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OFFICE OF INSPECTOR GENERAL
SEMIANNUAL REPORT TO THE CONGRESS
OCTOBER 1, 1996 - MARCH 31, 1997
Activities of the Department of the Treasury's:
* Office of Inspector General
* IRS Inspection Service
* Customs Office of Internal Affairs
* ATF Office of Inspection
* Secret Service Office of Inspection
The Inspector General Act of 1978 (Public
Law 95-452), as amended, sets forth specific requirements for
Semiannual Reports to be made to the Secretary for transmittal
to the Congress. Other statutory and administrative reporting
and enforcement responsibilities and authorities are listed below:
Public Law (P.L.) 97-177 Prompt Payment
Act
P.L. 97-255 Federal Managers' Financial
Integrity Act
P.L. 100-504 Inspector General Act Amendments
of 1988
P.L. 101-576 Chief Financial Officers
Act of 1990
P.L. 103-62 Government Performance and Results Act of
1993
P.L. 103-356 Government Management Reform
Act of 1994
P.L. 104-106 Information Technology Management Reform
Act of 1996
National Defense Authorization Act for
Fiscal Year 1996
P.L. 104-208 Federal Financial Management Improvement
Act of 1996
Title 5 United States Code (U.S.C.), section
552a(i)
Title 18 U.S.C., sections on crime and criminal
procedures as they pertain to the Office
of Inspector General's oversight of
departmental programs and employee
misconduct
Title 31 U.S.C., section 3729 et seq., the Civil
False Claims Act, and 3801 et seq., the
Program Fraud Civil Remedies Act
Title 42 U.S.C., sections 1320a-7, 1320a-7a,
1320c-5, 1395l, 1395m, 1395u, 1395dd,
and 1396b
FOREWORD
In my tenure as the Treasury Inspector
General, my office's focus has been to maximize the impact of
our work by concentrating on what is most important to the Department.
The strategic goals that support our mission include promoting
economy, efficiency, and effectiveness; improving financial management;
heightening integrity awareness and deterrence; and monitoring
departmental information systems development. We have created
a system for long and short-range planning that focuses particular
attention on areas that reflect the Department's priorities.
In less than 3 years, we have built one
of the strongest financial statement audit groups in the Inspector
General community. The scope of our financial statement audit
activity continues to expand in response to Government Management
Reform Act requirements and departmental mandates. This is the
first year that we will express an opinion on the Treasury's Department-wide
financial statements. In all, we plan to issue 16 audit reports
on Fiscal Year 1996 statements as compared to 12 reports on the
Fiscal Year 1995 statements. Progress in the area of financial
management has been demonstrated by improved levels of audit assurance,
and we intend to build on this success. However, much remains
to be done. Financial management will continue to be a major focus
for us. (Pages 11 to 14.)
Treasury is one of only three agencies
where the Inspector General has oversight responsibility for other
internal audit and investigative functions within the Department.
The 1988 Amendments to the Inspector General Act of 1978, which
established my office, did not create a single audit and investigative
entity for Treasury. Instead, we share that responsibility with
and have oversight of internal investigations by the Offices of
Internal Affairs and Inspection at the Bureau of Alcohol, Tobacco
and Firearms, United States Customs Service, and United States
Secret Service, and of internal audits and investigations by the
Internal Revenue Service Inspection Service. Two examples of our
oversight activities appear in this report. (Pages 35 and 36.)
In the past year we have strengthened
our organizational independence. During my tenure, the Office
of Inspector General has handled numerous issues requiring the
exercise of independent legal advice. The General Counsel and
I determined that a 1995 Memorandum of Understanding (MOU), meant
to ensure the provision of such legal services, did not adequately
reflect the appropriate relationship between my Counsel and the
Office of the General Counsel (OGC). Accordingly, we rescinded
the MOU. On February 4, 1997, the General Counsel and I formally
recognized that the Counsel to the Inspector General is organizationally
independent from OGC.
I believe that our process of establishing
goals and strategies for the long term, setting and achieving
annual targets, and reporting on our progress will enable us to
manage our programs more efficiently and effectively and provide
coverage to significant Treasury programs and operations.
Valerie Lau
Inspector General
Department of the Treasury
April 30, 1997
Acronyms
ACS Automated Collection System IGATI Inspectors General Auditor Training
AD-CV Antidumping and Countervailing Institute
ADP Automated Data Processing IPAs Independent Public Accountants
AID Agency for International IRA Individual Retirement Arrangement
Development IS Information Systems
AIMS Audit Inventory Management ISDN Integrated Services Digital Network
System IT Information Technology
AUO Administratively Uncontrollable LBCIP Land Border Carrier Initiative
Overtime Program
BAAs Business Area Analyses MACS Midwest Automated Compliance
CFO Chief Financial Officers System
CID Criminal Investigation Division MOU Memorandum of Understanding
DCAA Defense Contract Audit Agency NPR National Performance Review
DIS Distributed Input System ODC Other Direct Cost
DTS Digital Telecommunications System OGC Office of the General Counsel
EFDS Electronic Fraud Detection System OI Office of Investigations
EFTPS Electronic Federal Tax Payment OIG Office of Inspector General
System OMB Office of Management and EOAF Executive Office for Asset Budget
Forfeiture OTA Office of Technical
ERCS Examination Returns Control Assistance
System PCA Prompt Corrective Action
FAB Funds Accounting Branch PCIE President's Council on
FBI Federal Bureau of Investigation Integrity and Efficiency
FFSAM Federal Financial Statement Audit P.L. Public Law
Manual RACS Revenue Accounting Control FMD Financial Management Division System
FMFIA Federal Managers' Financial SCRIPS Service Center Recognition
Integrity Act Image Processing System
GAO General Accounting Office SOT Special Occupational Tax
GMRA Government Management Reform SSNs Social Security Numbers
Act TCMP Taxpayer Compliance
GPRA Government Performance and Measurement Program
Results Act TILA Truth In Lending Act
ICS Integrated Collection System TIN Tax Identification Number
IDRS Integrated Data Retrieval System TSM Tax Systems Modernization
UR Underreporter
U.S.C. United States Code
TABLE OF CONTENTS
Page
FOREWORD i
OVERVIEW 1
INTRODUCTION 5
Treasury Functions and Organization 6
Management and Financial Leadership 7
CHAPTER I: FINANCIAL MANAGEMENT
Financial Audits 11
CHAPTER II: ECONOMY, EFFICIENCY, AND
EFFECTIVENESS
Performance Reviews 15
Management Assessments 24
Information Technology Oversight 29
Contract Oversight 31
CHAPTER III: INVESTIGATIVE ACTIVITIES
Integrity Awareness and Deterrence 35
Criminal Investigations 36
Employee Conduct 48
STATISTICAL SUMMARIES 51
APPENDIX A: REPORT LISTING OCTOBER 1, 1996 THROUGH
MARCH 31, 1997 71
APPENDIX B: CROSS REFERENCES TO INSPECTOR
GENERAL ACT 79
Department of the Treasury
Bureaus Employees
Bureau of Alcohol, Tobacco and Firearms (ATF) 4,000
Office of the Comptroller of the Currency (OCC) 3,000
U.S. Customs Service (Customs) 19,400
Departmental Offices (DO) 1,800
Bureau of Engraving and Printing (BEP) 2,700
Federal Law Enforcement Training Center (FLETC) 500
Financial Management Service (FMS) 2,200
Internal Revenue Service (IRS) 119,500
U.S. Mint (Mint) 2,100
Bureau of the Public Debt (BPD) 1,700
U.S. Secret Service (Secret Service) 4,700
Office of Thrift Supervision (OTS) 1,300
Total 162,900
OVERVIEW
The Office of Inspector General (OIG)
issued 67 reports during the reporting period with recommendations
that funds be put to better use and questioned costs totaling
$30.6 million. The IRS Inspection Service issued 49 reports. Monetary
benefits relating to investigations conducted by the OIG and Offices
of Internal Affairs and Inspection exceeded $6.0 million. The
following summaries represent major issues and concerns for the
first half of Fiscal Year 1997.
ACCESS TO INFORMATION
* The Inspector General Act requires
Inspectors General to report those circumstances that, in the
judgment of the Inspector General, constitute an unreasonable
refusal of requested information or assistance. In the last Congress,
the Chairman of the Senate Governmental Affairs Committee asked
the OIG to respond to ten specific questions, which generally
pertained to Treasury policies and practices regarding background
investigation files and the production of the list used to request
those files. Subsequently, Secret Service provided testimony regarding
the process by which the White House access list is maintained
and updated. The Ranking Minority Member of the House Committee
on Government Reform and Oversight made a separate request for
an investigation into the preparation of testimony provided by
Secret Service officials before that Committee. Since the inception
of the OIG's investigatory efforts, Secret Service has imposed
certain limiting conditions regarding OIG access to necessary
information within Secret Service. As a result, the OIG has been
unable to conduct an investigation and respond to the questions
posed. In support of its position, Secret Service provided a memorandum
detailing its concerns from an operational and legal perspective.
The OIG views Secret Service's expression of these concerns as
a deflection of the OIG's clearly enunciated and narrowly focused
goal of providing responses to the questions posed by the requestors.
Accordingly, the OIG believes that Secret Service's position constitutes
an unreasonable denial of access, and has attempted unsuccessfully
to resolve this matter directly with Secret Service and through
the management chain of command. Given these circumstances, the
OIG has determined that it is unable to conduct a credible and
independent investigation and accordingly the investigation is
closed. (See pages 69 and 70.)
FINANCIAL MANAGEMENT
* Financial statement audit activity
continues to increase in response to Government Management Reform
Act requirements and departmental mandates. Audits have been completed
at seven entities, and another nine are in progress. The OIG plans
to issue 16 financial statement audit reports on Fiscal Year 1996
statements, including an audit report on Treasury's Department-wide
financial statements.
* Customs received an unqualified opinion
on its Fiscal Year 1996 statement of financial position and the
related statement of operations.
* The OIG is continuing to leverage resources
by contracting with public accounting firms and by working closely
with the General Accounting Office at IRS, BPD, and FMS, bureaus
which are significant to Government-wide as well as to Treasury
financial reporting.
* The Fiscal Year 1996 Department-wide
audited financial statements will be included in Treasury's Fiscal
Year 1996 Accountability Report. The audit currently is in progress,
and the OIG's audit report is expected to be issued shortly. (See
pages 11 to 14.)
TAX SYSTEMS MODERNIZATION
* The IRS Inspection Service still considers
Tax Systems Modernization (TSM) a Federal Managers' Financial
Integrity Act material weakness and categorizes TSM control weaknesses
as "Program Management," "Infrastructure,"
and "Financial Management."
* IRS is in the process of making critical
decisions regarding TSM projects. To support these projects and
to comply with Office of Management and Budget requirements, IRS
management plans to consolidate its current mainframe processing
environment. Current and anticipated funding constraints have
necessitated a reevaluation of consolidation alternatives, and
a high level review of the consolidation strategy is underway.
* Concerns have persisted over whether
IRS has the appropriate skills and resources to develop future
TSM systems while maintaining legacy systems that must satisfy
its near-term needs. IRS internal auditors found that IRS has
not established priorities for all TSM projects. To eliminate
the use of resources on lower yield, high-risk efforts and allow
IRS to focus higher skilled employees on critical TSM and legacy
projects, IRS' Chief Information Officer will determine which
projects to contract out and the IRS Investment Review Board will
prioritize all Information Systems work based on Congressional
spending levels. (See pages 29 to 31.)
DIGITAL TELECOMMUNICATIONS SYSTEM
* The Digital Telecommunications System
(DTS) offers an Integrated Services Digital Network (ISDN) telecommunications
system that serves the Washington Metropolitan Area and is the
nation's largest private ISDN installation. An OIG audit revealed
that weak controls over DTS lines and equipment are contributing
to unnecessary expenditures by the Department and its bureaus.
Corrective action could save the Department in excess of $3.9
million over the remaining life of the contract. (See pages 17
and 18.)
ADMINISTRATIVELY UNCONTROLLABLE OVERTIME
* In accordance with provisions of the
Omnibus Consolidated Appropriations Act of 1997, the OIG audited
the use of administratively uncontrollable overtime (AUO) within
Treasury. Insufficient documentation supporting the AUO hours
worked, recurring patterns of AUO usage, and internal control
weaknesses that collectively increase the risk of AUO abuse revealed
the need for tighter controls and increased documentation to support
AUO payments. In accordance with the legislative mandate, the
OIG reported the audit results to the Senate Governmental Affairs
Committee, House Government Reform and Oversight Committee, and
Office of Personnel Management. (See pages 18 and 19.)
IRS INTERNAL SECURITY ALLEGATIONS
* At the request of the former Under
Secretary for Enforcement, the OIG Office of Oversight initiated
a review of allegations of possible unethical, unprofessional,
and discriminatory practices by management officials in the IRS
Mid-Atlantic Region Office of Internal Security. The review disclosed
that there was merit to certain allegations, some of which have
been addressed by the Merit Systems Protection Board. (See pages
35 and 36.)
MONTANA FREEMEN ASSOCIATES CONVICTED
* Two individuals associated with the
Montana Freemen, an anti-Government group, were found guilty of
numerous Federal violations, including conspiracy, attempting
to interfere with IRS laws, and transporting stolen property.
The two defendants face maximum sentences of 104 years in prison
and $4.25 million in fines, and 31 years in prison and $1.5 million
in fines respectively. Evidence presented at the trial was the
culmination of separate investigations conducted by the Federal
Bureau of Investigation, IRS' Criminal Investigation Division,
the Secret Service, the United States Postal Inspection Service,
and the Department of Agriculture OIG. (See page 42.)
INTRODUCTION
Under the provisions of the Inspector
General Act of 1978, as amended, Treasury's OIG reports to the
Congress semiannually on its activities. This report, which covers
the first half of Fiscal Year 1997, describes major issues and
concerns identified during reviews, audits, evaluations, and investigations,
along with recommendations for corrective action. Because the
report describes selected significant reviews and investigations,
the conditions should not be considered as representative of overall
conditions in the Department of the Treasury and its bureaus.
Treasury's OIG consists of the following
components:
* The Audit Directorate,
* The Investigations Directorate,
* The Office of Evaluations,
* The Office of Information Technology,
and
* The Resources Directorate.
In accordance with the Government Performance
and Results Act (GPRA), the OIG is engaging in a strategic planning
process with the goals of achieving the greatest impact from available
resources and ensuring mission accomplishment and customer satisfaction.
The OIG's mission is to conduct independent audits, investigations,
and reviews to help the Department accomplish its mission; improve
the Department's programs and operations; promote economy, efficiency,
and effectiveness; and prevent and detect fraud and abuse. As
it has increased its involvement in performance budgeting, the
OIG has reengineered its products, streamlined its organization,
and explored new ways in which it can contribute to positive change
in the Department and strengthen the Department's position as
a leader in Federal financial management.
In addition to Treasury OIG operations,
the report covers the activities of the Offices of Internal Affairs
and Inspection at ATF, Customs, IRS, and Secret Service. The Inspector
General is responsible for oversight of internal investigations
by the Offices of Internal Affairs and Inspection at ATF, Customs,
and Secret Service and of the IRS Inspection Service's internal
audits and investigations.
The ATF Office of Inspection plans, directs,
and coordinates ATF's inspection and internal affairs activities.
Those activities include: office and program inspections, which
appraise the effectiveness of ATF operations, assess the quality
of management and supervision, and determine adherence to organizational
policies, regulations, and procedures; shooting reviews; and investigations
into allegations of employee misconduct (both administrative and
criminal), fraudulent Office of Worker's Compensation Program
claims, and bribery, and investigations of tort claims and other
critical or sensitive incidents. All findings are reported to
the Director of ATF and his Executive Staff. In addition, the
Office of Inspection executes ATF's personnel security program.
As part of its shared responsibility
with management to secure the right of every Customs employee
to work in an environment that is free from corruption, misconduct,
or mismanagement, the Customs Office of Internal Affairs investigates
allegations of misconduct; reports investigative results in a
professional and timely manner; screens potential Customs employees
for character and suitability; educates Customs employees regarding
ethical standards and integrity responsibilities; evaluates physical
security threats to Customs employees, facilities, and sensitive
information; and inspects Customs operations and processes for
managerial effectiveness and improvement.
Guided by a commitment to uphold the
policies of Secret Service and to ensure quality assurance, the
Office of Inspection's responsibilities include internal special
investigations, policy compliance reviews, ethics assessments,
reviews of operational programs, and validation of career development
and training programs. As a unique, non-parochial operational
unit, which is responsible for critical and impartial reviews,
the Office of Inspection provides objective and unbiased feedback
and oversight that validates both the Secret Service strategic
and customer service plans.
The IRS Inspection Service provides independent
and professional services to promote the effective administration
of the nation's tax laws; detect and deter fraud and abuse in
IRS programs and operations; and protect IRS against external
attempts to corrupt or threaten its employees. The organization,
which includes Internal Audit and Internal Security functions,
is headed by the Chief Inspector, who reports directly to the
IRS Commissioner and is overseen by Treasury's Inspector General.
This arrangement ensures that audit and investigative results
are reported independently to the IRS Commissioner and the Secretary
of the Treasury.
TREASURY FUNCTIONS AND ORGANIZATION
Treasury is organized into 12 bureaus
and offices. Treasury's mission is to formulate and recommend
economic, fiscal, and tax policies; serve as the financial agent
of the United States Government; enforce the law; protect the
President and other officials; and manufacture coins and currency.
The OIG and Offices of Internal Affairs
and Inspection assist in performing Treasury's many roles, which
include such diverse functions as striking commemorative medals,
enforcing national firearms and explosives laws, and investigating
financial institution fraud. Today, over 162,000 full-time Federal
employees work for the Department of the Treasury throughout the
world. Treasury, as one of the oldest Federal agencies, performs
some of the most fundamental governmental activities, including
collecting and borrowing the money to run our Government.
MANAGEMENT AND FINANCIAL LEADERSHIP
President's Council on Integrity and
Efficiency Audit Committee
Treasury's Inspector General has chaired
the Audit Committee of the President's Council on Integrity and
Efficiency (PCIE) since March 1995. The Audit Committee provides
recommendations for improving audit quality, leadership in coordinating
interagency and PCIE-wide audits, methods for enhancing the professionalism
of PCIE member organizations, and perspectives on emerging issues
in Government financial management. In addition, the Audit Committee
provides valuable information to the Inspector General community
on significant auditing and accounting issues.
During the 6 months ending March 31,
1997, the Audit Committee:
* Continued the task of revising two
important professional guides used by the Inspector General community.
In association with the Federal Audit Executive Council, the Audit
Committee has been updating the PCIE External Quality Control
Review Guide, which is used to assure the quality and professionalism
of audit functions. The revised Guide will incorporate recent
changes to the _Government Auditing Standards_ and improve the
quality and completeness of future reviews. Expected to be issued
in final form later this Spring, the Guide will be used for all
future peer reviews, beginning with the current cycle.
The Audit Committee's Task Group is continuing
its revision of the PCIE Federal Financial Statement Audit Manual
(FFSAM). As mentioned in the previous Semiannual Report, changes
to Government financial management practices mandated by legislation
such as the Chief Financial Officers (CFO) Act and the Government
Management Reform Act (GMRA) prompted the Audit Committee to review
the FFSAM's relevancy. The PCIE is working with the General Accounting
Office (GAO) and the private sector auditing and accounting community
to assure that the FFSAM addresses the many new issues emerging
in Government financial management. The Task Group has developed
an interim document for PCIE auditors that reflects the changes
already identified. Arranged by subject area, including Auditing
Standards and Guidance, Accounting Standards and Guidance, and
Significant Laws, the interim document contains a list of new
and proposed guidelines related to the changes, the date each
was passed, and their effective dates.
* Requested Treasury OIG financial management
auditors to perform a compilation of financial statements for
the Inspectors General Auditor Training Institute (IGATI) for
Fiscal Years 1993, 1994, and 1995. The statements and notes were
prepared on the accrual basis from IGATI's books and records,
which are maintained by the DO's Financial Management Division
(FMD). Because the auditors did not audit or review IGATI's financial
statements, they did not express an opinion or any other form
of assurance on the statements. A few instances, where records
could not be located by FMD or were insufficiently detailed to
support IGATI's cash receipts or disbursements transactions, were
noted. However, the auditors were able to obtain the necessary
supporting documentation from IGATI.
* Requested that the General Services
Administration OIG issue a PCIE report entitled, "Combined
Report on the Federal Civilian Agencies' Aircraft Management Programs."
The report summarized the results of OIG audits at ten agencies
that own, operate, and maintain aircraft. The participating OIGs
reviewed their own agency's aircraft management program and issued
separate audit reports, which disclosed shortcomings in aircraft
program safety, operations, and administration. Several recommendations
addressed the need to correct specific safety issues, improve
management and administrative information systems, and enhance
operational efficiencies by selling excess aircraft and entering
into sharing agreements. Agency officials are taking steps to
address many of the shortcomings.
Customs Land Border Crossing
Accompanied by the Western Region Inspectors
General for Audit and Investigations, the Inspector General toured
the San Ysidro passenger land border and the Otay Mesa commercial
cargo facility in January 1997. Both sites are located in San
Diego, California. San Ysidro is the world's busiest land border
crossing. In 1996, 36.5 million passenger vehicles and 8.7 million
pedestrians passed through San Ysidro, while nearly 4 million
trucks and other vehicles entered Otay Mesa. These numbers demonstrate
the tremendous challenge Customs faces in protecting the Southern
California border, particularly with regard to drug smuggling.
Customs officials briefed the Inspector
General on their various drug interdiction activities. The Inspector
General also observed Customs inspectors examining cargo at Otay
Mesa. One of Customs' newest applications of technology is a $3.2
million truck X-ray system. Resembling a stall of a drive-through
car wash, the system takes X-ray pictures of the entire truck.
Seizures resulting from use of the system have included marijuana
hidden in vehicles' gas tanks and rooftops.
Customs inspectors now examine cargo
at Otay Mesa with the assistance of a truck X-ray system, which
produces X-ray pictures of the entire vehicle.
OIG Independent Legal Counsel
Independent legal counsel is an extremely
important matter that affects the fundamental independence of
Inspectors General. Legal issues have become an increasingly significant
part of carrying out the mission of Inspectors General to combat
fraud, waste, and abuse. Historically, the Treasury OIG did not
have independent legal counsel. Rather, under a MOU, the Department's
OGC and the Inspector General established procedures for the provision
of legal services to the OIG.
The MOU included provisions which recognized that the Counsel to the Inspector General should, in some circumstances, be free to provide legal advice independently of the General Counsel and/or to sever communications with OGC about a particular subject. Nevertheless, under the MOU, the Counsel to the Inspector General Counsel reported organizationally to the General Counsel.
The Inspector General and the General
Counsel rescinded the MOU effective February 4, 1997, and the
Counsel to the Inspector General is no longer a member of OGC.
The rescission agreement arranged for a Departmental organizational
scheme and supporting documentation which provide that the Counsel
to the Inspector General is an OIG employee who reports directly
to, and is supervised by, the Inspector General.
FINANCIAL MANAGEMENT
The CFO Act and GMRA, which are intended
to strengthen Federal financial management, require audited financial
statements. The CFO Act requires audited financial statements
for revolving funds, trust funds, and significant commercial activities.
The GMRA extends these requirements to encompass all accounts
and activities of the agencies covered by the CFO Act. Annual
audited Treasury-wide financial statements must be prepared for
Fiscal Year 1996 and subsequent years.
The process of preparing and auditing
financial statements has resulted in the identification of areas
for improvement in management controls and business processes.
Using this information, Department and bureau managers can more
effectively fulfill their responsibilities, as well as provide
an audited annual reporting of their financial operations and
positions.
FINANCIAL AUDITS
The OIG's goal is to implement the CFO
Act's and GMRA's financial statements audit requirements by working
with the Department and its bureaus to address major financial
management and internal control problems that inhibit the production
of timely, reliable, and auditable information. The OIG is continuing
to leverage resources by contracting with public accounting firms
and by working closely with GAO at IRS, BPD, and FMS, key Treasury
bureaus that are significant to Government-wide as well as to
Treasury financial reporting. In addition, reimbursable agreements
with certain bureaus have been concluded, which provide
the necessary funding to meet the Department's audit requirements.
These added resources are necessary for the OIG to timely complete
the Department's Fiscal Year 1997 financial statement audits.
Department-wide Financial Statements
The Fiscal Year 1996 Department-wide
audited financial statements will be included in Treasury's Fiscal
Year 1996 Accountability Report, along with other information
that meets the reporting requirements of the CFO Act, GMRA, the
Federal Managers' Financial Integrity Act (FMFIA), GPRA, the Prompt
Payment Act, and other legislation. The statements reflect the
Department's five major business lines: manufacturing, banking/thrift
oversight, central fiscal services, tax/trade compliance and law
enforcement, and headquarters/general services.
Fiscal Year 1996 is the first year for
which audited Department-wide financial statements are required
under GMRA. This audit currently is in progress, and the OIG's
overall audit report will be issued shortly. A number of component
audits, most notably Customs, have already been completed and
are discussed below. (OIG)
Financial Statement Audits
The OIG plans to issue 16 financial statement audit reports for
Fiscal Year 1996, including an audit
report on Treasury's Department-wide financial statements. Six
Fiscal Year 1996 financial statement audits are completed, and
ten are in progress. Personnel from the OIG audited the financial
statements of Customs and the Mint's custodial gold and silver
reserves. Audits are in progress at ATF, Secret Service, and the
Exchange Stabilization Fund. Contracted Independent Public Accountants
(IPAs) completed audits of BEP, OCC, OTS, and the FMS Trust Funds.
The IPAs are completing six audits, including those of the Mint,
the Federal Financing Bank, BPD Administrative Accounts, the Treasury
Forfeiture Fund, and FMS Salaries and Expenses.
* The OIG audited Customs' financial
statements for the third consecutive fiscal year. The audit resulted
in an unqualified opinion on Customs' Statement of Financial Position
as of September 30, 1996, the same result as for 1995. An unqualified
opinion also resulted from the audit of the Statement of Operations
and Changes in Net Position for Fiscal Year 1996. The OIG disclaimed
an opinion on Customs' Statement of Operations and Changes in
Net Position for Fiscal Year 1995.
Customs' progress in addressing previously
reported internal control deficiencies enabled the rendering of
an unqualified opinion on its Fiscal Year 1996 financial statements.
Furthermore, because of additional supporting documentation provided
by Customs and additional procedures performed by the auditors,
the OIG was able to remove its qualification on Customs' Statement
of Financial Position as of September 30, 1995.
These noteworthy audit results demonstrate
Customs' ongoing commitment to sound financial management and
reporting. Nevertheless, Customs faces critical challenges. The
nature of Customs' continuing material weaknesses requires extensive,
sustained improvements to underlying systems and processes. While
achieving an unqualified opinion is an important accomplishment,
the broader objective is to produce reliable financial information
throughout the year, which can be used in management decisions.
Until long-term improvements are realized, Customs must continue
to dedicate resources to compensate for existing control weaknesses
in order to obtain the current level of audit assurance.
The OIG's report on Customs' Fiscal Year
1996 and 1995 financial statements cites three repeat material
weaknesses in Customs' internal control structure: the need for
(1) drawback controls to be strengthened; (2) controls over bills
of lading and in-bond shipments to be strengthened; and (3) core
financial systems to be improved and integrated. Drawback is a
refund of duties and taxes which were paid on imported goods that
are subsequently exported or destroyed. In-bond shipments refer
to goods that are authorized by law to move within the United
States prior to release or export without being appraised or classified
to assess duties, taxes, and fees.
The OIG cited one reportable instance of noncompliance with laws and
regulations. Customs had not re-authorized
use of its application systems or its general support system in
accordance with Office of Management and Budget (OMB) Circular
No. A-130, "Management of Federal Information Resources."
Re-authorization provides assurance that a system contains properly
functioning security safeguards and operates under appropriate
controls and procedures. The OIG also identified six other reportable
conditions in Customs' internal control structure: the need for
(1) additional compliance measurement programs; (2) improved security
over computer systems; (3) improved disaster recovery capabilities
for Customs' computer facility; (4) adherence to systems development
standards; (5) improved accountability controls over covert operations;
and (6) the performance of essential payroll reconciliations.
* An OIG audit of the Mint's Statements
of Custodial Gold and Silver Reserves as of September 30, 1996
and 1995 resulted in an unqualified opinion. There were no reportable
conditions involving the internal control structure and no instances
of noncompliance with laws and regulations.
* An IPA rendered an unqualified opinion
on BEP's Fiscal Year 1996 financial statements. No material weaknesses
were reported. However, the IPA's report on internal controls
identified two reportable conditions. Errors in certain account
balances were not detected because account reconciliations were
not properly prepared and/or adequately reviewed. The IPA also
noted errors in the implementation of reconciliation and counting
procedures during Fiscal Year 1996 physical inventories.
* Fourteen of fifteen Fiscal Year 1996
financial statements for custodial functions performed by FMS
for Government trust funds were completed by an IPA during the
reporting period. The FMS Funds Accounting Branch (FAB) provides
accounting, investment, and financial reporting services to the
trust funds.
The IPA rendered unqualified opinions
on these statements. The financial activity reported in the statements
is limited to the functions performed by FAB as custodian of the
trust fund moneys and investments. The FAB records trust fund
related receipts, disbursements, and transfers based on information
submitted by IRS, other Treasury bureaus, and additional Federal
and state agencies. Therefore, these financial statements do not
represent a complete accounting of all assets, liabilities, sources,
and uses of the trust funds.
No instances of noncompliance and no
material weaknesses were identified. The IPA cited three reportable
conditions on internal controls. The FAB lacked adequate controls
to timely identify errors in interest accruals and premium or
discount amortization, and to ensure that funds are timely and
accurately invested; and needed to improve controls over transfers
from the trust funds.
* The OCC received an unqualified opinion
on its financial statements for the year ended December 31, 1996.
Reports on the internal controls and compliance with laws and
regulations disclosed no material weaknesses or instances of noncompliance.
* An IPA rendered an unqualified opinion
on OTS' financial statements for the year ended December 31, 1996.
While the report on compliance with laws and regulations contained
no instances of noncompliance, the report on the internal control
structure mentioned one reportable condition, which was not considered
a material weakness. Certain users of the payroll/personnel system
had data entry capability for both functions, which eliminated
controls associated with the separation of duties. (OIG)
ECONOMY, EFFICIENCY, AND EFFECTIVENESS
The Inspector General Act of 1978 established
OIGs to promote the efficiency, economy, and effectiveness of
Federal programs and operations. At Treasury, the Act has resulted
in a program of audits and evaluations that focuses on internal
controls, management assessment, and program compliance and performance.
This work enables the OIG and the Offices of Internal Affairs
and Inspection at ATF, Customs, IRS, and Secret Service to provide
independent, objective assessments of programs and performance
which help to improve the Department's operations and ensure that
programs achieve desired results.
The OIG has refocused much of its audit
and evaluations work to address National Performance Review (NPR)
proposals for reorienting the Inspectors General. The NPR's report
stated, "In a government focused on results, the Inspectors
General can play a key role not only in controlling managers'
behavior by monitoring it, but in helping to improve it. In the
future, [Inspectors General] should help managers evaluate their
management control systems...[and] help improve systems to prevent
waste, fraud and abuse, and ensure efficient, effective service."
As the Department addresses critical
changes affecting its bureaus and programs, the OIG believes that
its work is helping by providing independent, objective information
and recommendations for program improvements. The OIG has sought
to provide products that its customers, departmental managers,
and the Congress will find useful and relevant. One of the OIG's
objectives is to help decision makers find solutions to the problems
they face in new or modified programs and with rapidly changing
technology that affects all areas of business and finance.
PERFORMANCE REVIEWS
Treasury Security Auctions
An OIG audit found that Treasury and
BPD officials have taken measures to ensure that the securities
auction process generally operates without incident or problems.
Despite these actions, BPD cannot be assured that the controls
in place are adequate to prevent improper bids. As a result of
an August 1991 incident, in which a primary securities dealer
admitted to submitting unauthorized bids in several auctions and
obtaining excessive holdings in specific securities, BPD established
additional controls in 1993. However, the OIG believes that the
controls rely too greatly on voluntary compliance for their effectiveness.
The information that bidders submit to ensure proper bidding generally
is not verified by the agencies, raising questions about how effective
the controls have been in preventing improper bids.
Most critical is BPD's lack of assurance
regarding a bidder's "net long" position. Several components,
including a bidder's holdings or position in the security prior
to the auction, are used to calculate net long. Net long reporting
is used to ensure that, upon completion of an auction, no bidder
will have acquired more than 35 percent of the amount awarded
to the public. If a bidder understates or does not reports its
net long position, it could acquire more than 35 percent of the
public offering amount, contrary to Treasury's Uniform Offering
Circular.
The OIG recommended additional controls
to ensure proper bids, including performing limited verifications
and continuing to educate bidders on auction rules. In addition,
the OIG recommended that BPD take actions to ensure that spot
checks performed by the Federal Reserve Banks are effective, and
that BPD analyze bidder error data to better target training.
The Department is taking appropriate action to improve the auction
process. (Report #OIG-97-004)
Joint Operations Expenses
An OIG audit found that Treasury bureaus
did not deduct payments for joint operations expenses in Fiscal
Years 1995 and 1996 before determining the amount of awards under
the Department's asset forfeiture sharing program. Through this
program, assets seized during an investigation or the proceeds
from the sale of seized assets are deposited into a forfeiture
fund administered by the Executive Office for Asset Forfeiture
(EOAF). State, county, and local law enforcement agencies that
have participated in an investigation may receive an equitable
share of those assets or proceeds. However, prior to awarding
these funds, Treasury bureaus are required to deduct any reimbursement
made to the law enforcement agencies for joint operations expenses.
The OIG found that bureaus, including
Customs, which provided the largest joint operations payments
during the 2-year period, have not tracked the awards to ensure
that deductions are made prior to equitable sharing. In addition,
officials from several of Treasury's law enforcement bureaus indicated
that they were unaware of the deduction requirement. Law enforcement
agencies also did not use common case numbers that would help
link joint operations payments with requests for equitable sharing
awards.
The OIG recommended that EOAF monitor
bureaus' efforts to ensure that adequate deductions are made,
and that EOAF require the use of investigative case numbers on
requests for joint operations reimbursement. Although EOAF's Director
agreed with the findings, she disagreed with the OIG's recommendations.
As noted above, the Department's bureaus are required to capture
joint operations reimbursements to arrive at net proceeds. Because
the bureaus' have operational responsibility for the equitable
sharing program, EOAF believes that the bureaus themselves must
comply with the Department's guidelines on this issue. The OIG
continues to think that oversight of joint operations funds is
a shared responsibility. Therefore, in accordance with Treasury
audit resolution procedures, the OIG will attempt to resolve the
differences with EOAF in the 6 months following the report's issuance.
(Report #OIG-97-021)
FMS Refund Processing
The OIG conducted an audit of FMS' processing
of claims and reclamations initiated by payees whose checks were
lost or stolen. The audit disclosed that FMS had not promptly
identified and posted $276 million in collected funds, which remained
in the Unidentified Collections account and resulted in the issuing
agencies not having use of all of the reclaimed money. Currently,
FMS is developing procedures to improve its processing of check
claims and reclamations
The auditors identified opportunities
for FMS to reduce the potential for fraud, such as taxpayers receiving
duplicate checks, and to improve its timeliness in providing replacement
checks to taxpayers. In addition, the auditors recommended that
FMS establish procedures for documenting check claim and reclamation
processing histories. The FMS is enhancing its automated system,
which tracks the collection of moneys due the Government, and
is correcting other programming errors identified by the OIG.
The FMS did not concur with the OIG's
recommendation to discontinue providing claimants with copies
of the original checks' endorsement when requesting a handwriting
sample. In FMS' opinion, such a change would result in far too
many claims to process, a substantial number of Congressional
inquiries, and delaying the claimants' receipt of replacement
checks. As a result, FMS does not intend to alter its current
practice or to require payees to submit a claim of non-receipt
in writing. In the OIG's opinion, discontinuing the provision
of endorsement copies would prevent fraud and protect the Government's
financial interests. The OIG will attempt to resolve this issue
in accordance with Treasury audit resolution procedures. (Report
#OIG-97-025)
Special Occupational Tax
An OIG audit found that Treasury annually
loses millions of dollars in Special Occupational Tax (SOT) revenue
as a result of retail alcoholic beverage dealers who do not pay
the SOT. The OIG estimates that alcoholic beverage retailers did
not pay over $64 million of SOT during tax years 1993 through
1995. The ATF, the Treasury bureau that is responsible for collecting
the tax and ensuring that all SOT revenues due to the Department
are paid, is hampered by its limited regulatory authority over
alcoholic beverage retailers.
Because it is difficult for ATF to acquire
accurate information on what alcoholic beverage retailers are
in business and should be paying the tax, Treasury has lost, and
is continuing to lose, millions of dollars in SOT revenues. The
OIG made recommendations to improve SOT collectability and provide
assurance that retailers who are subject to the tax are identified
and held accountable for payment. (Report #OIG-97-016)
Digital Telecommunications System
OIG auditors, with the assistance of
the IRS Chief Inspector's Office, conducted a Department-wide
review of DTS. The DTS offers an ISDN telecommunications system
that serves the Washington Metropolitan Area and is the nation's
largest private ISDN installation.
The audit revealed that weak controls
over DTS lines and equipment are contributing to unnecessary expenditures
by the Department and its bureaus. In the three bureaus reviewed,
BEP, FMS, and IRS, between 14 and 25 percent of the DTS inventory
could not be accounted for, equating to a cost of over $1.5 million.
In addition, an estimated 3 to 14 percent of the telephone lines
and sets were not being utilized, resulting in unnecessary expenses
of over $339,000. Corrective action could save the Department
in excess of $3.9 million over the remaining life of the contract.
The Department paid over $136,000 annually
to reserve telephone numbers that were not needed, and an analysis
of the computerized inventory system revealed that the Department
had more lines and telephone feature packages than actual telephone
sets. A lack of procedural guidance on DTS services, such as on-site
technician visits, resulted in the bureaus' inability to confirm
whether DTS services for which they were charged were actually
performed. Similarly, management controls over the entire computerized
inventory system and the DTS billing system needed to be strengthened.
Management took corrective action to improve the DTS program and
planned additional measures to further strengthen controls. (Report
#OIG-97-045)
OCC's Evaluation of Bank Management
An OIG audit determined that OCC routinely
followed up on previously identified weaknesses and concerns in
the management of banks. However, examiners did not always follow
established core procedures when evaluating management or develop
sufficient examination working papers to reflect the depth and
scope of their work. In addition, field managers did not always
review examiners' working papers to ensure that all management
aspects had been evaluated and that an independent reviewer had
concurred with the conclusions reached. Failure to properly evaluate
and document all management aspects could result in OCC having
inaccurate information about the quality of a bank's management
and could prevent OCC from taking timely action to correct a weakness
before it has an adverse effect on the bank's safety and soundness.
To strengthen the evaluation of a bank's
management, the auditors recommended that examiners and field
managers adhere to established core procedures; all components
reviewed be fully documented and reviewed by the supervisor; and
adequate documentation be provided to support the rating assigned
to the bank's management. To address the OIG's recommendations,
OCC implemented a new examiner training program which focuses
on the aspects that should be considered in determining a rating
for bank management and how to document and communicate those
aspects. The OCC also implemented a new quality assurance program
which should provide assurance that examiners properly evaluate,
document, and reach appropriate conclusions on banks' management.
(Report #OIG-97-023)
Administratively Uncontrollable Overtime
In accordance with provisions of the
Omnibus Consolidated Appropriations Act of 1997 (P.L. 104-208),
the OIG audited the use of AUO within Treasury. The ATF, Customs,
and Secret Service use AUO to compensate employees who are required
to work frequent and substantial amounts of irregular overtime
hours to effectively perform their duties.
The auditors found insufficient documentation
supporting the AUO hours worked; recurring patterns of AUO usage,
which raised questions as to whether the overtime met the criteria
of being irregular and uncontrollable; and internal control weaknesses
that collectively increase the risk of AUO abuse, such as the
failure to perform periodic rate determinations and required annual
reviews of positions.
In Fiscal Year 1996, the Department's
bureaus paid approximately $7.3 million in AUO to 579 employees.
The OIG reviewed third quarter AUO payments of approximately $667,000
for 205 of the 579 AUO recipients, and could not conclusively
determine whether any of the amount met AUO payment criteria.
In separate reports to the bureaus, the OIG recommended tighter
controls and increased documentation to support AUO payments.
The bureaus generally concurred with
the OIG's recommendations and have agreed to measures that should
reduce the potential for AUO abuse. In accordance with the legislative
mandate, the OIG reported the audit results to the Senate Governmental
Affairs Committee, House Government Reform and Oversight Committee,
and Office of Personnel Management. (Reports #OIG-97-038, #OIG-97-041,
and #OIG-97-042)
Customs' Land Border Carrier Initiative
Program
Customs established the Line Release
Program in November 1986 to expedite import processing of repetitive
high-volume/low-risk merchandise shipments. Since the program's
inception, concerns have been raised that Line Release shipments
are highly vulnerable to illegal drug smuggling. To address this
potential problem, Customs implemented the Land Border Carrier
Initiative Program (LBCIP) at southern United States border ports
on July 1, 1996.
The LBCIP's objective is to discourage
smugglers from using commercial conveyances and line release cargoes
to transport contraband into the United States. This is accomplished
by forging partnerships with trucking companies and encouraging
those companies to enhance their recognition and reporting of
smuggling activities. Participating carriers are certified to
transport line release cargo into the United States based on background
checks of the companies, employees, and vehicles; security reviews
of carrier facilities; and the training of carrier employees in
contraband detection. Only approved LBCIP carriers are allowed
to participate in the Line Release Program.
The OIG performed a limited review of
the LBCIP at two southern land ports. The review disclosed some
concerns, including the fact that commercial carrier trailers
were not always included in LBCIP coverage, even though experience
has shown that drug seizures frequently occur in trailers. In
addition, Customs had approved carriers for the LBCIP based on
successful background checks, but before facility security reviews
or employee drug interdiction training were conducted. (Report
#OIG-CA-97-001)
OTS' Implementation of Prompt Corrective
Action
Congress passed the Federal Deposit Insurance
Corporation Improvement Act of 1991 to resolve the regulation
and supervision of Federally insured depository institutions at
the least possible long-term loss to the deposit insurance fund.
Section 131 of the Act, Prompt Corrective Action (PCA), fortifies
the regulatory role of adequate capitalization and requires regulators
to take increasingly stringent action to correct problems at an
institution as its capital level falls. The OIG reviewed OTS'
implementation of PCA.
The OIG concluded that PCA has been largely
untested as an enforcement tool due to the thrift industry's marked
improvement since PCA's enactment. Record industry profits and
rising capital levels have been accompanied by a steady decline
in the number of undercapitalized and failing thrifts. While the
OIG found that OTS effectively identified thrifts subject to PCA,
OTS had not always met certain administrative processing milestones.
The OTS exceeded the 60 day time frame to approve or disapprove
capital plans for 29 of 43 capital plans (or 67 percent). On average,
OTS exceeded the 60 day time frame by 30 days. As a result, the
enforcement process for some thrifts was prolonged rather than
expedited.
The OIG also found inconsistencies in
PCA implementation among the three OTS regional offices covered
by the audit, and that OTS had not used all of the enforcement
provisions available under PCA. For example, PCA allows OTS to
impose certain operating restrictions when thrifts are adequately
capitalized, but engage in unsafe or unsound practices. The OTS
usually employed traditional enforcement tools rather than PCA
in those instances.
The OIG made three recommendations, one
of which OTS immediately addressed as part of its response to
the draft report by initiating corrective action to better ensure
that processing time frames are met. As required by Treasury Directive
40-01, OTS responded directly to the Under Secretary for Domestic
Finance on the two remaining recommendations, which involved the
practice of deferring the issuance of PCA directives to avoid
deterring potential investors from infusing capital into undercapitalized
thrifts and the issuance of clearer guidance on applying unused
PCA provisions. The OTS subsequently implemented corrective action
for both recommendations. (Report #OIG-97-057)
Revenue Protection Strategies
The IRS continues to improve systems
for detecting return filing fraud in advance of issuing tax refunds.
During the first 6 months of Fiscal Year 1997, IRS internal auditors
continued to assess revenue protection activities by issuing four
audit reports, one of which is summarized below.
* The fuel tax program is part of IRS'
Revenue Protection Strategy. Procedures for identifying fuel tax
cases to be screened by the Examination Division were changed
during the 1996 processing season, and the cases now are computer
identified rather than manually selected. If returns are not correctly
identified, a significant number of erroneous claims and fraudulent
refunds could result. Between January and September 1996, Office
of Refund Fraud reports indicated that over 48,000 returns were
screened nationwide, with close to 13,000 containing fuel tax
credits that were disallowed.
Internal auditors performed a review
to determine if controls were in place to prevent erroneous claims
for fuel tax credits on individual income tax returns. The auditors
found that computer programs designed to identify individual returns
claiming fuel tax credits on Form 4136 were not functioning because
computer programming necessary to identify questionable cases
had not been completed. After being informed of the problem, the
Office of the Assistant Commissioner for Submission Processing
and the Office of Refund Fraud quickly provided the missing programs.
The auditors also identified improvements
to further automate the process of identifying individual returns
with questionable credit claims. Sixty-eight percent of a sample
of taxpayers who claimed erroneous fuel tax credits for 1995 returns
made similar claims on their 1994 returns. As a result, the auditors
recommended that 1994 returns also be examined when questionable
tax year 1995 credits are identified. In addition, the auditors
determined that IRS should reacquaint return preparers with the
tax code provisions related to credit claims for diesel fuel used
by farmers. Over 23,000 farmers incorrectly claimed diesel fuel
tax credits totaling over $4.5 million, even though tax regulations
specifically prohibit these claims. Eighty-three percent of the
tax year 1995 returns on which farmers claimed the diesel fuel
credit were completed by paid return preparers.
IRS management agreed with the recommendations
and proposed corrective action. The Examination Division will
be required to check prior year returns for fuel tax credits when
closing current year cases with adjustments, and more explicit
instructions regarding farmers and diesel fuel credits will be
added to relevant IRS forms and publications. (IRS Report #070804)
IRS Examination Division Internal Controls
Internal auditors determined that the
IRS Examination Division's selection, control, and disposition
of cases must be improved in order to deter fraud, protect taxpayers'
privacy rights, maximize revenue, and prevent the waste of resources.
Without effective internal controls, an unscrupulous Examination
Division employee could have the opportunity to sell taxpayer
information, harass a taxpayer, conduct unauthorized examinations,
or intentionally lose tax returns without detection.
During Fiscal Year 1995, the Examination
Division closed approximately 2 million cases nationally. Examination
relies heavily on the Integrated Data Retrieval System (IDRS),
the Examination Returns Control System (ERCS), and the Audit Inventory
Management System (AIMS) to process cases. Due to the risks that
are inherent in these systems, IRS must ensure that security and
processing controls are in place to minimize vulnerabilities.
The auditors identified control weaknesses
in ERCS and IDRS security, and in procedures covering unlocatable
returns. The ERCS, which does not have an effective audit trail
system and cannot effectively limit user capabilities, does not
meet general Government security guidelines and has not been scheduled
for security certification. In addition, Examination does not
effectively limit the IDRS capabilities of examiners and group
managers, of whom nationwide, 894 could order tax returns and
establish, update, or close AIMS records. Examination also does
not accumulate data on the number of or the circumstances surrounding
unlocatable returns. During Fiscal Year 1995, approximately 17,000
cases were closed as errors or unlocatable returns. Management
agreed with the recommendations, which included improving ERCS'
security design, limiting IDRS capabilities, and conducting a
trend analysis to determine the causes of unlocatable returns,
and has initiated corrective action. (IRS Report #070106)
IRS Underreporter Program Productivity
An Underreporter (UR) case is created
when computer analysis detects a discrepancy between an individual's
tax return and payer information, including wages, dividends,
and interest. The UR cases are subsequently placed in inventory
categories and worked based on projected productivity. An effective
means of generating tax revenue, the UR Program contacted approximately
2.7 million taxpayers and generated $1.68 billion in gross assessments
at a cost of $69.5 million for Tax Year 1991. However, program
resources have been scaled back due to budget and staffing reductions.
For Tax Year 1994, which was mainly worked during Fiscal Year
1996, only 1.4 million cases were placed into inventory, a 67
percent decline from Tax Year 1991.
In accordance with the IRS Strategic
Business Plan, IRS internal auditors collaborated with UR Program
management to identify ways to increase productivity and voluntary
compliance, and to more effectively address underreporting. The
auditors recommended that UR Program management use actual costs
rather than a standard national cost figure to calculate productivity,
and select inventory using productivity rankings calculated through
the Gross Assessment Method. Refund overpayments would continue
to be worked at a level proportionate to UR Program resources.
Management agreed with the audit recommendations. (IRS Report
#071404)
IRS Examination Division Planning
IRS' Business Master Plan contains three
broad objectives, to increase voluntary compliance, reduce taxpayer
burden, and increase productivity and customer satisfaction. Effectively
and efficiently identifying the best returns for examination is
one element in accomplishing these goals. IRS internal auditors
evaluated the processes used to allocate resources and deliver
inventories for attaining the Business Master Plan's compliance
goals.
The auditors reviewed the Examination
Division's planning process to determine whether the Division
adequately utilizes current, accurate, and complete data. They
found that the planning process has basically remained the same
year after year while yields have fallen. Although the national
examination planning process is well designed, reliance on historical
data that does not represent current filing patterns reduces the
Examination Division's effectiveness. Actual cost information
has not been updated since Fiscal Year 1992, and the most recent
Taxpayer Compliance Measurement Program (TCMP) data were developed
from 1988 returns.
IRS has developed new systems to identify
productive cases and market segment issues, including the Midwest
Automated Compliance System (MACS). However, because there is
no systematic way to analyze which cases were selected using MACS,
its overall effectiveness cannot be determined. An analysis of
MACS indicators would assist in future planning assumptions by
determining the source of the most productive returns, issues,
or market segments selected for examination.
The Examination Division contracted with
Price Waterhouse to assess IRS' compliance data needs and to identify
appropriate cost-effective alternatives to the TCMP. The Assistant
Commissioners for Examination and Compliance Research will revise
IRS' average cost data after Price Waterhouse completes its study.
In addition, a MACS indicator will be incorporated into the nationwide
Information Gathering Project database. (IRS Report #072002)
IRS Service Center Recognition Image
Processing System
In 1995, IRS utilized the Service Center
Recognition Image Processing System (SCRIPS) for the first time
to process Tax Year 1994 paper information documents. An integral
part of IRS' TSM plans, SCRIPS cost approximately $100 million
to implement. IRS experienced difficulties with SCRIPS, which
resulted in the incorporation of additional manual checks and
programming changes to enhance the accuracy of information captured
from scanned paper information returns.
IRS control systems allowed SCRIPS data
problems to continue throughout the 1995 processing year undetected.
IRS Internal Audit and Department of Commerce inquiries ultimately
resulted in the errors' detection and subsequent corrective actions.
Although processing errors for Tax Year 1995 information documents
decreased from the previous year, they continued to be a problem.
The dollar amounts and volumes involved suggest that processing
errors continue to be significant and warrant management attention.
The SCRIPS errors were greater than management's
original projections because the testing methodology used to determine
the number of documents with mistakes was flawed. In addition,
the auditors concluded that a majority of the SCRIPS errors occurred
prior to management's test period. Finally, SCRIPS scanning difficulties
exist because of the design of one form, which requires excessive
operator intervention and results in erroneous information postings
to the Information Returns Master File.
The auditors recommended that IRS reports
be reviewed to determine whether large variances exist in the
volume and dollar amounts of information documents between processing
years, and that the above mentioned form be redesigned to increase
scanning accuracy. Management agreed with the recommendations
and proposed corrective actions. (IRS Report #071304)
Secret Service Customer Service Activities
Secret Service has a tradition of providing
high quality customer service in all that it does to fulfill its
two main missions, criminal investigations and protection. With
the enactment of Executive Order 12862, "Setting Customer
Standards," Secret Service has developed a formal plan
to document and implement goals and strategies to provide the
very best customer service to all recipients of its services (i.e.,
to provide "value for money" to American taxpayers).
The Office of Inspection continues to
formulate support strategies to enhance the Secret Service Customer
Service Plan, which includes developing inspection protocols to
measure customer satisfaction both internally and externally.
Customer service is an integral part of Secret Service's overall
strategic plan and the Office of Inspection will continue to play
a key role in keeping customer service a priority.
To accomplish this, the Office of Inspection
continues to re-evaluate its processes to ensure that they are
meaningful. Recently, the Inspection Checklist, which is used
as a guide in conducting inspections, was revised to reflect organizational
changes. Additions to the Checklist include questions about the
implementation of Secret Service strategic initiatives and partnerships
with other organizations.
The format of the final Inspection Report
also has been updated to improve meaningfulness for the reader.
Key information is now presented in an executive summary and answers
to routine questions have been made more concise to allow for
in-depth responses when warranted. Finally, the Inspection Report
preparation process has been altered to provide inspectors with
greater control over the final document and additional time to
conduct quality liaison visits with Headquarters and outside entities.
Pursuant to a 1987 MOU, Secret Service
provides polygraph support to OIG criminal investigations upon
written request from the Inspector General. Secret Service polygraph
examiners conduct the polygraphs at field locations throughout
the United States. In addition to assisting the OIG with several
cases, including a theft from the Mint, Secret Service has conducted
polygraphs for ATF and the OIGs of the Department of Justice,
the Federal Reserve Bank, and the Peace Corps. (Secret Service
Inspection)
MANAGEMENT ASSESSMENTS
Whistleblower Protection Notification
The OIG conducted a study of the Department
of the Treasury's progress in implementing the notification provision
of the Whistleblower Protection Act of 1994. Specifically, the
OIG assessed whether the Department had issued guidance to all
employees regarding whistleblower protection rights. The OIG found
that while the Department had not yet issued a policy statement
or guidance, several bureaus, including Customs and IRS, had independently
distributed information to some employees.
The OIG recommended that the Department,
in consultation with the Office of Special Counsel, develop guidance
on whistleblower protections for dissemination to all Treasury
personnel. In addition, each bureau should ensure that all employees
have access to policies and procedures on how they can exercise
whistleblower protection rights. Possible options for making such
information easily accessible on a continuing basis include hard-copy
distribution on a regular, recurring basis; posting the information
on a Home Page site or electronic bulletin board; and adding the
information to ethics and standards of conduct material and training.
(Report #OIG-96-E11)
Office of Technical Assistance
At the request of the Assistant Secretary
for International Affairs, the OIG reviewed the operation of the
Office of Technical Assistance (OTA) to determine the impact of
recent changes in the Agency for International Development's (AID)
budget, planning, and oversight processes on OTA's ability to
carry out its responsibilities in providing technical assistance
activities. The OIG also examined the State Department's, AID's,
and Treasury's perceptions regarding Treasury technical assistance
advisors' performance in Government debt issuance and management;
financial institution policy and regulation; tax policy and administration;
and budget policy, formulation, and execution.
State Department, AID, and Treasury officials have a positive perception of the technical assistance program. In addition, the OIG identified a number of factors that increase the complexity of Treasury's administration of technical assistance activities, including: (1) the need for the designation of an overall coordination point; (2) continued funding once the Support for East European Democracy and Freedom Support Acts expire, and expansion of technical assistance activities into new areas of the world; and (3) a Government-wide requirement for an overall long-range strategic plan.
The OIG suggested the following: (1)
OTA develop a systematic approach to collecting and maintaining
comments, requests for additional assistance, and other information
for use in evaluating its performance and supporting the results
of its technical assistance activities; (2) Treasury define the
roles of OTA's Director and Deputy Director, and fill the Director
position; (3) OTA explore potential sources for continued funding;
and (4) OTA consider developing an overall strategic plan based
on its functional responsibilities. Such a plan could support
emerging international needs and assist OTA in identifying and
supporting its potential future funding requirements and mission.
(Report #OIG-96-E07)
Truth In Lending Act
The OIG conducted a review of the Truth
in Lending Act (TILA) compliance examination process at OCC to
assess the process and provide suggestions for improving its efficiency
and effectiveness. The review also included an assessment of how
OCC officials utilize TILA results data.
The TILA was enacted on May 29, 1968
as Title I of the Consumer Credit Protection Act. Implemented
by Regulation Z, TILA became effective June 1, 1969. The TILA's
main purpose is to provide a meaningful disclosure of credit terms
so that consumers can make informed comparisons among various
credit offerings. In addition, TILA is designed to protect consumers
against inaccurate and unfair credit billing and credit card practices.
The review determined that OCC could
enhance the TILA examination process by increasing efforts in
certain areas. The OIG suggested that OCC accelerate efforts to
address the lack of summary TILA data, enhance its commitment
to automation improvements, implement a systematic approach to
monitoring exam information, and increase its efforts to coordinate
with other banking regulatory agencies to ensure consistency in
compliance supervision. (Report #OIG-96-E10)
Treasury Franchise Fund
At the request of the Director of the
Treasury Franchise Fund, the OIG provided technical assistance
to initiate implementation of the Fund's program. The assistance
involved researching, collecting, and analyzing procedural data
critical to ensuring the integrity of the Fund. The OIG provided
guidance to the Department for use in managing the Fund. Some
of the suggestions involved preparing materials for groups interested
in applying for the franchise fund; establishing an application
process; and formalizing both the criteria for selection/inclusion
in the program and the process used for selection.
The GMRA authorizes agencies to use the
franchise approach for certain common administrative support services,
such as personnel, travel processing, procurement, information
technology, facilities management, and accounting, on a pilot
and reimbursable basis both internally and to other Federal agencies.
In order to be financially self-sustaining, franchises must meet
customer needs by providing quality services and give customers
the opportunity to choose sources that best meet their needs.
(OIG)
ATF Inspections
During the 6-month period ending March
31, 1997, the ATF Office of Inspection conducted 6 inspections.
The inspections, which involved the review of 51 separate field
office locations, included areas such as personnel, training,
office security, internal controls, and a qualitative and quantitative
analysis of investigations and inspections. In addition, all employees
were interviewed regarding morale, supervision, and work-related
problems.
Deficiencies and/or variances identified
during the inspections were discussed with affected managers at
the closing conferences and documented in the final inspection
reports, which were disseminated to all affected ATF managers.
Inspection team leaders briefed the Director of ATF after each
inspection. (ATF Inspection)
Customs Inspections
The Customs Office of Internal Affairs
conducts various types of reviews, including comprehensive inspections,
spot checks, assessments, and financial audits of undercover operations.
The reviews gauge the effectiveness and efficiency of the offices
involved and verify the implementation of strategic plans and
compliance with policy and established operating procedures. During
the 6-month period ending March 31, 1997, the Customs Office of
Internal Affairs conducted five comprehensive inspections, including
one Special Agent in Charge office and four port locations.
Office of Internal Affairs inspections
are conducted by a multidisciplinary team of Internal Affairs
staff and field managers from peer organizations, who also are
known as field inspectors. Typically senior level personnel, the
field inspectors participate in a training week prior to the inspection,
during which the team reviews the results of research and analysis
conducted on the location to be inspected. Based on the review,
specific areas are targeted for on-site inspection. Having field
inspectors, who possess current operational knowledge, review
functions in which they have expertise enhances the credibility
of the inspections. In addition, the field inspectors have an
opportunity to observe a variety of management styles and operational
procedures. This process has been mutually enriching and has broadened
the perspective of those associated with it. A program of interim
spot check inspections was initiated as a complement to the comprehensive
inspections. (Customs Internal Affairs)
Secret Service Inspections
Established on July 1, 1950, the Secret Service Office of Inspection is charged with reviewing policies, procedures, and their implementation in the Secret Service. The Office of Inspection's programs include organizational analysis and cover areas such as personnel, office security, communications, training, management, and supervision. In addition, every employee is afforded a confidential interview to assess the quality of management and supervision within Secret Service. During the 6-month period ending March 31, 1997, the Office of Inspection conducted 35 inspections of field offices, resident offices, and resident agencies, including follow-up visits,
re-inspections, and unannounced audits.
All of the field offices, divisions,
and resident offices that were inspected were in compliance with
Secret Service policies and procedures, with the exception of
minor discrepancies that were brought to the attention of the
agents in charge and corrected during the course of the inspections.
Offices that previously had received recommendations were re-inspected
and found to be in compliance. In addition, the unannounced audits
did not reveal any misuse of Government funds or unauthorized
transactions. (Secret Service Inspection)
IRS Background Investigation Program
for Automated Data Processing Contractors
IRS is increasing its use of outside
contractors. By the conclusion of Fiscal Year 1997, contractors
will have assumed 68 percent of IRS' TSM-related work. Many Automated
Data Processing (ADP) contractors have access to IRS facilities
and systems containing taxpayer data. As a result, contractor
background investigations are an important part of automated information
system security and help to protect IRS property and personnel.
An evaluation of the effectiveness of IRS' background investigation program for ADP contractors revealed that 60 percent of the contractors did not have background investigations or other acceptable clearances as required by Treasury and information resource management guidelines. Thirty-two percent of the contractors identified from IRS National Office procurement files and 75 percent of the contractors identified from IRS service center files had no record of a background investigation or other clearance.
In addition, 55 percent of the IRS service
center contractors without record of a background investigation
or other clearance had computer room access.
An ineffective contractor background
investigation program makes IRS vulnerable to potential misuse
or unauthorized disclosure of taxpayer data, loss of equipment
or data through theft or sabotage, and threats to the personal
safety of IRS employees. In recent years, background investigations
have revealed problematic information on numerous contractors,
including arrests for theft, fraud, and possession of a concealed
weapon. At least 12 contractors were removed from or prevented
from working on contracts based on their background investigation
results.
The auditors recommended that Information
Systems (IS) coordinate a multi-functional effort to establish
IRS policy, criteria, and procedures to clarify the types of contractors
that need background investigations and provide for varying levels
of background investigations depending on the sensitivity of the
contractors' duties and the potential magnitude for loss or harm.
IRS management also needs to establish criteria for making decisions
based on problematic information identified during background
investigations. Management agreed with the recommendations and
proposed corrective actions, including forming a task force of
functional representatives involved in the background investigation
program to develop guidelines addressing the auditors' recommendations.
(IRS Report #070605)
IRS DB2 Database Management System
A review of IRS' DB2 Database Management
System, which supports the Automated Collection System (ACS) and
the Integrated Collection System (ICS), identified weaknesses
in DB2 security and overall management activity. The ACS and ICS
are computerized tax collection systems that assist Customer Service
and Collection Division employees with automated contact and follow-up
of delinquent taxpayers. Both systems manage and process critical
collection data through DB2.
IRS internal auditors found that access
to delinquent taxpayer data and application programs is not properly
restricted, which could result in IRS personnel accessing taxpayer
data for fraudulent purposes. In addition, the DB2 audit trail
does not record material security-related events and is not reviewed
on a regular basis. As a result, IRS cannot ensure that inappropriate
activities are prevented, or detect and investigate unauthorized
access or alterations. The administration and maintenance of DB2
also are inadequate, increasing the risk that DB2 will not perform
as intended.
The auditors recommended that IRS management
determine the DB2 privileges required by systems support personnel;
require periodic reviews of DB2 privileges; assign responsibility
for DB2 data security administration; identify material security-related
activities which can be captured in the audit trail; and determine
the retention period for audit trail records. Guidelines detailing
responsibilities for the day-to-day administration of DB2 should
be developed, and IRS service center directors should include
DB2 as a critical application in the service centers' disaster
recovery plans. Management agreed with the auditors' findings
and plans to implement the recommendations. (IRS Report #071703)
INFORMATION TECHNOLOGY OVERSIGHT
Department-wide Information Technology
Risk Assessment
The OIG's Office of Information Technology
performed a Department-wide Information Technology (IT) Risk Assessment.
The purpose of the assessment was to measure the state of "strategic
information technology and investment planning practices"
throughout the Department and to provide a risk based IT audit
plan for the OIG. As part of the risk assessment, each Treasury
bureau was surveyed, representatives of each bureau's Chief Information
Officer were interviewed, and other ongoing IT investment review
activities by OMB, GAO, and the Department were examined.
The survey specifically addressed investment
management practices as outlined in the recent Clinger-Cohen Act,
including project management practices, technology architecture,
systems development, and information resources management organizational
issues like reporting relationships and skill levels. In addition,
the survey requested specific information about each bureau's
significant development initiatives for risk factors such as technical
complexity, cost estimates, interdependencies with other projects,
and Year 2000 consequences. The information obtained from the
survey and the results of the OIG's assessment will assist the
Department in identifying and prioritizing high risk bureaus,
initiatives, and management practices and in highlighting "best
practices" within Treasury. (OIG)
Tax Systems Modernization
The TSM is the centerpiece of IRS efforts
to reengineer business processes, information systems, and organizational
culture. Since 1988, IRS has invested between $3 and $4 billion
to create an environment where taxpayer accounts are updated rapidly
and taxpayer information is readily available to IRS employees
in order to respond to taxpayer inquiries. The IRS Inspection
Service and others have provided extensive audit coverage of the
costs and difficulties associated with modernizing IRS information
systems. The Inspection Service still considers TSM an FMFIA material
weakness and categorizes TSM control weaknesses as "Program
Management," "Infrastructure," and "Financial
Management."
Since Fiscal Year 1991, the Inspection
Service has issued 89 reports relating to TSM initiatives, including
three in the first half of Fiscal Year 1997. Each of these reports
has been made available to the Department for its use in facilitating
oversight. In addition, IRS internal auditors have another nine
TSM reviews in various stages of completion. All reports issued
in the 6 months ending March 31, 1997 are summarized below.
* IRS is in the process of making critical
decisions regarding TSM projects. To support these projects and
to comply with OMB requirements, IRS management plans to consolidate
its current mainframe processing environment. Internal auditors
conducted a review to determine whether the consolidation strategy
was adequately planned, was cost-effective, and addressed available
alternatives.
The auditors determined that, in order
to ensure an efficient and cost beneficial transition to a consolidated
environment, IRS management should reevaluate computing site configurations,
hardware acquisitions, and operational issues. For example, three
computing sites may not be necessary based on current technology
and disaster recovery needs. IRS' Tennessee Computing Center,
which was designed for large-scale computer operations, would
be underutilized given the small size of available mainframe systems.
In addition, planned configurations may result in underutilized
processing capacities until TSM software products are ready for
production.
The auditors recommended that staffing
assumptions be reevaluated to ensure that experienced IS personnel
are strategically placed to achieve a smooth, effective consolidation.
Recent announcements of staff reductions and the potential retirement
of a significant number of IS employees may affect IRS' ability
to facilitate and operate consolidated processing at three sites.
The auditors also recommended that management re-examine cost
and site constraints identified in a 1995 management study, which
indicated that existing equipment could be consolidated. This
option could provide IRS with the opportunity to purchase better
and/or cheaper equipment in the future.
Management agreed with the recommendations
and indicated that current and anticipated funding constraints
have necessitated a reevaluation of consolidation alternatives.
A high level review of the consolidation strategy is underway.
(IRS Report #070905)
* IRS currently is preparing the Electronic
Federal Tax Payment System (EFTPS), which will serve as the Government's
electronic tax payment processing system, for immediate limited
implementation. System testing has taken longer than planned and
IRS must make significant changes and conduct additional tests
to ensure that an optimum system is implemented. Legislation recently
was passed that extended the date on which over 1.2 million taxpayers
must begin using EFTPS from January 1 to July 1, 1997.
Internal auditors reviewed both EFTPS,
to determine whether it was effectively secured, controlled, and
tested, and selected business areas impacted by EFTPS. Conducting
the audit in an on-line environment, the auditors immediately
raised significant issues to management's attention. The auditors
determined that IRS is at serious risk unless it continues to
ensure that EFTPS has adequate processing capacity and an effective
business resumption plan. Although EFTPS' basic functionality
was proven to process payments as expected, internal processing
rates continue to be unacceptably slow. In addition, incomplete
and incorrect taxpayer payment data are resulting in rejected
and unpostable payments, and the correction of data input errors
is complicated.
Management agreed with the auditors'
findings and has taken corrective action. Additional actions are
planned for implementation. (IRS Report #071207)
* Concerns have persisted over whether
IRS has the appropriate skills and resources to develop future
TSM systems while maintaining legacy systems that must satisfy
its near-term needs. In IRS' Fiscal Year 1996 appropriation, approximately
$100 million of the nearly $700 million designated for TSM was
subject to a requirement that IRS report to the Congress on its
progress in implementing GAO audit recommendations regarding its
software development process.
A review of whether developers at IRS
field development centers and the Detroit Computing Center were
being utilized effectively concluded that IRS has not established
priorities for all TSM projects. As a result, programming resources
are sometimes assigned to low priority and low return projects.
In addition, training efforts are inconsistent, developers consider
the functional requirements for projects under development to
be inadequate, and IRS has not taken significant actions to address
prior recommendations made by oversight organizations, including
GAO and the IRS Inspection Service.
The auditors made a number of recommendations
that would eliminate the use of resources on lower yield, high-risk
efforts and allow IRS to focus higher skilled employees on critical
TSM and legacy projects. Management's planned corrective actions
include having IRS' Chief Information Officer determine which
projects will be contracted out and having IRS' Investment Review
Board prioritize all IS work based on Congressional spending levels.
(IRS Report #070201)
CONTRACT OVERSIGHT
$2.5 Million in Contract Costs Questioned
All Treasury bureau requests for preaward,
cost incurred, and other contract audits are referred to the OIG.
The OIG either performs the audits, refers the audits to the Defense
Contract Audit Agency (DCAA) and other cognizant Government audit
agencies, or contracts with an IPA.
As shown above, the OIG performed or
contracted for a total of 37 contract audits which questioned
$2.5 million in Treasury contractor costs. Contracting officers
agreed to savings and disallowed costs of $1.3 million, including
amounts which were questioned prior to September 30, 1996. An
additional $8.7 million in potential monetary benefits, including
amounts which were questioned prior to September 30, 1996, are
awaiting completion of negotiations with contractors.
Preaward audits, which provide information
on whether pricing proposals are fair and reasonable, are used
by contracting officers in negotiating contracts. During a prior
period, DCAA auditors questioned $1,369,490 of costs included
in a $46,962,516 proposal submitted to IRS, including $374,445
of unsupported costs. The auditors also identified $28,537,028
of unresolved costs, which represent subcontract maintenance costs
that were reviewed by IRS. After negotiations, IRS contracting
officials sustained the entire amount of questioned and unsupported
costs. The DCAA performed an audit of the proposal for SCRIPS
maintenance.
The audit disclosed questioned direct
labor, other direct cost (ODC), procurement purchases, subcontract
labor, actual cost, and indirect expense rates. The questioned
costs were primarily due to differences between the contractor's
proposed direct and indirect rates which were based on the contractor's
forward pricing rates, and the actual rates that were contained
in the contractor's accounting records. In addition, questioned
actual costs included indirect costs that resulted from base direct
labor costs questioned. Unsupported costs consisted entirely of
ODCs, specifically, of administrative support labor costs for
which the contractor could not provide sufficient information
to enable the auditor to reach a definitive conclusion. (Report
#OIG-96-085)
During the period, DCAA conducted a preaward
audit of a proposal submitted to IRS, questioning $577,385 of
the total $2,719,779 proposed. The questioned costs' disposition
is pending future contract negotiations. The DCAA performed an
audit of the proposal for financial support services.
The audit disclosed that the majority
of questioned costs related to direct labor and indirect rates.
The contractor's proposed direct rates were based on using key
personnel to work on the contract. In fact, DCAA auditors found
that the contractor used new hires in two of the labor categories
for which key personnel were proposed. The difference between
the proposed and actual rates paid for both categories is 27 percent.
The DCAA applied the 27 percent decrement factor to all labor
category rates and questioned the difference between the proposed
and decrement rates. The OIG calculated the questioned costs by
applying the questioned direct labor rates to the proposed labor
hours, and the questioned indirect rates to the applicable base
costs. (Report #OIG-97-017)
Voucher review audits are used as the
basis for determining whether contractors' billed costs are reasonable,
allowable, and allocable under the subject contracts. For example,
DCAA auditors questioned $128,861 of the amount included in a
$742,770 invoice and bill submitted to the Department. The questioned
costs' disposition is pending future contract negotiations. The
DCAA performed an audit of the costs claimed for building repair
and restoration services.
The audit disclosed that the majority
of questioned costs related to labor and indirect expenses. The
DCAA questioned the difference between the contractor's direct
labor costs, which were based on the contract ceiling rates, and
the auditors' calculated direct labor costs, which were based
on the lower of either the employees' actual hourly or the contract
ceiling rate. Because the contractor did not have a subcontract
overhead expense pool and base, DCAA questioned the subcontract
overhead in its entirety. In addition, the contractor did not
compute or apply a subcontract overhead to its subcontracts. (Report
#OIG-97-055)
COMPLETED CONTRACT AUDITS
OCTOBER 1, 1996 THROUGH MARCH 31, 1997
PREAWARD PROPOSAL OVERHEAD AUDITS* OTHER CONTRACT
AUDITS* AUDITS*
FUNDS
NUMBER TO BE PUT NUMBER NUMBER
OF TO BETTER OF COSTS OF COSTS
REPORTS USE REPORTS QUESTIONED REPORTS
QUESTIONED
_CUSTOMS_
3 $1,110,925 5 $485,573 0 $0
_DO_
2 $0 1 $0 3 $128,861
_IRS_
2 577,385 1 $0 17 $0
_BEP_
0 $0 0 $0 1 $63,475
_USSS_
1 $0 0 $0 0 $0
_FLETC_
0 $0 1 $179,091 0 $0
_TOTALS**_
8 $1,688,310 8 $664,664 21 $192,336
* All thirty-seven audits were accomplished
by DCAA.
** The monetary amounts are reflected
in the table on monetary benefits from OIG audits in the Statistical
Summaries chapter of this report.
INVESTIGATIVE ACTIVITIES
The OIG and the Offices of Internal Affairs
and Inspection at ATF, Customs, IRS, and Secret Service carry
out many activities designed to protect the integrity of the Department
and its bureaus. These activities range from preventive measures
such as integrity awareness programs to investigations of civil
and criminal fraud. Because of the sensitive nature of much of
the Department's work, this is a high priority area for the OIG
and the Offices of Internal Affairs and Inspection.
INTEGRITY AWARENESS AND DETERRENCE
Integrity Awareness: A High Priority
Integrity awareness remains a high priority
for Treasury internal investigators. During the last 6 months,
the Offices of Internal Affairs and Inspection at Customs, IRS,
and Secret Service gave 1,590 presentations to over 18,100 employees.
Highlights of these programs follow:
* IRS Inspection Service auditors and
investigators routinely make presentations to IRS personnel that
are designed to heighten their awareness of ethics and integrity.
These presentations address various topics and are tailored to
the particular needs of the audience. For the 6-month period ending
March 31, 1997, 568 presentations were made to 14,490 employees.
* Customs' Office of Internal Affairs
special agents conduct yearly integrity and bribery awareness
presentations. In the past 6 months, Internal Affairs agents made
218 presentations to 3,646 employees.
* Secret Service's Office of Inspection
works closely with all elements of the Secret Service to foster
the highest standards of integrity and ethics. To this end, inspectors
conducted 804 integrity and ethics briefings for Secret Service
employees, including criminal investigator recruits, experienced
criminal investigators, special officers, Uniformed Division Officer
recruits and officers, and administrative personnel. (Offices
of Internal Affairs and Inspection)
IRS Internal Security Allegations
At the request of the former Under Secretary
for Enforcement, the OIG Office of Oversight initiated a review
of allegations involving the IRS Mid-Atlantic Region Office of
Internal Security. The allegations concerned possible unethical,
unprofessional, and discriminatory practices by management officials.
The complainant also maintained that he had been fired in retaliation
for reporting the allegations. The review disclosed that there
was merit to certain allegations. However, the Merit Systems Protection
Board sustained the complainant's termination from employment.
(OIG)
IRS Southwest Region Internal Security
Activities
The OIG conducted a review to determine
the effectiveness of the programs of IRS' Southwest Region Internal
Security Office. Some of the areas covered by the review included
firearms, training, asset accountability and control, procurement,
and security. Needed improvements were identified in over half
of the areas reviewed.
The OIG's recommendations for corrective
action included conducting a complete inventory of the office's
firearms, surveillance equipment, ammunition, and body armor,
and making necessary corrections to existing inventory listings.
Additional recommendations involved developing and maintaining
a master list of all inspectors required to qualify with their
weapons, and performing a comprehensive review of current Imprest
Fund Cashier procedures, which would emphasize the need to ensure
that purchases are not split to avoid the $25,000 limitation.
Management agreed with the recommendations and plans to take appropriate
action. (OIG)
Secret Service Credit Check Assistance
In February 1997, Secret Service and
the OIG initiated a pilot program in which, upon the written request
of the Director of the OIG's Office of Oversight, Secret Service
conducts credit bureau checks for OIG job applicants, whose background
investigations are being performed by the OIG. During the first
month of the program, Secret Service performed approximately one
dozen credit checks. This cooperative effort negates the need
for the OIG to subscribe to credit bureau services and results
in a more efficient background investigation process. (Secret
Service Inspection)
CRIMINAL INVESTIGATIONS
Criminal investigations by the OIG and
the Offices of Internal Affairs and Inspection at ATF, Customs,
IRS, and Secret Service include investigations of procurement
fraud; assaults and threats against employees; bribery; allegations
of criminal acts, such as embezzlement and theft, by employees;
referrals from national integrity projects; and allegations of
corruption against IRS by practitioners, such as attorneys and
certified public accountants.
Reorganization of the OIG's Office of
Investigations
As part of a continuing effort to better
serve its customers by becoming more efficient and effective,
the OIG's Office of Investigations (OI) recently reorganized.
On October 31, 1996, OI eliminated one of its four regional offices.
Two of the regions were renamed and reshaped into the Mid-States
Region (formerly the Central and Southern Regions) and the Eastern
Region (formerly the Northeast Region). The Western Region remained
the same. The OI will continue to have offices in Chicago and
New York City, and at FLETC. (OIG)
IRS Technical Equipment Assistance Policy
Change
As the result of an OIG Management Implication
Report, IRS Internal Security revised its procedures for lending
technical security equipment and providing technical assistance
to other law enforcement agencies. The new policy provides for
this assistance upon receipt of a letter that documents the law
enforcement agency's need for and the duration of the loan. Technical
assistance is defined as instruction on how to operate the equipment,
and IRS inspectors are prohibited from assisting with the equipment's
installation or actual operation. In addition, a higher level
of approval, either the Assistant Regional Inspector for Internal
Security or the Director of the Office of Investigations and Technology,
is now required for lending sensitive investigative equipment.
(OIG)
Confidential Informant Pleads Guilty
to Making a False Statement
After telling the OIG and the Federal
Bureau of Investigation (FBI) that he had seen a senior Customs
employee accept a large amount of United States currency from
a Mexican law enforcement official, a former confidential informant
failed a polygraph examination. The informant then confessed that
the information he provided was false. After his arrest by OIG
special agents, the informant pled guilty to making a false statement
and was sentenced to 3 years of probation and fined $600.
At the OIG's request, Secret Service
examiners administered a polygraph in Spanish to a second confidential
informant, who alleged that he was present during a meeting in
which the Mexican official bribed the Customs employee to facilitate
the entry of approximately 5 tons of narcotics into the United
States. Evaluated as being deceptive on relevant questions, the
second confidential informant told a Secret Service examiner in
the post-test interview that he was "mistaken" and that
no such bribe had occurred. (OIG and Secret Service Inspection)
Private Investigator Sentenced for Impersonating
a Federal Officer
A private investigator, who had impersonated
a Federal officer and traveled aboard an aircraft with a loaded
weapon, was arrested and convicted as a result of the successful
integration of separate OIG and FBI investigative efforts. Two
search warrants were obtained and executed, leading to the recovery
of valuable evidence, including fraudulent United States District
Court subpoenas, badges, and credentials. The private investigator
was sentenced to 9 months in Federal prison and 3 years of supervised
probation. (OIG)
IRS Contractor Sentenced for Making False
Statements
On January 31, 1997, an IRS contractor
was sentenced to serve 2 years of supervised probation, to pay
over $19,000 in restitution, and to notify all of his employers
of his conviction. As a result of an OIG investigation, the contractor
had pled guilty to making false statements to the Government regarding
his ability to perform interpretation services for the hearing
impaired for IRS. Debarment action against the contractor is pending.
(OIG)
BEP Manager Fired for Time and Attendance
Abuse
As a result of an OIG investigation,
a BEP manager and a subordinate were cited for abusing time and
attendance regulations. The manager was fired for the violation,
which resulted in over $10,000 in lost work hours for BEP. In
March 1997, BEP management advised the OIG that it had suspended
the manager's subordinate for 30 days without pay. The subordinate
also was required to reimburse BEP for leave for the time absent
from duty. (OIG)
BEP Employee Fired for Failure to File
Tax Returns
During an OIG investigation into allegations
of the chronic non-filing of tax returns by a BEP employee, the
employee admitted to failing to file Federal and state tax returns
from approximately 1979 to 1993. Federal and state tax records
corroborated the employee's non-filing, and the collection of
over $55,000 in outstanding tax liabilities, penalties, and interest
has been initiated. As a result of this violation, BEP fired the
employee. (OIG)
OCC Employee Resigns for Falsifying Documents
An OCC special assistant resigned after
admitting to falsifying documents and expense vouchers. The special
assistant kept the cash received for several on-the-spot awards
for subordinate employees. The theft was discovered and the money
was returned and given to the award recipients after the employees
inquired about the awards. Upon further investigation, OCC discovered
that the special assistant also had falsified expense vouchers
totaling approximately $3,000. To recover the debt, OCC withheld
that amount from the employee's payment for annual leave. (OIG)
Customs Branch Chief Demoted and Transferred
The OIG investigated allegations related to the misuse of Government aircraft by Customs pilots and mismanagement by the branch chief of Customs' New Orleans Aviation Branch. Evidence developed and secured during the
investigation substantiated the allegations.
As a result of the investigation, the branch chief received a
two-grade demotion to a GS-13 pilot position and a forced transfer
to Tampa, Florida. (OIG)
FLETC Instructor Resigns
A FLETC instructor resigned as the result
of an OIG investigation into allegations that he was involved
in the sale of cocaine as a means of repaying a $10,000 personal
loan. Although the investigation did not substantiate the allegations,
it disclosed that the instructor failed to repay loans he obtained
while operating a business; misused his Government credit card
by obtaining cash advances while he was not in official travel
status; issued several bad checks to community businesses; and
used his official position to solicit free docking privileges
for his personal boat at a local marina in exchange for obtaining
Government business for the marina. In addition, at the OIG's
request, the instructor was administered a polygraph examination
by Secret Service. During the examination, the instructor admitted
to using marijuana in 1995, while he was employed by FLETC. (OIG)
BEP Employee Suspended for False Statements
During the course of an OIG investigation,
a BEP employee made false statements on several occasions regarding
evidence that was in his possession. Although the employee ultimately
provided the evidence to the OIG, his actions impeded the investigation.
In December 1996, BEP management advised the OIG that it had imposed
a 30-day suspension to discipline the employee for his actions.
(OIG)
Customs Internal Affairs Manager Disciplined
Two OIG investigations disclosed that
a manager in Customs' Office of Internal Affairs made false statements
relating to Government expenditures, used a Government computer
for personal business, misused his authority by providing preferential
treatment to a private organization and individual, and interfered
with a third OIG investigation. As a result of both investigations,
the manager received a 5-day suspension. In addition, a disciplinary
reassignment was proposed. (OIG)
Retired ATF Employee Sentenced for Income
Tax and Mail Fraud
On February 3, 1997, a retired ATF chief
pilot, who pled guilty to income tax and mail fraud, was sentenced
to 7 ¼ years of incarceration followed by 3 years of probation.
In addition, IRS seized the pilot's boat, which was valued in
excess of $160,000, and the individual was ordered to reimburse
ATF nearly $200,000. An ATF Office of Inspection investigation
had disclosed that the pilot embezzled in excess of $1 million
from the Federal Government while he was employed by ATF.
In October 1993, information was uncovered
that ATF's recently retired chief pilot had possibly been involved
in fraudulent activity while he was in charge of ATF's air program.
During the investigation, numerous Federal violations, including
conspiracy, aiding and abetting, the theft of Government property,
and racketeering, were identified. Many individuals associated
with the pilot were interviewed, hundreds of financial records
from banks and telephone companies were reviewed, and an auditor
was detailed to assist in the investigation. After uncovering
a vast fraudulent scheme, which included fictitious companies
that had been created by the pilot, the ATF case agent worked
with the Department of Justice's Public Integrity Section and
IRS' Criminal Investigation Division (CID) to prosecute the pilot.
(ATF Inspection)
ATF Employee Sentenced for Theft of Public
Funds
On January 27, 1997, a program assistant
formerly employed at the ATF National Laboratory who pled guilty
to the theft of public funds was sentenced to 6 months of home
arrest and 5 years of probation, and was ordered to pay $3,000
in restitution. The program assistant had embezzled over $22,000
of Federal money by making unauthorized personal purchases using
a Government-issued credit card. In addition, the program assistant
had embezzled nearly $1,000 of Federal funds by converting to
personal use cash that was intended for official Government purchases.
An investigation involving audits of
the program assistant's imprest fund and Government-issued credit
card account activity was initiated after the program assistant's
supervisor reported accounting discrepancies to ATF's Office of
Inspection. Interviews with the program assistant and several
witnesses were conducted, and the program assistant resigned from
ATF during the course of the investigation. (ATF Inspection)
Individual Sentenced for Bank Fraud
In December 1996, an individual who was
not a Government employee pled guilty to bank fraud and was sentenced
to be incarcerated for time served plus 45 days. The individual's
plea agreement calls for his continued cooperation with Customs'
Office of Internal Affairs to identify other conspirators in the
bank fraud scheme. During the plea negotiation process, the individual
had named several other conspirators, none of whom were Customs
employees, and agreed to obtain evidence against them upon his
release.
The individual's September 1996 arrest
was the culmination of a 17 month long Internal Affairs investigation
into allegations that one or more unknown persons stole and then
attempted to negotiate a Customhouse broker's check. The individual
was identified as a suspect through an analysis of bank records,
surveillance photographs, and handwriting exemplars. (Customs
Internal Affairs)
Importer Sentenced for Bribery and Smuggling
In November 1996, an importer received
a sentence of 14 months of incarceration, a $27,000 fine, and
3 years of supervised probation for bribery and smuggling. The
importer also forfeited an additional $13,000, which was submitted
to covert agents as an initial installment of his bribery and
smuggling venture. During the course of a long-term Internal Affairs
investigation, the importer paid nearly $45,000 in bribes to a
cooperating Customs inspector for assistance in the illegal importation
of Iranian carpets. (Customs Internal Affairs)
Customs Inspector Pleads Guilty to Disclosing
Information
In November 1996, as part of a plea agreement
with the United States Attorney's Office, a Customs inspector
pled guilty to disclosing information obtained from the Treasury
Enforcement Communications System II. In November 1995, the inspector
made extensive unauthorized system queries concerning a Customs
investigative target and his associates. The inspector subsequently
violated the law by disclosing some of the information to the
target. As a result of her guilty plea, the inspector was placed
on indefinite suspension until her sentencing. On April 1, 1997,
the inspector was sentenced to 1 month in Federal custody, 3 months
of home detention, 3 years of probation, and 200 hours of community
service. In addition, as part of her sentence, the inspector was
formally removed from her position with Customs. (Customs Internal
Affairs)
Customs Fugitive Arrested
On October 22, 1996, a fugitive, who
had been indicted for conspiring to possess 1,000 kilograms of
marijuana, was arrested after his vehicle crossed through a port
of entry. Information had been received that the fugitive, who
allegedly belongs to an organization that has corrupt Customs
inspectors on its payroll, was residing in the El Paso/Juarez
area. Based upon the information, Internal Affairs initiated a
joint investigation with Customs' OI and the United States Marshals
Service. After his arrest, the fugitive was debriefed regarding
any information he possessed about corruption and smuggling. Internal
Affairs and OI are continuing to work together on the follow-up
investigation. (Customs Internal Affairs)
Customs Inspector Pleads Guilty to Felony
Charges
In January 1996, a Customs inspector
and his wife, who is a Mexican national, pled guilty to felony
charges, including harboring an illegal alien and misusing a passport.
An Internal Affairs investigation had disclosed that the inspector
knowingly and willfully facilitated the unlawful entry of his
wife, an undocumented alien traveling under a fraudulent Mexican
passport, into the United States on numerous occasions. As part
of his plea agreement, the inspector will perform 600 hours of
community service at a homeless shelter over the next 12 months,
resign from Customs, and never again apply for Federal employment.
In addition, the inspector is expected to plead guilty to a misdemeanor
charge of disclosing confidential information. The inspector's
wife, who had been in custody since December 5, 1996, was sentenced
to time served and will appear before an immigration judge and
agree to voluntary exclusion from the United States. (Customs
Internal Affairs)
Former Port Authority Supervisor Sentenced
for Smuggling Marijuana
On January 10, 1997, a former port authority
supervisor, who had been convicted of conspiring to possess and
distribute marijuana, was sentenced to 9 years and 2 months in
jail, a $60,000 fine, and 4 years of supervised release. The former
inspector had worked in the Customs area of the International
Arrivals building at John F. Kennedy International Airport. With
a crew of luggage handlers, the former inspector had smuggled
narcotics secreted in baggage through the airport, circumventing
detection by diverting international arrivals' luggage from Customs
examination. The former supervisor's sentencing was the culmination
of an Internal Affairs investigation of a conspiracy to import
marijuana and cocaine that was reported in the September 1995
and September 1996 Semiannual Reports. (Customs Internal Affairs)
Montana Freemen Associates Convicted
of Interfering with IRS Laws
Two individuals associated with the Montana
Freemen, an anti-Government group, were found guilty of numerous
Federal violations. The first defendant, who was convicted of
conspiracy, fraud, aiding and abetting, possessing false documents,
attempting to interfere with IRS laws, and transporting stolen
property, faces a maximum sentence of 104 years in prison and
$4.25 million in fines. The second defendant, who was convicted
of conspiracy, transporting stolen property, and attempting to
interfere with IRS laws, faces a maximum sentence of 31 years
in prison and $1.5 million in fines.
Both men also were charged with conspiracy
and bank and mail fraud, related to separate investigations conducted
by the FBI, IRS' CID, the Secret Service, the United States Postal
Inspection Service, and the Department of Agriculture OIG. Evidence
presented at the trial was the culmination of the various investigations.
In addition, the second defendant was one of the individuals arrested
in 1996 at the ranch where the Montana Freemen held off FBI agents
for 2 1/2 months.
An IRS Inspection Service investigation
was initiated when an IRS service center manager notified Internal
Security that IRS had received a fraudulent tax payment, which
was identified as a certified banker's check/comptroller warrant.
Subsequently, the first defendant was determined to be involved
in a scheme to negotiate bogus financial instruments with IRS,
other Government agencies, and financial institutions. The fraudulent
tax payment that the first defendant sent to IRS was for nearly
$4 million, and would have generated a refund of over $1.5 million
if IRS had followed his directions to apply the funds to his tax
account liability and remit the difference. (The first defendant
had threatened to file criminal conversion charges if IRS failed
to comply with his instructions.) The investigation also revealed
that both defendants sent threatening communications to IRS revenue
officers. (IRS Inspection)
Individuals Sentenced for Threatened
Assaults
Security management problems and issues
continually present challenges that require varying levels of
attention throughout the Federal Government. IRS employees have
extensive contact with the public, and noncompliance with tax
laws has been a common theme among some groups that have been
identified as advocating the use of force and violence. One of
the Inspection Service's responsibilities is investigating attempts
to interfere with the administration of internal revenue laws
through threats, assaults, and intimidation. The following three
examples illustrate the Inspection Service's significant investigative
results in this area.
* Two individuals were convicted of conspiring
to damage or destroy a Government building and using an explosive
device in relation to a crime of violence. The first defendant,
who identified the second defendant as his co-conspirator, received
10 years of incarceration. For his involvement in the plot, the
second defendant was sentenced to 36 years in prison. As previously
reported in the March 1996 Semiannual Report, the men attempted
to blow up an IRS office in December 1995 by planting a powerful
homemade bomb outside of the building. A fuse detonated the device's
blasting cap, but failed to ignite the main charge. As a result,
the bomb did not explode. The bomb was found in the building's
parking lot by an IRS employee arriving for work.
* A tax protester was convicted of attempting
to use a weapon of mass destruction and solicitation to commit
acts of violence for his involvement in a plot to bomb an IRS
service center. No bombing occurred, and the defendant was sentenced
to over 20 years for his actions.
The Inspection Service had been advised
by ATF that the subject of an ATF undercover illegal firearms
investigation had told the undercover agents that he was in the
market to purchase several thousand pounds of explosives. The
subject then informed the agents that he intended to use the explosives
to destroy IRS buildings. The ATF supplied additional agents to
pose as "strong men" who, for a price, offered to assist
the subject in his quest. During a monitored meeting, the subject
gave undercover agents photographs and diagrams of the service
center, showing where he wanted the bombs to be placed. The subject
also told the agents that he planned to destroy other IRS facilities
in the future.
During monitored meetings, the subject
expressed a hatred for IRS and implied that he had ties to militia
organizations. Investigators also uncovered evidence that the
subject had frequent contact with the head of a known tax protest
organization. Agents from ATF, the Inspection Service, the FBI,
and state and local law enforcement agencies arrested the subject
as he purchased a machine gun from an undercover officer. During
a search of the subject's residence following his arrest, agents
found business cards belonging to militia members. However, no
information was obtained to show that the subject was, in fact,
a member of a militia group. In addition, no evidence of a conspiracy
to blow up the IRS building was found.
* A taxpayer, who threatened an IRS revenue
officer with a shotgun and an unregistered sawed-off rifle, pled
guilty to possessing an unregistered firearm and was sentenced
to 1 year of incarceration and a 2-year suspended sentence. An
investigation was initiated when the revenue officer contacted
the IRS Inspection Service to report that the taxpayer had assaulted
him with firearms while he was performing his official duties.
A search of the taxpayer's business premises by the IRS Inspection
Service and ATF resulted in the discovery of both weapons. (IRS
Inspection)
IRS Bribery Case
Bribery of employees is a major concern
for IRS revenue and collection operations. IRS revenue agents
and other employees who have frequent contact with taxpayers need
to be particularly alert to the fact that their positions and
associated responsibilities make them potential targets for bribery
attempts. The following case illustrates an example of an IRS
employee soliciting bribes.
An IRS revenue agent, who was convicted
in 1995 of soliciting a $75,000 bribe from a taxpayer, resigned
his position and was sentenced to 2 1/3 years of incarceration.
During the investigation, IRS inspectors executing a search warrant
on the revenue agent's home discovered evidence of additional
bribe activity. Further investigation revealed that the revenue
agent had received nearly $30,000 from another taxpayer in exchange
for favorable audit results. In 1997, the second taxpayer, who
had been convicted of bribery, received a 3-year suspended and
a 6-month alternate sentence.
The initial investigation of the revenue
agent was begun when a taxpayer advised the Inspection Service
that the revenue agent had offered to make his tax delinquency
disappear in exchange for $75,000. Following the search of the
employee's home and IRS office, the second taxpayer admitted to
IRS inspectors that he had given the revenue agent four checks
in exchange for the revenue agent's offered assistance in eliminating
an estimated tax liability. The revenue agent also told the second
taxpayer that he would perform 4 years of consulting work for
a fee, an idea which appealed to the taxpayer. However, the taxpayer
advised the inspectors that he had not seen or had contact with
the revenue agent since the revenue agent received the checks.
(IRS Inspection)
Accountant Pleads Guilty to Tax Fraud
An accountant, who failed to timely file
tax returns for his clients and forward their state and Federal
tax payments, pled guilty to tax fraud and interfering with the
administration of internal revenue laws. The accountant defrauded
his clients of nearly $750,000, approximately $350,000 of which
represented taxes that were due to IRS. Sentencing is pending.
An IRS CID special agent informed the
Inspection Service that he had met with two of the accountant's
clients, who reported that the accountant had stolen approximately
$130,000 from them. The money was intended to cover the clients'
Federal and state estimated tax payments, their employees' Federal
and state withholdings, unemployment taxes, tax balances due,
and the accountant's fees. According to the CID, the accountant
prepared and signed false tax returns on the clients' behalf,
and filed the returns with IRS without making the required payments.
Further investigation revealed that the
accountant had prepared over 400 tax returns for numerous individuals
during 2 tax years. Thirteen of the accountant's clients were
interviewed. The accountant's client base consisted largely of
Italian immigrants who owned and operated small businesses and,
for whom, English was a second language. The accountant convinced
many of his clients that it would be easier if he paid their taxes
out of his funds and they subsequently reimbursed him.
For some clients, the accountant prepared
two sets of returns, one which reflected their true income and
estimated payments, and a second which reflected substantially
lower income and estimated payments. The accountant sent the second
set of returns to IRS and kept the estimated payment for himself.
He had other clients sign blank tax returns and give him a check,
and he failed to file any tax returns for another client for 7
years. The accountant kept his clients' records and rarely provided
them with copies of their tax returns or receipts. (IRS Inspection)
Revenue Officer Pleads Guilty to Stealing
Tax Remittances
A revenue officer, who was employed by
IRS for more than 10 years, pled guilty to stealing nearly $8,000
in payments from delinquent taxpayers trying to settle their tax
liabilities. The revenue officer faces a maximum sentence of 10
years in prison and a $250,000 fine. Sentencing is pending.
An investigation was initiated after
a Collection Division manager reported that his office had not
received two tax receipts from the revenue officer's receipt book.
A records review disclosed that neither receipt had been received
by the IRS cashier's office or credited to the appropriate taxpayers'
accounts. Further examination of the revenue officer's receipt
book revealed that during a 13-month period, the revenue officer
had not credited a total of 16 receipts to taxpayers' accounts.
The revenue officer tried to hide the thefts by creating false
entries in her account ledger.
The investigation also determined that
the revenue officer filed a false car loan application for $8,000
with a Federal credit union. In actuality, the revenue officer
used the money, which was deposited into her bank account, to
pay off her personal debts. Subpoenaed bank records for three
of the revenue officer's accounts disclosed a history of insufficient
funds. When interviewed by IRS inspectors, the revenue officer
admitted to engaging in the embezzlement to support her cocaine
addiction. The revenue officer subsequently resigned from IRS.
(IRS Inspection)
IRS Employee Indicted for Unauthorized
Disclosure of Tax Information
An IRS employee, who was indicted for
accessing and disclosing taxpayer return information in furtherance
of a credit card scheme, pled guilty to the unauthorized disclosure
of information. Sentencing is pending. An investigation was initiated
based on information provided by a Secret Service special agent,
who had identified the IRS employee as a supplier of taxpayer
return information to an individual involved in credit card fraud.
It is estimated that the employee's actions contributed to over
$150,000 of credit card fraud.
A computer audit trail revealed that
the employee accessed the accounts of three taxpayers, whose credit
cards had been stolen in the mail. The audit trail showed that
the subject obtained the taxpayers' full names, addresses, and
social security numbers (SSNs). The employee's supervisor confirmed
that the employee had no official reason to access the three taxpayers'
accounts. In addition, the investigation disclosed that the employee
previously had received a 7-day suspension for unauthorized tracking
of her neighbors' income tax refunds. Circumstantial evidence
suggests that the employee disclosed the taxpayer information
to her brother in furtherance of his credit card scheme. The employee
accessed the taxpayers' accounts on days close to the initiation
of several unauthorized credit card charges. (IRS Inspection)
IRS Impersonation Cases
Every year, taxpayers and businesses
are swindled out of thousands of dollars by individuals posing
as IRS employees or misrepresenting IRS. The IRS Inspection Service
is responsible for investigating these occurrences. Actions were
taken or initiated on several significant cases during the last
6 months.
* An individual, who defrauded his victims
by posing as a representative of IRS, the FBI, and the Central
Intelligence Agency, was sentenced to 8 years of incarceration
and 3 years of probation upon release. In addition, the defendant
was ordered to pay restitution in excess of $165,000.
The defendant had claimed to be the director
of a consulting firm that was affiliated with the United States
Government, funded by the Treasury Department, and created as
a sting operation to covertly investigate corrupt IRS employees.
While presenting himself as being employed under contract with
Treasury, the defendant fraudulently procured a small fleet of
automobiles, a large office suite, computers, cellular telephones,
pagers, identification badges, stationery, and office furniture.
The defendant also misrepresented himself and his business to
recruit 11 employees, whom he defrauded of substantial amounts
of money. Total financial losses to the defendant's victims are
estimated at over $240,000.
* The primary organizer of a telemarketing
scheme was sentenced to 6 years and 2 months of incarceration
for racketeering conspiracy. His accomplice, who picked up the
money that their victims wired, received 8 months of incarceration
and 3 years of supervised release, and was ordered to pay several
thousand dollars in restitution. A third participant in the conspiracy,
who previously pled guilty to wire fraud and aiding and abetting,
received 18 months of incarceration.
A joint investigation between the IRS
Inspection Service and a state attorney general's office was initiated
after two individuals advised state investigators that they had
been victims of a telemarketing scam and provided the name of
the individual to whom they had wired money. When interviewed,
the named individual implicated the primary organizer of the scheme.
Investigators eventually identified 17 victims, who had lost a
total of over $400,000, and estimated that the defendants defrauded
other unidentified victims of an additional $300,000 to $600,000.
* An individual, who received 4 months
of incarceration and 5 years of probation for an earlier telemarketing
conviction, was arrested upon his release from a Federal correctional
facility, where he had been in custody for violating his probation.
Prior to his arrest, the individual was indicted for false impersonation
and for wire and mail fraud.
An investigation was initiated after
a taxpayer advised the Inspection Service that she had received
two telephone calls from an individual who identified himself
as an IRS employee. The caller told the taxpayer that she had
won an $80,000 prize, but that she had to pay excise taxes to
IRS before she could collect the money. The defendant subsequently
was identified as being the caller. Further investigation determined
that the defendant often called elderly taxpayers, identified
himself as an IRS investigator, and told the taxpayers that he
had recovered money that they had lost to other telemarketers.
He then instructed his victims, who ranged in age from 72 to 87,
to send cash for the taxes via interstate overnight courier in
order to receive the recovered money. Further judicial action
is pending. (IRS Inspection)
Secret Service Special Agent Resigns
After Security Clearance Revoked
Secret Service's Office of Inspection
investigated the circumstances surrounding a special agent's arrest
for rape, aggravated assault, and adultery. The special agent
was indicted on the charges, which were brought by his long-time
girlfriend, and was placed on indefinite suspension without pay
pending the outcome of the judicial proceedings.
The District Attorney dismissed local
charges due to the complainant's lack of credibility. However,
the special agent was administered a polygraph and was found to
be deceptive concerning his assault on the complainant. The special
agent also made post-polygraph admissions to Secret Service inspectors.
After being served with notice that his security clearance was
revoked, the special agent resigned from Secret Service rather
than appeal the revocation. (Secret Service Inspection)
Secret Service Special Agent Resigns
in Lieu of Prosecution
Secret Service's Office of Inspection
investigated allegations that a special agent was engaged in questionable
credit card transactions. The investigation revealed that following
the special agent's use of his personal credit card to purchase
computer equipment at a local computer store, a second computer
was bought at the same store with the agent's credit card.
After filing a written protest with the
credit card company, indicating that he did not make the second
purchase or authorize anyone to use his credit card to do so,
the special agent returned the first computer to the store for
a full refund. A store examination of the returned computer indicated
that its hard drive had been modified. Subsequent forensic examination
by Secret Service's Electronic Crimes Branch revealed that the
returned computer was, in fact, altered using components from
the second computer, which the special agent said he had never
purchased or received.
The investigation also revealed several
other questionable credit card transactions made by the special
agent. The case was presented to the United States Attorney for
prosecutive opinion, and the agent was suspended. Following discussions
between the special agent's attorney and the United States Attorney,
the special agent resigned from Secret Service and the United
States Attorney declined prosecution. (Secret Service Inspection)
Stay-in-School Employee Sentenced for
Stealing Evidence
A Secret Service stay-in-school employee
was sentenced to 5 years of probation and was ordered to make
full restitution to Secret Service. The stay-in-school employee
stole registered mail that contained counterfeit United States
currency from the Secret Service mail room, along with genuine
United States currency. Also taken, but later recovered, was Secret
Service equipment, including pagers and a ballistic vest. The
employee admitted to the thefts and to passing counterfeit currency
after failing a polygraph examination. (Secret Service Inspection)
EMPLOYEE CONDUCT
Employee conduct investigations by the
OIG and the Offices of Internal Affairs and Inspection at ATF,
Customs, IRS, and Secret Service include investigations of violations
of the Standards of Ethical Conduct for Employees of the Executive
Branch, 5 Code of Federal Regulations 2635, and the Treasury and
IRS supplements.
IRS Employee Resigns
The OIG investigated allegations that
an IRS internal auditor was using his Government computer to access
sexually oriented Internet sites during official hours. A computer
network administrator had discovered the misuse while monitoring
the employee's on-line activity. The investigation substantiated
the allegations, and the employee resigned his position. (OIG)
IRS Inspector Suspended for Misconduct
An OIG investigation determined that
an IRS inspector misused a Government vehicle, consumed alcohol
while driving the vehicle after official hours, falsified his
time and attendance reports, and misused his authority while off-duty.
IRS suspended the inspector for 30 days. During the investigation,
four additional inspectors were cited for misconduct and received
counseling memorandums. (OIG)
Good O' Boy Roundup Attendee Suspended
In December 1996, a Secret Service agent,
who drove an official vehicle to the 1991 Good O' Boy Roundup,
was suspended from duty for 30 days without pay. The Good O' Boy
Roundup was an annual southeastern Tennessee event, first held
in 1980. (Secret Service Inspection)
Secret Service Course Instructors Receive
Letters of Reprimand
Two Secret Service course instructors
were given letters of reprimand for making inappropriate comments
to a class of special agent recruits. The comments, one of which
was of a sexual nature and the other of which concerned sexual
orientation, were made in mixed company with no intent of malice.
(Secret Service Inspection)
Administrative Action Against Secret
Service Employee Upheld
A Secret Service fingerprint specialist,
whom several coworkers accused of sexual harassment that included
physical touching and verbal comments of an explicit sexual nature,
successfully appealed a notice of proposed removal. Subsequently,
the fingerprint specialist was reduced in grade to a non-supervisory
position and transferred to a different work site. The fingerprint
specialist appealed his reduction in grade to the Merit Systems
Protection Board, which upheld the administrative action. (Secret
Service Inspection)
STATISTICAL SUMMARIES
This chapter contains statistical analyses
of OIG and Office of Inspection and Internal Affairs activities.
Several of the analyses fulfill reporting requirements in the
Inspector General Act, as amended.
Statistical Summary
_STATISTICAL HIGHLIGHTS APRIL 1996 -
MARCH 1997_ a/
_6 MONTHS ENDED_
_9/30/96_ _3/31/97_ _TOTAL_
_AUDITS_
Audit Reports 141 113 254
Recommended Monetary Benefits (in Thousands):
Questioned Costs $386 $925 $1,311
Savings 3,178 5,725 8,903
Revenue Enhancements _15,618_ _24,000_ _39,618_
Total $19,182 $30,650 $49,832
_EVALUATIONS_
Evaluation Reports 2 3 5
_INVESTIGATIONS_
Cases Opened 2,017 1,865 3,882
Cases Closed 2,210 1,847 4,057
Successful
Prosecutions 183 151 334
Administrative
Sanctions 468 436 904
Recoveries and Penalties
(in Thousands) $15,153 $6,059 $21,212
_OVERSIGHT AND QUALITY ASSURANCE REVIEWS_
Reviews and
Analyses 2 2 4
a/ Includes statistics for the OIG and
Treasury Offices of Internal Affairs and Inspection.
Audit and Evaluation Reports Issued by
Bureau
Appendix A of this report lists individual
audit and evaluation reports issued during the 6 months ended
March 31, 1997.
OIG Audits and Evaluations Reports
Multi-Bureau 1
ATF 3
OCC 3
Customs Service 13
DO 10
BEP 2
FLETC 3
FMS 3
IRS* 21
Mint 1
BPD 1
Secret Service 2
OTS 3
Independent Entity _1_
67
Inspection Service Audits of IRS _49_
Total _116_
* Includes OIG contract audits.
Reports With Questioned Costs
The IRS Inspection Service did not issue
any audit reports with questioned costs during this semiannual
reporting period. The term "questioned cost" means a
cost that is questioned because of (1) an alleged violation of
a provision of a law, regulation, contract, or other requirement
governing the expenditure of funds; (2) a finding that, at the
time of the audit, such cost is not supported by adequate documentation("unsupported
cost"); or (3) a finding that the expenditure of funds for
the intended purpose is unnecessary or unreasonable.
The term "disallowed cost"
means a questioned cost that management, in a management decision,
has sustained or agreed should not be charged to the Government.
OIG AUDIT REPORTS WITH QUESTIONED COSTS
6 MONTHS ENDED MARCH 31, 1997
_Questioned _Unsupported
Costs_a/ (in Costs_a/ (in
_Report Category_ _Number_ Thousands)
Thousands)
1. For which no management
decision had been made by
the beginning of the
reporting period 21 $8,384 $0
2. Which were issued
during the reporting
period _7_ b/ _925_ _0_
3. Subtotals (1 plus 2) 28 9,309 0
4. For which a management
decision was made during
the reporting period 8 3,002 0
* dollar value of
disallowed costs 7 c/ 2,645 0
* dollar value of costs
not disallowed 4 c/ 357 0
5. For which no management
decision has been made by
the end of the reporting
period (3 minus 4) _20_ _$6,307_ _$0_
6. Reports for which no
management decision was
made within six months of
issuance _14_ _ $5,779_ _$0_
a/ "Questioned costs" includes "unsupported costs."
b/ Six audits were performed by DCAA.
c/ Three reports were partially agreed
to and partially not agreed to.
Audit Reports With Recommendations That
Funds Be Put To Better Use
The term "recommendation that funds
be put to better use" means a recommendation that funds could
be used more efficiently if management took actions to implement
and complete the recommendation, including (1) reductions in outlays;
(2) deobligations of funds from programs or operations; (3) costs
not incurred by implementing recommended improvements related
to operations; (4) avoidance of unnecessary expenditures noted
in pre-award reviews of contract agreements; (5) any other savings
which are specifically identified; or (6) enhancements to revenues.
The term "management decision"
means the evaluation by management of the findings and recommendations
included in an audit report and the issuance of a final decision
concerning its response to such findings and recommendations,
including actions concluded to be necessary.
OIG AUDIT REPORTS WITH RECOMMENDATIONS THAT FUNDS BE PUT TO BETTER USE
6 MONTHS ENDED MARCH 31, 1997
_Revenue
_Savings_ Enhance-
(in Thou- ments_ (in
_Report Category_ _Number_ _Total_ sands)
Thousands)
1. For which no
management decision has
been made by the
commencement of the
reporting period 18 $30,928 $6,368 $24,560
2. Which were issued
during the reporting
period 4 a/ 29,725 5,725 24,000
3. Subtotals (1 plus
2) 22 60,653 12,093 48,560
4. For which a
management decision
was made during the
reporting period 5 833 833 0
* dollar value of
recommendations that
were agreed to
by management 3 b/ 629 629 0
* based on proposed
management action 3 b/ 629 629 0
* based on proposed
legislative action 0 0 0 0
* dollar value of
recommendations that
were not agreed to
by management 3 204 204 0
5. For which no
management decision has
been made by the end of
the reporting period
(3 minus 4) _17_ _$59,820_ _$11,260_
_$48,560_
6. Reports for which no
management decision was
made within six months
of issuance _13_ _$30,095_ _$5,535_ _$24,560_
a/ Two audits were performed by DCAA totaling $1,688,310.
b/ One report was partially agreed to
and partially not agreed to.
IRS AUDIT REPORTS WITH RECOMMENDATIONS THAT FUNDS BE PUT TO BETTER USE
6 MONTHS ENDED MARCH 31, 1997
_Revenue
_Savings_ Enhance-
in Thou- ments_ (in
_Report Category_ _Number_ _Total_ sands)
Thousands)
1. For which no
management decision has
been made by the
commencement of the
reporting period 0 $0 $0 $0
2. Which were issued
during the reporting
period _0_ _0_ _0_ _0_
3. Subtotals (1 plus
2) 0 0 0 0
4. For which a
management decision
was made during the
reporting period 0 0 0 0
* dollar value of
recommendations that
were agreed to
by management 0 0 0 0
* based on proposed
management action 0 0 0 0
* based on proposed
legislative action 0 0 0 0
* dollar value of
recommendations that
were not agreed to
by management 0 0 0 0
5. For which no
management decision has
been made by the end of
the reporting period
(3 minus 4) _0_ _$0_ _$0_ _$0_
6. Reports for which no
management decision was
made within six months
of issuance _0_ _$0_ _$0_ _$0_
a/ The IRS Inspection Service does not
have any financial accomplishments to report for the 6 months
ending March 31, 1997. It is evaluating reports issued during
Fiscal Year 1994 through Fiscal Year 1997 to date to identify
financial accomplishments not previously reported and to update
previously reported potential accomplishments with more accurate
actual accomplishments. The resulting changes will be reported
at a later date.
Disputed Audit Recommendations
The Inspector General Act requires Inspectors General to provide information on significant management decisions in response to audit recommendations, with which the Inspectors General disagree. As of
March 31, 1997, there were no disagreements
to report.
Undecided Audit Recommendations
The Inspector General Act requires a
summary of each audit report which has been undecided for over
6 months. There were 26 such reports.
_Report Title and Date_ _Report Number_
_Amounts_
| 1. ATF Administration of Cover Over Payments to Puerto Rico and the Virgin Islands, 3/28/94 c | OIG-94-063 | 3,160,000 |
| 2. Evaluation of Change Order Proposal Submitted Under Contract Number TIR-91-0038 for an Integrated Collection System, 5/11/94 a/ |
OIG-94-083 | 936,583 |
3. Defective Pricing Review of Cost or Pricing Data Submitted Under Contract TEP-88-205(TN), Option Year One, 5/26/94 a/ | OIG-94-096 | 2,967,177 |
| 4. Defective Pricing Review of Cost or Pricing Data Submitted Under Contract TEP-91-38(TN) for Currency Ink and Varnish, 6/7/94 a/ |
OIG-94-099 | 1,900,461 |
| 5. Evaluation of Proposal Submitted Under Contract TEP-91-66 for Installation and Support Services for Currency Inspection Systems, 7/19/94 b/ |
OIG-94-115 | 275,148 |
| 6. Defective Pricing Review of Cost or Pricing Data Submitted Under Contract TEP-91-18(TN) Base Year Costs, 7/21/94 a/ |
OIG-94-116 | 163,499 |
| 7. Evaluation of Subcontract Price Proposal Submitted Under Contract TEP-91-66 for Slitting, Batching and Stacking Systems, 10/3/94 b/ |
OIG-95-001 | 853,600 |
| 8. Evaluation of Subcontractor's Direct Labor and Indirect Cost Rates Submitted Under Contract TIR-89-0056, Task Order 182 for Automated Data Processing Support Services, 10/6/94 a/ |
OIG-95-003 | 238,156 |
| 9. Evaluation of Procurement Overhead Rates Under Contract TC-89-047, Review of Contractor's Accounts Payable Processing System, and Compliance with Cost Accounting Standard 412, 12/15/94 a/ |
OIG-95-029 | 10,234 |
| 10. Evaluation of Direct and Indirect Costs and Rates Claimed Under Contract TC-89-047 for Calendar Year Ending 12/31/92, 1/11/95 a/ |
OIG-95-033 | 69,284 |
| 11. Evaluation of Direct and Indirect Costs and Rates Claimed Under Contract TFTC 91-9 for the Periods October 1, 1992, through December 31, 1993, 2/2/95 a/ |
OIG-95-045 | 5,282 |
| 12. Follow-Up Audit of the Federal Workers' Compensation Program at the Bureau of Alcohol, Tobacco and Firearms, 8/24/95 f/ |
OIG-95-118 | 4,000,000 |
| 13. Final Report on the Executive Office for Asset Forfeiture's Investment of the Treasury Forfeiture Fund, 9/27/95 f/ |
OIG-95-126 | 2,200,000 |
| 14. Costs Incurred Under Contract TOS-92-71 for Audit Services, 10/12/95 a/ |
OIG-96-001 | 10,923 |
| 15. Follow-Up Audit of the Federal Worker's Compensation Program at the U.S. Customs Service, 10/19/95 f/ |
OIG-96-007 | 2,100,000 |
| 16. Use of Equitable Sharing Funds by the Philadelphia, Pennsylvania Police Department, 3/4/96 f/ |
OIG-96-038 | 304,373 |
| 17. Cost Incurred Under Contract TOS-91-31 for Calendar Year 1991, 3/12/96 a/ |
OIG-96-042 | 5,404 |
| 18. Use of Equitable Sharing Revenues by the Jefferson County, Texas Narcotics Task Force, 3/12/96 e/ |
OIG-96-043 | 47,188 |
| 19. Equitable Sharing Revenues by the Beaumont, Texas Police Department, 3/12/96 e/ |
OIG-96-044 | 271,904 |
| OIG-96-045 | 460,591 |
| 21. Incurred Costs Under Contract TEP-92-39(N) Covering Fiscal Years 1992 and 1993, 5/2/96 a/ |
OIG-96-065 | 12,998 |
| 22. Incurred Costs Under Contracts TEP-91-66 and TEP-95-06(TN) for Fiscal Years 1993, 1994, and July 11, 1995, 6/12/96 b/ |
OIG-96-077 | 79,051 |
| 23. Costs Incurred Under Contract TOS-92-70 for Contract Audit Services, 7/26/96 a/ |
OIG-96-086 | 14,198 |
| 24. Price Proposal Submitted Under Contract TC-96-001 for the Management and Sale of Seized Property, 8/21/96 b/ |
OIG-96-091 | 178,202 |
| 25. Final Report on the Customs Officers Pay Reform Amendments, 9/13/96 e/ |
OIG-96-94 | 5,2000,000 |
| 26. Final Report - ATF and Customs Need to Better Regulate the Sale of Tax-Exempt Cigarettes to the Fishing Industry, 9/30/96 e/ |
OIG-96-99 | 210,000 |
Total | $35,874,256 | |
a/ Contract negotiations have not yet been held or completed. b/ Contract negotiations have been held and the OIG is awaiting receipt of the negotiation documentation. c/ Recommendation is awaiting decision from General Counsel. d/ The OIG is in the process of reviewing the negotiation documentation. e/ Corrective action not yet completed. f/ There is no corrective action plan in place. | ||
Significant Unimplemented Recommendations
The Inspector General Act requires identification of significant recommendations described in previous semiannual reports on which corrective actions have not been completed. The following lists of such unimplemented recommendations in OIG and Inspection Service audit reports are based on information in the Department's automated tracking system, which is maintained by Treasury management officials. All of the recommendations are being implemented in accordance with currently established milestones.
_Issue _Report Title/Potential Monetary Benefits and
_Report Number_ Date_ Recommendation
Summary_
_OIG Audits_
| OIG-93-024 | 1/93 | Contract Administration at the Federal Law Enforcement Training Center
Consult with Legal Counsel to determine whether the Government can collect improper payments to contractors. | |
| OIG-94-060 | 3/94 | U.S. Customs Service Antidumping and Countervailing (AD-CV) Duty Program
Implement a Performance Measurement System for the AD-CV Duty Program that includes measures of quality, timeliness, and efficiency, and will allow Customs to assess how well the program has been implemented. | |
| OIG-94-063 | 3/94 | Alcohol, Tobacco, and Firearms Administration of Cover Over Payments to Puerto Rico and the Virgin Islands, $3,160,000
Implement the decision of the Department of the Treasury, OGC, on the timing of cover over payments. | |
| OIG-94-071 | 3/94 | U.S. Customs Service: Paperless Entry Program Entails Greater Risks Than Perceived
Establish a single audit program for districts to use in assessing the paperless program. (Two recommendations) | |
| OIG-94-097 | 5/94 | FMS's Activities to Process and Monitor Agency Disbursements
Ensure that employees complete actions so that Regional Finance Center files contain only current Agency Head signatures. (Two recommendations) | |
| OIG-94-143 | 9/94 | Bureau of Alcohol, Tobacco and Firearms: Tax Compliance Inspection Improvements Needed
Revise the specialist questionnaire to ensure all data concerning compliance risk is adequately considered in developing the Inspection Targeting Program rankings. (Two recommendations) | |
| OIG-95-118 | 8/95 | Follow-Up Audit of the Federal Worker's Compensation Program at the Bureau of Alcohol, Tobacco and Firearms, $4,000,000
There is no corrective action plan in place. | |
| OIG-95-126 | 9/95 | Final Report on the Executive Office for Asset Forfeiture's Investment of the Treasury Forfeiture Fund, $2,200,000
The Office of Asset Forfeiture should develop procedures to ensure that excess collections are invested throughout the year. | |
| OIG-96-043 | 3/96 | Use of Equitable Sharing Revenues by the Jefferson County, Texas Narcotics Task Force, $47,188
The EOAF should revise Treasury guidelines to require separate accounts for identifying expenditures. (Two recommendations) | |
| OIG-96-044 | 3/96 | Equitable Sharing Revenues by the Beaumont, Texas Police Department, $271,904
The EOAF should revise Treasury guidelines to require separate accounts for identifying expenditures. (Two recommendations) | |
| #034008 | 7/93 | Automated Underreporter Project Initiation and Tax Year 1988 Limited Pilot, $1,315,000
Determine whether contract overcharges can be recovered. (Five recommendations) | |
| #035006 | 9/93 | Debtor Master File Processing, $116,300,000
Improve the debtor file validation process by implementing all recommended systemic changes and assess whether mismatch conditions could be resolved through the use of IRS data files. (Five recommendations) | |
| #041403 | 1/94 | Nonresident Alien Information Documents
Identify noncompliance during processing.
Pursue legislation for a universal tax identification number (TIN). Develop regulations requiring a TIN on foreign investments over a specified amount. (Three recommendations) | |
| #043501 | 5/94 | Controls Over Access to Credit Bureau Databases
Mandate nationwide implementation of interim computer security applications until IRS' modernization efforts develop standardized security programs for all locator services. | |
| #044201 | 8/94 | Information Security Over Small Scale Computer Systems
Perform follow-up review to evaluate corrective action. | |
| #044301 | 8/94 | Local Telecommunications Expenses
Ensure a Cost Management Information System is implemented IRS-wide. | |
| #051408 | 1/95 | Opportunities for Reducing the Collection Queue Inventory
Reduce the risk that unproductive cases are assigned to revenue officers, improve the management of the account receivable inventory, use Inspection Service computer programs to identify and purge unproductive collection cases, and reduce taxpayer burden. (Seven recommendations) | |
| #051902 | 1/95 | Individual Retirement Arrangement (IRA) Excise Taxes, $315,000,000
Increase taxpayer awareness and ensure compliance by expanding systems and programs to identify taxpayers with retirement distributions in excess of stipulated amounts and advise elderly taxpayers of IRA minimum distribution requirements. (Three recommendations) | |
| #052106 | 2/95 | National Account Profile
Develop requirements for cleanup processing of discrepancies between the National Account Profile and the Master File. | |
| #052903 | 2/95 | Controls Over the Issuance of Employer Identification Numbers
Modify processing procedures to ensure actions are taken to obtain all necessary data from taxpayers requesting Employer Identification Numbers.7 (Three recommendations) | |
| #054406 | 5/95 | Interim Evaluation of the SCRIPS Pilot
Improve read accuracy rates on Form 1040EZ and Information Return Program documents to meet contract specifications. (Two recommendations) Develop the required test deck and system report for SCRIPS. | |
| #056301 | 8/95 | Protecting the Privacy of Third Party Taxpayer Information
Update the Internal Revenue Manual to include new procedures for controlling third party access to tax information. | |
| #056703 | 9/95 | Implementation of Examination's Fiscal Year 1995 Refund Strategy, $385,000,000
Track and assess the effectiveness of actions taken to change IRS computer systems to automatically adjust taxpayer filing status and child care credits when dependents are disallowed. | |
| #060303 | 10/95 | Electronic Return Originator Suitability Checks and Monitoring Efforts
Incorporate a TIN validation process before information is used to research applicant suitability. | |
| #061104 | 1/96 | FOCUS: An Automated System for Identifying Potential Civil and Criminal Tax Violations
Strengthen management of the FOCUS field testing process to ensure that system functionality is refined timely and completed in an effective and unbiased manner. (Six recommendations) | |
| #061509 | 1/96 | TAXLINK Processing and Related Programs
Develop additional contingency plan scenarios and test software capacity, enhance compliance procedures to ensure North American Free Trade agreement requirements are consistently enforced, better protect IRS interests when dealing with other Federal agencies, enhance TAXLINK design and programming, and develop a comprehensive marketing and enrollment methodology. (Four recommendations) | |
| #061610 | 1/96 | IRS' Efforts in Monitoring Trust Fund Recovery Penalty Assessments Need Improvement
Automate the processing of adjustments resulting from payments or credits on related Trust Fund Recovery accounts and reevaluate the definition of accounts receivable related to Trust Fund Recovery assessments. (Two recommendations) | |
| #060402 | 1/96 | Early Intervention Contact Processing
Consider alternate methods of obtaining current taxpayer locator information. | |
| #061714 | 2/96 | Electronic Fraud Detection System (EFDS) Rollout
Draft procedures for changing passwords immediately upon signing on to EFDS.
Develop and test a comprehensive Quality Assurance plan for Phase II to evaluate system functionality. Standardize Form W-2 data and establish requirements for conversion to a machine readable format. | |
| #062208 | 2/96 | Distributed Input System (DIS) Transition/Contingency Plan
Increase Four Phase Computer inventories by obtaining systems excised by other government agencies; ensure vendors obtain and use diagnostic software in scheduled maintenance; and develop and deliver DIS training. (Three recommendations) | |
| #062403 | 3/96 | Selected Aspects of the Service's Methodology For Developing TSM
Develop and integrate procedures to improve development coordination. Define the various uses of Business Area Analyses (BAAs) and delimit the objectives of the various types of BAAs. | |
| #062705 | 3/96 | Development of the Revenue Accounting Control System (RACS) Replacement
Provide a current list of TSM initiatives, projects, sub-projects, and smaller sub-projects. Enhance the Resource Tracking System to include smaller sub-projects. | |
| #063502 | 4/96 | Parent and Dependent Duplicate Exemption Claims, $30,800
Identify solutions to duplicate SSNs that minimize both taxpayer burden and impact to IRS. Segment the conditions of duplicate SSNs for control and aggressive management. | |
| #064102 | 5/96 | Preparer Program
Associate the preparer TIN with each individual return in the audit stream. Enhance the MACS so that the preparer TIN can be matched on the Audit Information Management System. | |
| #064008 | 6/96 | The Financial Accounting and Reporting of Collection's Seized Assets Could be Improved
Develop a strategy and implementation plan for the transmission of data between the Automated Work Control System seizure module and the RACS. (Two recommendations) Reclassify the reporting of seized assets. | |
| #064202 | 6/96 | EFTPS Implementation
Require mandatory management review of transactions with adjustments to both a taxpayer's name control and TIN. Develop a training environment for the pilot that does not involve live transactions. | |
| #064401 | 6/96 | 1996 Telefile Program
Ensure that the Telefile systems are adequately tested and that a Security Certification and Accreditation is completed as soon as possible. | |
| #065002 | 7/96 | Validity of Assessments
Evaluate causes of unproductive cases and identify additional program improvements.
Pursue the capability to access Social Security data via computer to enable quick, economical processing of cases. Develop instructions to Compliance employees on researching accounts for pending assessments. | |
| #065503 | 8/96 | Employment Tax Nonfiler Program
Use Income and Tax Statements (Forms W-3) and Wage and Tax Statements (Forms W-2) information to activate filing requirements and identify nonfilers. (Three recommendations) | |
| #066401
| 9/96 | Follow-up Review of Information Security Over Small Scale Computer Systems
Conduct another self-assessment and certification of systems, to be followed by a validation.
Include in the Fiscal Year 1997 Business Master Plan quantifiable measures for achieving computer security.
Enforce the requirements that any future purchases provide minimum security requirements. Include in first-line managers' expectations a requirement that they test computer security in periodic reviews. | |
Revised Management Decisions
The Inspector General Act requires Inspectors
General to provide a description and explanation of the reasons
for any significant revised management decisions made during the
reporting period. There were no such decisions during this reporting
period.
Legislative and Regulatory Review
The Inspector General Act requires the
Inspector General to review existing and proposed legislation
and regulations relating to the programs and operations of the
Department and to make recommendations concerning their impact.
The OIG reviewed and commented on five Treasury Directives and
Treasury Orders in the 6 months ended March 31, 1997. In addition,
the OIG reviewed and commented on two existing and proposed legislative
items.
Hotline Allegations
The table below summarizes allegations
of fraud, waste, misconduct, mismanagement, and assault received
through "800" hotline numbers during the 6 months ended
March 31, 1997. It does not include (1) allegations received by
the OIG and Treasury Offices of Inspection and Internal Affairs
through other sources; (2) inquiries on taxes and other matters
which are referred informally to Treasury program managers and
others for appropriate disposition; or (3) pending allegations
for which dispositions have not been determined.
Organization
_Disposition of Allegations_ _Total_
_OIG_ _USCS_ _IRS_
Referred for investigative
or audit inquiry 32 19 1 12
Referred to program managers 9 0 0 9
Referred to other agencies _49_ _48_
_1_ _0_
Totals _90_ _67_ _2_ _21_
1-800-359-3898 OIG Hotline
1-800-829-2996 Customs Hotline
1-800-366-4484 IRS Hotline
Caseload Accounting
This table accounts for the caseload of the OIG and Offices of Internal Affairs and Inspection for the 6 months ended March 31, 1997. The beginning balance of cases, plus the cases opened, minus the cases closed, equals the ending balance of open cases.
Organization
Total OIG ATF USCS IRS USSS
Number of open
cases at the
beginning of
the period 2,241* 170 128 377* 1,533
33
Number of cases
opened during
the period 1,865 74 106 109 1,557 19
Number of cases
closed during
the period 1,847 73 122 97 1,533 22
Number of open
cases at the end
of the period 2,259 171 112 389 1,557
30
*Adjusted figures.
Nature of Allegations
The table below classifies the nature
of allegations for investigative cases opened during the period.
The number of allegations equals the number of cases opened because
only the most significant allegation per case was counted.
Organization
Total OIG ATF USCS IRS USSS
Bribes, graft,
kickbacks 129 7 0 16 106 0
Procurement and
contract
irregularities 23 7 2 1 13 0
Assaults/threats 518 1 4 9 502 2
False statements
and claims 150 14 4 5 127 0
Theft/misuse of
funds/property 341 8 28 5 299 1
Drug abuse and
control 30 1 4 0 25 0
Impersonating a
Government
official 68 1 0 0 67 0
Criminal -- Other 237 4 3 6 220 4
Sexual Harassment 22 0 2 14 6 0
Improper conduct
or disclosure 249 11 40 28 161 9
Non-Criminal
-- Other _98_ _20_ _19_ _25_ _31_ _3_
Total Allegations _1,865_ _74_ _106_
_109_ _1,557_ _19_
Prosecutive Actions
The chart below accounts for the prosecutive actions of the OIG and Offices of Internal Affairs and Inspection for the 6 months ended March 31, 1997. The number of pending cases at the beginning of the period, plus the cases referred to prosecutive authorities, less the cases accepted for prosecution, less the declinations, equals the pending cases at the end of the period.
Organization
Total OIG ATF USCS IRS USSS
Number of cases
pending prosecutive
decision at the
beginning of the
period 745* 18 6 13 707 1*
Number of cases
referred to
prosecutive
authorities during
the period 713 6 8 11 675 13
Number of cases
accepted for
prosecution during
the period 162 4 2 5 142 9
Number of
declinations
during the period 437 6 8 3 417 3
Number of cases
pending prosecutive
decision at the
end of the period 859 14 4 16 823 2
*Adjusted figures.
Successful Prosecutions
This chart shows the number of successful
prosecutions involving the cases of the OIG and Offices of Internal
Affairs and Inspection during the 6 months ended March 31, 1997.
Successful prosecutions include the number of individuals who
as a result of investigations (1) are found guilty by a Federal
or state court, (2) are accepted for pretrial diversion agreements
by the Department of Justice, or (3) are granted plea bargaining
agreements.
_Organization_ _Prosecutions_
OIG 6
ATF 2
USCS 13
IRS 129
USSS _1_
Total _151_
Administrative Sanctions
This chart shows the number of personnel
actions and the number of suspensions and debarments of contractors
involving cases of the OIG and Offices of Internal Affairs and
Inspection.
_Personnel _Suspensions and
_Organization_ Actions_ Debarments_
OIG 36 1
ATF 34 0
USCS 20 0
IRS 343 0
USSS _2_ _0_
Total _435_ _1_
Investigative Monetary Benefits
This table summarizes monetary benefits relating to investigations of the OIG and Offices of Internal Affairs and Inspections.
Adminis
Organi- Criminal trative
zation Total Recoveries Penalties Penalties
Savings
OIG $848,230 $76,485 $0 $0 $771,745
ATF 190,000 190,000 0 0 0
USCS 1,208,267 817,767 360,500 30,000 0
IRS 3,809,586 3,530,468 279,118 0 0
USSS _3,400_ _0_ _3,400_ _0_ _0_
Total $6,059,483 $4,614,720 643,018 $30,000
$771,745
Access to Information
The Inspector General Act requires Inspectors
General to report those circumstances that, in the judgment of
the Inspector General, constitute an unreasonable refusal of requested
information or assistance.
In the last Congress, the Chairman of
the Senate Committee on Governmental Affairs asked the OIG to
respond to ten specific questions, which generally pertained to
Treasury policies and practices regarding background investigation
files and the production of the list used to request those files.
Subsequently, Secret Service provided testimony regarding the
process by which the White House access list is maintained and
updated. The Ranking Minority Member of the House Committee on
Government Reform and Oversight made a separate request for an
investigation into the preparation of testimony provided by Secret
Service officials before that Committee.
Since the inception of the OIG's investigatory
efforts, Secret Service has imposed certain limiting conditions
regarding OIG access to necessary information within Secret Service.
As a result, the OIG has been unable to conduct an investigation
and respond to the questions posed. Secret Service's position
is that the OIG may only gain access to documents and schedule
interviews within Secret Service by going through Secret Service's
internal affairs office, the Office of Inspection. In support
of its position, Secret Service provided a memorandum detailing
its concerns from an operational and legal perspective. Specifically,
Secret Service raised the concern that OIG access might impact
its protective mission. In addition, Secret Service raised ancillary
issues regarding the statutory exemptions to the Inspector General
Act, the Privacy Act, and the OIG's coordination with the Office
of Independent Counsel. The OIG views Secret Service's expression
of these concerns as a deflection of the OIG's clearly enunciated
and narrowly focused goal of providing responses to the questions
posed by the requesters.
Accordingly, the OIG believes that Secret
Service's position constitutes an unreasonable denial of access.
The OIG has attempted unsuccessfully to resolve this matter directly
with Secret Service and through the management chain of command.
Given these circumstances, the OIG has determined that it is unable
to conduct a credible and independent investigation and accordingly
the investigation is closed.
As noted above, the Inspector General
Act, as amended, (United States Code Annotated Appendix 3) Section
6(b)(2) provides that such instances of unreasonable refusal of
access be reported to the Department and disclosed in the Semiannual
Report. The OIG recognizes the complexity of this matter. That
is, the Inspector General Act contains specific Treasury provisions,
which authorize the Secretary to prohibit the Treasury Inspector
General from carrying out or completing an investigation in certain
areas requiring access to "sensitive information," as
defined in Section 8D. However, the Secretary has not exercised
this authority.
APPENDIX A: AUDIT REPORT LISTING 1/
October 1, 1996 through March 31, 1997
OIG Audits and Evaluations
Multi-Bureau
Department of the Treasury's Digital Telecommunications System, OIG-97-045,
2/21/97, $4,036,800 S
Bureau of Alcohol, Tobacco and Firearms
Alcohol, Tobacco and Firearms Special
Occupational Tax Program, OIG-97-016, 12/27/96, $24,000,000 R
Follow-up Audit of the Bureau of Alcohol,
Tobacco and Firearms Aviation Program: Controls Need Improvement,
OIG-97-028, 1/10/97
Bureau of Alcohol, Tobacco and Firearms
Use of Administratively Uncontrolled Overtime, OIG-97-038, 2/4/97
Office of the Comptroller of the Currency
Office of the Comptroller of the Currency's
Evaluation of Management, OIG-97-023, 12/30/96
Office of the Comptroller of the Currency
Truth in Lending Examination Process, OIG-96-E10, February 1997
Audited Calendar Year 1996 Financial
Statements of the Office of the Comptroller of the Currency, OIG-97-062,
3/28/97
U.S. Customs Service
Direct and Indirect Costs and Rates Claimed
Under Contract TC-89-047 for Calendar Year Ended December 31,
1993, OIG-97-002, 10/10/96, $135,600 Q
Proposal Submitted Under Contract TC-96-01
for Seized Property Management Services, OIG-97-008, 10/28/96
Land Border Carrier Initiative Program,
OIG-CA-97-001, 10/30/96
Direct and Indirect Costs and Rates Claimed Under Contract TC-94-026 for Fiscal Year Ended December 31, 1995, OIG-97-011, 11/5/96
______________________________________________________________________________
1/ Amounts shown for some reports represent recommended monetary benefits.
Q = Questioned Costs; S = Savings; R
= Revenue Enhancements.
Incurred Costs Under Contracts TC-90-049
and TC-95-018 for Fiscal Year 1995, OIG-97-013, 11/6/96, $12,000
Q
Contract Closing Statement Under Contract
TC-87-039 for the Design, Development, Installation and Test for
the C31 Program, OIG-97-015, 11/12/96, $337,800 Q
United States Customs Service Effectively
Controlled Firearms, OIG-97-022, 12/27/96
Final Procurement Determined Overhead
Rates Claimed Under Contract TC-89-047 for Fiscal Year Ending
December 31, 1990, OIG-97-032, 1/21/97
U.S. Customs Service Use of Administratively
Uncontrollable Overtime, OIG-97-041, 2/13/97
Direct and Indirect Rates Submitted in
Response to Solicitation CS-96-026 for Cargo Search X-Ray Inspection
Systems, OIG-97-046, 3/6/97
Pricing Proposal Submitted Under Contract
TC-93-029 for Vessel Maintenance, OIG-97-059, 3/25/97, $1,111,000
S
U.S. Customs Service: Follow-up Audit
of Small Airport Program, OIG-97-061, 3/28/97
U.S. Customs Service's Fiscal Years 1996 and 1995 Financial Statements,
OIG-97-054, 3/31/97
Departmental Offices
Treasury's Administration of Technical
Assistance Activities in Central and Eastern Europe and the Former
Soviet Union Countries, OIG-96-E07, October 1996
Implementation of the Whistleblower Protection
Act of 1994, OIG-96-E11, December 1996
Treasury Small Business Program, OIG-97-020,
12/11/96
Treasury Forfeiture Fund Awards May Have
Exceeded Limits, OIG-97-021, 12/23/96
Direct and Indirect Costs and Rates Claimed
Under Contract TSW-90-0209 for Fiscal Years 1992, 1993, 1994,
and 1995, OIG-97-040, 2/13/97
Application of Agreed-Upon Procedures
on Proposal Submitted Under Contract TOS-97-15 for Management
and Administrative Support Services, OIG-97-048, 3/11/97
Subcontractor Unit Prices, Applicable
to Contract TOS-96-23, OIG-97-050, 3/12/97
Application of Agreed-Upon Procedures
of Proposal Submitted Under Contract TOS-97-15 for Management
and Administrative Support Services, OIG-97-053, 3/18/97
Public Vouchers Submitted Under Contract
TOS-96-23 for Building Repairs and Restoration Services, OIG-97-055,
3/26/97, $128,900 Q
Public Vouchers Submitted Under Contract
TOS-96-23 for Building Repairs and Restoration Services, OIG-97-056,
3/26/97
Bureau of Engraving and Printing
Termination Settlement Proposal Submitted
Under Contract TEP-96-09(TN) for a Web Gravure Printing Press,
OIG-97-010, 11/1/96, $63,500 Q
Audited Fiscal Years 1996 and 1995 Financial
Statements of the Bureau of Engraving and Printing, OIG-97-058,
3/25/97
Federal Law Enforcement Training Center
Direct and Indirect Costs and Rates Claimed
Under Contract TFTC-91-9 for the Period December 29, 1993 Through
December 31, 1995, OIG-97-012, 11/5/96, $179,000 Q
Property Management Program at the Federal
Law Enforcement Training Center, OIG-97-029, 1/10/97
Pre-Audit Survey of the Federal Law Enforcement
Training Center, OIG-97-051, 3/12/97
Financial Management Service
Financial Management Service's Internal Controls Over Processing Refunds,
OIG-97-025, 1/7/97
Processing of Investment Transactions
by the Financial Management Service as a Service Organization,
OIG-97-031, 1/17/97
Treasury Financial Management Service
Funds Accounting Branch Custodial Financial Statements for the
Year Ended September 30, 1996, OIG-97-052, 3/14/97
Internal Revenue Service
Public Vouchers Submitted Under Contract
TIR-95-0063 for Treasury Information Processing Support Services,
OIG-97-001, 10/1/96
Defective Pricing Review of Cost or Pricing
Data Submitted Under Contract TIR-94-0028 for the Document Processing
System, OIG-97-003, 10/10/96
Indirect Costs and Rates Under Contract
TIR-91-0072, OIG-97-005, 10/23/96
Evaluation of Contractor's Estimating
System, OIG-97-006, 10/24/96
Contractor's Accounting System and Related
Internal Controls, OIG-97-007, 10/28/96
Contractor Labor Floorcheck and Timekeeping
Practices, OIG-97-009, 10/28/96
Proposal Submitted in Response to Solicitation
IRS-96-0005 for Architectural and Engineering Support Services,
OIG-97-014, 11/8/96
Application of Agreed-Upon Procedures
on Proposal Submitted in Response to Solicitation IRS-96-0041
for Financial Support Services, OIG-97-017, 11/18/96, $577,400
S
Public Vouchers Submitted Under Contract
TIR-94-0089 for Information Processing Support Services, OIG-97-018,
11/20/96
Public Vouchers Submitted Under Contract
TIR-95-0067 for Information Processing Support Services, OIG-97-026,
1/7/97
Public Vouchers Submitted Under Contract
TIR-95-0059 for Treasury Information Processing Support Services,
OIG-97-027, 1/8/97
Public Vouchers Submitted Under Contract
TIR-95-0064 for Treasury Information Processing Support Services,
OIG-97-030, 1/16/97
Allegation on Internal Revenue Service
Use of High Intensity Drug Trafficking Area Funds, OIG-97-035,
1/27/97, $68,000 Q
Public Vouchers Submitted Under Contract
TIR-95-0058 for Treasury Information Processing Support Services,
OIG-97-033, 1/28/97
Public Voucher Submitted Under Contract
TIRNO-94-00028 for the Treasury Document Processing System, OIG-97-034,
1/30/97
Contractor Labor Floorcheck and Timekeeping
Practices, OIG-97-036, 2/5/97
Public Vouchers Submitted Under Contract
TIR-95-0065 for Information Processing Support Services, OIG-97-037,
2/5/97
Public Vouchers Submitted Under Contract
TIR-94-0090 for Treasury Information Processing Support Services,
OIG-97-039, 2/7/97
Contractor Labor Floorcheck and Timekeeping
Practices, OIG-97-044, 2/20/97
Public Vouchers Submitted Under Contract
TIR-95-0062 for Treasury Information Processing Support Services,
OIG-97-047, 3/7/97
Public Vouchers Submitted Under Contract
TIR-95-0060 for Treasury Information Processing Support Services,
OIG-97-060, 3/31/97
U.S. Mint
Audited Statements of Custodial Gold
and Silver Reserves for the United States Mint as of September
30, 1996, and 1995, OIG-97-043, 2/27/97
Bureau of the Public Debt
Improvements Needed in the Treasury Securities
Auction Process, OIG-97-004, 11/8/96
U.S. Secret Service
Initial Pricing Proposal Submitted in Response to Solicitation USSS-96-0017,
OIG-97-019, 12/11/96
U.S. Secret Service: Audit of Administratively Uncontrollable Overtime,
OIG-97-042, 2/13/97
Office of Thrift Supervision
Follow-up Audit of Supervision of Problem
Thrifts, OIG-97-049, 3/10/97
Office of Thrift Supervision's Implementation of Prompt Corrective Action,
OIG-97-057, 3/25/97
Audited Calendar Year 1996 Financial
Statements of the Office of Thrift Supervision, OIG-97-065, 3/31/97
Independent Entity
Enterprise for the Americas Initiative
Financial Audit Reports, OIG-97-024, 12/31/96
Inspection Service Audits
Internal Revenue Service
Midstates Region Small
Purchase Card Controls, 370101, 10/1/96
Selection, Control, and
Disposition of District Examination Cases, 070106, 10/16/96
Customer Service - Brookhaven
Service Center, 670101, 10/17/96
Software Development at
the Field Development Centers, 070201, 10/18/96
Quality Assurance for Examination
Division - Western Region, 970203, 11/6/96
Central California District's
Controls Over Remittance Processing, 970304, 11/6/96
The Introduction of the
Form 1040T, 070403, 11/7/96
Currently Not Collectible
Cases - Indiana District, 170104, 11/7/96
Service's Use of Available
Data for Determining Compliance with the Foreign Investment in
Real Property Tax, 070302, 11/8/96
Service's Use of Interagency
Agreements, 070504, 11/13/96
Transition Activity - Northern
California District, 970102, 11/20/96
Cash Remittance Processing
Controls - Kansas City Service Center, 370304, 11/22/96
Risk Assessment of the
Housing Plan Program - Western Region's Laguna Niguel Site, 970402,
12/13/96
Collectibility Within Examination
Division, 370401, 12/16/96
Service's Background Investigation
Program for ADP Contractors, 070605, 12/23/96
Selected Southeast Region
Appeals Offices, 170200, 12/24/96
Processing Fuel Tax Claims,
070804, 12/30/96
Controls Over Deferred
Payment Offers in Compromise - Atlanta Service Center, 170302,
12/30/96
SCRS Consolidation in the
Computing Centers, 070905, 1/6/97
Selected Error Conditions
and Unproductive Editing Procedures in Returns Processing, 071004,
1/17/97
Mortgage Interest Deductions
- Brookhaven Service Center, 670201, 1/17/97
Revenue Agent Case Assignment
Practices, 071102, 1/24/97
Electronic Federal Tax
Payment System (Version 1.5) Testing, Security, and Business Issues,
071207, 1/24/97
Examination's Use of Taxpayer
Return Information - Southeast Region, 170402, 1/24/97
Appeals Case Validation
Sampling Process - Western Region, 970501, 1/27/97
Activity in the Adjustments
Branch - Atlanta Service Center, 170607, 1/31/97
Questionable Motor Fuel
Excise Tax Refunds Referred to the Fresno Service Center, 970600,
2/3/97
Taxpayer Service Walk-in
Activities - Northeast Region, 670402, 2/5/97
Consolidation of Property
Management Warehouses - Southeast Region, 170503, 2/7/97
Effectiveness of the Notice
Review Process - Kansas City Service Center, 370502, 2/7/97
Service Center Control
File, 170704, 2/10/97
Albany Imprest Fund, 670306,
2/10/97
Productivity of the Underreporter
Program, 071404, 2/19/97
Selected Collection Activities
- Gulf Coast District, 170802, 2/21/97
Selected Investigative
Equipment - Criminal Investigation Division New England District,
670504, 2/21/97
In-Business Trust Fund
Program - Northern California District, 970703, 2/21/97
Quality of Information
Document Processing, 071304, 3/3/97
Controls Over Investigative
Equipment - Brooklyn District Criminal Investigation Division,
670603, 3/3/97
Selected Publishing Services
Activities - National Office, 071603, 3/5/97
ACS/ICS DB2 Database Management
System, 071703, 3/6/97
Controls Over High Risk
Property - South Florida District, 170902, 3/12/97
National Office Examination
Planning, 072002, 3/13/97
Selected Issues in the
Coordinated Examination Program, 070700, 3/17/97
Examination Group Statute
Controls - Kentucky-Tennessee District, 171001, 3/18/97
Internal Control Assessment
of the Problem Resolution Program, 970901, 3/19/97
District Deposit Discrepancies
- Austin and Kansas City Service Centers, 370603, 3/21/97
Controls Over Investigative
Equipment - Connecticut-Rhode Island District Criminal Investigation
Division, 670700, 3/21/97
Western Region's Estate
and Gift Tax Program, 970803, 3/24/97
Examination Group Statute
Controls - Delaware-Maryland District, 171200, 3/28/97
APPENDIX B: CROSS REFERENCES TO INSPECTOR
GENERAL ACT, AS AMENDED 1/
Section 4(a)(2): Review of Legislation and
Regulations 65
Section 5(a)(1): Significant Problems, Abuses, and
Deficiencies 11-49
Section 5(a)(2): Recommendations with Respect to
Significant Problems, Abuses, and
Deficiencies 11-49
Section 5(a)(3): Significant Unimplemented Recommendations
Described in Previous Semiannual Reports
58-64
Section 5(a)(4): Matters Referred to Prosecutive
Authorities 67-68
Section 5(a)(5): Summary of Instances Where Information Was
Refused 69-70
Section 5(a)(6): List of Audit Reports
71-78
Section 5(a)(7): Summary of Significant
Reports 11-49
Section 5(a)(8): Statistical Table - Questioned
Costs 52-53
Section 5(a)(9): Statistical Table - Recommendations that
Funds Be Put to Better Use 53-55
Section 5(a)(10): Summary of Audit Reports Issued Before
the Commencement of the Reporting Period for which No
Management Decision Has Been Made 56-58
Section 5(a)(11): Significant Revised Management Decisions
Made During the Reporting Period 64
Section 5(a)(12): Management Decisions with which the
Inspector General Is in Disagreement
56
1/ As Amended
*** Last update 07/21/97 (clj) ***