Inspectors General: Office Consolidation and Related Issues
(15-AUG-02, GAO-02-575).
There are currently 57 inspectors general (IG) subject to the
Inspector General Act of 1978 or similar statutory provisions.
The President appoints 29 IGs who are confirmed by the Senate.
Twenty-eight IGs in designated federal entities (DFE IGs) are
appointed by their agency heads. GAO developed a survey that
included key elements related to IG independence, quality of
work, and resources. Responses to the survey indicate a clear
delineation between the responses of the presidential and DFE IGs
regarding the potential impact of conversion and consolidation.
The presidential IGs indicated that DFE IG independence, quality
and use of resources could be strengthened by conversion and
consolidation. DFE IGs responses to these same questions
indicated that there would be no impact or that these elements
would be weakened. The Presidential IGs indicated that several
elements affecting the DFE IGs' quality of work could be
strengthened through consolidation, including the ability to
issue hard-hitting reports when necessary, to audit issues of
high risk, to review issues across agencies, to get attention to
recommendations made by the IGs, and to plan work. The IGs
overwhelmingly responded that establishing the President's
Council on Integrity and Efficiency and the Executive Council on
Integrity and Efficiency through legislation could make these
organizations more effective, especially if provided a permanent
funding source along with stated roles and responsibilities. Most
IGs surveyed responded that the establishment of an IG office
should be based on factors such as mission and risk, regardless
of the size of an agency's budget.
-------------------------Indexing Terms-------------------------
REPORTNUM: GAO-02-575
ACCNO: A04483
TITLE: Inspectors General: Office Consolidation and Related
Issues
DATE: 08/15/2002
SUBJECT: Federal agencies
Federal legislation
Inspectors general
Internal audits
Fraud
Program abuses
******************************************************************
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GAO-02-575
a
GAO United States General Accounting Office
Report to the Chairman, Committee on Government Reform, House of
Representatives
August 2002 INSPECTORS GENERAL Office Consolidation and Related Issues
GAO- 02- 575
Page i GAO- 02- 575 IG Consolidation and Related Issues
Contents Letter 1
Results in Brief 3 Background 5 Objectives, Scope, and Methodology 9
Independence 12 Consolidation and IG Quality of Work 16 Consolidation and
the Potential Impact on IG Resources 32 Strengthening the PCIE and ECIE 44
Agency Budgets are Not the Sole Criteria for Establishing IGs 48 Survey
Conclusions and GAO Views Regarding Conversion and
Consolidation 50 Approaches to IG Conversion and Consolidation 55 Matters
for Congressional Consideration 56 Agency Comments and Our Response 57
Appendixes
Appendix I: Summary of IG Survey Responses Regarding Conversion and
Consolidation 63
Appendix II: Potential IG Consolidations and Related Agency Missions 64
Appendix III: Designated Federal Entity Inspectors General: Fiscal Year
2000 Budgets and Full- time Equivalents (FTEs) 66
Appendix IV: Inspectors General Appointed by the President: Fiscal Year
2000 Budgets and Full- time Equivalents (FTEs) 67
Appendix V: Presidential IGs with Five Comparable DFE IGs: Fiscal Year
2000 Budgets 68
Appendix VI: Designated Federal Entities: Fiscal Year 2000 Budgets with
$134 Million Threshold 70
Appendix VII: Comments from the President*s Council on Integrity and
Efficiency 72
Appendix VIII: Comments from the Executive Council on Integrity and
Efficiency 74 Tables Table 1: Twenty- eight Key Elements Related to IG
Independence,
Quality of Work, and Use of Resources 2 Figures Figure 1: Distribution of
Fiscal Year 2000 IG Budgets and Offices 6
Contents
Page ii GAO- 02- 575 IG Consolidation and Related Issues
Figure 2: Distribution of IGs with Comparable Fiscal Year 2000 Budgets and
Offices 7 Figure 3: Potential Effect of Conversion on IG Independence 13
Figure 4: Potential Effect of Consolidation on Actual IG Independence 15
Figure 5: Potential Effect of Consolidation on the Appearance of IG
Independence 16 Figure 6: Potential Effect of Consolidation on the Ability
of IGs to Issue Hard- hitting Reports 18
Figure 7: Potential Effect of Consolidation on the IGs* Ability to Use
Audit Resources to Review Issues That Cross All DFE Agencies 19 Figure 8:
Potential Effect of Consolidation on the Attention That DFE Agencies and
the Congress Give to IG Recommendations 20 Figure 9: Potential Effect of
Consolidation on the Ability of DFE
IGs to Address Issues of Higher Risk and Priority 21 Figure 10: Potential
Effect of Consolidation on the Ability to Uniformly Measure DFE Agency
Performance 22
Figure 11: Potential Effect of Consolidation on Day- to- Day Contact with
Senior DFE Officials 24 Figure 12: Potential Effect of Consolidation on
Communication
between the IGs and DFE Agency Heads 25 Figure 13: Potential Effect of
Consolidation on the Ability of DFE
Agency Head to Get the IG*s Attention 26 Figure 14: Potential Effect of
Consolidation on IG Presence as a
Preventative Measure for the DFE Agencies 27 Figure 15: Potential Effect
of Consolidation on IG Knowledge of DFE Agency Missions, Operations, and
Resource
Limitations 28 Figure 16: Potential Effect of Consolidation on IG
Knowledge of Priorities and Issues within Each of the DFE Agencies 29
Figure 17: Potential Effect of Consolidation on Oversight Planning 30
Figure 18: Potential Effect of Consolidation on the Timeliness of IG
Reports 31 Figure 19: Potential Effect of Consolidation on DFE Agency
Audit Coverage 32 Figure 20: Potential Effect of Consolidation on IG
Control over Spending for Travel, Training, and Personnel Related to
Oversight of DFE Agencies 34
Contents
Page iii GAO- 02- 575 IG Consolidation and Related Issues
Figure 21: Potential Effect of Consolidation on IG Control over Their Own
Budget Requests for Oversight Activity 35 Figure 22: Potential Effect of
Consolidation on the IGs* Ability to Absorb Resource Reductions 36 Figure
23: Potential Effect of Consolidation on the Availability of IG
Resources for Investigative Coverage 37 Figure 24: Potential Effect of
Consolidation on the IGs* Ability to Minimize Duplication of Audit Efforts
across the Federal
Government 38 Figure 25: Potential Effect of Consolidation on the Quality
of
Training for IG Audit Work 39 Figure 26: Potential Effect of Consolidation
on the IGs* Ability to Share Methods and Programs for Audits and
Investigations across the Federal Government 40 Figure 27: Potential
Effect of Consolidation on the IGs* Ability to Share Technology
Specialists and Expertise 41
Figure 28: Potential Effect of Consolidation on the IGs* Efficient Use of
Human Capital Skills and Resources across the Federal Government 42
Figure 29: Potential Effect of Consolidation on the Availability of
Adequate IG Resources 43 Figure 30: Potential Effect of Consolidation on
the Availability of
Resources to Cover DFE Agency Issues 44 Figure 31: How Important Is It to
Establish a Statutory PCIE/ ECIE
Organization for Improving Their Operations? 45 Figure 32: How Important
Is It to Provide Designated Funding Sources to the PCIE/ ECIE Organization
for Improving
Their Operations? 46 Figure 33: How Important Is It to Establish Stated
Roles and
Responsibilities of an Alternative PCIE/ ECIE Organization in Order to
Improve Operations? 47 Figure 34: Should Dollar Thresholds of Agency
Budgets Be the
Primary Factor in Determining Which Agencies Have an IG? 49 Figure 35: Are
Statutory IGs Needed for Agencies with Budgets Below $134 Million? 50
Page 1 GAO- 02- 575 IG Consolidation and Related Issues United States
General Accounting Office
Washington, D. C. 20548 Comptroller General
of the United States A
August 15, 2002 Lett er
The Honorable Dan Burton Chairman Committee on Government Reform House of
Representatives
Dear Mr. Chairman: This report responds to your request that we provide
information about how certain changes might affect the federal offices of
inspectors general (IG). There are currently 57 IGs subject to the IG Act
of 1978, as amended, or similar statutory provisions, with 29 IGs who are
appointed by the President and confirmed by the Senate, and 28 IGs who are
appointed by their agency heads in designated federal entities (DFE IGs).
Among other duties, the IGs are responsible for (1) conducting and
supervising audits and investigations; (2) promoting economy, efficiency,
and effectiveness;
and (3) preventing and detecting fraud and abuse in their agencies*
programs and operations. Specifically, our objectives were to survey the
IGs to obtain their views on how independence, quality of work, and use of
resources might be affected by (1) converting DFE IGs from appointment by
their agency heads to appointment by the President with Senate
confirmation (conversion) and (2) consolidating IG offices by moving
smaller DFE IG offices into larger Presidential IG offices
(consolidation). We also obtained the IGs* views on (1) creating a
statutory alternative to the President*s Council on Integrity and
Efficiency (PCIE) and the Executive Council on Integrity and Efficiency
(ECIE) 1 and (2) applying a budget- level threshold to determine which
agencies should have IGs as opposed to receiving oversight on a collateral
basis from a larger agency*s IG. We are also presenting our views on the
impact that conversion, consolidation, and potential legislated changes to
the PCIE and ECIE could have on IG effectiveness, and a
discussion of options to illustrate possible examples of IG conversion and
consolidation for consideration by the Congress.
1 The PCIE is an interagency council comprised principally of the
presidentially appointed and Senate- confirmed IGs, which was established
by Executive Order No. 12301 in 1981, to coordinate and enhance the work
of the IGs. In 1992, Executive Order No. 12805 created
the ECIE, which is comprised primarily of statutory IGs appointed by the
heads of designated federal entities. The Deputy Director for Management
in the Office of Management and Budget serves as the chair of both
organizations.
Page 2 GAO- 02- 575 IG Consolidation and Related Issues
As part of our review, we developed a survey instrument which included 28
key elements related to IG independence, quality of work, and use of
resources. (See table 1.)
Table 1: Twenty- eight Key Elements Related to IG Independence, Quality of
Work, and Use of Resources
We obtained the views of the IGs on the potential impact of conversion and
consolidation on each of these elements. The survey also asked the IGs
about the potential impact of a permanent statutory alternative to the
PCIE and the ECIE and the usefulness of a budget threshold to determine
where IG offices should be established.
Independence
1. Independence resulting from conversion 3. Appearance of independence 2.
Actual independence
Quality of work
4. Ability to issue hard hitting reports 11. Ability of DFE head to get
the IG*s attention 5. Ability to review issues crossing DFEs 12. Presence
of the IG as a prevention measure 6. Attention to IG recommendations 13.
Knowledge of DFE agency missions 7. Ability to audit issues of high risk
14. Knowledge of DFE agency priorities 8. Ability to uniformly measure
performance 15. Planning for IG oversight
9. Day- to- day contact between IGs and o f f i c i a l s 16. Timeliness
of reports
10. Communication between IGs and DFE heads 17. Oversight coverage of DFE
agencies
Use of IG resources
18. Control over spending 24. Ability to share methods 19. Control over
budget requests 25. Ability to share technology specialists 20. Ability to
absorb resource reductions 26. Efficient use of human capital skills 21.
Resources available for investigations 27. Availability of adequate
resources 22. Ability to minimize audit duplication 28. Resources
available to cover DFE agency
23. Quality of audit training
Page 3 GAO- 02- 575 IG Consolidation and Related Issues
Finally, as discussed with your staff, we are including our views on the
impact that conversion, consolidation, and legislated changes to the PCIE
and ECIE could have on IG effectiveness and a discussion of options to
illustrate possible examples of IG conversion and consolidation for
consideration by the Congress.
Results in Brief Our survey results indicate a clear delineation between
the responses of the Presidential IGs and the DFE IGs regarding the
potential impact of conversion and consolidation. Overall, the
Presidential IGs generally indicated that DFE IG independence, quality,
and use of resources could be strengthened by conversion and
consolidation. At the same time, the DFE IGs* responses to these same
survey questions indicated that there would be either no impact or that
these elements could be weakened. (See appendix I). The difference in
views between the Presidential and DFE IGs regarding the impact of
conversion and consolidation is not surprising
given the nature of the questions and issues involved, their various
related interests, and the potential impact on the affected offices,
especially the DFE IGs.
Specifically, the Presidential IGs indicated that conversion could
strengthen DFE IG independence while the DFE IGs in general indicated that
there would be no effect on independence. Regarding the impact of
consolidation, the Presidential IGs indicated that both the DFE IGs*
actual independence and appearance of independence could be strengthened
while the DFE IGs generally indicated that there would be no impact. The
Presidential IGs also indicated that several elements affecting the DFE
IGs* quality of work could be strengthened through consolidation,
including the ability to issue hard- hitting reports when necessary, to
audit issues of high risk, to review issues across agencies, to get
attention to recommendations made by the IGs, and to plan work. In
addition, the Presidential IGs indicated that consolidation could
strengthen the DFE IGs* use of resources by increasing control over
spending and budget requests,
the availability of investigative resources, the ability to minimize
duplication of audit efforts, the ability to share methods and technology
specialists and to use human capital skills efficiently. At the same time,
the DFE IGs generally indicated that there would be either no effect or
that these elements would be weakened through consolidation. The
Presidential IGs and DFE IGs generally agreed in their responses that
consolidation could result in weaknesses affecting the day- to- day
contact
Page 4 GAO- 02- 575 IG Consolidation and Related Issues
of IGs and DFE agency officials, knowledge of the DFE agency missions and
priorities, and the availability of resources to cover DFE agency issues.
For other elements in our survey, the Presidential IGs* responses were
inconclusive while the DFE IGs indicated potential weaknesses could occur.
The IGs overwhelmingly responded that establishing the PCIE and ECIE
through legislation could make these organizations more effective,
especially if provided a permanent- funding source along with stated roles
and responsibilities. These changes were viewed as increasing the ability
of both the PCIE and ECIE to provide coordinating mechanisms for effective
governmentwide oversight. In our survey, most IGs responded that agency
budgets should not be the
primary factor for determining whether an IG office should be established
in a specific agency and that other factors, such as mission and risk, may
indicate the need for an IG regardless of the size of an agency*s budget.
Comments provided by the IGs to our survey suggested that in addition to
agency budgets, other factors, such as the amount of federal funds at
risk,
should be considered when determining how to provide IG oversight. We
believe that certain elements of DFE IG independence and effectiveness
could be strengthened through conversion or consolidation. Also, if IG
offices were to be consolidated, the potential weaknesses indicated by the
DFE IGs* responses, if implemented properly, could be
mitigated through targeted and proactive attention to the various areas of
risk. For example, the lack of day- to- day contact between IGs and DFE
agency officials could be mitigated by having IG staff at the agency,
where appropriate, to keep both the IG and the agency head informed and to
coordinate necessary meetings between them. We also agree with the
combined DFE and Presidential IGs* responses that legislative changes to
the PCIE and ECIE could strengthen IG effectiveness. In addition, we
believe that legislation could strengthen the planning and coordination of
the IGs* efforts with other oversight organizations, such as GAO.
Any specific conversions or consolidations of IG offices should be a
process of continuing dialogue among the PCIE, ECIE, affected agencies,
and the Congress. Nevertheless, should the Congress choose to pursue the
conversion or consolidation of the DFE IGs, there are some options that
are illustrative of how this could be accomplished. For example, the
relative size of the IG budgets shows that several DFE IGs are comparable
to Presidential IGs and on that basis could be considered
Page 5 GAO- 02- 575 IG Consolidation and Related Issues
for conversion, while other IGs with relatively small budgets could be
considered for consolidation with Presidential IGs. Specifically, due to
the relative size of their budgets, the U. S. Postal Service (USPS),
National Science Foundation (NSF), and Federal Reserve Board (FRB) IGs
could be
considered as candidates for possible conversion and most of the remaining
DFE IGs could be considered for consolidation with Presidential IGs based
on some similarity of their agencies* missions. This consolidation would
include the Amtrak IG, which has a budget comparable to Presidential IGs
but an oversight mission closely related to the work of the Department of
Transportation (DOT) IG. The Government Printing Office (GPO) IG also has
a budget comparable to Presidential IGs
but GPO is a legislative branch agency and the IG would not be considered
for conversion or consolidation with a Presidential IG in the executive
branch.
In our view, the conversion and consolidation of selected DFE IG offices
would serve to further enhance the overall independence, efficiency, and
effectiveness of the IG community. Therefore, we are including matters for
consideration by the Congress related to amending the IG Act to include
specific conversion and consolidation of DFE IGs, as well as establishing
an IG council by statute.
Similar to the survey results, the PCIE and ECIE IGs provided a clear
divergence of views in making comments on a draft of our report. The PCIE
response did not take exception to the information and conclusions
presented in our draft report. In contrast, the ECIE IGs raised broad
concerns with our report conclusions and methodology. A summary of the
PCIE and ECIE IGs* comments with our response are presented on page 57 and
their comments are reprinted in their entirety in appendixes VII and VIII.
Background Over two decades ago, the Congress created IGs throughout the
federal government as a result of growing reports of serious and
widespread internal control breakdowns resulting in dollar losses and
reduced effectiveness or efficiency in federal activities. In the
intervening years, IGs have reported success in carrying out this mission
through billions of dollars in reported savings and cost recoveries and
thousands of
prosecutions of criminal cases resulting from their work. For example, for
fiscal year 2000, IGs reported potential savings to the government of $9.
5 billion; actions to recover $5. 5 billion in fines and restitutions,
suspensions or debarments of 7,000 individuals or businesses; and more
Page 6 GAO- 02- 575 IG Consolidation and Related Issues
than 2,600 civil or personnel actions resulting from their audit and
investigative work in that year alone. In total, for fiscal year 2000, the
IGs reported a potential return of taxpayer money of approximately $12 for
every $1 spent.
In fiscal year 2000, the 57 IG offices had total fiscal year budgets of
about $1. 3 billion and about 11, 000 staff. While all IGs have the same
basic mission and responsibilities, the IGs in the DFEs, with three
exceptions, have smaller budgets and fewer staff than do the IGs who are
appointed by the President. (See appendixes III and IV). Total fiscal year
2000 budgets
for the DFE IGs was $111.1 million, or about 8 percent of the total
budgets for all IGs for that year. The Presidential IGs for fiscal year
2000 had $1. 26 billion, or about 92 percent of total IG budgets for that
year. (See figure 1.)
Figure 1: Distribution of Fiscal Year 2000 IG Budgets and Offices
The IGs at the U. S. Postal Service (USPS), Amtrak, and the National
Science Foundation (NSF), had budgets larger than some IGs appointed by
the President. In addition, the Federal Reserve Board (FRB) and the
Government Printing Office (GPO) IGs are each comparable in size with
budgets that were equal to about 80 percent of the smallest Presidential
IG budget. (See appendix V.) For example, the USPS IG had a fiscal year
2000 92% Presidential IGs
8%
DFE IGs
51% Presidential IGs
49%
DFE IGs
IG budgets IG offices
Page 7 GAO- 02- 575 IG Consolidation and Related Issues
budget of about $72 million, the fifth largest of all IG budgets.
Likewise, the fiscal year 2000 budget for Amtrak was about $6.3 million,
and for the NSF IG, it was about $5.4 million. Both the Amtrak and NSF
IGs* budgets are larger than the budgets of two IGs appointed by the
President. The FRB and GPO IGs each had fiscal year 2000 budgets over $3
million compared to the Presidential IG at the Corporation for National
Service which had a
$4 million budget. The total fiscal year 2000 budgets of these five
largest DFE IGs make up about 81 percent of all DFE IG budgets, or about 7
percent of all IG budgets. The remaining 23 DFE IGs had budgets that total
about $21 million, roughly 1 percent of all IG budgets. (See figure 2.)
Fourteen of these 23 DFE IGs had budgets under $1 million and 17 had less
than 10 staff.
Figure 2: Distribution of IGs with Comparable Fiscal Year 2000 Budgets and
Offices
Consolidation of IG offices would likely result in IG oversight being
provided across several federal agencies and their respective missions.
This type of consolidated oversight is already being applied in various
departments and agencies across the government through both statutes and
other arrangements. For example, the oversight for the Broadcasting Board
of Governors and the International Broadcasting Bureau is consolidated
under the Department of State IG through the Foreign Affairs
Reform and Restructuring Act of 1998 (Public Law 105- 277). This statute
IG budgets IG offices 60% Presidential and
comparable DFE IGs
40%
Remaining DFE IGs
92% Presidential IGs
1%
Remaining DFE IGs
7%
Amtrak, USPS, NSF, FRB, and GPO IGs
Page 8 GAO- 02- 575 IG Consolidation and Related Issues
authorizes the Department of State IG to exercise the same authorities
with respect to these two agencies as the IG exercises under the IG Act of
1978 and section 209 of the Foreign Service Act of 1980 with respect to
the Department of State. In another example, the Agency for International
Development (AID) IG may conduct reviews, investigations, and
inspections of all phases of the Overseas Private Investment Corporation
(OPIC) and is required to report these findings to OPIC*s Board under the
authority of the Foreign Assistance Act of 1961, as amended. As a result
of the OPIC Amendments Act of 1981, Public Law 87- 65, the AID IG performs
audits, investigations, and inspections at the request of OPIC management
and is authorized to be reimbursed for expenses incurred on behalf of
OPIC. In addition, 1999 amendments to the IG Act of 1978 direct the AID IG
to supervise, direct, and control audit and investigative activities
relating to programs and operations within the Inter- American Foundation
and the African Development Foundation. In another example of consolidated
IG oversight, the Amtrak Reform and Accountability Act of 1997 (Public Law
105- 134) authorizes the Department of Transportation (DOT) IG to approve
and oversee the contract for the assessment of financial requirements of
Amtrak through fiscal year 2002. Also, the National Transportation Safety
Board (NTSB) Amendments Act of 2000 (Public Law 106- 424) provides the DOT
IG the authority to review the financial management, property management,
and business operations of
the NTSB, including internal accounting and administrative control
systems, to determine compliance with applicable laws, rules, and
regulations. In another example, the Appalachian Regional Commission*s IG
provides audit and investigative services to the Denali Commission through
a memorandum of agreement between the IG and the commission.
In 1998 the PCIE surveyed both the Presidential IGs and the DFE IGs to
obtain their views on S. 2167, the Inspector General Act Amendments of
1998, then under consideration. 2 Among other considerations, the
amendments contemplated consolidations of certain specific DFE IG offices
with specific IGs appointed by the President. For example, these
amendments proposed that the functions of the IGs for the Corporation for
Public Broadcasting, the National Endowment for the Arts, the National
Endowment for the Humanities, and the Smithsonian Institution be 2
President*s Council on Integrity and Efficiency, State of the Inspector
General Community, PCIE Survey on S. 2167, for the Senate Committee on
Governmental Affairs (Washington, D. C.: Sept. 9, 1998).
Page 9 GAO- 02- 575 IG Consolidation and Related Issues
transferred to the IG at the Department of Education. The bill did not
become public law, but the 1998 PCIE survey of the IGs did elicit valuable
and relevant information concerning advantages and disadvantages
associated with the consolidation of IG offices. In particular, the 1998
PCIE survey concluded that those IGs who agreed
with the proposed IG Act amendments felt that the independence of IG
oversight would be enhanced in the entities to be consolidated. However,
the IGs who opposed such a transfer felt that the benefits associated with
the presence of an IG in the smaller agencies outweighed the
administrative inefficiencies that may have existed. Also, the IGs
responded that the size of an IG organization does not adequately measure
the effectiveness and contributions of the IG in preventing and detecting
fraud, waste, and abuse in the DFE agencies* operations. Other IG comments
reported by the 1998 PCIE survey results include recognition
that by their proximity to the areas served, the DFE IGs are more attuned
to the agency employees, functions, operations, and goals which they
review. Finally, the PCIE reported that the IGs felt the issue of
transferring IG functions from DFE IGs to Presidential IGs needs further
study to determine whether such transfers would contribute to increased
efficiencies and more effective oversight. Objectives, Scope, and
Methodology
In order to provide information on the potential impact of the
consolidation or conversion of DFE IGs, we developed and sent a structured
survey to all existing IGs. As agreed with your staff, we identified and
analyzed 28 elements of IG effectiveness in the areas of (1) IG
independence, (2) the quality of IG work, and (3) the effective use of IG
resources. The elements were obtained from IG Act requirements, the IGs*
vision statement, 3 audit
and investigative standards, past GAO reports, and statements from the IGs
and members of the Congress. We also obtained comments from a panel of DFE
IGs regarding the use of the criteria for IG effectiveness.
We developed a survey instrument that was sent to the IGs to obtain their
views on the potential impact of conversion and consolidation on the
elements of effectiveness for the DFE IG offices, the potential impact of
a permanent statutory alternative to the PCIE and the ECIE, and the
3 President*s Council on Integrity and Efficiency and the Executive
Council on Integrity and Efficiency, Inspectors General Vision and
Strategies to Apply Our Reinvention Principles (Washington, D. C.: January
1994).
Page 10 GAO- 02- 575 IG Consolidation and Related Issues
usefulness of using a budget threshold to determine at which agencies IG
offices should be established. Survey responses were received from an
equal number of Presidential and DFE IGs - 28 of the IGs appointed by the
President and 28 of the IGs appointed by their agency heads. The Central
Intelligence Agency IG declined to respond. We did not independently
verify the information the IGs provided.
Our survey addressed the potential impact that both conversion and
consolidation could have on the independence of the DFE IGs and the
resulting Presidential IG offices. However, because consolidation would to
a large extent result in making DFE IG offices a part of Presidential IG
offices, we did not duplicate the entire survey for both conversion and
consolidation but rather relied on the IG responses to consolidation. Any
number of scenarios exist for implementing a conversion or consolidation
strategy. Two options for conversion and consolidation of IG offices not
specifically addressed by our survey include (1) combining the DFE IGs to
create one large DFE IG office to cover all DFE agencies and (2) combining
all the DFE IGs under a new IG appointed by the President and confirmed by
the Senate. These options for conversion and consolidation were previously
studied through a survey of the IGs and were met with limited support. The
results of our prior study, which were provided in a 1999 report, 4 showed
that the first option was supported by 27
percent of the Presidential IGs and 7 percent of the DFE IGs. The second
option was supported by 15 percent of the Presidential IGs and 10 percent
of the DFE IGs.
4 U. S. General Accounting Office, Inspectors General: Information on
Operational and Staffing Issues, GAO/ AIMD- 99- 29 (Washington, D. C.:
Jan. 4, 1999).
Page 11 GAO- 02- 575 IG Consolidation and Related Issues
Our current survey was completed prior to recent changes to Government
Auditing Standards 5 regarding auditor independence and therefore
addresses the requirements of the older independence standards.
Nevertheless, as a basic premise under the revised standards, the IGs
appointed by the President and confirmed by the Senate and IGs appointed
by and reporting to a statutorily created governing body, as well as the
DFE IGs appointed by their agency heads, are considered organizationally
independent to report externally. 6 Therefore, we do not believe that our
survey results would have changed in any material way as a result of the
changes in the auditor independence standards. We obtained comments on a
draft of this report from the Presidential IGs and the DFE IGs through the
PCIE and the ECIE. These included technical changes that have been
incorporated in the report. A summary of their written comments and our
response are presented on page 57. The PCIE and ECIE comments are
reprinted in their entirety in appendixes VII and
VIII. We performed our review from March 2001 through March 2002 in
accordance with generally accepted government auditing standards. 5 U. S.
General Accounting Office, Government Auditing Standards, Amendment No. 3,
Independence, GAO- 02- 388G (Washington, D. C.: January 2002). 6 The IG
Act provides the DFE IGs appointed by their agency heads with all the
statutory safeguards listed in the revised standards for organizational
independence. However, these IGs must document that the specific statutory
safeguards are applicable and have them reviewed by an independent quality
control review at least once every 3 years.
Page 12 GAO- 02- 575 IG Consolidation and Related Issues
Independence The independence of an audit entity is one of the most
important elements of the overall effectiveness of the audit function.
Auditors need to be as independent from external influences as possible
both in fact and appearance, in order to ensure that their audit work is
credible and respected. Therefore, the effect on IG independence is
critical when considering the conversion of the DFE IGs to appointment by
the President or consolidation of their offices with IGs appointed by the
President. The
IGs derive independence through numerous provisions in the IG Act. These
include the authority of IGs to report violations of law directly to the
Department of Justice, the requirement for IGs to prepare semiannual
reports of their activities for the Congress without alteration by their
agencies, the authority of IGs to perform any audit or investigation
without interference from the agency head and others except under certain
conditions specified by the act, and the requirement for the President or
the agency head to communicate to the Congress the reasons for removing
an IG. In addition, the IGs are required to follow Government Auditing
Standards, 7 which require IGs and individual auditors to be free from
personal, organizational, and external impairments to independence, and to
be independent in appearance. Conversion and Independence
The survey responses from the Presidential IGs and the DFE IGs differed as
to whether DFE IG independence could be increased by having IGs appointed
by the President with Senate confirmation instead of the present practice
of IG appointment by the heads of agencies in which they would
lead the IG staff. Specifically, as shown in figure 3, 29 IGs (24
Presidential and 5 DFE) responded that independence could be increased in
this way and 22 IGs (19 DFE and 3 Presidential), responded that conversion
would have no impact on DFE IG independence. One DFE IG responded that
independence could be decreased. Two DFE IGs and one Presidential IG had
no opinions and an additional IG did not respond.
7 Government Auditing Standards, 1994 revision, as amended, was issued by
the Comptroller General of the United States. IGs are required to follow
these standards in their audit work.
Page 13 GAO- 02- 575 IG Consolidation and Related Issues
Figure 3: Potential Effect of Conversion on IG Independence
Five of the 19 DFE IGs who responded that conversion would have no impact
on their independence also stated that appointment by the President could
actually increase political influence on the IGs. This
contrasts rather sharply with 24 of the Presidential IGs* survey responses
that conversion could increase the independence of DFE IGs. Typically, the
further removed the appointment source is from the entity to be
audited, the greater the level of independence. To illustrate, conversion
of IGs from appointment by their agency heads to appointment by the
President with Senate confirmation has been recognized previously by the
Congress as a way to obtain increased IG independence. Specifically, the
perceived limitation of the Federal Deposit Insurance Corporation IG*s
independence as a DFE IG under the IG Act was recognized as a reason to
convert the IG to appointment by the President with Senate confirmation
when Public Law 103- 204 was passed on December 17, 1993. More recently,
Public Law 106- 422, November 1, 2000, converted the Tennessee
Valley Authority (TVA) IG to appointment by the President with Senate
confirmation because of concerns about interference by TVA management and
recognized that the IG*s independence would be enhanced under appointment
by the President. Consequently, the change from agency
IG responses 0 5
10 15
20 25
30 Increase Decrease No effect No opinion 5
24 1
0 19
3 2
1
Designated federal entity IGs Presidential IGs
Page 14 GAO- 02- 575 IG Consolidation and Related Issues
appointment to appointment by the President has been recognized by the
Congress since the advent of the IG concept as a strengthening of this
critical element of IG effectiveness.
Consolidation and Independence
Similar to the survey results regarding conversion, the Presidential and
DFE IGs* responses were different regarding the impact that consolidation
could have on DFE IG independence. In responding to our survey, 26 IGs (24
Presidential and 2 DFE) indicated that independence could be increased and
2 DFE IGs believe it could be decreased. Of the remaining IGs, 25 (22 DFE
and 3 Presidential) responded that consolidation would have no effect on
independence and 2 (1 Presidential and 1 DFE) had no opinion. An
additional IG did not respond. (See figure 4).
Three DFE IGs provided explanations of how independence would be
decreased. Specifically, one DFE IG explained that the independence of the
agency (rather than IG independence) would decrease due to agency concerns
about undue political influence from the President. Another DFE IG stated
a preference for increasing independence through added provisions in the
IG Act rather than through consolidation, and the remaining DFE IG stated
that IGs appointed by the President are more affected by politics and are
more likely to be forced to resign.
Page 15 GAO- 02- 575 IG Consolidation and Related Issues
Figure 4: Potential Effect of Consolidation on Actual IG Independence With
respect to the appearance of independence there was some consensus. As
shown in figure 5, 39 IGs (27 Presidential and 12 DFE) indicated that the
appearance of independence could be strengthened by consolidating DFE IGs
with Presidential IGs. Fifteen IGs (14 DFE and 1 Presidential) responded
that there would be no effect, and 2 DFE IGs indicated that the appearance
of independence would be weakened
through consolidation. Of the two DFE IGs who indicated that the
appearance of independence would be decreased, one provided additional
comments, reiterating that the decrease in appearance of independence
would be the result of an appearance of political influence by an IG
appointed by the President.
IG responses 0 5
10 15
20 25
30 Increase Decrease No effect No opinion 2
24 2
0 22
3 1 1
Designated federal entity IGs Presidential IGs
Page 16 GAO- 02- 575 IG Consolidation and Related Issues
Figure 5: Potential Effect of Consolidation on the Appearance of IG
Independence
Consolidation and IG Quality of Work
The quality of audits and investigations is also a critical element of IG
effectiveness. To determine the possible impact of consolidation on the
quality of IG work, we obtained information for use in our survey from IG
testimony before the Congress, IG reports, concerns of the Congress, and
professional standards. These sources indicate that the quality of work is
largely determined by the ability to issue hard- hitting reports when
necessary, to review issues across agencies, to get attention to
recommendations made by the IGs, to audit issues of high risk, and to
measure agency performance. Also, within each agency the quality of work
is affected by the relationship the IG has with the agency and includes
dayto- day contact with agency management, communication between the IG
and the agency head including the ability of the agency head to get the
attention of the IG, the presence of an IG as a prevention measure, the
knowledge of agency missions and priorities, the IG*s ability to plan
work, the timeliness of IG reports, and the audit coverage of the agency.
As with the other survey questions, the views of Presidential IGs and DFE
IGs are markedly different regarding the potential effect of consolidation
IG responses 0 5
10 15
20 25
30 Strengthened Weakened Neither Not applicable 12
27 2
0 14
1 0 0
Designated federal entity IGs Presidential IGs
Page 17 GAO- 02- 575 IG Consolidation and Related Issues
on the quality of future IG work. The Presidential IGs* responses indicate
that consolidation could increase some of the elements of IG quality. For
these same elements, the DFE IGs* responses indicate that consolidation
would either have no impact or that work quality could be weakened. In
addition, responses from both the Presidential IGs and the DFE IGs
indicate that there are elements of quality that could be weakened. These
types of risks to quality would need to be addressed by the management of
the merged IG operations to avoid or abate any undesired consequences by a
consolidated IG. In our view, consolidation of DFE IG offices with
Presidential IGs would not necessarily result in a reduction of audit
quality, especially if proper steps are taken to mitigate areas that could
be weakened.
Ability to Issue Hard- hitting Reports When Necessary The DFE IGs and the
Presidential IGs again responded differently in assessing the impact of
consolidation on their ability to present hard- hitting
reports when necessary. Generally, the Presidential IGs responded that the
DFE IGs* ability to issue hard- hitting reports could be strengthened
through consolidation. However, the DFE IGs generally responded that
consolidation would either have no impact on this ability or that the
quality of work could be weakened. Specifically, 26 IGs (24 Presidential
and 2
DFE) indicated that the ability of DFE IGs to issue hard- hitting reports
would be strengthened. However, 21 IGs (19 DFE and 2 Presidential)
responded that there would be no impact, and 7 IGs (5 DFE and 2
Presidential) indicated this ability could be weakened. (See figure 4.)
The IGs provided no comments to explain their responses.
Page 18 GAO- 02- 575 IG Consolidation and Related Issues
Figure 6: Potential Effect of Consolidation on the Ability of IGs to Issue
Hard- hitting Reports
Oversight of Cross- Cutting Issues
The ability of IGs to issue reports that address not only issues that are
particular to their specific agencies but which address issues of broad
interest across several agencies is another function of the PCIE and ECIE.
This ability provides reports of cross- cutting issues for the Congress
and
for the benefit of the IGs* collective agencies. As a result, the IGs have
issued reports on such cross- cutting issues as computer security, debt
collection, the use of government credit cards, and financial management.
Twenty- two IGs (16 Presidential and 6 DFE) responded that consolidation
could strengthen their ability to review issues that cut across other
agencies while 16 IGs (12 DFE and 4 Presidential) indicated that there
would be no effect on the ability of the DFE IGs to issue cross- cutting
reports. In addition, six IGs (five DFE and one Presidential) responded
that this ability would be weakened by consolidation. (See figure 7).
IG responses 0 5
10 15
20 25
30 Strengthened Weakened Neither Not applicable 2
24 5
2 19
2 2 0
Designated federal entity IGs Presidential IGs
Page 19 GAO- 02- 575 IG Consolidation and Related Issues
Figure 7: Potential Effect of Consolidation on the IGs* Ability to Use
Audit Resources to Review Issues That Cross All DFE Agencies
Attention to IG Recommendations
The ability of the IGs to achieve results through their recommendations is
another key element of effectiveness. Some important objectives of the
IGs* audit work include improving accountability, saving tax dollars,
improving programs and operations, and providing better service to the
public. Auditors* recommendations are vehicles for fulfilling these
objectives but only the effective implementation of recommendations, not
the recommendations themselves, will enable the government to work
better at lower cost. Nineteen IGs (18 Presidential and 1 DFE) responded
that greater attention would be given DFE IG recommendations as a result
of consolidation. Eighteen IGs (14 DFE and 4 Presidential) indicated that
there would be no effect on the level of attention given to their
recommendations as a result of consolidation. Also, 11 IGs (all were DFE)
responded that there would be less attention to IG recommendations. (See
figure 8.) In comments regarding the potential weaknesses of
consolidation, one IG stated that consolidation would result in less
credibility of the IG in the DFE, and another IG stated that DFE IG
recommendations already receive attention.
IG responses 0 5
10 15
20 25
30 Strengthened Weakened Neither Not applicable 6
16 5
1 12
4 5 7
Designated federal entity IGs Presidential IGs
Page 20 GAO- 02- 575 IG Consolidation and Related Issues
Figure 8: Potential Effect of Consolidation on the Attention That DFE
Agencies and the Congress Give to IG Recommendations
Ability to Address High- Risk and Priority Issues
Assessing risk and establishing priorities for audits are important
elements of the planning process for audit organizations. The ability to
address those areas designated as high risk and of highest priority is
fundamental to any audit organization*s work. The Presidential IGs and the
DFE IGs again had widely different responses to this element of IG
effectiveness. Twentyone IGs (18 Presidential and 3 DFE) indicated that
consolidation could strengthen the ability of the DFE IGs to address
issues of higher risk and priority. However, 27 IGs (20 DFE and 7
Presidential) indicated that consolidation would have no impact. In
addition, two IGs (both were DFE) indicated that their ability in this
area could be weakened. (See figure 9.)
There were no additional comments provided by the IGs regarding their
responses.
IG responses 0 5
10 15
20 25
30 Strengthened Weakened Neither Not applicable 1
18 11
0 14
4 2
6
Designated federal entity IGs Presidential IGs
Page 21 GAO- 02- 575 IG Consolidation and Related Issues
Figure 9: Potential Effect of Consolidation on the Ability of DFE IGs to
Address Issues of Higher Risk and Priority
Ability to Uniformly Measure Performance The Government Performance and
Results Act of 1993 (GPRA) includes requirements for federal agencies to
engage in strategic planning, establish
performance measures, and report on their ability to meet these measures.
The validity of the measures and the verification of agency reports of
meeting the established measures is an important part of the success in
implementing GPRA. At the request of members of the Congress, the IGs
perform activities in the validation and verification of performance
measures developed by their agencies in compliance with GPRA requirements.
While there is no specific requirement in the act for the IGs to audit
GPRA results, the extent of the IGs* ability to assist their agencies
continues to be of interest to the Congress. To the extent IGs can
uniformly measure the performance of their agencies through use of the
GPRA measures and their own audit efforts, the IGs will be increasingly
effective in reporting on their agencies* ability to successfully achieve
their missions, goals, and specific performance measures. IG responses 0
5 10
15 20
25 30
Strengthened Weakened Neither Not applicable 3
18 2
0 20
7 3 3
Designated federal entity IGs Presidential IGs
Page 22 GAO- 02- 575 IG Consolidation and Related Issues
Twenty- five IGs (15 DFE and 10 Presidential) indicated that consolidation
would have no impact on the ability to measure DFE agency performance.
Fourteen IGs (12 Presidential and 2 DFE) indicated that this ability could
be strengthened. Four IGs (all were DFE) responded that their ability
would be weakened. Thirteen IGs responded that the question was not
applicable. (See figure 10.) No comments were provided by the IGs on this
issue.
Figure 10: Potential Effect of Consolidation on the Ability to Uniformly
Measure DFE Agency Performance
IG responses 0 5
10 15
20 25
30 Strengthened Weakened Neither Not applicable 2
12 4
0 15
10 7
6
Designated federal entity IGs Presidential IGs
Page 23 GAO- 02- 575 IG Consolidation and Related Issues
IG Contact with DFE Officials
The legislative history of the IG Act of 1978 includes guidance on IG
effectiveness by indicating that the IGs must have a close relationship
with their agency heads and be responsive to their concerns. Moreover, the
guidance illustrates that if the agency head is committed to managing the
agency effectively the IG can be the agency head*s strong right arm while
maintaining the IG independence needed to honor reporting responsibilities
to the Congress. 8 The survey responses indicate that both Presidential
and DFE IGs believe this working relationship between the IGs and their
DFE heads could be weakened through consolidation of the IG offices.
Responses from 36 IGs (26 DFE and 10 Presidential) indicate that
consolidation could weaken the ability of the IGs to have day- to- day
contact with senior DFE agency officials. Nine IGs (eight Presidential and
one DFE) indicated that there would be no impact on their day- to- day
contact with agency officials and five IGs (all were Presidential)
responded
that day- to- day contact could be strengthened. (See figure 11.) 8 U. S.
Government Printing Office, Establishment of Offices of Inspector and
Auditor General in Certain Executive Departments and Agencies, Report of
the Committee on Governmental Affairs United States Senate, Report No. 95-
1071 (Washington, D. C.: Aug. 8, 1978).
Page 24 GAO- 02- 575 IG Consolidation and Related Issues
Figure 11: Potential Effect of Consolidation on Day- to- Day Contact with
Senior DFE Officials
Communication between IGs and DFE Agency Heads
Attention to communication among IGs, agency heads, and program management
staff is included as part of the IGs* vision statement. The IGs have
stated their intent to work with agency heads and the Congress to improve
program management. Therefore, IG communication with DFE agency heads is
another indicator of the quality of IG work. Thirty- three IGs (26 DFE and
7 Presidential) responded that this communication could be weakened by
consolidation. The Presidential IGs* responses were almost evenly divided
among the strengthen, weaken, and no impact choices with eight responses
indicating that consolidation could actually
strengthen communication and eight responses indicating that there would
be no impact on communication. (See figure 12.) One DFE IG stated that
close working relations with the agency head are currently enjoyed by the
IG. No specific comments were made to indicate specifically how
communication between the IG and DFE head would be weakened.
IG responses 0 5
10 15
20 25
30 Strengthened Weakened Neither Not applicable 0
5 26
10 1
8 1
5
Designated federal entity IGs Presidential IGs
Page 25 GAO- 02- 575 IG Consolidation and Related Issues
Figure 12: Potential Effect of Consolidation on Communication between the
IGs and DFE Agency Heads
Ability of DFE Head to Get the Attention of the IG
While there are statutory protections to IG independence provided by the
IG Act, each IG is required by the act to be under the general supervision
of their respective agency head. In addition, the IG vision statement
recognizes the need for the agency head and the IG to work together.
Thirty- one IGs (24 DFE and 7 Presidential) responded that this ability
could be weakened by consolidation. The remaining responses of the
Presidential IGs include seven who took an opposing view indicating that
this ability could be strengthened by consolidation, and nine who
indicated
that there would be no impact. (See figure 13.)
IG responses 0 5
10 15
20 25
30 Strengthened Weakened Neither Not applicable 0
8 26
7 1
8 1
5
Designated federal entity IGs Presidential IGs
Page 26 GAO- 02- 575 IG Consolidation and Related Issues
Figure 13: Potential Effect of Consolidation on the Ability of DFE Agency
Head to Get the IG*s Attention
IG Presence as a Preventative Measure
Comments from the DFE IGs raised concerns that through consolidation with
large IG offices the DFE agencies would possibly lose the effect of having
a *cop on the beat* which can act as a deterrent to fraud, waste, abuse,
and mismanagement. While the survey results indicate a concern about
weakening this IG presence, the concern is largely from the DFE IGs and
not the Presidential IGs. Twenty- nine IGs (25 DFE and 4 Presidential)
indicated that the IGs* presence as a preventative measure would be
weakened in the DFE through consolidation. However, 13 Presidential IGs
responded that the IG presence in the DFE agencies would be strengthened
by consolidation. The remaining IG responses indicated either no impact or
that the question was not applicable. (See figure 14.) IG responses 0
5 10
15 20
25 30
Strengthened Weakened Neither Not applicable 0
7 24
7 3
9 1
5
Designated federal entity IGs Presidential IGs
Page 27 GAO- 02- 575 IG Consolidation and Related Issues
Figure 14: Potential Effect of Consolidation on IG Presence as a
Preventative Measure for the DFE Agencies
IG Knowledge of DFE Missions
Thirty- six IGs (26 DFE and 10 Presidential) indicated that the IG*s
knowledge of each DFE agency*s mission, operations, and activities would
be weakened through consolidation. This response appears to assume that
current DFE IG staff and their knowledge would no longer exist to provide
DFE agency oversight. However, eight Presidential IGs indicated that
consolidation could strengthen the IG*s knowledge of each DFE agency and
eight indicated that there would be no impact. (See figure 15.) One IG*s
comments indicated there would be a large learning curve for the IGs not
familiar with the DFEs; however another IG stated that the IG*s knowledge
could be strengthened depending on staffing and the availability of
resources.
IG responses 0 5
10 15
20 25
30 Strengthened Weakened Neither Not applicable 0
13 25
4 2
6 1
5
Designated federal entity IGs Presidential IGs
Page 28 GAO- 02- 575 IG Consolidation and Related Issues
Figure 15: Potential Effect of Consolidation on IG Knowledge of DFE Agency
Missions, Operations, and Resource Limitations
IG Knowledge of DFE Priorities
In responses identical to the previous survey question, 36 IGs (26 DFE and
10 Presidential) indicated that IG knowledge of the DFE agencies*
priorities and issues could be weakened through consolidation. Likewise,
eight
Presidential IGs indicated that this knowledge could be strengthened and
eight indicated that consolidation would have no impact. (See figure 16.)
One IG provided comments and stated that after consolidation, the IGs
would lose their perspective about the DFE agencies* goals and direction.
This response appears to assume that current DFE IG staff would no longer
be available to provide such a perspective.
IG responses 0 5
10 15
20 25
30 Strengthened Weakened Neither Not applicable 0
8 26
10 1
8 1 2
Designated federal entity IGs Presidential IGs
Page 29 GAO- 02- 575 IG Consolidation and Related Issues
Figure 16: Potential Effect of Consolidation on IG Knowledge of Priorities
and Issues within Each of the DFE Agencies
IG Ability to Plan Work In the area of planning work, 21 IGs (17 DFE and 4
Presidential) responded that the ability to plan their work at the DFEs
could be weakened. This contrasts with the responses of 13 IGs (12
Presidential and 1 DFE) who
indicated that planning could be strengthened. Fourteen IGs (eight
Presidential and six DFE) indicated that consolidation would have no
impact. (See figure 17.) No IGs commented on how this ability would be
strengthened; however, one DFE IG stated that planning for coverage of the
DFE agencies would be diluted by the other work requirements of the
consolidated IG office.
IG responses 0 5
10 15
20 25
30 Strengthened Weakened Neither Not applicable 0
8 26
10 1
8 1 2
Designated federal entity IGs Presidential IGs
Page 30 GAO- 02- 575 IG Consolidation and Related Issues
Figure 17: Potential Effect of Consolidation on Oversight Planning
Timeliness of IG Reporting Twenty- five IGs (23 DFE and 2 Presidential)
indicated that the timeliness of reports would be weakened by
consolidation. Fifteen IGs (11 Presidential and 4 DFE) indicated that
consolidation would have no impact. Also, six Presidential IGs indicated
that timeliness could be strengthened. Ten IGs (nine Presidential and one
DFE) responded that the question was not applicable. (See figure 18.) In
comments provided, one IG observed that the reports in large audit
organizations generally have longer report review
cycles. Likewise, comments from two DFE IGs stated they believe reports by
the DFE IGs are probably more timely than they would be under
consolidation. No comments were provided by the six IGs who indicated
that timeliness could be strengthened.
IG responses 0 5
10 15
20 25
30 Strengthened Weakened Neither Not applicable 1
12 17
4 6
8 4 4
Designated federal entity IGs Presidential IGs
Page 31 GAO- 02- 575 IG Consolidation and Related Issues
Figure 18: Potential Effect of Consolidation on the Timeliness of IG
Reports
Oversight Coverage of DFE Agencies The IGs are required by the IG Act to
coordinate, conduct, and provide policy direction for audits and
investigations in their agencies. Therefore,
IG oversight coverage of agency programs, offices, and activities is
another element of IG quality. Thirty- three IGs (25 DFE and 8
Presidential) indicated that IG coverage at the DFE agencies would be
decreased. Nine Presidential IGs took the opposite view, responding that
coverage could be increased. The 14 remaining IG responses (11
Presidential and 3 DFE) indicated either no impact or that they did not
have an opinion on this matter. (See figure 19.) Most of the IGs* comments
explained that the
decrease would be the result of low priorities for coverage in the DFEs by
IGs who are appointed by the President. Specifically, one DFE IG stated
that larger agencies have requirements that differ from those of smaller
agencies, making it much more likely that the priorities of large agencies
would supercede those of smaller agencies. In contrast, one Presidential
IG commented that audit coverage of the DFE would increase after
consolidation because the IG resulting from consolidation would first test
the control environment of the DFE agencies to determine the necessary
level of coverage, which would result, at least initially, in more
coverage. IG responses 0
5 10
15 20
25 30
Strengthened Weakened Neither Not applicable 0
6 23
2 4
11 1
9
Designated federal entity IGs Presidential IGs
Page 32 GAO- 02- 575 IG Consolidation and Related Issues
Also, another DFE IG who indicated that consolidation would have no effect
on coverage stated that coverage depends on the IG resources available as
well as the priorities established.
Figure 19: Potential Effect of Consolidation on DFE Agency Audit Coverage
Consolidation and the Potential Impact on IG Resources
The efficient and effective use of IG resources and human capital can
significantly affect the overall effectiveness of IG offices in helping
their agencies address problems. For example, many IGs have determined
that protecting agency information technology resources is a priority and
often assist their agencies through independent advice and guidance on
appropriate levels of IT security. However, these efforts require the use
of knowledgeable IT specialists and a wise use of overall budgetary
resources by the IGs. Also, the better IGs can control their own spending,
budget
requests, and absorb any budget decreases the more effective they can be
in addressing the oversight of their agencies. In addition, information
from IG testimony before the Congress, IG reports, concerns of the
Congress, and professional standards indicate that IGs are affected by the
ability to obtain resources for investigations, the ability to minimize
duplication of
IG responses 0 5
10 15
20 25
30 Increase Decrease No effect No opinion 0
9 25
8 2
4 1
7
Designated federal entity IGs Presidential IGs
Page 33 GAO- 02- 575 IG Consolidation and Related Issues
efforts, the quality of training, the ability to share methods and
technology specialists, the efficient use of human capital skills, and the
availability of adequate resources to provide oversight of the agency. The
IG Act Amendments of 1988 require separate appropriations accounts
for the IGs appointed by the President, which provides greater control for
these IGs over their budgets. The IG Act does not require such accounts
for the DFE IGs. We reported in a prior review of 16 DFE IGs* budgets that
14 of the DFE IGs had entity officials making decisions affecting the IGs*
fiscal year budgets who also competed with the IGs for resources and whose
programs and operations were subject to IG audits and investigations. 9
The results of our survey indicate that eight DFE IGs continue to obtain
approval from agency officials to make spending decisions in one or all of
the areas of travel, training, and personnel.
IG Control over Spending The survey results were again clearly delineated
between the responses from the Presidential IGs and the DFE IGs. In
response to our survey question on IG control over spending on travel,
training, and personnel for oversight of the DFE agencies, 27 IGs (18 DFE
and 9 Presidential) indicated that consolidation would have no impact.
However, 18 IGs (16 Presidential and 2 DFE) believe this control could be
strengthened by consolidation. In
addition, seven IGs (6 DFE and 1 Presidential) indicated that IG control
over this spending could be weakened. (See figure 20.)
9 U. S. General Accounting Office, Inspectors General: Action Needed to
Strengthen OIGs at Designated Federal Entities, GAO/ AIMD- 94- 39
(Washington, D. C.: Nov. 30, 1993).
Page 34 GAO- 02- 575 IG Consolidation and Related Issues
Figure 20: Potential Effect of Consolidation on IG Control over Spending
for Travel, Training, and Personnel Related to Oversight of DFE Agencies
IG Control over Budget Requests
The responses to the survey question on IG control over budget requests
for their own offices were clearly divided between Presidential IG and DFE
IG responses. Eighteen IGs (17 Presidential and 4 DFE) indicated that
control could be strengthened by consolidation, while 20 IGs (14 DFE and 6
Presidential) indicated that there would be no impact on IG control of
budget requests. Eight IGs (6 DFE and 2 Presidential) indicated that
consolidation could weaken IG control over budget requests, and the
remaining six IGs indicated that the question was not applicable. One IG
did not respond to the survey question. (See figure 21.) One DFE IG
expressed doubt that resources of the consolidated IGs would be devoted to
oversight of the DFE agencies; however, another DFE IG stated that
consolidation could result in fewer IG budget cuts.
IG responses 0 5
10 15
20 25
30 Strengthened Weakened Neither Not applicable 2
16 6
1 18
9 1 2
Designated federal entity IGs Presidential IGs
Page 35 GAO- 02- 575 IG Consolidation and Related Issues
Figure 21: Potential Effect of Consolidation on IG Control over Their Own
Budget Requests for Oversight Activity
IG Ability to Absorb Budget Reductions Twenty IGs (13 Presidential and 7
DFE) responded that consolidation
could strengthen the IGs* ability to absorb resource reductions. Sixteen
IGs (8 Presidential and 8 DFE) indicated that consolidation would have no
impact, and 12 IGs (9 DFE and 3 Presidential) indicated that this ability
would be weakened. (See figure 22.) One DFE IG commented that the ability
to absorb resource reductions is irrelevant because the DFE agencies would
be a low priority for the IGs after consolidation. Along the same lines,
another DFE IG expressed doubt that resources would be
devoted to DFE agency oversight.
IG responses 0 5
10 15
20 25
30 Strengthened Weakened Neither Not applicable 4
17 6
2 14
6 3 3
Designated federal entity IGs Presidential IGs
Page 36 GAO- 02- 575 IG Consolidation and Related Issues
Figure 22: Potential Effect of Consolidation on the IGs* Ability to Absorb
Resource Reductions
Availability of Investigative Resources In other areas of IG resources, 28
IGs (18 Presidential and 10 DFE)
indicated that consolidation could strengthen the availability of
investigative resources for coverage of the DFE agencies and 17 IGs (13
DFE and 4 Presidential) indicated that it would be weakened. Seven IGs
(four Presidential and three DFE) indicated that consolidation would have
no impact. One DFE IG commented that while more resources would be
available they would not be used for coverage of the DFEs. (See figure
23.)
IG responses 0 5
10 15
20 25
30 Strengthened Weakened Neither Not applicable 7
13 9
3 8 8
3 4
Designated federal entity IGs Presidential IGs
Page 37 GAO- 02- 575 IG Consolidation and Related Issues
Figure 23: Potential Effect of Consolidation on the Availability of IG
Resources for Investigative Coverage
Minimization of Duplication across IGs
Thirty- three IGs (21 DFE and 12 Presidential) responded that
consolidation would have no impact on the duplication of audit efforts by
the IGs. However, 17 IGs (14 Presidential and 3 DFE) indicated that the
ability to minimize duplication could be strengthened by consolidation.
Two DFE IGs indicated that this ability could be weakened. (See figure
24.) There were no specific comments regarding the issue of audit
duplication.
IG responses 0 5
10 15
20 25
30 Strengthened Weakened Neither Not applicable 10
18 13
4 3 4
2 2
Designated federal entity IGs Presidential IGs
Page 38 GAO- 02- 575 IG Consolidation and Related Issues
Figure 24: Potential Effect of Consolidation on the IGs* Ability to
Minimize Duplication of Audit Efforts across the Federal Government
Quality of Audit Training Continuing education and training for auditors
improves their knowledge and refines their skills, allowing them to better
meet the challenges of the
audit environment. Such education and training, since it enhances auditor
proficiency, helps ensure the quality of audits. In addition, auditors
working on audits in accordance with Government Auditing Standards must
comply with specific continuing educational requirements specified by
these standards. A majority of the IGs (21 DFE and 15 Presidential)
indicated through our survey that consolidation would have no impact on
the quality of auditor training. Thirteen IGs (11 Presidential and 2 DFE)
responded that the
quality of training could be strengthened and 4 DFE IGs indicated that
training could be weakened. (See figure 25.) One DFE IG commented that
Presidential IGs and DFE IGs use the same training sources, and another
DFE IG stated concern that consolidation would reduce the quality of
training because DFE agency- related subjects may decline depending on the
work priorities of the consolidated IG.
IG response 0 5
10 15
20 25
30 Strengthened Weakened Neither Not applicable 3
14 2
0 21
12 2 2
Designated federal entity IGs Presidential IGs
Page 39 GAO- 02- 575 IG Consolidation and Related Issues
Figure 25: Potential Effect of Consolidation on the Quality of Training
for IG Audit Work
Ability to Share Methods The ability of IGs to share methods and programs
for audits and investigations can enhance their use of government
resources. Thirty IGs
(20 DFE and 10 Presidential) indicated that consolidation would have no
impact on this ability. However, 22 IGs (17 Presidential and 5 DFE)
indicated that this area could be strengthened through consolidation. (See
figure 26.)
IG responses 0 5
10 15
20 25
30 Strengthened Weakened Neither Not applicable 2
11 4
0 21
15 1 2
Designated federal entity IGs Presidential IGs
Page 40 GAO- 02- 575 IG Consolidation and Related Issues
Figure 26: Potential Effect of Consolidation on the IGs* Ability to Share
Methods and Programs for Audits and Investigations across the Federal
Government
Ability to Share Technology Specialists and Expertise Twenty- six IGs (19
Presidential and 7 DFE) indicated that the IGs* ability to share
technology specialists and expertise could be strengthened by
consolidation while 1 DFE IG indicated that it would be weakened. Twenty-
seven IGs (19 DFE and 8 Presidential) indicated that consolidation would
have no impact on this ability. (See figure 27.) One DFE IG commented that
there is currently no difficulty obtaining needed specialists and
expertise. Another DFE IG stated that the IGs already share
such skills.
IG responses 0 5
10 15
20 25
30 Strengthened Weakened Neither Not applicable 5
17 2
0 20
10 1 1
Designated federal entity IGs Presidential IGs
Page 41 GAO- 02- 575 IG Consolidation and Related Issues
Figure 27: Potential Effect of Consolidation on the IGs* Ability to Share
Technology Specialists and Expertise
Efficient Use of Human Capital Skills
The survey results were also characteristically widespread between the
responses of the Presidential IGs and the DFE IGs regarding consolidation
and the efficient use of human capital skills. Twenty- four IGs (17 DFE
and 7 Presidential) indicated that consolidation would have no impact.
However, 22 IGs (18 Presidential and 4 DFE) indicated that consolidation
could strengthen the efficient use of human capital skills. In addition, 3
DFE IGs indicated that this could be weakened. (See figure 28.)
IG response 0 5
10 15
20 25
30 Strengthened Weakened Neither Not applicable 7
19 1
0 19
8 1 1
Designated federal entity IGs Presidential IGs
Page 42 GAO- 02- 575 IG Consolidation and Related Issues
Figure 28: Potential Effect of Consolidation on the IGs* Efficient Use of
Human Capital Skills and Resources across the Federal Government
Availability of Adequate IG Resources
The availability of adequate IG resources could be weakened by
consolidation according to the responses of 20 DFE IGs and 7 Presidential
IGs. At the same time, 12 IGs (9 Presidential and 3 DFE) indicated that
the availability of resources could be strengthened. Nine IGs (seven
Presidential and two DFE) responded that consolidation would have no
impact. (See figure 29.)
IG responses 0 5
10 15
20 25
30 Strengthened Weakened Neither Not applicable 4
18 3
0 17
7 4
3
Designated federal entity IGs Presidential IGs
Page 43 GAO- 02- 575 IG Consolidation and Related Issues
Figure 29: Potential Effect of Consolidation on the Availability of
Adequate IG Resources
Availability of IG Resources to Cover DFE Issues Similar to their concerns
about the potential for the lack of audit coverage
of DFE agency issues if the DFE IGs were consolidated, 38 IGs (26 DFE and
12 Presidential) responded that resources available to cover DFE issues
would be weakened by consolidation. Nevertheless, 7 Presidential IGs
indicated that consolidation could strengthen the coverage of DFE
agencies. Six IGs (five Presidential and one DFE) indicated that
consolidation would have no effect. (See figure 30.)
IG responses 0 5
10 15
20 25
30 Strengthened Weakened Neither Not applicable 3
9 20
7 2
7 3
5
Designated federal entity IGs Presidential IGs
Page 44 GAO- 02- 575 IG Consolidation and Related Issues
Figure 30: Potential Effect of Consolidation on the Availability of
Resources to Cover DFE Agency Issues
Strengthening the PCIE and ECIE
Our survey addressed issues that would affect the PCIE and ECIE. The
survey responses indicated that the PCIE and ECIE could be strengthened by
establishing an alternative council under statute with specified funding
sources and defined roles and responsibilities. It was generally viewed
that statutory authority with stated roles, responsibilities, and funding
sources would provide an alternative to the PCIE and ECIE with a
permanent, institutional footing that would allow the IGs to reach their
full potential and better serve the needs of the administration and the
Congress.
We asked the IGs how establishing the PCIE and ECIE by statute rather than
executive order would affect the effectiveness of these councils. Thirty-
four IGs (18 DFE and 16 Presidential) indicated that it was important for
the PCIE and ECIE to be established under statute. Nineteen
IGs (12 Presidential and 7 DFE) believe such statutory councils would be
of little or no importance. (See figure 31.)
IG responses 0 5
10 15
20 25
30 Strengthened Weakened Neither Not applicable 0
7 26
12 1
5 1
4
Designated federal entity IGs Presidential IGs
Page 45 GAO- 02- 575 IG Consolidation and Related Issues
Figure 31: How Important Is It to Establish a Statutory PCIE/ ECIE
Organization for Improving Their Operations?
We also asked the IGs whether having designated funding sources for the
PCIE and ECIE would be of importance. Forty- six IGs (24 DFE and 22
Presidential) believe that a designated funding source for the operation
of these councils would be of importance, and seven IGs (five Presidential
and two DFE) believe such funding is of little or no importance. (See
figure 32.) In addition, we asked the IGs whether stated roles and
responsibilities of the PCIE and ECIE in statute would be of importance.
Thirty- seven IGs (21 DFE and 16 Presidential) responded that such
statutory roles and responsibilities would be of importance, and 16 (11
Presidential and 5 DFE) indicated that they would be of little or no
importance. (See figure 33.)
IG responses 0 5
10 15
20 25
30 Important Not important No opinion 18
16 7
12 3
0
Designated federal entity IGs Presidential IGs
Page 46 GAO- 02- 575 IG Consolidation and Related Issues
Figure 32: How Important Is It to Provide Designated Funding Sources to
the PCIE/ ECIE Organization for Improving Their Operations? IG responses
0 5
10 15
20 25
30 Important Not important No opinion 24
22 2
5 2
1
Designated federal entity IGs Presidential IGs
Page 47 GAO- 02- 575 IG Consolidation and Related Issues
Figure 33: How Important Is It to Establish Stated Roles and
Responsibilities of an Alternative PCIE/ ECIE Organization in Order to
Improve Operations?
Comments from individual IGs indicate that appropriate statutory powers
could provide some improvements to the PCIE and ECIE. One IG stated that
such a statute would give shape, direction, and a mission to the PCIE.
Another IG commented that, once under statute, there would be a wider base
of support for the PCIE and ECIE by those sponsoring the legislation. In
other comments, some IGs stated that this would facilitate getting the IG
message to the Congress and the administration, would provide visibility
and clout to the councils, eliminate the appearance of conflict between
IGs and the chair of the councils, and provide the appearance that the
PCIE stands independently rather than as a subgroup of the Office of
Management and Budget. Perhaps most significantly, one IG stated that
having these councils established through legislation would provide
permanent and institutional footing.
IG response 0 5
10 15
20 25
30 Important Not important No opinion 21
16 5
11 2
1
Designated federal entity IGs Presidential IGs
Page 48 GAO- 02- 575 IG Consolidation and Related Issues
Agency Budgets are Not the Sole Criteria for Establishing IGs
The Inspector General Act Amendments of 1988 and the Government Printing
Office (GPO) Inspector General Act of 1988 (Titles I and II, Public Law
100- 504) established offices of inspectors general in 33 designated
federal entities and GPO. One of the criteria used by the Congress to
determine where to establish these new IGs offices was a budget threshold
of $100 million for the designated federal entities. Specifically, those
agencies with an annual budget of $100 million or greater were considered
for inclusion in the IG Act Amendments of 1988. Other agencies below this
budget threshold were also included for specific reasons.
In preparation for our survey, we calculated that the $100 million
threshold from 1988 would have been about $134 million in fiscal year
2000, if adjusted for inflation. 10 If this budget threshold were applied
to the current agencies that have statutory IGs, 12 agencies would no
longer meet this
budget criteria to justify an IG office. (See appendix VI.) In response to
our survey, 46 IGs (26 DFE and 20 Presidential) indicated that dollar
thresholds of agency budgets should not be the primary factor determining
which agencies should have IGs. However, nine IGs (eight Presidential and
one DFE) indicated that budget dollar thresholds should be the primary
factor. (See figure 34.) One IG stated that the primary factor for
determining which agencies should have IGs should be the level of
oversight that the Congress desires. Additional IGs responded that other
factors, such as the importance of the agency*s mission and the associated
risks, should be considered. Also, eight IGs (17 DFE and 11 Presidential)
responded that agencies with budgets below the $134 million threshold
should have IGs. However, 14 IGs (13 Presidential and 1 DFE) indicated
that an IG is not necessary for those agencies. (See figure 35.) In their
comments, the IGs stated that dollar thresholds are not meaningful by
themselves and that the budgets may be just one factor in making such a
determination. Another IG stated that the impact on public services should
be considered, including vulnerable groups and overseas missions.
10 From the U. S. Department of Commerce, Bureau of Economic Analysis*s
Gross Domestic Product (GDP) Price Index.
Page 49 GAO- 02- 575 IG Consolidation and Related Issues
Figure 34: Should Dollar Thresholds of Agency Budgets Be the Primary
Factor in Determining Which Agencies Have an IG?
IG responses 0 5
10 15
20 25
30 Yes No No opinion 1
8 26
20 0 0
Designated federal entity IGs Presidential IGs
Page 50 GAO- 02- 575 IG Consolidation and Related Issues
Figure 35: Are Statutory IGs Needed for Agencies with Budgets Below $134
Million?
Survey Conclusions and GAO Views Regarding Conversion and Consolidation
We believe that if properly structured and implemented, the conversion
and/ or consolidation of selected DFE IG offices could serve to enhance
the overall independence, economy, efficiency, and effectiveness of the IG
community. We recognize that there are potential weaknesses resulting
from consolidation, as indicated by the DFE IGs* responses, that would
have to be mitigated through proactive and targeted actions in order for
the benefits of consolidation to be realized without adversely affecting
DFE agency audit coverage. One of the most important of these targeted
areas would be communication between the IG and the agency head as well as
agency management officials where the IG is responsible for oversight. The
lack of an IG at the DFE agency should be mitigated by the physical
presence of at least one of the consolidated IG*s staff. Also, we agree
with the IGs* responses that indicate a legislative
underpinning for the PCIE and ECIE could strengthen the effectiveness of
these or alternative councils of IGs. In addition, we believe that any
legislative underpinning should include a requirement for coordinating the
efforts of these organizations with other oversight organizations, such as
IG responses 0
5 10
15 20
25 30
Needed Not needed No opinion 17
11 1
13 7
4
Designated federal entity IGs Presidential IGs
Page 51 GAO- 02- 575 IG Consolidation and Related Issues
GAO. Regarding the use of agency budgets as the criteria for establishing
IG offices in federal agencies, we agree with the IG responses that
indicate other factors, such as the risk and mission of the agency, must
be considered in addition to their budgets.
Independence The Presidential IGs mostly indicated that conversion could
strengthen DFE IG independence while the DFE IGs* generally indicated that
there would be no effect on their independence. Likewise, in their
responses regarding the impact of consolidation on independence, the IGs
were predictably different in their responses with Presidential IGs
indicating a
strengthening of independence and the DFE IGs indicating either a weakness
or no impact.
DFE IGs are established in legislation in a manner that makes them
independent external auditors under Government Auditing Standards.
The IG Act provides the DFE IGs with statutory protections, that among
others, prevent the audited entity from interfering with the initiation,
scope, timing, and completion of any audit and provide the IGs access to
records and documents that relate to the agency, program, or function
being audited. On the other hand, having IGs appointed by the President
with Senate confirmation provides a higher level of appearance of
independence. At the same time, given the number and relatively small size
of all but a few of the DFE IG offices and the organizations they are
responsible for auditing, it is not practical for all of them to be
converted to Presidential appointment and we do not favor the wholesale
conversion of DFE IGs to Presidential IGs. Therefore, the consolidation of
some DFE IG offices with Presidential IG offices would also serve to
increase the
perceived independence of the IGs where conversion is not practical. IG
Quality of Work The Presidential IGs also generally indicated that
consolidation could
strengthen the IGs* quality of work, while the DFE IGs indicated that
consolidation would either have no impact or would weaken quality as
related to (1) the ability to issue hard- hitting reports when necessary,
(2) the ability to review issues that cross agencies, (3) the ability to
get
attention to IG audit recommendations, (4) the ability to audit issues of
high risk and priority, (5) the presence of the IG as a preventative
measure, and (6) the ability to plan work. We believe that consolidation
could serve to strengthen the IGs* ability to issue hard- hitting reports,
to issue reports on cross- agency issues, to get
Page 52 GAO- 02- 575 IG Consolidation and Related Issues
attention to their audit recommendations, and to address high- risk and
priority areas because IGs of consolidated offices could use their broader
range of resources in the context of a governmentwide perspective rather
than in the context of a single, relatively small agency. In addition,
consolidation per se does not have to result in any material reduction on
the IGs* day- to- day contact and communication with the agency head and
ability to report on DFE agency performance as long as IGs maintain some
physical presence at the DFE agencies or take other proactive steps to
mitigate any potential reduction in communication and audit coverage.
Finally, in our view, consolidation could enable IG offices to better
target overall resources in planning their work to areas of greatest value
and risk. Use of IG Resources The Presidential and DFE IGs also had
differences in their responses
regarding the impact that consolidation could have on the use of IG
resources. The DFE IGs responded that consolidation would weaken or have
no impact, while the Presidential IG responses indicated that
consolidation could strengthen (1) the ability to control spending, (2)
the
ability to control budget requests, (3) the ability to absorb budget
reductions, (4) the availability of investigative resources, (5) the
ability to minimize duplication of audit efforts across IGs, (6) the
ability to share methods, (7) the ability to share technology specialists,
(8) the efficient use of human capital skills, and (9) the availability of
adequate resources. We believe that consolidation would serve to
strengthen the ability of IGs
to improve the allocation of human and financial resources within their
offices and to attract and retain a workforce with the talents,
multidisciplinary knowledge, and up- to- date skills to ensure the IG
office is equipped to achieve its mission. For the majority of DFE IG
offices, we
view consolidation not only as a means to achieve economies of scale but
more importantly as providing an enhanced critical mass of skills,
particularly given the emergence of technology and the ever increasing
need for technical staff with specialized skills. This is especially
appropriate given the limited resources in most DFE IG offices where 12
DFE IGs had five or fewer full time equivalent staff and another five had
less than 10 staff. In addition, consolidation should serve to increase
the availability of investigative resources through economies of scale and
other efficiencies and reduce the potential for duplication of work across
IGs through enhancement of a value and risk approach to the investment and
allocation of IG resources. Likewise, consolidation would serve to
increase the ability of IGs to share methods and to leverage overall IG
resources to
Page 53 GAO- 02- 575 IG Consolidation and Related Issues
increase the ability of IGs to properly use IG personnel in technical
areas, including information systems and forensic audits.
Potential Weaknesses and Mitigation of Risks
The survey responses from both the Presidential and DFE IGs did indicate
agreement that certain elements of effectiveness could be weakened through
consolidation. These include potential weaknesses in (1) the dayto- day
contact of IGs and DFE agency officials, (2) knowledge of the DFE agency
missions, (3) knowledge of DFE agency priorities, and (4) the availability
of resources to cover DFE agency issues. Additional potential weaknesses
were identified by the DFE IGs while the Presidential IGs* answers to the
same questions were inconclusive due to their relatively
even distribution across the possible responses. The potential weaknesses
cited by the DFE IGs were in (1) communication between the DFE agency head
and the IG, (2) the ability of the DFE agency head to get the attention of
the IG, (3) the timeliness of IG reporting, and (4) oversight coverage of
the DFE agencies.
We agree that if appropriate actions were not taken to mitigate potential
weaknesses, consolidation could weaken (1) the ability of the DFE IGs to
have day- to- day contact with senior DFE agency officials, (2)
communication between the DFE head and the IG, (3) the ability of the
DFE agency head to get the attention of the IG, (4) the knowledge of DFE
agency missions, (5) the knowledge of DFE agency priorities, and (6) the
resources to cover DFE issues. However, we believe that for the areas of
potential weaknesses indicated by the IGs, proactive steps could be taken
to reduce the related risks and mitigate their impact on IG effectiveness
to an acceptable level. For example, where appropriate a consolidated IG
could maintain onsite facilities at DFE agencies with one or more
dedicated staff to foster day- to- day communication with agency officials
and communication with the DFE head. To facilitate oversight planning
and to provide adequate oversight coverage, the IGs could leverage the
detailed knowledge of the DFE agencies* missions and priorities by
obtaining information from existing DFE IG personnel. In addition, the
current DFE IG staff would be available to provide the necessary
information for the proper planning and oversight of the DFE agencies. An
additional concern by the DFE IGs, the timeliness of reports, could be
addressed by having the IG establish priorities for reports on selected
DFE agency issues based on risk. Finally, if congressional attention were
given to mitigating the potential weaknesses identified by the IG
responses to our survey, consolidation would not necessarily result in a
loss of IG effectiveness in these areas.
Page 54 GAO- 02- 575 IG Consolidation and Related Issues
For about 90 percent of the DFE IGs, many of their additional comments
indicated concern about the potential loss of adequate audit coverage of
the DFE agencies that could result from consolidation. About 28 percent of
the Presidential IGs also had the view that audit coverage of the DFEs
would be weakened. While there may be a fewer number of audits or even
less coverage of those issues currently audited at the DFE agencies, the
survey responses of the Presidential IGs indicate that coverage by a
consolidated IG could address areas of higher risk, value, and priority,
resulting in potentially a more efficient and effective use of overall IG
resources.
Strengthening the PCIE and ECIE
The survey results indicate a general agreement among both the
Presidential and DFE IGs that a statutory alternative to the PCIE and ECIE
along with a specified funding source and stated roles and
responsibilities
would be beneficial. In our view, providing a statutory basis for the
roles and responsibilities of IG councils would help ensure permanence of
the councils and further enhance the appearance of the councils*
independence. Further, if adequately funded the councils* capability to be
more effective and proactive by taking on a broader scope and more
sensitive issues would also be enhanced. In addition, the PCIE and ECIE or
any alternative statutory council should have a mechanism in place that
would ensure the coordination and sharing of information among these
councils and other federal oversight organizations, including our office.
This should include developing strategic and annual plans and addressing
ongoing areas of mutual interest, such as methodologies, tools, and
training. Through this increased coordination, the efficient and effective
use of all federal oversight resources, as well as the overall
effectiveness of the IGs, can be greatly enhanced.
Agency Budgets as Criteria for Establishing IG Offices The Presidential
and DFE IGs were in general agreement that the use of an
agency budget threshold as sole criteria for establishing IG offices would
not be appropriate. In our view, the determination of whether an agency
should have its own IG should be based on a range of issues to include (1)
the nature of the agency, (2) the risk and value of the agency*s
operations and activities, (3) the significance of the financial amounts
involved, and (4) critical mass and economies of scale considerations.
Page 55 GAO- 02- 575 IG Consolidation and Related Issues
Approaches to IG Conversion and Consolidation
As you requested, we are providing a discussion on conversion and
consolidation options. Specific conversions, consolidations, and changes
to the structure of the IG community should be a process of continuing
dialogue among the PCIE, ECIE, affected agencies, and the Congress. We do
not believe the wholesale conversion of all DFE IGs to Presidential
appointment with Senate confirmation would be beneficial, nor do we
believe that all DFE IGs should be consolidated with Presidential IGs. For
example, we do not include the Government Printing Office (GPO) IG as an
option for consolidation because it is a legislative branch office and
therefore not a candidate for either conversion or consolidation with an
executive branch office. Various approaches exist to reorganize the IGs
based on the resulting effectiveness of conversion and consolidation. The
following options are intended to foster discussion among interested
parties should the Congress decide to pursue such changes, and are not
specifically recommended for implementation without consideration of input
from the affected agencies, the IGs, congressional committees, and
other interested parties. Options for Conversion In terms of budget size,
the DFE IGs at the U. S. Postal Service (USPS),
National Science Foundation (NSF), Amtrak, Federal Reserve Board (FRB),
and GPO have staff and budgets comparable to Presidential IGs, and, in the
case of USPS, much larger than most Presidential IGs. On that basis, these
IGs could be considered for conversion to appointment by the President
with Senate confirmation with the exception of the GPO IG, which is a
legislative branch office and therefore not a candidate for conversion or
consolidation. Specifically, the USPS IG was the fifth largest
IG office in terms of all fiscal year 2000 IG budget resources. The NSF IG
had fiscal year 2000 budget resources that were larger than two
Presidential IGs. Also, while the Amtrak IG has budget resources
comparable to some Presidential IGs, the oversight of Amtrak is closely
related to the work of the Department of Transportation (DOT) IG.
Moreover, the DOT IG currently provides some oversight of various Amtrak
programs. Therefore, the consolidation of the Amtrak IG with the DOT IG
could be considered, rather than conversion to Presidential appointment
with Senate confirmation.
Assuming that USPS, NSF, and FRB IGs were converted to Presidential
appointment, the Amtrak IG were consolidated with the DOT IG, and the GPO
IG had no changes, the remaining 23 DFE IGs had total fiscal year 2000
budgets of about $21 million, or about 1 percent of all IG budgets, and
Page 56 GAO- 02- 575 IG Consolidation and Related Issues
total staff of about 172. Staff sizes at these remaining 23 DFE IGs ranged
from a low of one at the Federal Labor Relations Authority IG to a high of
20 at the Smithsonian Institution IG. Therefore, we do not view these
remaining 23 IGs, 17 of which had less than 10 full time equivalent staff,
as candidates for conversion.
Illustrative Potential Option for Consolidation
Presented in appendix II is one option for consolidating the Amtrak and
DOT IGs and many of the remaining 23 IGs with other Presidential IG
offices if the USPS, NSF, and FRB IGs were converted to Presidential
appointment and the GPO IG remained the same. This option indicates how
agency missions may suggest consolidation of DFE IGs with Presidential IGs
to provide oversight of DFE agencies. For example, the consolidation of
the IGs at the Legal Services Corporation, Equal Employment Opportunity
Commission, and the Federal Trade Commission
with the Department of Justice IG would bring together those DFE IGs with
a Presidential IG to address law enforcement and legal issues. In another
example, the consolidation of IGs at Amtrak and the Federal Maritime
Commission with the Department of Transportation IG would combine those IG
offices that focus on transportation- related issues. Matters for
Congressional Consideration
Our survey results did not provide a clear cut agreement from the combined
IGs* responses regarding the impact of conversion and consolidation on the
effectiveness of DFE IG offices. However, the Presidential IGs did
indicate that elements of effectiveness could be strengthened and we
generally agree. In our view, the conversion and consolidation of selected
DFE IG offices would, if implemented properly, serve to enhance the
overall independence, economy, efficiency, and
effectiveness of the IG community. Therefore, based on these IG responses
and our views, we are providing the following matters for congressional
consideration intended as a starting point for a dialogue among the PCIE,
the ECIE, the affected agencies, and the Congress. These matters are that
the Congress consider (1) amending the IG Act to elevate the IGs at USPS,
NSF, and FRB to
Presidential status, (2) amending the IG Act to consolidate DFE IGs with
Presidential IGs based on related agency missions or where potential
benefits to IG effectiveness can be shown, and
Page 57 GAO- 02- 575 IG Consolidation and Related Issues
(3) establishing an IG council by statute that includes stated roles and
responsibilities, designated funding sources, and provisions for the
coordination of annual, strategic, and ongoing plans with other federal
oversight organizations, such as our office.
Agency Comments and Our Response
We received comments on a draft of this report from the PCIE and ECIE,
both of which had consolidated comments from the responding IGs within
their respective councils. Similar to the survey results discussed in the
body of this report, there was a clear divergence in views between the
comments received from the Presidential IGs in the PCIE*s response and
the DFE IGs in the ECIE*s response. The difference is not surprising given
the potential impact of consolidating the DFE IGs with the Presidentially
appointed IGs compared to the related interests of the two groups of IGs.
We believe that this difference in perspective between the two groups of
IGs, more than any other factor, helps to explain the significant
divergence in the responses to the survey as well as in the comments on
our draft report. The PCIE and ECIE IGs* comments also included technical
changes that have been incorporated in our report. The consolidated PCIE
response did not take exception to the information
or conclusions presented in our draft report. The response specifically
stated that none of the PCIE IGs objected to our conclusion that
establishing an IG council by statute with defined roles and designated
funding sources could strengthen the effectiveness of these councils and
points out that in July 2000 the Vice Chair of the PCIE testified in
support of legislation to codify the PCIE and ECIE.
According to the PCIE comment letter, of the 25 IGs responding to the
request for input to the PCIE response, 16 had no comments. The remaining
nine Presidential IGs discussed issues of concern or technical
corrections, with eight IGs commenting on the depth with which our report
discusses certain implementation issues surrounding consolidation or
conversion. Among the implementation issues discussed by the Presidential
IGs are funding, staff resources, areas of expertise, and criteria for
consolidation. One particular implementation issue involved an IG office
being subject to supervision by more than one agency head,
assuming that a consolidation initiative would be approached from a
functional perspective, such as having one IG provide audit services for
all grant- making agencies.
Page 58 GAO- 02- 575 IG Consolidation and Related Issues
We understand and appreciate the desire for additional detail on how any
such changes or realignments might be accomplished. Likewise, we fully
agree that the implementation issues raised by the Presidential IGs would
be key to the success and effectiveness of such an endeavor. In this
regard, it was not our objective to identify or recommend a specific
strategy or approach for accomplishing this. As stated in our report, any
specific
conversions, consolidations, and changes to the structure of the IG
community should be a process of continuing dialogue among the PCIE, ECIE,
affected agencies, and the Congress. Clearly, various approaches exist to
reorganize the IGs based on the resulting effectiveness of conversion or
consolidation. The scenarios we offer are intended to foster discussion
among interested parties should the Congress decide to purse such changes,
and are not specifically
recommended for implementation without consideration of input from the
affected agencies, the IGs, congressional committees, and other interested
parties.
In contrast with the PCIE*s general agreement with our report, the ECIE
raised broad concerns with our report conclusions and methodology.
Specifically, the ECIE stated its belief that (1) our report draws
conclusions that are inconsistent with the preponderance of the survey
responses and lacks supporting evidence, (2) the consolidation of IG
offices presents certain implementation problems, and (3) the effect of
recent revisions to
auditor independence standards after our survey was conducted could have
changed the survey results. In addition, the ECIE cited a prior GAO survey
of IGs where the IGs indicated that they had the resources and expertise
necessary to carry out their responsibilities.
Specifically, in commenting on our survey results, the ECIE stated that,
*The DFE IGs do not believe the report shows that the IG structure created
by the IG Act and 1988 amendments is broken and in need of a *fix* as
complex and substantive as consolidation.* Our report does not include,
nor was it the objective of our survey, to identify problems that must be
corrected in order for DFE IGs to be effective. As clearly stated in our
report, the objective of our survey was to obtain the views of the IGs on
how independence, quality of work, and use of resources might be affected
by conversion or consolidation of DFE IGs with Presidentially appointed
IGs. The ECIE also commented that, *GAO draws conclusions that are
inconsistent with the preponderance of the survey responses.* As a basis
Page 59 GAO- 02- 575 IG Consolidation and Related Issues
for this comment, the ECIE recast the results of our survey without
distinguishing between the Presidential IGs and the DFE IGs, and also
combined the *no impact* responses with the *weakened* responses. The
ECIE*s recasting of the survey results by combining all the IG responses
is inappropriate given the widely differing perspectives and interests
between the Presidential IGs and the DFE IGs, which are clearly
demonstrated by the survey results. It is misleading to disregard these
differences by relying on a simple majority of responses when analyzing
the survey results. To do so would have resulted in a report that lacks
contextual sophistication and
that would have been of little value to the Congress and other readers.
Instead, we provided a more detailed analysis of survey responses by
Presidential IG and DFE IG categories that clearly showed where
differences and a lack of consensus exist. In addition, to provide a
balanced, objective analysis, we showed the IGs* *no impact* responses as
a separate category. By their separate definitions, it is inappropriate to
combine the *no impact* responses with either the *strengthened* or
*weakened* responses for purposes of analyzing or presenting the survey
results. Finally, due to the widely divergent views of the ECIE and PCIE
IGs, we chose to add our own views on the potential impact of conversion
and consolidation, which represent our independent, objective and
professional opinion on these matters.
In comments about the implementation of IG consolidation, the ECIE states
that *GAO*s proposed consolidation scenarios are overly simplistic given
the diverse missions of the agencies involved; the various types of
funding, administrative, and personnel authorities and practices; the
differences in congressional oversight and appropriations processes; and
the separate governance and oversight structures of the regulatory
entities, state and/ or federal commissions, independent corporations and
boards,
and unique agencies that comprise the DFE IG agencies.* The options
presented in our report are intended to illustrate several possible ways
of conversion and consolidation of specific IG offices. As mentioned
previously, our report clearly states that any specific conversions or
consolidations of IG offices should be a process of continuing dialogue
among the PCIE, ECIE, affected agencies, and Congress. For instance, the
examples of possible IG consolidations provided by our report are intended
as a starting point for discussions on where the most appropriate
consolidations might occur and are based on similarities in the basic
missions of the agencies. We fully agree that other options for
conversions and consolidations may be appropriate in that the missions of
all the IGs as defined by the IG Act are the same regardless of their
agencies* missions.
Page 60 GAO- 02- 575 IG Consolidation and Related Issues
Regarding the implementation of IG consolidations, the ECIE*s comments
state that: *The DFE IGs also emphasized that consolidation sacrifices
providing a local preventive presence, oversight, and focus at individual
agencies or entities in favor of potentially fragmenting the attention of
a larger IG office across a broad and diverse spectrum of programs and
operations.* The ECIE further points out that *. . . legitimate questions
could be raised regarding whether priorities at the DFE agencies would be
considered *areas of greatest value and risk . . .* and * . . .
consolidation would probably result in fewer resources to cover DFE
agencies.* These examples of possible negative impact resulting from
consolidation
provided by the ECIE*s comments are clearly identified in our draft
report, which concludes that these weaknesses would need to be mitigated
for the benefits of consolidation to be fully realized. Our report also
states that these weaknesses can be mitigated by providing an IG presence
at each DFE agency, using the expertise of current IG staff for planning
required oversight, and by providing adequate audit coverage. Our report
concludes that consolidation could strengthen the ability of IGs to
improve the allocation of human and financial resources within their
offices and to attract and retain a workforce with the talents,
multidisciplinary
knowledge, and up- to- date skills to ensure that the IG office is
equipped to achieve its mission. DFE IG offices are generally very small -
11 have 5 or fewer staff - compared to the Presidential IG offices where
23 have over 100 staff. Basically, for the vast majority of DFE IG
offices, consolidation is not only a means to achieve economies of scale
and greater independence but, more importantly, a way to provide an
enhanced critical mass and range of skills, particularly given the rapidly
evolving emergence of technology and
the ever- increasing need for technical staff with specialized skills.
Page 61 GAO- 02- 575 IG Consolidation and Related Issues
Regarding the potential impact of recent changes in standards 11 for
auditor independence on our survey results, the ECIE states that *The DFE
IGs strongly believe that, contrary to GAO*s assertion in the report, the
survey results may have been materially affected by this amendment. The
revised standards, for the first time, recognize specifically that
Presidential appointment with Senate confirmation is but one way of
achieving organizational independence and that other organizational
structures can provide independence if a detailed list of safeguards are
met.* We disagree with the implication of the DFE IGs* comments that the
revised auditor
independence standard 12 may have materially affected our survey results.
Under Government Auditing Standards, which are issued by the Comptroller
General, the DFE IGs were previously recognized as being independent. What
the new standard does is to more fully articulate the rationale for this
recognition by explicitly stating the criteria that is used in
the independence provisions of the IG Act. The DFE IGs have been
considered independent under Government Auditing Standards since they were
established by the 1988 IG Act amendments. Therefore, the
independence of the DFE IGs both before and after the revised standards is
the same. Moreover, the survey questions focused on the relative impact of
conversion and consolidation on IG independence, which are valid questions
regardless of the revised standards.
Finally, the ECIE*s comments cited a prior GAO report 13 which concluded
that *. . . the IGs* work covers a broad spectrum of agency programs and
operations and, in general, the IGs indicated that they have the expertise
and resources necessary to assemble the teams of staff needed to perform
the major types of work for which they are responsible.* The ECIE also
noted that this previous report also indicated that *IGs have the
capability to obtain contractors or consultants, as needed, to provide
supplementary
expertise in certain areas.* In this regard, our prior report and our
current report need to be considered within the context of their different
purposes, scope, and objectives, the major difference being that the
objectives of our prior report did not extend to obtaining and analyzing
the IGs* views as to 11 U. S. General Accounting Office, Government
Auditing Standards, 1994 revision, as amended.
12 U. S. General Accounting Office, Government Auditing Standards, Answers
to Independence Standard Questions, GAO- 02- 870G (Washington, D. C.: July
2002). 13 U. S. General Accounting Office, Inspectors General: Information
on Operational and Staffing Issues, GAO/ AIMD- 99- 29, (Washington, D. C.:
Jan. 4, 1999).
Page 62 GAO- 02- 575 IG Consolidation and Related Issues
whether the ability to obtain necessary resources could be strengthened or
weakened by the conversion or consolidation of DFE IGs and Presidential
IGs. The survey responses of the Presidential IGs point to a significant
difference in the inherent ability of a large audit organization versus a
very small organization to address the need for specialized expertise and
skills, which is our view as well.
As agreed with your office, unless you announce its contents earlier, we
plan no further distribution of this report until 30 days after its
issuance date. At that time, we will send copies to the Ranking Minority
Member of the House Committee on Government Reform, the Chairman and
Ranking Member of the Senate Committee on Governmental Affairs, the Deputy
Director for Management of the Office of Management and Budget, and the
federal offices of inspectors general. After our final distribution this
report will be available at no charge on the GAO Web site at http:// www.
gao. gov.
If you have any questions or would like to discuss this report, please
contact Jeanette M. Franzel, Director, at (202) 512 9471, or by e- mail at
franzelj@ gao. gov; or Jackson Hufnagle, Assistant Director, at (202) 512
9470, or by e- mail at hufnaglej@ gao. gov. Sincerely yours,
David M. Walker Comptroller General of the United States
Page 63 GAO- 02- 575 IG Consolidation and Related Issues
Appendix I
Appendi xes Summary of IG Survey Responses Regarding Conversion and
Consolidation Appendi x I
a The IG responses were generally evenly divided among possible answers.
Summary of survey responses with GAO views IG effectiveness category
Elements of IG effectiveness Presidential IGs DFE IGs GAO
Conversion
1. IG independence Independence resulting from conversion Strengthened No
impact Strengthened
Consolidation
2. Actual independence Strengthened No impact Strengthened 3. Appearance
of independence Strengthened No impact Strengthened 4. IG quality of work
Ability to issue hard- hitting reports Strengthened No impact Strengthened
5. Ability to review issues crossing DFEs Strengthened No impact
Strengthened 6. Attention to IG recommendations Strengthened No impact
Strengthened 7. Ability to audit issues of high risk Strengthened No
impact Strengthened 8. Ability to uniformly measure performance No impact
No impact No impact 9. Day- to- day contact with DFE officials Weakened
Weakened Weakened 10. Communication - DFE head and the IG Inconclusive a
Weakened Weakened 11. Ability of DFE head get attention of the IG
Inconclusive a Weakened Weakened 12. Presence of IG as a prevention
measure Strengthened Weakened No impact 13. Knowledge of DFE missions
Weakened Weakened Weakened
14. Knowledge of DFE priorities and issues Weakened Weakened Weakened 15.
Planning for IG oversight Strengthened Weakened Strengthened 16.
Timeliness of reports Inconclusive a Weakened No impact 17. Oversight
coverage of the DFEs Inconclusive a Weakened No impact
18. IG resources Control over spending Strengthened No impact Strengthened
19. Control over budget requests Strengthened No impact Strengthened 20.
Ability to absorb resource reductions Strengthened Inconclusive a
Strengthened 21. Resources for investigative coverage Strengthened
Weakened Strengthened 22. Ability to minimize audit duplication
Strengthened No impact Strengthened 23. Quality of audit training No
impact No impact No impact 24. Ability share methods Strengthened No
impact Strengthened 25. Ability to share technology specialists
Strengthened No impact Strengthened 26. Efficient use of human capital
skills Strengthened No impact Strengthened 27. Availability of adequate
resources Strengthened Weakened Strengthened 28. Resources to cover DFE
issues Weakened Weakened Weakened
Page 64 GAO- 02- 575 IG Consolidation and Related Issues
Appendix II Potential IG Consolidations and Related Agency Missions
Appendi x II
Illustrative examples of agencies that could consolidate IG oversight
Primary agency missions
Department of Agriculture Enhance the quality of life by supporting the
production of agriculture.
Farm Credit Administration Promote a safe and sound competitive Farm
Credit System.
Department of Commerce Promote job creation, economic growth, and sustain
development and improved living standards.
Federal Communications Commission Regulation of communications by radio,
television, mire satellite, and cable.
Corporation for Public Broadcasting Provide grants to qualified public
television and radio stations to be used primarily for program production
or acquisition.
Appalachian Regional Commission Support economic and social development in
the Appalachian region. U. S. International Trade Commission Administer U.
S. trade laws and provide information
on trade matters. Consumer Product Safety Commission Reduce the risk of
injuries and deaths from consumer products.
Department of Housing and Urban Development Promote a decent, safe, and
sanitary home and
living environment for all. Federal Housing Finance Board Regulate banks
that help finance community development needs.
Department of Justice Enforcement of laws in the public interest. Legal
Services Corporation Ensure equal access to justice under the law. Equal
Employment Opportunity Commission Enforce federal statutes prohibiting
discrimination.
Federal Trade Commission Prevent monopolies, restraints, and unfair and
deceptive practices that affect free enterprise.
Department of the Treasury Responsible for financial, economic, and tax
policy, as well as financial law enforcement and the manufacturing of
coins and currency.
Securities and Exchange Commission Administer federal securities laws that
seek to provide protection for investors, to ensure that securities
markets are fair and honest, and to provide the means to enforce
securities laws through sanctions.
Commodity Futures Trading Commission Protect market participants against
manipulation, abusive trade practices, and fraud.
Federal Deposit Insurance Corporation Contribute to the stability of and
confidence in the nation*s financial system.
Appendix II Potential IG Consolidations and Related Agency Missions
Page 65 GAO- 02- 575 IG Consolidation and Related Issues
National Credit Union Administration Regulate and insure federal credit
unions and insure
state- chartered credit unions.
General Services Administration Provide quality services, space, and
products at competitive cost to enable federal employees to accomplish
their missions. Smithsonian Institution Hold artifacts and specimens for
the increase and
diffusion of knowledge. National Archives and Records Administration
Preserve the nation*s history by overseeing and managing federal records.
National Endowment for the Arts Nurture human creativity and foster
appreciation of artistic accomplishments.
National Endowment for the Humanities Support research, education, and
public programs in the humanities.
Federal Election Commission Disclose campaign finance information, enforce
provisions of the Federal Campaign Act, and oversee public funding of
Presidential Elections.
Department of Labor Foster, promote, and develop the welfare of U. S. wage
earners. Federal Labor Relations Authority Provide leadership and resolve
disputes relating to
federal labor- management. National Labor Relations Board Enforce the laws
governing relations between
unions and employees. Pension Benefit Guaranty Corporation Encourage the
growth and operations of defined
benefit pension plans.
Department of State Promote U. S. interests and the President*s foreign
policy in shaping a free, secure, and prosperous world. Peace Corps
Promote world peace and friendship.
Department of Transportation Develop policies for the national
transportation system with regard for need, the environment, and national
defense. Amtrak Develop modern rail service in meeting inter- city
passenger transportation needs. Federal Maritime Commission Regulate
shipping in foreign U. S. trade.
DFE IG offices for possible conversion
United States Postal Service Appointment by the President. National
Science Foundation Appointment by the President. Federal Reserve Board
Appointment by the President
IG office not a candidate for conversion or consolidation
Government Printing Office Legislative branch agency
(Continued From Previous Page)
Illustrative examples of agencies that could consolidate IG oversight
Primary agency missions
Page 66 GAO- 02- 575 IG Consolidation and Related Issues
Appendix III Designated Federal Entity Inspectors General: Fiscal Year
2000 Budgets and Full- time Equivalents (FTEs) Appendi x I II
a Estimates provided by the ECIE. b Staff on board. c Includes $419,000 in
nonappropriated funds. Source: As reported by the DFE IGs.
DFE IGs Budgets Total FTEs
1 United States Postal Service a $72, 000, 000 629 2 Amtrak 6,300, 000 64
3 National Science Foundation 5, 450,000 50 4 Federal Reserve Board 3,
312,661 29 5 Government Printing Office 3,198, 555 27 6 Pension Benefit
Guaranty Corporation 2, 512,000 13 7 Legal Services Corporation b 2,300,
000 17 8 Smithsonian Institution c 1,844, 000 20 9 Peace Corps 1,678, 400
15 10 Securities and Exchange Commission 1, 416,200 9 11 National Archives
and Records Administration 1, 170,000 12. 5 12 Federal Communications
Commission 1, 128,000 8 13 Equal Employment Opportunity Commission 1,
086,662 11 14 National Credit Union Administration 1, 050,883 7 15 Farm
Credit Administration 802, 852 4.8 16 National Labor Relations Board
775,800 7 17 Corporation for Public Broadcasting 715,000 8. 5 18 Federal
Trade Commission 607, 500 5 19 Commodity Futures Trading Commission 474,
000 4 20 Federal Housing Finance Board 473,475 5 21 Appalachian Regional
Commission 468,000 3 22 National Endowment for the Humanities 449, 000 5
23 United States International Trade Commission a 383, 000 3.5 24 National
Endowment for the Arts 365, 000 4 25 Federal Election Commission 348, 773
4 26 Federal Maritime Commission 345, 000 3 27 Federal Labor Relations
Authority 214, 000 1 28 Consumer Product Safety Commission 187, 000 2
DFE IG totals $111, 055, 761 971. 3
Page 67 GAO- 02- 575 IG Consolidation and Related Issues
Appendix IV Inspectors General Appointed by the President: Fiscal Year
2000 Budgets and Fulltime Equivalents (FTEs) Appendi x I V
a Budget authority and FTE estimates from the Fiscal Year 2001 President*s
Budget.
b Includes budget authority of $155 million to combat Medicare fraud. c
Tennessee Valley Authority IG to be appointed by the President under
Public Law 106- 422. d Budget and FTE information not available.
Fiscal year 2000 a Departments/ agencies IGs Budgets FTEs
1 Department of Health and Human Services b $208,000, 000 1, 432 2
Department of Defense 137,000, 000 1, 212 3 Treasury*s IG for Tax
Administration 114,000, 000 1, 020 4 Department of Housing and Urban
Development 83,000, 000 705 5 Department of Agriculture 68,000, 000 753 6
Social Security Administration 66,000, 000 536 7 Department of Labor
52,000, 000 428 8 Department of Justice 51,000, 000 380 9 Department of
Transportation 48,000, 000 455 10 Department of Veterans Affairs 46,000,
000 384 11 Environmental Protection Agency 43,000, 000 374 12 Department
of Education 34,000, 000 285 13 Federal Deposit Insurance Corporation
34,000, 000 231 14 General Services Administration 33,000, 000 297 15
Department of the Treasury 31,000, 000 282 16 Department of Energy 30,000,
000 265 17 Department of the Interior 29,000, 000 265 18 Department of
State 27,000, 000 277 19 Agency for International Development 25,000, 000
165 20 Department of Commerce 20,000, 000 200 21 National Aeronautics and
Space Administration 20,000, 000 210 22 Office of Personnel Management
11,000, 000 107 23 Small Business Administration 11,000, 000 117 24
Federal Emergency Management Agency 8,000, 000 80 25 Tennessee Valley
Authority c 7,154, 000 74 26 Nuclear Regulatory Commission 6,000, 000 44
27 Railroad Retirement Board 5, 000, 000 58 28 Corporation for National
Service 4,000, 000 18 29 Central Intelligence Agency na d na d
Totals $1, 251,154, 000 10, 654
Page 68 GAO- 02- 575 IG Consolidation and Related Issues
Appendix V Presidential IGs with Five Comparable DFE IGs: Fiscal Year 2000
Budgets Appendi x V
Department/ agency IGs Fiscal year 2000 a budgets
1 Department of Health and Human Services b $208, 000, 000 2 Department of
Defense 137, 000, 000 3 Treasury*s IG for Tax Administration 114, 000, 000
4 Department of Housing and Urban Development 83, 000, 000 5 United States
Postal Service c 72, 000, 000 6 Department of Agriculture 68, 000, 000 7
Social Security Administration 66, 000, 000 8 Department of Labor 52, 000,
000 9 Department of Justice 51, 000, 000 10 Department of Transportation
48, 000, 000 11 Department of Veterans Affairs 46, 000, 000 12
Environmental Protection Agency 43, 000, 000 13 Department of Education
34, 000, 000 14 Federal Deposit Insurance Corporation 34, 000, 000 15
General Services Administration 33, 000, 000 16 Department of the Treasury
31, 000, 000 17 Department of Energy 30, 000, 000 18 Department of the
Interior 29, 000, 000 19 Department of State 27, 000, 000 20 Agency for
International Development 25, 000, 000 21 Department of Commerce 20, 000,
000 22 National Aeronautics and Space Administration 20, 000, 000 23
Office of Personnel Management 11, 000, 000 24 Small Business
Administration 11, 000, 000 25 Federal Emergency Management Agency 8, 000,
000 26 Tennessee Valley Authority d 7,154, 000 27 Amtrak e 6,300, 000 28
Nuclear Regulatory Commission 6, 000, 000 29 National Science Foundation e
5, 450, 000 30 Railroad Retirement Board 5, 000, 000 31 Corporation for
National Service 4, 000, 000 32 Central Intelligence Agency na f 33
Federal Reserve Board e 3,312, 661 34 Government Printing Office e 3,198,
555
Tot al s $1,341, 415, 216
Appendix V Presidential IGs with Five Comparable DFE IGs: Fiscal Year 2000
Budgets
Page 69 GAO- 02- 575 IG Consolidation and Related Issues
a Budget authority estimates from the Fiscal Year 2001 President*s Budget.
b Includes budget authority of $155 million to combat Medicare fraud. c
Information supplied by the ECIE. d Tennessee Valley Authority IG to be
appointed by the President under Public Law 106- 422. e Information
provided by the IG. f Budget information not available.
Page 70 GAO- 02- 575 IG Consolidation and Related Issues
Appendix VI Designated Federal Entities: Fiscal Year 2000 Budgets with
$134 Million Threshold Appendi x VI
Note: $134 million is the present value of the $100 million threshold used
by the Congress to establish IG offices in 1988. The present value is
adjusted for inflation using the U. S. Department of Commerce, Bureau of
Economic Analysis*s Gross Domestic Product (GDP) Price Index.
a Budget amounts are from the Fiscal Year 2002 President*s Budget.
Dollars in millions
Designated federal entities Fiscal year 2000 budgets a Budget
threshold
1 United States Postal Service $68, 393 2 Federal Communications
Commission 6, 795 3 Tennessee Valley Authority b 6, 562 4 National Science
Foundation 4, 085 5 Amtrak c 2, 771 6 Pension Benefit Guaranty Corporation
2, 510 7 Government Printing Office 892 8 National Credit Union
Administration 823 9 Smithsonian Institution 546 10 Securities and
Exchange Commission 378 11 National Archives and Records Administration
341 12 Corporation for Public Broadcasting 316 13 Legal Services
Corporation 305 14 Equal Employment Opportunity Commission 284 15 Peace
Corps 249 16 National Labor Relations Board 205 17 Federal Reserve Board
(operations) 200 134 18 Federal Trade Commission 126 19 National Endowment
for the Humanities 118 20 National Endowment for the Arts 102 21
Appalachian Regional Commission 72 22 Commodity Futures Trading Commission
63 23 Consumer Product Safety Commission 52 24 United States International
Trade Commission 44 25 Federal Election Commission 38 26 Farm Credit
Administration 36 27 Federal Labor Relations Authority 24 28 Federal
Housing Finance Board 19 29 Federal Maritime Commission 15
Totals $96,364
Appendix VI Designated Federal Entities: Fiscal Year 2000 Budgets with
$134 Million Threshold
Page 71 GAO- 02- 575 IG Consolidation and Related Issues
b Tennessee Valley Authority IG to be appointed by the President under
Public Law 106- 422. c Amount provided by the IG.
Page 72 GAO- 02- 575 IG Consolidation and Related Issues
Appendix VII Comments from the President*s Council on Integrity and
Efficiency Appendi x VII
Appendix VII Comments from the President*s Council on Integrity and
Efficiency
Page 73 GAO- 02- 575 IG Consolidation and Related Issues
Page 74 GAO- 02- 575 IG Consolidation and Related Issues
Appendix VIII Comments from the Executive Council on Integrity and
Efficiency Appendi x VI II
Appendix VIII Comments from the Executive Council on Integrity and
Efficiency
Page 75 GAO- 02- 575 IG Consolidation and Related Issues
Appendix VIII Comments from the Executive Council on Integrity and
Efficiency
Page 76 GAO- 02- 575 IG Consolidation and Related Issues
Appendix VIII Comments from the Executive Council on Integrity and
Efficiency
Page 77 GAO- 02- 575 IG Consolidation and Related Issues
Appendix VIII Comments from the Executive Council on Integrity and
Efficiency
Page 78 GAO- 02- 575 IG Consolidation and Related Issues
Appendix VIII Comments from the Executive Council on Integrity and
Efficiency
Page 79 GAO- 02- 575 IG Consolidation and Related Issues (194032)
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