-.^.“l._“-.-~..- ” “-...I..-..-...---_---I_...-.--- .. . ---- INSPECTORS .I[ IIII(’ I!~!~0 GENERAL Treasury’s Office of Inspector General Properly Established 141778 --- United States GAO General Accounting Of’flce Washington, D.C. 20648 Accounting and Financial Management Division B-238246 June 14,199O The Honorable Robert C. Byrd Chairman, Committee on Appropriations United States Senate The Honorable John Glenn Chairman, Committee on Governmental Affairs United States Senate The Honorable Jamie L. Whitten Chairman, Committee on Appropriations House of Representatives The Honorable John Conyers, Jr. Chairman, Committee on Government Operations House of Representatives The conferencereport (H.R. 101-276,October 11,1989) on the Treasury Department Appropriations Act, 1990 (Public Law lOl-136), directed us to review the Department of the Treasury’s implementation of the Inspector General Act of 1978, as amended,and report the results to the your Committees, As agreedwith your offices, we determined if Trea- sury has taken actions specified by the act to establish an Office of Inspector General (OIG). Becauseof specific congressionalconcerns,we also determined if the OIG has been assignedor has carried out any oper- ational responsibilities, such as the approval of budget submissionsby Treasury’s four law enforcement bureaus-the Bureau of Alcohol, Tobaccoand Firearms; the U.S. CustomsService;the Secret Service; and the Internal RevenueService (IRS).In addition, we ascertained whether Treasury had placed any prohibitions on OIG audits or investigations. We found that Treasury has taken the steps specified by the act to Results in Brief establish an OIG. In addition, we found no evidencethat the OIG has any improper operational responsibility concerning the four law enforce- ment bureaus. Also, we found no prohibitions of OIG audits or investigations, The Inspector General Act Amendments of 1988 (Public Law 100-604, Background * October 18,1988) amendedthe Inspector General Act of 1978 to require Page 1 GAO/AFMD-90-70 Treasury’s Office of Inspector General the Department of the Treasury to establish an OIG similar to those in 23 other agencies.The 1988 amendmentsrequired that the President appoint the Inspector General, subject to Senateconfirmation. Prior to the enactment of this law, Treasury had established an administrative OIG and the Secretary of the Treasury had responsibility for appointing an Inspector General. The administratively established OIG at Treasury had less responsibility than statutory OIGS in other agencies.For exam- ple, we reported in 1986l that Treasury’s administratively established OIG had audit responsibility for about one-tenth of the Department. The remainder of the Department was subject to internal audit and internal investigative units maintained in the law enforcement bureaus. The objectives of our review were to determine if (1) Treasury has taken Objectives, Scope,and actions specified by the 1988 amendmentsto the Inspector General Act Methodology to establish an OIG, (2) the OIG has been assignedor has conducted any improper operational responsibilities, such as the approval of budget submissions,and (3) Treasury has prohibited any OIG audits or investigations. To fulfill these objectives, we met with the Inspector General and other OIG officials. We also reviewed documents related to the establishment of the OIG, including departmental orders, descriptions of OIG functions, plans, and fiscal year 1990 and 1991 budget data. In addition, we inter- viewed officials in Treasury’s law enforcement bureaus regarding the congressionalconcernsrelated to the OIG’S authority and role in these bureaus. To determine if Treasury had prohibited any audit or investi- gation, we talked with the Inspector General and the Acting Inspector General who was his predecessor. We discussedthe contents of this report with the Inspector General and incorporated his views where appropriate. Our work was conducted in accordancewith generally acceptedgovernment auditing standards at Treasury headquarters in Washington, D.C., between January and March 1990. We did not review the quality of Treasury OIG audits or the effectiveness of the OIG in providing internal audit coverageto the Department. ‘Treasury Department: An Assessment of the Need for a Statutory Inspector General (GAO/ -86-3, August 21,19&E). Page 2 GAO/AFMD-90-70 Treasury’s Office of Inspector General ----- ---- B-238246 As required by the 1988 amendments, Treasury consolidated the audit OIG Established at resources from the Bureau of Alcohol, Tobacco and Firearms; the US. Treasury Customs Service; the Secret Service; and the administratively estab- lished OIG to form the statutory OIG. Treasury’s fourth law enforcement bureau, the Internal Revenue Service, retained its own internal audit function, Each of the four law enforcement bureaus retained its internal investigation function. The Secretary also issued Treasury Order 114-01, dated May 16, 1989, which incorporated the requirements of the 1988 amendments into departmental policies. In addition, the President nominated and the Sen- ate confirmed the Inspector General, who was sworn into office on November 22, 1989. The Inspector General had previously served as the Deputy Inspector General at the Environmental Protection Agency and, prior to that, as Assistant Inspector General for Audit at the Depart- ment of Housing and Urban Development. For fiscal year 1990,237 full- time equivalent OIG staff positions have been authorized. In our opinion, the actions taken to establish the OIG have all been consistent with the provisions of the 1988 amendments. Congressional concerns about the OIG'S role in Treasury’s four law OIG Role in Law enforcement bureaus were voiced during deliberations over the Depart- Enforcement Bureaus ment’s fiscal year 1990 appropriation. In particular, there were concerns that the OIG may improperly exercise operational responsibilities, such as budget approval, for the four bureaus. The Inspector General Act of 1978, as amended, provides that an inspector general will not have any program operating responsibilities. In our discussions with OIG and law enforcement bureau officials and our review of Treasury’s policies pertaining to the OIG, we found no evi- dence that the OIG has improperly assumed operational responsibilities in the Department. With respect to the particular congressional concern that the law enforcement bureau budgets might be subject to OIG approval, OIG officials and bureau budget chiefs told us that the OIG does not play a role in the bureau budget approval process. The statutory OIG has assumed internal audit responsibilities in the three law enforcement bureaus whose internal audit functions were consoli- dated into the statutory OIG. OIG auditors are currently conducting audits in each of these bureaus. In addition, the OIG has oversight responsibili- ties for internal investigations in these bureaus. Page 3 GAO/AFMD-90-70 Treasury’s Office of Inspector General B-238246 The 1088 amendmentsdid not consolidate the IRS internal audit and internal investigation unit into the OIG but authorized the Inspector Gen- eral to conduct audits and investigations in the IRSas appropriate. The Inspector General has included the IRS in four multibureau internal audits that the OIG has conducted. In these cases,the Inspector General’s staff plans the audits and conducts work in other Treasury bureaus, but auditors from IRSperform the audit work in IRS. The Inspector General has not had his auditors perform any audits solely of IRS functions. However, the Assistant Inspector General for Audit said that this would be done if, for example, he found that IRS internal auditors were not auditing a specific area or their internal audits were not of an acceptable quality. In January 1990, the Commissionerof IRS and the Inspector General agreed,with the approval of the Deputy Secretary of the Treasury, that the Inspector General would (1) perform investigations of all IRS officials at or above grade 16 and other IRS employeeswhere the independenceof IRS internal investigators could be questioned, (2) provide oversight of ‘the internal audit and internal investigation unit, and (3) conduct special reviews of IRS operations. The agreement notes that the 1988 amend- ments authorize the OIG to perform these activities. The agreement also provides for the transfer of 16 full-time equivalent staff and $1.6 mil- lion in appropriated funds for fiscal year 1990 from the IRS to the OIG for the agreed-uponactivities. The 1988 amendmentsgive the Inspector General oversight responsibil- ity for IRS internal audits and all internal investigations conducted by the investigative units of all four law enforcement bureaus. Treasury Order 114-01requires that bureau heads consult with the Inspector General (1) in recruiting candidates to direct the internal audit and internal investigative units in the law enforcement bureaus and (2) prior to completing performance evaluations for the heads of these units. The Inspector General Act of 1978, as amended,states that an inspector Treasury Has Not general is under the general supervision of the agency head and that no Prohibited OIG Work agency official can prohibit an inspector general from initiating, carry- ing out, or completing any audit, investigation, or subpoena.However, under the 1988 amendments,the Treasury Inspector General is under Y the authority, direction, and control of the Secretary with respect to activities requiring accessto certain sensitive information. Sensitive information includes matters concerning ongoing criminal investigations or proceedings,undercover operations, deliberations on policy matters Page 4 GAO/AFMD-WI0 Treasury’s Office of Inspector General that could reasonably have a significant influence on the national econ- omy or market behavior, and matters which if disclosedwould seriously threaten the protection of certain persons, including the President. The 1988 amendments also authorize the Secretary to prohibit Inspector General activities if the Secretary determines the prohibition is neces- sary to prevent (1) disclosure of sensitive information or (2) a signifi- cant impairment to the national interest. The Inspector General told us that there had been no such prohibition in his tenure, which began in November 1989, and the former Acting Inspector General, his predeces- sor, said he knew of no such prohibition. Treasury has taken appropriate actions to establish its OIG in accordance Conclusions with the Inspector General Act of 1978, as amended.We found no indi- cations that the OIG had assumedany improper operational responsibili- ties in the Treasury law enforcement bureaus where there had been congressionalconcerns.Similarly, we found no indications that the OIG has been prohibited from performing any audit or investigation. We are sending copies of this report today to the Chairmen of the Senate and House Subcommitteeson Treasury, Postal Service, and General Gov- ernment, Committees on Appropriations. Unless you publicly announce the contents of this report earlier, we will not distribute it further until 30 days from its date. At that time, we will send copies to the Director, Office of Management and Budget; the Secretary of the Treasury; inter- ested congressionalcommittees; and other interested parties. Pleasecon- tact me at (202) 276-9464 if you or your staff have any questions. Major contributors to this report are listed in appendix I. Jeffrey C. Steinhoff Director, Financial Management Systems and Audit Oversight Page 6 GAO/AFMD9O-70 Treasury’s Of&e of Inspector General Appendix I Major Contributors to This Report Rex Simmons,Assistant Director, Financial ManagementSystemsand Accounting and Audit Oversight, (202) 275-9356 Financial Management H. Vernon Davis, Project Manager Division, Washington, William E. Adams, Evaluator-in-Charge D.C. (911662) Page 6 GAO/AFMD-!W70 Treasury’s Office of Inspector General I J.S. Gtweral Accounting Office Post, Office Hox 60 16 Gaithersburg, Maryland 20(177 ‘I’t~lephone 202-275-6241 Tht! first. five copies of each reporf. are fret&. Adciitional copies are $2.00 t*ach. ‘I’htw is a 25% discwint. on ordtw for 100 or more copies mailed t,o a sitlgle address. First-(Xass Mail ’ Post.agtt Iyr Fees Paid i GAO Permit, No. G 100 I
Inspectors General: Treasury's Office of Inspector General Properly Established
Published by the Government Accountability Office on 1990-06-14.
Below is a raw (and likely hideous) rendition of the original report. (PDF)