While many of the OIG's activities are specific to a particular component of the Department, other work covers more than one component and, in some instances, extends to Department contractors and grant recipients. The following describes OIG audits, evaluations, inspections, special reviews, and investigations that involve more than one Department component.
The OIG issued a report regarding official travel by U.S. Attorneys that exceeded the federal government lodging rate. Federal regulations list reimbursable lodging rates for Department employees on official travel (commonly known as the government rate) and identify limited circumstances in which Department employees can be reimbursed for lodging costs in excess of these rates.
Our review determined that the large majority of U.S. Attorneys rarely or never sought reimbursement above the government rate for lodging. We found that the practice of seeking reimbursement above the government rate was concentrated among a relatively small number of U.S. Attorneys. In particular, we identified five U.S. Attorneys who exhibited noteworthy patterns of improperly exceeding the government rate without sufficient justification. We also identified other troubling incidents of U.S. Attorneys seeking reimbursement for lodging above the government rate without justification.
In total, U.S. Attorneys sought reimbursement for lodging above the government rate for 724 separate trips, which was approximately 20 percent of the total trips taken by U.S. Attorneys during 2007-2009. While we cannot say with certainty the exact percentage of Department travel that exceeds the government rate for lodging, we believe it is much less than the 20 percent by which U.S. Attorney travel exceeded the government rate.
We found that, to some extent, deficiencies in Department travel policies contributed to the improper lodging reimbursements for U.S. Attorneys. U.S. Attorneys were permitted to authorize their own travel and approve their own travel expenses, which we believe contributed to some exceeding the government rate without adequate justification. Moreover, we found that internal controls within the Department provided ineffective oversight of U.S. Attorney travel. Yet, we do not believe any deficiencies in Department travel policies or internal controls excuse the problematic travel reimbursements described in the report.
In 2010, JMD and EOUSA issued memoranda intended to correct these problems. However, we do not believe these memoranda fully solve the problems identified in this report. The Department must ensure that travel authorizations are routed to individuals with the requisite approval authority and provide both the travelers and those approving the authorizations with clear and concise standards to apply when evaluating whether a request to exceed the government rate is appropriate. Our report made four recommendations for additional action to JMD and EOUSA to improve their travel practices and controls, which we believe would help prevent recurrences of the inappropriate travel practices by some U.S. Attorneys that are described in the report.
The OIG issued an audit report examining how the Department procures space for federal detainees at state and local detention facilities. Due to the shortage of federally-owned detention space, the Department depends on state and local governments to provide detention space for detainees.
The USMS and OFDT are responsible for negotiating intergovernmental agreements (IGA) with state and local detention officials to hold detainees for a set price per inmate per day, referred to as a "jail-day rate." Our audit reported that between 2005 through 2010 the USMS housed an average of about 36,000 detainees per day in state and local facilities using IGAs. We found that, although the number of daily detainees housed in state and local facilities remained relatively consistent, the USMS detention costs increased by over 19 percent, from $743 million in FY 2005 to $888 million in FY 2010. Because of the significance of these costs, it is critical that the Department ensure any jail-day rate paid under IGAs is fair and reasonable. The following graph illustrates this increase.
The audit concluded that the USMS and OFDT must take significant actions before the price analysis negotiation strategy it currently uses can be considered an effective tool for USMS specialists to justify fair and reasonable jail-day rates. For example, the OIG determined that the USMS and OFDT need to ensure that certain application data provided by the requesting facility is accurate before beginning negotiations. We identified one example where a USMS specialist relied on inaccurate information submitted by a facility. The subsequent negotiations resulted in a contract that will provide the facility with almost $8 million in profits over the 3-year term of the IGA.
We also found that although the USMS collects operating expense data from jails showing how much each spends to house detainees, the USMS did not consistently use this data to negotiate lower jail-day rates. Our sample of 25 IGAs showed that for just 25 IGAs, the USMS and OFDT potentially paid about $15 million more than it cost the facilities to house federal detainees over the IGA terms. We concluded that the USMS would have realized significant cost savings if it had consistently used available jail expense data when appropriate as leverage in its negotiations to lower proposed jail-day rates.
In addition, the audit found that the USMS inconsistently applied pricing factors — such as independent estimates and rates charged by nearby jails — during its negotiations and also did not adequately document how its negotiators determined a negotiated rate was fair and reasonable. We believe that the lack of sufficient evidence to show how pricing factors were considered during negotiations made it appear that negotiators picked certain price analysis techniques because they yielded the highest rates for state and local facilities.
We found that some state and local governments take advantage of circumstances such as detention space shortages to demand unjustifiable increased jail-day rates. We recommended that the USMS and OFDT require their negotiators to verify the costs reported by these detention facilities and attempt to negotiate a price based on the facility's actual cost instead of paying an inflated and unreasonable jail-day rate.
The OIG made 15 recommendations to help the USMS and OFDT improve its negotiation of IGA jail-day rates, including: validating facility-submitted information; applying jail operating expense estimated jail-day rates and other reliable estimates to gauge the reasonableness of proposed rates; and identifying exactly which facilities are similar to the requesting facility and using only those facilities for the basis of comparisons. The USMS and OFDT agreed with the majority of the OIG recommendations. However, while the USMS and OFDT agreed that government negotiators should consistently consider a jail's operating expense data and independent estimates, they did not believe that rates based on these estimated data should be the default negotiation position.
The Department's Financial Statement Audits
The Chief Financial Officers Act of 1990 and the Government Management Reform Act of 1994 require annual financial statement audits of the Department. The OIG's Audit Division oversees and issues the reports based on the work performed by independent public accountants. During this reporting period, we issued the audit report for the Department's Annual Financial Statements for FY 2010.
The Department received an unqualified opinion1 on its FYs 2009 and 2010 financial statements. This year, at the consolidated level the Department had one significant deficiency2, which related to a few serious, but isolated, financial reporting issues, including the USMS's funds management controls; the Assets Forfeiture Fund and Seized Asset Deposit Fund's seized and forfeited property reporting controls; and ATF's management controls.
As reflected in the chart, the Department has continued to make progress in its financial management systems and has continued to address significant deficiencies identified in the OIG's previous annual financial statement audits. For example, at the component level the number of significant deficiencies decreased from eight in FY 2009 to four in FY 2010. The Department and its components deserve credit for these substantial improvements.
|Comparison of FY 2010 and FY 2009 Audit Results|
|Reporting Entity||Auditors' Opinion
|Number of Material Weaknesses3||Number of Significant Deficiencies|
|Consolidated Department of Justice||U||U||0||0||0||0||1||1||0||1|
|Assets Forfeiture Fund and
Seized Asset Deposit Fund
|Offices, Boards and Divisions||U||U||0||0||0||0||0||1||0||0|
|U.S. Marshals Service||U||U||1||1||0||0||0||0||0||1|
|Office of Justice Programs||U||U||0||0||0||0||0||1||0||0|
|Drug Enforcement Administration||U||U||0||0||0||0||0||1||0||0|
|Federal Bureau of Investigation||U||U||0||0||0||0||0||0||1||0|
|Bureau of Alcohol, Tobacco,
Firearms and Explosives
|Federal Bureau of Prisons||U||U||0||0||0||0||0||0||0||1|
|Federal Prison Industries, Inc.||U||U||0||0||0||0||0||1||0||0|
Yet, it is important to note that the Department still does not have a unified financial management system to support ongoing accounting operations and preparation of financial statements. As discussed in past years, we believe the most important challenge facing the Department in its financial management is to implement an integrated financial management system to replace the disparate and, in some cases, antiquated financial systems used by Department components.
In the FY 2010 consolidated Independent Auditors' Report on Compliance and Other Matters, no instances of non-compliance with applicable laws and regulations or other matters were identified. Although instances of non-compliance were reported at some of the components, the consolidated auditors determined that none of the component level non-compliance issues caused the Department as a whole to be in non-compliance.
Federal Information Security Management Act Audits
The Federal Information Security Management Act (FISMA) requires the Inspector General for each agency to perform an annual independent evaluation of the agency's information security programs and practices. The evaluation includes testing the effectiveness of information security policies, procedures, and practices of a representative subset of agency systems. The Office on Management and Budget (OMB) issued guidance to agencies for the FY 2010 FISMA requirements. OMB instructed agency Chief Information Officers, Inspectors General, and Senior Agency Officials for Privacy to report FY 2010 FISMA results to OMB by November 15, 2010. The OIG provided OMB with this submission within the deadline.
The OIG is finalizing its FY 2010 FISMA review of the individual security programs for eight Department components: the U.S. National Central Bureau of INTERPOL (INTERPOL), EOUSA, OJP, NSD, FBI, ATF, DEA, and JMD. Within these components, we also selected for review five classified systems within NSD, FBI, DEA, and JMD. In addition, we selected four sensitive but unclassified systems in the other components: INTERPOL's Envoy System, EOUSA's Case Management Enterprise System, OJP's National Criminal Justice Reference Service System, and ATF's National Field Office Case Information System. The OIG plans to issue separate reports evaluating each of these systems, as well as the overall security programs of the eight components.
Accounting and Authentication of Drug Control Funds and Related Performance
The OIG is required to perform an annual attestation review of detailed accounting of funds expended by each drug control program and related performance summary by 21 U.S.C. § 1704(d), as implemented by the Office of National Drug Control Policy Circular, Drug Control Accounting, dated May 1, 2007. The OIG's Audit Division performs the review and issues the report. An attestation review is less in scope than an examination and, therefore, does not result in the expression of an opinion. However, nothing came to our attention that caused us to believe the submissions failed to present, in all material respects, in accordance with the requirements of the Office of National Drug Control Policy Circular.
Section 1001 of the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act (Patriot Act) directs the OIG to receive and review complaints of civil rights and civil liberties abuses by Department employees, to publicize how people can contact the OIG to file a complaint, and to submit a semiannual report to Congress discussing our implementation of these responsibilities. In February 2011, the OIG issued its 18th report summarizing its Section 1001 activities covering the period from July 1, 2010, to December 31, 2010. The report described the number of complaints we received under this section and the status of investigations conducted by the OIG and Department components.
Single Audit Act Reports
OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, is OMB's implementing guidance to federal agencies for the Single Audit Act, as amended. OMB A-133 establishes audit requirements for state and local governments, colleges and universities, and nonprofit organizations receiving federal financial assistance. Entities that expend more than $500,000 in federal financial assistance in one year must have a "single audit" performed annually covering all federal funds expended that year. Single audits are conducted by state and local government auditors, as well as independent public accounting firms. The OIG reviews these audit reports when they pertain to Department funds in order to determine whether the single audit reports meet the requirements of OMB Circular A-133 and generally accepted government auditing standards. In addition, the OIG reviews single audit reports to determine if they contain audit findings related to Department grants. As a result of the OIG's review of the single audits, during this semiannual period the OIG issued to the Department's granting agencies 48 single audit reports encompassing 353 contracts, grants, and other agreements totaling more than $146 million. The OIG also monitors these audits through the resolution and closure process.
The single audits disclosed that costs charged to Department grants were not always adequately supported, and that required financial reports were inaccurate and frequently were not filed in a timely manner. The state and local government auditors and independent public accounting firms who conducted the single audits also found examples of inadequate segregation of duties, failure to conduct physical inventories of assets purchased with federal funds, failure to submit timely single audit reporting packages to the Federal Audit Clearinghouse (an office operating on behalf of the OMB that facilitates federal oversight of entities expending federal money), and failure to reconcile significant accounting records with the general ledger and subsidiary ledgers. They also reported that grantees did not adequately monitor their grant sub-recipients to ensure that the sub-grantees were properly accounting for the grant funds and ensuring compliance with the terms and conditions of the grant.
The following is an example of a case involving more than one component that the OIG's Investigations Division handled during this reporting period:
- In our September 2008 Semiannual Report to Congress, we reported on a joint investigation by the OIG's Oversight and Review Division, FBI's Washington Field Office, United States Attorney's Office for the District of Maryland, and Public Integrity and Fraud Sections of the Criminal Division that led to the September 2008 indictment of Kevin A. Ring, a former lobbyist who worked with Jack A. Abramoff, on public corruption and obstruction of justice charges.
On November 15, 2010, a federal jury convicted Ring on five counts related to a scheme to corrupt public officials. The jury found Ring guilty on one count of conspiracy, one count of paying a gratuity to a Department official, and three counts of honest services wire fraud for engaging in a scheme to deprive U.S. citizens of their right to the honest services of certain public officials, including a Department official.
According to evidence presented at trial, while working as a lobbyist in Washington, Ring and his co-conspirators identified public officials who would perform official actions that would assist Ring and his clients, and then groomed those public officials by providing all-expenses-paid travel, meals, drinks, golf outings, as well as tickets to professional sporting events, concerts, and other events. Ring and his co-conspirators provided these things of value as a means of influencing, inducing, and rewarding official actions, and in exchange for official actions. Evidence presented at trial demonstrated that Ring corruptly sought assistance from public officials, including Department officials, which resulted in, among other things, his clients receiving appropriations and authorizations, including an additional $7 million from the Department to build a jail.
Ring faces a maximum sentence of 5 years in prison for conspiracy, 2 years in prison for payment of a gratuity, and 20 years in prison for each of the three counts of honest services wire fraud. Ring could also be ordered to pay a fine of up to $250,000 on each count of conviction.
The OIG is reviewing the Department's use of the material witness warrant statute, 18 U.S.C. 3144. Based on the OIG's responsibility under Section 1001 of the Patriot Act, the review is addressing allegations of civil rights and civil liberties abuses in the Department's post-9/11 use of the statute in the national security context. The review is also examining the Department's controls over the use of material witness warrants, trends in the use of material witness warrants, the benefit to the Department from the use of the statute, and the Department's treatment of material witnesses in national security cases, including issues such as length of detention, conditions of confinement, and access to counsel.
The OIG is reviewing ATF's firearms trafficking investigation known as Operation Fast and Furious, and other investigations with similar objectives, methods, and strategies. Our preliminary objectives are to examine the development and implementation of the investigations; the involvement of the Department (including ATF, the Criminal Division, and USAOs) and other law enforcement or government entities in the investigations; the guidelines and other internal controls in place and compliance with those controls during the investigations; and the investigative outcomes.
The OIG is reviewing the Department's role in the transfer of non-citizens incarcerated in federal prisons through the international prisoner treaty transfer program. The review is assessing the Department's process to approve or deny inmates' requests to serve their sentences in the foreign countries in which they are citizens.
The FBI and NSD share responsibility for identifying, investigating, and prosecuting persons and entities who provide financial support to terrorist organizations. The OIG is examining whether the FBI and NSD are appropriately handling and coordinating these responsibilities.
The OIG is conducting a review of the Department's Integrated Wireless Network program, which is a joint effort of the Department, and the Departments of Homeland Security and the Treasury to provide a secure, interoperable nationwide wireless communications network.
Justice Security Operations Center
The OIG is reviewing the Justice Security Operations Center, which helps protect the Department's information technology infrastructure and sensitive data from cyber attacks. This audit is evaluating the Center's capabilities regarding intrusion incidents and assessing its coordination and information-sharing with other Department and federal agencies.
Department Conference Expenditures FY 2008 and FY 2009
The OIG is auditing the Department's conference expenditures incurred during FYs 2008 and 2009 to determine whether the Department components properly accounted for and minimized conference planning, meal, and refreshment costs.
Administrative Suspension, Debarment, and Other Internal Remedies
Suspension and debarment actions prevent companies and individuals from participating in government contracts, subcontracts, loans, grants, and other assistance programs. Federal agencies can suspend or debar a party for reasons such as a conviction or indictment for a criminal offense or a willful failure to perform to the terms of a contract or grant. The OIG is evaluating the Department's implementation and oversight of administrative suspension and debarment activities.
Statutory Debarment Actions Reported and Maintained by the Department
The Department reports and maintains information on statutory debarment actions based on court convictions for certain qualifying offenses. The Defense Procurement Fraud Debarment and Denial of Federal Benefits Clearinghouse within the Bureau of Justice Assistance (BJA) maintains and reports the statutory debarment referrals from sources such as state courts or prosecuting USAOs. The OIG initiated a review to: (1) determine the extent to which qualifying statutory debarment cases are reported by the USAOs and other Department litigating divisions for inclusion in the General Services Administration's (GSA) Excluded Parties List System; (2) assess the BJA's process for collecting information and maintaining a current list of disqualified individuals; and (3) examine the BJA's process for reporting excluded parties to GSA.
Internal Controls over Terrorism Reporting
The OIG is conducting a follow-up audit of the Department's internal controls over its terrorism reporting. The OIG seeks to determine whether the NSD, EOUSA, and FBI took appropriate actions to implement the recommendations from our 2007 audit. In addition, we will determine whether corrective actions implemented improved the components' ability to gather, track, classify, verify, and report accurate terrorism-related statistics.
Ensuring Safe and Secure Non-Federal Detention Facilities
Within the Department, the OFDT manages and regulates the federal detention programs and the USMS is responsible for holding federal criminal detainees while courts adjudicate their cases. A detention facility's failure to meet federal detention facility standards can result in harm to detainees and legal liabilities for the federal government. The OIG is reviewing the Department's efforts to ensure a safe, secure, and humane environment for federal detainees located in non-federal detention facilities.
Unified Financial Management System
The OIG is evaluating the implementation of the Unified Financial Management System program, including the project's cost, schedule, and performance.
The OIG is examining the management of the FBI and DEA aviation operations.
Vetting Job Applicants
The OIG is reviewing the Department's process for checking the references of applicants being hired across a variety of job areas within both the excepted and competitive services.
Components' Security Clearances
The OIG is examining the security clearance processes of Department components.
- An unqualified opinion results when the financial statements present fairly, in all material respects, the financial position and results of operations of the reporting entity, in conformity with U.S. Generally Accepted Accounting Principles.
- A significant deficiency is a deficiency, or combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect and correct misstatements on a timely basis.
- A material weakness is a deficiency or combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a timely basis.