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Office of Justice Programs
Fiscal Year 2000

Report No. 01-22
August 2001
Office of the Inspector General

Notes to the Financial Statements
For the Year Ended September 30, 2000
(In Thousands)

Note 1. Summary of Significant Accounting Policies

  1. Basis of Presentation

    These financial statements have been prepared to report the financial position and the results of operations and changes in net position of the Office of Justice Programs (OJP), as required by The Government Management Reform Act (GMRA) of 1994, (P.L. 103-356), 108 Statue 3515(g) of the United States Code. These financial statements have been prepared from the books and records of OJP in conformity with accounting principles generally accepted in the United States of America and the form and content for entity financial statements specified by the Office of Management and Budget (OMB) Bulletin No. 97-01, Form and Content of Agency Financial Statements, as amended.

  2. Reporting Entity

    The Justice Act of 1984 created OJP to work within established partnership arrangements with federal, state and local agencies and community-based organizations to develop, operate, and evaluate a wide range of criminal and juvenile justice programs. OJP is authorized by Congress to award grants, contracts, cooperative agreements and other assistance authorized by Title I of the Omnibus Crime Control and Safe Street Act of 1968. OJP comprises various bureaus and offices, and is funded by several no year and one year appropriations which include Justice Assistance (JA), Weed and Seed (WS), Public Safety Officers Benefits (PSOB), State and Local Law Enforcement (SLLEA), Juvenile Justice Programs (JJ), and the Violent Crime Reduction Trust Fund (VCRTF).

    In addition, OJP received funds from the Crime Victims Fund (CVF), which is financed by collections of fines, penalty assessments, and bond forfeitures from defendants convicted of Federal crimes. The Fund was established by the Victims of Crime Act of 1984 (P.L. 98-473), as amended by the Children's Justice and Assistance Act of 1986 (P.L. 99-401), and reauthorized by the Anti-Drug Abuse Act of 1988 (P.L. 100-690). Funds are not available for obligation during the year of collection; rather, funds accumulate and are available for obligation in the following year, pursuant to Congressional approval, and for expenditure during the next three years.

  3. Basis of Accounting

    The accompanying financial statements have been prepared on the accrual basis of accounting. Under the accrual method, revenues are recognized when earned and expenses are recognized when a liability is incurred, without regard to the receipt or payment of cash. Transactions are recorded in the general ledger budgetary and proprietary accounts. Budgetary accounting facilitates compliance with legal constraints and controls over the use of federal funds.

  4. Fund Balance with Treasury

    Cash receipts and disbursements are processed by the U.S. Department of the Treasury (Treasury). The fund balance with Treasury is primarily appropriated funds that are available to pay current liabilities and fund authorized purchase commitments. OJP maintains no cash balances outside the U.S. Treasury.

  5. Advances

    Payments in advance of the receipt of goods and services are recorded as advances. These balances primarily consist of funds disbursed to grantees in the Local Law Enforcement Block Grant (LLEBG) and Juvenile Accountability Incentive Block Grant (JAIBG) programs in excess of expenditures made by those grantees.

  6. Property and Equipment

    The General Services Administration (GSA), provides the buildings in which OJP operates and charges rent equivalent to the commercial rental rates for similar properties.

    Acquisitions of property and equipment, with a cost of $25,000 and over, are capitalized and depreciated by OJP, based on historical cost, using the straight-line method over the estimated useful lives of the assets which, for most equipment, is five years. Equipment with an acquisition cost of less than $25,000 is expended when purchased. Equipment consists primarily of computer network components.

    On August 18, 1999, OJP's Center for Domestic Preparedness (CDP) entered into an agreement with the U.S. Army extending the CDP's use of certain facilities at Fort McClellan, Alabama through August 2001. Since 1998, the CDP has operated as a tenant of the U.S. Army and shared training facilities, lodging and dining facilities. In 2000, all operation, maintenance, and facilities support were provided by U.S. Army personnel based on an agreement between the OJP and the U.S. Army.

  7. Accounts Payable

    Accounts payable represent the amount of monies or other resources that are likely to be paid by OJP as a result of a transaction or event that has already occurred. Most of the accounts payable balance consists of the difference between amounts that grantees have expended and amounts reimbursed by OJP.

  8. Advances from Other Federal Agencies

    Advances from other federal agencies represent amounts collected by OJP that have not yet been earned under reimbursable agreements. The majority of reimbursable funding is provided by other DOJ components for services related to the mission of OJP.

  9. Liabilities Not Covered by Budgetary Resources

    No liability can be paid by OJP absent proper budget authority. Liabilities for which an appropriation has not been enacted are therefore classified as liabilities not covered by budgetary resources as there is no certainty that the appropriations will be enacted. Also, liabilities arising from other than contracts can be abrogated by the Government, acting in its sovereign capacity.

  10. Contingencies and Commitments

    OJP is a party in various administrative proceedings, legal actions, and claims brought by or against it. In the opinion of OJP management and legal counsel, the ultimate resolution of these proceedings, actions and claims, will not materially affect the financial position or results of operations of OJP.

  11. Annual, Compensatory, Sick, and Other Leave

    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. Because 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 sources.

    Sick leave and other types of non vested leave are expended as taken.

  12. Revenue

    OJP receives funding needed to support its activities through no-year and one year appropriations that may be used, within statutory limits, for operating and capital expenditures. Appropriations are recognized as revenue at the time related programs or administrative expenses are incurred, except for the purchase of property. Appropriations expended for property and equipment are recognized as revenue when the asset is purchased. Additional revenues are obtained through reimbursements for services performed for other Federal entities.

    Crime Victims Fund revenue, as noted in Note 1.B, is derived from fines, penalty assessments, and bond forfeitures from convicted Federal offenders, not from appropriations. The revenue is recognized when the court cases are settled, regardless of when funds are received.

    Earned revenues represent amounts earned through inter-agency agreements with other Federal entities for which OJP provides grant administration services.

  13. Use of Estimates

    The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reported period. Actual results could differ from those estimates. OJP estimates an expense and liability for unreimbursed grantee expenses.



Note 2. Fund Balance with Treasury

Fund balance with Treasury as of September 30, 2000 consists of:

OJP is statutorily prohibited from obligating more than $500,000 of fiscal year 2000 CVF revenue during fiscal year 2001. OJP received $778,491 in CVF revenues for fiscal year 2000, however $ 278,491 is unavailable for obligation until October 1, 2001.



Note 3. Accounts Receivable

OJP has accounts receivable with other government agencies and the public of which all are deemed to be collectible.


Note 4. Unexpended Appropriation

Unexpended appropriations at September 30, 2000 consists of:

As required by OMB Bulletin No. 97-01, Form and Content of Agency Financial Statements, as amended, all funds obligated but not actually paid out during the fiscal year are included in the amount reported as "Unexpended Appropriation."

The undelivered orders generally represents the amounts awarded/obligated but not yet paid out to grantees. In many cases, grantees incur cost but do not request immediate reimbursement. For these awards, recipients begin to incur costs during the period and generally will request reimbursement in FY2001 and beyond.

Most of the remaining undelivered orders result from funds obligated for multi-year awards. Recipients generally will request reimbursement for these project expenses as incurred throughout the award period. Funds are maintained in the U.S. Treasury until the recipient presents a valid request for payment and it is approved by OJP.

The remaining $913,977 unobligated balance are funds that are not currently awarded/obligated to recipients. The "Available" unobligated balance of $912,967 represents appropriated funds that have not been awarded for congressionally authorized programs. The "Unavailable" unobligated balance of $1,010 consists of monies returned to OJP as a result of closing out grants and deobligating unused funds. These unavailable monies must be retained in the account for future claims against the deobligated grant funds. The unobligated monies were designated for specific programs and are not available to fund other programs. An analysis of the unobligated balances at September 30, 2000, is provided below:



Note 5. Other Financing Sources

Crime Victims Fund revenue for the year ended September 30, 2000 was $778,491. As of September 30, 2000, assets and liabilities in the Crime Victims Fund are as follows:

In accordance with applicable law, CVF receipts becoming available in the current year are recorded as budget authority. However, in order to properly account for the fund, OJP also records current-year revenue as an other financing source.



Note 6. Property and Equipment

As of September 30, 2000, the acquisition value of OJP property and equipment was $4,640; accumulated depreciation $1,690; and net book value $2,950. The acquisition value of capital leases was $108; accumulated depreciation $8; and net book value $100.



Note 7. Retirement Plans

With few exceptions, employees hired before January 1, 1984, are covered by the Civil Service Retirement System (CSRS) and employees hired after that date are covered by the Federal Employees Retirement System (FERS).

For employees covered by the CSRS, OJP contributes 8.51 percent of the employee's gross pay for normal retirement. The OJP contribution for fiscal year 2000 was $973. For employees covered by FERS, the Department contributes approximately 13 percent. All employees are eligible to contribute to the Federal Thrift Savings Plan (TSP). For those employees covered by FERS, a TSP account is established, and OJP contributes 1 percent of gross pay to this plan and matches employees' contributions up to 4 percent. No matching contributions are made to the TSP accounts established by the CSRS employees. The OJP contribution for fiscal year 2000 related to FERS and the related TSP accounts was $3,811.

The accompanying financial statements do not report CSRS or FERS assets, accumulated plan benefits, or unfunded liabilities, if any, which may be applicable to OJP employees. Such reporting is the responsibility of the Office of Personnel Management. Imputed financing consists of amounts paid by other entities on behalf of OJP related to postretirement benefits of OJP employees. These amounts are reflected as part of the full cost of operations on the Statement of Net Cost. For fiscal year 2000 imputed financing cost is $ 2,842. The imputed costs are as follows: pension expense is $973; health benefit expense $1,861; and life insurance expense $8.



Note 8. Actuarial Liabilities

The Federal Employees Compensation Act (FECA) provides income and medical cost protection to covered civilian employees injured on the job, employees who have incurred a work-related occupational disease, and beneficiaries of employees whose death is attributable to a job-related injury or occupational disease. Claims incurred for benefits for OJP employees under FECA are administered by the Department of Labor (DOL) and are ultimately paid by OJP. The future workers' compensation liability has two components, (1) unpaid billings, and (2) an amount of estimated unfilled claims. The unfilled claims are estimated by applying actuarial procedures.

DOL calculated the liability of the Federal government for future compensation benefits, which includes the expected liability for death and disability determined using the paid-losses extrapolation method calculated over the next 37-year period. This method uses historical benefit payment patterns related to a specific incurred period to predict the ultimate payments related to that period.

The projected annual benefit payment was discounted to present value and the resulting Federal government liability was distributed by agency. The actuarial liability for workers compensation benefits are recorded for reporting purposes only. 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 OJP.

For fiscal year 2000 the FECA liability is $106 which includes $11 of accrued FECA liability owed to the Department of Labor and $ 95 that represents the actuarial portion of the liability. The $106 is not covered by budgetary resources.



Note 9. Budgetary Resources

The statement of budgetary resources reflects an increase in the prior year's unobligated balance. The majority of this increase is the revenue collected in FY1999 for Crime Victims Fund.

The statement of budgetary resources reflects recoveries of prior year obligations of $242,832 which represent cancellations or downward adjustments of obligations incurred in prior fiscal years that were not outlayed. For no-year and unexpired multi-year accounts, apportioned recoveries are available for new obligations.

The statement also reflects budgetary resources permanently and temporarily unavailable. The permanently unavailable resources of $ 77,849 represents a rescission resulting from (P.L. 106-51), the Emergency Steel Loan Guarantee and Emergency Oil and Gas Guaranteed Loan Act of 1999. The temporarily unavailable resources of $ 1,262,140 results from (P.L. 89-473), the Crime Victims Act of 1994.

Spending authority from offsetting collections of $ 396,557 represents budgetary resources made available through reimbursable agreements with other Federal agencies. OJP's policy is to collect amounts related to reimbursable authority in advance. Amounts unexpended at year-end are reflected on the balance sheet as advances from other federal agencies (see Note 1.H).



Note 10. Budget Functional Classification

All gross costs and earned revenue for fiscal year 2000 relate to budget functional classification 750, Administration of Justice.

OJP generates its revenue from other governmental agencies. In fiscal year 2000 OJP had intragovernmental gross cost of $ 64,755 and earned revenue of $ 25,380 with other Department of Justice components. The remaining intragovernmental gross cost of $145,571 and earned revenue of $44,716 were generated with other governmental agencies.



Note 11. Leases

Capital leases consist of rental equipment with various expiration dates. The total capital lease expense for fiscal year 2000 was $ 11. Following is a schedule of minimum lease payments which reflects payments in excess of one year.

Operating leases consist of rental equipment with various expiration dates. Following is a schedule of minimum operating lease payments which reflects payments in excess of one year.

Future Operating Lease Payments Due:



Note 12. Prior Period Adjustments

During fiscal year 2000 the prior period adjustments below were made to the Crime Victims Fund and Justice Assistance appropriations. These adjustments are attributed to correction of errors of prior years transactions that existed at September 30,1999 and were subsequently identified and corrected in fiscal year 2000.