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Federal Mediation and Conciliation Services (FMCS) 

Fiscal Year 2017 Financial Statement Audit

Final Independent Auditors’ Report

Submitted for review and acceptance to:

Terry Lee

Contracting Officer's Representative (COR)

Federal Mediation and Conciliation Services

250 E St SW

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, 2017

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

 
FEDERAL MEDIATION AND CONCILIATION SERVICE

 AUDIT REPORT

 SEPTEMBER 30, 2017

 ALLMOND & COMPANY, LLC

 Certified Public Accountants

 8181 Professional Place, Suite 250

 Landover, Maryland 20785

 (301) 918-8200
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 

Services, which comprise the balance sheet as of September 30, 2017 and 2016, and the related statement 

of net cost, statement of 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 2017 and 2016 financial statements of FMCS

based on our audits. We conducted our audits 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. 17-03, 

Audit Requirements for Federal Financial Statements. Those standards and OMB Bulletin No. 17-03

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 risk 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 

audit opinion.
Independent Auditors’ Report

Opinion

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

financial position of the Federal Mediation and Conciliation Services as of September 30, 2017 and 2016, 

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, 2017, we considered FMCS’s internal control over financial reporting by obtaining an understanding 

of FMCS’s internal controls, 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 controls 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. 17-03. We did not test all internal controls 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 preceding paragraph and was not designed to identify all deficiencies in internal control that might be 

material weaknesses or significant deficiencies and therefore, material weaknesses or significant 

deficiencies may exist that were not identified.

A deficiency in internal control over financial reporting 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 material weakness is a deficiency, or a 

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

misstatement of the FMCS’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 the attention by those charged 

with governance.

However, we noted three additional matters that we will report to FMCS management in a separate letter.
Independent Auditors’ Report

Compliance and Other Matters

As part of obtaining reasonable assurance about whether FMCSs’ fiscal year 2017 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 17-03. 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. 17-03.

Purpose of the Other Reporting Required by Government Auditing Standards

The purpose of the communication described in the Other Reporting Required by Government Auditing 

Standards section 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 FMCS's internal control or on 

compliance. This communication is an integral part of an audit performed in accordance with U.S. 

generally accepted government auditing standards in considering in internal controls and compliance with 

laws and regulations which could have a material effect on FMCS’s financial statements. Accordingly, 

this communication is not suitable for any other purpose.

November 15, 2017

Landover, MD
Federal Mediation and Conciliation Service

Fiscal Year 2017

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

2017 2016

Assets:

Intragovernmental

 Fund Balance with Treasury (Note 2) $ 13,723,906 $ 14,640,365

 Accounts Receivable, Net (Note 3) 22,157 158,101

Total intragovernmental Assets $ 13,746,063 $ 14,798,466

With the Public

 General property and equipment, net (Note 4) $ 692,345 $ 602,580

Total Assets $ 14,438,408 $ 15,401,046

Intragovernmental 

Accounts Payable $ 26,200 $ 11,500

Employer Contributions and Payroll Taxes Payable 277,236 274,068

Unfunded FECA (Note 5) 358,981 451,608

Other Unfunded Employment Related Liability 24,193 3,050

Total Intragovernmental $ 686,610 $ 740,226

With the Public:

Accounts Payable $ 407,364 $ 402,172

Accrued Payroll and Benefits 1,024,673 1,015,966

Actuarial FECA (Note 5) 2,028,207 2,449,113

Unfunded Leave (Note 5) 2,570,930 2,676,373

Total Non Government Liabilities $ 6,031,174 $ 6,543,624

Total Liabilities $ 6,717,784 $ 7,283,850

Net Position

 Unexpended Appropriations-Other Funds $ 8,156,658 $ 9,368,711

 Cumulative Results of Operations-Other Funds (436,034) (1,251,515)

Total Net Position $ 7,720,624 $ 8,117,196

Total Liabilities And Net Position $ 14,438,408 $ 15,401,046

FEDERAL MEDIATION AND CONCILIATION SERVICES

BALANCE SHEET

AS OF SEPTEMBER 30, 2017 AND 2016

Liabilities 

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

2017 2016

Program Costs:

Mediation/Representation

Intragovernmental $ 15,086,407 $ 15,104,020

Less: Governmental Earned Revenue 1,028,342 1,310,556

Total Government Costs $ 14,058,065 $ 13,793,464

With the Public $ 35,160,058 $ 34,045,222

Less: With the Public Earned Revenue 836,170 815,064

Total With the Public Costs $ 34,323,888 $ 33,230,158

Total Gross Program Costs $ 50,246,465 $ 49,149,242

Less: Total Earned Revenues 1,864,512 2,125,620

Net Costs of Operations $ 48,381,953 $ 47,023,622

FEDERAL MEDIATION AND CONCILIATION SERVICES

STATEMENT OF NET COST

FOR THE YEARS ENDED SEPTEMBER 30, 2017 AND 2016

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

2017 2016

Budgetary resources:

Unobligated balance brought forward, October 1 $ 5,345,795 $ 5,796,053

Recoveries of prior year unpaid obligations $ 940,676 $ 2,219,696

Other changes in unobligated balance $ 263,967 $ (540,342)

Unobligated balance from prior year budget authority, net $ 6,550,438 $ 7,475,407

Appropriations (discretionary and mandatory) $ 46,650,000 $ 48,748,000

Spending authority (discretionary and mandatory) $ 1,876,884 $ 2,125,620

Total budgetary resources $ 55,077,322 $ 58,349,027

Status of budgetary resources:

New Obligations and Upward Adjustments (Note 6): $ 49,253,888 $ 53,003,232

Unobligated balance, end of year:

Apportioned $ 1,283,667 $ 1,164,846

Unapportioned $ 2,913,799 $ 4,180,949

Expired $ 1,625,968 $ -

Total unobligated balance, end of year $ 5,823,434 $ 5,345,795

Total status of budgetary resources $ 55,077,322 $ 58,349,027

Change in obligated balance:

 Unpaid obligations:

Unpaid obligations, brought forward, October 1 (gross) $ 9,405,070 $ 6,384,047

New Obligations and upward adjustments (Note 6) $ 49,253,888 $ 53,003,232

Outlays (gross) $ (49,830,784) $ (47,762,513)

Recoveries of prior year unpaid obligations $ (940,676) $ (2,219,696)

Unpaid obligations, end of year (gross) $ 7,887,498 $ 9,405,070

 Uncollected payments:

Uncollected customer payments from Federal Sources, brought forward, October $ (158,002) $ (38,272)

Change in uncollected payments from Federal sources $ 135,845 $ (119,730)

Uncollected customer payments from Federal Sources,end of year $ (22,157) $ (158,002)

Obligated Balance, End of Year $ 7,865,341 $ 9,247,068

Obligation Start of Year $ 9,247,068 $ 6,345,775

Obligation End of Year $ 7,865,341 $ 9,247,068

Budget Authority and Outlays, Net

Budget authority, gross $ 48,526,884 $ 50,873,620

Actual offsetting collections $ (2,542,960) $ (2,021,359)

Change in uncollected customer payments from Federal sources $ 135,845 $ (119,730)

Recoveries, prior year paid obligations, $ 542,603 $ 15,469

Budget authority, net $ 46,662,372 $ 48,748,000

Outlays, gross $ 49,830,784 $ 47,762,513

Actual offsetting collections $ (2,542,960) $ (2,021,359)

Outlays, net $ 47,287,824 $ 45,741,154

Distributed offsetting receipts $ - $ -

Agency outlays, net $ 47,287,824 $ 45,741,154

FEDERAL MEDIATION AND CONCILIATION SERVICES

STATEMENT OF BUDGETARY RESOURCES

FOR THE YEARS ENDED SEPTEMBER 30, 2017 AND 2016

(In Dollars)
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FEDERAL MEDIATION AND CONCILIATION SERVICE

Notes to the Financial Statements

As of September 30, 2017 and September 30, 2016

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, 2017, 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, 2017 and 2016, 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 

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

 
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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 arises 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.
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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 non-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% for 2017

and 2016. 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. For FERS employees who do 

contribute their own money to the Thrift Savings Plan, FMCS matches the amount dollarfor-dollar on the first 3% and 0.50 cents on the dollar for each of the next 2%. The 
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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 contributions to the plan 

at an established rate by OPM were 11.9% for 2017 and 2016.

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 

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.
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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.
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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. The balances were comprised of the following at September 30:

A. Fund Balances: 2017 2016

 General Funds $13,723,906 $14,640,365

 Total $13,723,906 $14,640,365

B. Status of Fund Balance with Treasury

 2017 2016

Unobligated Balance

 Available $1,283,667 $1,164,846

 Unavailable 4,539,767 4,180,949

Obligated Balance not yet Disbursed 7,900,472 9,294,570

Total $13,723,906 $14,640,365

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:

 2017 2016

Account Receivable (Gov) $22,157 $158,101

Account Receivable (Non-gov) 0 0

Total Account Receivable $22,157 $158,101

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:
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2017 2016

 Equipment, Furniture, Hardware $2,965,263 $2,590,789

ADP Software 22,377 22,377

 Total $2,987,640 $2,613,166

Less: Accumulated depreciation 

On Equipment, Furniture $(2,272,919) $(1,988,209)

Less: Amortization on ADP software (22,377) (22,377)

Net Book Value $692,345 $602,580 

 

NOTE 5: LIABILITIES NOT COVERED BY BUDGETARY RESOURCES

Liabilities not covered by budgetary resources include liabilities for which congressional 

action is needed before budgetary resources can be provided.

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 

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.

FMCS future funding requirements were comprised of the following at September 30:

2017 2016

With the Public:

Unfunded Annual Leave $2,570,930 $2,676,373

Actuarial FECA 2,028,207 2,449,113

Intragovernmental:

Unfunded Unemployment Liability 24,193 3,050

Unfunded FECA Liability 358,981 451,608 

Total Liabilities Not Covered by Budgetary

 Resources $4,982,311 $5,580,144

Total Liabilities Covered by Budgetary 

Resources $1,735,473 $1,703,706 

Total Liabilities $6,717,784 $7,283,850 
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NOTE 6: Apportionment Categories of New Obligations and upward adjustments: Direct vs. 

Reimbursable Obligations

Direct vs. Reimbursable Obligations incurred had the following apportionment 

categories:

2017 2016

Direct Obligations (Category A) $47,977,542 $51,294,935

Reimbursable Obligations (Category A) 1,276,346 1,708,298

Total $49,253,888 $53,003,233 

Note 7: Undelivered Orders at the End of the Period

 

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

2017 and 2016 is $6,009,734 and $7,701,365 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 2030. 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

FY 2018 5,350,000

FY 2019 5,450,000

FY 2020 5,722,500

FY 2021 6,008,625

FY 2022 6,309,056

Total Future Minimum Lease Payments $28,840,181

Rent expense totaled $4,000,000 and $5,969,541 for fiscal years September 30, 2017 and 2016

respectively. 
10

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 benefit expense and the 

employee’s contribution. For the period ending September 30, 2017 and 2016, the 

Normal Cost, employers total pension expense, employees’ contribution and imputed 

financing amounts were as follows:

The imputed financing amount represents the difference between the employer’s total 

pension expense and the employer’s contribution.

Imputed financing sources in 2017 and 2016 consist of the following:

2017 2016

Office of Personnel Management $ 1,614,017 $ 1,723,103

Total Imputed Financing Sources $ 1,614,017 $ 1,723,103 

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, 2017, has not 

been published as of the issue date of these financial statements. A reconciliation of budgetary resources, 

obligations incurred and new 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, 2016, is shown 

below.

The Federal Mediation and Conciliation Services Budget Appendix can be found on the OMB website 

(http://www.whitehouse.gov/omb/budget). 
11

Budgetary 

Resources

Obligations 

Incurred

Distributed 

Offsetting Receipts

Outlays

Statement of Budgetary 

Resources

58 53 0 45

Expired Funds (3) (2) (0) 1

Budget of the U.S. 

Government

55 51 0 46

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 FY2016 Budget of the United States 

Government but not in the Statement of Budgetary Resources.
12

Note 11: Reconciliation of Net Cost of Operation to Budget

2017 2016

Resources Used to Finance Activities

Budgetary Resources Obligated:

 New Obligations and upward adjustments $ 49,253,888 $ 53,003,233

 Less: Spending Authority from Offsetting 

 Collections and Recoveries (3,347,792) (4,360,884)

 Obligations Net of Offsetting Collections

 and Recoveries 45,906,096 48,642,349

 Less: Offsetting Receipts - -

 Net Obligations 45,906,096 48,642,349

Other Resources:

 Imputed Financing from Costs Absorbed by Other 1,614,017 1,723,103

 Total Resources Used to Finance Activities $ 47,520,113 $ 50,365,452

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 1,549,339 (3,003,845)

Resources that Fund Expenses Recognized in Prior Periods (597,834) (532,014)

Resources that Finance the Acquisition of Assets (374,475) (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 577,030 (3,624,369)

Total Resources Used to Finance the Net Cost of Operations $ 48,097,143 $ 46,741,083

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

Total Components of Net Cost of OperationThat Will 

 Require or Generate Resources in Future Periods - 90,389

Components Not Requiring or Generating Resources:

 Depreciation and Amortization 284,710 192,150

 Revaluation of Assets or Liabilities

 Other

Total Components of Net Cost of Operation that will not

 Require or Generate Resources 284,710 192,150

Total Components of Net Cost of Operation that will not

 Require or Generate Resources in the Current Period 284,710 282,539

Net Cost of Operations $ 48,381,853 $ 47,023,622

FOR THE YEARS ENDED SEPTEMBER 30, 2017 AND 2016

FEDERAL MEDIATION AND CONCILIATION SERVICES

RECONCILIATION OF NET COST OF OPERATIONS (PROPRIETARY) TO BUDGET

(In Dollars)
13

SUPPLEMENTAL INFORMATION
14

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 - 8,098

 

-

United States Postal Service 18 - - -

National Oceanic and Atmospheric Administration 13 - 3,903

 

-

National Labor Relations Board 63 - - -

Federal Bureau of Investigation 15 - - -

Office of Compliance 09 - - -

Department of Interior 14 - 1,482

 

-

Department of Labor 16 - -

 

-

US Marine Corps 17 - -

 

-

Department of State 19 - 1,200

 

-

Department of Commerce 13 - - -

Department of Treasury 20 13,723,906 -

 

-

Office of Personnel Management 24 - -

 

-

Department of Veteran Affairs 36 - -

 

-

Department of Transportation 69 - -

 

-

Department of Homeland Security 70 - 210

 

-

US Agency for International Development 72 - -

 

-

Health and Human Services 75 - -

 

-

Department of Housing and Urban Development 86 - 5,664

 

-

US Army 97 - -

 

-
15

Treasury General Fund 99 - - -

Court Services and Offender 15 - 1,600 -

Department of Defense 97 - - -

Department of Energy 89 - - -

 Total Intra-governmental Assets $ 13,723,906 $ 22,157 $ -

Intra-governmental Liabilities by Trading Partner:

Other 

Trading Partner ID Accounts Payable Liabilities

Government Printing Office 04

United States Postal Service 18 $ -

Office of Personnel Management 24 -

Department of Veteran Affairs 36 -

General Services Administration 47 26,200 -

Department of Transportation 69 -

Health and Human Services 75 -

Health and Human Services 75 -

National Archives 88 -

Treasury General Fund 99 -

 Total Intra-governmental Liabilities $ 26,200 $ -