responsible for the consolidated financial 

statements; establishing and maintaining effective internal control over financial reporting; and 

complying with laws and regulations applicable to FMCS. 

Auditors’ Responsibilities: Our responsibility is to express an opinion on the fiscal year 2015 

and 2014 consolidated financial statements of FMCS based on our audits. We conducted our 

audit in accordance with Government Auditing Standards, auditing standards generally accepted 

in the United States, and OMB Bulletin No. 15-02, Audit Requirements for Federal Financial 

Statements. Those standards require that we plan and perform the audit to obtain reasonable 

assurance about whether the financial statements are free of material misstatement. An audit 

includes the consideration of internal control over financial reporting as a basis for designing 

audit procedures that are appropriate in the circumstances, but not for expressing an opinion on 

the effectiveness of FMCS internal control over financial reporting. Accordingly, we express no 

such opinion. 

An audit also includes: 

 Examining, on a test basis, evidence supporting the amounts and disclosures in the financial 

statements. 

 Assessing the accounting principles used and significant estimates made by management; 

and 

 Evaluating the overall financial statement presentation. 

We believe that our audits provide a reasonable basis for our opinion. 

In planning and performing our fiscal year 2015 audit, we considered FMCS’s internal control 

over financial reporting by obtaining an understanding of FMCS’s internal control, determining 

whether internal control had been placed in operation, assessing control risk, and performing 

tests of control to determine auditing procedures for the purpose of expressing our opinion on the 

consolidated financial statements, but not to provide an opinion on the effectiveness of FMCS 

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

internal controls over financial reporting. We limited internal control testing to those necessary 

to achieve the objectives described in OMB Bulletin No. 15-02. We did not test all internal 

control relevant to operating objectives as broadly defined by the Federal Managers’ Financial 

Integrity Act of 1982. 
Independent Auditors’ Report 

4 

As part of obtaining reasonable assurance about whether FMCS’s fiscal year 2015 consolidated 

financial statements are free of material misstatements, we performed test of FMCS’s 

compliance with certain provisions of laws and regulations, which noncompliance with could 

have a direct and material effect on the determination of the consolidated financial statement 

amounts, and certain provisions of other laws specified in OMB Bulletin 15-02. 

This report is intended solely for the information of FMCS management, OMB, and Congress. 

This report is not intended to be and should not be used by anyone other than these specified 

parties.

November 16, 2015 

 Federal Mediation and Conciliation Service 

 Fiscal Year 2015 

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

11 

2015 2014

Assets:

Intragovernmental

 Fund Balance with Treasury (Note 2) $ 12,189,330 $ 11,017,719

 Accounts Receivable, Net (Note 3) 38,272 124,434

Total intragovernmental Assets $ 12,227,602 $ 11,142,153

With the Public

 General property and equipment, net (Note 4) $ 706,220 $ 408,293

 Advances to Others - 70,000

Total Assets $ 12,933,822 $ 11,620,446

Intragovernmental 

Liabities for Advances $ - $ -

Accounts Payable 16,167 19,172

Employer Contributions and Payroll Taxes Payable 205,600 166,122

Custodial Liability - -

Unfunded FECA (Note 5) 596,526 665,647

Total Intragovernmental $ 818,293 $850,941

With the Public:

Accounts Payable $ 415,532 $ 381,685

Accrued Payroll and Benefits 808,830 714,538

Actuarial FECA (Note 5) 2,839,259 3,146,768

Unfunded Leave (Note 5) 2,585,984 2,665,908

Total Non Government Liabilities $ 6,649,605 $ 6,908,899

Total Liabilities $ 7,467,898 $ 7,759,840

Net Position

 Unexpended Appropriations-Other Funds $ 6,605,110 $ 5,593,862

 Cumulative Results of Operations-Other Funds (1,139,186) (1,733,257)

Total Net Position $ 5,465,924 $ 3,860,605

Total Liabilities And Net Position $ 12,933,822 $ 11,620,445

FEDERAL MEDIATION AND CONCILIATION SERVICES

BALANCE SHEET

AS OF SEPTEMBER 30, 2015 AND 2014

Liabilities 

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

12 

2015 2014

Program Costs:

Mediation/Representation

Intragovernmental 14,698,119 $ $ 13,052,986

Less: Governmental Earned Revenue 1,366,605 1,165,228

Total Government Costs $ 13,331,514 $ 11,887,758

With the Public $ 32,897,413 $ 36,829,102

Less: With the Public Earned Revenue 901,135 872,395

Total With the Public Costs $ 31,996,278 $ 35,956,707

Total Gross Program Costs $ 47,595,532 $ 49,882,088

Less: Total Earned Revenues 2,267,740 2,037,623

Net Costs of Operations $ 45,327,792 $ 47,844,465

FEDERAL MEDIATION AND CONCILIATION SERVICES

STATEMENT OF NET COST

FOR THE YEARS ENDED SEPTEMBER 30, 2015 AND 2014

( In Dollars)

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

13 

2015 2014

Cumulative Results of Operations:

Beginning Balances $ (1,733,256) $ 1,070,296

Beginning Balances, as Adjusted $ (1,733,256) $ 1,070,296

Budgetary Financing Sources

Appropriations Used 44,240,726 42,957,525

Other Financing Sources

Imputed Financing (Note 9) 1,681,136 2,083,388

Other Revenue -

Total Financing Sources 45,921,862 45,040,913

Net Cost of Operations (45,327,792) (47,844,465)

Net Change 594,070 (2,803,553)

Cumulative Results of Operations $ (1,139,186) $ (1,733,257)

Unexpended Appropriations:

Beginning Balances $ 5,523,862 $ 3,786,341

Beginning Balances, as Adjusted $ 5,523,862 $ 3,786,341

Budgetary Financing Sources:

Appropriations Received 45,666,000 45,149,000

Other Adjustments (344,026) (383,954)

Appropriations Used (44,240,726) (42,957,525)

Total Budgetary Financing Resources 1,081,248 1,807,521

Total Unexpended Appropriations $ 6,605,110 $ 5,593,862

Net Position $ 5,465,924 $ 3,860,605

FEDERAL MEDIATION AND CONCILIATION SERVICES

STATEMENT OF CHANGES IN NET POSITION

FOR THE YEARS ENDED SEPTEMBER 30, 2015 AND 2014

(In Dollars)

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

14 

2015 2014

Budgetary resources:

Unobligated balance brought forward, October 1 7,216,575 $ 6,410,142 $ 

Recoveries of prior year unpaid obligations 253,131 $ 502,164 $ 

Other changes in unobligated balance (344,026) $ (383,954) $ 

Unobligated balance from prior year budget authority, net 7,125,680 $ 6,528,352 $ 

Appropriations (discretionary and mandatory) 45,666,000 $ 45,149,000 $ 

Spending authority (discretionary and mandatory) 2,295,327 $ 1,882,088 $ 

Total budgetary resources 55,087,007 $ 53,559,440 $ 

Status of budgetary resources:

Obligations incurred (Note 6): 49,290,954 $ 46,272,864 $ 

Unobligated balance, end of year:

Apportioned 333,015 $ 1,770,788 $ 

Unapportioned 5,463,038 $ 5,515,788 $ 

Total unobligated balance, end of year 5,796,053 $ 7,286,576 $ 

Total status of budgetary resources 55,087,007 $ 53,559,440 $ 

Change in obligated balance:

 Unpaid obligations:

Unpaid obligations, brought forward, October 1 (gross) 3,878,077 $ 3,085,977 $ 

Obligations incurred 49,290,954 $ 46,272,864 $ 

Outlays (gross) (46,531,852) $ (45,048,600) $ 

Recoveries of prior year unpaid obligations (253,131) $ (502,164) $ 

Unpaid obligations, end of year (gross) 6,384,048 $ 3,808,077 $ 

 Uncollected payments:

Uncollected customer payments from Federal Sources, brought forward, October (124,434) $ (25,278) $ 

Adjustments to uncollected pymts, Fed sources, start of year - $ - $ 

Change in uncollected payments from Federal sources 86,162 $ (99,156) $ 

Obligated Balance, End of Year 6,345,776 $ 3,683,643 $ 

Obligation Start of Year 3,753,643 $ 3,060,699 $ 

Obligation End of Year 6,345,776 $ 3,683,643 $ 

Budget Authority and Outlays, Net

Budget authority, gross 47,961,327 $ 47,031,088 $ 

Actual offsetting collections (2,381,489) $ (1,782,932) $ 

Change in uncollected customer payments from Federal sources 86,162 $ (99,156) $ 

Anticipated offsetting collections (discretionary and mandatory) - $ - $ 

Budget authority, net 45,666,000 $ 45,149,000 $ 

Outlays, gross 46,531,852 $ 45,048,600 $ 

Actual offsetting collections (2,381,488) $ (1,782,932) $ 

Outlays, net 44,150,364 $ 43,265,668 $ 

Distributed offsetting receipts $ - $ -

Agency outlays, net $ 44,150,364 $ 43,265,668

FEDERAL MEDIATION AND CONCILIATION SERVICES

STATEMENT OF BUDGETARY RESOURCES

FOR THE YEARS ENDED SEPTEMBER 30, 2015 AND 2014

(In Dollars)
 Notes to Principal Financial Statements 

15 

FEDERAL MEDIATION AND CONCILIATION SERVICE 

Notes to Principal Financial Statements 

As of September 30, 2015 and 2014 

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 

A. Reporting Entity 

FMCS is an independent Federal agency whose primary mission is to prevent or 

minimize labor-management disputes affecting interstate commerce by providing 

mediation, conciliation, and voluntary arbitration. These activities are performed in both 

the private and public sectors, except for the railroad and airline industries, which are 

covered by the Railway Labor Act and the National Mediation Board, respectively. 

At September 30, 2015, FMCS consisted of a national office, ten regional offices, and 57 

field offices. 

B. Basis of Presentation 

These financial statements have been prepared from the books and records of FMCS to 

report the financial position and results of operations of the Federal Mediation and 

Conciliation Service (FMCS) as required by the Government Management Reform Act of 

1994, Public Law 103-356, 108, Stat. 3515 in accordance with accounting principles 

generally accepted in the United States (GAAP), and the form and content for entity’s 

financial statements specified by the Office of Management and Budget (OMB) in OMB 

Circular No. A-136, Financial Reporting Requirements, as revised. GAAP for federal 

entities are standards prescribed by the Federal Accounting Standards Advisory Board 

(FASAB), which has been designated the official accounting standards-setting body for 

the federal government by the American Institute of Certified Public Accountants 

(AICPA). 

OMB Circular No. A-136 requires agencies to prepare basic financial statements, which 

include a Balance Sheet, Statement of Net Cost, Statement of Changes in Net Position 

and a Statement of Budgetary Resources. The Balance Sheets present, as of September 

30, 2015 and 2014, amounts of future economic benefits owned or managed by the 

FMCS (assets), amounts owed by the FMCS (liabilities) and amounts which comprise the 

difference (net position). The Statements of Net Cost report the full cost of the Agency’s 

program, both direct and indirect costs of the output, and the costs of the identifiable 

supporting services provided by other segments within the FMCS. The statement of 

Budgetary Resources reports the FMCS’s budgetary activity. 

Net Position, shown on the Balance Sheet, is composed of unexpended appropriations 

and cumulative results of operations. Unexpended appropriations are appropriated funds 

obligated during the period when they were available for obligation. Those goods and 

services to be provided to FMCS that have not been completely received at the end of the 
 Notes to Principal Financial Statements 

16 

fiscal year will be delivered in a subsequent year. Funds to cover the cost of those goods 

and services are carried forward after fiscal year end close. “Cumulative results of 

operations” is the account to which revenues and expenses are closed. 

C. Dedicated Collections 

FMCS has no funds from dedicated collections as described by the Statement of Federal 

Financial Accounting Standards (SFFAS) 43. 

 

D. Basis of Accounting 

FMCS prepares financial statements to report its financial position and results of 

operations pursuant to the requirements of 31 U.X.C. 3515(b), the Chief Financial 

Officers Act of 1990 (P.L. 101-576), as amended by the Government Management 

Reform Act of 1994, and in accordance with the requirements in OMB Circular No. 

A-136, as revised. These statements have been prepared from the FMCS’ financial 

records using the accrual basis in conformity with GAAP. GAAP for federal entities are 

the standards prescribed by the FASAB and recognized by the AICPA as federal GAAP. 

Transactions are recorded on the accrual and budgetary bases of accounting. According 

to the accrual basis of accounting, revenues are recognized when earned, and expenses 

are recorded when resources are consumed, without regard to the payment of cash. 

Budgetary accounting principles, on the other hand, are designed to recognize the 

obligation of funds according to legal requirements, which in many cases is prior to the 

occurrence of accrual based transactions. The recognition of budgetary accounting 

transactions is essential for compliance with legal constraints and controls over the use of 

federal funds. The FMCS uses the cash basis of accounting for some programs with 

accrual adjustments made by recording year-end estimates of unpaid liabilities. 

E. Use of estimates 

The preparation of financial statements in conformity with GAAP requires management 

to make estimates and assumptions that affect the reported amounts of assets and 

liabilities, and disclosure of contingent assets and liabilities, at the date of the financial 

statements and the reported amounts of revenue and expenses during the reporting period. 

Actual results could differ from those estimates. 

F. Funds Balances with U.S. Department of the Treasury and Cash 

FMCS maintains its available funds with the Department of the Treasury (Treasury). The 

funds balance with Treasury is available to pay current liabilities and finance authorized 

purchases. Cash receipts and disbursements are processed by Treasury and reconciled 

with those of Treasury on a regular basis. Note 2, Funds Balance with Treasury, provide 

additional information. 

 
 Notes to Principal Financial Statements 

17 

G. Accounts Receivable 

 Accounts receivable consist of the amounts owed to FMCS as the result of the provision 

 of goods and services. Intra-governmental accounts receivable generally arise from the 

 provision of reimbursable services to other federal agencies and no allowance for 

 uncollectible accounts is established as those accounts are considered to be fully 

 collectible. 

H. General Property and Equipment 

General property and equipment (P&E) consists of software and equipment used for 

operations. The basis for recording purchased P&E is acquisition cost, which includes all 

costs incurred to bring the P&E to its intended use. All P&E with initial acquisition cost 

of $5,000 or more and estimated useful lives of two years or more are capitalized except 

for internal use software discussed below. 

The P&E is depreciated using the straight-line method over the estimated useful lives of 

assets. Maintenance and repair costs are expensed as incurred. 

I. Liabilities 

Liabilities represent the amount of monies or other resources that are likely to be paid by 

FMCS as a result of a transaction or event that has already occurred. Since FMCS is a 

component of the U.S. Government, a sovereign entity, its liabilities cannot be liquidated 

without legislation providing resources to do so. Liabilities for which an appropriation 

has not been enacted are classified as unfunded liabilities and there is no certainty that 

corresponding future appropriations will be enacted. Liabilities arising from other than 

contracts can be abrogated by the Government, acting in its sovereign capacity. Since 

liabilities are only those items that are present obligations of the government. The 

FMCS’s liabilities are classified as covered by budgetary resources or not covered by 

budgetary resources. 

Liabilities Covered by Budgetary Resources include: (1) new budget authority, (2) 

spending authority from offsetting collections, (3) recoveries of expired budget authority, 

(4) unobligated balances of budgetary resources at the beginning of the year, and (5) 

permanent indefinite appropriations or borrowing authority. Liabilities Not Covered by 

Budgetary Resources represent liabilities where funding has not yet been made available 

through Congressional appropriations or current earnings. The major liabilities in this 

category include employee annual leave earned but not taken. Liabilities Covered by 

Budgetary Resources and Liabilities Not Covered by Budgetary Resources are combined 

on the balance sheets.

J. Accounts Payable 

Accounts payable primarily consist of amounts due for goods and services received, 

progress on contract performance, interest due on accounts payable and other 

miscellaneous payables. 
 Notes to Principal Financial Statements 

18 

K. Accrued Payroll and Benefits 

Accrued payroll and benefits consist of salaries, wages, leave and benefits earned but not 

taken or disbursed as of year end. Annual and compensatory leave is expended with an 

offsetting liability as it is earned and the liability is reduced as leave is taken. Each year, 

the balance in the accrued annual leave liability account is adjusted to reflect current pay 

rates. To the extent current or prior year appropriations are not available to fund annual 

and compensatory leave earned but not taken; funding will be obtained from future 

financing resources. Sick leave and other types of noon-vested leave are expended as 

taken. 

L. Interest on Late Payments 

Pursuant to the Prompt Payment Act, 31 U>S>C> 3901-3907, Federal agencies must pay 

interest on payments for goods and services made to business concerns after the due date. 

The due date is generally 30 days after receipts of a proper invoice or acceptance of the 

goods or services and 15 days for Small Businesses. 

M. Federal Employee Benefits 

With a few exceptions, employees hired before January 1, 1984, are covered by the Civil 

Service Retirement System (CSRS) and employees first hired after December 31, 1983, 

are covered by the Federal Employees Retirement System (FERS). Employees hired on 

or after January 1, 2013, are covered by the FERS-RAE (Revised Annuity Employee). 

Those hired on or after January 1, 2014 are covered under FERS-FRAE (Further Revised 

Annuity Employee). 

For employees covered under CSRS, the FMCS withholds 7.0% of each employee's 

salary and contributes a matching amount to the fund. CSRS covered employees do not 

have FICA withholdings and, thus do not accrue Social Security benefits. However, 

1.45% for Medicare is withheld and matched. 

Employees covered under CSRS Offset have 0.8% of their basic pay withheld from their 

salaries biweekly. FMCS contributes 7% of their basic salaries to CSRS and 7.65% 

(6.2% OASDI + 1.45% Medicare) of their gross pay to Social Security biweekly. If an 

employee reaches the annual Social Security wages maximum and withholding stop for 

OASDI tax, the CSRS withholding increases to 7% (0.8% + 6.2%). 

For employees covered under FERS, in addition to FICA withholdings, FMCS withholds 

approximately 0.8% from employees' basic earnings for a retirement annuity. FMCS 

makes contributions to the plan at an established rate by OPM which was 13.2% and 

11.9% for 2015 and 2014, respectively. Under FERS, employees also receive retirement 

benefits from Social Security and benefits from a defined contribution plan called Thrift 

Savings Plan. Under the thrift plan, an employee may contribute up to the annual IRS 

limit to a tax deferred investment fund. FMCS contributes 1% of salary for FERS 

employees, whether or not they contribute their own money to the Thrift Savings Plan. 
 Notes to Principal Financial Statements 

19 

For FERS employees who do contribute their own money to the Thrift Savings Plan, 

FMCS matches the amount dollar-for-dollar on the first 3% and 0.50 cents on the dollar 

for each of the next 2%. The combined automatic and matching portion of FMCS’ 

contribution cannot exceed 5% of salary. Those employees who elected to remain under 

CSRS after December 31, 1983 and those covered by CSRS offset, continue to receive 

benefits in place, and may also contribute (tax deferred) up to the annual IRS limit to the 

thrift plan, but with no matching amount contributed by FMCS. CSRS, CSRS Offset and 

FERS employees are eligible to contribute an additional tax deferred amount to TSP for a 

“TSP Catch-Up” if they are over age 50 and have contributed the maximum in “regular” 

TSP deductions during the tax year. There is no match on the catch-up contributions. 

For employees covered under FERS-RAE, in addition to FICA withholdings, FMCS 

withholds 3.1% from employees’ basic earnings for a retirement annuity. For employees 

covered under FERS-FRAE, in addition to FICA withholdings, FMCS withholds 4.4% 

from employee’s basic earnings for a retirement annuity. FMCS makes contributions to 

the plan at an established rate by OPM of 9.6%. through September 30th, 2015 and 11.1% 

after October 1st, 2015 Otherwise, the same information regarding FERS employees is the 

same as above. 

The U.S. Office of Personnel and Management administers these benefit plans and, thus, 

report CSRS or FERS assets, accumulated plan benefits or unfunded liabilities applicable 

to federal employees. Therefore, the FMCS financial statements do not recognize any 

liability on its balance sheets for pension, other retirement benefits and other post 

employment benefits. 

N. Actuarial Liabilities 

The Federal Employees' Compensation Act (FECA) provides wage loss benefits, medical 

benefits, and vocational rehabilitation to cover Federal civilian employees injured on the 

job, employees who have incurred a work-related occupational disease, and survivor 

benefits to eligible dependants of injured workers whose death is attributable to a jobrelated injury or occupational disease. Claims incurred for benefits for FMCS employees 

under FECA are administered by the Department of Labor (DOL) and are ultimately paid 

by FMCS. The future workers' compensation liability has two components, (1) unpaid 

billings, and (2) an amount of estimated unbilled claims. The unbilled claims are 

estimated by applying actuarial procedures. The DOL calculated the liability of the 

Federal Government for future compensation benefits, which includes the expected 

liability for death, disability, medical, and miscellaneous costs for approved 

compensation costs. The liability was determined using the paid-losses extrapolation 

method patterns related to a specific incurred period to predict the ultimate payments 

related to that period. The projected annual benefit payments were discounted to present 

value. The resulting Federal Government liability was then distributed by agency. 

In accordance with Office of Management and Budget (OMB) guidance, each reporting 

entity preparing financial statements under the Chief Financial Officers Act and the 

Government Management Reform Act should include its respective portion of the 
 Notes to Principal Financial Statements 

20 

actuarial liability for workers' compensation benefits as a liability in its financial 

statement, if such amounts are material. The FECA actuarial data is for financial 

statement presentation only and should not be used as a standard for incorporating 

actuarial liabilities in fees, prices, and reimbursements. This liability constitutes an 

extended future estimate of cost, which will not be obligated against budgetary resources 

until the fiscal year in which the cost is actually billed to FMCS. 

O. Comparative Data 

Comparative data for the prior year have been presented in order to provide an 

understanding of changes in the financial position and operations of FMCS. 

P. Revenues and other Financing Sources 

FMCS receives the majority of the funding needed to support its operations through 

appropriations. The Agency receives annual appropriations that may be used, within 

statutory limits, for operating expenditures. Additional amounts are obtained from fees 

reimbursed for alternative dispute resolution and arbitration services provided to the 

federal, public and private sectors. 

Appropriations are recognized as other financing sources when used and fees for services 

are recognized as revenues at the time they are earned and the related program or 

administrative expenses are incurred. Appropriations accrued for property and 

equipment are recognized as expenses when the asset is consumed in operations. 

Q. Contingencies and commitments 

FMCS leases various facilities accounted for as operating leases. Assets held under these 

leases consist primarily of offices and parking facilities. All of the space occupied by 

FMCS is leased by the General Services Administration (GSA). The space is assigned to 

FMCS by GSA based on FMCS' square footage requirements. The rent charged by GSA 

is based on approximate commercial rates for commercial space and actual rates for 

private buildings. FMCS may terminate the leases with GSA; however, it is anticipated 

that FMCS will continue to occupy and lease space from GSA in future years. 
 Notes to Principal Financial Statements 

21 

NOTE 2: FUND BALANCE WITH THE U.S. TREASURY 

The Fund Balance with the U.S. Treasury as reported in the financial statements 

represents the unexpended cash balance on the FMCS books for all FMCS Treasury 

Symbols and custodial liability. The balances were comprised of the following at 

September 30: 

 

NOTE 3 ACCOUNTS RECEIVABLE 

Accounts receivable consist primarily of amounts due from federal government 

departments and other agencies. Since these receivable are from other government 

agencies, management believes these receivables are fully collectable. The receivable 

balance consisted of the following at September 30: 

2015 2014

Accounts Receivable (Gov) $ 38,272 $ 124,434

Accounts Receivable (NonGov) - - 

Total Accounts Receivable $ 38,272 $ 124,434

NOTE 4: GENERAL PROPERTY AND EQUIPMENT 

Property and equipment owned by FMCS are all classified as equipment and consisted of 

the following at September 30: 

A. Fund Balance: 2015 2014

General Funds $ 12,189,330 $ 11,017,719

Total Fund Balance with Treasury $ 12,189,330 $ 11,017,719

B. Status of Fund Balance with Treasury

Unobligated Balance:

 Available $ 333,015 $ 1,770,788

 Unavailable 5,463,038 5,515,788

Obligated Balance Not Yet Disbursed 6,393,277 3,731,143

Total Status of Fund Balance with Treasury $ 12,189,330 $ 11,017,719
 Notes to Principal Financial Statements 

22 

2015 2014

Equipment, Furniture and Hardware 2,502,279 $ $ 2,040,068

ADP Software 22,377 22,377

Total 2,524,656 2,062,445

Less: Accumulated depreciation on

Equipment and Furniture (1,796,059) (1,631,775)

Less: Accumulated amortization on

ADP Software (22,377) (22,377)

 Net Book Value $ 706,220 $ 408,293

NOTE 5: LIABILITIES NOT COVERED BY BUDGETARY RESOURCES

The liabilities on FMCS’s Balance Sheet as of September 30, 2015 and 2014 include 

liabilities not covered by budgetary resources for which 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. 

A. Intragovernmental and Public Liabilities 

2015 2014

Intragovernmental:

 Unfunded FECA Liability 596,526$ $ 665,647

Total Intragovernmental 596,526 665,647

Public Liabilities:

 Actuarial FECA $ 2,839,259 $ 3,146,768

 Unfunded Annual Leave 2,585,984 2,665,908

Total Liabilities Not Covered by Budgetary Resources 6,021,769 6,478,323

Total Liabilities Covered by Budgetary Resources 1,446,129 1,281,517

Total Liabilities $ 7,467,898 $ 7,759,840

B. Other Information 

Unfunded Payroll Liabilities consists of workers’ compensation claims payable to the 

Department of Labor, which will be funded in a future period, and an unfunded estimated 

liability for future workers’ compensation claims based on data provided from the DOL. 

The actuarial calculation is based on benefit payments made over 12 quarters, and 

calculates the annual average of payments. For medical expenses and compensation, this 

average is then multiplied by the liability-to-benefit paid ratio for the whole FECA 

program. 

Unfunded Leave represents a liability for earned leave and is reduced when leave is 

taken. At year end, the balance in the accrued leave account is adjusted to reflect the 

liability at current pay rates and leave balances. Accrued leave is paid from future 
 Notes to Principal Financial Statements 

23 

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

resources. 

All other liabilities are considered to be covered by budgetary resources. 

NOTE 6: Apportionment Categories of Obligations Incurred: Direct vs. Reimbursable 

Obligations

 Direct vs. Reimbursable Obligations incurred had the following apportionment 

 categories: 

 

2015 2014

Direct Obligations (Category A) $ 47,527,069 44,996,450$ 

Reimbursable Obligations (Category A) 1,833,885 1,276,414

Total $ 49,290,954 46,272,864$ 

 

Note 7: Undelivered Orders at the End of the Period 

The amount of budgetary resources obligated for undelivered orders at September 30, 

2015 and 2014 is $4,937,918 and $2,596,558 respectively. 

 

NOTE 8: OPERATING LEASES 

FMCS leases office space for headquarters operations in Washington, D.C. and for 

district and field operations. The lease agreements expire at various dates, the latest 

being 2023. Assets held under these leases consist primarily of offices. All office space 

occupied by FMCS is leased by the General Services Administration. 

Future estimated minimum lease payments for the fiscal years ended September 30 are as 

follows: 

Schedule of Future Minimum Lease Payments

2016 5,985,000 $ 

2017 5,999,000 

2018 6,118,000 

2019 6,240,000 

2020 6,364,000 

Total Future Minimum Lease Payments 30,706,000 $ 

Rent expense totaled $5,465,213 and $5,569,399 for fiscal years September 30, 2015 and 

2014 respectively. 
 Notes to Principal Financial Statements 

24 

NOTE 9: PENSIONS, OTHER RETIREMENT BENEFITS, AND OTHER POST 

RETIREMENT BENEFITS

The FMCS reports the full cost of employee pensions, other retirement benefits, and 

other post-employment benefits in accordance with SFFAS No. 5, Accounting for 

Liabilities of the Federal Government. Although the FMCS funds a portion of the 

benefits under FERS and CSRS relating to its employees and withholds the necessary 

payroll deductions, a portion of the Normal Pension Cost remains unpaid. SFFAS No. 5 

requires the recognition of this remaining cost as imputed financing. 

FMCS also funds a portion of the benefits for health and life insurance relating to its 

employees and withholds the necessary premiums as established annually by the Office 

of Personnel management. The FMCS portion of the health insurance premium is 

determined by the Office of Personnel Management and is based upon the plan under 

which the employee is enrolled. The FMCS portion of the basic life insurance coverage is 

2/3 of the premium. The premium is determined by the employee’s annual salary 

rounded to the next $1,000, plus $2,000. 

 Pension and other retirement benefit expenses are calculated using cost factors 

determined by actuaries at the Office of Personnel Management. These cost factors are 

calculated based on economic and demographic assumptions. The cost factor is 

multiplied by the basic pay in order to obtain the Normal Cost for the accounting period. 

This Normal Cost is the present value of the projected benefits of each employee 

allocated on a level basis over the service of the employee between entry age and 

assumed exit age. 

The imputed financing amount represents the difference between normal cost of the 

benefit plan and the employer’s total pension expense and the employers contribution. 

Imputed financing sources in 2015 and 2014 consists of the following: 

2015 2014

Office of Personnel Management $ 1,681,136 $ 2,083,388 

Total Imputed Financing Sources $ 1,681,136 $ 2,083,388 

Note 10: Statement of Budgetary Resources vs. Budget of the United States Government 

The Budget of the United States Government with actual amounts for the year ended 

September 30, 2014, has not been published as of the issue date of these financial 

statements. A reconciliation of budgetary resources, obligations incurred and newt 

outlays (in millions), as presented in the Statement of Budgetary Resources, to amounts 

included in the Budget of the United States Government for the year ended September 

30, 2014, is shown below. The Federal Mediation and Conciliation Services Budget 

Appendix can be found on the OMB website (http://www.whitehouse.gov/omb/budget) 

and will be available in early February 2016. 
 Notes to Principal Financial Statements 

25 

 

(In millions)

Budgetary 

Resources

Obligations 

Incurred

Distributed

Offsetting 

Receipts

Net 

Outlays

Statement of Budgetary Resources 53 $ 46 $ -$ 43$ 

Difference-Expired Appropriations (2) - - - 

Budget of the U.S. Government $ 51 $ 46 -$ 43$ 

The difference between the Statement of Budgetary Resources and the Budget of the U.S. 

Government is due to Expired Unobligated Balances being reported in the FY 2014 

Statement of Budgetary Resources but not in the Budget of the United States 

Government. 
 Notes to Principal Financial Statements 

26 

Note 11: Reconciliation of Net Cost of Operation to Budget (Statement of Financing) 

2015 2014

Resources Used to Finance Activities

Budgetary Resources Obligated:

 Obligations Incurred $ 49,290,954 $ 46,272,864

 Less: Spending Authority from Offsetting 

 Collections and Recoveries (2,548,458) (2,384,253)

 Obligations Net of Offsetting Collections

 and Recoveries 46,742,496 43,888,611

 Less: Offsetting Receipts - - 

 Net Obligations 46,742,496 43,888,611

Other Resources:

 Imputed Financing from Costs Absorbed by Other 1,681,136 2,083,388

 Total Resources Used to Finance Activities $ 48,423,632 $ 45,971,999

Resources Used to Finance Items not Part of the

 New Cost Of Operations

Change in Budgetary Resources Obligated for Goods,

 Services and Benefits Ordered but not yet Provided (2,341,360) (969,221)

Resources that Fund Expenses Recognized in Prior Periods (376,629) 2,915,642

Resources that Finance the Acquisition of Assets (158,569) (555,921) 

Other Resources or Adjustments to New Obligated 

 Resources that do not Affect Net Cost of Operation - - 

Total Resources Used to Finance Items not Part of the

 Net Cost of Operations (3,273,910) 1,787,852 

Total Resources Used to Finance the Net Cost of Operations 45,149,722 $ 47,759,851 $ 

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

 Generate Resources in the Current Period 

Components Requiring or Generating Resources in Future Periods:

 Increase in Annual Leave Liability (79,924) (158,266) 

Total Components of Net Cost of OperationThat Will 

 Require or Generate Resources in Future Periods (158,266) (79,924) 

Components Not Requiring or Generating Resources:

 Depreciation and Amortization 257,994 242,880

 Revaluation of Assets or Liabilities

 Other

Total Components of Net Cost of Operation that will not

 Require or Generate Resources 257,994 242,880

Total Components of Net Cost of Operation that will not

 Require or Generate Resources in the Current Period 178,070 84,614

Net Cost of Operations $ 45,327,792 $ 47,844,465

FOR THE YEARS ENDED SEPTEMBER 30, 2015 AND 2014

FEDERAL MEDIATION AND CONCILIATION SERVICES

RECONCILIATION OF NET COST OF OPERATIONS (PROPRIETARY) TO BUDGET

(In Dollars)
 

SUPPLEMENTAL INFORMATION
 

27 

INTRA-GOVERNMENTAL BALANCES BY TRADING PARTNER: 

Intra-governmental Assets by Trading Partner: 

Fund Balance Accounts Other 

Trading Partner ID with Treasury Receivable Assets 

Library of Congress 03 $ - $ - $ - 

United States Department of Agriculture 12 - 6,682 - 

National Oceanic and Atmospheric Administration 13 - 320 - 

Department of Interior 14 - 1,750 - 

Department of Labor 16 - 4,937 - 

US Marine Corps 17 - - - 

Department of State 19 - - - 

Department of Treasury 20 12,189,330 20,040 - 

Office of Personnel Management 24 - - - 

Department of Veteran Affairs 36 - - - 

Department of Transportation 69 - 113 - 

Department of Homeland Security 70 - - - 

US Agency for International Development 72 - 700 - 

Health and Human Services 75 - - - 

Department of Housing and Urban Development 86 - 3,330 - 

US Army 97 - 400 - 

Treasury General Fund 99 - - - 

 Total Intra-governmental Assets $ 12,189,330 $ 38,272 $ - 

Intra-governmental Liabilities by Trading 

Partner: 

Trading Partner ID 

Accounts 

Payable 

Other 

Liabilities 

Government Printing Office 04 $ 127 $ - 

United States Postal Service 18 500 - 

Office of Personnel Management 24 - - 

Department of Veteran Affairs 36 - - 

General Services Administration 47 14,511 - 

Department of Transportation 69 - - 

Health and Human Services 75 1,029 - 

National Archives 88 - - 

Treasury General Fund 99 - - 

 Total Intra-governmental Liabilities $ 16,167 $ -