COMPLIANCE WITH LEGAL AND REGULATORY FINANCIAL REQUIREMENTS



	United States Patent and Trademark Office

Performance and Accountability Report Fiscal Year 2001
Management Discussion and Analysis > Financial Discussion and Analysis

COMPLIANCE WITH LEGAL AND REGULATORY FINANCIAL REQUIREMENTS

This section provides information on the USPTO’s compliance with the following legislative mandates:

Federal Managers’ Financial Integrity Act (FMFIA).
Inspector General (IG) Act Amendments.
Federal Financial Management Improvement Act (FFMIA).
OMB Financial Management Indicators.
Prompt Payment Act.
Civil Monetary Penalty Act.
Debt Collection Improvement Act.
Biennial Review of Fees.

Federal Managers’ Financial Integrity Act

On the basis of the USPTO’s comprehensive management control program, I am pleased to certify, with reasonable assurance, that USPTO’s systems of accounting and internal control are in compliance with the internal control objectives in OMB’s Bulletin Number 98-08, as amended. Our agency’s systems of management control, taken as a whole, comply with section 2 of the Federal Managers’ Financial Integrity Act of 1982. Our agency also is in substantial compliance with applicable federal accounting standards and the U.S. General Ledger at the transaction level and with federal financial system requirements. Accordingly, our agency fully complies with Section 4 of the Federal Managers’ Financial Integrity Act of 1982.

Nicholas P. Godici
Acting Under Secretary of Commerce for Intellectual Property and
Acting Director of the United States Patent and Trademark Office

FMFIA requires federal agencies to annually provide a statement of assurance regarding management controls and financial systems. The above statement of assurance was based on the review and consideration of a wide variety of evaluations, internal analyses, reconciliations, reports, and other information, including Department of Commerce (DOC) Office of Inspector General audits, and independent public accountant’s opinion on USPTO financial statements and reports on internal control and compliance with laws and regulations.

Inspector General Act Amendments

Section 106 of the IG Act Amendments (Pub. L. 100-504) of The Inspector General Act (as amended) requires semiannual reporting on IG audits and related activities as well as agency follow-up. The report is required to provide information on the overall progress on audit follow-up and internal management controls, statistics for audit reports with disallowed costs, and statistics on audit report with funds put to better use. The USPTO did not have audit reports with disallowed costs or funds put to better use.

The USPTO’s follow-up actions on audit findings and recommendations are essential to improving the effectiveness and efficiency of our programs and operations. For FY 2001, management completed action on all outstanding recommendations on reports issued in FY 2000 and prior to FY 2000. In addition, action was taken to close six recommendations contained in two audit reports issued in FY 2001. These two audit reports still have three recommendations remaining open. Actions are under way to close these three recommendations during FY 2002.

Federal Financial Management Improvement Act

The Federal Financial Management Improvement Act (FFMIA) requires federal agencies to report on agency substantial compliance with federal financial management system requirements, federal accounting standards, and the U.S. Government Standard General Ledger. The USPTO complied substantially with the FFMIA for FY 2001.

OMB Financial Management Indicators

The OMB prescribes the use of quantitative indicators to monitor improvements in financial management. The USPTO tracks other financial performance measures as well. The table below shows the USPTO’s performance during FY 2001 against performance targets established internally and by the OMB:

Financial Performance Measure for Fiscal Year 2001
FINANCIAL PERFORMANCE MEASURE	FY 2001 Target	FY 2001 Performance
Percentage of Timely Vendor Payments	95%	99%
Percentage of Payroll by Electronic Transfer	90%	98%
Percentage of Treasury Agency Locations Fully Reconciled	95%	100%
Timely Posting of Inter-Agency Charges	30 days	29 days
Timely Reports to Central Agencies	95%	100%
Average Processing Time for Travel Payments	30 days	7.8 days
Audit Opinion on FY 2001 Financial Statements	Unqualified	Unqualified
Material Weaknesses Reported for FY 2001	None	None

Prompt Payment Act

The Prompt Payment Act requires federal agencies to report on their efforts to make timely payments to vendors, including interest penalties for late payments. In FY 2001, the USPTO did not pay interest penalties on 99.1 percent of our 11,943 vendor invoices, representing payments of approximately $279.4 million. Of the 220 invoices that were not processed in a timely manner, the USPTO was required to pay interest penalties on 104 invoices, and was not required to pay interest penalties on 116 invoices, where the interest was calculated at less than $1. The USPTO paid only $12 in interest penalties for every million dollars disbursed in FY 2001. Virtually all recurring payments were processed by EFT in accordance with the EFT provisions of the Debt Collection Improvement Act of 1996.

Civil Monetary Penalty Act

There were no civil monetary penalties assessed by the USPTO during FY 2001.

Debt Collection Improvement Act

The Debt Collection Improvement Act prescribes standards for the administrative collection, compromise, suspension, and termination of federal agency collection actions, and referral to the proper agency for litigation. Although the Act has no material effect on the USPTO since it operates with minimal delinquent debt, the organization transferred all debt more than 180 days old to Treasury for cross-servicing.

Biennial Review of Fees

The Chief Financial Officers Act of 1990 requires a biennial review of agency fees, rents, and other charges imposed for services and things of value it provides to specific beneficiaries as opposed to the American public in general. The objective of the reviews is to identify such activities and to begin charging fees, where permitted by law, and to periodically adjust existing fees to reflect current costs or market value so as to minimize general taxpayer subsidy of specialized services or things of value (such as rights or privileges) provided directly to identifiable non-federal beneficiaries. The USPTO is a fully fee-funded agency without subsidy of general taxpayer revenue. For non-legislative fees, it uses activity-based cost accounting to evaluate the costs of activities and determine if fees are set appropriately. When necessary, fees are adjusted to be consistent with the program and with the legislative requirement to recover full cost of the goods or services provided to the public.