[Semiannual Report to the Congress: April 1, 1997 - September 1997]
[From the U.S. Government Printing Office, www.gpo.gov]

Report No. 10-S-97

Title: Semiannual Report to the Congress: April 1, 1997 - September
       1997

Date: November 26, 1997


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A printed copy of this report may be obtained by referring to the PDF file or by calling the Office
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                       MESSAGE FROM  THE 
                       INSPECTOR GENERAL



When I became the Inspector General
approximately 2 1/2 years ago, one of my
goals was to introduce an element of
"proactivity" into our traditionally reactive
approach to the performance of our
mission.  An organization such as ours,
whose statutory mission includes not only
detection but also prevention of fraud,
waste, and abuse, and which is also
charged with promoting economy,
efficiency, and effectiveness in
Government operations, cannot, in my
view, simply sit and wait for things to
happen and react to those things, but must
take affirmative steps to make things
happen.  Therein, I believe, lies the
essence of being an agent of, or a catalyst
for, positive change.   

I am pleased to report that several
accomplishments from this new era of
"proactivity" now exist.  For example, our
"Fraud Awareness" outreach presentations
have reached several thousand Department
of the Interior employees and have earned
the distinction of being requested by
individual bureaus and offices within the
Department from one coast of the United
States to the other.  These presentations,
which focus on letting Department
employees know who we are and what we
are about, have helped to sensitize
program personnel to indicia of fraud and
to enlist their support and assistance in the
fight against fraud.  The already increasing
referrals to the Office of Inspector General
(OIG) demonstrate that the "shared
commitment" that we seek to foster within
the Department will prove to be a powerful
force in helping to improve program
operations at the Department of the
Interior.

Similarly, our Affirmative Civil
Enforcement (ACE) program, in which
civil actions are used as an adjunct to
criminal enforcement, has resulted in
several new proactive initiatives, including
in the areas of underpayment of royalties,
coal reclamation fees, Outer Continental
Shelf Lands Act violations, the
Government purchase card program, and
workers' compensation fraud.  These
initiatives already have started to bear fruit
in the form of civil recoveries.  We believe
that continued law enforcement in these
areas will also have an important deterrent
effect.
 
On the audit side, our proactive efforts are
continuing to blossom with tangible
benefits to the Department and insular area
governments.  These activities are
beginning to cover a broader scope of
operations, as we are asked with increasing
frequency to lend our expertise in a variety
of areas.  From financial accounting and
management, to pilot programs, to
Government reinvention and task force
efforts, the OIG's presence is clearly being
sought and felt.  Our newly established
Evaluations and Special Projects unit will
provide added capability and flexibility to
address these types of proactive and other
activities.

 Our proactive activities in both the audit
and investigative areas demonstrate that
we are indeed attempting, with notable
success, to make positive things happen
within the Department of the Interior.  We
are committed to continuing our efforts,
through both our proactive and other
activities, to contribute to the improvement
of Government operations.



     
          Wilma A. Lewis
          Inspector General  Subject: Semiannual Report to the Congress: April 1, 1997 - September 1997 (No. 10-S-97)


                            CONTENTS


                                                           Page

Statistical Highlights . . . . . . . . . . . . . . . . . . . . .v
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . .1
   Department Profile. . . . . . . . . . . . . . . . . . . . . .1
   OIG Organization. . . . . . . . . . . . . . . . . . . . . . .2
Audit Activity . . . . . . . . . . . . . . . . . . . . . . . . .4
Investigative Matters. . . . . . . . . . . . . . . . . . . . . .6
Legislative Review . . . . . . . . . . . . . . . . . . . . . . .8
Significant Audits and Investigations. . . . . . . . . . . . . .9
   Financial Statement Audits. . . . . . . . . . . . . . . . .  9
   Bureau of Indian Affairs. . . . . . . . . . . . . . . . . . 11
   Bureau of Land Management . . . . . . . . . . . . . . . . . 15
   Bureau of Reclamation . . . . . . . . . . . . . . . . . . . 17
   Insular Areas . . . . . . . . . . . . . . . . . . . . . . . 18
   Minerals Management Service . . . . . . . . . . . . . . . . 20
   Multi-Office. . . . . . . . . . . . . . . . . . . . . . . . 20
   National Biological Service . . . . . . . . . . . . . . . . 22
   National Park Service . . . . . . . . . . . . . . . . . . . 22
   Office of the Secretary . . . . . . . . . . . . . . . . . . 24
   Office of the Special Trustee for American Indians. . . . . 24
   Office of Surface Mining Reclamation and Enforcement. . . . 26
   U.S. Fish and Wildlife Service. . . . . . . . . . . . . . . 26
   U.S. Geological Survey. . . . . . . . . . . . . . . . . . . 28
   
Appendices

1 - Summary of Audit Activities From April 1, 1997, Through September 30, 199729
2 - Audit Reports Issued or Processed and Indirect Cost Proposals Negotiated
      During the 6-Month Period Ended September 30, 1997 . . . 30
      - Internal Audits. . . . . . . . . . . . . . . . . . . . 30
      - Contract and Grant Audits. . . . . . . . . . . . . . . 32
      - Single Audits. . . . . . . . . . . . . . . . . . . . . 34
      - Indirect Cost Proposals. . . . . . . . . . . . . . . . 49
3 - Monetary Impact of Audit Activities From April 1, 1997, Through September 30, 199758
4 - Non-Federal Funding Included in Monetary Impact of Audit Activities 
     During the 6-Month Period Ended September 30, 1997. . . . 59
5 - Audit Resolution Activities. . . . . . . . . . . . . . . . 60
      - Table I - Inspector General Audit Reports With Questioned Costs60
      - Table II - Inspector General Audit Reports With Recommendations That    
         Funds Be Put To Better Use. . . . . . . . . . . . . . 61
      - Table III - Inspector General Audit Reports With Lost or Potential Additional Revenues62
6 - Summary of Audit Reports Over 6 Months Old Pending Management Decisions63
      - Internal Audits. . . . . . . . . . . . . . . . . . . . 63
      - Contract and Grant Audits. . . . . . . . . . . . . . . 65
      - Single Audits. . . . . . . . . . . . . . . . . . . . . 66
7 - Summary of Internal Audit Reports Over 6 Months Old Pending Corrective Action69
8 - Statutory and Administrative Responsibilities. . . . . . . 73
9 - Cross-References to the Inspector General Act. . . . . . . 75



                                
                    STATISTICAL HIGHLIGHTS 






Audit Activities
   Audit Reports Issued or Processed . . . . . . . . . . . . .441
     - Internal Audits . . . . . . . . . . . . 35                
     - Contract and Grant Audits . . . . . . . 23                
     - Single Audits . . . . . . . . . . . .  383                
    Indirect Cost Proposals Negotiated . . . . . . . . . . . .179

Impact of Audit Activities - (Dollar Amounts in Millions)
    Total Monetary Impact. . . . . . . . . . . . . . . . . .$27.9
     - Questioned Costs. . . . . . . . . . .$4.0                 
     - Recommendations That Funds Be Put To Better Use$23.4                 
     - Lost or Potential Additional Revenues $.5                 
    Internal Audit Recommendations Made. . . . . . . . . . . .146
    Internal Audit Recommendations Resolved. . . . . . . . . . 41

Investigative Activities 
   Total Reports Issued. . . . . . . . . . . . . . . . . . . .117
    Cases Closed . . . . . . . . . . . . . . . . . . . . . . .141
    Cases Opened . . . . . . . . . . . . . . . . . . . . . . . 55
    Cases Pending. . . . . . . . . . . . . . . . . . . . . . .443
    Hotline Complaints Received. . . . . . . . . . . . . . . . 66
    Hotline Complaint Matters Opened . . . . . . . . . . . . . .0
    Hotline Complaint Matters  Closed. . . . . . . . . . . . . .7
    Hotline Complaint Matters Pending. . . . . . . . . . . . . 66
    General Information Matters Received . . . . . . . . . . .150

Impact of Investigative Activities
    Indictments/Informations . . . . . . . . . . . . . . . . . 20
    Convictions. . . . . . . . . . . . . . . . . . . . . . . . 23
    Sentencings. . . . . . . . . . . . . . . . . . . . . . . . 25
     - Jail. . . . . . . . . . . . . . . . . . . . . . .77 months
     - Probation . . . . . . . . . . . . . . . . . . . 974 months
     - Community Service . . . . . . . . . . . . . . . 1740 hours
     - Criminal Judgments/Restitutions . . . . . . . . .$282, 247
    Cases Pending Prosecutive Action as of April 1, 1997 . . .148
    Cases Referred for Prosecution This Period . . . . . . . . 20
    Cases Declined . . . . . . . . . . . . . . . . . . . . . . .9
    Cases Pending Prosecutive Action as of September 30, 1997.132
    Administrative Actions . . . . . . . . . . . . . . . . . . 32
    Civil Referrals. . . . . . . . . . . . . . . . . . . . . . .9
    Civil Declinations . . . . . . . . . . . . . . . . . . . . .0
    Civil Judgments (3). . . . . . . . . . . . . . . . . $314,451
    Cases Pending Civil Action as of September 30, 1997. . . . 41


 Administrative Actions Taken by Bureaus
    Matters Referred for Administrative Action . . . . . . . . 56
    Removals/Resignations. . . . . . . . . . . . . . . . . . . .5
    Employee Suspensions (Totaling 16 days). . . . . . . . . . .3
    Downgrades . . . . . . . . . . . . . . . . . . . . . . . . .2
    Reprimands/Counseling. . . . . . . . . . . . . . . . . . . 10
    Reassignments/Transfers. . . . . . . . . . . . . . . . . . .1
    Other Personnel Actions. . . . . . . . . . . . . . . . . . .1
    Restitutions (Totaling $5, 221). . . . . . . . . . . . . . .3
    General Policy Actions . . . . . . . . . . . . . . . . . . .3
    Contractor Debarments. . . . . . . . . . . . . . . . . . . .4
    


                                
                          INTRODUCTION





Department Profile

The Congress created the Department of
the Interior (DOI) on March 3, 1849, to
manage the Nation's internal affairs.  As the
Nation's principal conservation agency, DOI
has responsibility for most of our nationally
owned public lands and natural resources. 
This includes fostering the use of our land and
water resources; protecting our fish, wildlife,
and biological diversity; preserving the
environmental and cultural values of our
national parks and historic places; and
providing for the enjoyment of life through
outdoor recreation.  DOI assesses our mineral
resources and works to ensure that their
development is in the best interests of all our
people by encouraging stewardship and citizen
participation in the care of these resources.  

DOI  has  about 70,000  employees,  spends 
about  $9 billion  a  year,  collects revenues of
about $6 billion a year, and is geographically
dispersed to over 2,000 locations.  The
jurisdiction of DOI includes: 

Administration of over 500 million acres of
Federal land and trust responsibilities for
approximately 50 million acres of land, mostly
Indian reservations;

Conservation and development of mineral and
water resources;

Conservation, development, and utilization of
fish and wildlife resources;

Management of Federal recreation programs;

Preservation and administration of the
Nation's scenic and historic areas;

Operation of Job Corps Conservation Centers
and Youth Conservation Corps Camps and
coordination of other manpower and youth
training programs;

Reclamation of arid lands in the West through
irrigation; and 

Management of hydroelectric power systems.

DOI is also concerned with the social and
economic development of the insular areas
and administers programs providing services
to Indians and Alaska Natives.
  OIG Organization

To cover DOI's many and varied
activities, the Office of Inspector General
(OIG) has a budget of $24 million and has 251
full-time employees.  Employees are under the
direction of the Assistant Inspectors General
for Audits, Investigations, and Management
and Policy and are assigned to the
headquarters office in Washington, D.C., and
field offices in:

Agana, Guam; Rapid City, South Dakota;
Albuquerque, New Mexico; Sacramento,
California; Arlington, Virginia; St. Paul,
Minnesota; Billings, Montana; St. Thomas,
U.S. Virgin Islands; Lakewood, Colorado;
Tulsa, Oklahoma; and Phoenix, Arizona.

OIG provides policy direction for and
conducts, supervises, and coordinates  audits,
investigations, and other activities in DOI to
promote economy, efficiency, and
effectiveness and to prevent and detect fraud,
waste, abuse, and mismanagement.  The
Inspector General is DOI's focal point for
independent and objective reviews of the
integrity of DOI operations and is the central
authority concerned with the quality,
coverage, and coordination of the audit and
investigative services between DOI and other
Federal, state, and local governmental
agencies.  The Inspector General reports
directly to the Secretary of the Interior on
these matters and is required to keep the
Secretary and the Congress fully and currently
informed about problems and deficiencies
relating to the administration of DOI programs
and operations and the necessity for corrective
actions.


In addition to the Inspector General's
requirement for semiannual reporting to the
Secretary of the Interior and the Congress in
accordance with the Inspector General Act of
1978 (Public Law 95-452), as amended,
OIG's mission encompasses a wide array of
statutory and administrative audit and
investigative responsibilities.  These
responsibilities include OIG's review of
various programs and activities within DOI in
accordance with numerous public laws, Office
of Management and Budget (OMB) circulars,
and criminal and civil investigative authorities
(see Appendix 8).  The semiannual reporting
requirements of the Inspector General Act are
cross-referenced to applicable portions of this
report in Appendix 9.

In the insular areas of Guam, American
Samoa, the U.S. Virgin Islands, and the
Commonwealth of the Northern Mariana
Islands, OIG is responsible for 
"establishing an organization which will
maintain a satisfactory level of independent
audit oversight" for these insular areas, in
accordance with the Insular Areas Act of 1982
(48 U.S.C. 1422).  OIG has additional audit
responsibilities in the  Federated States of
Micronesia, the Republic of the Marshall
Islands, and the Republic of Palau pursuant to
the Compact of Free Association Act of 1985
(Public Law 99-239).  OIG's organizational
chart is included on the following page.
   


                         AUDIT ACTIVITY




Summary of Audit
Results

OIG auditors issued or processed 441
audit reports during the 6-month period
ended September 30, 1997.  Appendix 1
summarizes audit activities, and Appendix 2
lists the audit reports issued or processed and
the 179 indirect cost proposals negotiated. 
Monetary findings in the audit reports and
indirect cost proposals totaled $27.9 million,
which was composed of questioned costs,
funds to be put to better use, and lost or
potential additional revenues, as summarized
in Appendix 3.  Appendix 4 identifies the non-Federal funds (from audits of insular area
governments) included in the monetary impact
of audit activities.  During this 6-month
period, OIG resolved $107.1 million of
monetary findings from prior and current
reporting periods.  Appendix 5 provides
summary information on the resolution of the
monetary impact, Appendix 6 provides a
listing of audit reports over 6 months old
pending management decisions on
recommendations and/or monetary impact,
and Appendix 7 provides a summary of
resolved internal audits over 6 months old
pending final action by management
(implementation) on recommendations and on
monetary impacts.

Inspector General Establishes
Evaluations and Special Projects Unit

The Inspector General Act, as amended,
requires the Inspector General to
establish audit and investigation organizations
and authorizes the Inspector General "to make
such investigations and reports relating to the
administration of the programs and operations
of the applicable establishment as are, in the
judgement of the Inspector General, necessary
or desirable."    Consistent with this authority,
during this semiannual reporting period, OIG
established an Evaluations and Special
Projects (ESP) unit within the Office of the
Assistant Inspector General for Audits.  The
ESP unit will assist in meeting OIG mission
and strategic objectives by providing proactive
independent and objective evaluations of the
economy, efficiency, and effectiveness of the
programs and operations of DOI.  The
President's Council on Integrity and
Efficency's "Quality Standards for
Inspections" defines an inspection
(evaluation) as "a process, other than an audit
or an investigation, that is aimed at evaluating,
reviewing, studying, and/or analyzing the
programs and activities of a Department or
Agency for the purpose of providing
information to managers for decision making,
for making recommendations for
improvements to programs, policies or
procedures, and for administrative action."  

The ESP unit will also provide increased
capability and flexibility for OIG to provide
more timely coverage of unplanned requests
for OIG assistance, of which we receive
several during any given year.  Furthermore,
the establishment of the ESP unit is consistent
with a number of Office of Inspectors General
at cabinet-level departments and agencies that
already have such a unit, as well as the
National Performance Review's suggestion
that the focus of Inspectors General should be
broadened to include evaluating and
improving management control systems to
prevent fraud, waste, abuse, and
mismanagement.  






  


                     INVESTIGATIVE MATTERS




During the past 6 months, the Office of
Investigations has conducted
investigations that have resulted in 20
indictments/informations, 23 convictions, and
financial recoveries of $282,247 in criminal
judgments/restitutions and $314,451 in civil
judgments.

Update on Proactive
Initiatives

In our last Semiannual Report, we reported
that OIG was pursuing a series of proactive
initiatives in several areas, including the
underpayment of coal reclamation fees,
Government purchase card fraud, and
workers' compensation fraud.  During the 6-month period ended 
September 30, 1997, these initiatives began to
show results in terms of successful
prosecutions in these areas.  (Details are
presented in this report.)  

We continue to pursue proactive initiatives
designed to further our fraud awareness,
prevention, detection, and suppression efforts. 
Examples of these initiatives are as follows:

 Environmental Initiative

We have been participating in an
Environmental Crimes Working
Group formed by the Attorney General's
Office of the State of Oklahoma, which has
conducted inspections of oil production sites
in various counties in Oklahoma.  In addition
to OIG, other members of this working group
include the Federal Bureau of Investigation
(FBI), the U.S. Environmental Protection
Agency's OIG, the Defense Criminal
Investigative Service, U.S. Fish and Wildlife
Service (FWS) and Bureau of Land
Management (BLM) law enforcement, and
cognizant State of Oklahoma agencies.  The
inspections, organized by FWS, involved the
physical inspection of oil sites to identify
possible violations of the Migratory Bird
Treaty Act and other environmental laws.  The
inspections identified 291 oil production sites
that had problems ranging from improperly
maintained sites to sites where actual
violations of environmental laws had
occurred.

 Joint Initiatives With DOI 
Agencies To Achieve Savings
in DOI Programs

An OIG investigation determined that a
$1.95 million economic development
loan to a company to assist a Midwestern
Indian tribe was fraudulent.  The Bureau of
Indian Affairs (BIA) had guaranteed 90
percent of the loan amount, or $1,755,000.  As
a result of the OIG investigation, BIA learned
that the funds had been used to pay unrelated
debts of the company and that the loan had
been obtained by fraudulent means. 
Therefore, BIA refused to honor the loan
guarantee made to the lender, which resulted
in a savings of $1,755,000 to the BIA Loan
Guarantee Program.

Joint Audits-Investigative Initiatives

The Office of Investigations continues to
work closely with OIG Audits staff to
ensure the financial integrity of DOI
programs.  An OIG audit survey of a quasi-governmental agency revealed that an official
appointed to the organization was also a
Federal employee and that the former
employee may have received dual
compensation for part of calendar year 1994
before resigning from Federal employment. 
Such dual compensation is prohibited by law. 
The quasi-governmental agency was  created by the Congress and funded in part by
DOI.  The audit information was referred for
investigative review.  The resultant OIG
investigation determined that the individual
had received dual compensation.  The matter
was referred to the Department of Justice, and,
in a resultant civil settlement agreement, the
former employee agreed to make restitution of
$10,701.14 to the Government. 

 
  


                       LEGISLATIVE REVIEW




During this reporting period, OIG
reviewed several hundred legislative
items and, where appropriate, provided
comments.  OIG performed two reviews to
monitor legislative proposals and evaluate
their potential for promoting economy and
efficiency and preventing fraud, waste, and
mismanagement in the programs and
operations of DOI, as required by Section
4(a)(2) of the Inspector General Act of 1978,
as amended.

OIG provided comments on S 261, the
Biennial Budgeting and Appropriations Act. 
The purpose of  the proposed Act was to
provide for a biennial budget process and a
biennial appropriations process.  OIG
supported passage of the Act, noting that the
Act would enable agencies to engage in more
effective and efficient financial management
and planning.  OIG commented that a biennial
cycle would avoid the  problems connected with year-end spending,
allow for better decision making when funds
are tight, and provide more flexibility for an
agency to meet special funding needs.  Finally,
OIG  noted that the Act would eliminate some
of the uncertainty, such as agency shutdowns,
which can occur during the annual
appropriations process.

OIG also provided comments on Department
of Justice Draft Bill # 9, the Internet Gaming
Act.  OIG pointed out that the definition of 
"State" contained in the proposed Bill did not
include Federally recognized Indian tribes. 
Thus, the proposed legislation was silent as to
whether Indian tribal gaming needs to be
identified as a state or other entity.
 
 

                     SIGNIFICANT AUDITS AND
                         INVESTIGATIONS



Financial Statement
Audits

Department of the Interior
Consolidated Principal Financial
Statement Audits for Fiscal Years
1995 and 1996

We concluded that DOI's consolidated
principal financial statements for fiscal
years 1995 and 1996 were presented fairly
except that BIA did not provide adequate
documentation or reliable accounting
information to support, for fiscal year 1996,
the amounts of $170 million for other
structures and facilities, $17 million in
accounts receivable, $136 million of revenues,
and $19 million of bad debt expense. Also, for
fiscal year 1995, BIA did not provide adequate
documentation or reliable accounting
information  to support amounts for four
accounts ($3.5  billion for  property,  plant, 
and  equipment; 
$12  million  in  accounts receivable; 
$14 million in deferred revenue; and 
$175 million in revenues).  Furthermore, we
found that the internal accounting control
structure of DOI's 11 operating entities meets
the established internal control objectives
except for the controls relating to four
accounts (property, plant, and equipment;
accounts receivable; revenue; and bad debt
expense) at BIA, two accounts (property,
plant, and equipment and construction in
progress) at the National Park Service (NPS),
and one account (construction in progress) at
FWS. In addition, we found weaknesses in the
internal controls at the administrative service
centers operated by the U.S. Geological
Survey (USGS) and the Bureau of
Reclamation (BOR) and at BIA's Operations
Service Center.  Finally,  DOI's 11 operating
entities have complied in all material respects
with applicable laws and regulations except
 that  the  title  to the completed  portions of
the Navajo Indian Irrigation Project,  which
cost $334 million,  had not been transferred to
BIA from BOR.  This transfer was to have
been made pursuant to the agreement made by
these bureaus under Public Law 87-483,
which authorized the construction of the
project. Since our reports on the individual
bureaus' financial statements and the
administrative service centers include
recommendations to correct the reported
deficiencies, we did not make any additional
recommendations to DOI in our report on the
consolidated financial statements.

 Bureau Financial Statement Audits

During this semiannual period, OIG issued
audit reports on the financial statements
of 5 of DOI's 10 bureaus and offices.  We
expressed a qualified opinion on BIA's
financial statements for fiscal year 1996 and
unqualified opinions on the fiscal year 1996
financial statements of BOR, FWS, NPS, and
USGS.  These financial statement audits are
required by the Chief Financial Officers Act
of 1990.  

A qualified opinion was expressed on BIA's
financial statements because BIA did not
provide adequate documentation or reliable
accounting information to support the
balances reported in the fiscal year 1996
financial statements for other structures and
facilities, accounts receivable, revenue, and
bad debt expense and the effect that these
accounts had on the net position. We believe
that these deficiencies occurred because BIA
had not implemented the recommendations 
related to these areas in our prior report.

Although OIG was able to issue unqualified
opinions on the financial statements of BOR,
FWS, NPS, and USGS, we reported internal
control deficiencies for each bureau and
reported an instance of noncompliance with
selected provisions of laws and regulations at
BOR.  Specifically:

     - BOR internal controls were not
sufficient to provide reasonable assurance
that:  (1) costs were fully recovered in its
working capital fund and (2) amounts reported
in its general ledger  were supported by
subsidiary records.  We also found that system
integrity weaknesses existed in the general
controls of the Federal Financial System at
BOR's Administrative Service Center. 
Furthermore, BOR had not transferred title to
BIA for the Navajo Indian Irrigation Project,
as required by provisions of a 1962 law
(Public Law 87-483) that authorized the
construction of the project.  These conditions
were considered to be reportable weaknesses
in BOR's internal control structure and its
compliance with laws and regulations.

     - FWS had not fully implemented
recommendations to improve internal controls
over  its accounting for buildings, structures,
and construction-in-progress accounts.  This
condition was considered to be a reportable
weakness in the internal control structure that
needed to be corrected.

     - NPS internal controls were not
sufficient to provide reasonable assurance
that: (1) the property and equipment
subsidiary ledgers will be maintained in
agreement with the related general ledger
control account; (2) delinquent accounts
receivable will be collected in a timely
manner; (3) completed projects in the
construction-in-progress account will be
timely and appropriately transferred to the
buildings and the other structures and facilities
accounts; and (4) effective and periodic
financial information integrity reviews will be
made of the financial information contained in
the general ledger control accounts and in
their related subsidiary ledgers, listings, and
reconciliations.  In addition, NPS had not
established an adequate process to allow it to
obtain, in a timely manner, reliable
information on  the number and the balances
of the "special concession accounts" or on the
financial activities in these accounts.  These
conditions were considered to be reportable
weaknesses in NPS's internal control structure
that needed to be corrected.

     - USGS internal controls were not
sufficient to provide reasonable assurance
that: (1) the amounts reported in the general
ledger accounts Advances From Others
(incorporated into the account Deferred
Revenue in the financial statements),
Accounts Receivable Unbilled, and Accounts
Payable were properly supported by
subsidiary ledgers; (2) costs related to
Federal-state cooperative projects were
reported accurately and in accordance with
applicable  agreements; (3) delinquent
accounts receivable were collected in a timely
manner; (4)  monies were disbursed from the
investment plan, a component unit of the
working capital fund, in accordance with
established policies; and (5) Biological
Resources Division property was accounted
for and reported correctly. These conditions
were considered to be reportable weaknesses
in USGS's internal control structure that
needed to be corrected.  In addition, system
integrity weaknesses existed in the general
controls of the Federal Financial System at the
Reston General Purpose Computer Center and
in the accounting for costs of projects
conducted under the Federal-State
Cooperative Program.
 Bureau of Indian
Affairs

General Controls Over Automated
Information Systems Needed
Improvement

BIA's general controls over its automated
information systems at the Operations
Service Center were not fully effective. 
Specifically, an effective security program had
not been implemented; controls over access,
software development and changes,
segregation of duties, and system software
were inadequate; and  a service continuity
plan had not been developed and
implemented.  These deficiencies occurred
because BIA had not complied with the 
criteria in OMB Circular A-130,
"Management of Federal Information
Systems," and National Institute of Standards
and Technology Federal Information
Processing Standards publications in that it
had not developed a formal, up-to-date,
comprehensive system security program or
established formal policies, standards, and
procedures for computer operations.  As a
result, the deficient general controls
significantly increased the risk of
unauthorized access; unauthorized
modifications to and disclosure of sensitive
data maintained in the Center's mainframe
computers; theft or destruction of hardware,
software, and sensitive data; and the loss of
critical systems and functions in the event of
a disaster.  In addition, the deficient controls
decreased the reliability of the data maintained
on the Center's computers.  We made 13
recommendations for improving management
and internal controls for BIA's  automated
information systems at the Center.  In its
responses to the draft and final reports, BIA
agreed with all of the recommendations and
stated that physical security, user access,
segregation of duties, and system software
controls would be implemented as a result of
the conversion of the mainframe data
processing to USGS's host computer.  Based
on BIA's response, we considered 1
recommendation resolved and implemented
and 12 recommendations resolved but not
implemented.

Agricultural Leasing Effectively
Managed by the Colorado River
Indian Tribes

We concluded that the Colorado River
Indian Tribes effectively managed
agricultural leasing on their reservation.  The
Tribes managed the leasing under Public Law
93-638, the Indian Self-Determination and
Education Assistance Act.  Based on a
contract with BIA issued under the Act, the
Tribes:  (1) identified lands that were suitable
for agriculture; (2) ensured that lands
available for leasing were known to
prospective lessees; (3) initiated actions in a
timely manner to ensure that expiring leases
were reissued without a loss of revenue to the
landowners; (4) ensured that fair annual
rentals were realized for the leased lands; 
(5) required direct rental payments to
individual allottee landowners and assignees
by the lessees; (6) assessed interest when rents
were paid late; (7) took appropriate actions to
cancel leases when warranted by the
circumstances; and (8) enforced bonding
requirements stipulated in the leases.  The
report did not contain any recommendations.

Operation and Maintenance of
Government Furnished Quarters Not
Adequate

We found that while the Eastern Navajo
Agency complied with requirements
for the maintenance and rental of quarters, the
Fort Defiance Agency did not.  We also found
that neither agency complied with the
requirements governing the occupancy of
Government furnished quarters.  Specifically,
we found that: 
(1) quarters were poorly maintained and were
deteriorating; (2) bills of collection for
delinquent rents either were not prepared or
were not prepared timely; and 
(3) agreements for the temporary use of
housing either were not prepared or were not
properly executed by the Fort Defiance
Agency.  In addition, personnel records to
support that occupancy was required for BIA
employees were not prepared by either
agency, and neither agency performed annual
quarters needs assessments to determine the
number of quarters necessary for BIA
operations.  As a result, some quarters had
unsafe and unhealthy conditions, such as
broken windows and loose or missing floor
tiles; rents due of approximately $41,300 had
not been collected; and ineligible employees
may have been designated as requiring
occupancy.  On a positive note, we also found
that revenues from the rental of Government
furnished quarters were deposited into a
special fund and were used for the operation,
maintenance, and repair of housing units
within the quarters program of the two agency
offices.  BIA agreed with the report's five
recommendations to correct the deficiencies in
the report, including collecting the delinquent
rents and planning and performing routine
maintenance.  Based on BIA's response, we
considered three recommendations resolved
and implemented and two recommendations
resolved but not implemented.

Student Bank Funds Adequately
Accounted for by Institute Despite
Internal Control Weaknesses

In our audit of the Southwestern Indian
Polytechnic Institute, we found that the
Institute adequately accounted for funds in its
student bank, which processed transactions
exceeding $1.9 million for fiscal years 1995
and 1996.  For example, the commercial
checking account was properly supported by
subsidiary accounts; recorded transactions
were supported by proper documents such as
deposit receipts, withdrawal slips, and
payment vouchers; withdrawal slips and
requests for payment were approved by
authorized individuals; and interest earned
from the Institute's commercial bank account
was used for authorized purposes.  While bank
funds were adequately accounted for, we
noted that the Institute had inappropriately
transferred unclaimed student deposits and
fees of $12,486 to the Institute's nonprofit
foundation.  According to the BIA Manual
and the United States Code, these funds
should have been refunded to the students or
credited to BIA's appropriation.  Our report
contained five recommendations designed to
ensure that student deposits and fees were
properly handled and that internal controls
were enhanced to ensure compliance with
BIA's Manual and the Institute's plan of
operations.  In response to the
recommendations, BIA agreed to return the
funds to the appropriate accounts and to
institute improved controls over fees collected
from students.  Based on the response, we
considered four recommendations resolved
and implemented and one recommendation
resolved but not implemented. 

Tribal Employees Prosecuted,
Terminated for Embezzlement

A joint OIG-FBI investigation revealed that
from 1994 to 1996, five employees of a
New Mexico Indian tribal organization
diverted more than $200,000 in Federal funds
to their personal use.  BIA and other Federal
agencies funded a nonprofit organization that
was set up to provide social and economic
assistance to 19 Indian tribes in New Mexico. 
The monies were diverted through a scheme
whereby payroll advances were provided to
participants but not documented in the
accounting system, thereby allowing
participants to avoid repayment.  One of the
employees admitted to the theft of $2,560 and
is paying restitution through an agreement
with the Department of Justice.  The
remaining employees were charged criminally
in March 1997 with conspiracy and
embezzlement by a Federal grand jury in
Albuquerque, New Mexico, and subsequently
pled guilty.  In September 1997, one of these
four individuals, a staff accountant, was
sentenced to 4 months of imprisonment and 3
years of supervised probation and was ordered
to pay restitution of $33,800.  Sentencing of
the remaining three individuals is pending. 
All five of these employees were terminated
from their positions at the nonprofit
organization. 

Tribal Officials Convicted of
Embezzling Tribal Funds
 
A joint OIG-FBI investigation into
allegations of theft of tribal monies by
elected officials of a California Indian tribe
resulted in the indictment of two individuals
and their subsequent conviction in a trial in
U.S. District Court in September 1997 on
charges of embezzlement.  The two
individuals, who had served as tribal chairman
and as vice-chairman,  used their positions to
divert more than $39,000 of tribal monies to
their own use.  Sentencing is pending. 

Two Indicted in $203,000
Embezzlement

On June 11, 1997, a Federal grand jury for
the Central District of California
returned an indictment charging a former
tribal chairperson and a former secretary-treasurer with 29 counts of embezzlement
from an Indian tribal organization.  The
subjects allegedly conspired to divert
$203,000 in tribal funds to their personal use. 
A trial is pending.  This was a joint OIG-FBI
investigation.

Employee Removed for Waste and
Abuse of Funds

The superintendent of a BIA agency in the
Southwest was removed from Federal
employment following an OIG investigation
that revealed waste and abuse in the
employee's use of approximately $44,000 in
BIA funds to make improvements to his
government-owned quarters.  The misused
monies constituted the agency's total funding
for improvements to all of its government-owned housing for the year.  The investigation
also revealed that the employee made
numerous personal calls using a Government
cellular telephone service. 

Government Employee Pleads Guilty
to Payroll Fraud

A BIA employee in New Mexico falsified
her own time and attendance records
during a 4-year period to obtain more than
$36,000 in overtime compensation for hours
that she did not work.  The employee resigned
during the investigation.  In May 1997, a
Federal grand jury in Albuquerque, New
Mexico, charged the former employee with
filing false claims and mail fraud.  In
September 1997, the former employee pled
guilty to filing false claims.  Sentencing is
pending.

Eighteen Individuals Convicted in
Bingo Scheme

A 2-year investigation of a bingo enterprise
run by a Montana Indian tribe has thus
far resulted in convictions and guilty pleas by
18 individuals charged with embezzlement
and theft.  Most of the individuals involved
were current or former tribal employees of the
bingo operation, including the president of the
bingo operation's management firm.  The
individuals defrauded the tribe through
various schemes to embezzle and steal monies
from the tribal business, including
manipulating gambling machines to produce
counterfeit winning tickets, making false pay-outs, and stealing cash.  Sentences of the 18
individuals have resulted in orders for
$124,615 in restitution, 34 months of
incarceration, 696 months of probation, 1,520
hours of community service, $780 in fines,
and $1,200 in special assessments.

Tribal Official Sentenced 
for Theft of Funds 

The chairman and the treasurer of a
committee formed by a Montana Indian
tribe to promote ceremonial events converted
more than $50,000 of tribal funds to their
personal use.  The individuals were indicted
by a Federal grand jury in Billings, Montana,
in 1996.  They subsequently entered guilty
pleas to charges of theft from an Indian tribal
organization.  As previously reported, in
February 1997, the committee's treasurer was
sentenced to 6 months of electronically
monitored home detention and 60 months of
supervised probation and was ordered to pay
restitution of $23,048.54 and a $100 special
assessment.  In May 1997, 
the committee chairman was sentenced to 
5 years of supervised probation and 
3 months of electronically monitored home
confinement and was ordered to pay
restitution of $27,488.

Tribal Chairman and Gambling
Consultant Guilty of Bribery

An OIG investigation disclosed that the
tribal chairman of a Midwestern Indian
tribe accepted $127,000 in bribes from a
gambling consultant to facilitate the
placement and operation of illegal video
gambling devices in the tribe's casino
facilities.  The tribal chairman also did not
report the income to the Internal Revenue
Service.  On June 27, 1997, the tribal
chairman was found guilty of one count of
accepting a bribe as the agent of an Indian
tribal government and three counts of willfully
making and subscribing false individual U.S.
income tax returns.  The gambling consultant
was found guilty of one count of conspiring to
bribe an agent of an Indian tribal government
and one count of bribing an agent of an Indian
tribal government.  Sentencing is pending. 

Bureau of Land
Management

Wild Horse and Burro Population
Management Needs Improvement

B LM had not achieved appropriate
management levels of wild horse and
burro populations on public lands. The
appropriate levels are needed to maintain a
thriving natural ecological balance of animals
on public lands. From fiscal year 1986, when
BLM first established appropriate
management levels, through fiscal year 1996,
the number of wild horses and burros on
public lands exceeded the appropriate
management levels by about 
58 percent. Further, BLM's Strategic Plan for
the management of the wild horses and burros,
which was established in fiscal year 1992, had
not resulted in BLM's reaching appropriate
management levels.  BLM's inability to
achieve appropriate management levels
occurred because BLM: (1) was unable to
place sufficient numbers of animals with
private organizations and individuals through
its Adopt-A-Horse Program; (2) was
prevented from disposing of excess healthy
animals by legislative restrictions included in
its appropriation acts; and (3) had not
aggressively pursued other options for
controlling herd sizes, such as the use of
birthrate controls.  As a result, approximately
15,226 more horses and burros were on public
lands than  BLM determined the lands could
sustain at the end of fiscal year 1996.  We
made two recommendations to address the
deficiencies. Based on BLM's response to our
draft report, we considered one
recommendation  resolved but not
implemented and requested additional
information on the remaining
recommendation. 

Recreation Management Needs To Be
More Effective

BLM did not make effective use of its
authority to designate  special areas and
to collect special recreation permit fees at
those areas.  In addition, BLM did not collect
recreation use permit fees at all sites eligible
for fee collection or establish adequate
controls over fee collection activities.  BLM
did not maximize its revenue-producing
capability because it did not sufficiently
emphasize the benefits of using special area
designations or ensure that its state offices
charged recreation fees where appropriate.  As
a result of these deficiencies, we estimated,
based on fiscal year 1995 visitation data and
historical BLM revenue averages for
recreation use permit fees, that additional
revenues of about 
$15 million could have been collected for
fiscal year 1996 and used for resource
protection.  We made four recommendations
to address the deficiencies.  Based on BLM's
response to our draft report, we considered all
of the recommendations resolved but not
implemented.

Mineral Patents Processes Need
Improvement

We identified deficiencies in the mineral
validity examination process which we
believe BLM needs to correct to ensure that
mineral patents are not granted improperly. 
We also noted that BLM was not recovering
the costs of conducting mineral validity
examinations, which BLM estimated to
average about $80,000 per application.  In a
related matter, we found that BLM had not
completed its initial reviews of patent
applications within the 
10-month time frame established in its
Manual.  The deficiencies in BLM's mineral
validity examination process occurred
primarily because of weaknesses in BLM's
mineral report quality control process.  We
made seven recommendations to address the
weaknesses identified.  Based on BLM's
response to our draft report, we considered
three recommendations resolved but not
implemented and requested BLM  to 
reconsider its responses to three
recommendations and to provide additional
information on one recommendation.

Employee Resigns After
Embezzlement Investigation

An OIG investigation of monies missing
from the imprest fund of a BLM district
office in Oregon resulted in a BLM
employee's admission to the theft of 
$3,479.46 from the fund.  The employee, a
cashier for the fund, later resigned from BLM
after receiving a notice of proposed removal. 
The employee has made restitution to BLM
and will perform 40 hours of  
community service and obtain counseling
under a supervision agreement with the
Department of Justice.

Bureau of Reclamation

Better Monitoring of Grants for
Water Reuse Projects Needed

BOR did not adequately monitor the costs
claimed by grantees for four construction
projects under 10 grant agreements valued at
$544 million, including Federal funds
estimated at 
$135 million.  BOR procedures require that
BOR technical and accounting personnel audit
or review grant agreements annually to ensure
compliance with the terms of the agreement. 
BOR officials stated that the required reviews
were not performed because: (1) Mid-Pacific
Regional program officials were not aware of
the procedures and (2) Lower Colorado
Regional officials believed that the procedures
were optional and that the Region was
precluded from performing the annual reviews
because grantees were subject to annual audits
under the Single Audit Act.  Lower Colorado
Regional officials also stated that they did not
have sufficient staff to perform the reviews.
Furthermore, BOR officials in both regions
stated that they believed that relying on the
single audit process and on reviews of
summary billings submitted by the grantees
was sufficient to adequately monitor the costs
claimed under the grant agreements.  Despite
BOR's statement, we found that BOR did not
follow up on conditions identified in the
single audit reports and information in the
summary billings was not sufficient to allow
adequate monitoring.  As a result, BOR did
not have assurance that Federal funds of $25
million paid to the grantees were for
construction costs that were allowable under 
the terms of the grant agreements.  We made
two recommendations to correct these
conditions.  In response to these
recommendations, BOR agreed to begin
conducting annual reviews of grantees to
ensure compliance with grant requirements
and agreed to follow up on findings in single
audit reports.  Based on BOR's response to
our draft report, we considered both
recommendations resolved but not
implemented.  

Costs of $691,702 Questioned on
BOR Construction Contract

During 1995, BOR awarded a contract for
construction of a fish passage and
protective facilities on the Lemhi River as a
part of the Columbia and Snake River Salmon
Recovery Project.  After modifications, the
contract totaled $1,005,292.  The contractor
submitted a request for reimbursement of
additional costs of $691,702, citing site
easement conflicts and inaccurate contract
documents that resulted  in a defective design
for PVC pipe and additional erosion control
planting.  Based on our audit of these costs,
we questioned the allowability of the entire
$691,702 because the contractor did not
separately account for claimed costs, as
required by the contract.  Of these costs, we
also questioned costs of $472,546 because of
differences between actual and estimated costs
or rates and duplicate charges and costs of
$125,706 that were not supported by the
contractor's accounting records.  The
contracting officer's response to the report
was not due until after the end of this
semiannual reporting period.
 
Insular Areas

GUAM

Personnel and Payroll Practices 
Not Corrected

A followup review of the recommendations
contained in a February 1991 report
entitled "Personnel and Payroll Practices,
Legislative Branch and Other Elected
Officials, Government of Guam" (No. 91-I-372) found that only 1 of the report's 10
recommendations was implemented. 
Specifically, we found that the following
conditions still existed: 
(1) elected officials were permitted to accrue
annual leave, even though elected officials
were not required to take leave when they took
off from work; (2) contrary to the Guam Code,
legislative employees were permitted to
accrue annual leave at the maximum rate of 8
hours per pay period regardless of their length
of service; 
(3) senators and legislative employees
continued to receive lump-sum payments for
their unused annual leave balance at the end of
each legislative term, even if the senator was
reelected or the employee continued to work
for the Guam Government; (4) the Guam
Code permitted elected officials to collect
retirement annuities while still employed by
the Guam Government; 
(5) contrary to Guam law, elected officials of
the executive branch accrued sick leave,
which we found had enabled some elected
officials to receive increased retirement pay;
and (6) elected officials continued to exempt
themselves from Guam contracting
regulations and issued personal services
contracts that had vague terms and
requirements.
  
As a result of these conditions, the
Government of Guam incurred 
additional unnecessary personnel costs of
about $3.6 million (including $2.1 million for
lump-sum annual leave payments)  
from January 1, 1993, through 
September 30, 1995.  The Government also
did not ensure that full value was received
from the $4.6 million of personal services
contracts awarded during that time.  We made
five new recommendations to correct the
conditions noted.  The Guam Legislature
advised us in comments to our draft followup
report that it had implemented two of the
recommendations by legislation:  
(1) to discontinue annual leave accrual by
elected officials and (2) to establish
requirements for personal services contracts. 
We considered two of the three remaining
recommendations resolved but not
implemented.  We revised the remaining
recommendation in the final report based on
the Legislature's comments and requested a
response to this revised recommendation. 

Unnecessary Personnel Costs Cited

We concluded that the Bus Operations 
Division of the Government of
Guam's Department of Public Works used its
buses effectively in providing transportation
to the students of Guam.  However, we found
that the Division: 
(1) did not adequately control  overtime and
other personnel costs; (2) expended bus
charter revenues without an appropriation
from the Guam Legislature; (3) did not
adequately control bus charter fee billings and
collections; and (4) did not establish school
bus charter rates sufficient to recover the costs
of providing bus charter services.  These
conditions occurred because the Division had
not established alternative work schedules to
reduce overtime and personnel costs.  In
addition, the Division was not aware that an
appropriation was needed before bus charter
revenues could be spent and had not
developed written procedures for controlling
bus charter fee billings and collections and for
establishing bus charter rates. 

As a result of these deficiencies, the Division
incurred unnecessary overtime costs of about
$2.8 million between fiscal years 1994 and
1996 and incurred other unnecessary
personnel costs of $132,368 during two pay
periods we reviewed for  fiscal year 1996. In
addition, the Division: (1) improperly spent
bus charter revenues of $187,519; (2) had
little assurance that all bus charter fees were
eventually billed and collected; and (3) had
bus charter costs that exceeded collections by
at least $490,000.

We recommended that the Governor of Guam
require the Director, Department of Public
Works, to: (1) perform an operational study of
the Bus Operations Division to identify
methods, such as the use of split shifts and
part-time bus drivers, to minimize overtime
and personnel costs; (2) cease the practice of
spending bus charter revenues without an
appropriation; (3) develop and implement
written procedures to ensure that adequate
controls are established over bus charter
billings and collections; (4) develop and
implement written procedures to require the
Division to perform annual analyses of all
school bus operational costs to serve as a basis
for establishing new bus charter rates; and (5)
use the newly established bus charter rates
when billing customers for bus charter
services.

During the audit, we noted that the Governor
of Guam's "Vision 2001" statement addressed
the issue of public transportation systems on
Guam.  In that regard, the Director of Policy,
Development and Operations and the Director
of the Guam Mass Transit Authority told us
that the administration was considering a
strategy which would consolidate Guam's six
public transportation systems.  Because of the
deficiencies we identified during the audit, we
believe that this strategy will provide for a
more efficient public transportation system on
Guam.  Accordingly, we stated in the report
that the Governor should consider studying
operational alternatives for school bus
operations, such as merging these operations
with those of the Guam Mass Transit
Authority.

The Governor of Guam did not provide a
response to our draft report.  Therefore, all of
the report's six recommendations were
considered unresolved.

 Minerals Management
Service

Improvements Needed for Royalty
Management Program's Automated
Information Systems 

Our audit of the Minerals Management
Service (MMS)  Royalty Management
Program's automated information systems
showed that the systems were not operating
efficiently but that these inefficiencies had not
adversely affected the Program's ability to
perform its mission.  Specific inefficiencies
were that the Program did not ensure that
application software for its automated systems
was adequately tested or that supporting
documentation was complete and current.  To
overcome these inefficiencies, Program
personnel developed supplemental systems on
personal computers, or manual workarounds,
to assist in meeting the Program's royalty
management responsibilities.  The systems
were not operating efficiently because current
database structures were antiquated and
difficult to modify and enhance.  As a result,
the Program unnecessarily incurred, at a
minimum, contractor costs of $2 million
annually for operating and maintaining these
automated systems that did not efficiently
meet users' needs,  and the Program expended
about $1.2 million annually to detect and
correct data errors and problems in processing
data to ensure the accurate collection and
distribution of rents, bonuses, and royalties. 
We made seven recommendations to address
these deficiencies.  Based on MMS's response
to the final report, we considered one
recommendation resolved and implemented
and six recommendations, including those to
redesign the automated systems and to
improve application software testing and
documentation procedures, resolved but not
implemented. 

Multi-Office

Automated Law Enforcement
Systems Capable of Meeting
Applicable Reporting Requirements

In three separate audits of the automated law
enforcement systems of NPS, FWS, and
BIA, we determined that the systems, once
completed, will be capable of reporting crime
statistics in 22 offense categories to the FBI's
automated system.  This reporting is required
by the Uniform Federal Crime Reporting Act
of 1988 (Public Law 100-690).  We also
determined, however, that controls within
each of the bureaus' systems needed to be
improved to ensure that crime statistics are
reported accurately and that overall systems
operations are effective.  For example, NPS
needed to develop written policies that
describe data input or modification
procedures, data backup or archival
requirements, hardware and software security,
system processes, and specific data
submission procedures; FWS needed to
include additional data elements to meet all
reporting requirements of the FBI system and
to meet management information items
required by DOI for law enforcement case
files; and BIA needed to activate the security
features of the system software and develop
and implement system rules for security,
recovery, and operations.  The three audit
reports contained a total of 18
recommendations to address the needed
improvements. Based on the responses 
to the draft reports, we considered  
3 recommendations resolved and
implemented, 5 recommendations 
resolved but not implemented, and 
10 recommendations unresolved.

Further Improvements in Travel by
Principal Officials Needed

A followup audit of five recommendations
contained in the February 1993 audit
report entitled "Travel Activity of Principal
Officials" determined that three
recommendations had been fully implemented
and two recommendations had been partially
implemented.  As part of the followup audit,
we reviewed 518 vouchers, totaling $477,244,
for travel that occurred during the period of
October 1, 1994, and April 30, 1996, and
found that travelers:  
(1) claimed the cost of air transportation for
personal travel which was paid for by the
Government ($1,400) and used contract
airfare rates or Government contract credit
cards to pay for personal travel; (2) received
per diem and/or reimbursement for rental cars
while they were on personal leave or on
personal time ($956); (3) received payment for
costs that they did not incur ($1,151); 
(4) claimed, without approval or justification,
actual costs for lodging and meals that
exceeded per diem rates ($4,344); (5) did not
receive approval for non-Federal funding of
travel costs ($3,958); and 
(6) were not fully reimbursed for allowable
travel costs ($1,201).  As a result of these
findings, we made four new
recommendations, which focused on the need
for DOI to recover reimbursement for
unallowable travel costs, to provide training
on the Federal Travel Regulation to principal
officials, and to periodically review the
officials' travel vouchers to ensure compliance
with the Federal Regulation.  DOI managers
agreed to implement these recommendations.

Implementation of the Value
Engineering Program Needs
Improvement

DOI  did not fully implement new
requirements imposed by the May 1993
revision to OMB Circular A-131, "Value
Engineering Program."  Specifically, DOI did
not perform value engineering studies of all
potential construction projects and the
nonconstruction areas set forth in the Circular. 
In addition, DOI's method of funding its
program did not appear to encourage bureaus
and offices to perform value engineering
studies.  The program was not fully
implemented because DOI  had not enforced
requirements that annual value engineering
plans should be prepared and implemented;
that files should be maintained on all projects,
programs, systems, and products which meet
the criteria for the use of value engineering;
and that nonconstruction areas should be
included in DOI's value engineering program. 
In addition, DOI had not adequately staffed or
funded the program.  Although it was not
possible for us to estimate the full impact on
DOI, we believe that if the program had been
fully implemented in all potential areas, DOI
could have realized millions of dollars more in
cost savings and other benefits for fiscal year
1995.  We made four recommendations to
address these deficiencies.  Since comments to
the report were not received, all of the report's
recommendations were considered
unresolved.

National Biological
Service 

Former Employee Sentenced in
Drug-Related Case

As the result of an OIG investigation, a
secretary with the National Biological
Service (NBS) resigned from her position
after receiving written notice from NBS of a
decision to terminate her employment for
scheming to defraud a departmental imprest
fund.  The investigation revealed that the
former employee submitted $3,122.10 in false
claims for reimbursement to the imprest fund
and used the money to purchase drugs.  On
May 23, 1997, the employee was sentenced to
3 years of 
probation and was ordered to pay restitution of
$3,122.10 and to participate in a drug-testing
program.

National Park Service

Greater Oversight Needed Over
Reservation System Contractor

NPS did not ensure that reservation system
revenues collected on its behalf by a
reservation system contractor were remitted to
the U.S. Treasury promptly and that the
Government's interests were protected against
nonpayment of these revenues. These
conditions existed because NPS had not
adequately monitored the activities of the
contractor to ensure that reservation revenues
were remitted in a timely manner and had not
enforced the contractual requirement that the
contractor should maintain a performance
bond.  As a result, the contractor retained
reservation system revenues that totaled about
$609,000 for up to 120 days before remitting
the revenues to the U.S. Treasury.  The
contractor also did not maintain a performance
bond that would protect the Government's
interests in case of default.  The report
contained four recommendations.  NPS
concurred with the recommendations and
agreed  to recover unpaid revenues, improve
controls over the timely remittance of
revenues, and  enforce contract provisions to
protect the Government's interests in the event
of nonpayment.  Based on NPS's response, we
considered all of the recommendations
resolved and implemented.  NPS advised that
it had recovered the $609,000 in reservation
revenues oustanding at the time of our audit. 
However, after issuance of the final report,
NPS informed us that it continued to
experience delays in the receipt of contractor
remittances of reservations system revenue
and that it had been unable to get the
contractor to obtain a performance bond.  This
matter has been referred to our Office of
Investigations.

Media Program Could Benefit From
Cost-Saving Measures

NPS could improve the efficiency and
effectiveness of its Servicewide Media
Program by strengthening administrative
controls and implementing cost-saving
measures at the Harpers Ferry Center. 
Specifically, the Center, which provides for
the maintenance, repair, and replacement of
audiovisual equipment and for the
procurement of media products and services, 
needs to maintain accurate inventory records
on audiovisual equipment, transfer custodial
responsibility for audiovisual equipment to the
parks, cancel its warehouse lease because the
space is not needed, use competitive
procurement procedures as appropriate when
placing orders under indefinite-quantity
contracts, and obtain better information on the
distribution and inventories of park brochures
before publishing additional copies.  We
estimated that NPS could save about $204,000
annually by transferring responsibility for
audiovisual equipment to the parks and by
canceling the warehouse lease.  Also, the
Center could reduce costs by soliciting
competitive offers for items purchased under
indefinite-quantity contracts and by producing
park brochures based on replenishment
requirements. The report contained seven
recommendations to strengthen administrative
controls over Center operations and to reduce
Center operating costs.  All of the
recommendations were considered unresolved
because we did not receive an official
response from the Director to the draft report.

Costs of $183,892 Questioned on
Renovation Contract

In 1994, NPS issued a 3-year, 
$11.1 million contract for the renovation of 
utilities at a historic location.  The primary
contractor issued a subcontract in the amount
of $775,697 for electrical work.  In our audit
of costs of $768,268 billed by the
subcontractor, we questioned $183,892, which
consisted of costs of  $169,005 for charges
that were in excess of actual costs incurred
and $14,887 for charges that were not
supported by the subcontractor's accounting
records.  In responding to our report, NPS
agreed with our finding and stated that it will
offset the full amount of the questioned costs
of $183,892 from the contractor's future
billings.  Therefore, we considered the
questioned costs resolved but not
implemented.

Former Employee Convicted of
Workmen's Compensation Fraud

An OIG investigation revealed that a
former NPS employee received
disability payments totaling $73,000 from the
Office of Workers' Compensation Programs
(OWCP), which is administered by the
Department of Labor (DOL), following a back
injury that she claimed was work related but
that was, in fact, sustained during a fall in
1992 while she was shoveling snow.  While
receiving OWCP payments, the former
employee owned and operated a small
business.  During the period of disability, she
submitted several forms to OWCP that
reflected no active employment or work in any
capacity since the date of the alleged injury. 
Following the investigation, a Federal grand
jury in Montana charged the employee in a
March 1997 indictment with fraud in
connection with the application for OWCP
benefits.  In July 1997, the employee was
convicted in a trial in U.S. District Court,
Great Falls, Montana, of making a false
statement to the Government to obtain the
compensation.  In September 1997, the
employee was sentenced in Federal court in
Great Falls to 
6 months of incarceration and 36 months of
supervised probation and was ordered to pay
$24,104 in restitution and a $100 special
assessment.

 Office of the Secretary

Financial Management Activities of
the National Indian Gaming
Commission Need Improvement

The National Indian Gaming Commission
did not ensure that its revenues and
expenditures were properly accounted for and
reported in accordance with applicable laws
and regulations.  Specifically, the Commission
did not develop and implement adequate
internal controls for collecting fees,
accounting for revenues and expenditures,
billing for services, complying with travel
regulations, maintaining time and attendance
reports, and segregating duties.  As a result,
the Commission could not be assured that all
of the Class II gaming operations reported and
paid the appropriate fees.  Also, the general
ledger overstated assets of the Commission by
approximately $5.5 million, understated
liabilities by approximately $4.8 million, and
included $650,000 collected in civil
fines that were not returned to the U.S.
Treasury.  We made nine recommendations to
the Commission to improve the internal
controls over its fee assessment program;
develop a plan to reduce expenditures and/or
increase revenues; segregate duties in the
areas of collections, procurement, and
timekeeping; and establish policies and
procedures for travel and time and attendance. 
Based on the Commission's response to our
draft report, we considered five
recommendations resolved and implemented
and four recommendations resolved but not
implemented.

Employee Sentenced for Theft of
Government Property

An OIG investigation determined that a
voucher examiner/principal cashier
embezzled $12,532 from the Office of the
Secretary imprest fund.  The employee
admitted embezzling the money to pay
personal debts.  The employee resigned and
subsequently pled guilty to two misdemeanor
counts of theft of Government property.  On
June 25, 1997, the employee was sentenced to
5 years of probation on each of the two
misdemeanor counts (both sentences to run
concurrently).  The court also ordered the
former employee to serve 
4 months in an electronic monitoring program
and to make full restitution of the $12,532 to
the Office of the Secretary.

Office of the Special
Trustee for American
Indians

Judgment Award Funds Distributed
Inappropriately

In two of three audits of judgment award
funds, we found that BIA distributed, to
Indian tribes, judgment award principal and
reserved investment interest and income of
$9.8 million in violation of the public laws
which specified how the awards should be
used.  The inappropriate distributions occurred
because personnel responsible for reviewing
and approving disbursements did not
sufficiently analyze the use and distribution
plans and did not ensure that disbursements
were made in accordance with the plans.  In
addition, BIA's trust fund management
system did not have sufficient automated
controls to prevent disbursement from
accounts that should have been restricted.  The
audit reports contained five recommendations
for the Special Trustee for American Indians
to ensure that: (1) the improper distributions
were corrected in accordance with the
Secretary's final recommendations for
resolving disputed trust fund balances; (2)
appropriate controls over judgment fund
distribution were instituted; and (3) budget
amendments for significant changes were
submitted to the Secretary for approval.  The
responses to the recommendations in our
reports from the Office of the Special Trustee
for  American Indians indicated concurrence
with three recommendations. Based on the
responses, we requested additional
information for three recommendations and
requested that the Office reconsider its
responses to the remaining two
recommendations, which were unresolved.

 The results of the three audits of judgment
funds awarded to the Papago Tribe (currently
known as the Tohono O'Odham Nation), the
Navajo Nation, and the Turtle Mountain Band
of Chippewa Indians are summarized as
follows:

     - We concluded that the Tohono O'Odham
Nation appeared to use the judgment funds in
accordance with the uses authorized by Public
Law 97-408. However, BIA inappropriately
distributed to the Tohono O'Odham Nation
about $5.8 million in judgment award
principal ($1 million) and interest and
investment income 
($4.8 million).  As a result of the improper  distributions, we estimated that the Nation lost
about $1.2 million in interest and investment
income.

     - The audit found that the Navajo Nation
used the funds from three judgment awards
for the purposes specified in the respective
approved use and distribution plans. 
However, we also found that BIA improperly
distributed judgment funds of 
$4 million.  Specifically, BIA improperly
distributed to the Nation $1.9 million in 1987,
which resulted in a $1.9 million overdraft to
the Navajo Scholarship Trust Fund account. 
Subsequently, BIA improperly distributed the
$4 million of  principal: $1.9 million to
reimburse the overdrafted cash balance and
$2.1 million for the interest component of the
account for  local projects.  However, the use
and distribution plan specified that the
principal funds were to be held in trust and
invested and that only the interest income on
the invested funds was to be disbursed for
specified uses.  As a result of the improper
distribution, the Office of Trust Funds
Management estimated that interest income of
about $2.5 million was not earned.

     - During our audit of the Turtle Mountain
Band of Chippewa Indians, we found that BIA
held in trust at least 20 percent of the award
funds, that it distributed judgment funds of
$5.4 million to the Band in accordance with
Public Law 97-403, and that the accounting
records of the Band indicated that judgment
funds were spent for administration or social
and economic programs.  However, we noted
that the Band spent $1.7 million for activities
which were not included in the BIA-approved
budget or which were in excess of BIA-approved amounts and that future interest
income from judgment funds was assigned by
the Band as collateral on two loans totaling  
$1.5 million.  

Office of Surface
Mining Reclamation
and Enforcement

Reclamation Fee Collection Process
Could Be Expedited 

Overall, the Office of Surface Mining
Reclamation and Enforcement (OSM)
conducted its Fee Compliance Program in an
efficient and effective manner and in
compliance with authorizing legislation and
regulations.  Specifically, OSM had
established adequate controls and procedures
to ensure that reclamation fees were billed,
recorded, and accounted for properly and that
audits of coal mine operators were adequately
planned and conducted.  However, we found
that OSM had an opportunity to process fee
collections in a more cost-effective and timely
manner by enabling and requiring certain coal
mine operators to electronically transmit their
quarterly Coal Reclamation Fee Reports. 
OSM agreed with the report's
recommendation and said that it planned to
determine how to implement the electronic
data transfer while meeting Surface Mining
Control and Reclamation Act requirements for
a notary public to certify fee reports.  Based
on OSM's response, we considered the
recommendation resolved but not
implemented.

 Mining Company Official Sentenced
in Reclamation Fee Fraud

The president of a Pennsylvania mining
company pled guilty to charges of
conspiring with another official in the same
mining company to fraudulently underreport
and underpay mine reclamation fees to OSM. 
The OIG investigation determined that the
company president prepared and submitted
false OSM forms that understated the amount
of coal sold and the mine reclamation fees due
by $97,293.  On September 19, 1997, the
company president was sentenced to 3 years
of probation.

U.S. Fish and Wildlife
Service

Strengthened Oversight Needed in
Administering North American
Wetlands Conservation Act Grants

Improvements are needed in the
administration of FWS grants awarded
under provisions of the North American
Wetlands Conservation Act.  We found that
the FWS Waterfowl and Wetlands Office,
which has responsibility for grants
administration, did not adequately review or
obtain sufficient information to verify the
propriety of costs that were charged to the
grants.  Specifically,  FWS did not extend the
performance period prior to grant expiration to
cover additional work performed (12 grants),
credited partners with land that was bought or
easements that were obtained outside the grant
performance period (7 grants), and did not
ensure that work was performed in accordance
with the project agreements (5 grants).  We
also found that provisions of the Act were
unclear with respect to the amount and source
of required matching funds.  In  a  review  of 
29 wetlands conservation grants,  we
identified 12 grants in which costs of  
$1 million may have been improperly
reimbursed or credited to partners as their
contribution to project costs as a result of
inadequate administrative oversight.  The
report contained six recommendations.  FWS
concurred with the recommendations and
agreed to strengthen controls over grant
administration and to request an opinion from
the Solicitor to clarify the funding provisions
of the Act.  Based on FWS's response to the
draft report and subsequent correspondence,
we considered three recommendations
resolved and implemented, two
recommendations resolved but not
implemented, and one recommendation
unresolved.

Improvements Needed in Wildlife
Habitat Restoration Program

Overall, FWS was generally
accomplishing  its objectives of
restoring and enhancing habitat sites under its
Partners for Wildlife Habitat Restoration
Program; however, improvements were
needed in some areas.  In a review of 101
Program project files, we found that some
cooperative agreements lacked specific and/or
standard provisions on the scope of the
restoration work and/or the responsibilities of
the Federal and non-Federal Program
participants.  We also found that guidance on
cost-sharing arrangements was insufficient,
documentation supporting project expenses
was not adequate, and Program costs and
accomplishments were not tracked and
reported accurately and efficiently.  As a
result, FWS did not have sufficient controls to
effectively administer Program activities.  The
report contained five recommendations.  FWS
concurred with the recommendations and
agreed to improve controls over Program
operations and activities.  Based on FWS's
response to the draft report, we considered the
five recommendations resolved but not
implemented.

Claimed Costs of $1,692,644
Questioned on Construction Contract

FWS entered into a contract in the amount
of $3,176,024 with a  contractor for
construction of the Wichita Environmental
Education Center, in Wichita, Kansas.  The
contractor requested reimbursement of an
additional $1,704,215, citing increased costs
that occurred because  FWS's drawings and
specifications were "inaccurate" and
"confusing" and because untimely decisions
by FWS slowed the construction process.  We
audited the contractor's request for equitable
adjustment and questioned $1,692,644,
consisting of costs of $1,340,411, which were
unallowable under the Federal Acquisition
Regulation or which were paid previously
under the contract, and costs of $352,233,
which were not supported by the contractor's
accounting records.  In its response to our
report, FWS agreed to deny $1,692,104 of the
contractor's costs that we questioned. 
Therefore, we considered the questioned costs
resolved but not implemented.

 Former Employee Sentenced for
Theft From Imprest Fund

A former FWS budget clerk and imprest
fund cashier, who had left her FWS
position for employment with DOL, pled
guilty to one count of felony embezzlement
and theft of $23,113.  The OIG investigation
disclosed that while employed with the FWS,
the employee embezzled $4,000 from the
FWS imprest fund using duplicated and
falsified vouchers.  The employee also used
her Government purchase card to make
unauthorized purchases of personal items
totaling $19,113.  Some of the personal items
purchased included a $1,000 riding
lawnmower, a $1,000 10' x 16' outdoor shed
to house the riding lawnmower, and a $1,500
large-screen television set.  The employee also
devised a scheme using her Government
purchase card to purchase gift certificates at
local department stores and to convert them to
cash.  On June 4, 1997, the former employee
was sentenced to 5 years of probation and was
ordered to pay $23,113 in restitution to FWS. 
As a result of the OIG investigation, the
employee also resigned from DOL.     

 U.S. Geological Survey
                                 
Contractor Convicted and Debarred
for False Certifications

A joint investigation by OIGs of DOI and
DOL determined that the president of a
Colorado environmental engineering and
consulting company issued false training
certifications to numerous employees of
private companies and USGS.  Additionally,
the corporate official misrepresented to USGS
the extent of his academic qualifications to
provide training.  The training certifications
are regulated by DOL's Mine Safety and
Health Administration.  The purpose of the
training is to ensure that underground miners
are current in safety and health topics
designed to prepare them for the hazards
inherent in mining.  The false training
certifications placed the victims in potential
danger by falsely certifying that they could
enter and work at mine sites when they had
not received the proper designated training. 
As a result of the investigation, the company
official was charged with making false
certifications, a criminal violation of Federal
law.  After fleeing to avoid prosecution, the
official pled guilty in U.S. District Court in
Wyoming to making a false certification and
was sentenced to 21 months of imprisonment
and 2 years of probation.  Additionally, in July
1997, the officer and the corporation were
debarred from participating in all Federal
procurement and nonprocurement programs
for 15 years.  The debarment cited the fact that
the submission of false certifications
demonstrated a deliberate disregard for the
lives and safety of those who depended on the
training.