FDA's FY 2002 Annual Financial Report

U.S. Department of Health and Human Services
Food and Drug Administration
Annual Financial Report
Fiscal Year 2002

TABLE OF CONTENTS
Page

Message from the Deputy Commissioner

i

Message from the Chief Financial Officer

ii

Preface

iii

Section I - Management Discussion and Analysis

 

Agency Overview

I-1

Foods Program

I-17

Human Drugs Program

I-25

Biologics Program

I-33

Animal Drugs and Feeds Program

I-41

Devices and Radiological Health Program

I-47

National Center for Toxicological Research Program

I-55

Financial Performance

I-61

Section II - Consolidated Financial Statements

 

Consolidated Balance Sheets

II-2

Consolidated Statements of Net Costs

II-3

Consolidated Statements of Changes in Net Position

II-4

Consolidated Statements of Financing

II-5

Combined Statements of Budgetary Resources

II-6

Notes to Consolidated Principal Financial Statements

II-7

Section III - Required Supplementary Information (Unaudited)

 

Combining Statements of Budgetary Resources (2001) (2002)

III-2

Supplemental Consolidating Statements of Net Cost by Expense Type & Program (2001) (2002)

III-4

Deferred Maintenance

III-6

Intragovernmental Transactions ­ Intra-governmental Assets

III-7

Intragovernmental Transactions ­ Intra-governmental Liabilities

III-8

Intragovernmental Transactions ­ Intra-governmental Revenues and Expenses (2001) (2002)

III-9

Section IV - Required Supplementary Stewardship Information (Unaudited)

 

Research and Development

IV-1

Section V - Reports on the Audit of FDA's FY 2002 Financial Statements

 

Office of Inspector General's Transmittal Letter - PDF

V-2

Independent Auditors' Report on Consolidated Financial Statements - PDF

V-5

Independent Auditors' Report on Internal Control over Financial Reporting - PDF

V-7

Independent Auditors' Report on Compliance with Laws and Regulations - PDF

V-10

Agency's Response to Independent Auditors' Report - PDF

V-12

Appendices

 

Description of FDA User Fees

Appendix 1

FDA Acronyms

Appendix 2

December 16, 2002

Deputy Commissioner's Message

Lester Crawford

I present to you the Food and Drug Administration's (FDA) Annual Financial Report for fiscal year (FY) 2002. I am pleased to report that FDA has earned its fifth consecutive "clean" opinion on its audited financial statements. By comparing the fiscal information from these statements with the summary performance information reported under the Government Performance and Results Act, FDA is able to demonstrate how this investment yields valuable results.

After the events of September 11, 2001, protecting our homeland has become more important than ever before. As the nation's foremost consumer safety organization, FDA strives to assure a safe food supply through critical science-based prevention strategies; ensures medical product safety and their use by millions of Americans; brings safe and effective new technologies to a world-wide market; and monitors emerging hazards through surveillance systems and monitors about eight million import shipments that enter the United States. Additional FY 2002 resources allowed FDA to facilitate the availability of new bioterrorism tools accelerating the availability of medical products necessary for public health preparedness and to strengthen its surveillance, investigational, and laboratory support for detection and management of product contamination for foods, medical products, and blood.

The President's Management Agenda (PMA) lays out the framework for an effective Federal government that is citizen centered and results-oriented. During FY 2002, FDA made progress in accomplishing the PMA and the Department of Health and Human Services (DHHS) Secretarial goal of becoming "one HHS." The PMA includes five government-wide initiatives: Strategic Management of Human Capital, Competitive Sourcing, Improved Financial Performance, Expanded Electronic Government, and Budget and Performance Integration.

The Secretary is promoting changes to consolidate, streamline, and standardize administrative programs throughout DHHS. In line with his plan, in FY 2002, FDA took the first steps toward consolidating its administrative functions. A few FDA PMA activities include the first phase of de-layering the organization; the development of plans to implement a new financial system in conjunction with the DHHS initiative; the study of the creation of a "shared service" organization; and continued preparation for the consolidation of the agency at the White Oak Federal Center.

The Reports Consolidation Act of 2000 requires that I, as the Agency Head, give an assertion on the information in this report. So, as acting Agency Head, I assert that the financial information in this report is complete and reliable, based on data in FDA's financial information systems, and is reported in conformance with Generally Accepted Accounting Principles. Further, it has been deemed to "fairly represent" the financial condition and results of operation of the Agency by the Department's Office of Inspector General. For program performance information, the FY 2003 Performance Plans and Reports of HHS components will include descriptions of the means HHS programs use to verify and validate performance data and related data issues, including the completeness and reliability of the data. Where required, the programs have included discussions of actions planned and completed to improve the completeness and reliability of data.

I welcome your interest in FDA and its programs. In these challenging and uncertain times, taxpayers can be assured that FDA stands ready to protect the health and well being of all Americans.

Lester M. Crawford, D.V.M., Ph.D
Lester M. Crawford, D.V.M., Ph.D.

 

December 16, 2002

Message from the Chief Financial Officer

Jeff Weber

I am pleased to present you with the Food and Drug Administration's Annual Financial Report for fiscal year (FY) 2002. The goal of this report is to update you on our stewardship of resources and how we are achieving the Agency's mission.

This is the fifth consecutive year FDA has received an unqualified opinion on our financial statements. It is also the fifth consecutive year that our auditors did not identify and report material weaknesses in FDA's internal controls. The FY 2002 financial statements have been prepared in accordance with all new accounting standards that were effective for FY 2002 by the Office of Management and Budget and the Federal Accounting Standards Advisory Board. We will continue to work diligently to implement all new accounting standards in a timely manner.

FDA is making progress in implementing the President's Management Agenda (PMA) and the Department of Health and Human Services' Secretarial goal of becoming "one HHS." The PMA lays out a framework for an effective Federal government accomplished through five Executive Branch-wide initiatives addressing human capital, financial management, electronic government, competitive sourcing, and budget and performance integration. The "one HHS" initiative is the Secretary's goal to consolidate, streamline, and standardize administrative programs throughout HHS.

In FY 2002, our progress included the completion of the first phase of de-layering the organization; the development of plans to implement a new financial system in conjunction with the DHHS initiative; and the study of the creation of a "shared service" organization. This is an opportune time for FDA as we continue the process of consolidating many decentralized headquarters operations into one location at the White Oak Federal Center.

In response to the terrorist attack of September 11, 2001, and with additional FY 2002 resources provided by Congress, FDA quickly hired a substantial number of field staff that will increase our ability to ensure the safety of the national food supply and other regulated products. Other investments were made to strengthen our surveillance, investigational, and laboratory support capabilities for detection and management of product contamination of foods, medical products, and blood.

Working in partnership with FDA's program managers, my staff and I support the Commissioner's priorities by providing oversight and cost effective, strategic management of the Agency's limited resources. As CFO, I remain fully committed to the stewardship responsibilities needed to continue to maintain the highest level of accountability for the management of the Agency's financial resources.

We appreciate your interest in this report and hope that you find it useful and informative. If you wish to discuss this report, please contact Peter Kelchner, Chief, Division of Accounting's CFO Liaison Branch at Pkelchne@oc.fda.gov or 301-827-4792.

Jeffrey M. Weber
Jeffrey M. Weber