oversight

Inspectors General: Views on Semiannual Reporting

Published by the Government Accountability Office on 1999-08-25.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                  United States General Accounting Office

GAO               Report to Congressional Requesters




August 1999
                  INSPECTORS
                  GENERAL

                  Views on Semiannual
                  Reporting




GAO/AIMD-99-203
United States General Accounting Office                                                              Accounting and Information
Washington, D.C. 20548                                                                                    Management Division



                                    B-282804                                                                                          Letter

                                    August 25, 1999

                                    The Honorable Dan Burton
                                    Chairman
                                    Committee on Government Reform
                                    House of Representatives

                                    The Honorable Stephen Horn
                                    Chairman, Subcommittee on Government Management,
                                    Information and Technology
                                    Committee on Government Reform
                                    House of Representatives

                                    This report responds to your request that we review the semiannual
                                    reporting requirements contained in the Inspector General (IG) Act of 1978,
                                    as amended. The IG Act requires each Inspector General to issue
                                    semiannual reports summarizing the results of his or her work and
                                    identifies the type of information that the reports are to contain. The IG
                                    Act also requires the IG to submit the report to the agency head who
                                    transmits the report, with management’s response, to the appropriate
                                    congressional committees or subcommittees.

                                    Our review included 27 IGs who are appointed by the President with Senate
                                    confirmation.1 Our review also included the 30 IGs at designated federal
                                    entities (DFE) who are appointed by the agency head.2 Appendix I lists the
                                    presidentially appointed IGs and appendix II lists the DFE IGs included in
                                    our review.




                                    1
                                     The IG Act identifies 26 of the 27 IGs. Public Law 101-193 established an IG for the Central Intelligence
                                    Agency (CIA) who is appointed by the President and confirmed by the Senate, but is not subject to the
                                    IG Act. Public Law 101-193 contains semiannual reporting requirements similar to those in the IG Act.
                                    The Office of the IG for the CIA did not provide us copies of its semiannual reports, but did participate
                                    in other parts of our review. In addition, Public Law 105-206 amended the IG Act in 1998 to establish an
                                    IG for Tax Administration within the Department of the Treasury. The Senate confirmed the IG in April
                                    1999. At the time of our review, the IG had not issued a semiannual report and, therefore, was not
                                    included in this report.
                                    2
                                     Public Law 100-504 separately created an IG for the Government Printing Office (GPO). For purposes
                                    of this report, we included GPO in the term “designated federal entity” because the GPO IG has similar
                                    duties and responsibilities as the 29 DFE IGs.




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        Our objectives were to obtain (1) information on the composition of the
        semiannual reports and (2) the views of a range of individuals—IGs, agency
        managers, and congressional staff—on the usefulness of the current
        reports and what modifications, if any, should be made to the current
        semiannual reporting requirements. To accomplish our first objective, we
        reviewed the September 30, 1997, and March 31, 1998, semiannual reports
        for 26 of the 27 presidentially appointed IGs and the 30 DFE IGs—a total of
        112 reports. These were the two most recent semiannual reports available
        at the time we initiated our review. We did not independently verify the
        information—for example, dollar savings—contained in the semiannual
        reports. To obtain views on semiannual reporting, we (1) held focus groups
        with the IG or his or her designee and agency managers and (2) obtained
        the views of congressional staff through the use of a questionnaire.

        In planning for the focus groups, we requested that each IG and a
        representative of each agency participate. The agency managers who
        attended the focus groups were in senior-level positions within their
        agencies. Many of the attendees were their agency’s Chief Financial
        Officer, while others served as their agency’s Deputy Director for
        Administration, Deputy Executive Director, Controller, and Director, Office
        of Resource Management.

        To identify appropriate congressional staff, we asked each IG to provide us
        a list of the congressional committees, subcommittees, members, and
        congressional staff that are provided a copy of the semiannual report. From
        this information, we developed a list of congressional staff to whom the
        questionnaire was sent. The congressional staff who responded
        represented a cross-section of the Senate and House oversight,
        appropriations, and authorization committees. Prior to sending out the
        questionnaire, it was pretested and revised, as necessary. Appendix III
        provides further details on our objectives, scope, and methodology. We
        performed our review from September 1998 through May 1999 in
        accordance with generally accepted government auditing standards.

        We requested comments on a draft of this report from the 57 IGs included
        in our review and two officials in the Office of Management and Budget
        (OMB): the Deputy Director of OMB and the Acting Controller, Office of
        Federal Financial Management. The Acting Controller provided oral
        comments on behalf of OMB. At the time we finalized our report, we had
        received written or oral comments from all 57 IGs. The written responses
        that contained comments on the draft report or provided additional views




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                   on the issue of semiannual reports are discussed in the “Agency Comment”
                   section and reprinted in appendix VI.



Results in Brief   Overall, the semiannual reports generally addressed the reporting
                   requirements specified in the IG Act, as amended. Approximately 91
                   percent of the reports (102 of 112) addressed all 12 of the required areas.
                   Additionally, we found that the semiannual reports discussed
                   governmentwide issues, such as information technology, computer
                   security, and the Year 2000 computer problems, to varying degrees. Many
                   of the semiannual reports by presidentially appointed IGs—38 of 52—
                   discussed information technology, but far fewer discussed computer
                   security and the Year 2000 computer problem. In the DFE IG semiannual
                   reports we reviewed, 26 of the 60 discussed information technology issues,
                   but relatively few discussed computer security and the Year 2000 computer
                   problem.

                   Congressional staff, for the most part, viewed the semiannual reports as
                   being useful. They noted that the reports were used in preparing for
                   hearings as well as providing insight into the activities of the IGs and the
                   agencies. The congressional staff were also generally satisfied with the
                   current reporting requirements, including the requirement that the report
                   be issued semiannually. They were of the opinion, however, that more
                   emphasis needed to be placed on the systemic issues confronting each
                   agency’s management and that agency’s implementation of the IG
                   recommendations.

                   There was a general consensus among the IGs and agency managers that
                   the semiannual reports should be streamlined. They generally agreed that
                   the reports should focus on the significant issues that need to be brought to
                   the attention of the Congress and agency management. In this regard,
                   agency managers noted that the current semiannual reports are not very
                   useful because they encompass all of the work performed over the past 6
                   months and it is sometimes difficult to identify the most significant issues.
                   There was also strong sentiment in both groups for the issuance of the IG
                   semiannual report to be annually. However, about half of the DFE IGs
                   wanted to retain the current semiannual reporting requirement.

                   OMB and the IGs generally agreed with the contents of our report with
                   some of the IGs providing additional perspective on semiannual reporting.
                   Additionally, other IGs provided technical comments on the report, which
                   have been incorporated, as appropriate.



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Background   As enacted in 1978, the Inspector General Act of 1978 identified six specific
             areas that were to be discussed in each semiannual report. For example,
             the semiannual report was to provide a description of the significant
             problems in the agency’s programs and operations, a summary of matters
             referred to prosecutive authorities and resulting convictions, and a list of
             each audit report completed during the reporting period. The semiannual
             reports are to be prepared for the periods ending March 31 and September
             30 of each year and are generally transmitted to the Congress within 60
             days of the end of the reporting period.

             Although not addressed specifically in the act, the legislative history of the
             act clearly sets forth the purpose of the semiannual reports. For example,
             House Report 95-584, dated August 5, 1977, noted that the IG report should
             describe significant problems, abuses, and deficiencies in agency
             operations and programs disclosed by activities of the offices, together
             with recommendations made for corrective action and an evaluation of the
             progress made in implementing the recommendations. In addition, the IG
             semiannual reports were to be limited to recommendations that the IG
             regards as particularly important, rather than constituting a list of all
             recommendations for corrective action on which adequate management
             progress is not being made. Additional legislative history noted that the
             “reports will ordinarily be transmitted to Congress by the agency head
             without alteration or deletion.” In addition, the legislative history pointed
             out that this requirement was fundamental to the IG legislation and
             provides the foundation of the IG’s independence.

             The Inspector General Act amendments of 1988 changed the reporting
             requirements. One of the original reporting requirements was modified and
             six requirements were added. Appendix IV lists the 12 specific areas that
             are to be covered by each semiannual report. The modification and
             additions were made, according to Senate Report 100-150, because “IGs’
             semi-annual reports vary widely in the format and in terms used to describe
             the audit resolution process. As a result, it is difficult for Congress to
             analyze individual agencies and develop an overall picture of the Federal
             Government’s progress against waste, fraud and mismanagement.”
             Additionally, Senate Report 100-150 noted that the changes in the reporting
             requirements would require more uniform and statistically reliable reports
             from the IGs and require agency heads to provide additional information on
             the progress made in implementing corrective actions.




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Content of the IG    The following questions and answers discuss the (1) extent to which the
                     112 semiannual reports address each of the IG Act’s 12 reporting
Semiannual Reports   requirements and (2) degree to which selected governmentwide
                     management issues are addressed.

                     1. To what extent did the semiannual reports we reviewed address
                     the 12 specific areas required by the Inspector General Act of 1978,
                     as amended?

                     Overall, the semiannual reports generally addressed the reporting
                     requirements specified in the IG Act, as amended. Approximately 91
                     percent of the reports (102 of 112) addressed all 12 of the required areas.
                     For the presidential IGs, 85 percent, or 44 of the 52 reports, addressed the
                     12 areas. In the case of the DFE IGs, 97 percent, or 58 of the 60 reports,
                     addressed the required areas.

                     The following charts provide an overview of the extent to which the IG
                     semiannual reports addressed each of the 12 reporting requirements. For
                     reporting purposes, we classified the reporting requirements into three
                     categories, which are

                     1. requirements to identify significant concerns IGs have with agency
                     operations,

                     2. requirements to address concerns IGs have with actions taken by agency
                     management, such as not providing requested information, and

                     3. requirements for statistical tables.

                     In terms of our overall analysis, a “discussed” response means that the
                     semiannual reports contained some information for a particular reporting
                     requirement, whereas a “not discussed” response means that the
                     semiannual report did not contain information related to the particular
                     reporting requirement. A “no information to report” response means that
                     the IG indicated that he or she had no information to report for a particular
                     reporting requirement.

                     The first category includes the following five reporting requirements:

                     1. A description of significant problems (requirement #1).




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                                          2. A description of the recommendations for corrective action
                                          (requirement #2).

                                          3. A description of any recommendations for which corrective actions are
                                          incomplete (requirement #3).

                                          4. A summarization of matters referred to prosecutive authorities
                                          (requirement #4).

                                          5. A summarization of significant reports (requirement #7).

                                          As shown in figure 1 (for the presidential IGs) and figure 2 (for the DFE
                                          IGs) their respective semiannual reports generally provided information for
                                          the five reporting requirements.



Figure 1: Reporting Requirements That Provide the Presidential IGs the Opportunity to Identify Significant Concerns With
Agency Operations
Number of reports




                                          Note: There are 52 presidential reports.




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Figure 2: Reporting Requirements That Provide the DFE IGs the Opportunity to Identify Significant Concerns With Agency
Operations
Number of reports




                                         Note: There are 60 DFE IG reports.


                                         Four of the requirements shown in figures 1 and 2 were part of the original
                                         reporting requirements set forth in the 1978 Act and were aimed at
                                         identifying significant concerns the IG has with agency operations.

                                         The second category of requirements addresses concerns that the IGs have
                                         with actions being taken by agency management. This category includes
                                         the following four reporting requirements:

                                         1. A summary of matters for which the IG determined that there has been
                                         an unreasonable refusal to provide requested information or assistance
                                         (requirement #5).

                                         2. A summarization of each report issued in previous reporting periods for
                                         which no management decision had been made (requirement #10).

                                         3. A description and explanation of the reasons for any significant revised
                                         management decision (requirement #11).

                                         4. Information concerning any significant management decision with
                                         which the IG is in disagreement (requirement #12).




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                                          As shown in figures 3 and 4, the semiannual reports we reviewed frequently
                                          provided a “no information to report” response for these four reporting
                                          requirements.



Figure 3: Reporting Requirements That Provide the Presidential IGs the Opportunity to Identify Concerns With Actions Taken by
Agency Management
Number of reports




                                          Note: There are 52 presidential reports.




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Figure 4: Reporting Requirements That Provide the DFE IGs the Opportunity to Identify Concerns With Actions Taken by Agency
Management
Number of reports




                                          Note: There are 60 DFE reports.


                                          The third category of current reporting requirements involves the statistical
                                          tables. These three requirements (6, 8, and 9) require that monetary
                                          savings, if applicable, that result from the work performed by the IGs be
                                          identified. For requirement 6, the IGs are to prepare an overall table
                                          showing the total dollar value of (1) questioned costs 3 and
                                          (2) recommendations that funds be put to better use 4 for all audit reports
                                          issued during the reporting period. Further, these reports are to be
                                          subdivided by subject matter. The IG Act also requires that the semiannual
                                          report contain separate tables on questioned costs (requirement 8) and
                                          funds to be put to better use (requirement 9).5 These requirements were


                                          3
                                           House Conference Report 100-1020 defines questioned costs to mean those costs questioned by the IG
                                          because of (1) an alleged violation of a provision of law, regulation, contract, grant, cooperative
                                          agreement, or other agreement or document governing the expenditure of funds, (2) a finding that, at
                                          the time of the audit, such cost is not supported by adequate documentation, or (3) a finding that the
                                          expenditure of funds for the intended purpose is unnecessary or unreasonable.
                                          4
                                           Recommendations that funds be put to better use refers to recommendations made by the IG that
                                          funds could be used more efficiently if agency management “took actions to implement and complete
                                          the recommendation including (A) reductions in outlays; (B) deobligation of funds from programs or
                                          operations; (C) withdrawal of interest subsidy costs on loans or loan guarantees, insurance, or bonds;
                                          (D) cost not incurred by implementing recommended improvements related to the operations of the
                                          establishment, a contractor, or grantee; (E) avoidance of unnecessary expenditures noted in preaward
                                          reviews of contract or grant agreements; or (F) any other savings which are specifically identified.”




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                                         added to the IG Act by the 1988 amendments in an attempt to provide the
                                         Congress with more uniform and statistically reliable information on the
                                         federal government’s progress against fraud, waste, and abuse.

                                         As shown in figure 5, virtually all of the presidential IG semiannual reports
                                         contained dollar amounts for the three reporting requirements related to
                                         the statistical tables.



Figure 5: Summary of Presidential IG Semiannual Reports—Statistical Table Requirements
Number of reports




                                         Note: There are 52 presidential IG reports.


                                         The information reported by the DFE IGs was different. As shown in figure
                                         6, less than half of the DFE IG reports contained dollar amounts, with the
                                         majority reporting zeros in the tables or stating that the information was
                                         not applicable.




                                         5
                                          Each table is to show the total number of audit reports and the total dollar value for audit reports
                                         (1) for which no management decision had been made by the commencement of the reporting period,
                                         (2) which were issued during the reporting period, (3) for which a management decision had been made
                                         during the reporting period, and (4) for which no management decision had been made by the end of
                                         the reporting period.




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Figure 6: Summary of DFE IG Semiannual Reports—Statistical Table Requirements
Number of reports




                                        Note: There are 60 DFE IG reports.


                                        2. Besides the reporting requirements specified in the IG Act, did
                                        the IG semiannual reports discuss governmentwide issues such as
                                        the results of financial statement audits, information technology,
                                        the Year 2000 computer problem,6 computer security, and their
                                        agency’s implementation of the Results Act?7

                                        The IG semiannual reports discussed these governmentwide issues to
                                        varying degrees. As shown in figure 7, about 73 percent of the presidential
                                        IG semiannual reports (38 of 52) discussed the IGs’ efforts in the area of
                                        information technology. The Year 2000 problem and computer security
                                        were discussed to a lesser extent. Eleven of the 52 reports discussed


                                        6
                                         The Year 2000 computer problem involves the inability of computer programs at the Year 2000 to
                                        interpret the correct century from a recorded or calculated date having only two digits to indicate the
                                        year.
                                        7
                                         The Results Act—officially known as the Government Performance and Results Act of 1993—requires
                                        that each agency covered by the act develop a strategic plan that contains the following elements: (1) a
                                        comprehensive mission statement, (2) general goals and objectives for all major functions and
                                        operations, (3) approaches or strategies and the resources needed to achieve the goals and objectives,
                                        (4) a description of the relationship between the goals and objectives and the annual performance
                                        goals, (5) an identification of key factors external to the agency beyond its control that could
                                        significantly affect the achievement of the goals, and (6) a description of how past program evaluations
                                        were used to establish revised goals and a schedule for future program evaluations.




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computer security, whereas the Year 2000 problem was discussed in 19 of
the 52 reports.



Figure 7: Number of Presidential IG Reports That Discuss Information on
Governmentwide Issues
Number of reports




Note: There are 52 presidential reports.


As shown in figure 8, for the DFE IGs, almost half of the semiannual reports
(26 of 60) discussed information technology issues. Relatively few reports
discussed computer security (3 of 60) and the Year 2000 computer problem
(7 of 60).




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Figure 8: Number of DFE IG Reports That Discuss Information on Governmentwide
Issues
Number of reports




Note: There are 60 DFE IG reports.


As shown in figure 9, 25 of the presidential IGs discussed the results of
their respective agency’s financial statement audits and 16 discussed the
Results Act in at least one of the two semiannual reports we reviewed for
each IG.



Figure 9: Number of Presidential IGs That Discuss Financial Statement Audits and
the Results Act
Number of IGs




Note: Reporting related to the financial statement audits and the Results Act occurs annually.
Therefore, if these two areas were discussed in either of the two semiannual reports reviewed for each
IG, we considered them as being addressed. As a result, the information presented for the financial
statement audits and Results Act is based upon the number of IGs. We reviewed the semiannual
reports for 26 presidential IGs.




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                         Not all designated federal entities are required to have financial statement
                         audits. We found that 16 of the 30 entities had financial statement audits
                         and, as shown in figure 10, 11 of the DFE IGs included a discussion of the
                         results within one of the two semiannual reports. In addition, 23 of the 30
                         DFE IGs’ respective agencies are required to comply with the Results Act
                         and 9 of the 23 DFE IGs discussed the Results Act within one of the two
                         semiannual reports we reviewed from each IG.



                         Figure 10: Number of DFE IGs That Discuss Financial Statement Audits and the
                         Results Act
                         Number of IGs




                         Note: Reporting related to the financial statement audits and the Results Act occurs annually.
                         Therefore, if these two areas were discussed in either of the two semiannual reports reviewed, we
                         considered them as being addressed. As a result, the information presented for the financial
                         statement audits and Results Act is based upon the number of IGs—there are 30 DFE IGs.




Views of Congressional   We developed and administered a questionnaire to obtain the views of the
                         congressional staff on the usefulness of the semiannual reports. We
Staff and Agency         obtained the views of agency managers through focus groups. In total, we
Managers on the          obtained the views of 47 congressional staff and 29 agency managers.
Usefulness of IG         3. Do congressional staff and agency managers find the information
Semiannual Reports       contained in the IGs semiannual reports to be useful?

                         From an overall perspective, most of the congressional staff responding to
                         our questionnaire indicated that the semiannual reports were useful. On



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                               the other hand, 19 of the 29 agency managers told us that the semiannual
                               reports were not useful to them. A primary reason cited was that the
                               semiannual reports do not contain any new information. These two groups’
                               respective views are discussed in more detail below.


Views of Congressional Staff   In response to the questionnaire, 36 of the 47 congressional staff indicated
                               that the usefulness of the semiannual reports ranged from “moderate” to “a
                               very great extent.” The staff indicated that they used the reports primarily
                               to stay apprised of what was occurring in the agency (42 of 47) and within
                               the IG’s office (38 of 47). Congressional staff also noted that the
                               semiannual reports were beneficial in preparing for hearings (26 of 47) and
                               as a reference document (26 of 47). In their comments, congressional staff
                               indicated that the reports were used to generate ideas for hearings and
                               legislation, view issues from a multiagency perspective, and identify
                               Results Act and Year 2000 compliance.


Views of Agency                Agency managers were of the opinion that the semiannual reports did not
Management                     provide any new information or perspectives and were too detailed to be of
                               use to management. They noted that the semiannual reports were a recap
                               of the previously issued reports that had been commented upon by agency
                               management. Their view was that, as a result, it was sometimes difficult to
                               determine which were the most significant issues that should be the focus
                               of management’s attention. Additionally, some of the managers noted that
                               the semiannual reports are not very useful in a small agency where only a
                               few reports are issued in a 6-month period.



Modifications to the           We also obtained the views of the congressional staff, IGs, and agency
                               managers on (1) what modifications, if any, should be made to the current
Current Reporting              semiannual reporting requirements and (2) how the semiannual reports
Requirements                   could be improved.

                               4. What modifications, if any, did the congressional staff, IGs, and
                               agency managers believe should be made to the current reporting
                               requirements?

                               All three groups indicated a general satisfaction with most of the current
                               semiannual reporting requirements, except for the requirements related to
                               the statistical tables. Appendix V provides a summary of each group’s



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                             opinion in regard to each of the 12 current reporting requirements,
                             including suggested modifications.

                             5. What suggestions did congressional staff, IGs, and agency
                             managers have for improving semiannual reports?

                             From an overall perspective, the congressional staff, IGs, and agency
                             managers agreed that the primary purpose of semiannual reporting is to
                             inform the Congress of the various problems confronting each agency.
                             There was also general agreement that not all issues need to be discussed
                             in the semiannual report, but rather that the semiannual report should
                             focus on significant issues that the Congress and agency management need
                             to address.

                             Each group did suggest ways in which the semiannual reports could be
                             improved. The views of each group are discussed in more detail below.
                             The views presented below are not all inclusive, but rather represent the
                             most common views that were provided by each group.


Views of the Congressional   Although the congressional staff found the current reports to be useful and
Staff                        were in favor of the current reporting requirements, they offered various
                             suggestions as to how they think the reports could be made more useful.
                             For instance, 26 of the 47 staff responding to the questionnaire were of the
                             opinion that additional emphasis should be placed on the “significant
                             issues” facing agency management, such as the high-risk areas and the top
                             10 management issues. Second, 20 congressional staff noted that the IG
                             reports should provide additional insight into the actions being taken by
                             agency management to implement the recommendations made by the IG.
                             Additionally, 16 staff noted that the IG reports should discuss the systemic
                             problems agency management must resolve. The majority of the
                             congressional staff (30 of 47) favored retaining the current semiannual
                             reporting requirement. Only six congressional staff favored annual IG
                             reporting.


Views of the IGs             Among the IG community, there was a general consensus that the report
                             should be more streamlined. The IG focus groups made the following
                             suggestions.

                             • Twenty-nine IGs suggested that the report contain an executive
                               summary that would highlight the results of the IG’s work.



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                      • Ten IGs suggested that the report provide an overview of the agency,
                        discuss the IG’s resources, and summarize the activities of the IG. These
                        particular IGs were of the opinion that the report needs to be
                        meaningful, brief, and “not padded.”
                      • The report should be limited to 20 pages and discuss the five most
                        important issues within the agency. Along the same line, others
                        suggested that the report should discuss the top 10 management issues
                        affecting the agency. These two comments were supported by 10 IGs.
                      • About two thirds of the presidential IGs (17 of 24) were in favor of the
                        report being issued annually rather than semiannually. However, about
                        half of the DFE IGs (11 of 24) favored continuing with the current
                        semiannual reporting requirement. These IGs were of the opinion that
                        semiannual reporting to the Congress encourages agency management
                        to act upon the IG’s recommendations in a timely manner.

                      There was also some support among the IGs—presidential and DFE—that
                      the semiannual report should relate the activities of the IG to their
                      respective agency’s strategic plan and performance plan to focus the IG on
                      the important issues of the agency. As previously discussed, these plans
                      must be prepared by most agencies in order to comply with the Results Act.

                      The IGs were also of the opinion that their reports should remain distinct
                      from any other reporting done by the agency. They emphasized that
                      separate reporting by the IGs was critical in order to maintain some degree
                      of leverage in having agency management act upon their recommendations.
                      They were also of the opinion that if the IG’s report were to be combined
                      with a report prepared by the agency that the IG’s report would “get lost.”


Views of the Agency   Like the IGs, for the most part, agency managers were of the opinion that
Managers              the semiannual report should be streamlined. From an overall perspective,
                      agency managers noted that the report should focus more on the significant
                      issues that agency management must resolve. They offered the following
                      suggestions to improve the usefulness of the semiannual reporting.

                      • The report should discuss the top 10 management issues, be in the form
                        of a letter, and include management’s response.
                      • Less significant issues do not need to be included in the semiannual
                        report to the Congress, but they should continue to be reported to
                        agency management. The act requires the IG to include significant
                        issues in the semiannual report to the Congress, but in the view of
                        agency managers the term ”significant” has not been clearly defined. As



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                    a result, the agency managers view the current semiannual report as
                    basically all inclusive of the work performed by the IG during the
                    6-month period.
                  • The IG’s report should discuss systemic problems and identify the
                    course of action that should be followed to resolve the problems.
                  • The IG’s report should discuss the results of the IG’s latest peer review.
                    Under generally accepted government auditing standards, the IGs are to
                    have an external quality control review every 3 years. Such reviews are
                    generally performed by an IG in another agency and are intended to
                    provide reasonable assurance that established policies and procedures
                    and applicable auditing standards are being followed.
                  • There was also general consensus among the agency managers that the
                    report should be issued annually, rather than semiannually.

                  There was also support among the agency managers for incorporating the
                  IG’s report into the agency’s Accountability Report. The Government
                  Management Reform Act of 1994 authorized OMB to implement a pilot
                  program to streamline and consolidate certain statutory financial
                  management and performance reports into a single, annual agency
                  Accountability Report. However, as discussed above, some of the IGs were
                  opposed to any type of consolidated reporting, noting that the IG’s report
                  could “get lost” if combined with a report prepared by the agency.



Agency Comments   We received oral comments from OMB and oral or written comments from
                  all 57 IGs. OMB and the IGs generally agreed with the contents of the
                  report. We have incorporated their comments as appropriate.


                  We are sending copies of this report to Representative Henry A. Waxman,
                  Ranking Minority Member, House Committee on Government Reform;
                  Representative Jim Turner, Ranking Minority Member, Subcommittee on
                  Government Management, Information and Technology, House Committee
                  on Government Reform; Senator Fred Thompson, Chairman, and Senator
                  Joseph Liberman, Ranking Minority Member, Senate Committee on
                  Governmental Affairs; and the Honorable Jacob Lew, Director, Office of
                  Management and Budget; and the 57 IGs, included in our review. Copies
                  will be made available to others upon request.




                  Page 18                                 GAO/AIMD-99-203 IG Semiannual Reporting
B-282804




Key contributors to this report are listed in appendix VII. If you have any
questions concerning this report, please contact me at (202) 512-6240.




Linda D. Koontz
Associate Director, Audit Oversight and Liaison




Page 19                                 GAO/AIMD-99-203 IG Semiannual Reporting
Contents



Letter                                                                  1


Appendix I                                                             24
Presidentially
Appointed Inspectors
General Included in
Our Review

Appendix II                                                            26
Designated Federal
Entity Inspectors
General Included in
Our Review

Appendix III                                                           28
Objectives, Scope, and
Methodology

Appendix IV                                                            31
Semiannual Reporting
Requirement of the
Inspector General Act,
as Amended




                         Page 20   GAO/AIMD-99-203 IG Semiannual Reporting
Appendix V                                                                                       32
Summary of the Views
of IGs, Agency
Managers, and
Congressional Staff on
the Current
Semiannual Reporting
Requirements

Appendix VI                                                                                      33
Comments From the
Inspectors General

Appendix VII                                                                                     48
GAO Contacts and
Staff
Acknowledgements

Figures                  Figure 1: Reporting Requirements That Provide the Presidential
                           IGs the Opportunity to Identify Significant Concerns With
                           Agency Operations                                                  6
                         Figure 2: Reporting Requirements That Provide the DFE IGs the
                           Opportunity to Identify Significant Concerns With Agency
                           Operations                                                         7
                         Figure 3: Reporting Requirements That Provide the Presidential
                           IGs the Opportunity to Identify Concerns With Actions Taken by
                           Agency Management                                                  8
                         Figure 4: Reporting Requirements That Provide the DFE IGs the
                           Opportunity to Identify Concerns With Actions Taken by Agency
                           Management                                                         9
                         Figure 5: Summary of Presidential IG Semiannual Reports—Statistical
                           Table Requirements                                                10
                         Figure 6: Summary of DFE IG Semiannual Reports—Statistical Table
                           Requirements                                                      11




                         Page 21                             GAO/AIMD-99-203 IG Semiannual Reporting
Contents




Figure 7: Number of Presidential IG Reports That Discuss
  Information on Governmentwide Issues                                  12
Figure 8: Number of DFE IG Reports That Discuss Information on
  Governmentwide Issues                                                 13
Figure 9: Number of Presidential IGs That Discuss Financial
  Statement Audits and the Results Act                                  13
Figure 10: Number of DFE IGs That Discuss Financial Statement
  Audits and the Results Act                                            14




Abbreviations

CIA        Central Intelligence Agency
DFE        designated federal entity
GPO        Government Printing Office
IG         inspector general
OMB        Office of Management and Budget



Page 22                             GAO/AIMD-99-203 IG Semiannual Reporting
Page 23   GAO/AIMD-99-203 IG Semiannual Reporting
Appendix I

Presidentially Appointed Inspectors General
Included in Our Review                                                                       AppenIx
                                                                                                   di




               Agency for International Development

               Central Intelligence Agency

               Corporation for National and Community Service

               Department of Agriculture

               Department of Commerce

               Department of Defense

               Department of Education

               Department of Energy

               Department of Health and Human Services

               Department of Housing and Urban Development

               Department of the Interior

               Department of Justice

               Department of Labor

               Department of State

               Department of Transportation

               Department of the Treasury

               Department of Veterans Affairs

               Environmental Protection Agency

               Federal Deposit Insurance Corporation

               Federal Emergency Management Agency

               General Services Administration




               Page 24                                 GAO/AIMD-99-203 IG Semiannual Reporting
Appendix I
Presidentially Appointed Inspectors General
Included in Our Review




National Aeronautics and Space Administration

Nuclear Regulatory Commission

Office of Personnel Management

Railroad Retirement Board

Small Business Administration

Social Security Administration




Page 25                                       GAO/AIMD-99-203 IG Semiannual Reporting
Appendix II

Designated Federal Entity Inspectors General
Included in Our Review                                                                      AppeInx
                                                                                                  Idi




               Amtrak

               Appalachian Regional Commission

               Commodity Futures Trading Commission

               Consumer Product Safety Commission

               Corporation for Public Broadcasting

               Equal Employment Opportunity Commission

               Farm Credit Administration

               Federal Communications Commission

               Federal Election Commission

               Federal Housing Finance Board

               Federal Labor Relations Authority

               Federal Maritime Commission

               Federal Reserve Board

               Federal Trade Commission

               Government Printing Office

               Legal Services Corporation

               National Archives and Records Administration

               National Credit Union Administration

               National Endowment for the Arts

               National Endowment for the Humanities

               National Labor Relations Board




               Page 26                                GAO/AIMD-99-203 IG Semiannual Reporting
Appendix II
Designated Federal Entity Inspectors
General Included in Our Review




National Science Foundation

Panama Canal Commission

Peace Corps

Pension Benefit Guaranty Corporation

Securities and Exchange Commission

Smithsonian Institution

Tennessee Valley Authority

United States International Trade Commission

United States Postal Service




Page 27                                GAO/AIMD-99-203 IG Semiannual Reporting
Appendix III

Objectives, Scope, and Methodology                                                                                         AppIenIx
                                                                                                                                  di




               Our objectives were to obtain (1) information on the composition of the
               semiannual reports and whether the 12 specific areas identified in the
               Inspector General Act of 1978, as amended, were discussed in the
               semiannual reports and (2) the views of a range of individuals who are
               familiar with the semiannual reports—the IGs, agency managers, and
               congressional staff—on the usefulness of the current reports and what
               modifications, if any, should be made.

               To accomplish our first objective, we reviewed the September 30, 1997, and
               March 31, 1998, semiannual reports issued by 26 presidential and 30 DFE
               IGs—a total of 112 reports. These were the two most recent semiannual
               reports available at the time we initiated our review.1 We compared the 12
               areas specifically identified in the act to each report to determine if the
               items were included, or identified by the IG as not being applicable. In
               those instances in which all 12 areas were not clearly identified within the
               semiannual reports, we followed up with the respective IG’s office to
               ascertain why it was not included. In most instances, the IG’s office
               commented that there was nothing to report. In those cases, we
               considered the response to be “not applicable”—which we have considered
               as being responsive to the IG Act reporting requirements. In terms of our
               overall analysis, a “discussed” response means the semiannual reports
               contained some information for a particular reporting requirement,
               whereas, a “not discussed” response means the semiannual report did not
               provide data for a reporting requirement. A “no information to report”
               response means that the IG indicated he or she had no information to
               report for that particular reporting requirement. We did not independently
               verify the information—for example, dollar savings—contained in the
               semiannual reports.

               In reviewing these reports, we also determined if the semiannual reports
               addressed selected key management issues related to the results of
               financial statement audits, information technology, the Year 2000 computer
               problem, computer security, and their respective agency’s implementation
               of the Government Performance and Results Act—commonly referred to as
               the Results Act. Three of these issues—financial statement audits,
               implementation of the Results Act, and information technology—have been
               the subject of major management reform legislation in recent years and as
               such are of particular interest to the Congress. The remaining two issues—

               1
                The Office of the Inspector General for the Central Intelligence Agency did not provide us copies of the
               semiannual reports and therefore, was not part of our analysis. However, the CIA IG did participate in
               our focus groups.




               Page 28                                                GAO/AIMD-99-203 IG Semiannual Reporting
Appendix III
Objectives, Scope, and Methodology




the Year 2000 problem and computer security—have been identified by us
as being governmentwide areas at high risk2 and are likewise of particular
interest to the Congress, because such problems could disrupt the
continuity of key government operations.

To accomplish our second objective, we held focus groups with the IGs and
agency management. In planning for the focus groups, we requested that
each IG and a representative of each agency participate in the meetings.
Fifty of the IGs or their designees attended the meetings—26 presidential
IGs and 24 DFE IGs. The 29 agency managers who attended the focus
group meetings were in senior-level positions within their respective
agency. For example, many of the attendees were their respective agency’s
Chief Financial Officer, while others served as their agency’s Deputy
Director for Administration, Deputy Executive Director, Controller, or
Director, Office of Resource Management.

We obtained the views of the congressional staff through the use of a
questionnaire.3 In developing the list of congressional staff to whom we
sent the questionnaire, we asked each IG to list the congressional
committees, subcommittees, members, and congressional staff that are
provided a copy of the semiannual report. Prior to sending out the
questionnaire, it was pretested and revised as necessary. The questionnaire
was sent to 232 congressional staff and responses were received from 574
staff. The congressional staff that responded represented a cross-section
of the Senate and House oversight, appropriation, and authorization
committees.

In regard to the purpose and usefulness of the semiannual reports, we
asked the agency managers and congressional staff their views as users of
the reports. Also, we asked each group its respective views on the current
reporting requirements and what modifications, if any, should be
considered. Appendix V summarizes the views of all three groups with
regard to the current reporting requirements. We performed our review



2
    High-Risk Series: An Overview (GAO/HR-97-1, February 1997).
3
 Two focus group sessions were held with congressional staff. Since only eight attended, we used a
questionnaire to obtain a broader spectrum of views. The views presented at the focus groups were
used to demonstrate how congressional staff use the semiannual reports. The questionnaire results
were used to quantify information such as the data presented in appendix V.
4
 We received responses from 57 congressional staff, but 10 indicated that they either do not receive the
semiannual reports or do not use them.




Page 29                                               GAO/AIMD-99-203 IG Semiannual Reporting
Appendix III
Objectives, Scope, and Methodology




from September 1998 through May 1999, in accordance with generally
accepted government auditing standards.

We requested comments on a draft of this report from the 57 IGs included
in our review and two officials in the Office of Management and Budget
(OMB): the Deputy Director of OMB and the Acting Controller, Office of
Federal Financial Management. The Acting Controller provided oral
comments on behalf of OMB. At the time we finalized our report, we had
received written or oral comments from all 57 IGs. The written responses
that contained comments on the draft report or provided additional views
on the issue of semiannual reports are discussed in the “Agency Comment”
section and reprinted in appendix VI.




Page 30                              GAO/AIMD-99-203 IG Semiannual Reporting
Appendix IV

Semiannual Reporting Requirement of the
Inspector General Act, as Amended                                                                                                 AppenV
                                                                                                                                       Ix
                                                                                                                                        di




Sub-section   Section 5(a) reporting requirements
1             A description of significant problems, abuses and deficiencies relating to the administration of programs and
              operations of such establishment disclosed by such activities during the reporting period
2             A description of the recommendations for corrective action made by the IG during the reporting period with
              respect to significant problems, abuses, or deficiencies identified pursuant to subsection 1
3             An identification of each significant recommendation described in previous semiannual reports on which
              corrective action has not been completed
4             A summary of matters referred to prosecutive authorities and the prosecutions and convictions which have
              resulted
5             A summary of each report made to the head of the establishment when the IG judges that there has been an
              unreasonable refusal to provide requested information or assistance
6             A list, subdivided according to subject matter, of each audit report issued by the IG during the reporting period
              and for each audit report, where applicable, the total dollar value of questioned costs and the dollar value of
              recommendations that funds be put to better use
7             A summary of each particularly significant report
8             Statistical tables showing the total number of audit reports and the total dollar value of questioned costs audit
              reports
              a. for which no management decision had been made,
              b. which were issued during the reporting period,
              c. for which a management decision was made during the period, and
              d. for which no management decision had been made by the end of the reporting period
9             Statistical tables showing the total number of audit reports and the dollar value recommendations that funds be
              put to better use by management, for audit reports
              a. for which no management decision had been made by the commencement of the reporting period,
              b. which were issued during the reporting period,
              c. for which a management decision was made during the period, and
              d. for which no management decision had been made by the end of the reporting period
10            A summary of each audit report issued before the commencement of the reporting period for which no
              management decision has been made by the end of the reporting period, an explanation of the reasons such
              management decision has not been made, and a statement concerning the desired timetable for achieving a
              management decision on each such report
11            A description and explanation of the reasons for any significant revised management decision made during the
              reporting period
12            Information concerning any significant management decision with which the Inspector General disagrees




                                     Page 31                                          GAO/AIMD-99-203 IG Semiannual Reporting
Appendix V

Summary of the Views of IGs, Agency
Managers, and Congressional Staff on the
Current Semiannual Reporting Requirements                                                                                           Appenx
                                                                                                                                         di
                                                                                                                                         V




Requirementa         Keep                                   Delete                                     Modifyb
               IGs     AM       CS    Total           IGs      AM       CS       Total          IGs        AM         CS     Total
1              41      20       37      98             1         2        0          3             6         4         5           15


2              41      15       38      94             1         3        0          4             6         8         4           18


3              36      13       32      81             5         6        1         12             5         7         6           18


4              40      13       34      87             3         7        2         12             5         5         2           12


5              44      16       30      90             2         6        1          9             2         3         2            7


6              28       7       31      66            10        11        2         23           10          6         3           19


7              38      10       34      82             5        12        2         19             5         4         2           11


8              13       5       27      45            21         9        6         36           14         10         1           25


9              13       3       25      41            20        12        5         37           15          9         3           27


10             25      15       26      66            14         7        2         23             9         4         7           20


11             28      15       27      70            14         8        2         24             6         3         4           13


12             41      16       35      92             5         5        0         10             2         4         3            9
                            Legend:
                            IG--inspector general
                            AM--agency managers
                            CS--congressional staff
                            Note: Not all of the IGs or their designees (50), agency managers (29), or congressional staff (47),
                            provided their views on each of the current reporting requirements. Therefore, the number of
                            responses will not in all cases add to 50 for the IGs, 29 for the agency managers, or 47 for the
                            congressional staff.
                            a
                            See appendix IV for the specific wording for each of the listed reporting requirements.
                            b
                             In some instances, the respondents suggested that the current reporting element be modified, but did
                            not provide any specifics. In other instances, it was suggested that the specific words within a given
                            requirement be revised or additional explanation provided. While others suggested combining several
                            requirements.




                            Page 32                                              GAO/AIMD-99-203 IG Semiannual Reporting
Appendix VI

Comments From the Inspectors General                                            AppenV
                                                                                     diI
                                                                                     x




Note: GAO comments
supplementing those in the
report text appear at the end
of this appendix.




See comment 1.




                                Page 33   GAO/AIMD-99-203 IG Semiannual Reporting
                 Appendix VI
                 Comments From the Inspectors General




See comment 2.




                 Page 34                                GAO/AIMD-99-203 IG Semiannual Reporting
                        Appendix VI
                        Comments From the Inspectors General




See comment 3.




See comment 2.




See comments 2 and 4.




                        Page 35                                GAO/AIMD-99-203 IG Semiannual Reporting
                 Appendix VI
                 Comments From the Inspectors General




See comment 5.




See comment 6.




                 Page 36                                GAO/AIMD-99-203 IG Semiannual Reporting
                 Appendix VI
                 Comments From the Inspectors General




See comment 7.




See comment 8.




See comment 9.




                 Page 37                                GAO/AIMD-99-203 IG Semiannual Reporting
                         Appendix VI
                         Comments From the Inspectors General




See comment 10.




See comment 11.




                  Letr   Page 38                                GAO/AIMD-99-203 IG Semiannual Reporting
Appendix VI
Comments From the Inspectors General




Page 39                                GAO/AIMD-99-203 IG Semiannual Reporting
Appendix VI
Comments From the Inspectors General




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Appendix VI
Comments From the Inspectors General




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Appendix VI
Comments From the Inspectors General




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Appendix VI
Comments From the Inspectors General




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Appendix VI
Comments From the Inspectors General




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Appendix VI
Comments From the Inspectors General




Page 45                                GAO/AIMD-99-203 IG Semiannual Reporting
              Appendix VI
              Comments From the Inspectors General




              The following are GAO’s comments on the Appalachian Regional
              Commission Inspector General’s letter dated June 29, 1999, Department of
              Justice Inspector General’s letter dated July 15, 1999, Small Business
              Administration Inspector General’s letter dated July 20, 1999, and the
              National Labor Relations Board Inspector General’s letter dated July 21,
              1999.



GAO Comment   1. The report, as written, discusses the extent to which congressional staff,
              Inspectors General, and agency management believe the semiannual
              reports are meeting the expectations of each respective group. In regard to
              the appropriate frequency of reporting, there was no consensus among the
              focus group participants on this issue. The congressional staff were
              generally in favor of retaining the semiannual reporting requirement,
              whereas most of the agency managers favored annual reporting. In regard
              to the IGs, 17 of 24 presidential IGs favored annual reporting; but 11 of 24
              DFE IGs favored continuing with semiannual reporting. Finally, the
              alternative mentioned in the comment letter was not among the major
              points of view discussed by the focus group participants.

              2. We have provided additional details regarding participation by
              congressional staff and IGs.

              3. We recognize that the Inspector General Act does not require the
              semiannual reports to discuss governmentwide issues. Our analysis in this
              area was a means of characterizing the contents of the semiannual reports
              by identifying the extent to which the reports addressed well-known
              management challenges that are facing all agencies across government. We
              did not single out information technology, the Year 2000 problem, and
              computer security but also included financial statement audits and Results
              Act implementation. Three of these issues—financial statement audits,
              implementation of the Results Act, and information technology—have been
              the subject of major management reform legislation in recent years and as
              such are of particular interest to the Congress. The remaining two—the
              Year 2000 problem and computer security—have been identified by GAO as
              being governmentwide areas at high risk and are likewise of particular
              interest to the Congress, because such problems could disrupt the
              continuity of key government operations. We have revised the report to
              include our rationale for selecting these issues.

              4. We have clarified the report to show that appropriations staff were also
              queried. The results of the questionnaire sent to congressional staff cannot



              Page 46                                 GAO/AIMD-99-203 IG Semiannual Reporting
Appendix VI
Comments From the Inspectors General




be extrapolated to the universe of staff surveyed. For this reason, the
report properly discusses only the views of the staff that responded.

5. As discussed in the report, our objective was to summarize the views of
a wide range of knowledgeable individuals on the semiannual reports and,
thus, we draw no conclusions. The report, as written, includes the
participants’ rationale for their views where we were able to identify
common themes in the focus group discussions. However, we did not
specifically attempt to identify the participants’ rationale for their views on
keeping, deleting, or modifying the existing reporting requirements.

6. This report does not discuss the full range of IG reporting requirements
as this was beyond the scope of our work.

7. The report does not identify the specific views of any particular IG, but
rather, represents the most common views provided by the various focus
groups held with the IGs. In that regard, the IG of the National Labor
Relations Board participated in the focus group sessions while serving as
the IG at the International Trade Commission.

8. The terms, as discussed in the report, are technically correct and
therefore, no changes to the report are necessary.

9. For figures 1 through 6 “not applicable” has been changed to “no
information to report.”

10. The use of the term “significant” on pages 9 and 10 describes the first
reporting requirement of the IG Act which requires a discussion of
“. . . significant problems, abuses, and deficiencies . . .” as further defined in
appendix IV. The tables on these pages show the number of semiannual
reports which contained a discussion of problems that the IGs themselves
described as “significant.” We made no independent judgements on the
IGs’ designations.

11. No change to the report is deemed necessary.




Page 47                                    GAO/AIMD-99-203 IG Semiannual Reporting
Appendix VII

GAO Contacts and Staff Acknowledgements                                                           Appenx
                                                                                                       dIiI
                                                                                                       V




GAO Contacts          Darby W. Smith, (202) 512-7803
                      Edith A. Pyles, (202) 512-9582



Acknowledgements      In addition to those named above, Jackson W. Hufnagle, Jeffrey A.
                      Jacobson, Dieter M. Kiefer, and RoJeanne L. Liu made key contributions to
                      this report.




(911937)       Letr   Page 48                               GAO/AIMD-99-203 IG Semiannual Reporting
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