[Audit Report on Monetary Incentive Awards, Federal Aid Program, U.S. Fish  and Wildlife Service ]
[From the U.S. Government Printing Office, www.gpo.gov]

Report No. 00-I-709

Title: Audit Report on Monetary Incentive Awards, Federal Aid Program,
       U.S. Fish  and Wildlife Service 

 
  Date: September 29, 2000

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  Office of Inspector General
  U.S. Department of the Interior 
                    
  EXECUTIVE SUMMARY
                              
  Monetary Incentive Awards,
  Federal Aid Program,
  U.S. Fish and Wildlife Service
  Report No. 00-I-709
  September 2000
                                 
  The U.S. Fish and Wildlife Service (FWS) provides monetary incentive awards, including
  performance, on-the-spot, and group awards, to its employees in recognition of their
  outstanding accomplishments. Some FWS awards are financed with funds authorized under
  the Federal Aid in Sport Fish Restoration Act and Federal Aid in Wildlife Restoration Act
  that are made available to FWS for the administration of its Federal Aid Program. 
  
  The Director of FWS requested this audit to determine  whether monetary incentive awards
  financed with Program administrative funds were appropriate, awarded in a consistent
  manner, and processed in compliance with Federal, Department of the Interior (DOI), and
  FWS guidance.
  
  We found that FWS in some cases used Program administrative funds for incentive awards
  that were not fully justified, properly supported, or processed in compliance with applicable
  guidance.  Of 150 monetary incentive awards reviewed, totaling $171,578, we found 107
  awards, totaling $113,547, that were not adequately justified  and/or processed in compliance
  with guidance.  For example, 80 awards lacked documentation of required supervisory
  approvals, and 4 awards inappropriately compensated employees for achievements that had
  been recognized in 2 previous awards.  
  
  We recommended that FWS require that management reviews be performed periodically and 
  ensure that awards are given only to qualified and properly approved individuals and 
  processed in compliance with FWS and DOI guidance.   We also recommended that FWS
  update its incentive awards guidance to provide for issuance of awards based on the current
  performance appraisal system and revise its awards forms to clearly show the names and
  titles of officials who have recommended and approved the awards.
  
  AUDITEE COMMENTS AND OFFICE OF INSPECTOR GENERAL EVALUATION
  
  FWS concurred with the report's two recommendations and agreed to take the recommended
  corrective actions.  Based on the response, the recommendations were considered resolved
  but not implemented.
                                                              
  E-IN-FWS-OO4-00-R
  September 29, 2000
  
  AUDIT REPORT
  
  Memorandum
  
  To: Assistant Secretary for Fish and Wildlife and Parks
  
  From:  Roger La Rouche
  Acting Assistant Inspector General for Audits
  
  Subject: Audit Report on Monetary Incentive Awards, Federal Aid Program, U.S. Fish    
  and Wildlife Service  (No. 00-I-709)
  
   INTRODUCTION
  
  This report presents the results of our audit of the monetary incentive awards that the U.S.
  Fish and Wildlife Service (FWS) gave to its employees using administrative funds from its
  Federal Aid Program.  We initiated the audit at the request of the FWS Director, who
  expressed concern that recent Congressional hearings on FWS's Office of Federal Aid had
  resulted in "an appearance of inappropriate activity regarding monetary awards within the
  Federal Aid Program."  The objective of the audit was to determine whether monetary
  incentive awards financed with Program administrative funds were made in an appropriate
  and consistent manner and in compliance with Federal, Department of the Interior (DOI), and
  FWS guidance.
  
  BACKGROUND
  
  The FWS Federal Aid Program, which is authorized under the Federal Aid in Sport Fish 
  Restoration Act of 1950, as amended (16 U.S.C.  777-777k), and the Federal Aid in
  Wildlife Restoration Act of 1937, as amended (16 U.S.C.  669-669i), provides funding to
  the states to restore, conserve, manage, and enhance the Nation's fish and wildlife resources
  and to provide for the public use and benefit from these resources.  Funds for the Program
  come from excise taxes on firearms, ammunition, and archery equipment (the Wildlife Act)
  and on  fishing equipment and from other sources (the Sport Fish Act).  In 1998, FWS
  received Program  funding of  about  $552 million  ($180 million under the Wildlife Act  and 
  $372 million under the Sport Fish Act).   The authorizing legislation made 8 percent of the
  Wildlife and 6 percent of the Sport Fish Acts' funding available to FWS for administration
  of the Program.  The remaining funds were distributed to the states in accordance with
  statutory formulas based primarily on the states' land areas and the number of fishing and
  hunting licenses purchased. 
  
  FWS's use of Program administrative funds has been the subject of Congressional hearings
  and media coverage.  In July and September 1999, the U.S. House of Representatives
  Committee on Resources heard testimony from the U.S. General Accounting Office, which
  described FWS's administration and execution of the Program as in need of "attention."  The
  General Accounting Office also testified that FWS had a "culture of permissive spending,"
  may have spent some administrative funds "unnecessarily and ineffectively," and had not
  resolved problems disclosed by contract audits of Program grants.  A discussion of prior
  hearings, testimony, and audits is provided in Appendix 1.
  
  One area of particular interest to the Congress was the use of Program administrative funds
  to pay monetary awards to FWS employees.  FWS provides monetary awards as an incentive
  for employee accomplishment. The FWS Manual (224 FW 7.2A) states that the awards are
  "appropriate only when it can be shown that an individual contribution has resulted in
  savings or improved efficiency in the Federal Government or when the performance clearly
  exceeds the performance standards established for the position to the extent that monetary
  recognition is deserved."
  
  SCOPE OF AUDIT
  
  The audit was conducted from November 1999 through March 2000 at FWS offices in
  Washington, D.C., and Arlington, Virginia.  We also contacted FWS's Region 5 personnel
  office in Hadley and its Federal Aid offices in Portland, Albuquerque, Ft. Snelling, Atlanta, 
  Hadley, Denver, and, Anchorage.  
  
  To accomplish our audit objective, we reviewed Office of Personnel Management, DOI, and
  FWS regulations and guidance on monetary awards.  We also reviewed FWS's official
  accounting records and award certifications and interviewed FWS personnel responsible for
  processing and administering incentive awards.  
  
  The scope of our audit included monetary awards from Program funds to FWS employees
  in fiscal years 1996 though 1999.  This consisted of 710 monetary awards, totaling $786,040,
  that were given to 245 employees, according to FWS records.  From a listing of Program-
  financed employee incentive awards prepared by FWS, we randomly selected for review 150
  awards, totaling $171,578, that were given to 64 employees.  We reviewed each of the
  sample awards to determine whether documentation was prepared to justify each award and
  whether the awards were processed in accordance with FWS guidance.  We also compared
  awards financed with Program funds to awards financed with funds from other FWS program
  activities, such as resource management, construction management, and land acquisition, as
  well as to awards given to employees by DOI and its other bureaus.
    
  Our audit was made, as applicable, in accordance with the "Government Auditing
  Standards," issued by the Comptroller General of the United States. We also evaluated the
  system of internal controls over the granting of employee incentive awards.  We found
  internal control weaknesses in FWS's procedures for monitoring awards and for distributing
  Program funds for administrative purposes.  Our recommendations, if implemented, should
  improve the internal controls in this area. 
  
  


   RESULTS OF AUDIT
  
  FWS did not ensure that incentive awards financed with Federal Aid Program administrative
  funds were given only to qualified and properly approved individuals.  Specifically, based
  on a review of 150 monetary incentive awards, totaling $171,578, that were financed with
  Program funds during fiscal years 1996 through 1999, we found that 107 awards, totaling
  $113,547, were not supported with adequate written justifications and/or were not processed
  in compliance with applicable guidance.
  
  Justification
  
  We found that 11 awards, totaling $13,803, were not adequately justified.  One award, for
  $1,500, did not have the required documentation, which consists of information on the type
  of award, a written justification for the award, and the financial action record pertaining to
  the award.  According to Federal record retention guidance (the National Archives and
  Records Administration's General Records Schedule 1 (GRS 1), entitled "Civilian Personnel
  Records"), Federal agencies are required to retain records related to incentive awards for 2
  years.  Because the $1,500 award was given in fiscal year 1998,  FWS was required to have
  retained supporting documentation for the award at the time of our review.  
  
  The remaining 10 awards, totaling $12,303, were given to employees for achievements
  unrelated to the Program, even though the Sport Fish and the Wildlife Acts restrict the use
  of administrative funds to purposes "necessary" for administration of the Program.  For
  example:
  
        - An On-the-Spot award for $637 and a group award for $273 were given to one
  Program employee for serving as a member of a "Social Committee" and for assisting in the
  preparation of a "cookbook," respectively.  Neither activity directly related to the
  administration of the Program.
  
        -  Eight awards, totaling $11,393, were given to non-Program employees for
  accomplishments that were not directly related to the Program, such as software
  development, development of standards for "geospatial data," and the achievement of "core
  staffing goals."  Regional officials, who agreed that these awards were not for Program
  purposes, said that they were generally unaware that the awards had been financed with
  Program funds.  These officials said that FWS "probably" charged the awards to the Program
  as a method of allocating Program funds to the regions to pay a portion of the regions'
  common services (overhead) costs.  FWS, however, had no consistent and supportable basis
  for allocating Program funds to the regions for regional common services expenses (see
  Appendix 1).
  
  Compliance
  
  FWS did not always process incentive awards in compliance with DOI and FWS guidance
  or prepare documentation to show that awards were processed properly.   For 80 awards,
  totaling $81,502, FWS did not clearly identify the recommending official or the position of
  the official who approved the award.  As such, we could not determine whether the
  recommending and approving officials were different individuals, as required by FWS
  guidance, nor could we determine whether a second-level supervisor had approved the
  awards, as required by FWS guidance.
  
  We also found that 41 awards, totaling $38,572, that were given as group awards were not
  supported with justifications that described  each individual's contribution to the joint effort,
  as required by FWS guidance.
  
  Another four awards, totaling $6,400, were given to two employees (two awards of $1,600
  each) in recognition of the same achievements for which the employees had received
  previous awards.  These two employees received three awards each of $1,600 (or $9,600 in
  total) for "assuming the retired secretary's workload [for the Chief of the Program] plus
  much of their current workload."  DOI's "Human Resources Management Handbook" states
  that "[a]pproving officials must ensure that employees are not recognized with a monetary
  award more than once for the same achievement(s)." 
  
  We found that FWS lacked adequate controls to ensure that incentive awards were processed
  in compliance with guidance, were properly approved, and were given only to qualified
  individuals.  During the 4-year scope of our audit, FWS conducted no management reviews
  of and implemented no alternative controls over its incentive awards program, although it
  did compile statistics on the incentive awards that FWS gave during the period June 1, 1998
  to December 31, 1998.  According to FWS officials, FWS completed another statistical
  analysis of incentive award data in March 2000.  The March 2000 analysis covered 1999
  incentive awards.
  
  Guidance
  
  We found that FWS needed to supplement and update its guidance on employee awards as
  follows:
        
  - Guidance in the FWS Manual on quality step increases needs to be updated to
  reflect a change to the performance appraisal system that impacts the qualifications for this
  award.  Under the previous appraisal system, employees qualified for the increases based on
  their numerical performance rating.  The numerical rating has been replaced in all but one
  FWS region with an "achieved/not achieved" rating.
  
  - FWS needs to revise its award certification (Form DI-451) to clearly show the
  names and titles of the officials who have recommended and approved the incentive awards. 
  The revision is needed to provide documentary support that the awards have been processed
  and approved in accordance with FWS guidance (224 FW 7.1E and 7.7C).
  
  - The FWS Manual needs to be updated to provide guidance on DOI's Special
  Thanks for Achieving Results (STAR) Award.
  
  Comparison
  
  To evaluate the reasonableness of awards financed with Program administrative funds, we
  obtained information on the number and amounts of incentive awards that were given to
  FWS employees with Program funds, to FWS employees from other FWS funding sources,
  and to other DOI employees. Based on information from FWS and from several
  Departmental offices, we found that the cumulative award amount per full-time-equivalent
  employee under the Program on average was significantly higher and the cumulative number
  of awards on average was more numerous than the average amount and number of awards
  per full-time-equivalent employee that were given by other FWS divisions.  We also found
  that in fiscal years 1996 through 1999, FWS gave more awards (27,988) totaling more
  money ($25,449,127) than any other DOI bureau during our audit period, the cumulative
  amount of FWS awards per full-time-equivalent employee on average was almost twice as
  much as the cumulative award amount per full-time-equivalent employee for other DOI
  bureaus, and each FWS employee cumulatively received almost twice as many awards on
  average as did employees of other DOI bureaus.  Information on FWS's incentive awards
  and those of other DOI bureaus is shown as follows:
                           
  Fiscal Years 1996 Through 1999
  
  * Full-time-equivalent position
  **Because some award data were not provided on a fiscal year basis, we did not provide data   
on the annual award amounts. 
  Instead, we totaled all awards given during the 4-year period of 1996-1999 and computed the   
average number and amount
  of awards given on an annual basis. 
  
  Although we are not making any recommendations regarding the number or the amount of
  Program incentive awards, we suggest that FWS evaluate its Program-financed incentive
  awards compared with incentive awards financed from other DOI funding sources,
  particularly in light of General Accounting Office and Congressional concerns about the
  appropriateness of FWS's use of Program administrative funds.
  
  Recommendations
  
  We recommend that the Director, FWS:
  
  1.  Require that management reviews be performed periodically or that other
  controls be implemented to ensure that FWS's incentive awards are given only to qualified
  and properly approved individuals and that the awards are processed in compliance with
  FWS and DOI guidance.
  
   2.  Revise and update the FWS Manual sections on FWS's Employee Recognition
  and Incentives Program to conform with DOI's policies and procedures for incentive awards
  and with DOI's performance appraisal system. 
  
  FWS Response and OIG Reply
  
  In the August 21, 2000, response (Appendix 2) to the draft report from the Director, FWS,
  FWS said that it concurred with the report's two recommendations.  Based on the response,
  we consider the recommendations resolved but not implemented.  Accordingly, the
  unimplemented recommendations will be referred to the Assistant Secretary for Policy,
  Management and Budget for tracking of implementation.
  
  Since the report's recommendations are consider resolved, no further response to the Office
  of Inspector General is required (see Appendix 3).
  Section 5(a) of the Inspector General Act (5 U.S.C. app. 3) requires the Office of Inspector
  General to list this report in its semiannual report to the Congress.  In addition, the Office of
  Inspector General provides audit reports to the Congress.
  
     APPENDIX 1
  
                              
  PRIOR HEARINGS, TESTIMONY, AND AUDITS
  
  The House of Representatives Committee on Resources conducted oversight reviews on
  FWS's administration and management of the Federal Aid Program authorized under the
  Wildlife and Sport Fish Acts.  Specifically, in Committee reviews conducted in December
  1998 with the assistance of the General Accounting Office and in March 1999 with the
  support of the Committee's investigative staff, the Chairman of the Committee found that
  FWS used Program administrative funds for improper purposes, including the payment of
  (1) administrative expenses unrelated or not solely related to the administration and
  execution of the Acts, (2) nonadministrative expenses, (3) wasteful and unnecessary
  administrative expenses, and (4) regional office expenses unrelated to fish and wildlife
  conservation.
  
  Documenting its testimony at the hearings, the General Accounting Office issued two reports
  as follows:
  
  -  "Fish and Wildlife Service: Management and Oversight of the Federal Aid
  Program Needs Attention" (No. GAO/T-RCED-99-259), dated July 1999, described FWS's
  use of Program administrative funds.  The testimony cited deficiencies in the use of funds
  for expenses such as salaries, travel, grants, and contracts and cited as "inadequate" the
  controls over expenditures, revenues, grant funds used by the FWS Director, and the
  management and oversight of administrative grants.  The testimony also said that regional
  offices used administrative funds in an "inconsistent" manner, the accuracy of FWS-wide
  overhead charges was "uncertain," and no routine audits were performed on the use of
  administrative funds. The report did not contain any recommendations.
     
  - "Fish and Wildlife Service: Options to Improve the Use of Federal Aid Programs'
  Administrative Funds" (No. GAO/T-RCED-99-285), dated September 1999, restated the
  deficiencies described in the July 1999 testimony and added that these deficiencies "have led
  to a culture of permissive spending within the Office of Federal Aid."  The testimony also
  offered three options for controlling the use of administrative funds: (1) FWS could be given
  additional time to correct the problems identified, (2) legislative limits could be placed on
  how FWS spends administrative funds, and (3) FWS could be required to use appropriated
  funds to administer the Program.  In the testimony, the General Accounting Office expressed
  concern about FWS's commitment to correcting the deficiencies because FWS had not fully
  implemented prior recommendations.  The report did not contain any recommendations.
  







APPENDIX 3
                                                           
STATUS OF AUDIT REPORT RECOMMENDATIONS
                              
Finding/Recommendation
Reference