[Verification Review of the Two Recommendations Contained in Our Audit Report, âLand Exchanges and Acquisitions, Bureau of Land Management, Utah State Officeâ]
[From the U.S. Government Printing Office, www.gpo.gov]

Report No. C-VS-BLM-0003-2007

Title: Verification Review of the Two Recommendations Contained
       in Our Audit Report, ï¿½Land Exchanges and Acquisitions,
       Bureau of Land Management, Utah State Officeï¿½ (Report No.
       2001-I-413) 	 



Date:  February 22, 2007


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United States Department of the Interior
Office of Inspector General


VERIFICATION REVIEW


Memorandum

To:		Director, Bureau of Land Management
       		Assistant Secretary for Policy, Management and Budget
		  (Attention: Associate Director for Finance, Policy and Operations)

From:		Jack Rouch
		Regional Audit Manager

Subject:	Verification Review of the Two Recommendations Contained in Our Audit Report, ï¿½Land Exchanges and Acquisitions, Bureau of Land Management, Utah State Officeï¿½ (Report No. 2001-I-413)
	  	(No. C-VS-BLM-0003-2007)
                 

We completed a verification review of the two closed recommendations from the subject audit report.  The objective of this review was to determine whether the two recommendations were implemented as reported by the Bureau of Land Management (BLM).
	
We determined that Recommendation 1 was implemented.  Because BLMï¿½s real estate appraisal function was consolidated into the National Business Center (NBC), Recommendation 2 was no longer valid and was closed.  We consider the status of this recommendation to be properly closed without implementation.  The status of the recommendations is summarized in the Appendix.  The results of the verification review are summarized in the Results of Review section.


Background

Our July 2001 audit report, ï¿½Land Exchanges and Acquisitions, Bureau of Land Management, Utah State Officeï¿½ (No. 2001-I-413), made two recommendations to correct deficiencies in BLMï¿½s real estate appraisal process.  In the report, we determined that BLM may have compromised the independence and objectivity of its appraisal process by using an alternative approach that did not separate the appraisal process from price negotiations.  BLM also did not ensure that its appraisal reviews complied with appraisal standards or that land was acquired and exchanged based on fair market value. 

In a June 6, 2001 response, BLM concurred with both of the reportï¿½s recommendations.  BLMï¿½s response contained an action plan outlining the steps that BLM would take to implement the two 
recommendations.  Based on that response, we considered the recommendations to be resolved but not implemented.  In a July 20, 2004 memorandum from the Office of Financial Management to the Office of Inspector General we were notified that this report was closed. 


Scope and Methodology

The scope of our review was limited to determining whether BLM implemented the recommendations as reported.  To accomplish our objective, we reviewed the supporting documentation that BLM submitted to close the recommendations.  We also interviewed BLM personnel and reviewed additional information they supplied.  We did not perform site visits or conduct detailed fieldwork to determine whether underlying deficiencies identified in the original report have been corrected.

This review was not conducted in accordance with the Government Auditing Standards issued by the Comptroller General of the United States.


Results of Review

Recommendation 1
Obtain a peer review from The Appraisal Foundation of BLMï¿½s appraisal organization, policies, and procedures, including an evaluation of the alternative approach implemented in Washington County, Utah.  The review should recommend any changes needed to (a) protect the integrity of the appraisal process; (b) ensure the accountability of appraisers in conformance with professional and federal appraisal standards; (c) establish controls to prevent managers from interfering with the appraisal process through inappropriate direction; (d) separate negotiations from the appraisal process; (e) ensure that landowner involvement does not compromise the appraisal process; and (f) ensure the conduct of appraisals and appraisal reviews in conformance with data, documentation, and reporting standards of federal and professional appraisal standards.

In March 2002, BLM contracted with The Appraisal Foundation to perform an evaluation of BLMï¿½s appraisal program.  The Appraisal Foundation is an independent non-profit organization recognized by the Congress as the source of appraisal standards and appraiser qualifications.  After a comprehensive review, The Appraisal Foundation issued a report on October 9, 2002, that contained 24 recommendations designed to improve BLMï¿½s appraisal program.  We reviewed this report and consider Recommendation 1 to be implemented.

Recommendation 2
Implement the changes recommended by the peer review to ensure that BLM has a first-class appraisal system that protects the integrity and independence of the appraisal process.

In February 2003, BLM formed the Appraisal and Exchange Workgroup to address findings relating to BLMï¿½s appraisal program contained in audit reports issued by both the Government Accountability Office and the Office of Inspector General as well as the report issued by The Appraisal Foundation.  In May 2003, the Workgroup issued a report containing 38 recommendations.

On November 12, 2003, the Secretary issued Order No. 3251 authorizing consolidation of the Department of the Interiorï¿½s real estate appraisal functions into NBC within the Office of the Secretary effective immediately.  The Order transferred to NBC all real estate appraisal functions from BLM, the National Park Service, the Fish and Wildlife Service, and the Bureau of Reclamation.  The Appraisal and Exchange Workgroup had begun to implement the changes recommended by the Appraisal Foundation; however, as a result of the Secretaryï¿½s action, BLM was unable to complete the implementation process.  We concluded that Recommendation 2 was no longer valid and was properly closed without implementation.


Conclusion

At the exit conference on February 9, 2007, we informed BLM officials that we concluded that Recommendation 1 was implemented and Recommendation 2 was properly closed without implementation.


Responding to the Report

Because we consider both of the recommendations to be properly closed, a response to this report is not necessary.  If you have any questions regarding this report, please call me at 303-236-9243.


cc:	Audit Liaison Officer, Assistant Secretary for Land and Minerals Management
	Audit Liaison Officer, Department of the Interior
	Audit Liaison Officer, Bureau of Land Management
	Focus Leader for Management Control and Audit Follow-up
	Team Leader, National Land Exchange Team, Bureau of Land Management


Appendix
STATUS OF PRIOR AUDIT REPORT RECOMMENDATIONS

Recommendation: 1
Status:  Resolved and Implemented
Action Required:  No Action Required.

Recommendation: 2
Status:  Resolved and Implemented
Action Required:  No Action Required.