[Office of Inspector General Semiannual Report to the Congress - April 1996]
[From the U.S. Government Printing Office, www.gpo.gov]

Report No. 00-0-00

Title: Office of Inspector General Semiannual Report to the Congress
       - April 1996 

Date: April 1, 1996


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

This file contains an ASCII representation of an OIG report.  No attempt has been made to
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graphic images or illustrations.  Some tables may be included, but may not resemble those in the
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A printed copy of this report may be obtained by referring to the PDF file or by calling the Office
of Inspector General, Logistical Services Branch at (202) 219-3840.
                  ******************************

MESSAGE FROM THE INSPECTOR GENERAL


As "agents of positive change," our goal as Inspectors General is twofold--"improvement in
our agencies' management and program operations, and in our own offices."  This office,
now led by a new senior management team, has aggressively embraced both aspects of that
goal.

During the past 6 months, our continuing efforts to improve the management and program
operations
at the Department of the Interior have included traditional audit and investigative activities, as
well
as various proactive endeavors.  Of particular note with respect to our traditional audit activities
were
our audits of bureau financial statements pursuant to the Chief Financial Officers Act of 1990. 
Through the combined efforts of Office of Inspector General auditors, and bureau and
Departmental
personnel, significant improvements have been made in the financial management systems of the
various bureaus. 

Proactively, our auditors in the U.S. Virgin Islands have joined forces with the Federal
Emergency
Management Agency's Office of Inspector General and the Virgin Islands Bureau of Audit and
Control in performing audits designed to ensure that the appropriate controls, systems, and
procedures are in place to permit federal disaster relief funds received by the Virgin Islands in
the
aftermath of Hurricane 
Marilyn to be disbursed and accounted 
for in accordance with applicable laws and regulations.  Meanwhile, other auditors continue to
lend
their expertise, proactively, to a variety of projects under way at the Department.  In addition to
our
advisory work in connection with the Indian Self-Determination Act Negotiated Rulemaking
Committee, financial accounting system weaknesses and deficiencies within bureaus, a financial
management action plan for American Samoa, and operation and maintenance rates for irrigation
projects, during the past 6 months our auditors have also rendered advice concerning the
development of the Department's new personnel/payroll system, the streamlining and
reengineering
of the Department's travel 
program, and audit issues as they relate to grants administered by the Fish and Wildlife Service.

On the investigative side, our traditional activities were also supplemented with several proactive
efforts, including the continuation of our "Fraud Awareness" outreach program designed, among
other things, to sensitize Departmental employees to factors that, when recognized, may promote
the
early detection of fraud.  We have also expanded our task force participation to include a fraud
task
force in the Virgin Islands and an Indian gaming task force in New Mexico, in addition to the
already
existing task forces in the Commonwealth of the Northern Mariana Islands and in Arizona. 
Finally,
we are launching a new initiative in which we intend to pursue, in an aggressive manner, areas
that
may be potential candidates for the Affirmative Civil Enforcement program.

With respect to our own office, we have been equally assiduous in pursuing our goal of
improvement.  Cost-cutting and streamlining measures, organizational restructuring, revision of
the
automated management information system, and a variety of other internal measures are active
agenda items in varying stages of development.  These measures are designed to improve
day-to-day
management, optimize management techniques and approaches, and enhance the efficiency,
productivity, effectiveness, and economy of our operations.   


We will continue to pursue zealously the objective of making the theme "agents of positive
change"
not only a goal, but a reality.

                    
          
     
          Wilma A. Lewis
          Inspector General


Subject: Office of Inspector General Semiannual Report to the Congress - April 1996 
(No. 00-0-00)

                            CONTENTS
                                                           Page
Statistical Highlights . . . . . . . . . . . . . . . . . . . . .v
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . .1
   Department Profile. . . . . . . . . . . . . . . . . . . . . .1
   OIG Organization. . . . . . . . . . . . . . . . . . . . . . .2
Audit Activity . . . . . . . . . . . . . . . . . . . . . . . . .4
Investigative Matters. . . . . . . . . . . . . . . . . . . . . .8
Congressional Hearing. . . . . . . . . . . . . . . . . . . . . 10
Legislative Review . . . . . . . . . . . . . . . . . . . . . . 12
Significant Audits and Investigations. . . . . . . . . . . . . 13
   Financial Statement Audits. . . . . . . . . . . . . . . . . 13
   Bureau of Indian Affairs. . . . . . . . . . . . . . . . . . 16
   Bureau of Land Management . . . . . . . . . . . . . . . . . 18
   Bureau of Reclamation . . . . . . . . . . . . . . . . . . . 19
   U.S. Fish and Wildlife Service. . . . . . . . . . . . . . . 20
   U.S. Geological Survey. . . . . . . . . . . . . . . . . . . 20
   Minerals Management Service . . . . . . . . . . . . . . . . 21
   National Park Service . . . . . . . . . . . . . . . . . . . 22
   Office of Surface Mining Reclamation and Enforcement. . . . 23
   Insular Areas . . . . . . . . . . . . . . . . . . . . . . . 24
   Multi-Office. . . . . . . . . . . . . . . . . . . . . . . . 25

Appendices

1 - Summary of Audit Activities. . . . . . . . . . . . . . . . 26
2 - Audit Reports Issued and Indirect Cost Agreements Negotiated
      During the 6-Month Period Ended March 31, 1996 . . . . . 27
      - Internal Audit Reports . . . . . . . . . . . . . . . . 27
      - Contract Audit Reports . . . . . . . . . . . . . . . . 28
      - Single Audit Reports . . . . . . . . . . . . . . . . . 29
      - Indirect Cost Proposals. . . . . . . . . . . . . . . . 42
3 - Monetary Impact of Audit Activities. . . . . . . . . . . . 48
4 - Audit Resolution Activities. . . . . . . . . . . . . . . . 49
      - Table I - Inspector General Audit Reports With Questioned Costs49
      - Table II - Inspector General Audit Reports With  Recommendations That    
         Funds Be Put To Better Use. . . . . . . . . . . . . . 50
      - Table III - Inspector General Audit Reports With Lost or Potential Additional Revenues51
5 - Summary of Audit Reports Over 6 Months Old Pending Management Decisions52
      - Internal Audit Reports . . . . . . . . . . . . . . . . 52
      - Contract Audit Reports . . . . . . . . . . . . . . . . 53
      - Single Audit Reports . . . . . . . . . . . . . . . . . 54
6 - Summary of Audit Reports Over 6 Months Old Pending Corrective Action57
7 - Non-Federal Funding Included in Monetary Impact of Audit Activities 
     During the 6-Month Period Ended March  31, 1996 . . . . . 60
8 - Statutory and Administrative Responsibilities. . . . . . . 61
9 - Cross-References to the Inspector General Act. . . . . . . 63
                       STATISTICAL HIGHLIGHTS
                                
Audit Activities
   Audit Reports Issued or Processed . . . . . . . . . . . . .466
     - Internal Audits . . . . . . . . . . 29                    
     - Contract Audits . . . . . . . . . . 24                    
     - Single Audits . . . . . . . . . . .413                    
    Indirect Cost Proposals Negotiated . . . . . . . . . . . .168
Impact of Audit Activities - (Dollar Amounts in Millions)
    Total Monetary Impact. . . . . . . . . . . . . . . . . $230.6
     - Questioned Costs. . . . . . . . . $4.4                    
     - Recommendations That Funds Be Put To Better Use$149.8                    
     - Lost or Potential Additional Revenues$76.4                    
    Internal Audit Recommendations Made. . . . . . . . . . . . 97
    Internal Audit Recommendations Resolved. . . . . . . . . . 78

Administrative Actions Taken by Bureaus
    Matters Referred for Administrative Action . . . . . . . . 72
    Removals/Resignations. . . . . . . . . . . . . . . . . . . .3
    Employee Suspensions (Totaling 65 days). . . . . . . . . . .3
    Reprimands . . . . . . . . . . . . . . . . . . . . . . . . 13
    Other Personnel Actions. . . . . . . . . . . . . . . . . . .4
    Procurement Remedies . . . . . . . . . . . . . . . . . . . .1
    General Policy Actions . . . . . . . . . . . . . . . . . . 15

Investigative Activities 
    Total Reports Issued . . . . . . . . . . . . . . . . . . . 73
    Cases Closed . . . . . . . . . . . . . . . . . . . . . . . 52
    Cases Opened . . . . . . . . . . . . . . . . . . . . . . . 78
    Cases Pending. . . . . . . . . . . . . . . . . . . . . . .336
    Hotline Complaints Received. . . . . . . . . . . . . . . .169
    Hotline Referrals Closed . . . . . . . . . . . . . . . . .115
    Hotline Referrals Pending. . . . . . . . . . . . . . . . .291

Impact of Investigative Activities
    Indictments/Informations . . . . . . . . . . . . . . . . . 22
    Convictions. . . . . . . . . . . . . . . . . . . . . . . . 17
    Sentencings. . . . . . . . . . . . . . . . . . . . . . . . 20
     - Jail. . . . . . . . . . . . . . . . . . . . . . 479 months
     - Probation . . . . . . . . . . . . . . . . . . 1,164 months
     - Community Service . . . . . . . . . . . . . . . .624 hours
    Cases Pending Prosecutive Action as of October 1, 1995 . .145
    Cases Referred for Prosecution This Period . . . . . . . . 39
    Cases Declined . . . . . . . . . . . . . . . . . . . . . . 22
    Cases Pending Prosecutive Action as of March 31, 1996. . .142
    Administrative Actions . . . . . . . . . . . . . . . . . . 39
    Recoveries/Restitutions. . . . . . . . . . . . . . . $814,610
    Civil Judgments. . . . . . . . . . . . . . . . . . . . . . $0
    Civil Referrals. . . . . . . . . . . . . . . . . . . . . . .8
    Civil Declinations . . . . . . . . . . . . . . . . . . . . .2
    Civil Judgments. . . . . . . . . . . . . . . . . . . . . . .0













 

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 their care.  DOI also has a major
responsibility for American Indian reservation communities and insular area governments.

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;

Coordination of Federal and state 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 271 full-time employees.  Employees are under the direction of the
Assistant Inspectors General for Audits, Investigations, and Administration 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, Virgin Islands; Lakewood, Colorado; Tulsa, Oklahoma; and
Phoenix, Arizona

OIG provides policy direction for and conducts, supervises, and coordinates all audits,
investigations, and other activities in DOI designed to promote economy and efficiency or
prevent
and detect fraud, waste, and mismanagement.  The Inspector General is DOI's focal point for
independent and objective reviews of the integrity of operations; is the central authority
concerned
with the quality, coverage, and coordination of the audit and investigative services of DOI; and
reports directly to the Secretary of the Interior on these matters.  The Inspector General provides
the
means for keeping 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 action.

In addition to the Inspector General's requirements 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 audit and investigative
responsibilities (see Appendix 9).  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 Inspector General recommends policies for and conducts, supervises, or provides
coordination
between DOI and other Federal, state, and local government agencies for matters that promote
economy and efficiency and that prevent and detect fraud, waste, and mismanagement.  In the
insular
areas of Guam, American Samoa, the Virgin Islands, and the Commonwealth of the Northern
Mariana Islands, OIG performs the functions of government comptroller through audits of
revenues,
receipts, expenditures, and property 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 466 audit reports during this period.  Appendix 1
summarizes audit activities, and Appendix 2 lists the audit reports issued or processed and
the indirect cost proposals negotiated.  Monetary findings in these  reports totaled $230.6
million, which was composed of questioned costs, funds to be put to better use, and lost or
potential
additional revenues.  Appendix 3 summarizes the monetary impact of audit activities.  During
this
6-month period, OIG resolved $93.6 million of monetary findings.  Appendix 4 provides
summary
information of resolution activity, Appendix 5 provides a listing of audit reports over 6 months
old
pending management decisions, and Appendix 6 provides a summary of audits over 6 months old
pending final action.  Appendix 7 identifies the non-Federal funds (from audits of the insular area
governments) included in the monetary impact of audit activities.


Proactive Audit Accomplishments

Although the efforts of OIG auditors are generally geared toward conducting audits, during this
reporting period, the auditors continued to devote a significant amount of time in providing
technical
assistance to DOI to improve the efficiency and effectiveness of DOI programs and operations. 
In
addition, we provided audit assistance to another Federal OIG and participated in two
interagency
task forces.  Our proactive audit efforts are summarized as follows:

Hurricane-Related Audits Conducted in Cooperation With FEMA's OIG

On September 15, 1995, Hurricane Marilyn struck the Virgin Islands, causing major damage to
public and private structures and prompting the President of the United States to issue a disaster
declaration.  Therefore, in accordance with Section 203(b) of the Omnibus Insular Areas Act of
1992
(P.L. 102-247), a report by the Secretary of the Interior, in consultation with the Director of the
Federal Emergency Management Agency (FEMA), on the disaster recovery effort will be due the
Congress by September 1996.

In this regard, DOI's OIG, in cooperation with FEMA's OIG and the Virgin Islands Bureau of
Audit
and Control, is engaged in several projects that will fulfill the audit-related requirements of the
Act
as follows:

-  Overall Grant Administration:  A team of OIG and Virgin Islands auditors is reviewing the
overall
administration of Hurricane Marilyn disaster relief funds by the Virgin Islands Office of
Management and Budget (the FEMA grantee) to ensure that applicable grant administrative
requirements, including the monitoring of subgrantee activities, are being met.

-  Subgrantee Accounting Controls:  A team of OIG and Virgin Islands auditors is reviewing the
accounting system controls at individual Government of the Virgin Islands agencies
(subgrantees)
to ensure that record-keeping systems and internal controls are adequate to properly account for
and
safeguard disaster relief funds.

-  Hurricane-Related Contracting:  OIG auditors are reviewing the procurement procedures used
by
the Government of the Virgin Islands and, at FEMA's request, the U.S. Army Corps of Engineers
to acquire goods and services necessary for post-Hurricane Marilyn cleanup and reconstruction
to
ensure that those procedures meet applicable requirements.

-  Community Disaster Loan:  At the request of the Governor of the Virgin Islands, a team of
OIG
and Virgin Islands auditors is reviewing the central financial management system of the
Government
of the Virgin Islands to ensure that financial and other information that the Government will have
to provide to FEMA to support a community disaster loan can be produced timely and
accurately.

-  Hurricane Hugo Closeout:  Closeout reviews of disaster-relief projects are being performed by
a
team of FEMA and Virgin Islands auditors.  Funds for these projects were provided by FEMA to
the Government of the Virgin Islands as a result of Hurricane Hugo, which occurred in
September
1989.  The expeditious closeout of these projects is necessary to facilitate record keeping for
disaster
relief funds provided to the Government as a result of Hurricane Marilyn.


Our intention is to produce a report summarizing the results of the above projects which the
Secretary of the Interior can incorporate into his report to the Congress.

Audit Assistance in Development of New Personnel/Payroll System

Our electronic data processing (EDP) audit staff assisted DOI on an ongoing basis in the
development of its new personnel/payroll system, the Federal Personnel/Payroll System (FPPS). 
Our objective was to identify any internal control weaknesses in the FPPS documentation,
specifi-cations, and processes and to bring identified weaknesses to management's attention for
corrective
action before FPPS is implemented. To  accomplish the objective, we reviewed:  
(1) unit and integrated testing plans; (2) payroll processes for ensuring that critical processes
were
included in FPPS; and 
(3) interface requirements between FPPS and satellite systems.  As the development process
continued, our reviews ensured that, at the end of each phase of development, the following
occurred: (1) portions of FPPS would function as intended; (2) the appropriate internal controls
were
planned for; and (3) sufficient audit trails existed for identifying and solving problems.  When
processing control weaknesses were identified, management was notified, and the corrected
processing controls were incorporated into FPPS development products and tests.  

Participation In Accounting/Auditing Task Forces

Since November 1995, an OIG senior auditor has been participating as a member of two task
forces
responsible for developing accounting and auditing guidance for the implementation of the
accounting standards developed by the Federal Accounting Standards Advisory Board (FASAB)
regarding property, plant, and equipment and environmental liabilities.  In addition to the senior
auditor, the task forces are composed of senior officials from OMB; the General Accounting
Office
(GAO); DOI's Office of Financial Management; the Department of the Treasury; and certain
other
Federal agencies.  The task forces also include representatives from major public accounting
firms. 


The task forces are developing issue papers and recommending actions for determining: (1)
whether
an environmental liability is probable and can be estimated reasonably; (2) how to disclose and
audit
environmental liabilities; and (3) how to account for and audit heritage assets within the Federal
Government.  As a result of these efforts, guidance, policy, and requirements will be issued in the
form of OMB Circulars for Chief Financial Officers Act requirements and updates to the GAO
financial audit manual and other GAO publications.

Staff Assistance on the Travel Reinvention Laboratory

An OIG senior auditor is serving on a DOI-wide reinvention laboratory tasked with streamlining
and
reengineering DOI's travel program.  The laboratory was chartered by the Assistant Secretary for
Policy, Management and Budget in February 1996.  DOI spends about $160 million annually on
temporary duty travel plus an estimated $50 million annually for indirect costs associated with
administering the travel program.  The objectives of the laboratory are to improve service to
travelers, reduce direct and indirect travel costs to DOI, and maintain the integrity of DOI's
financial
systems.


Seminar on Auditing Grants

At the request of FWS officials, two OIG auditors conducted a seminar for FWS personnel on
audit
activities related to annual Federal Aid in Sport Fishing Restoration and Federal Aid in Wildlife
Restoration grants.  FWS had expressed an interest in learning how the OIG audits these grants
and
identifies issues that result in findings of noncompliance.  FWS indicated that it would provide
information from the OIG seminar to grant recipients within the states to enable the recipients to
avoid unallowable types of activities and expenditures.  

Internal Reviews Initiated

We have continued to perform self-critical reviews of our audit operations to ensure that we are
operating effectively and efficiently while we provide appropriate coverage of DOI's vast array
of
programs and functions.  For example, we are: (1) refining our audit universe (inventory of the
programs and functions for which we have audit responsibility) in order to quantify audit
resource
requirements; and (2) redefining the audit planning process by developing strategic plans and
identifying audit priorities.  We also have initiated a pilot program of using a customer survey
questionnaire at the conclusion of audits to determine whether the audits are of maximum utility
to
DOI offices and programs.  Further, we have restructured our Headquarters and regional
operations
to reduce overhead, facilitate effective team composition, and improve  utilization of resources in
the accomplishment of our mission.  









 Investigative Matters

During the past 6 months the Office of Investigations has conducted successful investigations
that resulted in 22 indictments/informations, 
17 convictions, and financial recoveries of $814,610, while we continue with some existing
organizational efforts and launch new initiatives.  

Task Force Participation Expands

Our participation in task forces continued with the establishment of a U.S. Attorney's task force
in
the U.S. Virgin Islands to investigate fraud in connection with the Small Business
Administration
(SBA) and the Federal Emergency Management Agency (FEMA) relief programs made available
to the Islands in the aftermath of Hurricane Marilyn.  In this effort, we have joined forces with
FEMA, SBA, the U.S. Marshals Service, the U.S. Postal Inspection Service, the Federal Bureau
of
Investigation (FBI), the U.S. Customs Ser-vice and local law enforcement agencies.  

We also joined forces with the
FBI and the Internal Revenue Service in a U.S. Attorney's task force in the State of New Mexico
involving Indian gaming issues.  This task force is similar to the task force in the State of
Arizona
reported on in our last semiannual report to the Congress.   

Internal Reviews Initiated

With the arrival of a newly-appointed Assistant Inspector General for Investigations we have
begun
to move on several initiatives as a result of a management study commissioned by the Inspector
General.  For instance we are studying our Department complaint referral process to determine
ways
to decentralize our headquarters operations and be more responsive to the Department at the field
level.  We are also in the midst of a critical assessment of our management information system to
make it more useful and less cumbersome.  

Aggressive Outreach Program Continues

We are continuing with an aggressive "Fraud Awareness" outreach program to enhance our
prevention efforts through education and interaction with Departmental managers, contracting
officers, personnel specialists, inspectors, and other key employees concerning conditions or
systemic weakness that may foster financial crimes.  Special agents visit field offices of 
DOI Bureaus and make presentations on the nature of the OIG investigative effort.  The program promotes the early detection of financial crimes
unique
to DOI, which can lead to earlier referrals.

New Initiative

We are actively supporting an initiative by the Department of Justice that targets fraud in federal
programs.  This initiative, called Affirmative Civil Enforcement (ACE), 
demonstrates that imposing civil penalties in fraud cases can be both an effective law
enforcement
tool and a means to compensate the government for its losses from unscrupulous and corrupt
individuals and organizations.  The United States Attorneys in 37 districts have established new
ACE teams consisting of 110 attorneys, investigators, and support staff funded from a special
fund
created by Congress known as the "3% fund."  This fund devotes 3% of the money collected
from
civil judgments to support additional financial litigation, including the ACE program.  

Our support for the initiative was demonstrated in a feature article in the ACE Reporter (a
Department of Justice Civil Division newsletter).  We believe that an educational program in the
Department, supported by the Department's top management, could enable DOI to participate
more
actively in the program.  We have therefore made plans to co-sponsor, with the Department of
Justice, ACE training conferences in Denver, Colorado and Washington, DC.  The purpose of the
conferences is to acquaint key bureau personnel, our own auditors and investigators, and
attorneys
from the Department's Solicitor's Office with the existence of the ACE initiative and the
opportunities to use the ACE program to combat fraud and other forms of white collar crime.  In
addition, we are committed to working with program officials within the Department of the
Interior
and with the Department of Justice to identify and develop appropriate cases for ACE referrals.
 

Congressional Hearing


On October 26, 1995, Inspector General Wilma A. Lewis testified before the Subcommittee
on National Parks, Forests, and Lands, Committee on Resources, U.S. House of
Representatives, about the OIG's audit of special use fees in the National Park Service
(NPS) and on H.R. 2025, Proposed Amendments to the Land and Water Conservation Fund Act
of
1965.  The section of the proposed amendment on which she was asked to comment would
establish
fees for commercial nonrecreational uses in national parks.

Regarding the audit, the Inspector General stated that NPS could not be assured that the
appropriate
amount of special use fees was being collected.  She indicated that the audit had found that NPS
had
not implemented its authority to collect and retain fees for special park uses in a consistent
manner. 
She explained that there were inconsistencies among the parks regarding:  (1) the types of
activities
that were subject to a fee; (2) the bases for determining the fee; and (3) the use of fee revenues. 
In
addition, she noted that our audit found deficiencies in the controls for collecting and/or
accounting
for fee revenues at 4 of the 13 parks we reviewed.  

Regarding H.R. 2025, the Inspector General stated that the proposed legislation was consistent
with
previously expressed recommendations in analogous contexts to expand the collection of fees for
various park uses.  However, she suggested that increased specificity was needed in the proposed
legislation regarding the expenditure of fees to prevent the uncertainty and inconsistencies found
in
NPS's implementation of special use fee authority.  She also recommended that the proposed
legislation require NPS to identify the major commercial or nonrecreational activities for which
fees
would be charged.  Further, NPS should be required to develop guidance to assist individual park
units in determining: (1) commercial or nonrecreational activities not specifically identified; and
(2)
fees for commercial or nonrecreational uses that consider the factors required by the Land and
Water
Conservation Fund Act. 

The Inspector General concluded her testimony with the overall assessment that the proposed fee
and cost recovery program could be successfully implemented if NPS continues its commitment
to
the development and implementation of clear guidance, reliable accounting systems, and
effective
program oversight.  In that regard, the Inspector General noted that NPS was in the process of revising guidance related to special park
uses
and that similar attention would have to be paid to additional revisions necessitated by the
proposed
legislation.  She also stated that progress was being made in the development of reliable
accounting
systems and that our office could assist in the development of effective program oversight
through
our annual audits of NPS's financial statements conducted pursuant to the Chief Financial
Officers
Act of 1990.

In addition, on November 8, 1995, Subcommittee Chairman, James V. Hansen submitted two
written
questions to the Inspector General, further exploring the user fees issue.  Chairman Hansen
inquired:
1) whether other Interior Bureaus have broad discretion as to when to charge and for what types
of
activities to charge for, and whether any other bureaus have authority to retain fees which are not
subject to appropriations; and 
2) whether any other Interior Bureaus or Federal agencies have the authority to retain 
the difference between actual costs and fair market value 
for goods or services rendered without being subject to appropriations?

The OIG, in cooperation with the Solicitor's Office (SOL), responded on December 15, 1995. 
The
OIG/SOL informed the Chairman that the issue regarding other Interior Bureaus that have broad
discretion as to when and for what types of activities they charge fees is best viewed as a
continuum
on which bureaus having little or no discretion in their specific fee collection activities are at one
end, and bureaus having broad discretion on both the type of activities for which fees can be
charged
and the amount of fees that can be assessed are at the other.  The OIG/SOL response provided
specific examples along the continuum.  

The OIG/SOL also informed the Chairman that some Interior Bureaus do have authority to retain
fees which are not subject to appropriations.  However, the statutes which authorize this activity
vary
on the amount of discretion accorded to the bureau regarding how such funds must be spent. 
Again,
the response provided specific examples.

Finally, the OIG/SOL responded that while our review was not exhaustive, we identified one
Interior
Bureau and one other federal agency that were authorized to retain the difference between the
actual
cost and fair market value of goods without being subject to appropriation. 









Legislative Review

During the reporting period, several hundred legislative items were reviewed and, where
appropriate, commented upon by OIG.  The purpose of this effort was to monitor
legislative proposals and evaluate their potential for encouraging 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 legislation, including the 
Ethics in Government Act Amendments of 1995.  The bill inserts a new provision requiring
notification to the designated agency ethics official, in advance of acceptance, by certain high
level
noncareer employees (e.g., GS-15 and up), of all honoraria aggregating to $200 or more from any
one source.  OIG supported the proposed amendments because prior notification can help avoid
conflicts of interest, as well as the appearance of such conflicts.  Furthermore, such reporting
prior
to the activity makes the task of monitoring somewhat easier than attempting to rectify, after the
fact,
any conflicts that would be discovered.



OIG also commented on the proposed Elimination of Unnecessary Reports to Congress in the
FY97
Budget.  OIG's comments focused on reports proposed for elimination that OIG is currently
required
to make to the Congress.  OIG agreed with the proposed elimination of five reports regarding
audit
activity, as they were duplicative.  OIG disagreed with the proposed elimination of two reports
required by the Inspector General Act that go to the heart of the mission of OIG: (1) the
Semiannual
Report to the Congress; and (2) the so-called "seven day letter," the requirement that particularly
serious or flagrant problems in the administration of programs and operations should be reported
to
the head of the agency, who, in turn, must report them to the Congress within 7 days of receipt,
along with appropriate comments. Significant Audits and Investigations

FINANCIAL STATEMENT AUDITS

During this semiannual period, OIG audited and issued audit reports on the financial
statements of 10 of DOI's 12 bureaus and offices.  These audits are required by the Chief
Financial Officers Act of 1990.  Because of delays caused by the Government furloughs
and the 1996 blizzard, these audit reports were not issued by the 
March 1, 1996, date required by OMB Bulletin 93-18, "Audited Financial Statements." The
financial
statement audits of the Office of the Secretary and NPS were not issued by the end of this
reporting
period because additional efforts were needed by NPS and DOI to correct and improve
conditions
reported in our previous reports. 

Based on the efforts of DOI and bureau financial managers,  significant improvements were
made
from last year.  Specifically, 8 of the 10 audit reports on the bureau's fiscal year 1995 financial
statements issued by the end of this reporting period had unqualified opinions, and 2 reports had
qualified opinions. Last year, for the same bureaus, we issued six reports with unqualified
opinions,
two reports with qualified opinions, and two reports with disclaimers of opinions.

Although they received qualified opinions on their fiscal year 1995 financial statements, notable
improvements were made by the Bureau of Indian Affairs (BIA) and the U.S. Geological Survey
(USGS).  Specifically, in last year's reports, we were unable to audit their financial statements
and
therefore issued disclaimers. However, because of management's commitment in each bureau,
major
changes were made to improve financial reporting.  For example:

-  BIA made significant progress in correcting the deficiencies in its accounting records and
internal
control structure for fiscal year 1995.  As a result, we were able to express a qualified opinion on
BIA's financial statements.  This is a notable improvement from our prior audit reports on BIA's
financial statements, in which we were unable to express an opinion because BIA could not
provide
documentation to support the amounts reported.  Our report on the fiscal year 1995 financial
statements was qualified because BIA was in the process of completing, but had not completed,
corrective actions related to amounts reported for property, plant, and equipment; accounts
receivable; deposit fund liabilities; revenue; bad debt expense; and net position.  

-  During fiscal year 1995, USGS made significant progress in correcting the deficiencies
identified
in our last report on its financial statements. Specifically, USGS implemented a fixed asset
subsystem to its financial management system and took action to correct the deficiencies
identified
in its property management system.  As a result, we were able to express a qualified opinion on
USGS's financial statements for fiscal year 1995. This is an improvement over our prior financial
statement audit report, in which we were unable to express an opinion because USGS did not
have
adequate support to substantiate the amounts reported for most of its material accounts.  

Improvements made by the Bureau of Land Management (BLM) and the U.S. Fish and Wildlife
Service (FWS)  enabled us to issue unqualified opinions on their fiscal year 1995 financial
statements.  In our financial statement audit reports issued last year on these bureaus, we issued
qualified opinions because of significant internal control weaknesses that affected our ability to
determine whether the account balances were presented fairly for property, plant, and equipment
and
depreciation.  However, 
during fiscal year 1995, both bureaus took significant actions to correct these conditions.  For
example: 

- BLM  developed a plan, which was approved by the Department, to begin the early
implementation
of the FASAB's draft accounting standard on property, plant, and equipment. The draft standard
allowed the bureaus to develop estimates for the values of property, plant, and equipment when
records to support the actual costs were not available. In addition, BLM was in the process of
correcting its internal control structure for its real property system so that it could correctly
account
for and report on real property in the future.

- FWS also began early implementation of the FASAB's draft accounting standard on property,
plant,
and equipment by developing and implementing a plan, which was approved by the Department. 
In accordance with its plan, FWS established reasonable estimated values for its property, plant,
and
equipment; reclassified most of its land as stewardship land; and removed the related amount
reported for land from the financial statements. 



We again issued unqualified opinions on the financial statements of the Minerals Management
Service (MMS), the Office of Surface Mining Reclamation and Enforcement (OSM), the Bureau
of
Mines (BOM), and the Office of Insular Affairs (formerly the Office of Territorial and
International
Affairs). We also reported that these bureaus' internal accounting controls met the required
internal
control objectives and that there were no material instances of noncompliance with provisions of
laws and regulations that we tested. 

Unqualified opinions were also issued on the financial statements of the Bureau of Reclamation
(BOR) and the National Biological Service (NBS).  However, we reported conditions that
affected
these bureaus' internal control structure and compliance with laws and regulations.  For example: 

-  NBS's internal accounting control structure meets the established internal control objectives
except
for the controls related to accounts payable (accrued expenses) and accounting for capitalized
equipment.

-  BOR's internal accounting control structure meets the established internal control objectives
except
for the controls related to the subsidiary records for real property, and BOR has complied with
applicable laws and regulations except for not enforcing cost recovery to ensure compliance with
the legislation establishing the Working Capital Fund.

The financial statements of BOM and NBS were prepared assuming that the bureaus would
continue
as going concerns. However, BOM is scheduled to discontinue most of its operations during
fiscal
year 1996 and transfer the remaining portion of its operations to other designated Federal
agencies.
NBS is scheduled to be transferred to USGS during fiscal year 1996. 

Financial Management in the Insular Areas

OIG developed an audit strategy designed to assist the insular area governments in making
improvements in
(1) financial management, 
(2) expenditure control, 
(3) revenue collection, and
(4) program operations.  In order to be able to measure subsequent improvements in these areas,
we
summarized 
the current status of improvements in financial management and program operations based on the
results of previous audits of  the Government of American Samoa, the Commonwealth of the
Northern Mariana Islands, the Government of Guam, and the Government of the Virgin Islands. 

We concluded in our summary reports that although each insular area government has made
improvements in each of the four functional areas noted above, further improvements are needed. 
We believe that each government can achieve reasonable performance improvement goals in
these
four functional areas by working with the Office of Insular Affairs to implement the
recommendations made in previous audit reports.  Areas that need to be improved are as follows:

-  The American Samoa Government continues to experience problems in budgetary controls,
long-term debt, grants management, expenditure control, and revenue collection.  Insular Affairs
has led
efforts to address these problems by providing technical assistance to the Government and by
training Government employees in the areas of governmental accounting, auditing, management,
and
procurement.  (Summary report issued this semiannual period.)

-  The Commonwealth of the Northern Mariana Islands continues to experience problems in
procurement, contracting, budgeting, grant accounting, and compliance reporting.  Insular Affairs
has provided technical assistance to address these problems through direct grants and
reimbursable
agreements with Federal Government agencies and has provided training to government
employees
in the areas of census taking, tourism awareness, electrical utility operation, drug awareness,
health
care, bank examining, microcomputer systems, and occupational safety.  Courses were also
provided
in governmental accounting, auditing, management, and procurement.  (Summary report issued
this
semiannual period.)

-  The Government of Guam continues to experience problems in expenditure control, revenue
collection, and property management.  Insular Affairs has provided technical assistance to
address
these problems through direct grants, reimbursable agreements with Federal and local
government
agencies, and contracts with private firms.  Various training courses also have been provided,
including governmental accounting and strategic planning and budgeting.  (Summary report
issued
this semiannual period.)




-  The Government of the Virgin Islands continues to experience problems in payroll operations,
procurement management, and data processing.  Insular Affairs has provided technical
assistance,
and the Government has made significant improvements in the problem areas identified. 
Training
has been provided in governmental accounting, auditing, data processing, grants management,
contracting, procurement, and budgeting.  (Summary report issued in a previous Semi-annual
period.)

BUREAU OF INDIAN AFFAIRS

Improvements in Irrigation Project Administration Needed

BIA did not base operation and maintenance rates for irrigation projects on the full cost of
delivering
water, including the cost of systematically rehabilitating and replacing project facilities and
equipment.  As a result, project revenues have been insufficient to adequately maintain the
projects,
some of which have deteriorated to the point that the continued  delivery of water is doubtful. 
Specifically, BIA had not recovered operation and maintenance charges totaling $3 million owed
eight projects for fiscal years 1993 and 1994.  In addition to not seeking regular rate increases to
cover the full cost of delivering water, BIA had not ensured compliance with existing
requirements
for the billing and collection of operation and maintenance charges and for surety bonds or other
securities.  Further, BIA had not taken adequate action to recover reimbursable construction costs
in a timely manner from non-Indian  
landowners for seven projects.  
Specifically, reimbursable construction costs totaling $7.7 million were not collected from the
landowners for five projects, and reimbursable costs of $3.3 million were not included in the
repayment contracts for two projects. This occurred because BIA had not negotiated repayment
contracts, adjusted repayment rates, or followed required procedures necessary to collect the
reimbursable construction debt from non-Indian landowners.  BIA agreed with all of our 
recommendations to correct these conditions. 

Three Indicted in Bank Fraud Scheme

Investigation disclosed that the former credit officer for a South Dakota Indian tribe conspired
with
two other individuals in a fraudulent scheme to obtain a $215,000 BIA direct loan.  The two
individuals used the $215,000 direct loan proceeds to purchase a business from the credit officer
and 
then defaulted on the full amount of the loan.  Investigation also disclosed that the credit officer
had
previously falsified BIA and other documents to obtain a $150,000 loan through a private
lending
institution insured by the Federal Deposit Insurance Corporation.  In February 1996, the credit
officer and the other two individuals were indicted on conspiracy and false statement charges.  In
addition, the credit officer was charged with bank fraud and witness tampering.  Judicial action is
pending.

School Employees Sentenced for Embezzlement

The business manager and two other employees of a Federally funded Indian school in Arizona
were
indicted in September 1995 after an OIG investigation disclosed that they had embezzled
approximately $185,000 from the school.  The embezzlement, which occurred over a 3-year
period,
prevented the construction of a much-needed gymnasium at the school and severely curtailed
other
student activities.  A Federal grand jury in Phoenix, Arizona, returned an indictment charging
each
subject with theft or embezzlement from an Indian tribal organization.  The indictments of the
individuals were reported in our last Semiannual Report.

Each of the individuals subsequently pled guilty.  
The business manager was sentenced to 15 months of incarceration, to be followed by 3 years of
supervised probation.  She was also ordered to make restitution to the school in the amount of
$98,744.47.  One of the other employees was sentenced to 5 years of supervised probation and
was
ordered to make restitution to the school in the amount of $19,354.54. Sentencing of the third
employee is pending.  

Tribal Official Indicted for Embezzlement From Scholarship Fund

On December 14, l995, a Federal grand jury in Great Falls, Montana, returned an indictment
charging the Director of Education for a Montana Indian tribe with one count of theft of public
money and one count of theft or embezzlement from an Indian tribal organization.  The
indictment
was the result of an OIG investigation which disclosed that the director had taken more than
$4,000
in BIA Higher Education Funds for his personal use from the scholarship fund of a tribally
operated
college.  When an audit of Federal funds revealed the theft, the Director misappropriated tribal
funds
to partially replace the missing BIA Higher Education Funds.  The trial is pending.

Two Tribal Officials Charged in Embezzlement

A tribal official in California was indicted on July 26, 1995, on five counts of theft or
embezzlement
from an Indian tribal organization.  The indictment stated that the individual charged a variety of
personal purchases valued at more than $8,700 to a tribal American Express credit card,
including
an AK-47 assault rifle, a 9mm Uzi assault weapon, and a 12-gauge shotgun.  On November 27,
1995, the subject pled guilty to one count of a five-count indictment of embezzlement of tribal
funds. 
Sentencing is pending.
      
In a related case, another former California Indian tribal official was indicted on January 23,
1996,
on 18 counts of theft or embezzlement from an Indian tribal organization.  
The subject made personal purchases with a tribal American Express credit card, which were
subsequently paid for with tribal funds.  The subject also conspired to have three tribal checks
issued
to himself.  This embezzlement of tribal funds exceeded $11,000.  The tribal official was arrested
on February 8, 1996, pursuant to an arrest warrant issued by a magistrate  for the Central District
of
California, Los Angeles, California.  Trial is pending.

Tribal Officials Convicted for Embezzling Travel Funds

Four former members of a tribal business committee were found guilty of embezzlement after a
trial
in the Western District of Oklahoma.  An OIG investigation disclosed that the former
Chairperson,
Business Manager, Comptroller, and a General Business Committee member embezzled $14,196
from tribal travel funds by submitting claims for expenses that were not incurred.  The four
officials
were sentenced in U.S. District Court, Oklahoma City, Oklahoma, to a total of 318 months of
imprisonment and 600 months of probation and were ordered to pay restitution and special
assessments in the total amount of $2,756.20.  Additionally, three of the four officials were
ordered
to perform 624 hours of community service.







Company Sentenced for Facilitating Sale and Illegal Transportation of Gambling Devices
                                 
A grand jury investigation conducted by a Federal Task Force on Indian Gaming in Minnesota
revealed that a New Jersey-based company facilitated the sale and illegal transportation of video
gambling machines and related machine parts to Michigan Indian casinos prior to the 1993
establishment of gaming compacts between the State of Michigan and Indian tribes within the
State. 
The company pled guilty after being named defendant in a 106-count indictment returned in the
U.S.
District Court, District of Minnesota, St. Paul, Minnesota.  The company was sentenced to 1 year
of probation, fined $5,000, and ordered to pay a special assessment of $400.  The court departed
from Federal sentencing guidelines based on substantial cooperation received from the company
during the investigation.

Casino Supervisor Pleads Guilty to Embezzlement
       
A bingo money room supervisor at a tribal casino in the Midwest pled guilty to two counts of
embezzlement and theft from an Indian tribal organization.  An OIG investigation revealed that
the
supervisor embezzled over $108,000 and falsified documents to conceal the thefts.  The
supervisor
was sentenced in U.S. District Court, Minneapolis, Minnesota, to 4 months of imprisonment, 120
days of home detention, and 3 years of probation; ordered to make restitution in the amount of
$4,628; and ordered to pay a special assessment of $50.

BUREAU OF LAND MANAGEMENT

Improvements in Administrative Activities Needed at Colorado State Office

BLM's Colorado State Office was generally conducting its administrative activities in accordance
with requirements.  However, actions were needed to ensure compliance with requirements in the
areas of cash management, deposit of mining fees, map inventories, and vehicle utilization. 
Specifically, the State Office was not reconciling daily receipts with daily deposits or using
appropriate budgetary activity accounts to account for mining fees.  It also was not providing
sufficient management control over certain aspects of its map sales, map orders, and map
inventory
activities.  In addition, the vehicle fleet was underutilized, with the result that some vehicles
could
be turned in.  Although State Office officials, at our exit conference, concurred with our
recommendations to improve control of their administrative activities, a response to this report
was
not due by the end of this reporting period.

Internet Abuse Detected

Concerns regarding the integrity and security of the 
BLM computer system were raised when a BLM senior systems analyst provided a BLM user
account number allowing access to a worldwide Internet connection to at least 25 members of a
locally based bulletin board service.  The BLM domain name was purportedly used to manage
E-mail messages for forwarding to a public bulletin board server. Covert Internet accounts were
provided by other cooperating law enforcement agencies to enable OIG to become a member of
the
bulletin board. Because of the rapidly emerging technology in the Internet area, issues in the
investigation involving the expectation of privacy were coordinated with the U.S. Attorney's
Office,
District of Colorado, and the Computer Crimes Division, U.S. Department of Justice. Internet
connectivity through the BLM was tested by passing Internet E-mail messages to and from the
bulletin board service. OIG inquiries determined that Internet connectivity was electronically
routed
through the BLM computer system.  Remote examination of the material contained on the
bulletin
board by modem revealed that the messages were not related to Government business and
originated
both nationally and internationally.  Corrective action was taken by BLM management, and a
policy
statement was developed addressing Internet usage and access within BLM.

In addition, due to the potential for misuse of the Internet, the OIG has recommended the
establishment and wide dissemination of a Department-wide policy regarding the use of and
access
to the Internet.  We also recommended that each bureau, as appropriate, establish and
disseminate
its own specific policies within the Departmental guidance.

Employee Investigated for Improper Access and Release of Information

Based upon a complaint received from BLM, an OIG investigation determined that a BLM
Special
Agent in the western United States used his position to improperly access criminal information
on
an individual in a non-work-related matter, which he subsequently divulged to others.  The BLM
Special Agent obtained the information from a state-owned and
-operated law enforcement data base.  The case was declined by the local District Attorney's
Office
and was referred to BLM.  Administrative action is pending. 

BUREAU OF RECLAMATION

Contract Not Administered Adequately 

BOR did not ensure that costs related to the award of delivery orders under a contract to clean up
the
Summitville Mine site, near South Fork, Colorado, were fair and reasonable.  BOR neither
adequately evaluated the contractor's proposed costs or its purchasing system nor considered
alternative contractors for portions of the cleanup effort.  As a result, the amount billed by the
contractor through December 31, 1994, which was based on negotiated contract rates, exceeded
actual costs by $5.3 million.  This amount was in addition to profit negotiated into contract prices
for labor, overhead, and general and administrative expenses.  Delivery orders on the
Summitville
project were beyond the scope of the initial contract award.  We reported that BOR should have
performed further analyses of the procurement method and the qualifications of the contractor.  

For example, we believe that subcontracting for production work on three delivery orders,
totaling
$12.5 million, indicates that BOR may have had the opportunity to reduce costs by competing
and
awarding separate contracts for the 
work thereby avoiding the contractor's profit and overhead on these orders.  
In regard to contract administration, we found that BOR: (1) did not establish formal inspection
procedures; (2) paid a fee to the contractor that may represent an unallowable interest payment or
additional profit that was not authorized under the contract; and (3) incurred, on four occasions,
costs
on the Summitville project in excess of funds authorized.  BOR officials disagreed with 6 of the
10
recommendations made in our audit report.

Contractor's Claim Not Substantiated

A subcontractor proposed and claimed costs of $529,049 related to concrete form work and
stripping
on a parking structure at Hoover Dam, Nevada.  The subcontractor's claim was part of an overall
certified claim of $31,040,071 submitted by the contractor to BOR.  The claim stated that
increased
and additional costs had occurred because of contract changes; differing site conditions; and
incomplete, inaccurate, and uncoordinated contract documents.  We questioned $330,600 of the
subcontractor's claimed costs of $529,049 because claimed costs were based on the
subcontractor's
proposed rates, which were higher than the audited rates; exceeded actual costs; were not
attributable
to BOR actions; or could not be substantiated by the accounting records.  The audit was in the
resolution process at the end of this reporting period.

U.S. FISH AND WILDLIFE SERVICE

Excess Employee Housing Exists

FWS had more Government furnished quarters than it needed to house employees essential to the
effective operation of its programs.  Specifically, 98 (25 percent) of the 387 quarters managed by
the three regions we reviewed were classified by the regions as vacant.  Further, FWS had not
established procedures to determine under what conditions housing units should be kept and
maintained.  We also found that FWS needed to improve controls over accounting for and using
quarters account funds and to ensure that rental rates for Government furnished quarters were
properly established.  FWS agreed with all of our recommendations to correct these conditions.

Contract Costs for Fencing Questioned

A contractor submitted a $107,624 claim to FWS on a $56,552 fixed price contract to construct
fencing around the boundary of the Ash Meadows National Wildlife Refuge in Pahrump,
Nevada. 
Because FWS was unable to obtain the required permits, the contractor could not begin work on
the
fencing and subsequently moved its equipment from the job site.  FWS postponed work on the
fence
and compensated the contractor for moving its equipment, which increased the contract price to
$59,600.  Of the $107,624 claimed, we questioned $104,555.  The audit was in the resolution
process
at the end of this reporting period. 



Employee Sentenced for Embezzlement

An OIG investigation determined that an FWS office automation clerk embezzled $12,271.60
from
the agency by submitting fraudulent invoices and forged claims for reimbursement to several
imprest
fund cashiers for payment.  The employee admitted that he embezzled the money to support a
drug
habit.  The individual was subsequently indicted on five counts of theft or conversion of public
funds.  The employee pled guilty, and on October 17, 1995, he was sentenced to 120 days of
home
detention and placed on probation for 5 years.  In addition, he was ordered to participate in a
drug
rehabilitation program and to make full restitution of $12,271.60 to FWS.

U.S. GEOLOGICAL SURVEY

Property Management Improved

USGS has made substantial improvements in the physical management of its capitalized
property. 
However, deficiencies still existed in its controls for recording acquisition costs in the property
system.  We estimated that the $335 million property and equipment balance as of September 30,
1994, was overstated by at least $5.9 million and that the recorded acquisition costs for
equipment
totaling about $1.9 million were not adequately supported by the accounting records.  USGS
concurred with our recommendations to correct deficiencies in its controls.

Theft of $32,000 Results in Guilty Pleas

An employee with USGS
in Wyoming signed and improperly issued 74 USGS third-party draft payments totaling $32,050. 
The employee falsified contract documents in an attempt to conceal the embezzlement.  
Seventy-two of the drafts 
were made payable to an accomplice, who negotiated the drafts and split the proceeds with the
USGS employee.  The employee also issued two other drafts to an associate, who cashed the
drafts
and gave the money to the employee.  On November 29, l995, a Federal grand jury indicted the
employee and accomplice on one count of conspiracy,  three counts of theft or conversion of
public
funds,  and one count of aiding and abetting.  On February 1, l996, the accomplice pled guilty to
one
count of conspiracy to defraud the Government and was sentenced on March 29, 1996, to 1 year
in
jail and 3 years of probation and was ordered to pay $5,000 in restitution.  On February 12, l996,
the
employee pled guilty to the theft of Government funds.  Sentencing of the employee is pending.

MINERALS MANAGEMENT SERVICE

Contract Costs for Aquatic Activities Questioned

MMS awarded, through the Small Business Administration, four cost-plus-fixed-fee contracts
totaling $1,681,539 after modifications.  The contracts were awarded to study California coastal
commercial and sport fisheries, monitor grey whales, and administer technical conferences on the
Alaska and Pacific Outer Continental Shelves.  Of the $1,665,636 claimed, we questioned
$720,169
in unsupported costs.  The audit was in the resolution process at the end of the reporting period.

$115,000 Civil Complaint Filed

In 1990, an MMS employee in California filed a false permanent change of station travel claim
regarding the sale of a house.  Investigation initiated in 1993 disclosed that the employee
improperly
claimed and was paid $55,250 in conjunction with the house sale. Pursuant to a referral to the
U.S.
Department of Justice,  Washington, D.C., the Regional Solicitor for DOI, on behalf of MMS,
filed
a civil complaint under the Program Fraud Civil Remedies Act of 1986.  On February 27, 1996,
the
employee was served with a civil complaint seeking recovery of $115,500 on behalf of MMS. 
(The
Program Fraud Civil Remedies Act of 1986 provides for recovery of double damages and a
penalty
of $5,000 per occurrence.) 

Company Assessed Penalties for Violating Regulations

An OIG investigation disclosed that a Louisiana-based company violated MMS regulations
governing sub-surface safety devices in off-shore oil and gas production facilities (wells)
operated
by the company.  Based on the investigative findings, the Regional Director, Gulf of Mexico
Region,
MMS, initi-ated three civil penalty actions against the company. Follow-ing a civil penalty
hearing,
the Reviewing Officer determined that the activities of the com-pany were violations of MMS
safety
regulations and assessed penalties totaling $172,400. 

NATIONAL PARK SERVICE

Special Park Use Fees Not Administered Consistently 

NPS did not consistently implement its authority to collect and retain fees for special park uses,
such as weddings, commercial filming, and athletic events.  Under the special use provisions of
NPS's Appropriations Acts for 1991 through 1994 to collect and retain fees, we found that some
parks had instituted special use permit fees for major activities and some had converted existing
fee activities to special use fee activities so that they could retain the revenues.  A combination of
both methods was also used.  Also, there were differences among the parks regarding:  (1) the
types of activities that were subject to a fee; (2) the bases for determining the amount of the fee;
and (3) the use of fee revenues.  For example, although some parks issued permits for special
use, only some of those parks collected fees for the special use activity.  NPS guidelines did not
provide park managers with sufficient guidance on when to use the cost or market approach in
establishing fees, the types of costs to include in the fees, or the documentation necessary to
support the fee determination.  In addition, we identified weaknesses in the controls for
collecting and/or accounting for special use fee revenues at 4 of the 13 parks we reviewed and
found that 11 of the parks carried over special use fee revenues totaling $331,864 into fiscal year
1995.  According to NPS records, NPS carried over special use fee revenues totaling $514,456
from all parks into fiscal year 1995.  NPS agreed to expedite the revision of its NPS-wide policy
regarding special park uses. 

Violation Notices Not Controlled Adequately

NPS's United States Park Police did not adequately control or account for all violation notice
forms assigned to its officers.  As a result, Park Police records did not contain information on the
disposition of 92 (34 percent) of the 270 notice forms we reviewed, and the Park Police had no
assurance that these notices were defaced, lost, or voided for valid reasons.  Although Park
Police guidance requires that requests for cancellation of violation notice forms be made in
writing and approved by an officer at the rank of captain or above, the Park Police did not
enforce these requirements.  Further, it did not have a system for reconciling lists of blank notice
forms assigned to officers with lists of notices issued.  NPS agreed with our recommendation to
adequately control or account for the notices.

Increased Efficiencies Needed 

Losses by a concessioner operating in the National Park System were attributable, in part, to
unprofitable operations at selected parks; high overhead costs; and unusual expenses incurred
during 1993 for legal fees, fringe benefits, and pension payments.  Despite
concessioner-implemented cost-cutting measures, we believe that the concessioner will continue
to sustain
losses unless unprofitable operations are curtailed or eliminated; operating and overhead costs
are controlled; and revenues are increased through raised prices for food services.  We also found
that NPS needs to improve its monitoring and guidance regarding the concessioner's use and
investment of special account funds.  NPS agreed with all of our recommendations. 

Employee Resigns Following OIG Investigation
                                 
An OIG investigation revealed that a former NPS employee submitted a fraudulent application
for employment to NPS in response to a vacancy announcement at a park in Florida.  The former
employee falsely represented on the application and supporting documentation that he was
entitled to a 10-point veterans preference. The employee resigned after receiving a Proposed
Notice of Removal from NPS.

OFFICE OF SURFACE MINING RECLAMATION AND ENFORCEMENT

Further Improvements Needed In Debt Collection

OSM and the Solicitor's Office have improved their debt collection programs since our last audit
in 1990.  However, we identified actions needed to improve the efficiency and effectiveness of
these programs and to ensure full compliance with Federal debt collection requirements.

Since 1987, OSM has significantly reduced the staffing level in its Division of Debt Management
by about 75 percent in response to a decreasing work load.  However, based on our analysis of
the Division's fiscal year 1994 work load, we concluded that further staff reductions were
warranted, which could result in savings of about $820,000 annually.  OSM officials indicated
that they were committed to making further staff reductions as the debt work load decreased.  We
also found that further action to enforce collection of delinquent accounts is needed, even though
only a relatively small amount of OSM's reclamation fee receivables became delinquent (in fiscal
year 1994, for example, about 98 percent of all fees were paid in a timely manner).  Specifically,
OSM needed to ensure that bureau, DOI, and Federal regulations pertaining to the debt collection
function were implemented comprehensively.

Although the Solicitor's office had made significant progress in reducing the backlog of debt
cases, we found that debt processing delays may be exacerbated by recent staff reductions and
additional case work assignments.  At the two offices reviewed, $8.0 million of debt had not
been processed in a timely manner, consisting of $6.3 million that should have been written off
and $1.7 million that required further processing to determine whether the debt was collectible. 
An additional $2.5 million of uncollectible debt (consisting mainly of cases closed by the
Solicitor) had not been deleted from OSM's accounting records, and $1.6 million of uncollectible
charges had accrued on bankruptcy debt.  However, we did not find significant amounts of
unprocessed collectible debt.

We recommended that OSM and the Solicitor enter into an agreement to ensure the timely
processing of debt and to facilitate the termination of uncollectible debt.  We also recommended
that OSM:  (1) maintain the Division of Debt Management staff at the level needed to process
delinquent debt efficiently; (2) implement administrative controls to ensure that required debt
collection functions are performed in compliance with Federal regulations; and (3) review the
status of debt that has been referred to the Solicitor to ensure that receivables are reported
accurately and accounted for fully.  Based on OSM's and the Solicitor's responses to the draft
report, we consider all the recommendations resolved.

Control Improvements Needed

At the request of OSM, we reviewed selected aspects of its Eastern Support Center's emergency
reclamation program.  We found that OSM was taking timely action to address mining-related
emergencies,  although improvements were needed in
internal controls over the award and administration of emergency contracts, particularly at the
Southern 
Apalachia Branch Office.  
Appropriate contract award procedures were not always followed, and the project design and cost
estimation processes were inadequate.  
In addition, construction contracts were not monitored effectively, and 4 of the 50 project files
reviewed did not contain sufficient documentation to adequately support program eligibility
determinations.  The contract monitoring deficiencies contributed to contractor claims for
additional work totaling about $450,000 and an overpayment to one contractor of $24,000.  OSM
generally agreed with our recommendations to ensure that expedited contract award procedures
are used only when justified; basic design plans for each project are prepared and reviewed
independently; project cost estimates are fully supported; project oversight actions are fully
documented in the project files and project oversight reports are complete and prepared in a
timely manner; and project eligibility determinations are adequately supported.  In that regard,
OSM had initiated actions to improve the program before our audit was completed.           

INSULAR AREAS

AMERICAN SAMOA

Legislative Expenditures Not Controlled Adequately

The Legislature of American Samoa routinely incurred expenditures in excess of appropriations,
employed temporary personnel in excess of terms authorized by law, and did not adequately
control or account for time and attendance of Legislative employees.  In addition, the Legislature
did not ensure that goods and services were procured competitively, nonexpendable property was
adequately accounted for and controlled, documentation was submitted to support travel
expenditures, and the need for travel was adequately justified.  The President of the Senate and
the Speaker of the House, Legislature of American Samoa, concurred with our recommendations
to ensure that appropriated funds are available for expenditures, to release all temporary
employees employed for over 1 year, to implement policies and procedures to control time and
attendance reporting, to make procurements competitively to 
the extent required by law, to record nonexpendable property when it is received, to ensure that
travelers file the required travel expense reports, and to ensure that travel is adequately justified. 
The Legislature's response to the draft report was sufficient for us to consider the
recommendations resolved.

COMMONWEALTH OF THE NORTHERN MARIANA ISLANDS

Public Land Policies Not Developed Effectively

The Marianas Public Land Corporation, now the Division of Public Lands, Department of Lands
and Natural Resources, did not effectively develop management policies, procedures, and
controls related to public land.  As a result, the Commonwealth lost $118.4 million on completed
exchanges of public land, could lose $70.1 million on pending exchanges, and lost revenues of
$25.1 million on exchanged public land that was leased to a developer by landowners.  In
addition, lease revenues of $565,000 were lost, and the Government may lose additional lease
revenues of $469.2 million over the unexpired period of the leases; homestead recipients
improperly received $7 million from the unauthorized sale or lease of the lots; and homestead
lots were awarded to applicants who were ineligible or who did not have the greatest need. 
Recommendations made to the Governor included ensuring that current appraisals were used for
land transactions and that policies and procedures were implemented for homestead lots.  The
Governor did not provide a response to the report.

Park Costs Questioned

We questioned costs of $141,619 for grant and trust funds totaling $1.6 million that were
applicable to the American Memorial Park, Commonwealth of the Northern Mariana Islands.
These grant and trust funds were provided for the establishment of the American Memorial Park
to honor Americans and Marianas who died during the World War II Marianas Campaign. 
Amounts claimed consisted of costs of $139,488 that were questioned because they were
unsupported and costs of $2,131 that were unallowable because they were not related to Park
activities.
A response to this report was not due by the end of this reporting period.

MULTI-OFFICE

Safety and Health Programs Not Managed Effectively

The safety and health programs managed by NPS, BLM, BIA, BOR, and FWS were not effective
in preventing work-related accidents and illnesses.  This occurred because senior-level bureau
management did not provide sufficient support and resources to emphasize the programs and
because existing field-level policies and procedures were not implemented to ensure reasonably
safe workplaces.  As a result, work-related accidents and illnesses in recent years have risen to
unacceptably high levels, along with the associated Workers' Compensation costs, which totaled
nearly $45 million in 1994.

Also, Workers' Compensation cases attributable to work-related accidents and illnesses were not
reviewed periodically.  Consequently, many previously injured claimants continued to receive
long-term Workers' Compensation benefits despite having possibly recovered from their
disabilities.  Moreover, approximately one-half of the 1,233 DOI employees receiving long-term
benefits during 1994 potentially could have been rehabilitated and returned to work, resulting in
an $11.8 million savings.  The Office of the Secretary concurred with all of the report's
recommendations.