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Financial Statements

Message from the Chief Financial Officer

The Accountability of Tax Dollars Act of 2002 requires the EEOC to prepare yearly financial statements. I am happy to report that for the 11th consecutive year we received an unmodified (clean) opinion on EEOC financial statements this year. Thank you to the staff in the Office of the Chief Financial Officer as well as administrative staff throughout the agency. Your dedication and hard work made this possible.

FY 2014 was a challenging year for the EEOC's financial operations due to our private sector financial service provider's inability to remain a going concern. Many services performed on EEOC's behalf, including vendor payments were untimely. Twelve days before the end of the fiscal year, a new provider assumed operation of the existing financial system hardware, software, and financial services. The new provider has kept the financial system operational. Currently, the new provider is completing some outstanding system- and service-related projects. Timely payment of the EEOC's bills is a priority. The agency is working closely with the new provider to ensure quality services are afforded to vendors, government agencies, and EEOC employees.

On the Budget front, the FY 2014 appropriation was $20M more than FY 2013. This infusion of funds allowed the EEOC to lift a two year hiring freeze; agencywide more than 200 external candidates for front-line and support positions were hired. Also, additional funding was allocated to strategic plan priorities. The agency is on track for restoring its capacity to more effectively meet the EEOC's mission.

Last year, I discussed the need for cost containment of rent and the reallocation of rent savings to other priority programs. This year, the EEOC continued to "freeze the footprint" to realize the cost containment goal. The Space Allocation Guidelines were updated to incorporate a 20 percent space reduction for telework. Also, EEOC analyzed the real estate footprint for a few locations to determine the cost benefit of returning excess space to GSA. During FY 2015, the agency will identify other opportunities to realize rent savings.

Over the next several years, the fiscal constraints are expected to remain and the funding to be limited. Sound financial management and budget planning will remain among the EEOC's top priorities in order to provide the services required by the public.

roseboro

Germaine P. Roseboro, CPA, CGFM
Chief Financial Officer

Independent Auditors' Report

November 17, 2014

MEMORANDUM

TO: Jenny R. Yang
Chair
 
FROM: Milton A. Mayo, Jr
Inspector General
mayo
SUBJECT: Audit of the Equal Employment Opportunity Commission's Fiscal Year 2014 Financial Statements (OIG Report No. 2014-01-FIN)

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 2014.  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 reported that EEOC's fiscal year 2014 financial statements and notes were fairly presented, in all material respects, in accordance with accounting principles generally accepted in the United States of America.  In regards to Internal Control over Financial Reporting, HRK noted two areas involving internal control and its operation that are considered to be significant deficiencies. These included the lack of sufficient controls over supporting documentation for personnel expenses, and the lack of sufficient controls over financial management relating to the failure to evaluate controls at the financial systems service provider Global Computer Enterprises (GCE).  HRK noted no instances of non compliance or other matters that were required to be reported under Government Auditing Standards or OMB Bulletin 14-02.

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 17, 2014 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:     Mona Papillon
Germaine Roseboro
Raj Mohan
Nicholas Inzeo
John Schmelzer
Lisa Williams
Kimberly Hancher
Peggy Mastroianni
Todd Cox
Carlton Hadden
Deidre Flippen

Auditors Letterhead

Independent Auditors' Report

Inspector General
U.S. Equal Employment Opportunity Commission

Report on the Financial Statements

We have audited the accompanying consolidated balance sheet of the Equal Employment Opportunity Commission (EEOC), as of September 30, 2014 and 2013, and the related consolidated statements of net cost, and changes in net position, and combined statement of budgetary resources, for the fiscal years then ended and the related notes to the financial statements.

Management's Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with general accepted accounting principles in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditors' Responsibility

Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audit contained in Government Auditing Standards issued by the Comptroller General of the United States; and Office of Management and Budget (OMB) Bulletin No. 14-02, Audit Requirements for Federal Financial Statements. Those standards and OMB Bulletin No. 14-02 require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors' judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditors consider internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

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 the Equal Employment Opportunity Commission as of September 30, 2014 and 2013, 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.

Other Matters

Required Supplementary Information

Generally accepted accounting principles in the United States of America require that the information in the Management's Discussion and Analysis, and Required Supplementary Information sections be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Federal Accounting Standards Advisory Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.

Other Information

Our audit was conducted for the purpose of forming an opinion on the basic financial statements as a whole. The information in the Message from the Chief Financial Officer (CFO) is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information has not been subjected to the auditing procedures applied in the audit of the basic financial statements, and accordingly, we do not express an opinion or provide any assurance on it.

Other Reporting Required by Government Auditing Standards

Internal Control over Financial Reporting

In planning and performing our audits of the financial statements, we considered EEOC's internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of EEOC's internal control. Accordingly, we do not express an opinion on the effectiveness of EEOC's internal control. We did not test all internal controls relevant to operating objectives as broadly defined by the Federal Managers' Financial Integrity Act of 1982.

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.

Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies and therefore, material weaknesses or significant deficiencies may exist that were not identified. During our audit, we did identify deficiencies in internal control that we consider to be significant deficiencies, described in Exhibit I.

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

Compliance and Other Matters

As part of obtaining reasonable assurance about whether EEOC's financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts, and certain provisions of other laws and regulations specified in OMB Bulletin No. 14-02. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests of compliance disclosed no instances of noncompliance or other matters that are required to be reported herein under Government Auditing Standards or OMB Bulletin No. 14-02.

EEOC's Responses to Findings

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

Purpose of the Other Reporting Required by Government Auditing Standards

The purpose of the communication described in the Other Reporting Required by Government Auditing Standards section is solely to describe the scope of our testing of internal control and compliance and the result of that testing, and not to provide an opinion on the effectiveness of EEOC's internal control or compliance. Accordingly, this communication is not suitable for any other purpose.

2012par_auditor_sig

November 17, 2014

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 2014, we tested a sample of 63 employees' personnel expenses and supporting documentation maintained by EEOC in the employees' personnel files (eOPF) for the period of October 1, 2013 through March 31, 2014. Based on our testing, we identified the following exceptions:

  • Two (2) employees do not have a FEHB enrollment form (SF-2809, SF-2810 or transcript) in eOPF, but show FEHB transactions per FPPS and LES.
  • Five (5) 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 which results in a variance between the employee's withholding amount calculated by the auditor and per the LES.
  • Four (4) 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 which results in a variance between the employer's contribution amount calculated by the auditor and per FPPS.
  • Two (2) employees do not have a FEGLI enrollment form (SF-2817, FE 2004 or RI 76-27) in eOPF, but show FEGLI transactions per FPPS and LES.
  • Six(6) 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 which results in a variance between actual employee withholdings per LES and calculated employee withholdings per OPM.
  • Three(3) 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 which results in a variance between actual employer contributions per FPPS and employer contributions as calculated by the auditor.
  • One (1) employee does not have a TSP election form (TSP-1 or transcript) in eOPF, but shows TSP transactions per LES.
  • Seven (7) 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 which results in variances between the employee withholding amount per LES and employee withholding as calculated by the auditor.
  • Seven (7) 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 which results in variances between the employer contribution amount per FPPS and employer withholding as calculated by the auditor.

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, FY 2012, and FY 2013.

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: We accept the recommendation that EEOC update its controls over the maintenance of its official personnel files. The Office of Chief Human Capital Office (OCHCO) has established a policy and procedure to perform internal audits of the EEOC eOPF system for proper implementation and application of all OPM and EEOC policies and procedures over the recording and maintaining of official personnel records. We currently have an agreement with IBC to automatically post changes made in Employee Express to be posted in e-OPF directly. However, this is not always done in "real" time. Therefore, OCHCO is currently working with Interior Business Center (IBC) to establish a link to "view FEHB/TSP Transaction Data" bi weekly. This report will allow OCHCO to view all FEHB and TSP transactions completed in Employee Express in a certain time frame (bi weekly); whereas we can cross reference any activities. This should be accomplished by November 24, 2014; and if not OCHCO will follow-up with IBC.

As for those issues that continue to require hard copy submissions, we plan to correct this going forward by fully utilizing our new WTTS/EODS systems (automated on-boarding system) and scanning in those documents we have received from our new hires. In addition, management will continue to perform a thorough review of its employees' personnel files to ensure that documentation is accurate and current, as we started this spring.

Also, you tested a sample of 63 payroll expense transaction and noted 37 exceptions. We have reviewed the 37 exceptions of which seven issues (2/6/51/55 and 1/10/26) were the same employees/same issues; twenty-two (22) were exceptions, which we will have to possibly negotiate with affected employees to complete a corrective document; and the remaining 8 have been investigated, forms located and scanned, in the appropriate e-OPF.

Auditors' Response: FY 2015 audit procedures will determine whether the corrective actions have been implemented and are operating effectively.

2.Lack of Sufficient Controls over Financial Management

The U.S. Equal Employment Opportunity Commission (EEOC) did not properly evaluate the controls in place at its financial systems service provider, Global Computer Enterprises, Inc. (GCE), during the fiscal year.

The U.S. Government Accountability Office's (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."

The Office of Management and Budget (OMB) Circular A-123, Management's Responsibility for Internal Control states: "Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting. Reliability of financial reporting means that management can reasonably make the following assertions:

  • Documentation for internal control, all transactions, and other significant events is readily available for examination.

The Federal Managers Financial Integrity Act of 1982 (FMFIA) states: "Internal accounting and administrative controls of each executive agency shall be established in accordance with standards prescribed by the Comptroller General, and shall provide reasonable assurances that --

  • (i) obligations and costs are in compliance with applicable law
  • (ii) funds, property, and other assets are safeguarded against waste, loss, unauthorized use, or misappropriation; and
  • (iii) revenues and expenditures applicable to agency operations are properly recorded and accounted for to permit the preparation of accounts and reliable financial and statistical reports and to maintain accountability over the assets.

GCE ceased its operations in September, 2014. As a result, GCE did not conduct or provide EEOC with an SSAE 16 Report over the controls in place during the fiscal year and EEOC did not perform an evaluation of the controls at the service provider.

The lack of monitoring internal controls could result in an inadequate assessment of the risk of material misstatement to the financial statements, ineffective review of financial transactions, and potential misstatement of the financial statements.

To address this issue, we recommend that EEOC implement procedures to ensure that it has a complete understanding of policies and procedures at its service providers.

Management Response: EEOC will be proactive to implement procedures so that we have a clear understanding of the services that are provided by our financial service provider (Note: relative to this recommendation, there was an unusual situation with GCE/GSA/DOL with the purchase of GCE). In February 2015, EEOC service provider will be DOI/IBC. Our previous experiences with DOI/IBC were exceptional and we do not foresee that this problem will exist with DOI/IBC.

Auditors' Response: FY 2015 audit procedures will determine whether the corrective actions have been implemented and are operating effectively.

Equal Employment Opportunity Commission
CONSOLIDATED BALANCE SHEETS
As of September 30, 2014 and 2013
(in dollars)
FY 2014 FY 2013
ASSETS:
Intragovernmental:
Fund Balance with Treasury (Note 2) $ 74,993,132 $ 55,598,951
Accounts Receivable (Note 3) 225,741 50,375
Advances and Prepaid Expenses 1,663,562 24,454
Total Intragovernmental 76,882,435 55,673,780
Public:
Accounts Receivable, Net (Note 3) 275,960 136,594
General Property, Plant and Equipment, Net (Note 4) 4,705,555 5,833,367
Advances and Prepaid Expenses 25,200 30,410
TOTAL ASSETS $ 81,889,150 $ 61,674,151
LIABILITIES:
Intragovernmental:
Accounts Payable (Note 6) $ 1,073,414 $ 1,309,042
Employer payroll taxes 1,140,968 954,580
Worker's compensation liability (Note 7) 2,587,587 2,802,436
Other Liabilities (Note 5) 66,884 266
Total Intragovernmental 4,868,853 5,066,324
Public:
Accounts Payable 20,690,617 13,344,911
Accrued payroll 5,535,163 4,653,544
Accrued annual leave (Note 7) 18,381,687 18,765,203
Future worker's compensation liability (Note 7) 12,255,529 13,254,476
Employer payroll taxes 339,384 311,908
Amounts collected for restitution (Note 7) 26,006 28,369
Deferred revenue 127,435 112,338
TOTAL LIABILITIES 62,224,674 55,537,073
NET POSITION:
Funds from Dedicated Collections:
Cumulative Results of Operations 2,852,625 3,117,352
Total Net Position - Funds from Dedicated Collections 2,852,625 3,117,352
All Other Funds:
Unexpended Appropriations 45,228,193 31,944,943
Cumulative Results of Operations (28,416,342) (28,925,217)
Total Net Position - All Other Funds 16,811,851 3,019,726
TOTAL NET POSITION $ 19,664,476 $ 6,137,078
TOTAL LIABILITIES AND NET POSITION $ 81,889,150 $ 61,674,151

The accompanying notes are an integral part of these statements.

Equal Employment Opportunity Commission
CONSOLIDATED STATEMENTS OF NET COST
For the Years Ended September 30, 2014 and 2013
(in dollars)
FY 2014 FY 2013
COMBATTING EMPLOYMENT DISCRIMINATION THROUGH STRATEGIC LAW ENFORCEMENT
Private Sector:
Enforcement $ 172,025,360 $ 159,157,631
Mediation 24,163,200 43,500,495
Litigation 73,273,243 67,166,061
Intake Information 9,087,077 10,024,016
State and Local 34,928,279 29,913,516
Total Program Costs - Private Sector 313,477,159 309,761,719
Revenue (72,000) (209,435)
Net Cost - Private Sector $ 313,405,159 $ 309,552,284
Federal Sector:
Hearings 28,302,110 25,738,224
Appeals 16,850,047 14,555,471
Mediation 945,839 886,875
Oversight 6,026,682 5,396,910
Total Program Costs - Federal Sector 52,124,678 46,577,480
Revenue - -
Net Cost - Federal Sector 52,124,678 46,577,480
Total, Private, Federal Sectors
Program Costs 365,601,837 356,339,199
Revenue (72,000) (209,435)
Net Costs, Private, Federal Sectors $ 365,529,837 $ 356,129,764
PREVENTING EMPLOYMENT DISCRIMINATION THROUGH EDUCATION AND OUTREACH
Outreach:
Fee Based 3,906,902 3,346,161
Non-Fee Based 1,492,006 518,111
Total Program Costs - Outreach 5,398,908 3,864,272
Revenue (3,450,577) (3,207,053)
Net Cost - Outreach $ 1,948,331 $ 657,219
Totals, All Programs
Program Costs 371,000,745 360,203,471
Revenue (Note 11) (3,522,577) (3,416,488)
Net Cost of Operations $ 367,478,168 $ 356,786,983

The accompanying notes are an integral part of these statements.

Equal Employment Opportunity Commission
CONSOLIDATED STATEMENTS OF CHANGES IN NET POSITION
For the Years Ended September 30, 2014 and 2013
(in dollars)
FY 2014 FY 2013
Consolidated
Funds from Dedicated Collections		 Consolidated
All Other Funds		 Consolidated
Total		 Consolidated
Funds from Dedicated Collections		 Consolidated
All Other Funds		 Consolidated
Total
CUMULATIVE RESULTS OF OPERATIONS
Beginning Balances: $ 3,117,352 $ (28,925,217) $ (25,807,865) $ 2,492,669 $ (27,792,180) $ (25,299,511)
Adjustments:
Beginning Balances, As Adjusted $ 3,117,352 $ (28,925,217) $ (25,807,865) $ 2,492,669 $ (27,792,180) $ (25,299,511)
Budgetary Financing Sources:
Appropriations Used - 346,837,996 346,837,996 - 337,196,793 337,196,793
Non-Exchange Revenue - 66,922 66,922 - 1,080 1,080
Other Financing Sources (Non_Exchange):
Imputed Financing (Note 15) - 20,884,320 20,884,320 - 19,076,575 19,076,575
Other (+/-) - (66,922) (66,922) - (1,080) (1,080)
Total Financing Sources - 367,722,316 367,722,316 - 356,278,629 356,278,629
Net Cost of Operations (264,727) (367,213,441) (367,478,168) 624,683 (357,411,666) (356,786,983)
Net Change (264,727) 508,875 244,148 624,683 (1,133,037) (508,354)
Cumulative Results of Operations 2,852,625 (28,416,342) (25,563,717) 3,117,352 (28,925,217) (25,807,865)
UNEXPENDED APPROPRIATIONS
Beginning Balances: $ - $ 31,944,943 $ 31,944,943 $ - $ 27,513,783 $ 27,513,783
Adjustments:
Beginning Balances, As Adjusted $ - $ 31,944,943 $ 31,944,943 $ - $ 27,513,783 $ 27,513,783
Budgetary Financing Sources:
Appropriations Received (Note 12) - 364,000,000 364,000,000 - 370,000,000 370,000,000
Other Adjustments - (3,878,754) (3,878,754) - (28,372,047) (28,372,047)
Appropriations Used - (346,837,996) (346,837,996) - (337,196,793) (337,196,793)
Total Budgetary Financing Sources - 13,283,250 13,283,250 - 4,431,160 4,431,160
Total Unexpended Appropriations - 45,228,193 45,228,193 - 31,944,943 31,944,943
Net Position $ 2,852,625 $ 16,811,851 $ 19,664,476 $ 3,117,352 $ 3,019,726 $ 6,137,078

The accompanying notes are an integral part of these statements.

Equal Employment Opportunity Commission
COMBINED STATEMENTS OF BUDGETARY RESOURCES
For the Years Ended September 30, 2014 and 2013
(in dollars)
FY 2014 FY 2013
Budgetary Resources:
Unobligated Balance Brought Forward, October 1 $ 11,504,972 $ 11,468,501
Adjustment to unobligated balance brought forward, Oct 1 (+ or -) (204,000) -
Unobligated balance brought forward, Oct 1, as adjusted 11,300,972 11,468,501
Recoveries of Prior Year Unpaid Obligations 2,842,373 3,964,269
Other Changes in Unobligated Balance (+ or -) (3,878,754) (2,590,877)
Unobligated Balance from Prior Year Budget Authority, Net 10,264,591 12,841,893
Appropriations (Discretionary and Mandatory) (Note 12) 364,000,000 344,218,830
Spending Authority from Offsetting Collections (Discretionary and Mandatory) 3,346,877 3,501,557
Total Budgetary Resources $ 377,611,468 $ 360,562,280
Status of Budgetary Resources:
Obligations Incurred (Note 13) $ 368,833,152 $ 349,057,308
Unobligated Balance, End of Year:
Apportioned 1,561,298 2,090,459
Unapportioned 7,217,018 9,414,513
Unobligated Balance, End of Year 8,778,316 11,504,972
Total Budgetary Resources $ 377,611,468 $ 360,562,280
Change in Obligated Balance:
Unpaid Obligations:
Unpaid Obligations, Brought Forward, October 1 $ 44,115,985 $ 42,751,345
Obligations Incurred 368,833,152 349,057,308
Outlays (Gross) (-) (344,184,213) (343,728,399)
Recoveries of Prior Year Unpaid Obligations (-) (2,842,373) (3,964,269)
Unpaid Obligations, End of Year 65,922,551 44,115,985
Uncollected Payments:
Uncollected Payments, Federal Sources, Brought Forward, October 1 (-) (50,375) (282,939)
Change in Uncollected Payments, Federal Sources (+ or -) (175,366) 232,564
Uncollected Payments, Federal Sources, End of Year (-) $ (225,741) $ (50,375)
Memorandum (non-add) entries:
Obligated Balance, Start of Year (+ or -) $ 44,065,610 $ 42,468,406
Obligated Balance, End of Year (Net) $ 65,696,810 $ 44,065,610
Budget Authority and Outlays, Net:
Budget Authority, Gross (Discretionary and Mandatory) $ 367,346,877 $ 347,720,387
Actual Offsetting Collections (Discretionary and Mandatory) (-) (3,459,511) (3,734,121)
Change in Uncollected Customer Payments from Federal Sources
(Discretionary and Mandatory) (+ or -)		 (175,366) 232,564
Budgetary Authority, Net (Discretionary and Mandatory) $ 363,712,000 $ 344,218,830
Outlays, Gross (Discretionary and Mandatory) $ 344,184,213 $ 343,728,399
Actual Offsetting Collections (Discretionary and Mandatory) (-) (3,459,511) (3,734,121)
Outlays, Net (Discretionary and Mandatory) $ 340,724,702 $ 339,994,278
Distributed Offsetting Receipts (-)
Agency Outlays, Net (Discretionary and Mandatory)

The accompanying notes are an integral part of these statements.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2014 and 2013
(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 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 the 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 the 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 to 15 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, is 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 2014 and 2013. 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 2014 and 2013.

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.

(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, 2014 and 2013 consists of the following:

FY 2014 FY 2013
Fund Type
Revolving funds $ 2,898,331 $ 3,087,605
Appropriated funds 72,068,795 52,482,977
Other fund types 26,006 28,369
Totals $ 74,993,132 $ 55,598,951

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. Unavailable unobligated balances are not available to fund new obligations because they are expired, they must be re-apportioned, or their use has been permanently or temporarily restricted. 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 $38,831,767 and $23,596,864 for FY 2014 and FY 2013, 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, 2014 and 2013, funds in closed accounts of $3,878,754 and $2,590,877 were returned to Treasury. For FYs ended September 30, 2014 and 2013, miscellaneous receipts of $116,482 and $111,798 were returned to Treasury.

Status of Fund Balance with Treasury as of September 30, 2014 and 2013 consists of the following:

FY 2014 FY 2013
Status of Funds
Unobligated balance:
Available $ 1,561,298 $ 2,090,459
Unavailable 7,709,018 9,414,513
Obligated balance not yet disbursed 65,696,810 44,065,610
Non-budgetary Fund Balance with Treasury 26,006 28,369
Totals $ 74,993,132 $ 55,598,951

(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 to 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, 2014 and 2013 are as follows:

FY 2014 FY 2013
Intragovernmental:
Accounts receivable (see detail below) $ 225,741 $ 50,375
Totals $ 225,741 $ 50,375
FY 2014 FY 2013
With the public:
Accounts receivable $ 485,690 $ 315,602
Allowance for uncollectible receivables (209,730) (179,008)
Totals $ 275,960 $ 136,594

Amounts due from various federal agencies are for accounts receivable as of September 30, 2014 and 2013. These are related to registered participants' training fees due to the revolving fund and appropriated interagency agreements as shown in the table below:

FY 2014 FY 2013
Agency:
Department of Homeland Security $ 51,104 $ 7,375
Bureau of Consumer Financial Protection 30,000 -
Department of Housing and Urban Development 26,189 -
Department of Justice 14,536 698
Department of Defense 12,730 -
Department of Health and Human Services 11,349 600
Department of Agriculture 10,656 -
Department of the Treasury 10,360 -
Department of the Interior 8,783 850
Department of Energy 7,727 2,836
Department of Labor 7,221 6,174
Department of the Navy 5,453 275
Department of the Air Force 4,620 -
Department of the Army 4,409 4,409
Department of Commerce 4,332 -
National Aeronautics and Space Administration 3,500 -
Social Security Administration 3,093 1,150
Environmental Protection Agency 1,899 1,899
Export-Import Bank of US 1,800 -
Department of State 1,700 1,700
Selective Service System 1,543 -
Department of Education 975 975
Securities and Exchange Commission 975 -
Department of Veterans Affairs 638 -
Central Intelligence Agency 149 1,949
Consumer Product Safety Commission - 7,000
Defense Agencies - 6,635
Other Independent Agencies - 5,850
Totals $ 225,741 $ 50,375

(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, 2014 Cost Accumulated Depreciation Net Book Value
Equipment $ 875,432 $ (867,099) $ 8,333
Capital leases 193,910 (193,910) -
Internal use software 4,134,204 (4,134,204) -
Leasehold improvements 11,772,261 (7,075,039) 4,697,222
Totals $ 16,975,807 $ (12,270,252) $ 4,705,555
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

Depreciation expense for the periods ended September 30, 2014 and 2013 is:

FY 2014 FY 2013
$ 1,112,378 $ 1,120,701

(5) Non-Entity Assets

The EEOC has $66,884 of net receivables to collect on behalf of the U.S. Treasury as of September 30, 2014, and $266 of net receivables to collect on behalf of the U.S. Treasury as of September 30, 2013.

(6) Liabilities Owed to Other Federal Agencies

As of September 30, 2014 and 2013, the following amounts were owed to other federal agencies:

FY 2014 FY 2013
Agency:
Department of Transportation $ 550,377 $ 443,633
General Services Administration 443,985 757,887
Government Printing Office 36,168 -
Department of Homeland Security 9,998 16,808
Other Independent Agencies 9,705 -
Environmental Protection Agency 8,043 (6,044)
Department of Justice 7,625 7,625
Department of the Interior 5,000 61,093
Office of Personnel Management 2,063 1,810
National Archives and Records Administration 450 450
Department of Labor - 23,026
Department of Health and Human Services - 2,779
US Army Corps of Engineers - (25)
Totals $ 1,073,414 $ 1,309,042

(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, 2014 and 2013 are shown in the following table:

FY 2014 FY 2013
Intragovernmental:
Workers' compensation liability $ 2,587,587 $ 2,802,436
Total intragovernmental 2,587,587 2,802,436
Accrued annual leave 18,381,687 18,765,203
Future workers' compensation liability 12,255,529 13,254,476
Amounts collected for restitution 26,006 28,369
Total liabilities not covered by budgetary resources 33,250,809 34,850,484
Total liabilities covered by budgetary resources 28,973,865 20,686,589
Total liabilities $ 62,224,674 $ 55,537,073

(8) Liabilities Analysis

Current and non-current liabilities as of September 30, 2014 are shown in the following table:

Current Non-Current Totals
Covered by budgetary resources:
Intragovernmental:
Accounts payable $ 1,073,414 $ - $ 1,073,414
Employer payroll taxes 1,140,968 - 1,140,968
Other liabilities 66,884 - 66,884
Total Intragovernmental 2,281,266 - 2,281,266
Accounts payable 20,690,617 - 20,690,617
Accrued payroll 5,535,163 - 5,535,163
Employer payroll taxes 339,384 - 339,384
Deferred revenue 127,435 - 127,435
Liabilities covered by budgetary resources 28,973,865 - 28,973,865
Liabilities not covered by budgetary resources:
Intragovernmental:
Workers' compensation liability 1,456,612 1,130,975 2,587,587
Total Intragovernmental 1,456,612 1,130,975 2,587,587
Accrued annual leave 18,381,687 - 18,381,687
Future workers' compensation liability - 12,255,529 12,255,529
Amounts collected for restitution 26,006 - 26,006
Liabilities not covered by budgetary resources: 19,864,305 13,386,504 33,250,809
Total liabilities $ 48,838,170 $ 13,386,504 $ 62,224,674

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
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
Deferred revenue 112,338 - 112,338
Liabilities covered by budgetary resources 20,686,589 - 20,686,589
Liabilities not covered by budgetary resources:
Intragovernmental:
Workers' compensation liability 1,575,179 1,227,257 2,802,436
Total Intragovernmental 1,575,179 1,227,257 2,802,436
Accrued annual leave 18,765,203 - 18,765,203
Future workers' compensation liability - 13,254,476 13,254,476
Amounts collected for restitution 28,369 - 28,369
Liabilities not covered by budgetary resources: 20,368,751 14,481,733 34,850,484
Total liabilities $ 41,055,340 $ 14,481,733 $ 55,537,073

(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 2014 and FY 2013, 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 2014 and 2013 are $28,200,594 and $27,947,290, 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, 2014 and 2013 was as follows:

FY 2014 FY 2013
Reimbursable revenue $ 72,000 $ 209,435
Fees from services 3,450,577 3,207,053
Total Revenue $ 3,522,577 $ 3,416,488

(12) Appropriations Received

Warrants received by the Commission as of September 30, 2014 and 2013 are:

FY 2014 FY 2013
$ 364,000,000 $ 370,000,000

The EEOC received the following warrant reductions for FYs 2014 and 2013:

FY 2014 FY 2013
Across the Board Recissions 7,671,010
Sequestration Reduction 18,110,160
Total Warrant Reduction $ - $ 25,781,170

(13) Obligations Incurred

Direct and Reimbursable obligations, by apportionment category, incurred as of September 30, 2014 and 2013 are:

Obligations FY 2014 FY 2013
Direct A $ 335,674,189 $ 318,288,246
Direct B 29,487,861 27,465,370
Subtotal Direct Obligations 365,162,050 345,753,616
Reimbursable - Direct A 3,671,102 3,303,692
Total Obligations $ 368,833,152 $ 349,057,308

(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 FY 2014 FY 2013
ASSETS
Fund balance with Treasury $ 2,898,331 $ 3,087,605
Accounts receivable (net of allowance) 331,911 123,173
Advances and prepaid expenses 913 47,068
TOTAL ASSETS $ 3,231,155 $ 3,257,846
LIABILITIES
Accounts payable 251,095 28,156
Deferred revenue 127,435 112,338
TOTAL LIABILITIES $ 378,530 $ 140,494
NET POSITION
Cumulative results of operations 2,852,625 3,117,352
TOTAL LIABILITIES AND NET POSITION $ 3,231,155 $ 3,257,846
Statement of Net Cost for the Periods Ended September 30
Program Costs $ 3,715,304 $ 2,582,370
Revenue (3,450,577) (3,207,053)
Net Cost (Revenue) $ 264,727 $ (624,683)

(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 2014. Expenses of the EEOC paid or to be paid by other federal agencies at September 30, 2014 and 2013 consisted of:

FY 2014 FY 2013
Judgment Fund $ 1,238,498 $ -
Office of Personnel Management:
Pension expenses 10,445,307 9,341,286
Federal employees health benefits (FEHB) 9,168,016 9,702,705
Federal employees group life insurance (FEGLI) 32,499 32,584
Total Imputed Financing $ 20,884,320 $ 19,076,575

(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 2014 and FY 2013 consisted of:

FY 2014 FY 2013
Costs
Office of Personnel Management $ 56,092,934 $ 55,781,333
General Services Administration 33,107,370 32,049,002
Treasury General Fund 12,349,848 11,890,407
Department of Transportation 2,746,133 655,669
Department of Homeland Security 2,696,946 2,754,017
Department of the Interior 1,650,817 1,482,266
Department of the Treasury 1,238,498 19,450
Department of Labor 975,042 1,461,275
US Postal Service 839,540 -
Department of Health and Human Services 377,485 388,272
Library of Congress 115,177 38,189
National Archives and Records Administration 93,800 76,390
Government Printing Office 60,622 -
Administrative Conference of the US 60,000 -
Environmental Protection Agency 30,093 61,909
Other Independent Agencies 4,419 42,403
US Army Corps of Engineers 1,750 213
National Aeronautics and Space Administration 798 -
Department of Agriculture (1,483) 1,340
Department of Commerce - 40,500
Department of Justice - 7,625
National Labor Relations Board - 3,114
National Science Foundation - 1,815
Intragovernmental Costs 112,439,789 106,755,189
Public costs 258,560,956 253,448,282
Total Program costs $ 371,000,745 $ 360,203,471

*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 2014 FY 2013
Revenue
Department of Defense $ 245,225 $ 177,775
Department of Homeland Security 98,382 143,846
Department of Agriculture 89,592 40,179
Department of the Army 88,869 33,009
Department of the Air Force 70,497 26,061
Department of Labor 69,808 63,057
Department of the Interior 64,758 147,968
Department of the Navy 59,219 18,812
Department of Justice 51,883 23,795
Department of Energy 50,942 50,043
Department of Health and Human Services 47,516 49,233
Department of Transportation 43,830 35,194
Department of Veterans Affairs 42,760 46,111
Bureau of Consumer Financial Protection 38,320 2,475
Department of the Treasury 36,054 50,367
Social Security Administration 34,083 108,385
Department of Commerce 33,715 8,615
Department of Housing and Urban Development 33,638 7,872
Equal Employment Opportunity Commission 26,201 7,736
Office of Personnel Management 23,555 41,593
US Postal Service 22,104 10,349
General Services Administration 19,148 10,368
National Aeronautics and Space Administration 18,537 19,720
Federal Deposit Insurance Corporation 17,177 5,340
Executive Office of the President 16,284 5,788
Central Intelligence Agency 16,008 23,276
Nuclear Regulatory Commission 14,121 3,130
Commodity Futures Trading Commission 12,975 3,250
Environmental Protection Agency 11,787 32,168
Tennessee Valley Authority 11,005 9,671
Securities and Exchange Commission 8,295 7,640
District Of Columbia - Court Services and Offender Supervision Agency 7,872 -
Department of Education 7,835 3,176
National Labor Relations Board 7,106 -
Department of State 6,467 11,786
Small Business Administration 5,851 -
Government Printing Office 4,714 15,448
Export-Import Bank of US 4,464 -
Federal Housing Finance Agency 4,332 5,007
Federal Election Commission 4,263 1,825
Smithsonian Institution 4,169 2,789
National Foundation on the Arts and the Humanities 3,988 300
Consumer Product Safety Commission 3,945 9,100
The Judiciary 3,600 -
Railroad Retirement Board 2,489 2,925
Agency for International Development 2,290 1,644
Commission on Civil Rights 2,290 -
National Transportation Safety Board 2,139 -
Denali Commission 2,120 -
Federal Communications Commission 2,120 -
Federal Retirement Thrift Investment Board 2,020 -
Office of Special Counsel 1,594 975
Selective Service System 1,543 2,000
Government Accountability Office 1,450 300
Millennium Challenge Corporation 1,445 975
Presidio Trust 1,444 -
National Archives and Records Administration 1,245 -
National Railroad Passenger Corporation 1,245 -
Congressional Budget Office 1,194 -
International Trade Commission 1,145 3,645
Federal Labor Relations Authority 975 -
National Science Foundation 969 1,804
Occupational Safety and Health Review Commission 850 -
Federal Maritime Commission 700 600
Armed Forces Retirement Home 638 319
Federal Trade Commission 600 600
Office of Government Ethics 575 -
Office Of Compliance 300 -
Other Independent Agencies - 25,331
Federal Mediation and Conciliation Services - 1,950
US Tax Court - 975
Merit Systems Protection Board - 600
Architect of the Capitol - 175
Treasury General Fund - (13,500)
Intragovernmental earned revenue 1,518,274 1,293,575
Public earned revenue 2,004,303 2,122,913
Total Program earned revenue (Note 11) 3,522,577 3,416,488
Net Cost of Operations $ 367,478,168 $ 356,786,983

(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, 2013 is shown in the following tables. A reconciliation is not presented for the period ended September 30, 2014, since the President's Budget for this period has not been issued by Congress.

The differences between the President's 2013 budget and the Combined Statement of Budgetary Resources for 2013 are shown below:

Dollars in millions Budgetary Resources Obligations Outlays
As reported on the Combined Statement of Budgetary Resources for FY 2013

$ 361

$ 349

$ 340
(a) Revolving fund collections not reported in the budget

(3)

3
(b) Obligations in the revolving fund (no-year fund) not included in the President's budget

(3)

(3)
(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

(15)
(e) Obligations in expired funds

(2)
(f) Canceled appropriations

3
(g) Rounding differences 1
As reported in the President's Budget for FY 2013 $ 344 $ 344 $ 341

(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 2014 FY 2013
Resources Used to Finance Activities
Current Year Gross Obligations $ 368,833,152 $ 349,057,308
Budgetary Resources from Offsetting Collections
Spending Authority from Offsetting Collections
Actual Offsetting Collections (3,459,511) (3,734,121)
Change in Receivables from Federal Sources (175,366) 232,564
Recoveries of Prior Year Unpaid Obligations (2,842,373) (3,964,269)
Other Financing Resources
Imputed Financing Sources 20,884,320 19,076,575
Total Resources Used to Finance Activity $ 383,240,222 $ 360,668,057
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 15,097 (4,827)
Change in Undelivered Orders (15,234,903) (4,919,673)
Change in Deferred Revenue (15,097) 4,827
Change in Nonfederal Receivables (89,181) (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 (20,884,320) (19,076,575)
Costs without Current Year Budgetary Effect
Depreciation and Amortization 1,112,378 1,120,701
Disposition of Assets 15,434 -
Future Funded Expenses (598,365) 74,879
Imputed costs 20,884,320 19,076,575
Bad Debt Expenses 30,494 52,913
Other Expenses Not Requiring Budgetary Resources (997,911) (120,283)
Net Cost of Operations $ 367,478,168 $ 356,786,983

(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 (IPERIA) 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 2014, 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 2014. 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 2014, 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 2015 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 2014. 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 2014 Amount Recovered FY 2014 Cumulative Identified Cumulative Recovered
Travel payments $ 1,678 $ 1,678 $ 1,678 $ 1,678