USPTO Performance and Accountability Report - U.S. Patent and ...

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68 Financial Discussion and Analysis Financial Highlights The USPTO received an unqualified (clean) audit opinion from the independent public accounting firm of KPMG LLP on its FY 2012 financial statements, provided in the Financial Section of this report. This is the 20th consecutive year that the USPTO received a clean opinion. Our unqualified audit opinion provides independent assurance to the public that the information presented in the USPTO financial statements is fairly presented, in all material respects, in conformity with accounting principles generally accepted in the United States of America. In addition, KPMG LLP reported no material weaknesses in the USPTO’s internal control, and no instances of non-compliance with laws and regulations affecting the financial statements. Refer to the Other Accompanying Information section for the Summary of Financial Statement Audit and Management Assurances. The summary financial highlights presented in this section provide an analysis of the information that appears in the USPTO’s FY 2012 financial statements. The USPTO financial management process ensures that management decision-making information is dependable, internal controls over financial reporting are effective, and that compliance with laws and regulations is maintained. The issuance of these financial statements is a component of the USPTO’s objective to continually improve the accuracy and usefulness of its financial management information. PERFORMANCE AND ACCOUNTABILITY REPORT: FISCAL YEAR 2012 Balance Sheet and Statement of Changes in Net Position At the end of FY 2012, the USPTO’s consolidated Balance Sheet presents total assets of $1,982.1 million, total liabilities of $1,255.2 million, and a net position of $726.9 million. Total assets increased 20.3 percent over the last four years, resulting largely from the increase in Fund Balance with Treasury. The decrease in Fund Balance with Treasury during FY 2009 is a result of the decrease in fee income. The following graph shows the changes in assets during this period.
Fund Balance with Treasury is the single largest asset on the Balance Sheet and represents 87.1 percent of total assets at the end of FY 2012. Over half of the Fund Balance with Treasury represents fees the USPTO has collected, but has not been authorized to spend through the annual appropriation process – this includes temporarily unavailable fees of $790.1 million and unavailable special fund receipts under OBRA of $233.5 million, which total $1,023.6 million in unavailable fees. This asset is also comprised of unpaid obligated funds of $344.8 million, other funds held on deposit for customers of $120.7 million, and unobligated funds carried over from one year to the next (operating reserve) of $237.9 million. The unavailable special fund receipts and the temporarily unavailable funds require Congressional appropriation before they will be available for USPTO’s use. These funds, together with amounts obligated and held on deposit, represent 86.2 percent of the Fund Balance with Treasury. The operating reserve is available for use without further Congressional appropriation and is maintained to permit the USPTO to plan for long-term financial stability, as well as temporary changes in our cash flow. As such, the operating reserve is not tied to a specific event and enables the USPTO to address fluctuations in revenues or unexpected demands on resources. In addition, the operating reserve is used to manage cash flow at the beginning of the fiscal year to ensure the agency has adequate resources to sustain current operations. Total fee collections are lower than operating requirements early in the year, and do not fully cover the necessary expenses such as payroll and contractual obligations that occur close to the fiscal year start. The operating reserve is intended to provide sufficient resources to continue current operations until the collection of fees builds over the subsequent months. As required by 35 U.S.C. 42(c)(3), the USPTO maintains and tracks two separate and distinct operating reserve balances – one for Patent operations and one for Trademark operations. At the end of FY 2012, the Patent operating reserve was $111.8 million and the Trademark operating reserve was $126.1 million, 0.6 and 7.5 months of operating expenses, respectively. MANAGEMENT’S DISCUSSION AND ANALYSIS The other major asset is property, plant, and equipment. The net balance of this asset has increased by $32.8 million during the past four years, with the acquisition values of property, plant, and equipment increasing by $194.0 million. Investments in IT software and software in development from FY 2008 to FY 2009 increased $12.7 million, in conjunction with enhancing the existing e-government capabilities in areas such as e-filing, application information retrieval, data and image capture, and web-based search systems. This increase slowed to only $6.8 million in FY 2010 as the USPTO chose to stop modifications to existing, outdated systems. Instead, the USPTO is beginning to completely re-invent our IT systems from end-to-end, which will lead to future increases in IT hardware, software, and software in development values. This was evidenced by increases in FY 2011 and FY 2012 of $76.1 million and $55.4 million, respectively, for IT hardware, software, and software in development. Total liabilities increased from $1,251.2 million at the end of FY 2011 to $1,255.2 million at the end of FY 2012, representing an increase of $4.0 million, or 0.3 percent. The following graph shows the composition of liabilities during the past five years. www.uspto.gov 69
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uspto Performance and Accountabilit
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Table of Contents Message from the
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4 MESSAGE FROM THE UNDER SECRETARY
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Management's Discussion and Analysi
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the Patent Public Advisory Committe
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America Invents Act President Obama
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There are 11 Strategic Plan perform
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What is a patent? A patent is an in
Page 19 and 20: Strategic Goal 1: Optimize Patent Q
Page 21 and 22: OBJECTIVE 2: Increase patent applic
Page 23 and 24: FIGURE 8 Cumulative Total PPH Filin
Page 25 and 26: measure. Note that FY 2011 was the
Page 27 and 28: E-petitions allow applicants to obt
Page 29 and 30: What is a trademark or service mark
Page 31 and 32: Strategic Goal 2: Optimize Trademar
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Page 35 and 36: was formed to work with applicants
Page 37 and 38: What is the role of the USPTO and i
Page 39 and 40: Strategic Goal 3: Provide Domestic
Page 41 and 42: the number of highly-qualified pate
Page 43 and 44: Improving Efficiency and Cooperatio
Page 45 and 46: Providing Policy Advice and Experti
Page 47: What is management’s focus on max
Page 50 and 51: 48 MANAGEMENT’S DISCUSSION AND AN
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Page 62 and 63: 60 Accompanying Information Perform
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Page 88 and 89: 86 FINANCIAL SECTION United States
Page 94 and 95: 92 FINANCIAL SECTION NOTE 1. Summar
Page 96 and 97: 94 FINANCIAL SECTION NOTE 1. Summar
Page 98 and 99: 96 FINANCIAL SECTION NOTE 3. Accoun
Page 100 and 101: 98 FINANCIAL SECTION NOTE 7. Entity
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Page 114 and 115: 112 FINANCIAL SECTION NOTE 21. Reco
Page 116 and 117: 114 INDEPENDENT AUDITORS’ REPORT
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118 INDEPENDENT AUDITORS’ REPORT
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124 Inspector General’s Top Sched
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126 OTHER ACCOMPANYING INFORMATION
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166 Summary of Financial Statement
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174 FY 2012 USPTO Workload Tables I
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182 TABLE 9 UNITED STATES PATENT AP
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206 Glossary of Acronyms and Abbrev
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208 GLOSSARY OF ACRONYMS AND ABBREV
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United States Patent and Trademark
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