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FY 2002 Annual financial Statements U.S. Department of Justice Notes to the Principal Financial Statements (Dollars in Thousands) Note 9. Other Assets
Other represents funds in the amount of $100,000 disbursed from and $56,255 deposited into the Treasury General Fund during FY 2002. The FY 2002 disbursement from the Treasury General Fund resulted because during FY 2000, Debt Collection Management was instructed to deposit the proceeds from a case settlement into the Treasury General Fund. A subsequent change in application document required the distribution of the funds to another Federal Agency instead of the Treasury General Fund. Note 10. Non-Entity Assets
Note 11. Debt During 1988, Congress granted FPI borrowing authority pursuant to Public Law 100-690. Under this authority, FPI borrowed $20,000 from the U.S. Treasury with an extended lump-sum maturity date of September 30, 2008. The funds received under this loan were internally restricted for use in the construction of factories and the purchase of equipment. The loan accrues interest, payable March 31 and September 30 of each year, at 5.5 percent (the rate equivalent to the yield of U.S. Treasury obligations of comparable maturities which existed on the date of the loan extension). Accrued interest payable under the loan is either fully or partially offset to the extent the non-interest bearing cash deposits are maintained with the U.S. Treasury. In this regard, there is no accrual of interest unless the cash balance, on deposit with the U.S. Treasury, falls below $20,000. When this occurs, interest is calculated on the difference between the loan amount ($20,000) and the cash balance. The loan agreement provides for certain restrictive covenants and a prepayment penalty for debt retirements prior to FY 2008. Additionally, the agreement limits authorized borrowings in an aggregate amount not to exceed 25 percent of the FPI’s net equity. There were no net interest expenses for the years ended September 30, 2002 and 2001. Note 12. Environmental Cleanup CostsThe FIST-5 (Fuel In Storage Tank 5-Year) Program is a nation-wide effort begun in FY 1995 to upgrade and optimize automotive and aviation bulk fueling capabilities. The Department monitors the environmental cleanup and any required remediation for all its known underground storage tanks. The original FIST-5 proposal indicated that the program would develop and identify new projects as time passes. During the course of the 5-year effort, the FIST-5 program has grown from 41 projects to 91 individual projects. Completed projects total 78, with the remaining 13 projects scheduled for completion over the next 12 -18 months. The total cumulative estimated remediation costs decreased from $21,200 in FY 2000 to $18,800 in FY 2001 and remained $18,800 for FY 2002. Of the $18,800, $15,867 has been disbursed. The remaining $2,933 has been accrued and is included in the environmental and disposal liability, of which $2,698 is covered and $235 is not covered by budgetary resources at September 30, 2002. All the Department underground storage tanks have been certified in compliance with the new, more stringent Environmental Protection Agency (EPA) regulations that took effect on December 22, 1999. The DEA owns a section of land located in Chicago, Illinois. Soil samples taken from this land, after removal of underground storage tanks indicated levels of benzene, ethyl benzene, and lead that were above soil remediation standards. Phase I of an environmental site assessment was conducted on January 15, 2002, for this site. The assessment revealed evidence of a potential environmental condition and recommended the study be extended to determine the extent of the contamination. Phase II of the environmental site assessment is scheduled to begin in FY 2003. At this time, needs for remediation activities have not been resolved nor have potential cleanup costs been determined. Although DEA may have a liability to cleanup this land, costs can not be estimated at this time. Therefore, no costs are reflected in the financial statements for this environmental cleanup project. Note 13. LeasesCapital leases include a Federal Detention Center (25 year lease term) and an airplane hangar (20 year lease term) in Oklahoma City, Oklahoma and a training facility (16 year lease term) in Pineville, Louisiana.
The majority of space occupied by the Department is leased from the General Services Administration (GSA). The space is assigned to the Department by the GSA based on the Department’s square footage requirements. The rent charged to the Department is intended to approximate commercial rates. Most of these leases may be terminated without incurring termination charges, however, it is anticipated that the Department will continue to lease space from the GSA in future years. Total future operating lease payments of $10,972,903 include GSA leases. Operating leases have been established for multiple years. Many of the operating leases that expire over an extended period of time include an option to purchase the equipment at the current fair market value, or to renew the lease for additional periods. Approximately $10,801,610 was for office space, parking facilities, and warehouses, and the remainder for office equipment and vehicles. Vehicles are leased from vendors for 12 months or less. Note 14. Other Liabilities
Intragovernmental other liabilities primarily represent civil debt collections where the Treasury General Fund is designated as the recipient of either a portion of a collection or the entire amount of a collection. Note 15. Liabilities Not Covered by Budgetary Resources
Generally, liabilities not covered by budgetary resources are liabilities for which Congressional action is needed before budgetary resources can be provided. However, some of the liabilities not covered by budgetary resources do not require appropriations and will be liquidated by the assets of these entities. They include civil and criminal debt collections and revolving fund operations. Note 16. Contingencies and CommitmentsThe Department is party to various administrative proceedings, legal actions, and claims, including environmental damage claims, equal opportunity matters, and contractual bid protests. The balance sheet includes an estimated liability for those legal actions where adverse decisions are considered "probable" by the Chief Counsel. Management has determined that it is probable that some of these proceedings and actions will result in the incurrence of liabilities, and the amounts are reasonably estimable. The estimated liability for these cases for FYs 2002 and 2001 were $142,996 and $73,909, respectively and recorded in the financial statements. There also are legal actions pending where adverse decisions are considered to be reasonably possible. The range for potential loss is undetermined at this time. Note 17. Future Funding RequirementsThe total liabilities not covered by budgetary resources presented in Note 15 for FYs 2002 and 2001 of $2,554,359 and $2,461,862, respectively do not equal the Components of net cost of operations requiring or generating resources in future periods on the Statement of Financing for FYs 2002 and 2001 of $93,947 and $250,725, respectively. Total components requiring or generating resources in future periods on the Statement of Financing include only current unfunded expense amounts and increases in exchange revenue receivable from the public, while the unfunded liabilities included on the Balance Sheet represent both current and prior year unfunded expense amounts including the unfunded annual and compensatory leave balances for FYs 2002 and 2001 of $628,818 and $590,331, respectively. The actuarial/accrued FECA liability for FYs 2002 and 2001 were $1,421,136 and $1,394,744, respectively. Note 18. Imputed Financing SourceImputed financing recognizes actual cost of future benefits, the Federal Employees Health Benefits Program (FEHB), the Federal Employees Group Life Insurance Program (FEGLI), and the Pension that are paid by other Federal entities. The Treasury Judgment Fund was established by the Congress and funded at 31 U.S.C. 1304 to pay in whole or in part the court judgments and settlement agreements negotiated by the Department on behalf of agencies, as well as certain types of administrative awards. Interpretation of SFFAS No. 2, "Accounting for Treasury Judgment Fund Transactions,” requires agencies to recognize liabilities and expenses when unfavorable litigation outcomes are probable and the amount can be estimated and will be paid by the Treasury Judgment Fund. SFFAS No. 5, “Accounting for Liabilities of the Federal Government,” requires that employing agencies recognize the cost of pensions and other retirement benefits during their employees active years of service. SFFAS No. 5 requires OPM to provide cost factors necessary to calculate cost. OPM actuaries calculate the value of pension benefits expected to be paid in the future, and then determine the total funds to be contributed by and for covered employees. For FERS and CSRS employees, OPM calculated that 11.5 (24.6 law enforcement) percent and 24.2 (40.0 law enforcement) percent respectively of each employee’s salary would be sufficient to fund these projected pension benefits. The cost to be paid by other agencies is the total calculated future costs, less employee and employer contributions. In addition, other retirement benefits which include the Federal Employees Health Benefits Program (FEHB) and the Federal Employees Group Life Insurance Program (FEGLI) that are paid by other Federal entities must also be disclosed. Imputed financing sources:
Note 19. Restatements and Reclassifications In accordance with SFFAS No. 21, “Reporting Corrections of Errors and Changes in Accounting Principles” the Department’s FY 2001 financial statements were restated as follows:
In FY 2001, the INS presented a consolidated Statement of Budgetary Resources (SBR), where their Fee Accounts and Salaries & Expense Accounts were combined and intra-fund reimbursement transactions were eliminated. The INS SBR was restated to reflect the Fee Accounts as a separate fund type from the Salaries and Expense Accounts. The restatement increased Total Budgetary Resources and Status of Resources by $1,716,662. In addition, amounts appropriated to INS by Treasury related to H1-B custodial collections were also adjusted to be reflected as offsetting receipts. The USMS also presented a consolidated SBR in FY 2001 and accordance with OMB Bulletin No. 01-09, “Form and Content of Agency Financial Statements,” restated the SBR to a combined presentation. As a result of the restatements discussed above, similar restatements were made to the Statement of Financing to account for these errors. The Department has fully implemented the provisions of OMB Bulletin No. 01-09 that became effective in FY 2002 and substantially changed the presentation of the Statement of Changes in Net Position and the SBR. As a result, the Department’s FY 2001 SBR, as discussed below, was reclassified to account for changes in financial presentation. In FY 2001, the OBD’s Radiation Exposure Trust Fund received $126,641 in appropriations to pay eligible claimants who suffered certain injuries during the 1950s as a result of atmospheric nuclear tests and radiation in underground uranium mines. The appropriation was originally credited to an annual fund but was then transferred to a no-year expenditure fund to be disbursed to eligible claimants. In accordance with OMB Bulletin No. 01-09, the OBD’s reclassified $126,617 in transfers to the following SBR line items: Appropriations Received, Obligations Incurred, Outlays, and Offsetting Receipts. Although the reclassification increased the OBD’s FY 2001 budgetary resources and obligations incurred by $126,617, it had no net effect on the total resources provided or used to pay claims during FY 2001. Additionally, a change in accounting treatment related to OJP transfers to the Department of Health and Human Services (HHS) is reflected in the change from the FY 2001 unobligated balance ending to the FY 2002 unobligated balance beginning. Note 20. Consolidated Gross Cost and Earned Revenue by Budget Functional Classification
Debt Collection Management (DCM) is responsible for implementing the provisions of the Federal Debt Recovery Act of 1986, which authorizes the Attorney General to contract with private counsel to help the U.S. Attorneys collect delinquent Federal civil debts. Since FY 1994, the Attorney General has been authorized to credit the WCF up to 3 percent of the total civil cash collections to be used for paying the costs of "processing and tracking" such litigation. DCM is responsible for the operation of the Nationwide Central Intake Facility, the private counsel pilot project, and other projects funded by the 3 percent of the civil debt collections. The Department, through the INS, is also responsible for collections for other Federal agencies that are deposited in the U.S. Treasury. These collections are reported on the Statement of Custodial Activity. The largest of these collections in the Custodial Statement relates to the $1,000 fee paid by employers sponsoring nonimmigrant petitioners for employment authorization in accordance with Section 214(c)(9) of the INA. In accordance with the enacting legislation, these monies are deposited by the INS directly to the Nonimmigrant Petitioner Account in the General Fund of the US Treasury who distributes these collections (via Treasury warrant) to the Department of Labor and the National Science Foundation with four percent transferred back to the INS. In general, SFFAS No. 7, “Accounting for Revenue and Other Financing Sources” requires that agencies collecting exchange revenue report such revenue on the Statement of Net Cost regardless of whether the entity retains the revenue for its own use or transfers to others. SFFAS No. 7 does, however, provide for an alternative treatment in certain exceptional circumstances such as when the reporting entity recognizes virtually no costs in connection with collecting the revenue. In such cases where the entity collects these amounts on behalf of others, entities are to report such exchange revenue as custodial activity. The Department believes the H1-B nonimmigrant petitioner collections meet the requirement of the exception to the general standard, and have reported these collections as custodial activity. To ensure that INS is reporting the H1-B collection in accordance with the accounting standards, an interpretation is being requested from the FASAB. Should FASAB determine that the INS needs to report this activity differently, the Department will include these collections on the Statement of Net Cost and show the respective transfer out on the Statement of Changes in Net Position. During the periods reported the DEA and INS also collected fines, penalties, and restitution payments that were incidental to their missions. Since these agencies have no statutory authority to use the funds they are transmitted to the Treasury’s General Fund upon receipt. Note 22. Permanent Indefinite AppropriationsA permanent indefinite appropriation is open-ended as to both its period of availability (amount of time the agency has to spend the funds) and its amount. Congress enacted a permanent indefinite appropriation to fund the expenses of Independent Counsel investigations and prosecutions in the 1988 Department of Justice Appropriations Act (P.L. 100-202). Under this appropriation, all necessary costs and expenses incurred in the pursuit of these investigations were funded from amounts available in the Treasury. On June 30, 1999, the Reauthorization Act of 1994 expired. To date there has been no reauthorization; however, several investigations are on going. This account also pays for appointed Special Counsel. Note 23. Statement of Budgetary Resources vs Budget of the United States Government
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