[Fiscal Year 1998 Audit Workplan Summary]
[From the U.S. Government Printing Office, www.gpo.gov]

Report No. 01-W-98

Title: Fiscal Year 1998 Audit Workplan Summary

  Date: November 10, 1997





                  **********DISCLAIMER**********

This file contains an ASCII representation of an OIG report.  No attempt has been made to display
graphic images or illustrations.  Some tables may be included, but may not resemble those in the
printed version.

A printed copy of this report may be obtained by referring to the PDF file or by calling the Office
of Inspector General, Division of Acquisition and Management Operations at (202) 208-4599.
                  ******************************
 
  
               U.S. DEPARTMENT OF THE INTERIOR
  
  
                 OFFICE OF INSPECTOR GENERAL
  
  
  
  
                    AUDIT WORKPLAN SUMMARY
  
  
  
  
  
  
  
  
                       FISCAL YEAR 1998
               FISCAL YEAR 1998 AUDIT WORKPLAN
                           SUMMARY
  
  
  Bureau/Audit Title                                     Page
  
  Multi-Office
   
      Department of the Interior Consolidated Financial
         Statements for Fiscal Years 1997 and 1998               MOA-1 
      Oversight of Audits of Individual Bureau Financial
         Statements for Fiscal Year 1998                         MOA-2
         General Controls for Processing Transactions at the
         Administrative Service Centers (USGS, BOR)              MOA-4          Year 2000 Compliance 
                                 MOA-6
      Implementation of the Clinger-Cohen Act of 1996            MOA-7
  
  Office of the Secretary
   
      Oversight of Audit of Indian Trust Funds Financial
         Statements for Fiscal Year 1998                         OSS-1
  
  U.S. Fish and Wildlife Service
   
      Oil and Gas Exploration and Extraction Activities
         on National Wildlife Refuges                            FWS-1
      Maintenance of Wildlife Refuges and Fish
         Hatcheries                                     FWS-2
      Miscellaneous Receipts                             FWS-3
  
  
       Subject: Fiscal Year 1998 Audit Workplan Summary (No. 01-W-98) Bureau/Audit Title (Continued)                                   Page
  
  National Park Service
   
      Employee Housing Rental Income                                  NPS-1
      Concession Contracting Procedures                          NPS-3
      Employee Housing                                           NPS-5
      Integrity of Program Funding                               NPS-6
      Line Item Construction Program Reserves                              NPS-7
      Acquisition of Utility Services                                 NPS-9
  
  Bureau of Indian Affairs
   
      Land Records Management System                             BIA-1
      Followup of Management of the Construction of New
         Indian School Facilities and of the Maintenance and
         Repair of School Facilities                                  BIA-2
      Fire Management Activities                                      BIA-4
      Indian Acute Distress Donation Program Administered
         by the Billings Area Office                                  BIA-6
      Followup of the Housing Improvement Program                     BIA-8
  
  Bureau of Land Management
   
      Processing and Monitoring Right-of-Way Grants                        BLM-1
      Management of the Drainage Protection Program                        BLM-3
      Wildlife and Fisheries Management on Public Lands                    BLM-5
      Rangeland Management                                       BLM-6
      Cultural Resources Management                                   BLM-8
  
  Minerals Management Service
   
      Biennial Audit of the Federal Royalty Management System         MMS-1
      Followup of Transportation and Processing Allowance        
         Deductions                                   MMS-2
      Oil Royalty in Kind Program                                MMS-4
      Royalties on Tax Credits for Nonconventional Fuels                   MMS-6
      
  
  
        
  Bureau/Audit Title (Continued)                                 Page
  
  Office of Surface Mining Reclamation and Enforcement
  
      Administration of State Regulatory Programs                     OSM-1
      Administration of State Reclamation Grant Programs                   OSM-2
  
  Bureau of Reclamation
  
      Environmental Mitigation and Enhancement Costs
         Associated With Previously Constructed Facilities                 BOR-1
      Utah Reclamation Mitigation and Conservation Commission         BOR-4
      Identification and Disposal of Unneeded Acquired Lands               BOR-6
      Franchise Fee Payments by Selected Concessioners                BOR-7
  
  U.S. Geological Survey
  
      Overhead Costs of Cost-Reimbursable Projects                    GSV-1
  
  Government of Guam
  
      Guam Economic Development Authority                             INS-1
      Construction of the Southern High School, Department
         of Public Works                                         INS-2
      
  Federated States of Micronesia
  
      Rural Economic and Community Development
         Services, U.S. Department of Agriculture,
         Pohnpei Area Office                                     INS-3
         
  Republic of the Marshall Islands
  
      Marshall Islands Development Bank                          INS-5
  
  Republic of Palau
  
      Palau National Development Bank                                 INS-7
  
  
  
  
     Bureau/Audit Title (Continued)                                   Page
  
  Government of the Virgin Islands
  
      Followup of Personnel Management Practices, Division
         of Personnel                                            INS-8
      Government Employees Retirement System                     INS-9
      Potable Water Service Charges, Virgin Islands Water
         and Power Authority                                     INS-11
                                   FACT SHEET
  
  
                  DEPARTMENT OF THE INTERIOR
              CONSOLIDATED FINANCIAL STATEMENTS
                FOR FISCAL YEARS 1997 AND 1998
  
  
  TYPE OF AUDIT
  
  Financial - all bureaus
  
  BACKGROUND
  
  The Congress enacted the Chief Financial Officers Act of 1990 to reform the fundamental
  financial management requirements and practices of obsolete and inefficient Federal systems. 
  The purpose of the Act is to bring more effective general and financial management practices 
  to the Federal Government by:  (1) improving the financial management functions of the
  Office of Management and Budget; (2) designating a chief financial officer in each executive
  department and major executive agency; and (3) providing for improvements in accounting
  and management control systems to ensure the issuance of complete, reliable, and timely
  financial information.
  
  AUDIT OBJECTIVE AND SCOPE
  
  We will audit the Department of the Interior's consolidated financial statements for fiscal
  years 1997 and 1998.  The objective of the audit is to determine whether:  (1) the
  consolidated financial statements of the Department were presented fairly and in accordance
  with applicable accounting standards; (2) internal controls were effectively implemented
  (that is, assurance was provided that the Department complied with applicable laws and
  regulations; safeguarded funds, property, and other assets against waste, loss, unauthorized
  use, or misappropriation; and properly recorded and accounted for revenues and
  expenditures); (3) the Department complied with applicable laws and regulations as required
  by generally accepted government auditing standards; (4) the internal control evaluation
  process was in compliance with the Federal Managers' Financial Integrity Act and Office of
  Management and Budget guidelines and requirements; and (5) significant financial
  information in the overview was consistent with the financial statements and the systems
  providing data for the significant performance measures in the overview were reliable.
                               FACT SHEET
  
  
                   OVERSIGHT OF AUDITS OF 
            INDIVIDUAL BUREAU FINANCIAL STATEMENTS
                     FOR FISCAL YEAR 1998
  
  
  TYPE OF AUDIT
  
  Financial - all funds
  
  BACKGROUND
  
  The Congress enacted the Chief Financial Officers Act of 1990 to reform the fundamental
  financial management requirements and practices of obsolete and inefficient Federal systems. 
  The purpose of the Act is to bring more effective general and financial management practices
  to the Federal Government by:  (1) improving the financial management functions of the
  Office of Management and Budget; (2) designating a chief financial officer in each executive
  department and major executive agency; and (3) providing for improvements in accounting
  and management control systems to ensure the issuance of complete, reliable, and timely
  financial information.
  
  The Office of Inspector General has been auditing the financial statements of each of the
  Department's bureaus and has issued separate opinions on their financial statements since 
  1991. However, beginning with the fiscal year 1998 financial statements, the Office of
  Inspector General will not audit or issue an opinion on each bureau's financial statements. 
  We anticipate that some bureau financial statements will be separately audited by
  independent external auditors.   In that regard, the Office of Inspector General is responsible
  for providing oversight of audits performed by independent external auditors, in accordance
  with the Chief Financial Officers Act of 1990, as required by Office of Management and
  Budget Bulletin 93-06, "Audit Requirements for Federal Financial Statements."
  
  AUDIT OBJECTIVE AND SCOPE
  
  The objective of the audit is for the Office of Inspector General to ensure, through oversight,
  that bureau financial statements audits performed by an independent external auditor are
  conducted in accordance with the requirements of Section 10 of Bulletin 93-06, "Audit
  Requirements for Federal Financial Statements."  In that regard, the Office of Inspector
  General will: (1)  provide technical advice and liaison to bureau officials and independent
  external  auditors;  (2)  perform  quality  control  reviews  of  audits  conducted  by   these 
  
  independent  external  auditors   and  provide   the  results to other  interested parties;  and
  (3) monitor and report on management's progress in resolving audit findings reported by the
  independent external auditors.
                              FACT SHEET
                               
                               
         GENERAL CONTROLS FOR PROCESSING TRANSACTIONS
            AT THE ADMINISTRATIVE SERVICE CENTERS,
       U.S. GEOLOGICAL SURVEY AND BUREAU OF RECLAMATION
                               
                                
  TYPE OF AUDIT
  
  Financial related
  
  BACKGROUND
  
  The Department of the Interior operates two Administrative Service Centers: the Washington
  Administrative Service Center, located in Reston, Virginia, under the direction of the U.S.
  Geological Survey, and the Denver Administrative Service Center, located in Lakewood,
  Colorado, under the direction of the Bureau of Reclamation.  These centralized centers
  provide ADP services to all Departmental bureaus and for other Federal agencies by contract. 
  The centers support planning, acquisition/development, implementation, and operation and
  maintenance of standardized Departmentwide administrative systems.
  
  Included in the duties of the Washington Administrative Service Center are the following: 
  
   -  Providing oversight of software modifications of the Federal Financial System (FFS)
  for all Departmental bureaus and other clients.  In addition, the Center operates and
  maintains the FFS for the U.S. Geological Survey, the National Park Service, the Bureau of
  Indian Affairs, and the Office of the Special Trustee for American Indians, as well as for
  other Federal agencies and the U.S. House of Representatives.
  
   - Implementing and maintaining the Department's standardized automated procurement
  system, the Interior Department Electronic Acquisition System (IDEAS). 
  
   - Providing computer services and operational support for the Governmentwide Federal
  Procurement Data System (FPDS).
  
  Included in the duties of the Denver Administrative Service Center are the following:
  
   - Providing, through the Payroll/Personnel System (PAY/PERS), payroll and personnel
  services to 16 Departmental bureaus and Federal agencies that have more than 110,000
  employee accounts nationwide.  PAY/PERS also supports a variety of user equipment at 135
  sites and access to its mainframe computer in Lakewood.
  
   - Developing, implementing, and maintaining  a new personnel and payroll system, the 
  Federal Personnel/Payroll System (FPPS), that will operate on the mainframe computer in
  Lakewood. 
  
   - Maintaining and operating the FFS for the Bureau of Reclamation, the Bureau of Land
  Management, and the U.S. Fish and Wildlife Service, as well as for other Federal agencies.
  
  AUDIT OBJECTIVE AND SCOPE
  
  The objective of the audit is to determine whether policies and procedures at the Denver
  Administrative Service Center and the Washington Administrative Service Center are
  designed to achieve specific control objectives and whether the control objectives are
  operating effectively to provide reasonable assurance that assets such as computers and the
  data contained therein are adequately safeguarded. The audit is to be performed during fiscal
  year 1998 and reported in accordance with the "Government Auditing Standards," which
  includes the American Institute of Certified Public Accountants Statement on Auditing
  Standards No. 70, "Reports on the Processing of Transactions by Service Organizations." 
  
                               FACT SHEET
  
  
                    YEAR 2000 COMPLIANCE,
                  DEPARTMENT OF THE INTERIOR
  
  
  TYPE OF AUDIT
  
  Survey - performance (economy and efficiency)
  
  BACKGROUND
  
  On or before January 1, 2000, a considerable number of computer systems are at risk of not
  working correctly, which may result in confusion and, potentially, in system failure.  This
  may occur because most computer systems currently cannot handle the change of date as we
  move from the year 1999 to the year 2000.  During processing, computers will interpret the
  year 2000 as 1900 because most software programs assume that the first two digits of any
  year are "19."  This could result in inaccurate data in determining due dates, interest, or
  benefits and in other tasks that schedule or project future events.  Some analysts have
  estimated the cost to remedy  the change of date in the Federal Government to be $30 billion
  and for the Department of the Interior's 67 major systems to be $25 million.
  
  The 67 major systems include systems that have been operational for many years, as well as
  systems that are currently being designed and developed.  These systems include the Bureau
  of Land Management's Automated Land and Minerals Record System (ALMRS), which
  tracks Federal and Indian land and minerals; the Minerals Management Service's Royalty
  Management System, which includes the Auditing and Finance System, which accounts for
  all Federal oil and gas royalties; and the Departmental accounting and personnel and payroll
  systems. While the Department has identified 67 major systems that will be affected by the
  change in date from 1999 to 2000, the Department has approximately 350 automated systems
  that  support Departmental programs and operations which also may be affected and may
  adversely impact the Department in accomplishing its mission. 
  
  AUDIT OBJECTIVE AND SCOPE
  
  The objective of the audit is to determine whether:  (1) the Department of the Interior has the
  capability to address the year 2000 compliance issues; (2) application programs and
  hardware and system software programs are year 2000 compliant; and (3) plans and
  procedures are in place to monitor year 2000 compliance changes to ensure that changes are
    made before the year 2000.                           FACT SHEET
  
  
                    IMPLEMENTATION OF THE
                  CLINGER-COHEN ACT OF 1996,
                 DEPARTMENT OF THE INTERIOR
                               
                               
                                TYPE OF AUDIT
  
  Survey (performance) - Departmentwide
  
  BACKGROUND
  
  In February 1996, the Congress passed the Information Technology Management Reform
  Act of 1996, which, under Public Law 104-208, was renamed the Clinger-Cohen Act of
  1996.  The Clinger-Cohen Act  requires the Director, Office of Management and Budget,
  with respect to information technology in the Federal Government, to control capital
  planning; improve acquisition, use, and disposal of such technology by improving Federal
  programs;  analyze, track, and evaluate the risks and results of all major capital investments
  in information systems as part of the budget process; oversee the Secretary of Commerce's
  development and implementation of standards and guidelines pertaining to Federal computer
  systems; use pilot projects for implementing information systems;  compare and disseminate
  agencies' results; inform the Congress of these results; and coordinate the development and
  review of policy associated with Federal information technology acquisition. In addition, the
  Act:
  
   - Requires the Director, Office of Management and Budget, to evaluate the information
  resources management practices of the executive agencies with respect to the performance
  and results of investments made in information technology. 
  
   - Provides enforcement authority to the Director to hold agency heads accountable for
  information resources management and investments.
  
   - Requires the head of each executive agency to design and implement a process for
  maximizing the value and assessing and managing the risks of information technology
  acquisitions; utilize performance- and results-based management practices; and prepare an
  annual report to the Congress concerning progress in achieving such goals. 
  
  
  
  
   - States that executive agencies should, during the 5-year period beginning with 1996,
  achieve at least a 5 percent decrease in information technology operation and maintenance
  costs and a 5 percent increase in efficiency of operations annually.  
  
  AUDIT OBJECTIVE AND SCOPE
  
  The objective of the audit is to determine, based on this review, whether the Department of
  the  Interior  can  implement  the  Clinger-Cohen  Act  of  1996  by   making  progress in: 
  (1) designing and implementing a process for maximizing the value and assessing and
  managing the risks of information technology acquisitions and (2) reducing operations and
  maintenance costs by 5 percent and increasing the efficiency of operations as required by the
  Act. To accomplish our review, we will use the General Accounting Office's "Assessing
  Risks and Returns: A Guide for Evaluating Federal Agencies' IT [information technology]
  Investment Decision-making" as a guideline for evaluating and assessing the Department's
  selection and management of its information technology resources.
  
                               FACT SHEET
  
  
                    OVERSIGHT OF AUDIT OF 
           INDIAN TRUST FUNDS FINANCIAL STATEMENTS
                     FOR FISCAL YEAR 1998
  
  
  TYPE OF AUDIT
  
  Financial - all funds
  
  BACKGROUND
  
  The Congress enacted the Chief Financial Officers Act of 1990 to reform the fundamental
  financial management requirements and practices of obsolete and inefficient Federal systems. 
  The purpose of the Act is to bring more effective general and financial management practices
  to the Federal Government by:  (1) improving the financial management functions of the
  Office of Management and Budget; (2) designating a chief financial officer in each executive
  department and major executive agency; and (3) providing for improvements in accounting
  and management control systems to ensure the issuance of complete, reliable, and timely
  financial information.
  
  The Secretary of the Interior has been designated by the Congress as the U.S. Government
  trustee on behalf of the account holders of the Indian Trust Funds. Through February 8,
  1996, the Secretary delegated the authority for management of the Indian Trust Funds to the
  Assistant Secretary for Indian Affairs, who carried out the management of the Indian Trust
  Funds through the Office of Trust Funds Management, Bureau of Indian Affairs. On
  February 9, 1996, the Secretary transferred the management of the Indian Trust Funds  from
  the Bureau of Indian Affairs to the newly established Office of the Special Trustee  for
  American Indians, within the Office of the Secretary. The Office of Trust Funds
  Management was also transferred from the Bureau of Indian Affairs to the Office of the
  Special Trustee, but administrative support of the Office of Trust Funds Management will
  continue to be provided by the Bureau.
  
  The Office of Trust Funds Management has contracted with a public accounting firm to audit
  the Indian Trust Funds financial statements. The financial audit of the operations of the
  Office of the Special Trustee and the Office of Trust Funds Management will be included
  in the financial statements audit of the Office of the Secretary, which is performed by the
  Office of Inspector General.  Office of Management and Budget Bulletin 93-06, "Audit
  Requirements for Federal Financial Statements," requires oversight by the Inspector General
  of audits performed by independent external auditors in accordance with the Chief Financial
  Officers Act of 1990.   
  
     AUDIT OBJECTIVE AND SCOPE
  
  The objective of the audit is for the Office of Inspector General to ensure, through its
  oversight, that the Indian Trust Funds financial statements audits performed by an
  independent external auditor are conducted in accordance with the requirements of Section
  10 of Bulletin 93-06, "Audit Requirements for Federal Financial Statements."  In that regard,
  the Office of Inspector General should: (1)  provide technical advice and liaison to Indian
  Trust Funds officials and independent external auditors; (2) perform quality control reviews
  of audits conducted by these independent external auditors and provide the results to other
  interested parties; and (3) monitor and report on management's progress in resolving audit
  findings reported by the independent external auditors.
  
                               FACT SHEET
                               
                               
                   OIL AND GAS EXPLORATION 
                 AND EXTRACTION ACTIVITIES ON
                  NATIONAL WILDLIFE REFUGES,
                U.S. FISH AND WILDLIFE SERVICE
                               
                               
                                TYPE OF AUDIT
  
  Performance - Servicewide
  
  BACKGROUND
  
  In several states,  companies conduct oil and gas exploration and extraction activities on
  U.S. Fish and Wildlife Service national wildlife refuges.  These activities are subject to
  oversight by the Service, which, in conjunction with the mineral rights holder, establishes
  the overall approach to exploration and extraction operations (such as acceptable exploration
  and extraction practices,  refueling restrictions, and hours or periods  of operation).  Also,
  the U.S. Coast Guard and the National Response Center (a consortium of the Environmental
  Protection Agency and other resource management organizations) monitor pipelines and oil
  production activities.
  
  AUDIT OBJECTIVE AND SCOPE
  
  The objective of the audit is to determine  whether: (1) the U.S. Fish and Wildlife Service 
  established adequate regulations and guidance to ensure that companies conducting oil and
  gas exploration and extraction activities on national wildlife refuges fully compensated the
  Government for the damage or contamination caused by their operations;  (2) amounts
  charged for mitigation of damages or as bonding/insurance coverage were fair and
  reasonable;  and (3) payments made by oil and gas companies for potential refuge damage
  were  spent in accordance with Federal regulations and prudent business practices.  The audit
  was requested by the Service.  The audit will review the Service's oversight and
  administration of oil and gas exploration activities that occurred during fiscal years 1995
  through 1998.
  
  
                              FACT SHEET
                               
                               
                   MAINTENANCE OF WILDLIFE
                 REFUGES AND FISH HATCHERIES,
                U.S. FISH AND WILDLIFE SERVICE
                               
                               
                                TYPE OF AUDIT
  
  Performance (economy and efficiency) - Servicewide
  
  BACKGROUND
   
  The U.S. Fish and Wildlife Service maintains buildings, roads, water control structures, and
  equipment to support its wildlife management and fishery programs.  The replacement value
  of these structures and equipment exceeds $4.5 billion for refuges and $700 million for
  hatcheries.  To maintain these items, the Service established the Maintenance Management
  System to plan, budget, implement, and document maintenance projects for its buildings,
  facilities, and equipment.  According to the Service, the most recent System information
  indicates that the refuge system has a maintenance backlog of about $428 million and that
  its hatcheries system has a maintenance backlog of about $134 million.  The fiscal year 1998
  funding request for hatchery maintenance is $6.9 million, and the request for refuge
  maintenance is $17.1 million.
  
  AUDIT OBJECTIVE AND SCOPE
  
  The objective of the audit is to determine whether the U.S. Fish and Wildlife Service: (1) was
  managing its maintenance program in an efficient and effective manner and in accordance
  with established laws, regulations, and guidance and (2) was maintaining and using a
  maintenance management system that provides useful and reliable data at a reasonable cost. 
  The audit will review refuge and hatchery maintenance activities that occurred during fiscal
  years 1996 through 1998. 
                               FACT SHEET
  
  
                   MISCELLANEOUS RECEIPTS,
                U.S. FISH AND WILDLIFE SERVICE
  
  
  TYPE OF AUDIT
  
  Performance (economy and efficiency) - Servicewide
  
  BACKGROUND 
  
  The U.S. Fish and Wildlife Service authorizes a variety of nonrecreational uses at more than
  500 units of the National Wildlife Refuge System.  In fiscal year 1996, the Service collected
  $9 million in miscellaneous receipts from timber sales, grazing fees, mineral royalties, rights
  of way, concession operations, and special uses, which was a $2.4 million increase over
  fiscal year 1995 receipts.  The Service uses the revenues to supplement its annual
  appropriations. 
  
  AUDIT OBJECTIVE AND SCOPE 
  
  The objective  of  the  audit is  to determine whether  the U.S. Fish  and Wildlife  Service:
  (1) established adequate guidance and controls over the assessment, collection, and use of
  fees that are charged at the refuges; (2) applied consistent fees or charges that provide a
  reasonable return to the Government and that enable the Service to recover related
  administrative costs; and (3) complied with applicable Government regulations. The scope
  of the audit will include receipts-related  activities that occurred during fiscal years 1996 and
  1997. 
  
                               FACT SHEET
  
  
               EMPLOYEE HOUSING RENTAL INCOME,
                    NATIONAL PARK SERVICE
  
  
  TYPE OF AUDIT
  
  Program and financial - Servicewide
  
  BACKGROUND
  
  The National Park Service maintains park housing for some employees who provide visitor
  services in the parks.  In-park housing is provided for some seasonal employees, permanent
  employees at isolated parks, and permanent employees at nonisolated parks who provide
  necessary visitor services or who protect Government property or resources.  In a few parks,
  Government housing is provided to concessioner employees.  In fiscal year 1996, the Park
  Service had about 5,200 single-family and multiple-unit housing quarters for park employees
  and collected about $12.5 million in rental income from park employees who used
  Government housing.  In its fiscal year 1997 budget justification, the Park Service reported
  that  it expected  to receive  rental income of about $15 million  in  fiscal year 1997 and
  $15.4 million in fiscal year 1998.  The Park Service does not maintain information on the
  amount of rental income received from concessioner employees because this income is
  collected by the concessioner and used to maintain these Park Service housing units.
  
  Federal guidance regulates the rental rates that are charged for the use of Government
  quarters.  Federal law (5 U.S.C. 5911) requires Federal agencies to establish rental rates or
  charges for Government quarters that are based on their "reasonable value . . . to the
  employee . . . in the circumstances under which the quarters and facilities are provided,
  occupied or made available."  Office of Management and Budget Circular No. A-45, "Rental
  and Construction of Government Quarters," states that rental rates should be based on "the
  rule of equivalence; namely, that charges for rental and related facilities should be set at
  levels equal to those prevailing for comparable private housing located in the same area,
  when practicable."  The Circular also states that the rates should not reflect subsidies to the
  employees or serve as an inducement in the recruitment or retention of employees and that
  the rates should be fair and consistent.  Public Law 101-121, Title III (Section 331), dated
  October 1989, provides for rents and charges for housing to be collected by payroll
  deduction, and Public Law 98-473 (Section 101(c)) provides for rental fees to be deposited
  in a special fund and for the monies "to remain available, until expended, for the
  maintenance and operation of the quarters of that agency."
  
  
  
  AUDIT OBJECTIVE AND SCOPE
  
  The objective of the audit is to determine whether: (1) the rental rates charged to employees
  of the National Park Service and to concessioner employees for the use of Government
  housing  are based on criteria contained in Office of Management and Budget Circular
  No. A-45 and (2) the National Park Service has established adequate controls over  assessing,
  recording, and using rental income paid by Park Service and concessioner employees for the
  use of Government quarters.  The scope of the audit will include rental rates, assessments,
    and collections that occurred from fiscal years 1996 through 1998.   
                          FACT SHEET
                               
                               
              CONCESSION CONTRACTING PROCEDURES,
                    NATIONAL PARK SERVICE
                               
                               
                                TYPE OF AUDIT 
  
  Performance - Servicewide
  
  BACKGROUND
  
  In fiscal year 1997, the National Park Service had 209 contracts and 456 permits with
  concessioners that operated at 133 park units nationwide.  Concession contracts, many of
  which are for terms of 10 or more years, have historically granted the concessioners
  preferential rights of renewal, exclusive rights to provide services or merchandise within a
  particular park area, and compensation for capital improvements.  The contracts also
  typically required the concessioner to pay a franchise fee and/or deposit funds into
  concessioner improvement accounts. Estimated franchise fees and improvement account
  deposits for fiscal year 1996 were $16.4 million and $24.5 million, respectively.  
  
  In response to public and Congressional concerns about preferential treatment granted to
  certain concessioners (for example, low franchise fees, overcompensation for possessory
  interest, and limited responsibility for the maintenance and insufficient compensation for the
  use of government facilities), the Park Service agreed to revise some of its concession
  contracting practices.  Since 1990, the Park Service has: (1) issued guidance on  limitations
  to the period of performance of concession contracts and on the assessment of building use
  fees; (2) agreed to issue guidance on utility cost reimbursements; (3) established special
  accounts  that  are  funded  by  concessioners  and  that  pay for capital improvements; and
  (4) assigned a greater responsibility to concessioners for the payment of maintenance and
  utility costs.  The Park Service also established authorization levels for the approval of
  concession contracting actions based on the dollar value of the awards.
  
  AUDIT OBJECTIVE AND SCOPE
  
  The objective of the audit is to determine whether the National Park Service contracted for
  concession services in compliance with Federal and Park Service regulations and in
  accordance with prudent business practices.  Specifically, we will determine whether the
  Park Service:  (1) negotiated and renegotiated contracts and permits and fees/payments
  (franchise, permit, capital account, and building use fees and maintenance and utility cost
  reimbursements)  in  accordance with Park Service policy and prudent business practices;
  (2) adequately  addressed  the issue of vesting concessioners with possessory interest; and
  (3) established adequate controls over concessioner improvement account funds, including
  deposits and expenditures.  The scope of the audit will include concession contracting-related
  activities that occurred during fiscal years 1996, 1997, and 1998. 
  
     
                          FACT SHEET
  
  
                      EMPLOYEE HOUSING,
                    NATIONAL PARK SERVICE
  
  
  
  TYPE OF AUDIT
  
  Performance - Servicewide
  
  BACKGROUND
  
  The National Park Service constructs park housing for some employees who provide in-park
  visitor services.  In-park housing is provided for some seasonal employees, permanent
  employees at isolated parks, and permanent employees at nonisolated parks who provide
  necessary visitor services or who protect Government property or resources.  In fiscal year
  1996, the Park Service had about 5,200 housing units for park employees, which consisted
  of single-family and multi-unit housing facilities.  
  
  In its testimony to the Congress on the fiscal year 1998 budget, the Park Service reported a
  significant maintenance backlog, which included housing rehabilitation and construction
  costs. A December 1996 Office of Inspector General report (No. 97-I-224) showed that the
  Park Service had a recapitalization requirement of about $441.9 million for housing
  permanent and seasonal employees.
  
  AUDIT OBJECTIVE AND SCOPE
  
  The objective of the audit is to determine whether the National Park Service justified its need
  for additional employee housing and for major renovation/rehabilitation of employee housing
  facilities, based its housing needs on an analysis of the most cost-effective means of
  providing housing facilities (single-family and multi-unit housing facilities), and initiated
  housing construction programs based on the highest priority housing needs. The audit will
  include a review of housing planned, under construction, or completed during fiscal years
  1996 through 1998.
  
  
                               FACT SHEET
  
  
               INTEGRITY OF  PROGRAM  FUNDING, 
                    NATIONAL PARK SERVICE
  
  
  TYPE OF AUDIT
  
  Performance - Servicewide
  
  BACKGROUND
  
  The national park system comprises 374 units, which include natural areas such as
  Yellowstone and Yosemite National Parks, urban areas such as the Gateway National
  Recreation Area in New York and New Jersey, national battlefields, national historic sites,
  and national preserves.  Most of the funding for the National Park Service is for park
  operating  budgets.   For  fiscal  year 1997,  the  Park Service  was  appropriated  about 
  $1.55 billion, of which $1.2 billion was to cover operations of the park system, including the
  headquarters and the regional offices.
  
  Park Service headquarters  has overall  program  responsibility for Servicewide programs
  such as maintenance, resource management, and law enforcement and plays a key role in
  formulating the budget requests for these programs  and in allocating funds to the parks. 
  However, upon receiving their budget allocations, the park superintendents exercise a great
  deal of discretion in setting operational priorities.  Under this decentralized, park-based,
  decision-making structure, park managers generally plan and execute their budgets with 
  little involvement from regional and headquarters managers.  Funds are allotted to the parks
  on a quarterly basis, and separate accounts have been established for recording expenditures
  under the various programs.
   
  AUDIT OBJECTIVE AND SCOPE
  
  The objective of the audit is to determine whether the National Park Service established
  adequate  budget  and accounting controls  to ensure that: (1)  funds were allocated  to the
  parks on a timely basis to ensure the efficient and effective  management of  park  programs; 
  (2) expenditures were recorded in the proper accounts; and (3) the accounting system
  provided sufficient information for program managers to monitor program expenditures
  effectively.  The audit was requested by the Park Service.  The audit will cover program
  funding for fiscal year 1997.
  
                               FACT SHEET
  
  
           LINE ITEM CONSTRUCTION PROGRAM RESERVES,
                                   NATIONAL PARK SERVICE
                                
  
  TYPE OF AUDIT 
  
  Performance - Servicewide
  
  BACKGROUND
  
  The National Park Service requests funds annually for its line item construction program,
  which provides for the construction, rehabilitation, and replacement of facilities.  The overall
  physical plant of the Park Service includes about 16,000 permanent structures, 300 major
  water and sewage treatment systems, 1,200 secondary water and sewage treatment systems,
  and 5,200 employee housing units. The line item construction program finances the 
  rehabilitation and preservation of historic, archeological, recreational, interpretive, and
  operational structures and facilities throughout the national park system.  Before requesting
  line item construction funds, the Park Service evaluates each project to ensure that
  construction planning has progressed sufficiently to justify obligation of project funds in the
  current fiscal year.  Also, Park Service construction cost estimates are based on nearly
  completed construction drawings or at least "advanced" construction planning.  In
  developing its annual construction appropriation budget justifications to the Congress, the
  Park Service adds an additional 16 percent to its cost estimates for approved projects for
  "contingencies" (for items such as cost overruns and contract modifications) and an
  additional 15 percent for "administrative costs" (for items such as the Denver Service
  Center's administrative costs and construction supervision).  All funds appropriated to the
  Park Service for this program are "no-year" monies, which are  available to the Park Service
  until expended.
  
  From fiscal years 1995 through 1997, the Congress appropriated construction funds of about
  $300.9 million to the Park Service as follows: 1995 - $126.5 million; 1996 - $92.2 million;
  and 1997 - $82.2 million.  Of these amounts, the Park Service reserved about $53.3 million
  for contingencies and $50 million for administrative costs. 
  
  AUDIT OBJECTIVE AND SCOPE
  
  The objective of the audit is to determine whether the National Park Service established
  effective accounting and administrative controls over the recording and use of funds reserved
  for contingencies and administrative expenses.  The scope of the audit will include a review
  of construction funds that were reserved for contingencies and administrative costs and that
  were obligated during fiscal years 1995 through 1997.
     
                          FACT SHEET
                               
                               
               ACQUISITION OF UTILITY SERVICES,
                    NATIONAL PARK SERVICE
                               
                               
                                TYPE OF AUDIT
  
  Performance - Servicewide
  
  BACKGROUND
  
  At some parks, the National Park Service constructs and operates utility systems that provide
  water, electricity, and the removal of wastewater, while at others, the Park Service purchases
  utility services, such as electricity and solid waste hauling, from municipal or public utility
  providers.  In general, the Park Service's Denver Service Center is responsible for the
  development of Government-owned utility facilities, and  the Public Utilities Branch of the
  Park Service's Washington Office is responsible for negotiating with municipal and public
  utility providers for utility services.  In fiscal year 1997, the Park Service identified
  capitalization requirements of over $304 million for utility systems in the parks. 
  
  The Code of  Federal Regulations (48 CFR 41.2) requires that agencies obtain utility services
  from sources of supply which are most advantageous to the Government in terms of
  economy, efficiency, reliability, or service.  In addition, the Service's management policies
  provide that the Service will use municipal or other utility systems outside the parks
  whenever economically and environmentally practicable and authorizes the Park Service to
  participate, where authorized, in cost-sharing projects with municipalities and others in
  meeting new, expanded, or replacement park utility needs.  Although it may be more cost
  effective for the Park Service to contract with local municipalities for utility services rather
  than to construct utility systems, factors such as the  isolation of the park and the size of
  existing local municipal plants may affect the decision to build or buy.  
  
  AUDIT OBJECTIVE AND SCOPE
  
  The objective of the audit is to determine whether the National Park Service  complied with
  Federal, Departmental, and Park Service regulations pertaining to the acquisition of utility
  services and  established an effective process for determining whether to build or rehabilitate
  utility systems or to purchase utility services from local municipality or public utility
  providers.  The scope of the audit will include a review of constructed or planned utility
  system developments in the parks from fiscal years 1994 through 1997.
                          FACT SHEET
  
  
               LAND RECORDS MANAGEMENT SYSTEM,
                   BUREAU OF INDIAN AFFAIRS
  
  
  TYPE OF AUDIT
  
  Performance - Bureauwide
  
  BACKGROUND 
  
  The Bureau of Indian Affairs has five Land Titles and Records offices, which are responsible
  for recording, imaging, adjudicating, certifying, and managing title documents (including
  leases) and title and ownership for Indian trust and restricted lands under the Bureau's
  jurisdiction.  The program offices provide title service to Bureau and Federal offices that
  deliver services to tribal and individual owners of trust and restricted lands and to those
  Federal, state, and private sector offices that rely on land titles and records data and reports. 
  The Bureau is responsible for maintaining land ownership records for more than 50 million
  acres of tribally and individually owned Indian lands.
  
  AUDIT OBJECTIVE AND SCOPE
  
  The objective of the audit is to determine whether the Bureau of Indian Affairs land records
  management system ensured that land ownership records were accurate.  The scope of audit
    will include land, title, and encumbrance records that pertained to fiscal years 1996 and 1997.                          FACT SHEET
                FOLLOWUP OF MANAGEMENT OF THE
       CONSTRUCTION OF NEW INDIAN SCHOOL FACILITIES AND
     OF THE MAINTENANCE AND REPAIR OF SCHOOL FACILITIES,
                   BUREAU OF INDIAN AFFAIRS
                                TYPE OF AUDIT
  Followup - Bureauwide
  BACKGROUND
  In accordance with applicable legislation, the Bureau of Indian Affairs is responsible for
  constructing new schools and repairing, operating, and maintaining 2,113 school buildings
  (excluding quarters), which have over 16 million square feet, that include academic facilities,
  dormitories, administrative offices, food services, transportation facilities, and recreation
  facilities.  
  
  The current priority list for constructing new school facilities was developed in 1993 and
  consists of  16 school facilities.  As of December 1996, construction was completed or nearly
  completed for seven facilities, and construction had not been started for the remaining nine
  facilities.  In fiscal year 1996, the Bureau received $18.5 million for new school construction
  and requested $4 million and $14 million for fiscal years 1997 and 1998, respectively.  The
  Bureau's Facilities Management and Construction Center, in Albuquerque, New Mexico, is
  responsible for designing school facilities, ensuring that space guidelines are met in the
  construction of facilities, and awarding and administering construction contracts.  The
  Bureau's Office of Indian Education Programs assists the Facilities Management and
  Construction Center in approving the size of the schools that are constructed. 
  
  Regarding existing school facilities,  the Bureau's 1998 budget justification estimated  that
  $682 million was needed to reduce the backlog of school improvement and repair projects.
  In comparison, the Bureau's 1998 budget request for education facilities improvement and
  repair was approximately $32 million. The school facilities improvement and repair program
  involves an ongoing effort to ensure that facilities are safe and sanitary, meet program
  requirements, and are handicapped accessible.  At the direction of the U.S. Senate, the
  Bureau uses existing health and safety criteria as the bases for prioritizing needed school
  improvements and repairs.  Potential projects are identified by facility users, area office
  facility staff, and the Facilities Management and Construction Center  to ensure that projects
  meet the health and safety requirements and that as many deficiencies at an individual
  location are corrected as economically feasible.  The Bureau received about $24.1 million
  for the improvement and repair program for school facilities for fiscal year 1997 and was
  authorized 29 full-time equivalent positions.  The Bureau received about $73.7 million for 
  cleaning, heating, and performing preventive maintenance on the schools and for the schools'
  daily operation and maintenance of Bureau, grant, and contract school facilities for fiscal
  year 1997.  Schools may be operated by the Bureau or by tribal organizations under Public
  Law 93-638 contracts or Public Law 100-297 grants. 
  
  AUDIT OBJECTIVE AND SCOPE
  
  The objective of the audit is to determine whether the Bureau of Indian Affairs satisfactorily
  implemented recommendations made in our October 1992, August 1991, and June 1991
  reports on the management and maintenance of school facilities and whether any new
  recommendations are warranted.  The audit will cover the status of school facilities and
  construction as of the end of fiscal year 1997.
                               FACT SHEET
  
  
                 FIRE MANAGEMENT ACTIVITIES,
                   BUREAU OF INDIAN AFFAIRS
  
  
  TYPE OF AUDIT
  
  Performance - Bureauwide
  
  BACKGROUND
  
  The Bureau of Indian Affairs is responsible for protecting against wildfires by providing fire
  preparedness and fire suppression services on more than 50 million acres of Native American
  lands.  In carrying out these responsibilities, the Bureau cooperates with other Department
  of the Interior bureaus and Federal, state, and local fire agencies to share scarce resources and
  minimize costs.  Also, certain Indian tribes have arranged, through contract or compact, to
  perform the Bureau's fire management activities on their reservations.  The Bureau's  fire
  program funds  are allocated from appropriations to the Bureau of Land Management for the
  Department's wildland fire management program.
  
  The fire management program consists of nonemergency and emergency activities, which
  are accounted for separately.  Nonemergency fire preparedness costs represent the
  predictable aspects of the Department's fire management program, such as the basic 40-hour
  workweek payroll costs of  fire suppression, support personnel and facilities, and aircraft
  availability.  Emergency fire suppression costs include the unpredictable  aspects of the fire
  program, such as overtime and hazard pay, wages of direct-hire emergency fire fighter
  personnel, and emergency costs to repair damage caused by wildfires. For fiscal year 1996,
  the Bureau incurred costs of $26.1 million for fire preparedness and $22.7 million for fire
  operations.  For fiscal year 1997, the Bureau budgeted $26.8 million for fire preparedness
  and $23.7 million for fire operations.
  
  Funding requests for fire suppression activities are based on the average costs of the last
  10 years, with emergency contingency funds available when authorized by the President. 
  Funding requests for fire preparedness activities should be based on a process known as the
  Most Efficient Level, which represents the organizational structure, staffing, and funding
  level required to provide the most cost-effective fire program that also meets established fire
  suppression standards and land management objectives.  The process is also used by the
  U.S. Forest Service. 
  
  General criteria applicable to the Bureau's fire management activities are as follows:  (1) the
  National  Indian  Forest  Resources  Management  Act   of  1990  (25 U.S.C. 3101),  which 
  provides  the  Bureau  with  authority  for  fire  protection  and  suppression  on  Indian  trust
  lands;  (2)  the  Indian Self-Determination and Education Assistance Act of 1975 (Public
  Law 93-638), which authorizes the contracting of Departmental programs with Indian tribes;
  (3) the Tribal Self-Governance Act of 1994 (Public Law 103-413), which establishes a
  program known as tribal "self-governance" (which authorizes the compacting of
  Departmental  programs); and (4) Part 53 of the Bureau of Indian Affairs Manual, which
  defines the Bureau's fire management policies.
  
  AUDIT OBJECTIVE AND SCOPE
  
  The objective of the audit is to determine whether the Bureau of Indian Affairs: (1) was
  managing its wildland fire management activities in accordance with applicable laws,
  regulations,  and policies and (2) was properly using and accounting for emergency and
  nonemergency fire program funding.  The scope of the audit will include fire management-related
activities that occurred at selected area and agency offices during fiscal years 1996
  and 1997.
                               FACT SHEET
  
  
            INDIAN ACUTE DISTRESS DONATION PROGRAM
          ADMINISTERED BY THE BILLINGS AREA OFFICE,
                   BUREAU OF INDIAN AFFAIRS
  
  
  TYPE OF AUDIT
  
  Performance - multiple locations
  
  BACKGROUND
  
  Under an emergency feed program authorized by Section 407 of the Agricultural Act of 1949
  (7 U.S.C. 1427), the U.S. Department of Agriculture provides free feed grain for the
  maintenance of Indian-owned subsistence livestock on any reservation designated by the
  Secretary of Agriculture to be an acute distress area.  The Act defines an acute distress area
  as a location where the chronic economic distress of needy members of an Indian tribe is
  materially increased because of natural disaster, such as a flood, drought, or blizzard.  The
  Department of Agriculture and the Department of the Interior jointly administer the
  emergency feed program through the Indian Acute Distress Donation Program.  The
  Commodity Credit Corporation, on behalf of the Department of Agriculture, determines the
  kind of grain, the quantity of grain, and the period of time for which the grain will be donated
  and delivers the grain to a central distribution point.  The Bureau of Indian Affairs, for the
  Department of the Interior, is responsible for the distribution of donated grain to eligible
  Indian participants.
  
  Under the Program, feed grains are to be distributed only to Indian tribal members who do
  not have sufficient cash, credit, or other means to purchase the necessary feed to maintain
  their subsistence livestock.  To meet its responsibility under the Program, Bureau agency
  officials are to review and approve applications from individual livestock owners and notify
  grain elevators of the amounts of grain approved for each participant.  Operators of grain
  elevators issue grain to participants and provide reports to Bureau agency offices on the
  amounts issued.  Agency office officials are to monitor the performance of the grain
  elevators.
  
  No data were provided by the Bureau on the number of participants, the amount of grain
  distributed, or the estimated cost  because agency offices were not required to report Program
  information until the middle or last part of June 1997.  However, preliminary discussions
  with area office personnel indicate that Program costs will probably be less than $1 million.
  
  AUDIT OBJECTIVE AND SCOPE
  
  The objective of the audit is to determine whether the Bureau of Indian Affairs ensured that
  emergency grain provided through the Indian Acute Distress Donation Program was properly
  distributed to only individuals who were eligible for assistance.  The audit was requested by
  the Assistant Secretary for Indian Affairs.  The review will cover Program activities that
    occurred during fiscal year 1997.                          FACT SHEET
                               
                               
         FOLLOWUP OF THE HOUSING IMPROVEMENT PROGRAM,
                   BUREAU OF INDIAN AFFAIRS
                               
                               
                                TYPE OF AUDIT
  
  Followup - Bureauwide
  
  BACKGROUND
  
  According to the Bureau of Indian Affairs, the purpose of the Housing Improvement
  Program is to provide decent, safe, and sanitary housing for Indians who reside in Indian
  communities. The Bureau provides four categories of housing assistance to eligible Indians
  in the form of grants or contracted services: (1) up to $2,500 for improvements to houses that
  will remain substandard; (2) up to $20,000 for improvements to houses presently in
  substandard condition but which can economically be brought up to standard condition;
  (3) up to $5,000 or 10 percent of the purchase price of a house plus closing costs, whichever
  is less, to secure a loan to purchase a house; and (4) up to $45,000 for constructing a new
  house.  The Bureau considers the last two categories to be low priorities.  The Program
  requires housing funds to be distributed on the basis of biennial inventories of housing needs,
  with priority given to families that have the greatest need.
  
  The Bureau's fiscal year 1997 budget for housing was about $18.3 million, which consisted
  of $15.8 million for improvements to houses of Indian families, $150,000 for central office 
  program direction, and $2.3 million for area office services.  This program has 39 full-time
  equivalent positions for central office (2) and area office (37) operations, which is a decrease 
  from the 75 positions that existed in 1992.
  
  The Department reported in the Secretary's Annual Statement and Report to the President
  and the Congress for fiscal year 1994 that the Housing Improvement Program had material
  weaknesses.  This statement was based on the results of three prior Office of Inspector
  General audit reports.  As a result of the reported weaknesses, the Department selected the
  Housing Improvement Program as a "Reinvention Laboratory" under the National
  Performance Review. 
  
  
  
  
  
  
  AUDIT OBJECTIVE AND SCOPE
  
  The objective of the audit is to determine whether the Bureau of Indian Affairs satisfactorily
  implemented recommendations made in our prior audit reports and whether any new
  recommendations are warranted.  The audit will focus on Housing Improvement Program
    activities that occurred during fiscal year 1997.                           FACT SHEET
  
  
        PROCESSING AND MONITORING RIGHT-OF-WAY GRANTS,
                  BUREAU OF LAND MANAGEMENT
  
  
  TYPE OF AUDIT
  
  Performance - Bureauwide
  
  BACKGROUND
  
  Under the Federal Land Policy and Management Act of 1976 (43 U.S.C. 1701) and the
  Mineral Leasing Act of 1920, as amended (30 U.S.C. 185), the Bureau of Land Management
  issues right-of-way grants for the construction, operation, and maintenance of a wide range
  of projects on public lands, such as reservoirs and water transportation systems, petroleum
  pipelines, power lines, roads, and communication sites.
  
  The Code of Federal Regulations (43 CFR 2800) provides the Bureau's specific regulations
  for processing right-of-way applications and for administering right-of-way grants.  The
  regulations specifically limit the amount of land that may be included in a right-of-way grant
  to those lands which the authorized officer determines "will be occupied by the facilities
  authorized . . . [and] be necessary for the construction, operation, maintenance, and
  termination of the authorized facilities."  The regulations also describe the circumstances
  warranting termination of a right-of-way authorization, such as a grantee's failure to use the
  right-of-way for the authorized purpose for any continuous 5-year period.
  
  The Bureau estimates that, during fiscal year 1997, it will process 3,000 new or existing
  right-of-way applications and will issue 3,000 right-of-way grants.  The work involved in 
  a right-of-way grant includes responding to the application, including preliminary
  investigations, assessments, and appraisals; developing legal stipulations; issuing the grant
  and/or temporary use permit; and monitoring the authorized grant.  The Bureau also
  processes application amendments and withdrawals and relinquishments, assignments, and
  expirations of existing grants.  Finally, the Bureau performs postauthorization compliance
  and monitoring to ensure that the project authorized is constructed and operated in
  accordance with the terms and conditions of the authorization, including the laws, the
  regulations, and the granting document.
  
  
  
  
     AUDIT OBJECTIVE AND SCOPE
  
  The objective of the audit is to determine whether the Bureau of Land Management was
  processing right-of-way applications and monitoring right-of-way grants in accordance with
  applicable laws and regulations.  To accomplish this objective, we will review right-of-way
  applications and grants that were active during fiscal year 1997.
                              FACT SHEET
                               
                               
        MANAGEMENT OF THE DRAINAGE PROTECTION PROGRAM,
                  BUREAU OF LAND MANAGEMENT
                               
                               
                                TYPE OF AUDIT
  
  Performance - Bureauwide
  
  BACKGROUND
  
  Drainage is the gradual removal of oil or gas from beneath a specified property by a
  producing well on an adjoining property.  Oil and gas in subsurface reservoirs tend to flow
  to areas of reduced pressure that surround a producing well, thus enabling the oil and gas to
  be removed and drainage to occur.  The rule of capture established by court decisions
  protects the producer that removes oil and gas which has migrated across property lines from
  any liability as long as the well itself does not trespass.  Furthermore, the owner of a lease
  acquires title  to all oil and gas produced regardless of whether such oil and gas migrated
  from adjoining lands.
  
  The Bureau of Land Management is responsible for identifying and analyzing potential
  drainage situations on Federal and Indian lands. The Code of  Federal Regulations (43 CFR 
  3100.2-2) requires the lessee of Federal lands that are being drained either to drill a
  protective well or to pay compensatory royalties.  Compensatory royalties are payments
  made by a lessee to the Government as reimbursement for revenues lost because the lessee
  did not protect its lease from drainage.  The Code of Federal Regulations (25 CFR 227.23) 
  requires similar protection on Indian lands.  In addition, Federal and Indian oil and gas leases
  require that lessees protect their leases from drainage.
  
  During fiscal years 1992 through 1996, the Bureau intensified its efforts to identify and
  resolve drainage cases.  As a result of these efforts, the Bureau reported that it has eliminated
  the backlog from 25,000 to a level of about 3,000 potential drainage situations, which it
  considers to be a working inventory or maintenance level.  Funding and personnel in the
  program have decreased in the past several years.  In its fiscal year 1997 budget justification,
  the Bureau reported that it screens almost all of the onshore wells drilled in the United States
  to decide whether a potential drainage situation exists.  About 200 cases annually of the
  3,000 potential drainage situations are identified as potential drainage cases and are subjected
  to additional review.  Of those cases reviewed in detail, current statistics show that
  approximately 10 percent will result in actual drainage assessments. 
  
  
  
  AUDIT OBJECTIVE AND SCOPE
  
  The objective of the audit is to determine whether the Bureau of Land Management, in
  managing the drainage program, identified all potential drainage situations and required the
  lessees to drill wells or pay compensatory damages when drainage was identified.
                              FACT SHEET
                               
                               
              WILDLIFE AND FISHERIES MANAGEMENT
                      ON PUBLIC  LANDS,
                  BUREAU OF LAND MANAGEMENT
                                
  
  TYPE OF AUDIT
  
  Performance - Bureauwide
  
  BACKGROUND
  
  The Federal Land Policy and Management Act of 1976 identified fish and wildlife
  development and utilization as major uses of public lands; directed that the public lands be
  managed to provide food and habitat for fish and wildlife; authorized the use of Range
  Betterment funds for the protection, maintenance, rehabilitation, improvement, and
  management of wildlife habitat; and provided for the preparation and maintenance of an
  inventory of public land resources on a continuing basis.  
  
  Wildlife habitat management is a critical component in maintaining public land resources
  and ecosystems.  To help restore, maintain, and enhance wildlife habitat conditions, the
  Bureau of Land Management plans and performs wildlife habitat improvement projects.  For
  fiscal year 1997, the Bureau planned to complete about 450 projects, which involved about
  7,000 acres.  These projects are funded  either entirely through appropriated funds or through
  the Bureau's Challenge Cost Share Program under agreements with cooperating private
  entities.  For fiscal year 1997, the Bureau was providing $4.5 million for cost share projects,
  which will contribute to more than $10 million in habitat improvements.
  
  The  Bureau's  budget  justification  for  fiscal  year  1997  includes   a  request  of  about 
  $27 million for the wildlife and fisheries management activity. This amount consists of about
  $20 million, which includes funding for 278 employees, for the wildlife management
  subactivity and about $7 million, which includes funding for 67 employees, for the fisheries
  management subactivity.
  
  AUDIT OBJECTIVE AND SCOPE
  
  The objective of the audit is to determine whether the Bureau of Land Management 
  managed its Wildlife and Fisheries Management Program effectively and efficiently.
  Specifically, we will review the Bureau's selecting, funding, managing, and reporting
  processes for wildlife habitat projects.  The audit will review Bureau wildlife management
  actions that occurred during fiscal years 1996 through 1997.
  
                                  FACT SHEET
  
  
                    RANGELAND MANAGEMENT,
                  BUREAU OF LAND MANAGEMENT
                               
  
  TYPE OF AUDIT
  
  Performance - Bureauwide
  
  BACKGROUND
  
  The Bureau of Land Management's Rangeland Management Program involves managing
  rangeland ecosystems to ensure their health, natural diversity, and long-term productivity. 
  Rangeland management activities include  administering livestock grazing permits,
  supporting wildlife habitats, serving wild horse and burro needs, promoting watershed health,
  and maintaining and improving the condition of  rangelands to serve a variety of uses and
  values.  The Bureau of Land Management's rangelands contain 22,000 grazing allotments
  encompassing 165 million acres in the western states.  The Bureau authorizes about
  10 million animal unit months of livestock use annually to about 19,000 operators.  These
  operators graze about 3.7 million livestock (2 million cattle and 1.7 million sheep).  By 
  contrast, there are only about 42,000 wild horses and burros on Bureau lands.  In its budget
  for  fiscal year 1998, the Bureau requested $54.3 million, which would include funding for
  767 employees.
  
  The Taylor Grazing Act of 1934, as amended (43 U.S.C. 315) provides for the regulation of
  livestock grazing, improvement of the productive capacity of the public rangeland, and
  stabilization of the livestock industry.  The Federal Land Policy and Management Act of
  1976, as amended (43 U.S.C. 1701 to 1734), states that public land management should be
  "on the basis of multiple use and sustained yield unless otherwise specified by law." As
  stated in the Act, management of the public rangelands requires balancing the guiding
  principles of multiple use and sustained yield.  With the enactment of the Public Rangelands
  Improvement Act of 1978 (43 U.S.C. 1901 to 1908), the Congress recognized that vast
  segments of the public rangelands were in an unsatisfactory condition and would remain so
  or even decline under Bureau  management existing at that time.  The Act required that the
  condition of the rangelands be improved so that they could become as productive as feasible
  for all rangeland values, that equitable livestock grazing fees be assessed, and that wild
  horses and burros continue to be protected while excess wild horses and burros are removed.
  
  Although there is no consensus among stakeholders of public rangelands as to the extent of
  degradation of the Bureau's  rangelands, Bureau statistics reported that, as of 1995, at least
  49 percent of the Bureau's rangelands were in an unsatisfactory condition.  However,
  authorized livestock grazing  has been reduced only slightly  since a 1988 General
  Accounting Office report found that overgrazing was the most prevalent cause of declining
  range conditions.  Continuous overgrazing could seriously, even permanently, damage the
  land.   
  
  AUDIT OBJECTIVE AND SCOPE
  
  The objective of the audit is to determine whether the Bureau of Land Management has been
  effective in implementing land use decisions to improve rangeland conditions.  Specifically,
  we will determine whether: (1) the Bureau's practice of reducing animal unit months of
  grazing preference before reducing actual livestock numbers has resulted in continued
  overgrazing; (2) practices on improved grazing allotments could be applied to unsatisfactory
  allotments; (3) grazing permittees have increased livestock numbers in multiple-use areas
  after wild horses were removed; and (4) any rangelands should be closed to grazing.  The
  audit will review Bureau actions taken to improve the condition of the rangelands since
  1988.
  
                              FACT SHEET
                               
                               
                CULTURAL RESOURCES MANAGEMENT,
                  BUREAU OF LAND MANAGEMENT
                                
  
  TYPE OF AUDIT
  
  Performance - Bureauwide
  
  BACKGROUND
  
  The Bureau of Land Management manages one of the Federal Government's largest, most
  varied, and most scientifically important body of archeological and historical resources.  The
  Bureau  has inventoried more than 10 million of the 270 million acres of public lands in 11
  western states and Alaska.  More than 190,000 cultural properties have been discovered to
  date, and estimates of the total number of these properties range from 4 million to 5 million.
  The Bureau is responsible for protecting and preserving these properties, which consist of
  paleontological localities  and archaeological and historical sites. The Bureau is also
  responsible for protecting and preserving  any objects (museum property) derived from these
  areas. For the most part, these museum properties or collections consist of archeological,
  physical anthropological, historical, or paleontological objects that are required to be held
  in public trust in perpetuity.
  
  Over the past 185 years, the Bureau and its predecessor organization, the General Land
  Office, have  transported many of  the museum objects collected from public lands to
  hundreds of professional non-Federal repositories, including museums, universities, and
  historical societies. Under the Archeological Resources Protection Act (16 U.S.C. 470 a, 470
  cc, and 470 ee), the Antiquities Act (16 U.S.C. 432), and the National Historic Preservation
  Act (16 U.S.C. 470), Federal agencies are required to manage and preserve museum
  collections whether they are located in Federal or non-Federal repositories. Federal
  regulations also require agencies to inventory the museum collections derived from lands
  under their jurisdiction. To date, the Bureau has identified about 24 million museum objects
  for which it is responsible.  About 98 percent of these objects are housed in about 220 non-Federal
repositories, while the remaining objects are located in two Bureau-maintained
  facilities: the Anasazi Heritage Center in Colorado and the Billings Curation Center in
  Montana. Although  progress appears to have been made in inventorying these objects,
  inventory completion has reportedly been hampered because the  records for many
  collections assembled before  1975 were found to be incomplete or disorganized.
  
  
  
     AUDIT OBJECTIVE AND SCOPE
  
  The objective of the audit is to determine whether the Bureau of Land Management was
  effectively and efficiently managing its cultural properties and museum collections in
  accordance with applicable  laws, regulations, and policies.  The audit will include a review
  of selected Bureau cultural properties and collections on record by the end of fiscal year
    1997.                             FACT SHEET
  
  
                BIENNIAL AUDIT OF THE FEDERAL
                 ROYALTY MANAGEMENT SYSTEM, 
                 MINERALS MANAGEMENT SERVICE
  
  
  TYPE OF AUDIT
  
  Mandatory - Servicewide
  
  BACKGROUND
  
  The Federal Oil and Gas Royalty Management Act of 1982 requires the Inspector General
  to conduct a biennial audit of the Federal Royalty Management System and to report the
  results to the Congress and the Secretary of the Interior.  Six biennial reports have been
  issued.  This audit data sheet provides the framework for the biennial audit requirement for
  fiscal years 1996 and 1997.
  
  The Royalty Management System is composed of activities managed by the Minerals
  Management Service, the Bureau of Land Management, and the Bureau of Indian Affairs. 
  Most of the royalty management functions and responsibilities are assigned to the Royalty
  Management Program of the Minerals Management Service.  The overall mission of the
  Royalty Management Program is to ensure proper determination, collection, and distribution
  of bonuses, rents, and royalties from Federal and Indian lands in a manner that maximizes
  incentives for the efficient management, production, and use of oil, gas, coal, and other
  mineral resources consistent with public health and safety, environmental, and public land
  use requirements.  Additionally, the Minerals Management Service is responsible for
  monitoring production from offshore Federal leases located on the Outer Continental Shelf,
  whereas the Bureau of Land Management monitors production from onshore Federal and
  Indian leases.  Further, the Bureau of Indian Affairs distributes minerals revenues to
  individual Indians and tribes.
  
  AUDIT OBJECTIVE AND SCOPE
  
  The objective of the audit is to determine whether the Department of the Interior has
  complied with the Federal Oil and Gas Royalty Management Act of 1982.  The audit will
  cover Royalty Management System activities that occurred during the biennial period of
    fiscal years 1998 and 1999.                           FACT SHEET
  
  
          FOLLOWUP OF TRANSPORTATION AND PROCESSING
                    ALLOWANCE DEDUCTIONS,
                 MINERALS MANAGEMENT SERVICE
                               
  
  TYPE OF AUDIT
  
  Performance - Servicewide
  
  BACKGROUND
  
  The Code of Federal Regulations (30 CFR 206) allows royalty payors to deduct the costs of
  oil and gas transportation and gas processing from their royalty payments.  In our August
  1994 report "Transportation and Processing Allowance Deductions, Minerals Management
  Service" (No. 94-I-1110), we found that the Minerals Management Service had not ensured
  that royalty payors were deducting the proper amount of transportation and processing
  allowances.  Specifically, some allowance deductions exceeded the payors' reported costs
  or exceeded 100 percent of the royalty value.  Also, we found that other deductions 
  exceeded maximum allowable percentages without the Service's approval being obtained. 
  These  deficiencies occurred because  the Service did not adequately monitor the allowance
  deduction process.
  
  Since our August 1994 report, the Service has revised the regulatory requirements for
  allowance deductions.  The prior and current regulations state the following:
  
          - For March 1988 through January 1996, royalty payors were required to submit an
  annual allowance report for Federal and Indian leases to the Service before they deducted
  allowances from their  royalty payments.  Payors were also required to obtain approval from
  the Service prior to deducting an allowance that exceeded regulatory limits.  If the actual
  transportation or processing costs were later determined to be less than the original reported
  amounts, payors were required to submit revised allowance and royalty reports and to pay
  any additional royalties due.
  
     - Beginning in February 1996, the requirement for payors to submit an annual allowance
  report for Federal leases was discontinued.  However, payors still had to submit reports for
  Indian leases.  The Service still required payors to obtain approval for both Federal and
  Indian leases before they deducted an allowance that exceeded regulatory limits.
  
  AUDIT OBJECTIVE AND SCOPE
  
  The objective of the audit is to determine whether the Minerals Management Service
  satisfactorily implemented the recommendations made in our August 1994 audit report and
  whether any new recommendations are warranted.  We will also determine whether the
  Service has ensured that royalty payors have complied with the regulatory changes
  applicable to allowances that became effective in February 1996.  The audit scope will
  consist of transportation and processing allowances that were deducted from royalty
  payments since the regulatory changes.  The audit will be conducted as part of the biennial
  review of the Royalty Management System, as required by the Federal Oil and Gas Royalty
    Management Act of 1982.                           FACT SHEET
  
  
                 OIL ROYALTY IN KIND PROGRAM,
                 MINERALS MANAGEMENT SERVICE
  
  
  TYPE OF AUDIT
  
  Performance (economy and efficiency) - Servicewide
  
  BACKGROUND
  
  Under the authority of the Mineral Lands Leasing Act of 1920 and the Outer Continental
  Shelf Lands Act of 1953 and provisions of the Federal onshore and offshore leases, the
  Federal Government takes part of its royalty oil in kind and sells the oil to certain small
  refiners that do not have access to a secure supply of crude oil.
  
  The Minerals Management Service, which manages the overall royalty program,  collected
  $1.1 billion from royalty oil sold in the Oil Royalty in Kind Program during calendar years
  1986 to 1995.  In 1995, 14 participating refiners purchased 21.7 million barrels of royalty
  oil (valued at $363.1 million)  from about 580 Federal onshore and offshore leases. The total
  oil royalty in kind represented over 30 percent of  the nearly $1.2 billion in oil royalties paid
  to the Federal Government.  During 1996 and 1997, the number of participating refiners
  decreased; consequently, in June 1997, six refiners were purchasing royalty oil from 234
  (183 offshore and 51 onshore) Federal leases.
  
  To be eligible to purchase royalty oil, a refiner must qualify:  (1) as a small and independent
  refiner as defined in the Emergency Petroleum Act for Federal onshore oil or (2) as a small
  business enterprise under the rules of the Small Business Administration (13 CFR 121.3-9(a)(1))
for Federal offshore oil.  After determining eligibility, the Service determines
  whether the eligible refiners have access to adequate supplies of crude oil and at equitable
  prices.  Upon determining that they do not have this access, the Service may elect to take
  some or all of the royalty oil in kind for sale to the eligible refiners. Interested refiners are
  advised of the availability of royalty oil and the approximate volume of royalty oil available
  in the "Notice of Availability of  Royalty Oil," which is published in the "Federal Register"
  and other  media as appropriate.  An eligible refiner interested in purchasing a quantity of
  this royalty oil must submit a formal written request application (MMS-4070) to the Service. 
  When two or more refiners are interested in purchasing oil at one location, the oil is equally
  divided among them.  The last crude oil sale was in 1987 for onshore oil and 1994 for
  offshore oil.  The sales contracts are usually 3 years in term but may be extended (1987
  contracts have been extended several times).  The oil is sold to the refiners at a contract price
  that consists of the average posted price,  including associated transportation costs from
  offshore leases to the designated delivery points. 
  
  The oil royalty in kind volume is reported monthly by the payor (producer) on a royalty
  reporting and payment form (Form MMS-2014); however, no payment is required. Using
  the payor's reported oil royalty in kind volume, the Service bills the refiner (royalty oil
  purchaser) for the volume at the contract price. The refiner is also required to post a bond
  with the Service equal to 1 month's oil purchases.  
  
  In addition to the royalty billings, the Service bills the refiners for the Program's
  administrative costs.  The Program's administrative costs, consisting of direct and indirect
  costs, amount to over $1 million annually. As of June 1997, the Service was billing the
  refiners $183.91 per lease monthly (approximately $660,000 for 1997) for administrative
  fees.
  
  As of June 1997, the Service had three project groups that had ongoing studies of various
  aspects of the royalty in kind issue, such as the future of and/or how to improve the existing
  Oil Royalty in Kind Program.   
  
  AUDIT OBJECTIVE AND SCOPE
  
  The objective of the audit is to determine whether the Minerals Management Service 
  effectively   administered  its  Oil  Royalty in Kind Program.  Specifically, we will 
  determine whether:  (1) the oil  royalty  taken  in  kind  has  been  properly  valued  and 
  billed; (2) administrative costs have been properly identified and assessed to the participating
  refiners; (3) eligibility requirements  have  been   met  by   the  participating  refiners; and
  (4) refiner bonds have been adequate.   Our audit will include a review of the Program's
  refiner eligibility verification process, sales process, pricing method, refiner bonds,
  administrative costs, oil royalty in kind volume reporting process, transportation costs, and
  billing process for the royalty oil sold.  We will review royalty oil sold during fiscal years
  1996 and 1997 and other periods as appropriate.
  
                               FACT SHEET
  
  
                 ROYALTIES ON TAX CREDITS FOR
                    NONCONVENTIONAL FUELS,
                 MINERALS MANAGEMENT SERVICE
  
  
  TYPE OF AUDIT
  
  Performance - Servicewide
  
  BACKGROUND
  
  Nonconventional fuels include gas  produced from coal seams and tight geological
  formations.  The Congress provided a subsidy to encourage development of the
  nonconventional fuels.  The value of  the tax credit has been approximately equal to the
  selling price of gas in recent years.  In our August 1993 audit report (No. 93-I-1502) on tax
  credits for nonconventional fuels earned from gas produced on Federal and Indian leases, we
  stated that if the Service had required lessees to pay royalties on these tax credits, it could
  have collected additional revenues during 1989 through  1992 estimated at $74 million.   We 
  estimated   that    potential   additional  royalty  revenues  of  at  least $210 million would be
  available over the next 10 years through an aggressive collection program based on 
  production remaining at the 1992 level.  Further, because of expected increases in future gas
  production, the potential revenues have increased rapidly since 1993 and are expected to
  continue to increase rapidly through 2002, when the tax credit expires.
  
  In 1993, the Internal Revenue Service issued a revenue ruling which provided that owners
  of royalty interests are allowed an allocable share of the nonconventional fuels tax credit. 
  Also in 1993, as a result of our prior audit, the Minerals  Management Service obtained a
  Solicitor's opinion which stated that tax credits for nonconventional fuels were not part of
  gross proceeds and therefore were not royalty bearing.  In a November 1995 development,
  the State of New Mexico initiated a program to "monetize" (sell the rights to the tax credits
  to a third party) its royalty interest from nonconventional fuels from state leases by
  auctioning off the royalty interests.  This plan was approved by the Internal Revenue Service. 
  The Solicitor's opinion, that the tax credits are not royalty bearing, does not appear to be
  consistent with the revenue ruling and the New Mexico program to monetize the royalty
  interest.
  
     AUDIT OBJECTIVE AND SCOPE
  
  The objective of  the audit is to determine whether the Minerals Management Service
  initiated the  collection of royalties from monetized tax credits on nonconventional fuels. 
  If  not, we will determine the amount of potential revenues lost as a result of this decision. 
  If so,  we will determine whether the Service has a program to match production reported for
  royalty purposes with production reported for Federal income tax purposes and whether
  producers can be required, if no such program exists, to provide tax return information as a
  provision of their lease or by a rule making.  We will review the circumstances of the New
  Mexico program as they relate to the 1993 Solicitor's opinion and Service activities related
  to the production of nonconventional fuels that occurred during fiscal years 1993 through
  1997.
                               FACT SHEET
  
  
                   ADMINISTRATION OF STATE 
                     REGULATORY PROGRAMS,
                   OFFICE OF SURFACE MINING
                 RECLAMATION AND ENFORCEMENT
  
  
  TYPE OF AUDIT
  
  Performance - Officewide
  
  BACKGROUND
  
  Under the Surface Mining Control and Reclamation Act of 1977, 24 states currently have
  programs approved by the Secretary of the Interior to regulate coal mining activities.  The
  state programs are funded through grants issued by the Office of Surface Mining
  Reclamation and Enforcement and include the review and issuance of mining permits,
  inspection and enforcement, designation of lands unsuitable for mining, administration of
  bonding and bond release programs that ensure proper reclamation of land after mining, and
  administration of small operator assistance programs.  In addition, some states that are
  authorized to perform the regulatory functions on Federal lands within state boundaries also
  receive funding through cooperative agreements with the Office of Surface Mining. 
  
  In its fiscal year 1998 budget  justification,  the  Office  of  Surface   Mining   requested
  $50.2 million for regulatory program grants to 24 states that have approved permanent
  regulatory programs (primacy) and reported that, in fiscal year 1997, the Office of Surface
  Mining provided primacy states with regulatory program grant funding of $50.7 million.
  According to the Act, grants to states currently cannot exceed 50 percent of total annual state
  costs.  The budget justification also showed that the States of Illinois, Kentucky, Ohio,
  Pennsylvania, Virginia, and West Virginia should receive $36.7 million, or more than
  73 percent, of the total fiscal year 1998 Federal regulatory grant funding provided.
  
  AUDIT OBJECTIVE AND SCOPE
  
  The objective of the audit is to determine whether the Office of Surface Mining Reclamation
  and Enforcement administered the state regulatory grant programs efficiently and effectively 
  and in accordance with applicable regulations and whether the state regulatory programs
  were operated efficiently and effectively and in accordance with grant and cooperative
  agreements.  The audit was requested by Office of Surface Mining officials.  The scope of
  the audit includes a review of the program's activities that occurred during fiscal years 1996
  and 1997.
                                                           FACT SHEET
                                
  
             ADMINISTRATION OF STATE RECLAMATION 
                       GRANT PROGRAMS,
                   OFFICE OF SURFACE MINING
                 RECLAMATION AND ENFORCEMENT
  
  
  TYPE OF AUDIT
  
  Performance - Officewide
  
  BACKGROUND
  
  Under the Surface Mining Control and Reclamation Act of 1977, grants are provided to
  states and Indian tribes that have reclamation programs approved by the Office of Surface
  Mining Reclamation and Enforcement.  The grants are used to address problems such as
  underground fires, subsidence, landslides, open shafts, unstable or burning refuse piles, acid
  mine drainage, and highwalls.  Funding for the grants and for the cost of the Office of
  Surface Mining's related monitoring and technical assistance is derived from the Abandoned
  Mine Reclamation Fund, which consists primarily of monies obtained from reclamation fees
  paid by coal operators.
  
  In  its budget justification for fiscal year 1998, the Office of Surface Mining requested
  $142.3 million for reclamation program grants to 23 states and 3 Indian tribes.  The budget
  justification also showed that in fiscal year 1997, reclamation grant funding of
  $142.0 million was provided to states and tribes.  In support of its reclamation program, the
  Office of Surface Mining provides grants management, technical assistance, and
  management of emergency projects for states that do not have approved programs.
  
  AUDIT OBJECTIVE AND SCOPE
  
  The objective of the audit is to determine whether the Office of Surface Mining Reclamation
  and Enforcement administered its state reclamation grant programs efficiently and effectively
  and in accordance with applicable regulations and whether the state reclamation programs
  were operated efficiently and effectively and in accordance with grant agreements.  The audit
  was requested by Office of  Surface Mining officials.  The scope of the audit includes a
  review of the programs' activities that occurred during fiscal years 1996 and 1997. 
                              FACT SHEET
                               
                               
        ENVIRONMENTAL MITIGATION AND ENHANCEMENT COSTS
      ASSOCIATED WITH PREVIOUSLY CONSTRUCTED FACILITIES,
                    BUREAU OF RECLAMATION
                                
  
  TYPE OF AUDIT
  
  Performance - Bureauwide
  
  BACKGROUND
  
  Environmental mitigation and enhancement efforts on Bureau of Reclamation projects have
  increased over the years as awareness of the effects of projects on the  environment has also
  increased.  Although such efforts have been applied to projects as they were constructed, the
  Bureau has also applied these efforts to projects that were constructed before the current level
  of environmental awareness.  Generally, environmental mitigation involves  activities 
  required by law or regulation for project construction and/or operation.  Environmental
  enhancement involves activities that, while not required by law or regulation, benefit wildlife
  in and around project areas.  According to the Bureau's fiscal year 1997 budget justification,
  Bureau  programs have evolved from projects that  emphasized  irrigation and hydropower
  generation to projects that serve a range of other uses:  urban needs, Indian self-sufficiency,
  fish and wildlife protection, endangered species recovery, recreation,  and environmental
  restoration.  
  
  With increasing frequency, the operation and the maintenance of older Bureau  projects are 
  being changed to respond to environmental concerns and operating criteria that were not
  envisioned when the projects were constructed.  Such changes may be required by
  Reclamation law and instructions; Federal, state, or local environmental protection
  directives; or court orders.  This process can affect the computations of construction
  repayment and operation and  maintenance costs and have financial ramifications for the
  Government  and  project water and power beneficiaries.   Reclamation law and instructions,
  project authorizing legislation, and specific project repayment and operation and 
  maintenance contracts define how project costs are to be allocated and financed.  In the past,
  Reclamation law has provided that the environmental mitigation and enhancement costs were
  nonreimbursable, although some recent project legislation has required that the project water,
  power, and other beneficiaries bear a portion of these costs.  However, project water and
  power beneficiaries have taken the position that the Federal Government should absorb all
  environmental mitigation and enhancement costs as part of the nonreimbursable portion of
  repayment of operation and maintenance costs.  This view seemingly does not recognize that
  these mitigation efforts can also work to the benefit of the water and power beneficiaries by
  eliminating the need to reduce or divert a project deliverable, such as water, to ease the
  negative effects the project is having on fish and wildlife.  
  
  In addition, changes in project operation caused by increased environmental awareness have
  been accompanied by new perspectives of how previously planned project operation and
  maintenance activities may affect the project areas. This may lead to project beneficiaries'
  seeking changes in the original allocation/repayment agreements  to lower their repayment
  or operation and maintenance obligations.   For example, on the Columbia Basin Project, a
  number of retention reservoirs that  were developed to provide for a stable and adequate
  irrigation water supply for farmers have, over the years, become populated with fish and  are
  being used by birds and other wildlife.  However, even these wildlife benefits are
  coincidental, and no costs were actually incurred to provide them.  Project irrigators have
  reportedly been requesting the Bureau to allocate more of the repayment and/or operation
  and maintenance costs as nonreimbursable under the fish and wildlife mitigation function
  of the project.  
  
  Based on our review of the Bureau's fiscal year 1997 budget justification, we found that
  about $60 million in proposed budget authority was requested for environmental mitigation
  and/or enhancement activities at previously constructed facilities.  A portion of this amount
  was previously recognized as part of the overall project development plans produced during
  project construction, while other portions of this amount are related to environmental
  mitigation and/or enhancement efforts initiated after project construction.  However, these
  environmental mitigation costs are currently required by law or regulation and may provide
  some benefits to project water and power beneficiaries regardless of whether such costs were
  planned as part of project development plans or were added after the projects were 
  constructed. Thus, some or all of these costs should be eligible for cost recovery as part of
  the operating "overhead" of the projects either through repayment or through operation and
  maintenance assessments.  Although some of these costs (such as those funded by the
  Central Valley Project Restoration Fund) are partially financed by beneficiary surcharges and
  donations, many of these costs are borne by the Federal Government.  Recovering these costs
  from benefiting water and power recipients would be in consonance with the
  Governmentwide initiatives to recover costs from project beneficiaries and, in this regard, 
  would place the water and power users on the same level as private sector businesses, which
  are required to comply with current environmental requirements as they pertain to the
  businesses' older facilities.
  
  AUDIT OBJECTIVE AND SCOPE
  
  The objective of the audit is to determine whether Bureau of Reclamation policies and
  procedures for allocating and funding construction and annual operation and maintenance
  costs associated with the environmental mitigation and enhancement activities on previously
  constructed reclamation projects were adequate to protect the Federal Government's financial
  interests in the projects.  Specifically, we will determine the extent to which previously
  constructed facilities were incurring unanticipated environmental mitigation or enhancement
  costs and the amount of unanticipated environmental mitigation or enhancement costs borne
  by the Federal Government.  We will also determine how such costs could be collected from
  the projects' water, power, or other beneficiaries.  The scope of the review will be limited
  to those projects that were in operation 25 years or longer which have had costs incurred for
  construction or operation and maintenance activities associated with environmental
  mitigation or enhancement that occurred during the last 2 fiscal years.
                              FACT SHEET
                               
                               
              UTAH RECLAMATION MITIGATION AND
                 CONSERVATION COMMISSION, 
                   BUREAU OF RECLAMATION
                                
  
  TYPE OF AUDIT
  
  Performance - compliance
  
  BACKGROUND
  
  The Utah Reclamation Mitigation and Conservation Commission was authorized by Section
  301(a) of Title IV of the Reclamation and Adjustment Act of 1992 (Public Law 102-575) to
  coordinate implementation of the Act's required mitigation and conservation activities for
  the Central Utah Project among Federal and State of Utah fish, wildlife, and recreation
  agencies.  Section 301(f) of the Act states: 
  
  The Commission shall administer the mitigation and conservation funds
       available under this Act to conserve, mitigate, and enhance fish, wildlife, and
       recreation resources affected by the development and operation of Federal
       reclamation projects in the State of Utah.  
       
       Section 301(b)(2) of the Act also states, "The Commission shall expire twenty years from
  the end of the fiscal year during which the Secretary declares the Central Utah Project to be
  substantially complete."  Sections 401(b) and 402(d) of the Act specify that the Utah
  Division of Wildlife Resources, upon expiration of the Commission, will assume
  responsibilities for mitigation and conservation projects identified in the Act and for projects
  of the Colorado River Storage Project in the State of Utah.  Section 402 of the Act
  established the Utah Reclamation Mitigation and Conservation account in the U.S. Treasury
  and identified contributions from Federal, State, and Project beneficiaries to be deposited
  into the account.  Section 402 of the Act further specified that the Federal Government, the
  State of Utah, and the Central Utah Water Conservancy District (which represents Project
  beneficiaries) will contribute annually no less than $10 million, $3 million, and $750,000,
  respectively, until the year 2001 or until the Project is declared substantially complete.  The
  sources and uses of Commission funds for fiscal years 1994 and 1995, as derived from the
  unaudited amounts reported in the audit report on Commission management practices issued
  in June 1995, are detailed as follows:
  
        SOURCE1                           FY 1994            FY 1995            Totals     
        
  Department of the Interior            $9,850,000         $16,133,000          $25,983,000
  State of Utah                          3,000,000           3,000,000            6,000,000
  Department of Energy (Western
     Area Power Administration)2         5,000,000           5,135,000           10,135,000
  Central Utah Water Conservancy District2           750,000                        772,500           1,522,500
  Interest on Investments
   (Treasury Notes)3                       184,000             768,500              952,500
  
           Total                       $18,784,000         $25,809,000          $44,593,000
  
  
        USES
  
  Commission Administrative Expenses2     $392,000          $1,029,000           $1,421,000
  Transfers Required by P.L. 102-5754      145,500             334,000              479,500
  Available for Mitigation and
      Conservation Projects5             4,562,500          10,799,000           15,361,500
  Invested3                                       13,684,000                     13,647,000          27,331,000
  
        Total                          $18,784,000         $25,809,000          $44,593,000
  
  
  
  
  1Sources and uses of funds derived from unaudited amounts reported in the June 1995 audit report
on
  Commission management practices.
  
  2Sections 402(b)(3)(C) and 301(I)(2) of the Act state that the annual contributions and Commission
  administrative expenses "shall be increased proportionally on March 1 of each year by the same
percentage
  increase during the previous calendar year in the Consumer Price Index for urban consumers,
published by
  the Department of Labor."
  
  3Section 402 of the Act states, "All funds deposited as principal in the Account shall earn interest
in the
  amount determined by the Secretary of the Treasury on the basis of the current average market yield
on
  outstanding marketable obligations of the United States of comparable maturities."
  
  4Section 314 of the Act authorizes the transfer of 3 percent of the funds available for
implementation of
  mitigation and conservation projects to the Secretary of the Interior for use on projects outside the
State of
  Utah.
  
  5Amounts available for projects are supported by interagency agreements and contracts with
Federal, state,
  local, and nonprofit environmental organizations.  
  
  AUDIT OBJECTIVE AND SCOPE
  
  The objective of the audit is to determine whether the Utah Reclamation Mitigation and
  Conservation Commission received and expended Commission funds in compliance with
  applicable laws and regulations.  The scope of the audit will include receipt and expenditure
  activities that occurred during fiscal years 1996 and 1997.
  
  
  
                                                          FACT SHEET
                               
                               
               IDENTIFICATION AND DISPOSAL OF 
                   UNNEEDED ACQUIRED LANDS,
                    BUREAU OF RECLAMATION
                                
  
  TYPE OF AUDIT
  
  Performance - Bureauwide
  
  BACKGROUND
  
  The Reclamation Act of 1902 and subsequent statutes authorized the Bureau of Reclamation
  to construct, operate, and maintain an infrastructure of water storage and development
  facilities to reclaim arid and semiarid lands for agricultural uses in the West.  Bureau projects
  consist of  about 348 storage reservoirs, 150 diversion dams, and 54,500 miles of canals and
  other conveyance and distribution facilities.  The Bureau also manages about 8 million acres
  of land, consisting of 5.8 million acres of withdrawn public domain land and 2.2 million
  acres of acquired land obtained through purchase, condemnation, gift, or exchange.
  
  In the late 1980s, the Bureau concluded that it had largely achieved its mission as a
  developer of large, Federally funded water projects.  As a result, some of the projects the
  Bureau anticipated constructing will not be built, and in some cases, the lands acquired will
  not be needed for project purposes.  
  
  AUDIT OBJECTIVE AND SCOPE
  
  The objective of the audit is to determine whether the Bureau of Reclamation was conducting
  required reviews of the real property it manages to identify, report, and dispose of acquired
  lands no longer needed for project purposes in accordance with Bureau regulations and
  Reclamation law.  The audit will review Bureau activities pertaining to unneeded acquired
  lands that occurred during fiscal years 1994 through 1997.
                              FACT SHEET
                               
                               
                    FRANCHISE FEE PAYMENTS
  BY SELECTED CONCESSIONERS,  
                    BUREAU OF RECLAMATION
                                
  
  TYPE OF AUDIT
  
  Performance (economy and efficiency) - selected locations
  
  BACKGROUND
  
  The Bureau of Reclamation is responsible for overseeing or managing more than 300
  recreation areas established on Bureau water project lands throughout the western states. 
  Bureau water development projects are considered among the Nation's most valuable
  recreational resources, and about 80 million people visit these areas for camping, swimming,
  boating, picnicking, and other short-term recreational purposes.  Annual visitations for these
  purposes are expected to increase to more than 100 million by the year 2000.  Most
  concessioners operating on Bureau recreational lands are required to pay a franchise fee to
  the Government.  The fee, which varies according to the agreement reached with the
  individual concessioners, is usually based on a percentage of revenues generated by the
  concessioner's business.  Bureau regulations require concessioners that have annual gross
  receipts in excess of $500,000 to submit audited financial statements annually that are
  prepared in accordance with Bureau guidelines.  Concessioners that have annual gross
  revenues of less than $500,000 are not subject to audit requirements.  Approximately
  250 concessions are operated at Bureau projects in 17 western states. Of that number, about
  210 operations are administered by state and local governments, and 40 are managed directly
  by the Bureau.
  
  The Bureau's role in providing for outdoor recreational activities on water project lands is
  defined primarily by the Federal Water Project Recreation Act, dated July 9, 1965 (Public
  Law 89-72), as amended.  The Act directed the Bureau to consider outdoor recreation in
  investigating and planning Federal water projects, in addition to primary project purposes
  such as providing water for irrigation and municipal and industrial use and for generating
  hydroelectric power.  The Act also authorized and encouraged the Bureau to enter into 
  agreements with state and local governments for the management of recreation areas.  The
  Act was amended on October 30, 1992, by the Reclamation Recreation Management Act
  (Public Law 102-575, Title XVIII), which emphasized the Federal responsibility to provide
  opportunities for public recreation at Federal water projects.  
  
  In January 1997, the Bureau issued proposed policy, directives, and standards to manage
  concession activities.  The policy emphasized effective  business practices; provided for an
  equitable return to the Government; and protected the interests of the public while providing
  facilities that are safe, sanitary, and reasonably priced.  The policy is to affect new
  concession agreements and future sales and transfers administered directly by both the
  Bureau and its non-Federal partners (state and local governments).  
  
  AUDIT OBJECTIVE AND SCOPE
  
  The objective of the audit is to determine whether concessioners properly computed,
  reported, and paid franchise fees in accordance with provisions of  concession contracts.  The
  audit will not determine whether the services provided by concessioners to visitors were
  adequate and appropriate or the rates and prices charged for these services were reasonable. 
  This audit was requested by the Bureau.  The scope of the audit will include concession
  operations and activities that occurred during fiscal years 1996 and 1997, including contracts
  awarded and renewed from prior periods that affect current concession contracts.
                               FACT SHEET
  
  
        OVERHEAD COSTS OF COST-REIMBURSABLE PROJECTS,
                    U.S. GEOLOGICAL SURVEY
  
  TYPE OF AUDIT
  
  Financial - Surveywide
  
  BACKGROUND
  
  The U.S. Geological Survey performs surveys, investigations, and research covering
  topography, geology, mineral, biological, and water resources.  Funding is obtained through
  Congressional appropriations.  However, the Geological Survey also performs portions of
  this work on a cost-reimbursable basis, with funds provided by other Federal and non-Federal
agencies.  Customers are charged the direct project costs and assessed a percentage
  of the Geological Survey's indirect costs (overhead) not economically or conveniently
  charged directly to a specific program.  The basis used to allocate the indirect costs is total
  direct costs, which totaled about $1 million during fiscal year 1996.  We determined that
  overhead rates ranged from 12 to 47 percent among the Geological Survey's divisions for
  fiscal year 1996 and 1997.
  
  On January 27, 1997, the Geological Survey issued a new assessment system policy in its
  Survey Manual (revised on February 10, 1997), which described new policies,
  responsibilities, and procedures for the bureau assessment system.   The Geological Survey
  said that, during fiscal year 1997, it would:  (1) complete division assessment rate policy
  supplements; (2) develop implementing procedures for the assessment rates used by division
  and  regional/district offices; and (3) recalculate all the assessment rates.  The new  rates are
  to be in effect by October 1, 1997, for use during fiscal year 1998.  Bureau costs are to be
  prorated to the divisions and included in the division rate calculations.  Documentation to
  support divisional rate calculations and divisional cost center rate calculations for the
  National Mapping Division and the Biological Resources Division is maintained at the
  Geological Survey's National Center in Reston, Virginia.  Supporting documentation for
  assessment rate calculations of the cost centers for the Water Resources and the Geologic
  Divisions is supposed to be maintained by the district/regional offices.  About 90 rates may
  be established within the Geological Survey, its divisions, and its cost centers.
  
  
  
  
  
     AUDIT OBJECTIVE AND SCOPE
  
  The objective of the audit is to determine whether the U.S. Geological Survey accurately
  computed and distributed its overhead costs to cost-reimbursable projects through assessment
  rates.  The audit is being conducted as part of the financial statements audits required by the
    Chief Financial Officers Act of 1990.  
                          FACT SHEET
  
  
             GUAM ECONOMIC DEVELOPMENT AUTHORITY,
                      GOVERNMENT OF GUAM
  
  
  TYPE OF AUDIT
  
  Performance - economy and efficiency
  
  BACKGROUND
  
  The Guam Economic Development Authority was created as a public corporation in 1965
  through Title 12, Chapter 2, Section 2101, of the Guam Code Annotated to promote the
  economic development of Guam.  As such, the Development Authority is authorized to
  provide loans, issue revenue bonds, purchase mortgages, and recommend to the Governor
  of Guam businesses qualifying for tax rebates and abatements.  The Development Authority
  uses various trust funds to accomplish some of its programs.  Two significant programs used
  to stimulate the local economy have been the Qualifying Certificates Program and the Guam
  Economic Development Fund.  The Qualifying Certificates Program was started in 1965 to
  grant tax benefits to eligible businesses through the rebate of income taxes and the abatement
  of property  taxes.    The  Economic   Development  Fund was  established  initially  with
  $6.2 million of  Federal funds as a revolving loan fund for business development.  As of
  September 30, 1995, the Development Fund had total assets and liabilities of $13.3 million
  and $159,000, respectively.  The assets include $4 million in net loans, with a $2.5 million
  allowance for doubtful accounts, plus $8.7 million of investments.  During the same period,
  the Fund received about $2 million in revenues and, after operating expenses, had a net
  income of $1.5 million. In addition, in 1985, the Development Authority issued  housing
  bonds of $300 million, which were the subject of a 52-count Federal indictment against the
  bond underwriter.
  
  AUDIT OBJECTIVE AND SCOPE
  
  The objective of the audit is to determine whether the Guam Economic Development
  Authority was effective in: (1) issuing bonds and administering the Qualifying Certificates
  Program and the Economic Development Fund and (2) achieving the objectives for which
  the programs were established.  The audit is based partly on a request from a member of the
  Guam Legislature. The scope of the audit will include a review of bond issues, tax  rebates
  and abatements awarded, and loans issued during fiscal years 1996 and 1997 and other
    periods as appropriate.                           FACT SHEET
  
  
          CONSTRUCTION OF THE SOUTHERN HIGH SCHOOL,
                 DEPARTMENT OF PUBLIC WORKS,
                      GOVERNMENT OF GUAM
  
  
  TYPE OF AUDIT
  
  Performance - economy and efficiency
  
  BACKGROUND
  
  As part of an overall plan to construct seven schools, the Government  of Guam issued a
  $175 million school bond in September 1993.  One of the seven schools planned was the
  Southern High School, which was to be constructed in the Village of Santa Rita on land
  previously under the control of the U.S. Navy.  The design and specifications for the project
  raised concerns at the outset that the $76 million estimated cost was higher than expected and
  the planned facilities were more elaborate than needed.  Eventually, a construction contract
  was awarded in January 1994 for $72 million; however, the lowest bid of the eight bids
  initially submitted was $82 million.
  
  Construction started in February 1994 but was stopped in January 1995 because toxic wastes
  were identified on the construction site.  Work started again in March 1995, after the site was
  cleaned.  However, the cost of the cleanup and additional payments to the contractor cost the
  Government of Guam an additional $1.8 million.  The project was scheduled to be completed
  in August 1997.  Classroom facilities opened for the 1997 fall term; however, some
  supporting facilities, such as the fine arts center, the swimming pool, and athletic fields, were
  not completed.
  
  AUDIT OBJECTIVE AND SCOPE
  
  The objective of the audit is to determine whether: (1) the design and engineering of the
  Southern High School project were performed to efficiently and effectively utilize available
  resources; (2) the procurement of design, engineering, and construction management services
  and the construction contract was in compliance with applicable laws and regulations; and
  (3) the project was managed in an efficient and effective manner.  The scope of the audit will
  include the project's planning, design, and construction phases that occurred during fiscal
  years 1993 through 1997.
  
  
                          FACT SHEET
  
  
                 RURAL ECONOMIC AND COMMUNITY
                    DEVELOPMENT SERVICES,
               U.S. DEPARTMENT OF AGRICULTURE,
                     POHNPEI AREA OFFICE,
                FEDERATED STATES OF MICRONESIA
  
  
  TYPE OF AUDIT
  
  Performance - economy and efficiency (limited survey)
  
  BACKGROUND
  
  U.S. Public Law 99-239, the Compact of Free Association of 1985 between the Government
  of the United States and the Government of the Federated States of Micronesia, was
  approved on January 14, 1986.  As provided by the Compact, the United States and the
  Federated States agreed, through Section 105(h)(1)(C), to extend the Rural Economic and
  Community Development Services (formerly the Farmers Home Administration), an agency
  of the U.S. Department of Agriculture, to each of the four states in the Federated States.  The
  four area offices are operated by the U.S. Department of Agriculture and managed by a
  District Director located on Guam, who reports to the State Director in Hilo, Hawaii.
  
  The Pohnpei Area Office administers three housing repair loan programs as authorized by
  Section 504 of the U.S. Housing Act.  During 1997, the Area Office had four locally hired
  Federal employees, two employees paid by the national government, and seven employees
  paid by the Pohnpei State Government.  The national and state governments combined
  provide about $100,000 per year, primarily for salaries, for operation of the Area Office.  Of
  the four area offices, the Pohnpei Area Office administers the largest number of loans, about
  2,200 loans, with a total loan balance of about $5 million.  The  three  loan  programs are:
  (1) an unsecured housing repair loan of up to $2,500; (2) a secured housing repair loan of up
  to $7,500 if the homeowner does not have clear title and cannot obtain fire insurance; and
  (3) a secured housing repair loan of up to $15,000 if the homeowner has clear title and can
  obtain fire insurance.  Although other loan and grant programs may become available to
  Pohnpei residents, the Area Office does not offer these programs.
     AUDIT OBJECTIVE AND SCOPE
  
  The objective of the limited survey is to determine whether the Pohnpei Area Office
  complied with U.S. Department of Agriculture loan and loan administration procedures.  The
  survey is based on a request from the U.S. Ambassador to the Federated States of Micronesia
  and the former Public Auditor of the Federated States.  The scope of the survey will include
  Area Office operations and all loans issued and administered during fiscal year 1997 and
  other periods as appropriate.
                               FACT SHEET
  
  
              MARSHALL ISLANDS DEVELOPMENT BANK,
               REPUBLIC OF THE MARSHALL ISLANDS
  
  
  TYPE OF AUDIT
  
  Performance - economy and efficiency 
  
  BACKGROUND
  
  The Republic of the Marshall Islands established the Development Bank in March 1978. 
  The purpose of the Development Bank is: (1) to provide financial assistance to businesses
  by  making   loans,  guaranteeing  loans,  and  making   equity   investments   in   enterprises; 
  (2) to provide nonfinancial assistance by identifying investment opportunities, undertaking
  feasibility studies, and promoting the formation of new enterprises and expanding existing
  enterprises to enlarge the economic base of the country; (3) to manage or participate in the
  management, supervision, or conduct of business enterprises; and (4) to participate in 
  programs and services of the Government of the United States, such as the Rural Economic
  and Community Development Services (formerly the Farmers Home Administration) of the
  U.S. Department of Agriculture.
  
  The Development Bank is funded through contributions from the Marshall Islands
  government and through administration of Compact funds (Sections 111 and 211).  In fiscal
  year 1989, the Development Bank received Compact contributions of $4 million. 
  Additionally, in fiscal year 1989, the Marshall Islands government transferred over
  $6.1 million from the Compact Investment Development Fund to the Development Bank for
  operating funds.  In January 1992, the assets and liabilities of the Marshall Islands Housing
  Authority were transferred to the Development Bank.
  
  The Marshall Islands fiscal year 1995 single audit report showed that the Development Bank
  had net loans receivable of $6.2 million, interest income of $1.1 million, and a calendar year
  1994 operating loss of $1.1 million.  In addition, the single audit reported contributed  capital 
  of  $17.3  million  and  an  unreserved  retained  earnings  deficit  of  $8.3 million.
     AUDIT OBJECTIVE AND SCOPE
  
  The objective of the audit is to determine whether: (1) Compact Section 211(B) funds were
  used efficiently and effectively in accordance with the intent of the Compact and (2) loans 
  and interest receivable were properly accounted for and effectively collected.  The audit was
  based partly on a request from the U.S. Ambassador to the Republic of the Marshall Islands.
  The scope of the audit will include all loans issued and administered during fiscal years 1996
  and 1997 and other periods as appropriate.
                               FACT SHEET
  
  
               PALAU NATIONAL DEVELOPMENT BANK,
                      REPUBLIC OF PALAU
  
  
  TYPE OF AUDIT
  
  Performance - economy and efficiency 
  
  BACKGROUND
  
  The National Development Banking Corporation was established in February 1982 as a
  wholly owned government corporation to provide guaranteed loans and direct Economic
  Development Loan Fund financing for the development of industrial or commercial
  undertakings in the private sector of Palau.  Special emphasis is given to those ventures that
  involve developing new enterprises or import substitutes.  Palau Public Law 1-27 prohibits
  the Development Bank from operating as a commercial bank.  A five-member Board of
  Directors manages the Development Bank.  A president, appointed by the Board of Directors
  subject to approval by the President of  Palau, manages the day-to-day operations.  In
  addition, an August 3, 1996, local newspaper article stated that the Development Bank would
  be reorganized with new policies and procedures that incorporate all the new loan programs
  (no details included in the article) created in the last 2 years by the Board.
  
  The single audit report on the Republic of Palau for fiscal year 1995 stated that the
  Development Bank had: (1) net loans receivable of $2.7 million; (2) interest income of
  $346,000; and (3) a fiscal year 1995 operating loss of $37,000.  Reported deficiencies
  included instances in which: (1) the amount of the loan exceeded the maximum amount
  allowed; (2) there was no evidence of insurance on leasehold improvements; (3) there was
  no evidence of approval for incremental payments based on progress of construction plans
  or inspections; and (4) there was a longer payback period than that allowed by bank policy. 
  In addition, the single audit reported contributed capital of $1.1 million, including $850,000
  of Compact Section 211(B) funds. 
  
  AUDIT OBJECTIVE AND SCOPE
  
  The objective of the audit is to determine whether: (1) Compact Section 211(B) funds were
  used efficiently and effectively in accordance with the intent of the Compact and (2) loans
  and interest receivable were properly accounted for and effectively collected.  The scope of
  the audit will include Compact funds received by the Development Bank and all loans issued
  and administered during fiscal years 1995 through 1997 and other periods as appropriate. 
                               FACT SHEET
  
  
                         FOLLOWUP OF 
               PERSONNEL MANAGEMENT PRACTICES,
                    DIVISION OF PERSONNEL,
               GOVERNMENT OF THE VIRGIN ISLANDS
  
  
  TYPE OF AUDIT
  
  Performance - economy and efficiency
  
  BACKGROUND
  
  The Division of Personnel is responsible for administering the Personnel Merit System, a
  group health insurance program, and a training program for Government employees.  In
  accordance with Title 3, Chapter 25, of the Virgin Islands Code and the corresponding Virgin
  Islands Rules and Regulations, the Director of Personnel is required to establish and maintain
  a system of personnel administration based on merit principles and scientific methods
  governing the appointment, promotion, transfer, layoff, removal, and discipline of the
  officers and employees of the Government.  Title 3, Section 491, of the Code contains the
  requirements for the classification of positions as unclassified and classified service.  Act 
  No. 6007, the Early Retirement Incentive, Training and Promotion Act of 1994 was approved
  on August 16, 1994, to reduce the deficit of the Government of the Virgin Islands through
  an early retirement incentive program for Government employees.
  
  AUDIT OBJECTIVE AND SCOPE
  
  The objective of the audit is to determine whether: (1)  the Legislature and the  Government
  of the Virgin Islands satisfactorily implemented recommendations made in our 1992 audit
  report on the Division of Personnel's operations and whether any new recommendations are
  warranted and  (2) the Early Retirement Incentive Act was effective in decreasing the number
  of Government employees.  The audit was requested by the President of the Virgin Islands
  Legislature.  The scope of the audit will include a review of Division of Personnel records
  for fiscal years 1996 and 1997, including: (1) a review of the actions taken on the six
  recommendations made in our 1992  report and (2) the effect the Early Retirement Incentive
  Act had on the number of Government employees.
                               FACT SHEET
  
  
           GOVERNMENT EMPLOYEES RETIREMENT SYSTEM,
               GOVERNMENT OF THE VIRGIN ISLANDS
  
  
  TYPE OF AUDIT
   
  Performance - economy and efficiency
  
  BACKGROUND
  
  The Government Employees Retirement System was established in October 1959 to
  administer the employee pension plan of the Government of the Virgin Islands.  The System
  provides for retirement, disability, and death benefits.  The Government's required
  contribution is 14.5 percent of the members' annual salaries, and the members' required
  contributions are 8 percent of annual salary for regular employees, 9 percent for senators, and
  10 percent for employees in certain high risk jobs as provided for by Act No. 5226 of the
  Legislature of the Virgin Islands.
  
  By law, the Virgin Islands Commissioner of Finance is the Treasurer of the System and
  therefore is responsible for all treasury functions of the Retirement System.  The Department
  of Finance established a separate bank account for the System in August 1994. However, the
  System has not been able to obtain adequate records to reconcile and verify the bank balance
  with the System's books and records.  As of fiscal year 1995, the Department of Finance had
  not provided confirmation of the balance of cash on deposit.  At the end of fiscal year 1994,
  the Department of Finance reported that the System's bank account had a cash balance of
  about $55 million.  As of the end of fiscal year 1995, the System also had investments valued
  at $659 million and outstanding mortgage, auto, and personal loans to members totaling
  about $92 million.
    
  According to a mandated consent judgment of the U.S. District Court, the Department of
  Finance is required to deposit employer and employee contributions and all other receipts
  into the System's bank account within 21 days of the end of the payroll period for which the
  contributions and receipts are collected.  However, as of the end of fiscal year 1995, the
  Department of Finance owed the System $27 million.  Of that amount, $24.2 million was
  past due beyond the 21-day period allowed by the consent judgment.  In addition, the
  judgment required interest to be accrued and paid into the System's bank account on amounts
  held by the Government  and due the  System from October 1, 1993.  However, the System's
  audited financial statements for fiscal year 1995 reported that, as of June 1996, this amount
  had not been determined and agreed upon between the System and the Government in order
  for such interest to be accrued and paid to the System.
  
     AUDIT OBJECTIVE AND SCOPE
  
  The objective of the audit is to determine whether:  (1) the Government of the Virgin Islands
  was making timely deposits of employer and employee contributions into the Retirement
  System in  accordance  with the  consent  judgment  issued  by the U.S. District Court and
  (2) interest receivable from the Government was properly accounted for and collected. The
  audit will also follow up on recommendations made in our 1991 audit report (No. 91-I-1431)
  of the Retirement System with regard to the management of mortgages and other loans to
  members.  The audit was  requested by the President of the Virgin Islands Legislature.  The
  scope of the audit will include Retirement System transactions that occurred during fiscal
  years 1996 and 1997 and policies and procedures in effect at the time of the audit.
  
                               FACT SHEET
  
  
                POTABLE WATER SERVICE CHARGES,
          VIRGIN ISLANDS WATER AND POWER AUTHORITY,
               GOVERNMENT OF THE VIRGIN ISLANDS
  
  
  TYPE OF AUDIT
  
  Performance - economy and efficiency
  
  BACKGROUND
  
  The Virgin Islands Water and Power Authority assumed responsibility for the distribution
  of potable water in 1988 under the authority of Title 30, Section 104, of the Virgin Islands
  Code.  Before that transfer, production of potable water was performed by the Authority, and
  distribution was handled by the Department of Public Works.  The Authority's latest
  financial  statements  indicated  that  potable  water  service  charges  generated  revenues 
  of  $25.9 million during fiscal year 1995 and $26.6 million during fiscal year 1996.  Despite
  the large amount of total revenues, the Authority's potable water system had an operating
  income of only $475,703 in fiscal year 1995.  Operating income increased to $3.2 million
  in fiscal year 1996, primarily because of a $2 million decrease in operating expenses.  The
  largest consumer of potable water is the Government of the Virgin Islands, with potable
  water revenues from that source totaling $13 million and $13.7 million during fiscal years
  1995 and 1996, respectively.  In addition, accounts receivable from Governmental agencies
  totaled $3.4 million and $6.7  million during fiscal years 1995 and 1996, respectively.   Total
  accounts receivable increased from $7.2 million in fiscal year 1995 to $11.5 million in fiscal
  year 1996.
  
  AUDIT OBJECTIVE AND SCOPE
  
  The objective of the audit is to determine whether the Water and Power Authority: (1) issued
  bills for potable water service in a timely manner; (2) maintained accurate accounts
  receivable records for delinquent potable water service charges; and (3) effectively enforced
  collection of amounts owed.  The scope of the audit will include transactions relating to
  potable water service that occurred during fiscal years 1996 and 1997 and policies and
  procedures in effect at the time of the audit.