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Fiscal Year 2013 Performance and Accountability Report

Financial Statements

Message from the Chief Financial Officer

The Accountability of Tax Dollars Act of 2002 requires the EEOC to prepare yearly financial statements. The statements depict the agency's financial status and the notes further explain financial practices and other pertinent information. Once again, I am happy to report that the EEOC received an unqualified opinion on its audited financial statements. This is the agency's tenth consecutive clean opinion. The opinion could not have been realized without the dedicated financial and administrative staff who worked diligently throughout the fiscal year toward excellence in financial management.

For FY 2013, the agency received a final funding level of $344M which is $16M less than FY 2012's appropriation. This reduction in resources made it challenging for the agency to continue operations and pay expenses. As a result, the longstanding hiring freeze remained in place. And programs, projects, and compensation and benefits were reduced. Collectively, these measures allowed the agency to end the fiscal year within budget. It is anticipated that the federal fiscal environment will remain tight. Therefore, going forward, the agency will focus on cost containment for expenses such as office rent. At eight percent of the total budget, rent is the second largest agency expense. (Compensation and benefits is the largest agency expense at 72 percent of the budget.) During FY 2013, the agency implemented "freeze the footprint" policy that includes a 20 percent reduction to future lease acquisitions for space reductions resulting from telework and new space designs. This initiative "promotes efficient spending," by slowing the growth of rent thereby allowing the agency to reallocate savings to other agency priority programs.

During FY 2014, the EEOC will continue long term budget planning, allocating resources to agency strategic initiatives and goals, and improving financial management.

Germaine P. Roseboro, CPA, CGFM
Chief Financial Officer

Inspector General's Audit Report

December 16, 2013

MEMORANDUM

TO: Jacqueline Berrien, Chair

FROM: Milton A. Mayo, Jr., Inspector General

SUBJECT: Audit of the Equal Employment Opportunity Commission's Fiscal Year 2013 Financial Statements (OIG Report No. 2013-FIN-01)

The Office of Inspector General (OIG) contracted with the independent certified public accounting firm of Harper, Rains, Knight and Company, P.A (HRK) to audit the financial statements of the U.S. Equal Employment Opportunity Commission (EEOC) for fiscal year 2013. The contract required that the audit be done in accordance with U.S. generally accepted government auditing standards contained in Government Auditing Standards issued by the Comptroller General of the United States and Office of Management and Budget's Bulletin 14-02, Audit Requirements for Federal Financial Statements, as amended.

HRK issued an unqualified opinion on EEOC's FY 2013 financial statements. In the Report on Internal Control, HRK noted one area involving internal control and its operation that was considered to be a significant deficiency. This included the lack of sufficient controls over supporting documentation for personnel expenses. In the Report on Compliance with Applicable Laws and Regulations, HRK noted no instances of non compliance with certain laws and regulations applicable to the agency.

In connection with the contract, OIG reviewed HRK's report and related documentation and inquired of its representatives. Our review, as differentiated from an audit in accordance with U.S. generally accepted government auditing standards, was not intended to enable us to express, and we do not express, opinions on EEOC's financial statements or conclusions about the effectiveness of internal controls or on whether EEOC's financial management systems substantially complied with FFMIA; or conclusions on compliance with laws and regulations. HRK is responsible for the attached auditor's report dated December 12, 2013 and the conclusions expressed in the report. However, OIG's review disclosed no instances where HRK did not comply, in all material respects, with generally accepted government auditing standards.

EEOC management was given the opportunity to review the draft report and to provide comments. Management comments are included in the report.

The Office of Management and Budget issued Circular Number A-50, Audit Follow Up, to ensure that corrective action on audit findings and recommendations proceed as rapidly as possible. EEOC Order 192.002, Audit Follow up Program, implements Circular Number A-50 and requires that for resolved recommendations, a corrective action work plan should be submitted within 30 days of the final evaluation report date describing specific tasks and completion dates necessary to implement audit recommendations. Circular Number A-50 requires prompt resolution and corrective action on audit recommendations. Resolutions should be made within six months of final report issuance.

cc: Claudia Withers
Germaine Roseboro
Raj Mohan
Nicholas Inzeo
John Schmelzer
Lisa Williams
Kimberly Hancher
Peggy Mastroianni
Todd Cox
Carlton Hadden
Deidre Flippen

Independent Auditors' Report

Independent Auditors' Report

Inspector General
U.S. Equal Employment Opportunity Commission

We have audited the accompanying consolidated balance sheets of the U.S. Equal Employment Opportunity Commission (EEOC), as of September 30, 2013 and 2012, and the related consolidated statements of net cost and changes in net position, and combined statements of budgetary resources, for the fiscal years then ended. These financial statements are the responsibility of EEOC management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted in the United States of America, the standards applicable to financial audit contained in Government Auditing Standards, issued by the Comptroller General of the United States, and OMB Bulletin No. 14-02, 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 examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provide a reasonable basis for our opinion.

In our audit of the EEOC for fiscal years 2013 and 2012, we found

  • the financial statements are presented fairly, in all material respects, in conformity with U.S. generally accepted accounting principles,
  • no material weaknesses in internal control over financial reporting (including safeguarding of assets) and compliance with laws and regulations, and
  • no reportable noncompliance with laws and regulations we tested.

The following sections discuss in more detail (1) these conclusions, (2) our conclusions on Management's Discussion and Analysis and other supplementary information, and (3) our and management's responsibilities.

Opinion on the Financial Statements
In our opinion, the financial statements including the accompanying notes, present fairly, in all material respects, the financial position of EEOC as of September 30, 2013 and 2012, and its net cost of operations, changes in net position, and budgetary resources for the fiscal years then ended, in conformity with accounting principles generally accepted in the United States of America.

Consistency of Other Information
Management's Discussion and Analysis (MD&A) is not a required part of the financial statements but is supplementary information required by the Federal Accounting Standards Advisory Board and OMB Circular A-136, Financial Reporting Requirements. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the MD&A. However, we did not audit the information and accordingly, we express no opinion on it.

Internal Control Over Financial Reporting
In planning and performing our audit, we considered EEOC's internal control over financial reporting and compliance. We did this in order to determine our audit procedures for the purpose of expressing our opinion on the financial statements and not to provide an opinion on internal control. We limited our internal control testing to those controls necessary to achieve the objectives described in OMB Bulletin No. 14-02. We did not test all internal controls relevant to the operating objectives as broadly defined by the Federal Managers' Financial Integrity Act of 1982. Providing an opinion on internal control was not the objective of our audit. Accordingly, we do not express an opinion on EEOC's internal control over financial reporting and compliance or on management's assertion on internal control included in Managements' Discussion and Analysis. However, for the controls we tested, we found no material weaknesses in internal control over financial reporting (including safeguarding of assets) and compliance.

A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected, on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. We consider the deficiency described in Exhibit I to be a significant deficiency.

Our internal control work would not necessarily disclose all deficiencies in internal control that might be material weaknesses or other significant deficiencies.

We noted certain additional matters that we will report to management of EEOC in a separate letter.

Compliance with Applicable Laws and Regulations
The management of EEOC is responsible for complying with laws and regulations applicable to EEOC. As part of obtaining reasonable assurance about whether EEOC's financial statements are free of material misstatement, we performed tests of its compliance with selected provisions of laws and regulations including laws governing the use of budgetary authority and government-wide policies identified in OMB Bulletin No. 14-02, non-compliance with which could have a direct and material effect on the determination of consolidated and combined financial statements. Our tests disclosed no instances of noncompliance with laws and regulations which would be reportable under auditing standards generally accepted in the United States of America or OMB audit guidance.

We limited our tests of compliance to the provisions of laws and regulations referred to in the preceding paragraph. Providing an opinion on compliance with those provisions was not an objective of our audit. Accordingly, we do not express such an opinion.

Management's Responsibility for the Financial Statements
EEOC's management is responsible for (1) preparing the financial statements in conformity with accounting principles generally accepted in the United States of America, (2) establishing, maintaining, and assessing internal control to provide reasonable assurance that the broad control objectives of the Federal Managers' Financial Integrity Act are met, and (3) complying with applicable laws and regulations.

Auditors' Responsibility
We are responsible for obtaining reasonable assurance about whether the financial statements are presented fairly, in all material respects, in conformity with accounting principles generally accepted in the United States of America. We are also responsible for (1) obtaining a sufficient understanding of internal control over financial reporting and compliance to plan the audit, (2) testing compliance with selected provisions of laws and regulations that have a direct and material effect on the financial statements and laws for which OMB audit guidance requires testing, and (3) performing limited procedures with respect to certain other information appearing in the Annual Financial Statement. We conducted our audit in accordance with auditing standards generally accepted in the United States of America; the Comptroller General of the United States; and OMB Bulletin No. 14-02. Those standards and OMB Bulletin No. 14-02 require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of EEOC's internal control over financial reporting. Accordingly, we express no such opinion.

In order to fulfill these responsibilities, we

  • examined, on a test basis, evidence supporting the amounts and disclosures in the financial statements;
  • assessed the accounting principles used and significant estimates made by management;
  • evaluated the overall presentation of the financial statements;
  • obtained an understanding of the entity and its operations, including its internal control related to financial reporting (including safeguarding assets), and compliance with laws and regulations (including execution of transactions in accordance with budget authority);
  • tested relevant internal controls over financial reporting, and compliance, and evaluated the design and operating effectiveness of internal control;
  • considered the design of the process for evaluating and reporting on internal control and financial management systems under the Federal Managers' Financial Integrity Act; and
  • tested compliance with selected provisions of laws and regulations that have a direct and material effect on the financial statements and those required by OMB Bulletin No. 14-02.

We believe that our audit provides a reasonable basis for our opinion.

We did not evaluate all internal controls relevant to operating objectives as broadly defined by the Federal Managers' Financial Integrity Act, such as those controls relevant to preparing statistical reports and ensuring efficient operations. We limited our internal control testing to controls over financial reporting and compliance. Because of inherent limitations in internal control, misstatements due to error or fraud, losses, or noncompliance may nevertheless occur and not be detected. We also caution that projecting our evaluation to future periods is subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with controls may deteriorate. In addition, we caution that our internal control testing may not be sufficient for other purposes.

We did not test compliance with all laws and regulations applicable to EEOC. We limited our tests of compliance to selected provisions of laws and regulations that have a direct and material effect on the financial statements and those required by OMB audit guidance that we deemed applicable to the EEOC's financial statements for the fiscal year ended September 30, 2013. We caution that noncompliance may occur and not be detected by these tests and that such testing may not be sufficient for other purposes.

Our audit was conducted for the purpose of forming an opinion on the financial statements of EEOC taken as a whole. The other accompanying information included in this performance and accountability report is presented for purposes of additional analysis and is not a required part of the financial statements. Such information has not been subjected to the auditing procedures applied in the audit of the financial statements and, accordingly, we express no opinion on them.

EEOC's written responses to the findings identified in our audit and presented in Exhibit I were not subjected to the auditing procedures applied in the audit of the EEOC's consolidated financial statements and, accordingly, we express no opinion on them.

This report is intended solely for the information and use of the management of the U.S. Equal Employment Opportunity Commission, the U.S. Office of Management and Budget, the U.S. Government Accountability Office, and the U.S. Congress and is not intended to be and should not be used by anyone other than these specified parties.

Signature

December 12, 2013

Significant Deficiencies
Exhibit I

1. Lack of Sufficient Controls over Supporting Documentation for Personnel Expenses

The U.S. Equal Employment Opportunity Commission (EEOC) does not properly maintain supporting documentation for personnel expenses recorded in the general ledger. EEOC maintains personnel files for all employees to ensure that wages and elections for withholdings and benefits are consistent with the employee's intent. These files have minimum standards for accuracy, relevancy, necessity, timeliness, and completeness.

In FY 2013, we tested a sample of 76 employees' personnel expenses and supporting documentation maintained by EEOC in the employees' personnel files (eOPF) for the period of October 1, 2012 through March 31, 2013. Based on our testing, we identified the following exceptions:

  • Six (6) employees do not have a FEHB enrollment form (SF-2809, SF-2810 or transcript) in eOPF.
  • Twenty (20) employees' enrollment code per most recent FEHB enrollment form (SF-2809, SF-2810 or transcript) in eOPF does not agree to enrollment code on LES for pay period sampled.
  • Five (5) employees' elected coverage per most recent FEGLI election form (SF-2817, FE 2004 or RI 76-27) in eOPF does not agree to election code per SF-50 effective during pay period sampled.
  • Seven (7) employees do not have a TSP election form (TSP-1 or transcript) in eOPF.
  • Fifteen (15) employees' elected contribution (percentage/dollar amount) per most recent TSP election form (TSP-1 or transcript) in eOPF does not agree to contribution on LES for pay period sampled.

These exceptions were caused by insufficient controls in place at EEOC to ensure proper and timely documentation is maintained in the eOPF. We identified similar exceptions in our audit from FY 2010, FY 2011 and FY 2012.

EEOC's failure to properly record and maintain official personnel records increases the risk for improper calculations of liabilities on the Balance Sheets and improper calculations of program costs on the Statements of Net Cost.

The Government Accountability Office's (GAO) GAO Standards for Internal Control in the Federal Government (Green Book) states: "Internal control and all transactions and other significant events need to be clearly documented, and the documentation should be readily available for examination. The documentation should appear in management directives, administrative policies, or operating manuals and may be in paper or electronic form. All documentation and records should be properly managed and maintained."

To address this issue, we recommend that EEOC update its controls over the maintenance of its official personnel files. Additionally, management should perform a thorough review of its employees' personnel files to ensure that documentation is current and complete.

Management's Response: As mentioned in last year's report, the majority of these issues occurred prior to our new agreement with DOI/IBC and OPM/Employee Express; whereas changes are transmitted automatically to the e-OPF. As for those issues that continue to require hard copy submissions, we will plan to correct this going forward by fully utilizing our new WTTS/EODS systems (automated on-boarding system), our Standard Operation Procedures dates August 6, 2012, which require internal audit and quality assurance reviews. This process requires the review of weekly reports from OPM and performing random samplings of e-OPFs each quarter with a report submitted to the Operations Services Director. We will also continue to use our volunteer veterans to perform some of these functions with the responsibility of monitoring the process and performing the audit going to the e-OPF Systems Administrator.

Auditors' Response: FY 2014 audit procedures will determine whether the corrective actions have been implemented and are operating effectively.

CONSOLIDATED BALANCE SHEETS
As of September 30, 2013 and 2012
(in dollars)
FY 2013 FY 2012
ASSETS:
Intragovernmental:
Fund Balance with Treasury (Note 2) $ 55,598,951 $ 53,993,070
Investments - -
Accounts Receivable (Note 3) 50,375 129,952
Loans Receivable - -
Advances 24,454 24,454
Other - -
Total Intragovernmental 55,673,780 54,147,476
Public:
Cash and Other Monetary Assets - -
Investments - -
Accounts Receivable, Net (Note 3) 136,594 385,187
Taxes Receivable, Net - -
Direct Loan and Loan Guarantees, Net - -
Inventory and Related Property, Net - -
General Property, Plant and Equipment, Net (Note 4) 5,833,367 6,954,068
Advances 30,410 38,634
Other - -
TOTAL ASSETS 61,674,151 61,525,365
Stewardship PP&E
LIABILITIES:
Intragovernmental:
Accounts Payable (Note 6) 1,309,042 871,217
Debt - -
Employer payroll taxes 954,580 1,070,691
Worker's compensation liability (Note 7) 2,802,436 2,794,487
Amounts due to Treasury for non-entity assets - -
Other Liabilities (Note 5) 266 8,384
Total Intragovernmental 5,066,324 4,744,779
Accounts Payable 13,344,911 18,088,604
Loan Guarantee Liability - -
Debt Held by the Public - -
Accrued payroll 4,653,544 4,106,517
Accrued annual leave (Note 7) 18,765,203 18,698,273
Future worker's compensation liability (Note 7) 13,254,476 13,459,331
Benefits Due and Payables - -
Employer payroll taxes 311,908 -
Environmental and Disposal Liabilities - -
Contingent liabilities - -
Capital lease liability - -
Amounts collected for restitution 28,369 56,163
Deferred revenue 112,338 117,163
Other Liabilities - 40,263
TOTAL LIABILITIES 55,537,073 59,311,093
NET POSITION:
Funds from Dedicated Collections:
Unexpended Appropriations - -
Cumulative Results of Operations 3,117,352 2,492,669
Total Net Position - Funds from Dedicated Collections 3,117,352 2,492,669
All Other Funds:
Unexpended Appropriations 31,944,943 27,513,783
Cumulative Results of Operations (28,925,217) (27,792,180)
Total Net Position - All Other Funds 3,019,726 (278,397)
Total Net Position 6,137,078 2,214,272
TOTAL LIABILITIES AND NET POSITION $ 61,674,151 $ 61,525,365

The accompanying notes are an integral part of these statements.

CONSOLIDATED STATEMENTS OF NET COST
For the Years Ended September 30, 2013 and 2012
(in dollars)
FY 2013 FY 2012
COMBATTING EMPLOYMENT DISCRIMINATION THROUGH STRATEGIC LAW ENFORCEMENT
Private Sector:
Enforcement $ 159,157,631 $ 177,187,809
Mediation 43,500,495 26,327,014
Litigation 67,166,061 75,857,359
Intake Information 10,024,016 4,407,499
State and Local 29,913,516 35,051,856
Total Program Costs - Private Sector 309,761,719 318,831,537
Revenue (209,435) (169,645)
Net Cost - Private Sector 309,552,284 318,661,892
Federal Sector:
Hearings 25,738,224 29,440,922
Appeals 14,555,471 15,642,877
Mediation 886,875 747,297
Oversight 5,396,910 6,099,157
Total Program Costs - Federal Sector 46,577,480 51,930,253
Revenue - -
Net Cost - Federal Sector 46,577,480 51,930,253
Total, Private, Federal Sectors
Program Costs 356,339,199 370,761,790
Revenue (209,435) (169,645)
Net Costs, Private, Federal Sectors 356,129,764 370,592,145
PREVENTING EMPLOYMENT DISCRIMINATION THROUGH EDUCATION AND OUTREACH
Outreach:
Fee Based 3,346,161 4,525,836
Non-Fee Based 518,111 7,834,644
Total Program Costs - Outreach 3,864,272 12,360,480
Revenue (3,207,053) (3,425,300)
Net Cost - Outreach 657,219 8,935,180
Totals, All Programs
Program Costs 360,203,471 383,122,270
Revenue (Note 11) (3,416,488) (3,594,945)
Costs Not Assigned - -
Net Cost of Operations $ 356,786,983 $ 379,527,325

The accompanying notes are an integral part of these statements.

CONSOLIDATED STATEMENTS OF CHANGES IN NET POSITION
For the Years Ended September 30, 2013 and 2012
(in dollars)
FY 2013 FY 2012
Consolidated
Funds from Dedicated Collections
(Note 14)
Consolidated
All Other Funds
Consolidated
Total
Consolidated
Funds from Dedicated Collections
(Note 14)
Consolidated
All Other Funds
Consolidated
Total
CUMULATIVE RESULTS OF OPERATIONS
Beginning Balances: $ 2,492,669 $ (27,792,180) $ (25,299,511) $ 3,333,431 $ (27,992,741) $ (24,659,310)
Adjustments:
Changes in Accounting Principles - - - - - -
Corrections of Errors - - - - - -
Beginning Balances, As Adjusted $ 2,492,669 $ (27,792,180) $ (25,299,511) $ 3,333,431 $ (27,992,741) $ (24,659,310)
Budgetary Financing Sources:
Other Adjustments - - - - - -
Appropriations Used - 337,196,793 337,196,793 - 358,428,095 358,428,095
Non-Exchange Revenue - 1,080 1,080 - 5,946 5,946
Donations and Forfeitures of Cash and Cash Equivalents - 5,261 5,261 - - -
Transfers-In/Out Without Reimbursement (+/-) - - - - - -
Other - - - - - -
Other Financing Sources (Non_Exchange):
Donations and Forfeitures of Property - - - - - -
Transfers-In/Out Without Reimbursement (+/-) - - - - - -
Imputed Financing (Note 15) - 19,076,575 19,076,575 - 20,460,314 20,460,314
Other (+/-) - (1,080) (1,080) - (7,231) (7,231)
Total Financing Sources - 356,278,629 356,278,629 - 378,887,124 378,887,124
Net Cost of Operations 624,683 (357,411,666) (356,786,983) (840,762) (378,686,563) (379,527,325)
Net Change 624,683 (1,133,037) (508,354) (840,762) 200,561 (640,201)
Cumulative Results of Operations 3,117,352 (28,925,217) (25,807,865) 2,492,669 (27,792,180) (25,299,511)
UNEXPENDED APPROPRIATIONS
Beginning Balances: $ - $ 27,513,783 $ 27,513,783 $ - $ 28,793,935 $ 28,793,935
Adjustments:
Changes in Accounting Principles - - - - - -
Corrections of Errors - - - - - -
Beginning Balances, As Adjusted $ - $ 27,513,783 $ 27,513,783 $ - $ 28,793,935 $ 28,793,935
Budgetary Financing Sources: - - - -
Appropriations Received (Note 12) - 370,000,000 370,000,000 - 360,000,000 360,000,000
Appropriations Transferred-In/Out - - - - - -
Other Adjustments - (28,372,047) (28,372,047) - (2,852,057) (2,852,057)
Appropriations Used - (337,196,793) (337,196,793) - (358,428,095) (358,428,095)
Total Budgetary Financing Sources - 4,431,160 4,431,160 - (1,280,152) (1,280,152)
Total Unexpended Appropriations - 31,944,943 31,944,943 - 27,513,783 27,513,783
Net Position $ 3,117,352 $ 3,019,726 $ 6,137,078 $ 2,492,669 $ (278,397) $ 2,214,272

The accompanying notes are an integral part of these statements.

COMBINED STATEMENTS OF BUDGETARY RESOURCES
For the Years Ended September 30, 2013 and 2012
(in dollars)
FY 2013 FY 2012
Budgetary Resources:
Unobligated Balance Brought Forward, October 1 $ 11,468,501 $ 14,391,006
Recoveries of Prior Year Unpaid Obligations 3,964,269 3,803,692
Other Changes in Unobligated Balance (+ or -) (2,590,877) (2,852,057)
Unobligated Balance from Prior Year Budget Authority, Net 12,841,893 15,342,641
Appropriations (Discretionary and Mandatory) (Note 12) 344,218,830 360,000,000
Borrowing Authority (Discretionary and Mandatory) - -
Spending Authority from Offsetting Collections (Discretionary and Mandatory) 3,501,557 4,773,786
Total Budgetary Resources $ 360,562,280 $ 380,116,427
Status of Budgetary Resources:
Obligations Incurred (Note 13) $ 349,057,308 $ 368,647,926
Unobligated Balance, End of Year:
Apportioned 2,090,459 594,052
Exempt from Apportionment - -
Unapportioned 9,414,513 10,874,449
Unobligated Balance, End of Year 11,504,972 11,468,501
Total Budgetary Resources $ 360,562,280 $ 380,116,427
Change in Obligated Balance:
Unpaid Obligations, Brought Forward, October 1 $ 42,751,345 $ 42,190,850
Obligations Incurred 349,057,308 368,647,926
Outlays (Gross) (-) (343,728,399) (364,283,739)
Actual Transfers, Unpaid Obligations (Net) (+ or -) - -
Recoveries of Prior Year Unpaid Obligations (-) (3,964,269) (3,803,692)
Unpaid Obligations, End of Year 44,115,985 42,751,345
Uncollected Payments
Uncollected Payments, Federal Sources, Brought Forward, October 1 (-) (282,939) (357,082)
Change in Uncollected Payments, Federal Sources (+ or -) 232,564 74,143
Actual Transfers, Uncollected Payments, Federal Sources (Net) (+ or -) - -
Uncollected Payments, Federal Sources, End of Year (-) $ (50,375) $ (282,939)
Memorandum (non-add) entries:
Obligated Balance, Start of Year (+ or -) 42,468,406 41,833,768
Obligated Balance, End of Year (Net) 44,065,610 42,468,406
Budget Authority and Outlays, Net:
Budget Authority, Gross (Discretionary and Mandatory) $ 347,720,387 $ 364,773,786
Actual Offsetting Collections (Discretionary and Mandatory) (-) (3,734,121) (4,847,929)
Change in Uncollected Customer Payments from Federal Sources - -
(Discretionary and Mandatory) (+ or -) 232,564 74,143
Anticipated Offsetting Collections (Discretionary and Mandatory) (+ or -) - -
Budgetary Authority, Net (Discretionary and Mandatory) $ 344,218,830 $ 360,000,000
Outlays, Gross (Discretionary and Mandatory) $ 343,728,399 $ 364,283,739
Actual Offsetting Collections (Discretionary and Mandatory) (-) (3,734,121) (4,847,929)
Outlays, Net (Discretionary and Mandatory) $ 339,994,278 $ 359,435,810

The accompanying notes are an integral part of these statements.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2013 and 2012
(In Dollars)

(1) Summary of Significant Accounting Policies

(a) Reporting Entity

The Equal Employment Opportunity Commission (EEOC; Commission) was created by Title VII of the Civil Rights Act of 1964 (78 Stat. 253:42 U.S.C. 2000e, et seq.) as amended by the Equal Employment Opportunity Act of 1972 (Public Law 92261), and became operational on July 2, 1965. Title VII requires that the Commission be composed of five members, not more than three of whom shall be of the same political party. The members are appointed by the President of the United States of America, by and with the consent of the Senate, for a term of 5 years. The President designates one member to serve as Chairman and one member to serve as Vice Chairman. The General Counsel is also appointed by the President, by and with the advice and consent of the Senate for a term of 4 years.

In addition, based on the EEOC Education Technical Assistance and Training Revolving Fund Act of 1992 (P.L. 102-411), the EEOC is authorized to charge and receive fees to offset the costs of education, technical assistance and training.

The Commission is concerned with discrimination by public and private employers with 15 or more employees (excluding elected or appointed officials of state and local governments), public and private employment agencies, labor organizations with 15 or more members, or agencies which refer persons for employment or which represent employees of employers covered by the Act, and joint labor-management apprenticeship programs of covered employers and labor organizations. The Commission carries out its mission through investigation, conciliation, litigation, coordination, regulation in the federal sector, and through education, policy research, and provision of technical assistance.

(b) Basis of Presentation

These financial statements have been prepared to report the consolidated financial position, net cost of operations, changes in net position, and budgetary resources of the EEOC, consistent with the Chief Financial Officers' Act of 1990 (CFO Act) and the Government Management Reform Act of 1994. These financial statements have been prepared from the books and records of the EEOC in accordance with generally accepted accounting principles (GAAP) and the form and content requirements of the Office of Management and Budget (OMB) Circular No. A-136, and the EEOC's accounting policies, which are summarized in this note. All intra-agency transactions and balances have been eliminated, except in the Statement of Budgetary Resources, which is presented on a combined basis, as required by OMB Circular No. A-136. These consolidated financial statements present proprietary information while other financial reports also prepared by the EEOC pursuant to OMB directives are used to monitor and control the EEOC's use of federal budgetary resources.

(c) Basis of Accounting

The Commission's integrated Financial Cloud Solutions (FCS) uses Global Computer Enterprises, Inc. (GCE) Oracle, which has funds control, management accounting, and a financial reporting system designed specifically for federal agencies.

Financial transactions are recorded in the financial system, using both an accrual and a budgetary basis of accounting. Under the accrual method, revenues are recognized when earned and expenses are recognized when a liability occurs without regard to the receipt or payment of cash. Budgetary accounting facilitates compliance with legal requirements and mandated controls over the use of federal funds. It generally differs from the accrual basis of accounting in that obligations are recognized when new orders are placed, contracts are awarded, or services are received that will require payments during the same or future periods.

(d) Revenues, User Fees and Financing Sources

The EEOC receives the majority of the funding needed to support its programs through congressional appropriations. Financing sources are received in annual and no-year appropriations that may be used, within statutory limits, for operating and capital expenditures. Appropriations used are recognized as an accrual-based financing source when expenses are incurred or assets are purchased.

The EEOC also has a permanent, indefinite appropriation. These additional funds are obtained through fees charged to offset costs for education, training and technical assistance provided through the revolving fund. The fund is used to pay the cost (including administrative and personnel expenses) of providing education, technical assistance, and training by the Commission. Revenue is recognized as earned when the services have been rendered.

An imputed financing source is recognized to offset costs incurred by the EEOC and funded by another federal source, in the period in which the cost was incurred. The types of costs offset by imputed financing are: (1) employees' pension benefits; (2) health insurance, life insurance and other post-retirement benefits for employees; and (3) losses in litigation proceedings.

(e) Assets and Liabilities

Assets and liabilities presented on the EEOC's balance sheets include both entity and non-entity balances. Entity assets are assets that the EEOC has authority to use in its operations. Non-entity assets are held and managed by the EEOC, but are not available for use in operations. The EEOC's non-entity assets represent receivables that, when collected will be transferred to the U.S. Treasury.

Intra-governmental assets and liabilities arise from transactions between the Commission and other federal entities. All other assets and liabilities result from activity with non-federal entities.

Liabilities covered by budgetary or other resources are those liabilities of the EEOC for which Congress has appropriated funds, or funding is otherwise available to pay amounts due. Liabilities not covered by budgetary or other resources represent amounts owed in excess of available congressionally appropriated funds or other amounts. The liquidation of liabilities not covered by budgetary or other resources is dependent on future congressional appropriations or other funding.

(f) Fund Balance with the U.S. Treasury

Fund Balances with U.S. Treasury are fund balances remaining as of the fiscal year (FY)-end from which the EEOC is authorized to make expenditures and pay liabilities resulting from operational activity, except as restricted by law. The balance consists primarily of appropriated undelivered orders, accounts payables, unavailable balances, and deposit funds that will be disbursed to third parties. The EEOC records and tracks appropriated funds in its general funds. Also included in Fund Balance with U.S. Treasury are fees collected for services which are recorded and accounted for in the EEOC's revolving fund.

(g) Accounts Receivable

Accounts receivable consists of amounts owed to the EEOC by other federal agencies and from the public.

Intra-governmental accounts receivable represents amounts due from other federal agencies. The receivables are stated net of an allowance for estimated uncollectible amounts. The method used for estimating the allowance is based on analysis of aging of receivables and historical data.

Accounts receivable from non-federal agencies are stated net of an allowance for estimated uncollectible amounts. All public receivables, collectible in their entirety become due upon the receipt of a due process notice. Although the allowance is determined by the age of the receivable for financial statement reporting, the actual allowance is determined by considering the debtor's current ability to pay, their payment record and willingness to pay and an analysis of aged receivable activity. The estimated allowance for accounts receivable is computed as follows: Accounts receivable between 365 days and 720 days old are computed at 50% and those older than 720 days are calculated at 100%.

(h) Property, Plant and Equipment

Property, plant and equipment consist of equipment, leasehold improvements and capitalized software. There are no restrictions on the use or convertibility of property, plant and equipment.

For property, plant and equipment, the EEOC capitalizes equipment (including capital leases), with a useful life of more than 2 years and an acquisition cost of $100,000 or more. Leasehold improvements and capitalized software are capitalized when the useful life is 2 years or more and the acquisition cost is at least $200,000.

Expenditures for normal repairs and maintenance for capitalized equipment and capitalized leases are charged to expense as incurred unless the expenditure is equal to or greater than $100,000 and the improvement increases the asset's useful life by more than 2 years. For Leasehold improvements and capitalized software the amount must be greater than $200,000 and the improvements increases the asset life by more than 2 years.

Depreciation or amortization of equipment is computed using the straight-line method over the assets' useful lives ranging from 5 to15 years. Copiers are depreciated using a 5-year life. Computer hardware is depreciated over 10 to 12 years. Capitalized software is amortized over a useful life of 2 years. Amortization of capitalized software begins on the date it is put in service, if purchased, or when the module or component has been successfully tested if developed internally. Leasehold improvements are amortized over the remaining life of the lease.

The EEOC leases the majority of its office space from the General Services Administration. The lease costs approximate commercial lease rates for similar properties.

(i) Advances and Prepaid Expenses

Amounts advanced to EEOC employees for travel are recorded as an advance until the travel is completed and the employee accounts for travel expenses.

Expenses paid in advance of receiving services are recorded as a prepaid expense until the services are received.

(j) Accrued Annual, Sick and Other Leave and Compensatory Time

Annual leave, compensatory time and other leave time, along with related payroll costs, are accrued when earned, reduced when taken, and adjusted for changes in compensation rates. Sick leave is not accrued when earned, but rather expensed when taken.

(k) Retirement Benefits

EEOC employees participate in the Civil Service Retirement System (CSRS) or the Federal Employees' Retirement System (FERS). On January 1, 1987, FERS went into effect pursuant to Public Law 99-335. Most employees hired after December 31, 1983 are automatically covered by FERS and Social Security. Employees hired prior to January 1, 1984 could elect to either join FERS and Social Security or remain in CSRS.

For employees under FERS, the EEOC contributes an amount equal to 1% of the employee's basic pay to the tax deferred thrift savings plan and matches employee contributions up to an additional 5% of pay. FERS and CSRS employees can contribute $17,500 of their gross earnings to the plan, for the calendar years 2013 and $17,000 for 2012. However, CSRS employees receive no matching agency contribution. There is also an additional $5,500 that can be contributed as a "catch-up" contribution for those 50 years of age or older, for the calendar years 2013 and 2012.

The EEOC recognizes the full cost of providing future pension and Other Retirement Benefits (ORB) for current employees as required by SFFAS No. 5, Accounting for Liabilities of the Federal Government. Full costs include pension and ORB contributions paid out of EEOC appropriations and costs financed by the U.S. Office of Personnel Management (OPM). The amount financed by OPM is computed based on OPM guidance and recognized as an imputed financing source and benefit program expense. Reporting amounts such as plan assets, accumulated plan benefits, or unfunded liabilities, if any, is the responsibility of OPM.

Liabilities for future pension payments and other future payments for retired employees who participate in the Federal Employees Health Benefits Program (FEHB) and the Federal Employees Group Life Insurance Program (FEGLI) are reported by OPM rather than the EEOC.

(l) Workers' Compensation

A liability is recorded for estimated future payments to be made for workers' compensation pursuant to the Federal Employees' Compensation Act (FECA). The FECA program is administered by the U.S. Department of Labor, (DOL) which initially pays valid claims and subsequently seeks reimbursement from federal agencies employing the claimants. Reimbursements to the DOL on payments made occur approximately 2 years subsequent to the actual disbursement. Budgetary resources for this intra-governmental liability are made available to the EEOC as part of its annual appropriation from Congress in the year that reimbursement to the DOL takes place. A liability is recorded for actual un-reimbursed costs paid by DOL to recipients under FECA.

Additionally, an estimate of the expected future liability for death, disability, medical and miscellaneous costs for approved compensation cases is recorded, as well as a component for claims that have been incurred but have not yet been reported. The EEOC computes this estimate using a DOL-provided model for non-CFO Act agencies that uses actual benefit payments for the EEOC from the past 9 to 12 quarters to project these future payments. The estimated liability is not covered by budgetary resources and will require future funding. This estimate is recorded as a noncurrent liability.

(m) Contingent Liabilities

Contingencies are recorded when losses are probable and the cost is measurable. When an estimate of contingent losses includes a range of possible costs, the most likely cost is reported, but where no cost is more likely than any other, the lowest possible cost in the range is reported.

(n) Amounts Collected for Restitution

The courts directed an individual to pay amounts to the EEOC as restitution to several claimants named in a court case. These monies will be paid to claimants as directed by the courts.

(o) Cost Allocations to Programs

Costs associated with the EEOC's various programs consist of direct costs consumed by the program, including personnel costs, and a reasonable allocation of indirect costs. The indirect cost allocations are based on actual hours devoted to each program from information provided by EEOC employees.

(p) Unexpended Appropriations

Unexpended appropriations include the unobligated balances and undelivered orders of the EEOC's appropriated spending authority as of the fiscal year-end that has not lapsed or been rescinded or withdrawn.

(q) Income Taxes

As an agency of the federal government, the EEOC is exempt from all income taxes imposed by any governing body, whether it is a federal, state, commonwealth, local, or foreign government.

(r) Use of Estimates

Management has made certain estimates and assumptions in reporting assets and liabilities and in the footnote disclosures. Actual results could differ from these estimates. Significant estimates underlying the accompanying financial statements include the allowance for doubtful accounts receivable, contingent liabilities and future workers' compensation costs.

(s) The FY 2012 financial statements were reclassified to conform to the FY 2013 financial statement presentation requirements and include changes in the presentation of the Consolidated Balance Sheet, Consolidated Statement of Changes in Net Position, and the Combined Statement of Budgetary Resources in accordance with the requirements of OMB Circular No. A-136, and the implementation of Federal Accounting Standards Advisory Board (FASAB) Statement of Federal Financial Accounting Standards (SFFAS) No. 43, "Funds from Dedicated Collections: Amending Statement of Federal Financial Accounting Standards 27, Identifying and Reporting Earmarked Funds." SFFAS No. 43 amended, among other things, the definition, terminology, presentation, and disclosure of Funds from Dedicated Collections (formerly called Earmarked Funds). In addition, FY 2012 amounts reported on the Consolidated Statement of Net Costs were reclassified to conform with the FY 2013 presentation by strategic goal. The reclassifications had no effect on total assets, liabilities, net position, net cost or budgetary resources as previously reported.

(2) Fund Balance with Treasury

The Department of the Treasury (Treasury) performs cash management activities for all federal agencies. The net activity represents Fund Balance with Treasury. The Fund Balance with Treasury represents the right of the EEOC to draw down funds from Treasury for expenses and liabilities. Fund Balance with Treasury by fund type as of September 30, 2013 and 2012 consists of the following:

FY 2013 FY 2012
Fund Type
Revolving funds $ 3,087,605 $ 2,352,769
Appropriated funds 52,482,977 51,584,138
Other fund types 28,369 56,163
Totals $ 55,598,951 $ 53,993,070

The status of the fund balance is classified as unobligated available, unobligated unavailable, or obligated. Unobligated funds, depending on budget authority, are generally available for new obligations in the current year of operations. The unavailable amounts are those appropriated in prior FYs, which are not available to fund new obligations. The obligated, but not yet disbursed, balance represents amounts designated for payment of goods and services ordered but not yet received, or goods and services received, but for which payment has not yet been made.

The Fund Balance with Treasury includes items for which budgetary resources are not recorded, such as deposit funds. These funds are shown in the table below as a Non-budgetary Fund Balance with Treasury.

The undelivered orders at the end of the period consist of $23,596,864 and $18,677,191 for FY 2013 and FY 2012, respectively.

Annual appropriation balances returned to Treasury along with balances classified as miscellaneous receipts are not included in EEOC's fund balance presented on its balance sheet. For FYs ended September 30, 2013 and 2012, funds in closed accounts of $2,590,877 and $2,852,057 were returned to Treasury. For FYs ended September 30, 2013 and 2012, miscellaneous receipts of $111,798 and $96,950 were returned to Treasury.

Status of Fund Balance with Treasury as of September 30, 2013 and 2012 consists of the following:

FY 2013 FY 2012
Status of Funds
Unobligated balance:
Available $ 2,090,459 $ 594,052
Unavailable 9,414,513 10,874,449
Obligated balance not yet disbursed 44,065,610 42,468,406
Non-budgetary Fund Balance with Treasury 28,369 56,163
Totals $ 55,598,951 $ 53,993,070

(3) Accounts Receivable, Net

Intra-governmental accounts receivable due from federal agencies arise from the sale of services to other federal agencies. This sale of services generally reduces the duplication of effort within the federal government resulting in a lower cost of federal programs and services. While all receivables from federal agencies are considered collectible, an allowance for doubtful accounts is sometimes used to recognize the occasional billing dispute.

Accounts receivable due to the EEOC from the public arise from payroll debts and revolving fund education, training and technical assistance provided to public and private entities or state and local agencies. An analysis of accounts receivable is performed to determine collectability and an appropriate allowance for uncollectible receivables is recorded. Accounts receivable as of September 30, 2013 and 2012 are as follows:

FY 2013 FY 2012
Intra-governmental:
Accounts receivable (see detail below) $ 50,375 $ 129,952
Allowance for uncollectible receivables - -
Totals $ 50,375 $ 129,952
FY 2013 FY 2012
With the public:
Accounts receivable $ 315,602 $ 504,405
Allowance for uncollectible receivables (179,008) (119,218)
Totals $ 136,594 $ 385,187

Amounts due from various federal agencies are for accounts receivable as of September 30, 2013 and 2012. These are related to registered participants' training fees due to the revolving fund and appropriated interagency agreements as shown in the table below:


FY 2013 FY 2012
Agency
Department of Homeland Security $ 7,375 $ 4,874
Consumer Product Safety Commission 7,000 -
Defense Agencies 6,635 6,810
Department of State 6,174 9,889
Judiciary 5,850 8,082
Department of Agriculture 4,409 -
Department of Health and Human Services 2,836 -
Central Intelligence Agency 1,949 -
General Services Administration 1,899 1,700
Department of the Interior 1,700 2,550
U.S. Treasury's General Fund 1,150 -
Department of Energy 975 975
Department of the Navy 850 61,775
Department of Labor 698 2,792
Department of Homeland Security 600 -
Department of the Treasury 275 -
Office of Special Counsel - 19,450
Department of Transportation - 4,875
Department of Education - 4,135
Department of Justice - 1,095
Other Independent Agencies - 950
Totals $ 50,375 $ 129,952

(4) Property, Plant and Equipment, Net

Property, plant and equipment consist of that property which is used in operations and consumed over time. The following tables summarize cost and accumulated depreciation of property, plant and equipment.

As of September 30, 2013 Cost Accumulated
Depreciation
Net Book Value
Equipment $ 908,432 $ (875,881) $ 32,551
Capital leases 193,910 (193,910) -
Internal use software 4,134,204 (4,134,204) -
Leasehold improvements 11,772,261 (5,971,445) 5,800,816
Totals $ 17,008,807 $ (11,175,440) $ 5,833,367
As of September 30, 2012 Cost Accumulated
Depreciation
Net Book Value
Equipment $ 908,432 $ (858,772) $ 49,660
Capital leases 193,910 (193,910) -
Internal use software 4,134,204 (4,134,204) -
Leasehold improvements 11,772,261 (4,867,853) 6,904,408
Totals $ 17,008,807 $ (10,054,739) $ 6,954,068

Depreciation expense for the periods ended September 30, 2013 and 2012 is:

FY 2013 FY 2012
$ 1,120,701 $ 1,174,726

(5) Non-Entity Assets

The EEOC has $266 of net receivables to collect on behalf of the U.S. Treasury as of September 30, 2013, and $8,384 of net receivables to collect on behalf of the U.S. Treasury as of September 30, 2012.


(6) Liabilities Owed to Other Federal Agencies

As of September 30, 2013 and 2012, the following amounts were owed to other federal agencies:

Agency: FY 2013 FY 2012
General Services Administration $ 757,887 $ 691,049
Department of Transportation 443,633 -
Department of the Interior 61,093 112,847
Department of Labor 23,026 23,026
Department of Homeland Security 16,808 6,745
Department of Justice 7,625 -
Department of Health and Human Services 2,779 2,348
Office of Personnel Management 1,810 -
National Archives and Records 450 10,000
Government Printing Office - 25,415
U.S. Army Corps of Engineers (25) (213)
Environmental Protection Agency (6,044) -
Totals $ 1,309,042 $ 871,217

(7) Liabilities Not Covered by Budgetary Resources

Liabilities not covered by budgetary resources represent amounts owed in excess of available congressionally appropriated funds or other amounts.

Liabilities not covered by budgetary resources as of September 30, 2013 and 2012 are shown in the following table:

FY 2013 FY 2012
Intra-governmental:
Worker's compensation liability $ 2,802,436 $ 2,794,487
Total intragovernmental 2,802,436 2,794,487
Accrued annual leave 18,765,203 18,698,273
Future worker's compensation liability 13,254,476 13,459,331
Total liabilities not covered by budgetary resources 34,822,115 34,952,091
Total liabilities covered by budgetary resources 20,714,958 24,359,002
Total Liabilities $ 55,537,073 $ 59,311,093

(8) Liabilities Analysis

Current and non-current liabilities as of September 30, 2013 are shown in the following table:

Current Non-Current Totals
Covered by Budgetary Resources:
Intragovernmental:
Accounts payable $ 1,309,042 $ - $ 1,309,042
Employer payroll taxes 954,580 - 954,580
Due to Treasury - - -
Other liabilities 266 - 266
Total Intragovernmental 2,263,888 - 2,263,888
Accounts payable 13,344,911 - 13,344,911
Accrued payroll 4,653,544 - 4,653,544
Employer payroll taxes 311,908 - 311,908
Amounts collected for restitution 28,369 - 28,369
Deferred revenue 112,338 - 112,338
Other liabilities - - -
Liabilities Covered by Budgetary Resources 20,714,958 - 20,714,958
Liabilities Not Covered by Budgetary Resources:
Intragovernmental:
Worker's compensation liability 1,575,179 1,227,257 2,802,436
Total Intragovernmental 1,575179 1,227,257 2,802,436
Accrued annual leave 18,765,203 - 18,765,203
Future worker's compensation liability - 13,254,476 13,254,476
Capital lease liability - - -
Liabilities Not Covered by Budgetary
Resources
20,340,382 14,481,733 34,822,115
Total Liabilities $ 41,055,340 $ 14,481,733 $ 55,537,073

Current and non-current liabilities as of September 30, 2012 are shown in the following table:

Current Non-Current Totals
Covered by Budgetary Resources:
Intragovernmental:
Accounts payable $ 871,217 $ - $ 871,217
Employer payroll taxes 1,070,691 - 1,070,691
Due to Treasury - - -
Other liabilities 8,384 - 8,384
Total Intragovernmental 1,950,292 - 1,950,292
Accounts payable 18,088,604 - 18,088,604
Accrued payroll 4,106,517 - 4,106,517
Employer payroll taxes - - -
Amounts collected for restitution 56,163 - 56,163
Deferred revenue 117,163 - 117,163
Other liabilities 40,263 - 40,263
Liabilities Covered by Budgetary Resources 24,359,002 - 24,359,002
Liabilities Not Covered by Budgetary
Resources
:
Intragovernmental:
Worker's compensation liability 1,675,668 1,118,819 2,794,487
Total Intragovernmental 1,675,668 1,118,819 2,794,487
Accrued annual leave 18,698,273 - 18,698,273
Future worker's compensation liability 13,459,331 13,459,331
Capital lease liability - - -
Liabilities Not Covered by Budgetary
Resources
20,373,941 14,578,150 34,952,091
Total Liabilities $ 44,732,943 $ 14,578,150 $ 59,311,093

(9) Contingent Liabilities

The EEOC is a party to various administrative proceedings, legal actions and claims that may eventually result in the payment of substantial monetary claims to third parties, or in the reallocation of material budgetary resources. Any financially unfavorable administrative or court decision could be funded from either the various claims to judgment funds maintained by the U.S. Treasury or paid by the EEOC

In FY 2013 and FY 2012, there is one claim for which it is probable that damages will be paid. This pending claim is for overtime to which employees claim they were entitled. An arbitrator has determined that the EEOC has some liability in this matter but the amount has not yet been determined and is unknown as of the date of the financial statements. In the opinion of the EEOC's management, the ultimate resolution of this pending litigation will not have a material effect on the EEOC's financial statements.

(10) Leases

Operating leases

The EEOC has several cancelable operating leases with the General Services Administration (GSA), for office space which do not have a stated expiration. The GSA charges rent that is intended to approximate commercial rental rates. Rental expenses for operating leases during FYs 2013 and 2012 are $27,947,290 and $27,888,290, respectively. The EEOC does not have any noncancellable operating leases with terms longer than one year.

(11) Earned Revenue

The EEOC charges fees to offset costs for education, training and technical assistance. These services are provided to other federal agencies, the public, and State and local agencies, as requested. In the chart below, the fees from services does not include intra-agency transactions. The Commission also has a small amount of reimbursable revenue from contracts with other federal agencies to provide on-site personnel. Revenue earned by the Commission as of September 30, 2013 and 2012 was as follows:

FY 2013 FY 2012
Reimbursable revenue $ 209,435 $ 169,645
Fees from services 3,207,053 3,425,300
Total Revenue $ 3,416,488 $ 3,594,945

(12) Appropriations Received

Warrants received by the Commission as of September 30, 2013 and 2012 are:

FY 2013 FY 2012
$ 370,000,000 $ 360,000,000

The EEOC received the following warrant reductions for FYs 2013 and 2012:

FY 2013 FY 2012
Across the board reductions $ 7,671,010 $ -
Sequestration Reduction 18,110,160 -
Total warrant reductions $ 25,781,170 $ -

(13) Obligations Incurred

Direct and Reimbursable obligations, by apportionment category, incurred as of September 30, 2013 and 2012 are:

Obligations FY 2013 FY 2012
Direct A $ 318,288,246 $ 334,164,524
Direct B 27,465,370 29,590,160
Subtotal direct obligations $ 345,753,616 $ 363,754,684
Reimbursable A 3,303,692 4,893,242
Total Obligations $ 349,057,308 $ 368,647,926

(14) Funds from Dedicated Collections (Permanent Indefinite Appropriations)

The Commission has permanent, indefinite appropriations from fees earned from services provided to the public and to other federal agencies. These fees are charged to offset costs for education, training and technical assistance provided through the revolving fund. This fund is a fund from dedicated collections and is accounted for separately from the other funds of the Commission. The fund is used to pay the cost (including administrative and personnel expenses) of providing education, technical assistance and training by the Commission. Revenue is recognized as earned when the services have been rendered by the EEOC.

Balance Sheet as of September 30, 2013 and 2012 FY 2013 FY 2012
ASSETS
Fund Balance with Treasury $ 3,087,605 $ 2,352,771
Accounts receivable (net of allowance) 123,173 247,364
Advances and prepaid expenses 47,068 47,944
TOTAL ASSETS $ 3,257,846 $ 2,648,079
LIABILITIES
Accounts payable 28,156 38,246
Deferred revenue 112,338 117,163
TOTAL LIABILITIES $ 140,494 $ 155,409
NET POSITION
Cumulative results of operations 3,117,352 2,492,669
TOTAL LIABILITIES AND NET POSITION $ 3,257,846 $ 2,648,078
Statement of Net Cost for the Periods Ended
September 30, 2013 and 2012
FY 2013 FY 2012
Program costs $ 2,582,370 $ 4,266,062
Revenue (3,207,053) (3,425,300)
Net Cost (Revenue) $ (624,683) $ 840,762

(15) Imputed Financing

OPM pays pension and other future retirement benefits on behalf of federal agencies for federal employees. OPM provides rates for recording the estimated cost of pension and other future retirement benefits paid by OPM on behalf of federal agencies. The costs of these benefits are reflected as imputed financing in the consolidated financial statements. The U.S. Treasury's Judgment Fund paid certain judgments on behalf of the EEOC in FY 2012. Expenses of the EEOC paid or to be paid by other federal agencies at September 30, 2013 and 2012 consisted of:

FY 2013 FY 2012
Judgment Fund $ - $ 77,333
Office of Personnel Management:
Pension expenses 9,341,286 8,712,626
Federal employees health benefits (FEHB) 9,702,705 11,635,919
Federal employees group life insurance (FEGLI) 32,584 34,436
Total Imputed Financing $ 19,076,575 $ 20,460,314

(16) Gross Program Costs and Exchange Revenue:

The Consolidated Statements of Net Cost report the EEOC's gross costs less earned revenues to arrive at net cost of operations for each FY presented. The table below shows the value of exchange transactions between the EEOC and other federal entities as well as with the public. Intragovernmental and nongovernmental costs and revenues for FY 2013 and FY 2012 consisted of:

FY 2013 FY 2012
Costs
Office of Personnel Management $ 55,781,333 $ 58,337,749
General Services Administration 32,049,002 34,189,729
U.S. Treasury's General Fund* 11,890,407 12,241,478
Department of Homeland Security 2,754,017 2,787,814
Department of the Interior 1,482,266 439,962
Department of Labor 1,461,275 1,189,811
Department of Transportation 655,669 82,754
Department of Health and Human Services 388,272 590,316
National Archives and Records Administration 76,390 80,279
Environmental Protection Agency 61,909 71,523
Other Independent Agencies 42,403 -
Department of Commerce 40,500 63,250
Library of Congress 38,189 50,424
Department of the Treasury 19,450 58,681
Department of Justice 7,625 (518)
National Labor Relations Board 3,114 4,174
National Science Foundation 1,815 256,719
Department of Agriculture 1,340 4,971
U.S. Army Corps of Engineers 213 2,125
Government Printing Office - 65,415
Federal Retirement Thrift Investment Board - 28,145
Intragovernmental costs 106,755,189 110,544,801
Public costs 253,448,282 272,577,469
Total Program Costs $ 360,203,471 $ 383,122,270

*Funds paid to the U.S. Treasury's General Fund account for employer benefit costs for benefit programs administered by the Social Security Administration.

FY 2013 FY 2012
Revenue
Defense Agencies $ 177,775 $ 413,789
Department of the Interior 147,968 74,172
Department of Homeland Security 143,846 132,636
Social Security Administration 108,385 31,047
Department of Labor 63,057 80,091
Department of the Treasury 50,367 27,484
Department of Energy 50,043 90,210
Department of Health and Human Services 49,233 53,563
Department of Veterans Affairs 46,111 47,837
Office of Personnel Management 41,593 25,112
Department of Agriculture 40,179 106,192
Other Independent Agencies 38,863 268,607
Department of Transportation 35,194 39,171
Department of the Army 33,009 -
Environmental Protection Agency 32,168 5,817
Department of the Air Force 26,061 -
Department of Justice 23,795 65,700
Central Intelligence Agency 23,276 -
National Aeronautics and Space Administration 19,720 3,800
Department of the Navy 18,812 -
Government Printing Office 15,448 1,564
Department of State 11,786 6,951
General Services Administration 10,368 2,786
U.S. Postal Service 10,349 17,107
Tennessee Valley Authority 9,671 13,475
Consumer Product Safety Commission 9,100 -
Department of Commerce 8,615 13,465
Department of Housing and Urban Development 7,872 17,535
Equal Employment Opportunity Commission 7,736 -
Securities & Exchange Commission 7,640 -
Executive Office of the President 5,788 -
Federal Deposit Insurance Corporation 5,340 -
International Trade Commission 3,645 -
Department of Education 3,176 6,336
Nuclear Regulatory Commission 3,130 -
Railroad Retirement Board 2,925 -
Smithsonian Institution 2,789 -
Selective Service System 2,000 -
Federal Mediation and Conciliation Services 1,950 -
National Science Foundation 1,804 -
U.S. Agency for International Development 1,644 -
Office of Special Counsel 975 -
U.S. Tax Court 975 -
Federal Maritime Commission 600 -
Federal Trade Commission 600 -
Merit Systems Protection Board 600 -
Armed Forces Retirement Home 319 -
Government Accountability Office 300 -
National Foundation on the Arts and the Humanities 300 -
Architect of the Capital 175 -
Judiciary - 7,500
U.S. Treasury General Fund (13,500) -
Intragovernmental earned revenue 1,293,575 1,551,947
Public earned revenue 2,122,913 2,042,998
Total Program Earned Revenue (Note 11) 3,416,488 3,594,945
Net Cost of Operations $ 356,786,983 $ 379,527,325

(17) Explanation of Differences between the Statement of Budgetary Resources and the Budget of the United States Government

Information from the President's Budget and the Combined Statement of Budgetary Resources for the period ended September 30, 2012 is shown in the following tables. A reconciliation is not presented for the period ended September 30, 2013, since the President's Budget for this period has not been issued by Congress.

The differences between the President's 2012 budget and the Combined Statement of Budgetary Resources for 2012 are shown below:

Dollars in millions Budgetary Resources Obligations Outlays
As reported on the Combined Statement of Budgetary Resources for FY 2012 $ 380 $ 369 $ 359
(a) Revolving fund collections not reported in the budget (4) 4
(b) Obligations in the revolving fund (no-year fund) not included in the President's budget (5) (5)
(c) Carry-forwards and recoveries in the revolving fund (no-year fund) not included in the President's Budget (2)
(d) Carry-forwards and recoveries in expired funds (18)
(e) Obligations in expired funds (4)
(f) Canceled appropriations 3
(g) Rounding differences 1 1
As reported in the President's Budget for FY 2012 $ 360 $ 360 $ 359

(a) The EEOC's revolving fund provides training and charges fees to offset the cost. The collections are reported on the Combined Statement of Budgetary Resources as a part of total budgetary resources, but are not reported in the President's Budget.

(b) The obligations incurred by the revolving fund and no year fund are not a part of the President's Budget but are included in total obligations incurred in the Combined Statement of Budgetary Resources.

(c) Revolving funds and no-year funds have carry-overs of unobligated balances and recoveries of obligations that are included in total resources on the Combined Statement of Budgetary Resources, but are not included in the President's Budget.

(d) Expired funds have carry-overs of unobligated balances and recoveries of obligations that are included in total resources on the Combined Statement of Budgetary Resources until they are canceled, but are not included in the President's Budget.

(e) New obligations in expired funds are shown as a part of obligations incurred on the Combined Statement of Budgetary Resources, but are not included in the President's Budget.

(f) Canceled appropriations are not shown in the President's Budget, but are reported as a reduction to resources in the Combined Statement of Budgetary Resources.

(g) Difference due to rounding by millions.

(18) Reconciliation of Net Cost of Operations to Budget

The objective of the information shown below is to provide an explanation of the differences between budgetary and financial (proprietary) accounting. This is accomplished by means of a reconciliation of budgetary obligations and non-budgetary resources available to the EEOC with its net cost of operations.

FY 2013 FY 2012
Resources Used to Finance Activities
Current year gross obligations $ 349,057,308 $ 368,647,926
Budgetary Resources from Offsetting Collections
Spending authority from offsetting collections
Actual offsetting collections (3,734,121) (4,847,929)
Change in receivables from Federal sources 232,564 74,143
Recoveries of prior year unpaid obligations (3,964,269) (3,803,692)
Other Financing Resources
Imputed financing sources 19,076,575 20,460,314
Total Resources Used to Finance Activity $ 360,668,057 $ 380,530,762
Resources Used to Finance Items Not Part of the Net Cost of Operations
Budgetary Obligations and Resources not in the Net Cost of Operations
Change in unfilled customer orders (4,827) 46,559
Change in undelivered orders (4,919,673) (823,064)
Current year capitalized purchases - -
Change in deferred revenue 4,827 (46,559)
Change in nonfederal receivables (94,872) -
Change in donated revenue 5,261 -
Components of the Net Cost of Operations which do not Generate or Use Resources in the Reporting Period Revenues without Current Year Budgetary Effect
Other financing sources not in the budget (19,076,575) (20,460,314)
Costs without Current Year Budgetary Effect
Depreciation and amortization 1,120,701 1,174,726
Disposition of assets -
Future funded expenses 74,879 (1,052,231)
Imputed costs 19,076,575 20,460,314
Bad debt expense 52,913 (29,972)
Other expenses not requiring budgetary resources (120,283) (272,896)
Net Cost of Operations $ 356,786,983 $ 379,527,325

(19) Improper Payments Elimination and Recovery Act

The Improper Payments Information Act (IPIA) of 2002, as amended by the Improper Payments Elimination and Recovery Act (IPERA) of 2010, requires agencies to review all programs and activities they administer and identify those which may be susceptible to significant erroneous payments. For all programs and activities in which the risk of erroneous payments is significant, agencies are to estimate the annual amount of erroneous payments made in those programs. OMB guidance provided in Circular No. A-136 and Appendix C of Circular No. A-123 requires detailed information related to EEOC's Improper Payments Elimination Program, which is provided below.

In FY 2013, the EEOC reviewed the programs and activities it administers to identify those which may be susceptible to significant erroneous payments. The risk assessment included 1) consideration of certain risk factors that are likely to contribute to a susceptibility to significant improper payments, and 2) transaction testing on a sample basis of payments made during FY 2013. The risk assess­ment was performed for the following programs:

  • Vendor payments (includes a separate review of travel payments).

Based on the results of transaction testing applied to a sample of payments, consideration of risk factors, and reliance on the internal controls in place over the payment process, the EEOC determined that none of its programs and activities are susceptible to significant improper payments at or above the threshold levels set by OMB. Significant erro­neous payments are defined as annual erroneous payments in the program exceeding both $10 million and 2.5 percent or $100 million of total annual program payments. In accordance with Appendix C of Circular A-123, the EEOC is not required to determine a statistically valid estimate of erroneous payments or develop a corrective action plan if the program is not susceptible to significant improper payments.

In FY 2013, EEOC's testing of its payments resulted in improper payment percentages that were well below one-half percent and less than $30,000.

Since the level of risk of erroneous payment is determined to be low and baseline estimates have been established, the EEOC is only required to conduct a formal risk assessment every three years unless the program experiences a significant change. The EEOC will conduct a follow on review in FY 2014 of its programs and activities to determine whether the programs have experienced any unexpected changes. If so, the EEOC will re-assess the programs' risk susceptibility and make a statistically valid estimate of erroneous payments for any programs determined to be susceptible to significant erroneous payments.

Recapture of Improper Payments

The EEOC does not administer grant, benefit or loan programs. Implementation of recapture auditing, if determined to be cost-effective, would apply to vendor payments. Because the definition of payment in the new IPERA legislation means any payment or transfer of Federal funds to any non-Federal person or entity, the EEOC is not required to review, and has not reviewed, intra-governmental transac­tions and payments to employees.

The EEOC has determined that implementing a payment recapture audit program for vendor payments is not cost-effective. That is, the benefits or recap­tured amounts associated with implementing and overseeing the program do not exceed the costs, including staff time and resources, or payments to a contractor for implementation, of a payment recapture audit program. In making this deter­mination, the EEOC considered its low improper payment rate based on testing conducted in FY 2013. The EEOC also considered whether sophisticated software and other cost-efficient matching techniques could be used to identify significant overpayments at a low cost per overpayment, or if labor intensive manual reviews of paper documentation would be required. In addition, the EEOC considered the availability of tools to efficiently perform the payment recapture audit and minimize payment recapture audit costs, and determined such tools to not be cost effective.

The EEOC will continue to monitor its improper payments across all programs and activities it administers and assess whether implementing payment recapture audits for each program is cost-effective. If through future risk assessments the agency determines a program is susceptible to significant improper payments and implementing a payment recapture program may be cost-beneficial, the EEOC will implement a pilot payment recapture audit to measure the likelihood of cost-effective payment recapture audits on a larger scale.

Even though the EEOC has determined that implementing a payment recapture audit program for its programs is not cost-effective, the agency strives to recover any overpay­ments identified through other sources, such as payments identified through statistical samples conducted under the IPIA. The amounts identified and recovered, by program, are shown below.

Overpayments Recaptured (in dollars)
Source Amount Identified
FY 2013
Amount Recovered
FY 2013
Cumulative
Identified
Cumulative
Recovered
Travel payments $ 3,938 $ 2,794 $ 3,938 $ 2,794
Vendor payments $ - $ - $ - $ -