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Highlights

Pursuant to a congressional request, GAO: (1) identified and verified the names of various audit and investigative groups not subject to inspector general legislation; (2) determined audit group missions, their staffing levels, and the existence of follow-up procedures; and (3) reviewed selected aspects of audit operations.

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Recommendations

Recommendations for Executive Action

Agency Affected Recommendation Status
Department of Justice 1. The heads of ACTION, the Peace Corps, the Export-Import Bank (Eximbank), the Interstate Commerce Commission (ICC), the Department of Justice, the Merit Systems Protection Board (MSPB), the National Labor Relations Board (NLRB), the National Railroad Passenger Corporation (Amtrak), the National Science Foundation (NSF), the Department of the Treasury, and the Federal Reserve System should take immediate steps to ensure that the heads of audit units report directly to them or their deputies.
Closed - Not Implemented
Justice contends that action is not needed because the audit group reports to the head of the agency in those instances where it is auditing the organization it reports to.
Department of the Treasury 2. The heads of ACTION, the Peace Corps, the Export-Import Bank (Eximbank), the Interstate Commerce Commission (ICC), the Department of Justice, the Merit Systems Protection Board (MSPB), the National Labor Relations Board (NLRB), the National Railroad Passenger Corporation (Amtrak), the National Science Foundation (NSF), the Department of the Treasury, and the Federal Reserve System should take immediate steps to ensure that the heads of audit units report directly to them or their deputies.
Closed - Not Implemented
Treasury contends that the heads of the law enforcement audit offices, who report to the head of its bureaus and not to the agency head or deputy, are independent because: (1) they are overseen by the Inspector General (IG), who reports to the agency head; and (2) their significant findings are reported monthly to the agency head by IG.
ACTION 3. The heads of ACTION, the Peace Corps, the Export-Import Bank (Eximbank), the Interstate Commerce Commission (ICC), the Department of Justice, the Merit Systems Protection Board (MSPB), the National Labor Relations Board (NLRB), the National Railroad Passenger Corporation (Amtrak), the National Science Foundation (NSF), the Department of the Treasury, and the Federal Reserve System should take immediate steps to ensure that the heads of audit units report directly to them or their deputies.
Closed - Implemented
In October 1987, ACTION established an Office of Inspector General reporting to the Deputy Director, ACTION.
Export-Import Bank of the United States 4. The heads of ACTION, the Peace Corps, the Export-Import Bank (Eximbank), the Interstate Commerce Commission (ICC), the Department of Justice, the Merit Systems Protection Board (MSPB), the National Labor Relations Board (NLRB), the National Railroad Passenger Corporation (Amtrak), the National Science Foundation (NSF), the Department of the Treasury, and the Federal Reserve System should take immediate steps to ensure that the heads of audit units report directly to them or their deputies.
Closed - Not Implemented
On December 23, 1986, Eximbank responded that it did not plan to comply with the recommendation because it is a small agency whose programs are closely monitored by its Office of Policy and Planning, which reports to the President and Chairman of the Board. GAO also conducts annual financial audits, as well as other audits, and reports the results to Congress.
Federal Reserve System 5. The heads of ACTION, the Peace Corps, the Export-Import Bank (Eximbank), the Interstate Commerce Commission (ICC), the Department of Justice, the Merit Systems Protection Board (MSPB), the National Labor Relations Board (NLRB), the National Railroad Passenger Corporation (Amtrak), the National Science Foundation (NSF), the Department of the Treasury, and the Federal Reserve System should take immediate steps to ensure that the heads of audit units report directly to them or their deputies.
Closed - Implemented
In July 1987, the Federal Reserve established a nonstatutory Office of Inspector General reporting to the Vice Chairman of the Board of Governors.
Interstate Commerce Commission 6. The heads of ACTION, the Peace Corps, the Export-Import Bank (Eximbank), the Interstate Commerce Commission (ICC), the Department of Justice, the Merit Systems Protection Board (MSPB), the National Labor Relations Board (NLRB), the National Railroad Passenger Corporation (Amtrak), the National Science Foundation (NSF), the Department of the Treasury, and the Federal Reserve System should take immediate steps to ensure that the heads of audit units report directly to them or their deputies.
Closed - Not Implemented
ICC has not taken action because the audit group does not audit the organization of which it is a part.
Merit Systems Protection Board 7. The heads of ACTION, the Peace Corps, the Export-Import Bank (Eximbank), the Interstate Commerce Commission (ICC), the Department of Justice, the Merit Systems Protection Board (MSPB), the National Labor Relations Board (NLRB), the National Railroad Passenger Corporation (Amtrak), the National Science Foundation (NSF), the Department of the Treasury, and the Federal Reserve System should take immediate steps to ensure that the heads of audit units report directly to them or their deputies.
Closed - Implemented
On April 1, 1987, MSPB established an independent, nonstatutory Office of Inspector General reporting directly to the Chairman of the Board.
National Labor Relations Board 8. The heads of ACTION, the Peace Corps, the Export-Import Bank (Eximbank), the Interstate Commerce Commission (ICC), the Department of Justice, the Merit Systems Protection Board (MSPB), the National Labor Relations Board (NLRB), the National Railroad Passenger Corporation (Amtrak), the National Science Foundation (NSF), the Department of the Treasury, and the Federal Reserve System should take immediate steps to ensure that the heads of audit units report directly to them or their deputies.
Closed - Not Implemented
The NLRB audit group reports to the Director of Administration, who is responsible for accounting and other functions subject to audit. As of November 12, 1987, NLRB was developing a proposal to contract for the audit function.
National Science Foundation 9. The heads of ACTION, the Peace Corps, the Export-Import Bank (Eximbank), the Interstate Commerce Commission (ICC), the Department of Justice, the Merit Systems Protection Board (MSPB), the National Labor Relations Board (NLRB), the National Railroad Passenger Corporation (Amtrak), the National Science Foundation (NSF), the Department of the Treasury, and the Federal Reserve System should take immediate steps to ensure that the heads of audit units report directly to them or their deputies.
Closed - Not Implemented
NSF contends that the audit group has full and immediate access to it, as well as, the National Science Board Committee on Audit and Oversight. Also, whenever an audit of the Controller's activities, to whom the audit group reports, is proposed or conducted, the agency head will make all decisions.
Peace Corps 10. The heads of ACTION, the Peace Corps, the Export-Import Bank (Eximbank), the Interstate Commerce Commission (ICC), the Department of Justice, the Merit Systems Protection Board (MSPB), the National Labor Relations Board (NLRB), the National Railroad Passenger Corporation (Amtrak), the National Science Foundation (NSF), the Department of the Treasury, and the Federal Reserve System should take immediate steps to ensure that the heads of audit units report directly to them or their deputies.
Closed - Not Implemented
The Peace Corps contends that current organizational status results in sufficient audit independence. While the audit group reports organizationally to the Associate Director for Management, it does have direct access to the agency head.
National Railroad Passenger Corporation 11. The heads of ACTION, the Peace Corps, the Export-Import Bank (Eximbank), the Interstate Commerce Commission (ICC), the Department of Justice, the Merit Systems Protection Board (MSPB), the National Labor Relations Board (NLRB), the National Railroad Passenger Corporation (Amtrak), the National Science Foundation (NSF), the Department of the Treasury, and the Federal Reserve System should take immediate steps to ensure that the heads of audit units report directly to them or their deputies.
Closed - Not Implemented
Amtrak claims that the audit function reports directly to the President on all substantive matters. However, GAO found that the head of audit reports organizationally to the Vice President for law whose activities are subject to audit.
Farm Credit Administration 12. The Directors of the Federal Emergency Management Agency (FEMA), NSF, the Office of Personnel Management (OPM), and the Acting Chairman of the Farm Credit Administration (FCA) should ensure that all important and vulnerable agency programs and functions are reviewed.
Closed - Implemented
A comprehensive audit plan to cover all agency operations has been developed and approved. Several audits have already been completed, including one audit to assess how effectively FCA carries out its responsibility to supervise and oversee Farm Credit Bank operations.
Federal Emergency Management Agency 13. The Directors of the Federal Emergency Management Agency (FEMA), NSF, the Office of Personnel Management (OPM), and the Acting Chairman of the Farm Credit Administration (FCA) should ensure that all important and vulnerable agency programs and functions are reviewed.
Closed - Implemented
An audit plan for reviewing all vulnerable and important FEMA programs has been developed and approved. A procurement audit has been completed.
National Science Foundation 14. The Directors of the Federal Emergency Management Agency (FEMA), NSF, the Office of Personnel Management (OPM), and the Acting Chairman of the Farm Credit Administration (FCA) should ensure that all important and vulnerable agency programs and functions are reviewed.
Closed - Implemented
Audits of all areas identified by GAO as needed are either completed or underway.
Office of Personnel Management 15. The Directors of the Federal Emergency Management Agency (FEMA), NSF, the Office of Personnel Management (OPM), and the Acting Chairman of the Farm Credit Administration (FCA) should ensure that all important and vulnerable agency programs and functions are reviewed.
Closed - Implemented
IG established a Program Benefits Branch with four staff to review retirement and insurance benefit programs. IG plans to ask for six more staff positions for this branch.
Federal Emergency Management Agency 16. The Directors, FEMA and NSF, should establish audit resolution and follow-up procedures.
Closed - Implemented
An instruction concerning follow-up on recommendations was developed. The Deputy Director, FEMA, was appointed the audit follow-up official.
National Science Foundation 17. The Directors, FEMA and NSF, should establish audit resolution and follow-up procedures.
Closed - Implemented
The follow-up and audit resolution system is in place.
Farm Credit Administration 18. The Inspector General, OPM, and the Director of Audit, FCA, should evaluate all of the significant fraud problems confronting their agencies to determine underlying causes and systemic weaknesses in order to identify preventive measures needed.
Closed - Not Implemented
FCA does not plan to take action on this recommendation and contends it is not a proper role for the audit group; however, the head of internal audit disagrees.
Office of Personnel Management 19. The Inspector General, OPM, and the Director of Audit, FCA, should evaluate all of the significant fraud problems confronting their agencies to determine underlying causes and systemic weaknesses in order to identify preventive measures needed.
Closed - Not Implemented
OIG agreed that it should conduct fraud analysis, but it currently has no resources to do so and does not routinely receive the information needed to accomplish this objective. OIG plans to ask for access to retirement fraud information so that analyses can be done. Additional resources were requested, but denied.

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