FMCS – 2016 Financial Statement Audit 

Contract: GS23F0111L/FMCS-2015-TO-0002 

Federal Mediation and Conciliation Services (FMCS) 

Fiscal Year 2016 Financial Statement Audit 

Final Independent Auditors’ Report 

Deliverable 2005, 2007, 2008 

Submitted for review and acceptance to: 

Terry Lee 

Contracting Officer's Representative (COR) 

Federal Mediation and Conciliation Services 

2100 K Street, NW 

Washington, DC 20427 

Submitted by:

Jason L. Allmond CPA, CGFM, CISA, CISM 

Member 

Allmond & Company, LLC 

8181 Professional Place, Suite 250 

Landover, MD 20785 

301-918-8200 

jallmond@allmondcpa.com 

Final Independent Auditors’ Report 

Prepared under contract to the Federal Mediation and Conciliation Services (FMCS) to provide financial auditing 

services 
 

FEDERAL MEDIATION AND CONCILIATION SERVICE 

 AUDIT REPORT 

 SEPTEMBER 30, 2016 

 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, 2016 

 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: 

 

Report on the Financial Statements 

We have audited the accompanying financial statements of the Federal Mediation and 

Conciliation Service, which comprise the balance sheet as of September 30, 2016 and 2015, and 

the related statement of net cost, changes in net position, and combined statement of budgetary 

resources for the year ended, and the related notes to the financial statements (hereinafter 

referred to as 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 U.S. generally accepted accounting principles; this includes the design, 

implementation, and maintenance of internal control relevant to the preparation of financial 

statements that are free from material misstatement, whether due to fraud or error. 

Auditors’ Responsibility 

Our responsibility is to express an opinion on the fiscal year 2016 and 2015 financial statements 

of FMCS based on our audit. We conducted our audit in accordance with auditing standards 

generally accepted in the United States of America; the standards applicable to financial audits 

contained in Government Auditing Standards issued by the Comptroller General of the United 

States; and OMB Bulletin No. 15-02, Audit Requirements for Federal Financial Statements. 

Those standards and OMB Bulletin No. 15-02 require that we plan and perform the audit to 

obtain reasonable assurance about whether the financial statements are free of material 

misstatement. 

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

disclosures in the financial statements. The procedures selected depend on the auditors' 

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. 
Independent Auditors’ Report 

2 

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 audit opinion. 

Opinion 

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

the financial position of the Federal Mediation Conciliation Services as of September 30, 2016 

and 2015, and its net costs, changes in net position, and budgetary resources for the year then 

ended in conformity with generally accepted accounting principles in the United States of 

America. 

Other Information 

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. 

Other Reporting Required by Government Auditing Standards 

Internal Control over Financial Reporting 

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

September 30, 2016, 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 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. 

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

described in the paragraph above 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. 
Independent Auditors’ Report 

3 

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 FMCSs’ 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. 

In our fiscal year 2016 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. 

Compliance and Other Matters 

As part of obtaining reasonable assurance about whether FMCSs’ fiscal year 2016 financial 

statements are free of material misstatements, we performed test of FMCSs’ 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. 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 of compliance as described in the preceding paragraph, 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. 

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 15, 2016 
 Federal Mediation and Conciliation Service 

 Fiscal Year 2016 

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

11 

2016 2015

Assets:

Intragovernmental

 Fund Balance with Treasury (Note 2) 14,640,365 $ 12,189,330 $ 

 Accounts Receivable, Net (Note 3) 158,101 38,272 

Total intragovernmental Assets $ 12,227,602 14,798,466 $ 

With the Public

 General property and equipment, net (Note 4) 602,580 $ 706,220 $ 

 Advances to Others - - 

Total Assets 15,401,046 $ 12,933,822 $ 

Intragovernmental 

Liabities for Advances - $ - $ 

Accounts Payable 11,500 16,167 

Employer Contributions and Payroll Taxes Payable 274,068 205,600 

Custodial Liability - - 

Unfunded FECA (Note 5) 451,608 596,526 

Other Unfunded Employment Related Liability 3,050 $0

Total Intragovernmental 740,226 $ $818,293

With the Public:

Accounts Payable 402,172 $ 415,532 $ 

Accrued Payroll and Benefits 1,015,966 808,830 

Actuarial FECA (Note 5) 2,449,113 2,839,259 

Unfunded Leave (Note 5) 2,676,373 2,585,984 

Total Non Government Liabilities 6,543,624 $ 6,649,605 $ 

Total Liabilities 7,283,850 $ 7,467,898 $ 

Net Position

 Unexpended Appropriations-Other Funds 9,368,711 $ 6,605,110 $ 

 Cumulative Results of Operations-Other Funds (1,251,515) (1,139,186) 

Total Net Position $ 5,465,924 8,117,196 $ 

Total Liabilities And Net Position $ 12,933,822 15,401,046 $ 

FEDERAL MEDIATION AND CONCILIATION SERVICES

BALANCE SHEET

AS OF SEPTEMBER 30, 2016 AND 2015

Liabilities 

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

12 

2016 2015

Program Costs:

Mediation/Representation

Intragovernmental 15,104,020 $ 14,698,119 $ 

Less: Governmental Earned Revenue 1,310,556 1,366,605

Total Government Costs 13,793,464 $ 13,331,514 $ 

With the Public 34,045,222 $ 32,897,413 $ 

Less: With the Public Earned Revenue 815,064 901,135

Total With the Public Costs 33,230,158 $ 31,996,278 $ 

Total Gross Program Costs 49,149,242 $ 47,595,532 $ 

Less: Total Earned Revenues 2,125,620 2,267,740 

Net Costs of Operations 47,023,622 $ 45,327,792 $ 

FEDERAL MEDIATION AND CONCILIATION SERVICES

STATEMENT OF NET COST

FOR THE YEARS ENDED SEPTEMBER 30, 2016 AND 2015

( In Dollars)

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

13 

2016 2015

Cumulative Results of Operations:

Beginning Balances (1,139,186) $ (1,733,256) $ 

Beginning Balances, as Adjusted (1,139,186) $ (1,733,256) $ 

Budgetary Financing Sources

Appropriations Used 45,188,190 44,240,726 

Other Financing Sources

Imputed Financing (Note 9) 1,723,103 1,681,136 

Other Revenue - 

Total Financing Sources 46,911,293 45,921,862 

Net Cost of Operations (47,023,622) (45,327,792) 

Net Change (112,329) 594,070 

Cumulative Results of Operations (1,251,515) $ (1,139,186) $ 

Unexpended Appropriations:

Beginning Balances 6,605,110 $ 5,523,862 $ 

Beginning balances - adjustment (240,398) $ 

Beginning Balances, as Adjusted 6,364,712 $ 5,523,862 $ 

Budgetary Financing Sources:

Appropriations Received 48,748,000 45,666,000 

Other Adjustments (555,811) (344,026) 

Appropriations Used (45,188,190) (44,240,726) 

Total Budgetary Financing Resources 3,003,999 1,081,248 

Total Unexpended Appropriations 9,368,711 $ 6,605,110 $ 

Net Position 8,117,196 $ 5,465,924 $ 

FEDERAL MEDIATION AND CONCILIATION SERVICES

STATEMENT OF CHANGES IN NET POSITION

FOR THE YEARS ENDED SEPTEMBER 30, 2016 AND 2015

(In Dollars)

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

14 

2016 2015

Budgetary resources:

Unobligated balance brought forward, October 1 5,796,053 $ 7,216,575

Recoveries of prior year unpaid obligations 2,219,696 $ 253,131 $ 

Other changes in unobligated balance (540,342) $ (344,026) $ 

Unobligated balance from prior year budget authority, net 7,475,407 $ 7,125,680 $ 

Appropriations (discretionary and mandatory) 48,748,000 $ 45,666,000 $ 

Spending authority (discretionary and mandatory) 2,125,620 $ 2,295,327 $ 

Total budgetary resources 58,349,027 $ 55,087,007 $ 

Status of budgetary resources:

Obligations incurred (Note 6): 53,003,232 $ 49,290,954 $ 

Unobligated balance, end of year:

Apportioned 1,164,846 $ 333,015 $ 

Unapportioned 4,180,949 $ 5,463,038 $ 

Total unobligated balance, end of year 5,345,795 $ 5,796,053 $ 

Total status of budgetary resources 58,349,027 $ 55,087,007 $ 

Change in obligated balance:

 Unpaid obligations:

Unpaid obligations, brought forward, October 1 (gross) 6,384,047 $ 3,878,077 $ 

Obligations incurred 53,003,232 $ 49,290,954 $ 

Outlays (gross) (47,762,513) $ (46,531,852) $ 

Recoveries of prior year unpaid obligations (2,219,696) $ (253,131) $ 

Unpaid obligations, end of year (gross) 9,405,070 $ 6,384,048 $ 

 Uncollected payments:

Uncollected customer payments from Federal Sources, brought forward, October (38,272) $ (124,434) $ 

Change in uncollected payments from Federal sources $ 86,162 (119,730) $ 

Uncollected customer payments from Federal Sources,end of year (158,002) $ (38,272) $ 

Obligated Balance, End of Year 9,247,068 $ 6,345,776 $ 

Obligation Start of Year 6,345,775 $ 3,753,643 $ 

Obligation End of Year 9,247,068 $ 6,345,776 $ 

Budget Authority and Outlays, Net

Budget authority, gross 50,873,620 $ 47,961,327 $ 

Actual offsetting collections (2,021,359) $ (2,381,489) $ 

Change in uncollected customer payments from Federal sources (119,730) $ 86,162 $ 

Recoveries, prior year paid obligations, 15,469 $ - $ 

Budget authority, net 48,748,000 $ 45,666,000 $ 

Outlays, gross 47,762,513 $ 46,531,852 $ 

Actual offsetting collections (2,021,359) $ (2,381,488) $ 

Outlays, net 45,741,154 $ 44,150,364 $ 

Distributed offsetting receipts - $ - $ 

Agency outlays, net 45,741,154 $ 44,150,364 $ 

FEDERAL MEDIATION AND CONCILIATION SERVICES

STATEMENT OF BUDGETARY RESOURCES

FOR THE YEARS ENDED SEPTEMBER 30, 2016 AND 2015

(In Dollars)
 Notes to Principal Financial Statements 

15 

FEDERAL MEDIATION AND CONCILIATION SERVICE 

Notes to Principal Financial Statements 

As of September 30, 2016 and 2015 

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, 2016, FMCS consisted of a national office, 10 regional offices, and 66 

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, 2016 and 2015, 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. 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. 

D. Dedicated Collections 

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

Financial Accounting Standards (SFFAS) 43. 

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 13.7% and 

13.2% for 2016 and 2015, 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 
 Notes to Principal Financial Statements 

19 

Plan. 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 which was 11.9% and 11.1% for 2016 and 2015, 

respectively. 

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 postemployment 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 dependents 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 

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 
 Notes to Principal Financial Statements 

20 

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: 

2016 2015

Accounts Receivable (Gov) $ 38,272 158,101 $ 

Accounts Receivable (NonGov) - - 

Total Accounts Receivable 158,101 $ 38,272 $ 

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: 2016 2015

General Funds 14,640,365 $ 12,189,330 $ 

Total Fund Balance with Treasury $ 12,189,330 14,640,365 $ 

B. Status of Fund Balance with Treasury

Unobligated Balance:

 Available 1,164,846 $ 333,015 $ 

 Unavailable 4,180,949 5,463,038

Obligated Balance Not Yet Disbursed 9,294,570 6,393,277

Total Status of Fund Balance with Treasury $ 12,189,330 14,640,365 $ 
 Notes to Principal Financial Statements 

22 

2016 2015

Equipment, Furniture and Hardware 2,590,789 $ 2,502,279 $ 

ADP Software 22,377 22,377

Total 2,613,166 2,524,656

Less: Accumulated depreciation on

Equipment and Furniture (1,988,209) (1,796,059) 

Less: Accumulated amortization on

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

 Net Book Value $ 706,220 602,580 $ 

NOTE 5: LIABILITIES NOT COVERED BY BUDGETARY RESOURCES

The liabilities on FMCS’s Balance Sheet as of September 30, 2014 and 2013 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 

2016 2015

Intragovernmental:

 Unfunded FECA Liability 451,608 $ 596,526 $ 

 Other unfunded employment related liability 3,050 - 

Total Intragovernmental 454,658 596,526 

Public Liabilities:

 Actuarial FECA 2,449,113 $ 2,839,259 $ 

 Unfunded Annual Leave 2,676,373 2,585,984

Total Liabilities Not Covered by Budgetary Resources 5,580,144 6,021,769 

Total Liabilities Covered by Budgetary Resources 1,703,706 1,446,127 

Total Liabilities 7,283,850 $ 7,467,896 $ 

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 
 Notes to Principal Financial Statements 

23 

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 

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: 

 

2016 2015

Direct Obligations (Category A) 51,294,935 $ 47,527,069 $ 

Reimbursable Obligations (Category A) 1,708,298 1,833,885 

Total 53,003,233 $ 49,290,954 $ 

 

Note 7: Undelivered Orders at the End of the Period 

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

2016 and 2015 is $7,701,365 and $4,937,918 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

2017 4,100,000 $ 

2018 5,769,352 

2019 6,057,820 

2020 6,360,711 

2021 6,678,746 

Total Future Minimum Lease Payments 28,966,629 $ 
 Notes to Principal Financial Statements 

24 

Rent expense totaled $5,605,900 and $5,465,213 for fiscal years September 30, 2016 and 

2015 respectively. 

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 2016 and 2015 consists of the following: 

2016 2015

Office of Personnel Management $ 1,723,103 $ 1,681,136 

Total Imputed Financing Sources $ 1,723,103 $ 1,681,136 

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, 2015, 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 
 Notes to Principal Financial Statements 

25 

30, 2015, 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. 

 

(In millions)

Budgetary 

Resources

Obligations 

Incurred

Distributed

Offsetting 

Receipts

Net 

Outlays

Statement of Budgetary Resources 55 $ 49 $ - $ 44 $ 

Expired Funds (2) - - - 

Budget of the U.S. Government 53 $ 49 $ - $ 44 $ 

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 2015 

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) 

2016 2015

Resources Used to Finance Activities

Budgetary Resources Obligated:

 Obligations Incurred 53,003,233 $ 49,290,954 $ 

 Less: Spending Authority from Offsetting 

 Collections and Recoveries (4,360,884) (2,548,458) 

 Obligations Net of Offsetting Collections

 and Recoveries 48,642,349 46,742,496 

 Less: Offsetting Receipts - - 

 Net Obligations 48,642,349 46,742,496 

Other Resources:

 Imputed Financing from Costs Absorbed by Other 1,723,103 1,681,136 

 Total Resources Used to Finance Activities 50,365,452 $ 48,423,632 $ 

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 (3,003,845) (2,341,360) 

Resources that Fund Expenses Recognized in Prior Periods (532,014) (376,629)

Resources that Finance the Acquisition of Assets (555,921) (88,510) 

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 (3,624,369) (3,273,910) 

Total Resources Used to Finance the Net Cost of Operations 46,741,083 $ 45,149,722 $ 

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 90,389 (79,924) 

Total Components of Net Cost of OperationThat Will 

 Require or Generate Resources in Future Periods (79,924) 90,389 

Components Not Requiring or Generating Resources:

 Depreciation and Amortization 192,150 257,994 

 Revaluation of Assets or Liabilities

 Other

Total Components of Net Cost of Operation that will not

 Require or Generate Resources 192,150 257,994 

Total Components of Net Cost of Operation that will not

 Require or Generate Resources in the Current Period 282,539 178,070 

Net Cost of Operations 47,023,622 $ 45,327,792 $ 

FOR THE YEARS ENDED SEPTEMBER 30, 2016 AND 2015

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 - 11,851 - 

United States Postal Service 18 - 45,159 - 

National Oceanic and Atmospheric Administration 13 - 8,349 - 

National Labor Relations Board 63 - 1,100 - 

Federal Bureau of Investigations 15 - 3,800 - 

Office of Compliance 09 - 800 - 

Department of Interior 14 - 3,481 - 

Department of Labor 16 - - - 

US Marine Corps 17 - - - 

Department of State 19 - 800 - 

Department of Treasury 20 14,640,365 10,736 - 

Office of Personnel Management 24 - - - 

Department of Veteran Affairs 36 - 4,420 - 

Department of Transportation 69 - - - 

Department of Homeland Security 70 - 25,941 - 

US Agency for International Development 72 - 861 - 

Health and Human Services 75 - 400 - 

Department of Housing and Urban Development 86 - 3,331 - 

US Army 97 - 400 - 

Treasury General Fund 99 - - - 

Court Services and Offender 15 - 2,400 - 

Department of Defense 97 - 2,197 - 

Department of Energy 89 - 837 - 

 Total Intra-governmental Assets $ 14,640,635 $ 158,002 $ - 

Intra-governmental Liabilities by Trading Partner: 

Trading Partner ID 

Accounts 

Payable 

Other 

Liabilities 

Government Printing Office 04 $ - $ - 

United States Postal Service 18 - - 

Office of Personnel Management 24 - - 

Department of Veteran Affairs 36 - - 

General Services Administration 47 11,500 - 

Department of Transportation 69 - - 

Health and Human Services 75 - - 

National Archives 88 - - 

Treasury General Fund 99 - - 

 Total Intra-governmental Liabilities $ 11,500 $ - 
 

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