Skip Navigation U.S. Department of Health and Human Services www.hhs.gov
Agency for Healthcare Research Quality www.ahrq.gov
Archive print banner
AHRQ Annual Report on Research and Management, FY 2001

This information is for reference purposes only. It was current when produced and may now be outdated. Archive material is no longer maintained, and some links may not work. Persons with disabilities having difficulty accessing this information should contact us at: https://info.ahrq.gov. Let us know the nature of the problem, the Web address of what you want, and your contact information.

Please go to www.ahrq.gov for current information.

Part 2. Financial Management

Overview of Financial Performance

The Director, Office of Management (OM) serves as the Chief Financial Officer (CFO), and as such is responsible for overseeing all financial management activities relating to the programs and operation of the Agency. The CFO is accountable for ensuring that the financial management legislation, such as the Chief Financial Officers (CFOs) Act of 1990, the Federal Managers Financial Integrity Act (FMFIA) of 1992, and the Government Management and Reform Act (GMRA) of 1994, are implemented.

The Division of Financial Management, a component of OM, takes the lead in providing services and guidance in all aspects of Agency financial management, including budget formulation and execution, funds control, appropriation legislation, and development of automated financial management systems. AHRQ purchases its fund accounting, financial reporting, debt management, and other related fiscal services from the Program Support Center's (PSC) Division of Financial Operations (DFO) on a fee for service basis. Because the Department prepares audited financial statements for its largest components only, AHRQ financial statements are not audited.

Budgetary Resources

AHRQ receives its funding through an annual discretionary appropriation that includes Federal funds and miscellaneous reimbursements. The reimbursements come from other Federal agencies, usually in the form of expenditure transfers (payments made from one account to another). In addition, AHRQ receives modest funds from Freedom of Information Act fees.

Select for Funding Sources (graph, 49 KB).

Mechanisms of Support

AHRQ provides financial support to public and private nonprofit entities and individuals through the award of grants, cooperative agreements, contracts, and interagency agreements (IAAs). The grant and cooperative agreement mechanisms are used for activities where there is a public purpose authorized by statute that must be accomplished. The contract mechanism is used when the required product or service is for the direct use or benefit of the Federal government. IAAs are used to provide to, purchase from, or exchange goods or services with another Federal agency.

Program Announcements (PAs) are employed to invite applications for new or ongoing grant activities of a general nature, and Requests for Applications (RFAs) are used to invite grant applications for a targeted area. In FY 2001, 59 percent of AHRQ grants and cooperative agreements were in response to RFAs, and 41 percent were in response to RFAs, and initiated by individual investigators who developed research proposals within an area of interest to the Agency.

AHRQ also supports small grants that facilitate the initiation of studies for preliminary short-term projects, dissertation grants undertaken as part of an academic program to earn a research doctoral degree, conference grants that complement and promote AHRQ's core research and help the Agency further its mission, and National Research Services Awards (NRSAs) that support predoctoral and postdoctoral trainees through grants to individuals and institutions such as medical schools and universities.

The Agency awards minority supplements to ongoing grants that have at least 2 years of committed support remaining. These supplements are used to train and provide health services research experience to minorities or to support research on minority health issues.

AHRQ uses the contract and Interagency Agreement (IAA) mechanisms to carry out a wide variety of directed health services research and administrative activities. Request for Proposals (RFPs) for contracts are announced in the Commerce Business Daily.

Select for Obligations by Mechanism (graph, 32 KB)

Analysis of Financial Statements

AHRQ's FY 2001 financial statements report the Agency's financial position and results of operations on an accrual basis. These annual financial statements are comprised of a balance sheet, statement of net costs, statement of changes in net position, statement of budgetary resources, statement of financing, and related notes that provide a clear description of the Agency and its mission as well as the significant accounting policies used to develop the statements.

Accrual Basis of Accounting

Method of accounting that recognizes revenue when earned rather than when collected, and recognizes expenses when incurred rather than when paid.

When: The order is placed.
Then: The obligation is recorded as undelivered.

When: The materials are received and accepted.
Then: The obligational authority is expended and an account payable is created.

When: The materials are consumed.
Then: The material is expensed.

When: The payment is made.
Then: An outlay occurs and the account payable is cleared.

Consolidated Balance Sheet

The major components of the Consolidated Balance Sheet are assets, liabilities, and net position.

Assets. Assets represent Agency resources that have future economic benefits. AHRQ's assets totaled $287.5 million in FY 2001, an increase of close to 28 percent over the FY 2000 amount of $225.4 million. Fund balances with Treasury—mostly undisbursed cash balances from appropriated funds—comprised over 99 percent of the total assets and accounted for the entire increase over FY 2000. Fund balances represent dollars maintained at the Treasury Department to pay current liabilities (graph 35 KB).

The increase in this category was driven primarily by the steady growth of the AHRQ appropriation over the past few years. AHRQ does not maintain any cash balances outside of the U.S. Treasury and does not have any revolving or trust funds. Less than 1 percent of AHRQ's assets were comprised of accounts receivable, which reflects funds owed to AHRQ by other Federal agencies under reimbursable agreements, funds owed to AHRQ by the public, and purchases of equipment less accumulated depreciation.

Liabilities. Liabilities represent unfunded activities that require future budgetary resources. Relative to AHRQ's assets, there are few liabilities. In FY 2001, AHRQ had total liabilities of $20.7 million, an increase of $7.4 million over FY 2000. The largest components of AHRQ's liabilities were accounts payable at $11.5 million, accrued grant liabilities at $5.0 million, and accrued leave and payroll/benefit liabilities at $3.5 million.

Accounts payable reflect funds owed primarily for contracts and other services. Accrued grant liabilities represent the difference between grant advances paid through the Payment Management System (PMS) and estimated grant accruals reported by the grantees. Grant advances are liquidated upon the grantee's reporting of expenditures. Accrued leave and payroll/benefit liabilities are the estimated charge for salary and funded annual and sick leave that has been earned but not paid. Select for graph (34 KB).

Net Position. AHRQ's net position, which reflects the difference between assets and liabilities and signifies the Agency's financial condition, totals $266.8 million. This amount is broken into two categories: unexpended appropriations (amount of authority granted by Congress that has not been expended or used) at $89.7 million and cumulative results of operations (net results of operations since inception plus the cumulative amount of prior period adjustments) at $177.1 million.

The upward change in net position was primarily the result of an increase in the funds balance with Treasury.

Consolidated Statement of Net Cost. The Consolidated Statement of Net Cost represents the net cost to operate the Agency. Net costs, which are comprised of gross costs less earned revenues, recognize costs when incurred, regardless of the year the money was appropriated during the budget process. The categories on this statement reflect AHRQ's budget activities (major programs), thus making it possible to relate program costs to GPRA performance measures and other programs. AHRQ's FY 2001 net cost of operations was $49.1 million: $228.9 million in gross costs less $179.8 million in earned revenues.

AHRQ's net cost has decreased since FY 1999 because significant portions of AHRQ's programs were funded with PHS Evaluation Funds, which are considered earned revenues.

Statement of Changes in Net Position. The Consolidated Statement of Changes in Net Position reports how the net cost of operations was financed. AHRQ ended FY 2001 with a consolidated net position total of $266.8 million, an increase of almost 26 percent from FY 2000. Net results of operations increased significantly, from $38.5 million in FY 2000 to $78.1 million in FY 2001, and appropriations used grew by $29.1 million and 30 percent. Between FY 2000 and FY 2001, unexpended appropriations decreased by $23.4 million due largely to a reduction of about $17.0 million in undelivered orders, which represent appropriations obligated but not yet received.

Select for graphs (27 KB).

Statement of Budgetary Resources. The Statement of Budgetary Resources focuses on budgetary resources (appropriations and reimbursables), the status of those resources (obligated or unobligated), and the relationship between the budgetary resources and outlays (collections and disbursements). AHRQ's FY 2001 budgetary resources totaled $295.3 million and were primarily made up of spending authority from offsetting collections ($186.7 million), which includes PHS Evaluation Funds and reimbursable funds, and budget authority funds ($104.8 million). This statement shows that about 98 percent ($290.1 million) of the resources budgeted for FY 2001 were either spent or earmarked for specific activities. AHRQ's outlays 75 totaled $31.4 million, a decrease of 40 percent from the FY 2000 level of $52.2 million. Since 1997, the proportion of PHS Evaluation Funds to AHRQ's total budget has steadily increased, resulting in a progressive decrease of AHRQ's net outlays during the same time period.

Select for graph (15 KB).

Combined Statement of Financing. The Combined Statement of Financing links proprietary and budgetary accounting information, and reconciles obligations incurred with the net cost of operations. While the budgetary accounting system tracks resources and the status of those resources on a cash basis, the financial accounting system facilitates the translation of the use of budgetary resources into financial statements on an accrual basis. Resources that do not fund operations include changes in undelivered orders and assets purchased during the period, while costs that do not require resources include depreciation.

For FY 2001, the resources used to finance AHRQ activities totaled $103.6 million, which was comprised chiefly of budgetary resources (obligations incurred less offsetting collections) as well as non-budgetary resources (costs incurred by others for AHRQ without reimbursement ). The resources used to finance the net cost of operations totaled $47.5 million, while the net cost of operations totaled $49.1 million, which agrees with the amount displayed on the Consolidated Statement of Net Cost.

Select for chart (26 KB).

Limitations to Financial Statements

The financial statements have been prepared to report the financial position and results of operations of the entity, pursuant to the requirements of 31 U.S.C. 3515(b).

Although these statements have been prepared from the books and records of the entity in accordance with the formats prescribed by OMB, these statements are in addition to the financial reports used to monitor and control budgetary resources, which are prepared from the same books and records.

These statements should be read with the realization that they are for a component of the U.S. Government, a sovereign entity. One key implication of this fact is that liabilities cannot be liquidated without legislation that provides the resources to do so.

Return to Contents

Other Performance Issues

Federal Managers' Financial Integrity Act (FMFIA) Efforts

The FMFIA Act of 1982 requires that Federal agencies establish processes to develop and implement appropriate, cost-effective management controls; assess the adequacy of management controls within programs and operations; identify needed improvements: and take corresponding corrective action.

In accordance with the Act, AHRQ has implemented a streamlined Management Accountability and Control Program (MAC) that uses periodic reviews, audits, and studies to provide reasonable assurance that Agency resources are protected against misappropriation, mismanagement, waste, and abuse. This Program integrates efforts to meet the requirements of FMFIA with other Agency efforts to improve effectiveness and accountability.

MAC Program activities undertaken in FY 2001 include work force planning, travel audits, IMPAC card audits, information technology security program audits, consolidation of human resource and information technology services assessments, as well as a continuing review and update of Agency operating policies and procedures. Based on an evaluation of these activities, the Agency did not identify any high-risk areas, critical weaknesses, and non-conformances in FY 2001. AHRQ also does not have any financial systems as defined by FMFIA.

The Agency remains committed to developing more efficient and effective ways to perform our mission while maintaining and protecting the integrity of the resources that have been entrusted to us. AHRQ has and will continue to use this activity as an opportunity to ensure that our financial and internal management systems and controls adequately support the accomplishment of our mission.

FY 2001 FMFIA Activities

  • Completed four workforce planning related activities: evaluated the Agency's recruitment process, more clearly defined the Agency's work functions and processes, refined the technical competencies needed by Agency staff, and developed a comprehensive five-year workforce restructuring plan that reflects Agency needs and Department priorities.
  • Performed periodic audits of travel documentation processed through the Travel Management System to ensure that travel expenditures conform to Department and Federal travel regulations.
  • Performed periodic audits of IMPAC cardholders, focusing on the adequacy of documentation and compliance with established procedures and regulations governing card usage.
  • Conducted an annual Agency-wide security program review and assessment to identify Agency information technology system and security vulnerabilities, and developed an action plan to correct all identified vulnerabilities.
  • Developed and implemented a plan to consolidate the Agency's human resources staff to the Program Support Center, who in turn will provide human resource services to AHRQ under a performance based agreement.
  • Institutionalized a process to allocate and when necessary, reallocate human resources to ensure that these resources are aligned with Agency strategic goals and are within budget constraints.
  • Awarded a new information technology support contract using an existing National Institutes of Health resource to provide AHRQ with all Agency information technology infrastructure support as well as support for all Chief Information Officer activities including mandated security and accountability activities.

Information Technology

Recognizing the importance of information technology (IT) for effective government, Congress enacted the Information Technology Management Reform Act (ITMRA) and the Federal Acquisition Reform Act (FAR) in 1996. These two Acts together, known as the Clinger-Cohen Act, ensure that the Federal government investment in information technology is made and used wisely and introduce a set of comprehensive measures intended to improve ways that agencies acquire, use, and dispose of IT. These laws were designed to increase competition, eliminate burdensome regulations, and help the Federal government benefit from efficient private sector techniques.

Since 1996, numerous other IT-related laws established new information management requirements, including the Government Paperwork Elimination Act (GPEA) of 1998. Under GPEA, persons required to submit information to the government or maintain information must be given the option to do so electronically when practicable. That includes providing for electronic signatures and the appropriate security for the information involved. Section 508 of this Act also mandated that individuals with disabilities have access to the Federal government's electronic and information technology. This law applies to all Federal agencies when they develop, procure, maintain, or use electronic and information technology.

The Government Information Security Reform Act (GISRA), part of the 2001 Defense Authorization Act, required Federal government agencies to develop and implement comprehensive information security programs. Congress passed this law in the wake of continuing reports that Federal government systems were vulnerable to insider attacks, outside infiltration, and damage from viruses and other malicious acts. This legislation reaffirms the need for each Agency to: ensure that policies are founded on a continuous risk management cycle, implement controls that adequately assess information security risks, promote continuing awareness of information security risks, continually monitor and evaluate information security policies, and control the effectiveness of information security practices.

AHRQ also supports the Department's efforts to develop a Unified Financial Management System. This system, which will replace five existing accounting systems currently in use across the Operating Divisions, will integrate the Department's financial management structure and provide a more timely and coordinated view of critical financial management information.

AHRQ's FY 2001 accomplishments toward meeting the requirements set forth in the above laws follow.

GISRA-Related Accomplishments

  • Updated and expanded AHRQ's Security Incident Response Plan.
  • Reviewed AHRQ's Business Continuity and Contingency Plan.
  • Performed an Agency-wide system security assessment.
  • Updated AHRQ's Security Program Plan.
  • Identified goals, developed action plans and preliminary implementation programs to meet GISRA objectives.

GPEA-Related Accomplishments

  • Identified goals, developed action plans and preliminary implementation programs to meet GPEA objectives.

Section 508-Workforce Investment Act of 1998

  • Identified goals, developed action plans and preliminary implementation programs to meet Section 508 objectives.

Return to Contents

Financial Statements

Consolidated Balance Sheet, As of September 30, 2001 and 2000 (in thousands)

Assets 2001 Restated
2000
   Intragovernmental    
      Fund Balance with Treasury (Note 2) $286,778 $219,029
      Accounts Receivable, Net (Note 3) 1 3,763
      Advances and Prepayments (Note 4) - 40
   Total Intragovernmental 286,779 222,832
   Accounts Receivable, Net (Note 3) 252 48
   Advances to Grantees (Note 4) - 2,309
   Advances and Prepayments (Note 4) 1 3
   Property and Equipment, Net (Note 5) 435 163
Total Assets $287,467 $225,355
Liabilities 2001 Restated
2000
   Intragovernmental    
      Accounts Payable $1,757 $1,835
      Advances from Federal Agencies    
      Accrued Payroll and Benefits 311 283
   Total Intragovernmental 2,068 2,118
   Accounts Payable 9,706 6,357
   Accrued Payroll and Benefits 1,243 1,132
   Accrued Grant Liability (Note 4) 4,967 -
   Actuarial FECA Liability (Note 6) 439 300
   Accrued Leave Liability 1,899 3,396
   Liability for Deposit Funds 328  
Total Liabilities 20,650 13,303
Net Position 2001 Restated
2000
   Unexpended Appropriations (Note 7) 89,680 103,683
   Cumulative Results of Operations 177,137 108,369
Total Net Position 266,817 212,052
Total Liabilities and Net Position $287,467 $225,355

The accompanying notes are an integral part of these statements.

Consolidated Statement of Net Cost, For the year ended September 30, 2000 (in thousands)

Current Programs Gross
Cost
Less:
Earned Revenues
Unaudited-Restated
Net Cost
   Research on Health Cost, Quality, and Outcomes $135,674 $103,904 $31,770
   Medical Expenditure Panel Survey 25,230 - 25,230
   Program Support 2,388 - 2,388
Net Cost of Operations $163,292 $103,904 $59,388

The accompanying notes are an integral part of these statements.

Return to Contents

Consolidated Statement of Net Cost, As of September 30, 2001 and 2000 (in thousands)

Current Programs 2001 Restated
2000
   Research on Health Cost, Quality and Outcomes $11,018 $31,770
   Medical Expenditure Panel Survey $35,555 $25,230
   Program Support 2,509 2,388
      Totals—Current Programs $49,082 $59,388
Net Cost of Operations $49,082 $59,388

The accompanying notes are an integral part of these statements.

Return to Contents

Consolidated Statement of Net Cost, For the period ended September 30, 2001 (in thousands)

Current Programs Gross
Cost
Less:
Earned Revenues
Net
Cost
   Research on Health Cost, Quality, and Outcomes $190,843 $179,825 $11,018
   Medical Expenditure Panel Survey 35,555 - 35,555
   Program Support 2,509 - 2,509
      Total—Current Programs $228,907 $179,825 $49,082
Net Cost of Operations $228,907 $179,825 $49,082

The accompanying notes are an integral part of these statements.

Return to Contents

Statement of Changes in Net Position, For periods ended September 30, 2001 and 2000

Net 2001 Restated
2000
Net Cost of Operations $49,082 $59,388
Financing Sources (Other than exchange revenues):    
   Appropriations 125,829 96,716
   Donated Revenues - 1
   Imputed Financing 1,372 1,209
Net Results of Operations 78,119 38,538
Prior Period Adjustments 77 (29)
Net Change in Cumulative Results of Operations 78,196 38,509
Increase (Decrease) in Unexpended Appropriations (23,431) 87,856
Change in Net Position 54,765 126,365
Net Position—Beginning of Period 212,052 85,687
Net Position—End of Period $266,817 $212,052

The accompanying notes are an integral part of these statements.

Return to Contents

Statement of Budgetary Resources, For the year ended September 30, 2001 and 2000 (in thousands)

Budgetary Resources September 2001 September 2000
   Budget Authority $104,755 $111,402
   Unobligated Balances—Beginning of Period 2,673 (493)
   Spending Authority from Offsetting Collections 186,671 104,786
   Adjustments 1,154 (1,240)
      Total Budgetary Resources $295,253 $214,455
Status of Budgetary Resources September 2001 September 2000
   Obligations Incurred $290,057 $212,365
   Unobligated Balances—Available 1,312 815
   Unobligated Balances—Not Available 3,884 1,275
      Total Status of Budgetary Resources $295,253 $214,455
Outlays September 2001 September 2000
   Obligations Incurred $290,057 $212,365
   Less: Spending Authority from Offsetting Collections and Adjustments 187,825 103,546
   Net Obligations Incurred 102,232 108,819
   Obligated Balance, Net—Beginning of Period 218,340 161,689
   Obligated Balance Transferred, Net - -
   Less: Obligated Balance, Net—End of Period 289,128 218,340
Total Outlays $31,444 $52,168

The accompanying notes are an integral part of these statements.

Return to Contents

Combined Statement of Financing, For the year ended September 30, 2001 and 2000 (in thousands)

Resources Used to Finance Activities 2001 Restated
2000
Budgetary    
   Budgetary resources obligated for orders and delivery of goods and services to be received or benefits to be provided to others $290,057 $212,365
   Less: Offsetting collections, recoveries of prior-year authority, and changes in unfilled customer orders 187,825 103,546
   Net budgetary resources used to finance activities 102,232 108,819
Non-Budgetary    
   Costs incurred by others for the entity without reimbursement 1,372 1,209
   Property received from others without reimbursement    
   Net non-budgetary resources used to finance activities 1,372 1,209
Total resources used to finance activities $103,604 $110,028
Relationship of Total Resources to the Net Cost of Operations:    
   Increase (decr.) in budgetary resources obligated to order goods and services not yet received or benefits not yet provided $56,066 $52,178
   Total resources used to fund items not part of the net cost of operations 56,066 52,178
Resources used to finance the net cost of operations $47,538 $57,850
Components of Net Cost of Operations that Do Not Require or Generate Resources During the Reporting Period:    
   Expenses or exchange revenue related to the disposition of assets or liabilities or allocation of their costs over time:    
      Expenses related to use of assets $131 $91
      Losses from re-evaluation of assets and liabilities (272)  
         Subtotal (141) 91
   Expenses that will be financed with budgetary resources recognized in future periods:    
      Increase in Annual Leave Liability 335 1,253
      Other 1,350 194
Total components of net cost of operations that do not require or generate resources during the reporting period 1,544 1,538
Net Cost of Operations $49,082 $59,388

The accompanying notes are an integral part of these statements.

Return to Contents
Proceed to Next Section

 

The information on this page is archived and provided for reference purposes only.

 

AHRQ Advancing Excellence in Health Care