The U.S. Equal Employment Opportunity Commission

Office of Inspector General
Semiannual Report to the Congress

April 28, 2006

The Honorable Cari M. Dominguez
Chair
Equal Employment Opportunity Commission
Washington, D.C. 20507

Dear Madam Chair:

The Office of Inspector General’s (OIG) Semiannual Report to Congress, summarizing our activities for the six-month period of October 1, 2005 through March 31, 2006, is provided for your review. The Inspector General Act of 1978, as amended, Public Law 95-451, Section 5(B), requires that you submit this report to the Congress within 30 days of receipt.

During this reporting period, the OIG issued 5 audit and evaluation reports, completed 6 investigations, and received 150 investigative inquiries. Highlights include Agency improvement in moving towards Green in the President’s Management Agenda initiatives and investigations addressing conflicts of interest, falsification of official records, and an alleged Whistleblower Act violation. Important ongoing work includes the evaluations of the National Contact Center and the reliability of key EEOC performance data; and contractor supported efforts in reviewing internal controls and assessing information security. The report also includes information on the challenges confronting management as the Agency proceeds in its repositioning initiatives.

The Office of Inspector General is dedicated to promoting government integrity, accountability, transparency and excellence. OIG staff thanks EEOC employees for their continued cooperation and support of our mission to prevent and detect fraud, waste and abuse within the Agency.

Sincerely,

Aletha L. Brown
Inspector General

October 26, 2005



Executive Summary

This report summarizes significant audit, evaluation and investigation activities of the Office of Inspector General (OIG) during the six month period ending March 31, 2006. The report also summarizes the challenges facing management in implementing Commission repositioning activities and preparing for its first OMB Program Assessment Rating Tool review.

OIG completed audit, evaluation and investigative projects including:

Work in progress includes the evaluation of the National Contact Center and an investigation of the misuse of the Agency seal, used in a scheme to defraud companies, businesses, corporations, and government entities of monies. Several matters have been referred to the Department of Justice for prosecutorial consideration.

INTRODUCTION

The Equal Employment Opportunity Commission

The EEOC is the federal agency responsible for enforcement of: Title VII of the Civil Rights Act of 1964, as amended; the Equal Pay Act of 1963; the Age Discrimination in Employment Act of 1967 (ADEA); in the Federal sector only, section 501 of the Rehabilitation Act of 1973; Title I of the Americans with Disabilities Act of 1990 (ADA); and the Civil Rights Act of 1991. These statutes prohibit employment discrimination based on race, sex, color, religion, national origin, age, or disability. The EEOC is also responsible for carrying out Executive Order 12067, which promotes coordination and minimizes conflict and duplication among Federal agencies that administer statutes or regulations involving employment discrimination.

EEOC is a bipartisan Commission comprised of five presidentially appointed members, including the Chair, Vice Chair and three Commissioners. The Chair is responsible for the administration and implementation of policy for the Commission and for the financial management and organizational development of the Commission. The Vice Chair and the Commissioners equally participate in the development and approval of the policies of the Commission, issue charges of discrimination where appropriate, and authorize the filing of suits. Additionally, the President appoints a General Counsel to support the Commission and provide direction, coordination, and supervision to EEOC's litigation program.

The Office of Inspector General

The United States Congress established an Office of Inspector General at the EEOC through the 1988 amendment of the Inspector General Act of 1978, which expanded authority to independent agencies and federal entities to create Offices of Inspector General. OIG's primary responsibility is to assist the EEOC by ensuring integrity, efficiency, and accountability in the Agency's programs to enforce laws against discrimination in the workplace. Specifically, OIG supports the Agency by carrying out its mandate to independently and objectively conduct and supervise audits, evaluations and investigations; prevent and detect fraud, waste, and abuse; and promote economy and efficiency in programs and operations. The OIG keeps EEOC's Chair and the Congress fully and currently informed about problems, recommends corrective action(s), and monitors the EEOC's progress in implementing such action.

The OIG is under the supervision of the Inspector General (IG), who provides overall direction, coordination, and leadership to staff. The OIG includes a deputy inspector general, an audit and evaluation staff, an investigative staff, an independent counsel, and an administrative staff. The Deputy Inspector General serves as alter ego of the Inspector General and has the responsibility for providing overall program guidance, direction and supervision to audit, evaluation and investigative staffs. The audit program provides assurance to the Chair and Congress that EEOC programs are working efficiently and effectively. The audit staff conducts performance and financial audits, as well as special reviews and evaluations. These audits focus on management controls, administrative and program operations, transaction processing and financial and other information systems. Special reviews and evaluations assess program performance and information security and consider the implications of EEOC programs, operations and policies.

The mission of the investigative program is to perform investigative activities related to the integrity of the EEOC's programs. Most of OIG's investigations focus on violations of law or misconduct by Agency employees, as well as, allegations of irregularities or abuses in operations and programs. When needed, OIG's investigators work in concert with other law enforcement entities. Over half of the investigative inquiries result from employees and the general public calling OIG's 24-hour telephone (hotline) to report wrongdoing. A significant amount of these calls concern EEOC's discrimination complaint process and are referred to the appropriate program office.

OIG successfully hired a confidential support assistant to provide administrative services to the Deputy Inspector General, Audit, Inspection and Investigation Programs. This position had been vacant for four years.

Summary of Significant Management Challenges

The following summarizes issues the Inspector General considers to be the most serious management challenges facing the Equal Employment Opportunity Commission during the reporting period. These issues require continuous effort by the agency and oversight by the Office of Inspector General.

National Contact Center

The Commission's repositioning plan is a three-phase effort intended to enhance the EEOC's enforcement presence and delivery of services; improve the efficiency of operations; and reduce or eliminate costs and expenses that threaten the financial stability of the Commission. The first phase was the establishment of a National Contact Center (NCC) Pilot in March 2005.

The OIG is overseeing an evaluation of the NCC Pilot Program. Issues assessed by the evaluation include EEOC staff understanding of the NCC, customer service, and business processes. The contractor performing the evaluation provided the OIG with a draft report in March, and will provide a final report in June. In July 2006, EEOC Commissioners will meet to determine the future of the National Contact Center.

Repositioning of Agency's Field Structure

At the beginning of this reporting period, Commission staff were tasked with implementing the Agency's new field structure, the second phase of the repositioning efforts. In summary, offices were faced with the challenge of supporting field repositioning efforts while maintaining regular operations. The Office of Human Resources is faced with filling vacancies for five Area Directors' positions, a Regional Attorney and the newly created position of District Resource Manager in District Offices. The task of developing the various field office structures has not been finalized but will likely be based upon the inventory of each field office. The Office of Information Technology experienced delays in updating the Integrated Mission System (IMS) and deploying the IMS to the Fair Employment Practices Agencies (FEPAs) due to field repositioning deadlines. The Chief Financial Officer's challenge was ensuring that financial data conversions relating to reporting changes by the new field structure had occurred by the deadline for reorganization. This included recoding payroll data to ensure that field employees were accurately reflected in the Agency's payroll system in accordance with the new field organizational structure. Similar changes also had to be made to the Agency's Integrated Financial Management System (IFMS).

Reorganization of EEOC Headquarters' Operation

Phase three of the Commission's repositioning plan centers on EEOC's Headquarters' operations. The future design of EEOC Headquarters' operation is currently being discussed. The purpose of the reorganization is to redistribute resources to provide better direction and support to the field organization thereby improving EEOC's service to the public. During the period, the Chair conducted a series of functional review meetings where Headquarters office directors comprehensively reviewed each office's organizational structure, programs, operations and resources. Indications of mission, function, program or activity overlap presented opportunities for consolidation at Headquarters, elimination, or realignment to the field. In addition to the redesign of the Headquarters' organization, the lease for the EEOC Headquarters' building expires in 2008 and alternative space and office reconfiguration options are being explored. All areas of the Headquarters' operations, i.e. programs, property and people could potentially be impacted.

Program Assessment Rating Tool (PART) Review

The Agency is scheduled to undergo its first PART review during the spring of 2006. To prepare for this event, a work group composed of EEOC staff from various Headquarters' offices was established to develop responses to the PART questionnaire and to gather the necessary supporting documentation. Once responses were developed, an internal "dry run" evaluation exercise was planned. The Office of Inspector General (OIG) staff was to assume the role of OMB evaluators having responsibility for scoring and rating the Agency. However, this planned exercise did not occur. EEOC must provide its final draft PART document to OMB by April 15, 2006. Evaluation of the PART document will impact the

Agency in its future dialogue with OMB and Congress in terms of budget decisions and performance results.

THE AUDIT AND EVALUATION PROGRAM

The Audit and Evaluation Program supports the Chair's Five-Point Plan goal of EEOC as a Model Workplace, as well as, OIG's strategic goal to improve the economy, efficiency, and effectiveness of EEOC programs, operations, and activities.

Completed Projects

Audit of the Equal Employment Opportunity Commission's Fiscal Year 2005 and 2004 Financial Statements (OIG Report No. 2005-09-FIN)

Cotton and Company LLP issued an unqualified opinion on EEOC's FY 2005 and 2004 financial statements. In its Report on Internal Control, Cotton and Company noted that the material weakness relating to quality assurance over the financial reporting process which was included in the FY 2004 audit report was resolved before the preparation of the FY 2005 statements. Cotton also reported that EEOC's financial management systems substantially complied with the requirements of the Federal Financial Management Integrity Act of 1996 (FFMIA), and found no reportable noncompliance with the laws and regulations it tested.

Management Letter Report for the Fiscal Year 2005 Financial Statement Audit (OIG Report No. 2005-10-FIN)

In connection with the FY 2005 Financial Statement Audit, Cotton and Company LLP issued its Management Letter Report addressing internal control matters that warranted management's attention. This year's Management Letter Report identified internal control matters and recommendations relating to the following:

Management generally agreed with the findings and recommendations and their responses are included as an appendix to the audit report. Also, the report includes an update of the status of prior year recommendations.

OMB Scorecard and EEOC Update (OIG Report No. 2005-08-MGT)

Since FY 2003 the Office of Inspector General (OIG) has provided the Chair with periodic Management Advisories relating to the OMB Scorecard and EEOC's efforts in getting to Green (the measure of success in government-wide initiatives). Our latest advisory was provided in October 2005. Based upon interviews with senior managers, we identified Agency accomplishments, weaknesses, and planned actions for each of the five President's Management Agenda initiatives. As a result of assessing progress in meeting the core requirements established by OMB, OIG issued Red lights in two of the five initiatives (Improved Financial Performance and Budget and Performance Integration). Regarding the Improved Financial Performance initiative, the material weakness relating to quality assurance over the financial reporting process, which resulted from the FY 2004 financial statement audit, had not been resolved before OIG's advisory to the Chair was issued. According to OMB's criteria, any reported material weakness requires issuance of a Red light. Further, because the Agency had not received a PART review at the time of this advisory, a Red light was issued for the Performance and Budget Integration initiative. However, future OIG assessments of these initiatives should result in improved scores. Yellow lights were issued for improvements in the Strategic Management of Human Capital and Competitive Sourcing initiatives. EEOC's efforts in Expanded Electronic Government has consistently earned a Green light from OIG.

Agency Compliance with the Federal Managers Financial Integrity Act (FMFIA) (OIG Report Number 2005-06-AIC)

Agency regulation, EEOC Order 195.001, Internal Control Systems requires OIG to annually provide a written advisory to the Chair on whether the management control evaluation process complied with OMB guidelines. To make this determination OIG reviewed: (1) assurance statements submitted by Headquarters' and district directors attesting that their systems of management accountability and control were effective and that resources under their control were used consistent with the Agency's mission and in compliance with the laws and regulations set out in the FMFIA of 1982; (2) all functional area summary tables, and functional area reports submitted by Headquarters' and field offices; and (3) the Office of Research, Information and Planning's (ORIP) FY 2003 FMFIA Assurance Statement and Assurance Statement Letter, with supporting documents. OIG's independent assessment showed that the Agency's management control evaluation was conducted in accordance with OMB's standards.

Further, based on the results of OIG audits, evaluations, and investigations conducted during the fiscal year, OIG concurred with ORIP's assertion that the Agency had no material weaknesses during this reporting cycle. Also, upon review of the Office of Chief Financial Officer and Administrative Services' information regarding the disclosure of financial non-conformance noted in Attachment #4, 2005 Financial Non-Conformances of the Assurance Statement Letter, OIG concluded that five of the seven non-conformances were corrected in FY 2005. A corrective action work plan has been developed to resolve the remaining two non-conformances by FY 2006.

Disabling Laptop Screen Locking Feature - Management Advisory

The OIG issued a management advisory addressing the screen locking feature that is installed on Agency provided laptops. The Agency's Chief Information Officer requested an opinion from the Inspector General on the feasibility of disabling this feature due to its reported interference when Agency staff conduct training activities. The screen disabling feature requires an individual to re-enter their user credentials after a set period of inactivity to reactivate the computer monitor. While this feature may inconvenience some users, the importance of this mechanism in protecting Agency information and information systems overrides this inconvenience. Therefore, the OIG recommended that the feature not be disabled.

Ongoing Audit and Evaluation Projects

Review of Internal Controls (2006-02-FIN)

OIG issued a Request for Proposal (RFP) for audit services to perform an evaluation of internal controls over financial reporting at the EEOC. The work under the task order will be used to: (1) assist management in identifying internal control weaknesses and identifying necessary actions to strengthen internal control relating to financial reporting and (2) to assist management in its efforts to implement the requirement of the Office of Management and Budget Circular No.A-123 Management's Responsibility for Internal Controls. The task order is expected to be issued and fieldwork to commence during the 3rd quarter of FY 2006.

Audit of the EEOC's FY 2006 Financial Statements (2006-03-FIN)

The initial planning meeting with independent public accountants, Cotton & Co. LLP was held in regards to the performance of OIG's audit of the Commission's FY 2006 financial statements. The firm plans to begin its fieldwork and testing in early 4th quarter 2006.

Evaluation of the National Contact Center Pilot

OIG is overseeing an evaluation of the EEOC's National Contact Center (NCC) Pilot. In this reporting period, the evaluation has assessed:

Data gathering and analysis took place October 2005 through February 2006. Information analyzed includes data and interviews obtained from the NCC site, EEOC field offices, and an EEOC field staff survey. Issues the evaluation assessed include staff's understanding of the NCC, customer service, and business processes. The contractor, Job Performance Systems, will issue a draft report to obtain comments from Agency principals and stakeholders in April 2006. A final report will be issued in June 2006. In July 2006, EEOC Commissioners will meet to determine the future operations of the National Contact Center.

Assessment of the Reliability of Key EEOC Performance Data (2005-02-AMR)

In FY 2005, OIG initiated a data reliability assessment project covering selected Agency performance data. Our original schedule for issuing a draft report was the fourth quarter of FY 2005. Two factors caused a revision in project schedule. First, OIG assumed the responsibility to conduct the independent assessment of the NCC project, and the data provided to OIG contained much information that was not usable requiring additional unanticipated work by the Evaluator. Therefore, issuance of draft and final reports has been rescheduled for the next reporting period.

Independent Evaluation of Federal Information Security Management Act Compliance

A request for contractor proposal will be issued for OIG's 2006 assessment of the Agency's compliance with the Federal Information Security Management Act of 2002 (FISMA). OIG decided to outsource this year's independent evaluation in an effort to conduct a 360 degree evaluation of EEOC's entire information security program emphasizing risk assessment, action plan and milestones, and the certification and accreditation process used by the Agency. The work is expected to be completed by the fourth quarter of this fiscal year.

Other Audit and Evaluation Projects

Review of Single Audit Act Reports

The Single Audit Act of 1984 requires recipients of federal funds to arrange for audits of their activities. Federal agencies that award these funds must receive annual audit reports to determine whether prompt and appropriate corrective action has been taken in response to audit findings. During the reporting period, OIG reviewed 14 audit reports issued by public accounting firms concerning Fair Employment Practices Agencies (FEPAs) that have work-sharing agreements with EEOC. There were no audit findings directed to FEPAs which were related to EEOC funds. (See Appendix III)

Audit Follow-Up

As required by Section 5(a)(3) of the Inspector General Act of 1978, as amended, semiannual reports shall provide the status of each significant recommendation previously reported where corrective action has been completed. OIG has no reports with recommendations previously reported to which corrective action has not been completed. Section 5(a)(1) of the Inspector General Act of 1978, as amended, requires that semiannual reports shall include a summary of each audit report issued before the commencement of the reporting period for which no management decision has been made by the end of the reporting period. OIG has no audit or evaluation reports that were issued before commencement of the reporting period for which no management decision has been made by the end of the reporting period.

THE INVESTIGATIVE PROGRAM

The Investigation Program supports OIG's strategic goal to focus limited investigative resources on issues that represent the greatest risk and offer the maximum opportunity to detect and prevent fraud, waste and abuse in EEOC programs and operations.

Investigative Inquiries Received
During the Reporting Period
ALLEGATIONS TOTAL
Charge Processing 63
Other Statutes 30
Title VII 24
Mismanagement 4
Ethics 1
Backgrounds 6
Theft 4
Other Criminal Violations 15
Fraud 3
TOTALS 150

Completed Investigations

Whistleblower Protection

The Office of Inspector General (OIG) completed the investigation of an allegation that an employee had been retaliated against by senior management within the EEOC because the employee filed a complaint with the OIG. After thoroughly investigating the matter, the OIG requested pertinent documents from the employee, who refused to provide any additional information to the OIG. Due to the employee's lack of cooperation, the OIG terminated its investigation of the allegations.

Conflict of Interest Referral

The Office of Inspector General completed the investigation of an allegation that an employee, a management official, had made a final decision in a matter involving the employee's spouse, which is a potential violation of Title 18 U.S.C. § 208, Conflict of Interest. After a thorough investigation into the matter, OIG determined that the employee did not make a final decision in the matter, as the employee did not participate personally and substantially in the decision making process in this matter. OIG has determined that, based on the evidence and applicable regulations, a conflict of interest did not arise in this matter.

Falsification of Records

The Office of Inspector General completed the preliminary investigation of an allegation that an investigator, assigned to investigate charges of discrimination, falsified documents related to his case files. While investigating this matter, the investigator resigned his position, and has been prohibited from seeking future employment with the EEOC. As a result of the investigator's resignation, and a review of the files by EEOC officials indicating that the charging parties experienced no substantial harm, the OIG has closed this matter.

Conflict of Interest

OIG conducted an investigation into allegations that an employee had violated Title 18 U.S.C. §205, Activities of officers and employees in claims against and other matters affecting the Government, when the employee, an attorney, represented two government employees in two separate instances in claims against the government. Based upon information and documents obtained in the course of the OIG's investigation of the matter it appears that the employee may have violated 18 U.S.C. §205, which prohibits a Government employee, other than in the performance of official duties, from representing anyone, with or without compensation, before an agency in connection with any covered matter in which the United States is a party or has a direct and substantial interest. The matter has been referred for prosecutorial consideration with the U.S. Attorney's Office.

Conflict of Interest

OIG conducted an investigation into allegations that an employee had violated Title 18 U.S.C. §208, Acts affecting a personal financial interest, by reviewing and making the final decision in a discrimination action, involving a respondent employer with whom the EEOC employee's spouse was employed. The OIG's investigation of the matter revealed that at the time the decision was made, the employee's spouse was not employed by the respondent, and no nexus could be established linking the two events. OIG found no conflict of interest.

Ongoing Investigative Activity

OIG has ongoing investigations in Headquarters and several field offices involving allegations of conflicts of interest, sexual harassment, Whistleblower Act violation, destruction of evidence, false statements, misuse of Government property, defamation, fraud, practicing law without Agency authorization and disclosure of confidential information. Several of these matters have been referred to the Department of Justice for prosecutorial consideration. Also, OIG continues to investigate fraud in the misuse of the Agency seal, used in a scheme to defraud companies, businesses, corporations, and government entities.

Two Year History of Hotline Complaints

Two Year History of Hotline Complaints

Other OIG Activities

2006-2007 Annual Performance Plan for Historically Black Colleges and Universities (HBCUs) Career Development and Internship Program

The OIG began developing an Annual Career Development and Internship Program for HBCUs in connection with Executive Order 13256, which requires Federal departments and agencies to increase the capacity of America's 105 HBCUs to participate in federal projects and programs.

The OIG's goals and objectives of implementing this plan are to: