FY 2011 Department of State Agency Financial Report
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UNITED STATES DEPARTMENT OF STATE FISCAL YEAR 2011 Agency Financial Report Leadership in a Time of Change 18 Blue Print Forward 22 Technology and Freedom 38 Financial Condition 50 Feed the Future 139 Our Challenges Assisting U.S. 148 Citizens Abroad About This Report he United States Department of State’s Agency Financial Report (AFR) for Fiscal Year (FY) 2011 provides an overview of the Department’s financial and Tperformance data to help Congress, the President, and the public assess our stewardship over the resources entrusted to us. See www.state.gov/s/d/rm/rls/perfrpt/2011/index.htm. The AFR is the first of a series of three annual financial and performance reports for Federal agencies choosing to produce a separate AFR, an integrated Performance Budget, and a Summary of Performance and Financial Information. The reporting schedule includes: (1) an Agency Financial Report issued in November 2011; (2) a complete agency Annual Performance Report (APR) for FY 2011 and Annual Performance Plan (APP) for FY 2013 as part of the FY 2013 Congressional Budget Justification (CBJ), which is the Department’s budget request to Congress, to be issued in February 2012; and (3) a Summary of Performance and Financial Information, to be released also in February 2012. The last report will be produced jointly with the United States Agency for International Development (USAID). These reports are available online athttp://www.state.gov/s/d/rm/c6113.ht m. Percent Change 2010 2009 2008 FY 2011 Highlights (dollars in millions) 2011 over 2010 2011 (Restated) (Restated) (Restated) Balance Sheet Totals as of September 30 Total Assets +8% $ 73,811 $ 68,334 $ 59,553 $ 51,717 Total Liabilities +5% 24,875 23,583 22,536 21,102 Total Net Position +9% 48,936 44,751 37,017 30,615 Results of Operations for the Year Ended September 30 Total Net Cost of Operations +8% $ 23,260 $ 21,548 $ 21,613 $ 17,753 Budgetary Resources for the Year Ended September 30 Total Budgetary Resources +1% $ 53,292 $ 52,581 $ 50,138 $ 38,825 Full-time, permanent employees in the Foreign Service +4% 13,518 13,008 12,258 11,582* Full-time, permanent employees in the Civil Service +6% 10,645 10,039 9,614 9,291* Full-time Foreign Service Nationals –6% 5,669 6,051 6,010 6,736 Number of Passports Issued (books and cards) –10% 12.6 million 13.9 million 13.5 million 16.2 million * Data as of August 31, 2008. About ThE COVER The cover images symbolize worldwide change and the Department’s leadership in this time. On the left, the Secretary delivers a statement in the Department’s Treaty Room announcing U.S. sanctions on Syria. The sanctions are in response to that government’s crackdown on its people demanding their universal human rights through peaceful demonstrations. The center image represents “freedom of the press,” as Tunisians came out to protest and test the word thereof of their president, Ben Ali. While in another image, people are celebrating the peaceful birth of a new nation, the Republic of South Sudan. The final image is of gear that stands ready for use by the Department’s evacuation team that accompanied evacuees of Tripoli, Libya on a chartered ferry to Valletta, Malta. TABLE OF CON T EN T S 2 Message from 51 Financial Section 122 Other Accompanying the Secretary Information 51 Message from the Chief Financial 6 Management’s Officer 122 Financial Management Plans and Reports Discussion and 53 Independent Auditor’s Report and Analysis OIG Transmittal 130 Management of Departmental Obligations 6 About the Department 73 CFO Response to Audit Report 135 Heritage Assets 13 Performance Summary and 75 Principal Financial Statements Highlights 139 Inspector General’s Assessment 76 Consolidated Balance Sheet of Management and Performance 19 Strategic Goals and Results Challenges 77 Consolidated Statement of 38 Summary Analysis of Financial Net Cost 147 Summary of Financial Statement Condition Audit and Management Assurances 78 Consolidated Statement of 46 Internal Controls, Financial Changes in Net Position Management Systems and Compliance with Laws and 79 Combined Statement of Regulations Budgetary Resources 149 Appendix 80 Notes to Principal Financial 149 Glossary of Acronyms Statements 120 Required Supplementary Information Images featured in Table of Contents are credited on the inside back cover MESSAGE FROM THE SECRETARY MESSAGE FRO M T HE SECRETARY am pleased to present the U.S. Department of In the Middle East and North Africa, where citizens have State’s Agency Financial Report for Fiscal Year 2011. stood up and demanded their universal rights, America’s IThis year has seen some dramatic changes around diplomats and development experts are reaching beyond the world, but one thing has remained constant: The the embassy walls to engage directly with the people remarkable men and women of the Department of State of the region, including through extensive use of social continue to work tirelessly to advance America’s interests networking and new media tools. In Tunisia, Egypt, and and values across the globe. This report presents financial now Libya—where the United States successfully rallied and performance information that reflects our dedication a broad international coalition to prevent a dictator from to leading American foreign policy in a rapidly changing slaughtering his own people—we are supporting civil society, international landscape. independent journalists, and students as they move from 2 | Un i t e d StateS de p a r t m e n t o f State • 2011 ag e n c y fi n a n c i a l re p o r t MESSAGE FROM THE SECRETARY protest to politics. We are helping transitional authorities invest time and energy, so that we put ourselves in the best build democratic institutions and prepare for elections. position to sustain our leadership, secure our interests, and For it to succeed, the Arab political awakening must also advance our values. One of the most important tasks of be an economic awakening. So we are working with leaders American statecraft in the next decade, therefore, will be to in the public and private sectors to create new economic lock in a substantially increased investment—diplomatic, opportunities, foster entrepreneurship, and increase regional economic, strategic, and otherwise—in the Asia-Pacific integration and trade. region, which has become a key driver of global politics and economics. In 2011, the United States continued to In Iraq, we are transitioning to a civilian partnership and increase its engagement with its traditional allies in Asia, as shifting our focus to governance and economic development. well as with the region’s emerging powers and multilateral We have opened new consulates in Erbil and Basrah that, organizations, including the Association of Southeast Asian along with our embassy, will support Iraqis as they work to Nations (ASEAN), the Asia-Pacific Economic Cooperation strengthen their democracy, combat international terrorism, (APEC) forum, and the East Asia Summit (EAS). We are and rejoin the international community. already seeing the results of this increased engagement—in FY 2011, U.S. exports to APEC members grew much faster In Afghanistan, we are transitioning to a security situation than exports to the rest of the world. that is Afghan led. We are pursuing our “fight, talk, build” strategy that aims to defeat al-Qaeda, increase military This effort is connected to our broader commitment to pressure on the Taliban and other insurgents, support elevate economic statecraft as a pillar of U.S. foreign policy Afghan-led reconciliation that meets clearly defined and a key driver of recovery and renewal here at home. objectives, and promote economic and political stability Our diplomats around the world are stepping up their through short-term development assistance and a long-term advocacy for America’s exporters and pushing back against vision of regional economic integration and trade we call the obstacles that U.S. businesses face overseas—from the New Silk Road. corruption to discriminatory regulations to the theft of intellectual property. We are working with partners As our remaining forces depart Iraq and America begins throughout the Federal Government to attract new foreign to withdraw its forces from Afghanistan, the United States investment into American communities that creates jobs and stands at a pivotal point. Over the last 10 years, we allocated opportunities. We were proud to help secure significant new immense resources to those two theaters. In the next 10 trade agreements with South Korea, Colombia, and Panama. years, we need to be smart and systematic about where we Our goal is to promote and protect an open, free, transparent, 2011 ag e n c y fi n a n c i a l re p o r t • Un i t e d StateS de p a r t m e n t o f State | 3 MESSAGE FROM THE SECRETARY and fair economic system where all can participate; where Including women in peace processes, such as reconciliation ideas, products, and capital flow unimpeded; where in Afghanistan, helps resolve conflicts and secure lasting regulations and rules are developed out in the open and are stability. Empowering women to participate in politics— equitably applied; and where all businesses are treated fairly. including in the transitions now under way in the Middle East and North Africa—leads to more sustainable and This year our diplomats and development experts also worked successful democracies. hard to uphold and advance universal human rights around the world, including the rights of individuals to express A final hallmark of our work this year has been a their views freely, whether in a traditional public square or commitment to modernizing the way we do business at in today’s online marketplace of ideas.